<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration File No. 333-66805
Prospectus Supplement
(To Prospectus dated February 17, 1999)
$1,084,654,074 (APPROXIMATE)
NATIONSLINK FUNDING CORPORATION
DEPOSITOR
BANC ONE MORTGAGE CAPITAL MARKETS, LLC
MASTER SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-1
<TABLE>
<CAPTION>
<S> <C>
The Series 1999-1 Commercial Mortgage Pass-Through
CONSIDER CAREFULLY THE RISK Certificates will consist of the following classes:
FACTORS BEGINNING ON PAGE S-17
IN THIS PROSPECTUS SUPPLEMENT - senior certificates consisting of the Class A-1, Class A-2
AND PAGE 10 IN THE ACCOMPANYING and Class X Certificates;
PROSPECTUS.
- junior certificates consisting of the Class B, Class C,
Neither the certificates nor the Class D, Class E, Class F, Class G, Class H, Class J and
underlying mortgage loans are Class K Certificates; and
insured or guaranteed by any
governmental agency. - the residual certificates consisting of the Class R-I and
Class R-II Certificates.
The certificates will represent
interests only in the trust and Only the senior certificates and the Class B, Class C, Class
will not represent interests in D and Class E Certificates are offered hereby.
or obligations of NationsLink
Funding Corporation or any of The trust's assets will consist primarily of 331 mortgage
its affiliates, including loans and other property described in this prospectus
BankAmerica Corporation. 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.
</TABLE>
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/DCR/S&P)(4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A-1............... $ 198,904,170 6.042 % November 20, 2007 Aaa/AAA/AAA
Class A-2............... $ 659,653,000 6.316 % November 20, 2008 Aaa/AAA/AAA
Class X................. $ 1,222,145,439(6) 0.329 % (7) December 20, 2013 Aaa/AAA/AAAr
Class B................. $ 64,162,635 6.422 % (2) November 20, 2008 Aa2/AA/AA
Class C................. $ 61,107,271 6.571 % (2) December 20, 2008 A2/A/A
Class D................. $ 67,217,999 7.100 % (2) January 20, 2009 Baa2/BBB/BBB
Class E................. $ 33,608,999 7.100 % (2) January 20, 2009 Baa3/NR/NR
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------
- ----------------------------------------------
RATED FINAL
DISTRIBUTION
CLASS DATE(5)
- ----------------------------------------------
<S> <C>
Class A-1............... January 20, 2031
Class A-2............... January 20, 2031
Class X................. January 20, 2031
Class B................. January 20, 2031
Class C................. January 20, 2031
Class D................. January 20, 2031
Class E................. January 20, 2031
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
(Footnotes to table on page S-4)
- --------------------------------------------------------------------------------
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 February 23, 1999. NationsLink Funding Corporation
expects to receive from this offering approximately 106.35% of the initial
principal amount of the offered certificates, plus accrued interest from
February 1, 1999, before deducting expenses payable by NationsLink Funding
Corporation.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
February 17, 1999
<PAGE> 2
NationsLink Funding Corporation
- --------------------------------------------------------------------------------
Commercial Mortgage Pass-Through Certificates, Series 1999-1
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................... 124 $ 424,069,244 34.7%
FL................... 25 96,907,585 7.9%
NV................... 8 82,184,910 6.7%
NY................... 13 56,997,593 4.7%
UT................... 6 54,111,236 4.4%
AL................... 1 52,538,304 4.3%
IL................... 29 41,596,635 3.4%
TX................... 14 40,987,515 3.4%
SC................... 10 38,497,279 3.1%
NC................... 5 33,310,768 2.7%
GA................... 9 32,695,319 2.7%
MN................... 24 26,567,549 2.2%
NM................... 10 23,198,279 1.9%
MO................... 8 21,600,766 1.8%
IN................... 5 20,513,636 1.7%
MD................... 7 20,135,413 1.6%
WI................... 9 19,973,235 1.6%
CO................... 10 16,433,925 1.3%
AZ................... 13 15,553,540 1.3%
WA................... 4 14,874,225 1.2%
OK................... 4 14,200,388 1.2%
MA................... 3 11,027,381 0.9%
LA................... 2 9,744,190 0.8%
VA................... 3 9,219,212 0.8%
TN................... 7 8,297,624 0.7%
MI................... 2 7,237,822 0.6%
NJ................... 2 7,225,617 0.6%
CT................... 1 6,388,917 0.5%
OR................... 3 5,463,857 0.4%
MS................... 1 2,791,743 0.2%
KS................... 1 2,482,290 0.2%
DC................... 1 2,195,888 0.2%
ID................... 3 1,712,503 0.1%
OH................... 1 1,411,053 0.1%
</TABLE>
MORTGAGE POOL BY PROPERTY TYPE
- ------------------------------
[PIE CHART]
Multifamily.......... 31.3%
Retail............... 25.9%
Industrial........... 11.7%
Hotel................ 11.5%
Office............... 10.9%
Health Care.......... 3.0%
Mobile Home.......... 2.9%
Mini Storage......... 1.4%
Franchise
Restaurant......... 1.2%
Marina............... 0.2%
<PAGE> 3
<TABLE>
<S> <C> <C>
FOR MORE INFORMATION TABLE OF CONTENTS
NationsLink Funding IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN
Corporation has filed with the THIS PROSPECTUS SUPPLEMENT AND THE
SEC additional registration ACCOMPANYING PROSPECTUS...................... S-5
materials relating to the EXECUTIVE SUMMARY.............................. S-6
certificates. You may read SUMMARY OF PROSPECTUS SUPPLEMENT............... S-8
and copy any of these RISK FACTORS................................... S-17
materials at the SEC's Public Risks Related to the Certificates............ S-17
Reference Room at the Lack of Control Over Trust Fund........... S-17
following locations: Potential Conflicts of Interest........... S-17
Yield Considerations...................... S-17
- SEC Public Reference Prepayments and Repurchases............... S-18
Section Borrower Default.......................... S-19
450 Fifth Street, N.W. Bankruptcy Proceedings.................... S-20
Room 1204 Advance Interest and Other Payments....... S-20
Washington, D.C. 20549 Limited Liquidity and Market Value........ S-20
Different Timing of Mortgage Loan
- SEC Midwest Regional Amortization............................ S-21
Offices Subordination of Subordinate Offered
Citicorp Center Certificates............................ S-21
500 West Madison Street Year 2000 Disruptions..................... S-21
Suite 1400 Risks Related to the Mortgage Loans.......... S-21
Chicago, Illinois Nature of the Mortgaged Properties........ S-21
60661-2511 Management................................ S-22
Balloon Payments and Hyper-Amortization
- SEC Northeast Regional Loans................................... S-22
Office Risks Particular to Multifamily
7 World Trade Center Properties.............................. S-23
Suite 1300 Risks Particular to Retail Properties..... S-23
New York, New York 10048 Risks Particular to Restaurant
Franchises.............................. S-24
You may obtain information on Risks Particular to Senior Housing/Health
the operation of the Public Care Properties......................... S-24
Reference Room by calling the Risks Particular to Office Properties..... S-25
SEC at 1-800-SEC-0330. The Risks Particular to Hotels................ S-25
SEC also maintains an Risks Particular to Mobile Home Park
Internet site that contains Properties.............................. S-25
reports, proxy and Risks Particular to Mini-Storage
information statements, and Facilities.............................. S-26
other information that has Risks of Subordinate Financing............ S-26
been filed electronically Limited Recourse.......................... S-26
with the SEC. The Internet Environmental Considerations.............. S-26
address is Limitations on Enforceability of Cross-
http://www.sec.gov. Collateralization....................... S-27
Related Parties........................... S-27
You may also contact Geographic Concentration.................. S-28
NationsLink Funding Other Concentrations...................... S-28
Corporation in writing at Changes in Concentrations................. S-29
Bank of America Corporate Prepayment Premiums....................... S-29
Center, 100 North Tryon Limited Information....................... S-30
Street, Charlotte, North Litigation................................ S-30
Carolina 28255, or by Other Risks.................................. S-30
telephone at (704) 386-2400. DESCRIPTION OF THE MORTGAGE POOL............... S-30
General...................................... S-30
See also the sections Certain Terms and Conditions of the Mortgage
captioned "Available Loans..................................... S-31
Information" and Due Dates................................. S-31
"Incorporation of Certain Mortgage Rates; Calculations of
Information by Reference" Interest................................ S-31
appearing at the end of the Hyperamortization......................... S-32
accompanying prospectus. Amortization of Principal................. S-32
Prepayment Provisions..................... S-33
</TABLE>
S-1
<PAGE> 4
<TABLE>
<S> <C>
Defeasance................................ S-33
"Due-on-Sale" and "Due-on-Encumbrance"
Provisions.............................. S-34
Significant Mortgage Loans................... S-34
RFS Note A and RFS Note B.................... S-34
The Loan.................................. S-34
The Properties............................ S-35
Debt Service Coverage Ratio............... S-35
Lock Box Account.......................... S-35
Loan to Value Ratio....................... S-35
Substitution of Collateral................ S-35
Sponsorship............................... S-35
The Summit Shopping Center Loan.............. S-36
The Loan.................................. S-36
The Property.............................. S-36
Cash Management Account................... S-37
Property Management....................... S-37
Eagle Trace and The Breakers Loans........... S-38
The Loans................................. S-38
The Properties............................ S-38
Property Management....................... S-38
Bay Bridge Industrial Loan................... S-39
The Loan.................................. S-39
The Property.............................. S-39
Other Information......................... S-40
Property Management....................... S-40
Operating History......................... S-40
Certain Environmental Considerations...... S-41
Additional Mortgage Loan Information......... S-41
General................................... S-41
Delinquencies............................. S-41
Tenant Matters............................ S-41
Ground Leases............................. S-41
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-45
Zoning and Building Code Compliance....... S-45
Hazard, Liability and Other Insurance..... S-45
The Mortgage Loan Seller..................... S-46
Assignment of Mortgage Loans; Repurchases.... S-47
Representations and Warranties;
Repurchases............................... S-48
Changes in Mortgage Pool Characteristics..... S-50
SERVICING OF THE MORTGAGE LOANS................ S-51
General...................................... S-51
The Master Servicer and the Special
Servicer.................................. S-53
Sub-Servicers................................ S-53
Servicing and Other Compensation and Payment
of Expenses............................... S-54
Evidence as to Compliance.................... S-57
Modifications, Waivers, Amendments and
Consents.................................. S-57
Sale of Defaulted Mortgage Loans............. S-59
REO Properties............................... S-59
Inspections; Collection of Operating
Information............................... S-60
Termination of the Special Servicer.......... S-60
</TABLE>
S-2
<PAGE> 5
<TABLE>
<S> <C>
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-64
General................................... S-64
The Available Distribution Amount......... S-65
Application of the Available Distribution
Amount.................................. S-66
Distributable Certificate Interest........ S-68
Principal Distribution Amount............. S-69
Distributions of Prepayment Premiums...... S-70
Treatment of REO Properties............... S-70
Subordination; Allocation of Losses and
Certain Expenses.......................... S-71
Interest Reserve Account..................... S-72
P&I Advances................................. S-72
Appraisal Reductions......................... S-73
Reports to Certificateholders; Certain
Available Information..................... S-75
Trustee Reports........................... S-75
Servicer Reports.......................... S-76
Other Information......................... S-77
Voting Rights................................ S-78
Termination.................................. S-78
The Trustee.................................. S-79
YIELD AND MATURITY CONSIDERATIONS.............. S-79
Yield Considerations......................... S-79
General................................... S-79
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 Lives....................... 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........................................ A-1
ANNEX B........................................ B-1
ANNEX C........................................ C-1
ANNEX D........................................ D-1
</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 (other
than the hyper-amortization loan) is prepaid, in whole or in part, prior to
its stated maturity, the hyper-amortization loan is not prepaid prior to,
but is paid in its entirety on, its anticipated repayment date and otherwise
based on the Maturity Assumptions (as described in this prospectus
supplement). 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"), Duff and
Phelps Credit Rating Co. ("DCR") and/or Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc. ("S&P"; and together with
Moody's and DCR, 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.
S-4
<PAGE> 7
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 1999-1 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 1999-1 and the mortgage loans; and
Risk Factors, which begins on page S-17 of this prospectus supplement
and describes risks that apply to Series 1999-1 which are in addition to
those described in the accompanying prospectus with respect to the
securities issued by the trust generally.
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
accompanying 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 accompanying prospectus are
defined on the pages indicated under the caption "Index of Principal
Definitions" beginning on page 100 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 May 24, 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/AAA $ 198,904,170 16.275% 29.75% Fixed Rate 6.042% 5.50
- ------------------------------------------------------------------------------------------------------------
A-2 Aaa/AAA/AAA $ 659,653,000 53.975% 29.75% Fixed Rate 6.316% 9.46
- ------------------------------------------------------------------------------------------------------------
X Aaa/AAA/AAAr $1,222,145,439(5) N/A N/A Variable Rate 0.329%(6) 9.04
(Interest
Only)
- ------------------------------------------------------------------------------------------------------------
B Aa2/AA/AA $ 64,162,635 5.250% 24.50% Fixed Rate 6.422%(3) 9.73
- ------------------------------------------------------------------------------------------------------------
C A2/A/A $ 61,107,271 5.000% 19.50% Fixed Rate 6.571%(3) 9.78
- ------------------------------------------------------------------------------------------------------------
D Baa2/BBB/BBB $ 67,217,999 5.500% 14.00% Fixed Rate 7.100%(3) 9.85
- ------------------------------------------------------------------------------------------------------------
E Baa3/NR/NR $ 33,608,999 2.750% 11.25% Fixed Rate 7.100%(3) 9.90
- ------------------------------------------------------------------------------------------------------------
Private Certificates -- Not Offered Hereby
- ------------------------------------------------------------------------------------------------------------
F (Not Offered) $ 51,941,181 4.250% 7.00% Fixed Rate 7.100%(3) 9.90
- ------------------------------------------------------------------------------------------------------------
G (Not Offered) $ 9,166,090 0.750% 6.25% Fixed Rate 6.000%(3) 9.90
- ------------------------------------------------------------------------------------------------------------
H (Not Offered) $ 30,553,635 2.500% 3.75% Fixed Rate 6.000%(3) 9.92
- ------------------------------------------------------------------------------------------------------------
J (Not Offered) $ 15,276,817 1.250% 2.50% Fixed Rate 6.000%(3) 10.43
- ------------------------------------------------------------------------------------------------------------
K (Not Offered) $ 30,553,642 2.500% N/A Fixed Rate 6.000%(3) 14.09
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------
CLASS PRINCIPAL WINDOW
- ----------------------------------
<S> <C>
Offered Certificates
- ----------------------------------
A-1 3/20/99-11/20/07
- ----------------------------------
A-2 11/20/07-11/20/08
- ----------------------------------
X N/A
- ----------------------------------
B 11/20/08-11/20/08
- ----------------------------------
C 11/20/08-12/20/08
- ----------------------------------
D 12/20/08-1/20/09
- ----------------------------------
E 1/20/09-1/20/09
- ----------------------------------
Private Certificates --
Not Offered Hereby
- ----------------------------------
F 1/20/09-1/20/09
- ----------------------------------
G 1/20/09-1/20/09
- ----------------------------------
H 1/20/09-2/20/09
- ----------------------------------
J 2/20/09-11/20/10
- ----------------------------------
K 11/20/10-12/20/13
- ----------------------------------
</TABLE>
(1) Ratings shown are those of Moody's, DCR 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, Class F,
Class G, Class H, Class J or Class K 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......................... $1,222,145,439
Number of Mortgage Loans..................... 331
Number of Mortgaged Properties............... 368
Average Cut-off Date Balance................. $ 3,692,282
Weighted Average Mortgage Rate............... 7.268%
Weighted Average Remaining Lock-Out Period... 101 months
Weighted Average Remaining Term to Maturity
or Anticipated Repayment Date.............. 117 months
Weighted Average Underwriting Debt Service
Coverage Ratio............................. 1.56x
Weighted Average Cut-off Date Loan-to-Value
Ratio...................................... 69.9%
</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 Bank of America 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 AND SPECIAL SERVICER
Banc One Mortgage Capital Markets, LLC, a Delaware limited liability
company. See "Servicing of the Mortgage Loans -- The Master Servicer and 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 Bank of
America Corporate Center, 100 North Tryon Street, Charlotte, North Carolina
28255. See "Description of the Mortgage Pool -- The Mortgage Loan Seller" in
this prospectus supplement.
CUT-OFF DATE
February 1, 1999.
DELIVERY DATE
On or about February 23, 1999.
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.
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 in March 1999.
DETERMINATION DATE
The 10th day of each month or, if any such 10th day is not a business day,
the immediately preceding business day.
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<PAGE> 11
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.
MORTGAGE LOANS
THE MORTGAGE POOL
The pool of mortgage loans (the "Mortgage Pool") will consist of 331
conventional, multifamily and commercial mortgage loans (the "Mortgage Loans"),
with an aggregate Cut-off Date Balance of approximately $1,222,145,439 (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 $279,432 to $55,402,022, and the
average Cut-off Date Balance is $3,692,282.
As of the Cut-off Date, the Mortgage Loans had the following additional
characteristics.
SELECTED MORTGAGE LOAN CHARACTERISTICS
<TABLE>
<S> <C>
Range of Mortgage Rates.................. 6.196% per annum to 8.730% per annum
Weighted Average Mortgage Rate........... 7.268% per annum
Range of Remaining Terms to Stated
Maturity or, in the case of the
Hyper-Amortization Loan, to the
Anticipated Repayment Date............. 57 months to 178 months
Weighted Average Remaining Term to Stated
Maturity or Anticipated Repayment Date,
as the case may be..................... 117 months
Range of Remaining Amortization Terms.... 57 months to 359 months
Weighted Average Remaining Amortization
Term................................... 334 months
Range of Cut-off Date Loan-to-Value
Ratios................................. 17.4% to 84.6%
Weighted Average Cut-off Date
Loan-to-Value Ratio.................... 69.9%
Range of Maturity Date Loan-to-Value
Ratios of Balloon Loans................ 15.3% to 72.7%
Weighted Average Maturity Date Loan-to-
Value Ratio of Balloon Loans........... 59.5%
Range of Underwriting Debt Service
Coverage Ratios........................ 1.21x to 3.94x
Weighted Average Underwriting Debt
Service Coverage Ratio................. 1.56x
</TABLE>
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<PAGE> 12
"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.................................................. 124 34.7%
Florida..................................................... 25 7.9
Nevada...................................................... 8 6.7
New York.................................................... 13 4.7
Utah........................................................ 6 4.4
</TABLE>
The remaining Mortgaged Properties are located throughout 28 other states
and the District of Columbia, with no more than 4.3% of the Initial Pool Balance
secured by Mortgaged Properties located in any such other jurisdiction.
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................................................. 122 31.3%
Retail...................................................... 87 25.9
Industrial.................................................. 43 11.7
Hotel....................................................... 18 11.5
Office...................................................... 51 10.9
Health Care................................................. 10 3.0
Mobile Home................................................. 21 2.9
Mini Storage................................................ 10 1.4
Franchise Restaurant........................................ 5 1.2
Marina...................................................... 1 0.2
</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 19 months preceding
the Cut-off Date. The Mortgage Loan Seller originated (directly or through an
originator participating in its conduit program) the Mortgage Loans pursuant to
its conduit program. The Mortgage Loan Seller is a wholly-owned subsidiary of
BankAmerica Corporation. See "Description of the Mortgage Pool -- The Mortgage
Loan Seller" in this prospectus supplement.
On or before the Delivery Date, the Mortgage Loan Seller, at the direction
of the Depositor, will transfer all of the Mortgage Loans, without recourse, to
the Trustee for the benefit of holders of the Certificates (the
"Certificateholders"). In connection with such transfer, the Mortgage Loan
Seller will make certain representations and warranties regarding the
characteristics of the 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 Mortgage Loans or repurchase the affected Mortgage
Loan. See "Description of the Mortgage Pool -- Assignment of the Mortgage Loan;
Repurchases" and "--Representations and Warranties; Repurchases" in this
prospectus supplement.
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<PAGE> 13
The Mortgage Loan Seller will sell the Mortgage Loans without recourse and
will have no 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 accompanying
prospectus. The compensation to be received by the Master Servicer (including
Master Servicing Fees) and the Special Servicer (including Standby Fees, Special
Servicing Fees, Liquidation Fees and Workout Fees) for their services is
described in this prospectus supplement 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
1999-1, 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 1999-1 consists of a total of fourteen classes of Certificates, the
following seven 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 and Class R-II (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. Neither the Class R-I nor Class R-II 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 331 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
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<PAGE> 14
(weighted on the basis of their respective Certificate Balances immediately
prior to such Distribution Date). The Pass-Through Rate on the Class X
Certificates will be calculated without regard to any modification of the terms
of any Mortgage Loan subsequent to the Closing Date, and will not be affected by
any step up on the Mortgage Rate on the Anticipated Repayment Date for the
Hyper-Amortization Loan.
See "Description the Certificates -- Pass-Through Rates" and
"-- Distributions" in this prospectus supplement.
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.
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<PAGE> 15
C. Prepayment Premiums
The manner in which any prepayment consideration and yield maintenance
premiums received during a particular Collection Period will be allocated to one
or more of the classes of Offered Certificates is described in "Description of
the Certificates -- Distributions -- Distributions of Prepayment Premiums" in
this prospectus supplement.
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.
[FLOW CHART]
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; Allocation of Losses
and Certain Expenses" in this prospectus supplement.
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<PAGE> 16
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
Master Servicer or Special Servicer is entitled to receive;
- shortfalls resulting from interest on advances of principal
and interest made by the Master 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 Master 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 Master Servicer will not be required to advance balloon
payments due at maturity or interest in excess of a loan's regular interest
rate. The Master Servicer also is not required to advance prepayment or yield
maintenance premiums, or balloon payments. If an advance is made, the Master
Servicer will not advance its servicing fee, but will advance the Trustee's fee
and the Special Servicer's standby fee.
B. Property Protection Advances
The Master 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 Master 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 accompanying 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.
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<PAGE> 17
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 accompanying prospectus.
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 two separate
REMICs -- REMIC I and REMIC II -- 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 II.
- 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 accompanying 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
accompanying 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:
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<PAGE> 18
(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
accompanying prospectus.
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,
DCR and S&P (together, the "Rating Agencies"):
<TABLE>
<CAPTION>
MOODY'S DCR S&P
------- --- ---
<S> <C> <C> <C>
Class A-1................................................... Aaa AAA AAA
Class A-2................................................... Aaa AAA AAA
Class X..................................................... Aaa AAA AAAr
Class B..................................................... Aa2 AA AA
Class C..................................................... A2 A A
Class D..................................................... Baa2 BBB BBB
Class E..................................................... Baa3 N/R N/R
</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. 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 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.
For a description of the limitations of the ratings of the Offered
Certificates, see "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 accompanying
prospectus.
S-16
<PAGE> 19
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-17
<PAGE> 20
- 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 classes 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.
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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 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 65.8% 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
Senior Housing/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 33 groups of Mortgaged Properties that have the same or related
management. No such group represents security for more than 7.8% of the Initial
Pool Balance.
BALLOON PAYMENTS AND HYPER-AMORTIZATION LOANS
Three hundred twenty-one of the Mortgage Loans, which represent 94.2% 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. In addition, one of the Mortgage Loans,
which represents 4.3% of the Initial Pool Balance, is a Hyper-Amortization Loan
which will have a substantial scheduled principal balance as of its Anticipated
Repayment Date, unless the Mortgage Loan is previously prepaid. Two hundred
eighty-four of the Balloon Loans, representing in the aggregate 78.3% of the
Initial Pool Balance, will have Balloon Payments due during the period from
August 2008 through January 2009.
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. Similarly, the ability of a borrower to
repay the Hyper-Amortization Loan on its
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Anticipated Repayment Date will depend on its ability either to refinance the
Mortgage Loan or to sell the related Mortgaged Property. Circumstances that will
affect the ability of the borrower to accomplish either of these goals at the
time of attempted sale or refinancing include:
- 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" in this
prospectus supplement and "Risk Factors -- Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans -- Increased Risk of
Default Associated with Balloon Payments" in the accompanying prospectus.
RISKS PARTICULAR TO MULTIFAMILY PROPERTIES
Multifamily properties secure 106 of the Mortgage Loans, representing 31.3%
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 property's 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 86 of the Mortgage Loans, representing 26.1% 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;
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- the attractiveness of the property to tenants and their
customers or clients;
- the public perception of the safety of customers at
shopping malls and shopping centers; and
- 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 2 of the Mortgage Loans,
representing approximately 1.2% 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 10 of the Mortgage Loans, which represent approximately 3.0%
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 considera-
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tion 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
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 51 of the Mortgage Loans, representing
approximately 10.9% 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 8 of the Mortgage Loans, representing
approximately 11.5% 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 21 of the
Mortgage Loans representing 2.9% 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
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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 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 10 of the Mortgage
Loans, representing security for approximately 1.4% 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. Two Mortgaged Properties, representing security for 0.7% 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 one Mortgage Loan,
representing 4.3% 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. In
addition, the related borrower may be permitted to incur additional indebtedness
secured by furniture, fixtures and equipment, and to incur additional unsecured
indebtedness. 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
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after April 1997. 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" in this prospectus
supplement. We cannot assure you, however, that such environmental assessments
identified all 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 seven sets of Cross-Collateralized Mortgage Loans,
each of which sets represents between 0.1% and 7.8% 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" in this
prospectus supplement.
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 7.8% 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
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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 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:
- 124 of the Mortgaged Properties, which constitute security
for 34.7% of the Initial Pool Balance, are located in
California.
- 25 of the Mortgaged Properties, which constitute security
for 7.9% of the Initial Pool Balance, are located in
Florida.
- 8 of the Mortgaged Properties, which constitute security for
6.7% of the Initial Pool Balance, are located in Nevada.
- 13 of the Mortgaged Properties, which constitute security
for 4.7% of the Initial Pool Balance, are located in New
York.
- 6 of the Mortgaged Properties, which constitute security for
4.4% of the Initial Pool Balance, are located in Utah.
No more than 8.1% 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:
- 81 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 4.5% of the Initial Pool Balance,
and the largest group of Cross-Collateralized Mortgage
Loans, by Cut-off Date Balances, represents in the aggregate
approximately 7.8% of the Initial Pool Balance.
- The ten largest Mortgage Loans, or groups of
Cross-Collateralized Mortgage Loans, have Cut-off Date
Balances that represent in the aggregate approximately 32.1%
of the Initial Pool Balance.
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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 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
for a material breach of representation or warranty on the
part of the Mortgage Loan Seller 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 accompanying prospectus. See
"Description of the Mortgage Pool -- Assignment of the Mortgage Loans;
Repurchases" and "-- Representations and Warranties; Repurchases", "Servicing of
the Mortgage Loans --
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<PAGE> 32
Sale of Defaulted Mortgage Loans" and "Description of the
Certificates -- Termination" in this prospectus supplement.
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.
- 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 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 19 months and, consequently, there are limited or, in the case of
13 Mortgage Loans (representing 13.7% of the Initial Pool Balance) that will
make their first Monthly Payment in February 1999, 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 331 conventional, multifamily and
commercial mortgage loans (the "Mortgage Loans") with an aggregate Cut-off Date
Balance of $1,222,145,439 (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 February 1, 1999
(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> 33
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") (127 Loans,
representing 34.2% 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
marina (a "Commercial Mortgaged Property"; and any Mortgage Loan secured
thereby, a "Commercial Loan") (204 Loans, representing 65.8% of the Initial Pool
Balance).
Each of 7 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
7.8% 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 -- Risks Related to 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 -- Risks Related to the Mortgage Loans -- Limited
Recourse" in this prospectus supplement.
One hundred twenty-four of the Mortgaged Properties, which constitute
security for 34.7% of the Initial Pool Balance, are located in California; 25 of
the Mortgaged Properties, which constitute security for 7.9% of the Initial Pool
Balance, are located in Florida; 8 of the Mortgaged Properties, which constitute
security for 6.7% of the Initial Pool Balance, are located in Nevada; 13 of the
Mortgaged Properties, which constitute security for 4.7% of the Initial Pool
Balance, are located in New York; and 6 of the Mortgaged Properties, which
constitute security for 4.4% of the Initial Pool Balance, are located in Utah.
The remaining Mortgaged Properties are located throughout 28 other states and
the District of Columbia, with no more than 4.3% of the Initial Pool Balance
secured by Mortgaged Properties located in any such other jurisdiction.
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"), except that, as described
below, the Hyper-Amortization Loan may require that certain additional amounts
be paid each month following its Anticipated Repayment 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, except that, as described below, the
Hyper-Amortization Loan will accrue interest at a higher rate after its
Anticipated Repayment Date. As used in this prospectus supplement, the term
"Mortgage Rate" does not include the incremental increase in the rate at which
interest may accrue on the Hyper-Amortization Loan after such date. As of the
Cut-off Date, the Mortgage Rates of the Mortgage Loans ranged from 6.196% per
annum to 8.730% per annum, and the weighted average Mortgage Rate of the
Mortgage Loans was 7.268%. No Mortgage Loan, other than the Hyper-Amortization
Loan, permits negative amortization or the deferral of accrued interest.
Three hundred twenty-five Mortgage Loans (the "Actual/360 Mortgage Loans"),
which represent 98.9% of the Initial Pool Balance, accrue interest on the basis
of the actual number of days elapsed in the relevant
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month of accrual and a 360-day year (an "Actual/360 Basis"). Six Mortgage Loans
(the "30/360 Mortgage Loans"), which represent 1.1% 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.
Hyperamortization. One of the Mortgage Loans (the "Hyper-Amortization
Loan"), which represents 4.3% of the Initial Pool Balance, provides for changes
in its payments and its accrual of interest if it is not paid in full by a
specified date (the "Anticipated Repayment Date"). The Hyper-Amortization Loan
will bear interest at its Mortgage Rate until its Anticipated Repayment Date.
Commencing on the Anticipated Repayment Date, the Hyper-Amortization Loan
generally will bear interest at a fixed per annum rate (the "Revised Rate")
equal to its Mortgage Rate plus 2%, or the interest rate applicable for certain
non-callable U.S. treasury obligations of comparable terms plus 2%, whichever is
greater. The interest accrued at the excess of the Revised Rate over the
Mortgage Rate (such interest, the "Excess Interest"; and such difference in
rate, the "Excess Interest Rate") will be deferred until the principal of such
Mortgage Loan is paid in full and, except where limited by applicable laws, will
itself accrue interest at the Revised Rate. Non-payment of such Excess Interest
will not constitute a default under such Mortgage Loan prior to the related
maturity date. From and after the Anticipated Repayment Date, in addition to
paying interest (at the Mortgage Rate) and principal (based on the amortization
schedule), the borrower generally will be required to apply all remaining
monthly cash flow from the related Mortgaged Property, if any, after paying all
permitted operating expenses and capital expenditures, to pay principal on the
Mortgage Loan until the Mortgage Loan is paid in full. As described below under
"-- Prepayment Provisions," the Hyper-Amortization Loan generally provides for
an initial five-year lock-out period, followed by a four-year Prepayment Period.
Commencing in its tenth year, the borrower may prepay the loan in whole without
payment of a Prepayment Premium. The Anticipated Repayment Date for the
Hyper-Amortization Loan is listed in Annex A.
Amortization of Principal. Three hundred twenty-one of the Mortgage Loans,
which represent 94.2% 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. 9 Mortgage
Loans, which represent 1.5% of the Initial Pool Balance, are fully amortizing
loans. The remaining Mortgage Loan, which represents 4.3% of the Initial Pool
Balance, is a hyper-amortization loan.
The original term to stated maturity or, in the case of the
Hyper-Amortization Loan, to the Anticipated Repayment Date of each Mortgage Loan
was between 60 and 180 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 60 to 371 months.
As of the Cut-off Date, the remaining terms to stated maturity or, in the case
of the Hyper-Amortization Loan, to the Anticipated Repayment Date of the
Mortgage Loans will range from 57 to 178 months, and the weighted average
remaining term to stated maturity or the Anticipated Repayment Date, as the case
may be, of the Mortgage Loans will be 117 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 57 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 334 months. See "Risk
Factors -- Risks Related to the Mortgage Loans -- Balloon Payments and
Hyper-Amortization Loans" in this prospectus supplement.
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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 18 months to 174 months, with a
weighted average remaining Lock-out Period of 101 months. As of the Cut-off
Date, the Open Period for each Mortgage Loan ranged from 2 months to 12 months
prior to stated maturity or, in the case of the Hyper-Amortization Loan, the
Anticipated Repayment Date with a weighted average Open Period of 4 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. Three hundred thirteen Mortgage Loans, representing 85.4% 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
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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
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
the applicable threshold amount for such Rating Agency (generally $20,000,000 or
2% of the then-outstanding principal balance of all of the Mortgage Loans); 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.
RFS NOTE A AND RFS NOTE B
The Loan. The mortgage loans (the "RFS Loans"), which are comprised of RFS
Note A ("Note A") and RFS Note B ("Note B"), represent, in the aggregate, 7.8%
of the Initial Pool Balance. The RFS Loans were originated by the Mortgage Loan
Seller on December 18, 1998. The RFS Loans, collateralized by Note A and Note, B
have a $95,717,353 combined aggregate principal balance as of the Cut-off Date.
Note A and Note B are cross-collateralized and cross-defaulted with each other.
Both Note A and Note B have a remaining term of 119 months, and mature on
January 1, 2009. The RFS Loans may not be prepaid before and including October
1, 2008. The RFS Loans are subject to
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defeasance with U.S. Treasury obligations beginning the earlier of 25 months
from the REMIC startup day or 49 months from the loan funding. During the final
3 months of the mortgage loans, each may be prepaid without any prepayment
premium.
Additional terms and escrows for Note A and Note B are set forth in Annex
A.
The Properties. Ten established hotels collateralize Note A and Note B.
The hotels operate under five nationally-recognized flags in the United States,
and are located within seven different states in the Midwest, Upper Midwest, and
California. The hotels have a total of 1,552 rooms which are being managed by an
experienced operating lessee under the various lease agreements (collectively,
the "Lease Agreements"). Note A and Note B are structured as follows:
<TABLE>
<CAPTION>
NUMBER
OF ROOMS OCCUPANCY YR. BUILT
-------- --------- ---------
<S> <C> <C> <C>
Hampton Inn -- Indianapolis, IN............................. 131 75.3% 1988
Hampton Inn -- Memphis, TN.................................. 120 78.8 1992
Comfort Inn -- Farmington Hills, MI......................... 135 65.2 1986
Sheraton -- Sunnyvale, CA................................... 173 78.8 1980
Sheraton -- Bakersfield, CA................................. 197 69.3 1983
----- ---- ----
Note A Total................................................ 756 73.4
Sheraton -- Milipitas, CA................................... 229 73.8% 1988
Sheraton -- Pleasanton, CA.................................. 214 72.3 1985
Hampton Inn -- Bloomington, MN.............................. 135 80.7 1983
Holiday Inn Express -- Wauwatosa, WI........................ 122 76.9 1984
Residence Inn -- Kansas City, MO............................ 96 74.9 1988
----- ---- ----
Note B Total................................................ 796 75.2
Portfolio Total/Weighted Average............................ 1,552 74.4
</TABLE>
Debt Service Coverage Ratio. DSCR is predicated on several levels of cash
flow and is structured to address the cash flow of the underlying property
operations, seasonality of individual properties, and contractual payments under
the Lease Agreements and the operating leases relating to the properties listed
above. In the event the note specific aggregate DSCR, based on operating cash
flow by Note, is determined to be less than 1.40x, a debt service reserve will
be required in an amount sufficient to pay three (3) months aggregate debt
service.
Lock Box Account. During the terms of the Lease Agreements, the lender
shall only require payment of the amounts actually due the borrower to be
deposited directly to a lock box. At any time that the borrower has the right to
additional funds from the collateral properties, whether due to expiration,
cancellation, modification or default under the Lease Agreements or any other
reason, the borrower will cause all property receipts and funds to be deposited
into the lock box.
Loan to Value Ratio. Cut-off Date loan-to-value ratios are 61.5% for Note
A and 62.5% for Note B.
Substitution of Collateral. Substitution of collateral will be allowed but
total substitution over each loan term will be limited to no more than 20% of
the original principal amount of each loan. Further, after giving effect to the
substitution, the debt service coverage ratio for the applicable loan(s) will be
at least equal to the greater of (1) the debt service coverage ratio at closing;
or (2) the debt service coverage ratio immediately prior to such substitution.
Moreover, substitution of collateral is subject to: (a) written confirmation
from each Rating Agency that such substitution will not result in the
withdrawal, downgrade or qualification of the rating of any Certificate; and (b)
documentation subject to review and approval of lender counsel.
Sponsorship. RFS is a self-administered and self-managed equity REIT
formed to continue and expand operations of RFS Hospitality, Inc. and affiliates
that have been involved in the hospitality business for over 20 years. RFS's 61
limited service, full service, and extended stay hotel properties, with 8,674
rooms, are diversified across 24 states. All of the company's hotels are leased
to third party managers, and substantially all of the company's hotels are
branded. RFS's strategy of diversifying by hotel type, franchise brand, and
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<PAGE> 38
geography helps to minimize vulnerability to downturns in any one region or
segment of the industry. The summarized operating history for Note A and Note B
follows:
<TABLE>
<CAPTION>
1995 1996 1997 ORIGINATOR'S
RFS A ACTUAL ACTUAL ACTUAL UNDERWRITTEN
- ----- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
EGI......................... $15,308,697 $16,724,105 $17,773,720 $17,185,493
Expenses.................... 9,578,332 9,647,790 8,765,952 9,934,635
----------- ----------- ----------- -----------
NOI......................... 5,730,365 7,076,315 9,007,768 7,250,858
Cash Flow................... 5,530,184 6,438,758 7,316,872 6,457,836
=========== =========== =========== ===========
Occupancy................... 73.5% 74.4% 75.6% 68.7%
DSCR based on NOI........... 1.55x 1.92x 2.44x 1.97x
DSCR based on Cash Flow..... 1.50x 1.75x 1.98x 1.75x
RFS B
- -----
EGI......................... $20,429,183 $20,698,417 $23,392,481 $22,799,640
Expenses.................... 12,931,517 11,231,078 10,738,346 12,963,369
----------- ----------- ----------- -----------
NOI......................... 7,497,666 9,467,339 12,654,135 9,836,271
Cash Flow................... 7,445,060 8,934,540 11,320,857 8,850,651
=========== =========== =========== ===========
Occupancy................... 73.8% 75.7% 75.7% 71.5%
DSCR based on NOI........... 1.48x 1.87x 2.50x 1.95x
DSCR based on Cash Flow..... 1.47x 1.77x 2.24x 1.75x
</TABLE>
The Summit Shopping Center Loan
The Loan. The Mortgage Loan (the "Summit Shopping Center Loan"), which is
secured by a first mortgage encumbering a retail center (the "Summit Shopping
Center") in Birmingham, Alabama, represents approximately 4.3% of the Initial
Pool Balance. Originated on December 23, 1997, and subsequently amended, the
Summit Shopping Center Loan has a principal balance as of the Cut-off Date of
$52,538,304. The Summit Shopping Center Loan was made to Bayer Retail Company,
LLC (the "Summit Borrower"), a single asset Alabama limited liability company
which is owned by the Bayer Family Partnership, Ltd. (45%), the Rotenstreich
Retail Partnership, Ltd. (40%) and the Silverstein Family Partnership, Ltd.
(15%).
The Summit Shopping Center Loan is a hyper-amortization loan (the
"Hyper-Amortization Loan") with an Anticipated Repayment Date of January 1, 2008
and with a final maturity date of January 1, 2028. The term to maturity for the
Anticipated Repayment Date is 107 months, and for the final maturity date is 347
months. The Summit Shopping Center Loan may not be prepaid prior to, and
including, January 1, 2003. Starting January 2, 2003, the Summit Shopping Center
Loan may be prepaid subject to a prepayment penalty based on a percentage of
principal balance of the loan. A partial prepayment of $1,025,000 was applied on
December 28, 1998. At the time of the principal pay-down, the subject loan was
re-amortized on a 360 month schedule. Future partial prepayments are subject to
prepayment penalties based on a percentage of principal amounts prepaid. The
Summit Shopping Center Loan may be prepaid without the payment of a prepayment
penalty during the twelve (12) months preceding the maturity date.
Additional terms and escrows for the Summit Shopping Center Loan are set
forth in Annex A.
The Property. The Summit Shopping Center consists of a 462,481 net
rentable square foot regional shopping center located on 62 acres at the
intersection of Interstate 459 and Highway 280 in Birmingham, Alabama. The site
consists of nine buildings containing forty-three tenant spaces plus two
out-parcel pad sites. Construction on the center was completed in October of
1997, and as of July 1998 the center was 97.1% leased. The largest tenants
occupying space at the property and their lease expiration dates include:
Parisian (Oct. 31, 2017), Carmike Cinema (Oct. 31, 2017), Bruno's (Oct. 31,
2022), Bed, Bath & Beyond (Oct. 31, 2013), Barnes & Noble (Oct. 31, 2012) and
Old Navy (Oct. 31, 2007). Selected trailing 12 months sales/SF include: Carmike
Cinemas $292,979/screen, Johnny Rockets $664/SF, Old Navy $792/SF, The Gap
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<PAGE> 39
$616/SF, Gap Kids $425/SF, Express $307/SF, Bath & Body Works $284/SF, Eddie
Bauer $274/SF, Talbots $328/SF and Williams-Sonoma $395/SF.
Cash Management Account. Beginning in the 11th year of the loan, a cash
management account will be established to capture all rents paid by the tenants
and disbursed as follows by the lender: (1) to interest computed at the initial
interest rate with the remainder applied to reduction of principal (See Note
below),(2) to monthly reserve deposits, (3) to monthly cash expenses, (4) to
monthly net capital expenditures, (5) to extraordinary expenses, (6) to payment
of principal, until principal amount paid in full, (7) to accrued interest, (8)
to other amounts due under the related loan documents, and (9) any excess to the
Summit Borrower.
Note: At the beginning of the 10th year, the borrower will remit payments
based on a revised interest rate (the greater of 10.273% or the interest rate
applicable for certain non-callable U.S. treasury obligations of comparable
terms plus 2%). The difference between the initial and revised rate will accrue
separately at the revised rate in an account held by the Trustee.
Property Management. The Summit Shopping Center is managed by Bayer
Properties, Inc., an affiliate of the Summit Borrower, which reportedly has
2,800,000 square feet under management in the local market.
Operating History:
<TABLE>
<CAPTION>
APPRAISER'S ORIGINATOR'S
ESTIMATE UNDERWRITTEN
----------- ------------
<S> <C> <C>
EGI......................................................... $7,655,684 $7,706,152
Expenses.................................................... 1,408,926 1,635,246
---------- ----------
NOI......................................................... $6,246,758 $6,070,906
Cash Flow................................................... $6,174,815 $5,907,879
========== ==========
Occupancy................................................... 98.3% 92.9%
DSCR based on NOI........................................... 1.30x 1.26x
DSCR based on Cash Flow..................................... 1.28x 1.23x
</TABLE>
- ---------------
Notes:
- - Due to the Summit Shopping Center's recent construction, its financial history
is limited.
- - Appraiser's Year 2 DCF is stated above since this represents a stabilized cash
flow.
Lease Expiration Schedule:
<TABLE>
<CAPTION>
PERCENTAGE OF NET CUMULATIVE
YEAR OF LOAN TERM SQUARE FEET RENTABLE SQUARE FEET EXPIRATION
----------------- ----------- -------------------- ----------
<S> <C> <C> <C>
Vacant............................................. 14,787 3.2% 3.2%
Year 1............................................. 0 0.0% 3.2%
Year 2............................................. 0 0.0% 3.2%
Year 3............................................. 0 0.0% 3.2%
Year 4............................................. 0 0.0% 3.2%
Year 5............................................. 0 0.0% 3.2%
Year 6............................................. 664 0.1% 3.3%
Year 7............................................. 25,140 5.4% 8.7%
Year 8............................................. 15,750 3.4% 12.1%
Year 9............................................. 0 0.0% 12.1%
Year 10............................................ 44,898 9.7% 21.8%
</TABLE>
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<PAGE> 40
Eagle Trace and The Breakers Loans
The Loans. The Mortgage Loans (the "Eagle Trace Loan" and the "Breakers
Loan"), are each secured by a first deed of trust on apartment complexes in Las
Vegas, Nevada, and represent approximately 3.6% and 1.5% of the Initial Pool
Balance, respectively. Both mortgage loans were originated on December 14, 1998.
The Eagle Trace Loan and the Breakers Loan have principal balances as of the
Cut-off Date of $43,974,545 and $18,169,482, respectively. The Eagle Trace Loan
was made to Eagle Trace, LLC (the "Eagle Trace Borrower") and the Breakers Loan
was made to the Breakers, LLC (the "Breakers Borrower"). Each is a single asset
Nevada Limited Liability Company which is owned 100% by Olen Residential Realty
Corp. The Eagle Trace Loan and the Breakers Loan are cross-collateralized and
cross-defaulted.
The Eagle Trace Loan and the Breakers Loan both have remaining terms of 119
months, and each matures on January 1, 2009. The Eagle Trace Loan and the
Breakers Loan may not be prepaid prior to, and including, October 1, 2008.
However, the Eagle Trace Loan and the Breakers Loan are subject to defeasance
with United States Treasury obligations beginning two years from the Closing
Date. The Eagle Trace Loan and the Breakers Loan may be prepaid without the
payment of a prepayment penalty during the three (3) months preceding the
maturity date.
Additional terms and escrows for Eagle Trace Loan and the Breakers Loan are
set forth in Annex A.
The Properties. The property securing the Eagle Trace Loan is 984 unit
apartment complex on 48.39 acres. It is located across the street from Nellis
Air Force Base in the far northeast section of Las Vegas, Nevada. The tenant
base at the property is 40% military. The complex was built in three phases from
1991 to 1995 and consists of 78 buildings containing 472 one bedrooms, 332 two
bedrooms and 180 three bedrooms. There is 916,008 net rentable square feet with
948 covered parking spaces and 684 non-parking spaces. Project amenities include
5 swimming pools, 3 fitness centers, 2 tennis courts, 2 racquetball courts, a
full size basketball court, children's play area and picnic facilities. The
units are large and have a full amenity package including full size
washer/dryers, roman size bathtubs, microwaves or security systems, ceiling fans
and patios or balconies. The complex is well managed and in excellent condition.
The property securing the Breakers Loan is a 400 unit apartment complex
located in the west section of Las Vegas, Nevada. The complex was built in 1989.
It consists of 50 two-story, 8-plex buildings containing 200 one-bedroom, and
200 two-bedroom units. The complex contains 353,008 of net rentable square feet
on 19.9 acres with 400 covered and 260 non-covered parking spaces. Project
amenities include two swimming pools, clubhouse, fitness center, recreation
room, lighted tennis courts, indoor & outdoor spas, saunas, a sand volleyball
court, barbecue grills and picnic facilities. The units are spacious and have a
full amenity package including stacked washer/dryers, Roman size bathtubs,
microwaves, ceiling fans, security systems, walk-in closets, and patios or
balconies. The complex is well managed and in excellent condition.
Property Management. The property is managed by the Olen Properties, Corp.
("Olen Properties"), an entity that is affiliated to the borrowing entity
through common ownership. Founded by Igor Olenicoff, Olen Properties, owns Olen
Residential Realty Corp which owns the Eagle Trace Borrower and the Breakers
Borrower. Olen Properties manages a total of 8,247 units in 28 apartment
communities located in either Las Vegas, the Coral Springs vicinity of Florida
or San Bernardino, California. Within Las Vegas alone, Olen Properties manages
17 communities comprising a total of 5,749 units. Olen Properties also manages
11 communities comprising 2,498 units in the Coral Springs vicinity of east
Florida and one project in San Bernardino, California. Other managed properties
include 3 million square feet of office and industrial space in Orange County,
California. Olen Properties is not a third-party fee based management company
and only exists to exclusively manage company owned real estate.
S-38
<PAGE> 41
Operating History -- Eagle Trace:
<TABLE>
<CAPTION>
1996 1997 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
<S> <C> <C> <C>
EGI.................................................... $6,720,209 $7,116,319 $7,401,793
Expenses............................................... 1,968,769 2,106,727 2,440,502
---------- ---------- ----------
NOI.................................................... $4,751,440 $5,009,592 $4,961,291
Cash Flow.............................................. $4,609,596 $4,801,732 $4,684,787
========== ========== ==========
Occupancy.............................................. 85.7% 91.5% 92%
DSCR Based on NOI...................................... 1.32x l.39x 1.38x
DSCR Based on Cash Flow................................ 1.28x 1.33x 1.30x
</TABLE>
Minimum lease term is either six or twelve months for both new and renewed
leases. The average turnover rate for the last 6 months was 62 units per month.
Operating History -- The Breakers:
<TABLE>
<CAPTION>
1996 1997 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
<S> <C> <C> <C>
EGI.................................................... $2,774,820 $2,850,603 $3,086,730
Expenses............................................... 959,422 950,816 1,116,917
---------- ---------- ----------
NOI.................................................... $1,815,398 $1,899,787 $1,969,813
Cash Flow.............................................. $1,739,463 $1,834,536 $1,860,613
========== ========== ==========
Occupancy.............................................. 86.6% 85.7% 93.3%
DSCR Based on NOI...................................... 1.22x 1.28x 1.32x
DSCR Based on Cash Flow................................ 1.17x 1.23x 1.25x
</TABLE>
Minimum lease term is either six or twelve months for both new and renewed
leases. The average turnover rate for the last 6 months was 24 units per month.
Bay Bridge Industrial Loan
The Loan. This Mortgage Loan (the "Bay Bridge Industrial Loan"), which is
secured by the first deed of trust on a multi-use, industrial, office and
warehouse facility (Bay Bridge Industrial) in Salt Lake City, Utah, represents
approximately 3.3% of the Initial Pool Balance. Originated on November 30, 1998,
the Bay Bridge Industrial Loan was made to Bay Bridge/Corporate, LLC, a special
purpose entity which is owned by Mark S. Whiting and John R. Stockman.
The Bay Bridge Industrial Loan has a remaining term of 118 months and
matures on December 1, 2008. The Bay Bridge Industrial Loan is subject to
defeasance with United States Treasury obligations beginning two years from the
Closing Date. The Bay Bridge Industrial Loan may be prepaid without the payment
of a prepayment penalty during the three (3) months preceding the maturity date.
The Property. The Bay Bridge Industrial Loan provided acquisition
financing for the L-3/Unisys Facility, an eight building, 889,548 square foot
industrial research and development ("R&D")/flex property plus 9.87 acres of
land located in Salt Lake City. The subject was developed in various stages from
1957 through 1984. Most buildings have been remodeled and upgraded, are in good
condition, and have an estimated remaining useful life of 40 years per the
property condition report. All buildings have reinforced concrete perimeter
foundations with spread footings and a concrete slab floor over compacted base
rock material. All buildings are fully sprinklered, have HVAC and a specialized,
card activated security system.
The buildings are a mix of office, R&D, manufacturing and warehouse space.
The offices have standard build out including painted gypsum wallboard, dropped
ceilings, fluorescent lighting and carpeted and static resistant tile floors.
The testing and lab areas include static resistant floor tiling, painted gypsum
walls with some dropped acoustical ceilings. Warehouse and industrial space
typically has exposed ceilings with dropped fluorescent lighting.
S-39
<PAGE> 42
The mortgaged property is located adjacent to the Salt Lake City Airport,
within 1 block of U.S. 215, the major north/south freeway, and 2.5 miles west of
the downtown.
The mortgaged property is currently leased to four tenants: L-3 (a company
consisting of the combined interest of Loral, Lockheed and Lehman Brothers),
Unisys Corp., Equifax Inc. and the United States Postal Service. All are debt
rated tenants with S&P bond ratings of B (L-3), BB- (Unisys), A- (Equifax) and
AAA (United States Postal Service).
L-3 is a leading merchant supplier of secure, high rate data communication
systems, primarily for military and federal government applications. The U.S.
Department of Defense is the largest end customer and represents about 62% of
the company's 1997 sales. L-3 also supplies microwave components, avionics,
ocean systems, telemetry, wireless and space products for linking communication
networks of various command and control platforms. L-3's single largest program,
which accounted for 13% of 1997 sales ($100 million) is systems support work for
the U-2 reconnaissance aircraft. The company has several facilities across the
country, however Salt Lake City is the Communication Systems West campus.
Unisys Corporation has three distinct business units: information services,
computer systems and global customer service. Unisys Corporation uses the
subject facility for the development of software products with some hardware
engineering.
Equifax is a worldwide information provider that specializes in consumer
credit reporting and collection services. Equifax uses the subject site for a
call center. The Postal Service uses its space as a routing center for letters
without zip codes.
Other Information. At the completion of the transaction, all L-3 leases
commenced with 20 year terms. Lease rollover is therefore calculated for the
following tenants: Unisys, Equifax, the Postal Service and the unoccupied PCF
building. Unisys' B lease matures on December 31, 2001 and its C lease on
December 31, 2000, although it has a 1 year option in both buildings. A 50%
renewal probability was assigned to the Unisys rollover and a 60% probability to
all other rollover per the appraisal. Lease rollover is mitigated by adequate TI
and LC reserve being collected throughout the term ($650,000 per year with a cap
of $2,400,000). In addition, a debt service reserve will be collected to
maintain debt service coverage during 2001 and 2002, the year's following the
Unisys lease expirations. Funds will be released only upon meeting specific debt
coverage and gross rent minimums.
Property Management. The mortgaged property has been managed by two
experienced property managers who work for L-3 and Unisys with the assistance of
a full staff. These management/maintenance employees are expected to stay in
place. The Borrower has retained CB Richard Ellis to provide financial
reporting, leasing assistance and property management.
Operating History. Prior to purchase, the property was owned by Unisys
Corporation and by the Unisys Retirement Plan. As such, the buildings were never
operated as a separate real estate asset with segregated financial statements.
The underwritten amounts are based on actual, verified expenses (property taxes,
insurance, and management), as well as the appraiser's estimates. All leases are
triple net, with most tenants paying for all capital items as well.
<TABLE>
<CAPTION>
APPRAISER'S ORIGINATORS
ESTIMATE UNDERWRITTEN
----------- ------------
<S> <C> <C>
EGI......................................................... $9,500,004 $8,564,776
Expenses.................................................... 3,652,100 3,728,696
---------- ----------
NOI......................................................... $5,847,904 $4,836,080
Cash Flow................................................... $5,759,204 $4,416,227
========== ==========
Occupancy................................................... 95.1% 91.2%
DSCR based on NOI........................................... 1.66x 1.37x
DSCR based on Cash Flow..................................... 1.63x 1.25x
</TABLE>
S-40
<PAGE> 43
Lease Expiration Schedule.
<TABLE>
<CAPTION>
SQUARE PERCENTAGE OF NET CUMULATIVE
YEAR OF LOAN TERM FEET RENTABLE SQUARE FEET EXPIRATION
----------------- ------- -------------------- ----------
<S> <C> <C> <C>
Vacant................................................... 82,400 9.3% 9.3%
Year 1................................................... 0 0.0% 9.3%
Year 2................................................... 0 0.0% 9.3%
Year 3................................................... 136,093 15.3% 24.6%
Year 4................................................... 155,000 17.4% 42.0%
Year 5................................................... 0 0.0% 42.0%
Year 6................................................... 28,750 3.2% 45.2%
Year 7................................................... 0 0.0% 45.2%
Year 8................................................... 0 0.0% 45.2%
Year 9................................................... 0 0.0% 45.2%
Year 10.................................................. 0 0.0% 45.2%
</TABLE>
Certain Environmental Considerations. The subject is undergoing final
remediation for an environmental contamination of chlorinated solvents and
petroleum. Unisys, as owner and lessor, voluntarily contracted the appropriate
State agency to begin remediation. Remediation has been in place for 10 years.
Petroleum levels have reached acceptable standards and the chlorinated solvents
are expected to reach acceptable standards with the results of an October 12,
1998 testing. A petition for closure is expected to be submitted February 15,
1999 with final closure anticipated within the second quarter of 1999. Unisys,
per their lease and indemnity included in the purchase contract, are responsible
for all liability and costs associated with the contamination and remediation.
Furthermore, a reserve of $105,000, equal to 125% of the estimated cost of
continued remediation and monitoring, was collected.
L-3 uses and maintains some hazardous materials on the site. The originator
of the Bay Bridge Industrial Loan, Bank of America NT&SA, reviewed L-3's
operations plan and, based solely on such review, the Depositor believes that
such materials are stored and disposed of properly.
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 19 months prior to
the Cut-off Date. In addition, in the case of 13 Mortgage Loans, representing
13.7% of the Initial Pool Balance, no payment history is available because the
first payment on each such Mortgage Loan is due in February 1999.
Tenant Matters. One hundred fifty three of the retail, office, industrial
and franchise restaurant Mortgaged Properties, which represent security for
41.3% of the Initial Pool Balance, are leased in large part to one or more Major
Tenants. The largest four concentrations of Major Tenants with respect to more
than one property (groups of Mortgage Loans where the same company is a Major
Tenant of each Mortgage Loan in the group) represent 2.0%, 1.6%, 1.3%, and .8%,
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.
Ground Leases. Five of the Mortgage Loans, which represent 3.3% 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
S-41
<PAGE> 44
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. Two of the Mortgaged Properties, representing
security for 0.7% 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
one Mortgage Loan, representing 4.3% 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 accompanying
prospectus. In addition, in several cases, borrowers under the Mortgage Loans
have incurred or, under the terms of the related Mortgage Loans may incur,
indebtedness secured by furniture, fixtures and equipment or unsecured
indebtedness.
Health Care Properties. Ten Mortgage Loans, which represent 3.0% 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 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, 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 April 1997. 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 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
S-42
<PAGE> 45
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; however, at several Multifamily Mortgaged
Properties located in geographic areas where radon is prevalent, radon testing
was not conducted.
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 several 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. A 1998 environmental site assessment conducted in connection with
the Mortgage Loan secured by the Calabasas Retail Center recommended additional
environmental assessment (a "Phase II") to determine whether the prior use of
the Mortgaged Property as a gasoline station may have resulted in the release of
hazardous materials onto or under the Mortgaged Property. However, in 1997, a
Phase II investigation was performed, after which a Closure Letter was issued by
the Los Angeles Department of Public Works. In light of such 1997 Phase II and
subsequent receipt of a closure letter, the recommendation of an additional
Phase II investigation has not been and is not expected to be implemented.
In the case of the Mortgage Loan secured by the Hertz Equipment Rental
Warehouse, the Mortgaged Property is restricted to industrial use due to the
presence of PCBs in the soil above residential standards. The Minnesota
Pollution Control Agency has issued a No Further Action letter for this site, as
well as a No Association Determination to the owner of the site stating that the
owner is not responsible for the residual contamination at the property.
In the case of the Mortgage Loan secured by Sunscape Apartments, the
environmental site assessment revealed that there are low levels of
trichloroethene in the groundwater beneath the Mortgaged Property. The United
States Air Force has been identified as the responsible party and is taking
measures to remediate any contamination as required by the state regulatory
agency. In addition, the Mortgaged Property is located at the
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edge of a petroleum contamination plume in the groundwater emanating from a
leaking underground storage tank at a gas station. Texaco, Inc. has been
identified as the responsible party and has undertaken cleanup activities.
In the case of the Mortgage Loan secured by University North Shopping
Center, the environmental site assessment indicated that in 1993 a leaking
underground storage tank at a gas station on the Mortgaged Property impacted the
groundwater beneath the Mortgaged Property. The site has been given a low
priority ranking on the state cleanup list, and remedial activities have not yet
begun. Shell Oil Company, the current owner of the gas station, and BP Oil
Company, the former owner, have been identified as the potentially responsible
parties. In addition, the environmental site assessment revealed that there are
other areas of potential petroleum contamination associated with the operations
of an auto repair facility at the Mortgaged Property.
In the case of the Mortgage Loan secured by Kragen Auto Parts, the
environmental site assessment indicated that the groundwater beneath the subject
property has been contaminated with perchloroethylene from an off-site source.
First Avenue Cleaners has been identified as the responsible party for the
remediation of the groundwater in the area. The Mortgaged Property is not
considered to be potential source of contamination.
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, the environmental assessment revealed the presence of an
underground storage tank no longer in use and recommended the removal of the
tank and in another that an investigation be performed to determine whether a
vent/fill pipe found on the subject property is associated with an underground
storage tank or former aboveground storage tank which may be/may have been
on-site. None of these recommendations has been or is 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, 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. With the exception of certain properties
operated as restaurant franchises, 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
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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.
None of the Depositor, the Mortgage Loan Seller, 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 has
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 the Mortgage Loan Seller does not consider
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 has 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
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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 Federal 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.
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
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").
The information set forth herein concerning the Mortgage Loan Seller has
been provided by the Mortgage Loan Seller. Neither the Depositor nor the
Underwriter makes any representation or warranty as to the accuracy or
completeness of such information.
On September 25, 1998, NationsBank Corporation, a North Carolina
corporation ("NationsBank"), reincorporated in Delaware by forming a new, wholly
owned Delaware subsidiary and merging into it (the "Reincorporation Merger"),
with the surviving Delaware corporation being renamed "NationsBank Corporation."
On September 30, 1998, BankAmerica Corporation, a Delaware corporation ("Old
BankAmerica"), merged with and into NationsBank Corporation (the "Merger").
NationsBank Corporation was the surviving corporation in the Merger and changed
its name to "BankAmerica Corporation." As a result of the Reincorporation Merger
and the Merger, BankAmerica succeeded to the assets and liabilities of both
NationsBank and Old BankAmerica. Additional information regarding these mergers
is set forth in NationsBank's Current Report on Form 8-K, as amended, filed
April 17, 1998.
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ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Delivery Date, by agreement with the Depositor, the
Mortgage Loan Seller (except as described in the next paragraph) will assign,
sell and transfer the Mortgage Loans, without recourse, to the Trustee for the
benefit of the Certificateholders. In connection with such assignment, the
Mortgage Loan Seller will be required to deliver the following documents, among
others, to the Trustee with respect to each Mortgage Loan:
(1) the original Mortgage Note, endorsed (without recourse) to the
order of the Trustee;
(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.
Some or all of the Mortgage Loans may instead be transferred to the Trustee
by a Delaware business trust wholly owned by the Mortgage Loan Seller (the "NB
Owner Trust"). With respect to such Mortgage Loans, the Mortgage Loan Seller
will nevertheless make the representations and warranties described below under
"-- Representations and Warranties; Repurchases" and, at the direction of such
business trust, deliver the documents listed above.
