<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration File No.:333-04272
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PROSPECTUS
IS DELIVERED. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 1999
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED SEPTEMBER 29, 1998)
$1,153,788,000
(APPROXIMATE)
COMM 1999-1
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
GERMAN AMERICAN CAPITAL CORPORATION
MORTGAGE LOAN SELLER
BANC ONE MORTGAGE CAPITAL MARKETS, LLC
MORTGAGE LOAN SELLER AND SERVICER
----------------
Deutsche Mortgage & Asset Receiving Corporation as depositor is offering
certain classes of its Commercial Mortgage Pass-Through Certificates, COMM
1999-1, which represent beneficial ownership interests in the COMM Mortgage
Trust. The trust's assets will primarily be 221 fixed-rate mortgage loans
secured by first liens on 272 commercial and multi-family properties. The COMM
1999-1 Certificates are not obligations of Deutsche Bank AG or any of its
affiliates or Deutsche Mortgage & Asset Receiving Corporation or any of its
affiliates, and neither the certificates nor the underlying mortgage loans are
insured or guaranteed by any governmental agency.
Certain characteristics of the offered certificates include:
<TABLE>
<CAPTION>
INITIAL CERTIFICATE INITIAL ASSUMED FINAL FITCH/MOODY'S
CLASS BALANCE (1) PASS-THROUGH RATE DISTRIBUTION DATE (2) ANTICIPATED RATINGS
- ----------- ----------------------- ------------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
Class X $ 1,311,125,920(3) November 15, 2018 AAA/Aaa
Class A-1 $ 181,434,000 February 15, 2008 AAA/Aaa
Class A-2 $ 723,242,000 September 15, 2008 AAA/Aaa
Class B $ 62,278,000 (4) October 15, 2008 AA/Aa2
Class C $ 22,944,000 (4) October 15, 2008 AA/Aa3
Class D $ 62,278,000 (4) October 15, 2008 A/A2
Class E $ 81,945,000 (5) October 15, 2008 BBB/Baa2
Class F $ 19,667,000 (5) October 15, 2008 BBB--/Baa3
</TABLE>
(footnotes on page S-3)
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined that this
prospectus supplement or the accompanying prospectus are truthful or complete.
Any representation to the contrary is a criminal offense.
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE S-23 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 9 OF THE
PROSPECTUS.
Deutsche Bank Securities Inc., Lehman Brothers Inc. and J.P. Morgan
Securities Inc. are acting as co-lead managers and underwriters of the
offering, except that Deutsche Bank Securities Inc. is sole underwriter of the
Class X Certificates and is the sole bookrunner of all the offered
certificates. The underwriters will offer the offered certificates to the
public in negotiated transactions at varying prices to be determined at the
time of sale.
Deutsche Bank Securities Inc. is required to purchase the offered
certificates from Deutsche Mortgage & Asset Receiving Corporation, subject to
certain conditions. The other underwriters are not required to sell any
specific amount of the offered certificates but will use their best efforts to
sell the offered certificates, and will each receive a fee equal to 0.125% of
the initial aggregate principal balance of the offered certificates. Deutsche
Mortgage & Asset Receiving Corporation expects to receive from the sale of the
offered certificates approximately % of the initial aggregate principal
balance of the offered certificates, plus accrued interest from March 1, 1999,
before deducting expenses payable by it. The underwriters expect to deliver the
offered certificates to purchasers on or about March , 1999.
DEUTSCHE BANK SECURITIES
LEHMAN BROTHERS
J.P. MORGAN & CO.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS FEBRUARY , 1999
<PAGE>
COMM 1999-1
Commercial Mortgage Pass-Through Certificates
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
[MAP OF UNITED STATES]
NEBRASKA MISSOURI MINNESOTA ILLINOIS
1 property 5 properties 12 properties 19 properties
$3,568,269 $33,488,746 $24,565,557 $70,962,007
0.27% of total 2.55% of total 1.87% of total 5.41% of total
WISCONSIN MICHIGAN INDIANA PENNSYLVANIA
4 properties 6 properties 3 properties 13 properties
$13,413,395 $46,920,097 $10,124,859 $103,728,877
1.02% of total 3.58% of total 0.77% of total 7.91% of total
OHIO MASSACHUSETTS CONNECTICUT NEW YORK
1 property 4 properties 1 property 21 properties
$1,584,170 $20,268,740 $1,482,023 $121,451,162
0.12% of total 1.55% of total 0.11% of total 9.26% of total
NEW JERSEY DELAWARE WASHINGTON, DC MARYLAND
9 properties 2 properties 1 property 11 properties
$51,322,685 $10,347,160 $2,143,496 $58,135,006
3.91% of total 0.79% of total 0.16% of total 4.43% of total
VIRGINIA KENTUCKY NORTH CAROLINA TENNESSEE
9 properties 2 properties 2 properties 2 properties
$41,068,467 $3,869,814 $7,722,231 $13,282,659
3.13% of total 0.30% of total 0.59% of total 1.01% of total
SOUTH CAROLINA GEORGIA FLORIDA MISSISSIPPI
1 property 4 properties 16 properties 4 properties
$3,328,607 $21,092,204 $141,103,230 $11,015,318
0.25% of total 1.61% of total 10.76% of total 0.84% of total
OKLAHOMA TEXAS COLORADO ARIZONA
2 properties 50 properties 4 properties 7 properties
$4,069,830 $160,862,180 $19,655,334 $27,626,919
0.31% of total 12.27% of total 1.50% of total 2.11% of total
NEVADA CALIFORNIA OREGON WASHINGTON
2 properties 50 properties 1 property 2 properties
$25,655,967 $241,871,974 $2,581,205 $6,745,494
1.96% of total 18.45% of total 0.20% of total 0.51% of total
VIRGIN ISLANDS
1 property
$6,068,238
0.46% of total
[LEGEND]
(Less than or Equal to) 1.00% of Initial Pool Balance [ ]
1.01% - 10.00% of Initial Pool Balance [ ]
(Greater than or Equal to) 10.00% of Initial Pool Balance [ ]
<PAGE>
(The footnotes to the table on the cover page are as follows)
- ----------
(1) Approximate, subject to adjustment as described herein.
(2) The "Assumed Final Distribution Date" with respect to any class of
offered certificates is the distribution date on which the final
distribution would occur for such class of certificates based upon the
assumption that no mortgage loan is prepaid prior to its stated maturity
and otherwise based on modeling assumptions described in this prospectus
supplement. The actual performance and experience of the mortgage loans
will likely differ from such assumptions. The Rated Final Distribution
Date (as defined in this prospectus supplement) for each class of offered
certificates (other than the Class X Certificates) is May 2032. See
"Prepayment and Yield Considerations--Rated Final Distribution Date" and
"Rating" in this prospectus supplement.
(3) The Class X Certificates will not have a certificate balance and will not
be entitled to receive distributions of principal. Interest will accrue
on such class of certificates at the applicable pass-through rate on the
notional balance thereof. The notional balance of the Class X
Certificates is initially $1,311,125,920. See "Description of the Offered
Certificates" in this prospectus supplement.
(4) The initial pass-through rates on the Class B, Class C and Class D
Certificates will equal the lesser of a specified fixed rate and the
Weighted Average Net Mortgage Pass-Through Rate (as defined in this
prospectus supplement).
(5) The Pass-Through Rates on the Class E and Class F Certificates will equal
the Weighted Average Net Mortgage Pass-Through Rate.
----------------
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates; and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. IF THE TERMS OF THE OFFERED
CERTIFICATES VARY BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus supplement and the prospectus. The information in this prospectus
supplement is accurate only as of the date of this prospectus supplement.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this prospectus
supplement and the prospectus to assist you in understanding the terms of the
offered certificates and this offering. The capitalized terms used in this
prospectus supplement are defined on the pages indicated under the caption
"Index of Principal Terms" beginning on page in this prospectus supplement.
The capitalized terms used in the prospectus are defined on the pages indicated
under the caption "Index of Principal Definitions" beginning on page 115 in the
prospectus.
----------------
In this prospectus supplement, the terms "Depositor," "we," "us" and "our"
refer to Deutsche Mortgage & Asset Receiving Corporation.
----------------
UNTIL THE DATE THAT IS NINETY DAYS FROM THE DATE OF THIS PROSPECTUS
SUPPLEMENT, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER
OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS'
OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
S-3
<PAGE>
EXECUTIVE SUMMARY
This Executive Summary does not include all of the information you need to
consider in making your investment decision. You are advised to carefully read,
and should rely solely on, the detailed information appearing elsewhere in this
prospectus supplement and the prospectus relating to the offered certificates
and the underlying mortgage loans.
THE CERTIFICATES
<TABLE>
<CAPTION>
INITIAL
ANTICIPATED CERTIFICATE APPROXIMATE
RATINGS PRINCIPAL OR PERCENT OF
(FITCH/ NOTIONAL TOTAL
CLASS MOODY'S) AMOUNT(2) CERTIFICATES
- --------------- ------------- ----------------- --------------
<S> <C> <C> <C>
Class X(1) .... AAA/Aaa $1,311,125,920 N/A
Class A-1 ..... AAA/Aaa 181,434,000 13.84%
Class A-2 ..... AAA/Aaa 723,242,000 55.16
Class B ....... AA/Aa2 62,278,000 4.75
Class C ....... AA/Aa3 22,944,000 1.75
Class D ....... A/A2 62,278,000 4.75
Class E ....... BBB/Baa2 81,945,000 6.25
Class F ....... BBB--/Baa3 19,667,000 1.50
Non-Offered Certificates (Non-Investment Grade Certificates)
Class G(4) .... $
Class H(4) ....
Class J(4) ....
Class K(4) ....
Class L(4) ....
<CAPTION>
WEIGHTED
APPROXIMATE DESCRIPTION OF INITIAL AVERAGE
CREDIT PASS-THROUGH PASS-THROUGH LIFE(5) PRINCIPAL
CLASS SUPPORT RATE RATE (YRS.) WINDOW(5)
- --------------- ---------------- ------------------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Class X(1) .... N/A Variable Rate I/O 8.83 4/99--11/18
Class A-1 ..... 31.00%(3) Fixed 5.00 4/99-- 2/08
Class A-2 ..... 31.00(3) Fixed 9.25 2/08-- 9/08
Class B ....... 26.25 Fixed(6) 9.55 9/08--10/08
Class C ....... 24.50 Fixed(6) 9.58 10/08--10/08
Class D ....... 19.75 Fixed(6) 9.58 10/08--10/08
Class E ....... 13.50 WAC(7) 9.58 10/08--10/08
Class F ....... 12.00 WAC(7) 9.58 10/08--10/08
Non-Offered Certificates (Non-Investment Grade
Certificates)
Class G(4) ....
Class H(4) ....
Class J(4) ....
Class K(4) ....
Class L(4) ....
</TABLE>
- ----------
(1) The Class X Certificates will not have a principal amount. Interest will
accrue on such class of certificates at the applicable pass-through rate
on its notional balance.
(2) Approximate; subject to a variance of plus or minus 5%.
(3) Represents the approximate credit support for the Class A-1 and Class A-2
Certificates in the aggregate.
(4) Not offered hereby.
(5) The weighted average life and principal window during which distributions
of principal (or reduction of the notional amount in the case of the
Class X Certificates) would be received set forth in the table with
respect to each class of certificates is based on (i) modeling
assumptions and prepayment assumptions described in this prospectus
supplement, (ii) assumptions that there are no prepayments (other than on
the "anticipated repayment date", if any) or losses on the mortgage
loans, and (iii) assumptions that there are no extensions of maturity
dates of mortgage loans that do not have anticipated repayment dates.
(6) Lesser of a specified fixed rate and the Weighted Average Net Mortgage
Pass-Through Rate (as defined in this prospectus supplement).
(7) Weighted average net mortgage rate (referred to as "WAC").
The Class Q-1, Q-2, R, MR and LR Certificates are not represented in this
table.
S-4
<PAGE>
THE MORTGAGE POOL
<TABLE>
<CAPTION>
<S> <C>
Initial Pool Balance (1) ............................. $1,311,125,920
Number of Mortgage Loans ............................. 221
Number of Mortgaged Properties ....................... 272
Average Mortgage Loan Balance ........................ $ 5,932,696
Weighted Average Mortgage Rate ....................... 7.15%
Weighted Average Remaining Term to the Earlier
of Maturity or Anticipated Repayment Date ........... 113 months
Weighted Average DSCR (2) ............................ 1.40x
Weighted Average LTV ................................. 71.32%
ARD Loans (3) ........................................ 60.50%
Fully Amortized Loans (other than ARD Loans) ......... 0.24%
Balloon Loans ........................................ 34.69%
</TABLE>
- ----------
(1) Subject to a permitted variance of plus or minus 5%.
(2) Debt Service Coverage Ratio ("DSCR") means, with respect to any mortgage
loan, or with respect to a mortgage loan evidenced by one note but
secured by multiple mortgaged properties, (a) the Underwritten Cash Flow
for the mortgaged property or properties divided by (b) the Annual Debt
Service for such mortgage loan. With respect to Cross-Collateralized
Loans, the DSCR and Loan-to-Value Ratio set forth in Annex A is based
upon each loan's DSCR and Annual Debt Service or Loan-to-Value Ratio,
respectively (as such terms are defined under "Definitions" in Annex A
hereto). In addition, for Cross-Collateralized Loans, an aggregate DSCR
and Loan-to-Value Ratio is shown on Annex A.
(3) An "ARD Loan" is a mortgage loan which provides that, commencing on a
specified date prior to maturity, all "excess cash flow" (as defined in
this prospectus supplement) is diverted to repay principal. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans -- Excess Interest" herein.
S-5
<PAGE>
PROSPECTUS SUPPLEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
EXECUTIVE SUMMARY ................................................................. S-4
SUMMARY OF PROSPECTUS SUPPLEMENT .................................................. S-8
RISK FACTORS ...................................................................... S-23
DESCRIPTION OF THE MORTGAGE POOL .................................................. S-45
General .......................................................................... S-45
Property Type .................................................................... S-45
Security for the Mortgage Loans .................................................. S-46
The Mortgage Loan Sellers ........................................................ S-47
Certain Underwriting Matters ..................................................... S-47
Certain Terms and Conditions of the Mortgage Loans ............................... S-49
Changes in Mortgage Pool Characteristics ......................................... S-53
DESCRIPTION OF THE OFFERED CERTIFICATES ........................................... S-55
General .......................................................................... S-55
Distributions .................................................................... S-56
Realized Losses .................................................................. S-64
Prepayment Interest Shortfall .................................................... S-65
Subordination .................................................................... S-66
Appraisal Reductions ............................................................. S-66
Delivery, Form and Denomination .................................................. S-67
Book-Entry Registration .......................................................... S-68
Definitive Certificates .......................................................... S-70
Transfer Restrictions ............................................................ S-71
YIELD AND MATURITY CONSIDERATIONS ................................................. S-72
Yield Considerations ............................................................. S-72
Weighted Average Life ............................................................ S-74
THE POOLING AND SERVICING AGREEMENT ............................................... S-86
General .......................................................................... S-86
Assignment of the Mortgage Loans ................................................. S-86
Representations and Warranties; Repurchase; Substitution ......................... S-86
Servicing of the Mortgage Loans; Collection of Payments .......................... S-88
Advances ......................................................................... S-89
Accounts ......................................................................... S-91
Withdrawals from the Collection Account .......................................... S-92
Enforcement of "Due-on-Sale" and "Due-on-Encumbrance" Clauses .................... S-93
Inspections ...................................................................... S-93
Insurance Policies ............................................................... S-94
Evidence as to Compliance ........................................................ S-95
Certain Matters Regarding the Depositor, the Servicer and the Special Servicer ... S-96
Events of Default ................................................................ S-97
Rights Upon Event of Default ..................................................... S-97
Amendment ........................................................................ S-98
Voting Rights .................................................................... S-99
Realization Upon Mortgage Loans .................................................. S-99
Modifications .................................................................... S-101
Optional Termination ............................................................. S-103
The Trustee ...................................................................... S-103
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Duties of the Trustee ..................................................... S-104
The Fiscal Agent .......................................................... S-105
Duties of the Fiscal Agent ................................................ S-105
The Servicer .............................................................. S-105
Servicing Compensation and Payment of Expenses ............................ S-105
Special Servicing ......................................................... S-106
The Automobile Adviser .................................................... S-109
Servicer and Special Servicer Permitted to Buy Certificates ............... S-110
Reports to Certificateholders; Available Information ...................... S-111
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS ................................ S-114
USE OF PROCEEDS ............................................................ S-114
CERTAIN FEDERAL INCOME TAX CONSEQUENCES .................................... S-115
General ................................................................... S-115
ERISA CONSIDERATIONS ....................................................... S-118
LEGAL INVESTMENT ........................................................... S-121
METHOD OF DISTRIBUTION ..................................................... S-121
LEGAL MATTERS .............................................................. S-122
RATING ..................................................................... S-122
INDEX OF PRINCIPAL TERMS ................................................... S-124
Annex A Certain Characteristics of the Mortgage Loans ...................... A-1
Annex B Form of Trustee Reports ............................................ B-1
Annex C Structural and Collateral Term Sheet .............................. C-1
Annex D Description of Significant Mortgage Loans and Mortgaged Properties . D-1
Annex E Exceptions to the Mortgage Loan Representations and Warranties ..... E-1
</TABLE>
S-7
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary highlights selected information from this prospectus
supplement and does not include all of the relevant information you need to
consider in making your investment decision. You are advised to carefully read,
and should rely solely on, the detailed information appearing elsewhere in this
prospectus supplement and in the accompanying prospectus.
RELEVANT PARTIES AND DATES
Depositor................... Deutsche Mortgage & Asset Receiving
Corporation.
Servicer.................... Banc One Mortgage Capital Markets, LLC. See
"The Pooling and Servicing Agreement -- The
Servicer" in this prospectus supplement.
Special Servicer............ Banc One Mortgage Capital Markets, LLC. See
"The Pooling and Servicing Agreement -- Special
Servicing" in this prospectus supplement.
Trustee..................... LaSalle National Bank. See "The Pooling and
Servicing Agreement -- The Trustee" in this
prospectus supplement.
Fiscal Agent................ ABN AMRO Bank N.V., a Netherlands banking
corporation and indirect corporate parent of the
Trustee.
Mortgage Loan Sellers....... German American Capital Corporation, an
affiliate of Deutsche Bank Securities Inc., an
underwriter; and Banc One Mortgage Capital
Markets, LLC.
The mortgage loans were originated or purchased
by the mortgage loan sellers as follows:
<TABLE>
<CAPTION>
% OF CUT-OFF
INITIAL DATE
POOL PRINCIPAL
MORTGAGE LOAN SELLER BALANCE BALANCE
- --------------------------- ----------- -----------------
<S> <C> <C>
German American Capital
Corporation ............. 87.89% $1,152,294,365
Banc One Mortgage Capital
Markets, LLC ............ 12.11% $ 158,831,555
</TABLE>
Underwriters................ Deutsche Bank Securities Inc., Lehman Brothers
Inc. and J.P. Morgan Securities Inc. Deutsche
Bank Securities Inc. is required to purchase the
offered certificates from Deutsche Mortgage &
Asset Receiving Corporation, subject to certain
conditions. The other underwriters are not
required to sell any specific amount of the
offered certificates but will use their best
efforts to sell the offered certificates, and
will each receive a fee equal to 0.125% of the
initial aggregate principal balance of the
offered certificates. See "Method of
Distribution" in this prospectus supplement.
Cut-Off Date................ March 1, 1999.
Closing Date................ On or about March , 1999.
S-8
<PAGE>
Distribution Date........... The 15th day of each month, or if such 15th day
is not a business day, the business day
immediately following such 15th day, commencing
in April 1999.
Record Date................. With respect to any distribution date, the
close of business on the last business day of the
preceding month.
OFFERED CERTIFICATES
General..................... Deutsche Mortgage & Asset Receiving Corporation
is offering the following seven classes of
Commercial Mortgage Pass-Through Certificates
(collectively, the "Offered Certificates") as
part of COMM 1999-1:
o Class X
o Class A-1
o Class A-2
o Class B
o Class C
o Class D
o Class E
o Class F
COMM 1999-1 will consist of a total of 18
classes, the following 10 of which are not being
offered through this prospectus supplement and
the accompanying prospectus: Class G, Class H,
Class J, Class K, Class L, Class Q-1, Class Q-2,
Class R, Class MR and Class LR (collectively,
the "Private Certificates").
The Offered Certificates and the Private
Certificates will represent beneficial ownership
interests in a trust created by Deutsche
Mortgage & Asset Receiving Corporation. The
trust's assets will primarily be 221 mortgage
loans secured by first liens on 272 commercial
properties.
Certificate Balances and
Notional Balances.......... The Offered Certificates have the approximate
aggregate initial certificate balance or notional
balance set forth below, subject to a permitted
variance of plus or minus 5%.
<TABLE>
<CAPTION>
<S> <C> <C>
Class X $1,311,125,920 Notional Amount
Class A-1 $ 181,434,000 Principal Amount
Class A-2 $ 723,242,000 Principal Amount
Class B $ 62,278,000 Principal Amount
Class C $ 22,944,000 Principal Amount
Class D $ 62,278,000 Principal Amount
Class E $ 81,945,000 Principal Amount
Class F $ 19,667,000 Principal Amount
</TABLE>
S-9
<PAGE>
The private certificates will have the initial
aggregate certificate balances, if any, as set
forth under "Executive Summary" in this
prospectus supplement.
See "Description of the Offered Certificates --
General" and "-- Distributions" in this
prospectus supplement.
Pass-Through Rates.......... Your certificates will accrue interest at an
annual rate called a "Pass-Through Rate" which is
set forth below.
<TABLE>
<CAPTION>
<S> <C>
Class A-1 %
Class A-2 %
</TABLE>
o The Pass-Through Rates applicable to the
Class B, C and D Certificates will, at all
times, be equal to the lesser of a specified
fixed rate and the Weighted Average Net
Mortgage Pass-Through Rate, each with the
initial Pass-Through Rate described in the
"Executive Summary" in this prospectus
supplement.
o The Pass-Through Rates applicable to the
Class E and Class F Certificates will, at all
times, be equal to the Weighted Average Net
Mortgage Pass-Through Rate.
o The Pass-Through Rates applicable to the
Class G, Class H, Class J, Class K and Class
L Certificates will, at all times, be equal
to the lesser of a specified fixed rate and
the Weighted Average Net Mortgage
Pass-Through Rate, each with the initial
Pass-Through Rate described in the "Executive
Summary" in this prospectus supplement. The
Class Q-1, Class Q-2, Class R, Class MR and
Class LR Certificates will not have
Pass-Through Rates. See "Description of the
Offered Certificates -- Distributions --
Method, Timing and Amount" and "-- Payment
Priorities" herein.
o The Pass-Through Rate applicable to the
Class X Certificates for the initial
distribution date will equal approximately
% per annum. The Pass-Through Rate
applicable to the Class X Certificates for
each distribution date subsequent to the
initial distribution date will be equal
generally to the difference between the
weighted average interest rate payable on the
mortgage loans and the weighted average
Pass-Through Rate of the Certificates
(weighted in each case based on their
principal balances).
o The notional amount of the Class X
Certificates will generally be equal to 100%
of the aggregate principal balance of the
mortgage loans outstanding from time to time.
The Class X Certificates will receive
interest only; they will not be entitled to
distributions of principal.
S-10
<PAGE>
o For purposes of calculating the Class X
Pass-Through Rate, the mortgage loan interest
rates will not reflect any default interest
rate or any rate increase occurring after an
effective maturity date. The mortgage loan
interest rates will also be determined
without regard to any loan term modifications
agreed to by the Special Servicer or
resulting from the borrower's bankruptcy or
insolvency. In addition, if a mortgage loan
does not accrue interest on a 30/360 basis,
its interest rate for any month that is not a
30-day month will be recalculated so that the
amount of interest that would accrue at that
rate in such month, calculated on a 30/360
basis, will equal the amount of interest that
actually accrues on that loan in that month.
Distributions............... On each distribution date, you will be entitled
to receive interest and principal distributions
from available funds in an amount equal to your
certificate's interest and principal entitlement,
subject to:
(i) payment of the respective interest
entitlement for any class of certificates
bearing an earlier alphabetical designation
(except in respect of the distribution of
interest among the Class X, Class A-1 and
Class A-2 Certificates, which will have the
same priority), and
(ii) if applicable, payment of the respective
principal entitlement for such distribution
date to outstanding classes of certificates
having an earlier alphanumeric designation.
A description of the principal and interest
entitlement of each class of certificates for
each distribution date can be found in
"Description of the Offered Certificates --
Distributions -- Method, Timing and Amount," "--
Payment Priorities" and "-- Distribution of
Available Funds" in this prospectus supplement.
The Class X Certificates will not be entitled to
any distributions of principal.
Prepayment Premiums......... The manner in which any prepayment premiums
received during a particular collection period
will be allocated to the Class X Certificates, on
the one hand, and the classes of Offered
Certificates entitled to principal, on the other
hand, is described in "Description of the Offered
Certificates -- Prepayment Premiums" in this
prospectus supplement.
Prepayment and Yield
Considerations............. The yield to investors, in particular investors
in subordinate classes, will be sensitive to the
timing of prepayments, repurchases or purchases
of mortgage loans, and the magnitude of losses on
the mortgage loans due to liquidations. The yield
to maturity on each class of the offered
certificates will be sensitive to, and the yield
to
S-11
<PAGE>
maturity of the Class X Certificates will be
extremely sensitive to, the rate and timing of
principal payments (including both voluntary and
involuntary prepayments, defaults and
liquidations) on the mortgage loans and payments
with respect to repurchases thereof that are
applied in reduction of the certificate balance
or notional balance of such class. A rapid rate
of such principal payments could result in the
failure of investors in the Class X Certificates
to recover their initial investment. See "Risk
Factors --The Certificates -- Special Prepayment
and Yield Considerations" and "Prepayment and
Yield Considerations" in this prospectus
supplement and "Yield and Maturity
Considerations" in the prospectus.
S-12
<PAGE>
Subordination; Allocation of Losses
and Certain Expenses....... The chart below describes the manner in which
the rights of various classes will be senior to
the rights of other classes. This subordination
will be effected in two ways: entitlement to
receive principal and interest on any
distribution date is in descending order and loan
losses are allocated in ascending order.
(However, no principal payments or principal
losses will be allocated to the Class X
Certificates).
<TABLE>
<CAPTION>
<S> <C>
Class A-1, Class A-2,
Class X
Class B
Class C
Class D
Class E
Class F
Class G
Class H
Class J
Class K
Class L
</TABLE>
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE
AVAILABLE FOR THE BENEFIT OF THE HOLDERS OF THE
OFFERED CERTIFICATES.
Shortfalls in mortgage loan interest that are
the result of the timing of prepayments and that
are in excess of the sum of (x) the servicing
fee payable to the Servicer and (y) the amount
of mortgage loan interest that accrues with
respect to any principal prepayment that is made
after the
S-13
<PAGE>
date on which interest is due will be allocated
to, and be deemed distributed to, each class of
certificates, pro rata, based upon amounts
distributable in respect of interest to each
such class. See "Description of the Offered
Certificates -- Prepayment Interest Shortfalls"
in this prospectus supplement.
Shortfalls in
Available Funds............. The following types of shortfalls in available
funds will be allocated in the same manner as
mortgage loan losses: (i) shortfalls resulting
from additional servicing compensation (other
than the servicing fee) which the Servicer or
Special Servicer is entitled to receive; (ii)
shortfalls resulting from interest on advances
made by the Servicer, the Trustee or the Fiscal
Agent (to the extent not covered by default
interest and late payment charges paid by the
borrower); (iii) shortfalls resulting from
unanticipated expenses of the trust (including,
but not limited to, expenses relating to
environmental assessments, appraisals, any
administrative or judicial proceeding, management
of REO properties, maintenance of insurance
policies, and permissible indemnification); and
(iv) shortfalls resulting from a reduction of a
mortgage loan's interest rate by a bankruptcy
court or from other unanticipated or
default-related expenses of the trust.
THE MORTGAGE POOL
Characteristics of the
Mortgage Pool
A. General............... For a more complete description of the mortgage
loans, see the following sections in this
prospectus supplement:
o Description of the Mortgage Pool;
o Annex A (Characteristics of the Mortgage
Loans);
o Annex B (Descriptions of the Largest
Mortgage Loans).
All numerical information provided in this
prospectus supplement with respect to the
mortgage loans is approximate. All weighted
average information regarding the mortgage loans
reflects weighting of the mortgage loans by their
respective principal balances as of the Cut-off
Date.
S-14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Number of Mortgage Loans 221
Aggregate Initial Principal Balance $1,311,125,920
(plus or minus 5%)
Range of Individual Mortgage $493,521 to
Loan Principal Balances $ 60,000,000
Average Mortgage Loan Principal $ 5,932,696
Balance
Range of Mortgage Rates 6.23% to 8.31%
Weighted Average Mortgage Rate 7.15%
Range of Remaining Terms to 54 months to 236
Scheduled Maturity months
Weighted Average Remaining 113 months
Term to Scheduled Maturity
Range of Remaining Amortization 175 months to 374
Terms (for the Amortizing Loans) months
Weighted Average Remaining 321 months
Amoritization Term (for the
Amortizing Loans)
Range of Loan-to-Value Ratios 25.05% to 86.60%
Weighted Average Loan-to-Value 71.32%
Ratio (as described in this
Prospectus Supplement on
Annex A)
Range of Debt Service Coverage 1.01x to 2.85x
Ratios
Weighted Average Debt Service 1.40x
Coverage Ratio (as described in
this Prospectus Supplement on
Annex A)
</TABLE>
B. Non-Recourse.......... Substantially all of the mortgage loans are
non-recourse obligations. No mortgage loan will
be insured or guaranteed by any governmental
entity or private insurer, or by any other
person.
C. Fee Simple/Leasehold... Each mortgage loan is secured by a first
mortgage lien on the borrower's fee simple (or,
in 7 cases, which represent 1.97% of the initial
outstanding balance, leasehold and in 3 cases,
which represents 2.82% of the initial outstanding
balance, a leasehold interest in a portion of the
property and a fee interest in the remainder of
the property) estate in an income-producing real
property.
D. Property Purpose....... The number of mortgaged properties, and the
approximate percentage of the initial outstanding
pool balance of the mortgage loans secured
thereby, for each indicated purpose are:
S-15
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
INITIAL POOL MORTGAGED
PROPERTY TYPE BALANCE PROPERTIES
- ------------------------ -------------- -----------
<S> <C> <C>
Office 24.98% 72
Multifamily 24.48% 78
Retail 23.53% 56
Industrial 7.41% 19
Special Purpose 4.57% 11
Skilled Nursing Home 3.52% 8
Mixed Use 3.45% 6
Hotel 3.10% 8
Assisted Living
Facilities 1.78% 3
Self Storage 1.57% 7
Congregate Care 1.26% 2
Mobile Home Park 0.35% 2
</TABLE>
E. Property Location..... The number of mortgaged properties, and the
approximate percentage of the initial outstanding
pool balance of mortgage loans secured thereby,
that are located in the 5 states with the highest
concentrations of mortgaged properties are:
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
INITIAL POOL MORTGAGED
STATE BALANCE PROPERTIES
- ---------------- --------------- -----------
<S> <C> <C>
California 18.45% 50
Texas 12.27% 50
Florida 10.76% 16
New York 9.26% 21
Pennsylvania 7.91% 13
</TABLE>
The remaining mortgaged properties are located
in 26 other states, the Virgin Islands and the
District of Columbia. No state other than those
set forth above has a concentration of mortgaged
properties that represents security for more
than 5.41% of the initial outstanding pool
balance. See Annex A hereto.
F. Other Mortgage Loan
Features............. of March 1, 1999, the mortgage loans had the
following characteristics:
o No scheduled payment of principal and
interest on the mortgage loan was thirty days
or more past due, and the mortgage loan has
not been thirty days or more delinquent in
the past year.
o Five (5) separate groups of mortgage loans
are, within such group, cross-collateralized
with each other, the largest group of which
represents 4.48% of the initial outstanding
pool balance of mortgage loans.
o Several groups of mortgage loans are made to
the same borrower or have related borrowers
that are affiliated with one another through
partial or complete
S-16
<PAGE>
direct or indirect common ownership, the
three largest of these groups representing
5.75%, 3.95% and 2.41%, respectively, of the
initial outstanding pool balance of mortgage
loans.
o Sixteen (16) additional mortgage loans are,
in each case, secured by one or more
mortgages encumbering multiple real
properties, with each such mortgage loan
representing between 0.15% and 2.90% of the
initial outstanding pool balance of mortgage
loans, and all such mortgage loans
collectively representing 16.53% of the
initial outstanding pool balance of mortgage
loans.
o All mortgage loans bear interest at fixed
rates, except that anticipated repayment date
loans accrue interest at a higher rate after
the related anticipated repayment date.
o No mortgage loan permits negative
amortization or the deferral of accrued
interest (other than Excess Interest accruing
on Anticipated Repayment Date Loans).
G. Balloon Loans; Anticipated
Repayment Date Loans The Mortgage Loans provide for one of the
following:
o Monthly payments that provide for payment of
interest only through the maturity date (one
such mortgage loan, representing 4.58% of the
initial outstanding pool balance); or
o Monthly payments that provide for payment of
interest only for a certain period after the
Cut-off Date and then payments of interest
and principal based on amortization schedules
significantly longer than their respective
terms to the maturity date or the anticipated
repayment date, as applicable (9 of such
mortgage loans, representing 10.69% of the
initial outstanding pool balance).
o Anticipated repayment date loans (142 of
such mortgage loans, representing 57.20% of
the initial outstanding pool balance) which
(i) accrue interest at a higher rate (not to
exceed the applicable mortgage rate plus 2%
per annum) after the related anticipated
repayment date, and (ii) provide that,
commencing on a specified date prior to
maturity, all excess cash flow is diverted to
repay principal. The anticipated repayment
date loans permit the related borrower to
prepay such loan without penalty for a period
generally beginning on or prior to the
anticipated repayment date and ending on the
related maturity date. The anticipated
repayment date for each loan is set forth on
Annex A. If the related borrower elects to
prepay a loan in full on the related
anticipated repayment date, a substantial
amount of principal will be due. See
"Description of the Mortgage
S-17
<PAGE>
Pool -- Certain Terms and Conditions of the
Mortgage Loans -- Excess Interest" herein.
o 67 mortgage loans, representing 27.30% of
the initial outstanding pool balance, provide
for payments of interest and principal and
then have an expected balloon balance at the
maturity date.
o Two (2) mortgage loans, representing 0.24%
of the initial outstanding pool balance, are
fully amortizing.
H. Prepayment Provisions;
Defeasance Loans.... of March 1, 1999, all of the mortgage loans
impose some restriction on voluntary principal
prepayments during certain periods of time. See
"Description of the Mortgage Pool -- Certain
Terms and Conditions of the Mortgage Loans --
Prepayment Provisions" and "-- Property Releases"
in this prospectus supplement and on Annex A. The
following table sets forth certain information
regarding prepayment restrictions contained in
the mortgage loans.
<TABLE>
<CAPTION>
% OF
INITIAL
PREPAYMENT RESTRICTION POOL BALANCE
- ------------------------------------------ -------------
<S> <C>
Lock-Out Period with defeasance 98.20%
Lock-Out Period with yield maintenance 1.73% `
Lock-Out Period Only 0.07%
</TABLE>
The mortgage loans generally provide for a
period prior to maturity (generally three to six
months) during which prepayments may be made
without penalty.
The mortgage loans are more particularly
described under "Description of the Mortgage
Pool," in the tables in Annex A. A brief summary
of the material terms of the largest mortgage
loans in the mortgage pool is set forth in
Annex B.
Advances of Principal and Interest
A. General................ The Servicer is required to advance (each, a
"P&I Advance") delinquent monthly mortgage loan
payments, if it determines that the advance will
be recoverable. P&I Advances will generally equal
the delinquent portion of the monthly mortgage
loan payment. The Servicer will not be required
to advance interest in excess of a loan's regular
interest rate (not including any default rate or
any rate increase after an effective maturity
date). The Servicer also is not required to
advance prepayment or yield maintenance premiums,
or balloon payments. If an advance is made, the
Servicer will defer rather than advance servicing
fees, but will advance the Trustee's fee.
S-18
<PAGE>
If a borrower fails to pay amounts due on the
maturity date of the related mortgage loan, the
Servicer will be required on and after such date
and until final liquidation thereof, to advance
only an amount equal to the interest and
principal portion of the constant mortgage loan
payment due immediately prior to the maturity
date.
If the Servicer fails to make a required P&I
Advance, the Trustee will be required to make
the P&I Advance. If the Trustee fails to make a
required P&I Advance, the Fiscal Agent -- ABN
AMRO Bank N.V., the indirect corporate parent of
the Trustee -- will be required to make such P&I
Advance. In both cases, the obligation to make
an Advance will also be subject to a
determination of recoverability.
P&I Advances are intended to maintain a regular
flow of scheduled interest and principal
payments to the certificateholders and are not
intended to guarantee or insure against losses.
Advances which cannot be reimbursed out of
collections on, or in respect of, the related
mortgage loans will be reimbursed directly from
any other collections on the mortgage loans as
provided in this prospectus supplement and this
will cause losses to be borne by
certificateholders in the priority specified in
this prospectus supplement. The Servicer, the
Trustee and the Fiscal Agent, as the case may
be, will be entitled to interest on any advances
made, such interest accruing at the rate and
payable under the circumstances described
herein. Interest accrued on outstanding advances
may result in reductions in amounts otherwise
payable on the certificates.
See "The Pooling and Servicing Agreement --
Advances" in this prospectus supplement.
B. Appraisal Reduction Event
Advances............. Certain adverse events affecting a mortgage
loan, called "Appraisal Reduction Events," will
require the Special Servicer to obtain a new
appraisal on the related mortgaged property.
Based on the appraised value in such appraisal,
it may be necessary to calculate an "Appraisal
Reduction Amount." The amount required to be
advanced in respect of a mortgage loan that has
been subject to an Appraisal Reduction Event will
be reduced so that the Servicer will not be
required to advance interest on the Appraisal
Reduction Amount (as described below). Due to the
payment priorities described above, this will
reduce the funds available to pay interest on the
most subordinate class or classes of certificates
then outstanding.
See "Description of the Offered Certificates --
Appraisal Reductions" in this prospectus
supplement.
S-19
<PAGE>
ADDITIONAL CONSIDERATIONS
Optional Termination........ On any distribution date on which the remaining
aggregate principal balance of the mortgage loans
is less than 1% of the initial outstanding pool
balance as of the Cut-off Date, the Servicer may
purchase, and if the Servicer does not exercise
the option, the holder of the Class LR
Certificates representing greater than 50% of the
Class LR Certificates may purchase, all of the
mortgage loans (and all property acquired through
exercise of remedies in respect of any mortgage
loan). Exercise of this option will effect the
termination of the trust and retirement of the
then-outstanding certificates.
See "The Pooling and Servicing Agreement --
Optional Termination" in this prospectus
supplement and "Description of the Certificates
-- Termination" in the prospectus.
