<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-57473
PROSPECTUS SUPPLEMENT
- ------------------------------------
(TO PROSPECTUS DATED NOVEMBER 5, 1998)
$1,399,564,622 (APPROXIMATE)
NATIONSLINK FUNDING CORPORATION
DEPOSITOR
MIDLAND LOAN SERVICES, INC.
MASTER SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-2
NationsLink Funding Corporation is offering certain classes of the Series
1998-2 Commercial Mortgage Pass-Through Certificates, which represent beneficial
ownership interests in a trust. The trust's assets consist primarily of mortgage
loans secured by multifamily and commercial properties, and other property
described in this prospectus supplement and the accompanying prospectus. The
mortgage loans are secured by first liens on commercial and multifamily
properties. This prospectus supplement more fully describes the offered
certificates, as well as the characteristics of the mortgage loans and the
related mortgaged properties.
The Series 1998-2 Certificates will not represent interests in or
obligations of NationsLink Funding Corporation or any of its affiliates. Neither
the certificates nor the mortgage loans are insured or guaranteed by any
governmental agency.
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. YOU SHOULD CAREFULLY
REVIEW THE "RISK FACTORS" BEGINNING ON PAGE S-18 IN THIS PROSPECTUS SUPPLEMENT
AND PAGE 15 OF THE PROSPECTUS.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these offered securities or determined
if this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
Certain characteristics of the offered certificates include:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
INITIAL CERTIFICATE ASSUMED FINAL
BALANCE OR PASS-THROUGH DISTRIBUTION RATINGS
CLASS NOTIONAL AMOUNT(1) RATE DATE(3) (MOODY'S/S&P)(4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A-1............... $ 429,503,407 6.001 % November 20, 2007 Aaa/AAA
Class A-2............... $ 676,635,062 6.476 % July 20, 2008 Aaa/AAA
Class X................. $ 1,581,964,668(6) 0.716 % (7) May 20, 2023 Aaa/AAAr
Class B................. $ 79,304,366 6.795 % (2) July 20, 2008 Aa2/AA
Class C................. $ 95,165,239 7.042 % (2) August 20, 2008 A2/A
Class D................. $ 83,269,584 7.105 % (2) August 20, 2008 Baa2/BBB
Class E................. $ 35,686,964 7.105 % (2) November 20, 2008 NR/BBB-
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------ --------------------
- ------------------------ --------------------
RATED FINAL
DISTRIBUTION
CLASS DATE(5)
- ------------------------ --------------------
<S> <C>
Class A-1............... August 20, 2030
Class A-2............... August 20, 2030
Class X................. August 20, 2030
Class B................. August 20, 2030
Class C................. August 20, 2030
Class D................. August 20, 2030
Class E................. August 20, 2030
- -------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
(Footnotes to table on page S-4)
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The underwriter, NationsBanc Montgomery Securities LLC, will purchase the
offered certificates from NationsLink Funding Corporation and will offer them to
the public at negotiated prices determined at the time of sale. NationsBanc
Montgomery Securities LLC expects to deliver the offered certificates to
purchasers on or about November 19, 1998. NationsLink Funding Corporation
expects to receive from this offering approximately 105.5% of the initial
principal amount of the offered certificates, plus accrued interest from
November 1, 1998, before deducting expenses payable by NationsLink Funding
Corporation.
- --------------------------------------------------------------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
November 5, 1998
<PAGE> 2
NationsLink Funding Corporation
- -------------------------------------------------------------------------------
Commercial Mortgage Pass-Through Certificates, Series 1998-2
Geographic Overview of Mortgage Pool
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
[MAP]
<TABLE>
<CAPTION>
% OF
NUMBER OF AGGREGATE INITIAL
MORTGAGED CUT-OFF DATE POOL
PROPERTY LOCATION PROPERTIES BALANCE BALANCE
----------------- ---------- -------------- -------
<S> <C> <C> <C>
CA................... 127 $ 435,659,576 27.5%
NC................... 10 153,240,124 9.7%
MD................... 10 119,168,943 7.5%
FL................... 29 114,366,151 7.2%
NJ................... 5 84,038,635 5.3%
TX................... 32 81,155,037 5.1%
WA................... 16 73,674,781 4.6%
AZ................... 17 57,755,509 3.6%
VA................... 9 57,232,752 3.6%
LA................... 6 43,788,163 2.8%
NV................... 7 43,424,822 2.7%
MN................... 21 31,935,027 2.0%
NY................... 10 27,436,257 1.7%
IL................... 14 26,875,421 1.7%
GA................... 6 24,598,347 1.6%
SC................... 10 23,932,615 1.5%
DC................... 1 23,684,547 1.5%
CO................... 5 22,329,538 1.4%
NM................... 9 22,153,374 1.4%
MO................... 4 18,269,647 1.2%
IN................... 4 15,778,018 1.0%
PA................... 3 14,547,051 0.9%
UT................... 4 11,934,394 0.8%
TN................... 4 11,425,847 0.7%
MA................... 2 11,063,674 0.7%
OR................... 4 7,741,259 0.5%
OH................... 1 6,942,865 0.4%
AL................... 2 6,251,463 0.4%
CT................... 2 3,249,229 0.2%
KS................... 1 2,991,795 0.2%
OK................... 2 2,876,067 0.2%
MS................... 1 2,317,597 0.1%
MI................... 1 1,641,705 0.1%
AR................... 1 1,514,738 0.1%
NE................... 1 1,092,357 0.1%
</TABLE>
MORTGAGE POOL BY PROPERTY TYPE
- ------------------------------
[PIE CHART]
Multifamily........... 32.9%
Retail................ 29.7%
Hotel................. 4.6%
Industrial............ 12.0%
Office................ 14.2%
Mobile Home........... 2.4%
Health Care........... 2.2%
Mini Storage.......... 0.9%
Franchise............. 0.8%
Parking............... 0.3%
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
EXECUTIVE SUMMARY........................................... S-6
SUMMARY OF PROSPECTUS SUPPLEMENT............................ S-8
RISK FACTORS................................................ S-18
Risks Related to the Certificates......................... S-18
Lack of Control Over Trust Fund........................ S-18
Potential Conflicts of Interest........................ S-18
Yield Considerations................................... S-18
Prepayments and Repurchases............................ S-19
Borrower Default....................................... S-20
Bankruptcy Proceedings................................. S-21
Advance Interest and Other Payments.................... S-21
Limited Liquidity and Market Value..................... S-21
Different Timing of Mortgage Loan Amortization......... S-22
Subordination of Subordinate Offered Certificates...... S-22
Year 2000 Disruptions.................................. S-22
Risks Related to the Mortgage Loans....................... S-22
Nature of Mortgaged Properties......................... S-22
Management............................................. S-23
Balloon Payments....................................... S-23
Risks Particular to Multifamily Properties............. S-24
Risks Particular to Retail Properties.................. S-24
Risks Particular to Restaurant Franchises.............. S-25
Risks Particular to Senior Housing/Health Care
Properties............................................ S-25
Risks Particular to Office Properties.................. S-26
Risks Particular to Hotels............................. S-26
Risks Particular to Mobile Home Park Properties........ S-26
Risks Particular to Mini-Storage Facilities............ S-27
Risks of Subordinate Financing......................... S-27
Limited Recourse....................................... S-27
Environmental Considerations........................... S-27
Limitations on Enforceability of
Cross-Collateralization............................... S-28
Related Parties........................................ S-28
Geographic Concentration............................... S-29
Other Concentrations................................... S-29
Risk of Changes in Concentrations...................... S-29
Prepayment Premiums.................................... S-30
Limited Information.................................... S-31
Litigation............................................. S-31
Other Risks............................................... S-31
DESCRIPTION OF THE MORTGAGE POOL............................ S-31
General................................................... S-31
Certain Terms and Conditions of the Mortgage Loans........ S-33
Due Dates.............................................. S-33
Mortgage Rates; Calculations of Interest............... S-33
Amortization of Principal.............................. S-33
Prepayment Provisions.................................. S-33
Defeasance............................................. S-34
"Due-on-Sale" and "Due-on-Encumbrance" Provisions...... S-34
Significant Mortgage Loans................................ S-35
International Home Furnishing Center Loan.............. S-35
The Gateway Center I and Gateway Center II Loans....... S-37
</TABLE>
S-1
<PAGE> 4
<TABLE>
<S> <C>
The Journal Square Plaza II Loan....................... S-38
The Research Tri-Center North A and Research Tri-Center
South B Loans......................................... S-39
Additional Mortgage Loan Information...................... S-41
General................................................ S-41
Delinquencies.......................................... S-41
Tenant Matters......................................... S-41
Ground Leases.......................................... S-42
Subordinate Financing.................................. S-42
Health Care Properties................................. S-42
Lender/Borrower Relationships.......................... S-42
Certain Underwriting Matters.............................. S-42
Environmental Assessments.............................. S-42
Property Condition Assessments......................... S-44
Appraisals and Market Studies.......................... S-44
Zoning and Building Code Compliance.................... S-45
Hazard, Liability and Other Insurance.................. S-45
The Mortgage Loan Seller and Bank of America.............. S-46
Assignment of Mortgage Loans; Repurchases................. S-46
Representations and Warranties; Repurchases............... S-48
Changes in Mortgage Pool Characteristics.................. S-51
SERVICING OF THE MORTGAGE LOANS............................. S-51
General................................................... S-51
The Master Servicer....................................... S-54
The Special Servicer...................................... S-54
Sub-Servicers............................................. S-54
Servicing and Other Compensation and Payment of
Expenses............................................... S-55
Evidence as to Compliance................................. S-58
Modifications, Waivers, Amendments and Consents........... S-58
Sale of Defaulted Mortgage Loans.......................... S-59
REO Properties............................................ S-60
Inspections; Collection of Operating Information.......... S-61
Termination of the Special Servicer....................... S-61
DESCRIPTION OF THE CERTIFICATES............................. S-62
General................................................... S-62
Registration and Denominations............................ S-62
Certificate Balances and Notional Amount.................. S-63
Pass-Through Rates........................................ S-63
Distributions............................................. S-65
General................................................ S-65
The Available Distribution Amount...................... S-65
Distributable Certificate Interest..................... S-68
Principal Distribution Amount.......................... S-69
Distributions of Prepayment Premiums................... S-70
Treatment of REO Properties............................ S-71
Subordination; Allocation of Losses and Certain
Expenses............................................... S-71
Interest Reserve Account.................................. S-73
P&I Advances.............................................. S-73
Appraisal Reductions...................................... S-74
Reports to Certificateholders; Certain Available
Information............................................ S-75
Trustee Reports........................................ S-75
Servicer Reports....................................... S-76
Other Information...................................... S-78
Voting Rights............................................. S-78
</TABLE>
S-2
<PAGE> 5
<TABLE>
<S> <C>
Termination............................................... S-79
The Trustee............................................... S-79
YIELD AND MATURITY CONSIDERATIONS........................... S-80
Yield Considerations...................................... S-80
General................................................ S-80
Class X Certificate Pass-Through Rate.................. S-80
Rate and Timing of Principal Payments.................. S-80
Losses and Shortfalls.................................. S-81
Certain Relevant Factors............................... S-81
Weighted Average Life..................................... S-82
Yield Sensitivity of the Class X Certificates............. S-87
USE OF PROCEEDS............................................. S-89
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... S-89
General................................................... S-89
Discount and Premium; Prepayment Premiums................. S-89
Characterization of Investments in Offered Certificates... S-90
Possible Taxes on Income From Foreclosure Property and
Other Taxes............................................ S-90
Reporting and Other Administrative Matters................ S-91
CERTAIN ERISA CONSIDERATIONS................................ S-91
LEGAL INVESTMENT............................................ S-94
METHOD OF DISTRIBUTION...................................... S-94
LEGAL MATTERS............................................... S-95
RATINGS..................................................... S-95
INDEX OF PRINCIPAL DEFINITIONS.............................. S-97
ANNEX A
ANNEX B
ANNEX C
</TABLE>
S-3
<PAGE> 6
FOOTNOTES TO TABLE ON COVER OF PROSPECTUS SUPPLEMENT
(1) Subject to a variance of plus or minus 5%.
(2) The Pass-Through Rate for any Class B, Class C, Class D or Class E
Certificate on any Distribution Date will not exceed the weighted average of
the interest rates (net of the fee rates payable to the Master Servicer, the
Special Servicer and the Trustee) borne by the mortgage loans. See
"Description of the Certificates -- Pass-Through Rates" in this prospectus
supplement.
(3) The "Assumed Final Distribution Date" with respect to any class of offered
certificates is the Distribution Date on which the final distribution would
occur for such class of certificates based upon the assumptions, among
others, that all payments are made when due and that no mortgage loan is
prepaid, in whole or in part, prior to its stated maturity. The actual
performance and experience of the mortgage loans will likely differ from
such assumptions. See "Yield and Maturity Considerations" in this prospectus
supplement.
(4) It is a condition to their issuance that the classes of offered certificates
be assigned ratings by Moody's Investors Service, Inc. ("Moody's") and/or
Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc. ("S&P"; and together with Moody's, the "Rating Agencies") no lower than
those set forth above. The ratings on the offered certificates do not
represent any assessments of (i) the likelihood or frequency of voluntary or
involuntary principal prepayments on the mortgage loans, (ii) the degree to
which such prepayments might differ from those originally anticipated or
(iii) whether and to what extent Prepayment Premiums will be received. Also
a security rating does not represent any assessment of the yield to maturity
that investors may experience or the possibility that the Class X
certificateholders might not fully recover their investment in the event of
rapid prepayments of the mortgage loans (including both voluntary and
involuntary prepayments).
(5) The "Rated Final Distribution Date" for each class of offered certificates
has been set at the first Distribution Date that follows two years after the
end of the amortization term for the mortgage loan that, as of the Cut-off
Date, has the longest remaining amortization term, irrespective of its
scheduled maturity. See "Ratings" in this prospectus supplement.
(6) The Class X Certificates will not have a Certificate Balance. The Class X
Certificates will accrue interest on a Notional Amount that is equal to the
aggregate of the Certificate Balances of the Class A-1, Class A-2, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J and Class K
certificates outstanding from time to time.
(7) Initial Pass-Through Rate. The related Pass-Through Rate is variable and
will, in general, equal the excess, if any, of (a) the weighted average of
the interest rates (net of the fee rates payable to the Master Servicer, the
Special Servicer and the Trustee) borne by the mortgage loans, over (b) the
weighted average of the Pass-Through Rates for the Class A-1, Class A-2,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J and
Class K certificates from time to time. See "Description of the
Certificates -- Pass-Through Rates" in this prospectus supplement.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates; and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. If the terms of the offered
certificates vary between this prospectus supplement and the accompanying
prospectus, you should rely on the information in this prospectus supplement.
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus supplement and the prospectus. The information in this prospectus
supplement is accurate only as of the date of this prospectus supplement.
This prospectus supplement begins with several introductory sections
describing the Series 1998-2 and the trust in abbreviated form:
Executive Summary, which begins on page S-6 of this prospectus
supplement and shows certain characteristics of the offered certificates in
tabular form;
Summary of Prospectus Supplement, which begins on page S-8 of this
prospectus supplement and gives a brief introduction of the key features of
Series 1998-2 and the mortgage loans; and
Risk Factors, which begins on page S-18 of this prospectus supplement
and describes risks that apply to Series 1998-2 which are in addition to
those described in the prospectus with respect to the securities issued by
the trust generally.
S-4
<PAGE> 7
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this prospectus
supplement and the prospectus to assist you in understanding the terms of the
offered certificates and this offering. The capitalized terms used in this
prospectus supplement are defined on the pages indicated under the caption
"Index of Principal Definitions" beginning on page S-97 in this prospectus
supplement. The capitalized terms used in the prospectus are defined on the
pages indicated under the caption "Index of Principal Definitions" beginning on
page 102 in the prospectus.
In this prospectus supplement, "we" refers to the Depositor, NationsLink
Funding Corporation, and "you" refers to a prospective investor in the offered
certificates.
---------------------
Until February 8, 1999 all dealers that buy, sell or trade the offered
certificates, whether or not participating in this offering, may be required to
deliver a prospectus supplement and the accompanying prospectus. This is in
addition to the dealers' obligation to deliver a prospectus supplement and the
accompanying prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
If and to the extent required by applicable law or regulation, this
prospectus supplement and the accompanying prospectus will be used by the
underwriter in connection with offers and sales related to market-making
transactions in the offered certificates with respect to which the underwriter
is a principal. The underwriter may also act as agent in such transactions. Such
sales will be made at negotiated prices at the time of sale.
S-5
<PAGE> 8
EXECUTIVE SUMMARY
The following Executive Summary does not include all relevant information
relating to the offered certificates and the mortgage loans. In particular, the
Executive Summary does not address the risks and special considerations involved
with an investment in the offered certificates, and prospective investors should
carefully review the detailed information appearing elsewhere in this prospectus
supplement and in the accompanying prospectus before making any investment
decision. Certain capitalized terms used in this Executive Summary may be
defined elsewhere in this prospectus supplement, including in Annex A hereto, or
in the prospectus. An "Index of Principal Definitions" is included at the end of
both this prospectus supplement and the prospectus. Terms that are used but not
defined in this prospectus supplement will have the meanings specified in the
prospectus.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
APPROXI-
INITIAL MATE APPROXI- PASS-
CERTIFICATE PERCENTAGE MATE THROUGH WEIGHTED
BALANCE OR OF INITIAL RATE AS AVERAGE
NOTIONAL INITIAL POOL CREDIT OF DELIVERY LIFE
CLASS RATINGS(1) AMOUNT(2) BALANCE SUPPORT DESCRIPTION DATE (YEARS)(4)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
- ------------------------------------------------------------------------------------------------------------
A-1 Aaa/AAA $ 429,503,407 27.15% 30.08% Fixed Rate 6.001% 5.49
- ------------------------------------------------------------------------------------------------------------
A-2 Aaa/AAA $ 676,635,062 42.77% 30.08% Fixed Rate 6.476% 9.43
- ------------------------------------------------------------------------------------------------------------
X Aaa/AAAr $1,581,964,668(5) N/A N/A Variable Rate 0.716%(6) 8.87
(Interest
Only)
- ------------------------------------------------------------------------------------------------------------
B Aa2/AA $ 79,304,366 5.01% 25.07% Fixed Rate 6.795%(3) 9.64
- ------------------------------------------------------------------------------------------------------------
C A2/A $ 95,165,239 6.02% 19.05% Fixed Rate 7.042%(3) 9.66
- ------------------------------------------------------------------------------------------------------------
D Baa2/BBB $ 83,269,584 5.26% 13.79% Fixed Rate 7.105%(3) 9.72
- ------------------------------------------------------------------------------------------------------------
E NR/BBB- $ 35,686,964 2.26% 11.53% Fixed Rate 7.105%(3) 9.75
- ------------------------------------------------------------------------------------------------------------
Private Certificates -- Not Offered Hereby
- ------------------------------------------------------------------------------------------------------------
F (Not Offered) $ 87,234,802 5.51% 6.02% Fixed Rate 7.105%(3) 12.18
- ------------------------------------------------------------------------------------------------------------
G (Not Offered) $ 11,895,654 0.75% 5.26% Fixed Rate 5.000% 14.32
- ------------------------------------------------------------------------------------------------------------
H (Not Offered) $ 31,721,746 2.01% 3.26% Fixed Rate 5.000% 14.42
- ------------------------------------------------------------------------------------------------------------
J (Not Offered) $ 7,930,436 0.50% 2.76% Fixed Rate 5.000% 14.47
- ------------------------------------------------------------------------------------------------------------
K (Not Offered) $ 43,617,407 2.76% N/A Fixed Rate 5.000% 15.06
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------- --------------------------
CLASS PRINCIPAL WINDOW
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Offered Certificates
- ------------------------------------------------------------------------------------------------------------
A-1 12/20/98-11/20/07
- ------------------------------------------------------------------------------------------------------------
A-2 11/20/07-7/20/08
- ------------------------------------------------------------------------------------------------------------
X N/A
- ------------------------------------------------------------------------------------------------------------
B 7/20/08-7/20/08
- ------------------------------------------------------------------------------------------------------------
C 7/20/08-8/20/08
- ------------------------------------------------------------------------------------------------------------
D 8/20/08-8/20/08
- ------------------------------------------------------------------------------------------------------------
E 8/20/08-11/20/08
- ------------------------------------------------------------------------------------------------------------
Private Certificates --
Not Offered Hereby
- ------------------------------------------------------------------------------------------------------------
F 11/20/08-1/20/13
- ------------------------------------------------------------------------------------------------------------
G 1/20/13-4/20/13
- ------------------------------------------------------------------------------------------------------------
H 4/20/13-5/20/13
- ------------------------------------------------------------------------------------------------------------
J 5/20/13-5/20/13
- ------------------------------------------------------------------------------------------------------------
K 5/20/13-5/20/23
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Ratings shown are those of Moody's and S&P, respectively.
(2) Subject to a variance of plus or minus 5%.
(3) The Pass-Through Rate for any Class B, Class C, Class D, Class E or Class F
Certificate on any Distribution Date will not exceed the weighted average of
the interest rates (net of the fee rates payable to the Master Servicer, the
Special Servicer and the Trustee) borne by the mortgage loans. See
"Description of the Certificates -- Pass-Through Rates" in this prospectus
supplement.
(4) Based on the Maturity Assumptions (as defined under "Yield and Maturity
Considerations" in this prospectus supplement).
(5) Notional Amount.
(6) Initial Pass-Through Rate. The Pass-Through Rate for the Class X Certificate
for any Distribution Date is variable and will, in general, equal the
excess, if any, of (a) the weighted average of the interest rates (net of
the fee rates payable to the Master Servicer, the Special Servicer and the
Trustee) borne by the mortgage loans, over (b) the weighted average of the
Pass-Through Rates for the Class A-1, Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J and Class K Certificates for
such Distribution Date. See "Description of the Certificate -- Pass-Through
Rates" in this prospectus supplement.
S-6
<PAGE> 9
Below is certain information regarding the Mortgage Loans and the Mortgaged
Properties as of the Cut-off Date. All weighted averages set forth below are
based on the respective Cut-off Date Balances (as defined herein) of the
Mortgage Loans. Such information is described, and additional information
regarding the Mortgage Loans and the Mortgaged Properties is contained, under
"Description of the Mortgage Pool" in this prospectus supplement and in Annex A
to this prospectus supplement.
MORTGAGE POOL CHARACTERISTICS
<TABLE>
<CAPTION>
ENTIRE MORTGAGE POOL
CHARACTERISTICS (APPROXIMATE)
- --------------- --------------------
<S> <C>
Initial Pool Balance......................... $1,586,087,324
Number of Mortgage Loans..................... 376
Number of Mortgaged Properties............... 381
Average Cut-off Date Balance................. $ 4,218,317
Weighted Average Mortgage Rate............... 7.245%
Weighted Average Remaining Lock-Out Period... 88 months
Weighted Average Remaining Term to
Maturity................................... 120 months
Weighted Average Underwriting Debt Service
Coverage Ratio............................. 1.48x
Weighted Average Cut-off Date Loan-to-Value
Ratio...................................... 70.8%
</TABLE>
"Cut-off Date Loan-to-Value Ratio" and "Underwriting Debt Service Coverage
Ratio" are calculated as described in Annex A hereto.
S-7
<PAGE> 10
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary highlights selected information from this prospectus
supplement. It does not contain all of the information you need to consider in
making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING
OF THE OFFERED CERTIFICATES, READ THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS CAREFULLY.
RELEVANT PARTIES AND DATES
DEPOSITOR
NationsLink Funding Corporation. The Depositor, a Delaware corporation, is
a subsidiary of NationsBank, N.A. The Depositor maintains its principal office
at NationsBank Corporate Center, 100 North Tryon Street, Charlotte, North
Carolina 28255. See "The Depositor" and "Method of Distribution" in this
prospectus supplement. Neither the Depositor nor any of its affiliates has
insured or guaranteed the Offered Certificates.
TRUSTEE
Norwest Bank Minnesota, National Association. The Trustee will also act as
REMIC Administrator. See "Description of the Certificates -- The Trustee".
MASTER SERVICER
Midland Loan Services, Inc., a Delaware corporation. See "Servicing of the
Mortgage Loans -- The Master Servicer" in this prospectus supplement.
SPECIAL SERVICER
Lennar Partners, Inc. See "Servicing of the Mortgage Loans -- The Special
Servicer" in this prospectus supplement.
MORTGAGE LOAN SELLER
NationsBank, N.A. The Mortgage Loan Seller, a national banking association,
is the parent of the Depositor and a wholly-owned subsidiary of NB Holdings
Corporation, which in turn is a wholly-owned subsidiary of BankAmerica
Corporation. The Mortgage Loan Seller maintains its principal office at
NationsBank Corporate Center, 100 North Tryon Street, Charlotte, North Carolina
28255. See "Description of the Mortgage Pool -- The Mortgage Loan Seller and
Bank of America" in this prospectus supplement.
CUT-OFF DATE
September 1, 1998.
TRUST FORMATION DATE
September 25, 1998.
COMMENCEMENT DATE
November 1, 1998.
DELIVERY DATE
On or about November 19, 1998.
RECORD DATE
With respect to each Class of Offered Certificates and each Distribution
Date, the last business day of the calendar month immediately preceding the
month in which such Distribution Date occurs.
S-8
<PAGE> 11
DISTRIBUTION DATE
The 20th day of each month or, if any such 20th day is not a business day,
the next succeeding business day, commencing with respect to the Offered
Certificates in December 1998.
DETERMINATION DATE
The 10th day of each month or, if any such 10th day is not a business day,
the immediately preceding business day.
COLLECTION PERIOD
With respect to any Distribution Date, the period that begins immediately
following the Determination Date in the calendar month preceding the month in
which such Distribution Date occurs (or, in the case of the initial Distribution
Date, that began immediately following the Cut-off Date) and ends on and
includes the Determination Date in the calendar month in which such Distribution
Date occurs. The first Collection Period applicable to the Certificates will
begin immediately following the Determination Date in November 1998 and end on
the Determination Date in December 1998.
MORTGAGE LOANS
THE MORTGAGE POOL
The pool of mortgage loans (the "Mortgage Pool") will consist of 376
conventional, multifamily and commercial mortgage loans (the "Mortgage Loans"),
with an aggregate Cut-off Date Balance of approximately $1,586,087,324 (the
"Initial Pool Balance"), subject to a variance of plus or minus 5%. All
numerical information provided herein with respect to the Mortgage Loans is
provided on an approximate basis. All weighted average information provided
herein with respect to the Mortgage Loans reflects weighting by related Cut-off
Date Balance. All percentages of the Mortgage Pool, or of any specified
sub-group thereof, referred to herein without further description are
approximate percentages by aggregate Cut-off Date Balance. See "Description of
the Mortgage Pool -- Changes in Mortgage Pool Characteristics" in this
prospectus supplement.
The "Cut-off Date Balance" of each Mortgage Loan is the unpaid principal
balance thereof as of the Cut-off Date, after application of all payments of
principal due on or before such date, whether or not received. The Cut-off Date
Balances of the Mortgage Loans range from $386,353 to $74,317,972, and the
average Cut-off Date Balance is $4,218,317.
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<PAGE> 12
As of the Cut-off Date, the Mortgage Loans had the following additional
characteristics. While the following numbers were accurate as of the Cut-off
Date, they may have changed if determined as of the Commencement Date. In
particular, any numbers reflecting remaining term would generally be 2 months
shorter as of the Commencement Date.
SELECTED MORTGAGE LOAN CHARACTERISTICS
<TABLE>
<S> <C>
Range of Mortgage Rates.................. 6.640% per annum to 9.830% per annum
Weighted Average Mortgage Rate........... 7.245% per annum
Range of Remaining Terms to Stated
Maturity............................... 69 months to 296 months
Weighted Average Remaining Term to Stated
Maturity............................... 120 months
Range of Remaining Amortization Terms.... 83 months to 359 months
Weighted Average Remaining Amortization
Term................................... 322 months
Range of Cut-off Date Loan-to-Value
Ratios................................. 20.30% to 85.19%
Weighted Average Cut-off Date
Loan-to-Value Ratio.................... 70.8%
Range of Maturity Date Loan-to-Value
Ratios of Balloon Loans................ 17.7% to 76.0%
Weighted Average Maturity Date Loan-to-
Value Ratio of Balloon Loans........... 62.1%
Range of Underwriting Debt Service
Coverage Ratios........................ 1.14x to 4.86x
Weighted Average Underwriting Debt
Service Coverage Ratio................. 1.48x
</TABLE>
"Cut-off Date Loan-to-Value Ratio," "Maturity Date Loan-to-Value Ratio" and
"Underwriting Debt Service Coverage Ratio" are each defined in Annex A to this
prospectus supplement.
Set forth below are the number of Mortgaged Properties, and the approximate
percentage of the Initial Pool Balance secured by such Mortgaged Properties,
located in the five states with the highest concentrations:
GEOGRAPHIC CONCENTRATION
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGED INITIAL POOL
STATE PROPERTIES BALANCE
- ----- ---------- -------------
<S> <C> <C>
California.................................................. 127 27.5%
North Carolina.............................................. 10 9.7
Maryland.................................................... 10 7.5
Florida..................................................... 29 7.2
New Jersey.................................................. 5 5.3
</TABLE>
The remaining Mortgaged Properties are located throughout 29 other states
and the District of Columbia, with no more than 5.1% of the Initial Pool Balance
secured by Mortgaged Properties located in any such other jurisdiction.
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<PAGE> 13
Set forth below are the number of Mortgaged Properties, and the approximate
percentage of the Initial Pool Balance secured by such Mortgaged Properties,
operated for each indicated purpose:
PROPERTY TYPE
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGED INITIAL POOL
PROPERTIES BALANCE(1)
---------- -------------
<S> <C> <C>
Multifamily................................................. 146 32.9%
Retail...................................................... 91 29.7
Office...................................................... 47 14.2
Industrial.................................................. 42 12.0
Hotel....................................................... 12 4.6
Mobile Home................................................. 15 2.4
Health Care................................................. 14 2.2
Mini Storage................................................ 7 0.9
Franchise Restaurant........................................ 6 0.8
Parking..................................................... 1 0.3
</TABLE>
- ---------------
(1) The sum of the percentages in this column may not equal 100% due to
rounding.
FOR MORE DETAILED STATISTICAL INFORMATION REGARDING THE MORTGAGE POOL, SEE
ANNEX A HERETO.
All of the Mortgage Loans were originated during the 21 months preceding
the Cut-off Date. The Mortgage Loan Seller originated (directly or through an
originator participating in its conduit program) 203 of the Mortgage Loans (the
"NationsBank Mortgage Loans"), which represent 72.6% of the Initial Pool
Balance, pursuant to its conduit program. Bank of America NT&SA ("Bank of
America") originated 173 of the Mortgage Loans (the "Bank of America Mortgage
Loans"), which represent 27.4% of the Initial Pool Balance, pursuant to its
conduit program. Each of the Mortgage Loan Seller and Bank of America is a
directly or indirectly wholly-owned subsidiary of BankAmerica Corporation. See
"Description of the Mortgage Pool -- The Mortgage Loan Seller and "Bank of
America" in this prospectus supplement.
On September 25, 1998, the Mortgage Loan Seller acquired the Bank of
America Mortgage Loans from Bank of America and, at the direction of the
Depositor, transferred all of the Mortgage Loans, without recourse, to the
Trustee for the benefit of holders of the Certificates (the
"Certificateholders"). The Mortgage Loan Seller has made certain representations
and warranties regarding the characteristics of the NationsBank Mortgage Loans,
and Bank of America has made certain representations and warranties regarding
the characteristics of the Bank of America Mortgage Loans. As described in more
detail later in this prospectus supplement, the Mortgage Loan Seller will be
obligated to cure any material breach of any such representation or warranty
made by the Mortgage Loan Seller with respect to the NationsBank Mortgage Loans
or repurchase the affected NationsBank Mortgage Loan, and Bank of America will
be obligated to cure any material breach of such representation or warranty made
by Bank of America with respect to the Bank of America Mortgage Loans or
repurchase the affected Bank of America Mortgage Loan. See "Description of the
Mortgage Pool -- Assignment of the Mortgage Loan; Repurchases and
"--Representations and Warranties; Repurchases" in this prospectus supplement.
The Mortgage Loan Seller and Bank of America have sold the Mortgage Loans
without recourse and neither has any obligations with respect to the Offered
Certificates other than pursuant to such representations, warranties and
repurchase obligations. The Depositor will make no representations or warranties
with respect to the Mortgage Loans and will have no obligation to repurchase or
replace Mortgage Loans with deficient documentation or which are otherwise
defective. See "Description of the Mortgage Pool" and "Risk Factors -- Risks
Related to the Mortgage Loans" in this prospectus supplement and "Description of
the Trust Funds" and "Certain Legal Aspects of Mortgage Loans" in the
accompanying prospectus.
The Master Servicer and, if circumstances require, the Special Servicer,
will service and administer the Mortgage Loans pursuant to the Pooling Agreement
(as defined below). See "Servicing of the Mortgage Loans" in this Prospectus
Supplement and "The Pooling and Servicing Agreements" in the Prospectus. The
S-11
<PAGE> 14
compensation to be received by the Master Servicer (including Master Servicing
Fees) and the Special Servicer (including Standby Fees, Special Servicing Fees
and Workout Fees) for their services is described herein under "Servicing of the
Mortgage Loans -- Servicing and Other Compensation and Payment of Expenses".
OFFERED SECURITIES
THE OFFERED CERTIFICATES; CERTIFICATE BALANCES AND PASS-THROUGH RATES
We are offering seven classes of Commercial Mortgage Pass-Through
Certificates (collectively, the "Offered Certificates") to you as part of Series
1998-2, namely the Class A-1, Class A-2, Class X, Class B, Class C, Class D and
Class E Certificates. Your certificates will have the approximate aggregate
initial principal amount or notional amount indicated in the chart on the cover
of this prospectus supplement, subject to a variance of plus or minus 5%, and
will accrue interest at an annual rate (the "Pass-Through Rate") indicated in
the chart on the cover of this prospectus supplement. The Pass-Through Rate for
any Class B, Class C, Class D or Class E Certificate on any Distribution Date
will not exceed the weighted average of the interest rates (net of the fee rates
payable to the Master Servicer, the Special Servicer and the Trustee) borne by
the mortgage loans. See "Description of the Certificates -- Pass-Through Rates"
in this prospectus supplement. Interest on the Offered Certificates (including
the Class X Certificates) will be calculated based on a 360-day year consisting
of twelve 30-day months, or a 30/360 basis.
Series 1998-2 consists of a total of 15 classes of Certificates, the
following eight of which are not being offered through this prospectus
supplement and the accompanying prospectus: Class F, Class G, Class H, Class J,
Class K, Class R-I, Class R-II and Class R-III (collectively, the "Private
Certificates"). The Pass-Through Rates applicable to each of the Class F, Class
G, Class H, Class J and Class K Certificates for each Distribution Date are set
forth on page S-64 hereof. None of the Class R-I, Class R-II or Class R-III
Certificates (the "REMIC Residual Certificates") will have a Certificate Balance
or a Notional Amount.
The Offered Certificates and the Private Certificates will represent
beneficial ownership interests in a trust created by NationsLink Funding
Corporation. The trust's assets will primarily be 376 mortgage loans secured by
first liens on commercial and multifamily properties.
CLASS X CERTIFICATES
The notional amount of the Class X Certificates will generally be equal to
the aggregate of the Certificate Balances of the Class A-1, Class A-2, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J and Class K
Certificates (the "Sequential Pay Certificates") outstanding from time to time.
The notional amount of the Class X Certificates is used solely for the purpose
of determining the amount of interest to be distributed on such Class of
Certificates and does not represent the right to receive any distributions of
principal.
The Pass-Through Rate applicable to the Class X Certificates for each
Distribution Date will, in general, equal the excess, if any, of (1) the
Weighted Average Net Mortgage Rate, over (2) the weighted average of the
Pass-Through Rates applicable to all the Classes of Sequential Pay Certificates
for such Distribution Date (weighted on the basis of their respective
Certificate Balances immediately prior to such Distribution Date).
See "Description the Certificates -- Distributions" in this prospectus
supplement.
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<PAGE> 15
DISTRIBUTIONS
The total of all payments or other collections (or advances in lieu
thereof) on or in respect of the Mortgage Loans (but excluding Prepayment
Premiums) that are available for distributions of interest on and principal of
the Certificates on any Distribution Date is herein referred to as the
"Available Distribution Amount" for such date. See "Description of the
Certificates -- Distributions -- The Available Distribution Amount" in this
prospectus supplement.
On each Distribution Date, the Trustee will apply the Available
Distribution Amount for such date for the following purposes and in the
following order of priority:
A. Amount and Order of Distributions
First, Class A and Class X: To interest on Class A-1, Class A-2 and Class
X, pro rata, in accordance with their interest entitlements.
Second, Class A: To the extent of funds available for principal, to
principal on Class A-1 and Class A-2, in that order, until each class is reduced
to zero.
Third, Class A: To reimburse Class A-1 and Class A-2, pro rata, for any
previously unreimbursed losses on the mortgage loans allocable to principal that
were previously borne by those classes.
Fourth, Class B: To Class B as follows: (a) to interest on Class B in the
amount of its interest entitlement; (b) to the extent of funds available for
principal, to principal on Class B until reduced to zero; and (c) to reimburse
Class B for any previously unreimbursed losses on the mortgage loans allocable
to principal that were previously borne by that class, together with interest.
Fifth, Class C: To Class C in a manner analogous to the Class B
allocations of the fourth step.
Sixth, Class D: To Class D in a manner analogous to the Class B
allocations of the fourth step.
Seventh, Class E: To Class E in a manner analogous to the Class B
allocations of the fourth step.
Finally, Private Certificates: In the amounts and order of priority
provided for in the Pooling Agreement.
The distributions referred to in priority Second above will be made pro
rata between the Class A-1 and Class A-2 Certificates when the Certificate
Balances of the Subordinate Certificates have been reduced to zero and in any
event on the final Distribution Date as described under "Description of the
Certificates -- Distributions -- The Available Distribution Amount" in this
prospectus supplement.
B. Interest and Principal Entitlements
A description of each Class's interest entitlement can be found in
"Description of the Certificates -- Distributions -- Distributable Certificate
Interest" in this prospectus supplement. As described in such section, there are
circumstances in which your interest entitlement for a distribution date could
be less than one full month's interest at the Pass-Through Rate on your
certificate's principal amount or notional amount.
The amount of principal required to be distributed to the classes entitled
to principal on a particular distribution date also can be found in "Description
of the Certificates -- Principal Distribution Amount" in this prospectus
supplement. If you invest in the Class X Certificates, you will not be entitled
to distributions of principal on the Class X Certificates.
C. Prepayment Premiums
The manner in which any prepayment consideration and yield maintenance
premiums received during a particular Collection Period will be allocated to the
Class X Certificates, on the one hand, and the classes of Class A, Class B,
Class C, Class D and Class E Certificates entitled to principal, on the other
hand, is described in "Description of the
Certificates -- Distributions -- Distributions of Prepayment Premiums" in this
prospectus supplement.
S-13
<PAGE> 16
SUBORDINATION
A. General
The chart below describes the manner in which the rights of various classes
will be senior to the rights of other classes. Entitlement to receive principal
and interest on any Distribution Date is depicted in descending order. The
manner in which mortgage loan losses are allocated is depicted in ascending
order. No principal payments or loan losses will be allocated to the Class X
Certificates. However, the Notional Amount on the Class X Certificates (which is
used to calculate interest due on the Class X Certificates) will effectively be
reduced by the allocation of principal payments and loan losses to the other
classes of Certificates, the principal balances of which correspond to the
Notional Amount of the Class X Certificates.
Class A-1, Class A-2, Class X*
|
|
Class B
|
|
Class C
|
|
Class D
|
|
Class E
|
|
Private Certificates
*The Class X Certificates will only be senior with respect to payments of
interest and will not be entitled to receive any payments in respect of
principal.
No other form of credit enhancement will be available for the benefit of
the holders of the Offered Certificates.
See "Description of the Certificates -- Subordination" in this prospectus
supplement.
B. Shortfalls in Available Funds
The following types of shortfalls in available funds will be allocated in
the same manner as mortgage loan losses:
- shortfalls resulting from additional compensation which the
Servicer or Special Servicer is entitled to receive;
S-14
<PAGE> 17
- shortfalls resulting from interest on advances of principal
and interest made by the Servicer or the Trustee;
- shortfalls resulting from extraordinary expenses of the trust; and
- shortfalls resulting from a reduction of a mortgage loan's
interest rate by a bankruptcy court or from other
unanticipated or default-related expenses of the trust.
See "Description of the Certificates -- Distributions" in this prospectus
supplement.
ADVANCES OF PRINCIPAL AND INTEREST
A. P&I Advances
The Servicer is required to advance (each, a "P&I Advance") delinquent
monthly mortgage loan payments if it determines that the advance will be
recoverable. The Servicer will not be required to advance balloon payments due
at maturity or interest in excess of a loan's regular interest rate. The
Servicer also is not required to advance prepayment or yield maintenance
premiums, or balloon payments. If an advance is made, the Servicer will not
advance its servicing fee, but will advance the Trustee's fee.
B. Property Protection Advances
The Servicer may also be required to make advances to pay delinquent real
estate taxes, assessments and hazard insurance premiums and similar expenses
necessary to protect and maintain the mortgaged property, to maintain the lien
on the mortgaged property or enforce the related mortgage loan documents
("Servicing Advances," and collectively with P&I Advances, "Advances").
C. Interest on Advances
The Servicer and the Trustee, as applicable, will be entitled to interest
as described in this prospectus supplement on any Advances made. Interest
accrued on outstanding Advances may result in reductions in amounts otherwise
payable on the certificates.
See "Description of the Certificates -- P&I Advances" and "Servicing of the
Mortgage Loans -- Servicing and Other Compensation and Payment of Expenses" in
this prospectus supplement and "Description of the Certificates -- Advances in
Respect of Delinquencies" and "The Pooling and Servicing
Agreements -- Certificate Account" in the prospectus.
OTHER ASPECTS OF THE CERTIFICATES
A. Denominations
The Class A Certificates will be offered in minimum denominations of
$10,000 initial principal amount. The Class X Certificates will be offered in
minimum denominations of $1,000,000 initial notional amount. The Offered
Certificates, other than the Class A Certificates and the Class X Certificates,
will be offered in minimum denominations of $100,000 initial principal amount.
Investments in excess of the minimum denominations may be made in multiples of
$1.
B. Registration, Clearance and Settlement
Each class of Offered Certificates will be registered in the name of Cede &
Co., as nominee of The Depository Trust Company ("DTC"). We may elect to
terminate the book-entry system through DTC with respect to all or any portion
of any class of the Offered Certificates.
See "Description of the Certificates -- Registration and Denominations" in
this prospectus supplement and in the prospectus.
S-15
<PAGE> 18
OPTIONAL TERMINATION
At its option, the Master Servicer or any holder or holders (other than the
Depositor or the Mortgage Loan Seller) of Certificates representing a majority
interest in the Controlling Class may purchase all of the Mortgage Loans and REO
Properties, and thereby effect a termination of the Trust and early retirement
of the then-outstanding Certificates, on any Distribution Date on which the
remaining aggregate Stated Principal Balance of the Mortgage Pool is less than
1.0% of the Initial Pool Balance. See "Description of the
Certificates -- Termination" in this prospectus supplement and in the
accompanying Prospectus.
TAX STATUS
An election will be made to treat a portion of the Trust as three separate
REMICs -- REMIC I, REMIC II and REMIC III -- for federal income tax purposes. In
the opinion of counsel, such portion of the Trust will qualify for this
treatment.
Pertinent federal income tax consequences of an investment in the Offered
Certificates include:
- Each class of Offered Certificates will constitute "regular
interests" in REMIC III.
- The regular interests will be treated as newly originated
debt instruments for federal income tax purposes.
- Beneficial owners will be required to report income thereon
in accordance with the accrual method of accounting.
- The Class X Certificates will, and one or more other
classes of Offered Certificates may, be issued with
original issue discount for federal income tax purposes,
which generally requires you to report income in advance of
the related cash distributions.
See "Certain Federal Income Tax Consequences" in this prospectus supplement
and in the prospectus.
ERISA CONSIDERATIONS
Subject to important considerations described under "Certain ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus, the Depositor expects that the Class A and Class X Certificates are
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts.
THE CLASS B, CLASS C, CLASS D AND CLASS E CERTIFICATES MAY NOT BE PURCHASED
BY, OR TRANSFERRED TO, A PLAN OR ANY PERSON INVESTING THE ASSETS OF A PLAN.
(THIS PROHIBITION DOES NOT APPLY TO AN INSURANCE COMPANY INVESTING ASSETS OF ITS
GENERAL ACCOUNT UNDER CIRCUMSTANCES WHICH WOULD QUALIFY FOR AN EXEMPTION UNDER
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.)
See "Certain ERISA Considerations" in this prospectus supplement and in the
prospectus.
LEGAL INVESTMENT
The Class A, Class X and Class B Certificates will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA"), so long as: (1) those certificates are rated
in one of the two highest rating categories by one or more rating agencies; and
(2) the underlying Mortgage Loans are secured by real estate. The other classes
of Offered Certificates will not constitute "mortgage related securities" within
the meaning of SMMEA.
See "Legal Investment" in this prospectus supplement and in the prospectus.
S-16
<PAGE> 19
CERTIFICATE RATINGS
It is a requirement for issuance of the Offered Certificates that they
receive credit ratings no lower than the following credit ratings from Moody's
and S&P (together, the "Rating Agencies"):
<TABLE>
<CAPTION>
MOODY'S S&P
------- ----
<S> <C> <C>
Class A-1................................................... Aaa AAA
Class A-2................................................... Aaa AAA
Class X..................................................... Aaa AAAr
Class B..................................................... Aa2 AA
Class C..................................................... A2 A
Class D..................................................... Baa2 BBB
Class E..................................................... N/R BBB-
</TABLE>
S&P assigns the additional symbol of "r" to highlight classes of securities
that S&P believes may experience high volatility or high variability in expected
returns due to non-credit risks; however, the absence of an "r" symbol should
not be taken as an indication that a Class will exhibit no volatility or
variability in total return.
The Rating Agencies' ratings of the Offered Certificates address the
likelihood of the timely payment of interest and the ultimate repayment of
principal by the Rated Final Distribution Date. A security rating does not
address the frequency of prepayments (either voluntary or involuntary) or the
possibility that certificateholders might suffer a lower than anticipated yield,
nor does a security rating address the likelihood of receipt of Prepayment
Premiums.
For a description of the limitations of the ratings of the Offered
Certificates, see "The Certificate Ratings" in this prospectus supplement.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Any such revision, if negative, or withdrawal of a rating could
have a material adverse effect on the affected class of Offered Certificates.
See "Ratings" in this prospectus supplement and "Rating" in the prospectus.
S-17
<PAGE> 20
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. In particular, distribution on your certificates will
depend on payments received on and other recoveries with respect to the mortgage
loans. Therefore, you should carefully consider the risk factors relating to the
mortgage loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to your certificates. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair your investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this prospectus
supplement.
RISKS RELATED TO THE CERTIFICATES
LACK OF CONTROL OVER TRUST FUND
You and other certificateholders generally do not have the right to make
decisions with respect to the administration of the trust. See "Servicing of the
Mortgage Loans -- General" in this prospectus supplement. Such decisions are
generally made, subject to the express terms of the Pooling Agreement, by the
Master Servicer, the Trustee or the Special Servicer, as applicable. Any
decision made by one of those parties in respect of the trust, even if such
decision is determined to be in your best interests by such party, may be
contrary to the decision that you or other certificateholders would have made
and may negatively affect your interests.
POTENTIAL CONFLICTS OF INTEREST
The Special Servicer will have considerable latitude in determining whether
to liquidate or modify defaulted Mortgage Loans. See "Servicing of the Mortgage
Loans -- Modifications, Waivers, Amendments and Consents" in this prospectus
supplement.
The Special Servicer or an affiliate has purchased certain of the Private
Certificates (including the Controlling Class discussed in this prospectus
supplement under "Servicing of the Mortgage Loans -- General"). This could cause
a conflict between the Special Servicer's duties to the Trust under the Pooling
Agreement and its interest as a holder of a certificate. However, the Pooling
Agreement provides that the mortgage loans shall be administered in accordance
with the servicing standards without regard to ownership of any certificate by
the Master Servicer, the Special Servicer or any affiliate of the Special
Servicer. See "Servicing of the Mortgage Loans -- General" in this prospectus
supplement.
YIELD CONSIDERATIONS
The yield on any offered certificate will depend on (a) the price at which
such certificate is purchased by an investor and (b) the rate, timing and amount
of distributions on such certificate. The rate, timing and amount of
distributions on any offered certificate will, in turn, depend on, among other
things:
- the Pass-Through Rate for such certificate
- the rate and timing of principal payments (including
principal prepayments) and other principal collections on
or in respect of the Mortgage Loans and the extent to which
such amounts are to be applied or otherwise result in a
reduction of the Certificate Balance or Notional Amount of
the class of certificates to which such certificate belongs
S-18
<PAGE> 21
- the rate, timing and severity of Realized Losses and
Additional Trust Fund Expenses and the extent to which such
losses and expenses result in the failure to pay interest
on, or a reduction of the Certificate Balance or Notional
Amount of, the class of certificates to which such
certificate belongs;
- the timing and severity of any Net Aggregate Prepayment
Interest Shortfalls and the extent to which such shortfalls
are allocated in reduction of the Distributable Certificate
Interest payable on the class of certificates to which such
certificate belongs; and
- the extent to which Prepayment Premiums are collected and,
in turn, distributed on the class of certificates to which
such certificate belongs.
It is impossible to predict with certainty any of the factors described in
the preceding paragraph. Accordingly, investors may find it difficult to analyze
the effect that such factors might have on the yield to maturity of any class of
offered certificates. See "Description of the Mortgage Pool", "Description of
the Certificates -- Distributions" and "-- Subordination; Allocation of Losses
and Certain Expenses" and "Yield and Maturity Considerations" in this prospectus
supplement. See also "Yield and Maturity Considerations" in the accompanying
prospectus.
The yield to maturity of the Class X Certificates will be highly sensitive
to the rate and timing of principal payments (including by reason of
prepayments, loan extensions, defaults and liquidations) and losses on the
Mortgage Loans. Investors in the Class X Certificates should fully consider the
associated risks, including the risk that an extremely rapid rate of
amortization, prepayment or other liquidation of the Mortgage Loans could result
in the failure of such investors to recoup fully their initial investments.
Because the Notional Amount of the Class X Certificates is equal to the
aggregate of the Certificate Balances of the Sequential Pay Certificates
outstanding from time to time, any payment of principal in respect of any
Mortgage Loan that is applied in reduction of the Certificate Balance of any
class of Sequential Pay Certificates will reduce such Notional Amount.
In general, in the case of the Class X Certificates and any other class of
offered certificates purchased at a premium, if principal payments on the
Mortgage Loans occur at a rate faster than anticipated at the time of purchase,
then (to the extent that the required Prepayment Premiums are not received or
are distributable to a different class of certificates) the investors' actual
yield to maturity will be lower than that assumed at the time of purchase.
Conversely, in the case of any class of offered certificates purchased at a
discount, if principal payments on the Mortgage Loans occur at a rate slower
than anticipated at the time of purchase, then (to the extent that the required
Prepayment Premiums are not received or are distributable to a different class
of certificates) the investors' actual yield to maturity will be lower than that
assumed at the time of purchase. Prepayment Premiums, even if available and
distributable on the Class X Certificates or other class of offered
certificates, may not be sufficient to offset fully any loss in yield on such
class or classes of certificates attributable to the related prepayments of the
Mortgage Loans.
PREPAYMENTS AND REPURCHASES
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the mortgage loans. For
this purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation, defaults and liquidations or repurchases upon breaches
of representations and warranties. Because the Notional Amount of the Class X
Certificates is based upon the Principal Amounts of the certificates with
principal amounts, the yield to maturity on the Class X Certificates will be
extremely sensitive to the rate and timing of prepayments of principal.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment on the
mortgage loans is higher or lower than you anticipate.
S-19
<PAGE> 22
Voluntary prepayments, if permitted, generally require payment of a
Prepayment Premium. Nevertheless, we cannot assure you that the related
borrowers will refrain from prepaying their mortgage loans due to the existence
of a prepayment premium. Also, we cannot assure you that involuntary prepayments
will not occur.
The rate at which voluntary prepayments occur on the mortgage loans will be
affected by a variety of factors, including:
- the terms of the mortgage loans;
- the length of any prepayment lockout period;
- the level of prevailing interest rates;
- the availability of mortgage credit;
- the applicable yield maintenance charges or prepayment premiums;
- the Master Servicer's or Special Servicer's ability to enforce those
charges or premiums;
- the occurrence of casualties or natural disasters; and
- economic, demographic, tax, legal or other factors.
No yield maintenance charge or prepayment premium will be required for
prepayments in connection with a casualty or condemnation unless, in the case of
most of the mortgage loans, an event of default has occurred and is continuing.
In addition, if the Mortgage Loan Seller or the Additional Warranting Party
repurchases any mortgage loan from the trust due to breaches of representations
or warranties, the repurchase price paid will be passed through to the holders
of the certificates with the same effect as if the mortgage loan had been
prepaid in part or in full, except that no prepayment premium or yield
maintenance charge would be payable. Such a repurchase may therefore adversely
affect the yield to maturity on your certificates.
BORROWER DEFAULT
The rate and timing of delinquencies or defaults on the mortgage loans will
affect:
- the aggregate amount of distributions on the offered
certificates;
- their yield to maturity;
- the rate of principal payments; and
- their weighted average life.
If losses on the mortgage loans exceed the aggregate principal amount of
the classes of certificates subordinated to a particular class, such class will
suffer a loss equal to the full amount of such excess (up to the outstanding
principal amount of such certificate).
If you calculate your anticipated yield based on assumed rates of defaults
and losses that are lower than the default rate and losses actually experienced
and such losses are allocable to your certificates, your actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios,
such yield could be negative. In general, the earlier a loss borne by you on
your certificates occurs, the greater the effect on your yield to maturity.
Even if losses on the mortgage loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so because those losses lead to your certificates
having a higher percentage ownership interest in the trust and related
distributions of principal payments on the mortgage loans than would otherwise
have been the case. The effect on the weighted average life and yield to
maturity of your certificates will depend upon the characteristics of the
remaining mortgage loans.
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Additionally, delinquencies and defaults on the mortgage loans may
significantly delay the receipt of distributions by you on your certificates,
unless P&I Advances are made to cover delinquent payments or the subordination
of another class of certificates fully offsets the effects of any such
delinquency or default.
BANKRUPTCY PROCEEDINGS
Under the Bankruptcy Code, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of the mortgaged property is
less than the principal balance of the mortgage loan it secures, the court may
prevent a lender from foreclosing on the mortgaged property (subject to certain
protections available to the lender). As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the then-value of the
mortgaged property. Such an action would make the lender a general unsecured
creditor for the difference between the then-value and the amount of its
outstanding mortgage indebtedness. A bankruptcy court also may: (1) grant a
debtor a reasonable time to cure a payment default on a mortgage loan; (2)
reduce monthly payments due under a mortgage loan; (3) change the rate of
interest due on a mortgage loan; or (4) otherwise alter the mortgage loan's
repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the trustee may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under the Bankruptcy Code, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. The Bankruptcy Code also may
interfere with the Trustee's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by the borrower to maintain the mortgaged property or
for other court authorized expenses.
As a result of the foregoing, the Trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
ADVANCE INTEREST AND OTHER PAYMENTS
To the extent described in this prospectus supplement, the Master Servicer,
the Special Servicer or the Trustee, as applicable, will be entitled to receive
interest on unreimbursed Advances. This interest will generally accrue from the
date on which the related P&I Advance is made or the related expense is incurred
through the date of reimbursement. In addition, under certain circumstances,
including delinquencies in the payment of principal and interest, a mortgage
loan will be specially serviced and the Special Servicer will be entitled to
compensation for special servicing activities. The right to receive interest on
Advances or special servicing compensation is senior to the rights of
certificateholders to receive distributions on the offered certificates. The
payment of interest on advances and the payment of compensation to the Special
Servicer may lead to shortfalls in amounts otherwise distributable on your
certificates.
LIMITED LIQUIDITY AND MARKET VALUE
Your certificates will not be listed on any securities exchange or traded
on the NASDAQ Stock Market, and there is currently no secondary market for your
certificates. While the Underwriter currently intends to make a secondary market
in the offered certificates, it is not obligated to do so. Accordingly, you may
not have an active or liquid secondary market for your certificates. Lack of
liquidity could result in a substantial decrease in the market value of your
certificates. Many other factors may affect the market value of your
certificates including the then-prevailing interest rates.
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DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION
As principal payments or prepayments are made on a mortgage loan that is
part of a pool of mortgage loans, the pool will be subject to more concentrated
risks with respect to the diversity of mortgaged properties, types of mortgaged
properties and number of borrowers, as described above. Classes that have a
later sequential designation or a lower payment priority are more likely to be
exposed to this concentration risk than are classes with an earlier sequential
designation or a higher priority. This is so because principal on the offered
certificates is generally payable in sequential order, and no class entitled to
distribution of principal generally receives principal until the principal
amount of the preceding class or classes entitled to receive principal have been
reduced to zero.
SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
As described in this prospectus supplement, unless your certificates are
Class A-1, Class A-2 or Class X Certificates, your rights to receive
distributions of amounts collected or advanced on or in respect of the mortgage
loans will be subordinated to those of the holders of the offered certificates
with an earlier alphabetical designation.
YEAR 2000 DISRUPTIONS
The transition from the year 1999 to the year 2000 may disrupt the ability
of computerized systems to process information. The issue presented by the "year
2000 problem" is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. If the Master Servicer, the Special Servicer or the Trustee do not have by
the year 2000 computerized systems which are year 2000 compliant, the resulting
disruptions in the collection or distribution of receipts or the mortgage loans
could materially and adversely affect your investment.
RISKS RELATED TO THE MORTGAGE LOANS
NATURE OF THE MORTGAGED PROPERTIES
The Mortgaged Properties consist solely of multifamily rental and
commercial properties. Commercial and multifamily lending is generally viewed as
exposing a lender to a greater risk of loss than lending on the security of one-
to four-family residences. This is because multifamily and commercial real
estate lending usually involves larger loans, and repayment is typically
dependent upon the successful operation of the related real estate project.
A large number of factors may adversely affect the net operating income and
property value of the mortgaged properties. Some of these factors relate to the
property itself, such as:
- the age, design and construction quality of the property;
- perceptions regarding the safety, convenience and
attractiveness of the property;
- the proximity and attractiveness of competing properties;
- the adequacy of the property's management and maintenance;
- increases in operating expenses;
- an increase in the capital expenditures needed to maintain
the property or make improvements;
- a decline in the financial condition of a major tenant;
- an increase in vacancy rates; and
- a decline in rental rates as leases are renewed or entered
into with new tenants.
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Operation of a multifamily or commercial property may also be affected by
circumstances outside the control of the borrower or lender, such as the quality
or stability of the surrounding neighborhood, the development of competing
projects or businesses, maintenance expenses (such as energy costs), and changes
in laws (such as the imposition of rent control or stabilization laws in the
case of multifamily rental properties, changes in the tax laws and retroactive
changes in building codes). If the cash flow from a particular property is
reduced (for example, if leases are not obtained or renewed, if tenant defaults
increase or rental rates decline or, in the case of a property occupied by its
owner, if the owner's business declines), the borrower's ability to repay the
loan may be impaired and the resale value of the particular property may
decline.
The borrowers' income would be adversely affected if tenants were unable to
pay rent, if space were unable to be rented on favorable terms or at all, or if
a significant tenant were to become a debtor in a bankruptcy case under the
United States Bankruptcy Code. For example, if any borrower were to relet or
renew the existing leases at rental rates significantly lower than expected
rates, then such lower rates would adversely affect borrower's funds from
operations. Changes in payment patterns by tenants may result from a variety of
social, legal and economic factors, such as the rate of inflation and
unemployment levels and may be reflected in the rental rates offered for
comparable space. In addition, upon reletting or renewing existing leases at
commercial properties, borrowers will likely be required to pay leasing
commissions and tenant improvement costs which may adversely affect cash flow
from the Mortgaged Property. See "Description of the Mortgage Pool -- Additional
Mortgage Loan Information -- Tenant Matters" herein.
Commercial properties represent security for 67.1% of the Initial Pool
Balance. Lending on commercial properties is generally perceived as involving
greater risk than lending on the security of multifamily residential properties,
and certain types of commercial properties are exposed to particular kinds of
risks. See "-- Risks Particular to Retail Properties", "-- Risks Particular to
Health Care Properties", "-- Risks Particular to Hotels", "-- Risks Particular
to Office Properties", "-- Risks Particular to Restaurant Franchises", "-- Risks
Particular to Mobile Home Park Properties" and "-- Risks Particular to
Mini-Storage Facilities" below.
MANAGEMENT
The successful operation of a real estate project is dependent on the
performance and viability of the property manager of such project. The property
manager is responsible for responding to changes in the local market, planning
and implementing the rental structure or the business plan, as the case may be,
and ensuring that maintenance and capital improvements can be carried out in a
timely fashion. Accordingly, by controlling costs, providing appropriate service
to tenants and seeing to the maintenance of improvements, sound property
management can improve occupancy rates/business and cash flow, reduce operating
and repair costs and preserve building value. On the other hand, management
errors can, in some cases, impair the long term viability of a real estate
project.
There are 41 groups of Mortgaged Properties that have the same or related
management. No such group represents security for more than 4.22% of the Initial
Pool Balance.
BALLOON PAYMENTS
Three hundred fifty-one of the Mortgage Loans, which represent 91.9% of the
Initial Pool Balance, will have substantial payments (that is, Balloon Payments)
due at their respective stated maturities, in each case unless the Mortgage Loan
is previously prepaid. Two hundred ninety of the Balloon Loans, representing
70.1% of the Initial Pool Balance, will have Balloon Payments due during the
period from December 1, 2007 through August 1, 2008.
Mortgage Loans with Balloon Payments involve a greater risk to the lender
than fully amortizing loans, because the ability of a borrower to make a Balloon
Payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property at a price sufficient to permit the
borrower to make the Balloon Payment. Circumstances that will affect the ability
of the borrower to accomplish this goal at the time of attempted sale or
refinancing include:
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- the level of available mortgage rates;
- the fair market value of the property;
- the borrower's equity in the related property;
- the financial condition of the borrower and operating
history of the property;
- tax laws;
- prevailing economic conditions, and
- the availability of credit for multifamily or commercial
properties, as the case may be.
See "Description of the Mortgage Pool -- Certain Terms and Conditions of
the Mortgage Loans" and "-- Additional Mortgage Loan Information" herein and
"Risk Factors -- Certain Factors Affecting Delinquency, Foreclosure and Loss of
the Mortgage Loans -- Increased Risk of Default Associated with Balloon
Payments" in the Prospectus.
RISKS PARTICULAR TO MULTIFAMILY PROPERTIES
Multifamily properties secure 146 of the Mortgage Loans, representing 32.9%
of the Initial Pool Balance.
Several factors may adversely affect the value and successful operation of
a multifamily property, including:
- the physical attributes of the apartment building (e.g.,
its age, appearance and construction quality);
- the location of the property (e.g., a change in the
neighborhood over time);
- the ability of management to provide adequate maintenance
and insurance;
- the types of services the property provides;
- the properties reputation;
- the level of mortgage interest rates (which may encourage
tenants to purchase rather than lease housing);
- the presence of competing properties;
- adverse local or national economic conditions; and
- state and local regulations.
RISKS PARTICULAR TO RETAIL PROPERTIES
Retail properties secure 91 of the Mortgage Loans, representing 29.7% of
the Initial Pool Balance.
Several factors may adversely affect the value and successful operation of
a retail property, including:
- changes in consumer spending patterns, local competitive
conditions (such as the supply of retail space or the
existence or construction of new competitive shopping
centers or shopping malls);
- alternative forms of retailing (such as direct mail, video
shopping networks and internet web sites which reduce the
need for retail space by retail companies);
- the quality and philosophy of management;
- the attractiveness of the properties to tenants and their
customers or clients;
- the public perception of the safety of customers at
shopping malls and shopping centers; and
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- the need to make major repairs or improvements to satisfy the needs
of major tenants.
The general strength of retail sales also directly affects retail
properties. The retailing industry is currently undergoing consolidation due to
many factors, including growth in discount and alternative forms of retailing.
If the sales by tenants in the Mortgaged Properties that contain retail space
were to decline, the rents that are based on a percentage of revenues may also
decline, and tenants may be unable to pay the fixed portion of their rents or
other occupancy costs. The cessation of business by a significant tenant can
adversely affect a retail property, not only because of rent and other factors
specific to such tenant, but also because significant tenants at a retail
property play an important part in generating customer traffic and making a
retail property a desirable location for other tenants at such property. In
addition, certain tenants at retail properties may be entitled to terminate
their leases if an anchor tenant fails to renew or terminates its lease, becomes
the subject of a bankruptcy proceeding or ceases operations at such property.
RISKS PARTICULAR TO RESTAURANT FRANCHISES
Properties operated as restaurants secure 4 of the Mortgage Loans,
representing approximately 0.8% of the Initial Pool Balance. Restaurant
franchises are subject to various risks which may be in addition to those
associated with other retail establishments. Franchise agreements typically do
not contain provisions protective of lenders. Often, a borrower's rights as
franchisee may be terminated without informing the lender, and the borrower may
be precluded from competing with the franchisor upon termination. In addition, a
lender that acquires title to a restaurant site through foreclosure or similar
proceedings may be restricted in the use of such site or may be unable to
succeed to the rights of the franchisee under the related franchise agreement.
The transferability of a franchise agreement otherwise may be restricted, and
federal and state franchise regulations may impose additional risks (including
the risk that the transfer of a franchise acquired through foreclosure or
similar proceedings may require registration with governmental authorities or
disclosure to prospective transferees).
RISKS PARTICULAR TO SENIOR HOUSING/HEALTH CARE PROPERTIES
Properties operated as skilled nursing facilities or assisted living
facilities secure 11 of the Mortgage Loans, which represent approximately 2.2%
of the Initial Pool Balance. Providers of long-term nursing care and other
medical services are subject to federal and state laws that relate to the
adequacy of medical care, distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies and additions to facilities and
services. To the extent dependent on patients whose fees are reimbursed by
private insurers, such providers are also subject to the reimbursement policies
of such insurers. In addition, facilities where such care or other medical
services are provided are subject to periodic inspection by governmental
authorities to determine compliance with various standards necessary for
continued licensing under state law and continued participation in the Medicaid
and Medicare reimbursement programs.
The failure of any such borrowers to maintain or renew any required license
or regulatory approval could prevent it from continuing operations at a
Mortgaged Property (in which case no revenues would be received from such
property or portion thereof requiring licensing). A failure to be licensed also
could bar it from participation in government reimbursement programs. In the
event of foreclosure, we cannot assure you that the Trustee (or Master Servicer
or Special Servicer) or purchaser in a foreclosure sale would be entitled to the
rights under such licenses. Such party may have to apply in its own right for
such a license, and we cannot assure you that a new license could be obtained.
Nursing facilities may receive a substantial portion of their revenues from
government reimbursement programs, primarily Medicaid and Medicare. Medicaid and
Medicare are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings, policy interpretations, delays by fiscal
intermediaries and government funding restrictions. Moreover, governmental
payors have employed cost-containment measures that limit payments to health
care providers, and there are currently under consideration various proposals
for national health care reform that could further limit those payments.
Accordingly, we cannot predict whether payments under government reimbursement
programs will be sufficient to fully reimburse the cost of caring for program
beneficiaries. Any such insufficiency could adversely affect the net
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operating income of the Mortgaged Properties that receive revenues from those
sources, and consequently the ability of the related borrowers to meet their
Mortgage Loan obligations.
RISKS PARTICULAR TO OFFICE PROPERTIES
Office properties secure 47 of the Mortgage Loans, representing
approximately 14.2% of the Initial Pool Balance.
A large number of factors may adversely affect the value of office
properties, including:
- the quality of an office building's tenants;
- the physical attributes of the building in relation to
competing buildings (e.g., age, condition, design, access to
transportation and ability to offer certain amenities, such
as sophisticated building systems);
- the desirability of the area as a business location; and
- the strength and nature of the local economy (including
labor costs and quality, tax environment and quality of life
for employees).
In addition, there may be significant costs associated with tenant
improvements and concessions in connection with reletting office space.
Moreover, the cost of refitting office space for a new tenant is often higher
than the cost of refitting other types of property.
RISKS PARTICULAR TO HOTELS
Properties operated as hotels secure 12 of the Mortgage Loans, representing
approximately 4.6% of the Initial Pool Balance.
Various factors may adversely affect the economic performance of a hotel,
including:
- adverse economic and social conditions, either local,
regional or national (which may limit the amount that can be
charged for a room and reduce occupancy levels);
- the construction of competing hotels or resorts;
- continuing expenditures for modernizing, refurbishing, and
maintaining existing facilities prior to the expiration of
their anticipated useful lives;
- a deterioration in the financial strength or managerial
capabilities of the owner and operator of a hotel; and
- changes in travel patterns caused by changes in access,
energy prices, strikes, relocation of highways, the
construction of additional highways or other factors.
Because hotel rooms generally are rented for short periods of time, hotel
properties tend to respond more quickly to adverse economic conditions and
competition than do other commercial properties. In addition, the franchise
license may be owned by an entity operating the hotel and not the borrower or,
if the franchise license is owned by the borrower, the transferability of the
related franchise license agreement may be restricted and, in the event of a
foreclosure on a hotel property, the mortgagee may not have the right to use the
franchise license without the franchisor's consent. Furthermore, the ability of
a hotel to attract customers, and some of such hotel's revenues, may depend in
large part on its having a liquor license. Such a license may not be
transferable.
RISKS PARTICULAR TO MOBILE HOME PARK PROPERTIES
Mobile home park properties ("Mobile Home Properties") secure 15 of the
Mortgage Loans representing 2.4% of the Initial Pool Balance. Significant
factors determining the value of Mobile Home Properties are generally similar to
the factors affecting the value of multifamily residential properties. In
addition, the Mobile Home Properties are special purpose properties that could
not be readily converted to general residential, retail or office use. In fact,
certain states also regulate changes in mobile home park use and require that
the landlord give written notice to its tenants a substantial period of time
prior to the projected change. Consequently, if the operation of any of the
Mobile Home Properties becomes unprofitable such that the borrower becomes
unable
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to meet its obligation on the related Mortgage Loan, the liquidation value of
that Mobile Home Property may be substantially less, relative to the amount
owing on the Mortgage Loan, than would be the case if the Mobile Home Property
were readily adaptable to other uses.
RISKS PARTICULAR TO MINI-STORAGE FACILITIES
Properties operated as mini-storage facilities secure 7 of the Mortgage
Loans, representing security for approximately 0.9% of the Initial Pool Balance.
Mini-storage (or self-storage) properties are considered vulnerable to
competition, because both acquisition costs and break-even occupancy are
relatively low. The conversion of mini-storage facilities to alternative uses
generally requires substantial capital expenditures. Thus, if the operation of
any of the mini-storage Mortgaged Properties becomes unprofitable such that the
borrower becomes unable to meet its obligations on the related Mortgage Loan,
the liquidation value of that mini-storage Mortgaged Property may be
substantially less, relative to the amount owning on the Mortgage Loan, than
would be the case if the mini-storage Mortgaged Property were readily adaptable
to other uses. Tenant privacy, anonymity and efficient access may heighten
environmental risks. No environmental assessment of a Mortgaged Property
included an inspection of the contents of the self-storage units included in the
self-storage Mortgaged Properties. We cannot assure you that all of the units
included in the mini-storage Mortgaged Properties are free from hazardous
substances, or that they will remain so in the future.
RISKS OF SUBORDINATE FINANCING
The existence of subordinated indebtedness encumbering a Mortgaged Property
may increase the difficulty of refinancing the related Mortgage Loan at maturity
and the possibility that reduced cash flow could result in deferred maintenance.
Also, in the event that the holder of the subordinated debt files for bankruptcy
or is placed in involuntary receivership, foreclosure on the Mortgaged Property
could be delayed. Four Mortgaged Properties, representing security for 3.5% of
the Initial Pool Balance, are encumbered by secured subordinated debt. In all of
such cases, the holders of the subordinate debt have agreed not to foreclose for
so long as the related Mortgage Loan is outstanding and the Trust is not
pursuing a foreclosure action. In addition, in the case of 7 Mortgage Loans,
representing 5.7% of the Initial Pool Balance, the borrower is permitted to
incur subordinated debt secured by the related Mortgaged Property if certain
conditions are satisfied. Other than in such cases, the Mortgage Loans either
prohibit the related borrower from encumbering the Mortgaged Property with
additional secured debt or require the consent of the holder of the first lien
prior to so encumbering such property. However, a violation of such prohibition
may not become evident until the related Mortgage Loan otherwise defaults. See
"Certain Legal Aspects of Mortgage Loans -- Subordinate Financing" in the
accompanying prospectus.
LIMITED RECOURSE
If a default occurs under any mortgage loan, recourse generally may be had
only against the specific properties and other assets that have been pledged to
secure the loan. Payment prior to maturity is consequently dependent primarily
on the sufficiency of the net operating income of the mortgaged property.
Payment at maturity is primarily dependent upon the market value of the
mortgaged property or the borrower's ability to refinance the property. Even in
the very limited cases where recourse to a borrower is permitted by the loan
documents, the Depositor has not undertaken an evaluation of the financial
condition of such person, and you should consider all of the Mortgage Loans to
be nonrecourse.
ENVIRONMENTAL CONSIDERATIONS
An environmental site assessment (or an update of a previously conducted
assessment) was performed (generally in a manner consistent with industry-wide
standards) at each of the Mortgaged Properties during or after September 1996.
No such assessment or update otherwise revealed any material adverse
environmental condition or circumstance at any Mortgaged Property, except as
described under "Description of the Mortgage Pool -- Certain Underwriting
Matters -- Environmental Assessments" and "Description of the Mortgage
Pool -- Significant Mortgage Loans -- International Home Furnishings Center
Loan," in the prospectus supplement. We cannot assure you, however, that such
environmental assessments identified all
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environmental conditions and risks Nor can we assure you that all recommended
operations and maintenance plans recommended in environmental assessments have
been or will continue to be implemented.
LIMITATIONS ON ENFORCEABILITY OF CROSS-COLLATERALIZATION
As described under "Description of the Mortgage Pool -- General" herein,
the Mortgage Pool includes 8 sets of Cross-Collateralized Mortgage Loans, each
of which sets represents between 0.3% and 2.5% of the Initial Pool Balance.
Cross-collateralization arrangements seek to reduce the risk that the inability
of one or more of the Mortgaged Properties securing any such set of
Cross-Collateralized Mortgage Loans (or any such Mortgage Loan with multiple
Mortgaged Properties) to generate net operating income sufficient to pay debt
service will result in defaults and ultimate losses. In addition, one or more of
the related Mortgaged Properties for certain sets of related
Cross-Collateralized Mortgage Loans may be released from the lien of the
applicable Mortgage under the circumstances described under "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage Loans."
Certain related Cross-Collateralized Mortgage Loans have different
borrowers. Cross-collateralization arrangements involving more than one borrower
could be challenged as fraudulent conveyances by creditors of the related
borrower in an action brought outside a bankruptcy case or, if such borrower
were to become a debtor in a bankruptcy case, by the borrower's representative.
A lien granted by such a borrower entity could be avoided if a court were
to determine that:
(1) such borrower was insolvent when granted the lien, was rendered
insolvent by the granting of the lien or was left with inadequate capital,
or was not able to pay its debts as they matured; and
(2) such borrower did not receive fair consideration or reasonably
equivalent value when it allowed its mortgaged property or properties to be
encumbered by a lien securing the entire indebtedness.
Among other things, a legal challenge to the granting of the liens may
focus on the benefits realized by such borrower from the respective mortgage
loan proceeds, as well as the overall cross-collateralization. If a court were
to conclude that the granting of the liens was an avoidable fraudulent
conveyance, that court could
(1) subordinate all or part of the pertinent mortgage loan to existing
or future indebtedness of that borrower;
(2) recover payments made under that mortgage loan; or
(3) take other actions detrimental to the holders of the certificates,
including, under certain circumstances, invalidating the mortgage loan or
the mortgages securing such cross-collateralization.
RELATED PARTIES
Certain groups of borrowers under the Mortgage Loans are affiliated or
under common control with one another. However, no such group of affiliated
borrowers are obligors on Mortgage Loans representing more than 4.2% of the
Initial Pool Balance. In addition, tenants in certain Mortgaged Properties also
may be tenants in other Mortgaged Properties, and certain tenants may be owned
by affiliates of the borrowers or otherwise related to or affiliated with a
borrower. There are also several cases in which a particular entity is a tenant
at multiple Mortgaged Properties, and although it may not be a Major Tenant at
any such property, it may be significant to the success of such properties.
In such circumstances, any adverse circumstances relating to a borrower or
tenant or a respective affiliate and affecting one of the related Mortgage Loans
or Mortgaged Properties could arise in connection with the other related
Mortgage Loans or Mortgaged Properties. In particular, the bankruptcy or
insolvency of any such borrower or tenant or respective affiliate could have an
adverse effect on the operation of all of the related Mortgaged Properties and
on the ability of such related Mortgaged Properties to produce sufficient cash
flow to make required payments on the related Mortgage Loans. For example, if a
person that owns or directly or indirectly controls several Mortgaged Properties
experiences financial difficulty at one Mortgaged Property, it could defer
maintenance at one or more other Mortgaged Properties in order to satisfy
current expenses with respect to the Mortgaged Property experiencing financial
difficulty. It could also attempt to avert foreclosure
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by filing a bankruptcy petition that might have the effect of interrupting
Monthly Payments for an indefinite period on all the related Mortgage Loans. See
"Certain Legal Aspects of Mortgage Loans -- Bankruptcy Laws" in the accompanying
prospectus.
In addition, a number of the borrowers under the Mortgage Loans are limited
or general partnerships. Under certain circumstances, the bankruptcy of the
general partner in a partnership may result in the dissolution of such
partnership. The dissolution of a borrower partnership, the winding-up of its
affairs and the distribution of its assets could result in an acceleration of
its payment obligations under the related Mortgage Loan.
GEOGRAPHIC CONCENTRATION
A concentration of Mortgaged Properties in a particular state or region
increases the exposure of the Mortgage Pool to any adverse economic developments
that may occur in such state or region, conditions in the real estate market
where the Mortgaged Properties securing the related Mortgage Loans are located,
changes in governmental rules and fiscal polices, acts of nature, including
floods, tornadoes and earthquakes (which may result in uninsured losses), and
other factors which are beyond the control of the borrowers. In this regard:
- 127 of the Mortgaged Properties, which constitute security
for 27.5% of the Initial Pool Balance, are located in
California.
- 10 of the Mortgaged Properties, which constitute security
for 9.7% of the Initial Pool Balance, are located in North
Carolina.
- 10 of the Mortgaged Properties, which constitute security
for 7.5% of the Initial Pool Balance, are located in
Maryland.
- 29 of the Mortgaged Properties, which constitute security
for 7.2% of the Initial Pool Balance, are located in
Florida.
- 5 of the Mortgaged Properties, which constitute security for
5.3% of the Initial Pool Balance, are located in New Jersey.
No more than 6.6% of Initial Pool Balance is secured by Mortgaged
Properties located in any particular county in California.
OTHER CONCENTRATIONS
Concentrations in a pool of mortgage loans with larger than average
balances can result in losses that are more severe, relative to the size of the
pool, than would be the case if the aggregate balance of such pool were more
evenly distributed. In this regard:
- 90 Mortgage Loans have Cut-off Date Balances that are higher
than the average Cut-off Date Balance.
- The largest single Mortgage Loan, by Cut-off Date Balance,
represents approximately 4.7% of the Initial Pool Balance,
and the largest group of Cross-Collateralized Mortgage
Loans, by Cut-off Date Balances, represents in the aggregate
approximately 2.5% of the Initial Pool Balance.
- The ten largest Mortgage Loans (including groups of
Cross-Collateralized Mortgage Loans) have Cut-off Date
Balances that represent in the aggregate approximately 23.0%
of the Initial Pool Balance.
RISK OF CHANGES IN CONCENTRATIONS
As payments in respect of principal (including payments in the form of
voluntary principal prepayments, Liquidation Proceeds and the repurchase prices
for any Mortgage Loans repurchased due to breaches of representations or
warranties) are received with respect to the Mortgage Loans, the remaining
Mortgage Loans as a group may exhibit increased concentration with respect to
the type of properties, property
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<PAGE> 32
characteristics, number of borrowers and affiliated borrowers and geographic
location. Because principal on the Sequential Pay Certificates is payable in
sequential order, Classes that have a lower priority with respect to the payment
of principal are relatively more likely to be exposed to any risks associated
with changes in concentrations.
PREPAYMENT PREMIUMS
With limited exception, all of the Mortgage Loans require, for a specified
period following the end of the related Lock-out Period, that any voluntary
principal prepayment be accompanied by a Prepayment Premium. See "Description of
the Mortgage Pool -- Certain Terms and Conditions of the Mortgage Loans --
Prepayment Provisions" in this prospectus supplement. Any Prepayment Premiums
actually collected on the Mortgage Loans will be distributed among the
respective Classes of the REMIC Regular Certificates in the amounts and in
accordance with the priorities described in this prospectus supplement under
"Description of the Certificates -- Distributions -- Distributions of Prepayment
Premiums". The Depositor, however, makes no representation as to the
collectibility of any Prepayment Premium.
Provisions requiring Prepayment Premiums may not be enforceable in some
states and under federal bankruptcy law. Those provisions also may constitute
interest for usury purposes. Accordingly, we cannot assure you that the
obligation to pay a Prepayment Premium will be enforceable. Also, we cannot
assure you that foreclosure proceeds will be sufficient to pay an enforceable
Prepayment Premium. Additionally, although the collateral substitution
provisions related to defeasance do not have the same effect on the
certificateholders as prepayment, we cannot assure you that a court would not
interpret those provisions as requiring a Prepayment Premium. In certain
jurisdictions those collateral substitution provisions might therefore be deemed
unenforceable under applicable law, or usurious.
We also note the following with respect to Prepayment Premiums:
- Liquidation Proceeds recovered in respect of any defaulted
Mortgage Loan will, in general, be applied to cover
outstanding servicing expenses and unpaid principal and
interest prior to being applied to cover any Prepayment
Premium due in connection with the liquidation of such
Mortgage Loan.
- The Special Servicer may waive a Prepayment Premium in
connection with obtaining a pay-off of a defaulted Mortgage
Loan.
- No Prepayment Premium will be payable in connection with any
repurchase of a Mortgage Loan by the Mortgage Loan Seller or
Bank of America for a material breach of representation or
warranty on the part of the Mortgage Loan Seller or Bank of
America, as the case may be, or any failure to deliver
documentation relating thereto.
- No Prepayment Premium will be payable in connection with the
purchase of all of the Mortgage Loans and any REO Properties
by the Master Servicer or any holder or holders of
Certificates evidencing a majority interest in the
Controlling Class in connection with the termination of the
Trust.
- No Prepayment Premium will be payable in connection with the
purchase of defaulted Mortgage Loans by the Master Servicer,
Special Servicer or any holder or holders of Certificates
evidencing a majority interest in the Controlling Class.
See "Servicing of the Mortgage Loans -- Modifications, Waivers, Amendments
and Consents" herein and "Certain Legal Aspects of Mortgage Loans -- Default
Interest and Limitations on Prepayments" in the Prospectus. See "Description of
the Mortgage Pool -- Assignment of the Mortgage Loans; Repurchases" and
"-- Representations and Warranties; Repurchases", "Servicing of the Mortgage
Loans -- Sale of Defaulted Mortgage Loans" and "Description of the
Certificates -- Termination" in this prospectus supplement.
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<PAGE> 33
LIMITED INFORMATION
The information set forth in this prospectus supplement with respect to the
Mortgage Loans is derived principally from one or more of the following sources:
- A review of the available credit and legal files relating to
the Mortgage Loans.
- Inspections of the Mortgaged Properties undertaken by or on
behalf of the Mortgage Loan Seller, with respect to the
NationsBank Mortgage Loans, and by or on behalf of Bank of
America, with respect to the Bank of America Mortgage Loans.
- Unaudited operating statements for the Mortgaged Properties
supplied by the borrowers.
- Appraisals for the Mortgaged Properties that generally were
performed at origination (which appraisals were used in
presenting information regarding the values of the Mortgaged
Properties as of the Cut-off Date under "Description of the
Mortgage Pool" and under Annex A for illustrative purposes
only).
- Information supplied by entities from which the Mortgage
Loan Seller or Bank of America, as the case may be,
acquired, or which currently service, certain of the
Mortgage Loans.
Also, several Mortgage Loans constitute acquisition financing. Accordingly,
limited or no operating information is available with respect to the related
Mortgaged Property. Moreover, all of the Mortgage Loans were originated during
the preceding 21 months and, consequently, there are limited or, in the case of
34 Mortgage Loans (representing 18.4% of the Initial Pool Balance) that had
their first Monthly Payment due in September 1998, no payment histories with
respect to the Mortgage Loans.
LITIGATION
Certain borrowers and the principals of certain borrowers may have been
involved in bankruptcy or similar proceedings or have otherwise been parties to
real estate-related litigation.
There may also be other legal proceedings pending and, from time to time,
threatened against the borrowers and their affiliates relating to the business
of or arising out of the ordinary course of business of the borrowers and their
affiliates. We cannot assure you that such litigation will not have a material
adverse effect on the distributions to Certificateholders.
OTHER RISKS
SEE "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS FOR A DESCRIPTION OF
CERTAIN OTHER RISKS AND SPECIAL CONSIDERATIONS THAT MAY BE APPLICABLE TO YOUR
CERTIFICATES AND THE MORTGAGE LOANS.
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 376 conventional, multifamily and
commercial mortgage loans (the "Mortgage Loans") with an aggregate Cut-off Date
Balance of $1,586,087,324 (the "Initial Pool Balance"), subject to a variance of
plus or minus 5%. See "Description of the Trust Funds" and "Certain Legal
Aspects of Mortgage Loans" in the prospectus. The "Cut-off Date Balance" of each
Mortgage Loan is the unpaid principal balance thereof as of September 1, 1998
(the "Cut-off Date"), after application of all payments of principal due on or
before such date, whether or not received. All numerical information provided
herein with respect to the Mortgage Loans is provided on an approximate basis.
All weighted average information provided herein with respect to the Mortgage
Loans reflects weighting by related Cut-off Date Balance. All percentages of the
Mortgage Pool, or of any specified sub-group thereof, referred to herein without
further description are approximate percentages by aggregate Cut-off Date
Balance.
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<PAGE> 34
Each Mortgage Loan is evidenced by a promissory note (a "Mortgage Note")
and secured by a mortgage, deed of trust or other similar security instrument (a
"Mortgage") that creates a first mortgage lien on a fee simple and/or leasehold
interest in real property (a "Mortgaged Property"). Each Mortgaged Property is
improved by (i) an apartment building or complex consisting of five or more
rental living units or a mobile home park (a "Multifamily Mortgaged Property";
and any Mortgage Loan secured thereby, a "Multifamily Loan") (161 Loans,
representing 35.2% of the Initial Pool Balance), or (ii) a retail shopping mall
or center, a franchise restaurant, an office building or complex, a hotel, a
health care facility, an industrial building, a self storage facility or a
parking garage (a "Commercial Mortgaged Property"; and any Mortgage Loan secured
thereby, a "Commercial Loan") (215 Loans, representing 64.8% of the Initial Pool
Balance).
Each of 8 sets of Mortgage Loans contains Mortgage Loans (the
"Cross-Collateralized Mortgage Loans") that are, solely as among such Mortgage
Loans in such particular set, cross-defaulted and cross-collateralized with each
other. The largest set of related Cross-Collateralized Mortgage Loans represents
2.5% of the Initial Pool Balance. Each of the Cross-Collateralized Mortgage
Loans is evidenced by a separate Mortgage Note and secured by a separate
Mortgage, which Mortgage contains provisions creating the relevant
cross-collateralization and cross-default arrangements. See Annex A hereto for
information regarding the Cross-Collateralized Mortgage Loans and see "Risk
Factors -- The Mortgage Loans -- Limitations on Enforceability of
Cross-Collateralization" in this prospectus supplement.
In general, with limited exception, the Mortgage Loans constitute
nonrecourse obligations of the related borrower. Upon any such borrower's
default in the payment of any amount due under the related Mortgage Loan, the
holder thereof may look only to the related Mortgaged Property or Properties for
satisfaction of the borrower's obligation. In addition, in those cases where the
loan documents permit recourse to a borrower or guarantor, the Depositor has not
undertaken an evaluation of the financial condition of any such person, and
prospective investors should thus consider all of the Mortgage Loans to be
nonrecourse. None of the Mortgage Loans is insured or guaranteed by the United
States, any governmental entity or instrumentality, or any private mortgage
insurer. See "Risk Factors -- The Mortgage Loans -- Limited Recourse" in this
prospectus supplement.
One hundred twenty-seven of the Mortgaged Properties, which constitute
security for 27.5% of the Initial Pool Balance, are located in California; 10 of
the Mortgaged Properties, which constitute security for 9.7% of the Initial Pool
Balance, are located in North Carolina; 10 of the Mortgaged Properties, which
constitute security for 7.5% of the Initial Pool Balance, are located in
Maryland; 29 of the Mortgaged Properties, which constitute security for 7.2% of
the Initial Pool Balance, are located in Florida; and 5 of the Mortgaged
Properties, which constitute security for 5.3% of the Initial Pool Balance, are
located in New Jersey. The remaining Mortgaged Properties are located throughout
29 other states and the District of Columbia, with no more than 5.1% of the
Initial Pool Balance secured by Mortgaged Properties located in any such other
jurisdiction.
The Mortgage Loan Seller originated (directly or through an originator
participating in its conduit program) 203 of the Mortgage Loans (the
"NationsBank Mortgage Loans"), which represent 72.6% of the Initial Pool
Balance, pursuant to its conduit program. Bank of America NT&SA ("Bank of
America") originated 173 of the Mortgage Loans (the "Bank of America Mortgage
Loans"), which represent 27.4% of the Initial Pool Balance, pursuant to its
conduit program. Each of the Mortgage Loan Seller at Bank of America is a
directly or indirectly wholly-owned subsidiary of BankAmerica Corporation. See
"Description of the Mortgage Pool -- The Mortgage Loan Seller and Bank of
America" in this prospectus supplement. On the Trust Formation Date, the
Mortgage Loan Seller acquired the Bank of America Mortgage Loans from Bank of
America and, at the direction of the Depositor, transferred all of the Mortgage
Loans, without recourse, to the Trustee for the benefit of the
Certificateholders. See "-- The Mortgage Loan Seller and Bank of America" and
"-- Assignment of the Mortgage Loans; Repurchase" below.
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<PAGE> 35
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. Each of the Mortgage Loans provides for scheduled payments of
principal and interest ("Monthly Payments") to be due on the first day of each
month (as to each such Mortgage Loan, the "Due Date").
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at a rate per annum (a "Mortgage Rate") that is fixed for the remaining
term of the Mortgage Loan. As of the Cut-off Date, the Mortgage Rates of the
Mortgage Loans ranged from 6.640% per annum to 9.830% per annum, and the
weighted average Mortgage Rate of the Mortgage Loans was 7.245%. No Mortgage
Loan permits negative amortization or the deferral of accrued interest.
Three hundred fifty-five Mortgage Loans (the "Actual/360 Mortgage Loans"),
which represent 96.9% of the Initial Pool Balance, accrue interest on the basis
of the actual number of days elapsed in the relevant month of accrual and a
360-day year (an "Actual/360 Basis"). Twenty-one Mortgage Loans (the "30/360
Mortgage Loans"), which represent 3.1% of the Initial Pool Balance, accrue
interest on the basis of a 360-day year consisting of twelve 30-day months (a
"30/360 Basis"). The total amount of the Monthly Payment for each Actual/360
Mortgage Loan is determined as though the Mortgage Loan accrued interest on a
30/360 Basis, and the portion of such Monthly Payment allocated to interest is
determined based on interest accrued in the preceding month on an Actual/360
Basis with the balance allocated to amortized principal. As a result, the full
amortization term is longer than would be the case if calculated on a 30/360
Basis, and the Balloon Payment on any such Mortgage Loan will be larger than
would be the case if interest accrued on a 30/360 Basis.
Amortization of Principal. Three hundred fifty-one of the Mortgage Loans,
which represent 91.9% of the Initial Pool Balance, provide for monthly payments
of principal based on amortization schedules significantly longer than the
respective remaining terms thereof, thereby leaving substantial principal
amounts due and payable (each such loan, a "Balloon Loan," and each such
payment, together with the corresponding interest payment, a "Balloon Payment")
on their respective maturity dates, unless prepaid prior thereto. Twenty-five
Mortgage Loans, which represents 8.1% of the Initial Pool Balance, are fully
amortizing loans.
The original term to stated maturity of each Mortgage Loan was between 84
and 300 months. The original amortization schedules of the Mortgage Loans
(calculated, in the case of Actual/360 Mortgage Loans on a 30/360 Basis for the
purposes of the accrual of interest) ranged from 84 to 360 months. As of the
Cut-off Date, the remaining terms to stated maturity of the Mortgage Loans will
range from 69 to 296 months, and the weighted average remaining term to stated
maturity of the Mortgage Loans will be 120 months. As of the Cut-off Date, the
remaining amortization terms of the Mortgage Loans (calculated on a 30/360 Basis
for the accrual of interest) will range from 83 to 359 months, and the weighted
average remaining amortization term (calculated on a 30/360 Basis for purposes
of the accrual of interest) of the Mortgage Loans will be 322 months. See "Risk
Factors -- Risks Related to the Mortgage Loans -- Balloon Payments" in this
prospectus supplement.
Prepayment Provisions. All of the Mortgage Loans provided as of
origination for, a sequence of three periods:
(1) a period (a "Lock-out Period") during which voluntary principal
prepayments are prohibited, followed by
(2) a period (a "Prepayment Premium Period") during which any
voluntary principal prepayment be accompanied by a premium, penalty, or fee
(a "Prepayment Premium"), followed by
(3) a period (an "Open Period") during which voluntary principal
prepayments may be made without an accompanying Prepayment Premium.
Voluntary principal prepayments (after any Lock-out Period) may be made in
full or in part, subject to certain limitations and, during a Prepayment Premium
Period, payment of the applicable Prepayment Premium. As of the Cut-off Date,
the remaining Lock-out Periods ranged from 14 months to 294 months, with a
weighted average remaining Lock-out Period of 88 months. As of the Cut-off Date,
the Open Period for
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<PAGE> 36
each Mortgage Loan ranged from 2 months to 7 months with a weighted average Open
Period of 5 months. Prepayment Premiums on the Mortgage Loans are generally
calculated either on the basis of a yield maintenance formula (subject, in
certain instances, to a minimum equal to a specified percentage of the principal
amount prepaid) or as a percentage (which may decline over time) of the
principal amount prepaid. The prepayment terms of each of the Mortgage Loans are
more particularly described in Annex A to this prospectus supplement.
As more fully described herein, Prepayment Premiums actually collected on
the Mortgage Loans will be distributed to the respective Classes of
Certificateholders in the amounts and priorities described under "Description of
the Certificates -- Distributions -- Distributions of Prepayment Premiums"
herein. The Depositor makes no representation as to the enforceability of the
provision of any Mortgage Loan requiring the payment of a Prepayment Premium or
as to the collectibility of any Prepayment Premium. See "Risk Factors -- Risks
Related to the Mortgage Loans -- Prepayment Premiums" in this prospectus
supplement and "Certain Legal Aspects of Mortgage Loans -- Default Interest and
Limitations on Prepayments" in the accompanying prospectus.
Defeasance. Two hundred ninety-one Mortgage Loans, representing 80.6% of
the Initial Pool Balance, permit the applicable borrower at any time after a
specified period (the "Defeasance Lock-Out Period"), which is at least two years
from the Closing Date, provided no event of default exists, to obtain a release
of a Mortgaged Property from the lien of the related Mortgage (a "Defeasance
Option").The borrower must meet certain conditions in order to exercise its
Defeasance Option. Among other conditions the borrower must pay on any Due Date
(the "Release Date"):
(1) all interest accrued and unpaid on the principal balance of the
Note to and including the Release Date
(2) all other sums, excluding scheduled interest or principal
payments, due under the Mortgage Loan and all other loan documents executed
in connection therewith and
(3) an amount (the "Collateral Substitution Deposit") that will be
sufficient to purchase direct non-callable obligations of the United States
of America providing payments (a) on or prior to, but as close as possible
to, all successive scheduled payment dates from the Release Date to the
related maturity date, (b) in amounts equal to the scheduled payments due
on such dates under the Mortgage Loan or the defeased amount thereof in the
case of a partial defeasance and (c) any costs and expenses incurred in
connection with the purchase of such U.S. government obligations.
In addition, the borrower must deliver a security agreement granting the
Trust Fund a first priority lien on the Collateral Substitution Deposit and
generally, an opinion of counsel to such effect. Simultaneously with such
actions, the related Mortgaged Property will be released from the lien of the
Mortgage Loan and the pledged U.S. government obligations (together with any
Mortgaged Property not released, in the case of a partial defeasance) will be
substituted as the collateral securing the Mortgage Loan. In general, a
successor borrower established or designated pursuant to the related loan
documents will assume all of the defeased obligations of a borrower exercising a
Defeasance Option under a Mortgage Loan and the borrower will be relieved of all
of the defeased obligations thereunder. If a Mortgage Loan is partially
defeased, the related Note will be split and only the defeased portion of the
borrower's obligations will be transferred to the successor borrower.
The Depositor makes no representation as to the enforceability of the
defeasance provisions of any Mortgage Loan. See "Risk Factors -- Risks Related
to the Certificates -- Yield Considerations" in this prospectus supplement.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. Substantially all of
the Mortgage Loans contain both "due-on-sale" and "due-on-encumbrance" clauses
that in each case, subject to certain limited exceptions, permit the holder of
the Mortgage to accelerate the maturity of the related Mortgage Loan if the
borrower sells or otherwise transfers or encumbers the related Mortgaged
Property or prohibit the borrower from doing so without consent of the holder of
the Mortgage. See "-- Additional Mortgage Loan Information -- Subordinate
Financing" herein. Certain of the Mortgage Loans permit transfer of the related
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<PAGE> 37
Mortgaged Property if certain specified conditions are satisfied or if the
transfer is to a borrower reasonably acceptable to the lender. The Master
Servicer or the Special Servicer, as applicable, will determine, in a manner
consistent with the servicing standard described herein under "Servicing of the
Mortgage Loans -- General" and with the REMIC Provisions, whether to exercise
any right the holder of any Mortgage may have under any such clause to
accelerate payment of the related Mortgage Loan upon, or to withhold its consent
to, any transfer or further encumbrance of the related Mortgaged Property;
provided, however, that neither the Master Servicer nor the Special Servicer
shall waive any right it has, or grant any consent that it may otherwise
withhold, under any related "due-on-sale" or "due-on-encumbrance" clause unless
it: (1) shall have received written confirmation from each Rating Agency that
such action would not result in the qualification, downgrade or withdrawal of
the rating then assigned by such Rating Agency to any Class of Certificates,
such confirmation to be required in the case of any waiver of rights under a
related "due-on-sale" clause only if the then-outstanding principal balance of
the subject Mortgage Loan (together with the then-outstanding aggregate
principal balance of all other Mortgage Loans to the same borrower or borrowers
that are, to the actual knowledge of the Master Servicer, affiliated) exceeds 2%
of the then-outstanding principal balance of all of the Mortgage Loans or
exceeds $20,000,000; and (2) shall have provided, at least five days prior to
the granting of such waiver or consent, to any majority Certificateholder of the
Controlling Class and, in the case of the Master Servicer, to the Special
Servicer, written notice of the matter and a written explanation of the
surrounding circumstances and, upon request made within such five-day period,
shall have discussed the matter with such majority Certificateholder of the
Controlling Class and, in the case of the Master Servicer, with the Special
Servicer. See "The Pooling and Servicing Agreements -- Due-on-Sale and Due-on-
Encumbrance Provisions" and "Certain Legal Aspects of Mortgage
Loans -- Due-on-Sale and Due-on-Encumbrance" in the accompanying prospectus.
SIGNIFICANT MORTGAGE LOANS
Certain of the larger Mortgage Loans or groups of Mortgage Loans (by
outstanding principal balance) are described below. Terms used below relating to
underwriting or property characteristics have the meaning assigned to such term
in Annex A.
International Home Furnishing Center Loan
The Loan. This Mortgage Loan (the "International Home Furnishing Center
Loan"), which is secured by the first deed of trust on a specialty retail center
(the "International Home Furnishing Center" or "IHFC") in High Point, North
Carolina, represents approximately 4.7% of the Initial Pool Balance. Originated
on July 20, 1998, the International Home Furnishing Center Loan has a principal
balance as of the Cut-off Date of $74,317,972. The International Home Furnishing
Center Loan was made to International Home Furnishing Center, Inc. (the
"International Home Furnishing Center Borrower"), a single asset North Carolina
Corporation which is owned by the Bassett Furniture Co. (41%), Jefferson Pilot
Insurance (25%), the Randall B. Terry Investor Group (20%), and Furniture Brands
International (14%).
The International Home Furnishing Center Loan has a remaining term of 83
months and matures on August 1, 2005. The International Home Furnishing Center
Loan may not be prepaid prior to, and including, March 31, 2005. However, the
International Home Furnishing Center Loan is subject to Defeasance with United
States Treasury obligations beginning two years from the Closing Date. The
International Home Furnishing Center Loan may be prepaid without the payment of
a prepayment penalty during the five (5) months preceding the maturity date. The
International Home Furnishing Center Loan is a seven year self-liquidating loan.
Additional terms and escrows for the International Home Furnishing Center
Loan are set forth in Annex B.
The Property. The International Home Furnishing Center is the largest of
the showrooms in High Point, NC, the "Furniture Capital of the World". With
2,519,415 square feet ("sf"), the subject facility is much larger than the next
largest showroom (approximately 400,000 square feet) and is the major component
of High Point's seven million square feet of showroom space. Biannually, IHFC
hosts the International Home
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<PAGE> 38
Furnishings Market Show which attracts over 70,000 buyers. Constructed in
phases, from 1921 through 1994, IHFC is composed of two buildings connected by
an eight story enclosed and elevated walkway with building heights of ten and
eleven stories. The basement area in the Market Building contains seven loading
docks, a shop area, a cafeteria and a Press Center. The second building is
located across Wrenn St. and is made up of five wings; Wrenn, Green, Commerce,
Design Center and Hamilton. On the eleventh floor of the Green wing there is a
large ballroom, a private club/restaurant with bar facilities and commercial
kitchen facilities which are used for industry functions, weddings and business
conventions.
Debt Service Escrow. Tenants generally sign five year leases and pay their
rent in semi-annual installments on May 1 and November 1. A debt service escrow
has been established, funded initially with seven months of debt service, to
mitigate any risk associated with the uneven flow of income.
Property Management. The International Home Furnishing Center has a
full-time marketing and leasing staff, as well as, a building operations group
which numbers year-round at 48 and increases to over 300 during show times.
Operating History:
<TABLE>
<CAPTION>
1995 1996 1997 ORIGINATOR'S
ACTUAL ACTUAL ACTUAL UNDERWRITTEN
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
EGI......................... $34,553,647 $33,918,360 $35,328,417 $30,910,638
Expenses.................... $11,326,006 $10,363,450 $10,045,835 $10,801,178
----------- ----------- ----------- -----------
NOI......................... $23,227,641 $23,554,910 $25,282,582 $20,109,460
UW Cash Flow................ $23,227,641 $23,554,910 $25,282,582 $19,479,596
=========== =========== =========== ===========
Occupancy................... 100% 100% 100% 90.10%
DSCR Based on NOI........... 1.70x 1.72x 1.85x 1.47x
DSCR based on UW Cash
Flow...................... 1.70x 1.72x 1.85x 1.43x
</TABLE>
Lease Expiration Schedule:
<TABLE>
<CAPTION>
PERCENTAGE OF
SQUARE NET RENTABLE
YEAR OF LOAN TERM FEET SQUARE FEET
----------------- --------- -------------
<S> <C> <C>
Vacant.................................................... -- 0.00%
Year 1.................................................... 327,648 13.00%
Year 2.................................................... 1,337,992 53.11%
Year 3.................................................... 229,732 9.12%
Year 4.................................................... 426,657 16.93%
Year 5.................................................... 172,240 6.84%
Year 7.................................................... 11,708 .46%
</TABLE>
Certain Environmental Considerations. The Phase I environmental assessment
conducted in connection with the origination of the International Home
Furnishings Center Loan recommended that a Phase II study also be conducted with
respect to potential contamination of the related Mortgaged Property resulting
from prior manufacturing activity conducted at the site and certain leaking
underground storage tanks ("LUSTs"). Due to the location of the improvements on
the Mortgaged Property, the Phase II Study cannot reasonably be performed
without damaging such improvements and therefore such Phase II study has not
been and is not expected to be conducted. With respect to environmental
liabilities arising from prior manufacturing activities, the related borrower
has obtained insurance. There can be no assurance that the amount of such
insurance will be adequate to cover the liabilities, if any, ultimately
associated with such prior activities. With respect to environmental liabilities
arising from soil contamination present on the Mortgaged Property, no insurance
has been obtained. However, the three LUSTs that were the source of the existing
contamination have been removed, and the affected area of the Mortgaged Property
is fully paved. In addition, the Mortgaged Property is connected to the
municipal water supply.
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<PAGE> 39
The Gateway Center I and Gateway Center II Loans
The Loans. These mortgage loans (the "Gateway Center I Loan" and "Gateway
Center II Loan") represent 1.7% and 2.5% of the Initial Pool Balance,
respectively. The seller originated both mortgage loans on June 10, 1998. The
Gateway Center I Loan has a principal balance as of the cutoff date of
$27,166,909, and The Gateway Center II Loan has a principal balance of
$39,751,581. Both loans are secured by a first deed of trust on bulk warehouse
facilities in Columbia, Maryland. The Gateway Center I Loan was made to GCC A 40
Associates and the Gateway Center II Loan was made to Parcel A-74 Associates,
LLC. Both entities are single-asset, Delaware limited liability companies.
The Gateway Center I and Gateway Center II Loans have a remaining term of
118 and 114 months, and mature on July 1, 2008 and March 1, 2008, respectively.
The Gateway Center I and Gateway Center II Loans may not be prepaid before and
including February 29, 2008 and October 31, 2007, respectively. Both loans are
subject to defeasance with U.S. Treasury obligations beginning two years from
the closing date. During the final 5 months of each loan, it may be prepaid
without consideration.
Additional terms and escrows for the Gateway Center I and Gateway Center II
Loans are set forth in Annex B.
The Properties. The property securing the Gateway Center Center I Loan
("Gateway Commerce Center I") is composed of 739,153 sf of bulk warehouse and
office space located along the I-95 corridor within the Baltimore MSA. The
majority of net rentable square feet is bulk warehouse with ceiling clear height
of 30'-60' built upon 24" concrete slab. The remainder of the space is office
space. The building was originally constructed in 1970 and fully renovated in
1994. Gateway Commerce Center I and Gateway Commerce Center II are situated upon
a total of 82.1 acres which provides ample room for building expansion, trailer
maneuverability, truck storage, and employee parking. Gateway Commerce Center I
has three credit tenants which generate 58% of underwritten gross potential
income and occupy 53% of net rentable square footage: Revlon ("B" credit
rating), Giant Food Inc. (controlled by AHOLD USA, an "A" rated company), and
Public Storage ("A-" credit rating).
The property securing the Gateway Center II Loan ("Gateway Commerce Center
II") includes two buildings, on the total site of 82.1 acres that together
provide 1,251,103 sf of bulk warehouse and office space. Approximately,
1,212,103 sf of the net rentable square footage is bulk warehouse with ceiling
clear height of 50'-60', built upon 24" concrete slab. The balance of the space,
approximately 39,000 sf, is office space. Gateway Commerce Center II was
originally constructed in 1970 and fully renovated in 1994. The Gateway Center
II Loan matures co-terminous with the Sears' lease term. Distribution access is
achieved via more than 100 dock doors with levelers. Building Two, totaling
289,450 sf, includes 40,000 sf of freezer space (Simco/Jack & Jill -- ice cream
distributor), 39,000 sf of office space and 30 dock doors. Together, Sears (with
S&P credit rating of "A-") and the United States Coast Guard generate 95.0% of
underwritten gross potential income and occupy 90% of net rentable square
footage.
Property Management. The property is managed by the Penrose Group, an
entity that is affiliated to the borrowing entity through common ownership and
has over three million square feet under management. The Pritzker family, whose
interests include real estate, Ticketmaster, Royal Caribbean Cruises, Hyatt
retirement centers and New York's Grand Hyatt, will control the Borrower
Principal. The Pritzker family holding company, H Group Holding, generates
annual revenues exceeding $915 million. The Pritzker family's net worth exceeds
$6 billion.
S-37
<PAGE> 40
Operating History -- Gateway Commerce Center I
<TABLE>
<CAPTION>
APPRAISER'S ORIGINATOR'S
ESTIMATE UNDERWRITTEN
----------- ------------
<S> <C> <C>
EGI......................................................... $3,611,967 $3,480,936
Expenses.................................................... $ 596,624 $ 585,605
---------- ----------
NOI......................................................... $3,015,343 $2,895,331
Cash Flow................................................... $2,709,521 $2,766,775
========== ==========
Occupancy................................................... 98.0% 89.7%
DSCR based on NOI........................................... 1.37x 1.32x
DSCR based on Cash Flow..................................... 1.24x 1.26x
</TABLE>
Note: Due to Gateway Commerce Center I's extensive renovations in 1996 and
1997, its financial history is limited.
Lease Expiration Schedule -- Gateway Commerce Center I
<TABLE>
<CAPTION>
PERCENTAGE OF
SQUARE NET RENTABLE
YEAR OF LOAN TERM FEET SQUARE FEET
----------------- ------- -------------
<S> <C> <C>
Vacant...................................................... 48,000 6.49%
Year 5...................................................... 366,003 49.52%
Year 9...................................................... 205,300 27.78%
Year 10..................................................... 119,850 16.21%
</TABLE>
Operating History -- Gateway Commerce Center II
<TABLE>
<CAPTION>
1995 1996 1997 ORIGINATOR'S
ACTUAL ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
EGI..................................... $4,232,888 $4,221,364 $4,474,287 $5,208,283
Expenses................................ $ 946,269 $1,165,184 $1,270,918 $ 953,303
---------- ---------- ---------- ----------
NOI..................................... $3,286,619 $3,056,180 $3,203,369 $4,254,980
Cash Flow............................... $3,286,619 $3,056,180 $3,203,369 $4,067,093
========== ========== ========== ==========
Occupancy............................... 90.0% 100.0% 100.0% 94.8%
DSCR based on NOI....................... 1.02x 0.95x 1.00x 1.33x
DSCR based on Cash Flow................. 1.02x 0.95x 1.00x 1.27x
</TABLE>
Lease Expiration Schedule -- Gateway Commerce Center II
<TABLE>
<CAPTION>
PERCENTAGE OF
SQUARE NET RENTABLE
YEAR OF LOAN TERM FEET SQUARE FEET
----------------- ------- -------------
<S> <C> <C>
Vacant...................................................... 39,000 3.12%
Year 5...................................................... 170,450 13.62%
Year 10..................................................... 961,653 76.86%
</TABLE>
The Journal Square Plaza II Loan
The Loan. This Mortgage Loan (the "Journal Square Plaza II Loan")
represents approximately 2.6% of the Initial Pool Balance and is secured by a
first mortgage on a nine story, Class A office building (the "Journal Square
Plaza II") located in Jersey City, New Jersey near Manhattan, New York.
Originated on July 10, 1998, the Journal Square Plaza II Loan has a principal
balance as of the Cut-off Date of $40,973,700. The Journal Square Plaza II Loan
was made to PHM Urban Renewal Associates, L.L.C., a single asset, special
purpose New Jersey limited liability company (the "Journal Square Borrower")
which is controlled by Hartz Mountain Industries, Inc.
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<PAGE> 41
The Journal Square Plaza II Loan has a remaining term of 119 months and
matures on August 1, 2008. The Journal Square Plaza II Loan may not be prepaid
prior to, and including, April 1, 2008. However the Journal Square Plaza II Loan
is subject to Defeasance with United States Treasury obligations beginning two
years from the Closing Date. The Journal Square Plaza II Loan may be prepaid
without prepayment penalty from April 2, 2008 until the Maturity Date.
Additional terms and escrows for the Journal Square Plaza II Loan are set
forth in Annex B.
The Property. Journal Square Plaza II consists of a single, nine-story
office building, and an adjacent multi-level parking garage containing 1,073
parking spaces, located on 2.4 acres in the central business district of Jersey
City, New Jersey near downtown Manhattan. Built in 1987, and consisting of
275,614 net rentable square feet, the property was 100% occupied as of July 14,
1998. The four tenants which occupy the entire building include Automated Data
Processing ("ADP"), Bank of New York, the United States General Services
Administration and the Hudson County Improvement Authority. ADP occupies over
91% of the net rentable area and is rated, as of the Cut-off Date, A-1+ by
Standard and Poor's. ADP has also invested approximately $40 to $50 million in
their space on computer, electrical and telecommunications systems.
ADP Rollover Escrow/Lockbox. The Lender will collect a monthly rollover
reserve of $52,620 beginning February 1, 2003. In the event that ADP gives
notice to vacate their premises at their option renewal notice date, January 1,
2007, which falls twelve months prior to the expiration date of the current
lease term, the Lender shall have the right to implement a springing hard
lockbox and the rollover reserve will increase to include all net cash flow
generated by the property over and above normal operating expenses and debt
service. This cash sweep will be utilized for leasing commissions, tenant
improvements and debt service while the property is retenanted.
Property Management. Journal Square Plaza II is managed by Hartz Mountain
Industries, Inc., which currently has approximately 32 million square feet under
management, and is the controlling member of the Journal Square Borrower.