The Trustee will be required to review the documents delivered thereto by
the Mortgage Loan Seller (regardless whether so delivered at the direction of
the Depositor or the NB Owner Trust) with respect to each 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 the Mortgage Loan Seller 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) and any interest on any Advances.
However, if such defect or breach is capable of being cured but not within the
90 day period and the Mortgage Loan Seller has commenced and is diligently
proceeding with cure of such defect or breach within such 90 day period, the
Mortgage Loan Seller 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
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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 cure/repurchase obligations of the Mortgage Loan Seller will constitute
the sole remedies available to the Certificateholders for any failure on the
part of the Mortgage Loan Seller 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 the Mortgage Loan Seller 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 recording thereon, can be obtained because of delays on
the part of the applicable recording office, then the Mortgage Loan Seller will
not 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.
The Pooling Agreement will require 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 Delivery Date at the expense of the Mortgage Loan Seller. See
"The Pooling and Servicing Agreements -- Assignment of Mortgage Loans;
Repurchases" in the accompanying prospectus.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In the Pooling Agreement, the Mortgage Loan Seller will be required to
represent and warrant with respect to the Mortgage Loans, as of the Delivery
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;
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(6) it has not waived any material default, breach, violation or event
of acceleration existing under any Mortgage or Mortgage Note;
(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, except for the
Hyper-Amortization Loan to the extent described under " -- Certain Terms
and Conditions of the Mortgage Loans -- Hyperamortization"; 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, the Mortgage Loan Seller will also make
representations, among other things, concerning the priority and certain terms
of ground leases securing Mortgage Loans, and certain terms of the mortgage loan
documents and other characteristics relating to Mortgaged Properties that are
health care facilities. The Mortgage Loan Seller will also be required to
represent and warrant, as of the Delivery Date,
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that, immediately prior to the transfer of the Mortgage Loans to the Trustee,
the Mortgage Loan Seller or the NB Owner Trust had good and marketable title to,
and was the sole owner of, each Mortgage Loan and had full right and authority
to sell, assign and transfer such Mortgage Loan. The Mortgage Loan Seller will
also represent with respect to each Mortgage Loan 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 Financial
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 Mortgage Loan
and such breach materially and adversely affects the value of such Mortgage Loan
or the interests of Certificateholders therein, then the Mortgage Loan Seller
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 has
commenced and is diligently proceeding with cure of such defect or breach within
such 90 day period, the Mortgage Loan Seller 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, including not meeting
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 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 the
Mortgage Loan Seller defaults on its obligation to do so. The Mortgage Loan
Seller will be the sole Warranting Party (as defined in the Prospectus) in
respect of the Mortgage Loans. See "The Pooling and Servicing
Agreements -- Representations and Warranties; Repurchases" in the accompanying
prospectus.
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.
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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 (1) 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; (2) the ownership of any Certificate
by the Master Servicer or the Special Servicer, as the case may be, or any
affiliate thereof; (3) the Master Servicer's obligation to make Advances (as
defined herein); (4) the Special Servicer's obligation to make Emergency
Advances (as defined herein) or to direct the Master Servicer to make Servicing
Advances (as defined herein); (5) 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 (6) 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: (1) the related borrower has failed to make when due 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;
(2) 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; (3) 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; (4) there shall have occurred a default under the
related loan documents, other than as described in clause (1) or (2) 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); (5) 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; (6) the
related borrower shall have
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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; (7) 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 (8) 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 (1) and (2)
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 (3), (5),
(6) and (7) 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 (4) of the
preceding paragraph, such default is cured; and
(z) with respect to the circumstances described in clause (8) 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 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 in accordance with the Servicing
Standard 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,
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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 Standard, 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 accompanying 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.
THE MASTER SERVICER AND THE SPECIAL SERVICER
Banc One Mortgage Capital Markets, LLC ("Banc One") will serve as Master
Servicer and as Special Servicer. As of December 31, 1998, Banc One and its
affiliates were responsible for servicing approximately 7,058 commercial and
multifamily loans with an aggregate principal balance of approximately
$22,287,101,048, the collateral for which is located in 49 states, Mexico,
Puerto Rico, Virgin Islands and the District of Columbia. With respect to such
loans, approximately 6,180 loans with an aggregate principal balance of
approximately $17,946,030,189 pertain to commercial and multifamily
mortgage-backed securities.
The information set forth herein concerning the Master Servicer and the
Special Servicer has been provided by Banc One 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 Master
Servicer. Each sub-servicing agreement between the Master Servicer or Special
Servicer, as the case
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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 (1) assume such party's rights and
obligations under such Sub-Servicing Agreement, (2) 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 (3) 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. 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 Stated Principal Balance as of
the Due Date in the immediately preceding Collection Period 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, and without giving effect to any Excess Interest that may accrue
on the Hyper-Amortization Loan on or after its Anticipated Repayment Date. The
"Master Servicing Fee Rate" will range from .09075% to .81775% per annum, on a
loan-by-loan basis, with a weighted average Master Servicing Fee Rate of .16080%
per annum as of the Cut-off Date. In the event that Banc One 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, Special Servicing Fees and
any Excess Interest) 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 other than a
Specially-Serviced Mortgage Loan (a "Non-Specially Serviced 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 Non-Specially
Serviced 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 Non-Specially Serviced Mortgage Loan, calculated at .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 Stated Principal Balance as of
the Due Date in the immediately preceding Collection Period 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, and without giving effect to any Excess Interest that may accrue on the
Hyper-Amortization Loan on or after its Anticipated Repayment Date. 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 Excess Interest) 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 Excess Interest or
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, 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
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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, "Default Interest"
(that is, interest (other than Excess 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 except for 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). The Special Servicer will
only be required to make Servicing Advances if such a Servicing Advance must be
made within five Business Days in order to avoid a material adverse consequence
to the Trust Fund (each such Servicing Advance, an "Emergency Advance"). The
Special Servicer may from time to time require the Master Servicer to reimburse
it for any Servicing Advance made as an Emergency Advance thereby (in which
case, such Servicing Advance will be deemed to have been made by the Master
Servicer). Servicing Advances other than Emergency Advances will be made by the
Master Servicer. However, 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.
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").
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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 accompanying 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, 2000, 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 on the basis of such examination
conducted substantially in compliance with generally accepted auditing standards
and the Uniform Single Attestation Program for Mortgage Bankers, such servicing
has been conducted in compliance with similar agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
generally accepted auditing standards and the Uniform Single Attestation Program
for Mortgage Bankers require it to report, in which case such exceptions and
errors shall be so reported.
The Pooling Agreement will also require that, on or before a specified date
in each year, commencing in 2000, 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 (as to Non-Specially Serviced Mortgage Loans) and the
Special Servicer (as to Specially Serviced Mortgage Loans) 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 (including as described below with respect
to Excess Interest), 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 Servicer's or the Special
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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 Terms
and Conditions of the Mortgage Loans -- Defeasance" and specific releases
contemplated by the terms of the mortgage loans in effect on the Delivery
Date, neither the Master Servicer nor the Special Servicer shall release
any collateral securing an outstanding Mortgage Loan;
In addition, assumptions of Non-Specially Serviced Mortgage Loans will also
require the consent of the Special Servicer. 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.
With respect to the Hyper-Amortization Loan, the Master Servicer shall be
permitted, in its discretion, to waive all or any accrued Excess Interest if,
prior to the related maturity date, the borrower has requested the right to
prepay the Mortgage Loan in full together with all other payments required by
the Mortgage Loan in connection with such prepayment except for all or a portion
of accrued Excess Interest, provided that the Master Servicer's determination to
waive the right to such accrued Excess Interest is reasonably likely to produce
a greater payment to Certificateholders on a present value basis than a refusal
to waive the right to such Excess Interest. Any such waiver will not be
effective until such prepayment is tendered. The Master Servicer will have no
liability to the Trust, the Certificateholders or any other person so long as
such
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determination is based on such criteria. Except as permitted by clauses (i)
through (v) of the preceding paragraph, the Special Servicer will have no right
to waive the payment of Excess Interest.
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 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, 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 or REMIC II 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 cause any Mortgaged
Property acquired as REO Property to be operated and managed 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
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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 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 2000, 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),
provided that at least 50% of the Mortgaged Properties (by both number and
aggregate Stated Principal Balances of the related Mortgage Loans) will be
inspected each year by the Master Servicer (or an entity employed by the Master
Servicer for such purpose) or, as described in the following sentence, the
Special Servicer. 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
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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 will issue its Commercial Mortgage Pass-Through Certificates,
Series 1999-1 (the "Certificates") on or about February 23, 1999 (the "Delivery
Date"), pursuant to a Pooling and Servicing Agreement, to be dated as of the
Cut-off Date, among the Depositor, the Master Servicer, the Special Servicer,
the Trustee, the REMIC Administrator and the Mortgage Loan Seller (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 accompanying prospectus).
The Certificates will consist of fourteen 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 and the Class R-II 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
accompanying 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 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
accompanying prospectus. The Trustee will initially serve as
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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............................. $ 198,904,170 16.275% 29.75%
Class A-2............................. $ 659,653,000 53.975% 29.75%
Class X............................... $ 1,222,145,439 N/A N/A
Class B............................... $ 64,162,635 5.250% 24.50%
Class C............................... $ 61,107,271 5.000% 19.50%
Class D............................... $ 67,217,999 5.500% 14.00%
Class E............................... $ 33,608,999 2.750% 11.25%
Class F............................... $ 51,941,181 4.250% 7.00%
Class G............................... $ 9,166,090 0.750% 6.25%
Class H............................... $ 30,553,635 2.500% 3.75%
Class J............................... $ 15,276,817 1.250% 2.50%
Class K............................... $ 30,553,642 2.500% 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 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 March
1999 Distribution Date will equal approximately 0.329% 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
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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, Class G, Class H, Class J
and Class K Certificates will, for any Distribution Date, be equal to 7.100%,
6.000%, 6.000%, 6.000% and 6.000% per annum, respectively, however, such
Pass-Through Rate will not exceed the Weighted Average Net Mortgage Rate for any
Distribution Date.
"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 is 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
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"). The
pass-through rate on the Class X Certificates will not be affected by any step
up in the Mortgage Rate on the Anticipated Repayment Date for Hyper-Amortization
Loan. 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 6.053% per annum to 8.457% per annum, with a weighted
average Net Mortgage Rate of 7.105% per annum. See "Servicing of the Mortgage
Loans -- Servicing and Other Compensation and Payment of Expenses" in this
prospectus supplement.
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 "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
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next succeeding business day, commencing, with respect to the Offered
Certificates, in March 1999 (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 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
accompanying prospectus.
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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;
(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;
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(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;
(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
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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.
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 Non-Specially Serviced 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
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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.
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
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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) as follows:
The holders of each Class of Sequential Pay Certificates (other than an
Excluded Class thereof) then entitled to distributions of principal on such
Distribution Date will be entitled to an amount equal to the product of (a) the
amount of such Prepayment Premium, multiplied by (b) a fraction (which in no
event may be greater than one), the numerator of which is equal to the excess,
if any, of the Pass-Through Rate of such Class of Sequential Pay Certificates,
over the relevant Reinvestment Yield (as defined below), and the denominator of
which is equal to the excess, if any, of the Mortgage Rate of the prepaid
Mortgage Loan, over the relevant Reinvestment Yield, multiplied by (c) a
fraction, the numerator of which is equal to the amount of principal
distributable on such Class of Sequential Pay Certificates on such Distribution
Date, and the denominator of which is the Principal Distribution Amount for such
Distribution Date. If there is more than one Class of Sequential Pay
Certificates (other than an Excluded Class thereof) entitled to distributions of
principal on any particular Distribution Date on which a Prepayment Premium is
distributable, the aggregate amount of such Prepayment Premium will be allocated
among all such Classes up to, and on a pro rata basis in accordance with their
respective entitlements thereto in accordance with, the foregoing sentence. The
portion, if any, of the Prepayment Premium remaining after any such payments to
the holders of the Sequential Pay Certificates will be distributed to the
holders of the Class X Certificates. For purposes of the foregoing, an "Excluded
Class" of Sequential Pay Certificates is any Class thereof other than the Class
A-1, Class A-2, Class B, Class C, Class D and Class E Certificates.
The "Reinvestment Yield" applicable to any Class of Offered Certificates
will be equal to the yield (when compounded monthly) on the U.S. Treasury issue
(primary issue) with a maturity date closest to the maturity date for the
prepaid Mortgage Loan or an interpolation thereof. In the event that there are
two such U.S. Treasury issues (a) with the same coupon, the issue with the lower
yield will be utilized, and (b) with maturity dates equally close to the
maturity date for the prepaid Mortgage Loan, the issue with the earliest
maturity date will be utilized.
For an example of the foregoing allocation of Prepayment Premiums see Annex
D hereto.
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
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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 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
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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 accompanying 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 accompanying
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 accompanying 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 accompanying 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.
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 (as defined
below) 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, an amount will be required to be withdrawn from the
Certificate Account, in respect of each Mortgage Loan which accrues interest on
an Actual/360 Basis, for deposit into the Interest Reserve Account, 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 withdrawn in any consecutive January (if applicable) and February, the
"Withheld Amount"). The "Master Servicer Remittance Date" for any month is the
business day preceding each Distribution Date. 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 only in Permitted Investments. The Trustee will have no
obligation to invest the funds on deposit in the Interest Reserve 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
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Payments) and any Assumed Monthly Payments, in each case net of related Master
Servicing Fees, Liquidation 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 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 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 accompanying 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 Special Servicer 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,
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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 Special Servicer 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 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.
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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 end
of the Collection Period for the immediately preceding Distribution Date,
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 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
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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 third 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 (i) to any interested party including the Rating Agencies, the
underwriters of the Certificates and any party to the Pooling Agreement via the
Trustee's Website or, (ii) to authorized persons identified by the Trustee to
the Master Servicer and parties to the Pooling Agreement, via the Master
Servicer's Website, with the use of a password provided by the Master Servicer
to such Person upon delivery to the Trustee of a certification in the form
attached to the Pooling Agreement; provided that the Rating Agencies, the
Underwriter and parties to the Pooling Agreement will not be required to provide
such certification:
(1) A "Delinquent Loan Status Report" setting forth, among other
things, those Mortgage Loans which, as of the end of the Collection Period
for the related Distribution Date, 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.
(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; provided however, that such information
may be shown as part of the reports described above and other Commercial
Real Estate Secondary Market and Securitization Association ("CSSA") form
reports in lieu of in a separate report.
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.
Following the end of each calendar quarter, commencing with the calendar
quarter ended March 31, 2000, within 105 days (or 180 days, in the case of
annual operating information) of receipt by the Master Servicer, as to
Non-Specially Serviced Mortgage Loans, and within 30 days after receipt by the
Special Servicer, as to Specially Serviced Mortgage Loans, of any annual or
quarterly operating statements or rent
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rolls with respect to any Mortgaged Property or REO Property, the Master
Servicer or the Special Servicer, as applicable, will, based upon such operating
statements or rent rolls prepare (or, if previously prepared, update) the
written analysis of the operations (the "Operating Statement Analysis Report"),
and the Special Servicer will remit each Operating Statement Analysis Report
prepared by it or the related data fields, together with the underlying
operating statements and rent rolls, to the Master Servicer in an electronic
format reasonably acceptable to the Master Servicer. Certain Information in each
Operating Statement Analysis Report will be normalized using standard CSSA
methodology as modified from time to time. All Operating Statement Analysis
Reports will be maintained by the Master Servicer with respect to each Mortgaged
Property and REO Property, and the Master Servicer will forward copies thereof
to the Trustee, the Directing Certificateholder and, upon written request any
Certificateholder, or to the extent the Trustee or a Certificate Owner has
confirmed its ownership interest in the Certificates held thereby, such
Certificate Owner, together with the related operating statement or rent rolls.
The Master Servicer will maintain an Operating Statement Analysis Report with
respect to each Mortgaged Property and REO Property. 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 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 to any interested party each month the Servicer Reports on
the Trustee's Website. The Trustee's Website will be located at
"www.ctslink.com/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 accompanying
prospectus or the prospectus supplement under the securities laws), the Pooling
Agreement, the accompanying 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.
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 accompanying 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
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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
interests in such Class evidenced by their respective Certificates. See
"Description of the Certificates -- Voting Rights" in the accompanying
prospectus. It is expected that Banc One Mortgage Capital Markets, LLC will be
the initial holder of one or more classes of the Private Certificates and as
such will be entitled to Voting Rights.
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)
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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, "AA" by
DCR and AA by S&P (or such lower rating as would not result, as confirmed in
writing by each Rating Agency, 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, 1998, Wells Fargo & Company, of which the
Trustee is a direct, wholly-owned subsidiary, had assets of over $200 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.
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
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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). 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. Failure
of the borrower under the Hyper-Amortization Loan to repay its Mortgage Loan by
or shortly after its Anticipated Repayment Date, for whatever reason, will also
tend to lengthen the weighted average lives of the Sequential Pay Certificates.
Although the Hyper-Amortization Loan includes incentives for the related
borrower to repay the Mortgage Loan by its Anticipated Repayment Date (e.g., an
increase in the Mortgage Rate and the application of all excess cash (net of
approved property expenses and any required reserves) from the related Mortgaged
Property to pay down the Mortgage Loan, in each case following the passage of
such date), there can be no assurance that the related borrower will want, or be
able, to repay the Mortgage Loan in full. 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.
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<PAGE> 83
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 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
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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 (or, in the case of the Hyper-Amortization Loan after its Anticipated
Repayment Date, the Revised 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 (or, in the case of the Hyper-Amortization Loan after its
Anticipated Repayment Date, the Revised Rate) for any Mortgage Loan, such
Mortgage Loan may be less likely to prepay (other than, in the case of the
Hyper-Amortization Loan, out of certain net cash flow from the related Mortgaged
Property). In particular, the Revised Rate for the Hyper-Amortization Loan
generally is the Mortgage Rate therefor plus 2%, or the interest rate applicable
for certain non-callable U.S. treasury obligations of comparable terms plus 2%,
whichever is greater, and the primary incentive to prepay the Hyper-Amortization
Loan on or before its Anticipated Repayment Date, assuming prevailing market
interest rates exceed such Revised Rate, is to give the borrower access to
excess cash flow, all of which (net of approved property expenses and any
required reserves) must be applied to pay down principal of the Mortgage Loan.
Accordingly, there can be no assurance that the Hyper-Amortization Loan will be
prepaid on or before its Anticipated Repayment Date or on any other date prior
to maturity.
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 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
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<PAGE> 85
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 accompanying 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 Initial Pool Balance is
approximately $1,222,145,439, (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, the Hyper-Amortization Loan is paid in full on its
Anticipated Repayment Date, 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, (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 March 1999, and (xii) the
Offered Certificates are settled on February 26, 1999 (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 occur even if the average
prepayment experience of the Mortgage Loans were to conform to
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<PAGE> 86
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
February 20, 2000........................... 93.03 93.03 93.03 93.03 93.03
February 20, 2001........................... 85.66 85.66 85.66 85.66 85.66
February 20, 2002........................... 77.60 77.60 77.60 77.60 77.60
February 20, 2003........................... 68.92 68.83 68.74 68.65 68.55
February 20, 2004........................... 59.65 58.56 57.47 56.39 55.32
February 20, 2005........................... 49.51 47.48 45.54 43.68 41.92
February 20, 2006........................... 37.25 34.35 31.70 29.27 27.06
February 20, 2007........................... 26.00 22.29 19.02 16.16 13.67
February 20, 2008........................... -- -- -- -- --
Weighted Average Life (years)............... 5.50 5.39 5.29 5.20 5.12
</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
February 20, 2000........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2001........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2002........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2003........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2004........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2005........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2006........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2007........................... 100.00 100.00 100.00 100.00 100.00
February 20, 2008........................... 84.13 84.06 84.00 83.93 83.86
February 20, 2009........................... -- -- -- -- --
Weighted Average Life (years)............... 9.46 9.46 9.46 9.45 9.45
</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
February 20, 2000................. 100.00 100.00 100.00 100.00 100.00
February 20, 2001................. 100.00 100.00 100.00 100.00 100.00
February 20, 2002................. 100.00 100.00 100.00 100.00 100.00
February 20, 2003................. 100.00 100.00 100.00 100.00 100.00
February 20, 2004................. 100.00 100.00 100.00 100.00 100.00
February 20, 2005................. 100.00 100.00 100.00 100.00 100.00
February 20, 2006................. 100.00 100.00 100.00 100.00 100.00
February 20, 2007................. 100.00 100.00 100.00 100.00 100.00
February 20, 2008................. 100.00 100.00 100.00 100.00 100.00
February 20, 2009................. -- -- -- -- --
Weighted Average Life (years)..... 9.73 9.73 9.73 9.73 9.73
</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
February 20, 2000................. 100.00 100.00 100.00 100.00 100.00
February 20, 2001................. 100.00 100.00 100.00 100.00 100.00
February 20, 2002................. 100.00 100.00 100.00 100.00 100.00
February 20, 2003................. 100.00 100.00 100.00 100.00 100.00
February 20, 2004................. 100.00 100.00 100.00 100.00 100.00
February 20, 2005................. 100.00 100.00 100.00 100.00 100.00
February 20, 2006................. 100.00 100.00 100.00 100.00 100.00
February 20, 2007................. 100.00 100.00 100.00 100.00 100.00
February 20, 2008................. 100.00 100.00 100.00 100.00 100.00
February 20, 2009................. -- -- -- -- --
Weighted Average Life (years)..... 9.78 9.78 9.78 9.77 9.77
</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
February 20, 2000................. 100.00 100.00 100.00 100.00 100.00
February 20, 2001................. 100.00 100.00 100.00 100.00 100.00
February 20, 2002................. 100.00 100.00 100.00 100.00 100.00
February 20, 2003................. 100.00 100.00 100.00 100.00 100.00
February 20, 2004................. 100.00 100.00 100.00 100.00 100.00
February 20, 2005................. 100.00 100.00 100.00 100.00 100.00
February 20, 2006................. 100.00 100.00 100.00 100.00 100.00
February 20, 2007................. 100.00 100.00 100.00 100.00 100.00
February 20, 2008................. 100.00 100.00 100.00 100.00 100.00
February 20, 2009................. -- -- -- -- --
Weighted Average Life (years)..... 9.85 9.84 9.84 9.84 9.84
</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
February 20, 2000................. 100.00 100.00 100.00 100.00 100.00
February 20, 2001................. 100.00 100.00 100.00 100.00 100.00
February 20, 2002................. 100.00 100.00 100.00 100.00 100.00
February 20, 2003................. 100.00 100.00 100.00 100.00 100.00
February 20, 2004................. 100.00 100.00 100.00 100.00 100.00
February 20, 2005................. 100.00 100.00 100.00 100.00 100.00
February 20, 2006................. 100.00 100.00 100.00 100.00 100.00
February 20, 2007................. 100.00 100.00 100.00 100.00 100.00
February 20, 2008................. 100.00 100.00 100.00 100.00 100.00
February 20, 2009................. -- -- -- -- --
Weighted Average Life (years)..... 9.90 9.90 9.90 9.90 9.90
</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>
4.79448%............. 10.175% 10.096% 10.023% 9.956% 9.894%
</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>
4.79448%............. 10.175% 10.108% 10.047% 9.990% 9.938%
</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>
4.79448%............. 10.175% 10.120% 10.070% 10.024% 9.983%
</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 as described under "Description of the
Certificates -- General" in this prospectus supplement, and to pay certain
expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
For federal income tax purposes, two 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" and "REMIC II" 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. For federal income tax purposes, (i) the Class R-I Certificates
will be the sole class of "residual interests" in REMIC I, (ii) the REMIC
Regular Certificates will evidence the "regular interests" in, and generally
will be treated as debt obligations of, REMIC II, and (iii) the Class R-II
Certificates will be the sole class of "residual interests" in REMIC II. 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 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 E Certificates will be issued with original issue discount and that the
Class A-1, Class A-2, Class B, Class C and Class D 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 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
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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 (except that the Hyper-Amortization Loan will be
repaid in full on its Anticipated Repayment Date). 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, 31.3%, 3.0% and 2.9% of the Initial Pool Balance
were Mortgage Loans secured by multifamily properties, health care properties
and mobile home community 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 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.
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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 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.
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<PAGE> 94
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 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, 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, "AAA" by
DCR 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 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) (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)
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<PAGE> 95
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 accompanying 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 accompanying
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.
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
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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 106.35% 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, the
Underwriter has no obligation to do so, any market 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 Certificates" in the
accompanying prospectus.
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<PAGE> 97
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to the Underwriter and the such
controlling person with respect to, certain liabilities, including certain
liabilities under the Securities Act. The Mortgage Loan Seller 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.
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"), Duff & Phelps Credit Rating Co. ("DCR") and/or Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"; and,
together with Moody's and DCR, the "Rating Agencies"):
<TABLE>
<CAPTION>
CLASS MOODY'S DCR S&P
- ----- ------- ---- ----
<S> <C> <C> <C>
Class A-1................................................ Aaa AAA AAA
Class A-2................................................ Aaa AAA AAA
Class X.................................................. Aaa AAA AAAr
Class B.................................................. Aa2 AA AA
Class C.................................................. A2 A A
Class D.................................................. Baa2 BBB BBB
Class E.................................................. Baa3 N/R N/R
</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 January 2031
(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 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
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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 (if applicable) 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, DCR 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.
S-96
<PAGE> 99
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
30/360 Basis...................... S-32, S-83
30/360 Mortgage Loans............. S-32
Accrued Certificate Interest...... S-68
ACMs.............................. S-42
Actual/360 Basis.................. S-32
Actual/360 Mortgage Loans......... S-31
Additional Trust Fund Expenses.... S-71
Administrative Fee Rate........... S-64, A-1
Administrative Fees............... S-79
Advances.......................... S-14, S-56
Annual Debt Service............... A-1
Anticipated Repayment Date........ S-32
Appraisal Reduction Amount........ S-74
Appraisal Value................... A-1
Asset Status Report............... S-52
Assumed Monthly Payment........... S-69
Available Distribution Amount..... S-12, S-65
Balloon........................... A-1
Balloon Loans..................... S-32
Balloon Payment................... S-32
Banc One.......................... S-53
BankAmerica....................... S-46
Bay Bridge Industrial Loan........ S-39
Beds.............................. A-3
Breakers Borrower................. S-38
Breakers Loan..................... S-38
CBE............................... S-87
Certificate Balance............... S-63
Certificate Owner................. S-62
Certificate Registrar............. S-63
Certificateholders................ S-10
Certificates...................... S-62
Class............................. S-62
Class A Certificates.............. S-62
Class X Certificates.............. S-62
Collateral Substitution Deposit... S-33
Collection Period................. S-64
Commercial Loan................... S-31
Commercial Mortgaged Property..... S-31
Controlling Class................. S-53
Controlling Class
Certificateholder............... S-52
Corrected Mortgage Loan........... S-52
Cross-Collateralized Mortgage
Loans........................... S-31
CSSA.............................. S-76
Cut-off Date...................... S-30
Cut-off Date Balance.............. S-9, S-30
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-4, S-95
Decl. % Premium................... S-87
Default Interest.................. S-56
Defeasance Lock-Out Period........ S-33
Defeasance Option................. S-33
Definitive Certificate............ S-62
Delinquent Loan Status Report..... S-76
Depositor......................... S-8
Delivery Date..................... S-62
Determination Date................ S-8, S-64
Directing Certificateholder....... S-52
Distributable Certificate
Interest........................ S-68
Distribution Date................. S-65
Distribution Date Statement....... S-75
DTC............................... S-15, S-62
Due Date.......................... S-31
Eagle Trace Borrower.............. S-38
Eagle Trace Loan.................. S-38
Emergency Advance................. S-51
ERISA............................. S-91
Excess Interest................... S-32
Excess Interest Rate.............. S-32
Excluded Class.................... S-70
Excluded Plan..................... S-93
Exemption Favored Party........... S-91
Exemption......................... S-91
Expenses.......................... A-2
FIRREA............................ S-45
Fitch............................. S-92
Form 8-K.......................... S-50
FREE.............................. A-1
Fully Amortizing.................. A-1
GAAP.............................. A-2
Grtr.............................. A-1
Historical Loan Modification
Report.......................... S-76
Historical Loss Report............ S-76
Holes............................. A-3
Hyper-Amortization Loan........... S-32, S-36
Initial Pool Balance.............. S-9, S-30
Interest Reserve Account.......... S-72
Interest Reserve Event............ S-72
Interested Person................. S-59
Leasable Square Footage........... A-1
Lease Agreements.................. S-35
Liquidation Fee................... S-55
Liquidation Fee Rate.............. S-55
Lock-out Period................... S-33
</TABLE>
S-97
<PAGE> 100
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LOP............................... S-83
MAI............................... S-45
Major Tenants..................... S-41
Master Servicer................... S-8
Master Servicer Remittance Date... S-72
Master Servicing Fee.............. S-54
Master Servicing Fee Rate......... S-54
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
Mobile Home Properties............ S-25
Modified Mortgage Loan............ S-74
Monthly Payments.................. S-31
Moody's........................... S-4, S-95
Mortgage.......................... S-31
Mortgage Loan Schedule............ S-48
Mortgage Loan Seller.............. S-8
Mortgage Loans.................... S-9, S-30
Mortgage Note..................... S-31
Mortgage Pool..................... S-9
Mortgage Rate..................... S-31
Mortgaged Property................ S-31
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-31
Multifamily Mortgaged Property.... S-31
NationsBank....................... S-46
NB Owner Trust.................... S-47
Negative Adjustment............... S-89
Net Aggregate Prepayment Interest
Shortfall....................... S-69
Net Mortgage Rate................. S-64
Net Rentable Area(SF)............. A-1
NOI............................... A-2
Nonrecoverable Advances........... S-73
Nonrecoverable P&I Advance........ S-73
Nonrecoverable Servicing
Advance......................... S-56
Non-Specially Serviced Mortgage
Loan............................ S-54
Norwest Bank...................... S-79
Notional Amount................... S-63
Note A............................ S-34
Note B............................ S-34
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Occupancy Percent................. A-3
Occupancy %....................... A-3
Offered Certificates.............. S-11, S-62
Old BankAmerica................... S-46
Olen Properties................... S-38
Open Period....................... S-33
Operating Statement Analysis
Report.......................... S-77
Participants...................... S-62
Party in Interest................. S-92
Pass-Through Rate................. S-11
Permitted Encumbrances............ S-48
Permitted Investments............. S-54
Phase II.......................... S-43
P&I Advance....................... S-14, S-72
Plan.............................. S-91
Plan Assets....................... S-91
Pooling Agreement................. S-62
Prepayment Interest Excess........ S-54
Prepayment Interest Shortfall..... S-54
Prepayment Premium................ S-33
Prepayment Premium Period......... S-33
Principal Distribution Amount..... S-69
Private Certificates.............. S-62
PTE............................... S-91
Purchase Price.................... S-47
R&D............................... S-39
Rated Final Distribution Date..... S-95
Rating Agencies................... S-16, S-95
Realized Losses................... S-71
Record Date....................... S-65
Reimbursement Rate................ S-73
Reincorporation Merger............ S-46
Reinvestment Yield................ S-70
Related Loans..................... A-3
Related Proceeds.................. S-56
Release Date...................... S-33
REMIC............................. S-89
REMIC Administrator............... S-79
REMIC I........................... S-89
REMIC II.......................... S-89
REMIC Regular Certificates........ S-62
REMIC Residual Certificates....... S-62
REO Extension..................... S-59
REO Property...................... S-51
REO Status Report................. S-76
REO Tax........................... S-90
Required Appraisal Date........... S-74
Required Appraisal Loan........... S-74
Restricted Group.................. S-92
Revenues.......................... A-2
Revised Rate...................... S-32
</TABLE>
S-98
<PAGE> 101
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RFS Loans......................... S-34
Rooms............................. A-3
Senior Certificates............... S-66
Sequential Pay Certificates....... S-11, S-62
Servicer Reports.................. S-76
Servicing Advances................ S-14
Servicing Standard................ S-50
Servicing Transfer Event.......... S-51
Settlement Date................... S-83
sf................................ S-35
Similar Law....................... S-93
SMMEA............................. S-15
S&P............................... S-4, S-95
Special Servicer.................. S-8
Special Servicer Loan Status
Report.......................... S-76
Special Servicing Fee............. S-55
Special Servicing Fee Rate........ S-55
Specially Serviced Mortgage
Loan............................ S-51
Standby Fee....................... S-55
Stated Principal Balance.......... S-64
Subordinate Certificates.......... S-66
Sub-Servicer...................... S-53
Sub-Servicing Agreement........... S-54
Sub-Servicing Fee Rate............ A-1
Successor Servicer Retained Fee... S-54
Summit Borrower................... S-36
Summit Shopping Center............ S-36
Summit Shopping Center Loan....... S-36
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Trailing Date..................... A-3
Trailing DSCR..................... A-3
Trailing Expenses................. A-3
Trailing NOI...................... A-3
Trailing Revenues................. A-3
Trust............................. 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-72
Workout Fee....................... S-55
Workout Fee Rate.................. S-55
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. "Hyper" means Hyper-Amortization Loan.
11. "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.
12. "Maturity" or "Maturity Date" means, with respect to any Mortgage
Loan, the date specified in the related Mortgage Note as its stated
maturity date or, in the case of the Hyper-Amortization Loan, the
Anticipated Repayment Date.
13. "Maturity Date Balance" means, with respect to any Mortgage Loan,
the balance due at maturity or, in the case of the Hyper-Amortization Loan,
the Anticipated Repayment Date, assuming no prepayments, defaults or
extensions.
14. "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.
A-1
<PAGE> 103
15. "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.
16. "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.
17. "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
A-2
<PAGE> 104
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.
18. "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 generally are calculated by physical presence or,
alternatively, collected rents as a percentage of potential rental
revenues.
19. "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.
20. "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").
21. "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.
22. "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).
23. "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.
24. "UPB" means, with respect to any Mortgage Loan, its unpaid
principal balance.
25. "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).
26. "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
A-3
<PAGE> 105
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 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.
27. "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.
28. "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.
29. "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 COUNTY CITY
- ------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N001 51386 Eagle Trace Apartments 5370 E. Craig Rd. Clark Las Vegas
N002 51385 The Breakers Apartments 9901 West Sahara Ave. Clark Las Vegas
SUB-TOTAL CROSSED LOANS
N003 50166 La Jolla International Gardens 3415-3465 Lebon Drive San Diego San Diego
N004 50167 La Scala Apartment Villas 3833-3899 Nobel Drive San Diego San Diego
N005 51289 Park Place Apartments-Tustin CA 1628 West Main St. Orange Tustin
N006 51192 Lakeside Village Apartments 1555 Ridgeview Dr. Washoe Reno
N007A 51046 L5 - Goldfarb Apartments-48 E. John St. 48 E. John St. Champaign Champaign
N007B 51046 L5 - Goldfarb Apartments-507 S. Fourth St. 507 S. Fourth St. Champaign Champaign
N007C 51046 L5 - Goldfarb Apartments-905-907 W. Oregon 905-907 W. Oregon Champaign Urbana
N007D 51046 L5 - Goldfarb Apartments-1102 E. Colorado 1102 E. Colorado Champaign Urbana
N007E 51046 L5 - Goldfarb Apartments-2007-2009 Philo Road 2007-2009 Philo Road Champaign Urbana
N007F 51046 L5 - Goldfarb Apartments-2008-2010 Vawter 2008-2010 Vawter Champaign Urbana
N007G 51046 L5 - Goldfarb Apartments-2011 Philo Road 2011 Philo Road Champaign Urbana
N007 51046 L5 - Goldfarb Apartments (Roll-Up)
N008 51160 Foxwood Apartments 6655 North Fresno Stree Fresno Fresno
N009 50563 River View Condominiums 93 Richards Avenue Fairfield Norwalk
N010 50668 Museum Walk Apartments 3500 SW 19th Ave Alachua Gainesville
N011 51041 Indiana Village Apartments 701 North Indiana Ave. Lubbock Lubbock
N012A 51033 L4 - Goldfarb Apartments-57 E. Chalmers 57 E. Chalmers Champaign Champaign
N012B 51033 L4 - Goldfarb Apartments-103 E. Chalmers 103 E. Chalmers Champaign Champaign
N012C 51033 L4 - Goldfarb Apartments-202 E. Chalmers 202 E. Chalmers Champaign Champaign
N012 51033 L4 - Goldfarb Apartments (Roll-Up)
N013 51004 Westside Colonial Apartments 10-70 Westland Street and
985-997 Pleasant Street Plymouth Brockton
N014 51101 Gaylord Apartments 3355 Wilshire Blvd. Los Angeles Los Angeles
N015 51056 Sheridan Square Apartments 402 NW Sheridan Rd Comanche Lawton
N016 50894 The Courtyards Apartments 1231 SW 3rd Avenue Alachua Gainesville
N017 51104 Broadway & 171st 621 W. 171st St & 620 W. New York New York
172nd St.
N018 51055 Sail Cloth Factory Apartments 121 South Fremont Ave. Baltimore Baltimore City
N019 51169 Horton 4th Avenue Apartments 770-810 4th Ave San Diego San Diego
N020 51093 Park Lane Apartments 412 South Willaman Drive Los Angeles Los Angeles
N021 50648 Colonial Plaza Apts 215 Sand Beach Blvd Caddo Shreveport
N022A 51014 L2 - Goldfarb Apartments-106-108 E. Healy St. 106-108 E. Healy St. Champaign Champaign
N022B 51014 L2 - Goldfarb Apartments-303 East Green St. 303 East Green St. Champaign Champaign
N022C 51014 L2 - Goldfarb Apartments-404 Clark St. 404 East Clark St. Champaign Champaign
N022D 51014 L2 - Goldfarb Apartments-804 West Illinois Ave. 804 West Illinois Ave. Champaign Urbana
N022E 51014 L2 - Goldfarb Apartments-812 West Nevada Ave. 812 West Nevada Ave. Champaign Urbana
N022 51014 L2 - Goldfarb Apartments (Roll-Up)
N023 51028 Innsbruck West Apartments 2302 Loop 289 West Lubbock Lubbock
N024 51287 Hensel Garden Apartments 300-336 North Garfield Ave .Los Angeles Montebell
N025 51043 Sunscape Apartments 2426 West Cardinal Loop Travis Del Valle
N026 51127 Raintree Meadows Apartments 471 N. Harr Drive Oklahoma Midwest City
N027 50986 Grand Rose Apartments 1601-1649 East Grand Ave San Diego Escondido
N028A 51053 L6 - Goldfarb Apartments-52 E. Armory 52 E Armory Champaign Champaign
N028B 51053 L6 - Goldfarb Apartments-104 N. 104 N. Lincoln Champaign Urbana
Lincoln/809 W. Stoughton
N028 51053 L6 - Goldfarb Apartments (Roll-Up)
N029 51077 Royal Orleans Apartments 1924-A McAllister Drive Mecklenburg Charlotte
N030 51261 Kenmore View Apartments 1840 North Kenmore Ave. Los Angeles Los Angeles
N031 51066 Forest at Duck Creek Apartment 4328 Duck Creek Drive Dallas Garland
N032 50776 Terraces Apartments 4739 Buford Highway Dekalb Chamblee
N033 51442 Chateau DePaix 9848 Tabor Street, Los Angeles Los Angeles
N034 51048 Lulav Square Apartments 620-644 Lenox Avenue Dade Miami Beach
N035 51316 La Jollan Townhouse 2638 Torrey Pines Road San Diego La Jolla
N036 51034 Blueberry Estates 1-8 Cicero Drive, 1-5 Plymouth Lakeville
& 7 Blueberry Lane
</TABLE>
<PAGE> 107
<TABLE>
<CAPTION>
CUT-OFF MATURITY
ZIP PROPERTY ORIGINAL DATE DATE LOAN
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE
----- ---- ------- -------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
NV 89115 Multifamily $44,000,000 $43,974,545 $38,682,750 Balloon
NV 89117 Multifamily 18,180,000 18,169,482 15,983,009 Balloon
----------- -----------
62,144,027 54,665,759
CA 92122 Multifamily 29,100,000 28,806,130 25,747,319 Balloon
CA 92122 Multifamily 26,400,000 26,133,397 23,358,392 Balloon
CA 92680 Multifamily 11,000,000 10,970,076 9,611,707 Balloon
NV 89509 Multifamily 10,000,000 9,961,559 8,663,399 Balloon
IL 61820 Multifamily
IL 61820 Multifamily
IL 61801 Multifamily
IL 61801 Multifamily
IL 61801 Multifamily
IL 61801 Multifamily
IL 61801 Multifamily
Multifamily 8,240,000 8,214,903 7,117,331 Balloon
CA 93710 Multifamily 6,856,000 6,836,587 5,966,974 Balloon
CT 06854 Multifamily 6,406,928 6,388,917 5,636,233 Balloon
FL 32607 Multifamily 6,340,000 6,286,354 5,500,837 Balloon
TX 79415 Multifamily 5,440,000 5,415,990 4,728,776 Balloon
IL 61820 Multifamily
IL 61820 Multifamily
IL 61820 Multifamily
Multifamily 5,360,000 5,339,194 4,638,543 Balloon
MA 02301 Multifamily 5,265,000 5,248,758 4,541,402 Balloon
CA 90010 Multifamily 5,220,000 5,209,122 4,559,656 Balloon
OK 73505 Multifamily 5,200,000 5,185,159 4,522,083 Balloon
FL 32601 Multifamily 5,000,000 4,982,021 4,363,038 Balloon
NY 10032 Multifamily 4,650,000 4,633,654 4,067,200 Balloon
MD 21201 Multifamily 4,520,000 4,503,004 3,925,367 Balloon
CA 92101 Multifamily 4,500,000 4,490,984 3,474,580 Balloon
CA 90048 Multifamily 4,500,000 4,489,488 3,883,561 Balloon
LA 71105 Multifamily 4,400,000 4,359,715 3,420,756 Balloon
IL 61820 Multifamily
IL 61820 Multifamily
IL 61820 Multifamily
IL 61801 Multifamily
IL 61801 Multifamily
Multifamily 4,317,000 4,303,852 3,728,826 Balloon
TX 79407 Multifamily 4,240,000 4,224,096 3,683,190 Balloon
CA 90640 Multifamily 4,200,000 4,178,944 3,297,576 Balloon
TX 78617 Multifamily 4,075,000 4,059,921 3,545,065 Balloon
OK 73110 Multifamily 3,900,000 3,891,873 3,406,639 Balloon
CA 92027 Multifamily 3,760,000 3,743,023 3,260,514 Balloon
IL 61820 Multifamily
IL 61801 Multifamily
Multifamily 3,740,000 3,725,019 3,225,092 Balloon
NC 28216 Multifamily 3,500,000 3,489,958 3,042,079 Balloon
CA 90027 Multifamily 3,500,000 3,486,381 3,028,075 Balloon
TX 75043 Multifamily 3,440,000 3,424,371 2,745,779 Balloon
GA 30341 Multifamily 3,426,000 3,402,817 3,013,520 Balloon
CA 90034 Multifamily 3,350,000 3,347,984 2,935,655 Balloon
FL 33139 Multifamily 3,200,000 3,182,062 2,570,873 Balloon
CA 92037 Multifamily 3,160,000 3,152,249 2,787,970 Balloon
MA 02347 Multifamily 3,106,000 3,097,551 2,713,995 Balloon
<CAPTION>
ADMINI-
STRATIVE SUB- NET FIRST INTEREST
MORTGAGE FEE SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
RATE RATE(I) FEE RATE RATE DATE DATE METHOD
- -------- -------- --------- -------- ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
7.251% 0.093% 0.050% 7.158% 12/14/1998 02/01/1999 Actual/360
7.251% 0.093% 0.050% 7.158% 12/14/1998 02/01/1999 Actual/360
7.515% 0.093% 0.050% 7.422% 10/09/1997 12/01/1997 Actual/360
7.515% 0.093% 0.050% 7.422% 10/09/1997 12/01/1997 Actual/360
7.000% 0.143% 0.100% 6.857% 09/15/1998 11/01/1998 Actual/360
6.690% 0.143% 0.100% 6.547% 07/27/1998 10/01/1998 Actual/360
6.570% 0.143% 0.100% 6.427% 09/09/1998 11/01/1998 Actual/360
6.850% 0.143% 0.100% 6.707% 09/29/1998 11/01/1998 Actual/360
7.090% 0.143% 0.100% 6.947% 11/01/1998 11/01/1998 Actual/360
6.720% 0.143% 0.100% 6.577% 02/03/1998 04/01/1998 Actual/360
6.810% 0.143% 0.100% 6.667% 07/30/1998 09/01/1998 Actual/360
6.650% 0.143% 0.100% 6.507% 08/21/1998 10/01/1998 Actual/360
6.520% 0.143% 0.100% 6.377% 09/30/1998 11/01/1998 Actual/360
7.000% 0.143% 0.100% 6.857% 10/13/1998 12/01/1998 Actual/360
6.820% 0.143% 0.100% 6.677% 09/17/1998 11/01/1998 Actual/360
6.960% 0.143% 0.100% 6.817% 08/07/1998 10/01/1998 Actual/360
7.050% 0.143% 0.100% 6.907% 08/31/1998 10/01/1998 Actual/360
6.780% 0.143% 0.100% 6.637% 08/31/1998 10/01/1998 Actual/360
7.150% 0.143% 0.100% 7.007% 10/30/1998 12/01/1998 Actual/360
6.550% 0.143% 0.100% 6.407% 10/14/1998 12/01/1998 Actual/360
7.310% 0.143% 0.100% 7.167% 12/26/1997 02/01/1998 Actual/360
6.570% 0.143% 0.100% 6.427% 09/09/1998 11/01/1998 Actual/360
6.790% 0.143% 0.100% 6.647% 08/26/1998 10/01/1998 Actual/360
6.314% 0.143% 0.100% 6.171% 09/02/1998 11/01/1998 Actual/360
6.845% 0.143% 0.100% 6.702% 08/31/1998 10/01/1998 Actual/360
7.000% 0.143% 0.100% 6.857% 10/29/1998 12/01/1998 Actual/360
6.720% 0.143% 0.100% 6.577% 07/29/1998 09/01/1998 Actual/360
6.520% 0.143% 0.100% 6.377% 08/27/1998 10/01/1998 Actual/360
6.800% 0.143% 0.100% 6.657% 09/09/1998 11/01/1998 Actual/360
6.640% 0.143% 0.100% 6.497% 08/21/1998 10/01/1998 Actual/360
6.830% 0.143% 0.100% 6.687% 09/08/1998 11/01/1998 Actual/360
7.260% 0.103% 0.060% 7.157% 03/31/1998 05/01/1998 Actual/360
7.125% 0.143% 0.100% 6.982% 12/07/1998 02/01/1999 Actual/360
7.050% 0.143% 0.100% 6.907% 08/26/1998 10/01/1998 Actual/360
7.375% 0.143% 0.100% 7.232% 09/28/1998 11/01/1998 Actual/360
7.000% 0.143% 0.100% 6.857% 09/30/1998 11/01/1998 Actual/360
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO
MONTHLY MATURITY TERM SEASONING MATURITY
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS)
- ------- -------- ------------ --------- ---------
<S> <C> <C> <C> <C>
$300,187 120 360 1 119
124,032 120 360 1 119
203,770 120 360 15 105
184,864 120 360 15 105
73,183 120 360 4 116
64,461 120 360 5 115
52,462 120 360 4 116
44,925 120 360 4 116
43,262 113 353 4 109
40,995 120 360 11 109
35,501 120 360 6 114
34,409 120 360 5 115
33,348 120 360 4 116
34,729 120 360 3 117
33,969 120 360 4 116
33,131 120 360 5 115
31,093 120 360 5 115
29,407 120 360 5 115
30,393 180 360 3 177
28,591 120 360 3 117
30,195 180 360 13 167
27,485 120 360 4 116
27,613 120 360 5 115
27,873 120 300 4 116
26,688 120 360 5 115
25,947 120 360 3 117
24,312 120 360 6 114
23,689 120 360 5 115
22,817 120 360 4 116
22,446 120 360 5 115
23,941 120 300 4 116
23,395 120 360 10 110
22,570 120 360 1 119
22,719 120 300 5 115
21,825 120 360 4 116
20,664 120 360 4 116
<CAPTION>
CROSS- LOCKOUT
MATURITY COLLATERALIZED RELATED EXPIRATION
DATE LOANS LOANS DATE PREPAYMENT PENALTY DESCRIPTION (MONTHS)
---- ----- ----- ---- ---------------------------------------
<S> <C> <C> <C> <C>
01/01/2009 Yes(1) Yes(A) 10/01/2008 LO(117)/OPEN(3)/DEFEASANCE
01/01/2009 Yes(1) Yes(A) 10/01/2008 LO(117)/OPEN(3)/DEFEASANCE
11/01/2007 No Yes(B) 10/31/2001 LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
11/01/2007 No Yes(B) 10/31/2001 LO(48)/GRTR1%PPMTorYM(66)/OPEN(6)
10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
09/01/2008 No No 07/02/2008 LO(118)/OPEN(2)/DEFEASANCE
10/01/2008 No Yes(C) 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
10/01/2008 No No 05/31/2008 LO(115)/OPEN(5)/DEFEASANCE
03/01/2008 No No 02/28/2002 LO(41)/GRTR1%PPMTorYM(66)/OPEN(6)
03/01/2008 No Yes(D) 02/28/2002 LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
08/01/2008 No Yes(E) 04/01/2008 LO(116)/OPEN(4)/DEFEASANCE
09/01/2008 No Yes(C) 04/30/2008 LO(115)/OPEN(5)/DEFEASANCE
10/01/2008 No No 05/31/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 No No 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
10/01/2008 No No 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
09/01/2008 No No 04/30/2008 LO(115)/OPEN(5)/DEFEASANCE
09/01/2008 No No 04/30/2008 LO(115)/OPEN(5)/DEFEASANCE
09/01/2008 No No 05/01/2008 LO(116)/OPEN(4)/DEFEASANCE
11/01/2013 No No 06/30/2013 LO(175)/OPEN(5)/DEFEASANCE
11/01/2008 No No 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
01/01/2013 No No 12/31/2005 LO(95)/GRTR1%PPMTorYM(78)/OPEN(7)
10/01/2008 No Yes(C) 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
09/01/2008 No Yes(E) 05/01/2008 LO(116)/OPEN(4)/DEFEASANCE
10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
09/01/2008 No No 05/01/2008 LO(116)/OPEN(4)/DEFEASANCE
11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
08/01/2008 No No 04/01/2008 LO(116)/OPEN(4)/DEFEASANCE
09/01/2008 No Yes(C) 04/30/2008 LO(115)/OPEN(5)/DEFEASANCE
10/01/2008 No No 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
09/01/2008 No No 07/02/2008 LO(118)/OPEN(2)/DEFEASANCE
10/01/2008 No No 05/31/2008 LO(115)/OPEN(5)/DEFEASANCE
04/01/2008 No No 03/31/2002 LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)/DEFEASANCE
01/01/2009 No No 11/01/2008 LO(118)/OPEN(2)/DEFEASANCE
09/01/2008 No No 04/30/2008 LO(115)/OPEN(5)/DEFEASANCE
10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
10/01/2008 No No 05/31/2008 LO(115)/OPEN(5)/DEFEASANCE
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
CUT-OFF
DATE
SE- LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED
- ------ ------ ------------- ----- ---- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
N001 51386 Eagle Trace Apartments $ 55,000,000 10/6/98 80% 1995
N002 51385 The Breakers Apartments 23,000,000 10/5/98 79% 1989
------------
SUB-TOTAL CROSSED LOANS 78,000,000
N003 50166 La Jolla International Gardens 41,000,000 7/31/97 70% 1986
N004 50167 La Scala Apartment Villas 36,500,000 7/31/97 72% 1989
N005 51289 Park Place Apartments-Tustin CA 15,100,000 7/27/98 73% 1969
N006 51192 Lakeside Village Apartments 17,700,000 6/15/98 56% 1979
N007A 51046 L5 - Goldfarb Apartments-48 E. John St 1988
N007B 51046 L5 - Goldfarb Apartments-507 S. Fourth St 1989
N007C 51046 L5 - Goldfarb Apartments-905-907 W. Oregon 1989
N007D 51046 L5 - Goldfarb Apartments-1102 E. Colorado 1994
N007E 51046 L5 - Goldfarb Apartments-2007-2009 Philo Road 1964
N007F 51046 L5 - Goldfarb Apartments-2008-2010 Vawter 1993
N007G 51046 L5 - Goldfarb Apartments-2011 Philo Road 1964
N007 51046 L5 - Goldfarb Apartments (Roll-Up) 10,300,000 6/2/98 80%
N008 51160 Foxwood Apartments 8,570,000 8/20/98 80% 1985
N009 50563 River View Condominiums 8,050,000 9/18/97 79% 1991
N010 50668 Museum Walk Apartments 8,000,000 11/6/97 79% 1997
N011 51041 Indiana Village Apartments 6,800,000 7/1/98 80% 1982
N012A 51033 L4 - Goldfarb Apartments-57 E. Chalmers 1994
N012B 51033 L4 - Goldfarb Apartments-103 E. Chalmers 1989
N012C 51033 L4 - Goldfarb Apartments-202 E. Chalmers 1995
N012 51033 L4 - Goldfarb Apartments (Roll-Up) 6,700,000 5/20/98 80%
N013 51004 Westside Colonial Apartments 8,000,000 6/15/98 66% 1963
N014 51101 Gaylord Apartments 9,000,000 7/13/98 58% 1924/1970
N015 51056 Sheridan Square Apartments 6,600,000 6/11/98 79% 1985
N016 50894 The Courtyards Apartments 6,700,000 3/31/98 74% 1970/1992
N017 51104 Broadway & 171st 5,820,000 7/30/98 80% 1939
N018 51055 Sail Cloth Factory Apartments 5,650,000 6/11/98 80% 1888/1987
N019 51169 Horton 4th Avenue Apartments 7,400,000 8/13/98 61% 1994
N020 51093 Park Lane Apartments 5,970,000 7/6/98 75% 1986
N021 50648 Colonial Plaza Apts 5,500,000 12/4/97 79% 1972
N022A 51014 L2 - Goldfarb Apartments-106-108 E. Healy St 1967
N022B 51014 L2 - Goldfarb Apartments-303 East Green St. 1990
N022C 51014 L2 - Goldfarb Apartments-404 Clark St. 1983
N022D 51014 L2 - Goldfarb Apartments-804 West Illinois Ave. 1988
N022E 51014 L2 - Goldfarb Apartments-812 West Nevada Ave 1990
N022 51014 L2 - Goldfarb Apartments (Roll-Up) 5,500,000 6/2/98 78%
N023 51028 Innsbruck West Apartments 5,300,000 7/1/98 80% 1984
N024 51287 Hensel Garden Apartments 7,560,000 7/17/98 55% 1947
N025 51043 Sunscape Apartments 5,100,000 6/8/98 80% 1984
N026 51127 Raintree Meadows Apartments 4,750,000 8/26/98 82% 1971
N027 50986 Grand Rose Apartments 4,640,000 5/21/98 81% 1965/1997
N028A 51053 L6 - Goldfarb Apartments-52 E. Armory 1992
N028B 51053 L6 - Goldfarb Apartments-104 N. Lincoln/809 W. Stoughton 1990
N028 51053 L6 - Goldfarb Apartments (Roll-Up) 4,675,000 5/20/98 80%
N029 51077 Royal Orleans Apartments 4,575,000 7/24/98 76% 1965/1996
N030 51261 Kenmore View Apartments 4,750,000 8/14/98 73% 1988
N031 51066 Forest at Duck Creek Apartments 4,650,000 7/14/98 74% 1986
N032 50776 Terraces Apartments 4,450,000 1/2/98 77% 1968
N033 51442 Chateau DePaix 4,900,000 8/10/98 68% 1977
N034 51048 Lulav Square Apartments 4,000,000 6/18/98 80% 1925/1978
N035 51316 La Jollan Townhouse 4,800,000 8/20/98 66% 1964/1997
N036 51034 Blueberry Estates 3,940,000 5/22/98 79% 1989
<CAPTION>
LOAN
TOTAL SF/ BALANCE
UNITS/ UNIT/ NET PER
SE- LOAN ROOM/ ROOM/ RENTABLE SF/UNIT/
QUENCE NUMBER PROPERTY NAME BED BED AREA (SF) ROOM/BED
- ------ ------ ------------- -- --- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
N001 51386 Eagle Trace Apartments 984 Units 916,008 $ 44,690
N002 51385 The Breakers Apartments 400 Units 353,008 45,424
SUB-TOTAL CROSSED LOANS
N003 50166 La Jolla International Gardens 400 Units 331,184 72,015
N004 50167 La Scala Apartment Villas 354 Units 270,102 73,823
N005 51289 Park Place Apartments-Tustin CA 246 Units 213,222 44,594
N006 51192 Lakeside Village Apartments 260 Units 283,666 38,314
N007A 51046 L5 - Goldfarb Apartments-48 E. John St 28 Units 27,255
N007B 51046 L5 - Goldfarb Apartments-507 S. Fourth St 16 Units 9,702
N007C 51046 L5 - Goldfarb Apartments-905-907 W. Oregon 32 Units 21,473
N007D 51046 L5 - Goldfarb Apartments-1102 E. Colorado 48 Units 47,496
N007E 51046 L5 - Goldfarb Apartments-2007-2009 Philo Road 16 Units 11,120
N007F 51046 L5 - Goldfarb Apartments-2008-2010 Vawter 36 Units 31,724
N007G 51046 L5 - Goldfarb Apartments-2011 Philo Road 12 Units 8,966
N007 51046 L5 - Goldfarb Apartments (Roll-Up) 188 Units 157,736 43,696
N008 51160 Foxwood Apartments 272 Units 212,612 25,135
N009 50563 River View Condominiums 92 Units 90,192 69,445
N010 50668 Museum Walk Apartments 105 Units 122,667 59,870
N011 51041 Indiana Village Apartments 288 Units 213,708 18,806
N012A 51033 L4 - Goldfarb Apartments-57 E. Chalmers 20 Units 14,861
N012B 51033 L4 - Goldfarb Apartments-103 E. Chalmers 16 Units 9,511
N012C 51033 L4 - Goldfarb Apartments-202 E. Chalmers 39 Units 34,315
N012 51033 L4 - Goldfarb Apartments (Roll-Up) 75 Units 58,687 71,189
N013 51004 Westside Colonial Apartments 180 Units 126,200 29,160
N014 51101 Gaylord Apartments 190 Units 115,776 27,416
N015 51056 Sheridan Square Apartments 276 Units 190,688 18,787
N016 50894 The Courtyards Apartments 90 Units 110,597 55,356
N017 51104 Broadway & 171st 96 Units 88,200 48,267
N018 51055 Sail Cloth Factory Apartments 107 Units 71,335 42,084
N019 51169 Horton 4th Avenue Apartments 66 Units 46,849 68,045
N020 51093 Park Lane Apartments 52 Units 44,918 86,336
N021 50648 Colonial Plaza Apts 192 Units 160,184 22,707
N022A 51014 L2 - Goldfarb Apartments-106-108 E. Healy St 36 Units 27,668
N022B 51014 L2 - Goldfarb Apartments-303 East Green St. 16 Units 13,966
N022C 51014 L2 - Goldfarb Apartments-404 Clark St. 10 Units 7,110
N022D 51014 L2 - Goldfarb Apartments-804 West Illinois Ave. 28 Units 19,252
N022E 51014 L2 - Goldfarb Apartments-812 West Nevada Ave 10 Units 8,627
N022 51014 L2 - Goldfarb Apartments (Roll-Up) 100 Units 75,029 43,039
N023 51028 Innsbruck West Apartments 208 Units 144,168 20,308
N024 51287 Hensel Garden Apartments 204 Units 173,264 20,485
N025 51043 Sunscape Apartments 216 Units 149,744 18,796
N026 51127 Raintree Meadows Apartments 216 Units 139,184 18,018
N027 50986 Grand Rose Apartments 108 Units 69,480 34,658
N028A 51053 L6 - Goldfarb Apartments-52 E. Armory 52 Units 32,658
N028B 51053 L6 - Goldfarb Apartments-104 N. Lincoln/809 W. Stoughton 23 Units 19,828
N028 51053 L6 - Goldfarb Apartments (Roll-Up) 75 Units 52,486 49,667
N029 51077 Royal Orleans Apartments 147 Units 121,380 23,741
N030 51261 Kenmore View Apartments 72 Units 62,272 48,422
N031 51066 Forest at Duck Creek Apartments 130 Units 112,846 26,341
N032 50776 Terraces Apartments 140 Units 110,992 24,306
N033 51442 Chateau DePaix 62 Units 45,607 54,000
N034 51048 Lulav Square Apartments 140 Units 45,240 22,729
N035 51316 La Jollan Townhouse 60 Units 59,472 52,537
N036 51034 Blueberry Estates 68 Units 63,816 45,552
</TABLE>
<PAGE> 110
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST MOST MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT RECENT RECENT
PERCENT DATE REVENUES REVENUES NOI DSCR RESERVES PER UNIT DATE REVENUES EXPENSES NOI
- -------- ---- -------- -------- --- ---- -------- -------- ---- -------- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
94% 11/12/98 $7,401,793 $2,440,502 $4,961,291 1.38 $276,504 $281.00 12/31/97 $7,116,319 $2,106,727 $5,009,592
95% 11/30/98 3,086,730 1,116,917 1,969,813 1.32 109,200 273.00 12/31/97 2,850,603 950,816 1,899,787
99% 09/30/98 4,432,741 1,307,801 3,124,940 1.28 61,200 153.00 12/31/97 4,270,822 1,489,062 2,781,760
99% 09/30/98 4,062,031 1,254,712 2,807,319 1.27 54,162 153.00 12/31/97 3,875,921 1,409,862 2,466,059
94% 08/01/98 2,141,917 774,696 1,367,221 1.56 70,836 287.95 12/31/97 1,923,419 689,810 1,233,609
92% 06/30/98 2,190,566 857,916 1,332,650 1.72 64,760 249.08 12/31/97 2,079,672 769,204 1,310,468
100% 07/31/98
100% 07/31/98
91% 07/31/98
98% 07/31/98
63% 07/31/98
100% 07/31/98
58% 07/31/98
1,476,831 566,920 909,911 1.45 100,620 535.21 12/31/97 1,421,063 513,850 907,213
95% 08/19/98 1,501,396 755,593 745,803 1.38 68,000 250.00 12/31/97 1,490,917 696,181 794,736
98% 06/23/98 1,121,760 456,441 665,319 1.28 18,676 203.00 12/31/97 1,103,223 409,623 693,600
97% 06/01/98 1,011,309 344,988 666,321 1.35 31,500 300.00 12/31/97 432,655 90,456 342,199
85% 06/26/98 1,310,716 648,929 661,787 1.55 86,400 300.00 12/31/97 1,298,231 582,785 715,446
100% 07/31/98
100% 07/31/98
100% 07/31/98
843,212 220,988 622,224 1.51 40,441 539.21 12/31/97 852,356 188,081 664,275
99% 09/03/98 1,413,438 741,650 671,788 1.68 27,000 150.00 12/31/97 1,367,326 697,820 669,506
98% 06/11/98 1,374,627 766,505 608,122 1.46 45,410 239.00 12/31/97 1,398,737 723,644 675,093
93% 08/21/98 1,236,498 656,619 579,879 1.42 62,100 225.00 12/31/97 1,291,026 645,387 645,639
99% 03/24/98 1,385,563 778,183 607,380 1.53 77,910 865.67 12/31/97 1,373,510 849,696 523,814
99% 09/01/98 966,393 477,992 488,401 1.31 21,000 218.75 12/31/97 1,003,922 871,928 131,994
93% 06/30/98 970,542 473,984 496,558 1.41 32,100 300.00 12/31/97 980,066 473,622 506,444
97% 08/25/98 776,033 305,068 470,965 1.29 14,520 220.00 12/31/97 731,184 279,121 452,063
98% 06/01/98 655,794 219,286 436,508 1.27 14,560 280.00 12/31/97 616,080 184,860 431,220
99% 09/30/98 936,571 432,094 504,477 1.39 47,424 247.00 12/31/97 891,786 415,501 476,285
92% 05/01/98
100% 05/01/98
90% 05/01/98
96% 05/01/98
100% 05/01/98
774,809 308,926 465,883 1.41 52,382 523.82 12/31/97 762,753 264,604 498,149
88% 06/29/98 1,012,098 512,074 500,024 1.51 62,400 300.00 12/31/97 1,005,191 438,763 566,428
98% 08/28/98 1,268,911 538,896 730,015 2.18 60,180 295.00 12/31/97 1,333,699 493,071 840,628
95% 07/29/98 1,191,172 669,711 521,461 1.63 38,880 180.00 12/31/97 1,144,082 626,337 517,745
98% 09/17/98 819,745 365,113 454,632 1.46 43,200 200.00 12/31/97 823,258 344,444 478,814
100% 09/30/98 666,058 279,697 386,361 1.32 21,600 200.00 12/31/97 622,556 266,221 356,335
98% 07/31/98
96% 07/31/98
642,946 236,541 406,405 1.43 38,587 514.49 12/31/97 660,340 175,542 484,798
97% 06/18/98 706,506 317,096 389,410 1.42 36,750 250.00 12/31/97 696,643 306,665 389,978
100% 07/31/98 599,715 245,044 354,671 1.32 16,470 228.75 12/31/97 602,133 233,887 368,246
94% 06/30/98 834,390 428,448 405,942 1.41 29,640 228.00 03/31/98 821,481 389,902 431,579
99% 08/12/98 835,022 432,393 402,629 1.43 49,000 350.00 12/31/97 838,108 474,114 363,994
100% 10/03/98 567,287 187,461 379,826 1.40 13,352 215.35 12/31/97 544,634 148,942 395,692
99% 07/01/98 759,696 380,322 379,374 1.39 35,000 250.00 12/31/97 828,140 357,184 470,956
100% 09/01/98 558,910 216,485 342,425 1.31 13,602 226.70 12/31/97 548,161 261,445 286,716
99% 09/24/98 502,284 177,256 325,028 1.31 15,028 221.00 12/31/97 509,754 132,791 376,963
<CAPTION>
2ND
MOST MOST
RECENT RECENT
NOI END
DSCR DATE
---- ----
<S> <C>
1.39 12/31/96
1.28 12/31/96
1.14 12/31/96
1.11 12/31/96
1.40 12/31/96
1.69 12/31/96
1.44 12/31/96
1.47 12/31/96
1.34 12/31/96
1.67
1.68 12/31/96
1.61 12/31/96
1.67 12/31/96
1.62 12/31/96
1.58 12/31/96
1.32 12/31/96
0.35 12/31/96
1.44 12/31/96
1.24 12/31/96
1.26 12/31/96
1.31 12/31/96
1.51 12/31/96
1.71 12/31/96
2.51 12/31/96
1.62 12/31/96
1.54 12/31/96
1.22 12/31/96
1.71 12/31/96
1.42 12/31/96
1.37 12/31/96
1.50 3/31/97
1.30 12/31/96
1.46 12/31/96
1.73 12/31/96
1.09 12/31/96
1.52 12/31/96
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
SECOND SECOND
2nd LARGEST LARGEST SECOND LARGEST LARGEST
2nd 2nd 2nd MOST LARGEST TENANT TENANT LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA- SECOND LARGEST LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION TENANT SF SF TION
-------- -------- --- ---- -------------- -- -- ---- ------ -- -- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$6,720,209 $1,968,769 $4,751,440 1.32
2,774,820 959,422 1,815,398 1.22
3,841,344 1,246,388 2,594,956 1.06
3,628,711 1,222,743 2,405,968 1.08
1,880,816 660,868 1,219,948 1.39
2,249,970 759,849 1,490,121 1.93
1,554,955 516,640 1,038,315 1.65
1,500,196 654,660 845,536 1.57
1,065,605 348,480 717,125 1.38
1,305,253 524,886 780,367 1.83
829,944 166,534 663,410 1.61
1,153,579 679,839 473,740 1.18
1,282,005 701,848 580,157 1.39 Bounty Restaurant 2,000 2% 11/1/99 Optical Store 2,000 2% 12/31/03
1,210,946 684,730 526,216 1.29
1,260,655 695,714 564,941 1.42
965,963 828,837 137,126 0.37 J&J Pharmacy 1,350 2% 7/31/04 Jose Diaz 1,350 2% 6/30/10
943,895 454,563 489,332 1.39
657,859 255,853 402,006 1.10
616,750 175,270 441,480 1.29
841,905 406,287 435,618 1.20
766,416 257,437 508,979 1.54
1,003,806 472,206 531,600 1.60
1,256,693 523,229 733,464 2.19
1,149,087 588,437 560,650 1.75
789,467 317,974 471,493 1.51
469,844 277,248 192,596 0.66
518,098 148,631 369,467 1.30
663,663 324,315 339,348 1.24
543,965 219,630 324,335 1.20
791,410 396,280 395,130 1.38
779,332 482,170 297,162 1.06
473,929 146,101 327,828 1.21
829,485 323,794 505,691 1.85
527,861 424,313 103,548 0.40
477,701 127,728 349,973 1.41
</TABLE>
<PAGE> 112
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS
------ ------ ------------- ----------------
<S> <C> <C> <C>
N037A 51027 L3 - Goldfarb Apartments-301 E. Chalmers St. 301 E. Chalmers St.
