<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REG. STATEMENT NO. 333-03200-01
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 4, 1996)
$254,135,000 (APPROXIMATE)
BANKAMERICA MANUFACTURED HOUSING CONTRACT TRUST II
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES, SERIES 1997-1
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
INITIAL CLASS FINAL SCHEDULED
CERTIFICATE BALANCE PASS-THROUGH RATE DISTRIBUTION DATE (2)
------------------------ ------------------------- ------------------------
<S> <C> <C> <C>
Class A-1....................... $ 25,500,000 5.910% May 10, 2002
Class A-2....................... $ 18,000,000 6.015% September 10, 2004
Class A-3....................... $ 20,500,000 6.060% February 10, 2007
Class A-4....................... $ 29,500,000 6.195% June 10, 2010
Class A-5....................... $ 14,300,000 6.265% December 10, 2011
Class A-6....................... $ 15,500,000 6.340% April 10, 2014
Class A-7....................... $ 39,300,000 6.580% October 10, 2019
Class A-8....................... $ 26,000,000 6.725% June 10, 2023
Class A-9....................... $ 27,545,000 7.015%(1) January 10, 2028
Class M......................... $ 22,270,000 6.800% January 10, 2028
Class B-1....................... $ 15,720,000 6.940% June 10, 2021
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The Pass-Through Rate is subject to a maximum rate equal to the weighted
average of the Net Contract Rates (as defined herein) of the Contracts in
the Contract Pool.
(2) Determined as described under "Prepayment and Yield
Considerations--Final Scheduled Distribution Date"; the final
Distribution Date could occur significantly earlier.
(PRINCIPAL AND INTEREST PAYABLE ON THE 10TH DAY OF EACH MONTH BEGINNING IN
AUGUST, 1997)
BANKAMERICA HOUSING SERVICES, AN UNINCORPORATED DIVISION
OF BANK OF AMERICA, FSB, SELLER AND SERVICER
The Class B-2 Certificates and the Class R Certificates have not been
registered under the Securities Act of 1933, as amended (the "Securities Act")
and are not being offered hereby.
(COVER CONTINUED ON NEXT PAGE)
------------------------
FOR A DISCUSSION OF SIGNIFICANT MATTERS AFFECTING INVESTMENTS IN THE OFFERED
CERTIFICATES
(DEFINED HEREIN), SEE "RISK FACTORS" HEREIN AT PAGE S-22 AND IN THE PROSPECTUS
AT PAGE 13.
-----------------
PROCEEDS FROM THE ASSETS IN THE TRUST FUND WILL BE THE ONLY SOURCE OF PAYMENT ON
THE CERTIFICATES, AND THE CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR
OBLIGATIONS OF BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
BANKAMERICA HOUSING SERVICES, THEIR PARENT CORPORATION, BANKAMERICA
CORPORATION, OR AFFILIATES THEREOF, SUBJECT TO CERTAIN EXCEPTIONS
DESCRIBED UNDER "RISK FACTORS" HEREIN AND IN THE PROSPECTUS.
NEITHER THE CERTIFICATES NOR THE UNDERLYING CONTRACTS OR
COLLECTIONS THEREON WILL BE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
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- --------------------------------------------------------------------------------------------------------------
PROCEEDS TO
SELLER (1)(2) PRICE TO PUBLIC (1) UNDERWRITING DISCOUNT
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Class A-1 Certificates.......... 99.861875% 99.984375% 0.1225%
Class A-2 Certificates.......... 99.834375% 99.984375% 0.1500%
Class A-3 Certificates.......... 99.809375% 99.984375% 0.1750%
Class A-4 Certificates.......... 99.800000% 100.000000% 0.2000%
Class A-5 Certificates.......... 99.718750% 99.968750% 0.2500%
Class A-6 Certificates.......... 99.684375% 99.984375% 0.3000%
Class A-7 Certificates.......... 99.634375% 99.984375% 0.3500%
Class A-8 Certificates.......... 99.600000% 100.000000% 0.4000%
Class A-9 Certificates.......... 99.559375% 99.984375% 0.4250%
Class M Certificates............ 99.534375% 99.984375% 0.4500%
Class B-1 Certificates.......... 99.421875% 99.921875% 0.5000%
Total........................... $ 253,319,110 $ 254,091,904 $ 772,794
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Plus accrued interest, if any, at the applicable rate from July 10,
1997.
(2) Before deducting expenses payable by the Seller, estimated to be
$550,000.00.
------------------------
The Offered Certificates are offered subject to prior sale, when, as and if
issued by the Trust Fund and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Offered Certificates will be made in book-entry form only through the Same Day
Funds Settlement system of The Depository Trust Company on or about August 6,
1997.
---------------------
BANCAMERICA SECURITIES, INC. MORGAN STANLEY DEAN WITTER
The date of this Prospectus Supplement is July 31, 1997
<PAGE>
The BankAmerica Manufactured Housing Contract Trust Senior/Subordinate
Pass-Through Certificates, Series 1997-1 (the "Certificates") will represent
interests in a pool (the "Contract Pool") of actuarial manufactured housing
installment sales contracts and installment loan agreements (the "Contracts")
and certain related property (the Contracts and such related property being
referred to as the "Trust Fund"). The Contracts will be conveyed to the Trust
Fund by BankAmerica Housing Services, an unincorporated division of Bank of
America, FSB ("BankAmerica Housing Services"). Each Contract was originated by
BankAmerica Housing Services on an individual basis in the ordinary course of
its business. BankAmerica Housing Services will serve as servicer of the
Contracts (together with any successor servicer, the "Servicer"). The term
"approximate," with respect to the aggregate principal amount of any
Certificates or Contracts, means that the amount is subject to a variance of
plus or minus 5%. Terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Prospectus dated June 4, 1996
attached hereto (the "Prospectus").
The Certificates will consist of nine classes of senior certificates
(collectively, the "Senior Certificates") designated as the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates, the Class A-8 Certificates and the Class A-9
Certificates and four classes of subordinate certificates designated as the
Class M Certificates, the Class B-1 Certificates, the Class B-2 Certificates and
the Class R Certificates (collectively, the "Subordinate Certificates"). Only
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class M and Class B-1 Certificates (collectively, the
"Offered Certificates") are being offered hereby. The Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class M and Class B-1 Certificates will evidence in the aggregate approximate
initial 9.73%, 6.87%, 7.82%, 11.26%, 5.46%, 5.92%, 15.00%, 9.92%, 10.51%, 8.50%,
and 6.00% undivided interests, respectively, in the Contract Pool. The Class B-2
Certificates will evidence in the aggregate an approximate initial 3.00%
undivided interest in the Contract Pool. The Class B-1 and Class B-2
Certificates are referred to collectively as the "Class B Certificates" herein.
The rights of the Subordinate Certificateholders to receive distributions of
principal and interest are subordinated as described herein to such rights of
the Senior Certificateholders and the rights of Class B and Class R
Certificateholders to receive distributions are subordinated as described herein
to such rights of the Senior Certificateholders and the Class M
Certificateholders. See "Description of the Certificates" herein.
Distributions of principal and interest on the Certificates will be made to
the holders of the Certificates on the 10th day of each month (or if the 10th
day is not a business day, the next business day) (each, a "Distribution Date"),
beginning in August, 1997. The Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class M and Class B-1 Certificates will
have the respective fixed Pass-Through Rates specified above. The Pass-Through
Rate for the Class A-9 Certificates is subject to a maximum rate equal to the
weighted average of the Net Contract Rates in the Contract Pool. See
"Description of the Certificates" herein.
An election will be made to treat the Trust Fund as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes. The
Certificates, other than the Class R Certificates, will represent "regular
interests" in the REMIC. See "Certain Federal Income Tax Consequences" herein
and in the Prospectus.
-------------------
The underwriters named herein (the "Underwriters") intend to make a
secondary market in the Offered Certificates, but have no obligation to do so.
There can be no assurance that a secondary market for the Offered Certificates
will develop, or if it does develop, that it will continue or provide sufficient
liquidity. See "Risk Factors" herein and in the Prospectus.
This Prospectus Supplement does not contain complete information about the
offering of the Offered Certificates. Additional information is contained in the
Prospectus and purchasers are urged to read both this Prospectus Supplement and
the Prospectus in full. Sales of the Offered Certificates may not be consummated
unless the purchaser has received both this Prospectus Supplement and the
Prospectus. Terms used and not otherwise defined herein have the respective
meanings ascribed to such terms in the Prospectus.
This Prospectus Supplement may be used by BancAmerica Securities, Inc., an
affiliate of the Seller and Servicer, in connection with offers and sales
related to market making transactions in the Offered Certificates. BancAmerica
Securities, Inc. may act as principal or agent in such transactions. Such sales
will be made at prices related to prevailing market prices at the time of the
sale.
UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
S-2
<PAGE>
NO DEALER, SALESMAN OR PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER OR UNDERWRITER. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY AND THEREBY
IN ANY STATE OR JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH STATE OR JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
SELLER SINCE SUCH DATES.
--------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Terms of the Offered Certificates............................................. S-4
Risk Factors.................................................................. S-22
The Contract Pool............................................................. S-23
The Seller.................................................................... S-30
Prepayment and Yield Considerations........................................... S-32
Description of the Certificates............................................... S-49
Certain Federal Income Tax Consequences....................................... S-66
ERISA Considerations.......................................................... S-67
Certain Legal Aspects of the Contracts........................................ S-69
Ratings....................................................................... S-72
Legal Investment.............................................................. S-72
Method of Distribution........................................................ S-72
Use of Proceeds............................................................... S-74
Legal Matters................................................................. S-74
Index of Significant Definitions.............................................. S-75
Appendix A.................................................................... A-1
PROSPECTUS
Incorporation of Certain Documents by Reference............................... 2
Additional Information........................................................ 3
Reports to Certificateholders................................................. 3
Summary of Terms.............................................................. 4
Risk Factors.................................................................. 13
The Contract Pools............................................................ 17
The Sellers................................................................... 20
Prepayment and Yield Considerations........................................... 27
Description of the Certificates............................................... 30
Credit and Liquidity Enhancement.............................................. 40
Certain Federal Income Tax Consequences....................................... 43
Other Tax Consequences........................................................ 65
Restrictions on Transfer of REMIC Residual Certificates....................... 65
Tax-Exempt Investors.......................................................... 66
Legal Investment.............................................................. 66
ERISA Considerations.......................................................... 67
Certain Legal Aspects of the Contracts........................................ 69
Ratings....................................................................... 73
Method of Distribution........................................................ 73
Use of Proceeds............................................................... 74
Legal Matters................................................................. 74
Other Considerations.......................................................... 74
Index of Significant Definitions.............................................. 76
</TABLE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF CERTIFICATES,
INCLUDING ENTERING STABILIZING BIDS OR EFFECTING SYNDICATE COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "METHOD OF
DISTRIBUTION."
S-3
<PAGE>
TERMS OF THE OFFERED CERTIFICATES
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Capitalized terms used and not otherwise defined herein
have the respective meanings assigned them in the Prospectus or elsewhere in
this Prospectus Supplement. Reference is made to the "Index of Significant
Definitions" herein for the location of the definitions of certain capitalized
terms.
Securities Offered.......... The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class
A-9, Class M and Class B-1 Certificates
(collectively, the "Offered Certificates") of the
BankAmerica Manufactured Housing Contract Trust
Senior/ Subordinate Pass-Through Certificates,
Series 1997-1. The Class B-2 and Class R
Certificates are not being offered hereby. The
Offered Certificates, the Class B-2 Certificates
and the Class R Certificates are collectively
referred to as the "Certificates" herein.
The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and
Class A-9 Certificates (collectively, the "Senior
Certificates") are senior to the Class M, Class
B-1, Class B-2 and Class R Certificates
(collectively, the "Subordinate Certificates") to
the extent described herein, and the Class B-1,
Class B-2 and Class R Certificates are subordinate
to the Class M Certificates to the extent
described herein. The Class B-1 and Class B-2
Certificates are referred to herein collectively
as the "Class B Certificates." The Offered
Certificates and the Class B-2 Certificates are
referred to herein collectively as the "Series
1997-1 Regular Certificates". The Class R
Certificates are referred to herein as the "Series
1997-1 Residual Certificates."
The Seller.................. BankAmerica Housing Services, an unincorporated
division of Bank of America, FSB ("BankAmerica
Housing Services").
Servicer.................... BankAmerica Housing Services (together with any
successor servicer under the Agreement (defined
below), the "Servicer").
Trustee..................... The First National Bank of Chicago (the
"Trustee").
Cut-off Date................ June 30, 1997.
Cut-off Date Pool Principal
Balance.................... $261,995,275.30 (Approximate, subject to a
variance of plus or minus 5%).
Initial Class A-1
Certificate Balance........ $25,500,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-2
Certificate Balance........ $18,000,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-3
Certificate Balance........ $20,500,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-4
Certificate Balance........ $29,500,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-5
Certificate Balance........ $14,300,000 (Approximate, subject to a variance of
plus or minus 5%).
S-4
<PAGE>
<TABLE>
<S> <C>
Initial Class A-6
Certificate Balance........ $15,500,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-7
Certificate Balance........ $39,300,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-8
Certificate Balance........ $26,000,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class A-9
Certificate Balance........ $27,545,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class M Certificate
Balance.................... $22,270,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class B-1
Certificate Balance........ $15,720,000 (Approximate, subject to a variance of
plus or minus 5%).
Initial Class B-2
Certificate Balance........ $7,860,275.30 (Approximate, subject to a variance
of plus or minus 5%).
Class A-1 Pass-Through
Rate....................... 5.910%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-2 Pass-Through
Rate....................... 6.015%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-3 Pass-Through
Rate....................... 6.060%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-4 Pass-Through
Rate....................... 6.195%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-5 Pass-Through
Rate....................... 6.265%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-6 Pass-Through
Rate....................... 6.340%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-7 Pass-Through
Rate....................... 6.580%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-8 Pass-Through
Rate....................... 6.725%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class A-9 Pass-Through
Rate....................... 7.015%, subject to a maximum rate equal to the
weighted average of the Net Contract Rates
(weighted by outstanding principal balance) on the
Contracts in the Contract Pool, calculated on the
basis of a 360-day year comprised of twelve 30-day
months. The "Net Contract Rate" of a Contract
equals the rate of interest borne by such Contract
minus the Annual Servicing Rate. The "Annual
Servicing Rate" is equal to 1%.
Class M Pass-Through Rate... 6.800%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class B-1 Pass-Through
Rate....................... 6.940%, calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Class B-2 Pass-Through
Rate....................... 7.700%, subject to a maximum rate equal to the
weighted average of the Net Contract Rates on the
Contracts in the Contract Pool, calculated on the
basis of a 360-day year comprised of twelve 30-day
months.
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
Distribution Date........... The 10th day of each month (or if such 10th day is
not a business day, the next succeeding business
day), commencing in August, 1997. The first
Distribution Date is August 11, 1997 (the "First
Distribution Date").
Collection Period........... With respect to any Distribution Date, the
calendar month prior to the month in which such
Distribution Date occurs (each, a "Collection
Period").
Agreement................... The Pooling and Servicing Agreement, dated as of
July 1, 1997 (the "Agreement"), by and between
BankAmerica Housing Services as Seller and as
Servicer, and the Trustee.
The Contract Pool........... The Contract Pool is comprised of fixed rate
actuarial manufactured housing installment sales
contracts and installment loan agreements
(collectively, the "Contracts"), in each case
secured by a new or used manufactured home (each
manufactured home securing a Contract being
referred to herein as a "Manufactured Home"). Some
of the Contracts are secured by a lien on real
estate. Each Contract was originated by
BankAmerica Housing Services on an individual
basis in the ordinary course of its business.
Neither the Contracts nor any collections thereon
will be insured or guaranteed by any governmental
agency or instrumentality.
As of the Cut-off Date, the Contract Pool consists
of approximately 8,769 Contracts having an
aggregate unpaid principal balance of
approximately $261,995,275.30. The Contracts, as
of their origination, were secured by Manufactured
Homes located in 45 states and have been selected
by BankAmerica Housing Services from the
manufactured housing installment sale contracts
and installment loan portfolio of BankAmerica
Housing Services on the basis of the criteria
specified in the Agreement (as defined herein).
Monthly payments of principal and interest on the
Contracts will be due on various days (each, a
"Due Date") throughout each month. As of the
Cut-off Date, the Contract Rates on the Contracts
ranged from 8.00% to 13.50%, with a weighted
average of approximately 10.72%. As of the Cut-off
Date, the Contracts had a weighted average
original term to maturity of approximately 280
months and a weighted average remaining term to
maturity of approximately 277 months. The final
scheduled payment date on the Contract with the
latest maturity is in July 2027. The Contracts
were originated in 1997. See "The Contract Pool"
and "Prepayment and Yield Considerations" herein
for a detailed description of the Contracts.
In addition to the security interest on the
manufactured home, certain of the Contracts (the
"Land Home Contracts" and "Land-in-Lieu
Contracts") will be secured by a mortgage or trust
deed on the real estate on which the manufactured
home is located. Land Home and Land-in-Lieu
Contracts in the aggregate comprise approximately
7.32% (by principal
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
balance) of the Contract Pool as of the Cut-off
Date. See "The Contract Pool-Land Home and
Land-in-Lieu Contracts" herein and "The Contract
Pools" in the Prospectus.
Description of
Certificates............... The Certificates evidence undivided interests in
the Contract Pool and certain other property held
in trust for the benefit of the Certificateholders
(the Contracts and such other property being
collectively referred to as the "Trust Fund"). The
Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8 and Class A-9
Certificates are Senior Certificates and the Class
M, Class B-1, Class B-2 and Class R Certificates
are Subordinate Certificates, all as described
herein. The Residual Interest is evidenced by the
Class R Certificates. The Offered Certificates
will be offered in denominations of $1,000 and
integral multiples of one dollar in excess
thereof. The undivided percentage interest (the
"Percentage Interest") evidenced by a Certificate
of any Class (other than a Class R Certificate) in
the distributions to the related Class will be
equal to the percentage obtained by dividing the
original denomination of such Certificate by the
initial Certificate Balance of such Class of
Certificates.
Non-Recourse Obligations.... Neither BankAmerica Housing Services nor any of
its affiliates will have any obligations with
respect to the Offered Certificates except, in the
case of the Seller, for obligations arising from
certain of its representations and warranties with
respect to the Contracts and for certain
contractual servicing obligations, each as further
described herein. SUBJECT ONLY TO THE FOREGOING
EXCEPTIONS, THE OFFERED CERTIFICATES WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION OR
BANKAMERICA HOUSING SERVICES, THEIR PARENT
CORPORATION, BANKAMERICA CORPORATION, OR ANY
AFFILIATE THEREOF, AND ASSETS IN THE TRUST FUND
WILL CONSTITUTE THE ONLY SOURCE OF FUNDS FOR
PAYMENT ON THE OFFERED CERTIFICATES. None of the
Certificates will include the benefit of a
guarantee or limited guarantee of the Seller or an
affiliate thereof. NONE OF THE OFFERED
CERTIFICATES NOR THE UNDERLYING CONTRACTS OR ANY
COLLECTIONS THEREON WILL BE INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY
ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
</TABLE>
Record Date................. The last business day preceding the Distribution
Date.
Distributions............... GENERAL. Distributions to the holders of the
Series 1997-1 Regular Certificates of interest and
principal, respectively, will be made first to the
holders of the Senior Certificates, second to the
holders of the Class M Certificates, third to the
holders of the Class B-1 Certificates and fourth
to the holders of the Class B-2 Certificates.
Within each Class of Certificates, such
distributions will be applied first to the payment
of interest and then to the payment of principal.
The funds available in the Certificate Account (as
hereinafter defined) for distribution on a
Distribution Date (the "Available Distribution
Amount," as
S-7
<PAGE>
<TABLE>
<S> <C>
further defined herein under "Description of the
Certificates-- Payments on the Contracts;
Certificate Account") will be applied in the
amounts and the order of priority set forth below.
Distributions of interest and principal to holders
of each Class of Certificates will be made on each
Distribution Date in an amount equal to their
respective Percentage Interests multiplied by the
aggregate amount distributed to such Class of
Certificates on such Distribution Date.
Distributions will be made on each Distribution
Date to holders of record on the preceding Record
Date, except that the final distribution in
respect of the Certificates will only be made upon
presentation and surrender of the Certificates at
the office or agency appointed by the Trustee for
that purpose in Chicago or New York City.
The percentages of the Formula Principal
Distribution Amount that are distributable to the
Senior Certificateholders, the Class M
Certificateholders, the Class B-1
Certificateholders and the Class B-2
Certificateholders are determined on the basis of
whether the Class M Principal Distribution Test or
the Class B Principal Distribution Test are met,
as described below. By their terms, neither of
such tests can be met prior to the Distribution
Date in August 2001. Consequently, unless the
Senior Certificate Balance is reduced to zero
prior to such Distribution Date, holders of the
Senior Certificates will receive 100% of the
Formula Principal Distribution Amount (in the
order described below) until at least such
Distribution Date.
PRIORITIES. On each Distribution Date, the
Available Distribution Amount, together with the
Reserve Account Draw Amount (as defined herein),
if any, will be distributed in the following
amounts and in the following order of priority:
(i) concurrently to the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9
Certificateholders, the Class A-1 Interest
Distribution Amount, the Class A-2 Interest
Distribution Amount, the Class A-3 Interest
Distribution Amount, the Class A-4 Interest
Distribution Amount, the Class A-5 Interest
Distribution Amount, the Class A-6 Interest
Distribution Amount, the Class A-7 Interest
Distribution Amount, the Class A-8 Interest
Distribution Amount and the Class A-9 Interest
Distribution Amount, respectively;
(ii) to the Senior Certificateholders, the
Senior Percentage of the Formula Principal
Distribution Amount in the following order of
priority:
(a) to the Class A-1 Certificateholders
until the Certificate Balance of the Class
A-1 Certificates is reduced to zero;
(b) to the Class A-2 Certificateholders
until the Certificate Balance of the Class
A-2 Certificates is reduced to zero;
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(c) to the Class A-3 Certificateholders
until the Certificate Balance of the Class
A-3 Certificates is reduced to zero;
(d) to the Class A-4 Certificateholders
until the Certificate Balance of the Class
A-4 Certificates is reduced to zero;
(e) to the Class A-5 Certificateholders
until the Certificate Balance of the Class
A-5 Certificates is reduced to zero;
(f) to the Class A-6 Certificateholders
until the Certificate Balance of the Class
A-6 Certificates is reduced to zero;
(g) to the Class A-7 Certificateholders
until the Certificate Balance of the Class
A-7 Certificates is reduced to zero;
(h) to the Class A-8 Certificateholders
until the Certificate Balance of the Class
A-8 Certificates is reduced to zero;
(i) to the Class A-9 Certificateholders
until the Certificate Balance of the Class
A-9 Certificates is reduced to zero;
(iii) to the Class M Certificateholders, the
Class M Interest Distribution Amount;
(iv) to the Class M Certificateholders, the
Class M Percentage of the Formula Principal
Distribution Amount until the Class M
Certificate Balance is reduced to zero;
(v) to the Class B-1 Certificateholders, the
Class B-1 Interest Distribution Amount;
(vi) to the Class B-1 Certificateholders, the
Class B Percentage of the Formula Principal
Distribution Amount until the Class B-1
Certificate Balance is reduced to zero;
(vii) to the Class B-2 Certificateholders, the
Class B-2 Interest Distribution Amount;
(viii) to the Class B-2 Certificateholders,
the Class B Percentage of the Formula
Principal Distribution Amount (less any
portion thereof distributed pursuant to clause
(vi) above) until the Class B-2 Certificate
Balance is reduced to zero;
(ix) if such Distribution Date is on or after
the earlier of (a) the Distribution Date in
August 2007 and (b) the first Distribution
Date on which the percentage equivalent of a
fraction, the numerator of which is the Pool
Scheduled Principal Balance (after giving
effect to distributions with respect to
principal) for such Distribution Date and the
denominator of which is the Cut-off Date Pool
Principal Balance, is less than or equal to
25%, to the Reserve Account, any remaining
Available Distribution Amount to the extent
necessary to increase the funds in the Reserve
Account to the Reserve Account Cap; and
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(x) to the Class R Certificateholders, any
remaining Available Distribution Amount.
Notwithstanding the foregoing, on any Distribution
Date on which the amount distributable (the
"initial distribution") to holders of the Class
B-2 Certificates pursuant to clause (viii) above
would cause (x) the sum of (i) the Class B-2
Certificate Balance and (ii) the amount on deposit
in the Reserve Account (in each case, after giving
effect to the initial distribution) (such sum, the
"Clause X Amount") to be less than (y) $5,239,906
(the "Clause Y Amount"), which is 2% of the
Cut-off Date Pool Principal Balance, then the
principal distribution to holders of the Class B-2
Certificates pursuant to clause (viii) above will
be reduced to such amount as will cause the Clause
X Amount to equal the Clause Y Amount, and the
Available Distribution Amount (allocable to
principal) that remains after such reduced
distribution to the Class B-2 Certificateholders
will be distributed pro rata to holders of the
Senior Certificates and the Class M Certificates
on the basis of their respective Certificate
Balances.
In addition, notwithstanding the prioritization of
the distribution of the Formula Principal
Distribution Amount to the holders of the Senior
Certificates pursuant to clause (ii) above, on a
Distribution Date, if any, in respect of which a
Deficiency Event (defined below) is in effect, the
portion of the Formula Principal Distribution
Amount for such Distribution Date that would
otherwise be distributed sequentially to the
holders of the Senior Certificates pursuant to
clause (ii) above will instead be distributed to
the holders of the Senior Certificates PRO RATA
based upon the Certificate Balance of each such
Class until the Certificate Balances of each of
the Senior Certificates have been reduced to zero.
A "Deficiency Event" will be in effect for any
Distribution Date as to which the Pool Scheduled
Principal Balance is equal to or less than the
aggregate Certificate Balance of the Senior
Certificates.
Furthermore, notwithstanding the foregoing, if the
percentage of the Formula Principal Distribution
Amount allocable to the holders of the Class A-9
Certificates on any Distribution Date pursuant to
clause (ii) above exceeds the Class A-9
Certificate Balance for such Distribution Date,
such excess will be distributed to the Class M and
Class B-1 Certificateholders (or the Class B-2
Certificateholders if the Certificate Balance of
the Class B-1 Certificates has been reduced to
zero) PRO RATA on the basis of the Class M and
Class B Percentages, respectively. If the
percentage of the Formula Principal Distribution
Amount allocable to the Class M Certificateholders
on any Distribution Date pursuant to clause (iv)
above exceeds the Class M Certificate Balance for
any such Distribution Date, such excess will be
distributed to the Class B-1 Certificateholders
until the Class B-1 Certificate Balance is reduced
to zero (and to the Class B-2 Certificateholders
thereafter).
DEFINITIONS. As to any Distribution Date, the
"Interest Distribution Amount" for any Class is
equal to the sum of (i) one
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month's interest at the Pass-Through Rate for that
Class on the Certificate Balance of that Class and
(ii) any previously undistributed shortfalls in
interest due to the Certificateholders of that
Class in respect of prior Distribution Dates. Any
shortfall in interest due to Certificateholders
will, to the extent legally permissible, bear
interest at the related Pass-Through Rate.
Interest will accrue with respect to each
Distribution Date in respect of the Series 1997-1
Regular Certificates during the one-month period
beginning on the 10th day of the month preceding
the month of such Distribution Date and ending on
the 9th day of the month of such Distribution
Date.
The "Senior Percentage" (which shall not be
greater than 100%) for a Distribution Date is the
percentage equivalent of a fraction, the numerator
of which is the Senior Certificate Balance
immediately prior to such Distribution Date and
the denominator of which is the sum of:
(i) the Senior Certificate Balance
immediately prior to such Distribution
Date,
(ii) if the Class M Principal Distribution
Test has been met, the Class M Certificate
Balance immediately prior to such
Distribution Date or, if the Class M
Principal Distribution Test has not been
met, zero, and
(iii) if the Class B Principal
Distribution Test has been met, the Class
B Certificate Balance immediately prior to
such Distribution Date or, if the Class B
Principal Distribution Test has not been
met, zero.
</TABLE>
The "Class M Percentage" (which shall not be
greater than 100%) for a Distribution Date is (i)
if the Class M Principal Distribution Test has
been met or the Senior Certificate Balance is zero
for such Distribution Date, the percentage
equivalent of a fraction, the numerator of which
is the Class M Certificate Balance immediately
prior to such Distribution Date and the
denominator of which is the sum of:
(a) the Senior Certificate Balance immediately
prior to such Distribution Date,
(b) the Class M Certificate Balance
immediately prior to such Distribution Date,
and
(c) if the Class B Principal Distribution Test
has been met, the Class B Certificate Balance
immediately prior to such Distribution Date,
or, if the Class B Principal Distribution Test
has not been met, zero,
or (ii) if the Class M Principal Distribution Test
has not been met and the Senior Certificate
Balance is not zero for such Distribution Date,
zero.
The "Class B Percentage" (which shall not be
greater than 100%) for a Distribution Date is (i)
if the Class B Principal Distribution Test has
been met or the Senior Certificate Balance and the
Class M Certificate Balance are zero for such
Distribution Date, the percentage equivalent of a
fraction, the
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numerator of which is the Class B Certificate
Balance immediately prior to such Distribution
Date and the denominator of which is the sum of:
(a) the Senior Certificate Balance immediately
prior to such Distribution Date,
(b) the Class M Certificate Balance
immediately prior to such Distribution Date,
and
(c) the Class B Certificate Balance
immediately prior to such Distribution Date,
or
(ii) if the Class B Principal Distribution Test
has not been met and the Senior Certificate
Balance and the Class M Certificate Balance are
not zero for such Distribution Date, zero.
Notwithstanding the foregoing, in no event will
(i) the Class M Percentage exceed the percentage
equal to 100% minus the Senior Percentage or (ii)
the Class B Percentage exceed the percentage equal
to 100% minus the sum of the Senior Percentage and
the Class M Percentage.
The "Class M Principal Distribution Test" will be
met if all of the following conditions are
satisfied:
(1) the Distribution Date is on or after the
Distribution Date in August 2001;
(2) the percentage equivalent of a fraction,
the numerator of which is the sum of (a) the
Class M Certificate Balance immediately prior
to such Distribution Date and (b) the Class B
Certificate Balance immediately prior to such
Distribution Date and the denominator of which
is the Pool Scheduled Principal Balance
immediately prior to such Distribution Date,
is equal to at least 26.25% (which is 1.5
times the percentage equivalent of the
fraction, the numerator of which is the sum of
(a) the Initial Class M Certificate Balance,
(b) the Initial Class B-1 Certificate Balance
and (c) the Initial Class B-2 Certificate
Balance and the denominator of which is the
Cut-off Date Pool Principal Balance);
(3) the Cumulative Realized Losses as of such
Distribution Date do not exceed (a) if such
Distribution Date is from and including August
2001 and up to and including July 2002, 6.0%
of the Cut-off Date Pool Principal Balance,
(b) if such Distribution Date is from and
including August 2002 and up to and including
July 2003, 7.0% of the Cut-off Date Pool
Principal Balance, (c) if such Distribution
Date is from and including August 2003 and up
to and including July 2004, 8.5% of the
Cut-off Date Pool Principal Balance, and (d)
if such Distribution Date is in or after
August 2004, 9.5% of the Cut-off Date Pool
Principal Balance;
(4) the Current Realized Loss Ratio as of such
Distribution Date does not exceed 2.5%;
(5) the Average Sixty-Day Delinquency Ratio as
of such Distribution Date does not exceed
3.5%; and
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(6) the Average Thirty-Day Delinquency Ratio
as of such Distribution Date does not exceed
5.5%.
The "Class B Principal Distribution Test" will be
met if all of the following conditions are
satisfied:
(1) the Distribution Date is on or after the
Distribution Date in August 2001;
(2) the percentage equivalent of a fraction,
the numerator of which is the Class B
Certificate Balance immediately prior to such
Distribution Date and the denominator of which
is the Pool Scheduled Principal Balance
immediately prior to such Distribution Date,
is equal to at least 13.50% (which is
approximately 1.5 times the percentage
equivalent of the fraction, the numerator of
which is the sum of (a) the Initial Class B-1
Certificate Balance and (b) the Initial Class
B-2 Certificate Balance and the denominator of
which is the Cut-off Date Pool Principal
Balance);
(3) the Cumulative Realized Losses as of such
Distribution Date do not exceed (a) if such
Distribution Date is from and including August
2001 and up to and including July 2002, 6.0%
of the Cut-off Date Pool Principal Balance,
(b) if such Distribution Date is from and
including August 2002 and up to and including
July 2003, 7.0% of the Cut-off Date Pool
Principal Balance, (c) if such Distribution
Date is from and including August 2003 and up
to and including July 2004, 8.5% of the
Cut-off Date Pool Principal Balance and (d) if
such Distribution Date is in or after August
2004, 9.5% of the Cut-off Date Pool Principal
Balance;
(4) the Current Realized Loss Ratio as of such
Distribution Date does not exceed 2.5%;
(5) the Average Sixty-Day Delinquency Ratio as
of such Distribution Date does not exceed
3.5%; and
(6) the Average Thirty-Day Delinquency Ratio
as of such Distribution Date does not exceed
5.5%.
The "Formula Principal Distribution Amount" in
respect of a Distribution Date equals the sum of
(a) the Total Regular Principal Amount (as defined
below) for such Distribution Date and (b) any
previously undistributed shortfalls in the
distribution of the Total Regular Principal Amount
in respect of prior Distribution Dates.
The "Total Regular Principal Amount" on each
Distribution Date is the sum of (i) the Scheduled
Principal Reduction Amount (defined below) for
such Distribution Date, (ii) the Scheduled
Principal Balance (defined below) of each Contract
which, during the related Collection Period, was
purchased by BankAmerica Housing Services on
account of certain breaches of representations and
warranties made by it in the Agreement, (iii) all
partial prepayments received during such related
Collection Period, (iv) the Scheduled Principal
Balance of each Contract that was prepaid in full
during such related
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Collection Period and (v) the Scheduled Principal
Balance of each Contract that became a Liquidated
Contract (defined below) during such related
Collection Period.
</TABLE>
The "Scheduled Principal Balance" of a Contract
for any Distribution Date is its principal balance
as of the Due Date in the Collection Period
immediately preceding such Distribution Date,
after giving effect to all previous partial
prepayments, all previous scheduled principal
payments (whether or not paid) and the scheduled
principal payment due on such Due Date, but
without giving effect to any adjustment due to
bankruptcy or similar proceedings.
The "Scheduled Principal Reduction Amount" for any
Distribution Date is an approximate calculation
(performed on an aggregate basis rather than on a
Contract-by-Contract basis) of the scheduled
payments of principal due during the related
Collection Period. Both of these terms are more
fully described herein under "Description of the
Certificates - Distributions" herein.
The "Pool Scheduled Principal Balance" for any
Distribution Date is equal to the Cut-off Date
Pool Principal Balance less the aggregate of the
Total Regular Principal Amounts for all prior
Distribution Dates.
In general, a "Liquidated Contract" is a defaulted
Contract as to which all amounts that the Servicer
expects to recover relating to such Contract
("Liquidation Proceeds") have been received. A
Liquidated Contract includes any defaulted
Contract in respect of which the related
Manufactured Home has been realized upon and
disposed of and the proceeds of such disposition
have been received.
The "Certificate Balance" for any Class as of any
Distribution Date is the Initial Certificate
Balance of that Class less all amounts previously
distributed to Certificateholders of that Class on
account of principal. The "Senior Certificate
Balance" as of any Distribution Date is the sum of
the Certificate Balances of the Senior
Certificates immediately prior to such
Distribution Date. The "Subordinate Certificate
Balance" as of any Distribution Date is the sum of
the Class M Certificate Balance, Class B-1
Certificate Balance and the Class B-2 Certificate
Balance immediately prior to such Distribution
Date. In no event shall the aggregate
distributions of principal to the holders of any
class of Offered Certificates and the Class B-2
Certificates exceed the Initial Class Certificate
Balances for such class of Offered Certificates or
the Initial Class B-2 Certificate Balance,
respectively.
Reserve Account............. On the Closing Date, the Trustee shall establish
an account (the "Reserve Account") for the benefit
of the Certificateholders. The Reserve Account
shall have an initial balance of zero on the
Closing Date. Commencing on the Distribution Date
which is the earlier of (a) the Distribution Date
in August 2007 and (b) the first Distribution Date
on which the percentage equivalent of a fraction,
the numerator of which is
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the Pool Scheduled Principal Balance (after giving
effect to distributions with respect to principal)
for such Distribution Date and the denominator of
which is the Cut-off Date Pool Principal Balance,
is less than 25%, the Trustee shall make a deposit
into the Reserve Account pursuant to clause (ix)
in the fourth paragraph under "Distributions"
above up to the Reserve Account Cap. On each
Distribution Date, the Trustee will withdraw from
the Reserve Account an amount (the "Reserve
Account Draw Amount") equal to the lesser of (a)
the amount then on deposit in the Reserve Account
and (b) the amount by which the aggregate of
amounts due to Certificateholders in clauses (i)
through (viii) under "Distributions" above exceeds
the Available Distribution Amount on such
Distribution Date and distribute such amount,
together with the Available Distribution Amount.
Funds in the Reserve Account will be invested in
Eligible Investments by the Trustee, and the net
investment earnings, if any, will be paid to the
Class R Certificateholders. "Eligible Investments"
means one or more common trust funds, collective
investment trusts or money market funds acceptable
to Moody's Investors Service, Inc. ("Moody's") and
Fitch Investors Service, L.P. ("Fitch") (as
evidenced by a letter from Moody's and Fitch to
such effect) or, if no such trusts or funds are
acceptable to Moody's and Fitch, any other
obligations acceptable to Moody's and Fitch.
On any Distribution Date, any funds on deposit in
the Reserve Account in excess of the Reserve
Account Cap (after giving effect to any Reserve
Account Draw Amount paid to the Certificateholders
on such date) will be withdrawn from the Reserve
Account and paid to the Class R
Certificateholders.
Amounts paid to the Class R Certificateholders
pursuant to the two immediately preceding
paragraphs will not be available to offset
shortfalls in distributions to holders of other
Classes of Certificates.
The Reserve Account is intended to enhance the
likelihood of regular receipt by the holders of
the Series 1997-1 Regular Certificates of the full
amount of the distributions due them and to afford
such holders protection against losses on
Liquidated Contracts, but no assurance can be
given that the Reserve Account will be sufficient
for such purpose.
The "Reserve Account Cap" shall be (i) as to any
Distribution Date (after giving effect to
distributions due thereon) after the Closing Date
and until none of the Offered Certificates remain
outstanding, $1,309,976 (which is 0.5% of the
Cut-off Date Pool Principal Balance) and (ii) as
to any Distribution Date (after giving effect to
distributions due thereon) after none of the
Offered Certificates remain outstanding, the
lesser of the then outstanding Class B-2
Certificate Balance and $1,309,976 (which is 0.5%
of the Cut-off Date Pool Principal Balance).
Subordination of the
Subordinate Certificates... The rights of the holders of the Subordinate
Certificates to
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receive distributions of available amounts in the
Trust Fund will be subordinated, to the extent
described herein, to such rights of the holders of
the Senior Certificates. This subordination is
intended to enhance the likelihood of regular
receipt by the holders of the Senior Certificates
of the full amount of interest and principal
distributable thereon and to afford such holders
protection against losses on Liquidated Contracts.
Similarly, the rights of the holders of the Class
B Certificates to receive distributions due them
from available amounts in the Trust Fund will be
subordinated, to the extent described herein, to
such rights of the holders of the Class M
Certificates, and the rights of the holders of the
Class B-2 Certificates to receive the
distributions due them from available amounts in
the Trust Fund will be subordinated, to the extent
described herein, to such rights of the holders of
the Class B-1 Certificates. Subject to the
subordination of the Subordinate Certificates to
the Senior Certificates, this subordination of the
Class B Certificates to the Class M Certificates
and of the Class B-2 Certificates to the Class M
and Class B-1 Certificates is intended to enhance
the likelihood of regular receipt by the holders
of the Class M Certificates and the holders of the
Class B-1 Certificates, respectively, of the full
amount of the distributions due them and to afford
such holders protection against losses on
Liquidated Contracts.
The protection afforded to the holders of Senior
Certificates by means of the subordination of the
Subordinate Certificates, to the Class M
Certificateholders by the subordination of the
Class B Certificates and to the Class B-1
Certificateholders by the subordination of the
Class B-2 Certificates (in each case, to the
extent described herein) will be accomplished by
the application of the Available Distribution
Amount (together with any Reserve Account Draw
Amount) in the order specified under
"Distributions" above. Accordingly, in the event
that the Available Distribution Amount (together
with any Reserve Account Draw Amount) on any
Distribution Date is not sufficient to permit the
distribution of the amount of interest and the
specified portion of the Formula Principal
Distribution Amount due to the holders of any
Class of Certificates, the subordination is
intended to protect such Certificateholders by the
right of such Certificateholders to receive
distributions of the Available Distribution Amount
(together with any Reserve Account Draw Amount) in
respect of interest and the Formula Principal
Distribution Amount that would otherwise have been
distributable to the Certificateholders of any
Class subordinate in priority of distribution to
such Class, until any shortfall in distributions
to the holders of the related senior Class or
Classes of Certificates in respect thereof has
been satisfied, to the extent described herein.
See "Description of the
Certificates--Distributions."
Losses on Liquidated
Contracts.................. As described above, the Total Regular Principal
Amount distributable to the holders of the Series
1997-1 Regular Certificates on each Distribution
Date includes the Scheduled
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Principal Balance of each Contract that became a
Liquidated Contract during the immediately
preceding Collection Period. The Liquidation
Proceeds, net of (i) certain expenses incurred to
liquidate such Liquidated Contract, (ii) all
accrued and unpaid interest thereon and (iii) all
Monthly Advances (as defined below) required to be
made in respect of such Liquidated Contract (the
"Net Liquidation Proceeds"), may be less than the
Scheduled Principal Balance of such Liquidated
Contract. Under such circumstances, the loss on
the Liquidated Contract, in the amount of the
deficiency between the Net Liquidation Proceeds
and the Scheduled Principal Balance of such
Liquidated Contract, may be covered to the extent
of the amount (the "Excess Interest"), if any, by
which the interest collected on nondefaulted
Contracts during the same Collection Period
exceeds interest distributions due to the holders
of the Series 1997-1 Regular Certificates and the
Monthly Servicing Fee.
The effect of any losses on Liquidated Contracts
during a Collection Period in excess of the
aggregate of Excess Interest generally will be to
reduce the Pool Scheduled Principal Balance below
the aggregate Certificate Balance of the
Certificates (excluding the Class R Certificates)
on the related Distribution Date. In the event the
Pool Scheduled Principal Balance falls below the
aggregate Certificate Balance of the Certificates
on any Distribution Date, shortfalls and/or losses
will arise with respect to the Certificates, which
shortfalls and/or losses will be borne by the
Class B-2 Certificateholders, the Class B-1
Certificateholders, the Class M Certificateholders
and the Senior Certificateholders, in that order.
Monthly Advances............ For each Distribution Date, the Servicer will be
obligated to make an advance (a "Monthly Advance")
equal to the lesser of (i) delinquent scheduled
payments of principal and interest on the
Contracts that were due in the preceding
Collection Period and (ii) the amount, if any, by
which scheduled distributions of principal and
interest due on the Series 1997-1 Regular
Certificates exceeds certain amounts on deposit in
the Certificate Account (as hereinafter defined)
as of the last day of the immediately preceding
Collection Period, except to the extent, in the
Servicer's judgment, such advance would not be
recoverable from related late payments,
Liquidation Proceeds or otherwise. Advances are
reimbursable to the Servicer as described herein
under "Description of the Certificates--
Advances."
</TABLE>
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Security Interests in the
Manufactured Homes;
Transfer of Contracts and
Security Interests;
Repurchase or Substitution
Obligations................ In connection with the issuance of the
Certificates, BankAmerica Housing Services will
convey to the Trustee all of its interests in the
Contracts. The certificates of title for the
Manufactured Homes will show BankAmerica Housing
Services as the lienholder, and the UCC financing
statements, where applicable, will show
BankAmerica Housing Services as secured party.
Because of the expense and administrative
inconvenience involved, neither the certificates
of title for the Manufactured Homes nor the UCC
financing statements evidencing the security
interest in such Manufactured Homes will be
notated or amended, as the case may be, to change
the lienholder specified therein to the Trustee.
Similarly, BankAmerica Housing Services will not
record an assignment to the Trustee of the
mortgage or deed of trust securing each Land Home
and Land-in-Lieu Contract. In some states, in the
absence of such a notation or amendment or
recordation of assignment, the assignment to the
Trustee of the security interest in the
Manufactured Homes or the mortgage or deed of
trust securing a Land Home or Land-in-Lieu
Contract may not be effective against creditors of
BankAmerica Housing Services. However, the Seller
will not be obligated to repurchase or substitute
a Contract solely on the basis of the failure by
BankAmerica Housing Services to cause any such
notation or amendment to be made with respect to a
document of title or UCC financing statement
relating to a Manufactured Home, except under
certain limited specified circumstances described
herein under "Description of the Certificates -
Conveyance of Contracts."
Under the Agreement, the Seller will agree to
repurchase, or at its option substitute another
contract for, a Contract sold by it if it has
failed to perfect a first-priority security
interest in such Manufactured Home or in the event
of certain violations of federal and state
consumer protection laws applicable to creditors
or assignees of the Contracts, unless such failure
does not materially and adversely affect the
Trustee's interest in the Contract or such failure
has been cured.
Under certain federal and state laws governing the
perfection of security interests in manufactured
homes and enforcement of rights to realize upon
the value of manufactured homes, the Trustee's
security interest in a Manufactured Home could be
rendered subordinate to the interest of other
parties if the Manufactured Home (that does not
secure a Land Home or Land-in-Lieu Contract) has
been affixed to real estate or is relocated to
another state without reperfection of the security
interest. See "Risk Factors--Security Interest in
the Manufactured Homes; Transfer of Contracts and
Security Interest" and "Certain Legal Aspects of
the Contracts -Security Interests in the
Manufactured Homes" in the Prospectus.
</TABLE>
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BankAmerica Housing Services, as Servicer, will
maintain possession of the Contract documents, and
the Seller will stamp or cause to be stamped each
Contract with a legend indicating that the
Contract has been assigned to the Trustee.
Optional Termination and
Termination Auction........ The Servicer has the option to purchase from the
Trust Fund all Contracts then outstanding and all
other property in the Trust Fund on any
Distribution Date after the Distribution Date if,
among other conditions, the Pool Scheduled
Principal Balance is less than 10% of the Cut-off
Date Pool Principal Balance. See "Description of
the Certificates--Optional Termination and
Termination Auction" herein. During that period,
the Servicer also may direct the Trustee to
conduct a Termination Auction for the sale of all
Contracts then outstanding in the Trust Fund, and,
in any event, if the Servicer has not exercised
the option call within 90 days of the first
Distribution Date when the Pool Scheduled
Principal Balance is less than 10% of the Cut-off
Date Pool Principal Balance, the Servicer shall
direct the Trustee to conduct a Termination
Auction. See "Description of the
Certificates--Optional Termination and Termination
Auction" herein. Any early termination of the
Trust Fund and early retirement of the
Certificates that results from the Servicer's
exercise of the option call or a successful
Termination Auction may have an effect on an
investor's yield on such Certificates. See
"Prepayment and Yield Considerations" herein and
in the Prospectus.
Registration of Offered
Certificates............... The Offered Certificates initially will be
represented by certificates registered in the name
of Cede & Co. ("Cede") as the nominee of The
Depository Trust Company ("DTC"), and will only be
available in the form of book-entries on the
records of DTC and participating members thereof.
Certificates representing the Offered Certificates
will be issued in definitive form only under the
limited circumstances described herein. All
references herein to "holders" or
"Certificateholders" shall reflect the rights of
beneficial owners of the Offered Certificates
("Certificate Owners") as they may indirectly
exercise such rights through DTC and participating
members thereof, except as otherwise specified
herein. See "Risk Factors" and "Description of the
Certificates--Global Certificates" in the
Prospectus and "Description of the
Certificates--General" and "Description of the
Certificates--Distributions" herein.
Federal Income Tax
Consequences............... For federal income tax purposes, an election will
be made to treat certain assets of the Trust Fund
as a real estate mortgage investment conduit
("REMIC"). The Series 1997-1 Regular Certificates
will constitute "regular interests" in the REMIC
and generally will be treated as debt instruments
of the Trust Fund for federal income tax purposes
with payment terms equivalent to the terms of such
Certificates. The Series 1997-1 Residual
Certificates will be treated as the "residual
interest" in the REMIC for federal income tax
purposes. Holders of the Series
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1997-1 Regular Certificates that would otherwise
report income under a cash method of accounting
will be required to include in income interest on
the Series 1997-1 Regular Certificates (including
original issue discount ("OID"), if any) in
accordance with the accrual method of accounting.
The Offered Certificates, depending on their
respective issue prices, may be issued with OID
for federal income tax purposes. See "Certain
Federal Income Tax Consequences" herein and in the
Prospectus.
ERISA Considerations........ SENIOR CERTIFICATES. Subject to the conditions and
discussion set forth herein, the Senior
Certificates may be purchased by employee benefit
plans that are subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
See "ERISA Considerations" herein and in the
Prospectus.
SUBORDINATE CERTIFICATES. Unless the opinion
referred to under "ERISA Considerations - Class M
and Class B-1 Certificates" is delivered to the
Trustee, an employee benefit plan or other plan
subject to ERISA and/or Section 4975 of the
Internal Revenue Code of 1986, as amended (the
"Code") will not be permitted to purchase or hold
the Class M or the Class B Certificates as such
actions may give rise to a transaction prohibited
under ERISA or Section 4975 of the Code. See
"ERISA Considerations" herein and in the
Prospectus.
Legal Investment............ The Senior Certificates and the Class M
Certificates at the time of issuance will qualify
as "mortgage related securities" under the
Secondary Mortgage Market Enhancement Act of 1984,
as amended ("SMMEA") and, as such, will constitute
legal investments for certain types of investors
to the extent provided in SMMEA. Such institutions
should consult their own legal advisors in
determining whether and to what extent the Senior
Certificates and the Class M Certificates
constitute legal investments for such investors.
Because the Class B-1 Certificates will not, at
the time of issuance, be rated in one of the two
highest rating categories of Moody's and Fitch,
the Class B-1 Certificates will not constitute
"mortgage related securities" for purposes of
SMMEA. Accordingly, many institutions with legal
authority to invest in more highly rated
securities based on manufactured housing
obligations may not be legally authorized to
invest in the Class B-1 Certificates. No
representation is made as to any regulatory
requirements or considerations (including without
limitation regulatory capital or permissible
investment requirements) applicable to the
purchase of the Class B-1 Certificates by banks,
savings and loan associations or other financial
institutions. Such institutions should consult
their own legal advisors in determining whether
and to what extent the Offered Certificates
constitute legal investments for such investors.
See "Legal Investment" herein and in the
Prospectus.
</TABLE>
S-20
<PAGE>
<TABLE>
<S> <C>
Rating...................... It is a condition to the issuance of the Offered
Certificates that the Senior Certificates be rated
at least "Aaa" by Moody's and "AAA" by Fitch, that
the Class M Certificates be rated at least "Aa3"
by Moody's and "AA-" by Fitch and that the Class
B-1 Certificates be rated at least "Baa2" by
Moody's and "BBB" by Fitch. The Seller has not
requested ratings on the Offered Certificates by
any rating agency other than Moody's and Fitch.
However, there can be no assurance as to whether
any other rating agency will rate any or all of
the Offered Certificates, or if it does, what
rating would be assigned by any such other rating
agency. A rating on any or all of the Offered
Certificates by certain other rating agencies, if
assigned at all, may be lower than the rating
assigned to such Certificates by Moody's and
Fitch. See "Ratings" herein and in the Prospectus.
A security rating is not a recommendation to buy,
sell or hold securities and may be subject to
revision or withdrawal at any time.
</TABLE>
S-21
<PAGE>
RISK FACTORS
The discussion under "Risk Factors" in the Prospectus should be read
carefully in connection with a decision to invest in any of the Offered
Certificates. The following discussion supplements, and does not replace or
supersede the discussion under "Risk Factors" in the Prospectus, unless the
context expressly so provides.
1. LIMITED LIQUIDITY. Only the Offered Certificates are being offered
hereby. The Underwriters intend to make a secondary market in the Offered
Certificates, but have no obligation to do so. There can be no assurance that a
secondary market will develop for the Offered Certificates or, if it does
develop, that it will provide the holders of any Class of Offered Certificates
with liquidity of investment or that it will remain for the term of such Class
of Offered Certificates.
The Class B-1 Certificates will not constitute "mortgage related securities"
for purposes of SMMEA. Accordingly, many institutions with legal authority to
invest in SMMEA securities will not be able to invest in the Class B-1
Certificates, limiting the market of such securities.
2. DISTRIBUTIONS OF PRINCIPAL. The yield to maturity on the Class M and
Class B-1 Certificates will be affected by the rate at which Contracts become
Liquidated Contracts and the severity of ensuing losses on such Liquidated
Contracts and the timing thereof. For any Distribution Date before the Class M
Principal Distribution Test has been met on which the Senior Certificate Balance
has not been reduced to zero, the Senior Certificateholders will receive all
payments of principal that are made on the Contracts. For any Distribution Date
after the Class M Principal Distribution Test has been met but before the Class
B Distribution Test has been met on which each of the Senior Certificate Balance
and the Class M Certificate Balance has not been reduced to zero, the Senior
Certificateholders and the Class M Certificateholders will receive all payments
of principal that are made on the Contracts. It is not possible to predict the
timing of the occurrence of the Distribution Date, if any, on which the Senior
Certificate Balance or the Class M Certificate Balance, as applicable, will be
reduced to zero, which occurrences will be affected by the rate of voluntary
prepayments in addition to prepayments due to default and subsequent
liquidation. Prepayments on Contracts may be influenced by a variety of
economic, geographic, social and other factors, including repossessions, aging,
seasonality, market interest rates, changes in housing needs, job transfers and
unemployment. See "Prepayment and Yield Considerations" herein and in the
Prospectus.
3. NO RECOURSE. Neither BankAmerica Housing Services nor any of its
affiliates will have any obligations with respect to the Offered Certificates
except, in the case of the Seller, for obligations arising from certain of its
representations and warranties with respect to the Contracts and for certain
contractual servicing obligations, each as further described herein. SUBJECT
ONLY TO THE FOREGOING EXCEPTIONS, THE OFFERED CERTIFICATES WILL NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION OR BANKAMERICA HOUSING SERVICES, THEIR PARENT CORPORATION,
BANKAMERICA CORPORATION, OR ANY AFFILIATE THEREOF, AND ASSETS IN THE TRUST FUND
WILL CONSTITUTE THE ONLY SOURCE OF FUNDS FOR PAYMENT ON THE OFFERED
CERTIFICATES. None of the Certificates will include the benefit of a guarantee
or limited guarantee of the Seller or an affiliate thereof. NONE OF THE OFFERED
CERTIFICATES NOR THE UNDERLYING CONTRACTS OR ANY COLLECTIONS THEREON WILL BE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
4. SUBORDINATION OF CLASS M AND CLASS B CERTIFICATES. The rights of the
holders of the Class M Certificates to receive distributions of available
amounts in the Trust Fund will be subordinate, to the extent described herein,
to the rights of the holders of the Senior Certificates. Consequently, if
shortfalls and/or losses arise with respect to the Certificates, they will be
borne by the Class M Certificateholders before they are borne by the Senior
Certificateholders. The rights of the holders of the Class B Certificates to
receive distributions of available amounts in the Trust Fund will be
subordinate, to the extent described herein, to the rights of the holders of the
Class M Certificates. Consequently, if shortfalls and/
S-22
<PAGE>
or losses arise with respect to the Certificates, they will be borne by the
Class B Certificateholders before they are borne by the Class M
Certificateholders.
5. PREPAYMENTS MAY AFFECT PASS-THROUGH RATES. The Pass-Through Rate for
each of the Certificates of Class A-9 and Class B-2 on any Distribution Date
will be adjusted so as not to exceed the weighted average of the Net Contract
Rates in the Contract Pool. Disproportionate prepayments (including prepayments
due to liquidations and repurchases by the Seller as required or permitted by
the Agreement) of Contracts with Net Contract Rates in excess of the initial
Pass-Through Rates (each an "Initial Pass-Through Rate") for the Class A-9 and
Class B-2 Certificates will increase the possibility that the Pass-Through Rate
for such Classes of Certificates will be adjusted to an amount lower than the
related Initial Pass-Through Rate. There is no mechanism to compensate Holders
of such Classes of Certificates for any such reduction. Any difference between
interest at the actual Pass-Through Rate and interest at the Initial
Pass-Through Rate will not constitute a shortfall, and any such difference will
be foregone permanently.
THE CONTRACT POOL
Each Contract was originated by BankAmerica Housing Services on an
individual basis in the ordinary course of its business. A description of
BankAmerica Housing Services' general practices with respect to the origination
or purchase of manufactured housing contracts similar to the Contracts is set
forth in the Prospectus under "The Sellers -- Loan Originations" and "The
Sellers -- Underwriting Policies."
On the date of initial issuance of the Offered Certificates, the Seller will
convey to the Trust Fund the Contracts. The Contract Pool in the Trust Fund will
consist of such Contracts. BankAmerica Housing Services, as Servicer, will
obtain and maintain possession of all Contract documents.
The Contracts are all fixed rate actuarial Contracts. Some of the Contracts
in the Contract Pool are secured by a lien on real estate. None of the Contracts
(i) was purchased in bulk from an unrelated third party, (ii) is insured in
whole or in part or guaranteed in whole or in part, as applicable, by the
Veterans Administration, the Federal Housing Administration or by any other
governmental entity or instrumentality, (iii) is amortized using the "simple
interest" amortization method or (iv) has a variable Contract Rate or a Contract
Rate which steps up on particular dates.
Management of BankAmerica Housing Services estimates that in excess of 90%
of the Manufactured Homes are used as primary residences by the Obligors under
the Contracts secured by such Manufactured Homes.
As of the Cut-off Date, the Contract Rates on the Contracts ranged from
8.00% to 13.50%. The weighted average Contract Rate of the Contracts as of the
Cut-off Date was approximately 10.72%. As of the Cut-off Date, the Contracts had
remaining scheduled maturities of not more than 360 months, and original
scheduled maturities of at least 22 months but not more than 362 months. As of
the Cut-off Date, the Contracts had a weighted average remaining term to
maturity of approximately 277 months, and a weighted average original term to
scheduled maturity of approximately 280 months. The average outstanding
principal balance of the Contracts as of the Cut-off Date was approximately
$29,877 and the outstanding principal balances of the Contracts as of the
Cut-off Date ranged from approximately $2,378 to $121,824. The weighted average
loan-to-value ratio for the Contracts at origination was approximately 89.57%
and the loan-to-value ratio of the Contracts at origination ranged from 14% to
100%. "Value" in such calculation is equal to the stated cash sale price of such
Manufactured Home, including sales and other taxes, plus, to the extent
financed, filing and recording fees imposed by law, and premiums for related
insurance. BankAmerica Housing Services' underwriting practices regarding
loan-to-value ratios of Contracts it originates or purchases are set forth in
the Prospectus under "The Sellers -- Loan Originations" and "The
Sellers -- Underwriting Policies." Manufactured homes, unlike site-built homes,
generally depreciate in value, and it has been BankAmerica Housing Services'
experience that, upon repossession, the market value of a manufactured home
securing a manufactured housing contract is
S-23
<PAGE>
generally lower than the principal balance of the related manufactured housing
contract. Certain statistical information relating to the average percentage of
principal recovered upon liquidation of certain manufactured housing contracts
is set forth herein and in the Prospectus under "The Sellers -- Delinquency and
Loan Loss/Repossession Experience." Such statistical information is included
herein and therein only for illustrative purposes. There is no assurance that
the Contracts have characteristics that are similar to the manufactured housing
contracts to which such statistical information relates. In addition, the
percentage recovery of principal on liquidation of manufactured housing
contracts historically has been adversely affected by downturns in regional or
local economic conditions. These regional or local economic conditions are often
volatile, and no predictions can be made regarding future economic loss upon
liquidation. In light of the foregoing, no assurance can be given that the
percentage of principal recovered upon liquidation of defaulted Contracts will
be similar to any statistical information contained herein. See "The
Sellers -- Delinquency and Loan Loss/Repossession Experience" herein and in the
Prospectus.
The Contracts are secured by Manufactured Homes located in 45 states;
approximately 9.41% of the Contracts by outstanding principal balance as of the
Cut-off Date were secured by Manufactured Homes located in Georgia, 9.23% in
Texas, 8.42% in Alabama, 6.68% in North Carolina, 6.05% in Florida. No other
state represented more than 5% (by outstanding principal balance as of the
Cut-off Date) of the Contracts.
Approximately 79% of the Contracts by outstanding principal balance as of
the Cut-off Date are secured by Manufactured Homes which were new at the time
the related Contracts were originated, and approximately 21% of the Contracts by
outstanding principal balance as of the Cut-off Date are secured by Manufactured
Homes which were used at the time the related Contracts were originated.
Approximately 7.32% of the Contracts by outstanding principal balance as of the
Cut-off Date are secured by liens on real estate as well as on Manufactured
Homes. See "Certain Legal Aspects of the Contracts" herein.
S-24
<PAGE>
Set forth below is a description of certain additional characteristics of
the Contracts:
GEOGRAPHICAL DISTRIBUTION OF MANUFACTURED HOMES AS OF ORIGINATION
<TABLE>
<CAPTION>
Aggregate
Principal
Number of Balance % of Contract Pool By
Contracts Outstanding Outstanding Principal Balance
State As of Cut-off Date As of Cut-off Date As of Cut-off Date (1)
- -------------------------------------------- ------------------- ------------------ -----------------------------
<S> <C> <C> <C>
Alabama..................................... 682 $ 22,073,098.39 8.42%
Arizona..................................... 318 11,359,719.23 4.34
Arkansas.................................... 242 7,047,537.93 2.69
California.................................. 95 3,367,209.78 1.29
Colorado.................................... 152 4,436,130.07 1.69
Delaware.................................... 42 1,089,661.21 0.42
Florida..................................... 462 15,863,500.40 6.05
Georgia..................................... 723 24,661,407.65 9.41
Idaho....................................... 47 1,441,224.52 0.55
Illinois.................................... 95 2,551,144.07 0.97
Indiana..................................... 162 3,837,995.44 1.46
Iowa........................................ 56 1,521,641.76 0.58
Kansas...................................... 77 2,209,625.01 0.84
Kentucky.................................... 441 11,656,487.74 4.45
Louisiana................................... 277 8,480,275.58 3.24
Maine....................................... 22 732,723.59 0.28
Maryland.................................... 39 1,137,791.52 0.43
Michigan.................................... 164 4,542,183.65 1.73
Minnesota................................... 69 1,537,987.26 0.59
Mississippi................................. 231 5,999,779.37 2.29
Missouri.................................... 218 5,911,656.53 2.26
Montana..................................... 52 1,755,468.97 0.67
Nebraska.................................... 59 1,798,337.36 0.69
Nevada...................................... 83 3,435,805.02 1.31
New Hampshire............................... 8 244,496.15 0.09
New Jersey.................................. 10 243,756.64 0.09
New Mexico.................................. 214 6,341,870.09 2.42
New York.................................... 141 3,696,508.49 1.41
North Carolina.............................. 611 17,504,033.85 6.68
North Dakota................................ 16 286,777.52 0.11
Ohio........................................ 182 4,652,636.27 1.78
Oklahoma.................................... 253 7,781,448.03 2.97
Oregon...................................... 68 2,122,899.14 0.81
Pennsylvania................................ 260 6,379,595.80 2.44
South Carolina.............................. 376 11,869,841.05 4.53
South Dakota................................ 35 823,815.38 0.31
Tennessee................................... 371 10,662,747.36 4.07
Texas....................................... 798 24,172,780.61 9.23
Utah........................................ 19 647,283.22 0.25
Vermont..................................... 7 193,530.00 0.07
Virginia.................................... 195 5,216,498.67 1.99
Washington.................................. 59 2,298,070.29 0.88
West Virginia............................... 240 6,000,549.93 2.29
Wisconsin................................... 60 1,406,795.92 0.54
Wyoming..................................... 38 1,000,948.84 0.38
----- ------------------ -------
Total................................... 8,769 $ 261,995,275.30 100.00%
----- ------------------ -------
----- ------------------ -------
</TABLE>
- --------------------------
(1) Entries may not add to 100.00% due to rounding.
S-25
<PAGE>
YEAR OF ORIGINATION OF CONTRACTS
<TABLE>
<CAPTION>
% OF CONTRACT POOL
BY OUTSTANDING
AGGREGATE PRINCIPAL PRINCIPAL BALANCE
NUMBER OF CONTRACTS BALANCE OUTSTANDING AS OF CUT-OFF DATE
YEAR OF ORIGINATION AS OF CUT-OFF DATE AS OF CUT-OFF DATE (1)
- --------------------------------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
1997......................................... 8,769 $ 261,995,275.30 100.00%
----- -------------------- -------
Total.................................... 8,769 $ 261,995,275.30 100.00%
----- -------------------- -------
----- -------------------- -------
</TABLE>
DISTRIBUTION OF ORIGINAL PRINCIPAL BALANCES OF CONTRACTS (1)
<TABLE>
<CAPTION>
% OF CONTRACT POOL
BY OUTSTANDING
AGGREGATE PRINCIPAL PRINCIPAL BALANCE
NUMBER OF CONTRACTS BALANCE OUTSTANDING AS OF CUT-OFF DATE
ORIGINAL CONTRACT AMOUNT AS OF CUT-OFF DATE AS OF CUT-OFF DATE (2)
- --------------------------------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
$0 - 5,000................................... 7 $ 29,972.00 0.01%
$5,001 - 7,500............................... 72 466,445.51 0.18
$7,501 - 10,000.............................. 288 2,483,964.01 0.95
$10,001 - 12,500............................. 359 4,016,338.96 1.53
$12,501 - 15,000............................. 500 6,818,348.63 2.60
$15,001 - 17,500............................. 527 8,498,617.01 3.24
$17,501 - 20,000............................. 528 9,829,242.29 3.75
$20,001 - 22,500............................. 609 12,876,891.87 4.91
$22,501 - 25,000............................. 705 16,640,893.23 6.35
$25,001 - 27,500............................. 737 19,256,075.10 7.35
$27,501 - 30,000............................. 695 19,902,984.95 7.60
$30,001 - 32,500............................. 627 19,488,777.41 7.44
$32,501 - 35,000............................. 490 16,439,386.10 6.27
$35,001 - 40,000............................. 803 29,987,416.40 11.45
$40,001 - 45,000............................. 561 23,745,873.97 9.06
$45,001 - 50,000............................. 406 19,160,820.33 7.31
$50,001 - 55,000............................. 319 16,641,359.72 6.35
$55,001 - 60,000............................. 184 10,510,159.53 4.01
$60,001 - 65,000............................. 125 7,775,752.32 2.97
$65,001 - 70,000............................. 77 5,170,708.45 1.97
$70,001 - 75,000............................. 41 2,948,051.29 1.13
$75,001 - 80,000............................. 38 2,928,717.12 1.12
$80,001 - 85,000............................. 28 2,303,851.05 0.88
$85,001 - 90,000............................. 15 1,309,639.18 0.50
$90,001 - 95,000............................. 12 1,108,917.49 0.42
$95,001 - 100,000............................ 5 482,104.78 0.18
]$100,001.................................... 11 1,173,966.60 0.45
----- -------------------- -------
Total.................................... 8,769 $ 261,995,275.30 100.00%
----- -------------------- -------
----- -------------------- -------
</TABLE>
- --------------------------
(1) The greatest original Contract principal balance is $121,906.29, which
represents 0.047% of the outstanding principal balance of the Contracts as
of the Cut-off Date.
(2) Entries may not add to 100.00% due to rounding.
S-26
<PAGE>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
% OF CONTRACT POOL
BY OUTSTANDING
AGGREGATE PRINCIPAL PRINCIPAL BALANCE
NUMBER OF CONTRACTS BALANCE OUTSTANDING AS OF CUT-OFF DATE
LOAN-TO-VALUE RATIO (1) AS OF CUT-OFF DATE AS OF CUT-OFF DATE (2)
- --------------------------------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
Less than or equal to 50%.................... 78 $ 1,288,698.57 0.49%
51-60%....................................... 95 1,935,060.47 0.74
61-70%....................................... 154 3,247,937.68 1.24
71-80%....................................... 862 21,241,269.16 8.11
81-85%....................................... 660 19,866,195.87 7.58
86-90%....................................... 3,395 100,395,492.95 38.32
91-95%....................................... 3,404 110,059,679.64 42.01
96-100%...................................... 121 3,960,940.96 1.51
----- -------------------- -------
Total.................................... 8,769 $ 261,995,275.30 100.00%
----- -------------------- -------
----- -------------------- -------
</TABLE>
- --------------------------
(1) Rounded to the nearest 1%. The definition of "Value" is set forth under "The
Contract Pool" above. Manufactured Homes, unlike site-built homes, generally
depreciate in value, and it should generally be expected, especially with
Contracts with high loan-to-value ratios at origination, that at any time
after the origination of a Contract, the market value of the Manufactured
Home securing such Contract may be lower than the outstanding principal
balance of such Contract.