Operating History:
<TABLE>
<CAPTION>
1995 1996 1997 ORIGINATOR'S
ACTUAL ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
EGI..................................... $6,093,286 $6,315,602 $6,295,913 $7,263,740
Expenses................................ $1,421,704 $1,455,527 $1,482,372 $2,636,845
---------- ---------- ---------- ----------
NOI..................................... $4,671,582 $4,860,075 $4,813,541 $4,626,895
UW Cash Flow............................ $4,671,582 $4,860,075 $4,813,541 $4,232,451
========== ========== ========== ==========
Occupancy............................... NAV 100% 100% 91.74%
DSCR Based on NOI....................... 1.44x 1.50x 1.48x 1.43x
DSCR based on Cash Flow................. 1.44x 1.50x 1.48x 1.30x
</TABLE>
Lease Expiration Schedule:
<TABLE>
<CAPTION>
PERCENTAGE OF
SQUARE NET RENTABLE
YEAR OF LOAN TERM FEET SQUARE FEET
----------------- ------- -------------
<S> <C> <C>
Vacant...................................................... -- 0.00%
Year 5...................................................... 23,097 8.38%
Year 10..................................................... 249,704 90.60%
</TABLE>
The Research Tri-Center North A and Research Tri-Center South B Loans
The Loans. The Research Tri-Center North A mortgage loan (the "North A
Loan)" and the Research Tri-Center South B mortgage loan (the "South B Loan")
represent 1.7% and 0.8% of the Initial Pool Balance, respectively. Both loans
were originated by the Seller on January 30, 1998. The North A Loan has a
principal balance as of the cutoff date of $26,617,153, and the South B Loan has
a principal balance of $13,288,683.
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<PAGE> 42
Both loans are secured by a first deed of trust on light industrial and flex
facilities in Durham, North Carolina. The North A Loan was made to Tri-Center
(KMWMDLJ), LLC and the South B Loan was made to Tri-Center (No. 4), LLC. Both
entities are single-asset, Virginia limited liability companies. The North A and
South B Loans are cross-collateralized and cross-defaulted with each other.
The North A and South B Loans have a remaining term of 77 months and mature
on February 1, 2005. Neither may be prepaid prior to January 31, 2001. From
February 1, 2001 until July 31, 2004, the loan may be prepaid upon payment of a
prepayment premium in the amount of the greater than 1% or the premium derived
from a yield maintenance calculation. Subsequent to July 31, 2004, the loan may
be prepaid without payment of a prepayment premium.
Additional terms and escrows for the North A and South B Loans are set
forth in Annex B.
The Properties. Research Tri-Center North A is a 631,252 sf light
industrial center built in phases between 1988 and 1990. The subject is
comprised of 3 structures, North I, North III/IV and North V. North I is an
158,856 sf of office/flex space with Glaxo Wellcome as its largest tenant. North
III/IV is a 272,396 sf bulk distribution warehouse that is 100% leased to IBM.
North V is a 200,000 sf light manufacturing facility that is 100% air
conditioned and 100% leased to IBM. With IBM ("A" rated) and Glaxo Wellcome
("AA" rated) occupying 472,396 sf and 26,768 sf, North A, respectively, the
property is 79.1% occupied by credit tenants. The property has excellent
location adjacent to the Research Triangle Park with good access to major
interchanges and I-40.
Research Tri-Center South B is a 379,656 sf light industrial center located
near Research Triangle Park in Durham, NC. The property includes three
buildings, South IV and South VI, completed in 1997, and South VII, completed in
1998. South IV is a 84,600 sf bulk distribution center that is 100% leased to
Road Packaging Systems. South VI is a 170,754 sf light manufacturing facility
that is 100% air conditioned and 68% leased to Bell & Howell. South VII is a
124,302 sf bulk distribution warehouse that is 81% leased to Medline and
Triangle Services.
Property Management. Research Tri-Center North A and South B are managed
by Craig Davis Properties, a leading management company in the Raleigh area with
3.5 million square feet under management.
Operating History -- Research Tri-Center North A
<TABLE>
<CAPTION>
1995 1996 1997 ORIGINATOR'S
ACTUAL ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
EGI..................................... $3,851,687 $3,509,310 $3,723,902 $3,755,081
Expenses................................ $ 900,679 $ 861,768 $ 884,223 $ 882,320
---------- ---------- ---------- ----------
NOI..................................... $2,951,008 $2,647,542 $2,839,679 $2,872,761
Cash Flow............................... $2,731,811 $2,088,042 $2,786,316 $2,685,229
========== ========== ========== ==========
Occupancy............................... NAV NAV NAV 90.4%
DSCR based on NOI....................... 1.37X 1.23X 1.32X 1.33X
DSCR based on Cash Flow................. 1.27X 0.97X 1.29X 1.24X
</TABLE>
Lease Expiration Schedule -- Research Tri-Center North A
<TABLE>
<CAPTION>
PERCENTAGE OF
SQUARE NET RENTABLE
YEAR OF LOAN TERM FEET SQUARE FEET
----------------- ------- -------------
<S> <C> <C>
Vacant...................................................... 97,603 15.46%
Year 1...................................................... 8,717 1.38%
Year 3...................................................... 52,536 8.32%
Year 4...................................................... 272,396 43.15%
Year 6...................................................... 200,000 31.68%
</TABLE>
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<PAGE> 43
Operating History -- Research Tri-Center South B
<TABLE>
<CAPTION>
APPRAISER'S ORIGINATOR'S
ESTIMATE UNDERWRITTEN
----------- ------------
<S> <C> <C>
EGI......................................................... $2,108,904 $1,998,831
Expenses.................................................... $ 405,701 $ 459,317
---------- ----------
NOI......................................................... $1,703,203 $1,539,514
Cash Flow................................................... $1,621,827 $1,446,814
========== ==========
Occupancy................................................... 98.0% 90.3%
DSCR based on NOI........................................... 1.58X 1.43X
DSCR based on Cash Flow..................................... 1.51X 1.34X
</TABLE>
Note: Due to Research Tri-Center South B's construction in 1997 and 1998,
its financial history is limited.
Lease Expiration Schedule -- Research Tri-Center South B
<TABLE>
<CAPTION>
PERCENTAGE OF
SQUARE NET RENTABLE
YEAR OF LOAN TERM FEET SQUARE FEET
----------------- ------- -------------
<S> <C> <C>
Vacant...................................................... 23,441 6.17%
Year 1...................................................... 38,925 10.25%
Year 3...................................................... 38,710 10.20%
Year 5...................................................... 62,151 16.37%
Year 6...................................................... 84,600 22.28%
</TABLE>
Subordinate Financing. There is secondary financing of approximately
$3,817,140 with a junior lien on Research Tri-Center North A. Similarly, there
is secondary financing of approximately $1,908,576 with a junior lien on
Research Tri-Center South B. In both scenarios, an "Agreement Concerning and
Amendment of Additional Indebtedness" was executed by the lender, the borrower,
and the holder of the additional, junior indebtedness. This document prohibits
any payments (principal, interest or otherwise) on the additional, junior
indebtedness except to the extent that operating income exceeds operating
expenses, debt service and required escrows.
ADDITIONAL MORTGAGE LOAN INFORMATION
General. For a detailed presentation of certain characteristics of the
Mortgage Loans and Mortgaged Properties, on an individual basis and in tabular
format, see Annex A hereto. Certain capitalized terms that appear herein are
defined in Annex A. See Annex B hereto for certain information with respect to
capital improvement, replacement and tenant improvement reserve accounts, as
well as certain other information with respect to Multifamily Mortgaged
Properties.
Delinquencies. No Mortgage Loan will be as of the Cut-off Date, or has
been since origination, 30 days or more delinquent in respect of any Monthly
Payment. All of the Mortgage Loans were originated during the 21 months prior to
the Cut-off Date. In addition, in the case of 34 Mortgage Loans, representing
18.4% of the Initial Pool Balance, no payment history is available because the
first payment on each such Mortgage Loan is due in September 1998.
Tenant Matters. One hundred forty-seven of the retail, office and
industrial Mortgaged Properties, which represent security for 45.5% of the
Initial Pool Balance, are leased in large part to one or more Major Tenants.
Four companies are Major Tenants with respect to more than one Mortgaged
Property, with the related groups of Mortgage Loans representing 3.1%, 1.9%,
1.3%, and 0.9%, of the Initial Pool Balance. In addition, there are several
cases in which a particular entity is a tenant at multiple Mortgaged Properties,
and although it may not be a Major Tenant at any such property, it may be
significant to the success of such properties. "Major Tenants" means any tenant
at a Commercial Mortgaged Property that rents at least 20% of the Leasable
Square Footage (as defined in Annex A) at such property.
Certain of the Multifamily Mortgaged Properties have material
concentrations of student tenants.
S-41
<PAGE> 44
Ground Leases. Nine of the Mortgage Loans, which represent 8.1% of the
Initial Pool Balance, are, in each such case, secured by a Mortgage on the
applicable borrower's leasehold interest in the related Mortgaged Property. In
each case, either (i) the ground lessor has subordinated its interest in the
related Mortgaged Property to the interest of the holder of the related Mortgage
Loan or (ii) the ground lessor has agreed to give the holder of the Mortgage
Loan notice of, and has granted such holder the right to cure, any default or
breach by the lessee. See "Certain Legal Aspects of Mortgage
Loans -- Foreclosure -- Leasehold Considerations" in the accompanying
prospectus.
Subordinate Financing. Four of the Mortgaged Properties, representing
security for 3.5% of the Initial Pool Balance, are encumbered by secured
subordinated debt. In all such cases, the holders of the subordinated debt have
agreed not to foreclose for so long as the related Mortgage Loan is outstanding
and the Trust is not pursuing a foreclosure action. In addition, in the case of
7 Mortgage Loans, representing 5.7% of the Initial Pool Balance, the borrower is
permitted to incur subordinated debt secured by the related Mortgaged Property
if certain conditions are satisfied. Other than in such cases, the Mortgage
Loans either prohibit the related borrower from encumbering the Mortgaged
Property with additional secured debt or require the consent of the holder of
the first lien prior to so encumbering such property. The existence of any such
subordinated indebtedness may increase the difficulty of refinancing the related
Mortgage Loan at maturity and the possibility that reduced cash flow could
result in deferred maintenance. Also, in the event that the holder of the
subordinated debt files for bankruptcy or is placed in involuntary receivership,
foreclosing on the Mortgaged Property could be delayed. See "Certain Legal
Aspects of Mortgage Loans -- Subordinate Financing" in the Prospectus. In
addition, in several cases, borrowers under the Mortgage Loans have incurred or,
under the terms of the related Mortgage Loans may incur, unsecured indebtedness.
Health Care Properties. Eleven Mortgage Loans, which represent 2.2% of the
Initial Pool Balance, are secured by liens on health care properties. Health
care facilities typically receive a substantial portion of their revenues from
government reimbursement programs, primarily Medicaid and Medicare. Medicaid and
Medicare are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings, policy interpretations, delays by fiscal
intermediaries and government funding restrictions, all of which can adversely
affect revenues from operation. Moreover, governmental payors have employed
cost-containment measures that limit payments to health care providers and there
are currently under consideration various proposals for national health care
relief that could further limit these payments. In addition, providers of long-
term nursing care and other medical services are highly regulated by federal,
state and local law and are subject to, among other things, federal and state
licensing requirements, facility inspections, rate setting, reimbursement
policies, and laws relating to the adequacy of medical care, distribution of
pharmaceuticals, equipment, personnel, operating policies and maintenance of and
additions to facilities and services, any or all of which factors can increase
the cost of operation, limit growth and, in extreme cases, require or result in
suspension or cessation of operations.
Lender/Borrower Relationships. The Mortgage Loan Seller, Bank of America
or the Depositor or any of their affiliates may maintain certain banking or
other relationships with borrowers under the Mortgage Loans or their affiliates,
and proceeds of the Mortgage Loans may, in certain limited cases, be used by
such borrowers or their affiliates in whole or in part to pay indebtedness owed
to the Mortgage Loan Seller, Bank of America, the Depositor or such other
entities.
CERTAIN UNDERWRITING MATTERS
Environmental Assessments. Each of the Mortgaged Properties was subject to
an environmental site assessment consisting of a "Phase I" or, in the case of
certain Mortgage Loans having an initial principal balance under $1,000,000, a
transaction screen or an update of a previously conducted assessment, which
assessment or update was conducted generally in accordance with industry-wide
standards, during or after September 1996. No such assessment or update
otherwise revealed any material adverse environmental condition or circumstance
at any Mortgaged Property, except as set forth below or in certain other cases
in which environmental site assessments recommend corrective action to address
environmental conditions, and which environmental conditions have been
mitigated, or are expected to be addressed in the manner and
S-42
<PAGE> 45
within the time frames specified in third-party clean-up agreements or the
related Mortgage Loan documents except as set forth below.
Certain federal, state and local laws, regulations and ordinances govern
the management, removal, encapsulation or disturbance of asbestos-containing
materials ("ACMs"). Such laws, as well as common law standards, may impose
liability for releases of or exposure to ACMs and may provide for third parties
to seek recovery from owners or operators of real properties for personal
injuries associated with such releases.
Recent federal legislation will in the future require owners of residential
housing constructed prior to 1978 to disclose to potential residents or
purchasers any known lead-based paint hazards and will impose treble damages for
any failure to so notify. In addition, the ingestion of lead-based paint chips
or dust particles by children can result in lead poisoning, and the owner of a
property where such circumstances exist may be held liable for such injuries and
for the costs of removal or encapsulation of the lead-based paint. Testing for
lead-based paint or lead in the water was conducted with respect to certain of
the Mortgaged Properties, generally based on the age and/or condition thereof.
When recommended by environmental site assessments, operations and
maintenance plans (addressing in some cases ACMs, lead-based paint, and/or
radon) were required, except in the case of certain Mortgaged Properties where
the environmental consultant conducting the assessment also identified the
condition of the ACM as good and "non-friable"(i.e. not easily crumbled). In a
few instances where related Mortgage Loan documents required the submission of
operations and maintenance plans, these plans have yet to be received. There can
be no assurance that recommended operations and maintenance plans have been or
will continue to be implemented. In many cases, certain adverse environmental
conditions were not tested for. For example, lead based paint and radon were
tested for only at Multifamily Mortgaged Properties and only if, in the case of
lead based paint, the age of the Mortgaged Property warranted such testing and,
in the case of radon, radon is prevalent in the geographic area where the
Mortgaged Property is located.
Certain of the Mortgaged Properties have off-site leaking underground
storage tank sites located nearby which the environmental consultant either has
advised are not likely to contaminate the related Mortgaged Properties but may
require future monitoring or has identified a party not related to the mortgagor
(borrower) as responsible for such condition. Certain other Mortgaged Properties
may contain contaminants in the soil or groundwater at levels which the
environmental consultant has advised are below typical regulatory levels or
otherwise are indicative of conditions typically not of regulatory concern and
are not likely to require any further action. In the case of two of the
Mortgaged Properties where the environmental site assessment recommended the
repair or removal of ACM in poor condition, such repair or removal was not
required in the related Mortgage Loan documents. In a few instances where
related Mortgage Loan documents required ACM repair or removal and the
submission of a confirmation that this work has been performed, the
confirmations have yet to be received. The environmental assessments revealed
other adverse environmental conditions such as the existence of storage tanks
needing replacement or removal, PCBs in equipment on-site and elevated radon
levels, in connection with which environmental reserves have been established
and/or removal or monitoring programs have been or are expected to be
implemented. An environmental site assessment conducted in connection with the
Ocean Front V Mortgage Loan recommended additional environmental assessment (a
"Phase II") to determine whether certain prior used of the Mortgaged Property
may have resulted in the release of hazardous materials onto or under the
Mortgaged Property. Prior uses included gasoline underground storage tanks
formerly located on but since removed from the Mortgaged Property and an on-site
dry cleaners. The Phase II was not conducted. An environmental indemnity
together with a guaranty of indemnity performance has been provided by parties
not related to the mortgagor (borrower) to address certain adverse environmental
conditions, if any, on the Mortgaged Property; however, there is no assurance
that such indemnity and related guaranty actually will be performed or will
address the liabilities, if any, that may be associated with the prior uses of
the Mortgaged Property. An environmental assessment conducted in connection with
the International Home Furnishings Center Loan also recommended a Phase II that
will not be conducted. See "Description of the Mortgage Pool -- Significant
Mortgage Loans -- The International Home Furnishings Center Loan" in this
prospectus supplement.
S-43
<PAGE> 46
Environmental site assessments conducted for certain of the Mortgaged
Properties concluded that there were no recognized environmental conditions in
connection with these Mortgaged Properties but nevertheless recommended that
certain actions be taken to prevent the possibility of future contamination. In
one instance, it was recommended that groundwater monitoring wells no longer in
use be closed and in another that a detention pond used to collect stormwater
runoff be lined with an impermeable material. Neither of these recommendations
have been and are not expected to be implemented.
The information contained herein regarding environmental conditions at the
Mortgaged Properties is based on the environmental assessments and has not been
independently verified by the Depositor, the Mortgage Loan Seller, Bank of
America, the Underwriter, the Master Servicer, the Special Servicer, the
Trustee, the REMIC Administrator, or any of their respective affiliates. There
can be no assurance that such environmental assessments or studies, as
applicable, identified all environmental conditions and risks, or that any such
environmental conditions will not have material adverse effect on the value or
cash flow of the related Mortgaged Property.
The Pooling Agreement requires that the Special Servicer obtain an
environmental site assessment of a Mortgaged Property prior to acquiring title
thereto or assuming its operation. Such requirement precludes enforcement of the
security for the related Mortgage Loan until a satisfactory environmental site
assessment is obtained (or until any required remedial action is taken), but
will decrease the likelihood that the Trust will become liable for a material
adverse environmental condition at the Mortgaged Property. However, there can be
no assurance that the requirements of the Pooling Agreement will effectively
insulate the Trust from potential liability for a materially adverse
environmental condition at any Mortgaged Property. See "Servicing of the
Mortgage Loans" herein and "The Pooling and Servicing Agreements -- Realization
Upon Defaulted Mortgage Loans", "Risk Factors -- Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans -- Risk of Liability
Arising from Environmental Conditions" and "Certain Legal Aspects of Mortgage
Loans -- Environmental Considerations" in the accompanying prospectus.
Property Condition Assessments. Inspections of all of the Mortgaged
Properties were conducted by independent licensed engineers in connection with
or subsequent to the origination of the related Mortgage Loan. Such inspections
were generally commissioned to inspect the exterior walls, roofing, interior
construction, mechanical and electrical systems and general condition of the
site, buildings and other improvements located at a Mortgaged Property. With
respect to certain of the Mortgage Loans, the resulting reports indicated a
variety of deferred maintenance items and recommended capital improvements. The
estimated cost of the necessary repairs or replacements at a Mortgaged Property
was included in the related property condition assessment; and, in the case of
certain Mortgaged Properties, such cost exceeded $100,000. In general, with
limited exception, cash reserves were established to fund such estimated
deferred maintenance or replacement items. In addition, various Mortgage Loans
require monthly deposits into cash reserve accounts to fund property maintenance
expenses.
Appraisals and Market Studies. An independent appraiser that is either a
member of the Appraisal Institute ("MAI") or state certified performed an
appraisal (or updated an existing appraisal) of each of the related Mortgaged
Properties in connection with or subsequent to the origination of each Mortgage
Loan in order to establish that the appraised value of the related Mortgaged
Property or Properties exceeded the original principal balance of the Mortgage
Loan (or, in the case of certain sets of related Cross-Collateralized Mortgage
Loans, the aggregate original principal balance of such sets). Such appraisal or
property valuation was prepared on or about the "Appraisal Date" indicated on
Annex A hereto, and except in the case of the Mortgage Loans relating to
Mortgaged Properties operated as restaurants and certain other Mortgage Loans,
conforms to the appraisal guidelines set forth in Title XI of the Federal
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA").
In general, such appraisals represent the analysis and opinions of the
respective appraisers at or before the time made, and are not guarantees of, and
may not be indicative of, present or future value. There can be no assurance
that another appraiser would not have arrived at a different valuation, even if
such appraiser used the same general approach to and same method of appraising
the property. In addition, appraisals seek to establish the amount a typically
motivated buyer would pay a typically motivated seller. Such amount could be
significantly higher than the amount obtained from the sale of a Mortgaged
Property under a distress or liquidation sale.
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<PAGE> 47
None of the Depositor, the Mortgage Loan Seller, Bank of America, the
Underwriter, the Master Servicer, the Special Servicer, the Trustee, the REMIC
Administrator, or any of their respective affiliates has prepared or conducted
its own separate appraisal or reappraisal of any Mortgaged Property.
Zoning and Building Code Compliance. The Mortgage Loan Seller, with
respect to the NationsBank Mortgage Loans, and Bank of America, with respect to
the Bank of America Mortgage Loans, have examined whether the use and operation
of the related Mortgaged Properties were in compliance in all material respects
with all applicable zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders applicable to such Mortgaged
Properties at the time such Mortgage Loans were originated. Establishment of
such compliance may have been supported by legal opinions, certifications from
government officials and/or representations by the related borrower contained in
the related Mortgage Loan documents. Certain violations may exist, but neither
the Mortgage Loan Seller, with respect to the NationsBank Mortgage Loans, nor
Bank of America, with respect to the Bank of America Mortgage Loans, considers
them to be material.
In some cases, the use, operation and/or structure of the related Mortgaged
Property constitutes a permitted nonconforming use and/or structure that may not
be rebuilt to its current state in the event of a material casualty event. With
respect to such Mortgaged Properties, the Mortgage Loan Seller, with respect to
the NationsBank Mortgage Loans, and Bank of America, with respect to the Bank of
America Mortgage Loans, have determined that in the event of a material casualty
affecting the Mortgaged Property that either:
(1) insurance proceeds would be available and sufficient to pay off
the related Mortgage Loan in full,
(2) the Mortgaged Property, if permitted to be repaired or restored in
conformity with current law, would constitute adequate security for the
related Mortgage Loan or
(3) the risk that the entire Mortgaged Property would suffer a
material casualty to such a magnitude that it could not be rebuilt to its
current state is remote.
Although the lender expects insurance proceeds to be available for
application to the related Mortgage Loan in the event of a material casualty, no
assurance can be given that such proceeds would be sufficient to pay off such
Mortgage Loan in full. In addition, if the Mortgaged Property were to be
repaired or restored in conformity with current law, no assurance can be given
as to what its value would be relative to the remaining balance of the related
Mortgage Loan or what would be the revenue-producing potential of the property.
Hazard, Liability and Other Insurance. Substantially all of the
Mortgages require that each Mortgaged Property be insured by a hazard insurance
policy in an amount (subject to a customary deductible) at least equal to the
lesser of the outstanding principal balance of the related Mortgage Loan and
100% of the full insurable replacement cost of the improvements located on the
related Mortgaged Property, and if applicable, that the related hazard insurance
policy contain appropriate endorsements to avoid the application of co-insurance
and not permit reduction in insurance proceeds for depreciation; provided that,
in the case of certain of the Mortgage Loans, the hazard insurance may be in
such other amounts as was required by the related originators.
In addition, if any portion of a Mortgaged Property securing any Mortgage
Loan was, at the time of the origination of such Mortgage Loan, in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards, and flood insurance was available, a flood
insurance policy meeting any requirements of the then-current guidelines of the
Federal Insurance Administration is required to be in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of
(1) the outstanding principal balance of such Mortgage Loan,
(2) the full insurable value of such Mortgaged Property,
(3) the maximum amount of insurance available under the National Flood
Insurance Act of 1968, as amended, and
(4) 100% of the replacement cost of the improvements located on the
related Mortgaged Property.
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In general, the standard form of hazard insurance policy covers physical
damage to, or destruction of, the improvements on the Mortgaged Property by
fire, lightning, explosion, smoke, windstorm and hail, riot or strike and civil
commotion, subject to the conditions and exclusions set forth in each policy.
Each Mortgage generally also requires the related borrower to maintain
comprehensive general liability insurance against claims for personal and bodily
injury, death or property damage occurring on, in or about the related Mortgaged
Property in an amount customarily required by institutional lenders.
Each Mortgage generally further requires the related borrower to maintain
business interruption insurance in an amount not less than 100% of the projected
rental income from the related Mortgaged Property for not less than twelve
months (or, in the case of a Mortgaged Property not having an elevator, for at
least a six month period).
In general, the Mortgage Loans (including those secured by Mortgaged
Properties located in California) do not require earthquake insurance.
THE MORTGAGE LOAN SELLER AND BANK OF AMERICA
The Mortgage Loan Seller is a national banking association. The principal
office of the Mortgage Loan Seller is in Charlotte, North Carolina. The Mortgage
Loan Seller is a wholly-owned subsidiary of NB Holdings Corporation, which in
turn is a wholly-owned subsidiary of BankAmerica Corporation ("BankAmerica").
Bank of America National Trust and Savings Association ("Bank of America")
is a national banking association. The principal office of Bank of America is in
San Francisco, California. Bank of America is a wholly-owned subsidiary of
BankAmerica.
The information set forth herein concerning (i) the Mortgage Loan Seller
has been provided by the Mortgage Loan Seller and (ii) Bank of America has been
provided by Bank of America. Neither the Depositor nor the Underwriter makes any
representation or warranty as to the accuracy or completeness of such
information.
On September 30, 1998, NationsBank Corporation ("NationsBank") and
BankAmerica Corporation entered into an Agreement and Plan of Reorganization
pursuant to which (i) NationsBank formed a new Delaware subsidiary ("NationsBank
(DE)") and merged with and into NationsBank (DE), with NationsBank (DE)
("Reincorporation Merger") as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica thereafter merged with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation (the "Merger"). The
corporation resulting from the Merger was named "BankAmerica Corporation".
In the event that, following the effective time of the Merger (the
"Effective Time"), NationsBank, N.A. and Bank of America merge, the resulting
entity from such merger (the "Surviving Mortgage Loan Seller") will thereafter
perform all of the duties and obligations with respect to the Mortgage Loans as
both Mortgage Loan Seller and Additional Warranting Party.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Trust Formation Date, at the direction of the Depositor,
the Mortgage Loan Seller assigned, sold and transferred the Mortgage Loans,
without recourse, to the Trustee for the benefit of the Certificateholders. In
connection with such assignment, the Mortgage Loan Seller was required to
deliver the following documents, among others, to the Trustee with respect to
each NationsBank Mortgage Loan and Bank of America will be required to deliver
the following documents, among others, to the Trustee with respect to each Bank
of America Mortgage Loan:
(1) the original Mortgage Note, endorsed (without recourse) to the
order of the Trustee;
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(2) the original or a copy of the related Mortgage(s), together with
originals or copies of any intervening assignments of such document(s), in
each case (unless the particular document has not been returned from the
applicable recording office) with evidence of recording thereon;
(3) the original or a copy of any related assignment(s) of leases and
rents (if any such item is a document separate from the Mortgage), together
with originals or copies of any intervening assignments of such
document(s), in each case (unless the particular document has not been
returned from the applicable recording office) with evidence of recording
thereon;
(4) an assignment of each related Mortgage in favor of the Trustee, in
recordable form (or a certified copy of such assignment as sent for
recording);
(5) an assignment of any related assignment(s) of leases and rents (if
any such item is a document separate from the Mortgage) in favor of the
Trustee, in recordable form (or a certified copy of such assignment as sent
for recording);
(6) an original or copy of the related lender's title insurance policy
(or, if a title insurance policy has not yet been issued, a commitment for
title insurance "marked-up" at the closing of such Mortgage Loan or other
binding commitment to issue title insurance);
(7) an assignment in favor of the Trustee of each effective UCC
financing statement in the possession of the transferor (or a certified
copy of such assignment as sent for filing); and
(8) in those cases where applicable, the original or a copy of the
related ground lease.
The Trustee is required to review the documents delivered thereto by the
Mortgage Loan Seller with respect to each NationsBank Mortgage Loan and by Bank
of America with respect to each Bank of America Mortgage Loan within a specified
period following such delivery, and the Trustee will hold the related documents
in trust. If it is found during the course of such review or at any time
thereafter that any of the above-described documents was not delivered with
respect to any Mortgage Loan or that any such document is defective, and in
either case such omission or defect materially and adversely affects the value
of the related Mortgage Loan or the interests of Certificateholders therein,
then either the Mortgage Loan Seller (if, but only if the affected Mortgage Loan
is a NationsBank Mortgage Loan) or Bank of America (if, but only if, the
affected Mortgage Loan is a Bank of America Mortgage Loan) will be obligated,
except as otherwise described below, within a period of 90 days following its
receipt of notice of such omission or defect to deliver the missing documents or
cure the defect in all material respects, as the case may be, or to repurchase
(or cause the repurchase of) the affected Mortgage Loan at a price (the
"Purchase Price") generally equal to the unpaid principal balance of such
Mortgage Loan, plus any accrued but unpaid interest thereon at the related
Mortgage Rate to but not including the Due Date in the Collection Period of
repurchase, plus any related unreimbursed Servicing Advances (as defined
herein). However, if such defect or breach is capable of being cured but not
within the 90 day period and the Mortgage Loan Seller or Bank of America, as the
case may be, has commenced and is diligently proceeding with cure of such defect
or breach within such 90 day period, the Mortgage Loan Seller or Bank of
America, as the case may be, shall have an additional 90 days to complete such
cure or, failing such cure, to repurchase the related Mortgage Loan (such
possible additional cure period shall not apply in the event of a defect that
causes the Mortgage Loan not to constitute a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code or not to meet certain Code-specified
criteria with respect to required loan-to-value ratio, customary prepayment
penalties or permissible defeasance).
The respective cure/repurchase obligations of the Mortgage Loan Seller (in
the case of NationsBank Mortgage Loans) and Bank of America (in the case of Bank
of America Mortgage Loans) will constitute the sole remedies available to the
Certificateholders for any failure on the part of the Mortgage Loan Seller or
Bank of America, as the case may be, to deliver any of the above-described
documents with respect to any Mortgage Loan or for any defect in any such
document, and neither the Depositor nor any other person will be obligated to
repurchase the affected Mortgage Loan if either the Mortgage Loan Seller or Bank
of America, as the case may be, defaults on its obligation to do so.
Notwithstanding the foregoing, if any of the above-described documents is not
delivered with respect to any Mortgage Loan because such document has been
submitted for recording, and neither such document nor a copy thereof, in either
case with evidence of
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recording thereon, can be obtained because of delays on the part of the
applicable recording office, then neither the Mortgage Loan Seller nor Bank of
America will be required to repurchase (or cause the repurchase of) the affected
Mortgage Loan on the basis of such missing document so long as it continues in
good faith attempt to obtain such document or such copy.
On or after the Effective Time, it is expected that the Surviving Mortgage
Loan Seller will become the successor to the Mortgage Loan Seller, in all
respects as regards to any cure/repurchase obligation of a NationsBank Mortgage
Loan, and Bank of America, in all respects as regards to any cure/repurchase
obligation of a Bank of America Mortgage Loan. See "-- The Mortgage Loan Seller
and Bank of America" above.
The Pooling Agreement requires that the assignments in favor of the Trustee
with respect to each Mortgage Loan described in clauses (4) and (5) of the first
paragraph under this heading be submitted for recording in the real property
records of the appropriate jurisdictions within a specified number of days
following the Trust Formation Date at the expense of the Mortgage Loan Seller.
See "The Pooling and Servicing Agreements -- Assignment of Mortgage Loans;
Repurchases" in the Prospectus.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In the Pooling Agreement, the Mortgage Loan Seller represented and
warranted solely with respect to the NationsBank Mortgage Loans, and Bank of
America represented and warranted solely with respect to the Bank of America
Mortgage Loans, in each case as of the Trust Formation Date or as of such
earlier date specifically provided in the related representation or warranty,
among other things, substantially as follows:
(1) the information set forth in the schedule of Mortgage Loans (the
"Mortgage Loan Schedule") attached to the Pooling Agreement (which will
contain a limited portion of the information set forth in Annex A) is true
and correct in all material respects as of the Cut-off Date;
(2) each Mortgage securing a Mortgage Loan is a valid first lien on
the related Mortgaged Property subject only to (a) the lien of current real
estate taxes and assessments not yet due and payable, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record, (c) rights of tenants (whether under ground leases, space
leases or operating leases) at the Mortgaged Property to remain following a
foreclosure or similar proceeding (provided that such tenants are
performing under such leases), (d) exceptions and exclusions specifically
referred to in the related lender's title insurance policy issued or, as
evidenced by a "marked-up" commitment, to be issued in respect of such
Mortgage Loan and (e) if such Mortgage Loan is cross-collateralized with
any other Mortgage Loan, the lien of the Mortgage for such other Mortgage
Loan (the exceptions set forth in the foregoing clauses (a), (b), (c), (d),
and (e) collectively, "Permitted Encumbrances");
(3) the Mortgage(s) and Mortgage Note for each Mortgage Loan and all
other documents to which the related borrower is a party and which evidence
or secure such Mortgage Loan, are the legal, valid and binding obligations
of the related borrower (subject to any non-recourse provisions contained
in any of the foregoing agreements and any applicable state anti-deficiency
legislation), enforceable in accordance with their respective terms, except
as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles of
equity regardless of whether such enforcement is considered in a proceeding
in equity or at law;
(4) no Mortgage Loan was as of the Cut-off Date, or during the
twelve-month period prior thereto, 30 days or more delinquent in respect of
any Monthly Payment, without giving effect to any applicable grace period;
(5) there is no valid offset, defense or counterclaim to any Mortgage
Loan;
(6) it has not waived any material default, breach, violation or event
of acceleration existing under any Mortgage or Mortgage Note;
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(7) it has not received actual notice that (a) there is any proceeding
pending or threatened for the total or partial condemnation of any
Mortgaged Property, or (b) there is any material damage at any Mortgaged
Property that materially and adversely affects the value of such Mortgaged
Property;
(8) all insurance coverage required under each Mortgage securing a
Mortgage Loan is in full force and effect with respect to the related
Mortgaged Property;
(9) at origination, each Mortgage Loan complied in all material
respects with all requirements of federal and state law, including those
requirements pertaining to usury, relating to the origination of such
Mortgage Loan;
(10) in connection with or subsequent to the origination of the
related Mortgage Loan, one or more environmental site assessments (or an
update of a previously conducted assessment) has been performed with
respect to each Mortgaged Property, and it, having made no independent
inquiry other than reviewing the resulting report(s) and/or employing an
environmental consultant to perform the assessments or updates referenced
herein, has no knowledge of any material and adverse environmental
condition or circumstance affecting such Mortgaged Property that was not
disclosed in the related report(s);
(11) the lien of each Mortgage is insured by a title insurance policy
issued by a nationally recognized title insurance company that insures the
originator, its successors and assigns, as to the first priority lien of
such Mortgage in the original principal amount of the related Mortgage Loan
after all advances of principal, subject only to Permitted Encumbrances
(or, if a title insurance policy has not yet been issued in respect of any
Mortgage Loan, a policy meeting the foregoing description is evidenced by a
commitment for title insurance "marked-up" at the closing of such loan);
(12) the proceeds of each Mortgage Loan have been fully disbursed, and
there is no requirement for future advances thereunder;
(13) the terms of the Mortgage Note and Mortgage(s) for each Mortgage
Loan have not been impaired, waived, altered or modified in any material
respect, except as specifically set forth in the related Mortgage File or
indicated on the Mortgage Loan Schedule;
(14) there are no delinquent taxes, ground rents, insurance premiums,
assessments, including, without limitation, assessments payable in future
installments, or other similar outstanding charges (and, to its actual
knowledge, at the origination of such Mortgage Loan, there were no
delinquent water charges or sewer rents) affecting the related Mortgaged
Property;
(15) the related borrower's interest in each Mortgaged Property
securing a Mortgage Loan consists of a fee simple and/or leasehold estate
or interest in real property;
(16) no Mortgage Loan contains any equity participation by the lender,
provides for any contingent or additional interest in the form of
participation in the cash flow of the related Mortgaged Property or
provides for the negative amortization of interest; and
(17) all escrow deposits (including capital improvements and
environmental remediation reserves) relating to each Mortgage Loan that
were required to be delivered to the mortgagee under the terms of the
related loan documents have been received and, to the extent of any
remaining balances of such escrow deposits, are in the possession or under
the control of the representing party or its agents (which shall include
the Master Servicer).
In the Pooling Agreement, Bank of America also represented and
warranted, as of the Trust Formation Date, that, immediately prior to the
transfer of the Bank of America Mortgage Loans by Bank of America to the
Mortgage Loan Seller, Bank of America had good and marketable title to, and
was the sole owner of, each related Bank of America Mortgage Loan and had
the full right and authority to sell, assign and transfer such Mortgage
Loan. In the Pooling Agreement, the Mortgage Loan Seller also represented
and warranted, as of the the Trust Formation Date, that, immediately prior
to the transfer of the Mortgage Loans to the Trustee, the Mortgage Loan
Seller had good and marketable title to, and was
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the sole owner of, each Mortgage Loan (including each Bank of America
Mortgage Loan) and had full right and authority to sell, assign and
transfer such Mortgage Loan (provided that, in the case of Bank of America
Mortgage Loans, such representation and warranty was made on the assumption
that the representation and warranty of Bank of America described in the
prior sentence was true and correct). Each of the Mortgage Loan Seller and
Bank of America also represented with respect to each NationsBank Mortgage
Loan and each Bank of America Mortgage Loan, respectively, that except with
respect to Mortgage Loans relating to restaurant franchises, the related
Mortgage File contains an appraisal of the Mortgaged Property, and that
such appraisal and the related appraisal satisfy the requirements of Title
XI of the Federal Institutions, Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the
date the Mortgage Loan was originated.
If the Mortgage Loan Seller discovers or is notified of a breach of any of
the foregoing representations and warranties with respect to any NationsBank
Mortgage Loan (or, in the case of a breach of any representation and warranty
described in the last sentence of the prior paragraph, with respect to any
Mortgage Loan), or Bank of America discovers or is notified of a breach of any
of the foregoing representations and warranties with respect to any Bank of
America Mortgage Loan (other than the representation and warranty described in
the last sentence of the prior paragraph), and in any case such breach
materially and adversely affects the value of such Mortgage Loan or the
interests of Certificateholders therein, then either the Mortgage Loan Seller
(if, but only if, the affected Mortgage Loan is a NationsBank Mortgage Loan or
the breach is in respect of the representation and warranty described in the
last sentence of the prior paragraph) or Bank of America (if, but only if, the
affected Mortgage Loan is a Bank of America Mortgage Loan and the breach is not
in respect of the representation and warranty described in the last sentence of
the prior paragraph) will be obligated, within a period of 90 days following its
discovery or receipt of notice of such breach, to cure such breach in all
material respects or to repurchase (or cause the repurchase of) the affected
Mortgage Loan at the applicable Purchase Price. However, if such defect or
breach is capable of being cured but not within the 90 day period and the
Mortgage Loan Seller or Bank of America, as the case may be, has commenced and
is diligently proceeding with cure of such defect or breach within such 90 day
period, the Mortgage Loan Seller or Bank of America, as the case may be, shall
have an additional 90 days to complete such cure or, failing such cure, to
repurchase the related Mortgage Loan (such possible additional cure period shall
not apply on the event of a defect that causes the Mortgage Loan not to
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code or not to meet certain Code-specified criteria with respect to required
loan-to-value ratio, customary prepayment penalties or permissible defeasance).
The foregoing cure/repurchase obligation of the Mortgage Loan Seller or
Bank of America, as applicable, will constitute the sole remedy available to the
Certificateholders for any breach of any of the foregoing representations and
warranties, and neither the Depositor nor any other person will be obligated to
repurchase any affected Mortgage Loan in connection with a breach of such
representations and warranties if either the Mortgage Loan Seller or Bank of
America, as applicable, defaults on its obligation to do so. The Mortgage Loan
Seller and Bank of America will be the sole Warranting Parties (as defined in
the Prospectus) in respect of the Mortgage Loans, with the Mortgage Loan Seller
being the sole Warranting Party with respect to the NationsBank Mortgage Loans
and Bank of America being the sole Warranting Party with respect to the Bank of
America Mortgage Loans (except as described in the last sentence of the second
preceding paragraph). See "The Pooling and Servicing
Agreements -- Representations and Warranties; Repurchases" in the accompanying
prospectus. In addition, each of the foregoing representations and warranties by
the Mortgage Loan Seller or Bank of America has been made as of the Trust
Formation Date or such earlier date specifically provided in the related
representation and warranty, and neither the Mortgage Loan Seller nor Bank of
America will be obligated to cure or repurchase any Mortgage Loan due to any
breach arising from events subsequent to the date as of which such
representation or warranty was made.
In the event that following the Effective Time, NationsBank, N.A. and Bank
of America merge, the Surviving Mortgage Loan Seller will become the successor
to the Mortgage Loan Seller, in all respects as regards to any cure/repurchase
obligation of a NationsBank Mortgage Loan, and to Bank of America, in all
respects as regards to any cure/repurchase obligation of a Bank of America
Mortgage Loan. See "-- The Mortgage Loan Seller and Bank of America" above.
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CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued, as adjusted for the
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the Offered Certificates, a Mortgage Loan may be
removed from the Mortgage Pool if the Depositor deems such removal necessary or
appropriate or if it is prepaid. A limited number of other mortgage loans may be
included in the Mortgage Pool prior to the issuance of the Offered Certificates,
unless including such mortgage loans would materially alter the characteristics
of the Mortgage Pool as described herein. The Depositor believes that the
information set forth herein will be representative of the characteristics of
the Mortgage Pool as it will be constituted at the time the Offered Certificates
are issued, although the range of Mortgage Rates and maturities, as well as the
other characteristics of the Mortgage Loans described herein, may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Delivery Date and
will be filed, together with the Pooling Agreement, with the Securities and
Exchange Commission within fifteen days after the initial issuance of the
Offered Certificates. In the event Mortgage Loans are removed from or added to
the Mortgage Pool as set forth in the preceding paragraph, such removal or
addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will each be required to service and administer the respective
Mortgage Loans for which it is responsible, in the best interests and for the
benefit of the Certificateholders, in accordance with any and all applicable
laws, the terms of the Pooling Agreement, related insurance policies and the
respective Mortgage Loans and, to the extent consistent with the foregoing, the
following standard (the "Servicing Standard"): (a) in the same manner in which,
and with the same care, skill, prudence and diligence with which, the Master
Servicer or Special Servicer, as the case may be, generally services and
administers similar mortgage loans or assets, as applicable, for third parties
or generally services and administers similar mortgage loans or assets, as
applicable, held in its own portfolio, whichever servicing procedure is of a
higher standard; (b) with a view to the timely collection of all scheduled
payments of principal and interest under the Mortgage Loans or, if a Mortgage
Loan comes into and continues in default and if, in the good faith and
reasonable judgment of the Special Servicer, no satisfactory arrangements can be
made for the collection of the delinquent payments, the maximization of the
recovery on such Mortgage Loan to the Certificateholders (collectively) on a
present value basis; and (c) without regard to (i) any relationship that the
Master Servicer or the Special Servicer, as the case may be, or any affiliate
thereof may have with any related borrower; (ii) the ownership of any
Certificate by the Master Servicer or the Special Servicer, as the case may be,
or any affiliate thereof; (iii) the Master Servicer's obligation to make
Advances (as defined herein); (iv) the Special Servicer's obligation to make (or
to direct the Master Servicer to make) Servicing Advances (as defined herein);
(v) the right of the Master Servicer or the Special Servicer, as the case may
be, or any affiliate thereof to receive compensation for its services or
reimbursement of costs under the Pooling Agreement or with respect to any
particular transaction; and (vi) the servicing of other mortgage loans by the
Master Servicer or the Special Servicer, as the case may be.
In general, the Master Servicer will be responsible for the servicing and
administration of all the Mortgage Loans as to which no Servicing Transfer Event
(as defined herein) has occurred and all Corrected Mortgage Loans (as defined
herein), and the Special Servicer will be obligated to service and administer
each Mortgage Loan (other than a Corrected Mortgage Loan) as to which a
Servicing Transfer Event has occurred (each, a "Specially Serviced Mortgage
Loan") and each Mortgaged Property acquired on behalf of the Certificateholders
in respect of a defaulted Mortgage Loan through foreclosure, deed-in-lieu of
foreclosure or otherwise (upon acquisition, an "REO Property"). A "Servicing
Transfer Event" with respect to any Mortgage Loan consists of any of the
following events: (i) the related borrower has failed to make when due
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any Balloon Payment, which failure has continued, or the Master Servicer
determines in its good faith and reasonable judgment will continue, unremedied
for 30 days; (ii) the related borrower has failed to make when due any Monthly
Payment (other than a Balloon Payment) or any other payment required under the
related Mortgage Note or the related Mortgage(s), which failure has continued,
or the Master Servicer determines in its good faith and reasonable judgment will
continue, unremedied for 60 days; (iii) the Master Servicer has determined in
its good faith and reasonable judgment that a default in the making of a Monthly
Payment (including a Balloon Payment) or any other payment required under the
related Mortgage Note or the related Mortgage(s) is likely to occur within 30
days and is likely to remain unremedied for at least 60 days or, in the case of
a Balloon Payment, for at least 30 days; (iv) there shall have occurred a
default under the related loan documents, other than as described in clause (i)
or (ii) above, that may, in the Master Servicer's good faith and reasonable
judgment, materially impair the value of the related Mortgaged Property as
security for the Mortgage Loan or otherwise materially and adversely affect the
interests of Certificateholders, which default has continued unremedied for the
applicable cure period under the terms of the Mortgage Loan (or, if no cure
period is specified, 60 days); (v) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the related borrower and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; (vi)
the related borrower shall have consented to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to such borrower or
of or relating to all or substantially all of its property; (vii) the related
borrower shall have admitted in writing its inability to pay its debts generally
as they become due, filed a petition to take advantage of any applicable
insolvency or reorganization statute, made an assignment for the benefit of its
creditors, or voluntarily suspended payment of its obligations; or (viii) the
Master Servicer shall have received notice of the commencement of foreclosure or
similar proceedings with respect to the related Mortgaged Property or
Properties. The Master Servicer shall continue to collect information and
prepare all reports to the Trustee required under the Pooling Agreement with
respect to any Specially Serviced Mortgage Loans and REO Properties, and further
to render incidental services with respect to any Specially Serviced Mortgage
Loans and REO Properties as are specifically provided for in the Pooling
Agreement. The Master Servicer and the Special Servicer shall not have any
responsibility for the performance by each other of their respective duties
under the Pooling Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities) at such time as such of the following as
are applicable occur with respect to the circumstances identified above that
caused the Mortgage Loan to be characterized as a Specially Serviced Mortgage
Loan (and provided that no other Servicing Transfer Event then exists):
(w) with respect to the circumstances described in clauses (i) and
(ii) of the preceding paragraph, the related borrower has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to the circumstances described in clauses (iii), (v),
(vi) and (vii) of the preceding paragraph, such circumstances cease to
exist in the good faith and reasonable judgment of the Special Servicer;
(y) with respect to the circumstances described in clause (iv) of the
preceding paragraph, such default is cured; and
(z) with respect to the circumstances described in clause (viii) of
the preceding paragraph, such proceedings are terminated.
The Special Servicer will prepare a report (an "Asset Status Report") for
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan not later
than 30 days after the servicing of such Mortgage Loan
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is transferred to the Special Servicer. Each Asset Status Report will be
delivered to the Directing Certificateholder (as defined below), the Master
Servicer and the Rating Agencies. The Directing Certificateholder may object to
any Asset Status Report within 10 business days of receipt; provided, however,
that the Special Servicer shall implement the recommended action as outlined in
such Asset Status Report if it makes an affirmative determination that such
objection is not in the best interest of all the Certificateholders. In
connection with making such affirmative determination, the Special Servicer may
request a vote by all Certificateholders, but shall in any event take the
recommended action after making such affirmative determination. If the Directing
Certificateholder does not disapprove an Asset Status Report within 10 business
days, the Special Servicer shall implement the recommended action as outlined in
such Asset Status Report. If the Directing Certificateholder disapproves such
Asset Status Report and the Special Servicer has not made the affirmative
determination described above, the Special Servicer will revise such Asset
Status Report as soon as practicable thereafter, but in no event later than 30
days after such disapproval. The Special Servicer will revise such Asset Status
Report until the Directing Certificateholder fails to disapprove such revised
Asset Status Report as described above or until the Special Servicer, in
accordance with the Servicing Standard makes a determination that such objection
is not in the best interests of the Certificateholders.
The "Directing Certificateholder" is the Controlling Class
Certificateholder selected by the majority Certificateholder of the Controlling
Class, as certified by the Trustee from time to time; provided, however, that
(i) absent such selection, or (ii) until a Directing Certificateholder is so
selected, or (iii) upon receipt of a notice from a majority of the Controlling
Class, by Certificate Principal Balance, that a Directing Certificateholder is
no longer designated, the Controlling Class Certificateholder that owns the
largest aggregate Certificate Balance of the Controlling Class will be the
Directing Certificateholder.
A "Controlling Class Certificateholder" is each Holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified to
the Trustee from time to time by such Holder (or Certificate Owner).
The "Controlling Class" will be, as of any date of determination, the
outstanding Class of Sequential Pay Certificates with the lowest payment
priority (the Class A Certificates being treated as a single class for this
purpose) that has a then outstanding Certificate Balance at least equal to 25%
of its initial Certificate Balance (or, if no Class of Sequential Pay
Certificates has a Certificate Balance at least equal to 25% of its initial
Certificate Balance, then the Controlling Class shall be the outstanding Class
of Sequential Pay Certificates with the largest outstanding Certificate
Balance). The Controlling Class as of the Delivery Date will be the Class K
Certificates.
The Special Servicer will not be required to take or refrain from taking
any action pursuant to instructions from the Directing Certificateholder that
would cause it to violate applicable law, the Pooling Agreement, including the
Servicing Standards, or the REMIC Provisions.
The Master Servicer and Special Servicer will each be required to service
and administer any group of related Cross-Collateralized Mortgage Loans as a
single Mortgage Loan as and when it deems necessary and appropriate, consistent
with the Servicing Standard. If any Cross-Collateralized Mortgage Loan becomes a
Specially Serviced Mortgage Loan, then each other Mortgage Loan that is
cross-collateralized with it shall also become a Specially Serviced Mortgage
Loan. Similarly, no Cross-Collateralized Mortgage Loan shall subsequently become
a Corrected Mortgage Loan, unless and until all Servicing Transfer Events in
respect of each other Mortgage Loan with which it is cross-collateralized, are
remediated or otherwise addressed as contemplated above.
Set forth below is a description of certain pertinent provisions of the
Pooling Agreement relating to the servicing of the Mortgage Loans. Reference is
also made to the Prospectus, in particular to the section captioned "The Pooling
and Servicing Agreements," for additional important information regarding the
terms and conditions of the Pooling Agreement as such terms and conditions
relate to the rights and obligations of the Master Servicer and the Special
Servicer thereunder.
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THE MASTER SERVICER
Midland Loan Services, L.P. was organized under the laws of Missouri in
1992 as a limited partnership. On April 3, 1998, substantially all of the assets
of Midland Loan Services, L.P., were acquired by Midland Loan Services, Inc.
("Midland"), a newly formed, wholly owned subsidiary of PNC Bank, National
Association. Midland is a real estate financial services company that provides
loan servicing and asset management for large pools of commercial and
multifamily real estate assets and that originates commercial real estate loans.
Midland's address is 210 West 10th Street, 6th Floor, Kansas City, Missouri
64105. Midland will serve as the Master Servicer under the Pooling Agreement.
As of July 31, 1998, Midland and its affiliates were responsible for
servicing approximately 12,586 commercial and multifamily loans with an
aggregate principal balance of approximately $29.6 billion, the collateral for
which is located in all 50 states, Puerto Rico and the District of Columbia.
With respect to such loans, approximately 10,250 loans with an aggregate
principal balance of approximately $20.5 billion pertain to commercial and
multifamily mortgage-backed securities. Midland has been approved as a master
and special servicer for investment grade-rated commercial and multifamily
mortgage-backed securities by Fitch IBCA, Inc. and Moody's. The information set
forth herein concerning the Master Servicer has been provided by it and neither
the Depositor nor the Underwriter makes any representation or warranty as to the
accuracy or completeness of such information.
THE SPECIAL SERVICER
Lennar Partners, Inc., a Florida corporation, a subsidiary of LNR Property
Corporation ("LNR"), will serve as the Special Servicer and in such capacity
will be responsible for servicing the Specially Serviced Mortgage Loans. The
principal executive offices of the Special Servicer are located at 760 N.W.
107th Avenue, Miami, Florida 33172, and its telephone number is (305) 485-2000.
LNR, its subsidiaries and affiliates are involved in the real estate investment
and management business and engage principally in (i) developing, acquiring and
actively managing commercial and residential multi-family rental real estate,
(ii) acquiring portfolios of commercial mortgage loans and properties and
providing workout, property management and asset sale services with regard to
the portfolio assets, (iii) acting as special servicer with regard to commercial
mortgage pools which are the subject of commercial mortgage backed securities
("CMBS"), (iv) acquiring unrated and rated CMBS issued with regard to commercial
mortgage pools as to which the Special Servicer acts as special servicer, and
(v) making mortgage loans to companies and individuals engaged in commercial
real estate activities and to developers and builders of residential
communities. The Special Servicer has regional offices located across the
country in Florida, Georgia, Oregon and California. As of July 1, 1998, the
Special Servicer and its affiliates were managing a portfolio including over
7,800 assets in most states with an original face value of over $24.4 billion,
most of which are commercial real estate assets. Included in this managed
portfolio are $18.6 billion of commercial real estate assets representing 41
securitization transactions, for which the Special Servicer is the master
servicer or special servicer. The Special Servicer and its affiliates own and
are in the business of acquiring assets similar in type to the assets of the
Trust Fund. Accordingly, the assets of the Special Servicer and its affiliates
may, depending upon the particular circumstances, including the nature and
location of such assets, compete with the Mortgaged Properties for tenants,
purchasers, financing and so forth.
The information set forth herein concerning the Special Servicer has been
provided by the Special Servicer, and neither the Depositor nor the Underwriter
makes any representation or warranty as to the accuracy or completeness of such
information.
SUB-SERVICERS
The Master Servicer and Special Servicer may each delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that the Master
Servicer or Special Servicer, as the case may be, will remain obligated under
the Pooling Agreement for such delegated duties. A majority of the Mortgage
Loans are currently being primary serviced by third-party servicers that are
entitled to and will become Sub-Servicers of such loans on behalf of the
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Master Servicer. Each sub-servicing agreement between the Master Servicer or
Special Servicer, as the case may be, and a Sub-Servicer (each, a "Sub-Servicing
Agreement") must provide that, if for any reason the Master Servicer or Special
Servicer, as the case may be, is no longer acting in such capacity, the Trustee
or any successor to such Master Servicer or Special Servicer may (i) assume such
party's rights and obligations under such Sub-Servicing Agreement, (ii) enter
into a new Sub-Servicing Agreement with such Sub-Servicer on such terms as the
Trustee or such other successor Master Servicer or Special Servicer and such
Sub-Servicer shall mutually agree or (iii) terminate such Sub-Servicer without
cause (but only upon payment to the Sub-Servicer of specified compensation). The
Master Servicer and Special Servicer will each be required to monitor the
performance of Sub-Servicers retained by it.
The Master Servicer and Special Servicer will each be solely liable for all
fees owed by it to any Sub-Servicer retained thereby, irrespective of whether
its compensation pursuant to the Pooling Agreement is sufficient to pay such
fees. Each Sub-Servicer retained thereby will be reimbursed by the Master
Servicer or Special Servicer, as the case may be, for certain expenditures which
it makes, generally to the same extent the Master Servicer or Special Servicer
would be reimbursed under the Pooling Agreement. See " -- Servicing and Other
Compensation and Payment of Expenses" herein.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its master servicing activities will be the Master Servicing Fee. The "Master
Servicing Fee" will be payable monthly on a loan-by-loan basis from amounts
received in respect of interest on each Mortgage Loan (including Specially
Serviced Mortgage Loans and Mortgage Loans as to which the related Mortgaged
Property has become an REO Property), will accrue at the applicable Master
Servicing Fee Rate and will be computed on the basis of the same principal
amount and for the same number of days respecting which any related interest
payment on the related Mortgage Loan is computed under the terms of the related
Mortgage Note and applicable law. The "Master Servicing Fee Rate" will range
from 0.06075% to 0.35075% per annum, on a loan-by-loan basis, with a weighted
average Master Servicing Fee Rate of 0.13664% per annum as of the Cut-off Date.
In the event that Midland shall resign or be terminated as the Master Servicer
and a successor Master Servicer shall agree for any reason to perform services
of the Master Servicer for an amount (the "Successor Servicer Retained Fee")
less than the Master Servicing Fee, no part of any excess of the Master
Servicing Fee over the Successor Servicer Retained Fee will be available for
payment to Certificateholders. As additional servicing compensation, the Master
Servicer will be entitled to retain Prepayment Interest Excesses (as described
below) collected on the Mortgage Loans. In addition, the Master Servicer will be
authorized to invest or direct the investment of funds held in any and all
accounts maintained by it that constitute part of the Certificate Account, in
certain government securities and other investment grade obligations specified
in the Pooling Agreement ("Permitted Investments"), and the Master Servicer will
be entitled to retain any interest or other income earned on such funds, but
will be required to cover any losses from its own funds without any right to
reimbursement.
If a borrower prepays a Mortgage Loan, in whole or in part, after the Due
Date but on or before the Determination Date in any calendar month, the amount
of interest (net of related Master Servicing Fees) accrued on such prepayment
from such Due Date to, but not including, the date of prepayment (or any later
date through which interest accrues) will, to the extent actually collected,
constitute a "Prepayment Interest Excess". Conversely, if a borrower prepays a
Mortgage Loan, in whole or in part, after the Determination Date in any calendar
month and does not pay interest on such prepayment through the end of such
calendar month, then the shortfall in a full month's interest (net of related
Master Servicing Fees and any Excess Interest) on such prepayment will
constitute a "Prepayment Interest Shortfall". Prepayment Interest Excesses
collected on the Mortgage Loans will be retained by the Master Servicer as
additional servicing compensation. The Master Servicer will cover, out of its
own funds, any Prepayment Interest Shortfalls incurred with respect to the
Mortgage Loans during any Collection Period, but only to the extent of
Prepayment Interest Excesses and a portion of its aggregate Master Servicing Fee
for the related Collection Period, which portion is, in the case of each and
every Mortgage Loan, calculated at 0.020% per annum.
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The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Standby Fee, the Special Servicing
Fee, the Workout Fee and the Liquidation Fee. The "Standby Fee" will accrue with
respect to each Mortgage Loan (including a Specially Serviced Mortgage Loan and
a Mortgage Loan as to which the related Mortgaged Property has become an REO
Property) in the same manner as the Master Servicing Fee, and will be payable by
the Master Servicer out of its Master Servicing Fees received with respect to
such Mortgage Loan. The "Special Servicing Fee" will accrue with respect to each
Specially Serviced Mortgage Loan and each Mortgage Loan as to which the related
Mortgaged Property has become an REO Property, at a rate equal to 0.25% per
annum (the "Special Servicing Fee Rate"), on the basis of the same principal
amount and for the same number of days respecting which any related interest
payment due or deemed due on such Mortgage Loan is computed under the related
Mortgage Loan and applicable law. All such Special Servicing Fees will be
payable monthly from general collections on the Mortgage Loans and any REO
Properties on deposit in the Certificate Account from time to time. A "Workout
Fee" will in general be payable with respect to each Corrected Mortgage Loan. As
to each Corrected Mortgage Loan, the Workout Fee will be payable out of, and
will be calculated by application of a "Workout Fee Rate" of 1.0% to, each
collection of interest (other than Default Interest (as defined below)) and
principal (including scheduled payments, prepayments, Balloon Payments and
payments at maturity) received on such Mortgage Loan for so long as it remains a
Corrected Mortgage Loan. The Workout Fee with respect to any Corrected Mortgage
Loan will cease to be payable if such loan again becomes a Specially Serviced
Mortgage Loan or if the related Mortgaged Property becomes an REO Property;
provided that a new Workout Fee will become payable if and when such Mortgage
Loan again becomes a Corrected Mortgage Loan. If the Special Servicer is
terminated (other than for cause) or resigns, it shall retain the right to
receive any and all Workout Fees payable with respect to Mortgage Loans that
became Corrected Mortgage Loans during the period that it acted as Special
Servicer and were still such at the time of such termination or resignation (and
the successor Special Servicer shall not be entitled to any portion of such
Workout Fees), in each case until the Workout Fee for any such loan ceases to be
payable in accordance with the preceding sentence. A "Liquidation Fee" will be
payable with respect to each Specially Serviced Mortgage Loan as to which the
Special Servicer obtains a full or discounted payoff with respect thereto from
the related borrower and, except as otherwise described below, with respect to
any Specially Serviced Mortgage Loan or REO Property as to which the Special
Servicer receives any Liquidation Proceeds. As to each such Specially Serviced
Mortgage Loan and REO Property, the Liquidation Fee will be payable from, and
will be calculated by application of a "Liquidation Fee Rate" of 1.0% to, the
related payment or proceeds (other than any portion thereof that represents
accrued but unpaid Default Interest). Notwithstanding anything to the contrary
described above, no Liquidation Fee will be payable based on, or out of,
Liquidation Proceeds received in connection with (i) the repurchase of any
Mortgage Loan by the Mortgage Loan Seller or Bank of America, as the case may
be, for a breach of representation or warranty or for defective or deficient
Mortgage Loan documentation so long as such repurchase occurs within the time
required under the Pooling Agreement, (ii) the purchase of any Specially
Serviced Mortgage Loan or REO Property by the Master Servicer, the Special
Servicer or any holder or holders of Certificates evidencing a majority interest
in the Controlling Class or (iii) the purchase of all of the Mortgage Loans and
REO Properties by the Master Servicer or any holder or holders of Certificates
evidencing a majority interest in the Controlling Class in connection with the
termination of the Trust. If, however, Liquidation Proceeds are received with
respect to any Corrected Mortgage Loan and the Special Servicer is properly
entitled to a Workout Fee, such Workout Fee will be payable based on and out of
the portion of such Liquidation Proceeds that constitute principal and/or
interest. The Special Servicer will be authorized to invest or direct the
investment of funds held in any accounts maintained by it that constitute part
of the Certificate Account, in Permitted Investments, and the Special Servicer
will be entitled to retain any interest or other income earned on such funds,
but will be required to cover any losses from its own funds without any right to
reimbursement.
The Master Servicer and the Special Servicer will each be responsible for
the fees of any Sub-Servicers retained by it (without right of reimbursement
therefor). As additional servicing compensation, the Sub-Servicers (or, to the
extent such Sub-Servicers are not entitled thereto, the Master Servicer) with
respect to Mortgage Loans that are not Specially Serviced Mortgage Loans, and
the Special Servicer with respect to Specially Serviced Mortgage Loans,
generally will be entitled to retain all assumption and modification fees,
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"Default Interest" (that is, interest in excess of interest at the related
Mortgage Rate accrued as a result of a default) and late payment charges (to the
extent such Default Interest and/or late payment charges are not otherwise
applied to cover interest on Advances if received on a Specially Serviced
Mortgage Loan), charges for beneficiary statements or demands and any similar
fees, in each case to the extent actually paid by the borrowers with respect to
such Mortgage Loans (and, accordingly, such amounts will not be available for
distribution to Certificateholders). The respective Sub-Servicers (or, to the
extent such Sub-Servicers are not entitled thereto, the Master Servicer) shall
be entitled to receive all amounts collected for checks returned for
insufficient funds with respect to all Mortgage Loans (including Specially
Serviced Mortgage Loans) as additional servicing compensation. Default Interest
and late payment charges accrued in respect of any Mortgage Loan after it has
become a Specially Serviced Mortgage Loan are to be applied to cover interest on
Advances in respect of such Mortgage Loan. In addition, collections on a
Mortgage Loan are to be applied to interest (at the related Mortgage Rate) and
principal then due and owing prior to being applied to Default Interest and late
payment charges.
The Master Servicer and the Special Servicer will, in general, each be
required to pay its overhead and any general and administrative expenses
incurred by it in connection with its servicing activities under the Pooling
Agreement, and neither will be entitled to reimbursement therefor except as
expressly provided in the Pooling Agreement. In general, customary, reasonable
and necessary "out of pocket" costs and expenses incurred by the Master Servicer
or Special Servicer in connection with the servicing of a Mortgage Loan after a
default, delinquency or other unanticipated event, or in connection with the
administration of any REO Property, will constitute "Servicing Advances"
(Servicing Advances and P&I Advances, collectively, "Advances") and, in all
cases, will be reimbursable from future payments and other collections,
including in the form of Insurance Proceeds, Condemnation Proceeds and
Liquidation Proceeds, on or in respect of the related Mortgage Loan or REO
Property ("Related Proceeds"). Notwithstanding the foregoing, the Master
Servicer and the Special Servicer will each be permitted to pay, or to direct
the payment of, certain servicing expenses directly out of the Certificate
Account and at times without regard to the relationship between the expense and
the funds from which it is being paid (including in connection with the
remediation of any adverse environmental circumstance or condition at a
Mortgaged Property or an REO Property, although in such specific circumstances
the Master Servicer may advance the costs thereof). In addition, the Special
Servicer may from time to time require the Master Servicer to reimburse it for
any Servicing Advance made thereby (in which case, such Servicing Advance will
be deemed to have been made by the Master Servicer). Furthermore, if the Special
Servicer (i) is required under the Pooling Agreement to direct the Master
Servicer to make a Servicing Advance or (ii) is otherwise aware a reasonable
period in advance that it is reasonably likely that the Special Servicer will
incur a cost or expense that will, when incurred, constitute a Servicing
Advance, the Special Servicer is required to (in the case of clause (i)
preceding), or is required to use reasonable efforts to (in the case of clause
(ii) preceding), request that the Master Servicer make such Advance, such
request to be made in writing and in a timely manner that does not adversely
affect the interests of any Certificateholder; provided, however, that the
Special Servicer is obligated to make any Servicing Advance in an emergency or
in circumstances where the failure to make the Advance in lieu of requesting
that the Master Servicer make such Advance would be inconsistent with the
Servicing Standard; and provided, further, that the Special Servicer is
obligated to make any Servicing Advance with respect to Specially Serviced
Mortgage Loans and REO Properties that it fails to timely request the Master
Servicer to make. The Special Servicer will, with limited exception as described
in the preceding sentence, be relieved of any obligations with respect to an
Advance that it timely requests the Master Servicer to make (regardless of
whether or not the Master Servicer makes that Advance). The Master Servicer will
be required to make any such Servicing Advance that it is requested by the
Special Servicer to so make within five business days of the Master Servicer's
receipt of such request.
If the Master Servicer or Special Servicer is required under the Pooling
Agreement to make a Servicing Advance, but neither does so within 15 days after
such Servicing Advance is required to be made, then the Trustee will, if it has
actual knowledge of such failure, be required to give the defaulting party
notice of such failure and, if such failure continues for one more business day,
the Trustee will be required to make such Servicing Advance.
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The Master Servicer, the Special Servicer and the Trustee will be obligated
to make Servicing Advances only to the extent that such Servicing Advances are,
in the reasonable and good faith judgment of the Master Servicer, the Special
Servicer or the Trustee, as the case may be, ultimately recoverable from Related
Proceeds (any Servicing Advance not so recoverable, a "Nonrecoverable Servicing
Advance").
The foregoing paragraph notwithstanding, the Master Servicer is required
(at the direction of the Special Servicer if a Specially Serviced Mortgage Loan
or an REO Property is involved) to pay directly out of the Certificate Account
any servicing expense that, if paid by the Master Servicer or the Special
Servicer, would constitute a Nonrecoverable Servicing Advance; provided that the
Master Servicer (or the Special Servicer, if a Specially Serviced Mortgage Loan
or an REO Property is involved) has determined in accordance with the Servicing
Standard that making such payment is in the best interests of the
Certificateholders (as a collective whole), as evidenced by an officer's
certificate delivered promptly to the Trustee, the Depositor and the Rating
Agencies, setting forth the basis for such determination and accompanied by any
supporting information the Master Servicer or the Special Servicer may have
obtained.
As and to the extent described herein, the Master Servicer, the Special
Servicer and the Trustee are each entitled to receive interest at the
Reimbursement Rate on Servicing Advances made thereby. See "The Pooling and
Servicing Agreements -- Certificate Account" and "-- Servicing Compensation and
Payment of Expenses" in the Prospectus and "Description of the
Certificates -- P&I Advances" in this prospectus supplement.
EVIDENCE AS TO COMPLIANCE
On or before April 30 of each year, beginning April 30, 1999, each of the
Master Servicer and the Special Servicer, at its expense, will be required to
cause a firm of independent public accountants that is a member of the American
Institute of Certified Public Accountants to furnish a statement to the
Depositor and the Trustee to the effect that such firm has examined such
documents and records as it has deemed necessary and appropriate relating to the
Master Servicer's or Special Servicer's, as the case may be, servicing of the
Mortgage Loans under the Pooling Agreement or servicing of mortgage loans
similar to the Mortgage Loans under substantially similar agreements for the
preceding calendar year (or during the period from the date of commencement of
the Master Servicer's or Special Servicer's, as the case may be, duties under
the Pooling Agreement until the end of such preceding calendar year in the case
of the first such certificate) and that the assertion of the management of the
Master Servicer or Special Servicer, as the case may be, that it maintained an
effective internal control system over servicing of the Mortgage Loans or
similar mortgage loans is fairly stated in all material respects, based upon
established criteria, which statement meets the standards applicable to
accountants' reports intended for general distribution.
The Pooling Agreement will also require that, on or before a specified date
in each year, each of the Master Servicer and the Special Servicer deliver to
the Trustee a statement signed by one or more officers thereof to the effect
that the Master Servicer or Special Servicer, as the case may be, has fulfilled
its material obligations under the Pooling Agreement in all material respects
throughout the preceding calendar year or the portion thereof during which the
Certificates were outstanding.
MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
The Master Servicer and the Special Servicer each may, consistent with the
Servicing Standard, agree to any modification, waiver or amendment of any term
of, forgive or defer the payment of interest on and principal of, permit the
release, addition or substitution of collateral securing, and/or permit the
release of the borrower on or any guarantor of any Mortgage Loan it is required
to service and administer, without the consent of the Trustee or any
Certificateholder, subject, however, to each of the following limitations,
conditions and restrictions:
(i) with limited exception, neither the Master Servicer nor the
Special Servicer may agree to any modification, waiver or amendment of any
term of, or take any of the other above referenced actions with respect to,
any Mortgage Loan it is required to service and administer that would
affect the amount or timing of any related payment of principal, interest
or other amount payable thereunder or, in the Master
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Servicer's or the Special Servicer's good faith and reasonable judgment,
would materially alter the security for such Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon; provided, however, the
Special Servicer may agree to any modification, waiver or amendment of any
term of, or take any of the other above referenced actions with respect to,
a Specially Serviced Mortgage Loan that would have any such effect, but
only if a material default on such Mortgage Loan has occurred or, in the
Special Servicer's reasonable and good faith judgment, a default in respect
of payment on such Mortgage Loan is reasonably foreseeable, and such
modification, waiver, amendment or other action is reasonably likely to
produce a greater recovery to Certificateholders (collectively) on a
present value basis than would liquidation as certified to the Trustee in
an officer's certificate;
(ii) the Special Servicer may not, in connection with any particular
extension, extend the maturity date of a Mortgage Loan beyond a date that
is two years prior to the Rated Final Distribution Date, or beyond a date
which is 10 years prior to the expiration date of any related Ground Lease;
(iii) unless the proviso to clause (i) above applies, neither the
Master Servicer nor the Special Servicer may make or permit any
modification, waiver or amendment of any term of, or take any of the other
above referenced actions with respect to, any Mortgage Loan that would
constitute a "significant modification" of such Mortgage Loan within the
meaning of Treasury Regulations Section 1.860G-2(b) (neither the Master
Servicer nor the Special Servicer shall be liable for judgments as regards
decisions made under this subsection which were made in good faith and,
unless it would constitute bad faith or gross negligence to do so, each of
the Master Servicer and the Special Servicer may rely on opinions of
counsel in making such decisions);
(iv) neither the Master Servicer nor the Special Servicer may permit
any borrower to add or substitute any collateral for an outstanding
Mortgage Loan, which collateral constitutes real property, unless (A) the
Special Servicer shall have first determined in accordance with the
Servicing Standard, based upon a Phase I environmental assessment (and such
additional environmental testing as the Special Servicer deems necessary
and appropriate), that such additional or substitute collateral is in
compliance with applicable environmental laws and regulations and that
there are no circumstances or conditions present with respect to such new
collateral relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment,
clean-up or remediation would be required under any then applicable
environmental laws and/or regulations and (B) in the case of substitutions
of collateral only, the Master Servicer or the Special Servicer, as the
case may be, shall have obtained written confirmation from each Rating
Agency that such substitution will not result in the withdrawal, downgrade
or qualification of any rating then assigned to any Class of Certificates;
and
(v) with limited exceptions, including a permitted defeasance as
described above under "Description of the Mortgage Pool -- Certain
Characteristics of the Mortgage Loans as Defeasance," neither the Master
Servicer nor the Special Servicer shall release any collateral securing an
outstanding Mortgage Loan;
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) (ii), (iv) and (v) above will not apply to any of the above
referenced actions in respect of any term of any Mortgage Loan that is required
under the terms of such Mortgage Loan in effect on the Trust Formation Date, and
(y) notwithstanding clauses (i) through (v) above, neither the Master Servicer
nor the Special Servicer will be required to oppose the confirmation of a plan
in any bankruptcy or similar proceeding involving a borrower if in their
reasonable and good faith judgment such opposition would not ultimately prevent
the confirmation of such plan or one substantially similar.
SALE OF DEFAULTED MORTGAGE LOANS
The Pooling Agreement grants to the Master Servicer, the Special Servicer
and any holder or holders of Certificates evidencing a majority interest in the
Controlling Class a right to purchase from the Trust certain defaulted Mortgage
Loans in the priority described below. If the Special Servicer has determined,
in its good faith and reasonable judgment, that any defaulted Mortgage Loan will
become the subject of a foreclosure sale or similar proceeding and that the sale
of such Mortgage Loan under the circumstances described in this
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paragraph is in accordance with the Servicing Standard, the Special Servicer
will be required to promptly so notify in writing the Trustee and the Master
Servicer, and the Trustee will be required, within 10 days after receipt of such
notice, to notify the holder (or holders) of the Controlling Class. A single
holder or particular group of holders of Certificates evidencing a majority
interest in the Controlling Class may, at its or their option, purchase any such
defaulted Mortgage Loan from the Trust, at a price equal to the applicable
Purchase Price. If such Certificateholder(s) has (have) not purchased such
defaulted Mortgage Loan within 15 days of its having received notice in respect
thereof, either the Special Servicer or the Master Servicer, in that order, may,
at its option, purchase such defaulted Mortgage Loan from the Trust, at a price
equal to the applicable Purchase Price.
The Special Servicer may offer to sell any defaulted Mortgage Loan that has
not otherwise been purchased as described in the prior paragraph, if and when
the Special Servicer determines, consistent with the Servicing Standard, that
such a sale would be in the best economic interests of the Trust. Such offer is
to be made in a commercially reasonable manner for a period of not less than 30
days. Unless the Special Servicer determines that acceptance of any offer would
not be in the best economic interests of the Trust, the Special Servicer shall
accept the highest cash offer received from any person that constitutes a fair
price (which may be less than the Purchase Price) for such Mortgage Loan;
provided that none of the Special Servicer, the Master Servicer, the Depositor,
the Mortgage Loan Seller, Bank of America, the holder of any Certificate or any
affiliate of any such party (each, an "Interested Person") may purchase such
Mortgage Loan (or any REO Property acquired in respect thereof) for less than
the Purchase Price unless at least two other offers are received from
independent third parties at a price that is less than the Purchase Price and
the price proposed by any Interested Persons; and provided, further, that
neither the Trustee nor an affiliate thereof may make an offer for any such
Mortgage Loan. See also "The Pooling and Servicing Agreements--Realization Upon
Defaulted Mortgage Loans" in the accompanying prospectus.
REO PROPERTIES
If title to any Mortgaged Property is acquired by the Special Servicer on
behalf of the Certificateholders, the Special Servicer, on behalf of such
holders, will be required to sell the Mortgaged Property not later than the end
of third calendar year following the year of acquisition, unless (i) the
Internal Revenue Service grants an extension of time to sell such property (an
"REO Extension") or (ii) the Special Servicer obtains an opinion of independent
counsel generally to the effect that the holding of the property subsequent to
the end of the third calendar year following the year in which such acquisition
occurred will not result in the imposition of a tax on the Trust or cause REMIC
I, REMIC II or REMIC III to fail to qualify as a REMIC under the Code. Subject
to the foregoing, the Special Servicer will generally be required to solicit
cash offers for any Mortgaged Property so acquired in such a manner as will be
reasonably likely to realize a fair price for such property. The Special
Servicer may retain an independent contractor to operate and manage any REO
Property; however, the retention of an independent contractor will not relieve
the Special Servicer of its obligations with respect to such REO Property.
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially feasible, maximize the Trust's net after-tax proceeds from
such property. The Special Servicer could determine that it would not be
commercially feasible to manage and operate such property in a manner that would
avoid the imposition of a tax on "net income from foreclosure property".
Generally, net income from foreclosure property means income which does not
qualify as "rents from real property" within the meaning of Code Section
856(c)(3)(A) and Treasury regulations thereunder or as income from the sale of
such REO Property. "Rents from real property" do not include the portion of any
rental based on the net income or gain of any tenant or sub-tenant. No
determination has been made whether rent on any of the Mortgaged Properties
meets this requirement. "Rents from real property" include charges for services
customarily furnished or rendered in connection with the rental of real
property, whether or not the charges are separately stated. Services furnished
to the tenants of a particular building will be considered as customary if, in
the geographic market in which the building is located, tenants in buildings
which are of similar Class are customarily provided with the service. No
determination has been made whether the services furnished to the tenants of
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the Mortgaged Properties are "customary" within the meaning of applicable
regulations. It is therefore possible that a portion of the rental income with
respect to a Mortgaged Property owned by the Trust Fund, presumably allocated
based on the value of any non-qualifying services, would not constitute "rents
from real property." In addition to the foregoing, any net income from a trade
or business operated or managed by an independent contractor on a Mortgaged
Property owned by REMIC I, such as a hotel or skilled nursing care business,
will not constitute "rents from real property." Any of the foregoing types of
income instead constitute "net income from foreclosure property," which would be
taxable to REMIC I at the highest marginal federal corporate rate (currently
35%) and may also be subject to state or local taxes. Any such taxes would be
chargeable against the related income for purposes of determining the Net REO
Proceeds available for distribution to holders of Certificates. See "Certain
Federal Income Tax Consequences -- REMICs -- Prohibited Transactions Tax and
Other Taxes" in the accompanying prospectus.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
Commencing in 1999, the Master Servicer is required to perform (or cause to
be performed) physical inspections of each Mortgaged Property (other than REO
Properties and Mortgaged Properties securing Specially Serviced Mortgage Loans)
at least once every two years (or, if the related Mortgage Loan has a
then-current balance greater than $2,000,000, at least once every year). In
addition, the Special Servicer, subject to statutory limitations or limitations
set forth in the related loan documents, is required to perform a physical
inspection of each Mortgaged Property as soon as practicable after servicing of
the related Mortgage Loan is transferred thereto. The Special Servicer and the
Master Servicer will each be required to prepare (or cause to be prepared) as
soon as reasonably possible a written report of each such inspection performed
thereby describing the condition of the Mortgaged Property.
With respect to each Mortgage Loan that requires the borrower to deliver
quarterly or annual operating statements with respect to the related Mortgaged
Property, the Master Servicer or the Special Servicer, depending on which is
obligated to service such Mortgage Loan, is also required to make reasonable
efforts to collect and review such statements. However, there can be no
assurance that any operating statements required to be delivered will in fact be
so delivered, nor is the Master Servicer or the Special Servicer likely to have
any practical means of compelling such delivery in the case of an otherwise
performing Mortgage Loan.
TERMINATION OF THE SPECIAL SERVICER
The holder or holders of Certificates evidencing a majority interest in the
Controlling Class may at any time replace any Special Servicer. Such holder(s)
shall designate a replacement to so serve by the delivery to the Trustee of a
written notice stating such designation. The Trustee shall, promptly after
receiving any such notice, so notify the Rating Agencies. If the designated
replacement is acceptable to the Trustee, which approval may not be unreasonably
withheld, the designated replacement shall become the Special Servicer as of the
date the Trustee shall have received: (i) written confirmation from each Rating
Agency stating that if the designated replacement were to serve as Special
Servicer under the Pooling Agreement, the then-current rating or ratings of one
or more Classes of the Certificates would not be qualified, downgraded or
withdrawn as a result thereof; (ii) a written acceptance of all obligations of
the Special Servicer, executed by the designated replacement; and (iii) an
opinion of counsel to the effect that the designation of such replacement to
serve as Special Servicer is in compliance with the Pooling Agreement, that the
designated replacement will be bound by the terms of the Pooling Agreement and
that the Pooling Agreement will be enforceable against such designated
replacement in accordance with its terms. The existing Special Servicer shall be
deemed to have resigned simultaneously with such designated replacement's
becoming the Special Servicer under the Pooling Agreement.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Depositor originally issued its Commercial Mortgage Pass-Through
Certificates, Series 1998-2 (the "Certificates") on September 25, 1998 (the
"Trust Formation Date"), pursuant to a Pooling and Servicing Agreement, dated as
of the Cut-off Date, among the Depositor, the Master Servicer, the Special
Servicer, the Trustee, the REMIC Administrator, the Mortgage Loan Seller and the
Additional Warranting Party (the "Original Pooling Agreement"). Interests in the
trust established by the Original Pooling Agreement corresponding to the Offered
Certificates were issued to the Mortgage Loan Seller in partial consideration
for the Mortgage Loans. On and as of the Delivery Date, the Mortgage Loan Seller
will transfer such interests to the Depositor, the Depositor will transfer such
interests to the Trustee in exchange for the Offered Certificates, and the
Original Pooling Agreement will be amended and restated in accordance with its
terms to enable the issuance of the Offered Certificates. The Original Pooling
Agreement, as so amended and restated, is referred to in this Prospectus
Supplement as the "Pooling Agreement".
The Offered Certificates, together with the Private Certificates, will
represent in the aggregate the entire beneficial interest in a trust (the
"Trust"), the assets of which (such assets collectively, the "Trust Fund")
include: (i) the Mortgage Loans and all payments thereunder and proceeds thereof
received after the Cut-off Date (exclusive of payments of principal, interest
and other amounts due thereon on or before the Cut-off Date); (ii) any REO
Properties; and (iii) such funds or assets as from time to time are deposited in
the Certificate Account and the Interest Reserve Account (see "The Pooling and
Servicing Agreements -- Certificate Account" in the Prospectus).
The Certificates will consist of 15 classes (each, a "Class") to be
designated as: (i) the Class A-1 and Class A-2 Certificates (collectively, the
"Class A Certificates"); (ii) the Class B Certificates, the Class C
Certificates, the Class D Certificates, the Class E Certificates, the Class F
Certificates, the Class G Certificates, the Class H Certificates, the Class J
Certificates and the Class K Certificates (collectively with the Class A
Certificates, the "Sequential Pay Certificates"); (iii) the Class X Certificates
(the "Class X Certificates", and collectively with the Sequential Pay
Certificates, the "REMIC Regular Certificates"); and (iv) the Class R-I
Certificates, Class R-II Certificates and the Class R-III Certificates
(collectively, the "REMIC Residual Certificates"). Only the Class X, Class A-1,
Class A-2, Class B, Class C, Class D and Class E Certificates (collectively, the
"Offered Certificates") are offered hereby.
The Class F, Class G, Class H, Class J and Class K Certificates and the
REMIC Residual Certificates (collectively, the "Private Certificates") have not
been registered under the Securities Act and are not offered hereby.
Accordingly, to the extent this Prospectus Supplement contains information
regarding the terms of the Private Certificates, such information is provided
because of its potential relevance to a prospective purchaser of an Offered
Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be issued in book-entry format in
denominations of: (i) in the case of the Class A Certificates, $10,000 actual
principal amount and in any whole dollar denomination in excess thereof; (ii) in
the case of the Class X Certificates, $1,000,000 notional principal amount and
in any whole dollar denomination in excess thereof; and (iii) in the case of the
other Offered Certificates, $100,000 actual principal amount and in any whole
dollar denomination in excess thereof.
Each Class of Offered Certificates will initially be represented by one or
more Certificates registered in the name of the nominee of The Depository Trust
Company ("DTC"). The Depositor has been informed by DTC that DTC's nominee will
be Cede & Co. No beneficial owner of an Offered Certificate (each, a
"Certificate Owner") will be entitled to receive a fully registered physical
certificate (a "Definitive Certificate") representing its interest in such Class
, except under the limited circumstances described under "Description of the
Certificates -- Book-Entry Registration and Definitive Certificates" in the
Prospectus. Unless and until Definitive Certificates are issued in respect of
the Offered Certificates, beneficial ownership interests in each such Class of
Certificates will be maintained and transferred on the book-entry records of DTC
and its participating organizations (its "Participants"), and all references to
actions by holders of each
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such Class of Certificates will refer to actions taken by DTC upon instructions
received from the related Certificate Owners through its Participants in
accordance with DTC procedures, and all references herein to payments, notices,
reports and statements to holders of each such Class of Certificates will refer
to payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder thereof, for distribution to the related Certificate Owners
through its Participants in accordance with DTC procedures. The form of such
payments and transfers may result in certain delays in receipt of payments by an
investor and may restrict an investor's ability to pledge its securities. See
"Description of the Certificates -- Book-Entry Registration and Definitive
Certificates" in the Prospectus. The Trustee will initially serve as registrar
(in such capacity, the "Certificate Registrar") for purposes of recording and
otherwise providing for the registration of the Offered Certificates and, if and
to the extent Definitive Certificates are issued in respect thereof, of
transfers and exchanges of the Offered Certificates.
CERTIFICATE BALANCES AND NOTIONAL AMOUNT
On the Delivery Date, the respective classes of Sequential Pay Certificates
will have the following Certificate Balances (in each case, subject to a
variance of plus or minus 5%):
<TABLE>
<CAPTION>
APPROXIMATE
INITIAL CERTIFICATE APPROXIMATE PERCENT INITIAL
BALANCE OR OF INITIAL CREDIT
CLASS NOTIONAL AMOUNT POOL BALANCE SUPPORT
- ----- ------------------- ------------------- -----------
<S> <C> <C> <C>
Class A-1............................. $ 429,503,407 27.15% 30.08%
Class A-2............................. 676,635,062 42.77 30.08
Class X............................... 1,581,964,668 N/A N/A
Class B............................... 79,304,366 5.01 25.07
Class C............................... 95,165,239 6.02 19.05
Class D............................... 83,269,584 5.26 13.79
Class E............................... 35,686,964 2.26 11.53
Class F............................... 87,234,802 5.51 6.02
Class G............................... 11,895,654 0.75 5.26
Class H............................... 31,721,746 2.01 3.26
Class J............................... 7,930,436 0.50 2.76
Class K............................... 43,617,407 2.76 N/A
</TABLE>
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time will be the then aggregate stated principal amount
thereof. On each Distribution Date, the Certificate Balance of each Class of
Sequential Pay Certificates will be reduced by any distributions of principal
actually made on such Class of Certificates on such Distribution Date, and will
be further reduced by any Realized Losses and Additional Trust Fund Expenses
allocated to such Class of Certificates on such Distribution Date. See
"-- Distributions" and "-- Subordination; Allocation of Losses and Certain
Expenses" below.
The Class X Certificates will not have a Certificate Balance. The Class X
Certificates will represent the right to receive distributions of interest
accrued as described herein on a notional amount ("Notional Amount") equal to
the aggregate of the Certificate Balances of all of the Classes of Sequential
Pay Certificates outstanding from time to time.
No class of REMIC Residual Certificates will have a Certificate Balance or
a Notional Amount.
A Class of Offered Certificates will be considered to be outstanding until
its Certificate Balance or Notional Amount, as the case may be, is reduced to
zero; provided, however, that, under very limited circumstances, reimbursement
of any previously allocated Realized Losses and Additional Trust Fund Expenses
may thereafter be made with respect thereto.
PASS-THROUGH RATES
The Pass-Through Rates applicable to the Class A-1, Class A-2, Class B,
Class C, Class D and Class E Certificates will, for any Distribution Date, at
all times, be equal to the rate set forth on the cover of this
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prospectus supplement. However, the Pass-Through Rate of any Class B, Class C,
Class D or Class E Certificate will not exceed the Weighted Average Net Mortgage
Rate on any Distribution Date.
The Pass-Through Rate applicable to the Class X Certificates for the
December 1998 Distribution Date will equal approximately 0.716% per annum. The
Pass-Through Rate applicable to the Class X Certificates for each subsequent
Distribution Date will, in general, equal the excess, if any, of (i) the
Weighted Average Net Mortgage Rate, over (ii) the weighted average of the
Pass-Through Rates applicable to the Sequential Pay Certificates for such
Distribution Date (weighted on the basis of their respective Certificate
Balances immediately prior to such Distribution Date), such that the interest
accrued at such Pass-Through Rate on the Notional Amount of the Class X
Certificates will, in general, equal the sum of the amounts by which interest
accrued at the Weighted Average Net Mortgage Rate on an amount equal to the
Certificate Principal Balance of each Class of Sequential Pay Certificates
exceeds the interest accrued at the applicable Pass-Through Rate on such Class.
The Pass-Through Rate applicable to the Class F Certificate will, for any
Distribution Date, be equal to 7.105%; however, such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Rate for any Distribution Date. The
Pass-Through Rates applicable to the Class G, Class H, Class J and Class K
Certificates will, at all times, be equal to 5.000%, 5.000%, 5.000% and 5.000%
per annum, respectively.
"Weighted Average Net Mortgage Rate" for any Distribution Date, means the
weighted average of the Net Mortgage Rates for all the Mortgage Loans (weighted
on the basis of their respective Stated Principal Balances (as defined herein)
immediately following the preceding Distribution Date (or, in the case of the
initial Distribution Date, as of the Cut-off Date).
The "Net Mortgage Rate" with respect to any Mortgage Loan is, in general, a
per annum rate equal to the related Mortgage Rate in effect from time to time,
minus the sum of the applicable Master Servicing Fee Rate (including the Standby
Fee rate) and the per annum rate at which the monthly Trustee Fee are calculated
(such sum, the "Administrative Fee Rate"); provided, however, that for purposes
of calculating the Pass-Through Rate for each Class of REMIC Regular
Certificates from time to time, the Net Mortgage Rate for any Mortgage Loan will
be calculated without regard to any modification, waiver or amendment of the
terms of such Mortgage Loan subsequent to the Closing Date; and provided
further, however, that if any Mortgage Loan does not accrue interest on the
basis of a 360-day year consisting of twelve 30-day months (which is the basis
on which interest accrues in respect of the REMIC Regular Certificates), then,
solely for purposes of calculating the Pass-Through Rates on the Class X
Certificates, the Net Mortgage Rate of such Mortgage Loan for any one-month
period preceding a related Due Date will be the annualized rate at which
interest would have to accrue in respect of such loan on the basis of a 360-day
year consisting of twelve 30-day months in order to produce the aggregate amount
of interest actually accrued in respect of such loan during such one-month
period at the related Mortgage Rate (net of the related Administrative Fee Rate,
and adjusted to take into account the addition or subtraction of any Withheld
Amounts as described under "Description of the Certificates-Interest Reserve
Account"). As of the Cut-off Date (without regard to the adjustment described in
the proviso to the second preceding sentence), the Net Mortgage Rates for the
Mortgage Loans ranged from 6.497% per annum to 9.662% per annum, with a weighted
average Net Mortgage Rate of 7.106% per annum. See "Servicing of the Mortgage
Loans -- Servicing and Other Compensation and Payment of Expenses" herein.
The "Stated Principal Balance" of each Mortgage Loan will initially equal
the Cut-off Date Balance thereof and will be permanently reduced (to not less
than zero) on each Distribution Date by (i) any payments or other collections
(or advances in lieu thereof) of principal on such Mortgage Loan that have been
(or, if they had not been applied to cover Additional Trust Fund Expenses, would
have been) distributed on the Certificates on such date, and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period.
The "Collection Period" for each Distribution Date is the period that
begins immediately following the Determination Date in the calendar month
preceding the month in which such Distribution Date occurs (or, in the case of
the initial Distribution Date, immediately following the Cut-off Date) and ends
on the Determination Date in the calendar month in which such Distribution Date
occurs. The first Collection Period
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applicable to the Certificates will begin immediately following the
Determination Date in November 1998 and end on the Determination Date in
December 1998. The "Determination Date" will be the 10th day of each month or,
if any such 10th day is not a business day, the immediately preceding business
day.
DISTRIBUTIONS
General. Distributions on or with respect to the Certificates will be made
by the Trustee, to the extent of available funds, on the 20th day of each month
or, if any such 20th day is not a business day, then on the next succeeding
business day, commencing, with respect to the Offered Certificates, in December
1998 (each, a "Distribution Date"). Except as otherwise described below, all
such distributions will be made to the persons in whose names the Certificates
are registered at the close of business on the related Record Date and, as to
each such person, will be made by wire transfer in immediately available funds
to the account specified by the Certificateholder at a bank or other entity
having appropriate facilities therefor, if such Certificateholder will have
provided the Trustee with written wiring instructions no less than five business
days prior to the related Record Date, or otherwise by check mailed to such
Certificateholder. Until Definitive Certificates are issued in respect thereof,
Cede & Co. will be the registered holder of the Offered Certificates. See
"-- Registration and Denominations" above. The final distribution on any
Certificate (determined without regard to any possible future reimbursement of
any Realized Losses or Additional Trust Fund Expense previously allocated to
such Certificate) will be made in like manner, but only upon presentation and
surrender of such Certificate at the location that will be specified in a notice
of the pendency of such final distribution. Any distribution that is to be made
with respect to a Certificate in reimbursement of a Realized Loss or Additional
Trust Fund Expense previously allocated thereto, which reimbursement is to occur
after the date on which such Certificate is surrendered as contemplated by the
preceding sentence (the likelihood of any such distribution being remote), will
be made by check mailed to the Certificateholder that surrendered such
Certificate. All distributions made on or with respect to a Class of
Certificates will be allocated pro rata among such Certificates based on their
respective percentage interests in such Class.
With respect to any Distribution Date and any Class of Certificates, the
"Record Date" will be the last business day of the calendar month immediately
preceding the month in which such Distribution Date occurs.
The Available Distribution Amount. With respect to any Distribution Date,
distributions of interest on and principal of the Certificates will be made from
the Available Distribution Amount for such Distribution Date. The "Available
Distribution Amount" for any Distribution Date will, in general, equal (a) all
amounts on deposit in the Certificate Account as of the close of business on the
related Determination Date, exclusive of any portion thereof that represents one
or more of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to the
related Collection Period;
(ii) Prepayment Premiums (which are separately distributable on the
Certificates as hereinafter described);
(iii) amounts that are payable or reimbursable to any person other
than the Certificateholders (including amounts payable to the Master
Servicer, the Special Servicer, any Sub-Servicers or the Trustee as
compensation (including Trustee Fees, Master Servicing Fees, Special
Servicing Fees, Workout Fees, Liquidation Fees, Default Interest and late
payment charges (to the extent not otherwise applied to cover interest on
Advances), assumption fees and modification fees), amounts payable in
reimbursement of outstanding Advances, together with interest thereon, and
amounts payable in respect of other Additional Trust Fund Expenses); and
(iv) amounts deposited in the Certificate Account in error; plus
(b) to the extent not already included in clause (a), any P&I Advances made
with respect to such Distribution Date and any payments made by the Master
Servicer to cover Prepayment Interest Shortfalls incurred during the related
Collection Period.
The Available Distribution Amount for any Distribution Date will also
include any interest or other income earned on funds in the Interest Reserve
Account (if any) and, for the Distribution Date occurring in
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each March immediately following an Interest Reserve Event, the related Withheld
Amounts as described below under "-- Interest Reserve Account." However, with
respect to any Distribution Date occurring in each February, and in any January
of a year that is not a leap year, in each case upon the occurrence of an
Interest Reserve Event, the Available Distribution Amount for any such
Distribution Date will not include the related Withheld Amount (if any).
See "The Pooling and Servicing Agreements -- Certificate Account" in the
Prospectus.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will apply the Available Distribution Amount for such date for
the following purposes and in the following order of priority:
(1) to pay interest to the holders of the Class A-1, Class A-2 and
Class X Certificates (collectively, the "Senior Certificates"), up to an
amount equal to, and pro rata as among such Classes in accordance with, all
Distributable Certificate Interest in respect of each such Class of
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(2) to pay principal first to the holders of the Class A-1
Certificates and second to the Class A-2 Certificates, up to an amount
equal to the lesser of (a) the then-outstanding Certificate Balance of such
Class of Certificates and (b) the remaining portion of the Principal
Distribution Amount (as defined below) for such Distribution Date;
(3) to reimburse the holders of the Class A-1 and Class A-2
Certificates, up to an amount equal to, and pro rata as among such Classes
in accordance with, the respective amounts of Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to such
Classes of Certificates and for which no reimbursement has previously been
paid; and
(4) to make payments on the other Classes of Certificates
(collectively, the "Subordinate Certificates") as contemplated below;
provided that, on each Distribution Date as of which the aggregate Certificate
Balance of the Subordinate Certificates is to be or has been reduced to zero,
and in any event on the final Distribution Date in connection with a termination
of the Trust (see "--Termination" below), the payments of principal to be made
as contemplated by clause (2) above with respect to the Class A Certificates,
will be so made (subject to available funds) to the holders of the respective
Classes of such Certificates, up to an amount equal to, and pro rata as among
such Classes in accordance with, the respective then outstanding Certificate
Balances of such Classes of Certificates.
On each Distribution Date, following the above-described distributions on
the Senior Certificates, the Trustee will apply the remaining portion, if any,
of the Available Distribution Amount for such date for the following purposes
and in the following order of priority:
(1) to pay interest to the holders of the Class B Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(2) if the Certificate Balances of the Class A Certificates have been
reduced to zero, to pay principal to the holders of the Class B
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(3) to reimburse the holders of the Class B Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been paid;
(4) to pay interest to the holders of the Class C Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
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(5) if the Certificate Balances of the Class A and Class B
Certificates have been reduced to zero, to pay principal to the holders of
the Class C Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(6) to reimburse the holders of the Class C Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(7) to pay interest to the holders of the Class D Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(8) if the Certificate Balances of the Class A, Class B and Class C
Certificates have been reduced to zero, to pay principal to the holders of
the Class D Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(9) to reimburse the holders of the Class D Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(10) to pay interest to the holders of the Class E Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(11) if the Certificate Balances of the Class A, Class B, Class C and
Class D Certificates have been reduced to zero, to pay principal to the
holders of the Class E Certificates, up to an amount equal to the lesser of
(a) the then outstanding Certificate Balance of such Class of Certificates
and (b) the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(12) to reimburse the holders of the Class E Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(13) to pay interest to the holders of the Class F Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(14) if the Certificate Balances of the Class A, Class B, Class C,
Class D and Class E Certificates have been reduced to zero, to pay
principal to the holders of the Class F Certificates, up to an amount equal
to the lesser of (a) the then outstanding Certificate Balance of such Class
of Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(15) to reimburse the holders of the Class F Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(16) to pay interest to the holders of the Class G Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(17) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E and Class F Certificates have been reduced to zero, to pay
principal to the holders of the Class G Certificates, up to an amount equal
to the lesser of (a) the then outstanding Certificate Balance of such Class
of Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
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(18) to reimburse the holders of the Class G Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(19) to pay interest to the holders of the Class H Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(20) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F and Class G Certificates have been reduced to
zero, to pay principal to the holders of the Class H Certificates, up to an
amount equal to the lesser of (a) the then outstanding Certificate Balance
of such Class of Certificates and (b) the remaining portion of the
Principal Distribution Amount for such Distribution Date;
(21) to reimburse the holders of the Class H Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(22) to pay interest to the holders of the Class J Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(23) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates have been
reduced to zero, to pay principal to the holders of the Class J
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(24) to reimburse the holders of the Class J Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(25) to pay interest to the holders of the Class K Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(26) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F, Class G, Class H and Class J Certificates have
been reduced to zero, to pay principal to the holders of the Class K
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(27) to reimburse the holders of the Class K Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
and
(28) to pay to the holders of the REMIC Residual Certificates, the
balance, if any, of the Available Distribution Amount for such Distribution
Date;
provided that, on the final Distribution Date in connection with a termination
of the Trust, the payments of principal to be made as contemplated by any of
clauses (2), (5), (8), (11), (14), (17), (20), (23) and (26) above with respect
to any Class of Sequential Pay Certificates, will be so made (subject to
available funds) up to an amount equal to the entire then outstanding
Certificate Balance of such Class of Certificates.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date is equal to the Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date, reduced by such Class of
Certificates' allocable share (calculated as described below) of any Net
Aggregate Prepayment Interest Shortfall for such Distribution Date.
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The "Accrued Certificate Interest" in respect of each Class of REMIC
Regular Certificates for each Distribution Date is equal to one month's interest
at the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date accrued on the related Certificate Balance or Notional Amount,
as the case may be, outstanding immediately prior to such Distribution Date.
Accrued Certificate Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
To the extent of Prepayment Interest Excesses and a portion of its
aggregate Master Servicing Fee for the related Collection Period, which portion
is, in the case of each and every Mortgage Loan, calculated at 0.020% per annum,
the Master Servicer is required to make a non-reimbursable payment with respect
to each Distribution Date to cover the aggregate of any Prepayment Interest
Shortfalls incurred with respect to the Mortgage Pool during such Collection
Period. The "Net Aggregate Prepayment Interest Shortfall" for any Distribution
Date will be the amount, if any, by which (a) the aggregate of all Prepayment
Interest Shortfalls incurred with respect to the Mortgage Pool during the
related Collection Period, exceeds (b) any such payment made by the Master
Servicer with respect to such Distribution Date to cover such Prepayment
Interest Shortfalls. See "Servicing of the Mortgage Loans -- Servicing and Other
Compensation and Payment of Expenses" in this prospectus supplement. The Net
Aggregate Prepayment Interest Shortfall, if any, for each Distribution Date will
be allocated on such Distribution Date: pro rata among the Classes of REMIC
Regular Certificates, in each case up to an amount equal to the lesser of any
remaining unallocated portion of such Net Aggregate Prepayment Interest
Shortfall and any Accrued Certificate Interest in respect of the particular
Class of Certificates for such Distribution Date.
Principal Distribution Amount. The "Principal Distribution Amount" for any
Distribution Date will, in general, equal the aggregate of the following:
(a) the principal portions of all Monthly Payments (other than Balloon
Payments) and any Assumed Monthly Payments due or deemed due, as the case
may be, in respect of the Mortgage Loans for their respective Due Dates
occurring during the related Collection Period;
(b) all voluntary principal prepayments received on the Mortgage Loans
during the related Collection Period;
(c) with respect to any Balloon Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period,
any payment of principal (exclusive of any voluntary principal prepayment
and any amount described in clause (d) below) made by or on behalf of the
related borrower during the related Collection Period, net of any portion
of such payment that represents a recovery of the principal portion of any
Monthly Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Monthly Payment deemed due, in respect of such
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) all Liquidation Proceeds and Insurance and Condemnation Proceeds
received on the Mortgage Loans during the related Collection Period that
were identified and applied by the Master Servicer as recoveries of
principal thereof, in each case net of any portion of such amounts that
represents a recovery of the principal portion of any Monthly Payment
(other than a Balloon Payment) due, or the principal portion of any Assumed
Monthly Payment deemed due, in respect of the related Mortgage Loan on a
Due Date during or prior to the related Collection Period and not
previously recovered; and
(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of (i) the Principal Distribution
Amount for the immediately preceding Distribution Date, over (ii) the
aggregate distributions of principal made on the Sequential Pay
Certificates in respect of such Principal Distribution Amount on such
immediately preceding Distribution Date.
For purposes of the foregoing, the Monthly Payment due on any Mortgage Loan
on any related Due Date will reflect any waiver, modification or amendment of
the terms of such Mortgage Loan, whether agreed to by the Master Servicer or
Special Servicer or resulting from a bankruptcy, insolvency or similar
proceeding involving the related borrower.
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An "Assumed Monthly Payment" is an amount deemed due in respect of: (i) any
Mortgage Loan that is delinquent in respect of its Balloon Payment beyond the
first Determination Date that follows its stated maturity date and as to which
no arrangements have been agreed to for collection of the delinquent amounts; or
(ii) any Mortgage Loan as to which the related Mortgaged Property has become an
REO Property. The Assumed Monthly Payment deemed due on any such Mortgage Loan
delinquent as to its Balloon Payment, for its stated maturity date and for each
successive Due Date that it remains outstanding, will equal the Monthly Payment
that would have been due thereon on such date if the related Balloon Payment had
not come due, but rather such Mortgage Loan had continued to amortize in
accordance with its amortization schedule, if any, in effect immediately prior
to maturity and had continued to accrue interest in accordance with such loan's
terms in effect immediately prior to maturity. The Assumed Monthly Payment
deemed due on any such Mortgage Loan as to which the related Mortgaged Property
has become an REO Property, for each Due Date that such REO Property remains
part of the Trust Fund, will equal the Monthly Payment (or, in the case of a
Mortgage Loan delinquent in respect of its Balloon Payment as described in the
prior sentence, the Assumed Monthly Payment) due on the last Due Date prior to
the acquisition of such REO Property.
Distributions of Prepayment Premiums. Any Prepayment Premiums (whether
described in the related Mortgage Loan documents as yield maintenance amounts or
fixed prepayment premiums) actually collected during any particular Collection
Period as the result of prepayments of principal on the Mortgage Loans will be
distributed in respect of the REMIC Regular Certificates outstanding on the
related Distribution Date (and will not be applied to reduce the outstanding
Certificate Balance of any such Class) in the following amount and order of
priority:
(a) first, to the holders of the Class X Certificates and the holders
of the respective Class or Classes of the Class A, Class B, Class C, Class
D and Class E Certificates then entitled to distributions of principal on
such Distribution Date, up to an amount equal to the corresponding PV Yield
Loss Amount (as defined below) for each such Class of Certificates, pro
rata in accordance with their respective entitlement; and
(b) second, to the extent of any portion of such Prepayment Premiums
remaining following the distributions described in the preceding clause
(a), to the holders of the Class X Certificates.
The "PV Yield Loss Amount" for any Distribution Date means, with respect to
each Class of REMIC Regular Certificates as to which any prepayment of principal
is to be applied on such Distribution Date in reduction of its Certificate
Balance, and each Class of Class X Certificates, as the case may be, an amount
equal to the product of the applicable Annuity Factor and the applicable Lost
Coupon Amount.
For purposes of computing the PV Yield Loss Amount for any Class of REMIC
Regular Certificates for any Distribution Date, the following definitions shall
apply:
The "Annuity Factor" for any Class of Certificates is equal to the
following:
-n
1-(1+T)
----------
T
n = either (i) one-twelfth of the number of months from such
Distribution Date to the Assumed Final Distribution Date for such Class,
if the Assumed Final Distribution Date for such Class is later than such
Distribution Date, or (ii) zero, if the Assumed Final Distribution Date
for such Class is earlier than such Distribution Date. In the case of a
Class of Offered Certificates, its Assumed Final Distribution Date is
set forth on the cover hereof.
T = the Reinvestment Yield.
The PV Yield Loss Amount for the Class F, Class G, Class H, Class J and
Class K Certificates, and for any Class of Sequential Pay Certificates that is
not receiving a distribution of principal, is zero.
The "Lost Coupon Amount" means: (a) with respect to any Class of the
Classes of Class A, Class B, Class C, Class D and Class E Certificates as to
which a prepayment of principal is to be applied on such Distribution Date in
reduction of its Certificate Balance (after application of scheduled principal
payments), the product of (x) the amount, if any, by which the Pass-Through Rate
for such Class exceeds the applicable Reinvestment Yield and (y) the aggregate
amount of principal in respect of prepayments on the Mortgage
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Loans paid to such Class in reduction of its Certificate Balance on such
Distribution Date; and (b) with respect to the Class X Certificates, the product
of (x) the Pass-Through Rate applicable to such Class for such Distribution
Date, and (y) the amount by which the aggregate Notional Amount of the Class X
Certificates is reduced in respect of prepayments on the Mortgage Loans on such
Distribution Date.
The "Reinvestment Yield" for any Class of Certificates and any Distribution
Date will be a rate determined by the Trustee, in its good faith, equal to the
average yield for "This Week" as most recently reported by the Federal Reserve
Board in Federal Reserve Statistical Release H.15 (519) for U.S. Treasury
securities with a maturity coterminus with the Assumed Final Distribution Date
for such Class. If there is no U.S. Treasury security listed with a maturity
coterminus with the Assumed Final Distribution Date for such Class, then the
Reinvestment Yield will be a rate determined by the Trustee, in its good faith,
equal to the interpolated yield to maturity of U.S. Treasury securities with
maturities next longer and shorter than such remaining term to maturity (such
interpolated yield to be rounded to the nearest whole multiple of 1/100 of 1%
per annum, if the interpolated yield is not such a multiple). In the event the
yields of U.S. Treasury securities are no longer published in Federal Reserve
Statistical Release H.15(519), the Trustee will be permitted to select a
comparable publication to determine the Reinvestment Yield.
The Depositor makes no representation as to the enforceability of the
provision of any Mortgage Note requiring the payment of a Prepayment Premium or
of the collectibility of any Prepayment Premium. See "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage
Loans -- Prepayment Provisions" and "Risk Factors -- Risks Related to the
Mortgage Loans -- Prepayment Premiums" in this prospectus supplement.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of, among other things, determining distributions on the Certificates,
allocations of Realized Losses and Additional Trust Fund Expenses to the
Certificates, and the amount of Master Servicing Fees, Standby Fees, Special
Servicing Fees and Trustee Fees payable under the Pooling Agreement, as having
remained outstanding until such REO Property is liquidated. Among other things,
such Mortgage Loan will be taken into account when determining the Pass-Through
Rate for the Class X Certificates and the Principal Distribution Amount for each
Distribution Date. In connection therewith, operating revenues and other
proceeds derived from such REO Property (after application thereof to pay
certain costs and taxes, including certain reimbursements payable to the Master
Servicer, the Special Servicer and/or the Trustee, incurred in connection with
the operation and disposition of such REO Property) will be "applied" by the
Master Servicer as principal, interest and other amounts "due" on such Mortgage
Loan; and, subject to the recoverability determination described below (see
"-- P&I Advances"), the Master Servicer and the Trustee will be required to make
P&I Advances in respect of such Mortgage Loan, in all cases as if such Mortgage
Loan had remained outstanding.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
As and to the extent described herein, the rights of holders of the
Subordinate Certificates to receive distributions of amounts collected or
advanced on the Mortgage Loans will, in the case of each Class thereof, be
subordinated to the rights of holders of the Senior Certificates and, further,
to the rights of holders of each other Class of Subordinate Certificates, if
any, with an earlier alphabetical Class designation. This subordination is
intended to enhance the likelihood of timely receipt by holders of the
respective Classes of Senior Certificates of the full amount of Distributable
Certificate Interest payable in respect of their Certificates on each
Distribution Date, and the ultimate receipt by holders of the respective Classes
of Class A Certificates of principal equal to, in each such case, the entire
related Certificate Balance. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the likelihood of timely receipt by
holders of the other Classes of Offered Certificates of the full amount of
Distributable Certificate Interest payable in respect of their Certificates on
each Distribution Date, and the ultimate receipt by holders of the other Classes
of Offered Certificates of principal equal to, in each such case, the entire
related Certificate Balance. The subordination of any Class of Subordinate
Certificates will be accomplished by, among other things, the application of the
Available Distribution Amount on each Distribution Date in the order of priority
described
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under "-- Distributions -- The Available Distribution Amount" above. No other
form of Credit Support will be available for the benefit of holders of the
Offered Certificates.
If, following the distributions to be made in respect of the Certificates
on any Distribution Date, the aggregate Stated Principal Balance of the Mortgage
Pool that will be outstanding immediately following such Distribution Date is
less than the then aggregate Certificate Balance of the Sequential Pay
Certificates, the Certificate Balances of the Class K, Class J, Class H, Class
G, Class F, Class E, Class D, Class C and Class B Certificates will be reduced,
sequentially in that order, in the case of each such Class until such deficit
(or the related Certificate Balance) is reduced to zero (whichever occurs
first). If any portion of such deficit remains at such time as the Certificate
Balances of such Classes of Certificates are reduced to zero, then the
respective Certificate Balances of the Class A-1 and Class A-2 Certificates will
be reduced, pro rata in accordance with the relative sizes of the remaining
Certificate Balances of such Classes of Certificates, until such deficit (or
each such Certificate Balance) is reduced to zero. Any such deficit will, in
general, be the result of Realized Losses incurred in respect of the Mortgage
Loans and/or Additional Trust Fund Expenses to the extent paid from funds which
would otherwise have been used to make distributions of principal. Accordingly,
the foregoing reductions in the Certificate Balances of the respective Classes
of the Sequential Pay Certificates will constitute an allocation of any such
Realized Losses and Additional Trust Fund Expenses. Any such reduction in the
Certificate Balance of a Class of Sequential Pay Certificates will result in a
corresponding reduction in the Notional Amount of the Class X Certificates.
"Realized Losses" are losses on or in respect of the Mortgage Loans arising
from the inability of the Master Servicer and/or the Special Servicer to collect
all amounts due and owing under any such Mortgage Loan, including by reason of
the fraud or bankruptcy of a borrower or a casualty of any nature at a Mortgaged
Property, to the extent not covered by insurance. The Realized Loss in respect
of a liquidated Mortgage Loan (or related REO Property) is an amount generally
equal to the excess, if any, of (a) the outstanding principal balance of such
Mortgage Loan as of the date of liquidation, together with (i) all accrued and
unpaid interest thereon at the related Mortgage Rate to but not including the
Due Date in the Collection Period in which the liquidation occurred and (ii) all
related unreimbursed Servicing Advances and outstanding liquidation expenses,
over (b) the aggregate amount of Liquidation Proceeds, if any, recovered in
connection with such liquidation. If any portion of the debt due under a
Mortgage Loan is forgiven, whether in connection with a modification, waiver or
amendment granted or agreed to by the Master Servicer or the Special Servicer or
in connection with the bankruptcy or similar proceeding involving the related
borrower, the amount so forgiven also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" include, among other things, (i) all
Special Servicing Fees, Workout Fees and Liquidation Fees paid to the Special
Servicer, (ii) any interest paid to the Master Servicer, the Special Servicer
and/or the Trustee in respect of unreimbursed Advances, (iii) the cost of
various opinions of counsel required or permitted to be obtained in connection
with the servicing of the Mortgage Loans and the administration of the Trust
Fund, (iv) certain unanticipated, non-Mortgage Loan specific expenses of the
Trust, including certain reimbursements and indemnifications to the Trustee as
described under "The Pooling and Servicing Agreements -- Certain Matters
Regarding the Trustee" in the Prospectus, certain reimbursements to the Master
Servicer, the Special Servicer, the REMIC Administrator and the Depositor as
described under "The Pooling and Servicing Agreements -- Certain Matters
Regarding the Master Servicer, the Special Servicer, the REMIC Administrator and
the Depositor" in the Prospectus and certain federal, state and local taxes, and
certain tax-related expenses, payable out of the Trust Fund as described under
"Certain Federal Income Tax Consequences -- Possible Taxes on Income From
Foreclosure Property and Other Taxes" herein and "Certain Federal Income Tax
Consequences -- Taxation of Owners of REMIC Regular Certificates -- Prohibited
Transactions Tax and Other Taxes" in the Prospectus, (v) if not advanced by the
Master Servicer, any amounts expended on behalf of the Trust to remediate an
adverse environmental condition at any Mortgaged Property securing a defaulted
Mortgage Loan (see "The Pooling and Servicing Agreements -- Realization Upon
Defaulted Mortgage Loans" in the Prospectus), and (vi) any other expense of the
Trust Fund not specifically included in the calculation of "Realized Loss" for
which there is no corresponding collection from a borrower. Additional Trust
Fund Expenses will reduce amounts payable to Certificateholders and,
consequently, may result in a loss on the Offered Certificates.