Certain Federal Income Tax
Consequences............... Elections will be made to treat the trust
(other than rights to specific payments on
certain Mortgage Loans identified in the Pooling
and Servicing Agreement) as three separate REMICs
-- a Lower-Tier REMIC, a Middle-Tier REMIC and an
Upper-Tier REMIC -- for federal income tax
purposes. In the opinion of counsel, the trust
will qualify for this treatment pursuant to its
election.
Federal income tax consequences of an investment
in the offered certificates include:
o Each class of offered certificates other
than the Class X Certificates will constitute
a class of "regular interests" in the
Upper-Tier REMIC.
o The Class X Certificates will represent an
investment in 12 separate classes of "regular
interests" in the Upper-Tier REMIC (each, a
"Class X Component"). Each Class X Component
represents a right to a specified portion of
interest on a corresponding Middle-Tier REMIC
regular interest.
o The regular interests will be treated as
newly originated debt instruments for federal
income tax purposes.
o Beneficial owners will be required to report
income thereon in accordance with the accrual
method of accounting.
o The Class X Certificates will, and one or
more other classes of offered certificates
may, be issued with original issue discount.
See "Certain Federal Income Tax Consequences" in
this prospectus supplement and "Certain Federal
Income Tax Consequences -- Federal Income Tax
Consequences for REMIC Certificates" in the
prospectus.
S-20
<PAGE>
ERISA Considerations........ A fiduciary of a Plan should review with its
legal advisors whether the purchase or holding of
offered certificates could give rise to a
transaction that is prohibited or is not
otherwise permitted either under ERISA or Section
4975 of the Code or whether there exists any
statutory or administrative exemption applicable
thereto. The United States Department of Labor
has granted to the underwriters an administrative
exemption (Deutsche Bank Securities Inc., as
Department Final Authorization Number 97-03E, as
amended by Prohibited Transaction Exemption
("PTE") 97-34 (the "DBS Exemption"), Lehman
Brothers Inc. as PTE 91-14 (the "LBI Exemption")
and J.P. Morgan Securities Inc. as PTE 90-23 (the
"JPM Exemption" and, collectively with the DBS
Exemption and the LBI Exemption, the
"Exemption")) which generally exempts from the
application of certain of the prohibited
transaction provisions of Section 406 of ERISA
and the excise taxes imposed on such prohibited
transactions by Sections 4975(a) and (B) of the
Code, transactions relating to the purchase, sale
and holding of pass-through certificates
underwritten by the underwriters and the
servicing and operation of related asset pool,
provided that certain conditions are satisfied.
The Depositor expects that the Exemption will
generally apply to the Class A-1, Class A-2 and
Class X Certificates but they will not apply to
the other Classes of Offered Certificates.
ACCORDINGLY, THE CLASS B, CLASS C, CLASS D,
CLASS E AND CLASS F CERTIFICATES SHOULD NOT BE
ACQUIRED BY, ON BEHALF OF OR WITH ASSETS OF A
PLAN, UNLESS THE PURCHASE AND HOLDING OF SUCH
CERTIFICATE OR INTEREST THEREIN IS EXEMPT FROM
THE PROHIBITED TRANSACTION PROVISIONS OF SECTION
406 OF ERISA AND THE RELATED EXCISE TAX
PROVISIONS OF SECTION 4975 OF THE CODE UNDER
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60,
WHICH PROVIDES AN EXEMPTION FROM THE PROHIBITED
TRANSACTION RULES FOR CERTAIN TRANSACTIONS
INVOLVING AN INSURANCE COMPANY GENERAL ACCOUNT.
See "ERISA Considerations" herein and in the
Prospectus.
Ratings..................... It is a condition to their issuance that the
offered certificates receive from Fitch IBCA,
Inc. and Moody's Investors Service Inc. the
credit ratings indicated below.
<TABLE>
<CAPTION>
FITCH MOODY'S
------- --------
<S> <C> <C>
Class X AAA Aaa
Class A-1 and A-2 AAA Aaa
Class B AA Aa2
Class C AA Aa3
Class D A A2
Class E BBB Baa2
Class F BBB- Baa3
</TABLE>
A rating agency may lower or withdraw a security
rating at any time.
S-21
<PAGE>
See "Risk Factors" and "Ratings" in this
prospectus supplement and "Yield Considerations"
in the prospectus for a discussion of the basis
upon which ratings are given, the limitations of
and restrictions on the ratings, and the
conclusions that should not be drawn from a
rating.
Legal Investment............ The appropriate characterization of the offered
certificates under various legal investment
restrictions, and thus the ability of investors
subject to these restrictions to purchase the
offered certificates, may be subject to
significant interpretative uncertainties. NONE OF
THE CERTIFICATES WILL CONSTITUTE "MORTGAGE
RELATED SECURITIES" WITHIN THE MEANING OF THE
SECONDARY MORTGAGE MARKET ENHANCEMENT ACT OF
1984, AS AMENDED. Investors should consult their
own legal advisors to determine whether and to
what extent the offered certificates constitute
legal investments for them. See "Legal
Investment" herein and in the prospectus.
Denominations;
Clearance and Settlement... The offered certificates will be issuable in
registered form, in minimum denominations of
certificate or notional balance of (i) $50,000
with respect to the Class A, B, C, D, E and F
Certificates, and (ii) $1,000,000 with respect of
the Class X Certificates. Investments in excess
of the minimum denominations may be made in
multiples of $1.
You may hold your certificates through (i) The
Depository Trust Company ("DTC") (in the United
States) or (ii) Cedel Bank, S.A. ("CEDEL") or
The Euroclear System ("Euroclear") (in Europe).
Transfers within DTC, CEDEL or Euroclear will be
in accordance with the usual rules and operating
procedures of the relevant system. See
"Description of the Offered Certificates --
Delivery, Form and Denomination," "-- Book-Entry
Registration" and "-- Definitive Certificates"
in this prospectus supplement and "Description
of the Certificates -- Book-Entry Registration
and Definitive Certificates" in the prospectus.
S-22
<PAGE>
RISK FACTORS
You should carefully consider the risks before making an investment
decision. In particular, the timing and amount of distributions on your
certificates will depend on payments received on and other recoveries with
respect to the mortgage loans. Therefore, you should carefully consider the
risk factors relating to the mortgage loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to your certificates. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair your investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this prospectus
supplement.
MORTGAGE LOANS ARE NONRECOURSE AND ARE NOT INSURED OR GUARANTEED
Payments under the mortgage loans are not insured or guaranteed by any
person or entity.
Substantially all of the mortgage loans are nonrecourse loans. If a
default occurs, the lender's remedies generally are limited to foreclosing
against the specific properties and other assets that have been pledged to
secure the loan. Payment of amounts due under the mortgage loan prior to
maturity is consequently dependent primarily on the sufficiency of the net
operating income of the mortgaged property. Payment of the mortgage loan at
maturity is primarily dependent upon the borrower's ability to sell or
refinance the property for an amount sufficient to repay the loan.
All of the mortgage loans were originated within 13 months prior to the
Cut-off Date. Consequently, the mortgage loans do not have a long-standing
payment history.
COMMERCIAL LENDING IS DEPENDENT UPON NET OPERATING INCOME
The mortgage loans are secured by various types of income-producing
commercial properties. Commercial mortgage loans are generally thought to
expose a lender to greater risk than one-to-four family residential loans
because commercial mortgage loans are typically larger and are made to a single
borrower.
The repayment of a commercial loan is typically dependent upon the ability
of the applicable property to produce cash flow. Even the liquidation value of
a commercial property is determined, in substantial part, by the amount of the
property's cash flow (or its potential to generate cash flow). However, net
operating income and cash flow can be volatile and may be insufficient to cover
debt service on the loan at any given time. Lenders typically look to the debt
service coverage ratio (that is, the ratio of net cash flow to debt service) of
a loan secured by income producing property as an important measure of the risk
of default of such loan.
The net operating income, cash flow and property value of the mortgaged
properties may be adversely affected by a large number of factors. Some of
these factors relate to the property itself, such as:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o increases in operating expenses at the property and in relation to
competing properties;
S-23
<PAGE>
o an increase in the capital expenditures needed to maintain the property
or make improvements;
o the dependence upon a single tenant, or a concentration of tenants in a
particular business or industry;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or entered into with
new tenants.
Others factors are more general in nature, such as:
o national, regional or local economic conditions (including plant
closings, military base closings, industry slowdowns and unemployment
rates);
o local real estate conditions (such as an oversupply of competing
properties, space, multifamily housing or hotel rooms);
o demographic factors;
o decreases in consumer confidence;
o changes in consumer tastes and preferences;
o retroactive changes in building codes;
o changes in healthcare regulations, including reimbursement
requirements;
o changes or continued weakness in specific industry segments; and
o the public's perception of safety for customers and clients.
The volatility of net operating income will be influenced by many of the
foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o tenant defaults;
o in the case of rental properties, the rate at which new rentals occur;
and
o the property's "operating leverage" (i.e., the percentage of total
property expenses in relation to revenue, the ratio of fixed operating
expenses to those that vary with revenues, and the level of capital
expenditures required to maintain the property and to retain or replace
tenants).
A decline in the real estate market or in the financial condition of a
major tenant will tend to have a more immediate effect on the net operating
income of properties with short-term revenue sources and may lead to higher
rates of delinquency or defaults under mortgage loans.
SOME MORTGAGED PROPERTIES MAY NOT BE READILY CONVERTIBLE TO ALTERNATIVE USES
Some of the mortgaged properties may not be readily convertible to
alternative uses if those properties were to become unprofitable for any
reason. Converting commercial properties to alternate uses generally requires
substantial capital expenditures. In addition, zoning or other restrictions
also may prevent alternative uses. The liquidation value of any such mortgaged
property consequently may be substantially less than would be the case if the
property were readily adaptable to other uses.
PROPERTY VALUE MAY BE ADVERSELY AFFECTED EVEN WHEN CURRENT OPERATING INCOME IS
NOT
Various factors may adversely affect the value of the mortgaged properties
without affecting the properties' current net operating income. These factors
include, among others:
S-24
<PAGE>
o changes in governmental regulations, fiscal policy, zoning or tax laws;
o potential environmental legislation or liabilities or other legal
liabilities;
o the availability of refinancing; and
o changes in interest rate levels.
TENANT CONCENTRATION ENTAILS RISK
A deterioration in the financial condition of a tenant can be particularly
significant if a mortgaged property is leased to a single tenant, or a small
number of tenants. Mortgaged properties leased to a single tenant, or a small
number of tenants, also are more susceptible to interruptions of cash flow if a
tenant fails to renew its lease. This is so because: (i) the financial effect
of the absence of rental income may be severe; (ii) more time may be required
to re-lease the space; and (iii) substantial capital costs may be incurred to
make the space appropriate for replacement tenants.
In the case of 16 mortgage loans, representing 12.60% of the initial
outstanding pool balance, one or more of the related Mortgaged Properties are
100% leased to a single tenant.
Retail and office properties also may be adversely affected if there is a
concentration of particular tenants among the mortgaged properties or of
tenants in a particular business or industry.
MORTGAGED PROPERTIES LEASED TO MULTIPLE TENANTS ALSO HAVE RISKS
If a mortgaged property has multiple tenants, re-leasing expenditures may
be more frequent than in the case of mortgaged properties with fewer tenants,
thereby reducing the cash flow available for debt service payments.
Multi-tenanted mortgaged properties also may experience higher continuing
vacancy rates and greater volatility in rental income and expenses.
RISKS RELATING TO LOAN CONCENTRATION
Several groups of mortgage loans are made to the same borrower or have
related borrowers that are affiliated with one another through partial or
complete direct or indirect common ownership, the three largest of these groups
representing 5.75%, 3.95% and 2.41%, respectively, of the initial outstanding
pool balance of mortgage loans. Several of the mortgage loans have Cut-off Date
balances that are substantially higher than the average Cut-off Date balance.
In general, concentrations in mortgage loans with larger-than-average balances
can result in losses that are more severe, relative to the size of the pool
than would be the case if the aggregate balance of the pool were more evenly
distributed. The 5 largest loans equal 17.93% of the mortgage pool. Losses on
any of these loans may have a particularly adverse effect on the Offered
Certificates.
These largest loans are described in Annex D attached hereto.
Each of the other mortgage loans represents less than 2.5% of the Cut-off
Date balance.
A concentration of mortgaged property types or of mortgage loans with the
same borrower or related borrowers also can pose increased risks. For instance,
if a borrower that owns several mortgaged properties experiences financial
difficulty at one mortgaged property, or another income producing property that
it owns, it could attempt to avert foreclosure by filing a bankruptcy petition
that might have the effect of interrupting monthly payments for an indefinite
period on all of the related mortgage loans. As to property types:
o office properties represent 24.98% of the aggregate principal balance
of the mortgage pool as of the Cut-off Date;
o multifamily properties represent 24.48%;
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o retail properties represent 23.53%;
o industrial properties represent 7.41%;
o special purpose properties represent 4.57%;
o skilled nursing home property types represent 3.52%.
o mixed use properties represent 3.45%;
o hotel properties represent 3.10%;
o assisted living properties represent 1.78%;
o self-storage properties represent 1.57%
o congregate care properties represent 1.26%; and
o mobile home park properties represent 0.35%.
GEOGRAPHIC CONCENTRATION ENTAILS RISKS
The mortgaged properties are located in 31 states, the Virgin Islands and
the District of Columbia. Mortgaged properties securing mortgage loans
representing 18.45% of the initial outstanding pool balance are located in
California, mortgaged properties securing mortgage loans representing 12.27% of
the initial outstanding pool balance are located in Texas, and mortgaged
properties securing mortgage loans representing 10.76% of the initial
outstanding pool balance are located in Florida. See the table entitled
"Geographic Distribution of the Mortgaged Properties." Except as set forth
above, no state contains more than 9.26% of the mortgaged properties (based on
the principal balance as of the Cut-off Date of the related mortgage loans or
in the case of mortgage loans secured by multiple mortgaged properties, on the
portion of principal amount of the related mortgage loan allocated to such
mortgaged property).
The economy of any state or region in which a mortgaged property is
located may be adversely affected more than that of other areas of the country
by:
o certain developments particularly affecting industries concentrated in
such state or region;
o conditions in the real estate markets where the mortgaged properties
are located;
o changes in governmental rules and fiscal policies;
o acts of nature (which may result in uninsured losses); and
o other factors which are beyond the control of the borrowers.
For example, improvements on mortgaged properties located in California
may be more susceptible to certain types of special hazards not fully covered
by insurance (such as earthquakes) than properties located in other parts of
the country. To the extent that general economic or other relevant conditions
in states or regions in which concentrations of mortgaged properties securing
significant portions of the aggregate principal balance of the mortgage loans
are located decline and result in a decrease in commercial property, housing or
consumer demand in the region, the income from and market value of the
mortgaged properties and repayment by borrowers may be adversely affected.
OFFICE PROPERTIES HAVE SPECIAL RISKS
Seventy-two of the mortgaged properties, which represent security for
24.98% of the initial outstanding pool balance, are office properties.
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office building's tenants;
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o an economic decline in the business operated by the tenants;
o the diversity of an office building's tenants (or reliance on a single
or dominant tenant);
o the physical attributes of the building in relation to competing
buildings (e.g., age, condition, design, location, access to
transportation and ability to offer certain amenities, such as
sophisticated building systems);
o the desirability of the area as a business location;
o the strength and nature of the local economy (including labor costs and
quality, tax environment and quality of life for employees); and
o an adverse change in population, patterns of telecommuting or sharing
of office space, and employment growth (which creates demand for office
space).
Moreover, the cost of refitting office space for a new tenant is often
higher than the cost of refitting other types of property.
MULTIFAMILY PROPERTIES HAVE SPECIAL RISKS
Seventy-eight of the mortgaged properties, which represent security for
24.48% of the initial outstanding pool balance, are multifamily properties.
A large number of factors may adversely affect the value and successful
operation of a multifamily property, including:
o the physical attributes of the apartment building (e.g., its age,
appearance and construction quality);
o the location of the property (e.g., a change in the neighborhood over
time);
o the ability of management to provide adequate maintenance and
insurance;
o the types of services the property provides;
o the property's reputation;
o the level of mortgage interest rates (which may encourage tenants to
purchase rather than rent housing);
o the presence of competing properties in the local market;
o adverse local or national economic conditions, which may limit the
amount of rent that can be charged and may result in a reduction in
timely rent payments or a reduction in occupancy;
o state and local regulations;
o government assistance/rent subsidy programs; and
o national, state, or local politics.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent
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increases to fixed percentages, to percentages of increases in the consumer
price index, to increases set or approved by a governmental agency, or to
increases determined through mediation or binding arbitration. In many cases,
the rent control laws do not permit vacancy decontrol. Local authority to
impose rent control is pre-empted by state law in certain states, and rent
control is not imposed at the state level in those states. In some states,
however, local rent control ordinances are not pre-empted for tenants having
short-term or month-to-month leases, and properties there may be subject to
various forms of rent control with respect to those tenants. Any limitations on
a borrower's ability to raise property rents may impair such borrower's ability
to repay its multifamily loan from its net operating income or the proceeds of
a sale or refinancing of the related multifamily property.
In addition, one of the mortgage loans, representing less than .01% of the
initial outstanding pool balance and, in the case of mortgage loans secured by
multiple properties, on that portion of the mortgage loan allocated to such
property, secured by multifamily properties, are eligible under the Section 8
program administered by HUD. This low income rent subsidy program authorizes
the payment by the federal government of rental subsidies to owners of
qualified housing. There may be differing default and prepayment rate
experiences between loans receiving Section 8 rent subsidies and mortgage loans
secured by multifamily properties but not receiving Section 8 rent subsidies.
In addition, upon expiration of coverage under the Section 8 program, the
related mortgaged properties are subject to market influences that may bear
upon the ability of such mortgaged properties to produce sufficient income to
service the mortgage loan and maintain the property. See "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage Loans -- HUD
Section 8 Loans" in this prospectus supplement.
RETAIL PROPERTIES HAVE SPECIAL RISKS
Fifty-six of the mortgaged properties, which represent security for 23.53%
of the initial outstanding pool balance, are retail properties. The quality and
success of a retail property's tenants significantly affect the property's
value. For example, if the sales of retail tenants were to decline, rents tied
to a percentage of gross sales may decline and those tenants may be unable to
pay their rent or other occupancy costs.
The presence or absence of an "anchor tenant" in a shopping center also
can be important, because anchors play a key role in generating customer
traffic and making a center desirable for other tenants. The economic
performance of an anchored retail property will consequently be adversely
affected by:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease, or if the anchor tenant owns
its own site, a decision to vacate;
o the bankruptcy or economic decline of an anchor tenant or self-owned
anchor; or
o the cessation of the business of an anchor tenant or of a self-owned
anchor (notwithstanding its continued payment of rent).
If anchor stores in a mortgaged property were to close, the related
borrower may be unable to replace those anchors in a timely manner or without
suffering adverse economic consequences. Furthermore, certain of the anchor
stores at the retail properties have co-tenancy clauses in their leases or
operating agreements which permit those anchors to cease operating if certain
other stores are not operated at those locations. The breach of various other
covenants in anchor store leases or operating agreements also may permit those
stores to cease operating. Certain non-anchor tenants at retail properties also
may be permitted to terminate their leases if certain other stores are not
operated or if those tenants fail to meet certain business objectives.
Retail properties also face competition from sources outside a given real
estate market. For example, all of the following compete with more traditional
retail properties for consumer business: factory outlet centers; discount
shopping centers and clubs; catalogue retailers; home
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shopping networks; internet web sites; and telemarketing. Continued growth of
these alternative retail outlets (which often have lower operating costs) could
adversely affect the rents collectible at the retail properties included in the
mortgage pool, as well as the income from, and market value of, the mortgaged
properties.
Moreover, additional competing retail properties may be built in the areas
where the retail properties are located.
INDUSTRIAL PROPERTIES HAVE SPECIAL RISKS
Nineteen of the mortgaged properties, which represent security for 7.41%
of the initial outstanding pool balance, are industrial properties. Various
factors may adversely affect the economic performance of an industrial property
including:
o quality of the tenants;
o reduced demand for industrial space because of a decline in a
particular industry segment;
o whether the building design is conducive to industrial use;
o a property becoming functionally obsolete;
o the unavailability of labor sources;
o changes in access, energy prices, strikes, relocation of highways, the
construction of additional highways or other factors;
o a change in the proximity of supply sources; and
o environmental hazards.
HEALTHCARE PROPERTIES HAVE SPECIAL RISKS
Thirteen of the mortgaged properties, which represent security for 6.56%
of the initial outstanding pool balance (the "Healthcare Loans"), are secured
by skilled nursing homes, assisted living facilities and congregate care
facilities (each, a "Healthcare Property"). Most of these mortgage loans are
secured by facilities that typically receive a portion of their revenues from
government reimbursement programs, primarily Social Security, Medicaid and
Medicare.
Factors that may adversely effect the revenues of healthcare facilities
that receive a portion of their revenues from such government reimbursement
programs include:
o Regulatory changes by government;
o Rate adjustments by regulatory agencies and governmental authorities;
o Government restrictions and rulings that may negatively effect receipt
of reimbursements;
o Delays in payment by government authorities; and
o Measures employed by governmental payors that limit payments to
healthcare providers.
In addition, in the event that the trustee or another party forecloses on
a healthcare property, it would not generally be entitled to reimbursements by
Social Security, Medicare and Medicaid for services rendered prior to such
foreclosure.
Providers of long-term nursing care and other medical services are highly
regulated. Certain factors involved in operating a healthcare facility can
increase the cost of operations, limit growth and in extreme cases, require or
result in suspension or cessation of operations. Such factors include:
o Licensing requirements;
o Facility inspections;
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o Rate setting and reimbursement policies;
o Laws relating to the adequacy of medical care, distribution of
pharmaceuticals, equipment and personnel operating policies; and
o Laws relating to the maintenance of and additions to facilities and
services.
In the event that the trustee or another party forecloses on a healthcare
property, it may have to apply in its own right for necessary licenses and
regulatory approvals. A new license may not be obtainable and new approvals may
not be granted. This uncertainty may adversely affect the liquidation value of
the facility.
Other factors that may adversely effect the value and successful operation
of a healthcare property include:
o increasing governmental regulation and supervision (as to those
facilities not already subject to it);
o a decline in the financial health, skills or reputation of the
operator;
o increased operating expenses; and
o competing facilities owned by non-profit organizations or government
agencies supported by endowments, charitable contributions, tax
revenues and other sources.
HOTEL PROPERTIES HAVE SPECIAL RISKS
Eight of the mortgaged properties, which represent security for 3.10% of
the initial outstanding pool balance, are hotel properties. Various factors may
adversely affect the economic performance of a hotel, including:
o adverse economic and social conditions, either local, regional or
national (which may limit the amount that can be charged for a room and
reduce occupancy levels);
o the construction of competing hotels or resorts;
o continuing expenditures for modernizing, refurbishing, and maintaining
existing facilities prior to the expiration of their anticipated useful
lives;
o a deterioration in the financial strength or managerial capabilities of
the owner and operator of a hotel or an economic decline in a
particular hotel chain; and
o changes in travel patterns caused by changes in access, energy prices,
strikes, relocation of highways, the construction of additional
highways or other factors.
Because hotel rooms generally are rented for short periods of time, the
financial performance of hotels tends to be affected by adverse economic
conditions and competition more quickly than other types of commercial
properties. Additionally, as a result of high operating costs, relatively small
decreases in revenue can cause significant stress on a property's cashflow.
Moreover, the hotel and lodging industry is generally seasonal in nature.
This seasonality can be expected to cause periodic fluctuations in a hotel
property's revenues, occupancy levels, room rates and operating expenses.
RISKS RELATING TO AFFILIATION WITH A FRANCHISE OR HOTEL MANAGEMENT COMPANY
Certain of the hotel properties are franchises of national hotel chains or
managed by a hotel management company. The performance of a hotel property
affiliated with a franchise or hotel management company depends in part on:
o the continued existence and financial strength of the franchisor or
hotel management company;
o the public perception of the franchise or hotel chain service mark; and
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o the duration of the franchise licensing or agreements.
Any provision in a franchise agreement or management agreement providing
for termination because of a bankruptcy of a franchisor or manager generally
will not be enforceable.
The transferability of franchise license agreements may be restricted. In
the event of a foreclosure, the lender or its agent may not have the right to
use the franchise license without the franchisor's consent. Conversely, in the
case of certain mortgage loans, the lender may be unable to remove a franchisor
or a hotel management company that it desires to replace following a
foreclosure.
Further, in the event of a foreclosure, the Trustee or a purchaser of such
mortgaged property probably would not be entitled to the rights under any
liquor license for the mortgaged property. Such party would be required to
apply in its own right for such a license, and we cannot assure you that a new
license could be obtained.
OTHER TYPES OF PROPERTIES HAVE SPECIAL RISKS
For example, automobile dealership properties secure one of the underlying
mortgage loans (representing 2.90% of the initial outstanding pool balance)
(the "Automobile Loan").
Loans that are secured by automobile dealership properties generally
involve all of the risks associated with small business loans. Such operations
are affected by the numerous factors impacting any retail commercial loan such
as adverse economic and social conditions. In addition, such operations may be
adversely affected by factors unique to the automobile retail industry,
including:
o changing automotive technology and its effects on average life of an
automobile and service requirements (changing technology is resulting
in automobiles designed to have a longer useful life);
o competition from other automotive dealerships; and changes in
competition from other sources for automobile sales, such as the
internet (the success of an automobile dealership may be negatively
impacted by such changes);
o the popularity of a particular automobile franchise;
o termination of a franchise agreement prior to the term of the mortgage
loan;
o an adequate supply of sales and services personnel in order to make
sales (increased wages, greater employee turnover and lower
unemployment can have adverse effects on the operating results of such
facilities and affect the ability of the related borrowers to repay the
related loans); and
o the difficulty in converting the property into any other retail use.
In addition, there are other factors, including changes in zoning or tax
laws, the availability of credit for financing, and changes in interest rate
levels that may adversely affect the value of a project (and thus the
borrower's ability to sell or refinance) without necessarily affecting the
ability to generate current income.
SELF-STORAGE FACILITIES HAVE SPECIAL RISKS
Seven of the mortgaged properties, which represent security for 1.57% of
the initial outstanding pool balance, are self-storage facilities. Various
factors may adversely affect the value and successful operation of a
self-storage facility:
o competition because both acquisition and development costs and
break-even occupancy are relatively low;
o conversion of a self-storage facility to an alternative use generally
requires substantial capital expenditures;
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o a change in the proximity of demand sources;
o security concerns; and
o user privacy and ease of access to individual storage space may
increase environmental risks (although lease agreements generally
prohibit users from storing hazardous substances in the units).
The environmental assessments discussed herein did not include an
inspection of the contents of the self-storage units of the self-storage
properties. Accordingly, there is no assurance that all of the units included
in the self-storage properties are free from hazardous substances or will
remain so in the future.
SINGLE-TENANT MORTGAGE LOANS
In the case of 16 Mortgage Loans, representing 12.60% of the initial
outstanding pool balance, one or more of the related mortgaged properties are
100% leased to a single tenant (each such mortgage loan, a "Single-Tenant
Mortgage Loan"). The Mortgaged Property securing each such Mortgage Loan is
generally subject to a single space lease, which generally have a primary lease
term that expires on or after the scheduled maturity date or Anticipated
Repayment Date of the related mortgage loan and the remainder of which have
shorter primary lease terms. The amount of the monthly rental payments payable
by the tenant under the lease is equal to or greater than the scheduled payment
of all principal, interest and other amounts (other than any Balloon Payment)
due each month on the related Mortgage Loan.
The underwriting of the Single-Tenant Mortgage Loans is based primarily
upon the monthly rental payments due from the tenant under the lease of the
related Mortgaged Property, and where the primary lease term expires before the
scheduled maturity date (or Anticipated Repayment Date, where applicable) of
the related Mortgage Loan, the underwriting considered the incentives for the
primary tenant to re-lease the premises and the anticipated rental value of the
premises at the end of the primary lease term. In addition, the loan
underwriting for certain of the Single-Tenant Mortgage Loans takes into account
the creditworthiness of the tenants under the applicable leases. Accordingly,
such Single-Tenant Mortgage Loans may have higher loan-to-value ratios and
lower debt-service-coverage ratios than other types of Mortgage Loans.
Each lease generally provides that the related tenant must pay all real
property taxes and assessments levied or assessed against the related Mortgaged
Property and all charges for utility services, insurance and other operating
expenses incurred in connection with the operation of the related Mortgaged
Property. Generally, the tenants under such leases are required, at their
expense, to maintain the related Mortgaged Properties in good order and repair.
CERTAIN ADDITIONAL RISKS RELATING TO TENANTS
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Repayment of the mortgage loans secured by retail and office properties
will be affected by the expiration of leases and the ability of the respective
borrowers to renew the leases or relet the space on comparable terms.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow
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from the mortgaged properties. Moreover, if a tenant defaults in its
obligations to a borrower, the borrower may incur substantial costs and
experience significant delays associated with enforcing its rights and
protecting its investment, including costs incurred in renovating and reletting
the property.
TENANT BANKRUPTCY ENTAILS RISKS
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail and office properties may adversely affect the income
produced by a mortgaged property. Under the Bankruptcy Code, a tenant has the
option of assuming or rejecting any unexpired lease. If the tenant rejects the
lease, the landlord's claim for breach of the lease would be a general
unsecured claim against the tenant (absent collateral securing the claim). The
claim would be limited to the unpaid rent under the lease for the periods prior
to the bankruptcy petition (or earlier surrender of the leased premises), plus
the rent under the lease for the greater of one year, or 15% (not to exceed
three years), of the remaining term of such lease.
ENVIRONMENTAL LAWS ENTAIL RISKS
Various environmental laws may make a current or previous owner or
operator of real property liable for the costs of removal or remediation of
hazardous or toxic substances on, under, adjacent to, or in such property.
Those laws often impose liability whether or not the owner or operator knew of,
or was responsible for, the presence of the hazardous or toxic substances. For
example, certain laws impose liability for release of asbestos-containing
materials ("ACMs") into the air or require the removal or containment of ACMs.
In some states, contamination of a property may give rise to a lien on the
property to assure payment of the costs of cleanup. In some states, this lien
has priority over the lien of a pre-existing mortgage. Additionally, third
parties may seek recovery from owners or operators of real properties for
personal injury or property damages associated with ACMs or other exposure to
hazardous substances related to the properties.
The owner's liability for any required remediation generally is not
limited by law and could accordingly exceed the value of the property and/or
the aggregate assets of the owner. The presence of hazardous or toxic
substances also may adversely affect the owner's ability to refinance the
property or to sell the property to a third party. The presence of, or strong
potential for contamination by, hazardous substances consequently can have a
materially adverse effect on the value of the property and a borrower's ability
to repay its mortgage loan.
In addition, under certain circumstances, a lender (such as the trust)
could be liable for the costs of responding to an environmental hazard. See
"Legal Matters" in the prospectus.
POTENTIAL TRUST LIABILITY RELATING TO A MATERIALLY ADVERSE ENVIRONMENTAL
CONDITION
The mortgage loan sellers have represented to the Depositor that all of
the mortgaged properties have been subject to environmental site assessments or
an update of a previously conducted assessment or an update of an assessment
based upon information in an established database or studies within the 24
months preceding the Cut-off Date. See "Description of the Mortgage Pool --
Certain Underwriting Matters -- Environmental Assessments" in this prospectus
supplement. There can be no assurance that any such assessment, study or review
revealed all possible environmental hazards. Each mortgage loan seller has
informed the Depositor that no assessment, study or review revealed any
environmental condition or circumstance that such mortgage loan seller believes
will have a material adverse impact on the value of the related mortgaged
property or the borrower's ability to pay its debt. The environmental
assessments in respect of certain of the mortgage loans revealed the existence
of friable or non-friable ACMs, lead-based paint, radon gas, leaking
underground storage tanks, PCE contamination or other material environmental
conditions. Each mortgage loan seller has informed the Depositor that where
such conditions were identified, the borrowers agreed to establish and maintain
opera-
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tions and maintenance or abatement programs, environmental reserves or
indemnification agreements of third parties. For more information regarding
environmental considerations, see "Certain Legal Aspects of the Mortgage Loans
- -- Environmental Considerations" in the prospectus.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers any condition on the
property that causes exposure to lead-based paint. In addition, every contract
for the purchase and sale of any interest in residential housing constructed
prior to 1978 must contain a "Lead Warning Statement" that informs the
purchaser of the potential hazards to pregnant women and young children
associated with exposure to lead-based paint. The ingestion of lead-based paint
chips and/or the inhalation of dust particles from lead-based paint by children
can cause permanent injury, even at low levels of exposure. Property owners may
be held liable for injuries to their tenants resulting from exposure to
lead-based paint under common law and various state and local laws and
regulations that impose affirmative obligations on property owners of
residential housing containing lead-based paint. The environmental assessments
revealed the existence of lead-based paint at certain of the multifamily
residential properties.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a Mortgaged Property prior to
acquiring title thereto on behalf of the trust or assuming its operation. Such
requirement may effectively preclude enforcement of the security for the
related Note until a satisfactory environmental site assessment is obtained (or
until any required remedial action is thereafter taken), but will decrease the
likelihood that the trust will become liable under any environmental law.
However, there can be no assurance that the requirements of the Pooling and
Servicing Agreement will effectively insulate the trust from potential
liability under environmental laws. See "The Pooling and Servicing Agreement --
Realization Upon Mortgage Loans" in this prospectus supplement and "Certain
Legal Aspects of the Mortgage Loans -- Environmental Considerations" in the
prospectus.
BORROWER MAY BE UNABLE TO REPAY REMAINING PRINCIPAL BALANCE ON MATURITY DATE
Mortgage Loans representing 27.30% of the initial outstanding pool
balance, are Balloon Loans which provide for payments of interest and principal
and then have substantial payments of principal ("Balloon Payments") due at
their stated maturities unless previously prepaid. Mortgage loans representing
57.20% of the initial outstanding pool balance have anticipated repayment
dates, and have substantial scheduled principal balances as of such date.
Loans that require Balloon Payments involve a greater risk to the lender
than fully amortizing loans because a borrower's ability to repay a Balloon
Loan on its maturity or an anticipated repayment date loan on its anticipated
repayment date or stated maturity date typically will depend upon its ability
either to refinance the loan or to sell the mortgaged property at a price
sufficient to permit repayment. A borrower's ability to achieve either of these
goals will be affected by a number of factors, including:
o the availability of, and competition for, credit for commercial real
estate projects;
o prevailing interest rates;
o the fair market value of the related properties;
o the borrower's equity in the related properties;
o the borrower's financial condition;
o the operating history and occupancy level of the property; the tax
laws; and
o prevailing general and regional economic conditions.
The availability of funds in the credit markets fluctuates over time.
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RISKS RELATING TO MODIFICATION OF MORTGAGE LOANS WITH BALLOON PAYMENTS
In order to maximize recoveries on defaulted mortgage loans, the Pooling
and Servicing Agreement enables the Special Servicer to extend and modify
mortgage loans that are in material default or as to which a payment default
(including the failure to make a Balloon Payment) is reasonably foreseeable;
subject, however, to the limitations described under "Servicing of the Mortgage
Loans -- Modifications, Waivers and Amendments" in this prospectus supplement.
There can be no assurance, however, that any such extension or modification
will increase the present value of recoveries in a given case. Any delay in
collection of a Balloon Payment that would otherwise be distributable in
respect of a class of offered certificates, whether such delay is due to
borrower default or to modification of the related mortgage loan by the Special
Servicer, will likely extend the weighted average life of such class of offered
certificates. See "Yield and Maturity Considerations" in this prospectus
supplement and in the prospectus.
RISKS RELATING TO BORROWERS
Although the loan documents generally contain covenants customarily
employed to ensure that a borrower is a special-purpose, single asset entity
(such as limitations on indebtedness and affiliate transactions and
restrictions on the borrower's ability to dissolve, liquidate, consolidate,
merge, sell all of its assets or amend its organizational documents), most of
the borrowers do not have an independent director whose consent would be
required to file a voluntary bankruptcy petition on behalf of such borrower.
One of the purposes of an independent director of the borrower (or of a
special-purpose entity having an interest in the borrower) is to avoid a
bankruptcy petition filing which is intended solely to benefit an affiliate and
is not justified by the borrower's own economic circumstances. Borrowers (and
any special purpose entity having an interest in any such borrowers) that do
not have an independent director may be more likely to file a voluntary
bankruptcy petition on behalf of such borrower and therefore less likely to
repay the related mortgage loan.
AUTHORITY TO EFFECT OTHER BORROWINGS ENTAILS RISKS
Substantially all of the mortgage loans permit the related borrower to
incur limited indebtedness in the ordinary course of business. In addition one
(1) of the mortgage loans (GA 5631), representing 4.58% of the initial
outstanding pool balance, permits the borrower to incur up to $2 million of
additional unsecured indebtedness subject to certain conditions.
When a mortgage loan borrower (or its constituent members) also has one or
more other outstanding loans (even if subordinated or mezzanine loans), the
trust is subjected to additional risk. The borrower may have difficulty
servicing and repaying multiple loans. The existence of another loan generally
also will make it more difficult for the borrower to obtain refinancing of the
mortgage loan and may thereby jeopardize repayment of the mortgage loan.
Moreover, the need to service additional debt may reduce the cash flow
available to the borrower to operate and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on the
mortgage loan and/or any other loan, actions taken by other lenders could
impair the security available to the trust. If a junior lender files an
involuntary petition for bankruptcy against the borrower (or the borrower files
a voluntary petition to stay enforcement by a junior lender), the trust's
ability to foreclose on the property would be automatically stayed, and
principal and interest payments might not be made during the course of the
bankruptcy case. The bankruptcy of another lender also may operate to stay
foreclosure by the trust.
Further, if another loan secured by the mortgaged property is in default,
the other lender may foreclose on the mortgaged property, absent an agreement
to the contrary, thereby causing a delay in payments and/or an involuntary
repayment of the mortgage loan prior to maturity. The trust may also be subject
to the costs and administrative burdens of involvement in foreclosure
proceedings or related litigation.
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BANKRUPTCY PROCEEDINGS ENTAIL CERTAIN RISKS
Under the Bankruptcy Code, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of the mortgaged property is
less than the principal balance of the mortgage loan it secures, the court may
prevent a lender from foreclosing on the mortgaged property (subject to certain
protections available to the lender). As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the then-current value of
the mortgaged property. This action would make the lender a general unsecured
creditor for the difference between the then-current value and the amount of
its outstanding mortgage indebtedness. A bankruptcy court also may: (i) grant a
debtor a reasonable time to cure a payment default on a mortgage loan; (ii)
reduce monthly payments due under a mortgage loan; (iii) change the rate of
interest due on a mortgage loan; or (iv) otherwise alter the mortgage loan's
repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to
foreclose on the junior lien. Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain special powers to avoid,
subordinate or disallow debts. In certain circumstances, the claims of the
trustee may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under the Bankruptcy Code, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. The Bankruptcy Code also may
interfere with the Trustee's ability to enforce any lockbox requirements. The
legal proceedings necessary to resolve these issues can be time consuming and
may significantly delay the lender's receipt of rents. Rents also may escape an
assignment to the extent they are used by the borrower to maintain the
mortgaged property or for other court authorized expenses.