(2) Entries may not add to 100.00% due to rounding.
S-27
<PAGE>
DISTRIBUTION OF CONTRACT RATES
<TABLE>
<CAPTION>
% OF CONTRACT POOL
BY OUTSTANDING
AGGREGATE PRINCIPAL PRINCIPAL BALANCE
NUMBER OF CONTRACTS BALANCE OUTSTANDING AS OF CUT-OFF DATE
RANGES OF CONTRACTS BY CONTRACT RATE AS OF CUT-OFF DATE AS OF CUT-OFF DATE (1)
- --------------------------------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
8.00%........................................ 114 $ 5,791,785.42 2.21%
8.25%........................................ 226 11,808,967.82 4.51
8.50%........................................ 199 9,038,670.48 3.45
8.75%........................................ 141 5,920,328.14 2.26
9.00%........................................ 151 5,908,161.06 2.26
9.25%........................................ 154 7,519,117.21 2.87
9.50%........................................ 233 9,476,574.38 3.62
9.75%........................................ 281 8,989,420.07 3.43
10.00%....................................... 362 12,662,538.30 4.83
10.25%....................................... 578 21,748,486.24 8.30
10.50%....................................... 625 22,310,615.90 8.52
10.75%....................................... 653 17,640,241.15 6.73
11.00%....................................... 655 17,824,109.79 6.80
11.25%....................................... 444 15,949,630.85 6.09
11.50%....................................... 455 16,137,864.73 6.16
11.75%....................................... 633 16,439,677.93 6.27
12.00%....................................... 950 22,602,202.58 8.63
12.25%....................................... 512 9,393,821.96 3.59
12.50%....................................... 481 9,173,545.40 3.50
12.75%....................................... 83 1,610,852.45 0.61
13.00%....................................... 105 1,942,687.32 0.74
13.25%....................................... 288 4,563,316.43 1.74
13.50%....................................... 446 7,542,659.69 2.88
----- -------------------- -------
Total.................................... 8,769 $ 261,995,275.30 100.00%
----- -------------------- -------
----- -------------------- -------
</TABLE>
- --------------------------
(1) Entries may not add to 100.00% due to rounding.
S-28
<PAGE>
REMAINING MONTHS TO MATURITY
<TABLE>
<CAPTION>
% OF CONTRACT POOL
BY OUTSTANDING
AGGREGATE PRINCIPAL PRINCIPAL BALANCE
NUMBER OF CONTRACTS BALANCE OUTSTANDING AS OF CUT-OFF DATE
MONTHS REMAINING AS OF CUT-OFF DATE AS OF CUT-OFF DATE AS OF CUT-OFF DATE (1)
- --------------------------------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
Greater than 0 and less than or
equal to 30................................ 5 $ 18,713.25 0.01%
Greater than 31 and less than or equal to
60......................................... 153 1,480,477.74 0.57
Greater than 61 and less than or equal to
90......................................... 342 4,463,246.93 1.70
Greater than 91 and less than or equal to
120........................................ 715 11,187,614.53 4.27
Greater than 121 and less than or equal to
150........................................ 245 4,061,780.44 1.55
Greater than 151 and less than or equal to
180........................................ 1,708 35,059,775.81 13.38
Greater than 181 and less than or equal to
210........................................ 9 257,861.84 0.10
Greater than 211 and less than or equal to
240........................................ 2,186 63,193,092.67 24.12
Greater than 241 and less than or equal to
270........................................ 6 221,864.52 0.08
Greater than 271 and less than or equal to
300........................................ 769 27,340,742.81 10.44
Greater than 301 and less than or equal to
330........................................ 11 455,903.16 0.17
Greater than 331 and less than or equal to
360........................................ 2,620 114,254,201.60 43.61
----- -------------------- -------
Total.................................... 8,769 $ 261,995,275.30 100.00%
----- -------------------- -------
----- -------------------- -------
</TABLE>
- --------------------------
(1) Entries may not add to 100.00% due to rounding.
S-29
<PAGE>
THE SELLER
The following information supplements the information in the Prospectus
under the heading "The Sellers."
The volume of manufactured housing contracts originated by SPHSI (the
business predecessor of BankAmerica Housing Services, as described in the
Prospectus under "The Sellers -- BankAmerica Housing Services"), BankAmerica
Housing Services or purchased by SPHSI or BankAmerica Housing Services from
dealers on an individual basis for the periods indicated below and certain other
information at the end of such periods are as follows:
CONTRACTS ORIGINATED OR PURCHASED ON AN INDIVIDUAL BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST
QUARTER
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
---------- ---------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Principal Balance of Contracts
Purchased (1)(2)................. $ 758,757 $ 873,227 $ 1,248,346 $ 2,586,896 $ 2,990,081 $ 611,056
Number of Contracts Purchased
(1).............................. 32,752 35,645 46,865 87,407 91,033 17,331
Average Contract Size (2).......... $ 23.2 $ 24.5 $ 26.6 $ 29.6 $ 32.8 $ 35.3
Weighted Average Contract Rate
(2).............................. 11.55% 10.03% 10.68% 10.04% 9.52% 9.41%
Number of Regional Offices (3)..... 23 26 35 38 40 46
</TABLE>
- --------------------------
(1) Does not include any portfolios acquired in bulk from third parties.
Includes only contracts originated by SPHSI or BankAmerica Housing Services
or purchased from dealers.
(2) As of period end.
(3) Includes regional offices in the United States originating or purchasing
manufactured housing contracts as of the end of the time period.
The following table shows the size of the portfolio of manufactured housing
contracts serviced (including contracts already in repossession) by SPHSI and
now BankAmerica Housing Services through the manufactured housing regional
office system as of the dates indicated:
SIZE OF SERVICED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST
QUARTER
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Unpaid Principal Balance of
Contracts Being Serviced.... $ 4,028,114 $ 4,337,902 $ 4,877,858 $ 6,739,285 $ 8,660,898 $ 8,986,780
Average Contract Unpaid
Principal Balance........... $ 18.6 $ 19.0 $ 19.8 $ 22.2 $ 24.4 $ 24.7
Number of Contracts Being
Serviced.................... 216,714 228,452 246,572 303,739 355,664 363,326
</TABLE>
S-30
<PAGE>
DELINQUENCY AND LOAN LOSS/REPOSSESSION EXPERIENCE
The following table sets forth the delinquency experience since 1992 of
manufactured housing contracts serviced through SPHSI's and now BankAmerica
Housing Services' manufactured housing regional office system (other than
contracts already in repossession as of the dates indicated):
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
FIRST
QUARTER
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts Outstanding (1)............ 215,544 227,411 245,432 302,455 354,081 361,664
Number of Contracts Delinquent (2)
30-59 days..................................... 2,317 1,992 2,599 4,408 5,883 4,195
60-89 days..................................... 540 469 633 974 1,460 1,113
90 days or more................................ 640 641 739 1,179 1,743 1,911
--------- --------- --------- --------- --------- -----------
Total Contracts Delinquent..................... 3,497 3,102 3,971 6,561 9,086 7,219
Delinquencies as a Percentage of Contracts
Outstanding (3).............................. 1.62% 1.36% 1.62% 2.17% 2.57% 2.00%
</TABLE>
- --------------------------
(1) Excludes contracts already in repossession.
(2) Based on number of days payments are contractually past due (assuming 30-day
months). Consequently, a payment due on the first day of a month is not 30
days delinquent until the first day of the following month. Excludes
contracts already in repossession.
(3) By number of contracts, as of period end.
The following table sets forth the loan loss/repossession experience of
manufactured housing contracts serviced through SPHSI's and now BankAmerica
Housing Services' manufactured housing regional office system (including
contracts already in repossession) as of the dates indicated:
LOAN LOSS/REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST
QUARTER
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts Serviced
(1)............................. 216,714 228,452 246,572 303,739 355,664 363,326
Principal Balance of Contracts
Being Serviced (1).............. $ 4,028,114 $ 4,337,902 $ 4,877,858 $ 6,739,285 $ 8,660,898 $ 8,986,780
Average Principal Recovery Upon
Liquidation (2)................. 47.25% 45.61% 47.61% 50.92% 50.08% 46.72%
Contract Liquidations (3)......... 2.93% 2.51% 2.19% 2.04% 2.49% .71%
Net Losses (4):
Dollars......................... $ 75,435 $ 70,510 $ 63,601 $ 69,864 $ 107,996 $ 36,378
Percentage (5).................. 1.87% 1.63% 1.30% 1.04% 1.25% .40%
Contracts in Repossession....... 1,170 1,041 1,140 1,284 1,583 1,662
</TABLE>
- --------------------------
(1) As of period end. Includes contracts already in repossession.
(2) As a percentage of the outstanding principal balance of contracts that were
liquidated during the applicable period, based on the gross amounts
recovered upon liquidation less any liquidation proceeds applied to unpaid
interest accrued through the date of liquidation and after the payment of
repossession and other liquidation expenses.
(3) Number of contracts liquidated during the period as a percentage of the
total number of contracts being serviced as of period end.
(4) The calculation of net loss includes unpaid interest accrued through the
date of liquidation and all repossession and other liquidation expenses.
(5) The aggregate net loss amount as a percentage of the principal balance of
contracts being serviced as of period end.
S-31
<PAGE>
BANKAMERICA HOUSING SERVICES' MANAGEMENT'S DISCUSSION AND ANALYSIS OF
DELINQUENCY, REPOSSESSION AND LOAN LOSS EXPERIENCE
The delinquency, repossession and loan loss experience exhibited by the
foregoing tables for the periods referenced therein are for illustrative
purposes only and there is no assurance that the delinquency, repossession or
loan loss experience of any Contracts sold to the Trust Fund will be similar to
that set forth above. Management believes the increase in the percentage net
losses in 1996 over 1995, and again in the first quarter 1997 (when annualized)
over 1996, is due primarily to the seasoning of the portfolio. Management has
not observed any material economic development in the general business
environment of the country or in local areas where BankAmerica Housing Services'
manufactured housing contracts are originated which has unfavorably affected
portfolio performance in relation to delinquencies, repossessions and loan
losses during this period. However, the delinquency, loan loss and repossession
experience of manufactured housing contracts historically has been adversely
affected by a downturn in regional or local economic conditions. These regional
or local economic conditions are often volatile, and no predictions can be made
regarding future economic loss upon repossession. Information regarding the
geographic location, at origination, of the Manufactured Homes securing the
Contracts in the Contract Pool is set forth under "The Contract Pool" herein.
PREPAYMENT AND YIELD CONSIDERATIONS
The general prepayment and yield considerations discussed in the Prospectus
under "Prepayment and Yield Considerations" should be read carefully in
connection with a decision to invest in any of the Offered Certificates. The
following discussion supplements, and does not replace or supersede the
discussion under "Prepayment and Yield Considerations" in the Prospectus, unless
the context expressly so provides.
The Contracts had maturities at origination ranging from 22 months to 362
months, but may be prepaid in full or in part at any time. The prepayment
experience of the Contracts (including prepayments due to liquidations of
defaulted Contracts) will affect the average life and the maturity of the
Offered Certificates. BankAmerica Housing Services does not maintain statistics
with respect to the rate of prepayment of manufactured housing contracts in its
servicing portfolio, except for contracts in certain pools of manufactured
housing contracts sold by SPHSI and contracts in certain pools of manufactured
housing contracts sold by BankAmerica Housing Services, Bank of America or
SPFSC, as the case may be, for which at least sixteen months of prepayment
information is available, as described in Appendix A to this Prospectus
Supplement. Any pool of contracts, including the Contract Pool, might include
contracts with contract rates that are generally higher or lower, in absolute
terms or in comparison to prevailing rates, than the contract rates of the
contracts from which are derived certain historical statistical data set forth
in Appendix A. As a result, the prepayment experience of the contracts contained
in any contract pool, including the Contract Pool, might be faster or slower
than the prepayment experience of the contracts reflected in the historical
data. In addition, although BankAmerica Housing Services' management is aware of
limited publicly available information relating to historical rates of
prepayment on manufactured housing contracts, BankAmerica Housing Services'
management believes that such information is not necessarily indicative of the
rate of prepayment that may be expected to be exhibited by the Contracts.
Nevertheless, BankAmerica Housing Services' management anticipates that a number
of Contracts will be prepaid in full in each year during which the Offered
Certificates are outstanding. See "Prepayment and Yield Considerations --
Prepayment Considerations," "Description of the Certificates -- Optional and
Mandatory Repurchase; Optional Termination" and "Certain Legal Aspects of the
Contracts -- Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer" in the Prospectus and "Description of the Certificates -- Optional
Termination and Termination Auction" herein for a discussion of certain factors
that may influence prepayments, including homeowner mobility, general and
regional economic conditions, prevailing interest rates, provisions in the
Contracts prohibiting the owner from selling the Manufactured Home without the
prior consent of the holder of the related Contract, the early termination of
the Trust Fund pursuant to a successful Termination Auction and the option of
the Servicer (whether or not BankAmerica Housing Services remains the Servicer)
to purchase the Contracts and any other property constituting the Trust Fund or
to direct the
S-32
<PAGE>
Trustee to solicit bids for an auction for the sale of the Contracts and any
other property constituting the Trust Fund. In addition, repurchases of
Contracts on account of certain breaches of representations and warranties as
described below under "Description of the Certificates -- Conveyance of
Contracts" will have the effect of prepaying such Contracts and therefore will
affect the average life of the Certificates.
The allocation of distributions to the Certificateholders in accordance with
the Agreement will have the effect of accelerating the amortization of certain
of the Classes of the Series 1997-1 Regular Certificates and delaying the
amortization of certain other Classes of the Series 1997-1 Regular Certificates
from the amortization that otherwise would be applicable if distributions in
respect of the Total Regular Principal Amount were made pro rata according to
the outstanding principal balances of the Series 1997-1 Regular Certificates. If
a purchaser of Offered Certificates in a Class of Offered Certificates purchases
them at a discount and calculates its anticipated yield to maturity based on an
assumed rate of distributions of principal on such Class of Offered Certificates
that is faster than the rate actually realized, such purchaser's actual yield to
maturity will be lower than the yield so calculated by such purchaser. See
"Description of the Certificates -- Distributions" herein and "Prepayment and
Yield Considerations" in the Prospectus.
There can be no assurance that the delinquency or repossession experience
set forth under "The Seller -- Delinquency and Loan Loss/Repossession
Experience" will be representative of the results that may be experienced with
respect to the Contracts. See "Prepayment and Yield Considerations" in the
Prospectus for a discussion of the effect delinquencies and repossessions on the
Contracts would have on the average life of the Certificates.
The expected final scheduled payment date on the Contract with the latest
maturity is in July 2027.
The last scheduled Distribution Dates for the Series 1997-1 Regular
Certificates are set forth on the cover of this Prospectus Supplement. However,
the actual last Distribution Date for each such Class of Offered Certificates
could occur significantly earlier than such scheduled Distribution Dates. When
the Pool Scheduled Principal Balance falls below 10% of the Cut-off Date Pool
Principal Balance and certain other conditions are met, the Trust Fund could be
terminated pursuant to the Servicer's exercise of an option call or pursuant to
a successful Termination Auction. See "Description of the Certificates --
Optional Termination and Termination Auction" herein. Either of these events, if
they occur, would result in the early retirement of the then outstanding
Certificates.
As described herein under "Description of the Certificates -- Subordination"
and "Description of the Certificates -- Losses on Liquidated Contracts," to the
extent that, on any Distribution Date, the Available Distribution Amount,
together with the Reserve Account Draw Amount, is not sufficient to permit a
full distribution of the Total Regular Principal Amount to the holders of any
Class of Offered Certificates, the effect will be to cause the Offered
Certificates to be amortized more slowly than they otherwise would have been
amortized, and losses on Liquidated Contracts and delinquencies on the Contracts
(if not covered by Monthly Advances) will be borne by the holders of such Class
of Offered Certificates in the manner described thereunder and as described
below.
In the event there is a sufficiently large number of delinquencies on the
Contracts in any Collection Period that were not covered by Monthly Advances as
described herein, the amounts distributed to the holders of the Offered
Certificates could be less than the amount of principal and interest that
otherwise would be payable on such Certificates on the related Distribution
Date. In such event, even if delinquent payments on the Contracts were
eventually recovered upon liquidation, if the amounts received do not include
interest on delinquent interest payments, the effective yield on the Contracts
would be reduced, and under certain circumstances it is possible that sufficient
Available Distribution Amounts might not be available to provide for aggregate
distributions on the Offered Certificates equal to the sum of their initial
outstanding Certificate Balances plus accrued interest thereon, thereby reducing
the effective yield on such Certificates.
Obligors are not required to pay interest on the Contracts after the date of
full prepayment of principal or the date of a partial prepayment of principal
(to the extent of such partial prepayment). As a
S-33
<PAGE>
result, partial or full prepayments in advance of the related Due Dates for such
Contracts in any Collection Period will reduce the amount of interest received
from the related Obligors during such Collection Period to less than one month's
interest. However, when a partial prepayment is made on a Contract or a Contract
is prepaid in full during any Collection Period, but after the Due Date for such
Contract in such Collection Period, the effect will be to increase the amount of
interest received from the related Obligor during such Collection Period to more
than one month's interest. If a sufficient amount of partial prepayments are
made or a sufficient number of Contracts are prepaid in full in a given
Collection Period in advance of their respective Due Dates, interest received on
all of the Contracts during that Collection Period, after netting out the
Monthly Servicing Fee (and other expenses of the Trust Fund), may be less than
the interest payable on the Senior and/or Subordinate Certificates on the
related Distribution Date. As a result, the Available Distribution Amount
(together with the Reserve Account Draw Amount) for the related Distribution
Date may not be sufficient to distribute the interest on the Offered
Certificates in the full amount set forth herein under "Description of the
Certificates -- Distributions" and to make a full distribution of the Total
Regular Principal Amount to the Senior and/or Subordinate Certificateholders.
Although no assurance can be given in this matter, BankAmerica Housing Services
does not anticipate that the net shortfall of interest caused by partial
prepayments or prepayments in full in any Collection Period would be great
enough, in the absence of delinquencies or liquidation losses, to reduce the
Available Distribution Amount for a Distribution Date below the amount that
would have been required to be distributed to the holders of the Offered
Certificates on that Distribution Date in the absence of such prepayment
interest shortfalls.
Because the Contracts are actuarial Contracts, the outstanding principal
balances thereof will reduce, for purposes of accrual of interest thereon, by a
precomputed amortization amount on each Due Date whether or not the Scheduled
Payment for such Due Date is received in advance of or subsequent to such Due
Date, except as described above with respect to prepayments. See "The Contract
Pools" in the Prospectus. Thus, the effect of delinquent Scheduled Payments,
even if they are ultimately paid by the Obligor, will be to reduce the yields on
such Contracts below their respective Contract Rates (because interest will not
have accrued on the principal portion of any Scheduled Payment while it is
delinquent). If the Servicer does not make an advance with respect to such
delinquent Contracts as described herein, the result will be to reduce the
effective yield to the Trust Fund derived from such Contracts to a yield below
their Contract Rates. Under certain circumstances, such yield reductions could
cause the aggregate yield to the Trust Fund derived from the Contract Pool to be
insufficient to support the distribution of interest on the Offered
Certificates, after netting out other expenses of the Trust Fund.
The table below sets forth with respect to each pool of contracts described
in Appendix A to this Prospectus Supplement (a) the initial aggregate principal
balance (calculated as of the first day of the month of the sale), (b) the
weighted average contract rate ("WAC") of the contracts in the pool as of the
first day of the month of the sale of such pool, (c) the weighted average
remaining term to maturity ("WAM") of the contracts in the pool as of the first
day of the month of the sale of such pool, (d) the estimated average age of the
pool as of the first day of the month of the sale of such pool, (e) the
aggregate principal balance of such pool as of March 1, 1997, (f) the WAC of the
contracts in the pool as of March 1, 1997 and (g) the percentage of the
Prepayment Model (as described in "-- Weighted Average Life of the Offered
Certificates" below) for the life of each pool through March 1, 1997. The
prepayment performance of the contract pools described in the following table is
not indicative of the
S-34
<PAGE>
prepayment performance of the Contracts in the Trust Fund, and no assurance can
be given that the prepayment performance of the Contracts in the Trust Fund will
correspond with the prepayment performance of any of the pools described below
or in Appendix A to this Prospectus Supplement.
<TABLE>
<CAPTION>
ESTIMATED
AGGREGATE ORIGINAL AVERAGE PERCENTAGE
ORIGINAL WAM AT AGE AT AGGREGATE OF THE
PRINCIPAL ORIGINAL SALE SALE PRINCIPAL PREPAYMENT
MONTH AND YEAR OF SALE BALANCE WAC (MONTHS) (MONTHS) BALANCE(1) WAC(1) MODEL(1)
- ---------------------------------------- ------------- --------- --------- ---------- ------------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
September 1988.......................... $ 106,635,430 13.44% 178 5 26,955,863 13.40% 184%
December 1988........................... 104,666,978 13.35 184 4 28,249,568 13.32% 188%
May 1989................................ 105,629,211 13.84 185 4 28,617,040 13.82% 207%
September 1989.......................... 125,140,010 13.10 184 8 38,442,568 13.03% 189%
November 1989........................... 105,106,711 13.14 192 2 33,320,045 13.14% 199%
March 1990.............................. 140,369,133 13.48 186 5 44,065,275 13.44% 210%
June 1990............................... 149,153,886 13.61 188 4 49,753,316 13.58% 210%
September 1990.......................... 176,504,848 13.79 185 5 59,185,733 13.77% 217%
December 1990........................... 176,277,296 13.69 189 5 57,560,947 13.79% 238%
March 1991.............................. 115,743,068 13.46 187 12 40,485,462 13.53% 226%
June 1991............................... 139,806,805 13.21 192 3 54,501,656 13.32% 220%
September 1991.......................... 150,531,673 13.11 196 3 61,282,814 13.20% 223%
December 1991........................... 150,837,421 12.76 193 3 63,160,667 12.75% 225%
March 1992.............................. 140,964,598 12.10 192 3 64,336,723 12.12% 210%
June 1992............................... 175,780,463 12.21 191 3 86,100,836 12.14% 201%
October 1992............................ 175,970,703 11.57 198 3 94,285,801 11.58% 191%
May 1995................................ 124,994,111 10.93 227 13 99,350,935 10.93% 177%
November 1995(2)........................ 125,209,123 10.63 225 14 106,883,051 10.64% 167%
</TABLE>
- ------------------------
(1) As of March 1, 1997
(2) Of the $125,209,123 aggregate original principal balance of the November
1995 pool, contracts totaling $68,452,887, or 54.67%, were conveyed to the
trust fund by Bank of America NT&SA as seller under the related pooling and
servicing agreement. Bank of America NT&SA is not a seller of any of the
Contracts in the Contract Pool of this offering.
WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Offered
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.
Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security is repaid
to the investor. The weighted average life of an Offered Certificate is
determined by (i) multiplying the amount of each cash distribution in reduction
of the Certificate Balance of such Certificate by the number of years from the
date of issuance of such Certificate to the stated Distribution Date, (ii)
adding the results, and (iii) dividing the sum by the Initial Certificate
Balance of such Certificate. The weighted average life of the Offered
Certificates will be affected by the rate at which principal on the Contracts is
paid. Principal payments on Contracts may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
repayments (other than from scheduled amortization) and liquidations due to
default or other dispositions of Contracts). Prepayments on Contracts may be
measured by a prepayment standard or model. The model used in this Prospectus
Supplement ("Prepayment Model") is based on an assumed rate of prepayment each
month of the then unpaid principal balance of a pool of new contracts. 100% of
the Prepayment Model assumes prepayment rates of 3.7% per annum of the then
unpaid principal balance
S-35
<PAGE>
of such Contracts in the first month of the life of the Contracts and an
additional 0.1% per annum in each month thereafter (for example, 3.9% per annum
in the third month) until the 24th month. Beginning in the 24th month and in
each month thereafter during the life of the Contracts, 100% of the Prepayment
Model assumes a constant prepayment rate of 6.0% per annum.
As used in the following table, "0% of the Prepayment Model" assumes no
prepayments on the Contracts; "100% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 100% of the Prepayment Model assumed
prepayment rates; "150% of the Prepayment Model" assumes the Contracts will
prepay at rates equal to 150% of the Prepayment Model assumed prepayment rates;
"170% of the Prepayment Model" assumes the Contracts will prepay at rates equal
to 170% of the Prepayment Model assumed prepayment rates; "200% of the
Prepayment Model" assumes the Contracts will prepay at rates equal to 200% of
the Prepayment Model assumed prepayment rates; "250% of the Prepayment Model"
assumes the Contracts will prepay at rates equal to 250% of the Prepayment Model
assumed prepayment rates; and "300% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 300% of the Prepayment Model assumed
prepayment rates.
There is no assurance, however, that prepayments of the Contracts will
conform to any level of the Prepayment Model, and no representation is made that
the Contracts will prepay at the prepayment rates shown or any other prepayment
rate. The rate of principal payments on pools of manufactured housing contracts
is influenced by a variety of economic, geographic, social and other factors,
including the level of interest rates and the rate at which manufactured
homeowners sell their manufactured homes or default on their contracts. Other
factors affecting prepayment of such contracts include changes in obligors'
housing needs, job transfers, unemployment and obligors' net equity in the
manufactured homes. In the case of mortgage loans secured by site-built homes,
in general, if prevailing interest rates fall significantly below the interest
rates on such mortgage loans, the mortgage loans are likely to be subject to
higher prepayment rates than if prevailing interest rates remained at or above
the rates borne by such mortgage loans. Conversely, if prevailing interest rates
rise above the interest rates on such mortgage loans, the rate of prepayment
would be expected to decrease. In the case of manufactured housing contracts,
however, because the outstanding principal balances are, in general, smaller
than mortgage loan balances and the original term to maturity of each such
contract is generally shorter, the reduction or increase in the size of the
monthly payments on contracts of the same maturity and principal balance arising
from a change in the interest rate thereon is generally smaller. Consequently,
changes in prevailing interest rates may not have a similar effect, or may have
a similar effect, but to a smaller degree, on the prepayment rates on
manufactured housing contracts.
The percentages and weighted average lives in the following tables were
determined using the following assumptions (the "Structuring Assumptions") (i)
scheduled interest and principal payments on the Contracts are received in a
timely manner and prepayments are made at the indicated percentages of the
Prepayment Model set forth in the tables, (ii) the Servicer does not exercise
its right of optional termination described above but the Trust Fund is
terminated pursuant to a Termination Auction as described in "Description of the
Certificates -- Optional Termination and Termination Auction" herein, (iii) the
Contracts, as of the Cut-off Date, will be grouped into four groups having the
additional characteristics set forth in the table entitled "Assumed Contract
Characteristics" below, (iv) the Class A-1 Certificates initially represent
9.73% of the entire ownership interest in the Trust Fund and have a Class A-1
Pass-Through Rate of 5.910% per annum, the Class A-2 Certificates initially
represent 6.87% of the entire ownership interest in the Trust Fund and have a
Class A-2 Pass-Through Rate of 6.015% per annum, the Class A-3 Certificates
initially represent 7.82% of the entire ownership interest in the Trust Fund and
have a Class A-3 Pass-Through Rate of 6.060% per annum, the Class A-4
Certificates initially represent 11.26% of the entire ownership interest in the
Trust Fund and have a Class A-4 Pass-Through Rate of 6.195% per annum, the Class
A-5 Certificates initially represent 5.46% of the entire ownership interest in
the Trust Fund and have a Class A-5 Pass-Through Rate of 6.265% per annum, the
Class A-6 Certificates initially represent 5.92% of the entire ownership
interest in the Trust Fund and have a Class A-6 Pass-Through Rate of 6.340% per
annum, the Class A-7 Certificates initially represent 15.00% of the entire
ownership interest in the Trust Fund and have a Class A-7 Pass-Through Rate of
6.580% per
S-36
<PAGE>
annum, the Class A-8 Certificates initially represent 9.92% of the entire
ownership interest in the Trust Fund and have a Class A-8 Pass-Through Rate of
6.725% per annum, the Class A-9 Certificates initially represent 10.51% of the
entire ownership interest in the Trust Fund and have a Class A-9 Pass-Through
Rate of 7.015% per annum, the Class M Certificates initially represent 8.50% of
the entire ownership interest in the Trust Fund and have a Class M Pass-Through
Rate of 6.800% per annum and the Class B-1 Certificates initially represent
6.00% of the entire ownership interest in the Trust Fund and have a Class B-1
Pass-Through Rate of 6.940% per annum, (v) no interest shortfalls will arise in
connection with prepayment in full of the Contracts, (vi) there will be no
repurchases of any Contracts due to a breach in a representation or warranty
with respect thereto, and (vii) a servicing fee of 1.00% per annum will be paid
to the Servicer. The tables assume that there are no losses or delinquencies on
the Contracts. No representation is made that losses or delinquencies on the
Contracts will be experienced at the rate assumed in the preceding sentence or
at any other rate.
ASSUMED CONTRACT CHARACTERISTICS
<TABLE>
<CAPTION>
ORIGINAL REMAINING
CURRENT TERM TO MATURITY TERM TO MATURITY
POOL PRINCIPAL BALANCE CONTRACT RATE (MONTHS) (MONTHS)
- ---------------------------------------- ------------------- -------------- ------------------- -------------------
<S> <C> <C> <C> <C>
1....................................... $ 17,014,447.32 11.509% 103 100
2....................................... 39,043,385.62 11.597 176 173
3....................................... 63,103,268.41 11.121 240 236
4....................................... 142,834,173.95 10.216 348 344
------------------- ------- --- ---
Total or weighted average............... $ 261,995,275.30 10.724% 280 277
</TABLE>
Since the tables were prepared on the basis of the assumptions (the
"Structuring Assumptions") in the preceding paragraph, there are discrepancies
between the characteristics of the actual Contracts and the characteristics of
the Contracts assumed in preparing the tables. Any such discrepancy may have an
effect upon the percentages of the Initial Certificate Balance of each Class of
Offered Certificates outstanding and weighted average lives of such Certificates
set forth in the tables. In addition, since the actual Contracts and the Trust
Fund have characteristics which differ from those assumed in preparing the
tables set forth below, the distributions of principal on the Offered
Certificates may be made earlier or later than as indicated in the tables.
It is not likely that Contracts will prepay at any constant percentage of
the Prepayment Model to maturity or that all Contracts will prepay at the same
rate. In addition, the diverse remaining terms to maturity of the Contracts
(which include recently originated Contracts) could produce slower distributions
of principal than indicated in the tables at the various percentages of the
Prepayment Model specified even if the weighted average remaining term to
maturity of the Contracts is 277 months.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed herein.
Based on the Structuring Assumptions, the following tables indicate the
resulting weighted average lives of the Offered Certificates and sets forth the
percentage of the Initial Class A-1 Certificate Balance, the Initial Class A-2
Certificate Balance, the Initial Class A-3 Certificate Balance, the Initial
Class A-4 Certificate Balance, the Initial Class A-5 Certificate Balance, the
Initial Class A-6 Certificate Balance, the Initial Class A-7 Certificate
Balance, the Initial Class A-8 Certificate Balance, the Initial Class A-9
Certificate Balance, the Initial Class M Certificate Balance, and the Initial
Class B-1 Certificate Balance that would be outstanding after each of the dates
shown at the indicated percentages of the Prepayment Model.
S-37
<PAGE>
PERCENT OF THE INITIAL CLASS A-1 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200%
- -------------------------------------------------------------------- --------- ----------- ----------- ----------- -----------
Initial Percentage.................................................. 100 100 100 100 100
July 10, 1998....................................................... 83 37 13 4 0
July 10, 1999....................................................... 65 0 0 0 0
July 10, 2000....................................................... 44 0 0 0 0
July 10, 2001....................................................... 21 0 0 0 0
July 10, 2002....................................................... 0 0 0 0 0
July 10, 2003....................................................... 0 0 0 0 0
July 10, 2004....................................................... 0 0 0 0 0
July 10, 2005....................................................... 0 0 0 0 0
July 10, 2006....................................................... 0 0 0 0 0
July 10, 2007....................................................... 0 0 0 0 0
July 10, 2008....................................................... 0 0 0 0 0
July 10, 2009....................................................... 0 0 0 0 0
July 10, 2010....................................................... 0 0 0 0 0
July 10, 2011....................................................... 0 0 0 0 0
July 10, 2012....................................................... 0 0 0 0 0
July 10, 2013....................................................... 0 0 0 0 0
July 10, 2014....................................................... 0 0 0 0 0
July 10, 2015....................................................... 0 0 0 0 0
July 10, 2016....................................................... 0 0 0 0 0
July 10, 2017....................................................... 0 0 0 0 0
July 10, 2018....................................................... 0 0 0 0 0
July 10, 2019....................................................... 0 0 0 0 0
July 10, 2020....................................................... 0 0 0 0 0
July 10, 2021....................................................... 0 0 0 0 0
July 10, 2022....................................................... 0 0 0 0 0
July 10, 2023....................................................... 0 0 0 0 0
July 10, 2024....................................................... 0 0 0 0 0
July 10, 2025....................................................... 0 0 0 0 0
July 10, 2026....................................................... 0 0 0 0 0
Weighted Average Life (years)....................................... 2.59 0.76 0.56 0.50 0.44
<CAPTION>
<S> <C> <C>
DATE 250% 300%
- -------------------------------------------------------------------- ----------- -----------
Initial Percentage.................................................. 100 100
July 10, 1998....................................................... 0 0
July 10, 1999....................................................... 0 0
July 10, 2000....................................................... 0 0
July 10, 2001....................................................... 0 0
July 10, 2002....................................................... 0 0
July 10, 2003....................................................... 0 0
July 10, 2004....................................................... 0 0
July 10, 2005....................................................... 0 0
July 10, 2006....................................................... 0 0
July 10, 2007....................................................... 0 0
July 10, 2008....................................................... 0 0
July 10, 2009....................................................... 0 0
July 10, 2010....................................................... 0 0
July 10, 2011....................................................... 0 0
July 10, 2012....................................................... 0 0
July 10, 2013....................................................... 0 0
July 10, 2014....................................................... 0 0
July 10, 2015....................................................... 0 0
July 10, 2016....................................................... 0 0
July 10, 2017....................................................... 0 0
July 10, 2018....................................................... 0 0
July 10, 2019....................................................... 0 0
July 10, 2020....................................................... 0 0
July 10, 2021....................................................... 0 0
July 10, 2022....................................................... 0 0
July 10, 2023....................................................... 0 0
July 10, 2024....................................................... 0 0
July 10, 2025....................................................... 0 0
July 10, 2026....................................................... 0 0
Weighted Average Life (years)....................................... 0.36 0.30
</TABLE>
S-38
<PAGE>
PERCENT OF THE INITIAL CLASS A-2 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200%
- -------------------------------------------------------------------- --------- ----------- ----------- ----------- -----------
Initial Percentage.................................................. 100 100 100 100 100
July 10, 1998....................................................... 100 100 100 100 86
July 10, 1999....................................................... 100 50 0 0 0
July 10, 2000....................................................... 100 0 0 0 0
July 10, 2001....................................................... 100 0 0 0 0
July 10, 2002....................................................... 93 0 0 0 0
July 10, 2003....................................................... 52 0 0 0 0
July 10, 2004....................................................... 6 0 0 0 0
July 10, 2005....................................................... 0 0 0 0 0
July 10, 2006....................................................... 0 0 0 0 0
July 10, 2007....................................................... 0 0 0 0 0
July 10, 2008....................................................... 0 0 0 0 0
July 10, 2009....................................................... 0 0 0 0 0
July 10, 2010....................................................... 0 0 0 0 0
July 10, 2011....................................................... 0 0 0 0 0
July 10, 2012....................................................... 0 0 0 0 0
July 10, 2013....................................................... 0 0 0 0 0
July 10, 2014....................................................... 0 0 0 0 0
July 10, 2015....................................................... 0 0 0 0 0
July 10, 2016....................................................... 0 0 0 0 0
July 10, 2017....................................................... 0 0 0 0 0
July 10, 2018....................................................... 0 0 0 0 0
July 10, 2019....................................................... 0 0 0 0 0
July 10, 2020....................................................... 0 0 0 0 0
July 10, 2021....................................................... 0 0 0 0 0
July 10, 2022....................................................... 0 0 0 0 0
July 10, 2023....................................................... 0 0 0 0 0
July 10, 2024....................................................... 0 0 0 0 0
July 10, 2025....................................................... 0 0 0 0 0
July 10, 2026....................................................... 0 0 0 0 0
Weighted Average Life (years)....................................... 5.99 1.97 1.47 1.34 1.18
<CAPTION>
<S> <C> <C>
DATE 250% 300%
- -------------------------------------------------------------------- ----------- -----------
Initial Percentage.................................................. 100 100
July 10, 1998....................................................... 52 19
July 10, 1999....................................................... 0 0
July 10, 2000....................................................... 0 0
July 10, 2001....................................................... 0 0
July 10, 2002....................................................... 0 0
July 10, 2003....................................................... 0 0
July 10, 2004....................................................... 0 0
July 10, 2005....................................................... 0 0
July 10, 2006....................................................... 0 0
July 10, 2007....................................................... 0 0
July 10, 2008....................................................... 0 0
July 10, 2009....................................................... 0 0
July 10, 2010....................................................... 0 0
July 10, 2011....................................................... 0 0
July 10, 2012....................................................... 0 0
July 10, 2013....................................................... 0 0
July 10, 2014....................................................... 0 0
July 10, 2015....................................................... 0 0
July 10, 2016....................................................... 0 0
July 10, 2017....................................................... 0 0
July 10, 2018....................................................... 0 0
July 10, 2019....................................................... 0 0
July 10, 2020....................................................... 0 0
July 10, 2021....................................................... 0 0
July 10, 2022....................................................... 0 0
July 10, 2023....................................................... 0 0
July 10, 2024....................................................... 0 0
July 10, 2025....................................................... 0 0
July 10, 2026....................................................... 0 0
Weighted Average Life (years)....................................... 0.98 0.83
</TABLE>
S-39
<PAGE>
PERCENT OF THE INITIAL CLASS A-3 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200%
- --------------------------------------------------------------------- --------- ----- ----- ----- -----
Initial Percentage................................................... 100 100 100 100 100
July 10, 1998........................................................ 100 100 100 100 100
July 10, 1999........................................................ 100 100 84 60 25
July 10, 2000........................................................ 100 55 0 0 0
July 10, 2001........................................................ 100 0 0 0 0
July 10, 2002........................................................ 100 0 0 0 0
July 10, 2003........................................................ 100 0 0 0 0
July 10, 2004........................................................ 100 0 0 0 0
July 10, 2005........................................................ 61 0 0 0 0
July 10, 2006........................................................ 21 0 0 0 0
July 10, 2007........................................................ 0 0 0 0 0
July 10, 2008........................................................ 0 0 0 0 0
July 10, 2009........................................................ 0 0 0 0 0
July 10, 2010........................................................ 0 0 0 0 0
July 10, 2011........................................................ 0 0 0 0 0
July 10, 2012........................................................ 0 0 0 0 0
July 10, 2013........................................................ 0 0 0 0 0
July 10, 2014........................................................ 0 0 0 0 0
July 10, 2015........................................................ 0 0 0 0 0
July 10, 2016........................................................ 0 0 0 0 0
July 10, 2017........................................................ 0 0 0 0 0
July 10, 2018........................................................ 0 0 0 0 0
July 10, 2019........................................................ 0 0 0 0 0
July 10, 2020........................................................ 0 0 0 0 0
July 10, 2021........................................................ 0 0 0 0 0
July 10, 2022........................................................ 0 0 0 0 0
July 10, 2023........................................................ 0 0 0 0 0
July 10, 2024........................................................ 0 0 0 0 0
July 10, 2025........................................................ 0 0 0 0 0
July 10, 2026........................................................ 0 0 0 0 0
Weighted Average Life (years)........................................ 8.25 3.03 2.26 2.05 1.80
<CAPTION>
<S> <C> <C>
Date 250% 300%
- --------------------------------------------------------------------- ----- -----
Initial Percentage................................................... 100 100
July 10, 1998........................................................ 100 100
July 10, 1999........................................................ 0 0
July 10, 2000........................................................ 0 0
July 10, 2001........................................................ 0 0
July 10, 2002........................................................ 0 0
July 10, 2003........................................................ 0 0
July 10, 2004........................................................ 0 0
July 10, 2005........................................................ 0 0
July 10, 2006........................................................ 0 0
July 10, 2007........................................................ 0 0
July 10, 2008........................................................ 0 0
July 10, 2009........................................................ 0 0
July 10, 2010........................................................ 0 0
July 10, 2011........................................................ 0 0
July 10, 2012........................................................ 0 0
July 10, 2013........................................................ 0 0
July 10, 2014........................................................ 0 0
July 10, 2015........................................................ 0 0
July 10, 2016........................................................ 0 0
July 10, 2017........................................................ 0 0
July 10, 2018........................................................ 0 0
July 10, 2019........................................................ 0 0
July 10, 2020........................................................ 0 0
July 10, 2021........................................................ 0 0
July 10, 2022........................................................ 0 0
July 10, 2023........................................................ 0 0
July 10, 2024........................................................ 0 0
July 10, 2025........................................................ 0 0
July 10, 2026........................................................ 0 0
Weighted Average Life (years)........................................ 1.51 1.30
</TABLE>
S-40
<PAGE>
PERCENT OF THE INITIAL CLASS A-4 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200%
- -------------------------------------------------------------------- --------- ----- ----- ----- -----
Initial Percentage.................................................. 100 100 100 100 100
July 10, 1998....................................................... 100 100 100 100 100
July 10, 1999....................................................... 100 100 100 100 100
July 10, 2000....................................................... 100 100 79 56 22
July 10, 2001....................................................... 100 80 6 0 0
July 10, 2002....................................................... 100 24 0 0 0
July 10, 2003....................................................... 100 0 0 0 0
July 10, 2004....................................................... 100 0 0 0 0
July 10, 2005....................................................... 100 0 0 0 0
July 10, 2006....................................................... 100 0 0 0 0
July 10, 2007....................................................... 88 0 0 0 0
July 10, 2008....................................................... 58 0 0 0 0
July 10, 2009....................................................... 25 0 0 0 0
July 10, 2010....................................................... 0 0 0 0 0
July 10, 2011....................................................... 0 0 0 0 0
July 10, 2012....................................................... 0 0 0 0 0
July 10, 2013....................................................... 0 0 0 0 0
July 10, 2014....................................................... 0 0 0 0 0
July 10, 2015....................................................... 0 0 0 0 0
July 10, 2016....................................................... 0 0 0 0 0
July 10, 2017....................................................... 0 0 0 0 0
July 10, 2018....................................................... 0 0 0 0 0
July 10, 2019....................................................... 0 0 0 0 0
July 10, 2020....................................................... 0 0 0 0 0
July 10, 2021....................................................... 0 0 0 0 0
July 10, 2022....................................................... 0 0 0 0 0
July 10, 2023....................................................... 0 0 0 0 0
July 10, 2024....................................................... 0 0 0 0 0
July 10, 2025....................................................... 0 0 0 0 0
July 10, 2026....................................................... 0 0 0 0 0
Weighted Average Life (years)....................................... 11.19 4.52 3.36 3.05 2.67
<CAPTION>
<S> <C> <C>
Date 250% 300%
- -------------------------------------------------------------------- ----- -----
Initial Percentage.................................................. 100 100
July 10, 1998....................................................... 100 100
July 10, 1999....................................................... 78 40
July 10, 2000....................................................... 0 0
July 10, 2001....................................................... 0 0
July 10, 2002....................................................... 0 0
July 10, 2003....................................................... 0 0
July 10, 2004....................................................... 0 0
July 10, 2005....................................................... 0 0
July 10, 2006....................................................... 0 0
July 10, 2007....................................................... 0 0
July 10, 2008....................................................... 0 0
July 10, 2009....................................................... 0 0
July 10, 2010....................................................... 0 0
July 10, 2011....................................................... 0 0
July 10, 2012....................................................... 0 0
July 10, 2013....................................................... 0 0
July 10, 2014....................................................... 0 0
July 10, 2015....................................................... 0 0
July 10, 2016....................................................... 0 0
July 10, 2017....................................................... 0 0
July 10, 2018....................................................... 0 0
July 10, 2019....................................................... 0 0
July 10, 2020....................................................... 0 0
July 10, 2021....................................................... 0 0
July 10, 2022....................................................... 0 0
July 10, 2023....................................................... 0 0
July 10, 2024....................................................... 0 0
July 10, 2025....................................................... 0 0
July 10, 2026....................................................... 0 0
Weighted Average Life (years)....................................... 2.22 1.90
</TABLE>
S-41
<PAGE>
PERCENT OF THE INITIAL CLASS A-5 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200%
- ------------------------------------------------------------------- --------- ----------- ----------- ----------- -----------
Initial Percentage................................................. 100 100 100 100 100
July 10, 1998...................................................... 100 100 100 100 100
July 10, 1999...................................................... 100 100 100 100 100
July 10, 2000...................................................... 100 100 100 100 100
July 10, 2001...................................................... 100 100 100 55 0
July 10, 2002...................................................... 100 100 12 0 0
July 10, 2003...................................................... 100 66 0 0 0
July 10, 2004...................................................... 100 0 0 0 0
July 10, 2005...................................................... 100 0 0 0 0
July 10, 2006...................................................... 100 0 0 0 0
July 10, 2007...................................................... 100 0 0 0 0
July 10, 2008...................................................... 100 0 0 0 0
July 10, 2009...................................................... 100 0 0 0 0
July 10, 2010...................................................... 91 0 0 0 0
July 10, 2011...................................................... 28 0 0 0 0
July 10, 2012...................................................... 0 0 0 0 0
July 10, 2013...................................................... 0 0 0 0 0
July 10, 2014...................................................... 0 0 0 0 0
July 10, 2015...................................................... 0 0 0 0 0
July 10, 2016...................................................... 0 0 0 0 0
July 10, 2017...................................................... 0 0 0 0 0
July 10, 2018...................................................... 0 0 0 0 0
July 10, 2019...................................................... 0 0 0 0 0
July 10, 2020...................................................... 0 0 0 0 0
July 10, 2021...................................................... 0 0 0 0 0
July 10, 2022...................................................... 0 0 0 0 0
July 10, 2023...................................................... 0 0 0 0 0
July 10, 2024...................................................... 0 0 0 0 0
July 10, 2025...................................................... 0 0 0 0 0
July 10, 2026...................................................... 0 0 0 0 0
Weighted Average Life (years)...................................... 13.62 6.18 4.59 4.05 3.51
<CAPTION>
<S> <C> <C>
DATE 250% 300%
- ------------------------------------------------------------------- ----------- -----------
Initial Percentage................................................. 100 100
July 10, 1998...................................................... 100 100
July 10, 1999...................................................... 100 100
July 10, 2000...................................................... 37 0
July 10, 2001...................................................... 0 0
July 10, 2002...................................................... 0 0
July 10, 2003...................................................... 0 0
July 10, 2004...................................................... 0 0
July 10, 2005...................................................... 0 0
July 10, 2006...................................................... 0 0
July 10, 2007...................................................... 0 0
July 10, 2008...................................................... 0 0
July 10, 2009...................................................... 0 0
July 10, 2010...................................................... 0 0
July 10, 2011...................................................... 0 0
July 10, 2012...................................................... 0 0
July 10, 2013...................................................... 0 0
July 10, 2014...................................................... 0 0
July 10, 2015...................................................... 0 0
July 10, 2016...................................................... 0 0
July 10, 2017...................................................... 0 0
July 10, 2018...................................................... 0 0
July 10, 2019...................................................... 0 0
July 10, 2020...................................................... 0 0
July 10, 2021...................................................... 0 0
July 10, 2022...................................................... 0 0
July 10, 2023...................................................... 0 0
July 10, 2024...................................................... 0 0
July 10, 2025...................................................... 0 0
July 10, 2026...................................................... 0 0
Weighted Average Life (years)...................................... 2.91 2.48
</TABLE>
S-42
<PAGE>
PERCENT OF THE INITIAL CLASS A-6 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200%
- ------------------------------------------------------------------- --------- ----------- ----------- ----------- -----------
Initial Percentage................................................. 100 100 100 100 100
July 10, 1998...................................................... 100 100 100 100 100
July 10, 1999...................................................... 100 100 100 100 100
July 10, 2000...................................................... 100 100 100 100 100
July 10, 2001...................................................... 100 100 100 100 75
July 10, 2002...................................................... 100 100 100 56 0
July 10, 2003...................................................... 100 100 27 0 0
July 10, 2004...................................................... 100 90 0 0 0
July 10, 2005...................................................... 100 21 0 0 0
July 10, 2006...................................................... 100 0 0 0 0
July 10, 2007...................................................... 100 0 0 0 0
July 10, 2008...................................................... 100 0 0 0 0
July 10, 2009...................................................... 100 0 0 0 0
July 10, 2010...................................................... 100 0 0 0 0
July 10, 2011...................................................... 100 0 0 0 0
July 10, 2012...................................................... 76 0 0 0 0
July 10, 2013...................................................... 34 0 0 0 0
July 10, 2014...................................................... 0 0 0 0 0
July 10, 2015...................................................... 0 0 0 0 0
July 10, 2016...................................................... 0 0 0 0 0
July 10, 2017...................................................... 0 0 0 0 0
July 10, 2018...................................................... 0 0 0 0 0
July 10, 2019...................................................... 0 0 0 0 0
July 10, 2020...................................................... 0 0 0 0 0
July 10, 2021...................................................... 0 0 0 0 0
July 10, 2022...................................................... 0 0 0 0 0
July 10, 2023...................................................... 0 0 0 0 0
July 10, 2024...................................................... 0 0 0 0 0
July 10, 2025...................................................... 0 0 0 0 0
July 10, 2026...................................................... 0 0 0 0 0
Weighted Average Life (years)...................................... 15.57 7.55 5.70 5.04 4.23
<CAPTION>
<S> <C> <C>
DATE 250% 300%
- ------------------------------------------------------------------- ----------- -----------
Initial Percentage................................................. 100 100
July 10, 1998...................................................... 100 100
July 10, 1999...................................................... 100 100
July 10, 2000...................................................... 100 39
July 10, 2001...................................................... 0 0
July 10, 2002...................................................... 0 0
July 10, 2003...................................................... 0 0
July 10, 2004...................................................... 0 0
July 10, 2005...................................................... 0 0
July 10, 2006...................................................... 0 0
July 10, 2007...................................................... 0 0
July 10, 2008...................................................... 0 0
July 10, 2009...................................................... 0 0
July 10, 2010...................................................... 0 0
July 10, 2011...................................................... 0 0
July 10, 2012...................................................... 0 0
July 10, 2013...................................................... 0 0
July 10, 2014...................................................... 0 0
July 10, 2015...................................................... 0 0
July 10, 2016...................................................... 0 0
July 10, 2017...................................................... 0 0
July 10, 2018...................................................... 0 0
July 10, 2019...................................................... 0 0
July 10, 2020...................................................... 0 0
July 10, 2021...................................................... 0 0
July 10, 2022...................................................... 0 0
July 10, 2023...................................................... 0 0
July 10, 2024...................................................... 0 0
July 10, 2025...................................................... 0 0
July 10, 2026...................................................... 0 0
Weighted Average Life (years)...................................... 3.43 2.92
</TABLE>
S-43
<PAGE>
PERCENT OF THE INITIAL CLASS A-7 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200% 250%
- ------------------------------------------------------------- --------- --------- --------- --------- --------- ---------
Initial Percentage........................................... 100 100 100 100 100 100
July 10, 1998................................................ 100 100 100 100 100 100
July 10, 1999................................................ 100 100 100 100 100 100
July 10, 2000................................................ 100 100 100 100 100 100
July 10, 2001................................................ 100 100 100 100 100 84
July 10, 2002................................................ 100 100 100 100 91 46
July 10, 2003................................................ 100 100 100 88 58 13
July 10, 2004................................................ 100 100 80 58 28 0
July 10, 2005................................................ 100 100 53 31 2 0
July 10, 2006................................................ 100 85 29 8 0 0
July 10, 2007................................................ 100 63 8 0 0 0
July 10, 2008................................................ 100 43 0 0 0 0
July 10, 2009................................................ 100 23 0 0 0 0
July 10, 2010................................................ 100 4 0 0 0 0
July 10, 2011................................................ 100 0 0 0 0 0
July 10, 2012................................................ 100 0 0 0 0 0
July 10, 2013................................................ 100 0 0 0 0 0
July 10, 2014................................................ 94 0 0 0 0 0
July 10, 2015................................................ 74 0 0 0 0 0
July 10, 2016................................................ 50 0 0 0 0 0
July 10, 2017................................................ 30 0 0 0 0 0
July 10, 2018................................................ 17 0 0 0 0 0
July 10, 2019................................................ 3 0 0 0 0 0
July 10, 2020................................................ 0 0 0 0 0 0
July 10, 2021................................................ 0 0 0 0 0 0
July 10, 2022................................................ 0 0 0 0 0 0
July 10, 2023................................................ 0 0 0 0 0 0
July 10, 2024................................................ 0 0 0 0 0 0
July 10, 2025................................................ 0 0 0 0 0 0
July 10, 2026................................................ 0 0 0 0 0 0
Weighted Average Life (years)................................ 19.15 10.66 8.17 7.33 6.28 4.91
<CAPTION>
<S> <C>
DATE 300%
- ------------------------------------------------------------- ---------
Initial Percentage........................................... 100
July 10, 1998................................................ 100
July 10, 1999................................................ 100
July 10, 2000................................................ 100
July 10, 2001................................................ 42
July 10, 2002................................................ 6
July 10, 2003................................................ 0
July 10, 2004................................................ 0
July 10, 2005................................................ 0
July 10, 2006................................................ 0
July 10, 2007................................................ 0
July 10, 2008................................................ 0
July 10, 2009................................................ 0
July 10, 2010................................................ 0
July 10, 2011................................................ 0
July 10, 2012................................................ 0
July 10, 2013................................................ 0
July 10, 2014................................................ 0
July 10, 2015................................................ 0
July 10, 2016................................................ 0
July 10, 2017................................................ 0
July 10, 2018................................................ 0
July 10, 2019................................................ 0
July 10, 2020................................................ 0
July 10, 2021................................................ 0
July 10, 2022................................................ 0
July 10, 2023................................................ 0
July 10, 2024................................................ 0
July 10, 2025................................................ 0
July 10, 2026................................................ 0
Weighted Average Life (years)................................ 3.96
</TABLE>
S-44
<PAGE>
PERCENT OF THE INITIAL CLASS A-8 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200% 250%
- ------------------------------------------------------------- --------- --------- --------- --------- --------- ---------
Initial Percentage........................................... 100 100 100 100 100 100
July 10, 1998................................................ 100 100 100 100 100 100
July 10, 1999................................................ 100 100 100 100 100 100
July 10, 2000................................................ 100 100 100 100 100 100
July 10, 2001................................................ 100 100 100 100 100 100
July 10, 2002................................................ 100 100 100 100 100 100
July 10, 2003................................................ 100 100 100 100 100 100
July 10, 2004................................................ 100 100 100 100 100 79
July 10, 2005................................................ 100 100 100 100 100 45
July 10, 2006................................................ 100 100 100 100 71 17
July 10, 2007................................................ 100 100 100 82 44 0
July 10, 2008................................................ 100 100 84 56 20 0
July 10, 2009................................................ 100 100 58 31 0 0
July 10, 2010................................................ 100 100 33 10 0 0
July 10, 2011................................................ 100 79 11 0 0 0
July 10, 2012................................................ 100 56 0 0 0 0
July 10, 2013................................................ 100 37 0 0 0 0
July 10, 2014................................................ 100 18 0 0 0 0
July 10, 2015................................................ 100 0 0 0 0 0
July 10, 2016................................................ 100 0 0 0 0 0
July 10, 2017................................................ 100 0 0 0 0 0
July 10, 2018................................................ 100 0 0 0 0 0
July 10, 2019................................................ 100 0 0 0 0 0
July 10, 2020................................................ 81 0 0 0 0 0
July 10, 2021................................................ 56 0 0 0 0 0
July 10, 2022................................................ 27 0 0 0 0 0
July 10, 2023................................................ 0 0 0 0 0 0
July 10, 2024................................................ 0 0 0 0 0 0
July 10, 2025................................................ 0 0 0 0 0 0
July 10, 2026................................................ 0 0 0 0 0 0
Weighted Average Life (years)................................ 24.12 15.38 12.34 11.26 9.82 7.90
<CAPTION>
<S> <C>
DATE 300%
- ------------------------------------------------------------- ---------
Initial Percentage........................................... 100
July 10, 1998................................................ 100
July 10, 1999................................................ 100
July 10, 2000................................................ 100
July 10, 2001................................................ 100
July 10, 2002................................................ 100
July 10, 2003................................................ 65
July 10, 2004................................................ 29
July 10, 2005................................................ 0
July 10, 2006................................................ 0
July 10, 2007................................................ 0
July 10, 2008................................................ 0
July 10, 2009................................................ 0
July 10, 2010................................................ 0
July 10, 2011................................................ 0
July 10, 2012................................................ 0
July 10, 2013................................................ 0
July 10, 2014................................................ 0
July 10, 2015................................................ 0
July 10, 2016................................................ 0
July 10, 2017................................................ 0
July 10, 2018................................................ 0
July 10, 2019................................................ 0
July 10, 2020................................................ 0
July 10, 2021................................................ 0
July 10, 2022................................................ 0
July 10, 2023................................................ 0
July 10, 2024................................................ 0
July 10, 2025................................................ 0
July 10, 2026................................................ 0
Weighted Average Life (years)................................ 6.42
</TABLE>
S-45
<PAGE>
PERCENT OF THE INITIAL CLASS A-9 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200% 250%
- ------------------------------------------------------------- --------- --------- --------- --------- --------- ---------
Initial Percentage........................................... 100 100 100 100 100 100
July 10, 1998................................................ 100 100 100 100 100 100
July 10, 1999................................................ 100 100 100 100 100 100
July 10, 2000................................................ 100 100 100 100 100 100
July 10, 2001................................................ 100 100 100 100 100 100
July 10, 2002................................................ 100 100 100 100 100 100
July 10, 2003................................................ 100 100 100 100 100 100
July 10, 2004................................................ 100 100 100 100 100 100
July 10, 2005................................................ 100 100 100 100 100 100
July 10, 2006................................................ 100 100 100 100 100 100
July 10, 2007................................................ 100 100 100 100 100 95
July 10, 2008................................................ 100 100 100 100 100 77
July 10, 2009................................................ 100 100 100 100 99 62
July 10, 2010................................................ 100 100 100 100 82 0
July 10, 2011................................................ 100 100 100 91 67 0
July 10, 2012................................................ 100 100 94 76 0 0
July 10, 2013................................................ 100 100 80 0 0 0
July 10, 2014................................................ 100 100 66 0 0 0
July 10, 2015................................................ 100 100 0 0 0 0
July 10, 2016................................................ 100 84 0 0 0 0
July 10, 2017................................................ 100 69 0 0 0 0
July 10, 2018................................................ 100 0 0 0 0 0
July 10, 2019................................................ 100 0 0 0 0 0
July 10, 2020................................................ 100 0 0 0 0 0
July 10, 2021................................................ 100 0 0 0 0 0
July 10, 2022................................................ 100 0 0 0 0 0
July 10, 2023................................................ 96 0 0 0 0 0
July 10, 2024................................................ 61 0 0 0 0 0
July 10, 2025................................................ 0 0 0 0 0 0
July 10, 2026................................................ 0 0 0 0 0 0
Weighted Average Life (years)................................ 26.83 19.84 16.64 15.44 13.85 11.69
<CAPTION>
<S> <C>
DATE 300%
- ------------------------------------------------------------- ---------
Initial Percentage........................................... 100
July 10, 1998................................................ 100
July 10, 1999................................................ 100
July 10, 2000................................................ 100
July 10, 2001................................................ 100
July 10, 2002................................................ 100
July 10, 2003................................................ 100
July 10, 2004................................................ 100
July 10, 2005................................................ 100
July 10, 2006................................................ 79
July 10, 2007................................................ 62
July 10, 2008................................................ 0
July 10, 2009................................................ 0
July 10, 2010................................................ 0
July 10, 2011................................................ 0
July 10, 2012................................................ 0
July 10, 2013................................................ 0
July 10, 2014................................................ 0
July 10, 2015................................................ 0
July 10, 2016................................................ 0
July 10, 2017................................................ 0
July 10, 2018................................................ 0
July 10, 2019................................................ 0
July 10, 2020................................................ 0
July 10, 2021................................................ 0
July 10, 2022................................................ 0
July 10, 2023................................................ 0
July 10, 2024................................................ 0
July 10, 2025................................................ 0
July 10, 2026................................................ 0
Weighted Average Life (years)................................ 9.92
</TABLE>
S-46
<PAGE>
PERCENT OF THE INITIAL CLASS M CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200% 250%
- ------------------------------------------------------------- --------- --------- --------- --------- --------- ---------
Initial Percentage 100 100 100 100 100 100
July 10, 1998................................................ 100 100 100 100 100 100
July 10, 1999................................................ 100 100 100 100 100 100
July 10, 2000................................................ 100 100 100 100 100 100
July 10, 2001................................................ 100 100 100 100 100 100
July 10, 2002................................................ 100 100 89 87 86 83
July 10, 2003................................................ 100 92 78 76 73 68
July 10, 2004................................................ 100 83 68 66 62 56
July 10, 2005................................................ 100 75 60 57 52 45
July 10, 2006................................................ 100 68 52 49 44 37
July 10, 2007................................................ 100 61 46 42 37 30
July 10, 2008................................................ 100 55 40 36 31 25
July 10, 2009................................................ 100 49 34 31 26 20
July 10, 2010................................................ 95 43 29 26 22 0
July 10, 2011................................................ 88 37 25 21 18 0
July 10, 2012................................................ 82 33 21 18 0 0
July 10, 2013................................................ 77 29 18 0 0 0
July 10, 2014................................................ 71 25 15 0 0 0
July 10, 2015................................................ 64 21 0 0 0 0
July 10, 2016................................................ 57 18 0 0 0 0
July 10, 2017................................................ 51 15 0 0 0 0
July 10, 2018................................................ 47 0 0 0 0 0
July 10, 2019................................................ 43 0 0 0 0 0
July 10, 2020................................................ 38 0 0 0 0 0
July 10, 2021................................................ 33 0 0 0 0 0
July 10, 2022................................................ 27 0 0 0 0 0
July 10, 2023................................................ 21 0 0 0 0 0
July 10, 2024................................................ 13 0 0 0 0 0
July 10, 2025................................................ 0 0 0 0 0 0
July 10, 2026................................................ 0 0 0 0 0 0
Weighted Average Life (years)................................ 20.47 12.47 10.14 9.62 8.94 8.05
<CAPTION>
<S> <C>
DATE 300%
- ------------------------------------------------------------- ---------
Initial Percentage 100
July 10, 1998................................................ 100
July 10, 1999................................................ 100
July 10, 2000................................................ 100
July 10, 2001................................................ 100
July 10, 2002................................................ 80
July 10, 2003................................................ 63
July 10, 2004................................................ 50
July 10, 2005................................................ 39
July 10, 2006................................................ 31
July 10, 2007................................................ 24
July 10, 2008................................................ 0
July 10, 2009................................................ 0
July 10, 2010................................................ 0
July 10, 2011................................................ 0
July 10, 2012................................................ 0
July 10, 2013................................................ 0
July 10, 2014................................................ 0
July 10, 2015................................................ 0
July 10, 2016................................................ 0
July 10, 2017................................................ 0
July 10, 2018................................................ 0
July 10, 2019................................................ 0
July 10, 2020................................................ 0
July 10, 2021................................................ 0
July 10, 2022................................................ 0
July 10, 2023................................................ 0
July 10, 2024................................................ 0
July 10, 2025................................................ 0
July 10, 2026................................................ 0
Weighted Average Life (years)................................ 7.35
</TABLE>
S-47
<PAGE>
PERCENT OF THE INITIAL CLASS B-1 CERTIFICATE BALANCE AT THE
RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL
(ASSUMING TERMINATION PURSUANT TO A TERMINATION AUCTION)
<TABLE>
<CAPTION>
PREPAYMENTS (% OF PREPAYMENT MODEL)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DATE 0% 100% 150% 170% 200% 250%
- ------------------------------------------------------------- --------- --------- --------- --------- --------- ---------
Initial Percentage........................................... 100 100 100 100 100 100
July 10, 1998................................................ 100 100 100 100 100 100
July 10, 1999................................................ 100 100 100 100 100 100
July 10, 2000................................................ 100 100 100 100 100 100
July 10, 2001................................................ 100 100 100 100 100 100
July 10, 2002................................................ 100 100 83 81 78 74
July 10, 2003................................................ 100 88 67 64 59 52
July 10, 2004................................................ 100 75 53 49 43 34
July 10, 2005................................................ 100 62 39 35 28 18
July 10, 2006................................................ 100 51 28 23 16 6
July 10, 2007................................................ 100 42 18 13 6 0
July 10, 2008................................................ 100 32 9 4 0 0
July 10, 2009................................................ 100 23 1 0 0 0
July 10, 2010................................................ 92 15 0 0 0 0
July 10, 2011................................................ 81 6 0 0 0 0
July 10, 2012................................................ 73 0 0 0 0 0
July 10, 2013................................................ 65 0 0 0 0 0
July 10, 2014................................................ 56 0 0 0 0 0
July 10, 2015................................................ 47 0 0 0 0 0
July 10, 2016................................................ 36 0 0 0 0 0
July 10, 2017................................................ 26 0 0 0 0 0
July 10, 2018................................................ 21 0 0 0 0 0
July 10, 2019................................................ 14 0 0 0 0 0
July 10, 2020................................................ 7 0 0 0 0 0
July 10, 2021................................................ 0 0 0 0 0 0
July 10, 2022................................................ 0 0 0 0 0 0
July 10, 2023................................................ 0 0 0 0 0 0
July 10, 2024................................................ 0 0 0 0 0 0
July 10, 2025................................................ 0 0 0 0 0 0
July 10, 2026................................................ 0 0 0 0 0 0
Weighted Average Life (years)................................ 17.64 9.40 7.45 7.14 6.76 6.28
<CAPTION>
<S> <C>
DATE 300%
- ------------------------------------------------------------- ---------
Initial Percentage........................................... 100
July 10, 1998................................................ 100
July 10, 1999................................................ 100
July 10, 2000................................................ 100
July 10, 2001................................................ 100
July 10, 2002................................................ 70
July 10, 2003................................................ 45
July 10, 2004................................................ 25
July 10, 2005................................................ 9
July 10, 2006................................................ 0
July 10, 2007................................................ 0
July 10, 2008................................................ 0
July 10, 2009................................................ 0
July 10, 2010................................................ 0
July 10, 2011................................................ 0
July 10, 2012................................................ 0
July 10, 2013................................................ 0
July 10, 2014................................................ 0
July 10, 2015................................................ 0
July 10, 2016................................................ 0
July 10, 2017................................................ 0
July 10, 2018................................................ 0
July 10, 2019................................................ 0
July 10, 2020................................................ 0
July 10, 2021................................................ 0
July 10, 2022................................................ 0
July 10, 2023................................................ 0
July 10, 2024................................................ 0
July 10, 2025................................................ 0
July 10, 2026................................................ 0
Weighted Average Life (years)................................ 5.93
</TABLE>
FINAL SCHEDULED DISTRIBUTION DATE
The Final Scheduled Distribution Dates for each Class of Offered
Certificates is set forth on the cover hereof. The Final Scheduled Distribution
Dates for the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8 and Class B-1 Certificates were determined on the basis of
the Structuring Assumptions and the assumption that there are no prepayments,
the Servicer does not exercise its optional termination right and the Contracts
are not sold in a Termination Auction. The Final Scheduled Distribution Dates
for the Class A-9 and Class M Certificates were determined by adding six months
to the date of maturity of the latest possible maturing Contract. The actual
final Distribution Date for each Class of Offered Certificates is likely to be
shorter, and could occur significantly earlier than, the applicable Final
Scheduled Distribution Date because (i) prepayments are likely to occur, (ii)
the Seller may repurchase Contracts in the event of breaches of representations
and warranties and (iii) the Servicer may cause an optional termination of the
Trust Fund or a Termination Auction may occur.
S-48
<PAGE>
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement (the "Agreement"). A form of the Pooling and Servicing Agreement will
be made available to prospective investors upon request (made to the Servicer at
the address specified in the Prospectus under "Incorporation of Certain
Documents by Reference") and will be filed with the Securities and Exchange
Commission after the initial issuance of the Certificates as exhibits to a
Current Report on Form 8-K. Reference is made to the Prospectus for additional
information regarding the terms and conditions of the Agreement. The following
discussion supplements, and does not replace or supersede the discussion under
"Description of the Certificates" in the Prospectus, unless the context
otherwise provides.