N037B 51027 L3 - Goldfarb Apartments-506 S. Fourth St. 506 S. Fourth St.
N037C 51027 L3 - Goldfarb Apartments-506 W. Elm St. 506 W. Elm St.
N037 51027 L3 - Goldfarb Apartments (Roll-Up)
N038 51221 Chaumont Villas 1600 West Broadway
N039 51297 Stadium Terrace Apartments 1960 N Canyon St.
N040 50935 Barrington Apartments 607 Moody Road
N041 51065 Ambassador East Apartments 8911 Northeastern Blvd. NE
N042A 51035 L7 - Goldfarb Apartments-105 N. Busey 105 N. Busey
N042B 51035 L7 - Goldfarb Apartments-809-813 W. Springfield 809-813 W. Springfield
N042 51035 L7 - Goldfarb Apartments (Roll-Up)
N043 50099 300 Carpenter Apartments 300 Carpenter Dr.
N044 50969 Eastwyck Village Apartments 1201 Edenham Court
N045 51075 L10 - Goldfarb Apartments 306-410 E. Michigan Ave
N046 51299 Broadway Manor 1051 Broadway
N047 50937 Belle Terrace Apartments 1-2 Dark Hollow Road and 3-8 Presidents Drive
N048 50888 Northpark Village Apts 3502 Newman Road
N049 51096 Aspen Circle Apartments 3717 East San Miguel Street
N050 51348 Barrington Apartments 2449 S. Barrington Ave.
N051 50852 Windover Woods Apartments 2605 Columbia Blvd
N052 51354 Colter Meadows Apartments 3010 West Colter St.
N053 51038 Le Tournesol Apartments 2640 Portage Bay Ave
N054 50331 Crosswinds West Apartments 5525 Southwest 41st Street
N055 51042 Westside Apartments 89th St.
N056 51215 Orion Garden Apartments 8414 Orion Ave.
N057 51198 Beverly Plaza Apartments 3655-3739 Beverly Ave. NE
N058 51251 947 Bush Street 947 Bush St.
N059 51294 Grace Manor Apartments 3323 SW Multnomah Blvd.
N060 51281 Casa Del Campbell Apartments 2525-2529 West Campbell Ave.
N061 51086 Glen Garden Apartments 316-330 Glen Ave. & Memorial Plaza
N062 51076 1636 Lexington Avenue Apartments 1636-1648 Lexington Ave
N063 51245 Silver Ridge Apartments 1230 E. 38 1/2 Street
N064 51036 L9 - Goldfarb Apartments 105 S. Wright
N065 50904 College View Apartments 1105 Northwest 3rd Ave
N066 51322 Justin Court Apartments 156 Warner Milne Rd.
N067 51124 270 East 10th St. Apartments 270 East 10th Street
N068 51320 Bostonia Townhomes 1234 & 1242 North 1st St.
N069 50336 The Park At Westridge Apartments 11809 East 83rd Street
N070 51246 Wilshire Occidental Apartments 415 South Occidental Blvd
N071 51173 Raintree Apartments 1200 W. McGaffey St.
N072 50509 Oxnard Villa Apartments 13115-13129 Oxnard Street
N073 50853 Greentree Apts 6405 N.E. Hazel Dell Ave
N074 51303 Sun Valley Apartments 12440 N. 113th Ave.
N075 51190 Apache Manor Apartments 3817 Macalaster Dr. NE
N076 51202 Campus Village Apartments 263 N Chorro St.
N077 51372 Casa de Porter Apartments 512 N Porter St.
N078 51357 Cote D'Azur Apartments 11117 Hartsook Street
N079 51189 Avon Street Apartments 33, 39 and 45 Avon Street South
N080 50788 2474 Valentine Avenue Apartments 2474 Valentine Avenue
N081 51248 Woodside Apartments 2930 North 52nd St.
N082 51271 1407-1415 W. Sherwin Ave. Apts. 1407-1415 W. Sherwin Ave.
N083 51302 Summit Avenue Apartments 901-909 Summit Ave.
N084 51325 Napa Broadway Apartments 5410 Broadway
N085 51390 Croftwood Apartments 1005 Craycroft Road
N086 51319 Charles Avenue Apartments 1958, 1604, & 1618 Charles Ave.
N087 51425 Sheila Gardens 200 Sheila Court
N088 51224 Pillsbury Manor 2435 Pillsbury Ave.
N089 51123 522 East 6th St. Apartments 522 East 6th Street
<CAPTION>
COUNTY CITY
------ ----
<S> <C>
Champaign Campaign
Champaign Champaign
Champaign Urbana
Orange Anaheim
Utah Provo
Putnam Palatka
Bernalillo Albuquerque
Champaign Urbana
Champaign Urbana
Fulton Sandy Springs
City Virginia Beach
Champaign Urbana
San Mateo Millbrae
Suffolk Port Jefferson
Jasper Joplin
El Paso Colorado Springs
Los Angeles Los Angeles
Brevard Titusville
Maricopa Phoenix
Yolo Davis
Broward Pembroke Park
New York New York
Los Angeles Van Nuys
Marion Salem
San Francisco San Francisco
Multnomah Portland
Maricopa Phoenix
Wicomico Salisbury
New York New York
Travis Austin
Champaign Champaign
Alachua Gainesville
Clackamas Oregon City
New York New York
San Diego El Cajon
Jackson Raytown
Los Angeles Los Angeles
Chaves Roswell
Los Angeles Van Nuys
Clark Vancouver
Maricopa Youngtown
Ramsey St. Anthony
San Luis Obispo San Luis Obispo
Orange Santa Ana
Los Angeles North Hollywood
Ramsey St. Paul
Bronx Bronx
Maricopa Phoenix
Cook Chicago
Hennepin Minneapolis
Alameda Oakland
Pima Tucson
Ramsey St. Paul
Stanislaus Modesto
Hennepin Minneapolis
New York New York
</TABLE>
<PAGE> 113
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE
----- ---- ---- ------- ------- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
IL 61820 Multifamily
IL 61820 Multifamily
IL 61801 Multifamily
Multifamily $ 3,007,200 $ 2,995,527 $ 2,602,430 Balloon 6.650%
CA 92802 Multifamily 3,000,000 2,987,059 2,614,043 Balloon 6.900%
UT 84604 Multifamily 2,944,000 2,935,991 2,572,441 Balloon 7.000%
FL 32177 Multifamily 2,920,000 2,907,404 2,544,336 Balloon 6.900%
NM 87112 Multifamily 2,900,000 2,879,266 1,214,998 Balloon 7.010%
IL 61801 Multifamily
IL 61801 Multifamily
Multifamily 2,772,000 2,760,896 2,390,363 Balloon 6.520%
GA 30328 Multifamily 2,772,000 2,745,422 2,505,641 Balloon 8.410%
VA 23464 Multifamily 2,600,000 2,590,175 2,256,742 Balloon 6.760%
IL 61801 Multifamily 2,560,000 2,552,203 2,211,210 Balloon 6.570%
CA 94030 Multifamily 2,500,000 2,493,426 2,191,615 Balloon 7.125%
NY 11777 Multifamily 2,500,000 2,488,796 1,999,844 Balloon 6.900%
MO 64801 Multifamily 2,329,160 2,319,520 1,791,853 Balloon 7.060%
CO 80909 Multifamily 2,325,000 2,318,794 1,980,408 Balloon 6.610%
CA 90064 Multifamily 2,250,000 2,245,311 1,965,368 Balloon 7.000%
FL 32780 Multifamily 2,250,000 2,241,726 1,958,700 Balloon 6.870%
AZ 85017 Multifamily 2,200,000 2,195,416 1,921,695 Balloon 7.000%
CA 95616 Multifamily 2,200,000 2,192,129 1,920,745 Balloon 6.980%
FL 33023 Multifamily 2,136,000 2,115,947 1,696,991 Balloon 7.810%
NY 10023 Multifamily 2,100,000 2,090,159 1,667,773 Balloon 6.670%
CA 91406 Multifamily 2,000,000 1,991,858 1,752,911 Balloon 7.123%
OR 97305 Multifamily 1,975,000 1,966,856 1,728,799 Balloon 7.074%
CA 94109 Multifamily 1,950,000 1,942,456 1,688,172 Balloon 6.664%
OR 97219 Multifamily 1,875,000 1,869,899 1,638,359 Balloon 7.000%
AZ 85017 Multifamily 1,840,000 1,834,194 1,583,202 Balloon 6.431%
MD 21804 Multifamily 1,800,000 1,792,168 1,446,588 Balloon 7.050%
NY 10029 Multifamily 1,788,000 1,784,741 1,581,862 Balloon 7.500%
TX 78722 Multifamily 1,720,000 1,713,750 1,499,223 Balloon 6.918%
IL 61820 Multifamily 1,680,000 1,673,270 1,448,705 Balloon 6.520%
FL 32604 Multifamily 1,644,000 1,633,041 1,321,008 Balloon 7.050%
OR 97045 Multifamily 1,630,500 1,627,102 1,424,237 Balloon 7.000%
NY 10009 Multifamily 1,600,000 1,596,879 1,406,657 Balloon 7.250%
CA 92021 Multifamily 1,600,000 1,595,787 1,402,451 Balloon 7.120%
MO 64138 Multifamily 1,560,000 1,543,683 1,375,285 Balloon 7.370%
CA 90057 Multifamily 1,500,000 1,494,386 1,303,329 Balloon 6.799%
NM 88201 Multifamily 1,450,000 1,448,649 1,180,749 Balloon 7.500%
CA 91401 Multifamily 1,432,000 1,418,795 1,259,528 Balloon 7.280%
WA 98665 Multifamily 1,420,000 1,412,101 1,243,863 Balloon 7.100%
AZ 85363 Multifamily 1,400,000 1,396,192 1,223,309 Balloon 7.000%
MN 55421 Multifamily 1,308,000 1,305,379 1,146,997 Balloon 7.150%
CA 93405 Multifamily 1,300,000 1,292,053 1,058,667 Balloon 7.493%
CA 92701 Multifamily 1,200,000 1,198,715 1,062,008 Balloon 7.500%
CA 91601 Multifamily 1,160,000 1,157,583 1,013,257 Balloon 7.000%
MN 55105 Multifamily 1,144,000 1,141,616 999,281 Balloon 7.000%
NY 10458 Multifamily 1,098,000 1,095,401 971,773 Balloon 7.500%
AZ 85018 Multifamily 1,012,500 1,008,795 881,882 Balloon 6.890%
IL 60626 Multifamily 1,000,000 996,295 869,838 Balloon 6.840%
MN 55403 Multifamily 1,000,000 995,606 802,423 Balloon 7.000%
CA 94618 Multifamily 995,000 993,186 880,287 Balloon 7.500%
AZ 85711 Multifamily 862,500 861,689 770,428 Balloon 7.880%
MN 55104 Multifamily 860,000 856,405 695,380 Balloon 7.250%
CA 95350 Multifamily 800,000 799,280 654,330 Balloon 7.650%
MN 55404 Multifamily 800,000 795,261 654,513 Balloon 7.650%
NY 10009 Multifamily 750,000 748,537 659,371 Balloon 7.250%
<CAPTION>
ADMINI-
STRATIVE SUB- NET FIRST INTEREST
FEE SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
RATE (I) FEE RATE RATE DATE DATE METHOD
-------- -------- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
0.143% 0.100% 6.507% 08/21/1998 10/01/1998 Actual/360
0.143% 0.100% 6.757% 07/29/1998 09/01/1998 Actual/360
0.143% 0.100% 6.857% 09/17/1998 11/01/1998 Actual/360
0.143% 0.100% 6.757% 07/30/1998 09/01/1998 Actual/360
0.143% 0.100% 6.867% 09/08/1998 11/01/1998 Actual/360
0.143% 0.100% 6.377% 08/27/1998 10/01/1998 Actual/360
0.143% 0.100% 8.267% 07/15/1997 09/01/1997 Actual/360
0.143% 0.100% 6.617% 08/10/1998 10/01/1998 Actual/360
0.143% 0.100% 6.427% 09/09/1998 11/01/1998 Actual/360
0.143% 0.100% 6.982% 09/23/1998 11/01/1998 Actual/360
0.143% 0.100% 6.757% 09/16/1998 11/01/1998 Actual/360
0.143% 0.100% 6.917% 07/31/1998 09/01/1998 Actual/360
0.143% 0.100% 6.467% 10/23/1998 12/01/1998 30/360
0.143% 0.100% 6.857% 09/25/1998 12/01/1998 Actual/360
0.143% 0.100% 6.727% 08/05/1998 10/01/1998 Actual/360
0.143% 0.100% 6.857% 10/15/1998 12/01/1998 Actual/360
0.143% 0.100% 6.837% 08/28/1998 10/01/1998 Actual/360
0.143% 0.100% 7.667% 10/20/1997 12/01/1997 Actual/360
0.143% 0.100% 6.527% 09/08/1998 11/01/1998 Actual/360
0.143% 0.100% 6.980% 07/24/1998 09/01/1998 Actual/360
0.143% 0.100% 6.931% 07/20/1998 09/01/1998 Actual/360
0.143% 0.100% 6.521% 08/26/1998 10/01/1998 Actual/360
0.143% 0.100% 6.857% 09/15/1998 11/01/1998 Actual/360
0.143% 0.100% 6.288% 08/31/1998 11/01/1998 Actual/360
0.143% 0.100% 6.907% 09/15/1998 11/01/1998 Actual/360
0.143% 0.100% 7.357% 10/05/1998 12/01/1998 Actual/360
0.143% 0.100% 6.775% 08/19/1998 10/01/1998 Actual/360
0.143% 0.100% 6.377% 08/27/1998 10/01/1998 Actual/360
0.143% 0.100% 6.907% 07/21/1998 09/01/1998 Actual/360
0.143% 0.100% 6.857% 09/24/1998 12/01/1998 Actual/360
0.143% 0.100% 7.107% 10/29/1998 12/01/1998 Actual/360
0.143% 0.100% 6.977% 09/28/1998 11/01/1998 Actual/360
0.118% 0.075% 7.252% 10/30/1997 12/01/1997 Actual/360
0.143% 0.100% 6.656% 08/20/1998 10/01/1998 Actual/360
0.143% 0.100% 7.357% 12/02/1998 02/01/1999 Actual/360
0.143% 0.100% 7.137% 12/11/1997 02/01/1998 Actual/360
0.143% 0.100% 6.957% 05/21/1998 07/01/1998 Actual/360
0.143% 0.100% 6.857% 09/21/1998 11/01/1998 Actual/360
0.143% 0.100% 7.007% 09/25/1998 12/01/1998 Actual/360
0.143% 0.100% 7.350% 07/20/1998 09/01/1998 Actual/360
0.143% 0.100% 7.357% 11/02/1998 01/01/1999 Actual/360
0.143% 0.100% 6.857% 10/07/1998 12/01/1998 Actual/360
0.143% 0.100% 6.857% 09/25/1998 12/01/1998 Actual/360
0.143% 0.100% 7.357% 09/18/1998 11/01/1998 Actual/360
0.143% 0.100% 6.747% 08/24/1998 10/01/1998 Actual/360
0.143% 0.100% 6.697% 08/26/1998 10/01/1998 Actual/360
0.143% 0.100% 6.857% 09/11/1998 11/01/1998 Actual/360
0.143% 0.100% 7.357% 10/20/1998 12/01/1998 Actual/360
0.143% 0.100% 7.737% 11/19/1998 01/01/1999 Actual/360
0.143% 0.100% 7.107% 09/23/1998 11/01/1998 Actual/360
0.143% 0.100% 7.507% 10/15/1998 02/01/1999 Actual/360
0.143% 0.100% 7.507% 07/21/1998 09/01/1998 Actual/360
0.293% 0.250% 6.957% 10/29/1998 12/01/1998 Actual/360
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS)(MONTHS) DATE
- ------- ------ ----------- ------ ------ ---
<S> <C> <C> <C> <C> <C>
$ 19,305 120 360 5 115 9/1/08
19,758 120 360 6 114 8/1/08
19,587 120 360 4 116 10/1/08
19,231 120 360 6 114 8/1/08
22,501 180 240 4 176 10/1/13
17,557 120 360 5 115 9/1/08
21,138 120 360 18 102 8/1/07
16,881 120 360 5 115 9/1/08
16,299 120 360 4 116 10/1/08
16,843 120 360 4 116 10/1/08
17,510 120 300 4 116 10/1/08
15,590 180 360 6 174 8/1/13
14,864 120 360 3 117 11/1/08
14,969 120 360 3 117 11/1/08
14,773 120 360 5 115 9/1/08
14,637 120 360 3 117 11/1/12
14,607 120 360 5 115 9/1/08
15,391 180 360 15 165 11/1/12
14,403 120 300 4 116 10/1/08
13,472 120 360 6 114 8/1/08
13,238 120 360 6 114 8/1/08
12,536 120 360 5 115 9/1/08
12,474 120 360 4 116 10/1/08
11,547 120 360 4 116 10/1/08
12,780 120 300 4 116 10/1/08
12,502 120 360 3 117 11/1/08
11,349 120 360 5 115 9/1/08
10,641 120 360 5 115 9/1/08
11,672 120 300 6 114 8/1/08
10,848 120 360 3 117 11/1/08
10,915 120 360 3 117 11/1/08
10,774 120 360 4 116 10/1/08
10,769 120 360 15 105 11/1/07
9,778 120 360 5 115 9/1/08
10,715 120 300 1 119 1/1/09
9,798 120 360 13 107 1/1/08
9,543 120 360 8 112 6/1/08
9,314 120 360 4 116 10/1/08
8,834 120 360 3 117 11/1/08
9,601 120 300 6 114 8/1/08
8,391 120 360 2 118 12/1/08
7,718 120 360 3 117 11/1/08
7,611 120 360 3 117 11/1/08
7,677 120 360 4 116 10/1/08
6,662 120 360 5 115 9/1/08
6,546 120 360 5 115 9/1/08
7,068 120 300 4 116 10/1/08
6,957 120 360 3 117 11/1/08
6,257 120 360 2 118 12/1/08
6,216 120 300 4 116 10/1/08
5,990 120 300 1 119 1/1/09
5,990 120 300 6 114 8/1/08
5,116 120 360 3 117 11/1/08
<CAPTION>
CROSS-
COLLATER- LOCKOUT
ALIZED RELATED EXPIRATION PREPAYMENT PENALTY
LOANS LOANS DATE DESCRIPTION (MONTHS)
-------- ------- ---------- --------------------------------------
<S> <C> <C> <C>
No Yes(C) 4/30/08 LO(115)/OPEN(5)/DEFEASANCE
No No 6/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(D) 3/31/08 LO(115)/OPEN(5)/DEFEASANCE
No 6/1/13 LO(176)/OPEN(4)/DEFEASANCE
No Yes(C) 4/30/08 LO(115)/OPEN(5)/DEFEASANCE
No No 7/31/01 LO(48)/GRTR 1%PPMT OR YM(66)/OPEN
No No 4/30/08 LO(115)/OPEN(5)/DEFEASANCE
No Yes(C) 6/1/08 LO(116)/OPEN(4)/DEFEASANCE
No No 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 5/31/08 LO(115)/OPEN(5)/DEFEASANCE
No No 3/31/13 LO(175)/OPEN(5)/DEFEASANCE
No No 6/30/08 LO(115)/OPEN(5)/DEFEASANCE
No No 9/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 4/30/08 LO(115)/OPEN(5)/DEFEASANCE
No No 9/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 4/30/08 LO(115)/OPEN(5)/DEFEASANCE
No No 10/31/05 LO(96)/GRTR 1% PPMT OR YM(78)/OPEN(6)
No No 5/31/08 LO(115)/OPEN(5)/DEFEASANCE
No Yes(F) 6/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 6/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 7/2/08 LO(118)/OPEN(2)/DEFEASANCE
No No 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 5/31/08 LO(115)/OPEN(2)/DEFEASANCE
No No 6/30/08 LO(115)/OPEN(5)/DEFEASANCE
No No 7/2/08 LO(118)/OPEN(5)/DEFEASANCE
No Yes(C) 4/30/08 LO(115)/OPEN(2)/DEFEASANCE
No Yes(D) 3/31/08 LO(115)/OPEN(5)/DEFEASANCE
No No 9/1/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(G) 7/1/08 LO(116)/OPEN(4)/DEFEASANCE
No No 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 10/31/01 LO(48)/GRTR 1% PPMT OR YM(60)/OPEN(12)
No No 7/2/98 LO(118)/OPEN(2)/DEFEASANCE
No No 10/1/08 LO(117)/OPEN(3)/DEFEASANCE
No No 12/31/01 LO(48)/GRTR 1% PPMT OR YM (66)/OPEN(6)/DEFEASANCE
No No 5/31/02 LO(47)/GRTR 1% PPMT OR YM (66)/OPEN(7)/DEFEASANCE
No No 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(H) 8/2/08 LO(117)/OPEN(3)/DEFEASANCE
No No 6/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 10/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 9/1/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(H) 8/2/08 LO(117)/OPEN(3)/DEFEASANCE
No No 5/31/08 LO(115)/OPEN(5)/DEFEASANCE
No No 7/2/08 LO(118)/OPEN(2)/DEFEASANCE
No No 7/2/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(H) 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 9/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 10/1/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(H) 8/1/08 LO(118)/OPEN(2)/DEFEASANCE
No No 11/1/09 LO(118)/OPEN(2)/DEFEASANCE
No No 6/1/08 LO(118)/OPEN(2)/DEFEASANCE
No Yes(G) 7/1/08 LO(116)/OPEN(4)/DEFEASANCE
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
CUT-OFF TOTAL
DATE UNITS/
LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/ ROOM/
SEQUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED
- -------- ------ ------------- ----- ---- ------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
N037A 51027 L3 - Goldfarb Apartments-301 E. Chalmers St. 1997 17
N037B 51027 L3 - Goldfarb Apartments-506 S. Fourth St. 1984 24
N037C 51027 L3 - Goldfarb Apartments-506 W. Elm St. 1985 11
N037 51027 L3 - Goldfarb Apartments (Roll-Up) $3,970,000 06/04/98 76% 52
N038 51221 Chaumont Villas 4,400,000 07/10/98 68% 1961 60
N039 51297 Stadium Terrace Apartments 3,680,000 07/31/98 80% 1970 44
N040 50935 Barrington Apartments 3,675,000 04/28/98 79% 1985 104
N041 51065 Ambassador East Apartments 4,200,000 07/14/98 69% 1963 118
N042A 51035 L7 - Goldfarb Apartments-105 N. Busey 1986 26
N042B 51035 L7 - Goldfarb Apartments-809-813 W. Springfield 1986 34
N042 51035 L7 - Goldfarb Apartments (Roll-Up) 3,465,000 04/24/98 80% 60
N043 50099 300 Carpenter Apartments 3,585,000 10/01/97 77% 1964 102
N044 50969 Eastwyck Village Apartments 4,680,000 06/04/98 55% 1994 96
N045 51075 L10 - Goldfarb Apartments 3,200,000 06/02/98 80% 1971 96
N046 51299 Broadway Manor 3,800,000 08/05/98 66% 1987 41
N047 50937 Belle Terrace Apartments 3,500,000 04/27/98 71% 1960 64
N048 50888 Northpark Village Apts 3,100,000 02/04/98 75% 1996 120
N049 51096 Aspen Circle Apartments 3,400,000 06/24/98 68% 1971 105
N050 51348 Barrington Apartments 3,100,000 08/12/98 72% 1986 33
N051 50852 Windover Woods Apartments 3,150,000 11/26/97 71% 1984 128
N052 51354 Colter Meadows Apartments 2,925,000 09/03/98 75% 1986 71
N053 51038 Le Tournesol Apartments 3,250,000 07/03/98 68% 1981 45
N054 50331 Crosswinds West Apartments 2,670,000 08/18/97 79% 1976/1996 81
N055 51042 Westside Apartments 3,100,000 06/23/98 67% 1926/1970 45
N056 51215 Orion Garden Apartments 2,900,000 06/11/98 69% 1977 130
N057 51198 Beverly Plaza Apartments 2,680,000 06/15/98 73% 1993 60
N058 51251 947 Bush Street 3,225,000 07/13/98 60% 1909 53
N059 51294 Grace Manor Apartments 2,490,000 08/11/98 75% 1967 58
N060 51281 Casa Del Campbell Apartments 2,480,000 07/03/98 74% 1971/1980 121
N061 51086 Glen Garden Apartments 2,400,000 07/09/98 75% 1966 88
N062 51076 1636 Lexington Avenue Apartments 2,430,000 05/05/98 73% 1934 47
N063 51245 Silver Ridge Apartments 2,170,000 07/09/98 79% 1969/1985 74
N064 51036 L9 - Goldfarb Apartments 2,100,000 05/12/98 80% 1997 25
N065 50904 College View Apartments 2,150,000 04/23/98 76% 1950 54
N066 51322 Justin Court Apartments 2,170,000 08/26/98 75% 1995 39
N067 51124 270 East 10th St. Apartments 2,000,000 09/08/98 80% 1900/1983 13
N068 51320 Bostonia Townhomes 2,000,000 08/07/98 80% 1991 30
N069 50336 The Park At Westridge Apartments 1,950,000 09/17/97 79% 1973 96
N070 51246 Wilshire Occidental Apartments 2,000,000 07/07/98 75% 1968 51
N071 51173 Raintree Apartments 2,100,000 06/23/98 69% 1974 73
N072 50509 Oxnard Villa Apartments 1,790,000 10/01/97 79% 1960 40
N073 50853 Greentree Apts 2,560,000 03/13/98 55% 1972/1997 67
N074 51303 Sun Valley Apartments 1,750,000 07/15/98 80% 1978/1982 70
N075 51190 Apache Manor Apartments 1,635,000 07/22/98 80% 1967 42
N076 51202 Campus Village Apartments 2,000,000 05/27/98 65% 1963 36
N077 51372 Casa de Porter Apartments 1,750,000 08/07/98 69% 1986 47
N078 51357 Cote D'Azur Apartments 1,450,000 08/20/98 80% 1987 23
N079 51189 Avon Street Apartments 1,430,000 07/22/98 80% 1902 28
N080 50788 2474 Valentine Avenue Apartments 1,660,000 05/29/98 66% 1930 55
N081 51248 Woodside Apartments 1,380,000 06/22/98 73% 1979/1995 34
N082 51271 1407-1415 W. Sherwin Ave. Apts. 1,250,000 05/08/98 80% 1919 39
N083 51302 Summit Avenue Apartments 1,260,000 07/09/98 79% 1911 34
N084 51325 Napa Broadway Apartments 1,675,000 08/15/98 59% 1962 27
N085 51390 Croftwood Apartments 1,240,000 08/17/98 70% 1978 53
N086 51319 Charles Avenue Apartments 1,075,000 07/14/98 80% 1930 45
N087 51425 Sheila Gardens 2,195,000 06/18/98 36% 1974 75
N088 51224 Pillsbury Manor 1,070,000 06/10/98 74% 1968 40
N089 51123 522 East 6th St. Apartments 950,000 09/08/98 79% 1900 10
<CAPTION>
LOAN
SF/ BALANCE
UNIT/ NET PER
ROOM/ RENTABLE SF/UNIT/
BED AREA (SF) ROOM/BED
----- --------- ---------
<C> <C> <C>
Units 12,822
Units 22,830
Units 7,883
Units 43,535 57,606
Units 62,328 49,784
Units 48,540 66,727
Units 96,200 27,956
Units 99,768 24,401
Units 18,062
Units 25,108
Units 43,170 46,015
Units 105,000 26,916
Units 85,680 26,981
Units 99,200 26,585
Units 22,867 60,815
Units 46,800 38,887
Units 86,820 19,329
Units 85,050 22,084
Units 23,225 68,040
Units 95,891 17,513
Units 77,472 30,921
Units 51,995 48,714
Units 76,862 26,123
Units 51,750 46,448
Units 69,037 15,322
Units 55,370 32,781
Units 26,401 36,650
Units 48,502 32,240
Units 102,690 15,159
Units 74,216 20,366
Units 32,650 37,973
Units 50,462 23,159
Units 20,031 66,931
Units 36,832 30,242
Units 34,074 41,721
Units 8,675 122,837
Units 30,600 53,193
Units 76,280 16,080
Units 32,348 29,302
Units 76,122 19,845
Units 44,020 35,470
Units 58,520 21,076
Units 44,500 19,946
Units 32,541 31,080
Units 19,480 35,890
Units 26,688 25,505
Units 18,576 50,330
Units 22,700 40,772
Units 38,500 19,916
Units 28,200 29,670
Units 27,524 25,546
Units 19,240 29,283
Units 17,460 36,785
Units 29,536 16,258
Units 22,085 19,031
Units 61,165 10,657
Units 31,601 19,882
Units 6,750 74,854
</TABLE>
<PAGE> 116
<TABLE>
<CAPTION>
MOST
OCCUPANCY U/W U/W RECENT MOST MOST
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES END RECENT RECENT
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT DATE REVENUES EXPENSES
- --------- -------- -------- -------- --- ---- -------- -------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100% 07/31/98
100% 07/31/98
100% 07/31/98
$502,558 $183,795 $318,763 1.38 $29,177 $561.10 12/31/97 $385,779 $145,493
100% 09/30/98 601,178 218,302 382,876 1.61 16,002 266.70 12/31/97 608,220 163,836
98% 09/01/98 528,813 198,305 330,508 1.41 16,393 372.57 04/30/98 552,008 169,131
99% 03/31/98 554,915 217,237 337,678 1.46 29,952 288.00 12/31/97 543,176 203,852
91% 07/21/98 768,020 383,496 384,524 1.42 35,677 302.35 12/31/97 746,617 344,940
100% 05/01/98
97% 05/01/98
504,967 175,646 329,321 1.56 32,301 538.35 12/31/97 503,096 123,576
86% 07/01/98 646,000 298,300 347,700 1.37 30,600 300.00 12/31/97 272,174 157,707
99% 05/01/98 617,901 323,366 294,535 1.45 24,000 250.00 12/31/97 625,095 312,807
95% 07/31/98 517,403 231,080 286,323 1.46 35,226 366.94 12/31/97 503,028 201,096
100% 06/30/98 381,910 120,349 261,561 1.29 9,887 241.15 12/31/97 380,369 81,743
98% 08/30/98 601,068 306,378 294,690 1.40 19,200 300.00 12/31/97 597,800 288,369
86% 06/30/98 472,630 227,136 245,494 1.31 21,000 175.00 12/31/97 395,722 165,922
91% 10/15/98 533,655 268,389 265,266 1.49 26,250 250.00 12/31/97 563,817 251,972
100% 09/01/98 337,692 101,567 236,125 1.31 8,250 250.00 12/31/97 355,186 91,209
98% 03/01/98 669,078 388,147 280,931 1.58 30,720 240.00 12/31/97 687,484 389,998
96% 09/01/98 487,553 210,894 276,659 1.58 23,163 326.24 12/31/97 480,357 231,093
98% 06/20/98 451,761 207,037 244,724 1.40 13,500 300.00 12/31/97 456,964 221,539
99% 08/14/98 518,145 269,754 248,391 1.34 17,145 211.67 12/31/97 493,697 255,431
100% 07/01/98 503,483 257,313 246,170 1.42 9,000 200.00 12/31/97 503,096 231,864
99% 06/30/98 610,017 334,588 275,429 1.70 32,500 250.00 12/31/97 619,679 235,699
97% 05/30/98 372,170 134,437 237,733 1.50 12,842 214.03 12/31/97 369,578 106,947
100% 07/13/98 371,316 134,681 236,635 1.57 20,061 378.51 12/31/97 358,373 124,121
98% 08/31/98 378,638 181,167 197,471 1.32 17,174 296.10 12/31/97 389,262 197,073
100% 07/01/98 543,694 288,756 254,938 1.84 33,275 275.00 12/31/97 514,905 275,836
100% 06/30/98 419,417 206,372 213,045 1.39 17,600 200.00 12/31/97 407,406 152,502
83% 07/31/98 397,908 186,776 211,132 1.41 23,500 500.00 12/31/97 381,943 195,540
91% 07/16/98 434,715 225,975 208,740 1.53 14,600 197.30 12/31/97 418,724 214,051
100% 07/31/98 259,010 78,658 180,352 1.41 12,899 515.96 12/31/97 148,616 24,027
100% 04/01/98 312,566 114,284 198,282 1.42 16,200 300.00 12/31/97 324,218 109,740
95% 08/01/98 262,087 96,070 166,017 1.28 9,796 251.18 12/31/97 249,383 72,192
100% 11/01/98 243,755 77,250 166,505 1.27 2,600 200.00 12/31/97 219,838 56,839
97% 08/31/98 253,661 77,452 176,209 1.36 7,500 250.00 12/31/97 241,156 61,936
98% 06/24/98 486,776 298,328 188,448 1.46 21,120 220.00 12/31/97 420,328 328,473
92% 06/25/98 325,640 166,172 159,468 1.36 10,200 200.00 12/31/97 316,792 162,126
97% 09/01/98 329,857 143,274 186,583 1.45 23,944 328.00 12/31/97 346,040 99,986
98% 09/30/98 281,168 122,964 158,204 1.35 11,240 281.00 12/31/97 250,308 178,556
88% 07/01/98 371,767 211,621 160,146 1.40 16,750 250.00 12/31/97 337,474 211,994
99% 08/01/98 269,061 97,911 171,150 1.53 18,668 266.69 12/31/97 277,570 77,072
100% 08/31/98 279,940 128,516 151,424 1.43 12,518 298.05 12/31/97 284,198 146,643
94% 07/16/98 229,835 67,752 162,083 1.41 9,446 262.39 12/31/97 249,240 59,712
100% 09/01/98 283,793 117,766 166,027 1.65 14,789 314.66 12/31/97 293,260 102,364
96% 10/16/98 190,403 67,343 123,060 1.33 8,618 374.70 12/31/97 207,180 46,763
99% 09/03/98 237,011 102,396 134,615 1.47 7,179 256.39 12/31/97 241,076 118,261
93% 06/30/98 322,149 187,713 134,436 1.46 19,250 350.00 12/31/97 246,312 92,919
97% 06/10/98 185,438 56,240 129,198 1.62 8,500 250.00 12/31/97 182,281 51,506
100% 02/27/98 248,382 124,468 123,914 1.58 12,832 329.03 12/31/97 218,703 119,096
100% 08/01/98 221,334 96,505 124,829 1.47 8,500 250.00 12/31/97 224,172 99,490
100% 06/30/98 210,819 75,129 135,690 1.63 5,400 200.00 12/31/97 202,061 46,493
94% 09/01/98 226,740 99,739 127,001 1.69 11,395 215.00 03/31/98 224,726 104,988
96% 07/01/98 227,262 107,539 119,723 1.61 11,250 250.00 12/31/97 226,964 114,042
92% 06/12/98 358,800 200,929 157,871 2.20 18,750 250.00 12/31/97 351,078 201,563
100% 04/30/98 244,804 142,888 101,916 1.42 10,000 250.00 12/31/97 247,144 143,360
100% 10/01/98 111,331 32,569 78,762 1.28 2,000 200.00 12/31/97 110,129 30,017
<CAPTION>
2ND
MOST MOST
MOST RECENT RECENT
RECENT NOI END
NOI DSCR DATE
------ ------ ------
<S> <S> <S>
$240,286 1.04 12/31/96
444,384 1.87 12/31/96
382,877 1.63 04/30/97
339,324 1.47 12/31/96
401,677 1.49 12/31/96
379,520 1.80 12/31/96
114,467 0.90
312,288 1.54 12/31/96
301,932 1.54 12/31/96
298,626 1.48 12/31/96
309,431 1.47 12/31/96
229,800 1.23
311,845 1.75 12/31/96
263,977 1.47 12/31/96
297,486 1.68
249,264 1.42
235,425 1.34 12/31/96
238,266 1.29
271,232 1.57 12/31/96
383,980 2.38 12/31/96
262,631 1.65 12/31/96
234,252 1.56 12/31/96
192,189 1.28 12/31/96
239,069 1.73 12/31/96
254,904 1.66 12/31/96
186,403 1.24 12/31/96
204,673 1.50
124,589 1.30
214,478 1.53 12/31/96
177,191 1.36 12/31/96
162,999 1.24 12/31/96
179,220 1.39
91,855 0.71
154,666 1.32 12/31/96
246,054 1.91 12/31/96
71,752 0.61
125,480 1.10 12/31/96
200,498 1.79 12/31/96
137,555 1.30 12/31/96
189,528 1.65 12/31/96
190,896 1.90 12/31/96
160,417 1.73 12/31/96
122,815 1.34 12/31/96
153,393 2.00
130,775 1.64 12/31/96
99,607 1.27
124,682 1.47 12/31/96
155,568 1.86 12/31/96
119,738 1.59 03/31/97
112,922 1.51 12/31/96
149,515 2.08 12/31/96
103,784 1.44 12/31/96
80,112 1.30 12/31/96
</TABLE>
<PAGE> 117
<TABLE>
<CAPTION>
SECOND SECOND
2ND LARGEST LARGEST SECOND LARGEST LARGEST
2ND 2ND 2ND MOST LARGEST TENANT TENANT LARGEST TENANT TENANT
MOST MOST MOST RECENT TENANT % OF LEASE SECOND TENANT % OF LEASE
RECENT RECENT RECENT NOI LEASED TOTAL EXPIRA- LARGEST LEASED TOTAL EXPIRA-
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF TION TENANT SF SF TION
- -------- -------- ------ ------ --------------- -------- ------ --------- -------- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <S>
$324,553 $103,330 $221,223 0.95
632,591 189,447 443,144 1.87
506,646 163,322 343,324 1.46
509,013 220,370 288,643 1.25
714,594 367,110 347,484 1.29
133,832 37,410 96,422 1.37
605,949 300,684 305,265 1.51
542,397 149,331 393,066 2.01
370,125 85,746 284,379 1.41
561,479 271,773 289,706 1.38
565,109 230,401 334,708 1.88
316,053 87,307 228,746 1.27
445,431 220,997 224,434 1.28
491,675 227,193 264,482 1.53
606,953 279,658 327,295 2.02
355,729 98,366 257,363 1.62
348,998 115,530 233,468 1.55
358,903 185,166 173,737 1.16
548,420 267,996 280,424 2.02
395,001 165,319 229,682 1.50
330,327 219,591 110,736 0.74 Sabater Grocery Store 830 3% 5/31/07 Schwade Restaurant 830 3% 4/30/02
309,744 103,734 206,010 1.47
181,866 46,118 135,748 1.04
214,150 49,374 164,776 1.26
301,395 166,831 134,564 1.15
334,944 105,133 229,811 1.79
318,826 206,741 112,085 0.98
274,183 67,410 206,773 1.85
273,642 144,131 129,511 1.22
224,459 48,399 176,060 1.53
290,661 87,011 203,650 2.02
164,205 67,968 96,237 1.04
227,722 116,322 111,400 1.22
177,631 62,122 115,509 1.44
213,386 95,394 117,992 1.39
190,926 47,770 143,156 1.71
226,234 101,548 124,686 1.66
221,944 108,799 113,145 1.52
347,495 189,704 157,791 2.20
243,287 145,288 97,999 1.36
87,877 29,465 58,412 0.95
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
- ------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N090 51336 1835-1839 Green St. Apartments 1835-1839 Green Street San Francisco San Francisco
N091 51341 Franklin Ave. Apartments 600 Franklin Ave. Hennepin Minneapolis
N092 50960 Kentwood Apartments 3000 North Kentwood Ave. Greene Springfield
N093 51343 Johnson Apartments 2244 Johnson St. NE Hennepin Minneapolis
N094 51009 Bull Creek Apartments 5001 Bull Creek Road Travis Austin
N095 51323 Bryant Avenue Apartments 2517 Bryant Ave. South Hennepin Minneapolis
N096 51347 Tamarisk Apartments 3221 North 36th Street Maricopa Phoenix
N097 51301 682 Grand Ave. Apartments 682 Grand Ave. Ramsey St. Paul
N098 51339 1967 Grand Ave. Apartments 1967 Grand Ave. Ramsey St. Paul
N099 51342 1962 Grand Ave. Apartments 1962 Grand Ave. Ramsey St. Paul
N100 51023 L1 - Goldfarb Apartments 107 E. Healy Street Champaign Champaign
N101 51318 Hennepin Ave. Apartments 2609 Hennepin Ave. Hennepin Minneapolis
N102 51419 1435-1445 E. Ft. Lowell Road 1435-1445 E. Ft. Lowell Rd. Pima Tucson
N103 51300 669 Grand Avenue Apartments 669 Grand Ave. Ramsey St. Paul
N104 50695 The Summit Shopping Center (iii) NEC of US Hwy. 280 & I-459 Jefferson Birmingham
N105 51286 San Gabriel Square 140 West Valley Blvd Los Angeles San Gabriel
N106 50883 University Center North 1405 SW 107th Ave. Miami-Dade Miami
Shopping Center
N107 50148 Salisbury Mall Jake Alexander Blvd Rowan Salisbury
& U.S. Highway 70
N108 51008 Washington Square Shopping Center S. McDowell Blvd. & E. Washington Sonoma Petaluma
N109 51010 Daniels Crossing Shopping Center 6900 Daniels Parkway Lee Fort Myers
N110 51366 Home Base Building 1900 19th Ave. SE Snohomish Everett
N111 51107 Hatcher Point Mall 2215 Memorial Dr. Ware Waycross
N112 51118 Heartland Shopping Center 2272-2375 Richmond Ave. Richmond Staten Island
N113 50990 Ashley Landing Shopping Center 1401 Sam Rittenberg Rd. Charleston Charleston
N114 51219 Towne House Plaza 9791 Adams Ave. &
19881 Brookhurst St. Orange Huntington Beach
N115 51401 Katie Reed Plaza 210 South Monarch Street Pitkin Aspen
N116 51081 Castleton Place Shopping Center 82nd St. @ Castleton Square Mall Marion Indianapolis
N117 51039 Genito Forest Shopping Center 11,000 Hull St. (US Route 360) Chesterfield Richmond
N118 50941 Village at Countryside 26210 US Highway 19 N Pinellas Clearwater
N119 51139 Landmark Plaza 14306-14308 N. Dale Mabry Hwy Hillsborough Tampa
N120 51132 Cabaret Center 25700 - 25720 US Highway 19 North Pinellas Clearwater
SUB-TOTAL CROSSED LOANS
N121 50391 Lakewest Town Center 2211-2329 Singleton Blvd. Dallas Dallas
N122 51025 New Market Crossing Shopping Center 695 Independence Blvd. Surry Mount Airy
N123 51106 Pinellas Place Shopping Center 6501 102nd Ave Pinellas Pinellas Park
N124 51074 Washington Corners Shopping Center 9910-9994 E. Washington St. Marion Indianapolis
N125 51291 Dinkydome & Starbucks 1501 University Ave. SE & 1500
Fourth Street SE Hennepin Minneapolis
N126 51087 San Luis Rey Center 73705-73745 El Paseo Riverside Palm Desert
N127 51018 Clearwater Plaza Shopping Center 1219-1293 Missouri Ave. Pinellas Clearwater
N128 51045 Washington Shoppes Shopping Center 10009-10089 E. Washington St. Marion Indianapolis
N129 51079 Castleton Village Shopping Center SEQ 82nd St. & Craig St. Marion Indianapolis
N130 50207 Church Crossing Shopping Center North Church Street and Lees
Chapel Road Guilford Greensboro
N131 51197 PetsMart Retail Building 820 Paseo Del Rey San Diego Chula Vista
N132 51001 Rainbow Shopping Center 7920-8000 SW 8th St. Miami-Dade Miami
N133 51119 Eckerds 1220 Horizon Rd. Rockwall Rockwall
N134 51147 Polo Plaza Shopping Center 9810 Two Notch Rd. Richland Columbia
N135 50499 Sears Plaza 290 Elliot Street Middlesex Ashland
N136 51253 La Verne Town Center North 2445-2497 Foothill Blvd Los Angeles La Verne
N137 51134 Goldmine Village Shopping Center 300 and 400 Wal-Mart Way Lumpkin Dahlonega
N138 50975 Brentwood Plaza 1 Brent Lane Escambia Pensacola
N139 51220 Willow Pass Center 1657 Willow Pass Rd Contra Costa Concord
N140 51090 Brickyard Shopping Center 9940 Two Notch Road Richland Columbia
N141 51263 Central Plaza 11629 - 11655 Valley Blvd Los Angeles El Monte
N142 51349 Roosevelt Place Shopping Center 2237-2269 Colorado Boulevard Los Angeles Pasadena
N143 51116 Lancaster Triangle 42158-43271 15th St. West & 1525
West Ave. K Los Angeles Lancaster
N144 51151 2626 Naylor Road Shopping Center 2626 Naylor Rd. SE Columbia Washington
N145 51217 Rancho Plaza 8710 19th St. & 6612-6660
Carnelian Street San Bernardino Rancho Cucamonga
N146 51115 Mid-Valley Automotive 18401-18425 Vanowen St. Los Angeles Reseda
N147 51061 Office Depot Center 6700 Folsom Blvd. Sacramento Sacramento
</TABLE>
<PAGE> 119
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
ADMINI- SUB-
CUT-OFF MATURITY STRATIVE SERVICING NET FIRST INTEREST
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE FEE FEE MORTGAGE NOTE PAYMENT ACCRUAL
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE RATE(I) RATE RATE DATE DATE METHOD
- ----- ---- -------- --------- ---------- --------- ------ -------- ------- -------- -------- ---- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CA 94123 Multifamily $ 750,000 $ 748,537 $ 659,371 Balloon 7.250% 0.143% 0.100% 7.107% 10/07/98 12/01/98 Actual/360
MN 55405 Multifamily 738,000 735,655 596,509 Balloon 7.250% 0.143% 0.100% 7.107% 10/09/98 12/01/98 Actual/360
MO 65803 Multifamily 660,000 658,265 578,586 Balloon 7.125% 0.393% 0.350% 6.732% 09/25/98 11/01/98 Actual/360
MN 55418 Multifamily 637,500 636,273 561,179 Balloon 7.300% 0.143% 0.100% 7.157% 10/08/98 12/01/98 Actual/360
TX 78731 Multifamily 610,000 607,883 534,241 Balloon 7.100% 0.293% 0.250% 6.807% 08/31/98 10/01/98 Actual/360
MN 55405 Multifamily 553,000 551,243 446,977 Balloon 7.250% 0.143% 0.100% 7.107% 10/01/98 12/01/98 Actual/360
AZ 85018 Multifamily 544,000 542,712 481,460 Balloon 7.500% 0.143% 0.100% 7.357% 09/24/98 11/01/98 Actual/360
MN 55105 Multifamily 525,000 522,805 424,504 Balloon 7.250% 0.143% 0.100% 7.107% 09/09/98 11/01/98 Actual/360
MN 55105 Multifamily 508,000 506,386 410,604 Balloon 7.250% 0.143% 0.100% 7.107% 10/09/98 12/01/98 Actual/360
MN 55105 Multifamily 488,000 486,449 394,438 Balloon 7.250% 0.143% 0.100% 7.107% 10/09/98 12/01/98 Actual/360
IL 61820 Multifamily 443,000 441,651 382,642 Balloon 6.570% 0.143% 0.100% 6.427% 09/09/98 11/01/98 Actual/360
MN 55408 Multifamily 425,000 423,223 343,647 Balloon 7.250% 0.143% 0.100% 7.107% 09/23/98 11/01/98 Actual/360
AZ 85719 Multifamily 416,000 415,838 375,739 Balloon 8.375% 0.143% 0.100% 8.232% 12/07/98 02/01/99 Actual/360
MN 55105 Multifamily 318,000 316,670 257,128 Balloon 7.250% 0.143% 0.100% 7.107% 09/08/98 11/01/98 Actual/360
AL 35243 Retail 54,000,000 52,538,304 47,337,795 Hyper 8.273% 0.820% 0.777% 7.453% 12/23/97 02/01/98 Actual/360
Amortization
CA 91776 Retail 33,000,000 32,909,986 28,827,542 Balloon 6.990% 0.143% 0.100% 6.847% 09/15/98 11/01/98 Actual/360
FL 33174 Retail 16,000,000 15,941,598 13,820,126 Balloon 6.900% 0.143% 0.100% 6.757% 08/10/98 10/01/98 Actual/360
NC 28144 Retail 12,650,000 12,513,372 11,262,941 Balloon 7.770% 0.143% 0.100% 7.627% 08/26/97 10/01/97 Actual/360
CA 94954 Retail 10,000,000 9,970,394 8,663,541 Balloon 6.680% 0.143% 0.100% 6.537% 09/02/98 11/01/98 Actual/360
FL 33912 Retail 9,000,000 8,961,029 7,839,007 Balloon 6.885% 0.143% 0.100% 6.742% 07/24/98 09/01/98 Actual/360
WA 98208 Retail 8,000,000 7,984,393 7,033,285 Balloon 7.250% 0.143% 0.100% 7.107% 10/15/98 12/01/98 Actual/360
GA 31501 Retail 7,000,000 6,991,873 6,156,094 Balloon 7.250% 0.143% 0.100% 7.107% 11/23/98 01/01/99 Actual/360
NY 10314 Retail 7,000,000 6,985,413 6,114,483 Balloon 7.000% 0.143% 0.100% 6.857% 10/28/98 12/01/98 Actual/360
SC 29407 Retail 6,000,000 5,987,004 5,220,266 Balloon 6.850% 0.143% 0.100% 6.707% 10/19/98 12/01/98 Actual/360
CA 92646 Retail 5,500,000 5,476,312 4,793,174 Balloon 6.906% 0.143% 0.100% 6.763% 07/30/98 09/01/98 Actual/360
CO 81611 Retail 5,000,000 4,994,304 4,403,939 Balloon 7.310% 0.143% 0.100% 7.167% 11/06/98 01/01/99 Actual/360
IN 46250 Retail 4,710,000 4,696,909 4,106,883 Balloon 6.920% 0.143% 0.100% 6.777% 09/30/98 11/01/98 Actual/360
VA 23112 Retail 4,500,000 4,485,702 3,637,244 Balloon 7.250% 0.143% 0.100% 7.107% 10/13/98 12/01/98 Actual/360
FL 33761 Retail 4,200,000 4,182,752 3,677,963 Balloon 7.090% 0.143% 0.100% 6.947% 07/20/98 09/01/98 Actual/360
FL 33618 Retail 2,200,000 2,195,410 1,765,266 Balloon 7.000% 0.143% 0.100% 6.857% 11/06/98 01/01/99 Actual/360
FL 33763 Retail 1,800,000 1,796,245 1,444,308 Balloon 7.000% 0.143% 0.100% 6.857% 11/06/98 01/01/99 Actual/360
--------- ---------
3,991,655 3,209,574
TX 75212 Retail 4,000,000 3,943,320 3,254,334 Balloon 7.480% 0.143% 0.100% 7.337% 12/15/97 02/01/98 Actual/360
NC 27030 Retail 3,900,000 3,883,306 3,400,956 Balloon 6.930% 0.143% 0.100% 6.787% 07/30/98 09/01/98 Actual/360
FL 33782 Retail 3,700,000 3,695,533 3,243,483 Balloon 7.125% 0.143% 0.100% 6.982% 11/25/98 01/01/99 Actual/360
IN 46229 Retail 3,700,000 3,692,026 3,220,876 Balloon 6.870% 0.143% 0.100% 6.727% 10/07/98 12/01/98 Actual/360
MN 55414 Retail 3,510,000 3,499,081 3,024,836 Balloon 6.487% 0.143% 0.100% 6.344% 09/14/98 11/01/98 Actual/360
CA 92260 Retail 3,425,000 3,415,833 2,997,440 Balloon 7.060% 0.143% 0.100% 6.917% 09/01/98 11/01/98 Actual/360
FL 33756 Retail 3,400,000 3,388,378 2,982,355 Balloon 7.160% 0.143% 0.100% 7.017% 08/04/98 10/01/98 Actual/360
IN 46229 Retail 3,360,000 3,352,666 2,921,012 Balloon 6.820% 0.143% 0.100% 6.677% 10/07/98 12/01/98 Actual/360
IN 46250 Retail 3,250,000 3,240,967 2,833,836 Balloon 6.920% 0.143% 0.100% 6.777% 09/30/98 11/01/98 Actual/360
NC 27455 Retail 3,208,200 3,175,839 2,573,804 Balloon 8.040% 0.143% 0.100% 7.897% 08/28/97 10/01/97 Actual/360
CA 91910 Retail 3,100,000 3,091,166 2,696,289 Balloon 6.826% 0.143% 0.100% 6.683% 09/09/98 11/01/98 Actual/360
FL 33144 Retail 3,040,000 3,032,191 2,670,854 Balloon 7.210% 0.143% 0.100% 7.067% 09/18/98 11/01/98 Actual/360
TX 75032 Retail 2,984,000 2,974,046 2,393,569 Balloon 7.000% 0.143% 0.100% 6.857% 10/30/98 12/01/98 Actual/360
SC 29223 Retail 2,900,000 2,893,957 2,533,142 Balloon 7.000% 0.143% 0.100% 6.857% 10/30/98 12/01/98 Actual/360
MA 01721 Retail 2,700,000 2,681,072 2,388,032 Balloon 7.455% 0.143% 0.100% 7.312% 02/17/98 04/01/98 Actual/360
CA 91750 Retail 2,625,000 2,615,749 2,295,402 Balloon 7.040% 0.143% 0.100% 6.897% 08/06/98 10/01/98 Actual/360
GA 30533 Retail 2,520,000 2,516,839 2,201,886 Balloon 7.000% 0.143% 0.100% 6.857% 11/04/98 01/01/99 Actual/360
FL 32503 Retail 2,500,000 2,494,858 2,186,597 Balloon 7.050% 0.143% 0.100% 6.907% 10/01/98 12/01/98 Actual/360
CA 94520 Retail 2,450,000 2,440,096 2,148,816 Balloon 7.150% 0.143% 0.100% 7.007% 07/23/98 09/01/98 Actual/360
SC 29223 Retail 2,419,000 2,411,028 1,944,094 Balloon 7.063% 0.143% 0.100% 6.920% 10/02/98 12/01/98 Actual/360
CA 91732 Retail 2,400,000 2,390,779 2,079,328 Balloon 6.692% 0.143% 0.100% 6.549% 08/12/98 10/01/98 Actual/360
CA 91107 Retail 2,300,000 2,295,807 2,034,833 Balloon 7.500% 0.143% 0.100% 7.357% 10/08/98 12/01/98 Actual/360
CA 93534 Retail 2,230,000 2,225,532 1,955,507 Balloon 7.150% 0.143% 0.100% 7.007% 10/30/98 12/01/98 Actual/360
DC 20020 Retail 2,200,000 2,195,888 1,435,982 Balloon 7.500% 0.143% 0.100% 7.357% 11/18/98 01/01/99 Actual/360
CA 91701 Retail 2,200,000 2,186,570 1,791,963 Balloon 7.500% 0.143% 0.100% 7.357% 07/20/98 09/01/98 Actual/360
CA 91335 Retail 2,150,000 2,145,862 1,892,602 Balloon 7.300% 0.143% 0.100% 7.157% 10/30/98 12/01/98 Actual/360
CA 95819 Retail 2,137,500 2,130,260 1,710,327 Balloon 6.920% 0.143% 0.100% 6.777% 10/15/98 12/01/98 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 PREPAYMENT PENALTY DESCRIPTION
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE (MONTHS)
- ------ -------- ------------- --------- --------- --------- -------------- ------- ---------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 5,116 120 360 3 117 11/01/2008 No No 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
5,334 120 300 3 117 11/01/2008 No Yes(H) 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
4,447 120 360 4 116 10/01/2008 No No 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
4,371 120 360 3 117 11/01/2008 No No 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
4,099 120 360 5 115 09/01/2008 No No 08/31/2002 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)/DEFEASANCE
3,997 120 300 3 117 11/01/2008 No Yes(H) 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
3,804 120 360 4 116 10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
3,795 120 300 4 116 10/01/2008 No Yes(H) 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
3,672 120 300 3 117 11/01/2008 No Yes(H) 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
3,527 120 300 3 117 11/01/2008 No Yes(H) 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
2,820 120 360 4 116 10/01/2008 No Yes(C) 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
3,072 120 300 4 116 10/01/2008 No Yes(H) 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
3,162 120 360 1 119 01/01/2009 No No 11/01/2008 LO(118)/OPEN(2)/DEFEASANCE
2,299 120 300 4 116 10/01/2008 No Yes(H) 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
400,549 120 371 13 107 01/01/2008 No No 01/01/2003 LO(60)/3%(24)/0.5%(24)/OPEN(12)
219,328 120 360 4 116 10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
105,376 125 360 5 120 02/01/2009 No Yes(I) 08/31/2002 LO(47)/GRTR1%PPMTorYM(71)/
OPEN(7)/DEFEASANCE
90,801 120 360 17 103 09/01/2007 No No 08/31/2001 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)
64,395 120 360 4 116 10/01/2008 No No 05/31/2008 LO(115)/OPEN(5)/DEFEASANCE
59,184 120 360 6 114 08/01/2008 No No 03/31/2008 LO(115)/OPEN(5)/DEFEASANCE
54,574 120 360 3 117 11/01/2008 No No 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
47,752 120 360 2 118 12/01/2008 No No 08/01/2008 LO(116)/OPEN(4)/DEFEASANCE
46,571 120 360 3 117 11/01/2008 No No 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
39,316 120 360 3 117 11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
36,245 120 360 6 114 08/01/2008 No No 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
34,313 120 360 2 118 12/01/2008 No No 06/02/2008 LO(114)/OPEN(6)/DEFEASANCE
31,083 120 360 4 116 10/01/2008 No Yes(J) 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
32,526 120 300 3 117 11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
28,197 120 360 6 114 08/01/2008 No No 03/31/2008 LO(115)/OPEN(5)/DEFEASANCE
15,549 120 300 2 118 12/01/2008 Yes(2) Yes(K) 08/01/2008 LO(116)/OPEN(4)/DEFEASANCE
12,722 120 300 2 118 12/01/2008 Yes(2) Yes(K) 08/01/2008 LO(116)/OPEN(4)/DEFEASANCE
29,508 120 300 13 107 01/01/2008 No No 12/31/2001 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)
25,764 120 360 6 114 08/01/2008 No No 07/31/2002 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)/DEFEASANCE
24,928 120 360 2 118 12/01/2008 No No 09/01/2008 LO(117)/OPEN(3)/DEFEASANCE
24,294 120 360 3 117 11/01/2008 No Yes(J) 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
22,156 120 360 4 116 10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
22,925 120 360 4 116 10/01/2008 No No 09/30/2002 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)/DEFEASANCE
22,987 120 360 5 115 09/01/2008 No No 04/30/2008 LO(115)/OPEN(5)/DEFEASANCE
21,949 120 360 3 117 11/01/2008 No Yes(J) 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
21,448 120 360 4 116 10/01/2008 No Yes(J) 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
23,630 180 360 17 163 09/01/2012 No No 08/31/2005 LO(95)/GRTR1%PPMTorYM(78)/
OPEN(7)
20,263 120 360 4 116 10/01/2008 No No 08/01/2008 LO(118)/OPEN(2)/DEFEASANCE
20,656 120 360 4 116 10/01/2008 No Yes(I) 06/01/2008 LO(116)/OPEN(4)/DEFEASANCE
21,090 120 300 3 117 11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
19,294 120 360 3 117 11/01/2008 No Yes(L) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
18,796 120 360 11 109 03/01/2008 No No 02/28/2002 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)/DEFEASANCE
17,535 120 360 5 115 09/01/2008 No No 07/02/2008 LO(118)/OPEN(2)/DEFEASANCE
16,766 120 360 2 118 12/01/2008 No No 07/31/2008 LO(115)/OPEN(5)/DEFEASANCE
16,717 120 360 3 117 11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
16,547 120 360 6 114 08/01/2008 No No 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
17,194 120 300 3 117 11/01/2008 No No 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
15,474 120 360 5 115 09/01/2008 No Yes(M) 07/02/1998 LO(118)/OPEN(2)/DEFEASANCE
16,082 120 360 3 117 11/01/2008 No Yes(M) 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
15,062 120 360 3 117 11/01/2008 No Yes(K) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
16,258 180 300 2 178 12/01/2013 No No 08/01/2013 LO(176)/OPEN(4)/DEFEASANCE
16,258 120 300 6 114 08/01/2008 No No 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
14,740 120 360 3 117 11/01/2008 No Yes(K) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
14,998 120 300 3 117 11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
</TABLE>