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INTEREST RESERVE ACCOUNT
Upon the occurrence of an Interest Reserve Event, the Trustee will be
required to establish and maintain an "Interest Reserve Account" in the name of
the Trustee for the benefit of the holders of the Certificates. An "Interest
Reserve Event" will occur if, on the master servicer remittance date in any
February, and in any January in a year that is not a leap year, the Weighted
Average Net Mortgage Rate anticipated for February of the same year would be
less than the Class A-2 Pass-Through Rate. Such anticipated Weighted Average Net
Mortgage Rate calculated in January shall be determined assuming that there will
be no payments of principal prior to the following March 1 other than Balloon
Payments due on February 1 and certain loans in default or as to which a notice
of prepayment has been received, to the extent any such loans have Net Mortgage
Rates in excess of the Class A-2 Pass-Through Rate. On each master servicer
remittance date occurring in or after the year in which an Interest Reserve
Event has occurred and so long as the Class A-2 Certificates remain outstanding,
the Master Servicer will be required to deposit, in respect of each Mortgage
Loan which accrues interest on an Actual/360 Basis, an amount equal to one day's
interest at the related Mortgage Rate on the respective Stated Principal
Balance, as of the Due Date in the month preceding the month in which such
master servicer remittance date occurs, of each such Mortgage Loan, to the
extent a Monthly Payment or P&I Advance is made in respect thereof (all amounts
so deposited in any consecutive January (if applicable) and February, the
"Withheld Amount"). On each master servicer remittance date occurring in March,
the Trustee will be required to withdraw from the Interest Reserve Account an
amount equal to the Withheld Amounts from the preceding January (if applicable)
and February, if any, and deposit such amount into the Certificate Account.
Amounts on deposit in the Interest Reserve Account may be invested in Permitted
Investments. Interest or other income earned, if any, on funds in the Interest
Reserve Account will be deposited into the Certificate Account.
P&I ADVANCES
With respect to each Distribution Date, the Master Servicer will be
obligated, subject to the recoverability determination described below, to make
advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as and to the extent provided in the Pooling Agreement,
funds held in the Certificate Account that are not required to be part of the
Available Distribution Amount for such Distribution Date, in an amount generally
equal to the aggregate of all Monthly Payments (other than Balloon Payments) and
any Assumed Monthly Payments, in each case net of related Master Servicing Fees
and Workout Fees, that were due or deemed due, as the case may be, in respect of
the Mortgage Loans during the related Collection Period and that were not paid
by or on behalf of the related borrowers or otherwise collected as of the close
of business on the last day of the related Collection Period. The Master
Servicer's obligations to make P&I Advances in respect of any Mortgage Loan will
continue through liquidation of such Mortgage Loan or disposition of any REO
Property acquired in respect thereof. Notwithstanding the foregoing, if it is
determined that an Appraisal Reduction Amount (as defined below) exists with
respect to any Required Appraisal Mortgage Loan (as defined below), then, with
respect to the Distribution Date immediately following the date of such
determination and with respect to each subsequent Distribution Date for so long
as such Appraisal Reduction Amount exists, in the event of subsequent
delinquencies on such Mortgage Loan, the interest portion of the P&I Advance
required to be made in respect of such Mortgage Loan will be reduced (no
reduction to be made in the principal portion, however) to an amount equal to
the product of (i) the amount of the interest portion of such P&I Advance that
would otherwise be required to be made for such Distribution Date without regard
to this sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which is equal to the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which is
equal to the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below. Subject to the recoverability determination described below,
if the Master Servicer fails to make a required P&I Advance, the Trustee will be
required to make such P&I Advance. See "-- The Trustee" below.
The Master Servicer and the Trustee will each be entitled to recover any
P&I Advance made out of its own funds from any Related Proceeds. Notwithstanding
the foregoing, neither the Master Servicer nor the Trustee will be obligated to
make any P&I Advance that it determines in its reasonable good faith judgment
would, if made, not be recoverable out of Related Proceeds (a "Nonrecoverable
P&I Advance"; and, together
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with a Nonrecoverable Servicing Advance, "Nonrecoverable Advances"), and the
Master Servicer and the Trustee, as applicable, will be entitled to recover any
P&I Advance that at any time is determined to be a Nonrecoverable P&I Advance
out of funds received on or in respect of other Mortgage Loans. See "Description
of the Certificates -- Advances in Respect of Delinquencies" and "The Pooling
and Servicing Agreements -- Certificate Account" in the Prospectus.
The Master Servicer and the Trustee will each be entitled with respect to
any Advance made thereby, and the Special Servicer will be entitled with respect
to any Servicing Advance made thereby, to interest accrued on the amount of such
Advance for so long as it is outstanding at a rate per annum (the "Reimbursement
Rate") equal to the "prime rate" as published in the "Money Rates" section of
The Wall Street Journal, as such "prime rate" may change from time to time. Such
interest on any Advance will be payable to the Master Servicer, the Special
Servicer or the Trustee, as the case may be, first, out of Default Interest and
late payment charges collected on the related Mortgage Loan (but only if such
items accrued after such Mortgage Loan became a Specially Serviced Mortgage
Loan) and, second, at any time coinciding with or following the reimbursement of
such Advance, out of any amounts then on deposit in the Certificate Account. Any
delay between a Sub-Servicer's receipt of a late collection of a Monthly Payment
as to which a P&I Advance was made and the forwarding of such late collection to
the Master Servicer will increase the amount of interest accrued and payable to
the Master Servicer or the Trustee, as the case may be, on such P&I Advance. To
the extent not offset by Default Interest and/or late payment charges accrued
and actually collected on the related Mortgage Loan while it is a Specially
Serviced Mortgage Loan, interest accrued on outstanding Advances will result in
a reduction in amounts payable on the Certificates.
APPRAISAL REDUCTIONS
Within 60 days (or within such longer period as the Master Servicer or the
Special Servicer, as applicable, is diligently and in good faith proceeding to
obtain such) after the earliest of (i) the date on which any Mortgage Loan
becomes a Modified Mortgage Loan (as defined below), (ii) the 60th day following
the occurrence of any uncured delinquency in Monthly Payments with respect to
any Mortgage Loan, (iii) the date on which a receiver is appointed and continues
in such capacity in respect of the Mortgaged Property securing any Mortgage
Loan, (iv) the date on which the borrower under any Mortgage Loan becomes the
subject of bankruptcy or insolvency proceedings, and (v) the date on which a
Mortgaged Property securing any Mortgage Loan becomes an REO Property (each such
Mortgage Loan, a "Required Appraisal Loan"; and each such date, a "Required
Appraisal Date"), the Master Servicer or the Special Servicer, as applicable,
will be required to obtain an appraisal of the related Mortgaged Property from
an independent MAI-designated appraiser, unless such an appraisal had previously
been obtained within the prior twelve months. The cost of such appraisal will be
advanced by the Master Servicer, subject to its right to be reimbursed therefor
as a Servicing Advance. As a result of any such appraisal, it may be determined
that an Appraisal Reduction Amount exists with respect to the related Required
Appraisal Loan. The "Appraisal Reduction Amount" for any Required Appraisal Loan
will, in general, be an amount (determined as of the Determination Date
immediately succeeding the later of the date on which the relevant appraisal is
obtained and the earliest relevant Required Appraisal Date) equal to the excess,
if any, of (a) the sum of (i) the Stated Principal Balance of such Required
Appraisal Loan, (ii) to the extent not previously advanced by or on behalf of
the Master Servicer or the Trustee, all unpaid interest on the Required
Appraisal Loan through the most recent Due Date prior to such Determination Date
at a per annum rate equal to the sum of the related Net Mortgage Rate and the
per annum rate at which the Trustee Fee is calculated, (iii) all accrued but
unpaid Master Servicing Fees and Special Servicing Fees in respect of such
Required Appraisal Loan, (iv) all related unreimbursed Advances made by or on
behalf of the Master Servicer, the Special Servicer or the Trustee with respect
to such Required Appraisal Loan plus interest accrued thereon at the
Reimbursement Rate and (v) all currently due and unpaid real estate taxes and
assessments, insurance premiums and, if applicable, ground rents in respect of
the related Mortgaged Property (net of any escrow reserves held by the Master
Servicer or Special Servicer to cover any such item), over (b) 90% of an amount
equal to (i) the appraised value of the related Mortgaged Property or REO
Property as determined by such appraisal, net of (ii) the amount of any liens on
such property (not otherwise arising out of the items described in clause (a)(v)
above) that are prior to the lien of the Required Appraisal Loan; provided that,
if an appraisal is required to be obtained as
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contemplated by the first sentence of this paragraph but has not been received
within the 60-day period contemplated by such sentence, then until (but just
until) such appraisal is obtained the Appraisal Reduction Amount for the subject
Required Appraisal Loan will be deemed to equal 30% of the Stated Principal
Balance of such Required Appraisal Loan (after receipt of such appraisal, the
Appraisal Reduction Amount, if any, will be calculated without regard to this
proviso).
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during the preceding twelve months, in which case it will cease
to be a Required Appraisal Loan), the Special Servicer is required, within 30
days of each anniversary of such Mortgage Loan having become a Required
Appraisal Loan, to order an update of the prior appraisal (the cost of which
will be advanced by the Master Servicer at the direction of the Special Servicer
and will be reimbursable as a Servicing Advance). Based upon such appraisal, the
Special Servicer is to redetermine and report to the Trustee and the Master
Servicer the Appraisal Reduction Amount, if any, with respect to such Mortgage
Loan.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
in a manner that: (A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (B) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding principal prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (C) in the good faith and
reasonable judgment of the Special Servicer, otherwise materially impairs the
security for such Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.
REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Master Servicer and the Special Servicer and delivered to the
Trustee, on each Distribution Date the Trustee will be required to provide or
make available, either in electronic format or by first-class mail, to the
holders of each Class of REMIC Regular Certificates, the following statements
and reports (collectively, the "Distribution Date Statement") substantially in
the forms set forth in Annex C (although such forms may be subject to change
over time) and substantially containing the information set forth below:
(1) A statement setting forth, among other things: (i) the amount of
distributions, if any, made on such Distribution Date to the holders of
each Class of REMIC Regular Certificates and applied to reduce the
respective Certificate Balances thereof; (ii) the amount of distributions,
if any, made on such Distribution Date to the holders of each Class of
REMIC Regular Certificates allocable to Distributable Certificate Interest
and Prepayment Premiums; (iii) the Available Distribution Amount for such
Distribution Date; (iv) the aggregate amount of P&I Advances made in
respect of the immediately preceding Distribution Date; (v) the aggregate
Stated Principal Balance of the Mortgage Pool outstanding immediately
before and immediately after such Distribution Date; (vi) the number,
aggregate principal balance, weighted average remaining term to maturity
and weighted average Mortgage Rate of the Mortgage Pool as of the end of
the Collection Period for the prior Distribution Date; (vii) as of the
close of business on the last day of the most recently ended calendar
month, the number and aggregate unpaid principal balance of Mortgage Loans
(A) delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90
days or more, and (D) as to which foreclosure proceedings have been
commenced; (viii) with respect to any REO Property included in the Trust
Fund as of the end of the Collection Period for such Distribution Date, the
principal balance of the Mortgage Loan as of the date such Mortgage Loan
became delinquent; (ix) the Accrued Certificate Interest and Distributable
Certificate Interest in respect of each Class of REMIC Regular Certificates
for such Distribution Date; (x) the aggregate amount of Distributable
Certificate Interest payable in respect of each Class of REMIC Regular
Certificates on such Distribution Date, including, without limitation, any
Distributable Certificate Interest remaining unpaid from prior Distribution
Dates; (xi) any unpaid Distributable
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Certificate Interest in respect of such Class of REMIC Regular Certificates
after giving effect to the distributions made on such Distribution Date;
(xii) the Pass-Through Rate for each Class of REMIC Regular Certificates
for such Distribution Date; (xiii) the Principal Distribution Amount for
such Distribution Date, separately identifying the respective components of
such amount; (xiv) the aggregate of all Realized Losses incurred during the
related Collection Period and, aggregated by type, all Additional Trust
Fund Expenses incurred during the related Collection Period; (xv) the
Certificate Balance or Notional Amount, as the case may be, of each Class
of REMIC Regular Certificates outstanding immediately before and
immediately after such Distribution Date, separately identifying any
reduction therein due to the allocation of Realized Losses and Additional
Trust Fund Expenses on such Distribution Date; (xvi) the aggregate amount
of servicing fees paid to the Master Servicer and the Special Servicer,
collectively and separately, during the Collection Period for the prior
Distribution Date; and (xvii) a brief description of any material waiver,
modification or amendment of any Mortgage Loan entered into by the Master
Servicer or Special Servicer pursuant to the Pooling Agreement during the
related Collection Period. In the case of information furnished pursuant to
clauses (i) and (ii) above, the amounts shall be expressed as a dollar
amount in the aggregate for all Certificates of each applicable Class and
per a specified denomination.
(2) A report containing information regarding the Mortgage Loans as of
the close of business on the immediately preceding Determination Date,
which report shall contain certain of the categories of information
regarding the Mortgage Loans set forth in this Prospectus Supplement in the
tables under the caption "Annex A: Certain Characteristics of the Mortgage
Loans" (calculated, where applicable, on the basis of the most recent
relevant information provided by the borrowers to the Master Servicer or
the Special Servicer and by the Master Servicer or the Special Servicer, as
the case may be, to the Trustee) and such information shall be presented in
a loan-by-loan and tabular format substantially similar to the formats
utilized in this Prospectus Supplement on Annex A (provided that no
information will be provided as to any repair and replacement or other cash
reserve and the only financial information to be reported on an ongoing
basis will be actual expenses, actual revenues and actual net operating
income for the respective Mortgaged Properties and a debt service coverage
ratio calculated on the basis thereof).
Servicer Reports. The Master Servicer is required to deliver to the
Trustee on the Business Day prior to each Distribution Date, and the Trustee is
to provide or make available, either in electronic format or by first-class mail
to each Certificateholder, and, if requested in writing, any potential investor
in the Certificates, on each Distribution Date, the following five reports (the
"Servicer Reports"), all of which will be made available electronically to any
Certificate Owner or any Person identified to the Trustee by any Certificate
Owner as a prospective transferee of a Certificate, the Rating Agencies, the
underwriters of the Certificate and any party to the Pooling Agreement via the
Trustee's Website with the use of a personal password provided by the Trustee to
such Person of a certification in the form attached to the Pooling Agreement;
provided that the Rating Agencies and Parties to the Pooling Agreement will not
be required to provide such information:
(1) A "Delinquent Loan Status Report" setting forth, among other
things, those Mortgage Loans which, as of the close of business on the last
day of the most recently ended calendar month, were delinquent 30-59 days,
delinquent 60-89 days, delinquent 90 days or more, current but specially
serviced, or in foreclosure but not REO Property.
(2) An "Historical Loan Modification Report" setting forth, among
other things, those Mortgage Loans which, as of the close of business on
the immediately preceding Determination Date, have been modified pursuant
to the Pooling Agreement (i) during the Collection Period ending on such
Determination Date and (ii) since the Cut-off Date, showing the original
and the revised terms thereof.
(3) An "Historical Loss Report" setting forth, among other things, as
of the close of business on the immediately preceding Determination Date,
(i) the aggregate amount of Liquidation Proceeds received, and liquidation
expenses incurred, both during the Collection Period ending on such
Determination Date and historically, and (ii) the amount of Realized Losses
occurring during such Collection Period and historically, set forth on a
Mortgage Loan-by-Mortgage Loan basis.
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(4) A "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust Fund as of the
close of business on the immediately preceding Determination Date, (i) the
acquisition date of such REO Property, (ii) the amount of income collected
with respect to any REO Property (net of related expenses) and other
amounts, if any, received on such REO Property during the Collection Period
ending on such Determination Date and (iii) the value of the REO Property
based on the most recent appraisal or other valuation thereof available to
the Master Servicer as of such Determination Date (including any prepared
internally by the Special Servicer).
(5) A "Special Servicer Loan Status Report" setting forth, among other
things, as of the close of business on the immediately preceding
Determination Date, (i) the aggregate principal balance of all Specially
Serviced Mortgage Loans and (ii) a loan-by-loan listing of all Specially
Serviced Mortgage Loans indicating their status, date and reason for
transfer to the Special Servicer.
None of the Distribution Date Statement or the Servicer Reports will
include any information that the Master Servicer deems to be confidential. The
information that pertains to Specially Serviced Mortgage Loans and REO
Properties reflected in such reports shall be based solely upon the reports
delivered by the Special Servicer to the Master Servicer prior to the related
Distribution Date. None of the Master Servicer, the Special Servicer or the
Trustee shall be responsible for the accuracy or completeness of any information
supplied to it by a borrower or other third party that is included in any
reports, statements, materials or information prepared or provided by the Master
Servicer, the Special Servicer or the Trustee, as applicable.
The Master Servicer is also required to deliver to the Trustee, within 105
days (or 180 days, in the case of annual operating information) following the
end of each calendar quarter, commencing with the calendar quarter ending
December 31, 1998, with respect to each Mortgaged Property and REO Property, an
"Operating Statement Analysis" in electronic form containing revenue, expense
and net operating income information normalized using the methodology described
in Annex A as of the end of such calendar quarter (but only to the extent, in
the case of a Mortgaged Property, that the related borrower is required by the
Mortgage to deliver, or otherwise agrees to provide, such information) for such
Mortgaged Property or REO Property as of the end of such calendar quarter.
Certificate Owners who have certified to the Master Servicer as to their
beneficial ownership of any Offered Certificate may, to the extent such owners
request them, obtain copies of any of the Operating Statement Analyses described
above. Conveyance of notices and other communications by DTC to Participants,
and by Participants to Certificate Owners, will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. The Master Servicer, the Special Servicer, the
Trustee, the Depositor, the REMIC Administrator, the Mortgage Loan Seller, Bank
of America and the Certificate Registrar are required to recognize as
Certificateholders only those persons in whose names the Certificates are
registered on the books and records of the Certificate Registrar.
The Trustee will make available each month, to any interested party, the
Distribution Date Statement via the Trustee's Website. In addition, the Trustee
will make available each month the Servicer Reports on the Trustee's Website.
The Trustee's Website will be located at "www.securitieslink.net/cmbs". The
Trustee's electronic bulletin board may be accessed by calling (301) 815-6620,
and its fax-on-demand service may be accessed by calling (301) 815-6610. In
addition, the Trustee will also make Mortgage Loan information as presented in
the CSSA loan setup file and CSSA loan periodic update file format available
each month to any Certificateholder, any Certificate Owner, the Rating Agencies,
the parties hereto or any other interested party via the Trustee's Website. In
addition, pursuant to the Pooling Agreement, the Trustee will make available, as
a convenience for interested parties (and not in furtherance of the distribution
of the Prospectus or the Prospectus Supplement under the securities laws), the
Pooling Agreement, the Prospectus and the Prospectus Supplement via the
Trustee's Website. For assistance with the above-referenced services, interested
parties may call (301) 815-6600. The Trustee will make no representations or
warranties as to the accuracy or completeness of such documents and will assume
no responsibility therefor.
In connection with providing access to the Trustee's Website or electronic
bulletin board, the Trustee may require registration and the acceptance of a
disclaimer. The Trustee shall not be liable for the dissemination of information
in accordance with the Pooling Agreement.
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For a discussion of certain annual information reports to be furnished by
the Trustee to persons who at any time during the prior calendar year were
holders of the Offered Certificates, see "Description of the
Certificates -- Reports to Certificateholders" in the Prospectus.
Other Information. The Pooling Agreement requires that the Trustee make
available at its offices, during normal business hours, upon reasonable advance
written notice, for review by any holder or Certificate Owner of an Offered
Certificate or any person identified to the Trustee by any such holder or
Certificate Owner as a prospective transferee of an Offered Certificate or any
interest therein, originals or copies of, among other things, the following
items: (a) all officer's certificates delivered to the Trustee since the
Delivery Date as described under "Servicing of the Mortgage Loans -- Evidence as
to Compliance" herein, (b) all accountant's reports delivered to the Trustee
since the Delivery Date as described under "Servicing of the Mortgage
Loans -- Evidence as to Compliance" herein, and (c) the Mortgage Note, Mortgage
and other legal documents relating to each Mortgage Loan, including any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Master Servicer or the Special Servicer and delivered to the
Trustee. In addition, the Master Servicer is required to make available, during
normal business hours, upon reasonable advance written notice, for review by any
holder or Certificate Owner of an Offered Certificate or any person identified
to the Master Servicer as a prospective transferee of an Offered Certificate or
any interest therein, originals or copies of any and all documents (in the case
of documents generated by the Special Servicer, to the extent received
therefrom) that constitute the servicing file for each Mortgage Loan, in each
case except to the extent the Master Servicer in its reasonable, good faith
determination believes that any item of information contained in such servicing
file is of a nature that it should be conveyed to all Certificateholders at the
same time, in which case the Master Servicer is required, as soon as reasonably
possible following its receipt of any such item of information, to disclose such
item of information to the Trustee for inclusion by the Trustee along with the
Distribution Date Statement referred to under "-- Reports to Certificateholders;
Certain Available Information -- Trustee Reports" above; provided that, until
the Trustee has either disclosed such information to all Certificateholders
along with the Distribution Date Statement or has properly filed such
information with the Securities and Exchange Commission on behalf of the Trust
under the Securities Exchange Act of 1934, the Master Servicer is entitled to
withhold such item of information from any Certificateholder or Certificate
Owner or prospective transferee of a Certificate or an interest therein; and,
provided, further, that the Master Servicer is not required to make information
contained in any servicing file available to any person to the extent that doing
so is prohibited by applicable law or by any documents related to a Mortgage
Loan.
The Trustee and, subject to the last sentence of the prior paragraph, the
Master Servicer will each make available, upon reasonable advance written notice
and at the expense of the requesting party, originals or copies of the items
referred to in the prior paragraph that are maintained thereby, to
Certificateholders, Certificate Owners and prospective purchasers of
Certificates and interests therein; provided that the Trustee and Master
Servicer may each require (a) in the case of a Certificate Owner, a written
confirmation executed by the requesting person or entity, in a form reasonably
acceptable to the Trustee or Master Servicer, as applicable, generally to the
effect that such person or entity is a beneficial owner of Offered Certificates
and will keep such information confidential, and (b) in the case of a
prospective purchaser, confirmation executed by the requesting person or entity,
in a form reasonably acceptable to the Trustee or Master Servicer, as
applicable, generally to the effect that such person or entity is a prospective
purchaser of Offered Certificates or an interest therein, is requesting the
information solely for use in evaluating a possible investment in such
Certificates and will otherwise keep such information confidential.
Certificateholders, by the acceptance of their Certificates, will be deemed to
have agreed to keep such information confidential.
VOTING RIGHTS
At all times during the term of the Pooling Agreement, 95.0% of the voting
rights for the Certificates (the "Voting Rights") shall be allocated among the
holders of the respective Classes of Sequential Pay Certificates in proportion
to the Certificate Balances of their Certificates and 5.0% of the Voting Rights
shall be allocated to the holders of the Class X Certificates in proportion to
their Notional Amounts. Voting Rights allocated to a Class of Certificateholders
shall be allocated among such Certificateholders in proportion to the percentage
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interests in such Class evidenced by their respective Certificates. See
"Description of the Certificates -- Voting Rights" in the Prospectus.
TERMINATION
The obligations created by the Pooling Agreement will terminate following
the earliest of (i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or related REO Property remaining in the
Trust Fund, and (ii) the purchase of all of the Mortgage Loans and REO
Properties remaining in the Trust Fund by the Master Servicer or by any holder
or holders (other than the Depositor or Mortgage Loan Seller) of Certificates
representing a majority interest in the Controlling Class. Written notice of
termination of the Pooling Agreement will be given to each Certificateholder,
and the final distribution with respect to each Certificate will be made only
upon surrender and cancellation of such Certificate at the office of the
Certificate Registrar or other location specified in such notice of termination.
Any such purchase by the Master Servicer or the majority holder(s) of the
Controlling Class of all the Mortgage Loans and REO Properties remaining in the
Trust Fund is required to be made at a price equal to (a) the sum of (i) the
aggregate Purchase Price of all the Mortgage Loans then included in the Trust
Fund (other than any Mortgage Loans as to which the related Mortgaged Properties
have become REO Properties) and (ii) the fair market value of all REO Properties
then included in the Trust Fund, as determined by an appraiser mutually agreed
upon by the Master Servicer and the Trustee, minus (b) (solely in the case of a
purchase by the Master Servicer) the aggregate of all amounts payable or
reimbursable to the Master Servicer under the Pooling Agreement. Such purchase
will effect early retirement of the then outstanding Certificates, but the right
of the Master Servicer or the majority holder(s) of the Controlling Class to
effect such termination is subject to the requirement that the then aggregate
Stated Principal Balance of the Mortgage Pool be less than 1.0% of the Initial
Pool Balance. The purchase price paid by the Master Servicer or the majority
holder(s) of the Controlling Class, exclusive of any portion thereof payable or
reimbursable to any person other than the Certificateholders, will constitute
part of the Available Distribution Amount for the final Distribution Date.
THE TRUSTEE
Norwest Bank Minnesota, National Association ("Norwest Bank") will act as
Trustee pursuant to the Pooling Agreement. Norwest Bank, a direct, wholly-owned
subsidiary of Wells Fargo & Company, is a national banking association
originally chartered in 1872 and is engaged in a wide range of activities
typical of a national bank. Norwest Bank's principal office is located at
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0113.
Certificate transfer services are conducted at Norwest Bank's offices in
Minneapolis. Norwest Bank otherwise conducts its trustee and securities
administration services, including administration of the Trust Fund, at its
offices in Columbia, Maryland. Such office is located at 11000 Broken Land
Parkway, Columbia, Maryland 21044-3562. In addition, Norwest Bank maintains a
trust office in New York City located at 3 New York Plaza, New York, New York
10004. Certificateholders and other interested parties should direct inquiries
to Norwest Bank's New York City office. The telephone number is (212) 515-5240.
The Trustee is at all times to be, and will be required to resign if it fails to
be, (i) a corporation, bank or banking association, organized and doing business
under the laws of the United States of America or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority and (ii) an institution whose
long-term senior unsecured debt is rated not less than Aa3 by Moody's and AA by
S&P (or such lower rating as would not result, as confirmed in writing by each
Rating Agency, result in a qualification, downgrade or withdrawal of any of the
then current ratings assigned by such Rating Agency to the Certificates). As of
December 31, 1997, the Trustee had assets of approximately $88.0 billion. See
"The Pooling and Servicing Agreements -- The Trustee", "-- Duties of the
Trustee", "-- Certain Matters Regarding the Trustee" and "-- Resignation and
Removal of the Trustee" in the accompanying prospectus.
Pursuant to the Pooling Agreement, the Trustee will be entitled to a
monthly fee (the "Trustee Fee"; and, together with the Master Servicing Fee
(including the Standby Fee), the "Administrative Fees") payable out of general
collections on the Mortgage Loans and any REO Properties.
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The Trustee will also have certain duties with respect to REMIC
administration (in such capacity the "REMIC Administrator"). See "Certain
Federal Income Tax Consequences -- REMICs -- Reporting and Other Administrative
Matters" and "The Pooling and Servicing Agreements -- Certain Matters Regarding
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Depositor", "-- Events of Default" and "-- Rights Upon Event of Default" in the
accompanying prospectus.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (v) the Pass-Through Rate for such Certificate (which is fixed in the
case of each Class of Offered Certificates other than the Class X Certificates),
(w) the rate and timing of principal payments (including principal prepayments)
and other principal collections on or in respect of the Mortgage Loans and the
extent to which such amounts are to be applied or otherwise result in reduction
of the Certificate Balance or Notional Amount of the Class of Certificates to
which such Certificate belongs, (x) the rate, timing and severity of Realized
Losses on or in respect of the Mortgage Loans and of Additional Trust Fund
Expenses and Appraisal Reductions and the extent to which such losses, expenses
and reductions are allocable to or otherwise result in the nonpayment or
deferred payment of interest on, or reduction of the Certificate Balance or
Notional Amount of, the Class of Certificates to which such Certificate belongs,
(y) the timing and severity of any Net Aggregate Prepayment Interest Shortfalls
and the extent to which such shortfalls are allocable in reduction of the
Distributable Certificate Interest payable on the Class of Certificates to which
such Certificate belongs and (z) the extent to which Prepayment Premiums are
collected and, in turn, distributed on the Class of Certificates to which such
Certificate belongs.
Class X Certificate Pass-Through Rate. The Pass-Through Rate applicable to
the Class X Certificates will be variable and will be calculated based in part
on the weighted average of the Net Mortgage Rates on the Mortgage Loans from
time to time. Accordingly, the yield on such Certificates will be sensitive to
changes in the relative composition of the Mortgage Pool as a result of
scheduled amortization, voluntary prepayments and liquidations of Mortgage Loans
following default. The Pass-Through Rate and yield to maturity of the Class X
Certificates will be adversely affected if Mortgage Loans with relatively higher
Mortgage Rates amortize and/or prepay faster than Mortgage Loans with relatively
lower Mortgage Rates. See "Description of the Certificates -- Pass-Through
Rates" and "Description of the Mortgage Pool" herein and "-- Rate and Timing of
Principal Payments" below.
Rate and Timing of Principal Payments. The yield to holders of the Class X
Certificates will be extremely sensitive to, and the yield to holders of any
other Class of Offered Certificates purchased at a discount or premium will be
affected by, the rate and timing of reductions of the Certificate Balances or
Notional Amount, as the case may be, of such Class of Certificates. As described
herein, the Principal Distribution Amount for each Distribution Date will be
distributable entirely in respect of the Class A Certificates until the related
Certificate Balances thereof are reduced to zero. Following retirement of the
Class A Certificates, the Principal Distribution Amount for each Distribution
Date will be distributable entirely in respect of the other Classes of
Sequential Pay Certificates, sequentially in alphabetical order of Class
designation, in each such case until the related Certificate Balance is reduced
to zero. The Notional Amount of the Class X Certificates will equal the
aggregate Certificate Balances of the Classes of Sequential Pay Certificates
outstanding from time to time. Consequently, the rate and timing of reductions
of the Certificate Balance or Notional Amount, as the case may be, of each Class
of Offered Certificates will depend on the rate and timing of principal payments
on or in respect of the Mortgage Loans, which will in turn be affected by the
amortization schedules thereof, the dates on which any Balloon Payments are due
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Fund).
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Prepayments and, assuming the respective stated maturity dates therefor have not
occurred, liquidations of the Mortgage Loans will result in distributions on the
Sequential Pay Certificates of amounts that would otherwise be distributed over
the remaining terms of the Mortgage Loans and will tend to shorten the weighted
average lives of those Certificates. Defaults on the Mortgage Loans,
particularly in the case of Balloon Loans at or near their stated maturity
dates, may result in significant delays in payments of principal on the Mortgage
Loans (and, accordingly, on the Sequential Pay Certificates) while workouts are
negotiated or foreclosures are completed, and such delays will tend to lengthen
the weighted average lives of those Certificates. See "Servicing of the Mortgage
Loans -- Modifications, Waivers, Amendments and Consents" herein and "The
Pooling and Servicing Agreements -- Realization Upon Defaulted Mortgage Loans"
and "Certain Legal Aspects of Mortgage Loans -- Foreclosure" in the accompanying
prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on or in respect of the Mortgage Loans are
distributed or otherwise result in a reduction of the Certificate Balance or
Notional Amount of such Certificates. An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of a Class X Certificate or any other Offered Certificate purchased at
a premium, the risk that a faster than anticipated rate of principal payments on
the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of principal
on or in respect of the Mortgage Loans is distributed or otherwise results in
reduction of the notional amount of a Class X Certificate or the principal
balance of any other Offered Certificate purchased at a discount or premium, the
greater will be the effect on an investor's yield to maturity. As a result, the
effect on an investor's yield of principal payments occurring at a rate higher
(or lower) than the rate anticipated by the investor during any particular
period may not be fully offset by a subsequent like reduction (or increase) in
the rate of principal payments. Investors in the Class X Certificates should
fully consider the risk that an extremely rapid rate of principal payments on
the Mortgage Loans could result in the failure of such investors to fully recoup
their initial investments. Because the rate of principal payments on or in
respect of the Mortgage Loans will depend on future events and a variety of
factors (as described more fully below), no assurance can be given as to such
rate or the rate of principal prepayments in particular. The Depositor is not
aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. As and to the extent
described herein, Realized Losses and Additional Trust Fund Expenses will be
allocated to the respective Classes of Sequential Pay Certificates (which
allocation will, in general, reduce the amount of interest distributable thereto
in the case of Additional Trust Fund Expenses and reduce the Certificate Balance
thereof in the case of Realized Losses) in the following order: first, to each
Class of Sequential Pay Certificates (other than the Class A Certificates), in
reverse alphabetical order of Class designation, until the Certificate Balance
thereof has been reduced to zero; then, to the Class A-1 and Class A-2
Certificates pro rata in accordance with their respective remaining Certificate
Balances, until the remaining Certificate Balance of each such Class of
Certificates has been reduced to zero. Any such reduction in the Certificate
Balance of a Class of Sequential Pay Certificates will cause a corresponding
reduction of the Notional Amount of the Class X Certificates.
The Net Aggregate Prepayment Interest Shortfall, if any, for each
Distribution Date will be allocated to the respective Classes of REMIC Regular
Certificates (in each case, to reduce the amount of interest otherwise payable
thereon on such Distribution Date) as follows: first, to the respective Classes
of REMIC Regular Certificates (other than the Senior Certificates) sequentially
in reverse alphabetical order of Class designation, in each case up to an amount
equal to the lesser of any remaining unallocated portion of such Net Aggregate
Prepayment Interest Shortfall and any Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date; and, thereafter, if and
to the extent that any portion of such Net
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<PAGE> 84
Aggregate Prepayment Interest Shortfall remains unallocated, among the
respective Classes of Senior Certificates, up to, and pro rata in accordance
with, the respective amounts of Accrued Certificate Interest for each such Class
of Senior Certificates for such Distribution Date.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on or in respect of the Mortgage Loans may
be affected by a number of factors, including, without limitation, prevailing
interest rates, the terms of the Mortgage Loans (for example, Prepayment
Premiums, Lock-out Periods and amortization terms that require Balloon
Payments), the demographics and relative economic vitality of the areas in which
the Mortgaged Properties are located and the general supply and demand for
retail shopping space, rental apartments, hotel rooms, industrial space, health
care facility beds, senior living units or office space, as the case may be, in
such areas, the quality of management of the Mortgaged Properties, the servicing
of the Mortgage Loans, possible changes in tax laws and other opportunities for
investment. See "Risk Factors -- Risks Related to the Mortgage Loans",
"Description of the Mortgage Pool" and "Servicing of the Mortgage Loans" herein
and "The Pooling and Servicing Agreements" and "Yield and Maturity
Considerations -- Yield and Prepayment Considerations" in the accompanying
prospectus.
The rate of prepayment on the Mortgage Loans is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below the Mortgage
Rate at which a Mortgage Loan accrues interest, a borrower may have an increased
incentive to refinance such Mortgage Loan. Conversely, to the extent prevailing
market interest rates exceed the applicable Mortgage Rate for any Mortgage Loan,
such Mortgage Loan may be less likely to prepay.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits.
If a Mortgage Loan is not in a Lock-out Period, any Prepayment Premium in
respect of such Mortgage Loan may not be sufficient economic disincentive to
prevent the related borrower from voluntarily prepaying the loan as part of a
refinancing thereof or a sale of the related Mortgaged Property. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans" in this prospectus supplement.
The Depositor makes no representation or warranty as to the particular
factors that will affect the rate and timing of prepayments and defaults on the
Mortgage Loans, as to the relative importance of such factors, as to the
percentage of the principal balance of the Mortgage Loans that will be prepaid
or as to which a default will have occurred as of any date or as to the overall
rate of prepayment or default on the Mortgage Loans.
WEIGHTED AVERAGE LIVES
The weighted average life of any Offered Certificate (other than a Class X
Certificate) refers to the average amount of time that will elapse from the date
of its issuance until each dollar to be applied in reduction of the principal
balance of such Certificate is distributed to the investor. For purposes of this
Prospectus Supplement, the weighted average life of any such Offered Certificate
is determined by (i) multiplying the amount of each principal distribution
thereon by the number of years from the assumed Settlement Date (as defined
below) to the related Distribution Date, (ii) summing the results and (iii)
dividing the sum by the aggregate amount of the reductions in the principal
balance of such Certificate. Accordingly, the weighted average life of any such
Offered Certificate will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid or otherwise collected or advanced and
the extent to which such payments, collections and/or advances of principal are
in turn applied in reduction of the Certificate Balance of the Class of
Certificates to which such Offered Certificate belongs. As described herein, the
Principal Distribution Amount for each Distribution Date will be distributable
entirely in respect of the Class A Certificates until the Certificate Balances
thereof are reduced to zero, and will thereafter be distributable entirely in
respect of the other Classes of Sequential Pay Certificates, sequentially in
alphabetical
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order of Class designation, in each such case until the related Certificate
Balance is reduced to zero. As a consequence of the foregoing, the weighted
average lives of the Class A Certificates may be shorter, and the weighted
average lives of the other Classes of Sequential Pay Certificates may be longer,
than would otherwise be the case if the Principal Distribution Amount for each
Distribution Date was being distributed on a pro rata basis among the respective
Classes of Sequential Pay Certificates.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the CPR model (as
described in the Prospectus). As used in each of the following tables, the
column headed "0%" assumes that none of the Mortgage Loans is prepaid before
maturity. The columns headed "4%", "8%", "12%" and "16%" assume that no
prepayments are made on any Mortgage Loan during such Mortgage Loan's Lock-out
Period, if any, or during such Mortgage Loan's yield maintenance period, if any,
and are otherwise made on each of the Mortgage Loans at the indicated CPRs.
There is no assurance, however, that prepayments of the Mortgage Loans (whether
or not in a Lock-out Period or a yield maintenance period) will conform to any
particular CPR, and no representation is made that the Mortgage Loans will
prepay in accordance with the assumptions at any of the CPRs shown or at any
other particular prepayment rate, that all the Mortgage Loans will prepay in
accordance with the assumptions at the same rate or that Mortgage Loans that are
in a Lock-out Period or a yield maintenance period will not prepay as a result
of involuntary liquidations upon default or otherwise. A "yield maintenance
period" is any period during which a Mortgage Loan provides that voluntary
prepayments be accompanied by a Prepayment Premium calculated on the basis of a
yield maintenance formula.
The following tables indicate the percentages of the initial Certificate
Balances of the Class A, Class B, Class C, Class D and Class E Certificates that
would be outstanding after each of the dates shown at various CPRs, and the
corresponding weighted average lives of such Classes of Certificates, under the
following assumptions (the "Maturity Assumptions"): (i) the Mortgage Loans have
the characteristics set forth on Annex A and the Pool Balance as of the
Commencement Date is approximately $1,581,964,668, (ii) the Pass-Through Rate
and the initial Certificate Balance or Notional Amount, as the case may be, of
each Class of Offered Certificates are as described herein, (iii) the scheduled
Monthly Payments for each Mortgage Loan that accrues interest on the basis of a
360-day year consisting of twelve 30-day months (a "30/360 Basis"), are based on
such Mortgage Loan's Cut-off Date Balance, calculated remaining amortization
term as of the Cut-off Date and Mortgage Rate as of the Cut-off Date, and the
scheduled Monthly Payments for each Mortgage Loan that accrues interest on the
basis of actual number of days elapsed during the month of accrual in a 360-day
year are the actual contractual Monthly Payments, (iv) there are no
delinquencies or losses in respect of the Mortgage Loans, there are no
modifications, extensions, waivers or amendments affecting the payment by
borrowers of principal or interest on the Mortgage Loans, there are no Appraisal
Reduction Amounts with respect to the Mortgage Loans and there are no casualties
or condemnations affecting the Mortgaged Properties, (v) scheduled Monthly
Payments on the Mortgage Loans are timely received on the first day of each
month, (vi) no voluntary or involuntary prepayments are received as to any
Mortgage Loan during such Mortgage Loan's Lock-out Period ("LOP"), if any, or
yield maintenance period ("YMP"), if any, and, otherwise, prepayments are made
on each of the Mortgage Loans at the indicated CPRs set forth in the tables
(without regard to any limitations in such Mortgage Loans on partial voluntary
principal prepayments), (vii) neither the Master Servicer nor any majority
holder(s) of the Controlling Class exercises its or exercise their right of
optional termination described herein, (viii) no Mortgage Loan is required to be
repurchased by the Mortgage Loan Seller or Bank of America, (ix) no Prepayment
Interest Shortfalls are incurred and no Prepayment Premiums are collected, (x)
there are no Additional Trust Fund Expenses, (xi) distributions on the Offered
Certificates are made on the 20th day of each month, commencing in December
1998, and (xii) the Offered Certificates are settled on November 30, 1998 (the
"Settlement Date"). To the extent that the Mortgage Loans have characteristics
that differ from those assumed in preparing the tables set forth below, the
Class A-1, Class A-2, Class B, Class C, Class D and/or Class E Certificates may
mature earlier or later than indicated by the tables. It is highly unlikely that
the Mortgage Loans will prepay in accordance with the above assumptions at any
of the specified CPRs until maturity or that all the Mortgage Loans will so
prepay at the same rate. In addition, variations in the actual prepayment
experience and the balance of the Mortgage Loans that prepay may increase or
decrease the percentages of initial Certificate Balances (and weighted average
lives) shown in the following tables. Such variations may
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<PAGE> 86
occur even if the average prepayment experience of the Mortgage Loans were to
conform to the assumptions and be equal to any of the specified CPRs. Investors
are urged to conduct their own analyses of the rates at which the Mortgage Loans
may be expected to prepay.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
----------------------------------------------
DATE 0% 4% 8% 12% 16%
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Delivery Date............................... 100.00 100.00 100.00 100.00 100.00
November 20, 1999........................... 93.90 93.90 93.90 93.90 93.90
November 20, 2000........................... 87.36 87.36 87.36 87.36 87.36
November 20, 2001........................... 80.26 80.26 80.26 80.26 80.26
November 20, 2002........................... 72.61 72.61 72.61 72.61 72.61
November 20, 2003........................... 64.40 64.37 64.35 64.33 64.30
November 20, 2004........................... 53.64 53.40 53.15 52.90 52.65
November 20, 2005........................... 26.58 26.29 26.02 25.74 25.48
November 20, 2006........................... 19.21 18.71 18.24 17.79 17.37
November 20, 2007........................... -- -- -- -- --
Weighted Average Life (year)................ 5.49 5.48 5.46 5.45 5.44
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
----------------------------------------------
DATE 0% 4% 8% 12% 16%
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Delivery Date............................... 100.00 100.00 100.00 100.00 100.00
November 20, 1999........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2000........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2001........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2002........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2003........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2004........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2005........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2006........................... 100.00 100.00 100.00 100.00 100.00
November 20, 2007........................... 99.97 99.51 99.05 98.58 98.11
November 20, 2008........................... -- -- -- -- --
Weighted Average Life (years)............... 9.43 9.42 9.42 9.42 9.41
</TABLE>
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<PAGE> 87
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------
DATE 0% 4% 8% 12% 16%
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Delivery Date..................... 100.00 100.00 100.00 100.00 100.00
November 20, 1999................. 100.00 100.00 100.00 100.00 100.00
November 20, 2000................. 100.00 100.00 100.00 100.00 100.00
November 20, 2001................. 100.00 100.00 100.00 100.00 100.00
November 20, 2002................. 100.00 100.00 100.00 100.00 100.00
November 20, 2003................. 100.00 100.00 100.00 100.00 100.00
November 20, 2004................. 100.00 100.00 100.00 100.00 100.00
November 20, 2005................. 100.00 100.00 100.00 100.00 100.00
November 20, 2006................. 100.00 100.00 100.00 100.00 100.00
November 20, 2007................. 100.00 100.00 100.00 100.00 100.00
November 20, 2008................. -- -- -- -- --
Weighted Average Life (years)..... 9.64 9.64 9.64 9.64 9.64
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS C CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------
DATE 0% 4% 8% 12% 16%
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Delivery Date..................... 100.00 100.00 100.00 100.00 100.00
November 20, 1999................. 100.00 100.00 100.00 100.00 100.00
November 20, 2000................. 100.00 100.00 100.00 100.00 100.00
November 20, 2001................. 100.00 100.00 100.00 100.00 100.00
November 20, 2002................. 100.00 100.00 100.00 100.00 100.00
November 20, 2003................. 100.00 100.00 100.00 100.00 100.00
November 20, 2004................. 100.00 100.00 100.00 100.00 100.00
November 20, 2005................. 100.00 100.00 100.00 100.00 100.00
November 20, 2006................. 100.00 100.00 100.00 100.00 100.00
November 20, 2007................. 100.00 100.00 100.00 100.00 100.00
November 20, 2008................. -- -- -- -- --
Weighted Average Life (years)..... 9.66 9.66 9.66 9.66 9.66
</TABLE>
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<PAGE> 88
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------
DATE 0% 4% 8% 12% 16%
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Delivery Date..................... 100.00 100.00 100.00 100.00 100.00
November 20, 1999................. 100.00 100.00 100.00 100.00 100.00
November 20, 2000................. 100.00 100.00 100.00 100.00 100.00
November 20, 2001................. 100.00 100.00 100.00 100.00 100.00
November 20, 2002................. 100.00 100.00 100.00 100.00 100.00
November 20, 2003................. 100.00 100.00 100.00 100.00 100.00
November 20, 2004................. 100.00 100.00 100.00 100.00 100.00
November 20, 2005................. 100.00 100.00 100.00 100.00 100.00
November 20, 2006................. 100.00 100.00 100.00 100.00 100.00
November 20, 2007................. 100.00 100.00 100.00 100.00 100.00
November 20, 2008................. -- -- -- -- --
Weighted Average Life (years)..... 9.72 9.72 9.72 9.72 9.72
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------
DATE 0% 4% 8% 12% 16%
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Delivery Date..................... 100.00 100.00 100.00 100.00 100.00
November 20, 1999................. 100.00 100.00 100.00 100.00 100.00
November 20, 2000................. 100.00 100.00 100.00 100.00 100.00
November 20, 2001................. 100.00 100.00 100.00 100.00 100.00
November 20, 2002................. 100.00 100.00 100.00 100.00 100.00
November 20, 2003................. 100.00 100.00 100.00 100.00 100.00
November 20, 2004................. 100.00 100.00 100.00 100.00 100.00
November 20, 2005................. 100.00 100.00 100.00 100.00 100.00
November 20, 2006................. 100.00 100.00 100.00 100.00 100.00
November 20, 2007................. 100.00 100.00 100.00 100.00 100.00
November 20, 2008................. -- -- -- -- --
Weighted Average Life (years)..... 9.75 9.75 9.75 9.75 9.75
</TABLE>
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<PAGE> 89
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity of the Class X Certificates will be highly sensitive
to the rate and timing of principal payments (including by reason of
prepayments, loan extensions, defaults and liquidations) and losses on or in
respect of the Mortgage Loans. Investors in the Class X Certificates should
fully consider the associated risks, including the risk that an extremely rapid
rate of amortization, prepayment or other liquidation of the Mortgage Loans
could result in the failure of such investors to recoup fully their initial
investments.
The following tables indicate the approximate pre-tax yield to maturity on
a corporate bond equivalent ("CBE") basis on the Class X Certificates for the
specified CPRs based on the Maturity Assumptions. In addition, it was assumed,
when specifically indicated in a particular table, that 50% (or, if so
specified, 100%) of any Prepayment Premium calculated as a declining percentage
of the amount prepaid (a "Decl. % Premium") is collected in connection with each
prepayment as to which such a Prepayment Premium is applicable. It was further
assumed that the purchase price of the Class X Certificates is as specified
below, expressed as a percentage of the initial Notional Amount of such
Certificates, without accrued interest.
The yields set forth in the following tables were calculated by determining
the monthly discount rates that, when applied to the assumed streams of cash
flows to be paid on the Class X Certificates, would cause the discounted present
value of such assumed stream of cash flows to equal the assumed purchase price
thereof, and by converting such monthly rates to semi-annual corporate bond
equivalent rates. Such calculation does not take into account shortfalls in
collection of interest due to prepayments (or other liquidations) of the
Mortgage Loans or the interest rates at which investors may be able to reinvest
funds received by them as distributions on the Class X Certificates (and,
accordingly, does not purport to reflect the return on any investment in the
Class X Certificates when such reinvestment rates are considered).
The characteristics of the Mortgage Loans may differ from those assumed in
preparing the tables below. In addition, there can be no assurance that the
Mortgage Loans will prepay in accordance with the above assumptions at any of
the rates shown in the tables or at any other particular rate, that the cash
flows on the Class X Certificates will correspond to the cash flows shown herein
or that the aggregate purchase price of the Class X Certificates will be as
assumed. In addition, it is unlikely that the Mortgage Loans will prepay in
accordance with the above assumptions at any of the specified CPRs until
maturity or that all the Mortgage Loans will so prepay at the same rate. Timing
of changes in the rate of prepayments may significantly affect the actual yield
to maturity to investors, even if the average rate of principal prepayments is
consistent with the expectations of investors. Investors must make their own
decisions as to the appropriate prepayment assumption to be used in deciding
whether to purchase Class X Certificates.
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ----------------------------------------------------------------------
PRICE 0% 4% 8% 12% 16%
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
4.52483%............. 10.278% 10.254% 10.230% 10.206% 10.184%
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (50% RECOVERY OF DECL. % PREMIUMS)
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ----------------------------------------------------------------------
PRICE 0% 4% 8% 12% 16%
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
4.52483%............. 10.278% 10.257% 10.237% 10.217% 10.198%
</TABLE>
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<PAGE> 90
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (100% RECOVERY OF DECL. % PREMIUMS)
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ----------------------------------------------------------------------
PRICE 0% 4% 8% 12% 16%
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
4.52483%............. 10.278% 10.261% 10.244% 10.228% 10.212%
</TABLE>
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<PAGE> 91
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase the interests in the Trust from the
Mortgage Loan Seller described under "Description of the
Certificates -- General," and to pay certain expenses in connection with the
issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
For federal income tax purposes, three separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to designated
portions of the Trust Fund, the resulting REMICs being herein referred to as
"REMIC I", "REMIC II", and "REMIC III" respectively. The assets of REMIC I will
include the Mortgage Loans, any REO Properties acquired on behalf of the
Certificateholders and amounts with respect thereto contained in the Certificate
Account, the Interest Reserve Account and the REO Accounts (each as defined in
the Prospectus). The assets of REMIC II will consist of the separate,
uncertificated "regular interests" in REMIC I and amounts in the Certificate
Account with respect thereto. The assets of REMIC III will consist of the
separate, uncertificated interests in REMIC II and amounts in the Certificate
Account with respect thereto. For federal income tax purposes, (i) the Offered
Certificates and the Class F Certificates will evidence the "regular interests"
in, and generally will be treated as debt obligations of, REMIC III, (ii) the
Class G, Class H, Class J and Class K Certificates will evidence the "regular
interests" in, and generally will be treated as debt obligations of, REMIC II,
(iii) the Class R-I Certificates will be the sole class of "residual interests"
in REMIC I, (iv) the Class R-II Certificates will be the sole class of "residual
interests" in REMIC II, and (v) the Class R-III Certificates will be the sole
class of "residual interests" in REMIC III. Upon issuance of the Offered
Certificates, Cadwalader, Wickersham & Taft, special tax counsel to the
Depositor, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Pooling Agreement, for federal income tax
purposes, each of REMIC I and REMIC II will continue to qualify as a REMIC and
REMIC III will qualify as a REMIC under the Code. See "Certain Federal Income
Tax Consequences -- REMICs" in the accompanying prospectus.
DISCOUNT AND PREMIUM; PREPAYMENT PREMIUMS
The Offered Certificates generally will be treated as newly originated debt
instruments for federal income tax purposes. Beneficial owners of the Offered
Certificates will be required to report income on such regular interests in
accordance with the accrual method of accounting. It is anticipated that the
Class D and Class E Certificates will be issued with original issue discount and
that the Class A-1, Class A-2, Class B and Class C Certificates will be issued
at a premium, for federal income tax purposes. See "Certain Federal Income Tax
Consequences -- REMICs -- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" and "--Premium" in the accompanying
prospectus.
Although unclear for federal income tax purposes, it is anticipated that
the Class X Certificates will be considered to be issued with original issue
discount in an amount equal to the excess of all distributions of interest
expected to be received thereon (assuming the Weighted Average Net Mortgage
Pass-Through Rate changes in accordance with the Prepayment Assumption (as
described below)), over their respective issue prices (including accrued
interest, if any). Any "negative" amounts of original issue discount on the
Class X Certificates attributable to rapid prepayments with respect to the
Mortgage Loans will not be deductible currently, but may be offset against
future positive accruals of original issue discount, if any. Finally, a holder
of a Class X Certificate may be entitled to a loss deduction to the extent it
becomes certain that such holder will not recover a portion of its basis in such
Certificate, assuming no further prepayments. In the alternative, it is possible
that rules similar to the "noncontingent bond method" of the OID Regulations, as
amended on June 12, 1996, may be promulgated with respect to the Certificates.
See "Certain Federal Income Tax Consequences -- REMICs -- Taxation of Owners of
REMIC Regular Certificates -- Original Issue Discount" in the Prospectus. Under
the noncontingent bond method, if the interest payable for any period is greater
or less than the amount projected, the amount of income included for that period
would be either
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<PAGE> 92
increased or decreased accordingly. Any reduction in the income accrual for a
period below zero (a "Negative Adjustment") would be treated by a
Certificateholder as ordinary loss to the extent of prior income accruals and
may be carried forward to offset future interest accruals. At maturity, any
remaining Negative Adjustment would be treated as a loss on retirement of the
Certificate. The legislative history of relevant Code provisions indicates,
however, that negative amount of original issue discount on an instrument such
as a REMIC regular interest may not give rise to taxable losses in any accrual
period prior to the instrument's disposition or retirement. Thus, it is not
clear whether any losses resulting from a Negative Adjustment would be
recognized currently or be carried forward until disposition or retirement of
the debt obligation.
For purposes of accruing original issue discount, determining whether such
original issue discount is de minimis and amortizing any premium, the Prepayment
Assumption will be 0% CPR. See "Yield and Maturity Considerations -- Weighted
Average Lives" herein. No representation is made as to the rate, if any, at
which the Mortgage Loans will prepay.
Although not free from doubt, it is anticipated that any prepayment
premiums will be treated as ordinary income to the extent allocable to
beneficial owners of the Offered Certificates as such amounts become
distributable to such beneficial owners.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
Generally, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(4)(A) of the Code
in the same proportion that the assets of the Trust would be so treated. In
addition, interest (including original issue discount, if any) on the Offered
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code. If 95% or more of the Mortgage
Loans are treated as assets described in Section 856(c)(4)(A) of the Code, the
Offered Certificates will be treated as such assets in their entirety. The
Offered Certificates will generally only be considered assets described in
Section 7701(a)(19)(C) of the Code to the extent that the Mortgage Loans are
secured by residential property, including residences for persons under health
care. As of the Cut-off Date, 32.9%, 2.4% and 2.2% of the Initial Pool Balance
were Mortgage Loans secured by multifamily properties, mobile home community
properties and health care properties, respectively. Accordingly, an investment
in the Offered Certificates may not be suitable for some thrift institutions.
The Offered Certificates will be treated as "qualified mortgages" for another
REMIC under Section 860G(a)(3)(C) of the Code and as "permitted assets" for a
financial asset securitization investment trust under Section 860L(c) of the
Code. See "Description of the Mortgage Pool" in this prospectus supplement and
"Certain Federal Income Tax Consequences -- REMICs -- Characterization of
Investments in REMIC Certificates" in the accompanying prospectus.
POSSIBLE TAXES ON INCOME FROM FORECLOSURE PROPERTY AND OTHER TAXES
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially feasible, maximize the Trust's net after-tax proceeds from
such property. After the Special Servicer reviews the operation of such property
and consults with the REMIC Administrator to determine the Trust's federal
income tax reporting position with respect to income it is anticipated that the
Trust would derive from such property, the Special Servicer could determine that
it would not be commercially feasible to manage and operate such property in a
manner that would avoid the imposition of a tax on "net income from foreclosure
property" (generally, income not derived from renting or selling real property)
within the meaning of the REMIC Provisions (an "REO Tax"). To the extent that
income the Trust receives from an REO Property is subject to a tax on "net
income from foreclosure property," such income would be subject to federal tax
at the highest marginal corporate tax rate (currently 35%). The determination as
to whether income from an REO Property would be subject to an REO Tax will
depend on the specific facts and circumstances relating to the management and
operation of each REO Property. These considerations will be of particular
relevance with respect to any health care facilities or hotels that become REO
Property. Any REO Tax imposed on the Trust's income from an REO Property would
reduce the amount available for distribution to Certificateholders.
Certificateholders are
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advised to consult their own tax advisors regarding the possible imposition of
REO Taxes in connection with the operation of commercial REO Properties by
REMICs.
REPORTING AND OTHER ADMINISTRATIVE MATTERS
Reporting of interest income, including any original issue discount, if
any, with respect to REMIC Regular Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of REMIC Regular
Certificates and the IRS; holders of REMIC Regular Certificates that are
corporations, trusts, securities dealers and certain other non-individuals will
be provided interest and original issue discount income information and the
information set forth in the following paragraph upon request in accordance with
the requirements of the applicable regulations. The information must be provided
by the later of 30 days after the end of the quarter for which the information
was requested, or two weeks after the receipt of the request. The REMIC must
also comply with rules requiring a REMIC Regular Certificate issued with
original issue discount to disclose on its face the amount of original issue
discount and the issue date, and requiring such information to be reported to
the IRS. Reporting with respect to the REMIC Residual Certificates, including
income, excess inclusions, investment expenses and relevant information
regarding qualification of the REMIC's assets will be made as required under the
Treasury regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC Administrator may not have, such regulations only
require that information pertaining to the appropriate proportionate method of
accruing market discount be provided.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences -- REMICs" in the accompanying prospectus.
CERTAIN ERISA CONSIDERATIONS
A fiduciary of any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code (each, a "Plan")
should carefully review with its legal advisors whether the purchase or holding
of Offered Certificates could give rise to a transaction that is prohibited or
is not otherwise permitted either under ERISA or Section 4975 of the Code or
whether there exists any statutory or administrative exemption applicable
thereto. Certain fiduciary and prohibited transaction issues arise only if the
assets of the Trust constitute "plan assets" for purposes of Part 4 of Title I
of ERISA and Section 4975 of the Code ("Plan Assets"). Whether the assets of the
Trust will constitute Plan Assets at any time will depend on a number of
factors, including the portion of any Class of Certificates that are held by
"benefit plan investors" (as defined in U.S. Department of Labor Regulation
Section 2510.3-101).
The U.S. Department of Labor issued to NationsBank Corporation (predecessor
in interest to BankAmerica Corporation) an individual prohibited transaction
exemption, Prohibited Transaction Exemption ("PTE") 93-31 (the "Exemption"),
which generally exempts from the application of the prohibited transaction
provisions of Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes
imposed on such prohibited transactions pursuant to Sections 4975(a) and (b) of
the Code, certain transactions, among others, relating to the servicing and
operation of mortgage pools, such as the Mortgage Pool, and the purchase, sale
and holding of mortgage pass-through certificates, such as the Senior
Certificates, underwritten by an Exemption-Favored Party (as hereinafter
defined), provided that certain conditions set forth in the Exemption are
satisfied. "Exemption-Favored Party" shall include (a) BankAmerica Corporation,
(b) any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control
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with BankAmerica Corporation (such as NationsBanc Montgomery Securities LLC),
and (c) any member of the underwriting syndicate or selling group of which a
person described in (a) or (b) is a manager or co-manager with respect to the
Senior Certificates.
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of a Senior Certificate
to be eligible for exemptive relief thereunder. First, the acquisition of such
Senior Certificate by a Plan must be on terms that are at least as favorable to
the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the rights and interests evidenced by such Senior Certificate
must not be subordinated to the rights and interests evidenced by the other
Certificates. Third, such Senior Certificate at the time of acquisition by the
Plan must be rated in one of the three highest generic rating categories by
Fitch IBCA, Inc. ("Fitch"), Moody's, S&P or Duff & Phelps Credit Rating Co.
("DCR"). Fourth, the Trustee cannot be an affiliate of any other member of the
"Restricted Group", which (in addition to the Trustee) consists of any
Exemption-Favored Party, the Depositor, the Master Servicer, the Special
Servicer, any sub-servicer, the Mortgage Loan Seller, Bank of America, any
borrower with respect to Mortgage Loans constituting more than 5% of the
aggregate unamortized principal balance of the Mortgage Pool as of the date of
initial issuance of the Certificates and any affiliate of any of the
aforementioned persons. Fifth, the sum of all payments made to and retained by
the Exemption-Favored Parties must represent not more than reasonable
compensation for underwriting the Senior Certificates; the sum of all payments
made to and retained by the Depositor pursuant to the assignment of the Mortgage
Loans to the Trust must represent not more than the fair market value of such
obligations; and the sum of all payments made to and retained by the Master
Servicer, the Special Servicer and any sub-servicer must represent not more than
reasonable compensation for such person's services under the Pooling Agreement
and reimbursement of such person's reasonable expenses in connection therewith.
Sixth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Commission under the Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Certificates, the second general condition set forth above is satisfied with
respect to such Certificates. It is a condition of their issuance that each
Class of Senior Certificates be rated not lower than "Aaa" by Moody's and "AAA"
(or "AAAr" in the case of the Class X Certificates) by S&P. As of the Delivery
Date, the fourth general condition set forth above will be satisfied with
respect to the Senior Certificates. A fiduciary of a Plan contemplating
purchasing a Senior Certificate in the secondary market must make its own
determination that, at the time of such purchase, such Certificate continues to
satisfy the third and fourth general conditions set forth above. A fiduciary of
a Plan contemplating purchasing a Senior Certificate, whether in the initial
issuance of such Certificate or in the secondary market, must make its own
determination that the first and fifth general conditions set forth above will
be satisfied with respect to such Certificate as of the date of such purchase. A
Plan's authorizing fiduciary will be deemed to make a representation regarding
satisfaction of the sixth general condition set forth above in connection with
the purchase of a Senior Certificate.
The Exemption also requires that the Trust meet the following requirements:
(i) the Trust Fund must consist solely of assets of the type that have been
included in other investment pools; (ii) certificates evidencing interests in
such other investment pools must have been rated in one of the three highest
categories of Fitch, Moody's, S&P or DCR for at least one year prior to the
Plan's acquisition of a Senior Certificate; and (iii) certificates evidencing
interests in such other investment pools must have been purchased by investors
other than Plans for at least one year prior to any Plan's acquisition of a
Senior Certificate. The Depositor has confirmed to its satisfaction that such
requirements have been satisfied as of the date hereof.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA, as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code, in connection
with (i) the direct or indirect sale, exchange or transfer of Senior
Certificates in the initial issuance of Certificates between the Depositor or an
Exemption-Favored Party and a Plan when the Depositor, an Exemption-Favored
Party, the Trustee, the Master Servicer, the Special Servicer, a sub-servicer,
the Mortgage Loan Seller, Bank of America or a borrower is a party in interest
(within the meaning of Section 3(14) of ERISA) or a disqualified person (within
the meaning of Section 4975(e)(2) of the Code)
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(a "Party in Interest") with respect to the investing Plan, (ii) the direct or
indirect acquisition or disposition in the secondary market of Senior
Certificates by a Plan and (iii) the continued holding of Senior Certificates by
a Plan. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
Senior Certificate on behalf of an Excluded Plan (as defined in the next
sentence) by any person who has discretionary authority or renders investment
advice with respect to the assets of such Excluded Plan. For purposes hereof, an
"Excluded Plan" is a Plan sponsored by any member of the Restricted Group.
Moreover, if the general conditions of the Exemption, as well as certain
other specific conditions set forth in the Exemption, are satisfied, the
Exemption may also provide an exemption from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code, in
connection with (1) the direct or indirect sale, exchange or transfer of Senior
Certificates in the initial issuance of Certificates between the Depositor or an
Exemption-Favored Party and a Plan when the person who has discretionary
authority or renders investment advice with respect to the investment of Plan
assets in such Certificates is (a) a borrower with respect to 5% or less of the
fair market value of the Mortgage Pool or (b) an affiliate of such a person, (2)
the direct or indirect acquisition or disposition in the secondary market of
Senior Certificates by a Plan and (3) the continued holding of Senior
Certificates by a Plan.
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the excise taxes imposed by Sections 4975(a) and (b) of
the Code by reason of Section 4975(c) of the Code, for transactions in
connection with the servicing, management and operation of the Mortgage Pool.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1) (A) through (D) of
the Code, if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan by
virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Senior Certificates.
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm that (i) the Senior Certificates constitute "certificates" for purposes
of the Exemption and (ii) the specific and general conditions and the other
requirements set forth in the Exemption would be satisfied. In addition to
making its own determination as to the availability of the exemptive relief
provided in the Exemption, the Plan fiduciary should consider the availability
of any other prohibited transaction class exemptions. See "Certain ERISA
Considerations" in the Prospectus. There can be no assurance that any such class
exemptions will apply with respect to any particular Plan investment in the
Offered Certificates or, even if it were deemed to apply, that any exemption
would apply to all transactions that may occur in connection with such
investment.
The characteristics of the Class B, Class C, Class D and Class E
Certificates do not meet the requirements of the Exemptions. Accordingly, the
Certificates of those Classes may not be acquired by a Plan, other than an
insurance company general account, which may be able to rely on Section III of
PTCE 95-60 or Section 401(c) of ERISA, as discussed in "Certain ERISA
Considerations -- Insurance Company General Accounts" in the Prospectus.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
Title I of ERISA or Section 4975 of the Code. However, such a governmental plan
may be subject to a federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code ("Similar Law"). A
fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under Similar Law.
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Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Depositor or the Underwriter that this investment meets
all relevant legal requirements with respect to investments by Plans generally
or by any particular Plan, or that this investment is appropriate for Plans
generally or for any particular Plan.
LEGAL INVESTMENT
The Class A, Class X and the Class B Certificates will constitute "mortgage
related securities" for purposes of SMMEA, so long as they are rated in one of
the two highest rating categories by one or more Rating Agencies and the
underlying Mortgage Loans are secured by real estate. None of the other Offered
Certificates will constitute "mortgage related securities" within the meaning of
SMMEA. The appropriate characterization of the Offered Certificates under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase the Offered Certificates, is subject to
significant interpretive uncertainties. No representation is made as to the
proper characterization of any class of Offered Certificates for legal
investment, financial institution regulatory or other purposes, or as to the
ability of particular investors to purchase the Offered Certificates under
applicable legal investment or other restrictions. All institutions whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities should
consult with their own legal advisors in determining whether and to what extent
the Offered Certificates constitute legal investments for them or are subject to
investment, capital or other restrictions. See "Legal Investment" in the
accompanying prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement
between the Depositor and the Underwriter (the "Underwriting Agreement"), the
Offered Certificates will be purchased from the Depositor by the Underwriter
upon issuance. The Underwriter is an affiliate of the Depositor. Proceeds to the
Depositor from the sale of the Offered Certificates, before deducting expenses
payable by the Depositor, will be an amount equal to approximately 105.5% of the
initial aggregate Certificate Balance of the Offered Certificates, plus accrued
interest on all the Offered Certificates, before deducting expenses payable by
the Depositor.
The Underwriter has agreed in the Underwriting Agreement to purchase the
aggregate principal balance or notional amount, as the case may be, of each
Class of Offered Certificates.
Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. The Underwriter may effect such transactions
by selling the Offered Certificates to or through dealers, and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter. In connection with the purchase and sale of
the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. The
Underwriter and any dealers that participate with the Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Certificates; however, neither
Underwriter has any obligation to do so, any market
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<PAGE> 97
making may be discontinued at any time and there can be no assurance that an
active public market for the Offered Certificates will develop. See "Risk
Factors -- Risks Related to the Certificates -- Limited Liquidity and Market
Value" in this prospectus supplement and "Risk Factors -- Limited Liquidity of
Offered Certificates" in the accompanying prospectus.
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls each Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and the such
controlling person with respect to, certain liabilities, including certain
liabilities under the Securities Act. Each of the Mortgage Loan Seller and Bank
of America has agreed to indemnify the Depositor, its officers and directors,
the Underwriter, and each person, if any, who controls the Depositor or the
Underwriter within the meaning of Section 15 of the Securities Act, with respect
to certain liabilities, including certain liabilities under the Securities Act,
relating to certain of the Mortgage Loans. Bank of America has agreed to
indemnify the Mortgage Loan Seller with respect to certain liabilities,
including certain liabilities under the Securities Act, relating to the Bank of
America Mortgage Loans.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriter by Cadwalader, Wickersham & Taft, New York, New York.
RATINGS
It is a condition to their issuance that the Offered Certificates receive
the credit ratings indicated below from Moody's Investors Service, Inc.
("Moody's") and/or Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc. ("S&P"; and, together with Moody's, the "Rating
Agencies"):
<TABLE>
<CAPTION>
CLASS MOODY'S S&P
- ----- ------- -------
<S> <C> <C>
Class A-1................................................... Aaa AAA
Class A-2................................................... Aaa AAA
Class X..................................................... Aaa AAAr
Class B..................................................... Aa2 AA
Class C..................................................... A2 A
Class D..................................................... Baa2 BBB
Class E..................................................... N/R BBB-
</TABLE>
S&P assigns the additional symbol of "r" to highlight classes of securities
that S&P believes may experience high volatility or high variability in expected
returns due to non-credit risks; however, the absence of an "r" symbol should
not be taken as an indication that a Class will exhibit no volatility or
variability in total return.
The ratings of the Offered Certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they are
entitled on each Distribution Date and, except in the case of the Class X
Certificates, the ultimate receipt by holders thereof of all payments of
principal to which they are entitled by the Distribution Date in August 20, 2030
(the "Rated Final Distribution Date"). The ratings take into consideration the
credit quality of the Mortgage Pool, structural and legal aspects associated
with the Certificates, and the extent to which the payment stream from the
Mortgage Pool is adequate to make payments of principal and/or interest, as
applicable, required under the Offered Certificates. The ratings of the Offered
Certificates do not, however, represent any assessments of (i) the likelihood or
frequency of voluntary or involuntary principal prepayments on the Mortgage
Loans, (ii) the degree to which such prepayments might differ from those
originally anticipated, or (iii) whether and to what extent Prepayment Premiums
will be collected on the Mortgage Loans in connection with such prepayments or
the corresponding effect on yield to investors. Also, a security rating does not
represent any assessment of the yield to maturity that investors may experience
or the possibility that the Class X Certificateholders might not fully recover
their investment
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in the event of rapid prepayments and/or other liquidations of the Mortgage
Loans (including both voluntary and involuntary prepayments). In general, the
ratings thus address credit risk and not prepayment risk. As described herein,
the amounts payable with respect to the Class X Certificates consist only of
interest (and, to the extent described herein, may consist of a portion of the
Prepayment Premiums actually collected on the Mortgage Loans). If the entire
pool were to prepay in the initial month, with the result that the Class X
Certificateholders receive only a single month's interest and thus suffer a
nearly complete loss of their investment, all amounts "due" to such
Certificateholders will nevertheless have been paid, and such result is
consistent with the ratings received on the Class X Certificates. The Notional
Amounts upon which interest is calculated with respect to the Class X
Certificates are subject to reduction in connection with each reduction in the
Certificate Balance of a Class of Sequential Pay Certificates, whether as a
result of principal payments or the allocation of Realized Losses. The ratings
on the Class X Certificates do not address the timing or magnitude of reduction
of such Notional Amounts, but only the obligation to pay interest timely on such
Notional Amounts as so reduced from time to time. Accordingly, the ratings on
the Class X Certificates should be evaluated independently from similar ratings
on other types of securities.
There is no assurance that any rating assigned to the Offered Certificates
by a Rating Agency will not be lowered, qualified or withdrawn by such Rating
Agency, if, in its judgment, circumstances so warrant. There can be no assurance
as to whether any rating agency not requested to rate the Offered Certificates
will nonetheless issue a rating to any Class thereof and, if so, what such
rating would be. A rating assigned to any Class of Offered Certificates by a
rating agency that has not been requested by the Depositor to do so may be lower
than the ratings assigned thereto by S&P and/or Moody's.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. See "Risk
Factors -- Limited Nature of Ratings" in the accompanying prospectus.
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<PAGE> 99
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
30/360 Basis...................... S-33
30/360 Mortgage Loans............. S-33
Accrued Certificate Interest...... S-69
ACMs.............................. S-43
Actual/360 Basis.................. S-33
Actual/360 Mortgage Loans......... S-33
Additional Trust Fund Expenses.... S-72
Administrative Fee Rate........... S-64, A-1
Administrative Fees............... S-79
ADP............................... S-39
Advances.......................... S-57
Annual Debt Service............... A-1
Annuity Factor.................... S-70
Appraisal Reduction Amount........ S-74
Appraisal Value................... A-1
Asset Status Report............... S-52
Assumed Monthly Payment........... S-70
Available Distribution Amount..... S-13, S-65
Balloon........................... A-1
Balloon Loans..................... S-33
Balloon Payment................... S-33
BankAmerica....................... S-46
Bank of America................... S-46
Bank of America Mortgage Loans.... S-32
Beds.............................. A-3
CBE............................... S-87
Certificate Balance............... S-63
Certificate Owner................. S-62
Certificate Registrar............. S-63
Certificateholders................ S-11
Certificates...................... S-62
Class............................. S-62
Class A Certificates.............. S-62
Class X Certificates.............. S-62
CMBS.............................. S-54
Collateral Substitution Deposit... S-34
Collection Period................. S-64
Commencement Date................. S-8
Commercial Loan................... S-32
Commercial Mortgaged Property..... S-32
Controlling Class................. S-53
Controlling Class
Certificateholder............... S-53
Corrected Mortgage Loan........... S-52
Cross-Collateralized Mortgage
Loans........................... S-32
Cut-off Date...................... S-31
Cut-off Date Balance.............. S-9, S-31
Cut-off Date Loan-to-Value
Ratio........................... A-1
Cut-off Date LTV.................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Cut-off Date LTV Ratio............ A-1
DCR............................... S-92
Decl. % Premium................... S-87
Default Interest.................. S-57
Defeasance Lock-Out Period........ S-34
Defeasance Option................. S-34
Definitive Certificate............ S-62
Delinquent Loan Status Report..... S-76
Depositor......................... S-8
Delivery Date..................... cover
Determination Date................ S-9, S-65
Directing Certificateholder....... S-53
Distributable Certificate
Interest........................ S-68
Distribution Date................. S-65
Distribution Date Statement....... S-75
DTC............................... S-62
Due Date.......................... S-33
Effective Time.................... S-46
ERISA............................. S-91
Excluded Plan..................... S-93
Exemption Favored Party........... S-91
Exemption......................... S-91
Expenses.......................... A-2
FIRREA............................ S-44
Fitch............................. S-92
Form 8-K.......................... S-51
FREE.............................. A-1
Fully Amortizing.................. A-1
GAAP.............................. A-2
Gateway Center I Loan............. S-37
Gateway Center II Loan............ S-37
Gateway Commerce Center I......... S-37
Gateway Commerce Center II........ S-37
Grtr.............................. A-1
Historical Loan Modification
Report.......................... S-76
Historical Loss Report............ S-76
Holes............................. A-3
IHFC.............................. S-35
Initial Pool Balance.............. S-9, S-31
Interest Reserve Account.......... S-73
Interest Reserve Event............ S-73
Interested Person................. S-60
International Home Furnishing
Center.......................... S-35
International Home Furnishing
Center Borrower................. S-35
International Home Furnishing
Center Loan..................... S-35
Journal Square Borrower........... S-38
</TABLE>
S-97
<PAGE> 100
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Journal Square Plaza II........... S-38
Journal Square Plaza II Loan...... S-38
Leasable Square Footage........... A-1
Liquidation Fee................... S-56
Liquidation Fee Rate.............. S-56
LNR............................... S-54
Lock-out Period................... S-33
LOP............................... S-83
Lost Coupon Amount................ S-70
LUSTs............................. S-36
MAI............................... S-44
Major Tenants..................... S-41
Master Servicing Fee.............. S-55
Master Servicing Fee Rate......... S-55
Maturity.......................... A-1
Maturity Assumptions.............. S-83
Maturity Date..................... A-1
Maturity Date Balance............. A-1
Maturity Date Loan-to-Value
Ratio........................... A-1
Maturity Date LTV................. A-1
Merger............................ S-46
Midland........................... S-54
Mobile Home Properties............ S-26
Modified Mortgage Loan............ S-75
Monthly Payments.................. S-33
Moody's........................... S-4, S-95
Mortgage.......................... S-32
Mortgage Loan Schedule............ S-48
Mortgage Loan Seller.............. S-8
Mortgage Loans.................... S-9, S-31
Mortgage Note..................... S-32
Mortgage Pool..................... S-9
Mortgage Rate..................... S-33
Mortgaged Property................ S-32
Most Recent DSCR.................. A-1
Most Recent End Date.............. A-1
Most Recent Expenses.............. A-2
Most Recent NOI................... A-2
Most Recent Revenues.............. A-2
Multifamily Loan.................. S-32
Multifamily Mortgaged Property.... S-32
NationsBank....................... S-46
NationsBank (DE).................. S-46
NationsBank Mortgage Loans........ S-32
Negative Adjustment............... S-90
Net Aggregate Prepayment Interest
Shortfall....................... S-69
Net Mortgage Rate................. S-64
Net Rentable Area(SF)............. A-1
NOI............................... A-2
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Nonrecoverable Advances........... S-74
Nonrecoverable P&I Advance........ S-73
Nonrecoverable Servicing
Advance......................... S-58
North A Loan...................... S-39
Norwest Bank...................... S-79
Notional Amount................... S-63
Occupancy Percent................. A-2
Occupancy %....................... A-2
Offered Certificates.............. S-62
Open Period....................... S-33
Operating Statement Analysis...... S-77
Original Pooling Agreement........ S-62
Participants...................... S-62
Party in Interest................. S-93
Pass-Through Rate................. S-12
Permitted Encumbrances............ S-48
Permitted Investments............. S-55
Phase II.......................... S-43
P&I Advance....................... S-73
Plan.............................. S-91
Plan Assets....................... S-91
Pooling Agreement................. S-62
Prepayment Interest Excess........ S-55
Prepayment Interest Shortfall..... S-55
Prepayment Premium................ S-33
Prepayment Premium Period......... S-33
Principal Distribution Amount..... S-69
Private Certificates.............. S-62
PTE............................... S-91
PV Yield Loss Amount.............. S-70
Purchase Price.................... S-47
Rated Final Distribution Date..... S-4, S-95
Rating Agencies................... S-4, S-95
Realized Losses................... S-72
Record Date....................... S-65
Reimbursement Rate................ S-74
Reincorporation Merger............ S-46
Reinvestment Yield................ S-71
Related Loans..................... A-3
Related Proceeds.................. S-57
Release Date...................... S-34
REMIC............................. S-89
REMIC Administrator............... S-8, S-80
REMIC I........................... S-89
REMIC II.......................... S-89
REMIC III......................... S-89
REMIC Regular Certificates........ S-62
REMIC Residual Certificates....... S-62
REO Extension..................... S-60
REO Property...................... S-51
REO Status Report................. S-77
</TABLE>
S-98
<PAGE> 101
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REO Tax........................... S-90
Required Appraisal Date........... S-74
Required Appraisal Loan........... S-74
Restricted Group.................. S-92
Revenues.......................... A-2
Rooms............................. A-3
Senior Certificates............... S-66
Sequential Pay Certificates....... S-12, S-62
Servicer Reports.................. S-76
Servicing Advances................ S-57
Servicing Standard................ S-51
Servicing Transfer Event.......... S-51
Settlement Date................... S-83
sf................................ S-35
Similar Law....................... S-93
SMMEA............................. S-16
S&P............................... S-4, S-95
South B Loan...................... S-39
Special Servicer Loan Status
Report.......................... S-77
Special Servicing Fee............. S-56
Special Servicing Fee Rate........ S-56
Specially Serviced Mortgage
Loan............................ S-51
Standby Fee....................... S-56
Stated Principal Balance.......... S-64
Subordinate Certificates.......... S-66
Sub-Servicer...................... S-54
Sub-Servicing Agreement........... S-55
Sub-Servicing Fee Rate............ A-1
Successor Servicer Retained Fee... S-55
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Surviving Mortgage Loan Seller.... S-46
Trailing Date..................... A-3
Trailing DSCR..................... A-3
Trailing Expenses................. A-3
Trailing NOI...................... A-3
Trailing Revenues................. A-3
Trust............................. S-62
Trust Formation Date.............. S-62
Trust Fund........................ S-62
Trustee Fee....................... S-79
Underwriting Agreement............ S-94
Underwriting Debt Service
Coverage Ratio.................. A-3
Underwriting DSCR................. A-3
Underwriting NOI.................. A-3
Units............................. A-3
UPB............................... A-3
U/W DSCR.......................... A-3
U/W Expenses...................... A-4
U/W NOI........................... A-3
U/W Reserves...................... A-4
U/W Reserves Per Unit............. A-4
U/W Revenues...................... A-3
Voting Rights..................... S-78
Weighted Average Net Mortgage
Rate............................ S-64
Withheld Amount................... S-73
Workout Fee....................... S-56
Workout Fee Rate.................. S-56
YM................................ A-4
YMP............................... S-83
</TABLE>
S-99
<PAGE> 102
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
The schedule and tables appearing in this Annex A set forth certain
information with respect to the Mortgage Loans and Mortgaged Properties. Unless
otherwise indicated, such information is presented as of the Cut-off Date. The
statistics in such schedule and tables were derived, in many cases, from
information and operating statements furnished by or on behalf of the respective
borrowers. Such information and operating statements were generally unaudited
and have not been independently verified by the Depositor or the Underwriter, or
any of their respective affiliates or any other person.
For purposes of the Prospectus Supplement, including the schedule and
tables in this Annex A, the indicated terms shall have the following meanings:
1. "Administrative Fee Rate" means the sum of the Master Servicing Fee
Rate (including the per annum rates at which the monthly sub-servicing fee
is payable to the related Sub-Servicer (the "Sub-Servicing Fee Rate") and
the Standby Fee is payable to the Special Servicer), plus the per annum
rate applicable to the calculation of the Trustee Fee.
2. "Annual Debt Service" means, for any Mortgage Loan, twelve times
the amount of the Monthly Payment under such Mortgage Loan as of the
Cut-off Date.
3. "Appraisal Value" means, for any Mortgaged Property, the
appraiser's value as stated in the appraisal available to the Depositor as
of the date specified on the schedule.
4. "Balloon" means Balloon Loan.
5. "Cut-off Date Loan-to-Value Ratio", "Cut-off Date LTV Ratio" or
"Cut-off Date LTV" means, with respect to any Mortgage Loan, the Cut-off
Date Balance of such Mortgage Loan divided by the Appraisal Value of the
related Mortgaged Property. "Maturity Date Loan-to-Value Ratio" or
"Maturity Date LTV" means, with respect to any Mortgage Loan, the Maturity
Date Balance, divided by the Appraisal Value of the related Mortgaged
Property.
6. "DEFEASANCE" means, with respect to any Mortgage Loan, that such
Mortgage Loan is subject to a Defeasance Option.
7. "FREE" means, with respect to any Mortgage Loan, that such Mortgage
Loan may be voluntarily prepaid without a Prepayment Premium.
8. "Fully Amortizing" means fully amortizing Mortgage Loan.
9. "Grtr" means "the greater of".
10. "Leasable Square Footage" or "Net Rentable Area (SF)" means, in
the case of a Mortgaged Property operated as a retail center, franchise
restaurant, office complex or industrial facility, the square footage of
the net leasable area.
11. "Maturity" or "Maturity Date" means, with respect to any Mortgage
Loan, the date specified in the related Mortgage Note as its stated
maturity date.
12. "Maturity Date Balance" means, with respect to any Mortgage Loan,
the balance due at maturity assuming no prepayments, defaults or
extensions.
13. "Most Recent DSCR" means, with respect to any Mortgage Loan, (a)
the Most Recent NOI for the related Mortgaged Property, divided by (b) the
Annual Debt Service for such Mortgage Loan.
14. "Most Recent End Date" means, with respect to each Mortgage Loan,
the date indicated on Annex A as the "Most Recent End Date" with respect to
such Mortgage Loan, which date is generally the end date with respect to
the period covered by the latest available annual operating statement
provided by the related borrower.
A-1
<PAGE> 103
15. "Most Recent NOI" means, with respect to any Mortgaged Property,
the NOI derived therefrom that was available for debt service, calculated
as Most Recent Revenues less Most Recent Expenses. See also "NOI" below.
(i) "Most Recent Revenues" are the Revenues received (or annualized
or estimated in certain cases) in respect of a Mortgaged Property for
the 12-month period ended as of the Most Recent End Date, based upon the
latest available annual operating statement and other information
furnished by the borrower for its most recently ended fiscal year.
(ii) "Most Recent Expenses" are the Expenses incurred (or
annualized or estimated in certain cases) for a Mortgaged Property for
the 12-month period ended as of the Most Recent End Date, based upon the
latest available annual operating statement and other information
furnished by the borrower for its most recently ended fiscal year.
16. "NOI" means with respect to any Mortgaged Property, the total cash
flow available for annual debt service on the related Mortgage Loan,
generally calculated as the excess of Revenues over Expenses.
(i) "Revenues" generally consist of certain revenues received in
respect of a Mortgaged Property, including, for example, (A) for the
Multifamily Mortgaged Properties, rental and other revenues; (B) for the
Commercial Mortgaged Properties (other than the health care related and
hotel Mortgaged Properties), base rent (less mark-to-market adjustments
in some cases), percentage rent, expense reimbursements and other
revenues; (C) for the health care Mortgaged Properties, resident
charges, Medicaid and Medicare payments, and other revenues; (D) for the
hotel and franchise restaurant Mortgaged Properties, guest room rates
(hotels only), food and beverage charges, telephone charges and other
revenues.
(ii) "Expenses" generally consist of all expenses incurred for a
Mortgaged Property, including for example, salaries and wages, the costs
or fees of utilities, repairs and maintenance, marketing, insurance,
management, landscaping, security (if provided at the Mortgaged
Property) and the amount of real estate taxes, general and
administrative expenses, ground lease payments, and other costs but
without any deductions for debt service, depreciation and amortization
or capital expenditures therefor. In the case of hotel and franchise
restaurant Mortgaged Properties, Expenses include, for example, expenses
relating to guest rooms (hotels only), food and beverage costs,
telephone bills, and rental and other expenses, and such operating
expenses as general and administrative, marketing and franchise fees.
Examples of expenses in the case of health care Mortgaged Properties
include routine and ancillary contractual expenses, nursing expenses,
dietary expenses, laundry/housekeeping expenses, activities/social
service expenses, equipment rental expenses and other expenses.
In certain cases, Trailing NOI, Most Recent NOI and/or U/W NOI have been
adjusted by removing certain non-recurring expenses and revenue or by certain
other normalizations. Such NOI does not necessarily reflect accrual of certain
costs such as capital expenditures and leasing commissions and does not reflect
non-cash items such as depreciation or amortization. In some cases, capital
expenditures and non-recurring items may have been treated by a borrower as an
expense but were deducted from Trailing Expenses, Most Recent Expenses or U/W
Expenses to reflect normalized Trailing NOI, Most Recent NOI or U/W NOI, as the
case may be. The Depositor has not made any attempt to verify the accuracy of
any information provided by each borrower or to reflect changes in that may have
occurred since the date of the information provided by each borrower for the
related Mortgaged Property. Such NOI was not necessarily determined in
accordance with generally accepted accounting principles ("GAAP"). Such NOI is
not a substitute for net income determined in accordance with GAAP as a measure
of the results of a Mortgaged Property's operations or a substitute for cash
flows from operating activities determined in accordance with GAAP as a measure
of liquidity. Moreover, in certain cases such NOI may reflect partial-year
annualizations.
17. "Occupancy %" or "Occupancy Percent" means the percentage of
Leasable Square Footage or Total Units/Rooms/Pads, as the case may be, of
the Mortgaged Property that was occupied as of a specified date, as
specified by the borrower or as derived from the Mortgaged Property's rent
rolls, which
A-2
<PAGE> 104
generally are calculated by physical presence or, alternatively, collected
rents as a percentage of potential rental revenues.
18. "Related Loans" means two or more Mortgage Loans with respect to
which the related Mortgaged Properties are either owned by the same entity
or owned by two or more entities controlled by the same key principals.
19. "Units" "Rooms", "Beds" and "Holes" respectively, mean: (i) in the
case of a Mortgaged Property operated as multifamily housing, the number of
apartments, regardless of the size of or number of rooms in such apartment
(referred to in the schedule as "Units"); (ii) in the case of a Mortgaged
Property operated as a hotel, the number of rooms (referred to in the
schedule as "Rooms"); (iii) in the case of a Mortgaged Property operated as
a health care facility, the number of beds (referred to in the schedule as
"Beds"); and (iv) in the case of the Mortgaged Property operated as a golf
course, the number of golf holes (referred to in the schedule as "Holes").
20. "Trailing Date" means, with respect to any Mortgage Loan, the date
indicated on Annex A as the "Trailing Date" with respect to such Mortgage
Loan.
21. "Trailing DSCR" means, with respect to any Mortgage Loan, (a) the
Trailing NOI for the related Mortgaged Property (plus, in the case of
restaurant franchise loans only, ground rents), divided by (b) the Annual
Debt Service for such Mortgage Loan (plus, in the case of restaurant
franchise loans only, ground rents).
22. "Trailing NOI" means, with respect to any Mortgaged Property, the
NOI derived therefrom that was available for debt service, calculated as
Trailing Revenues less Trailing Expenses. See also "NOI" above.
(i) "Trailing Revenues" are the Revenues received (or annualized or
estimated in certain cases) in respect of a Mortgaged Property for the
12-month period ended on the Trailing Date, based upon operating
statements and other information furnished by the related borrower.
(ii) "Trailing Expenses" are the Expenses incurred (or annualized
or estimated in certain cases) for a Mortgaged Property for the 12-month
period ended on the Trailing Date, based upon operating statements and
other information furnished by the related borrower.
23. "UPB" means, with respect to any Mortgage Loan, its unpaid
principal balance.
24. "U/W DSCR", "Underwriting DSCR" or "Underwriting Debt Service
Coverage Ratio" means, with respect to any Mortgage Loan, (a) the U/W NOI
for the related Mortgaged Property (plus, in the case of restaurant
franchise loans only, ground rents) divided by (b) the Annual Debt Service
for such Mortgage Loan (plus, in the case of restaurant franchise loans
only, ground rents).
25. "U/W NOI" or "Underwriting NOI" means, with respect of any
Mortgaged Property, the NOI derived therefrom that was available for debt
service, calculated as U/W Revenues less U/W Expenses. See also "NOI"
above.
(i) "U/W Revenues" are the anticipated Revenues in respect of a
Mortgaged Property, generally determined by means of an estimate made at
the origination of such Mortgage Loan. U/W Revenues have generally been
calculated (a) assuming that the occupancy rate for the Mortgaged
Property was consistent with the Mortgaged Property's current or
historical rate, or the relevant market rate, if such rate was less than
the occupancy rate reflected in the most recent rent roll or operating
statements, as the case may be, furnished by the related borrower, and
(b) in the case of retail, office and industrial Mortgaged Properties,
assuming a level of reimbursements from tenants consistent with the
terms of the related leases or historical trends at the Mortgaged
Property, and in certain cases, assuming that a specified percentage of
rent will become defaulted or otherwise uncollectible. In addition, in
the case of retail, office and industrial Mortgaged Properties, upward
adjustments may have been made with respect to such revenues to account
for all or a portion of the rents provided for under any new leases
scheduled to take effect later in the year. Also, in the case of
A-3
<PAGE> 105
certain Mortgaged Properties that are operated as franchise restaurant,
nursing home or hotel properties and are subject to an operating lease
with a single operator, U/W Revenues were calculated based on revenues
received by the operator rather than rental payments received by the
related borrower under the operating lease.
(ii) "U/W Expenses" are the anticipated Expenses in respect of a
Mortgaged Property, generally determined by means of an estimate made at
the origination of such Mortgage Loan. U/W Expenses were generally
assumed to be equal to historical annual expenses reflected in the
operating statements and other information furnished by the borrower,
except that such expenses were generally modified by (a) if there was no
management fee or a below market management fee, assuming that a
management fee was payable with respect to the Mortgaged Property in an
amount approximately equal to a percentage of assumed gross revenues for
the year, (b) adjusting certain historical expense items upwards or
downwards to amounts that reflect industry norms for the particular type
of property and/or taking into consideration material changes in the
operating position of the related Mortgaged Property (such as newly
signed leases and market data) and (c) adjusting for non-recurring items
(such as capital expenditures) and tenant improvement and leasing
commissions, if applicable (in the case of certain retail, office and
industrial Mortgaged Properties, adjustments may have been made to
account for tenant improvements and leasing commissions at costs
consistent with historical trends or prevailing market conditions and,
in other cases, operating expenses did not include such costs).
Actual conditions at the Mortgaged Properties will differ, and may differ
substantially, from the assumed conditions used in calculating U/W NOI. In
particular, the assumptions regarding tenant vacancies, tenant improvements and
leasing commissions, future rental rates, future expenses and other conditions
if and to the extent used in calculating U/W NOI for a Mortgaged Property, may
differ substantially from actual conditions with respect to such Mortgaged
Property. There can be no assurance that the actual costs of reletting and
capital improvements will not exceed those estimated or assumed in connection
with the origination or purchase of the Mortgage Loans.
In some cases, U/W NOI describes the cash flow available before
deductions for capital expenditures such as tenant improvements, leasing
commissions and structural reserves. U/W NOI has been calculated without
including U/W Reserves or any other reserves among Underwriting Expenses.
Had such reserves been so included, U/W NOI would have been lower. Even in
those cases where such "reserves" were so included, no cash may have been
actually escrowed. No representation is made as to the future net cash flow
of the properties, nor is U/W NOI set forth herein intended to represent
such future net cash flow.
26. "U/W Reserves" means, with respect to any Mortgaged Property, the
aggregate amount of on-going reserves (generally for capital improvements
and replacements) assumed to be maintained with respect to such Mortgaged
Property. In each case, actual reserves, if any, may be less than the
amount of U/W Reserves.
27. "U/W Reserves Per Unit" means, with respect to any Mortgaged
Property, (a) the related U/W Reserves, divided by (b) the number of Units,
Leasable Square Feet, Rooms, Beds or Holes, as applicable.
28. "YM" means, with respect to any Mortgage Loan, a yield maintenance
premium.
A-4
<PAGE> 106
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------------- ----------------
<C> <C> <S> <C>
N001 50752 Parkview Towers Apts. 5101 Park Ave.
N002 50659 Summerwind Apartments 2055 Summerside Drive
N003 50958 Vanderbilt Apts. I & II 13110 Kuykendahl Rd.
N004 50750 Sonterra at Williams Centre (Apt) 5400 E. Williams Blvd.
N005 50925 Colony Hills Apartments 3950 Patrick Drive
N006 50924 Grandes Cortez Apartments 1150 University Drive
N007 50923 Canyon Walk Apartments 1502 W. Glendale Ave.
N008 50921 Paseo Del Sol Apartments 2634 51st Street
SUB-TOTAL CROSSED LOANS
N009 50646 599-621 Front Street 599-621 Front Street (Hofstra Gardens Apts.)
N010 50645 299 Jackson Street 299 Jackson Street (Colonial Gardens Apts.)
N011 50654 15-35 Elk Street 15-35 Elk Street (Bennett Gardens Apts.)
N012 50644 100 Jerusalem Avenue 100 Jerusalem Avenue (Hampshire House Apts.)
N013 50655 357 Jackson Street Apartments 357 Jackson Street
N014 50656 51 Bell Street Apartments 51 Bell Street
SUB-TOTAL CROSSED LOANS
B015 3054921 Kimberly Place Apartments 895 Sierra Vista Drive
N016 50691 Parcwood Apartments 1700 Via Pacifica Avenue
N017 50094 Colonial Homes Apartments 240 Colonial Homes Dr.
N018 50790 Relais Esplanade Apartments 1201 West Esplanade Avenue
B019 3047180 Dry Creek Properties 33300 Mission Blvd.
N020 50971 Spring Villas Apartments 431 Spring Villas Drive
B021 3052107 Gentry Walk Apartments 12725 S.E. 312th Street
N022 50842 Pioneer Warehouse Lofts 315 Fourth Avenue
N023 50013 St. Charles Regency Apts. 1205 St. Charles St.
N024 50920 Southwest Village Apartments 275 Isabell Road
N025 50936 Twin Lakes Manor Apartments 3311 53rd Avenue North
N026 50844 Dos Santos Apts. 2210 Miguel Chavez Road
N027 50831 Prospect Creek Apts. 414 Point Return Drive
B028 3052032 Villa Pacific Apartments 2901-2993 1/4, Clairmont Drive, 4902-5030 1/4 Field Street
N029 50836 Laurel Gardens Cooperative, Inc. 2 Laurel Place
N030 50122 Beacon Hill Apartments 4653 Refugee Road
B031 3054673 Queen Vista Apartments 1321 Queen Anne Avenue North
N032 50784 Amberwood Apts. 7651-7677 Stage Road
N033 50492 Franklin Regency Apartments 7200 Franklin Avenue
N034 50997 Whispering Meadows Apartments 508 Douglas Avenue
B035 3051950 Mahara Condo Apartments 820 Casanova Avenue
B036 3057007 Hyde Park Apartments 5150 North Valentine Avenue
B037 3051125 Village Apartments 3342 M Street
B038 3055316 Happy Village Apartments 6301 Ranchester Drive
B039 3048246 Hickory Terrace Apartments 4247 Hickory Hills Drive
B040 3052248 Rockshire Apartments 115 South High School Road
N041 50865 Highland Terrace Apts. 1300 Highland Avenue
B042 3056934 Bayfill Apartments 3600 Fillmore Street
N043 50815 Sierra Chase Apartments 8079 Sunrise East Way
N044 50806 Park Place Apts. 1257 Crom Street
B045 3049152 De Soto Apartments 7233, 7242, and 7259 Kelvin Avenue and 7230 De Soto Avenue
B046 3047040 Park Meridian Apartments 950 Meridian Avenue
B047 3052396 The Elms Apartments 745 North 100 East
N048 50279 Maplewood Senior Citizens Apartments 558-572 Irvington Avenue
N049 50763 Stonebrook Square Apartments 1912 Heathcliff Drive
N050 50493 Jessica Apts. 1611 N. Formosa Avenue
B051 3062247 St. Francis Towers 30 40&50 Escuela Drive
B052 3051695 4532 Murietta Avenue 4532 Murietta Avenue
B053 3052370 Pacific Vista Apartments 57 Soledad
N054 50840 Vermont Hills Apts. 22811-22815 Vermont Street
N055 50689 New Heritage Apts. 2148 Geary Street, SE
N056 50710 Frederick Gardens Apts. 1405 SW 10th Terrace
N057 50895 Bay Harbor Apts. 404 Edgebrook Drive
N058 50744 Alder Creek Condominiums (Apt.) 671-691 Gardenia Court, 701-735 Gardenia Circle
N059 50866 Tara Hills Apts. 200 Elmhurst Drive
N060 50854 Pantano Villas Apartments 260 South Pantano Road
N061 50959 Wil-Ru Apartments SE 1615 Bleasner Drive
N062 50884 Quail Hollow Apartments 7561 Quail Meadow Lane
N063 50772 Spring Valley Apartments 1858 Thompson Bridge Road
N064 50824 Pheasant Run Apartments 8800 E. Harry Street
N065 50553 Spring Garden Apts. 1175 West Minnesota Ave.
B066 3052230 Karolena Park Apartments 20230 Bothell-Everett Highway
N067 50554 Pershing Oaks Apts. 4439 Hector Court
N068 50841 Valley Vista Apartments 6830 Tacoma Mall Blvd.