Set forth below are summaries of the specific terms and provisions pursuant
to which the Certificates will be issued. The following summaries do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, the provisions of the Agreement. When particular provisions or
terms used in the Agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference.
GENERAL
All the Offered Certificates initially will be issuable in one or more
Global Certificates registered in the name of Cede as the nominee of DTC.
Ownership in Offered Certificates represented by such Global Certificates will
only be available in the form of book-entries on the records of DTC and
participating members thereof. All references to "holders" or
"Certificateholders," and to authorized denominations, when used with respect to
the Offered Certificates issued as Global Certificates, shall reflect the rights
of beneficial owners of the Offered Certificates ("Certificate Owners"), and
limitations thereof, as they may be indirectly exercised through DTC and its
participating members, except as otherwise specified herein. See "Description of
the Certificates -- Global Certificates" in the Prospectus. See the Prospectus
under "Description of the Certificates -- Global Certificates" for a description
of the circumstances in which Definitive Certificates in the future may be
issued. Any Offered Certificates issued as Definitive Certificates will be
transferable and exchangeable at the corporate trust office of the Trustee at
its Corporate Trust Department in Chicago, Illinois or, if it so elects, at the
office of an agent in New York, New York. No service charge will be made for any
registration of exchange or transfer, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge.
The Offered Certificates will be issued in fully registered form only, in
denominations equal to $1,000 or any integral multiple of one dollar in excess
thereof. The "Percentage Interest" of a Certificate of a Class is the percentage
obtained from dividing the original denomination of such Certificate by the
Initial Certificate Balance of the Certificates of that class.
The Trust Fund includes (i) the Contract Pool, including certain rights to
receive payments on the Contracts on and after the Cut-off Date, (ii) the
amounts held from time to time in the "Certificate Account" (as described below
under "-- Payment on Contracts; Certificate Account") maintained by the Trustee
pursuant to the Agreement, (iii) any property which initially secured a Contract
and which is acquired in the process of realizing thereon, (iv) the obligations
of BankAmerica Housing Services, under certain conditions, to repurchase
Contracts sold by it with respect to which certain representations and
warranties have been breached and not cured, (v) the proceeds of all insurance
policies described herein and (vi) the Reserve Account.
BankAmerica Housing Services will convey the Contracts to the Trustee. See
"The Contract Pool" herein and "-- Conveyance of Contracts" below. BankAmerica
Housing Services, as Servicer, will service the Contracts pursuant to the
Agreement. The Contract documents will be held for the benefit of the Trustee by
the Servicer.
Distributions of principal and interest to the holders of the Certificates
will be made on the 10th day of each month, or, if such day is not a business
day, the next succeeding business day (each, a
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<PAGE>
"Distribution Date") beginning in August 1997, to the persons in whose names the
Certificates are registered at the close of business on the last business day
preceding each Distribution Date (the "Record Date").
PASS-THROUGH RATES
The Class A-1 Pass-Through Rate will be 5.910% per annum.
The Class A-2 Pass-Through Rate will be 6.015% per annum.
The Class A-3 Pass-Through Rate will be 6.060% per annum.
The Class A-4 Pass-Through Rate will be 6.195% per annum.
The Class A-5 Pass-Through Rate will be 6.265% per annum.
The Class A-6 Pass-Through Rate will be 6.340% per annum.
The Class A-7 Pass-Through Rate will be 6.580% per annum.
The Class A-8 Pass-Through Rate will be 6.725% per annum.
The Class M Pass-Through Rate will be 6.800% per annum.
The Class B-1 Pass-Through Rate will be 6.940% per annum.
The Pass-Through Rate for each of the Certificates of Class A-9 and Class
B-2 on any Distribution Date will be adjusted so as not to exceed the weighted
average of the Net Contract Rates of the Contracts in the Contract Pool at the
beginning of the month preceding the month of such Distribution Date. The "Net
Contract Rate" of a Contract equals the rate of interest borne by such Contract
minus the Annual Servicing Rate. The "Annual Servicing Rate" is equal to 1%. The
weighted average Net Contract Rate of the Contract Pool as of the Cut-off Date
was approximately 9.72%.
The Class A-9 Pass-Through Rate on each Distribution Date will be 7.015% per
annum, subject to a maximum rate equal to the weighted average of the Net
Contract Rates on the Contracts in the Contract Pool, computed on the basis of a
360-day year of twelve 30-day months. In all but the most unusual prepayment
scenarios, it is anticipated that the Class A-9 Pass-Through Rate will be
7.015%. If a large principal amount of Contracts having Contract Rates equal to
or higher than 8.015% were to prepay while a proportionate principal amount of
the Contracts having Contract Rates lower than 8.015% did not prepay, with the
result that the interest collections on the remaining Contracts were not
sufficient to support a Class A-9 Pass-Through Rate of 7.015%, then the Class
A-9 Pass-Through Rate would be equal to the weighted average of the Net Contract
Rates on the Contracts remaining in the Contract Pool. Of the initial Contracts,
97.79% by aggregate principal balance as of the Cut-off Date had Contract Rates
equal to or higher than 8.015%.
The Class B-2 Pass-Through Rate on each Distribution Date will be 7.700% per
annum, subject to a maximum rate equal to the weighted average of the Net
Contract Rates on the Contracts in the Contract Pool, computed on the basis of a
360-day year of twelve 30-day months. In all but the most unusual prepayment
scenarios, it is anticipated that the Class B-2 Pass-Through Rate will be
7.700%. If a large principal amount of Contracts having Contract Rates equal to
or higher than 8.700% were to prepay while a proportionate principal amount of
the Contracts having Contract Rates lower than 8.700% did not prepay, with the
result that the interest collections on the remaining Contracts were not
sufficient to support a Class B-2 Pass-Through Rate of 7.700%, then the Class
B-2 Pass-Through Rate would be equal to the weighted average of the Net Contract
Rates on the Contracts remaining in the Contract Pool. Of the initial Contracts,
89.83% by aggregate principal balance as of the Cut-off Date had Contract Rates
equal to or higher than 8.700%.
CONVEYANCE OF CONTRACTS
On the date of initial issuance of the Certificates, BankAmerica Housing
Services will convey to the Trustee, without recourse, all right, title and
interest of BankAmerica Housing Services in and to the Contracts, and all rights
under the standard hazard insurance policies on the related Manufactured Homes.
The conveyance of the Contracts to the Trustee will include a conveyance of all
rights to receive Scheduled Payments thereon that were due on or after the
Cut-off Date, even if received prior to the Cut-
S-50
<PAGE>
off Date, as well as all rights to any payments received on or after the Cut-off
Date (other than late receipts of Scheduled Payments that were due prior to the
Cut-off Date). The Contracts will be described on a schedule attached to the
Agreement (the "Contract Schedule"). The Contract Schedule will include the
principal balance of each Contract as of the Cut-off Date, the amount of each
Scheduled Payment due on each Contract as of the Cut-off Date, the Contract Rate
on each Contract (determined as of the Cut-off Date) and the maturity date of
each Contract. Prior to the conveyance of the Contracts to the Trustee, the
BankAmerica Housing Services' operations department will be required to complete
a review of all of the originals of the Contracts, the certificates of title to,
or other evidence of a perfected security interest in, the Manufactured Homes,
any related mortgages and any assignments or modifications of the foregoing
(collectively, the "Contract Files") confirming the accuracy of the Contract
Schedule delivered to the Trustee. Any Contract discovered not to agree with
such schedule in a manner that is materially adverse to the interests of the
Certificateholders will be repurchased by BankAmerica Housing Services or
replaced with another Contract, except that if the discrepancy relates to the
principal balance of a Contract (determined as described above), BankAmerica
Housing Services may, under certain conditions, deposit cash in the Certificate
Account in an amount sufficient to offset such discrepancy. The Trustee will not
review the Contract Files.
The Servicer will hold, as custodian and agent on behalf of the Trustee, the
original Contracts and copies of documents and instruments relating to each
Contract and the security interest in the Manufactured Home, and real property,
if any, relating to each Contract. See "Risk Factors -- Security Interests in
the Manufactured Homes; Transfer of Contracts and Security Interests" and
"Certain Legal Aspects of the Contracts -- Security Interests in Manufactured
Homes" and "-- Land Home and Land-in-Lieu Contracts" in the Prospectus for
discussion of the consequences of the Servicer maintaining possession of the
original Contracts and the security interest in the related Manufactured Homes
and real property, if any, securing such Contracts. In order to give notice of
the Trustee's right, title and interest in and to the Contracts, a UCC-1
financing statement identifying the Trustee as the secured party and identifying
all the Contracts as collateral will be filed in the appropriate office in the
appropriate states. The Contracts will be stamped or otherwise marked to reflect
their assignment to the Trustee. To the extent that the Contracts do not
constitute "chattel paper" within the meaning of the UCC as in effect in the
applicable jurisdictions or to the extent that the Contracts do constitute
chattel paper and a subsequent purchaser is able to take physical possession of
the Contracts without notice of such assignment, the Trustee's interest in the
Contracts could be defeated. See "Certain Legal Aspects of the Contracts" in the
Prospectus.
BankAmerica Housing Services will make certain representations and
warranties to the Trustee with respect to each Contract sold by it, as of the
Closing Date (unless expressly stated otherwise), including the following: (a)
as of the Cut-off Date, no Contract is more than 59 days delinquent; (b) no
provision of such Contract has been waived, altered or modified in any respect,
except by instruments or documents identified in the related Contract File; (c)
such Contract is a legal, valid and binding obligation of the Obligor and is
enforceable in accordance with its terms (except as may be limited by laws
affecting creditors' rights generally or by general equity principles); (d) such
Contract is not subject to any right of rescission, set-off, counterclaim or
defense; (e) such Contract is covered by hazard insurance described under
"Description of the Certificates -- Servicing Compensation and Payment of
Expenses; Certain Matters Regarding the Servicer -- A. Hazard Insurance
Policies" in the Prospectus; (f) such Contract was either (i) originated by a
manufactured housing dealer acting, to the knowledge of BankAmerica Housing
Services, in the regular course of its business and purchased on an individual
basis by BankAmerica Housing Services in the ordinary course of its business, or
(ii) originated by BankAmerica Housing Services in the ordinary course of its
business; (g) such Contract was neither originated in nor is subject to the laws
of any jurisdiction whose laws would make the transfer of the Contract or an
interest therein to the Trustee pursuant to the Agreement or pursuant to the
Certificates unlawful; (h) such Contract complies with all requirements of law;
(i) such Contract has not been satisfied or subordinated in whole or in part or
rescinded and the Manufactured Home securing such Contract has not been released
from the lien of such Contract; (j) such Contract creates a valid and
enforceable first-priority security interest in favor of BankAmerica Housing
Services in the Manufactured Home and real property,
S-51
<PAGE>
if any, securing such Contract, (k) such security interest has been assigned to
the Trustee, and, after such assignment, the Trustee has a valid and perfected
first-priority security interest in the Manufactured Home and real property, if
any, securing such Contract, (l) such Contract has not been sold, assigned or
pledged to any other person, and prior to the transfer of the Contracts to the
Trustee, BankAmerica Housing Services had good and marketable title to such
Contract sold by it, free and clear of any encumbrance, equity, loan, pledge,
charge, claim or security interest, and it was the sole owner thereof and had
full right to transfer such Contract to the Trustee; (m) as of the Cut-off Date,
there was no default, breach, violation or event permitting acceleration under
such Contract and no event which, with notice and the expiration of any grace or
cure period, would constitute such a default, breach, violation or event
permitting acceleration (except payment delinquencies permitted by clause (a)
above), and BankAmerica Housing Services has not waived any of the foregoing;
(n) as of the Closing Date (as defined below), there were, to the knowledge of
BankAmerica Housing Services' no liens or claims which have been filed for work,
labor or materials affecting a Manufactured Home or real property, if any,
securing such Contract, which are or may be liens prior to or equal with or
subordinate to the lien of such Contract; (o) such Contract is a
fully-amortizing loan with a fixed Contract Rate and provides for level payments
over the term of such Contract; (p) such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the benefits of the
security; (q) the information contained in the Contract Schedule with respect to
such Contract is true and correct; (r) there is only one original of such
Contract; (s) such Contract did not have a loan-to-value ratio at origination
greater than 100%; (t) the related Manufactured Home is not considered or
classified as part of the real estate on which it is located under the laws of
the jurisdiction in which it is located unless it is subject to a Land-in-Lieu
or Land Home Contract and as of the Closing Date such Manufactured Home is, to
the knowledge of BankAmerica Housing Services free of damage and in good repair;
(u) such Contract is a "qualified mortgage" under Section 860G(a)(3) of the
Code; (v) the related Manufactured Home is a "manufactured home" within the
meaning of Section 5402(6) of Title 42 of the United States Code and, as to each
Contract, Bank of America, FSB was a federally-chartered savings bank as of the
time of such Contract's origination as required under Section 3(a)(41)(A)(ii) of
the Exchange Act; (w) such Contract is secured by a "single family residence"
within the meaning of Section 25(e)(10) of the Code; (x) such Contract will be
stamped to indicate its assignment to the Trustee within 60 days of the Closing
Date and (y) the Contract with the lowest Contract Rate has a Contract Rate of
8.00% and the Contract with the highest Contract Rate has a Contract Rate of
13.50%. Under the terms of the Agreement, and subject to the relevant Seller's
option to effect a substitution with respect to Contracts sold by it as
described in the last paragraph under this subheading, BankAmerica Housing
Services will be obligated to repurchase, at the price described below, any
Contract sold by it within 90 days after BankAmerica Housing Services becomes
aware, or after BankAmerica Housing Services' receipt of written notice from the
Trustee or the Servicer, of a breach of any representation or warranty of
BankAmerica Housing Services in the Agreement that materially and adversely
affects the Trust Fund's interest in any Contract it sold thereto unless such
breach has been cured.
Notwithstanding the foregoing, BankAmerica Housing Services will not be
required to repurchase or substitute any Contract relating to a Manufactured
Home and real property, if any, securing such Contract located in any
jurisdiction on account of a breach of the representation and warranty described
in clause (k) above solely on the basis of the failure by BankAmerica Housing
Services to cause a notation to be made on any document of title relating to any
such Manufactured Home or to execute any transfer instrument relating to any
such Manufactured Home or real property, if any (other than a notation or
transfer instrument necessary to show BankAmerica Housing Services as lienholder
or legal title holder) unless (i) a court of competent jurisdiction has adjudged
that, because of such failure, the Trustee does not have a perfected
first-priority security interest in such related Manufactured Home or (ii)(A)
the Servicer has received written advice of counsel to the effect that a court
of competent jurisdiction has held that, solely because of a substantially
similar failure on the part of a pledgor or assignor of manufactured housing
contracts (who has perfected the assignment or pledge of such contracts), a
perfected first-priority security interest was not created in favor of the
pledgee or assignee in a related manufactured home which is located in such
jurisdiction and which is subject to the same
S-52
<PAGE>
laws regarding the perfection of security interests therein applicable to the
Manufactured Homes located in such jurisdiction and (B) the Servicer shall not
have completed all appropriate remedial action with respect to such Manufactured
Home within 180 days after receipt of such written advice. Any such advice will
be from counsel selected by the Servicer on a non-discriminatory basis from
among the counsel used by the Servicer in its general business in the
jurisdiction in question. The Servicer will have no ongoing obligation to seek
advice with respect to the matters described in clause (ii) above. However, the
Servicer is required to seek advice with respect to such matters whenever
information comes to the attention of its counsel which causes such counsel to
determine that a holding of the type described in clause (ii)(A) might exist. If
any counsel selected by the Servicer informs the Servicer that no holding of the
type described in clause (ii)(A) exists, such advice will be conclusive and
binding on the parties to the Agreement pursuant to which a Trustee has an
interest in any Contracts in the applicable jurisdiction as of the applicable
date. If any holding described above which would give rise to a repurchase
obligation on the part of BankAmerica Housing Services were to result from
proceedings brought by a receiver or conservator of BankAmerica Housing
Services, it is likely that such receiver or conservator would also reject the
resulting repurchase obligation.
The repurchase obligation described above generally constitutes the sole
remedy available to the Trustee and the Certificateholders for a breach of a
representation or warranty under the Agreement with respect to the Contracts.
The repurchase price for any Contract will be equal to the remaining principal
balance of such Contract as of the beginning of the month of repurchase, plus
accrued and unpaid interest from the Due Date with respect to which the Obligor
last made a payment to the Due Date occurring in the Collection Period during
which such Contract is repurchased.
In lieu of repurchasing a Contract as specified above, during the two-year
period following the date of the initial issuance of the Certificates (the
"Closing Date"), BankAmerica Housing Services may, at its option, substitute an
Eligible Substitute Contract (as defined below) for the Contract that it is
otherwise obligated to repurchase (referred to herein as the "Replaced
Contract"). An "Eligible Substitute Contract" is a Contract that satisfies, as
of the date of its substitution, the representations and warranties specified in
the Agreement, has a Scheduled Principal Balance that is not greater than the
Scheduled Principal Balance of the Replaced Contract as of the beginning of the
month in which such substitution takes place, has a Contract Rate that is at
least equal to the Contract Rate of the Replaced Contract, has a remaining term
to scheduled maturity that is not greater than the remaining term to scheduled
maturity of the Replaced Contract and has not been delinquent for more than 31
days as to any Scheduled Payment due in the twelve months prior to its
substitution. BankAmerica Housing Services will be required to deposit in the
Certificate Account cash in the amount, if any, by which the Scheduled Principal
Balance of the Replaced Contract as of the beginning of the month in which
substitution takes place exceeds the Scheduled Principal Balance of the Contract
it sold being substituted as of the beginning of the month.
PAYMENTS ON THE CONTRACTS; CERTIFICATE ACCOUNT
The Trustee will initially establish and maintain an account (the
"Certificate Account") at a depository institution organized under the laws of
the United States or any state, the deposits of which are insured to the full
extent permitted by law by the Federal Deposit Insurance Corporation (the
"FDIC") whose commercial paper, long-term deposits or long-term unsecured senior
debt has a rating of P-1 by Moody's and F-1 by Fitch (if rated by Fitch) in the
case of commercial paper or in one of the two highest rating categories by
Moody's and Fitch (if rated by Fitch) in the case of long-term deposits or
long-term unsecured senior debt, and which is subject to examination by federal
or state authorities or a depository institution otherwise acceptable to Moody's
and Fitch (an "Eligible Institution"). The funds in the Certificate Account are
required to be invested by the Trustee in common trust funds, collective
investment trusts or Eligible Investments that will mature not later than the
business day preceding the applicable Distribution Date. "Eligible Investments"
include, among other investments, obligations of the United States or of any
agency thereof backed by the full faith and credit of the United States;
certificates of deposit, time deposits and bankers' acceptances sold by eligible
financial institutions;
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commercial paper rated P-1 by Moody's and F-1 by Fitch (if rated by Fitch);
money market funds acceptable to Moody's and Fitch (as evidenced by a letter
from Moody's and Fitch to such effect); and other obligations acceptable to
Moody's and Fitch.
All payments in respect of principal and interest on the Contracts received
during any Collection Period by the Servicer (exclusive of Scheduled Payments
due prior to the Cut-off Date), including Liquidation Proceeds (net of
Liquidation Expenses, as defined below), are required to be paid into the
Certificate Account not later than the second business day following receipt
thereof. Amounts received as late payment fees, extension fees, assumption fees
or similar fees may be retained by the Servicer as part of its servicing fees.
See " -- Servicing Compensation; Certain Other Matters Regarding the Servicer"
below. In addition, the amount paid by BankAmerica Housing Services for any
Contract repurchased by it as a result of a breach of a representation or
warranty under the Agreement, and amounts required to be deposited upon
substitution of an Eligible Substitute Contract because of a breach of a
representation or warranty (which amounts will be treated as partial principal
prepayments), as described under " -- Conveyance of Contracts" above, are
required to be paid into the Certificate Account.
On the third business day prior to each Distribution Date (the
"Determination Date"), the Servicer will determine the Available Distribution
Amount and the amounts to be distributed on the Certificates on such
Distribution Date. The "Available Distribution Amount" for any Distribution Date
is the sum of (a) the Monthly Advance for such Distribution Date (as defined
below under " -- Advances") and (b) the amount in the Certificate Account on the
close of business on the last day of the immediately preceding Collection
Period, less the sum of (i) any repossession profits (of which there are
expected to be a DE MINIMIS amount) on defaulted Contracts, (ii) payments on
Contracts that have been repurchased as a result of a breach of a representation
or warranty that are received during or after the month of repurchase, (iii)
Excess Contract Payments (as defined below) and any other payments not required
to be distributed to Certificateholders on the related Distribution Date, (iv)
reimbursements to the Servicer in the amount of expenses incurred in connection
with the liquidation of a Contract ("Liquidation Expenses") and certain taxes
and insurance premiums advanced by the Servicer in respect of Manufactured Homes
(as described below under "-- Advances"), (v) reimbursements to the Servicer for
Nonrecoverable Advances in respect of Contracts and Monthly Advances to the
extent permitted by the Agreement (as described below under " -- Advances") and
(vi) the Monthly Servicing Fee (as hereinafter defined).
An "Excess Contract Payment" is a payment received on a Contract that is in
excess of the Scheduled Payment (or, generally, an integral multiple thereof) on
such Contract, is not a partial principal prepayment or prepayment in full and
is not part of any Liquidation Proceeds. Excess Contract Payments will be held
by the Trustee in the Certificate Account and may be applied as described under
" -- Advances" below.
The Trustee or its paying agent will withdraw funds from the Certificate
Account on each Distribution Date (but only to the extent of the related
Available Distribution Amount) to make payments to Certificateholders as
specified under "-- Distributions" below. From time to time, as provided in the
Agreement, the Servicer will also withdraw funds from the Certificate Account to
make payments to it or BankAmerica Housing Services as permitted by the
Agreement and described in subclauses (i), (ii), (iv), (v) and (vi) of clause
(b) in the second preceding paragraph.
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DISTRIBUTIONS
Distributions to the holders of the Series 1997-1 Regular Certificates will
be applied first to the holders of the Senior Certificates, second to the
holders of the Class M Certificates and third to the holders of the Class B
Certificates. The Available Distribution Amount for each Distribution Date will
be applied in the amounts and the order of priority set forth below.
Distributions of principal and interest to holders of each Class of Certificates
will be made on each Distribution Date in an amount equal to their respective
Percentage Interests multiplied by the aggregate amount distributed to such
Class of Certificates on such Distribution Date. Interest will be calculated on
the basis of a 360-day year consisting of twelve 30-day months.
Each distribution with respect to book-entry certificates will be paid to
DTC, which will credit the amount of such distribution to the accounts of its
participants in accordance with its normal procedures. Each participant will be
responsible for disbursing such distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm will be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to book-entry
certificates are to be made by DTC and its participants in accordance with DTC's
rules. See "Description of the Certificates -- Global Certificates" below.
The percentages of the Formula Principal Distribution Amount that are
distributable to the Senior Certificateholders, the Class M Certificateholders,
the Class B-1 Certificateholders and the Class B-2 Certificateholders are
determined on the basis of whether the Class M Principal Distribution Test or
the Class B Principal Distribution Test are met, as described below. By their
terms, neither of such tests can be met prior to the Distribution Date in August
2001. Consequently, unless the Senior Certificate Balance is reduced to zero
prior to such Distribution Date, holders of the Senior Certificates will receive
100% of the Formula Principal Distribution Amount (in the order described below)
until at least such Distribution Date.
PRIORITIES. On each Distribution Date, the Available Distribution Amount,
together with the Reserve Account Draw Amount (as defined herein), if any, will
be distributed in the following amounts and in the following order of priority:
(i)
concurrently to the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8 and Class A-9
Certificateholders, the Class A-1 Interest Distribution Amount, the Class
A-2 Interest Distribution Amount, the Class A-3 Interest Distribution
Amount, the Class A-4 Interest Distribution Amount, the Class A-5 Interest
Distribution Amount, the Class A-6 Interest Distribution Amount, the Class
A-7 Interest Distribution Amount, the Class A-8 Interest Distribution Amount
and the Class A-9 Interest Distribution Amount, respectively;
(ii)
to the Senior Certificateholders, the Senior Percentage of the
Formula Principal Distribution Amount in the following order of
priority:
(a) to the Class A-1 Certificateholders until the Certificate Balance of
the Class A-1 Certificates is reduced to zero;
(b) to the Class A-2 Certificateholders until the Certificate Balance of
the Class A-2 Certificates is reduced to zero;
(c) to the Class A-3 Certificateholders until the Certificate Balance of
the Class A-3 Certificates is reduced to zero;
(d) to the Class A-4 Certificateholders until the Certificate Balance of
the Class A-4 Certificates is reduced to zero;
(e) to the Class A-5 Certificateholders until the Certificate Balance of
the Class A-5 Certificates is reduced to zero;
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(f) to the Class A-6 Certificateholders until the Certificate Balance of
the Class A-6 Certificates is reduced to zero;
(g) to the Class A-7 Certificateholders until the Certificate Balance of
the Class A-7 Certificates is reduced to zero;
(h) to the Class A-8 Certificateholders until the Certificate Balance of
the Class A-8 Certificates is reduced to zero; and
(i)
to the Class A-9 Certificateholders until the Certificate Balance of
the Class A-9 Certificates is reduced to zero;
(iii)
to the Class M Certificateholders, the Class M Interest Distribution
Amount;
(iv)
to the Class M Certificateholders, the Class M Percentage of the
Formula Principal Distribution Amount until the Class M Certificate
Balance is reduced to zero;
(v)
to the Class B-1 Certificateholders, the Class B-1 Interest
Distribution Amount;
(vi)
to the Class B-1 Certificateholders, the Class B Percentage of the
Formula Principal Distribution Amount until the Class B-1 Certificate
Balance is reduced to zero;
(vii)
to the Class B-2 Certificateholders, the Class B-2 Interest
Distribution Amount;
(viii)
to the Class B-2 Certificateholders, the Class B Percentage of the
Formula Principal Distribution Amount (less any portion thereof
distributed pursuant to clause (vi) above) until the Class B-2 Certificate
Balance is reduced to zero;
(ix)
if such Distribution Date is on or after the earlier of (a) the
Distribution Date in August 2007 and (b) the first Distribution Date
on which the percentage equivalent of a fraction, the numerator of which is
the Pool Scheduled Principal Balance (after giving effect to distributions
with respect to principal) for such Distribution Date and the denominator of
which is the Cut-off Date Pool Principal Balance, is less than or equal to
25%, to the Reserve Account, any remaining Available Distribution Amount to
the extent necessary to increase the funds in the Reserve Account to the
Reserve Account Cap; and
(x)
to the Class R Certificateholders, any remaining Available
Distribution Amount.
Notwithstanding the foregoing, on any Distribution Date on which the amount
distributable (the "initial distribution") to holders of the Class B-2
Certificates pursuant to clause (viii) above would cause (x) the sum of (i) the
Class B-2 Certificate Balance and (ii) the amount on deposit in the Reserve
Account (in each case, after giving effect to the initial distribution) (such
sum, the "Clause X Amount") to be less than (y) $5,239,906 (the "Clause Y
Amount"), which is 2% of the Cut-off Date Pool Principal Balance, then the
principal distribution to holders of the Class B-2 Certificates pursuant to
clause (viii) above will be reduced to such amount as will cause the Clause X
Amount to equal the Clause Y Amount, and the Available Distribution Amount
(allocable to principal) that remains after such reduced distribution to the
Class B-2 Certificateholders will be distributed PRO RATA to holders of the
Senior Certificates and the Class M Certificates on the basis of their
respective Certificate Balances.
In addition, notwithstanding the prioritization of the distribution of the
Formula Principal Distribution Amount to the holders of the Senior Certificates
pursuant to clause (ii) above, on a Distribution Date, if any, in respect of
which a Deficiency Event (defined below) is in effect, the portion of the
Formula Principal Distribution Amount for such Distribution Date that would
otherwise be distributed sequentially to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9
Certificateholders pursuant to clause (ii) above will instead be distributed to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 and Class A-9 Certificateholders PRO RATA based upon the Certificate
Balance of each such Class until each of the Certificate Balances of the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8
and
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Class A-9 Certificates have been reduced to zero. A "Deficiency Event" will be
in effect for any Distribution Date as to which the Pool Scheduled Principal
Balance is equal to or less than the aggregate Certificate Balance of the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8
and Class A-9 Certificates.
Furthermore, notwithstanding the foregoing, if the percentage of the Formula
Principal Distribution Amount allocable to the holders of the Class A-9
Certificates on any Distribution Date pursuant to clause (ii) above exceeds the
Class A-9 Certificate Balance for such Distribution Date, such excess will be
distributed to the Class M and Class B-1 Certificateholders (or the Class B-2
Certificateholders if the Certificate Balance of the Class B-1 Certificates has
been reduced to zero) PRO RATA on the basis of the Class M and Class B
Percentages, respectively. If the percentage of the Formula Principal
Distribution Amount allocable to the Class M Certificateholders on any
Distribution Date pursuant to clause (iv) above exceeds the Class M Certificate
Balance for any such Distribution Date, such excess will be distributed to the
Class B-1 Certificateholders until the Class B-1 Certificate Balance is reduced
to zero (and to the Class B-2 Certificateholders thereafter).
DEFINITIONS. As to any Distribution Date, the "Interest Distribution
Amount" for any Class is equal to the sum of (i) one month's interest at the
Pass-Through Rate for that Class on the Certificate Balance of that Class and
(ii) any previously undistributed shortfalls in interest due to the
Certificateholders of that Class in respect of prior Distribution Dates. Any
shortfall in interest due to Certificateholders will, to the extent legally
permissible, bear interest at the related Pass-Through Rate. Interest will
accrue with respect to each Distribution Date in respect of the Series 1997-1
Regular Certificates during the one-month period beginning on the 10th day of
the month preceding the month of such Distribution Date and ending on the 9th
day of the month of such Distribution Date.
The "Senior Percentage" (which shall not be greater than 100%) for a
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is the Senior Certificate Balance immediately prior to such Distribution
Date and the denominator of which is the sum of:
(i)
the Senior Certificate Balance immediately prior to such Distribution
Date,
(ii)
if the Class M Principal Distribution Test has been met, the Class M
Certificate Balance immediately prior to such Distribution Date or,
if the Class M Principal Distribution Test has not been met, zero, and
(iii)
if the Class B Principal Distribution Test has been met, the Class B
Certificate Balance immediately prior to such Distribution Date or,
if the Class B Principal Distribution Test has not been met, zero.
The "Class M Percentage" (which shall not be greater than 100%) for a
Distribution Date is (i) if the Class M Principal Distribution Test has been met
or the Senior Certificate Balance is zero for such Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the Class M
Certificate Balance immediately prior to such Distribution Date and the
denominator of which is the sum of:
(a) the Senior Certificate Balance immediately prior to such Distribution
Date,
(b) the Class M Certificate Balance immediately prior to such
Distribution Date, and
(c) if the Class B Principal Distribution Test has been met, the Class B
Certificate Balance immediately prior to such Distribution Date, or,
if the Class B Principal Distribution Test has not been met, zero,
or (ii) if the Class M Principal Distribution Test has not been met and the
Senior Certificate Balance is not zero for such Distribution Date, zero.
The "Class B Percentage" (which shall not be greater than 100%) for a
Distribution Date is (i) if the Class B Principal Distribution Test has been met
or the Senior Certificate Balance and the Class M
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Certificate Balance are zero for such Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the Class B Certificate
Balance immediately prior to such Distribution Date and the denominator of which
is the sum of:
(a) the Senior Certificate Balance immediately prior to such Distribution
Date,
(b) the Class M Certificate Balance immediately prior to such
Distribution Date, and
(c) the Class B Certificate Balance immediately prior to such
Distribution Date,
or (ii) if the Class B Principal Distribution Test has not been met and the
Senior Certificate Balance and the Class M Certificate Balance are not zero for
such Distribution Date, zero.
Notwithstanding the foregoing, in no event will (i) the Class M Percentage
exceed the percentage equal to 100% minus the Senior Percentage or (ii) the
Class B Percentage exceed the percentage equal to 100% minus the sum of the
Senior Percentage and the Class M Percentage.
The Class M Principal Distribution Test will be met if all of the following
conditions are satisfied:
(1) the Distribution Date is on or after the Distribution Date in August
2001;
(2) the percentage equivalent of a fraction, the numerator of which is
the sum of (a) the Class M Certificate Balance immediately prior to
such Distribution Date and (b) the Class B Certificate Balance immediately
prior to such Distribution Date and the denominator of which is the Pool
Scheduled Principal Balance immediately prior to such Distribution Date, is
equal to at least 26.25% (which is 1.5 times the percentage equivalent of
the fraction, the numerator of which is the sum of (a) the Initial Class M
Certificate Balance, (b) the Initial Class B-1 Certificate Balance and (c)
the Initial Class B-2 Certificate Balance and the denominator of which is
the Cut-off Date Pool Principal Balance);
(3) The Cumulative Realized Losses as of such Distribution Date do not
exceed (a) if such Distribution Date is from and including August
2001 and up to and including July 2002, 6.0% of the Cut-off Date Pool
Principal Balance, (b) if such Distribution Date is from and including
August 2002 and up to and including July 2003, 7.0% of the Cut-off Date Pool
Principal Balance, (c) if such Distribution Date is from and including
August 2003 and up to and including July 2004, 8.5% of the Cut-off Date Pool
Principal Balance, and (d) if such Distribution Date is in or after August
2004, 9.5% of the Cut-off Date Pool Principal Balance;
(4) the Current Realized Loss Ratio as of such Distribution Date does not
exceed 2.5%;
(5) the Average Sixty-Day Delinquency Ratio as of such Distribution Date
does not exceed 3.5%; and
(6) the Average Thirty-Day Delinquency Ratio as of such Distribution Date
does not exceed 5.5%.
The Class B Principal Distribution Test will be met if all of the following
conditions are satisfied:
(1) the Distribution Date is on or after the Distribution Date in August
2001;
(2) the percentage equivalent of a fraction, the numerator of which is
the Class B Certificate Balance immediately prior to such
Distribution Date and the denominator of which is the Pool Schedule
Principal Balance immediately prior to such Distribution Date, is equal to
at least 13.50% (which is approximately 1.5 times the percentage equivalent
of the fraction, the numerator of which is the sum of (a) the Initial Class
B-1 Certificate Balance and (b) the Initial Class B-2 Certificate Balance
and the denominator of which is the Cut-off Date Pool Principal Balance);
(3) The Cumulative Realized Losses as of such Distribution Date do not
exceed (a) if such Distribution Date is from and including July 2002
and up to and including 6.0% of the Cut-off Date Pool Principal Balance, (b)
if such Distribution Date is from and including August 2002 and up to and
including July 2003, 7.0% of the Cut-off Date Pool Principal Balance, (c) if
such Distribution Date is
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from and including August 2003 and up to and including July 2004, 8.5% of
the Cut-off Date Pool Principal Balance and (d) if such Distribution Date is
on or after August 2004, 9.5% of the Cut-off Date Pool Principal Balance.
(4) the Current Realized Loss Ratio as of such Distribution Date does not
exceed 2.5%;
(5) the Average Sixty-Day Delinquency Ratio as of such Distribution Date
does not exceed 3.5%; and
(6) the Average Thirty-Day Delinquency Ratio as of such Distribution Date
does not exceed 5.5%.
The "Formula Principal Distribution Amount" in respect of a Distribution
Date equals the sum of (a) the Total Regular Principal Amount for such
Distribution Date and (b) any previously undistributed shortfalls in the
distribution of the Total Regular Principal Amount in respect of prior
Distribution Dates.
The "Total Regular Principal Amount" on each Distribution Date is the sum of
(i) the Scheduled Principal Reduction Amount (defined below) for such
Distribution Date, (ii) the Scheduled Principal Balance (defined below) of each
Contract which, during the related Collection Period, was purchased by
BankAmerica Housing Services on account of certain breaches of representations
and warranties made by it in the Agreement, (iii) all partial prepayments
received during such related Collection Period, (iv) the Scheduled Principal
Balance of each Contract that was prepaid in full during such related Collection
Period and (v) the Scheduled Principal Balance of each Contract that became a
Liquidated Contract (defined below) during such related Collection Period.
The "Scheduled Principal Balance" of a Contract for any Distribution Date is
its principal balance as of the Due Date in the Collection Period immediately
preceding such Distribution Date, after giving effect to all previous partial
prepayments, all previous scheduled principal payments (whether or not paid) and
the scheduled principal payment due on such Due Date, but without giving effect
to any adjustment due to bankruptcy or similar proceedings. The "Scheduled
Principal Reduction Amount" for any Distribution Date is an approximate
calculation (performed on an aggregate basis rather than on a Contract-by-
Contract basis) of the scheduled payments of principal due during the related
Collection Period. Both of these terms are more fully described herein under "--
Distributions" above.
The "Pool Scheduled Principal Balance" for any Distribution Date is equal to
the Cut-off Date Pool Principal Balance less the aggregate of the Total Regular
Principal Amounts for all prior Distribution Dates.
In general, a "Liquidated Contract" is a defaulted Contract as to which all
amounts that the Servicer expects to recover relating to such Contract
("Liquidation Proceeds") have been received. A Liquidated Contract includes any
defaulted Contract in respect of which the related Manufactured Home has been
realized upon and disposed of and the proceeds of such disposition have been
received.
The "Certificate Balance" for any Class as of any Distribution Date is the
Initial Certificate Balance of that Class less all amounts previously
distributed to Certificateholders of that Class on account of principal. The
"Senior Certificate Balance" as of any Distribution Date is the sum of the
Certificate Balances of the Senior Certificates immediately prior to such
Distribution Date. The "Subordinate Certificate Balance" as of any Distribution
Date is the sum of the Class M Certificate Balance, the Class B-1 Certificate
Balance and the Class B-2 Certificate Balance immediately prior to such
Distribution Date. The term "Certificate Balance" in respect of any one or more
Classes of Certificates has the corresponding meaning. In no event shall the
aggregate distributions of principal to the holders of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class M, Class B-1 and Class B-2 Certificates exceed the Initial Class A-1
Certificate Balance, the Initial Class A-2 Certificate Balance, the Initial
Class A-3 Certificate Balance, the Initial Class A-4 Certificate Balance, the
Initial Class A-5 Certificate Balance, the Initial Class A-6 Certificate
Balance, the Initial Class A-7 Certificate Balance, the Initial Class A-8
Certificate Balance, the Initial Class A-9 Certificate Balance, the Initial
Class M Certificate Balance, the Initial Class B-1 Certificate Balance and the
Initial Class B-2 Certificate Balance, respectively.
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The "Average Sixty-Day Delinquency Ratio" and the "Average Thirty-Day
Delinquency Ratio" are, in general, the ratios of the average of the aggregate
principal balances of Contracts delinquent 60 days or more and 30 days or more,
respectively, for the preceding three Collection Periods (determined as of the
last day of each such Collection Period) to the average Pool Scheduled Principal
Balance for such periods. "Cumulative Realized Losses" are, in general, the
aggregate net liquidation losses (calculated as specified in the Agreement) in
respect of Liquidated Contracts since the Cut-off Date. The "Current Realized
Loss Ratio" is, in general, the ratio of the aggregate net liquidation losses in
respect of Liquidated Contracts for the periods specified in the Agreement to an
average Pool Scheduled Principal Balance specified in the Agreement.
RESERVE ACCOUNT
On the Closing Date, the Trustee shall establish an account (the "Reserve
Account") for the benefit of the Certificateholders. The Reserve Account shall
have an initial balance of zero on the Closing Date. Commencing on the
Distribution Date which is the earlier of (a) the Distribution Date in August
2007 and (b) the first Distribution Date on which the percentage equivalent of a
fraction, the numerator of which is the Pool Scheduled Principal Balance (after
giving effect to distribution with respect to principal) for such Distribution
Date and the denominator of which is the Cut-off Date Pool Principal Balance, is
less than or equal to 25%, the Trustee shall make a deposit into the Reserve
Account pursuant to clause (ix) in the fourth paragraph under "Distributions"
above up to the Reserve Account Cap. On each Distribution Date, the Trustee will
withdraw from the Reserve Account an amount (the "Reserve Account Draw Amount")
equal to the lesser of (a) the amount then on deposit in the Reserve Account and
(b) the amount by which the aggregate of amounts due to Certificateholders in
clauses (i) through (viii) under "Distributions" above exceeds the Available
Distribution Amount on such Distribution Date and distribute such amount,
together with the Available Distribution Amount.
Funds in the Reserve Account will be invested in Eligible Investments as
directed by the Trustee, and the net investment earnings, if any, will be paid
to the Class R Certificateholders. "Eligible Investments" means one or more
common trust funds, collective investment trusts or money market funds
acceptable to Moody's and Fitch (as evidenced by a letter from Moody's and Fitch
to such effect or, if no such trusts or funds are acceptable to Moody's and
Fitch any other obligations acceptable to Moody's and Fitch.
On any Distribution Date, any funds on deposit in the Reserve Account in
excess of the Reserve Account Cap (after giving effect to any Reserve Account
Draw Amount paid to the Certificateholders on such date) will be withdrawn from
the Reserve Account and paid to the Class R Certificateholders.
Amounts paid to the Class R Certificateholders pursuant to the two
immediately preceding paragraphs will not be available to offset shortfalls in
distributions to holders of other Classes of Certificates.
The Reserve Account is intended to enhance the likelihood of regular receipt
by the holders of the Series 1997-1 Regular Certificates of the full amount of
the distributions due them and to afford such holders protection against losses
on Liquidated Contracts, but no assurance can be given that the Reserve Account
will be sufficient for such purpose.
The "Reserve Account Cap" shall be (i) as to any Distribution Date (after
giving effect to distributions due thereon) after the Closing Date and until
none of the Offered Certificates remain outstanding, $1,309,976 (which is 0.5%
of the Cut-off Date Pool Principal Balance) and (ii) as to any Distribution Date
(after giving effect to distributions due thereon) after none of the Offered
Certificates remain outstanding, the lesser of the then outstanding Class B-2
Certificate Balance and $1,309,976 (which is 0.5% of the Cut-off Date Pool
Principal Balance).
SUBORDINATION
The rights of the holders of the Subordinate Certificates to receive
distributions of available amounts in the Trust Fund will be subordinate, to the
extent described herein, to such rights of the holders of the
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Senior Certificates. This subordination is intended to enhance the likelihood of
regular receipt by the holders of the Senior Certificates of the full amount of
interest and principal distributable thereon and to afford such holders
protection against losses on Liquidated Contracts.
Similarly, the rights of the holders of the Class B Certificates to receive
distributions due them from available amounts in the Trust Fund will be
subordinated, to the extent described herein, to such rights of the holders of
the Class M Certificates, and the rights of the holders of the Class B-2
Certificates to receive the distributions due them from available amounts in the
Trust Fund will be subordinated, to the extent described herein, to such rights
of the holders of the Class B-1 Certificates. Subject to the subordination of
the Subordinate Certificates to the Senior Certificates, this subordination of
the Class B Certificates to the Class M Certificates and of the Class B-2
Certificates to the Class M and Class B-1 Certificates is intended to enhance
the likelihood of regular receipt by the holders of the Class M Certificates and
the holders of the Class B-1 Certificates, respectively, of the full amount of
the distributions due them and to afford such holders protection against losses
on Liquidated Contracts.
The protection afforded to the holders of Senior Certificates by means of
the subordination of the Subordinate Certificates, to the Class M
Certificateholders by the subordination of the Class B Certificates and to the
Class B-1 Certificateholders by the subordination of the Class B-2 Certificates
(in each case, to the extent described herein) will be accomplished by the
application of the Available Distribution Amount (together with any Reserve
Account Draw Amount) in the order specified under "Distributions" above.
Accordingly, in the event that the Available Distribution Amount (together with
any Reserve Account Draw Amount) on any Distribution Date is not sufficient to
permit the distribution of the amount of interest and the specified portion of
the Formula Principal Distribution Amount due to the holders of any Class of
Certificates, the subordination is intended to protect such Certificateholders
by the right of such Certificateholders to receive distributions of the
Available Distribution Amount in respect of interest and the Formula Principal
Distribution Amount that would otherwise have been distributable to the
Certificateholders of any Class subordinate in priority of distribution to such
Class, until any shortfall in distributions to the holders of the related senior
Class or Classes of Certificates in respect thereof has been satisfied, to the
extent described herein.
LOSSES ON LIQUIDATED CONTRACTS
As described above, the Total Regular Principal Amount distributable to the
holders of the Series 1997-1 Regular Certificates on each Distribution Date
includes the Scheduled Principal Balance of each Contract that became a
Liquidated Contract during the immediately preceding Collection Period. The
Liquidation Proceeds, net of (i) certain expenses incurred to liquidate such
Liquidated Contract, (ii) all accrued and unpaid interest thereon and (iii) all
Monthly Advances required to be made in respect of such Liquidated Contract (the
"Net Liquidation Proceeds"), may be less than the Scheduled Principal Balance of
such Liquidated Contract. Under such circumstances, the loss on the Liquidated
Contract, in the amount of the deficiency between the Net Liquidation Proceeds
and the Scheduled Principal Balance of such Liquidated Contract, may be covered
to the extent of the amount (the "Excess Interest"), if any, by which the
interest collected on nondefaulted Contracts during the same Collection Period
exceeds interest distributions due to holders of the Series 1997-1 Regular
Certificates and the Monthly Servicing Fee.
The effect of any losses on Liquidated Contracts during a Collection Period
in excess of the (i) Excess Interest, if any, and (ii) the funds, if any, on
deposit in the Reserve Account generally will be to reduce the Pool Scheduled
Principal Balance below the aggregate Certificate Balance of the Certificates on
the related Distribution Date. In the event the Pool Scheduled Principal Balance
falls below the aggregate Certificate Balance of the Certificates on any
Distribution Date, shortfalls and/or losses will arise with respect to the
Certificates, which shortfalls and/or losses will be borne by the Class B-2
Certificateholders, the Class B-1 Certificateholders, the Class M
Certificateholders and the Senior Certificateholders, in that order.
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EXAMPLE OF DISTRIBUTIONS
The following chart sets forth an example of the flow of funds on the
Certificates for the Distribution Date occurring in August 1997:
<TABLE>
<S> <C> <C>
June 30.................................... (A) Cut-off Date.
July 1-31.................................. (B) Servicer receives scheduled payments on the
Contracts and any principal prepayments
made by Obligors and applicable interest
thereon.
August 8................................... (C) Record Date.
August 6................................... (D) Determination Date.
August 11.................................. (E) Distribution Date. (Distribution Date is
the 10th day of each month or, if the 10th
day is not a business day, the next
business day.)
Succeeding months follow the pattern of (B) through (E).
</TABLE>
- ------------------------
(A) The Cut-off Date Pool Principal Balance on June 30, 1997 will be computed as
described under "-- Conveyance of Contracts" above.
(B) Scheduled Payments, principal prepayments and Liquidation Proceeds (net of
Liquidation Expenses) and amounts for the repurchase of Contracts may be
received at any time during this period and will be distributed to
Certificateholders on August 11, 1997. When a partial prepayment is made or
a Contract is prepaid in full, interest on the amount prepaid is collected
from the Obligor only to the date of payment. The Available Distribution
Amount for the distribution on August 11, 1997 are described under "--
Payments on Contracts; Certificate Account" above.
(C) Distributions on August 11, 1997 will be made to Certificateholders of
record at the close of business on August 8, 1997.
(D) On August 6, 1997 (three business days prior to the Distribution Date), the
Servicer will determine the amounts of principal and interest which will be
passed through on August 11, 1997 to Certificateholders.
(E) On August 11, 1997, the amounts determined on August 6, 1997 will be
distributed to Certificateholders.
ADVANCES
For each Distribution Date, the Servicer will be obligated to make an
advance (a "Monthly Advance") equal to the lesser of (i) delinquent scheduled
payments of principal and interest on the Contracts that were due in the
preceding Collection Period and (ii) the amount, if any, by which scheduled
distributions of principal and interest due on the Series 1997-1 Regular
Certificates exceeds the amount specified in clause (b) of the definition of
Available Distribution Amount (as set forth above under "-- Payments on
Contracts; Certificate Account"), except to the extent, in the Servicer's
judgment, such advance would not be recoverable from related late payments,
Liquidation Proceeds or otherwise (a "Nonrecoverable Advance").
The aggregate amount of any additional advances made by the Servicer that
have not been reimbursed to the Servicer as described below is referred to
herein as the "Outstanding Amount Advanced." The Servicer may apply any Excess
Contract Payments in the Certificate Account (rather than its own funds) to make
all or a portion of a Monthly Advance, but must replace such Excess Contract
Payments to the extent required to make scheduled payments on the related
Contracts. In addition, upon the determination that a Nonrecoverable Advance has
been made in respect of a
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Contract, the Servicer will reimburse itself (but only to the extent of the
Outstanding Amount Advanced) out of funds in the Certificate Account for the
delinquent Scheduled Payments on such Contract or out of any other funds in the
Certificate Account.
In making Monthly Advances, the Servicer will be attempting to maintain a
regular flow of scheduled interest and principal to the Series 1997-1 Regular
Certificateholders rather than to guarantee or insure against losses.
The Servicer will also be obligated to make advances, to the extent
recoverable out of Liquidation Proceeds or otherwise, in respect of certain
taxes and insurance premiums not paid by an Obligor on a timely basis. Funds so
advanced are reimbursable to the Servicer as provided in the Agreement.
REPORTS TO CERTIFICATEHOLDERS
The Trustee will include with each distribution to a Certificateholder a
statement as of the related Distribution Date setting forth, among other things
for each Class of Certificates:
(a) the aggregate amount distributed on each Class of Certificates on
such Distribution Date;
(b) the amount of such distribution on each Class of Certificates which
constitutes principal;
(c) the amount of such distribution on each Class of Certificates which
constitutes interest;
(d) the remaining Certificate Balance;
(e) the number of and aggregate unpaid principal balance of Contracts
with payments delinquent 31 to 59, 60 to 89, and 90 or more days,
respectively;
(f) the amount of fees payable out of the Trust Fund;
(g) the Senior Percentage;
(h) the Class M Percentage;
(i) the Class B Percentage;
(j) the balance in the Reserve Account, if any; and
(k) the Reserve Account Draw Amount, if any.
(l) the Monthly Servicing Fee payable on such Distribution Date and the
amount of any other fees payable out of the Trust Fund;
(m) the number of Contracts that were repurchased or replaced by a Seller
in accordance with the Agreement during the prior Collection Period,
identifying such Contracts and (i) the Repurchase Price of such Contracts
and (ii) the amount, if any, paid by such Seller due to the differences, if
any, between the remaining principal balances of the replaced Contracts and
the Eligible Substitute Contracts;
(n) the aggregate principal balances of all Contracts that are not
Liquidated Contracts and in respect of which the related Manufactured
Homes have been repossessed or foreclosed upon;
(o) the aggregate liquidation losses (less costs of liquidation) realized
by the Trust Fund through the Collection Period immediately preceding
such Distribution Date, expressed in dollars;
(p) the aggregate liquidation losses (less costs of liquidation) realized
by the Trust Fund through the Collection Period immediately preceding
such Distribution Date, expressed as a percentage of the Cut-off Date Pool
Principal Balance;
(q) the amount of any Monthly Advance for such Distribution Date and the
aggregate amount of Monthly Advances that remain outstanding as of
such Distribution Date;
(r) the weighted average Net Contract Rate for the Contract Pool for the
Collection Period immediately preceding the month of such
Distribution Date; and
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(s) the number of Manufactured Homes currently held by the Servicer due
to repossessions and the aggregate principal balance of the related
defaulted Contracts.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will furnish a report to each holder of a Series
1997-1 Regular Certificate of record at any time during such calendar year as to
the aggregate of amounts reported pursuant to clauses (b) and (c) above for such
calendar year.
OPTIONAL TERMINATION AND TERMINATION AUCTION
The Agreement provides that on any Distribution Date after the Distribution
Date on which the Pool Scheduled Principal Balance is less than 10% of the
Cut-off Date Pool Principal Balance, the Servicer will have the option to
repurchase, upon giving notice mailed no later than the 10th day of the month
next preceding the month of the exercise of such option, all outstanding
Contracts at a price equal to the greater of (a) the sum of (x) 100% of the
Scheduled Principal Balance of each Contract (other than any Contract as to
which the related Manufactured Home has been acquired and not yet disposed of
and whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date, and (y) the fair market value of such acquired property
(as determined by the Servicer), and (b) the aggregate fair market value (as
determined by the Servicer) of all of the assets of the Trust Fund, plus, in the
case of both clause (a) and (b), an amount sufficient to reimburse
Certificateholders for any shortfall in interest due thereto in respect of prior
Distribution Dates. Notwithstanding the foregoing, the Servicer's option shall
not be exercisable if there will not be distributed to the holders of each
outstanding Class of 1997-1 Regular Certificates an amount equal to the
respective Certificate Balances of such Certificates together with any shortfall
in interest due on such Certificates in respect of prior Distribution Dates and
one month's interest at the applicable Pass-Through Rates on such unpaid
Certificate Balances (collectively, the "Minimum Termination Amount").
On any Distribution Date after the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, the Servicer may also direct the Trustee to conduct a Termination
Auction for the sale of all Contracts then outstanding in the Trust Fund, and in
any case the Servicer shall be obligated to direct the Trustee to conduct such a
Termination Auction within 90 days of the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, unless the Servicer has exercised the repurchase option described
above. The Servicer shall give notice mailed no later than 10 days preceding the
date on which any Termination Auction is to occur. The Trustee will solicit each
registered Certificateholder, the Seller and one or more active participants in
the asset-backed securities or manufactured housing contract market that are not
affiliated with BankAmerica Corporation to make a bid to purchase the Contracts
at the Termination Auction. The Trustee will sell all the Contracts to the
highest bidder, subject, among other things, to: (i) the requirement that the
highest bid equal or exceed the Minimum Termination Amount; and (ii) the
requirement that at least one bid be tendered by an active participant in the
asset-backed securities or manufactured housing contract market that is not
affiliated with Bank of America, FSB. If the foregoing requirements are
satisfied, the successful bidder or bidders shall deposit the aggregate purchase
price for the Contracts in the Certificate Account. If the foregoing
requirements are not satisfied, the purchase shall not occur and distributions
will continue to be made on the Certificates. Any sale and consequent
termination of the Trust Fund as a result of a Termination Auction must
constitute a "qualified liquidation" of the Trust Fund under Section 860F of the
Code.
TERMINATION OF THE AGREEMENT
The Agreement will terminate upon the last action required to be taken by
the Trustee on the final Distribution Date following the earlier of (i) the
purchase by the Servicer of all Contracts and all property acquired in respect
of any Contract remaining in the Trust Fund as described above under "--
Optional Termination and Termination Auction" or (ii) the final payment or other
liquidation (or any advance with respect thereto) of the last Contract remaining
in the Trust Fund or the disposition of all property
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acquired upon repossession of any Manufactured Home or (iii) the sale in a
Termination Auction of all Contracts and all other property acquired in respect
of any Contract remaining in the Trust Fund as described above under "--
Optional Termination and Termination Auction."
Upon presentation and surrender of the Series 1997-1 Regular Certificates,
the Trustee shall cause to be distributed, to the extent of funds available, to
such Certificateholders on the final Distribution Date in proportion to their
respective Percentage Interests an amount equal to the respective unpaid
Certificate Balances of the Series 1997-1 Regular Certificates, together with
any unpaid interest on such Certificates due on prior Distribution Dates and one
month's interest at the applicable pass-through rates on such unpaid Certificate
Balances; provided that such funds will be distributed in the applicable order
of priority specified under "-- Distributions" above. If the Agreement is then
being terminated, any amount which remains on deposit in the Certificate Account
(other than amounts retained to meet claims) after distribution to the holders
of the Series 1997-1 Regular Certificates will be distributed to the Class R
Certificateholders.
COLLECTION AND OTHER SERVICING PROCEDURES
The Servicer will administer, service and make collections on the Contracts,
exercising the degree of care that the Servicer exercises with respect to
similar contracts serviced by the Servicer.
Subject to the requirements of applicable law, the Servicer will be required
to commence repossession and other realization procedures with respect to any
defaulted Contract promptly after the Servicer determines that such Contract
will not be brought current. The Servicer may rescind, cancel or make material
modifications of the terms of a Contract (including modifying the amounts and
Due Dates of Scheduled Payments) in connection with a default or imminent
default thereunder.
SERVICING COMPENSATION; CERTAIN OTHER MATTERS REGARDING THE SERVICER
For its servicing of the Contracts, the Servicer will be entitled to receive
a monthly servicing fee equal to the product of one-twelfth of 1.00% and the
Pool Scheduled Principal Balance for the related Distribution Date (the "Monthly
Servicing Fee"), whether or not the related Scheduled Payments on the Contracts
are received. The Available Distribution Amount will be net of the Monthly
Servicing Fee. See "-- Payments on the Contracts; Certificate Account" above.
As part of its servicing fees, the Servicer will also be entitled to retain,
as compensation for the additional services provided in connection therewith,
any fees for late payments made by Obligors, extension fees paid by Obligors for
the extension of scheduled payments and assumption fees for permitted
assumptions of Contracts by purchasers of the related Manufactured Homes.
THE TRUSTEE
The First National Bank of Chicago (the "Trustee") has its corporate trust
offices at One First National Plaza, Chicago, Illinois 60670-0126. The Trustee
may resign at any time, in which event the Seller will be obligated to appoint a
successor Trustee. The Seller may also remove the Trustee if the Trustee ceases
to be eligible to continue as such under the Agreement or if the Trustee becomes
insolvent. In such circumstances, the Seller will also be obligated to appoint a
successor Trustee. 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.
The Agreement requires the Trustee to maintain, at its own expense, an
office or agency in New York City or Chicago where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee and the certificate registrar in respect of the
Certificates pursuant to the Agreement may be served.
The Trustee, or any of its affiliates, in its individual or any other
capacity, may become the owner or pledgee of Certificates with the same rights
as it would have if it were not Trustee.
The Trustee will also act as paying agent, certificate registrar and
authenticating agent under the Agreement.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the Offered Certificates, Morrison & Foerster LLP,
special counsel to BankAmerica Housing Services, will deliver its opinion that,
assuming (i) the making of appropriate elections, (ii) compliance with
applicable provisions of the Code, including Sections 860A through 860G of the
Code (the "REMIC Provisions"), and related Treasury regulations, and (iii)
compliance by the Seller, the Servicer and the Trustee with all of the
provisions of the related Agreements, (a) the Trust Fund will qualify, for
federal income tax purposes, as a "real estate mortgage investment conduit" (a
"REMIC") within the meaning of the REMIC Provisions, and (b) the Offered
Certificates, together with the Class B-2 Certificates, evidence the "regular
interests" in such REMIC and (c) the Class R Certificates is the sole class of
"residual interests" in such REMIC, respectively, each within the meaning of the
REMIC Provisions in effect on the date hereof.
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates,
to the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of Morrison & Foerster LLP, special counsel to
BankAmerica Housing Services, subject to the qualifications set forth herein. In
addition, Morrison & Foerster LLP, special counsel to BankAmerica Housing
Services, has prepared or reviewed the statements in this Prospectus Supplement
under the heading "Certain Federal Income Tax Consequences," and is of the
opinion that such statements are correct in all material respects. Such
statements are intended as an explanatory discussion of the possible effects of
the classification of the Trust Fund 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
the Offered Certificates.
The Offered Certificates will be Regular Certificates (as defined in the
Prospectus under "Certain Federal Income Tax Consequences -- REMIC
Certificates"). Generally, the Offered Certificates will be treated as debt
instruments for federal income tax purposes with payment terms equivalent to the
terms of the Offered Certificates. Holders of Offered Certificates will be
required to report income with respect to such Offered Certificates under the
accrual method of accounting, regardless of their normal tax accounting method.
Certain classes of the Offered Certificates, depending on their respective
issue prices, may be issued with original issue discount ("OID") for federal
income tax purposes. The prepayment assumption that will be used in determining
the rate of accrual of OID is 170%. No representation is made as to whether the
Contracts will prepay at that rate or any other rate.
The Offered Certificates will be treated as regular interests in a REMIC
under Section 860G of the Internal Revenue Code of 1986, as amended (the
"Code"). Accordingly, the Offered Certificates will be treated as (i) assets
described in Section 7701(a)(19)(C) of the Code and (ii) "real estate assets"
within the meaning of Section 856(c)(5) of the Code, in each case to the extent
described in the Prospectus. As described in the Prospectus, interest on the
Offered Certificates will be treated as interest on obligations secured by
mortgages on real property within the meaning of Section 856(c)(B) of the Code
to the same extent that the Offered Certificates are treated as real estate
assets. The Small Business Job Protection Act of 1996 generally repealed,
effective for taxable years beginning after December 31, 1995, the reserve
method of accounting for bad debts of certain financial institutions formerly
provided under Section 593 of the Code. Regular certificates in a REMIC
generally were treated as "qualifying real property loans" for purposes of such
Section 593 to the extent described in the Prospectus. Entities that formerly
used the Section 593 method of accounting continue to be subject to certain
requirements under the Code. Accordingly, entities affected by Section 593 of
the Code should consult their own tax advisors concerning these provisions.
If an Offered Certificate is sold, exchanged, redeemed or retired, the
seller of such Certificate will recognize gain or loss equal to the difference
between the amount realized on the sale, exchange,
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redemption, or retirement and such seller's adjusted basis in the Offered
Certificate. Such adjusted basis generally will equal the cost of the Offered
Certificate to the seller, increased by any OID and market discount included in
the seller's gross income with respect to the Offered Certificate, and reduced
(but not below zero) by payments included in the stated redemption price at
maturity previously received by the seller and by any amortized premium.
Similarly, a holder who receives a payment that is part of the stated redemption
price at maturity of an Offered Certificate will recognize gain equal to the
excess, if any, of the amount of the payment over the holder's adjusted basis in
the Offered Certificate. An Offered Certificateholder who receives a final
payment that is less than the holder's adjusted basis in the Offered Certificate
will generally recognize a loss. Except as provided in the following paragraph,
any such gain will be and any such loss may be capital gain or loss, provided
that the Offered Certificate is held as a "capital asset" (generally, property
held for investment) within the meaning of Code Section 1221. Legislation is
currently pending in Congress which, if enacted in its present form, would
reduce the long-term capital gain tax rate applicable to individuals and change
the holding period required to qualify for long-term capital gain treatment. No
assurances can be provided that such legislation will in fact be enacted.
Gain from the sale or other disposition of an Offered Certificate that might
otherwise be a capital gain will be treated as ordinary income to the extent
that such gain does not exceed the excess, if any, of (i) the amount that would
have been includible in such holder's income with respect to the Offered
Certificate had income accrued thereon at a rate equal to 110% of the applicable
federal rate as defined in Code Section 1274(d) determined as of the date of
purchase of such Offered Certificate, over (ii) the amount actually includible
in such holder's income.
See "Certain Federal Income Tax Consequences" in the Prospectus.
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans that are subject to ERISA
("Plans") and on persons who are fiduciaries with respect to such Plans. See
"ERISA Considerations" in the Prospectus.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption
(defined below) and other administrative exemptions under ERISA and the
potential consequences in their specific circumstances, prior to making an
investment in the Offered Certificates. Moreover, each Plan fiduciary should
determine whether under the general fiduciary standards of investment prudence
and diversification an investment in the Offered Certificates is appropriate for
the Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
SENIOR CERTIFICATES
The Department of Labor ("DOL") has granted to Morgan Stanley & Co.
Incorporated an administrative exemption (DOL Prohibited Transaction Exemption
90-24, Exemption Application No. D-8019, 55 Fed. Reg. 20548 (May 17, 1990)) (the
"Exemption")) from certain of the prohibited transaction rules of ERISA. The
Exemption exempts from the prohibitions of Sections 406(a) and 407(a) of ERISA,
and the related excise tax provisions of Section 4975 of the Code, the purchase,
holding, and resale by Plans of pass-through certificates representing interests
in trusts that hold assets consisting primarily of certain receivables, loans,
and other obligations that meet the general conditions summarized below. The
receivables covered by the Exemption include manufactured housing installment
sales contracts and installment loan agreements secured by manufactured homes
such as the Contracts. The Seller believes that the Exemption will apply to the
acquisition and holding of Senior Certificates by Plans and that all conditions
of the Exemption other than those within the control of the investors have been
or will be met.
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Among the general conditions which must be satisfied for the Exemption to
apply to the acquisition, holding and resale by a Plan of the Senior
Certificates are the following:
(1) The acquisition of the Senior Certificates by a Plan is on terms
(including the price for the Senior Certificates) that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party.
(2) The rights and interests evidenced by the Senior Certificates acquired
by the Plan are not subordinated to the rights and interests evidenced by other
Certificates of the Trust.
(3) The Senior Certificates acquired by the Plan have received a rating at
the time of such acquisition that is in one of the three highest generic rating
categories from either Moody's or Fitch.
(4) The Trustee is not an affiliate of the Underwriters, BankAmerica Housing
Services, any Obligor with respect to Contracts included in the Trust Fund
constituting more than 5% of the aggregate unamortized principal balance of the
assets in the Trust Fund, or any affiliate of such parties. (Such parties, and
the Trustee and its affiliates, are sometimes referred to herein collectively as
the "Restricted Group"). As of the date hereof, no Obligor with respect to
Contracts included in the Trust Fund is an Obligor with respect to Contracts
constituting more than 5% of the aggregate unamortized principal balance of the
assets of the Trust Fund.
(5) The sum of all payments made to and retained by the Underwriters in
connection with the distribution of the Senior Certificates represents not more
than reasonable compensation for underwriting the Senior Certificates. The sum
of all payments made to and retained by the Seller pursuant to the sale of the
Contracts to the Trust Fund represents not more than the fair market value of
such Contracts. The sum of all payments made to and retained by BankAmerica
Housing Services represents not more than reasonable compensation for
BankAmerica Housing Services' services under the Agreement and reimbursement of
BankAmerica Housing Services' reasonable expenses in connection therewith.
(6) The Plan is an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D of the Securities and Exchange Commission under the Securities Act
of 1933.
In addition, the Exemption exempts from the prohibitions of Sections 406(a),
406(b) and 407(a) of ERISA, and the related excise tax provisions of Section
4975 of the Code, transactions undertaken in connection with the servicing,
management and operation of such a trust pursuant to a binding pooling and
servicing agreement, subject to the foregoing general conditions and to certain
additional requirements. The Seller believes that the Exemption will apply to
such transactions undertaken with respect to the Trust Fund and the Contracts
and that all conditions of the Exemption other than those within the control of
the investors have been or will be met.
The Exemption also exempts from the prohibition of Sections 406(b)(1) and
406(b)(2) of ERISA the related excise tax provisions of Section 4975 of the
Code, the direct or indirect sale, exchange or transfer of Senior Certificates
between either Seller or the Underwriters and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of the Plan's assets in the Senior Certificates (the "Fiduciary") is
(a) an obligor with respect to 5% or less of the fair market value of Contracts
in the Trust Fund or (b) an affiliate of any such person, subject to the general
conditions summarized above and to the following additional requirements:
(1) No member of the Restricted Group is a sponsor of the Plan.
(2) In connection with the initial issuance of Senior Certificates, at least
50% in Percentage Interests of such Class of Certificates is acquired by persons
independent of the Restricted Group and at least 50% of the aggregate interest
in the Trust Fund is acquired by persons independent of the Restricted Group.
(3) The Plan's investment in the Senior Certificates does not exceed 25% in
Percentage Interests of any such Class of Certificates outstanding at the time
of acquisition.
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(4) Immediately after the acquisition of the Senior Certificates, no more
than 25% of the assets of the Plan with respect to which the Fiduciary has
discretionary authority or renders investment advice are invested in
certificates representing an interest in a trust containing assets sold or
serviced by the same entity.
This exemption also applies to the direct or indirect acquisition or
disposition of Senior Certificates by a Plan in the secondary market if certain
conditions are met and the continued holding of Senior Certificates acquired in
initial or secondary markets.
Before purchasing a Senior Certificate, a fiduciary of a Plan should make
its own determination as to the availability of the exemptive relief provided in
the Exemption or the availability of any other prohibited transaction
exemptions, and whether the conditions of any such exemption will be applicable
to the Certificate. Any fiduciary of a Plan considering whether to purchase a
Senior Certificate should also carefully review with its own legal advisors the
applicability of the fiduciary duty and prohibited transaction provisions of
ERISA and the Code to such investment. See "ERISA Considerations" in the
Prospectus.
CLASS M AND CLASS B-1 CERTIFICATES
UNLESS THE OPINION REFERRED TO BELOW IS DELIVERED, A PLAN OR FIDUCIARY WILL
NOT BE PERMITTED TO PURCHASE OR HOLD THE CLASS M AND CLASS B-1 CERTIFICATES AS
SUCH ACTIONS MAY GIVE RISE TO A TRANSACTION PROHIBITED UNDER ERISA OR SECTION
4975 OF THE CODE. SEE "ERISA CONSIDERATIONS" IN THE PROSPECTUS. BECAUSE THE
CLASS M AND CLASS B-1 CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE
EXEMPTION, IT DOES NOT APPLY TO THEM.