<PAGE> 121
<TABLE>
<CAPTION>
CUT-OFF
DATE
LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/
SEQUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED
- -------- ------ ------------- ----------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
N090 51336 1835-1839 Green St. Apartments $ 1,300,000 09/11/98 58% 1920
N091 51341 Franklin Ave. Apartments 985,000 07/20/98 75% 1922
N092 50960 Kentwood Apartments 825,000 04/20/98 80% 1988
N093 51343 Johnson Apartments 870,000 08/26/98 73% 1976
N094 51009 Bull Creek Apartments 780,000 06/12/98 78% 1965/1993
N095 51323 Bryant Avenue Apartments 745,000 07/20/98 74% 1923
N096 51347 Tamarisk Apartments 690,000 09/8/98 79% 1962
N097 51301 682 Grand Ave. Apartments 700,000 07/9/98 75% 1920
N098 51339 1967 Grand Ave. Apartments 610,000 07/14/98 83% 1920/1985
N099 51342 1962 Grand Ave. Apartments 585,000 07/14/98 83% 1920
N100 51023 L1 - Goldfarb Apartments 610,000 05/12/98 72% 1972
N101 51318 Hennepin Ave. Apartments 590,000 07/9/98 72% 1909
N102 51419 1435-1445 E. Ft. Lowell Road 520,000 10/13/98 80% 1972/1997
N103 51300 669 Grand Avenue Apartments 440,000 07/9/98 72% 1925
N104 50695 The Summit Shopping Center (iii) 65,125,000 03/1/98 81% 1997
N105 51286 San Gabriel Square 44,000,000 04/5/98 75% 1991
N106 50883 University Center North Shopping Center 19,900,000 02/3/98 80% 1989
N107 50148 Salisbury Mall 16,900,000 06/12/97 74% 1986
N108 51008 Washington Square Shopping Center 19,280,000 06/29/98 52% 1972/1994
N109 51010 Daniels Crossing Shopping Center 11,300,000 05/8/98 79% 1991
N110 51366 Home Base Building 12,000,000 10/1/98 67% 1998
N111 51107 Hatcher Point Mall 10,000,000 08/17/98 70% 1973/1996
N112 51118 Heartland Shopping Center 11,110,000 08/3/98 63% 1975
N113 50990 Ashley Landing Shopping Center 10,000,000 09/25/98 60% 1965
N114 51219 Towne House Plaza 12,400,000 06/22/98 44% 1968
N115 51401 Katie Reed Plaza 7,250,000 08/6/98 69% 1993
N116 51081 Castleton Place Shopping Center 6,400,000 06/26/98 73% 1980
N117 51039 Genito Forest Shopping Center 5,800,000 05/28/98 77% 1989
N118 50941 Village at Countryside 5,800,000 05/13/98 72% 1978
N119 51139 Landmark Plaza 2,870,000 08/8/98 77% 1988
N120 51132 Cabaret Center 2,400,000 08/8/98 75% 1988
-----------
SUB-TOTAL CROSSED LOANS 5,270,000
N121 50391 Lakewest Town Center 6,000,000 09/30/97 66% 1959/1993
N122 51025 New Market Crossing Shopping Center 4,950,000 06/19/98 79% 1988
N123 51106 Pinellas Place Shopping Center 5,300,000 07/15/98 70% 1983
N124 51074 Washington Corners Shopping Center 5,700,000 06/26/98 65% 1979
N125 51291 Dinkydome & Starbucks 4,680,000 06/30/98 75% 1920/1976
N126 51087 San Luis Rey Center 4,900,000 07/16/98 70% 1981
N127 51018 Clearwater Plaza Shopping Center 4,550,000 06/1/98 75% 1959
N128 51045 Washington Shoppes Shopping Center 7,200,000 06/26/98 47% 1974
N129 51079 Castleton Village Shopping Center 4,600,000 06/26/98 71% 1987
N130 50207 Church Crossing Shopping Center 4,075,000 07/15/97 78% 1988
N131 51197 PetsMart Retail Building 5,170,000 07/23/98 60% 1996
N132 51001 Rainbow Shopping Center 3,800,000 01/26/98 80% 1983
N133 51119 Eckerds 3,760,000 08/22/98 79% 1998
N134 51147 Polo Plaza Shopping Center 3,900,000 04/1/99 74% 1986/1998
N135 50499 Sears Plaza 3,600,000 11/6/97 75% 1996
N136 51253 La Verne Town Center North 3,500,000 02/20/98 75% 1985
N137 51134 Goldmine Village Shopping Center 3,150,000 11/1/98 80% 1997
N138 50975 Brentwood Plaza 3,444,000 05/12/98 72% 1961/1995
N139 51220 Willow Pass Center 4,150,000 05/18/98 59% 1960/1988
N140 51090 Brickyard Shopping Center 3,180,000 07/27/98 76% 1989
N141 51263 Central Plaza 3,200,000 05/29/98 75% 1952/1988
N142 51349 Roosevelt Place Shopping Center 3,380,000 05/20/98 68% 1987
N143 51116 Lancaster Triangle 3,000,000 09/21/98 74% 1981
N144 51151 2626 Naylor Road Shopping Center 2,940,000 07/24/98 75% 1963/1998
N145 51217 Rancho Plaza 3,700,000 05/4/98 59% 1978/1992
N146 51115 Mid-Valley Automotive 3,000,000 09/1/98 72% 1955/1983
N147 51061 Office Depot Center 2,850,000 07/17/98 75% 1960/1995
<CAPTION>
LOAN
SF/ BALANCE
UNIT/ NET PER
ROOM/ RENTABLE SF/UNITS/
BED AREA (SF) ROOM/BED
------- --------- ----------
<S> <C> <C>
Units 4,114 $124,756
Units 19,700 25,367
Units 26,000 16,457
Units 15,940 28,921
Units 17,400 25,328
Units 14,500 29,013
Units 15,200 23,596
Units 22,000 20,912
Units 12,767 25,319
Units 12,767 24,322
Units 10,098 21,031
Units 10,377 21,161
Units 11,505 31,988
Units 8,652 26,389
SF 462,481 114
SF 218,708 150
SF 182,880 87
SF 291,175 43
SF 200,068 50
SF 112,003 80
SF 111,830 71
SF 257,904 27
SF 56,864 123
SF 291,243 21
SF 134,031 41
SF 21,633 231
SF 47,108 100
SF 53,245 84
SF 98,981 42
SF 35,510 62
SF 28,209 64
SF 146,087 27
SF 110,718 35
SF 113,214 33
SF 60,630 61
SF 32,689 107
SF 31,731 108
SF 127,981 26
SF 81,334 41
SF 33,386 97
SF 62,495 51
SF 40,000 77
SF 41,986 72
SF 10,908 273
SF 58,024 50
SF 35,869 75
SF 30,988 84
SF 27,350 92
SF 78,910 32
SF 37,000 66
SF 47,007 51
SF 29,875 80
SF 29,117 79
SF 22,137 101
SF 27,334 80
SF 30,531 72
SF 37,839 57
SF 48,700 44
</TABLE>
<PAGE> 122
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
OCCUPANCY U/W
OCCUPANCY AS OF U/W U/W U/W NOI U/W
PERCENT DATE REVENUES EXPENSE NOI DSCR RESERVES
--------- -------- ----------- ----------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
100% 08/01/98 $ 106,544 $ 21,375 $ 85,169 1.39 $ 1,755
100% 05/31/98 191,702 93,042 98,660 1.54 7,250
100% 03/31/98 137,443 61,872 75,571 1.42 8,000
100% 09/01/98 138,558 67,541 71,017 1.35 5,500
96% 05/01/98 149,612 78,409 71,203 1.45 8,400
100% 08/01/98 138,949 74,102 64,847 1.35 4,750
100% 09/28/98 99,247 36,538 62,709 1.37 5,750
100% 07/01/98 142,735 72,779 69,956 1.54 6,250
100% 05/01/98 135,430 65,581 69,849 1.59 5,000
100% 10/01/98 134,155 66,943 67,212 1.59 5,000
95% 07/31/98 89,946 38,346 51,600 1.52 9,132
100% 07/01/98 127,116 66,332 60,784 1.65 5,000
100% 11/02/98 78,963 25,129 53,834 1.42 2,600
100% 07/01/98 94,274 49,164 45,110 1.64 3,000
97% 07/07/98 7,706,152 1,635,246 6,070,906 1.26 59,169
97% 08/01/98 5,661,673 1,653,514 4,008,159 1.52 23,609
98% 07/31/98 2,650,455 887,050 1,763,405 1.39 32,806
90% 06/01/98 2,143,277 654,606 1,488,671 1.37 54,595
92% 09/23/98 2,191,157 686,601 1,504,556 1.95 50,017
95% 07/14/98 1,359,178 403,051 956,127 1.35 22,401
100% 07/31/98 1,035,825 36,254 999,571 1.53 11,182
96% 07/31/98 1,442,383 565,793 876,590 1.53 51,581
100% 09/16/98 1,582,859 654,606 928,253 1.66 14,216
88% 10/05/98 1,080,311 350,169 730,142 1.55 72,811
99% 06/30/98 1,225,132 395,839 829,293 1.91 21,444
100% 09/18/98 856,321 258,798 597,523 1.45 1,388
100% 09/02/98 702,798 150,912 551,886 1.48 18,843
93% 09/22/98 649,163 86,889 562,274 1.44 7,927
97% 07/01/98 781,154 290,424 490,730 1.45 14,847
100% 10/26/98 400,384 126,807 273,577 1.47 7,102
100% 10/26/98 304,609 81,827 222,782 1.46 7,334
99% 07/31/98 882,742 277,365 605,377 1.71 29,522
97% 07/22/98 616,643 158,158 458,485 1.48 28,787
94% 10/23/98 721,072 272,042 449,030 1.50 24,341
100% 10/01/98 634,876 166,950 467,926 1.61 24,252
99% 06/30/98 780,302 300,347 479,955 1.81 14,198
92% 08/18/98 546,479 165,856 380,623 1.38 7,933
91% 07/16/98 703,837 263,002 440,835 1.60 31,995
100% 10/01/98 797,588 240,733 556,855 2.11 28,467
97% 09/29/98 520,938 122,118 398,820 1.55 13,354
91% 03/31/98 484,433 99,872 384,561 1.36 12,499
100% 07/07/98 503,040 32,996 470,044 1.93 4,000
100% 08/31/98 589,150 246,118 343,032 1.38 8,817
100% 10/28/98 378,066 67,639 310,427 1.23 1,091
95% 09/30/98 447,859 129,900 317,959 1.37 12,088
96% 10/21/98 437,321 111,539 325,782 1.44 3,587
94% 06/01/98 440,301 101,491 338,810 1.61 10,865
95% 10/28/98 336,925 68,178 268,747 1.34 2,735
98% 06/30/98 444,036 119,794 324,242 1.62 19,728
100% 06/22/98 535,193 150,532 384,661 1.94 6,287
94% 09/23/98 382,249 89,435 292,814 1.42 12,352
93% 03/25/98 440,761 114,988 325,773 1.75 4,054
90% 10/08/98 410,168 109,757 300,411 1.56 3,714
95% 10/23/98 363,791 97,517 266,274 1.47 4,649
100% 06/30/98 482,356 213,163 269,193 1.38 8,173
94% 06/08/98 409,347 85,225 324,122 1.66 6,246
95% 10/31/98 383,919 111,127 272,792 1.54 5,676
100% 09/30/98 347,022 68,369 278,653 1.55 15,584
<CAPTION>
2ND
MOST MOST MOST
U/W RECENT MOST MOST MOST RECENT RECENT
RESERVES END RECENT RECENT RECENT NOI END
PER UNIT DATE REVENUES EXPENSES NOI DSCR DATE
-------- -------- -------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
292.50 12/31/97 121,788 $ 12,783 $ 109,005 1.78 12/31/96
250.00 12/31/97 187,670 104,082 83,588 1.31 12/31/96
200.00 12/31/97 138,294 47,659 90,635 1.70 12/31/96
250.00 12/31/97 130,320 62,009 68,311 1.30 12/31/96
350.00 12/31/97 155,741 72,726 83,015 1.69 12/31/96
250.00 12/31/97 138,363 78,372 59,991 1.25 12/31/96
250.00 12/31/97 93,593 34,183 59,410 1.30
250.00 12/31/97 142,846 77,705 65,141 1.43 12/31/96
250.00 12/31/97 136,799 72,780 64,019 1.45 12/31/96
250.00 12/31/97 135,556 72,850 62,706 1.48 12/31/96
434.86 12/31/97 86,756 34,917 51,839 1.53 12/31/96
250.00 12/31/97 123,284 63,288 59,996 1.63 12/31/96
200.00 12/31/97 79,564 14,469 65,095 1.72 12/31/96
250.00 12/31/97 94,033 50,165 43,868 1.59 12/31/96
0.13
0.11 12/31/97 5,265,458 1,589,211 3,676,247 1.40 12/31/96
0.18 12/31/97 2,681,961 837,051 1,844,910 1.46 12/31/96
0.19 12/31/97 1,779,205 638,648 1,140,557 1.05 12/31/96
0.25 12/31/97 2,197,676 569,365 1,628,311 2.11 12/31/96
0.20 12/31/97 1,295,034 376,610 918,424 1.29 12/31/96
0.10
0.20 12/31/97 1,426,300 475,825 950,475 1.66 12/31/96
0.25 12/31/97 1,793,038 601,289 1,191,749 2.13 12/31/96
0.25 12/31/97 1,085,253 347,148 738,105 1.56 12/31/96
0.16 12/31/97 1,025,519 303,772 721,747 1.66 12/31/96
0.06 12/31/97 847,400 262,018 585,382 1.42 12/31/96
0.40 12/31/97 795,426 134,822 660,604 1.77 12/31/96
0.15 12/31/97 698,558 64,693 633,865 1.62 12/31/96
0.15 12/31/97 851,290 270,064 581,226 1.72 12/31/96
0.20 12/31/97 420,423 118,118 302,305 1.62 12/31/96
0.26 12/31/97 351,563 77,072 274,491 1.80 12/31/96
0.20 12/31/97 793,498 262,086 531,412 1.50 12/31/96
0.26 12/31/97 623,429 130,755 492,674 1.59 12/31/96
0.21 12/31/97 789,275 255,780 533,495 1.78 12/31/96
0.40 12/31/97 671,868 159,336 512,532 1.76 12/31/96
0.43 12/31/97 758,298 262,477 495,821 1.86 12/31/96
0.25 12/31/97 599,244 164,874 434,370 1.58 12/31/96
0.25 12/31/97 647,621 249,508 398,113 1.44 12/31/96
0.35 12/31/97 803,389 230,124 573,265 2.18 12/31/96
0.40 12/31/97 576,946 104,367 472,579 1.84 12/31/96
0.20 12/31/97 468,406 103,002 365,404 1.29 12/31/96
0.10
0.21 12/31/97 608,719 233,115 375,604 1.52 12/31/96
0.10
0.21 12/31/97 452,887 116,225 336,662 1.45 12/31/96
0.10 12/31/97 221,801 57,232 164,569 0.73
0.35 12/31/97 432,336 92,850 339,486 1.61 12/31/96
0.10
0.25 12/31/97 458,856 135,189 323,667 1.61 12/31/96
0.17 12/31/97 525,949 112,617 413,332 2.08 12/31/96
0.26 12/31/97 367,900 78,594 289,306 1.40 12/31/96
0.14 12/31/97 443,793 60,279 383,514 2.07 12/31/96
0.13 12/31/98 435,995 99,820 336,175 1.74
0.21 12/31/97 395,618 89,207 306,411 1.70 12/31/96
0.30
0.20 12/31/97 450,464 77,525 372,939 1.91 12/31/96
0.15 12/31/97 424,714 114,368 310,346 1.75 12/31/96
0.32 12/31/97 357,100 55,094 302,006 1.68 12/31/96
</TABLE>
<PAGE> 123
<TABLE>
<CAPTION>
2ND
2ND 2ND 2ND MOST LARGEST
MOST MOST MOST RECENT TENANT
RECENT RECENT RECNENT NOI LEASED
REVEBUES EXPENSES NOI DSCR LARGEST TENANT SF
- -------- ------------ ----------- ------- --------------- --------
<S> <C> <C> <C> <C> <C>
$ 105,168 $ 12,040 $ 93,128 1.52
177,822 94,629 83,193 1.30
140,791 45,404 95,387 1.79
124,180 54,786 69,394 1.32
146,288 74,112 72,176 1.47
134,358 72,611 61,747 1.29
135,460 69,569 65,891 1.45
128,772 70,102 58,670 1.33
127,097 71,357 55,740 1.32
91,127 31,931 59,196 1.75
115,362 61,555 53,807 1.46
70,350 14,460 55,890 1.47
88,742 48,887 39,855 1.44
Parisian 114,534
5,009,562 1,476,776 3,532,786 1.34 Focus Department Store 52,500
2,616,464 815,353 1,801,111 1.42 Publix 42,112
1,731,279 603,925 1,127,354 1.03 Belk-Harry, Inc. 80,125
2,197,839 480,934 1,716,905 2.22 Safeway 53,993
1,412,447 378,636 1,033,811 1.46 Publix 48,890
HomeBase 111,830
1,124,535 499,367 625,168 1.09 JC Penney 80,929
1,618,546 590,937 1,027,609 1.84 Ethan Allen 7,813
1,256,436 361,004 895,432 1.90 Carolina Pottery 87,000
1,047,031 119,141 927,890 2.13 Mervyn's 71,995
792,499 266,485 526,014 1.28 Sun Microsystems, Inc. 5,502
742,750 145,584 597,166 1.60 Bedroom One 12,780
703,366 78,232 625,134 1.60 Regal Cinema 37,245
779,257 288,016 491,241 1.45 Service Merch/Uptons 60,000
396,140 113,628 282,512 1.51 Chuck E.Cheese 16,266
321,778 73,932 247,846 1.62 Men's Warehouse 6,000
812,958 272,951 540,007 1.53 Minyard Food Store 36,682
459,468 109,106 350,362 1.13 Roses 54,000
649,281 237,739 411,542 1.38 Winn Dixie 41,125
690,352 172,075 518,277 1.78 Bedroom One 8,900
863,285 264,288 598,997 2.25 Student Book Store 7,800
588,316 150,580 437,736 1.59 Palm Desert Nat'l Bank 11,140
655,254 240,443 414,811 1.50 Bealls 28,800
717,658 211,455 506,203 1.92 Factory Card Outlet 14,000
563,369 109,731 453,638 1.76 S&K Famous Brands 5,217
478,245 99,185 379,060 1.34 Food Lion 29,000
PetsMart, Inc. 40,000
540,099 225,471 314,628 1.27 Denny's 5,800
Eckerd Drug 10,908
456,702 110,973 345,729 1.49 Food Lion 35,384
Sears Hardware 24,069
318,343 85,443 232,900 1.11 Hollywood Video 7,650
Famous Footwear 4,500
602,166 142,139 460,027 2.29 Big Lots 29,280
368,589 108,090 260,499 1.31 Sherman D's 9,000
351,926 85,032 266,894 1.29 Gold's Gym (Piggly Wiggly) 29,800
452,511 104,993 347,518 1.87 Central Electric 15,600
Cosmo Prof. 3,360
352,348 93,891 258,457 1.43 Coco's Restaurant 5,469
District of Columbia 13,480
435,169 77,897 357,272 1.83 Host Marriott Corporation 5,500
396,885 120,978 275,907 1.56 Center Valley Auto 12,112
355,084 56,617 298,467 1.66 Office Depot 21,600
<CAPTION>
SECOND
LARGEST SECOND LARGEST SECOND
TENANT LARGEST TENANT LARGEST
% of TENANT % OF TENANT
TOTAL LEASE SECOND LARGEST LEASED TOTAL LEASE
SF EXPIRATION TENANT SF SF EXPIRATION
------ ----------- ----------------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
25% 10/31/17 Carmike Cinema 60,191 13% 10/31/17
24% 11/30/06 99 Ranch Market 45,000 21% 8/31/01
23% 1/31/09 Computer School 12,245 7% 10/31/02
28% 7/30/06 J. C. Penney Company 33,796 12% 7/31/06
27% 2/20/13 Mervyn's 48,000 24% 7/31/03
44% 10/31/10 Ben Franklin Crafts 20,000 18% 3/31/01
100% 10/10/18
31% 8/31/11 Belk-Hudson 61,230 24% 8/05/11
14% 1/06/07 Palmer Video 5,600 10% 9/14/00
30% 12/31/07 Burlington Coat Factory 60,575 21% 12/01/09
54% 7/01/01 Jo-Ann Fabrics 19,000 14% 11/30/06
25% 5/31/01 The Steak Pit, Inc. 4,174 19% 5/31/03
27% 3/31/02 Men's Wearhouse 6,300 13% 4/30/00
70% 2/28/09 Greek Islands Restaurant 3,200 6% 3/31/00
61% 2/28/05 Dockside Imports 8,075 8% 2/28/00
46% 7/31/01 Carpet Max 5,750 16% 3/31/01
21% 5/31/99 Family Christian Stores 3,995 14% 9/30/04
25% 10/31/15 Weiner Stores, Inc. 19,720 13% 1/31/09
49% 4/16/09 Ingles 32,000 29% 6/24/09
36% 11/09/03 Eckerd Drug 10,356 9% 5/31/03
15% 6/30/01 Video Update 7,200 12% 4/30/99
24% 3/31/00 Perkins 2,892 9% 9/30/04
35% 11/30/10 Mamma Gina 4,904 15% 3/31/05
23% 4/30/02 McFrugals 21,580 17% 7/31/15
17% 10/31/04 Bedroom One 10,000 12% 3/31/01
16% 1/31/02 GTE Mobilnet 4,832 14% 12/31/99
46% 10/04/07 CVS Pharmacy Inc. 8,470 14% 10/31/02
100% 7/01/16
14% 4/30/14 Universal Spanish 5,151 12% 10/31/99
100% 5/01/18
61% 5/31/06 Eckerd Drug 8,640 15% 6/15/06
67% 12/09/06 Blockbuster Video 5,000 14% 3/31/04
25% 8/14/06 Clothestime 5,502 18% 8/31/99
16% 6/30/02 Dollar Tree 4,000 15% 7/31/01
37% 1/31/03 Goodwill Industries 19,380 25% 12/01/00
24% 6/12/01 The Tool Guys 6,800 18% 6/01/00
63% 3/14/09 Palmetto Reserve 6,000 13% NAV
52% 12/31/00 Launderland 2,600 9% 12/31/00
12% 5/31/02 Bearly Stichen 3,103 11% 9/30/99
25% 8/21/05 Sung & Myong 4,668 21% 11/30/99
49% 9/30/08 Pep Boys 10,354 38% 7/31/07
18% 3/31/04 Rip Tide 4,200 14% 2/28/00
32% 7/31/99 Reiter 4,692 12% 1/31/06
44% 10/31/02 A&A Carpet 12,000 25% 4/30/07
</TABLE>
<PAGE> 124
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N148 51058 Del Plaza Shopping Center Independence St. at
Harrison St. Pottawatomie Shawnee
N149 50942 Staples - Hobbs NM 1731 Turner St. Lea Hobbs
N150 51228 701 Montana 701-715 Montana Ave. Los Angeles Santa Monica
N151 51328 Evergreen Center 5575 - 5669 Mack Rd. Sacramento Sacramento
N152 51117 For Eyes, Gwinnett 2130 Pleasant Hill Rd. Gwinnett Duluth
N153 51196 L.A. Woman Building 11650 Santa Monica Blvd Los Angeles Los Angeles
N154 51146 River Crossing Shopping Center US 1/601 South Kershaw Lugoff
N155 51239 Academy Crossing Shopping Center 280-296 S Academy Blvd El Paso Colorado Springs
N156 51267 1210 West Morena Blvd 1210 West Morena Blvd San Diego San Diego
N157 51288 Park Village Shopping Center 7019 South Redwood Rd Salt Lake West Jordan
N158 51395 Yuma Mesa Shopping Center 1601 S. 4th Ave Yuma Yuma
N159 51264 Anaheim Town Center 100 West Lincoln Ave. Orange Anaheim
N160 51262 The Ellinwood Center 1300 Contra Costa Blvd Contra Costa Pleasant Hill
N161 51068 North Towne Square Shopping Center 2529-2537 N. Broad Street Kershaw Camden
N162 51125 Mountain Park Square, Ph II 4232 East Chandler Blvd. Maricopa Phoenix
N163 51201 Central Avenue Plaza 4349-69 Central Avenue Los Angeles Los Angeles
N164 51308 Calabasas Retail Center 23528-23536 Calabasas Rd Los Angeles Calabasas
N165 51266 920 Morena Industrial 920 Morena Blvd San Diego San Diego
N166 51199 Wendys 1305-07 N. Vermont Ave. Los Angeles Los Angeles
N167 51284 Mission Center 2335 Misson St. Santa Cruz Santa Cruz
N168 51233 Pier I Imports Building 733 Grand Avenue Ramsey St. Paul
N169 51382 Arcadia Center 556-558 Las Tunas Drive Los Angeles Arcadia
N170 51242 Brookhurst Center 519-521 S. Brookhurst St. Orange Anaheim
N171 51210 Trader Joes 1820 S Grant St. San Mateo San Mateo
N172 51397 Country Corner Retail Center 2240 Encinitas Blvd. San Diego Encinitas
N173 51298 Sandra Plaza 2728-2730 West 3500 South Salt Lake West Valley City
N174 51283 Kragen Auto Parts-Chico CA 1618 Mangrove Ave. Butte Chico
N175 51378 Green Gables Shoppette 7800 West Jewell Ave. Jefferson Lakewood
N176 51317 Strip Retail Center 16304 E 14th St. Alameda San Leandro
N177 51207 Magnolia Center 10689 Magnolia Ave. Riverside Riverside
N178 51282 Schucks Automotive 3610 Overland Rd. Ada Boise
N179 51161 UMC Taco Bell 2116 West Craig Road Clark North Las Vegas
N180 51413 Chestnut Place Retail Center 13991-13997 Anderson Lakes
Parkway Hennepin Eden Prairie
N181 51072 Payless Shoes Store (Beltline Blvd.) 4240 W. Beltline Blvd. & 2941
Two Notch Rd. Richland Columbia
N182 51073 Payless Shoe Store (Dutch Square) 1725 Broad River Rd. Richland Columbia
N183 51435 Kragen Auto Parts-Marysville CA 905 B Street Yuba Marysville
N184 51304 Plaza Temecula 27326 Jefferson Ave. Riverside Temecula
N185 51324 851 Mistletoe Lane 851 Mistletoe Lane Shasta Redding
N186 51188 Yacoub Property:True Value Hardware 724 Irving Street San Francisco San Francisco
N187 51415 Banana Belt Strip Center 300 West Highway 24 Teller Woodland Park
N188 51353 San Marcos Retail Plaza 3708-3732 Eubank Blvd NE Bernalillo Albuquerque
N189 51383 Baybridge Business Park 320-640 North 2200 West Street Salt Lake Salt Lake City
N190 51029 Renfro Warehouse Highway 76 & Springdale Road Laurens Clinton
N191 50825 Purolator Distribution Center 4800 Corporation Drive Cumberland Fayetteville
N192 50930 Ironhorse Park 1040 Ironhorse Drive Summit Park City
N193 51109 Kingsley Tool Company 3000 Kingsley Rd. Dallas Garland
N194A 51129 Huntington Center-15145-15245 Springdale/
Transistor Lane 15145-15245 Springdale St/
1514 0-15252 Trans. Ln Orange Huntington Beach
N194B 51129 Huntington Center-5312 System Drive 5312 System Drive Orange Huntington Beach
N194C 51129 Huntington Center-5362 Industrial Drive 5362 Industrial Drive Orange Huntington Beach
N194D 51129 Huntington Center-5452 McFadden Avenue 5452 McFadden Avenue Orange Huntington Beach
N194 51129 Huntington Center Industrial Properties
(Roll-Up)
N195 51138 Hillside Industrial II 994 & 996 Flower Glen St. Ventura Simi Valley
N196 51213 Aplex Building 830 Stewart Dr. Santa Clara Sunnyvale
N197 51013 Federal Express Distribution Facility 1525 Morrison Parkway Fulton Alpharetta
N198 50929 Patrick Airport Center 2900 East Patrick Lane Clark Las Vegas
N199 51227 Mighty Micro Building 3400 Gateway Blvd Alameda Fremont
</TABLE>
<PAGE> 125
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY
ZIP PROPERTY ORIGINAL DATE DATE
STATE CODE TYPE BALANCE BALANCE BALANCE
- ----- ---- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
OK 74801 Retail $2,050,000 $2,038,756 $1,314,306
NM 88240 Retail 2,000,000 1,994,741 1,543,320
CA 90401 Retail 2,000,000 1,993,483 1,762,626
CA 95823 Retail 1,900,000 1,896,293 1,670,405
GA 30136 Retail 1,840,000 1,837,964 1,624,341
CA 90025 Retail 1,800,000 1,793,518 1,595,877
SC 29078 Retail 1,700,000 1,696,457 1,484,946
CO 80910 Retail 1,687,500 1,681,782 1,481,507
CA 92110 Retail 1,650,000 1,643,660 1,429,539
UT 84088 Retail 1,575,000 1,570,715 1,376,222
AZ 85364 Retail 1,500,000 1,497,290 1,227,366
CA 92805 Retail 1,500,000 1,493,878 1,290,695
CA 94523 Retail 1,480,000 1,474,982 1,299,271
SC 29020 Retail 1,480,000 1,469,448 620,859
AZ 85044 Retail 1,425,000 1,422,183 1,251,203
CA 90011 Retail 1,407,000 1,401,248 1,232,662
CA 91302 Retail 1,365,000 1,361,769 1,208,077
CA 92110 Retail 1,350,000 1,344,813 1,169,622
CA 90027 Retail 1,331,250 1,325,949 1,169,311
CA 95060 Retail 1,300,000 1,294,701 1,055,121
MN 55105 Retail 1,250,000 1,245,655 1,094,585
CA 91007 Retail 1,150,000 1,148,707 1,013,933
CA 92804 Retail 1,100,000 1,096,244 964,979
CA 94402 Retail 1,100,000 1,078,866
CA 92024 Retail 1,000,000 998,286 823,611
UT 84088 Retail 1,000,000 997,280 835,602
CA 95928 Retail 855,000 852,876 753,482
CO 80232 Retail 847,000 845,754 709,958
CA 94578 Retail 840,000 838,287 752,504
CA 92505 Retail 825,000 821,826 727,031
ID 83705 Retail 820,000 817,950 722,216
NV 89031 Retail 742,000 739,974 613,075
MN 55344 Retail 712,500 711,920 589,926
SC 29204 Retail 695,089 690,307 296,253
SC 29210 Retail 628,000 623,680 267,661
CA 95901 Retail 590,000 589,735 528,308
CA 92590 Retail 505,000 503,712 443,963
CA 96001 Retail 490,000 488,620 403,127
CA 94122 Retail 440,000 439,242 391,191
CO 80866 Retail 435,000 434,846 394,882
NM 87111 Retail 420,000 418,853 347,023
UT 84116 Industrial 40,700,000 40,661,316 36,329,199
SC 29325 Industrial 11,700,000 11,652,952 10,266,992
NC 28306 Industrial 10,300,000 10,248,293 8,970,663
UT 84060 Industrial 5,400,000 5,350,043 3,681,739
TX 75041 Industrial 5,342,250 5,319,872 4,333,556
CA 92649 Industrial
CA 92649 Industrial
CA 92649 Industrial
CA 92649 Industrial
Industrial 5,050,000 5,033,155 4,050,778
CA 93065 Industrial 5,000,000 4,989,608 4,368,631
CA 94086 Industrial 5,000,000 4,966,818 4,020,504
GA 30004 Industrial 4,000,000 3,955,964 2,789,131
NV 89120 Industrial 3,600,000 3,576,598 2,904,245
CA 94538 Industrial 3,625,000 3,569,667
<CAPTION>
ADMINI-
STRATIVE SUB- NET FIRST INTEREST
LOAN MORTGAGE FEE SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
TYPE RATE RATE FEE RATE RATE DATE DATE METHOD
-------- -------- ------- -------- -------- ---- ------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
Balloon 7.165% 0.143% 0.100% 7.022% 08/31/98 10/01/98 Actual/360
Balloon 7.125% 0.143% 0.100% 6.982% 09/24/98 11/01/98 Actual/360
Balloon 7.345% 0.143% 0.100% 7.202% 07/21/98 10/01/98 Actual/360
Balloon 7.250% 0.143% 0.100% 7.107% 09/25/98 12/01/98 Actual/360
Balloon 7.400% 0.143% 0.100% 7.257% 11/23/98 01/01/99 Actual/360
Balloon 7.578% 0.143% 0.100% 7.435% 07/07/98 09/01/98 Actual/360
Balloon 7.000% 0.143% 0.100% 6.857% 10/30/98 12/01/98 Actual/360
Balloon 7.194% 0.143% 0.100% 7.051% 08/18/98 10/01/98 Actual/360
Balloon 6.692% 0.143% 0.100% 6.549% 08/24/98 10/01/98 Actual/360
Balloon 7.000% 0.143% 0.100% 6.857% 09/10/98 11/01/98 Actual/360
Balloon 7.650% 0.143% 0.100% 7.507% 11/23/98 01/01/99 Actual/360
Balloon 6.442% 0.143% 0.100% 6.299% 08/27/98 10/01/98 Actual/360
Balloon 7.192% 0.143% 0.100% 7.049% 08/26/98 10/01/98 Actual/360
Balloon 7.030% 0.143% 0.100% 6.887% 09/21/98 11/01/98 Actual/360
Balloon 7.200% 0.143% 0.100% 7.057% 10/26/98 12/01/98 Actual/360
Balloon 7.107% 0.143% 0.100% 6.964% 07/17/98 09/01/98 Actual/360
Balloon 7.500% 0.143% 0.100% 7.357% 09/25/98 11/01/98 Actual/360
Balloon 6.692% 0.143% 0.100% 6.549% 08/24/98 10/01/98 Actual/360
Balloon 7.207% 0.143% 0.100% 7.064% 07/13/98 09/01/98 Actual/360
Balloon 7.375% 0.143% 0.100% 7.232% 09/14/98 11/01/98 Actual/360
Balloon 7.094% 0.143% 0.100% 6.951% 08/03/98 10/01/98 Actual/360
Balloon 7.350% 0.143% 0.100% 7.207% 11/04/98 01/01/99 Actual/360
Balloon 7.164% 0.143% 0.100% 7.021% 08/07/98 10/01/98 Actual/360
Fully
Amortizing 6.997% 0.143% 0.100% 6.854% 07/09/98 09/01/98 30/360
Balloon 7.875% 0.143% 0.100% 7.732% 11/19/98 01/01/99 Actual/360
Balloon 7.000% 0.143% 0.100% 6.857% 09/09/98 11/01/98 Actual/360
Balloon 7.330% 0.143% 0.100% 7.187% 09/02/98 11/01/98 Actual/360
Balloon 8.500% 0.143% 0.100% 8.357% 11/05/98 01/01/99 Actual/360
Balloon 8.000% 0.143% 0.100% 7.857% 09/25/98 11/01/98 Actual/360
Balloon 7.336% 0.143% 0.100% 7.193% 07/21/98 09/01/98 Actual/360
Balloon 7.307% 0.143% 0.100% 7.164% 09/01/98 11/01/98 Actual/360
Balloon 8.000% 0.143% 0.100% 7.857% 10/29/98 12/01/98 Actual/360
Balloon 8.075% 0.143% 0.100% 7.932% 12/02/98 02/01/99 Actual/360
Balloon 7.280% 0.293% 0.250% 6.987% 09/23/98 11/01/98 Actual/360
Balloon 7.280% 0.293% 0.250% 6.987% 09/23/98 11/01/98 Actual/360
Balloon 8.000% 0.143% 0.100% 7.857% 11/23/98 02/01/99 Actual/360
Balloon 7.235% 0.143% 0.100% 7.092% 09/10/98 11/01/98 Actual/360
Balloon 7.850% 0.143% 0.100% 7.707% 10/14/98 12/01/98 Actual/360
Balloon 7.700% 0.143% 0.100% 7.557% 09/24/98 12/01/98 Actual/360
Balloon 8.600% 0.143% 0.100% 8.457% 12/07/98 02/01/99 Actual/360
Balloon 8.000% 0.143% 0.100% 7.857% 10/09/98 12/01/98 Actual/360
Balloon 7.850% 0.093% 0.050% 7.757% 11/30/98 01/01/99 Actual/360
Balloon 7.170% 0.143% 0.100% 7.027% 07/24/98 09/01/98 Actual/360
Balloon 6.870% 0.128% 0.085% 6.742% 06/29/98 08/01/98 Actual/360
Balloon 6.900% 0.143% 0.100% 6.757% 08/18/98 10/01/98 Actual/360
Balloon 7.000% 0.143% 0.100% 6.857% 09/28/98 11/01/98 Actual/360
Balloon 7.000% 0.143% 0.100% 6.857% 10/30/98 12/01/98 Actual/360
Balloon 7.010% 0.143% 0.100% 6.867% 10/28/98 12/01/98 Actual/360
Balloon 7.073% 0.143% 0.100% 6.930% 07/21/98 09/01/98 Actual/360
Balloon 6.930% 0.143% 0.100% 6.787% 07/31/98 09/01/98 Actual/360
Balloon 7.180% 0.143% 0.100% 7.037% 07/16/98 09/01/98 Actual/360
Fully
Amortizing 7.520% 0.143% 0.100% 7.377% 08/11/98 10/01/98 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 PREPAYMENT PENALTY
PAYMENT (MONTHS) (MONTHS) (II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE DESCRIPTION (MONTHS)
------- --------- ------------- --------- -------- -------- -------------- ------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$14,705 180 300 5 175 09/01/13 No No 04/30/13 LO(175)/OPEN(5)/DEFEASANCE
13,474 180 360 4 176 10/01/13 No No 05/31/13 LO(175)/OPEN(5)/DEFEASANCE
13,773 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
12,961 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
12,740 120 360 2 118 12/01/08 No No 07/31/08 LO(115)/OPEN(5)/DEFEASANCE
12,682 120 360 6 114 08/01/08 No No 06/01/08 LO(118)/OPEN(2)/DEFEASANCE
11,310 120 360 3 117 11/01/08 No Yes(L) 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
11,448 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
10,638 120 360 5 115 09/01/08 No Yes(N) 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
10,479 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
11,232 120 300 2 118 12/01/08 No No 09/01/08 LO(117)/OPEN(3)/DEFEASANCE
9,424 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
10,038 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
11,501 180 240 4 176 10/01/13 No Yes(O) 05/31/13 LO(175)/OPEN(5)/DEFEASANCE
9,673 120 360 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
9,462 120 360 6 114 08/01/08 No Yes(M) 06/01/08 LO(118)/OPEN(2)/DEFEASANCE
9,544 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
8,704 120 360 5 115 09/01/08 No Yes(N) 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
9,043 120 360 6 114 08/01/08 No No 06/01/08 LO(118)/OPEN(2)/DEFEASANCE
9,501 120 300 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
8,395 120 360 5 115 09/01/08 No No 03/04/08 LO(114)/OPEN(6)/DEFEASANCE
7,923 120 360 2 118 12/01/08 No no 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
7,440 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
9,885 180 180 6 174 08/01/13 No No 06/01/13 LO(178)/OPEN(2)/DEFEASANCE
7,636 120 300 2 118 12/01/08 No No 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
6,653 144 360 4 140 10/01/10 No No 08/01/10 LO(142)/OPEN(2)/DEFEASANCE
5,879 120 360 4 116 10/01/08 No Yes(P) 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
6,820 120 300 2 118 12/01/08 No No 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
6,164 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
5,676 120 360 6 114 08/01/08 No No 06/01/08 LO(118)/OPEN(2)/DEFEASANCE
5,626 120 360 4 116 10/01/08 No Yes(P) 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
5,727 120 300 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
5,535 120 300 1 119 01/01/09 No No 11/01/08 LO(118)OPEN(2)DEFEASANCE
5,506 180 240 4 176 10/01/13 No Yes(O) 05/31/13 LO(175)/OPEN(5)/DEFEASANCE
4,975 180 240 4 176 10/01/13 No Yes(O) 05/31/13 LO(175)/OPEN(5)/DEFEASANCE
4,329 120 360 1 119 01/01/09 No No 11/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,440 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,733 120 300 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,137 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,376 120 360 1 119 01/01/09 No No 11/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,242 120 300 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
294,397 120 360 2 118 12/01/08 No No 09/01/08 LO(117)/OPEN(3)/DEFEASANCE
79,181 120 360 6 114 08/01/08 No No 04/01/08 LO(116)/OPEN(4)/DEFEASANCE
67,629 120 360 7 113 07/01/08 No No 06/30/02 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)/DEFEASANCE
41,543 120 240 5 115 09/01/08 No No 04/30/08 LO(115)/OPEN(5)/DEFEASANCE
37,486 120 306 4 116 10/01/08 No No 05/31/08 LO(115)/OPEN(5)/DEFEASANCE
35,692 120 300 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
33,299 120 360 3 117 11/01/08 No No 07/01/08 LO(116)/OPEN(4)/DEFEASANCE
35,572 120 300 6 114 08/01/08 No No 06/01/08 LO(118)/OPEN(2)/DEFEASANCE
30,844 116 240 6 110 04/01/08 No No 12/01/07 LO(112)/OPEN(4)/DEFEASANCE
25,859 120 300 6 114 08/01/08 No No 07/31/02 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)/DEFEASANCE
33,645 180 180 5 175 09/01/13 No No 07/02/13 LO(178)/OPEN(2)/DEFEASANCE
</TABLE>
<PAGE> 127
<TABLE>
<CAPTION>
LOAN
CUT-OFF TOTAL SF/ BALANCE
DATE UNITS/ UNIT/ NET PER
APPRAISAL APPRAISAL LTV YEAR BUILT/ ROOM/ ROOM/ RENTABLE SF/UNIT/
PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED AREA(SF) ROOM/BED
------------- --------- --------- ------- ----------- ------ ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Del Plaza Shopping Center 2,750,000 07/01/98 74% 1964 66,737 SF 66,737 31
Staples - Hobbs NM 2,525,000 05/07/98 79% 1998 24,049 SF 24,049 83
701 Montana 3,350,000 02/21/98 60% 1986 8,707 SF 8,707 229
Evergreen Center 2,700,000 04/05/98 70% 1985 29,823 SF 29,823 64
For Eyes, Gwinnett 2,300,000 08/24/98 80% 1998 9,500 SF 9,500 193
L.A. Woman Building 2,500,000 06/19/98 72% 1949/1986 11,636 SF 11,636 154
River Crossing Shopping Center 2,125,000 08/24/98 80% 1989 37,000 SF 37,000 46
Academy Crossing Shopping Center 2,250,000 07/03/98 75% 1985 55,086 SF 55,086 31
1210 West Morena Blvd 2,500,000 07/01/98 66% 1972 27,188 SF 27,188 60
Park Village Shopping Center 2,100,000 08/06/98 75% 1989 14,150 SF 14,150 111
Yuma Mesa Shopping Center 4,600,000 09/10/98 33% 1960/1975 85,495 SF 85,495 18
Anaheim Town Center 4,450,000 05/08/98 34% 1981 33,580 SF 33,580 44
The Ellinwood Center 2,350,000 07/10/98 63% 1986 12,346 SF 12,346 119
North Towne Square Shopping Center 1,850,000 06/29/98 79% 1978/1994 80,599 SF 80,599 18
Mountain Park Square, Ph II 1,930,000 11/01/98 74% 1998 14,050 SF 14,050 101
Central Avenue Plaza 1,865,000 06/10/98 75% 1960/1993 21,282 SF 21,282 66
Calabasas Retail Center 1,820,000 07/21/98 75% 1928/1978 8,982 SF 8,982 152
920 Morena Industrial 2,110,000 07/01/98 64% 1973 22,823 SF 22,823 59
Wendys 1,775,000 05/29/98 75% 1979/1989 4,604 SF 4,604 288
Mission Center 2,370,000 07/21/98 55% 1990 16,436 SF 16,436 79
Pier I Imports Building 1,620,000 07/23/98 77% 1983/1990 10,215 SF 10,215 122
Arcadia Center 2,500,000 09/01/98 46% 1988 18,925 SF 18,925 61
Brookhurst Center 1,525,000 06/10/98 72% 1966/1987 8,361 SF 8,361 131
Trader Joes 2,300,000 02/09/98 47% 1991 11,370 SF 11,370 95
Country Corner Retail Center 1,500,000 09/16/98 67% 1978 14,573 SF 14,573 69
Sandra Plaza 1,800,000 08/03/98 55% 1980/1993 19,213 SF 19,213 52
Kragen Auto Parts-Chico CA 1,460,000 08/14/98 58% 1998 8,092 SF 8,092 105
Green Gables Shoppette 1,210,000 09/11/98 70% 1974 23,240 SF 23,240 36
Strip Retail Center 1,250,000 08/14/98 67% 1987 9,425 SF 9,425 89
Magnolia Center 1,100,000 04/15/98 75% 1990 12,870 SF 12,870 64
Schucks Automotive 1,100,000 07/29/98 74% 1997 12,000 SF 12,000 68
UMC Taco Bell 985,000 08/28/98 75% 1998 2,118 SF 2,586 349
Chestnut Place Retail Center 950,000 10/06/98 75% 1989 8,118 SF 8,118 88
Payless Shoes Store (Beltline Blvd.) 960,000 06/29/98 72% 1998 4,997 SF 4,997 138
Payless Shoe Store (Dutch Square) 820,000 06/29/98 76% 1998 3,060 SF 3,060 204
Kragen Auto Parts-Marysville CA 1,090,000 09/25/98 54% 1997 7,000 SF 7,000 84
Plaza Temecula 750,000 08/04/98 67% 1988 10,490 SF 10,490 48
851 Mistletoe Lane 900,000 09/03/98 54% 1978 14,000 SF 14,000 35
Yacoub Property:True Value Hardware 785,000 08/21/98 56% 1926 2,736 SF 2,736 161
Banana Belt Strip Center 580,000 06/11/98 75% 1983 6,333 SF 6,333 69
San Marcos Retail Plaza 600,000 08/18/98 70% 1975/1997 9,324 SF 9,324 45
Baybridge Business Park 62,100,000 09/03/98 66% 1957/1994 889,548 SF 889,548 46
Renfro Warehouse 15,174,000 07/10/98 77% 1986 566,564 SF 566,564 21
Purolator Distribution Center 12,900,000 01/09/98 79% 1997 506,115 SF 506,115 20
Ironhorse Park 10,500,000 04/29/98 51% 1985/1996 111,528 SF 111,528 48
Kingsley Tool Company 6,285,000 08/18/98 85% 1962 341,840 SF 341,840 16
Huntington Center-15145-15245 Springdale/Transistor Lane 1980 90,670 SF 90,670
Huntington Center-5312 System Drive 1977 11,206 SF 11,206
Huntington Center-5362 Industrial Drive 1979 11,408 SF 11,408
Huntington Center-5452 McFadden Avenue 1974 20,000 SF 20,000
Huntington Center Industrial Properties (Roll-Up) 8,620,000 09/08/98 58% 133,284 SF 133,284 38
Hillside Industrial II 6,500,000 06/15/98 77% 1998 88,896 SF 88,896 56
Aplex Building 8,990,000 06/08/98 55% 1970 60,800 SF 60,800 82
Federal Express Distribution Facility 5,700,000 06/18/98 69% 1998 88,215 SF 88,215 45
Patrick Airport Center 4,600,000 06/30/98 78% 1997 62,315 SF 62,315 57
Mighty Micro Building 5,700,000 07/31/98 63% 1998 39,156 SF 39,156 91
</TABLE>
<PAGE> 128
<TABLE>
<CAPTION>
OCCUPANCY U/W
OCCUPANCY AS OF U/W U/W U/W NOI U/W
PERCENT DATE REVENUES EXPENSE NOI DSCR RESERVES
- --------- -------- ----------- ----------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
94% 08/27/98 323,467 55,978 267,489 1.52 13,347
100% 09/30/98 227,324 9,436 217,888 1.35 3,607
83% 02/28/98 376,599 92,780 283,819 1.72 3,309
92% 07/01/98 379,184 141,279 237,905 1.53 7,351
100% 10/01/98 258,400 47,553 210,847 1.38 1,425
100% 07/14/98 242,350 13,217 229,133 1.51 1,732
100% 09/30/98 270,239 75,190 195,049 1.44 7,400
95% 07/01/98 377,954 134,089 243,865 1.78 8,962
100% 09/30/98 255,100 49,582 205,518 1.61 6,499
94% 08/01/98 222,273 11,114 211,159 1.68 2,439
100% 10/31/98 683,068 223,262 459,806 3.41 24,687
91% 03/01/98 654,504 249,011 405,493 3.59 12,434
100% 07/01/98 257,725 80,435 177,290 1.47 3,959
74% 08/31/98 263,607 54,068 209,539 1.52 20,150
100% 10/22/98 228,853 54,437 174,416 1.50 2,108
92% 07/15/98 300,026 109,370 190,656 1.68 2,228
100% 09/24/98 217,552 53,373 164,179 1.43 3,178
100% 09/30/98 213,462 32,581 180,881 1.73 2,791
100% 05/29/98 209,584 42,574 167,010 1.54 1,473
100% 09/08/98 281,522 82,270 199,252 1.75 1,825
100% 07/14/98 233,931 71,214 162,717 1.62 2,759
95% 09/13/98 307,627 72,218 235,409 2.48 3,231
100% 08/14/98 181,142 37,242 143,900 1.61 4,271
100% 02/09/98 281,320 65,095 216,225 1.82 1,572
100% 04/30/98 227,926 90,395 137,531 1.50 4,900
100% 09/04/98 208,648 33,737 174,911 2.19 3,046
100% 09/16/98 117,674 23,957 93,717 1.33 809
100% 10/27/98 168,144 49,166 118,978 1.45 3,486
72% 07/23/98 152,470 38,055 114,415 1.55 1,885
100% 07/17/98 150,518 40,116 110,402 1.62 5,793
100% 09/15/98 118,512 26,491 92,021 1.36 1,200
100% 10/06/98 97,031 11,610 85,421 1.24 911
100% 06/23/98 153,878 62,694 91,184 1.37 1,217
100% 08/31/98 100,876 18,577 82,299 1.25 750
100% 08/31/98 86,867 13,121 73,746 1.24 459
100% 09/30/98 94,461 17,681 76,780 1.48 700
100% 06/30/98 106,237 30,626 75,611 1.83 1,049
100% 09/18/98 107,160 30,119 77,041 1.72 2,800
100% 09/04/98 59,147 6,670 52,477 1.39 540
100% 10/13/98 87,791 26,506 61,285 1.51 1,241
94% 08/26/98 77,413 16,872 60,541 1.56 1,401
91% 11/20/98 8,564,776 3,728,696 4,836,080 1.37 136,214
100% 07/01/98 1,417,163 56,671 1,360,492 1.43 0
100% 07/01/98 1,245,043 24,901 1,220,142 1.50 23,274
93% 09/30/98 1,160,789 311,598 849,191 1.70 22,306
100% 09/25/98 600,000 29,092 570,908 1.27 30,766
99% 11/01/98
100% 11/01/98
100% 11/01/98
100% 11/01/98
1,021,983 290,626 731,357 1.71 30,006
100% 04/30/98 734,375 202,846 531,529 1.33 8,890
100% 07/21/98 930,931 88,430 842,501 1.97 11,426
100% 06/30/98 532,060 20,367 511,693 1.38 8,809
91% 07/09/98 552,071 103,629 448,442 1.45 6,232
100% 08/13/98 580,292 34,818 545,474 1.35 3,916
<CAPTION>
2ND
MOST MOST MOST
U/W RECENT MOST MOST MOST RECENT RECENT
RESERVES END RECENT RECENT RECENT NOI END
PER UNIT DATE REVENUES EXPENSES NOI DSCR DATE
- -------- -------- -------- ---------- ---------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
0.20 12/31/97 331,080 32,807 298,273 1.69 12/31/96
0.15
0.38 12/31/97 448,489 70,407 378,082 2.29 12/31/96
0.25 12/31/97 402,025 115,355 286,670 1.84 12/31/96
0.15
0.15 12/31/97 276,356 3,420 272,936 1.79 12/31/96
0.20 12/31/97 273,643 71,305 202,338 1.49 12/31/96
0.16 12/31/97 288,504 89,384 199,120 1.45 12/31/96
0.24 12/31/97 265,718 33,630 232,088 1.82 12/31/96
0.17 12/31/97 268,081 115,514 152,567 1.21 12/31/96
0.29 12/31/97 744,612 246,685 497,927 3.69 12/31/96
0.37 07/31/98 708,519 188,514 520,005 4.60
0.32 12/31/97 281,576 78,199 203,377 1.69 12/31/96
0.25 12/31/97 240,200 37,918 202,282 1.47 12/31/96
0.15
0.10 12/31/97 311,561 107,560 204,001 1.80 12/31/96
0.35 12/31/97 219,775 44,141 175,634 1.53 12/31/96
0.12 12/31/97 226,949 29,064 197,885 1.89 12/31/96
0.32 12/31/97 216,437 35,477 180,960 1.67 12/31/96
0.11 12/31/97 260,928 64,146 196,782 1.73 12/31/96
0.27 12/31/97 202,196 62,626 139,570 1.39 12/31/96
0.17 12/31/97 333,511 52,611 280,900 2.95 12/31/96
0.51 12/31/97 185,344 20,516 164,828 1.85 12/31/96
0.14 12/31/97 312,418 57,802 254,616 2.15 12/31/96
0.34 12/31/97 191,170 72,637 118,533 1.29 12/31/96
0.16 12/31/97 195,997 31,787 164,210 2.06 12/31/96
0.10
0.15 12/31/97 152,057 42,405 109,652 1.34 12/31/96
0.20 12/31/97 171,131 28,002 143,129 1.94 12/31/96
0.45 12/31/97 97,949 32,439 65,510 0.96 12/31/96
0.10
0.43
0.15 12/31/97 153,325 55,733 97,592 1.47 12/31/96
0.15
0.15
0.10
0.10 12/31/97 101,970 24,601 77,369 1.87 12/31/96
0.20 12/31/97 101,650 21,253 80,397 1.79 12/31/96
0.20 12/31/97 60,447 4,178 56,269 1.49 12/31/96
0.20 12/31/97 106,157 18,612 87,545 2.16
0.15 12/31/97 69,613 10,702 58,911 1.51 12/31/96
0.15
0.00
0.05
0.20 12/31/97 1,138,971 284,500 854,471 1.71 12/31/96
0.09
0.23 12/31/97 955,813 282,106 673,707 1.57 12/31/96
0.10
0.19 12/31/97 554,807 218,031 336,776 0.79 12/31/96
0.10
0.10
0.10
</TABLE>
<PAGE> 129
<TABLE>
<CAPTION>
2ND
2ND 2ND 2ND MOST LARGEST
MOST MOST MOST RECENT TENANT
RECENT RECENT RECENT NOI LEASED
REVEBUES EXPENSES NOI DSCR LARGEST TENANT SF
-------- ------------ ----------- ------- --------------- --------
<S> <C> <C> <C> <C> <C>
281,338 30,294 251,044 1.42 Sav-A-Lot 15,080
Staples 24,049
446,442 71,952 374,490 2.27 Let's Travel 1,360
388,718 113,746 274,972 1.77 Liquor Center 4,655
Only Diamonds 4,950
255,097 6,610 248,487 1.63 LA Woman, Inc 11,636
269,300 68,146 201,154 1.48 Food Lion 25,000
225,343 135,355 89,988 0.66 Brown Group Retail, Inc 14,000
248,098 42,623 205,475 1.61 Petco Annimal Supplies, Inc 20,108
264,671 103,116 161,555 1.28 Hollywood Video 5,700
722,539 334,731 387,808 2.88 Southwest Super Markets, LLC 24,560
Wells Fargo Bank 6,000
285,934 81,363 204,571 1.70 Mian, Jalani 2,682
251,056 63,136 187,920 1.36 Food Lion 32,708
The Lighter Side 3,000
305,079 95,594 209,485 1.84 The Pep Boys, Manny, Moe & Jack of California 12,083
222,541 41,802 180,739 1.58 Gaetano's Italian Restaurant 3,902
221,117 15,661 205,456 1.97 Scan Furniture 22,823
203,677 35,478 168,199 1.55 Wendy's 2,316
250,349 60,712 189,637 1.66 New Leaf Market 7,646
182,898 42,286 140,612 1.40 Pier 1 Imports 10,215
315,498 57,770 257,728 2.71 Shanghai Restaurant 4,990
184,070 20,893 163,177 1.83 Khouraki, Abdo 3,900
276,519 56,036 220,483 1.86 Trader Joe's Company 11,370
147,290 68,528 78,762 0.86 7-Eleven Southland Corp. 4,000
197,449 29,380 168,069 2.11 Michael's Stores, Inc. 17,808
Kragen Auto Parts 8,092
148,362 36,839 111,523 1.36 Jewell Auto Body 11,200
175,870 35,418 140,452 1.90 Launderland 4,225
121,274 30,464 90,810 1.33 Kaiser Foundation Hospitals 8,379
Schucks Auto Parts 12,000
Las Cal Corporation 2,586
143,541 55,543 87,998 1.32 Oasis Mini-Market 2,992
Payless Shoe Source 3,060
Payless Shoe Source 3,060
Kragen Auto Parts 7,000
113,084 27,770 85,314 2.07 Interior For Today 3,300
97,875 24,568 73,307 1.64 Redding Instruments 3,000
57,940 4,291 53,649 1.43 True Value Hardware 2,736
Banana Belt Liquors 3,110
74,197 9,907 64,290 1.65 Garden Fresh Produce 4,275
L3 487,460
Renfro 566,564
Purolator 506,115
1,082,265 250,872 831,393 1.67 Summit Sports 8,000
Kingsley Tool Co. 341,840
Integrated Tech 5,110
Summit Steel 11,206
Haddonstone 11,408
F.P. Diesel 20,000
1,012,669 300,112 712,557 1.66 F.P. Diesel 20,000
Countrywide Funding Inc. 45,888
170,034 139,473 30,561 0.11 Aplex, Inc. 60,800
FedEx 88,215
Gaming Systems 17,038
Mighty Micro 39,156
<CAPTION>
SECOND
LARGEST SECOND LARGEST SECOND
TENANT LARGEST LARGEST TENANT LARGEST
% of TENANT TENANT % OF TENANT
TOTAL LEASE SECOND LARGEST LEASED TOTAL LEASE
SF EXPIRATION TENANT SF SF EXPIRATION
------ ----------- ----------------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
23% 08/31/99 Family Dollar 9,600 14% 12/31/03
100% 09/01/13
16% 09/01/00 Starbuck's 1,240 14% 09/01/04
16% 09/30/03 Chief Auto Parts 3,400 11% 10/31/00
52% 09/30/18 For Eyes 2,550 27% 07/31/13
100% 03/15/03
68% 10/28/09 State of SC 3,600 10% 07/31/99
25% 11/30/03 Faith Alliance Church 9,140 17% 12/31/01
74% 05/08/04 Ochoc, Robert Al 7,080 26% 02/28/02
40% 08/31/08 Little Caesar's 1,750 12% 05/31/99
29% 10/31/03 Pic 'N' Save 19,600 23% 06/30/04
18% 09/30/05 Bahay Natin Filipino Restaurant 3,000 9% 09/30/00
22% 04/09/03 Super Five 2,116 17% 12/31/06
41% 06/12/14 CVS Drugstore (REVCO) 8,450 10% NAV
21% 05/19/03 Dr. John E. Culp 2,340 17% 06/19/05
57% 01/31/06 Pizza Hut of San Diego, Inc. 1,404 7% 09/30/01
43% 10/31/01 Small Treasures 2,183 24% 10/31/00
100% 04/14/02 Martin Outdoor 0 0% 09/30/01
50% 05/31/08 Tera Flora 1,144 25% MTM
47% 05/24/00 Mission Liquor 2,300 14% 08/31/03
100% 03/31/10
26% 09/30/00 Lucko Financial Service, Inc. 3,227 17% 04/30/01
47% 03/07/05 Pontius Corp 2,936 35% 09/30/99
100% 10/31/04
27% 10/31/08 Wrapco, Inc 2,000 14% 04/30/02
93% 02/28/00 Pizza Hut 1,405 7% 10/31/99
100% 03/31/18
48% 04/30/01 Takayama Restaurant 2,140 9% 12/31/99
45% 12/14/00 Windmill Cleaners 1,300 14% 11/30/03
65% 12/31/02 Nice Liquor & Video 2,860 22% NAV
100% 07/31/17
100% 04/30/18
37% 07/31/99 Mr. Q's Vietnamese Cuisine 2,432 30% 07/31/99
61% 04/30/13 Bully Farr 1,937 39% 10/31/02
100% 05/31/13
100% 08/08/12
31% 01/31/01 Lady of the Lake 2,790 27% 12/31/01
21% 06/30/99 Mistletoe Realty 2,000 14% 06/30/99
100% 11/30/01
49% 12/31/05 Great Divide Printing 1,670 26% 12/31/03
46% 12/31/04 Wonder Bread Bakery 3,000 32% 12/31/02
55% 11/01/18 Unisys 266,488 30% 12/01/00
100% 07/22/13
100% 10/31/07
7% 04/01/02 Jupiter Property Mgt 5,800 5% 02/01/05
100% 07/01/14
6% 08/31/00 Sun Engineering 5,019 6% 02/28/03
100% 09/30/00
100% 09/30/00
100% 02/28/99
15% 02/28/99 Haddonstone 11,408 9% 09/30/00
52% 07/01/03 Condor Systems 43,008 48% 02/01/05
100% 12/31/02
100% 03/31/08
27% 03/31/03 Performance Contracting 10,200 16% 01/31/02
100% 08/04/13
</TABLE>
<PAGE> 130
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N200A 50933 Collierville Business Center-Collierville
Plaza 141 US Highway 72 Shelby Collierville
N200B 50933 Collierville Business Center-Federal Avenue 5603 Federal Ave. Shelby Memphis
N200C 50933 Collierville Business Center-Magnolia Ridge 318 & 320 Mt. Pleasant Road Shelby Collierville
N200D 50933 Collierville Business Center-Pecan Ridge
Center 205 Mt. Pleasant Road Shelby Collierville
N200E 50933 Collierville Business Center-Ripley Oaks
Retail Center 449 US Highway 72 Shelby Collierville
N200F 50933 Collierville Business Center-Wonder Center 165 Main Street Shelby Collierville
N200 50933 Collierville Business Center (Roll-Up)
N201 51346 Bentek Manufacturing Building 2350 Harris Way Santa Clara San Jose