<CAPTION>
SE-
QUENCE COUNTY CITY
- ------ ------ ----
<C> <C> <C>
N001 Hudson West New York
N002 Santa Clara San Jose
N003 Harris Houston
N004 Pima Tucson
N005 El Paso Colorado Springs
N006 Maricopa Tempe
N007 Maricopa Phoenix
N008 Maricopa Phoenix
N009 Nassau Hempstead
N010 Nassau Hempstead
N011 Nassau Hempstead
N012 Nassau Hempstead
N013 Nassau Hempstead
N014 Nassau Hempstead
B015 Clark Las Vegas
N016 Riverside Corona
N017 Fulton Atlanta
N018 Jefferson Parish Kenner
B019 Alameda Union City
N020 Washoe Sparks
B021 King Auburn
N022 San Diego San Diego
N023 Orleans New Orleans
N024 Washoe Reno
N025 Hennepin Brooklyn Center
N026 Santa Fe Santa Fe
N027 St. Louis Manchester
B028 San Diego San Diego
N029 Monmouth Eatontown
N030 Franklin Columbus
B031 King Seattle
N032 Orange Buena Park
N033 Los Angeles Hollywood Hills
N034 Kern Bakersfield
B035 Monterey Monterey
B036 Fresno Fresno
B037 Merced Merced
B038 Harris Houston
B039 Lake Waukegan
B040 Marion Indianapolis
N041 Knox Knoxville
B042 San Francisco San Francisco
N043 Sacramento Citrus Heights
N044 San Joaquin Manteca
B045 Los Angeles Canoga Park
B046 Santa Clara San Jose
B047 Utah Provo
N048 Essex Maplewood
N049 Whitfield Dalton
N050 Los Angeles Los Angeles
B051 San Mateo Daly City
B052 Los Angeles Sherman Oaks
B053 Monterey Monterey
N054 Alameda Hayward
N055 Linn Albany
N056 Alachua Gainesville
N057 Champaign Champaign
N058 San Luis Obispo Paso Robles
N059 Anderson Oak Ridge
N060 Pima Tucson
N061 Whitman Pullman
N062 Mecklenburg Charlotte
N063 Hall Gainesville
N064 Sedgwick Wichita
N065 Volusia Deland
B066 Snohomish Bothell
N067 Orange Orlando
N068 Pierce Tacoma
</TABLE>
<PAGE> 107
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY ADMINI-
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE STRATIVE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE FEE RATE(I)
----- ---- ---- ------- ------- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NJ 07093-2532 Multifamily $ 28,000,000 $ 27,924,914 $ 21,546,065 Balloon 7.053% 0.113%
CA 95122 Multifamily 20,100,000 20,015,720 17,575,275 Balloon 7.010% 0.113%
TX 77090 Multifamily 16,450,000 16,427,843 15,100,703 Balloon 6.760% 0.143%
AZ 85711 Multifamily 16,400,000 16,328,713 14,286,884 Balloon 6.870% 0.103%
CO 80916 Multifamily 7,317,000 7,307,316 6,364,138 Balloon 6.820% 0.143%
AZ 85281 Multifamily 3,241,000 3,236,898 2,830,210 Balloon 6.970% 0.143%
AZ 85021 Multifamily 3,045,000 3,038,538 2,437,804 Balloon 6.920% 0.143%
AZ 85035 Multifamily 2,600,000 2,596,709 2,270,455 Balloon 6.970% 0.143%
---------- ----------
16,179,461 13,902,608
NY 11550 Multifamily 3,622,500 3,601,475 3,181,583 Balloon 7.223% 0.143%
NY 11550 Multifamily 3,275,000 3,255,992 2,876,379 Balloon 7.223% 0.143%
NY 11550 Multifamily 2,640,000 2,624,677 2,318,670 Balloon 7.223% 0.143%
NY 11550-6041 Multifamily 2,422,500 2,408,440 2,127,642 Balloon 7.223% 0.143%
NY 11550 Multifamily 800,000 792,694 645,883 Balloon 7.223% 0.143%
NY 11550 Multifamily 640,000 634,155 516,706 Balloon 7.223% 0.143%
---------- ----------
13,317,432 11,666,864
NV 89109 Multifamily 12,400,000 12,375,835 10,905,072 Balloon 7.254% 0.143%
CA 91720 Multifamily 12,264,000 12,218,675 10,672,596 Balloon 6.850% 0.143%
GA 30309 Multifamily 12,000,000 11,908,174 10,813,375 Balloon 8.255% 0.113%
LA 70065 Multifamily 11,800,000 11,747,787 10,260,312 Balloon 6.800% 0.143%
CA 94587 Multifamily 9,950,000 9,921,908 8,663,993 Balloon 6.861% 0.143%
NV 89431 Multifamily 8,560,000 8,548,200 7,846,811 Balloon 6.680% 0.143%
WA 98092 Multifamily 8,400,000 8,378,578 7,386,500 Balloon 7.236% 0.143%
CA 92101 Multifamily 8,350,000 8,340,059 7,329,839 Balloon 7.170% 0.143%
LA 70130 Multifamily 8,392,000 8,308,397 7,634,755 Balloon 8.730% 0.193%
NV 89509 Multifamily 8,142,000 8,135,140 6,977,183 Balloon 6.860% 0.133%
MN 55429 Multifamily 8,100,000 8,089,185 7,039,498 Balloon 6.790% 0.143%
NM 87505-6923 Multifamily 8,037,500 8,020,664 7,018,471 Balloon 6.980% 0.143%
MO 63021-5798 Multifamily 7,600,000 7,565,940 6,080,910 Balloon 6.900% 0.143%
CA 92117 Multifamily 7,500,000 7,478,842 6,531,171 Balloon 6.864% 0.143%
NJ 07724 Multifamily 7,200,000 7,184,643 6,275,543 Balloon 6.910% 0.143%
OH 43232 Multifamily 7,000,000 6,942,865 6,190,691 Balloon 7.495% 0.143%
WA 98119 Multifamily 6,400,000 6,387,018 5,606,575 Balloon 7.103% 0.143%
CA 90621 Multifamily 6,000,000 5,982,762 5,215,286 Balloon 6.795% 0.143%
CA 90046 Multifamily 5,800,000 5,775,617 5,070,137 Balloon 7.000% 0.143%
CA 93308 Multifamily 5,475,000 5,471,430 4,765,559 Balloon 6.860% 0.143%
CA 93940 Multifamily 5,500,000 5,449,267 Fully Amortizing 7.146% 0.143%
CA 93711 Multifamily 5,175,000 5,168,115 4,498,908 Balloon 6.802% 0.143%
CA 95348 Multifamily 5,100,000 5,081,459 4,446,007 Balloon 6.916% 0.143%
TX 77036 Multifamily 5,050,000 5,044,778 4,054,969 Balloon 7.027% 0.143%
IL 60087 Multifamily 4,824,000 4,807,954 4,243,855 Balloon 7.266% 0.143%
IN 46241 Multifamily 4,800,000 4,790,225 4,203,292 Balloon 7.088% 0.143%
TN 37916 Multifamily 4,499,000 4,486,860 3,935,081 Balloon 7.030% 0.143%
CA 94123 Multifamily 4,500,000 4,470,949 Fully Amortizing 6.769% 0.143%
CA 95610 Multifamily 4,396,400 4,380,631 3,838,104 Balloon 6.970% 0.143%
CA 95336 Multifamily 4,349,800 4,334,354 3,801,416 Balloon 7.010% 0.123%
CA 91306 Multifamily 4,125,000 4,110,179 3,600,504 Balloon 6.963% 0.143%
CA 95125 Multifamily 4,000,000 3,994,626 3,610,689 Balloon 6.769% 0.143%
UT 84606 Multifamily 4,000,000 3,989,542 3,509,225 Balloon 7.146% 0.143%
NJ 07040 Multifamily 4,000,000 3,965,281 2,609,995 Balloon 7.510% 0.193%
GA 30720 Multifamily 3,855,000 3,840,717 3,353,871 Balloon 6.840% 0.143%
CA 90046 Multifamily 3,824,465 3,808,387 3,343,200 Balloon 7.000% 0.143%
CA 94015 Multifamily 3,800,000 3,794,894 3,300,525 Balloon 6.768% 0.143%
CA 91423 Multifamily 3,800,000 3,792,656 3,344,521 Balloon 7.285% 0.143%
CA 93940 Multifamily 3,760,000 3,751,251 3,333,401 Balloon 7.559% 0.143%
CA 94541 Multifamily 3,600,000 3,589,968 3,138,805 Balloon 6.910% 0.143%
OR 97321 Multifamily 3,535,996 3,522,205 2,750,650 Balloon 7.285% 0.168%
FL 32601 Multifamily 3,440,000 3,425,703 3,010,596 Balloon 7.044% 0.143%
IL 61820 Multifamily 3,400,000 3,395,990 2,986,916 Balloon 7.200% 0.143%
CA 93446 Multifamily 3,391,375 3,377,792 2,626,406 Balloon 7.185% 0.168%
TN 37830 Multifamily 3,202,000 3,193,360 2,800,651 Balloon 7.030% 0.143%
AZ 87510 Multifamily 3,120,000 3,116,309 2,740,228 Balloon 7.190% 0.143%
WA 99163 Multifamily 3,100,000 3,096,076 2,707,081 Balloon 6.970% 0.143%
NC 28210 Multifamily 3,100,000 3,095,849 2,693,404 Balloon 6.780% 0.143%
GA 30501 Multifamily 3,008,000 2,997,061 2,622,203 Balloon 6.915% 0.143%
KS 67207 Multifamily 3,000,000 2,991,795 2,620,521 Balloon 6.980% 0.143%
FL 32720 Multifamily 2,960,000 2,947,653 2,589,561 Balloon 7.030% 0.143%
WA 98010 Multifamily 2,950,000 2,942,033 2,580,035 Balloon 7.027% 0.143%
FL 32822 Multifamily 2,925,000 2,912,799 2,558,941 Balloon 7.030% 0.143%
WA 98409 Multifamily 2,900,000 2,892,068 2,533,170 Balloon 6.980% 0.143%
<CAPTION>
SUB- NET FIRST INTEREST
SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
FEE RATE RATE DATE DATE METHOD
-------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.070% 6.940% 4/9/98 6/1/98 Actual/360
0.070% 6.897% 2/25/98 4/1/98 Actual/360
0.100% 6.617% 6/22/98 8/1/98 Actual/360
0.060% 6.767% 2/27/98 4/1/98 Actual/360
0.100% 6.677% 6/30/98 8/1/98 Actual/360
0.100% 6.827% 6/30/98 8/1/98 Actual/360
0.100% 6.777% 6/30/98 8/1/98 Actual/360
0.100% 6.827% 6/30/98 8/1/98 Actual/360
0.100% 7.080% 12/24/97 2/1/98 Actual/360
0.100% 7.080% 12/24/97 2/1/98 Actual/360
0.100% 7.080% 12/24/97 2/1/98 Actual/360
0.100% 7.080% 12/24/97 2/1/98 Actual/360
0.100% 7.080% 12/24/97 2/1/98 Actual/360
0.100% 7.080% 12/24/97 2/1/98 Actual/360
0.100% 7.111% 5/22/98 7/1/98 Actual/360
0.100% 6.707% 3/3/98 5/1/98 Actual/360
0.070% 8.142% 6/30/97 8/1/97 Actual/360
0.100% 6.657% 2/20/98 4/1/98 Actual/360
0.100% 6.718% 4/21/98 6/1/98 Actual/360
0.100% 6.537% 6/30/98 8/1/98 Actual/360
0.100% 7.093% 4/14/98 6/1/98 Actual/360
0.100% 7.027% 6/1/98 8/1/98 Actual/360
0.150% 8.537% 1/30/97 3/1/97 Actual/360
0.090% 6.727% 7/22/98 9/1/98 30/360
0.100% 6.647% 6/26/98 8/1/98 Actual/360
0.100% 6.837% 5/4/98 7/1/98 Actual/360
0.100% 6.757% 4/20/98 6/1/98 Actual/360
0.100% 6.721% 4/16/98 6/1/98 Actual/360
0.100% 6.767% 5/29/98 7/1/98 Actual/360
0.100% 7.352% 8/4/97 10/1/97 Actual/360
0.100% 6.960% 5/1/98 7/1/98 Actual/360
0.100% 6.652% 4/29/98 6/1/98 Actual/360
0.100% 6.857% 2/4/98 4/1/98 Actual/360
0.100% 6.717% 7/2/98 9/1/98 Actual/360
0.100% 7.003% 4/28/98 6/1/98 30/360
0.100% 6.659% 6/26/98 8/1/98 Actual/360
0.100% 6.773% 3/23/98 5/1/98 Actual/360
0.100% 6.884% 7/6/98 9/1/98 Actual/360
0.100% 7.123% 3/27/98 5/1/98 Actual/360
0.100% 6.945% 5/5/98 7/1/98 Actual/360
0.100% 6.887% 4/20/98 6/1/98 Actual/360
0.100% 6.626% 5/26/98 8/1/98 30/360
0.100% 6.827% 3/31/98 5/1/98 Actual/360
0.080% 6.887% 3/26/98 5/1/98 Actual/360
0.100% 6.820% 3/11/98 5/1/98 Actual/360
0.100% 6.626% 6/1/98 8/1/98 Actual/360
0.100% 7.003% 4/23/98 6/1/98 Actual/360
0.150% 7.317% 12/15/97 2/1/98 Actual/360
0.100% 6.697% 3/5/98 5/1/98 Actual/360
0.100% 6.857% 1/28/98 4/1/98 Actual/360
0.100% 6.625% 6/23/98 8/1/98 Actual/360
0.100% 7.142% 5/13/98 7/1/98 Actual/360
0.100% 7.416% 4/24/98 6/1/98 Actual/360
0.100% 6.767% 4/13/98 6/1/98 Actual/360
0.125% 7.117% 2/4/98 4/1/98 Actual/360
0.100% 6.901% 2/18/98 4/1/98 Actual/360
0.100% 7.057% 6/12/98 8/1/98 Actual/360
0.125% 7.017% 2/5/98 4/1/98 Actual/360
0.100% 6.887% 4/20/98 6/1/98 Actual/360
0.100% 7.047% 6/19/98 8/1/98 Actual/360
0.100% 6.827% 6/26/98 8/1/98 Actual/360
0.100% 6.637% 6/15/98 8/1/98 Actual/360
0.100% 6.772% 3/16/98 5/1/98 Actual/360
0.100% 6.837% 4/21/98 6/1/98 Actual/360
0.100% 6.887% 2/5/98 4/1/98 Actual/360
0.100% 6.884% 4/27/98 6/1/98 Actual/360
0.100% 6.887% 2/5/98 4/1/98 Actual/360
0.100% 6.837% 4/23/98 6/1/98 Actual/360
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE
------- -------- ------------ -------- -------- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 187,282.41 180 360 4 176 5/1/13 No Yes(A) 12/31/12
133,860.82 120 360 6 114 3/1/08 No No 2/28/02
106,803.76 84 360 2 82 7/1/05 No No 2/28/05
107,681.54 120 360 6 114 3/1/08 No No 2/28/02
47,798.89 120 360 2 118 7/1/08 Yes(1) Yes(B) 2/29/08
21,497.19 120 360 2 118 7/1/08 Yes(1) Yes(B) 2/29/08
21,366.28 120 300 2 118 7/1/08 Yes(1) Yes(B) 2/29/08
17,245.51 120 360 2 118 7/1/08 Yes(1) Yes(B) 2/29/08
24,645.53 120 360 8 112 1/1/08 Yes(2) Yes(C) 12/31/01
22,281.33 120 360 8 112 1/1/08 Yes(2) Yes(C) 12/31/01
17,961.13 120 360 8 112 1/1/08 Yes(2) Yes(C) 12/31/01
16,481.38 120 360 8 112 1/1/08 Yes(2) Yes(C) 12/31/01
5,768.55 120 300 8 112 1/1/08 Yes(2) Yes(C) 12/31/01
4,614.84 120 300 8 112 1/1/08 Yes(2) Yes(C) 12/31/01
84,623.50 120 360 3 117 6/1/08 No No 4/1/08
80,360.99 120 360 5 115 4/1/08 No No 3/31/02
90,194.18 120 360 14 106 7/1/07 No No 6/30/01
76,927.17 120 360 6 114 3/1/08 No No 10/31/07
65,271.37 120 360 4 116 5/1/08 No No 3/1/08
55,122.28 84 360 2 82 7/1/05 No No 2/28/05
57,223.06 120 360 4 116 5/1/08 No No 3/1/08
56,509.34 120 360 2 118 7/1/08 No No 6/30/02
65,900.06 120 360 19 101 2/1/07 No No 3/1/00
53,405.56 120 360 1 119 8/1/08 No No 3/31/08
52,752.00 120 360 2 118 7/1/08 No No 2/29/08
53,365.77 120 360 3 117 6/1/08 No No 2/1/08
53,231.37 120 300 4 116 5/1/08 No No 4/30/02
49,214.55 120 360 4 116 5/1/08 No No 3/1/08
47,467.38 120 360 3 117 6/1/08 No No 1/31/08
48,921.05 120 360 12 108 9/1/07 No No 8/31/01
43,022.99 120 360 3 117 6/1/08 No No 4/1/08
39,095.53 120 360 4 116 5/1/08 No No 4/30/02
38,587.54 120 360 6 114 3/1/08 No Yes(D) 2/28/02
35,911.99 120 360 1 119 8/1/08 No No 3/31/08
45,322.94 216 216 4 212 5/1/16 No No 3/1/16
33,744.02 120 360 2 118 7/1/08 No Yes(E) 5/1/08
33,643.20 120 360 5 115 4/1/08 No Yes(F) 1/31/08
35,779.38 120 300 1 119 8/1/08 No No 6/1/08
32,960.55 120 360 5 115 4/1/08 No No 1/31/08
32,218.70 120 360 3 117 6/1/08 No No 4/1/08
30,022.66 120 360 4 116 5/1/08 No Yes(G) 4/30/02
39,868.34 180 180 2 178 7/1/13 No No 5/1/13
29,160.83 120 360 5 115 4/1/08 No No 11/30/07
28,968.55 120 360 5 115 4/1/08 No No 3/31/02
27,341.30 120 360 5 115 4/1/08 No No 1/31/08
25,994.46 96 360 2 94 7/1/06 No No 6/1/01
27,005.46 120 360 4 116 5/1/08 No No 3/1/08
29,585.67 180 300 8 172 1/1/13 No Yes(A) 12/31/05
25,234.52 120 360 5 115 4/1/08 No Yes(H) 3/31/02
25,444.26 120 360 6 114 3/1/08 No Yes(D) 2/28/02
24,692.21 120 360 2 118 7/1/08 No No 5/1/08
26,012.97 120 360 3 117 6/1/08 No No 4/1/08
26,442.54 120 360 4 116 5/1/08 No No 3/1/08
23,733.69 120 360 4 116 5/1/08 No No 4/30/02
24,205.73 180 360 6 174 3/1/13 No Yes(I) 2/28/06
22,988.15 120 360 6 114 3/1/08 No Yes(J) 2/28/02
23,078.80 120 360 2 118 7/1/08 No No 2/29/08
22,985.83 180 360 6 174 3/1/13 No Yes(I) 2/28/06
21,367.54 120 360 4 116 5/1/08 No Yes(G) 4/30/02
21,157.08 120 360 2 118 7/1/08 No No 6/30/02
20,561.96 120 360 2 118 7/1/08 No No 2/29/08
20,168.40 120 360 2 118 7/1/08 No Yes(K) 1/1/08
19,840.88 120 360 5 115 4/1/08 No No 3/31/02
19,918.80 120 360 4 116 5/1/08 No Yes 4/30/02
19,752.63 120 360 6 114 3/1/08 No Yes(L) 2/28/02
19,679.95 120 360 4 116 5/1/08 No No 3/1/08
19,519.07 120 360 6 114 3/1/08 No Yes(L) 2/28/02
19,254.84 120 360 4 116 5/1/08 No No 4/30/02
<CAPTION>
PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---------------------------------------
<S> <C>
LO(175)/OPEN(5)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)/DEFEASANCE
LO(79)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(116)/OPEN(4)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(79)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)/DEFEASANCE
LO(37)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(5)
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(115)/OPEN(5)/DEFEASANCE
LO(214)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(178)/OPEN(2)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(35)/GRTR1%PPMTorYM(55)/OPEN(6)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(115)/OPEN(5)/DEFEASANCE
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(114)/OPEN(6)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
TOTAL SF/
CUT-OFF UNITS/ UNIT/
SE- LOAN APPRAISAL APPRAISAL DATE LTV YEAR BUILT/ ROOM/ ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED
- ------ ------ ------------- ----- ---- ----- --------- --- ---
<C> <C> <S> <C> <C> <C> <C> <C> <C>
N001 50752 Parkview Towers Apts. $ 36,000,000 12/29/97 78% 1976 682 Units
N002 50659 Summerwind Apartments 32,000,000 12/1/97 63% 1970 288 Units
N003 50958 Vanderbilt Apts. I & II 21,000,000 5/22/98 78% 1983 416 Units
N004 50750 Sonterra at Williams Centre (Apt.) 21,000,000 1/8/98 78% 1995 344 Units
N005 50925 Colony Hills Apartments 10,100,000 5/19/98 72% 1985 216 Units
N006 50924 Grandes Cortez Apartments 4,020,000 4/30/98 81% 1980 151 Units
N007 50923 Canyon Walk Apartments 4,330,000 4/30/98 70% 1974 166 Units
N008 50921 Paseo Del Sol Apartments 3,750,000 4/30/98 69% 1981 215 Units
---------
SUB-TOTAL CROSSED LOANS 22,200,000
N009 50646 599-621 Front Street 4,600,000 12/3/97 78% 1956 132 Units
N010 50645 299 Jackson Street 4,100,000 12/3/97 79% 1930/1994 113 Units
N011 50654 15-35 Elk Street 3,300,000 12/3/97 80% 1940 85 Units
N012 50644 100 Jerusalem Avenue 3,100,000 12/3/97 78% 1962 96 Units
N013 50655 357 Jackson Street Apartments 1,100,000 12/3/97 72% 1930 31 Units
N014 50656 51 Bell Street Apartments 1,000,000 12/3/97 63% 1930 27 Units
---------
SUB-TOTAL CROSSED LOANS 17,200,000
B015 3054921 Kimberly Place Apartments 15,550,000 4/7/98 80% 1974 346 Units
N016 50691 Parcwood Apartments 17,775,000 12/15/97 69% 1988 312 Units
N017 50094 Colonial Homes Apartments 16,000,000 11/4/97 74% 1948 254 Units
N018 50790 Relais Esplanade Apartments 14,750,000 1/19/98 80% 1984 336 Units
B019 3047180 Dry Creek Properties 15,600,000 1/19/98 64% 1971 198 Units
N020 50971 Spring Villas Apartments 10,700,000 3/19/98 80% 1978 160 Units
B021 3052107 Gentry Walk Apartments 10,500,000 3/4/98 80% 1992 167 Units
N022 50842 Pioneer Warehouse Lofts 13,700,000 2/18/98 61% 1914/1992 85 Units
N023 50013 St. Charles Regency Apts. 10,500,000 12/21/96 79% 1950/1984 221 Units
N024 50920 Southwest Village Apartments 10,375,000 3/12/98 78% 1973 332 Units
N025 50936 Twin Lakes Manor Apartments 10,450,000 5/15/98 77% 1967 310 Units
N026 50844 Dos Santos Apts. 10,200,000 2/26/98 79% 1994 176 Units
N027 50831 Prospect Creek Apts. 10,100,000 2/24/98 75% 1978 244 Units
B028 3052032 Villa Pacific Apartments 12,600,000 3/24/98 59% 1957 184 Units
N029 50836 Laurel Gardens Cooperative, Inc. 10,500,000 2/2/98 68% 1959 235 Units
N030 50122 Beacon Hill Apartments 8,150,000 6/25/97 85% 1971 432 Units
B031 3054673 Queen Vista Apartments 8,660,000 4/6/98 74% 1950/1997 87 Units
N032 50784 Amberwood Apts. 8,590,000 10/15/97 70% 1977 122 Units
N033 50492 Franklin Regency Apartments 7,585,000 10/20/97 76% 1989 116 Units
N034 50997 Whispering Meadows Apartments 7,320,000 5/29/98 75% 1988 240 Units
B035 3051950 Mahara Condo Apartments 8,000,000 3/17/98 68% 1984 128 Units
B036 3057007 Hyde Park Apartments 6,825,000 6/3/98 76% 1991 138 Units
B037 3051125 Village Apartments 8,350,000 2/11/98 61% 1977 288 Units
B038 3055316 Happy Village Apartments 6,300,000 5/26/98 80% 1971 288 Units
B039 3048246 Hickory Terrace Apartments 6,030,000 11/22/97 80% 1986 168 Units
B040 3052248 Rockshire Apartments 6,400,000 3/9/98 75% 1970/1998 212 Units
N041 50865 Highland Terrace Apts. 5,750,000 3/20/98 78% 1959 278 Units
B042 3056934 Bayfill Apartments 8,590,000 4/10/98 52% 1998 33 Units
N043 50815 Sierra Chase Apartments 5,650,000 1/16/98 78% 1976 144 Units
N044 50806 Park Place Apts. 5,500,000 12/12/97 79% 1988 112 Units
B045 3049152 De Soto Apartments 5,500,000 2/10/98 75% 1964/1996 151 Units
B046 3047040 Park Meridian Apartments 7,200,000 1/16/98 55% 1966/1997 84 Units
B047 3052396 The Elms Apartments 5,925,000 3/10/98 67% 1973 60 Units
N048 50279 Maplewood Senior Citizens Apartments 5,250,000 7/9/97 76% 1979 114 Units
N049 50763 Stonebrook Square Apartments 4,900,000 12/18/97 78% 1972 140 Units
N050 50493 Jessica Apts. 4,785,000 10/20/97 80% 1989 61 Units
B051 3062247 St. Francis Towers 5,850,000 5/15/98 65% 1974/1998 69 Units
B052 3051695 4532 Murietta Avenue 4,860,000 4/2/98 78% 1991/1997 33 Units
B053 3052370 Pacific Vista Apartments 4,700,000 3/17/98 80% 1990 58 Units
N054 50840 Vermont Hills Apts. 5,600,000 2/17/98 64% 1984 64 Units
N055 50689 New Heritage Apts. 4,900,000 12/18/97 72% 1993 100 Units
N056 50710 Frederick Gardens Apts. 4,300,000 11/6/97 80% 1962 173 Units
N057 50895 Bay Harbor Apts. 4,300,000 3/16/98 79% 1970 206 Units
N058 50744 Alder Creek Condominiums (Apt.) 4,650,000 12/13/97 73% 1985 96 Units
N059 50866 Tara Hills Apts. 4,150,000 3/20/98 77% 1976 214 Units
N060 50854 Pantano Villas Apartments 3,900,000 2/17/98 80% 1979 136 Units
N061 50959 Wil-Ru Apartments 4,584,000 4/1/98 68% 1968 116 Units
N062 50884 Quail Hollow Apartments 4,172,000 4/15/98 74% 1981 90 Units
N063 50772 Spring Valley Apartments 3,760,000 10/20/97 80% 1987 80 Units
N064 50824 Pheasant Run Apartments 4,045,000 2/15/98 74% 1976 102 Units
N065 50553 Spring Garden Apts. 3,700,000 10/15/97 80% 1987 95 Units
B066 3052230 Karolena Park Apartments 4,230,000 3/19/98 70% 1986 56 Units
N067 50554 Pershing Oaks Apts. 3,700,000 10/15/97 79% 1987 87 Units
N068 50841 Valley Vista Apartments 3,625,000 12/5/97 80% 1987 108 Units
<CAPTION>
LOAN
NET BALANCE PER
SE- RENTABLE SF/UNIT
QUENCE AREA(SF) ROOM/BED
- ------ -------- --------
<C> <C> <C>
N001 487,292 $ 40,946
N002 298,242 69,499
N003 418,554 39,490
N004 318,230 47,467
N005 176,550 33,830
N006 63,273 21,436
N007 95,784 18,304
N008 93,597 12,078
N009 109,698 27,284
N010 97,268 28,814
N011 68,793 30,879
N012 87,948 25,088
N013 23,400 25,571
N014 19,885 23,487
B015 274,390 35,768
N016 254,897 39,162
N017 268,520 46,883
N018 251,856 34,964
B019 167,577 50,111
N020 208,000 53,426
B021 158,736 50,171
N022 113,704 98,118
N023 126,932 37,595
N024 296,638 24,503
N025 216,840 26,094
N026 141,381 45,572
N027 205,821 31,008
B028 153,600 40,646
N029 185,850 30,573
N030 302,400 16,071
B031 61,423 73,414
N032 110,394 49,039
N033 74,672 49,790
N034 230,000 22,798
B035 87,824 42,572
B036 127,546 37,450
B037 269,892 17,644
B038 264,466 17,517
B039 227,817 28,619
B040 203,073 22,595
N041 159,900 16,140
B042 33,325 135,483
N043 114,400 30,421
N044 96,352 38,700
B045 98,977 27,220
B046 64,054 47,555
B047 71,863 66,492
N048 72,700 34,783
N049 154,968 27,434
N050 54,260 62,433
B051 51,615 54,998
B052 41,783 114,929
B053 35,820 64,677
N054 69,344 56,093
N055 92,088 35,222
N056 113,705 19,802
N057 126,771 16,485
N058 80,038 35,185
N059 184,650 14,922
N060 116,320 22,914
N061 71,856 26,690
N062 97,938 34,398
N063 78,610 37,463
N064 106,528 29,331
N065 96,900 31,028
B066 66,430 52,536
N067 88,740 33,480
N068 91,908 26,778
</TABLE>
<PAGE> 110
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES
------- ---- -------- -------- --- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97% 3/31/98 6,939,943 $ 3,786,007 $ 3,153,936 1.40 $136,400 $ 200.00 12/31/97 $ 7,112,659
100% 5/31/98 3,713,248 1,396,391 2,316,857 1.44 86,400 300.00 12/31/97 3,561,280
97% 5/1/98 3,105,944 1,418,485 1,687,459 1.32 114,400 275.00 12/31/97 1,682,452
96% 2/25/98 2,598,648 883,509 1,715,139 1.33 60,200 175.00 12/31/97 2,633,357
97% 3/1/98 1,426,114 543,079 883,035 1.54 64,200 297.22 12/31/97 1,502,865
98% 4/1/98 908,677 511,483 397,194 1.54 37,242 246.64 12/31/97 978,763
96% 4/1/98 983,545 587,994 395,551 1.54 41,500 250.00 12/31/97 985,918
95% 4/1/98 1,030,059 714,698 315,361 1.52 52,750 245.35 12/31/97 1,062,522
97% 12/31/97 1,218,140 777,818 440,322 1.49 62,700 475.00 12/31/97 1,213,438
98% 12/31/97 968,758 570,615 398,143 1.49 56,500 500.00 12/31/97 973,685
100% 12/31/97 791,488 476,827 314,661 1.46 40,375 475.00 12/31/97 795,451
100% 12/31/97 879,163 587,695 291,468 1.47 40,800 425.00 12/31/97 884,404
97% 12/31/97 257,082 152,059 105,023 1.52 10,850 350.00 12/31/97 247,407
98% 12/31/97 259,652 172,770 86,882 1.57 9,450 350.00 12/31/97 256,117
95% 4/1/98 2,369,540 936,844 1,432,696 1.41 76,808 221.99 12/31/97 2,178,130
99% 12/1/97 2,450,396 1,174,736 1,275,660 1.32 70,200 225.00 12/31/97 2,385,905
91% 3/28/98 2,289,739 850,913 1,438,826 1.33 50,800 200.00 12/31/97 2,155,840
95% 1/23/98 2,162,905 831,531 1,331,374 1.44 85,680 255.00 12/31/97 2,125,436
97% 12/19/97 2,089,363 738,764 1,350,599 1.72 49,500 250.00 12/31/97 2,047,255
94% 5/5/98 1,539,012 622,781 916,231 1.39 42,880 268.00 12/31/97 1,631,229
94% 3/25/98 1,414,064 505,311 908,753 1.32 40,585 243.02 12/31/97 1,381,807
100% 1/20/98 1,530,660 482,395 1,048,265 1.55 20,850 245.29 12/31/97 1,705,115
89% 12/31/97 1,596,000 692,656 903,344 1.14 44,200 200.00 12/31/97 1,610,697
92% 5/1/98 2,005,371 1,033,945 971,426 1.52 106,240 320.00 12/31/97 2,121,683
100% 6/19/98 1,632,902 742,484 890,418 1.41 62,000 200.00 12/31/97 1,568,515
99% 2/19/98 1,341,273 509,983 831,290 1.30 30,800 175.00 12/31/97 1,358,338
98% 1/15/98 1,587,459 725,108 862,351 1.35 59,536 244.00 12/31/97 1,612,742
99% 2/1/98 1,733,434 578,325 1,155,109 1.96 53,200 289.13 12/31/97 1,766,916
100% 5/28/98 1,817,912 844,837 973,075 1.71 53,100 225.96 12/31/97 1,318,243
94% 1/31/98 2,058,287 1,160,177 898,110 1.53 96,768 224.00 12/31/97 2,064,678
99% 4/1/98 951,902 301,291 650,611 1.26 6,585 75.69 12/31/97 861,324
98% 1/19/98 1,041,854 420,469 621,385 1.32 30,500 250.00 12/31/97 1,033,041
97% 12/31/97 1,043,138 390,293 652,845 1.41 25,868 223.00 12/31/97 1,025,996
92% 5/27/98 1,282,849 672,132 610,717 1.42 72,000 300.00 12/31/97 1,300,548
99% 3/25/98 1,002,231 309,500 692,731 1.27 32,900 257.03 12/31/97 1,001,993
92% 6/4/98 931,662 330,898 600,764 1.48 35,124 254.52 12/31/97 917,614
97% 10/31/97 1,499,853 687,744 812,109 2.01 88,272 306.50 12/31/97 1,568,267
96% 4/1/98 1,468,956 727,620 741,336 1.73 74,782 259.66 12/31/97 1,468,957
88% 2/28/98 1,041,705 445,034 596,671 1.51 25,200 150.00 12/31/97 1,021,365
91% 4/6/98 1,182,098 589,629 592,469 1.53 52,518 247.73 12/31/97 1,052,461
87% 3/10/98 1,157,802 606,041 551,761 1.53 83,400 300.00 12/31/97 1,152,604
97% 5/27/98 978,198 230,757 747,441 1.56 6,600 200.00
97% 12/31/97 819,178 363,197 455,981 1.30 36,000 250.00 12/31/97 806,460
98% 1/26/98 783,819 322,404 461,415 1.33 26,880 240.00 12/31/97 759,170
93% 11/1/97 890,520 371,724 518,796 1.58 35,371 234.25 12/31/97 902,005
94% 2/28/98 825,733 289,887 535,846 1.72 25,640 305.24 12/31/97 727,886
100% 3/20/98 839,691 282,924 556,767 1.72 21,900 365.00 12/31/97 850,894
99% 12/31/97 1,095,306 604,104 491,202 1.38 25,650 225.00 12/31/97 1,096,590
86% 2/13/98 793,608 362,846 430,762 1.42 35,000 250.00 12/31/97 811,722
95% 1/31/98 656,244 259,311 396,933 1.30 14,555 238.61 12/31/97 656,177
97% 5/1/98 798,543 335,187 463,356 1.56 16,465 238.62 12/31/97 648,025
94% 5/7/98 543,600 136,821 406,779 1.30 8,050 243.94 12/31/97 570,270
100% 2/28/98 547,192 153,377 393,815 1.24 14,512 250.21 12/31/97 545,646
100% 3/11/98 583,146 208,680 374,466 1.31 17,280 270.00 12/31/97 546,795
96% 12/31/97 631,340 248,254 383,086 1.32 20,000 200.00 12/31/97 624,719
97% 1/1/98 740,873 353,070 387,803 1.41 55,014 318.00 12/31/97 768,526
98% 3/17/98 697,493 286,594 410,899 1.48 53,250 258.50 12/31/97 689,879
100% 12/1/97 586,964 224,298 362,666 1.31 24,000 250.00 12/31/97 607,852
86% 3/24/98 902,548 524,384 378,164 1.47 57,566 269.00 12/31/97 922,481
98% 1/31/98 675,004 314,711 360,293 1.42 34,000 250.00 12/31/97 691,172
97% 6/18/98 580,660 241,191 339,469 1.38 29,000 250.00 12/31/97 653,560
97% 4/27/98 727,142 294,500 432,642 1.79 41,625 462.50 12/31/97 732,913
100% 3/6/98 557,455 233,606 323,849 1.36 24,400 305.00 12/31/97 286,225
100% 1/1/98 650,156 302,530 347,626 1.45 25,500 250.00 12/31/97 648,758
95% 3/31/98 529,640 201,733 327,907 1.38 26,125 275.00 12/31/97 534,236
95% 3/12/98 510,501 157,271 353,230 1.50 13,971 249.48 12/31/97 465,258
94% 4/1/98 523,021 204,655 318,366 1.36 21,750 250.00 12/31/97 516,643
97% 3/23/98 643,460 312,512 330,948 1.43 30,132 279.00 12/31/97 624,098
<CAPTION>
MOST 2ND
MOST MOST RECENT MOST
RECENT RECENT NOI RECENT
EXPENSES NOI DSCR END DATE
----------- ----------- ------ --------
<S> <C> <C> <C> <C>
$ 3,729,058 $ 3,383,601 1.51 12/31/96
1,327,615 2,233,665 1.39 12/31/96
794,129 888,323 0.69 12/31/96
719,963 1,913,394 1.48
531,900 970,965 1.69 12/31/96
505,176 473,587 1.84 12/31/96
547,992 437,926 1.71 12/31/96
676,642 385,880 1.86 12/31/96
790,747 422,691 1.43 12/31/96
526,399 447,286 1.67 12/31/96
383,271 412,180 1.91 12/31/96
484,741 399,663 2.02 12/31/96
155,367 92,040 1.33 12/31/96
158,481 97,636 1.76 12/31/96
874,302 1,303,828 1.28 12/31/96
1,113,997 1,271,908 1.32 12/31/96
755,143 1,400,697 1.29 12/31/96
822,348 1,303,088 1.41 12/31/96
628,161 1,419,094 1.81 12/31/96
605,951 1,025,278 1.55 12/31/96
485,740 896,067 1.30 12/31/96
421,671 1,283,444 1.89 12/31/96
694,619 916,078 1.16 12/31/96
959,537 1,162,146 1.81 12/31/96
709,757 858,758 1.36 12/31/96
505,741 852,597 1.33 12/31/96
705,439 907,303 1.42 12/31/96
553,652 1,213,264 2.05 12/31/96
686,796 631,447 1.11 12/31/96
1,131,607 933,071 1.59 12/31/96
256,780 604,544 1.17 12/31/96
399,087 633,954 1.35 12/31/96
309,477 716,519 1.55 12/31/96
673,378 627,170 1.46 12/31/96
301,439 700,554 1.29 12/31/96
351,711 565,903 1.40 12/31/96
632,136 936,131 2.32 12/31/96
544,177 924,780 2.15 12/31/96
436,234 585,131 1.48 12/31/96
793,070 259,391 0.67 12/31/96
585,938 566,666 1.57 12/31/96
347,604 458,856 1.31 12/31/96
285,029 474,141 1.36 12/31/96
351,183 550,822 1.68 12/31/96
257,615 470,271 1.51
221,963 628,931 1.94 12/31/96
544,244 552,346 1.56 12/31/96
352,709 459,013 1.52 12/31/96
179,859 476,318 1.56 12/31/96
316,829 331,196 1.12 12/31/96
110,676 459,594 1.47
126,291 419,355 1.32 12/31/96
176,448 370,347 1.30 12/31/96
215,142 409,577 1.41 12/31/96
329,261 439,265 1.59 12/31/96
155,877 534,002 1.93 12/31/96
224,228 383,624 1.39 12/31/96
565,770 356,711 1.39 12/31/96
296,687 394,485 1.55 12/31/96
210,756 442,804 1.79 12/31/96
278,215 454,698 1.88 12/31/96
121,492 164,733 1.38 12/31/96
234,012 414,746 1.74 12/31/96
135,076 399,160 1.68 12/31/96
125,629 339,629 1.44 12/31/96
147,208 369,435 1.58 12/31/96
315,668 308,430 1.33 12/31/96
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
2ND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,105,707 $ 3,716,849 $ 3,388,858 1.51
3,135,457 1,306,313 1,829,144 1.14
1,621,258 868,738 752,520 0.59
1,461,236 524,796 936,440 1.63
950,143 474,908 475,235 1.84
908,471 498,042 410,429 1.60
1,018,625 616,249 402,376 1.94
1,155,388 727,815 427,573 1.45
933,954 556,516 377,438 1.41
753,051 445,955 307,096 1.42
875,907 564,304 311,603 1.58
239,279 132,254 107,025 1.55
246,576 141,456 105,120 1.90
2,055,175 852,589 1,202,586 1.18
2,216,011 1,109,741 1,106,270 1.15
2,066,713 903,967 1,162,746 1.07
2,194,809 744,879 1,449,930 1.57
1,897,515 662,137 1,235,378 1.58
1,667,153 609,443 1,057,710 1.60
1,324,099 458,857 865,242 1.26
1,612,648 414,751 1,197,897 1.77 Cougan's 8,394 7% 1/31/07
1,869,677 1,075,959 793,718 1.00 Restaurant 3,000 2% 3/31/99
2,229,499 939,274 1,290,225 2.01
1,450,322 1,168,261 282,061 0.45
1,317,323 541,730 775,593 1.21
1,556,733 624,323 932,410 1.46
1,695,536 518,209 1,177,327 1.99
1,308,811 668,559 640,252 1.12
1,916,802 1,364,647 552,155 0.94
800,242 242,882 557,360 1.08
1,017,324 399,191 618,133 1.32
1,043,214 373,274 669,940 1.45
1,267,869 634,735 633,134 1.47
929,146 286,309 642,837 1.18
894,650 332,621 562,029 1.39
1,480,752 576,583 904,169 2.24
1,428,423 604,474 823,949 1.92
991,724 446,612 545,112 1.38
576,364 222,385 353,979 0.92
1,146,152 773,833 372,319 1.03
823,553 175,035 648,518 1.85
701,522 274,450 427,072 1.23
893,566 334,116 559,450 1.71
790,558 217,570 572,988 1.77
1,133,086 561,934 571,152 1.61
786,354 346,215 440,139 1.45
644,141 222,838 421,303 1.38
463,146 151,440 311,706 1.05
483,900 144,245 339,655 1.07
496,959 220,650 276,309 0.97
599,099 207,460 391,639 1.35
749,744 344,791 404,953 1.47
641,297 146,042 495,255 1.79
585,910 224,933 360,977 1.31
1,025,905 471,879 554,026 2.16
667,620 301,070 366,550 1.44
656,604 253,676 402,928 1.63
701,855 294,049 407,806 1.69
578,126 223,153 354,973 1.49
627,063 199,193 427,870 1.79
509,361 125,866 383,495 1.62
458,753 128,866 329,887 1.40
479,633 151,310 328,323 1.40
523,573 317,764 205,809 0.89
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<S> <C> <C> <C> <C>
Ruby's Diner 4,000 4% 7/31/03
Sanchez 2,000 2% 10/31/98
</TABLE>
<PAGE> 112
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------------- ----------------
<C> <C> <S> <C>
N069 50588 Fleur De Leis Apts. 807 Walters Street
B070 3056801 Dorset House 10216 Vultee Avenue
B071 3062239 Ridgewood Apartments 1501-1601 Ridgecrest Street
B072 3057015 Hunters Glen Apartments 4101 Brittany Street
N073 50427 365 W. 20th St. Apartments 365 West 20th Street
N074 50290 6011 Gaston Avenue Apartments 6011 Gaston Ave.
N075 50272 Golf Villa Apartments 1250-A College Parkway
B076 3051844 Sawgrass Estates 1125 Sheridan Ave.
B077 3049590 Country Lane Apartments 355 E. Lassen Avenue
N078 50922 Hilltop Towers Apartments 259-279 Oakville Ave.
B079 3057023 Victoria Park Apartments 3165 W. Shields Avenue
N080 50823 Pomona West Apts. 815 Pomona Avenue
N081 50765 Westview Apartments-Dalton 1104 Walston Street
N082 50830 Coldwater Crossing Apartments 333 Northeast Drive
B083 3049483 Hacienda Silva Apartment 132 & 140-182 E. Lewelling Blvd.
B084 3049712 110 Delaware Apartments 2050 Delaware Avenue
B085 3049863 Riverside Tower Apartments 11505 Riverside Drive
B086 3049855 Terrace Apartments 10834 Blix Street
N087 50155 Commodore Apartments 1621 SW Morrison St.
N088 50206 The White House Dormitory 2819 Rio Grande
N089 50901 Aztec Villa Apartments 3913 Pisa Drive
B090 3048121 Bethany Towers 301 Bethany Road
B091 3051786 Evergreen Apartments LLC 50 Hollowview Lane
B092 3046414 Railview Apartments 1015 2nd Avenue
B093 3062411 Metro View I & II 302-310 8th Ave. South & 327 7th Ave. South
B094 3062098 Princeton Place Apartments 3166 West Princeton Avenue
N095 50795 Rosewood Apartments 6600 Lancaster Road
N096 50019 Oak Street Apartments 7722 Oak Street
B097 3050929 Hillcrest Apartments 21901 58th Avenue West
B098 3062957 Durfee Terrace Apartments 4928 Durfee Avenue
N099 50743 Cedar Creek Apts. 1000 University Drive East
B100 3046406 Oak Hills Manor Apartments 820 Civic Heights Drive
B101 3051687 Broadway Manor Apartments 6640 West Broadway Avenue
B102 3062106 Marshall Reed Apartments 511 South Graham Street
N103 50415 Westwood Parc 2030 Belle Vue Way
N104 50988 112 1st Avenue 112 1st Avenue
N105 50845 Norwood Village Apartments 507 Sandpiper Lane
B106 3049038 White Crane Building 900-914 West Belmont Avenue
B107 3062114 Bingham Court Apartments 3537 Bingham Ave.
B108 3054780 Manhattan Court Apartments 111 and 115 15th Street Court
B109 3049020 Sheffield Apartments 3115-21 N. Sheffield Avenue
B110 3054830 Patricia Avenue Apartments 1817 Patricia Avenue
B111 3056850 Mississippi View Apartments 110 and 120 18th St. Northwest
B112 3051091 Romney Apartments Riverside 1970 7th Street
N113 50085 Wedgewood Apartments 2819 Walton Ave.
N114 50411 Embassy House 415 N. Gadsden
B115 3055464 Caltempo Apartments 14950 Vanowen St.
B116 3052305 Colorado Court Apartments 1410 Colorado Ave. South
B117 3052313 Victoria Lake Apartments 8340 & 8400 Minnetonka Blvd., 2948 Wyoming Avenue South
B118 3049665 Viewcrest Apartments 14438 59th Ave. South
B119 3056736 Raintree Apartments 800-876 S. E. 187th Avenue
B120 3049319 Catalina Vista Apartments 8550 East Old Spanish Trail
N121 50775 Palmetto Garden Apts. 139 O'Neil Court
B122 3049004 The Buckingham 710-716 West Buckingham Aveune
B123 3049012 The Grace 712-720 West Grace Avenue
N124 50996 Del Capri Apartments 4006-4012 Puente Avenue
N125 50413 Greenbriar Apts. 2210 Jackson Bluff Rd.
B126 3054590 Woodbridge Terrace Apartments 1523 Woodbridge Street and 208 Hoyt Avenue West
B127 3051133 Bear Creek North Apartments 2904 M Street
B128 3046604 Morningstar Apartments 100,120 Iowa Ave. West
N129 50150 Silver Sage Apartments 1243 High School Street
B130 3050903 Issaquah Valley Place 75 NW Dogwood Street
N131 50676 Village Green II Apartments 2700 N. 5th Street
N132 50742 Oak Ridge Apts. 1120 NW 45th Ave.
N133 50882 Garden Park Apartments 1700 North Mays Street
B134 3056751 Verona Apartments 5860 N. Kenmore Avenue
B135 3062445 Kachina Court 5255 East 29th Street
B136 3052297 Lakeview Apartments 723 Water Street
B137 3054798 Sunplace Apartments 1721 Marion Street
B138 3049749 Redmond Apartments 217-229 8th Avenue SE
<CAPTION>
SE-
QUENCE COUNTY CITY
- ------ ------ ----
<C> <C> <C>
N069 Calcasieu Parish Lake Charles
B070 Los Angeles Downey
B071 Los Angeles Monterey Park
B072 Kern Bakersfield
N073 Manhattan New York
N074 Dallas Dallas
N075 Santa Rosa Gulf Breeze
B076 Butte Chico
B077 Butte Chico
N078 New Haven Waterbury
B079 Fresno Fresno
N080 Butte Chico
N081 Whitfield Dalton
N082 Allen Fort Wayne
B083 Alameda San Lorenzo
B084 Dakota West St. Paul
B085 Los Angeles Los Angeles
B086 Los Angeles Los Angeles
N087 Multnomah Portland
N088 Travis Austin
N089 Bay Panama City
B090 Los Angeles Burbank
B091 Santa Cruz Watsonville
B092 St. Louis Proctor
B093 Stearns St. Cloud
B094 Fresno Fresno
N095 Pulaski Little Rock
N096 Orleans New Orleans
B097 Snohomish Mountlake Terrace
B098 Los Angeles Pico Rivera
N099 Brazos College Station
B100 Anoka Circle Pines
B101 Hennepin Brooklyn Park
B102 Jackson Carbondale
N103 Leon Tallahassee
N104 New York New York
N105 Tarrant Arlington
B106 Cook Chicago
B107 St. Louis St. Louis
B108 Benton Sauk Rapids
B109 Cook Chicago
B110 Ventura Simi Valley
B111 Benton Sauk Rapids
B112 Riverside Riverside
N113 Tarrant Ft. Worth
N114 Leon Tallahassee
B115 Los Angeles Van Nuys
B116 Hennepin St. Louis Park
B117 Hennepin St. Louis Park
B118 King Tukwila
B119 Multnomah Gresham
B120 Pima Tucson
N121 Richland Columbia
B122 Cook Chicago
B123 Cook Chicago
N124 Los Angeles Baldwin Park
N125 Leon Tallahassee
B126 Ramsey St. Paul
B127 Merced Merced
B128 Ramsey St. Paul
N129 Douglas Gardenerville
B130 King Issaquah
N131 Kay Ponca City
N132 Alachua Gainesville
N133 Williamson Round Rock
B134 Cook Chicago
B135 Pima Tucson
B136 Hennepin Excelsior
B137 Ramsey Roseville
B138 Hennepin Minneapolis
</TABLE>
<PAGE> 113
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY ADMINI-
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE STRATIVE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE FEE RATE(I)
----- ---- ---- ------- ------- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LA 70607 Multifamily $ 2,850,000 $ 2,833,637 $ 2,506,106 Balloon 7.270% 0.168%
CA 90241 Multifamily 2,750,000 2,744,460 2,410,700 Balloon 7.129% 0.143%
CA 91754 Multifamily 2,720,000 2,716,709 2,384,469 Balloon 7.118% 0.143%
CA 93312 Multifamily 2,600,000 2,596,541 2,260,321 Balloon 6.802% 0.143%
NY 10122 Multifamily 2,600,000 2,585,406 2,262,347 Balloon 6.870% 0.143%
TX 75214 Multifamily 2,600,000 2,583,178 2,310,901 Balloon 7.700% 0.143%
FL 32561 Multifamily 2,600,000 2,582,476 2,416,546 Balloon 7.530% 0.143%
CA 95926 Multifamily 2,500,000 2,495,063 2,195,789 Balloon 7.204% 0.143%
CA 95973 Multifamily 2,475,000 2,469,928 2,165,968 Balloon 7.064% 0.143%
CT 06708 Multifamily 2,400,000 2,398,499 2,096,759 Balloon 7.000% 0.143%
CA 93722 Multifamily 2,360,000 2,356,922 2,055,414 Balloon 6.870% 0.143%
CA 95928 Multifamily 2,337,000 2,332,343 2,050,827 Balloon 7.170% 0.143%
GA 30720 Multifamily 2,215,000 2,206,794 1,927,062 Balloon 6.840% 0.143%
IN 46825 Multifamily 2,190,000 2,183,069 1,771,640 Balloon 7.270% 0.243%
CA 94580 Multifamily 2,025,000 2,020,168 1,791,360 Balloon 7.472% 0.143%
MN 55118 Multifamily 1,950,000 1,943,598 1,717,674 Balloon 7.316% 0.143%
CA 91602 Multifamily 1,925,000 1,920,249 1,697,800 Balloon 7.353% 0.143%
CA 91602 Multifamily 1,925,000 1,920,249 1,697,800 Balloon 7.353% 0.143%
OR 97205 Multifamily 1,895,000 1,871,967 1,561,306 Balloon 7.910% 0.143%
TX 78705 Multifamily 1,838,600 1,827,029 1,480,745 Balloon 8.120% 0.118%
FL 32405 Multifamily 1,800,000 1,797,618 1,565,594 Balloon 6.820% 0.143%
CA 91504 Multifamily 1,725,000 1,719,113 1,513,658 Balloon 7.166% 0.143%
CA 95070 Multifamily 1,700,000 1,695,446 1,487,969 Balloon 7.057% 0.143%
MN 55810 Multifamily 1,600,000 1,590,750 Fully Amortizing 7.016% 0.143%
MN 56301 Multifamily 1,584,000 1,583,087 1,393,277 Balloon 7.262% 0.143%
CA 93722 Multifamily 1,560,000 1,557,966 1,358,663 Balloon 6.870% 0.143%
AR 72209 Multifamily 1,520,000 1,514,738 1,331,842 Balloon 7.110% 0.143%
LA 70118 Multifamily 1,512,000 1,501,467 1,387,571 Balloon 9.080% 0.193%
WA 98043 Multifamily 1,475,000 1,471,974 1,290,695 Balloon 7.060% 0.143%
CA 90660 Multifamily 1,450,000 1,449,087 1,266,026 Balloon 6.977% 0.143%
TX 77840 Multifamily 1,455,000 1,448,643 1,266,848 Balloon 6.850% 0.143%
MN 55014 Multifamily 1,450,000 1,446,947 1,265,496 Balloon 6.960% 0.143%
MN 55428 Multifamily 1,440,000 1,436,270 1,264,433 Balloon 7.180% 0.143%
IL 62901 Multifamily 1,425,000 1,423,304 1,250,901 Balloon 7.170% 0.143%
FL 32304 Multifamily 1,430,000 1,422,149 1,276,350 Balloon 7.860% 0.168%
NY 10005 Multifamily 1,400,000 1,399,098 1,219,887 Balloon 6.900% 0.143%
TX 76013 Multifamily 1,400,000 1,397,180 1,227,298 Balloon 7.130% 0.143%
IL 60657 Multifamily 1,400,000 1,396,143 1,222,039 Balloon 6.953% 0.143%
MO 63111 Multifamily 1,345,000 1,343,374 1,179,146 Balloon 7.120% 0.143%
MN 56379 Multifamily 1,280,000 1,277,679 1,133,227 Balloon 7.519% 0.143%
IL 60657 Multifamily 1,275,000 1,271,487 1,112,928 Balloon 6.953% 0.143%
CA 91302 Multifamily 1,235,000 1,232,546 1,084,078 Balloon 7.181% 0.143%
MN 56379 Multifamily 1,225,000 1,223,539 1,075,169 Balloon 7.164% 0.143%
CA 92507 Multifamily 1,200,000 1,195,999 1,110,640 Balloon 7.257% 0.143%
TX 76133 Multifamily 1,200,000 1,190,655 1,127,137 Balloon 8.190% 0.168%
FL 32303 Multifamily 1,165,000 1,158,193 1,033,542 Balloon 7.610% 0.143%
CA 91405 Multifamily 1,150,000 1,149,250 1,000,985 Balloon 6.860% 0.143%
MN 55416 Multifamily 1,125,000 1,123,603 984,038 Balloon 7.033% 0.143%
MN 55426 Multifamily 1,120,000 1,118,609 979,664 Balloon 7.033% 0.143%
WA 98168 Multifamily 1,120,000 1,118,596 978,867 Balloon 7.002% 0.143%
OR 97233 Multifamily 1,100,000 1,097,842 966,767 Balloon 7.229% 0.143%
AZ 85710 Multifamily 1,100,000 1,096,894 957,828 Balloon 6.861% 0.143%
SC 29223-7623 Multifamily 1,100,000 1,096,450 887,169 Balloon 7.170% 0.193%
IL 60657 Multifamily 1,087,000 1,084,005 948,826 Balloon 6.953% 0.143%
IL 60613 Multifamily 1,050,000 1,047,107 916,529 Balloon 6.953% 0.143%
CA 91706 Multifamily 1,025,000 1,024,359 895,491 Balloon 7.000% 0.143%
FL 32304 Multifamily 1,025,000 1,019,373 914,867 Balloon 7.860% 0.168%
MN 55117 Multifamily 1,000,000 998,859 880,893 Balloon 7.306% 0.143%
CA 95348 Multifamily 1,000,000 998,615 866,137 Balloon 6.665% 0.143%
MN 55117 Multifamily 1,000,000 997,492 880,696 Balloon 7.296% 0.143%
NV 89410 Multifamily 1,000,000 992,750 800,249 Balloon 7.980% 0.293%
WA 98027 Multifamily 945,000 943,061 826,920 Balloon 7.060% 0.143%
OK 74601 Multifamily 900,000 892,190 624,128 Balloon 7.365% 0.293%
FL 32609 Multifamily 880,000 874,510 714,913 Balloon 7.390% 0.293%
TX 78664 Multifamily 875,000 873,962 768,296 Balloon 7.180% 0.243%
IL 60660 Multifamily 860,000 851,958 Fully Amortizing 7.207% 0.143%
AZ 85711 Multifamily 806,250 805,371 712,739 Balloon 7.446% 0.143%
MN 55331 Multifamily 755,000 754,062 660,399 Balloon 7.033% 0.143%
MN 55113 Multifamily 750,000 747,971 671,187 Balloon 8.043% 0.143%
MN 55414 Multifamily 750,000 747,538 660,644 Balloon 7.316% 0.143%
<CAPTION>
SUB- NET FIRST INTEREST
SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
FEE RATE RATE DATE DATE METHOD
-------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.125% 7.102% 12/29/97 2/1/98 Actual/360
0.100% 6.986% 5/22/98 7/1/98 Actual/360
0.100% 6.975% 6/16/98 8/1/98 Actual/360
0.100% 6.659% 6/26/98 8/1/98 Actual/360
0.100% 6.727% 1/20/98 3/1/98 Actual/360
0.100% 7.557% 10/29/97 12/1/97 Actual/360
0.100% 7.387% 10/20/97 12/1/97 Actual/360
0.100% 7.061% 5/27/98 7/1/98 Actual/360
0.100% 6.921% 4/28/98 7/1/98 Actual/360
0.100% 6.857% 7/10/98 9/1/98 Actual/360
0.100% 6.727% 6/10/98 8/1/98 Actual/360
0.100% 7.027% 5/22/98 7/1/98 Actual/360
0.100% 6.697% 3/5/98 5/1/98 Actual/360
0.200% 7.027% 5/14/98 7/1/98 Actual/360
0.100% 7.329% 4/17/98 6/1/98 Actual/360
0.100% 7.173% 3/26/98 5/1/98 Actual/360
0.100% 7.210% 4/23/98 6/1/98 Actual/360
0.100% 7.210% 4/23/98 6/1/98 Actual/360
0.100% 7.767% 8/14/97 10/1/97 Actual/360
0.075% 8.002% 9/17/97 11/1/97 Actual/360
0.100% 6.677% 6/30/98 8/1/98 Actual/360
0.100% 7.023% 3/10/98 5/1/98 Actual/360
0.100% 6.914% 4/23/98 6/1/98 Actual/360
0.100% 6.873% 5/18/98 7/1/98 30/360
0.100% 7.119% 7/9/98 9/1/98 Actual/360
0.100% 6.727% 6/11/98 8/1/98 Actual/360
0.100% 6.967% 3/30/98 5/1/98 Actual/360
0.150% 8.887% 4/7/97 6/1/97 Actual/360
0.100% 6.917% 5/19/98 7/1/98 Actual/360
0.100% 6.834% 7/6/98 9/1/98 Actual/360
0.100% 6.707% 2/27/98 4/1/98 Actual/360
0.100% 6.817% 5/18/98 7/1/98 Actual/360
0.100% 7.037% 4/3/98 6/1/98 Actual/360
0.100% 7.027% 6/16/98 8/1/98 Actual/360
0.125% 7.692% 11/17/97 1/1/98 Actual/360
0.100% 6.757% 7/9/98 9/1/98 Actual/360
0.100% 6.987% 5/11/98 7/1/98 Actual/360
0.100% 6.810% 3/24/98 6/1/98 Actual/360
0.100% 6.977% 6/16/98 8/1/98 Actual/360
0.100% 7.376% 5/6/98 7/1/98 Actual/360
0.100% 6.810% 3/20/98 6/1/98 Actual/360
0.100% 7.038% 5/22/98 7/1/98 Actual/360
0.100% 7.021% 6/2/98 8/1/98 Actual/360
0.100% 7.114% 3/27/98 5/1/98 Actual/360
0.125% 8.022% 6/19/97 8/1/97 Actual/360
0.100% 7.467% 11/17/97 1/1/98 Actual/360
0.100% 6.717% 7/9/98 9/1/98 Actual/360
0.100% 6.890% 6/5/98 8/1/98 Actual/360
0.100% 6.890% 6/5/98 8/1/98 Actual/360
0.100% 6.859% 6/16/98 8/1/98 Actual/360
0.100% 7.086% 5/11/98 7/1/98 Actual/360
0.100% 6.718% 3/23/98 6/1/98 Actual/360
0.150% 6.977% 5/5/98 7/1/98 Actual/360
0.100% 6.810% 3/23/98 6/1/98 Actual/360
0.100% 6.810% 3/20/98 6/1/98 Actual/360
0.100% 6.857% 7/20/98 9/1/98 Actual/360
0.125% 7.692% 11/17/97 1/1/98 Actual/360
0.100% 7.163% 6/1/98 8/1/98 Actual/360
0.100% 6.522% 6/8/98 8/1/98 Actual/360
0.100% 7.153% 4/20/98 6/1/98 Actual/360
0.250% 7.687% 8/1/97 10/1/97 Actual/360
0.100% 6.917% 5/19/98 7/1/98 Actual/360
0.250% 7.072% 3/16/98 5/1/98 Actual/360
0.250% 7.097% 2/26/98 4/1/98 Actual/360
0.200% 6.937% 6/24/98 8/1/98 Actual/360
0.100% 7.064% 5/12/98 7/1/98 30/360
0.100% 7.303% 6/24/98 8/1/98 Actual/360
0.100% 6.890% 6/5/98 8/1/98 Actual/360
0.100% 7.900% 5/11/98 7/1/98 Actual/360
0.100% 7.173% 3/26/98 5/1/98 Actual/360
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE
------- -------- ------------ -------- -------- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 19,480.70 120 360 8 112 1/1/08 No No 12/31/01
18,534.68 120 360 3 117 6/1/08 No No 4/1/08
18,312.29 120 360 2 118 7/1/08 No No 5/1/08
16,953.52 120 360 2 118 7/1/08 No Yes(E) 5/1/08
17,071.46 120 360 7 113 2/1/08 No No 1/31/02
18,536.96 120 360 10 110 11/1/07 No No 10/31/01
18,233.02 84 360 10 74 11/1/04 No No 10/31/99
16,976.48 120 360 3 117 6/1/08 No No 4/1/08
16,572.75 120 360 3 117 6/1/08 No No 4/1/08
15,967.26 120 360 1 119 8/1/08 No No 7/31/02
15,495.64 120 360 2 118 7/1/08 No Yes(E) 5/1/08
15,815.85 120 360 3 117 6/1/08 No No 2/1/08
14,499.21 120 360 5 115 4/1/08 No Yes(H) 3/31/02
15,857.70 120 300 3 117 6/1/08 No No 5/31/02
14,120.29 120 360 4 116 5/1/08 No No 3/1/08
13,389.84 120 360 5 115 4/1/08 No Yes(M) 1/31/08
13,266.65 120 360 4 116 5/1/08 No Yes(N) 3/1/08
13,266.65 120 360 4 116 5/1/08 No Yes(N) 3/1/08
14,513.12 120 300 12 108 9/1/07 No No 8/31/01
13,645.12 180 360 11 169 10/1/12 No No 9/30/05
11,758.64 120 360 2 118 7/1/08 No Yes(K) 1/1/08
11,669.42 120 360 5 115 4/1/08 No No 1/31/08
11,375.29 120 360 4 116 5/1/08 No No 3/1/08
12,420.15 240 240 3 237 6/1/18 No No 4/1/18
10,818.57 120 360 1 119 8/1/08 No No 6/1/08
10,242.88 120 360 2 118 7/1/08 No Yes(E) 5/1/08
10,225.14 120 360 5 115 4/1/08 No No 3/31/02
12,253.03 120 360 16 104 5/1/07 No No 4/30/01
9,872.72 120 360 3 117 6/1/08 No Yes(O) 4/1/08
9,624.50 120 360 1 119 8/1/08 No Yes(P) 6/1/08
9,534.02 120 360 6 114 3/1/08 No No 2/28/02
9,607.97 120 360 3 117 6/1/08 No Yes(Q) 4/1/08
9,755.06 120 360 4 116 5/1/08 No No 3/1/08
9,643.81 120 360 2 118 7/1/08 No Yes(R) 5/1/08
10,353.61 120 360 9 111 12/1/07 No Yes(S) 11/30/01
9,220.40 120 360 1 119 8/1/08 No No 3/31/08
9,436.78 120 360 3 117 6/1/08 No No 5/31/02
9,270.09 120 360 4 116 5/1/08 No Yes(T) 3/1/08
9,056.98 120 360 2 118 7/1/08 No Yes(R) 5/1/08
8,966.60 120 360 3 117 6/1/08 No No 4/1/08
8,442.40 120 360 4 116 5/1/08 No Yes(T) 3/1/08
8,367.16 120 360 3 117 6/1/08 No No 4/1/08
8,285.32 120 360 2 118 7/1/08 No No 5/1/08
8,191.81 84 360 5 79 4/1/05 No No 1/30/05
8,964.63 84 360 14 70 7/1/04 No No 6/30/00
8,233.78 120 360 9 111 12/1/07 No Yes(S) 11/30/01
7,543.16 120 360 1 119 8/1/08 No No 6/1/08
7,509.60 120 360 2 118 7/1/08 No Yes(U) 1/2/08
7,476.23 120 360 2 118 7/1/08 No Yes(U) 1/2/08
7,452.89 120 360 2 118 7/1/08 No No 5/1/08
7,488.28 120 360 3 117 6/1/08 No No 4/1/08
7,215.93 120 360 4 116 5/1/08 No No 3/1/08
7,894.27 120 300 3 117 6/1/08 No No 5/31/02
7,197.56 120 360 4 116 5/1/08 No Yes(T) 3/1/08
6,952.56 120 360 4 116 5/1/08 No Yes(T) 3/1/08
6,819.35 120 360 1 119 8/1/08 No No 3/31/08
7,421.29 120 360 9 111 12/1/07 No Yes(S) 11/30/01
6,859.79 120 360 2 118 7/1/08 No No 5/1/08
6,429.58 120 360 2 118 7/1/08 No Yes(F) 5/1/08
6,852.99 120 360 4 116 5/1/08 No No 3/1/08
7,323.71 180 360 12 168 9/1/12 No No 7/31/05
6,325.23 120 360 3 117 6/1/08 No Yes(O) 4/1/08
7,176.23 120 240 5 115 4/1/08 No No 3/31/02
6,440.29 120 300 6 114 3/1/08 No Yes(J) 2/28/02
5,927.55 120 360 2 118 7/1/08 No Yes(V) 6/30/02
7,829.79 180 180 3 177 6/1/13 No Yes(W) 4/1/13
5,607.63 120 360 2 118 7/1/08 No No 5/1/08
5,039.78 120 360 2 118 7/1/08 No Yes(U) 1/2/08
5,810.00 84 300 3 81 6/1/05 No No 4/1/05
5,149.94 120 360 5 115 4/1/08 No Yes(M) 1/31/08
<CAPTION>
PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---------------------------------------
<S> <C>
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(24)/GRTR1%PPMTorYM(36)/2%(12)/1%(6)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(114)/OPEN(6)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(238)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(115)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(81)/OPEN(3)/DEFEASANCE
LO(36)/GRTR1%PPMTorYM(42)/OPEN(6)
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(114)/OPEN(6)/DEFEASANCE
LO(114)/OPEN(6)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(114)/OPEN(6)/DEFEASANCE
LO(82)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
TOTAL SF/
CUT-OFF UNITS/ UNIT/
SE- LOAN APPRAISAL APPRAISAL DATE LTV YEAR BUILT/ ROOM/ ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED
- ------ ------ ------------- ----- ---- ----- --------- --- ---
<C> <C> <S> <C> <C> <C> <C> <C> <C>
N069 50588 Fleur De Leis Apts. $ 3,950,000 9/10/97 72% 1972 176 Units
B070 3056801 Dorset House 3,650,000 4/16/98 75% 1965 53 Units
B071 3062239 Ridgewood Apartments 3,400,000 3/4/98 80% 1962 74 Units
B072 3057015 Hunters Glen Apartments 3,475,000 6/5/98 75% 1992 72 Units
N073 50427 365 W. 20th St. Apartments 4,770,000 9/10/97 54% 1927 74 Units
N074 50290 6011 Gaston Avenue Apartments 3,200,000 8/5/97 81% 1961/1996 45 Units
N075 50272 Golf Villa Apartments 3,725,000 8/26/97 69% 1983 136 Units
B076 3051844 Sawgrass Estates 3,200,000 4/14/98 78% 1990 69 Units
B077 3049590 Country Lane Apartments 3,500,000 4/6/98 71% 1987 80 Units
N078 50922 Hilltop Towers Apartments 3,150,000 5/12/98 76% 1966/1993 111 Units
B079 3057023 Victoria Park Apartments 2,950,000 12/4/97 80% 1985 142 Units
N080 50823 Pomona West Apts. 3,180,000 12/29/97 73% 1991 60 Units
N081 50765 Westview Apartments-Dalton 2,800,000 12/18/97 79% 1973 101 Units
N082 50830 Coldwater Crossing Apartments 3,175,000 1/28/98 69% 1963/1985 144 Units
B083 3049483 Hacienda Silva Apartment 2,700,000 3/10/98 75% 1997 23 Units
B084 3049712 110 Delaware Apartments 2,630,000 2/11/98 74% 1970 55 Units
B085 3049863 Riverside Tower Apartments 2,450,000 12/9/97 78% 1987 36 Units
B086 3049855 Terrace Apartments 2,650,000 12/9/97 72% 1986 32 Units
N087 50155 Commodore Apartments 2,454,000 6/20/97 76% 1927/1987 67 Units
N088 50206 The White House Dormitory 2,500,000 7/10/97 73% 1965/1993 37 Units
N089 50901 Aztec Villa Apartments 2,900,000 4/14/98 62% 1974 128 Units
B090 3048121 Bethany Towers 2,350,000 2/10/98 73% 1988 26 Units
B091 3051786 Evergreen Apartments LLC 2,570,000 3/12/98 66% 1988 37 Units
B092 3046414 Railview Apartments 2,500,000 2/10/98 64% 1977 60 Units
B093 3062411 Metro View I & II 1,980,000 4/7/98 80% 1948/1989 52 Units
B094 3062098 Princeton Place Apartments 1,950,000 12/4/97 80% 1985 90 Units
N095 50795 Rosewood Apartments 1,900,000 1/19/98 80% 1968 100 Units
N096 50019 Oak Street Apartments 1,890,000 1/10/97 79% 1935/1995 43 Units
B097 3050929 Hillcrest Apartments 2,180,000 4/2/98 68% 1990 27 Units
B098 3062957 Durfee Terrace Apartments 2,150,000 5/22/98 67% 1988/1997 36 Units
N099 50743 Cedar Creek Apts. 2,000,000 12/18/97 72% 1984 67 Units
B100 3046406 Oak Hills Manor Apartments 2,085,000 2/6/98 69% 1995 48 Units
B101 3051687 Broadway Manor Apartments 1,800,000 11/7/97 80% 1965/1972 59 Units
B102 3062106 Marshall Reed Apartments 1,900,000 4/22/98 75% 1967 121 Units
N103 50415 Westwood Parc 2,000,000 9/2/97 71% 1974 94 Units
N104 50988 112 1st Avenue 1,790,000 5/6/98 78% 1889/1985 8 Units
N105 50845 Norwood Village Apartments 1,720,000 2/10/98 81% 1975 112 Units
B106 3049038 White Crane Building 1,925,000 1/26/98 73% 1918/1988 17 Units
B107 3062114 Bingham Court Apartments 1,680,000 4/20/98 80% 1929/1997 96 Units
B108 3054780 Manhattan Court Apartments 1,600,000 4/2/98 80% 1991 48 Units
B109 3049020 Sheffield Apartments 1,700,000 1/26/98 75% 1928/1992 21 Units
B110 3054830 Patricia Avenue Apartments 1,600,000 4/21/98 77% 1990 22 Units
B111 3056850 Mississippi View Apartments 1,700,000 4/2/98 72% 1989 48 Units
B112 3051091 Romney Apartments Riverside 1,600,000 3/6/98 75% 1970/1991 81 Units
N113 50085 Wedgewood Apartments 1,500,000 4/29/97 79% 1969/1995 118 Units
N114 50411 Embassy House 1,470,000 9/2/97 79% 1969 48 Units
B115 3055464 Caltempo Apartments 1,700,000 6/4/98 68% 1969 59 Units
B116 3052305 Colorado Court Apartments 1,500,000 4/16/98 75% 1969 43 Units
B117 3052313 Victoria Lake Apartments 1,550,000 4/16/98 72% 1960 50 Units
B118 3049665 Viewcrest Apartments 1,410,000 2/27/98 79% 1962 39 Units
B119 3056736 Raintree Apartments 1,510,000 3/9/98 73% 1972 40 Units
B120 3049319 Catalina Vista Apartments 1,400,000 1/29/98 78% 1971/1996 50 Units
N121 50775 Palmetto Garden Apts. 1,550,000 1/13/98 71% 1973 64 Units
B122 3049004 The Buckingham 1,450,000 1/26/98 75% 1923/1993 14 Units
B123 3049012 The Grace 1,400,000 1/26/98 75% 1906/1993 34 Units
N124 50996 Del Capri Apartments 1,400,000 5/26/98 73% 1963 36 Units
N125 50413 Greenbriar Apts. 1,380,000 9/2/97 74% 1965 50 Units
B126 3054590 Woodbridge Terrace Apartments 1,250,000 4/6/98 80% 1969 48 Units
B127 3051133 Bear Creek North Apartments 1,800,000 2/11/98 55% 1970 54 Units
B128 3046604 Morningstar Apartments 1,250,000 12/30/97 80% 1964 46 Units
N129 50150 Silver Sage Apartments 1,600,000 6/26/97 62% 1994 23 Units
B130 3050903 Issaquah Valley Place 1,520,000 4/2/98 62% 1995 14 Units
N131 50676 Village Green II Apartments 1,200,000 7/11/97 74% 1985 62 Units
N132 50742 Oak Ridge Apts. 1,300,000 11/6/97 67% 1972/1986 64 Units
N133 50882 Garden Park Apartments 1,200,000 3/17/98 73% 1971 48 Units
B134 3056751 Verona Apartments 1,190,000 1/27/98 72% 1926 69 Units
B135 3062445 Kachina Court 1,075,000 5/22/98 75% 1979 82 Units
B136 3052297 Lakeview Apartments 1,050,000 4/16/98 72% 1969 30 Units
B137 3054798 Sunplace Apartments 1,000,000 3/30/98 75% 1971 30 Units
B138 3049749 Redmond Apartments 1,560,000 2/11/98 48% 1890/1997 21 Units
<CAPTION>
LOAN
NET BALANCE PER
SE- RENTABLE SF/UNIT
QUENCE AREA(SF) ROOM/BED
- ------ -------- --------
<C> <C> <C>
N069 166,416 $ 16,100
B070 53,604 51,782
B071 50,956 36,712
B072 68,492 36,063
N073 44,990 34,938
N074 41,368 57,404
N075 119,200 18,989
B076 65,343 36,160
B077 64,192 30,874
N078 98,291 21,608
B079 84,309 16,598
N080 80,100 38,872
N081 104,159 21,849
N082 96,912 15,160
B083 29,299 87,833
B084 57,087 35,338
B085 29,475 53,340
B086 31,240 60,008
N087 24,894 27,940
N088 26,640 49,379
N089 122,400 14,044
B090 22,770 66,120
B091 37,367 45,823
B092 34,208 26,512
B093 41,911 30,444
B094 53,265 17,311
N095 83,472 15,147
N096 26,780 34,918
B097 27,351 54,518
B098 33,049 40,252
N099 68,846 21,622
B100 41,122 30,145
B101 46,475 24,344
B102 45,258 11,763
N103 57,360 15,129
N104 5,440 174,887
N105 64,512 12,475
B106 26,347 82,126
B107 46,440 13,993
B108 45,010 26,618
B109 22,394 60,547
B110 22,932 56,025
B111 46,800 25,490
B112 23,928 14,765
N113 116,966 10,090
N114 47,088 24,129
B115 35,640 19,479
B116 30,407 26,130
B117 33,930 22,372
B118 29,955 28,682
B119 31,732 27,446
B120 43,740 21,938
N121 52,000 17,132
B122 16,661 77,429
B123 20,870 30,797
N124 24,564 28,454
N125 36,600 20,387
B126 34,832 20,810
B127 55,480 18,493
B128 40,557 21,685
N129 27,609 43,163
B130 16,138 67,362
N131 47,880 14,390
N132 49,440 13,664
N133 29,500 18,208
B134 32,800 12,347
B135 26,240 9,822
B136 20,400 25,135
B137 22,260 24,932
B138 33,848 35,597
</TABLE>
<PAGE> 116
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES
------- ---- -------- -------- --- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
87% 3/26/98 $ 881,768 $ 528,528 $ 353,240 1.51 $ 38,720 $ 220.00 12/31/97 $ 874,589
96% 5/14/98 464,365 144,534 319,831 1.44 13,662 257.77 12/31/97 449,355
100% 5/31/98 491,551 162,153 329,398 1.50 28,194 381.00 12/31/97 489,878
95% 6/4/98 485,727 177,811 307,916 1.51 21,460 298.06 12/31/97 500,628
95% 3/17/98 882,914 467,448 415,466 2.03 11,100 150.00 12/31/97 726,472
100% 3/28/98 472,361 173,268 299,093 1.34 9,000 200.00 12/31/97 372,211
90% 12/31/97 775,354 456,712 318,642 1.46 34,000 250.00 12/31/97 771,589
99% 3/31/98 444,563 159,379 285,184 1.40 16,321 236.54 12/31/97 444,563
99% 4/24/98 456,963 155,968 300,995 1.51 17,613 220.16 12/31/97 443,383
94% 5/12/98 662,457 389,099 273,358 1.43 23,953 215.79 12/31/97 682,423
87% 5/28/98 535,981 264,733 271,248 1.46 32,284 227.35 12/31/97 499,715
95% 7/21/98 470,112 214,830 255,282 1.35 18,000 300.00 12/31/97 464,414
86% 2/17/98 545,054 290,267 254,787 1.46 25,250 250.00 12/31/97 544,130
94% 1/6/98 694,235 386,672 307,563 1.62 36,000 250.00 12/31/97 707,137
100% 2/1/98 320,334 87,456 232,878 1.37 3,069 133.43 12/31/97 320,335
100% 1/1/98 401,545 186,010 215,535 1.34 14,905 271.00 12/31/97 423,845
100% 2/16/98 313,608 101,782 211,826 1.33 8,892 247.00 12/31/97 268,556
100% 1/6/98 321,153 93,977 227,176 1.43 8,960 280.00 12/31/97 321,708
99% 3/27/98 377,504 140,614 236,890 1.36 13,188 196.84 12/31/97 334,787
100% 1/1/98 694,611 468,795 225,816 1.38 12,950 350.00 12/31/97 703,058
98% 3/10/98 670,633 386,982 283,651 2.01 60,800 475.00 12/31/97 668,894
100% 2/1/98 272,735 81,870 190,865 1.36 4,628 178.00 12/31/97 276,314
97% 1/1/98 429,476 183,664 245,812 1.80 10,985 296.89 12/31/97 438,447
100% 1/1/98 365,700 144,897 220,803 1.48 15,000 250.00 12/31/97 390,282
100% 3/24/98 381,057 176,116 204,941 1.58 15,160 291.54 12/31/97 381,057
80% 5/28/98 353,883 170,009 183,874 1.50 25,781 286.46 12/31/97 356,465
96% 3/1/97 396,108 198,220 197,888 1.61 31,083 310.83 12/31/97 411,248
98% 12/31/97 310,847 102,939 207,908 1.41 8,600 200.00 12/31/97 318,345
100% 2/23/98 246,295 78,848 167,447 1.41 5,759 213.30 12/31/97 257,061
100% 6/11/98 319,285 101,514 217,771 1.89 13,322 370.06 12/31/97 320,694
94% 12/16/97 449,419 264,782 184,637 1.61 19,430 290.00 12/31/97 450,014
100% 1/30/98 318,172 141,090 177,082 1.54 9,600 200.00 12/31/97 311,086
98% 2/20/98 378,838 186,207 192,631 1.65 15,576 264.00 12/31/97 373,107
87% 4/1/98 480,969 246,156 234,813 2.03 34,508 285.19 12/31/97 429,203
99% 3/18/98 409,307 223,789 185,518 1.49 28,200 300.00 12/31/97 415,627
100% 3/24/98 183,675 38,030 145,645 1.32 2,960 370.00 12/31/97 187,494
88% 3/1/98 456,981 274,099 182,882 1.61 28,000 250.00 12/31/97 445,524
100% 1/26/98 306,180 137,471 168,709 1.52 4,649 273.47 12/31/97 312,000
100% 4/15/98 404,206 190,299 213,907 1.97 24,000 250.00 12/31/97 239,789
100% 3/1/98 284,205 132,181 152,024 1.41 9,494 197.79 12/31/97 279,531
100% 3/12/98 235,503 85,793 149,710 1.48 4,200 200.00 12/31/97 249,540
100% 5/27/98 192,774 60,235 132,539 1.32 4,400 200.00 12/31/97 196,437
90% 3/20/98 301,763 156,726 145,037 1.46 12,950 269.79 12/31/97 285,053
94% 1/31/98 308,373 142,064 166,309 1.69 16,200 200.00 12/31/97 325,226
91% 3/1/98 664,356 492,167 172,189 1.60 35,400 300.00 12/31/97 572,810
98% 3/18/98 277,156 140,585 136,571 1.38 10,800 225.00 12/31/97 268,957
98% 6/1/98 285,791 136,797 148,994 1.65 14,938 253.19 12/31/97 307,254
100% 3/24/98 277,132 122,775 154,357 1.71 8,941 207.93 12/31/97 288,103
100% 4/1/98 300,118 142,226 157,892 1.76 10,000 200.00 12/31/97 314,798
100% 3/3/98 242,017 107,027 134,990 1.51 11,271 289.00 12/31/97 208,999
100% 4/2/98 212,827 87,517 125,310 1.39 8,780 219.50 12/31/97 204,530
88% 1/25/98 316,364 181,893 134,471 1.55 10,400 208.00 12/31/97 304,067
100% 1/13/98 329,705 167,253 162,452 1.71 16,000 250.00 12/31/97 346,057
100% 3/12/98 200,678 76,722 123,956 1.44 2,800 200.00 12/31/97 212,040
100% 3/12/98 242,488 115,100 127,388 1.53 6,800 200.00 12/31/97 255,840
97% 5/1/98 204,481 88,667 115,814 1.42 9,432 262.00 12/31/97 198,777
90% 12/18/97 256,457 130,485 125,972 1.41 15,000 300.00 12/31/97 250,745
100% 1/1/98 273,898 145,888 128,010 1.56 14,459 301.23 12/31/97 272,548
100% 11/1/97 303,983 121,998 181,985 2.36 15,692 290.59 12/31/97 243,195
100% 2/1/98 257,281 125,150 132,131 1.61 13,800 300.00 12/31/97 238,223
96% 3/31/98 185,916 62,141 123,775 1.41 7,259 315.61 12/31/97 128,392
100% 2/23/98 159,233 53,346 105,887 1.40 3,550 253.57 12/31/97 164,911
97% 1/1/98 248,690 112,287 136,403 1.58 17,360 280.00 12/31/97 246,051
97% 3/1/98 252,806 137,678 115,128 1.49 18,688 292.00 12/31/97 239,937
94% 2/28/98 241,342 134,302 107,040 1.50 9,120 190.00 12/31/97 254,095
100% 4/1/98 306,174 161,986 144,188 1.53 19,464 282.09 12/31/97 316,500
100% 3/31/98 248,112 129,631 118,481 1.76 16,800 204.88
100% 3/17/98 196,826 94,142 102,684 1.70 6,350 211.67 12/31/97 191,949
100% 5/1/98 173,450 76,160 97,290 1.40 9,000 300.00 12/31/97 178,744
100% 2/5/98 269,597 113,589 156,008 2.52 5,271 251.00 12/31/97 280,100
<CAPTION>
MOST 2ND
MOST MOST RECENT MOST
RECENT RECENT NOI RECENT
EXPENSES NOI DSCR END DATE
----------- ----------- ------ --------
<S> <C> <C> <C> <C>
$ 464,048 $ 410,541 1.76 12/31/96
102,901 346,454 1.56 12/31/96
164,791 325,087 1.48 12/31/96
178,700 321,928 1.58 12/31/96
422,108 304,364 1.49 12/31/96
62,733 309,478 1.86
469,868 301,721 1.38 12/31/96
161,970 282,593 1.39 12/31/96
120,531 322,852 1.62 12/31/96
377,651 304,772 1.59 12/31/96
250,416 249,299 1.34 12/31/96
207,541 256,873 1.35 12/31/96
270,876 273,254 1.57 12/31/96
373,251 333,886 1.75 12/31/96
73,040 247,295 1.46 12/31/96
176,192 247,653 1.54 12/31/96
95,134 173,422 1.09 12/31/96
93,024 228,684 1.44 12/31/96
148,462 186,325 1.28 12/31/96
452,823 250,235 1.53 12/31/96
370,274 298,620 2.12 12/31/96
78,369 197,945 1.41 12/31/96
160,735 277,712 2.03 12/31/96
150,189 240,093 1.61 12/31/96
155,041 226,016 1.74 12/31/96
185,781 170,684 1.39 12/31/96
155,186 256,062 2.09 12/31/96
58,274 260,071 1.77 12/31/96
63,298 193,763 1.64 12/31/96
113,473 207,221 1.79
248,402 201,612 1.76 12/31/96
145,361 165,725 1.44 12/31/96
209,180 163,927 1.40 12/31/96
210,639 218,564 1.89 12/31/96
242,883 172,744 1.39 12/31/96
30,792 156,702 1.42 12/31/96
269,135 176,389 1.56 12/31/96
84,142 227,858 2.05
141,907 97,882 0.90
124,857 154,674 1.44 12/31/96
63,773 185,767 1.83 12/31/96
59,910 136,527 1.36 12/31/96
156,830 128,223 1.29 12/31/96
126,796 198,430 2.02
338,877 233,933 2.37 12/31/96
138,759 130,198 1.32 12/31/96
137,597 169,657 1.87 12/31/96
129,104 158,999 1.76 12/31/96
145,805 168,993 1.88 12/31/96
131,787 77,212 0.86
85,260 119,270 1.33 12/31/96
187,066 117,001 1.35 12/31/96
160,557 185,500 1.96
61,073 150,967 1.75 12/31/96
86,085 169,755 2.03 12/31/96
70,791 127,986 1.56 12/31/96
139,619 111,126 1.25 12/31/96
157,570 114,978 1.40 12/31/96
100,395 142,800 1.85 12/31/96
104,938 133,285 1.62 12/31/96
17,811 110,581 1.89 12/31/96
48,157 116,754 1.54 12/31/96
105,475 140,576 1.63 12/31/96
124,982 114,955 1.49 12/31/96
122,098 131,997 1.86 12/31/96
120,309 196,191 2.09 12/31/96
87,092 104,857 1.73 12/31/96
71,224 107,520 1.54 12/31/96
110,070 170,030 2.75 12/31/96
</TABLE>
<PAGE> 117
<TABLE>
<CAPTION>
2ND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 911,697 $ 509,852 $ 401,845 1.72
417,862 116,968 300,894 1.35
468,272 158,984 309,288 1.41
471,758 181,408 290,350 1.43
700,993 406,333 294,660 1.44 Butcher Shop 1,715 4% 3/31/99
898,246 435,792 462,454 2.11
432,436 147,024 285,412 1.40
464,207 140,156 324,051 1.63
653,140 402,162 250,978 1.31
529,707 248,489 281,218 1.51
468,532 207,206 261,326 1.38
542,122 249,344 292,778 1.68
676,436 319,564 356,872 1.88
312,952 60,210 252,742 1.49
380,771 150,443 230,328 1.43
276,937 103,338 173,599 1.09
285,599 116,201 169,398 1.06
348,693 149,089 199,604 1.15 Commodore Rest. 3,092 62% 4/30/00
719,087 425,910 293,177 1.79
683,855 347,458 336,397 2.38
275,497 78,795 196,702 1.40
417,810 145,575 272,235 1.99
382,483 147,143 235,340 1.58
365,073 153,798 211,275 1.63
354,929 211,285 143,644 1.17
331,967 141,683 190,284 1.55
127,272 30,295 96,977 0.66
237,552 62,300 175,252 1.48
187,108 90,138 96,970 2.03
142,300 170,294 (27,994) (0.24)
332,922 152,447 180,475 1.54
451,436 219,070 232,366 2.01
412,303 216,211 196,092 1.58
161,812 29,508 132,304 1.20
336,309 165,606 170,703 2.01
Victorian House 4,800 18% 2/28/99
270,713 128,648 142,065 1.32
237,360 62,081 175,279 1.73
197,428 56,905 140,523 1.40
294,613 152,334 142,279 1.43
664,079 498,494 165,585 1.54
284,409 135,116 149,293 1.51
302,415 133,368 169,047 1.87
278,348 118,222 160,126 1.78
303,176 130,416 172,760 1.93
208,850 88,594 120,256 1.34
283,646 203,205 80,441 0.93
205,380 59,086 146,294 1.69
248,580 81,426 167,154 2.00
194,021 76,820 117,201 1.43
253,807 126,329 127,478 1.43
272,958 145,055 127,903 1.55
315,979 132,710 183,269 2.38
250,531 102,323 148,208 1.80
192,514 47,057 145,457 1.66
154,782 48,808 105,974 1.40
255,623 109,584 146,039 1.70
180,081 101,658 78,423 1.01
122,240 57,118 65,122 1.83
311,378 83,143 228,235 2.43
170,057 71,869 98,188 1.62
170,768 93,684 77,084 1.11
257,359 116,683 140,676 2.28
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<S> <C> <C> <C> <C>
Grocery 875 2% 9/30/00
Commodore Grocery 951 19% 1/31/01
Corham Healthcare 1,400 5% 10/31/98
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------------- ----------------
<C> <C> <S> <C>
B139 3046398 Piedmont Manor Apartments 2501 Leonard Street
B140 3046422 Spirit Mountain Apartments 9416 Old Highway 61
B141 3049756 Margaret Ann Apartments 1908 Hennepin Avenue
N142 50940 Duval Crossing Apartments 4200, 4202, 4204 and 4206 Duval Road
B143 3050945 Skyway Park 7041 South 116th Place
B144 3050937 Mainplace 2010 South Main Street
B145 3050911 Columbia Park 4717-23 36th Ave. S
B146 3049251 5536 N. Campbell Apartments 5536 N. Campbell Avenue
N147 50886 International Home Furnishing Center 210 East Commerce Ave.
N148 50774 Corridor Marketplace Shopping Center 3393 Laurel Fort Meade Road
N149 50428 Granada Hills Town Center 17960 Chatsworth Street
N150 50847 41/49 Highway Junction Project SW Corner of CA Highway 41 and CA Highway 49 Intersection
N151 50861 Berkeley Mall 614 Berkley Blvd.
N152 50978 Boynton Trail Shopping Center 9760-9990 Military Trail
N153 50977 Village Square Shopping Center 1570 Harrison Street
SUB-TOTAL CROSSED LOANS
N154 50838 Elmwood North I 5141,5151 Citrus Boulevard
N155 50973 Worth Plaza Arcade 215-223, 309-319 Worth Ave.
N156 50568 Okee Square Shopping Center 2021 Okeechobee Blvd.
N157 50514 Townfair Center 475 Ben Franklin Road, South
N158 50900 Warm Springs Marketplace 7135, 7161, 7205, 7211, & 7291 So. Eastern Ave.
N159 50078 Market Place @ Webb Chapel 9655 Webb Chapel Rd.
N160 50651 Sedona Village Shopping Center 160 Coffee Pot Drive
B161 3051117 Fred Meyers Superstore 9925 State Avenue
N162 50839 Clarkson - Clayton Center 1312 Clarkson Road
B163 3062320 Arapahoe Village Shopping Center 5100 East Arapahoe Road
B164 3043320 Victor Valley Town Centr 17100 Bear Valley Road
B165 3062379 Vista Plaza Shopping 4216-4338 Pacific Coast Hwy.
N166 50897 Parker Shopping Center 10970-11000 S. Parker Rd.
N167 50896 FoodsCo. Grocery Store 1800 Folsom St.
N168 50126 Berne Square 2500 Clarendon Blvd.
N169 50104 Diamond Oaks Shopping Center 4105 Denton Highway
N170 50109 Corsicana Shopping Center 1809 West 7th Avenue
N171 50111 Graham Shopping Center 1310-1318 Cherry Street
N172 50108 Kennendale Shopping Center 106 Mansfield Hwy.
N173 50107 River Oaks Shopping Center 5500-5520 River Oaks Blvd.
N174 50105 Stonegate Shopping Center 1309 Brown Trail
N175 50110 Centerpointe Shopping Center 611-625 West Panola St.
N176 50106 McCart Plaza Shopping Center 5203 McCart Ave.
SUB-TOTAL CROSSED LOANS
N177 50857 Thornblade Shopping Center 421 The Parkway
B178 3049814 Hopyard Plaza Shopping Center 3003-3059 Hopyard Road and 5525-5737 Valley Ave.
N179 50418 Mil-Lake Plaza Shopping Center 4615 Lake Worth Road
B180 3054954 Cinemark Theatre 11450 Market St.
N181 50559 Benchmark Square Shopping Center 2906-2934 Randleman Rd.
N182 50851 The Oaks Shopping Center 4058 13th Street
N183 50073 Tower Plaza Shopping Center 14703 Baltimore Ave.
B184 3052339 Germania Place 108 W. Germania Place
N185 50850 Normandy Station Shopping Center 7200 Normandy Blvd.
B186 3052271 First National Plaza 1101-1275 Butterfield Rd.
N187 50064 Plaza 303 Shopping Center 305 East Spur 303 (SEC Highway 303)
B188 3062395 Pic'N Save 955 West Sepulveda Blvd.
N189 50065 Rush Creek Shopping Center 2500 West Pioneer Parkway
N190 50738 White Oak Village Shopping Center 1834 State Route 17
N191 50867 349-351 Newbury St. 349-351 Newbury St.
N192 50870 Potter Square Shopping Center 4400 Potter Rd.
N193 50667 Sea Pines Center 71 Lighthouse Rd.
N194 50627 Merritt Crossing 203-281 Crockett Boulevard
B195 3049186 Newhall Plaza Shopping 24130-24180 Lyons Avenue
N196 50813 Pecan Square Shopping Center 349 Nanticoke Rd. (aka Maryland Route No. 349)
N197 50124 Belleview Square Shopping Center 1448 East Main St.
N198 50801 Country Corner Shopping Center 601, 609, 617, 641-645, 651-665, & 675 North Broadway
B199 3049129 Tweedy Shopping Center 4149 Tweedy Boulevard
N200 50891 John R. Wood Plaza 4947, 4949 and 4951 Tamiami Trail
B201 3062338 Huntington Gardens 16361-Bolsa Chica Street
N202 50707 Marketplace at Cayce Shopping Center 2245 Charleston Highway/NE Corner North Eden Drive
N203 50736 Marketown Shopping Center 295 Highway 90 (at Dunbar Ave.)
N204 50918 Newport Plaza Shopping Center 4551 New Falls Rd.
N205 50136 Harvest Plaza I 9650 Strickland Rd.
N206 50137 Harvest Plaza II 8800 Harvest Oaks Drive
(a) This loan pays interest only for the first 12 payments.
<CAPTION>
SE-
QUENCE COUNTY CITY
- ------ ------ ----
<C> <C> <C>
B139 St. Louis Duluth
B140 St. Louis Proctor
B141 Hennepin Minneapolis
N142 Travis Austin
B143 King Seattle
B144 King Seattle
B145 King Seattle
B146 Cook Chicago
N147 Guilford High Point
N148 Anne Arundel Laurel
N149 Los Angeles Granada Hills
N150 Madera Oakhurst
N151 Wayne Goldsboro
N152 Palm Beach Bonita Beach
N153 Brevard Titusville
N154 Jefferson Harahan (New Orleans)
N155 Palm Beach Palm Beach
N156 Palm Beach West Palm Beach
N157 Indiana Indiana
N158 Clark Las Vegas
N159 Dallas Dallas
N160 Yavapai Sedona
B161 Snohomish Marysville
N162 St. Louis Ellisville
B163 Arapahoe Littleton
B164 San Bernardino Victor Valley
B165 Los Angeles Torrance
N166 Douglas Parker
N167 San Francisco San Francisco
N168 Craven New Bern
N169 Tarrant Haltom City
N170 Navarro Corsicana
N171 Young Graham
N172 Tarrant Kennendale
N173 Tarrant River Oaks
N174 Tarrant Bedford
N175 Panola Carthage
N176 Tarrant Ft Worth
N177 Greenville Greer
B178 Alameda Pleasanton
N179 Palm Beach Greenacres
B180 Harris Jacinto City
N181 Guilford Greensboro
N182 Osceola St. Cloud
N183 Prince Georges Laurel
B184 Cook Chicago
N185 Duval Jacksonville
B186 Du Page Wheaton
N187 Dallas Grand Prairie
B188 Los Angeles Torrance
N189 Tarrant Pantego
N190 Essex Tappahannock
N191 Suffolk Boston
N192 Union Stallings
N193 Beaufort Hilton Head Island
N194 Brevard Merritt Island
B195 Los Angeles Santa Clarita
N196 Wicomico Salisbury
N197 York Rock Hill
N198 San Diego Escondio
B199 Los Angeles South Gate
N200 Collier Naples
B201 Orange Huntington Beach
N202 Lexington Cayce
N203 Hancock Bay St. Louis
N204 Bucks Levittown
N205 Wake Raleigh
N206 Wake Raleigh
</TABLE>
<PAGE> 119
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY ADMINI-
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE STRATIVE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE FEE RATE(I)
----- ---- ---- ------- ------- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MN 55911 Multifamily $ 725,000 $ 722,538 $ 579,992 Balloon 6.906% 0.143%
MN 55810 Multifamily 680,000 677,690 543,992 Balloon 6.906% 0.143%
MN 55403 Multifamily 650,000 647,782 570,364 Balloon 7.166% 0.143%
TX 78759 Multifamily 630,000 629,250 553,030 Balloon 7.170% 0.243%
WA 98178 Multifamily 625,000 623,718 546,905 Balloon 7.060% 0.143%
WA 98144 Multifamily 525,000 523,923 459,400 Balloon 7.060% 0.143%
WA 98118 Multifamily 505,000 503,964 441,899 Balloon 7.060% 0.143%
IL 60660 Multifamily 390,000 386,353 Fully Amortizing 7.207% 0.143%
NC 27260 Retail 75,000,000 74,317,972 Fully Amortizing 7.060% 0.063%
MD 20724 Retail 33,000,000 32,887,200 25,504,721 Balloon 7.160% 0.103%
CA 91344 Retail 27,750,000 27,732,649 21,290,743 Balloon 7.000% 0.143%
CA 93644 Retail 19,000,000 18,961,134 16,630,671 Balloon 7.071% 0.143%
NC 27534 Retail 18,500,000 18,473,776 13,655,312 Balloon 6.955% 0.143%
FL 33426 Retail 15,500,000 15,490,658 13,584,006 Balloon 7.120% 0.143%
FL 32780 Retail 2,350,000 2,348,584 2,059,510 Balloon 7.120% 0.143%
---------- ----------
17,839,242 15,643,516
LA 70123 Retail 17,252,000 17,213,668 14,972,730 Balloon 6.750% 0.103%
FL 33480 Retail 12,100,000 12,092,685 9,329,620 Balloon 7.110% 0.143%
FL 33409 Retail 11,500,000 11,469,052 10,061,192 Balloon 7.040% 0.143%
PA 15701 Retail 10,700,000 10,654,551 9,343,653 Balloon 6.960% 0.143%
NV 89119 Retail 8,906,000 8,895,496 7,823,963 Balloon 7.200% 0.143%
TX 75220 Retail 8,850,000 8,839,292 8,080,738 Balloon 8.850% 0.168%
AZ 86336 Retail 8,500,000 8,443,341 6,834,284 Balloon 7.050% 0.103%
WA 98270 Retail 7,800,000 7,754,768 6,232,921 Balloon 6.869% 0.143%
MO 63011 Retail 7,300,000 7,270,651 5,570,022 Balloon 7.020% 0.143%
CO 80122 Retail 7,000,000 6,995,717 6,126,909 Balloon 7.071% 0.143%
CA 92392 Retail 6,697,500 6,672,637 5,825,617 Balloon 6.832% 0.143%
CA 90505 Retail 6,000,000 5,996,475 5,269,461 Balloon 7.202% 0.143%
CO 80134 Retail 6,000,000 5,992,611 5,251,913 Balloon 7.060% 0.143%
CA 94103 Retail 5,800,000 5,800,000 Fully Amortizing 7.285% 0.143%
NC 28560 Retail 5,475,000 5,406,722 4,492,761 Balloon 7.770% 0.143%
TX 76117 Retail 804,000 789,109 383,549 Balloon 9.110% 0.353%
TX 75110 Retail 664,000 657,134 469,458 Balloon 9.110% 0.353%
TX 76450 Retail 661,000 654,165 467,340 Balloon 9.110% 0.353%
TX 76060 Retail 657,500 650,701 464,863 Balloon 9.110% 0.353%
TX 76114 Retail 642,000 635,362 453,906 Balloon 9.110% 0.353%
TX 76022 Retail 616,000 609,630 435,523 Balloon 9.110% 0.353%
TX 75663 Retail 529,500 524,025 374,365 Balloon 9.110% 0.353%
TX 76115 Retail 521,000 515,613 368,358 Balloon 9.110% 0.353%
---------- ----------
5,035,739 3,417,363
SC 29650 Retail 5,008,000 5,001,757 4,379,006 Balloon 7.020% 0.143%
CA 94588 Retail 5,000,000 4,987,418 4,402,133 Balloon 7.284% 0.143%
FL 33463 Retail 5,000,000 4,980,296 4,079,244 Balloon 7.540% 0.143%
TX 77029 Retail 4,900,000 4,882,811 Fully Amortizing 7.763% 0.143%
NC 27406 Retail 4,600,000 4,594,455 4,007,016 Balloon 7.130% 0.143%
FL 34769 Retail 4,240,000 4,235,323 3,591,569 Balloon 7.410% 0.143%
MD 20707 Retail 4,048,632 4,030,359 3,464,787 Balloon 9.100% 0.168%
IL 60610 Retail 3,850,000 3,843,408 3,425,751 Balloon 7.724% 0.143%
FL 32205 Retail 3,840,000 3,835,764 3,252,740 Balloon 7.410% 0.143%
IL 60187 Retail 3,803,000 3,796,674 3,392,206 Balloon 7.825% 0.143%
TX 75050 Retail 3,694,000 3,651,282 2,585,182 Balloon 8.880% 0.168%
CA 90502 Retail 3,600,000 3,595,641 3,155,669 Balloon 7.115% 0.143%
TX 76013 Retail 3,525,000 3,484,236 2,466,910 Balloon 8.880% 0.168%
VA 22560 Retail 3,480,000 3,470,962 3,054,923 Balloon 7.170% 0.143%
MA 02115 Retail 3,400,000 3,395,876 3,139,919 Balloon 7.110% 0.143%
NC 28106 Retail 3,300,000 3,295,773 2,878,685 Balloon 6.930% 0.143%
SC 29928-7216 Retail 3,300,000 3,290,239 2,696,798 Balloon 7.610% 0.143%
FL 32953 Retail 3,200,000 3,172,852 2,561,650 Balloon 6.950% 0.143%
CA 92705 Retail 3,050,000 3,038,330 2,644,185 Balloon 6.709% 0.143%
MD 21801 Retail 3,000,000 2,987,533 2,428,554 Balloon 7.280% 0.143%
SC 29730 Retail 2,975,000 2,953,215 2,659,568 Balloon 7.940% 0.143%
CA 92025 Retail 2,900,000 2,888,400 2,547,666 Balloon 7.190% 0.143%
CA 90280 Retail 2,800,000 2,793,881 2,495,327 Balloon 7.772% 0.143%
FL 34103 Retail 2,800,000 2,790,383 1,920,617 Balloon 7.050% 0.143%
CA 92649 Retail 2,437,500 2,434,774 2,150,561 Balloon 7.368% 0.143%
SC 29033 Retail 2,339,500 2,327,432 1,611,925 Balloon 7.330% 0.123%
MS 39520-3600 Retail 2,330,100 2,317,597 1,885,614 Balloon 7.280% 0.143%
PA 19056 Retail 2,200,000 2,197,702 1,763,961 Balloon 6.980% 0.143%
NC 27615 Retail 2,100,000 2,087,296 1,909,224 Balloon 8.680% 0.168%
NC 27615 Retail 2,075,000 2,062,447 1,886,496 Balloon 8.680% 0.168%
<CAPTION>
SUB- NET FIRST INTEREST
SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
FEE RATE RATE DATE DATE METHOD
-------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.100% 6.763% 5/20/98 7/1/98 Actual/360
0.100% 6.763% 5/18/98 7/1/98 Actual/360
0.100% 7.023% 3/26/98 5/1/98 Actual/360
0.200% 6.927% 6/24/98 8/1/98 Actual/360
0.100% 6.917% 5/19/98 7/1/98 Actual/360
0.100% 6.917% 5/19/98 7/1/98 Actual/360
0.100% 6.917% 5/19/98 7/1/98 Actual/360
0.100% 7.064% 5/12/98 7/1/98 30/360
0.020% 6.997% 7/20/98 9/1/98 Actual/360
0.060% 7.057% 3/16/98 5/1/98 Actual/360
0.100% 6.857% 7/13/98 9/1/98 Actual/360
0.100% 6.928% 5/8/98 7/1/98 Actual/360
0.100% 6.812% 7/20/98 9/1/98 Actual/360
0.100% 6.977% 7/22/98 9/1/98 Actual/360
0.100% 6.977% 7/22/98 9/1/98 Actual/360
0.060% 6.647% 5/1/98 7/1/98 Actual/360
0.100% 6.967% 7/9/98 9/1/98 Actual/360
0.100% 6.897% 4/6/98 6/1/98 Actual/360
0.100% 6.817% 2/13/98 4/1/98 Actual/360
0.100% 7.057% 6/3/98 8/1/98 Actual/360
0.125% 8.682% 5/29/98 7/1/98 Actual/360
0.060% 6.947% 2/23/98 4/1/98 Actual/360
0.100% 6.726% 3/23/98 5/1/98 Actual/360
0.100% 6.877% 5/1/98 7/1/98 Actual/360
0.100% 6.928% 7/6/98 9/1/98 Actual/360
0.100% 6.689% 3/2/98 5/1/98 Actual/360
0.100% 7.059% 7/6/98 9/1/98 Actual/360
0.100% 6.917% 6/12/98 8/1/98 Actual/360
0.100% 7.142% 7/20/98 9/1/98 Actual/360
0.100% 7.627% 8/27/97 10/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.310% 8.757% 7/25/97 9/1/97 Actual/360
0.100% 6.877% 6/26/98 8/1/98 Actual/360
0.100% 7.141% 4/3/98 6/1/98 Actual/360
0.100% 7.397% 4/24/98 6/1/98 Actual/360
0.100% 7.620% 6/1/98 8/1/98 30/360
0.100% 6.987% 6/29/98 8/1/98 Actual/360
0.100% 7.267% 6/8/98 8/1/98 Actual/360
0.125% 8.932% 5/1/98 5/1/98 Actual/360
0.100% 7.581% 5/7/98 7/1/98 Actual/360
0.100% 7.267% 6/8/98 8/1/98 Actual/360
0.100% 7.682% 5/26/98 7/1/98 Actual/360
0.125% 8.712% 6/11/97 8/1/97 Actual/360
0.100% 6.972% 6/23/98 8/1/98 Actual/360
0.125% 8.712% 6/25/97 8/1/97 Actual/360
0.100% 7.027% 4/9/98 6/1/98 Actual/360
0.100% 6.967% 6/2/98 8/1/98 Actual/360
0.100% 6.787% 6/23/98 8/1/98 Actual/360
0.100% 7.467% 5/27/98 7/1/98 Actual/360
0.100% 6.807% 1/30/98 3/1/98 Actual/360
0.100% 6.566% 3/16/98 5/1/98 Actual/360
0.100% 7.137% 4/7/98 6/1/98 Actual/360
0.100% 7.797% 8/20/97 10/1/97 Actual/360
0.100% 7.047% 2/23/98 4/1/98 Actual/360
0.100% 7.629% 4/17/98 6/1/98 Actual/360
0.100% 6.907% 6/16/98 8/1/98 Actual/360
0.100% 7.225% 6/23/98 8/1/98 Actual/360
0.080% 7.207% 5/27/98 7/1/98 Actual/360
0.100% 7.137% 3/5/98 5/1/98 Actual/360
0.100% 6.837% 7/9/98 9/1/98 Actual/360
0.125% 8.512% 8/28/97 10/1/97 Actual/360
0.125% 8.512% 8/28/97 10/1/97 Actual/360
</TABLE>
<PAGE> 120
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE
------- -------- ------------ -------- -------- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 5,080.76 120 300 3 117 6/1/08 No No 4/1/08
4,765.40 120 300 3 117 6/1/08 No Yes(Q) 4/1/08
4,397.17 120 360 5 115 4/1/08 No Yes(M) 1/31/08
4,263.58 120 360 2 118 7/1/08 No Yes(V) 2/29/08
4,183.36 120 360 3 117 6/1/08 No Yes(O) 4/1/08
3,514.02 120 360 3 117 6/1/08 No Yes(O) 4/1/08
3,380.15 120 360 3 117 6/1/08 No Yes(O) 4/1/08
3,550.72 180 180 3 177 6/1/13 No Yes(W) 4/1/13
1,137,986.80 84 84 1 83 8/1/05 No No 3/31/05
223,107.23 180 360 5 175 4/1/13 No No 11/30/12
184,621.44 180 360 1 179 8/1/13 No No 7/31/06
127,314.75 120 360 3 117 6/1/08 No No 5/31/02
137,021.27 120 264 1 119 8/1/08 No No 7/31/02
104,374.07 120 360 1 119 8/1/08 Yes(3) Yes(X) 3/31/08
15,824.46 120 360 1 119 8/1/08 Yes(3) Yes(X) 3/31/08
111,896.14 120 360 3 117 6/1/08 No No 1/31/08
81,397.47 180 360 1 179 8/1/13 No No 3/31/13
76,818.97 120 360 4 116 5/1/08 No No 4/30/02
70,900.16 120 360 6 114 3/1/08 No No 2/28/02
60,452.88 120 360 2 118 7/1/08 No No 3/1/08
70,256.02 120 360 3 117 6/1/08 No Yes(Y) 5/31/01
60,347.62 120 300 6 114 3/1/08 No No 2/28/02
54,478.66 120 300 5 115 4/1/08 No No 1/31/08
53,375.14 120 276 3 117 6/1/08 No No 1/31/08
46,905.44 120 360 1 119 8/1/08 No Yes(Z) 6/1/08
43,805.55 120 360 5 115 4/1/08 No No 3/2/02
40,735.42 120 360 1 119 8/1/08 No No 6/1/08
40,160.22 120 360 2 118 7/1/08 No No 3/1/08
57,975.00 168(a) 156 1 167 8/1/12 No No 3/31/12
41,426.17 120 300 12 108 9/1/07 No Yes(AA) 8/31/01
7,290.77 180 240 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
5,622.37 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
5,596.96 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
5,567.33 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
5,436.08 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
5,215.93 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
4,483.50 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
4,411.52 180 300 13 167 8/1/12 Yes(4) Yes(AB) 7/31/05
33,385.64 120 360 2 118 7/1/08 No No 2/29/08
34,224.20 120 360 4 116 5/1/08 No No 3/1/08
37,079.75 120 300 4 116 5/1/08 No No 4/30/02
40,265.79 240 240 2 238 7/1/18 No No 5/1/18
31,006.57 124 360 2 122 10/31/08 No Yes(AC) 6/30/02
29,385.83 144 360 2 142 7/1/10 No Yes(AD) 3/1/10
34,567.43 110 290 5 105 6/1/07 No No 5/31/00
27,512.73 120 360 3 117 6/1/08 No No 4/1/08
26,613.59 144 360 2 142 7/1/10 No Yes(AD) 3/1/10
27,442.52 120 360 3 117 6/1/08 No No 4/1/08
30,696.93 180 300 14 166 7/1/12 No Yes(AB) 6/30/05
24,229.57 120 360 2 118 7/1/08 No No 5/1/08
29,292.55 180 300 14 166 7/1/12 No Yes(AB) 6/30/05
23,551.20 120 360 4 116 5/1/08 No No 12/31/07
22,872.02 84 360 2 82 7/1/05 No No 2/28/05
21,800.06 120 360 2 118 7/1/08 No No 6/30/02
24,623.31 120 300 3 117 6/1/08 No No 5/31/02
22,514.97 120 300 7 113 2/1/08 No No 1/31/02
19,699.19 120 360 5 115 4/1/08 No No 1/31/08
21,742.22 120 300 4 116 5/1/08 No No 4/30/02
21,705.19 120 360 12 108 9/1/07 No Yes(AC) 8/31/01
19,665.23 120 360 6 114 3/1/08 No No 10/31/07
20,102.13 120 360 4 116 5/1/08 No No 3/1/08
21,792.49 120 240 2 118 7/1/08 No No 2/29/08
16,823.58 120 360 2 118 7/1/08 No No 5/1/08
18,604.41 121 240 3 118 7/1/08 No No 6/30/02
16,887.18 120 300 5 115 4/1/08 No No 3/31/02
15,521.08 120 300 1 119 8/1/08 No No 3/31/08
16,415.83 120 360 12 108 9/1/07 No Yes(AE) 8/31/01
16,220.40 120 360 12 108 9/1/07 No Yes(AE) 8/31/01
<CAPTION>
PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---------------------------------------
<S> <C>
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(79)/OPEN(5)/DEFEASANCE
LO(175)/OPEN(5)/DEFEASANCE
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(175)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(116)/OPEN(4)/DEFEASANCE
LO(36)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(6)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(70)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(163)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(238)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(70)/OPEN(7)/DEFEASANCE
LO(140)/OPEN(4)/DEFEASANCE
LO(26)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(140)/OPEN(4)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(96)/GRTR1%PPMTorYM(78)/OPEN(6)
LO(115)/OPEN(5)/DEFEASANCE
LO(79)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(117)/OPEN(3)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(48)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
</TABLE>
<PAGE> 121
<TABLE>
<CAPTION>
TOTAL SF/
CUT-OFF UNITS/ UNIT/
SE- LOAN APPRAISAL APPRAISAL DATE LTV YEAR BUILT/ ROOM/ ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED
- ------ ------ ------------- ----- ---- ----- --------- --- ---
<C> <C> <S> <C> <C> <C> <C> <C> <C>
B139 3046398 Piedmont Manor Apartments $ 970,000 2/10/98 74% 1976 34 Units
B140 3046422 Spirit Mountain Apartments 950,000 2/10/98 71% 1977 34 Units
B141 3049756 Margaret Ann Apartments 940,000 2/11/98 69% 1914 24 Units
N142 50940 Duval Crossing Apartments 840,000 5/26/98 75% 1985 16 Units
B143 3050945 Skyway Park 870,000 3/23/98 72% 1994 16 Units
B144 3050937 Mainplace 910,000 4/2/98 58% 1992 12 Units
B145 3050911 Columbia Park 775,000 3/20/98 65% 1992 12 Units
B146 3049251 5536 N. Campbell Apartments 710,000 1/27/98 54% 1928 20 Units
N147 50886 International Home Furnishing Center 210,000,000 5/1/98 35% 1921/1994 2,519,415 SF
N148 50774 Corridor Marketplace Shopping Center 42,000,000 1/19/98 78% 1995 300,891 SF
N149 50428 Granada Hills Town Center 37,000,000 10/1/97 75% 1997/1998 195,552 SF
N150 50847 41/49 Highway Junction Project 24,500,000 2/18/98 77% 1989/1994 327,880 SF
N151 50861 Berkeley Mall 28,000,000 1/6/98 66% 1976/1997 448,726 SF
N152 50978 Boynton Trail Shopping Center 19,450,000 6/29/98 80% 1987/1998 249,730 SF
N153 50977 Village Square Shopping Center 3,000,000 6/1/98 78% 1986 77,356 SF
---------
SUB-TOTAL CROSSED LOANS 22,450,000
N154 50838 Elmwood North I 21,565,000 2/19/98 80% 1997 181,059 SF
N155 50973 Worth Plaza Arcade 15,800,000 4/7/98 77% 1929/1989 20,699 SF
N156 50568 Okee Square Shopping Center 14,500,000 11/5/97 79% 1994 115,960 SF
N157 50514 Townfair Center 13,760,000 11/1/97 77% 1996 163,863 SF
N158 50900 Warm Springs Marketplace 11,875,000 5/1/98 75% 1995 66,302 SF
N159 50078 Market Place @ Webb Chapel 11,800,000 3/1/98 75% 1985/1998 118,255 SF
N160 50651 Sedona Village Shopping Center 10,600,000 1/5/98 80% 1991 121,497 SF
B161 3051117 Fred Meyers Superstore 11,100,000 2/2/98 70% 1985 174,455 SF
N162 50839 Clarkson - Clayton Center 10,500,000 3/9/98 69% 1980/1997 133,033 SF
B163 3062320 Arapahoe Village Shopping Center 8,900,000 4/27/98 79% 1975 87,522 SF
B164 3043320 Victor Valley Town Centr 8,930,000 11/30/97 75% 1989 101,027 SF
B165 3062379 Vista Plaza Shopping 9,350,000 5/1/98 64% 1972 75,732 SF
N166 50897 Parker Shopping Center 8,200,000 4/23/98 73% 1985 77,747 SF
N167 50896 FoodsCo. Grocery Store 8,780,000 4/7/98 66% 1955 59,935 SF
N168 50126 Berne Square 7,300,000 9/1/97 74% 1973/1997 178,292 SF
N169 50104 Diamond Oaks Shopping Center 1,300,000 5/1/97 61% 1971/0 70,012 SF
N170 50109 Corsicana Shopping Center 1,050,000 4/21/97 63% 1971 42,029 SF
N171 50111 Graham Shopping Center 1,400,000 4/21/97 47% 1970 52,450 SF
N172 50108 Kennendale Shopping Center 1,100,000 4/19/97 59% 1965/1971 46,688 SF
N173 50107 River Oaks Shopping Center 950,000 4/9/97 67% 1951 44,852 SF
N174 50105 Stonegate Shopping Center 1,200,000 5/1/97 51% 1969 53,040 SF
N175 50110 Centerpointe Shopping Center 800,000 5/1/97 66% 1974 36,957 SF
N176 50106 McCart Plaza Shopping Center 1,100,000 4/9/97 47% 1973 63,270 SF
---------
SUB-TOTAL CROSSED LOANS 8,900,000
N177 50857 Thornblade Shopping Center 6,260,000 3/25/98 80% 1995 66,235 SF
B178 3049814 Hopyard Plaza Shopping Center 8,650,000 2/11/98 58% 1982/1997 77,602 SF
N179 50418 Mil-Lake Plaza Shopping Center 6,700,000 10/1/97 74% 1982 90,569 SF
B180 3054954 Cinemark Theatre 7,000,000 5/22/98 70% 1998 60,578 SF
N181 50559 Benchmark Square Shopping Center 5,750,000 10/28/97 80% 1986 76,366 SF
N182 50851 The Oaks Shopping Center 5,300,000 3/12/98 80% 1989 87,254 SF
N183 50073 Tower Plaza Shopping Center 5,800,000 11/25/96 69% 1988 46,934 SF
B184 3052339 Germania Place 5,100,000 1/28/98 75% 1888 45,523 SF
N185 50850 Normandy Station Shopping Center 4,800,000 3/12/98 80% 1987 70,780 SF
B186 3052271 First National Plaza 5,200,000 4/2/98 73% 1978/1995 75,533 SF
N187 50064 Plaza 303 Shopping Center 5,200,000 4/9/97 70% 1973 118,194 SF
B188 3062395 Pic'N Save 4,800,000 6/1/98 75% 1973/1996 47,432 SF
N189 50065 Rush Creek Shopping Center 4,700,000 4/1/97 74% 1983 75,931 SF
N190 50738 White Oak Village Shopping Center 4,350,000 2/6/98 80% 1987/1997 72,454 SF
N191 50867 349-351 Newbury St. 4,300,000 3/24/98 79% 1881/1988 18,302 SF
N192 50870 Potter Square Shopping Center 4,200,000 3/12/98 78% 1994 58,010 SF
N193 50667 Sea Pines Center 6,300,000 2/10/98 52% 1983 59,284 SF
N194 50627 Merritt Crossing 4,660,000 11/19/97 68% 1983 89,727 SF
B195 3049186 Newhall Plaza Shopping 4,630,000 1/30/98 66% 1985 21,448 SF
N196 50813 Pecan Square Shopping Center 4,000,000 1/19/98 75% 1992 61,196 SF
N197 50124 Belleview Square Shopping Center 3,976,000 11/1/97 74% 1988/1997 77,145 SF
N198 50801 Country Corner Shopping Center 4,100,000 1/29/98 70% 1981 52,427 SF
B199 3049129 Tweedy Shopping Center 3,800,000 3/3/98 74% 1989 22,559 SF
N200 50891 John R. Wood Plaza 5,550,000 4/8/98 50% 1985/1989 50,658 SF
B201 3062338 Huntington Gardens 3,250,000 5/4/98 75% 1979/1988 21,220 SF
N202 50707 Marketplace at Cayce Shopping Center 3,200,000 11/11/97 73% 1987 59,372 SF
N203 50736 Marketown Shopping Center 4,150,000 1/5/98 56% 1983 98,259 SF
N204 50918 Newport Plaza Shopping Center 3,175,000 4/20/98 69% 1969/1979 24,297 SF
N205 50136 Harvest Plaza I 2,800,000 5/5/97 75% 1996 23,900 SF
N206 50137 Harvest Plaza II 2,775,000 5/5/97 74% 1996 18,200 SF
<CAPTION>
LOAN
NET BALANCE PER
SE- RENTABLE SF/UNIT
QUENCE AREA(SF) ROOM/BED
- ------ -------- --------
<C> <C> <C>
B139 25,128 $ 21,251
B140 26,816 19,932
B141 22,513 26,991
N142 18,712 39,328
B143 12,528 38,982
B144 9,652 43,660
B145 9,240 41,997
B146 18,300 19,318
N147 2,519,415 29
N148 300,891 109
N149 195,552 142
N150 327,880 58
N151 448,726 41
N152 230,001 62
N153 77,356 30
N154 181,059 95
N155 20,699 584
N156 115,960 99
N157 163,863 65
N158 66,302 134
N159 118,255 75
N160 121,497 69
B161 174,455 44
N162 133,033 55
B163 87,522 80
B164 101,027 66
B165 75,732 79
N166 77,747 77
N167 59,935 97
N168 178,292 30
N169 70,012 11
N170 42,029 16
N171 52,450 12
N172 46,688 14
N173 44,852 14
N174 53,040 11
N175 36,957 14
N176 63,270 8
N177 66,235 76
B178 77,602 64
N179 90,569 55
B180 60,578 81
N181 76,366 60
N182 87,254 49
N183 46,934 86
B184 45,523 84
N185 70,780 54
B186 75,533 50
N187 118,194 31
B188 46,232 76
N189 75,931 46
N190 72,454 48
N191 18,302 186
N192 58,010 57
N193 59,284 55
N194 89,727 35
B195 21,448 142
N196 61,196 49
N197 77,145 38
N198 52,427 55
B199 22,559 124
N200 50,658 55
B201 21,220 115
N202 59,372 39
N203 98,259 24
N204 24,297 90
N205 23,900 87
N206 18,200 113
</TABLE>
<PAGE> 122
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES
------- ---- -------- -------- --- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
94% 12/1/97 $ 195,143 $ 84,277 $ 110,866 1.82 $ 10,200 $ 300.00 12/31/97 $ 198,421
88% 2/1/98 184,225 87,809 96,416 1.69 11,186 329.00 12/31/97 185,730
100% 2/5/98 159,055 72,346 86,709 1.64 5,784 241.00 12/31/97 159,682
88% 4/28/98 120,303 47,746 72,557 1.42 4,864 304.00 12/31/97 124,451
100% 12/9/97 118,407 45,422 72,985 1.45 2,798 174.88 12/31/97 122,301
100% 2/23/98 92,145 31,466 60,679 1.44 2,487 207.25 12/31/97 94,708
100% 2/23/98 91,928 30,170 61,758 1.52 2,787 232.25 12/31/97 92,354
100% 1/27/98 113,604 50,916 62,688 1.47 6,470 323.50 12/31/97 117,990
100% 11/30/97 30,910,638 10,801,178 20,109,460 1.47 629,864 0.25 12/31/97 35,328,417
100% 7/1/98 4,580,828 1,035,519 3,545,309 1.32 30,000 0.10 12/31/97 3,050,862
94% 7/7/98 4,004,241 969,191 3,035,050 1.37 20,065 0.10
93% 4/27/98 2,553,221 466,757 2,086,464 1.37 34,096 0.10 12/31/97 2,633,846
96% 1/1/98 3,261,729 1,078,946 2,182,783 1.33 67,309 0.15 12/31/97 3,448,011
98% 5/1/98 2,547,203 854,983 1,692,220 1.35 85,100 0.34 12/31/97 2,758,658
92% 6/30/98 441,830 171,589 270,241 1.42 25,373 0.33 12/31/97 400,487
100% 2/23/98 2,333,074 485,420 1,847,654 1.38 27,159 0.15 12/31/97 1,125,308
100% 5/15/98 1,635,680 395,502 1,240,178 1.27 5,479 0.26 12/31/97 1,680,795
100% 4/7/98 1,851,398 600,514 1,250,884 1.36 17,007 0.15 12/31/97 1,949,040
99% 3/31/98 1,434,344 322,057 1,112,287 1.31 16,386 0.10 12/31/97 1,074,180
97% 5/19/98 1,294,923 315,945 978,978 1.35 17,128 0.26 12/31/97 1,374,532
100% 6/30/98 1,439,267 352,092 1,087,175 1.29 11,826 0.10
97% 3/31/98 1,467,868 383,819 1,084,049 1.50 24,299 0.20 12/31/97 1,394,109
100% 4/12/98 1,110,718 27,768 1,082,950 1.66 17,446 0.10
98% 3/26/98 1,523,411 596,719 926,692 1.45 33,258 0.25 12/31/97 1,584,527
97% 5/11/98 1,224,652 371,881 852,771 1.52 12,274 0.14 12/31/97 1,035,512
93% 2/19/98 1,374,563 455,539 919,024 1.75 49,503 0.49 12/31/97 1,306,692
100% 5/1/98 1,113,766 318,040 795,726 1.63 11,360 0.15 12/31/97 1,191,926
100% 5/1/98 936,476 213,427 723,049 1.50 19,437 0.25 12/31/97 1,095,171
100% 3/23/98 834,080 15,848 818,232 1.18 0 0.00 12/31/97 475,007
91% 4/1/98 850,072 149,704 700,368 1.41 26,760 0.15 6/30/96 842,852
99% 3/31/98 253,351 106,228 147,123 1.68 14,002 0.20 12/31/97 283,952
100% 3/31/98 156,239 47,228 109,011 1.62 8,406 0.20 12/31/97 178,658
100% 3/31/98 171,911 50,502 121,409 1.81 10,490 0.20 12/31/97 202,057
100% 3/31/98 181,890 66,276 115,614 1.73 9,338 0.20 12/31/97 194,186
100% 3/31/98 170,134 63,124 107,010 1.64 8,998 0.20 12/31/97 219,113
69% 7/15/98 176,849 62,163 114,686 1.83 10,568 0.20 12/31/97 230,757
100% 3/31/98 139,705 50,464 89,241 1.66 7,391 0.20 12/31/97 153,838
97% 3/31/98 204,481 95,648 108,833 2.06 12,654 0.20 12/31/97 224,301
98% 4/27/98 710,320 164,078 546,242 1.36 6,624 0.10 12/31/97 726,626
96% 1/1/98 1,072,634 367,960 704,674 1.72 16,790 0.22 12/31/97 991,645
96% 4/1/98 908,383 290,542 617,841 1.39 21,737 0.24 12/31/97 845,682
100% 6/1/98 973,500 333,288 640,212 1.32 6,058 0.10
100% 5/29/98 643,884 116,172 527,712 1.42 21,637 0.28 12/31/97 629,340
100% 6/15/98 658,075 175,521 482,554 1.37 21,814 0.25 12/31/97 638,439
89% 5/31/98 811,091 220,888 590,203 1.42 11,734 0.25 12/31/97 772,057
100% 4/24/98 865,749 380,514 485,235 1.47 9,649 0.21 12/31/97 1,264,855
95% 5/26/98 588,197 150,224 437,973 1.37 19,111 0.27 12/31/97 598,713
100% 3/1/98 610,078 157,416 452,662 1.37 5,423 0.07 12/31/97 632,443
96% 5/1/98 695,933 190,792 505,141 1.37 11,819 0.10 12/31/97 743,099
100% 5/31/98 531,148 111,738 419,410 1.44 10,872 0.23 12/31/97 512,583
93% 1/31/98 662,336 189,535 472,801 1.35 15,186 0.20 6/30/98 603,575
100% 11/6/97 497,465 96,938 400,527 1.42 12,100 0.17 12/31/97 488,801
100% 6/5/98 558,841 182,596 376,245 1.37 4,026 0.22 12/31/97 556,741
100% 6/5/98 453,854 91,828 362,026 1.38 8,702 0.15 12/31/97 446,338
77% 5/20/98 770,928 311,158 459,770 1.56 20,749 0.35 12/31/97 858,889
93% 5/1/98 613,968 227,110 386,858 1.43 22,432 0.25 12/31/97 592,660
96% 3/9/98 628,592 200,314 428,278 1.81 11,746 0.55 12/31/97 655,424
93% 3/5/98 510,918 133,914 377,004 1.44 9,179 0.15 6/30/97 536,481
98% 3/9/98 484,335 120,966 363,369 1.40 15,429 0.20 12/31/97 390,116
91% 4/30/98 685,749 294,058 391,691 1.66 15,958 0.30 12/31/97 691,095
100% 3/27/98 449,988 113,619 336,369 1.39 9,764 0.43 12/31/97 481,876
81% 6/1/98 639,064 192,539 446,525 1.71 10,132 0.20 12/31/97 563,363
100% 6/18/98 378,648 68,365 310,283 1.54 6,515 0.31 12/31/97 391,827
93% 4/29/98 400,974 92,035 308,939 1.38 21,028 0.35 12/31/97 427,132
93% 1/5/98 509,622 136,331 373,291 1.84 21,699 0.22 12/31/97 522,816
100% 6/30/98 374,397 117,254 257,143 1.38 6,317 0.26 12/31/97 401,414
100% 3/31/98 327,862 67,367 260,495 1.32 2,629 0.11 12/31/97 330,225
100% 3/31/98 312,694 54,368 258,326 1.33 1,820 0.10 12/31/97 299,975
<CAPTION>
MOST 2ND
MOST MOST RECENT MOST
RECENT RECENT NOI RECENT
EXPENSES NOI DSCR END DATE
----------- ----------- ------ --------
<S> <C> <C> <C> <C>
$ 97,779 $ 100,642 1.65 12/31/96
93,944 91,786 1.61 12/31/96
64,941 94,741 1.80 12/31/96
46,214 78,237 1.53 12/31/96
37,673 84,628 1.69 12/31/96
20,163 74,545 1.77 12/31/96
28,909 63,445 1.56 12/31/96
38,313 79,677 1.87 12/31/96
10,045,835 25,282,582 1.85 12/31/96
492,973 2,557,889 0.96
394,459 2,239,387 1.47 12/31/96
1,090,728 2,357,283 1.43 12/31/96
857,514 1,901,144 1.52 12/31/96
163,075 237,412 1.25 12/31/96
103,376 1,021,932 1.01
386,484 1,294,311 1.33 12/31/96
556,944 1,392,096 1.51 12/31/96
79,917 994,263 1.17 12/31/96
313,017 1,061,515 1.46 12/31/96
366,456 1,027,653 1.42 12/31/96
565,191 1,019,336 1.59 12/31/96
346,525 688,987 1.22 12/31/96
452,897 853,795 1.62 12/31/96
253,933 937,993 1.92 12/31/96
224,277 870,894 1.81 12/31/96
200 474,807 1.17
137,102 705,750 1.42 6/30/95
87,724 196,228 2.24 12/31/96
54,880 123,778 1.83 12/31/96
43,055 159,002 2.37 12/31/96
55,020 139,166 2.08 12/31/96
48,212 170,901 2.62 12/31/96
78,539 152,218 2.43 12/31/96
65,779 88,059 1.64 12/31/96
73,493 150,808 2.85 12/31/96
156,704 569,922 1.42 12/31/96
322,865 668,780 1.63 12/31/96
266,429 579,253 1.30 12/31/96
112,125 517,215 1.39 12/31/96
160,336 478,103 1.36 12/31/96
159,840 612,217 1.48 12/31/96
334,433 930,422 2.82 12/31/96
135,593 463,120 1.45 12/31/96
141,389 491,054 1.49 12/31/96
193,026 550,073 1.49 12/31/96
80,581 432,002 1.49 12/31/96
193,289 410,285 1.17 6/30/96
87,806 400,995 1.42 12/31/96
152,713 404,028 1.47 12/31/96
82,719 363,619 1.39 12/31/96
352,429 506,460 1.71 12/31/96
228,895 363,765 1.35 12/31/96
148,968 506,456 2.14 12/31/96
128,031 408,450 1.57 6/30/96
107,953 282,163 1.08 12/31/96
280,042 411,053 1.74 12/31/96
115,443 366,433 1.52 12/31/96
168,602 394,761 1.51 12/31/96
117,602 274,225 1.36 12/31/96
86,593 340,539 1.53 12/31/96
119,336 403,480 1.99 12/31/96
107,343 294,071 1.58 12/31/96
45,410 284,815 1.45
29,575 270,400 1.39
</TABLE>
<PAGE> 123
<TABLE>
<CAPTION>
2ND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 195,812 $ 81,155 $ 114,657 1.88
182,964 81,376 101,588 1.78
146,400 66,456 79,944 1.52
123,397 44,711 78,686 1.54
115,912 42,670 73,242 1.46
88,437 23,373 65,064 1.54
89,144 27,927 61,217 1.51
114,875 52,882 61,993 1.45
33,918,360 10,363,450 23,554,910 1.72 Lane Furniture 110,982 4% 5/1/00
Kohl's Dept. Store 86,616 29% 2/2/18
Ralphs Grocery 47,947 25% 10/31/18
2,534,222 417,392 2,116,830 1.39 Vons 58,175 18% 12/31/14
3,288,857 1,062,513 2,226,344 1.35 Belk 103,480 23% 8/31/06
2,582,046 796,700 1,785,346 1.43 Winn Dixie 45,500 20% 4/22/07
465,773 160,889 304,884 1.61 Winn Dixie 45,500 59% 2/19/06
Home Depot 101,860 56% 1/1/18
1,276,838 401,420 875,418 0.90 Taboo 5,122 25% 9/30/11
1,780,545 515,194 1,265,351 1.37 United Artists 30,084 26% 12/31/13
591,943 30,266 561,677 0.66 Lowes 95,173 58% 10/15/15
374,583 108,137 266,446 0.37 Sears 21,261 32% 11/25/06
Minyard Food Store 53,632 45% 1/1/22
1,322,205 319,775 1,002,430 1.38 Basha's 47,400 39% 9/30/15
Fred Meyer Stores 174,455 100% 2/28/08
1,558,947 579,366 979,581 1.53 Dierbergs 51,850 39% 1/31/05
987,245 268,003 719,242 1.28 Rite Aid 21,733 25% 2/28/00
1,247,502 419,978 827,524 1.57 Ross 17,475 17% 1/31/00
1,144,520 233,281 911,239 1.86 Bally's 23,172 31% 4/30/07
1,077,907 244,832 833,075 1.73 Safeway 45,022 58% 11/30/04
Foods Co. 59,935 100% 8/31/12
811,528 140,936 670,592 1.35 Winn Dixie 42,000 24% 8/28/05
242,404 115,948 126,456 1.45 Winn Dixie 33,946 48% 10/31/04
151,503 44,609 106,894 1.58 K Kash Rent to Own 6,720 16% 6/30/02
184,966 63,078 121,888 1.81 United Supermarkets 23,800 45% 11/30/99
182,079 76,596 105,483 1.58 Minyard Food Store 23,272 50% 11/30/01
206,162 54,870 151,292 2.32 Texas Live Oak Army-Navy Store 16,800 37% 8/28/01
204,298 61,000 143,298 2.29 Grace Fellowship Church 17,400 33% 6/30/01
121,462 50,592 70,870 1.32 Sav-A-Lot 13,500 37% 6/13/05
222,914 98,662 124,252 2.35 McCart Thrift Store 29,413 46% 5/31/03
641,702 148,078 493,624 1.23 Publix 47,955 72% 9/9/15
960,446 289,054 671,392 1.63 La Petite Academy 7,400 10% 5/31/02
890,497 269,364 621,133 1.40 Fun Time Party Store 30,510 34% 9/30/01
Cinemark USA, Inc. 60,578 100% 5/18/18
631,481 125,548 505,933 1.36 Harris Teeter 41,686 55% 10/31/08
544,198 158,466 385,732 1.09 Winn Dixie 45,500 52% 6/30/10
692,969 293,937 399,032 0.96 La-z-boy 9,788 21% 6/27/04
795,179 265,591 529,588 1.60 Gpi Ballrooms 17,167 38% 1/31/10
595,383 137,225 458,158 1.43 Food Lion 33,000 47% 8/15/10
493,209 136,760 356,449 1.08 Fox Bowl, Inc. 26,381 35% 5/30/11
756,562 179,124 577,438 1.57 Kroger 51,000 43% 2/28/03
420,099 74,547 345,552 1.19 Pic'N Save 24,992 53% 1/31/05
635,784 171,914 463,870 1.32 Minyard Foods 46,046 61% 6/30/17
446,499 101,349 345,150 1.22 Food Lion 36,304 50% 6/1/17
528,637 150,583 378,054 1.38 Hold Everything 3,900 21% 6/1/00
426,252 86,631 339,621 1.30 Winn Dixie 38,660 67% 12/1/13
801,473 295,721 505,752 1.71 Knowhere 6,808 11% 1/31/05
595,424 238,505 356,919 1.32 Publix 38,520 43% 9/30/03
679,710 136,567 543,143 2.30 Kinkos 5,680 26% 5/31/00
497,232 124,314 372,918 1.43 Food Lion 32,110 52% 12/31/12
436,778 96,161 340,617 1.31 Winn Dixie 44,810 58% 6/22/08
558,015 291,645 266,370 1.13 Purple Heart Thrift Store 11,720 22% 1/31/03
499,784 114,859 384,925 1.60 Solo Fashion 3,511 16% 1/31/99
808,414 145,182 663,232 2.54 John R. Wood 6,689 13% 9/14/07
395,700 108,382 287,318 1.42 Taco Bell 5,000 24% 4/29/07
405,891 114,268 291,623 1.31 Winn Dixie 35,922 61% 6/22/08
475,342 104,260 371,082 1.83 Jitney Jungle 31,500 32% 1/31/03
401,612 112,090 289,522 1.55 Blockbuster Video 10,260 42% 3/19/00
Kerr Drug 12,000 50% 8/31/16
Pet Depot 8,000 44% 10/31/06
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<S> <C> <C> <C> <C>
Broyhill Furniture 74,361 3% 5/1/00
Waccamaw 56,398 19% 9/29/16
Orchard Supply Hardware 45,573 23% 11/30/17
Longs Drug Store 26,060 8% 2/28/20
Sears 88,000 20% 10/15/03
Scotty's (RLR Theatres) 44,600 19% 12/28/06
Eckerd Drug 10,356 13% 4/6/06
Linens 'n Things 36,000 20% 1/1/13
Martha Gottfried 2,458 12% 9/30/02
Bed Bath & Beyond 28,693 25% 1/31/04
Shop-n-Save 50,000 31% 6/1/12
Blockbuster Video 5,700 9% 8/31/06
Bally Total Fitness 35,937 30% 5/31/04
Walgreens 13,510 11% 1/31/41
Walgreens 12,126 9% 9/30/10
Laser Storm, Inc. 10,460 12% 6/30/03
Family Bargain Center 8,800 9% 10/19/99
Michael's 20,020 26% 3/31/02
Allstar Video 3,356 4% 12/31/00
Consolidated/Big Lots 26,485 15% 1/31/03
BMA of NE Ft. Worth 10,735 15% 4/30/05
Family Dollar 6,250 15% 12/31/98
The Acorn Shop, Inc. 15,400 29% 11/30/01
Dollar General 10,296 22% 7/31/01
Thrift Junction 15,489 35% 2/28/03
Renters Choice 6,000 11% 12/31/01
Family Dollar 7,580 21% 12/31/00
Chips Furniture & Appliance 14,630 23% 3/31/00
Monterrey Mexican Rest 5,100 8% 11/30/00
The P-Town Hopyard 3,405 4% 2/25/04
Goodwill Industries 11,670 13% 1/31/99
City of Greensboro 6,000 8% 1/31/03
World Gym 11,780 14% 12/31/03
Buddy's Crabs 9,082 19% 3/15/08
Sandburg Ace Hardware 7,770 17% 6/30/09
Walgreens 11,165 16% 12/31/07
Tuesday Morning, Inc. 7,695 10% 12/31/98
S. Ace Hardware 9,350 8% 10/31/98
99 Cent Store 21,240 45% 1/31/05
Blockbuster Video 6,150 8% 5/31/01
Eckerd Drug 8,470 12% 8/1/02
Dibona, Bornstein&Ransom 3,400 19% 12/31/99
Kerr Drugs 9,600 17% 12/1/03
Truffles Cafe 5,071 9% 7/31/00
Eckerd Drug 10,368 12% 11/8/03
Don Cuco's 4,002 19% 2/29/00
Edgehill Pharmacy 6,272 10% 12/31/02
Dollar General 7,500 10% 3/1/08
Hollywood Video 6,600 13% 3/23/06
Household Finance 2,500 11% 10/31/98
Flacos 4,988 10% 8/30/06
Circle K 4,280 20% 8/31/02
Revco Discount Drug Centers, Inc. 8,450 14% 8/31/03
Eckerd Drug 8,640 9% 11/30/02
Rite Aid 5,800 24% 3/18/00
Eastern Chinese 5,000 21% 7/31/07
Mancino's 5,883 32% 10/31/06
</TABLE>
<PAGE> 124
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------------- ----------------
<C> <C> <S> <C>
N207 50800 La Mirada Shopping Center 8200 Montgomery Blvd., NE
N208 50149 Satilla Square 1803 Knight Ave/504 City Blvd.