IN ADDITION, NO TRANSFER OF A CLASS M OR CLASS B-1 CERTIFICATE SHALL BE
REGISTERED UNLESS THE PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE, THE SELLER
AND THE SERVICER WITH (A) A CERTIFICATION TO THE EFFECT THAT SUCH TRANSFEREE (1)
IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT TO SECTION 406 OR SECTION 407 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE
TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A
PERSON USING THE ASSETS OF ANY SUCH PLAN AND (2) SUCH TRANSFEREE IS AN INSURANCE
COMPANY WHICH IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(E) OF
THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE
PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR (B)
AN OPINION OF COUNSEL (A "BENEFIT PLAN OPINION") SATISFACTORY TO THE TRUSTEE,
THE SELLER AND THE SERVICER, AND UPON WHICH THE TRUSTEE, THE SELLER AND THE
SERVICER SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF SUCH CLASS B CERTIFICATE BY THE PROSPECTIVE TRANSFEREE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE SELLER OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO THOSE
UNDERTAKEN BY SUCH ENTITIES IN THE AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT
BE AN EXPENSE OF THE TRUSTEE, THE SELLER OR THE SERVICER. OWNERS OF THE CLASS M
OR CLASS B-1 CERTIFICATES WILL BE DEEMED TO MAKE THE REPRESENTATIONS IN CLAUSES
(1) AND (2).
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
LAND HOME AND LAND-IN-LIEU CONTRACTS
GENERAL. Approximately 7.32% (by principal balance) of the Contracts are
Land Home Contracts or Land-in-Lieu Contracts. The Land Home Contracts and the
Land-in-Lieu Contracts will be secured by either first mortgages or deeds of
trust on the real estate on which the manufactured home is located, depending
upon the prevailing practice in the state in which the underlying property is
located. A mortgage creates a lien upon the real property described in the
mortgage. There are two parties to a mortgage: the mortgagor, who is the
borrower, and the mortgagee, who is the lender. In a mortgage state, the
mortgagor delivers to the mortgagee a note or bond evidencing the loan and the
mortgage. Although a deed of trust is similar to a mortgage, a deed of trust has
three parties: the borrower, a lender as beneficiary, and a third-party grantee
called the trustee. Under a deed of trust, the borrower grants the
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property, irrevocably until the debt is paid, in trust, generally with a power
of sale, to the trustee to secure payment of the loan. The trustee's authority
under a deed of trust and the mortgagee's authority under a mortgage are
governed by the express provisions of the deed of trust or mortgage, applicable
law, and, in some cases, with respect to the deed of trust, the directions of
the beneficiary.
FORECLOSURE. Foreclosure of a mortgage is generally accomplished by
judicial action. Generally, the action is initiated by the service of legal
pleadings upon all parties having an interest of record in the real property.
Delays in completion of the foreclosure occasionally may result from
difficulties in locating necessary parties defendants. When the mortgagee's
right to foreclosure is contested, the legal proceedings necessary to resolve
the issue can be time-consuming and expensive. After the completion of a
judicial foreclosure proceeding, the court may issue a judgment of foreclosure
and appoint a receiver or other officer to conduct the sale of the property. In
some states, mortgages may also be foreclosed by advertisement, pursuant to a
power of sale provided in the mortgage. Foreclosure of a mortgage by
advertisement is essentially similar to foreclosure of a deed of trust by
non-judicial power of sale.
Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust that authorizes
the trustee to sell property to a third party upon any default by the borrower
under the terms of the note or deed of trust. In certain states, such
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states the trustee must record a notice of
default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and the notice of sale. In
addition, the trustee must provide notice in some states to any other individual
having an interest of record in the real property, including any junior
lienholders. If the deed of trust is not reinstated within any applicable cure
period, 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. In addition,
some state laws require that a copy of the notice of sale be posted on the
property and sent to all parties having an interest of record in the property.
In some states, the borrower-trustor has the right to reinstate the loan at
any time following default until shortly before the trustee's sale. In general,
the borrower, or any other person having a junior encumbrance on the real
estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Certain state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, that may be recovered by a lender.
In the case of foreclosure under either a mortgage or a deed of trust, the
sale by the receiver or other designated officer, or by the trustee, is a public
sale. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
not common for a third party to purchase the property at the foreclosure sale.
Rather, the lender generally purchases the property from the trustee or receiver
for an amount equal to the unpaid principal amount of the note, accrued and
unpaid interest and the expenses of foreclosure. Thereafter, subject to the
right of the borrower in some states to remain in possession during the
redemption period, the lender will assume the burdens of ownership, including
obtaining hazard insurance and making such repairs at its own expense as are
necessary to render the property suitable for sale. The lender commonly will
obtain the services of a real estate broker and pay the broker a commission in
connection with the sale 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.
RIGHTS OF REDEMPTION. In some states, after sale pursuant to a deed of
trust or foreclosure of a mortgage, the borrower and certain foreclosed junior
lienors are given a statutory period in which to redeem the property from the
foreclosure sale. In certain other states, this right of redemption applies only
to sale following judicial foreclosure, and not sale pursuant to a non-judicial
power of sale. In most states where the right of redemption is available,
statutory redemption may occur upon payment of the foreclosure purchase price,
accrued interest and taxes. In some states the right to redeem is an
S-70
<PAGE>
equitable right. The effect of a right of redemption is to diminish the ability
of the lender to sell the foreclosed property. The exercise of a right of
redemption would defeat the title of any purchaser at a foreclosure sale, or of
any purchaser from the lender subsequent to judicial foreclosure or sale under a
deed of trust. Consequently, the practical effect of the redemption right is to
force the lender to maintain the property and pay the expense of ownership until
the expiration of the redemption period.
ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS. Certain
states have imposed statutory restrictions that limit the remedies of a
beneficiary under a deed of trust or a mortgagee under a mortgage relating to a
single family residence. In some states, statutes limit the right of the
beneficiary or mortgagee to 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 borrower equal in most cases to the difference
between the amount due to the lender and the net amount realized upon the
foreclosure sale.
Some state statutes may require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt 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 these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies with respect to the security. Consequently, the
practical effect of the election requirement, when applicable, is that lenders
will usually proceed first against the security rather than bringing a personal
action against the borrower.
Other statutory provisions may limit any deficiency judgment against the
former borrower following a foreclosure sale to the excess of the outstanding
debt over the fair market value of the property at the time of such sale. The
purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale. In some states, exceptions to the
anti-deficiency statutes are provided for in certain instances where the value
of the lender's security has been impaired by acts or omissions of the borrower,
for example, in the event of waste of the property.
In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the federal Soldiers' and Sailors' Civil Relief Act of 1940 and state laws
affording relief to debtors, may interfere with or affect the ability of a
secured mortgage lender to realize upon its security. For example, with respect
to a Land Home Contract, in a Chapter 13 proceeding under the federal Bankruptcy
Code, when a court determines that the value of a home is less than the
principal balance of the loan, the court may prevent a lender from foreclosing
on the home, and, as part of the rehabilitation plan, reduce the amount of the
secured indebtedness to the value of the home as it exists at the time of the
proceeding, leaving the lender as a general unsecured creditor for the
difference between that value and the amount of outstanding indebtedness. A
bankruptcy court may grant the debtor a reasonable time to cure a payment
default, and in the case of a mortgage loan not secured by the debtor's
principal residence, also may reduce the monthly payments due under such
mortgage loan, change the rate of interest and alter the mortgage loan repayment
schedule. Certain court decisions have applied such relief to claims secured by
the debtor's principal residence.
The Code provides priority to certain tax liens over the lien of the
mortgage or deed of trust. The laws of some states provide priority to certain
tax liens over the lien mortgage or deed of trust. Numerous federal and some
state consumer protection laws impose substantive requirements upon mortgage
lenders in connection with the origination, servicing and the enforcement of
mortgage loans. These laws include the federal Truth in Lending Act, Real Estate
Settlement Procedures Act, Equal Credit Opportunity, Fair Credit Billing Act,
Fair Credit Reporting Act, and related statutes and regulations. These federal
laws and state laws impose specific statutory liabilities upon lenders who
originate or service mortgage loans and who fail to comply with the provisions
of the law. In some cases, this liability may affect assignees of the Contracts.
S-71
<PAGE>
RATINGS
It is a condition to the issuance of the Certificates that the Senior
Certificates be rated "Aaa" by Moody's and "AAA" by Fitch, that the Class M
Certificates be rated at least "Aa3" by Moody's and "AA-" by Fitch and that the
Class B-1 Certificates be rated at least "Baa2" by Moody's and "BBB" by Fitch. 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.
The security rating of the Offered Certificates should be evaluated
independently of similar security ratings assigned to other kinds of securities.
The ratings assigned by Moody's and Fitch to pass-through certificates
address the likelihood of the receipt by the related certificateholders of their
allocable share of principal and interest on the underlying assets. Moody's and
Fitch ratings take into consideration the credit quality of the related
underlying assets, any credit support arrangements, structural and legal aspects
associated with such certificates, and the extent to which the payment stream on
such underlying assets is adequate to make payments required by such
certificates. Moody's and Fitch ratings on such certificates do not, however,
constitute a statement regarding frequency of prepayments on the underlying
assets or as to whether yield may be adversely affected as a result thereof. An
explanation of the significance of such ratings may be obtained from Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004, telephone:
(212) 553-0300, and Fitch Investors Service, L.P., One State Street Plaza, New
York, New York 10004, telephone (212) 908-0500, respectively.
The Seller has not requested a rating on the Offered Certificates by any
rating agency other than Moody's and Fitch. However, there can be no assurance
as to whether any other rating agency will rate any or all of the Offered
Certificates, or if it did, what rating would be assigned to the Offered
Certificates by any such other rating agency. A rating on any or all of the
Offered Certificates by certain other rating agencies, if assigned at all, may
be lower than the rating assigned to such Certificates by Moody's and Fitch.
LEGAL INVESTMENT
The Senior and Class M Certificates at the time of issuance will qualify as
"mortgage related securities" under the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA") and, as such, will constitute legal
investments for certain types of investors to the extent provided in SMMEA. Such
institutions should consult their own legal advisors in determining whether and
to what extent the Senior Certificates constitute legal investments for such
investors.
Because the Class B-1 Certificates will not, at the time of issuance, be
rated in one of the two highest rating categories of Moody's and Fitch, the
Class B-1 Certificates will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions with legal authority to invest
in more highly rated securities based on first mortgage loans may not be legally
authorized to invest in the Class B-1 Certificates. No representation is made as
to any regulatory requirements or considerations (including without limitation
regulatory capital or permissible investment requirements) applicable to the
purchase of the Class B-1 Certificates by banks, savings and loan associations
or other financial institutions. Such institutions should consult their own
legal advisors in determining whether and to what extent the Offered
Certificates constitute legal investments for such investors. See "Legal
Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions of the Underwriting Agreement dated July
31, 1997 (the "Underwriting Agreement"), the Seller has agreed to sell, and each
of BancAmerica Securities, Inc. and
S-72
<PAGE>
Morgan Stanley & Co. Incorporated (the "Underwriters") has agreed to purchase
from the Seller, the respective principal amounts of the Offered Certificates
set forth below its name in the table below. BancAmerica Securities, Inc. is an
affiliate of the Seller.
<TABLE>
<CAPTION>
UNDERWRITERS
-----------------------------------------------------------------
PRINCIPAL AMOUNT OF BANCAMERICA SECURITIES, INC. MORGAN STANLEY & CO. INCORPORATED
- -------------------------------------------------- ---------------------------- -----------------------------------
<S> <C> <C>
Class A-1 Certificates............................ $ 12,750,000 $ 12,750,000
Class A-2 Certificates............................ $ 9,000,000 $ 9,000,000
Class A-3 Certificates............................ $ 10,250,000 $ 10,250,000
Class A-4 Certificates............................ $ 14,750,000 $ 14,750,000
Class A-5 Certificates............................ $ 7,150,000 $ 7,150,000
Class A-6 Certificates............................ $ 7,750,000 $ 7,750,000
Class A-7 Certificates............................ $ 19,650,000 $ 19,650,000
Class A-8 Certificates............................ $ 13,000,000 $ 13,000,000
Class A-9 Certificates............................ $ 13,772,500 $ 13,772,500
Class M Certificates.............................. $ 11,135,000 $ 11,135,000
Class B-1 Certificates............................ $ 7,860,000 $ 7,860,000
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Offered
Certificates if any Offered Certificates are purchased. In the event of default
by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the Underwriting Agreement may be terminated.
The Seller has been advised by the Underwriters that they propose initially
to offer the Offered Certificates to the public at the prices set forth herein,
and to certain dealers at such prices less the initial concession not in excess
of 0.0735% of the Class A-1 Certificate Balance, 0.0900% of the Class A-2
Certificate Balance, 0.1050% of the Class A-3 Certificate Balance, 0.1200% of
the Class A-4 Certificate Balance, 0.1500% of the Class A-5 Certificate Balance,
0.1800% of the Class A-6 Certificate Balance, 0.2100% of the Class A-7
Certificate Balance, 0.2400% of the Class A-8 Certificate Balance, 0.2550% of
the Class A-9 Certificate Balance, 0.2700% of the Class M Certificate Balance,
0.3000% of the Class B-1 Certificate Balance. The Underwriters may allow
dealers, and such dealers may allow, a concession not in excess of 0.03675% of
the Class A-1 Certificate Balance, 0.0450% of the Class A-2 Certificate Balance,
0.0525% of the Class A-3 Certificate Balance, 0.0600% of the Class A-4
Certificate Balance, 0.0750% of the Class A-5 Certificate Balance, 0.0900% of
the Class A-6 Certificate Balance, 0.1050% of the Class A-7 Certificate Balance,
0.1200% of the Class A-8 Certificate Balance, 0.1275% of the Class A-9
Certificate Balance, 0.1350% of the Class M Certificate Balance, and 0.1500% of
the Class B-1 Certificate Balance. After the initial public offering of the
Offered Certificates, the public offering prices and such concessions may be
changed.
The Underwriting Agreement provides that the Seller will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Underwriters will reimburse certain expenses of the Seller.
In connection with the sale of the Offered Certificates, the Underwriters
and other persons participating in the sale may engage in transactions that
stabilize, maintain or otherwise affect the price of the Offered Certificates.
Specifically, the Underwriters may over-allot in connection with the sale,
creating a short position in the Offered Certificates for their own account. To
cover over-allotments or to stabilize the price of the Offered Certificates, the
Underwriters may bid for, and purchase, Offered Certificates in the open market.
Finally, the Underwriters may bid for, and purchase, Offered Certificates in
market making transactions. These activities may stabilize or maintain the
market price of the Offered Certificates above market levels that may otherwise
prevail. The Underwriters are not required to engage in these activities and may
end any of these activities at any time.
S-73
<PAGE>
USE OF PROCEEDS
Substantially all of the net proceeds to be received from the sale of the
Offered Certificates will be used by the Seller for general corporate purposes,
including the purchase of the Contracts and the payment of other expenses
connected with pooling the Contracts and issuing the Offered Certificates.
LEGAL MATTERS
Certain legal matters relating to the Offered Certificates, including legal
matters relating to material federal income tax consequences concerning the
Offered Certificates, will be passed upon for the Seller by Morrison & Foerster
LLP, Los Angeles, California and for the Underwriters by Brown & Wood LLP, New
York, New York.
S-74
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<CAPTION>
PAGE IN PROSPECTUS
SUPPLEMENT ON WHICH
TERM TERM IS DEFINED, S-
- ------------------------------------------------------------ ----------------------
<S> <C>
Agreement................................................... 6, 49
Annual Servicing Rate....................................... 5, 50
Available Distribution Amount............................... 7, 54
Average Sixty-Day Delinquency Ratio......................... 60
Average Thirty-Day Delinquency Ratio........................ 60
BankAmerica Housing Services................................ 2, 4
Cede........................................................ 19
Certificate Account......................................... 49
Certificate Balance......................................... 14, 59
Certificate Owners.......................................... 19, 49
Certificateholders.......................................... 19, 49
Certificates................................................ 2, 4
Class A-1 Pass-Through Rate................................. 5, 50
Class A-2 Pass-Through Rate................................. 5, 50
Class A-3 Pass-Through Rate................................. 5, 50
Class A-4 Pass-Through Rate................................. 5, 50
Class A-5 Pass-Through Rate................................. 5, 50
Class A-6 Pass-Through Rate................................. 5, 50
Class A-7 Pass-Through Rate................................. 5, 50
Class A-8 Pass-Through Rate................................. 5, 50
Class A-9 Pass-Through Rate................................. 5, 50
Class B Certificates........................................ 2, 4
Class B Percentage.......................................... 11, 57
Class B Principal Distribution Test......................... 13, 58
Class B-1 Pass-Through Rate................................. 5, 50
Class B-2 Pass-Through Rate................................. 6, 50
Class M Pass-Through Rate................................... 5, 50
Class M Percentage.......................................... 11, 57
Class M Principal Distribution Test......................... 12, 58
Clause X Amount............................................. 10, 56
Clause Y Amount............................................. 10, 56
Closing Date................................................ 53
Code........................................................ 20, 66
Collection Period........................................... 6
Contract Files.............................................. 51
Contract Pool............................................... 2
Contract Schedule........................................... 51
Contracts................................................... 6
CPR......................................................... A-1
Cumulative Realized Losses.................................. 60
Current Realized Loss Ratio................................. 60
Cut-off Date................................................ 4
Cut-off Date Pool Principal Balance......................... 4
Deficiency Event............................................ 57
Determination Date.......................................... 54
Distribution Date........................................... 2, 50
DOL......................................................... 67
DTC......................................................... 19
Due Date.................................................... 6
</TABLE>
S-75
<PAGE>
<TABLE>
<CAPTION>
PAGE IN PROSPECTUS
SUPPLEMENT ON WHICH
TERM TERM IS DEFINED, S-
- ------------------------------------------------------------ ----------------------
<S> <C>
Eligible Institution........................................ 53
Eligible Investments........................................ 15, 53
Eligible Substitute Contract................................ 53
ERISA....................................................... 20, 67
Excess Contract Payment..................................... 54
Excess Interest............................................. 17, 61
Exemption................................................... 67
FDIC........................................................ 53
Fiduciary................................................... 68
First Distribution Date..................................... 6
Fitch....................................................... 15
Formula Principal Distribution Amount....................... 13, 59
Initial Class A-1 Certificate Balance....................... 4
Initial Class A-2 Certificate Balance....................... 4
Initial Class A-3 Certificate Balance....................... 4
Initial Class A-4 Certificate Balance....................... 4
Initial Class A-5 Certificate Balance....................... 4
Initial Class A-6 Certificate Balance....................... 5
Initial Class A-7 Certificate Balance....................... 5
Initial Class A-8 Certificate Balance....................... 5
Initial Class A-9 Certificate Balance....................... 5
Initial Class B-1 Certificate Balance....................... 5
Initial Class B-2 Certificate Balance....................... 5
Initial Class M Certificate Balance......................... 5
Initial Pass-Through Rate................................... 23
Interest Distribution Amount................................ 10, 57
Liquidated Contract......................................... 14, 59
Liquidation Expenses........................................ 54
Liquidation Proceeds........................................ 14, 59
Manufactured Home........................................... 6
Minimum Termination Amount.................................. 64
Moody's..................................................... 15
Monthly Advance............................................. 17, 62
Monthly Servicing Fee....................................... 65
Net Contract Rate........................................... 5, 50
Net Liquidation Proceeds.................................... 17, 61
Nonrecoverable Advance...................................... 62
Offered Certificates........................................ 4
OID......................................................... 20, 66
Outstanding Amount Advanced................................. 62
Percentage Interest......................................... 7, 49
Plans....................................................... 67
Pool Scheduled Principal Balance............................ 14, 59
Prepayment Model............................................ 35
Prospectus.................................................. 2
PTCE 95-60.................................................. 69
Record Date................................................. 7, 50
REMIC....................................................... 2, 19, 66
REMIC Provisions............................................ 66
Replaced Contract........................................... 53
</TABLE>
S-76
<PAGE>
<TABLE>
<CAPTION>
PAGE IN PROSPECTUS
SUPPLEMENT ON WHICH
TERM TERM IS DEFINED, S-
- ------------------------------------------------------------ ----------------------
<S> <C>
Reserve Account............................................. 14, 60
Reserve Account Cap......................................... 15, 60
Reserve Account Draw Amount................................. 15, 60
Restricted Group............................................ 68
Scheduled Principal Balance................................. 14, 59
Scheduled Principal Reduction Amount........................ 14, 59
Senior Certificates......................................... 2, 4
Senior Certificate Balance.................................. 14, 59
Senior Percentage........................................... 11, 57
Series 1997-1 Regular Certificates.......................... 4
Series 1997-1 Residual Certificates......................... 4
Servicer.................................................... 2, 4
SMMEA....................................................... 20, 72
Structuring Assumptions..................................... 36
Subordinate Certificate Balance............................. 14, 59
Subordinate Certificates.................................... 4
Total Regular Principal Amount.............................. 13, 59
Trust Fund.................................................. 2, 7
Trustee..................................................... 4, 65
Underwriters................................................ 2, 73
Underwriting Agreement...................................... 72
Value....................................................... 27
WAC......................................................... 34, A-1
WAM......................................................... 34
</TABLE>
S-77
<PAGE>
APPENDIX A
PREPAYMENT EXPERIENCE OF CERTAIN POOLS
Certain statistical information relating to the prepayment behavior of
certain but not all pools of manufactured housing contracts sold by SPHSI,
SPFSC, Bank of America or BankAmerica Housing Services and serviced by SPHSI and
now BankAmerica Housing Services is set forth below in tabular form. These
tables relate to 18 sold pools for which prepayment information is available
covering a period of at least 16 months and which had an aggregate principal
balance as of the first day of the month of sale of at least $100,000,000. In
evaluating whether the data contained in these tables contain useful information
with respect to the expected prepayment behavior of any particular contract
pool, prospective Certificateholders should consider the following: neither
BankAmerica Housing Services nor SPHSI has performed statistical analysis to
determine whether the contracts to which such tables relate constitute a
statistically significant sample of manufactured housing contracts for purposes
of determining expected prepayment behavior. Furthermore, no assurance can be
given that the Contracts in the Contract Pool will have characteristics similar
to the contracts in any sold pool to which the following tables relate. FOR
THESE REASONS, AND BECAUSE OF THE UNPREDICTABLE NATURE OF THE FACTORS DESCRIBED
HEREIN AS INFLUENCING THE AMOUNT OF PREPAYMENTS OF MANUFACTURED HOUSING
CONTRACTS, NO ASSURANCE CAN BE GIVEN THAT THE PREPAYMENT EXPERIENCE FOR THE
CONTRACT POOL WITH AN AVERAGE AGE AS OF THE CUT-OFF DATE SIMILAR TO THE AVERAGE
AGES (AS OF THE FIRST DAY OF THE MONTH OF SALE) OF THE POOLS TO WHICH THE TABLES
RELATE WILL EXHIBIT PREPAYMENT BEHAVIOR SIMILAR TO THE BEHAVIOR SUMMARIZED IN
SUCH TABLES FOR THE PERIODS COVERED BY SUCH TABLES.
In addition to the foregoing, prospective Certificateholders should consider
that the tables set forth below are limited in the periods which are covered
thereby and thus cannot reflect the effects, if any, of aging on the prepayment
behavior of manufactured housing contracts beyond the periods covered thereby.
The following tables set forth, with respect to each sold pool, an initial
aggregate principal balance (calculated as of the first day of the month of the
sale), the decline in outstanding aggregate principal balance for each
subsequent month (whether due to liquidations, scheduled principal payments,
principal prepayments or repurchases), the constant prepayment rate ("CPR") for
each such month and for the life of the pool through March 1997 (calculated as
the annual rate of the decline in the outstanding aggregate principal balance
due to liquidations, principal prepayments and repurchases exhibited during such
month or over the life of the pool) and the weighted average annual percentage
rate ("WAC") of the contracts in each pool as of the first day of the month of
the sale of each pool and the first day of every month thereafter up to and
including March 1, 1997. The estimated average age of each pool as of the first
day of the month of sale is listed in "Prepayment and Yield Considerations"
herein.
A-1
<PAGE>
<TABLE>
<CAPTION>
POOL #1 Aggregate
First Day Contract
of: Balance CPR WAC
- -----------------------------------------------
<S> <C> <C> <C>
09/88 $ 106,635,430 N/A 13.44%
10/88 106,201,722 2.7 13.44
11/88 105,764,850 2.7 13.44
12/88 105,152,199 4.7 13.44
01/89 104,660,291 3.3 13.44
02/89 104,091,429 4.2 13.44
03/89 103,445,075 5.0 13.44
04/89 102,783,943 5.2 13.44
05/89 102,006,218 6.5 13.44
06/89 101,202,860 6.9 13.44
07/89 100,576,704 4.9 13.44
08/89 99,620,002 8.6 13.44
09/89 98,774,927 7.5 13.44
10/89 97,806,739 8.9 13.44
11/89 96,815,927 9.2 13.42
12/89 96,086,905 6.3 13.39
01/90 95,476,621 4.9 13.39
02/90 94,636,378 7.6 13.33
03/90 93,668,085 9.2 13.29
04/90 92,707,003 9.2 13.28
05/90 91,634,640 10.6 13.33
06/90 90,875,008 6.9 13.36
07/90 90,037,016 7.9 13.43
08/90 89,168,747 8.4 13.43
09/90 88,308,307 8.4 13.42
10/90 87,454,888 8.3 13.43
11/90 86,564,470 8.9 13.43
12/90 85,741,658 8.1 13.43
01/91 85,189,946 4.6 13.43
02/91 84,553,254 5.7 13.41
03/91 83,601,111 9.9 13.41
04/91 82,936,157 6.2 13.41
05/91 82,144,379 7.9 13.41
06/91 81,332,690 8.3 13.41
07/91 80,523,791 8.3 13.41
08/91 79,711,554 8.4 13.42
09/91 78,801,839 9.8 13.43
10/91 77,982,326 8.7 13.42
11/91 77,093,626 9.7 13.43
12/91 76,207,108 9.8 13.43
01/92 75,345,871 9.5 13.43
02/92 74,530,579 8.9 13.43
03/92 73,588,380 10.9 13.43
04/92 72,589,761 11.8 13.43
05/92 71,251,343 16.9 13.43
06/92 70,404,838 9.9 13.43
07/92 69,443,800 11.8 13.43
<CAPTION>
POOL #1 Aggregate
First Day Contract
of: Balance CPR WAC
- -----------------------------------------------
<S> <C> <C> <C>
08/92 68,607,048 10.0 13.43
09/92 67,575,407 13.2 13.43
10/92 66,483,741 14.3 13.43
11/92 65,592,220 11.3 13.43
12/92 64,887,083 8.3 13.43
01/93 64,144,305 9.1 13.43
02/93 63,330,934 10.4 13.43
03/93 62,562,742 9.7 13.42
04/93 61,605,428 13.1 13.42
05/93 60,822,804 10.2 13.42
06/93 59,959,841 11.7 13.42
07/93 59,268,795 8.8 13.42
08/93 58,634,774 7.8 13.42
09/93 57,643,912 14.4 13.42
10/93 56,735,046 13.2 13.42
11/93 55,811,083 13.7 13.42
12/93 55,052,816 10.7 13.42
01/94 54,112,035 14.4 13.42
02/94 53,366,527 10.8 13.42
03/94 52,513,547 13.1 13.42
04/94 51,515,555 16.1 13.42
05/94 50,684,703 13.1 13.42
06/94 49,796,491 14.5 13.42
07/94 48,866,042 15.6 13.42
08/94 47,950,065 15.6 13.42
09/94 47,250,212 11.1 13.42
10/94 46,476,989 12.9 13.42
11/94 45,715,769 12.8 13.42
12/94 45,119,865 9.1 13.42
01/95 44,633,046 6.5 13.42
02/95 43,928,180 12.0 13.42
03/95 43,217,716 12.3 13.42
04/95 42,430,409 14.3 13.42
05/95 41,784,571 11.0 13.42
06/95 41,071,348 12.9 13.41
07/95 40,306,580 14.5 13.41
08/95 39,536,819 14.9 13.42
09/95 38,835,332 13.3 13.41
10/95 38,185,512 12.2 13.41
11/95 37,522,999 12.7 13.41
12/95 36,705,717 17.2 13.41
01/96 36,097,353 11.6 13.41
02/96 35,468,218 12.4 13.41
03/96 34,879,172 11.4 13.41
04/96 34,146,281 16.0 13.41
05/96 33,414,651 16.3 13.41
06/96 32,548,492 20.6 13.41
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
POOL #1 Aggregate
First Day Contract
of: Balance CPR WAC
- -----------------------------------------------
<S> <C> <C> <C>
07/96 31,864,375 15.6 13.41
08/96 31,217,208 14.7 13.41
09/96 30,511,662 16.9 13.41
10/96 29,945,599 12.6 13.41
11/96 29,379,830 12.8 13.41
12/96 28,579,387 21.1 13.41
<CAPTION>
POOL #1 Aggregate
First Day Contract
of: Balance CPR WAC
- -----------------------------------------------
<S> <C> <C> <C>
01/97 28,043,886 12.3 13.41
02/97 27,462,023 14.3 13.40
03/97 26,955,863 11.6 13.40
- ---------- ---
LIFE 10.7
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
POOL #2 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/88 $ 104,666,978 N/A 13.35%
01/89 104,330,298 1.8 13.35
02/89 103,810,280 3.9 13.35
03/89 103,401,842 2.6 13.35
04/89 102,775,547 5.1 13.35
05/89 102,177,092 4.8 13.35
06/89 101,666,453 3.8 13.35
07/89 100,901,916 6.7 13.35
08/89 100,395,667 3.8 13.35
09/89 99,608,204 7.0 13.35
10/89 98,874,730 6.4 13.35
11/89 98,029,122 7.7 13.39
12/89 97,279,994 6.7 13.32
01/90 96,621,368 5.6 13.33
02/90 95,896,177 6.5 13.26
03/90 95,138,920 6.9 13.21
04/90 94,317,626 7.7 13.22
05/90 93,550,175 7.1 13.25
06/90 92,613,999 9.1 13.28
07/90 91,869,593 6.9 13.35
08/90 90,963,362 8.9 13.35
09/90 90,196,945 7.3 13.35
10/90 89,396,505 7.7 13.39
11/90 88,378,224 10.5 13.34
12/90 87,471,368 9.2 13.34
01/91 86,704,347 7.5 13.34
02/91 86,072,778 5.8 13.33
03/91 85,099,245 10.3 13.33
04/91 84,140,819 10.2 13.33
05/91 83,161,608 10.6 13.33
06/91 82,217,723 10.2 13.33
07/91 81,613,927 5.7 13.33
08/91 80,708,386 9.9 13.33
09/91 79,472,342 14.3 13.34
10/91 78,610,881 9.5 13.34
11/91 77,740,763 9.7 13.34
12/91 76,757,797 11.4 13.34
01/92 75,979,811 8.6 13.34
02/92 74,809,501 14.2 13.34
03/92 73,712,124 13.4 13.34
04/92 72,709,234 12.3 13.34
05/92 71,425,353 16.4 13.34
06/92 70,297,849 14.5 13.34
07/92 69,387,110 11.4 13.34
08/92 68,330,816 13.8 13.34
09/92 67,518,195 10.2 13.34
10/92 66,769,514 9.3 13.34
11/92 65,963,947 10.3 13.34
<CAPTION>
POOL #2 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/92 65,005,420 12.9 13.34
01/93 64,310,875 8.7 13.34
02/93 63,484,944 11.0 13.34
03/93 62,544,620 13.0 13.34
04/93 61,862,758 8.8 13.34
05/93 61,185,856 8.8 13.34
06/93 60,372,378 11.3 13.34
07/93 59,590,532 10.8 13.34
08/93 58,856,333 10.1 13.34
09/93 57,853,762 15.1 13.34
10/93 56,806,065 16.1 13.33
11/93 55,992,232 12.1 13.33
12/93 54,961,935 16.3 13.33
01/94 53,815,297 18.7 13.33
02/94 53,036,952 12.1 13.33
03/94 52,221,870 13.0 13.33
04/94 51,164,117 18.0 13.33
05/94 50,394,740 12.5 13.33
06/94 49,654,167 12.1 13.33
07/94 48,858,902 13.4 13.33
08/94 48,161,176 11.5 13.33
09/94 47,491,356 11.0 13.33
10/94 46,766,762 12.4 13.33
11/94 46,152,843 10.0 13.33
12/94 45,280,418 16.1 13.33
01/95 44,533,494 13.5 13.33
02/95 43,959,276 9.5 13.33
03/95 43,282,875 12.2 13.33
04/95 42,463,257 15.8 13.33
05/95 41,793,015 12.4 13.33
06/95 41,303,763 7.9 13.33
07/95 40,744,338 9.8 13.33
08/95 40,071,772 13.0 13.33
09/95 39,427,452 12.4 13.33
10/95 38,689,666 15.1 13.33
11/95 37,923,980 16.1 13.33
12/95 37,277,415 13.2 13.33
01/96 36,711,400 11.1 13.33
02/96 35,986,657 15.8 13.33
03/96 35,476,851 9.8 13.33
04/96 34,946,824 10.5 13.33
05/96 34,112,016 19.7 13.33
06/96 33,403,432 16.5 13.33
07/96 32,685,544 17.1 13.33
08/96 32,134,743 12.1 13.33
09/96 31,639,639 10.5 13.33
10/96 31,068,080 13.2 13.33
11/96 30,449,023 15.0 13.33
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
POOL #2 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/96 29,902,494 12.8 13.33
01/97 29,401,167 11.4 13.33
02/97 28,818,555 14.6 13.32
03/97 28,249,568 14.4 13.32
- ---------- -----
LIFE 10.9
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
POOL #3 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
05/89 $ 105,629,211 N/A 13.84%
06/89 105,157,806 3.4 13.83
07/89 104,449,414 6.0 13.84
08/89 104,035,907 2.8 13.84
09/89 103,421,633 5.0 13.84
10/89 102,715,059 6.0 13.84
11/89 101,850,511 7.8 13.82
12/89 101,000,512 7.7 13.78
01/90 100,292,376 6.2 13.78
02/90 99,418,058 8.1 13.70
03/90 98,590,905 7.6 13.69
04/90 97,590,300 9.6 13.69
05/90 96,616,013 9.4 13.74
06/90 95,831,591 7.3 13.76
07/90 95,129,841 6.4 13.84
08/90 94,345,031 7.4 13.84
09/90 93,421,578 9.1 13.84
10/90 92,734,650 6.3 13.84
11/90 91,452,930 13.4 13.84
12/90 90,558,601 9.0 13.84
01/91 89,868,276 6.5 13.84
02/91 89,150,909 6.9 13.83
03/91 88,428,541 7.0 13.83
04/91 87,434,289 10.5 13.83
05/91 86,579,315 8.8 13.83
06/91 85,471,262 12.1 13.83
07/91 84,669,743 8.3 13.83
08/91 83,770,685 9.6 13.83
09/91 82,726,334 11.6 13.83
10/91 81,925,060 8.5 13.83
11/91 80,829,874 12.5 13.83
12/91 79,895,967 10.5 13.83
01/92 79,119,830 8.5 13.84
02/92 77,864,286 15.0 13.84
03/92 76,806,834 12.6 13.84
04/92 75,286,351 19.0 13.84
05/92 74,034,161 15.7 13.84
06/92 72,963,816 13.4 13.84
07/92 71,968,846 12.5 13.84
08/92 71,102,403 10.8 13.84
09/92 70,161,360 12.0 13.84
10/92 69,135,125 13.4 13.84
11/92 68,192,969 12.3 13.84
12/92 67,011,839 16.2 13.84
01/93 66,083,484 12.5 13.84
02/93 65,343,612 9.6 13.84
03/93 64,587,266 10.0 13.84
04/93 63,760,282 11.2 13.84
05/93 62,801,496 13.6 13.84
<CAPTION>
POOL #3 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
06/93 61,686,051 16.4 13.84
07/93 60,641,871 15.5 13.84
08/93 59,831,242 11.7 13.84
09/93 58,998,145 12.2 13.84
10/93 58,159,362 12.5 13.84
11/93 57,050,005 17.5 13.84
12/93 56,028,888 16.2 13.84
01/94 55,073,189 15.3 13.84
02/94 54,323,595 11.6 13.84
03/94 53,406,901 15.0 13.84
04/94 52,497,348 15.1 13.84
05/94 51,691,204 13.3 13.84
06/94 50,793,430 15.4 13.84
07/94 49,951,027 14.5 13.83
08/94 49,201,140 12.8 13.83
09/94 48,401,019 14.0 13.83
10/94 47,486,896 16.7 13.83
11/94 46,593,213 16.6 13.83
12/94 45,829,015 14.0 13.83
01/95 45,290,381 8.9 13.83
02/95 44,701,649 10.2 13.83
03/95 44,038,216 12.2 13.83
04/95 43,269,294 14.8 13.83
05/95 42,613,381 12.4 13.83
06/95 41,791,324 16.6 13.83
07/95 41,032,117 15.4 13.83
08/95 40,311,753 14.7 13.83
09/95 39,644,712 13.5 13.83
10/95 38,929,489 15.0 13.83
11/95 38,233,104 14.8 13.83
12/95 37,561,000 14.4 13.83
01/96 36,829,412 16.3 13.83
02/96 36,341,838 9.6 13.83
03/96 35,618,875 16.5 13.83
04/96 34,947,035 15.4 13.83
05/96 34,278,259 15.6 13.83
06/96 33,796,023 10.1 13.83
07/96 33,131,735 15.9 13.83
08/96 32,399,773 18.3 13.82
09/96 31,788,270 14.9 13.82
10/96 31,184,285 15.0 13.82
11/96 30,576,813 15.4 13.82
12/96 30,020,317 13.9 13.82
01/97 29,616,697 8.7 13.82
02/97 29,066,999 14.1 13.82
03/97 28,617,040 10.7 13.82
- ---------- -----
LIFE 12.0
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
POOL #4 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
09/89 $ 125,140,010 N/A 13.10%
10/89 124,471,167 4.3 13.10
11/89 123,799,250 4.3 13.00
12/89 123,034,059 5.2 12.99
01/90 122,377,544 4.2 12.99
02/90 121,735,704 4.1 12.96
03/90 121,071,849 4.3 12.94
04/90 120,142,817 6.8 12.91
05/90 119,342,906 5.6 12.93
06/90 118,166,370 9.2 13.01
07/90 117,403,815 5.3 13.01
08/90 116,232,187 9.2 13.02
09/90 115,251,907 7.5 13.02
10/90 114,288,398 7.4 13.02
11/90 113,469,274 6.0 13.02
12/90 112,667,389 5.9 13.02
01/91 112,038,416 4.1 13.01
02/91 110,905,125 9.2 13.00
03/91 110,067,701 6.3 12.99
04/91 109,143,179 7.3 12.99
05/91 107,675,157 12.7 12.99
06/91 106,549,929 9.5 13.00
07/91 105,670,799 7.0 13.01
08/91 104,755,611 7.4 13.01
09/91 103,621,996 9.8 13.02
10/91 102,627,500 8.4 13.02
11/91 101,612,768 8.7 13.02
12/91 100,681,978 7.8 13.02
01/92 99,553,749 10.1 13.02
02/92 98,359,570 10.9 13.02
03/92 96,747,080 15.5 13.02
04/92 95,591,531 10.8 13.02
05/92 94,470,670 10.5 13.02
06/92 93,397,640 10.0 13.02
07/92 92,077,621 13.0 13.02
08/92 90,799,327 12.7 13.02
09/92 89,873,995 8.6 13.02
10/92 88,575,791 13.2 13.02
11/92 87,549,394 10.1 13.02
12/92 86,430,545 11.4 13.02
01/93 85,397,442 10.4 13.02
02/93 84,314,640 11.2 13.03
03/93 83,293,579 10.5 13.02
04/93 82,153,822 12.2 13.03
05/93 81,214,243 9.7 13.03
06/93 80,274,299 9.8 13.03
07/93 78,875,479 15.9 13.03
<CAPTION>
POOL #4 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
08/93 77,793,520 12.0 13.03
09/93 76,279,861 17.9 13.03
10/93 75,093,767 13.9 13.03
11/93 74,046,313 12.1 13.03
12/93 72,684,505 16.7 13.03
01/94 71,687,070 11.8 13.03
02/94 70,576,819 13.6 13.03
03/94 69,616,416 11.5 13.03
04/94 68,014,236 21.1 13.03
05/94 67,002,763 12.8 13.03
06/94 65,898,474 14.4 13.03
07/94 64,928,853 12.5 13.03
08/94 64,006,461 11.9 13.03
09/94 63,068,421 12.3 13.03
10/94 62,281,019 9.9 13.03
11/94 61,585,838 8.4 13.03
12/94 60,944,270 7.5 13.03
01/95 60,280,015 8.0 13.03
02/95 59,520,146 9.8 13.03
03/95 58,819,732 8.8 13.03
04/95 57,870,299 13.5 13.03
05/95 57,120,918 10.0 13.03
06/95 56,053,562 16.0 13.03
07/95 55,133,823 13.6 13.03
08/95 54,272,712 12.7 13.03
09/95 53,265,620 15.7 13.03
10/95 52,363,381 13.9 13.03
11/95 51,477,181 13.8 13.03
12/95 50,520,676 15.5 13.04
01/96 49,804,294 10.7 13.04
02/96 48,915,358 14.6 13.04
03/96 48,301,839 8.8 13.04
04/96 47,558,242 11.8 13.04
05/96 46,478,071 19.3 13.04
06/96 45,717,590 12.6 13.04
07/96 44,979,860 12.3 13.03
08/96 44,218,127 13.1 13.03
09/96 43,383,152 15.0 13.03
10/96 42,478,648 17.0 13.03
11/96 41,578,044 17.2 13.03
12/96 40,793,017 14.7 13.03
01/97 40,122,455 12.1 13.04
02/97 39,265,174 17.1 13.04
03/97 38,442,568 16.6 13.03
- ---------- -----
LIFE 11.1
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
POOL #5 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
11/89 $ 105,106,711 N/A 13.14%
12/89 104,517,728 4.8 13.14
01/90 104,076,365 3.2 13.14
02/90 103,509,134 4.6 13.14
03/90 102,964,215 4.3 13.14
04/90 102,478,673 3.7 13.14
05/90 101,818,565 5.6 13.14
06/90 101,239,231 4.7 13.15
07/90 100,775,509 3.4 13.15
08/90 100,220,378 4.5 13.15
09/90 99,612,196 5.1 13.15
10/90 99,070,842 4.3 13.15
11/90 98,459,378 5.2 13.15
12/90 97,805,060 5.7 13.15
01/91 97,011,555 7.3 13.15
02/91 96,396,979 5.3 13.14
03/91 95,799,871 5.1 13.14
04/91 94,954,333 8.0 13.14
05/91 94,166,145 7.4 13.14
06/91 93,205,981 9.5 13.14
07/91 92,256,052 9.5 13.14
08/91 91,380,706 8.7 13.14
09/91 90,327,468 10.9 13.14
10/91 89,362,996 9.9 13.14
11/91 88,598,988 7.5 13.14
12/91 87,646,774 9.9 13.14
01/92 86,806,659 8.6 13.14
02/92 86,086,172 7.2 13.15
03/92 85,082,556 10.8 13.14
04/92 83,794,966 14.5 13.14
05/92 82,612,786 13.4 13.14
06/92 81,682,610 10.3 13.14
07/92 80,681,989 11.3 13.14
08/92 79,473,890 14.2 13.15
09/92 78,510,744 11.1 13.14
10/92 77,315,115 14.4 13.14
11/92 76,503,081 9.3 13.14
12/92 75,694,206 9.3 13.14
01/93 74,720,143 11.8 13.14
02/93 73,882,219 10.0 13.14
03/93 73,005,059 10.7 13.14
04/93 72,179,402 10.0 13.14
05/93 71,203,262 12.4 13.14
06/93 70,214,144 12.7 13.14
07/93 69,114,022 14.5 13.14
08/93 68,209,547 11.8 13.14
<CAPTION>
POOL #5 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
09/93 67,138,882 14.5 13.14
10/93 65,801,810 18.8 13.14
11/93 64,771,906 14.4 13.14
12/93 63,687,205 15.5 13.14
01/94 62,646,848 15.0 13.14
02/94 61,578,724 15.7 13.13
03/94 60,421,042 17.4 13.14
04/94 59,345,557 16.4 13.14
05/94 58,186,466 18.1 13.14
06/94 57,108,833 17.0 13.14
07/94 56,243,373 13.5 13.14
08/94 55,303,971 15.1 13.14
09/94 54,358,920 15.4 13.14
10/94 53,505,339 13.9 13.14
11/94 52,700,174 13.2 13.14
12/94 51,828,682 14.7 13.14
01/95 51,252,887 8.8 13.14
02/95 50,659,055 9.3 13.15
03/95 49,899,965 12.9 13.14
04/95 49,064,499 14.7 13.14
05/95 48,479,215 9.5 13.14
06/95 47,911,058 9.2 13.14
07/95 47,357,741 9.0 13.14
08/95 46,584,787 14.1 13.14
09/95 45,877,427 12.8 13.14
10/95 45,064,141 15.4 13.14
11/95 44,238,482 16.0 13.14
12/95 43,599,931 11.8 13.14
01/96 43,000,284 11.0 13.14
02/96 42,185,475 16.4 13.14
03/96 41,435,453 15.1 13.14
04/96 40,585,601 17.9 13.14
05/96 39,734,615 18.3 13.14
06/96 38,886,609 18.6 13.14
07/96 38,060,720 18.4 13.14
08/96 37,572,200 9.5 13.14
09/96 37,007,538 11.8 13.14
10/96 36,292,692 16.2 13.14
11/96 35,587,669 16.3 13.14
12/96 34,880,597 16.6 13.14
01/97 34,273,781 14.0 13.14
02/97 33,813,967 9.6 13.14
03/97 33,320,045 10.9 13.14
- ---------- -----
LIFE 11.5
</TABLE>
A-8
<PAGE>
<TABLE>
<CAPTION>
POOL #6 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
03/90 $ 140,369,133 N/A 13.48%
04/90 139,307,289 6.9 13.48
05/90 138,542,319 4.5 13.48
06/90 137,744,173 4.8 13.48
07/90 136,722,016 6.7 13.48
08/90 135,891,876 5.1 13.48
09/90 135,067,275 5.1 13.48
10/90 134,138,159 6.0 13.48
11/90 133,001,662 7.8 13.48
12/90 131,784,864 8.5 13.48
01/91 131,092,482 4.1 13.48
02/91 130,139,214 6.4 13.48
03/91 129,057,536 7.5 13.47
04/91 127,953,575 7.7 13.47
05/91 126,139,620 13.8 13.47
06/91 124,843,063 9.6 13.47
07/91 123,577,533 9.4 13.47
08/91 122,149,158 10.9 13.47
09/91 120,890,366 9.5 13.47
10/91 119,938,520 6.8 13.47
11/91 118,791,159 8.7 13.47
12/91 117,478,073 10.3 13.47
01/92 116,164,302 10.4 13.47
02/92 114,876,803 10.2 13.47
03/92 113,322,858 12.8 13.47
04/92 111,660,646 14.0 13.47
05/92 109,951,389 14.6 13.47
06/92 108,852,303 8.9 13.47
07/92 107,335,788 13.1 13.47
08/92 105,990,750 11.6 13.47
09/92 105,134,707 6.7 13.47
10/92 103,743,190 12.3 13.47
11/92 102,356,180 12.4 13.47
12/92 100,937,484 12.9 13.47
01/93 99,646,666 11.7 13.47
02/93 98,540,784 9.8 13.47
03/93 97,204,553 12.5 13.47
04/93 96,033,841 10.8 13.47
05/93 94,857,002 11.0 13.47
06/93 93,319,340 15.1 13.47
07/93 92,012,794 12.8 13.47
08/93 90,777,159 12.1 13.47
09/93 89,562,026 12.0 13.47
10/93 88,236,495 13.5 13.47
<CAPTION>
POOL #6 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
11/93 86,910,996 13.7 13.47
12/93 85,357,787 16.6 13.46
01/94 83,926,688 15.4 13.46
02/94 82,693,586 13.2 13.46
03/94 81,224,465 16.4 13.46
04/94 79,694,386 17.4 13.46
05/94 78,422,900 14.4 13.46
06/94 77,139,889 14.8 13.46
07/94 75,979,467 13.4 13.46
08/94 74,720,564 14.9 13.45
09/94 73,435,334 15.5 13.45
10/94 72,578,320 9.6 13.45
11/94 71,426,658 14.0 13.45
12/94 70,209,233 15.2 13.46
01/95 69,167,297 12.9 13.45
02/95 68,242,609 11.2 13.45
03/95 67,269,839 12.1 13.45
04/95 66,081,386 15.6 13.45
05/95 64,939,442 15.2 13.45
06/95 63,994,901 12.3 13.45
07/95 62,862,213 15.5 13.45
08/95 62,017,301 10.9 13.45
09/95 60,947,531 14.9 13.45
10/95 60,091,935 11.5 13.44
11/95 59,059,181 14.7 13.45
12/95 58,180,727 12.2 13.44
01/96 57,238,958 13.6 13.45
02/96 56,241,441 14.8 13.45
03/96 55,328,873 13.5 13.45
04/96 54,285,000 16.1 13.45
05/96 53,218,535 16.9 13.45
06/96 52,064,416 18.9 13.45
07/96 51,199,945 13.6 13.44
08/96 50,274,142 15.0 13.44
09/96 49,364,722 15.0 13.44
10/96 48,219,787 20.1 13.44
11/96 47,126,415 19.5 13.44
12/96 46,339,702 13.3 13.44
01/97 45,629,652 11.7 13.44
02/97 44,917,117 12.0 13.44
03/97 44,065,275 15.4 13.44
- ---------- -----
LIFE 12.1
</TABLE>
A-9
<PAGE>
<TABLE>
<CAPTION>
POOL #7 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
06/90 $ 149,153,886 N/A 13.61%
07/90 148,147,890 6.1 13.61
08/90 147,299,392 4.9 13.61
09/90 146,642,210 3.4 13.61
10/90 145,900,449 4.1 13.61
11/90 145,013,229 5.2 13.61
12/90 144,298,570 3.9 13.61
01/91 143,564,389 4.0 13.61
02/91 142,626,509 5.7 13.61
03/91 141,652,613 6.0 13.60
04/91 140,727,422 5.6 13.60
05/91 139,455,466 8.4 13.59
06/91 137,973,804 10.1 13.59
07/91 136,631,272 9.1 13.59
08/91 135,390,424 8.4 13.60
09/91 134,136,651 8.5 13.60
10/91 132,822,133 9.1 13.60
11/91 131,243,842 11.4 13.60
12/91 129,962,591 9.0 13.60
01/92 128,477,670 10.8 13.60
02/92 127,096,263 10.1 13.61
03/92 125,467,921 12.2 13.61
04/92 123,779,177 12.9 13.61
05/92 122,190,897 12.2 13.60
06/92 120,734,785 11.2 13.60
07/92 119,348,875 10.7 13.60
08/92 117,877,485 11.6 13.60
09/92 116,679,776 9.2 13.60
10/92 115,237,297 11.6 13.60
11/92 113,768,483 11.9 13.60
12/92 112,474,388 10.4 13.60
01/93 110,900,600 13.2 13.60
02/93 109,854,660 8.2 13.60
03/93 108,798,886 8.4 13.60
04/93 107,497,617 10.9 13.60
05/93 105,862,028 14.3 13.60
06/93 103,972,722 17.0 13.60
07/93 102,567,231 12.5 13.60
08/93 101,020,234 14.1 13.60
09/93 99,598,027 13.0 13.60
10/93 97,854,883 16.5 13.60
11/93 96,342,616 14.4 13.60
<CAPTION>
POOL #7 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/93 94,571,341 17.4 13.60
01/94 93,155,574 13.8 13.60
02/94 92,154,899 9.2 13.60
03/94 90,898,988 12.3 13.60
04/94 89,135,591 18.2 13.60
05/94 87,718,590 14.6 13.60
06/94 86,299,579 14.9 13.60
07/94 84,518,698 19.3 13.60
08/94 83,240,668 13.7 13.60
09/94 81,880,315 14.9 13.60
10/94 80,471,804 15.7 13.60
11/94 79,340,802 12.4 13.60
12/94 78,110,503 13.9 13.59
01/95 77,027,559 12.1 13.60
02/95 75,889,218 13.0 13.60
03/95 74,648,956 14.6 13.59
04/95 73,583,436 12.4 13.59
05/95 72,632,050 10.9 13.59
06/95 71,450,336 14.4 13.59
07/95 70,322,148 13.8 13.59
08/95 69,060,840 16.0 13.59
09/95 67,850,659 15.5 13.59
10/95 66,777,237 13.7 13.59
11/95 65,660,892 14.6 13.59
12/95 64,640,584 13.3 13.59
01/96 63,793,128 10.6 13.58
02/96 62,835,707 12.6 13.58
03/96 62,079,297 9.3 13.58
04/96 60,997,301 15.0 13.59
05/96 59,921,102 15.2 13.59
06/96 58,613,109 19.4 13.59
07/96 57,488,105 16.6 13.58
08/96 56,426,952 15.8 13.58
09/96 55,549,703 12.7 13.58
10/96 54,630,174 13.7 13.58
11/96 53,511,568 17.7 13.58
12/96 52,402,315 17.9 13.58
01/97 51,503,131 14.1 13.58
02/97 50,622,884 14.0 13.58
03/97 49,753,316 14.0 13.58
- ---------- -----
LIFE 12.1
</TABLE>
A-10
<PAGE>
<TABLE>
<CAPTION>
POOL #8 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
09/90 $ 176,504,848 N/A 13.79%
10/90 175,563,611 4.4 13.79
11/90 174,653,919 4.2 13.79
12/90 173,862,457 3.4 13.79
01/91 173,210,915 2.5 13.79
02/91 172,095,188 5.6 13.78
03/91 171,027,106 5.3 13.77
04/91 170,149,446 4.0 13.77
05/91 168,946,209 6.2 13.78
06/91 167,474,918 8.0 13.78
07/91 166,258,643 6.4 13.78
08/91 164,571,129 9.6 13.79
09/91 162,908,428 9.5 13.79
10/91 161,480,582 8.0 13.79
11/91 160,134,796 7.5 13.79
12/91 158,828,431 7.3 13.79
01/92 157,286,760 9.0 13.79
02/92 155,814,361 8.6 13.79
03/92 153,706,875 13.0 13.79
04/92 152,175,234 9.2 13.79
05/92 149,801,555 15.1 13.79
06/92 148,032,049 11.1 13.79
07/92 146,294,304 11.0 13.79
08/92 144,743,720 9.7 13.79
09/92 142,934,547 11.8 13.79
10/92 140,889,684 13.7 13.79
11/92 139,288,967 10.5 13.79
12/92 137,490,727 12.1 13.79
01/93 135,475,334 13.9 13.79
02/93 133,749,503 11.9 13.79
03/93 132,419,593 8.8 13.79
04/93 130,716,971 11.9 13.79
05/93 128,792,763 13.9 13.79
06/93 127,116,113 12.0 13.79
07/93 125,281,404 13.5 13.79
08/93 123,730,333 11.3 13.79
09/93 122,003,942 12.9 13.79
10/93 120,047,166 15.1 13.79
11/93 118,265,768 13.8 13.79
12/93 116,472,314 14.1 13.79
01/94 114,510,764 15.8 13.79
<CAPTION>
POOL #8 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
02/94 112,800,855 13.8 13.79
03/94 110,905,944 15.7 13.79
04/94 108,922,479 16.7 13.79
05/94 106,912,326 17.3 13.79
06/94 104,687,780 19.6 13.79
07/94 102,734,881 17.4 13.79
08/94 101,166,637 13.9 13.79
09/94 99,623,724 13.8 13.79
10/94 98,031,349 14.5 13.78
11/94 96,426,111 14.9 13.78
12/94 95,068,634 12.4 13.78
01/95 93,727,295 12.4 13.78
02/95 92,464,966 11.7 13.78
03/95 91,226,065 11.5 13.78
04/95 89,497,205 17.3 13.78
05/95 88,141,711 13.3 13.78
06/95 86,461,828 17.3 13.78
07/95 84,959,266 15.5 13.78
08/95 83,346,363 17.1 13.78
09/95 81,675,846 18.1 13.78
10/95 80,253,040 15.4 13.78
11/95 78,850,249 15.4 13.78
12/95 77,500,394 15.0 13.78
01/96 76,325,792 12.9 13.78
02/96 74,928,630 16.1 13.78
03/96 73,835,927 12.1 13.78
04/96 72,385,294 17.3 13.78
05/96 70,738,724 20.4 13.78
06/96 69,161,374 19.9 13.78
07/96 67,875,919 16.1 13.78
08/96 66,475,900 18.1 13.78
09/96 65,370,050 13.9 13.78
10/96 64,140,014 16.1 13.78
11/96 62,943,351 15.9 13.78
12/96 61,869,710 14.1 13.78
01/97 60,958,597 11.6 13.78
02/97 60,011,759 12.4 13.77
03/97 59,185,733 10.4 13.77
- ---------- -----
LIFE 12.6
</TABLE>
A-11
<PAGE>
<TABLE>
<CAPTION>
POOL #9 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/90 $ 176,277,296 N/A 13.69%
01/91 175,445,175 3.8 13.69
02/91 174,698,830 3.2 13.68
03/91 173,886,282 3.7 13.67
04/91 172,531,627 7.2 13.67
05/91 171,439,177 5.5 13.67
06/91 170,324,184 5.7 13.68
07/91 168,770,421 8.6 13.68
08/91 167,384,694 7.6 13.68
09/91 166,213,224 6.2 13.68
10/91 164,814,057 7.8 13.68
11/91 163,278,460 8.8 13.68
12/91 161,716,906 9.0 13.68
01/92 160,149,306 9.1 13.68
02/92 158,588,724 9.2 13.68
03/92 156,853,052 10.4 13.68
04/92 154,429,786 15.2 13.68
05/92 152,494,175 12.1 13.68
06/92 150,912,507 9.7 13.68
07/92 148,537,910 15.4 13.69
08/92 146,469,356 13.5 13.70
09/92 145,222,234 7.6 13.70
10/92 143,317,723 12.6 13.71
11/92 141,055,124 15.4 13.71
12/92 139,065,155 13.6 13.71
01/93 136,895,954 15.1 13.71
02/93 135,255,995 11.3 13.71
03/93 133,599,810 11.5 13.71
04/93 131,798,110 12.8 13.71
05/93 129,839,022 14.2 13.71
06/93 128,320,101 10.8 13.71
07/93 126,287,126 15.2 13.72
08/93 124,332,891 14.8 13.74
09/93 122,001,975 18.1 13.76
10/93 119,575,308 19.2 13.77
11/93 117,463,494 16.9 13.79
12/93 115,386,610 16.9 13.81
01/94 112,815,272 21.4 13.81
02/94 111,067,681 14.6 13.81
<CAPTION>
POOL #9 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
03/94 109,245,795 15.5 13.81
04/94 106,964,229 20.0 13.81
05/94 105,010,158 17.3 13.81
06/94 102,982,189 18.3 13.81
07/94 101,385,933 14.4 13.81
08/94 99,872,156 13.8 13.81
09/94 97,881,531 18.8 13.80
10/94 95,992,706 18.2 13.80
11/94 94,762,887 11.4 13.81
12/94 93,244,286 14.8 13.80
01/95 91,693,868 15.3 13.81
02/95 90,833,709 7.5 13.80
03/95 89,474,344 13.5 13.80
04/95 87,720,895 18.2 13.80
05/95 86,425,521 13.2 13.80
06/95 84,849,556 16.8 13.81
07/95 83,511,029 14.2 13.81
08/95 82,098,333 15.3 13.80
09/95 80,499,522 17.9 13.80
10/95 79,210,634 14.3 13.80
11/95 77,606,285 18.6 13.80
12/95 76,348,473 14.4 13.80
01/96 75,175,029 13.5 13.80
02/96 74,137,711 11.7 13.80
03/96 73,088,739 12.1 13.80
04/96 71,722,074 16.8 13.80
05/96 70,193,757 19.3 13.80
06/96 68,728,962 18.8 13.80
07/96 67,236,683 19.6 13.80
08/96 66,007,010 16.1 13.80
09/96 64,807,494 15.9 13.80
10/96 63,588,739 16.5 13.80
11/96 62,197,707 19.5 13.80
12/96 60,940,113 17.8 13.79
01/97 59,753,915 17.0 13.79
02/97 58,645,868 16.0 13.79
03/97 57,560,947 15.9 13.79
- ---------- -----
LIFE 13.7
</TABLE>
A-12
<PAGE>
<TABLE>
<CAPTION>
POOL #10 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
03/91 $ 115,743,068 N/A 13.46%
04/91 114,981,288 5.8 13.46
05/91 114,255,049 5.5 13.46
06/91 113,138,005 9.4 13.46
07/91 112,290,981 6.8 13.46
08/91 111,555,226 5.7 13.46
09/91 110,646,156 7.5 13.46
10/91 109,931,401 5.6 13.46
11/91 109,090,473 6.9 13.46
12/91 108,075,431 8.7 13.46
01/92 107,171,264 7.6 13.46
02/92 106,181,798 8.6 13.46
03/92 104,734,230 13.3 13.46
04/92 103,377,903 12.6 13.47
05/92 101,819,504 14.8 13.47
06/92 100,426,809 13.3 13.47
07/92 99,236,089 11.3 13.47
08/92 98,069,274 11.2 13.47
09/92 96,763,126 12.8 13.47
10/92 95,280,985 14.9 13.47
11/92 93,980,642 13.1 13.47
12/92 92,805,968 11.9 13.48
01/93 91,302,846 15.7 13.49
02/93 90,209,204 11.2 13.49
03/93 89,076,155 11.8 13.51
04/93 87,756,596 14.2 13.51
05/93 86,702,252 11.2 13.51
06/93 85,253,020 16.1 13.51
07/93 83,935,408 14.8 13.51
08/93 82,922,212 11.1 13.51
09/93 81,669,503 14.3 13.51
10/93 80,368,862 15.2 13.51
11/93 78,857,733 18.1 13.51
12/93 77,265,332 19.4 13.51
01/94 75,915,865 16.6 13.52
02/94 74,910,043 12.2 13.54
03/94 73,435,099 18.8 13.56
04/94 72,186,113 16.1 13.57
<CAPTION>
POOL #10 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
05/94 71,034,481 14.9 13.56
06/94 69,853,670 15.6 13.56
07/94 68,671,758 15.9 13.56
08/94 67,715,127 12.7 13.56
09/94 66,448,306 17.6 13.56
10/94 65,472,172 13.4 13.56
11/94 64,679,876 10.6 13.56
12/94 64,065,577 7.7 13.56
01/95 62,944,820 16.2 13.55
02/95 62,236,139 9.6 13.55
03/95 61,382,935 12.2 13.55
04/95 60,447,514 13.8 13.55
05/95 59,581,892 12.7 13.55
06/95 58,600,625 14.9 13.55
07/95 57,693,717 13.9 13.55
08/95 56,793,029 14.0 13.55
09/95 56,000,030 12.2 13.55
10/95 54,957,988 17.0 13.54
11/95 53,902,600 17.5 13.55
12/95 52,952,173 15.9 13.54
01/96 52,121,682 13.8 13.54
02/96 51,223,654 15.3 13.54
03/96 50,311,300 15.9 13.54
04/96 49,459,849 14.9 13.54
05/96 48,464,902 18.1 13.54
06/96 47,393,293 20.1 13.54
07/96 46,664,772 13.1 13.54
08/96 45,693,107 18.7 13.54
09/96 44,716,213 19.2 13.54
10/96 43,898,150 16.0 13.53
11/96 43,131,587 15.1 13.53
12/96 42,473,751 12.7 13.53
01/97 41,912,067 10.4 13.53
02/97 41,136,572 16.0 13.53
03/97 40,485,462 13.1 13.53
- ---------- -----
LIFE 13.3
</TABLE>
A-13
<PAGE>
<TABLE>
<CAPTION>
POOL #11 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
06/91 $ 139,806,805 N/A 13.21%
07/91 139,119,599 4.0 13.21
08/91 138,410,072 4.2 13.21
09/91 137,754,385 3.7 13.21
10/91 136,991,510 4.6 13.21
11/91 136,288,619 4.1 13.21
12/91 135,502,269 4.9 13.21
01/92 134,679,772 5.2 13.21
02/92 133,696,571 6.6 13.21
03/92 132,513,642 8.3 13.21
04/92 130,974,330 11.3 13.21
05/92 129,428,484 11.4 13.21
06/92 128,143,059 9.4 13.21
07/92 126,840,616 9.6 13.21
08/92 125,674,015 8.5 13.21
09/92 124,475,777 8.9 13.21
10/92 123,414,190 7.7 13.21
11/92 122,176,237 9.4 13.21
12/92 120,771,917 10.9 13.21
01/93 119,643,813 8.6 13.22
02/93 118,638,591 7.5 13.22
03/93 117,152,632 12.0 13.22
04/93 115,620,906 12.5 13.23
05/93 114,296,364 10.8 13.24
06/93 112,790,163 12.6 13.25
07/93 111,216,800 13.4 13.25
08/93 110,123,895 8.9 13.25
09/93 108,775,207 11.5 13.26
10/93 107,220,538 13.6 13.27
11/93 105,559,921 14.9 13.28
12/93 104,020,757 13.9 13.29
01/94 102,319,772 15.7 13.30
02/94 101,101,902 11.0 13.30
03/94 99,781,716 12.2 13.30
04/94 97,611,790 21.0 13.32
05/94 95,807,029 17.8 13.33
<CAPTION>
POOL #11 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
06/94 94,112,388 16.9 13.34
07/94 92,684,108 14.3 13.34
08/94 91,307,027 13.9 13.33
09/94 90,184,654 11.2 13.34
10/94 88,864,649 13.6 13.33
11/94 87,328,173 16.3 13.33
12/94 85,761,437 17.0 13.33
01/95 84,593,329 12.4 13.33
02/95 83,217,877 15.2 13.33
03/95 82,365,254 8.7 13.33
04/95 80,978,168 15.7 13.33
05/95 79,783,720 13.5 13.33
06/95 78,560,339 14.1 13.33
07/95 77,319,592 14.5 13.33
08/95 76,021,241 15.5 13.33
09/95 74,594,270 17.5 13.33
10/95 73,468,378 13.6 13.33
11/95 72,233,253 15.4 13.33
12/95 71,001,179 15.6 13.32
01/96 69,662,906 17.4 13.32
02/96 68,714,724 11.9 13.32
03/96 67,615,452 14.4 13.32
04/96 66,328,878 17.4 13.32
05/96 65,408,609 12.0 13.32
06/96 63,931,551 20.9 13.32
07/96 62,749,168 16.7 13.32
08/96 61,500,474 18.1 13.32
09/96 60,426,701 15.6 13.32
10/96 59,198,072 18.4 13.32
11/96 58,158,196 15.6 13.32
12/96 57,229,776 13.9 13.32
01/97 57,173,334 16.4 13.32
02/97 55,402,002 11.4 13.32
03/97 54,501,656 14.0 13.32
- ---------- -----
LIFE 12.6
</TABLE>
A-14
<PAGE>
<TABLE>
<CAPTION>
POOL #12 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
09/91 $ 150,531,673 N/A 13.11%
10/91 149,521,845 6.1 13.11
11/91 148,662,503 5.0 13.11
12/91 147,852,894 4.6 13.11
01/92 147,233,908 3.1 13.11
02/92 146,432,226 4.6 13.11
03/92 145,323,404 7.0 13.11
04/92 144,149,234 7.5 13.11
05/92 142,560,540 10.7 13.11
06/92 141,393,868 7.6 13.11
07/92 140,442,064 5.9 13.11
08/92 139,128,157 8.9 13.11
09/92 137,784,633 9.2 13.11
10/92 136,405,239 9.5 13.11
11/92 135,313,288 7.3 13.11
12/92 133,918,938 9.8 13.11
01/93 132,512,083 10.0 13.11
02/93 131,614,144 5.8 13.11
03/93 130,162,377 10.5 13.11
04/93 128,941,019 8.7 13.11
05/93 127,408,580 11.4 13.11
06/93 125,940,707 11.0 13.11
07/93 124,067,841 14.5 13.12
08/93 122,564,650 11.6 13.13
09/93 121,285,947 9.7 13.13
10/93 119,635,298 13.1 13.16
11/93 117,895,033 14.1 13.17
12/93 116,135,731 14.4 13.17
01/94 114,202,548 16.2 13.17
02/94 112,343,349 15.8 13.17
03/94 110,989,113 11.3 13.17
04/94 108,924,731 18.1 13.17
05/94 107,227,171 15.0 13.17
06/94 105,420,284 16.3 13.17
07/94 103,543,767 17.2 13.20
<CAPTION>
POOL #12 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
08/94 101,784,363 16.3 13.22
09/94 100,180,744 15.0 13.23
10/94 98,500,485 16.1 13.23
11/94 97,275,814 11.5 13.23
12/94 95,657,669 15.8 13.23
01/95 94,484,894 11.2 13.23
02/95 93,189,576 12.7 13.23
03/95 91,537,580 16.9 13.23
04/95 90,297,351 12.5 13.23
05/95 88,789,534 15.7 13.23
06/95 87,499,771 13.5 13.23
07/95 86,387,385 11.5 13.23
08/95 85,005,277 14.9 13.23
09/95 83,425,382 17.5 13.23
10/95 82,097,321 14.8 13.23
11/95 80,704,703 15.8 13.23
12/95 78,896,842 21.2 13.22
01/96 77,538,818 16.0 13.22
02/96 76,306,437 14.6 13.22
03/96 75,270,273 12.1 13.22
04/96 73,950,118 16.2 13.22
05/96 72,577,694 17.2 13.22
06/96 71,066,221 19.4 13.22
07/96 69,843,117 15.7 13.22
08/96 68,456,636 18.4 13.22
09/96 67,148,504 17.6 13.22
10/96 66,108,384 13.8 13.22
11/96 65,061,335 14.1 13.22
12/96 64,121,552 12.6 13.22
01/97 63,176,609 12.9 13.22
02/97 62,273,480 12.3 13.21
03/97 61,282,814 14.0 13.20
- ---------- -----
LIFE 12.7
</TABLE>
A-15
<PAGE>
<TABLE>
<CAPTION>
POOL #13 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/91 $ 150,837,421 N/A 12.76%
01/92 149,715,119 6.8 12.76
02/92 148,608,677 6.7 12.76
03/92 147,605,705 6.0 12.76
04/92 146,525,632 6.6 12.76
05/92 145,545,336 5.9 12.76
06/92 144,317,387 7.8 12.76
07/92 143,336,299 6.0 12.76
08/92 142,356,947 6.0 12.76
09/92 141,375,351 6.0 12.75
10/92 140,159,130 7.9 12.75
11/92 139,028,952 7.3 12.75
12/92 137,701,304 8.9 12.75
01/93 136,529,247 7.7 12.75
02/93 135,121,050 9.7 12.75
03/93 133,503,496 11.5 12.75
04/93 132,154,874 9.4 12.75
05/93 130,891,143 8.8 12.74
06/93 129,436,144 10.5 12.74
07/93 127,617,624 13.6 12.74
08/93 125,941,513 12.6 12.74
09/93 124,418,392 11.4 12.74
10/93 122,735,762 12.9 12.75
11/93 121,131,896 12.4 12.76
12/93 119,054,994 16.7 12.76
01/94 117,404,138 13.2 12.76
02/94 116,169,658 9.6 12.76
03/94 114,766,653 11.3 12.75
04/94 113,124,117 13.6 12.76
05/94 111,268,919 15.8 12.77
06/94 109,363,958 16.5 12.78
07/94 107,260,482 18.6 12.77
08/94 105,829,972 12.5 12.77
<CAPTION>
POOL #13 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
09/94 104,210,538 14.5 12.77
10/94 102,195,318 18.6 12.79
11/94 100,785,694 12.8 12.81
12/94 99,510,091 11.6 12.81
01/95 98,331,253 10.7 12.81
02/95 97,134,948 11.0 12.81
03/95 95,998,823 10.5 12.80
04/95 94,306,923 16.7 12.80
05/95 92,887,549 14.0 12.80
06/95 91,253,372 16.6 12.80
07/95 89,872,608 14.0 12.80
08/95 88,261,260 16.8 12.79
09/95 86,394,422 20.0 12.80
10/95 84,773,109 17.6 12.79
11/95 83,255,130 16.7 12.78
12/95 81,654,149 18.0 12.78
01/96 80,539,117 12.2 12.78
02/96 79,464,194 11.8 12.78
03/96 77,818,358 19.3 12.78
04/96 76,297,394 18.1 12.78
05/96 74,920,471 16.6 12.77
06/96 73,631,529 15.7 12.77
07/96 72,344,251 15.9 12.77
08/96 71,130,675 15.2 12.76
09/96 69,909,330 15.5 12.76
10/96 68,625,575 16.7 12.76
11/96 67,409,642 16.0 12.76
12/96 66,310,672 14.5 12.75
01/97 65,248,284 14.1 12.75
02/97 64,211,530 13.9 12.75
03/97 63,160,687 14.4 12.75
- ---------- -----
LIFE 12.8
</TABLE>
A-16
<PAGE>
<TABLE>
<CAPTION>
POOL #14 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
03/92 $ 140,964,598 N/A 12.10%
04/92 139,815,477 7.5 12.10
05/92 138,701,137 7.2 12.10
06/92 138,062,321 3.4 12.09
07/92 137,253,497 4.8 12.09
08/92 136,397,947 5.2 12.09
09/92 135,559,635 5.1 12.09
10/92 134,852,925 4.0 12.09
11/92 133,740,916 7.4 12.09
12/92 132,781,548 6.2 12.09
01/93 131,915,227 5.4 12.09
02/93 131,059,130 5.3 12.09
03/93 130,086,497 6.4 12.09
04/93 128,934,422 8.0 12.09
05/93 127,561,234 9.9 12.09
06/93 126,037,402 11.3 12.09
07/93 124,560,507 11.0 12.09
08/93 123,065,849 11.3 12.09
09/93 121,475,143 12.3 12.09
10/93 119,811,531 13.1 12.09
11/93 118,034,467 14.2 12.09
12/93 116,557,845 11.7 12.09
01/94 114,843,279 14.0 12.10
02/94 113,488,307 10.9 12.10
03/94 111,908,855 13.1 12.11
04/94 110,158,129 14.9 12.11
05/94 108,627,654 13.1 12.11
06/94 107,190,708 12.3 12.11
07/94 105,818,582 11.8 12.11
08/94 104,491,427 11.5 12.11
09/94 103,045,330 12.9 12.11
10/94 101,477,687 14.3 12.11
<CAPTION>
POOL #14 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
11/94 100,291,578 10.5 12.11
12/94 98,844,244 13.4 12.11
01/95 97,456,185 13.0 12.12
02/95 96,344,852 10.1 12.13
03/95 95,191,479 10.7 12.13
04/95 93,832,043 13.1 12.13
05/95 92,556,481 12.3 12.13
06/95 91,447,043 10.6 12.13
07/95 90,215,767 12.1 12.13
08/95 88,882,363 13.5 12.13
09/95 87,396,067 15.5 12.13
10/95 86,053,086 14.0 12.13
11/95 84,637,256 15.1 12.13
12/95 83,317,530 14.2 12.13
01/96 81,863,806 16.1 12.13
02/96 80,563,597 14.4 12.13
03/96 79,233,261 15.0 12.13
04/96 78,091,848 12.8 12.13
05/96 76,454,931 19.5 12.13
06/96 75,104,591 16.1 12.13
07/96 73,874,328 14.7 12.13
08/96 72,608,760 15.5 12.13
09/96 71,548,910 12.8 12.12
10/96 70,194,377 17.2 12.12
11/96 68,977,043 15.5 12.12
12/96 67,627,420 17.8 12.12
01/97 66,637,322 12.6 12.12
02/97 65,433,631 16.1 12.12
03/97 64,336,723 14.7 12.12
- ---------- -----
LIFE 11.9
</TABLE>
A-17
<PAGE>
<TABLE>
<CAPTION>
POOL #15 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
06/92 $ 175,780,463 N/A 12.21%
07/92 174,893,821 3.9 12.21
08/92 173,888,027 4.7 12.21
09/92 172,900,902 4.6 12.21
10/92 171,799,472 5.4 12.21
11/92 170,822,539 4.6 12.21
12/92 169,428,653 7.4 12.21
01/93 168,328,636 5.4 12.21
02/93 167,276,328 5.1 12.21
03/93 166,036,755 6.4 12.21
04/93 164,768,637 6.7 12.20
05/93 163,344,998 7.8 12.20
06/93 161,904,759 7.9 12.20
07/93 160,348,006 8.8 12.20
08/93 158,797,129 8.8 12.20
09/93 156,977,414 10.8 12.20
10/93 155,294,480 9.9 12.20
11/93 153,569,741 10.3 12.20
12/93 151,518,618 12.7 12.20
01/94 149,758,526 10.8 12.20
02/94 148,034,884 10.7 12.20
03/94 146,195,833 11.6 12.20
04/94 144,151,947 13.3 12.20
05/94 142,158,052 13.1 12.19
06/94 139,850,057 15.6 12.19
07/94 138,199,521 10.8 12.19
08/94 136,631,309 10.3 12.19
09/94 134,748,163 12.9 12.19
10/94 133,014,848 11.9 12.19
11/94 131,182,299 12.8 12.19
<CAPTION>
POOL #15 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
12/94 129,469,528 12.0 12.18
01/95 127,912,233 10.9 12.18
02/95 126,514,001 9.7 12.18
03/95 124,891,021 11.7 12.18
04/95 123,487,500 9.9 12.18
05/95 122,125,085 9.7 12.18
06/95 120,307,309 13.8 12.18
07/95 118,654,777 12.5 12.18
08/95 116,709,354 15.3 12.18
09/95 114,872,658 14.6 12.18
10/95 113,488,304 10.6 12.17
11/95 111,752,880 14.0 12.17
12/95 109,977,171 14.6 12.17
01/96 108,472,346 12.2 12.17
02/96 106,964,557 12.4 12.17
03/96 105,399,275 13.2 12.16
04/96 103,554,462 16.1 12.16
05/96 101,600,050 17.5 12.16
06/96 99,706,230 17.2 12.16
07/96 97,910,833 16.5 12.16
08/96 96,183,972 16.1 12.16
09/96 94,409,595 16.9 12.15
10/96 92,879,140 14.5 12.15
11/96 91,374,193 14.5 12.15
12/96 90,002,898 13.2 12.15
01/97 88,498,151 14.9 12.15
02/97 87,255,949 12.0 12.14
03/97 86,100,836 11.1 12.14
- ---------- -----
LIFE 11.3
</TABLE>
A-18
<PAGE>
<TABLE>
<CAPTION>
POOL #16 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
10/92 $ 175,970,703 N/A 11.57%
11/92 174,789,934 5.9 11.57
12/92 173,742,173 5.0 11.57
01/93 172,705,068 5.0 11.57
02/93 171,553,752 5.7 11.57
03/93 170,488,376 5.2 11.57
04/93 169,329,699 5.8 11.57
05/93 168,126,157 6.2 11.57
06/93 166,891,049 6.4 11.57
07/93 165,331,963 8.6 11.57
08/93 164,200,153 5.8 11.56
09/93 162,434,783 10.1 11.56
10/93 161,023,828 7.8 11.56
11/93 159,426,963 9.2 11.56
12/93 157,628,520 10.6 11.56
01/94 156,117,917 8.8 11.56
02/94 154,289,483 11.1 11.56
03/94 152,403,860 11.6 11.56
04/94 150,476,984 12.0 11.56
05/94 148,783,695 10.5 11.56
06/94 146,907,633 11.9 11.56
07/94 145,421,226 9.2 11.57
08/94 144,048,001 8.4 11.57
09/94 142,276,280 11.5 11.57
10/94 140,590,585 11.0 11.57
11/94 138,705,260 12.6 11.57
12/94 137,389,810 8.3 11.57
01/95 136,076,300 8.4 11.57
<CAPTION>
POOL #16 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
02/95 134,556,921 10.1 11.57
03/95 132,922,875 11.2 11.57
04/95 131,479,084 9.7 11.57
05/95 129,638,952 13.1 11.57
06/95 128,116,877 10.6 11.57
07/95 126,251,409 13.6 11.58
08/95 124,575,746 12.2 11.59
09/95 122,882,358 12.5 11.57
10/95 121,601,532 9.1 11.59
11/95 120,064,006 11.5 11.59
12/95 118,381,753 12.9 11.59
01/96 117,251,433 8.0 11.59
02/96 115,879,171 10.3 11.59
03/96 114,360,957 11.8 11.59
04/96 112,665,369 13.6 11.59
05/96 110,859,033 14.8 11.59
06/96 108,694,817 18.4 11.59
07/96 106,918,870 15.1 11.59
08/96 105,168,050 15.1 11.59
09/96 103,078,754 18.6 11.59
10/96 101,147,600 17.4 11.59
11/96 99,419,180 15.7 11.59
12/96 97,862,093 14.2 11.59
01/97 96,603,209 11.2 11.59
02/97 95,540,127 9.1 11.58
03/97 94,285,801 11.4 11.58
- ---------- -----
LIFE 10.7
</TABLE>
A-19
<PAGE>
<TABLE>
<CAPTION>
POOL #17 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
05/95 $ 124,994,111 N/A 10.93%
06/95 123,985,511 7.8 10.93
07/95 123,356,713 4.4 10.93
08/95 122,513,265 6.4 10.93
09/95 121,475,844 8.2 10.93
10/95 120,425,456 8.4 10.93
11/95 119,270,182 9.4 10.93
12/95 118,380,963 7.0 10.94
01/96 117,430,696 7.6 10.94
02/96 116,482,433 7.7 10.94
03/96 115,372,348 9.3 10.94
04/96 113,971,632 12.1 10.94
05/96 112,720,649 10.8 10.94
<CAPTION>
POOL #17 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
06/96 111,527,118 10.4 10.94
07/96 109,867,944 14.9 10.94
08/96 108,341,082 13.9 10.93
09/96 106,974,617 12.5 10.94
10/96 105,684,016 11.9 10.93
11/96 104,006,911 15.9 10.93
12/96 102,751,283 11.9 10.93
01/97 101,623,957 10.7 10.93
02/97 100,447,091 11.3 10.94
03/97 99,350,935 10.6 10.93
- ---------- -----
LIFE 10.2
</TABLE>
A-20
<PAGE>
<TABLE>
<CAPTION>
POOL #18 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
11/95 $ 125,209,123 10.63%
12/95 124,335,412 6.5 10.63%
01/96 123,608,249 5.2 10.63%
02/96 122,658,404 7.3 10.63%
03/96 121,835,212 6.1 10.63%
04/96 120,884,166 7.4 10.64%
05/96 119,624,047 10.2 10.64%
06/96 118,445,892 9.6 10.64%
07/96 117,322,439 9.2 10.64%
08/96 115,934,439 11.7 10.64%
<CAPTION>
POOL #18 Aggregate
First Day Contract
of: Balance CPR WAC
- ---------------------------------------------
<S> <C> <C> <C>
09/96 114,396,042 13.2 10.64%
10/96 113,008,025 12.0 10.64%
11/96 111,785,625 10.6 10.64%
12/96 110,260,354 13.6 10.64%
01/97 108,855,085 12.6 10.64%
02/97 107,942,774 7.8 10.64%
03/97 106,833,051 9.4 10.64%
- ---------- -----
LIFE 9.5
</TABLE>
- ------------------------
(1) Of the $125,209,123 aggregate original principal balance of Pool # 18,
contracts totaling $68,452,887, or 54.67%, were conveyed to the trust fund
by Bank of America NT&SA as seller under the related pooling and servicing
agreement. Bank of America NT&SA is not a seller of any of the Contracts in
the Contract Pool of this offering.