N202 51351 Thousand Oaks Business Center 250, 270 & 290 Conejo Ridge
Avenue Ventura Thousand Oaks
N203 50902 McGaw Business Center 1555-1565 McGaw Ave,
17151-17153
Gillette Ave Orange Irvine
N204 51256 Faber Street Industrial Building 2801-2809 Faber St. Alameda Union City
N205 51387 Magellan Systems Building 1292-1294 Hammerwood Avenue Santa Clara Sunnyvale
N206 51358 33300 Western Ave Industrial Center 33300 Western Avenue Alameda Union City
N207 51170 Center Street Industrial Center 4400 34st Street North-
US Highway 19 Pinellas St. Petersburg
N208 51334 Valley View Building 16932 Valley View Ave. Los Angeles La Mirada
N209 51250 Hi-Val Industrial 1300 E Wakeham Ave. Orange Santa Ana
N210 51103 Redmoor Industrial Center 18080 Northeast 68th St. King Redmond
N211 51258 Redfield Tech Center 7848 East Redfield Rd Maricopa Scottsdale
N212 51205 Clark Foods Sterling Heights 6635 Sterling Drive South Macomb Sterling Heights
N213 51120 Rosewood Industrial Plaza 4500-4530 N. Hiatus Rd. Broward Sunrise
N214 51310 30 Janis Way Building 30 Janis Way Santa Cruz Scotts Valley
N215 51265 Black Mountain Industrial 9520 Black Mountain Rd San Diego San Diego
N216 51365 Napa Warehouse 912-918 Enterprise Way Napa Napa
N217 51237 Applied Graphics Tech 5670 Oberlin Dr. San Diego San Diego
N218 51268 Buenos Industrial 980 Buenos Ave. San Diego San Diego
N219 51355 Grouse Creek Center 23798 U.S. Highway 24 Eagle Minturn
N220 51277 Faraday Ave. Light Industrial 3 Faraday Ave. Orange Irvine
N221 51269 C Street Industrial 591 - 595 C Street San Diego Chula Vista
N222 51399 Fremont Light Industrial Building 44829-44853 Freemont Blvd Alameda Fremont
N223 51400 Air Liquide Light Industrial 201 S. River Run Road Coconino Flagstaff
N224 51396 Lake Forest Light Industrial Building 20611 Canada Road Orange Lake Forest
N225 51340 Hertz Equipment Rental Warehouse 800 Industrial Circle South Scott Shakopee
N226A 51429 RFS Hotel Note B-Hampton Inn-Bloomington 4201 West 80th Street Hennepin Bloomington
N226B 51429 RFS Hotel Note B-Holiday Inn-Wauwatosa 11111 West North Avenue Milwaukee Wauwatosa
N226C 51429 RFS Hotel Note B-Sheraton Milpitas 1801 Barber Lane Santa Clara Milpitas
N226D 51429 RFS Hotel Note B-Sheraton-Pleasanton 5115 Hopyard Road Alameda Pleasanton
N226E 51429 RFS Hotel Note B-Residence Inn-Kansas City 2975 Main Street Jackson Kansas City
N226 51429 RFS Hotel Note B (Roll-Up)
N227A 51428 RFS Hotel Note A-Comfort Inn-Farmington Hills 30715 Twelve Mile Road Oakland Farmington Hills
N227B 51428 RFS Hotel Note A-Hampton Inn Indianapolis 5601 Fortune Circle West Marion Indianapolis
N227C 51428 RFS Hotel Note A-Hampton Inn-Memphis 33 Humphrey Center Drive Shelby Memphis
N227D 51428 RFS Hotel Note A-Sheraton-Bakersfield 5101 California Avenue Kern Bakersfield
N227E 51428 RFS Hotel Note A-Sheraton-Sunnyvale 1100 North Mathilda Avenue Santa Clara Sunnyvale
N227 51428 RFS Hotel Note A (Roll-Up)
SUB-TOTAL CROSSED LOANS
N228 51006 The Lodge at Woodcliff 199 Woodcliff Drive Monroe Fairport
N229 51060 Lighthouse Lodge and Suites 1150 & 1249 Lighthouse Ave. Monterey Pacific Grove
N230A 51121 Lexington Suites - Dallas 4150 Independence Drive Dallas Dallas
N230B 51121 Lexington Suites - Houston 16410 N. Freeway (IH-45) Harris Houston
N230C 51121 Lexington Suites - Oklahoma City 1200 South Meridian Avenue Oklahoma Oklahoma City
N230 51121 Lexington Suites Hotels (Roll-Up)
N231 51156 Spyglass Inn 2703 & 2705 Spyglass Dr. San Luis Obispo Pismo Beach
N232 51122 Fairfield Inn 20 Orme Dr. Warren Vicksburg
N233 51157 Fireside Inn (Best Western) 6700 Moonstone Beach Dr. San Luis Obispo Cambria
N234 51131 450 7th Avenue 450 7th Ave. (Nelson Bldg.) New York New York
N235 51111 Corte Madera Plaza 21 Tamal Vista Blvd. Marin Corte Madera
N236 51254 379 Lytton Avenue Building 379 Lytton Ave. Santa Clara Palo Alto
</TABLE>
<PAGE> 131
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
ADMINI-
CUT-OFF MATURITY STRATIVE SUB- NET FIRST INTEREST
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE FEE SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE RATE FEE RATE RATE DATE DATE METHOD
- ----- ---- ---------- ------- ------- ------- ---------- -------- ------- -------- -------- ---- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TN 38017 Retail
TN 38118 Industrial
TN 38017 Industrial
TN 38017 Industrial
TN 38017 Retail
TN 38017 Industrial
Industrial 3,400,000 3,381,120 2,735,742 Balloon 7.100% 0.143% 0.100% 6.957% 08/12/98 10/01/98 Actual/360
CA 95131 Industrial 3,150,000 3,100,264 Fully
Amortizing 7.126% 0.143% 0.100% 6.983% 07/31/98 10/01/98 30/360
CA 91361 Industrial 2,800,000 2,794,353 2,453,761 Balloon 7.125% 0.143% 0.100% 6.982% 10/08/98 12/01/98 Actual/360
CA 92614 Industrial 2,625,000 2,614,277 2,299,921 Balloon 7.110% 0.093% 0.050% 7.017% 07/29/98 09/01/98 Actual/360
CA 94587 Industrial 2,500,000 2,491,078 2,183,238 Balloon 6.990% 0.143% 0.100% 6.847% 08/27/98 10/01/98 Actual/360
CA 94702 Industrial 2,475,000 2,472,771 2,217,110 Balloon 8.000% 0.143% 0.100% 7.857% 11/02/98 01/01/99 Actual/360
CA 94587 Industrial 2,470,000 2,465,181 2,171,527 Balloon 7.250% 0.143% 0.100% 7.107% 10/15/98 12/01/98 Actual/360
FL 33714 Industrial 2,320,000 2,315,474 2,039,652 Balloon 7.250% 0.143% 0.100% 7.107% 10/27/98 12/01/98 Actual/360
CA 90638 Industrial 2,290,000 2,285,532 2,013,277 Balloon 7.250% 0.143% 0.100% 7.107% 10/01/98 12/01/98 Actual/360
CA 92705 Industrial 2,047,500 2,039,725 1,776,228 Balloon 6.740% 0.143% 0.100% 6.597% 08/03/98 10/01/98 Actual/360
WA 98052 Industrial 2,000,000 1,996,119 1,759,217 Balloon 7.270% 0.143% 0.100% 7.127% 10/30/98 12/01/98 Actual/360
AZ 85260 Industrial 2,000,000 1,992,994 1,749,970 Balloon 7.064% 0.143% 0.100% 6.921% 08/18/98 10/01/98 Actual/360
MI 48312 Industrial 1,905,000 1,891,124 1,545,477 Balloon 7.353% 0.143% 0.100% 7.210% 06/24/98 08/01/98 Actual/360
FL 33351 Industrial 1,750,000 1,744,302 1,409,126 Balloon 7.125% 0.143% 0.100% 6.982% 10/26/98 12/01/98 Actual/360
CA 95066 Industrial 1,500,000 1,496,056 1,314,968 Balloon 7.125% 0.143% 0.100% 6.982% 09/10/98 11/01/98 Actual/360
CA 92126 Industrial 1,290,000 1,285,044 1,117,639 Balloon 6.692% 0.143% 0.100% 6.549% 08/24/98 10/01/98 Actual/360
CA 94558 Industrial 1,218,000 1,214,168 985,966 Balloon 7.300% 0.143% 0.100% 7.157% 10/26/98 12/01/98 Actual/360
CA 92121 Industrial 1,150,000 1,146,076 1,008,920 Balloon 7.167% 0.143% 0.100% 7.024% 08/14/98 10/01/98 Actual/360
CA 92110 Industrial 1,100,000 1,095,774 953,026 Balloon 6.692% 0.143% 0.100% 6.549% 08/24/98 10/01/98 Actual/360
CO 81645 Industrial 950,000 947,055 770,753 Balloon 7.375% 0.143% 0.100% 7.232% 10/08/98 12/01/98 Actual/360
CA 92618 Industrial 850,000 847,809 746,536 Balloon 7.197% 0.143% 0.100% 7.054% 09/01/98 11/01/98 Actual/360
CA 91910 Industrial 755,000 752,099 654,123 Balloon 6.692% 0.143% 0.100% 6.549% 08/24/98 10/01/98 Actual/360
CA 94538 Industrial 560,000 559,079 463,536 Balloon 8.050% 0.143% 0.100% 7.907% 11/23/98 01/01/99 Actual/360
AZ 86001 Industrial 505,000 504,570 453,973 Balloon 8.150% 0.143% 0.100% 8.007% 11/25/98 01/01/99 Actual/360
CA 92630 Industrial 500,000 499,550 447,901 Balloon 8.000% 0.143% 0.100% 7.857% 11/23/98 01/01/99 Actual/360
MN 55379 Industrial 487,500 486,562 429,136 Balloon 7.300% 0.143% 0.100% 7.157% 10/13/98 12/01/98 Actual/360
MN 55437 Hotel
WI 53226 Hotel
CA 95035 Hotel
CA 94588 Hotel
MO 64108 Hotel
Hotel 55,450,000 55,402,022 45,578,728 Balloon 7.821% 0.093% 0.050% 7.728% 12/18/98 02/01/99 Actual/360
MI 48334 Hotel
IN 46241 Hotel
TN 38120 Hotel
CA 93309 Hotel
CA 94089 Hotel
Hotel 40,350,000 40,315,331 33,195,434 Balloon 7.851% 0.093% 0.050% 7.758% 12/18/98 02/01/99 Actual/360
---------- ----------
95,717,353 78,774,162
NY 14450 Hotel 17,250,000 17,154,933 13,896,828 Balloon 7.140% 0.143% 0.100% 6.997% 08/14/98 10/01/98 Actual/360
CA 93950 Hotel 9,300,000 9,261,587 7,533,445 Balloon 7.310% 0.143% 0.100% 7.167% 09/16/98 11/01/98 Actual/360
TX 75237 Hotel
TX 77090 Hotel
OK 73108 Hotel
Hotel 9,285,000 9,253,802 7,349,155 Balloon 7.750% 0.143% 0.100% 7.607% 10/29/98 12/01/98 Actual/360
CA 93449 Hotel 3,150,000 3,139,493 2,526,724 Balloon 7.000% 0.143% 0.100% 6.857% 10/30/98 12/01/98 Actual/360
MS 39180 Hotel 2,800,000 2,791,743 2,288,572 Balloon 7.625% 0.143% 0.100% 7.482% 10/29/98 12/01/98 Actual/360
CA 93428 Hotel 2,800,000 2,790,945 2,257,008 Balloon 7.160% 0.143% 0.100% 7.017% 10/30/98 12/01/98 Actual/360
NY 10123 Office 11,000,000 10,977,077 9,608,472 Balloon 7.000% 0.143% 0.100% 6.857% 10/28/98 12/01/98 Actual/360
CA 94925 Office 9,100,000 9,080,764 7,937,348 Balloon 6.945% 0.098% 0.055% 6.847% 10/13/98 12/01/98 Actual/360
CA 94301 Office 8,800,000 8,766,991 7,644,357 Balloon 6.790% 0.143% 0.100% 6.647% 08/26/98 10/01/98 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 PREPAYMENT PENALTY
PAYMENT (MONTHS) (MONTHS) (ii) (MONTHS) (MONTHS) DATE LOANS LOANS DATE DESCRIPTION (MONTHS)
------- --------- ------------- --------- -------- -------- -------------- ------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
24,248 120 300 5 115 09/01/08 No No 09/30/02 LO(48)/GRTR1%PPMTorYM(69)/
OPEN(3)
28,535 180 180 5 175 09/01/13 No No 07/02/13 LO(178)/OPEN(2)/DEFEASANCE
18,864 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
17,659 120 360 6 114 08/01/08 No No 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
16,616 120 360 5 115 09/01/08 No No 07/02/98 LO(118)/OPEN(2)/DEFEASANCE
18,161 120 360 2 118 12/01/08 No No 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
16,850 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
15,826 120 360 3 117 11/01/08 No Yes(Q) 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
15,622 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
13,266 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
13,671 120 360 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
13,392 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
13,896 120 300 7 113 07/01/08 No No 05/01/08 LO(118)/OPEN(2)/DEFEASANCE
12,509 120 300 3 117 11/01/08 No No 07/01/08 LO(116)/OPEN(4)/DEFEASANCE
10,106 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
8,317 120 360 5 115 09/01/08 No Yes(N) 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
8,843 120 300 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
7,780 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
7,092 120 360 5 115 09/01/08 No Yes(N) 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
6,943 120 300 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
5,768 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
4,868 120 360 5 115 09/01/08 No Yes(N) 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
4,341 120 300 2 118 12/01/08 No No 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,758 120 360 2 118 12/01/08 No No 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,669 120 360 2 118 12/01/08 No No 10/01/08 LO(118)/OPEN(2)/DEFEASANCE
3,342 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
421,411 120 300 1 119 01/01/09 Yes(3) Yes(R) 10/01/08 LO(117)/OPEN(3)/DEFEASANCE
307,448 120 300 1 119 01/01/09 Yes(3) Yes(R) 10/01/08 LO(117)/OPEN(3)/DEFEASANCE
123,464 120 300 5 115 09/01/08 No No 04/30/08 LO(115)/OPEN(5)/DEFEASANCE
67,581 120 300 4 116 10/01/08 No No 06/01/08 LO(116)/OPEN(4)/DEFEASANCE
71,624 120 282 3 117 11/01/08 No No 07/01/08 LO(116)/OPEN(4)/DEFEASANCE
22,264 120 300 3 117 11/01/08 No No 10/31/02 LO(47)/GRTR1%PPMTorYM(68)/
OPEN(5)/DEFEASANCE
20,920 120 300 3 117 11/01/08 No No 07/01/08 LO(116)/OPEN(4)/DEFEASANCE
20,077 120 300 3 117 11/01/08 No No 10/31/02 LO(47)/GRTR1%PPMTorYM(68)/
OPEN(5)/DEFEASANCE
73,183 120 360 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
60,207 120 360 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
57,311 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
</TABLE>
<PAGE> 133
<TABLE>
<CAPTION>
CUT-OFF
DATE
SE- LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED
- ------ ------ ------------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
N200A 50933 Collierville Business Center-Collierville Plaza 1976
N200B 50933 Collierville Business Center-Federal Avenue 1989
N200C 50933 Collierville Business Center-Magnolia Ridge 1986
N200D 50933 Collierville Business Center-Pecan Ridge Center 1990
N200E 50933 Collierville Business Center-Ripley Oaks Retail Center 1958
N200F 50933 Collierville Business Center-Wonder Center 1953
N200 50933 Collierville Business Center (Roll-Up) 6,855,00 03/30/1998 49%
N201 51346 Bentek Manufacturing Building 5,400,000 05/28/1998 57% 1978
N202 51351 Thousand Oaks Business Center 4,850,000 08/06/1998 58% 1990
N203 50902 McGaw Business Center 3,900,000 04/03/1998 67% 1990
N204 51256 Faber Street Industrial Building 3,350,000 06/19/1998 74% 1985
N205 51387 Magellan Systems Building 3,300,000 09/03/1998 75% 1975
N206 51358 33300 Western Ave Industrial Center 3,300,000 07/02/1998 75% 1978
N207 51170 Center Street Industrial Center 2,900,000 09/15/1998 80% 1959/1990
N208 51334 Valley View Building 3,050,000 08/11/1998 75% 1974
N209 51250 Hi-Val Industrial 2,730,000 06/20/1998 75% 1961/1996
N210 51103 Redmoor Industrial Center 3,325,000 06/26/1998 60% 1990
N211 51258 Redfield Tech Center 2,650,000 06/12/1998 75% 1984
N212 51205 Clark Foods Sterling Heights 2,540,000 05/14/1998 75% 1968
N213 51120 Rosewood Industrial Plaza 2,830,000 08/06/1998 62% 1991
N214 51310 30 Janis Way Building 2,810,000 07/21/1998 53% 1974
N215 51265 Black Mountain Industrial 2,110,000 06/30/1998 61% 1984
N216 51365 Napa Warehouse 1,760,000 09/01/1998 69% 1985
N217 51237 Applied Graphics Tech 1,770,000 06/11/1998 65% 1983/1996
N218 51268 Buenos Industrial 1,700,000 07/29/1998 65% 1977
N219 51355 Grouse Creek Center 1,365,000 08/17/1998 69% 1975
N220 51277 Faraday Ave. Light Industrial 1,280,000 07/22/1998 66% 1980
N221 51269 C Street Industrial 1,165,000 06/25/1998 65% 1986
N222 51399 Fremont Light Industrial Building 1,115,000 08/25/1998 50% 1985
N223 51400 Air Liquide Light Industrial 710,000 09/08/1998 71% 1998
N224 51396 Lake Forest Light Industrial Builin 750,000 09/22/1998 67% 1990
N225 51340 Hertz Equipment Rental Warehouse 650,000 08/10/1998 75% 1980/1997
N226A 51429 RFS Hotel Note B-Hampton Inn-Bloomington 1983/1998
N226B 51429 RFS Hotel Note B-Holiday Inn-Wauwatosa 1984/1995
N226C 51429 RFS Hotel Note B-Sheraton Milpitas 1988/1998
N226D 51429 RFS Hotel Note B-Sheraton-Pleasanton 1985/1998
N226E 51429 RFS Hotel Note B-Residence Inn-Kansas City 1988
N226 51429 RFS Hotel Note B (Roll-Up) 88,600,000 01/01/1999 63%
N227A 51428 RFS Hotel Note A-Comfort Inn-Farmington Hills 1986/1997
N227B 51428 RFS Hotel Note A-Hampton Inn Indianapolis 1988/1998
N227C 51428 RFS Hotel Note A-Hampton Inn-Memphis 1992
N227D 51428 RFS Hotel Note A-Sheraton-Bakersfield 1983/1998
N227E 51428 RFS Hotel Note A-Sheraton-Sunnyvale 1980/1998
N227 51428 RFS Hotel Note A (Roll-Up) 65,600,000 01/01/1999 62%
-----------
SUB-TOTAL CROSSED LOANS 154,200,000
N228 51006 The Lodge at Woodcliff 25,000,000 06/01/1998 69% 1986/1996
N229 51060 Lighthouse Lodge and Suites 14,200,000 06/01/1998 65% 1968
N230A 51121 Lexington Suites - Dallas 1984/1997
N230B 51121 Lexington Suites - Houston 1984/1994
N230C 51121 Lexington Suites - Oklahoma City 1981/1996
N230 51121 Lexington Suites Hotels (Roll-Up) 13,875,000 08/21/1998 67%
N231 51156 Spyglass Inn 7,100,000 07/29/1998 44% 1970/1997
N232 51122 Fairfield Inn 4,100,000 08/20/1998 68% 1995
N233 51157 Fireside Inn (Best Western) 4,700,000 07/27/1998 59% 1973/1985
N234 51131 450 7th Avenue 63,000,000 08/20/1998 17% 1931
N235 51111 Corte Madera Plaza 12,000,000 06/30/1998 76% 1975
N236 51254 379 Lytton Avenue Building 13,100,000 07/27/1998 67% 1986
<CAPTION>
LOAN
TOTAL SF/ BALANCE
UNITS/ UNIT/ NET PER
ROOM/ ROOM/ RENTABLE SF/UNIT/
BED BED AREA (SF) ROOM/BED
- ------ ----- --------- --------
<S> <C> <C> <C>
8,286 SF 8,286
6,000 SF 6,000
9,461 SF 9,461
46,530 SF 46,530
55,282 SF 55,282
193,103 SF 193,103
318,802 SF 318,802 11
49,294 SF 49,294 63
53,296 SF 53,296 52
42,901 SF 42,901 61
55,615 SF 55,615 45
25,200 SF 25,200 98
73,860 SF 73,860 33
116,500 SF 116,500 20
83,900 SF 83,900 27
57,064 SF 57,064 36
47,660 SF 47,660 42
38,500 SF 38,500 52
81,225 SF 81,225 23
47,815 SF 47,815 36
44,360 SF 44,360 34
34,007 SF 34,007 38
35,624 SF 35,624 34
18,430 SF 18,430 62
29,040 SF 29,040 38
13,780 SF 13,780 69
15,600 SF 15,600 54
20,460 SF 20,460 37
19,935 SF 19,935 28
4,065 SF 4,065 124
8,610 SF 8,610 58
18,430 SF 18,430 26
135 Rooms 63,728
122 Rooms 59,286
229 Rooms 165,693
214 Rooms 150,000
96 Rooms 95,500
796 Rooms 534,207 69,601
135 Rooms 72,564
131 Rooms 75,976
120 Rooms 60,684
197 Rooms 125,398
173 Rooms 71,448
756 Rooms 406,070 53,327
244 Rooms 166,509 70,307
97 Rooms 47,004 95,480
108 Rooms 47,187
248 Rooms 106,228
145 Rooms 65,916
501 Rooms 219,331 18,471
82 Rooms 43,682 38,286
81 Rooms 37,100 34,466
46 Rooms 26,000 60,673
448,982 SF 448,982 24
48,687 SF 48,687 187
29,705 SF 29,705 295
</TABLE>
<PAGE> 134
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
OCCUPANCY U/W
OCCUPANCY AS OF U/W U/W U/W NOI U/W
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES
--------- ---------- -------- -------- --- ---- --------
<S> <C> <C> <C> <C> <C> <C>
100% 08/05/1998
100% 08/05/1998
100% 08/05/1998
100% 08/05/1998
100% 08/05/1998
91% 08/05/1998
$821,698 $236,536 $585,162 2.01 $63,832
100% 07/12/1996 561,952 33,717 528,235 1.54 4,929
100% 10/02/1998 590,495 135,862 454,633 2.01 5,330
100% 09/25/1998 374,676 81,624 293,052 1.38 4,719
100% 09/11/1998 311,134 13,945 297,189 1.49 12,584
100% 11/30/1998 337,478 17,234 320,244 1.47 8,752
100% 08/01/1998 294,701 14,735 279,966 1.38 14,314
100% 10/02/1998 371,092 84,744 286,348 1.51 17,475
100% 09/17/1998 322,562 59,198 263,364 1.40 10,297
100% 07/24/1998 333,393 62,980 270,413 1.70 1,644
100% 09/30/1998 356,710 98,812 257,898 1.57 11,677
100% 11/30/1998 329,215 90,965 238,250 1.48 4,952
100% 06/17/1998 316,230 17,610 298,620 1.79 20,262
100% 10/02/1998 371,721 149,708 222,013 1.48 7,172
100% 02/28/1998 348,588 96,719 251,869 2.08 4,432
100% 08/17/1998 211,000 43,543 167,457 1.68 4,081
100% 09/29/1998 219,037 58,281 160,756 1.51 4,495
100% 06/30/1998 211,668 42,131 169,537 1.82 1,036
100% 09/30/1998 195,717 44,807 150,910 1.77 4,356
100% 08/16/1998 160,831 39,382 121,449 1.46 2,067
100% 08/27/1998 139,362 31,897 107,465 1.55 1,560
100% 09/30/1998 129,248 25,175 104,073 1.78 6,299
100% 09/04/1998 132,194 36,202 95,992 1.84 2,990
100% 10/22/1998 77,343 15,915 61,428 1.36 813
100% 08/04/1998 89,657 26,338 63,319 1.44 775
100% 10/27/1998 102,989 43,729 59,260 1.48 1,843
81% 09/30/1998
77% 09/30/1998
74% 09/30/1998
72% 09/30/1998
75% 09/30/1998
75% 09/30/1998 22,799,640 12,963,369 9,836,271 1.95 985,620
65% 09/30/1998
75% 09/30/1998
79% 09/30/1998
69% 09/30/1998
79% 09/30/1998
73% 09/30/1998 17,185,493 9,934,635 7,250,858 1.97 793,022
68% 07/31/1998 10,157,952 7,655,920 2,502,032 1.69 406,318
74% 09/30/1998 3,102,719 1,830,156 1,272,563 1.57 124,109
68% 07/31/1998
63% 07/31/1998
52% 07/31/1998
6,534,369 4,989,023 1,545,346 1.80 326,718
69% 06/30/1998 1,607,545 875,135 732,410 2.74 80,377
84% 08/31/1998 1,229,631 812,585 417,046 1.66 61,482
71% 06/30/1998 1,079,797 614,427 465,370 1.93 43,192
92% 09/01/1998 7,857,029 4,393,436 3,463,593 3.94 108,807
100% 09/01/1998 1,325,402 316,837 1,008,565 1.40 9,697
100% 06/25/1998 1,347,895 422,378 925,517 1.35 12,180
<CAPTION>
2ND
MOST MOST MOST
U/W RECENT MOST MOST MOST RECENT RECENT
RESERVES END RECENT RECENT RECENT NOI END
PER UNIT DATE REVENUES EXPENSES NOI DSCR DATE
-------- ------ -------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
0.20 12/31/1997 $ 769,234 $ 182,620 $ 586,614 2.02 12/31/1996
0.10
0.10 12/31/1997 648,568 98,943 549,625 2.43
0.11 12/31/1997 426,567 77,183 349,384 1.65 12/31/1996
0.23 12/31/1997 373,996 69,160 304,836 1.53 12/31/1996
0.35
0.19
0.15 12/31/1997 380,628 175,760 204,868 1.08 12/31/1996
0.12
0.03 12/31/1997 275,256 52,377 222,879 1.40
0.25 12/31/1997 399,826 83,265 316,561 1.93 12/31/1996
0.13 06/30/1998 341,331 73,103 268,228 1.67
0.25
0.15 12/31/1997 382,243 100,475 281,768 1.88 12/31/1996
0.10 12/31/1997 350,110 88,028 262,082 2.16 12/31/1996
0.12 12/31/1997 212,193 37,182 175,011 1.75 12/31/1996
0.13 12/31/1997 199,027 53,670 145,357 1.37 12/31/1996
0.06 12/31/1997 218,979 22,363 196,616 2.11
0.15 12/31/1997 193,141 36,546 156,595 1.84 12/31/1996
0.15 12/31/1997 142,810 25,327 117,483 1.41 12/31/1996
0.10 12/31/1997 137,467 25,553 111,914 1.62 12/31/1996
0.31 12/31/1997 132,877 20,879 111,998 1.92 12/31/1996
0.15 12/31/1997 124,833 32,928 91,905 1.76 12/31/1996
0.20
0.09
0.10
1,238.22 12/31/1997 23,392,481 10,738,346 12,654,135 2.50 12/31/1996
1,048.97 12/31/1997 17,773,720 8,765,952 9,007,768 2.44 12/31/1996
1,665.24 12/31/1997 9,925,522 7,046,938 2,878,584 1.94 12/31/1996
1,279.47 12/31/1997 3,220,287 1,662,641 1,557,646 1.92 12/31/1996
652.13 12/31/1997 6,872,177 5,022,623 1,849,554 2.15 12/31/1996
980.21 12/31/1997 1,627,418 768,156 859,262 3.22 12/31/1996
759.04 12/31/1997 1,228,238 764,637 463,601 1.85 12/31/1996
938.96 12/31/1997 1,111,277 584,882 526,395 2.18 12/31/1996
0.24 12/31/1997 7,149,415 4,192,416 2,956,999 3.37 12/31/1996
0.20 12/31/1997 1,287,615 283,843 1,003,772 1.39 12/31/1996
0.41 12/31/1997 1,225,975 314,630 911,345 1.33 12/31/1996
</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>
Hart's Transportation 1,940 23% 05/31/2000
Prism 6,000 100% 11/30/1999
Spar Industries 7,000 74% NAV
Creative Kitchens 22,200 48% 02/28/2000
Collierville Church 16,300 29% NAV
Stabilet 45,000 23% 01/31/2000
$ 764,102 $ 187,492 $ 576,610 1.98 Stabilet 45,000 14% 01/31/2000
Bentek, Inc 49,294 100% 08/31/2016
PTS Furniture 27,244 51% 01/31/2001
388,279 79,839 308,440 1.46 Electrosci, Inc. 5,788 13% 02/28/2000
346,674 67,547 279,127 1.40 EMPaC 36,600 66% 05/30/2008
Magellan Network Systems, Inc. 25,200 100% 09/30/2002
Caravan Trading Company 49,219 67% 06/30/2008
368,864 149,616 219,248 1.15 National Safe 21,900 19% 10/01/1999
Pacific Multi-Grain Foods, Inc. 83,900 100% 09/30/2010
Hi Val Industrial 57,064 100% 08/31/2008
356,121 74,288 281,833 1.72 Lamson Products 13,410 28% NAV
Kitchen Craft 7,490 19% 08/31/2002
Clark Food Service, Inc. 81,225 100% 05/31/2010
345,843 100,206 245,637 1.64 Nailite 4,580 10% 04/30/2002
336,496 78,069 258,427 2.13 Threshold Enterprises, Inc 14,000 32% 09/30/1999
183,083 34,149 148,934 1.49 Sterling Business Forms 25,637 75% 02/28/2001
202,047 51,572 150,475 1.42 Lazer Exhibitor Service 6,000 17% 03/31/2000
Applied Graphics Technologies, Inc. 18,430 100% 12/31/2006
189,965 40,780 149,185 1.75 R & B Enterprises 12,105 42% 04/30/2001
136,210 23,049 113,161 1.36 Animal Hospital of the Valley 4,500 33% 01/01/2001
130,144 21,264 108,880 1.57 Cosmopro, Inc 7,800 50% 03/31/1999
95,291 23,389 71,902 1.23 Walachek Industries, Inc 8,460 41% 04/30/2001
117,338 33,185 84,153 1.62 Hussinger, Keith 4,461 22% 10/31/1999
Air Liquide 4,065 100% 02/28/2008
British Indoor Gardens, Inc 8,610 100% 09/30/2001
Hertz Equipment Rental Corporation 18,430 100% 08/31/2002
20,698,417 11,231,078 9,467,339 1.87
16,724,105 9,647,790 7,076,315 1.92
8,323,678 6,312,951 2,010,727 1.36
2,985,518 1,611,140 1,374,378 1.69
6,482,410 4,621,680 1,860,730 2.16
1,724,706 806,651 918,055 3.44
1,172,658 700,108 472,550 1.88
1,010,531 544,829 465,702 1.93
6,638,685 3,705,909 2,932,776 3.34 Penn Pavilion Associates 16,130 4% 04/30/2003
1,246,854 302,375 944,479 1.31 Headlands Mtg. 5,885 12% 08/11/1999
1,153,542 294,798 858,744 1.25 Townsend & Townsend & Crew 24,215 82% 12/31/2009
<CAPTION>
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SECOND LARGEST LEASED TOTAL EXPIRA-
TENANT SF SF TION
------ -- -- ----
<C> <C> <C> <C>
Lindsey's TV 1,200 14% 07/31/1999
Legacy Homes 2,461 26% 08/01/2001
Mid South Metals 16,000 34% 07/31/1999
Unique Antiques 10,880 20% 04/30/1999
Diversified Packaging 21,600 11% 01/31/2000
Creative Kitchens 22,200 7% 02/28/2000
PTS Furniture 9,010 17% 01/31/2003
Consolidated Imaging 5,446 13% 06/30/2001
Trinova (Merkel) 19,100 34% 03/14/2002
Caravan Baking 24,641 33% 06/30/2008
All Alum 14,000 12% 07/30/2001
Calzone & Co. 7,500 16% 08/31/2002
Process Label System 6,350 16% 09/30/2000
Cosmic Nail Intl 3,502 7% 06/30/2003
Wolfram Electric, Inc 7,600 17% 06/30/2002
A & J International, Inc. 8,370 25% 06/30/1999
Stag's Leap Wine Cellars 6,000 17% NAV
Syntronics, Inc. 4,000 14% 03/31/2003
Stone Mechanical, Inc 1,800 13% 01/01/2000
AST Berarings 7,800 50% 08/12/2000
South Bay Batting Cages 6,000 29% 03/31/2001
Tsai, Terry 1,533 8% 08/31/1999
450 Retail Realty 12,683 3% 11/30/2012
Maguire/Maguire 2,829 6% 12/31/2001
A G Edwards & Sons, Inc 5,490 18% 10/31/2001
</TABLE>
<PAGE> 136
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N237 51092 Trianon Centre 850 Park Shore Drive &
3777 Tamiani Trail N. Collier Naples
N238 51007 The Prado 5600 Roswell Rd. Fulton Atlanta
N239 51158 Uptown Square Office Building 6601-6605 Uptown Blvd, NE Bernalillo Albuquerque
N240 50999 Tenley Medical Office Building 50 & 51 W. Edmonston Dr. Montgomery Rockville
N241 51244 Fairfield Way Office Park 121-129 Fairfield Way DuPage Bloomingdale
N242 51167 Museum Parke Office Building 1350-1450 Central Ave. Los Alamos Los Alamos
N243 51069 Stern Business Center 8901 Farrow Road Richland Columbia
N244 51137 Frontier Regional HQ 2710 Executive Drive Brown Ashwaubenon
N245 51165 195 East Road Office Building 195 East Road Los Alamos Los Alamos
N246 51094 277 Broadway Office Building 277 Broadway Manhattan New York
N247 51016 Glendale Executive Campus 1000 White Horse Rd. Camden Voorhees Township
N248 51255 Naperville Professional Center 608 South Washington St. DuPage Naperville
N249 51367 Park Place of Layton Office Building 579 West Heritage Blvd Salt Lake Layton
N250 51243 282 Second Street 282 Second St. San Francisco San Francisco
N251 51285 2300 McDaniel St. 2280-2320 McDaniel St. Clark North Las Vegas
N252 51309 23201 Mill Creek Drive Building 23201 Mill Creek Dr. Orange Laguna Hills
N253 51026 Montefiore Medical Office Bldg. 3316 Rochambeau Ave. Bronx Bronx
N254 51312 NationsBank Building 9385 North 56th Street Hillsborough Temple Terrace
N255 51295 Columbia Professional Center 10840 Little Pataxent Parkway Howard Columbia
N256 51329 McClelland Office Park 2850 McClelland Drive Larimer Fort Collins
N257 51249 Ygnacio Woods Office Complex 2255 Ygnacio Valley Road Contra Costa Walnut Creek
N258 51130 147 Waverly Place 147 Waverly Place New York New York
N259 51080 Bedford Square Office Building 1314 Bedford Ave. Baltimore Pikesville
N260 51174 UMC Sierra 2202 W. Craig Road Clark North Las Vegas
N261 51172 UMC Quick Care 2031 North Buffalo St. Clark Las Vegas
N262 51311 North County Medical Dental Center 9855 Erma Rd. San Diego San Diego
N263 51241 Dee Building 4916 El Camino Real Santa Clara Los Altos
N264 51238 6501 Van Nuys Building 6501 Van Nuys Blvd. Los Angeles Van Nuys
N265 51338 Sutter Medical Office Clinic 12811 Covey Circle Tuolomne Sonora
N266 51368 Contra Costa Water District Building 2300 Stanwell Dr. Contra Costa Concord
N267 51259 Louisville Medical/Dental 325-333 S. Boulder Rd Boulder Louisville
N268 51275 Calabasas Office Building 4766 Park Granada Blvd Los Angeles Calabasas
N269 51296 Green Street Building 918 East Green St. Los Angeles Pasedena
N270 51235 420 Building 420 West Lake Cook Road Lake County Deerfield
N271 51236 Marriott Center 4701 Patrick Henry Dr.,
Buildings 17 and 19 Santa Clara Santa Clara
N272 51211 Fountain Bell Office Building 10240 West Bell Road Maricopa Sun City
N273 51313 Rafael North Executive Park 155 North Redwood Dr. Marin San Rafael
N274 51376 RE/Max West Building 5440 Ward Road Jefferson Arvada
N275 50121 5450 NW Central 5450 Northwest Central Drive Harris Houston
N276 51434 Starling Office Building 7798 Starling Drive San Diego San Diego
N277 51402 2111 Business Center Drive 2111 Business Center Drive Orange Irvine
N278 51273 Custom Research Building 10301 Wayzata Blvd. Hennepin Minnetonka
N279 51240 San Clemente Office Building 111/115 Calle De Industrias Orange San Clemente
N280 51373 Garden Road Office Plaza 2150 Garden Road Monterey Monterey
N281 51166 600 6th Street Office Building 600 6th St. Los Alamos Los Alamos
N282 51274 Ventura Blvd Retail 18061, 18063 & 18065
Ventura Blvd Los Angeles Encino
N283 51293 Country Club Offices, Ltd 7490 Clubhouse Road Boulder Boulder
N284 51371 Liberty Square Office 914 North San Francisco
Street Coconino Flagstaff
N285 50915 Oak Tree Villas Assisted Living 3108 W. Truman Blvd. Cole Jefferson City
N286 50912 Westphalia Retirement Center HCR-65, Box 6 Osage Westphalia
N287 50913 DeSoto Residential Care Apartments 1710 Koch Lane Jefferson DeSoto
N288 50914 Indian Hills Retirement Village 2601 Fair Street Livingston Chillicothe
SUB-TOTAL CROSSED LOANS
N289 50312 Westminster Retirement Residence 11 East Augusta Place Greenville Greenville
N290 51150 Pilgrim Manor of Bossier City North Nursing
Home 1524 Doctors Drive Bossier Bossier City
N291 50828 Community Programs, Inc 423 West Landis Ave Cumberland Vineland
N292 51015 Brighton Court Retirement Center 1308 N. Vercler Rd Spokane Spokane
N293 51148 The Vyne at Meadows Park 12221 West Maple Street Sedgwick Wichita
N294 51149 Mayfair Portsmouth 901 Enterprise Way Portsmouth Portsmouth City
</TABLE>
<PAGE> 137
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
ADMINI-
CUT-OFF MATURITY STRATIVE SUB- NET
ZIP PROPERTY ORIGINAL DATE DATE LOAN MORTGAGE FEE SERVICING MORTGAGE
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE RATE RATE(1) FEE RATE RATE
- ----- ---- ---------- -------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FL 34103 Office $6,100,000 $6,081,800 $5,280,447 Balloon 6.650% 0.143% 0.100% 6.507%
GA 30342 Office 5,300,000 5,265,145 4,267,875 Balloon 7.120% 0.143% 0.100% 6.977%
NM 87110 Office 4,800,000 4,789,997 4,192,788 Balloon 7.000% 0.143% 0.100% 6.857%
MD 20852 Office 4,348,000 4,319,405 3,501,268 Balloon 7.120% 0.143% 0.100% 6.977%
IL 60108 Office 4,200,000 4,185,030 3,668,322 Balloon 6.995% 0.143% 0.100% 6.852%
NM 87544 Office 4,000,000 3,991,665 3,493,990 Balloon 7.000% 0.143% 0.100% 6.857%
SC 29203 Office 4,000,000 3,982,388 3,208,697 Balloon 6.990% 0.143% 0.100% 6.847%
WI 54304 Office 3,848,000 3,829,161 2,583,754 Balloon 7.000% 0.143% 0.100% 6.857%
NM 87544 Office 3,705,000 3,692,937 2,983,321 Balloon 7.125% 0.143% 0.100% 6.982%
NY 10007 Office 3,490,000 3,482,727 2,676,663 Balloon 7.000% 0.143% 0.100% 6.857%
NJ 08043 Office 3,325,000 3,310,913 2,902,594 Balloon 6.970% 0.143% 0.100% 6.827%
IL 60540 Office 3,075,000 3,063,323 2,667,595 Balloon 6.740% 0.143% 0.100% 6.597%
UT 84041 Office 2,600,000 2,595,890 2,328,231 Balloon 8.000% 0.143% 0.100% 7.857%
CA 94105 Office 2,500,000 2,490,643 2,172,217 Balloon 6.799% 0.143% 0.100% 6.656%
NV 89030 Office 2,415,000 2,407,757 2,089,398 Balloon 6.630% 0.143% 0.100% 6.487%
CA 92653 Office 2,300,000 2,292,305 1,965,911 Balloon 6.196% 0.143% 0.100% 6.053%
NY 10467 Office 2,270,000 2,175,462 Fully
Amortizing 7.250% 0.143% 0.100% 7.107%
FL 33617 Office 2,118,750 2,112,591 1,839,069 Balloon 6.750% 0.143% 0.100% 6.607%
MD 21046 Office 2,075,000 2,068,438 1,784,956 Balloon 6.422% 0.143% 0.100% 6.279%
CO 80525 Office 2,000,000 1,995,966 1,752,687 Balloon 7.125% 0.143% 0.100% 6.982%
CA 94549 Office 2,000,000 1,988,064 1,590,082 Balloon 6.714% 0.143% 0.100% 6.571%
NY 10014 Office 1,800,000 1,783,814 Fully
Amortizing 7.375% 0.143% 0.100% 7.232%
MD 21208 Office 1,775,000 1,770,313 1,555,440 Balloon 7.110% 0.143% 0.100% 6.967%
NV 89031 Office 1,687,000 1,683,485 1,473,591 Balloon 7.000% 0.143% 0.100% 6.857%
NV 89128 Office 1,675,000 1,671,510 1,463,108 Balloon 7.000% 0.143% 0.100% 6.857%
CA 92131 Office 1,650,000 1,645,511 1,441,756 Balloon 7.000% 0.143% 0.100% 6.857%
CA 94022 Office 1,600,000 1,594,681 1,407,349 Balloon 7.268% 0.143% 0.100% 7.125%
CA 91401 Office 1,600,000 1,575,286 Fully
Amortizing 7.382% 0.143% 0.100% 7.239%
CA 95370 Office 1,500,000 1,496,874 1,310,246 Balloon 7.000% 0.143% 0.100% 6.857%
CA 94520 Office 1,500,000 1,492,534 1,047,710 Balloon 7.580% 0.143% 0.100% 7.437%
CO 80027 Office 1,400,000 1,394,555 1,211,295 Balloon 6.642% 0.143% 0.100% 6.499%
CA 91302 Office 1,350,000 1,346,466 1,183,963 Balloon 7.141% 0.143% 0.100% 6.998%
CA 91106 Office 1,350,000 1,345,625 1,158,139 Balloon 6.325% 0.143% 0.100% 6.182%
IL 60015 Office 1,350,000 1,345,472 1,186,422 Balloon 7.234% 0.143% 0.100% 7.091%
CA 95054 Office 1,350,000 1,345,450 1,185,845 Balloon 7.215% 0.143% 0.100% 7.072%
AZ 85351 Office 1,312,605 1,307,673 1,159,272 Balloon 7.423% 0.143% 0.100% 7.280%
CA 94903 Office 1,250,000 1,246,825 1,099,340 Balloon 7.250% 0.143% 0.100% 7.107%
CO 80002 Office 1,125,000 1,122,805 989,056 Balloon 7.250% 0.143% 0.100% 7.107%
TX 77092 Office 1,050,000 1,039,767 988,200 Balloon 8.350% 0.168% 0.125% 8.182%
CA 92123 Office 1,000,000 999,575 898,475 Balloon 8.145% 0.143% 0.100% 8.002%
CA 92612 Office 1,000,000 999,086 894,954 Balloon 7.960% 0.143% 0.100% 7.817%
MN 55305 Office 1,000,000 997,231 872,273 Balloon 6.934% 0.143% 0.100% 6.791%
CA 92672 Office 1,000,000 996,345 871,110 Balloon 6.895% 0.143% 0.100% 6.752%
CA 93940 Office 945,000 943,937 833,188 Balloon 7.350% 0.143% 0.100% 7.207%
NM 87544 Office 920,000 917,077 743,615 Balloon 7.250% 0.143% 0.100% 7.107%
CA 91316 Office 900,000 897,857 796,118 Balloon 7.479% 0.143% 0.100% 7.336%
CO 80301 Office 700,000 698,063 610,639 Balloon 6.937% 0.143% 0.100% 6.794%
AZ 86001 Office 575,000 573,995 510,591 Balloon 7.650% 0.143% 0.100% 7.507%
MO 65109 Health Care 3,900,000 3,876,523 3,183,247 Balloon 7.570% 0.143% 0.100% 7.427%
MO 65085 Health Care 3,150,000 3,131,038 2,571,084 Balloon 7.570% 0.143% 0.100% 7.427%
MO 63020 Health Care 2,900,000 2,882,543 2,367,030 Balloon 7.570% 0.143% 0.100% 7.427%
MO 64601 Health Care 2,200,000 2,186,756 1,795,678 Balloon 7.570% 0.143% 0.100% 7.427%
---------- ---------
12,076,860 9,917,039
SC 29605 Health Care 7,200,000 7,090,058 5,854,903 Balloon 7.450% 0.143% 0.100% 7.307%
LA 71111 Health Care 5,400,000 5,384,476 4,429,798 Balloon 7.750% 0.143% 0.100% 7.607%
NJ 08360 Health Care 3,940,000 3,914,704 3,568,824 Balloon 8.730% 0.393% 0.350% 8.337%
WA 99216 Health Care 3,500,000 3,481,612 2,841,004 Balloon 7.390% 0.143% 0.100% 7.247%
KS 67235 Health Care 2,489,631 2,482,290 2,034,893 Balloon 7.625% 0.143% 0.100% 7.482%
VA 23704 Health Care 2,150,000 2,143,335 1,744,336 Balloon 7.375% 0.143% 0.100% 7.232%
<CAPTION>
FIRST INTEREST
NOTE PAYMENT ACCRUAL
STATE DATE DATE METHOD
- ----- ---- ------- --------
<S> <C> <C> <C>
FL 09/17/98 11/01/98 Actual/360
GA 07/31/98 09/01/98 Actual/360
NM 10/26/98 12/01/98 Actual/360
MD 07/14/98 09/01/98 Actual/360
IL 08/20/98 10/01/98 Actual/360
NM 10/30/98 12/01/98 Actual/360
SC 09/21/98 11/01/98 Actual/360
WI 10/30/98 12/01/98 Actual/360
NM 10/30/98 12/01/98 Actual/360
NY 10/29/98 12/01/98 Actual/360
NJ 07/09/98 09/01/98 Actual/360
IL 08/26/98 10/01/98 Actual/360
UT 10/20/98 12/01/98 Actual/360
CA 08/24/98 10/01/98 Actual/360
NV 09/08/98 11/01/98 Actual/360
CA 09/09/98 11/01/98 Actual/360
NY
10/30/98 12/01/98 Actual/360
FL 09/04/98 11/01/98 Actual/360
MD 09/18/98 11/01/98 Actual/360
CO 09/25/98 12/01/98 Actual/360
CA 08/19/98 10/01/98 Actual/360
NY
10/30/98 12/01/98 Actual/360
MD 09/10/98 11/01/98 Actual/360
NV 10/29/98 12/01/98 Actual/360
NV 10/28/98 12/01/98 Actual/360
CA 09/22/98 11/01/98 Actual/360
CA 08/18/98 10/01/98 Actual/360
CA
08/03/98 10/01/98 30/360
CA 10/09/98 12/01/98 Actual/360
CA 10/19/98 12/01/98 Actual/360
CO 08/24/98 10/01/98 Actual/360
CA 08/25/98 11/01/98 Actual/360
CA 09/01/98 11/01/98 Actual/360
IL 08/11/98 10/01/98 Actual/360
CA 08/12/98 10/01/98 Actual/360
AZ 07/28/98 09/01/98 Actual/360
CA 09/25/98 11/01/98 Actual/360
CO 10/07/98 12/01/98 Actual/360
TX 07/31/97 09/01/97 Actual/360
CA 12/01/98 02/01/99 Actual/360
CA 11/19/98 01/01/99 Actual/360
MN 08/28/98 11/01/98 Actual/360
CA 08/05/98 10/01/98 Actual/360
CA 10/30/98 01/01/99 Actual/360
NM 10/30/98 12/01/98 Actual/360
CA 08/24/98 11/01/98 Actual/360
CO 09/03/98 11/01/98 Actual/360
AZ 10/30/98 12/01/98 Actual/360
MO 07/01/98 09/01/98 Actual/360
MO 07/01/98 09/01/98 Actual/360
MO 07/01/98 09/01/98 Actual/360
MO 07/01/98 09/01/98 Actual/360
SC 11/13/97 01/01/98 Actual/360
LA 10/30/98 12/01/98 Actual/360
NJ 05/01/98 07/01/98 Actual/360
WA 08/14/98 10/01/98 Actual/360
KS 10/29/98 12/01/98 Actual/360
VA 10/30/98 12/01/98 Actual/360
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO CROSS- LOCKOUT
MONTHLY MATURITY TERM SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION PREPAYMENT PENALTY
PAYMENT (MONTHS) (MONTHS) (II) (MONTHS) (MONTHS) DATE LOANS LOANS DATE DESCRIPTION (MONTHS)
------- --------- ------------- --------- -------- -------- -------------- ------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$39,160 120 360 4 116 10/01/08 No No 06/01/08 LO(116)/OPEN(4)/DEFEASANCE
37,866 120 300 6 114 08/01/08 No No 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
31,935 120 360 3 117 11/01/08 No No 07/01/08 LO(116)/OPEN(4)/DEFEASANCE
31,064 120 300 6 114 08/01/08 No Yes(Q) 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
27,929 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
26,612 120 360 3 117 11/01/08 No Yes(S) 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
28,246 120 300 4 116 10/01/08 No Yes(O) 05/31/08 LO(115)/OPEN(5)/DEFEASANCE
29,186 132 252 3 129 11/01/09 No Yes(E) 06/30/09 LO(127)/OPEN(5)/DEFEASANCE
26,482 120 300 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
23,219 180 360 3 177 11/01/13 No No 07/01/13 LO(176)/OPEN(4)/DEFEASANCE
22,054 120 360 6 114 08/01/08 No Yes(Q) 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
19,924 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
19,078 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
16,296 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
15,471 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
14,081 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
45,335 60 60 3 57 11/01/03 No No 06/30/03 LO(55)/OPEN(5)/DEFEASANCE
13,742 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
13,009 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
13,474 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
13,773 120 300 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
16,669 180 180 3 177 11/01/13 No No 07/01/13 LO(176)/OPEN(4)/DEFEASANCE
11,941 120 360 4 116 10/01/08 No No 05/31/08 LO(115)/OPEN(5)/DEFEASANCE
11,224 120 360 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
11,144 120 360 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
10,977 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
10,934 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
14,725 180 180 5 175 09/01/13 No No 07/02/13 LO(178)/OPEN(2)/DEFEASANCE
9,980 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
12,157 120 240 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
8,980 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
9,110 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
8,378 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
9,195 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
9,177 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
9,109 120 360 6 114 08/01/08 No No 06/01/08 LO(118)/OPEN(2)/DEFEASANCE
8,527 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
7,674 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
7,962 84 360 18 66 08/01/04 No No 07/31/00 LO(36)/GRTR1%PPMTorYM(42)/
OPEN(6)
7,439 120 360 1 119 01/01/09 No No 11/01/08 LO(118)/OPEN(2)/DEFEASANCE
7,310 120 360 2 118 12/01/08 No No 10/01/08 LO(118)OPEN(2)DEFEASANCE
6,609 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
6,583 120 360 5 115 09/01/08 No No 07/02/08 LO(118)/OPEN(2)/DEFEASANCE
6,511 120 360 2 118 12/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
6,650 120 300 3 117 11/01/08 No Yes(S) 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
6,280 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
4,628 120 360 4 116 10/01/08 No No 08/01/08 LO(118)/OPEN(2)/DEFEASANCE
4,080 120 360 3 117 11/01/08 No No 09/01/08 LO(118)/OPEN(2)/DEFEASANCE
28,998 120 300 6 114 08/01/08 Yes(4) Yes(T) 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
23,422 120 300 6 114 08/01/08 Yes(4) Yes(T) 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
21,563 120 300 6 114 08/01/08 Yes(4) Yes(T) 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
16,358 120 300 6 114 08/01/08 Yes(4) Yes(T) 03/31/08 LO(115)/OPEN(5)/DEFEASANCE
52,973 120 300 14 106 12/01/07 No No 11/30/01 LO(47)/GRTR1%PPMTorYM(66)/
OPEN(7)
40,788 120 300 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
32,339 84 300 8 76 06/01/05 No No 01/31/05 LO(79)/OPEN(5)/DEFEASANCE
25,615 120 300 5 115 09/01/08 No No 04/30/08 LO(115)/OPEN(5)/DEFEASANCE
18,601 120 300 3 117 11/01/08 No No 06/30/08 LO(115)/OPEN(5)/DEFEASANCE
15,714 120 300 3 117 11/01/08 No No 06/30/98 LO(115)/OPEN(5)/DEFEASANCE
</TABLE>
<PAGE> 139
<TABLE>
<CAPTION>
LOAN
CUT- BALANCE
OFF TOTAL SF/ NET PER
DATE YEAR UNITS/ UNIT/ RENTABLE SF/UNIT/
SE- LOAN APPRAISAL APPRAISAL LTV BUILT/ ROOM/ ROOM/ AREA ROOM/
QUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED BED BED (SF) BED
- ------ ------ ------------- ----- ---- ----- --------- --- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N237 51092 Trianon Centre $ 8,890,000 07/23/98 68% 1989 44,295 SF 44,295 137
N238 51007 The Prado 10,800,000 03/27/98 49% 1972 179,951 SF 179,951 29
N239 51158 Uptown Square Office Building 6,150,000 09/09/98 78% 1983 48,974 SF 48,974 98
N240 50999 Tenley Medical Office Building 5,750,000 05/01/98 75% 1965 50,328 SF 50,328 86
N241 51244 Fairfield Way Office Park 7,000,000 07/14/98 60% 1989 97,563 SF 97,563 43
N242 51167 Museum Parke Office Building 5,100,000 08/31/98 78% 1992 32,482 SF 32,482 123
N243 51069 Stern Business Center 5,000,000 06/18/98 80% 1986 81,742 SF 81,742 49
N244 51137 Frontier Regional HQ 4,810,000 07/17/98 80% 1986/1997 36,817 SF 36,817 104
N245 51165 195 East Road Office Building 4,900,000 08/31/98 75% 1994 56,249 SF 56,249 66
N246 51094 277 Broadway Office Building 8,300,000 06/30/98 42% 1904 84,382 SF 84,382 41
N247 51016 Glendale Executive Campus 4,250,000 05/21/98 78% 1986 52,564 SF 52,564 63
N248 51255 Naperville Professional Center 4,100,000 06/15/98 75% 1984 34,972 SF 34,972 88
N249 51367 Park Place of Layton Office Buildin 3,700,000 07/27/98 70% 1997 29,876 SF 29,876 87
N250 51243 282 Second Street 5,310,000 07/14/98 47% 1908/1983 28,639 SF 28,639 87
N251 51285 2300 McDaniel St. 3,450,000 06/25/98 70% 1992 21,159 SF 21,159 114
N252 51309 23201 Mill Creek Drive Building 3,440,000 07/14/98 67% 1982 25,133 SF 25,133 91
N253 51026 Montefiore Medical Office Bldg. 5,750,000 06/04/98 38% 1993 19,500 SF 19,500 112
N254 51312 NationsBank Building 2,825,000 04/20/98 75% 1960/1977 26,373 SF 26,373 80
N255 51295 Columbia Professional Center 3,650,000 07/15/98 57% 1974/1986 30,793 SF 30,793 67
N256 51329 McClelland Office Park 3,000,000 08/14/98 67% 1984 34,184 SF 34,184 58
N257 51249 Ygnacio Woods Office Complex 3,900,000 07/09/98 51% 1980 36,243 SF 36,243 55
N258 51130 147 Waverly Place 5,100,000 07/01/98 35% 1912 56,000 SF 56,000 32
N259 51080 Bedford Square Office Building 2,450,000 07/13/98 72% 1984/1985 26,417 SF 26,417 67
N260 51174 UMC Sierra 2,250,000 08/28/98 75% 1998 8,566 SF 8,566 197
N261 51172 UMC Quick Care 2,650,000 07/20/98 63% 1997 8,335 SF 8,335 201
N262 51311 North County Medical Dental Center 3,400,000 07/17/98 48% 1974 31,348 SF 31,348 52
N263 51241 Dee Building 2,150,000 07/07/98 74% 1968 12,388 SF 12,388 129
N264 51238 6501 Van Nuys Building 1,960,000 04/23/98 80% 1957 25,805 SF 25,805 61
N265 51338 Sutter Medical Office Clinic 2,050,000 09/18/98 73% 1998 9,352 SF 9,352 160
N266 51368 Contra Costa Water District Building 2,285,000 08/13/98 65% 1978/1996 21,600 SF 21,600 69
N267 51259 Louisville Medical/Dental 2,180,000 07/10/98 64% 1984 19,247 SF 19,247 72
N268 51275 Calabasas Office Building 1,800,000 07/09/98 75% 1978 16,816 SF 16,816 80
N269 51296 Green Street Building 1,800,000 05/06/98 75% 1951/1994 17,435 SF 17,435 77
N270 51235 420 Building 1,800,000 05/12/98 75% 1954/1985 20,492 SF 20,492 66
N271 51236 Marriott Center 2,250,000 07/07/98 60% 1981 10,992 SF 10,992 122
N272 51211 Fountain Bell Office Building 1,760,000 06/02/98 74% 1975 18,148 SF 18,148 72
N273 51313 Rafael North Executive Park 1,800,000 09/04/98 69% 1981 10,838 SF 10,838 115
N274 51376 RE/Max West Building 1,500,000 08/24/98 75% 1982 18,221 SF 18,221 62
N275 50121 5450 NW Central 1,850,000 04/09/97 56% 1981 57,299 SF 57,299 18
N276 51434 Starling Office Building 1,860,000 10/02/98 54% 1975 20,582 SF 20,582 49
N277 51402 2111 Business Center Drive 2,100,000 09/01/98 48% 1978 16,438 SF 16,438 61
N278 51273 Custom Research Building 1,325,000 07/21/98 75% 1980/1988 15,000 SF 15,000 66
N279 51240 San Clemente Office Building 2,230,000 06/03/98 45% 1980 6,020 SF 6,020 166
N280 51373 Garden Road Office Plaza 1,450,000 08/24/98 65% 1977 19,124 SF 19,124 49
N281 51166 600 6th Street Office Building 1,475,000 08/31/98 62% 1940/1988 12,188 SF 12,188 75
N282 51274 Ventura Blvd Retail 1,200,000 03/31/98 75% 1955/1978 5,600 SF 5,600 160
N283 51293 Country Club Offices, Ltd 1,310,000 07/20/98 53% 1978 13,263 SF 13,263 53
N284 51371 Liberty Square Office 800,000 09/01/98 72% 1986 8,567 SF 8,567 67
N285 50915 Oak Tree Villas Assisted Living 5,200,000 04/01/98 75% 1984/1997 93 Beds 68,029 41,683
N286 50912 Westphalia Retirement Center 4,200,000 04/01/98 75% 1994/1998 58 Beds 25,923 53,983
N287 50913 DeSoto Residential Care Apartments 4,100,000 04/01/98 70% 1984/1992 98 Beds 67,875 29,414