As a result of the foregoing, the Trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
LACK OF SKILLFUL PROPERTY MANAGEMENT ENTAIL RISKS
The successful operation of a real estate project depends upon the
property manager's performance and viability. The property manager is generally
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are carried out in a
timely fashion.
Properties deriving revenues primarily from short-term sources are
generally more management intensive than properties leased to creditworthy
tenants under long-term leases.
A good property manager, by controlling costs, providing appropriate
service to tenants and seeing to the maintenance of improvements, can improve
cash flow, reduce vacancy, leasing and repair costs and preserve the building's
value. On the other hand, management errors can, in some cases, impair
short-term cash flow and the long-term viability of an income-producing
property.
We make no representation or warranty as to the skills of any present or
future managers. Additionally, we cannot assure you that the property managers
will be in a financial condition to fulfill their management responsibilities
throughout the terms of their respective management agreements.
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RISKS OF INSPECTIONS RELATING TO PROPERTY
Licensed engineers or consultants inspected the mortgaged properties in
connection with the origination of the mortgage loans to assess items such as
structure, exterior walls, roofing, interior construction, mechanical and
electrical systems and general condition of the site, buildings and other
improvements. However, there is no assurance that all conditions requiring
repair or replacement were identified.
ABSENCE OR INADEQUACY OF INSURANCE COVERAGE ENTAILS RISKS
The mortgaged properties may suffer casualty losses due to risks which
were not covered by insurance or for which insurance coverage is inadequate. In
addition, certain of the mortgaged properties are located in California and
Texas and in coastal areas of Florida, states that have historically been at
greater risk regarding acts of nature (such as hurricanes, floods and
earthquakes) than other states. There is no assurance borrowers will be able to
maintain adequate insurance. Moreover, if reconstruction or any major repairs
are required, changes in laws may materially affect the borrower's ability to
effect such reconstruction or major repairs or may materially increase the cost
thereof.
One mortgaged property (GA 5503), representing 0.31% of the initial
outstanding pool balance, suffered estimated damages of $250,000 as a result of
a hurricane in September 1998. Debt service payments on the mortgage loans have
continued to be paid, and restoration of the mortgaged property has nearly been
completed.
As a result of any of the foregoing, the amount available to make
distributions on the Offered Certificates could be reduced.
APPRAISALS AND MARKET STUDIES HAVE CERTAIN LIMITATIONS
An appraisal or other market analysis was conducted in respect of the
mortgaged properties in connection with the origination or acquisition of the
related mortgage loan. The resulting estimates of value are the bases of the
Cut-off Date Loan-to-Value Ratios referred to in this prospectus supplement.
Those estimates represent the analysis and opinion of the person performing the
appraisal or market analysis and are not guarantees of present or future
values. Moreover, the values of the mortgaged properties may have fluctuated
significantly since the appraisal or market study was performed. In addition,
appraisals seek to establish the amount a typically motivated buyer would pay a
typically motivated seller. Such amount could be significantly higher than the
amount obtained from the sale of a mortgaged property under a distress or
liquidation sale. Information regarding the values of mortgaged properties
available to the Depositor as of the Cut-off Date is presented in Appendix I
and Appendix II hereto for illustrative purposes only. See "Description of the
Mortgage Pool -- Assessments of Property Value and Condition -- Appraisals" in
this prospectus supplement.
DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION POSES CERTAIN RISKS
As principal payments or prepayments are made on a mortgage loan that is
part of a pool of loans, the pool may be subject to more risk with respect to
the decreased diversity of mortgaged properties, types of mortgaged properties,
geographic location and number of borrowers and affiliated borrowers, as
described above. Classes that have a later sequential designation or a lower
payment priority are more likely to be exposed to this concentration risk than
are classes with an earlier sequential designation or higher priority. This is
so because principal on the Offered Certificates is generally payable in
sequential order, and no class entitled to distribution of principal generally
receives principal until the principal amount of the preceding class or classes
entitled to receive principal have been reduced to zero.
SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
As described in this prospectus supplement, unless your certificates are
Class A-1, Class A-2 or Class X Certificates, your rights to receive
distributions of amounts collected or advanced on
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or in respect of the mortgage loans will be subordinated to those of the
holders of the offered certificates with an earlier alphabetical designation.
See "Description of the Certificates -- Distributions" and "-- Subordination;
Allocation of Losses and Certain Expenses" in this prospectus supplement and
"Risk Factors -- Subordination of the Subordinate Certificates; Effect of
Losses on the Assets" in the prospectus.
TAX CONSIDERATIONS RELATING TO FORECLOSURE
If the trust acquires a mortgaged property pursuant to a foreclosure or
deed in lieu of foreclosure, the Special Servicer will generally retain an
independent contractor to operate the property. Any net income from such
operation (other than qualifying "rents from real property"), or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
non-customary service, will subject the Lower-Tier REMIC to federal tax on such
income at the highest marginal corporate tax rate (currently 35%) and possibly
state or local tax. In such event, the net proceeds available for distribution
to certificateholders will be reduced. The Special Servicer may permit the
Lower-Tier REMIC to earn "net income from foreclosure property" that is subject
to tax if it determines that the net after-tax benefit to certificateholders is
greater than under another method of operating or leasing the mortgaged
property.
RISKS RELATING TO ENFORCEABILITY
All of the mortgages permit the lender to accelerate the debt upon default
by the borrower. The courts of all states will enforce acceleration clauses in
the event of a material payment default. State equity courts, however, may
refuse to permit foreclosure or acceleration if a default is deemed immaterial
or the exercise of those remedies would be unjust or unconscionable.
If a mortgaged property has tenants, the borrower typically assigns its
income as landlord to the lender as further security, while retaining a license
to collect rents as long as there is no default. If the borrower defaults, the
license terminates and the lender is entitled to collect rents. In certain
jurisdictions, such assignments may not be perfected as security interests
until the lender takes actual possession of the property's cash flow. In some
jurisdictions, the lender may not be entitled to collect rents until the lender
takes possession of the property and secures the appointment of a receiver. In
addition, as previously discussed, if bankruptcy or similar proceedings are
commenced by or for the borrower, the lender's ability to collect the rents may
be adversely affected.
STATE LAW LIMITATIONS ENTAIL CERTAIN RISKS
Some states (including California) have laws prohibiting more than one
"judicial action" to enforce a mortgage obligation. Some courts have construed
the term "judicial action" broadly. In the case of a pool loan secured by
mortgaged properties located in multiple states, the Servicer or Special
Servicer may be required to foreclose first on mortgaged properties located in
states where such "one action" rules apply (and where non-judicial foreclosure
is permitted) before foreclosing on properties located in states where judicial
foreclosure is the only permitted method of foreclosure. As a result, the
ability to realize upon the mortgage loans may be limited by the application of
state laws. Foreclosure actions may also, in certain circumstances, subject the
trust to liability as a "lender-in-possession" or result in the equitable
subordination of the claims of the trustee to the claims of other creditors of
the borrower. The Servicer or the Special Servicer may take these state laws
into consideration in deciding which remedy to choose following a default by a
borrower.
LEASEHOLD INTERESTS ENTAIL CERTAIN RISKS
Seven (7) of the mortgage loans (representing 1.97% of the initial
outstanding pool balance) are secured solely by mortgages on borrowers'
leasehold interests under ground leases. In addition, three (3) mortgage loans
(representing 2.82% of the initial outstanding pool balance),
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are secured by a mortgage on both the borrower's leasehold interest in a
portion of the related mortgaged property and the borrower's fee simple
interest in the remainder of the related mortgaged property. See "Description
of the Mortgage Pool -- Certain Terms and Characteristics of the Mortgage Loans
- -- Ground Leases".
Leasehold mortgage loans are subject to certain risks not associated with
mortgage loans secured by a lien on the fee estate of the borrower. The most
significant of these risks is that if the borrower's leasehold were to be
terminated upon a lease default, the leasehold mortgagee would lose its
security. Generally, the related ground lease requires the lessor to give the
leasehold mortgagee notice of lessee defaults and an opportunity to cure them,
permits the leasehold estate to be assigned to the leasehold mortgagee or the
purchaser at a foreclosure sale, and contains certain other protective
provisions typically included in a "mortgageable" ground lease.
Upon the bankruptcy of a lessor or a lessee under a ground lease, the
debtor entity has the right to assume or reject the lease. If a debtor lessor
rejects the lease, the lessee has the right to remain in possession of its
leased premises under the rent under the lease for the term of the lease
(including renewals). If a debtor lessee/borrower rejects any or all of its
leases, the leasehold lender could succeed to the lessee/borrower's position
under the lease only if the lessor specifically grants the lender such right.
If both the lessor and the lessee/borrowers are involved in bankruptcy
proceedings, the trustee may be unable to enforce the bankrupt
lessee/borrower's obligation to refuse to treat a ground lease rejected by a
bankrupt lessor as terminated. In such circumstances, a lease could be
terminated notwithstanding lender protection provisions contained therein or in
the mortgage.
Most of the ground leases securing the mortgaged properties provide that
the ground rent payable thereunder increases during the term of the lease.
These increases may adversely affect the cash flow and net income of the
borrower from the mortgaged property.
RISKS RELATING TO ENFORCEABILITY OF CROSS-COLLATERALIZATION
Five (5) separate groups of mortgage loans are, within such group,
cross-collateralized with each other, the largest group of which represents
4.48% of the initial outstanding pool balance of mortgage loans.
Cross-collateralization arrangements involving more than one borrower could be
challenged as fraudulent conveyances by creditors of the related borrower in an
action brought outside a bankruptcy case or, if such borrower were to become a
debtor in a bankruptcy case, by the borrower's representative. A lien granted
by a borrower entity could be avoided if a court were to determine that: (i)
such borrower was insolvent when it granted the lien, was rendered insolvent by
the granting of the lien or was left with inadequate capital, or was not able
to pay its debts as they matured; and (ii) such borrower did not receive fair
consideration or reasonably equivalent value when it allowed its mortgaged
property or properties to be encumbered by a lien securing the entire
indebtedness. Among other things, a legal challenge to the granting of the
liens may focus on the benefits realized by such borrower from the respective
mortgage loan proceeds, as well as the overall cross-collateralization. If a
court were to conclude that the granting of the liens was an avoidable
fraudulent conveyance, that court could subordinate all or part of the
pertinent mortgage loan to existing or future indebtedness of that borrower.
The court also could recover payments made under that mortgage loan or take
other actions detrimental to the holders of the certificates, including, under
certain circumstances, invalidating the loan or the mortgages securing such
cross-collateralization.
POTENTIAL ABSENCE OF ATTORNMENT PROVISIONS ENTAILS RISKS
In some jurisdictions, if tenant leases are subordinate to the liens
created by the mortgage and do not contain attornment provisions (i.e.,
provisions requiring the tenant to recognize a successor owner following
foreclosure as landlord under the lease), the leases may terminate upon the
transfer of the property to a foreclosing lender or purchaser at foreclosure.
Not all leases were reviewed to ascertain the existence of attornment or
subordination provisions. Accordingly,
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if a mortgaged property is located in such a jurisdiction and is leased to one
or more desirable tenants under leases that are subordinate to the mortgage and
do not contain attornment provisions, such mortgaged property could experience
a further decline in value if such tenants' leases were terminated. This is
particularly likely if such tenants were paying above-market rents or could not
be replaced.
If a lease is not subordinate to a mortgage, the trust will not possess
the right to dispossess the tenant upon foreclosure of the mortgaged property
(unless it has otherwise agreed with the tenant). If the lease contains
provisions inconsistent with the mortgage (e.g. provisions relating to
application of insurance proceeds or condemnation awards) or which could affect
the enforcement of the lender's rights (e.g., a right of first refusal to
purchase the property), the provisions of the lease will take precedence over
the provisions of the mortgage.
RISKS RELATING TO LITIGATION
There may be pending or threatened legal proceedings against the borrowers
and managers of the mortgaged properties and their respective affiliates
arising out of the ordinary business of the borrowers, managers and affiliates,
which litigation could have a material adverse effect on your investment.
RISKS RELATING TO COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
Under the Americans with Disabilities Act of 1990 ("ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Borrowers may incur costs complying with
the ADA. In addition, noncompliance could result in the imposition of fines by
the federal government or an award of damages to private litigants.
CONFLICTS OF INTEREST
Conflicts Between Various Classes of Certificateholders. The Special
Servicer is given considerable latitude in determining whether and in what
manner to liquidate or modify defaulted mortgage loans. The Controlling Class
will be empowered to replace the Special Servicer. The Controlling Class is the
most subordinated (or, under certain circumstances, the next most subordinated)
class of certificates outstanding from time to time, and such holders may have
interests in conflict with those of the holders of the other certificates. For
instance, the holders of certificates of the Controlling Class might desire to
mitigate the potential for loss to that Class from a troubled mortgage loan by
deferring enforcement in the hope of maximizing future proceeds. However, the
interests of the trust may be better served by prompt action, since delay
followed by a market downturn could result in less proceeds to the trust than
would have been realized if earlier action had been taken.
The Special Servicer or an affiliate may acquire certain of the most
subordinated certificates. Under such circumstances, the Special Servicer
itself may have interests that conflict with the interests of the other holders
of the certificates.
Conflicts Between Trustee and Affiliates of each of German American
Capital Corporation and Banc One Mortgage Capital Markets, LLC. Conflicts of
interest may arise between the trust and affiliates of each of German American
Capital Corporation and Banc One Mortgage Capital Markets, LLC that engage in
the acquisition, development, operation, financing and disposition of real
estate.
Those conflicts may arise because affiliates of each of German American
Capital Corporation and Banc One Mortgage Capital Markets, LLC intend to
continue to actively acquire, develop, operate, finance and dispose of real
estate-related assets in the ordinary course of their business. During the
course of their business activities, those affiliates may acquire or sell
properties, or finance mortgage loans secured by properties which may include
the mortgaged properties or properties which are in the same markets as the
mortgaged properties. In such case, the interests
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of those affiliates may differ from, and compete with, the interests of the
trust, and decisions made with respect to those assets may adversely affect the
amount and timing of distributions with respect to the certificates.
Conflicts Between Managers and the Mortgage Loan Borrowers. Substantially
all of the property managers for the mortgaged properties (or their affiliates)
manage additional properties, including properties that may compete with the
mortgaged properties. Affiliates of the managers, and certain of the managers
themselves, also may own other properties, including competing properties. The
managers of the mortgaged properties may accordingly experience conflicts of
interest in the management of such mortgaged properties.
Conflicts Between Sellers of Mortgage Loans and Classes of
Certificateholders. Affiliates of German American Capital Corporation and Banc
One Mortgage Capital Markets, LLC may acquire certain of the Offered
Certificates. Under such circumstances, they may become the holder of the
Controlling Class, and as such have interests that may conflict with their
interests as Sellers of the mortgage loans.
RISKS RELATING TO PREPAYMENTS AND REPURCHASES
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the mortgage loans. For
this purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation of mortgaged properties, defaults and liquidations by
borrowers, or repurchases upon a Seller's breach of representations or
warranties. Because the Notional Amount of the Class X Certificates is based
upon the Principal Amounts of the certificates with principal amounts, the
yield to maturity on the Class X Certificates will be extremely sensitive to
the rate and timing of prepayments of principal.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment is higher or
lower than you anticipate.
Voluntary prepayments under certain of the mortgage loans require payment
of a yield maintenance premium unless the prepayment is made within a specified
number of days of the anticipated repayment date or stated maturity date, as
the case may be. See "Description of the Mortgage Pool -- Certain Terms and
Characteristics of the Mortgage Loans -- Prepayment Restrictions."
Nevertheless, we cannot assure you that the related borrowers will refrain from
prepaying their mortgage loans due to the existence of a prepayment premium. We
also cannot assure you that involuntary prepayments will not occur. The rate at
which voluntary prepayments occur on the mortgage loans will be affected by a
variety of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or prepayment premiums;
o the Servicer's or Special Servicer's ability to enforce those charges
or premiums;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
Generally, no yield maintenance charge or prepayment premium will be
required for prepayments in connection with a casualty or condemnation unless,
in the case of most of the mortgage loans, an event of default has occurred and
is continuing. In addition, if a Seller repurchases any mortgage loan from the
trust due to breaches of representations or warranties, the repurchase price
paid will be passed through to the holders of the certificates with the same
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effect as if the mortgage loan had been prepaid in part or in full, except that
no prepayment premium or yield maintenance charge would be payable. Such a
repurchase may therefore adversely affect the yield to maturity on your
certificates.
RISKS RELATING TO ENFORCEABILITY OF PREPAYMENT PREMIUMS AND DEFEASANCE
PROVISIONS
Provisions requiring yield maintenance charges, prepayment premiums and
lock-out periods may not be enforceable in some states and under federal
bankruptcy law. Those provisions for charges and premiums also may constitute
interest for usury purposes. Accordingly, we cannot assure you that the
obligation to pay a yield maintenance charge or prepayment premium or to
prohibit prepayments will be enforceable. We also cannot assure you that the
foreclosure proceeds will be sufficient to pay an enforceable yield maintenance
charge or prepayment premium. Additionally, although the collateral
substitution provisions related to defeasance do not have the same effect on
the certificateholders as prepayment, we cannot assure you that a court would
not interpret those provisions as requiring a yield maintenance charge or
prepayment premium. In certain jurisdictions those collateral substitution
provisions might therefore be deemed unenforceable under applicable law, or
usurious.
YIELD CONSIDERATIONS
The yield on any certificate will depend on (i) the price at which such
certificate is purchased by an investor and (ii) the rate, timing and amount of
distributions on such certificate. The rate, timing and amount of distributions
on any certificate will, in turn, depend on, among other things:
o the interest rate for such certificate;
o the rate and timing of principal payments (including principal
prepayments) and other principal collections on or in respect of the
mortgage loans and the extent to which such amounts are to be applied
or otherwise result in a reduction of the balance or Notional Amount of
such certificate;
o the rate, timing and severity of losses on or in respect of the
mortgage loans or unanticipated expenses of the trust;
o the timing and severity of any interest shortfalls resulting from
prepayments;
o the timing and severity of any Appraisal Reductions; and
o the extent to which prepayment premiums are collected and, in turn,
distributed on such certificate.
RISKS RELATING TO BORROWER DEFAULT
The rate and timing of delinquencies or defaults on the mortgage loans
will affect:
o the aggregate amount of distributions on the Offered Certificates;
o their yield to maturity;
o the rate of principal payments; and
o their weighted average life.
The rights of holders of each class of subordinate certificates to receive
certain payments of principal and interest otherwise payable on their
certificates will be subordinated to such rights of the holders of the more
senior certificates having an earlier alphabetical class designation. See
"Description of the Certificates -- Distributions" in this prospectus
supplement. Losses on the mortgage loans will be allocated to the Class L,
Class K, Class J, Class H, Class G, Class F, Class E, Class D, Class C and
Class B Certificates, in that order, reducing amounts otherwise payable to each
class. Any remaining losses would then be allocated to the Class A
Certificates, pro rata.
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Each class of certificates (other than the Class Q-1, Class Q-2, Class R,
Class MR and Class LR Certificates) is senior to certain other classes of
certificates in respect of the right to receive distributions and to be
allocated losses. If losses on the mortgage loans exceed the aggregate
principal amount of the classes of certificates subordinated to such class,
that class will suffer a loss equal to the full amount of such excess (up to
the outstanding principal amount of such class).
If you calculate your anticipated yield based on assumed rates of default
and losses that are lower than the default rate and losses actually experienced
and such losses are allocable to your certificates, your actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios,
such yield could be negative. In general, the earlier a loss borne by your
certificates occurs, the greater the effect on your yield to maturity.
Even if losses on the mortgage loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so because those losses cause your certificates to
have a higher percentage ownership interest in the trust (and therefore related
distributions of principal payments on the mortgage loans) than would otherwise
have been the case. The effect on the weighted average life and yield to
maturity of your certificates will depend upon the characteristics of the
remaining mortgage loans.
Additionally, delinquencies and defaults on the mortgage loans may
significantly delay the receipt of distributions by you on your certificates,
unless P&I Advances are made to cover delinquent payments or the subordination
of another class of certificates fully offsets the effects of any such
delinquency or default.
Also, if the related borrower does not repay a mortgage loan with a
hyper-amortization feature by its anticipated repayment date, the effect will
be to increase the weighted average life of your certificates and may reduce
your yield to maturity.
RISKS RELATING TO CERTAIN PAYMENTS
To the extent described in this prospectus supplement, the Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, will be
entitled to receive interest on unreimbursed Advances. This interest will
generally accrue from the date on which the related Advance is made or the
related expense is incurred through the date of reimbursement. In addition,
under certain circumstances, including delinquencies in the payment of
principal and interest, a mortgage loan will be specially serviced, and the
Special Servicer is entitled to compensation for special servicing activities.
The right to receive interest on Advances or special servicing compensation is
senior to the rights of certificateholders to receive distributions.
RISKS OF LIMITED LIQUIDITY AND MARKET VALUE
There is currently no secondary market for the Offered Certificates. While
the Underwriters have advised that they currently intend to make a secondary
market in the Offered Certificates, they are under no obligation to do so. We
cannot assure you that a secondary market for the Offered Certificates will
develop. Moreover, if a secondary market does develop, we cannot assure you
that it will provide you with liquidity of investment or that it will continue
for the life of the Offered Certificates. The Offered Certificates will not be
listed on any securities exchange. Lack of liquidity could result in a
precipitous drop in the market value of the Offered Certificates. In addition,
the market value of the Offered Certificates at any time may be affected by
many factors, including then prevailing interest rates, and no representation
is made by any person or entity as to the market value of any Offered
Certificate at any time.
RISK OF PASS-THROUGH RATE VARIABILITY CONSIDERATIONS
The interest rate of the Class X Certificates is generally equal to the
difference between the weighted average interest rate payable on the Mortgage
Loans and the weighted average
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Pass-Through Rate of the Certificates (weighted in each case based on their
principal balances). In general, mortgage loans with relatively high mortgage
interest rates are more likely to prepay than mortgage loans with relatively
low mortgage interest rates. Varying rates of principal payments on mortgage
loans having mortgage interest rates above the weighted average of such rates
of the mortgage loans will have the effect of reducing the interest rate of
such certificates.
RISK OF LIMITED ASSETS
The Offered Certificates will represent interests solely in the assets of
the trust and will not represent an interest in or an obligation of any other
entity or person. Distributions on any of the certificates will depend solely
on the amount and timing of payments on the mortgage loans.
RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE
We are aware of the issues associated with the programming code in
existing computer systems as the millennium (year 2000) approaches. The "year
2000 problem" is pervasive and complex; virtually every computer operation will
be affected in some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or otherwise fail.
We have been advised by each of the Servicer and the Special Servicer that
they are committed either to (i) implement modifications to their respective
existing systems to the extent required to cause them to be year 2000 compliant
or (ii) acquire computer systems that are year 2000 compliant in each case
prior to January 1, 2000. Furthermore, we have been advised by the Trustee that
it will use reasonable commercial efforts to cure (by August 1999) any
deficiencies with regard to the manipulation or calculation of dates beyond
December 31, 1999 in the internally maintained computer software systems used
by the Trustee in the conduct of its trust business which would materially and
adversely affect its ability to perform its obligations under the Pooling and
Servicing Agreement. However, we have not made any independent investigation of
the computer systems of the Servicer, the Special Servicer or the Trustee. In
the event that computer problems arise out of a failure of such efforts to be
completed on time, or in the event that the computer systems of the Servicer,
the Special Servicer or the Trustee are not fully year 2000 compliant, the
resulting disruptions in the collection or distribution of receipts on the
mortgage loans could materially adversely affect your investment.
RISKS RELATING TO LACK OF CERTIFICATEHOLDER CONTROL OVER TRUST
You generally do not have a right to vote, except with respect to required
consents to certain amendments to the Pooling and Servicing Agreement.
Furthermore, you will generally not have the right to make decisions concerning
trust administration. The Pooling and Servicing Agreement gives the Servicer,
the Trustee, the Special Servicer or the REMIC Administrator, as applicable,
certain decision-making authority concerning trust administration. These
parties may make decisions different than those that holders of any particular
class of offered certificates would have made, and which may negatively affect
those holders' interests.
OTHER RISKS
"Risk Factors" in the prospectus describes other risks and special
considerations that may apply to your investment in certificates.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
A trust (the "Trust") to be created by Deutsche Mortgage & Asset Receiving
Corporation (the "Depositor") will consist primarily of a pool (the "Mortgage
Pool") of 221 fixed-rate mortgage loans (the "Mortgage Loans") secured by first
liens on 272 multifamily and commercial properties (each a "Mortgaged
Property", and collectively, the "Mortgaged Properties"). The Mortgage Pool has
an aggregate principal balance as of March 1, 1999 (the "Cut-off Date") of
approximately $1,311,125,920 (the "Initial Pool Balance"), subject to a
variance of plus or minus 5%. The principal balances of the Mortgage Loans as
of the Cut-off Date (each, a "Cut-off Date Principal BalanceCut-off Date
Principal Balance") will range from $493,521 to $60,000,000 and the average
Cut-off Date Principal Balance will be $5,932,696. In addition to the Mortgage
Loans, the Trust will include a 50% beneficial ownership interest in another
trust that holds as its only asset a mortgage loan secured by the Elder Trust
Meridian 6 Mortgaged Properties (GA 5848). The Trustee, the Servicer and the
Special Servicer will also act as the trustee, servicer and special servicer,
respectively, of that trust, and the servicer will service that Mortgage Loan
in accordance with the same Servicing Standard that is set forth in the Pooling
and Servicing Agreement. For purposes of this Prospectus Supplement, the term
"Mortgage Loan" will include the Trust's 50% ownership interest in that other
trust, and as to that Mortgage Loan, the term "Initial Pool Balance" will mean
the initial amount evidenced by that ownership interest. All references in this
Prospectus Supplement and all calculations with respect thereto will be based
on the Trust's 50% ownership interest in that other trust. All numerical
information provided herein with respect to the Mortgage Loans is provided on
an approximate basis. All percentages of the Mortgage Pool, or of any specified
sub-group thereof, referred to herein without further description are
approximate percentages of the Initial Pool Balance. Descriptions of the terms
and provisions of the Mortgage Loans are generalized descriptions of the terms
and provisions of the Mortgage Loans in the aggregate. Many of the individual
Mortgage Loans have specific terms and provisions that deviate from the general
description.
Each Mortgage Loan is evidenced by one or more promissory notes (each, a
"Note") and secured by one or more mortgages, deeds of trust or other similar
security instruments (a "Mortgage"). Each of the Mortgages creates a first lien
on the interests of the related borrower in the related Mortgaged Property, as
set forth on the following table:
SECURITY FOR THE MORTGAGE LOANS
<TABLE>
<CAPTION>
% OF
INITIAL POOL
BALANCE(1)
INTEREST OF BORROWER ENCUMBERED -------------
<S> <C>
Fee Simple Estate(2) ........... 95.21%
Leasehold(3) ................... 1.97
Combined Fee/Leasehold ......... 2.82
------
Total ........................ 100.00%
======
</TABLE>
- ----------
(1) Based on the Allocated Loan Amount of the related Mortgaged Property.
(2) For any Mortgaged Property where the ground lessee and ground lessor are
both parties to the Mortgage, the Mortgaged Property was categorized as a
fee simple estate.
(3) Includes any Mortgaged Property where a material portion of such property
is subject to a ground lease and the ground lessor is not a party to the
Mortgage.
----------
PROPERTY TYPE
o Seventy-two (72) of the Mortgaged Properties, which represent security
for 24.98% of the Initial Pool Balance, are office properties;
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o Seventy-eight (78) of the Mortgaged Properties, which represent
security for 24.48% of the Initial Pool Balance, are multifamily apartment
properties;
o Fifty-six (56) of the Mortgaged Properties, which represent security
for 23.53% of the Initial Pool Balance, are retail properties;
o Nineteen (19) of the Mortgaged Properties, which represent security
for 7.41% of the Initial Pool Balance, are industrial properties;
o Eleven (11) of the Mortgaged Properties, which represent security for
4.57% of the Initial Pool Balance, are special purpose properties;
o Eight (8) of the Mortgaged Properties, which represent security for
3.52% of the Initial Pool Balance are skilled nursing home properties;
o Six (6) of the Mortgaged Properties, which represent security for
3.45% of the Initial Pool Balance, are mixed use properties;
o Eight (8) of the Mortgaged Properties, which represent security for
3.10% of the Initial Pool Balance, are hotel or other hospitality properties;
o Three (3) of the Mortgaged Properties, which represent security for
1.78% of the Initial Pool Balance, are assisted living facilities;
o Seven (7) of the Mortgaged Properties, which represent security for
1.57% of the Initial Pool Balance, are self-storage facilities;
o Two (2) of the Mortgaged Properties, which represent security for
1.26% of the Initial Pool Balance, are congregate care facilities; and
o Two (2) of the Mortgaged Properties, which represent security for
0.35% of the Initial Pool Balance, are mobile home park properties.
Certain of the Mortgage Loans are secured by two or more Mortgaged
Properties, either pursuant to cross-collateralization with other Mortgage
Loans in the Mortgage Pool or pursuant to a single Note by a single borrower
secured by multiple Mortgaged Properties, or both. See Annex A hereto for
additional information.
SECURITY FOR THE MORTGAGE LOANS
None of the Mortgage Loans is insured or guaranteed by the United States,
any governmental agency or instrumentality, any private mortgage insurer or by
the Depositor, any of Deutsche Bank AG, German American Capital Corporation
("GACC") or Banc One Mortgage Capital Markets, LLC ("BOMCM"; BOMCM together
with GACC, the "Mortgage Loan Sellers"), the Servicer, the Special Servicer,
the Trustee or the Fiscal Agent or any of their respective affiliates. Each
Mortgage Loan is generally non-recourse and is secured by one or more Mortgages
encumbering the related borrower's interest in the applicable Mortgaged
Property or Properties so that, in the event of a borrower default on any
Mortgage Loan, recourse may generally be had only against the specific
Mortgaged Property or Mortgaged Properties securing such Mortgage Loan and such
limited other assets as have been pledged to secure such Mortgage Loan, and not
against the borrower's other assets. Each Mortgage Loan is also secured by an
assignment of the related borrower's interest in the leases, rents, issues and
profits of the related Mortgaged Properties. In certain instances, additional
collateral exists in the nature of partial indemnities or guaranties, or the
establishment and pledge of one or more reserve or escrow accounts (such
accounts, "Reserve Accounts"). Each Mortgage constitutes a first lien on a
Mortgaged Property, subject generally only to (i) liens for real estate and
other taxes and special assessments not yet due and payable, (ii) covenants,
conditions, restrictions, rights of way, easements and other encumbrances
whether or not of public record as of the date of recording of the related
Mortgage, such exceptions having been acceptable to the related Mortgage Loan
Seller in connection with the purchase or origination of the related Mortgage
Loan, and (iii) such other exceptions and encumbrances on Mortgaged Properties
as are reflected in the related title insurance policies.
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THE MORTGAGE LOAN SELLERS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from GACC pursuant to a Mortgage
Loan Purchase Agreement (the "Mortgage Loan Purchase Agreement"), to be dated
the Closing Date.
German American Capital Corporation. Mortgage Loans were sold to the
Depositor by GACC. GACC is a wholly-owned subsidiary of Deutsche Bank Americas
Holding Corp., which in turn is a wholly-owned subsidiary of Deutsche Bank AG,
a German corporation. GACC is also an affiliate of Deutsche Bank Securities
Inc., one of the Underwriters. GACC engages primarily in the business of
purchasing and holding mortgage loans pending securitization, repackaging or
other disposition. GACC also acts from time to time as the originator of
mortgage loans. Although GACC purchases and sells mortgage loans for its own
account, it does not act as a broker or dealer in connection with any such
loans. The principal offices of GACC are located at 31 West 52nd Street, New
York, New York 10019. Its telephone number is (212) 469-7280.
Banc One Mortgage Capital Markets, LLC. BOMCM is a Delaware limited
liability company, composed of three (3) members, 49% of the company being
owned by Banc One Capital Partners XI, Ltd., an Ohio limited liability company,
6% owned by Banc One Management and Consulting Corporation, an Ohio corporation
("BOMCC"), and 45% owned by ORIX USA Corporation, a Delaware corporation. Banc
One Capital Partners XI, Ltd., and BOMCC are wholly-owned subsidiaries of Bank
One Corporation, and ORIX USA Corporation is a wholly-owned subsidiary of ORIX
Corporation. BOMCM engages primarily in the business of mortgage origination,
servicing, and investment services related to the real estate capital markets.
Although BOMCM purchases and sells mortgage loans for its own account, it does
not act as a broker or dealer in connection with any such loans. The principal
offices of BOMCM are located at 1717 Main Street, Suite 1400, Dallas, Texas
75201. Its telephone number is (214) 290-3643.
Although BOMCM is described as a Seller in this Prospectus Supplement, it
intends to sell its respective Mortgage Loans to GACC on or before the Closing
Date. GACC intends to sell the BOMCM Mortgage Loans and the GACC Mortgage Loans
to the Depositor on the Closing Date and intends to make representations and
warranties to the Depositor in respect thereof. The Depositor will assign the
representations and warranties relating to the Mortgage Loans to the Trustee.
Although BOMCM is making the same representations and warranties to GACC in
respect of the BOMCM Loans as GACC is making in respect of the GACC Mortgage
Loans to the Depositor, BOMCM will not be directly responsible to the Trust
Fund in respect of the representations and warranties or the remedies for a
breach thereof.
The information set forth herein concerning the Mortgage Loan Sellers and
the underwriting conducted by each of the Mortgage Loan Sellers with respect to
the related Mortgage Loans has been provided by the respective Mortgage Loan
Sellers, and none of the Depositor, the Underwriters or the other Mortgage Loan
Sellers make any representation or warranty as to the accuracy or completeness
of such information.
CERTAIN UNDERWRITING MATTERS
Environmental Assessments. Environment assessments or updates of a
previously conducted assessment or an update of an assessment based on
information in an established database or studies were conducted on the
Mortgaged Properties. Such environmental assessments, updates or reviews were
conducted within the 26-month period prior to the Cut-off Date. In some cases
these assessments or updates revealed the existence of material environmental
conditions (for more information regarding environmental conditions, see "Risk
Factors -- Potential Trust Liability Relating to a Materially Adverse
Environmental Condition"). The Mortgage Loan Sellers have informed the
Depositor that where such conditions were identified, the borrowers agreed to
establish and maintain operations and maintenance or abatement programs,
environmental reserves or indemnification agreements of third parties.
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The information contained herein regarding environmental conditions at the
Mortgaged Properties is based on the environmental assessments or similar
studies and has not been independently verified by the Depositor, the Mortgage
Loan Sellers, the Underwriters, the Servicer, the Special Servicer, the
Trustee, or any of their respective affiliates. There can be no assurance that
such environmental assessments or studies, as applicable, identified all
environmental conditions and risks, or that any such environmental conditions
will not have material adverse effect on the value or cash flow of the related
Mortgaged Property.
Property Condition Assessments. The Mortgage Loan Sellers have informed
the Depositor that inspections of the Mortgaged Properties (or updates of
previously conducted inspections) were conducted by independent licensed
engineers or other representatives or designees of the related Mortgage Loan
Seller within 20 months of the Cut-off Date. Such inspections were commissioned
to inspect the exterior walls, roofing, interior construction, mechanical and
electrical systems (in most cases) and general condition of the site, buildings
and other improvements located at a Mortgaged Property. With respect to certain
of the Mortgage Loans, the resulting reports indicated a variety of deferred
maintenance items and recommended capital expenditures. The estimated cost of
the necessary repairs or replacements at a Mortgaged Property was included in
the related property condition assessment. In some (but not all) instances,
cash reserves were established to fund such deferred maintenance and/or
replacement items.
Appraisals and Market Analysis. The Mortgage Loan Sellers have informed
the Depositor that an appraisal or market analysis for most of the Mortgaged
Properties was performed (or an existing appraisal updated) on behalf of the
related Mortgage Loan Seller within 27 months of the Cut-off Date. See Annex A
hereto. Each such appraisal was conducted by an independent appraiser that is
state certified and/or designated as a Member of the Appraisal Institute
("MAI"), in order to establish that the appraised value of the related
Mortgaged Property or Properties exceeded the original principal balance of the
Mortgage Loan (or, in the case of a set of related Pool Loans (as defined
herein), the aggregate original principal balance of such set). In general,
such appraisals represent the analysis and opinions of the respective
appraisers at or before the time made, and are not guarantees of, and may not
be indicative of, present or future value. There can be no assurance that
another appraiser would not have arrived at a different valuation, even if such
appraiser used the same general approach to and same method of appraising the
property. In addition, appraisals seek to establish the amount a typically
motivated buyer would pay a typically motivated seller. Such amount could be
significantly higher than the amount obtained from the sale of a Mortgaged
Property under a distress or liquidation sale. See "Risk Factors -- The
Mortgage Loans -- Limitations of Appraisals and Market Studies" in this
Prospectus Supplement.
Hazard, Liability and Other Insurance. The Mortgage Loans require that
either: (i) in most cases, the Mortgaged Property be insured by a hazard
insurance policy in an amount (subject to a customary deductible) at least
equal to the lesser of the outstanding principal balance of the related
Mortgage Loan, 100% of the full insurable replacement cost of the improvements
located on the related Mortgaged Property or, with respect to certain Mortgage
Loans, the full insurable actual cash value of the Mortgaged Property; or (ii)
in certain cases, the Mortgaged Property be insured by hazard insurance in such
other amounts as was required by the related originators and if applicable, the
related hazard insurance policy contains appropriate endorsements to avoid the
application of co-insurance and does not permit reduction in insurance proceeds
for depreciation. In addition, if any portion of the improvement to a Mortgaged
Property securing any Mortgage Loan was, at the time of the origination of such
Mortgage Loan, in an area identified in the "Federal Register" by the Federal
Emergency Management Agency as having special flood hazards, and flood
insurance was available, a flood insurance policy meeting any requirements of
the then current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of
such Mortgage Loan, (2) the full insurable actual cash value of
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<PAGE>
such Mortgaged Property, (3) the maximum amount of insurance required by the
terms of the related Mortgage and available for the related Mortgaged Property
under the National Flood Insurance Act of 1968, as amended and (4) 100% of the
replacement cost of the improvements located in the special flood hazard area
on the related Mortgaged Property except in certain cases where self insurance
was permitted. In general, the standard form of hazard insurance policy covers
physical damage to, or destruction of, the improvements on the Mortgaged
Property by fire, lightning, explosion, smoke, windstorm and hail, riot or
strike and civil commotion, subject to the conditions and exclusions set forth
in each policy.
Each Mortgage generally also requires the related borrower to maintain
comprehensive general liability insurance against claims for personal and
bodily injury, death or property damage occurring on, in or about the related
Mortgaged Property in an amount customarily required by institutional lenders.
Each Mortgage generally further requires the related borrower to maintain
business interruption or rent loss insurance in an amount not less than 100% of
the projected rental income from the related Mortgaged Property for not less
than six months. In general, the Mortgaged Properties are not insured for
earthquake risk, floods and other water-related causes, landslides and mudflow,
vermin, nuclear reaction or war.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Calculation of Interest. 43.93% of the Mortgage Loans, based on the
Initial Pool Balance, accrue interest on the basis of a 360 day year consisting
of twelve 30-day months, 56.07% of the Mortgage Loans, based on the Initial
Pool Balance, accrue interest on the basis of the actual number of days elapsed
and a 360 day year.