A-21
<PAGE>
PROSPECTUS
BANKAMERICA MANUFACTURED HOUSING CONTRACT TRUST
PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, SELLER
BANKAMERICA HOUSING SERVICES,
AN UNINCORPORATED DIVISION OF
BANK OF AMERICA, FSB, SELLER AND SERVICER
BankAmerica Manufactured Housing Contract Trust Pass-Through Certificates
("Certificates") of one or more series (each, a "Series") may be sold from time
to time under this Prospectus and a Prospectus Supplement for each such Series.
The Certificates of each Series may be issued in one or more classes or
subclasses (each, a "Class"), as further described herein. If the Certificates
of a Series are issued in more than one Class, all or less than all of such
Classes may be sold under this Prospectus, and there may be separate Prospectus
Supplements for one or more of such Classes so sold. Any reference herein to the
Prospectus Supplement relating to a Series comprised of more than one Class
should be understood to refer to each of the Prospectus Supplements relating to
the Classes sold hereunder.
The Certificates of each Series will represent interests, as specified in
the related Prospectus Supplement, in a trust fund (a "Trust Fund") created by
Bank of America National Trust and Savings Association ("Bank of America" or
"Seller") or BankAmerica Housing Services, an unincorporated division of Bank of
America, FSB ("BankAmerica Housing Services" or "Seller," and, together with
Bank of America, the
"Sellers") or both. The Trust Fund for each Series of Certificates will be
separate from the Trust Fund for
(COVER CONTINUED ON NEXT PAGE)
This Prospectus and any related Prospectus Supplement may be used by BA
Securities, Inc., an affiliate of the Sellers, in connection with offers and
sales related to market making transactions in any Series of the Certificates.
BA Securities, Inc. may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
the sale.
With respect to any Series of Certificates, none of the Certificates
evidencing the Residual Interest (as defined herein) for such Series have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
or will be offered or sold pursuant to this Prospectus.
See page 76 herein for the Index of Significant Definitions contained herein.
FOR A DISCUSSION OF SIGNIFICANT MATTERS AFFECTING INVESTMENTS IN THE
CERTIFICATES, SEE "RISK FACTORS" HEREIN AT PAGE 13 AND IN THE PROSPECTUS
SUPPLEMENT.
---------------------
PROCEEDS FROM THE ASSETS IN THE TRUST FUND FOR A SERIES WILL BE THE ONLY SOURCE
OF PAYMENT ON THE CERTIFICATES OF SUCH SERIES, AND THE CERTIFICATES WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF BANK OF AMERICA, BANKAMERICA HOUSING
SERVICES, THEIR PARENT CORPORATION, BANKAMERICA CORPORATION, OR OTHER
AFFILIATES, SUBJECT TO CERTAIN EXCEPTIONS DESCRIBED UNDER "RISK FACTORS" HEREIN.
NEITHER THE CERTIFICATES NOR (UNLESS OTHERWISE SPECIFIED IN THE RELATED
PROSPECTUS SUPPLEMENT) UNDERLYING CONTRACTS OR ANY COLLECTIONS THEREON WILL BE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
This Prospectus may not be used to consummate sales of Certificates unless
accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS JUNE 4, 1996.
<PAGE>
any other Series of Certificates. Each Trust Fund will include a pool (each, a
"Contract Pool") of manufactured housing installment sales contracts and
installment loan agreements (the "Contracts") together with certain contract
rights and other rights relating to such Contracts (as discussed below).
BankAmerica Housing Services will act as the servicer of the Contracts in each
Trust Fund (together with any successor servicer appointed as described herein,
the "Servicer").
The Contracts comprising each Contract Pool will be conveyed to the relevant
Trust Fund by the applicable Sellers. Each Contract will have been either (i)
originated or purchased by Bank of America, BankAmerica Housing Services or
Security Pacific Financial Services of California, Inc. ("SPFSC"), a wholly-
owned subsidiary of Bank of America, in each case on an individual basis in the
ordinary course of its business or (ii) purchased by Bank of America,
BankAmerica Housing Services, SPFSC, or any combination thereof, in bulk from
other lenders or finance companies (including from affiliates of the Sellers),
from governmental agencies or instrumentalities or from other entities.
Interests in each Trust Fund will be evidenced by a separate Series of
Certificates. SPFSC will not be conveying any Contracts to any Trust Fund. Any
Contracts purchased on an individual basis or in bulk by SPFSC will be sold by
it to Bank of America, and conveyed by Bank of America to the Trustee of a Trust
Fund immediately before the issuance of Certificates evidencing interests in
such Contracts.
If a Series of Certificates is comprised of more than one Class, the related
Prospectus Supplement will set forth the interest in the applicable Trust Fund
represented by each Class sold hereunder. The timing of distributions of
principal and/or interest to the holders of Certificates of such Classes may be
on a sequential, pro-rata or other basis as specified in the related Prospectus
Supplement. In addition, if specified in the related Prospectus Supplement, the
rights of the holders of the Certificates of one or more Classes of a
multiple-Class Series to receive distributions with respect to some or all of
the assets of the related Trust Fund may be subordinate to such rights of the
holders of the Certificates of one or more other Classes.
Neither Bank of America nor BankAmerica Housing Services nor any of their
affiliates will have any obligations with respect to any Series of Certificates
except, in the case of the Sellers, for obligations arising from certain
representations and warranties of Bank of America and BankAmerica Housing
Services, as the case may be, with respect to the Contracts sold by it in the
related Contract Pool and, in the case of BankAmerica Housing Services, for
certain contractual servicing obligations, each as further described herein. See
"Risk Factors -- No Recourse" herein.
To the extent specified in the related Prospectus Supplement, the holders of
the Certificates of any Series, or of one or more Classes within a Series, may
be entitled to the benefit of overcollateralization or subordination of one or
more Classes of Certificates within such Series, one or more spread accounts or
other reserve funds, one or more letters of credit, one or more surety bonds or
other credit facilities and/or one or more certificate purchase agreements or
other liquidity facilities. See "Credit and Liquidity Enhancement" herein and
the related Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates of a Series or of any Class within a Series will be issuable in the
form of one or more global certificates represented by book-entries on the
records of a depository or participating members thereof. See "Reports to
Certificateholders," "Risk Factors," and "Description of the Certificates --
Global Certificates" herein and the related Prospectus Supplement.
There will have been no public market for any Certificates sold hereunder
prior to the offering thereof and there is no assurance that any such market
will develop. The Underwriters named in the Prospectus Supplement relating to a
Series may from time to time buy and sell Certificates of such Series, but there
can be no assurance that an active secondary market therefor will develop, and
there is no assurance that any such market, if established, will continue. See
"Risk Factors" herein.
An election may be made to cause the Trust Fund relating to a Series of
Certificates to be treated as a real estate mortgage investment conduit (a
"REMIC") for federal income tax purposes. See "Certain Federal Income Tax
Consequences" herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference all reports and other documents
filed or caused to be filed by either Seller or the Servicer (if other than
BankAmerica Housing Services) with respect to the Trust Fund for any Series of
Certificates, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), subsequent to the date of
this Prospectus and prior to the termination of the offering of the Certificates
of such Series. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this
2
<PAGE>
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus. Upon request by any person to whom this
Prospectus and the applicable Prospectus Supplement are delivered in connection
with the offering of one or more Classes of Certificates, the Servicer will
provide or cause to be provided without charge a copy of any such documents
and/or reports incorporated herein by reference, in each case to the extent such
documents or reports relate to such Classes of Certificates, other than the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests to the Servicer should be directed
orally or in writing to BankAmerica Housing Services, Investor Services, 10089
Willow Creek Road, San Diego, California, 92131-9516, telephone number (619)
530-9394. Each of Bank of America and BankAmerica Housing Services has
determined that its respective financial statements are not material to the
offering of any Certificates.
ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each Series of
Certificates will contain, a summary of certain material terms of certain of the
documents referred to herein and therein, but neither contains or will contain
all of the information set forth in the Registration Statement of which this
Prospectus is a part (the "Registration Statement"). For further information,
reference is made to such Registration Statement and the exhibits thereto which
the Sellers have jointly filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., under the Securities Act. Statements contained
in this Prospectus and any Prospectus Supplement describing a provision of any
contract or other document referred to are summaries, and if this Prospectus or
such Prospectus Supplement indicates that such contract or other document has
been filed as an exhibit to the Registration Statement, reference is made to the
copy of the contract or other document filed as an exhibit, each such statement
being qualified in all respects by reference to the actual provision being
described. Copies of the Registration Statement can be inspected and, upon
payment of the Commission's prescribed charges, copies can be obtained at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's following regional
offices: Northeast Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048; and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) with respect to
a Trust Fund are issued, monthly and annual reports, which contain unaudited
information concerning the Trust Fund and are prepared by the Servicer, will be
sent on behalf of the Trust Fund to Cede & Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC") and registered holder of the Certificates
offered hereby, pursuant to the Agreement (as defined herein). See "Description
of the Certificates -- Global Certificates." Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The Agreement will not require the sending of, and the Sellers do
not intend to send, any of their financial reports to registered holders (the
"Certificateholders") of the Certificates offered hereby or to owners (the
"Certificate Owners") of beneficial interests in the Certificates. The Servicer
will file with the Commission such periodic reports with respect to the Trust
Fund as are required under the Exchange Act, and the rules and regulations of
the Commission thereunder. If the number of Certificateholders of record is
below 300, the Certificates may cease to be subject to the periodic reporting
requirements of the Exchange Act. In that case, the Servicer may cease to file
such reports with the Commission. The Trustee would, however, continue to
provide periodic reports to Certificateholders as and to the extent described in
the Prospectus Supplement.
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SUMMARY OF TERMS
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and by reference to the
information with respect to each Series of Certificates contained in the related
Prospectus Supplement. Reference is made to the "Index of Significant
Definitions" herein beginning at page 76 for the location in this Prospectus of
the definitions of certain capitalized terms.
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Title of Certificates........... BankAmerica Manufactured Housing Contract Trust Pass-
Through Certificates (Issuable in Series).
Seller or Sellers............... As to any Contract (as hereinafter defined), Bank of
America National Trust and Savings Association ("Bank of
America") or BankAmerica Housing Services, an
unincorporated division of Bank of America, FSB
("BankAmerica Housing Services"), and, as to any Trust
Fund (as hereinafter defined), Bank of America,
BankAmerica Housing Services, or both of them.
Servicer........................ BankAmerica Housing Services (together with any successor
servicer under the Agreement (as defined herein), the
"Servicer").
Risk Factors.................... Certain risk factors are particularly relevant to a
decision to invest in any Certificates sold hereunder. See
"Risk Factors" herein.
The Contracts................... The Certificates of any Series will represent undivided
ownership in a pool (a "Contract Pool") of certain
manufactured housing installment sales contracts and
installment loan agreements (each, a "Contract" and,
collectively, the "Contracts"). Contracts comprising a
Contract Pool will have been either (i) originated or
purchased by Bank of America, BankAmerica Housing
Services, Security Pacific Financial Services of
California, Inc. ("SPFSC"), a wholly-owned subsidiary of
Bank of America, or any combination thereof, in each case
on an individual basis in the ordinary course of its
business or (ii) purchased by Bank of America, BankAmerica
Housing Services, SPFSC, or any combination thereof, in
bulk from other lenders or finance companies (including
from affiliates of the Sellers), from governmental
agencies or instrumentalities or from other entities.
SPFSC will not be conveying any Contracts to any Trust
Fund. Any Contracts purchased on an individual basis or in
bulk by SPFSC will be sold by it to Bank of America, and
conveyed by Bank of America to the Trustee of a Trust Fund
immediately before the issuance of Certificates evidencing
interests in such Contracts.
Each Contract will be secured by a new or used
manufactured home (each manufactured home securing a
Contract being referred to herein as a "Manufactured
Home"). Unless otherwise specified in the related
Prospectus Supplement, none of the Contracts nor
collections thereon will be insured or guaranteed by any
governmental agency or instrumentality. The applicable
Prospectus Supplement will specify if any of the related
Contracts will be secured by real property and whether the
annual percentage rate ("Contract Rate") for each such
Contract is fixed, is variable or increases ("steps up")
in specified increments on certain dates.
The Prospectus Supplement relating to each Series of
Certificates will provide information as of the first day
of the month of initial
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issuance of such Certificates (the "Cut-off Date") with
respect to, among other things, (i) the number, the
aggregate unpaid principal balance, and the range of
outstanding principal balances of the Contracts comprising
the related Contract Pool; (ii) the weighted average of
the Contract Rates ("Weighted Average Contract Rate") of
the Contracts and the distribution of Contract Rates;
(iii) the weighted average original and remaining terms to
maturity of the Contracts and the distribution of
remaining terms to maturity; (iv) the average outstanding
principal balance of the Contracts; (v) the geographical
distribution of the related Manufactured Homes at
origination; (vi) the years of origination of the
Contracts; (vii) the distribution of original principal
balances of the Contracts; (viii) the percentage amount of
Contracts secured by new or used Manufactured Homes; (ix)
the range of and weighted average loan-to-value ratios at
origination; and (x) the month and year in which the final
scheduled payment date for the Contract with the latest
maturity is scheduled to occur. If a Contract Pool
contains Step-Up Rate Contracts (as defined herein), the
related Prospectus Supplement will specify the percentage
of the Contract Pool comprised of such Contracts, the
period during which the Contract Rates for such Contracts
will be stepped up, the range of increases in such
Contract Rates and the range of increases in the Scheduled
Payments (as defined herein) for such Contracts. If a
Contract Pool contains variable rate Contracts, the
related Prospectus Supplement will contain a description
of the basis on which such rates are determined, including
any maximum or minimum rates and the frequency with which
any such rate adjusts. The Prospectus Supplement relating
to a Series of Certificates also will contain certain
information about Contracts in the related Trust Fund that
are Land Home Contracts (as defined herein), Land-in-Lieu
Contracts (as defined herein) or Contracts that are
partially guaranteed by the Veterans Administration or
partially insured by the Federal Housing Administration.
To the extent that Bank of America or BankAmerica Housing
Services, as the case may be, believes such information to
be material, any Prospectus Supplement may also include
additional information concerning the related Contract
Pool that is stored in BankAmerica Housing Services'
electronic data processing system.
Description of Certificates..... Each Series of Certificates will be issued pursuant to a
pooling and servicing agreement (each, an "Agreement")
entered into by Bank of America or BankAmerica Housing
Services, or both of them, in each case as Seller with
respect to Contracts sold by it for the related Contract
Pool, BankAmerica Housing Services, as Servicer, the
trustee specified in the related Prospectus Supplement
(the "Trustee"), and such other parties, if any, as may be
specified in the related Prospectus Supplement. The
Certificates of a Series may be issued in one or more
classes or subclasses (each referred to in this Prospectus
as a "Class"). If the Certificates of a Series are issued
in more than one Class, the Certificates of all or less
than all of such Classes may be sold under this
Prospectus, and there may be separate Prospectus
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Supplements relating to one or more of such Classes so
sold. Any reference herein to the Prospectus Supplement
relating to a Series comprised of more than one Class
should be understood to refer to each of the Prospectus
Supplements relating to the Classes of such Series sold
hereunder. Any reference herein to the Certificates of a
Class should be understood as a reference to the
Certificates of a Class within a Series, the Certificates
of a subclass within a Class or all of the Certificates of
a single-Class Series, as the context may require.
The Certificates of each Series will evidence an interest,
as specified in the related Prospectus Supplement, in a
trust fund (a "Trust Fund") created by Bank of America,
BankAmerica Housing Services or both of them, as the case
may be, pursuant to an Agreement. Each Trust Fund will
include a Contract Pool together with certain contract
rights and other rights relating to such Contracts (as
discussed below). Each Trust Fund may from time to time
also include title to any Manufactured Home that is
repossessed following a Contract default, hazard insurance
claims and proceeds from the sale of any such Manufactured
Home or such hazard insurance claims. The Contracts
comprising each Contract Pool will be sold to the related
Trust Fund by Bank of America, BankAmerica Housing
Services or both of them.
Non-Recourse Obligations........ Neither Bank of America nor BankAmerica Housing Services
nor any of their affiliates will have any obligations with
respect to any Series of Certificates except, in the case
of the Sellers, for obligations arising from certain
representations and warranties of Bank of America and
BankAmerica Housing Services, as the case may be, with
respect to the Contracts sold by it in the related
Contract Pool and, in the case of BankAmerica Housing
Services, for certain contractual servicing obligations,
each as further described herein. SUBJECT ONLY TO THE
FOREGOING EXCEPTIONS, THE CERTIFICATES WILL NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF BANK OF AMERICA OR
BANKAMERICA HOUSING SERVICES, THEIR PARENT CORPORATION,
BANKAMERICA CORPORATION, OR ANY AFFILIATE THEREOF, AND
ASSETS IN THE TRUST FUND WILL CONSTITUTE THE ONLY SOURCE
OF FUNDS FOR PAYMENT ON THE CERTIFICATES. NONE OF THE
CERTIFICATES NOR (UNLESS OTHERWISE SPECIFIED IN THE
RELATED PROSPECTUS SUPPLEMENT) THE UNDERLYING CONTRACTS OR
ANY COLLECTIONS THEREON WILL BE INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
Distributions on Certificates... All Certificates will entitle the holders thereof to
distributions, on the dates specified in the related
Prospectus Supplement (each, a "Distribution Date"), from
amounts collected on the underlying Contracts. The
Certificates of a Class may entitle the holders thereof to
(a) distributions of both principal and interest, (b)
distributions of principal only or (c) distributions of
interest only. Such distributions will be made in
accordance with a formula
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described in the related Prospectus Supplement, and,
unless otherwise specified in such Prospectus Supplement,
distributions allocable to a Class of Certificates will be
applied first to interest, if any, and second to
principal, if any. To the extent specified in the related
Prospectus Supplement, the rights of the holders of the
Certificates of one or more Classes of a multiple-Class
Series to receive distributions of principal and/or
interest from amounts collected on the Contracts may be
subordinate to such rights of the holders of Certificates
of one or more other Classes. See "Credit and Liquidity
Enhancement" herein and the applicable Prospectus
Supplement.
A. Distributions of Principal... If the Certificates of a Class entitle the holders thereof
to distributions of principal, the related Prospectus
Supplement will specify an initial aggregate principal
balance for the Certificates of such Class (the related
"Certificate Balance") and a method of computing the
amount of principal, if any, to be distributed to the
holders of such Certificates on each Distribution Date.
Unless otherwise specified in the related Prospectus
Supplement, principal distributions for the Certificates
of a Class will be computed on the basis of a formula
which, on each Distribution Date, allocates all or a
portion of the Total Regular Principal Amount relating to
such Distribution Date to the Certificates of such Class.
The "Total Regular Principal Amount" is the total amount
by which the aggregate outstanding principal balance of
the Contracts in the related Contract Pool is reduced
during one or more collection periods prior to such
Distribution Date designated in such Prospectus Supplement
(each, a "Collection Period"). Such reduction may occur as
a result of actuarially predetermined scheduled principal
reductions, receipt of principal prepayments, liquidation
of Contracts, losses on Contracts and repurchases of
Contracts under certain conditions, the failure of a third
party credit support provider, if any, to make a required
payment, or a combination of the foregoing events. See
"The Contract Pools," "Description of the Certificates --
Conveyance of Contracts," "Description of the Certificates
-- Optional and Mandatory Repurchase of Certificates;
Termination Auction" and "Description of the Certificates
-- Collection and Other Servicing Procedures" herein.
Distributions with respect to all or a portion of the
Total Regular Principal Amount are sometimes referred to
herein as distributions of "Regular Principal." The Total
Regular Principal Amount with respect to any Contract Pool
and any Distribution Date may be estimated in a manner
specified in the related Prospectus Supplement.
If, due to liquidation losses or other circumstances
adversely affecting the collections on the underlying
Contract Pool, the Contract collections available on any
Distribution Date to make distributions of Regular
Principal to the holders of the Certificates of a Class
are less than the portion of the Total Regular Principal
Amount allocable to such Class, the deficiency may be made
up from (i) the amount, if any, by which the interest
collected on nondefaulted Contracts during the same
Collection Period exceeds the interest distribution due to
the holders of Certificates
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for the related Series, the servicing fee of the Servicer
(to the extent such servicing fee is payable prior to
distributions of interest to the holders of any Class of
Certificates) and other expenses of the Trust Fund or (ii)
funds available from one or more forms of credit support,
but only to the extent, if any, specified in the
applicable Prospectus Supplement. See "Credit and
Liquidity Enhancement" herein. If specified in the
applicable Prospectus Supplement, the Certificate Balance
of the Certificates of a Class will be reduced on each
Distribution Date by the full amount of the portion of the
Total Regular Principal Amount allocable to such Class
even if, due to deficient Contract collections, a full
distribution thereof is not made.
The applicable distribution formula for each Class of a
multiple-Class Series may allocate the Total Regular
Principal Amount among the various Classes on a pro rata,
sequential or other basis, as specified in the related
Prospectus Supplement. If specified in the related
Prospectus Supplement, any such formula may entitle the
holders of Certificates of a particular Class to receive
on certain Distribution Dates, distributions of Regular
Principal from particular sources of credit support upon
the occurrence of certain losses or delinquencies, even if
the holders of the Certificates of such Class would not
have been entitled to receive principal distributions on
such Distribution Dates from amounts collected on the
underlying Contracts in the absence of such losses or
delinquencies.
If specified in the applicable Prospectus Supplement, the
Certificates of a Class may entitle the holders thereof to
special principal distributions on particular Distribution
Dates that are unrelated to the Total Regular Principal
Amount for any such Distribution Date ("Special Principal
Distributions"). Special Principal Distributions may be
made, under the circumstances set forth in the applicable
Prospectus Supplement, from interest collected on the
underlying Contract Pool, from funds available from one or
more forms of credit support or from such other source as
may be specified in such Prospectus Supplement. The
Certificates of a Class having an initial Certificate
Balance may entitle the holders thereof to distributions
of Regular Principal only, to distributions of Regular
Principal and to Special Principal Distributions or to
Special Principal Distributions only. However, unless
otherwise stated in the related Prospectus Supplement, the
Certificates of a Class will not entitle the holders
thereof to aggregate principal distributions in excess of
the initial Certificate Balance for such Class.
B. Distributions of Interest.... The distribution formula for a Class of Certificates
having an initial Certificate Balance may, but need not,
also specify a method of computing the interest, if any,
to be distributed on specified Distribution Dates (which
may include all or less than all of the Distribution
Dates) to the holders of the Certificates of such Class.
Such interest may be equal, subject to such adjustments as
may be described in the related Prospectus Supplement, to
a specified number of days' interest on the applicable
Certificate Balance (before giving effect to any reduction
thereof on such
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Distribution Date), calculated at a rate (the
"Pass-Through Rate") specified in the related Prospectus
Supplement. The Pass-Through Rate may be fixed or
variable, and, if specified in the related Prospectus
Supplement, may shift from a variable rate to a fixed rate
under the conditions specified in such Prospectus
Supplement. See "Description of the Certificates --
Distributions on Certificates -- B. Distributions of
Interest" herein for a general description of the types of
variable Pass-Through Rates that might be applicable to a
Class of Certificates. Alternatively, such interest may be
equal to all or a portion (which portion will be
determined as described in the related Prospectus
Supplement) of the interest due on the related Contracts
during one or more Collection Periods occurring prior to
such Distribution Date. Classes of Certificates that do
not entitle the holders thereof to receive distributions
of principal may nevertheless entitle such holders to
receive interest distributions calculated on this basis.
If, due to liquidation losses or other circumstances
adversely affecting the collections on the underlying
Contract Pool, the Contract collections available to make
distributions of interest to the holders of the
Certificates of a Class are less than the amount of
interest computed as described above, the deficiency may
be made up from other sources, but only to the extent, if
any, specified in the related Prospectus Supplement. See
"Credit and Liquidity Enhancement" herein and the
applicable Prospectus Supplement.
C. Residual Interests........... If specified in the related Prospectus Supplement, a Class
of Certificates in any Series may evidence a residual
interest in the related Trust Fund (the "Residual
Interest"). Any such Class will not have been registered
under the Securities Act and will not be offered or sold
pursuant to this Prospectus. Certificates evidencing a
Residual Interest will not have the features described
above. Rather, unless otherwise specified in such
Prospectus Supplement, such Certificates will entitle the
holders thereof to receive distributions from amounts
collected on the Contracts which would not be needed to
make distributions to the holders of other interests in
the Trust Fund (or to pay expenses of the related Trust
Fund) in the absence of liquidation losses or other events
resulting in deficient Contract collections.
In addition, if specified in the related Prospectus
Supplement, certain or all Certificates evidencing
Residual Interests may also entitle the holders thereof to
receive additional distributions of assets of the related
Trust Fund, to the extent any such assets remain after
being applied to make distributions to the holders of
other interests in the Trust Fund (or to pay expenses of
the Trust Fund). The Certificates evidencing a Residual
Interest may entitle the holders thereof to distributions
at various times throughout the life of the related Trust
Fund or only upon termination of the Trust Fund, all as
more fully set forth in the related Prospectus Supplement.
If an election is made to treat the related Trust Fund as
a REMIC, the holders of a Residual Interest in such Trust
Fund will be subject to federal income taxation with
respect to their
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ownership of such Residual Interest as described herein
under "Certain Federal Income Tax Consequences -- REMIC
Certificates -- D. Taxation of Residual Certificates."
Global Certificates............. Unless otherwise specified in the related Prospectus
Supplement, the Certificates of a Series, or of one or
more Classes within a Series, will be issuable in the form
of one or more global certificates (each, a "Global
Certificate") to be held by Cede & Co ("Cede"), as nominee
of The Depository Trust Company ("DTC"), on behalf of the
beneficial owners (the "Certificate Owners") of the
Certificates, as described herein under "Description of
the Certificates -- Global Certificates." If some or all
of the Certificates of a Series are issued in the form of
one or more Global Certificates, certain monthly and
annual reports prepared by the Servicer under the related
Agreement will be sent on behalf of the related Trust Fund
to Cede and not to the Certificate Owners, as described in
"Reports to Certificateholders" above.
Credit and Liquidity
Enhancement.................... The extent, if any, to which a Class of Certificates in
any Series may be entitled to the benefit of one or more
forms of credit and liquidity enhancement by means of
overcollateralization or subordination of one or more
Classes of Certificates in such Series, the deposit of
funds into one or more spread accounts or other reserve
funds, the issuance of one or more letters of credit,
surety bonds, or other credit facilities, or a combination
thereof, and/or the performance under one or more
certificate purchase agreements or other liquidity
facilities, or a combination thereof, will be described in
the related Prospectus Supplement. See "Credit and
Liquidity Enhancement" herein and the related Prospectus
Supplement.
Advances........................ The extent, if any, to which the Servicer will be required
to make advances of delinquent scheduled payments on the
Contracts in a Contract Pool will be described in the
related Prospectus Supplement.
Termination Auction............. If specified in the applicable Prospectus Supplement, the
Trustee for the related Trust Fund shall solicit bids for
the purchase at an auction (a "Termination Auction") of
the Contracts remaining in the Trust Fund within ninety
days following the Distribution Date as of which the Pool
Principal Balance for a Contract Pool is less than 10% of
such Contract Pool's Cut-off Date Pool Principal Balance.
In the event that satisfactory bids are received as
described in the applicable Agreement, the net sale
proceeds will be distributed to Certificateholders, in the
same order of priority as collections received in respect
of the Contracts. If satisfactory bids are not received,
the Trustee shall decline to sell the Contracts and shall
not be under any obligation to solicit any further bids or
otherwise negotiate any further sale of the Contracts. If
an election has been made to treat the related Trust Fund
as a REMIC, such sale and consequent termination of the
related Trust Fund must constitute a "qualified
liquidation" of the Trust Fund under Section 860F of the
Code, including the requirement that the qualified
liquidation takes place over a period not to exceed 90
days. See "Description of the
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Certificates -- Optional and Mandatory Repurchase;
Termination Auction" herein and the applicable Prospectus
Supplement. Any early termination of a Trust Fund and
early retirement of the related Certificates that results
from a successful Termination Auction may have an effect
on an investor's yield on such Certificates. See
"Prepayment and Yield Considerations" herein and in the
applicable Prospectus Supplement.
Optional Termination............ If so specified in the related Prospectus Supplement and
if the related Trust Fund has not been terminated
following a successful Termination Auction, the Servicer
will have the option to purchase from the related Trust
Fund all Contracts then outstanding and all other property
in such Trust Fund at the time, in the manner and at the
price specified in such Prospectus Supplement and subject
to the conditions set forth in the related Agreement. See
"Description of the Certificates -- Optional and Mandatory
Repurchase; Termination Auction" and "Description of the
Certificates -- Termination of the Agreement" herein. Any
early termination of the related Trust Fund and early
retirement of the Certificates of the related Series that
result from the Servicer exercising either such option may
have an effect on an investor's yield on such
Certificates. See "Prepayment and Yield Considerations"
herein and in the related Prospectus Supplement.
Federal Income Tax
Consequences................... The federal income tax consequences of the purchase,
ownership and disposition of the Certificates in any
Series will depend on, among other factors, whether an
election is made to treat the related Trust Fund as a
REMIC under the provisions of the Internal Revenue Code of
1986, as amended (the "Code"). See "Certain Federal Income
Tax Consequences -- REMIC Certificates" herein for a
discussion of the federal income tax consequences of the
purchase, ownership and disposition of the Certificates in
any Series if such an election is made. See "Certain
Federal Income Tax Consequences -- Non-REMIC Certificates"
for a discussion of the federal income tax consequences of
the purchase, ownership and disposition of the
Certificates in any Series if such an election is not
made.
ERISA Considerations............ A fiduciary of any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code should
carefully review with its own legal advisors whether the
purchase or holding of Certificates could give rise to a
transaction that is prohibited or otherwise impermissible
under ERISA or the Code. See "ERISA Considerations" herein
and in the related Prospectus Supplement. If specified in
the related Prospectus Supplement, certain Certificates
sold hereunder will not be transferable to certain benefit
plan investors except under the conditions set forth in
such Prospectus Supplement.
Legal Investment................ Unless otherwise indicated in the applicable Prospectus
Supplement, any Certificates offered hereby that are rated
by at least one nationally recognized statistical rating
organization in
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one of its two highest rating categories will generally
constitute "mortgage related securities" under the
Secondary Mortgage Market Enhancement Act of 1984, as
amended ("SMMEA") and, as such, would be "legal
investments" for certain types of institutional investors
to the extent provided in SMMEA. Certain state laws have
overridden SMMEA and, therefore, institutional investors
should review with their own legal advisors whether such
Certificates would constitute a legal investment. In
addition, some Classes of Certificates offered hereby may
not be rated in one of the two highest rating categories
and thus would not constitute "mortgage related
securities." See "Legal Investment" herein and in the
related Prospectus Supplement.
Rating.......................... It is a condition to the issuance of each Class of
Certificates sold under this Prospectus that it be rated
at the time of issuance by at least one nationally
recognized statistical rating organization in one of its
four highest rating categories. 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. The security rating of any Class
of Certificates should be evaluated independently of
similar security ratings assigned to other kinds of
securities, including Certificates in the same Series or
Certificates of other Series sold under this Prospectus.
Ratings on manufactured housing contract pass-through
certificates address the likelihood of the receipt by
certificateholders of their allocable share of principal
and interest on the underlying manufactured housing
contract assets. These ratings address structural and
legal aspects associated with such certificates, the
extent to which the payment stream on such underlying
assets is adequate to make payments required by such
certificates and the credit quality of the credit
enhancer, if any. Ratings on the Certificates do not,
however, constitute a statement regarding the likelihood
of principal prepayments by Obligors under the Contracts
in the related Contract Pool, the degree by which
prepayments made by such Obligors might differ from those
originally anticipated or whether the yield originally
anticipated by investors of any Series of Certificates may
be adversely affected as a result of such prepayments. As
a result, investors of any Series of Certificates might
suffer a lower than anticipated yield.
See "Rating" herein and in the related Prospectus
Supplement.
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RISK FACTORS
Prospective purchasers of Certificates should consider, among other things,
the following factors in connection with the purchase of Certificates:
1. LIMITED LIQUIDITY. There can be no assurance that a secondary market
will develop for Certificates or, if it does develop, that it will provide the
holders of Certificates with liquidity of investment or that it will remain for
the term of such Certificates.
2. BOOK-ENTRY FORM. To the extent any Certificate is represented by a
Global Certificate, the issuance of such Certificates in book-entry form may
reduce the liquidity of such Certificates in the secondary trading market since
investors may be unwilling to purchase Certificates for which they cannot obtain
physical certificates. See "Description of the Certificates -- Global
Certificates" herein.
3. PREVAILING ECONOMIC CONDITIONS. An investment in Certificates may be
affected by, among other things, a downturn in national, regional or local
economic conditions. The geographic location of the Manufactured Homes in any
Contract Pool at origination of the related Contract will be set forth in the
related Prospectus Supplement under "The Contract Pool." Regional and local
economic conditions are often volatile and, historically, regional and local
economic conditions, as well as national economic conditions, have affected the
delinquency, loan loss and repossession experience of manufactured housing
installment sales contracts and/or installment loan contracts (hereinafter
generally referred to as "contracts" or "manufactured housing contracts").
Sufficiently high delinquencies and liquidation losses on the Contracts in any
Contract Pool will have the effect of reducing, and possibly eliminating, the
protection against loss afforded by any credit enhancement supporting any Class
of the related Certificates. If such protection is eliminated with respect to a
Class of Certificates, the holders of such Certificates will bear all risk of
loss on the related Contracts and will have to rely on the value of the related
Manufactured Homes for recovery of the outstanding principal of and unpaid
interest on any defaulted Contracts in the related Contract Pool. See "Credit
and Liquidity Enhancement" herein and the related Prospectus Supplement.
4. DEPRECIATION OF MANUFACTURED HOMES. Manufactured housing generally
depreciates in value, regardless of its location. Thus, Certificateholders
should expect that, as a general matter, the market value of any Manufactured
Home will be lower than the outstanding principal balance of the related
Contract. See "The Contract Pools" herein and "The Contract Pool" in the related
Prospectus Supplement. To the extent the Servicer has to repossess Manufactured
Homes relating to Contracts in a Contract Pool (or to the extent there are
casualty losses on the related Manufactured Homes), there are likely to be
liquidation losses on the Contracts in such Contract Pool, which will have the
effect of reducing, and possibly eliminating, the protection against loss
afforded by any credit enhancement supporting any Class of the related
Certificates. If such protection is eliminated with respect to a Class of
Certificates, the holders of such Certificates will bear all risk of loss on the
related Contracts and will have to rely on the value of the related Manufactured
Homes for recovery of the outstanding principal of and unpaid interest on any
defaulted Contracts in the related Contract Pool. See "Credit and Liquidity
Enhancement" herein and the related Prospectus Supplement.
5. NO RECOURSE. Neither Bank of America nor BankAmerica Housing Services
nor any of their affiliates will have any obligations with respect to any Series
of Certificates except, in the case of the Sellers, for obligations arising from
certain representations and warranties of Bank of America and BankAmerica
Housing Services, as the case may be, with respect to the Contracts sold by it
in the related Contract Pool, and, in the case of BankAmerica Housing Services,
for certain contractual servicing obligations, each as further described herein.
In all other respects, the purchase of any Certificate will be without recourse
unless the related Prospectus Supplement (i) specifies that some or all of the
Contracts evidenced by such Certificate are partially guaranteed by the Veterans
Administration or partially insured by the Federal Housing Administration, or
(ii) describes one or more forms of credit or liquidity enhancement supporting
distributions on the related Certificates. SUBJECT ONLY TO THE FOREGOING
EXCEPTIONS, PROCEEDS FROM THE ASSETS IN THE RELATED TRUST FUND WILL
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CONSTITUTE THE ONLY SOURCE OF FUNDS FOR PAYMENT ON THE CERTIFICATES OF THE
RELATED SERIES. THE CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS
OF BANK OF AMERICA, BANKAMERICA HOUSING SERVICES, THEIR PARENT CORPORATION,
BANKAMERICA CORPORATION, OR ANY AFFILIATE THEREOF, AND NEITHER THE CERTIFICATES
NOR THE UNDERLYING CONTRACTS OR ANY COLLECTIONS THEREON WILL BE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
6. SECURITY INTERESTS IN THE MANUFACTURED HOMES. On the date of initial
issuance of Certificates in any Series, Bank of America or BankAmerica Housing
Services or both will convey the related Contracts to the related Trust Fund.
BankAmerica Housing Services, as Servicer, will obtain and maintain physical
possession of the Contract documents as custodian and agent for the related
Trustee. Each Contract is secured by a security interest in a Manufactured Home
and, in the case of Land Home Contracts or Land-in-Lieu Contracts (both as
defined herein), the real estate on which the related Manufactured Home is
located. Perfection of security interests in the Manufactured Homes and
enforcement of rights to realize upon the value of the Manufactured Homes as
collateral for the Contracts are subject to a number of federal and state laws,
including the Uniform Commercial Code (the "UCC") as adopted in the states in
which the Manufactured Homes are located and such states' certificate of title
statutes, but generally not their real estate laws. Under such federal and state
laws, a number of factors may limit the ability of a holder of a perfected
security interest in Manufactured Homes to realize upon such Manufactured Homes
or may limit the amount realized to less than the amount due under the related
Contract. See "Certain Legal Aspects of the Contracts--Security Interests in the
Manufactured Homes" herein.
Unless otherwise specified in the related Prospectus Supplement, the
certificates of title for the Manufactured Homes (including Manufactured Homes
securing Contracts which are purchased by SPFSC and then conveyed by Bank of
America to the related Trust Fund) will show "Security Pacific Financial
Services, a Division of Bank of America, FSB" (the name under which BankAmerica
Housing Services was conducting business from approximately February 1993 to
February 1994), "Security Pacific Housing Services, a Division of Bank of
America, FSB" (the name under which BankAmerica Housing Services was conducting
business from approximately February 1994 to June 1995), "Bank of America, FSB,"
or "BankAmerica Housing Services, a Division of Bank of America, FSB" as the
lienholder; the UCC financing statements, where applicable, will show
BankAmerica Housing Services (under one of the foregoing names) as secured
party. Because of the expense and administrative inconvenience involved,
BankAmerica Housing Services will not amend the certificates of title to change
the lienholder specified therein to the relevant Trustee at the time Contracts
are conveyed to a Trust Fund, and will not execute any transfer instrument
(including, among other instruments, UCC-3 assignments) relating to any
Manufactured Home in favor of the relevant Trustee or deliver any certificate of
title to such Trustee or note thereon such Trustee's interest. In some states,
in the absence of such an amendment, notation, execution or delivery, the
assignment to the Trustee of the security interest in the Manufactured Homes
located therein may not be effective or such security interest may not be
perfected. If any otherwise effectively assigned security interest in favor of
the Trustee is not perfected, such assignment of the security interest to the
Trustee may not be effective against creditors of BankAmerica Housing Services,
which continues to be specified as lienholder on any certificate of title or as
secured party on any UCC filing, or against a receiver or conservator of
BankAmerica Housing Services. See "Description of the Certificates -- Conveyance
of Contracts" in the applicable Prospectus Supplement for a description of
certain limited circumstances under which BankAmerica Housing Services or Bank
of America, as the case may be, will be obligated to repurchase, or at its
option substitute another contract for, a Contract sold by it if, as a result of
the failure by BankAmerica Housing Services to take any action described above
in this paragraph with respect to the related Manufactured Home, the Trustee
does not have a perfected first-priority security interest in such Manufactured
Home.
7. TRANSFER OF CONTRACTS AND RELATED SECURITY INTERESTS. Each Contract
generally will be "chattel paper" as defined in the UCC as in effect in
California (where BankAmerica Housing Services' and Bank of America's chief
executive offices are located and where the chief executive office of SPFSC is
located)
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and the jurisdiction in which the related Manufactured Home was located at
origination. Under the UCC as in effect in each such jurisdiction, the sale of
chattel paper is treated in a manner similar to perfection of a security
interest in chattel paper. BankAmerica Housing Services or Bank of America, as
the case may be, will make or cause to be made appropriate filings of UCC-1
financing statements to give notice of the Trustee's ownership of the Contracts
sold by it. The Trustee's interest in the Contracts could be defeated if a
subsequent purchaser were able to take physical possession of the Contracts
without notice of such assignment. Unless otherwise specified in the applicable
Prospectus Supplement, BankAmerica Housing Services or Bank of America or both
of them, as the case may be, will be required under the related Agreement to
stamp or cause to be stamped each Contract sold by it to indicate its transfer
to the Trustee. To the extent the Contracts do not constitute "chattel paper"
within the meaning of the UCC as in effect in California and the jurisdictions
in which the related Manufactured Homes were located at origination, these steps
may not be sufficient to protect the Trustee's interest in the Contracts against
the claims of BankAmerica Housing Services' or Bank of America's (or an
affiliate's) creditors, a receiver or conservator of BankAmerica Housing
Services or Bank of America or a receiver, conservator or trustee in bankruptcy
of an affiliate thereof that sold such Contracts to BankAmerica Housing Services
or Bank of America.
In addition, a federal circuit court decision may adversely affect a
Trustee's interest in Contracts comprising a Contract Pool even if such
Contracts constitute chattel paper. In OCTAGON GAS SYSTEMS, INC. V. RIMMER, 995
F.2d 948 (10th Cir. 1993), the court's decision included language to the effect
that accounts sold by an entity which subsequently became bankrupt remained
property of the debtor's bankruptcy estate. Sales of chattel paper, like sales
of accounts, are governed by Article 9 of the UCC. If any affiliate of Bank of
America or BankAmerica Housing Services has sold Contracts to Bank of America or
BankAmerica Housing Services and becomes a debtor in a proceeding under the
federal bankruptcy code, and the court with jurisdiction for such bankruptcy
proceeding were to follow the reasoning of the Tenth Circuit and apply such
reasoning to chattel paper, Certificateholders could experience a delay in, or
reduction of, distributions as to the Contracts that constitute chattel paper
and were sold by such debtor.
8. FEDERAL AND STATE CONSUMER PROTECTION LAWS. Numerous federal and state
consumer protection laws could adversely affect the interest of any Trust Fund
in the Contracts comprising the related Contract Pool. For example, as described
herein under "Certain Legal Aspects of the Contracts -- Consumer Protection
Laws," the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act") could, under certain circumstances, cap the amount of interest
that may be charged on certain Contracts at 6% per annum and may hinder the
ability of the Servicer to foreclose on such Contracts in a timely fashion. In
addition, other federal and state consumer protection laws impose requirements
on lending under installment sales contracts and installment loan agreements
such as the Contracts, and the failure by the lender or seller of goods to
comply with such requirements could give rise to liabilities of assignees for
amounts due under such agreements and the right of set-off against claims by
such assignees. These laws could apply to any Trust Fund as assignee of the
related Contracts. Pursuant to each Agreement, BankAmerica Housing Services or
Bank of America or both of them, as the case may be, will represent and warrant
that each Contract sold by it complies with all requirements of law. To the
extent described in the applicable Prospectus Supplement under "Description of
Certificates -- Conveyance of Contracts," a breach of any such representation or
warranty that materially and adversely affects the related Trust Fund's interest
in a Contract will create an obligation by BankAmerica Housing Services or Bank
of America, as the case may be, to repurchase, or at its option substitute
another contract for, such Contract, unless such breach is cured within the time
period specified in the related Agreement. Neither BankAmerica Housing Services
nor Bank of America will have any obligation to repurchase any Contract because
of limitations imposed under the Relief Act, however.
9. PREPAYMENT CONSIDERATIONS. The prepayment experience on the Contracts
underlying any Series of Certificates (including prepayments due to liquidations
of defaulted Contracts) will affect the average life and the maturity of such
Certificates. Prepayments on the Contracts in any Contract Pool
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may be influenced by a variety of economic, geographic, social and other
factors, including repossessions, aging, seasonality and interest rates. Other
factors affecting prepayment on such Contracts include changes in housing needs,
job transfers and unemployment. In addition, in the event a partial prepayment
is made on a Contract, or a Contract is prepaid in full, interest on such
Contract to the extent of such prepayment will cease to accrue as of the date of
prepayment. If with respect to any Trust Fund such prepayments and related
interest shortfalls were sufficiently high during a Collection Period, the
Available Distribution Amount (as defined in the applicable Prospectus
Supplement) for the related Distribution Date could be less than the amount of
principal and interest that would be distributable to the related
Certificateholders in the absence of such shortfalls. See "Prepayment and Yield
Considerations" herein and in the related Prospectus Supplement.
10. DIFFICULTY IN PLEDGING. To the extent transactions in Certificates can
be effected only through DTC, participating organizations, indirect participants
and certain banks, the ability of a Certificate Owner to pledge any such
Certificate to persons or entities that do not participate in the DTC system, or
otherwise to take actions in respect of such Certificates, may be limited due to
the lack of physical certificates representing any such Certificate. See
"Description of the Certificates -- Global Certificates" herein.
11. POTENTIAL DELAYS IN RECEIPT OF DISTRIBUTIONS. To the extent any
Certificate is represented by a Global Certificate, Certificate Owners with
respect thereto may experience some delay in their receipt of distributions.
Distributions will be forwarded by the Trustee to DTC and DTC will credit such
distributions to the accounts of its Participants (as defined herein), which
will thereafter credit them to the accounts of Certificate Owners either
directly or indirectly through indirect participants. See "Description of the
Certificates -- Global Certificates" herein.
12. INSOLVENCY, RECEIVERSHIP OR BANKRUPTCY OF CONTRACT SELLERS. In the
event of an insolvency, conservatorship or receivership of BankAmerica Housing
Services or Bank of America, as the case may be, or the insolvency or bankruptcy
of any affiliate thereof that has sold Contracts to Bank of America or
BankAmerica Housing Services and becomes a debtor in a proceeding under the
federal bankruptcy code, the sale of Contracts by Bank of America or BankAmerica
Housing Services or both of them, or the sale of Contracts by an insolvent
affiliate to either of them, as the case may be, could be recharacterized as a
borrowing secured by a pledge of the Contracts. Such an attempt, even if
unsuccessful, could result in delays in or reductions of distributions on the
Certificates. See "Other Considerations" herein.
13. INSOLVENCY, CONSERVATORSHIP OR RECEIVERSHIP OF SERVICER. In the event
of a conservatorship or receivership of Bank of America, FSB (of which
BankAmerica Housing Services is an unincorporated division), the receiver or
conservator could prevent the termination of BankAmerica Housing Services as
Servicer if no event of default under the applicable Agreement exists other than
the receivership or conservatorship or insolvency of the Servicer. Such
restriction could result in a delay or possibly a reduction in payments on the
Certificates to the extent BankAmerica Housing Services received (but did not
deposit with the trustee) Contract collections before the date of receivership
or conservatorship. See "Other Considerations" herein.
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THE CONTRACT POOLS
Each Contract contained in a Contract Pool will have been (i) originated by
Bank of America, BankAmerica Housing Services or SPFSC or purchased by Bank of
America, BankAmerica Housing Services or SPFSC from a manufactured housing
dealer on an individual basis in the ordinary course of its business and/or (ii)
purchased by Bank of America, BankAmerica Housing Services or SPFSC, from one or
more governmental agencies or instrumentalities and/or from one or more other
lenders or finance companies (including affiliates of the Sellers) that purchase
and hold manufactured housing contracts ("Bulk Sellers"), all as more
particularly specified in the related Prospectus Supplement. Each Contract will
be secured by a new or used Manufactured Home. Unless otherwise specified in the
related Prospectus Supplement, the Contracts will not be insured by any
governmental agency or instrumentality. However, if so specified in the related
Prospectus Supplement, some or all of the Contracts and collections thereon
will, subject to the conditions described below, be partially insured by the
Federal Housing Administration or partially guaranteed by the Veterans
Administration.
On the date of initial issuance of the Certificates of any Series, Bank of
America, BankAmerica Housing Services or both of them will convey the Contracts
comprising the related Contract Pool to the related Trust Fund. BankAmerica
Housing Services, as Servicer, will obtain and maintain possession of all
Contract documents.
Unless otherwise specified in the applicable Prospectus Supplement, the
Agreement relating to each Contract Pool will require the related Manufactured
Homes to comply with the requirements of certain federal statutes which
generally would require the Manufactured Homes to have a minimum of 400 square
feet of living space and a minimum width of 102 inches and to be of a kind
customarily used at a fixed location. Such statutes would also require the
Manufactured Homes to be transportable in one or more sections, built on a
permanent chassis and designed to be used as dwellings, with or without
permanent foundations, when connected to the required utilities. The statutes
also would require that the security interest in any Manufactured Home include
the plumbing, heating, air conditioning and electrical systems relating to such
Manufactured Home.
Each Agreement will require the Servicer to maintain hazard insurance
policies with respect to each Manufactured Home in the amounts and manner set
forth herein under "Description of the Certificates -- Servicing Compensation
and Payment of Expenses; Certain Matters Regarding the Servicer -- A. Hazard
Insurance Policies." Generally, no other insurance will be required with respect
to the Manufactured Homes, the Contracts or any Contract Pool.
Each Contract Pool may contain actuarial or simple interest Contracts (as
further described below) bearing a Contract Rate that is fixed or variable or
increases in specified increments on particular dates (a "Step-Up Rate"). The
rate at which the Contracts in a particular Contract Pool bear interest will be
further described in the applicable Prospectus Supplement. Unless otherwise
specified in the applicable Prospectus Supplement, each Contract will provide
for payments on scheduled monthly due dates (each, a "Due Date"). The day of
each month constituting the Due Date will vary from Contract to Contract. Unless
the Contracts bear interest at a variable rate, the scheduled payment due on
each monthly Due Date (the "Scheduled Payment") will be specified in the
Contract. The Scheduled Payments for fixed-rate Contracts will be constant
assuming no prepayments. Unless otherwise specified in the applicable Prospectus
Supplement, the Scheduled Payments for Contracts bearing interest at a Step-Up
Rate ("Step-Up Rate Contracts") will increase on the dates on which the Contract
Rates are stepped up. In addition, unless otherwise specified in the related
Prospectus Supplement, the Contracts may be prepaid in full or in part at any
time.
Unless otherwise stated in the applicable Prospectus Supplement, Scheduled
Payments whether for actuarial or simple interest Contracts, may be paid prior
to their Due Dates, whether in, or in months prior to, the months of their Due
Dates. Thus, the obligor under a Contract (each, an "Obligor") may, in June, pay
the Scheduled Payments due in June, July and August. In that event, no further
payment will become due on such Contract until the September Due Date. In the
case of a simple interest Contract, the Obligor would have to instruct the
Servicer to apply such payment as a pay-ahead of future
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Scheduled Payments; otherwise such payment would be applied as a partial
principal prepayment. There is no limit to the number of Scheduled Payments that
may be paid ahead in this manner. The effect of paid-ahead Scheduled Payments
will be different for actuarial Contracts than for simple interest Contracts, as
further described below.
The Scheduled Payments for each actuarial Contract (whether a fixed rate
Contract or a Step-Up Rate Contract) will fully amortize the principal balance
of the Contract over its term. The portion of each Scheduled Payment allocable
to principal is equal to the total amount thereof less the portion allocable to
interest. The portion of each Scheduled Payment due in a particular month that
is allocable to interest is a precomputed amount equal to one month's interest
on the principal balance of the Contract, which principal balance is determined
by reducing the initial principal balance by the principal portion of all
Scheduled Payments that were due in prior months (whether or not such Scheduled
Payments were timely made) and all prior partial principal prepayments. Thus,
each Scheduled Payment will be applied to interest and to principal in
accordance with a precomputed allocation, whether such Scheduled Payments are
received in advance of or subsequent to their Due Dates. Unless otherwise
specified in the applicable Prospectus Supplement, all payments received in a
Collection Period on an actuarial Contract in excess of the related Obligor's
Scheduled Payment (other than payments not allocated to principal and interest
(such as late payment charges) or payments sufficient to pay in full the
outstanding principal balance of and all accrued and unpaid interest on such
Contract) are applied as a partial prepayment of principal on the Contract,
unless (i) the related Obligor notifies or confirms with the Servicer that such
payments are to be applied to future Scheduled Payments in the order of the Due
Dates of such payments or (ii) the amount of such excess payment is
approximately equal (subject to a variance of plus or minus 10%) to the amount
of a future Scheduled Payment.
The Scheduled Payments for each simple interest Contract (whether a fixed
rate Contract or a Step-Up Rate Contract) would, if made exactly on their
respective Due Dates, result in a nearly full amortization of the Contract.
However, each such Scheduled Payment will be applied when received first to
accrued interest on the unpaid principal balance of the Contract (computed on a
daily simple interest basis) and then to principal. Thus, the portions of each
such Scheduled Payment allocable to principal and interest will depend on the
amount of interest accrued to the date payment is received. Unless otherwise
stated in the applicable Prospectus Supplement, no Scheduled Payment on a
Contract will be considered to be delinquent once 90% of the amount thereof is
received. Late payments or payments of less than 100% of any Scheduled Payment
on a simple interest Contract will result in such Contract amortizing more
slowly than originally scheduled and could extend the maturity date of any such
Contract beyond its original scheduled maturity date.
Under certain circumstances, the amount of accrued interest on a simple
interest Contract could exceed the amount of the Scheduled Payment. This could
happen, for example, in the case of delinquency, or in the case of the first
Scheduled Payment due after one or more Scheduled Payments have been paid ahead
as described above (because interest continues to accrue on simple interest
Contracts during the months in which the paid-ahead Scheduled Payments would
have become due). In any such event, the entire amount of the payment will be
allocated to interest, and although some accrued interest will remain unpaid,
the unpaid interest will not be added to the principal balance of the Contract
and will not bear interest. Under other circumstances, no interest will have
accrued between the dates of receipt of Scheduled Payments on simple interest
Contracts. This could be the case if, for example, one or more Scheduled
Payments were paid ahead on a Due Date occurring in a month prior to the months
in which such Scheduled Payments would have become due, as described above. In
that event, the entire amount of such paid-ahead Scheduled Payments generally
will be allocated to principal.
Variable rate Contracts may be either actuarial or simple interest
Contracts. Unless otherwise specified in the related Prospectus Supplement, the
Scheduled Payments on variable rate Contracts will be allocated between
principal and interest as described above for actuarial Contracts and simple
interest Contracts, respectively, based upon the Contract Rate in effect when
such Scheduled Payments
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are due. Unless otherwise specified in the related Prospectus Supplement, the
amounts of such Scheduled Payments will be adjusted, on the basis described in
such Prospectus Supplement, whenever the related variable rate is adjusted.