N288 50914 Indian Hills Retirement Village 4,100,000 04/01/98 53% 1974/1997 111 Beds 46,815 19,701
SUB-TOTAL CROSSED LOANS ---------
17,600,000
N289 50312 Westminster Retirement Residence
N290 51150 Pilgrim Manor of Bossier City
North Nursing Home 9,600,000 09/16/97 74% 1997 115 Units 88,051 61,653
N291 50828 Community Programs, Inc 7,200,000 07/01/98 75% 1974 178 Beds 48,000 30,250
N292 51015 Brighton Court Retirement Center 6,200,000 02/01/98 63% 1913/1991 250 Units 20,135 15,659
N293 51148 The Vyne at Meadows Park 4,800,000 05/09/98 73% 1988/1997 52 Units 36,683 66,954
N294 51149 Mayfair Portsmouth 3,400,000 09/15/98 73% 1996 44 Beds 31,400 56,416
4,200,000 09/17/98 51% 1988 75 Beds 27,321 28,578
</TABLE>
<PAGE> 140
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
OCCUPANCY U/W U/W
OCCUPANCY AS OF U/W U/W U/W NOI U/W RESERVES
PRESENT DATE REVENUES EXPENSES NOI DSCR RESERVES PER UNIT
------- ---- -------- -------- --- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
98% 06/30/98 993,765 229,556 764,209 1.63 10,336 0.23
93% 07/09/98 2,232,485 1,364,540 867,945 1.91 49,567 0.28
100% 08/30/98 779,138 227,648 551,490 1.44 9,795 0.20
78% 10/01/98 873,465 335,900 537,565 1.44 15,098 0.30
90% 09/02/98 1,208,680 547,923 660,757 1.97 14,634 0.15
100% 10/22/98 640,382 195,119 445,263 1.39 5,008 0.15
100% 06/30/98 730,269 184,680 545,589 1.61 20,436 0.25
100% 10/19/98 681,445 225,525 455,920 1.30 12,272 0.33
96% 10/22/98 641,127 200,056 441,071 1.39 4,716 0.08
97% 10/01/98 1,615,861 922,074 693,787 2.49 20,229 0.24
98% 10/01/98 679,325 260,618 418,707 1.58 10,513 0.20
98% 08/01/98 664,100 268,038 396,062 1.66 5,786 0.17
100% 10/13/98 478,375 125,324 353,051 1.54 3,161 0.11
100% 08/19/98 699,707 237,069 462,638 2.37 7,162 0.25
100% 08/21/98 398,400 78,377 320,023 1.72 3,159 0.15
100% 08/01/98 460,516 184,826 275,690 1.63 4,312 0.17
100% 07/08/98 677,017 15,490 661,527 1.22 2,925 0.15
98% 05/01/98 457,716 162,104 295,612 1.79 7,532 0.29
95% 08/18/98 466,799 89,350 377,449 2.42 9,896 0.32
100% 09/01/98 492,090 195,342 296,748 1.84 16,406 0.48
100% 08/05/98 604,469 248,730 355,739 2.15 11,972 0.33
100% 10/13/98 749,681 422,362 327,319 1.64 11,200 0.20
100% 11/20/98 334,428 112,184 222,244 1.55 3,980 0.15
100% 10/06/98 245,650 54,829 190,821 1.42 1,275 0.15
100% 10/01/98 282,308 48,061 234,247 1.75 1,584 0.19
87% 08/01/98 457,056 179,567 277,489 2.11 12,700 0.41
100% 08/06/98 300,119 89,559 210,560 1.60 5,867 0.47
100% 05/01/98 397,670 123,971 273,699 1.55 6,217 0.24
100% 10/06/98 203,631 37,941 165,690 1.38 1,403 0.15
100% 10/13/98 269,466 51,892 217,574 1.49 3,240 0.15
100% 08/21/98 262,594 67,306 195,288 1.81 12,749 0.66
100% 08/01/98 298,854 125,793 173,061 1.58 2,859 0.17
100% 08/31/98 302,483 106,663 195,820 1.95 8,404 0.48
100% 08/14/98 297,384 101,267 196,117 1.78 4,513 0.22
100% 08/14/98 156,636 6,265 150,371 1.37 7,063 0.64
100% 07/22/98 280,020 108,836 171,184 1.57 4,868 0.27
100% 09/24/98 263,343 85,620 177,723 1.74 1,055 0.10
100% 08/01/98 227,227 95,392 131,835 1.43 3,412 0.19
97% 07/16/98 470,908 314,230 156,678 1.64 12,606 0.22
100% 11/10/98 256,611 109,201 147,410 1.65 5,057 0.25
100% 09/03/98 266,318 91,929 174,389 1.99 7,285 0.44
100% 08/01/98 279,537 141,450 138,087 1.74 7,197 0.48
100% 07/29/98 191,004 53,644 137,360 1.74 2,403 0.40
87% 08/11/98 190,738 58,067 132,671 1.70 3,246 0.17
100% 09/30/98 218,502 90,628 127,874 1.60 3,047 0.25
100% 12/01/98 135,638 24,015 111,623 1.48 840 0.15
100% 06/30/98 210,775 109,698 101,077 1.82 2,061 0.16
100% 09/10/98 111,323 32,420 78,903 1.61 1,713 0.20
89% 10/31/98 2,194,194 1,663,552 530,642 1.52 28,830 310.00
88% 10/31/98 1,777,560 1,376,740 400,820 1.43 14,750 254.31
79% 10/31/98 1,924,889 1,557,463 367,426 1.42 25,774 263.00
77% 10/31/98 2,420,899 2,118,070 302,829 1.54 28,250 254.50
100% 09/30/98 1,856,611 856,132 1,000,479 1.57 28,750 250.00
91% 09/30/98 3,886,194 3,204,052 682,142 1.39 44,750 251.40
63% 06/30/98 2,565,931 1,955,276 610,655 1.57 3,899 15.60
96% 06/30/98 1,203,028 751,970 451,058 1.47 12,750 245.19
93% 09/30/98 984,566 683,389 301,177 1.35 11,000 250.00
85% 09/30/98 1,306,665 1,003,996 302,669 1.61 18,750 250.00
<CAPTION>
2ND
MOST MOST MOST
RECENT MOST MOST MOST RECENT RECENT
END RECENT RECENT RECENT NOI END
DATE REVENUES EXPENSES NOI DSCR DATE
---- -------- -------- --- ---- ----
<C> <C> <C> <C> <C> <C>
12/31/97 997,954 221,225 776,729 1.65 12/31/96
12/31/97 1,969,671 1,117,663 852,008 1.88 12/31/96
12/31/97 838,463 180,734 657,729 1.72 12/31/96
12/31/97 889,595 313,638 575,957 1.55 12/31/96
12/31/97 997,024 512,578 484,446 1.45 12/31/96
12/31/97 667,707 191,762 475,945 1.49 12/31/96
12/31/97 760,781 141,989 618,792 1.83 12/31/96
12/31/97 612,572 158,588 453,984 1.43 12/31/96
12/31/97 1,751,601 860,196 891,405 3.20 12/31/96
12/31/97 701,667 248,245 453,422 1.71 12/31/96
12/31/97 717,439 267,590 449,849 1.88 12/31/96
12/31/97 614,841 205,298 409,543 2.09 12/31/96
12/31/97 421,571 73,791 347,780 1.87 12/31/96
12/31/97 561,063 160,152 400,911 2.37 12/31/96
12/31/97 576,497 0 576,497 1.06 12/31/96
12/31/97 503,882 149,940 353,942 2.15 12/31/96
12/31/97 429,943 85,834 344,109 2.20 12/31/96
12/31/97 538,557 187,691 350,866 2.17 12/31/96
12/31/97 586,658 238,977 347,681 2.10 12/31/96
12/31/97 802,221 389,817 412,404 2.06 12/31/96
12/31/97 359,198 115,551 243,647 1.70 12/31/96
12/31/97 440,794 153,108 287,686 2.18 12/31/96
12/31/97 243,310 55,349 187,961 1.43 12/31/96
12/31/97 408,648 114,922 293,726 1.66 12/31/96
12/31/97 285,120 59,140 225,980 1.55 12/31/96
12/31/97 326,753 44,893 281,860 2.62
12/31/97 312,716 99,255 213,461 1.95 12/31/96
12/31/97 303,096 91,809 211,287 2.10 12/31/96
12/31/97 299,300 86,936 212,364 1.92
12/31/97 162,518 0 162,518 1.48
12/31/97 301,252 85,506 215,746 1.97 12/31/96
12/31/97 244,529 80,973 163,556 1.60 12/31/96
12/31/97 211,710 82,423 129,287 1.40 12/31/96
12/31/97 497,419 340,570 156,849 1.64 12/31/96
12/31/97 203,577 90,618 112,959 1.27 12/31/96
12/31/97 230,262 83,530 146,732 1.67 12/31/96
12/31/97 211,725 46,765 164,960 2.09 12/31/96
12/31/97 134,412 36,290 98,122 1.26 12/31/96
12/31/97 259,717 79,822 179,895 2.25 12/31/96
12/31/97 171,120 17,400 153,720 2.04 12/31/96
12/31/97 180,708 108,081 72,627 1.31 12/31/96
12/31/97 101,955 29,196 72,759 1.49 12/31/96
12/31/97 2,228,235 1,732,052 496,183 1.43 12/31/96
12/31/97 1,806,361 1,346,615 459,746 1.64 12/31/96
12/31/97 1,982,379 1,561,809 420,570 1.63 12/31/96
12/31/97 2,485,243 2,145,019 340,224 1.73 12/31/96
12/31/97 808,120 734,490 73,630 0.20
12/31/97 3,857,376 2,918,578 938,798 1.92 12/31/96
12/31/97 2,567,254 2,309,308 257,946 0.66 12/31/96
12/31/97 1,159,383 694,769 464,614 1.51
12/31/97 780,455 519,442 261,013 1.17 12/31/96
12/31/97 1,380,557 988,319 392,238 2.08 12/31/96
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
2ND LARGEST
2ND 2ND 2ND MOST LARGEST TENANT LARGEST
MOST MOST MOST RECENT TENANT % OF TENANT
RECENT RECENT RECENT NOI LEASED TOTAL LEASE
REVENUES EXPENSES NOI DSCR LARGEST TENANT SF SF EXPIRATION
--------- --------- -------- ----- -------------- ------ ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 965,448 $ 209,568 $ 755,880 1.61 Roetzel & Andress 9,218 21% 10/31/03
1,856,489 1,525,688 330,801 0.73 Cityscape 11,926 7% 07/31/01
823,299 196,707 626,592 1.64 NationsBank 14,775 30% 11/30/03
747,106 283,771 463,335 1.24 1st National Bank 5,000 10% 03/31/04
972,861 489,200 483,661 1.44 Outokumpu Cooper (USA) 11,408 12% 08/31/01
663,407 200,889 462,518 1.45 UC-Johnson Controls 13,832 43% 04/30/03
730,993 138,178 592,815 1.75 DHEC 55,834 68% 10/31/04
Frontier Telecommunications 36,817 100% 10/14/09
619,259 164,958 454,301 1.43 U.S. West 19,000 34% 07/31/05
1,702,710 871,210 831,500 2.98 Klein Wagner 5,150 6% 11/30/07
678,375 256,694 421,681 1.59 Garden State I 5,494 10% 08/31/00
697,980 232,737 465,243 1.95 Executive Suites 9,650 28% 12/31/02
First American Title Ins. Co. 15,431 52% 03/15/03
551,057 237,931 313,126 1.60 Aeneid Corp 4,560 16% 03/31/00
396,039 60,747 335,292 1.81 NLVH, Inc. dba Lake Mead Medical Center 7,781 37% 01/01/03
530,862 179,007 351,855 2.08 Professional Equities, Inc. 8,614 34% 03/31/08
549,045 17,503 531,542 0.98 Montefiore 19,500 100% 03/31/03
455,833 159,550 296,283 1.80 NationsBank 15,332 58% 05/01/03
495,194 101,775 393,419 2.52 O'Conner, Piper & Flynn 6,070 20% 03/31/01
482,332 171,368 310,964 1.92 R & R Realty Corp 5,337 16% NAV
576,746 104,370 472,376 2.86 John Muir Medical Foundation 4,867 13% 12/31/00
810,241 405,313 404,928 2.02 Chris Thena Inc. 6,500 12% 12/31/03
364,991 110,912 254,079 1.77 Admiral Mortgage 4,117 16% 04/30/01
UMC 8,566 100% 07/31/08
UMC 8,335 100% 06/01/08
412,652 153,299 259,353 1.97 Our Gang Child Care 7,200 23% 03/31/03
212,915 66,056 146,859 1.12 Brook Furniture 3,522 28% 06/30/02
420,977 119,856 301,121 1.70 U.S. Govt Gen Services-Social Security 15,437 60% 05/30/08
Gould/Sutter Medical Foundation 9,352 100% 06/30/08
274,813 56,621 218,192 1.50 Contra Costa Water District 21,600 100% 10/31/01
Boulder Medical Center 10,222 53% 02/28/05
285,104 90,586 194,518 1.78 Tredent Data Systems 3,735 22% 05/14/00
307,068 71,356 235,712 2.34 E-Z Data 15,896 91% 07/31/06
Lexington Capital 2,692 13% 12/01/01
West Tech ExpoCorp 6,000 55% 08/31/00
295,165 87,652 207,513 1.90 American Express Financial Advisors, Inc 4,859 27% 10/30/00
196,578 74,058 122,520 1.20 Sanifil of California, Inc. 7,685 71% 04/30/00
210,303 76,688 133,615 1.45 Woodside Realty Company, Inc 14,015 77% 09/30/13
393,418 319,496 73,922 0.77 Agape Home Health 6,389 11% 06/30/00
247,387 104,880 142,507 1.60 Dr. Jonathan E. Brahme 4,428 22% 09/14/00
239,363 74,205 165,158 1.88 Met-Rx U.S.A. Inc. 8,765 53% 07/31/99
Bell American Mortgage 15,000 100% 07/31/08
182,684 46,792 135,892 1.72 Citizens Thrift & Loan 3,010 50% NAV
153,792 30,651 123,141 1.58 R. MacDonald Studios, Inc. 8,110 42% 06/30/99
248,664 76,755 171,909 2.15 Merrick & Company 9,720 80% 07/14/03
191,160 19,212 171,948 2.28 Functional Restoration Medical Center 3,200 57% 05/31/02
186,308 104,019 82,289 1.48 Colorado Center for Metabolic Medicine 4,172 31% 08/31/02
92,159 28,078 64,081 1.31 AHCCCS 2,500 29% 12/31/99
2,184,210 1,721,145 463,065 1.33
1,609,519 1,227,970 381,549 1.36
1,859,715 1,511,182 348,533 1.35
2,588,071 2,215,552 372,519 1.90
3,832,027 2,920,027 912,000 1.86
2,320,267 2,030,817 289,450 0.75
104,185 426,359 (322,174) (4.33)
1,227,717 913,503 314,214 1.67
<CAPTION>
SECOND
SECOND LARGEST SECOND
LARGEST TENANT LARGEST
TENANT % OF TENANT
SECOND LARGEST LEASED TOTAL LEASE
TENANT SF SF EXPIRATION
------ -- -- ----------
<C> <C> <C> <C>
AG Edwards 8,667 20% 02/28/04
Prado Executive Suites 9,489 5% MTM
Ned's 7,064 14% 04/30/03
Calimar, LLC 3,580 7% 06/13/06
Midwest Technical Inspection, Inc 5,946 6% 07/31/00
UC-Museum Park 13,075 40% 04/30/03
Physicians Sales 16,000 20% 02/28/01
Los Alamos Fire Dept. 6,800 12% 10/31/99
Broadway-Chamber 4,652 6% 03/31/01
Insurance Marketing 4,619 9% NAV
Humana Health Plan, Inc. 7,461 21% 07/31/01
Park Place Suites 12,350 41% 02/15/03
Intergraph 4,110 14% 01/09/03
Renal Treatment Center-West, Inc. 7,570 36% 06/30/07
Magellan Software, Inc. 7,028 28% 04/30/00
Levin & McMillan 1,322 5% 04/30/02
Automobile Club of Maryland 5,649 18% 03/31/02
USDA Soil Conservation 4,153 12% NAV
EV Free Church 3,357 9% 01/31/02
Snow Owl Cafe Inc. 4,500 8% 12/31/03
Psychogeriatric 2,385 9% 10/31/00
Professional Dental Group 3,625 12% 07/31/01
ScImage, Inc. 2,966 24% 08/31/03
DynCorp Property Management 6,180 24% 04/30/03
Centura Health 2,895 15% 04/30/00
Pauli, William A 2,436 14% 02/28/00
Okuno Associates 1,539 9% 12/31/08
Advantage Advertising 2,120 10% 06/01/05
West Tech ExpoCorp 4,992 45% 08/31/00
Acacia Mutual Life Insurance Co 4,388 24% 02/28/00
U.S. District Court Field Office 2,705 25% 11/30/01
Land Title Guarantee Company 2,382 13% 01/09/01
AG Morgan & Associates 6,073 11% 09/30/00
County of San Diego Probation Dept. 3,769 18% 03/31/01
M.A.Francis and Associates, Inc. 4,099 25% 06/30/02
Sunstone 1,610 27% NAV
Elliot Frame Design, Inc. 4,507 24% 12/31/02
The Plus Group, Inc TAD 1,250 10% 04/30/99
Fastframe, Inc. 1,400 25% 04/30/02
Countrywide Asset Management Corp 4,075 31% 06/30/03
AHCCCS 2,400 28% NAV
</TABLE>
<PAGE> 142
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
- ------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N295 51135 Cedar Crossings Apartments 5804 Rosebay Court Frederick Frederick
N296 51012 Northrup Court Apartments 805 Applegrove Street, NW Stark North Canton
N297 51185 Forest Downs Apartments 10224 W. Forest Home Ave. Milwaukee Hales Corners
N298 51136 Spacious Acres Mobile Home Park W1211 015 Lakeview Drive Jefferson Sullivan
N299 51177 South Hills Mobile Home Park 100 Long Lane Dodge Beaver Dam
N300 51175 Evergreen Estate Mobile Home Park 415 Western Avenue SW Rice Fairbault
N301 51176 Cloverleaf Mobile Home Park 150 Highway 10 North Benton St. Cloud
N302 51178 Monroe Estates Mobile Home Park 560 W. 21st Street Green Monroe
N303 51179 Camelot Mobile Home Park 1140 Arthur Blvd Brown Pulaski
N304 51180 Lakeshore Terrace Mobile Home Park 2136 Colan Blvd Barron Rice Lake
N305 51181 Forest Junction Mobile Home Park West 2377 US Highway 10 Calumet Brillion
N306 51182 Alexandria Mobile Estates 3305 South Broadway, Lot 50 Douglas Alexandria
N307 51183 Maplewood Mobile Home Park Route 3, Lot 49 Wabasha Lake City
N308 51184 Shamrock Mobile Home Park 1009 Shamrock Lane Stearns Albany
SUB-TOTAL CROSSED LOANS
N309 51209 Arabian Gardens Mobile Home Park 81-600 Fred Waring Drive Riverside Indio
N310 51212 Rollingwood Mobile Home Park 20 Rollingwood Dr. Amador Jackson
N311 51143 Tall Pines Mobile Home 314 South Erie Drive Saint Lucie Fort Pierce
N312 50994 Picacho Mobile Home Park 2200 Holiday Avenue Dona Ana Las Cruces
N313 50993 North Valley Mobile Home Park 7051 Buffalo Trail Bexar San Antonio
N314 51388 Kentwood Mobile Estates 123 Henshaw Avenue Butte Chico
N315 51377 Canyon Country Mobile Home Park 16274 Vasquez Canyon Road Los Angeles Canyon Country
N316 51203 Country Club Mobile Home Park 5315 Targee St. Ada Boise
N317 51398 Gemstone Mobile Home Park 2451 Soledad Canyon Road Los Angeles Acton
N318 51204 Green Acres Mobile Home Park 816 North Midland Blvd Canyon Nampa
N319 51423 Del Rey Self Storage 4051-4063 Redwood Avenue Los Angeles Marina Del Rey
N320 51145 Handy Storage 13 350 South University Drive Broward Pembroke Pines
N321 51381 Safeguard Mini Storage (North) 16173 Golden State Blvd Madera Madera
N322 51380 Safeguard Mini Storage (South) 450 E. Almond Ave Madera Madera
SUB-TOTAL CROSSED LOANS
N323 51105 Payless Mini Storage 633 West Swain Road San Joaquin Stockton
N324 51159 Fort Knox Mini Storage 6650 Edith Blvd NE Bernalillo Albuquerque
N325 51230 AAA Self Storage 226 Doctor Claassen Way Yolo Woodland
N326 51426 Sanger Self Storage 225 L Street Fresno Sanger
N327 51356 Executive Mini-Storage 6340 Freeport Blvd Sacramento Sacramento
N328 51231 BlueBonnet Self Storage 200 Maple St. Hunt Commerce
N329A 50319 Applebee's #8673 678 West 23rd St. Bay Panama City
N329B 50319 Applebee's #8902 1005 NW 13th Street Alachua Gainesville
N329C 50319 Applebee's #9145 1401 Capitol Circle, NW Leon Tallahassee
N329 50319 Applebee's #8673, #8902 & #9145 (Roll-Up)
N330A 50322 Applebee's #8623 637 Westover Blvd Dougherty Albany
N330B 50322 Applebee's #8867 1301 St. Augustine Road Lowndes Valdosta
N330 50322 Applebee's #8623 & #8867 (Roll-Up)
SUB-TOTAL CROSSED LOANS
N331 50979 Spring Cove Marina 455 Lore Rd. Calvert Solomons
===================================================================================================================================
TOTALS/WEIGHTED AVERAGE 331 LOANS
===================================================================================================================================
</TABLE>
(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.
<PAGE> 143
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF MATURITY
ZIP PROPERTY ORIGINAL DATE DATE LOAN
STATE CODE TYPE BALANCE BALANCE BALANCE TYPE
- ----- ---- -------- -------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
MD 21703 Multifamily $3,200,000 $3,193,332 $2,795,192 Balloon
OH 44720 Multifamily 1,414,000 1,411,053 1,235,125 Balloon
WI 53130 Multifamily 1,317,000 1,314,256 1,150,397 Balloon
WI 53178 Mobile Home 3,096,000 3,089,715 2,711,404 Balloon
WI 53916 Mobile Home 2,360,000 2,355,209 2,066,833 Balloon
MN 55021 Mobile Home 1,664,000 1,660,622 1,457,292 Balloon
MN 56304 Mobile Home 1,600,000 1,596,752 1,401,242 Balloon
WI 53566 Mobile Home 1,333,000 1,330,294 1,167,409 Balloon
WI 54162 Mobile Home 1,136,000 1,133,694 994,883 Balloon
WI 54868 Mobile Home 1,102,000 1,099,763 965,106 Balloon
WI 54123 Mobile Home 1,071,000 1,068,826 937,957 Balloon
MN 56308 Mobile Home 600,000 598,782 525,466 Balloon
MN 55041 Mobile Home 592,000 590,798 518,460 Balloon
MN 56307 Mobile Home 280,000 279,432 245,217 Balloon
---------- ----------
20,722,528 18,171,983
CA 92201 Mobile Home 4,600,000 4,580,842 4,022,579 Balloon
CA 95642 Mobile Home 4,370,000 4,351,082 3,806,373 Balloon
FL 34946 Mobile Home 3,500,000 3,492,706 3,057,240 Balloon
NM 88005 Mobile Home 1,750,000 1,722,217 Fully Amortizing
TX 78238 Mobile Home 1,750,000 1,722,091 Fully Amortizing
CA 95973 Mobile Home 1,575,000 1,572,109 1,286,084 Balloon
CA 91351 Mobile Home 1,500,000 1,496,874 1,310,246 Balloon
ID 83705 Mobile Home 600,000 596,369 489,340 Balloon
CA 93510 Mobile Home 550,000 549,532 494,426 Balloon
ID 83651 Mobile Home 300,000 298,184 244,670 Balloon
CA 90066 Mini Storage 6,750,000 6,742,590 5,962,605 Balloon
FL 33025 Mini Storage 3,000,000 2,993,748 2,620,493 Balloon
CA 93637 Mini Storage 862,500 861,687 770,337 Balloon
CA 93637 Mini Storage 735,000 733,740 605,355 Balloon
---------- ----------
1,595,427 1,375,692
CA 95207 Mini Storage 1,399,000 1,393,151 901,413 Balloon
NM 87113 Mini Storage 1,350,000 1,342,877 929,379 Balloon
CA 95776 Mini Storage 1,250,000 1,230,685 Fully Amortizing
CA 93657 Mini Storage 1,027,500 1,027,060 922,754 Balloon
CA 95822 Mini Storage 966,000 964,416 862,468 Balloon
TX 75428 Mini Storage 375,000 373,207 308,707 Balloon
FL 32405 Franchise
FL 32601 Franchise
FL 32303 Franchise
Franchise 9,330,000 9,130,414 6,747,217 Balloon
GA 31707 Franchise
GA 31601 Franchise
Franchise 6,110,000 5,979,296 4,418,595 Balloon
---------- ----------
15,109,710 11,165,812
MD 20688 Marina 2,500,000 2,488,753 2,075,664 Balloon
==============================================================================================
$1,228,360,563 $1,222,145,439 $1,030,329,772
==============================================================================================
<CAPTION>
ADMINI-
STRATIVE SUB- NET FIRST INTEREST
MORTGAGE FEE SERVICING MORTGAGE NOTE PAYMENT ACCRUAL
RATE RATE(I) FEE RATE RATE DATE DATE METHOD
- -------- -------- --------- -------- ---- ------- --------
<S> <C> <C> <C> <C> <C> <C>
7.000% 0.143% 0.100% 6.857% 10/30/1998 12/01/1998 Actual/360
7.000% 0.143% 0.100% 6.857% 10/30/1998 12/01/1998 Actual/360
7.000% 0.143% 0.100% 6.857% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.100% 0.143% 0.100% 6.957% 10/30/1998 12/01/1998 Actual/360
7.036% 0.143% 0.100% 6.893% 07/22/1998 09/01/1998 Actual/360
6.886% 0.143% 0.100% 6.743% 07/20/1998 09/01/1998 Actual/360
7.000% 0.143% 0.100% 6.857% 10/30/1998 12/01/1998 Actual/360
6.870% 0.143% 0.100% 6.727% 08/24/1998 10/01/1998 Actual/360
6.820% 0.143% 0.100% 6.677% 08/24/1998 10/01/1998 Actual/360
7.580% 0.143% 0.100% 7.437% 11/13/1998 01/01/1999 Actual/360
7.000% 0.143% 0.100% 6.857% 10/14/1998 12/01/1998 Actual/360
7.543% 0.143% 0.100% 7.400% 07/15/1998 09/01/1998 Actual/360
8.150% 0.143% 0.100% 8.007% 11/25/1998 01/01/1999 Actual/360
7.543% 0.143% 0.100% 7.400% 07/15/1998 09/01/1998 Actual/360
7.425% 0.143% 0.100% 7.282% 11/10/1998 01/01/1999 Actual/360
7.000% 0.143% 0.100% 6.857% 10/23/1998 12/01/1998 Actual/360
7.875% 0.143% 0.100% 7.732% 11/16/1998 01/01/1999 Actual/360
7.875% 0.143% 0.100% 7.732% 11/16/1998 01/01/1999 Actual/360
7.250% 0.143% 0.100% 7.107% 09/30/1998 11/01/1998 Actual/360
7.170% 0.143% 0.100% 7.027% 10/30/1998 12/01/1998 Actual/360
7.378% 0.143% 0.100% 7.235% 08/04/1998 10/01/1998 30/360
8.125% 0.143% 0.100% 7.982% 12/02/1998 02/01/1999 Actual/360
7.875% 0.143% 0.100% 7.732% 10/06/1998 12/01/1998 Actual/360
7.870% 0.143% 0.100% 7.727% 07/22/1998 10/01/1998 Actual/360
8.600% 0.203% 0.160% 8.397% 11/21/1997 01/01/1998 Actual/360
8.600% 0.203% 0.160% 8.397% 11/21/1997 01/01/1998 Actual/360
8.170% 0.143% 0.100% 8.027% 08/25/1998 10/01/1998 Actual/360
===============================================================================
7.268% 7.105%
===============================================================================
</TABLE>
<PAGE> 144
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
TERM TO AMORTIZATION TERM TO
MONTHLY MATURITY TERM SEASONING MATURITY
PAYMENT (MONTHS) (MONTHS)(II) (MONTHS) (MONTHS)
------- -------- ------------- --------- ---------
<S> <C> <C> <C> <C>
$ 21,290 120 360 3 117
9,407 120 360 3 117
8,762 120 360 3 117
20,806 120 360 3 117
15,860 120 360 3 117
11,183 120 360 3 117
10,753 120 360 3 117
8,958 120 360 3 117
7,634 120 360 3 117
7,406 120 360 3 117
7,197 120 360 3 117
4,032 120 360 3 117
3,978 120 360 3 117
1,882 120 360 3 117
30,715 120 360 6 114
28,740 120 360 6 114
23,286 120 360 3 117
15,710 180 180 5 175
15,661 180 180 5 175
11,721 120 300 2 118
9,980 120 360 3 117
4,451 120 300 6 114
4,093 120 360 2 118
2,225 120 300 6 114
46,851 120 360 2 118
19,959 120 360 3 117
6,254 120 360 2 118
5,612 120 300 2 118
10,112 180 300 4 176
10,605 120 240 3 117
11,501 180 180 5 175
7,629 120 360 1 119
7,004 120 360 3 117
2,862 120 300 5 115
81,559 120 240 14 106
53,411 120 240 14 106
19,578 120 300 5 115
=======================================================
$8,618,284 122 339 5 117
=======================================================
<CAPTION>
CROSS- LOCKOUT
MATURITY COLLATERALIZED RELATED EXPIRATION PREPAYMENT PENALTY DESCRIPTION
DATE LOANS LOANS DATE (MONTHS)
-------- -------------- ------- ---------- ------------------------------
<C> <C> <C> <C> <C>
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/1998 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
11/01/2008 Yes(5) Yes(U) 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
08/01/2008 No No 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
08/01/2008 No No 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
09/01/2013 No Yes(V) 04/30/2013 LO(175)/OPEN(5)/DEFEASANCE
09/01/2013 No Yes(V) 04/30/2013 LO(175)/OPEN(5)/DEFEASANCE
12/01/2008 No No 10/01/2008 LO(118)/OPEN(2)/DEFEASANCE
11/01/2008 No No 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
08/01/2008 No Yes(W) 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
12/01/2008 No No 10/01/2008 LO(118)/OPEN(2)/DEFEASANCE
08/01/2008 No Yes(W) 06/01/2008 LO(118)/OPEN(2)/DEFEASANCE
12/01/2008 No Yes(F) 10/01/2008 LO(118)/OPEN(2)/DEFEASANCE
11/01/2008 No No 07/01/2008 LO(116)/OPEN(4)/DEFEASANCE
12/01/2008 Yes(6) Yes(X) 10/01/2008 LO(118)/OPEN(2)/DEFEASANCE
12/01/2008 Yes(6) Yes(X) 10/01/2008 LO(118)/OPEN(2)/DEFEASANCE
10/01/2013 No No 05/31/2013 LO(175)/OPEN(5)/DEFEASANCE
11/01/2008 No No 06/30/2008 LO(115)/OPEN(5)/DEFEASANCE
09/01/2013 No No 07/02/2013 LO(178)/OPEN(2)/DEFEASANCE
01/01/2009 No Yes(X) 11/01/2008 LO(118)/OPEN(2)/DEFEASANCE
11/01/2008 No Yes(X) 09/01/2008 LO(118)/OPEN(2)/DEFEASANCE
09/01/2008 No No 07/02/2008 LO(118)/OPEN(2)/DEFEASANCE
12/01/2007 Yes(7) Yes(Y) 11/30/2001 LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
12/01/2007 Yes(7) Yes(Y) 11/30/2001 LO(47)/GRTR1%PPMTorYM(66)/OPEN(7)
09/01/2008 No No 05/01/2008 LO(116)/OPEN(4)/DEFEASANCE
==========================================================================================
==========================================================================================
</TABLE>
(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.
<PAGE> 145
<TABLE>
<CAPTION>
CUT-OFF
DATE
LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/
SEQUENCE NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED
- -------- ------- ------------- ----------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
N295 51135 Cedar Crossings Apartments $4,000,000 7/15/98 80% 1986
N296 51012 Northrup Court Apartments 2,020,000 7/27/98 70% 1986
N297 51185 Forest Downs Apartments 1,805,000 7/10/98 73% 1990
N298 51136 Spacious Acres Mobile Home Park 3,870,000 8/1/98 80% 1971
N299 51177 South Hills Mobile Home Park 2,950,000 8/1/98 80% 1968/1998
N300 51175 Evergreen Estate Mobile Home Park 2,080,000 8/1/98 80% 1967
N301 51176 Cloverleaf Mobile Home Park 2,000,000 8/1/98 80% 1953
N302 51178 Monroe Estates Mobile Home Park 1,770,000 8/1/98 75% 1970
N303 51179 Camelot Mobile Home Park 1,460,000 8/1/98 78% 1980
N304 51180 Lakeshore Terrace Mobile Home Park 1,450,000 8/1/98 76% 1973
N305 51181 Forest Junction Mobile Home Park 1,380,000 8/1/98 78% 1977
N306 51182 Alexandria Mobile Estates 750,000 8/1/98 80% 1968
N307 51183 Maplewood Mobile Home Park 740,000 8/1/98 80% 1971
N308 51184 Shamrock Mobile Home Park 350,000 8/1/98 80% 1967
-----------
SUB-TOTAL CROSSED LOANS 26,625,000
N309 51209 Arabian Gardens Mobile Home Park 6,000,000 6/3/98 76% 1962/1995
N310 51212 Rollingwood Mobile Home Park 7,000,000 6/23/98 62% 1985
N311 51143 Tall Pines Mobile Home 4,845,000 8/7/98 72% 1978
N312 50994 Picacho Mobile Home Park 3,670,000 6/16/98 47% 1988
N313 50993 North Valley Mobile Home Park 3,010,000 6/15/98 57% 1974
N314 51388 Kentwood Mobile Estates 2,920,000 10/19/98 54% 1963
N315 51377 Canyon Country Mobile Home Park 3,740,000 8/4/98 40% 1973
N316 51203 Country Club Mobile Home Park 900,000 6/15/98 66% 1957
N317 51398 Gemstone Mobile Home Park 900,000 9/16/98 61% 1976/1986
N318 51204 Green Acres Mobile Home Park 550,000 6/15/98 54% 1968
N319 51423 Del Rey Self Storage 10,300,000 6/3/98 66% 1952/1985
N320 51145 Handy Storage 13 6,675,000 8/9/98 45% 1995
N321 51381 Safeguard Mini Storage (North) 1,300,000 8/19/98 66% 1986
N322 51380 Safeguard Mini Storage (South) 1,050,000 8/19/98 70% 1982
-----------
SUB-TOTAL CROSSED LOANS 2,350,000
N323 51105 Payless Mini Storage 2,000,000 7/14/98 70% 1990
N324 51159 Fort Knox Mini Storage 1,990,000 8/11/98 68% 1994
N325 51230 AAA Self Storage 3,830,000 7/10/98 32% 1987
N326 51426 Sanger Self Storage 1,370,000 10/5/98 75% 1985
N327 51356 Executive Mini-Storage 1,350,000 8/14/98 71% 1987/1996
N328 51231 BlueBonnet Self Storage 570,000 7/1/98 66% 1995
N329A 50319 Applebee's #8673 1991
N329B 50319 Applebee's #8902 1994
N329C 50319 Applebee's #9145 1995
N329 50319 Applebee's #8673, #8902 & #9145 (Roll-Up) 11,570,000 11/3/97 79%
N330A 50322 Applebee's #8623 1990
N330B 50322 Applebee's #8867 1994
N330 50322 Applebee's #8623 & #8867 (Roll-Up) 8,500,000 11/3/97 70%
-----------
SUB-TOTAL CROSSED LOANS 20,070,000
N331 50979 Spring Cove Marina 3,950,000 5/12/98 63% 1960/1987
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS/WEIGHTED AVERAGE 70%
=================================================================================================================================
<CAPTION>
LOAN
TOTAL SF/ BALANCE
UNITS/ UNIT/ NET PER
ROOM/ ROOM/ RENTABLE SF/UNIT/
BED BED AREA (SF) ROOM/BED
----- --------- --------- ---------
<S> <C> <C> <C>
109 Units 55,872 $29,297
90 Units 46,080 15,678
35 Units 24,245 37,550
182 Pads 16,976
168 Pads 14,019
161 Pads 10,314
165 Pads 9,677
102 Pads 13,042
90 Pads 12,597
135 Pads 8,146
82 Pads 13,034
89 Pads 6,728
75 Pads 7,877
31 Pads 9,014
248 Pads 843,200 18,471
159 Pads 27,365
257 Pads 13,590
273 Pads 1,043,144 6,308
183 Pads 805,200 9,410
137 Pads 11,475
98 Pads 15,274
52 Pads 11,469
34 Pads 16,163
41 Pads 7,273
79,066 SF 79,066 85
89,446 SF 89,446 33
29,690 SF 29,690 29
46,277 SF 46,277 16
39,524 SF 39,524 35
56,260 SF 56,260 24
67,100 SF 67,100 18
39,055 SF 39,055 26
24,600 SF 24,600 39
21,000 SF 21,000 18
4,928 SF 4,928
5,076 SF 5,076
4,928 SF 4,928
14,932 SF 14,932 611
4,350 SF 4,350
4,928 SF 4,928
9,278 SF 9,278 644
246 Units 6,567 10,117
- ------------------------------------------------------------------
==================================================================
</TABLE>
<PAGE> 146
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
OCCUPANCY U/W
OCCUPANCY AS OF U/W U/W U/W NOI U/W
PERCENT DATE REVENUES EXPENSES NOI DSCR RESERVES
--------- -------- ----------- ----------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
99% 8/30/98 $ 652,892 $ 276,629 $ 376,263 1.47 $22,890
97% 9/30/98 382,326 219,445 162,881 1.44 21,690
100% 7/1/98 243,685 104,372 139,313 1.32 7,875
100% 9/30/98 532,479 190,180 342,299 1.37 9,100
99% 6/30/98 431,160 170,518 260,642 1.37 8,500
94% 9/30/98 375,611 186,805 188,806 1.41 8,050
98% 9/30/98 413,115 242,251 170,864 1.32 8,250
98% 6/30/98 240,249 100,725 139,524 1.30 5,100
99% 6/30/98 179,212 60,153 119,059 1.30 4,500
99% 6/30/98 233,542 115,681 117,861 1.33 6,750
98% 9/30/98 158,204 46,106 112,098 1.30 4,100
98% 9/30/98 148,022 78,471 69,551 1.44 4,450
96% 6/30/98 129,442 59,854 69,588 1.46 3,750
97% 9/30/98 55,489 23,350 32,139 1.42 1,550
93% 7/20/98 1,058,794 513,831 544,963 1.48 8,141
98% 7/7/98 831,930 295,785 536,145 1.55 7,950
96% 9/1/98 642,705 246,322 396,383 1.42 12,800
83% 7/31/98 551,676 230,356 321,320 1.70 13,650
100% 7/31/98 449,314 189,368 259,946 1.38 9,150
99% 9/15/98 469,444 237,424 232,020 1.65 6,850
96% 9/30/98 494,889 183,263 311,626 2.60 5,359
98% 7/8/98 140,727 61,207 79,520 1.49 4,320
100% 9/28/98 154,058 68,608 85,450 1.74 1,700
95% 5/31/98 84,421 33,737 50,684 1.90 3,280
92% 10/23/98 1,095,321 261,935 833,386 1.48 6,048
74% 8/6/98 849,473 415,563 433,910 1.81 20,740
87% 4/30/98 196,608 80,661 115,947 1.55 4,454
64% 8/19/98 190,352 84,835 105,517 1.57 4,628
100% 9/18/98 267,629 91,748 175,881 1.45 5,929
83% 8/18/98 300,485 125,079 175,406 1.38 8,715
94% 7/31/98 403,142 109,935 293,207 2.12 4,527
94% 8/14/98 216,828 70,781 146,047 1.60 3,900
100% 8/24/98 193,810 65,906 127,904 1.52 3,690
99% 12/1/98 91,919 44,782 47,137 1.37 3,150
100%
100%
100%
7,142,256 5,801,758 1,340,498 1.37 6,183
100%
100%
4,734,450 3,959,165 775,285 1.21 4,231
1,317,393 956,976 360,417 1.53 24,600
- ----------------------------------------------------------------------------------------------------------
93% 1.56
==========================================================================================================
<CAPTION>
2nd
MOST MOST MOST
U/W RECENT MOST MOST MOST RECENT RECENT
RESERVES END RECENT RECENT RECENT NOI END
PER UNIT DATE REVENUES EXPENSES NOI DSCR DATE
- -------- -------- -------- ----------- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
$210.00 12/31/97 $668,056 $ 258,855 $ 409,201 1.60 12/31/96
241.00 12/31/97 392,235 221,943 170,292 1.51 12//1996
225.00 12/31/97 243,310 92,030 151,280 1.44 12/31/96
50.00 12/31/97 532,844 190,210 342,634 1.37 12/31/96
50.60 12/31/97 430,509 153,731 276,778 1.45 12/31/96
50.00 12/31/97 364,182 178,937 185,245 1.38 12/31/96
50.00 12/31/97 403,394 233,793 169,601 1.31 12/31/96
50.00 12/31/97 236,615 96,727 139,888 1.30 12/31/96
50.00 12/31/97 178,786 55,379 123,407 1.35 12/31/96
50.00 12/31/97 229,231 106,300 122,931 1.38 12/31/96
50.00 12/31/97 151,815 46,859 104,956 1.22 12/30/96
50.00 12/31/97 144,414 79,824 64,590 1.33 12/31/96
50.00 12/31/97 129,349 53,967 75,382 1.58 12/31/96
50.00 12/31/97 56,090 23,414 32,676 1.45 12/31/96
32.83 12/31/97 1,001,901 530,658 471,243 1.28 12/31/96
50.00 12/31/97 858,364 261,432 596,932 1.73 12/31/96
49.81 12/31/97 627,479 165,742 461,737 1.65 12/31/96
50.00 12/31/97 574,304 173,339 400,965 2.13 12/31/96
50.00 12/31/97 465,930 153,826 312,104 1.66 12/31/96
50.00 12/31/97 468,279 209,202 259,077 1.84 12/31/96
54.68 12/31/97 481,556 133,853 347,703 2.90 12/31/96
83.08 12/31/97 142,773 60,171 82,602 1.55 12/31/96
50.00 12/31/97 152,241 53,973 98,268 2.00 12/31/96
80.00 12/31/97 80,574 31,455 49,119 1.84 12/31/96
0.08 12/31/97 1,014,019 263,321 750,698 1.34
0.23 12/31/97 824,444 348,825 475,619 1.99 12/31/96
0.15 12/31/97 198,377 82,166 116,211 1.55 12/31/96
0.10 12/31/97 189,608 86,967 102,641 1.52 12/31/96
0.15 12/31/97 253,157 74,504 178,653 1.47 12/31/96
0.15 12/31/97 292,118 120,557 171,561 1.35 12/31/96
0.07 12/31/97 389,330 104,358 284,972 2.06 12/31/96
0.10 12/31/97 204,411 39,498 164,913 1.80 12/31/96
0.15 12/31/97 194,504 46,410 148,094 1.76
0.15 12/31/97 95,806 23,630 72,176 2.10
0.41 12/31/97 7,003,547 5,725,954 1,277,593 1.31 12/31/96
0.46 12/31/97 4,541,913 3,779,710 762,203 1.19 12/31/96
100.00 12/31/97 1,317,339 922,747 394,592 1.68 12/31/96
- ---------------------------------------------------------------------------------------------------
===================================================================================================
</TABLE>
<PAGE> 147
<TABLE>
<CAPTION>
2ND
2ND 2ND 2ND MOST LARGEST
MOST MOST MOST RECENT TENANT
RECENT RECENT RECNENT NOI LEASED
REVEBUES EXPENSES NOI DSCR LARGEST TENANT SF
- -------- ------------ ----------- ------- --------------- --------
<S> <C> <C> <C> <C> <C>
$643,421 $246,115 $397,306 1.56
399,668 203,825 195,843 1.73
241,080 85,616 155,464 1.48
511,939 192,676 319,263 1.28
417,536 160,628 256,908 1.35
352,545 170,118 182,427 1.36
382,741 204,962 177,779 1.38
235,804 93,784 142,020 1.32
160,955 52,212 108,743 1.19
221,776 106,852 114,924 1.29
142,991 47,382 95,609 1.11
132,036 69,384 62,652 1.29
122,942 62,399 60,543 1.27
53,233 22,470 30,763 1.36
996,208 535,861 460,347 1.25
834,523 227,705 606,818 1.76
597,779 154,104 443,675 1.59
542,940 196,948 345,992 1.84
441,298 130,962 310,336 1.65
468,873 213,224 255,649 1.82
444,354 136,236 308,118 2.57
137,895 59,924 77,971 1.46
142,054 57,646 84,408 1.72
72,023 31,216 40,807 1.53
McZand Herbal, Inc. 19,775
483,412 272,046 211,366 0.88
197,150 67,455 129,695 1.73
197,150 71,312 125,838 1.87
258,538 76,285 182,253 1.50
125,633 114,663 10,970 0.09
323,339 91,530 231,809 1.68
206,671 32,946 173,725 1.90
6,374,107 5,599,023 775,084 0.79 Applebees 14,932
5,135,382 4,326,939 808,443 1.26 Applebees 9,278
1,261,242 847,997 413,245 1.76
- --------------------------------------------------------------------------------------------
============================================================================================
<CAPTION>
SECOND
LARGEST SECOND LARGEST SECOND
TENANT LARGEST LARGEST TENANT LARGEST
% of TENANT TENANT % OF TENANT
TOTAL LEASE SECOND LARGEST LEASED TOTAL LEASE
SF EXPIRATION TENANT SF SF EXPIRATION
- ------ ----------- ----------------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
25% 12/31/00 Binary Compass Enterprises, Inc. 13,200 17% 12/31/03
100%
100%
- --------------------------------------------------------------------------------------------------------
========================================================================================================
</TABLE>
<PAGE> 148
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N295 51135 Cedar Crossings Apartments 5804 Rosebay Court Frederick Frederick
N296 51012 Northrup Court Apartments 805 Applegrove Street, NW Stark North Canton
N297 51185 Forest Downs Apartments 10224 W. Forest Home Ave. Milwaukee Hales Corners
N298 51136 Spacious Acres Mobile Home Park W1211 015 Lakeview Drive Jefferson Sullivan
N299 51177 South Hills Mobile Home Park 100 Long Lane Dodge Beaver Dam
N300 51175 Evergreen Estate Mobile Home Park 415 Western Avenue SW Rice Fairbault
N301 51176 Cloverleaf Mobile Home Park 150 Highway 10 North Benton St. Cloud
N302 51178 Monroe Estates Mobile Home Park 560 W. 21st Street Green Monroe
N303 51179 Camelot Mobile Home Park 1140 Arthur Blvd Brown Pulaski
N304 51180 Lakeshore Terrace Mobile Home Park 2136 Colan Blvd Barron Rice Lake
N305 51181 Forest Junction Mobile Home Park West 2377 US Highway 10 Calumet Brillion
N306 51182 Alexandria Mobile Estates 3305 South Broadway, Lot 50 Douglas Alexandria
N307 51183 Maplewood Mobile Home Park Route 3, Lot 49 Wabasha Lake City
N308 51184 Shamrock Mobile Home Park 1009 Shamrock Lane Stearns Albany
SUB-TOTAL CROSSED LOANS
N309 51209 Arabian Gardens Mobile Home Park 81-600 Fred Waring Drive Riverside Indio
N310 51212 Rollingwood Mobile Home Park 20 Rollingwood Dr. Amador Jackson
N311 51143 Tall Pines Mobile Home 314 South Erie Drive Saint Lucie Fort Pierce
N312 50994 Picacho Mobile Home Park 2200 Holiday Avenue Dona Ana Las Cruces
N313 50993 North Valley Mobile Home Park 7051 Buffalo Trail Bexar San Antonio
N314 51388 Kentwood Mobile Estates 123 Henshaw Avenue Butte Chico
N315 51377 Canyon Country Mobile Home Park 16274 Vasquez Canyon Road Los Angeles Canyon Country
N316 51203 Country Club Mobile Home Park 5315 Targee St. Ada Boise
N317 51398 Gemstone Mobile Home Park 2451 Soledad Canyon Road Los Angeles Acton
N318 51204 Green Acres Mobile Home Park 816 North Midland Blvd Canyon Nampa
N319 51423 Del Rey Self Storage 4051-4063 Redwood Avenue Los Angeles Marina Del Rey
N320 51145 Handy Storage 13 350 South University Drive Broward Pembroke Pines
N321 51381 Safeguard Mini Storage (North) 16173 Golden State Blvd Madera Madera
N322 51380 Safeguard Mini Storage (South) 450 E. Almond Ave Madera Madera
SUB-TOTAL CROSSED LOANS
N323 51105 Payless Mini Storage 633 West Swain Road San Joaquin Stockton
N324 51159 Fort Knox Mini Storage 6650 Edith Blvd NE Bernalillo Albuquerque
N325 51230 AAA Self Storage 226 Doctor Claassen Way Yolo Woodland
N326 51426 Sanger Self Storage 225 L Street Fresno Sanger
N327 51356 Executive Mini-Storage 6340 Freeport Blvd Sacramento Sacramento
N328 51231 BlueBonnet Self Storage 200 Maple St. Hunt Commerce
N329A 50319 Applebee's #8673 678 West 23rd St. Bay Panama City
N329B 50319 Applebee's #8902 1005 NW 13th Street Alachua Gainesville
N329C 50319 Applebee's #9145 1401 Capitol Circle, NW Leon Tallahassee
N329 50319 Applebee's #8673, #8902 & #9145 (Roll-Up)
N330A 50322 Applebee's #8623 637 Westover Blvd Dougherty Albany
N330B 50322 Applebee's #8867 1301 St. Augustine Road Lowndes Valdosta
N330 50322 Applebee's #8623 & #8867 (Roll-Up)
SUB-TOTAL CROSSED LOANS
N331 50979 Spring Cove Marina 455 Lore Rd. Calvert Solomons
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS/WEIGHTED AVERAGE 331 LOANS
====================================================================================================================================
</TABLE>
<PAGE> 149
<TABLE>
<CAPTION>
SE- LOAN
QUENCE NUMBER PROPERTY NAME PROPERTY ADDRESS COUNTY CITY
------ ------ ------------- ---------------- ------ ----
<S> <C> <C> <C> <C> <C>
N090 51336 1835-1839 Green St. Apartments 1835-1839 Green Street San Francisco San Francisco
N091 51341 Franklin Ave. Apartments 600 Franklin Ave. Hennepin Minneapolis
N092 50960 Kentwood Apartments 3000 North Kentwood Ave. Greene Springfield
N093 51343 Johnson Apartments 2244 Johnson St. NE Hennepin Minneapolis
N094 51009 Bull Creek Apartments 5001 Bull Creek Road Travis Austin
N095 51323 Bryant Avenue Apartments 2517 Bryant Ave. South Hennepin Minneapolis
N096 51347 Tamarisk Apartments 3221 North 36th Street Maricopa Phoenix
N097 51301 682 Grand Ave. Apartments 682 Grand Ave. Ramsey St. Paul
N098 51339 1967 Grand Ave. Apartments 1967 Grand Ave. Ramsey St. Paul
N099 51342 1962 Grand Ave. Apartments 1962 Grand Ave. Ramsey St. Paul
N100 51023 L1 - Goldfarb Apartments 107 E. Healy Street Champaign Champaign
N101 51318 Hennepin Ave. Apartments 2609 Hennepin Ave. Hennepin Minneapolis
N102 51419 1435-1445 E. Ft. Lowell Road 1435-1445 E. Ft. Lowell Rd. Pima Tucson
N103 51300 669 Grand Avenue Apartments 669 Grand Ave. Ramsey St. Paul
N104 50695 The Summit Shopping Center (iii) NEC of US Hwy. 280 & I-459 Jefferson Birmingham
N105 51286 San Gabriel Square 140 West Valley Blvd Los Angeles San Gabriel
N106 50883 University Center North Shopping Center 1405 SW 107th Ave. Miami-Dade Miami
N107 50148 Salisbury Mall Jake Alexander Blvd & U.S.
Highway 70 Rowan Salisbury
N108 51008 Washington Square Shopping Center S. McDowell Blvd. & E. Washington Sonoma Petaluma
N109 51010 Daniels Crossing Shopping Center 6900 Daniels Parkway Lee Fort Myers
N110 51366 Home Base Building 1900 19th Ave. SE Snohomish Everett
N111 51107 Hatcher Point Mall 2215 Memorial Dr. Ware Waycross
N112 51118 Heartland Shopping Center 2272-2375 Richmond Ave. Richmond Staten Island
N113 50990 Ashley Landing Shopping Center 1401 Sam Rittenberg Rd. Charleston Charleston
N114 51219 Towne House Plaza 9791 Adams Ave. & 19881 Brookhurst St. Orange Huntington
Beach
N115 51401 Katie Reed Plaza 210 South Monarch Street Pitkin Aspen
N116 51081 Castleton Place Shopping Center 82nd St. @ Castleton Square Mall Marion Indianapolis
N117 51039 Genito Forest Shopping Center 11,000 Hull St. (US Route 360) Chesterfield Richmond
N118 50941 Village at Countryside 26210 US Highway 19 N Pinellas Clearwater
N119 51139 Landmark Plaza 14306-14308 N. Dale Mabry Hwy Hillsborough Tampa
N120 51132 Cabaret Center 25700 - 25720 US Highway 19 North Pinellas Clearwater
SUB-TOTAL CROSSED LOANS
N121 50391 Lakewest Town Center 2211-2329 Singleton Blvd. Dallas Dallas
N122 51025 New Market Crossing Shopping Center 695 Independence Blvd. Surry Mount Airy
N123 51106 Pinellas Place Shopping Center 6501 102nd Ave Pinellas Pinellas Park
N124 51074 Washington Corners Shopping Center 9910-9994 E. Washington St. Marion Indianapolis
N125 51291 Dinkydome & Starbucks 1501 University Ave. SE & 1500
Fourth Street SE Hennepin Minneapolis
N126 51087 San Luis Rey Center 73705-73745 El Paseo Riverside Palm Desert
N127 51018 Clearwater Plaza Shopping Center 1219-1293 Missouri Ave. Pinellas Clearwater
N128 51045 Washington Shoppes Shopping Center 10009-10089 E. Washington St. Marion Indianapolis
N129 51079 Castleton Village Shopping Center SEQ 82nd St. & Craig St. Marion Indianapolis
N130 50207 Church Crossing Shopping Center North Church Street and Lees
Chapel Road Guilford Greensboro
N131 51197 PetsMart Retail Building 820 Paseo Del Rey San Diego Chula Vista
N132 51001 Rainbow Shopping Center 7920-8000 SW 8th St. Miami-Dade Miami
N133 51119 Eckerds 1220 Horizon Rd. Rockwall Rockwall
N134 51147 Polo Plaza Shopping Center 9810 Two Notch Rd. Richland Columbia
N135 50499 Sears Plaza 290 Elliot Street Middlesex Ashland
N136 51253 La Verne Town Center North 2445-2497 Foothill Blvd Los Angeles La Verne
N137 51134 Goldmine Village Shopping Center 300 and 400 Wal-Mart Way Lumpkin Dahlonega
N138 50975 Brentwood Plaza 1 Brent Lane Escambia Pensacola
N139 51220 Willow Pass Center 1657 Willow Pass Rd Contra Costa Concord
N140 51090 Brickyard Shopping Center 9940 Two Notch Road Richland Columbia
N141 51263 Central Plaza 11629 - 11655 Valley Blvd Los Angeles El Monte
N142 51349 Roosevelt Place Shopping Center 2237-2269 Colorado Boulevard Los Angeles Pasadena
N143 51116 Lancaster Triangle 42158-43271 15th St. West & 1525
West Ave. K Los Angeles Lancaster
N144 51151 2626 Naylor Road Shopping Center 2626 Naylor Rd. SE
Columbia Washington
N145 51217 Rancho Plaza 8710 19th St. & 6612-6660
Carnelian Street San Bernardino Rancho
Cucamonga
N146 51115 Mid-Valley Automotive 18401-18425 Vanowen St. Los Angeles Reseda
N147 51061 Office Depot Center 6700 Folsom Blvd. Sacramento Sacramento
</TABLE>
(iii) The monthly payment for this loan was recast as of January 1999 on the
basis of a 360 month amortization term resulting in a total amortization
term of 371 months.
<PAGE> 150
PREPAYMENT LOCK-OUT/PREPAYMENT ANALYSIS
BASED ON OUTSTANDING PRINCIPAL BALANCE(1)
<TABLE>
<CAPTION>
FEB-1999 FEB-2000 FEB-2001 FEB-2002 FEB-2003 FEB-2004 FEB-2005 FEB-2006
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out........................ 100.00% 100.00% 99.91% 91.79% 81.91% 81.89% 81.63% 81.06%
Yield Maintenance................. 0.00% 0.00% 0.09% 8.21% 13.72% 13.72% 13.65% 14.50%
3%................................ 0.00% 0.00% 0.00% 0.00% 4.37% 4.39% 0.00% 0.00%
0.5%.............................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 4.41% 4.44%
No Penalty........................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.32% 0.00%
--------- --------- --------- --------- --------- --------- --------- ---------
Total............................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========= ========= ========= ========= ========= ========= ========= =========
Aggregate Principal Balance of
Mortgage Loans ($Millions)....... $1,222.15 $1,208.28 $1,193.62 $1,177.58 $1,160.32 $1,141.89 $1,121.73 $1,097.34
Percentage of Cut-Off Date Balance
of the Mortgage Loans
Outstanding...................... 100.00% 98.87% 97.67% 96.35% 94.94% 93.43% 91.78% 89.79%
<CAPTION>
FEB-2007 FEB-2008 FEB-2009 FEB-2010 FEB-2011 FEB-2012 FEB-2013 FEB-2014
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out........................ 81.04% 92.39% 77.72% 74.99% 73.00% 71.32% 100.00% 0.00%
Yield Maintenance................. 14.36% 3.69% 22.28% 25.01% 27.00% 28.68% 0.00% 0.00%
3%................................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
0.5%.............................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty........................ 4.60% 3.92% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
--------- ------- ------- ------- ------- ------- ------- ------
Total............................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
========= ======= ======= ======= ======= ======= ======= ======
Aggregate Principal Balance of
Mortgage Loans ($Millions)....... $1,074.96 $918.53 $ 37.87 $ 33.01 $ 29.85 $ 27.37 $ 17.08 $ 0.00
Percentage of Cut-Off Date Balance
of the Mortgage Loans
Outstanding...................... 87.96% 75.16% 3.10% 2.70% 2.44% 2.24% 1.40% 0.00%
</TABLE>
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments.