Excess Interest. 142 of the Mortgage Loans, representing approximately
57.20% of the Initial Pool Balance, accrue interest at a higher rate (the "ARD
Loans") commencing on a specified date prior to maturity (the "Anticipated
Repayment Date"). Commencing on or within three months of the respective
Anticipated Repayment Date, each such Mortgage Loan generally will bear
interest at a fixed rate (the "Revised Rate") per annum, equal to the Mortgage
Rate (as defined in this Prospectus Supplement) plus 2%. In the event that any
Mortgage Loan provides for an increase greater than 2%, the Mortgage Loan
Seller, pursuant to the Pooling and Servicing Agreement, has modified such
Mortgage Loan to waive any provision that would increase the interest rate by
more than 2% per annum for so long as such Mortgage Loan is included in the
Mortgage Pool. Until the principal balance of each such Mortgage Loan has been
reduced to zero, such Mortgage Loan will only be required to pay interest at
the Mortgage Rate and the interest accrued at the excess, if any, of the
related Revised Rate over the related Mortgage Rate will be deferred (such
accrued and deferred interest and interest thereon, if any, the "Excess
Interest"). Except where limited by applicable law, Excess Interest so accrued
will generally earn interest at the Revised Rate. On or prior to the
Anticipated Repayment Date, borrowers under ARD Loans will be required to enter
into an agreement establishing an account in the name of the Lender (a "Lock
Box Account") whereby all revenue will be deposited directly into the Lock Box
Account which will be controlled by the Servicer. From and after the
Anticipated Repayment Date, in addition to paying interest (at the Mortgage
Rate) and principal (based on the amortization schedule) (together, the
"Monthly Debt Service Payment"), the related borrower generally will be
required to apply all monthly cash flow from the related Mortgaged Property or
Properties pursuant to the terms of a cash management agreement. The cash flow
from the Mortgaged Property or Properties securing an ARD Loan after payments
of the Monthly Debt Service Payment and certain other items is referred to
herein as "Excess Cash Flow". As described below, ARD Loans generally provide
that the related borrower is prohibited from prepaying the Mortgage Loan
without penalties until generally one to six months prior to the Anticipated
Repayment Date but, upon the commencement of such period, may prepay the loan,
in whole or in part, without payment of a Prepayment Premium. The Anticipated
Repayment Date for each ARD Loan is listed in Annex A.
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Amortization of Principal. The Mortgage Loans provide for one of the
following:
Monthly payments that provide for payment of interest only through the
maturity date (one such Mortgage Loan, representing 4.58% of the Initial Pool
Balance); or
Monthly payments that provide for payment of interest only for a certain
period after the Cut-off Date and then payments of interest and principal based
on amortization schedules significantly longer than their respective terms to
the maturity date or the Anticipated Repayment Date, as applicable (9 of such
Mortgage Loans, representing 10.69% of the Initial Pool Balance).
Anticipated Repayment Date Loans (142 of such Mortgage Loans, representing
57.20% of the Initial Pool Balance) (i) accrue interest at a higher rate (not
to exceed the applicable mortgage rate plus 2% per annum) after the related
Anticipated Repayment Date, and (ii) provide that, commencing on a specified
date prior to maturity, all excess cash flow is diverted to repay principal.
The Anticipated Repayment Date Loans permit the related borrower to prepay such
loan without penalty for a period generally beginning on or prior to the
Anticipated Repayment Date and ending on the related maturity date. The
Anticipated Repayment Date for each loan is set forth on Annex A. If the
related borrower elects to prepay a loan in full on the related Anticipated
Repayment Date, a substantial amount of principal will be due. See "Description
of the Mortgage Pool -- Certain Terms and Conditions of the Mortgage Loans --
Excess Interest" herein.
Sixty-seven (67) mortgage loans, representing 27.30% of the Initial Pool
Balance provide for payments of interest and principal and then have an
expected balloon balance at the maturity date.
Two (2) mortgage loans, representing 0.24% of the Initial Pool Balance,
are fully amortizing.
Prepayment Provisions. All of the Mortgage Loans either (i) prohibit
voluntary prepayment for a specified period (each, a "Lock-Out Period") or (ii)
require the payment of a premium or fee (a "Prepayment Premium") upon the
voluntary prepayment of such Mortgage Loans during a specified period described
on Annex A hereto or (iii) provide for defeasance as described below under "--
Property Releases." The weighted average Lock-Out Period remaining from the
Cut-off Date for the Mortgage Loans is approximately 35 months.
In the case of most of the Mortgage Loans, if an award or loss resulting
from an event of condemnation or casualty is less than a specified percentage
of the original principal balance of the Mortgage Loan and if in the reasonable
judgment of the mortgagee (i) the Mortgaged Property can be restored within six
months prior to the maturity of the related Note to a property no less valuable
or useful than it was prior to the condemnation or casualty, (ii) after a
restoration the Mortgaged Property would adequately secure the outstanding
balance of the Note and (iii) no event of default has occurred or is
continuing, the proceeds or award may be applied by the borrower to the costs
of repairing or replacing the Mortgaged Property. In all other circumstances,
the Mortgage Loans provide generally that in the event of a condemnation or
casualty, the mortgagee may apply the condemnation award or insurance proceeds
to the repayment of debt, without payment of a Prepayment Premium. In general,
in the event that a condemnation award or insurance proceeds are used to prepay
a Specially Serviced Mortgage Loan (as defined in this Prospectus Supplement),
the constant monthly payment due under the related note shall be revised based
on the remaining balance, amortization term and the applicable interest rate.
Certain Mortgage Loans provide that if casualty or condemnation proceeds
are above a specified amount, the borrower will be permitted to supplement such
proceeds with an amount sufficient to prepay the entire principal balance of
the Mortgage Loan. In such event, no Prepayment Premium would be required to be
paid.
Neither the Depositor nor any of the Mortgage Loan Sellers makes any
representation as to the enforceability of the provision of any Mortgage Loan
requiring the payment of a Prepayment Premium, or of the collectability of any
Prepayment Premium. See "Risk Factors -- The Certificates -- Special Prepayment
and Yield Considerations" in this Prospectus Supplement and "Certain Legal
Aspects of Mortgage Loans -- Default Interest and Limitations on Prepayments"
in the Prospectus.
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Property Releases. Certain of the Mortgage Loans contain provisions which
permit the related borrower to release some or all of the Mortgaged Properties
securing such Mortgage Loans.
Two hundred and nine (209) Mortgage Loans representing 98.20% of the
Initial Pool Balance permit the applicable borrower at any time after a
specified period (the "Defeasance Lock-Out Period"), provided no event of
default exists, to obtain a release of a Mortgaged Property from the lien of
the related Mortgage (a "Defeasance Option"), provided that, among other
conditions, the borrower (a) pays on any Due Date (the "Release Date") (i) all
interest accrued and unpaid on the principal balance of the Note to and
including the Release Date, (ii) all other sums, excluding scheduled interest
or principal payments, due under the Mortgage Loan and all other loan documents
executed in connection therewith, (iii) an amount (the "Collateral Substitution
Deposit") that will be sufficient to purchase direct non-callable obligations
of the United States of America providing payments (1) on or prior to, but as
close as possible to, all successive scheduled payment dates from the Release
Date to the related maturity date, assuming, in the case of an ARD Loan, that
such loan prepays on the related Anticipated Repayment Date and (2) in amounts
equal to the scheduled payments due on such dates under the Mortgage Loan or
the defeased amount thereof in the case of a partial defeasance, and (3) any
costs and expenses incurred in connection with the purchase of such U.S.
government obligations and (b) delivers a security agreement granting the Trust
a first priority lien on the Collateral Substitution Deposit and the U.S.
government obligations purchased with the Collateral Substitution Deposit and
an opinion of counsel to such effect. Eight (8) Mortgage Loans representing
5.81% of the Initial Pool Balance provide for a portion of the Mortgaged
Property to be released upon the partial defeasance of the Mortgage Loan. These
Mortgage Loans generally require that (i) in the case of such a partial
defeasance, prior to the release of a related Mortgaged Property, a specified
percentage (generally 125%) of the Allocated Loan Amount for such Mortgaged
Property be defeased and (ii) that the DSCR with respect to the remaining
Mortgaged Properties after the defeasance be no less than the greater of (x)
the DSCR at origination and (y) the DSCR immediately prior to such defeasance.
Any amount in excess of the amount necessary to purchase such U.S. government
obligations will be returned to the borrower. Simultaneously with such actions,
the related Mortgaged Property will be released from the lien of the Mortgage
Loan and the pledged U.S. government obligations (together with any Mortgaged
Property not released, in the case of a partial defeasance) will be substituted
as the collateral securing the Mortgage Loan. Eight (8) Mortgage Loans,
representing 6.64% of the Initial Pool Balance, provide that upon notice that
the Borrower intends to prepay the Mortgage Loan, the Mortgagee has the option
to require either the payment of a yield maintenance premium or the defeasance
of the Mortgage Loan. The Servicer will be directed in the Pooling and
Servicing Agreement to elect defeasance in such circumstances.
In general, a successor borrower established or designated by the related
Mortgage Loan Seller will assume all of the defeased obligations of a borrower
exercising a Defeasance Option under a Mortgage Loan and the borrower will be
relieved of all of the defeased obligations thereunder. If a Mortgage Loan is
partially defeased, the related Note will be split and only the defeased
portion of the borrower's obligations will be transferred to the successor
borrower.
The Depositor makes no representation as to the enforceability of the
defeasance provisions of any Mortgage Loan. See "Risk Factors -- The
Certificates -- Special Prepayment and Yield Considerations" in this Prospectus
Supplement.
Mortgage Loans representing 16.53% of the Initial Pool Balance are
secured, pursuant to one or more notes executed by a single borrower, by
multiple Mortgaged Properties. Such Mortgage Loans permit the borrower at any
time after a specified period from the date of origination, to obtain a partial
release of a Mortgaged Property from the lien of the related Mortgage (a
"Partial Release"), provided that (i) no event of default exists and (ii) among
other conditions, (a) the borrower pays a partial release payment (the "Release
Payment") in an amount equal to at least
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120% of the Allocated Loan Amount (as reduced by amortization of the related
Mortgage Loan as of the date of the Release Payment, except in the cases of the
Mortgage Loans sold to the Depositor by BCMC which do not provide for such
reduction), and (b) satisfaction of certain tests regarding DSCR and/or LTV.
Two Mortgage Loans representing 5.41% of the Initial Pool Balance provide
that the Borrower may substitute another property for the Mortgaged Property
securing such Mortgage Loan provided certain conditions, including rating
agency confirmation, have been satisfied.
Escrows. Certain of the Mortgage Loans provide for monthly escrows to
cover property taxes, insurance premiums, ground lease payments and ongoing
capital replacements.
Subordinate Financing. Only one of the Mortgaged Properties, representing
0.22% of the Initial Pool Balance, is known to be encumbered by secured
subordinated debt. The existence of secured subordinate, indebtedness may
increase the difficulty of refinancing the related Mortgage Loan at maturity.
Also, if the holder of the secured subordinated debt becomes a debtor in a
bankruptcy proceeding, foreclosure of the Mortgage Loan could be delayed. The
Mortgage Loan documents generally prohibit direct or indirect transfers of
ownership interests in the Mortgaged Property, including a pledge or assignment
of ownership interests in the related Borrower (the "Mezzanine Debt"); however
the Sellers have notified the Depositor that there exists Mezzanine Debt held
by third parties (including GACC) with respect to seven Mortgage Loans,
representing 9.96% of the Initial Pool Balance.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. The Mortgage Loans
generally contain "due-on-sale" and "due-on-encumbrance" clauses that, in each
case, permit the holder of the Mortgage Loan to accelerate the maturity of the
Mortgage Loan if the borrower sells or otherwise transfers or encumbers the
related Mortgaged Property without the consent of the mortgagee. The Servicer
or the Special Servicer, as applicable, will determine, in a manner consistent
with the Servicing Standard, whether to exercise any right the mortgagee may
have under any such clause to accelerate payment of the related Mortgage Loan
upon, or to withhold its consent to, any transfer or further encumbrance of the
related Mortgaged Property. Certain of the Mortgage Loans provide that the
mortgagee may condition an assumption of the loan on the receipt of an
assumption fee, which is in some cases equal to one percent of the then unpaid
principal balance of the applicable Note, in addition to the payment of all
costs and expenses incurred in connection with such assumption. Certain of the
Mortgage Loans permit either: (i) a transfer of the related Mortgaged Property
if certain specified conditions are satisfied or if the transfer is to a
borrower reasonably acceptable to the lender; or (ii) transfers to parties
related to the borrower. See "Description of the Pooling Agreements --
Due-on-Sale and Due-on-Encumbrance Provisions" and "Certain Legal Aspects of
the Mortgage Loans -- Due-on-Sale and Due-on-Encumbrance Provisions" in the
Prospectus. See "Risk Factors -- The Mortgage Loans -- Exercise of Remedies" in
this Prospectus Supplement and "Certain Legal Aspects of Mortgage Loans --
Due-on-Sale and Due-on-Encumbrance Provisions" in the Prospectus. The Depositor
makes no representation as to the enforceability of any due-on-sale or
due-on-encumbrance provision in any Mortgage Loan.
Cross-Collateralization and Cross-Default of Certain Mortgage Loans. 14 of
the Mortgage Loans (the "Pool Loans") representing 11.43% of the Initial Pool
Balance, are secured by more than one Mortgaged Property. The Pool Loans
include 5 separate sets of Mortgage Loans which are, within such group,
cross-collateralized with each other, the largest group of which represents
4.48% of the Initial Pool Balance. However, because certain states require the
payment of a mortgage recording or documentary stamp tax based upon the
principal amount of debt secured by a mortgage, the Mortgages recorded with
respect to certain Mortgaged Properties do not secure the full amount of the
related Mortgage Loan, but rather secure only a percentage of the Allocated
Loan Amount of each Mortgaged Property located in such states. See "Risk
Factors -- The Mortgage Loans -- Limitations on Enforceability of
Cross-Collateralization" in this Prospectus Supplement and "Loan
Characteristics" in Annex A.
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As to the Pool Loans, the portion of the principal amount that is
allocated to any particular Mortgaged Property is referred to in this
Prospectus Supplement as the "Allocated Loan Amount." The Allocated Loan Amount
for each such mortgage loan has been determined as provided in the related
mortgage loan.
Purchase Options. For one (1) of the Mortgage Loans (representing 0.24% of
the Initial Pool Balance), the Ground Lessor has a right to repurchase the
leasehold estate under certain circumstances. The Ground Lessor has agreed to
defer its right to repurchase the Mortgaged Property for so long as the
Mortgage Loan is outstanding.
HUD Section 8 Loans. One of the Multifamily Loans, representing less than
0.01% of the Initial Pool Balance, are secured by Mortgaged Properties that are
eligible for low income rent subsidies under the United States Department of
Housing and Urban Development ("HUD") "Section 8" program ("Section 8").
Section 8 rent subsidies provided for the direct or indirect payment of rental
subsidies by HUD to owners of certain types of low income multifamily housing
properties on behalf of eligible tenants. Tenant eligibility is determined
based upon family income and size, as well as the median income for the area.
The subsidy paid by HUD is based on the difference between the rent charged to
the tenant (which rent is established by HUD) and the tenant's ability to pay.
The payment of subsidies to a particular project owner is made pursuant to a
Housing Assistance Payment contract (a "HAP Contract") between HUD and the
owner of the project or a local public housing authority. Upon expiration of a
HAP Contract, the rental subsidies terminate.
Delinquency. As of the Cut-off Date, none of the Mortgage Loans was 30
days or more delinquent, or had been 30 days or more delinquent during the 12
calendar months preceding the Cut-off Date.
Borrower Concentrations. Several groups of Mortgage Loans are made to the
same borrower or have related borrowers ("Related Borrower Loan Groups") that
are affiliated with one another through partial or complete direct or indirect
common ownership. The three largest of these groups represent 5.75%, 3.95%, and
2.41% representatively, of the Initial Pool Balance.
Single-Tenant Mortgage Loans. In the case of 16 Mortgage Loans,
representing 12.60% of the Initial Pool Balance, one or more of the related
Mortgaged Property is 100% leased to a single tenant (each such Mortgage Loan,
a "Single-Tenant Mortgage Loan"). The Mortgaged Property securing each such
Mortgage Loan is generally subject to a single space lease, which generally
have a primary lease term that expires on or after the scheduled maturity date
or Hyper-Amortization Date of the related Mortgage Loan and the remainder of
which have shorter primary lease terms. The amount of the monthly rental
payments payable by the tenant under the lease is equal to or greater than the
scheduled payment of all principal, interest and other amounts (other than any
Balloon Payment) due each month on the related Mortgage Loan.
Geographic Location. The Mortgaged Properties are located throughout 31
states, the Virgin Islands and the District of Columbia with the largest
concentrations in the State of California (50 Mortgaged Properties, which
represent security for 18.45% of the Initial Pool Balance), the State of Texas
(50 Mortgaged Properties, which represent security for 12.27% of the Initial
Pool Balance) and the State of Florida (16 Mortgaged Properties, which
represent 10.76% of the Initial Pool Balance). No other state has a
concentration of Mortgaged Properties that represents security for more than
9.26% of the Initial Pool Balance.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the close of business on the Cut-off Date, as adjusted for the
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the Offered Certificates, a Mortgage Loan
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may be removed from the Mortgage Pool if the Depositor deems such removal
necessary or appropriate or if it is prepaid. This may cause the range of
Mortgage Rates and maturities as well as the other characteristics of the
Mortgage Loans to vary from those described herein.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates and will be filed by the Depositor,
together with the Pooling and Servicing Agreement with the Securities and
Exchange Commission within fifteen days after the initial issuance of the
Offered Certificates. In the event Mortgage Loans are removed from the Mortgage
Pool as set forth in the preceding paragraph, such removal will be noted in the
Form 8-K. Such Form 8-K will be available to purchasers and potential
purchasers of the Offered Certificates.
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DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of eighteen classes (each, a "Class") to be
designated as the Class X Certificates, Class A-1 Certificates, Class A-2
Certificates, Class B Certificates, Class C Certificates, Class D Certificates,
Class E Certificates, Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates, Class L Certificates,
Class Q-1 Certificates, Class Q-2 Certificates, Class R Certificates, Class MR
Certificates and Class LR Certificates. Only the Class X, Class A-1, Class A-2,
Class B, Class C , Class D, Class E and Class F Certificates (the "Offered
Certificates") are offered hereby. The Class G, Class H, Class J, Class K,
Class L, Class Q-1, Class Q-2, Class R, Class MR and Class LR Certificates (the
"Private Certificates") are not offered hereby.
The Certificates represent in the aggregate the entire beneficial
ownership interest in a Trust consisting of: (i) the Mortgage Loans and all
payments under and proceeds of the Mortgage Loans due after the Cut-off Date;
(ii) any Mortgaged Property acquired on behalf of the Trust through foreclosure
or deed in lieu of foreclosure (upon acquisition, an "REO Property"); (iii)
such funds or assets as from time to time are deposited in the Collection
Account, the Distribution Account, the Excess Interest Distribution Account,
the Default Interest Distribution Account, the Interest Reserve Account and any
account established in connection with REO Properties (an "REO Account"); (iv)
the rights of the mortgagee under all insurance policies with respect to the
Mortgage Loans; (iv) the Depositor's rights and remedies under the Mortgage
Loan Purchase Agreement; and (v) all of the mortgagee's right, title and
interest in the Reserve Accounts and Lock Box Accounts.
Upon initial issuance, the Class A-1, Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates will have the following aggregate principal balances (each, a
"Certificate Balance") (in each case, subject to a variance of plus or minus
5%):
<TABLE>
<CAPTION>
INITIAL AGGREGATE APPROXIMATE PERCENT APPROXIMATE PERCENT
CLASS CERTIFICATE BALANCE OF INITIAL POOL BALANCE OF CREDIT SUPPORT
- -------------- --------------------- ------------------------- --------------------
<S> <C> <C> <C>
Class A-1 $181,434,000 13.84% 31.00%
Class A-2 723,242,000 55.16 31.00
Class B 62,278,000 4.75 26.25
Class C 22,944,000 1.75 24.50
Class D 62,278,000 4.75 19.75
Class E 81,945,000 6.25 13.50
Class F 19,667,000 1.50 12.00
Class G 68,834,000 5.25 6.75
Class H 13,111,000 1.00 5.75
Class J 26,222,000 2.00 3.75
Class K 19,667,000 1.50 2.25
Class L 29,503,920 2.25 --
</TABLE>
The Class X Certificates will have an initial notional balance (the
"Notional Balance") equal to $1,311,125,920, which is equal to the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.
The Class Q-1, Class Q-2, Class R, Class MR and Class LR Certificates will
not have Certificate Balances or Notional Balances.
The Certificate Balance of any Class of Certificates outstanding at any
time represents the maximum amount which the holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans and the other assets in the Trust; provided, however, that in
the event that Realized Losses previously allocated to a Class of Certificates
in reduction of the Certificate Balance thereof are recovered subsequent to the
reduction of the
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Certificate Balance of such Class to zero, such Class may receive distributions
in respect of such recoveries in accordance with the priorities set forth under
"-- Distributions -- Priorities" in this Prospectus Supplement.
The respective Certificate Balance of each Class of Certificates (other
than the Class Q-1, Class Q-2, Class X, Class R, Class MR and Class LR
Certificates) will in each case be reduced by amounts actually distributed
thereon that are allocable to principal and by any Realized Losses allocated to
such Class of Certificates. The Class X Certificates represent a right to
receive interest accrued as described below on a Notional Balance. The Notional
Balance of the Class X Certificates will for purposes of distributions on each
Distribution Date equal the aggregate Stated Principal Balance of the Mortgage
Loans immediately prior to such Distribution Date. The Notional Balance of the
Class X Certificates will be reduced to the extent of all reductions in the
aggregate Stated Principal Balance of such Mortgage Loans. The Class X
Certificates consist of twelve separate component interests, each of which
(collectively, the "Class X Components") relates to a separate Class of
Principal Balance Certificates and, for federal income tax purposes, represents
a right to a "specified portion" of interest on a related Class of Middle-Tier
Regular Interests. None of the Class R, Class MR, Class LR, Class Q-1 or Class
Q-2 Certificates will have a Certificate Balance or Notional Balance.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Certificates will be made
on the 15th day of each month or, if such 15th day is not a business day, then
on the next succeeding business day, commencing in April 1999 (each, a
"Distribution Date"). All distributions (other than the final distribution on
any Certificate) will be made by the Trustee to the persons in whose names the
Certificates are registered at the close of business on the last business day
of the calendar month immediately preceding the month in which such
Distribution Date occurs (the "Record Date"). Such distributions will be made
(a) by wire transfer in immediately available funds to the account specified by
the Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder provides the Trustee with wiring
instructions no less than five business days prior to the related Record Date,
or otherwise (b) by check mailed to such Certificateholder. The final
distribution on any Offered Certificates will be made in like manner, but only
upon presentment or surrender (for notation that the Certificate Balance
thereof has been reduced to zero) of such Certificate at the location specified
in the notice to the holder thereof of such final distribution. All
distributions made with respect to a Class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates of such
Class based on their respective Percentage Interests. The "Percentage Interest"
evidenced by any Offered Certificate is equal to the initial denomination
thereof as of the Closing Date divided by the initial Certificate Balance or
Notional Balance, as applicable, of the related Class.
The aggregate distribution to be made with respect to the Certificates on
any Distribution Date will equal the Available Funds. The "Available Funds" for
any Distribution Date will be the sum of (i) all previously undistributed
Monthly Payments or other receipts on account of principal and interest on or
in respect of the Mortgage Loans (including Unscheduled Payments and Net REO
Proceeds, if any) received by the Servicer in the related Collection Period,
(ii) all P&I Advances made by the Servicer, the Trustee or the Fiscal Agent, as
applicable, in respect of such Distribution Date, (iii) all other amounts
required to be deposited in the Collection Account by the Servicer pursuant to
the Pooling and Servicing Agreement allocable to the Mortgage Loans, (iv) any
late payments of Monthly Payments received after the end of the Collection
Period relating to such Distribution Date but prior to the related Servicer
Remittance Date, (v) any amounts representing Prepayment Interest Shortfalls
remitted by the Servicer to the Collection Account (as described under
"--Prepayment Interest Shortfalls") and (vi) for the Distribution Date
occurring in each March, the Withheld Amounts then on deposit in the Interest
Reserve Account as described under "--Interest Reserve Account" below, but
excluding the following:
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(a) amounts permitted to be used to reimburse the Servicer, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, for previously
unreimbursed Advances and interest thereon as described in this Prospectus
Supplement under "The Pooling and Servicing Agreement -- Advances";
(b) the aggregate amount of the Servicing Fee (which includes the fees
for the Servicer, the Trustee, the Automobile Adviser and fees for primary
servicing functions), and the other Servicing Compensation (e.g., Net
Prepayment Interest Excess, late fees, assumption fees, loan modification
fees, extension fees, loan service transaction fees, demand fees,
beneficiary statement charges, and similar fees) payable to the Servicer
and the Special Servicing Fee, (and other amounts payable to the Special
Servicer described under "The Pooling and Servicing Agreement -- Special
Servicing" herein), and reinvestment earnings on payments received with
respect to the Mortgage Loans which the Servicer or Special Servicer is
entitled to receive as additional servicing compensation, in each case in
respect of such Distribution Date;
(c) all amounts representing scheduled Monthly Payments due after the
related Due Date;
(d) to the extent permitted by the Pooling and Servicing Agreement, that
portion of liquidation proceeds, insurance proceeds and condemnation
proceeds with respect to a Mortgage Loan which represents any unpaid
Servicing Fee and special servicing compensation together with interest
thereon as described in this Prospectus Supplement, to which the Servicer,
the Special Servicer, the Automobile Advisor, any subservicer and the
Trustee are entitled;
(e) all amounts representing certain expenses reimbursable or payable to
the Servicer, the Special Servicer, the Trustee or the Fiscal Agent and
other amounts permitted to be retained by the Servicer or withdrawn
pursuant to the Pooling and Servicing Agreement in respect of various
items, including interest thereon as provided in the Pooling and Servicing
Agreement;
(f) Prepayment Premiums;
(g) Default Interest;
(h) Excess Interest;
(i) all amounts received with respect to each Mortgage Loan previously
purchased or repurchased from the Trust pursuant to the Pooling and
Servicing Agreement or the Mortgage Loan Purchase Agreement during the
related Collection Period and subsequent to the date as of which such
Mortgage Loan was purchased or repurchased;
(j) the amount reasonably determined by the Trustee to be necessary to
pay any applicable federal, state or local taxes imposed on the Upper-Tier
REMIC, the Middle-Tier REMIC or the Lower-Tier REMIC under the
circumstances and to the extent described in the Pooling and Servicing
Agreement; and
(k) with respect to any Distribution Date occurring in each February, and
in any January occurring in a year that is not a leap year, the Withheld
Amounts to be deposited in the Interest Reserve Account and held for future
distribution.
The "Monthly Payment" with respect to any Mortgage Loan (other than any
REO Mortgage Loan) and any Due Date is the scheduled monthly payment of
principal (if any) and interest at the Mortgage Rate, excluding any Balloon
Payment (but not excluding any constant Monthly Payment due on a Balloon Loan),
which is payable by the related borrower on the related Due Date. The Monthly
Payment with respect to an REO Mortgage Loan for any Distribution Date is the
monthly payment that would otherwise have been payable on the related Due Date
had the related Note not been discharged, determined as set forth in the
Pooling and Servicing Agreement.
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"Unscheduled Payments" are all net liquidation proceeds, net insurance
proceeds and net condemnation proceeds payable under the Mortgage Loans, the
repurchase price of any Mortgage Loan repurchased by a Mortgage Loan Seller due
to a breach of a representation or warranty made by them or the purchase price
paid by the parties described under "The Pooling and Servicing Agreement --
Optional Termination" and "-- Realization Upon Mortgage Loans", and any other
payments under or with respect to the Mortgage Loans not scheduled to be made,
including Principal Prepayments, but excluding Prepayment Premiums.
"Net REO Proceeds" with respect to any REO Property and any related REO
Mortgage Loan are all revenues received by the Special Servicer with respect to
such REO Property or REO Mortgage Loan net of any insurance premiums, taxes,
assessments and other costs and expenses permitted to be paid therefrom
pursuant to the Pooling and Servicing Agreement.
"Principal Prepayments" are payments of principal made by a borrower on a
Mortgage Loan which are received in advance of the scheduled Due Date for such
payments and which are not accompanied by an amount of interest representing
the full amount of scheduled interest due on any date or dates in any month or
months subsequent to the month of prepayment, other than any amount paid in
connection with the release of the related Mortgaged Property through
defeasance.
The "Collection Period" with respect to a Distribution Date, is the period
that begins immediately following the Determination Date in the calendar month
preceding the month in which such Distribution Date occurs (or, in the case of
the initial Distribution Date, immediately following the Cut-Off Date) and ends
on the Determination Date in the calendar month in which such Distribution Date
occurs. The "Determination Date" will be the 6th business day preceding each
Distribution Date.
"Net Default Interest" with respect to any Mortgage Loan is any Default
Interest accrued on such Mortgage Loan less amounts required to pay the
Servicer, the Trustee or Fiscal Agent, as applicable, interest on Advances at
the Advance Rate.
"Default Interest" with respect to any Mortgage Loan is interest accrued
on such Mortgage Loan at the excess of (i) the related Default Rate over (ii)
the sum of the related Mortgage Rate and, if applicable, the related Excess
Rate.
The "Default Rate" with respect to any Mortgage Loan is the per annum rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan including a default in the payment of a Monthly Payment
or a Balloon Payment.
"Excess Interest" with respect to each of the Mortgage Loans that has a
Revised Rate, interest accrued on such Mortgage Loan allocable to the Excess
Rate.
"Excess Rate" with respect to each of the Mortgage Loans that has a
Revised Rate, the difference between (a) the applicable Revised Rate and (b)
the applicable Mortgage Rate.
Payment Priorities. As used below in describing the priorities of
distribution of Available Funds for each Distribution Date, the terms set forth
below will have the following meanings.
The "Interest Accrual Amount" with respect to any Distribution Date and
any Class of Certificates (other than the Class Q-1, Class Q-2, Class R, Class
MR and Class LR Certificates), is equal to interest for the related Interest
Accrual Period at the Pass-Through Rate for such Class on the related
Certificate Balance or Notional Balance (provided, that for interest accrual
purposes any distributions in reduction of Certificate Balance or reductions in
Notional Balance as a result of allocations of Realized Losses on the
Distribution Date occurring in an Interest Accrual Period will be deemed to
have been made on the first day of such Interest Accrual Period), as
applicable, minus the amount of any Excess Prepayment Interest Shortfall
allocated to such Class with respect to such Distribution Date. Calculations of
interest due in respect of the Certificates will be made on the basis of a
360-day year consisting of twelve 30-day months.
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"Appraisal Reduction Amount" is the amount described under "-- Appraisal
Reductions."
"Delinquency" means any failure of the borrower to make a scheduled
payment on a Due Date.
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month immediately preceding the month in which such Distribution Date
occurs.
An "Interest Shortfall" with respect to any Distribution Date for any
Class of Offered Certificates is any shortfall in the amount of interest
required to be distributed on such Class on such Distribution Date. No interest
accrues on Interest Shortfalls.
The "Pass-Through Rate" for any Class of Offered Certificates is the per
annum rate at which interest accrues on the Certificates of such Class during
any Interest Accrual Period. The Pass-Through Rate on the Class A-1 and Class
A-2 Certificates is a per annum rate equal to % and %, respectively. The
Pass-Through Rate on the Class B, Class C and Class D Certificates will, at all
times, be equal to the lesser of %, % and %, respectively, and the
Weighted Average Net Mortgage Pass-Through Rate. The Pass-Through Rates
applicable to the Class E and Class F Certificates will, at all times, be equal
to the Weighted Average Net Mortgage Pass-Through Rate. The Pass-Through Rates
applicable to the Class G, Class H, Class J, Class K and Class L Certificates
will, at all times, be equal to the lesser of a fixed rate specified in the
Pooling and Servicing Agreement and the Weighted Average Net Mortgage
Pass-Through Rate The Pass-Through Rate applicable to the Class X Certificates
for any Distribution Date will be variable and will be equal to the weighted
average (by Certificate Balance of the corresponding Class of Principal Balance
Certificates) of the Pass-Through Rates then applicable to each Class X
Component. The Pass-Through Rate in respect of each Class X Component for any
Distribution Date will equal the excess, if any, of the Weighted Average Net
Mortgage Pass-Through Rate for such Distribution Date over the Pass-Through
Rate for such Distribution Date applicable to the related Class of Principal
Balance Certificates. The Pass-Through Rate for any Class X Component relating
to a Class of Principal Balance Certificates having a Pass-Through Rate equal
to the Weighted Average Net Mortgage Rate will be zero. Each of the Class Q-1,
Class Q-2, Class R, Class MR and Class LR Certificates will not have a
Pass-Through Rate.
The "Weighted Average Pass-Through Rate" for purposes of calculating the
Pass-Through Rate on the Class X Certificates, with respect to any Interest
Accrual Period, is the amount (expressed as a percentage), the numerator of
which is the sum of the products of (A) the Pass-Through Rate with respect to
each Class of Certificates having a Pass-Through Rate (other than the Class X
Certificates) and (B) the Certificate Balance of such Class as of the first day
of such Interest Accrual Period and the denominator of which is the sum of the
Certificate Balances of each Class included in (A) above as of such date
(provided in each case, any reductions in Certificate Balance as a result of
distributions or allocations of Realized Losses to such Class or the related
Class, respectively, occurring in an Interest Accrual Period will be deemed to
have been made on the first day of such Interest Accrual Period).
The "Weighted Average Net Mortgage Pass-Through Rate" for any Distribution
Date is the amount (expressed as a percentage) the numerator of which is the
sum for all Mortgage Loans of the products of (i) the Net Mortgage Pass-Through
Rate of each such Mortgage Loan as of the immediately preceding Distribution
Date and (ii) the Stated Principal Balance of each such Mortgage Loan and the
denominator of which is the sum of the Stated Principal Balances of all such
Mortgage Loans as of the immediately preceding Distribution Date.
The "Due Date" with respect to any Mortgage Loan, is the first day of the
month in the related Collection Period.
The "Net Mortgage Pass-Through Rate" with respect to any Mortgage Loan and
any Distribution Date is the Mortgage Pass-Through Rate for such Mortgage Loan
for the related Interest Accrual Period minus the Servicing Fee Rate.
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The "Mortgage Pass-Through Rate" with respect to any Mortgage Loan is the
Mortgage Rate in each case without giving effect to any default rate.
Notwithstanding the foregoing, if any Mortgage Loan does not accrue interest on
the basis of a 360-day year consisting of twelve 30-day months, then the
Mortgage Pass-Through Rate of such Mortgage Loan for any Mortgage Loan interest
accrual period will be the annualized rate at which interest would have to
accrue in respect of such Mortgage Loan on the basis of a 360-day year
consisting of twelve 30-day months in order to produce the aggregate amount of
interest actually accrued in respect of such Mortgage Loan during such Mortgage
Loan interest accrual period at the related Mortgage Rate; provided, however,
that (i) the Mortgage Rate for the one-month period preceding the Due Dates in
(a) January and February in each year that is not a leap year or (b) February
only in each year that is a leap year will be determined net of the Withheld
Amounts and (ii) the Net Mortgage Rate for the one-month period preceding the
Due Date in March will be determined after taking into account the addition of
the Withheld Amounts with respect to each such Mortgage Loan.
The "Mortgage Rate" with respect to each Mortgage Loan and any Interest
Accrual Period is the annual rate, not including any Excess Rate, at which
interest accrues on such Mortgage Loan during such period (in the absence of a
default), as set forth in the related Note and on Annex A. The Mortgage Rate
for purposes of calculating the Weighted Average Net Mortgage Pass-Through Rate
will be the Mortgage Rate of such Mortgage Loan without taking into account any
reduction in the interest rate by a bankruptcy court pursuant to a plan of
reorganization or pursuant to any of its equitable powers or a reduction of
interest or principal due to a modification as described under "The Pooling and
Servicing Agreement -- Modifications."
The "Principal Distribution Amount" for any Distribution Date will be
equal to the sum of the following items without duplication:
(i) the principal component of all scheduled Monthly Payments (other than
Balloon Payments) due on the Mortgage Loans on or before the related Due
Date (if received or advanced);
(ii) the principal component of all Assumed Scheduled Payments due on or
before the related Due Date (if received or advanced) with respect to any
Mortgage Loan that is delinquent in respect of its Balloon Payment;
(iii) the Stated Principal Balance of each Mortgage Loan that was, during
the related Collection Period, repurchased from the Trust in connection
with the breach of a representation or warranty or purchased from the Trust
as described herein under "The Pooling and Servicing Agreement -- Optional
Termination";
(iv) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan which was liquidated during the related Collection Period;
(v) all Balloon Payments and, to the extent not included in the preceding
clauses, any other principal payment on any Mortgage Loan received on or
after the Maturity Date thereof, to the extent received during the related
Collection Period;
(vi) to the extent not included in the preceding clause (iii) or (iv),
all other Principal Prepayments received in the related Collection Period;
and
(vii) to the extent not included in the preceding clauses, any other full
or partial recoveries in respect of principal, including net insurance
proceeds, net liquidation proceeds and Net REO Proceeds received in the
related Collection Period (in the case of clauses (i) through (vii) net of
any related outstanding P&I Advances allocable to principal).
The "Assumed Scheduled Payment" with respect to any Mortgage Loan that is
delinquent in respect of its Balloon Payment (including any REO Mortgage Loan
as to which the Balloon Payment would have been past due) is an amount equal to
the sum of (a) the principal portion of the Monthly Payment that would have
been due on such Mortgage Loan on the related Due Date based on the constant
payment required by the related Note or the original amortization schedule
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thereof (as calculated with interest at the related Mortgage Rate), if
applicable, assuming such Balloon Payment has not become due after giving
effect to any modification, and (b) interest at the applicable Net Mortgage
Pass-Through Rate.