If so specified in the applicable Prospectus Supplement, the related
Contract Pool may contain Contracts which combine certain features of actuarial
and simple interest Contracts as follows: Scheduled Payments will be applied to
principal and interest as if such Contracts were actuarial Contracts, but if any
such Contract is prepaid in full, the amount required to be paid will be
calculated as if the Scheduled Payments received prior to the date of prepayment
were applied to principal and interest in the same manner as they would have
been had such Contract been a simple interest Contract.
If specified in the related Prospectus Supplement, certain Contracts ("Land
Home Contracts") will also be secured by liens on the real estate on which the
related Manufactured Homes are located. Unless otherwise specified in the
related Prospectus Supplement, all Land Home Contracts will have financed the
purchase of the related Manufactured Home together with the real estate on which
the Manufactured Home is located. In certain jurisdictions, a lender cannot
obtain separate evidence of its lien on the Manufactured Home securing a Land
Home Contract and its lien on the property on which the Manufactured Home is
located. In those jurisdictions, the only evidence of liens on the Manufactured
Homes securing Land Home Contracts will be the deeds of trust, mortgages or
similar security instruments (in each case, a "Mortgage") on the real estate on
which the Manufactured Homes are located. It is a policy of BankAmerica Housing
Services to obtain title insurance policies with respect to any such Contract
that it originates insuring that the related Manufactured Home is subject to the
lien of the related Mortgage, although title policies may not have been obtained
with respect to Land Home Contracts acquired from Bulk Sellers. Where the real
estate on which the related Manufactured Home is located is owned by the related
Obligor, the Obligor may provide a Mortgage on the real estate in lieu of all or
part of any required down payment for any such Contract. Any such Contract is
referred to herein as a "Land-in-Lieu Contract" rather than a "Land Home
Contract." Generally, separate evidences of liens on Manufactured Homes securing
Land-in-Lieu Contracts can be obtained. As a result, no title insurance is
obtained in respect of such Contracts.
The Prospectus Supplement relating to each Series of Certificates will
provide information as of the Cut-off Date for such Series with respect to,
among other things, (i) the number, the aggregate principal balance, and the
range of outstanding principal balances of the Contracts comprising the related
Contract Pool; (ii) the weighted average of the Contract Rates ("Weighted
Average Contract Rate") of the Contracts and the distribution of Contract Rates;
(iii) the weighted average original and remaining terms to maturity of the
Contracts and the distribution of remaining terms to maturity; (iv) the average
outstanding principal balance of the Contracts; (v) the geographical
distribution of the related Manufactured Homes at origination; (vi) the years of
origination of the Contracts; (vii) the distribution of original principal
balances of the Contracts; (viii) the percentage amount of Contracts secured by
new or used Manufactured Homes; (ix) the range of and weighted average
loan-to-value ratios at origination; and (x) the month and year in which the
final scheduled payment date for the Contract with the latest maturity is
scheduled to occur. If a Contract Pool contains Step-Up Rate Contracts, the
related Prospectus Supplement will specify the percentage of the Contract Pool
comprised of such Contracts, the period during which the Contract Rates for such
Contracts will be stepped up, the range of increases in such Contract Rates and
the range of increases in the Scheduled Payments for such Contracts. If a
Contract Pool contains variable rate Contracts, the related Prospectus
Supplement will contain a description of the basis on which such rates are
determined, including any maximum or minimum rates and the frequency with which
any such rate adjusts. The Prospectus Supplement relating to a Series of
Certificates also will contain certain information about Contracts in the
related Trust Fund that are Land Home Contracts, Land-in-Lieu Contracts or
Contracts that are partially guaranteed by the Veterans Administration or
partially insured by the Federal Housing Administration. In addition, to the
extent Bank of America's or BankAmerica Housing Services' management believes
such information to be material, any Prospectus Supplement may also include
additional information concerning the related Contract Pool that is stored in
BankAmerica Housing Services' electronic data processing system.
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See "The Sellers" herein for a description of certain origination and
underwriting practices of BankAmerica Housing Services with respect to
manufactured housing contracts that have been originated by BankAmerica Housing
Services or purchased by BankAmerica Housing Services or SPFSC on an individual
basis. To the extent any Contracts in a Contract Pool were purchased by one or
more of the Sellers from one or more Bulk Sellers, the applicable Prospectus
Supplement will contain a description of certain practices observed by such
Seller or the Sellers, as the case may be, in connection with any such purchase.
THE SELLERS
BANKAMERICA HOUSING SERVICES, AN UNINCORPORATED DIVISION OF BANK OF AMERICA, FSB
BankAmerica Housing Services is an unincorporated division of Bank of
America, FSB ("BAFSB"); BankAmerica Housing Services is not a separate legal
entity from BAFSB, and all references in this Prospectus and any Prospectus
Supplement to BankAmerica Housing Services (unless otherwise specified herein)
are intended to reflect its status as a division of, and not a corporate entity
separate from, BAFSB. In the fourth quarter of 1992, BankAmerica Housing
Services began purchasing and originating manufactured housing installment
contracts through the regional offices in the United States of its affiliate,
Security Pacific Housing Services, Inc. ("SPHSI"). Prior to that time, SPHSI
conducted the business of purchasing, originating, servicing and selling
manufactured housing contracts. SPHSI discontinued the conduct of that business
in July 1993, transferring to BankAmerica Housing Services the regional office
structure, systems and employees relating to that business. The applicable
Prospectus Supplement will contain a description of SPHSI's loan origination and
underwriting practices for any Contract contained in the related Contract Pool
that was originated or purchased by SPHSI on an individual basis in the ordinary
course of its business. BankAmerica Housing Services' principal office is
located at 10089 Willow Creek Road, San Diego, California 92131-2447 (telephone
619-549-4700).
BANK OF AMERICA, FSB
BAFSB is a federal savings bank and wholly owned subsidiary of BankAmerica
Corporation. As of December 31, 1995, BAFSB and its consolidated subsidiaries
accounted for approximately 3% of the consolidated total assets of BankAmerica
Corporation and constituted BankAmerica Corporation's sixth largest bank
subsidiary. As of December 31, 1995, and based on the Thrift Financial Report of
BAFSB at such date, BAFSB and its consolidated subsidiaries had total deposits
of $1.6 billion, total assets of $7.4 billion and capital and surplus of $828
million. BAFSB's headquarters are located in Portland, Oregon, and its
administrative offices are located at 555 California Street, San Francisco,
California 94104 (telephone 415-622-2220).
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Bank of America, a wholly-owned subsidiary of BankAmerica Corporation, is a
national banking association. As of December 31, 1995, Bank of America and its
consolidated subsidiaries accounted for approximately 70% of the consolidated
total assets of the BankAmerica Corporation and constituted BankAmerica
Corporation's largest bank subsidiary. As of December 31, 1995, and based on the
Consolidated Report of Condition of Bank of America at such date, Bank of
America and its consolidated subsidiaries had total deposits of $119.2 billion
(including deposits from BankAmerica Corporation and other subsidiaries of
BankAmerica Corporation of $2.0 billion), total assets of $163.4 billion and
capital and surplus of $11.7 billion. Bank of America's headquarters are located
at 555 California Street, San Francisco, California 94104 (telephone
415-622-3530).
Currently, Bank of America originates and purchases manufactured housing
contracts but does not purchase on an individual basis any of the manufactured
housing contracts originated or purchased by BankAmerica Housing Services. Bank
of America expects that any Contracts it conveys to a Trust Fund will have been
originated or purchased by BankAmerica Housing Services on an individual basis,
transferred by BankAmerica Housing Services to SPFSC (as further described under
"-- Loan Originations." below), and purchased by Bank of America from SPFSC
immediately prior to Bank of America's conveyance of such Contracts to a Trust
Fund. If any Contracts that Bank of America conveys to a Trust
20
<PAGE>
Fund are not transferred between BankAmerica Housing Services, SPFSC and Bank of
America in the foregoing manner, the related Prospectus Supplement will describe
the conveyances for such Contracts from such Contracts' origination to their
conveyance to the related Trust Fund.
SECURITY PACIFIC FINANCIAL SERVICES OF CALIFORNIA, INC.
SPFSC is a subsidiary of Bank of America and an affiliate of BAFSB. In the
second quarter of 1994, SPFSC began purchasing certain contracts on an
individual basis from BankAmerica Housing Services. SPFSC's headquarters are
located in San Diego, California (telephone 619-578-6150).
LOAN ORIGINATIONS
BankAmerica Housing Services purchases and originates manufactured housing
contracts on an individual basis through 38 regional offices throughout the
United States, serving 48 states. Through its regional offices, BankAmerica
Housing Services arranges to purchase manufactured housing contracts originated
by manufactured housing dealers located throughout the United States. Generally,
these purchases result from BankAmerica Housing Services' regional office
personnel contacting dealers located in their regions and explaining BankAmerica
Housing Services' available financing plans, terms, prevailing rates and credit
and financing policies. If a dealer wishes to make such financing available to
its customers, the dealer must apply for dealer approval. Upon satisfactory
results of BankAmerica Housing Services' investigation of the dealer's
creditworthiness and general business reputation, BankAmerica Housing Services
and the dealer will enter into a dealer agreement. BankAmerica Housing Services
also originates manufactured housing contracts directly with customers.
Under current laws and regulations applicable to federal savings banks such
as BAFSB, a federal savings bank cannot maintain in its portfolio any
manufactured housing contract that has a term to maturity of more than twenty
years or any manufactured housing contract with respect to which the financed
amount is greater than 90% of the value of the manufactured home. Manufactured
housing contracts that cannot be maintained in the portfolio of BankAmerica
Housing Services for these reasons are currently acquired by SPFSC on an
individual basis at or about the time such contracts are originated or purchased
by BankAmerica Housing Services. Any such contracts that constitute Contracts
for a Contract Pool will be purchased by Bank of America from SPFSC immediately
prior to Bank of America's conveyance of such Contracts to the related Trust
Fund. The foregoing circumstances may change if the relevant laws or regulations
are modified to permit the investment by federal savings banks in contracts
having terms to maturity of more than twenty years or with respect to which the
financed amount is greater than 90% of the value of the related manufactured
homes. The documents of title in respect of a Contract sold by BankAmerica
Housing Services to SPFSC, then by SPFSC to Bank of America and then by Bank of
America to any Trust Fund will show BankAmerica Housing Services as the
lienholder. See "Risk Factors -- Security Interests in the Manufactured Homes"
and "Certain Legal Aspects of the Contracts -- Security Interests in the
Manufactured Homes" herein. If any Contracts having terms to maturity of more
than twenty years or with respect to which the financed amount is greater than
90% of the value of the related manufactured homes are not transferred between
BankAmerica Housing Services, SPFSC and Bank of America in the foregoing manner
(or if any Contracts conveyed by Bank of America to a Trust Fund were not
originated or purchased on an individual basis by BankAmerica Housing Services),
the related Prospectus Supplement will describe the conveyances for such
Contracts from such Contracts' origination to their conveyance to the related
Trust Fund.
In addition to purchasing and originating manufactured housing contracts on
an individual basis, BankAmerica Housing Services makes bulk purchases of
manufactured housing contracts. These bulk purchases may be from the portfolios
of other lenders or finance companies (including affiliates of BankAmerica
Housing Services), the portfolios of governmental agencies or instrumentalities
or the portfolios of other entities that purchase and hold manufactured housing
contracts. Moreover, BankAmerica Housing Services, on behalf of other owners
(including SPFSC), services manufactured housing contracts that were not
purchased or originated by BankAmerica Housing Services. Currently, the
servicing of all such contracts is, and BankAmerica Housing Services' management
currently
21
<PAGE>
anticipates that servicing of all such contracts will continue to be, performed
through BankAmerica Housing Services' manufactured housing regional office
system. However, BankAmerica Housing Services can provide no assurance that this
will continue to be the case.
BankAmerica Housing Services' general practices with regard to the
origination of contracts and the purchase of contracts from manufactured housing
dealers are described below under "-- Underwriting Practices." See "--
Servicing" below for a description of certain of BankAmerica Housing Services'
servicing practices.
UNDERWRITING PRACTICES
With respect to each retail manufactured housing contract that is purchased
from a dealer, BankAmerica Housing Services' general practice is to have the
dealer submit the customer's credit application, manufacturer's invoice (if the
contract is for a new home) and certain other information relating to the
contract to the applicable regional office of BankAmerica Housing Services.
Personnel at the regional office analyze the creditworthiness of the customer
and certain other aspects of the proposed transaction. If the creditworthiness
of the customer and other aspects of the transaction are approved by the
regional office, the customer and the dealer execute a contract on a form
provided or approved in advance by BankAmerica Housing Services. After the
manufactured home financed under such contract is delivered and set up by the
dealer, and the customer has moved in, BankAmerica purchases the contract from
the dealer.
Because manufactured homes generally depreciate in value, BankAmerica
Housing Services' management believes that the creditworthiness of a potential
obligor should be the most important criterion in determining whether to approve
the purchase or origination of a contract. As a result, BankAmerica Housing
Services' underwriting guidelines generally require, and have required, regional
office personnel to examine each applicant's credit history, residence history,
employment history and debt-to-income ratio. There is no minimum requirement for
any of these criteria, although BankAmerica Housing Services has developed
certain guidelines for employment history and debt-to-income ratios. In the case
of employment history, BankAmerica Housing Services generally requires its
regional office personnel to consider whether the applicant has worked
continuously for the same employer for at least 24 months and, if not, whether
the applicant has worked in the same occupational field for at least 24 months.
The recommended debt-to-income ratio for a particular credit application depends
on the credit score recommendation (described below) generated for that
application. In general, the maximum debt-to-income ratio for each application
that is either recommended for approval or approved by the credit scoring system
ranges from 70 percent to 53 percent, based on BankAmerica Housing Services'
estimate of the applicant's after-tax income. Although BankAmerica Housing
Services has guidelines for some of these criteria, BankAmerica Housing Services
management does not believe that an applicant's inability to satisfy some of
these guidelines warrants denial of credit in all cases. For example, if an
applicant fails to meet a guideline by a certain margin for one of the criteria
mentioned above, the applicant generally must exceed the threshold for one or
more other criteria by a compensating margin for such applicant's credit
application to be approved. In addition, in special cases, credit applications
are approved even if certain of the criteria are not met. For these reasons,
BankAmerica Housing Services' management believes that the ultimate decision
whether to approve or reject a credit application should be made by regional
office personnel. To assist personnel in evaluating credit applications,
BankAmerica Housing Services began using a Fair-Isaacs credit scoring system in
January 1995. The Fair-Isaacs credit scoring system generates a recommendation
to approve or deny a credit application based on certain criteria established by
BankAmerica Housing Services' management. BankAmerica Housing Services'
underwriting guidelines allow the recommendation generated by the Fair-Isaacs
credit scoring system to be used by regional personnel as a guide in determining
whether to extend credit to an applicant, but do not require regional personnel
to make credit decisions based solely on the system's recommendations.
BankAmerica Housing Services does not disclose the criteria used by this credit
scoring system either to regional personnel or to the dealers assisting in the
preparation of credit applications. The criteria is periodically reviewed by
management at BankAmerica Housing Services' headquarters, and modified as
necessary.
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<PAGE>
It is the policy of BankAmerica Housing Services that one authorized person
provide written approval of credit applications for amounts up to or equal to
certain limits and that two authorized persons provide written approval of
credit applications for amounts over those limits. The credit limits established
by BankAmerica Housing Services vary with each regional office. In addition,
each person authorized to make these credit decisions has to be either a
regional manager or another regional office employee to whom the authority to
approve credit applications has been delegated. Any such delegated authority may
be limited in that the person to whom such authority is delegated may not be
authorized to approve credit applications for contracts with initial principal
amounts above certain specified levels. The qualifications of all regional
office personnel authorized to approve or reject credit applications are
reviewed and approved by BankAmerica Housing Services' management. Generally,
both the dealer service manager and the credit manager in each regional office
(in addition to the regional manager) have authority to approve credit
applications. However, each regional office may at various times have
additional, or in some cases fewer, personnel authorized to approve or reject
credit applications. BankAmerica Housing Services has no set qualifications for
regional managers or for other employees to whom authority to approve credit
applications may be delegated; rather, such authority is given commensurate with
such manager's or employee's experience.
It is and has been the policy of BankAmerica Housing Services that each
credit application be approved or rejected within one to seven days after
receipt. Thus, there is less time for credit investigation than is the case, for
example, with loans for site-built homes. Although BankAmerica Housing Services'
management believes that the seven day period for approval or rejection of each
credit application is consistent with industry practice, no assurance can be
given that any credit application that was approved in one to seven days would
have been approved if a longer period had been provided for credit
investigation.
The credit review and approval practices of each regional office are subject
to internal reviews and audits (which are performed in certain instances by an
affiliate of BankAmerica Housing Services) that, through sampling, examine the
nature of the verification of credit histories, residence histories, employment
histories and debt-to-income ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through such regional offices by
rating the obligors on such contracts according to their credit histories,
employment histories and debt-to-income ratios. Selection of underwriting files
for review is generally made by the personnel performing the examination,
without prior knowledge on the part of regional office personnel of the files to
be selected for review. However, BankAmerica Housing Services has no requirement
that any specific random selection procedures be followed and no assurance can
be given that the files reviewed in any examination process are representative
of the contract originations in the related regional office. In addition, no
statistical analysis is performed on the results of any such examination of
underwriting files.
Conventional manufactured housing contracts (that is, contracts that are not
insured or guaranteed by a governmental agency or instrumentality) currently
comprise 100% (by initial principal balance) of the manufactured housing
contracts purchased or originated by BankAmerica Housing Services. However,
BankAmerica Housing Services can provide no assurance that it will not seek to
originate or purchase manufactured housing contracts, whether on an individual
basis from authorized dealers or in bulk from Bulk Sellers, that are partially
insured or guaranteed by one or more governmental agencies or instrumentalities.
Before May 1994, in the case of conventional manufactured housing contracts
secured by new manufactured homes, it was the policy of BankAmerica Housing
Services to finance no more than the lower of (i) 125% of the manufacturer's
invoice price plus taxes, freight charges, certain dealer installed equipment
and certain set-up costs and (ii) 90% of the buyer's total cost of any new
manufactured home. A buyer's cost includes certain fees, prepaid financing
charges (points), sales tax and certain insurance premiums (including up to five
years of premiums on required hazard insurance). Before May 1994, in the case of
conventional manufactured housing contracts secured by used manufactured homes,
the maximum amount financed by BankAmerica Housing Services was the lower of (i)
90% of retail value, as specified in the National Automobile Dealers Association
("NADA") Mobile/Manufactured Housing
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<PAGE>
Appraisal Guide or the "Kelley Blue Book", plus taxes and certain set-up costs,
and (ii) an amount determined by BankAmerica Housing Services using a formula
based on the square feet, age and type of manufactured home, plus sales tax,
license fee and insurance.
Since May 1994, it has been the policy of BankAmerica Housing Services to
finance, with respect to new and used manufactured homes, no more than 90% or,
in the case of manufactured housing contracts to be held by SPFSC, 95%, of the
total buyer's cost of any manufactured home. Such buyer's cost includes certain
fees, prepaid financing charges (points), sales tax and certain insurance
premiums (including up to five years of premiums on required hazard insurance).
In the case of new manufactured homes, the maximum amount financed cannot exceed
130% of the manufacturer's invoice price plus taxes, freight charges, certain
dealer installed equipment and certain set-up costs. BankAmerica Housing
Services also has had a policy from May 1994 to July 1995 not to finance
manufactured housing contracts for terms exceeding 20 years (or, in the case of
certain contracts held by SPFSC, for terms exceeding 25 years). In July 1995,
that policy was modified to permit financing of manufactured housing contracts
for terms up to 30 years provided that such contracts are sold to SPFSC at the
time of origination or purchase by BankAmerica Housing Services.
BankAmerica Housing Services requires a down payment in the form of cash
and/or the trade-in value of a previously owned manufactured home and/or, in the
case of Land in Lieu Contracts, an estimated value of equity in real property
pledged as an additional collateral. For previously owned homes, the trade-in
allowance accepted by the dealer must be consistent with the value of such home
determined by BankAmerica Housing Services in light of current market
conditions. The value of real property pledged as additional collateral is
estimated by regional personnel or appraisers who are familiar with the area in
which the property is located.
Underwriting policies for the origination or purchase on an individual basis
of manufactured housing contracts are established by BankAmerica Housing
Services' management at its headquarters in San Diego and are applicable to all
regional offices in BankAmerica Housing Services' manufactured housing regional
office system.
The volume of manufactured housing contracts originated by SPHSI,
BankAmerica Housing Services or purchased by SPHSI or BankAmerica Housing
Services from dealers on an individual basis for the periods indicated below and
certain other information at the end of such periods are as follows:
CONTRACTS ORIGINATED OR PURCHASED ON AN INDIVIDUAL BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1991 1992 1993 1994 1995
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Principal Balance of Contracts
Purchased (1)(2)........................... $ 605,861 $ 758,757 $ 873,227 $ 1,248,346 $ 2,586,896
Number of Contracts Purchased (1)........... 27,612 32,752 35,645 46,865 87,407
Average Contract Size (2)................... $21.9 $23.2 $24.5 $26.6 $29.6
Weighted Average Contract Rate (2).......... 13.00% 11.55% 10.03% 10.68% 10.04%
Number of Regional Offices (3).............. 20 23 26 35 38
</TABLE>
- ------------------------
(1) Does not include any portfolios acquired in bulk from third parties.
Includes only contracts originated by SPHSI or BankAmerica Housing Services
or purchased from dealers.
(2) Based on principal balance or Contract Rate, as applicable, at the time of
origination or purchase in the specified period.
(3) Includes regional offices in the United States originating or purchasing
manufactured housing contracts as of the end of the time period.
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<PAGE>
SERVICING
BankAmerica Housing Services, through its manufactured housing regional
office system, services all of the manufactured housing contracts that it
purchases or originates, whether on an individual basis or in bulk. Generally,
whenever any contracts are sold, BankAmerica Housing Services will retain
servicing responsibilities with respect to such contracts. In addition,
BankAmerica Housing Services has made arrangements, and is actively seeking
further arrangements, pursuant to which it services, or would service,
manufactured housing contracts owned by other entities. Such contracts would not
be purchased by BankAmerica Housing Services. Generally, such servicing
responsibilities are, and would be, carried out through BankAmerica Housing
Services' manufactured housing regional office system. BankAmerica Housing
Services also services contracts purchased on an individual basis or in bulk by
SPHSI or SPFSC, as well as those previously serviced (but not owned) by SPHSI.
Servicing responsibilities include collecting principal and interest payments,
taxes, insurance premiums and other payments from obligors and, when such
contracts are not owned by BankAmerica Housing Services, remitting principal and
interest payments to the owners thereof, to the extent such owners are entitled
thereto. Collection procedures include repossession and resale of manufactured
homes securing defaulted contracts and, if deemed advisable by BankAmerica
Housing Services, entering into workout arrangements with obligors under certain
defaulted contracts. Although decisions as to whether to repossess any
manufactured home are made on an individual basis, BankAmerica Housing Services'
general policy is to institute repossession procedures promptly after regional
office personnel determine that it is unlikely that a defaulted contract will be
brought current, and thereafter to diligently pursue the resale of such
manufactured homes. See "-- Delinquency and Loan Loss/Repossession Experience"
below and "The Seller(s)" in the Prospectus Supplement for any Series of
Certificates offered hereby for certain historical statistical data relating to
the delinquency and repossession experience of the contracts serviced through
BankAmerica Housing Services' manufactured housing regional office system. The
following table shows the size of the portfolio of manufactured housing
contracts serviced (including contracts already in repossession) by SPHSI and
now BankAmerica Housing Services through the manufactured housing regional
office system as of the dates indicated:
SIZE OF SERVICED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------
1991 1992 1993 1994 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Unpaid Principal Balance of Contracts
Being Serviced....................... $ 3,480,706 $ 4,028,114 $ 4,337,902 $ 4,877,858 $ 6,739,285
Average Unpaid Principal Balance...... $18.6 $18.6 $19.0 $19.8 $22.2
Number of Contracts Being Serviced.... 187,636 216,714 228,452 246,572 303,739
</TABLE>
DELINQUENCY AND LOAN LOSS/REPOSSESSION EXPERIENCE
The delinquency, repossession and loan loss experience shown in the
following tables for the periods referenced therein is for illustrative purposes
only, and there is no assurance that the delinquency, repossession or loan loss
experience of any Contracts sold to a Trust Fund will be similar to that set
forth below. Differences between the related Contract Pool and the serviced
portfolio as a whole as to interest rates, borrower characteristics and location
and type of collateral may result in significant differences in performance as
to delinquency, repossession and loan loss experience.
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<PAGE>
The following table sets forth the delinquency experience since 1991 of
manufactured housing contracts serviced through SPHSI's and now BankAmerica
Housing Services' manufactured housing regional office system (other than
contracts already in repossession as of the dates indicated):
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding (1).................... 186,376 215,544 227,411 245,432 302,455
Number of Contracts Delinquent (2)
30-59 days........................................... 2,460 2,317 1,992 2,599 4,408
60-89 days........................................... 607 540 469 633 974
90 days or more...................................... 758 640 641 739 1,179
--------- --------- --------- --------- ---------
Total Contracts Delinquent............................. 3,825 3,497 3,102 3,971 6,561
Delinquencies as a Percentage of Contracts
Outstanding (3)....................................... 2.05% 1.62% 1.36% 1.62% 2.17%
</TABLE>
- ------------------------
(1) Excludes contracts already in repossession.
(2) Based on number of days payments are contractually past due (assuming 30-day
months). Consequently, a payment due on the first day of a month is not 30
days delinquent until the first day of the following month. Excludes
contracts already in repossession.
(3) By number of contracts, as of period end.
The following table sets forth the loan loss/repossession experience of
manufactured housing contracts serviced through SPHSI's and now BankAmerica
Housing Services' manufactured housing regional office system (including
contracts already in repossession) as of the dates indicated:
LOAN LOSS/REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1991 1992 1993 1994 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Number of Contracts Serviced (1)...... 187,636 216,714 228,452 246,572 303,739
Principal Balance of Contracts Being
Serviced (1)......................... $ 3,480,706 $ 4,028,114 $ 4,337,902 $ 4,877,858 $ 6,739,285
Average Principal Recovery Upon
Liquidation (2)...................... 48.64% 47.25% 45.61% 47.61% 50.92%
Contract Liquidations (3)............. 3.02% 2.93% 2.51% 2.19% 2.04%
Net Losses (4):
Dollars............................. $ 62,435 $ 75,435 $ 70,510 $ 63,601 $ 69,864
Percentage (5)...................... 1.79% 1.87% 1.63% 1.30% 1.04%
Contracts in Repossession............. 1,260 1,170 1,041 1,140 1,284
</TABLE>
- ------------------------
(1) As of period end. Includes contracts already in repossession.
(2) As a percentage of the outstanding principal balance of contracts that were
liquidated during the applicable period, based on the gross amounts
recovered upon liquidation less any liquidation proceeds applied to unpaid
interest accrued through the date of liquidation and after the payment of
repossession and other liquidation expenses.
(3) Number of contracts liquidated during the period as a percentage of the
total number of contracts being serviced as of period end.
(4) The calculation of net loss includes unpaid interest accrued through the
date of liquidation and all repossession and other liquidation expenses.
(5) The aggregate net loss amount as a percentage of the principal balance of
contracts being serviced as of period end.
26
<PAGE>
BANKAMERICA HOUSING SERVICES' MANAGEMENT'S DISCUSSION AND ANALYSIS OF
DELINQUENCY, REPOSSESSION AND LOAN LOSS EXPERIENCE
The delinquency, repossession and loan loss experience exhibited by the
foregoing tables for the periods referenced therein are for illustrative
purposes only and there is no assurance that the delinquency, repossession or
loan loss experience of any Contracts sold to a Trust Fund will be similar to
that set forth above. Management has not observed any material economic
development in the general business environment of the country or in local areas
where BankAmerica Housing Services' manufactured housing contracts are
originated which have favorably affected portfolio performance in relation to
delinquencies, repossessions and loan losses during this period. Portfolio
performance in these respects has been somewhat worse in Southern California
than in other geographical areas. As of December 31, 1995, contracts related to
manufactured homes located in Southern California represent 1.95% of BankAmerica
Housing Services' loan servicing portfolio based on the aggregate principal
balance of the contracts being serviced. In Southern California, the
delinquencies as a percentage of contracts outstanding were 2.15% and 2.14%, as
of December 31, 1994 and December 31, 1995, respectively, as compared to 1.62%
and 2.17% for the portfolio as a whole for these periods. Losses on defaulted
contracts as a percentage of the aggregate principal balance of contracts being
serviced in Southern California for these periods were 11.60% and 13.64%,
respectively, as compared with 1.30% and 1.04% for the portfolio as a whole.
BankAmerica Housing Services' management believes that these differences reflect
the adverse prevailing economic conditions in Southern California during these
periods, including job losses and declines in real estate values. They also may
in part result from different minimum loan underwriting criteria used in
underwriting loans in California prior to July 1991. Prior to that date, SPHSI
used more liberal loan underwriting criteria in California in response to the
underwriting practices of competing lenders. Although these standards were used
throughout California, only the portion of the portfolio in Southern California
has suffered materially different delinquency and loss experience than the rest
of the country. The differing underwriting practices for California were
discontinued in July 1991. Presently, BankAmerica Housing Services is not
actively originating contracts in Southern California. In 1993, 1994 and 1995,
loan originations in Southern California were less than 3% of total
originations, based on the number of contracts.
No assurance can be given that local or national economic conditions may not
in the future adversely affect portfolio performance in these respects.
PREPAYMENT AND YIELD CONSIDERATIONS
PREPAYMENT CONSIDERATIONS
Unless otherwise specified in the related Prospectus Supplement, the
Contracts in any Contract Pool may be prepaid in full or in part at any time.
The prepayment experience of the Contracts (including prepayments due to
liquidations of defaulted Contracts) will affect the average life and the
maturity of the related Certificates. BankAmerica Housing Services does not
maintain statistics with respect to the rate of prepayment of manufactured
housing contracts in its servicing portfolio, except for certain pools of
manufactured housing contracts sold by SPHSI, BankAmerica Housing Services'
business predecessor, and certain pools of manufactured housing contracts sold
by BankAmerica Housing Services, Bank of America or SPFSC for which at least
eighteen months of prepayment information is available. As to such pools, the
Prospectus Supplement for any Series of Certificates will contain information
concerning the historical rates of prepayment on manufactured housing contracts
in such pools through a date as to which such information is available as of the
date of such Prospectus Supplement. For example, a Contract Pool might include
Contracts with Contract Rates that are generally higher or lower, in absolute
terms or in comparison to prevailing rates, than the contract rates of the
contracts from which are derived certain historical statistical data set forth
in the Prospectus or Prospectus Supplement. As a result, the prepayment
performance of the Contracts contained in that Contract Pool might be higher or
lower than the prepayment performance of the contracts reflected in the
historical data. In addition, Housing Services' management is aware of limited
publicly available information relating to historical rates of
27
<PAGE>
prepayment on manufactured housing contracts. However, BankAmerica Housing
Services' management believes that neither the prepayment experience of other
pools of manufactured housing contracts nor the historical rates of prepayment
for any other manufactured housing contracts will necessarily be indicative of
the rate of prepayment that may be expected to be exhibited by the Contracts in
any other Contract Pool. Nevertheless, BankAmerica Housing Services' management
anticipates that a number of Contracts will be prepaid in full in each year
during which any related Certificates are outstanding. The amount of prepayments
on such Contracts (including prepayments due to liquidations of defaulted
Contracts) during any particular year may be influenced by a variety of
economic, geographic, social and other factors, including repossessions, aging,
seasonality, interest rates and the rate at which manufactured homeowners sell
their manufactured homes. Other factors affecting prepayments on such Contracts
include changes in Obligors' housing needs, job transfers, unemployment and
Obligors' net equity in manufactured homes. Because of the depreciating nature
of manufactured housing, which limits the possibilities for refinancing, and
because the terms of manufactured housing contracts are generally shorter than
the terms for mortgage loans secured by site-built homes (and changes in
interest rates have a correspondingly smaller effect on the monthly payments on
manufactured housing contracts as opposed to mortgage loans secured by
site-built homes), changes in interest rates may play a smaller role in
prepayment behavior of manufactured housing contracts than they do in the
prepayment behavior of loans secured by mortgages on site-built homes.
Conversely, local economic conditions and certain of the other factors mentioned
above are likely to play a larger role in the prepayment behavior of
manufactured housing contracts than they do in the prepayment behavior of loans
secured by mortgages on site-built homes.
Repurchases of Contracts on account of certain breaches of representations
and warranties as described in the applicable Prospectus Supplement also will
have the effect of prepaying such Contracts and therefore will affect the
average life of and yield on the Certificates. See "Description of the
Certificates -- Conveyance of Contracts." In addition, most of the Contracts
contain provisions that prohibit the related owner from selling the Manufactured
Home without the prior consent of the holder of the related Contract. Such
provisions are similar to "due-on-sale" clauses and may not be enforceable in
certain states. See "Certain Legal Aspects of the Contracts -- Transfers of
Manufactured Homes; Enforceability of Restrictions on Transfer" herein. The
Servicer's policy is to permit most sales of Manufactured Homes where the
proposed buyer meets the Servicer's then current underwriting standards and
enters into an assumption agreement.
To the extent provided in the related Prospectus Supplement, the Servicer
under each Agreement will have the option to purchase all of the Contracts in
the related Contract Pool, at the price and under the conditions specified in
such Prospectus Supplement, when the aggregate Pool Principal Balance (as
defined in the related Prospectus Supplement) of the Contract Pool has been
reduced to 5% of its initial Pool Principal Balance. The exercise of any such
option will affect the average life of and yield on the related Certificates. To
the extent provided in the related Prospectus Supplement, the Trustee for the
related Trust Fund shall solicit bids for the purchase of the Contracts
remaining in the Trust Fund at a Termination Auction (as defined herein) within
ninety days following the Distribution Date as of which the Pool Principal
Balance for a Contract Pool is less than 10% of such Contract Pool's Cut-off
Date Pool Principal Balance. The sale and consequent termination of the related
Trust Fund pursuant to a Termination Auction will affect the average life and
yield on the related Certificates.
The average life and maturity of the Certificates of any Class will also be
affected by the amount and timing of any Special Principal Distributions to the
holders of such Certificates. In addition, if any Certificate of a Class is
subject to mandatory repurchase, the occurrence of the Repurchase Date (as
hereinafter defined) for such Certificate will have the same effect as the
maturation of such Certificate (with the repurchase price being equivalent to
the amount due at maturity). See "Description of the Certificates --
Distributions on Certificates" and "Description of the Certificates -- Optional
and Mandatory Repurchase of Certificates; Termination Auction" herein. The
Prospectus Supplement relating to any Class that is entitled to Special
Principal Distributions or is subject to mandatory repurchase will
28
<PAGE>
contain a description of the conditions under which such distributions or
repurchases will take place and a description of some of the factors that might
affect the rate of Special Principal Distributions or the timing of any
Repurchase Dates.
Information regarding the "Prepayment Model" (to be defined in the related
Prospectus Supplement) or any other rate of assumed prepayment, as applicable,
will be set forth in the Prospectus Supplement applicable to the relevant Class
or Classes of Certificates offered hereby.
YIELD CONSIDERATIONS
To the extent that any credit enhancement or any advancing obligation of the
Servicer described in the related Prospectus Supplement is insufficient to
protect the holders of any Class of Certificates from losses or delinquencies on
the related Contract Pool, the yield to such holders from their investment in
such Certificates will be adversely affected should such losses or delinquencies
occur. In the absence of losses or delinquencies which are not covered by credit
enhancement or advances, respectively, on a Distribution Date, the effective
yield on the Certificates will depend upon, among other things, the price at
which the Certificates are purchased, the rate at which the Contracts for the
related Trust Fund liquidate or are prepaid and the amount and timing of any
Special Principal Distributions. If a purchaser of Certificates purchases them
at a discount (premium) and calculates its anticipated yield to maturity based
on an assumed rate of distributions of principal on such Certificates that is
faster (slower) than the rate actually realized, such purchaser's actual yield
to maturity will be lower than the yield so calculated by such purchaser. Losses
which are covered by credit enhancement, but on later than anticipated
Distribution Dates will have the same effect on anticipated yield as prepayments
that are made later than anticipated, as just described, depending on whether
the Certificates were purchased at a discount or premium.
The yield to holders of any Class of Certificates may be below that
otherwise produced by the applicable Pass-Through Rate because, while, in the
absence of losses or delinquencies, one month's interest on the related
Contracts will be collected during each Collection Period, the portion of such
interest to which the holders of such Certificates are entitled will not be
distributed until the first Distribution Date after such Collection Period.
If a Certificate is subject to mandatory repurchase, the yield to the
Repurchase Date will be affected by, among other things, the applicable
repurchase price, the ability of any Liquidity Facility Provider (as hereinafter
defined) to distribute the repurchase price and the date, if any, on which the
Repurchase Date occurs. If, in connection with a mandatory repurchase, the
repurchase price for a Certificate is equal to its Percentage Interest (as
hereinafter defined) of the then current Certificate Balance, and the
Certificate is purchased at a discount, and the purchaser calculates its
anticipated yield to the Repurchase Date based on an assumed Repurchase Date
that is earlier than the actual Repurchase Date, then such purchaser's actual
yield to maturity will be lower than it would have been if a repurchase occurred
on the assumed date.
The payment features of the Contracts comprising any Contract Pool (as
described above under "The Contract Pools") may, under certain extraordinary
circumstances, cause the amounts collected thereon during particular Collection
Periods to be insufficient to fund all distributions of principal and interest
to the holders of some or all of the Certificates of the related Series, even in
the absence of losses or delinquencies. Such circumstances could occur if a
sufficiently large number of partial or full prepayments, as a percentage of the
then outstanding Pool Principal Balance of the related Contract Pool, are
received on Contracts in a particular Collection Period, if such prepayments are
made in advance of such Contracts' respective Due Dates during such Collection
Period. In such case, a non-default collection shortfall could occur because
interest that actually accrues on such Contracts is less than interest that
would have accrued if the payments were paid on the Contracts' respective Due
Dates. A non-default collection shortfall could adversely affect the yield to
holders of any Class of Certificates to the extent such shortfalls are not
covered by credit enhancement or advances.
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DESCRIPTION OF THE CERTIFICATES
Each Series of Certificates will be issued pursuant to a separate Agreement.
The following summaries describe certain provisions expected to be common to
each Agreement and the related Certificates, but do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, the
provisions of the related Agreement and the description set forth in the related
Prospectus Supplement. Section references contained herein refer to sections of
the form of Agreement filed as an exhibit to the Registration Statement. The
Prospectus Supplement for each Series will describe the specific material
provisions of the Agreement relating to such Series. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned to them in the
form of Agreement filed as an exhibit to the Registration Statement.
GENERAL
The Certificates may be issued in one or more Classes. If the Certificates
of a Series are issued in more than one Class, the Certificates of all or less
than all of such Classes may be sold pursuant to this Prospectus, and there may
be separate Prospectus Supplements relating to one or more of such Classes so
sold. Any reference herein to the Prospectus Supplement relating to a Series
comprised of more than one Class should be understood as a reference to each of
the Prospectus Supplements relating to the Classes sold hereunder. Any reference
herein to the Certificates of a Class should be understood to refer to the
Certificates of a Class within a Series, the Certificates of a subclass within a
Series or all of the Certificates of a single-Class Series, as the context may
require.
The Certificates will be issued in the denominations specified in the
related Prospectus Supplement. (Section 6.02.) The "Percentage Interest" of a
Certificate is the percentage obtained from dividing the original denomination
of such Certificate by the initial principal balance of all of the Certificates
of such Class. Certificates, if issued in registered form ("Definitive
Certificates") to Certificate Owners or nominees thereof, will be transferable
and exchangeable at the corporate trust office of the Trustee or, if it so
elects, at the office of an agent in New York, New York. (Sections 6.02 and
9.11.) No service charge will be made for any registration of exchange or
transfer, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge. (Section 6.02.)
The Certificates of each Series will evidence an interest, as specified in
the related Prospectus Supplement, in a Trust Fund. Each Trust Fund will include
(i) a Contract Pool, including certain rights to receive payments on the
Contracts comprising such Contract Pool on and after the Cut-off Date, (ii) the
amounts held from time to time in the "Certificate Account" (as described in the
applicable Prospectus Supplement under "-- Payment on Contracts; Certificate
Account") maintained by the Trustee pursuant to the Agreement, (iii) any
property which initially secured a Contract and which is acquired in the process
of realizing thereon, (iv) the obligations of Bank of America, BankAmerica
Housing Services or both of them, as applicable, under certain conditions, to
repurchase Contracts sold by it with respect to which certain representations
and warranties have been breached and not cured, (v) certain contractual
servicing obligations of the Servicer, (iv) the proceeds of all insurance
policies described herein and (vii) if applicable, one or more forms of credit
support.
Bank of America, BankAmerica Housing Services or both of them, as
applicable, will convey the Contracts to the Trustee. See "The Contract Pools"
herein and "-- Conveyance of Contracts" below. BankAmerica Housing Services, as
Servicer, will service the Contracts pursuant to the Agreement. The Contract
documents will be held for the benefit of the Trustee by the Servicer.
CONVEYANCE OF CONTRACTS
On the date of initial issuance of the Certificates of a Series, BankAmerica
Housing Services, Bank of America, or both of them will sell to the Trustee,
without recourse, all right, title and interest of BankAmerica Housing Services
or Bank of America, as the case may be, in and to the Contracts sold by it, and
all rights under the standard hazard insurance policies on the related
Manufactured Homes. The conveyance of the Contracts to the Trustee will include
a conveyance of all rights to receive Scheduled Payments thereon that were due
on or after the Cut-off Date, even if received prior to the Cut-off Date, as
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well as all rights to any payments received on or after the Cut-off Date other
than late receipts of Scheduled Payments that were due prior to the Cut-off
Date. The Contracts will be described on a schedule attached to the Agreement
(the "Contract Schedule"). The Contract Schedule will include the principal
balance of each Contract as of the Cut-off Date, the amount of each Scheduled
Payment due on each Contract as of the Cut-off Date, the Contract Rate on each
Contract (determined as of the Cut-off Date) and the maturity date of each
Contract. Prior to the conveyance of the Contracts to the Trustee, the
BankAmerica Housing Services' operations department will be required to complete
a review of all of the originals of the Contracts, the certificates of title to,
or other evidence of a perfected security interest in, the Manufactured Homes,
any related Mortgages, and any assignments or modifications of the foregoing
(collectively, the "Contract Files") confirming the accuracy of the Contract
Schedule delivered to the Trustee. Any Contract discovered not to agree with
such schedule in a manner that is materially adverse to the interests of the
Certificateholders will be repurchased by Bank of America or BankAmerica Housing
Services, as applicable, or replaced with another Contract, except that if the
discrepancy relates to the principal balance of a Contract (determined as
described above), Bank of America or BankAmerica Housing Services, as
applicable, may, under certain conditions, deposit cash in the Certificate
Account in an amount sufficient to offset such discrepancy. The Trustee will not
review the Contract Files. (Section 2.01.)
The Servicer will hold, as custodian and agent on behalf of the Trustee, the
original Contracts and copies of documents and instruments relating to each
Contract and the security interest in the Manufactured Home relating to each
Contract. In order to give notice of the Trustee's right, title and interest in
and to the Contracts, a UCC-1 financing statement identifying the Trustee as the
secured party and identifying all the Contracts as collateral will be filed in
the appropriate office in the appropriate states. The Contracts will be stamped
or otherwise marked to reflect their assignment to the Trustee. To the extent
that the Contracts do not constitute "chattel paper" within the meaning of the
UCC as in effect in the applicable jurisdictions or to the extent that the
Contracts do constitute chattel paper and a subsequent purchaser is able to take
physical possession of the Contracts without notice of such assignment, the
Trustee's interest in the Contracts could be defeated. See "Certain Legal
Aspects of the Contracts -- Security Interests in the Manufactured Homes"
herein.
Bank of America, BankAmerica Housing Services or both of them, as
applicable, will make certain representations and warranties to the Trustee with
respect to each Contract sold by it. The applicable Prospectus Supplement will
describe the representations and warranties made by Bank of America, BankAmerica
Housing Services or both of them in connection with the Contracts conveyed to
the related Trust Fund, the terms pursuant to which Bank of America or
BankAmerica Housing Services, as the case may be, will be obligated to
repurchase, at the price specified therein, any Contract sold by it if any such
representation and warranty has been breached (unless such breach has been cured
or otherwise is not required to be cured), and the terms pursuant to which Bank
of America or BankAmerica Housing Services may remedy any such breach. (Section
3.05.)
PAYMENTS ON CONTRACTS
The applicable Prospectus Supplement will specify the arrangements pursuant
to which Contract collections are held pending distribution to
Certificateholders. (Section 4.05.) Certain Contract collections will be applied
to pay the Servicer's servicing compensation and to reimburse it for certain
expenses, as set forth in each Prospectus Supplement and as set forth herein
under "-- Servicing Compensation and Payment of Expenses; Certain Matters
Regarding the Servicer" below.
DISTRIBUTIONS ON CERTIFICATES
The Certificates of any Class will entitle the holders thereof to
distributions, on the Distribution Dates specified in the related Prospectus
Supplement, from amounts collected on the underlying Contracts. The Certificates
of a Class may entitle the holders thereof to (a) distributions of both
principal and interest, (b) distributions of principal only, or (c)
distributions of interest only. Such distributions will be made in accordance
with a formula described in the related Prospectus Supplement, and, unless
otherwise specified in such Prospectus Supplement, such distributions will be
applied first to interest, if
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any, and second to principal, if any. To the extent specified in the related
Prospectus Supplement, the rights of the holders of the Certificates of one or
more Classes of a multiple Class Series to receive distributions of principal
and/or interest from amounts collected on the Contracts may be subordinate to
such rights of the holders of Certificates of one or more other Classes. See
"Credit and Liquidity Enhancement" herein.
A. DISTRIBUTIONS OF PRINCIPAL. If the Certificates of a Class entitle the
holders thereof to distributions of principal, the related Prospectus Supplement
will specify an initial aggregate Certificate Balance for the Certificates of
such Class and a method of computing the amount of principal, if any, to be
distributed to the holders of such Certificates on each Distribution Date.
Unless otherwise specified in the related Prospectus Supplement, principal
distributions for the Certificates of a Class will be computed on the basis of a
formula which, on each Distribution Date, allocates all or a portion of the
Total Regular Principal Amount relating to such Distribution Date to the
Certificates of such Class. The "Total Regular Principal Amount" is the total
amount by which the aggregate outstanding principal balance of the Contracts in
the related Contract Pool is reduced during one or more collection periods prior
to such Distribution Date designated in such Prospectus Supplement (each, a
"Collection Period"). Such reduction may occur as a result of actuarially
predetermined scheduled principal reductions, receipt of principal prepayments,
liquidation of Contracts, repurchases of Contracts under certain conditions,
losses on Contracts, the failure of a third party credit support provider, if
any, to make a required payment, or a combination of any of the foregoing
events. See "The Contract Pools" and "-- Servicing Compensation and Payment of
Expenses; Certain Matters Regarding the Servicer" herein. Distributions with
respect to all or a portion of the Total Regular Principal Amount are sometimes
referred to herein as distributions of "Regular Principal." The Total Regular
Principal Amount with respect to any Contract Pool and any Distribution Date may
be estimated in a manner specified in the related Prospectus Supplement.
If, due to liquidation losses or other circumstances adversely affecting the
collections on the underlying Contract Pool, the Contract collections available
on any Distribution Date to make distributions of Regular Principal to the
holders of the Certificates of a Class are less than the portion of the Total
Regular Principal Amount allocable to such Class, the deficiency may be made up
from (i) the amount ("Excess Interest"), if any, by which the interest collected
on nondefaulted Contracts during the same Collection Period exceeds the interest
distribution due to the holders of the Certificates for the related Series and
the Monthly Servicing Fee (as defined hereinafter and in the related Prospectus
Supplement), or (ii) funds available from one or more forms of credit support
referred to below, but only to the extent, if any, specified in the applicable
Prospectus Supplement. See "Credit and Liquidity Enhancement" herein. If
specified in the applicable Prospectus Supplement, the Certificate Balance of
the Certificates of a Class will be reduced on each Distribution Date by the
full amount of the portion of the Total Regular Principal Amount allocable to
such Class even if, due to deficient Contract collections, a full distribution
thereof is not made.
The applicable distribution formula for each Class of a multiple-Class
Series may allocate the Total Regular Principal Amount among the various Classes
on a pro rata, sequential or other basis, as specified in the related Prospectus
Supplement. If specified in the related Prospectus Supplement, any such formula
may entitle the holders of Certificates of a particular Class to receive on
certain Distribution Dates, distributions of Regular Principal from particular
sources of funds (E.G., one or more of the forms of credit support referred to
below) upon the occurrence of certain losses or delinquencies, even if the
holders of the Certificates of such Class would not have been entitled to
receive principal distributions on such Distribution Dates from amounts
collected on the underlying Contracts in the absence of such losses or
delinquencies.
If specified in the applicable Prospectus Supplement, the Certificates of a
Class may entitle the holders thereof to special principal distributions on
particular Distribution Dates that are unrelated to the Total Regular Principal
Amount for any such Distribution Date ("Special Principal Distributions").
Special Principal Distributions may be made, under the circumstances set forth
in the applicable Prospectus Supplement, from interest collected on the
underlying Contract Pool, from funds available from one or
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more forms of credit support or from any other source specified in such
Prospectus Supplement. The Certificates of a Class having an initial Certificate
Balance may entitle the holders thereof to distributions of Regular Principal
only, to distributions of Regular Principal and to Special Principal
Distributions or to Special Principal Distributions only. However, unless
otherwise stated in the related Prospectus Supplement, the Certificates of a
Class will not entitle the holders thereof to aggregate principal distributions
in excess of the initial Certificate Balance for such Class.
B. DISTRIBUTIONS OF INTEREST. The distribution formula for a Class of
Certificates having an initial Certificate Balance may, but need not, also
specify a method of computing the interest, if any, to be distributed on
specified Distribution Dates (which may include all or less than all of the
Distribution Dates) to the holders of the Certificates of such Class. Such
interest may be equal, subject to such adjustments as may be described in the
related Prospectus Supplement, to a specified number of days' interest on the
applicable Certificate Balance (before giving effect to any reduction thereof on
such Distribution Date), calculated at a rate (the "Pass-Through Rate")
specified in the related Prospectus Supplement. The Pass-Through Rate may be
fixed or variable, and, if specified in the related Prospectus Supplement, may
shift from a variable rate to a fixed rate under the conditions specified in
such Prospectus Supplement. Variable Pass-Through Rates may vary from time to
time based upon changes in an index or other measure of certain market rates,
all as more fully described in the related Prospectus Supplement. In that case,
the time period between Pass-Through Rate adjustments (each, a "Rate Period")
and the specific basis on which the Pass-Through Rate for each Rate Period will
be determined (including the particular market rates and measures thereof
relevant for determining the Pass-Through Rate for each Rate Period) may remain
constant or may change from time to time at the election of the Servicer or
otherwise, all as specified in the related Prospectus Supplement. Variable
Pass-Through Rates may also vary from time to time, in the manner specified in
the related Prospectus Supplement, based upon changes in the weighted average of
the Contract Rates of the Contracts in the related Contract Pool or on any other
basis. To the extent set forth in the related Prospectus Supplement, variable
Pass-Through Rates may also have floor rates and/or ceiling rates which may be
fixed or subject to adjustment as set forth in such Prospectus Supplement. In
addition, a variable Pass-Through Rate may be converted to a fixed Pass-Through
Rate at the election of the Sellers or upon the occurrence of certain
conditions. In that event, the related Prospectus Supplement will set forth the
conditions under which the variable Pass-Through Rate may be converted to a
fixed Pass-Through Rate.
Rather than entitling the holders thereof to receive distributions of
interest based upon a Pass-Through Rate, the distribution formula for the
Certificates of a Class may entitle the holders thereof to distributions of
interest on specified Distribution Dates (which may include all or less than all
of the Distribution Dates) equal, in the case of any such Distribution Date, to
all or a portion (which portion will be determined as described in the related
Prospectus Supplement) of the interest payable on the related Contracts during
one or more Collection Periods occurring prior to such Distribution Date.
Classes of Certificates that do not entitle the holders thereof to receive
distributions of principal may nevertheless entitle such holders to receive
interest distributions calculated on this basis.
If, due to liquidation losses or other circumstances adversely affecting the
collections on the underlying Contract Pool, the Contract collections available
to make distributions of interest to the holders of the Certificates of a Class
are less than the amount of interest computed as described above, the deficiency
may be made up from other sources, but only to the extent, if any, specified in
the applicable Prospectus Supplement. See "Credit and Liquidity Enhancement"
herein.
Each Prospectus Supplement will contain information relating to the full
amounts of principal and interest required to be distributed to the holders of
the related Class or Classes of Certificates, to the extent there are sufficient
Contract collections available therefor (sometimes referred to herein as "full
distributions"), to the amounts paid or payable on the underlying Contracts.
C. RESIDUAL INTERESTS. If specified in the related Prospectus Supplement, a
Class of Certificates sold hereunder may evidence a residual interest in the
related Trust Fund (the "Residual Interest"). Certificates evidencing a Residual
Interest will not have the features described above. Rather, unless
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otherwise specified in such Prospectus Supplement, such Certificates will
entitle the holders thereof to receive distributions from amounts collected on
the Contracts which would not be needed to make distributions to the holders of
other interests in the Trust Fund (or to pay expenses of the Trust Fund) in the
absence of liquidation losses or other events resulting in deficient Contract
collections. In addition, if specified in such Prospectus Supplement, any such
Certificates may also entitle the holders thereof to receive additional
distributions of assets of the related Trust Fund, to the extent any such assets
remain after being applied to make distributions to the holders of other
interests in the Trust Fund (or to pay expenses of the Trust Fund). The
Certificates evidencing a Residual Interest may entitle the holders thereof to
distributions at various times throughout the life of the related Trust Fund or
only upon termination of the Trust Fund, all as more fully set forth in the
related Prospectus Supplement. If an election is made to treat the related Trust
Fund as a REMIC (as hereinafter defined), the holders of a Residual Interest in
such Trust Fund will be subject to federal income taxation with respect to their
ownership of such Residual Interest as described herein under "Certain Federal
Income Tax Consequences -- REMIC Certificates -- D. Taxation of Residual
Certificates."
GLOBAL CERTIFICATES
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates of a Series, or of one or more Classes within a Series, will be
issuable in the form of one or more global certificates (each, a "Global
Certificate") that are initially registered in the name of Cede & Co. ("Cede"),
as nominee of The Depository Trust Company ("DTC"), on behalf of the beneficial
owners (the "Certificate Owners") of the Certificates. DTC is a limited-purpose
trust company organized under the laws of the State of New York, 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 accepts securities for
deposit from its participating organizations ("Participants") and facilitates
the clearance and settlement of securities transactions between Participants in
such securities through electronic book-entry changes in accounts of
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks and
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Certificate Owners who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Certificates may do so only through Participants
(unless and until Definitive Certificates are issued). In addition, Certificate
Owners will receive all distributions of principal of, and interest on, the
Certificates from the Trustee through DTC and Participants. Certificate Owners
will not receive or be entitled to receive certificates representing their
respective interests in the Certificates, except under the limited circumstances
described below. In addition, if some or all of the Certificates of a Series are
issued in the form of one or more Global Certificates, certain monthly and
annual reports prepared by the Servicer under the related Agreement will be sent
on behalf of the related Trust Fund to Cede and not to the Certificate Owners.
Unless and until Definitive Certificates are issued, it is anticipated that
the only "Certificateholder" of the Certificates will be Cede, as nominee of
DTC. Certificate Owners will not be Certificateholders as that term is used in
the Agreement. Certificate Owners are only permitted to exercise the rights of
Certificateholders indirectly through Participants and DTC.
Unless otherwise specified in the related Prospectus Supplement, while the
Certificates are outstanding (except under the circumstances described below),
under the rules, regulations and procedures creating and affecting DTC and its
operations (the "DTC Rules"), Participants are required to make book-entry
transfers through DTC's facilities with respect to the Certificates, and DTC as
the sole holder of the Certificates is required to receive and transmit
distributions of principal of, and interest on, the Certificates. Unless and
until Definitive Certificates are issued, Certificate Owners who are not
Participants may transfer ownership of Certificates only through Participants by
instructing such Participants to transfer Certificates, by
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book-entry transfer, through DTC for the account of the purchasers of such
Certificates, which account is maintained with their respective Participants.
Under the DTC Rules and in accordance with DTC's normal procedures, transfers of
ownership of Certificates will be executed through DTC, and the accounts of the
respective Participants at DTC will be debited and credited.
Definitive Certificates will be issued to Certificate Owners, or their
nominees, rather than to DTC, only if (i) the Servicer advises the Trustee in
writing that DTC is no longer willing or qualified to discharge properly its
responsibilities as nominee and depository with respect to the Certificates and
the Servicer or the Trustee is unable to locate a qualified successor, (ii) the
Sellers, at their option, jointly elect to terminate the book-entry system
through DTC, or (iii) after the occurrence of an Event of Default (See "--
Servicing Compensation and Payment of Expenses; Certain Matters Regarding the
Servicer -- Events of Default" below), Certificate Owners having a majority in
Percentage Interests of each Class of the Certificates advise the Trustee and
DTC through the Participants, in writing, that the continuation of a book-entry
system through DTC (or a successor thereto) to the exclusion of any physical
certificates being issued to Certificate Owners is no longer in the best
interests of Certificate Owners. Upon issuance of Definitive Certificates to
Certificate Owners, such Certificates will be transferable directly (and not
exclusively on a book-entry basis), and registered holders will deal directly
with the Trustee with respect to transfers, notices and distributions.
Except as otherwise specified in the related Prospectus Supplement, unless
and until Definitive Certificates are issued, DTC will take any action permitted
to be taken by a Certificateholder under the Agreement only at the direction of
one or more Participants to whose DTC accounts the Certificates are credited and
will take such action with respect to any Percentage Interests of the
Certificates only at the direction of and on behalf of such Participants with
respect to such Percentage Interests of the Certificates. DTC may take actions,
at the direction of the related Participants, with respect to some Certificates
which conflict with actions taken with respect to other Certificates.
OPTIONAL AND MANDATORY REPURCHASE OF CERTIFICATES; TERMINATION AUCTION
A. OPTIONAL REPURCHASE. Unless otherwise specified in the applicable
Prospectus Supplement, the Servicer for any Trust Fund will have the option to
repurchase, upon giving notice mailed no later than the Distribution Date next
preceding the month of the exercise of such option, all outstanding Contracts
after the first Distribution Date on which the Pool Scheduled Principal Balance
(as defined hereinafter) is less than 5% of the initial Pool Principal Balance
on the Cut-off Date. The price at which the Servicer for such Trust Fund may
repurchase the related Contracts will equal the greater of (a) the sum of (x)
100% of the Pool Scheduled Principal Balance of each Contract (other than any
Contract as to which the related Manufactured Home has been acquired and not yet
disposed of and whose fair market value is included pursuant to clause (y)
below) as of the final Distribution Date, and (y) the fair market value of such
acquired property (as determined by the Servicer) and (b) the aggregate fair
market value (as determined by the Servicer) of all of the assets of such Trust
Fund, plus, in the case of both clause (a) and (b), an amount sufficient to
reimburse Certificateholders for each outstanding Class for any shortfall in
interest due thereto in respect of prior Distribution Dates. Notwithstanding the
foregoing, the Servicer's option shall not be exercisable if there will not be
distributed to the Certificateholders for each outstanding Class an amount equal
to the aggregate Certificate Balance for each outstanding Class together with
any shortfall in interest due to such Certificateholders in respect of prior
Distribution Dates and one month's interest on the aggregate Certificate Balance
for each outstanding Class at the respective Pass-Through Rates for such Classes
(the "Minimum Termination Amount"). See "Description of the Certificates --
Optional Termination" in the related Prospectus Supplement. (Section 10.01.)
B. MANDATORY REPURCHASE. Some or all of the Certificates of a Class may be
subject to repurchase by or on behalf of the Sellers at the option of the
holders thereof and/or at the option of the Sellers, but only to the extent, at
the prices, on the dates and under the conditions specified in the related
Prospectus Supplement. In addition, some or all of the Certificates of a Class
may be subject to mandatory repurchase by or on behalf of the Sellers to the
extent, at the prices, on the dates and under the conditions specified in the
related Prospectus Supplement. On the date on which any Certificate is
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subject to repurchase (the "Repurchase Date") the holder thereof will cease to
be entitled to any benefit of the Certificate or the related Agreement and will
be entitled only to receive from the Trustee the repurchase price of the
Certificate upon surrender thereof at the office or agency designated by the
Trustee. To the extent specified in the related Prospectus Supplement, the funds
necessary to distribute the repurchase price of any Certificate subject to
mandatory or optional repurchase as described therein will be provided under a
certificate purchase agreement or other Liquidity Facility as described in
"Credit and Liquidity Enhancement" herein.
C. TERMINATION AUCTION. If specified in the applicable Prospectus
Supplement, the Trustee for the related Trust Fund shall solicit bids for the
purchase at an auction (a "Termination Auction") of the Contracts remaining in
the Trust Fund no later than ninety days following the Distribution Date as of
which the Pool Principal Balance for a Contract Pool is less than 10% of such
Contract Pool's Cut-off Date Pool Principal Balance. In the event that
satisfactory bids are received as described in the applicable Agreement, the net
sale proceeds will be distributed to Certificateholders, in the same order of
priority as collections received in respect of the Contracts. If satisfactory
bids are not received, the Trustee shall decline to sell the Contracts and shall
not be under any obligation to solicit any further bids or otherwise negotiate
any further sale of the Contracts. Under the applicable Agreement, the winning
bid must equal or exceed the Minimum Termination Amount. If an election has been
made to treat the related Trust Fund as a REMIC, such sale and consequent
termination of the related Trust Fund must constitute a "qualified liquidation"
of the Trust Fund under Section 860F of the Code, including the requirement that
the qualified liquidation takes place over a period not to exceed 90 days.
(Section 10.01.)
TERMINATION OF THE AGREEMENT
The Agreement will terminate upon the last action required to be taken by
the Trustee on the final Distribution Date following the earlier of (i) the
purchase or sale of all Contracts and all property acquired in respect of any
Contract remaining in the Trust Fund as described above under "-- Optional and
Mandatory Repurchase of Certificates; Termination Auction" or (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Contract remaining in the relevant Trust Fund (including the disposition of all
property acquired upon repossession of any Manufactured Home). (Section 10.01.)
In the event of the termination of any Agreement, the holders of
Certificates of any Class of the related Series will be entitled to receive,
upon presentation and surrender of their Certificates at the office or agency
designated by the Trustee, a final distribution in an amount computed as
described in the related Prospectus Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Except as otherwise provided in the related Agreement, the Servicer may
rescind, cancel or make material modifications of the terms of a Contract
(including modifying the amounts and Due Dates of Scheduled Payments) in
connection with a default or imminent default thereunder. However, unless
otherwise specified in the related Prospectus Supplement and unless required by
the applicable law or to bring Contracts into conformity with the
representations and warranties contained in the Agreement, the Servicer may not
rescind, cancel or materially modify any Contract unless the Servicer obtains an
opinion of counsel to the effect that such action will not have certain adverse
federal income tax consequences. (Section 4.07.)
SERVICING COMPENSATION AND PAYMENT OF EXPENSES; CERTAIN MATTERS REGARDING THE
SERVICER
The monthly servicing fee (the "Monthly Servicing Fee") and any additional
servicing compensation with respect to the Contracts underlying a Series of
Certificates will be specified in the applicable Prospectus Supplement. (Section
1.01.)
The Monthly Servicing Fee provides compensation for customary manufactured
housing contract third-party servicing activities to be performed by the
Servicer for the Trust Fund and for additional administrative services performed
by the Servicer on behalf of the Trust Fund. Customary servicing activities
include collecting and recording payments, communicating with Obligors,
investigating payment delinquencies, providing billing and tax records to
Obligors and maintaining internal records with
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respect to each Contract. Administrative services performed by the Servicer on
behalf of the Trust Fund include calculating distributions to Certificateholders
and providing related data processing and reporting services for
Certificateholders and on behalf of the Trustee. Unless otherwise specified in
the applicable Prospectus Supplement, expenses incurred in connection with
servicing the Contracts and paid by the Servicer from its Monthly Servicing Fee
include, without limitation, payment of fees and expenses of accountants,
payment of all fees and expenses incurred in connection with the enforcement of
Contracts (except liquidation expenses and certain other expenses) and payment
of expenses incurred in connection with distributions and reports to
Certificateholders. The Servicer will be reimbursed out of the liquidation
proceeds from a defaulted Contract for all reasonable, out-of-pocket liquidation
expenses incurred by it in realizing upon the related Manufactured Home as well
as for advances of taxes and insurance premiums previously made with respect to
any such Contract (to the extent not previously recovered).
Unless otherwise specified in the related Prospectus Supplement, as part of
its servicing fees, the Servicer will also be entitled to retain, as
compensation for the additional services provided in connection therewith, any
fees for late payments made by Obligors, extension fees paid by Obligors for the
extension of scheduled payments and assumption fees for permitted assumptions of
Contracts by purchasers of the related Manufactured Homes. (Sections 4.15 and
5.03.)
Unless otherwise specified in the applicable Prospectus Supplement, any
person with which the Servicer is merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer is
a party, or any person succeeding to the business of the Servicer, will be the
successor to the Servicer under the Agreement, so long as such successor has a
net worth of at least $50 million and has serviced at least $100 million of
manufactured housing contracts for at least one year. The Servicer may assign
its rights and delegate its duties under the Agreement (whereupon it will no
longer be liable for the obligations of the Servicer under the Agreement),
provided that, among other conditions, any rating assigned to the Certificates
will not be reduced because of such assignment and delegation. (Sections 7.04,
7.06 and 7.07.)
A. HAZARD INSURANCE POLICIES. Unless otherwise specified in the related
Prospectus Supplement, the Servicer will be obligated to cause to be maintained
one or more hazard insurance policies with respect to each Manufactured Home in
an amount at least equal to the lesser of its maximum insurable value or the
principal amount due from the Obligor under the related Contract. Such hazard
insurance policies will, at a minimum, provide fire and extended coverage on
terms and conditions customary in manufactured housing hazard insurance
policies. If a Manufactured Home is located within a federally designated flood
area, the Servicer will, to the extent required by applicable law or regulation,
also be obligated to cause flood insurance to be maintained in an amount equal
to the lesser of the amounts described above or the maximum amount available for
such Manufactured Home under the federal flood insurance programs. Such policies
may provide for customary deductible amounts. Coverage thereunder will be
required to be sufficient to avoid the application of any co-insurance
provisions. Such policies will be required to contain a standard loss payee
clause in favor of the Servicer and its successors and assigns. In general, the
Servicer will not be obligated to cause to be obtained and maintained hazard
insurance policies that provide earthquake coverage. If earthquake coverage is
required with respect to Contracts in a particular Trust Fund, that fact will be
disclosed in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, all amounts
collected by the Servicer under a hazard or flood insurance policy will be
applied either to the restoration or repair of the Manufactured Home or against
the remaining principal balance of the related Contract upon repossession of the
Manufactured Home, after reimbursing the Servicer for amounts previously
advanced by it for such purposes. The Servicer may satisfy its obligation to
maintain hazard and flood insurance policies with respect to each Manufactured
Home by maintaining a blanket policy insuring against hazard and flood losses on
the related Obligor's interest in such Manufactured Home. Such blanket policy
may contain a deductible clause, in which case the Servicer will be required to
make payments to the related Trust Fund in the amount of any deductible amounts
in connection with insurance claims on repossessed Manufactured Homes.
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Unless otherwise specified in the related Prospectus Supplement, if the
Servicer repossesses a Manufactured Home on behalf of the Trustee, the Servicer
is required to either maintain a Hazard Insurance Policy with respect to such
Manufactured Home meeting the requirements set forth above, or to indemnify the
Trust Fund against any damage to such Manufactured Home prior to resale or other
disposition. (Section 4.09.)
B. EVIDENCE AS TO COMPLIANCE. Unless otherwise specified in the related
Prospectus Supplement, the Servicer will be required to deliver to the Trustee
each year an officer's certificate executed by an officer of the Servicer (i)
stating that a review of the activities of the Servicer during the preceding
calendar year and of performance under the Agreement has been made under the
supervision of such officer, and (ii) stating that to the best of such officer's
knowledge, the Servicer has fulfilled all its obligations under the Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. Such officer's certificate will be accompanied by a
statement of a firm of independent public accountants to the effect that, on the
basis of an examination of certain documents and records relating to servicing
of the Contracts under the Agreement (or, at the Servicer's option, the
Contracts and other contracts being serviced by the Servicer under agreements
similar to the Agreement), conducted in accordance with generally accepted
auditing standards, the Servicer's servicing has been conducted in compliance
with the provisions of the Agreement (or such agreements), except (i) such
exceptions as such firm believes to be immaterial and (ii) such other exceptions
as may be set forth in such statement. (Sections 4.20 and 4.21.)