A-5
<PAGE> 151
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM ANALYSIS
BASED ON CUT-OFF DATE BALANCE
<TABLE>
<CAPTION>
FEB FEB FEB FEB FEB FEB FEB FEB
1999 2000 2001 2002 2003 2004 2005 2006
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out...................... 100.00% 98.87% 97.58% 88.44% 77.77% 76.51% 74.92% 72.78%
Yield Maintenance............... 0.00% 0.00% 0.08% 7.91% 13.03% 12.82% 12.52% 13.02%
3%.............................. 0.00% 0.00% 0.00% 0.00% 4.14% 4.10% 0.00% 0.00%
0.5%............................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 4.05% 3.99%
No Penalty...................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.29% 0.00%
Paid Down....................... 0.00% 1.13% 2.33% 3.65% 5.06% 6.57% 8.22% 10.21%
--------- --------- --------- --------- --------- --------- --------- ---------
Total........................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========= ========= ========= ========= ========= ========= ========= =========
Aggregate Principal Balance of
Mortgage Loans ($Millions):.... $1,222.15 $1,208.28 $1,193.62 $1,177.58 $1,160.32 $1,141.89 $1,121.73 $1,097.34
Percentage of Cut-Off Date
Balance of the Mortgage Loans
Outstanding:................... 100.00% 98.87% 97.67% 96.35% 94.94% 93.43% 91.78% 89.79%
<CAPTION>
FEB FEB FEB FEB FEB FEB FEB
2007 FEB 2008 2009 2010 2011 2012 2013 2014
--------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out...................... 71.28% 69.43% 2.41% 2.03% 1.78% 1.60% 1.40% 0.00%
Yield Maintenance............... 12.63% 2.78% 0.69% 0.68% 0.66% 0.64% 0.00% 0.00%
3%.............................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
0.5%............................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty...................... 4.04% 2.95% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Paid Down....................... 12.04% 24.84% 96.90% 97.30% 97.56% 97.76% 98.60% 100.00%
--------- -------- ------- ------- ------- ------- ------- -------
Total........................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========= ======== ======= ======= ======= ======= ======= =======
Aggregate Principal Balance of
Mortgage Loans ($Millions):.... $1,074.96 $ 918.53 $ 37.87 $ 33.01 $ 29.85 $ 27.37 $ 17.08 $ 0.00
Percentage of Cut-Off Date
Balance of the Mortgage Loans
Outstanding:................... 87.96% 75.16% 3.10% 2.70% 2.44% 2.24% 1.40% 0.00%
</TABLE>
A-6
<PAGE> 152
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.......... 122 33.2% $ 382,858,142 31.3% 1.42x 1.27/2.20x 74.2%
Retail............... 87 23.6% 316,173,043 25.9% 1.52x 1.23/3.59x 71.7%
Industrial........... 43 11.7% 142,805,297 11.7% 1.50x 1.27/2.08x 68.1%
Hotel................ 18 4.9% 140,109,856 11.5% 1.90x 1.57/2.74x 63.1%
Office............... 51 13.9% 133,178,251 10.9% 1.83x 1.22/3.94x 62.9%
Health Care.......... 10 2.7% 36,573,334 3.0% 1.49x 1.35/1.61x 70.0%
Mobile Home.......... 21 5.7% 35,185,892 2.9% 1.50x 1.30/2.60x 69.7%
Mini Storage......... 10 2.7% 17,663,162 1.4% 1.59x 1.37/2.12x 61.2%
Franchise
Restaurant......... 5 1.4% 15,109,710 1.2% 1.31x 1.21/1.37x 75.5%
Marina............... 1 0.3% 2,488,753 0.2% 1.53x 1.53/1.53x 63.0%
--- ----- -------------- ----- ----- ---------- ----
Total/ Wtd Avg....... 368 100.0% $1,222,145,439 100.0% 1.56x 1.21/3.94x 69.9%
=== ===== ============== ===== ===== ========== ====
<CAPTION>
WEIGHTED
MIN/MAX AVERAGE
CUT-OFF DATE MORTGAGE
PROPERTY TYPE LTV RATIO RATE
------------- ------------ --------
<S> <C> <C>
Multifamily.......... 36.4/83.2% 7.066%
Retail............... 32.5/80.7% 7.310%
Industrial........... 49.3/84.6% 7.322%
Hotel................ 44.2/68.6% 7.672%
Office............... 17.4/80.4% 7.015%
Health Care.......... 51.0/74.8% 7.673%
Mobile Home.......... 40.0/79.8% 7.075%
Mini Storage......... 32.1/75.0% 7.432%
Franchise
Restaurant......... 70.3/78.9% 8.600%
Marina............... 63.0/63.0% 8.170%
---------- -----
Total/ Wtd Avg....... 17.4/84.6% 7.268%
========== =====
</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>
$279,432 - $999,999........ 65 19.6% $ 44,919,031 3.7% 1.56x 67.9% 7.489%
$1,000,000 - $1,999,999...... 95 28.7% 142,672,595 11.7% 1.62x 68.2% 7.124%
$2,000,000 - $2,999,999...... 60 18.1% 147,624,475 12.1% 1.54x 69.7% 7.122%
$3,000,000 - $3,999,999...... 43 13.0% 149,609,442 12.2% 1.55x 71.1% 7.102%
$4,000,000 - $4,999,999...... 21 6.3% 94,768,128 7.8% 1.52x 72.2% 6.958%
$5,000,000 - $7,499,999...... 21 6.3% 123,597,116 10.1% 1.53x 68.5% 7.076%
$7,500,000 - $9,999,999...... 10 3.0% 90,585,836 7.4% 1.55x 68.3% 7.146%
$10,000,000 - $14,999,999...... 5 1.5% 56,361,771 4.6% 1.94x 64.3% 7.182%
$15,000,000 - $19,999,999...... 3 0.9% 51,266,014 4.2% 1.47x 75.9% 7.105%
$20,000,000 - $29,999,999...... 2 0.6% 54,939,527 4.5% 1.27x 70.9% 7.515%
$30,000,000 - $34,999,999...... 1 0.3% 32,909,986 2.7% 1.52x 74.8% 6.990%
$35,000,000 - $55,402,022...... 5 1.5% 232,891,519 19.1% 1.59x 70.2% 7.825%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg.................. 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
A-7
<PAGE> 153
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................... 124 33.7% $ 424,069,244 34.7% 1.62x 66.2% 7.240%
Los Angeles........ 30 8.2% 98,868,001 8.1% 1.56x 70.7% 7.034%
San Diego.......... 16 4.3% 81,923,574 6.7% 1.37x 69.0% 7.355%
Santa Clara........ 8 2.2% 63,138,760 5.2% 1.81x 62.7% 7.573%
Orange............. 17 4.6% 38,544,535 3.2% 1.73x 62.5% 6.963%
Alameda............ 7 1.9% 28,112,366 2.3% 1.76x 64.4% 7.658%
Marin.............. 2 0.5% 10,327,589 0.8% 1.44x 74.9% 6.982%
Monterey........... 2 0.5% 10,205,524 0.8% 1.58x 65.2% 7.314%
Sonoma............. 1 0.3% 9,970,394 0.8% 1.95x 51.7% 6.680%
Riverside.......... 4 1.1% 9,322,212 0.8% 1.48x 73.3% 7.082%
Fresno............. 2 0.5% 7,863,647 0.6% 1.41x 79.1% 7.017%
Other Counties..... 35 9.5% 65,792,642 5.4% 1.74x 60.8% 7.232%
FL................... 25 6.8% 96,907,585 7.9% 1.46x 75.3% 7.121%
NV................... 8 2.2% 82,184,910 6.7% 1.43x 76.0% 7.158%
NY................... 13 3.5% 56,997,593 4.7% 2.07x 55.7% 7.087%
UT................... 6 1.6% 54,111,236 4.4% 1.44x 65.1% 7.677%
AL................... 1 0.3% 52,538,304 4.3% 1.26x 80.7% 8.273%
IL................... 29 7.9% 41,596,635 3.4% 1.53x 76.6% 6.659%
TX................... 14 3.8% 40,987,515 3.4% 1.53x 74.7% 7.115%
SC................... 10 2.7% 38,497,279 3.1% 1.49x 73.8% 7.125%
NC................... 5 1.4% 33,310,768 2.7% 1.43x 76.8% 7.319%
GA................... 9 2.4% 32,695,319 2.7% 1.47x 69.1% 7.525%
MN................... 24 6.5% 26,567,549 2.2% 1.62x 74.1% 7.236%
NM................... 10 2.7% 23,198,279 1.9% 1.44x 72.3% 7.091%
MO................... 8 2.2% 21,600,766 1.8% 1.56x 69.6% 7.545%
IN................... 5 1.4% 20,513,636 1.7% 1.75x 63.8% 7.146%
MD................... 7 1.9% 20,135,413 1.6% 1.56x 73.2% 7.076%
WI................... 9 2.4% 19,973,235 1.6% 1.48x 74.4% 7.246%
CO................... 10 2.7% 16,433,925 1.3% 1.58x 68.7% 7.199%
AZ................... 13 3.5% 15,553,540 1.3% 1.75x 70.7% 7.215%
WA................... 4 1.1% 14,874,225 1.2% 1.51x 66.0% 7.271%
OK................... 4 1.1% 14,200,388 1.2% 1.53x 76.3% 7.121%
MA................... 3 0.8% 11,027,381 0.9% 1.52x 71.4% 6.882%
LA................... 2 0.5% 9,744,190 0.8% 1.39x 76.8% 7.553%
VA................... 3 0.8% 9,219,212 0.8% 1.48x 65.0% 7.141%
TN................... 7 1.9% 8,297,624 0.7% 1.98x 56.5% 7.545%
MI................... 2 0.5% 7,237,822 0.6% 1.92x 64.9% 7.721%
NJ................... 2 0.5% 7,225,617 0.6% 1.58x 69.9% 7.924%
CT................... 1 0.3% 6,388,917 0.5% 1.28x 79.4% 7.090%
OR................... 3 0.8% 5,463,857 0.4% 1.37x 74.4% 7.027%
MS................... 1 0.3% 2,791,743 0.2% 1.66x 68.1% 7.625%
KS................... 1 0.3% 2,482,290 0.2% 1.35x 73.0% 7.625%
DC................... 1 0.3% 2,195,888 0.2% 1.38x 74.7% 7.500%
ID................... 3 0.8% 1,712,503 0.1% 1.50x 68.0% 7.430%
OH................... 1 0.3% 1,411,053 0.1% 1.44x 69.9% 7.000%
--- ----- -------------- ----- ---- ---- -----
Total/Weighted
Average............ 368 100.0% $1,222,145,439 100.0% 1.56X 69.9% 7.268%
=== ===== ============== ===== ==== ==== =====
</TABLE>
- ---------------
(1) States or district in which the respective Mortgaged Properties are located.
For Mortgage Loans secured by multiple properties, the Cut-Off Date Balance
is allocated.
A-8
<PAGE> 154
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>
1.20x - 1.24x........ 5 1.5% $ 12,492,458 1.0% 1.22x 67.3% 7.883%
1.25x - 1.29x........ 12 3.6% 135,323,343 11.1% 1.27x 75.5% 7.706%
1.30x - 1.34x........ 21 6.3% 65,722,669 5.4% 1.32x 77.1% 7.099%
1.35x - 1.39x........ 47 14.2% 236,036,803 19.3% 1.37x 74.5% 7.364%
1.40x - 1.49x........ 81 24.5% 214,547,836 17.6% 1.44x 74.0% 7.073%
1.50x - 1.59x........ 59 17.8% 196,213,985 16.1% 1.54x 72.0% 7.149%
1.60x - 1.69x........ 38 11.5% 95,399,712 7.8% 1.64x 68.0% 7.067%
1.70x - 1.79x........ 25 7.6% 55,246,249 4.5% 1.73x 62.5% 6.975%
1.80x - 1.89x........ 11 3.3% 24,957,142 2.0% 1.81x 63.9% 7.188%
1.90x - 1.99x........ 13 3.9% 136,546,156 11.2% 1.95x 59.6% 7.568%
2.00x - 2.99x........ 16 4.8% 35,690,841 2.9% 2.27x 48.5% 6.903%
3.00x - MaxDSCR...... 3 0.9% 13,968,246 1.1% 3.85x 20.8% 7.010%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........ 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</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>
17.4% - 29.9%........ 1 0.3% $ 10,977,077 0.9% 3.94x 17.4% 7.000%
30.0% - 49.9%........ 21 6.3% 47,649,870 3.9% 2.14x 43.8% 7.057%
50.0% - 59.9%........ 39 11.8% 101,762,366 8.3% 1.77x 56.0% 6.995%
60.0% - 64.9%........ 23 6.9% 143,816,374 11.8% 1.82x 62.3% 7.634%
65.0% - 69.9%........ 54 16.3% 199,760,744 16.3% 1.51x 67.1% 7.315%
70.0% - 74.9%........ 87 26.3% 283,605,312 23.2% 1.46x 73.1% 7.268%
75.0% - 79.9%........ 96 29.0% 306,180,521 25.1% 1.41x 78.4% 7.061%
80.0% - 84.6%........ 10 3.0% 128,393,175 10.5% 1.33x 80.6% 7.597%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........ 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
MATURITY DATE LOAN-TO-VALUE RATIO
<TABLE>
<CAPTION>
WEIGHTED
RANGE OF % OF WEIGHTED AVERAGE WEIGHTED
MATURITY NUMBER 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%........ 10 3.0% $ 28,935,429 2.4% 2.45x 5.8% 7.138%
25.0% - 49.9%........ 53 16.0% 130,235,924 10.7% 1.88x 42.6% 7.015%
50.0% - 59.9%........ 80 24.2% 358,796,806 29.4% 1.64x 54.8% 7.485%
60.0% - 64.9%........ 72 21.8% 228,747,251 18.7% 1.44x 62.6% 7.268%
65.0% - 69.9%........ 94 28.4% 339,001,804 27.7% 1.45x 67.7% 7.010%
70.0% - 72.7%........ 22 6.6% 136,428,225 11.2% 1.33x 71.2% 7.607%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........ 331 100.0% $1,222,145,439 100.0% 1.56x 59.2% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
A-9
<PAGE> 155
MORTGAGE RATES
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE % OF AVERAGE CUT-OFF AVERAGE
MORTGAGE MORTGAGE MORTGAGE CUT-OFF DATE INITIAL POOL UNDERWRITING DATE MORTGAGE
RATES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- -------------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
6.196% -- 6.499%...... 7 2.1% $ 16,712,465 1.4% 2.13x 62.8% 6.373%
6.500% -- 6.999%...... 80 24.2% 330,676,718 27.1% 1.55x 71.0% 6.812%
7.000% -- 7.249%...... 114 34.4% 317,635,860 26.0% 1.62x 68.8% 7.070%
7.250% -- 7.499%...... 62 18.7% 189,156,359 15.5% 1.47x 72.5% 7.301%
7.500% -- 7.749%...... 29 8.8% 100,821,307 8.2% 1.41x 68.8% 7.534%
7.750% -- 7.999%...... 15 4.5% 171,926,998 14.1% 1.73x 64.7% 7.827%
8.000% -- 8.499%...... 19 5.7% 74,910,719 6.1% 1.33x 77.4% 8.228%
8.500% -- 8.999%...... 5 1.5% 20,305,014 1.7% 1.37x 72.9% 8.621%
--- ----- -------------- ----- ----- ---- -----
Total/Wtg Avg......... 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
ORIGINAL TERM NUMBER OF % OF AGGREGATE % OF AVERAGE CUT-OFF AVERAGE
TO MATURITY MORTGAGE MORTGAGE CUT-OFF DATE INITIAL POOL UNDERWRITING DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- -------------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
60................... 1 0.3% $ 2,175,462 0.2% 1.22x 37.8% 7.250%
84................... 2 0.6% 4,954,471 0.4% 1.59x 61.7% 8.650%
113................... 1 0.3% 6,388,917 0.5% 1.28x 79.4% 7.090%
116................... 1 0.3% 3,955,964 0.3% 1.38x 69.4% 6.930%
120................... 301 90.9% 1,134,889,729 92.9% 1.57x 70.0% 7.271%
125................... 1 0.3% 15,941,598 1.3% 1.39x 80.1% 6.900%
132................... 1 0.3% 3,829,161 0.3% 1.30x 79.6% 7.000%
144................... 1 0.3% 997,280 0.1% 2.19x 55.4% 7.000%
180................... 22 6.6% 49,012,859 4.0% 1.52x 65.2% 7.267%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg......... 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
ORIGINAL AMORTIZATION TERM (1)
<TABLE>
<CAPTION>
ORIGINAL % OF WEIGHTED WEIGHTED WEIGHTED
AMORTIZATION NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
TERM MORTGAGE 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>
60...................... 1 0.3% $ 2,175,462 0.2% 1.22x 37.8% 7.250%
180...................... 8 2.4% 15,782,890 1.3% 1.58x 54.5% 7.218%
240...................... 10 3.0% 32,913,829 2.7% 1.41x 69.5% 7.756%
252...................... 1 0.3% 3,829,161 0.3% 1.30x 79.6% 7.000%
282...................... 1 0.3% 9,253,802 0.8% 1.80x 66.7% 7.750%
300...................... 77 23.3% 280,235,183 22.9% 1.74x 65.5% 7.475%
306...................... 1 0.3% 5,319,872 0.4% 1.27x 84.6% 7.000%
353...................... 1 0.3% 6,388,917 0.5% 1.28x 79.4% 7.090%
360...................... 230 69.5% 813,708,020 66.6% 1.53x 70.9% 7.112%
371...................... 1 0.3% 52,538,304 4.3% 1.26x 80.7% 8.273%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg............ 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</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> 156
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>
57 - 59................. 1 0.3% $ 2,175,462 0.2% 1.22x 37.8% 7.250%
60 - 83................. 2 0.6% 4,954,471 0.4% 1.59x 61.7% 8.650%
84 - 119................ 303 91.5% 1,145,234,609 93.7% 1.57x 70.1% 7.268%
120 - 179................ 25 7.6% 69,780,898 5.7% 1.49x 69.2% 7.165%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg............ 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
YEAR OF MORTGAGE ORIGINATION
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
ORIGINATION LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------- --------- -------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1997..................... 15 4.5% $ 162,533,457 13.3% 1.32x 75.4% 7.902%
1998..................... 316 95.5% 1,059,611,982 86.7% 1.60x 69.1% 7.171%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg............ 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
YEAR OF MORTGAGE MATURITY
<TABLE>
<CAPTION>
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
MATURITY LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- -------------- ------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
2003................. 1 0.3% $ 2,175,462 0.2% 1.22x 37.8% 7.250%
2004................. 1 0.3% 1,039,767 0.1% 1.64x 56.2% 8.350%
2005................. 1 0.3% 3,914,704 0.3% 1.57x 63.1% 8.730%
2007................. 8 2.4% 93,941,771 7.7% 1.32x 72.6% 7.742%
2008................. 282 85.2% 883,656,571 72.3% 1.56x 70.0% 7.154%
2009................. 15 4.5% 187,407,026 15.3% 1.67x 70.0% 7.536%
2010................. 1 0.3% 997,280 0.1% 2.19x 55.4% 7.000%
2012................. 2 0.6% 5,291,786 0.4% 1.35x 78.5% 7.948%
2013 20 6.0% 43,721,073 3.6% 1.54x 63.6% 7.185%
--- ----- -------------- ----- ----- ---- -----
Total/Wtd Avg........ 331 100.0% $1,222,145,439 100.0% 1.56x 69.9% 7.268%
=== ===== ============== ===== ===== ==== =====
</TABLE>
A-11
<PAGE> 157
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT BALANCE INITIAL
TO CAPITAL IN CAPITAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N001 51386 Eagle Trace Apartments Multifamily $10,019 $10,019
N002 51385 The Breakers Apartments Multifamily 4,445 4,445
N003 50166 La Jolla International Gardens Multifamily 3,875 3,737
N004 50167 La Scala Apartment Villas Multifamily 6,250 6,181
N005 51289 Park Place Apartments-Tustin CA Multifamily 6,250 6,289
N006 51192 Lakeside Village Apartments Multifamily
N007 51046 L5 - Goldfarb Apartments Multifamily 5,000 5,027
N008 51160 Foxwood Apartments Multifamily
N009 50563 River View Condominiums Multifamily $ 20,000
N010 50668 Museum Walk Apartments Multifamily
N011 51041 Indiana Village Apartments Multifamily 41,906 21,457
N012 51033 L4 - Goldfarb Apartments Multifamily
N013 51004 Westside Colonial Apartments Multifamily 88,575
N014 51101 Gaylord Apartments Multifamily
N015 51056 Sheridan Square Apartments Multifamily 4,375 4,375
N016 50894 The Courtyards Apartments Multifamily 8,406 8,522 45,000
N017 51104 Broadway & 171st Multifamily
N018 51055 Sail Cloth Factory Apartments Multifamily
N019 51169 Horton 4th Avenue Apartments Multifamily
N020 51093 Park Lane Apartments Multifamily
N021 50648 Colonial Plaza Apts Multifamily 69,848 50,300
N022 51014 L2 - Goldfarb Apartments Multifamily 4,500 4,524
N023 51028 Innsbruck West Apartments Multifamily 24,375 216
N024 51287 Hensel Garden Apartments Multifamily 45,000 45,292
N025 51043 Sunscape Apartments Multifamily 37,625 100,493
N026 51127 Raintree Meadows Apartments Multifamily
N027 50986 Grand Rose Apartments Multifamily
N028 51053 L6 - Goldfarb Apartments Multifamily
N029 51077 Royal Orleans Apartments Multifamily 89,381 65,254
N030 51261 Kenmore View Apartments Multifamily
N031 51066 Forest at Duck Creek Apartments Multifamily
N032 50776 Terraces Apartments Multifamily 251,156 94,503
N033 51442 Chateau DePaix Multifamily
N034 51048 Lulav Square Apartments Multifamily 2,093 2,118
<CAPTION>
ANNUAL CURRENT INITIAL ANNUAL CURRENT
DEPOSIT TO BALANCE IN TAX AND DEPOSIT DEPOSIT TO BALANCE IN
REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$246,000 Yes 1/7/99
100,000 Yes 1/7/99
60,000 $ 65,646 Yes 1/13/99
46,020 50,292 Yes 1/13/99
61,500 15,401 Yes 1/7/99
64,760 16,252 Yes 1/7/99
42,864 10,735 Yes 1/7/99
68,000 17,039 Yes 1/7/99
18,396 35,736 Yes 1/8/99
24,888 20,924 Yes 1/13/99
74,880 19,152 Yes 1/7/99
17,480 7,336 Yes 1/7/99
27,180 83,856 Yes 1/8/99
45,410 3,792 Yes 1/7/99
62,100 10,350 Yes 1/7/99
96,460 32,612 Yes 1/7/99
18,900 4,731 Yes 1/7/99
27,071 30,832 Yes 12/31/98
14,400 2,422 Yes 1/7/99
14,560 1,215 Yes 1/7/99
47,424 61,851 Yes 12/31/98
25,500 6,379 Yes 1/7/99
52,000 13,031 Yes 1/7/99
30,600 7,660 Yes 1/7/99
38,880 152,187 Yes 12/31/98
32,400 2,700 Yes 1/7/99
24,084 10,035 Yes 1/13/99
17,625 5,879 Yes 1/7/99
22,050 5,516 Yes 1/7/99
16,470 4,126 Yes 1/7/99
28,600 Yes 12/31/98
49,000 18,679 Yes 1/7/99
13,352 Yes 1/7/99
35,000 8,787 Yes $70,000 $70,969 1/7/99
</TABLE>
<PAGE> 158
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT BALANCE INITIAL
TO CAPITAL IN CAPITAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N035 51316 La Jollan Townhouse Multifamily
N036 51034 Blueberry Estates Multifamily $5,000
N037 51027 L3 - Goldfarb Apartments Multifamily $9,125 $9,159
N038 51221 Chaumont Villas Multifamily
N039 51297 Stadium Terrace Apartments Multifamily
N040 50935 Barrington Apartments Multifamily 16,250 16,250
N041 51065 Ambassador East Apartments Multifamily 44,938
N042 51035 L7 - Goldfarb Apartments Multifamily
N043 50099 300 Carpenter Apartments Multifamily 300,000 500
N044 50969 Eastwyck Village Apartments Multifamily
N045 51075 L10 - Goldfarb Apartments Multifamily 6,250
N046 51299 Broadway Manor Multifamily
N047 50937 Belle Terrace Apartments Multifamily 11,095 11,149
N048 50888 Northpark Village Apts Multifamily 17,937 18,209
N049 51096 Aspen Circle Apartments Multifamily 3,750 3,768 115,000
N050 51348 Barrington Apartments Multifamily
N051 50852 Windover Woods Apartments Multifamily
N052 51354 Colter Meadows Apartments Multifamily
N053 51038 Le Tournesol Apartments Multifamily 13,500 13,631
N054 50331 Crosswinds West Apartments Multifamily 17,500
N055 51042 Westside Apartments Multifamily
N056 51215 Orion Garden Apartments Multifamily
N057 51198 Beverly Plaza Apartments Multifamily
N058 51251 947 Bush Street Multifamily 34,400 34,662
N059 51294 Grace Manor Apartments Multifamily 55,020 55,373
N060 51281 Casa Del Campbell Apartments Multifamily 39,375
N061 51086 Glen Garden Apartments Multifamily 2,000 2,000
N062 51076 1636 Lexington Avenue Apartments Multifamily 46,000
N063 51245 Silver Ridge Apartments Multifamily
N064 51036 L9 - Goldfarb Apartments Multifamily
N065 50904 College View Apartments Multifamily 3,343 3,344
N066 51322 Justin Court Apartments Multifamily
N067 51124 270 East 10th St. Apartments Multifamily
N068 51320 Bostonia Townhomes Multifamily
<CAPTION>
ANNUAL CURRENT INITIAL ANNUAL CURRENT
DEPOSIT TO BALANCE IN TAX AND DEPOSIT DEPOSIT TO BALANCE IN
REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$13,596 $ 3,401 Yes 1/7/99
16,750 9,205 Yes 1/8/99
13,364 5,596 Yes 1/7/99
16,002 6,685 Yes 1/7/99
16,393 4,100 Yes 1/7/99
29,952 12,526 Yes 1/13/99
31,860 7,970 Yes 1/7/99
15,420 5,144 Yes 1/7/99
30,600 36,081 Yes 1/7/99
24,000 8,030 Yes 1/7/99
28,800 13,488 Yes 1/7/99
4,100 684 Yes 1/7/99
21,760 5,443 Yes 1/7/99
21,000 8,781 Yes 1/7/99
26,250 25,407 Yes 1/7/99
4,608 768 Yes 1/7/99
7,710 Yes 1/7/99
17,750 2,959 Yes 1/7/99
13,500 3,389 Yes 1/7/99
17,820 14,384 Yes 1/7/99
7,200 1,800 Yes 1/7/99
28,172 Yes 1/7/99
12,842 4,291 Yes 1/7/99
15,000 3,382 Yes 1/7/99
17,184 4,300 Yes 1/7/99
32,064 3,022 Yes 1/7/99
13,200 3,300 Yes 1/7/99
23,500 79,636 Yes 12/31/98
12,884 4,302 Yes 1/7/99
6,000 2,001 Yes 1/7/99
14,418 6,008 Yes 1/13/99
9,750 1,626 Yes 1/7/99
1,625 271 Yes 1/7/99
6,000 1,501 Yes 1/7/99
</TABLE>
<PAGE> 159
ANNEX B
Capital Improvement, Replacement Reserve and Escrow Accounts
(All Mortgage Loans)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT BALANCE INITIAL
TO CAPITAL IN CAPITAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N069 50336 The Park At Westridge Apartments Multifamily
N070 51246 Wilshire Occidental Apartments Multifamily $3,125 $3,149
N071 51173 Raintree Apartments Multifamily
N072 50509 Oxnard Villa Apartments Multifamily 16,213 $17,500
N073 50853 Greentree Apts Multifamily
N074 51303 Sun Valley Apartments Multifamily
N075 51190 Apache Manor Apartments Multifamily
N076 51202 Campus Village Apartments Multifamily 8,125
N077 51372 Casa de Porter Apartments Multifamily 47,838 48,015
N078 51357 Cote D'Azur Apartments Multifamily
N079 51189 Avon Street Apartments Multifamily
N080 50788 2474 Valentine Avenue Apartments Multifamily
N081 51248 Woodside Apartments Multifamily
N082 51271 1407-1415 W. Sherwin Ave. Apts. Multifamily
N083 51302 Summit Avenue Apartments Multifamily 29,500 29,648
N084 51325 Napa Broadway Apartments Multifamily
N085 51390 Croftwood Apartments Multifamily
N086 51319 Charles Avenue Apartments Multifamily 26,000 26,131
N087 51425 Sheila Gardens Multifamily
N088 51224 Pillsbury Manor Multifamily
N089 51123 522 East 6th St. Apartments Multifamily
N090 51336 1835-1839 Green St. Apartments Multifamily
N091 51341 Franklin Ave. Apartments Multifamily 8,250 8,286
N092 50960 Kentwood Apartments Multifamily
N093 51343 Johnson Apartments Multifamily 20,000
N094 51009 Bull Creek Apartments Multifamily 7,250
N095 51323 Bryant Avenue Apartments Multifamily 6,750
N096 51347 Tamarisk Apartments Multifamily
N097 51301 682 Grand Ave. Apartments Multifamily 33,250 33,439
N098 51339 1967 Grand Ave. Apartments Multifamily 32,625 32,768
N099 51342 1962 Grand Ave. Apartments Multifamily 46,500 46,704
N100 51023 L1 - Goldfarb Apartments Multifamily
N101 51318 Hennepin Ave. Apartments Multifamily 24,250 24,367
N102 51419 1435-1445 E. Ft. Lowell Road Multifamily
<CAPTION>
ANNUAL CURRENT INITIAL ANNUAL CURRENT
DEPOSIT TO BALANCE IN TAX AND DEPOSIT DEPOSIT TO BALANCE IN
REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$19,200 $22,602 Yes 1/8/99
4,803 1,602 Yes 1/7/99
37,960 Yes 1/7/99
12,000 20,771 Yes 1/11/99
16,762 Yes 1/26/99
10,000 2,502 Yes 1/7/99
12,518 1,044 Yes 1/7/99
9,466 3,954 Yes 1/7/99
11,750 979 Yes 1/7/99
5,750 479 Yes 1/7/99
7,179 598 Yes 1/7/99
19,248 21,673 Yes 12/31/98
8,463 2,823 Yes 1/7/99
9,750 3,253 Yes 1/7/99
8,500 1,419 Yes 1/7/99
5,400 900 Yes 1/7/99
11,395 950 Yes 1/7/99
11,250 1,878 Yes 1/7/99
18,750 Yes 1/7/99
10,000 3,341 Yes 1/7/99
1,400 233 Yes 1/7/99
1,755 293 Yes 1/7/99
7,250 604 Yes 1/7/99
8,000 1,333 Yes 1/7/99
5,500 20,537 Yes 1/7/99
8,400 10,050 Yes 1/13/99
4,750 396 Yes 1/7/99
5,750 958 Yes 1/7/99
6,250 1,042 Yes 1/7/99
5,000 417 Yes 1/7/99
5,000 417 Yes 1/7/99
5,040 1,261 Yes 1/7/99
5,000 835 Yes 1/7/99
2,600 Yes 1/7/99
</TABLE>
<PAGE> 160
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL TO CAPITAL INITIAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N103 51300 669 Grand Avenue Apartments Multifamily $7,625 $ 7,668
N104 50695 The Summit Shopping Center Retail
N105 51286 San Gabriel Square Retail
N106 50883 University Center North Shopping Center Retail
N107 50148 Salisbury Mall Retail 8,750
N108 51008 Washington Square Shopping Center Retail
N109 51010 Daniels Crossing Shopping Center Retail
N110 51366 Home Base Building Retail
N111 51107 Hatcher Point Mall Retail
N112 51118 Heartland Shopping Center Retail 375 25,000 $25,000
N113 50990 Ashley Landing Shopping Center Retail 55,344 55,344 11,000
N114 51219 Towne House Plaza Retail 25,500
N115 51401 Katie Reed Plaza Retail
N116 51081 Castleton Place Shopping Center Retail 24,000
N117 51039 Genito Forest Shopping Center Retail 7,093 7,094
N118 50941 Village at Countryside Retail 5,750 5,791
N119 51139 Landmark Plaza Retail
N120 51132 Cabaret Center Retail
N121 50391 Lakewest Town Center Retail 3,250
N122 51025 New Market Crossing Shopping Center Retail 100,000 101,467
N123 51106 Pinellas Place Shopping Center Retail
N124 51074 Washington Corners Shopping Center Retail 30,000
N125 51291 Dinkydome & Starbucks Retail
N126 51087 San Luis Rey Center Retail 24,563 2,718
N127 51018 Clearwater Plaza Shopping Center Retail
N128 51045 Washington Shoppes Shopping Center Retail 4,000
N129 51079 Castleton Village Shopping Center Retail
N130 50207 Church Crossing Shopping Center Retail
N125 51291 Dinkydome & Starbucks Retail
N126 51087 San Luis Rey Center Retail
N127 51018 Clearwater Plaza Shopping Center Retail
N128 51045 Washington Shoppes Shopping Center Retail
N129 51079 Castleton Village Shopping Center Retail
N130 50207 Church Crossing Shopping Center Retail
N131 51197 PetsMart Retail Building Retail
N132 51001 Rainbow Shopping Center Retail 26,100
N133 51119 Eckerds Retail
N134 51147 Polo Plaza Shopping Center Retail
N135 50499 Sears Plaza Retail
N136 51253 La Verne Town Center North Retail
<CAPTION>
ANNUAL CURRENT ANNUAL CURRENT
DEPOSIT TO BALANCE IN TAX AND INITIAL DEPOSIT DEPOSIT TO BALANCE IN
REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,000 $ 500 Yes 1/7/99
73,684 71,816 Yes $344,119 1/28/99
23,604 5,909 Yes 1/7/99
32,806 10,954 Yes 1/7/99
87,353 39,536 Yes $458,910 1/7/99
Yes 12/31/98
19,232 8,041 Yes 1/7/99
No 1/7/99
51,581 4,298 Yes 1/7/99
15,000 2,875 Yes 1/7/99
72,811 23,135 Yes 1/7/99
No 1/7/99
1,388 Yes $20,000 1/7/99
18,843 28,711 Yes 1/7/99
7,927 1,321 Yes 39,000 6,500 1/7/99
12,000 5,000 Yes 30,000 12,524 1/8/99
7,102 Yes 1/7/99
7,334 Yes 1/7/99
29,522 33,431 Yes 1/7/99
22,144 7,415 Yes 100,000 101,467 1/7/99
43,021 Yes 1/7/99
24,252 34,042 Yes 35,000 35,000 1/7/99
14,198 2,368 Yes 25,000 35,928 31,156 1/7/99
15,866 3,967 Yes 1/13/99
20,477 5,132 Yes 1/7/99
28,473 8,745 Yes 1/7/99
13,354 3,338 Yes 1/7/99
12,504 2,252 Yes 1/7/99
No 1/7/99
8,862 26,963 Yes 1/7/99
No 1/7/99
11,605 967 Yes 3,756 313 1/7/99
3,857 2,921 Yes 1/13/99
10,860 2,717 Yes 23,292 5,839 1/7/99
</TABLE>
<PAGE> 161
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Initial Deposit Capital Balance Annual Current
To Capital in Capital Initial Deposit Deposit to Balance in
Loan Property Improvement Improvement Replacement Replacement Replacement
Sequence Number Property Name Type Reserves Reserves Reserves Reserves Reserves
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N137 51134 Goldmine Village Shopping Center Retail $ 2,735 $ 228
N138 50975 Brentwood Plaza Retail $ 8,244 $ 8,244 19,728 3,288
N139 51220 Willow Pass Center Retail 6,287 2,627
N140 51090 Brickyard Shopping Center Retail 19,750 19,827 12,321 2,055
N141 51263 Central Plaza Retail 4,054 1,014
N142 51349 Roosevelt Place Shopping Center Retail 3,714 310
N143 51116 Lancaster Triangle Retail 875 879 4,649 776
N144 51151 2626 Naylor Road Shopping Center Retail 10,774 10,774 2,919 243
N145 51217 Rancho Plaza Retail 6,246 2,606
N146 51115 Mid-Valley Automotive Retail 2,813 2,825 5,676 474
N147 51061 Office Depot Center Retail 55,313 6,134 14,610 3,767
N148 51058 Del Plaza Shopping Center Retail $ 5,000 13,347 9,479
N149 50942 Staples - Hobbs NM Retail
N150 51228 701 Montana Retail 5,000 3,312 830
N151 51328 Evergreen Center Retail 7,351 1,226
N152 51117 For Eyes, Gwinnett Retail 1,425 119
N153 51196 L.A. Woman Building Retail 31,000 31,322 1,732 722
N154 51146 River Crossing Shopping Center Retail 3,696 308
N155 51239 Academy Crossing Shopping Center Retail 8,267 2,758
N156 51267 1210 West Morena Blvd Retail 3,423 1,142
N157 51288 Park Village Shopping Center Retail 9,375 9,434 2,439 610
N158 51395 Yuma Mesa Shopping Center Retail
N159 51264 Anaheim Town Center Retail 5,037 1,680
N160 51262 The Ellinwood Center Retail 2,469 619
N161 51068 North Towne Square Shopping Center Retail 22,281 22,281 55,000 23,374 58,896
N162 51125 Mountain Park Square, Ph II Retail 2,108 351
N163 51201 Central Avenue Plaza Retail 5,014 5,060 2,228 744
N164 51308 Calabasas Retail Center Retail 2,245 374
N165 51266 920 Morena Industrial Retail 2,791 931
N166 51199 Wendys Retail 1,473 616
N167 51284 Mission Center Retail 1,825 456
N168 51233 Pier I Imports Building Retail
N169 51382 Arcadia Center Retail 2,982 497
N170 51242 Brookhurst Center Retail 1,247 417
</TABLE>
<TABLE>
<CAPTION>
Annual Current
Tax and Initial Deposit Deposit to Balance in
Insurance to TI/LC TI/LC TI/LC Report
Escrow Escrow Escrow Escrow Date
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Yes 1/7/99
Yes 1/7/99
Yes $ 25,000 $ 23,627 $ 35,105 1/7/99
Yes 1/7/99
Yes 22,081 5,535 1/7/99
Yes 12,000 30,771 14,622 1/7/99
Yes 9,814 9,858 1/7/99
Yes 127,980 127,980 1/7/99
Yes 23,273 9,738 1/7/99
Yes 4,650 4,671 1/7/99
Yes 24,667 1/7/99
Yes 1/8/99
Yes 12/31/98
Yes 21,420 5,355 1/7/99
Yes 23,843 3,975 1/7/99
Yes 1/7/99
Yes 23,628 9,876 1/7/99
Yes 1/7/99
Yes 22,858 7,638 1/7/99
Yes 12,144 4,056 1/7/99
Yes 10,000 2,501 1/7/99
No 1/7/99
Yes 6,000 28,393 15,534 1/7/99
Yes 9,000 2,255 1/7/99
Yes 1/7/99
Yes 1/13/99
Yes 12,828 4,289 1/7/99
Yes 7,439 1,241 1/7/99
Yes 18,435 6,161 1/7/99
Yes 4,000 7,149 7,018 1/7/99
Yes 6,500 1,626 1/7/99
No 1/7/99
Yes 1,914 1/7/99
Yes 6,828 2,281 1/7/99
</TABLE>
<PAGE> 162
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Initial Deposit Current Balance Annual
To Capital in Capital Initial Deposit Deposit to
Loan Property Improvement Improvement Replacement Replacement
Sequence Number Property Name Type Reserves Reserves Reserves Reserves
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
N171 51210 Trader Joes Retail $ 1,572
N172 51397 Country Corner Retail Center Retail 4,900
N173 51298 Sandra Plaza Retail 3,046
N174 51283 Kragen Auto Parts-Chico CA Retail 809
N175 51378 Green Gables Shoppette Retail $ 60,000 $ 60,226 3,486
N176 51317 Strip Retail Center Retail 1,885
N177 51207 Magnolia Center Retail 1,287
N178 51282 Schucks Automotive Retail 1,200
N179 51161 UMC Taco Bell Retail
N180 51413 Chestnut Place Retail Center Retail $ 5,000 1,217
N181 51072 Payless Shoes Store (Beltline Blvd.) Retail 750
N182 51073 Payless Shoe Store (Dutch Square) Retail 459
N183 51435 Kragen Auto Parts-Marysville CA Retail 700
N184 51304 Plaza Temecula Retail 1,049
N185 51324 851 Mistletoe Lane Retail 2,800
N186 51188 Yacoub Property:True Value Hardware Retail 684
N187 51415 Banana Belt Strip Center Retail 1,241
N188 51353 San Marcos Retail Plaza Retail 1,401
N189 51383 Baybridge Business Park Industrial 290,900 290,900 202,860
N190 51029 Renfro Warehouse Industrial
N191 50825 Purolator Distribution Center Industrial
N192 50930 Ironhorse Park Industrial 22,306
N193 51109 Kingsley Tool Company Industrial
N194 51129 Huntington Center Industrial Properties Industrial 20,000 30,006
N195 51138 Hillside Industrial II Industrial 8,890
N196 51213 Aplex Building Industrial 11,426
N197 51013 Federal Express Distribution Facility Industrial 8,809
N198 50929 Patrick Airport Center Industrial 6,231
N199 51227 Mighty Micro Building Industrial 2,870
N200 50933 Collierville Business Center Industrial 15,468
N201 51346 Bentek Manufacturing Building Industrial 4,929
N202 51351 Thousand Oaks Business Center Industrial 3,847
N203 50902 McGaw Business Center Industrial 2,187 2,213 4,719
N204 51256 Faber Street Industrial Building Industrial 12,588
</TABLE>
<TABLE>
<CAPTION>
Current Annual Current
Balance in Tax and Initial Deposit Deposit to Balance in
Replacement Insurance to TI/LC TI/LC TI/LC Report
Reserves Escrow Escrow Escrow Escrow Date
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 656 Yes $ 7,610 $ 3,174 1/7/99
408 Yes $ 20,000 10,594 20,031 1/7/99
762 Yes 1/7/99
202 No 1/7/99
291 Yes 9,103 759 1/7/99
472 Yes 10,000 12,928 13,286 1/7/99
537 Yes 10,000 5,639 12,453 1/7/99
300 Yes 1/7/99
Yes 1/11/99
5,000 Yes 26,000 6,923 26,000 1/7/99
125 Yes 1/7/99
77 No 1/7/99
No 1,687 1/7/99
262 Yes 4,910 1,228 1/7/99
467 Yes 12,218 2,039 1/7/99
114 Yes 10,000 2,316 10,423 1/7/99
Yes 3,479 1/7/99
234 Yes 5,095 849 1/7/99
18,106 Yes 700,000 650,000 754,167 1/7/99
No 1/7/99
No 58,821 24,595 12/31/98
7,454 Yes 1/26/99
No 1/8/99
22,556 Yes 1/26/99
742 Yes 1/7/99
4,772 Yes 150,000 75,000 183,981 1/7/99
3,684 No 1/7/99
2,606 Yes 108,430 1/26/99
957 Yes 15,400 5,141 1/7/99
4,511 Yes 66,000 19,250 1/11/99
1,645 Yes 15,774 5,269 1/7/99
641 Yes 34,731 5,789 1/7/99
1,581 Yes 27,157 22,275 32,410 1/7/99
3,149 Yes 15,672 3,924 1/7/99
</TABLE>
<PAGE> 163
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT BALANCE INITIAL
TO CAPITAL IN CAPITAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N205 51387 Magellan Systems Building Industrial
N206 51358 33300 Western Ave Industrial Center Industrial
N207 51170 Center Street Industrial Center Industrial
N208 51334 Valley View Building Industrial
N209 51250 Hi-Val Industrial Industrial
N210 51103 Redmoor Industrial Center Industrial
N211 51258 Redfield Tech Center Industrial
N212 51205 Clark Foods Sterling Heights Industrial
N213 51120 Rosewood Industrial Plaza Industrial
N214 51310 30 Janis Way Building Industrial
N215 51265 Black Mountain Industrial Industrial
N216 51365 Napa Warehouse Industrial
N217 51237 Applied Graphics Tech Industrial
N218 51268 Buenos Industrial Industrial
N219 51355 Grouse Creek Center Industrial $49,000 $12,115
N220 51277 Faraday Ave. Light Industrial Industrial
N221 51269 C Street Industrial Industrial
N222 51399 Fremont Light Industrial Building Industrial
N223 51400 Air Liquide Light Industrial Industrial
N224 51396 Lake Forest Light Industrial Building Industrial
N225 51340 Hertz Equipment Rental Warehouse Industrial
N226 51429 RFS Hotel Note B Hotel 49,875 49,946 $68,500
N227 51428 RFS Hotel Note A Hotel 63,181 63,281
N228 51006 The Lodge at Woodcliff Hotel
N229 51060 Lighthouse Lodge and Suites Hotel 54,040 26,895
N230 51121 Lexington Suites Hotels Hotel
N231 51156 Spyglass Inn Hotel
N232 51122 Fairfield Inn Hotel 14,625 14,625
N233 51157 Fireside Inn (Best Western) Hotel
N234 51131 450 7th Avenue Office
N235 51111 Corte Madera Plaza Office 3,563 3,582
N236 51254 379 Lytton Avenue Building Office
N237 51092 Trianon Centre Office
N238 51007 The Prado Office 3,750 3,395
<CAPTION>
ANNUAL CURRENT INITIAL ANNUAL CURRENT
DEPOSIT TO BALANCE IN TAX AND DEPOSIT DEPOSIT TO BALANCE IN
REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,123 $ 427 Yes $28,896 $ 2,408 1/7/99
14,314 2,386 Yes 11,001 1,834 1/7/99
17,475 1,459 Yes $93,680 94,132 1/7/99
10,296 858 No 1/7/99
1,644 548 Yes 17,576 5,868 1/7/99
11,677 973 Yes 1/11/99
4,952 1,652 Yes 24,354 8,135 1/7/99
20,262 8,472 Yes 1/7/99
6,455 1,076 Yes 1/7/99
4,756 1,191 Yes 40,000 10,013 1/7/99
1,700 567 Yes 16,977 5,670 1/7/99
4,495 750 Yes 11,146 1,859 1/7/99
1,036 346 Yes 13,576 4,534 1/7/99
1,524 508 Yes 15,315 5,115 1/7/99
2,067 345 Yes 6,433 1,072 1/7/99
1,560 390 Yes 22,500 6,721 24,314 1/7/99
2,450 817 Yes 10,544 3,517 1/7/99
2,990 249 Yes 13,000 14,238 14,192 1/7/99
813 68 Yes 1,770 148 1/7/99
775 65 Yes 4,000 3,879 4,328 1/7/99
1,903 307 Yes 4,395 733 1/7/99
985,620 68,608 Yes 1/7/99
793,022 Yes 1/7/99
406,320 82,645 Yes 1/8/99
124,109 17,120 Yes 1/7/99
326,718 27,253 Yes 1/7/99
Yes 1/13/99
51,135 5,155 Yes 1/7/99
Yes 1/13/99
No 1/7/99
9,773 816 Yes 1/7/99
5,941 1,982 Yes 9,000 3,002 1/7/99
8,859 2,216 Yes 1/7/99
60,914 20,609 Yes 1/7/99
</TABLE>
<PAGE> 164
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT BALANCE INITIAL
TO CAPITAL IN CAPITAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N239 51158 Uptown Square Office Building Office $4,438 $4,438
N240 50999 Tenley Medical Office Building Office 7,281 7,372 $4,000
N241 51244 Fairfield Way Office Park Office
N242 51167 Museum Parke Office Building Office
N243 51069 Stern Business Center Office
N244 51137 Frontier Regional HQ Office 4,313
N245 51165 195 East Road Office Building Office
N246 51094 277 Broadway Office Building Office 22,500 22,500 185,000
N247 51016 Glendale Executive Campus Office 8,000 8,099 13,500
N248 51255 Naperville Professional Center Office
N249 51367 Park Place of Layton Office Building Office
N250 51243 282 Second Street Office
N251 51285 2300 McDaniel St. Office
N252 51309 23201 Mill Creek Drive Building Office
N253 51026 Montefiore Medical Office Bldg. Office
N254 51312 NationsBank Building Office
N255 51295 Columbia Professional Center Office
N256 51329 McClelland Office Park Office
N257 51249 Ygnacio Woods Office Complex Office
N258 51130 147 Waverly Place Office 39,000 39,000
N259 51080 Bedford Square Office Building Office
N260 51174 UMC Sierra Office
N261 51172 UMC Quick Care Office
N262 51311 North County Medical Dental Center Office
N263 51241 Dee Building Office 25,000
N264 51238 6501 Van Nuys Building Office
N265 51338 Sutter Medical Office Clinic Office
N266 51368 Contra Costa Water District Building Office
N267 51259 Louisville Medical/Dental Office
N268 51275 Calabasas Office Building Office
N269 51296 Green Street Building Office
N270 51235 420 Building Office
N271 51236 Marriott Center Office
N272 51211 Fountain Bell Office Building Office
<CAPTION>
ANNUAL CURRENT INITIAL ANNUAL CURRENT
DEPOSIT TO BALANCE IN TAX AND DEPOSIT DEPOSIT TO BALANCE IN
REPLACEMENT REPLACEMENT INSURANCE TO TI/LC TI/LC TI/LC
RESERVES RESERVES ESCROW ESCROW ESCROW ESCROW REPORT DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$12,244 $2,041 Yes 1/7/99
15,098 9,110 Yes 1/7/99
10,840 3,616 Yes $100,000 $33,431 1/7/99
4,872 813 Yes $195,650 196,193 1/26/99
15,531 2,589 Yes 11,833 1/7/99
18,409 3,068 Yes 1/13/99
4,716 787 Yes 150,745 226,371 1/26/99
185,000 No 1/7/99
10,513 3,523 Yes 25,871 28,787 1/7/99
5,786 1,930 Yes 37,000 12,364 1/7/99
3,161 527 Yes 32,853 5,476 1/7/99
Yes 1/7/99
1,468 367 Yes 12,000 3,001 1/7/99
2,800 700 Yes 22,500 5,633 1/7/99
2,925 765 No 1/7/99
7,536 1,885 Yes 21,972 5,501 1/7/99
9,900 2,476 Yes 44,772 11,215 1/7/99
16,046 2,675 Yes 100,000 50,805 109,322 1/7/99
11,972 3,994 Yes 1/7/99
11,200 1,867 Yes 1/7/99
2,654 663 Yes 1/7/99
No 1/11/99
No 1/11/99
4,615 1,154 Yes 38,628 9,675 1/7/99
1,850 25,651 Yes 15,669 3,928 1/7/99
6,217 2,074 Yes 37,217 12,435 1/7/99
1,211 202 Yes 6,111 1,019 1/7/99
3,240 270 Yes 100,000 25,000 102,212 1/7/99
12,749 4,258 Yes 14,488 4,838 1/7/99
2,859 477 Yes 25,000 21,124 28,672 1/7/99
4,543 1,139 Yes 10,000 2,501 1/7/99
3,919 981 Yes 30,000 21,170 35,550 1/7/99
7,063 1,767 No 100,000 20,000 101,461 1/7/99
2,722 1,135 Yes 25,748 10,763 1/7/99
</TABLE>
<PAGE> 165
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT TO BALANCE IN INITIAL ANNUAL CURRENT
CAPITAL CAPITAL DEPOSIT TO DEPOSIT TO BALANCE IN
LOAN PROPERTY IMPROVEMENT IMPROVEMENT REPLACEMENT REPLACEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME TYPE RESERVES RESERVES RESERVES RESERVES RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N273 51313 Rafael North Executive Park Office $ 1,055 $ 264
N274 51376 RE/Max West Building Office 2,733 456
N275 50121 5450 NW Central Office $52,750 $54,175 12,600 18,057
N276 51434 Starling Office Building Office 3,802
N277 51402 2111 Business Center Drive Office 7,285 607
N278 51273 Custom Research Building Office 7,197 1,200
N279 51240 San Clemente Office Building Office 16,000 16,125 2,403 802
N280 51373 Garden Road Office Plaza Office 20,340 20,340 3,246 271
N281 51166 600 6th Street Office Building Office 15,625 3,047 16,177
N282 51274 Ventura Blvd Retail Office $3,500 840 3,728
N283 51293 Country Club Offices, Ltd Office 2,061 516
N284 51371 Liberty Square Office Office 1,713 286
N285 50915 Oak Tree Villas Assisted Living Health Care 5,625 28,830 29,060
N286 50912 Westphalia Retirement Center Health Care 14,750 14,868
N287 50913 DeSoto Residential Care Apartments Health Care 6,375 25,774 26,086
N288 50914 Indian Hills Retirement Village Health Care 9,250 6,665 28,250 28,475
N289 50312 Westminster Retirement Residence Health Care 1,888 22,655 25,144
N290 51150 Pilgrim Manor of Bossier City N. Nurs. Home Health Care 3,058 36,695 9,174
N291 50828 Community Programs, Inc Health Care 325 3,900 2,331
N292 51015 Brighton Court Retirement Center Health Care 1,921 11,526 5,795
N293 51148 The Vyne at Meadows Park Health Care 1,443 8,660 2,165
N294 51149 Mayfair Portsmouth Health Care 1,667 10,000 3,333
N295 51135 Cedar Crossings Apartments Multifamily 26,160 4,360
N296 51012 Northrup Court Apartments Multifamily 21,690 3,615
N297 51185 Forest Downs Apartments Multifamily 7,875 1,313
N298 51136 Spacious Acres Mobile Home Park Mobile Home 9,100 1,517
N299 51177 South Hills Mobile Home Park Mobile Home 8,500 1,417
N300 51175 Evergreen Estate Mobile Home Park Mobile Home 625 625 8,050 1,342
N301 51176 Cloverleaf Mobile Home Park Mobile Home 1,562 1,563 8,250 1,375
N302 51178 Monroe Estates Mobile Home Park Mobile Home 1,250 1,250 5,100 850
N303 51179 Camelot Mobile Home Park Mobile Home 4,500 750
N304 51180 Lakeshore Terrace Mobile Home Park Mobile Home 6,750 1,125
N305 51181 Forest Junction Mobile Home Park Mobile Home 4,100 683
N306 51182 Alexandria Mobile Estates Mobile Home 2,500 2,500 6,675 1,113
<CAPTION>
INITIAL ANNUAL CURRENT
TAX AND DEPOSIT DEPOSIT BALANCE
INSURANCE TO TI/LC TO TI/LC IN TI/LC REPORT
ESCROW ESCROW ESCROW ESCROW DATE
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Yes $16,164 $4,045 1/7/99
Yes 7,491 1,249 1/7/99
Yes 1/8/99
Yes 15,686 1/7/99
Yes $6,000 29,993 8,499 1/7/99
Yes 15,240 2,541 1/7/99
Yes 14,000 12,024 18,127 1/7/99
Yes 20,000 20,448 21,704 1/7/99
Yes 1/26/99
Yes 5,202 1,303 1/7/99
Yes 12,656 3,166 1/7/99
Yes 11,000 14,921 13,531 1/7/99
Yes 1/8/99
Yes 1/8/99
Yes 1/8/99
Yes 1/8/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
Yes 1/13/99
</TABLE>
<PAGE> 166
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL CURRENT
DEPOSIT TO BALANCE IN INITIAL ANNUAL CURRENT
CAPITAL CAPITAL DEPOSIT TO DEPOSIT TO BALANCE IN
LOAN PROPERTY IMPROVEMENT IMPROVEMENT REPLACEMENT REPLACEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME TYPE RESERVES RESERVES RESERVES RESERVES RESERVES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N307 51183 Maplewood Mobile Home Park Mobile Home $ 5,000 $5,000 $ 7,875 $1,313
N308 51184 Shamrock Mobile Home Park Mobile Home 1,250 1,250 1,550 258
N309 51209 Arabian Gardens Mobile Home Park Mobile Home 8,141 2,717
N310 51212 Rollingwood Mobile Home Park Mobile Home 3,335 1,391
N311 51143 Tall Pines Mobile Home Mobile Home 5,750 5,750 7,680 640
N312 50994 Picacho Mobile Home Park Mobile Home 13,650 4,563
N313 50993 North Valley Mobile Home Park Mobile Home 2,745
N314 51388 Kentwood Mobile Estates Mobile Home 7,750 7,764 $23,000 6,850 23,625
N315 51377 Canyon Country Mobile Home Park Mobile Home 5,000 833
N316 51203 Country Club Mobile Home Park Mobile Home 4,320 1,802
N317 51398 Gemstone Mobile Home Park Mobile Home 5,000 1,700 5,000
N318 51204 Green Acres Mobile Home Park Mobile Home 3,280 1,368
N319 51423 Del Rey Self Storage Mini Storage
N320 51145 Handy Storage 13 Mini Storage 20,740 3,457
N321 51381 Safeguard Mini Storage (North) Mini Storage 4,454 371
N322 51380 Safeguard Mini Storage (South) Mini Storage 4,628 386
N323 51105 Payless Mini Storage Mini Storage 5,929 991
N324 51159 Fort Knox Mini Storage Mini Storage 8,715 726
N325 51230 AAA Self Storage Mini Storage 3,348 917
N326 51426 Sanger Self Storage Mini Storage 3,900
N327 51356 Executive Mini-Storage Mini Storage 3,690 615
N328 51231 BlueBonnet Self Storage Mini Storage 3,150 1,051
N329 50319 Applebee's #8673, 8902 & 9145 Franchise 6,150 3,710 6,183 6,501
N330 50322 Applebee's #8623 & #8867 Franchise 4,231 4,449
N331 50979 Spring Cove Marina Marina 9,102 3,040
- -------------------------------------------------------------------------------------------------------------------------------
TOTALS $2,703,994 $1,763,485 $1,172,788 $7,182,147 $2,461,940
<CAPTION>
INITIAL ANNUAL CURRENT
TAX AND DEPOSIT DEPOSIT BALANCE
INSURANCE TO TI/LC TO TI/LC IN TI/LC REPORT
ESCROW ESCROW ESCROW ESCROW DATE
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Yes 1/13/99
Yes 1/13/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/26/99
Yes 1/26/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes $ 22,984 $ 1,915 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/26/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
Yes 1/7/99
- ---------------------------------------------------------------------
$2,853,301 $2,488,722 $3,243,103
</TABLE>
<PAGE> 167
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
SEQUENCE LOAN NUMBER PROPERTY NAME CUT-OFF BALANCE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
N001 51386 Eagle Trace Apartments $43,974,544.92
N002 51385 The Breakers Apartments $18,169,482.43
--------------
SUB-TOTAL CROSSED LOANS $62,144,027.35
N003 50166 La Jolla International Gardens $28,806,130.35
N004 50167 La Scala Apartment Villas $26,133,396.58
N005 51289 Park Place Apartments-Tustin CA $10,970,076.01
N006 51192 Lakeside Village Apartments $ 9,961,558.79
N007A 51046 L5 - Goldfarb Apartments-48 E. John St
N007B 51046 L5 - Goldfarb Apartments-507 S. Fourth St
N007C 51046 L5 - Goldfarb Apartments-905-907 W. Oregon
N007D 51046 L5 - Goldfarb Apartments-1102 E. Colorado
N007E 51046 L5 - Goldfarb Apartments-2007-2009 Philo Road
N007F 51046 L5 - Goldfarb Apartments-2008-2010 Vawter
N007G 51046 L5 - Goldfarb Apartments-2011 Philo Road
N007 51046 L5 - Goldfarb Apartments (Roll - Up) $ 8,214,902.99
N008 51160 Foxwood Apartments $ 6,836,586.81
N009 50563 River View Condominiums $ 6,388,916.80
N010 50668 Museum Walk Apartments $ 6,286,354.03
N295 51135 Cedar Crossings Apartments $ 3,193,331.63
N296 51012 Northrup Court Apartments $ 1,411,053.40
N297 51185 Forest Downs Apartments $ 1,314,255.56
--------------
SUB-TOTAL CROSSED LOANS $ 5,918,640.59
N011 51041 Indiana Village Apartments $ 5,415,989.83
N012A 51033 L4 - Goldfarb Apartments-57 E. Chalmers
N012B 51033 L4 - Goldfarb Apartments-103 E. Chalmers
N012C 51033 L4 - Goldfarb Apartments-202 E. Chalmers
N012 51033 L4 - Goldfarb Apartments (Roll - Up) $ 5,339,193.73
N013 51004 Westside Colonial Apartments $ 5,248,757.90
N014 51101 Gaylord Apartments $ 5,209,122.22
N015 51056 Sheridan Square Apartments $ 5,185,158.71
N016 50894 The Courtyards Apartments $ 4,982,021.09
N017 51104 Broadway & 171st $ 4,633,654.29
N018 51055 Sail Cloth Factory Apartments $ 4,503,003.73
N019 51169 Horton 4th Avenue Apartments $ 4,490,984.32
N020 51093 Park Lane Apartments $ 4,489,487.75
N021 50648 Colonial Plaza Apts $ 4,359,714.59
<CAPTION>
STUDIO 1 BEDROOM 2 BEDROOM 3 BEDROOM 4 BEDROOM
----------------------------------------------------------------------------------------
# OF AVG # OF AVG # OF AVG # OF AVG # OF AVG
UTILITIES TENANT PAYS UNITS RENT UNITS RENT UNITS RENT UNIT RENT UNITS RENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electric/Gas/Cable TV/AC 472 $562 332 $712 180 $796
Electric/Gas/Cable TV 200 634 200 750
Electric/Gas/Cable TV 200 781 200 1,005
Electric 18 $724 164 835 172 1,050
Electric/Hot Water/Cable TV/AC/Heat 246 789
Electric/Gas 76 744 158 822 26 1,057
Electric/Gas/Sewer/Water 28 $851
Electric/Gas/Sewer/Water 1 410 13 631 2 1,100
Electric/Gas/Sewer/Water 10 659 18 795 4 995
Electric/Gas/Sewer/Water 32 621 12 827 4 1,010
Electric/Gas/Sewer/Water 16 428
Electric/Gas/Sewer/Water 16 543 12 602 8 783
Electric/Gas/Sewer/Water 1 340 11 400
2 375 98 557 42 749 46 877
Electric/Gas/Cable TV 106 459 166 529
Electric/Gas 14 900 3 1,125 78 1,100
Electric/Gas/Cable TV 71 752 34 989
Electric/Gas 32 431 69 530 8 644
Electric/Gas/Cable TV 27 353 56 387 7 525
Electric/Cable TV 34 583 1*
Electric/Cable TV 160 372 128 488
Electric/Gas/Sewer/Water/Cable TV 5 515 9 675 6 1,185
Electric/Gas/Sewer/Water/Cable TV 1 425 13 634 2 1,103
Electric/Gas/Sewer/Water/Cable TV 1 540 19 770 19 1,494
7 506 41 706 27 1,396
Electric 4 561 81 626 94 729 1 790
None 142 492 44 705 4 1,100
Electric 72 285 64 385 140 453
Electric 2 720 88 1,501
Electric 30 479 24 564 30 582
Electric 3 665 99 793 5 1,020
Electric/Gas/Cable TV 30 762 36 1,024
Electric/Gas/Cable TV 36 965 16 1,362
Electric/Cable TV/AC/Heat 72 417 112 495 8 595
</TABLE>
<PAGE> 168
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
SEQUENCE LOAN NUMBER PROPERTY NAME CUT-OFF BALANCE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
N022A 51014 L2 - Goldfarb Apartments-106-108 E. Healy St
N022B 51014 L2 - Goldfarb Apartments-303 East Green St.
N022C 51014 L2 - Goldfarb Apartments-404 Clark St.
N022D 51014 L2 - Goldfarb Apartments-804 West Illinois Ave.
N022E 51014 L2 - Goldfarb Apartments-812 West Nevada Ave
N022 51014 L2 - Goldfarb Apartments (Roll - Up) $4,303,851.51
N023 51028 Innsbruck West Apartments $4,224,095.85
N024 51287 Hensel Garden Apartments $4,178,943.85
N025 51043 Sunscape Apartments $4,059,921.15
N026 51127 Raintree Meadows Apartments $3,891,872.91
N027 50986 Grand Rose Apartments $3,743,023.47
N028A 51053 L6 - Goldfarb Apartments-52 E. Armory
N028B 51053 L6 - Goldfarb Apartments-104 N. Lincoln/809 W. Stoughton
N028 51053 L6 - Goldfarb Apartments (Roll - Up) $3,725,018.84
N029 51077 Royal Orleans Apartments $3,489,957.89
N030 51261 Kenmore View Apartments $3,486,380.76
N031 51066 Forest at Duck Creek Apartments $3,424,371.19
N032 50776 Terraces Apartments $3,402,816.94
N033 51442 Chateau DePaix $3,347,984.08
N034 51048 Lulav Square Apartments $3,182,061.79
N035 51316 La Jollan Townhouse $3,152,248.97
N036 51034 Blueberry Estates $3,097,550.53
N037A 51027 L3 - Goldfarb Apartments-301 E. Chalmers St.