N209 50926 Hilton Head Plaza 5 Greenwood Dr.
N210 50525 Mayfair Shopping Center SE Corner of W. Kenosha St(71st) & N. Aspen Ave(145th Ave)
N211 50151 South Pointe Plaza 1902-60 Stickney Point Road
B212 3043874 Long Drugs State Highway 299
B213 3054822 Cinnamon Sq Shoppin Ctr 6151 Ball Road
N214 50819 Los Altos Shopping Center 4200 Wyoming Blvd., NE
N215 50807 Sears Monro Muffler @ Robinson Town Center 400, 405, 410 Home Drive
N216 50225 Fourth Street Shopping Center 3131 4th Street North
N217 50808 271-279 E. Paces Ferry Rd. Bldg. 271-279 East Paces Ferry Road, NE
B218 3056728 Hawthorne Plaza 11800-11830 Hawthorne Boulevard
N219 50459 Corner Plaza Shopping Center 3918 South Highland Drive
N220 50747 Coral Ridge Plaza 2801-2811 East Oakland Park Blvd.
N221 50024 Singer Square Center 3004 Emmorton Rd.
B222 3051836 Saratoga Oaks 12772 Saratoga Sunnyvale Road
N223 50718 Walgreen's Plaza - Yuma AZ 1100-1150 West 8th Street
N224 50593 Fidelity Square Shopping Center 2740 Wyoming Boulevard, NE
B225 3056876 Roscoe Reseda Plaza 8301 Reseda Boulevard
N226 50799 McCain Center 4 South McCain Drive
N227 50859 Haywood Centre 301 Haywood Road
B228 3062213 550 Waverly Street 550 Waverly Street
B229 3054749 Pine Lane Center 6250-East Pine Lane
B230 3062197 Central Pavillion 1220 South Central Avenue
B231 3054913 Blackhorse Shopping Center 497 North Clovis Avenue
B232 3062205 Plaza De Santa Fe 1355 and 1385 Santa Fe Drive
B233 3062718 Chief Auto Parts 1433 Carson Street
B234 3051000 Avis Plaza 1544-1562 N. Cahuenga Blvd.
B235 3051018 Hollywood Video 900 West Main Street
B236 3052420 Checker Auto Parts 7337 East Pav Way
B237 3047198 Manhattan Beach Property 328-332 Manhattan Beach Boulevard
N238 50892 Journal Square Plaza II 2 Journal Square
N239 50445 Park Center Building I 3101 Park Center Drive
N240 50934 National Guard Building One Massachusetts Ave., NW
B241 3055241 Mission Plaza 2260-2280 Agnew Road
N242 50833 Crestar Bank Building 500 East Main St.
B243 3055050 901 Battery St. Building 901 Battery Street & 998 Sansome Street
B244 3056884 Peninsula Prof. Building 1828 El Camino Real
B245 3056967 Bell Professional Plaza 3123 Professional Drive
B246 3048287 Demuro Corporate Square 1505-1575 W. University Dr.
N247 50626 Park 3000 Business Center 3000 Coliseum Blvd.
B248 3056785 J. Brad Lampley Building 539 Bryant Street
B249 3062494 Sun America Building 10801 National Blvd.
B250 3049764 Hollister Prof. Building 5266 & 5276 Hollister Avenue
N251 50980 Forest Professional Bldg. 2110 Forest Ave.
N252 50641 Los Alamos Business Center 2201 and 2237 Trinity Drive
N253 50042 11500 NW Freeway 11500 Northwest Freeway
B254 3051976 Lincoln Broadway Building 1475 North Broadway
N255 50863 Doctor's Pavillion 1916 Patterson St.
B256 3062262 Sutter Business Park III 3780 Rosin Court
N257 50449 Commercial Block Building 1211-1217 East Cary Street
N258 50685 Greenwich Station Office Building 5589 Greenwich Road
N259 50198 1700 Commerce Office Building 1700 Commerce Street
N260 50517 Rivergate Center I 4995 Lacross Rd.
N261 50910 Great Western Bank Building 2401-2435 E. Atlantic Blvd. & 12 NE 24th Avenue
B262 3054525 Medical Village Off. Building 415 South Medical Drive
B263 3052263 992 South Deanza 992 S. De Anza Blvd.
B264 3051893 29 W. Anapamu Building 29 West Anapamu Street
B265 3052123 Wang NMR Building 550 North Canyons Parkway
B266 3047693 Civic Center Building 1150 North First Street
N267 50792 Miramar Professional Plaza 8910 Miramar Parkway
N268 50820 Lovelace Medical Center 9101 Montgomery NE
B269 3056983 Gould/Sutter Medical Bldg. 3612 Dale Road
B270 3056793 1410 N. Third St. Building 1410-1418 N. 3rd St.
B271 3062403 The Atrium Office Plaza 707-709 East Colorado Blvd.
B272 3051877 Dana Point Clock Tower 24681 La Plaza Drive
N273 50873 Bear Canyon III Office Bldg. 8205 Spain Rd. NE
B274 3056975 Universal Executive Ctr. 7430 East Butherus Drive
B275 3052156 600 Allerton St Blvd. 600 Allerton Street
B276 3045333 Unicom Plaza 15535 San Fernando Mission Blvd.
<CAPTION>
SE-
QUENCE COUNTY CITY
- ------ ------ ----
<C> <C> <C>
N207 Bernalillo Albuquerque
N208 Ware Waycross
N209 Beaufort Hilton Head Island
N210 Tulsa Broken Arrow
N211 Sarasota Sarasota
B212 Trinity Weavervill
B213 Orange Cypress
N214 Bernalillo Albuquerque
N215 Allegheny Pittsburgh
N216 Pinellas St. Petersburg
N217 Fulton Atlanta
B218 Los Angeles Hawthorne
N219 Salt Lake Salt Lake City
N220 Broward Ft. Lauderdale
N221 Harford Abingdon
B222 Santa Clara Saratoga
N223 Yuma Yuma
N224 Bernalillo Albuquerque
B225 Los Angeles Northridge
N226 Frederick Frederick
N227 Greenville Greenville
B228 Santa Clara Palo Alto
B229 Douglas Parker
B230 Los Angeles Glendale
B231 Fresno Clovis
B232 Denver Denver
B233 Los Angeles Torrance
B234 Los Angeles Hollywood
B235 Jackson Carbondale
B236 Yavapai Prescott Valley
B237 Los Angeles Manhattan Beach
N238 Hudson Jersey City
N239 Alexandria City Alexandria
N240 District Of Columbia Washington
B241 Santa Clara Santa Clara
N242 Norfolk City Norfolk
B243 San Francisco San Francisco
B244 San Mateo Burlingame
B245 Placer Auburn
B246 Maricopa Tempe
N247 Allen Fort Wayne
B248 San Francisco San Francisco
B249 Los Angeles Los Angeles
B250 Santa Barbara Santa Barbara
N251 Santa Clara San Jose
N252 Los Alamos Los Alamos
N253 Harris Houston
B254 Contra Costa Walnut Creek
N255 Davidson Nashville
B256 Sacramento Sacramento
N257 Richmond City Richmond
N258 Virginia Beach Virginia Beach
N259 Dallas Dallas
N260 Charleston Charleston
N261 Broward Pompano Beach
B262 Davis Bountiful
B263 Santa Clara San Jose
B264 Santa Barbara Santa Barbara
B265 Alameda Livermore
B266 Santa Clara San Jose
N267 Broward Miramar
N268 Bernalillo Albuquerque
B269 Stanislaus Modesto
B270 Maricopa Phoenix
B271 Los Angeles Pasadena
B272 Orange Dana Point
N273 Bernalillo Albuquerque
B274 Maricopa Scottsdale
B275 San Mateo Redwood City
B276 Los Angeles Mission Hills
</TABLE>
<PAGE> 125
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY ADMINI-
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE STRATIVE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE FEE RATE(I)
----- ---- ---- ------- ------- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NM 87109 Retail $ 2,100,000 $ 2,052,097 $ Fully Amortizing 6.940% 0.143%
GA 31501 Retail 2,025,000 2,000,432 1,668,893 Balloon 7.920% 0.143%
SC 29928 Retail 2,000,000 1,996,219 1,627,272 Balloon 7.450% 0.143%
OK 74012 Retail 2,000,000 1,983,877 1,615,734 Balloon 7.250% 0.143%
FL 34231 Retail 2,000,000 1,977,896 1,688,360 Balloon 8.780% 0.168%
CA 96093 Retail 1,950,000 1,940,675 Fully Amortizing 7.259% 0.143%
CA 90630 Retail 1,850,000 1,846,788 1,644,175 Balloon 7.675% 0.143%
NM 87111 Retail 1,800,000 1,791,326 1,480,509 Balloon 7.830% 0.143%
PA 15275 Retail 1,700,000 1,694,797 1,382,282 Balloon 7.440% 0.243%
FL 33704 Retail 1,700,000 1,681,603 1,404,782 Balloon 8.000% 0.193%
GA 30305 Retail 1,650,000 1,645,169 1,350,380 Balloon 7.660% 0.143%
CA 90250 Retail 1,624,000 1,622,366 1,444,245 Balloon 7.687% 0.143%
UT 84117 Retail 1,550,000 1,531,011 1,084,207 Balloon 7.640% 0.143%
FL 33306 Retail 1,450,000 1,441,841 1,164,485 Balloon 7.030% 0.143%
MD 21009 Retail 1,402,300 1,387,033 1,216,955 Balloon 9.830% 0.168%
CA 95070 Retail 1,400,000 1,367,878 Fully Amortizing 7.296% 0.143%
AZ 85364 Retail 1,350,000 1,346,127 1,173,597 Balloon 6.800% 0.143%
NM 87111 Retail 1,320,000 1,309,754 1,073,408 Balloon 7.470% 0.143%
CA 91324 Retail 1,300,000 1,292,375 Fully Amortizing 7.870% 0.143%
MD 21703 Retail 1,280,000 1,273,758 1,050,976 Balloon 7.770% 0.193%
SC 29607 Retail 1,200,000 1,185,468 Fully Amortizing 7.580% 0.243%
CA 94301 Retail 1,125,000 1,123,893 1,002,065 Balloon 7.752% 0.143%
CO 80202 Retail 1,100,000 1,098,117 978,810 Balloon 7.725% 0.143%
CA 91204 Retail 1,025,000 1,023,107 836,511 Balloon 7.552% 0.143%
CA 93611 Retail 1,000,000 998,281 889,502 Balloon 7.710% 0.143%
CO 80204 Retail 937,500 935,777 765,622 Balloon 7.575% 0.143%
CA 90501 Retail 830,000 829,584 737,830 Balloon 7.686% 0.143%
CA 90028 Retail 750,000 748,386 669,233 Balloon 7.824% 0.143%
IL 62901 Retail 730,000 721,440 Fully Amortizing 7.950% 0.143%
AZ 86315 Retail 717,500 712,574 Fully Amortizing 7.992% 0.143%
CA 90266 Retail 715,000 704,107 Fully Amortizing 7.542% 0.143%
NJ 07036 Office 41,000,000 40,973,700 35,739,453 Balloon 6.915% 0.118%
VA 22302 Office 28,650,000 28,460,566 24,402,900 Balloon 7.610% 0.168%
DC 20001 Office 23,700,000 23,684,547 20,628,994 Balloon 6.860% 0.143%
CA 95054 Office 16,255,000 16,235,937 14,286,712 Balloon 7.218% 0.143%
VA 23510 Office 12,580,000 12,540,219 11,034,288 Balloon 7.150% 0.143%
CA 94111 Office 8,500,000 8,484,231 7,509,763 Balloon 7.436% 0.143%
CA 94010 Office 6,075,000 6,067,637 5,324,776 Balloon 7.112% 0.143%
CA 95603 Office 5,415,000 5,408,847 4,771,495 Balloon 7.318% 0.143%
AZ 85281 Office 5,350,000 5,339,482 4,701,038 Balloon 7.221% 0.143%
IN 46805 Office 5,100,000 5,066,525 4,110,674 Balloon 7.130% 0.243%
CA 94107 Office 5,000,000 4,983,991 4,037,617 Balloon 7.211% 0.143%
CA 90064 Office 4,200,000 4,195,040 3,689,340 Balloon 7.196% 0.143%
CA 93111 Office 4,000,000 3,990,150 3,528,611 Balloon 7.361% 0.143%
CA 95128 Office 3,712,500 3,710,165 3,241,720 Balloon 6.980% 0.143%
NM 87544 Office 3,700,000 3,681,188 3,426,955 Balloon 7.320% 0.143%
TX 77009 Office 3,200,000 3,178,544 3,040,876 Balloon 9.050% 0.168%
CA 94596 Office 2,850,000 2,843,829 2,541,794 Balloon 7.803% 0.143%
TN 37203 Office 2,700,000 2,698,332 2,361,325 Balloon 7.040% 0.143%
CA 95834 Office 2,700,000 2,696,795 2,370,679 Balloon 7.179% 0.143%
VA 23219 Office 2,600,000 2,579,819 2,114,288 Balloon 7.470% 0.143%
VA 23462 Office 2,370,000 2,353,835 1,898,482 Balloon 6.930% 0.143%
TX 75247 Office 2,101,000 2,087,385 1,979,083 Balloon 8.420% 0.168%
SC 29406 Office 1,980,000 1,964,147 1,601,501 Balloon 7.290% 0.143%
FL 33062 Office 1,900,000 1,896,254 1,537,098 Balloon 7.260% 0.143%
UT 84010 Office 1,875,000 1,873,052 1,663,530 Balloon 7.591% 0.143%
CA 95129 Office 1,725,000 1,719,705 1,401,982 Balloon 7.425% 0.143%
CA 93101 Office 1,700,000 1,695,864 1,501,291 Balloon 7.404% 0.143%
CA 94550 Office 1,665,000 1,663,098 1,466,538 Balloon 7.302% 0.143%
CA 95112 Office 1,600,000 1,590,946 1,403,654 Balloon 7.000% 0.143%
FL 33025 Office 1,513,000 1,507,186 1,334,298 Balloon 7.340% 0.143%
NM 87111 Office 1,500,000 1,497,088 1,216,069 Balloon 7.330% 0.143%
CA 95356 Office 1,460,000 1,450,642 Fully Amortizing 6.852% 0.143%
AZ 85004 Office 1,400,000 1,398,381 1,231,866 Balloon 7.262% 0.143%
CA 91101 Office 1,400,000 1,398,225 1,222,391 Balloon 6.965% 0.143%
CA 92629 Office 1,400,000 1,397,537 1,242,809 Balloon 7.628% 0.143%
NM 87109 Office 1,400,000 1,395,841 624,075 Balloon 7.980% 0.143%
AZ 85260 Office 1,375,000 1,373,486 1,214,577 Balloon 7.415% 0.143%
CA 94063 Office 1,340,000 1,336,733 1,183,131 Balloon 7.396% 0.143%
CA 91345 Office 1,300,000 1,268,412 Fully Amortizing 7.691% 0.143%
<CAPTION>
SUB- NET FIRST INTEREST
SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
FEE RATE RATE DATE DATE METHOD
-------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.100% 6.797% 4/29/98 6/1/98 Actual/360
0.100% 7.777% 8/26/97 10/1/97 Actual/360
0.100% 7.307% 6/12/98 8/1/98 Actual/360
0.100% 7.107% 1/30/98 3/1/98 Actual/360
0.125% 8.612% 7/24/97 9/1/97 Actual/360
0.100% 7.116% 4/3/98 6/1/98 30/360
0.100% 7.532% 5/26/98 7/1/98 Actual/360
0.100% 7.687% 3/27/98 5/1/98 Actual/360
0.200% 7.197% 5/26/98 7/1/98 Actual/360
0.150% 7.807% 9/29/97 11/1/97 Actual/360
0.100% 7.517% 5/8/98 7/1/98 Actual/360
0.100% 7.544% 5/22/98 8/1/98 Actual/360
0.100% 7.497% 1/21/98 3/1/98 Actual/360
0.100% 6.887% 3/16/98 5/1/98 Actual/360
0.125% 9.662% 4/15/97 6/1/97 Actual/360
0.100% 7.153% 4/22/98 6/1/98 30/360
0.100% 6.657% 4/16/98 6/1/98 Actual/360
0.100% 7.327% 1/16/98 3/1/98 Actual/360
0.100% 7.727% 6/12/98 8/1/98 30/360
0.150% 7.577% 3/25/98 5/1/98 Actual/360
0.200% 7.337% 4/29/98 6/1/98 30/360
0.100% 7.609% 6/11/98 8/1/98 Actual/360
0.100% 7.582% 5/8/98 7/1/98 Actual/360
0.100% 7.409% 6/25/98 8/1/98 Actual/360
0.100% 7.567% 5/14/98 7/1/98 Actual/360
0.100% 7.432% 6/15/98 8/1/98 Actual/360
0.100% 7.543% 6/29/98 9/1/98 Actual/360
0.100% 7.681% 4/7/98 6/1/98 Actual/360
0.100% 7.807% 3/27/98 6/1/98 30/360
0.100% 7.849% 4/24/98 6/1/98 30/360
0.100% 7.399% 3/11/98 5/1/98 30/360
0.075% 6.797% 7/10/98 9/1/98 Actual/360
0.125% 7.442% 10/30/97 12/1/97 Actual/360
0.100% 6.717% 7/16/98 9/1/98 Actual/360
0.100% 7.075% 6/22/98 8/1/98 Actual/360
0.100% 7.007% 3/27/98 5/1/98 Actual/360
0.100% 7.293% 5/26/98 7/1/98 Actual/360
0.100% 6.969% 6/12/98 8/1/98 Actual/360
0.100% 7.175% 6/17/98 8/1/98 Actual/360
0.100% 7.078% 5/1/98 7/1/98 Actual/360
0.200% 6.887% 2/10/98 4/1/98 Actual/360
0.100% 7.068% 5/17/98 7/1/98 Actual/360
0.100% 7.053% 6/24/98 8/1/98 Actual/360
0.100% 7.218% 4/7/98 6/1/98 Actual/360
0.100% 6.837% 7/15/98 9/1/98 Actual/360
0.100% 7.177% 1/13/98 3/1/98 Actual/360
0.125% 8.882% 5/8/97 7/1/97 Actual/360
0.100% 7.660% 4/24/98 6/1/98 Actual/360
0.100% 6.897% 7/13/98 9/1/98 Actual/360
0.100% 7.036% 6/24/98 8/1/98 Actual/360
0.100% 7.327% 1/30/98 3/1/98 Actual/360
0.100% 6.787% 2/12/98 4/1/98 Actual/360
0.125% 8.252% 8/28/97 10/1/97 Actual/360
0.100% 7.147% 1/22/98 3/1/98 Actual/360
0.100% 7.117% 6/1/98 8/1/98 Actual/360
0.100% 7.448% 6/1/98 8/1/98 Actual/360
0.100% 7.282% 5/20/98 7/1/98 Actual/360
0.100% 7.261% 5/21/98 6/1/98 Actual/360
0.100% 7.159% 6/8/98 8/1/98 Actual/360
0.100% 6.857% 3/16/98 5/1/98 Actual/360
0.100% 7.197% 2/27/98 4/1/98 Actual/360
0.100% 7.187% 6/1/98 8/1/98 Actual/360
0.100% 6.709% 6/2/98 8/1/98 30/360
0.100% 7.119% 6/9/98 8/1/98 Actual/360
0.100% 6.822% 6/24/98 8/1/98 Actual/360
0.100% 7.485% 5/14/98 7/1/98 Actual/360
0.100% 7.837% 6/15/98 8/1/98 Actual/360
0.100% 7.272% 6/17/98 8/1/98 Actual/360
0.100% 7.253% 4/24/98 6/1/98 Actual/360
0.100% 7.548% 12/26/97 2/1/98 30/360
</TABLE>
<PAGE> 126
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE
------- -------- ------------ -------- -------- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 24,317.90 120 120 4 116 5/1/08 No No 4/30/02
15,522.11 120 300 12 108 9/1/07 No Yes(AA) 8/31/01
14,714.84 120 300 2 118 7/1/08 No No 2/29/08
14,456.14 120 300 7 113 2/1/08 No No 1/31/02
16,483.66 120 300 13 107 8/1/07 No No 7/31/00
14,106.04 300 300 4 296 5/1/23 No No 3/1/23
13,157.87 120 360 3 117 6/1/08 No No 4/1/08
13,690.59 120 300 5 115 4/1/08 No No 3/31/02
12,496.58 120 300 3 117 6/1/08 No No 5/31/02
13,120.88 120 300 11 109 10/1/07 No No 9/30/01
12,365.59 120 300 3 117 6/1/08 No No 5/31/02
11,563.91 120 360 2 118 7/1/08 No No 5/1/08
12,619.72 120 240 7 113 2/1/08 No No 1/31/02
10,276.06 120 300 5 115 4/1/08 No No 3/31/02
12,575.05 120 300 16 104 5/1/07 No No 4/30/00
16,469.57 120 120 4 116 5/1/08 No No 3/1/08
8,800.99 120 360 4 116 5/1/08 No No 4/30/02
9,728.94 120 300 7 113 2/1/08 No No 1/31/02
12,326.11 180 180 2 178 7/1/13 No No 5/1/13
9,685.02 120 300 5 115 4/1/08 No No 3/31/02
11,178.78 180 180 4 176 5/1/13 No No 12/31/12
8,061.19 120 360 2 118 7/1/08 No Yes(AF) 5/1/08
7,861.54 120 360 3 117 6/1/08 No No 4/1/08
7,609.36 120 300 2 118 7/1/08 No No 5/1/08
7,136.50 120 360 3 117 6/1/08 No No 4/1/08
6,973.84 120 300 2 118 7/1/08 No No 5/1/08
5,909.56 120 360 1 119 8/1/08 No No 6/1/08
5,411.49 120 360 4 116 5/1/08 No No 3/1/08
6,955.21 180 180 4 176 5/1/13 No No 3/1/13
5,997.89 240 240 4 236 5/1/18 No No 3/1/18
6,645.21 180 180 5 175 4/1/13 No No 1/30/13
270,437.54 120 360 1 119 8/1/08 No No 4/1/08
202,487.36 144 360 10 134 11/1/09 No No 10/31/01
155,454.66 120 360 1 119 8/1/08 No No 3/31/08
110,535.16 120 360 2 118 7/1/08 No Yes(AG) 5/1/08
85,005.98 120 360 5 115 4/1/08 No No 3/31/02
59,061.17 120 360 3 117 6/1/08 No No 4/1/08
40,875.11 120 360 2 118 7/1/08 No Yes(AH) 5/1/08
37,189.93 120 360 2 118 7/1/08 No No 5/1/08
36,391.26 120 360 3 117 6/1/08 No No 4/1/08
36,469.79 120 300 6 114 3/1/08 No No 02/28/02
36,014.81 120 300 3 117 6/1/08 No No 4/1/08
28,497.73 120 360 2 118 7/1/08 No No 5/1/08
27,588.85 120 360 4 116 5/1/08 No Yes(AI) 3/1/08
24,649.51 120 360 1 119 8/1/08 No No 4/1/08
25,416.43 84 360 7 77 2/1/05 No No 1/31/01
25,863.13 84 360 15 69 6/1/04 No Yes(Y) 5/31/00
20,522.23 120 360 4 116 5/1/08 No No 3/1/08
18,035.76 120 360 1 119 8/1/08 No No 7/31/02
18,288.91 120 360 2 118 7/1/08 No Yes(Z) 5/1/08
19,163.06 120 300 7 113 2/1/08 No No 1/31/02
16,644.98 120 300 6 114 3/1/08 No No 2/28/02
16,035.90 84 360 12 72 9/1/04 No No 8/31/00
14,362.64 120 300 7 113 2/1/08 No No 1/31/02
13,745.57 120 300 2 118 7/1/08 No No 2/29/08
13,227.31 120 360 2 118 7/1/08 No No 5/1/08
12,663.56 120 300 3 117 6/1/08 No No 4/1/08
11,775.10 120 360 4 116 5/1/08 No Yes(AI) 3/1/08
11,417.02 120 360 2 118 7/1/08 No No 5/1/08
11,308.47 84 300 5 79 4/1/05 No No 1/30/05
10,413.85 120 360 6 114 3/1/08 No No 2/28/02
10,919.53 120 300 2 118 7/1/08 No No 3/1/08
13,002.38 180 180 2 178 7/1/13 No No 5/1/13
9,561.87 120 360 2 118 7/1/08 No No 5/1/08
9,281.35 120 360 2 118 7/1/08 No No 5/1/08
9,912.00 120 360 3 117 6/1/08 No No 4/1/08
11,692.74 180 240 2 178 7/1/13 No No 6/30/06
9,534.30 120 360 2 118 7/1/08 No No 5/1/08
9,274.23 120 360 4 116 5/1/08 No No 3/1/08
12,192.69 180 180 8 172 1/1/13 No No 11/1/12
<CAPTION>
PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---------------------------------------
<S> <C>
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(115)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(36)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(6)
LO(298)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(36)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(178)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(175)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(238)/OPEN(2)/DEFEASANCE
LO(177)/OPEN(3)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(90)/OPEN(7)
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(35)/GRTR1%PPMTorYM(42)/OPEN(7)
LO(36)/GRTR1%PPMTorYM(42)/OPEN(6)
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(36)/GRTR1%PPMTorYM(42)/OPEN(6)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(116)/OPEN(4)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(81)/OPEN(3)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
</TABLE>
<PAGE> 127
<TABLE>
<CAPTION>
TOTAL SF/
CUT-OFF UNITS/ UNIT/
SE- LOAN APPRAISAL APPRAISAL DATE LTV YEAR BUILT/ ROOM/ ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED
- ------ ------ ------------- ----- ---- ----- --------- --- ---
<C> <C> <S> <C> <C> <C> <C> <C> <C>
N207 50800 La Mirada Shopping Center $ 5,650,000 1/13/98 36% 1977 150,813 SF
N208 50149 Satilla Square 2,700,000 6/10/97 74% 1974/1997 117,212 SF
N209 50926 Hilton Head Plaza 3,400,000 5/15/98 59% 1972 21,114 SF
N210 50525 Mayfair Shopping Center 3,650,000 10/31/97 54% 1985 65,372 SF
N211 50151 South Pointe Plaza 2,900,000 11/18/96 68% 1960 37,120 SF
B212 3043874 Long Drugs 2,600,000 12/10/97 87% 1998 22,965 SF
B213 3054822 Cinnamon Sq. Shopping Ctr. 2,870,000 4/20/98 64% 1979 40,760 SF
N214 50819 Los Altos Shopping Center 2,900,000 1/27/98 62% 1986 41,198 SF
N215 50807 Sears Monro Muffler @ Robinson Town Center 2,289,000 1/15/98 74% 1997 10,500 SF
N216 50225 Fourth Street Shopping Center 2,550,000 7/22/97 66% 1958/1985 41,043 SF
N217 50808 271-279 E. Paces Ferry Rd. Bldg. 2,200,000 1/9/98 75% 1948 12,410 SF
B218 3056728 Hawthorne Plaza 2,240,000 4/12/98 72% 1984 13,222 SF
N219 50459 Corner Plaza Shopping Center 2,250,000 10/30/97 68% 1961/1987 40,991 SF
N220 50747 Coral Ridge Plaza 2,230,000 1/8/98 65% 1993 14,457 SF
N221 50024 Singer Square Center 2,050,000 4/15/97 68% 1985 19,465 SF
B222 3051836 Saratoga Oaks 3,850,000 4/6/98 36% 1989 12,777 SF
N223 50718 Walgreen's Plaza-Yuma, AZ 2,000,000 12/11/97 67% 1994 20,015 SF
N224 50593 Fidelity Square Shopping Center 1,760,000 12/1/97 74% 1972 30,062 SF
B225 3056876 Roscoe Reseda Plaza 2,550,000 5/27/98 51% 1986 17,393 SF
N226 50799 McCain Center 1,650,000 1/7/98 77% 1982 19,200 SF
N227 50859 Haywood Centre 1,925,000 2/23/98 62% 1987 21,595 SF
B228 3062213 550 Waverly Street 1,950,000 4/21/98 58% 1960/1997 7,275 SF
B229 3054749 Pine Lane Center 1,465,000 4/7/98 75% 1982 30,300 SF
B230 3062197 Central Pavillion 1,550,000 6/5/98 66% 1993 11,985 SF
B231 3054913 Blackhorse Shopping Center 1,585,000 4/14/98 63% 1997 9,842 SF
B232 3062205 Plaza De Santa Fe 1,300,000 5/15/98 72% 1984 16,871 SF
B233 3062718 Chief Auto Parts 1,140,000 6/10/98 73% 1959/1998 9,405 SF
B234 3051000 Avis Plaza 1,000,000 11/7/97 75% 1985 10,200 SF
B235 3051018 Hollywood Video 1,230,000 2/26/98 59% 1997 7,488 SF
B236 3052420 Checker Auto Parts 1,105,000 3/24/98 64% 1997 7,000 SF
B237 3047198 Manhattan Beach Property 1,650,000 1/30/98 43% 1997 4,980 SF
N238 50892 Journal Square Plaza II 55,000,000 3/20/98 74% 1987 275,614 SF
N239 50445 Park Center Building I 37,000,000 6/17/97 77% 1981/0 218,943 SF
N240 50934 National Guard Building 30,000,000 3/2/98 79% 1990 173,793 SF
B241 3055241 Mission Plaza 23,000,000 5/20/98 71% 1985 100,608 SF
N242 50833 Crestar Bank Building 16,300,000 3/6/98 77% 1972/1997 228,544 SF
B243 3055050 901 Battery St. Building 14,800,000 5/7/98 57% 1922/1974 75,538 SF
B244 3056884 Peninsula Prof. Building 8,100,000 5/13/98 75% 1974 55,989 SF
B245 3056967 Bell Professional Plaza 7,650,000 5/14/98 71% 1991 44,906 SF
B246 3048287 Demuro Corporate Square 7,650,000 2/12/98 70% 1984 86,759 SF
N247 50626 Park 3000 Business Center 6,400,000 11/28/97 79% 1966/1997 75,555 SF
B248 3056785 J. Brad Lampley Building 10,865,000 4/12/98 46% 1912/1985 67,891 SF
B249 3062494 Sun America Building 6,500,000 5/6/98 65% 1969 59,230 SF
B250 3049764 Hollister Prof. Building 5,485,000 3/4/98 73% 1971 49,512 SF
N251 50980 Forest Professional Bldg. 4,950,000 5/20/98 75% 1985 19,837 SF
N252 50641 Los Alamos Business Center 5,000,000 11/19/97 74% 1995 40,334 SF
N253 50042 11500 NW Freeway 4,300,000 4/9/97 74% 1983 82,046 SF
B254 3051976 Lincoln Broadway Building 4,200,000 3/16/98 68% 1967 36,383 SF
N255 50863 Doctor's Pavillion 3,900,000 3/20/98 69% 1970 58,548 SF
B256 3062262 Sutter Business Park III 3,600,000 5/11/98 75% 1985 44,666 SF
N257 50449 Commercial Block Building 3,900,000 10/14/97 66% 1866/1985 47,289 SF
N258 50685 Greenwich Station Office Building 3,160,000 11/25/97 74% 1997 29,475 SF
N259 50198 1700 Commerce Office Building 3,700,000 5/8/97 56% 1925/1995 117,873 SF
N260 50517 Rivergate Center I 2,825,000 10/23/97 70% 1984 46,172 SF
N261 50910 Great Western Bank Building 2,535,000 5/20/98 75% 1955/1974 30,563 SF
B262 3054525 Medical Village Off. Building 2,500,000 4/15/98 75% 1979/1985 30,025 SF
B263 3052263 992 South Deanza 2,380,000 4/28/98 72% 1982/1997 13,223 SF
B264 3051893 29 W. Anapamu Building 2,350,000 3/4/98 72% 1984 18,282 SF
B265 3052123 Wang NMR Building 2,220,000 4/7/98 75% 1989 36,466 SF
B266 3047693 Civic Center Building 3,950,000 2/9/98 40% 1982 34,473 SF
N267 50792 Miramar Professional Plaza 2,075,000 1/21/98 73% 1986 30,753 SF
N268 50820 Lovelace Medical Center 2,080,000 1/26/98 72% 1990 12,559 SF
B269 3056983 Gould/Sutter Medical Bld 2,470,000 4/22/98 59% 1997 12,200 SF
B270 3056793 1410 N. Third St. Building 1,950,000 4/29/98 72% 1960/1980 17,506 SF
B271 3062403 The Atrium Office Plaza 1,950,000 6/4/98 72% 1940/1982 18,342 SF
B272 3051877 Dana Point Clock Tower 2,150,000 5/1/98 65% 1987 21,384 SF
N273 50873 Bear Canyon III Office Bldg. 2,100,000 4/1/98 66% 1983 34,300 SF
B274 3056975 Universal Executive Ctr. 1,950,000 4/17/98 70% 1980 21,041 SF
B275 3052156 600 Allerton St. Blvd. 2,500,000 3/20/98 53% 1976 15,324 SF
B276 3045333 Unicom Plaza 1,850,000 11/28/97 69% 1991 24,776 SF
<CAPTION>
LOAN
NET BALANCE PER
SE- RENTABLE SF/UNIT
QUENCE AREA(SF) ROOM/BED
- ------ -------- --------
<C> <C> <C>
N207 150,813 $ 14
N208 117,212 17
N209 21,114 95
N210 65,372 30
N211 37,120 53
B212 22,965 85
B213 40,760 45
N214 41,198 43
N215 10,500 161
N216 41,043 41
N217 12,410 133
B218 13,222 123
N219 40,991 37
N220 14,457 100
N221 19,465 71
B222 12,777 107
N223 20,015 67
N224 30,062 44
B225 17,393 74
N226 19,200 66
N227 21,595 55
B228 7,275 154
B229 30,300 36
B230 11,985 85
B231 9,842 101
B232 16,871 55
B233 9,405 88
B234 10,200 73
B235 7,488 96
B236 7,000 102
B237 4,980 141
N238 275,614 149
N239 218,943 130
N240 173,793 136
B241 100,608 161
N242 228,544 55
B243 75,538 112
B244 55,989 108
B245 44,906 120
B246 86,759 62
N247 75,555 67
B248 67,891 73
B249 59,230 71
B250 49,512 81
N251 19,837 187
N252 40,334 91
N253 82,046 39
B254 36,383 78
N255 58,548 46
B256 44,666 60
N257 47,289 55
N258 29,475 80
N259 117,873 18
N260 46,172 43
N261 30,563 62
B262 30,025 62
B263 13,223 130
B264 18,282 93
B265 36,466 46
B266 34,473 46
N267 30,753 49
N268 12,559 119
B269 12,200 119
B270 17,506 80
B271 18,342 76
B272 21,384 65
N273 34,300 41
B274 21,041 65
B275 15,324 87
B276 24,776 51
</TABLE>
<PAGE> 128
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES
------- ---- -------- -------- --- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100% 4/1/98 $ 707,856 $ 136,318 $ 571,538 1.96 $ 37,703 $ 0.25 12/31/97 $ 732,567
97% 4/1/98 439,196 137,184 302,012 1.62 23,442 0.20 6/30/96 457,612
97% 5/29/98 334,687 88,385 246,302 1.39 4,223 0.20 12/31/97 341,208
100% 4/29/98 489,468 121,243 368,225 2.12 16,534 0.25 12/31/97 533,799
98% 3/31/98 391,427 98,638 292,789 1.48 5,568 0.15 12/31/97 514,695
100% 4/2/98 227,213 5,680 221,533 1.31 2,297 0.10
95% 4/30/98 349,022 118,659 230,363 1.46 8,560 0.21 12/31/97 313,571
100% 2/27/98 326,440 79,431 247,009 1.50 10,300 0.25 12/31/97 319,200
100% 2/19/98 267,859 70,459 197,400 1.32 1,575 0.15
95% 6/15/98 371,133 114,373 256,760 1.63 12,723 0.31 12/31/97 281,953
100% 4/9/98 260,683 58,267 202,416 1.36 4,095 0.33 12/31/97 256,835
100% 2/1/98 247,478 60,145 187,333 1.35 2,644 0.20 12/31/97 314,563
95% 12/17/97 290,192 77,636 212,556 1.40 12,297 0.30 12/31/97 310,045
100% 12/31/97 305,139 93,165 211,974 1.72 3,614 0.25 12/31/97 286,540
100% 12/31/97 258,516 46,880 211,636 1.40 3,893 0.20 12/31/97 196,701
100% 4/22/98 427,834 92,010 335,824 1.70 2,381 0.19 12/31/97 427,302
93% 3/17/98 229,897 51,428 178,469 1.69 5,938 0.30 12/31/97 224,216
93% 1/5/98 256,666 71,292 185,374 1.59 18,939 0.63 12/31/97 183,216
100% 3/25/98 248,988 76,995 171,993 1.16 5,436 0.31 12/31/97 353,944
100% 2/17/98 217,468 59,562 157,906 1.36 4,800 0.25 12/31/97 238,972
100% 3/31/98 243,320 68,795 174,525 1.30 4,319 0.20 12/31/97 239,021
100% 5/29/98 175,415 40,720 134,695 1.39 2,099 0.29 12/31/97 139,853
100% 1/27/98 210,110 50,310 159,800 1.69 6,434 0.21 12/31/97 211,938
100% 6/2/98 203,500 58,921 144,579 1.58 4,264 0.36 12/31/97 216,068
100% 5/8/98 192,291 52,765 139,526 1.63 1,281 0.13
100% 4/16/98 212,728 78,831 133,897 1.60 4,218 0.25 12/31/97 222,358
100% 6/15/98 119,163 21,378 97,785 1.38 1,411 0.15
92% 11/7/97 137,601 32,946 104,655 1.61 3,199 0.31 12/31/96 177,542
100% 12/15/97 120,220 3,607 116,613 1.40 1,498 0.20
100% 8/2/97 91,719 2,293 89,426 1.24 1,050 0.15
100% 3/3/98 150,355 6,014 144,341 1.81 500 0.10
100% 7/14/98 7,263,740 2,636,845 4,626,895 1.43 40,916 0.15 12/31/97 6,295,913
100% 1/1/98 4,849,705 1,605,363 3,244,342 1.34 32,841 0.15 12/31/97 4,718,531
93% 5/13/98 4,302,894 1,709,906 2,592,988 1.39 35,628 0.21 12/31/97 4,010,099
100% 9/15/97 2,498,260 196,566 2,301,694 1.74 13,150 0.13 12/31/97 2,486,141
85% 3/23/98 3,030,595 1,441,318 1,589,277 1.56 45,709 0.20 12/31/97 2,716,573
100% 4/29/98 1,724,836 596,888 1,127,948 1.59 26,576 0.35 12/31/97 1,507,631
84% 5/1/98 1,261,192 485,797 775,396 1.58 8,064 0.14 12/31/97 1,222,835
94% 5/1/98 891,908 188,833 703,075 1.58 6,736 0.15 12/31/97 867,198
98% 3/13/98 924,310 239,119 685,192 1.57 27,696 0.32 12/31/97 899,597
96% 3/31/98 1,034,537 409,070 625,467 1.43 7,556 0.10 12/31/97 327,290
100% 3/4/98 1,162,665 300,281 862,384 2.00 12,381 0.18 12/31/97 1,143,084
100% 2/1/98 990,621 443,671 546,950 1.60 17,213 0.29 12/31/97 1,074,609
99% 3/19/98 800,357 259,119 541,238 1.63 10,653 0.22 12/31/97 809,397
100% 6/15/98 592,654 138,126 454,528 1.54 6,546 0.33 12/31/97 589,192
100% 3/30/98 691,716 228,620 463,096 1.52 6,050 0.15 12/31/97 773,611
98% 3/4/98 870,267 436,051 434,216 1.40 8,569 0.10 12/31/97 868,845
100% 4/1/98 587,402 223,683 363,719 1.48 4,298 0.12 12/31/97 567,945
91% 5/12/98 779,994 406,643 373,351 1.73 14,608 0.25 12/31/97 791,926
97% 7/8/98 614,476 267,160 347,316 1.58 15,633 0.35 12/31/97 518,898
97% 3/31/98 584,674 224,366 360,308 1.57 9,518 0.20 12/31/97 586,684
100% 4/8/98 452,120 141,031 311,089 1.56 4,421 0.15
87% 4/13/98 880,977 593,863 287,114 1.49 16,562 0.14 12/31/97 845,860
97% 3/31/98 444,671 173,864 270,807 1.57 9,234 0.20 12/31/97 477,206
96% 5/22/98 405,593 159,434 246,159 1.49 12,227 0.40 12/31/97 420,777
100% 3/31/98 316,835 76,599 240,236 1.51 6,326 0.21 12/31/97 315,739
100% 3/23/98 236,110 9,444 226,666 1.49 3,128 0.24 12/31/97 222,312
100% 2/17/98 307,300 97,589 209,711 1.48 4,724 0.26 12/31/97 300,928
100% 5/19/98 322,759 97,795 224,964 1.64 5,015 0.14 12/31/97 436,825
100% 1/12/98 633,951 246,975 386,976 2.85 5,171 0.15 12/31/97 615,485
100% 5/3/98 375,214 162,308 212,906 1.70 10,764 0.35 12/31/97 372,985
100% 5/27/98 190,897 4,446 186,451 1.42 4,521 0.36 12/31/97 228,527
100% 4/22/98 251,808 40,269 211,539 1.36 1,830 0.15
100% 6/3/98 370,801 154,516 216,285 1.88 11,850 0.68 12/31/97 400,703
97% 5/29/98 322,502 138,826 183,676 1.65 3,564 0.19 12/31/97 270,019
97% 5/14/98 271,507 67,288 204,219 1.72 3,596 0.17 12/31/97 296,401
100% 5/15/98 403,056 151,298 251,758 1.79 10,354 0.30 12/31/97 429,228
100% 6/12/98 235,760 57,405 178,355 1.56 6,134 0.29 12/31/97 203,074
100% 4/1/98 277,499 84,199 193,300 1.74 9,918 0.65 12/31/97 292,104
100% 11/20/97 374,557 177,093 197,464 1.35 4,955 0.20 12/31/97 353,280
<CAPTION>
MOST 2ND
MOST MOST RECENT MOST
RECENT RECENT NOI RECENT
EXPENSES NOI DSCR END DATE
----------- ----------- ------ --------
<S> <C> <C> <C> <C>
$ 122,572 $ 609,995 2.09 12/31/96
112,869 344,743 1.85 6/30/95
108,725 232,483 1.32 12/31/96
111,436 422,363 2.43 12/31/96
85,802 428,892 2.17 12/31/96
95,574 217,997 1.38
71,606 247,594 1.51 12/31/96
91,604 190,349 1.61 12/31/96
35,043 221,792 1.49 12/31/96
43,377 271,186 1.95 12/31/96
84,699 225,346 1.49 12/31/96
69,527 217,013 1.76 12/31/96
31,380 165,321 1.64 12/31/96
73,727 353,575 1.79 12/31/96
46,235 177,981 1.69 12/31/96
53,627 129,589 1.90
62,257 291,687 1.97 12/31/96
55,622 183,350 1.58 12/31/96
68,024 170,997 1.27 12/31/96
33,353 106,500 1.10 12/31/96
39,496 172,442 1.83
46,249 169,819 1.86 12/31/96
78,888 143,470 1.71 12/31/96
17,154 160,388 2.47 12/31/95
1,482,372 4,813,541 1.48 12/31/96
1,593,424 3,125,107 1.29 12/31/96
1,629,523 2,380,576 1.28 12/31/96
131,009 2,355,132 1.78 12/31/96
1,058,081 1,658,492 1.63 12/31/96
548,356 959,275 1.35 12/31/96
496,866 725,969 1.48 12/31/96
174,218 692,980 1.55 12/31/96
222,186 677,411 1.55 12/31/96
156,491 170,799 0.78
248,015 895,069 2.07 12/31/96
439,792 634,817 1.86 12/31/96
250,123 559,275 1.69 12/31/96
115,968 473,224 1.60 12/31/96
246,771 526,840 1.73 12/31/96
449,414 419,431 1.35 12/31/96
176,528 391,417 1.59 12/31/96
396,160 395,766 1.83 12/31/96
307,227 211,671 0.96
249,976 336,708 1.46 12/31/96
651,780 194,080 1.01 12/31/96
166,837 310,369 1.80 12/31/96
152,780 267,997 1.62 12/31/96
46,718 269,021 1.69 12/31/96
30,907 191,405 1.26 12/31/96
95,812 205,116 1.45
74,040 362,785 2.65 12/31/96
224,219 391,266 2.88 12/31/96
169,807 203,178 1.63 12/31/96
567 227,960 1.74 12/31/96
150,170 250,533 2.18 12/31/96
160,979 109,040 0.98 12/31/96
94,986 201,415 1.69 12/31/96
122,577 306,651 2.19 12/31/96
45,780 157,294 1.37 12/31/96
79,370 212,734 1.91 12/31/96
172,895 180,385 1.23
</TABLE>
<PAGE> 129
<TABLE>
<CAPTION>
2ND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 703,390 $ 126,461 $ 576,929 1.98 Wal-Mart 82,800 55% 3/31/06
466,650 98,866 367,784 1.97 J.H.Harvey 33,512 29% 8/31/04
396,508 128,801 267,707 1.52 Hilton Head Brewing Co. 4,835 23% 8/31/99
557,964 115,899 442,065 2.55 Fitness Plus 11,000 17% 6/30/99
363,128 93,466 269,662 1.36 Granary, Inc. 9,694 26% 10/31/99
Longs Drug Store 22,965 100% 9/30/22
Cypress High Bingo 9,800 24% 11/30/99
285,316 58,028 227,288 1.38 Par Golf (Golf Mart) 11,027 27% 10/31/03
Ski North 6,000 57% 8/31/07
321,992 139,617 182,375 1.16 Smart & Final Stores 17,000 41% 7/16/16
243,579 24,606 218,973 1.48 The Dessert Place 3,950 32% 5/15/01
310,110 67,203 242,907 1.75 Chief Auto Parts 3,500 26% 5/1/00
296,112 83,670 212,442 1.40 Lofgren's 20,008 49% 1/31/02
274,030 67,578 206,452 1.67 Eckerd Drug 9,777 68% 5/1/13
201,715 46,286 155,429 1.03 Medical Health 7,480 38% 7/31/01
405,942 64,590 341,352 1.73 Alain Pinel 9,111 71% 10/31/02
127,885 28,605 99,280 1.88 Walgreens 14,040 70% 8/31/44
Bible Store 9,784 33% 9/30/02
344,130 57,669 286,461 1.94 Mini Market 3,330 19% 1/31/01
182,309 53,395 128,914 1.11 Hawaiian Tan 3,600 19% 6/30/01
275,977 61,043 214,934 1.60 David's Bridal 8,845 41% 3/21/07
124,950 42,090 82,860 0.86 Upstream Fly Fishing 4,550 63% 9/30/07
Pine Lane Auto Boday 8,000 26% 5/31/06
207,546 47,966 159,580 1.75 CDS 2,756 23% 2/15/99
Quality Food & Liquor 2,310 23% 4/15/08
231,126 90,431 140,695 1.68 Santa Fe Liquors 3,000 18% 7/31/00
Chief Auto Parts 9,405 100% 6/15/08
131,252 41,711 89,541 1.38 South American Restaurant 3,800 37% 6/30/00
Hollywood Video 7,488 100% 12/17/12
CSK Auto, Inc., dba Checker
Auto 7,000 100% 7/1/17
Noah's Bagels 1,812 36% 11/28/07
6,315,602 1,455,527 4,860,075 1.50 ADP Financial Info. Svcs. 252,915 92% 1/31/08
4,509,295 1,510,109 2,999,186 1.23 GSA-Agriculture 179,536 82% 7/31/08
4,973,889 1,733,694 3,240,195 1.74 US Mint 44,912 26% 2/28/00
2,302,772 126,147 2,176,625 1.64 Advanced Micro Devices 100,608 100% 1/31/01
2,586,260 1,136,393 1,449,867 1.42 Crestar Bank 78,711 34% 3/31/05
1,694,029 619,905 1,074,124 1.52 KMD Storage 30,034 40% 3/31/02
1,270,952 503,517 767,435 1.56 Peninsula Women's Health 11,615 21% 1/31/02
932,926 182,056 750,870 1.68
812,932 241,638 571,294 1.31 US Geological Survey 7,153 8% 2/29/00
Innovative Services 50,044 66% 7/31/07
1,108,391 289,916 818,475 1.89 Cambridge Management 20,474 30% 12/31/99
1,068,078 453,740 614,338 1.80 Agapay, Levyn & Halling 6,160 10% 6/30/00
756,636 257,531 499,106 1.51 Telecote Research 10,234 21% 11/30/98
596,290 121,961 474,329 1.60 HealthSouth 11,735 59% 4/30/08
782,820 219,502 563,318 1.85 Univ. of California 19,044 47% 9/30/98
806,641 513,618 293,023 0.94 Shirley Baker School 18,846 23% 8/31/01
484,970 195,469 289,501 1.18 Development Associates 4,208 12% 9/1/02
754,203 399,606 354,597 1.64 Dr. Campa 4,600 8% 5/31/00
Mcgee & Theilen 9,757 22% 10/31/03
592,671 211,172 381,499 1.66 Thompson & McMullen 12,046 25% 11/30/04
WVAE (Heritage Media) 15,737 53% 8/30/07
834,577 646,104 188,473 0.98 Magazine Limited Partnership 6,630 6% 7/14/00
441,599 175,801 265,798 1.54 GSA-IRS 13,802 30% 7/31/00
446,926 151,964 294,962 1.79 Gordon Bateman 9,928 32% 6/30/04
303,555 71,047 232,508 1.46 Drs. Beck and Peterson 3,600 12% 6/22/00
204,000 17,920 186,080 1.22 Mach One Communications 13,223 100% 10/30/02
S.B. Medical Foundation 5,906 32% 12/31/99
268,026 62,826 205,200 1.50 Forcal 20,625 57% 12/31/07
549,175 207,309 341,866 2.52 Golden State Business College 4,341 13% 10/31/98
371,231 159,118 212,113 1.70 Mortgage Inform 13,209 43% 8/31/01
222,256 508 221,748 1.69 Lovelace 12,559 100% 10/31/00
Gould Medical Foundation 12,200 100% 8/31/12
402,211 147,789 254,422 2.22 Samaritan Health Services 12,160 69% 11/20/01
292,245 169,645 122,600 1.10 Foothill Eye Care Center 2,633 14% 11/30/01
288,961 90,134 198,827 1.67 Auspex 2,454 11% N/A
448,556 96,404 352,152 2.51 F.D.I.C. 5,492 16% 9/14/02
176,181 32,759 143,422 1.25 Mini Storage Technology 3,519 17% 1/31/99
259,410 73,830 185,580 1.67 County of San Mateo 9,454 62% 10/31/98
County of LA 13,500 54% 11/1/99
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<S> <C> <C> <C> <C>
Albertson's 42,124 28% 1/31/03
Consolidated Stores/Big Lots 26,700 23% 10/31/03
Reilley's 3,825 18% 12/31/05
China Star 7,670 12% 6/30/01
Famous Shoes 8,480 23% 6/30/01
Mexican Restaurant 8,400 21% 12/31/01
Eyeglass World Exp. 6,020 15% 9/30/01
Monro Muffler 4,500 43% 8/5/12
Sacino & Sons 6,000 15% 6/30/00
Natural Body Up/Down 3,060 25% 4/30/00
Clean King Coin Op 2,500 19% 6/1/05
Widow's 6,439 16% 8/31/01
Las Vegas Restaurant 2,600 18% 12/1/03
Long & Foster 5,230 27% 12/31/01
First American Title Company 3,666 29% 11/30/02
National Bank of Arizona 2,100 10% 9/30/01
Leslie Pool Supplies 4,663 16% 2/28/01
El Pollo Loco 1,950 11% 7/21/10
Plamondon Enterprise 3,600 19% 12/31/99
Rene's 5,220 24% 5/31/00
Prolific Oven 2,725 37% 1/31/02
Parker Imports 6,000 20% 5/31/03
BV General 1,503 13% 8/1/03
TCBY Yogurt 2,282 23% 9/1/07
Plaza Veterinary 2,299 14% 3/31/00
Astoria Restaurant 2,400 24% 9/14/98
Pete's Coffee & Tea 1,608 32% 12/9/07
US GSA 15,785 6% 5/14/03
GSA-Army Audit 27,656 13% 7/31/02
National Guard 40,007 23% 8/31/20
Williams Kelly 18,311 8% 11/30/98
ITN Satellite Services 25,833 34% 3/1/02
Mills Peninsula Health Svcs. 4,732 8% 1/31/02
Cs&S Computer Systems, Inc. 6,383 7% 5/31/01
Parkview Hospital 22,724 30% 6/30/07
Tpd Publishing 9,383 14% 10/31/02
Arthur Andersen 4,929 8% 10/31/00
Santa Barbara Business College 10,069 20% 3/31/01
V. Nola, MD 2,731 14% 12/31/02
Burns & Roe 13,444 33% 2/28/01
Hydro Tech Systems 13,948 17% 11/30/00
Institutional Real Estate 4,208 12% N/A
Dr. Horowitz 4,511 8% MTM
Great Western Bank 8,534 19% 5/12/00
Alex Brown & Sons 10,214 22% 11/30/03
EVMS Academic Physicians 8,851 30% 9/30/05
Techsys Advanced Resources 6,630 6% 4/30/99
GSA-Social Security 6,716 15% 2/6/00
Great Western Savings 4,560 15% 10/31/01
Dr. Colabrese 2,310 8% 12/20/00
Alek Haimouici 5,453 30% 4/30/00
AAI Inc. 6,000 16% 2/28/01
Carisch Inc. 2,758 8% 6/30/02
Linzer, DO, PA 2,312 8% 9/30/00
Donor Network Of Az 3,017 17% 9/16/01
Integrated Capital 2,327 13% 12/31/02
Domino's Pizza 2,250 11% 2/14/99
Jones R.E. 2,695 8% 6/30/00
American Classic Development 3,248 15% 4/30/01
Omix, Inc. 5,870 38% 9/21/98
Unicom 6,200 25% 12/31/07
</TABLE>
<PAGE> 130
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------------- ----------------
<C> <C> <S> <C>
B277 3062346 Calif. Street Office Building 200 California Avenue
B278 3052404 Jackson Street Building 10 Jackson Street
B279 3062312 634-640 Ramona St. Office Building 634-640 Ramona Street
B280 3051174 4301 & 4321 Birch Street 4301 & 4321 Birch Street
B281 3062361 853 Middlefield Road 853 Middlefield Road
N282 50810 USDA Forestry Service Building Highway 173
B283 3049509 Country Offices 4370 Alpine Road
B284 3056892 809 Sacramento Building 809 Sacramento Street
N285 50696 Research Tri-Center North A Cornwallis Rd. and South Alston Rd.
N286 50728 Research Tri-Center South B 2530 South Tricenter Blvd. & 3791, 3831 Alston Avenue
SUB-TOTAL CROSSED LOANS
N287 50880 Gateway Commerce Center II 8700 Robert Fulton Dr. & 6751 Alexander Bell Dr.
N288 50879 Gateway Commerce Center I 8700 Robert Fulton Dr.
B289 3051067 Hawthorne Industrial Bldg. 2701-West El Segundo Blvd.
B290 3056710 Amax Building 1565 Reliance Way
N291 50560 Inner Belt Industrial Center 21 & 43 Third Avenue, 59 & 61 Inner Belt Road
B292 3049608 Clark Foods #1 1901 Bendix Drive
N293 50480 LySonix 1170 Mark Avenue
B294 3054814 Jarrett Building 2355 Old Oakland Road
B295 3062429 Maricopa Freeway Center 4110 East Wood Street
N296 50719 South Cedros Center 410-444 South Cedros Ave.
Edison Way/Old Warm Springs Blvd.
B297 3054889 Industrial 3612-96 Edison Way & 44250 Old Warm Springs Blvd.
B298 3044591 R&D Building 48301 Lakeview Blvd.
B299 3051992 4487 Technology Drive 4487 Technology Drive
N300 50890 Aviation Blvd. 8635-8651 Aviation Blvd.
N301 50887 Harmer Center 5050 Steptoe Dr.
N302 50700 Mid Cities Industrial Center 1915-1921 Annapolis Road
B303 3052446 Gary Center 135 East St. Charles Road
B304 3054707 Vernon Industrial Plaza 5720 East Second Street
B305 3049624 Clark Foods #2 8311 East Boon Road
B306 3051711 2930-2964 Corvin 2930-2964 Corvin Drive
B307 3049491 3575 Haven Avenue 3575 Haven Avenue
B308 3047727 5648 Copley Drive Building 5648 Copley Drive
B309 3049475 Woodruff Ave. Industrial 12152-62 Woodruff Avenue
B310 3062478 2518 2nd St. North Building 2518 2nd Street North Bldg.
B311 3062437 C-5 Civic Center 1033-1035 E. Jefferson Street
B312 3051760 Raichem Building 8225 Mercury Court
B313 3049533 Border Products Building 5601 Eastgate Drive
B314 3056769 Grove Business Center 1030-1040 N. Grove St.
B315 3062460 Forbes Rd. Industrl/Wrhs 27742 Forbes Road
B316 3049467 Seville Building 13113 South Figueroa Street
B317 3062189 1413 Sherman Road 1413 Sherman Road
B318 3049616 Clark Foods #3 432 Front Avenue
N319 50512 The Glendinning Company Building 740 Century Circle
B320 3051703 Metzler Business Park 17671 Metzler Lane
N321 50511 The Guest Company Building 95 Research Parkway
B322 3056777 Coley River Building 11711 Coley River Circle
B323 3050952 Airport Business Center 210 Boeing Court
3800 Midway Place, NE/5940 Midway Park Blvd. (same
N324 50834 Midway Industrial Center structure)
B325 3051026 Linden Street Industrial Bldg. 1433 & 1473 West Linden Street
B326 3056942 Sumner Industrial Building 8601-8609 Production Ave.
N327 50868 Edgewater Inn 2411 Alaskan Way
N328 50856 Ocean Key House Zero Duval Street
N329 50701 Residence Inn by Marriott-Albany Airport One Residence Inn Drive
N330 50846 Hampton Inn-Juno Beach 13801 US Highway 1
N331 50869 Radisson Inn-Park City 2121 Park Avenue
N332 50928 Crowne Plaza Hotel-Richmond 555 East Canal St.
N333 50875 Palm Plaza Hotel 3301 S. Atlantic Ave.
N334 50872 Holiday Inn Express-Williamsville 6700 Transit Rd.
N335 50505 Best Western Bradbury Suites 180 South Beltline Highway
N336 50693 Howard Johnson Inn-Salisbury, MD 2625 North Salisbury Blvd.
N337 50783 Best Western-Maplewood Inn 1780 East County Road D
N338 50816 EconoLodge-Carthage, MO 1441 West Central
B339 3052412 Bonita Paradise MHP 3131 Valley Road
B340 3062940 White River Estates 4240 A Street SE
N341 50939 The Meadows Mobile Home Park 1218 East Cleveland Ave.
B342 3051778 Rancho Tempe 4605 South Priest Drive
N343 50938 Kings River Mobile Home Park 10300 Kings River Road
B344 3049350 Rodeo Mobile Estate 100 North Rodeo Gulch Road
<CAPTION>
SE-
QUENCE COUNTY CITY
- ------ ------ ----
<C> <C> <C>
B277 Santa Clara Palo Alto
B278 Santa Clara Los Gatos
B279 Santa Clara Palo Alto
B280 Orange Newport Beach
B281 Santa Clara Palo Alto
N282 Unicoi Unicoi
B283 San Mateo Portola Valley
B284 San Francisco San Francisco
N285 Durham Durham
N286 Durham Durham
N287 Howard Columbia
N288 Howard Columbia
B289 Los Angeles Hawthorne
B290 Alameda Fremont
N291 Middlesex Somerville
B292 St. Joseph South Bend
N293 Santa Barbara Carpinteria
B294 Santa Clara San Jose
B295 Maricopa Phoenix
N296 San Diego Solana Beach
B297 Alameda Fremont
B298 Alameda Fremont
B299 Alameda Fremont
N300 Los Angeles Inglewood
N301 Clark Las Vegas
N302 Baltimore Baltimore City
B303 Du Page Carol Stream
B304 Los Angeles Vernon
B305 Wexford Cadillac
B306 Santa Clara Santa Clara
B307 San Mateo Menlo Park
B308 San Diego San Diego
B309 Los Angeles Downey
B310 Hennepin Minneapolis
B311 Maricopa Phoenix
B312 San Diego San Diego
B313 San Diego San Diego
B314 Orange Anaheim
B315 Orange Laguna Niguel
B316 Los Angeles Los Angeles
B317 Will Romeoville
B318 Ramsey St. Paul
N319 Horry Conway
B320 Orange Huntington Beach
N321 Meriden Meriden
B322 Orange Fountain Valley
B323 Alameda Livermore
N324 Bernalillo Albuquerque
B325 Riverside Riverside
B326 San Diego San Diego
N327 King Seattle
N328 Monroe Key West
N329 Albany Latham
N330 Palm Beach Juno Beach
N331 Summit Park City
N332 Richmond City Richmond
N333 Volusia Daytona Beach
N334 Erie Williamsville
N335 Mobile Mobile
N336 Wicomico Salisbury
N337 Ramsey Maplewood
N338 Jasper Carthage
B339 San Diego National City
B340 King Auburn
N341 Madera Madera
B342 Maricopa Tempe
N343 Fresno Reedley
B344 Santa Cruz Soquel
</TABLE>
<PAGE> 131
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY ADMINI-
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE STRATIVE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE FEE RATE(I)
----- ---- ---- ------- ------- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CA 94301 Office $ 1,125,000 $ 1,123,782 $ 995,068 Balloon 7.468% 0.143%
CA 95032 Office 1,115,000 1,113,086 991,892 Balloon 7.714% 0.143%
CA 94301 Office 1,100,000 1,098,809 972,956 Balloon 7.468% 0.143%
CA 92660 Office 1,056,000 1,051,944 864,695 Balloon 7.664% 0.143%
CA 94301 Office 1,050,000 1,048,858 928,358 Balloon 7.452% 0.143%
TN 37650 Office 1,050,000 1,047,295 922,457 Balloon 7.200% 0.143%
CA 94028 Office 1,000,000 998,148 815,842 Balloon 7.541% 0.143%
CA 94108 Office 770,000 769,089 676,274 Balloon 7.190% 0.143%
NC 27713 Industrial 26,760,000 26,617,153 24,695,546 Balloon 7.100% 0.143%
NC 27713 Industrial 13,360,000 13,288,683 12,329,316 Balloon 7.100% 0.143%
---------- ----------
39,905,836 37,024,862
MD 21046 Industrial 39,800,000 39,751,581 35,108,337 Balloon 7.100% 0.083%
MD 21046 Industrial 27,200,000 27,166,909 23,833,532 Balloon 7.100% 0.133%
CA 90250 Industrial 9,400,000 9,380,917 8,234,015 Balloon 7.100% 0.143%
CA 94539 Industrial 8,450,000 8,371,353 Fully Amortizing 7.262% 0.143%
MA 02143 Industrial 7,700,000 7,667,797 7,103,189 Balloon 7.020% 0.143%
IN 46628 Industrial 3,750,000 3,738,200 3,316,720 Balloon 7.478% 0.143%
CA 93013 Industrial 3,790,000 3,700,033 Fully Amortizing 7.910% 0.143%
CA 95131 Industrial 3,500,000 3,495,766 3,068,251 Balloon 7.118% 0.143%
AZ 85040 Industrial 3,075,000 3,073,157 2,696,148 Balloon 7.138% 0.143%
CA 92075 Industrial 2,600,000 2,587,842 2,147,752 Balloon 7.980% 0.143%
CA 94538 Industrial 2,570,000 2,565,025 2,261,607 Balloon 7.279% 0.143%
CA 94538 Industrial 2,450,000 2,435,685 2,150,201 Balloon 7.194% 0.143%
CA 94538 Industrial 2,100,000 2,094,589 1,844,868 Balloon 7.199% 0.143%
CA 90301 Industrial 2,000,000 1,998,843 1,850,786 Balloon 7.250% 0.143%
NV 89122 Industrial 2,000,000 1,998,008 1,614,451 Balloon 7.200% 0.123%
MD 21230 Industrial 1,925,000 1,909,187 1,549,981 Balloon 7.140% 0.143%
IL 60188 Industrial 1,820,000 1,815,826 1,615,506 Balloon 7.609% 0.143%
CA 90058 Industrial 1,700,000 1,697,932 1,489,596 Balloon 7.100% 0.143%
MI 49601 Industrial 1,650,000 1,641,705 1,348,688 Balloon 7.616% 0.143%
CA 95051 Industrial 1,600,000 1,593,586 1,302,138 Balloon 7.457% 0.143%
CA 94025 Industrial 1,593,750 1,574,576 Fully Amortizing 7.656% 0.143%
CA 92111 Industrial 1,537,500 1,532,711 1,361,143 Balloon 7.516% 0.143%
CA 90241 Industrial 1,500,000 1,496,484 1,328,989 Balloon 7.534% 0.143%
MN 55411 Industrial 1,460,000 1,458,261 1,281,558 Balloon 7.168% 0.143%
AZ 85034 Industrial 1,312,500 1,311,726 1,152,280 Balloon 7.188% 0.143%
CA 92111 Industrial 1,250,000 1,245,294 1,026,398 Balloon 7.759% 0.143%
CA 92121 Industrial 1,200,000 1,197,534 1,049,893 Balloon 7.054% 0.143%
CA 92806 Industrial 1,160,000 1,157,829 1,024,039 Balloon 7.404% 0.143%
CA 92677 Industrial 1,100,000 1,098,750 969,279 Balloon 7.318% 0.143%
CA 90061 Industrial 1,100,000 1,090,099 Fully Amortizing 7.647% 0.143%
IL 60446 Industrial 1,035,000 1,033,771 908,760 Balloon 7.179% 0.143%
MN 55117 Industrial 975,000 970,063 796,108 Balloon 7.580% 0.143%
SC 29526 Industrial 900,000 895,505 691,128 Balloon 7.660% 0.253%
CA 92647 Industrial 890,000 887,913 788,514 Balloon 7.533% 0.143%
CT 06450 Industrial 855,000 850,730 656,572 Balloon 7.660% 0.253%
CA 92708 Industrial 850,000 848,418 750,769 Balloon 7.425% 0.143%
CA 94550 Industrial 800,000 797,768 715,236 Balloon 7.920% 0.143%
NM 87109 Industrial 800,000 797,045 658,633 Balloon 7.850% 0.143%
CA 92507 Industrial 745,000 743,064 669,990 Balloon 8.170% 0.143%
CA 92121 Industrial 525,000 521,932 Fully Amortizing 7.914% 0.143%
WA 98121 Hotel 26,100,000 26,009,898 18,352,066 Balloon 7.430% 0.143%
FL 33040 Hotel 11,500,000 11,476,973 9,283,713 Balloon 7.190% 0.143%
NY 12110 Hotel 7,245,000 7,182,259 5,026,906 Balloon 7.380% 0.143%
FL 33408 Hotel 4,576,000 4,568,034 3,762,865 Balloon 7.810% 0.143%
UT 84060 Hotel 4,550,000 4,540,790 3,667,517 Balloon 7.140% 0.143%
VA 23219 Hotel 3,500,000 3,492,682 2,808,171 Balloon 6.990% 0.143%
FL 32118 Hotel 3,400,000 3,390,037 1,611,304 Balloon 7.100% 0.143%
NY 14221 Hotel 2,961,000 2,952,061 2,091,450 Balloon 7.880% 0.143%
AL 36608 Hotel 2,571,300 2,562,398 2,135,170 Balloon 8.150% 0.143%
MD 21801 Hotel 2,400,000 2,391,745 1,994,615 Balloon 8.180% 0.243%
MN 55109 Hotel 2,400,000 2,379,504 1,671,117 Balloon 7.480% 0.143%
MO 64836 Hotel 2,100,000 2,089,682 1,471,921 Balloon 7.670% 0.143%
CA 92050 Mobile H.P. 4,300,000 4,291,188 3,763,097 Balloon 7.064% 0.143%
WA 98002 Mobile H.P. 4,000,000 3,997,424 3,485,575 Balloon 6.902% 0.143%
CA 93638 Mobile H.P. 3,540,000 3,535,064 3,064,035 Balloon 6.640% 0.143%
AZ 85282 Mobile H.P. 3,500,000 3,491,116 3,079,050 Balloon 7.253% 0.143%
CA 93654 Mobile H.P. 3,400,000 3,395,259 2,942,858 Balloon 6.640% 0.143%
CA 95073 Mobile H.P. 3,288,000 3,278,876 2,867,993 Balloon 6.926% 0.143%
<CAPTION>
SUB- NET FIRST INTEREST
SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
FEE RATE RATE DATE DATE METHOD
-------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.100% 7.325% 6/15/98 8/1/98 Actual/360
0.100% 7.571% 5/1/98 7/1/98 Actual/360
0.100% 7.325% 6/11/98 8/1/98 Actual/360
0.100% 7.521% 4/6/98 6/1/98 Actual/360
0.100% 7.309% 6/15/98 8/1/98 Actual/360
0.100% 7.057% 4/9/98 6/1/98 Actual/360
0.100% 7.398% 5/11/98 8/1/98 Actual/360
0.100% 7.047% 6/12/98 8/1/98 Actual/360
0.100% 6.957% 1/30/98 3/1/98 Actual/360
0.100% 6.957% 1/30/98 3/1/98 Actual/360
0.040% 7.017% 6/10/98 8/1/98 Actual/360
0.090% 6.967% 6/10/98 8/1/98 Actual/360
0.100% 6.957% 5/21/98 7/1/98 Actual/360
0.100% 7.119% 5/19/98 7/1/98 30/360
0.100% 6.877% 2/26/98 4/1/98 Actual/360
0.100% 7.335% 3/18/98 5/1/98 Actual/360
0.100% 7.767% 12/31/97 2/1/98 Actual/360
0.100% 6.975% 6/24/98 8/1/98 Actual/360
0.100% 6.995% 6/24/98 9/1/98 Actual/360
0.100% 7.837% 3/04/98 5/1/98 Actual/360
0.100% 7.136% 5/14/98 7/1/98 Actual/360
0.100% 7.051% 12/23/97 2/1/98 Actual/360
0.100% 7.056% 4/15/98 6/1/98 Actual/360
0.100% 7.107% 7/9/98 9/1/98 Actual/360
0.080% 7.077% 7/17/98 9/1/98 Actual/360
0.100% 6.997% 1/30/98 3/1/98 Actual/360
0.100% 7.466% 4/28/98 6/1/98 Actual/360
0.100% 6.957% 6/2/98 8/1/98 Actual/360
0.100% 7.473% 3/24/98 5/1/98 Actual/360
0.100% 7.314% 4/8/98 6/1/98 Actual/360
0.100% 7.513% 4/6/98 6/1/98 30/360
0.100% 7.373% 3/5/98 5/1/98 Actual/360
0.100% 7.391% 4/2/98 6/1/98 Actual/360
0.100% 7.025% 6/25/98 8/1/98 Actual/360
0.100% 7.045% 6/24/98 9/1/98 Actual/360
0.100% 7.616% 4/28/98 6/1/98 Actual/360
0.100% 6.911% 5/18/98 7/1/98 Actual/360
0.100% 7.261% 5/14/98 7/1/98 Actual/360
0.100% 7.175% 6/19/98 8/1/98 Actual/360
0.100% 7.504% 3/18/98 7/1/98 30/360
0.100% 7.036% 6/12/98 8/1/98 Actual/360
0.100% 7.437% 3/25/98 5/1/98 Actual/360
0.210% 7.407% 4/24/98 6/1/98 Actual/360
0.100% 7.390% 4/1/98 6/1/98 Actual/360
0.210% 7.407% 4/24/98 6/1/98 Actual/360
0.100% 7.282% 5/14/98 7/1/98 Actual/360
0.100% 7.777% 3/27/98 5/1/98 Actual/360
0.100% 7.707% 4/29/98 6/1/98 Actual/360
0.100% 8.027% 3/30/98 5/1/98 Actual/360
0.100% 7.771% 5/27/98 8/1/98 30/360
0.100% 7.287% 6/09/98 8/1/98 Actual/360
0.100% 7.047% 6/17/98 8/1/98 Actual/360
0.100% 7.237% 3/30/98 5/1/98 Actual/360
0.100% 7.667% 6/3/98 8/1/98 Actual/360
0.100% 6.997% 6/18/98 8/1/98 Actual/360
0.100% 6.847% 6/29/98 8/1/98 Actual/360
0.100% 6.957% 7/6/98 9/1/98 Actual/360
0.100% 7.737% 6/16/98 8/1/98 Actual/360
0.100% 8.007% 4/29/98 6/1/98 Actual/360
0.200% 7.937% 4/9/98 6/1/98 Actual/360
0.100% 7.337% 3/19/98 5/1/98 Actual/360
0.100% 7.527% 5/8/98 7/1/98 Actual/36
0.100% 6.921% 4/29/98 7/1/98 Actual/360
0.100% 6.759% 7/6/98 9/1/98 Actual/360
0.100% 6.497% 6/30/98 8/1/98 Actual/360
0.100% 7.110% 4/20/98 6/1/98 Actual/360
0.100% 6.497% 6/30/98 8/1/98 Actual/360
0.100% 6.783% 3/30/98 6/1/98 Actual/360
</TABLE>
<PAGE> 132
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE
------- -------- ------------ -------- -------- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,841.53 120 360 2 118 7/1/08 No Yes(AF) 5/1/08
7,960.28 120 360 3 117 6/1/08 No No 4/1/08
7,667.27 120 360 2 118 7/1/08 No Yes(AF) 5/1/08
7,916.74 120 300 4 116 5/1/08 No No 3/1/08
7,307.27 120 360 2 118 7/1/08 No No 5/1/08
7,127.28 120 360 4 116 5/1/08 No No 4/30/02
7,416.60 120 300 2 118 7/1/08 No No 5/1/08
5,221.46 120 360 2 118 7/1/08 No Yes(AH) 5/1/08
179,835.75 84 360 7 77 2/1/05 Yes(5) Yes(AK) 1/31/01
89,783.47 84 360 7 77 2/1/05 Yes(5) Yes(AK) 1/31/01
267,468.72 116 360 2 114 3/1/08 No Yes(AL) 10/31/07
182,792.69 120 360 2 118 7/1/08 No Yes(AL) 2/29/08
63,171.00 120 360 3 117 6/1/08 No No 4/1/08
77,194.08 180 180 3 177 6/1/13 No No 4/1/13
51,331.76 84 360 6 78 3/1/05 No No 2/28/01
26,164.08 120 360 5 115 4/1/08 No Yes(AM) 1/31/08
36,273.93 180 180 8 172 1/1/13 No No 12/31/05
23,563.61 120 360 2 118 7/1/08 No No 5/1/08
20,743.83 120 360 1 119 8/1/08 No Yes(AG) 6/1/08
20,032.79 120 300 5 115 4/1/08 No No 3/31/02
17,582.51 120 360 3 117 6/1/08 No No 4/1/08
16,620.36 120 360 8 112 1/1/08 No No 12/23/01
14,253.13 120 360 4 116 5/1/08 No No 3/1/08
13,643.53 84 360 1 83 8/1/05 No No 3/31/05
14,391.77 120 300 1 119 8/1/08 No No 7/31/02
13,777.90 120 300 7 113 2/1/08 No No 1/31/02
12,861.82 120 360 4 116 5/1/08 No No 3/1/08
11,424.54 120 360 2 118 7/1/08 No No 5/1/08
12,318.12 120 300 5 115 4/1/08 No Yes(AM) 1/31/08
11,779.14 120 300 4 116 5/1/08 No No 3/1/08
14,915.90 180 180 4 176 5/1/13 No No 3/1/13
10,767.27 120 360 5 115 4/1/08 No No 1/31/08
10,523.16 120 360 4 116 5/1/08 No No 3/1/08
9,878.70 120 360 2 118 7/1/08 No No 5/1/08
8,898.44 120 360 1 119 8/1/08 No Yes(AG) 6/1/08
9,449.00 120 300 4 116 5/1/08 No No 3/1/08
8,027.20 120 360 3 117 6/1/08 No No 4/1/08
8,034.77 120 360 3 117 6/1/08 No Yes(AN) 2/1/08
7,554.74 120 360 2 118 7/1/08 No No 5/1/08
10,289.24 180 180 3 177 6/1/13 No No 4/1/13
7,010.75 120 360 2 118 7/1/08 No No 5/1/08
7,255.98 120 300 5 115 4/1/08 No Yes(AM) 1/31/08
7,001.15 120 270 4 116 5/1/08 No Yes(AO) 4/30/02
6,243.13 120 360 4 116 5/1/08 No Yes(AN) 1/1/08
6,651.09 120 270 4 116 5/1/08 No Yes(AO) 4/30/02
5,899.73 120 360 3 117 6/1/08 No Yes(AN) 2/1/08
5,825.56 120 360 5 115 4/1/08 No No 1/31/08
6,095.25 120 300 4 116 5/1/08 No No 4/30/02
5,555.09 120 360 5 115 4/1/08 No No 1/31/08
4,991.14 180 180 2 178 7/1/13 No No 5/1/13
211,896.61 113 233 2 111 12/1/07 No Yes(AP) 6/30/02
82,678.77 120 300 2 118 7/1/08 No Yes(AP) 6/30/02
57,834.78 120 240 5 115 4/1/08 No No 3/31/02
34,744.30 120 300 2 118 7/1/08 No No 6/30/02
32,565.95 120 300 2 118 7/1/08 No No 2/29/08
24,714.95 120 300 2 118 7/1/08 No No 2/29/08
30,750.56 120 180 1 119 8/1/08 No No 7/31/02
24,546.31 120 240 2 118 7/1/08 No No 6/30/02
20,101.89 120 300 4 116 5/1/08 No No 4/30/02
18,810.67 120 300 4 116 5/1/08 No No 4/30/02
19,304.90 120 240 5 115 4/1/08 No No 3/31/02
17,136.42 120 240 3 117 6/1/08 No No 5/31/02
28,793.07 120 360 3 117 6/1/08 No No 4/1/08
26,349.36 120 360 1 119 8/1/08 No No 6/1/08
22,702.13 120 360 2 118 7/1/08 No Yes(AQ) 2/28/08
23,883.29 120 360 4 116 5/1/08 No No 11/2/07
21,804.31 120 360 2 118 7/1/08 No Yes(AQ) 2/28/08
21,711.98 120 360 4 116 5/1/08 No Yes(AS) 3/1/08
<CAPTION>
PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---------------------------------------
<S> <C>
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(35)/GRTR1%PPMTorYM(42)/OPEN(7)
LO(35)/GRTR1%PPMTorYM(42)/OPEN(7)
LO(111)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(35)/GRTR1%PPMTorYM(42)/OPEN(7)
LO(117)/OPEN(3)/DEFEASANCE
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(71)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(79)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(116)/OPEN(4)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(116)/OPEN(4)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(116)/OPEN(4)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(59)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(114)/OPEN(6)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
</TABLE>
<PAGE> 133
<TABLE>
<CAPTION>
TOTAL SF/
CUT-OFF UNITS/ UNIT/
SE- LOAN APPRAISAL APPRAISAL DATE LTV YEAR BUILT/ ROOM/ ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED
- ------ ------ ------------- ----- ---- ----- --------- --- ---
<C> <C> <S> <C> <C> <C> <C> <C> <C>
B277 3062346 Calif Street Office Building $ 1,820,000 4/21/98 62% 1960/1997 8,373 SF
B278 3052404 Jackson Street Building 1,860,000 3/25/98 60% 1974 10,071 SF
B279 3062312 634-640 Ramona St. Office Building 1,580,000 4/21/98 70% 1960/1998 4,750 SF
B280 3051174 4301 & 4321 Birch Street 1,500,000 3/4/98 70% 1965 21,477 SF
B281 3062361 853 Middlefield Road 1,600,000 4/21/98 66% 1952 6,714 SF
N282 50810 USDA Forestry Service Building 1,400,000 1/30/98 75% 1997 11,800 SF
B283 3049509 Country Offices 2,780,000 2/25/98 36% 1974 9,791 SF
B284 3056892 809 Sacramento Building 1,100,000 5/27/98 70% 1930/1997 4,961 SF
N285 50696 Research Tri-Center North A 33,450,000 11/26/97 80% 1989 631,252 SF
N286 50728 Research Tri-Center South B 16,700,000 11/26/97 80% 1997 379,656 SF
---------
SUB-TOTAL CROSSED LOANS 50,150,000
N287 50880 Gateway Commerce Center II 50,100,000 5/1/98 79% 1970/1994 1,251,103 SF
N288 50879 Gateway Commerce Center I 32,800,000 5/28/98 83% 1970/1994 739,153 SF
B289 3051067 Hawthorne Industrial Bld. 12,100,000 3/19/98 78% 1960/1997 244,200 SF
B290 3056710 Amax Building 12,500,000 3/31/98 67% 1998 115,338 SF
N291 50560 Inner Belt Industrial Center 10,230,000 8/15/97 75% 1971 161,568 SF
B292 3049608 Clark Foods #1 5,000,000 10/8/97 75% 1964/1980 169,350 SF
N293 50480 LySonix 5,500,000 10/15/97 67% 1984 61,120 SF
B294 3054814 Jarrett Building 5,800,000 2/5/98 60% 1980 42,720 SF
B295 3062429 Maricopa Freeway Center 4,100,000 5/14/98 75% 1982 81,161 SF
N296 50719 South Cedros Center 4,600,000 11/26/97 56% 1959/1992 47,940 SF
B297 3054889 Edison Way/Old Warm Springs Blvd. Ind. 3,600,000 4/20/98 71% 1979 48,563 SF
B298 3044591 R&D Building 4,900,000 11/26/97 50% 1987 35,694 SF
B299 3051992 4487 Technology Drive 3,450,000 3/26/98 61% 1981 38,291 SF
N300 50890 Aviation Blvd. 2,700,000 4/13/98 74% 1971 47,358 SF
N301 50887 Harmer Center 2,700,000 2/25/98 74% 1983 76,125 SF
N302 50700 Mid Cities Industrial Center 2,650,000 12/2/97 72% 1965/1967 159,860 SF
B303 3052446 Gary Center 2,500,000 4/10/98 73% 1986 41,084 SF
B304 3054707 Vernon Industrial Plaza 2,450,000 5/10/98 69% 1981 63,569 SF
B305 3049624 Clark Foods #2 2,200,000 2/12/98 75% 1969 92,453 SF
B306 3051711 2930-2964 Corvin 2,475,000 2/26/98 64% 1975 20,195 SF
B307 3049491 3575 Haven Avenue 2,650,000 2/13/98 59% 1981 39,478 SF
B308 3047727 5648 Copley Drive Building 2,050,000 1/2/98 75% 1997 22,450 SF
B309 3049475 Woodruff Ave. Industrial 2,000,000 1/15/98 75% 1961 58,650 SF
B310 3062478 2518 2nd St. North Building 1,950,000 5/4/98 75% 1946/1988 68,712 SF
B311 3062437 C-5 Civic Center 1,750,000 5/14/98 75% 1983 24,100 SF
B312 3051760 Raichem Building 1,720,000 3/10/98 72% 1973 20,160 SF
B313 3049533 Border Products Building 1,975,000 3/27/98 61% 1994 20,463 SF
B314 3056769 Grove Business Center 1,600,000 3/5/98 72% 1974 38,400 SF
B315 3062460 Forbes Rd. Industrial/Wrhs. 1,580,000 5/04/98 70% 1988 24,000 SF
B316 3049467 Seville Building 1,800,000 1/21/98 61% 1973/1992 43,220 SF
B317 3062189 1413 Sherman Road 1,380,000 5/6/98 75% 1989 24,400 SF
B318 3049616 Clark Foods #3 1,300,000 2/1/98 75% 1958/1979 55,356 SF
N319 50512 The Glendinning Company Building 1,200,000 11/3/97 75% 1996 34,255 SF
B320 3051703 Metzler Business Park 1,210,000 2/27/98 73% 1987 23,270 SF
N321 50511 The Guest Company Building 1,140,000 10/23/97 75% 1981/1996 32,551 SF
B322 3056777 Coley River Building 1,130,000 3/13/98 75% 1979 19,072 SF
B323 3050952 Airport Business Center 1,300,000 3/9/98 61% 1998 14,807 SF
N324 50834 Midway Industrial Center 1,200,000 2/17/98 66% 1985 30,860 SF
B325 3051026 Linden Street Industrial Bldg. 1,020,000 3/15/98 73% 1990 31,280 SF
B326 3056942 Sumner Industrial Building 880,000 4/23/98 59% 1976/1995 13,860 SF
N327 50868 Edgewater Inn 38,000,000 3/1/98 68% 1962/1987 241 Rooms
N328 50856 Ocean Key House 23,500,000 2/26/98 49% 1984 96 Rooms
N329 50701 Residence Inn by Marriott-Albany Airport 10,350,000 10/9/97 69% 1989 112 Rooms
N330 50846 Hampton Inn-Juno Beach 6,700,000 3/1/98 68% 1995 88 Rooms
N331 50869 Radisson Inn-Park City 6,650,000 4/10/98 68% 1987 131 Rooms
N332 50928 Crowne Plaza Hotel-Richmond 9,000,000 2/4/98 39% 1986 299 Rooms
N333 50875 Palm Plaza Hotel 6,700,000 4/7/98 51% 1988 98 Rooms
N334 50872 Holiday Inn Express-Williamsville 4,230,000 2/12/98 70% 1972/1992 80 Rooms
N335 50505 Best Western Bradbury Suites 3,700,000 10/16/97 69% 1985/1995 101 Rooms
N336 50693 Howard Johnson Inn-Salisbury, MD 3,500,000 12/1/97 68% 1962/1997 123 Rooms
N337 50783 Best Western-Maplewood Inn 4,290,000 1/9/98 55% 1977/1997 118 Rooms
N338 50816 EconoLodge-Carthage MO 3,000,000 1/23/98 70% 1987/1993 83 Rooms
B339 3052412 Bonita Paradise MHP 6,100,000 2/9/98 70% 1970 167 Units
B340 3062940 White River Estates 7,400,000 6/5/98 54% 1979 204 Units
N341 50939 The Meadows Mobile Home Park 5,070,000 4/29/98 70% 1973 183 Pads
B342 3051778 Rancho Tempe 6,700,000 3/17/98 52% 1971 291 Units
N343 50938 Kings River Mobile Home Park 5,120,000 4/27/98 66% 1975 179 Pads
B344 3049350 Rodeo Mobile Estate 6,310,000 10/20/97 52% 1972 205 Units
<CAPTION>
LOAN
NET BALANCE PER
SE- RENTABLE SF/UNIT
QUENCE AREA(SF) ROOM/BED
- ------ -------- --------
<C> <C> <C>
B277 8,373 $ 134
B278 10,071 111
B279 4,750 231
B280 21,477 49
B281 6,714 156
N282 11,800 89
B283 9,791 102
B284 4,961 155
N285 631,252 42
N286 379,656 35
N287 1,251,103 32
N288 739,153 37
B289 244,200 38
B290 115,338 73
N291 161,568 47
B292 169,325 22
N293 61,120 61
B294 42,720 82
B295 81,161 38
N296 47,940 54
B297 48,563 53
B298 35,694 68
B299 38,291 55
N300 47,358 42
N301 76,125 26
N302 159,860 12
B303 41,084 44
B304 63,569 27
B305 92,453 18
B306 20,195 79
B307 39,478 40
B308 22,450 68
B309 58,650 26
B310 68,712 21
B311 24,100 54
B312 20,160 62
B313 20,463 59
B314 38,400 30
B315 24,000 46
B316 43,220 25
B317 24,400 42
B318 55,356 18
N319 34,255 26
B320 23,270 38
N321 32,551 26
B322 19,072 44
B323 14,807 54
N324 30,860 26
B325 31,280 24
B326 13,860 38
N327 145,033 107,925
N328 109,604 119,552
N329 74,055 64,127
N330 44,980 51,909
N331 73,229 34,663
N332 208,013 11,681
N333 52,215 34,592
N334 42,690 36,901
N335 51,850 25,370
N336 54,121 19,445
N337 74,184 20,165
N338 39,361 25,177
B339 25,696
B340 19,595
N341 19,317
B342 11,997
N343 18,968
B344 15,995
</TABLE>
<PAGE> 134
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES
------- ---- -------- -------- --- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100% 5/29/98 $ 221,593 $ 76,002 $ 145,591 1.55 $ 1,675 $ 0.20 12/31/97 $ 157,094
100% 4/29/98 227,162 68,522 158,640 1.66 3,525 0.35 12/31/97 234,109
100% 5/30/98 157,500 31,020 126,480 1.37 950 0.20 12/31/97 139,761
100% 3/16/98 257,150 87,572 169,578 1.79 3,222 0.15
100% 12/31/97 193,002 59,871 133,131 1.52 1,709 0.25 12/31/97 194,988
100% 3/23/98 151,866 30,128 121,738 1.42 1,770 0.15
100% 3/26/98 356,888 87,327 269,561 3.03 2,285 0.23 12/31/97 354,915
100% 7/3/98 135,458 22,244 113,214 1.81 1,343 0.27 12/31/97 75,006
85% 5/28/98 3,755,081 882,320 2,872,761 1.33 63,125 0.10 12/31/97 3,723,902
94% 5/31/98 1,998,831 459,317 1,539,514 1.43 37,966 0.10 12/31/97 466,810
97% 5/28/98 5,208,283 953,303 4,254,980 1.33 54,214 0.04 12/31/97 4,474,287
94% 5/28/98 3,480,936 585,605 2,895,331 1.32 33,262 0.05 12/31/97 1,096,512
100% 6/11/98 1,208,518 161,705 1,046,813 1.38 38,916 0.16
100% 5/5/98 1,314,853 65,743 1,249,110 1.35 11,534 0.10
100% 3/31/98 1,182,354 307,834 874,520 1.42 25,288 0.16 12/31/97 1,258,174
100% 3/12/98 470,250 14,108 456,142 1.45 25,000 0.15
100% 11/12/97 805,115 251,275 553,840 1.27 15,783 0.26 12/31/97 827,318
100% 6/29/98 627,249 140,729 486,520 1.72 23,494 0.55 12/31/97 578,798
100% 3/31/98 478,981 111,447 367,534 1.48 3,765 0.05 12/31/97 506,240
100% 3/31/98 542,156 114,104 428,052 1.78 9,588 0.20 12/31/97 575,703
98% 3/30/98 411,004 64,599 346,405 1.64 16,174 0.33 12/31/97 357,584
0% 8/24/98 508,640 25,432 483,208 2.42 13,308 0.37 12/31/97 556,196
100% 4/19/98 362,205 73,544 288,661 1.69 9,691 0.25 12/31/97 247,228
87% 7/2/98 306,031 70,015 236,016 1.44 9,472 0.20 12/31/97 219,605
100% 6/30/98 312,218 49,778 262,440 1.52 15,225 0.20 12/31/97 316,723
100% 1/12/98 362,623 94,013 268,610 1.62 23,979 0.15 12/31/97 415,172
93% 4/1/98 342,537 105,577 236,960 1.54 13,350 0.32 12/31/97 317,302
100% 4/8/98 299,614 79,684 219,930 1.60 11,345 0.18 12/31/97 292,460
100% 3/12/98 266,311 23,307 243,004 1.64 40,259 0.44
100% 2/16/98 247,712 51,932 195,780 1.39 2,731 0.14 12/31/97 230,174
100% 2/20/98 270,030 13,501 256,529 1.43 12,238 0.31
100% 9/18/97 230,894 46,996 183,898 1.42 2,299 0.10
100% 3/18/98 243,276 45,522 197,754 1.57 5,865 0.10 12/31/97 262,860
100% 5/1/98 310,841 104,663 206,178 1.74 10,307 0.15 12/31/97 306,632
100% 3/31/98 233,630 68,020 165,610 1.55 5,818 0.24 12/31/97 250,085
100% 4/1/98 198,417 36,325 162,092 1.43 2,439 0.12 12/31/97 182,901
100% 6/20/98 178,644 38,309 140,335 1.46 2,046 0.10 12/31/97 171,000
98% 6/25/98 217,422 61,231 156,191 1.62 3,072 0.08 12/31/97 202,530
100% 6/12/98 176,755 36,276 140,479 1.55 6,980 0.29 12/31/97 200,817
100% 1/1/98 201,932 41,133 160,799 1.30 7,762 0.18 12/31/97 216,000
100% 5/15/98 208,015 62,689 145,326 1.73 3,660 0.15 12/31/97 171,896
100% 3/12/98 157,765 4,733 153,032 1.76 17,563 0.32
100% 11/25/97 152,478 37,351 115,127 1.37 1,713 0.05
100% 3/27/98 147,934 35,083 112,851 1.51 1,164 0.05 12/31/97 147,164
100% 11/25/97 150,519 45,601 104,918 1.31 1,628 0.05
100% 3/27/98 139,806 29,559 110,247 1.56 1,981 0.10 12/31/97 135,456
100% 3/1/98 141,794 28,274 113,520 1.62 2,221 0.15
99% 1/1/98 182,257 43,830 138,427 1.89 7,715 0.25 12/31/97 176,176
82% 3/27/98 143,126 44,453 98,673 1.48 4,692 0.15 12/31/97 99,861
100% 4/15/98 99,864 17,350 82,514 1.38 2,133 0.15 12/31/97 100,440
85% 4/30/98 15,176,928 11,022,323 4,154,605 1.63 682,962 2,833.87 12/31/97 15,559,227
72% 3/31/98 8,772,586 7,007,651 1,764,935 1.78 263,178 2,741.44 12/31/97 9,103,914
88% 2/28/98 3,219,367 2,112,343 1,107,024 1.60 128,775 1,149.78 12/31/97 3,535,241
75% 3/31/98 1,309,988 681,630 628,358 1.51 65,499 744.31 12/31/97 1,361,195
69% 3/31/98 4,212,525 3,453,070 759,455 1.94 168,501 1,286.27 12/31/97 4,375,041
63% 4/30/98 6,025,748 5,203,677 822,071 2.77 301,287 1,007.65 12/31/97 6,018,024
80% 4/30/98 2,260,429 1,574,990 685,439 1.86 90,417 922.62 12/31/97 2,450,354
66% 4/30/98 1,423,158 926,013 497,145 1.69 71,287 891.09 12/31/97 1,460,731
72% 3/31/98 1,273,656 884,580 389,076 1.61 63,428 628.00 12/31/97 1,253,485
60% 4/30/98 1,686,519 1,281,625 404,894 1.79 84,326 685.58 12/31/97 2,058,530
79% 12/31/97 2,876,862 2,430,880 445,982 1.93 115,074 975.20 12/31/97 2,891,395
69% 12/31/97 927,521 551,565 375,956 1.83 46,376 558.75 12/31/97 978,531
91% 1/1/98 898,062 385,218 512,844 1.48 7,662 45.88 12/31/97 923,278
100% 6/1/98 805,850 271,114 534,736 1.69 10,200 50.00 3/31/97 792,053
99% 4/1/98 673,112 219,926 453,186 1.66 9,000 49.18 12/31/97 675,039
100% 2/1/98 1,287,352 811,522 475,830 1.66 53,253 183.00 12/31/97 1,287,269
97% 4/1/98 664,397 230,028 434,369 1.66 8,950 50.00 12/31/97 661,064
99% 3/31/98 892,432 386,332 506,100 1.94 16,605 81.00 12/31/97 929,959
<CAPTION>
MOST 2ND
MOST MOST RECENT MOST
RECENT RECENT NOI RECENT
EXPENSES NOI DSCR END DATE
----------- ----------- ------ --------
<S> <C> <C> <C> <C>
$ 75,515 $ 81,579 0.87 12/31/96
47,045 187,064 1.96 12/31/96
31,761 108,000 1.17 12/31/96
60,549 134,439 1.53 12/31/96
78,930 275,985 3.10 12/31/96
10,381 64,625 1.03 12/31/96
884,223 2,839,679 1.32 12/31/96
90,309 376,501 0.47
1,270,918 3,203,369 1.00 12/31/96
279,640 816,872 0.37
309,333 948,841 1.54 12/31/96
222,203 605,115 1.39
107,940 470,858 1.67 12/31/96
97,656 408,584 1.64 12/31/96
111,792 463,911 1.93 12/31/96
62,249 295,335 1.40 12/31/96
70,742 485,454 2.43 12/31/96
46,715 200,513 1.17 12/31/96
57,260 162,345 0.99 12/31/96
29,787 286,936 1.66 12/31/96
89,816 325,356 1.97 12/31/96
99,949 217,353 1.41 12/31/96
77,980 214,480 1.56 12/31/96
27,656 202,518 1.43 12/31/96
13,484 249,376 1.97 12/31/96
73,470 233,162 1.97 12/31/96
67,594 182,491 1.71 12/31/96
96 182,805 1.61 12/31/96
0 171,000 1.78
51,422 151,108 1.57 12/31/96
37,301 163,516 1.80 12/31/96
0 216,000 1.75 12/31/96
58,025 113,871 1.35 12/31/96
28,848 118,316 1.58 12/31/96
24,554 110,902 1.57 12/31/96
42,760 133,416 1.82 12/31/96
40,114 59,747 0.90 12/31/96
12,648 87,792 1.47 12/31/96
10,677,471 4,881,756 1.92 12/31/96
6,941,211 2,162,703 2.18 12/31/96
2,186,024 1,349,217 1.94 12/31/96
700,548 660,647 1.58 12/31/96
3,475,886 899,155 2.30 12/31/96
4,970,334 1,047,690 3.53 12/31/96
1,393,794 1,056,560 2.86 12/31/96
914,374 546,357 1.85 12/31/96
788,383 465,102 1.93 12/31/96
1,554,658 503,872 2.23 12/31/96
2,362,586 528,809 2.28 12/31/96
513,617 464,914 2.26 12/31/96
377,347 545,931 1.58 12/31/96
231,729 560,324 1.77 3/31/96
177,189 497,850 1.83 12/31/96
752,443 534,826 1.87 12/31/96
186,225 474,839 1.81 12/31/96
305,641 624,318 2.40 12/31/96
</TABLE>
<PAGE> 135
<TABLE>
<CAPTION>
2ND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 135,317 $ 73,029 $ 62,288 0.66 Blue Shift 4,500 54% 8/31/02
210,684 40,085 170,599 1.79 Bunny Cuts 1,570 16% 3/31/02
133,100 26,418 106,682 1.16 Diamond, Morgan 4,750 100% 4/30/03
Whitaker Wellness 11,600 54% 2/28/01
135,317 60,978 74,339 0.85 Amy Guthrie Dds 1,993 30% 4/30/01
USDA Forest Services 11,800 100% 11/24/07
342,087 71,114 270,973 3.04 Institute of Behavior 1,614 16% 4/30/00
6,033 10,240 (4,207) (0.07) Public Printing 3,738 75% 9/30/09
3,509,310 861,768 2,647,542 1.23 IBM, Corporation 272,396 43% 9/30/01
Bell & Howell 116,345 31% 12/31/07
4,221,364 1,165,184 3,056,180 0.95 Sears 961,653 77% 3/1/08
Revlon 205,300 28% 5/1/07
Alesis Studio Electronics 104,000 43% 4/30/08
Amax Engineering Corp 115,338 100% 5/1/13
1,196,888 307,319 889,569 1.44 UPS 56,230 35% 7/31/00
Clark Food Service, Inc. 169,325 100% 10/1/17
LySonix, Inc. 61,120 100% 12/31/12
348,815 130,234 218,581 0.77 Button King Inc 10,025 23% 12/31/01
523,610 95,012 428,598 1.72 Graphic Resources 49,265 61% 2/28/99
485,458 104,640 380,818 1.58 CBS Scientific 20,520 43% 7/1/08
286,732 48,655 238,077 1.13 Community Day 4,995 10% 10/31/99
450,535 72,423 378,112 1.90
211,959 0 211,959 1.24 Transend Access 19,128 50% 9/15/00
220,268 57,723 162,545 0.99 US Broker 12,900 27% 2/28/99
291,312 23,649 267,663 1.55 Display & Exhibit Rentals 37,500 49% 4/15/03
298,410 91,715 206,695 1.25 Woodform 89,860 56% 12/31/98
296,933 88,266 208,667 1.35 Mwp Inc. 12,181 30% 7/31/00
272,836 69,590 203,246 1.48 IGA Corp. 9,608 15% 4/30/01
Clark Food Service, Inc. 92,453 100% 10/1/17
216,013 27,671 188,342 1.33 Brothers Union 9,060 45% 10/31/02
Bay Packaging Inc 39,478 100% 3/31/13
Continental Labs 15,823 70% 12/31/02
254,268 12,477 241,791 1.91 Storo Pack Inc 40,178 69% 12/31/00
316,175 84,120 232,055 1.96 Web Label, Ltd. 19,800 29% 6/30/01
92,965 71,104 21,861 0.20 Comcare 6,049 25% 12/13/01
235,209 120 235,089 2.07 Hemagen Diagnostics 20,160 100% 9/30/02
Border Products 20,463 100% 1/31/08
182,369 56,337 126,032 1.31 Kurica Trucking 2,880 8% N/A
194,557 38,432 156,125 1.72 Orange County Register 24,000 100% 2/28/05
216,000 0 216,000 1.75 Seville Classics, Inc. 43,120 100% 3/1/14
181,268 52,661 128,607 1.53 Scotchwood Services 4,500 18% 9/30/01
Clark Food Service, Inc. 55,356 100% 10/1/17
The Glendenning Co. 34,255 100% 10/22/10
143,067 29,789 113,278 1.51 Custom Stainless 3,690 16% 1/31/99
The Guest Company 32,551 100% 10/22/10
113,565 21,248 92,317 1.30 Stello Industries 6,184 32% N/A
Motivational Systems Inc 12,070 82% 9/30/07
157,390 30,028 127,362 2.09 Tipps Equipment 8,000 26% 9/30/00
102,266 42,469 59,797 0.90 Mcdonald / Byrne 2,688 9% 10/31/98
106,650 18,267 88,383 1.48 Fritz Companies Inc. 13,860 100% 3/31/99
14,877,007 10,310,079 4,566,928 1.80
8,558,796 6,572,871 1,985,925 2.00
3,426,960 2,146,202 1,280,758 1.85
1,057,500 539,631 517,869 1.24
4,147,965 3,383,817 764,148 1.96
5,966,691 4,612,137 1,354,554 4.57
2,191,933 1,275,145 916,788 2.48
1,348,145 940,230 407,915 1.38
1,340,280 846,840 493,440 2.05
2,016,384 1,499,494 516,890 2.29
2,807,856 2,292,500 515,356 2.22
1,050,672 501,094 549,578 2.67
914,105 357,490 556,615 1.61
720,000 257,449 462,551 1.46
649,616 162,474 487,142 1.79
1,158,816 728,823 429,993 1.50
663,272 164,911 498,361 1.90
903,885 310,493 593,392 2.28
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<S> <C> <C> <C> <C>
Clarum Corp 1,661 20% 2/28/03
Allot 1,275 13% 12/31/00
Alpine/Fount/Barrett 2,610 12% 2/28/99
Mazzetti & Keiles Dmd 1,767 26% 5/31/01
Donald Creevy 1,110 11% 8/31/00
Asian Week 2,976 60% 12/31/09
IBM, Corporation 200,000 32% 5/31/03
RPS 84,600 22% 3/5/04
US Coast Guard 170,450 14% 4/1/03
Genco, Inc. 174,362 24% 2/1/03
Khalil Corp. 70,100 29% 10/30/02
Nynex 30,750 19% 6/30/02
Device Dynamics 7,400 17% 12/31/00
Designer Components Inc. 20,285 25% 4/30/02
CBS Scientific 4,200 9% 3/1/02
JTB Autotech 3,480 7% 7/31/00
Brusch Wellman Inc. 16,847 44% 7/31/05
MCL & Associates 6,558 14% 11/20/99
Western Electronics 26,125 34% 6/30/02
Eastern Manufacturing 40,000 25% 12/31/06
Warner Electricinear 8,917 22% 3/31/01
Golden Ross Co 7,895 12% 5/31/01
Advantech Precision Machine 4,050 20% 8/31/98
Color Systems 6,627 30% 12/31/02
Leo Molds Inc. 18,472 31% 12/31/01
Complete Graphics 16,000 23% 6/30/99
City of Phoenix Traffic Count
Stop 5,991 25% 11/21/01
Orange County Patio 1,920 5% 12/31/98
Hoffend Exposition 4,200 17% 1/31/00
Darrel's Automotive 3,328 14% 8/31/98
Omni Metal Finishing 3,212 17% N/A
Pool Savers 2,737 18% 3/14/01
Harrison Equipment 6,000 19% 10/31/98
Advanced Refrigeration 1,624 5% 5/30/99
</TABLE>
<PAGE> 136
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------------- ----------------
<C> <C> <S> <C>
B345 3051869 Chateau MHP 3301 Buchanan Road
B346 3049301 Rexford Mobile Home 1350 Pueblo Avenue
B347 3056918 Rio Plaza Mobile Home Pk. 101 River Drive
B348 3052180 Vista Del Rio MHP Highway 304
B349 3056926 Stonegate MHP 840 Airport Boulevard
B350 3062148 Hillsdale Mobile Home Park 6300 Roseville Road
B351 3062916 Table Rock Mobile Estate 6850 Downing Road
B352 3051828 Foothill MHP 2920 Clark Road
B353 3047990 Oasis Mobile Estates 1565 West Arrow Highway
N354A 50164 Rose Haven Retreat Nursing Home 200 Live Oak Street
N354B 50164 Golden Villa Nursing Homes 1104 South Williams Street
N354 50164 Golden Villa and Rose Haven Nursing Homes
(Roll-up)
N355A 50192 Village Manor Nursing Home 503 North College Street
N355B 50192 Heritage Nursing Home 1026 East Goude Street
N355 50192 Heritage & Village Manor Nursing Home
(Roll-up)
SUB-TOTAL CROSSED LOANS
N356 50278 Sun Terrace Retirement and Assisted Living 907 Ida Belle Street
N357 50802 Pinebrook Care Center 104 Pension Road
N358 50690 Hanna Oaks Assisted Living Facility 2425 East Hanna Avenue
N359 50000 Windsor House West 840, 848, 850 Reidville Rd.