C. EVENTS OF DEFAULT. Unless otherwise specified in the related Prospectus
Supplement, events of default under the Agreement will consist of (i) any
failure by the Servicer to make any deposit or payment required of it under the
Agreement which continues unremedied for five days after the giving of written
notice, (ii) any failure by the Servicer duly to observe or perform in any
material respect any of its other covenants or agreements in the Agreement which
continues unremedied for 30 days after the giving of written notice of such
failure, and (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or other similar proceedings regarding the
Servicer. Unless otherwise specified in the related Prospectus Supplement,
"notice" as used in this paragraph means notice to the Servicer by the Trustee,
the Sellers or, if applicable, the Credit Facility Provider, or to the Servicer,
the Trustee and the Sellers by the holders of Certificates evidencing interests
("Fractional Interests") in the outstanding principal balance of outstanding
Certificates that, in the aggregate, equal at least 25% of the principal balance
of all outstanding Certificates (excluding Certificates held by the Sellers,
BankAmerica Housing Services (as well as any successor Servicer, if BankAmerica
Housing Services is not the Servicer) or any of their respective affiliates).
(Section 8.01.)
D. RIGHTS UPON EVENT OF DEFAULT. Unless otherwise specified in the related
Prospectus Supplement so long as an event of default remains unremedied, the
Trustee may (but only with the consent of the Credit Facility Provider (if any)
if the Credit Facility has not expired or if the Credit Facility has expired or
been terminated and such Credit Facility Provider has not been reimbursed for
all amounts due it), and at the written direction of the holders of Certificates
evidencing Fractional Interests aggregating not less than 51% shall, terminate
all of the rights and obligations of the Servicer under the Agreement and in and
to the related Contracts, whereupon (subject to applicable law regarding the
Trustee's ability to make monthly advances) the Trustee or a successor Servicer
under the Agreement will succeed to all the responsibilities, duties and
liabilities of the Servicer under the Agreement and will be entitled to similar
compensation arrangements. If the Trustee is obligated to succeed the Servicer
but is unwilling or unable so to act, it may appoint, or petition a court of
competent jurisdiction for the appointment of, a Servicer. Pending such
appointment, the Trustee is obligated to act in such capacity. The Trustee and
such successor may agree upon the servicing compensation to be paid, which in no
event may be greater than a monthly amount specified in the Agreement. (Sections
7.07 and 8.01.)
Unless otherwise specified in the related Prospectus Supplement, no
Certificateholder will have any right under the Agreement to institute any
proceeding with respect to the Agreement unless such holder previously has given
to the Trustee written notice of default and unless the holders of Certificates
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evidencing Fractional Interests aggregating not less than 25% have requested the
Trustee in writing to institute such proceeding in its own name as Trustee and
have offered to the Trustee reasonable indemnity and the Trustee for 60 days has
neglected or refused to institute any such proceeding. The Trustee will be under
no obligation to take any action or institute, conduct or defend any litigation
under the Agreement at the request, order or direction of any of the holders of
Certificates, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which the Trustee may incur. (Sections 8.01 and 11.08.)
AMENDMENT
Unless otherwise specified in the related Prospectus Supplement, the
Agreement may be amended by the Sellers, the Servicer and the Trustee without
the consent of the Certificateholders (but only with the consent of the Credit
Facility Provider (if any) if the Credit Facility has not expired or if the
Credit Facility has expired or been terminated and such Credit Facility Provider
has not been reimbursed for all amounts due it), (i) to cure any ambiguity, (ii)
to correct or supplement any provision therein that may be inconsistent with any
other provision therein, (iii) to add to the duties or obligations of the
Servicer, (iv) to obtain a rating from a nationally recognized rating agency or
to maintain or improve the ratings of any Class of the Certificates then given
by any rating agency (it being understood that, after obtaining the rating of
the Certificates from the rating agencies specified in such Agreement, none of
the Trustee, the Sellers or the Servicer is obligated to obtain, maintain or
improve any rating assigned to the Certificates), or (v) to make any other
provisions with respect to matters or questions arising under such Agreement,
provided that such action will not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of the
Certificateholders. The Agreement may also be amended, by the Sellers, the
Servicer and the Trustee with the consent of at least 51% of the holders of
Certificates of each Class affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, any distributions on any
Certificate, without the consent of the Holder of such Certificate as the case
may be, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing, as
to such Class, Percentage Interests aggregating 66% or (iii) reduce the
aforesaid percentage of Certificates the holders of which are required to
consent to any such amendment, without the consent of the holders of all
Certificates then outstanding, and no such amendment shall adversely affect the
status of the Trust Fund as a REMIC.
Unless otherwise specified in the applicable Prospectus Supplement, the
Agreement may also be amended from time to time, without the consent of any
Certificateholders, by the Sellers, the Trustee and the Servicer to modify,
eliminate or add to the provisions of the Agreement to (i) maintain the
qualification of the Trust Fund as a REMIC under the Code or avoid, or minimize
the risk of, the imposition of any tax on the Trust Fund under the Code that
would be a claim against the Trust Fund assets, provided that an opinion of
counsel is delivered to the Trustee to the effect that such action is necessary
or appropriate to maintain such qualification or avoid any such tax or minimize
the risk of its imposition, or (ii) prevent the Trust Fund from entering into
any "prohibited transaction" as defined in Section 860F of the Code, provided
that an opinion of counsel is delivered to the Trustee to the effect that such
action is necessary or appropriate to prevent the Trust Fund from entering into
such prohibited transaction. (Section 11.01.)
The Agreement may otherwise be subject to amendment without the consent of
any Certificateholders and, under certain circumstances, without the consent of
the Trustee, if and to the extent specified in the related Prospectus
Supplement.
THE TRUSTEE
The Trustee with respect to a Series will be identified in the applicable
Prospectus Supplement. Unless otherwise specified therein, the Trustee may
resign at any time, in which event the Sellers will be obligated to appoint a
successor Trustee. The Sellers may also remove the Trustee if the Trustee ceases
to be eligible to continue as such under the related Agreement or if the Trustee
becomes insolvent. In
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such circumstances, the Sellers will also be obligated to appoint a successor
Trustee. 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. (Section 9.07.)
Unless otherwise specified in the related Prospectus Supplement, the
Agreement for any Series will require the Trustee to maintain, at its own
expense, an office or agency in New York City where the Certificates for such
Series may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Trustee and the Certificate Registrar in
respect of such Certificates pursuant to the related Agreement may be served.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee, or any of its affiliates, in its individual or any other capacity, may
become the owner or pledgee of the Certificates of any Series with the same
rights as it would have if it were not Trustee.
Unless otherwise specified in the related Prospectus Supplement, the Trustee
will act as Paying Agent, Certificate Registrar and Authenticating Agent for the
related Series of Certificates.
INDEMNIFICATION
Unless otherwise specified in the applicable Prospectus Supplement, each
Agreement will provide that neither the Servicer nor any of its directors,
officers, employees or agents will be under any liability to the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to such Agreement, or for errors in judgment;
provided, however, that such provision shall not protect the Servicer or any
such person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which
arises under an Agreement (other than in connection with the enforcement of any
Contract in accordance with the Agreement) and which in its opinion may involve
it in any expenses or liability; provided, however, that the Servicer may in its
discretion undertake any such other legal action which it may deem necessary or
desirable in respect of the Agreement and the rights and duties of the parties
thereto. In such event, the legal expenses and costs of such other legal action
and any liability resulting therefrom shall be expenses, costs and liabilities
payable from the Trust Fund and the Servicer shall be entitled to be reimbursed
therefor from amounts collected on the Contracts. (Section 7.05.)
CREDIT AND LIQUIDITY ENHANCEMENT
To the extent specified in the related Prospectus Supplement, a Class of
Certificates may be entitled to the benefit of one or more of the following
forms of credit and liquidity enhancement:
SUBORDINATION
The Certificates of one or more Classes of a multiple-Class Series (the
"Senior Certificates") may afford the holders thereof a right to receive
distributions of principal and/or interest on each Distribution Date from
amounts collected on the related Contract Pool that is prior to the right to
receive such distributions afforded by the Certificates of the other Class or
Classes (the "Junior Certificates" or "Subordinate Certificates"). Unless
otherwise specified in the related Prospectus Supplement, this prior right will
result from one or both of the following two features:
1. The Senior Certificates will entitle the holders thereof to receive
on some or all Distribution Dates, prior to any distribution of principal or
of both principal and interest (as specified in the related Prospectus
Supplement) being made to the holders of the Junior Certificates on any such
Distribution Date, a full distribution of principal or of both principal and
interest (as specified in the related Prospectus Supplement) from amounts
collected on the Contracts during the related Collection Period(s). To the
extent that Contract collections during the related Collection Period(s)
would, in the absence of liquidation losses or other circumstances adversely
affecting such Contract collections, have been applied to make distributions
to the holders of the Junior Certificates, this feature will enhance the
likelihood of timely receipt by the holders of the Senior Certificates of
full distributions of principal and interest in accordance with the
applicable distribution formula.
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2. The distribution formula for the Senior Certificates will entitle
the holders thereof to receive, on some or all Distribution Dates, all or a
disproportionate share of the Total Regular Principal Amount until the
Certificate Balance of the Senior Certificates has been reduced to zero. See
"Description of Certificates -- Distributions on Certificates -- A.
Distributions of Principal" above. This feature, in effect, will provide the
holders of the Senior Certificates with a prior right to receive the
principal collected on the Contracts until the Certificate Balance of the
Senior Certificates has been reduced to zero. The degree of priority will
depend on the share of the Total Regular Principal Amount to which the
holders of the Senior Certificates are entitled on particular Distribution
Dates. If the holders of the Senior Certificates are entitled to receive all
of the Total Regular Principal Amount on each Distribution Date (to the
extent of the Contract collections available to make distributions of
Regular Principal on such Distribution Date), then the holders of the Senior
Certificates will, in effect, have a right to receive all principal
collected on the Contracts that is absolutely prior to the right of the
holders of the Junior Certificates to receive any principal collected on the
Contracts. If, however, the holders of the Senior Certificates are entitled
to receive only a disproportionate share of the Total Regular Principal
Amount, or are entitled to receive all or a disproportionate share of the
Total Regular Principal Amount only on certain Distribution Dates, then the
prior right of the holders of the Senior Certificates to receive
distributions of principal collected on the Contracts will, to that extent,
be limited. The prior right to receive distributions of principal
collections described above will enhance the likelihood that the holders of
the Senior Certificates will ultimately receive distributions of principal
in an aggregate amount equal to the initial Certificate Balance of the
Senior Certificates. It will not, however, enhance the likelihood of timely
receipt by the holders of the Senior Certificates of full distributions of
the amounts to which they would have been entitled in the absence of
liquidation losses or other circumstances adversely affecting Contract
collections.
If specified in the related Prospectus Supplement, the features described
above may be characteristic of different Classes within a multiple-Class Series.
Thus, Certificates which constitute Senior Certificates under the criteria
described in paragraph 1 above may constitute Junior Certificates under the
criteria described in paragraph 2 above, and Certificates which constitute
Senior Certificates under the criteria described in paragraph 2 above may
constitute Junior Certificates under the criteria described in paragraph 1
above. In general, the splitting of the features described above among two
separate Classes of a multiple-Class Series will undercut the protection against
loss afforded by each of such features. The particular effects of any such
splitting will be discussed in the applicable Prospectus Supplement. The
following discussion is based on the assumption that the features described
above will not be characteristic of different Classes within a multiple-Class
Series.
The degree of protection against loss provided to the holders of the Senior
Certificates at any time by either of the subordination features described above
will be determined primarily by the degree to which the aggregate principal
balance of the underlying Contracts (the "Pool Principal Balance") exceeds the
Certificate Balance of the Senior Certificates (and to a lesser extent, if the
holders of the Senior Certificates also have a prior right to receive interest,
by the degree to which the interest payable on the Contracts, net of the
portions thereof used to pay the servicing fee of the Servicer (if such
servicing fee is payable prior to distributions of interest to the holders of
the Senior Certificates) and other expenses of the Trust Fund, exceeds the
interest distributable to the holders of the Senior Certificates). The relative
levels of the Certificate Balance of the Senior Certificates (the "Senior
Certificate Balance") and the related Pool Principal Balance, and hence the
degree of protection against loss afforded by the subordination features
described above, may change over time depending on, among other things, the
formula by which principal is distributed to the holders of the Senior
Certificates and the level of liquidation losses on the underlying Contracts.
Generally, if the holders of Senior Certificates receive a disproportionate
share of the Total Regular Principal Amount on any Distribution Date, the effect
will be to increase, as a relative matter, the degree by which the Pool
Principal Balance exceeds the Certificate Balance of the Senior Certificates,
thus increasing the degree of protection against loss afforded by the
subordination of the Junior Certificates. In addition, Special Principal
Distributions to the holders of the Senior Certificates from sources other than
principal collections on the underlying Contracts generally will increase the
degree of protection against loss above the protection that would have been
provided if
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such distributions were not made (because the Senior Certificate Balance will be
reduced without a reduction in the Pool Principal Balance). On the other hand,
if, due to liquidation losses or other circumstances adversely affecting
Contract collections, the holders of Senior Certificates receive less than their
proportionate share of the Total Regular Principal Amount, the effect will be to
decrease, as a relative matter, the degree to which the Pool Principal Balance
exceeds the Certificate Balance of the Senior Certificates, thus decreasing the
degree of protection against loss afforded by the subordination of the Junior
Certificates. The effects of particular principal distribution formulae in this
regard will be discussed in the applicable Prospectus Supplement. The
description of any such effects in a particular Prospectus Supplement may relate
the Certificate Balances of the Senior Certificates to Pool Principal Balances
which are estimated or adjusted as described therein. Such Pool Principal
Balances may sometimes be referred to in a Prospectus Supplement as "Pool
Scheduled Principal Balances."
Where there is more than one Class of Junior Certificates, the rights of one
or more of such Classes of Junior Certificates to receive distributions of
principal, interest or principal and interest may be subordinated to the rights
of one or more other Classes of Junior Certificates to receive such
distributions. Any Class of Junior Certificates that is entitled to receive such
distributions from Contract Pool collections prior to any other Class of Junior
Certificates is a "mezzanine" Class of Junior Certificates. The subordination of
any Class of Junior Certificate to a mezzanine Class of Junior Certificates will
enhance the likelihood of timely receipt by the holders of such mezzanine Class
of Junior Certificates relative to any Class of Junior Certificates that is
subordinate to such mezzanine Class of Junior Certificates. Junior Certificates,
including any mezzanine Classes of Junior Certificates, may only be sold
hereunder if rated in one of the four highest rating categories of a nationally
recognized statistical rating organization. (See "Rating" herein). The effect of
any subordination on any Classes of Junior Certificates sold hereunder will be
discussed in the applicable Prospectus Supplement.
RESERVE FUNDS
The Certificates of one or more Classes may be entitled to the benefit of
one or more spread accounts or other reserve funds (each, a "Reserve Fund")
which, to the extent specified in the related Prospectus Supplement, will cover
shortfalls created when collections on the related Contract Pool that are
available to make distributions to the holders of such Certificates are not
sufficient to fund full distributions of principal and interest to such
Certificateholders. Any Reserve Fund may be available to cover all or a portion
of such shortfalls and may be available to cover any shortfalls, no matter what
the cause, or only shortfalls due to certain causes (E.G., liquidation losses
only or delinquencies only), all as specified in the related Prospectus
Supplement. In addition, to the extent specified in the related Prospectus
Supplement, a Reserve Fund may be used to make distributions of interest or
Regular Principal to the holders of a Class of Certificates on particular
Distribution Dates upon the occurrence of certain losses, delinquencies or other
events, even if such Certificateholders would not have been entitled to any such
distributions on such Distribution Dates in the absence of losses, delinquencies
or other events. A Reserve Fund may also be used to fund Special Principal
Distributions under the circumstances set forth in the related Prospectus
Supplement. The related Prospectus Supplement will specify whether any Reserve
Fund will be established as part of the Trust Fund or held outside of the Trust
Fund by a collateral agent or similar third party (who may be the Trustee acting
in a different capacity) and will contain a description of any arrangement
pursuant to which the Reserve Fund is held outside of the Trust Fund.
The method of funding any Reserve Fund, and the required levels of funding,
if any, as well as the circumstances under which amounts on deposit in any
Reserve Fund may be distributed to persons other than Certificateholders, will
be described in the applicable Prospectus Supplement. To the extent that a
Reserve Fund may be funded in whole or in part from some or all of the interest
collected on the Contracts in excess of the interest needed to make
distributions to the holders of one or more Classes of Certificates, such
Reserve Fund may be referred to in the applicable Prospectus Supplement as a
"Spread Account."
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CREDIT FACILITIES
The Certificates of one or more Classes may be entitled to the benefit of
one or more letters of credit, surety bonds or similar credit facilities (each,
a "Credit Facility"). Each such Credit Facility may be in an amount greater
than, equal to or less than the Certificate Balance of the Certificates of each
Class entitled to the benefits thereof, and may be subject to reduction or be
limited as to duration, all as described in the applicable Prospectus
Supplement. To the extent specified in the related Prospectus Supplement,
amounts realized under a Credit Facility supporting the Certificates of any
Class may be used for the same purposes as amounts on deposit in Reserve Funds.
See "-- Reserve Funds" above. A Credit Facility may be held by a Trustee as part
of the related Trust Fund or may be held by a collateral agent or other third
party (who may be the Trustee acting in a different capacity). The related
Prospectus Supplement will contain a description of the material terms of any
Credit Facility and any arrangement pursuant to which the Credit Facility is
held outside of the Trust Fund. Such Prospectus Supplement will also contain
certain information concerning the provider of the Credit Facility (the "Credit
Facility Provider"), which information will have been provided to the Sellers by
the Credit Facility Provider for use in such Prospectus Supplement. Bank of
America, BankAmerica Housing Services or an affiliate thereof may be a Credit
Facility Provider.
If specified in the applicable Prospectus Supplement, a Credit Facility,
rather than supporting distributions of particular amounts to the holders of
Certificates of particular Classes, may, instead, support certain collections on
the related Contract Pool. These collections may be of all or a portion of
amounts due on Contracts in liquidation, all or a portion of the scheduled
monthly payments due on the Contracts or of other amounts. The extent to which
any such collections are supported by a Credit Facility which functions in this
manner will be described in the applicable Prospectus Supplement.
LIQUIDITY FACILITIES
The Certificates of one or more Classes may be entitled to the benefit of
one or more certificate purchase agreements or other liquidity facilities (each,
a "Liquidity Facility"), pursuant to which the provider of such Liquidity
Facility (the "Liquidity Facility Provider") will provide funds to be used to
purchase some or all of such Certificates on the Repurchase Dates applicable
thereto. Unless otherwise specified in the applicable Prospectus Supplement, a
Liquidity Facility will be held outside of the Trust Fund by a third party
(which may be the Trustee acting in another capacity). The related Prospectus
Supplement will contain a description of the material terms of any such
Liquidity Facility and any arrangement pursuant to which it is held outside of
the Trust Fund, and will contain certain information concerning the Liquidity
Facility Provider, which information will have been provided to the Sellers by
the Liquidity Facility Provider for use in such Prospectus Supplement. Bank of
America, BankAmerica Housing Services or an affiliate thereof may be a Liquidity
Facility Provider. If specified in the related Prospectus Supplement, a Reserve
Fund or Credit Facility may also serve as a Liquidity Facility.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of Certificates of
any Series, to the extent it relates to matters of law or legal conclusions with
respect thereto, represents the opinion of special counsel to Bank of America
and Bank America Housing Services with respect to that Series on the material
matters associated with such consequences, subject to any qualifications set
forth herein. Special counsel to Bank of America and BankAmerica Housing
Services for each Series will be Morrison & Foerster LLP, and a copy of the
legal opinion of such counsel rendered in connection with any Series of
Certificates will be filed with the Commission on a Current Report on Form 8-K
within 15 days after the issuance of the related Series of Certificates. This
discussion is directed primarily to Certificateholders that hold the
Certificates as "capital assets" within the meaning of Section 1221 of the Code
(although portions thereof also may 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
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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 "Service") with respect to any of the federal income tax
consequences discussed below, and no assurance can be given that the Service
will not take contrary positions. Taxpayers and preparers of tax returns
(including those filed by any REMIC or other issuer) should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice (i) is given
with respect to events that have occurred at the time the advice is rendered and
is not given with respect to the consequences of contemplated actions, and (ii)
is directly relevant to the determination of an entry on a tax return.
Accordingly, taxpayers should consult their tax advisors and tax return
preparers regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed herein. In addition to the federal
income tax consequences described herein, potential investors are advised to
consider the state, local and other tax consequences, if any, of the purchase,
ownership and disposition of Certificates in a Series. See "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 Certificates in a Series.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund with
respect to which an election to be treated as a "real estate mortgage investment
conduit" ("REMIC") under Sections 860A through 860G (the "REMIC Provisions") of
the Code will be made, and (ii) Grantor Trust Certificates representing
interests in a Trust Fund ("Grantor Trust Fund") as to which no such election
will be made.
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.
The following discussion is limited in applicability to the Certificates.
For purposes of this tax discussion, references to a "Certificateholder" or a
"holder" are to the beneficial owner of a Certificate.
REMIC ELECTIONS
Under the Code, an election may be made with respect to a Trust Fund related
to any Series of Certificates to treat such Trust Fund as a "real estate
mortgage investment conduit" ("REMIC") within the meaning of Section 860D(a) of
the Code, in which case the Certificates of any Class of such Series will be
either "regular interests" in the REMIC within the meaning of Section 860G(a)(1)
of the Code or "residual interests" in the REMIC within the meaning of Section
860G(a)(2) of the Code. The Prospectus Supplement for each Series of
Certificates will indicate whether each Seller of Contracts to the related
Contract Pool intends to cause an election to be made to treat the Trust Fund as
a REMIC, and if such an election is to be made, which Certificates will be
regular interests and which will be the residual interest in the REMIC. The
discussion under the heading "-- REMIC Certificates" discusses Series with
respect to which each Seller of Contracts to the related Contract Pool will
cause a REMIC election to be made and the discussion under the heading "--
Non-REMIC Certificates" discusses Series with respect to which the Sellers (or
if only one Seller sells Contracts to the related Contract Pool, the applicable
Seller) will not cause a REMIC election to be made.
REMIC CERTIFICATES
The discussion in this section applies only to a Series of Certificates for
which a REMIC election is made. Upon the issuance of each Series of Certificates
for which a REMIC election is made, Morrison & Foerster LLP, special counsel to
Bank of America and BankAmerica Housing Services, will deliver its opinion
generally to the effect that, with respect to each such Series of Certificates,
under then existing law and assuming compliance by the Seller(s), the Servicer
and the Trustee for such Series with all of the provisions of the related
Agreement, the agreement or agreements, if any, providing for a Credit Facility
or a Liquidity Facility, together with any agreement documenting the arrangement
through which a Credit Facility or a Liquidity Facility is held outside the
related Trust Fund, and agreement or agreements
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with any Underwriter, the Trust Fund will be a REMIC, and the Certificates of
such Series will be treated as either "regular interests" in the REMIC ("Regular
Certificates") or "residual interests" in the REMIC ("Residual Certificates").
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 Morrison & Foerster LLP, special counsel to
Bank of America and BankAmerica Housing Services, subject to any qualifications
set forth herein. In addition, Morrison & Foerster LLP, special counsel to Bank
of America and BankAmerica Housing Services, have prepared or reviewed the
statements in this Prospectus under the heading "Certain Federal Income Tax
Consequences -- REMIC Certificates," 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 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.
A. TAX STATUS OF REMIC CERTIFICATES. Unless otherwise specified in the
related Prospectus Supplement, the Certificates of any Series, in their
entirety, will generally be considered (i) "qualifying real property loans"
within the meaning of Section 593(d) of the Code, (ii) "real estate assets"
within the meaning of Section 856(c)(5)(A) of the Code and (iii) assets
described in Section 7701(a)(19)(C) of the Code (assets qualifying under one or
more of those sections, applying each section separately, "qualifying assets")
for a calendar quarter if at least 95% of the assets of the related Trust Fund
are qualifying assets during such calendar quarter. In the event the percentage
of the Trust Fund's assets which are qualifying assets falls below 95% for any
calendar quarter, then a corresponding percentage of the Certificates will be
treated as qualifying assets for such calendar quarter. Any amount includable in
gross income with respect to the Certificates will be treated as "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 to the extent
that the Certificates are treated as "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code. The assets of the Trust Fund will include, in
addition to the Contracts, payments on the Contracts held pending distribution,
and may include, among other assets, one or more Reserve Funds. With respect to
the treatment of Contracts as qualifying assets, (i) the Treasury Regulations
under Section 593 of the Code define a "qualifying real property loan" to
include a loan secured by manufactured housing that qualifies as a single family
residence under the Code, (ii) the Treasury Regulations under Section 856 of the
Code define a "real estate asset" under Section 856(c)(5)(A) of the Code to
include a loan secured by manufactured housing that qualifies as a single family
residence under the Code, and (iii) the Treasury Regulations under Section
7701(a)(19)(C) of the Code provide that assets described in that Section include
loans secured by manufactured housing that qualify as a single family residence
under the Code. It is unclear whether other assets of the Trust Fund would be
treated as qualifying assets under the three foregoing sections of the Code.
However, the REMIC Regulations provide that "permitted investments," as defined
below under "-- B. Qualification as a REMIC," will be considered to be
"qualifying real property loans" within the meaning of Section 593(b) of the
Code and "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code. REMIC Certificates held by a real estate investment trust will not
constitute "Government Securities" within the meaning of Code Section
856(c)(5)(A), and REMIC Certificates held by a regulated investment company will
not constitute "Government Securities" within the meaning of Code Section
851(b)(4)(A)(ii).
B. QUALIFICATION AS A REMIC. Qualification as a REMIC requires ongoing
compliance with certain conditions. The following discussion assumes that such
requirements will be satisfied by a Trust Fund so long any REMIC Certificates
related to such Trust Fund are outstanding. Substantially all of the assets of
the REMIC must consist of "qualified mortgages" and "permitted investments" as
of the close of the third month beginning after the day on which the REMIC
issues all of its regular and residual interests (the "Startup Day") and at all
times thereafter. The term "qualified mortgage" means any obligation
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(including a participation or certificate of beneficial ownership in such
obligation) which is principally secured by an interest in real property that is
transferred to the REMIC on the Startup Day in exchange for regular or residual
interests in the REMIC or is purchased by the REMIC within the three-month
period beginning on the Startup Day if such purchase is pursuant to a fixed
price contract in effect on the Startup Day. The REMIC Regulations provide that
a manufactured housing contract is principally secured by an interest in real
property if the fair market value of the real property securing the contract is
at least equal to either (i) 80% of the issue price (generally, the principal
balance) of the contract at the time it was originated or (ii) 80%, of the
adjusted issue price (the then outstanding principal balance, with certain
adjustments) of the contract at the time it is contributed to a REMIC. The fair
market value of the underlying real property is to be determined after taking
into account other liens encumbering that real property. Alternatively, a
manufactured housing contract is principally secured by an interest in real
property if substantially all of the proceeds of the contract were used to
acquire or to improve or protect an interest in real property that, at the
origination date, is the only security for the contract (other than the personal
liability of the obligor). The REMIC Regulations as well as a published notice
issued by the Internal Revenue Service (the "Service") provide that obligations
secured by interests in manufactured housing, which qualify as "single family
residences" within the meaning of Section 25(e)(10) of the Code, are to be
treated as "qualified mortgages" for qualifying a Trust Fund as a REMIC. Under
Section 25(e)(10) of the Code, the term "single family residence" includes any
manufactured home which has a minimum of 400 square feet of living space and a
minimum width in excess of 102 inches and which is of a kind customarily used at
a fixed location. Bank of America or BankAmerica Housing Services or both of
them, as the case may be, will represent and warrant that each of the
manufactured homes securing the Contracts conveyed by it to a Trust Fund meets
this definition of a "single family residence." A qualified mortgage also
includes a "qualified replacement mortgage" that is used to replace any
"qualified mortgage" within three months of the Startup Day or to replace a
defective mortgage within two years of the Startup Day.
"Permitted investments" consist of (a) temporary investments of cash
received under qualified mortgages before distribution to holders of interests
in the REMIC ("cash-flow investments"), (b) amounts, such as a reserve fund, if
any, reasonably required to provide for full payment of expenses of the REMIC,
the principal and interest due on regular or residual interests in the event of
defaults on qualified mortgages, lower than expected returns on cash-flow
investments, prepayment interest shortfalls or certain other contingencies
("qualified reserve assets") and (c) certain property acquired as a result of
foreclosure of defaulted qualified mortgages ("foreclosure property"). A reserve
fund will not be qualified if more than 30% of the gross income from the assets
in the reserve fund is derived from the sale or other disposition of property
held for three months or less, unless such sale is necessary to prevent a
default in payment of principal or interest on Regular Certificates. In
accordance with Section 860G(a)(7) of the Code, a reserve fund must be "promptly
and appropriately" reduced as payments on contracts are received. Foreclosure
property will be a permitted investment only to the extent that such property is
not held for more than two years unless an extension of such holding period is
obtained from the Service.
The Code requires that in order to qualify as a REMIC an entity must make
reasonable arrangements designed to ensure that certain specified entities,
generally including governmental entities or other entities that are exempt from
United States tax, including the tax on unrelated business income ("Disqualified
Organizations"), not hold the residual interest in the REMIC. Consequently, it
is expected that in the case of any Trust Fund for which a REMIC election is
made the transfer, sale, or other disposition of a Residual Certificate to a
Disqualified Organization will be prohibited, and the ability of a Residual
Certificate to be transferred will be conditioned on the Trustee's receipt of a
certificate or other document representing that the proposed transferee is not a
Disqualified Organization. The transferor of a Residual Certificate must not, as
of the time of the transfer, have actual knowledge that such representation is
false. The Code further requires that reasonable arrangements be made to enable
a REMIC to provide the Service and certain other parties, including transferors
of residual interests in a REMIC, with the information needed to compute the tax
imposed by Section 860E(e)(1) of the Code if, in spite of the steps taken to
prevent Disqualified Organizations from holding residual interests, such an
organization does, in fact, acquire a residual interest. See "Restrictions on
Transfer of Residual Certificates" below.
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For certain Series of Certificates, two separate elections may be made to
treat segregated portions of the assets of a single Trust Fund as REMICs for
federal income tax purposes (respectively, the "Subsidiary REMIC" and the
"Master REMIC"). Upon the issuance of any such series of Certificates, Morrison
& Foerster LLP, special tax counsel to Bank of America and BankAmerica Housing
Services, will have advised Bank of America and BankAmerica Housing Services, as
described above, that at the initial issuance of the Certificates of such
Series, the Subsidiary REMIC and the Master REMIC will each qualify as a REMIC
for federal income tax purposes, and that the Certificates in such Series will
be treated either as Regular Certificates or Residual Certificates of the
appropriate REMIC. Only REMIC Certificates issued by the Master REMIC will be
offered hereunder. Solely for the purpose of determining whether such Regular
Certificates will constitute qualifying real estate or real property assets for
certain categories of financial institutions or real estate investment trusts as
described above under "-- A. Tax Status of REMIC Certificates," both REMICs in a
two-tier REMIC structure will be treated as one. See the discussion below under
"-- C. Taxation of Regular 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 REMIC status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and interests in the REMIC may be treated as debt or
equity interests therein. The Code, however, authorizes the Treasury Department
to issue Treasury regulations that address situations where failure to meet one
or more of the requirements for REMIC status occurs inadvertently and in good
faith, and disqualification of a REMIC would occur absent regulatory relief.
Investors should be aware, however, that the Conference Committee Report to the
Tax Reform Act of 1986 (the "1986 Act") indicates that the relief may be
accompanied by sanctions, such as the imposition of a corporate income tax on
all or a portion of the REMIC's income for the period of time in which the
requirements for REMIC status are not satisfied. The Agreement with respect to
each REMIC will include provisions designed to maintain the related Trust Fund's
status as a REMIC. It is not anticipated that the status of any Trust Fund as a
REMIC will be terminated.
C. TAXATION OF REGULAR CERTIFICATES.
1. GENERAL. The Regular Certificates in any Series will constitute "regular
interests" in the related REMIC. Accordingly, the Regular Certificates will
generally be treated for federal income tax purposes as debt instruments that
are issued by the related Trust Fund on the date of issuance of the Regular
Certificates and not as ownership interests in the Trust Fund or the Trust
Fund's assets. Interest, original issue discount, and market discount accrued on
a Regular Certificate will be treated as ordinary income to the holder. Each
holder must use the accrual method of accounting with regard to Regular
Certificates, regardless of the method of accounting otherwise used by such
holder.
2. ORIGINAL ISSUE DISCOUNT. Regular Certificates may be issued with
"original issue discount." Rules governing original issue discount are set forth
in Sections 1271-1273 and 1275 of the Code and the OID Regulations. The
discussion herein is based in part on the OID Regulations. Although the rules
relating to original issue discount contained in the Code were modified by the
1986 Act specifically to address the tax treatment of securities, such as the
Regular Certificates, on which principal is required to be prepaid based on
prepayments of the underlying assets, regulations under that legislation have
not yet been finalized. Certificateholders also should be aware that the OID
Regulations do not address certain issues relevant to prepayable securities such
as the Regular Certificates.
In general, in the hands of the original holder of a Regular Certificate,
original issue discount, if any, is the difference between the "stated
redemption price at maturity" of the Regular Certificate and its "issue price."
The original issue discount with respect to a Regular Certificate will be
considered to be zero if it is less than 0.25% of the Regular Certificate's
stated redemption price at maturity multiplied by the number of complete years
from the date of issue of such Regular Certificate to its maturity date. The OID
Regulations, however, provide a special DE MINIMIS rule to apply to obligations
such as the Regular Certificates that have more than one principal payment or
that have interest payments that are not
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qualified stated interest as defined in the OID Regulations, payable before
maturity ("installment obligations"). Under the special rule, original issue
discount on an installment obligation is generally considered to be zero if it
is less than 0.25% of the principal amount of the obligation multiplied by the
weighted average maturity of the obligation as defined in the OID Regulations.
Because of the possibility of prepayments, it is not clear whether or how the DE
MINIMIS rules will apply to the Regular Certificates. It is possible that the
anticipated rate of prepayments assumed in pricing the debt instrument (the
"Assumed Prepayment Rate") will be required to be used in determining the
weighted average maturity of the Regular Certificates. In the absence of
authority to the contrary, and unless the related Prospectus Supplement
otherwise provides, it is expected that each Trust Fund as to which a REMIC
election is made will apply the DE MINIMIS rule applicable to installment
obligations by using the Assumed Prepayment Rate. The OID Regulations provide a
further special DE MINIMIS rule applicable to any Regular Certificates that are
"self-amortizing installment obligations," I.E., Regular Certificates that
provide for equal payments composed of principal and qualified stated interest
payable unconditionally at least annually during its entire term, with no
significant additional payment required at maturity. Under this special rule,
original issue discount on a self-amortizing installment obligation is generally
considered to be zero if it is less than 0.167% of the principal amount of the
obligation multiplied by the number of complete years from the date of issue of
such a Regular Certificate to its maturity date.
Generally, the original holder of a Regular Certificate that includes a DE
MINIMIS amount of original issue discount includes that original issue discount
in income as principal payments are made. The amount included in income with
respect to each principal payment equals a pro rata portion of the entire amount
of DE MINIMIS original issue discount with respect to that Regular Certificate.
Any DE MINIMIS amount of original issue discount included in income by a holder
of a Regular Certificate is generally treated as a capital gain if the Regular
Certificate is a capital asset in the hands of the holder thereof. Pursuant to
the OID Regulations, a holder of a Regular Certificate may, however, elect to
include in gross income all interest that accrues on a Regular Certificate,
including any DE MINIMIS original issue discount and market discount, by using
the constant yield method described below with respect to original issue
discount.
The stated redemption price at maturity of a Regular Certificate generally
will be equal to the sum of all payments, whether denominated as principal or
interest, to be made with respect thereto other than "qualified stated
interest." Pursuant to the OID Regulations, qualified stated interest is stated
interest that is unconditionally payable at least annually at a single fixed
rate of interest (or, under certain circumstances, a variable rate tied to an
objective index) during the entire term of the Regular Certificate (including
short periods). It is possible that the Service could assert that the stated
rate of interest on the Certificates is not unconditionally payable or otherwise
does not qualify as qualified stated interest. Such position, if successful,
would require all holders of Certificates to accrue all income on the
Certificates under the OID Regulations. Unless otherwise noted in the applicable
Prospectus Supplement, and unless the related Prospectus Supplement otherwise
provides, it is expected that each Trust Fund as to which a REMIC election is
made will treat all stated interest on the Certificates as qualified stated
interest. Under the OID Regulations, certain variable interest rates payable on
Regular Certificates, including rates based upon the weighted average interest
rate of Contracts in the related Contract Pool, may not be treated as qualified
stated interest. In such case, the OID Regulations would treat interest under
such rates as contingent interest which generally must be included in income by
the Regular Certificateholder when the interest becomes fixed, as opposed to
when it accrues. Until further guidance is issued concerning the treatment of
such interest payable on Regular Certificates, unless otherwise noted in the
applicable Prospectus Supplement, the REMIC will treat such interest as being
payable at a variable rate
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tied to a single objective index of market rates. Prospective investors should
consult their tax advisors regarding the treatment of such interest under the
OID Regulations. In the absence of authority to the contrary and if otherwise
appropriate, and unless the related Prospectus Supplement otherwise provides, it
is expected that each Trust Fund as to which a REMIC election is made will
determine the stated redemption price at maturity of a Regular Certificate by
assuming that the anticipated rate of prepayment for all Contracts in the
related Contract Pool will occur in such a manner that the initial Pass-Through
Rate for a Certificate will not change. Accordingly, interest at the initial
Pass-Through Rate will constitute qualified stated interest payments for
purposes of applying the original issue discount provisions of the Code. In
general, the issue price of a Regular Certificate in a Class is the first price
at which a substantial amount of the Regular Certificates of such Class are sold
for money to the public (excluding bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers). If a portion of the initial offering price of a Regular
Certificate is allocable to interest that has accrued prior to its date of
issue, the issue price of such a Regular Certificate includes that pre-issuance
accrued interest.
Where the interval between the issue date and the first Distribution Date on
a Regular Certificate is longer than the interval between subsequent
Distribution Dates, the greater of any original issue discount (disregarding the
rate in the first period) and any interest foregone during the first period is
treated as the amount by which the stated redemption price at maturity of the
Certificate exceeds its issue price for purposes of the DE MINIMIS rule
described above. The OID Regulations suggest that all interest on a long first
period Regular Certificate that is issued with non-DE MINIMIS original issue
discount, as determined under the foregoing rule, will be treated as original
issue discount. Where the interval between the issue date and the first
Distribution Date on a Regular Certificate is shorter than the interval between
subsequent Distribution Dates, interest due on the first Distribution Date in
excess of the amount that accrued during the first period would be added to the
Certificates' stated redemption price at maturity. Regular Certificateholders
should consult their own tax advisors to determine the issue price and stated
redemption price at maturity of a Regular Certificate.
If the Regular Certificates are determined to be issued with original issue
discount, a holder of a Regular Certificate must generally include the original
issue discount in ordinary gross income for federal income tax purposes as it
accrues in advance of the receipt of any cash attributable to such income. The
amount of original issue discount, if any, required to be included in a Regular
Certificateholder's ordinary gross income for federal income tax purposes in any
taxable year will be computed in accordance with Section 1272(a) of the Code and
the OID Regulations. Under such Section and the OID Regulations, original issue
discount accrues on a daily basis under a constant yield method that takes into
account the compounding of interest. The amount of original issue discount to be
included in income by a holder of a debt instrument, such as a Regular
Certificate, under which principal payments may be subject to acceleration
because of prepayments of other debt obligations securing such instruments, is
computed by taking into account the Assumed Prepayment Rate.
The amount of original issue discount included in income by a holder of a
Regular Certificate is the sum of the "daily portions" of the original issue
discount for each day during the taxable year on which the holder held the
Regular Certificate. The daily portions of original issue discount are
determined by allocating to each day in any "accrual period" a PRO RATA portion
of the excess, if any, of the sum of (i) the present value of all remaining
payments to be made on the Regular Certificate as of the close of the "accrual
period" and (ii) the payments during the "accrual period" of amounts included in
the stated redemption price of the Regular Certificate over the "adjusted issue
price" of the Regular Certificate at the beginning of the "accrual period."
Generally, the "accrual period" for the Regular Certificates corresponds to the
intervals at which amounts are paid or compounded with respect to such Regular
Certificate, beginning with their date of issuance and ending with the maturity
date. The "adjusted issue price" of a Regular Certificate at the beginning of
any accrual period is the sum of the issue price and accrued original issue
discount for each prior accrual period reduced by the amount of payments other
than payments of qualified stated interest made during each prior accrual
period. The Code requires the present value of the remaining payments to be
determined on the bases of (a) the original yield to
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maturity (determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period), (b) events,
including actual prepayments, which have occurred before the close of the
accrual period, and (c) the assumption that the remaining payments will be made
in accordance with the original Assumed Prepayment Rate. The effect of this
method is to increase the portions of original issue discount that a Regular
Certificateholder must include in income to take into account prepayments on
Contracts held by the related Trust Fund that occur at a rate that exceeds the
Assumed Prepayment Rate and to decrease (but not below zero for any period) the
portions of original issue discount that a Regular Certificateholder must
include in income to take into account prepayments made on Contracts that occur
at a rate that is slower than the Assumed Prepayment Rate. Although original
issue discount will be reported to Regular Certificateholders based on the
Assumed Prepayment Rate, no representation is made to Regular Certificateholders
that the Contracts held by the related Trust Fund will be prepaid at that rate
or at any other rate.
A subsequent purchaser of a Regular Certificate also will be required to
include in such purchaser's ordinary gross income for federal income tax
purposes the original issue discount, if any, accruing with respect to such
Regular Certificate, unless the price paid equals or exceeds the sum of all
amounts payable on the Regular Certificate other than payments of qualified
stated interest. If the price exceeds the sum of the Regular Certificate's issue
price plus the aggregate amount of original issue discount accrued with respect
to the Regular Certificate, but does not equal or exceed the sum of all amounts
payable on the Regular Certificate other than payments of qualified stated
interest, the amount of original issue discount to be accrued will be reduced in
accordance with a formula set forth in Section 1272(a)(7)(B) of the Code.
Bank of America and BankAmerica Housing Services believe, upon the advice of
Morrison & Foerster LLP, special tax counsel to Bank of America and BankAmerica
Housing Services, that the holder of a Regular Certificate determined to be
issued with non-DE MINIMIS original issue discount will be required to include
the original issue discount in ordinary gross income for federal income tax
purposes computed in the manner described above. However, the OID Regulations
either do not address or are subject to varying interpretations with respect to
several issues concerning the computation of original issue discount for
obligations such as the Regular Certificates.
3. VARIABLE RATE REGULAR CERTIFICATES. Regular Certificates may bear
interest at a variable rate. Under the OID Regulations, if a variable rate
Regular Certificate provides for qualified stated interest payments computed on
the basis of certain qualified floating rates or objective rates, then any
original issue discount on such a Regular Certificate is computed and accrued
under the same methodology that applies to Regular Certificates paying qualified
stated interest at a fixed rate. See the discussion above under "-- 2. Original
Issue Discount." Accordingly, if the issue price of such a Regular Certificate
is equal to its stated redemption price at maturity, the Regular Certificate
will not have any original issue discount.
For purposes of applying the original issue discount provisions of the Code,
all or a portion of the interest payable with respect to a variable rate Regular
Certificate may not be treated as qualified stated interest in certain
circumstances, including the following: (i) if the variable rate of interest is
subject to one or more minimum or maximum rate floors or ceilings which are not
fixed throughout the term of the Regular Certificate and which are reasonably
expected as of the issue date to cause the rate in certain accrual periods to be
significantly higher or lower than the overall expected return on the Regular
Certificate determined without such floor or ceiling; (ii) if it is reasonably
expected that the average value of the variable rate during the first half of
the term of the Regular Certificate will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the term of the Regular Certificate; or (iii) if interest is not payable in
all circumstances. In these situations, as well as others, it is unclear under
the OID Regulations whether such interest payments constitute qualified stated
interest payments, or must be treated either as part of a Regular Certificate's
stated redemption price at maturity resulting in original issue discount, or
represent contingent payments which are recognized as ordinary gross income for
federal income tax purposes only as the interest payments become fixed in each
accrual period.
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If a variable rate Regular Certificate is deemed to have been issued with
original issue discount, as described above, the amount of original issue
discount accrues on a daily basis under a constant yield method that takes into
account the compounding of interest; provided, however, that the interest
associated with such a Regular Certificate generally is assumed to remain
constant throughout the term of the Regular Certificate at a rate that, in the
case of a qualified floating rate, equals the value of such qualified floating
rate as of the issue date of the Regular Certificate, or, in the case of an
objective rate, at a fixed rate that reflects the yield that is reasonable
expected for the Regular Certificate. A holder of such a Regular Certificate
would then recognize original issue discount during each accrual period which is
calculated based upon such Regular Certificate's assumed yield to maturity,
adjusted to reflect the difference between the assumed and actual interest rate.
The OID Regulations either do not address or are subject to varying
interpretations with respect to several issues concerning the computation of
original issue discount with respect to the Regular Certificates, including
variable rate Regular Certificates. Additional information regarding the manner
of reporting original issue discount to the Service and to the holders of
variable rate Regular Certificates will be set forth in the Prospectus
Supplement relating to the issuance of such Regular Certificates.
4. PREMIUM. A holder of a Regular Certificate that purchases such Regular
Certificate at a cost (net of accrued interest) greater than its remaining
stated redemption price at maturity will be considered to have purchased such
Regular Certificate at a premium equal to the excess of such cost over such
remaining stated redemption price, and may, under Section 171 of the Code, if
the holder holds the Regular Certificate as a capital asset within the meaning
of Section 1221 of the Code, elect to amortize such premium under a constant
yield method over the life of the Regular Certificate. Although not free from
doubt, the Assumed Prepayment Rate should be taken into account in determining
the life of the Regular Certificate for this purpose. Such amortized premium is
generally treated as an offset to the amount of interest income from such
Regular Certificate, rather than as a separate interest deduction. An election
made by a holder under Section 171 of the Code would generally apply to the
premium on all debt instruments held for investment by the holder at any time
after the beginning of the taxable year in which such election is made, unless
the election is revoked with the Service's consent.
5. MARKET DISCOUNT. A purchaser of a Regular Certificate may also be
subject to the market discount rules. Market discount is generally the excess of
(i) in the case of a Regular Certificate issued with original issue discount,
the revised issue price, or (ii) in the case of a Regular Certificate issued
without original issue discount, its principal balance, over the holder's basis
in such Regular Certificate. Such purchaser will recognize gain upon receipt of
a principal distribution on the Regular Certificate, whether it is received on
the date on which such payment is scheduled to be made or as a prepayment. In
particular, the holder will be required to allocate that principal distribution
first to the portion of the market discount on such Regular Certificate that has
accrued, but has not previously been included in income, and will recognize
ordinary income to that extent. In general terms, market discount on a Regular
Certificate may be treated, at the holder's election, as accruing under either
(i) a constant yield method or (ii) in proportion to remaining accruals of
original issue discount (or, if there is no original issue discount, in
proportion to remaining accruals of interest at the applicable Pass-Through
Rate), in each case taking into account the Assumed Prepayment Rate. Such
purchaser also generally will be required to treat a portion of any gain on a
sale or exchange of the Regular Certificate as ordinary income to the extent of
the discount accrued, but unrecognized, to the date of disposition under one of
the foregoing methods. As an alternative to the inclusion of market discount in
income on the foregoing basis, the holder may elect 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. Such an election may be revoked
only with the consent of the Secretary of the Treasury.
In addition, deductions for a portion of a Regular Certificateholder's
interest expense on any debt incurred or continued to purchase or carry a
Regular Certificate purchased with market discount may be deferred. The deferred
portion of any interest deduction would not exceed the portion of the market
discount on such Regular Certificate that accrues during the taxable year in
which such interest would otherwise be deductible, and generally would be
deductible when such market discount is included in
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income, upon receipt of a principal distribution on, or sale of, such Regular
Certificate. The interest deferral rule will not apply if the Certificateholder
elects to include market discount in income currently as it accrues, as
described above. Each Trust Fund for which a REMIC election is made will report
annually to certain categories of its Regular Certificateholders and the Service
information necessary to compute accruals of market discount.
Notwithstanding the above rules, market discount on a Regular Certificate
will be considered to be zero if such discount is less than 0.25% of the
remaining principal amount (or, in the case of a Regular Certificate issued with
original issue discount, the remaining stated redemption price at maturity) of
the Regular Certificate multiplied by its weighted average remaining maturity.
The weighted average remaining maturity of the Regular Certificate presumably
would be calculated in a manner similar to the weighted average maturity
described above under "-- 2. Original Issue Discount," taking into account
distributions (including distributions of prepayments) prior to the date of
acquisition of such Regular Certificate by the holder. If market discount on a
Regular Certificate is considered to be zero under this rule, the actual amount
of such discount must be allocated to the remaining principal distributions on
such Regular Certificate and when each such distribution is received, gain equal
to the discount allocated to such distribution will be recognized. Treasury
regulations implementing the market discount rules have not yet been issued, and
therefore investors should consult with their own tax advisors regarding the
application of these rules as well as the advisability of making any of the
elections with respect thereto.
6. EFFECTS OF DEFAULTS OR DELINQUENCIES. Certain Series of Certificates may
contain one or more Classes of Subordinate Certificates. In the event there are
defaults or delinquencies on Contracts in the related Trust Fund, amounts that
would otherwise be distributed on the Subordinate Certificates may instead be
distributed on the Senior Certificates. Holders of Subordinate Certificates
nevertheless will be required to report interest income with respect to such
Certificates (including original issue discount) as such income accrues without
giving effect to delays or reductions in distributions on such Subordinate
Certificates attributable to defaults and delinquencies on such Contracts,
except to the extent that it can be established that the undistributed amounts
are not collectible. As a result, the amount of income reported by a holder of a
Subordinate Certificate in any period could significantly exceed the amount of
cash distributed to such holder in that period. The holder will eventually be
allowed a loss (or will be allowed to report a lesser amount of income) to the
extent that the aggregate amount of distributions on the Subordinate Certificate
is reduced as a result of defaults or delinquencies on the related Contracts.
However, the timing of such losses or reductions in income is uncertain, and in
some circumstances losses could be capital losses that generally can be offset
only with capital gains. Holders of Subordinate Certificates should consult
their own tax advisors on these points.
7. SALES OF CERTIFICATES. If a Regular Certificate is sold or exchanged,
the seller will recognize gain or loss equal to the difference, if any, between
the amount realized (net of accrued interest) and its adjusted basis in such
Regular Certificate. A seller's adjusted basis generally will equal the cost of
such Regular Certificate to the seller, increased by any original issue discount
reported by such seller with respect to such Regular Certificate and reduced
(but not below zero) by distributions received by such seller and by any
amortized premium. Except as described above with respect to under "-- 5. Market
Discount" and with respect to the next three paragraphs, any such gain or loss
will be capital gain or loss provided the Regular Certificate is held as a
capital asset, and will be long term or short term depending upon whether the
Regular Certificate has been held for more than one year.
Gain from the disposition of a Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent that such gain
does not exceed the excess, if any, of (i) the amount that would have been
includable in the seller's gross income had income accrued at a rate equal to
110% of "the applicable Federal rate" under Section 1274(d) of the Code
(generally, an average yield of United States Treasury obligations of different
ranges of maturities published monthly by the Service), determined as of the
date of purchase of such Regular Certificate, over (ii) the amount of income
actually includable in the gross income of the seller with respect to the
Regular Certificate.
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Regular Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, and accordingly, gain or loss recognized from
a sale of a Regular Certificate by a bank or thrift institution to which such
section applies would be ordinary income or loss.
If Bank of America and BankAmerica Housing Services, or either of them, is
determined to have intended on the date of issue of the Regular Certificates to
call all or any portion of the Regular Certificates prior to their stated
maturity within the meaning of Section 1271(a)(2)(A) of the Code, any gain
realized upon a sale, exchange, retirement, or other disposition of a Regular
Certificate would be considered ordinary income to the extent it does not exceed
the unrecognized portion of the original issue discount, if any, with respect to
the Regular Certificate. The OID Regulations provide that the intention to call
rule will not be applied to mortgage-backed securities such as the Regular
Certificates. In addition, under the OID Regulations, a mandatory sinking fund
or call option is not evidence of an intention to call.
8. PASS-THROUGH OF EXPENSES OTHER THAN INTEREST. If a Trust Fund for which
a REMIC election is made is considered a "single-class REMIC" (as defined
below), a portion of such Trust Fund's servicing, administrative and other
non-interest expenses will be allocated as a separate item to those Regular
Certificateholders that are "pass-through interest holders" (as defined below).
Such a holder would be required to add its allocable share, if any, of such
expenses to its gross income and to treat the same amount as an item of
investment expense. An individual would generally be allowed a deduction for
such an expense item for regular tax purposes only as a miscellaneous itemized
deduction subject to the limitation under Section 67 of the Code, and may not be
allowed any deduction for such item for purposes of the alternative minimum tax.
Section 67 of the Code allows deductions for miscellaneous itemized deductions
only to the extent that in the aggregate they exceed 2% of an individual's
adjusted gross income. The Revenue Reconciliation Act of 1990 further limits the
itemized deductions allowed to certain individuals. If so specified in the
related Prospectus Supplement, the applicable Agreement will require each holder
to give the Trust Fund written notice immediately upon becoming a holder, if it
is a pass-through interest holder, or is holding a Regular Certificate on behalf
of a pass-through interest holder. The Trust Fund will report to each holder
that has given the Trust Fund such notice (and others if it is required) and to
the Service, each such holder's allocable share, if any, of the Trust Fund's
noninterest expenses. Generally, a "single-class REMIC" is defined as (i) a
REMIC that would be treated as an investment trust under Treasury regulations
but for its qualification as a REMIC or (ii) a REMIC that is substantially
similar to an investment trust but is structured with the principal purpose of
avoiding the allocation requirement imposed under Section 67 of the Code. The
term "pass-through interest holder" generally refers to individuals, entities
taxed as individuals and certain pass-through entities, but does not include
real estate investment trusts. Such investors should consult their own tax
advisors regarding consequences to them of the allocation of the Trust Fund's
non-interest expenses. In addition, the amount of itemized deductions otherwise
allowable for the taxable year of an individual whose adjusted gross income
exceeds certain thresholds will be reduced.
9. TAXATION OF CERTAIN FOREIGN INVESTORS. For purposes of this discussion,
a "Foreign Holder" is a Certificateholder who holds a Regular Certificate and
who is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership, or other entity organized in or under the laws of the United States
or a political subdivision thereof or (iii) an estate or trust, the income of
which is included in gross income for United States tax purposes regardless of
its source. Unless the interest on a Regular Certificate is effectively
connected with the conduct by the Foreign Holder of a trade or business within
the United States, the Foreign Holder is not subject to federal income or
withholding tax on interest (or original issue discount, if any) on a Regular
Certificate (subject to possible backup withholding of tax, discussed below),
provided the Foreign Holder is not a controlled foreign corporation related to
Bank of America or BankAmerica Housing Services and does not own actually or
constructively 10% or more of the voting stock of Bank of America or BankAmerica
Housing Services. To qualify for this tax exemption, the Foreign Holder will be
required to provide periodically a statement signed under penalties of perjury
certifying that the Foreign Holder meets the requirements for treatment as a
Foreign Holder and providing the Foreign Holder's name and address. The
statement, which may be made on a Form W-8 or
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substantially similar substitute form, generally must be provided in the year a
payment occurs or in either of the two preceding years. The statement must be
provided either directly or through a clearing organization or financial
institution. This exemption may not apply to a Foreign Holder that owns directly
or indirectly both Regular Certificates and Residual Certificates. If the
interest on a Regular Certificate is effectively connected with the conduct by a
Foreign Holder of a trade or business within the United States, then the Foreign
Holder will be subject to tax at regular graduated rates. Foreign Holders should
consult their own advisors regarding the specific tax consequences of their
owning a Regular Certificate.
Any gain recognized by a Foreign Holder upon a sale, retirement or other
taxable disposition of a Regular Certificate generally will not be subject to
United States federal income tax unless either (i) the Foreign Holder is a
non-resident alien individual who holds the Regular Certificate as a capital
asset and who is present in the United States for 183 days or more in the
taxable year of the disposition and either the gain is attributable to an office
or other fixed place of business maintained in the United States by the
individual or the individual has a "tax home" in the United States, or (ii) the
gain is effectively connected with the conduct by the Foreign Holder of a trade
or business within the United States.
A Regular Certificate will not be included in the estate of a Foreign Holder
who does not own actually or constructively 10% or more of the voting stock of
Bank of America or BankAmerica Housing Services. Regular Certificateholders who
are non-U.S. Persons and persons related to such holders should not acquire any
Residual Certificates, and Residual Certificateholders and persons related to
Residual Certificateholders should not acquire any Regular Certificates without
consulting their tax advisors as to the possible adverse tax consequences of
doing so.
10. BACKUP WITHHOLDING. Under certain circumstances, a REMIC
Certificateholder may be subject to "backup withholding" at a 31% rate. Backup
withholding may apply to a REMIC Certificateholder who is a United States person
if the holder, among other circumstances, fails to furnish his Social Security
number or other taxpayer identification number to the Trustee. Backup
withholding may apply, under certain circumstances, to a REMIC Certificateholder
who is a foreign person if the REMIC Certificateholder fails to provide the
Trustee or the REMIC Certificateholder's securities broker with the statement
necessary to establish the exemption from federal income and withholding tax on
interest on the REMIC Certificates. Backup withholding, however, does not apply
to payments on a Certificate made to certain exempt recipients, such as
corporations and tax-exempt organizations, and to certain foreign persons. REMIC
Certificateholders should consult their tax advisors for additional information
concerning the potential application of backup withholding to payments received
by them with respect to a Certificate.
11. REPORTING REQUIREMENTS. The Servicer will report annually to the
Service, to holders of record of the Regular Certificates that are not excepted
from the reporting requirements and, to the extent required by the Code, to
other interested parties, information with respect to the interest paid or
accrued on the Regular Certificates, original issue discount, if any, accruing
on the Regular Certificates and information necessary to compute the accrual of
any market discount or the amortization of any premium on the Regular
Certificates.
D. TAXATION OF RESIDUAL CERTIFICATES. The discussion under this heading
applies only to a Series of Certificates with respect to which a REMIC election
is made and to Residual Certificates. Such Residual Certificates will be subject
to tax rules, described below, that differ from those that would apply if they
were treated for federal income tax purposes as direct ownership interests in
the related Trust Fund or as debt instruments issued by such Trust Fund.
1. GENERAL. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not generally subject to federal income tax. Rather, the
taxable income of a REMIC is taken into account by the holders of REMIC residual
interests.
In general, each original holder of a Residual Certificate will report on
its federal income tax return, as ordinary income, its share of the "daily
portion" of the taxable income of the Trust Fund for each day during the taxable
year on which such Residual Certificateholder held a Residual Certificate. The
"daily portion" of the taxable income of the Trust Fund is determined by
allocating to each day in any calendar
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quarter its ratable portion of the taxable income or net loss of the Trust Fund
for such quarter, and such Residual Certificateholder's share of the "daily
portion" is based on the portion of outstanding Residual Certificates that such
Residual Certificateholder owns on such day. REMIC taxable income will be
taxable to the Residual Certificateholders without regard to the timing or
amounts of cash distributions by the REMIC. Ordinary income derived from
Residual Certificates will be "portfolio income" for purposes of the taxation of
taxpayers subject to the limitation on the deductibility of "passive losses." As
residual interests, the Residual Certificates will be subject to tax rules,
described below, that differ from those that would apply if the Residual
Certificates were treated for federal income tax purposes as direct ownership
interests in the Certificates, or as debt instruments issued by the REMIC. UNDER
CERTAIN CIRCUMSTANCES, A RESIDUAL CERTIFICATEHOLDER MAY BE REQUIRED TO RECOGNIZE
FOR A GIVEN PERIOD INCOME SUBSTANTIALLY IN EXCESS OF DISTRIBUTIONS MADE ON THE
RESIDUAL CERTIFICATES.
A subsequent Residual Certificateholder also will report on its federal
income tax return amounts representing a daily share of the taxable income of
the Trust Fund for each day that such Residual Certificateholder held such
Residual Certificate. Those daily amounts generally would equal the amounts,
described above, that would have been reported for the same days by a holder of
a Residual Certificate (an "Original Holder") that purchased such Residual
Certificate at its original issuance and held it continuously thereafter. As
discussed below, the taxable income of the Trust Fund will be calculated based
in part on the initial tax basis to the Trust Fund of its assets, which in turn
equals the sum of the issue prices of the Residual Certificates and each Class
of Regular Certificates. The legislative history of the 1986 Act indicates that
certain adjustments may be appropriate to reduce (or increase) the income of a
subsequent Residual Certificateholder that purchased such Residual Certificate
at a price greater than (or less than) the adjusted basis (as defined below in
"Distributions") such Residual Certificate would have in the hands of an
Original Holder. For the present, however, adjustments are apparently not
permitted or required.
2. DISTRIBUTIONS. A holder's adjusted basis in a Residual Certificate will
equal the purchase price of such Residual Certificate, increased by the amount
of the related Trust Fund's taxable income that is allocated to the holder of
such Residual Certificate, and decreased (but not below zero) by the amount of
distributions received thereon by such holder and the Trust Fund's net losses
allocated to such holder. Payments on a Residual Certificate (whether at their
scheduled times or as a result of prepayments) will generally not result in any
taxable income or loss to the holder of a Residual Certificate. If the amount of
such payment exceeds a holder's adjusted basis in its Residual Certificate,
however, the holder will recognize gain (treated as gain from the sale or
exchange of its Residual Certificate) to the extent of such excess. See "-- 10.
Sale or Exchange" below.
3. TAXABLE INCOME OF THE TRUST FUND. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except that (i) the limitation on deductibility of
investment interest expense and expenses for the production of income do not
apply, (ii) all bad loans will be deductible as business bad debts, and (iii)
the limitation on the deductibility of interest and expenses related to
tax-exempt income will apply. In general, the Trust Fund's taxable income will
reflect a netting of (i) the gross income produced by the assets of the Trust
Fund, including the stated interest and any original issue discount or market
discount income on the Contracts in the related Contract Pool (net of any
amortized premium on such Contracts), income from the investment or reinvestment
of cash flows and, if applicable, reserve assets, and amortization of any issue
premium with respect to the Regular Certificates and (ii) deductions, including
stated interest and original issue discount expense on Regular Certificates that
would be permitted if the Regular Certificates were indebtedness of the Trust
Fund, servicing fees, and other administrative expenses of the Trust Fund
(except as described below under "-- 5. Expenses Other Than Interest"). If there
is more than one Class of Regular Certificates, deductions allowed to the Trust
Fund with respect to the Regular Certificates will generally be calculated
separately with respect to each Class based on the yield of that Class.
For purposes of determining its taxable income, the Trust Fund will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the Regular Certificates and the Residual
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Certificates. Such aggregate basis will be allocated first to cash and cash
equivalents held by the Trust Fund and then among the individual Contracts and
other assets of the Trust Fund in proportion to their respective fair market
values. The issue price of a Certificate of a Class (whether Regular
Certificates or Residual Certificates) that is publicly offered will be the
initial offering price to the public (excluding bond houses and brokers) at
which a substantial amount of the Certificates of that Class is sold, and if not
publicly offered will be the fair market value of that Certificate at the time
of issuance. If a Residual Certificate has a negative value, it is not clear
whether its issue price would be considered to be zero or such negative amount
for purposes of determining the REMIC's basis in its assets. The REMIC
Regulations imply that residual interest cannot have a negative basis or a
negative issue price. However, the preamble to the REMIC Regulations indicates
that, while existing tax rules do not accommodate such concepts, the Service is
considering the tax treatment of these types of residual interests, including
the proper tax treatment of a payment made by the transferor of such a residual
interest to induce the transferee to acquire that interest. Absent regulations
or administrative guidance to the contrary, and unless the related Prospectus
Supplement otherwise provides, it is not expected that any Trust Fund as to
which a REMIC election is made will treat a Class of Residual Certificates as
having a value of less than zero for purposes of determining the basis of the
related REMIC in its assets.
If a Trust Fund acquires a Contract and the principal amount of such
Contract (or revised issue price in the case of a Contract issued with original
issue discount) exceeds the Trust Fund's basis in such Contract by more than a
DE MINIMIS amount (as described above in "C. Taxation of Regular Certificates --
5. Market Discount"), such discount would generally be includable in the Trust
Fund's income as it accrues, in advance of receipt of the cash attributable to
such income, under a constant yield method, similar to the method for accruing
original issue discount on Regular Certificates described above in "C. Taxation
of Regular Certificates -- 2. Original Issue Discount." The Trust Fund's
deductions for original issue discount expense with respect to Regular
Certificates also will be determined under those rules, except that the DE
MINIMIS rule that may apply to holders of Regular Certificates and the
adjustments for holders of Regular Certificates that purchase their Certificates
at a price greater than the adjusted issue price described therein will not
apply.
If the basis of the Trust Fund exceeds the remaining stated redemption price
at maturity of such a Contract, the Trust Fund will be considered to have
acquired such Contract at a premium equal to the amount of such excess. In the
event that any Contract in the Contract Pool is acquired by the Trust Fund at a
premium, the Trust Fund will be entitled to amortize such premium on a
yield-to-maturity basis. Although the matter is not free from doubt, the Trust
Fund intends to make this calculation using a reasonable prepayment assumption.
If a Class of Regular Certificates is issued at a price in excess of the
aggregate principal amount of such Class (the excess, the "Issue Premium"), the
portion of the Issue Premium that is considered to be amortized during a taxable
year will be treated as ordinary income of the Trust Fund for such taxable year.
Although the matter is not entirely certain, it is likely that the 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 "C. Taxation of
Regular Certificates -- 2. Original Issue Discount."
The taxable income recognized by a holder of a Residual Certificate also may
be greater in earlier years because the REMIC will use a constant yield in
computing income from the Contracts and interest deductions with respect to
Regular Certificates, expressed as a percentage of the outstanding principal
amount of the Regular Certificates, may increase over time as earlier Classes
are paid. This method of taxation of Residual Certificates can produce a
significantly less favorable after-tax return for a Residual Certificate than if
it were taxed as a debt instrument.
A Residual Certificateholder will not be permitted to amortize the cost of
its Residual Certificate as an offset to its share of the taxable income of the
Trust Fund. However, that taxable income will not include cash received by the
Trust Fund that represents a recovery of the Trust Fund's basis in its assets,
and, as described above, the issue price of the Residual Certificates will be
added to the issue price of Regular Certificates in determining the Trust Fund's
initial basis in its assets. Such recovery of basis by the Trust
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Fund will have the effect of amortization of the issue price of the Residual
Certificates over the life of the Trust Fund's assets. However, in view of the
possible acceleration of the income of holders of Residual Certificates
described above, the period of time over which such issue price is effectively
amortized may be longer than the economic life of the Residual Certificates.
THE METHOD OF TAXATION OF RESIDUAL CERTIFICATES DESCRIBED ABOVE CAN PRODUCE
A SIGNIFICANTLY LOWER AFTER-TAX YIELD FOR A RESIDUAL CERTIFICATE THAN WOULD BE
THE CASE IF (I) RESIDUAL CERTIFICATES WERE TAXABLE IN THE SAME MANNER AS DEBT
INSTRUMENTS ISSUED BY THE TRUST FUND OR (II) NO PORTION OF THE TAXABLE INCOME ON
THE RESIDUAL CERTIFICATES IN EACH PERIOD WERE TREATED AS "EXCESS INCLUSIONS" (AS
DEFINED BELOW). IN CERTAIN PERIODS, TAXABLE INCOME AND THE RESULTING TAX
LIABILITY ON A RESIDUAL CERTIFICATE ARE LIKELY TO EXCEED PAYMENTS RECEIVED
THEREON. IN ADDITION, A SUBSTANTIAL TAX MAY BE IMPOSED ON CERTAIN TRANSFERORS OF
THE RESIDUAL CERTIFICATES AND CERTAIN BENEFICIAL OWNERS OF THE RESIDUAL
CERTIFICATES THAT ARE "PASS-THRU" ENTITIES. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE PURCHASING A RESIDUAL CERTIFICATE.
4. NET LOSSES OF THE TRUST FUND. The Trust Fund will have a net loss for a
calendar quarter if its deductions for that calendar quarter exceed its gross
income for that calendar quarter. The net loss allocable to any Residual
Certificate will not be deductible by the holder to the extent that such net
loss exceeds such holder's adjusted basis (as defined above in "-- 2.
Distributions") in such Residual Certificate at the end of the calendar quarter
in which such loss arises (or the time of disposition of the Residual
Certificate, if earlier), determined without taking into account the net loss
for such quarter. Any net loss that is not currently deductible by reason of
this limitation may be carried forward indefinitely, but may be used only to
offset taxable income of the same Trust Fund subsequently allocated to such
Residual Certificateholder. The ability of Residual Certificateholders that are
individuals or closely-held corporations to deduct net losses may be subject to
additional limitations under the Code.