An "REO Mortgage Loan" is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
Distribution of Available Funds. On each Distribution Date, prior to the
Crossover Date, the Available Funds for such Distribution Date will be
distributed in the following amounts and order of priority:
(i) First, pro rata, in respect of interest, to the Class A-1, Class A-2
and Class X Certificates, up to an amount equal to the aggregate Interest
Accrual Amounts of such Classes;
(ii) Second, pro rata, to the Class A-1, Class A-2 and Class X
Certificates, in respect of interest, up to an amount equal to the
aggregate unpaid Interest Shortfalls previously allocated to such Classes;
(iii) Third, to the Class A-1 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount until the Certificate Balance thereof is reduced to zero;
(iv) Fourth, to the Class A-2 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance thereof is reduced to
zero;
(v) Fifth, to the Class B Certificates in respect of interest, up to an
amount equal to the Interest Accrual Amount of such Class;
(vi) Sixth, to the Class B Certificates, in respect of interest, up to an
amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(vii) Seventh, to the Class B Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(viii) Eighth, to the Class B Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized
Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(ix) Ninth, to the Class C Certificates in respect of interest, up to an
amount equal to the Interest Accrual Amount of such Class;
(x) Tenth, to the Class C Certificates, in respect of interest, up to an
amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(xi) Eleventh, to the Class C Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xii) Twelfth, to the Class C Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized
Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xiii) Thirteenth, to the Class D Certificates in respect of interest, up
to an amount equal to the Interest Accrual Amount of such Class;
(xiv) Fourteenth, to the Class D Certificates, in respect of interest, up
to an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
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(xv) Fifteenth, to the Class D Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xvi) Sixteenth, to the Class D Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xvii) Seventeenth, to the Class E Certificates in respect of interest,
up to an amount equal to the Interest Accrual Amount of such Class;
(xviii) Eighteenth, to the Class E Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xix) Nineteenth, to the Class E Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xx) Twentieth, to the Class E Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxi) Twenty-first, to the Class F Certificates in respect of interest,
up to an amount equal to the Interest Accrual Amount of such Class;
(xxii) Twenty-second, to the Class F Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxiii) Twenty-third, to the Class F Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxiv) Twenty-fourth, to the Class F Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxv) Twenty-fifth, to the Class G Certificates in respect of interest,
up to an amount equal to the Interest Accrual Amount of such Class;
(xxvi) Twenty-sixth, to the Class G Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxvii) Twenty-seventh, to the Class G Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxviii) Twenty-eighth, to the Class G Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxix) Twenty-ninth, to the Class H Certificates in respect of interest,
up to an amount equal to the Interest Accrual Amount of such Class;
(xxx) Thirtieth, to the Class H Certificates, in respect of interest, up
to an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(xxxi) Thirty-first, to the Class H Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
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(xxxii) Thirty-second, to the Class H Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxxiii) Thirty-third, to the Class J Certificates in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxxiv) Thirty-fourth, to the Class J Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxxv) Thirty-fifth, to the Class J Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxxvi) Thirty-sixth, to the Class J Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxxvii) Thirty-seventh, to the Class K Certificates in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxxviii) Thirty-eighth, to the Class K Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxxix) Thirty-ninth, to the Class K Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xl) Fortieth, to the Class K Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized
Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class; and
(xli) Forty-first, to the Class L Certificates in respect of interest, up
to an amount equal to the Interest Accrual Amount of such Class;
(xlii) Forty-second, to the Class L Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xliii) Forty-third, to the Class L Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xliv) Forty-fourth, to the Class L Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xlv) Forty-fifth, to the Class R, the Class MR and Class LR Certificates
as specified in the Pooling and Servicing Agreement.
All references to "pro rata" in the preceding clauses unless otherwise
specified mean pro rata based upon the amount distributable pursuant to such
clause.
Notwithstanding the foregoing, on each Distribution Date occurring on or
after the Crossover Date, the Principal Distribution Amount will be distributed
to the Class A-1 and Class A-2 Certificates, pro rata, based on their
respective Certificate Balances, in reduction of their respective Certificate
Balances, until the Certificate Balance of each such Class is reduced to zero,
and any unreimbursed amounts of Realized Losses previously allocated to such
classes, if available, will be distributed pro rata based on their respective
Certificate Balances. The
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"Crossover Date" is the Distribution Date on which the Certificate Balance of
each Class of Certificates other than the Class A-1 and Class A-2 Certificates
have been reduced to zero. The Class X Certificates will not be entitled to any
distribution of principal.
Prepayment Premiums. Any Prepayment Premium actually collected with
respect to a Mortgage Loan during any particular Collection Period will be
distributed on the related Distribution Date to the holders of each Class of
Offered Certificates other than the Class X Certificates (not in reduction of
the Certificate Balances thereof) in an aggregate amount up to the product of
(a) such Prepayment Premium, (b) the Discount Rate Fraction and (c) the
Principal Allocation Fraction of each such Class. The "Discount Rate Fraction"
is equal to a fraction (not greater than 1.0 or less than 0.0) the numerator of
which is equal to the excess of (x) the Pass- Through Rate for such Class of
Certificates over (y) the relevant Discount Rate (as defined below) and the
denominator of which is equal to the excess of (x) the Mortgage Rate of the
related Mortgage Loan over (y) the relevant Discount Rate. With respect to any
Distribution Date and each Class of Offered Certificates (other than the Class
X Certificates), the "Principal Allocation Fraction" is a fraction the
numerator of which is the Principal Distribution Amount allocated to such Class
of Certificates for such Distribution Date and the denominator of which is the
Principal Distribution Amount for all Classes of Certificates as of such
Distribution Date. The portion of the Prepayment Premium remaining after the
payment of the amount calculated as described above will be distributed to the
holders of the Class X Certificates.
The "Discount Rate" means the yield (compounded monthly) for "This Week"
as reported by the Federal Reserve Board in Federal Reserve Statistical Release
H.15(519) for the constant maturity treasury having a maturity coterminous with
the Maturity Date or Anticipated Repayment Date of such Mortgage Loan as of the
Determination Date. If there is no Discount Rate for instruments having a
maturity coterminous with the remaining term (to maturity or Anticipated
Repayment Date, where applicable) of the relevant Mortgage Loan, then the
Discount Rate will be equal to the linear interpolation of the yields of the
constant maturity treasurities with maturities next longer and shorter than
such remaining term to maturity or Anticipated Repayment Date.
The Prepayment Premiums, if any, collected on the Mortgage Loans during
any Collection Period may not be sufficient to fully compensate
Certificateholders of any Class for any loss in yield attributable to the
related prepayments of principal.
Default Interest and Excess Interest. On each Distribution Date, Net
Default Interest and Excess Interest received in the related Collection Period
with respect to a default on a Mortgage Loan will be distributed solely to the
Class Q-1 and Class Q-2 Certificates, respectively, to the extent set forth in
the Pooling and Servicing Agreement, and will not be available for distribution
to holders of the Offered Certificates. The Class Q-1 and Class Q-2
Certificates are not entitled to any other distributions of interest, principal
or Prepayment Premiums.
REALIZED LOSSES
The Certificate Balance of the Certificates will be reduced without
distribution on any Distribution Date as a write-off to the extent of any
Realized Loss allocated to the applicable Class of Certificates with respect to
such Distribution Date. As referred to herein, the "Realized Loss" with respect
to any Distribution Date shall mean the amount, if any, by which the aggregate
Certificate Balance of the Regular Certificates (other than the Class X
Certificates) after giving effect to distributions made on such Distribution
Date exceeds the aggregate Stated Principal Balance of the Mortgage Loans
immediately following the Servicer Remittance Date preceding such Distribution
Date. Any such Realized Losses will be applied to the Classes of Certificates
in the following order, until the Certificate Balance of each is reduced to
zero: first, to the Class L Certificates, second to the Class K Certificates,
third, to the Class J Certificates, fourth, to the Class H Certificates, fifth,
to the Class G Certificates, sixth, to the Class F Certificates, seventh, to
the Class E Certificates, eighth, to the Class D Certificates, ninth, to the
Class C Certificates, tenth, to the Class B Certificates, and finally, pro
rata, to the Class A-1 and Class A-2 Certificates based on their respective
Certificate Balances. Any amounts recovered in respect of any such amounts
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previously written-off as Realized Losses will be distributed to the Classes of
Regular Certificates in reverse order of allocation of such Realized Losses
thereto. Shortfalls in Available Funds resulting from interest on Advances to
the extent not covered by Default Interest, extraordinary expenses of the
Trust, a reduction of the interest rate of a Mortgage Loan by a bankruptcy
court pursuant to a plan of reorganization or pursuant to any of its equitable
powers, a reduction in interest rate or a forgiveness of principal of a
Mortgage Loan as described under "The Pooling and Servicing Agreement --
Modifications," herein or otherwise, will be allocated in the same manner as
Realized Losses. Excess Prepayment Interest Shortfalls, as described under "--
Prepayment Interest Shortfalls" herein, will be allocated to, and be deemed
distributed to, each Class of Certificates, pro rata, based upon amounts
distributable in respect of interest to each such Class (without giving effect
to any such allocation of Excess Prepayment Interest Shortfall). The Notional
Balance of the Class X Certificates will be reduced to reflect reductions in
the Stated Principal Balances of the Mortgage Loans as a result of write-offs
in respect of final recovery determinations in respect of liquidation of
defaulted Mortgage Loans.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-Off Date Principal Balance thereof (or in the case of a Replacement
Mortgage Loan, the outstanding principal balance as of the related date of
substitution), reduced (to not less than zero) on each Distribution Date by (i)
any payments or other collections (or Advances in lieu thereof) of principal of
such Mortgage Loan that have been distributed on the Certificates on such date
and (ii) the principal portion of any Realized Loss incurred in respect of or
allocable to such Mortgage Loan during the related Collection Period.
PREPAYMENT INTEREST SHORTFALL
For any Distribution Date, a "Prepayment Interest Shortfall" will arise
with respect to any Mortgage Loan if a mortgagor makes a full Principal
Prepayment or a Balloon Payment during the related Collection Period, and the
date such payment was made (or, in the case of a Balloon Payment, the date
through which interest thereon accrues) occurred prior to the Due Date for such
Mortgage Loan in the related Collection Period. Such a shortfall arises because
the amount of interest which accrues on the amount of such Principal Prepayment
or the principal portion of a Balloon Payment, as the case may be, will be less
than the corresponding amount of interest accruing on the Certificates and fees
payable to the Trustee and the Servicer. In such case, the Prepayment Interest
Shortfall will generally equal the excess of (a) the aggregate amount of
interest which would have accrued on the Stated Principal Balance of such
Mortgage Loan for the one month period ending on such Due Date if such
Principal Prepayment or Balloon Payment had not been made over (b) the
aggregate interest that did so accrue through the date such payment was made.
In any case in which a Principal Prepayment in full or in part or a
Balloon Payment is made during any Collection Period after the Due Date for a
Mortgage Loan in the related Collection Period, "Prepayment Interest Excess"
will arise since the amount of interest which accrues on the amount of such
Principal Prepayment or the principal portion of a Balloon Payment will exceed
the corresponding amount of interest accruing on the Certificates and fees
payable to the Trustee and the Servicer.
To the extent that the aggregate of such Prepayment Interest Shortfalls
for all Mortgage Loans exceed such Prepayment Interest Excess for such Mortgage
Loans as of any Distribution Date ("Net Prepayment Interest Shortfall"), such
amount will reduce the aggregate Master Servicing Fee (but not the fees payable
to the Special Servicer in the case of Specially Serviced Mortgage Loans and
not the Trustee Fee) in an amount necessary to offset such Net Prepayment
Interest Shortfalls. See "The Pooling and Servicing Agreement -- Servicing
Compensation and Payment of Expenses" herein. With respect to the Mortgage
Loans, the aggregate Prepayment Interest Shortfalls in excess of the sum of (i)
the Prepayment Interest Excess and (ii) the aggregate
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Master Servicing Fee ("Excess Prepayment Interest Shortfall") will generally be
allocated to each Class of Certificates, pro rata, based on interest amounts
distributable (without giving effect to any such allocation of Excess
Prepayment Interest Shortfall) to each such Class.
To the extent that such Prepayment Interest Excess for all Mortgage Loans
exceeds such Prepayment Interest Shortfalls for all Mortgage Loans as of any
Distribution Date, such excess amount (the "Net Prepayment Interest Excess")
will be payable to the Servicer as additional compensation.
SUBORDINATION
As a means of providing a certain amount of protection to the holders of
the Class A-1, Class A-2 and Class X Certificates (except as set forth below)
against losses associated with delinquent and defaulted Mortgage Loans, the
rights of the holders of the Class B, Class C, Class D, Class E, Class F, Class
G, Class H, Class J, Class K and Class L Certificates to receive distributions
of interest and principal (if applicable) with respect to the Mortgage Loans,
as applicable, will be subordinated to such rights of the holders of the Class
A-1, Class A-2 and Class X Certificates. The Class B Certificates will be
likewise protected by the subordination of the Class C, Class D, Class E, Class
F, Class G, Class H, Class J, Class K and Class L Certificates. The Class C
Certificates will be likewise protected by the subordination of the Class D,
Class E, Class F, Class G, Class H, Class J, Class K and Class L Certificates.
The Class D Certificates will be likewise protected by the subordination of the
Class E, Class F, Class G, Class H, Class J, Class K and Class L Certificates.
The Class E Certificates will be likewise protected by the subordination of the
Class F, Class G, Class H, Class J, Class K and Class L Certificates. The Class
F Certificates will likewise be protected by the subordination of the Class G,
Class H, Class J, Class K and Class L Certificates. This subordination will be
effected in two ways: (i) by the preferential right of the holders of a Class
of Regular Certificates to receive on any Distribution Date the amounts of
interest and principal, distributable in respect of such Regular Certificates
on such date prior to any distribution being made on such Distribution Date in
respect of any Classes of Regular Certificates subordinate thereto, and (ii) by
the allocation of Realized Losses (as defined herein), first, to the Class L
Certificates, second, to the Class K Certificates, third, to the Class J
Certificates, fourth, to the Class H Certificates, fifth, to the Class G
Certificates, sixth, to the Class F Certificates, seventh, to the Class E
Certificates, eighth, to the Class D Certificates, ninth, to the Class C
Certificates, tenth, to the Class B Certificates, and finally, pro rata, to the
Class A-1 and Class A-2 Certificates based on their respective Certificate
Balances. No other form of credit enhancement will be available for the benefit
of the holders of the Offered Certificates.
APPRAISAL REDUCTIONS
With respect to the first Distribution Date following the earliest of (i)
the date on which any Mortgage Loan becomes a Modified Mortgage Loan, (ii) the
90th day following the occurrence of any uncured delinquency in Monthly
Payments with respect to any Mortgage Loan, (iii) receipt of notice that the
related borrower has filed a bankruptcy petition or the date on which a
receiver is appointed and continues in such capacity in respect of the
Mortgaged Property securing any Mortgage Loan and (iv) the date on which the
Mortgaged Property securing any Mortgage Loan becomes an REO Property (any of
(i), (ii), (iii) and (iv), an "Appraisal Reduction Event"), an Appraisal
Reduction Amount will be calculated. The "Appraisal Reduction Amount" for any
Distribution Date and for any Mortgage Loan as to which any Appraisal Reduction
Event has occurred will be an amount equal to the excess of (a) the outstanding
Stated Principal Balance of such Mortgage Loan over (b) the excess of (i) 90%
of the sum of the appraised values (net of any prior liens) of the related
Mortgaged Properties as determined by independent MAI appraisals (the costs of
which shall be paid by the Servicer as an Advance) over (ii) the sum of (A) all
unpaid interest on such Mortgage Loan at a per annum rate equal to the Mortgage
Rate, (B) all unreimbursed Property Advances, the principal portion of all
unreimbursed P&I Advances and all unpaid interest on Advances at the Advance
Rate in respect of such Mortgage Loan and (C) all
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currently due and unpaid real estate taxes, ground rents and assessments and
insurance premiums and all other amounts due and unpaid under the Mortgage Loan
(which tax, premiums and other amounts have not been the subject of an Advance
by the Servicer). If no independent MAI appraisal has been obtained within
twelve months prior to the first Distribution Date on or after an Appraisal
Reduction Event has occurred, the Servicer will be required to estimate the
value of the related Mortgaged Properties (the "Servicer's Appraisal Estimate")
and such estimate will be used for purposes of the Appraisal Reduction Amount.
Within 30 days after the Appraisal Reduction Event, the Servicer will be
required to obtain an independent MAI appraisal. On the first Distribution Date
occurring on or after the delivery of such independent MAI appraisal, the
Servicer will be required to adjust the Appraisal Reduction Amount to take into
account such appraisal (regardless of whether the independent MAI appraisal is
higher or lower than the Servicer's Appraisal Estimate). Appraisal Reduction
Amounts will be recalculated annually based on Updated Appraisals.
Contemporaneously with the earliest of (i) the effective date of any
modification of the stated maturity, Mortgage Rate, principal balance or
amortization terms of any Mortgage Loan, any extension of the Maturity Date of
a Mortgage Loan or consent to the release of any Mortgaged Property or REO
Property from the lien of the related Mortgage, (ii) the occurrence of an
Appraisal Reduction Event, or (iii) the date on which the Special Servicer,
consistent with the Servicing Standard, requests an Updated Appraisal, the
Servicer (after consultation with the Special Servicer) will obtain an
appraisal (or a letter update for an existing appraisal which is less than two
years old) of the Mortgaged Property, or REO Property, as the case may be, from
an independent appraiser who is a member of the Appraiser Institute (an
"Updated Appraisal") provided, that, the Servicer will not be required to
obtain an Updated Appraisal of any Mortgaged Property with respect to which
there exists an appraisal which is less than twelve months old.
In the event that an Appraisal Reduction Event occurs with respect to a
Mortgage Loan, the amount advanced by the Servicer with respect to delinquent
payments of interest for such Mortgage Loan will be reduced as described under
"The Pooling Agreement --Advances" herein. In addition, the Certificate Balance
of each of the Regular Certificates will be notionally reduced (solely for
purposes of determining the Voting Rights of the related Classes) on any
Distribution Date to the extent of any Appraisal Reduction Amounts allocated to
such Class on such Distribution Date. Any such reductions will be applied in
the following order of priority: first, to the Class L Certificates; second to
the Class K Certificates; third, to the Class J Certificates; fourth, to the
Class H Certificates; fifth, to the Class G Certificates; sixth, to the Class F
Certificates; seventh, to the Class E Certificates; eighth, to the Class D
Certificates; ninth, to the Class C Certificates; and finally, to the Class B
Certificates (provided in each case that no Certificate Balance in respect of
any such Class may be notionally reduced below zero).
A "Modified Mortgage Loan" is any Specially Serviced Mortgage Loan which
has been modified by the Special Servicer in a manner that: (a) affects the
amount or timing of any payment of principal or interest due thereon (other
than, or in addition to, bringing current Monthly Payments with respect to such
Mortgage Loan); (b) except as expressly contemplated by the related Mortgage,
results in a release of the lien of the Mortgage on any material portion of the
related Mortgaged Property without a corresponding principal prepayment in an
amount not less than the fair market value (as is) of the property to be
released; or (c) in the reasonable good faith judgment of the Servicer,
otherwise materially impairs the security for such Mortgage Loan or reduces the
likelihood of timely payment of amounts due thereon.
DELIVERY, FORM AND DENOMINATION
The Offered Certificates will be issuable in registered form, in minimum
denominations of Certificate Balance of $50,000 and multiples of $1 in excess
thereof and, in the case of the Class X Certificates, in minimum denominations
of Notional Balance of $1,000,000 and multiples of $1 in excess thereof.
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The Offered Certificates will initially be represented by one or more
global Certificates for each such Class registered in the name of the nominee
of DTC. The Depositor has been informed by DTC that DTC's nominee will be Cede
& Co. No holder of an Offered Certificate will be entitled to receive a
certificate issued in fully registered, certificated form (each, a "Definitive
Certificate") representing its interest in such Class, except under the limited
circumstances described in the Prospectus under "Description of the
Certificates -- Book Entry Registration and Definitive Certificates." Unless
and until Definitive Certificates are issued, all references to actions by
holders of the Offered Certificates will refer to actions taken by DTC upon
instructions received from holders of Offered Certificates through its
participating organizations (together with CEDEL and Euroclear participating
organizations, the "Participants"), and all references herein to payments,
notices, reports, statements and other information to holders of Offered
Certificates will refer to payments, notices, reports and statements to DTC or
Cede & Co., as the registered holder of the Offered Certificates, for
distribution to holders of Offered Certificates through its Participants in
accordance with DTC procedures; provided, however, that to the extent that the
party responsible for distributing any report, statement or other information
has been provided with the name of the beneficial owner of a Certificate (or
the prospective transferee of such beneficial owner), such report, statement or
other information will be provided to such beneficial owner (or prospective
transferee).
Until Definitive Certificates are issued in respect of the Offered
Certificates, interests in the Offered Certificates will be transferred on the
book-entry records of DTC and its Participants. The Trustee will initially
serve as certificate registrar (in such capacity, the "Certificate Registrar")
for purposes of recording and otherwise providing for the registration of the
Offered Certificates.
A "Certificateholder" under the Pooling and Servicing Agreement will be
the person in whose name a Certificate is registered in the certificate
register maintained pursuant to the Pooling and Servicing Agreement, except
that solely for the purpose of giving any consent or taking any action pursuant
to the Pooling and Servicing Agreement, any Certificate registered in the name
of the Depositor, the Servicer, the Special Servicer, the Trustee (in its
individual capacity), a manager of a Mortgaged Property, a mortgagor or any
person affiliated with the Depositor, the Servicer, the Special Servicer, the
Trustee, such manager or a mortgagor will be deemed not to be outstanding and
the Voting Rights to which it is entitled will not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent or take any such action has been obtained; provided,
however, that for purposes of obtaining the consent of Certificateholders to an
amendment to the Pooling and Servicing Agreement, any Certificates beneficially
owned by the Servicer or Special Servicer or an affiliate will be deemed to be
outstanding, provided that such amendment does not relate to compensation of
the Servicer or Special Servicer or otherwise benefit the Servicer or the
Special Servicer in any material respect; provided, further, that for purposes
of obtaining the consent of Certificateholders to any action proposed to be
taken by the Special Servicer with respect to a Specially Serviced Mortgage
Loan, any Certificates beneficially owned by the Servicer or an affiliate will
be deemed to be outstanding, provided that, the Special Servicer is not the
Servicer, provided further, however, that such restrictions will not apply to
the exercise of the Special Servicer's rights, if any, as a member of the
Controlling Class. Notwithstanding the foregoing, solely for purposes of
providing or distributing any reports, statements or other information pursuant
to the Pooling and Servicing Agreement, a Certificateholder will include any
beneficial owner (or prospective transferee of a beneficial owner) to the
extent that the party required or permitted to provide or distribute such
report, statement or other information has been provided with the name of such
beneficial owner (or prospective transferee). The Percentage Interest of any
Class of Offered Certificate will be equal to the percentage obtained by
dividing the denomination of such Certificate by the aggregate initial
Certificate Balance of such Class of Certificates. See "Description of the
Certificates -- Book-Entry Registration and Definitive Certificates" in the
Prospectus.
BOOK-ENTRY REGISTRATION
Holders of Offered Certificates may hold their Certificates through DTC
(in the United States) or CEDEL or Euroclear (in Europe) if they are
Participants of such system, or indirectly through
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organizations that are participants in such systems. CEDEL and Euroclear will
hold omnibus positions on behalf of the CEDEL Participants and the Euroclear
Participants, respectively, through customers' securities accounts in CEDEL's
and Euroclear's names on the books of their respective depositaries
(collectively, the "Depositaries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities for its Participants and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic computerized book-entries, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through CEDEL Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing system
by its Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures.
If the transaction complies with all relevant requirements, Euroclear or CEDEL,
as the case may be, will then deliver instructions to the Depository to take
action to effect final settlement on its behalf.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
CEDEL Participant or Euroclear Participant on such business day. Cash received
in CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following
settlement in DTC.
The holders of Offered Certificates that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interests in, Offered Certificates may do so only through Participants
and Indirect Participants. In addition, holders of Offered Certificates will
receive all distributions of principal and interest from the Trustee through
the Participants who in turn will receive them from DTC. Under a book-entry
format, holders of Offered Certificates may experience some delay in their
receipt of payments, reports and notices, since such payments, reports and
notices will be forwarded by the Trustee to Cede & Co., as nominee for DTC. DTC
will forward such payments, reports and notices to its Participants, which
thereafter will forward them to Indirect Participants, CEDEL, Euroclear or
holders of Offered Certificates.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect to
the Offered Certificates and to receive and transmit distributions of principal
of, and interest on, the Offered Certificates. Participants and Indirect
Participants with which the holders of Offered Certificates have accounts with
respect to
S-69
<PAGE>
the Offered Certificates similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective holders of
Offered Certificates. Accordingly, although the holders of Offered Certificates
will not possess the Offered Certificates, the Rules provide a mechanism by
which Participants will receive payments on Offered Certificates and will be
able to transfer their interest.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes
in accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear system ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear system,
withdrawal of securities and cash from the Euroclear system, and receipts of
payments with respect to securities in the Euroclear system.
Although DTC, Euroclear and CEDEL have implemented the foregoing
procedures in order to facilitate transfers of interests in Global Certificates
among Participants of DTC, Euroclear and CEDEL, they are under no obligation to
perform or to continue to comply with such procedures, and such procedures may
be discontinued at any time. None of the Depositor, the Trustee, the Fiscal
Agent, the Servicer, the Special Servicer or the Underwriters will have any
responsibility for the performance by DTC, Euroclear or CEDEL or their
respective direct or indirect Participants of their respective obligations
under the rules and procedures governing their operations.
The information herein concerning DTC, CEDEL and Euroclear and their
book-entry systems has been obtained from sources believed to be reliable, but
the Depositor takes no responsibility for the accuracy or completeness thereof.
DEFINITIVE CERTIFICATES
Definitive Certificates will be delivered to beneficial owners of the
Offered Certificates ("Certificate Owners") (or their nominees) only if (i) DTC
is no longer willing or able properly to discharge its responsibilities as
depository with respect to the Book-Entry Certificates, and the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
elects to terminate the book-entry system through DTC with respect to some or
all of any Class or Classes of Certificates, or (iii) after the occurrence of
an Event of Default under the Pooling and Servicing Agreement, Certificate
Owners representing a majority in principal amount of the Book-Entry
Certificates then outstanding advise the Trustee and DTC through DTC
Participants in writing that the continuation of a book-entry system through
DTC (or a successor thereto) is no longer in the best interest of Certificate
Owners.
S-70
<PAGE>
Upon the occurrence of any of the events described in clauses (i) through
(iii) in the immediately preceding paragraph, the Trustee is required to notify
all affected Certificateholders (through DTC and related DTC Participants) of
the availability through DTC of Definitive Certificates. Upon delivery of
Definitive Certificates, the Trustee, Certificate Registrar, and Servicer will
recognize the holders of such Definitive Certificates as holders under the
Pooling and Servicing Agreement ("Holders"). Distributions of principal and
interest on the Definitive Certificates will be made by the Trustee directly to
Holders of Definitive Certificates in accordance with the procedures set forth
in the Prospectus and the Pooling and Servicing Agreement.
Upon the occurrence of any of the events described in clauses (i) through
(iii) of the second preceding paragraph, requests for transfer of Definitive
Certificates will be required to be submitted directly to the Certificate
Registrar in a form acceptable to the Certificate Registrar (such as the forms
which will appear on the back of the certificate representing a Definitive
Certificate), signed by the Holder or such Holder's legal representative and
accompanied by the Definitive Certificate or Certificates for which transfer is
being requested. The Trustee will be appointed as the initial Certificate
Registrar.
TRANSFER RESTRICTIONS
In the event that holders of the Class B, Class C, Class D, Class E or
Class F Certificates (the "Subordinated Offered Certificates") become entitled
to receive Definitive Certificates under the circumstances described under "--
Definitive Certificates", each prospective transferee of a Subordinated Offered
Certificate that is a Definitive Certificate will be required to (i) deliver to
the Certificate Registrar and the Trustee a representation letter substantially
in the form set forth as an exhibit to the Pooling and Servicing Agreement
stating that such transferee is not an employee benefit plan or other
retirement arrangement subject to Title I 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"), or a governmental plan (as
defined in Section 3(32) of ERISA) subject to any federal, state or local law
which is, to a material extent, similar to the foregoing provisions of ERISA or
the Code (each, a "Plan"), or a person acting on behalf of or investing the
assets of a Plan, other than an insurance company investing the assets of its
general account under circumstances whereby the purchase and subsequent holding
of a Subordinated Offered Certificate would be exempt from the prohibited
transaction restrictions of ERISA and the Code under Sections I and Ill of PTE
95-60, or (ii) provide an opinion of counsel and such other documentation as
described under "ERISA Considerations" herein. The purchaser or transferee of
any interest in a Subordinated Offered Certificate that is not a Definitive
Certificate shall be deemed to represent that it is not a person described in
clause (i) above.
The Subordinated Offered Certificates will contain a legend describing
such restrictions on transfer and the Pooling and Servicing Agreement will
provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void.
S-71
<PAGE>
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on: (i) the
Pass-Through Rate in effect from time to time for such Certificate; (ii) the
price paid for such Certificate and the rate and timing of payments of
principal on such Certificate; and (iii) the aggregate amount of distributions
on such Certificate.
Pass-Through Rate. The Pass-Through Rate for the Class A-1 and Class A-2
Certificates will be fixed. The Pass-Through Rate for the Class X Certificates
for any Distribution Date will be variable and will be based on the Weighted
Average Net Mortgage Pass-Through Rate for such Distribution Date. The
Pass-Through Rates applicable to the Class B, Class C and Class D Certificates
for any Distribution Date will be equal to the lesser of a specified rate and
the Weighted Average Net Mortgage Pass-Through Rate with respect to such
Distribution Date. The Pass-Through Rates applicable to the Class E and Class F
Certificates for any Distribution Date will be equal to the Weighted Average
Net Pass-Through Mortgage Rate with respect to such Distribution Date.
Accordingly, the yield on the Offered Certificates (other than the Class A-1
and Class A-2 Certificates) will be sensitive to changes in the relative
composition of the Mortgage Loans as a result of scheduled amortization,
voluntary prepayments, liquidations of Mortgage Loans following default and
repurchases of Mortgage Loans. Losses or payments of principal on the Mortgage
Loans with higher Net Mortgage Rates could result in a reduction in the
Weighted Average Net Mortgage Pass-Through Rate, thereby reducing the
Pass-Through Rates for the Class X, Class E and Class F Certificates and, to
the extent that the Weighted Average Net Mortgage Pass-Through Rate is reduced
below the specified fixed rate with respect to the Class B, Class C and Class D
Certificates, reducing the Pass-Through Rates on such Classes of Offered
Certificates.
See "Description of the Offered Certificates" and "Description of the
Mortgage Pool" herein and "--Yield Considerations--Rate and Timing of Principal
Payments" and "--Yield Sensitivity of the Class X Certificates" below.
Rate and Timing of Principal Payments. The yield to holders of the Class X
Certificates and the other Offered Certificates will be affected by the rate
and timing of principal payments on the Mortgage Loans (including principal
prepayments on the Mortgage Loans resulting from both voluntary prepayments by
the mortgagors and involuntary liquidations). The rate and timing of principal
payments on the Mortgage Loans will in turn be affected by, among other things,
the amortization schedules thereof, the dates on which Balloon Payments are due
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of Mortgage
Loans out of the Trust). Prepayments and, assuming the respective stated
maturity dates thereof have not occurred, liquidations and purchases of the
Mortgage Loans, will result in distributions on the Certificates with principal
balances (the "Principal Balance Certificates") of amounts that otherwise would
have been distributed (and reductions in the Notional Amount of the Class X
Certificates that would otherwise have occurred) over the remaining terms of
the Mortgage Loans. Defaults on the Mortgage Loans, particularly at or near
their stated maturity dates, may result in significant delays in payments of
principal on the Mortgage Loans (and, accordingly, on the Principal Balance
Certificates) while work-outs are negotiated or foreclosures are completed. See
"The Pooling and Servicing Agreement--Modifications, Waivers, Amendments and
Consents" herein and "The Pooling and Servicing Agreement--Realization Upon
Defaulted Mortgage Loans" and "Certain Legal Aspects of the Mortgage
Loans--Foreclosure" in the Prospectus. The failure on the part of any borrower
to pay its Anticipated Repayment Date Loan on its Anticipated Repayment Date
may result in significant delays in payments of principal on such Anticipated
Repayment Date Loan and, accordingly, on the Offered Certificates. Because the
rate of principal payments on the Mortgage Loans will depend on future events
and a variety of factors (as described below), no assurance can be given as to
such rate or the rate of principal prepayments
S-72
<PAGE>
in particular. The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience
of a large group of mortgage loans comparable to the Mortgage Loans.
The extent to which the yield to maturity of an Offered Certificate may
vary from the anticipated yield will depend upon the degree to which such
Certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on or
otherwise result in the reduction of the principal balance or notional amount,
as the case may be, of such Certificate. An investor should consider, in the
case of any Offered Certificate purchased at a discount, the risk that a slower
than anticipated rate of principal payments on such Certificate could result in
an actual yield to such investor that is lower than the anticipated yield and,
in the case of any Offered Certificate purchased at a premium, the risk that a
faster than anticipated rate of principal payments on such Certificate could
result in an actual yield to such investor that is lower than the anticipated
yield. In general, the earlier a payment of principal is made on an Offered
Certificate purchased at a discount or premium, the greater will be the effect
on an investor's yield to maturity. As a result, the effect on an investor's
yield of principal payments on such investor's Offered Certificates occurring
at a rate higher (or lower) than the rate anticipated by the investor during
any particular period would not be fully offset by a subsequent like reduction
(or increase) in the rate of principal payments. The yield to maturity of the
Class X Certificates will be highly sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) on or in respect of the Mortgage Loans. Investors in the Class X
Certificates should fully consider the associated risks, including the risk
that an extremely rapid rate of amortization and prepayment of the Mortgage
Loans could result in the failure of such investors to fully recoup their
initial investments.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will generally be borne: first, by the holders
of the respective Classes of Subordinate Certificates, in reverse alphabetical
order of Class designation, to the extent of amounts otherwise distributable in
respect of their Certificates; and then, by the holders of the Senior
Certificates. In addition, reductions in the balances of the Principal Balance
Certificates will also reduce the Notional Amount of the Class X Certificates.
Further, any Net Prepayment Interest Shortfall for each Distribution Date will
be allocated on such Distribution Date among each Class of Certificates, pro
rata, in accordance with the respective Interest Accrual Amounts for each such
Class of Certificates for such Distribution Date.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates,
the terms of the Mortgage Loans (for example, Prepayment Premiums, prepayment
lock-out periods and amortization terms that require Balloon Payments), the
demographics and relative economic vitality of the areas in which the Mortgaged
Properties are located and the general supply and demand for comparable
residential and/or commercial space in such areas, the quality of management of
the Mortgaged Properties, the servicing of the Mortgage Loans, possible changes
in tax laws and other opportunities for investment. See "Risk Factors" and
"Description of the Mortgage Pool" herein and "Risk Factors" and "Yield and
Maturity Considerations--Yield and Prepayment Considerations" in the
Prospectus.
The rate of prepayment on the Mortgage Loan is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. If a Mortgage Loan is not in a lock-out period, the Prepayment Premium,
if any, in respect of such Mortgage Loan may not be sufficient economic
disincentive to prevent the related borrower from voluntarily prepaying the
loan as part of a refinancing thereof. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans" herein.
S-73
<PAGE>
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least 15
days following the end of the related Interest Accrual Period, the effective
yield to the holders of the Offered Certificates will be lower than the yield
that would otherwise be produced by the applicable Pass-Through Rates and
purchase prices (assuming such prices did not account for such delay).
Unpaid Interest. As described under "Description of the Offered
Certificates--Distributions--
Application of the Available Distribution Amount" herein, if the portion of the
Available Distribution Amount to be distributed in respect of interest on any
Class of Offered Certificates on any Distribution Date is less than the accrued
interest for such Class, the shortfall will be distributable to holders of such
Class of Certificates on subsequent Distribution Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Certificates
for so long as it is outstanding.
WEIGHTED AVERAGE LIFE
The weighted average life of a Principal Balance Certificate refers to the
average amount of time that will elapse from the date of its issuance until
each dollar allocable to principal of such Certificate is distributed to the
investor. For purposes of this Prospectus Supplement, the weighted average life
of a Principal Balance Certificate is determined by (i) multiplying the amount
of each principal distribution thereon by the number of years from the Closing
Date to the related Distribution Date, (ii) summing the results and (iii)
dividing the sum by the aggregate amount of the reductions in the principal
balance of such Certificate. Accordingly, the weighted average life of any such
Certificate will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid or otherwise collected or advanced and
the extent to which such payments, collections or advances of principal are in
turn applied in reduction of the Certificate Balance of the Class of
Certificates to which such Certificate belongs. If the Balloon Payment on a
Balloon Loan having a Due Date after the Determination Date in any month is
received on the stated maturity date thereof, the excess of such payment over
the related Assumed Monthly Payment will not be included in the Available
Distribution Amount until the Distribution Date in the following month.
Therefore, the weighted average life of the Certificates may be extended.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the Constant Prepayment
Rate ("CPR") model. The CPR Model assumes that a group of mortgage loans
experiences prepayments each month at a specified constant annual rate. As used
in each of the following sets of tables with respect to any particular Class,
the column headed "0%" assumes that none of the Mortgage Loans is prepaid
before maturity (or the Anticipated Repayment Date, in the case of an ARD
Loan). The columns headed "25%," "50%," "75%," and "100%" assume that no
prepayments are made on any Mortgage Loan during such Mortgage Loan's
prepayment lock-out or defeasance period, if any, or during such Mortgage
Loan's yield maintenance period, if any, and are otherwise made on each of the
Mortgage Loans at the indicated CPR percentages. There is no assurance,
however, that prepayments of the Mortgage Loans (whether or not in a prepayment
lock-out or defeasance period or a yield maintenance period) will conform to
any particular CPR percentages, and no representation is made that the Mortgage
Loans will prepay in accordance with the assumptions at any of the CPR
percentages shown or at any other particular prepayment rate, that all the
Mortgage Loans will prepay in accordance with the assumptions at the same rate
or that Mortgage Loans that are in a prepayment lock-out or defeasance period
or a yield maintenance period will not prepay as a result of involuntary
liquidations upon default or otherwise. A "prepayment lock-out period" is any
period during which the terms of the Mortgage Loan prohibit voluntary
prepayments on the part of the borrower. A "defeasance period" is any period
during which the borrower may, under the terms of the Mortgage Loan, exercise a
Defeasance Option. A "yield maintenance period" is any period during which the
terms of the Mortgage Loan provide that voluntary prepayments be accompanied by
a Prepayment Premium calculated on the basis of a yield maintenance formula.