N360A 50561 Ritenour House 403 North Coalter Street
N360B 50561 Dudley Manor Route 1, Box 95 (Long Meadow Road)
N360 50561 Dudley Manor and Ritenour House (Roll-up)
N361 50670 Carolee's Mountain View Assisted Living 888 South Hillhurst Rd.
N362 50531 Evangeline of Natchitoches 750 Keyser Avenue
N363 50821 Mayfair House-Petersburg 590 Flank Road
N364 50528 Midland Villa Nursing Home 1720 Burton Drive
N365 50908 Peoples Storage-56th St 12225 56th St. North
N366 50907 Peoples Storage-Linebaugh Ave. 5907 West Linebaugh Ave.
SUB-TOTAL CROSSED LOANS
B367 3049525 U-Store Self Storage 25142 Front Street
B368 3043155 West Sahara Ministorage 6318 West Sahara Avenue
B369 3062130 Security Self Storage 601 Martin Avenue
B370 3056959 Santa Fe Self Storage 13633 Rosecrans Avenue
B371 3049178 Irvington Self Storage 1155 East Irvington Road
N372A 50324 Applebee's #9311 8224 Fredericksberg Rd.
N372B 50324 Applebee's #9053 995 IH 35 North
N372C 50324 Applebee's #8781 5809 Loop 410 NW
N372 50324 Applebee's #8781, 9053, 9311 (Roll-Up)
N373 50323 Applebee's #8739 3050 Ross Clark Circle, SW
N374 50320 Applebee's #9249 7880 IH 35 North (In front of Windsor Park Mall)
N375 50321 Applebee's #8862 97 Loop 410 NE
SUB-TOTAL CROSSED LOANS
N376 50829 210 W. Baltimore St. Parking Garage 210-218 West Baltimore Street
- --------------------------------------------------------------------------------------------------------------------------
TOTALS/WEIGHTED AVERAGES 376 LOANS
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
(i) Administrative Fee Rate includes the Sub-Servicing Fee Rate.
(ii) For Mortgage Loans which accrue interest on the basis of actual days elapsed each calendar month and a 360-day year
or a 365-day year, the amortization term is the term over which the Mortgage Loans would amortize if interest accrued
and was paid on the basis of a 360-day year consisting of twelve 30-day months. The actual amortization term would be
longer.
<CAPTION>
SE-
QUENCE COUNTY CITY
- ------ ------ ----
<C> <C> <C>
B345 Contra Costa Antioch
B346 Napa Napa
B347 Monterey King City
B348 Valencia Belen
B349 Sonoma Santa Rosa
B350 Sacramento Sacramento
B351 Jackson Central Point
B352 Butte Oroville
B353 San Bernardino Upland
N354A Cass Atlanta
N354B Cass Atlanta
N354 Cass Atlanta
N355A Wood Quitman
N355B Wood Quitman
N355 Wood Quitman
N356 Yakima Sunnyside
N357 Monmouth Englishtown
N358 Hillsborough Tampa
N359 Spartanburg Spartanburg
N360A Staunton Staunton
N360B Augusta Fisherville
N360
N361 Clark Ridgefield
N362 Natchitoches Parish Natchitoches
N363 Richmond Petersburg
N364 Richardson Falls City
N365 Hillsborough Tampa
N366 Hillsborough Tampa
B367 Orange Lake Forest
B368 Clark Las Vegas
B369 Sonoma Rohnert Park
B370 Los Angeles Santa Fe Springs
B371 Pima Tucson
N372A Bexar San Antonio
N372B Comal New Braunfels
N372C Bexar San Antonio
N372
N373 Houston Dothan
N374 Bexar San Antonio
N375 Bexar San Antonio
N376 Baltimore City Baltimore
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
(i) A
(ii) F
o
a
l
</TABLE>
<PAGE> 137
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY ADMINI-
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE STRATIVE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE FEE RATE(I)
----- ---- ---- ------- ------- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CA 94509 Mobile H.P. $ 3,150,000 $ 3,143,731 $ 2,764,630 Balloon 7.175% 0.143%
CA 94559 Mobile H.P. 2,640,000 2,632,645 2,301,852 Balloon 6.911% 0.143%
CA 93930 Mobile H.P. 1,925,000 1,923,760 1,677,433 Balloon 6.902% 0.143%
NM 87002 Mobile H.P. 1,612,500 1,608,372 1,417,434 Balloon 7.222% 0.143%
CA 95403 Mobile H.P. 1,537,000 1,536,010 1,339,332 Balloon 6.902% 0.143%
CA 95842 Mobile H.P. 1,350,000 1,348,235 1,175,484 Balloon 6.861% 0.143%
OR 97502 Mobile H.P. 1,250,000 1,249,245 1,095,286 Balloon 7.113% 0.143%
CA 95965 Mobile H.P. 1,225,000 1,222,590 1,133,048 Balloon 7.219% 0.143%
CA 91786 Mobile H.P. 1,000,000 996,817 Fully Amortizing 6.897% 0.143%
TX 75551 Health Care
TX 75551 Health Care
TX 75551 Health Care 6,258,000 6,198,762 4,442,740 Balloon 9.210% 0.218%
TX 75783 Health Care
TX 75783 Health Care
TX 75783 Health Care 3,742,000 3,706,578 2,656,555 Balloon 9.210% 0.218%
---------- ----------
9,905,340 7,099,295
WA 98944 Health Care 4,800,000 4,755,247 3,266,459 Balloon 8.340% 0.143%
NJ 07726 Health Care 4,000,000 3,990,097 2,741,111 Balloon 8.460% 0.218%
FL 33610 Health Care 3,550,000 3,529,139 2,909,828 Balloon 7.690% 0.218%
SC 29306 Health Care 3,275,121 3,222,183 2,799,812 Balloon 9.280% 0.243%
VA 24401 Health Care
VA 29229 Health Care
VA Health Care 2,360,000 2,342,324 1,930,697 Balloon 7.675% 0.143%
WA 98642 Health Care 2,290,000 2,276,434 1,874,840 Balloon 7.650% 0.143%
LA 71457 Health Care 2,200,000 2,183,208 1,828,095 Balloon 8.215% 0.143%
VA 23805 Health Care 2,000,000 1,992,344 1,638,449 Balloon 7.680% 0.143%
NE 68355 Health Care 1,100,000 1,092,357 910,903 Balloon 8.100% 0.143%
FL 33617 Mini Storage 2,450,000 2,444,997 1,972,397 Balloon 7.100% 0.143%
FL 33624 Mini Storage 1,900,000 1,896,120 1,529,615 Balloon 7.100% 0.143%
---------- ----------
4,341,118 3,502,012
CA 92630 Mini Storage 3,700,000 3,685,665 3,025,966 Balloon 7.622% 0.143%
NV 89102 Mini Storage 2,500,000 2,479,394 2,052,888 Balloon 7.797% 0.143%
CA 94928 Mini Storage 1,858,600 1,855,142 1,515,379 Balloon 7.520% 0.143%
CA 90670 Mini Storage 1,057,000 1,055,819 932,618 Balloon 7.370% 0.143%
AZ 85714 Mini Storage 1,050,000 1,046,689 928,496 Balloon 7.470% 0.143%
TX 78229 Franchise
TX 78130 Franchise
TX 78238 Franchise
TX Franchise 5,910,000 5,829,512 4,273,959 Balloon 8.600% 0.203%
AL 36301 Franchise 3,740,000 3,689,065 2,704,671 Balloon 8.600% 0.203%
TX 78218 Franchise 1,820,000 1,791,184 1,234,362 Balloon 8.600% 0.203%
TX 78216 Franchise 1,100,000 1,047,194 Fully Amortizing 8.600% 0.203%
---------- ----------
12,356,956 8,212,993
MD 21202 Parking 5,400,000 5,383,638 4,397,315 Balloon 7.490% 0.143%
- -----------------------------------------------------------------------------------------------------------------------------------
1,592,054,689 1,586,087,324 1,240,189,201 7.245%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SUB- NET FIRST INTEREST
SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
FEE RATE RATE DATE DATE METHOD
-------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.100% 7.032% 5/22/98 7/1/98 Actual/360
0.100% 6.768% 3/27/98 6/1/98 Actual/360
0.100% 6.759% 7/2/98 9/1/98 Actual/360
0.100% 7.079% 4/20/98 6/1/98 Actual/360
0.100% 6.759% 7/6/98 9/1/98 Actual/360
0.100% 6.718% 6/5/98 8/1/98 Actual/360
0.100% 6.970% 7/1/98 9/1/98 Actual/360
0.100% 7.076% 4/29/98 7/1/98 Actual/360
0.100% 6.754% 6/16/98 9/1/98 30/360
0.175% 8.992% 8/27/97 10/1/97 Actual/360
0.175% 8.992% 8/27/97 10/1/97 Actual/360
0.100% 8.197% 10/23/97 12/1/97 Actual/360
0.175% 8.242% 5/13/98 7/1/98 Actual/360
0.175% 7.472% 2/18/98 4/1/98 Actual/360
0.200% 9.037% 12/23/96 2/1/97 Actual/360
0.100% 7.532% 1/22/98 3/1/98 Actual/360
0.100% 7.507% 2/26/98 4/1/98 Actual/360
0.100% 8.072% 12/31/97 2/1/98 Actual/360
0.100% 7.537% 4/27/98 6/1/98 Actual/360
0.100% 7.957% 1/28/98 3/1/98 Actual/360
0.100% 6.957% 6/30/98 8/1/98 Actual/360
0.100% 6.957% 6/30/98 8/1/98 Actual/360
0.100% 7.479% 4/13/98 6/1/98 Actual/360
0.100% 7.654% 12/5/97 2/1/98 Actual/360
0.100% 7.377% 6/9/98 8/1/98 Actual/360
0.100% 7.227% 6/3/98 8/1/98 Actual/360
0.100% 7.327% 3/17/98 5/1/98 Actual/360
0.160% 8.397% 11/21/97 1/1/98 Actual/360
0.160% 8.397% 11/21/97 1/1/98 Actual/360
0.160% 8.397% 11/21/97 1/1/98 Actual/360
0.160% 8.397% 11/21/97 1/1/98 Actual/360
0.100% 7.347% 5/5/98 7/1/98 Actual/360
- -----------------------------------------------------------------------------------------------------------------------------------
7.106%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE
------- -------- ------------ -------- -------- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 21,328.54 120 360 3 117 6/1/08 No Yes(AR) 4/1/08
17,406.47 120 360 4 116 5/1/08 No Yes(AR) 3/1/08
12,680.63 120 360 1 119 8/1/08 No Yes(AS) 6/1/08
10,969.49 120 360 4 116 5/1/08 No No 3/1/08
10,124.74 120 360 1 119 8/1/08 No Yes(AS) 6/1/08
8,855.91 120 360 2 118 7/1/08 No No 4/1/08
8,411.36 120 360 1 119 8/1/08 No Yes(P) 6/1/08
8,330.92 84 360 3 81 6/1/05 No No 4/1/05
8,930.80 180 180 1 179 8/1/13 No No 6/1/13
53,419.75 180 300 12 168 9/1/12 Yes(6) Yes(AT) 8/31/05
31,942.59 180 300 12 168 9/1/12 Yes(6) Yes(AT) 8/31/05
38,134.73 180 300 10 170 11/1/12 No No 10/31/06
32,101.33 180 300 3 177 6/1/13 No No 2/1/13
26,674.49 120 300 6 114 3/1/08 No No 2/28/02
28,115.37 120 300 20 100 1/1/07 No No 2/1/00
17,709.71 120 300 7 113 2/1/08 No No 1/31/02
17,146.96 120 300 6 114 3/1/08 No No 2/28/02
17,294.48 120 300 8 112 1/1/08 No No 12/31/01
15,014.78 120 300 4 116 5/1/08 No No 4/30/02
8,562.98 120 300 7 113 2/1/08 No No 1/31/02
17,472.70 120 300 2 118 7/1/08 Yes(7) Yes(AU) 2/29/08
13,550.25 120 300 2 118 7/1/08 Yes(7) Yes(AU) 2/29/08
27,636.96 120 300 4 116 5/1/08 No No 3/1/08
18,960.43 120 300 8 112 1/1/08 No No 11/1/07
13,759.08 120 300 2 118 7/1/08 No No 5/1/08
7,296.83 120 360 2 118 7/1/08 No No 5/1/08
7,320.19 120 360 5 115 4/1/08 No No 1/31/08
51,663.02 120 240 9 111 12/1/07 Yes(8) Yes(AV) 11/30/01
32,693.69 120 240 9 111 12/1/07 Yes(8) Yes(AV) 11/30/01
16,344.53 120 224 9 111 12/1/07 Yes(8) Yes(AV) 11/30/01
13,697.33 120 120 9 111 12/1/07 Yes(8) Yes(AV) 11/30/01
39,870.41 120 300 3 117 6/1/08 No No 5/31/02
- ----------------------------------------------------------------------------------------------------------------------
11,807,298.38 124 326 4 120
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---------------------------------------
<S> <C>
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(82)/OPEN(2)/DEFEASANCE
LO(178)/OPEN(2)/DEFEASANCE
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)
LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)
LO(107)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(176)/OPEN(4)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(37)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(5)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(67)/OPEN(6)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(115)/OPEN(5)/DEFEASANCE
LO(115)/OPEN(5)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(118)/OPEN(2)/DEFEASANCE
LO(117)/OPEN(3)/DEFEASANCE
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 139
<TABLE>
<CAPTION>
TOTAL SF/
CUT-OFF UNITS/ UNIT/
SE- LOAN APPRAISAL APPRAISAL DATE LTV YEAR BUILT/ ROOM/ ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED
- ------ ------ ------------- ----- ---- ----- --------- --- ---
<C> <C> <S> <C> <C> <C> <C> <C> <C>
B345 3051869 Chateau MHP $ 4,870,000 4/8/98 65% 1970 122 Units
B346 3049301 Rexford Mobile Home 4,400,000 2/24/98 60% 1961 122 Units
B347 3056918 Rio Plaza Mobile Home Pk. 2,600,000 5/7/98 74% 1973 110 Units
B348 3052180 Vista Del Rio MHP 2,150,000 11/19/97 75% 1972 123 Units
B349 3056926 Stonegate MHP 2,050,000 5/26/98 75% 1966 68 Units
B350 3062148 Hillsdale Mobile Home Park 6,640,000 5/14/98 20% 1971 211 Units
B351 3062916 Table Rock Mobile Estate 1,700,000 6/9/98 73% 1973/1991 75 Units
B352 3051828 Foothill MHP 1,635,000 4/10/98 75% 1978 127 Units
B353 3047990 Oasis Mobile Estates 2,300,000 1/21/98 43% 1959 84 Units
N354A 50164 Rose Haven Retreat Nursing Home 2,600,000 6/4/97 85% 1974 108 Beds
N354B 50164 Golden Villa Nursing Homes 4,700,000 6/4/97 85% 1994 120 Beds
---------
N354 50164 Golden Villa and Rose Haven Nursing Homes 7,300,000 85% 228 Beds
(Roll-up)
N355A 50192 Village Manor Nursing Home 1,420,000 6/4/97 66% 1971 62 Beds
N355B 50192 Heritage Nursing Home 4,200,000 6/3/97 66% 1971/1988 164 Beds
---------
N355 50192 Heritage & Village Manor Nursing Home 5,620,000 66% 226 Beds
(Roll-up)
---------
SUB-TOTAL CROSSED LOANS 12,920,000
N356 50278 Sun Terrace Retirement and Assisted Living 6,400,000 9/1/97 74% 1985/1996 88 Units
N357 50802 Pinebrook Care Center 5,600,000 10/1/97 71% 1967/1982 123 Beds
N358 50690 Hanna Oaks Assisted Living Facility 4,900,000 10/13/97 72% 1986/1988 120 Beds
N359 50000 Windsor House West 5,000,000 11/20/96 64% 1996 94 Beds
N360A 50561 Ritenour House 1,200,000 10/17/97 71% 1940/1990 53 Beds
N360B 50561 Dudley Manor 2,100,000 10/17/97 71% 1857/1997 27 Beds
---------
N360 50561 Dudley Manor and Ritenour House (Roll-up) 3,300,000 71% 80 Beds
N361 50670 Carolee's Mountain View Assisted Living 3,280,000 10/17/97 69% 1985/1995 48 Units
N362 50531 Evangeline of Natchitoches 3,100,000 11/11/97 70% 1974/1998 98 Beds
N363 50821 Mayfair House-Petersburg 3,300,000 1/15/98 60% 1991/1996 50 Beds
N364 50528 Midland Villa Nursing Home 1,850,000 10/27/97 59% 1972 80 Beds
N365 50908 Peoples Storage-56th St. 3,300,000 4/15/98 74% 1986 58,375 SF
N366 50907 Peoples Storage-Linebaugh Ave. 2,800,000 4/15/98 68% 1987 55,825 SF
---------
SUB-TOTAL CROSSED LOANS 6,100,000
B367 3049525 U-Store Self Storage 5,850,000 3/17/98 63% 1986 934 Units
B368 3043155 West Sahara Ministorage 3,930,000 10/14/97 63% 1993/1995 686 Units
B369 3062130 Security Self Storage 4,000,000 5/6/98 46% 1987 631 Units
B370 3056959 Santa Fe Self Storage 1,410,000 4/20/98 75% 1989 419 Units
B371 3049178 Irvington Self Storage 1,400,000 2/6/98 75% 1996 336 Units
N372A 50324 Applebee's #9311 3,820,000 11/3/97 63% 1997 4,928 SF
N372B 50324 Applebee's #9053 2,580,000 11/3/97 63% 1996 4,928 SF
N372C 50324 Applebee's #8781 2,790,000 11/3/97 63% 1993 4,928 SF
---------
N372 50324 Applebee's #8781, 9053, 9311 (Roll-up) 9,190,000 63% 14,784 SF
N373 50323 Applebee's #8739 5,200,000 11/3/97 71% 1993 5,000 SF
N374 50320 Applebee's #9249 2,130,000 11/3/97 84% 1997 4,928 SF
N375 50321 Applebee's #8862 1,650,000 11/3/97 63% 1994 4,928 SF
---------
SUBTOTAL CROSSED LOANS 18,170,000
N376 50829 210 W. Baltimore St. Parking Garage 7,700,000 1/27/98 70% 1986 161,772 SF
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS/WEIGHTED AVERAGES 71%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LOAN
NET BALANCE PER
SE- RENTABLE SF/UNIT
QUENCE AREA(SF) ROOM/BED
- ------ -------- --------
<C> <C> <C>
B345 $ 25,768
B346 21,579
B347 17,489
B348 13,076
B349 22,588
B350 6,390
B351 16,657
B352 9,627
B353 11,867
N354A 23,508
N354B 32,700
N354 56,208 27,188
N355A 14,524
N355B 43,781
N355 58,305 16,401
N356 33,260 54,037
N357 79,000 32,440
N358 40,677 29,409
N359 47,811 34,279
N360A 17,014
N360B 9,200
N360 26,214 29,279
N361 21,157 47,426
N362 25,000 22,278
N363 17,679 39,847
N364 23,674 13,654
N365 58,375 42
N366 55,825 34
B367 89,507 3,946
B368 76,725 3,614
B369 73,225 2,940
B370 32,580 2,520
B371 29,980 3,115
N372A 4,928
N372B 4,928
N372C 4,928
N372 14,784 394
N373 5,000 738
N374 4,928 363
N375 4,928 212
N376 161,772 33
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 140
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES
------- ---- -------- -------- --- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99% 12/1/97 $ 695,198 $ 313,090 $ 382,108 1.49 $ 6,100 $ 50.00 12/31/97 $ 723,165
100% 3/1/98 555,794 190,422 365,372 1.75 6,100 50.00 12/31/97 573,000
100% 7/1/98 326,282 110,538 215,744 1.42 5,500 50.00 12/31/97 285,470
100% 3/31/98 315,837 120,131 195,706 1.49 6,150 50.00 12/31/97 337,584
100% 5/1/98 278,094 106,536 171,558 1.41 3,500 51.47 12/31/97 244,327
93% 3/1/98 933,370 416,449 516,921 4.86 10,550 50.00 12/31/97 927,403
97% 4/29/98 206,407 62,604 143,803 1.42 3,750 50.00 12/31/97 211,430
77% 2/20/98 344,706 215,906 128,800 1.29 4,900 38.58 12/31/97 344,882
89% 11/1/97 443,468 217,074 226,394 2.11 4,272 50.86 12/31/97 430,213
82% 12/31/97 2,244,172 1,904,383 339,789 27,000 250.00 9/30/97 2,497,673
90% 12/31/97 3,399,793 2,693,688 706,105 30,000 250.00 9/30/97 3,322,912
87% 12/31/97 5,643,965 4,598,071 1,045,894 1.63 57,000 250.00 9/30/97 5,820,585
82% 12/31/97 1,403,261 1,282,708 120,553 14,750 237.90 9/30/97 1,381,988
88% 12/31/97 3,809,355 3,292,753 516,602 41,000 250.00 9/30/97 3,813,783
86% 12/31/97 5,212,616 4,575,461 637,155 1.66 55,750 246.68 9/30/97 5,195,771
100% 3/31/97 1,952,703 1,148,116 804,587 1.76 22,000 250.00 12/31/97 1,736,621
95% 3/31/98 6,380,817 5,816,259 564,558 1.47 46,494 378.00 12/31/97 6,747,636
89% 3/31/98 1,512,087 1,044,041 468,046 1.46 36,000 300.00 9/30/96 1,391,561
99% 3/1/98 1,648,644 1,170,075 478,569 1.42 23,500 250.00 12/31/97 1,738,036
90% 12/31/97
90% 12/31/97
90% 12/31/97 1,092,420 675,329 417,091 1.96 21,000 262.50 12/31/97 986,849
98% 4/1/98 1,111,500 766,405 345,095 1.68 12,750 265.63 12/31/97 1,079,148
90% 3/31/98 2,348,941 2,055,964 292,977 1.41 24,500 250.00 6/30/97 2,353,750
93% 3/31/98 955,582 601,217 354,365 1.97 15,180 303.60 12/31/97 956,302
88% 3/31/98 1,914,858 1,749,116 165,742 1.61 23,440 293.00 12/31/97 2,065,485
92% 3/31/98 504,081 208,745 295,336 1.41 11,980 0.21 12/31/97 522,590
91% 3/31/98 463,944 222,337 241,607 1.49 11,860 0.21 12/31/97 461,843
96% 1/8/98 805,548 208,057 597,491 1.80 6,023 6.45 12/31/97 855,533
76% 8/19/97 479,422 150,101 329,321 1.45 10,000 14.58 12/31/97 479,422
99% 4/30/98 528,757 147,597 381,160 2.31 12,669 20.08 12/31/97 518,591
95% 5/1/98 246,698 109,456 137,242 1.57 3,154 7.53 12/31/97 241,366
98% 2/27/98 222,556 81,231 141,325 1.61 3,401 10.12 12/31/97 213,022
100% 3/31/98 2,129,250 1,751,001 378,249 1,577 0.32 12/31/97 93,183
100% 3/31/98 1,602,198 1,452,771 149,427 1,577 0.32 12/31/97 1,631,826
100% 3/31/98 1,906,806 1,684,157 222,649 1,577 0.32 12/31/97 1,813,605
100% 3/31/98 5,638,254 4,887,929 750,325 1.21 4,731 0.32 12/31/97 3,538,614
100% 3/31/98 2,870,730 2,397,126 473,604 1.21 1,600 0.32 12/31/97 2,698,760
100% 3/31/98 2,264,520 1,949,250 315,270 1.20 1,577 0.32 12/31/97 1,518,741
100% 3/31/98 2,184,360 1,789,681 394,679 1.20 1,577 0.32 12/31/97 2,074,549
1,122,998 474,473 648,525 1.36 24,266 0.15 12/31/97 1,201,979
- ----------------------------------------------------------------------------------------------------------------------------
95% 1.48
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MOST 2ND
MOST MOST RECENT MOST
RECENT RECENT NOI RECENT
EXPENSES NOI DSCR END DATE
----------- ----------- ------ --------
<S> <C> <C> <C> <C>
$ 300,376 $ 422,789 1.65 12/31/96
195,491 377,509 1.81 12/31/96
107,543 177,927 1.17 12/31/96
115,108 222,476 1.69 12/31/96
99,231 145,096 1.19 12/31/96
379,047 548,356 5.16 12/31/98
69,614 141,816 1.41 12/31/96
193,035 151,847 1.52 12/31/96
181,627 248,586 2.32 12/31/96
2,185,385 312,287 9/30/96
2,877,822 445,090 9/30/96
5,063,206 757,379 1.18 9/30/96
1,324,049 57,939 9/30/96
3,460,203 353,580 9/30/96
4,784,252 411,519 1.07 9/30/96
966,447 770,174 1.68
5,671,112 1,076,524 2.79 12/31/96
1,077,180 314,381 0.98 9/30/95
1,220,469 517,567 1.53 12/31/96
622,705 364,144 1.71 12/31/96
759,540 319,608 1.55 12/31/96
2,130,609 223,141 1.08 6/30/96
611,555 344,747 1.91 12/31/96
1,734,759 330,726 3.22 12/31/96
190,377 332,213 1.58 12/31/96
190,803 271,040 1.67 12/31/96
170,777 684,756 2.06 12/31/96
130,427 348,995 1.53 12/31/96
119,497 399,094 2.42 12/31/96
83,760 157,606 1.80 12/31/96
85,445 127,577 1.45
143,344 (50,161)
1,427,558 204,268 12/31/96
1,598,011 215,594 12/31/96
3,168,913 369,701 0.60 12/31/96
2,225,977 472,783 1.21 12/31/96
1,333,584 185,157 0.71
1,721,397 353,152 0.97 12/31/96
410,307 791,672 1.65 12/31/96
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
2ND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 726,406 $ 295,325 $ 431,081 1.68
562,953 189,271 373,682 1.79
258,660 197,432 61,228 0.40
322,047 108,184 213,863 1.62
241,375 112,593 128,782 1.06
898,718 411,064 487,654 4.59
208,176 87,803 120,373 1.19
253,571 178,219 75,352 0.75
435,233 180,835 254,398 2.37
2,099,713 1,804,561 295,152
2,881,255 2,328,769 552,486
4,980,968 4,133,330 847,638 1.32
1,379,757 1,244,154 135,603
3,530,758 3,096,260 434,498
4,910,515 4,340,414 570,101 1.49
5,742,209 5,459,443 282,766 0.73
1,280,727 876,353 404,374 1.26
1,209,742 890,957 318,785 0.94
497,446 271,282 226,164 1.06
975,021 646,027 328,994 1.60
2,221,467 1,919,859 301,608 1.45
796,364 506,795 289,569 1.61
1,986,085 1,780,128 205,957 2.00
487,942 173,280 314,662 1.50
447,863 186,581 261,282 1.61
831,247 157,296 673,951 2.03
453,291 123,783 329,508 1.45
491,373 121,177 370,196 2.24
233,464 73,022 160,442 1.83
1,583,561 1,508,030 75,531
1,864,679 1,723,704 140,975
3,448,240 3,231,734 216,506 0.35
3,063,140 2,531,484 531,656 1.36
2,055,699 1,781,862 273,837 0.83
1,134,178 434,729 699,449 1.46
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 142
PREPAYMENT PROVISION ANALYSIS
OUTSTANDING PRINCIPAL BALANCE(1)
<TABLE>
<CAPTION>
SEP-1998 SEP-1999 SEP-2000 SEP-2001 SEP-2002 SEP-2003 SEP-2004 SEP-2005 SEP-2006
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out........... 100.00% 100.00% 98.34% 92.24% 63.04% 62.80% 62.81% 62.47% 59.45%
Yield Maintenance.... 0.00% 0.00% 1.66% 7.76% 36.96% 37.03% 32.32% 35.51% 38.51%
3%................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.27% 0.66% 0.00%
2%................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.17% 0.00% 1.36% 0.67%
1%................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.14%
No Penalty........... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.61% 0.00% 0.23%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total................ 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========= ========= ========= ========= ========= ========= ========= ========= =========
Aggregate Outstanding
Principal Balance
of Mortgage Loans
($Millions)........ $1,586.09 $1,560.24 $1,532.50 $1,502.35 $1,469.93 $1,435.06 $1,391.71 $1,271.04 $1,239.75
% of Initial Pool
Balance............ 100.00% 98.37% 96.62% 94.72% 92.68% 90.48% 87.74% 80.14% 78.16%
<CAPTION>
SEP-2007 SEP-2008
--------- --------
<S> <C> <C>
Locked Out........... 61.72% 51.97%
Yield Maintenance.... 27.84% 45.87%
3%................... 0.00% 0.00%
2%................... 0.00% 0.00%
1%................... 0.70% 0.00%
No Penalty........... 9.73% 2.15%
--------- -------
Total................ 100.00% 100.00%
========= =======
Aggregate Outstanding
Principal Balance
of Mortgage Loans
($Millions)........ $1,160.91 $186.50
% of Initial Pool
Balance............ 73.19% 11.76%
</TABLE>
- ---------------
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments.
A-5
<PAGE> 143
PREPAYMENT PROVISION ANALYSIS
CUT-OFF DATE BALANCE(1)
<TABLE>
<CAPTION>
INITIAL SEP-1999 SEP-2000 SEP-2001 SEP-2002 SEP-2003 SEP-2004 SEP-2005
--------- --------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out........... 100.00% 98.37% 95.02% 87.37% 58.43% 56.82% 55.11% 50.06%
Yield Maintenance.... 0.00% 0.00% 1.60% 7.35% 34.25% 33.50% 28.36% 28.46%
3%................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.11% 0.53%
2%................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.15% 0.00% 1.09%
1%................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty........... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.17% 0.00%
Paid Down............ 0.00% 1.63% 3.38% 5.28% 7.32% 9.52% 12.26% 19.86%
--------- --------- ---------- ---------- ---------- ---------- ---------- ----------
Total................ 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========= ========= ========== ========== ========== ========== ========== ==========
Aggregate Outstanding
Principal Balance
of Mortgage Loans
($Millions)........ $1,586.09 $1,560.24 $ 1,532.50 $ 1,502.35 $ 1,469.93 $ 1,435.06 $ 1,391.71 $ 1,271.04
% of Initial Pool
Balance............ 100.00% 98.37% 96.62% 94.72% 92.68% 90.48% 87.74% 80.14%
<CAPTION>
SEP-2006 SEP-2007 SEP-2008
---------- ---------- --------
<S> <C> <C> <C>
Locked Out........... 46.47% 45.18% 6.11%
Yield Maintenance.... 30.10% 20.38% 5.39%
3%................... 0.00% 0.00% 0.00%
2%................... 0.52% 0.00% 0.00%
1%................... 0.89% 0.51% 0.00%
No Penalty........... 0.18% 7.12% 0.25%
Paid Down............ 21.84% 26.81% 88.24%
---------- ---------- -------
Total................ 100.00% 100.00% 100.00%
========== ========== =======
Aggregate Outstanding
Principal Balance
of Mortgage Loans
($Millions)........ $ 1,239.75 $ 1,160.91 $186.50
% of Initial Pool
Balance............ 78.16% 73.19% 11.76%
</TABLE>
(1) Prepayment provisions in effect as a percentage of the Initial Pool Balance
assuming no prepayments.
A-6
<PAGE> 144
PROPERTY TYPE
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE MIN/MAX AVERAGE
MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING UNDERWRITING CUT-OFF DATE
PROPERTY TYPE PROPERTIES PROPERTIES BALANCE BALANCE DSCR DSCR LTV RATIO
------------- ---------- ---------- -------------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily.......... 146 38.3% $ 521,436,965 32.9% 1.47x 1.14/2.52x 73.8%
Retail............... 91 23.9% 470,433,246 29.7% 1.43x 1.16/2.12x 67.1%
Office............... 47 12.3% 225,938,371 14.2% 1.53x 1.34/3.03x 72.0%
Industrial........... 42 11.0% 190,099,252 12.0% 1.42x 1.27/2.42x 75.8%
Hotel................ 12 3.1% 73,036,065 4.6% 1.75x 1.15/2.77x 62.9%
Mobile Home.......... 15 3.9% 37,650,331 2.4% 1.74x 1.29/4.86x 62.0%
Health Care.......... 14 3.7% 35,288,674 2.2% 1.63x 1.41/1.97x 71.8%
Mini Storage......... 7 1.8% 14,463,826 0.9% 1.67x 1.41/2.31x 65.1%
Franchise............ 6 1.6% 12,356,956 0.8% 1.21x 1.20/1.21x 68.7%
Parking.............. 1 0.3% 5,383,638 0.3% 1.36x 1.36/1.36x 69.9%
--- ----- -------------- ----- ----- ---------- ----
Total/ Wtd Avg....... 381 100.0% $1,586,087,324 100.0% 1.48x 1.14/4.86x 70.8%
=== ===== ============== ===== ===== ========== ====
<CAPTION>
WEIGHTED
MIN/MAX AVERAGE
CUT-OFF DATE MORTGAGE
PROPERTY TYPE LTV RATIO RATE
------------- ------------ --------
<S> <C> <C>
Multifamily.......... 47.9/85.2% 7.099%
Retail............... 35.4/79.9% 7.279%
Office............... 35.9/79.2% 7.244%
Industrial........... 49.7/82.8% 7.207%
Hotel................ 38.8/69.8% 7.433%
Mobile Home.......... 20.3/74.9% 6.960%
Health Care.......... 59.0/84.9% 8.478%
Mini Storage......... 46.4/74.9% 7.453%
Franchise............ 63.4/84.1% 8.600%
Parking.............. 69.9/69.9% 7.490%
---------- -----
Total/ Wtd Avg....... 20.3/85.2% 7.245%
========== =====
</TABLE>
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
CUT-OFF DATE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
BALANCES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
$386,353 - $999,999......... 50 13.3% $ 38,382,785 2.4% 1.67x 65.6% 7.651%
$1,000,000 - $1,999,999....... 119 31.6% 172,592,265 10.9% 1.58x 69.7% 7.411%
$2,000,000 - $2,999,999....... 59 15.7% 148,337,730 9.4% 1.56x 70.3% 7.364%
$3,000,000 - $3,999,999....... 55 14.6% 193,868,663 12.2% 1.52x 70.0% 7.388%
$4,000,000 - $4,999,999....... 19 5.1% 86,426,104 5.4% 1.54x 70.3% 7.371%
$5,000,000 - $7,499,999....... 28 7.4% 168,887,343 10.6% 1.52x 72.3% 7.226%
$7,500,000 - $9,999,999....... 17 4.5% 143,145,265 9.0% 1.43x 73.4% 7.240%
$10,000,000 - $14,999,999....... 10 2.7% 119,772,634 7.6% 1.42x 74.2% 7.172%
$15,000,000 - $19,999,999....... 7 1.9% 119,131,728 7.5% 1.40x 75.5% 6.963%
$20,000,000 - $29,999,999....... 8 2.1% 207,612,356 13.1% 1.40x 75.6% 7.156%
$30,000,000 - $34,999,999....... 1 0.3% 32,887,200 2.1% 1.32x 78.3% 7.160%
$35,000,000 - $74,317,972....... 3 0.8% 155,043,252 9.8% 1.42x 57.0% 7.032%
--- ----- ------------- ----- ----- ---- -----
Total/Wtd Avg................... 376 100.0% 1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============= ===== ===== ==== =====
</TABLE>
A-7
<PAGE> 145
GEOGRAPHIC DISTRIBUTION(1)
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MORTGAGED MORTGAGED CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
PROPERTY LOCATION PROPERTIES PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
----------------- ---------- ---------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
CA................... 127 33.3% $ 435,659,576 27.5% 1.55x 68.3% 7.136%
Los Angeles........ 32 8.4% 105,088,986 6.6% 1.45x 73.1% 7.147%
Santa Clara........ 14 3.7% 59,232,757 3.7% 1.61x 64.1% 7.138%
Alameda............ 10 2.6% 38,446,980 2.4% 1.62x 64.1% 7.148%
San Diego.......... 9 2.4% 30,083,803 1.9% 1.65x 63.5% 7.201%
San Francisco...... 5 1.3% 24,508,260 1.5% 1.58x 56.5% 7.225%
Madera............. 2 0.5% 22,496,197 1.4% 1.41x 76.2% 7.003%
Orange............. 10 2.6% 20,392,382 1.3% 1.55x 68.8% 7.316%
Riverside.......... 3 0.8% 14,157,738 0.9% 1.36x 69.5% 6.954%
San Mateo.......... 5 1.3% 13,771,987 0.9% 1.68x 65.5% 7.138%
Fresno............. 5 1.3% 13,476,543 0.8% 1.54x 73.6% 6.848%
Other Counties..... 32 8.4% 94,003,943 5.9% 1.58x 69.3% 7.134%
NC................... 10 2.6% 153,240,124 9.7% 1.42x 56.1% 7.120%
MD................... 10 2.6% 119,168,943 7.5% 1.35x 78.5% 7.268%
FL................... 29 7.6% 114,366,151 7.2% 1.47x 71.5% 7.260%
NJ................... 5 1.3% 84,038,635 5.3% 1.44x 74.9% 7.062%
TX................... 32 8.4% 81,155,037 5.1% 1.43x 73.6% 8.122%
WA................... 16 4.2% 73,674,781 4.6% 1.54x 70.4% 7.277%
AZ................... 17 4.5% 57,755,509 3.6% 1.49x 74.2% 7.057%
VA................... 9 2.4% 57,232,752 3.6% 1.54x 73.4% 7.416%
LA................... 6 1.6% 43,788,163 2.8% 1.36x 78.6% 7.326%
NV................... 7 1.8% 43,424,822 2.7% 1.42x 76.9% 7.101%
MN................... 21 5.5% 31,935,027 2.0% 1.59x 73.1% 7.127%
NY................... 10 2.6% 27,436,257 1.7% 1.58x 72.4% 7.285%
IL................... 14 3.7% 26,875,421 1.7% 1.51x 75.0% 7.377%
GA................... 6 1.6% 24,598,347 1.6% 1.39x 76.1% 7.677%
SC................... 10 2.6% 23,932,615 1.5% 1.44x 68.5% 7.666%
DC................... 1 0.3% 23,684,547 1.5% 1.39x 78.9% 6.860%
CO................... 5 1.3% 22,329,538 1.4% 1.53x 74.6% 7.039%
NM................... 9 2.4% 22,153,374 1.4% 1.50x 70.3% 7.266%
MO................... 4 1.0% 18,269,647 1.2% 1.49x 72.4% 7.052%
IN................... 4 1.0% 15,778,018 1.0% 1.49x 75.4% 7.219%
PA................... 3 0.8% 14,547,051 0.9% 1.32x 75.8% 7.019%
UT................... 4 1.0% 11,934,394 0.8% 1.73x 69.0% 7.277%
TN................... 4 1.0% 11,425,847 0.7% 1.55x 75.3% 7.048%
MA................... 2 0.5% 11,063,674 0.7% 1.40x 76.2% 7.048%
OR................... 4 1.0% 7,741,259 0.5% 1.36x 73.3% 7.400%
OH................... 1 0.3% 6,942,865 0.4% 1.53x 85.2% 7.495%
AL................... 2 0.5% 6,251,463 0.4% 1.37x 70.3% 8.416%
CT................... 2 0.5% 3,249,229 0.2% 1.40x 75.7% 7.173%
KS................... 1 0.3% 2,991,795 0.2% 1.45x 74.0% 6.980%
OK................... 2 0.5% 2,876,067 0.2% 1.96x 60.6% 7.286%
MS................... 1 0.3% 2,317,597 0.1% 1.84x 55.8% 7.280%
MI................... 1 0.3% 1,641,705 0.1% 1.64x 74.6% 7.616%
AR................... 1 0.3% 1,514,738 0.1% 1.61x 79.7% 7.110%
NE................... 1 0.3% 1,092,357 0.1% 1.61x 59.0% 8.100%
--- ----- -------------- ----- ---- ---- -----
Total/Weighted
Average............ 381 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ==== ==== =====
</TABLE>
- ---------------
(1) States or district in which the respective Mortgaged Properties are located.
A-8
<PAGE> 146
UNDERWRITING DEBT SERVICE COVERAGE RATIO
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
UNDERWRITING MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DSCRS LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1.14x - 1.19x........ 3 0.8% $ 15,400,771 1.0% 1.16x 71.8% 8.114%
1.20x - 1.29x........ 12 3.2% 54,511,666 3.4% 1.26x 72.7% 7.832%
1.30x - 1.34x........ 34 9.0% 314,956,127 19.9% 1.32x 76.7% 7.183%
1.35x - 1.39x........ 48 12.8% 248,958,650 15.7% 1.37x 76.0% 7.170%
1.40x - 1.49x........ 94 25.0% 423,647,923 26.7% 1.44x 67.3% 7.212%
1.50x - 1.59x........ 64 17.0% 201,019,345 12.7% 1.54x 72.3% 7.167%
1.60x - 1.69x........ 50 13.3% 133,562,697 8.4% 1.64x 69.1% 7.486%
1.70x - 1.79x........ 33 8.8% 112,466,123 7.1% 1.74x 65.2% 7.202%
1.80x - 1.89x........ 14 3.7% 23,320,798 1.5% 1.83x 61.7% 7.344%
1.90x - 1.99x........ 8 2.1% 25,408,151 1.6% 1.95x 60.0% 7.137%
2.00x - 2.99x........ 14 3.7% 30,488,691 1.9% 2.23x 51.5% 7.098%
3.00x - 4.86x........ 2 0.5% 2,346,383 0.1% 4.08x 26.9% 7.150%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
CUT-OFF DATE LOAN-TO-VALUE RATIO
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DATE LTV RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------------- --------- -------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
20.3% - 29.9%........ 1 0.3% $ 1,348,235 0.1% 4.86x 20.3% 6.861%
30.0% - 49.9%........ 15 4.0% 108,189,752 6.8% 1.67x 38.3% 7.119%
50.0% - 59.9%........ 33 8.8% 81,620,873 5.1% 1.71x 55.5% 7.268%
60.0% - 64.9%........ 35 9.3% 109,109,524 6.9% 1.56x 62.8% 7.344%
65.0% - 69.9%........ 65 17.3% 234,750,855 14.8% 1.52x 68.2% 7.333%
70.0% - 74.9%........ 128 34.0% 365,684,266 23.1% 1.49x 73.5% 7.396%
75.0% - 79.9%........ 89 23.7% 628,095,603 39.6% 1.38x 78.3% 7.108%
80.0% - 85.19%....... 10 2.7% 57,288,216 3.6% 1.45x 82.7% 7.442%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
MATURITY DATE LOAN-TO-VALUE RATIO
<TABLE>
<CAPTION>
WEIGHTED
RANGE OF NUMBER % OF WEIGHTED AVERAGE WEIGHTED
MATURITY OF % OF AGGREGATE INITIAL AVERAGE MATURITY AVERAGE
DATE LTV MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- -------------- ------- ------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0% - 24.9%................ 27 7.2% $ 132,486,002 8.4% 1.48x 0.8% 7.184%
25.0% - 49.9%............... 43 11.4% 149,512,656 9.4% 1.70x 45.2% 7.523%
50.0% - 59.9%............... 99 26.3% 342,268,648 21.6% 1.54x 56.0% 7.300%
60.0% - 64.9%............... 71 18.9% 242,121,685 15.3% 1.49x 62.2% 7.224%
65.0% - 69.9%............... 101 26.9% 489,979,835 30.9% 1.42x 67.5% 7.162%
70.0% - 74.9%............... 33 8.8% 221,584,978 14.0% 1.37x 71.6% 7.203%
75.0% - 75.96%.............. 2 0.5% 8,133,520 0.5% 1.54x 75.8% 7.597%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg............... 376 100.0% $1,586,087,324 100.0% 1.48x 57.1% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
A-9
<PAGE> 147
MORTGAGE RATES
<TABLE>
<CAPTION>
WEIGHTED
NUMBER % OF WEIGHTED AVERAGE WEIGHTED
RANGE OF OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
MORTGAGE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
RATES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- -------------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
6.640% - 6.999%.............. 78 20.7% $ 406,674,496 25.6% 1.51x 72.0% 6.866%
7.000% - 7.249%.............. 121 32.2% 702,024,638 44.3% 1.46x 70.2% 7.102%
7.250% - 7.499%.............. 66 17.6% 202,965,127 12.8% 1.53x 70.4% 7.359%
7.500% - 7.749%.............. 44 11.7% 107,540,865 6.8% 1.50x 71.3% 7.616%
7.750% - 7.999%.............. 28 7.4% 58,692,800 3.7% 1.46x 68.7% 7.846%
8.000% - 8.499%.............. 13 3.5% 37,160,932 2.3% 1.50x 71.3% 8.252%
8.500% - 8.999%.............. 11 2.9% 42,767,801 2.7% 1.26x 73.1% 8.740%
9.000% - 9.499%.............. 14 3.7% 26,873,632 1.7% 1.56x 70.8% 9.157%
9.500% - 9.830%.............. 1 0.3% 1,387,033 0.1% 1.40x 67.7% 9.830%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg................ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
WEIGHTED
NUMBER % OF WEIGHTED AVERAGE WEIGHTED
ORIGINAL TERM OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
TO MATURITY MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- -------------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
84.......................... 17 4.5% $ 169,740,121 10.7% 1.44x 58.7% 7.104%
96.......................... 1 0.3% 3,994,626 0.3% 1.72x 55.5% 6.769%
110.......................... 1 0.3% 4,030,359 0.3% 1.42x 69.5% 9.100%
113.......................... 1 0.3% 26,009,898 1.6% 1.63x 68.4% 7.430%
116.......................... 1 0.3% 39,751,581 2.5% 1.33x 79.3% 7.100%
120.......................... 305 81.1% 1,103,604,323 69.6% 1.51x 71.9% 7.212%
121.......................... 1 0.3% 2,327,432 0.1% 1.38x 72.7% 7.330%
124.......................... 1 0.3% 4,594,455 0.3% 1.42x 79.9% 7.130%
144.......................... 3 0.8% 36,531,653 2.3% 1.34x 77.6% 7.566%
168.......................... 1 0.3% 5,800,000 0.4% 1.18x 66.1% 7.285%
180.......................... 39 10.4% 175,126,800 11.0% 1.41x 73.0% 7.484%
216.......................... 1 0.3% 5,449,267 0.3% 1.27x 68.1% 7.146%
240.......................... 3 0.8% 7,186,134 0.5% 1.35x 67.9% 7.620%
300.......................... 1 0.3% 1,940,675 0.1% 1.31x 74.6% 7.259%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg................ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
ORIGINAL AMORTIZATION TERM (1)
<TABLE>
<CAPTION>
WEIGHTED
ORIGINAL NUMBER % OF WEIGHTED AVERAGE WEIGHTED
AMORTIZATION OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
TERM MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- -------------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
84.......................... 1 0.3% $ 74,317,972 4.7% 1.47x 35.4% 7.060%
120.......................... 3 0.8% 4,467,169 0.3% 1.70x 42.4% 7.438%
156.......................... 1 0.3% 5,800,000 0.4% 1.18x 66.1% 7.285%
180.......................... 16 4.3% 31,976,550 2.0% 1.46x 59.8% 7.337%
216.......................... 1 0.3% 5,449,267 0.3% 1.27x 68.1% 7.146%
224.......................... 1 0.3% 1,791,184 0.1% 1.20x 84.1% 8.600%
233.......................... 1 0.3% 26,009,898 1.6% 1.63x 68.4% 7.430%
240.......................... 15 4.0% 41,034,184 2.6% 1.50x 66.3% 7.799%
264.......................... 1 0.3% 18,473,776 1.2% 1.33x 66.0% 6.955%
270.......................... 2 0.5% 1,746,235 0.1% 1.34x 74.6% 7.660%
276.......................... 1 0.3% 7,270,651 0.5% 1.45x 69.2% 7.020%
290.......................... 1 0.3% 4,030,359 0.3% 1.42x 69.5% 9.100%
300.......................... 88 23.4% 225,743,429 14.2% 1.62x 67.9% 7.629%
360.......................... 244 64.9% 1,137,976,650 71.7% 1.46x 74.5% 7.150%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg................ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
- ---------------
(1) For Mortgage Loans which accrue interest on the basis of actual days elapsed
during each calendar month and a 360-day year, the amortization term is the
term in which the loan would amortize if interest paid on the basis of a
30-day month and a 360-day year. The actual amortization term would be
longer.
A-10
<PAGE> 148
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
RANGE OF
REMAINING NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
TERMS TO OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MATURITY MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- -------------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
69 - 83................ 17 4.5% $ 169,740,121 10.7% 1.44x 58.7% 7.104%
84 - 119............... 310 82.4% 1,179,718,218 74.4% 1.51x 72.1% 7.218%
120 - 179............... 44 11.7% 222,052,908 14.0% 1.39x 73.7% 7.485%
180 - 296............... 5 1.3% 14,576,077 0.9% 1.32x 68.9% 7.395%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........... 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
YEAR OF MORTGAGE ORIGINATION
<TABLE>
<CAPTION>
WEIGHTED
NUMBER % OF WEIGHTED AVERAGE WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
ORIGINATION LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------- --------- -------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1996......................... 1 0.3% $ 3,222,183 0.2% 1.42x 64.4% 9.280%
1997......................... 54 14.4% 167,963,695 10.6% 1.42x 73.7% 8.113%
1998......................... 321 85.4% 1,414,901,446 89.2% 1.49x 70.5% 7.137%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg................ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
YEAR OF MORTGAGE MATURITY
<TABLE>
<CAPTION>
WEIGHTED
NUMBER % OF WEIGHTED AVERAGE WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
MATURITY LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
2004......................... 4 1.1% $ 9,039,061 0.6% 1.46x 69.3% 8.357%
2005......................... 13 3.5% 160,701,060 10.1% 1.43x 58.1% 7.033%
2006......................... 1 0.3% 3,994,626 0.3% 1.72x 55.5% 6.769%
2007......................... 24 6.4% 101,891,802 6.4% 1.42x 72.7% 8.117%
2008......................... 286 76.1% 1,078,426,245 68.0% 1.51x 72.1% 7.135%
2009......................... 1 0.3% 28,460,566 1.8% 1.34x 76.9% 7.610%
2010......................... 2 0.5% 8,071,087 0.5% 1.37x 79.9% 7.410%
2012......................... 16 4.3% 35,451,623 2.2% 1.52x 70.7% 8.607%
2013......................... 24 6.4% 145,475,177 9.2% 1.37x 73.3% 7.202%
2016......................... 1 0.3% 5,449,267 0.3% 1.27x 68.1% 7.146%
2018......................... 3 0.8% 7,186,134 0.5% 1.35x 67.9% 7.620%
2023......................... 1 0.3% 1,940,675 0.1% 1.31x 74.6% 7.259%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg................ 376 100.0% $1,586,087,324 100.0% 1.48x 70.8% 7.245%
=== ===== ============== ===== ===== ==== =====
</TABLE>
A-11
<PAGE> 149
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
N001 50752 Parkview Towers Apts Multifamily
N002 50659 Summerwind Apartments Multifamily $ 28,750 $ 28,990
N003 50958 Vanderbilt Apts. I & II Multifamily 76,375 76,375
N004 50750 Sonterra at Williams Centre (Apt) Multifamily
N005 50925 Colony Hills Apartments Multifamily
N006 50924 Grandes Cortez Apartments Multifamily
N007 50923 Canyon Walk Apartments Multifamily 37,661
N008 50921 Paseo Del Sol Apartments Multifamily
N009 50646 599-621 Front Street Multifamily 31,375 21,386
N010 50645 299 Jackson Street Multifamily 27,875 11,192
N011 50654 15-35 Elk Street Multifamily 30,188 14,019
N012 50644 100 Jerusalem Avenue Multifamily 57,625 47,022
N013 50655 357 Jackson Street Apartments Multifamily 20,688 14,001
N014 50656 51 Bell Street Apartments Multifamily 16,563 5,225
B015 3054921 Kimberly Place Apartments Multifamily
N016 50691 Parcwood Apartments Multifamily 21,089 21,089
N017 50094 Colonial Homes Apartments Multifamily 1,600,000 255,518
N018 50790 Relais Esplanade Apartments Multifamily
B019 3047180 Dry Creek Properties Multifamily
N020 50971 Spring Villas Apartments Multifamily
B021 3052107 Gentry Walk Apartments Multifamily
N022 50842 Pioneer Warehouse Lofts Multifamily 2,500
N023 50013 St. Charles Regency Apts. Multifamily 514,963 107,496
N024 50920 Southwest Village Apartments Multifamily 328,106 338,697
N025 50936 Twin Lakes Manor Apartments Multifamily 115,850 116,053
N026 50844 Dos Santos Apts Multifamily 23,125 23,395
N027 50831 Prospect Creek Apts Multifamily 23,750 23,999
B028 3052032 Villa Pacific Apartments Multifamily
N029 50836 Laurel Gardens Cooperative, Inc Multifamily 61,123 61,320
N030 50122 Beacon Hill Apartments Multifamily 906,000
B031 3054673 Queen Vista Apartments Multifamily 50,000 115,833
N032 50784 Amberwood Apts Multifamily 13,475 13,475
N033 50492 Franklin Regency Apartments Multifamily 10,375 10,375
N034 50997 Whispering Meadows Apartments Multifamily 58,125 58,125
B035 3051950 Mahara Condo Apartments Multifamily
B036 3057007 Hyde Park Apartments Multifamily
B037 3051125 Village Apartments Multifamily 100,000 101,328
B038 3055316 Happy Village Apartments Multifamily
B039 3048246 Hickory Terrace Apartments Multifamily
B040 3052248 Rockshire Apartments Multifamily 23,563 23,666
N041 50865 Highland Terrace Apts Multifamily 34,438 34,602
B042 3056934 Bayfill Apartments Multifamily
N043 50815 Sierra Chase Apartments Multifamily 17,375 17,454
N044 50806 Park Place Apts Multifamily 3,750
B045 3049152 De Soto Apartments Multifamily
B046 3047040 Park Meridian Apartments Multifamily 4,000 4,009
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
N001 No 8/17/98
N002 $100,000 $ 86,400 $137,877 Yes 8/17/98
N003 54,000 114,400 63,533 Yes 8/17/98
N004 Yes 8/19/98
N005 64,200 5,350 Yes 8/17/98
N006 18,000 37,242 3,104 Yes 8/17/98
N007 80,000 41,500 3,458 Yes 8/17/98
N008 52,750 4,396 Yes 8/17/98
N009 62,700 36,784 Yes 8/14/98
N010 90,000 56,496 48,440 Yes 8/14/98
N011 50,000 40,380 74,387 Yes 8/14/98
N012 50,000 40,800 74,655 Yes 8/14/98
N013 40,000 10,848 46,922 Yes 8/14/98
N014 40,000 9,456 46,105 Yes 8/14/98
B015 76,808 12,809 Yes 8/14/98
N016 5,850 70,200 23,400 Yes 8/17/98
N017 48,400 53,669 Yes 8/17/98
N018 30,000 85,680 64,242 Yes 8/14/98
B019 49,500 12,392 Yes 8/14/98
N020 42,876 Yes 8/18/98
B021 40,585 10,160 Yes 8/14/98
N022 Yes 8/17/98
N023 44,200 16,793 Yes 8/17/98
N024 106,240 38,510 Yes 8/18/98
N025 69,744 5,812 Yes 8/17/98
N026 26,400 4,406 Yes 8/17/98
N027 60,996 15,307 Yes 8/17/98
B028 Yes 8/14/98
N029 41,304 6,888 Yes 8/17/98
N030 86,400 110,150 Yes 8/17/98
B031 50,000 50,226 Yes 8/14/98
N032 30,500 5,083 Yes 8/17/98
N033 27,144 11,310 No 8/17/98
N034 45,000 72,000 45,000 Yes 8/17/98
B035 Yes 8/14/98
B036 27,564 2,297 Yes 8/14/98
B037 88,272 29,501 Yes 8/14/98
B038 74,783 Yes 8/14/98
B039 23,308 7,786 Yes 8/14/98
B040 52,518 8,759 Yes 8/14/98
N041 55,600 13,905 Yes 8/17/98
B042 5,000 417 Yes 8/14/98
N043 32,551 10,882 Yes 8/18/98
N044 50,000 26,880 55,827 Yes 8/17/98
B045 35,371 14,769 Yes 8/14/98
B046 20,970 1,748 Yes 8/14/98
</TABLE>
B-1
<PAGE> 150
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B047 3052396 The Elms Apartments Multifamily
N048 50279 Maplewood Senior Citizens Apartments Multifamily $ 46,750
N049 50763 Stonebrook Square Apartments Multifamily 8,212 $ 5,870
N050 50493 Jessica Apts Multifamily 12,750 12,750
B051 3062247 St. Francis Towers Multifamily
B052 3051695 4532 Murietta Avenue Multifamily
B053 3052370 Pacific Vista Apartments Multifamily
N054 50840 Vermont Hills Apts Multifamily 5,263 5,263
N055 50689 New Heritage Apts Multifamily 6,375 6,375
N056 50710 Frederick Gardens Apts Multifamily 49,313 49,313
N057 50895 Bay Harbor Apts Multifamily 301,756 147,172
N058 50744 Alder Creek Condominiums (Apt) Multifamily 9,188 9,188
N059 50866 Tara Hills Apts Multifamily 119,975 120,548
N060 50854 Pantano Villas Apartments Multifamily 30,000 30,037
N061 50959 Wil-Ru Apartments Multifamily
N062 50884 Quail Hollow Apartments Multifamily 13,219 13,219
N063 50772 Spring Valley Apartments Multifamily
N064 50824 Pheasant Run Apartments Multifamily 56,563
N065 50553 Spring Garden Apts Multifamily
B066 3052230 Karolena Park Apartments Multifamily 11,000 11,060
N067 50554 Pershing Oaks Apts Multifamily 14,500
N068 50841 Valley Vista Apartments Multifamily
N069 50588 Fleur De Leis Apts Multifamily
B070 3056801 Dorset House Multifamily
B071 3062239 Ridgewood Apartments Multifamily 40,094 40,168
B072 3057015 Hunters Glen Apartments Multifamily
N073 50427 365 W. 20th St. Apartments Multifamily
N074 50290 6011 Gaston Avenue Apartments Multifamily
N075 50272 Golf Villa Apartments Multifamily 138,438 25,769
B076 3051844 Sawgrass Estates Multifamily
B077 3049590 Country Lane Apartments Multifamily
N078 50922 Hilltop Towers Apartments Multifamily
B079 3057023 Victoria Park Apartments Multifamily
N080 50823 Pomona West Apts Multifamily 7,775 7,813
N081 50765 Westview Apartments -- Dalton Multifamily 9,344 6,422
N082 50830 Coldwater Crossing Apartments Multifamily 2,500 2,526
B083 3049483 Hacienda Silva Apartment Multifamily
B084 3049712 110 Delaware Apartments Multifamily 1,563 1,568
B085 3049863 Riverside Tower Apartments Multifamily
B086 3049855 Terrace Apartments Multifamily
N087 50155 Commodore Apartments Multifamily 55,942
N088 50206 The White House Dormitory Multifamily 5,760 6,007
N089 50901 Aztec Villa Apartments Multifamily 58,148 58,148
B090 3048121 Bethany Towers Multifamily
B091 3051786 Evergreen Apartments LLC Multifamily
B092 3046414 Railview Apartments Multifamily 20,000
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B047 $ 21,900 $ 5,479 Yes 8/14/98
N048 No 8/17/98
N049 $ 92,250 35,004 40,227 Yes 8/17/98
N050 13,725 5,719 No 8/17/98
B051 16,465 1,372 Yes 8/14/98
B052 8,050 1,342 Yes 8/14/98
B053 14,512 3,631 Yes 8/14/98
N054 8,000 17,280 12,320 Yes 8/17/98
N055 1,292 15,500 6,245 Yes 8/17/98
N056 55,020 23,017 Yes 8/18/98
N057 42,600 3,550 Yes 8/18/98
N058 20,000 24,000 16,463 Yes 8/17/98
N059 57,566 14,397 Yes 8/17/98
N060 Yes 8/18/98
N061 17,400 1,450 Yes 8/17/98
N062 58,500 4,875 Yes 8/17/98
N063 10,000 24,000 18,097 Yes 8/17/98
N064 21,936 Yes 8/17/98
N065 26,400 13,490 Yes 8/14/98
B066 13,971 3,495 Yes 8/14/98
N067 25,000 21,756 36,377 Yes 8/14/98
N068 20,000 29,700 27,539 Yes 8/17/98
N069 87,000 39,600 111,266 Yes 8/17/98
B070 13,662 2,278 Yes 8/14/98
B071 28,194 2,350 Yes 8/14/98
B072 21,460 1,788 Yes 8/14/98
N073 11,100 5,571 Yes 8/17/98
N074 6,750 5,141 Yes 8/17/98
N075 33,996 16,815 Yes 8/14/98
B076 16,321 2,721 Yes 8/14/98
B077 17,613 2,936 Yes 8/14/98
N078 31,644 Yes 8/17/98
B079 32,284 2,690 Yes 8/14/98
N080 15,456 2,579 Yes 8/18/98
N081 98,000 25,248 95,670 Yes 8/17/98
N082 36,000 6,014 Yes 8/17/98
B083 3,069 768 Yes 8/14/98
B084 14,905 4,977 Yes 8/14/98
B085 8,892 2,226 Yes 8/14/98
B086 8,960 2,243 Yes 8/14/98
N087 10,116 9,363 Yes 8/17/98
N088 12,948 10,969 Yes 8/17/98
N089 100,000 60,800 105,067 Yes 8/17/98
B090 4,628 1,546 Yes 8/14/98
B091 10,989 2,749 Yes 8/14/98
B092 15,000 22,559 Yes 8/14/98
</TABLE>
B-2
<PAGE> 151
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B093 3062411 Metro View I & II Multifamily
B094 3062098 Princeton Place Apartments Multifamily
N095 50795 Rosewood Apartments Multifamily $ 33,188 $ 33,718
N096 50019 Oak Street Apartments Multifamily
B097 3050929 Hillcrest Apartments Multifamily
B098 3062957 Durfee Terrace Apartments Multifamily
N099 50743 Cedar Creek Apts Multifamily 9,001 9,001
B100 3046406 Oak Hills Manor Apartments Multifamily
B101 3051687 Broadway Manor Apartments Multifamily 8,281
B102 3062106 Marshall Reed Apartments Multifamily
N103 50415 Westwood Parc Multifamily
N104 50988 112 1st Avenue Multifamily 625
N105 50845 Norwood Village Apartments Multifamily 14,041 14,041
B106 3049038 White Crane Building Multifamily
B107 3062114 Bingham Court Apartments Multifamily 31,665 31,751
B108 3054780 Manhattan Court Apartments Multifamily 1,563 1,566
B109 3049020 Sheffield Apartments Multifamily 17,500 17,624
B110 3054830 Patricia Avenue Apartments Multifamily
B111 3056850 Mississippi View Apartments Multifamily
B112 3051091 Romney Apartments Riverside Multifamily
N113 50085 Wedgewood Apartments Multifamily 251,928 205,717
N114 50411 Embassy House Multifamily
B115 3055464 Caltempo Apartments Multifamily
B116 3052305 Colorado Court Apartments Multifamily
B117 3052313 Victoria Lake Apartments Multifamily
B118 3049665 Viewcrest Apartments Multifamily 27,181 11,766
B119 3056736 Raintree Apartments Multifamily
B120 3049319 Catalina Vista Apartments Multifamily 22,438
N121 50775 Palmetto Garden Apts Multifamily
B122 3049004 The Buckingham Multifamily
B123 3049012 The Grace Multifamily 7,250 7,304
N124 50996 Del Capri Apartments Multifamily 1,619
N125 50413 Greenbriar Apts. Multifamily
B126 3054590 Woodbridge Terrace Apartments Multifamily 3,750 3,763
B127 3051133 Bear Creek North Apartments Multifamily 30,000
B128 3046604 Morningstar Apartments Multifamily 12,500 12,569
N129 50150 Silver Sage Apartments Multifamily
B130 3050903 Issaquah Valley Place Multifamily
N131 50676 Village Green II Apartments Multifamily 10,000 10,000
N132 50742 Oak Ridge Apts Multifamily 13,750 13,750
N133 50882 Garden Park Apartments Multifamily
B134 3056751 Verona Apartments Multifamily
B135 3062445 Kachina Court Multifamily 9,375 9,233
B136 3052297 Lakeview Apartments Multifamily
B137 3054798 Sunplace Apartments Multifamily
B138 3049749 Redmond Apartments Multifamily 5,313 5,352
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B093 $ 15,160 Yes 8/14/98
B094 25,781 $ 2,148 Yes 8/14/98
N095 34,000 11,393 Yes 8/17/98
N096 $ 3,000 8,604 14,008 Yes 8/14/98
B097 5,759 961 Yes 8/14/98
B098 13,322 Yes 8/14/98
N099 19,430 5,870 Yes 8/19/98
B100 9,600 1,601 Yes 8/14/98
B101 15,576 3,896 Yes 8/14/98
B102 34,508 2,876 Yes 8/14/98
N103 7,000 18,804 14,230 Yes 8/14/98
N104 2,960 Yes 8/17/98
N105 47,000 28,000 51,667 Yes 8/18/98
B106 4,649 1,163 Yes 8/14/98
B107 16,719 1,393 Yes 8/14/98
B108 9,494 1,583 Yes 8/14/98
B109 3,070 768 Yes 8/14/98
B110 4,400 734 Yes 8/14/98
B111 12,950 1,079 Yes 8/14/98
B112 15,341 5,120 Yes 8/14/98
N113 35,400 31,492 Yes 8/18/98
N114 18,000 10,800 16,837 Yes 8/14/98
B115 14,938 Yes 8/14/98
B116 8,941 745 Yes 8/14/98
B117 10,000 833 Yes 8/14/98
B118 11,252 Yes 8/14/98
B119 8,780 1,464 Yes 8/14/98
B120 10,417 2,606 Yes 8/14/98
N121 50,000 17,600 53,517 Yes 8/17/98
B122 1,413 354 Yes 8/14/98
B123 4,100 1,026 Yes 8/14/98
N124 9,432 Yes 8/18/98
N125 20,000 11,256 19,813 Yes 8/14/98
B126 14,459 1,205 Yes 8/14/98
B127 15,692 31,360 Yes 8/14/98
B128 13,800 3,452 Yes 8/14/98
N129 4,600 4,301 Yes 8/17/98
B130 3,550 592 Yes 8/14/98
N131 17,352 5,787 Yes 8/17/98
N132 18,564 7,763 Yes 8/18/98
N133 31,250 9,120 32,049 Yes 8/18/98
B134 19,464 Yes 8/14/98
B135 16,800 1,400 Yes 8/14/98
B136 6,350 529 Yes 8/14/98
B137 Yes 8/14/98
B138 5,271 1,759 Yes 8/14/98
</TABLE>
B-3
<PAGE> 152
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B139 3046398 Piedmont Manor Apartments Multifamily
B140 3046422 Spirit Mountain Apartments Multifamily
B141 3049756 Margaret Ann Apartments Multifamily $ 2,500 $ 2,508
N142 50940 Duval Crossing Apartments Multifamily 11,250 11,250
B143 3050945 Skyway Park Multifamily
B144 3050937 Mainplace Multifamily 8,640 8,665
B145 3050911 Columbia Park Multifamily
B146 3049251 5536 N. Campbell Apartments Multifamily
N147 50886 International Home Furnishing Center Retail
N148 50774 Corridor Marketplace Shopping Center Retail
N149 50428 Granada Hills Town Center Retail
N150 50847 41/49 Highway Junction Project Retail 13,750 13,903
N151 50861 Berkeley Mall Retail
N152 50978 Boynton Trail Shopping Center Retail 6,250 6,250
N153 50977 Village Square Shopping Center Retail 20,219 20,219
N154 50838 Elmwood North I Retail
N155 50973 Worth Plaza Arcade Retail
N156 50568 Okee Square Shopping Center Retail
N157 50514 Townfair Center Retail
N158 50900 Warm Springs Marketplace Retail
N159 50078 Market Place @ Webb Chapel Retail 9,016
N160 50651 Sedona Village Shopping Center Retail
B161 3051117 Fred Meyers Superstore Retail
N162 50839 Clarkson-Clayton Center Retail 39,330 6,984
B163 3062320 Arapahoe Village Shopping Center Retail 43,875 43,935
B164 3043320 Victor Valley Town Center Retail
B165 3062379 Vista Plaza Shopping Retail
N166 50897 Parker Shopping Center Retail 25,750 25,750
N167 50896 FoodsCo. Grocery Store Retail
N168 50126 Berne Square Retail
N169 50104 Diamond Oaks Shopping Center Retail 1,000
N170 50109 Corsicana Shopping Center Retail 2,438
N171 50111 Graham Shopping Center Retail 2,188
N172 50108 Kennendale Shopping Center Retail 1,250
N173 50107 River Oaks Shopping Center Retail 1,000
N174 50105 Stonegate Shopping Center Retail 2,750
N175 50110 Centerpointe Shopping Center Retail
N176 50106 McCart Plaza Shopping Center Retail
N177 50857 Thornblade Shopping Center Retail
B178 3049814 Hopyard Plaza Shopping Center Retail
N179 50418 Mil-Lake Plaza Shopping Center Retail 6,250 3,777
B180 3054954 Cinemark Theatre Retail
N181 50559 Benchmark Square Shopping Center Retail
N182 50851 The Oaks Shopping Center Retail
N183 50073 Tower Plaza Shopping Center Retail
B184 3052339 Germania Place Retail
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B139 $ 32,669 $ 10,064 $ 34,396 Yes 8/14/98
B140 23,231 11,186 25,241 Yes 8/14/98
B141 5,784 1,930 Yes 8/14/98
N142 4,800 400 Yes 8/18/98
B143 2,798 467 Yes 8/14/98
B144 2,487 415 Yes 8/14/98
B145 2,787 465 Yes 8/14/98
B146 6,470 Yes 8/14/98
N147 No 8/17/98
N148 30,000 10,056 Yes 8/17/98
N149 9,977 Yes 8/17/98
N150 35,100 5,860 Yes 8/17/98
N151 67,309 Yes 8/17/98
N152 125,352 Yes $ 111,468 $ 22,272 $111,468 8/17/98
N153 33,000 Yes 17,429 8/17/98
N154 13,050 3,280 Yes 8/17/98
N155 7,866 Yes 8/17/98
N156 No 8/19/98
N157 8,193 3,422 Yes 8/17/98
N158 13,260 1,105 Yes 8/17/98
N159 11,844 13,028 Yes 138,268 58,086 8/17/98
N160 No 8/17/98
B161 No 8/14/98
N162 No 8/17/98
B163 12,274 Yes 40,000 8/14/98
B164 10,000 3,337 Yes 40,000 13,365 8/14/98
B165 4,123 Yes 58,398 8/14/98
N166 Yes 8/17/98
N167 No 8/18/98
N168 26,760 4,677 Yes 283,000 414 8/17/98
N169 10,502 10,737 Yes 8/17/98
N170 8,406 2,099 Yes 8/17/98
N171 9,441 2,204 Yes 8/17/98
N172 7,937 4,940 Yes 8/17/98
N173 7,199 7,360 Yes 8/17/98
N174 10,568 5,350 Yes 8/17/98
N175 7,391 6,425 Yes 8/17/98
N176 9,491 9,703 Yes 8/17/98
N177 6,624 552 Yes 8/17/98
B178 16,790 4,201 Yes 20,000 89,260 153,827 8/14/98
N179 21,737 5,443 Yes 190,688 191,682 8/17/98
B180 Yes 300,000 301,679 8/14/98
N181 26,724 2,227 Yes 8/17/98
N182 No 8/19/98
N183 1,200 1,419 Yes 8/14/98
B184 9,648 1,609 Yes 14,286 2,382 8/14/98
</TABLE>
B-4
<PAGE> 153
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
N185 50850 Normandy Station Shopping Center Retail
B186 3052271 First National Plaza Retail $ 12,375 $ 12,397
N187 50064 Plaza 303 Shopping Center Retail
B188 3062395 Pic'N Save Retail
N189 50065 Rush Creek Shopping Center Retail 4,688
N190 50738 White Oak Village Shopping Center Retail 13,125 13,275
N191 50867 349-351 Newbury St. Retail 2,500 336
N192 50870 Potter Square Shopping Center Retail
N193 50667 Sea Pines Center Retail 51,408 51,768
N194 50627 Merritt Crossing Retail
B195 3049186 Newhall Plaza Shopping Retail 21,600 21,752
N196 50813 Pecan Square Shopping Center Retail
N197 50124 Belleview Square Shopping Center Retail 21,709 15,152
N198 50801 Country Corner Shopping Center Retail 20,438 20,677
B199 3049129 Tweedy Shopping Center Retail
N200 50891 John R. Wood Plaza Retail
B201 3062338 Huntington Gardens Retail
N202 50707 Marketplace at Cayce Shopping Center Retail 28,296 28,296
N203 50736 Marketown Shopping Center Retail
N204 50918 Newport Plaza Shopping Center Retail 31,656 31,682
N205 50136 Harvest Plaza I Retail 8,094
N206 50137 Harvest Plaza II Retail 5,990 12
N207 50800 La Mirada Shopping Center Retail
N208 50149 Satilla Square Retail 88,235
N209 50926 Hilton Head Plaza Retail 5,250
N210 50525 Mayfair Shopping Center Retail 22,500 23,042
N211 50151 South Pointe Plaza Retail
B212 3043874 Long Drugs Retail
B213 3054822 Cinnamon Sq Shopping Ctr Retail
N214 50819 Los Altos Shopping Center Retail
N215 50807 Sears Monro Muffler @ Robinson Town Cen Retail
N216 50225 Fourth Street Shopping Center Retail
N217 50808 271-279 E. Paces Ferry Rd. Bldg. Retail 27,994 28,293
B218 3056728 Hawthorne Plaza Retail
N219 50459 Corner Plaza Shopping Center Retail
N220 50747 Coral Ridge Plaza Retail
N221 50024 Singer Square Center Retail 31,250
B222 3051836 Saratoga Oaks Retail
N223 50718 Walgreen's Plaza - Yuma AZ Retail
N224 50593 Fidelity Square Shopping Center Retail 17,188
B225 3056876 Roscoe Reseda Plaza Retail 3,000 3,006
N226 50799 McCain Center Retail
N227 50859 Haywood Centre Retail
B228 3062213 550 Waverly Street Retail
B229 3054749 Pine Lane Center Retail
B230 3062197 Central Pavillion Retail
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
N185 No 8/19/98
B186 $ 5,423 $ 904 Yes $ 30,256 $ 5,045 8/14/98
N187 $ 17,500 11,820 13,583 Yes 8/17/98
B188 10,872 906 Yes 16,440 1,370 8/14/98
N189 15,192 10,771 Yes 8/17/98
N190 12,108 3,037 Yes 8/17/98
N191 4,032 2,508 Yes 8/17/98
N192 8,702 725 Yes 8/17/98
N193 23,712 3,960 Yes 8/17/98
N194 61,000 31,404 77,381 Yes 8/17/98
B195 2,100 701 Yes 27,294 9,121 8/14/98
N196 9,180 2,304 Yes 8/17/98
N197 3,084 2,882 Yes 8/17/98
N198 13,831 5,789 Yes 8/18/98
B199 9,764 2,443 Yes 22,104 5,534 8/14/98
N200 4,559 Yes 8/17/98
B201 3,842 320 Yes 14,720 1,227 8/14/98
N202 14,844 2,474 Yes 8/17/98
N203 30,100 24,565 29,061 Yes 8/17/98
N204 6,317 Yes $ 200,000 200,166 8/18/98
N205 2,629 2,237 Yes 8/17/98
N206 1,274 1,084 Yes 8/17/98
N207 37,703 9,464 Yes 8/17/98
N208 11,000 8,208 9,441 Yes 8/17/98
N209 5,700 475 Yes 8/17/98
N210 32,688 16,512 Yes 8/17/98
N211 5,568 2,090 Yes 8/17/98
B212 2,297 192 No 8/14/98
B213 8,558 1,427 Yes 35,000 22,058 38,792 8/14/98
N214 8,652 2,900 Yes 8/17/98
N215 1,575 263 Yes 8/17/98
N216 12,723 9,319 Yes 8/17/98
N217 4,095 684 Yes 8/17/98
B218 2,640 220 Yes 8,232 4,194 8/14/98
N219 8,198 3,425 Yes 8/17/98
N220 1,446 482 Yes 8/17/98
N221 4,800 6,166 Yes 8/17/98
B222 Yes 8/14/98
N223 5,004 1,254 Yes 8/18/98
N224 18,939 9,505 Yes 8/17/98
B225 5,436 453 Yes 30,000 11,058 30,992 8/14/98
N226 8,064 2,703 Yes 25,423 8/17/98
N227 1,945 488 Yes 8/17/98
B228 2,099 Yes 8,225 8/14/98
B229 6,434 1,073 Yes 12,720 2,121 8/14/98
B230 1,798 150 Yes 13,900 1,158 8/14/98
</TABLE>
B-5
<PAGE> 154
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B231 3054913 Blackhorse Shopping Center Retail
B232 3062205 Plaza De Santa Fe Retail $ 2,375 $ 2,377
B233 3062718 Chief Auto Parts Retail
B234 3051000 Avis Plaza Retail 12,375 7,708
B235 3051018 Hollywood Video Retail
B236 3052420 Checker Auto Parts Retail
B237 3047198 Manhattan Beach Property Retail
N238 50892 Journal Square Plaza II Office
N239 50445 Park Center Building I Office
N240 50934 National Guard Building Office
B241 3055241 Mission Plaza Office
N242 50833 Crestar Bank Building Office
B243 3055050 901 Battery St. Building Office
B244 3056884 Peninsula Prof Building Office 81,650 81,812
B245 3056967 Bell Professional Plaza Office 250,000 250,877
B246 3048287 Demuro Corporate Square Office 10,428 10,478
N247 50626 Park 3000 Business Center Office 250,000 255,747
B248 3056785 J. Brad Lampley Building Office
B249 3062494 Sun America Building Office
B250 3049764 Hollister Prof Building Office
N251 50980 Forest Professional Bldg. Office 2,500
N252 50641 Los Alamos Business Center Office
N253 50042 11500 NW Freeway Office 14,250 14,572
B254 3051976 Lincoln Broadway Building Office
N255 50863 Doctor's Pavillion Office 8,594
B256 3062262 Sutter Business Park III Office
N257 50449 Commercial Block Building Office
N258 50685 Greenwich Station Office Building Office
N259 50198 1700 Commerce Office Building Office
N260 50517 Rivergate Center I Office 20,781 14,223
N261 50910 Great Western Bank Building Office 7,421 7,454
B262 3054525 Medical Village Off Building Office
B263 3052263 992 South Deanza Office
B264 3051893 29 W Anapamu Building Office
B265 3052123 Wang NMR Building Office
B266 3047693 Civic Center Building Office
N267 50792 Miramar Professional Plaza Office 22,544 22,919
N268 50820 Lovelace Medical Center Office
B269 3056983 Gould/Sutter Medical Bld Office
B270 3056793 1410 N Third St Building Office
B271 3062403 The Atrium Office Plaza Office
B272 3051877 Dana Point Clock Tower Office
N273 50873 Bear Canyon III Office Bldg. Office 3,000 3,000
B274 3056975 Universal Executive Ctr Office
B275 3052156 600 Allerton St. Blvd. Office
B276 3045333 Unicom Plaza Office
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B231 $ 1,281 $ 214 Yes $ 5,787 $ 965 8/14/98
B232 4,218 352 Yes 7,984 665 8/14/98
B233 1,411 Yes 2,260 8/14/98
B234 3,199 800 Yes 7,917 1,981 8/14/98
B235 1,499 250 Yes 8/14/98
B236 Yes 8/14/98
B237 285 95 Yes 5,874 1,960 8/14/98
N238 27,277 Yes 8/17/98
N239 32,844 24,836 Yes 8/14/98
N240 35,628 Yes 8/17/98
B241 13,152 Yes 158,268 13,189 8/14/98
N242 45,709 8,779 Yes $ 500,000 8/17/98
B243 26,756 4,461 Yes 143,721 23,972 8/14/98
B244 8,064 Yes 150,000 97,858 158,632 8/14/98
B245 3,938 328 Yes 64,477 5,373 8/14/98
B246 27,696 4,618 Yes 44,976 7,503 8/14/98
N247 3,003 1,260 Yes 8/17/98
B248 Yes 8/14/98
B249 17,208 35,642 Yes 50,400 4,200 8/14/98
B250 10,653 2,665 Yes 14,380 3,598 8/14/98
N251 15,000 Yes 8/17/98
N252 6,060 3,040 Yes 21,000 30,263 8/17/98
N253 $ 40,000 8,205 50,584 Yes 8/17/98
B254 20,000 4,298 20,072 Yes 60,000 60,239 8/14/98
N255 65,000 14,604 Yes 8/17/98
B256 8,879 740 Yes 47,288 3,941 8/14/98
N257 Yes 8/19/98
N258 4,416 1,854 Yes 8/17/98
N259 16,562 15,307 Yes 8/17/98
N260 59,250 9,234 60,427 Yes 21,837 8/17/98
N261 17,000 12,227 18,093 Yes 8/18/98
B262 4,504 375 Yes 32,088 2,674 8/14/98
B263 3,128 522 Yes 19,438 3,242 8/14/98
B264 4,724 788 Yes 5,446 908 8/14/98
B265 5,015 418 Yes 2,332 14,720 2,332 8/14/98
B266 Yes 8/14/98
N267 12,301 5,160 Yes 8/17/98
N268 4,524 100,045 No 8/17/98
B269 1,694 141 Yes 8/14/98
B270 11,856 988 Yes 28,200 2,350 8/14/98
B271 3,564 297 Yes 22,968 1,914 8/14/98
B272 3,600 600 Yes 34,512 35,888 8/14/98
N273 6,700 10,354 7,563 Yes 8/17/98
B274 6,134 511 Yes 7,000 20,760 8,743 8/14/98
B275 3,065 766 Yes 140,000 20,950 145,925 8/14/98
B276 3,276 1,918 Yes 20,000 37,068 41,981 8/14/98
</TABLE>
B-6
<PAGE> 155
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B277 3062346 Calif Street Office Building Office
B278 3052404 Jackson Street Building Office
B279 3062312 634-640 Ramona St. Office Building Office
B280 3051174 4301 & 4321 Birch Street Office
B281 3062361 853 Middlefield Road Office
N282 50810 USDA Forestry Service Building Office
B283 3049509 Country Offices Office
B284 3056892 809 Sacramento Building Office
N285 50696 Research Tri-Center North A Industrial $ 88,981 $ 91,027
N286 50728 Research Tri-Center South B Industrial 2,448 2,504
N287 50880 Gateway Commerce Center II Industrial
N288 50879 Gateway Commerce Center I Industrial
B289 3051067 Hawthorne Industrial Bld Industrial
B290 3056710 Amax Building Industrial
N291 50560 Inner Belt Industrial Center Industrial
B292 3049608 Clark Foods #1 Industrial 68,250 68,874
N293 50480 LySonix Industrial
B294 3054814 Jarrett Building Industrial
B295 3062429 Maricopa Freeway Center Industrial
N296 50719 South Cedros Center Industrial
B297 3054889 Edison Way/Old Warm Springs Blvd. Indust Industrial
B298 3044591 R&D Building Industrial
B299 3051992 4487 Technology Drive Industrial 6,250
N300 50890 Aviation Blvd. Industrial 31,250 31,250
N301 50887 Harmer Center Industrial
N302 50700 Mid Cities Industrial Center Industrial
B303 3052446 Gary Center Industrial 11,375 11,436
B304 3054707 Vernon Industrial Plaza Industrial
B305 3049624 Clark Foods #2 Industrial 20,010 20,151
B306 3051711 2930-2964 Corvin Industrial
B307 3049491 3575 Haven Avenue Industrial 93,688 56,645
B308 3047727 5648 Copley Drive Building Industrial
B309 3049475 Woodruff Ave Industrial Industrial
B310 3062478 2518 2nd St North Building Industrial
B311 3062437 C-5 Civic Center Industrial
B312 3051760 Raichem Building Industrial
B313 3049533 Border Products Building Industrial
B314 3056769 Grove Business Center Industrial
B315 3062460 Forbes Rd Industrial/Wrhs Industrial
B316 3049467 Seville Building Industrial
B317 3062189 1413 Sherman Road Industrial
B318 3049616 Clark Foods #3 Industrial
N319 50512 The Glendinning Company Building Industrial
B320 3051703 Metzler Business Park Industrial
N321 50511 The Guest Company Building Industrial
B322 3056777 Coley River Building Industrial 59,375 59,548
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B277 $ 1,675 $ 140 Yes $ 12,835 $ 1,070 8/14/98
B278 3,525 588 Yes 13,285 2,216 8/14/98
B279 950 79 Yes 7,967 664 8/14/98
B280 3,228 808 Yes 23,724 5,940 8/14/98
B281 1,709 142 Yes 11,304 942 8/14/98
N282 1,770 444 Yes 8/17/98
B283 2,285 190 Yes 21,017 1,751 8/14/98
B284 1,343 112 Yes 4,111 342 8/14/98
N285 88,375 No 8/17/98
N286 No 8/17/98
N287 No 8/19/98
N288 No 8/19/98
B289 38,916 6,493 Yes 47,706 7,959 8/14/98
B290 11,534 1,923 Yes 8/14/98
N291 31,116 13,073 Yes 8/17/98
B292 25,000 116,424 Yes 8/14/98
N293 15,891 9,319 Yes 8/18/98
B294 23,494 1,958 Yes $ 20,000 59,269 24,975 8/14/98
B295 3,768 Yes 36,672 8/14/98
N296 19,176 6,410 Yes 8/18/98
B297 16,174 2,697 Yes 70,000 70,317 8/14/98
B298 5,354 3,131 Yes 300,000 38,800 329,761 8/14/98
B299 3,829 958 Yes 23,546 5,893 8/14/98
N300 9,472 Yes 90,000 17,760 8/19/98
N301 Yes 8/17/98
N302 9,592 Yes 8/19/98
B303 13,350 3,341 Yes 15,000 30,635 22,757 8/14/98
B304 6,357 530 Yes 18,458 1,538 8/14/98
B305 40,259 13,452 Yes 8/14/98
B306 2,731 684 Yes 13,664 3,421 8/14/98
B307 12,238 3,062 Yes 8/14/98
B308 2,299 767 Yes 14,746 4,924 8/14/98
B309 5,865 1,467 Yes 16,998 4,253 8/14/98
B310 8,122 677 Yes 25,000 30,189 27,553 8/14/98
B311 5,820 Yes 16,344 8/14/98
B312 2,016 505 Yes 12,387 3,101 8/14/98
B313 754 126 Yes 3,993 666 8/14/98
B314 1,522 254 Yes 5,000 834 8/14/98
B315 4,416 368 Yes 9,744 406 8/14/98
B316 7,762 1,295 Yes 8/14/98
B317 889 74 Yes 13,822 1,152 8/14/98
B318 17,563 5,866 Yes 8/14/98
N319 No 8/17/98
B320 704 176 Yes 5,000 1,252 8/14/98
N321 No 8/17/98
B322 1,522 254 Yes 8/14/98
</TABLE>
B-7
<PAGE> 156
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B323 3050952 Airport Business Center Industrial
N324 50834 Midway Industrial Center Industrial
B325 3051026 Linden Street Industrial Bldg. Industrial
B326 3056942 Sumner Industrial Building Industrial
N327 50868 Edgewater Inn Hotel $ 7,250 $ 7,250
N328 50856 Ocean Key House Hotel 13,775 13,775
N329 50701 Residence Inn by Marriott -- Albany Airport Hotel
N330 50846 Hampton Inn -- Juno Beach Hotel
N331 50869 Radisson Inn -- Park City Hotel 21,813 21,813
N332 50928 Crowne Plaza Hotel -- Richmond Hotel
N333 50875 Palm Plaza Hotel Hotel
N334 50872 Holiday Inn Express -- Williamsville Hotel
N335 50505 Best Western Bradbury Suites Hotel 8,844 8,937
N336 50693 Howard Johnson Inn -- Salisbury, MD Hotel 87,085 23,355
N337 50783 Best Western -- Maplewood Inn Hotel 180,250 63,333
N338 50816 EconoLodge -- Carthage MO Hotel 8,566 8,662
B339 3052412 Bonita Paradise MHP Mobile H.P. 100,000 100,670
B340 3062940 White River Estates Mobile H.P.
N341 50939 The Meadows Mobile Home Park Mobile H.P. 6,050 6,064
B342 3051778 Rancho Tempe Mobile H.P. 15,624 15,710
N343 50938 Kings River Mobile Home Park Mobile H.P. 5,600
B344 3049350 Rodeo Mobile Estate Mobile H.P.
B345 3051869 Chateau MHP Mobile H.P.
B346 3049301 Rexford Mobile Home Mobile H.P.
B347 3056918 Rio Plaza Mobile Home Pk Mobile H.P.
B348 3052180 Vista Del Rio MHP Mobile H.P.
B349 3056926 Stonegate MHP Mobile H.P.
B350 3062148 Hillsdale Mobile Home Park Mobile H.P.
B351 3062916 Table Rock Mobile Estate Mobile H.P.
B352 3051828 Foothill MHP Mobile H.P.
B353 3047990 Oasis Mobile Estates Mobile H.P.
N354 50164 Golden Villa and Rose Haven Nursing Home Health Care 2,850 17
N355 50192 Heritage & Village Manor Nursing Home Health Care 2,925
N356 50278 Sun Terrace Retirement and Assisted Living Health Care
N357 50802 Pinebrook Care Center Health Care
N358 50690 Hanna Oaks Assisted Living Facility Health Care
N359 50000 Windsor House West Health Care
N360 50561 Dudley Manor and Ritenour House Health Care 6,906 6,921
N361 50670 Carolee's Mountain View Assisted Living Health Care
N362 50531 Evangeline of Natchitoches Health Care 5,313
N363 50821 Mayfair House -- Petersburg Health Care
N364 50528 Midland Villa Nursing Home Health Care 11,688 11,688
N365 50908 Peoples Storage -- 56th St. Mini Storage
N366 50907 Peoples Storage -- Linebaugh Ave Mini Storage
B367 3049525 U-Store Self Storage Mini Storage
B368 3043155 West Sahara Ministorage Mini Storage 10,000
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B323 $ 2,221 $ 741 Yes $ 5,750 $ 1,919 8/14/98
N324 7,716 1,930 Yes 8/17/98
B325 4,692 1,568 Yes 12,845 4,292 8/14/98
B326 2,133 178 Yes $ 25,000 25,492 8/14/98
N327 607,077 50,590 Yes 8/17/98
N328 266,126 Yes 8/17/98
N329 128,775 43,186 Yes 8/17/98
N330 65,499 Yes 8/17/98
N331 $103,915 106,047 39,357 Yes 8/17/98
N332 141,475 11,790 Yes 8/17/98
N333 90,417 Yes 8/17/98
N334 71,287 Yes 8/17/98
N335 62,892 15,787 Yes 8/17/98
N336 85,812 21,542 Yes 8/17/98
N337 95,509 10,090 Yes 8/17/98
N338 46,369 7,750 Yes 8/17/98
B339 7,762 1,294 Yes 8/14/98
B340 6,398 Yes 8/14/98
N341 4,500 Yes 8/18/98
B342 14,550 2,428 Yes 8/14/98
N343 4,475 5,613 Yes 8/18/98
B344 16,605 4,156 Yes 8/14/98
B345 Yes 8/14/98
B346 Yes 8/14/98
B347 3,330 Yes 8/14/98
B348 3,191 798 Yes 8/14/98
B349 3,302 Yes 8/14/98
B350 Yes 8/14/98
B351 3,756 Yes 8/14/98
B352 4,473 746 Yes 8/14/98
B353 Yes 8/14/98
N354 1,919 23,028 23,550 Yes 8/17/98
N355 3,810 45,720 46,756 Yes 8/17/98
N356 1,980 11,880 11,039 Yes 8/17/98
N357 46,500 7,750 Yes 8/17/98
N358 6,000 36,000 21,084 Yes 8/17/98
N359 9,588 15,717 Yes 8/17/98
N360 5,000 10,992 10,516 Yes 8/14/98
N361 6,528 2,726 Yes 8/17/98
N362 3,185 19,110 14,551 Yes 8/17/98
N363 1,265 15,180 5,092 Yes 8/17/98
N364 4,667 23,448 16,629 Yes 8/17/98
N365 11,980 998 Yes 8/17/98
N366 11,860 988 Yes 8/17/98
B367 6,023 1,507 Yes 8/14/98
B368 9,960 10,147 Yes 8/14/98
</TABLE>
B-8
<PAGE> 157
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL
LOAN IMPROVEMENT IMPROVEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES
- -------- ------ ---------------------------------------------- ------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
B369 3062130 Security Self Storage Mini Storage
B370 3056959 Santa Fe Self Storage Mini Storage
B371 3049178 Irvington Self Storage Mini Storage
N372 50324 Applebee's #8781, 9053, 9311 Franchise
N373 50323 Applebee's #8739 Franchise
N374 50320 Applebee's #9249 Franchise
N375 50321 Applebee's #8862 Franchise
N376 50829 210 W. Baltimore St. Parking Garage Parking
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
TO REPLACEMENT REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
SEQUENCE RESERVES RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------- --------------- ----------- ----------- --------- --------------- ----------- ---------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
B369 $ 12,669 $ 1,056 Yes 8/14/98
B370 3,154 263 Yes 8/14/98
B371 3,401 1,135 Yes 8/14/98
N372 $ 4,731 4,892 Yes 8/17/98
N373 1,600 1,654 Yes 8/17/98
N374 1,577 1,631 Yes 8/17/98
N375 1,577 1,631 Yes 8/17/98
N376 7,440 1,242 Yes 8/17/98
</TABLE>
B-9
<PAGE> 158
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
STUDIO 1 BEDROOM
------------------ --------------
LOAN CUT-OFF # OF AVG # OF AVG
SEQUENCE NUMBER PROPERTY NAME BALANCE UTILITIES TENANT PAYS UNITS RENT UNITS RENT
- -------- ------- ------------------------------ ----------- ------------------------- --------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N001 50752 Parkview Towers Apts $27,924,914 None 184 $ 787 408 $ 844
N002 50659 Summerwind Apartments 20,015,720 Electric/Gas
N003 50958 Vanderbilt Apts. I & II 16,427,843 Electric 144 547
N004 50750 Sonterra at Williams Centre 16,328,713 Electric/Gas 180 556
(Apt)
N005 50925 Colony Hills Apartments 7,307,316 Electric/Gas
N006 50924 Grandes Cortez Apartments 3,236,898 None 48 483 102 553
N007 50923 Canyon Walk Apartments 3,038,538 None 54 440 68 517
N008 50921 Paseo Del Sol Apartments 2,596,709 None 78 390 137 470
-----------
Sub-Total Crossed Loans................ 16,179,461
N009 50646 599-621 Front Street 3,601,475 Electric/Gas 64 695 44 771
N010 50645 299 Jackson Street 3,255,992 Electric/Gas 90 709
N011 50654 15-35 Elk Street 2,624,677 Electric/Gas 4 643 64 765
N012 50644 100 Jerusalem Avenue 2,408,440 Electric 36 719 51 812
N013 50655 357 Jackson Street Apartments 792,694 Electric/Gas 4 602 25 709
N014 50656 51 Bell Street Apartments 634,155 Electric/Gas 12 819
-----------
Sub-Total Crossed Loans................ 13,317,432
B015 3054921 Kimberly Place Apartments 12,375,835 Electric 191 540
N016 50691 Parcwood Apartments 12,218,675 Electric 52 546 132 609
N017 50094 Colonial Homes Apartments 11,908,174 Electric/Gas
N018 50790 Relais Esplanade Apartments 11,747,787 Electric/Sewer/Water 224 499
B019 3047180 Dry Creek Properties 9,921,908 Electric/Gas 64 806
N020 50971 Spring Villas Apartments 8,548,200 Electric/Gas 80 888
B021 3052107 Gentry Walk Apartments 8,378,578 Electric/Gas 22 603
N022 50842 Pioneer Warehouse Lofts 8,340,059 Electric/Gas 85 1,137
N023 50013 St. Charles Regency Apts. 8,308,397 Electric 78 469 143 665
N024 50920 Southwest Village Apartments 8,135,140 Electric/Gas 98 491
N025 50936 Twin Lakes Manor Apartments 8,089,185 Electric 2 400 308 500
N026 50844 Dos Santos Apts 8,020,664 Electric/Gas 88 608
N027 50831 Prospect Creek Apts 7,565,940 Electric/Gas 89 468
B028 3052032 Villa Pacific Apartments 7,478,842 Electric/Gas 24 700
N029 50836 Laurel Gardens Cooperative, 7,184,643 Electric 44 550 146 647
Inc.
<CAPTION>
2 BEDROOM 3 BEDROOM 4 BEDROOM
-------------- -------------- --------------
# OF AVG # OF AVG # OF AVG
SEQUENCE UNITS RENT UNITS RENT UNITS RENT
- -------- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
N001 90 $1,001
N002 192 1,188 96 $1,458
N003 260 763 12 999
N004 142 702 22 898
N005 214 603
N006 1*
N007 44 639
N008
N009 24 950
N010 22 849 1 1,040
N011 17 929
N012 9 832
N013 2 824
N014 12 839 3 909
B015 155 688
N016 88 718 40 866
N017 254 790
N018 112 672
B019 80 908 54 1,191
N020 80 883
B021 108 692 37 837
N022
N023
N024 216 595 18 739
N025
N026 88 720
N027 124 563 31 696
B028 160 808
N029 45 723
</TABLE>
B-10
<PAGE> 159
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
STUDIO 1 BEDROOM
------------------ --------------
LOAN CUT-OFF # OF AVG # OF AVG
SEQUENCE NUMBER PROPERTY NAME BALANCE UTILITIES TENANT PAYS UNITS RENT UNITS RENT
- -------- ------- ------------------------------ ----------- ------------------------- --------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N030 50122 Beacon Hill Apartments $ 6,942,865 Electric 216 $ 389
B031 3054673 Queen Vista Apartments 6,387,018 Water/Sewer/Garbage 12 $ 710 52 800
Gas/Electric
N032 50784 Amberwood Apts 5,982,762 Electric/Cable TV 1 550 33 655
N033 50492 Franklin Regency Apartments 5,775,617 Electric/Gas 76 713 36 825
N034 50997 Whispering Meadows Apartments 5,471,430 Electric 40 423
B035 3051950 Mahara Condo Apartments 5,449,267 Electric/Gas 32 600 40 700
B036 3057007 Hyde Park Apartments 5,168,115 Electric/Gas 40 510
B037 3051125 Village Apartments 5,081,459 Electric/Gas 102 424
B038 3055316 Happy Village Apartments 5,044,778 Electric 126 360
B039 3048246 Hickory Terrace Apartments 4,807,954 Electric 92 550
B040 3052248 Rockshire Apartments 4,790,225 Electric 41 422
N041 50865 Highland Terrace Apts 4,486,860 Electric 56 275 179 360
B042 3056934 Bayfill Apartments 4,470,949 Electric 7 2,421
N043 50815 Sierra Chase Apartments 4,380,631 NAV 40 465
N044 50806 Park Place Apts 4,334,354 Electric/Gas 32 556
B045 3049152 De Soto Apartments 4,110,179 Electric 34 425 98 550
B046 3047040 Park Meridian Apartments 3,994,626 Electric 2 750 55 925
B047 3052396 The Elms Apartments 3,989,542 Electric/Gas
N048 50279 Maplewood Senior Citizens Apts 3,965,281 None 28 767 86 825
N049 50763 Stonebrook Square Apartments 3,840,717 Electric 32 390
N050 50493 Jessica Apts 3,808,387 Electric/Gas 3 682 30 810
B051 3062247 St. Francis Towers 3,794,894 Electric 18 768 18 879
B052 3051695 4532 Murietta Avenue 3,792,656 Electric/Gas
B053 3052370 Pacific Vista Apartments 3,751,251 Electric/Gas 18 723
N054 50840 Vermont Hills Apts 3,589,968 Electric
N055 50689 New Heritage Apts 3,522,205 Electric
N056 50710 Frederick Gardens Apts 3,425,703 Electric/Sewer/Water 1 330 115 361
N057 50895 Bay Harbor Apts 3,395,990 Electric/Gas/Sewer/Water 66 228 94 288
N058 50744 Alder Creek Condominiums (Apt) 3,377,792 Electric 18 484
N059 50866 Tara Hills Apts 3,193,360 Electric 72 370
N060 50854 Pantano Villas Apartments 3,116,309 Electric 64 412
N061 50959 Wil-Ru Apartments 3,096,076 Electric 4 356 35 404
N062 50884 Quail Hollow Apartments 3,095,849 Electric/Gas 12 628
N063 50772 Spring Valley Apartments 2,997,061 Electric/Gas 36 575
N064 50824 Pheasant Run Apartments 2,991,795 Electric 24 440
N065 50553 Spring Garden Apts 2,947,653 Electric
B066 3052230 Karolena Park Apartments 2,942,033 Electric
N067 50554 Pershing Oaks Apts 2,912,799 Electric/Sewer/Water
<CAPTION>
2 BEDROOM 3 BEDROOM 4 BEDROOM
-------------- -------------- --------------
# OF AVG # OF AVG # OF AVG
SEQUENCE UNITS RENT UNITS RENT UNITS RENT
- -------- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
N030 216 $ 470
B031 23 1,035
N032 87 763 1 $ 925
N033 4 1,150
N034 200 523
B035 56 777
B036 74 602 24 708
B037 166 486 20 596
B038 108 521 54 594
B039 76 665
B040 141 471 30 645
N041 43 513
B042 26 2,885
N043 104 550
N044 80 631
B045 19 725
B046 27 1,250
B047 58
N048
N049 60 516 48 635
N050 28 1,078
B051 33 1,128
B052 33 1,472
B053 40 918
N054 64 788
N055 66 524 34 612
N056 57 458
N057 46 371
N058 78 522
N059 118 420 24 505
N060 72 494
N061 75 475 2 800
N062 78 739
N063 44 703
N064 78 571
N065 95 488
B066 56 809
N067 87 540
</TABLE>
B-11
<PAGE> 160
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
STUDIO 1 BEDROOM
------------------ --------------
LOAN CUT-OFF # OF AVG # OF AVG
SEQUENCE NUMBER PROPERTY NAME BALANCE UTILITIES TENANT PAYS UNITS RENT UNITS RENT
- -------- ------- ------------------------------ ----------- ------------------------- --------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N068 50841 Valley Vista Apartments $ 2,892,068 Electric
N069 50588 Fleur De Leis Apts 2,833,637 Electric 32 $ 425
B070 3056801 Dorset House 2,744,460 Electric/Gas 16 648
B071 3062239 Ridgewood Apartments 2,716,709 Electric/Gas 1 525
B072 3057015 Hunters Glen Apartments 2,596,541 Electric/Gas 20 545
N073 50427 365 W. 20th St. Apartments 2,585,406 Electric/Gas 46 $1,349 28 1,550
N074 50290 6011 Gaston Avenue Apartments 2,583,178 Electric/Gas/Sewer/Water 30 889
N075 50272 Golf Villa Apartments 2,582,476 Electric/Gas 16 474
B076 3051844 Sawgrass Estates 2,495,063 Electric/Gas 12 454
B077 3049590 Country Lane Apartments 2,469,928 Electric/Gas 32 455
N078 50922 Hilltop Towers Apartments 2,398,499 Electric 17 422 53 496
B079 3057023 Victoria Park Apartments 2,356,922 Electric/Gas 40 285 32 325
N080 50823 Pomona West Apts 2,332,343 NAV
N081 50765 Westview Apartments - Dalton 2,206,794 Electric 28 416
N082 50830 Coldwater Crossing Apartments 2,183,069 Electric/Gas 49 387
B083 3049483 Hacienda Silva Apartment 2,020,168 Electric/Gas
B084 3049712 110 Delaware Apartments 1,943,598 Electric 18 510
B085 3049855 Terrace Apartments 1,920,249 Electric
B086 3049863 Riverside Tower Apartments 1,920,249 Electric 8 667
N087 50155 Commodore Apartments 1,871,967 Electric 35 364 32 474
N088 50206 The White House Dormitory 1,827,029 None
N089 50901 Aztec Villa Apartments 1,797,618 Electric/Gas 32 424
B090 3048121 Bethany Towers 1,719,113 Electric/Gas 10 778
B091 3051786 Evergreen Apartments LLC 1,695,446 Electric/Gas
B092 3046414 Railview Apartments 1,590,750 Electric 56 533
B093 3062411 Metro View I & II 1,583,087 None 16 204
B094 3062098 Princeton Place Apartments 1,557,966 Electric/Gas 24 285 24 325
N095 50795 Rosewood Apartments 1,514,738 Electric/Gas
N096 50019 Oak Street Apartments 1,501,467 Electric/Sewer/Water 30 500
B097 3050929 Hillcrest Apartments 1,471,974 Electric
B098 3062957 Durfee Terrace Apartments 1,449,087 Electric
N099 50743 Cedar Creek Apts 1,448,643 Electric
B100 3046406 Oak Hills Manor Apartments 1,446,947 Electric 12 520
B101 3051687 Broadway Manor Apartments 1,436,270 Electric 18 475
B102 3062106 Marshall Reed Apartments 1,423,304 None 11 255 102 251
N103 50415 Westwood Parc 1,422,149 Electric/Gas 54 352
N104 50988 112 1st Avenue 1,399,098 Electric 7 1,168 1 1,500
N105 50845 Norwood Village Apartments 1,397,180 Electric 56 339
B106 3049038 White Crane Building 1,396,143 Electric
<CAPTION>
2 BEDROOM 3 BEDROOM 4 BEDROOM
-------------- -------------- --------------
# OF AVG # OF AVG # OF AVG
SEQUENCE UNITS RENT UNITS RENT UNITS RENT
- -------- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
N068 108 $ 534
N069 80 475 40 $ 535 24 $ 638
B070 31 828 6 930
B071 72 615 1 700
B072 36 665 16 745
N073
N074 15 1,013
N075 120 509
B076 43 565 14 654
B077 48 555
N078 41 605
B079 69 378 1 500
N080 60 745
N081 48 494 25 601
N082 95 430
B083 22 1,160 1 1,700
B084 31 647 6 730
B085 32 909
B086 28 795
N087
N088 37 1,837
N089 80 500 16 627
B090 16 1,056
B091 1 850 36 1,055
B092 4 598
B093 3 211 29 235 4 348
B094 41 397 1 500
N095 72 350 28 395
N096 10 784 3 952
B097 27 778
B098 36 781
N099 67 586
B100 36 605
B101 41 583
B102 8 515
N103 40 474
N104
N105 56 398
B106 10 988 3 1,117
</TABLE>
B-12
<PAGE> 161
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
STUDIO 1 BEDROOM
------------------ --------------
LOAN CUT-OFF # OF AVG # OF AVG
SEQUENCE NUMBER PROPERTY NAME BALANCE UTILITIES TENANT PAYS UNITS RENT UNITS RENT
- -------- ------- ------------------------------ ----------- ------------------------- --------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
B107 3062114 Bingham Court Apartments $ 1,343,374 Electric 84 $ 350 12 $ 327
B108 3054780 Manhattan Court Apartments 1,277,679 Electric 2 345
B109 3049020 Sheffield Apartments 1,271,487 Electric 13 809
B110 3054830 Patricia Avenue Apartments 1,232,546 Electric/Gas 5 725
B111 3056850 Mississippi View Apartments 1,223,539 Electric 3 392
B112 3051091 Romney Apartments Riverside 1,195,999 Electric 46 340 35 370
N113 50085 Wedgewood Apartments 1,190,655 Electric 18 355
N114 50411 Embassy House 1,158,193 Electric/Sewer/Water 24 436
B115 3055464 Caltempo Apartments 1,149,250 Electric 7 420 50 480
B116 3052305 Colorado Court Apartments 1,123,603 Electric 6 445 23 515
B117 3052313 Victoria Lake Apartments 1,118,609 Electric 29 481
B118 3049665 Viewcrest Apartments 1,118,596 Electric 11 496
B119 3056736 Raintree Apartments 1,097,842 Electric 14 405
B120 3049319 Catalina Vista Apartments 1,096,894 Electric/Gas 14 378
N121 50775 Palmetto Garden Apts 1,096,450 Electric 24 405
B122 3049004 The Buckingham 1,084,005 Electric
B123 3049012 The Grace 1,047,107 Electric 14 518 20 665
N124 50996 Del Capri Apartments 1,024,359 Electric/Gas 18 482
N125 50413 Greenbriar Apts. 1,019,373 Sewer/Water 10 400
B126 3054590 Woodbridge Terrace Apts. 998,859 Electric 4 394 20 426
B127 3051133 Bear Creek North Apartments 998,615 Electric/Gas 12 465
B128 3046604 Morningstar Apartments 997,492 Electric 11 430
N129 50150 Silver Sage Apartments 992,750 Electric/Gas
B130 3050903 Issaquah Valley Place 943,061 Electric/Water/Sewer 6 721
N131 50676 Village Green II Apartments 892,190 Electric 20 302
N132 50742 Oak Ridge Apts 874,510 Electric 16 322
N133 50882 Garden Park Apartments 873,962 Electric 8 390 19 436
B134 3056751 Verona Apartments 851,958 Electric 44 328 24 453
B135 3062445 Kachina Court 805,371 Electric/Gas 82 285
B136 3052297 Lakeview Apartments 754,062 Electric 24 495
B137 3054798 Sunplace Apartments 747,971 Electric 24 456
B138 3049749 Redmond Apartments 747,538 Electric
B139 3046398 Piedmont Manor Apartments 722,538 Electric 22 475
B140 3046422 Spirit Mountain Apartments 677,690 Electric 17 417
B141 3049756 Margaret Ann Apartments 647,782 Electric 2 360 21 557
N142 50940 Duval Crossing Apartments 629,250 Electric
B143 3050945 Skyway Park 623,718 Electric 1 575
B144 3050937 Mainplace 523,923 Electric 4 625
B145 3050911 Columbia Park 503,964 Electric 1 715
B146 3049251 5536 N. Campbell Apartments 386,353 Electric 2 400 18 550
<CAPTION>
2 BEDROOM 3 BEDROOM 4 BEDROOM
-------------- -------------- --------------
# OF AVG # OF AVG # OF AVG
SEQUENCE UNITS RENT UNITS RENT UNITS RENT
- -------- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
B107
B108 34 $ 448 12 $ 555
B109 8 1,234
B110 17 878
B111 21 497 24 593
B112
N113 80 413 20 525
N114 24 590
B115 2 600
B116 13 620 1 795
B117 21 653
B118 28 590
B119 26 520
B120 24 480 12 615
N121 40 475
B122 2 793 12 1,307
B123
N124 18 556
N125 40 514
B126 24 515
B127 25 499 17 573
B128 35 520
N129 23 712
B130 8 889
N131 40 350 2 450
N132 48 376
N133 21 520
B134 1 560
B135
B136 6 685
B137 6 540
B138 21 $1,265
B139 12 555
B140 17 498
B141 1 1,025
N142 8 647 8 746
B143 15 615
B144 8 726
B145 11 676
B146
</TABLE>
* There is only 1 2-BR Unit which is occupied by the Manager at a reduced rent.