5. EXPENSES OTHER THAN INTEREST. Except in the limited circumstance when
the Trust Fund is considered a "single-class REMIC" (as defined above in "C.
Taxation of Regular Certificates -- 8. Pass-Through of Expenses Other Than
Interest"), the Trust Fund's servicing, administrative and other noninterest
expenses will be allocated entirely to the Residual Certificateholders. In the
case where the Trust Fund is considered a single-class REMIC, such expenses will
be allocated proportionately among Regular and Residual Certificateholders. See
"C. Taxation of Regular Certificates -- 8. Pass-Through of Expenses Other Than
Interest." In either case, such expenses will be allocated as a separate item to
those holders that are "pass-through interest holders" (as defined above in "C.
Taxation of Regular Certificates -- 8. Pass-Through of Expenses Other Than
Interest"). Such a holder would be required to add its allocable share, if any,
of such expenses to its gross income and treat the same amount as an item of
investment expense. Limitations on the deductibility of such expenses are
described above in "C. Taxation of Regular Certificates -- 8. Pass-Through of
Expenses Other Than Interest." The related Agreement will require each holder to
give the Trust Fund written notice upon becoming a holder if it is a
pass-through interest holder, or is holding a Residual Certificate on behalf of
a pass-through interest holder. The Trust Fund will report quarterly to each
holder of a Residual Certificate during any calendar quarter that has given the
Trust Fund such notice (and others if it is required) and to the Service
annually such holder's allocable share, if any, of the Trust Fund's non-interest
expenses. Such investors should consult their tax advisors in determining the
consequences to them of the allocation of the Trust Fund's non-interest
expenses.
6. PROHIBITED TRANSACTIONS; SPECIAL TAXES. Income from certain transactions
by the REMIC, called prohibited transactions, will not be part of the
calculation of income or loss includable in the federal income tax returns of
Residual Certificateholders, but rather will be taxed directly to the REMIC at a
100% rate. Prohibited transactions generally include (i) the disposition of
qualified mortgages other than pursuant to a (a) substitution for a defective
mortgage within two years or for any qualified mortgage within three months of
the specified Startup Date, (b) repurchase of a defective mortgage, (c)
foreclosure, default, or imminent default of a qualified mortgage, (d)
bankruptcy or insolvency of the REMIC or (e) qualified (complete) liquidation,
(ii) the receipt of income from assets that are not the type of mortgage loans
or investments that the REMIC is permitted to hold, (iii) the receipt of
compensation
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for services or (iv) the receipt of gain from disposition of cash flow
investments other than pursuant to a qualified (complete) liquidation. The Trust
Fund will be subject to a tax equal to 100% of the amount of any contributions
of property made to the Trust Fund after the Startup Day, except for certain
cash contributions specified in Section 860G(d) of the Code. An additional tax
may be imposed on the Trust Fund, at the highest marginal federal corporate
income tax rate, on certain net income from foreclosure property.
It is anticipated that the Trust Fund will not engage in any prohibited
transactions in which it would recognize a material amount of net income or
receive substantial contributions of property after the Startup Date. However,
if the Trust Fund is subject to the tax on prohibited transactions or
contributions, such tax would generally be borne by the Residual
Certificateholders.
7. EXCESS INCLUSIONS. A portion of the income of the Trust Fund allocable
to a Residual Certificateholder referred to in the Code as an "excess inclusion"
will, with an exception for certain thrift institutions, be subject to federal
income tax in all events. (Excess inclusions are defined below.) Thus, for
example, an excess inclusion (i) may not, except with respect to certain thrift
institutions, be offset by any unrelated losses or net operating loss carryovers
of a Residual Certificateholder, (ii) will be treated as "unrelated business
taxable income" within the meaning of Section 512 of the Code if the Residual
Certificateholder is a pension fund or any other organization that is subject to
tax only on its unrelated business taxable income and (iii) is not eligible for
any reduction in the rate of withholding tax in the case of a Residual
Certificateholder that is a foreign investor, as further discussed in "-- 13.
Foreign Investors" below. In addition, if a real estate investment trust,
regulated investment company, or certain pass-through entities own a Residual
Certificate, a portion of dividends paid by such entities would be treated as
excess inclusions in the hands of its shareholders with the same consequences as
excess inclusions attributed directly to a Residual Certificateholder.
Except as discussed in the following paragraph, with respect to any Residual
Certificateholder, the excess inclusion for any calendar quarter will equal the
excess, if any, of (i) the amount of the Trust Fund's taxable income for the
calendar quarter allocable to the Residual Certificateholder, over (ii) the sum
of the "daily accruals" (as defined below) for all days during the calendar
quarter on which the Residual Certificateholder held such Residual Certificate.
For this purpose, daily accruals with respect to a Residual Certificateholder
will be calculated by allocating to each day in such calendar quarter its
ratable portion of the product of (i) the "adjusted issue price" (as defined
below) of the Residual Certificate at the beginning of such calendar quarter,
and (ii) 120% of the "long-term Federal rate" (defined below), calculated on the
issue date of the Residual Certificate as if it were a debt instrument and based
on quarterly compounding. For this purpose, the "adjusted issue price" of a
Residual Certificate at the beginning of any calendar quarter will equal its
issue price, increased by the aggregate of the daily accruals for all prior
calendar quarters and the amount of any contributions made to the Trust Fund
with respect to the Residual Certificates after the Startup Date, and decreased
(but not below zero) by the aggregate amount of distributions made with respect
to the Residual Certificate before the beginning of such calendar quarter. 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 Service. As an exception to the general rule described above, the
Treasury has authority to issue regulations that would treat 100% of the income
accruing on a Residual Certificate as an excess inclusion, if the Residual
Certificates, in the aggregate, are considered not to have "significant value."
The REMIC Regulations, however, do not contain such a rule.
As discussed above, thrift organizations to which Section 593 of the Code
applies are excepted from the general rule that excess inclusions are, in all
events, subject to taxation. However, the REMIC Regulations prohibit thrift
institutions from offsetting their excess inclusions with unrelated losses and
net operating loss carryovers if such Residual Certificates do not have
"significant value." A Residual Certificate has significant value if (i) the
aggregate of the issue prices of the Residual Certificates in the REMIC is at
least 2% of the aggregate of the issue prices of all Residual and Regular
Certificates of the REMIC and (ii) the "anticipated weighted average life" of
the Residual Certificate (as defined below) is at least 20% of the "anticipated
life of the REMIC" (as defined below). The anticipated weighted average life
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of the Residual Certificates is based on all anticipated payments to be received
with respect thereto (using the Assumed Prepayment Rate). The anticipated
weighted average life of the REMIC is the weighted average of the anticipated
weighted average lives of all Classes of Certificates in the REMIC (computed
using all anticipated payments on a Regular Certificate with nominal or no
principal). Finally, an ordering rule under the REMIC Regulations provides that
a thrift institution may only offset its excess inclusion income with deductions
after it has first applied its deductions against income that is not excess
inclusion income. If applicable, the Prospectus Supplement with respect to a
Series will set forth whether the related Residual Certificates are expected to
have "significant value."
8. EFFECT OF DEFAULTS AND DELINQUENCIES. The Residual Certificates of a
multiple-Class Series may be subordinate to one or more Classes of Regular
Certificates (for purposes of this paragraph, "Senior Certificates"), and, in
the event there are defaults or delinquencies on the Contracts in the related
Contract Pool, amounts that would otherwise be distributed on the Residual
Certificates may instead be distributed on the Senior Certificates. However, the
Trust Fund will generally be required to report income in respect of Contracts
(and deductions with respect to the Regular Certificates) without giving effect
to default and delinquencies, except to the extent it can be established that
amounts due on the Contracts are uncollectible. To the extent the income on a
delinquent or defaulted Contract is greater than the deduction allowed in
respect of interest on the Regular Certificate that relates to such Contract,
the Trust Fund may recognize net income without making corresponding
distributions of cash on the Residual Certificates, and holders of Residual
Certificates will be required to report their pro rata share of the net income
of the Trust Fund without regard to the timing and amount of cash distributed on
such Residual Certificates.
9. TAX ON TRANSFERS OF RESIDUAL CERTIFICATES TO CERTAIN ORGANIZATIONS. An
entity will not qualify as a REMIC unless there are reasonable arrangements
designed to ensure that residual interests in such entity are held by
"disqualified organizations" (as defined below). Restrictions on the transfer of
the Residual Certificates that are intended to meet this requirement will be
included in the related Agreement and are discussed more fully in "Restrictions
on Transfer of REMIC Residual Certificates." If, notwithstanding those
restrictions, a Residual Certificate is transferred to a "disqualified
organization," a tax would be imposed in an amount equal to the product of (i)
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. Under the REMIC
Regulations, the anticipated excess inclusions must be determined based on (i)
events that have occurred up to the time of the transfer and (ii) the project
payments based on the Assumed Prepayment Rate. The REMIC Regulations also
provide that the present value of the anticipated excess inclusions is
determined by discounting the anticipated excess inclusions as of the date of
the transfer using the applicable Federal rate under Section 1274(d)(1) of the
Code for the month of the transfer that would apply to a hypothetical obligation
with a term beginning on the date of the transfer and ending on the date the
life of the REMIC is anticipated to expire (as determined under rules described
above in "-- 7. Excess Inclusions"). Such a tax would generally be imposed on
the transferor of the 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 Residual Certificate (or an
agent for a disqualified organization) would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to such transferor (or
such agent) an affidavit that the transferee is not a disqualified organization,
and as of the time of the transfer the transferor or the agent does not have
actual knowledge that such affidavit is false.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations.
However, a pass-through entity will in no event be liable for such tax with
respect to a record holder
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if the record holder furnishes the pass-through entity with an affidavit that
the record holder is not a disqualified organization, and, as of the time the
record holder becomes such a holder, the pass-through entity does not have
actual knowledge that such affidavit is false.
For these purposes, the term "disqualified organization" means (i) the
United States, any State or political subdivision thereof, any possession of the
United States, any foreign government, any international organization, or any
agency or instrumentality of the foregoing (other than an instrumentality that
is a corporation if all of its activities are subject to tax and, except for the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by an such governmental unit), (ii) an organization (other than a
cooperative described in Section 521 of the Code) which is exempt from federal
income tax (including the tax imposed by Section 511 of the Code on unrelated
business taxable income) on excess inclusions or (iii) any organization
described in Section 1381(a)(2)(C) of the Code. For these purposes, the term
"pass-through entity" means any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate and certain
other entities described in Section 860E(e)(6) of the Code. Except as may be
provided in Treasury Regulations, any person holding an interest in a
pass-through entity as a nominee for another will, with respect to such
interest, be treated as a pass-through entity.
10. SALE OR EXCHANGE. If a Residual Certificate is sold or exchanged, the
seller will recognize gain or loss equal to the difference, if any, between the
amount realized and its adjusted basis in the Residual Certificate (as defined
above in "-- 2. Distributions") at the time of such sale or exchange (except
that the recognition of a loss may be limited under the "wash sale" rules
described below). In general, any such gain or loss will be capital gain or
loss, provided the Residual Certificate is held as a capital asset as defined in
Section 1221 of the Code. However, a Residual Certificate will be an "evidence
of indebtedness" within the meaning of Section 582(c)(1) of the Code, so that
gain or loss recognized from the sale of a Residual Certificate by a bank or
thrift institution to which such section applies would be ordinary income or
loss.
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury Regulations, the wash sale rules of Section 1091 of the
Code will apply to dispositions of Residual Certificates where the seller of the
Residual Certificate, during the period beginning six months before the sale or
disposition of the Residual Certificate and ending six months after such sale or
disposition, acquires (or enters into any other transaction that results in the
application of Section 1091 of the Code) any residual interest in any REMIC or
any interest in a "taxable mortgage pool" (such as a non-REMIC owner trust) that
is economically comparable to a Residual Certificate.
11. NONECONOMIC RESIDUAL INTERESTS. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC. Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" (as defined below) to a Residual Holder is disregarded for all federal
income tax purposes if a significant purpose of the transfer is to enable the
transferor to impede the assessment or collection of tax. A residual interest in
a REMIC (including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of transfer, (i) the present
value of the expected future distributions on the residual interest at least
equals the product of the present value of the anticipated excess inclusions and
the highest corporate income tax rate in effect for the year in which the
transfer occurs and (ii) the transferor reasonably expects that the transferee
will receive distributions from the REMIC at or after the time at which taxes
accrue on the anticipated excess inclusions in an amount sufficient to satisfy
the accrued taxes. The anticipated excess inclusions and the present value rate
are determined in the same manner as set forth above. The REMIC Regulations
explain that a significant purpose to impede the assessment or collection of tax
exists if the transferor at the time of the transfer either knew or should have
known that the transferee would be unwilling or unable to pay taxes due on its
share of the taxable income of the REMIC. A safe harbor is provided if (i) the
transferor conducted, at the time of the transfer, a reasonable investigation of
the financial condition of the transferee and, as a result of the investigation,
the transferor found that the transferee had historically
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paid its debts as they came due and found no significant evidence to indicate
that the transferee will not continue to pay its debts as they come due in the
future and (ii) the transferee represents to the transferor that it understands
that, as the holder of a non-economic residual interest, the transferee may
incur tax liabilities in excess of any cash flows generated by the interest and
that the transferee intends to pay taxes associated with holding the residual
interest as they become due. The Agreement with respect to each Series of REMIC
Certificates will require the transferee of a Residual Certificate to certify to
the statements in clause (ii) of the preceding sentence as part of the affidavit
described below under "Restrictions on Transfer of REMIC Residual Certificates."
12. TERMINATION. The Trust Fund related to a Series of Certificates will
terminate shortly following the retirement of Certificates in such Series. If a
Residual Certificateholder's adjusted basis in its Residual Certificate exceeds
the amount of cash distributed to such Residual Certificateholder in final
liquidation of its interest, then, although the matter is not entirely free from
doubt, it would appear that the Residual Certificateholder is entitled to a loss
equal to the amount of such excess.
13. FOREIGN INVESTORS. Unless otherwise provided in the applicable
Prospectus Supplement, no record or beneficial ownership interest in a Residual
Certificate may be transferred to a person that is a Foreign Holder (as defined
above in "C. Taxation of Regular Certificates -- 9. Taxation of Certain Foreign
Investors"). See "Restrictions on Transfer of REMIC Residual Certificates"
below. With respect to permitted transfers, Residual Certificateholders that are
Foreign Holders should assume that payments made on the Residual Certificates
they hold will be subject to a 30% withholding tax, or such a lesser rate as may
be provided under any applicable tax treaty, except that the rate of withholding
on any payments made on Residual Certificates that are excess inclusions will
not be subject to reduction under any applicable tax treaties. See "-- 7. Excess
Inclusions" above. Under the REMIC Regulations, a transfer of a residual
interest that has tax avoidance potential is disregarded for all federal income
tax purposes if the transferee is a Foreign Holder. The REMIC Regulations state
that a residual interest has tax avoidance potential unless, at the time of the
transfer, the transferor reasonably expects that, for each excess inclusion, the
REMIC will distribute to the transferee residual interest holder an amount that
will equal at least 30% of the excess inclusion, and that each such amount will
be distributed at or after the time at which the excess inclusion accrues and
not later than the close of the calendar year following the calendar year of
accrual. See "-- 9. Tax on Transfers of Residual Certificates to Certain
Organizations" above for rules regarding the determination of anticipated excess
inclusions. The above rules do not apply to transfers of Residual Certificates
if the transferee's income from the Residual Certificate would be effectively
connected with a United States trade or business of the transferee. The REMIC
Regulations also provide that a transfer of a Residual Certificate from a
Foreign Holder to a United States person or to a Foreign Holder in whose hands
the income from the Residual Certificate would be effectively connected with a
United States trade or business of the transferee will be disregarded if the
transfer has the effect of allowing the transferor to avoid tax on accrued
excess inclusions.
14. MARK-TO-MARKET OF RESIDUAL CERTIFICATES. Prospective purchasers of a
Residual Certificate should be aware that, under proposed regulations (the
"Proposed Mark-to-Market Regulations"), a Residual Certificate acquired after
January 3, 1995 cannot be marked-to-market. The Proposed Mark-to-Market
Regulations change the temporary regulations which allowed a Residual
Certificate to be marked-to-market provided that it was not a "negative value"
residual interest and did not have the same economic effect as a "negative
value" residual interest. Prospective purchasers of a REMIC Residual Certificate
should consult their tax advisors regarding the possible application of the
Temporary Mark-to-Market Treasury Regulations and Proposed Mark-to-Market
Treasury Regulations to REMIC Residual Certificates.
15. ADDITIONAL TAXABLE INCOME OF RESIDUAL INTERESTS. Any payment received
by a holder of a Residual Certificate in connection with the acquisition of such
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 includable in income immediately upon its receipt or
accrual as ordinary income, the IRS might assert that such payment should be
included in income over time
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according to an amortization schedule or according to some other method. Because
of the uncertainty concerning the treatment of such payments, holders of
Residual Certificates should consult their tax advisors concerning the treatment
of such payments for income tax purposes.
E. OTHER MATTERS RELATING TO REMIC CERTIFICATES; ADMINISTRATIVE
MATTERS. Solely for the purposes of the administrative provisions of the Code,
each Trust Fund for which a REMIC election is made will be treated as a
partnership, and the Residual Certificateholders will be treated as the partners
thereof. The Trust Fund must maintain its books on a calendar year basis and
must file federal information returns in a manner similar to a partnership for
federal income tax purposes. Certain information on such returns will be
furnished to each Residual Certificateholder. The Trust Fund also will be
subject to the procedural and administrative rules of the Code applicable to
partnerships, including rules for determining any adjustments to among other
things, items of REMIC income, gain, loss, deduction or credit by the Service in
a unified administrative proceeding. The holders of Residual Certificates will
generally be entitled to participate in audits of the Trust Fund by the Service
to the same extent as general partners in an audit of a partnership, Regular
Certificateholders will not be entitled to participate in any such audits.
Each Residual Certificateholder is required to treat items on its return
consistently with their treatment on the Trust Fund's return, unless the
Residual Certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the Trust Fund. The Service may assert a deficiency
resulting from a failure to comply with the consistency requirement without
instituting an administrative proceeding at the Trust Fund level. The Trust Fund
does not intend to register as a tax shelter pursuant to Section 6111 of the
Code because it is not anticipated that the Trust Fund will have a net loss for
any of the first five taxable years of its existence. Any person that holds a
Residual Certificate as a nominee for another person will be required to furnish
the Trust Fund, in a manner provided in Treasury Regulations, with the name and
address of such person, and other information.
Each Residual Certificateholder, by purchasing its Residual Certificate, (A)
shall be deemed to consent to the appointment of the Servicer as (i) the "tax
matters person" (within the meaning of Section 1.860F -- 4(d) of the REMIC
Regulations) for the Trust Fund and (ii) attorney-in-fact and agent for any
person that is the tax matters person if the Servicer is unable to serve as the
tax matters person, and (B) agrees to execute any documents required to give
effect to (A) above.
NON-REMIC CERTIFICATES
The discussion under this heading applies only to a Series of Certificates
with respect to which a REMIC election is not made ("Non-REMIC Certificates").
A. CHARACTERIZATION OF THE TRUST FUND. Upon the issuance of any Series of
Certificates with respect to which no REMIC election is made, Morrison &
Foerster LLP, special counsel to Bank of America and BankAmerica Housing
Services, will deliver its opinion generally to the effect that with respect to
each such Series of Certificates, under then existing law and assuming
compliance by the Seller(s), the Servicer and the Trustee of such Series with
all of the provisions of the related Agreement, and agreement or agreements, if
any, providing for a Credit Facility or a Liquidity Facility, together with any
agreement documenting the arrangement through which a Credit Facility or a
Liquidity Facility is held outside the related Trust Fund, the agreement or
agreements with any Underwriter, for federal income tax purposes, the Trust Fund
will be classified as a grantor trust and not as a corporation or an association
which is taxable as a corporation. Accordingly, each Non-REMIC Certificateholder
will be treated for federal income tax purposes as the owner of an undivided
interest in the Contracts and other assets included in the Trust Fund. As
further described below, each holder of a Non-REMIC Certificate must therefore
report on its federal income tax return the gross income from the portion of the
Contracts that is allocable to such Non-REMIC Certificate and may deduct its
share of the expenses paid by the Trust Fund that are allocable to such
Non-REMIC Certificate, at the same time and to the same extent as such items
would be reported by such holder if it had purchased and held directly such
interest in the Contracts and received directly its share of the payments on the
Contracts and paid directly its share of the expenses paid by the Trust Fund
when those amounts are received and paid by the Trust Fund. A
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Non-REMIC Certificateholder who is an individual will be allowed deductions for
such expenses only to the extent that the sum of those expenses and certain
other of the Non-REMIC Certificateholder's miscellaneous itemized deductions
exceeds 2% of such individual's adjusted gross income. In addition, the amount
of itemized deductions otherwise allowable for the taxable year of an individual
whose adjusted gross income exceeds certain thresholds will be reduced. Other
potential limitations on deductibility are described above in "REMIC
Certificates -- C. Taxation of Regular Certificates -- 8. Pass-Through of
Expenses Other Than Interest." Although not clear, it appears that expenses paid
by the Trust Fund, and the gross income used to pay such expenses, should be
allocated among the classes of Non-REMIC Certificates in proportion to their
respective fair market values at issuance.
Under current Service interpretations of applicable Treasury Regulations,
Bank of America or BankAmerica Housing Services would be able to sell or
otherwise dispose of any subordinated Non-REMIC Certificates. Accordingly, Bank
of America and BankAmerica Housing Services expect to offer subordinated
Non-REMIC Certificates for sale to investors. In general, such subordination
should not affect the federal income tax treatment of either the subordinated or
senior Certificates, and holders of subordinated classes of Certificates should
be able to recognize any losses allocated to such class when and if losses are
realized.
To the extent that any of the Contracts comprising a Contract Pool were
originated on or after March 21, 1984 and under circumstances giving rise to
original issue discount, Certificateholders will be required to report annually
an amount of additional interest income attributable to such discount in such
Contracts prior to receipt of cash related to such discount. See the discussion
above under "REMIC Certificates -- C. Taxation of Regular Certificates -- 2.
Original Issue Discount." Similarly, Code provisions concerning market discount
and amortizable premium will apply to the Contracts comprising a Contract Pool
to the extent that the loans were originated after July 18, 1984 and September
27, 1985, respectively. See the discussions above under "REMIC Certificates --
C. Taxation of Regular Certificates -- 5. Market Discount" and "REMIC
Certificates -- C. Taxation of Regular Certificates -- 4. Premium."
B. STATUS OF CERTIFICATES AS REAL PROPERTY LOANS. In general, the Non-REMIC
Certificates, other than "Premium Non-REMIC Certificates" (as defined below)
will be (i) "qualifying real property loans" within the meaning of Section
593(d) of the Code, (ii) "real estate assets" within the meaning of Section
856(c)(5)(A) of the Code and (iii) assets described in Section 7701(a)(19)(C) of
the Code to the extent the Trust Fund's assets qualify under those Sections of
the Code. Any amount includible in gross income with respect to the Non-REMIC
Certificates will be treated as "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 to the extent the income on the Trust Fund's assets
qualifies under that Code Section. The Treasury Regulations under Section 593 of
the Code define a "qualifying real property loan" to include a loan secured by a
mobile home unit "permanently fixed to real property." The Service has ruled
that obligations secured by permanently installed mobile home units qualify as
"real estate assets" under Section 856(c)(5)(A) of the Code. Assets described in
Section 7701(a)(19)(C) of the Code include loans secured by mobile homes not
used on a transient basis. However, whether Manufactured Homes would be viewed
as "permanently fixed" or permanently installed for purposes of Sections 593 or
856 of the Code would depend on the facts and circumstances of each case. The
Treasury Regulations under Section 593 of the Code provide, by way of example,
that a mobile home unit is permanently fixed to real property if, except for a
brief period in which the unit is transported to its site, such unit is placed
on a foundation at a site with wheels and axles removed, affixed to the ground
by means of straps, and connected to water, sewer, gas and electric facilities.
In this regard, investors should note that, unless stated otherwise in the
related Prospectus Supplement, most of the Contracts in the related Contract
Pool prohibit the Obligor from permanently attaching the related Manufactured
Home to its site if it were not so attached on the date of the Contract.
Non-REMIC Certificates that represent the right solely to interest payments on
the Contracts and Non-REMIC Certificates that are issued at prices that
substantially exceed the portion of the principal amount of the Contracts
allocable to such Non-REMIC Certificates (both types of Non-REMIC Certificates,
"Premium Non-REMIC Certificates") should qualify under
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the foregoing sections of the Code to the same extent as other Certificates, but
the matter is not free from doubt. Prospective purchasers of Certificates who
may be affected by the foregoing Code provisions should consult their tax
advisors regarding the status of the Certificates under such provisions.
C. TAXATION OF NON-REMIC CERTIFICATES UNDER STRIPPED BOND RULES. Unless the
Prospectus Supplement indicates otherwise, the Non-REMIC Certificates will be
subject to the "stripped bond" rules of Section 1286 of the Code (or, if the
application of those rules to a particular Series of Non-REMIC Certificates is
uncertain, the Trust Fund will take the position that they apply). There is some
uncertainty as to how that section will be applied to securities such as the
Non-REMIC Certificates. Investors should consult their own tax advisors
regarding the treatment of the Non-REMIC Certificates under the stripped bond
rules.
Under the stripped bond rules, in each month the holder of a Non-REMIC
Certificate (whether a cash or accrual method taxpayer) will be required to
report interest income from the Non-REMIC Certificate equal to the income that
accrues on the Non-REMIC Certificate in such month, calculated, in accordance
with the rules of the Code relating to original issue discount, under a constant
yield method. In general, the amount of such income reported in any month would
equal the product of such holder's adjusted basis in such Non-REMIC Certificate
at the beginning of such month (see " -- D. Sales of Certificates" below) and
the yield of such Non-REMIC Certificate to such holder. Such yield would be the
monthly rate (assuming monthly compounding) determined as of the date of
purchase that, if used in discounting the remaining payments on the portion of
the Contracts that is allocable to such Non-REMIC Certificate, would cause the
present value of those payments to equal the price at which the holder purchased
the Non-REMIC Certificate.
With respect to certain categories of debt instruments, the Code requires
the use of a reasonable prepayment assumption in accruing original issue
discount and provides a method of adjusting those accruals to account for
differences between the assumed prepayment rate and the actual rate. These rules
apply to "regular interests" in a REMIC and are described under "REMIC
Certificates -- C. Taxation of Regular Certificates -- 2. Original Issue
Discount." Regulations could be adopted applying these rules to the Non-REMIC
Certificates. It is unclear whether these rules would be applicable to the Non-
REMIC Certificates in the absence of such regulations or whether use of a
reasonable prepayment assumption may be required or permitted without reliance
on these rules. It is also uncertain, if a reasonable prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Non-REMIC Certificates or, with
respect to any holder, at the time of purchase of the Non-REMIC Certificate by
that holder. Finally, if these rules were applied to the Non-REMIC Certificates,
and the principles used in calculating the amount of original issue discount
that accrues in any month would produce a negative amount of original issue
discount, it is unclear when such loss would be allowed.
In the case of a Non-REMIC Certificate acquired at a price equal to the
principal amount of the Contracts allocable to such Non-REMIC Certificate, the
use of a reasonable prepayment assumption would not have any significant effect
on the yield used in calculating accruals of interest income. In the case,
however, of a Non-REMIC 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 the reporting of interest income,
respectively.
If the yield used by the holder of a Non-REMIC Certificate in calculating
the amount of interest that accrues in any month is determined based on
scheduled payments on the Contracts (that is, without using a reasonable
prepayment assumption) and such Non-REMIC Certificate was acquired at a discount
or premium, then such holder generally will recognize a net amount of ordinary
income or loss if a Contract prepays in full in an amount equal to the
difference between the portion of the prepaid principal amount of the Contract
that is allocable to the Non-REMIC Certificate and the portion of the adjusted
basis of the Non-REMIC Certificate (see "-- D. Sales of Certificates" below)
that is allocable to the
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Contract. In general, basis would be allocated among the Contracts in proportion
to their respective principal balances determined immediately before such
prepayment. It is not clear whether any other adjustments would be required or
permitted to take account of prepayments of the Contracts.
Solely for purposes of reporting income on the Non-REMIC Certificates to the
Service and to certain holders, as required under the Code, it is anticipated
that the yield of the Non-REMIC Certificates will be calculated based on (i) a
representative initial offering price of the Non-REMIC Certificates to the
public and (ii) a reasonable Assumed Prepayment Rate, which will be the rate
used in pricing the initial offering of the Non-REMIC Certificates. (Such yield
may differ significantly from the yield to any particular holder that would be
used in calculating the interest income of such holder.) No representation is
made that the Contracts will in fact prepay at the Assumed Prepayment Rate or at
any other rate.
D. SALES OF CERTIFICATES. Upon sale or exchange of a Non-REMIC Certificate,
a Non-REMIC Certificateholder will recognize gain or loss equal to the
difference between the amount realized in the sale and its aggregate adjusted
basis in the Contracts represented by the Non-REMIC Certificate. Generally, the
aggregate adjusted basis will equal the Non-REMIC Certificateholder's cost for
the Non-REMIC Certificate increased by the amount of any previously reported
gain with respect to the Non-REMIC Certificate and decreased by the amount of
any losses previously reported with respect to the Non-REMIC Certificate and the
amount of any distributions received thereon. Except as provided above with
respect to the original issue discount and market discount rules, any such gain
or loss would be capital gain or loss if the Non-REMIC Certificate was held as a
capital asset.
E. FOREIGN INVESTORS. Generally, interest or original issue discount paid
to or accruing for the benefit of a Non-REMIC Certificateholder who is a Foreign
Holder (as defined above in "REMIC Certificates -- C. Taxation of Regular
Certificates -- 9. Taxation of Certain Foreign Investors") will be treated as
"portfolio interest" and therefore will be exempt from the 30% withholding tax.
Such Non-REMIC Certificateholder will be entitled to receive interest payments
and original issue discount on the Non-REMIC Certificates free of United States
federal income tax, but only to the extent the Contracts were originated after
July 18, 1984 and provided that such Non-REMIC Certificateholder periodically
provides the Trustee (or other person who would otherwise be required to
withhold tax) with a statement certifying under penalty of perjury that such
Non-REMIC Certificateholder is not a United States person and providing the name
and address of such Non-REMIC Certificateholder. For additional information
concerning interest or original issue discount paid to a Foreign Holder and the
treatment of a sale or exchange of a Non-REMIC Certificate by a Foreign Holder,
which will generally have the same tax consequences as the sale of a Regular
Certificate, see the discussion above under "REMIC Certificates -- C. Taxation
of Regular Certificates -- 9. Taxation of Certain Foreign Investors."
OTHER TAX CONSEQUENCES
No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax effect of
ownership of Certificates in any state or locality. Certificateholders are
advised to consult their own tax advisors with respect to any state or local
income, franchise, personal property, or other tax consequences arising out of
their ownership of Certificates.
RESTRICTIONS ON TRANSFER OF REMIC RESIDUAL CERTIFICATES
As discussed in "Certain Federal Income Tax Consequences -- D. Taxation of
Residual Certificates -- 9. Tax on Transfers of Residual Certificates to Certain
Organizations," in order for the Trust Fund to qualify as a REMIC, there must be
reasonable arrangements designed to ensure that the Residual Certificates are
not held by disqualified organizations. Further, transfers to persons that are
not United States persons raise special tax issues. Accordingly, unless the
related Prospectus Supplement provides otherwise, no record or beneficial
ownership interest in a Residual Certificate that is sold under this Prospectus
may be transferred unless, among other things, the Trustee receives (i) an
affidavit from the proposed transferee to the effect that it is not a
"disqualified organization" and is not purchasing on behalf of a disqualified
organization (see "Certain Federal Income Tax Consequences -- D. Taxation of
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Residual Certificates -- 9. Tax on Transfers of Residual Certificates to Certain
Organizations"), (ii) a representation from the proposed transferee to the
effect that it is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust whose
income from sources without the United States is includable in gross income for
United States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States and (iii) a covenant of
the proposed transferee to the effect that the proposed transferee agrees to be
bound by and to abide by the transfer restrictions applicable to such REMIC
Residual Certificate.
TAX-EXEMPT INVESTORS
A qualified pension plan or other entity 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
"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 -- Certificates as REMIC Residual Interests -- 7. Excess
Inclusions."
LEGAL INVESTMENT
The Prospectus Supplement for each Series of Certificates will specify
which, if any, of the Classes of Certificates offered thereby constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Classes of Certificates that qualify as
"mortgage related securities" will be legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including depository institutions, life 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 as, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any such entities. Under SMMEA, if a state enacted
legislation prior to October 4, 1991 specifically limiting the legal investment
authority of any such entities with respect to "mortgage related securities,"
Certificates will constitute legal investments for entities subject to such
legislation only to the extent provided therein. Approximately twenty-one states
adopted such legislation prior to the October 4, 1991 deadline.
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 Certificates
without limitations as to the percentage of their assets represented thereby,
federal credit unions may invest in mortgage related securities, and national
banks may purchase Certificates for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal authority may prescribe. In this connection, federal credit unions
should review the National Credit Union Administration ("NCUA") Letter to Credit
Unions No. 96, as modified by Letter to Credit Unions No. 108, which includes
guidelines to assist federal credit unions in making investment decisions for
mortgage related securities, and the NCUAs regulation "Investment and Deposit
Activities" (12 C.F.R. Part 703), which sets forth certain restrictions on
investment by federal credit unions in mortgage related securities.
All depository institutions considering an investment in the Certificates
(whether or not the Class of Certificates under consideration for purchase
constitutes a "mortgage related security") should review the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "Policy Statement"), setting forth, in relevant part, certain securities
trading and sales practices deemed unsuitable for an institution's investment
portfolio, and guidelines for (and restrictions on) investing in mortgage
derivative products, including "mortgage related securities," which are
"high-risk mortgage securities" as defined in the
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Policy Statement. According to the Policy Statement, such "high-risk mortgage
securities" include securities such as certificates not entitled to
distributions allocated to principal or interest, or subordinated certificates.
Under the Policy Statement, it is the responsibility of each depository
institution to determine, prior to purchase (and at stated intervals
thereafter), whether a particular mortgage derivative product is a "high-risk
mortgage security," and whether the purchase (or retention) of such a product
would be consistent with the Policy Statement.
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 and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying."
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Certificates or to
purchase Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans subject to ERISA
("Plans") and on persons having certain specified relationships to a Plan
("Parties in Interest") with respect to such Plans, including, for this purpose,
individual retirement arrangements described in Section 408 of the Code. Certain
employee benefit plans, such as governmental plans and church plans (if no
election has been made under Section 410(d) of the Code), are not subject to the
requirements of ERISA, and assets of such plans may be invested in 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 under Section 401(a) of the Code and exempt from taxation under
Section 501(a) of the Code is, however, subject to the prohibited transaction
rules set forth in Section 503 of the Code.
Investments by Plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. A fiduciary which decides to invest the assets of a Plan in
Certificates should consider, among other factors, the sensitivity of the
investments to the rate of principal payments (including prepayments) on the
Contracts as discussed in "Prepayment and Yield Considerations" herein.
The United States Department of Labor (the "DOL") has issued regulations
concerning the definition of what constitutes the assets of a Plan (Labor Reg.
Section 2510.3-101). Under these regulations, the underlying assets and
properties of corporations, partnerships and certain other entities in which a
Plan makes an "equity" investment could be deemed for purposes of ERISA to be
assets of the investing Plan in certain circumstances. However, the regulations
provide that, generally, the assets of a corporation or partnership in which a
Plan invests will not be deemed for purposes of ERISA to be assets of such Plan
if the equity interest acquired by the investing Plan is a publicly offered
security. A publicly offered security, as defined in Labor Reg. Section
2510.3-101 is a security that is widely held, freely transferable and either
registered under the Exchange Act or sold to the Plan as part of a public
offering under the Securities Act that then becomes so registered.
In addition to the imposition of general fiduciary standards of investment
prudence and diversification, ERISA prohibits a broad range of transactions
involving Plan assets and Parties in Interest, and imposes additional
prohibitions where Parties in Interest are fiduciaries with respect to such
Plan. To the extent that the Contracts may be deemed Plan assets of each Plan
that purchases Certificates, an investment in the Certificates by a Plan might
be a prohibited transaction under ERISA Sections 406 and 407 and subject to an
excise tax under Section 4975 of the Code unless a statutory or administrative
exemption applies.
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In Prohibited Transaction Exemption 83-1 ("PTE 83-1"), which amended
Prohibited Transaction Exemption 81-7, the DOL exempted from ERISA's prohibited
transaction rules certain transactions relating to the operation of residential
mortgage pool investment trusts and the purchase, sale and holding of "mortgage
pool pass-through certificates" in the initial issuance of such certificates.
PTE 83-1 permits, subject to certain conditions, transactions which might
otherwise be prohibited between Plans and Parties in Interest with respect to
those Plans related to the origination, maintenance and termination of mortgage
pools consisting of mortgage loans secured by first or second mortgages or deeds
of trust on single-family residential property, and the acquisition and holding
of certain mortgage pool pass-through certificates representing an interest in
such mortgage pools by Plans. If the general conditions (discussed below) of PTE
83-1 are satisfied, investments by a Plan in certificates that represent
interests in a mortgage pool consisting of single family loans will be exempt
from the prohibitions of ERISA Sections 406(a) and 407 (relating generally to
transactions with Parties in Interest who are not fiduciaries) if the Plan
purchases those certificates at no more than fair market value and will be
exempt from the prohibitions of ERISA Sections 406(b)(1) and (2) (relating
generally to transactions with fiduciaries) if, in addition, the purchase is
approved by an independent fiduciary, no sales commission is paid to the pool
sponsor, the Plan does not purchase more than 25% of all certificates of the
like class, and at least 50% of all such certificates are purchased by persons
independent of the pool sponsor or pool trustee. PTE 83-1 does not provide an
exemption for transactions involving subordinate certificates of the like class.
Accordingly, unless otherwise provided in the related Prospectus Supplement, no
transfer of a subordinate certificate may be made to a Plan.
PTE 83-1 sets forth three general conditions which must be satisfied for any
transaction to be eligible for exemption: (i) the maintenance of a system of
insurance or other protection for the pooled mortgage loans and property
securing such loans, and for indemnifying certificateholders against reductions
in pass-through payments due to property damage or defaults in loan payments in
an amount not less than the greater of one percent of the aggregate principal
balance of all covered pooled mortgage loans or the principal balance of the
largest covered pooled mortgage loan; (ii) the existence of a pool trustee who
is not an affiliate of the pool sponsor; and (iii) a limitation on the amount of
the payment retained by the pool sponsor, together with other funds inuring to
its benefit, to not more than adequate consideration for selling the mortgage
loans plus reasonable compensation for services provided by the pool sponsor to
the mortgage pool.
Each Plan fiduciary who is responsible for making the investment decisions
whether to purchase or commit to purchase and to hold Certificates must make its
own determination as to whether the first and third general conditions, and the
specific conditions described briefly in the preceding paragraph, of PTE 83-1
have been satisfied, or as to the availability of any other prohibited
transaction exemptions. Each Plan fiduciary should also determine whether, under
the general fiduciary standards of investment prudence and diversification, an
investment in the Certificates is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
Several underwriters of asset-backed securities have applied for and
obtained ERISA prohibited transaction exemptions which are in some respects
broader than the exemptions described in the DOL regulation referred to above.
Such exemptions can only apply to asset-backed securities which, among other
conditions, are sold in an offering with respect to which such underwriter
serves as the sole or a managing underwriter, or as a selling or placement
agent. If such an exemption might be applicable to a Series of Certificates, the
related Prospectus Supplement will refer to such possibility.
Any Plan fiduciary which proposes to cause a Plan to purchase Certificates
should consult with their counsel concerning the impact of ERISA and the Code,
the applicability of PTE 83-1 and the potential consequences in their specific
circumstances, prior to making such investment. Moreover, each Plan fiduciary
should determine whether, under the general fiduciary standards of investment
procedure and diversification, an investment in the Certificates is appropriate
for the Plan, taking into account the overall investment policy of the Plan and
the composition of the Plan's investment portfolio.
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CERTAIN LEGAL ASPECTS OF THE CONTRACTS
GENERAL
As a result of the assignment of Contracts in a Contract Pool to the
Trustee, the related Trust Fund will succeed collectively to all of the rights
(including the right to receive payment on such Contracts), and will assume the
obligations of the obligee, under such Contracts. Each Contract evidences both
(a) the obligation of the Obligor to repay the loan evidenced thereby, and (b)
the grant of a security interest in either the Manufactured Home, and, in the
case of a Land Home Contract or Land-in-Lieu Contract, the real estate on which
the related Manufactured Home is located, to secure repayment of such loan.
Certain aspects of both features of the Contracts are described more fully
below.
The following discussion focuses on issues relating generally to Bank of
America's, BankAmerica Housing Services' or any lender's interest in
manufactured housing contracts. See "-- Security Interests in the Manufactured
Homes" herein for a discussion of certain issues relating to the transfer to a
Trust Fund of Contracts and the related security interests in the Manufactured
Homes comprising the related Contract Pool.
SECURITY INTERESTS IN THE MANUFACTURED HOMES
The Manufactured Homes securing the Contracts in a Contract Pool may be
located in all 50 states and the District of Columbia. Security interests in
manufactured homes similar to the ones securing the Contracts ("manufactured
homes") generally may be perfected either by notation of the secured party's
lien on the certificate of title or by delivery of the required documents and
payment of a fee to the state motor vehicle authority, depending on state law.
In some nontitle states, perfection pursuant to the provisions of the UCC is
required. Generally, with respect to manufactured housing contracts individually
originated or purchased by BankAmerica Housing Services (for itself or as agent
for any affiliate of BankAmerica Housing Services that purchases any such
contracts from BankAmerica Housing Services) effects such notation or delivery
of the required documents and fees, and obtains possession of the certificate of
title or a lien certificate, as appropriate, under the laws of the state in
which any manufactured home securing a manufactured housing contract is
registered. If BankAmerica Housing Services fails, due to clerical errors or
otherwise, to effect such notation or delivery, or files the security interest
under the wrong law (for example, under a motor vehicle title statute rather
than under the UCC, in a few states), BankAmerica Housing Services (for itself,
or as agent of the secured lender) may not have a first-priority security
interest in the manufactured home securing a contract. As manufactured homes
have become larger and often have been attached to their sites without any
apparent intention to move them, courts in many states have held that
manufactured homes, under certain circumstances, may become subject to real
estate title and recording laws. As a result, a security interest in a
manufactured home could be rendered subordinate to the interests of other
parties claiming an interest in the home under applicable state real estate law.
In order to perfect a security interest in a manufactured home under real estate
laws, the holder of the security interest must file either a "fixture filing"
under the provisions of the UCC or a real estate mortgage under the real estate
laws of the state where the home is located. These filings must be made in the
real estate records office of the county where the home is located. Unless
otherwise specified in the related Prospectus Supplement, most of the Contracts
in any Contract Pool will contain provisions prohibiting the Obligor from
permanently attaching the Manufactured Home to its site if it was not so
attached on the date of the Contract. As long as each Manufactured Home was not
so attached on the date of the Contract and the Obligor does not violate this
agreement, a security interest in the Manufactured Home will be governed by the
certificate of title laws or the UCC, and the notation of the security interest
on the certificate of title or the filing of a UCC financing statement will be
effective to maintain the priority of BankAmerica Housing Services' security
interest in the Manufactured Home. If any such Manufactured Home does become
attached after the date of the related Contract, the related Contract provides
that such attachment constitutes an "event of default" that, if unremedied,
gives rise to certain discrete remedies including acceleration of the unpaid
principal balance of the Contract plus accrued interest and repossession of the
Manufactured Home. Regardless of whether a full recovery is obtained from an
Obligor whose Manufactured Home becomes attached, Bank of America, BankAmerica
Housing Services or both will represent that, at the date of the initial
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issuance of Certificates in any Series, it had obtained a perfected
first-priority security interest in each of the Manufactured Homes securing the
related Contracts sold by it. Such representation, however, will not be based
upon an inspection of the site of any Manufactured Home to determine if the
Manufactured Home had become permanently attached to its site. See "Description
of the Certificates -- Conveyance of Contracts" herein.
In addition, a federal circuit court decision may adversely affect a
Trustee's interest in the Contract Pool related to a Series of Certificates even
if the related Contracts constitute chattel paper. In OCTAGON GAS SYSTEMS, INC.
V. RIMMER, 995 F.2d 948 (10th Cir. 1993), the court's decision included language
to the effect that accounts sold by an entity which subsequently became bankrupt
remained property of the debtor's bankruptcy estate. Sales of chattel paper,
like sales of accounts, are governed by Article 9 of the UCC. If any affiliate
of Bank of America, BankAmerica Housing Services or both of them is subject to
the federal bankruptcy code, sells Contracts to Bank of America or BankAmerica
Housing Services and becomes a debtor under the federal bankruptcy code, and a
court were to follow the reasoning of the Tenth Circuit and apply such reasoning
to chattel paper, Certificateholders for such Series could experience a delay
in, or reduction of, distributions as to the Contracts that constitute chattel
paper and were sold to the related Trust Fund, directly or indirectly, by any of
them.
In the absence of fraud, forgery or permanent affixation of a manufactured
home to its site by the manufactured home owner, or administrative error by
state recording officials, the notation of the lien of BankAmerica Housing
Services on the certificate of title or delivery of the required documents and
fees (or if applicable, perfection under the UCC) will be sufficient to protect
BankAmerica Housing Services against the rights of subsequent purchasers of a
manufactured home or subsequent lenders who take a security interest in the
manufactured home. If there are any manufactured homes as to which the security
interest in favor of BankAmerica Housing Services is not perfected, such
security interest would be subordinate to the claims of, among others,
subsequent purchasers for value of and holders of perfected security interests
in such manufactured homes.
In the event that the owner of a manufactured home moves it to a state other
than the state in which such manufactured home initially is registered, under
the laws of most states, the perfected security interest in the manufactured
home would continue for four months after such relocation and thereafter until
the owner registers the manufactured home in such state. If the owner were to
relocate a manufactured home to another state and were to re-register the
manufactured home in such state, and if steps are not taken to re-perfect an
existing security interest in such state, the security interest in the
manufactured home would cease to be perfected. A majority of states generally
require surrender of a certificate of title to re-register a manufactured home.
BankAmerica Housing Services must therefore surrender possession if it holds the
certificate of title to such manufactured home or, in the case of manufactured
homes registered in states which provide for notation of lien, BankAmerica
Housing Services would receive notice of surrender if its security interest in
the manufactured home is noted on the certificate of title. Accordingly,
BankAmerica Housing Services would have the opportunity to re-perfect its
security interest in the manufactured home in the state of relocation. In states
which do not require a certificate of title for registration of a manufactured
home, re-registration could defeat the perfection. In the ordinary course of
servicing manufactured housing contracts, BankAmerica Housing Services takes
steps to effect such re-perfection upon receipt of notice of re-registration or
information from the obligor as to relocation. Similarly, when an obligor under
a contract sells a manufactured home, BankAmerica Housing Services must
surrender possession of the certificate of title or BankAmerica Housing Services
will receive notice as a result of its lien noted thereon; accordingly,
BankAmerica Housing Services will have an opportunity to require satisfaction of
the related contract before release of the lien. Such protections generally
would not be available in the case of security interests in manufactured homes
located in nontitle states where perfection of such security interest is
achieved by appropriate filings under the UCC (as in effect in such state).
Under the laws of most states, liens for repairs performed on a manufactured
home and liens for personal property taxes take priority over a perfected
security interest in the manufactured home. Each
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of Bank of America and BankAmerica Housing Services will warrant in the
Agreement with respect to each Series of Certificates that, as of the date of
initial issuance of such Series of Certificates, no Manufactured Home relating
to a Contract it sold was, to its knowledge, subject to any such lien. However,
such warranty will not be based on any lien searches or other review. See
"Description of the Certificates -- Conveyance of Contracts" in the Prospectus
Supplement related to a Series of Certificates for a description of the remedies
for a breach of the representations and warranties made by Bank of America and
BankAmerica Housing Services under the related Agreement. In addition, such
liens could arise after the date of initial issuance of the Certificates. Notice
may not be given to Bank of America, BankAmerica Housing Services, the Servicer,
the Trustee or Certificateholders in the event such a lien arises.
ENFORCEMENT OF SECURITY INTERESTS IN MANUFACTURED HOMES
Unless otherwise specified in the applicable Prospectus Supplement, the
Servicer on behalf of the Trustee, to the extent required by the related
Agreement, may take action to enforce the Trustee's security interest with
respect to Contracts in default by repossession and resale of the Manufactured
Homes securing such defaulted Contracts. In general, as long as a manufactured
home has not become subject to the real estate law, a creditor can repossess a
manufactured home by voluntary surrender, by "self-help" repossession that is
"peaceful" (I.E., without breach of the peace) or, in the absence of voluntary
surrender and the ability to repossess without breach of the peace, by judicial
process. The holder of a manufactured housing contract generally must give the
obligor a number of days' notice prior to commencement of any repossession. The
UCC and consumer protection laws in most states place restrictions on
repossession sales, including requiring prior notice to the obligor and
commercial reasonableness in effecting such a sale. The law in most states also
requires that the obligor be given notice of any sales prior to resale of the
unit so that the obligor may redeem at or before such resale.
Under the laws applicable in most states, a creditor is entitled to obtain a
deficiency judgment from an obligor for any deficiency on repossession and
resale of the manufactured home securing such obligor's contract. However, some
states impose prohibitions or limitations on deficiency judgments, and in many
cases the defaulting obligor would have no assets with which to pay a judgment.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, and general equitable principles may limit or delay
BankAmerica Housing Services' ability to repossess and resell any Manufactured
Home or enforce a deficiency judgment.
LAND HOME AND LAND-IN-LIEU CONTRACTS
Unless otherwise specified in the applicable Prospectus Supplement, the
related Contract Pool will not contain Land Home Contracts or Land-in-Lieu
Contracts. To the extent Land Home Contracts or Land-in-Lieu Contracts or both
are contained in any Contract Pool, the related Prospectus Supplement will
include a discussion of legal issues relating to the transfer of such contracts,
and the related security interest in the property on which the related
Manufactured Home is located, to the Trust, and to the enforcement of the rights
of secured parties with respect to such contracts.
CONSUMER PROTECTION LAWS
The so-called "Holder-in-Due-Course" rule of the Federal Trade Commission is
intended to defeat the ability of the transferor of a consumer credit contract
which is the seller of goods which gave rise to the transaction (and certain
related lenders and assignees) to transfer such contract free of notice of
claims by the obligor thereunder. The effect of this rule is to subject the
assignee of such a contract to all claims and defenses which the obligor could
assert against the seller of goods. Liability under this rule is limited to
amounts paid under such a contract; however, the obligor also may be able to
assert the rule to set off remaining amounts due as a defense against a claim
brought by the assignee against such obligor. Generally, this rule will apply to
any Contracts conveyed to the Trustee and to any claims made by the Servicer on
behalf of the Trustee, as Bank of America's or BankAmerica Housing Services'
assignee, as applicable. Numerous other federal and state consumer protection
laws impose requirements applicable to the origination and lending pursuant to
such Contracts, including the Truth in Lending Act, the Federal Trade Commission
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
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the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the
Uniform Consumer Credit Code. In the case of some of these laws, the failure to
comply with their provisions may affect the enforceability of the related
Contract or create liability for the Trust Fund.
The Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Relief
Act") could, under certain circumstances, cap the amount of interest that may be
charged on certain Contracts at 6% and may hinder the ability of the Servicer to
foreclose on such Contracts in a timely fashion. Under the terms of the Relief
Act, if so required by an obligor under a manufactured housing contract who
enters military service after the origination of such obligor's contract
(including an obligor who is a member of the National Guard or is in reserve
status at the time of the origination of the contract and is later called to
active duty), such obligor may not be charged interest above an annual rate of
6% during the period of such obligor's active duty status, unless a court orders
otherwise upon application of the lender. In addition, the Relief Act imposes
limitations which would impair the ability of any lender to foreclose on an
affected contract during the obligor's period of active duty status and within
three months thereafter. It is possible that application of the Relief Act to
certain of the Contracts could have an effect, for an indeterminate period of
time, on the ability of the Servicer to collect full amounts of interest or
foreclose on such Contract, and could result in delays in payment or losses to
the holders of the Certificates. Neither Bank of America nor BankAmerica Housing
Services will make any representation or warranty as to whether any Contract is
or could become subject to the Relief Act.
TRANSFERS OF MANUFACTURED HOMES; ENFORCEABILITY OF RESTRICTIONS ON TRANSFER
Unless otherwise specified in the related Prospectus Supplement, the
Contracts comprising any Contract Pool generally will prohibit the sale or
transfer of the related Manufactured Homes without the consent of the obligee
and permit the acceleration of the maturity of the Contracts by the obligee upon
any such sale or transfer to which BankAmerica Housing Services has not
consented. Under the Agreement for a Series of Certificates (unless otherwise
specified in the related Prospectus Supplement), BankAmerica Housing Services as
Servicer will be required to consent to any such transfer and to permit the
assumption of the related Contract if the proposed buyer meets the Servicer's
underwriting standards and enters into an assumption agreement, the Servicer
determines that permitting such assumption will not materially increase the risk
of nonpayment of the Contract and such action will not adversely affect or
jeopardize any coverage under any insurance policy required by such Agreement.
If the Servicer determines that these conditions have not been fulfilled, then
it will be required to withhold its consent to the transfer, but only to the
extent permitted under the Contract and applicable law and governmental
regulations and only to the extent that such action will not adversely affect or
jeopardize any coverage under any insurance policy required by the Agreement. In
certain cases, a delinquent Obligor may attempt to transfer a Manufactured Home
in order to avoid a repossession proceeding with respect to such Manufactured
Home.
In the case of a transfer of a Manufactured Home after which the obligee
desires to accelerate the maturity of the related Contract, the obligee's
ability to do so will depend on the enforceability under state law of the clause
permitting acceleration on transfer. The Garn-St. Germain Depository
Institutions Act of 1982 preempts, subject to certain exceptions and conditions,
state laws prohibiting enforcement of such clauses applicable to manufactured
homes. To the extent such exceptions and conditions apply in some states, the
Servicer may be prohibited from enforcing such a clause in respect of certain
Manufactured Homes.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Controls
Act of 1980, as amended ("Title V"), provides that, subject to the following
conditions, state usury limitations shall not apply to any loan which is secured
by a first lien on certain kinds of manufactured housing. The Contracts related
to any Series of Certificates would be covered under Title V if, among other
things, they satisfy certain conditions governing the terms of any prepayments,
late charges and deferral fees and contain a requirement of a 30-day notice
period prior to instituting any action leading to repossession of the related
unit.
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Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejected application of the federal law. Fifteen
states adopted such a law prior to the April 1, 1983 deadline. In addition, even
where Title V was not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
BankAmerica Housing Services or, where applicable, Bank of America will
represent, in the Agreement for a Series of Certificates (unless otherwise
specified in the related Prospectus Supplement), that the Contracts sold by it
comply with applicable usury laws.
RATINGS
It is a condition to the issuance of the Certificates of each Series offered
hereby that at the time of issuance they shall have been rated in one of the
four highest rating categories by the nationally recognized statistical rating
agency or agencies specified in the related Prospectus Supplement.
Ratings on manufactured housing contract pass-through certificates address
the likelihood of the receipt by certificateholders of their allocable share of
principal and interest on the underlying manufactured housing contract assets.
These ratings address structural and legal aspects associated with such
certificates, the extent to which the payment stream on such underlying assets
is adequate to make payments required by such certificates and the credit
quality of the credit enhancer or guarantor, if any. Ratings on the Certificates
do not, however, constitute a statement regarding the likelihood of principal
prepayments by Obligors under the Contracts in the related Contract Pool, the
degree by which prepayments made by such Obligors might differ from those
originally anticipated or whether the yield originally anticipated by investors
of any Series of Certificates may be adversely affected as a result of such
prepayments. As a result, investors of any Series of Certificates might suffer a
lower than anticipated yield.
A rating on any or all of the Certificates of any Series by certain other
rating agencies, if assigned at all, may be lower than the rating or ratings
assigned to such Certificates by the rating agency or agencies specified in the
related 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 agency. Each security rating should be evaluated
independently of any other security rating.
METHOD OF DISTRIBUTION
The Sellers may sell Certificates of each Series to or through underwriters
(the "Underwriters") by a negotiated firm commitment underwriting and public
reoffering by the Underwriters, and also may sell and place Certificates
directly to other purchasers or through agents. The Sellers intend that
Certificates be offered through such various methods from time to time and that
offerings may be made concurrently through more than one of these methods or
that an offering of a particular Series of Certificates may be made through a
combination of such methods.
This Prospectus and any related Prospectus Supplement may be used by BA
Securities, Inc., an affiliate of the Sellers, in connection with offers and
sales related to market making transactions in any Series of the Certificates.
BA Securities, Inc. may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
the sale.
The distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Sellers or any affiliate thereof may purchase some or all of
one or more Classes of Certificates of such Series from the Underwriter or
Underwriters at a price specified in such Prospectus Supplement. Such purchaser
may thereafter from time to time offer and sell, pursuant to this Prospectus,
some or all of such Certificates so purchased directly, through one or more
Underwriters to be designated at the time of the offering of such
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Certificates or through broker-dealers acting as agent and/or principal. Such
offering may be restricted in the manner specified in such Prospectus
Supplement. Such transactions may be effected at market prices prevailing at the
time of sale, at negotiated prices or at fixed prices.
In connection with the sale of the Certificates, Underwriters may receive
compensation from the Sellers or from purchasers of Certificates for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell the Certificates of a Series to or through dealers and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the Underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Certificates of a Series may be deemed to be
Underwriters, and any discounts or commissions received by them from the Sellers
and any profit on the resale of the Certificates by them may be deemed to be
underwriting discounts and commissions, under the Securities Act. Any such
Underwriters or agents will be identified, and any such compensation received
from the Sellers will be described, in the Prospectus Supplement.
Under agreements which may be entered into by Bank of America, BankAmerica
Housing Services or both of them, Underwriters and agents who participate in the
distribution of the Certificates may be entitled to indemnification by Bank of
America or BankAmerica Housing Services, as the case may be, against certain
liabilities, including liabilities under the Securities Act.
The Underwriters may, from time to time, buy and sell Certificates, but
there can be no assurance that an active secondary market will develop and there
is no assurance that any such market, if established, will continue.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement,
substantially all of the net proceeds to be received from the sale of the
Certificates will be used by the Sellers for general corporate purposes,
including the payment of expenses in connection with pooling the Contracts and
issuing the Certificates.
LEGAL MATTERS
Certain legal matters relating to the Certificates, including legal matters
relating to material federal income tax consequences concerning the
Certificates, will be passed upon for Bank of America and BankAmerica Housing
Services by Morrison & Foerster LLP, Irvine, California.
OTHER CONSIDERATIONS
As federally insured depository institutions, Bank of America and BAFSB (of
which BankAmerica Housing Services is an unincorporated division) are subject to
conservatorship and receivership rules enacted pursuant to the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended
("FIRREA"). If a receiver or conservator were appointed for BAFSB, the receiver
or conservator could prevent the termination of BankAmerica Housing Services as
Servicer and the appointment of a successor Servicer if no event of default
under the applicable Agreements exists other than the receivership,
conservatorship or insolvency of the Servicer. In addition, the appointment of a
receiver or conservator for BAFSB could result in a delay or possibly a
reduction in payments on the Certificates to the extent BankAmerica Housing
Services received (but did not deposit with the Trustee) Contract collections
before the date of receivership or conservatorship.
Each of the Sellers believes that the transfer of Contracts sold by it to
any Trust Fund will constitute absolute and unconditional sales. However, in the
event of a conservatorship or receivership of Bank of America, BAFSB or both of
them, a conservator or receiver, as the case may be, could recharacterize the
sale of Contracts by Bank of America or BankAmerica Housing Services, or both of
them, as a borrowing secured by a pledge of the Contracts sold by it. Such an
attempt, even if unsuccessful, could result in delays in or reductions of
distributions on the Certificates offered hereby and by the related Prospectus
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Supplement. If such an attempt were successful, the conservator or receiver, as
the case may be, could elect to accelerate payment of the Certificates and
liquidate the Contracts, with the holders of Certificates entitled to no more
than the then outstanding principal amount of such Certificates together with
interest at the applicable Pass-Through Rate to the date of payment. Thus, the
holders of Certificates could lose the right to future distributions of
interest, and might suffer reinvestment loss in a lower interest rate
environment.
The foregoing discussion does not purport to be comprehensive. Prospective
investors should consult their own legal advisors as to the possible
consequences of any insolvency, conservatorship, receivership or similar
proceeding instituted by or in respect of Bank of America or BAFSB.
Similar consequences could result from a bankruptcy proceeding instituted by
or in respect of any affiliate of Bank of America or BAFSB that sells Contracts
to Bank of America or BAFSB or both and becomes subject to a bankruptcy,
conservatorship, receivership or similar proceeding. Prospective investors
should consult their own legal advisors as to such matters.
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INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<CAPTION>
PAGE IN PROSPECTUS
ON WHICH TERM IS
TERM DEFINED
- --------------------------------------------------------------------------------------------- -------------------
<S> <C>
1986 Act..................................................................................... 47
Agreement.................................................................................... 5
Assumed Prepayment Rate...................................................................... 48
Available Distribution Amount................................................................ 16
BAFSB........................................................................................ 20
BankAmerica Housing Services................................................................. 1, 4
Bank of America.............................................................................. 1, 4
Bulk Sellers................................................................................. 17
Cede......................................................................................... 3, 10, 34
Certificate Account.......................................................................... 30
Certificate Owners........................................................................... 3, 10, 34
Certificateholders........................................................................... 3, 34, 44
Certificate Balance.......................................................................... 7
Certificates................................................................................. 1
Class........................................................................................ 1, 5
Code......................................................................................... 11
Collection Period............................................................................ 7, 32
Commission................................................................................... 3
Contract Files............................................................................... 31
Contract Pool................................................................................ 1, 4
Contract Rate................................................................................ 4
Contract Schedule............................................................................ 31
Contracts.................................................................................... 1, 4
contracts.................................................................................... 13
Credit Facility.............................................................................. 43
Credit Facility Provider..................................................................... 43
Cut-off Date................................................................................. 5
Definitive Certificates...................................................................... 30
Disqualified Organizations................................................................... 46
Distribution Date............................................................................ 6
DOL.......................................................................................... 67
DTC.......................................................................................... 3, 10, 34
DTC Rules.................................................................................... 34
Due Date..................................................................................... 17
ERISA........................................................................................ 11, 67
Exchange Act................................................................................. 2
Foreign Holder............................................................................... 53
Fractional Interests......................................................................... 38
Global Certificates.......................................................................... 10, 34
Indirect Participants........................................................................ 34
Issue Premium................................................................................ 56
Junior Certificates.......................................................................... 40
Land Home Contract........................................................................... 19
Land-in-Lieu Contract........................................................................ 19
Legal Investment............................................................................. 11, 66
Liquidity Facility........................................................................... 43
Liquidity Facility Provider.................................................................. 43
Manufactured Home............................................................................ 4
manufactured homes........................................................................... 69
manufactured housing contracts............................................................... 13
Master REMIC................................................................................. 47
Minimum Termination Amount................................................................... 35
</TABLE>
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<TABLE>
<CAPTION>
PAGE IN PROSPECTUS
ON WHICH TERM IS
TERM DEFINED
- --------------------------------------------------------------------------------------------- -------------------
<S> <C>
Monthly Servicing Fee........................................................................ 36
Mortgage..................................................................................... 19
Non-REMIC Certificates....................................................................... 62
Obligor...................................................................................... 18
OID Regulations.............................................................................. 44
Optional Termination......................................................................... 11
Original Holder.............................................................................. 55
Participants................................................................................. 34
Parties in Interest.......................................................................... 67
Pass-Through Rate............................................................................ 9, 33
Percentage Interest.......................................................................... 30
Plans........................................................................................ 67
Policy Statement............................................................................. 66
Pool Principal Balance....................................................................... 41
Pool Scheduled Principal Balance............................................................. 42
Prepayment Model............................................................................. 29
PTE 83-1..................................................................................... 68
Rate Period.................................................................................. 33
Rating....................................................................................... 12, 73
Registration Statement....................................................................... 3
Regular Certificates......................................................................... 45
REMIC........................................................................................ 2, 44
REMIC Regulations............................................................................ 44
Regular Principal............................................................................ 7, 32
Relief Act................................................................................... 15, 72
Repurchase Date.............................................................................. 36
Reserve Fund................................................................................. 42
Residual Certificates........................................................................ 45
Residual Interest............................................................................ 9, 33
Scheduled Payment............................................................................ 17
Securities Act............................................................................... 1
Security Pacific Housing Services............................................................ 14
Senior Certificates.......................................................................... 40, 59
Service...................................................................................... 46
Servicer..................................................................................... 4
SMMEA........................................................................................ 12, 66
SPFSC........................................................................................ 4
Special Principal Distributions.............................................................. 8, 32
SPHSI........................................................................................ 20
Startup Day.................................................................................. 46
Step-Up Rate................................................................................. 17
Step-Up Rate Contracts....................................................................... 17
Subordinate Certificates..................................................................... 40
Subsidiary REMIC............................................................................. 47
Termination Auction.......................................................................... 10, 36
Title V...................................................................................... 72
Total Regular Principal Amount............................................................... 7, 32
Trust Fund................................................................................... 1, 6
Trustee...................................................................................... 5
UCC.......................................................................................... 14
Underwriters................................................................................. 73
Weighted Average Contract Rate............................................................... 5, 19
</TABLE>
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NO DEALER, SALESMAN OR PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER OR ANY UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY AND
THEREBY IN ANY STATE OR JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE OR JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE SELLER OR IN THE TRUST FUND SINCE SUCH DATES.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Terms of Offered Certificates..................... S-4
Risk Factors...................................... S-22
The Contract Pool................................. S-23
The Seller........................................ S-30
Prepayment and Yield Considerations............... S-32
Description of the Certificates................... S-49
Certain Federal Income Tax Consequences........... S-66
ERISA Considerations.............................. S-67
Certain Legal Aspects of the Contracts............ S-69
Ratings........................................... S-72
Legal Investment.................................. S-72
Method of Distribution............................ S-72
Use of Proceeds................................... S-74
Legal Matters..................................... S-74
Index of Significant Definitions.................. S-75
Appendix A -- Prepayment Experience of
Certain Pools.................................... A-1
PROSPECTUS
Incorporation of Certain Information by
Reference........................................ 2
Additional Information............................ 3
Reports to Certificateholders..................... 3
Summary of Terms.................................. 4
Risk Factors...................................... 13
The Contract Pools................................ 17
The Sellers....................................... 20
Prepayment and Yield Considerations............... 27
Description of the Certificates................... 30
Credit and Liquidity Enhancement.................. 40
Certain Federal Income Tax Consequences........... 43
Other Tax Consequences............................ 65
Restrictions on Transfer of REMIC Residual
Certificates..................................... 65
Tax-Exempt Investors.............................. 66
Legal Investment.................................. 66
ERISA Considerations.............................. 67
Certain Legal Aspects of the Contracts............ 69
Ratings........................................... 73
Method of Distribution............................ 73
Use of Proceeds................................... 74
Legal Matters..................................... 74
Other Considerations.............................. 74
Index of Significant Definitions.................. 76
</TABLE>
BANKAMERICA MANUFACTURED
HOUSING CONTRACT TRUST II
BANKAMERICA HOUSING SERVICES, AN UNINCORPORATED DIVISION
OF BANK OF AMERICA, FSB, SELLER AND SERVICER
<TABLE>
<S> <C> <C> <C>
CLASS A-1.......... $25,500,000* 5.910%
CLASS A-2.......... $18,000,000* 6.015%
CLASS A-3.......... $20,500,000* 6.060%
CLASS A-4.......... $29,500,000* 6.195%
CLASS A-5.......... $14,300,000* 6.265%
CLASS A-6.......... $15,500,000* 6.340%
CLASS A-7.......... $39,300,000* 6.580%
CLASS A-8.......... $26,000,000* 6.725%
CLASS A-9.......... $27,545,000* 7.015%**
CLASS M............ $22,270,000* 6.800%
CLASS B-1.......... $15,720,000* 6.940%
</TABLE>
* NUMBERS ARE APPROXIMATE
** SUBJECT TO A MAXIMUM RATE EQUAL TO THE WEIGHTED AVERAGE OF THE NET CONTRACT
RATES (AS DEFINED HEREIN) OF THE CONTRACTS IN THE CONTRACT POOL.
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES,
SERIES 1997-1
---------------------
PROSPECTUS SUPPLEMENT
---------------------
BANCAMERICA SECURITIES, INC.
MORGAN STANLEY DEAN WITTER
JULY 31, 1997
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