S-74
<PAGE>
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates (other than the Class X
Certificates) that would be outstanding after each of the dates shown at the
indicated CPR percentages and the corresponding weighted average life of each
such Class of Certificates. The tables have been prepared on the basis of the
information set forth on Annex A and the following assumptions (collectively,
the "Modeling Assumptions"): (i) the initial Certificate Balance or Notional
Amount, as the case may be, and the Pass-Through Rate for each Class of
Certificates are as set forth herein, (ii) the scheduled Monthly Payments for
each Mortgage Loan are based on such Mortgage Loan's Cut-off Date Balance,
stated monthly principal and interest payments, and the Mortgage Rate in effect
as of the Cut-off Date for such Mortgage Loan, (iii) all scheduled Monthly
Payments (including Balloon Payments) are assumed to be timely received on the
first day of each month commencing in April 1999, (iv) there are no
delinquencies or losses in respect of the Mortgage Loans, there are no
extensions of maturity in respect of the Mortgage Loans, there are no Appraisal
Reductions with respect to the Mortgage Loans and there are no casualties or
condemnations affecting the Mortgaged Properties, (v) prepayments are made on
each of the Mortgage Loans at the indicated CPR percentages set forth in the
table (without regard to any limitations in such Mortgage Loans on partial
voluntary principal prepayments) (except to the extent modified below by the
assumption numbered (xiii)), (vi) the ARD Loans mature on their respective
Anticipated Repayment Dates, (vii) all Mortgage Loans accrue interest under the
method as specified in Annex A, (viii) neither the Servicer nor the Depositor
exercises its right of optional termination described herein, (ix) no Mortgage
Loan is required to be repurchased by the Mortgage Loan Seller, (x) no
Prepayment Interest Shortfalls are incurred and no Prepayment Premiums are
collected, (xi) there are no Additional Trust Fund Expenses, (xii)
distributions on the Certificates are made on the 15th day of each month,
commencing in April 1999, (xiii) no prepayments are received as to any Mortgage
Loan during such Mortgage Loan's prepayment lock-out period or defeasance
period, if any, or yield maintenance period, if any, (xiv) the prepayment
provisions for each Mortgage Loan are as set forth on Annex A, assuming the
term for the Prepayment Provisions begin on the Mortgage Loans first payment
date, (xv) the Closing Date is March 16, 1999, (xvi) the assumed Pass-Through
Rates for the Class A-1 and Class A-2 Certificates are 5.950% and 6.292%,
respectively, the assumed Pass-Through Rate for the Class B, Class C and Class
D Certificates (subject to the Weighted Average Net Mortgage Pass-Through Rate
limitation) are 6.412%, 6.452% and 6.709%, respectively, the assumed
Pass-Through Rates for the Class E and Class F Certificates are equal to the
Weighted Average Net Mortgage Pass-Through Rate, where its initial Pass-Through
Rate is approximately 7.238%, the assumed Pass-Through Rates for each of the
Class G through Class L Certificates (subject to the Weighted Average Net
Mortgage Pass-Through Rate limitation) is 5.950% and the assumed initial
Pass-Through Rate for the Class X Certificates is approximately 0.933%, and
(xvii) the assumed Initial Certificate Balances for Class G, Class H, Class J,
Class K and Class L Certificates are $68,834,000, $13,111,000, $26,222,000,
$19,667,000 and $29,503,920. To the extent that the Mortgage Loans have
characteristics or experience performance that differs from those assumed in
preparing the tables set forth below, the Class A-1, Class A-2, Class B, Class
C, Class D, Class E and Class F Certificates may mature earlier or later than
indicated by the tables. It is highly unlikely that the Mortgage Loans will
prepay or perform in accordance with the Modeling Assumptions at any constant
rate until maturity or that all the Mortgage Loans will prepay in accordance
with the Modeling Assumptions or at the same rate. In particular, certain of
the Mortgage Loans may not permit voluntary partial prepayments. In addition,
variations in the actual prepayment experience and the balance of the specific
Mortgage Loans that prepay may increase or decrease the percentages of initial
Certificate Balances (and weighted average lives) shown in the following
tables. Such variations may occur even if the average prepayment experience of
the Mortgage Loans were to equal any of the specified CPR percentages. In
addition, there can be no assurance that the actual pre-tax yields on, or any
other payment characteristics of, any Class of Offered Certificates will
correspond to any of the information shown in the yield tables herein, or that
the aggregate purchase prices of the Offered Certificates will be as assumed.
Accordingly, investors must make their own decisions as to the appropriate
assumptions (including prepayment assumptions) to be used in deciding whether
to purchase the Offered Certificates.
Investors are urged to conduct their own analyses of the rates at which
the Mortgage Loans may be expected to prepay.
S-75
<PAGE>
Based on the Modeling Assumptions, the following tables indicate the
resulting weighted average lives of the Class A-1, Class A-2, Class B, Class C,
Class D, Class E and Class F Certificates and set forth the percentage of the
initial Certificate Balance of each such Class of Certificates that would be
outstanding after the Closing Date and each of the Distribution Dates shown
under the applicable assumptions at the indicated CPR percentages.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 93 93 93 93 93
March 15, 2001 ............................ 84 84 84 84 84
March 15, 2002 ............................ 74 74 74 74 74
March 15, 2003 ............................ 64 64 64 64 64
March 15, 2004 ............................ 51 51 51 51 51
March 15, 2005 ............................ 39 39 39 39 39
March 15, 2006 ............................ 27 27 27 27 27
March 15, 2007 ............................ 13 13 13 13 13
March 15, 2008 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 5.00 5.00 5.00 4.99 4.99
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 100 100 100 100 100
March 15, 2001 ............................ 100 100 100 100 100
March 15, 2002 ............................ 100 100 100 100 100
March 15, 2003 ............................ 100 100 100 100 100
March 15, 2004 ............................ 100 100 100 100 100
March 15, 2005 ............................ 100 100 100 100 100
March 15, 2006 ............................ 100 100 100 100 100
March 15, 2007 ............................ 100 100 100 100 100
March 15, 2008 ............................ 88 86 84 80 50
March 15, 2009 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 9.25 9.24 9.22 9.20 9.03
</TABLE>
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<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 100 100 100 100 100
March 15, 2001 ............................ 100 100 100 100 100
March 15, 2002 ............................ 100 100 100 100 100
March 15, 2003 ............................ 100 100 100 100 100
March 15, 2004 ............................ 100 100 100 100 100
March 15, 2005 ............................ 100 100 100 100 100
March 15, 2006 ............................ 100 100 100 100 100
March 15, 2007 ............................ 100 100 100 100 100
March 15, 2008 ............................ 100 100 100 100 100
March 15, 2009 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 9.55 9.54 9.52 9.50 9.36
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 100 100 100 100 100
March 15, 2001 ............................ 100 100 100 100 100
March 15, 2002 ............................ 100 100 100 100 100
March 15, 2003 ............................ 100 100 100 100 100
March 15, 2004 ............................ 100 100 100 100 100
March 15, 2005 ............................ 100 100 100 100 100
March 15, 2006 ............................ 100 100 100 100 100
March 15, 2007 ............................ 100 100 100 100 100
March 15, 2008 ............................ 100 100 100 100 100
March 15, 2009 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 9.58 9.58 9.58 9.57 9.41
</TABLE>
S-77
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 100 100 100 100 100
March 15, 2001 ............................ 100 100 100 100 100
March 15, 2002 ............................ 100 100 100 100 100
March 15, 2003 ............................ 100 100 100 100 100
March 15, 2004 ............................ 100 100 100 100 100
March 15, 2005 ............................ 100 100 100 100 100
March 15, 2006 ............................ 100 100 100 100 100
March 15, 2007 ............................ 100 100 100 100 100
March 15, 2008 ............................ 100 100 100 100 100
March 15, 2009 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 9.58 9.58 9.58 9.58 9.41
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 100 100 100 100 100
March 15, 2001 ............................ 100 100 100 100 100
March 15, 2002 ............................ 100 100 100 100 100
March 15, 2003 ............................ 100 100 100 100 100
March 15, 2004 ............................ 100 100 100 100 100
March 15, 2005 ............................ 100 100 100 100 100
March 15, 2006 ............................ 100 100 100 100 100
March 15, 2007 ............................ 100 100 100 100 100
March 15, 2008 ............................ 100 100 100 100 100
March 15, 2009 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 9.58 9.58 9.58 9.58 9.46
</TABLE>
S-78
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS F CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED
CPR
<TABLE>
<CAPTION>
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage ........................ 100% 100% 100% 100% 100%
March 15, 2000 ............................ 100 100 100 100 100
March 15, 2001 ............................ 100 100 100 100 100
March 15, 2002 ............................ 100 100 100 100 100
March 15, 2003 ............................ 100 100 100 100 100
March 15, 2004 ............................ 100 100 100 100 100
March 15, 2005 ............................ 100 100 100 100 100
March 15, 2006 ............................ 100 100 100 100 100
March 15, 2007 ............................ 100 100 100 100 100
March 15, 2008 ............................ 100 100 100 100 100
March 15, 2009 ............................ 0 0 0 0 0
Weighted Average Life (in years) .......... 9.58 9.58 9.58 9.58 9.54
</TABLE>
S-79
<PAGE>
CERTAIN PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE")
yield and weighted average life in years with respect to each Class of Offered
Certificates (other than the Class X Certificates) under the Modeling
Assumptions.
The yields set forth in the following tables were calculated by
determining the monthly discount rates which, when applied to the assumed
stream of cash flows to be paid on each Class of Offered Certificates (other
than the Class X Certificates), would cause the discounted present value of
such assumed stream of cash flows as of March 16, 1999 to equal the assumed
purchase prices, plus accrued interest at the applicable Pass-Through Rate as
stated on the cover hereof from and including March 1, 1999 to but excluding
the Closing Date, and converting such monthly rates to semi-annual corporate
bond equivalent rates. Such calculation does not take into account variations
that may occur in the interest rates at which investors may be able to reinvest
funds received by them as reductions of the Certificate Balances of such
Classes of Offered Certificates and consequently does not purport to reflect
the return on any investment in such Classes of Offered Certificates when such
reinvestment rates are considered. Purchase prices are expressed in 32nds and
interpreted as a percentage of the initial Certificate Balance of the specified
Class (i.e., 99.16 means 9916/32%) and are exclusive of accrued interest.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-1 CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-----------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
98.16 ..................... 6.338% 6.339% 6.339% 6.339% 6.339%
98.24. .................... 6.276% 6.276% 6.276% 6.276% 6.277%
99.00 ..................... 6.214% 6.214% 6.214% 6.214% 6.214%
99.08 ..................... 6.152% 6.152% 6.152% 6.152% 6.152%
99.16 ..................... 6.090% 6.090% 6.090% 6.090% 6.090%
99.24 ..................... 6.029% 6.029% 6.029% 6.029% 6.029%
100.00 ..................... 5.968% 5.968% 5.968% 5.968% 5.967%
100.08 ..................... 5.907% 5.907% 5.906% 5.906% 5.906%
100.16 ..................... 5.846% 5.846% 5.846% 5.846% 5.845%
100.24 ..................... 5.785% 5.785% 5.785% 5.785% 5.785%
101.00 ..................... 5.725% 5.725% 5.725% 5.725% 5.724%
101.08 ..................... 5.665% 5.665% 5.664% 5.664% 5.664%
101.16 ..................... 5.605% 5.605% 5.605% 5.604% 5.604%
101.24 ..................... 5.545% 5.545% 5.545% 5.545% 5.544%
102.00 ..................... 5.486% 5.485% 5.485% 5.485% 5.484%
102.08 ..................... 5.426% 5.426% 5.426% 5.426% 5.425%
102.16 ..................... 5.367% 5.367% 5.367% 5.367% 5.366%
Weighted Average Life
(yrs.) .................... 5.00 5.00 5.00 4.99 4.99
First Principal Payment Date Apr-1999 Apr-1999 Apr-1999 Apr-1999 Apr-1999
Last Principal Payment Date Feb-2008 Jan-2008 Jan-2008 Dec-2007 Oct-2007
</TABLE>
S-80
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-2 CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-----------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
99.16 ..................... 6.413% 6.413% 6.413% 6.413% 6.413%
99.24 ..................... 6.376% 6.376% 6.376% 6.376% 6.376%
100.00 ..................... 6.339% 6.339% 6.339% 6.339% 6.339%
100.08 ..................... 6.303% 6.303% 6.303% 6.302% 6.301%
100.16 ..................... 6.266% 6.266% 6.266% 6.266% 6.264%
100.24 ..................... 6.230% 6.230% 6.230% 6.229% 6.227%
101.00 ..................... 6.194% 6.194% 6.193% 6.193% 6.191%
101.08 ..................... 6.158% 6.158% 6.157% 6.157% 6.154%
101.16 ..................... 6.122% 6.122% 6.121% 6.121% 6.117%
101.24 ..................... 6.086% 6.086% 6.085% 6.085% 6.081%
102.00 ..................... 6.050% 6.050% 6.050% 6.049% 6.045%
102.08 ..................... 6.015% 6.014% 6.014% 6.013% 6.008%
102.16 ..................... 5.979% 5.979% 5.978% 5.978% 5.972%
102.24 ..................... 5.944% 5.943% 5.943% 5.942% 5.936%
103.00 ..................... 5.909% 5.908% 5.908% 5.907% 5.900%
103.08 ..................... 5.873% 5.873% 5.872% 5.871% 5.864%
103.16 ..................... 5.838% 5.838% 5.837% 5.836% 5.829%
Weighted Average Life
(yrs.) .................... 9.25 9.24 9.22 9.20 9.03
First Principal Payment Date Feb-2008 Jan-2008 Jan-2008 Dec-2007 Oct-2007
Last Principal Payment Date Sep-2008 Sep-2008 Sep-2008 Sep-2008 Jul-2008
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
99.16 ...................... 6.534% 6.534% 6.535% 6.535% 6.535%
99.24 ...................... 6.498% 6.498% 6.498% 6.498% 6.498%
100.00 ..................... 6.462% 6.462% 6.462% 6.462% 6.462%
100.08 ..................... 6.427% 6.426% 6.426% 6.426% 6.425%
100.16 ..................... 6.391% 6.391% 6.391% 6.390% 6.389%
100.24 ..................... 6.355% 6.355% 6.355% 6.355% 6.353%
101.00 ..................... 6.320% 6.320% 6.319% 6.319% 6.317%
101.08 ..................... 6.284% 6.284% 6.284% 6.283% 6.281%
101.16 ..................... 6.249% 6.249% 6.248% 6.248% 6.245%
101.24 ..................... 6.214% 6.214% 6.213% 6.213% 6.209%
102.00 ..................... 6.179% 6.178% 6.178% 6.177% 6.174%
102.08 ..................... 6.144% 6.143% 6.143% 6.142% 6.138%
102.16 ..................... 6.109% 6.109% 6.108% 6.107% 6.103%
102.24 ..................... 6.074% 6.074% 6.073% 6.072% 6.068%
103.00 ..................... 6.040% 6.039% 6.038% 6.038% 6.033%
103.08 ..................... 6.005% 6.005% 6.004% 6.003% 5.997%
103.16 ..................... 5.971% 5.970% 5.969% 5.968% 5.962%
Weighted Average Life
(yrs.) .................... 9.55 9.54 9.52 9.50 9.36
First Principal Payment Date Sep-2008 Sep-2008 Sep-2008 Sep-2008 Jul-2008
Last Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Sep-2008 Aug-2008
</TABLE>
S-81
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-----------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
99.16 ..................... 6.575% 6.575% 6.575% 6.575% 6.576%
99.24 ..................... 6.539% 6.539% 6.539% 6.539% 6.539%
100.00 ..................... 6.503% 6.503% 6.503% 6.503% 6.503%
100.08 ..................... 6.467% 6.467% 6.467% 6.467% 6.467%
100.16 ..................... 6.432% 6.432% 6.432% 6.432% 6.430%
100.24 ..................... 6.396% 6.396% 6.396% 6.396% 6.394%
101.00 ..................... 6.361% 6.361% 6.361% 6.360% 6.358%
101.08 ..................... 6.325% 6.325% 6.325% 6.325% 6.322%
101.16 ..................... 6.290% 6.290% 6.290% 6.290% 6.287%
101.24 ..................... 6.255% 6.255% 6.255% 6.254% 6.251%
102.00 ..................... 6.220% 6.220% 6.220% 6.219% 6.216%
102.08 ..................... 6.185% 6.185% 6.185% 6.184% 6.180%
102.16 ..................... 6.150% 6.150% 6.150% 6.149% 6.145%
102.24 ..................... 6.115% 6.115% 6.115% 6.115% 6.110%
103.00 ..................... 6.081% 6.081% 6.081% 6.080% 6.075%
103.08 ..................... 6.046% 6.046% 6.046% 6.045% 6.040%
103.16 ..................... 6.012% 6.012% 6.012% 6.011% 6.005%
Weighted Average Life (yrs.) 9.58 9.58 9.58 9.57 9.41
First Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Sep-2008 Aug-2008
Last Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Aug-2008
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-----------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
99.16 ..................... 6.838% 6.838% 6.838% 6.838% 6.839%
99.24 ..................... 6.802% 6.802% 6.802% 6.802% 6.802%
100.00 ..................... 6.765% 6.765% 6.765% 6.765% 6.765%
100.08 ..................... 6.729% 6.729% 6.729% 6.729% 6.728%
100.16 ..................... 6.693% 6.693% 6.693% 6.693% 6.692%
100.24 ..................... 6.657% 6.657% 6.657% 6.657% 6.655%
101.00 ..................... 6.621% 6.621% 6.621% 6.621% 6.619%
101.08 ..................... 6.585% 6.585% 6.585% 6.585% 6.583%
101.16 ..................... 6.550% 6.550% 6.550% 6.550% 6.546%
101.24 ..................... 6.514% 6.514% 6.514% 6.514% 6.510%
102.00 ..................... 6.479% 6.479% 6.479% 6.479% 6.474%
102.08 ..................... 6.443% 6.443% 6.443% 6.443% 6.439%
102.16 ..................... 6.408% 6.408% 6.408% 6.408% 6.403%
102.24 ..................... 6.373% 6.373% 6.373% 6.373% 6.367%
103.00 ..................... 6.338% 6.338% 6.338% 6.338% 6.332%
103.08 ..................... 6.303% 6.303% 6.303% 6.303% 6.296%
103.16 ..................... 6.268% 6.268% 6.268% 6.268% 6.261%
Weighted Average Life (yrs.) 9.58 9.58 9.58 9.58 9.41
First Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Aug-2008
Last Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Aug-2008
</TABLE>
S-82
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-----------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
95.29 ...................... 7.852% 7.852% 7.853% 7.853% 7.859%
96.05 ...................... 7.813% 7.813% 7.813% 7.814% 7.820%
96.13 ...................... 7.774% 7.774% 7.774% 7.775% 7.780%
96.21 ...................... 7.735% 7.735% 7.736% 7.736% 7.741%
96.29 ...................... 7.697% 7.697% 7.697% 7.697% 7.702%
97.05 ...................... 7.658% 7.658% 7.658% 7.659% 7.663%
97.13 ...................... 7.620% 7.620% 7.620% 7.620% 7.625%
97.21 ...................... 7.581% 7.581% 7.582% 7.582% 7.586%
97.29 ...................... 7.543% 7.543% 7.543% 7.544% 7.547%
98.05 ...................... 7.505% 7.505% 7.505% 7.506% 7.509%
98.13 ...................... 7.467% 7.467% 7.467% 7.468% 7.471%
98.21 ...................... 7.429% 7.429% 7.430% 7.430% 7.433%
98.29 ...................... 7.392% 7.392% 7.392% 7.392% 7.394%
99.05 ...................... 7.354% 7.354% 7.354% 7.355% 7.357%
99.13 ...................... 7.317% 7.317% 7.317% 7.317% 7.319%
99.21 ...................... 7.279% 7.279% 7.280% 7.280% 7.281%
99.29 ...................... 7.242% 7.242% 7.242% 7.243% 7.244%
Weighted Average Life
(yrs.) .................... 9.58 9.58 9.58 9.58 9.46
First Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Aug-2008
Last Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Sep-2008
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS F CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--
OTHERWISE AT INDICATED CPR
-----------------------------------------------------------
ASSUMED PRICE
(32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ---------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
89.20 ...................... 8.880% 8.880% 8.881% 8.881% 8.887%
89.28 ...................... 8.838% 8.838% 8.838% 8.838% 8.845%
90.04 ...................... 8.795% 8.795% 8.795% 8.795% 8.802%
90.12 ...................... 8.753% 8.753% 8.753% 8.753% 8.759%
90.20 ...................... 8.710% 8.711% 8.711% 8.711% 8.717%
90.28 ...................... 8.668% 8.668% 8.669% 8.669% 8.675%
91.04 ...................... 8.626% 8.627% 8.627% 8.627% 8.633%
91.12 ...................... 8.585% 8.585% 8.585% 8.585% 8.591%
91.20 ...................... 8.543% 8.543% 8.543% 8.543% 8.549%
91.28 ...................... 8.502% 8.502% 8.502% 8.502% 8.508%
92.04 ...................... 8.460% 8.460% 8.460% 8.461% 8.466%
92.12 ...................... 8.419% 8.419% 8.419% 8.419% 8.425%
92.20 ...................... 8.378% 8.378% 8.378% 8.378% 8.384%
92.28 ...................... 8.337% 8.337% 8.337% 8.337% 8.343%
93.04 ...................... 8.296% 8.296% 8.297% 8.297% 8.302%
93.12 ...................... 8.256% 8.256% 8.256% 8.256% 8.261%
93.20 ...................... 8.215% 8.215% 8.215% 8.216% 8.221%
Weighted Average Life
(yrs.) .................... 9.58 9.58 9.58 9.58 9.54
First Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Sep-2008
Last Principal Payment Date Oct-2008 Oct-2008 Oct-2008 Oct-2008 Oct-2008
</TABLE>
S-83
<PAGE>
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity of the Class X Certificates will be especially
sensitive to the prepayment, repurchase and default experience on the Mortgage
Loans, which prepayment, repurchase and default experience may fluctuate
significantly from time to time. A rapid rate of principal payments will have a
material negative effect on the yield to maturity of the Class X Certificates.
There can be no assurance that the Mortgage Loans will prepay at any particular
rate. In addition, the Pass-Through Rate for any Class X Component relating to
a Class of Principal Balance Certificates having a Pass-Through Rate equal to
the Weighted Average Net Mortgage Rate will be zero. Prospective investors in
the Class X Certificates should fully consider the associated risks, including
the risk that such investors may not fully recover their initial investment.
The following table indicates the sensitivity of the pre-tax yield to
maturity on the Class X Certificates to various CPR percentages on the Mortgage
Loans by projecting the monthly aggregate payments of interest on the Class X
Certificates and computing the corresponding pre-tax yields to maturity on a
corporate bond equivalent basis, based on the Modeling Assumptions. It was
further assumed that the aggregate purchase price of the Class X Certificates
are as specified below, in each case expressed in 32nds and interpreted as a
percentage (i.e., 4.31 is 431/32%) of the initial Notional Amount (without
accrued interest). Any differences between such assumptions and the actual
characteristics and performance of the Mortgage Loans and of the Class X
Certificates may result in yields being different from those shown in such
table. Discrepancies between assumed and actual characteristics and performance
underscore the hypothetical nature of the table, which is provided only to give
a general sense of the sensitivity of yields in varying prepayment scenarios.
The pre-tax yields set forth in the following table were calculated by
determining the monthly discount rates that, when applied to the assumed
streams of cash flows to be paid on the Class X Certificates, would cause the
discounted present value of such assumed stream of cash flows as of March 16,
1999 to equal the assumed aggregate purchase price plus accrued interest at the
initial Pass-Through Rate for the Class X Certificates from and including March
1, 1999 to but excluding the Closing Date, and by converting such monthly rates
to semi-annual corporate bond equivalent rates. Such calculation does not take
into account shortfalls in the collection of interest due to prepayments (or
other liquidations) of the Mortgage Loans or the interest rates at which
investors may be able to reinvest funds received by them as distributions on
the Class X Certificates (and accordingly does not purport to reflect the
return on any investment in the Class X Certificates when such reinvestment
rates are considered).
Notwithstanding the assumed prepayment rates reflected in the following
table, it is highly unlikely that the Mortgage Loans will be prepaid according
to one particular pattern. For this reason, and because the timing of cash
flows is critical to determining yields, the pre-tax yield to maturity on the
Class X Certificates is likely to differ from those shown in the following
table, even if all of the Mortgage Loans prepay at the indicated CPR
percentages over any given time period or over the entire life of the
Certificates.
There can be no assurance that the Mortgage Loans will prepay in
accordance with the Modeling Assumptions at any particular rate or that the
yield on the Class X Certificates will conform to the yields described herein.
Investors are urged to make their investment decisions based on the
determinations as to anticipated rates of prepayment under a variety of
scenarios. Investors in the Class X Certificates should fully consider the risk
that a rapid rate of prepayments on the Mortgage Loans could result in the
failure of such investors to fully recover their investments.
In addition, holders of the Class X Certificates generally have rights to
relatively larger portions of interest payments on Mortgage Loans with higher
Mortgage Rates; thus, the yield on the Class X Certificates will be materially
and adversely affected if the Mortgage Loans with higher Mortgage Rates prepay
faster than the Mortgage Loans with lower Mortgage Rates.
S-84
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PAYMENT DATE AND
LAST PAYMENT DATE FOR THE CLASS X CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT
INDICATED CPR
-----------------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
4.15 ........................ 12.374% 12.359% 12.339% 12.310% 12.092%
4.17 ........................ 11.983% 11.967% 11.948% 11.918% 11.698%
4.19 ........................ 11.600% 11.585% 11.565% 11.535% 11.312%
4.21 ........................ 11.226% 11.211% 11.191% 11.160% 10.935%
4.23 ........................ 10.860% 10.844% 10.824% 10.794% 10.566%
4.25 ........................ 10.502% 10.486% 10.465% 10.434% 10.204%
4.27 ........................ 10.151% 10.135% 10.114% 10.083% 9.850%
4.29 ........................ 9.807% 9.791% 9.770% 9.738% 9.503%
4.31 ........................ 9.470% 9.454% 9.432% 9.401% 9.163%
5.01 ........................ 9.140% 9.123% 9.102% 9.070% 8.830%
5.03 ........................ 8.816% 8.799% 8.778% 8.745% 8.503%
5.05 ........................ 8.498% 8.481% 8.460% 8.427% 8.183%
5.07 ........................ 8.186% 8.169% 8.148% 8.114% 7.868%
5.09 ........................ 7.881% 7.863% 7.841% 7.808% 7.559%
5.11 ........................ 7.580% 7.563% 7.541% 7.507% 7.256%
5.13 ........................ 7.285% 7.268% 7.246% 7.212% 6.959%
5.15 ........................ 6.996% 6.978% 6.956% 6.921% 6.667%
Weighted Average Life (yrs.)* 8.83 8.82 8.81 8.79 8.66
First Payment Date .......... Apr-1999 Apr-1999 Apr-1999 Apr-1999 Apr-1999
Last Payment Date ........... Nov-2018 Nov-2018 Nov-2018 Nov-2018 Sep-2018
</TABLE>
* Based on reduction in the Notional Amount of the Class X Certificates.
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THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, to be dated as of March 1, 1999 (the "Pooling and Servicing
Agreement"), by and among the Depositor, the Servicer, the Special Servicer,
the Trustee and the Fiscal Agent.
Reference is made to the Prospectus for important information in addition
to that set forth herein regarding the terms of the Pooling and Servicing
Agreement and terms and conditions of the Offered Certificates. The Trustee has
informed the Depositor that it will provide to a prospective or actual holder
of an Offered Certificate without charge, upon written request, a copy (without
exhibits) of the Pooling and Servicing Agreement. Requests should be addressed
to LaSalle National Bank, 135 South LaSalle Street, Chicago, Illinois 60674,
Attention: Asset Backed Securities Trust Services Group--COMM 1999-1.
ASSIGNMENT OF THE MORTGAGE LOANS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from GACC pursuant to the Mortgage
Loan Purchase Agreement. See "Description of the Mortgage Loan Pool -- The
Mortgage Loan Sellers" in this Prospectus Supplement.
On the Closing Date, the Depositor will sell, transfer or otherwise
convey, assign or cause the assignment of the Mortgage Loans, without recourse,
together with the Depositor's rights and remedies against GACC in respect of
breaches of representations and warranties regarding the related Mortgage Loans
to the Trustee for the benefit of the holders of Certificates. On or prior to
the Closing Date, the Depositor will deliver to the Trustee, with respect to
each Mortgage Loan, certain documents and instruments including, among other
things, the following: (i) the original Note endorsed in blank and delivered to
the Trustee, (ii) the original mortgage or counterpart thereof; (iii) the
assignment of the mortgage in recordable form in favor of the Trustee; (iv) if
applicable, preceding assignments of mortgages; (v) the related security
agreement, if applicable, (vi) to the extent not contained in the Mortgages,
the original assignments of leases and rents or counterpart thereof; (vii) if
applicable, the original assignments of assignments of leases and rents to the
Trustee; (viii) if applicable, preceding assignments of assignments of leases
and rents; (ix) where applicable, a "filed"-marked copy of the UCC-1 financing
statements, if any, including UCC-3 continuation statements and UCC-3
assignments; (x) if any, the original loan agreements; and (xi) the original
lender's title insurance policy (or marked commitments to insure). The Trustee
will hold such documents in trust for the benefit of the holders of
Certificates. The Trustee is obligated to review such documents for each
Mortgage Loan within 90 days after the later of delivery or the Closing Date
and report any missing documents or certain types of defects therein to the
Depositor and GACC.
REPRESENTATIONS AND WARRANTIES; REPURCHASE; SUBSTITUTION
In the Pooling and Servicing Agreement, the Depositor will assign the
representations and warranties made by GACC to the Depositor in the Mortgage
Loan Purchase Agreement to the Trustee for the benefit of Certificateholders.
In the Mortgage Loan Purchase Agreement, GACC will represent and warrant
with respect to each of its Mortgage Loans, subject to certain exceptions set
forth in the Mortgage Loan Purchase Agreement and summarized in Annex E
attached hereto, as of the Closing Date, or as of such other date specifically
provided in the representation and warranty, among other things, generally to
the effect that: (i) the Mortgage Loan Seller owns such Mortgage Loan free and
clear of any and all liens, encumbrances and other encumbrances; (ii) the
Mortgage Loan Seller has full right and authority to sell, assign and transfer
such Mortgage Loan; (iii) the information set forth in the Mortgage Loan
Schedule attached to the Mortgage Loan Purchase Agreement was true and
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correct in all material respects as of the Cut-off Date; (iv) such Mortgage
Loan was not delinquent (giving effect to any applicable grace period) as of
the Cut-off Date, and has not been during the twelve-month period prior
thereto, 30 days or more delinquent in respect of any debt service payment
required thereunder (without giving effect to any applicable grace period); (v)
the lien of the related Mortgage is insured by an American Land Title
Association, or an equivalent form of, lender's title insurance policy,
insuring the first priority lien of the Mortgage, subject only to the
exceptions stated therein; (vi) the Mortgage Loan Seller has not waived any
material default, breach, violation or event of acceleration existing under the
related Mortgage or Note; (vii) there is no valid offset, defense or
counterclaim to such Mortgage Loan; (viii) the Mortgage Loan Seller has not
received actual notice that there is any proceeding pending or threatened for
the total or partial condemnation of the related Mortgaged Property and, to the
Mortgage Loan Seller's knowledge, the related Mortgaged Property is free and
clear of any damage that would materially and adversely affect the value of
such Mortgaged Property as security for the related Mortgage Loan; (ix) at
origination, such Mortgage Loan complied with all applicable usury laws except
for provisions relating to default interest, yield maintenance charges or
prepayment premiums; (x) the proceeds of such Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder; (xi) the
Note and Mortgage for such Mortgage Loan and all other documents and
instruments evidencing or securing such Mortgage Loan is the legal, valid and
binding obligation of the maker thereof (subject to certain creditors' rights
exceptions and other exceptions of general application) except with respect to
provisions relating to default interest, yield maintenance charges or
prepayment premiums; (xii) the Mortgage requires the mortgagor to maintain in
respect of each Mortgaged Property insurance against loss by hazards and
comprehensive general liability insurance in amounts generally required by the
related Mortgage Loan Seller, and at least six months' rental or business
interruption insurance, and all of such insurance required under the Mortgage
for such Mortgage Loan is in full force and effect and names the originator,
the Mortgage Loan Seller, or their respective successors or assigns as an
additional insured; (xiii) each related Mortgaged Property was subject to an
environmental site assessment or similar review (or an update of a previously
conducted assessment or review) as to which the related report was delivered to
the Mortgage Loan Seller in connection with its origination or acquisition of
such Mortgage Loan; and the Mortgage Loan Seller has no knowledge of any
material and adverse environmental condition or circumstance affecting such
Mortgaged Property that was not disclosed in the related report(s); (xiv) such
Mortgage Loan is not cross-collateralized with any mortgage loan that is not
included in the Trust; (xv) all escrow deposits relating to such Mortgage Loan
that as of the Closing Date were required to be deposited with the mortgagee or
its agent under the terms of the related loan documents, have been so
deposited; (xvi) as of the date of origination of such Mortgage Loan and, to
the actual knowledge of the Mortgage Loan Seller, as of the Closing Date, each
related Mortgaged Property was and is free and clear of any mechanics' and
materialmen's liens or liens in the nature thereof which create a lien prior to
that created by the related Mortgage; (xvii) no holder of the Mortgage Loan
has, to the Mortgage Loan Seller's knowledge, advanced funds or induced,
solicited or knowingly received any advance of funds from a party, directly or
indirectly, for the payment of any amount required by the Mortgage Loan;
(xviii) to the Mortgage Loan Seller's knowledge, based on due diligence
customarily performed in the origination of comparable mortgage loans by the
Mortgage Loan Seller, as of the date of origination of the Mortgage Loan, the
related mortgagor or operator (with respect to certain healthcare properties)
was in possession of all material licenses, permits and authorizations required
by applicable laws for the ownership and operation of each related Mortgaged
Property as it was then operated; and (xix) the related Mortgage or Note,
together with applicable state law, contains customary and enforceable
provisions such as to render the rights and remedies of the holders thereof
adequate for the practical realization against the related Mortgaged Property
of the principal benefits of the security intended to be provided thereby.
The Pooling and Servicing Agreement requires that the Servicer, the
Special Servicer or the Trustee notify GACC and the Depositor upon its becoming
aware of any breach of any
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representation or warranty contained in the above clauses that materially and
adversely affects the value of such Mortgage Loan or the interests of the
holders of the Certificates therein. The Mortgage Loan Purchase Agreement
provides that, with respect to any such Mortgage Loan, within 90 days after
notice from the Servicer, the Special Servicer or the Trustee, GACC shall
either (a) repurchase such Mortgage Loan at an amount equal to (i) the
outstanding principal balance of the Mortgage Loan as of the Due Date as to
which a payment was last made by the borrower (less any Advances previously
made on account of principal), (ii) accrued interest up to the Due Date in the
month following the month in which such repurchase occurs (less P&I Advances
previously made on account of interest), (iii) the amount of any unreimbursed
Advances (with interest thereon) and any unreimbursed servicing compensation
relating to such Mortgage Loan and (iv) any expenses reasonably incurred or to
be incurred by the Servicer, the Special Servicer or the Trustee in respect of
the breach or defect giving rise to the repurchase obligation, including any
expenses arising out of the enforcement of the repurchase obligation (such
price the "Repurchase Price"); (b) substitute a new mortgage loan (a
"Replacement Mortgage Loan") for the affected Mortgage Loan (the "Removed
Mortgage Loan"); provided that the following criteria are met: (i) the
Replacement Mortgage Loan has certain financial terms substantially similar to
the Removed Mortgage Loan, (ii) the Replacement Mortgage Loan is a Qualifying
Substitute Mortgage Loan, (iii) the Replacement Mortgage Loan is a "qualified
replacement mortgage" within the meaning of Section 860G(a)(4) of the Code and
(iv) the respective Mortgage Loan Seller deposits in the Distribution Account
the amount, if any, by which the Stated Principal Balance of the Removed
Mortgage Loan exceeds the Stated Principal Balance of the Replacement Mortgage
Loan (the "Substitution Shortfall Amount"); or (c) promptly cure such breach in
all material respects. In addition, under the Pooling and Servicing Agreement,
the Depositor has agreed to cure, repurchase or substitute such Mortgage Loans
to the extent that the Mortgage Loan Seller fails to cure, repurchase or
substitute as described in this paragraph.
A "Qualifying Substitute Mortgage Loan" is a Mortgage Loan that, among
other things: (i) has a Stated Principal Balance of not more than the Stated
Principal Balance of the related Removed Mortgage Loan, (ii) accrues interest
at a rate of interest at least equal to that of the related Removed Mortgage
Loan, (iii) is a fixed-rate Mortgage Loan, (iv) has a remaining term to stated
maturity of not greater than, and not more than two years less than, the
related Removed Mortgage Loan.
The obligations of GACC to repurchase, substitute or cure constitute the
sole remedies available to holders of Certificates or the Trustee for a breach
of a representation or warranty by GACC with respect to a Mortgage Loan. None
of the Servicer, the Special Servicer, the Trustee or the Fiscal Agent will be
obligated to purchase or substitute a Mortgage Loan if the Depositor or GACC
defaults on its obligation to repurchase, substitute or cure, and no assurance
can be given that the Depositor or GACC will fulfill such obligations. No
assurance can be given that the Depositor or GACC will perform any obligation
to cure or repurchase a Mortgage Loan for a breach of any representation
referred to in the second preceding paragraph. If such obligation is not met as
to a Mortgage Loan that is not a "qualified mortgage within the meaning of
Section 860G(a)(3) of the Code," the Upper-Tier REMIC, the Middle-Tier REMIC
and Lower-Tier REMIC may fail to qualify to be treated as REMICs for federal
income tax purposes.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
The Pooling and Servicing Agreement requires the Servicer and Special
Servicer to service and administer the Mortgage Loans on behalf of the Trust
solely in the best interests of and for the benefit of all of the holders of
Certificates (as determined by the Servicer or Special Servicer in the exercise
of its reasonable judgment) in accordance with applicable law, the terms of the
Pooling and Servicing Agreement and the Mortgage Loans and to the extent not
inconsistent with the foregoing, in the same manner in which, and with the same
care, skill, prudence and diligence with which, it (a) services and administers
similar mortgage loans comparable to the Mortgage Loans and held for other
third party portfolios or (b) administers mortgage loans for its own account,
whichever standard is higher, but without regard to (i) any known relationship
that the
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Servicer or Special Servicer, or an affiliate of the Servicer or Special
Servicer, may have with the borrowers or any other party to the Pooling and
Servicing Agreement; (ii) the ownership of any Certificate by the Servicer or
Special Servicer or any affiliate of the Servicer or Special Servicer, as
applicable; (iii) the Servicer's or Special Servicer's obligation to make
Advances or to incur servicing expenses with respect to the Mortgage Loans;
(iv) the Servicer's or Special Servicer's right to receive compensation for its
services under the Pooling and Servicing Agreement or with respect to any
particular transaction; or (v) the ownership, or servicing or management for
others, by the Servicer or Special Servicer of any other mortgage loans or
property (the "Servicing Standard"). The Servicer and the Special Servicer are
permitted, at their own expense, to employ subservicers, agents or attorneys in
performing any of their respective obligations under the Pooling and Servicing
Agreement, but will not thereby be relieved of any such obligation, and will be
responsible for the acts and omissions of any such subservicers, agents or
attorneys. The Pooling and Servicing Agreement provides, however, that neither
the Servicer, the Special Servicer nor any of their respective directors,
officers, employees or agents shall have any liability to the Trust or the
Certificateholders for taking any action or refraining from taking an action in
good faith, or for errors in judgment. The foregoing provision would not
protect the Servicer or the Special Servicer for the breach of its
representations or warranties in the Pooling and Servicing Agreement, the
breach of certain specified covenants therein or any liability by reason of
willful misconduct, bad faith, fraud or negligence in the performance of its
duties or by reason of its reckless disregard of obligations or duties under
the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement requires the Servicer or the Special
Servicer, as applicable, to make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and to the
extent such procedures shall be consistent with the Servicing Standard.