B-13
<PAGE> 162
(NORWEST BANKS LOGO)
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
DISTRIBUTION DATE STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
STATEMENT SECTIONS PAGE(S)
<S> <C>
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7-9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14-15
Modified Loan Detail 16
Liquidated Loan Detail 17
</TABLE>
<TABLE>
<CAPTION>
UNDERWRITER MASTER SERVICER SPECIAL SERVICER
<S> <C> <C>
NationsBanc Montgomery Securities, LLC Midland Loan Services, L.P. Lennar Partners, Inc.
NationsBanc Corporate Center 210 West 10th Street 700 N.W. 107th Avenue
100 North Tryon Street Kansas City, MO 64105 Miami, FL 33172
Charlotte, NC 28255
Contact: Scott Joel Contact: Brad Hauger Contact: Steve Engel
Phone Number: (704) 388-3023 Phone Number: (816) 435-5175 Phone Number: (305) 229-6407
</TABLE>
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Master Servicer, Special Servicer
and others. Norwest has not independently confirmed the accuracy of information
received from these third parties and assumes no duty to do so. Norwest
expressly disclaims any responsibility for the accuracy or completeness of
information furnished by third parties.
C-1
<PAGE> 163
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
CERTIFICATE DISTRIBUTION DETAIL
<TABLE>
<CAPTION>
Class CUSIP Pass-Through Original Beginning Principal Interest Prepayment Collateral Support
Rate Balance Balance Distribution Distribution Premiums Deficit
Allocation/(Reimb)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
F 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
G 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
H 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
J 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
K 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
Totals 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
Class Total Ending Current
Distribution Balance Subordination
Level(1)
<S> <C> <C> <C>
A-1 0.00 0.00 0.00%
A-2 0.00 0.00 0.00%
B 0.00 0.00 0.00%
C 0.00 0.00 0.00%
D 0.00 0.00 0.00%
E 0.00 0.00 0.00%
F 0.00 0.00 0.00%
G 0.00 0.00 0.00%
H 0.00 0.00 0.00%
J 0.00 0.00 0.00%
K 0.00 0.00 0.00%
R-I 0.00 0.00 0.00%
R-II 0.00 0.00 0.00%
Totals 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Class CUSIP Pass-Through Original Beginning Interest Prepayment Total Ending
Rate Notional Notional Distribution Premiums Distribution Notional
Amount Amount Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the designated
class and (ii) the ending certificate balance of all classes which are not
subordinate to the designated class and dividing the result by (A).
C-2
<PAGE> 164
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
CERTIFICATE FACTOR DETAIL
<TABLE>
<CAPTION>
Class CUSIP Beginning Principal Interest Prepayment Collateral Support Ending
Balance Distribution Distribution Premiums Deficit Balance
Allocation/(Reimb)
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
F 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
G 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
H 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
J 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
K 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
<TABLE>
<CAPTION>
Class CUSIP Beginning Ending
Notional Interest Prepayment Notional
Amount Distribution Premiums Amount
<S> <C> <C> <C> <C> <C>
X 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
C-3
<PAGE> 165
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
RECONCILIATION DETAIL
<TABLE>
<CAPTION>
ADVANCE SUMMARY SERVICING FEE BREAKDOWNS
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Master Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Master Servicing Fees 0.00
Less Reductions to Master Servicing Fees 0.00
Reimbursement for Interest on Advances 0.00 Plus Master Servicing Fees for Delinquent Payments Received 0.00
paid from general collections Plus Adjustments for Prior Master Servicing Calculation 0.00
Total Master Servicing Fees Collected 0.00
</TABLE>
CERTIFICATE INTEREST RECONCILIATION
<TABLE>
<CAPTION>
Accrued Net Aggregate Distributable Distributable Additional Interest Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Distribution Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Certificate Interest
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
X 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00 0.00 0.00
J 0.00 0.00 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
C-4
<PAGE> 166
(Norwest Logo and Chart)
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
OTHER REQUIRED INFORMATION
<TABLE>
<S> <C> <C>
Sec 4.02(a)(iii)
Available Distribution Amount 0.00
Sec 4.02(a)(xiii)
Principal Distribution Amount 0.00
(a) Principal portion of Monthly Payments 0.00
and any Assumed Monthly Payments
(b) Voluntary Principal Prepayments 0.00
(c) Collection of Principal on a Balloon 0.00
Loan after its Stated Maturity Date
(d) Liquidation Proceeds and Insurance 0.00
Proceeds received on a Mortgage Loan
(e) Plus the excess of the prior Principal Distribution 0.00
Amount over the principal paid to the Sequential
Pay Certificates
Sec 4.02(a)(v) and (vi)
Aggregate Number of Outstanding Loans 0
Aggregate Stated Principal Balance of the Mortgage Proof before distribution 0.00
Aggregate Stated Principal Balance of the Mortgage Pool after distribution 0.00
Sec 4.02(a)(xiii)
Total Servicing and Special Servicing Fee paid 0.00
Servicing Fee paid 0.00
Special Servicing Fee paid 0.00
Trustee Fee paid 0.00
Sec 4.02(a)(xiv)
Additional Trust Fund Expenses 0.00
(i) Fees paid to Special Servicer 0.00
(ii) Interest on Advances 0.00
(iii) Cost of opinions of counsel 0.00
(iv) Unanticipated expenses of the Trust 0.00
(v) Cost to remedy adverse environmental 0.00
conditions of a defaulted Mortgage Loan
(vi) Other expenses of the Trust Fund not 0.00
included in the calculation of "Realized Loss"
</TABLE>
APPRAISAL REDUCTION AMOUNT
<TABLE>
<CAPTION>
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
<S> <C> <C>
Total
</TABLE>
C-5
<PAGE> 167
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
RATINGS DETAIL
<TABLE>
<CAPTION>
Original Ratings Current Ratings(1)
Class CUSIP DCR Fitch Moody's S&P DCR Fitch Moody's S&P
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
G
H
J
K
</TABLE>
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in this
transaction at the time of original issuance.
N/A - Date not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because
the ratings may have changed, you may want to obtain current ratings directly
from the rating agencies.
<TABLE>
<S> <C> <C> <C>
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc. Moody's Investors Service Standard & Poor's Rating Services
55 East Monroe Street One State Street Plaza 99 Church Street 26 Broadway
Chicago, Illinois 60603 New York, New York 10004 New York, New York 10007 New York, New York 10004
(312) 368-3100 (212) 908-0500 (212) 553-0300 (212) 208-8000
</TABLE>
C-6
<PAGE> 168
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
Scheduled Balance
<TABLE>
<CAPTION>
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
<C> <C> <C> <C> <C> <C> <C>
Totals
State(3)
<CAPTION>
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR(1)
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
See footnotes on last page of this section.
C-7
<PAGE> 169
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
DEBT Service Coverage Ratio
<TABLE>
<CAPTION>
Debt Service # of Scheduled % of WAM Weighted
Coverage Ratio Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Property Type(3)
<TABLE>
<CAPTION>
Property # of Scheduled % of WAM Weighted
Type Props. Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Note Rate
<TABLE>
<CAPTION>
Note # of Scheduled % of WAM Weighted
Rate Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Seasoning
<TABLE>
<CAPTION>
Seasoning # of Scheduled % of WAM Weighted
Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
See footnotes on last page of this section.
C-8
<PAGE> 170
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
Current Mortgage Loan and Property Stratification Tables
Anticipated Remaining Term (ARD and Balloon Loans)
<TABLE>
<CAPTION>
Anticipated Remaining # of Scheduled % of WAM Weighted
Term(2) Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Remaining Stated Term (Fully Amoritizing Loans)
<TABLE>
<CAPTION>
Remaining Stated # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Remaining Amoritization Term (ARD and Balloon Loans)
<TABLE>
<CAPTION>
Remaining Amoritization # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Age of Most Recent NOI
<TABLE>
<CAPTION>
Age of Most # of Scheduled % of WAM Weighted
Recent NOI Loans Balance Agg. (2) WAC Avg. DSCR (1)
Bal.
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
(1) Debt Service Coverage Ratios are calculated as described in the
prospectus, values are updated periodically as new NOI figures become
available from borrowers on an asset level. The Trustee makes no
representations as to the accuracy of the data provided by the borrower for
this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(3) Date in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the
related mortgage loan as disclosed in the offering document.
Note: There are no Hyper-Amoritization Loans included in the Mortgage Pool.
C-9
<PAGE> 171
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
MORTGAGE LOAN DETAIL
<TABLE>
<CAPTION>
Anticipated Neg.
Loan Property Interest Principal Gross Repayment Maturity Amort.
Number ODCR Type(1) City State Payment Payment Coupon Date Date (Y/N)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Beginning Ending Paid Appraisal Appraisal Res. Mod.
Scheduled Scheduled Thru Reduction Reduction Strat. Code
Balance Balance Date Date Amount (2) (3)
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
<TABLE>
<CAPTION>
(1) Property Type Code (2) Resolution Strategy Code (3) Modification Code
<S> <C> <C> <C> <C>
MF - Multi-Family OF - Office 1 - Modification 7 - REO 1 - Maturity Date Extension
RT - Retail MU - Mixed Use 2 - Foreclosure 8 - Resolved 2 - Amoritization Change
HC - Health Care LO - Lodging 3 - Bankruptcy 9 - Pending Return 3 - Principal Write-Off
IN - Industrial SS - Self Storage 4 - Extension to Master Servicer 4 - Combination
WH - Warehouse OT - Other 5 - Note Sale 10- Deed in Lieu Of
MH - Mobile Home Park 6 - DPO Foreclosure
</TABLE>
C-10
<PAGE> 172
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
PRINCIPAL PREPAYMENT DETAIL
<TABLE>
<CAPTION>
Offering Document Principal Prepayment Amount Prepayment Premiums
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
<S> <C> <C> <C> <C> <C>
Totals
</TABLE>
C-11
<PAGE> 173
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
HISTORICAL DETAIL
<TABLE>
<CAPTION>
Delinquencies Prepayments
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Rate and Maturities
Next Weighted Avg.
Coupon Remit WAM
<S> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
C-12
<PAGE> 174
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
DELINQUENCY LOAN DETAIL
<TABLE>
<CAPTION>
Offering # of Current Outstanding Status of Resolution
Loan Number Document Months Paid Through P&I P&I Mortgage Strategy Servicing
Cross-Reference Delinq. Date Advances Advances** Loan(1) Code(2) Transfer Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Totals
<CAPTION>
Current Outstanding REO
Foreclosure Servicing Servicing Bankruptcy Date Date
Date Advances Advances
<S> <C> <C> <C> <C>
Totals
</TABLE>
<TABLE>
<CAPTION>
(1) Status of Mortgage Loan (2) Resolution Strategy Code
<S> <C> <C> <C>
A - Payment Not Received 2 - Two Months Delinquent 1 - Modification 7 - REO
But Still in Grace Period 3 - Three Or More Months Delinquent 2 - Foreclosure 8 - Resolved
B - Late Payment But Less 4 - Assumed Scheduled Payment 3 - Bankruptcy 9 - Pending Return
Than 1 Month Delinquent (Performing Matured Balloon) 4 - Extension to Master Servicer
0 - Current 7 - Foreclosure 5 - Note Sale 10- Deed in Lieu Of
1 - One Month Delinquent 9 - REO 6 - DPO Foreclosure
</TABLE>
** Outstanding P&I Advances include the current period advance
C-13
<PAGE> 175
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
SPECIALLY SERVICED LOAN DETAIL - PART 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property State Interest Actual
Date Number Cross-Reference Date Code(1) Balance Type(2) Rate Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Net Remaining
Operating NOI DSCR Note Maturity Amortization
Income Date Date Date Term
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
(1) Resolution Strategy Code (2) Property Type Code
<S> <C> <C> <C>
1 - Modification 7 - REO MF - Multi-Family OF - Office
2 - Foreclosure 8 - Resolved RT - Retail MU - Mixed Use
3 - Bankruptcy 9 - Pending Return HC - Health Care LO - Lodging
4 - Extension to Master Servicer IN - Industrial SS - Self Storage
5 - Note Sale 10 - Deed in Lieu Of WH - Warehouse OT - Other
6 - DPO Foreclosure MH - Mobile Home Park
</TABLE>
C-14
<PAGE> 176
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
SPECIALLY SERVICED LOAN DETAIL - PART 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Phase 1 Date Appraisal Appraisal Other REO Comment
Date Number Cross-Reference Code(1) Date Date Value Property Revenue
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
(1) Resolution Strategy Code
<S> <C>
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed in Lieu Of
6 - DPO Foreclosure
</TABLE>
C-15
<PAGE> 177
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
MODIFIED LOAN DETAIL
<TABLE>
<CAPTION>
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
<S> <C> <C> <C> <C>
Total
</TABLE>
C-16
<PAGE> 178
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-2
PAYMENT DATE: 12/21/98
RECORD DATE: 11/30/98
LIQUIDATED LOAN DETAIL
<TABLE>
<CAPTION>
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Liquidation Liquidation as a % of Realized by Seller
Expenses* Proceeds Actual Balance Loss (Y/N)
<S> <C> <C> <C> <C>
Current Total
Cumulative Total
</TABLE>
* Aggregate liquidation expenses also include outstanding P&I advances and
unpaid fees (servicing, trustee, etc.).
C-17
<PAGE> 179
PROSPECTUS
NATIONSLINK FUNDING CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series. The Offered Certificates of any
series, together with any other mortgage pass-through certificates of such
series, are collectively referred to herein as the "Certificates".
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series, the
"Trust Fund" to be formed by NationsLink(SM) Funding Corporation (the
"Depositor") and consisting primarily of a segregated pool (a "Mortgage Asset
Pool") of various types of multifamily and commercial mortgage loans ("Mortgage
Loans"), mortgage-backed securities ("MBS") that evidence interests in, or that
are secured by pledges of, one or more of various types of multifamily or
commercial mortgage loans, or a combination of Mortgage Loans and MBS
(collectively, "Mortgage Assets"). If so specified in the related Prospectus
Supplement, the Trust Fund for a series of Certificates may include letters of
credit, insurance policies, guarantees, reserve funds or other types of credit
support, or any combination thereof, and also interest rate exchange agreements
and other financial assets, or any combination thereof. See "Description of the
Trust Funds", "Description of the Certificates" and "Description of Credit
Support".
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments) on
the Mortgage Assets in the related Trust Fund and the timing of receipt of such
payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations". A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates -- Termination".
(cover continued on next page)
------------------------
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR OR ANY OF ITS
AFFILIATES, INCLUDING NATIONSBANK CORPORATION, THE DEPOSITOR'S ULTIMATE PARENT.
NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE ASSETS WILL BE GUARANTEED OR
INSURED BY THE DEPOSITOR OR ANY OF ITS AFFILIATES OR, UNLESS OTHERWISE SPECIFIED
IN THE RELATED PROSPECTUS SUPPLEMENT, BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 15
HEREIN UNDER THE CAPTION "RISK FACTORS" AND SUCH INFORMATION AS MAY BE SET FORTH
UNDER THE CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE
PURCHASING ANY OFFERED CERTIFICATE.
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, which may include
NationsBanc Montgomery Securities LLC, an affiliate of the Depositor, as
described under "Method of Distribution" and in the related Prospectus
Supplement.
There will be no secondary market for the Offered Certificates of any
series prior to the offering thereof. There can be no assurance that a secondary
market for any Offered Certificates will develop or, if it does develop, that it
will continue. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any series unless
accompanied by the Prospectus Supplement for such series.
The date of this Prospectus is November 5, 1998
<PAGE> 180
(cover continued)
As described in the related Prospectus Supplement, the Certificates of each
series, including the Offered Certificates of such series, may consist of one or
more classes of Certificates that: (i) provide for the accrual of interest
thereon based on a fixed, variable or adjustable interest rate; (ii) are senior
or subordinate to one or more other classes of Certificates in entitlement to
certain distributions on the Certificates; (iii) are entitled to distributions
of principal, with disproportionate, nominal or no distributions of interest;
(iv) are entitled to distributions of interest, with disproportionate, nominal
or no distributions of principal; (v) provide for distributions of interest
thereon or principal thereof that commence only following the occurrence of
certain events, such as the retirement of one or more other classes of
Certificates of such series; (vi) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; or
(vii) provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology. Distributions in respect of the Certificates of each series will be
made on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. See "Description of the
Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as a
"real estate mortgage investment conduit" (each, a "REMIC") for federal income
tax purposes. If applicable, the Prospectus Supplement for a series of
Certificates will specify which class or classes of such series of Certificates
will be considered to be regular interests in the related REMIC and which class
of Certificates or other interests will be designated as the residual interest
in the related REMIC. See "Certain Federal Income Tax Consequences".
2
<PAGE> 181
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to each series of Offered Certificates will, among other things, set forth, as
and to the extent appropriate: (i) a description of the class or classes of such
Offered Certificates, including the payment provisions with respect to each such
class, the aggregate principal amount, if any, of each such class, the rate at
which interest accrues from time to time, if at all, with respect to each such
class or the method of determining such rate, and whether interest with respect
to each such class will accrue from time to time on its aggregate principal
amount, if any, or on a specified notional amount, if at all; (ii) information
with respect to any other classes of Certificates of the same series; (iii) the
respective dates on which distributions are to be made; (iv) information as to
the assets, including the Mortgage Assets, constituting the related Trust Fund
(all such assets, with respect to the Certificates of any series, the "Trust
Assets"); (v) the circumstances, if any, under which the related Trust Fund may
be subject to early termination; (vi) additional information with respect to the
method of distribution of such Offered Certificates; (vii) whether one or more
REMIC elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created and the identity of the person
(the "REMIC Administrator") responsible for the various tax-related duties in
respect of each REMIC to be created; (viii) the initial percentage ownership
interest in the related Trust Fund to be evidenced by each class of Certificates
of such series; (ix) information concerning the Trustee (as defined herein) of
the related Trust Fund; (x) if the related Trust Fund includes Mortgage Loans,
information concerning the Master Servicer and any Special Servicer (each as
defined herein) of such Mortgage Loans and the circumstances under which all or
a portion, as specified, of the servicing of a Mortgage Loan would transfer from
the Master Servicer to the Special Servicer; (xi) information as to the nature
and extent of subordination of any class of Certificates of such series,
including a class of Offered Certificates; and (xii) whether such Offered
Certificates will be initially issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Room 1204, Washington, D.C. 20549, and at its
Midwest Regional Offices located as follows: Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511; and Northeast Regional Office,
Seven World Trade Center, Suite 1300, New York, New York 10048. The Commission
also maintains a public access site on the Internet through the World Wide Web
at which site reports, information statements and other information, including
all electronic filings, regarding the Depositor and the Trust Fund may be
viewed. The Internet address of such World Wide Web site is http://www.sec.gov.
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any other person. Neither the delivery of this Prospectus or
any related Prospectus Supplement nor any sale made hereunder or thereunder
shall under any circumstances create an implication that there has been no
change in the information herein since the date hereof or therein since the date
thereof. This Prospectus and any related Prospectus Supplement are not an offer
to sell or a solicitation of an offer to buy any security in any jurisdiction in
which it is unlawful to make such offer or solicitation.
The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a class or series of Offered Certificates are being held and
transferred in book-entry
3
<PAGE> 182
format through the facilities of The Depository Trust Company ("DTC") as
described herein, then unless otherwise provided in the related Prospectus
Supplement, such reports will be sent on behalf of the related Trust Fund to a
nominee of DTC as the registered holder of the Offered Certificates. Conveyance
of notices and other communications by DTC to its participating organizations,
and directly or indirectly through such participating organizations to the
beneficial owners of the applicable Offered Certificates, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. See "Description of the
Certificates -- Reports to Certificateholders" and "-- Book-Entry Registration
and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Depositor intends to make a
written request to the staff of the Commission that the staff either (i) issue
an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor
from certain reporting requirements under the Exchange Act with respect to each
Trust Fund or (ii) state that the staff will not recommend that the Commission
take enforcement action if the Depositor fulfills its reporting obligations as
described in its written request. If such request is granted, the Depositor will
file or cause to be filed with the Commission as to each Trust Fund the periodic
unaudited reports to holders of the Offered Certificates referenced in the
preceding paragraph; however, because of the nature of the Trust Funds, it is
unlikely that any significant additional information will be filed. In addition,
because of the limited number of Certificateholders expected for each series,
the Depositor anticipates that a significant portion of such reporting
requirements will be permanently suspended following the first fiscal year for
the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, prior
to the termination of an offering of Offered Certificates evidencing interests
therein. The Depositor will provide or cause to be provided without charge to
each person to whom this Prospectus is delivered in connection with the offering
of one or more classes of Offered Certificates, upon written or oral request of
such person, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one or
more of such classes of such Offered Certificates, other than the exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Such requests to the Depositor should be directed in writing
to its principal executive offices at the NationsBank Corporate Center,
Charlotte, North Carolina 28255, or by telephone at (704) 386-2400.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
PROSPECTUS SUPPLEMENT....................................... 3
AVAILABLE INFORMATION....................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........... 4
SUMMARY OF PROSPECTUS....................................... 8
RISK FACTORS................................................ 15
Limited Liquidity of Offered Certificates................. 15
Limited Assets............................................ 15
Credit Support Limitations................................ 16
Effect of Prepayments on Average Life of Certificates..... 16
Effect of Prepayments on Yield of Certificates............ 18
Limited Nature of Ratings................................. 18
Certain Factors Affecting Delinquency, Foreclosure and
Loss of the Mortgage Loans............................. 18
Inclusion of Delinquent and Nonperforming Mortgage Loans
in a Mortgage Asset Pool............................... 21
DESCRIPTION OF THE TRUST FUNDS.............................. 22
General................................................... 22
Mortgage Loans............................................ 22
MBS....................................................... 26
Certificate Accounts...................................... 27
Credit Support............................................ 27
Cash Flow Agreements...................................... 27
YIELD AND MATURITY CONSIDERATIONS........................... 27
General................................................... 27
Pass-Through Rate......................................... 27
Payment Delays............................................ 28
Certain Shortfalls in Collections of Interest............. 28
Yield and Prepayment Considerations....................... 28
Weighted Average Life and Maturity........................ 30
Other Factors Affecting Yield, Weighted Average Life and
Maturity............................................... 30
THE DEPOSITOR............................................... 32
DESCRIPTION OF THE CERTIFICATES............................. 32
General................................................... 32
Distributions............................................. 33
Distributions of Interest on the Certificates............. 34
Distributions of Principal of the Certificates............ 35
Distributions on the Certificates in Respect of Prepayment
Premiums or in Respect of Equity Participations........ 35
Allocation of Losses and Shortfalls....................... 36
Advances in Respect of Delinquencies...................... 36
Reports to Certificateholders............................. 37
Voting Rights............................................. 38
Termination............................................... 38
Book-Entry Registration and Definitive Certificates....... 39
THE POOLING AND SERVICING AGREEMENTS........................ 40
General................................................... 40
Assignment of Mortgage Loans; Repurchases................. 41
Representations and Warranties; Repurchases............... 42
</TABLE>
5
<PAGE> 184
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Collection and Other Servicing Procedures................. 43
Sub-Servicers............................................. 45
Certificate Account....................................... 45
Modifications, Waivers and Amendments of Mortgage Loans... 48
Realization Upon Defaulted Mortgage Loans................. 48
Hazard Insurance Policies................................. 50
Due-on-Sale and Due-on-Encumbrance Provisions............. 50
Servicing Compensation and Payment of Expenses............ 51
Evidence as to Compliance................................. 51
Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator
and the Depositor...................................... 52
Events of Default......................................... 53
Rights Upon Event of Default.............................. 54
Amendment................................................. 54
List of Certificateholders................................ 55
The Trustee............................................... 55
Duties of the Trustee..................................... 55
Certain Matters Regarding the Trustee..................... 56
Resignation and Removal of the Trustee.................... 56
DESCRIPTION OF CREDIT SUPPORT............................... 56
General................................................... 56
Subordinate Certificates.................................. 57
Insurance or Guarantees with Respect to Mortgage Loans.... 57
Letter of Credit.......................................... 57
Certificate Insurance and Surety Bonds.................... 58
Reserve Funds............................................. 58
Credit Support with respect to MBS........................ 58
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS..................... 58
General................................................... 59
Types of Mortgage Instruments............................. 59
Leases and Rents.......................................... 59
Personalty................................................ 60
Foreclosure............................................... 60
Bankruptcy Laws........................................... 63
Environmental Considerations.............................. 64
Due-on-Sale and Due-on-Encumbrance Provisions............. 66
Junior Liens; Rights of Holders of Senior Liens........... 66
Subordinate Financing..................................... 67
Default Interest and Limitations on Prepayments........... 68
Applicability of Usury Laws............................... 68
Certain Laws and Regulations.............................. 68
Americans with Disabilities Act........................... 69
Soldiers' and Sailors' Civil Relief Act of 1940........... 69
Forfeitures in Drug and RICO Proceedings.................. 69
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 70
General................................................... 70
REMICs.................................................... 71
Grantor Trust Funds....................................... 86
</TABLE>
6
<PAGE> 185
<TABLE>
<CAPTION>
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<S> <C>
STATE AND OTHER TAX CONSEQUENCES............................ 94
CERTAIN ERISA CONSIDERATIONS................................ 94
General................................................... 94
Plan Asset Regulations.................................... 95
Insurance Company General Accounts........................ 96
Consultation With Counsel................................. 97
Tax Exempt Investors...................................... 97
LEGAL INVESTMENT............................................ 97
USE OF PROCEEDS............................................. 99
METHOD OF DISTRIBUTION...................................... 99
LEGAL MATTERS............................................... 100
FINANCIAL INFORMATION....................................... 100
RATING...................................................... 101
INDEX OF PRINCIPAL DEFINITIONS.............................. 102
</TABLE>
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<PAGE> 186
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
SECURITIES OFFERED......... Mortgage pass-through certificates.
DEPOSITOR.................. NationsLink(SM) Funding Corporation, a Delaware
corporation and a subsidiary of NationsBank, N.A.
See "The Depositor".
TRUSTEE.................... The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "The Pooling and
Servicing Agreements -- The Trustee".
MASTER SERVICER............ If a Trust Fund includes Mortgage Loans, then the
master servicer (the "Master Servicer") for the
corresponding series of Certificates will be named
in the related Prospectus Supplement. The Master
Servicer for any series of Certificates may be an
affiliate of the Depositor. See "The Pooling and
Servicing Agreements -- Certain Matters Regarding
the Master Servicer, the Special Servicer, the
REMIC Administrator and the Depositor".
SPECIAL SERVICER........... If a Trust Fund includes Mortgage Loans, then the
special servicer (the "Special Servicer") for the
corresponding series of Certificates will be named,
or the circumstances under which a Special Servicer
may be appointed will be described, in the related
Prospectus Supplement. The Special Servicer for any
series of Certificates may be the Master Servicer
or an affiliate of the Depositor. See "The Pooling
and Servicing Agreements -- Collection and Other
Servicing Procedures".
MBS ADMINISTRATOR.......... If a Trust Fund includes MBS, then the entity
responsible for administering such MBS (the "MBS
Administrator") will be named in the related
Prospectus Supplement. If an entity other than the
Trustee and the Master Servicer is the MBS
Administrator, such entity will be herein referred
to as the "Manager". The Manager for any series of
Certificates may be an affiliate of the Depositor.
REMIC ADMINISTRATOR........ The person (the "REMIC Administrator") responsible
for the various tax-related administration duties
for a series of Certificates as to which one or
more REMIC elections have been made, will be named
in the related Prospectus Supplement. Any REMIC
Administrator may be an affiliate of the Depositor
and/or may also be acting as Master Servicer,
Special Servicer, Trustee or MBS Administrator. See
"Certain Federal Income Tax
Consequences -- REMICs -- Reporting and Other
Administrative Matters."
THE MORTGAGE ASSETS........ The Mortgage Assets will be the primary assets of
any Trust Fund. The Mortgage Assets with respect to
each series of Certificates will, in general,
consist of a pool of mortgage loans ("Mortgage
Loans") secured by first or junior liens on, or
security interests in, without limitation, (i)
residential properties consisting of five or more
rental or cooperatively-owned dwelling units in
high-rise, mid-rise or garden apartment buildings
or other residential structures ("Multifamily
Properties") or (ii) office buildings, retail
stores and establishments, hotels or motels,
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<PAGE> 187
nursing homes, hospitals or other health
care-related facilities, recreational vehicle and
mobile home parks, warehouse facilities,
mini-warehouse facilities, self-storage facilities,
industrial plants, parking lots, entertainment or
sports arenas, restaurants, marinas, mixed use or
various other types of income-producing properties
or unimproved land ("Commercial Properties").
However, no one of the following types of
Commercial Properties will represent security for a
material concentration of the Mortgage Loans in any
Trust Fund, based on principal balance at the time
such Trust Fund is formed: (i) restaurants; (ii)
entertainment or sports arenas; or (iii) marinas.
The Mortgage Loans will not be guaranteed or
insured by the Depositor or any of its affiliates
or, unless otherwise provided in the related
Prospectus Supplement, by any governmental agency
or instrumentality or by any other person. If so
specified in the related Prospectus Supplement,
some Mortgage Loans may be delinquent or
nonperforming as of the date the related Trust Fund
is formed.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for accrual
of interest thereon at an interest rate (a
"Mortgage Rate") that is fixed over its term or
that adjusts from time to time, or that may be
converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may
permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or
nonamortizing, with a balloon payment due on its
stated maturity date, (iv) may prohibit over its
term or for a certain period prepayments and/or
require payment of a premium or a yield maintenance
payment in connection with certain prepayments and
(v) may provide for payments of principal, interest
or both, on due dates that occur monthly,
quarterly, semi-annually or at such other interval
as is specified in the related Prospectus
Supplement. Each Mortgage Loan will have had an
original term to maturity of not more than 40
years. No Mortgage Loan will have been originated
by the Depositor; however, some or all of the
Mortgage Loans in any Trust Fund may have been
originated by an affiliate of the Depositor. See
"Description of the Trust Funds -- Mortgage Loans".
If any Mortgage Loan, or group of related Mortgage
Loans, constitutes a concentration of credit risk,
financial statements or other financial information
with respect to the related Mortgaged Property or
Mortgaged Properties will be included in the
related Prospectus Supplement. See "Description of
the Trust Funds -- Mortgage Loans -- Mortgage Loan
Information in Prospectus Supplements".
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets with
respect to a series of Certificates may also
include, or consist of, mortgage participations,
mortgage pass-through certificates and/or other
mortgage-backed securities (collectively, "MBS"),
that evidence an interest in, or are secured by a
pledge of, one or more mortgage loans that conform
to the descriptions of the Mortgage Loans contained
herein and which may or may not be issued, insured
or
9
<PAGE> 188
guaranteed by the United States or an agency or
instrumentality thereof. See "Description of the
Trust Funds -- MBS".
THE CERTIFICATES........... Each series of Certificates will be issued in one
or more classes pursuant to a pooling and servicing
agreement or other agreement specified in the
related Prospectus Supplement (in any case, a
"Pooling and Servicing Agreement") and will
represent in the aggregate the entire beneficial
ownership interest in the related Trust Fund.
As described in the related Prospectus Supplement,
the Certificates of each series, including the
Offered Certificates of such series, may consist of
one or more classes of Certificates that, among
other things: (i) are senior (collectively, "Senior
Certificates") or subordinate (collectively,
"Subordinate Certificates") to one or more other
classes of Certificates in entitlement to certain
distributions on the Certificates; (ii) are
entitled to distributions of principal, with
disproportionate, nominal or no distributions of
interest (collectively, "Stripped Principal
Certificates"); (iii) are entitled to distributions
of interest, with disproportionate, nominal or no
distributions of principal (collectively, "Stripped
Interest Certificates"); (iv) provide for
distributions of interest thereon or principal
thereof that commence only after the occurrence of
certain events, such as the retirement of one or
more other classes of Certificates of such series;
(v) provide for distributions of principal thereof
to be made, from time to time or for designated
periods, at a rate that is faster (and, in some
cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at
which payments or other collections of principal
are received on the Mortgage Assets in the related
Trust Fund; (vi) provide for distributions of
principal thereof to be made, subject to available
funds, based on a specified principal payment
schedule or other methodology; or (vii) provide for
distribution based on collections on the Mortgage
Assets in the related Trust Fund attributable to
prepayment premiums, yield maintenance payments or
equity participations.
If so specified in the related Prospectus
Supplement, a series of Certificates may include
one or more "Controlled Amortization Classes",
which will entitle the holders thereof to receive
principal distributions according to a specified
principal payment schedule. Although prepayment
risk cannot be eliminated entirely for any class of
Certificates, a Controlled Amortization Class will
generally provide a relatively stable cash flow so
long as the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund remains
relatively constant at the rate, or within the
range of rates, of prepayment used to establish the
specific principal payment schedule for such
Certificates. Prepayment risk with respect to a
given Mortgage Asset Pool does not disappear,
however, and the stability afforded to a Controlled
Amortization Class comes at the expense of one or
more other classes of the same series, any of which
other classes may also be a class of Offered
Certificates. See "Risk Factors -- Effect of
Prepayments on Average Life of Certificates" and
"-- Effect of Prepayments on Yield of
Certificates".
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of REMIC Residual Certificates (as
defined herein), will have an initial stated
principal amount (a "Certificate Balance"); and
each class of Certificates, other than certain
classes of Stripped Principal Certificates and
certain classes of REMIC
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<PAGE> 189
Residual Certificates, will accrue interest on its
Certificate Balance or, in the case of certain
classes of Stripped Interest Certificates, on a
notional amount (a "Notional Amount"), based on a
fixed, variable or adjustable interest rate (a
"Pass-Through Rate"). The related Prospectus
Supplement will specify the Certificate Balance,
Notional Amount and/or Pass-Through Rate (or, in
the case of a variable or adjustable Pass-Through
Rate, the method for determining such rate), as
applicable, for each class of Offered Certificates.
If so specified in the related Prospectus
Supplement, a class of Certificates may have two or
more component parts, each having characteristics
that are otherwise described herein as being
attributable to separate and distinct classes.
The Certificates will not be guaranteed or insured
by the Depositor or any of its affiliates, by any
governmental agency or instrumentality or by any
other person or entity, unless otherwise provided
in the related Prospectus Supplement. See "Risk
Factors -- Limited Assets".
DISTRIBUTIONS OF INTEREST
ON THE CERTIFICATES........ Interest on each class of Offered Certificates
(other than certain classes of Stripped Principal
Certificates and certain classes of REMIC Residual
Certificates) of each series will accrue at the
applicable Pass-Through Rate on the Certificate
Balance or, in the case of certain classes of
Stripped Interest Certificates, the Notional Amount
thereof outstanding from time to time and will be
distributed to Certificateholders as provided in
the related Prospectus Supplement (each of the
specified dates on which distributions are to be
made, a "Distribution Date"). Distributions of
interest with respect to one or more classes of
Certificates (collectively, "Accrual Certificates")
may not commence until the occurrence of certain
events, such as the retirement of one or more other
classes of Certificates, and interest accrued with
respect to a class of Accrual Certificates prior to
the occurrence of such an event will either be
added to the Certificate Balance thereof or
otherwise deferred as described in the related
Prospectus Supplement. Distributions of interest
with respect to one or more classes of Certificates
may be reduced to the extent of certain
delinquencies, losses and other contingencies
described herein and in the related Prospectus
Supplement. See "Risk Factors -- Effect of
Prepayments on Average Life of Certificates" and
"-- Effect of Prepayments on Yield of
Certificates", "Yield and Maturity
Considerations -- Certain Shortfalls in Collections
of Interest" and "Description of the
Certificates -- Distributions of Interest on the
Certificates".
DISTRIBUTIONS OF PRINCIPAL
OF THE CERTIFICATES........ Each class of Certificates of each series (other
than certain classes of Stripped Interest
Certificates and certain classes of REMIC Residual
Certificates) will have a Certificate Balance. The
Certificate Balance of a class of Certificates
outstanding from time to time will represent the
maximum amount that the holders thereof are then
entitled to receive in respect of principal from
future cash flow on the assets in the related Trust
Fund. The initial aggregate Certificate Balance of
all classes of a series of Certificates will not be
greater than the outstanding principal balance of
the related Mortgage Assets as of a specified date
(the "Cut-off Date"), after application of
scheduled payments due on or before such date,
whether or not received. As and to the extent
described in
11
<PAGE> 190
each Prospectus Supplement, distributions of
principal with respect to the related series of
Certificates will be made on each Distribution Date
to the holders of the class or classes of
Certificates of such series then entitled thereto
until the Certificate Balances of such Certificates
have been reduced to zero. Distributions of
principal with respect to one or more classes of
Certificates: (i) may be made at a rate that is
faster (and, in some cases, substantially faster)
or slower (and, in some cases, substantially
slower) than the rate at which payments or other
collections of principal are received on the
Mortgage Assets in the related Trust Fund; (ii) may
not commence until the occurrence of certain
events, such as the retirement of one or more other
classes of Certificates of the same series; (iii)
may be made, subject to certain limitations, based
on a specified principal payment schedule; or (iv)
may be contingent on the specified principal
payment schedule for another class of the same
series and the rate at which payments and other
collections of principal on the Mortgage Assets in
the related Trust Fund are received. Unless
otherwise specified in the related Prospectus
Supplement, distributions of principal of any class
of Offered Certificates will be made on a pro rata
basis among all of the Certificates of such class.
See "Description of the Certificates --
Distributions of Principal of the Certificates".
CREDIT SUPPORT AND CASH
FLOW AGREEMENTS............ If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage Assets
in the related Trust Fund may be provided to one or
more classes of Certificates of the related series
in the form of subordination of one or more other
classes of Certificates of such series, which other
classes may include one or more classes of Offered
Certificates, or by one or more other types of
credit support, such as a letter of credit,
insurance policy, guarantee, reserve fund or
another type of credit support, or a combination
thereof (any such coverage with respect to the
Certificates of any series, "Credit Support"). If
so provided in the related Prospectus Supplement, a
Trust Fund may include: (i) guaranteed investment
contracts pursuant to which moneys held in the
funds and accounts established for the related
series will be invested at a specified rate; or
(ii) certain other agreements, such as interest
rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to
reduce the effects of interest rate fluctuations on
the Mortgage Assets or on one or more classes of
Certificates (any such agreement, in the case of
clause (i) or (ii), a "Cash Flow Agreement").
Certain relevant information regarding any
applicable Credit Support or Cash Flow Agreement
will be set forth in the Prospectus Supplement for
a series of Offered Certificates. See "Risk
Factors -- Credit Support Limitations",
"Description of the Trust Funds -- Credit Support"
and "-- Cash Flow Agreements" and "Description of
Credit Support".
ADVANCES................... If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund includes
Mortgage Loans, the Master Servicer, the Special
Servicer, the Trustee, any provider of Credit
Support and/or any other specified person may be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest on
such Mortgage Loans. Any such advances made with
respect to a particular Mortgage Loan will be
reimbursable
12
<PAGE> 191
from subsequent recoveries in respect of such
Mortgage Loan and otherwise to the extent described
herein and in the related Prospectus Supplement.
See "Description of the Certificates -- Advances in
Respect of Delinquencies". If and to the extent
provided in the Prospectus Supplement for a series
of Certificates, any entity making such advances
may be entitled to receive interest thereon for a
specified period during which certain or all of
such advances are outstanding, payable from amounts
in the related Trust Fund. See "Description of the
Certificates -- Advances in Respect of
Delinquencies". If a Trust Fund includes MBS, any
comparable advancing obligation of a party to the
related Pooling and Servicing Agreement, or of a
party to the related MBS Agreement, will be
described in the related Prospectus Supplement.
OPTIONAL TERMINATION....... If so specified in the related Prospectus
Supplement, a series of Certificates may be subject
to optional early termination through the
repurchase of the Mortgage Assets in the related
Trust Fund by the party or parties specified
therein, under the circumstances and in the manner
set forth therein. If so provided in the related
Prospectus Supplement, upon the reduction of the
Certificate Balance of a specified class or classes
of Certificates by a specified percentage or amount
or upon a specified date, a party specified therein
may be authorized or required to solicit bids for
the purchase of all of the Mortgage Assets of the
related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or
classes, under the circumstances and in the manner
set forth therein. See "Description of the
Certificates -- Termination".
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... The Certificates of each series will constitute or
evidence ownership of either (i) "regular
interests" ("REMIC Regular Certificates") and
"residual interests" ("REMIC Residual
Certificates") in a Trust Fund, or a designated
portion thereof, treated as a REMIC under Sections
860A through 860G of the Internal Revenue Code of
1986 (the "Code"), or (ii) interests ("Grantor
Trust Certificates") in a Trust Fund treated as a
grantor trust (or a partnership) under applicable
provisions of the Code.
Investors are advised to consult their tax advisors
and to review "Certain Federal Income Tax
Consequences" herein and in the related Prospectus
Supplement.
CERTAIN ERISA
CONSIDERATIONS............. Fiduciaries of retirement plans and certain other
employee benefit plans and arrangements, including
individual retirement accounts, annuities, Keogh
plans, and collective investment funds and separate
accounts in which such plans, accounts, annuities
or arrangements are invested, that are subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the
Code, should review with their legal advisors
whether the purchase or holding of Offered
Certificates could give rise to a transaction that
is prohibited or is not otherwise permissible
either under ERISA or Section 4975 of the Code. See
"Certain ERISA Considerations" herein and in the
related Prospectus Supplement.
LEGAL INVESTMENT........... The Offered Certificates will constitute "mortgage
related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984,
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<PAGE> 192
as amended ("SMMEA"), only if so specified in the
related Prospectus Supplement. Investors whose
investment authority is subject to legal
restrictions should consult their legal advisors to
determine whether and to what extent the Offered
Certificates constitute legal investments for them.
See "Legal Investment" herein and in the related
Prospectus Supplement.
RATING..................... At their respective dates of issuance, each class
of Offered Certificates will be rated not lower
than investment grade by one or more nationally
recognized statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein and in the
related Prospectus Supplement.
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<PAGE> 193
RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
LIMITED LIQUIDITY OF OFFERED CERTIFICATES
General. The Offered Certificates of any series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time.
Furthermore, except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates -- Termination".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Certificates of any series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for any series of Offered Certificates may indicate that
an underwriter specified therein intends to establish a secondary market in such
Offered Certificates; however, no underwriter will be obligated to do so. Any
such secondary market may provide less liquidity to investors than any
comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Certificates of any series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling and Servicing
Agreement as described herein under the heading "Description of the
Certificates -- Reports to Certificateholders". There can be no assurance that
any additional ongoing information regarding the Offered Certificates of any
series will be available through any other source. The limited nature of such
information in respect of a series of Offered Certificates may adversely affect
the liquidity thereof, even if a secondary market for such Certificates does
develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to any series of Offered Certificates
or class thereof, the market value of such Certificates will be affected by
several factors, including the perceived liquidity thereof, the anticipated cash
flow thereon (which may vary widely depending upon the prepayment and default
assumptions applied in respect of the underlying Mortgage Loans) and prevailing
interest rates. The price payable at any given time in respect of certain
classes of Offered Certificates (in particular, a class with a relatively long
average life, a Companion Class (as defined herein) or a class of Stripped
Interest Certificates or Stripped Principal Certificates) may be extremely
sensitive to small fluctuations in prevailing interest rates; and the relative
change in price for an Offered Certificate in response to an upward or downward
movement in prevailing interest rates may not necessarily equal the relative
change in price for such Offered Certificate in response to an equal but
opposite movement in such rates. Accordingly, the sale of Offered Certificates
by a holder in any secondary market that may develop may be at a discount from
the price paid by such holder. The Depositor is not aware of any source through
which price information about the Offered Certificates will be generally
available on an ongoing basis.
LIMITED ASSETS
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other person
or entity; and no Offered Certificate of any series will represent a claim
against or security interest in the Trust Funds for any other
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series. Accordingly, if the related Trust Fund has insufficient assets to make
payments on a series of Offered Certificates, no other assets will be available
for payment of the deficiency, and the holders of one or more classes of such
Offered Certificates will be required to bear the consequent loss. Furthermore,
certain amounts on deposit from time to time in certain funds or accounts
constituting part of a Trust Fund, including the Certificate Account and any
accounts maintained as Credit Support, may be withdrawn under certain
conditions, if and to the extent described in the related Prospectus Supplement,
for purposes other than the payment of principal of or interest on the related
series of Certificates. If and to the extent so provided in the Prospectus
Supplement for a series of Certificates consisting of one or more classes of
Subordinate Certificates, on any Distribution Date in respect of which losses or
shortfalls in collections on the Mortgage Assets have been incurred, all or a
portion of the amount of such losses or shortfalls will be borne first by one or
more classes of the Subordinate Certificates, and, thereafter, by the remaining
classes of Certificates in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
CREDIT SUPPORT LIMITATIONS
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for a series of Certificates will describe any Credit Support provided with
respect thereto. Use of Credit Support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement. Moreover,
such Credit Support may not cover all potential losses; for example, Credit
Support may or may not cover loss by reason of fraud or negligence by a mortgage
loan originator or other parties. Any such losses not covered by Credit Support
may, at least in part, be allocated to one or more classes of Offered
Certificates.
Disproportionate Benefits to Certain Classes and Series. A series of
Certificates may include one or more classes of Subordinate Certificates (which
may include Offered Certificates), if so provided in the related Prospectus
Supplement. Although subordination is intended to reduce the likelihood of
temporary shortfalls and ultimate losses to holders of Senior Certificates, the
amount of subordination will be limited and may decline under certain
circumstances. In addition, if principal payments on one or more classes of
Offered Certificates of a series are made in a specified order of priority, any
related Credit Support may be exhausted before the principal of the later paid
classes of Offered Certificates of such series has been repaid in full. As a
result, the impact of losses and shortfalls experienced with respect to the
Mortgage Assets may fall primarily upon those classes of Offered Certificates
having a later right of payment. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
the holders of Offered Certificates of one (or more) such series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable Credit Support supporting one or more classes of Offered
Certificates, including the subordination of one or more other classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and certain
other factors. There can, however, be no assurance that the loss experience on
the related Mortgage Assets will not exceed such assumed levels. See
"Description of the Certificates -- Allocation of Losses and Shortfalls" and
"Description of Credit Support". If the losses on the related Mortgage Assets do
exceed such assumed levels, the holders of one or more classes of Offered
Certificates will be required to bear such additional losses.
EFFECT OF PREPAYMENTS ON AVERAGE LIFE OF CERTIFICATES
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the Offered
Certificates of the related series may be highly unpredictable. Prepayments on
the Mortgage Loans in any Trust Fund will result in a faster rate of principal
payments on one or more classes of the related series of Certificates than if
payments on such Mortgage Loans were made as scheduled. Thus, the prepayment
experience on the Mortgage Loans in a Trust Fund may affect the average life of
one or more classes of Certificates of the related series, including a class of
Offered Certificates. The rate of principal payments on pools of mortgage loans
varies among pools and from time to
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time is influenced by a variety of economic, demographic, geographic, social,
tax and legal factors. For example, if prevailing interest rates fall
significantly below the Mortgage Rates borne by the Mortgage Loans included in a
Trust Fund, then, subject to the particular terms of the Mortgage Loans (e.g.,
provisions that prohibit voluntary prepayments during specified periods or
impose penalties in connection therewith) and the ability of borrowers to obtain
new financing, principal prepayments on such Mortgage Loans are likely to be
higher than if prevailing interest rates remain at or above the rates borne by
those Mortgage Loans. Conversely, if prevailing interest rates rise
significantly above the Mortgage Rates borne by the Mortgage Loans included in a
Trust Fund, then principal prepayments on such Mortgage Loans are likely to be
lower than if prevailing interest rates remain at or below the mortgage rates
borne by those Mortgage Loans. There can be no assurance as to the actual rate
of prepayment on the Mortgage Loans in any Trust Fund or that such rate of
prepayment will conform to any model described herein or in any Prospectus
Supplement. As a result, depending on the anticipated rate of prepayment for the
Mortgage Loans in any Trust Fund, the retirement of any class of Certificates of
the related series could occur significantly earlier or later, and the average
life thereof could be significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the related
series will depend on the terms and provisions of such Certificates. A class of
Certificates, including a class of Offered Certificates, may provide that on any
Distribution Date the holders of such Certificates are entitled to a pro rata
share of the prepayments on the Mortgage Loans in the related Trust Fund that
are distributable on such date, to a disproportionately large share (which, in
some cases, may be all) of such prepayments, or to a disproportionately small
share (which, in some cases, may be none) of such prepayments. A class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of early retirement of such class ("Call Risk") if the
rate of prepayment is relatively fast; while a class of Certificates that
entitles the holders thereof to a disproportionately small share of the
prepayments on the Mortgage Loans in the related Trust Fund increases the
likelihood of an extended average life of such class ("Extension Risk") if the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
classes of Certificateholders of any series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A series of Certificates may include one or more Controlled Amortization
Classes, which will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule. Although
prepayment risk cannot be eliminated entirely for any class of Certificates, a
Controlled Amortization Class will generally provide a relatively stable cash
flow so long as the actual rate of prepayment on the Mortgage Loans in the
related Trust Fund remains relatively constant at the rate, or within the range
of rates, of prepayment used to establish the specific principal payment
schedule for such Certificates. Prepayment risk with respect to a given Mortgage
Asset Pool does not disappear, however, and the stability afforded to a
Controlled Amortization Class comes at the expense of one or more Companion
Classes of the same series, any of which Companion Classes may also be a class
of Offered Certificates. In general, and as more specifically described in the
related Prospectus Supplement, a Companion Class may entitle the holders thereof
to a disproportionately large share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively fast, and/or may
entitle the holders thereof to a disproportionately small share of prepayments
on the Mortgage Loans in the related Trust Fund when the rate of prepayment is
relatively slow. As and to the extent described in the related Prospectus
Supplement, a Companion Class absorbs some (but not all) of the Call Risk and/or
Extension Risk that would otherwise belong to the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans in the
related Trust Fund were allocated on a pro rata basis.
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EFFECT OF PREPAYMENTS ON YIELD OF CERTIFICATES
A series of Certificates may include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recover its original investment
under some prepayment scenarios. The extent to which the yield to maturity of
any class of Offered Certificates may vary from the anticipated yield will
depend upon the degree to which such Certificates are purchased at a discount or
premium and the amount and timing of distributions thereon. An investor should
consider, in the case of any Offered Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments
could result in an actual yield to such investor that is lower than the
anticipated yield. See "Yield and Maturity Considerations". See also "Certain
Legal Aspects of the Mortgage Loans -- Default Interest and Limitations on
Prepayments" herein regarding the enforceability of Prepayment Premiums.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such Offered
Certificates will receive payments to which such Certificateholders are entitled
under the related Pooling and Servicing Agreement. Such rating will not
constitute an assessment of the likelihood that principal prepayments on the
related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the related Trust Fund. Furthermore, such rating
will not address the possibility that prepayment of the related Mortgage Loans
at a higher or lower rate than anticipated by an investor may cause such
investor to experience a lower than anticipated yield or that an investor that
purchases an Offered Certificate at a significant premium might fail to recover
its initial investment under certain prepayment scenarios. Hence, a rating
assigned by a Rating Agency does not guarantee or ensure the realization of any
anticipated yield on a class of Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of the Certificates of such
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. As a result, the
Credit Support required in respect of the Offered Certificates of any series may
be insufficient to fully protect the holders thereof from losses on the related
Mortgage Asset Pool. See "Description of Credit Support" and "Rating".
CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS
General. The payment performance of the Offered Certificates of any series
will be directly related to the payment performance of the underlying Mortgage
Loans. Set forth below is a discussion of certain factors that will affect the
full and timely payment of the Mortgage Loans in any Trust Fund. In addition, a
description of certain material considerations associated with investments in
mortgage loans is included herein under "Certain Legal Aspects of Mortgage
Loans".
The Offered Certificates will be directly or indirectly backed by mortgage
loans secured by Multifamily Properties and/or Commercial Properties. Mortgage
loans made on the security of Multifamily or Commercial Property may have a
greater likelihood of delinquency and foreclosure, and a greater likelihood of
loss in the event thereof, than loans made on the security of an owner-occupied
single-family property. See
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"Description of the Trust Funds -- Mortgage Loans -- Default and Loss
Considerations with Respect to the Mortgage Loans". The ability of a borrower to
repay a loan secured by an income-producing property typically is dependent
primarily upon the successful operation of such property rather than upon the
existence of independent income or assets of the borrower; thus, the value of an
income-producing property is directly related to the net operating income
derived from such property. If the net operating income of the property is
reduced (for example, if rental or occupancy rates decline or real estate tax
rates or other operating expenses increase), the borrower's ability to repay the
loan may be impaired. A number of the Mortgage Loans may be secured by liens on
owner-occupied Mortgaged Properties or on Mortgaged Properties leased to a
single tenant or in which only a few tenants produce a material amount of the
rental income. As the primary component of Net Operating Income, rental income
(and maintenance payments from tenant stockholders of a Cooperative) and the
value of any Mortgaged Property are subject to the vagaries of the applicable
real estate market and/or business climate. Properties typically leased,
occupied or used on a short-term basis, such as health care-related facilities,
hotels and motels, and mini-warehouse and self-storage facilities, tend to be
affected more rapidly by changes in market or business conditions than do
properties leased, occupied or used for longer periods, such as (typically)
warehouses, retail stores, office buildings and industrial plants. Commercial
Loans may be secured by owner-occupied Mortgaged Properties or Mortgaged
Properties leased to a single tenant. Accordingly, a decline in the financial
condition of the mortgagor or single tenant, as applicable, may have a
disproportionately greater effect on the Net Operating Income from such
Mortgaged Properties than would be the case with respect to Mortgaged Properties
with multiple tenants.
Changes in the expense components of Net Operating Income due to the
general economic climate or economic conditions in a locality or industry
segment, such as increases in interest rates, real estate and personal property
tax rates and other operating expenses including energy costs; changes in
governmental rules, regulations and fiscal policies, including environmental
legislation; and acts of God may also affect the Net Operating Income and the
value of the Mortgaged Property and the risk of default on the related Mortgage
Loan. As may be further described in the related Prospectus Supplement, in some
cases leases of Mortgaged Properties may provide that the lessee, rather than
the mortgagor, is responsible for payment of certain of these expenses ("Net
Leases"); however, because leases are subject to default risks as well when a
tenant's income is insufficient to cover its rent and operating expenses, the
existence of such "net of expense" provisions will only temper, not eliminate,
the impact of expense increases on the performance of the related Mortgage Loan.
Additional considerations may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals and nursing homes are subject to significant governmental
regulation of the ownership, operation, maintenance and financing of health care
institutions. Hotel, motel and restaurant properties are often operated pursuant
to franchise, management or operating agreements that may be terminable by the
franchisor or operator, and the transferability of a hotel's or restaurant's
operating, liquor and other licenses upon a transfer of the hotel, or the
restaurant, as the case may be, whether through purchase or foreclosure, is
subject to local law requirements.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited to
the specific real property and other assets, if any, that were pledged to secure
the Mortgage Loan. However, even with respect to those Mortgage Loans that
provide for recourse against the borrower and its assets generally, there can be
no assurance that enforcement of such recourse provisions will be practicable,
or that the assets of the borrower will be sufficient to permit a recovery in
respect of a defaulted Mortgage Loan in excess of the liquidation value of the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans --
Foreclosure -- Anti-Deficiency Legislation".
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Limitations on Enforceability of Cross-Collateralization. A Mortgage Pool
may include groups of Mortgage Loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all of
the collateral pledged to secure the respective Mortgage Loans in a cross-
collateralized group, and the cash flows generated thereby, are available to
support debt service on, and ultimate repayment of, the aggregate indebtedness
evidenced by those Mortgage Loans. These arrangements thus seek to reduce the
risk that the inability of one or more of the Mortgaged Properties securing any
such group of Mortgage Loans to generate net operating income sufficient to pay
debt service will result in defaults and ultimate losses.
If the Mortgaged Properties securing a group of cross-collateralized
Mortgage Loans are not all owned by the same entity, creditors of one or more of
the related borrowers could challenge the cross-collateralization arrangement as
a fraudulent conveyance. Generally, under federal and state fraudulent
conveyance statutes, the incurring of an obligation or the transfer of property
by a person will be subject to avoidance under certain circumstances if the
person did not receive fair consideration or reasonably equivalent value in
exchange for such obligation or transfer and was then insolvent, was rendered
insolvent by such obligation or transfer or had unreasonably small capital for
its business. Accordingly, a creditor seeking to enforce remedies against a
Mortgaged Property subject to such cross-collateralization to repay such
creditor's claim against the related borrower could assert (i) that such
borrower was insolvent at the time the cross-collateralized Mortgage Loans were
made and (ii) that such borrower did not, when it allowed its property to be
encumbered by a lien securing the indebtedness represented by the other Mortgage
Loans in the group of cross-collateralized Mortgage Loans, receive fair
consideration or reasonably equivalent value for, in effect, "guaranteeing" the
performance of the other borrowers. Although the borrower making such
"guarantee" may be receiving "guarantees" from each of the other borrowers in
return, there can be no assurance that such exchanged "guarantees" would be
found to constitute fair consideration or be of reasonably equivalent value.
The cross-collateralized Mortgage Loans may be secured by mortgage liens on
Mortgaged Properties located in different states. Because of various state laws
governing foreclosure or the exercise of a power of sale and because, in
general, foreclosure actions are brought in state court, and the courts of one
state cannot exercise jurisdiction over property in another state, it may be
necessary upon a default under any such Mortgage Loan to foreclose on the
related Mortgaged Properties in a particular order rather than simultaneously in
order to ensure that the lien of the related Mortgages is not impaired or
released.
Increased Risk of Default Associated With Balloon Payments. Certain of the
Mortgage Loans included in a Trust Fund may be nonamortizing or only partially
amortizing over their terms to maturity and, thus, will require substantial
payments of principal and interest (that is, balloon payments) at their stated
maturity. Mortgage Loans of this type involve a greater likelihood of default
than self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
value of the related Mortgaged Property, the level of available mortgage rates
at the time of sale or refinancing, the borrower's equity in the related
Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Depositor
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "The Pooling and Servicing
Agreements -- Realization Upon Defaulted Mortgage Loans". While the Master
Servicer or the Special Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery than liquidation, taking into account the time value of money, there
can be no assurance that any such extension or modification will in fact
increase the present value of receipts from or proceeds of the affected Mortgage
Loans.
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Lender Difficulty in Collecting Rents Upon the Default and/or Bankruptcy of
Borrower. Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases typically will be secured by an assignment of
leases and rents pursuant to which the mortgagor assigns to the mortgagee its
right, title and interest as lessor under the leases of the related Mortgaged
Property, and the income derived therefrom, as further security for the related
Mortgage Loan, while retaining a license to collect rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect rents. Some state laws may require that the lender take
possession of the Mortgaged Property and obtain a judicial appointment of a
receiver before becoming entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are commenced by or in respect of the
borrower, the lender's ability to collect the rents may be adversely affected.
See "Certain Legal Aspects of Mortgage Loans -- Leases and Rents".
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration
Clauses. Mortgages may contain a due-on-sale clause, which permits the lender
to accelerate the maturity of the Mortgage Loan if the borrower sells, transfers
or conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages also may include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or nonmonetary default of the
mortgagor. Such clauses are generally enforceable subject to certain exceptions.
The courts of all states will enforce clauses providing for acceleration in the
event of a material payment default. The equity courts of any state, however,
may refuse the foreclosure of a mortgage or deed of trust when an acceleration
of the indebtedness would be inequitable or unjust or the circumstances would
render the acceleration unconscionable.
Risk of Liability Arising From Environmental Conditions. Under the laws of
certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under the
laws of some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, a lender may be liable, as
an "owner" or "operator", for costs of addressing releases or threatened
releases of hazardous substances at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether the environmental damage or threat was caused by the
borrower or a prior owner. A lender also risks such liability on foreclosure of
the mortgage. See "Certain Legal Aspects of Mortgage Loans -- Environmental
Considerations".
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, each of the Master
Servicer and the Special Servicer may satisfy its obligation to cause hazard
insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. In general, the standard form of fire and
extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm and
hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the policies covering the
Mortgaged Properties will be underwritten by different insurers under different
state laws in accordance with different applicable state forms, and therefore
will not contain identical terms and conditions, most such policies typically do
not cover any physical damage resulting from war, revolution, governmental
actions, floods and other water-related causes, earth movement (including
earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals
and certain other kinds of risks. Unless the related Mortgage specifically
requires the mortgagor to insure against physical damage arising from such
causes, then, to the extent any consequent losses are not covered by Credit
Support, such losses may be borne, at least in part, by the holders of one or
more classes of Offered Certificates of the related series. See "The Pooling and
Servicing Agreements -- Hazard Insurance Policies".
INCLUSION OF DELINQUENT AND NONPERFORMING MORTGAGE LOANS IN A MORTGAGE ASSET
POOL
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past due
or are nonperforming. If so specified in the related Prospectus
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Supplement, the servicing of such Mortgage Loans will be performed by the
Special Servicer; however, the same entity may act as both Master Servicer and
Special Servicer. Credit Support provided with respect to a particular series of
Certificates may not cover all losses related to such delinquent or
nonperforming Mortgage Loans, and investors should consider the risk that the
inclusion of such Mortgage Loans in the Trust Fund may adversely affect the rate
of defaults and prepayments in respect of the subject Mortgage Asset Pool and
the yield on the Offered Certificates of such series. See "Description of the
Trust Funds -- Mortgage Loans -- General".
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of (i) various types of
multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates or other mortgage-backed securities
("MBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans or (iii) a
combination of Mortgage Loans and MBS (collectively, "Mortgage Assets"). Each
Trust Fund will be established by the Depositor. Each Mortgage Asset will be
selected by the Depositor for inclusion in a Trust Fund from among those
purchased, either directly or indirectly, from a prior holder thereof (a
"Mortgage Asset Seller"), which prior holder may or may not be the originator of
such Mortgage Loan or the issuer of such MBS and may be an affiliate of the
Depositor. The Mortgage Assets will not be guaranteed or insured by the
Depositor or any of its affiliates or, unless otherwise provided in the related
Prospectus Supplement, by any governmental agency or instrumentality or by any
other person. The discussion below under the heading "-- Mortgage Loans", unless
otherwise noted, applies equally to mortgage loans underlying any MBS included
in a particular Trust Fund.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (the "Mortgaged Properties") consisting of (i)
residential properties consisting of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures ("Multifamily Properties") or (ii) office buildings,
retail stores and establishments, hotels or motels, nursing homes, hospitals or
other health care-related facilities, recreational vehicle and mobile home
parks, warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial plants, parking lots, entertainment or sports arenas, restaurants,
marinas, mixed use or various other types of income-producing properties or
unimproved land ("Commercial Properties"). The Multifamily Properties may
include mixed commercial and residential structures and apartment buildings
owned by private cooperative housing corporations ("Cooperatives"). However, no
one of the following types of Commercial Properties will represent security for
a material concentration of the Mortgage Loans in any Trust Fund, based on
principal balance at the time such Trust Fund is formed: (i) restaurants; (ii)
entertainment or sports arenas; (iii) marinas; or (iv) nursing homes, hospitals
or other health care-related facilities. Unless otherwise specified in the
related Prospectus Supplement, each Mortgage will create a first priority
mortgage lien on a borrower's fee estate in a Mortgaged Property. If a Mortgage
creates a lien on a borrower's leasehold estate in a property, then, unless
otherwise specified in the related Prospectus Supplement, the term of any such
leasehold will exceed the term of the Mortgage Note by at least ten years.
Unless otherwise specified in the related Prospectus Supplement, each Mortgage
Loan will have been originated by a person (the "Originator") other than the
Depositor; however, the Originator may be or may have been an affiliate of the
Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related senior liens ("Senior Liens") may not be
included in the Mortgage Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the related Senior Liens to satisfy
fully both the Senior Liens and the Mortgage Loan. In the event that a holder of
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a Senior Lien forecloses on a Mortgaged Property, the proceeds of the
foreclosure or similar sale will be applied first to the payment of court costs
and fees in connection with the foreclosure, second to real estate taxes, third
in satisfaction of all principal, interest, prepayment or acceleration
penalties, if any, and any other sums due and owing to the holder of the Senior
Liens. The claims of the holders of the Senior Liens will be satisfied in full
out of proceeds of the liquidation of the related Mortgage Property, if such
proceeds are sufficient, before the Trust Fund as holder of the junior lien
receives any payments in respect of the Mortgage Loan. If the Master Servicer
were to foreclose on any Mortgage Loan, it would do so subject to any related
Senior Liens. In order for the debt related to such Mortgage Loan to be paid in
full at such sale, a bidder at the foreclosure sale of such Mortgage Loan would
have to bid an amount sufficient to pay off all sums due under the Mortgage Loan
and any Senior Liens or purchase the Mortgaged Property subject to such Senior
Liens. In the event that such proceeds from a foreclosure or similar sale of the
related Mortgaged Property are insufficient to satisfy all Senior Liens and the
Mortgage Loan in the aggregate, the Trust Fund, as the holder of the junior
lien, and, accordingly, holders of one or more classes of the Certificates of
the related series bear (i) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (ii) the risk of loss
if the deficiency judgment is not obtained and satisfied. Moreover, deficiency
judgments may not be available in certain jurisdictions, or the particular
Mortgage Loan may be a nonrecourse loan, which means that, absent special facts,
recourse in the case of default will be limited to the Mortgaged Property and
such other assets, if any, that were pledged to secure repayment of the Mortgage
Loan.
If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular series of Certificates may include Mortgage Loans that are
delinquent or nonperforming as of the date such Certificates are issued. In that
case, the related Prospectus Supplement will set forth, as to each such Mortgage
Loan, available information as to the period of such delinquency or
nonperformance, any forbearance arrangement then in effect, the condition of the
related Mortgaged Property and the ability of the Mortgaged Property to generate
income to service the mortgage debt.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of such property (that is, its ability to generate income). Moreover, as noted
above, some or all of the Mortgage Loans included in a particular Trust Fund may
be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "Net Operating Income"
means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (i)
noncash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on the related Mortgage Loan or on any other loans that
are secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a nonowner occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, and mini-warehouse and self-storage
facilities, tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods, such as
warehouses, retail stores, office buildings and industrial plants. Commercial
Properties may be owner-occupied or leased to a small number of tenants. Thus,
the Net Operating Income of such a Mortgaged Property may depend
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substantially on the financial condition of the borrower or a tenant, and
Mortgage Loans secured by liens on such properties may pose a greater likelihood
of default and loss than loans secured by liens on Multifamily Properties or on
multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus Supplement, in some cases
leases of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
the lessee is able to absorb operating expense increases while continuing to
make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the "Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater the
percentage of the borrower's equity in a Mortgaged Property, and thus (a) the
greater the incentive of the borrower to perform under the terms of the related
Mortgage Loan (in order to protect such equity) and (b) the greater the cushion
provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
based on the market comparison method (recent resale value of comparable
properties at the date of the appraisal), the cost replacement method (the cost
of replacing the property at such date), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or upon
a selection from or interpolation of the values derived from such methods. Each
of these appraisal methods can present analytical difficulties. It is often
difficult to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization rate and
discount rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of the likelihood of default and loss, is
even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors -- Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans -- General"
and "-- Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans -- Increased Risk of Default Associated With Balloon Payments".
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Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than 40 years and (ii)
provide for scheduled payments of principal, interest or both, to be made on
specified dates ("Due Dates") that occur monthly, quarterly, semi-annually or
annually. A Mortgage Loan (i) may provide for no accrual of interest or for
accrual of interest thereon at a Mortgage Rate that is fixed over its term or
that adjusts from time to time, or that may be converted at the borrower's
election from an adjustable to a fixed Mortgage Rate, or from a fixed to an
adjustable Mortgage Rate, (ii) may provide for level payments to maturity or for
payments that adjust from time to time to accommodate changes in the Mortgage
Rate or to reflect the occurrence of certain events, and may permit negative
amortization, (iii) may be fully amortizing or may be partially amortizing or
nonamortizing, with a balloon payment due on its stated maturity date, and (iv)
may prohibit over its term or for a certain period prepayments (the period of
such prohibition, a "Lock-out Period" and its date of expiration, a "Lock-out
Date") and/or require payment of a premium or a yield maintenance payment (a
"Prepayment Premium") in connection with certain prepayments, in each case as
described in the related Prospectus Supplement. A Mortgage Loan may also contain
a provision that entitles the lender to a share of appreciation of the related
Mortgaged Property, or profits realized from the operation or disposition of
such Mortgaged Property or the benefit, if any, resulting from the refinancing
of the Mortgage Loan (any such provision, an "Equity Participation"), as
described in the related Prospectus Supplement. See "Certain Legal Aspects of
the Mortgage Loans -- Default Interest and Limitations on Prepayments" in the
Prospectus regarding the enforceability of Prepayment Premiums.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment of
the Mortgage Loans, (iii) the earliest and latest origination date and maturity
date of the Mortgage Loans, (iv) the original and remaining terms to maturity of
the Mortgage Loans, or the respective ranges thereof, and the weighted average
original and remaining terms to maturity of the Mortgage Loans, (v) the
Loan-to-Value Ratios of the Mortgage Loans (either at origination or as of a
more recent date), or the range thereof, and the weighted average of such
Loan-to-Value Ratios, (vi) the Mortgage Rates borne by the Mortgage Loans, or
the range thereof, and the weighted average Mortgage Rate borne by the Mortgage
Loans, (vii) with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based, the
adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits on Mortgage Rate adjustments at the time of any
adjustment and over the life of the ARM Loan, (viii) information regarding the
payment characteristics of the Mortgage Loans, including, without limitation,
balloon payment and other amortization provisions, Lock-out Periods and
Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage Loans
(either at origination or as of a more recent date), or the range thereof, and
the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to provide the specific information described above at the
time Offered Certificates of a series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related Prospectus
Supplement. However, many servicers do not maintain records regarding such
matters or, at least, not in a format that can be readily aggregated. In
addition, the relevant characteristics of a Master Servicer's servicing
portfolio may
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be so materially different from those of the related Mortgage Asset Pool that
such prepayment experience would not be meaningful to an investor. For example,
differences in geographic dispersion, property type and/or loan terms (e.g.,
mortgage rates, terms to maturity and/or prepayment restrictions) between the
two pools of loans could render the Master Servicer's prepayment experience
irrelevant. Because of the nature of the assets to be serviced and administered
by a Special Servicer, no comparable prepayment information will be presented
with respect to the Special Servicer's multifamily and/or commercial mortgage
loan servicing portfolio.
MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates or other
mortgage-backed securities or (ii) certificates issued and/or insured or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal
National Mortgage Association ("FNMA"), the Governmental National Mortgage
Association ("GNMA") or the Federal Agricultural Mortgage Corporation ("FAMC"),
provided that, unless otherwise specified in the related Prospectus Supplement,
each MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage Asset
Pool: (a) either will (i) have been previously registered under the Securities
Act of 1933, as amended, (ii) be exempt from such registration requirements or
(iii) have been held for at least the holding period specified in Rule 144(k)
under the Securities Act of 1933, as amended; and (b) will have been acquired
(other than from the Depositor or an affiliate thereof) in bona fide secondary
market transactions.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related Prospectus
Supplement may have the right or obligation to repurchase or substitute assets
underlying the MBS after a certain date or under other circumstances specified
in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available, (i) the aggregate
approximate initial and outstanding principal amount(s) and type of the MBS to
be included in the Trust Fund, (ii) the original and remaining term(s) to stated
maturity of the MBS, if applicable, (iii) the pass-through or bond rate(s) of
the MBS or the formula for determining such rate(s), (iv) the payment
characteristics of the MBS, (v) the MBS Issuer, MBS Servicer and MBS Trustee, as
applicable, of each of the MBS, (vi) a description of the related credit
support, if any, (vii) the circumstances under which the related underlying
mortgage loans, or the MBS themselves, may be purchased prior to their maturity,
(viii) the terms on which mortgage loans may be substituted for those originally
underlying the MBS, (ix) the type of mortgage loans underlying the MBS and, to
the extent available to the Depositor and appropriate under the circumstances,
such other information in respect of the underlying mortgage loans
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described under "-- Mortgage Loans -- Mortgage Loan Information in Prospectus
Supplements", and (x) the characteristics of any cash flow agreements that
relate to the MBS.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund will be
deposited to the extent described herein and in the related Prospectus
Supplement. See "The Pooling and Servicing Agreements -- Certificate Account".
CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided to one or more classes of
Certificates of such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of Credit
Support, such as a letter of credit, insurance policy, guarantee or reserve
fund, among others, or a combination thereof. The amount and types of Credit
Support, the identity of the entity providing it (if applicable) and related
information with respect to each type of Credit Support, if any, will be set
forth in the Prospectus Supplement for a series of Certificates. See "Risk
Factors -- Credit Support Limitations" and "Description of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include certain other
agreements, such as interest rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to reduce the effects of interest
rate fluctuations on the Mortgage Assets on one or more classes of Certificates.
The principal terms of any such Cash Flow Agreement, including, without
limitation, provisions relating to the timing, manner and amount of payments
thereunder and provisions relating to the termination thereof, will be described
in the related Prospectus Supplement. The related Prospectus Supplement will
also identify the obligor under the Cash Flow Agreement.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors -- Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a class of Certificates as will the characteristics and behavior
of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related Prospectus
Supplement will discuss the effect, if any, that the payment characteristics of
the MBS may have on the yield to maturity and weighted average lives of the
Offered Certificates of the related series.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to any series of Certificates will specify the
Pass-Through Rate for each class of Offered Certificates of such series or, in
the case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if
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any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one or
more classes of Offered Certificates; and whether the distributions of interest
on the Offered Certificates of any class will be dependent, in whole or in part,
on the performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed through
to Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on any series of
Certificates and distributable thereon on any Distribution Date will generally
correspond to interest accrued on the Mortgage Loans to their respective Due
Dates during the related Due Period. A "Due Period" will be a specified time
period (generally corresponding in length to the period between Distribution
Dates) and all scheduled payments on the Mortgage Loans in the related Trust
Fund that are due during a given Due Period will, to the extent received by a
specified date (the "Determination Date") or otherwise advanced by the related
Master Servicer, Special Servicer or other specified person, be distributed to
the holders of the Certificates of such series on the next succeeding
Distribution Date. Consequently, if a prepayment on any Mortgage Loan is
distributable to Certificateholders on a particular Distribution Date, but such
prepayment is not accompanied by interest thereon to the Due Date for such
Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "Prepayment Interest Shortfall") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related series. If and
to the extent that any such shortfall is allocated to a class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for each series of Certificates will describe the manner in which any
such shortfalls will be allocated among the classes of such Certificates. The
related Prospectus Supplement will also describe any amounts available to offset
such shortfalls.
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the principal balance (or notional amount, if applicable) of
such Certificate. The rate of principal payments on the Mortgage Loans in any
Trust Fund will in turn be affected by the amortization schedules thereof
(which, in the case of ARM Loans, may change periodically to accommodate
adjustments to the Mortgage Rates thereon), the dates on which any balloon
payments are due, and the rate of principal prepayments thereon (including for
this purpose, voluntary prepayments by borrowers and also prepayments resulting
from liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the related Mortgaged Properties, or purchases of Mortgage Loans out
of the related Trust Fund). Because the rate of principal prepayments on the
Mortgage Loans in any Trust Fund will depend on future events and a variety of
factors (as described below), no assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). An investor should consider, in the case of any Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans in the related Trust Fund could result
in an actual yield to such investor that is lower than the
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anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments on
such Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In addition, if an investor purchases an
Offered Certificate at a discount (or premium), and principal payments are made
in reduction of the principal balance or notional amount of such investor's
Offered Certificates at a rate slower (or faster) than the rate anticipated by
the investor during any particular period, any consequent adverse effects on
such investor's yield would not be fully offset by a subsequent like increase
(or decrease) in the rate of principal payments.
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be inversely
related to the rate at which payments and other collections of principal are
received on such Mortgage Assets or distributions are made in reduction of the
Certificate Balances of such classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of various constant assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various constant assumed prepayment rates and will not
be intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors which
increase the attractiveness of selling a Mortgaged Property or refinancing a
Mortgage Loan or which enhance a borrower's ability to do so, as well as those
factors which increase the likelihood of default under a Mortgage Loan, would be
expected to cause the rate of prepayment in respect of any Mortgage Asset Pool
to accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment of any Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent enforceable,
such provisions could constitute either an absolute prohibition (in the case of
a Lock-out Period) or a disincentive (in the case of a Prepayment Premium) to a
borrower's voluntarily prepaying its Mortgage Loan, thereby slowing the rate of
prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan. Therefore, as prevailing market interest rates decline, prepayment speeds
would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax
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depreciation benefits. The Depositor makes no representation as to the
particular factors that will affect the prepayment of the Mortgage Loans in any
Trust Fund, as to the relative importance of such factors, as to the percentage
of the principal balance of such Mortgage Loans that will be paid as of any date
or as to the overall rate of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Unless otherwise
specified in the related Prospectus Supplement, weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar allocable as principal of such instrument is repaid
to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments by borrowers and
also prepayments resulting from liquidations of Mortgage Loans due to default,
casualties or condemnations affecting the related Mortgaged Properties and
purchases of Mortgage Loans out of the related Trust Fund), is paid to such
class. Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("SPA") prepayment model. CPR represents
an assumed constant rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the thirtieth month. Beginning in the thirtieth month, and in
each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Certificates of such series with a Certificate Balance,
and the percentage of the initial Certificate Balance of each such class that
would be outstanding on specified Distribution Dates, based on the assumptions
stated in such Prospectus Supplement, including assumptions that prepayments on
the related Mortgage Loans are made at rates corresponding to various
percentages of CPR or SPA, or at such other rates specified in such Prospectus
Supplement. Such tables and assumptions will illustrate the sensitivity of the
weighted average lives of the Certificates to various assumed prepayment rates
and will not be intended to predict, or to provide information that will enable
investors to predict, the actual weighted average lives of the Certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a possibility that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or
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adverse conditions in the market where the property is located. In order to
minimize losses on defaulted Mortgage Loans, the Master Servicer or the Special
Servicer, to the extent and under the circumstances set forth herein and in the
related Prospectus Supplement, may be authorized to modify Mortgage Loans that
are in default or as to which a payment default is imminent. Any defaulted
balloon payment or modification that extends the maturity of a Mortgage Loan may
delay distributions of principal on a class of Offered Certificates and thereby
extend the weighted average life of such Certificates and, if such Certificates
were purchased at a discount, reduce the yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative amortization
to occur (that is, Mortgage Loans that provide for the current payment of
interest calculated at a rate lower than the rate at which interest accrues
thereon, with the unpaid portion of such interest being added to the related
principal balance). Negative amortization on one or more Mortgage Loans in any
Trust Fund may result in negative amortization on the Offered Certificates of
the related series. The related Prospectus Supplement will describe, if
applicable, the manner in which negative amortization in respect of the Mortgage
Loans in any Trust Fund is allocated among the respective classes of
Certificates of the related series. The portion of any Mortgage Loan negative
amortization allocated to a class of Certificates may result in a deferral of
some or all of the interest payable thereon, which deferred interest may be
added to the Certificate Balance thereof. In addition, an ARM Loan that permits
negative amortization would be expected during a period of increasing interest
rates to amortize at a slower rate (and perhaps not at all) than if interest
rates were declining or were remaining constant. Such slower rate of Mortgage
Loan amortization would correspondingly be reflected in a slower rate of
amortization for one or more classes of Certificates of the related series.
Accordingly, the weighted average lives of Mortgage Loans that permit negative
amortization (and that of the classes of Certificates to which any such negative
amortization would be allocated or that would bear the effects of a slower rate
of amortization on such Mortgage Loans) may increase as a result of such
feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (ii) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (iii) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during a
period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable Mortgage
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate was
purchased at a premium or a discount and (ii) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on such Certificate (or, in the case of a Stripped Interest
Certificate, delay or accelerate the reduction of the notional amount thereof).
See "-- Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or
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shortfalls in collections arising out of defaults on the Mortgage Loans in the
related Trust Fund and the timing of such losses and shortfalls. In general, the
earlier that any such loss or shortfall occurs, the greater will be the negative
effect on yield for any class of Certificates that is required to bear the
effects thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (ii)
establishing a priority of payments among such classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more classes of Certificates of any series, including
one or more classes of Offered Certificates of such series, may provide for
distributions of principal thereof from (i) amounts attributable to interest
accrued but not currently distributable on one or more classes of Accrual
Certificates, (ii) Excess Funds or (iii) any other amounts described in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "Excess Funds" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
THE DEPOSITOR
NationsLinkSM Funding Corporation, a Delaware corporation (the
"Depositor"), was organized on December 13, 1995 for the limited purpose of
acquiring, owning and transferring Mortgage Assets and selling interests therein
or bonds secured thereby. The Depositor is a subsidiary of NationsBank, N.A. The
Depositor maintains its principal office at NationsBank Corporate Center,
Charlotte, North Carolina 28255. Its telephone number is (704) 386-2400.
Unless otherwise noted in the related Prospectus Supplement, neither the
Depositor nor any of the Depositor's affiliates will insure or guarantee
distributions on the Certificates of any series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling and Servicing
Agreement. As described in the related Prospectus Supplement, the Certificates
of each series, including the Offered Certificates of such series, may consist
of one or more classes of Certificates that, among other things: (i) provide for
the accrual of interest on the Certificate Balance or Notional Amount thereof at
a fixed, variable or adjustable rate; (ii) constitute Senior Certificates
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or Subordinate Certificates; (iii) constitute Stripped Interest Certificates or
Stripped Principal Certificates; (iv) provide for distributions of interest
thereon or principal thereof that commence only after the occurrence of certain
events, such as the retirement of one or more other classes of Certificates of
such series; (v) provide for distributions of principal thereof to be made, from
time to time or for designated periods, at a rate that is faster (and, in some
cases, substantially faster) or slower (and, in some cases, substantially
slower) than the rate at which payments or other collections of principal are
received on the Mortgage Assets in the related Trust Fund; (vi) provide for
distributions of principal thereof to be made, subject to available funds, based
on a specified principal payment schedule or other methodology; or (vii) provide
for distributions based on collections on the Mortgage Assets in the related
Trust Fund attributable to Prepayment Premiums and Equity Participations.
If so specified in the related Prospectus Supplement, a class of
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct classes. For example, a class of Certificates may have a Certificate
Balance on which it accrues interest at a fixed, variable or adjustable rate.
Such class of Certificates may also have certain characteristics attributable to
Stripped Interest Certificates insofar as it may also entitle the holders
thereof to distributions of interest accrued on a Notional Amount at a different
fixed, variable or adjustable rate. In addition, a class of Certificates may
accrue interest on one portion of its Certificate Balance at one fixed, variable
or adjustable rate and on another portion of its Certificate Balance at a
different fixed, variable or adjustable rate.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or REMIC Residual Certificates,
notional amounts or percentage interests, specified in the related Prospectus
Supplement. As provided in the related Prospectus Supplement, one or more
classes of Offered Certificates of any series may be issued in fully registered,
definitive form (such Certificates, "Definitive Certificates") or may be offered
in book-entry format (such Certificates, "Book-Entry Certificates") through the
facilities of DTC. The Offered Certificates of each series (if issued as
Definitive Certificates) may be transferred or exchanged, subject to any
restrictions on transfer described in the related Prospectus Supplement, at the
location specified in the related Prospectus Supplement, without the payment of
any service charges, other than any tax or other governmental charge payable in
connection therewith. Interests in a class of Book-Entry Certificates will be
transferred on the book-entry records of DTC and its participating
organizations. If so specified in the related Prospectus Supplement,
arrangements may be made for clearance and settlement through CEDEL Bank,
Societe Anonyme, or the Euroclear System (in Europe) if they are participants in
DTC.
DISTRIBUTIONS
Distributions on the Certificates of each series will be made on each
Distribution Date from the Available Distribution Amount for such series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any series of Certificates
and any Distribution Date will refer to the total of all payments or other
collections (or advances in lieu thereof) on, under or in respect of the
Mortgage Assets and any other assets included in the related Trust Fund that are
available for distribution to the holders of Certificates of such series on such
date. The particular components of the Available Distribution Amount for any
series and Distribution Date will be more specifically described in the related
Prospectus Supplement. In general, the Distribution Date for a series of
Certificates will be the 25th day of each month (or, if any such 25th day is not
a business day, the next succeeding business day), commencing in the month
immediately following the month in which such series of Certificates is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such class
in
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proportion to the respective Percentage Interests evidenced thereby unless
otherwise specified in the related Prospectus Supplement. Payments will be made
either by wire transfer in immediately available funds to the account of a
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution. The undivided percentage interest (the "Percentage
Interest") represented by an Offered Certificate of a particular class will be
equal to the percentage obtained by dividing the initial principal balance or
notional amount of such Certificate by the initial Certificate Balance or
Notional Amount of such class.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each class of Offered Certificates. Unless otherwise
specified in the related Prospectus Supplement, interest on the Certificates of
each series will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than a class of Accrual Certificates, which will be entitled to distributions of
accrued interest commencing only on the Distribution Date or under the
circumstances specified in the related Prospectus Supplement, and other than any
class of Stripped Principal Certificates or REMIC Residual Certificates that is
not entitled to any distributions of interest) will be made on each Distribution
Date based on the Accrued Certificate Interest for such class and such
Distribution Date, subject to the sufficiency of that portion, if any, of the
Available Distribution Amount allocable to such class on such Distribution Date.
Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on such class will be added to the Certificate Balance thereof on each
Distribution Date or otherwise deferred as described in the related Prospectus
Supplement. With respect to each class of Certificates (other than certain
classes of Stripped Interest Certificates and certain classes of REMIC Residual
Certificates), the "Accrued Certificate Interest" for each Distribution Date
will be equal to interest at the applicable Pass-Through Rate accrued for a
specified period (generally the most recently ended calendar month) on the
outstanding Certificate Balance of such class of Certificates immediately prior
to such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the Accrued Certificate Interest for each Distribution Date on a
class of Stripped Interest Certificates will be similarly calculated except that
it will accrue on a Notional Amount that is either (i) based on the principal
balances of some or all of the Mortgage Assets in the related Trust Fund or (ii)
equal to the Certificate Balances of one or more other classes of Certificates
of the same series. Reference to a Notional Amount with respect to a class of
Stripped Interest Certificates is solely for convenience in making certain
calculations and does not represent the right to receive any distributions of
principal. If so specified in the related Prospectus Supplement, the amount of
Accrued Certificate Interest that is otherwise distributable on (or, in the case
of Accrual Certificates, that may otherwise be added to the Certificate Balance
of) one or more classes of the Certificates of a series may be reduced to the
extent that any Prepayment Interest Shortfalls, as described under "Yield and
Maturity Considerations -- Certain Shortfalls in Collections of Interest",
exceed the amount of any sums that are applied to offset the amount of such
shortfalls. The particular manner in which such shortfalls will be allocated
among some or all of the classes of Certificates of that series will be
specified in the related Prospectus Supplement. The related Prospectus
Supplement will also describe the extent to which the amount of Accrued
Certificate Interest that is otherwise distributable on (or, in the case of
Accrual Certificates, that may otherwise be added to the Certificate Balance of)
a class of Offered Certificates may be reduced as a result of any other
contingencies, including
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delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a class of Certificates by reason of the
allocation to such class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result in a corresponding
increase in the Certificate Balance of such class. See "Risk Factors -- Effect
of Prepayments on Average Life of Certificates" and "-- Effect of Prepayments on
Yield of Certificates" and "Yield and Maturity Considerations -- Certain
Shortfalls in Collections of Interest".
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of REMIC Residual
Certificates) will have a Certificate Balance, which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will be
entitled to receive as principal out of the future cash flow on the Mortgage
Assets and other assets included in the related Trust Fund. The outstanding
Certificate Balance of a class of Certificates will be reduced by distributions
of principal made thereon from time to time and, if and to the extent so
provided in the related Prospectus Supplement, further by any losses incurred in
respect of the related Mortgage Assets allocated thereto from time to time. In
turn, the outstanding Certificate Balance of a class of Certificates may be
increased as a result of any deferred interest on or in respect of the related
Mortgage Assets being allocated thereto from time to time, and will be
increased, in the case of a class of Accrual Certificates prior to the
Distribution Date on which distributions of interest thereon are required to
commence, by the amount of any Accrued Certificate Interest in respect thereof
(reduced as described above). The initial aggregate Certificate Balance of all
classes of a series of Certificates will not be greater than the aggregate
outstanding principal balance of the related Mortgage Assets as of a specified
date (the "Cut-off Date"), after application of scheduled payments due on or
before such date, whether or not received. The initial Certificate Balance of
each class of a series of Certificates will be specified in the related
Prospectus Supplement. As and to the extent described in the related Prospectus
Supplement, distributions of principal with respect to a series of Certificates
will be made on each Distribution Date to the holders of the class or classes of
Certificates of such series entitled thereto until the Certificate Balances of
such Certificates have been reduced to zero. Distributions of principal with
respect to one or more classes of Certificates may be made at a rate that is
faster (and, in some cases, substantially faster) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund. Distributions of principal with respect to one or
more classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other classes of Certificates of
the same series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more classes of Certificates
(each such class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more other classes of Certificates (each
such class, a "Companion Class") may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same series and the
rate at which payments and other collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless otherwise specified in the
related Prospectus Supplement, distributions of principal of any class of
Offered Certificates will be made on a pro rata basis among all of the
Certificates of such class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums or
payments in respect of Equity Participations received on or in connection with
the Mortgage Assets in any Trust Fund will be distributed on each Distribution
Date to the holders of the class of Certificates of the related series entitled
thereto in accordance with the provisions described in such Prospectus
Supplement. Alternatively, such items may be retained by the Depositor or any of
its affiliates or by any other specified person and/or may be excluded as Trust
Assets.
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ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (ii)
establishing a priority of payments among such classes of Certificates. See
"Description of Credit Support".
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related series of Certificates for such Distribution Date, an
amount up to the aggregate of any payments of principal (other than the
principal portion of any balloon payments) and interest that were due on or in
respect of such Mortgage Loans during the related Due Period and were delinquent
on the related Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts drawn under any fund
or instrument constituting Credit Support) respecting which such advances were
made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including, in
the case of a series that includes one or more classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more classes of such Subordinate Certificates. No advance will be required to
be made by a Master Servicer, Special Servicer or Trustee if, in the judgment of
the Master Servicer, Special Servicer or Trustee, as the case may be, such
advance would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable Advance"); and, if
previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on or prior to any
future Distribution Date to the extent that funds in such Certificate Account on
such Distribution Date are less than payments required to be made to the related
series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all of
such advances for a specified period during which such advances are outstanding
at the rate specified in such Prospectus Supplement, and such entity will be
entitled to payment of such interest periodically from general collections on
the Mortgage Loans in the related Trust Fund prior to any payment to the related
series of Certificateholders or as otherwise provided in the related Pooling and
Servicing Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling and Servicing Agreement
or of a party to the related MBS Agreement.
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REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders of
each class of the Offered Certificates of a series, a Master Servicer, Manager
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of
Offered Certificates that was applied to reduce the Certificate Balance
thereof;
(ii) the amount of such distribution to holders of such class of
Offered Certificates that was applied to pay Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of such
class of Offered Certificates that was allocable to (A) Prepayment Premiums
and (B) payments on account of Equity Participations;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are
entitled;
(v) if the related Trust Fund includes Mortgage Loans, the aggregate
amount of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if
payable directly out of the related Trust Fund, by any Special Servicer and
any Sub-Servicer) and, if the related Trust Fund includes MBS, the amount
of administrative compensation received by the MBS Administrator;
(vii) information regarding the aggregate principal balance of the
related Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans, information
regarding the number and aggregate principal balance of such Mortgage Loans
that are delinquent;
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments
made with respect to such Mortgage Loans during the related "Prepayment
Period", which is the specified period, generally corresponding in length
to the period between Distribution Dates, during which prepayments and
other unscheduled collections on the Mortgage Loans in the related Trust
Fund must be received in order to be distributed on a particular
Distribution Date;
(x) the Certificate Balance or Notional Amount, as the case may be, of
such class of Certificates at the close of business on such Distribution
Date, separately identifying any reduction in such Certificate Balance or
Notional Amount due to the allocation of any losses in respect of the
related Mortgage Assets, any increase in such Certificate Balance or
Notional Amount due to the allocation of any negative amortization in
respect of the related Mortgage Assets and any increase in the Certificate
Balance of a class of Accrual Certificates, if any, in the event that
Accrued Certificate Interest has been added to such balance;
(xi) if such class of Offered Certificates has a variable Pass-Through
Rate or an adjustable Pass-Through Rate, the Pass-Through Rate applicable
thereto for such Distribution Date and, if determinable, for the next
succeeding Distribution Date;
(xii) the amount deposited in or withdrawn from any reserve fund on
such Distribution Date, and the amount remaining on deposit in such reserve
fund as of the close of business on such Distribution Date;
(xiii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a
surety bond, the amount of coverage under each such instrument as of the
close of business on such Distribution Date; and
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(xiv) the amount of Credit Support being afforded by any classes of
Subordinate Certificates.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per specified
denomination of the relevant class of Offered Certificates or as a percentage.
The Prospectus Supplement for each series of Certificates may describe
additional information to be included in reports to the holders of the Offered
Certificates of such series.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer, Manager or Trustee for a series of Certificates, as the case
may be, will be required to furnish to each person who at any time during the
calendar year was a holder of an Offered Certificate of such series a statement
containing the information set forth in subclauses (i)-(iii) above, aggregated
for such calendar year or the applicable portion thereof during which such
person was a Certificateholder. Such obligation will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Code as are from time to time in force. See,
however, "-- Book-Entry Registration and Definitive Certificates" below.
If the Trust Fund for a series of Certificates includes MBS, the ability of
the related Master Servicer, Manager or Trustee, as the case may be, to include
in any Distribution Date Statement information regarding the mortgage loans
underlying such MBS will depend on the reports received with respect to such
MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that series
in connection with distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes of
such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the related Pooling and
Servicing Agreement and as otherwise specified in the related Prospectus
Supplement. See "The Pooling and Servicing Agreements -- Amendment". The holders
of specified amounts of Certificates of a particular series will have the right
to act as a group to remove the related Trustee and also upon the occurrence of
certain events which if continuing would constitute an Event of Default on the
part of the related Master Servicer, Special Servicer or REMIC Administrator.
See "The Pooling and Servicing Agreements -- Events of Default", "-- Rights Upon
Event of Default" and "-- Resignation and Removal of the Trustee".
TERMINATION
The obligations created by the Pooling and Servicing Agreement for each
series of Certificates will terminate following (i) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of all
property acquired upon foreclosure of any Mortgage Loan subject thereto and (ii)
the payment (or provision for payment) to the Certificateholders of that series
of all amounts required to be paid to them pursuant to such Pooling and
Servicing Agreement. Written notice of termination of a Pooling and Servicing
Agreement will be given to each Certificateholder of the related series, and the
final distribution will be made only upon presentation and surrender of the
Certificates of such series at the location to be specified in the notice of
termination.
If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the repurchase
of the Mortgage Assets in the related Trust Fund by the party or parties
specified therein, under the circumstances and in the manner set forth therein.
If so provided in the related Prospectus Supplement upon the reduction of the
Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount or upon a specified date, a party designated
therein may be authorized or required to solicit bids for the purchase of all
the Mortgage Assets of the related Trust Fund, or
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of a sufficient portion of such Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set forth therein.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such series will be offered
in book-entry format through the facilities of DTC, and each such class will be
represented by one or more global Certificates registered in the name of DTC or
its nominee.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system also is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each actual purchaser
of a Book-Entry Certificate (a "Certificate Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate Owners
are expected to receive written confirmations providing details of such
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interests in the Book-Entry Certificates are
to be accomplished by entries made on the books of Participants acting on behalf
of Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except in
the event that use of the book-entry system for the Book-Entry Certificates of
any series is discontinued as described below.
DTC has no knowledge of the actual Certificate Owners of the Book-Entry
Certificates; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Certificates are credited, which may or may not be the
Certificate Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of each such Participant (and not
of DTC, the Depositor or any Trustee, Master Servicer, Special Servicer or
Manager), subject to any statutory or regulatory requirements as may be in
effect from time to time. Accordingly, under a book-entry system, Certificate
Owners may receive payments after the related Distribution Date.
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Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling and Servicing
Agreement) of Book-Entry Certificates will be the nominee of DTC, and the
Certificate Owners will not be recognized as Certificateholders under the
Pooling and Servicing Agreement. Certificate Owners will be permitted to
exercise the rights of Certificateholders under the related Pooling and
Servicing Agreement only indirectly through the Participants who in turn will
exercise their rights through DTC. The Depositor has been informed that DTC will
take action permitted to be taken by a Certificateholder under a Pooling and
Servicing Agreement only at the direction of one or more Direct Participants to
whose account with DTC interests in the Book-Entry Certificates are credited.
Because DTC can act only on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interest in Book-Entry Certificates, may be limited
due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all Direct Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
"Certificateholders" under and within the meaning of the related Pooling and
Servicing Agreement.
THE POOLING AND SERVICING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a Pooling and
Servicing Agreement. In general, the parties to a Pooling and Servicing
Agreement will include the Depositor, the Trustee, the Master Servicer, the
Special Servicer and, if one or more REMIC elections have been made with respect
to the Trust Fund, the REMIC Administrator. However, a Pooling and Servicing
Agreement that relates to a Trust Fund that includes MBS may include a Manager
as a party, but may not include a Master Servicer, Special Servicer or other
servicer as a party. All parties to each Pooling and Servicing Agreement under
which Certificates of a series are issued will be identified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement, an
affiliate of the Depositor, or the Mortgage Asset Seller or an affiliate
thereof, may perform the functions of Master Servicer, Special Servicer, Manager
or REMIC Administrator. If so specified in the related Prospectus Supplement,
the Master Servicer may also perform the duties of Special Servicer, and the
Master Servicer, the Special Servicer or the Trustee may also perform the duties
of REMIC Administrator. Any party to a Pooling and Servicing Agreement or any
affiliate thereof may own Certificates issued thereunder; however, unless other
specified in the related Prospectus Supplement, except with respect to required
consents to certain amendments to a Pooling and Servicing Agreement,
Certificates issued thereunder that are held by the Master Servicer or Special
Servicer for the related Series will not be allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling and Servicing Agreement will vary depending upon the
nature of the Certificates to be issued thereunder and the nature of the related
Trust Fund. The following summaries describe certain provisions that may appear
in a Pooling and Servicing
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Agreement under which Certificates that evidence interests in Mortgage Loans
will be issued. The Prospectus Supplement for a series of Certificates will
describe any provision of the related Pooling and Servicing Agreement that
materially differs from the description thereof contained in this Prospectus
and, if the related Trust Fund includes MBS, will summarize all of the material
provisions of the related Pooling and Servicing Agreement. The summaries herein
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of the provisions of the Pooling and Servicing
Agreement for each series of Certificates and the description of such provisions
in the related Prospectus Supplement. The Depositor will provide a copy of the
Pooling and Servicing Agreement (without exhibits) that relates to any series of
Certificates without charge upon written request of a holder of a Certificate of
such series addressed to it at its principal executive offices specified herein
under "The Depositor".
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans to
be included in the related Trust Fund, together with, unless otherwise specified
in the related Prospectus Supplement, all principal and interest to be received
on or with respect to such Mortgage Loans after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for the Mortgage Loans and the other
assets to be included in the Trust Fund for such series. Each Mortgage Loan will
be identified in a schedule appearing as an exhibit to the related Pooling and
Servicing Agreement. Such schedule generally will include detailed information
that pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include the address of the related Mortgaged Property
and type of such property; the Mortgage Rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap information; the original
and remaining term to maturity; the amortization term; and the original and
outstanding principal balance.
In addition, unless otherwise specified in the related Prospectus
Supplement, the Depositor will, as to each Mortgage Loan to be included in a
Trust Fund, deliver, or cause to be delivered, to the related Trustee (or to a
custodian appointed by the Trustee as described below) the Mortgage Note
endorsed, without recourse, either in blank or to the order of such Trustee (or
its nominee), the Mortgage with evidence of recording indicated thereon (except
for any Mortgage not returned from the public recording office), an assignment
of the Mortgage in blank or to the Trustee (or its nominee) in recordable form,
together with any intervening assignments of the Mortgage with evidence of
recording thereon (except for any such assignment not returned from the public
recording office), and, if applicable, any riders or modifications to such
Mortgage Note and Mortgage, together with certain other documents at such times
as set forth in the related Pooling and Servicing Agreement. Such assignments
may be blanket assignments covering Mortgages on Mortgaged Properties located in
the same county, if permitted by law. Notwithstanding the foregoing, a Trust
Fund may include Mortgage Loans where the original Mortgage Note is not
delivered to the Trustee if the Depositor delivers, or causes to be delivered,
to the related Trustee (or such custodian) a copy or a duplicate original of the
Mortgage Note, together with an affidavit certifying that the original thereof
has been lost or destroyed. In addition, if the Depositor cannot deliver, with
respect to any Mortgage Loan, the Mortgage or any intervening assignment with
evidence of recording thereon concurrently with the execution and delivery of
the related Pooling and Servicing Agreement because of a delay caused by the
public recording office, the Depositor will deliver, or cause to be delivered,
to the related Trustee (or such custodian) a true and correct photocopy of such
Mortgage or assignment as submitted for recording. The Depositor will deliver,
or cause to be delivered, to the related Trustee (or such custodian) such
Mortgage or assignment with evidence of recording indicated thereon after
receipt thereof from the public recording office. If the Depositor cannot
deliver, with respect to any Mortgage Loan, the Mortgage or any intervening
assignment with evidence of recording thereon concurrently with the execution
and delivery of the related Pooling and Servicing Agreement because such
Mortgage or assignment has been lost, the Depositor will deliver, or cause to be
delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment with evidence of recording thereon.
Unless otherwise specified in the related Prospectus Supplement, assignments of
Mortgage to the Trustee (or its nominee) will be recorded in the appropriate
public recording office, except in states where, in the opinion of counsel
acceptable to the Trustee, such recording is not required to protect the
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Trustee's interests in the Mortgage Loan against the claim of any subsequent
transferee or any successor to or creditor of the Depositor or the originator of
such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered to
it within a specified period of days after receipt thereof, and the Trustee (or
such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or defective,
and such omission or defect, as the case may be, materially and adversely
affects the interests of the Certificateholders of the related series, the
Trustee (or such custodian) will be required to notify the Master Servicer, the
Special Servicer and the Depositor, and one of such persons will be required to
notify the relevant Mortgage Asset Seller. In that case, and if the Mortgage
Asset Seller cannot deliver the document or cure the defect within a specified
number of days after receipt of such notice, then, except as otherwise specified
below or in the related Prospectus Supplement, the Mortgage Asset Seller will be
obligated to repurchase the related Mortgage Loan from the Trustee at a price
generally equal to the unpaid principal balance thereof, together with accrued
but unpaid interest through a date on or about the date of purchase, or at such
other price as will be specified in the related Prospectus Supplement (in any
event, the "Purchase Price"). If so provided in the Prospectus Supplement for a
series of Certificates, a Mortgage Asset Seller, in lieu of repurchasing a
Mortgage Loan as to which there is missing or defective loan documentation, will
have the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of such series of Certificates, to replace such
Mortgage Loan with one or more other mortgage loans, in accordance with
standards that will be described in the Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation will constitute the sole remedy to holders of the Certificates of any
series or to the related Trustee on their behalf for missing or defective
Mortgage Loan documentation, and neither the Depositor nor, unless it is the
Mortgage Asset Seller, the Master Servicer or the Special Servicer will be
obligated to purchase or replace a Mortgage Loan if a Mortgage Asset Seller
defaults on its obligation to do so.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund and to maintain possession of and, if applicable, to review
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee. The identity of any such custodian to be appointed on the date of
initial issuance of the Certificates will be set forth in the related Prospectus
Supplement. Any such custodian may be an affiliate of the Depositor.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling and Servicing
Agreement; (ii) the enforceability of the related Mortgage Note and Mortgage and
the existence of title insurance insuring the lien priority of the related
Mortgage; (iii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iv) the
payment status of the Mortgage Loan. It is expected that in most cases the
Warranting Party will be the Mortgage Asset Seller; however, the Warranting
Party may also be an affiliate of the Mortgage Asset Seller, the Depositor or an
affiliate of the Depositor, the Master Servicer, the Special Servicer or another
person acceptable to the Depositor. The Warranting Party, if other than the
Mortgage Asset Seller, will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling and Servicing Agreement will provide that the Master Servicer and/or
Trustee will be required to notify promptly any Warranting Party of any breach
of any representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Certificateholders of the
related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such
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Mortgage Loan from the Trustee at the applicable Purchase Price. If so provided
in the Prospectus Supplement for a series of Certificates, a Warranting Party,
in lieu of repurchasing a Mortgage Loan as to which a breach has occurred, will
have the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of such series of Certificates, to replace such
Mortgage Loan with one or more other mortgage loans, in accordance with
standards that will be described in the Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation will constitute the sole remedy available to holders of the
Certificates of any series or to the related Trustee on their behalf for a
breach of representation and warranty by a Warranting Party, and neither the
Depositor nor the Master Servicer, in either case unless it is the Warranting
Party, will be obligated to purchase or replace a Mortgage Loan if a Warranting
Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the related
series of Certificates is issued, and thus may not address events that may occur
following the date as of which they were made. However, the Depositor will not
include any Mortgage Loan in the Trust Fund for any series of Certificates if
anything has come to the Depositor's attention that would cause it to believe
that the representations and warranties made in respect of such Mortgage Loan
will not be accurate in all material respects as of the date of issuance. The
date as of which the representations and warranties regarding the Mortgage Loans
in any Trust Fund were made will be specified in the related Prospectus
Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer for any Mortgage Pool, directly or through
Sub-Servicers, will each be obligated under the related Pooling and Servicing
Agreement to service and administer the Mortgage Loans in such Mortgage Pool for
the benefit of the related Certificateholders, in accordance with applicable law
and further in accordance with the terms of such Pooling and Servicing
Agreement, such Mortgage Loans and any instrument of Credit Support included in
the related Trust Fund. Subject to the foregoing, the Master Servicer and the
Special Servicer will each have full power and authority to do any and all
things in connection with such servicing and administration that it may deem
necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that it
services and will be obligated to follow such collection procedures as it would
follow with respect to mortgage loans that are comparable to such Mortgage Loans
and held for its own account, provided (i) such procedures are consistent with
the terms of the related Pooling and Servicing Agreement and (ii) do not impair
recovery under any instrument of Credit Support included in the related Trust
Fund. Consistent with the foregoing, the Master Servicer and the Special
Servicer will each be permitted, in its discretion, unless otherwise specified
in the related Prospectus Supplement, to waive any Prepayment Premium, late
payment charge or other charge in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling and Servicing Agreement,
for payment of taxes, insurance premiums, ground rents and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; negotiating modifications;
conducting property inspections on a periodic or other basis; managing (or
overseeing the management of) Mortgaged Properties acquired on behalf of such
Trust Fund through foreclosure, deed-in-lieu of foreclosure or otherwise (each,
an "REO Property"); and maintaining servicing records relating to such Mortgage
Loans. The related Prospectus Supplement will specify when and the extent to
which servicing of a Mortgage Loan is to be transferred from the Master Servicer
to the Special Servicer. In general, and subject to the discussion in the
related Prospectus Supplement, a Special Servicer will be responsible for the
servicing and administration of: (i) Mortgage Loans that are delinquent in
respect of a specified number of scheduled payments; (ii) Mortgage Loans as to
which the related borrower has entered into or consented to bankruptcy,
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appointment of a receiver or conservator or similar insolvency proceeding, or
the related borrower has become the subject of a decree or order for such a
proceeding which shall have remained in force undischarged or unstayed for a
specified number of days; and (iii) REO Properties. If so specified in the
related Prospectus Supplement, a Pooling and Servicing Agreement also may
provide that if a default on a Mortgage Loan has occurred or, in the judgment of
the related Master Servicer, a payment default is reasonably foreseeable, the
related Master Servicer may elect to transfer the servicing thereof, in whole or
in part, to the related Special Servicer. Unless otherwise provided in the
related Prospectus Supplement, when the circumstances no longer warrant a
Special Servicer's continuing to service a particular Mortgage Loan (e.g., the
related borrower is paying in accordance with the forbearance arrangement
entered into between the Special Servicer and such borrower), the Master
Servicer will resume the servicing duties with respect thereto. If and to the
extent provided in the related Pooling and Servicing Agreement and described in
the related Prospectus Supplement, a Special Servicer may perform certain
limited duties in respect of Mortgage Loans for which the Master Servicer is
primarily responsible (including, if so specified, performing property
inspections and evaluating financial statements); and a Master Servicer may
perform certain limited duties in respect of any Mortgage Loan for which the
Special Servicer is primarily responsible (including, if so specified,
continuing to receive payments on such Mortgage Loan (including amounts
collected by the Special Servicer)), making certain calculations with respect to
such Mortgage Loan and making remittances and preparing certain reports to the
Trustee and/or Certificateholders with respect to such Mortgage Loan. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be responsible for filing and settling claims in respect of particular
Mortgage Loans under any applicable instrument of Credit Support. See
"Description of Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Special
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which the Special Servicer can make
the initial determination of appropriate action, evaluate the success of
corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose (or accept a deed to a Mortgaged Property in
lieu of foreclosure) on behalf of the Certificateholders of the related series
may vary considerably depending on the particular Mortgage Loan, the Mortgaged
Property, the mortgagor, the presence of an acceptable party to assume the
Mortgage Loan and the laws of the jurisdiction in which the Mortgaged Property
is located. If a mortgagor files a bankruptcy petition, the Special Servicer may
not be permitted to accelerate the maturity of the Mortgage Loan or to foreclose
on the related Mortgaged Property for a considerable period of time. See
"Certain Legal Aspects of Mortgage Loans -- Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectibility of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus
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Supplement, the Master Servicer also will be required to notify any superior
lienholder in writing of the existence of the Mortgage Loan and request
notification of any action (as described below) to be taken against the
mortgagor or the Mortgaged Property by the superior lienholder. If the Master
Servicer is notified that any superior lienholder has accelerated or intends to
accelerate the obligations secured by the related Senior Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the related
Mortgaged Property sold or foreclosed, then, unless otherwise specified in the
related Prospectus Supplement, the Master Servicer and the Special Servicer will
each be required to take, on behalf of the related Trust Fund, whatever actions
are necessary to protect the interests of the related Certificateholders and/or
to preserve the security of the related Mortgage Loan, subject to the
application of the REMIC Provisions. Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer or Special Servicer, as applicable,
will be required to advance the necessary funds to cure the default or reinstate
the Senior Lien, if such advance is in the best interests of the related
Certificateholders and the Master Servicer or Special Servicer, as applicable,
determines such advances are recoverable out of payments on or proceeds of the
related Mortgage Loan.
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling and Servicing
Agreement. A Sub-Servicer for any series of Certificates may be an affiliate of
the Depositor. Unless otherwise provided in the related Prospectus Supplement,
each sub-servicing agreement between a Master Servicer and a Sub-Servicer (a
"Sub-Servicing Agreement") must provide for servicing of the applicable Mortgage
Loans consistent with the related Pooling and Servicing Agreement. The Master
Servicer and Special Servicer in respect of any Mortgage Asset Pool will each be
required to monitor the performance of Sub-Servicers retained by it and will
have the right to remove a Sub-Servicer retained by it at any time it considers
such removal to be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling and Servicing Agreement
is sufficient to pay such fees. Each Sub-Servicer will be reimbursed by the
Master Servicer or Special Servicer, as the case may be, that retained it for
certain expenditures which it makes, generally to the same extent such Master
Servicer or Special Servicer would be reimbursed under a Pooling and Servicing
Agreement. See "-- Certificate Account" and "-- Servicing Compensation and
Payment of Expenses".