N037B 51027 L3 - Goldfarb Apartments-506 S. Fourth St.
N037C 51027 L3 - Goldfarb Apartments-506 W. Elm St.
N037 51027 L3 - Goldfarb Apartments (Roll - Up) $2,995,526.74
N038 51221 Chaumont Villas $2,987,059.33
N039 51297 Stadium Terrace Apartments $2,935,991.23
N040 50935 Barrington Apartments $2,907,404.42
N041 51065 Ambassador East Apartments $2,879,265.58
N042A 51035 L7 - Goldfarb Apartments-105 N. Busey
N042B 51035 L7 - Goldfarb Apartments-809-813 W. Springfield
N042 51035 L7 - Goldfarb Apartments (Roll - Up) $2,760,896.34
N043 50099 300 Carpenter Apartments $2,745,421.96
N044 50969 Eastwyck Village Apartments $2,590,175.16
N045 51075 L10 - Goldfarb Apartments $2,552,202.89
<CAPTION>
STUDIO 1 BEDROOM 2 BEDROOM 3 BEDROOM 4 BEDROOM
---------------------------------------------------------------------------------------
# OF AVG # OF AVG # OF AVG # OF AVG # OF AVG
UTILITIES TENANT PAYS UNITS RENT UNITS RENT UNITS RENT UNIT RENT UNITS RENT
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electric/Gas 2 $390 34 $440
Electric/Gas/Water 8 654 8 $1,164
Electric/Gas/Water 1 $285 1 355 1 510 7 $541
Electric/Gas/Water 2 535 26 734
Electric/Gas/Water 2 560 8 1,037
1 285 3 355 47 474 33 687 16 1,025
Electric/Cable TV 144 400 64 516
Electric/Gas 44 596 160 659
Electric 40 360 80 439 96 555
Electric 56 278 80 329 80 373
Electric/Gas/Cable TV 78 506 30 603
Electric/Gas/Water 21 484 25 661 6 1,153
Electric/Gas/Water 4 640 3 755 16 926
21 484 29 658 3 755 22 988
Electric/Gas/Cable TV 28 387 119 417
Electric 16 575 16 700 40 875
Electric 48 463 50 594 32 775
Electric/Gas 60 446 40 524 40 579
Electric/Gas/Hot Water/AC/Heat 20 728 32 812 10 1,060
Electric 140 476
Electric/Gas/Cable TV/Heat 60 822
Electric/Gas/Hot Water 12 602 56 661
Electric/Gas/Sewer/Water/Cable TV 11 794 6 1,483
Electric/Gas/Sewer/Water/Cable TV 6 810 18 889
Electric/Gas/Sewer/Water/Cable TV 6 508 5 627
Electric/Gas/Sewer/Water/Cable TV 17 693 11 727 24 1,037
Electric/Gas/Cable TV/AC 46 818 14 918
None 1 400 5 860 38 1,290
Electric/Gas/Sewer/Trash/Water 32 394 72 489
Cable TV/Tel 10 437 57 536 51 672
Electric/Gas/Sewer/Water/Cable TV 1 405 12 592 9 723 4 892
Electric/Gas/Sewer/Water/Cable TV 18 592 4 723 12 892
Electric/Gas/Sewer/Water/Cable TV 1 405 30 592 13 723 16 892
Electric/Gas/Cable TV/AC/Heat 58 508 44 618
Electric/Cable TV 72 531 24 609
Electric/Gas/Sewer/Water/Cable TV 8 414 88 457
</TABLE>
<PAGE> 169
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
PROPERTY NAME CUT-OFF BALANCE UTILITIES TENANT PAYS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Broadway Manor $2,493,426.14 Electric/Hot Water/Cable TV/Heat
Belle Terrace Apartments $2,488,795.96 Electric
Northpark Village Apts $2,319,519.86 Electric/Cable TV
Aspen Circle Apartments $2,318,794.01 Electric/Cable TV
Barrington Apartments $2,245,311.29 Electric/Gas
Windover Woods Apartments $2,241,725.73 Electric
Colter Meadows Apartments $2,195,415.50 Electric/Cable TV
Le Tournesol Apartments $2,192,128.86 Electric/Gas
Crosswinds West Apartments $2,115,947.39 Electric/Cable TV
Westside Apartments $2,090,159.27 Electric
Orion Garden Apartments $1,991,857.54
Beverly Plaza Apartments $1,966,855.52 Electric/Hot Water/Cable TV/Heat
947 Bush Street $1,942,456.31 Electric/Gas
Grace Manor Apartments $1,869,899.32 Electric/Hot Water/Cable TV/Heat
Casa Del Campbell Apartments $1,834,194.16 Electric/Hot Water/Cable TV/AC/Heat
Glen Garden Apartments $1,792,167.84 Electric/Gas/Heat
1636 Lexington Avenue Apartments $1,784,740.77 Electric/Gas
Silver Ridge Apartments $1,713,749.92 Cable TV
L9 - Goldfarb Apartments $1,673,270.49 Electric/Gas/Sewer/Water/Cable TV
College View Apartments $1,633,041.49 Electric/Cable TV
Justin Court Apartments $1,627,102.25 Electric/Hot Water/Cable TV/Heat
270 East 10th St. Apartments $1,596,878.58 Electric
Bostonia Townhomes $1,595,786.95 Electric/Hot Water/Cable TV/AC/Heat
The Park At Westridge Apartments $1,543,682.88 Electric/Cable TV
Wilshire Occidental Apartments $1,494,385.99 Electric/Gas/Cable TV
Raintree Apartments $1,448,649.21 Electric/Cable TV
Oxnard Villa Apartments $1,418,794.50 Electric/Gas/Cable TV
Greentree Apts $1,412,100.61 Electric/Gas/Cable TV/AC/Heat
Sun Valley Apartments $1,396,191.50 Electric/Cable TV
Apache Manor Apartments $1,305,379.45 Cable TV
Campus Village Apartments $1,292,053.13 Electric/Hot Water/Cable TV/Heat
Casa de Porter Apartments $1,198,714.72 Electric/Cable TV/AC/Heat
Cote D'Azur Apartments $1,157,582.71 Electric/Cable TV/AC/Heat
Avon Street Apartments $1,141,616.06 Water
2474 Valentine Avenue Apartments $1,095,401.12 Electric/Gas
Woodside Apartments $1,008,795.03 Electric
1407-1415 W. Sherwin Ave. Apts. $996,295.07 Cable TV
Summit Avenue Apartments $995,605.60 Electric
Napa Broadway Apartments $993,186.29 Electric/Gas/Heat
Croftwood Apartments $861,688.90 Electric/Hot Water/AC/Heat
Charles Avenue Apartments $856,404.51 Electric
Sheila Gardens $799,279.80 Electric/Cable TV/Heat
Pillsbury Manor $795,260.90 Electric/AC
<CAPTION>
STUDIO 1 BEDROOM 2 BEDROOM 3 BEDROOM 4 BEDROOM
- -------------------------------------------------------------------------------------------------------
# OF AVG # OF AVG # OF AVG # OF AVG # OF AVG
UNITS RENT UNITS RENT UNITS RENT UNITS RENT UNITS RENT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $849 40 $849
32 740 32 $895
60 305 60 360
3 300 66 395 36 522
21 800 12 1,033
43 415 85 490
71 641
20 704 25 $1,009
1 400 14 498 66 606
4 762 28 879 11 1,168 2 1,827
129 416 1
44 495 16 630
39 768 11 1,100 3 1,300
42 533 16 656
121 421
41 402 47 432
3 242 13 626 31 625
62 482 12 617
4 559 16 819 5 $1,318
10 405 44 523
18 505 18 650 3 735
10 1,466 3 2,192
30 762
32 413 56 467 8 605
10 357 19 539 22 689
12 349 47 396 14 434
2 550 20 623 18 711
1 350 6 440 39 525 19 625 2 725
68 394 2 550
25 515 17 622
35 556 1 900
13 451 24 552 10 704
12 610 11 802
18 596 10 980
32 562 12 558 10 687 1 691
6 352 28 488
6 475 29 566 4 775
16 518 17 592 1 670
24 641 3 779
20 288 24 373 9 480
6 363 39 448
46 460 29 540
1 412 35 500 4 625
</TABLE>
<PAGE> 170
ANNEX B
MULTIFAMILY SCHEDULE
<TABLE>
<CAPTION>
PROPERTY NAME CUT-OFF BALANCE UTILITIES TENANT PAYS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
522 East 6th St. Apartments $748,536.84 Electric/Gas
1835-1839 Green St. Apartments $748,536.84 Electric/Gas/Hot Water/Heat
Franklin Ave. Apartments $735,655.07 Electric/Gas/Cable TV/AC
Kentwood Apartments $658,264.51 Electric
Johnson Apartments $636,272.89 Electric
Bull Creek Apartments $607,882.78 Electric/Cable TV
Bryant Avenue Apartments $551,242.88 Electric/Cable TV
Tamarisk Apartments $542,712.36 Electric/Hot Water/AC/Heat
682 Grand Ave. Apartments $522,805.05 Electric
1967 Grand Ave. Apartments $506,385.86 Electric/Cable TV/AC
1962 Grand Ave. Apartments $486,449.40 Electric/Cable TV/AC
L1 - Goldfarb Apartments $441,650.71 Electric/Gas/Sewer/Water/Cable TV
Hennepin Ave. Apartments $423,223.15
1435-1445 E. Ft. Lowell Road $415,838.21 Electric/Gas/Hot Water/Cable TV/AC/Heat
669 Grand Avenue Apartments $316,670.49 Electric/Cable TV
<CAPTION>
STUDIO 1 BEDROOM 2 BEDROOM 3 BEDROOM 4 BEDROOM
- -------------------------------------------------------------------------------------------------------
# OF AVG # OF AVG # OF AVG # OF AVG # OF AVG
UNITS RENT UNITS RENT UNITS RENT UNITS RENT UNITS RENT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $202 8 $889 1 $2,400
6 1,508
3 460 21 556 5 693
40 284
2 390 16 490 4 588
15 494 9 624
7 474 12 719
19 373 4 475
15 448 10 560
19 558 1 650
19 566 1 680
3 283 18 361
4 448 15 518 1 725
13 536
12 665
</TABLE>
*There is only 1 2-BR Unit which is occupied by the Manager.
<PAGE> 171
(NORWEST BANKS LOGO)
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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 SERVICER SPECIAL SERVICER
<S> <C> <C>
NationsBanc Montgomery Securities, LLC Banc One Mortgage Capital Markets, LLC Banc One Mortgage Capital Markets, LLC
NationsBanc Corporation Center 1717 Main Street, 14th Floor 1717 Main Street, 14th Floor
100 North Tryon Street Dallas, TX 75201 Dallas, TX 75201
Charlotte, NC 28255
Contact: Mahesh Rajagopalan Contact: Paul G. Smyth Contact: Paul G. Smyth
Phone Number: (704) 388-3021 Phone Number: (214) 290-2505 Phone Number: (214) 290-2505
</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> 172
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
CERTIFICATE DISTRIBUTION DETAIL
<TABLE>
<CAPTION>
Class CUSIP Pass-Through Original Beginning Principal Interest Prepayment Realized Loss/
Rate Balance Balance Distribution Distribution Penalties Additional Trust
Fund Expenses
<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 Penalties 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> 173
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
CERTIFICATE FACTOR DETAIL
<TABLE>
<CAPTION>
Class CUSIP Beginning Principal Interest Prepayment Realized Loss/ Ending
Balance Distribution Distribution Penalties Additional Trust Balance
Fund Expenses
<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 Penalties Amount
<S> <C> <C> <C> <C> <C>
X 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
C-3
<PAGE> 174
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
RECONCILIATION DETAIL
<TABLE>
<CAPTION>
ADVANCE SUMMARY SERVICING FEE BREAKDOWNS
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Servicing Fees 0.00
Less Reductions to Servicing Fees 0.00
Reimbursement for Interest on Advances 0.00 Plus Servicing Fees for Delinquent Payments Received 0.00
paid from general collections Plus Adjustments for Prior Servicing Calculation 0.00
Total 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> 175
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
OTHER REQUIRED INFORMATION
<TABLE>
<S> <C> <C>
Available Distribution Amount 0.00
Principal Distribution Amount 0.00
(a) Principal portion of Monthly Payments 0.00
and any Assumed Monthly Payments
(b) 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) Liquidation Proceeds, Insurance proceeds, 0.00
or REO Revenues received on an REO
Plus the excess of the prior Principal Distribution 0.00
Amount over the principal paid to the Sequential
Pay Certificates
Aggregate Number of Outstanding Loans 0
Aggregate Stated Principal Balance of the Mortgage Pool before distribution 0.00
Aggregate Stated Principal Balance of the Mortgage Pool after distribution 0.00
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
Additional Trust Fund Expenses 0.00
(i) Fees paid to Special Servicer 0.00
(ii) Interest on Advances 0.00
(iii) Other Expenses of the Trust 0.00
</TABLE>
Appraisal Reduction Amount
<TABLE>
<CAPTION>
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
<S> <C> <C>
NONE
TOTAL
</TABLE>
C-5
<PAGE> 176
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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 - Data 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> 177
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 3/22/1999
RECORD DATE: 2/26/1999
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> 178
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 179
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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 AMORTIZING 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 AMORTIZATION TERM (ARD AND BALLOON LOANS)
<TABLE>
<CAPTION>
Remaining Amortization # 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 updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. 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) Data 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: (i) "Scheduled Balance" has the meaning assigned thereto in the CSSA
Standard Information Package.
(ii) An ARD Loan constitutes a "Hyper-Amortization Loan" as defined in the
offering document.
C-9
<PAGE> 180
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 181
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
PRINCIPAL PREPAYMENT DETAIL
<TABLE>
<CAPTION>
Offering Document Principal Prepayment Amount Prepayment Penalties
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
<S> <C> <C> <C> <C> <C>
Totals
</TABLE>
C-11
<PAGE> 182
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 183
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 184
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 185
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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>
</TABLE>
<TABLE>
<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> 186
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 187
[NORWEST BANKS LOGO]
NATIONSLINK FUNDING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-1
PAYMENT DATE: 03/22/1999
RECORD DATE: 02/26/1999
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> 188
ANNEX D
PREPAYMENT PREMIUM ALLOCATION
Prepayment Premiums are distributed to Certificateholders on the
Distribution Date following the one-month collection period in which the
prepayment occurred. All Prepayment Premiums will be allocated among the Class A
through E, in each case, up to the product of (i) the Prepayment Premium, (ii)
the "Discount Rate Fraction" and (iii) the percentage of total principal
distribution to Certificate holders to which such class is entitled. Any excess
amounts will be distributed to the Class X Certificates.
The Discount Rate Fraction for Classes A through E is defined as:
(COUPON ON CLASS - REINVESTMENT YIELD)/(GROSS MORTGAGE LOAN RATE - REINVESTMENT
YIELD)
A yield maintenance prepayment premium will generally be equal to the present
value of the reduction in interest payments as a result of the prepayment
through the maturity of the Mortgage Loan, discounted at the yield of a Treasury
security of similar maturity in most cases (converted from semi-annual to
monthly pay). The following example reflects that method.
PREPAYMENT PREMIUM ALLOCATION EXAMPLE
Assuming the following:
- Only two Classes of Certificates: A-1 and X
- Mortgage loan characteristics of loan being prepaid:
<TABLE>
<S> <C>
Balance (at prepayment) $28,014,749.54
Gross Mortgage Rate 7.515%
Remaining Term (months) 71
Treasury Yield (MEY) 4.616%
Yield Maintenance Collected $4,054,242.81
</TABLE>
- Certificate Characteristics:
<TABLE>
<S> <C>
Class A-1 Coupon 5.782%
</TABLE>
DISCOUNT RATE FRACTION CALCULATION
<TABLE>
<CAPTION>
Class A-1 Class X
Certificates Certificates
-----------------------------------
<S> <C> <C>
(Class A-1 Coupon -- Reinvestment (5.782% - 4.616%)/
Yield)/ (7.515% - 4.616%)= (100% - 40.230%)
(Gross Mortgage 1.166%/2.899%
Rate -- Reinvestment Yield)=
% OF PREMIUM ALLOCATED TO CLASSES 40.230% 59.770%
(DISCOUNT RATE FRACTION)
$ OF PREPAYMENT PREMIUM ALLOCATED
TO CLASSES $1,631,018.30 $2,423,224.51
</TABLE>
See "Description of the Certificates -- Distributions -- Distribution of
Prepayment Premiums" in the prospectus supplement for a narrative description of
the foregoing method of allocation.
D-1
<PAGE> 189
Prospectus
NATIONSLINK FUNDING CORPORATION
DEPOSITOR
MORTGAGE PASS-THROUGH CERTIFICATES
<TABLE>
<CAPTION>
<S> <C>
CONSIDER CAREFULLY THE RISK FACTORS THE TRUST --
BEGINNING ON PAGE 10 IN THIS - may periodically issue mortgage pass-through
PROSPECTUS. certificates in one or more series with one or more
Neither the certificates nor the classes; and
underlying mortgage loans are insured - will own --
by any governmental agency. - multifamily and commercial mortgage loans;
The certificates will represent - mortgage-backed securities; and
interests only in the related trust - other property described and in the accompanying
only and will not represent interests prospectus supplement.
in or obligations of NationsLink THE CERTIFICATES --
Funding Corporation or any of its - will represent interests in the trust and will be
affiliates, including BankAmerica paid only from the trust assets;
Corporation. - provide for the accrual of interest based on a fixed,
This prospectus may be used to offer variable or adjustable interest rate;
and sell any series of certificates - may be offered through underwriters, which may
only if accompanied by the prospectus include NationsBanc Montgomery Securities LLC, an
supplement for that series. affiliate of NationsLink Funding Corporation; and
- will not be listed on any securities exchange.
THE CERTIFICATEHOLDERS --
- will receive interest and principal payments based on
the rate of payment of principal and the timing of
receipt of payments on mortgage loans.
</TABLE>
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
February 17, 1999
<PAGE> 190
<TABLE>
<S> <C> <C>
FOR MORE INFORMATION TABLE OF CONTENTS
NationsLink Funding <CAPTION>
Corporation has filed with the PAGE
SEC additional registration ----
materials relating to the
certificates. You may read SUMMARY OF PROSPECTUS.......................... 5
and copy any of these RISK FACTORS................................... 10
materials at the SEC's Public Limited Liquidity of Certificates............ 10
Reference Room at the Limited Assets............................... 10
following locations: Credit Support Limitations................... 11
Effect of Prepayments on Average Life of
- SEC Public Reference Certificates.............................. 11
Section Effect of Prepayments on Yield of
450 Fifth Street, N.W. Certificates.............................. 12
Room 1204 Limited Nature of Ratings.................... 12
Washington, D.C. 20549 Certain Factors Affecting Delinquency,
Foreclosure and Loss of the Mortgage
- SEC Midwest Regional Loans..................................... 13
Offices Citicorp Center Inclusion of Delinquent Mortgage Loans in a
500 West Madison Street Mortgage Asset Pool....................... 16
Suite 1400 PROSPECTUS SUPPLEMENT.......................... 16
Chicago, Illinois DESCRIPTION OF THE TRUST FUNDS................. 18
60661-2511 General...................................... 18
Mortgage Loans............................... 18
- SEC Northeast Regional MBS.......................................... 22
Office Certificate Accounts......................... 23
7 World Trade Center Credit Support............................... 23
Suite 1300 Cash Flow Agreements......................... 23
New York, New York 10048 YIELD AND MATURITY CONSIDERATIONS.............. 24
General...................................... 24
You may obtain information on Pass-Through Rate............................ 24
the operation of the Public Payment Delays............................... 24
Reference Room by calling the Certain Shortfalls in Collections of
SEC at 1-800-SEC-0330. The Interest.................................. 24
SEC also maintains an Yield and Prepayment Considerations.......... 25
Internet site that contains Weighted Average Life and Maturity........... 26
reports, proxy and Other Factors Affecting Yield, Weighted
information statements, and Average Life and Maturity................. 27
other information that has THE DEPOSITOR.................................. 29
been filed electronically DESCRIPTION OF THE CERTIFICATES................ 29
with the SEC. The Internet General...................................... 29
address is Distributions................................ 30
http://www.sec.gov. Distributions of Interest on the
Certificates.............................. 30
You may also contact Distributions of Principal of the
NationsLink Funding Certificates.............................. 31
Corporation in writing at Distributions on the Certificates Concerning
Bank of America Corporate Prepayment Premiums or Concerning Equity
Center, Participations............................ 32
100 North Tryon Street, Allocation of Losses and Shortfalls.......... 32
Charlotte, Advances in Respect of Delinquencies......... 32
North Carolina 28255, or by Reports to Certificateholders................ 33
telephone at (704) 386-2400. Voting Rights................................ 35
Termination.................................. 35
See also the sections Book-Entry Registration and Definitive
captioned "Available Certificates.............................. 35
Information" and THE POOLING AND SERVICING AGREEMENTS........... 37
"Incorporation of Certain General...................................... 37
Information by Reference" Assignment of Mortgage Loans; Repurchases.... 37
appearing at the end of this Representations and Warranties;
prospectus. Repurchases............................... 39
Collection and Other Servicing Procedures.... 40
Sub-Servicers................................ 41
Certificate Account.......................... 42
Modifications, Waivers and Amendments of
Mortgage Loans............................ 44
</TABLE>
2
<PAGE> 191
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Realization Upon Defaulted Mortgage Loans.... 45
Hazard Insurance Policies.................... 46
Due-on-Sale and Due-on-Encumbrance
Provisions................................ 47
Servicing Compensation and Payment of
Expenses.................................. 47
Evidence as to Compliance.................... 48
Certain Matters Regarding the Master
Servicer, the Special Servicer, the REMIC
Administrator and the Depositor........... 48
Events of Default............................ 50
Rights Upon Event of Default................. 50
Amendment.................................... 51
List of Certificateholders................... 52
The Trustee.................................. 52
Duties of the Trustee........................ 52
Certain Matters Regarding the Trustee........ 52
Resignation and Removal of the Trustee....... 53
DESCRIPTION OF CREDIT SUPPORT.................. 53
General...................................... 53
Subordinate Certificates..................... 54
Insurance or Guarantees Concerning Mortgage
Loans..................................... 54
Letter of Credit............................. 54
Certificate Insurance and Surety Bonds....... 54
Reserve Funds................................ 54
Cash Collateral Account...................... 55
Credit Support with respect to MBS........... 55
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS........ 55
General...................................... 55
Types of Mortgage Instruments................ 56
Leases and Rents............................. 56
Personalty................................... 57
Foreclosure.................................. 57
Bankruptcy Laws.............................. 60
Environmental Considerations................. 61
Due-on-Sale and Due-on-Encumbrance
Provisions................................ 63
Junior Liens; Rights of Holders of Senior
Liens..................................... 63
Subordinate Financing........................ 64
Default Interest and Limitations on
Prepayments............................... 65
Applicability of Usury Laws.................. 65
Certain Laws and Regulations................. 65
Americans with Disabilities Act.............. 66
Soldiers' and Sailors' Civil Relief Act of
1940...................................... 66
Forfeitures in Drug and RICO Proceedings..... 66
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........ 67
General...................................... 67
REMICs....................................... 68
Grantor Trust Funds.......................... 83
STATE AND OTHER TAX CONSEQUENCES............... 91
CERTAIN ERISA CONSIDERATIONS................... 91
General...................................... 91
Plan Asset Regulations....................... 92
Insurance Company General Accounts........... 93
Consultation With Counsel.................... 94
Tax Exempt Investors......................... 94
</TABLE>
3
<PAGE> 192
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LEGAL INVESTMENT............................. 94
USE OF PROCEEDS.............................. 96
METHOD OF DISTRIBUTION....................... 96
LEGAL MATTERS................................ 97
FINANCIAL INFORMATION........................ 97
RATING....................................... 98
AVAILABLE INFORMATION........................ 98
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE................................. 99
INDEX OF PRINCIPAL DEFINITIONS............... 100
</TABLE>
4
<PAGE> 193
SUMMARY OF PROSPECTUS
This summary highlights selected information from this prospectus. It does not
contain all the information you need to consider in making your investment
decision. You should carefully review this prospectus and the related prospectus
supplement in their entirety before making any investment in the certificates of
any series. As used in this prospectus, "you" refers to a prospective investor
in certificates, and "we" refers to the Depositor, NationsLink Funding
Corporation. An Index of Principal Definitions appears at the end of this
Prospectus.
SECURITIES OFFERED
Mortgage pass-through certificates.
DEPOSITOR
NationsLink Funding Corporation, a Delaware corporation and a subsidiary of
NationsBank, N.A. NationsLink Funding Corporation has its principal executive
offices at Bank of America Corporate Center, 100 North Tryon Street, Charlotte,
North Carolina 28255, and its telephone number is (704) 386-2400.
TRUSTEE
The trustee for each series of certificates will be named in the related
prospectus supplement.
MASTER SERVICER
If the trust includes mortgage loans, the master servicer for the corresponding
series of certificates will be named in the prospectus supplement.
SPECIAL SERVICER
If the trust includes mortgage loans, 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 prospectus supplement.
MBS ADMINISTRATOR
If the trust includes mortgage-backed securities, the entity responsible for
administering the mortgage-backed securities will be named in the prospectus
supplement.
REMIC ADMINISTRATOR
The person responsible for the various tax-related administration duties for a
series of certificates concerning real estate mortgage investment conduits will
be named in the prospectus supplement.
THE MORTGAGE LOANS
Each series of certificates will, in general, consist of a pool of mortgage
loans (a "Mortgage Asset Pool") secured by first or junior liens on --
- - 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; or
- - office buildings, retail stores, 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.
5
<PAGE> 194
However, no one of the following types of properties will be overly-represented
in the trust at the time the trust is formed: (1) restaurants; (2) entertainment
or sports arenas; (3) marinas; or (4) nursing homes, hospitals or other health
care-related facilities.
The mortgage loans will not be guaranteed or insured by NationsLink Funding
Corporation or any of its affiliates or, unless otherwise provided in the
prospectus supplement, by any governmental agency or by any other person.
If specified in the prospectus supplement, some mortgage loans may be delinquent
as of the date the trust is formed.
As described in the prospectus supplement, a mortgage loan may --
- - provide for no accrual of interest or for accrual of interest at an interest
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;
- - 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;
- - be fully amortizing or may be partially amortizing or nonamortizing, with a
balloon payment due on its stated maturity date;
- - 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
- - provide for payments of principal, interest or both, on due dates that occur
monthly, quarterly, semi-annually or at such other interval as specified in
the 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 NationsLink Funding
Corporation, although one of its affiliates may have originated some of the
mortgage loans.
If any mortgage loan, or group of related mortgage loans, involves unusual
credit risk, financial statements or other financial information concerning the
related mortgaged property will be included in the related prospectus
supplement.
As described in the prospectus supplement, the trust may also consist of
mortgage participations, mortgage pass-through certificates and/or other
mortgage-backed securities that evidence an interest in, or are secured by a
pledge of, one or more mortgage loans similar to the other mortgage loans in the
trust and which may or may not be issued, insured or guaranteed by the United
States or any governmental agency.
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 prospectus
supplement and will represent in total the entire beneficial ownership interest
in the trust.
As described in the prospectus supplement, the certificates of each series may
consist of one or more classes that --
- - 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;
- - are "stripped principal certificates" entitled to distributions of principal,
with disproportionate, nominal or no distributions of interest;
- - are "stripped interest certificates" entitled to distributions of interest,
with disproportionate, nominal or no distributions of principal;
6
<PAGE> 195
- - provide for distributions of interest or principal that commence only after
the occurrence of certain events, such as the retirement of one or more other
classes of certificates of such series;
- - provide for distributions of principal 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 trust;
- - provide for distributions of principal to be made, subject to available funds,
based on a specified principal payment schedule or other methodology; or
- - provide for distribution based on collections on the mortgage assets in the
trust attributable to prepayment premiums, yield maintenance payments or
equity participations.
If specified in the prospectus supplement, a series of certificates may include
one or more "controlled amortization classes," which will entitle the holders 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 trust remains relatively constant at the rate 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.
Each class of certificates, other than certain classes of stripped interest
certificates and certain classes of real estate mortgage investment conduit
residual certificates (also known as "REMIC residual certificates"), will have
an initial stated principal amount (a "Certificate Balance"). Each class of
certificates, other than certain classes of stripped principal certificates and
certain classes of REMIC residual certificates, will accrue interest on its
certificate balance or, in the case of certain classes of stripped interest
certificates, on a notional amount, based on a pass-through rate (a
"Pass-Through Rate") which may be fixed, variable or adjustable. The prospectus
supplement will specify the certificate balance, notional amount and/or pass-
through rate for each class of certificates.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Interest on each class of 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 and will paid on a distribution date. However, in the case of certain
classes of stripped interest certificates, the notional amount outstanding from
time to time will be paid to certificateholders as provided in the prospectus
supplement on a specified distribution date (each of the specified dates on
which distributions are to be made, a "Distribution Date").
Distributions of interest concerning 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. Interest accrued concerning a class of accrual certificates prior
to the occurrence of such an event will either be added to the certificate
balance or otherwise deferred as described in the prospectus supplement.
Distributions of interest concerning one or more classes of certificates may be
reduced to the extent of certain delinquencies, losses and other contingencies
described in this prospectus and in the prospectus supplement.
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 are then entitled to receive in respect of principal
from future cash flow on the assets in the trust. The initial total 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
cut-off date, after application of scheduled payments
7
<PAGE> 196
due on or before such date, whether or not received. As described in the
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 certificates of such series then entitled 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) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the assets in
the trust;
- - 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;
- - may be made, subject to certain limitations, based on a specified principal
payment schedule; or
- - 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 trust are received. Unless
otherwise specified in the prospectus supplement, distributions of principal
of any class of certificates will be made on a pro rata basis among all of the
certificates of such class.
CREDIT SUPPORT AND CASH FLOW AGREEMENTS
If specified in the prospectus supplement, partial or full protection against
certain defaults and losses on the assets in the trust may be provided to one or
more classes of certificates by (1) subordination of one or more other classes
of certificates to classes in the same series, or by (2) of such series, one or
more other types of credit support, such as a letter of credit, insurance
policy, guarantee, reserve fund, cash collateral account or
overcollateralization (any such coverage with respect to the Certificates of any
series, "Credit Support"). If so provided in the prospectus supplement, the
trust may include --
- - 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
- - 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.
Certain relevant information regarding any applicable credit support or cash
flow agreement will be set forth in the prospectus supplement for a series of
certificates.
ADVANCES
As specified in the prospectus supplement, if the trust includes mortgage loans,
the master servicer, the special servicer, the trustee, any provider of credit
support, and/or another specified person may be obligated to make, or have the
option of making, certain advances concerning delinquent scheduled payments of
principal and/or interest on mortgage loans. Any advances made concerning a
particular mortgage loan will be reimbursable from subsequent recoveries
relating to the particular mortgage loan and as described in the prospectus
supplement. If specified in the prospectus supplement, any entity making such
advances may be entitled to receive interest for a specified period during which
certain or all of such advances are outstanding, payable from amounts in the
trust. If the trust includes mortgaged-backed securities, any comparable
advancing obligation of a party to the related pooling and servicing agreement,
or of a party to the related mortgage-backed securities agreement, will be
described in the prospectus supplement.
OPTIONAL TERMINATION
If specified in the prospectus supplement, a series of certificates may be
subject to optional early termination through the repurchase of the mortgage
assets in the trust. If 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, a specified party may be
authorized or required to solicit bids for the purchase of all of the assets of
the trust, or of a sufficient portion of such assets to retire such class or
classes.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The certificates of each series will constitute or evidence ownership of
either --
- - "regular interests" ("REMIC Regular Certificates") or "residual interests"
("REMIC Residual Certificates") in the trust, or a designated portion thereof,
treated as a REMIC under Sections 860A through 860G of the Internal Revenue
Code of 1986; or
- - certificates ("Grantor Trust Certificates") in a trust treated as a grantor
trust (or a partnership) under applicable provisions of the Internal Revenue
Code of 1986.
Investors are advised to consult their tax advisors and to review "Certain
Federal Income Tax Consequences" in this prospectus and in the 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, or Section 4975 of
the Internal Revenue Code of 1986, should review with their legal advisors
whether the purchase or holding of certificates could give rise to a transaction
that is prohibited.
LEGAL INVESTMENT
The certificates will constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA"),
only if specified in the prospectus supplement. Investors whose investment
authority is subject to legal restrictions should consult their legal advisors
to determine whether and to what extent the certificates constitute legal
investments for them.
RATING
At their respective dates of issuance, each class of certificates will be rated
as of investment grade by one or more nationally recognized statistical rating
agencies.
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RISK FACTORS
In considering an investment in the certificates of any series, you should
consider carefully the following risk factors and the risk factors in the
prospectus supplement.
LIMITED LIQUIDITY OF CERTIFICATES
General. The certificates of any series may have limited or no liquidity.
You may be forced to bear the risk of investing in the certificates for an
indefinite period of time. In addition, you may have no redemption rights, and
the certificates are subject to early retirement only under certain
circumstances.
Lack of a Secondary Market. We cannot assure you that a secondary market
for the certificates will develop or, if it does develop, that it will provide
certificateholders with liquidity of investment or that it will continue for as
long as the certificates remain outstanding.
The prospectus supplement may indicate that an underwriter intends to
establish a secondary market in the certificates, although no underwriter will
be obligated to do so. Any secondary market may provide less liquidity to
investors than any comparable market for securities relating to single-family
mortgage loans. Unless specified in the prospectus supplement, the certificates
will not be listed on any securities exchange.
Limited Ongoing Information. The primary source of ongoing information
regarding the certificates, including information regarding the status of the
related mortgage assets and any credit support for the certificates, will be the
periodic reports to certificateholders to be delivered pursuant to the related
pooling and servicing agreement.
We cannot assure you that any additional ongoing information regarding the
certificates will be available through any other source. The limited nature of
such information concerning a series of certificates may adversely affect
liquidity, even if a secondary market for the certificates does develop.
Sensitivity to Interest Rates. If a secondary market does develop for the
certificates, the market value of the certificates will be affected by several
factors, including (1) perceived liquidity, (2) the anticipated cash flow (which
may vary widely depending upon the prepayment and default assumptions concerning
the underlying mortgage loans) and (3) prevailing interest rates.
The price payable at any given time for certain classes of certificates may
be extremely sensitive to small fluctuations in prevailing interest rates. The
relative change in price for a certificate in response to an upward or downward
movement in prevailing interest rates may not necessarily equal the relative
change in price for the certificate in response to an equal but opposite
movement in such rates. Therefore, the sale of certificates by a holder in any
secondary market that may develop may be at a discount from the price paid by
such holder. We are not aware of any source through which price information
about the certificates will be generally available on an ongoing basis.
LIMITED ASSETS
Unless specified in the prospectus supplement, neither the certificates nor
the mortgage assets in the trust will be guaranteed or insured by NationsLink
Funding Corporation or any of its affiliates, by any governmental agency or by
any other person or entity. No certificate will represent a claim against or
security interest in the trust funds for any other series. Therefore, if the
related trust fund has insufficient assets to make payments, no other assets
will be available for payment of the deficiency, and the holders of one or more
classes of the certificates will be required to bear the consequent loss.
Certain amounts on deposit from time to time in certain funds or accounts
constituting part of the trust, including the certificate account and any
accounts maintained as credit support, may be withdrawn under certain
conditions, for purposes other than the payment of principal of or interest on
the related series of certificates. On any distribution occurring after losses
or shortfalls in collections on the mortgage assets have been incurred, all or a
portion of the amount of losses or shortfalls in collections on the mortgage
assets will be borne on a disproportionate basis among classes of certificates.
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CREDIT SUPPORT LIMITATIONS
Limitations Regarding Types of Losses Covered. The prospectus supplement
for a series of certificates will describe any credit support. 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 certificates.
Disproportionate Benefits to Certain Classes and Series. A series of
certificates may include one or more classes of subordinate certificates, if
provided in the 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 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 certificates of such series has been repaid in full.
The impact of losses and shortfalls experienced with respect to the
mortgage assets may fall primarily upon those classes of certificates having a
later right of payment.
If a form of credit support covers the 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 certificates of one (or more) such
series such credit support will disproportionately benefit, to the detriment of
the holders of 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 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. However, we cannot assure you that the loss experience on the related
mortgage assets will not exceed such assumed levels. If the losses on the
related mortgage assets do exceed such assumed levels, the holders of one or
more classes of 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 the trust, the amount
and timing of distributions of principal and/or interest on the certificates of
the related series may be highly unpredictable. Prepayments on the mortgage
loans in the trust 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. Therefore, the prepayment experience on
the mortgage loans in the trust may affect the average life of one or more
classes of certificates of the related series.
The rate of principal payments on pools of mortgage loans varies among
pools and from time to 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 the trust, 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
the trust, 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.
We cannot assure you what as to the actual rate of prepayment on the
mortgage loans in the trust will be, or that such rate of prepayment will
conform to any model in any prospectus supplement. As a result, depending on the
anticipated rate of prepayment for the mortgage loans in the trust, the
retirement of any class of certificates of the related series could occur
significantly earlier or later, and its average life could be significantly
shorter or longer, than expected.
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The extent to which prepayments on the mortgage loans in trust ultimately
affect the average life of any class of certificates of the related series will
depend on the terms and provisions of the certificates. A class of certificates
may provide that on any distribution date the holders of the certificates are
entitled to a pro rata share of the prepayments on the mortgage loans in the
trust fund that are distributable on such date.
A class of certificates that entitles the holders to a disproportionately
large share of the prepayments on the mortgage loans in the trust increases the
likelihood of early retirement of such class if the rate of prepayment is
relatively fast. This type of early retirement risk is sometimes referred to as
"call risk."
A class of certificates that entitles the holders thereof to a
disproportionately small share of the prepayments on the mortgage loans in the
trust increases the likelihood of an extended average life of such class if the
rate of prepayment is relatively slow. This type of prolonged retirement risk is
sometimes referred to as "extension risk."
As described in the 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
trust 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 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 trust remains
relatively constant at the rate of prepayment used to establish the specific
principal payment schedule for the certificates. Prepayment risk concerning 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.
As described in the prospectus supplement, a companion class may entitle
the holders to a disproportionately large share of prepayments on the mortgage
loans in the trust when the rate of prepayment is relatively fast, and/or may
entitle the holders to a disproportionately small share of prepayments on the
mortgage loans in the trust when the rate of prepayment is relatively slow. 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 trust were allocated on a
pro rata basis.
EFFECT OF PREPAYMENTS ON YIELD OF CERTIFICATES
A series of certificates may include one or more classes 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 trust fund. If 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 yield to maturity of
any class of certificates may vary from the anticipated yield due to the degree
to which the certificates are purchased at a discount or premium and the amount
and timing of distributions.
You should consider, in the case of any 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. In the case of any certificate purchased at a
premium, you should consider 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.
LIMITED NATURE OF RATINGS
Any rating assigned by a rating agency to a class of certificates will
reflect only its assessment of the likelihood that holders of the certificates
will receive payments to which the certificateholders are entitled under the
related pooling and servicing agreement. Such rating will not constitute an
assessment of the
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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
trust. Any rating will not address the possibility that prepayment of the
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 purchasing a certificate at a significant premium might fail to recover
its initial investment under certain prepayment scenarios. Therefore, a rating
assigned by a rating agency does not guarantee or ensure the realization of any
anticipated yield on a class of certificates.
The amount, type and nature of credit support given 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. 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 properties that provide security for the mortgage loans. However,
we cannot assure you that those values will not decline in the future. As a
result, the credit support required in respect of the certificates of any series
may be insufficient to fully protect the holders thereof from losses on the
related mortgage asset pool.
CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS
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 than loans made on the security of an owner-occupied
single-family property. 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. Therefore, 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
properties or on 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 the net operating income of a property, rental income (and maintenance
payments from tenant stockholders of a Cooperative) and the value of any
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 Properties may be secured by
owner-occupied properties or properties leased to a single tenant. Therefore, a
decline in the financial condition of the borrower or a single tenant may have a
disproportionately greater effect on the net operating income from such
properties than would be the case with respect to properties with multiple
tenants.
Changes in the expense components of the net operating income of a property
due to the general economic climate or economic conditions in a locality or
industry segment, such as (1) increases in interest rates, real estate and
personal property tax rates and other operating expenses including energy costs,
(2) changes in governmental rules, regulations and fiscal policies, including
environmental legislation, and (3) acts of God may also affect the net operating
income and the value of the property and the risk of default on the related
mortgage loan. In some cases leases of 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 as 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.
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Additional considerations may be presented by the type and use of a
particular property. For instance, 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. The transferability of a hotel's or restaurant's operating, liquor and
other licenses upon a transfer of the hotel or the restaurant, whether through
purchase or foreclosure, is subject to local law requirements.
In addition, the concentration of default, foreclosure and loss risks in
mortgage loans in the trust will generally be greater than for pools of
single-family loans because mortgage loans in the trust generally will 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. We anticipate 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. In this type of
mortgage loan, recourse in the event of borrower default will be limited to the
specific real property and other assets 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, we cannot assure you that
enforcement of such recourse provisions will be practicable, or that the assets
of the borrower will be sufficient to permit a recovery concerning a defaulted
mortgage loan in excess of the liquidation value of the related property.
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. Cash flows generated on these type of mortgage loans
are available to support debt service on, and ultimate repayment of, the total
indebtedness. These arrangements 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 properties securing a group of mortgage loans which are
cross-collateralized 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. 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. A creditor seeking to enforce remedies against a property subject
to such cross-collateralization to repay such creditor's claim against the
related borrower could assert that (1) such borrower was insolvent at the time
the cross-collateralized mortgage loans were made and (2) 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" will be receiving
"guarantees" from each of the other borrowers in return, we cannot assure you
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
properties located in different states. Because of various state laws governing
foreclosure or the exercise of a power of sale and because foreclosure actions
are usually 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. Some of the
mortgage loans included in the trust may be nonamortizing or only partially
amortizing over their terms to maturity. These types of mortgage loans will
require substantial payments of principal and interest (that is, balloon
payments) at their
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stated maturity. These loans 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 property. The ability of a borrower to accomplish either of
these goals will be affected by --
- - the value of the related property;
- - the level of available mortgage rates at the time of sale or refinancing;
- - the borrower's equity in the related property;
- - the financial condition and operating history of the borrower and the related
property;
- - tax laws;
- - rent control laws (pertaining to certain residential properties);
- - Medicaid and Medicare reimbursement rates (pertaining to hospitals and nursing
homes);
- - prevailing general economic conditions; and
- - the availability of credit for loans secured by multifamily or commercial
property.
Neither NationsLink Funding Corporation nor any of its affiliates will be
required to refinance any mortgage loan.
As specified in the prospectus supplement, 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. Although 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, we cannot assure you that any such extension or
modification will in fact increase the present value of receipts from or
proceeds of the affected mortgage loans.
Lender Difficulty in Collecting Rents Upon the Default and/or Bankruptcy of
Borrower. Each mortgage loan included in the trust secured by property that is
subject to leases typically will be secured by an assignment of leases and
rents. Under such an assignment, the mortgagor assigns to the mortgagee its
right, title and interest as lessor under the leases of the related property,
and the income derived, 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
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.
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 property or its interest in the 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
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threat was caused by the borrower or a prior owner. A lender also risks such
liability on foreclosure of the mortgage.
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a prospectus supplement, the master servicer and special
servicer for the trust will be required to cause the borrower on each mortgage
loan in the trust to maintain such insurance coverage in respect of the property
as is required under the related mortgage, including hazard insurance. As
described in the prospectus supplement, the master servicer and the special
servicer may satisfy its obligation to cause hazard insurance to be maintained
with respect to any 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 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 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 certificates of the related series.
INCLUSION OF DELINQUENT MORTGAGE LOANS IN A MORTGAGE ASSET POOL
If provided in the prospectus supplement, the trust fund for a particular
series of certificates may include mortgage loans that are past due. As
specified in the related prospectus supplement, the servicing of such mortgage
loans will be performed by the special servicer. 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 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 concerning the subject mortgage asset pool and the
yield on the certificates of such series.
PROSPECTUS SUPPLEMENT
To the extent appropriate, the prospectus supplement relating to each
series of offered certificates will contain:
- - 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);
- - information with respect to any other classes of Certificates of the same
series;
- - the respective dates on which distributions are to be made;
- - 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");
- - the circumstances, if any, under which the related Trust Fund may be subject
to early termination;
- - additional information with respect to the method of distribution of such
offered certificates;
- - 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;
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- - the initial percentage ownership interest in the related Trust Fund to be
evidenced by each class of Certificates of such series;
- - information concerning the Trustee (as defined herein) of the related Trust
Fund;
- - 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;
- - information as to the nature and extent of subordination of any class of
Certificates of such series, including a class of offered certificates; and
- - whether such offered certificates will be initially issued in definitive or
book-entry form.
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DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust (the "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 NationsLink Funding Corporation (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: (1) restaurants; (2)
entertainment or sports arenas; (3) marinas; or (4) 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
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
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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 (1) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (2) 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 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, 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 (1) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (2) 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 (1)
noncash items such as depreciation and amortization, (2) capital expenditures
and (3) 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 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
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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 (1) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (2) 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".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(1) have had original terms to maturity of not more than 40 years and (2)
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 (1) 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, (2) may provide for level payments to
maturity or for payments that adjust from time to time to
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accommodate changes in the Mortgage Rate or to reflect the occurrence of certain
events, and may permit negative amortization, (3) may be fully amortizing or may
be partially amortizing or nonamortizing, with a balloon payment due on its
stated maturity date, and (4) 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:
- the aggregate outstanding principal balance and the largest, smallest
and average outstanding principal balance of the Mortgage Loans,
- the type or types of property that provide security for repayment of
the Mortgage Loans,
- the earliest and latest origination date and maturity date of the
Mortgage Loans,
- 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,
- 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,
- the Mortgage Rates borne by the Mortgage Loans, or the range thereof,
and the weighted average Mortgage Rate borne by the Mortgage Loans,
- 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,
- information regarding the payment characteristics of the Mortgage
Loans, including, without limitation, balloon payment and other
amortization provisions, Lock-out Periods and Prepayment Premiums,
- 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
- 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.
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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 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 (1) 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 (2) 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 (1) have been previously registered under the Securities
Act of 1933, as amended, (2) be exempt from such registration requirements or
(3) 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.
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The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available,
- the aggregate approximate initial and outstanding principal amount(s)
and type of the MBS to be included in the Trust Fund,
- the original and remaining term(s) to stated maturity of the MBS, if
applicable,
- the pass-through or bond rate(s) of the MBS or the formula for
determining such rate(s),
- the payment characteristics of the MBS,
- the MBS Issuer, MBS Servicer and MBS Trustee, as applicable, of each
of the MBS,
- a description of the related credit support, if any,
- the circumstances under which the related underlying mortgage loans,
or the MBS themselves, may be purchased prior to their maturity,
- the terms on which mortgage loans may be substituted for those
originally underlying the MBS,
- 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
described under "-- Mortgage Loans -- Mortgage Loan Information in
Prospectus Supplements", and
- 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 (any such agreement, a "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.
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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 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.
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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 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 (1) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (2) 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.
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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 (1) converting to a
fixed rate loan and thereby "locking in" such rate or (2) 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 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
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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 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 (1) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (2) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (3) 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
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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 (1) whether such Offered Certificate was
purchased at a premium or a discount and (2) 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 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 (1) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (2)
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 (1) amounts attributable to interest
accrued but not currently distributable on one or more classes of Accrual
Certificates, (2) Excess Funds or (3) 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 (A) 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 (B) 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.
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THE DEPOSITOR
NationsLink 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 Bank of America 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 Certificates being offered for sale (the "Offered
Certificates") of such series, may consist of one or more classes of
Certificates that, among other things:
- provide for the accrual of interest on the Certificate Balance or
Notional Amount thereof at a fixed, variable or adjustable rate;
- constitute Senior Certificates or Subordinate Certificates;
- constitute Stripped Interest Certificates or Stripped Principal
Certificates;
- 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;
- 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;
- provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or
other methodology; or
- 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
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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 20th day of each month (or, if any such 20th 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 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
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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 (a "Notional Amount") that is either (1)
based on the principal balances of some or all of the Mortgage Assets in the
related Trust Fund or (2) 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 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
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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 CONCERNING PREPAYMENT PREMIUMS OR CONCERNING
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.
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 (1) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (2)
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
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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.
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:
- the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
- the amount of such distribution to holders of such class of Offered
Certificates that was applied to pay Accrued Certificate Interest;
- 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;
- the amount, if any, by which such distribution is less than the amounts
to which holders of such class of Offered Certificates are entitled;
- if the related Trust Fund includes Mortgage Loans, the aggregate amount
of advances included in such distribution;
- 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;
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- information regarding the aggregate principal balance of the related
Mortgage Assets on or about such Distribution Date;
- if the related Trust Fund includes Mortgage Loans, information regarding
the number and aggregate principal balance of such Mortgage Loans that
are delinquent;
- 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" (that 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);
- 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;
- 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;
- 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;
- 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
- the amount of Credit Support being afforded by any classes of Subordinate
Certificates.
In the case of information furnished pursuant to the first 3 bulleted items
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 the first 3 bulleted items 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.
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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 (1) 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 (2)
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 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.
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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.
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 (1) 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 (2) 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
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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 or other agreement specified in the related Prospectus
Supplement (in any case 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 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,
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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
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
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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: (1) 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; (2) the enforceability of the related Mortgage Note and Mortgage and
the existence of title insurance insuring the lien priority of the related
Mortgage; (3) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (4) 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 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.
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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 (1) such procedures are consistent with
the terms of the related Pooling and Servicing Agreement and (2) 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: (1) Mortgage Loans that are delinquent in
respect of a specified number of scheduled payments; (2) Mortgage Loans as to
which the related borrower has entered into or consented to bankruptcy,
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 (3) 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
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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 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
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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 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:
- all payments on account of principal, including principal prepayments, on
the Mortgage Loans;
- 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;
- 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 the seventh bulleted item listed below, "Liquidation
Proceeds"), together with the
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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;
- any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
- any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
- any amounts paid under any Cash Flow Agreement;
- 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";
- 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;
- 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";
- 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
- 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.
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:
- to make distributions to the Certificateholders on each Distribution
Date;
- 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;
- 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;
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- 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 the bulleted clause immediately listed above incurred by it while such
remain outstanding and unreimbursed;
- 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";
- 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";
- 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;
- if and to the extent described in the related Prospectus Supplement, to
reimburse prior draws on any form of Credit Support;
- 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;
- to pay any servicing expenses not otherwise required to be advanced by
the Master Servicer, the Special Servicer or any other specified person;
- 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 transactions, as
and to the extent described under "Certain Federal Income Tax
Consequences -- REMICs -- Prohibited Transactions Tax and Other Taxes";
- to pay for the cost of various opinions of counsel obtained pursuant to
the related Pooling and Servicing Agreement for the benefit of
Certificateholders;
- to make any other withdrawals permitted by the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement;
and
- 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 (1) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (2) 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 (3) 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, (1) a
material default on the Mortgage Loan has occurred or a payment default is
imminent, (2) 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 (3) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support.
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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:
(1) 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
(2) 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 (1)(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 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 (1) the Internal Revenue Service
(the "IRS") grants an extension of time to sell such property or (2) 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
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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 (1) 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 (2) 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.
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
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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 (1) the
replacement cost of the improvements less physical depreciation and (2) 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 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: (1) a specified portion of the interest payments on
each Mortgage Loan in the related Trust Fund, whether or not serviced by it; (2)
an additional specified portion of the interest payments on each Mortgage Loan
then currently serviced by it; and (3) 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.
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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 (1)
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 (2) 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 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
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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 gross 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 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 gross negligence on the part of any such agent or attorney
appointed by it with due care.
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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,
- 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,
- 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;
- 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;
- 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
- 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.
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
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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, (1) to cure any ambiguity, (2) to correct or supplement any
provision therein which may be inconsistent with any other provision therein or
to correct any error, (3) 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, (4)
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 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), (5) 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 (6) 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
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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 (1) 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 (2) 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 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
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indemnification will not extend to any loss liability or expense incurred by
reason of willful misfeasance, bad faith or gross 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 and/or cash
collateral accounts, overcollateralization, 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 Certificateholders 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 (1) the nature and
amount of coverage under such Credit Support, (2) any conditions to payment
thereunder not otherwise described herein, (3) 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 (4) 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".
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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 CONCERNING 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 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
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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.
CASH COLLATERAL ACCOUNT
If so specified in the related Prospectus Supplement, all or any portion of
credit enhancement for a series of Certificates may be provided by the
establishment of a cash collateral account. A cash collateral account will be
similar to a reserve fund except that generally a cash collateral account is
funded initially by a loan from a cash collateral lender, the proceeds of which
are invested with the cash collateral lender or other eligible institution. The
loan from the cash collateral lender will be repaid from such amounts as are
specified in the related Prospectus Supplement. Amounts on deposit in the cash
collateral account will be available in generally the same manner described
above with respect to a reserve fund. As specified in the related Prospectus
Supplement, a cash collateral account may be deemed to be part of the assets of
the related Trust, may be deemed to be part of the assets of a separate cash
collateral trust or may be deemed to be property of the party specified in the
related Prospectus Supplement and pledged for the benefit of the holders of one
or more classes of Certificates of a series.
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.
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
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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 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
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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 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
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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 selling
a mortgaged property, a lender could realize an overall loss on a mortgage loan
even if the mortgaged
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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 and by the leasehold
mortgagee or the purchaser at a foreclosure sale, and contains certain other
protective
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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 the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the
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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, (1)
assume the lease and retain it or assign it to a third party or (2) 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 any 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 (1) the risk of delay in distributions while a deficiency judgment
against the borrower is obtained and (2) 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: (1) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (2) 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 Internal Revenue Code of 1986, as amended (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: (1)
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 (2) 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 (1) 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 (2) 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 (1)
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, (2) using a discount rate equal to the original yield to
maturity of the Certificate and (3) 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 (1) 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 (2) 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: (1) on the basis of a constant yield
method, (2) 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 (3) 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 (a "REMIC Residual
Certificateholder") 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 (1) the daily portions
of REMIC taxable income allocable to such REMIC Residual Certificate over (2)
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 (1) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (2) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (3) 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, (1) 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 (2) 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 (1) 3% of the excess of the
individual's adjusted gross income over such amount or (2) 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 (1) 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 (2) 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 (1) 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 (2) 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 (1) residual interests in
such entity are not held by disqualified organizations and (2) 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 (1) 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
(2) 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 (1) 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 (2) 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 (1) 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), (2) 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 (3) 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 any
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 (1) "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code; (2) "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 (3) "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 (1) 3% of the excess
of the individual's adjusted gross income over such amount or (2) 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 (1) a class of Grantor
Trust Strip Certificates is issued as part of the same series of Certificates or
(2) 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 (1) the use of a reasonable
prepayment assumption in accruing original issue discount and (2) 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 (1) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (2) 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 (1) 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 (2) 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: (1) on the basis of a constant yield method, (2) 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 (3) 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 instruments 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 projected 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 as of the date of this Prospectus 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
Certificates if such MBS are included in the Trust Fund.
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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 such 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 any of the Exemptions
solely because they (1) are subordinated to other Classes of Certificates in the
Trust and/or (2) 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 one 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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constitute Plan Assets, unless (1) as otherwise provided by the Secretary of
Labor in the 401(c) Regulations to prevent avoidance of the regulations or (2)
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 (1) are rated in one
of the two highest rating categories by one or more Rating Agencies and (2) 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
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include, in 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. The Office of Thrift Supervision (the "OTS") has issued Thrift
Bulletin 13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
Offered Certificates.
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 OTS 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 (transaction), 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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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
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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 at 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.
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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.
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 in this Prospectus or in such Prospectus Supplement, 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., 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.
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that
contains reports, proxy and information statements, and other information that
has been filed electronically with the SEC. The Internet address 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 in this Prospectus since the date hereof or in such
Prospectus Supplement 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 format through the facilities of The Depository Trust
Company ("DTC") as described in this Prospectus, 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
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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 (1) 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 (2) 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
The Depositor hereby incorporates 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 interest 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 in this Prospectus 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 request to
the Depositor should be directed in writing to its principal executive offices
at the Bank of America Corporate Center, Charlotte, North Carolina 28255, or by
telephone at (704) 386-2400.
99
<PAGE> 288
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<S> <C>
1998 Policy Statement......... 95
401(c) Regulations............ 93
Accrual Certificates.......... 7
Accrued Certificate
Interest.................... 31
Act........................... 62
ADA........................... 66
ARM Loans..................... 21
Available Distribution
Amount...................... 30
Book-Entry Certificates....... 29
Call Risk..................... 12
Cash Flow Agreement........... 23
CERCLA........................ 62
Certificate Account........... 23
Certificate Balance........... 7
Certificate Owner............. 36
Certificateholder............. 36
Closing Date.................. 69
Code.......................... 67
Commercial Properties......... 18
Commission.................... 98
Committee Report.............. 69
Companion Class............... 32
Contingent Payment
Regulations................. 90
Contributions Tax............. 79
Controlled Amortization
Class....................... 32
Cooperatives.................. 18
CPR........................... 26
Credit Support................ 8
Crime Control Act............. 66
Cut-off Date.................. 31
Debt Service Coverage Ratio... 19
Definitive Certificates....... 29
Depositor..................... 18, 29
Determination Date............ 24, 30
Direct Participants........... 35
Distribution Date............. 7
Distribution Date Statement... 33
DOL........................... 92
DTC........................... 98
Due Dates..................... 20
Due Period.................... 24
Equity Participation.......... 21
ERISA......................... 91
Events of Default............. 50
Excess Funds.................. 28
Exchange Act.................. 99
Exemptions.................... 93
Extension Risk................ 12
FAMC.......................... 22
FHLMC......................... 22
FNMA.......................... 22
GNMA.......................... 22
Garn Act...................... 63
Grantor Trust Certificates.... 9
Grantor Trust Fractional
Interest Certificate........ 83
Grantor Trust Fund............ 67
Grantor Trust Strip
Certificate................. 83
Indirect Participants......... 35
Insurance and Condemnation
Proceeds.................... 42
IRS........................... 45, 67
Issue Premium................. 75
Letter of Credit Bank......... 54
Liquidation Proceeds.......... 42
Loan-to-Value Ratio........... 20
Lock-out Date................. 21
Lock-out Period............... 21
Mark-to-Market Regulations.... 77
Master Servicer............... 5
MBS........................... 18
MBS Administrator............. 5
MBS Agreement................. 22
MBS Issuer.................... 22
MBS Servicer.................. 22
MBS Trustee................... 22
Mortgages..................... 18
Mortgage Asset Seller......... 18
Mortgage Asset Pool........... 5
Mortgage Assets............... 18
Mortgage Loans................ 18
Mortgage Notes................ 18
Mortgage Rate................. 20
Mortgaged Properties.......... 18
Multifamily Properties........ 18
NationsBanc Montgomery........ 96
NCUA.......................... 95
Net Leases.................... 13
Net Operating Income.......... 19
New Regulations............... 82
Non-SMMEA Certificates........ 94
Nonrecoverable Advance........ 33
Notional Amount............... 31
OCC........................... 95
OID Regulations............... 67
Offered Certificates.......... 29
Originator.................... 18
OTS........................... 95
</TABLE>
100
<PAGE> 289
<TABLE>
<S> <C>
Participants.................. 35
Parties in Interest........... 92
Pass-Through Rate............. 7
Percentage Interest........... 30
Permitted Investments......... 42
Plan Asset Regulations........ 92
Plans......................... 91
Pooling and Servicing
Agreement................... 37
Prepayment Assumption......... 69
Prepayment Interest
Shortfall................... 24
Prepayment Period............. 34
Prepayment Premium............ 21
Prohibited Transactions Tax... 79
Prospectus Supplement......... 16
PTCE.......................... 93
PTCE 95-60.................... 93
Purchase Price................ 38
Rating Agency................. 9
RCRA.......................... 62
Record Date................... 30
Related Proceeds.............. 32
Relief Act.................... 66
REMIC......................... 67
REMIC Administrator........... 16
REMIC Certificates............ 67
REMIC Provisions.............. 67
REMIC Regular Certificates.... 9
REMIC Regulations............. 67
REMIC Residual Certificates... 9
REMIC Residual
Certificateholder........... 73
REO Property.................. 40
RICO.......................... 66
Senior Certificates........... 6
Senior Liens.................. 18
SMMEA......................... 9
SPA........................... 24
Special Servicer.............. 5
Stripped Interest
Certificates................ 6
Stripped Principal
Certificates................ 6
Subordinate Certificates...... 6
Sub-Servicer.................. 41
Sub-Servicing Agreement....... 42
Tax Exempt Investor........... 94
Tiered REMICs................. 68
Title V....................... 65
Trust Assets.................. 16
Trust Fund.................... 18
Trustee....................... 5
UBTI.......................... 94
UCC........................... 56
U.S. Person................... 82
Value......................... 20
Voting Rights................. 35
Warranting Party.............. 39
</TABLE>
101
<PAGE> 290
[DISKETTE]
This diskette contains a spreadsheet file that can be put on a
user-specified hard drive or network drive. The file is "NL9901.xls" The file
"NL9901.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> 291
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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 MAY
24, 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-17
Description of the Mortgage Pool..... S-30
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
Annex D.............................. D-1
PROSPECTUS
Summary of Prospectus................ 5
Risk Factors......................... 10
Description of the Trust Funds....... 18
Yield and Maturity Considerations.... 24
The Depositor........................ 29
Description of the Certificates...... 29
The Pooling and Servicing
Agreements......................... 37
Description of Credit Support........ 53
Certain Legal Aspects of Mortgage
Loans.............................. 55
Certain Federal Income Tax
Consequences....................... 67
State and Other Tax Consequences..... 91
Certain ERISA Considerations......... 91
Legal Investment..................... 94
Use of Proceeds...................... 96
Method of Distribution............... 96
Legal Matters........................ 97
Financial Information................ 97
Rating............................... 98
Available Information................ 98
Incorporation of Certain Information
by Reference....................... 99
Index of Principal Definitions....... 100
</TABLE>
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$1,084,654,074
(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 1999-1
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
February 17, 1999
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