Consistent with the above, the Servicer or Special Servicer may, in its
discretion, waive any late payment charge in connection with any delinquent
Monthly Payment or Balloon Payment with respect to any Mortgage Loan. With
respect to the ARD Loans, the Servicer and Special Servicer will be directed in
the Pooling and Servicing Agreement not to take any enforcement action with
respect to payment of Excess Interest or principal in excess of the principal
component of the constant Monthly Payment prior to the final maturity date.
ADVANCES
The Servicer will be obligated to advance, on the business day immediately
preceding a Distribution Date (the "Servicer Remittance Date") an amount (each
such amount, a "P&I Advance") equal to the amount not received in respect of
the Monthly Payment or Assumed Monthly Payment on a Mortgage Loan (with
interest at the Mortgage Pass-Through Rate minus the Master Servicing Fee Rate)
that was delinquent as of the close of business on the immediately preceding
Due Date (and which delinquent payment has not been cured as of the Servicer
Remittance Date), or, in the event of a default in the payment of amounts due
on the maturity date of a Mortgage Loan, the amount equal to the Monthly
Payment or portion thereof not received that was due prior to the maturity date
provided, however, the Servicer will not be required to make an Advance to the
extent it determines that such advance would not be ultimately recoverable from
late payments, condemnation proceeds, net insurance proceeds, net liquidation
proceeds and other collections with respect to the related Mortgage Loan. P&I
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the Certificates entitled thereto, rather than
to guarantee or insure against losses. The Servicer will not be required or
permitted to make a P&I Advance for Excess Interest or Default Interest. The
amount required to be advanced in respect of delinquent Monthly Payments or
Assumed Scheduled Payments on a Mortgage Loan that has been subject to an
Appraisal Reduction Event will equal the product of (a) the amount that would
be required to be advanced by the Servicer without giving effect to such
Appraisal Reduction Event and (b) a fraction, the numerator of which is the
Stated Principal Balance of the Mortgage Loan (as of the last day of the
related Collection Period) less any Appraisal Reduction Amounts thereof and the
denominator of which is the Stated Principal Balance (as of the last day of the
related Collection Period).
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In addition to P&I Advances, the Servicer (and with respect to Specially
Serviced Mortgage Loans, the Special Servicer) will also be obligated (subject
to the limitations described herein) to make cash advances ("Property
Advances," and together with P&I Advances, "Advances") to pay delinquent real
estate taxes, assessments and hazard insurance premiums and to cover other
similar costs and expenses necessary to preserve the priority of the related
Mortgage, enforce the terms of any Mortgage Loan or to maintain each related
Mortgaged Property.
To the extent the Servicer fails to make an Advance it is required to make
under the Pooling and Servicing Agreement, the Trustee, subject to a
determination of recoverability, will make such required Advance or, in the
event the Trustee fails to make such Advance, the Fiscal Agent, subject to a
determination of recoverability, will make such Advance, in each case pursuant
to the terms of the Pooling and Servicing Agreement. To the extent the Special
Servicer fails to make an Advance it is required to make under the Pooling and
Servicing Agreement, the Servicer, subject to a determination of
recoverability, will make such an Advance. Both the Trustee and the Fiscal
Agent will be entitled to rely conclusively on any non-recoverability
determination of the Servicer or the Special Servicer, as the case may be. See
"-- Trustee" and "-- Fiscal Agent" below.
The Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, will be entitled to reimbursement for any Advance made by it in an
amount equal to the amount of such Advance and interest accrued thereon at the
Advance Rate (i) from Default Interest and late payments on the Mortgage Loan
by the mortgagor, (ii) from insurance proceeds, condemnation proceeds,
liquidation proceeds from the sale of the Specially Serviced Mortgage Loan or
the related Mortgaged Property or other collections relating to the Mortgage
Loan or (iii) upon determining in good faith that such Advance or interest is
not recoverable in the manner described in the preceding two clauses, from any
other amounts from time to time on deposit in the Collection Account.
The Servicer, the Special Servicer, the Trustee and the Fiscal Agent will
each be entitled to receive interest on Advances at a per annum rate equal to
the Prime Rate (the "Advance Rate"), compounded monthly, as of each Servicer
Remittance Date and the Servicer will be authorized to pay itself, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, such interest monthly
from general collections with respect to all of the Mortgage Loans prior to any
payment to holders of Certificates. To the extent that the payment of such
interest at the Advance Rate results in a shortfall in amounts otherwise
payable on one or more Classes of Certificates on the next Distribution Date,
the Servicer, the Trustee or the Fiscal Agent, as applicable, will be obligated
to make a cash advance to cover such shortfall, but only to the extent the
Servicer, the Trustee or the Fiscal Agent, as applicable, concludes that, with
respect to each such Advance, such Advance can be recovered from amounts
payable on or in respect of the Mortgage Loan to which the Advance is related.
If the interest on such Advance is not recovered from Default Interest on such
Mortgage Loan, a shortfall will result which will have the same effect as a
Realized Loss. The "Prime Rate" is the rate, for any day, set forth as such in
the "Money Rates" section of The Wall Street Journal, Eastern Edition.
The obligation of the Servicer, the Special Servicer, the Trustee or the
Fiscal Agent, as applicable, to make Advances with respect to any Mortgage Loan
pursuant to the Pooling and Servicing Agreement continues through the
foreclosure of such Mortgage Loan and until the liquidation of the Mortgage
Loan or related Mortgaged Properties. P&I Advances are intended to provide a
limited amount of liquidity, not to guarantee or insure against losses. None of
the Servicer, the Special Servicer, the Trustee or the Fiscal Agent will be
required to make any Advance that it determines in its good faith business
judgment will not be recoverable by the Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, as applicable, out of related late payments,
insurance proceeds, liquidation proceeds and other collections with respect to
the Mortgage Loan as to which such Advances were made. In addition, if the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as applicable,
determines in its good faith business judgment that any Advance previously made
will not be recoverable from the foregoing sources, then the Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, will be
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entitled to reimburse itself for such Advance, plus interest thereon, out of
amounts payable on or in respect of all of the Mortgage Loans prior to
distributions on the Certificates. Any such judgment or determination with
respect to the recoverability of Advances must be evidenced by an officers'
certificate delivered to the Depositor, the Trustee and the Fiscal Agent in the
case of the Servicer or the Special Servicer (and also to the Servicer, in the
case of the Special Servicer), and delivered to the Depositor in the case of
the Trustee or the Fiscal Agent (and also to the Trustee in the case of the
Fiscal Agent), setting forth such judgment or determination of
nonrecoverability and the considerations of the Servicer, the Special Servicer,
the Trustee or the Fiscal Agent, as applicable, forming the basis of such
determination (including but not limited to information selected by the person
making such determination in its good faith discretion such as related income
and expense statements, rent rolls, occupancy status, property inspections,
inquiries by the Servicer, the Special Servicer, the Trustee or the Fiscal
Agent, as applicable, and an independent appraisal performed in accordance with
Appraiser Institute standards conducted within the past twelve months on the
applicable Mortgaged Property).
ACCOUNTS
Collection Account. The Servicer will establish and maintain one or more
segregated accounts (the "Collection Account") pursuant to the Pooling and
Servicing Agreement, and will be required to deposit into the Collection
Account all payments in respect of the Mortgage Loans, other than amounts
permitted to be withheld by the Servicer or amounts to be deposited into any
Reserve Account.
Distribution Accounts. The Trustee will establish and maintain one or more
segregated accounts (the "Distribution Account") in the name of the Trustee for
the benefit of the holders of Certificates. With respect to each Distribution
Date, the Servicer will deposit in the Distribution Account, to the extent of
funds on deposit in the Collection Account, on the Servicer Remittance Date an
aggregate amount of immediately available funds equal to the sum of (i) the
Available Funds (including all P&I Advances) and (ii) the Trustee Fee. To the
extent the Servicer fails to do so, the Trustee or the Fiscal Agent will
deposit all P&I Advances into the Distribution Account as described herein. See
"Description of the Offered Certificates -- Distributions" in this Prospectus
Supplement.
Interest Reserve Account. The Trustee will establish and maintain an
"Interest Reserve Account" in the name of the Trustee for the benefit of the
holders of the Certificates. With respect to each Distribution Date occurring
in February and each Distribution Date occurring in any January which occurs in
a year that is not a leap year, there shall be deposited, in respect of each
Mortgage Loan, an amount equal to one day's interest at the related Mortgage
Rate (net of any Servicing Fee payable therefrom) on the respective Stated
Principal Balance as of the immediately preceding Due Date, to the extent a
Monthly Payment or P&I Advance is made in respect thereof (all amounts so
deposited in any consecutive January (if applicable) and February, "Withheld
Amounts"). With respect to each Distribution Date occurring in March, an amount
is required to be withdrawn from the Interest Reserve Account in respect of
each Interest Reserve Loan equal to the related Withheld Amounts from the
preceding January (if applicable) and February, if any, and deposited into the
Certificate Account.
The Trustee will also establish and maintain one or more segregated
accounts or sub-accounts for the "Middle-Tier Distribution Account," the
"Upper-Tier Distribution Account," the "Excess Interest Distribution Account"
and the "Default Interest Distribution Account" each in the name of the Trustee
for the benefit of the holders of the Certificates.
The Collection Account, the Distribution Account, the Upper-Tier
Distribution Account, the Middle-Tier Distribution Account, the Excess Interest
Distribution Account and the Default Interest Distribution Account will be held
in the name of the Trustee (or the Servicer on behalf of the Trustee) on behalf
of the holders of Certificates and the Servicer will be authorized to make
withdrawals from the Collection Account. Each of the Collection Account, any
REO Account, the Distribution Account, the Upper-Tier Distribution Account, the
Middle-Tier Distribution Account,
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the Excess Interest Distribution Account and the Default Interest Distribution
Account will be either (i) (A) an account or accounts maintained with a
depository institution or trust company the short term unsecured debt
obligations or commercial paper of which are rated at least P-1 by Moody's and
F-1+ by Fitch in the case of accounts in which deposits have a maturity of 30
days or less or, in the case of accounts in which deposits have a maturity of
more than 30 days, the long term unsecured debt obligations of which are rated
at least "AA" by Fitch and "Aa3" by Moody's or (B) as to which the Trustee has
received written confirmation from each of the Rating Agencies that holding
funds in such account would not cause any Rating Agency to qualify, withdraw or
downgrade any of its then current ratings on the Certificates or (ii) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution, is
subject to regulations substantially similar to 12 C.F.R. Section 9.10(b),
having in either case a combined capital surplus of at least $50,000,000 and
subject to supervision or examination by federal and state authority, or any
other account that, as evidenced by a written confirmation from each Rating
Agency that such account would not, in and of itself, cause a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates, which may be an account maintained with the Trustee or the
Servicer (an "Eligible Bank"). Amounts on deposit in the Collection Account and
any REO Account may be invested in certain United States government securities
and other high-quality investments specified in the Pooling and Servicing
Agreement ("Permitted Investments"). Interest or other income earned on funds
in the Collection Account will be paid to the Servicer (except to the extent
required to be paid to the related borrower) as additional servicing
compensation and interest or other income earned on funds in any REO Account
will be payable to the Special Servicer.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Servicer may make withdrawals from the Collection Account for the
following purposes, to the extent permitted and in the priorities provided in
the Pooling and Servicing Agreement: (i) to remit on or before each Servicer
Remittance Date (A) to the Distribution Account an amount equal to the sum of
(I) Available Funds and any Prepayment Premiums and (II) the Trustee Fee for
such Distribution Date and (B) to the Default Interest Distribution Account an
amount equal to the Net Default Interest received in the related Collection
Period and (C) to the Excess Interest Distribution Account an amount equal to
the Excess Interest received in the related Collection Period, if any; (ii) to
pay or reimburse the Servicer, the Special Servicer, the Trustee or the Fiscal
Agent, as applicable, for Advances made by any of them and, if applicable,
interest on Advances (provided, that the Trustee and Fiscal Agent will have
priority with respect to such payment or reimbursement), the Servicer's right
to reimbursement for items described in this clause (ii) being limited as
described herein under "-- Advances"; (iii) to pay on or before each Servicer
Remittance Date to the Servicer and the Special Servicer as compensation, the
aggregate unpaid Servicing Compensation, Special Servicing Fee, Workout Fee,
Liquidation Fee, and any other servicing or special servicing compensation in
respect of the immediately preceding calendar month; (iv) to pay on or before
each Distribution Date to the Mortgage Loan Seller with respect to each
Mortgage Loan or REO Property that has previously been purchased or repurchased
by it pursuant to the Pooling and Servicing Agreement, all amounts received
thereon during the related Collection Period and subsequent to the date as of
which the amount required to effect such purchase or repurchase was determined;
(v) to the extent not reimbursed or paid pursuant to any of the above clauses,
to reimburse or pay the Servicer, the Special Servicer, the Trustee, the Fiscal
Agent and/or the Depositor for unpaid servicing compensation (in the case of
the Servicer, the Special Servicer or the Trustee) and certain other
unreimbursed expenses incurred by such persons pursuant to and to the extent
reimbursable under the Pooling and Servicing Agreement and to satisfy any
indemnification obligations of the Trust under the Pooling and Servicing
Agreement; (vi) to pay to the Trustee amounts requested by it to pay taxes on
certain net income with respect to REO Properties; (vii) to withdraw any amount
deposited into the Collection Account that was not required to be deposited
therein; and (viii) to clear and terminate the Collection Account pursuant to a
plan for termination and liquidation of the Trust.
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ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
In general, the Mortgage Loans contain provisions in the nature of
"due-on-sale" clauses, which by their terms (a) provide that the Mortgage Loans
shall (or may at the mortgagee's option) become due and payable upon the sale
or other transfer of an interest in the related Mortgaged Property or (b)
provide that the Mortgage Loans may not be assumed without the consent of the
related mortgagee in connection with any such sale or other transfer. The
Servicer or the Special Servicer, as applicable, will not be required to
enforce any such due-on-sale clauses and in connection therewith will not be
required to (i) accelerate payments thereon or (ii) withhold its consent to
such an assumption if (x) such provision is not exercisable under applicable
law or such provision is reasonably likely to result in meritorious legal
action by the borrower or (y) the Servicer or the Special Servicer, as
applicable, determines, in accordance with the Servicing Standard, that
granting such consent would be likely to result in a greater recovery, on a
present value basis (discounting at the related Mortgage Rate), than would
enforcement of such clause. If the Servicer or the Special Servicer, as
applicable, determines that granting such consent would be likely to result in
a greater recovery, the Servicer or the Special Servicer, as applicable, is
authorized to take or enter into an assumption agreement from or with the
proposed transferee as obligor thereon provided that (a) the credit status of
the prospective transferee is in compliance with the Servicer's or Special
Servicer's, as applicable, regular commercial mortgage origination or servicing
standards and criteria and the terms of the related Mortgage and (b) the
Servicer or the Special Servicer, as applicable, with respect to Mortgage Loans
that represent more than 5% of the then-current aggregate Stated Principal of
the Mortgage Loans (taking into account for the purposes of this calculation
(a) in the case of any such Mortgage Loan that is a Cross-Collateralized
Mortgage Loan, any Mortgage Loan with which it is cross-collateralized and (b)
in the case of any such Mortgage Loan with respect to which the related
Borrower or its affiliate is a Borrower with respect to one or more other
Mortgage Loans, such other Mortgage Loans), has received written confirmation
from Moody's and Fitch that such assumption or substitution would not, in and
of itself, cause a downgrade, qualification or withdrawal of the then current
ratings assigned to the Certificates. No assumption agreement may contain any
terms that are different from any term of any Mortgage or related Note, except
pursuant to the provisions described under "-- Realization Upon Mortgage Loans"
and "-- Modifications," in this Prospectus Supplement.
In general, the Mortgage Loans contain provisions in the nature of a
"due-on-encumbrance" clause which by their terms (a) provide that the Mortgage
Loans shall (or may at the mortgagee's option) become due and payable upon the
creation of any lien or other encumbrance on the related Mortgaged Property, or
(b) require the consent of the related mortgagee to the creation of any such
lien or other encumbrance on the related Mortgaged Property. The Servicer or
the Special Servicer, as applicable, will not be required to enforce such
due-on-encumbrance clauses and in connection therewith will not be required to
(i) accelerate payments thereon or (ii) withhold its consent to such lien or
encumbrance if the Servicer or the Special Servicer, as applicable, (x)
determines, in accordance with the Servicing Standard, that such enforcement
would not be in the best interests of the Trust and (y) with respect to
Mortgage Loans that represent more than 5% of the then current aggregate Stated
Principal of the Mortgage Loans, receives prior written confirmation from
Moody's and Fitch, that granting such consent would not, in and of itself,
cause a downgrade, qualification or withdrawal of any of the then-current
ratings assigned to the Certificates. See "Certain Legal Aspects of the
Mortgage Loans -- Due-on-Sale and Due-on-Encumbrance Provisions" in the
Prospectus.
INSPECTIONS
The Servicer (or with respect to any Specially Serviced Mortgage Loan, the
Special Servicer) is required to inspect or cause to be inspected each
Mortgaged Property at such times and in such manner as are consistent with the
Servicing Standards described herein, but in any event is required to inspect
each Mortgaged Property securing a Note, with a Stated Principal Balance (or in
the case of a Note secured by more than one Mortgaged Property, having an
Allocated Loan
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Amount) of (a) $2,000,000 or more at least once every twelve months and (b)
less than $2,000,000 at least once every 24 months, in each case commencing in
March 2000 (or at such lesser frequency, provided each Rating Agency has
confirmed in writing to the Servicer that such schedule will not result in the
withdrawal, downgrading or qualification of the then-current ratings assigned
to the Certificates).
INSURANCE POLICIES
The Pooling and Servicing Agreement requires the Servicer, to the extent
provided in the related Mortgage Loan (or the Special Servicer in the case of
an REO Property) to obtain or cause the mortgagor on each Mortgage Loan to
maintain fire and hazard insurance with extended coverage on each related
Mortgaged Property in an amount which is at least equal to the lesser of (A)
one hundred percent (100%) of the then "full insurable replacement cost" of the
improvements, and (B) the outstanding principal balance of the related Mortgage
Loan, or such greater amount or such endorsement as is necessary to prevent any
reduction, by reason of the application of co-insurance and to prevent the
Trustee thereunder from being deemed a co-insurer. The Pooling and Servicing
Agreement also requires the Servicer (or the Special Servicer in the case of an
REO Property) to obtain or cause the mortgagor on each Mortgaged Property to
maintain insurance providing coverage against at least six months of rent
interruptions (24 months with respect to an REO Property) and any other
insurance as is required in the related Mortgage Loan and customarily obtained
at commercially reasonable rates. In the case of an REO Property, if the
Special Servicer fails to maintain fire and hazard insurance as described above
or flood insurance as described below, the Servicer shall maintain such
insurance, and if the Servicer does not maintain such insurance, the Trustee
shall maintain such insurance and if the Trustee does not maintain such
insurance, the Fiscal Agent shall do so, subject to the provisions concerning
nonrecoverable Advances. Any cost incurred by the Servicer, Special Servicer,
Trustee or Fiscal Agent in maintaining any such insurance shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
In general, the standard form of fire and hazard extended coverage policy
covers physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm, hail, riot, strike and civil
commotion, subject to certain conditions and exclusions in each policy.
Although the policies relating to the Mortgage Loans will be underwritten by
different insurers in different states and therefore will not contain identical
terms and conditions, most such policies will not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin, domestic animals and certain other kinds of
uninsured risks. When improvements on a Mortgaged Property are located in a
federally designated flood area, the Pooling and Servicing Agreement requires
the Servicer to use its best efforts to cause the related borrower to maintain,
or if not maintained, to itself obtain (subject to the provisions concerning
nonrecoverable Advances) flood insurance, to the extent required by such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser
of (i) the outstanding principal balance of the related Mortgage Loan, (ii) the
maximum amount of such insurance required by the terms of the related Mortgage
and available for the related property under the National Flood Insurance Act
of 1968, as amended, and (iii) 100% of the replacement cost of the improvements
located in the special flood hazard area on the related Mortgaged Property,
except to the extent self-insurance is permitted under the related Mortgage
Loan. If an REO Property (i) is located in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards or (ii) is related to a Mortgage Loan pursuant to which earthquake
insurance was in place at the time of origination and continues to be available
at commercially reasonable rates, the Pooling and Servicing Agreement requires
that the Special Servicer obtain (subject to the issues concerning
nonrecoverable Advances) flood insurance and/or earthquake insurance. If a
recovery due to a flood or earthquake is not available for an REO Property but
would have been available if such insurance were
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maintained, the Special Servicer will be required (subject to the provisions
concerning nonrecoverable Advances) to (i) immediately deposit into the
Collection Account from its own funds the amount that would have been recovered
or (ii) apply to the restoration and repair of the property from its own funds
the amount that would have been recovered, if such application is consistent
with the Servicing Standard; provided, however, that the Special Servicer shall
not be responsible for any shortfall in insurance proceeds resulting from an
insurer's refusal or inability to pay a claim.
The Servicer or the Special Servicer may obtain and maintain a blanket or
mortgage impairment insurance policy insuring against fire and hazard losses on
all of the Mortgaged Properties (other than REO Properties) as to which the
related borrower has not maintained insurance to satisfy its obligations
concerning the maintenance of insurance coverage. Any such blanket insurance
policy shall be maintained with an insurer qualified under the terms of the
Pooling and Servicing Agreement. Additionally, the Servicer or the Special
Servicer may obtain a master force placed insurance policy, as long as such
policy is issued by an insurer qualified under the terms of the Pooling and
Servicing Agreement and provides no less coverage in scope and amount than
otherwise required to be maintained as described in the preceding paragraphs.
The ability of the Servicer to assure that fire and hazard, flood or
earthquake insurance proceeds are appropriately applied may be dependent upon
its being named as an additional insured under such policy, or upon the extent
to which information in this regard is furnished by mortgagors.
Under the terms of the Mortgage Loans, the borrowers will be required to
present claims to insurers under hazard insurance policies maintained on the
related Mortgaged Properties. The Servicer or Special Servicer, as applicable,
on behalf of itself, the Trustee and Certificateholders, is obligated to
present or cause to be presented claims under any blanket insurance policy
insuring against hazard losses on Mortgaged Properties securing the Mortgage
Loans. However, the ability of the Servicer or Special Servicer, as applicable,
to present or cause to be presented such claims is dependent upon the extent to
which information in this regard is furnished to the Servicer or Special
Servicer, as applicable, by the borrowers.
All insurance policies required shall name the Trustee or the Servicer or
the Special Servicer, on behalf of the Trustee as the mortgagee, as loss payee.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement requires the Servicer to cause a
nationally recognized firm of independent public accountants, which is a member
of the American Institute of Certified Public Accountants, to furnish to the
Trustee, the Depositor and the Rating Agencies on or before April 15 of each
year, beginning April 15, 2000, a statement to the effect that such firm has
examined certain documents and records relating to the servicing of similar
mortgage loans for the preceding twelve months and that on the basis of their
examination, conducted substantially in compliance with generally accepted
auditing standards and the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC, such servicing
has been conducted in compliance with similar agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
generally accepted auditing standards and the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC require it to report, in which case such exceptions and errors shall be
so reported.
The Pooling and Servicing Agreement also requires the Servicer to deliver
to the Trustee, the Depositor and the Rating Agencies on or before April 15 of
each year, beginning April 15, 2000, an officer's certificate of the Servicer
stating that, to the best of such officer's knowledge, the Servicer has
fulfilled its obligations under the Pooling and Servicing Agreement throughout
the preceding year or, if there has been a default, specifying each default
known to such officer and the action proposed to be taken with respect thereto.
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CERTAIN MATTERS REGARDING THE DEPOSITOR, THE SERVICER AND THE SPECIAL SERVICER
Each of the Servicer and Special Servicer may assign its rights and
delegate its duties and obligations under the Pooling and Servicing Agreement
in connection with the sale or transfer of a substantial portion of its
mortgage servicing or asset management portfolio, provided that certain
conditions are satisfied including obtaining the consent of the Trustee and
written confirmation of each Rating Agency that such assignment or delegation
will not cause a qualification, withdrawal or downgrading of the then-current
ratings assigned to the Certificates. The Pooling and Servicing Agreement
provides that the Servicer or Special Servicer may not otherwise resign from
its obligations and duties as Servicer or Special Servicer thereunder, except
upon the determination that performance of its duties is no longer permissible
under applicable law and provided that such determination is evidenced by an
opinion of counsel delivered to the Trustee. No such resignation may become
effective until the Trustee or a successor Servicer or Special Servicer has
assumed the obligations of the Servicer or Special Servicer under the Pooling
and Servicing Agreement. The Trustee or any other successor Servicer or Special
Servicer assuming the obligations of the Servicer or Special Servicer under the
Pooling and Servicing Agreement will be entitled to the compensation to which
the Servicer or Special Servicer would have been entitled. If no successor
Servicer or Special Servicer can be obtained to perform such obligations for
such compensation, additional amounts payable to such successor Servicer or
Special Servicer will be treated as Realized Losses. In addition, the Pooling
and Servicing Agreement provides that the Trustee is permitted to remove the
Servicer upon receipt of notice from any Rating Agency that if such Servicer is
not removed there is the risk of a downgrade, qualification or withdrawal of
the then current rating of any Class of Certificates.
The Pooling and Servicing Agreement also provides that neither the
Depositor, the Servicer, the Special Servicer, the Automobile Adviser, nor any
director, officer, employee or agent (including subservicers) of the Depositor,
the Servicer, the Special Servicer or the Automobile Adviser will be under any
liability to the Trust, or the holders of Certificates for any action taken or
for refraining from the taking of any action in good faith pursuant to the
Pooling and Servicing Agreement (including actions take at the direction of the
Controlling Class), or for errors in judgment; provided, however, that neither
the Depositor, the Servicer, the Special Servicer, the Automobile Adviser nor
any director, officer, employee or agent (including subservicers) of the
Depositor, the Servicer, the Special Servicer and the Automobile Adviser will
be protected against any breach of its representations and warranties made in
the Pooling and Servicing Agreement or any liability which would otherwise be
imposed by reason of willful misconduct, bad faith, fraud or negligence (or in
the case of the Servicer, by reason of any specific liability imposed for a
breach of the Servicing Standard) in the performance of duties thereunder or by
reason of reckless disregard of obligations and duties thereunder. The Pooling
and Servicing Agreement further provides that the Depositor, the Servicer, the
Special Servicer, the Automobile Adviser and any director, officer, employee or
agent (including subservicers) of the Depositor, the Servicer, the Special
Servicer and the Automobile Adviser will be entitled to indemnification by the
Trust for any loss, liability or expense incurred in connection with any legal
action relating to the Pooling and Servicing Agreement or the Certificates,
other than any loss, liability or expense (i) incurred by reason of willful
misconduct, bad faith, fraud or negligence (or in the case of the Servicer, by
reason of any specific liability imposed for a breach of the Servicing
Standard) in the performance of duties thereunder or by reason of reckless
disregard of obligations and duties thereunder or (ii) imposed by any taxing
authority if such loss, liability or expense is not specifically reimbursable
pursuant to the terms of the Pooling and Servicing Agreement.
In addition, the Pooling and Servicing Agreement provides that neither the
Depositor, the Servicer, the Special Servicer nor the Automobile Adviser will
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its duties under the Pooling and Servicing
Agreement and which in its opinion does not expose it to any expense or
liability. The Depositor, the Servicer or the Special Servicer may, however, in
its discretion undertake any such action which it may deem necessary or
desirable with respect to the Pooling
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and Servicing Agreement and the rights and duties of the parties thereto and
the interests of the holders of Certificates thereunder. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
will be expenses, costs and liabilities of the Trust, and the Depositor, the
Servicer and the Special Servicer will be entitled to be reimbursed therefor
and to charge the Collection Account.
The Depositor is not obligated to monitor or supervise the performance of
the Servicer, the Special Servicer or the Trustee under the Pooling and
Servicing Agreement. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer or the Special Servicer under the Pooling and
Servicing Agreement and may, but is not obligated to, perform or cause a
designee to perform any defaulted obligation of the Servicer or the Special
Servicer or exercise any right of the Servicer or the Special Servicer under
the Pooling and Servicing Agreement. In the event the Depositor undertakes any
such action, it will be reimbursed by the Trust from the Collection Account to
the extent not recoverable from the Servicer or Special Servicer as applicable.
Any such action by the Depositor will not relieve the Servicer or the Special
Servicer of its obligations under the Pooling and Servicing Agreement.
Any person into which the Servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the Servicer is a
party, or any person succeeding to the business of the Servicer, will be the
successor of the Servicer under the Pooling and Servicing Agreement, and shall
be deemed to have assumed all of the liabilities and obligations of the
Servicer under the Pooling and Servicing Agreement if each of the Rating
Agencies has confirmed in writing that such merger or consolidation or transfer
of assets or succession, in and of itself, will not cause a downgrade,
qualification or withdrawal of the then current ratings assigned by such Rating
Agency for any Class of Certificates.
EVENTS OF DEFAULT
Events of default of the Servicer (each, an "Event of Default") under the
Pooling and Servicing Agreement consist, among other things, of (i) any failure
by the Servicer to remit to the Collection Account or any failure by the
Servicer to remit to the Trustee for deposit into the Distribution Account,
Excess Interest Distribution Account or Default Interest Distribution Account
any amount required to be so remitted pursuant to the Pooling and Servicing
Agreement or (ii) any failure by the Servicer duly to observe or perform in any
material respect any of its other covenants or agreements or the breach of its
representations or warranties under the Pooling and Servicing Agreement which
continues unremedied for thirty days after the giving of written notice of such
failure to the Servicer by the Depositor or the Trustee, or to the Servicer and
to the Depositor and the Trustee by the holders of Certificates evidencing
Percentage Interests of at least 25% of any affected Class; or (iii) any
failure by the Servicer to make any Advances as required pursuant to the
Pooling and Servicing Agreement; or (iv) confirmation in writing by any Rating
Agency that not terminating the Servicer would, in and of itself, cause the
then-current rating assigned to any Class of Certificates to be qualified,
withdrawn or downgraded; (v) certain events of insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings and certain
actions by, on behalf of or against the Servicer indicating its insolvency or
inability to pay its obligations or (vi) the Servicer shall no longer be an
"approved" servicer by each of the Rating Agencies for mortgage pools similar
to the Trust.
Events of Default of the Special Servicer under the Pooling and Servicing
Agreement include the items specified in clauses (i) through (vi) above with
respect to, and to the extent applicable to, the Special Servicer.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default with respect to the Servicer occurs, then the
Trustee may, and at the direction of the holders of Certificates evidencing at
least 25% of the aggregate Voting Rights of all Certificateholders, the Trustee
will, terminate all of the rights and obligations of the Servicer as
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servicer under the Pooling and Servicing Agreement and in and to the Trust.
Notwithstanding the foregoing, upon any termination of the Servicer under the
Pooling and Servicing Agreement the Servicer will continue to be entitled to
receive all accrued and unpaid servicing compensation through the date of
termination plus all Advances and interest thereon as provided in the Pooling
and Servicing Agreement. In the event that the Servicer is also the Special
Servicer and the Servicer is terminated, the Servicer will also be terminated
as Special Servicer.
On and after the date of termination following an Event of Default by the
Servicer, the Trustee will succeed to all authority and power of the Servicer
(and the Special Servicer if the Special Servicer is also the Servicer) under
the Pooling and Servicing Agreement and will be entitled to the compensation
arrangements to which the Servicer (and the Special Servicer if the Servicer is
also the Special Servicer) would have been entitled. If the Trustee is
unwilling or unable so to act, or if the holders of Certificates evidencing at
least 25% of the aggregate Voting Rights of all Certificateholders so request,
or if the long-term unsecured debt rating of the Trustee or the Fiscal Agent is
not at least "AA" by Fitch and "Aa2" by Moody's or if the Rating Agencies do
not provide written confirmation that the succession of the Trustee as
Servicer, will not cause a qualification, withdrawal or downgrading of the
then-current ratings assigned to the Certificates, the Trustee must appoint, or
petition a court of competent jurisdiction for the appointment of, a mortgage
loan servicing institution the appointment of which will not result in the
downgrading, qualification or withdrawal of the rating or ratings then assigned
to any Class of Certificates as evidenced in writing by each Rating Agency to
act as successor to the Servicer under the Pooling and Servicing Agreement.
Pending such appointment, the Trustee is obligated to act in such capacity. The
Trustee and any such successor may agree upon the servicing compensation to be
paid.
If the Special Servicer is not the Servicer and an Event of Default with
respect to the Special Servicer occurs, the Trustee will terminate the Special
Servicer and the Servicer will succeed to all the power and authority of the
Special Servicer under the Pooling and Servicing Agreement (provided that such
succession would not result in the downgrading, qualification or withdrawal of
the rating or ratings assigned to any Class of Certificates as evidenced in
writing by each Rating Agency) and will be entitled to the compensation to
which the Special Servicer would have been entitled.
No Certificateholder will have any right under the Pooling and Servicing
Agreement to institute any proceeding with respect to the Pooling and Servicing
Agreement or the Mortgage Loans, unless, with respect to the Pooling and
Servicing Agreement, such holder previously shall have given to the Trustee a
written notice of a default under the Pooling and Servicing Agreement, and of
the continuance thereof, and unless also the holders of Certificates of any
Class affected thereby evidencing Percentage Interests of at least 25% of such
Class shall have made written request of the Trustee to institute such
proceeding in its own name as Trustee under the Pooling and Servicing Agreement
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute such
proceeding.
The Trustee will have no obligation to make any investigation of matters
arising under the Pooling and Servicing Agreement or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order
or direction of any of the holders of Certificates, unless such holders of
Certificates shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
AMENDMENT
The Pooling and Servicing Agreement may be amended at any time by the
Depositor, the Servicer, the Special Servicer, the Trustee and the Fiscal Agent
without the consent of any of the holders of Certificates (i) to cure any
ambiguity; (ii) to correct or supplement any provisions therein which may be
defective or inconsistent with any other provisions therein; (iii) to amend any
provision thereof to the extent necessary or desirable to maintain the rating
or ratings
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assigned to each Class of Certificates; (iv) to amend or supplement a provision
which will not adversely affect in any material respect the interests of any
Certificateholder not consenting thereto, as evidenced in writing by an opinion
of counsel or confirmation in writing from each Rating Agency that such
amendment will not result in a qualification, withdrawal or downgrading of the
then current ratings assigned to the Certificates; and (v) to amend or
supplement any provisions therein to the extent not inconsistent with the
provisions of the Pooling and Servicing Agreement and will not result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates as confirmed in writing by each Rating Agency. The
Pooling and Servicing Agreement requires that no such amendment shall cause the
Upper-Tier REMIC, Middle-Tier REMIC or the Lower-Tier REMIC to fail to qualify
as a REMIC.
The Pooling and Servicing Agreement may also be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Trustee and the
Fiscal Agent with the consent of the holders of Certificates evidencing at
least 66 2/3% of the Percentage Interests of each Class of Certificates
affected thereby for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or modifying in any manner the rights of the holders of Certificates;
provided, however, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on the Mortgage Loans
which are required to be distributed on any Certificate; (ii) alter the
obligations of the Servicer, the Special Servicer, the Trustee or the Fiscal
Agent to make a P&I Advance or Property Advance or alter the servicing
standards set forth in the Pooling and Servicing Agreement; (iii) change the
percentages of Voting Rights of holders of Certificates which are required to
consent to any action or inaction under the Pooling and Servicing Agreement; or
(iv) amend the section in the Pooling and Servicing Agreement relating to the
amendment of the Pooling and Servicing Agreement, in each case, without the
consent of the holders of all Certificates representing all the Percentage
Interests of the Class or Classes affected thereby.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 98%
of the voting rights for the Certificates (the "Voting Rights") shall be
allocated among the holders of the respective Classes of Regular Certificates
(other than the Class X Certificates) in proportion to the Certificate Balances
of their Certificates, 2% of the Voting Rights shall be allocated among the
holders of the Class X Certificates. Voting Rights allocated to a Class of
Certificateholders shall be allocated among such Certificateholders in
proportion to the Percentage Interests in such Class evidenced by their
respective Certificates. Appraisal Reduction Amounts will be allocated in
reduction of the respective Certificate Balances as described under
"Description of the Offered Certificates -- Appraisal Reductions" herein for
the purpose of calculating Voting Rights.
REALIZATION UPON MORTGAGE LOANS
The Pooling and Servicing Agreement grants to the Servicer, the Special
Servicer and the holder or holders of Certificates evidencing a majority
interest in the Controlling Class a right to purchase from the Trust certain
defaulted Mortgage Loans. If the Special Servicer has determined, in its good
faith and reasonable judgment, that any defaulted Mortgage Loan will become the
subject of a foreclosure, the Special Servicer will be required to promptly so
notify in writing the Trustee, and the Trustee will be required, within 10 days
after receipt of such notice, to notify the holders of the Controlling Class.
Any holder or holders of Certificates evidencing a majority interest in
the Controlling Class may, at its or their option, purchase from the Trust, at
a price at least equal to the unpaid principal balance of such Mortgage Loan,
together with any accrued but unpaid interest thereon to but not including the
Due Date in the Collection Period of the purchase and any related unreimbursed
Advances (the "Purchase Price") any such defaulted Mortgage Loan. If such
Certificateholders have not purchased such defaulted Mortgage Loan within 15
days of their having received notice
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in respect thereof, either the Servicer or the Special Servicer may, at its
option, purchase such defaulted Mortgage Loan from the Trust, at a price equal
to the applicable Purchase Price.
Pursuant to the terms of the Pooling and Servicing Agreement, the Special
Servicer may, to the extent consistent with the related Asset Status Report,
offer to sell any such defaulted Mortgage Loan not otherwise purchased pursuant
to the prior paragraph, if and when the Special Servicer determines, consistent
with the Servicing Standard, that such a sale would be in the best economic
interests of the Trust. Such offer is required to be made in a commercially
reasonable manner for a period of not less than 10 days. Unless the Special
Servicer determines, in its good faith and reasonable judgment, that acceptance
of any offer would not be in the best economic interests of the Trust, the
Special Servicer, to the extent consistent with the related Asset Status
Report, is required to accept the highest cash offer received from any person
that constitutes a fair price (which may be less than the Purchase Price) for
such Mortgage Loan; provided that none of the Servicer, the Special Servicer,
the Depositor, the holder of any Certificate or an affiliate of any such party
may purchase such Mortgage Loan for less than the Purchase Price unless at
least two other offers are received from independent third parties.
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, then, pursuant to the Pooling and
Servicing Agreement, the Special Servicer, on behalf of the Trustee, may, to
the extent consistent with the related Asset Status Report, at any time
institute foreclosure proceedings, exercise any power of sale contained in the
related Mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire
title to the related Mortgaged Property, by operation of law or otherwise. The
Special Servicer is not permitted, however, to acquire title to any Mortgaged
Property, have a receiver of rents appointed with respect to any Mortgaged
Property or take any other action with respect to any Mortgaged Property that
would cause the Trustee, for the benefit of the Certificateholders, or any
other specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or an "operator" of such
Mortgaged Property within the meaning of certain federal environmental laws,
unless the Special Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters and
related costs) on the information set forth in such report, determines that
taking such actions as are necessary to bring the Mortgaged Property into
compliance with applicable environmental laws and regulations and/or taking
the actions contemplated by clause (i)(b) above, is reasonably likely to
produce a greater recovery, taking into account the time value of money,
than not taking such actions.