CERTIFICATE ACCOUNT
General. The Master Servicer, the Trustee and/or the Special Servicer
will, as to each Trust Fund that includes Mortgage Loans, establish and maintain
or cause to be established and maintained the corresponding Certificate Account,
which will be established so as to comply with the standards of each Rating
Agency that has rated any one or more classes of Certificates of the related
series. A Certificate Account may be maintained as an interest-bearing or a
noninterest-bearing account and the funds held therein may be invested pending
each succeeding Distribution Date in United States government securities and
other obligations that are acceptable to each Rating Agency that has rated any
one or more classes of Certificates of the related series ("Permitted
Investments"). Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in a Certificate Account will be
paid to the related Master Servicer, Trustee or Special Servicer as additional
compensation. A Certificate Account may be maintained with the related Master
Servicer, Special Servicer, Trustee or Mortgage Asset Seller or with a
depository institution that is an affiliate of any of the foregoing or of the
Depositor, provided that it complies with applicable Rating Agency standards. If
permitted by the applicable Rating Agency or Agencies, a Certificate Account may
contain funds relating to more than one series of mortgage pass-through
certificates and may contain other
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funds representing payments on mortgage loans owned by the related Master
Servicer or Special Servicer or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling and Servicing
Agreement and described in the related Prospectus Supplement, the following
payments and collections received or made by the Master Servicer, the Trustee or
the Special Servicer subsequent to the Cut-off Date (other than payments due on
or before the Cut-off Date) are to be deposited in the Certificate Account for
each Trust Fund that includes Mortgage Loans, within a certain period following
receipt (in the case of collections on or in respect of the Mortgage Loans) or
otherwise as provided in the related Pooling and Servicing Agreement:
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including any default interest collected, in each case net of any portion
thereof retained by the Master Servicer or the Special Servicer as its
servicing compensation or as compensation to the Trustee;
(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan or in connection with the full or partial
condemnation of a Mortgaged Property (other than proceeds applied to the
restoration of the property or released to the related borrower)
(collectively, "Insurance and Condemnation Proceeds") and all other amounts
received and retained in connection with the liquidation of defaulted
Mortgage Loans or property acquired in respect thereof, by foreclosure or
otherwise (such amounts, together with those amounts listed in clause (vii)
below, "Liquidation Proceeds"), together with the net operating income
(less reasonable reserves for future expenses) derived from the operation
of any Mortgaged Properties acquired by the Trust Fund through foreclosure
or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
(v) any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement;
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or
any other specified person as described under "-- Assignment of Mortgage
Loans; Repurchases" and "-- Representations and Warranties; Repurchases",
all proceeds of the purchase of any defaulted Mortgage Loan as described
under "-- Realization Upon Defaulted Mortgage Loans", and all proceeds of
any Mortgage Asset purchased as described under "Description of the
Certificates -- Termination";
(viii) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or the Special Servicer and
is not otherwise retained by the Depositor or another specified person, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations with respect to the
Mortgage Loans;
(ix) all payments required to be deposited in the Certificate Account
with respect to any deductible clause in any blanket insurance policy as
described under "-- Hazard Insurance Policies";
(x) any amount required to be deposited by the Master Servicer, the
Special Servicer or the Trustee in connection with losses realized on
investments for the benefit of the Master Servicer, the Special Servicer or
the Trustee, as the case may be, of funds held in the Certificate Account;
and
(xi) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling and Servicing Agreement and
described in the related Prospectus Supplement.
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Withdrawals. Unless otherwise provided in the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement, a Master
Servicer, Trustee or Special Servicer may make withdrawals from the Certificate
Account for each Trust Fund that includes Mortgage Loans for any of the
following purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
(ii) to pay the Master Servicer or the Special Servicer any servicing
fees not previously retained thereby, such payment to be made out of
payments and other collections of interest on the particular Mortgage Loans
as to which such fees were earned;
(iii) to reimburse the Master Servicer, the Special Servicer or any
other specified person for unreimbursed advances of delinquent scheduled
payments of principal and interest made by it, and certain unreimbursed
servicing expenses incurred by it, with respect to Mortgage Loans in the
Trust Fund and properties acquired in respect thereof, such reimbursement
to be made out of amounts that represent late payments collected on the
particular Mortgage Loans, Liquidation Proceeds and Insurance and
Condemnation Proceeds collected on the particular Mortgage Loans and
properties, and net income collected on the particular properties, with
respect to which such advances were made or such expenses were incurred or
out of amounts drawn under any form of Credit Support with respect to such
Mortgage Loans and properties, or if in the judgment of the Master
Servicer, the Special Servicer or such other person, as applicable, such
advances and/or expenses will not be recoverable from such amounts, such
reimbursement to be made from amounts collected on other Mortgage Loans in
the same Trust Fund or, if and to the extent so provided by the related
Pooling and Servicing Agreement and described in the related Prospectus
Supplement, only from that portion of amounts collected on such other
Mortgage Loans that is otherwise distributable on one or more classes of
Subordinate Certificates of the related series;
(iv) if and to the extent described in the related Prospectus
Supplement, to pay the Master Servicer, the Special Servicer or any other
specified person interest accrued on the advances and servicing expenses
described in clause (iii) above incurred by it while such remain
outstanding and unreimbursed;
(v) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "-- Realization
Upon Defaulted Mortgage Loans";
(vi) to reimburse the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor, the Trustee, or any of their respective
directors, officers, employees and agents, as the case may be, for certain
expenses, costs and liabilities incurred thereby, as and to the extent
described under "-- Certain Matters Regarding the Master Servicer, the
Special Servicer, the REMIC Administrator and the Depositor" and
"-- Certain Matters Regarding the Trustee";
(vii) if and to the extent described in the related Prospectus
Supplement, to pay the fees of the Trustee, the REMIC Administrator and any
provider of Credit Support;
(viii) if and to the extent described in the related Prospectus
Supplement, to reimburse prior draws on any form of Credit Support;
(ix) to pay the Master Servicer, the Special Servicer or the Trustee,
as appropriate, interest and investment income earned in respect of amounts
held in the Certificate Account as additional compensation;
(x) to pay any servicing expenses not otherwise required to be
advanced by the Master Servicer, the Special Servicer or any other
specified person;
(xi) if one or more elections have been made to treat the Trust Fund
or designated portions thereof as a REMIC, to pay any federal, state or
local taxes imposed on the Trust Fund or its assets or
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transactions, as and to the extent described under "Certain Federal Income
Tax Consequences -- REMICs -- Prohibited Transactions Tax and Other Taxes";
(xii) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling and Servicing Agreement for the benefit of
Certificateholders;
(xiii) to make any other withdrawals permitted by the related Pooling
and Servicing Agreement and described in the related Prospectus Supplement;
and
(xiv) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master Servicer and the Special Servicer may each agree to modify,
waive or amend any term of any Mortgage Loan serviced by it in a manner
consistent with the applicable Servicing Standard; provided that, unless
otherwise set forth in the related Prospectus Supplement, the modification,
waiver or amendment (i) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (ii) will not, in the
judgment of the Master Servicer or the Special Servicer, as the case may be,
materially impair the security for the Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon and (iii) will not adversely affect the
coverage under any applicable instrument of Credit Support. Unless otherwise
provided in the related Prospectus Supplement, the Special Servicer also may
agree to any other modification, waiver or amendment if, in its judgment, (i) a
material default on the Mortgage Loan has occurred or a payment default is
imminent, (ii) such modification, waiver or amendment is reasonably likely to
produce a greater recovery with respect to the Mortgage Loan, taking into
account the time value of money, than would liquidation and (iii) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred, the Special Servicer, on
behalf of the Trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related Mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related Mortgaged
Property, by operation of law or otherwise. Unless otherwise specified in the
related Prospectus Supplement, the Special Servicer may not, however, acquire
title to any Mortgaged Property, have a receiver of rents appointed with respect
to any Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related series of
Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Special Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value of
money, than not taking such actions. See "Certain Legal Aspects of Mortgage
Loans -- Environmental Considerations".
A Pooling and Servicing Agreement may grant to the Master Servicer, the
Special Servicer, a provider of Credit Support and/or the holder or holders of
certain classes of the related series of Certificates a right of first refusal
to purchase from the Trust Fund, at a predetermined price (which, if less than
the Purchase Price, will
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be specified in the related Prospectus Supplement), any Mortgage Loan as to
which a specified number of scheduled payments are delinquent. In addition,
unless otherwise specified in the related Prospectus Supplement, the Special
Servicer may offer to sell any defaulted Mortgage Loan if and when the Special
Servicer determines, consistent with its normal servicing procedures, that such
a sale would produce a greater recovery, taking into account the time value of
money, than would liquidation of the related Mortgaged Property. In the absence
of any such sale, the Special Servicer will generally be required to proceed
against the related Mortgaged Property, subject to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Special Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property before the close of the third calendar
year following the year of acquisition, unless (i) the Internal Revenue Service
(the "IRS") grants an extension of time to sell such property or (ii) the
Trustee receives an opinion of independent counsel to the effect that the
holding of the property by the Trust Fund for longer than such period will not
result in the imposition of a tax on the Trust Fund or cause the Trust Fund (or
any designated portion thereof) to fail to qualify as a REMIC under the Code at
any time that any Certificate is outstanding. Subject to the foregoing and any
other tax-related limitations, the Special Servicer will generally be required
to attempt to sell any Mortgaged Property so acquired on the same terms and
conditions it would if it were the owner. Unless otherwise provided in the
related Prospectus Supplement, if title to any Mortgaged Property is acquired by
a Trust Fund as to which a REMIC election has been made, the Special Servicer
will also be required to ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by the Trust Fund of any income from nonpermitted assets as described in
Code Section 860F(a)(2)(B), and that the Trust Fund does not derive any "net
income from foreclosure property" within the meaning of Code Section 860G(c)(2),
with respect to such property unless the method of operation that produces such
income would produce a greater after-tax return than a different method of
operation of such property. If the Trust Fund acquires title to any Mortgaged
Property, the Special Servicer, on behalf of the Trust Fund, may retain an
independent contractor to manage and operate such property. The retention of an
independent contractor, however, will not relieve the Special Servicer of its
obligation to manage such Mortgaged Property as required under the related
Pooling and Servicing Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Special Servicer and/or the Master Servicer in connection with
such Mortgage Loan, then, to the extent that such shortfall is not covered by
any instrument or fund constituting Credit Support, the Trust Fund will realize
a loss in the amount of such shortfall. The Special Servicer and/or the Master
Servicer will be entitled to reimbursement out of the Liquidation Proceeds
recovered on any defaulted Mortgage Loan, prior to the distribution of such
Liquidation Proceeds to Certificateholders, any and all amounts that represent
unpaid servicing compensation in respect of the Mortgage Loan, unreimbursed
servicing expenses incurred with respect to the Mortgage Loan and any
unreimbursed advances of delinquent payments made with respect to the Mortgage
Loan. In addition, if and to the extent set forth in the related Prospectus
Supplement, amounts otherwise distributable on the Certificates may be further
reduced by interest payable to the Master Servicer and/or Special Servicer on
such servicing expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, neither the Special Servicer nor the Master Servicer will be
required to expend its own funds to effect such restoration unless (and to the
extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master Servicer, as the case may be, for its
expenses and (ii) that such expenses will be recoverable by it from related
Insurance and Condemnation Proceeds, Liquidation Proceeds and/or amounts drawn
on any instrument or fund constituting Credit Support.
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HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will require the Master Servicer (or the Special
Servicer with respect to Mortgage Loans serviced thereby) to use reasonable
efforts to cause each Mortgage Loan borrower to maintain a hazard insurance
policy that provides for such coverage as is required under the related Mortgage
or, if the Mortgage permits the holder thereof to dictate to the borrower the
insurance coverage to be maintained on the related Mortgaged Property, such
coverage as is consistent with the Master Servicer's (or Special Servicer's)
normal servicing procedures. Unless otherwise specified in the related
Prospectus Supplement, such coverage generally will be in an amount equal to the
lesser of the principal balance owing on such Mortgage Loan and the replacement
cost of the related Mortgaged Property. The ability of a Master Servicer (or
Special Servicer) to assure that hazard insurance proceeds are appropriately
applied may be dependent upon its being named as an additional insured under any
hazard insurance policy and under any other insurance policy referred to below,
or upon the extent to which information concerning covered losses is furnished
by borrowers. All amounts collected by a Master Servicer (or Special Servicer)
under any such policy (except for amounts to be applied to the restoration or
repair of the Mortgaged Property or released to the borrower in accordance with
the Master Servicer's (or Special Servicer's) normal servicing procedures and/or
to the terms and conditions of the related Mortgage and Mortgage Note) will be
deposited in the related Certificate Account. The Pooling and Servicing
Agreement may provide that the Master Servicer (or Special Servicer) may satisfy
its obligation to cause each borrower to maintain such a hazard insurance policy
by maintaining a blanket policy insuring against hazard losses on the Mortgage
Loans in a Trust Fund. If such blanket policy contains a deductible clause, the
Master Servicer (or Special Servicer) will be required, in the event of a
casualty covered by such blanket policy, to deposit in the related Certificate
Account all additional sums that would have been deposited therein under an
individual policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Trustee may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any fee collected
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in connection with the permitted transfer of a Mortgaged Property. See "Certain
Legal Aspects of Mortgage Loans -- Due-on-Sale and Due-on-Encumbrance
Provisions".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion of
the interest payments on each Mortgage Loan in the related Trust Fund, including
Mortgage Loans serviced by the related Special Servicer. If and to the extent
described in the related Prospectus Supplement, a Special Servicer's primary
compensation with respect to a series of Certificates may consist of any or all
of the following components: (i) a specified portion of the interest payments on
each Mortgage Loan in the related Trust Fund, whether or not serviced by it;
(ii) an additional specified portion of the interest payments on each Mortgage
Loan then currently serviced by it; and (iii) subject to any specified
limitations, a fixed percentage of some or all of the collections and proceeds
received with respect to each Mortgage Loan which was at any time serviced by
it, including Mortgage Loans for which servicing was returned to the Master
Servicer. Insofar as any portion of the Master Servicer's or Special Servicer's
compensation consists of a specified portion of the interest payments on a
Mortgage Loan, such compensation will generally be based on a percentage of the
principal balance of such Mortgage Loan outstanding from time to time and,
accordingly, will decrease with the amortization of the Mortgage Loan. As
additional compensation, a Master Servicer or Special Servicer may be entitled
to retain all or a portion of late payment charges, Prepayment Premiums,
modification fees and other fees collected from borrowers and any interest or
other income that may be earned on funds held in the related Certificate
Account. A more detailed description of each Master Servicer's and Special
Servicer's compensation will be provided in the related Prospectus Supplement.
Any Sub-Servicer will receive as its sub-servicing compensation a portion of the
servicing compensation to be paid to the Master Servicer or Special Servicer
that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will provide that on or before a specified date
in each year, beginning the first such date that is at least a specified number
of months after the Cut-off Date, there will be furnished to the related Trustee
a report of a firm of independent certified public accountants stating that (i)
it has obtained a letter of representation regarding certain matters from the
management of the Master Servicer which includes an assertion that the Master
Servicer has complied with certain minimum mortgage loan servicing standards (to
the extent applicable to commercial and multifamily mortgage loans), identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the Master
Servicer's servicing of commercial and multifamily mortgage loans during the
most recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that, in the opinion of such firm, such standards require it to report. In
rendering its report such firm may rely, as to the matters relating to the
direct servicing of commercial and multifamily mortgage loans by Sub-Servicers,
upon comparable reports of firms of independent public accountants rendered on
the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
The
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Prospectus Supplement may provide that additional reports of independent
certified public accountants relating to the servicing of mortgage loans may be
required to be delivered to the Trustee.
Each Pooling and Servicing Agreement will also provide that, on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, the Master Servicer and
Special Servicer shall each deliver to the related Trustee an annual statement
signed by one or more officers of the Master Servicer or the Special Servicer,
as the case may be, to the effect that, to the best knowledge of each such
officer, the Master Servicer or the Special Servicer, as the case may be, has
fulfilled in all material respects its obligations under the Pooling and
Servicing Agreement throughout the preceding year or, if there has been a
material default in the fulfillment of any such obligation, such statement shall
specify each such known default and the nature and status thereof. Such
statement may be provided as a single form making the required statements as to
more than one Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER, THE REMIC
ADMINISTRATOR AND THE DEPOSITOR
Any entity serving as Master Servicer, Special Servicer or REMIC
Administrator under a Pooling and Servicing Agreement may be an affiliate of the
Depositor and may have other normal business relationships with the Depositor or
the Depositor's affiliates. Unless otherwise specified in the Prospectus
Supplement for a series of Certificates, the related Pooling and Servicing
Agreement will permit the Master Servicer, the Special Servicer and any REMIC
Administrator to resign from its obligations thereunder only upon a
determination that such obligations are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it. No such resignation will become effective until the
Trustee or other successor has assumed the obligations and duties of the
resigning Master Servicer, Special Servicer or REMIC Administrator, as the case
may be, under the Pooling and Servicing Agreement. The Master Servicer and
Special Servicer for each Trust Fund will be required to maintain a fidelity
bond and errors and omissions policy or their equivalent that provides coverage
against losses that may be sustained as a result of an officer's or employee's
misappropriation of funds or errors and omissions, subject to certain
limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions permitted by the related Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will further provide that none of the Master
Servicer, the Special Servicer, the REMIC Administrator, the Depositor, any
extension adviser or any director, officer, employee or agent of any of them
will be under any liability to the related Trust Fund or Certificateholders for
any action taken, or not taken, in good faith pursuant to the Pooling and
Servicing Agreement or for errors in judgment; provided, however, that none of
the Master Servicer, the Special Servicer, the REMIC Administrator, the
Depositor, any extension adviser or any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of obligations or duties thereunder
or by reason of reckless disregard of such obligations and duties. Unless
otherwise specified in the related Prospectus Supplement, each Pooling and
Servicing Agreement will further provide that the Master Servicer, the Special
Servicer, the REMIC Administrator, the Depositor, any extension adviser and any
director, officer, employee or agent of any of them will be entitled to
indemnification by the related Trust Fund against any loss, liability or expense
incurred in connection with any legal action that relates to such Pooling and
Servicing Agreement or the related series of Certificates; provided, however,
that such indemnification will not extend to any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of obligations or duties under such Pooling and Servicing Agreement,
or by reason of reckless disregard of such obligations or duties. In addition,
each Pooling and Servicing Agreement will provide that none of the Master
Servicer, the Special Servicer, the REMIC Administrator, any extension adviser
or the Depositor will be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its respective responsibilities under
the Pooling and Servicing Agreement and that in its opinion may involve it in
any
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expense or liability. However, each of the Master Servicer, the Special
Servicer, the REMIC Administrator, any extension adviser and the Depositor will
be permitted, in the exercise of its discretion, to undertake any such action
that it may deem necessary or desirable with respect to the enforcement and/or
protection of the rights and duties of the parties to the Pooling and Servicing
Agreement and the interests of the related series of Certificateholders
thereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, will be expenses, costs and liabilities of the
related series of Certificateholders, and the Master Servicer, the Special
Servicer, the REMIC Administrator, any extension adviser or the Depositor, as
the case may be, will be entitled to charge the related Certificate Account
therefor.
Any person into which the Master Servicer, the Special Servicer, the REMIC
Administrator or the Depositor may be merged or consolidated, or any person
resulting from any merger or consolidation to which the Master Servicer, the
Special Servicer, the REMIC Administrator or the Depositor is a party, or any
person succeeding to the business of the Master Servicer, the Special Servicer,
the REMIC Administrator or the Depositor, will be the successor of the Master
Servicer, the Special Servicer, the REMIC Administrator or the Depositor, as the
case may be, under the related Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling and Servicing Agreement either directly or by or through agents or
attorneys, and the REMIC Administrator will not be responsible for any willful
misconduct or negligence on the part of any such agent or attorney appointed by
it with due care.
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling and Servicing
Agreement will include, without limitation, (i) any failure by the Master
Servicer to distribute or cause to be distributed to the Certificateholders of
such series, or to remit to the Trustee for distribution to such
Certificateholders, any amount required to be so distributed or remitted,
pursuant to, and at the time specified by, the terms of the Pooling and
Servicing Agreement, (ii) any failure by the Special Servicer to remit to the
Master Servicer or the Trustee, as applicable, any amount required to be so
remitted, pursuant to, and at the time specified by, the terms of the Pooling
and Servicing Agreement; (iii) any failure by the Master Servicer or the Special
Servicer duly to observe or perform in any material respect any of its other
covenants or obligations under the related Pooling and Servicing Agreement,
which failure continues unremedied for thirty days (fifteen days in the case of
a failure to pay the premium for any insurance policy required to be maintained
under the Pooling and Servicing Agreement) after written notice thereof has been
given to the Master Servicer or the Special Servicer, as the case may be, by any
other party to the related Pooling and Servicing Agreement, or to the Master
Servicer or the Special Servicer, as the case may be, with a copy to each other
party to the related Pooling and Servicing Agreement, by Certificateholders
entitled to not less than 25% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights for such series; (iv) any failure by
a REMIC Administrator (if other than the Trustee) duly to observe or perform in
any material respect any of its covenants or obligations under the related
Pooling and Servicing Agreement, which failure continues unremedied for thirty
days after written notice thereof has been given to the REMIC Administrator by
any other party to the related Pooling and Servicing Agreement, or to the REMIC
Administrator, with a copy to each other party to the related Pooling and
Servicing Agreement, by Certificateholders entitled to not less than 25% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series; and (v) certain events of insolvency,
readjustment of debt, marshaling of assets and liabilities, or similar
proceedings in respect of or relating to the Master Servicer, the Special
Servicer or the REMIC Administrator (if other than the Trustee), and certain
actions by or on behalf of the Master Servicer, the Special Servicer or the
REMIC Administrator (if other than the Trustee) indicating its insolvency or
inability to pay its obligations. Material variations to the foregoing Events of
Default (other than to add thereto or shorten cure periods or eliminate notice
requirements) will be specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, when a single entity
acts as Master Servicer, Special Servicer and REMIC Administrator, or in any two
of the foregoing capacities, for any Trust Fund, an Event of Default in one
capacity will constitute an Event of Default in each capacity.
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RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer, the
Special Servicer or a REMIC Administrator under a Pooling and Servicing
Agreement, then, in each and every such case, so long as the Event of Default
remains unremedied, the Depositor or the Trustee will be authorized, and at the
direction of Certificateholders of the related series entitled to not less than
51% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights for such series, the Trustee will be required, to terminate
all of the rights and obligations of the defaulting party as Master Servicer,
Special Servicer or REMIC Administrator, as applicable, under the Pooling and
Servicing Agreement, whereupon the Trustee will succeed to all of the
responsibilities, duties and liabilities of the defaulting party as Master
Servicer, Special Servicer or REMIC Administrator, as applicable, under the
Pooling and Servicing Agreement (except that if the defaulting party is required
to make advances thereunder regarding delinquent Mortgage Loans, but the Trustee
is prohibited by law from obligating itself to make such advances, or if the
related Prospectus Supplement so specifies, the Trustee will not be obligated to
make such advances) and will be entitled to similar compensation arrangements.
Unless otherwise specified in the related Prospectus Supplement, if the Trustee
is unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution or other entity
that (unless otherwise provided in the related Prospectus Supplement) is
acceptable to each applicable Rating Agency to act as successor to the Master
Servicer, Special Servicer or REMIC Administrator, as the case may be, under the
Pooling and Servicing Agreement. Pending such appointment, the Trustee will be
obligated to act in such capacity.
If the same entity is acting as both Trustee and REMIC Administrator, it
may be removed in both such capacities as described under "-- Resignation and
Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling and Servicing
Agreement to institute any proceeding with respect to such Pooling and Servicing
Agreement unless such holder previously has given to the Trustee written notice
of default and the continuance thereof and unless the holders of Certificates of
any class evidencing not less than 25% of the aggregate Percentage Interests
constituting such class have made written request upon the Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity and the Trustee for sixty days after receipt of
such request and indemnity has neglected or refused to institute any such
proceeding. However, the Trustee will be under no obligation to exercise any of
the trusts or powers vested in it by the Pooling and Servicing Agreement or to
institute, conduct or defend any litigation thereunder or in relation thereto at
the request, order or direction of any of the holders of Certificates covered by
such Pooling and Servicing Agreement, unless such Certificateholders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
AMENDMENT
Except as otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement may be amended by the parties thereto, without
the consent of any of the holders of Certificates covered by such Pooling and
Servicing Agreement, (i) to cure any ambiguity, (ii) to correct or supplement
any provision therein which may be inconsistent with any other provision therein
or to correct any error, (iii) to change the timing and/or nature of deposits in
the Certificate Account, provided that (A) such change would not adversely
affect in any material respect the interests of any Certificateholder, as
evidenced by an opinion of counsel, and (B) such change would not result in the
withdrawal, downgrade or qualification of any of the then-current ratings on the
Certificates, as evidenced by a letter from each applicable Rating Agency, (iv)
if a REMIC election has been made with respect to the related Trust Fund, to
modify, eliminate or add to any of its provisions (A) to such extent as shall be
necessary to maintain the qualification of the Trust Fund (or any designated
portion thereof) as a REMIC or to avoid or minimize the risk of imposition of
any tax on the related Trust Fund, provided that the Trustee has received an
opinion of counsel to the effect that (1) such action is necessary or desirable
to maintain such qualification or to avoid or minimize such risk, and (2) such
action will not adversely affect in any material respect the interests of any
holder of Certificates covered by the
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Pooling and Servicing Agreement, or (B) to restrict the transfer of the REMIC
Residual Certificates, provided that the Depositor has determined that the
then-current ratings of the classes of the Certificates that have been rated
will not be withdrawn, downgraded or qualified, as evidenced by a letter from
each applicable Rating Agency, and that any such amendment will not give rise to
any tax with respect to the transfer of the REMIC Residual Certificates to a
non-permitted transferee (See "Certain Federal Income Tax
Consequences -- REMICs -- Tax and Restrictions on Transfers of REMIC Residual
Certificates to Certain Organizations" herein), (v) to make any other provisions
with respect to matters or questions arising under such Pooling and Servicing
Agreement or any other change, provided that such action will not adversely
affect in any material respect the interests of any Certificateholder, or (vi)
to amend specified provisions that are not material to holders of any class of
Certificates offered hereunder.
The Pooling and Servicing Agreement may also be amended by the parties
thereto with the consent of the holders of Certificates of each class affected
thereby evidencing, in each case, not less than 66 2/3% (or such other
percentage specified in the related Prospectus Supplement) of the aggregate
Percentage Interests constituting such class for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Pooling and Servicing Agreement or of modifying in any manner the rights of
the holders of Certificates covered by such Pooling and Servicing Agreement,
except that no such amendment may (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on a Certificate of any class without the consent of the holder
of such Certificate or (ii) reduce the aforesaid percentage of Certificates of
any class the holders of which are required to consent to any such amendment
without the consent of the holders of all Certificates of such class covered by
such Pooling and Servicing Agreement then outstanding.
Notwithstanding the foregoing, if one or more REMIC elections have been
made with respect to the related Trust Fund, the Trustee will not be required to
consent to any amendment to a Pooling and Servicing Agreement without having
first received an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Master Servicer, the Special Servicer, the
Depositor, the Trustee or any other specified person in accordance with such
amendment will not result in the imposition of a tax on the related Trust Fund
or cause such Trust Fund (or any designated portion thereof) to fail to qualify
as a REMIC.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling and Servicing Agreement, the
Trustee or other specified person will afford such Certificateholders access
during normal business hours to the most recent list of Certificateholders of
that series held by such person. If such list is as of a date more than 90 days
prior to the date of receipt of such Certificateholders' request, then such
person, if not the registrar for such series of Certificates, will be required
to request from such registrar a current list and to afford such requesting
Certificateholders access thereto promptly upon receipt.
THE TRUSTEE
The Trustee under each Pooling and Servicing Agreement will be named in the
related Prospectus Supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as Trustee may
have typical banking relationships with the Depositor and its affiliates and
with any Master Servicer, Special Servicer or REMIC Administrator and its
affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling and Servicing Agreement,
such Certificates or any underlying Mortgage Asset or related document and will
not be accountable for the use or application by or on behalf of any Master
Servicer or Special Servicer of any funds paid to the Master Servicer or Special
Servicer in respect of the Certificates or
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the underlying Mortgage Assets. If no Event of Default has occurred and is
continuing, the Trustee for each series of Certificates will be required to
perform only those duties specifically required under the related Pooling and
Servicing Agreement. However, upon receipt of any of the various certificates,
reports or other instruments required to be furnished to it pursuant to the
related Pooling and Servicing Agreement, a Trustee will be required to examine
such documents and to determine whether they conform to the requirements of such
agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling and
Servicing Agreement; provided, however, that such indemnification will not
extend to any loss liability or expense incurred by reason of willful
misfeasance, bad faith or negligence on the part of the Trustee in the
performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling and Servicing Agreement or perform
any of its duties thereunder either directly or by or through agents or
attorneys, and the Trustee will not be responsible for any willful misconduct or
negligence on the part of any such agent or attorney appointed by it with due
care.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. Upon
becoming aware of such circumstances, the Depositor will be obligated to appoint
a successor Trustee. The Trustee may also be removed at any time by the holders
of Certificates of the applicable series evidencing not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee. Notwithstanding anything herein to the
contrary, if any entity is acting as both Trustee and REMIC Administrator, then
any resignation or removal of such entity as the Trustee will also constitute
the resignation or removal of such entity as REMIC Administrator, and the
successor trustee will serve as successor to the REMIC Administrator as well.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a pool insurance policy or
guarantee insurance, the establishment of one or more reserve funds or another
method of Credit Support described in the related Prospectus Supplement, or any
combination of the foregoing. If and to the extent so provided in the related
Prospectus Supplement, any of the foregoing forms of Credit Support may provide
credit enhancement for more than one series of Certificates.
Unless otherwise provided in the related Prospectus Supplement for a series
of Certificates, the Credit Support will not provide protection against all
risks of loss and will not guarantee payment to Certificate-
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holders of all amounts to which they are entitled under the related Pooling and
Servicing Agreement. If losses or shortfalls occur that exceed the amount
covered by the related Credit Support or that are of a type not covered by such
Credit Support, Certificateholders will bear their allocable share of
deficiencies. Moreover, if a form of Credit Support covers the Offered
Certificates of more than one series and losses on the related Mortgage Assets
exceed the amount of such Credit Support, it is possible that the holders of
Offered Certificates of one (or more) such series will be disproportionately
benefited by such Credit Support to the detriment of the holders of Offered
Certificates of one (or more) other such series.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors -- Credit Support
Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of certain
types of losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the method and amount of subordination provided by a
class or classes of Subordinate Certificates in a series and the circumstances
under which such subordination will be available.
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of such
coverage.
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or other financial institution (which may be an affiliate of the Depositor)
specified in such Prospectus Supplement (the "Letter of Credit Bank"). Under a
letter of credit, the Letter of Credit Bank will be obligated to honor draws
thereunder in an aggregate fixed dollar amount, net of unreimbursed payments
thereunder, generally equal to a percentage specified in the related Prospectus
Supplement of the aggregate principal balance of some or all of the related
Mortgage Assets on the related Cut-off Date or of the initial aggregate
Certificate Balance of one or more classes of Certificates. If so specified in
the related Prospectus Supplement, the letter of credit may permit draws only in
the event of certain types of losses and shortfalls. The amount available under
the letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments thereunder and may otherwise be reduced as described in
the related Prospectus Supplement. The
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obligations of the Letter of Credit Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies or surety bonds provided
by one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Certificates of the related series, timely
distributions of interest or distributions of principal on the basis of a
schedule of principal distributions set forth in or determined in the manner
specified in the related Prospectus Supplement. The related Prospectus
Supplement will describe any limitations on the draws that may be made under any
such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of certain collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable state law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular state, or to encompass the laws
of all states in which the security for the Mortgage Loans (or mortgage loans
underlying any MBS) is situated. Accordingly, the summaries are qualified in
their entirety by reference to the applicable laws of those states. See
"Description of the Trust Funds -- Mortgage Loans". For purposes of the
following discussion, "Mortgage Loan" includes a mortgage loan underlying an
MBS.
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GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a deed
of trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
nonbankruptcy law, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates (in light of certain revisions to the Bankruptcy
Code which are effective for all bankruptcy cases commenced on or after October
22, 1994) constitute "cash collateral" and
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therefore cannot be used by the bankruptcy debtor without lender's consent or a
hearing at which the lender's interest in the room rates is given adequate
protection (e.g., the lender receives cash payments from otherwise unencumbered
funds or a replacement lien on unencumbered property, in either case equal in
value to the amount of room rates that the debtor proposes to use, or other
similar relief). See "-- Bankruptcy Laws".
In the case of office and retail properties, the bankruptcy or insolvency
of a major tenant or a number of smaller tenants may have an adverse impact on
the Mortgaged Properties affected and the income produced by such Mortgaged
Properties. Under bankruptcy law, a tenant has the option of assuming
(continuing), or rejecting (terminating) or, subject to certain conditions,
assigning to a third party any unexpired lease. If the tenant assumes its lease,
the tenant must cure all defaults under the lease and provide the landlord with
adequate assurance of its future performance under the lease. If the tenant
rejects the lease, the landlord's claim for breach of the lease would (absent
collateral securing the claim) be treated as a general unsecured claim. The
amount of the claim would be limited to the amount owed for unpaid pre-petition
lease payments unrelated to the rejection, plus the greater of one year's lease
payments or 15% of the remaining lease payments payable under the lease (but not
to exceed three years' lease payments). If the tenant assigns its lease, the
tenant must cure all defaults under the lease and the proposed assignee must
demonstrate adequate assurance of future performance under the lease.
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure
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actions. These principles are generally designed to relieve borrowers from the
effects of mortgage defaults perceived as harsh or unfair. Relying on such
principles, a court may alter the specific terms of a loan to the extent it
considers necessary to prevent or remedy an injustice, undue oppression or
overreaching, or may require the lender to undertake affirmative actions to
determine the cause of the borrower's default and the likelihood that the
borrower will be able to reinstate the loan. In some cases, courts have
substituted their judgment for the lender's and have required that lenders
reinstate loans or recast payment schedules in order to accommodate borrowers
who are suffering from a temporary financial disability. In other cases, courts
have limited the right of the lender to foreclose in the case of a nonmonetary
default, such as a failure to adequately maintain the mortgaged property or an
impermissible further encumbrance of the mortgaged property. Finally, some
courts have addressed the issue of whether federal or state constitutional
provisions reflecting due process concerns for adequate notice require that a
borrower receive notice in addition to statutorily-prescribed minimum notice.
For the most part, these cases have upheld the reasonableness of the notice
provisions or have found that a public sale under a mortgage providing for a
power of sale does not involve sufficient state action to trigger constitutional
protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the acceleration of the
indebtedness), plus the lender's expenses incurred in enforcing the obligation.
In other states, the borrower or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, may be nonrecourse. See "Risk
Factors -- Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans -- Limited Recourse Nature of the Mortgage Loans".) Thereafter,
subject to the borrower's right in some states to remain in possession during a
redemption period, the lender will become the owner of the property and have
both the benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance and
to make such repairs as are necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from that
property. The lender also will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale or lease of
the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, because of the expenses associated with acquiring, owning and
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selling a mortgaged property, a lender could realize an overall loss on a
mortgage loan even if the mortgaged property is sold at foreclosure, or resold
after it is acquired through foreclosure, for an amount equal to the full
outstanding principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following foreclosure
or sale under a deed of trust. A deficiency judgment is a personal judgment
against the former borrower equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes may require the lender to exhaust the security afforded
under a mortgage before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of those states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee could lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, requires the lessor to grant
the mortgagee a new lease if the existing lease is rejected in a bankruptcy
proceeding, permits the leasehold estate to be assigned to
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and by the leasehold mortgagee or the purchaser at a foreclosure sale, and
contains certain other protective provisions typically included in a
"mortgageable" ground lease. Certain Mortgage Loans, however, may be secured by
ground leases which do not contain these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Such a loan typically is subordinate to the mortgage, if any,
on the Cooperative's building which, if foreclosed, could extinguish the equity
in the building and the proprietary leases of the dwelling units derived from
ownership of the shares of the Cooperative. Further, transfer of shares in a
Cooperative are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and the shares may be canceled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the Cooperative provides, among other things, the lender with an opportunity to
cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
Cooperative to receive sums due under the proprietary leases.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the reduction in the amount of each scheduled
payment, by means of a reduction in the rate of interest and/or an alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan), and/or by an extension (or shortening) of the term to maturity.
Some bankruptcy courts have approved plans, based on the particular facts of the
reorganization case, that effected the cure of a mortgage loan default by paying
arrearages over a number of years. Also, a bankruptcy court may permit a debtor,
through its rehabilitative plan, to reinstate a loan mortgage payment schedule
even if the lender has obtained a final judgment of foreclosure prior to the
filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability to
enforce
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the borrower's assignment of rents and leases. In addition to the inclusion of
hotel revenues within the definition of "cash collateral" as noted previously in
the section entitled "-- Leases and Rents", the amendments provide that a
pre-petition security interest in rents or hotel revenues extends (unless the
bankruptcy court orders otherwise based on the equities of the case) to such
post-petition rents or revenues and is intended to overrule those cases that
held that a security interest in rents is unperfected under the laws of certain
states until the lender has taken some further action, such as commencing
foreclosure or obtaining a receiver prior to activation of the assignment of
rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy case relating to a lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor with respect to its claim for damages
for termination of the lease. The Bankruptcy Code also limits a lessor's damages
for lease rejection to the rent reserved by the lease (without regard to
acceleration) for the greater of one year, or 15%, not to exceed three years, of
the remaining term of the lease.
Pursuant to the federal doctrine of "substantive consolidation" or to the
(predominantly state law) doctrine of "piercing the corporate veil", a
bankruptcy court, in the exercise of its equitable powers, also has the
authority to order that the assets and liabilities of a related entity be
consolidated with those of an entity before it. Thus, property ostensibly the
property of one entity may be determined to be the property of a different
entity in bankruptcy, the automatic stay applicable to the second entity
extended to the first and the rights of creditors of the first entity impaired
in the fashion set forth above in the discussion of ordinary bankruptcy
principles. Depending on facts and circumstances not wholly in existence at the
time a loan is originated or transferred to the Trust Fund, the application of
any of these doctrines to one or more of the mortgagors in the context of the
bankruptcy of one or more of their affiliates could result in material
impairment of the rights of the Certificateholders.
For each mortgagor that is described as a "special purpose entity", "single
purpose entity" or bankruptcy remote entity" in the Prospectus Supplement, the
activities that may be conducted by such mortgagor and its ability to incur debt
are restricted by the applicable Mortgage or the organizational documents of
such mortgagor in such manner as is intended to make the likelihood of a
bankruptcy proceeding being commenced by or against such mortgagor remote, and
such mortgagor has been organized and is designed to operate in a manner such
that its separate existence should be respected notwithstanding a bankruptcy
proceeding in respect of one or more affiliated entities of such mortgagor.
However, the Depositor makes no representation as to the likelihood of the
institution of a bankruptcy proceeding by or in respect of any mortgagor or the
likelihood that the separate existence of any mortgagor would be respected if
there were to be a bankruptcy proceeding in respect of any affiliated entity of
a mortgagor.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
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Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
become sufficiently involved in the management of such mortgaged property or the
operations of the borrower. Such liability may exist even if the lender did not
cause or contribute to the contamination and regardless of whether or not the
lender has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal balance of a loan or to
the value of the property securing a loan. Excluded from CERCLA's definition of
"owner" or "operator", however, is a person "who without participating in the
management of the facility, holds indicia of ownership primarily to protect his
security interest". This is the so-called "secured creditor exemption."
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Act") amended, among other things, the provisions of CERCLA with respect
to lender liability and the secured creditor exemption. The Act offers
substantial protection of lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property of the borrower. The Act provides that "merely having
the capacity to influence, or unexercised right to control" operations does not
constitute participation in management. A lender will lose the protection of the
secured creditor exemption only if it exercises decision making control over the
borrower's environmental compliance and hazardous substance handling and
disposal practices, or assumes day-to-day management of operational functions of
the mortgaged property. The Act also provides that a lender will continue to
have the benefit of the secured-creditor exemption even if it forecloses on a
mortgaged property, purchases it at a foreclosure sale or accepts a deed-in-lieu
of foreclosure provided that the lender seeks to sell the mortgaged property at
the earliest practicable commercially reasonable time on commercially reasonable
terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act ("RCRA").
In addition, the definition of "hazardous substances" under CERCLA
specifically excludes petroleum products. Subtitle I of RCRA governs underground
petroleum storage tanks. Under the Act, the protections accorded to lenders
under CERCLA are also accorded to the holders of security interests in
underground storage tanks. It should be noted, however, that liability for
cleanup of petroleum contamination may be governed by state law, which may not
provide for specific protection of secured creditors.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, unanticipated or uninsured liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or
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operator who created the environmental hazard, but that individual or entity may
be without substantial assets. Accordingly, it is possible that such costs could
become a liability of the Trust Fund and occasion a loss to the
Certificateholders of the related series.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling and Servicing Agreement will provide
that neither the Master Servicer nor the Special Servicer, acting on behalf of
the Trustee, may acquire title to a Mortgaged Property or take over its
operation unless the Special Servicer, based solely (as to environmental
matters) on a report prepared by a person who regularly conducts environmental
audits, has made the determination that it is appropriate to do so, as described
under "The Pooling and Servicing Agreements -- Realization Upon Defaulted
Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn Act") generally preempts state laws that prohibit the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to certain limitations as set forth in the Garn Act
and the regulations promulgated thereunder. Accordingly, a Master Servicer may
nevertheless have the right to accelerate the maturity of a Mortgage Loan that
contains a "due-on-sale" provision upon transfer of an interest in the property,
without regard to the Master Servicer's ability to demonstrate that a sale
threatens its legitimate security interest.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related Senior Liens may not be included in the
Mortgage Pool. In addition to the risks faced by the holder of a first lien,
holders of Mortgage Loans secured by junior liens also face the risk that
adequate funds will not be received in connection with a foreclosure on the
related Mortgaged Property to satisfy fully both the Senior Liens and the
Mortgage Loan. In the event that a holder of a Senior Lien forecloses on a
Mortgaged Property, the proceeds of the foreclosure or similar sale will be
applied first to the payment of court costs and fees in connection with the
foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgaged Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. In the event that such proceeds from a foreclosure or similar
sale of the related
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Mortgaged Property are insufficient to satisfy all Senior Liens and the Mortgage
Loan in the aggregate, the Trust Fund, as the holder of the junior lien, and,
accordingly, holders of one or more classes of the Certificates of the related
series bear (i) the risk of delay in distributions while a deficiency judgment
against the borrower is obtained and (ii) the risk of loss if the deficiency
judgment is not realized upon. Moreover, deficiency judgments may not be
available in certain jurisdictions or the Mortgage Loan may be nonrecourse.
The rights of the Trust Fund (and therefore the Certificateholders), as
beneficiary under a junior deed of trust or as mortgagee under a junior
mortgage, are subordinate to those of the mortgagee or beneficiary under the
senior mortgage or deed of trust, including the prior rights of the senior
mortgagee or beneficiary to receive rents, hazard insurance and condemnation
proceeds and to cause the property securing the Mortgage Loan to be sold upon
default of the mortgagor or trustor, thereby extinguishing the junior
mortgagee's or junior beneficiary's lien unless the Master Servicer asserts its
subordinate interest in a property in foreclosure litigation or satisfies the
defaulted senior loan. As discussed more fully below, in many states a junior
mortgagee or beneficiary may satisfy a defaulted senior loan in full, adding the
amounts expended to the balance due on the junior loan. Absent a provision in
the senior mortgage, no notice of default is required to be given to the junior
mortgagee.
The form of the mortgage or deed of trust used by many institutional
lenders confers on the mortgagee or beneficiary the right both to receive all
proceeds collected under any hazard insurance policy and all awards made in
connection with any condemnation proceedings, and to apply such proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in such
order as the mortgage or beneficiary may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other casualty,
or in the event the property is taken by condemnation, the mortgagee or
beneficiary under the senior mortgage or deed of trust will have the prior right
to collect any insurance proceeds payable under a hazard insurance policy and
any award of damages in connection with the condemnation and to apply the same
to the indebtedness secured by the senior mortgage or deed of trust. Proceeds in
excess of the amount of senior mortgage indebtedness will, in most cases, be
applied to the indebtedness of a junior mortgage or trust deed to the extent the
junior mortgage or deed of trust so provides. The laws of certain states may
limit the ability of mortgagees or beneficiaries to apply the proceeds of hazard
insurance and partial condemnation awards to the secured indebtedness. In such
states, the mortgagor or trustor must be allowed to use the proceeds of hazard
insurance to repair the damage unless the security of the mortgagee or
beneficiary has been impaired. Similarly, in certain states, the mortgagee or
beneficiary is entitled to the award for a partial condemnation of the real
property security only to the extent that its security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a "future advance" clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust.
While such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or "optional" advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other liens. Priority of advances under a
"future advance" clause rests, in many other states, on state law giving
priority to all advances made under the loan agreement up to a "credit limit"
amount stated in the recorded mortgage.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is
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subjected to additional risk. First, the borrower may have difficulty servicing
and repaying multiple loans. Moreover, if the subordinate financing permits
recourse to the borrower (as is frequently the case) and the senior loan does
not, a borrower may have more incentive to repay sums due on the subordinate
loan. Second, acts of the senior lender that prejudice the junior lender or
impair the junior lender's security may create a superior equity in favor of the
junior lender. For example, if the borrower and the senior lender agree to an
increase in the principal amount of or the interest rate payable on the senior
loan, the senior lender may lose its priority to the extent any existing junior
lender is harmed or the borrower is additionally burdened. Third, if the
borrower defaults on the senior loan and/or any junior loan or loans, the
existence of junior loans and actions taken by junior lenders can impair the
security available to the senior lender and can interfere with or delay the
taking of action by the senior lender. Moreover, the bankruptcy of a junior
lender may operate to stay foreclosure or similar proceedings by the senior
lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Forms of notes and mortgages used by lenders may contain provisions
obligating the mortgagor to pay a late charge or additional interest if payments
are not timely made, and in some circumstances may provide for prepayment fees
or yield maintenance penalties if the obligation is paid prior to maturity or
prohibit such prepayment for a specified period. In certain states, there are or
may be specific limitations upon the late charges which a lender may collect
from a mortgagor for delinquent payments. Certain states also limit the amounts
that a lender may collect from a mortgagor as an additional charge if the loan
is prepaid. The enforceability under the laws of a number of states and the
Bankruptcy Code of provisions providing for prepayment fees of penalties upon,
or prohibition of, an involuntary prepayment is unclear, and no assurance can be
given that, at the time a prepayment premium is required to be made on a
Mortgage Loan in connection with an involuntary prepayment, the obligation to
make such payment, or the provisions of any such prohibition, will be
enforceable under applicable state law. The absence of a restraint on
prepayment, particularly with respect to Mortgage Loans having higher Mortgage
Rates, may increase the likelihood of refinancing or other early retirements of
the Mortgage Loans.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
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AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer or
Special Servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related series of Certificates, and would not be covered by
advances or, unless otherwise specified in the related Prospectus Supplement,
any form of Credit Support provided in connection with such Certificates. In
addition, the Relief Act imposes limitations that would impair the ability of
the Master Servicer or Special Servicer to foreclose on an affected Mortgage
Loan during the borrower's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property", including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of Offered
Certificates of any series thereof, to the extent it relates to matters of law
or legal conclusions with respect thereto, represents the opinion of counsel to
the Depositor with respect to that series on the material matters associated
with such consequences, subject to any qualifications set forth herein. Counsel
to the Depositor for each series will be Cadwalader, Wickersham & Taft, and a
copy of the legal opinion of such counsel rendered in connection with any series
of Certificates will be filed by the Depositor with the Commission on a Current
Report on Form 8-K within 15 days after the Closing Date for such series of
Certificates. This discussion is directed primarily to Certificateholders that
hold the Certificates as "capital assets" within the meaning of Section 1221 of
the Code (although portions thereof may also apply to Certificateholders who do
not hold Certificates as "capital assets") and it does not purport to discuss
all federal income tax consequences that may be applicable to the individual
circumstances of particular investors, some of which (such as banks, insurance
companies and foreign investors) may be subject to special treatment under the
Code. Further, the authorities on which this discussion, and the opinion
referred to below, are based are subject to change or differing interpretations,
which could apply retroactively. Prospective investors should note that no
rulings have been or will be sought from the Internal Revenue Service (the
"IRS") with respect to any of the federal income tax consequences discussed
below, and no assurance can be given the IRS will not take contrary positions.
In addition to the federal income tax consequences described herein, potential
investors are advised to consider the state and local tax consequences, if any,
of the purchase, ownership and disposition of Offered Certificates. See "State
and Other Tax Consequences". Certificateholders are advised to consult their tax
advisors concerning the federal, state, local or other tax consequences to them
of the purchase, ownership and disposition of Offered Certificates.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the REMIC Administrator will elect to have treated as a
real estate mortgage investment conduit ("REMIC") under Sections 860A through
860G (the "REMIC Provisions") of the Code, and (ii) Grantor Trust Certificates
representing interests in a Trust Fund ("Grantor Trust Fund") as to which no
such election will be made. The Prospectus Supplement for each series of
Certificates will indicate whether a REMIC election (or elections) will be made
for the related Trust Fund and, if such an election is to be made, will identify
all "regular interests" and "residual interests" in the REMIC. For purposes of
this tax discussion, references to a "Certificateholder" or a "holder" are to
the beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements other than guaranteed
investment contracts are included in a Trust Fund, the anticipated material tax
consequences associated with such Cash Flow Agreements also will be discussed in
the related Prospectus Supplement. See "Description of the Trust Funds -- Cash
Flow Agreements".
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in Sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC Provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID Regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the Certificates.
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REMICS
Classification of REMICs. Upon the issuance of each series of REMIC
Certificates, counsel to the Depositor will give its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the related Trust Fund (or each applicable portion thereof)
will qualify as a REMIC and the REMIC Certificates offered with respect thereto
will be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in that REMIC within the meaning of the REMIC Provisions.
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of REMIC Certificates,
to the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of counsel to the Depositor for the applicable
series as specified in the related Prospectus Supplement, subject to any
qualifications set forth herein. In addition, counsel to the Depositor have
prepared or reviewed the statements in this Prospectus under the heading
"Certain Federal Income Tax Consequences -- REMICs," and are of the opinion that
such statements are correct in all material respects. Such statements are
intended as an explanatory discussion of the possible effects of the
classification of any Trust Fund (or applicable portion thereof) as a REMIC for
federal income tax purposes on investors generally and of related tax matters
affecting investors generally, but do not purport to furnish information in the
level of detail or with the attention to an investor's specific tax
circumstances that would be provided by an investor's own tax advisor.
Accordingly, each investor is advised to consult its own tax advisors with
regard to the tax consequences to it of investing in REMIC Certificates.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling and Servicing Agreement with respect to each REMIC will
include provisions designed to maintain the Trust Fund's status as a REMIC under
the REMIC Provisions. It is not anticipated that the status of any Trust Fund as
a REMIC will be inadvertently terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C). Moreover, if 95% or more of the assets of the REMIC qualify for
any of the foregoing characterizations at all times during a calendar year, the
REMIC Certificates will qualify for the corresponding status in their entirety
for that calendar year. Interest (including original issue discount) on the
REMIC Regular Certificates and income allocated to the REMIC Residual
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code. In addition, the REMIC Regular
Certificates will be "qualified mortgages" for a REMIC within the meaning of
Section 860G(a)(3) of the Code and "permitted assets" for a financial asset
securitization investment trust within the meaning of Section 860L(c) of the
Code. The determination as to the percentage of the REMIC's assets that
constitute assets described in the foregoing sections of the Code will be made
with respect to each calendar quarter based on the average adjusted basis of
each category of the assets held by the REMIC during such calendar quarter. The
REMIC Administrator will report those determinations to Certificateholders in
the manner and at the times required by applicable Treasury regulations.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as REMICs ("Tiered REMICs") for federal income tax purposes. As to
each such series of REMIC Certificates, in the opinion of counsel to the
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Depositor, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the Tiered REMICs will each qualify as a REMIC and the
REMIC Certificates issued by the Tiered REMICs, will be considered to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(4)(A) of the Code and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the "constant yield" method described below,
in advance of the receipt of the cash attributable to such income. In addition,
Section 1272(a)(6) of the Code provides special rules applicable to REMIC
Regular Certificates and certain other debt instruments issued with original
issue discount. Regulations have not been issued under that section.
The Code requires that a reasonable prepayment assumption be used with
respect to Mortgage Loans held by a REMIC in computing the accrual of original
issue discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the
"Committee Report") indicates that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate must be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "Prepayment Assumption") used in
reporting original issue discount for each series of REMIC Regular Certificates
will be consistent with this standard and will be disclosed in the related
Prospectus Supplement. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Prepayment Assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "Closing Date"), the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest".
"Qualified stated interest" is interest that is unconditionally payable at least
annually (during the entire term of the instrument) at a single fixed rate, or
at a "qualified floating rate", an "objective rate", a combination of a single
fixed rate and one or more "qualified floating rates" or one "qualified inverse
floating rate", or a combination of "qualified floating rates" that does not
operate in a manner that accelerates or defers interest payments on such REMIC
Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the
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characteristics of such REMIC Regular Certificates. If the original issue
discount rules apply to such Certificates, the related Prospectus Supplement
will describe the manner in which such rules will be applied with respect to
those Certificates in preparing information returns to the Certificateholders
and the IRS.
Certain classes of the REMIC Regular Certificates may provide for the first
interest payment with respect to such Certificates to be made more than one
month after the date of issuance, a period which is longer than the subsequent
monthly intervals between interest payments. Assuming the "accrual period" (as
defined below) for original issue discount is each monthly period that ends on
the day prior to a Distribution Date, in some cases, as a consequence of this
"long first accrual period", some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and
accounted for as original issue discount. Because interest on REMIC Regular
Certificates must in any event be accounted for under an accrual method,
applying this analysis would result in only a slight difference in the timing of
the inclusion in income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of such
REMIC Regular Certificate (and not as a separate asset the cost of which is
recovered entirely out of interest received on the next Distribution Date) and
that portion of the interest paid on the first Distribution Date in excess of
interest accrued for a number of days corresponding to the number of days from
the Closing Date to the first Distribution Date should be included in the stated
redemption price of such REMIC Regular Certificate. However, the OID Regulations
state that all or some portion of such accrued interest may be treated as a
separate asset the cost of which is recovered entirely out of interest paid on
the first Distribution Date. It is unclear how an election to do so would be
made under the OID Regulations and whether such an election could be made
unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average maturity. For this
purpose, the weighted average maturity of the REMIC Regular Certificate is
computed as the sum of the amounts determined, as to each payment included in
the stated redemption price of such REMIC Regular Certificate, by multiplying
(i) the number of complete years (rounding down for partial years) from the
issue date until such payment is expected to be made (presumably taking into
account the Prepayment Assumption) by (ii) a fraction, the numerator of which is
the amount of the payment, and the denominator of which is the stated redemption
price at maturity of such REMIC Regular Certificate. Under the OID Regulations,
original issue discount of only a de minimis amount (other than de minimis
original issue discount attributable to a so-called "teaser" interest rate or an
initial interest holiday) will be included in income as each payment of stated
principal is made, based on the product of the total amount of such de minimis
original issue discount and a fraction, the numerator of which is the amount of
such principal payment and the denominator of which is the outstanding stated
principal amount of the REMIC Regular Certificate. The OID Regulations also
would permit a Certificateholder to elect to accrue de minimis original issue
discount into income currently based on a constant yield method. See
"-- Taxation of Owners of REMIC Regular Certificates -- Market Discount" below
for a description of such election under the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such Certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that begins on a date that
corresponds to a Distribution Date (or in the case of the first such period,
begins on the Closing Date) and ends on the day preceding the immediately
following Distribution Date, a
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calculation will be made of the portion of the original issue discount that
accrued during such accrual period. The portion of original issue discount that
accrues in any accrual period will equal the excess, if any, of (i) the sum of
(a) the present value, as of the end of the accrual period, of all of the
distributions remaining to be made on the REMIC Regular Certificate, if any, in
future periods and (b) the distributions made on such REMIC Regular Certificate
during the accrual period of amounts included in the stated redemption price,
over (ii) the adjusted issue price of such REMIC Regular Certificate at the
beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence will be calculated (i)
assuming that distributions on the REMIC Regular Certificate will be received in
future periods based on the Mortgage Loans being prepaid at a rate equal to the
Prepayment Assumption, (ii) using a discount rate equal to the original yield to
maturity of the Certificate and (iii) taking into account events (including
actual prepayments) that have occurred before the close of the accrual period.
For these purposes, the original yield to maturity of the Certificate will be
calculated based on its issue price and assuming that distributions on the
Certificate will be made in all accrual periods based on the Mortgage Loans
being prepaid at a rate equal to the Prepayment Assumption. The adjusted issue
price of a REMIC Regular Certificate at the beginning of any accrual period will
equal the issue price of such Certificate, increased by the aggregate amount of
original issue discount that accrued with respect to such Certificate in prior
accrual periods, and reduced by the amount of any distributions made on such
REMIC Regular Certificate in prior accrual periods of amounts included in the
stated redemption price. The original issue discount accruing during any accrual
period, computed as described above, will be allocated ratably to each day
during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (ii) the daily portions of original issue
discount for all days during such accrual period prior to such day.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under Section 1276 of the
Code such a Certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A Certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If made, such election will apply to all
market discount bonds acquired by such Certificateholder on or after the first
day of the first taxable year to which such election applies. In addition, the
OID Regulations permit a Certificateholder to elect to accrue all interest and
discount (including de minimis market or original issue discount) in income as
interest, and to amortize premium, based on a constant yield method. If such an
election were made with respect to a REMIC Regular Certificate with market
discount, the Certificateholder would be deemed to have made an election to
include currently market discount in income with respect to all other debt
instruments having market discount that such Certificateholder acquires during
the taxable year of the election or thereafter, and possibly previously acquired
instruments. Similarly, a Certificateholder that made this election for a
Certificate that is acquired at a premium would be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Certificateholder owns or acquires. See
"-- Taxation of Owners of REMIC Regular Certificates -- Premium" below. Each of
these elections to accrue interest, discount and premium with respect to a
Certificate on a constant yield method or as interest would be irrevocable
except with the approval of the IRS.
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However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "-- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" above. Such treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on REMIC Regular Certificates should
accrue, at the Certificateholder's option: (i) on the basis of a constant yield
method, (ii) in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to the
total amount of stated interest remaining to be paid on the REMIC Regular
Certificate as of the beginning of the accrual period, or (iii) in the case of a
REMIC Regular Certificate issued with original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the original
issue discount accrued in the accrual period bears to the total original issue
discount remaining on the REMIC Regular Certificate at the beginning of the
accrual period. Moreover, the Prepayment Assumption used in calculating the
accrual of original issue discount is also used in calculating the accrual of
market discount. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield method
over the life of the Certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID Regulations also permit Certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the Certificateholder as having made the election
to amortize premium generally. See
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"-- Taxation of Owners of REMIC Regular Certificates -- Market Discount" above.
Although final Treasury regulations issued under Section 171 of the Code do not
by their terms apply to prepayable obligations such as REMIC Regular
Certificates, the Committee Report states that the same rules that apply to
accrual of market discount (which rules will require use of a Prepayment
Assumption in accruing market discount with respect to REMIC Regular
Certificates without regard to whether such Certificates have original issue
discount) will also apply in amortizing bond premium.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their Certificates become wholly or partially
worthless as the result of one or more realized losses on the Mortgage Loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until such holder's Certificate
becomes wholly worthless (i.e., until its Certificate Balance has been reduced
to zero) and that the loss will be characterized as a short-term capital loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans or the Underlying Certificates until it can
be established that any such reduction ultimately will not be recoverable. As a
result, the amount of taxable income reported in any period by the holder of a
REMIC Regular Certificate could exceed the amount of economic income actually
realized by the holder in such period. Although the holder of a REMIC Regular
Certificate eventually will recognize a loss or reduction in income attributable
to previously accrued and included income that, as the result of a realized
loss, ultimately will not be realized, the law is unclear with respect to the
timing and character of such loss or reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC generally is not subject to entity-level taxation, except with
regard to prohibited transactions and certain other transactions. See
"-- Prohibited Transactions Tax and Other Taxes" below. Rather, the taxable
income or net loss of a REMIC is generally taken into account by the holder of
the REMIC Residual Certificates. Accordingly, the REMIC Residual Certificates
will be subject to tax rules that differ significantly from those that would
apply if the REMIC Residual Certificates were treated for federal income tax
purposes as direct ownership interests in the Mortgage Loans or as debt
instruments issued by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
Prospectus Supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on such day. Any amount included in the gross income or
allowed as a loss of any REMIC Residual Certificateholder by virtue of this
paragraph will be treated as ordinary income or loss. The taxable income of the
REMIC will be determined under the rules described below in "-- Taxable Income
of the REMIC" and will be taxable to the REMIC Residual Certificateholders
without regard to the timing or amount of cash distributions by the REMIC until
the REMIC's termination. Ordinary income derived from REMIC Residual
Certificates will be "portfolio income" for purposes of the taxation of
taxpayers subject to limitations under Section 469 of the Code on the
deductibility of "passive losses".
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as
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described above. The Committee Report indicates that certain modifications of
the general rules may be made, by regulations, legislation or otherwise to
reduce (or increase) the income of a REMIC Residual Certificateholder that
purchased such REMIC Residual Certificate from a prior holder of such
Certificate at a price greater than (or less than) the adjusted basis (as
defined below) such REMIC Residual Certificate would have had in the hands of an
original holder of such Certificate. The REMIC Regulations, however, do not
provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate from the
seller of such Certificate in connection with the acquisition of such REMIC
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt, the IRS
might assert that such payment should be included in income over time according
to an amortization schedule or according to some other method. Because of the
uncertainty concerning the treatment of such payments, holders of REMIC Residual
Certificates should consult their tax advisors concerning the treatment of such
payments for income tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions" and
"noneconomic" residual interests discussed below. The fact that the tax
liability associated with the income allocated to REMIC Residual
Certificateholders may exceed the cash distributions received by such REMIC
Residual Certificateholders for the corresponding period may significantly
adversely affect such REMIC Residual Certificateholders' after-tax rate of
return. Such disparity between income and distributions may not be offset by
corresponding losses or reductions of income attributable to the REMIC Residual
Certificateholder until subsequent tax years and, then, may not be completely
offset due to changes in the Code, tax rates or character of the income or loss.
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the Mortgage Loans (including interest, market discount and, if
applicable, original issue discount and less premium) and other assets of the
REMIC plus any cancellation of indebtedness income due to the allocation of
realized losses to REMIC Regular Certificates, less the deductions allowed to
the REMIC for interest (including original issue discount and reduced by any
premium on issuance) on the REMIC Regular Certificates (and any other class of
REMIC Certificates constituting "regular interests" in the REMIC not offered
hereby), amortization of any premium on the Mortgage Loans, bad debt losses with
respect to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, such Class's fair market value). Such aggregate basis will be
allocated among the Mortgage Loans and the other assets of the REMIC in
proportion to their respective fair market values. The issue price of any REMIC
Certificates offered hereby will be determined in the manner described above
under "-- Taxation of Owners of REMIC Regular Certificates -- Original Issue
Discount". The issue price of a REMIC Certificate received in exchange for an
interest in the Mortgage Loans or other property will equal the fair market
value of such interests in the Mortgage Loans or other property. Accordingly, if
one or more classes of REMIC Certificates are retained initially rather than
sold, the REMIC Administrator may be required to estimate the fair market value
of such interests in order to determine the basis of the REMIC in the Mortgage
Loans and other property held by the REMIC.
The method of accrual by the REMIC of original issue discount income and
market discount income with respect to Mortgage Loans that it holds will be
equivalent to the method for accruing original issue discount income for holders
of REMIC Regular Certificates (that is, under the constant yield method taking
into account the Prepayment Assumption), but without regard to the de minimis
rule applicable to REMIC Regular Certificates. However, a REMIC that acquires
loans at a market discount must include such market
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discount in income currently, as it accrues, on a constant yield basis. See
"-- Taxation of Owners of REMIC Regular Certificates" above, which describes a
method for accruing such discount income that is analogous to that required to
be used by a REMIC as to Mortgage Loans with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption. Further, such an election would not apply to any Mortgage
Loan originated on or before September 27, 1985. Instead, premium on such a
Mortgage Loan should be allocated among the principal payments thereon and be
deductible by the REMIC as those payments become due or upon the prepayment of
such Mortgage Loan.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "-- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount", except that the de minimis rule and
the adjustments for subsequent holders of REMIC Regular Certificates (including
any other class of REMIC Certificates constituting "regular interests" in the
REMIC not offered hereby) described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess "Issue Premium"), the
REMIC will have additional income in each taxable year in an amount equal to the
portion of the Issue Premium that is considered to be amortized or repaid in
that year. Although the matter is not entirely certain, it is likely that Issue
Premium would be amortized under a constant yield method in a manner analogous
to the method of accruing original issue discount described above under
"-- Taxation of Owners of REMIC Regular Certificates -- Original Issue
Discount".
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "-- Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other noninterest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "-- Possible Pass-Through of Miscellaneous Itemized
Deductions" below. If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such excess will be the net loss for the REMIC
for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such net
loss). Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the
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REMIC Residual Certificate. The ability of REMIC Residual Certificateholders to
deduct net losses may be subject to additional limitations under the Code, as to
which REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end
of the calendar quarter, or perhaps the end of the calendar year, with respect
to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or (together with their initial bases) are less than the amount of
such distributions, gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "-- Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder and the adjusted basis such REMIC Residual Certificate would
have in the hands of an original holder see "-- Taxation of Owners of REMIC
Residual Certificates -- General" above.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events. In
general, the "excess inclusions" with respect to a REMIC Residual Certificate
for any calendar quarter will be the excess, if any, of (i) the daily portions
of REMIC taxable income allocable to such REMIC Residual Certificate over (ii)
the sum of the "daily accruals" (as defined below) for each day during such
quarter that such REMIC Residual Certificate was held by such REMIC Residual
Certificateholder. The daily accruals of a REMIC Residual Certificateholder will
be determined by allocating to each day during a calendar quarter its ratable
portion of the product of the "adjusted issue price" of the REMIC Residual
Certificate at the beginning of the calendar quarter and 120% of the "long-term
Federal rate" in effect on the Closing Date. For this purpose, the adjusted
issue price of a REMIC Residual Certificate as of the beginning of any calendar
quarter will be equal to the issue price of the REMIC Residual Certificate,
increased by the sum of the daily accruals for all prior quarters and decreased
(but not below zero) by any distributions made with respect to such REMIC
Residual Certificate before the beginning of such quarter. The issue price of a
REMIC Residual Certificate is the initial offering price to the public
(excluding bond houses and brokers) at which a substantial amount of the REMIC
Residual Certificates were sold. The "long-term Federal rate" is an average of
current yields on Treasury securities with a remaining term of greater than nine
years, computed and published monthly by the IRS.
For REMIC Residual Certificateholders, an excess inclusion (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however, "-- Foreign
Investors in REMIC Certificates" below.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real
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estate investment trust taxable income (within the meaning of Section 857(b)(2)
of the Code, excluding any net capital gain), will be allocated among the
shareholders of such trust in proportion to the dividends received by such
shareholders from such trust, and any amount so allocated will be treated as an
excess inclusion with respect to a REMIC Residual Certificate as if held
directly by such shareholder. Treasury regulations yet to be issued could apply
a similar rule to regulated investment companies, common trust funds and certain
cooperatives; the REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted clean up calls, or required liquidation provided for in
the REMIC's organizational documents, (1) the present value of the expected
future distributions (discounted using the "applicable Federal rate" for
obligations whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS) on the
REMIC Residual Certificate equals at least the present value of the expected tax
on the anticipated excess inclusions, and (2) the transferor reasonably expects
that the transferee will receive distributions with respect to the REMIC
Residual Certificate at or after the time the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling and Servicing Agreement that are intended to reduce
the possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain
representations as to the financial condition of the prospective transferee, as
to which the transferor is also required to make a reasonable investigation to
determine such transferee's historic payment of its debts and ability to
continue to pay its debts as they come due in the future. Prior to purchasing a
REMIC Residual Certificate, prospective purchasers should consider the
possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "-- Foreign Investors in REMIC Certificates" below
for additional restrictions applicable to transfers of certain REMIC Residual
Certificates to foreign persons.
Mark-to-Market Rules. On January 4, 1995, the IRS issued final regulations
(the "Mark-to-Market Regulations") relating to the requirement that a securities
dealer mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities owned by a dealer, except to the extent
that the dealer has specifically identified a security as held for investment.
The Mark-to-Market Regulations provide that for purposes of this mark-to-market
requirement, any REMIC Residual Certificate acquired on or after January 4, 1995
will not be treated as a security and thus generally may not be marked to
market.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to certain types of holders of
the related REMIC Residual Certificates. The applicable Treasury regulations
indicate, however, that in the case of a REMIC that is similar to a single class
grantor trust, all or a portion of such fees and expenses should be allocated to
such types of holders of the related REMIC Regular Certificates. Unless
otherwise stated in the related Prospectus Supplement, such fees and expenses
will be allocated to the related REMIC Residual Certificates in their entirety
and not to the holders of the related REMIC Regular Certificates.
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With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees and expenses
will be treated as a miscellaneous itemized deduction allowable subject to the
limitation of Section 67 of the Code, which permits such deductions only to the
extent they exceed in the aggregate 2% of a taxpayer's adjusted gross income. In
addition, Section 68 of the Code provides that the amount of itemized deductions
otherwise allowable for an individual whose adjusted gross income exceeds a
specified amount will be reduced by the lesser of (i) 3% of the excess of the
individual's adjusted gross income over such amount or (ii) 80% of the amount of
itemized deductions otherwise allowable for the taxable year. The amount of
additional taxable income reportable by REMIC Certificateholders that are
subject to the limitations of either Section 67 or Section 68 of the Code may be
substantial. Furthermore, in determining the alternative minimum taxable income
of such a holder of a REMIC Certificate that is an individual, estate or trust,
or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, no deduction will be allowed for such holder's allocable
portion of servicing fees and other miscellaneous itemized deductions of the
REMIC, even though an amount equal to the amount of such fees and other
deductions will be included in such holder's gross income. Accordingly, such
REMIC Certificates may not be appropriate investments for individuals, estates,
or trusts, or pass-through entities beneficially owned by one or more
individuals, estates or trusts. Such prospective investors should consult with
their tax advisors prior to making an investment in such Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such Certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described above
under "-- Taxation of Owners of REMIC Residual Certificates -- Basis Rules, Net
Losses and Distributions". Except as provided in the following four paragraphs,
any such gain or loss will be capital gain or loss, provided such REMIC
Certificate is held as a capital asset (generally, property held for investment)
within the meaning of Section 1221 of the Code. The Code as of the date of this
Prospectus provides for a top marginal tax rate of 39.6% for individuals and a
maximum marginal rate for long-term capital gains of individuals of 20% for
property held for more than one year. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be a
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the Certificate based on the
application of the Prepayment Assumption to such Certificate), determined as of
the date of purchase of such REMIC Regular Certificate, over (ii) the amount of
ordinary income actually includible in the seller's income prior to such sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by a
seller who purchased such REMIC Regular Certificate at a market discount will be
taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "-- Taxation of Owners of REMIC Regular
Certificates -- Market Discount" and "-- Premium".
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REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires such REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of such sale, such sale will be subject to the "wash sale" rules
of Section 1091 of the Code. In that event, any loss realized by the REMIC
Residual Certificateholder on the sale will not be deductible, but instead will
be added to such REMIC Residual Certificateholder's adjusted basis in the
newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions" (a
"Prohibited Transactions Tax"). In general, subject to certain specified
exceptions a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage Loans
for temporary investment pending distribution on the REMIC Certificates. It is
not anticipated that any REMIC will engage in any prohibited transactions in
which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling and Servicing Agreement will include
provisions designed to prevent the acceptance of any contributions that would be
subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property", determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
As provided in each Pooling and Servicing Agreement, a REMIC may recognize "net
income from foreclosure property" subject to federal income tax to the extent
that the REMIC Administrator determines that such method of operation will
result in a greater after-tax return to the Trust Fund than any other method of
operation.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax or
Contributions Tax will be borne by the related REMIC Administrator, Master
Servicer, Special Servicer, Manager or Trustee, in any case out of its own
funds,
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provided that such person has sufficient assets to do so, and provided further
that such tax arises out of a breach of such person's obligations under the
related Pooling and Servicing Agreement and in respect of compliance with
applicable laws and regulations. Any such tax not borne by a REMIC
Administrator, a Master Servicer, Special Servicer, Manager or Trustee will be
charged against the related Trust Fund resulting in a reduction in amounts
payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (i) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate) of the total
anticipated excess inclusions with respect to such REMIC Residual Certificate
for periods after the transfer and (ii) the highest marginal federal income tax
rate applicable to corporations. The anticipated excess inclusions must be
determined as of the date that the REMIC Residual Certificate is transferred and
must be based on events that have occurred up to the time of such transfer, the
Prepayment Assumption and any required or permitted clean up calls or required
liquidation provided for in the REMIC's organizational documents. Such a tax
generally would be imposed on the transferor of the REMIC Residual Certificate,
except that where such transfer is through an agent for a disqualified
organization, the tax would instead be imposed on such agent. However, a
transferor of a REMIC Residual Certificate would in no event be liable for such
tax with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless there
are reasonable arrangements designed to ensure that (i) residual interests in
such entity are not held by disqualified organizations and (ii) information
necessary for the application of the tax described herein will be made
available. Restrictions on the transfer of REMIC Residual Certificates and
certain other provisions that are intended to meet this requirement will be
included in each Pooling and Servicing Agreement, and will be discussed in any
Prospectus Supplement relating to the offering of any REMIC Residual
Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity (i) such holder's social security number and a statement
under penalties of perjury that such social security number is that of the
record holder or (ii) a statement under penalties of perjury that such record
holder is not a disqualified organization.
For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a REMIC Residual Certificate, all interests in the
electing large partnership are treated as held by disqualified organizations for
purposes of the tax imposed upon a pass-through entity by Section 860E(c) of the
Code. An exception to this tax, otherwise available to a pass-through entity
that is furnished certain affidavits by record holders of interests in the
entity and that does not know such affidavits are false, is not available to an
electing large partnership.
For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the Federal Home Loan Mortgage Corporation), (ii) any organization
(other than a cooperative described in Section 521 of the Code) that is exempt
from federal income tax, unless it is subject to the tax imposed by Section 511
of the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code. In addition, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in Section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest,
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be treated as a pass-through entity. For these purposes, an "electing large
partnership" means a partnership (other than a service partnership or certain
commodity pools) having more than 100 members that has elected to apply certain
simplified reporting provisions under the Code.
Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such Certificate, such REMIC Residual
Certificateholder should (but may not) be treated as realizing a loss equal to
the amount of such difference, and such loss may be treated as a capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, the holder of the
largest percentage interest in a class of REMIC Residual Certificates will be
the "tax matters person" with respect to the related REMIC, and the REMIC
Administrator will file REMIC federal income tax returns on behalf of the
related REMIC, and will be designated as and will act as agent of, and
attorney-in-fact for, the tax matters person with respect to the REMIC in all
respects.
As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the REMIC Residual
Certificateholders in connection with the administrative and judicial review of
items of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. REMIC Residual Certificateholders generally will be required to
report such REMIC items consistently with their treatment on the related REMIC's
tax return and may in some circumstances be bound by a settlement agreement
between the REMIC Administrator, as tax matters person, and the IRS concerning
any such REMIC item. Adjustments made to the REMIC tax return may require a
REMIC Residual Certificateholder to make corresponding adjustments on its
return, and an audit of the REMIC's tax return, or the adjustments resulting
from such an audit, could result in an audit of a REMIC Residual
Certificateholder's return. No REMIC will be registered as a tax shelter
pursuant to Section 6111 of the Code because it is not anticipated that any
REMIC will have a net loss for any of the first five taxable years of its
existence. Any person that holds a REMIC Residual Certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of such person and
other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other nonindividuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. The REMIC must also comply with rules
requiring a REMIC Regular Certificate issued with original issue discount to
disclose on its face the amount of original issue discount and the issue date,
and requiring such information to be reported to the IRS. Reporting with respect
to REMIC Residual Certificates, including income, excess inclusions, investment
expenses and relevant information regarding qualification of the REMIC's assets
will be made as required under the Treasury regulations, generally on a
quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such
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regulations only require that information pertaining to the appropriate
proportionate method of accruing market discount be provided. See "-- Taxation
of Owners of REMIC Regular Certificates -- Market Discount".
Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the REMIC Administrator.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner. The New Regulations,
as described below, change certain of the rules relating to certain presumptions
currently available relating to information reporting and backup withholding.
Non-U.S. Persons are urged to contact their own tax advisors regarding the
application to them of backup withholding and information reporting.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a U.S. Person (as defined below) and is not subject to federal
income tax as a result of any direct or indirect connection to the United States
in addition to its ownership of a REMIC Regular Certificate will not, unless
otherwise disclosed in the related Prospectus Supplement, be subject to United
States federal income or withholding tax in respect of a distribution on a REMIC
Regular Certificate, provided that the holder complies to the extent necessary
with certain identification requirements (including delivery of a statement,
signed by the Certificateholder under penalties of perjury, certifying that such
Certificateholder is not a U.S. Person and providing the name and address of
such Certificateholder). For these purposes, "U.S. Person" means a citizen or
resident of the United States, a corporation, partnership (except to the extent
provided in applicable Treasury regulations) or other entity created or
organized in, or under the laws of, the United States or any political
subdivision thereof, an estate the income of which is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons). It is possible that the IRS
may assert that the foregoing tax exemption should not apply with respect to a
REMIC Regular Certificate held by a REMIC Residual Certificateholder that owns
directly or indirectly a 10% or greater interest in the REMIC Residual
Certificates. If the holder does not qualify for exemption, distributions of
interest, including distributions in respect of accrued original issue discount,
to such holder may be subject to a tax rate of 30%, subject to reduction under
any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a nonresident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are nonresident
alien individuals should consult their tax advisors concerning this question.
The IRS recently issued final regulations (the "New Regulations") which
would provide alternative methods of satisfying the beneficial ownership
certification requirement described above. The New Regulations are effective
January 1, 2000, although valid withholding certificates that are held on
December 31, 1999, remain valid until the earlier of December 31, 2000 or the
due date of expiration of the certificate under the rules as currently in
effect. The New Regulations would require, in the case of Regular Certificates
held by a foreign partnership, that (x) the certification described above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. Non-U.S. Persons
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should consult their own tax advisors concerning the application of the
certification requirements in the New Regulations.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons will
be prohibited under the related Pooling and Servicing Agreement.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
Grantor Trust Certificates, in the opinion of counsel to the Depositor for such
series, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the related Grantor Trust Fund will be classified as a
grantor trust under subpart E, part I of subchapter J of the Code and not as a
partnership or an association taxable as a corporation. The following general
discussion of the anticipated federal income tax consequences of the purchase,
ownership and disposition of Grantor Trust Certificates, to the extent it
relates to matters of law or legal conclusions with respect thereto, represents
the opinion of counsel to the Depositor for the applicable series as specified
in the related Prospectus Supplement, subject to any qualifications set forth
herein. In addition, counsel to the Depositor have prepared or reviewed the
statements in this Prospectus under the heading "Certain Federal Income Tax
Consequences -- Grantor Trust Funds," and are of the opinion that such
statements are correct in all material respects. Such statements are intended as
an explanatory discussion of the possible effects of the classification of the
Grantor Trust Fund as a grantor trust for federal income tax purposes on
investors generally and of related tax matters affecting investors generally,
but do not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an investor's own tax advisor. Accordingly, each investor is advised to consult
its own tax advisors with regard to the tax consequences to it of investing in
Grantor Trust Certificates.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees) and interest paid to the holders of Grantor Trust
Fractional Interest Certificates issued with respect to such Grantor Trust Fund
will be referred to as a "Grantor Trust Strip Certificate". A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code; (ii) "obligation[s]
(including any participation or Certificate of beneficial ownership therein)
which . . . [are] principally secured by an interest in real property" within
the meaning of Section 860G(a)(3) of the Code; and (iii) "real estate assets"
within the meaning of Section 856(c)(4)(A) of the Code. In addition, counsel to
the Depositor will deliver an opinion that interest on Grantor Trust Fractional
Interest Certificates will to the same extent be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of Mortgage Loans that
are "loans . . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code and "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code, and the interest on which is
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code, it is unclear whether the Grantor
Trust Strip Certificates, and the income therefrom, will be so characterized.
However, the policies underlying
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such sections (namely, to encourage or require investments in mortgage loans by
thrift institutions and real estate investment trusts) may suggest that such
characterization is appropriate. Counsel to the Depositor will not deliver any
opinion on these questions. Prospective purchasers to which such
characterization of an investment in Grantor Trust Strip Certificates is
material should consult their tax advisors regarding whether the Grantor Trust
Strip Certificates, and the income therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or Certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
Taxation of Owners of Grantor Trust Fractional Interest Certificates.
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. Because of stripped interests, market or original issue
discount, or premium, the amount includible in income on account of a Grantor
Trust Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the Mortgage Loans. Under Section
67 of the Code, an individual, estate or trust holding a Grantor Trust
Fractional Interest Certificate directly or through certain pass-through
entities will be allowed a deduction for such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such holder's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by holders of Grantor Trust
Fractional Interest Certificates who are subject to the limitations of either
Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. Although it is not entirely clear,
it appears that in transactions in which multiple classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the classes of Grantor Trust Certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of statutory or administrative clarification as to the
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a class of Grantor
Trust Strip Certificates is issued as part of the same series of Certificates or
(ii) the Depositor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. The
related Prospectus Supplement will include information regarding servicing fees
paid to a Master Servicer, a Special Servicer, any Sub-Servicer or their
respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "-- Taxation of Owners of Grantor Trust Fractional
Interest Certificates -- Market Discount" below. Under the stripped bond rules,
the holder of a Grantor Trust Fractional Interest Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month
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calculated under a constant yield method, in accordance with the rules of the
Code relating to original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser of the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest", if any, as well as such Certificate's share of reasonable servicing
fees and other expenses. See "-- Taxation of Owners of Grantor Trust Fractional
Interest Certificates -- If Stripped Bond Rules Do Not Apply" for a definition
of "qualified stated interest". In general, the amount of such income that
accrues in any month would equal the product of such holder's adjusted basis in
such Grantor Trust Fractional Interest Certificate at the beginning of such
month (see "-- Sales of Grantor Trust Certificates" below) and the yield of such
Grantor Trust Fractional Interest Certificate to such holder. Such yield would
be computed as the rate (compounded based on the regular interval between
payment dates) that, if used to discount the holder's share of future payments
on the Mortgage Loans, would cause the present value of those future payments to
equal the price at which the holder purchased such Certificate. In computing
yield under the stripped bond rules, a Certificateholder's share of future
payments on the Mortgage Loans will not include any payments made in respect of
any ownership interest in the Mortgage Loans retained by the Depositor, the
Master Servicer, the Special Servicer, any Sub-Servicer or their respective
affiliates, but will include such Certificateholder's share of any reasonable
servicing fees and other expenses.
Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,
and regulations could be adopted applying those provisions to the Grantor Trust
Fractional Interest Certificates. It is unclear whether those provisions would
be applicable to the Grantor Trust Fractional Interest Certificates or whether
use of a reasonable prepayment assumption may be required or permitted without
reliance on these rules. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Fractional
Interest Certificate or, with respect to any holder, at the time of purchase of
the Grantor Trust Fractional Interest Certificate by that holder.
Certificateholders are advised to consult their tax advisors concerning
reporting original issue discount in general and, in particular, whether a
prepayment assumption should be used in reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the Grantor Trust Fractional Interest Certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See
"-- REMICs -- Taxation of Owners of REMIC Regular Certificates -- Original Issue
Discount" above. It is unclear whether any other adjustments would be required
to reflect differences between an assumed prepayment rate and the actual rate of
prepayments.
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In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
Prepayment Assumption that will be disclosed in the related Prospectus
Supplement and on a constant yield computed using a representative initial
offering price for each class of Certificates. However, neither the Depositor
nor any other person will make any representation that the Mortgage Loans will
in fact prepay at a rate conforming to such Prepayment Assumption or any other
rate and Certificateholders should bear in mind that the use of a representative
initial offering price will mean that such information returns or reports, even
if otherwise accepted as accurate by the IRS, will in any event be accurate only
as to the initial Certificateholders of each series who bought at that price.
Under Treasury regulations Section 1.1286-1, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue and market discount described in "-- Taxation of Owners of
Grantor Trust Fractional Interest Certificates -- If Stripped Bond Rules Do Not
Apply" and "-- Market Discount" below.
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. The original issue
discount rules will apply, even if the stripped bond rules do not apply, to a
Grantor Trust Fractional Interest Certificate to the extent it evidences an
interest in Mortgage Loans issued with original issue discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. For a definition of "stated redemption price," see "-- Taxation of
Owners of REMIC Regular Certificates -- Original Issue Discount" above. In
general, the issue price of a Mortgage Loan will be the amount received by the
borrower from the lender under the terms of the Mortgage Loan, less any "points"
paid by the borrower, and the stated redemption price of a Mortgage Loan will
equal its principal amount, unless the Mortgage Loan provides for an initial
"teaser," or below-market interest rate. The determination as to whether
original issue discount will be considered to be de minimis will be calculated
using the same test as in the REMIC discussion. See "-- Taxation of Owners of
REMIC Regular Certificates -- Original Issue Discount" above.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans by the Trustee or
Master Servicer, as applicable, in preparing information returns to the
Certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
Regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However,
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Section 1272(a)(6) of the Code may require that a prepayment assumption be made
in computing yield with respect to all mortgage-backed securities.
Certificateholders are advised to consult their own tax advisors concerning
whether a prepayment assumption should be used in reporting original issue
discount with respect to Grantor Trust Fractional Interest Certificates.
Certificateholders should refer to the related Prospectus Supplement with
respect to each series to determine whether and in what manner the original
issue discount rules will apply to Mortgage Loans in such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (i) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (ii) the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
Mortgage Loan at the beginning of any accrual period will equal the issue price
of such Mortgage Loan, increased by the aggregate amount of original issue
discount with respect to such Mortgage Loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such Mortgage Loan in
prior accrual periods of amounts included in its stated redemption price.
Unless otherwise provided in the related Prospectus Supplement, the Trustee
or Master Servicer, as applicable, will provide to any holder of a Grantor Trust
Fractional Interest Certificate such information as such holder may reasonably
request from time to time with respect to original issue discount accruing on
Grantor Trust Fractional Interest Certificates. See "-- Grantor Trust Reporting"
below.
Market Discount. If the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount", that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "-- Taxation of Owners of REMIC
Regular Interests -- Market Discount" above.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
holder's option: (i) on the basis of a constant yield method, (ii) in the case
of a Mortgage Loan issued without original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or
(iii) in the case of a Mortgage Loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
original issue discount accrued in the accrual period bears to the total
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original issue discount remaining at the beginning of the accrual period. The
prepayment assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a prepayment assumption could be to accelerate the reporting of such
discount income. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Mortgage Loan purchased at a discount in the
secondary market.
Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described above in "-- REMICs -- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" above within the exception that it is
less likely that a prepayment assumption will be used for purposes of such rules
with respect to the Mortgage Loans.
Further, under the rules described above in "-- REMICs -- Taxation of
Owners of REMIC Regular Certificates -- Market Discount", any discount that is
not original issue discount and exceeds a de minimis amount may require the
deferral of interest expense deductions attributable to accrued market discount
not yet includible in income, unless an election has been made to report market
discount currently as it accrues. This rule applies without regard to the
origination dates of the Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "-- REMICs -- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" above. It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption and the actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "-- Taxation of Owners of Grantor
Trust Fractional Interest Certificates -- If Stripped Bond Rules Apply", no
regulations or published rulings under Section 1286 of the Code have been issued
and some uncertainty exists as to how it will be applied to securities such as
the Grantor Trust Strip Certificates. Accordingly, holders of Grantor Trust
Strip Certificates should consult their tax advisors concerning the method to be
used in reporting income or loss with respect to such Certificates.
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The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "-- Possible Application of Proposed Contingent Payment Rules"
below and assumes that the holder of a Grantor Trust Strip Certificate will not
own any Grantor Trust Fractional Interest Certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the Mortgage Loans. See "-- Taxation of Owners of Grantor Trust Fractional
Interest Certificates -- If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the Grantor Trust Strip Certificates. It is unclear whether
those provisions would be applicable to the Grantor Trust Strip Certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Strip Certificate
or, with respect to any subsequent holder, at the time of purchase of the
Grantor Trust Strip Certificate by that holder.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Prepayment
Assumption disclosed in the related Prospectus Supplement and on a constant
yield computed using a representative initial offering price for each class of
Certificates. However, neither the Depositor nor any other person will make any
representation that the Mortgage Loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate and Certificateholders should
bear in mind that the use of a representative initial offering price will mean
that such information returns or reports, even if otherwise accepted as accurate
by the IRS, will in any event be accurate only as to the initial
Certificateholders of each series who bought at that price. Prospective
purchasers of the Grantor Trust Strip Certificates should consult their tax
advisors regarding the use of the Prepayment Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Grantor Trust Strip Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Prepayment Assumption. However, if a Grantor Trust Strip Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a
Grantor Trust Strip Certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the Grantor Trust Strip Certificate that
is allocable to such Mortgage Loan.
Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the Grantor Trust Strip Certificates would cease if the Mortgage Loans were
prepaid in full, the Grantor Trust Strip Certificates could be considered to be
debt instruments providing for contingent payments. Under the OID Regulations,
debt instruments providing for contingent payments are not
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subject to the same rules as debt instruments providing for noncontingent
payments. Regulations have been promulgated regarding contingent payment debt
instruments (the "Contingent Payment Regulations"), but it appears that Grantor
Trust Strip Certificates, due to their similarity to other mortgage-backed
securities (such as REMIC regular interests and debt interests subject to
Section 1272(a)(6) of the Code) that are expressly excepted from the application
of the Contingent Payment Regulations, may be excepted from such regulations.
Like the OID Regulations, the Contingent Payment Regulations do not specifically
address securities, such as the Grantor Trust Strip Certificates, that are
subject to the stripped bond rules of Section 1286 of the Code.
If the contingent payment rules similar to those under the OID Regulations
were to apply, the holder of a Grantor Trust Strip Certificate would be required
to apply a "noncontingent bond method." Under the "noncontingent bond method,"
the issuer of a Grantor Trust Strip Certificate determines a projected payment
schedule. Holders of Grantor Trust Strip Certificates are bound by the issuer's
projected payment schedule. The projected payment schedule consists of all
noncontingent payments and a projected amount for each contingent payment based
on the comparable yield (as described below) of the Grantor Trust Strip
Certificate. The projected amount of each payment is determined so that the
projected payment schedule reflects the comparable yield. The projected amount
of each payment must reasonably reflect the relative expected values of the
payments to be received by the holders of a Grantor Trust Strip Certificate. The
comparable yield referred to above is a rate that, as of the issue date,
reflects the yield at which the issuer would issue a fixed rate debt instrument
with terms and conditions similar to the contingent payment debt instrument,
including general market conditions, the credit quality of the issuer, and the
terms and conditions of the Mortgage Loans. The holder of a Grantor Trust Strip
Certificate would be required to include as interest income in each month the
adjusted issue price of the Grantor Trust Strip Certificate at the beginning of
the period multiplied by the comparable yield.
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Grantor Trust Strip
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code generally provides for maximum tax rates of noncorporate
taxpayers of 39.6% on ordinary income and 20% on long-term capital gains
(generally, property held for more than one year). No such rate differential
exists for corporations. In addition, the distinction between a capital gain or
loss and ordinary income or loss remains relevant for other purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust Certificate is held as part of a "conversion transaction"
within the meaning of Section 1258 of the Code. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk, if substantially
all of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in such transaction. The amount of gain realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
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Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for that taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master Servicer, as applicable,
will furnish, within a reasonable time after the end of each calendar year, to
each holder of a Grantor Trust Certificate who was such a holder at any time
during such year, information regarding the amount of servicing compensation
received by the Master Servicer, the Special Servicer or any Sub-Servicer, and
such other customary factual information as the Depositor or the reporting party
deems necessary or desirable to enable holders of Grantor Trust Certificates to
prepare their tax returns and will furnish comparable information to the IRS as
and when required by law to do so. Because the rules for accruing discount and
amortizing premium with respect to the Grantor Trust Certificates are uncertain
in various respects, there is no assurance the IRS will agree with the Trustee's
or Master Servicer's, as the case may be, information reports of such items of
income and expense. Moreover, such information reports, even if otherwise
accepted as accurate by the IRS, will in any event be accurate only as to the
initial Certificateholders that bought their Certificates at the representative
initial offering price used in preparing such reports.
Backup Withholding. In general, the rules described above in
"-- REMICs -- Backup Withholding with Respect to REMIC Certificates" will also
apply to Grantor Trust Certificates.
Foreign Investors. In general, the discussion with respect to REMIC
Regular Certificates in "-- REMICs -- Foreign Investors in REMIC Certificates"
above applies to Grantor Trust Certificates except that Grantor Trust
Certificates will, unless otherwise disclosed in the related Prospectus
Supplement, be eligible for exemption from U.S. withholding tax, subject to the
conditions described in such discussion, only to the extent the related Mortgage
Loans were originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
nonresident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore,
prospective investors should consult their tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
CERTAIN ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on retirement plans, and on certain
other employee benefit plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts (and as applicable, insurance company general accounts) in which such
plans, accounts or arrangements are invested that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code ("Plans"), and
on persons who are fiduciaries with respect to such Plans, in connection with
the investment of Plan assets. Certain employee benefit plans, such as
governmental plans (as defined in
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ERISA Section 3(32)), and, if no election has been made under Section 410(d) of
the Code, church plans (as defined in Section 3(33) of ERISA) are not subject to
ERISA requirements. Accordingly, assets of such plans may be invested in Offered
Certificates without regard to the ERISA considerations described below, subject
to the provisions of other applicable federal and state law. Any such plan which
is qualified and exempt from taxation under Sections 401(a) and 501(a) of the
Code, however, is subject to the prohibited transaction rules set forth in
Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("parties in interest" within the meaning of ERISA and "disqualified
persons" within the meaning of the Code; collectively, "Parties in Interest")
who have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. Certain Parties in Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code or a penalty imposed pursuant to Section
502(i) of ERISA, unless a statutory or administrative exemption is available.
These prohibited transactions generally are set forth in Section 406 of ERISA
and Section 4975 of the Code.
PLAN ASSET REGULATIONS
A Plan's investment in Offered Certificates may cause the underlying
Mortgage Assets and other assets included in a related Trust Fund to be deemed
assets of such Plan. Section 2510.3-101 of the regulations (the "Plan Asset
Regulations") of the United States Department of Labor (the "DOL") provides that
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions not applicable here apply, or
unless the equity participation in the entity by "benefit plan investors" (i.e.,
Plans and certain employee benefit plans not subject to ERISA) is not
"significant", both as defined therein. For this purpose, in general, equity
participation by benefit plan investors will be "significant" on any date if 25%
or more of the value of any class of equity interests in the entity is held by
benefit plan investors. Equity participation in a Trust Fund will be significant
on any date if immediately after the most recent acquisition of any Certificate,
25% or more of any class of Certificates is held by benefit plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Assets and other assets included in a Trust Fund
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets, such as the Master Servicer, any Special
Servicer, any Sub-Servicer, the Trustee, the obligor under any credit
enhancement mechanism, or certain affiliates thereof may be deemed to be a Plan
"fiduciary" and thus subject to the fiduciary responsibility provisions and
prohibited transaction provisions of ERISA and the Code with respect to the
investing Plan. In addition, if the Mortgage Assets and other assets included in
a Trust Fund constitute Plan assets, the purchase of Certificates by a Plan, as
well as the operation of the Trust Fund, may constitute or involve a prohibited
transaction under ERISA or the Code.
The Plan Asset Regulations provide that where a Plan acquires a "guaranteed
governmental mortgage pool certificate", the Plan's assets include such
certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" FHLMC Certificates, GNMA Certificates and FNMA
Certificates, but, on their face, do not include FAMC Certificates. Accordingly,
even if such MBS (other than, perhaps, FAMC Certificates) included in a Trust
Fund were deemed to be assets of Plan investors, the mortgages underlying such
MBS (other than, perhaps, FAMC Certificates) would not be treated as assets of
such Plans. Private label mortgage participations, mortgage pass-through
certificates or other mortgage-backed securities are not "guaranteed
governmental mortgage pool certificates" within the meaning of the Plan Asset
Regulations. Potential Plan investors should consult their counsel and review
the ERISA discussion in the related Prospectus Supplement before purchasing any
such Certificates.
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In considering an investment in the Offered Certificates, a Plan fiduciary
should consider the availability of prohibited transaction exemptions
promulgated by the DOL including, among others, Prohibited Transaction Class
Exemption ("PTCE") 75-1, which exempts certain transactions involving Plans and
certain broker-dealers, reporting dealers and banks; PTCE 90-1, which exempts
certain transactions between insurance company separate accounts and Parties in
Interest; PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest; PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager"; PTCE 95-60, which exempts certain transactions between insurance
company general accounts and Parties in Interest; and PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager." There can be no assurance that any of these class exemptions will
apply with respect to any particular Plan investment in the Certificates or,
even if it were deemed to apply, that any exemption would apply to all
prohibited transactions that may occur in connection with such investment. The
Prospectus Supplement with respect to a series of Certificates may contain
additional information regarding the availability of other exemptions with
respect to the Certificates offered thereby.
The DOL has granted to certain underwriters administrative exemptions,
referred to herein as the "Exemptions", for certain mortgage-backed and
asset-backed certificates underwritten in whole or in part by the underwriters.
An Exemption might be applicable to the initial purchase, the holding, and the
subsequent resale by a Plan of certain certificates, such as the Offered
Certificates, underwritten by the underwriters, representing interests in
pass-through trusts that consist of certain receivables, loans and other
obligations, provided that the conditions and requirements of the Exemption are
satisfied. The loans described in the Exemptions include mortgage loans such as
the Mortgage Assets. However, it should be noted that in issuing the Exemptions,
the DOL may not have considered interests in pools of the exact nature as some
of the Offered Certificates. If all of the conditions of an Exemption are met,
whether or not a Plan's assets would be deemed to include an ownership interest
in the Mortgage Assets, the acquisition, holding and resale of the Offered
Certificates by Plans would be exempt from certain of the prohibited transaction
provisions of ERISA and the Code.
INSURANCE COMPANY GENERAL ACCOUNTS
Section III of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust) in which an insurance company general account has an
interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase certain Classes
of Certificates which do not meet the requirements of the Exemptions solely
because they (i) are subordinated to other Classes of Certificates in the Trust
and/or (ii) have not received a rating at the time of the acquisition in one of
the three highest rating categories from S&P, Moody's, DCR or Fitch. All other
conditions of the Exemptions would have to be satisfied in order for PTCE 95-60
to be available. Before purchasing such Class of Certificates, an insurance
company general account seeking to rely on Section III of PTCE 95-60 should
itself confirm that all applicable conditions and other requirements have been
satisfied.
The Small Business Job Protection Act of 1996 added a new Section 401(c) to
ERISA, which provides certain exemptive relief from the provisions of Part 4 of
Title I of ERISA and Section 4975 of the Code, including the prohibited
transaction restrictions imposed by ERISA and the related excise taxes imposed
by the Code, for transactions involving an insurance company general account.
Pursuant to Section 401(c) of ERISA, the DOL is required to issue final
regulations ("401(c) Regulations") no later than December 31, 1997 which are to
provide guidance for the purpose of determining, in cases where insurance
policies supported by an insurer's general account are issued to or for the
benefit of a Plan on or before December 31, 1998, which general account assets
constitute Plan Assets. On December 22, 1997, the DOL proposed such regulations.
Section 401(c) of ERISA generally provides that, until the date which is 18
months after the 401(c) Regulations become final, no person shall be subject to
liability under Part 4 of Title I of ERISA and Section 4975 of the Code on the
basis of a claim that the assets of an insurance company general account
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<PAGE> 275
constitute Plan Assets, unless (i) as otherwise provided by the Secretary of
Labor in the 401(c) Regulations to prevent avoidance of the regulations or (ii)
an action is brought by the Secretary of Labor for certain breaches of fiduciary
duty which would also constitute a violation of federal or state criminal law.
Any assets of an insurance company general account which support insurance
policies issued to a Plan after December 31, 1998 or issued to Plans on or
before December 31, 1998 for which the insurance company does not comply with
the 401(c) Regulations may be treated as Plan Assets. In addition, because
Section 401(c) does not relate to insurance company separate accounts, separate
account assets are still treated as Plan Assets of any Plan invested in such
separate account. Insurance companies contemplating the investment of general
account assets in the Offered Certificates should consult with their legal
counsel with respect to the applicability of Section 401(c) of ERISA, including
the general account's ability to continue to hold the Offered Certificates after
the date which is 18 months after the date the 401(c) Regulations become final.
CONSULTATION WITH COUNSEL
Any Plan fiduciary which proposes to purchase Offered Certificates on
behalf of or with assets of a Plan should consider its general fiduciary
obligations under ERISA and should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investment and the
availability of any prohibited transaction exemption in connection therewith.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to federal
income tax. See "Certain Federal Income Tax Consequences -- REMICs -- Taxation
of Owners of REMIC Residual Certificates -- Excess Inclusions".
LEGAL INVESTMENT
If so specified in the related Prospectus Supplement, the Offered
Certificates will constitute "mortgage related securities" for purposes of
SMMEA. The appropriate characterization of those Offered Certificates not
qualifying as "mortgage related securities" ("Non-SMMEA Certificates") under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase such Offered Certificates, may be subject to
significant interpretive uncertainties. Accordingly, investors whose investment
authority is subject to legal restrictions should consult their own legal
advisors to determine whether and to what extent the Non-SMMEA Certificates
constitute legal investments for them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies and (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of Originators specified in SMMEA and secured by
first liens on real estate, will be "mortgage related securities" for purposes
of SMMEA. Classes of Offered Certificates qualifying as "mortgage related
securities" will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including
depository institutions, insurance companies and pension funds) created pursuant
to or existing under the laws of the United States or of any state (including
the District of Columbia and Puerto Rico) whose authorized investments are
subject to state regulation, to the same extent that, under applicable law,
obligations issued by or guaranteed as to principal and interest by the United
States or any agency or instrumentality thereof constitute legal investments for
such entities. Under SMMEA, a number of states enacted legislation, on or before
the October 3, 1991 cutoff for such enactments, limiting to varying extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" (effective
December 31, 1996) to include, in
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<PAGE> 276
relevant part, Offered Certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on one
or more parcels of real estate upon which are located one or more commercial
structures, states were authorized to enact legislation, on or before September
23, 2001, specifically referring to Section 347 and prohibiting or restricting
the purchase, holding or investment by state-regulated entities in such types of
Offered Certificates. Section 347 also provides that the enactment by a state of
any such legislative restrictions shall not affect the validity of any
contractual commitment to purchase, hold or invest in securities qualifying as
"mortgage related securities" solely by reason of Section 347 that was made, and
shall not require the sale or disposition of any securities acquired, prior to
the enactment of such state legislation. Accordingly, the investors affected by
any such state legislation, when and if enacted, will be authorized to invest in
Offered Certificates qualifying as "mortgage related securities" only to the
extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
sec. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the "OCC") has amended 12 C.F.R. Part 1 to
authorize national banks to purchase and sell for their own account, without
limitation as to a percentage of the bank's capital and surplus (but subject to
compliance with certain general standards in 12 C.F.R. sec. 1.5 concerning
"safety and soundness" and retention of credit information), certain "Type IV
securities," defined in 12 C.F.R. sec. 1.2(1) to include certain "commercial
mortgage-related securities" and "residential mortgage-related securities." As
so defined, "commercial mortgage-related security" and "residential
mortgage-related security" mean, in relevant part, "mortgage related security"
within the meaning of SMMEA, provided that, in the case of a "commercial
mortgage-related security," it "represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of loans
to numerous obligors." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any class of Offered Certificates will
qualify as "commercial mortgage-related securities," and thus as "Type IV
securities," for investment by national banks. The National Credit Union
Administration ("NCUA") has adopted rules, codified at 12 C.F.R. Part 703, which
permit federal credit unions to invest in "mortgage related securities" under
certain limited circumstances, other than stripped mortgage related securities,
residual interests in mortgage related securities, and commercial mortgage
related securities, unless the credit union has obtained written approval from
the NCUA to participate in the "investment pilot program" described in 12 C.F.R.
sec. 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of
the Federal Financial Institutions Examination Council, which has been adopted
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the OCC and the Office of Thrift Supervision effective
May 26, 1998, and by the NCUA effective October 1, 1998. The 1998 Policy
Statement sets forth general guidelines which depository institutions must
follow in managing risks (including market, credit, liquidity, operational
(transactional), and legal risks) applicable to all securities (including
mortgage pass-through securities and mortgage-derivative products) used for
investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Offered
Certificates, as certain series or classes may be deemed unsuitable investments,
or may otherwise be restricted, under such rules, policies or guidelines (in
certain instances irrespective of SMMEA).
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<PAGE> 277
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any Offered Certificates issued
in book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase Offered Certificates under
applicable legal investment restrictions. The uncertainties described above (and
any unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the Offered Certificates) may
adversely affect the liquidity of the Offered Certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent the Offered Certificates of any class constitute
legal investments or are subject to investment, capital or other restrictions
and, if applicable, whether SMMEA has been overridden in any jurisdiction
relevant to such investor.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor to cover expenses related thereto. The Depositor
expects to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the net proceeds to the
Depositor from such sale.
The Depositor intends that Offered Certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of the Offered
Certificates of a particular series may be made through a combination of two or
more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters, which may include NationsBanc
Montgomery Securities LLC ("NationsBanc Montgomery"), an affiliate of the
Depositor;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the Offered
Certificates of a series may be offered in whole or in part to the seller of the
related Mortgage Assets that would comprise the Trust Fund for such
Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of
99
<PAGE> 278
commitment therefor. Such underwriters may be broker-dealers affiliated with the
Depositor whose identities and relationships to the Depositor will be as set
forth in the related Prospectus Supplement. The managing underwriter or
underwriters with respect to the offer and sale of Offered Certificates of a
particular series will be set forth on the cover of the Prospectus Supplement
relating to such series and the members of the underwriting syndicate, if any,
will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may be
deemed to be underwriters in connection with such Certificates, and any
discounts or commissions received by them from the Depositor and any profit on
the resale of Offered Certificates by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale of
the Offered Certificates of any series will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, in connection with reoffers and sales by them of
Offered Certificates. Holders of Offered Certificates should consult with their
legal advisors in this regard prior to any such reoffer or sale.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by NationsBanc Montgomery in connection with offers and
sales related to market-making transactions in Offered Certificates previously
offered hereunder in transactions with respect to which NationsBanc Montgomery
acts as principal. NationsBanc Montgomery may also act as agent in such
transactions. Sales may be made a negotiated prices determined at the time of
sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor by Robert W. Long, Jr., Assistant General Counsel of BankAmerica
Corporation. Certain legal matters relating to the Certificates will be passed
upon for the underwriter or underwriters by Cadwalader, Wickersham & Taft.
Certain federal income tax matters and other matters will be passed upon for the
Depositor by Cadwalader, Wickersham & Taft.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement. The Depositor has determined that its financial statements will not
be material to the offering of any Offered Certificates.
100
<PAGE> 279
RATING
It is a condition to the issuance of any class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, Certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of Stripped Interest Certificates might, in extreme
cases fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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<PAGE> 280
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<S> <C>
1998 Policy Statement......... 98
401(c) Regulations............ 96
Accrual Certificates.......... 11
Accrued Certificate
Interest.................... 34
Act........................... 65
ADA........................... 69
ARM Loans..................... 25
Available Distribution
Amount...................... 33
Book-Entry Certificates....... 33
Call Risk..................... 17
Cash Flow Agreement........... 12
CERCLA........................ 65
Certificate Account........... 27
Certificate Balance........... 10
Certificate Owner............. 39
Certificateholder............. 40
Closing Date.................. 72
Code.......................... 13
Commercial Properties......... 9, 22
Commission.................... 3
Committee Report.............. 72
Companion Class............... 35
Contingent Payment
Regulations................. 93
Contributions Tax............. 82
Controlled Amortization
Class....................... 10, 35
Cooperatives.................. 22
CPR........................... 30
Credit Support................ 12
Crime Control Act............. 69
Cut-off Date.................. 11, 35
Debt Service Coverage Ratio... 23
Definitive Certificates....... 33
Depositor..................... cover, 32
Determination Date............ 28, 33
Direct Participants........... 39
Distribution Date............. 11
Distribution Date Statement... 37
DOL........................... 95
DTC........................... 4
Due Dates..................... 25
Due Period.................... 28
Equity Participation.......... 25
ERISA......................... 13, 94
Events of Default............. 53
Excess Funds.................. 32
Exchange Act.................. 4
Exemptions....................
Extension Risk................ 17
FAMC.......................... 26
FFIEC......................... 98
FHLMC......................... 26
FNMA.......................... 26
GNMA.......................... 26
Garn Act...................... 66
Grantor Trust Certificates.... 13
Grantor Trust Fractional
Interest Certificate........ 86
Grantor Trust Fund............ 70
Grantor Trust Strip
Certificate................. 86
Indirect Participants......... 39
Insurance and Condemnation
Proceeds.................... 46
IRS........................... 49, 70
Issue Premium................. 78
Letter of Credit Bank......... 57
Liquidation Proceeds.......... 46
Loan-to-Value Ratio........... 24
Lock-out Date................. 25
Lock-out Period............... 25
Manager....................... 8
Mark-to-Market Regulations.... 80
Master Servicer............... 8
MBS........................... 9, 22
MBS Administrator............. 8
MBS Agreement................. 26
MBS Issuer.................... 26
MBS Servicer.................. 26
MBS Trustee................... 26
Mortgage...................... 22
Mortgage Asset Seller......... 22
Mortgage Asset Pool........... cover
Mortgage Assets............... cover, 22
Mortgage Loans................ cover, 8, 22
Mortgage Notes................ 22
Mortgage Rate................. 9
Mortgaged Properties.......... 22
Multifamily Properties........ 8, 22
NationsBanc Montgomery........ 99
NCUA.......................... 98
Net Leases.................... 24
Net Operating Income.......... 23
New Regulations............... 86
Non-SMMEA Certificates........ 97
Nonrecoverable Advance........ 36
Notional Amount............... 11
OCC........................... 98
OID Regulations............... 70
Offered Certificates.......... cover
</TABLE>
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<PAGE> 281
<TABLE>
<S> <C>
Originator.................... 22
OTS........................... 97
Participants.................. 39
Parties in Interest........... 95
Pass-Through Rate............. 11
Percentage Interest........... 34
Permitted Investments......... 45
Plan Asset Regulations........ 95
Plans......................... 94
Pooling and Servicing
Agreement................... 10
Prepayment Assumption......... 72
Prepayment Interest
Shortfall................... 28
Prepayment Period............. 37
Prepayment Premium............ 25
Prohibited Transactions Tax... 82
Prospectus Supplement......... cover
PTCE.......................... 96
PTCE 95-60.................... 96
Purchase Price................ 42
Rating Agency................. 14
RCRA.......................... 65
Record Date................... 33
Related Proceeds.............. 36
Relief Act.................... 69
REMIC......................... 2, 70
REMIC Administrator........... 8
REMIC Certificates............ 70
REMIC Provisions.............. 70
REMIC Regular Certificates.... 13
REMIC Regulations............. 70
REMIC Residual Certificates... 13
REO Property.................. 43
Residual Owner................ 96
RICO.......................... 69
Senior Certificates........... 10
Senior Liens.................. 22
SMMEA......................... 14
SPA........................... 30
Special Servicer.............. 8
Stripped Interest
Certificates................ 10
Stripped Principal
Certificates................ 10
Subordinate Certificates...... 10
Sub-Servicer.................. 45
Sub-Servicing Agreement....... 45
Tax Exempt Investor........... 97
Tiered REMICs................. 71
Title V....................... 68
Trust Assets.................. 3
Trustee....................... 8
UBTI.......................... 97
UCC........................... 59
U.S. Person................... 85
Value......................... 24
Voting Rights................. 38
Warranting Party.............. 42
</TABLE>
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[DISKETTE]
This diskette contains a spreadsheet file that can be put on a
user-specified hard drive or network drive. The file is "NL9802.xls" The file
"NL9802.xls" is a Microsoft Excel(1), Version 5.0 spreadsheet. The file
provides, in electronic format, certain loan level information shown in ANNEX A
of the Prospectus Supplement.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. After the file is opened, a securities law legend will be displayed. READ
THE LEGEND CAREFULLY. To view the ANNEX A data, "click" on the worksheet labeled
"ANNEX A."
- ---------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE> 283
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YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THE CERTIFICATES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS AS OF ANY DATE OTHER THAN THE DATES STATED ON
THEIR RESPECTIVE COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
WHEN ACTING AS UNDERWRITERS OF THE CERTIFICATES AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS. IN ADDITION, ALL DEALERS SELLING THE CERTIFICATES
WILL DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS UNTIL
FEBRUARY 8, 1999.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Table of Contents.................... S-1
Summary of Prospectus Supplement..... S-8
Risk Factors......................... S-18
Description of the Mortgage Pool..... S-31
Servicing of the Mortgage Loans...... S-51
Description of the Certificates...... S-62
Yield and Maturity Considerations.... S-79
Use of Proceeds...................... S-89
Certain Federal Income Tax
Consequences....................... S-89
Certain ERISA Considerations......... S-91
Legal Investment..................... S-94
Method of Distribution............... S-94
Legal Matters........................ S-95
Ratings.............................. S-95
Index of Principal Definitions....... S-97
Annex A.............................. A-1
Annex B.............................. B-1
Annex C.............................. C-1
PROSPECTUS
Prospectus Supplement................ 3
Available Information................ 3
Incorporation of Certain Information
by Reference....................... 4
Summary of Prospectus................ 8
Risk Factors......................... 15
Description of the Trust Funds....... 22
Yield and Maturity Considerations.... 27
The Depositor........................ 32
Description of the Certificates...... 32
The Pooling and Servicing
Agreements......................... 40
Description of Credit Support........ 56
Certain Legal Aspects of Mortgage
Loans.............................. 58
Certain Federal Income Tax
Consequences....................... 70
State and Other Tax Consequences..... 94
Certain ERISA Considerations......... 94
Legal Investment..................... 97
Use of Proceeds...................... 99
Method of Distribution............... 99
Legal Matters........................ 100
Financial Information................ 100
Rating............................... 101
Index of Principal Definitions....... 102
</TABLE>
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$1,399,564,622
(APPROXIMATE)
NATIONSLINK
FUNDING
CORPORATION
DEPOSITOR
CLASS A-1, CLASS A-2,
CLASS X, CLASS B
CLASS C, CLASS D AND CLASS E
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
SERIES 1998-2
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
November 5, 1998
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