Such requirement precludes enforcement of the security for the related
Mortgage Loan until a satisfactory environmental site assessment is obtained
(or until any required remedial action is taken), but will decrease the
likelihood that the Trust will become liable for a material adverse
environmental condition at the Mortgaged Property. However, there can be no
assurance that the requirements of the Pooling and Servicing Agreement will
effectively insulate the Trust from potential liability for a materially
adverse environmental condition at any Mortgaged Property.
If title to any Mortgaged Property is acquired by a Trust, the Special
Servicer, on behalf of the Trust, will be required to sell the Mortgaged
Property prior to the close of the third calendar year following the year in
which the Trust acquires such Mortgaged Property, unless (i) the Internal
Revenue Service grants an extension of time to sell such property or (ii) the
Trustee receives an opinion of independent counsel to the effect that the
holding of the property by the Trust beyond
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such period will not result in the imposition of a tax on the Trust or cause
the Trust (or any designated portion thereof) to fail to qualify as a REMIC
under the Code at any time that any Certificate is outstanding. Subject to the
foregoing and any other tax-related limitations, the Special Servicer will
generally be required to attempt to sell any Mortgaged Property so acquired on
the same terms and conditions it would if it were the owner. If title to any
Mortgaged Property is acquired by the Trust, the Special Servicer will also be
required to ensure that the Mortgaged Property is administered so that it
constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times that the sale of such property does not result in the
receipt by the Trust of any income from non-permitted assets as described in
Code Section 860F(a)(2)(B) with respect to such property. If the Trust acquires
title to any Mortgaged Property, the Special Servicer, on behalf of the Trust,
may be required to retain an independent contractor to manage and operate such
property. The retention of an independent contractor, however, will not relieve
the Special Servicer of its obligation to manage such Mortgaged Property as
required under the Pooling and Servicing Agreement.
In general, the Special Servicer will be obligated to (or may contract
with a third party to) operate and manage any Mortgaged Property acquired as
REO Property in a manner that would, in its good faith and reasonable judgment
and to the extent commercially feasible, maximize the Trust's net after-tax
proceeds from such property. After the Special Servicer reviews the operation
of such property and consults with the Trustee to determine the Trust's federal
income tax reporting position with respect to income it is anticipated that the
Trust would derive from such property, the Special Servicer could determine,
pursuant to the Pooling and Servicing Agreement, that it would not be
commercially feasible to manage and operate such property in a manner that
would avoid the imposition of a tax on "net income from foreclosure property"
within the meaning of the REMIC Regulations (such tax referred to herein as the
"REO Tax"). To the extent that income the Trust receives from an REO Property
is subject to a tax on "net income from foreclosure property", such income
would be subject to federal tax at the highest marginal corporate tax rate
(currently 35%). The determination as to whether income from an REO Property
would be subject to an REO Tax will depend on the specific facts and
circumstances relating to the management and operation of each REO Property.
Any REO Tax imposed on the Trust's income from an REO Property would reduce the
amount available for distribution to Certificateholders. Certificateholders are
advised to consult their own tax advisors regarding the possible imposition of
the REO Tax in connection with the operation of commercial REO Properties by
REMICs. The Special Servicer will be required to sell any REO Property acquired
on behalf of the Trust within the time period and in the manner described
above.
Under the Pooling and Servicing Agreement, the Special Servicer is
required to establish and maintain one or more REO Accounts, to be held on
behalf of the Trustee in trust for the benefit of the Certificateholders, for
the retention of revenues, Liquidation Proceeds (net of related liquidation
expenses) and insurance proceeds derived from each REO Property. The Special
Servicer is required to use the funds in the REO Account to pay for the proper
operation, management, maintenance, disposition and liquidation of any REO
Property, but only to the extent of amounts on deposit in the REO Account
relate to such REO Property. To the extent that amounts in the REO Account in
respect of any REO Property are insufficient to make such payments, the Special
Servicer is required to make a Property Advance, unless it determines such
Property Advance would be nonrecoverable. Within one business day following the
end of each Collection Period, the Special Servicer is required to deposit all
amounts received in respect of each REO Property during such Collection Period,
net of any amounts withdrawn to make any permitted disbursements, to the
Collection Account, provided that the Special Servicer may retain in the REO
Account permitted reserves.
MODIFICATIONS
The Servicer, or, with respect to Specially Serviced Mortgage Loans, the
Special Servicer may agree to any modification, waiver or amendment of any term
of, forgive interest on and principal of, capitalize interest on, permit the
release, addition or substitution of collateral securing, and/or
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permit the release of the borrower on or any guarantor of any Mortgage Loan
without the consent of the Trustee or any Certificateholder, subject, however,
to each of the following limitations, conditions and restrictions:
(i) other than with respect to the waiver of late payment charges or
waivers in connection with "due-on-sale" or "due-on-encumbrance" clauses in
the Mortgage Loans, as described under the heading "-- Enforcement of
"Due-on-Sale" and "Due-on-Encumbrance Clauses" above, the Servicer or the
Special Servicer, as applicable, may not agree to any modification, waiver
or amendment of any term of, or take any of the other above referenced
actions with respect to, any Mortgage Loan that would affect the amount or
timing of any related payment of principal, interest or other amount
payable thereunder or, in the Servicer's or the Special Servicer's, as
applicable, good faith and reasonable judgment, would materially impair the
security for such Mortgage Loan or reduce the likelihood of timely payment
of amounts due thereon or materially alter, substitute or increase the
security for such Mortgage Loan (other than the alteration or construction
of improvements thereon) or any guarantee or other credit enhancement with
respect thereto (other than the substitution of a similar commercially
available credit enhancement contract), unless, with respect to Specially
Serviced Mortgage Loans in the Special Servicer's judgment, a material
default on such Mortgage Loan has occurred or a default in respect of
payment on such Mortgage Loan is reasonably foreseeable, and such
modification, waiver, amendment or other action is reasonably likely to
produce a greater recovery to Certificateholders on a present value basis
than would liquidation;
(ii) the Servicer or the Special Servicer, as applicable, may not extend
the maturity of any Mortgage Loan beyond the date that is two years prior
to the Rated Final Distribution Date;
(iii) neither the Servicer or the Special Servicer, as applicable, shall
make or permit any modification, waiver or amendment of any term of any
Mortgage Loan that would (A) be a "significant modification" of such
Mortgage Loan within the meaning of Treasury Regulations Section
1.860G-2(b) or (B) cause any Mortgage Loan to cease to be a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code (provided
that the Servicer or the Special Servicer, as applicable, shall not be
liable for judgments as regards decisions made under this subsection which
were made in good faith and, unless it would constitute bad faith or
negligence to do so, the Servicer or the Special Servicer, as applicable,
may rely on opinions of counsel in making such decisions);
(iv) neither the Servicer or the Special Servicer, as applicable, shall
permit any borrower to add or substitute any collateral for an outstanding
Mortgage Loan, which collateral constitutes real property, unless the
Servicer or the Special Servicer, as applicable, shall have first
determined in its good faith and reasonable judgment, based upon a Phase I
environmental assessment (and such additional environmental testing as the
Servicer or the Special Servicer, as applicable, deems necessary and
appropriate), that such additional or substitute collateral is in
compliance with applicable environmental laws and regulations and that
there are no circumstances or conditions present with respect to such new
collateral relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment,
clean-up or remediation would be required under any then applicable
environmental laws and/or regulations; and
(v) with limited exceptions, the Servicer or the Special Servicer, as
applicable, shall not release any collateral securing an outstanding
Mortgage Loan;
provided that notwithstanding clauses (i) through (v) above, neither the
Servicer or the Special Servicer, as applicable, will be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
borrower if in its reasonable and good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.
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OPTIONAL TERMINATION
The Servicer, and, if the Servicer does not exercise its option, any
holder of the Class LR Certificates representing greater than 50% of the
Percentage Interest of the Class LR Certificates will have the option to
purchase all of the Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust, and thereby effect termination of the
Trust and early retirement of the then outstanding Certificates, on any
Distribution Date on which the aggregate Stated Principal Balance of the
Mortgage Loans remaining in the Trust is less than 1% of the aggregate
principal balance of such Mortgage Loans as of the Cut-off Date. The purchase
price payable upon the exercise of such option on such a Distribution Date will
be an amount equal to the greater of (i) the sum of (A) 100% of the outstanding
principal balance of each Mortgage Loan included in the Trust as of the last
day of the month preceding such Distribution Date (less any P&I Advances
previously made on account of principal); (B) the fair market value of all
other property included in the Trust as of the last day of the month preceding
such Distribution Date, as determined by an independent appraiser as of a date
not more than 30 days prior to the last day of the month preceding such
Distribution Date; (C) all unpaid interest accrued on such principal balance of
each such Mortgage Loan (including any Mortgage Loans as to which title to the
related Mortgaged Property has been acquired) at the Mortgage Rate (plus the
Excess Rate, to the extent applicable) to the last day of the month preceding
such Distribution Date (less any P&I Advances previously made on account of
interest), and (D) unreimbursed Advances (with interest thereon) and unpaid
Trust expenses and (ii) the aggregate fair market value of the Mortgage Loans
and all other property acquired in respect of any Mortgage Loan in the Trust,
on the last day of the month preceding such Distribution Date, as determined by
an independent appraiser acceptable to the Servicer, together with one month's
interest thereon at the Mortgage Rate. Notwithstanding the foregoing, such
Mortgage Loan may not be purchased if the fair market value of the Mortgage
Loan is greater than 100% of the outstanding principal balance of such Mortgage
Loan.
THE TRUSTEE
LaSalle National Bank, a national banking association with its principal
offices in Chicago, Illinois, will act as Trustee pursuant to the Pooling and
Servicing Agreement. The Trustee's corporate trust office is located at 135
South LaSalle Street, Suite 1625, Chicago, Illinois 60674, Attention: Asset
Backed Securities Trust Services Group, COMM 1999-1.
The Trustee may resign at any time by giving written notice to the
Depositor, the Servicer, Special Servicer and the Rating Agencies, provided
that no such resignation shall be effective until a successor has been
appointed. Upon such notice, the Servicer will appoint a successor trustee. If
no successor trustee is appointed within one month after the giving of such
notice of resignation, the resigning Trustee may petition the court for
appointment of a successor trustee.
The Servicer or the Depositor may remove the Trustee and the Fiscal Agent
if, among other things, the Trustee ceases to be eligible to continue as such
under the Pooling and Servicing Agreement or if at any time the Trustee becomes
incapable of acting, or is adjudged bankrupt or insolvent, or a receiver of the
Trustee or its property is appointed or any public officer takes charge or
control of the Trustee or of its property. The holders of Certificates
evidencing aggregate Voting Rights of at least 50% of all Certificateholders
may remove the Trustee and the Fiscal Agent upon written notice to the
Depositor, the Servicer, the Trustee and the Fiscal Agent. Any resignation or
removal of the Trustee and the Fiscal Agent and appointment of a successor
trustee and, if such trustee is not rated at least "AA" or the equivalent by
each Rating Agency, fiscal agent, will not become effective until acceptance of
the appointment by the successor trustee and, if necessary, fiscal agent.
Notwithstanding the foregoing, upon any termination of the Trustee and Fiscal
Agent under the Pooling and Servicing Agreement, the Trustee and Fiscal Agent
will continue to be entitled to receive from the Trust all accrued and unpaid
compensation and expenses through the date of termination plus all Advances and
interest thereon as provided in the Pooling and Servicing Agreement. In
addition, if the Trustee is terminated without cause, the terminating party
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is required to pay all of the expenses of the Trustee necessary to effect the
transfer of its responsibilities to the successor Trustee. Any successor
trustee must have a combined capital and surplus of at least $50,000,000 and
such appointment must not result in the downgrade, qualification or withdrawal
of the then-current ratings assigned to the Certificates, as evidenced in
writing by the Rating Agencies.
Pursuant to the Pooling and Servicing Agreement, the Trustee will be
entitled to withdraw from the Distribution Account a monthly fee (the "Trustee
Fee"), which constitutes a portion of the Servicing Fee.
The Trust will indemnify the Trustee and the Fiscal Agent against any and
all losses, liabilities, damages, claims or unanticipated expenses (including
reasonable attorneys' fees) arising in respect of the Pooling and Servicing
Agreement or the Certificates other than those resulting from the negligence,
bad faith or willful misconduct of the Trustee or the Fiscal Agent, as
applicable. Neither the Trustee nor the Fiscal Agent will be required to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties under the Pooling and Servicing Agreement, or in the
exercise of any of its rights or powers, if in the Trustee's or the Fiscal
Agent's opinion, as applicable, the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. Each
of the Servicer, the Special Servicer, the Depositor, the Paying Agent, the
Certificate Registrar and the Custodian will indemnify the Trustee, the Fiscal
Agent, and certain related parties for similar losses incurred related to the
willful misconduct, bad faith, fraud and/or negligence in the performance of
each such party's respective duties under the Pooling and Servicing Agreement
or by reason of reckless disregard of its obligations and duties under the
Pooling and Servicing Agreement.
At any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or property securing the same is
located, the Trustee will have the power to appoint one or more persons or
entities approved by the Trustee to act (at the expense of the Trustee) as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
co-trustee or separate trustee such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. Except as required
by applicable law, the appointment of a co-trustee or separate trustee will not
relieve the Trustee of its responsibilities, obligations and liabilities under
the Pooling and Servicing Agreement to the extent set forth therein.
DUTIES OF THE TRUSTEE
The Trustee (except for the information under the first paragraph of
"--The Trustee") will make no representation as to the validity or sufficiency
of the Pooling and Servicing Agreement, the Certificates or the Mortgage Loans,
this Prospectus or related documents. The Trustee will not be accountable for
the use or application by the Depositor, the Servicer or the Special Servicer
of any Certificates issued to it or of the proceeds of such Certificates, or
for the use of or application of any funds paid to the Depositor, the Servicer
or the Special Servicer in respect of the assignment of the Mortgage Loans to
the Trust, or any funds deposited in or withdrawn from the Lock Box Accounts,
Reserve Accounts, Collection Account or any other account maintained by or on
behalf of the Servicer or Special Servicer, nor will the Trustee be required to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer or Special Servicer under the Pooling and Servicing
Agreement.
In the event that the Servicer fails to make a required Advance, the
Trustee will make such Advance, provided that the Trustee shall not be
obligated to make any Advance it deems to be nonrecoverable. The Trustee shall
be entitled to rely conclusively on any determination by the Servicer or the
Special Servicer that an Advance, if made, would not be recoverable. The
Trustee will be entitled to reimbursement for each Advance, with interest, made
by it in the same manner and to same extent as the Servicer or the Special
Servicer.
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If no Event of Default has occurred, and after the curing of all Events of
Default which may have occurred, the Trustee is required to perform only those
duties specifically required under the Pooling and Servicing Agreement. Upon
receipt of the various certificates, reports or other instruments required to
be furnished to it, the Trustee is required to examine such documents and to
determine whether they conform on their face to the requirements of the Pooling
and Servicing Agreement to the extent set forth therein.
The Trustee will be the REMIC Administrator, as described in the
Prospectus. See "Description of the Pooling Agreements -- Certain Matters
Regarding the Master Servicer, the Special Servicer, the REMIC Administrator
and the Depositor."
THE FISCAL AGENT
ABN AMRO Bank N.V., a banking corporation organized under the laws of The
Netherlands, will act as Fiscal Agent pursuant to the Pooling and Servicing
Agreement. The Fiscal Agent's office is located at 135 South LaSalle Street,
Chicago, Illinois 60674. The Fiscal Agent will be deemed to have resigned or
been removed in the event of the resignation or removal of the Trustee.
DUTIES OF THE FISCAL AGENT
The Fiscal Agent will make no representation as to the validity or
sufficiency of the Pooling and Servicing Agreement, the Certificates, the
Mortgage Loan, this Prospectus Supplement (except for the information under
"-- The Fiscal Agent" above) or related documents. The duties and obligations of
the Fiscal Agent consist only of making Advances as described below and in
"-- Advances" above; the Fiscal Agent shall not be liable except for the
performance of such duties and obligations.
In the event that the Servicer and the Trustee fail to make a required
Advance, the Fiscal Agent will make such Advance, provided that the Fiscal
Agent will not be obligated to make any Advance that it deems to be
nonrecoverable. The Fiscal Agent shall be entitled to rely conclusively on any
determination by the Servicer or the Trustee, as applicable, that an Advance,
if made, would not be recoverable. The Fiscal Agent will be entitled to
reimbursement for each Advance made by it in the same manner and to the same
extent as the Trustee and the Servicer.
THE SERVICER
Banc One Mortgage Capital Markets, LLC ("Banc One"), a Delaware limited
liability company, will be the Servicer, and in such capacity will be
responsible for servicing the Mortgage Loans. The principal offices of Banc One
are located at 1717 Main Street, Dallas, Texas 75201.
As of December 31, 1998, Banc One and its affiliates were responsible for
servicing approximately 7,058 commercial and multifamily loans with an
aggregate principal balance of approximately $22.3 billion, the collateral for
which is located in 49 states, Mexico, Puerto Rico, the Virgin Islands and the
District of Columbia. With respect to such loans, approximately 6,180 loans
with an aggregate principal balance of approximately $17.9 billion pertain to
commercial and multifamily mortgage-backed securities.
The information concerning the Servicer set forth herein has been provided
by the Servicer, and none of the Mortgage Loan Sellers, the Special Servicer,
the Depositor, the Trustee, the Fiscal Agent or the Underwriters makes any
representation or warranty as to the accuracy thereof. The Servicer (except for
the information under this heading) will make no representation as to the
validity or sufficiency of the Pooling and Servicing Agreement, the
Certificates or the Mortgage Loans, this Prospectus or related documents.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
entitled to withdraw the Master Servicing Fee monthly from the Collection
Account. The "Master Servicing Fee" will
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be payable monthly and will accrue at 0.1% per annum (the "Master Servicing Fee
Rate."). The "Servicing Fee" will be payable monthly on a loan-by-loan basis
and will accrue at a percentage rate per annum (the "Servicing Fee Rate") set
forth on Annex A for each Mortgage Loan and will include the Master Servicing
Fee, the Trustee Fee, the Automobile Adviser Fee, if any, and any fee for
primary servicing functions (which varies loan by loan). The Master Servicing
Fee will be retained by the Servicer from payments and collections (including
insurance proceeds, condemnation proceeds and liquidation proceeds) in respect
of such Mortgage Loan. The Servicer will also be entitled to retain as
additional servicing compensation (together with the Master Servicing Fee,
"Servicing Compensation") (i) all investment income earned on amounts on
deposit in the Collection Account, the Interest Reserve Account and certain
Reserve Accounts (to the extent consistent with the related Mortgage Loan),
(ii) to the extent permitted by applicable law and the related Mortgage Loans,
any loan modification, extension and assumption fees (for as long as the
Mortgage Loan is not a Specially Serviced Mortgage Loan), late payment charges,
loan service transaction fees, beneficiary statement charges, or similar items
(but not including Prepayment Premiums) and (iii) Net Prepayment Interest
Excess, if any. If the Mortgage Loan is a Specially Serviced Mortgage Loan, the
Special Servicer will be entitled to the full amount of any modification,
extension or assumption fees, as described below under "-- Special Servicing."
The Master Servicing Fee and the Trustee Fee will accrue on a basis of twelve
months of 30 days each.
In connection with any Net Prepayment Interest Shortfall, the Servicer
will be obligated to reduce its Servicing Compensation as provided above under
"Description of the Offered Certificates -- Distributions -- Prepayment
Interest Shortfalls."
The Servicer will pay all expenses incurred in connection with its
responsibilities under the Pooling and Servicing Agreement (subject to
reimbursement as described herein). The Trustee will withdraw monthly from the
Distribution Account the portion of the Servicing Fee representing the Trustee
Fee.
SPECIAL SERVICING
Banc One Mortgage Capital Markets, LLC will initially be appointed as
special servicer (the "Special Servicer") to, among other things, oversee the
resolution of non-performing Mortgage Loans and act as disposition manager of
REO Properties. The Pooling and Servicing Agreement will provide that more than
one Special Servicer may be appointed, but only one Special Servicer may
specially service any Mortgage Loan.
In addition to its loan servicing capabilities, BOMCM has expertise in all
areas of asset management including loan workouts, asset valuation,
environmental reviews, and REO management and disposition and is an active
purchaser of unrated and sub-investment grade interests in commercial mortgage
backed securities. The principal task of Banc One's asset management division
is the management, turnaround, and capital recovery of distressed and
underperforming real estate loans and foreclosed real estate assets. The asset
management division of Banc One is also responsible for the valuation of
portfolios in connection with the purchase of commercial mortgage backed
securities.
The holder or holders of Certificates entitled to more than 50% of the
Voting Rights allocated to the Controlling Class may at any time terminate
substantially all of the rights and duties of the Special Servicer and appoint
a replacement to perform such duties under substantially the same terms and
conditions as applicable to the Special Servicer. Such holder(s) shall
designate a replacement to so serve by the delivery to the Trustee of a written
notice stating such designation. The Trustee shall, promptly after receiving
any such notice, so notify the Rating Agencies. If the designated replacement
is acceptable to the Trustee, which approval may not be unreasonably withheld,
the designated replacement shall become the Replacement Special Servicer as of
the date the Trustee shall have received: (i) written confirmation from each
Rating Agency stating that if the designated replacement were to serve as
Special Servicer under the Pooling and Servicing Agreement, none of the
then-current rating of all outstanding Classes of the Certificates would be
qualified, downgraded or withdrawn as a result thereof; (ii) a written
acceptance of all obligations
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of such replacement Special Servicer, executed by the designated replacement;
and (iii) an opinion of counsel to the effect that the designation of such
replacement to serve as Special Servicer is in compliance with the Pooling and
Servicing Agreement, that the designated replacement will be bound by the terms
of the Pooling and Servicing Agreement and that the Pooling and Servicing
Agreement will be enforceable against such designated replacement in accordance
with its terms. The prior Special Servicer shall be deemed to have resigned
from its duties under the Pooling and Servicing Agreement in respect of
Specially Serviced Mortgage Loans and REO Properties simultaneously with such
designated replacement's becoming the Special Servicer under the Pooling and
Servicing Agreement. Any replacement Special Servicer may be similarly so
replaced by the holder or holders of Certificates entitled to more than 50% of
the Voting Rights allocated to the Controlling Class.
The "Controlling Class" will be, as of any date of determination, the
Class of Regular Certificates (other than the Class X Certificates) with the
latest alphabetical Class designation that has a then aggregate Certificate
Balance (net of any Appraisal Reduction Amount) at least equal to the lesser of
(i) 25% of the initial aggregate Certificate Balance of such Class of Regular
Certificates as of the Closing Date and (ii) 2% of the aggregate Certificate
Balance (net of any Appraisal Reduction Amount) of all the Regular Certificates
(other than the Class X Certificates) as of such date of determination. As of
the Closing Date, the Controlling Class will be the Class L Certificates. For
purposes of determining the Controlling Class, the Class A-1 and Class A-2
Certificates collectively will be treated as one Class.
The duties of the Special Servicer relate to Specially Serviced Mortgage
Loans and to any REO Property. The Pooling and Servicing Agreement will define
a "Specially Serviced Mortgage Loan" to include any Mortgage Loan with respect
to which: (i) the related borrower has not made two consecutive Monthly
Payments (and has not cured at least one such delinquency by the next due date
under the related Mortgage Loan) or (ii) the Servicer, the Trustee and/or the
Fiscal Agent has made four consecutive P&I Advances (regardless of whether such
P&I Advances have been reimbursed); (iii) the borrower has expressed to the
Servicer a hardship that will cause an inability to pay the Mortgage Loan in
accordance with its terms and therefore, in the reasonable judgment of the
Servicer, the borrower is in imminent risk of being in default of the terms of
the Mortgage Loan; (iv) the Servicer has received notice that the borrower has
become the subject of any bankruptcy, insolvency or similar proceeding,
admitted in writing the inability to pay its debts as they come due or made an
assignment for the benefit of creditors; (v) the Servicer has received notice
of a foreclosure or threatened foreclosure of any lien on the Mortgaged
Property securing the Mortgage Loan; (vi) a default (other than a failure by
the borrower to pay principal or interest) which in the judgment of the
Servicer materially and adversely affects the interests of the
Certificateholders has occurred and remained unremedied for the applicable
grace period specified in the Mortgage Loan (or, if no grace period is
specified, 60 days); provided, that a default requiring a Property Advance will
be deemed to materially and adversely affect the interests of
Certificateholders; (vii) (A) in the case of a Healthcare Loan in which the
related Healthcare Property is a nursing facility (1) the license or
certificate of need to operate the related Mortgaged Property as a Healthcare
Property, (2) the certification of the related Healthcare Property to
participate as a nursing home provider in Medicare or Medicaid (and their
successor programs), or (3) the right to admit residents and/or receive
payments under Medicare or Medicaid (and their successor programs) has been
terminated, revoked, surrendered or suspended; or (B) in the case of Healthcare
Loan in which the related Healthcare Property is an assisted living facility,
the right to admit residents or the license to operate as an assisted living
facility has been terminated, revoked, surrendered or suspended; (C) in the
case of any Healthcare Loan, the related Healthcare Property has been cited for
a material deficiency for which its license or certification can be revoked and
which is not cured within the earlier of the time permitted by the applicable
regulatory authority or 180 days; (D) in the case of any Healthcare Loan, more
than ten percent (10%) of the licensed beds of the related Healthcare Property
becomes unavailable for use either (1) through a taking by condemnation or
eminent domain, or (2) through a casualty loss; provided, however, that the
Servicer has determined that as a result of (1) or (2) above the
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related mortgagor's ability to pay the debt service on such Healthcare Loan has
been impaired; or (viii) the related mortgagor has failed to make a Balloon
Payment as and when due; provided, however, that a Mortgage Loan will cease to
be a Specially Serviced Mortgage Loan (each, a "Corrected Mortgage Loan") (i)
with respect to the circumstances described in clauses (i), (ii), and (viii)
above, when the borrower thereunder has brought the Mortgage Loan current and
thereafter made three consecutive full and timely monthly payments, including
pursuant to any workout of the Mortgage Loan, (ii) with respect to the
circumstances described in clause (iii), (iv) and (v) above, when such
circumstances cease to exist in the good faith judgment of the Special Servicer
or with respect to the circumstances described in clause (vi) or (vii) above,
when such default is cured; provided, in each case, that at that time no
circumstance exists (as described above) that would cause the Mortgage Loan to
continue to be characterized as a Specially Serviced Mortgage Loan.
The Special Servicer will prepare a report (an "Asset Status Report") for
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan not later
than 30 days after the servicing of such Mortgage Loan is transferred to the
Special Servicer. Each Asset Status Report will be delivered to the Directing
Certificateholder (and with respect to any Automobile Loan, the Automobile
Adviser) and the Rating Agencies. If the Directing Certificateholder does not
disapprove an Asset Status Report within 15 business days, the Special Servicer
shall implement the recommended action as outlined in such Asset Status Report.
The Directing Certificateholder may object to any Asset Status Report within 15
business days of receipt; provided, however, that the Special Servicer shall
implement the recommended action as outlined in such Asset Status Report if it
makes an affirmative determination, consistent with the Servicing Standard,
that such objection is not in the best interest of all the Certificateholders.
If the Directing Certificateholder disapproves such Asset Status Report and the
Special Servicer has not made the affirmative determination described above,
the Special Servicer will revise such Asset Status Report as soon as
practicable thereafter, but in no event later than 5 days after such
disapproval. In any event, if the Directing Certificateholder does not approve
an Asset Status Report within 25 business days from the first submission of an
Asset Status Report, the Special Servicer may act upon the form of Asset Status
Report that it deems appropriate and in compliance with the Servicing Standard.
The Directing Certificateholder is required to act as promptly as possible in
order to finalize the Asset Status Report. The Special Servicer will revise
such Asset Status Report until the Directing Certificateholder fails to
disapprove such revised Asset Status Report as described above or until the
Special Servicer makes a determination, consistent with the Servicing Standard,
that such objection is not in the best interests of the Certificateholders.
The "Directing Certificateholder" will be the Controlling Class
Certificateholder selected by more than 50% of the Controlling Class
Certificateholders, by Certificate Balance, as certified by the Trustee from
time to time; provided, however, that (i) absent such selection, or (ii) until
a Directing Certificateholder is so selected or (iii) upon receipt of a notice
from a majority of the Controlling Class Certificateholders, by Certificate
Balance, that a Directing Certificateholder is no longer designated, the
Controlling Class Certificateholder that owns the largest aggregate Certificate
Balance of the Controlling Class will be the Directing Certificateholder.
A "Controlling Class Certificateholder" is each holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified to
the Trustee from time to time by such holder (or Certificate Owner).
The Special Servicer will not be required to take or refrain from taking
any action pursuant to instructions from the Directing Certificateholder that
would cause it to violate applicable law, the Pooling and Servicing Agreement,
including the Servicing Standard, or the REMIC Regulations.
Pursuant to the Pooling and Servicing Agreement, the Special Servicer will
be entitled to certain fees including a special servicing fee, payable with
respect to each Interest Accrual Period, equal to 0.25% of the Stated Principal
Balance of each related Specially Serviced Mortgage Loan (the "Special
Servicing Fee"). A "Workout Fee" will in general be payable to the Special
Servicer
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with respect to each Mortgage Loan that ceases to be a Specially Serviced
Mortgage Loan pursuant to the definition thereof. As to each such Mortgage
Loan, the Workout Fee will be payable out of, and will be calculated by
application of a "Workout Fee Rate" of 1.0% to, each collection of interest and
principal (including scheduled payments, prepayments, Balloon Payments and
payments at maturity) received on such Mortgage Loan for so long as it remains
a Corrected Mortgage Loan. The Workout Fee with respect to any such Mortgage
Loan will cease to be payable if such loan again becomes a Specially Serviced
Mortgage Loan or if the related Mortgaged Property becomes an REO Property;
provided that a new Workout Fee will become payable if and when such Mortgage
Loan again ceases to be a Specially Serviced Mortgage Loan. If the Special
Servicer is terminated (other than for cause) or resigns with respect to any or
all of its servicing duties, it shall retain the right to receive any and all
Workout Fees payable with respect to Mortgage Loans that ceases to be a
Specially Serviced Mortgage Loans during the period that it had responsibility
for servicing Specially Serviced Mortgage Loans and that had ceased being
Specially Serviced Mortgage Loans at the time of such termination or
resignation (and the successor Special Servicer shall not be entitled to any
portion of such Workout Fees), in each case until the Workout Fee for any such
loan ceases to be payable in accordance with the preceding sentence. A
"Liquidation Fee" will be payable to the Special Servicer with respect to each
Specially Serviced Mortgage Loan as to which the Servicer obtains a full or
discounted payoff from the related borrower and, except as otherwise described
below, with respect to any Specially Serviced Mortgage Loan or REO Property as
to which the Special Servicer recovered any proceeds ("Liquidation Proceeds").
As to each such Specially Serviced Mortgage Loan and REO Property, the
Liquidation Fee will be payable from, and will be calculated by application of
a "Liquidation Fee Rate" of 1.0% to, the related payment or proceeds.
Notwithstanding anything to the contrary described above, no Liquidation Fee
will be payable based on, or out of, Liquidation Proceeds received in
connection with the purchase of any Specially Serviced Mortgage Loan or REO
Property by the Servicer, the Special Servicer, any Mortgage Loan Seller or any
holder of Certificates evidencing a majority interest in the Controlling Class
or the purchase of all of the Mortgage Loans and REO Properties by the Servicer
or the holder of the Class LR Certificates in connection with the termination
of the Trust. If, however, Liquidation Proceeds are received with respect to
any Specially Serviced Mortgage Loan to which the Special Servicer is properly
entitled to a Workout Fee, such Workout Fee will be payable based on and out of
the portion of such Liquidation Proceeds that constitute principal and/or
interest. In addition, the Special Servicer will be entitled to receive (i) any
loan modification, extension and assumption fees related to the Specially
Serviced Mortgage Loans and (ii) any income earned on deposits in the REO
Accounts.
THE AUTOMOBILE ADVISER
Election of the Automobile Adviser. On the Closing Date and as otherwise
provided, the Controlling Class will be entitled to elect a consultant with
respect to the Automobile Loans and the Automobile Properties (the "Automobile
Adviser"), who shall be appointed by the Trust to provide the Servicer, the
Special Servicer and the Controlling Class with advice with respect to
Automobile Loans and Automobile Properties using the same care, skill,
prudence, and diligence with which, it (a) advises and administers similar
automobile loans and automobile properties comparable to the Automobile Loans
and Automobile Properties and held for other third-party portfolios or (b)
advises and administers automobile loans or automobile properties for its own
account, whichever standard is higher, but without regard to (i) any known
relationship that the Automobile Adviser, or an affiliate of the Automobile
Adviser may have with the borrowers or any other party to the Pooling and
Servicing Agreement; (ii) the ownership of any Certificate by the Automobile
Adviser or any affiliate of the Automobile Adviser, as applicable; (iii) the
Automobile Adviser's right to receive compensation for its services under the
Pooling and Servicing Agreement or with respect to any particular transaction;
or (iv) the ownership or advising or management for others, by the Automobile
Adviser of other health care loans or health care properties (the "Automobile
Adviser Standard"). Upon (i) the receipt by the Trustee of written requests for
an election of a Automobile Adviser from the Controlling Class, (ii) the
resignation or
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removal of the person acting as Automobile Adviser or (iii) a determination by
the Trustee that the Controlling Class has changed, an election of a successor
Automobile Adviser will be held commencing as soon as practicable thereafter.
The Automobile Adviser may be removed at any time by the written vote of the
Controlling Class.
It is anticipated that the initial Automobile Adviser will be Allied
Capital Corporation.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Automobile Adviser is required to be an entity that has expertise in lending to
automobile dealerships.
In the event that after the Closing Date an Automobile Adviser shall have
resigned or been removed and a successor Automobile Adviser shall not have been
elected within 90 days, the Servicer shall appoint a new Automobile Adviser.
Duties of the Automobile Adviser. The Trustee, the Servicer and the
Special Servicer will be required to deliver to the Automobile Adviser all
reports and other information they receive with respect to any Automobile
Property and Automobile Loan. The Automobile Adviser will monitor such
Automobile Loans and Automobile Properties and will provide advice to the
Servicer, the Special Servicer and the Controlling Class with respect thereto,
such advice to be given in accordance with the Automobile Adviser Standard. The
Special Servicer is required to consult with the Automobile Adviser with
respect to the preparation of each Asset Status Report pertaining to any
Automobile Loan or Automobile Property. The Servicer and the Special Servicer
will be restricted from taking any material actions with respect to Automobile
Loans and the Automobile Properties without first providing notice to, and
consulting with, the Automobile Adviser. The Automobile Adviser in turn will
recommend to the Servicer or Special Servicer, as the case may be, an action
that should be taken (which recommendation the Servicer or the Special
Servicer, as applicable, may or may not adopt) with respect to such Automobile
Loan or Automobile Property, such advice to be given in accordance with the
Automobile Adviser Standard.
Limitation on Liability of Automobile Adviser. The Automobile Adviser will
have no responsibility or liability to the Trust or any Class of
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to the Pooling and Servicing Agreement, or
for errors in judgment; provided that the Automobile Adviser will not be
protected against any liability which would otherwise be imposed by reason of
willful misconduct, bad faith, fraud or gross negligence in the performance of
duties or by reason of reckless disregard of obligations or duties. By its
acceptance of a Certificate, each Certificateholder confirms its understanding
that the Automobile Adviser may advise actions that favor the interests of one
or more Classes of the Certificates over other Classes of the Certificates, and
that the Automobile Adviser may have special relationships and interests that
conflict with those of Holders of some Classes of the Certificates and, absent
willful misconduct, bad faith, fraud or negligence on the part of the
Automobile Adviser, agree to take no action against the Automobile Adviser or
any of its officers, directors, employees, principals or agents as a result of
such special relationship or conflict.
SERVICER AND SPECIAL SERVICER PERMITTED TO BUY CERTIFICATES
Banc One, the initial Servicer and the initial Special Servicer is
permitted to purchase any Class of Certificates. Such a purchase by the
Servicer or Special Servicer could cause a conflict relating to the Servicer's
or Special Servicer's duties pursuant to the Pooling and Servicing Agreement
and the Servicer's or Special Servicer's interest as a holder of Certificates,
especially to the extent that certain actions or events have a disproportionate
effect on one or more Classes of Certificates. The Pooling and Servicing
Agreement provides that the Servicer or Special Servicer shall administer the
Mortgage Loans in accordance with the servicing standard set forth therein
without regard to ownership of any Certificate by the Servicer or Special
Servicer or any affiliate thereof.
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REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports
Based on information provided in monthly reports prepared by the Servicer
and the Special Servicer and delivered to the Trustee, the Trustee will prepare
and forward on each Distribution Date to each Certificateholder, the Depositor,
the Servicer, the Special Servicer, each Underwriter, each Rating Agency , the
Automobile Adviser and, if requested, any potential investors in the
Certificates (i) a statement (a "Distribution Date Statement) ") in the form
attached hereto as Annex B and (ii) a report containing information regarding
the Mortgage Loans as of the end of the related Collection Period, which report
shall contain substantially the categories of information regarding the
Mortgage Loans set forth in this Prospectus Supplement in the tables under the
caption "Description of the Mortgage Pool -- Certain Terms and Conditions of
the Mortgage Loans."
Certain information made available in the Distribution Date Statements
referred to in item (1) above may be obtained by calling LaSalle National
Bank's ASAP system at (714) 282-5518 and requesting statement number 388.
Additionally, certain information regarding the Mortgage Loans will be made
accessible at the website maintained by LaSalle National Bank at www.lnbabs.com
or their electronic bulletin board service at (714) 282-3990 or such other
mechanism as the Trustee may have in place from time-to-time.
After all of the Certificates have been sold by the Underwriters, certain
information will be made accessible at the website maintained by the Servicer
at www.bomcm.com.
Servicer Reports
Commencing in May 1999, the Servicer is required to deliver to the Trustee
prior to each Distribution Date, and the Trustee is to deliver to each
Certificateholder, the Depositor, each Underwriter, each Rating Agency, the
Automobile Adviser, the Directing Certificateholder and, if requested, any
potential investor in the Certificates, on each Distribution Date, the
following six reports:
(a) A "Comparative Financial Status Report" setting forth, to the extent
such information is provided by the related borrowers, among other things,
the occupancy, revenue, underwritten cash flow and DSCR for the Mortgage
Loans as of the current Determination Date for each of the following three
periods; (i) the most current available year-to-date, (ii) the previous two
full fiscal years (if made available to the Servicer), and (iii) the "base
year" (representing the original underwriting information used as of the
Cut-Off Date).
(b) A "Delinquent Loan Status Report" setting forth, among other things,
those Mortgage Loans which, as of the close of business on the
Determination Date immediately preceding the respective Distribution Date,
were delinquent 30 days, 60 days, 90 days or more, current but specially
serviced, or in foreclosure but not REO Property.
(c) An "Historical Loan Modification Report" setting forth, among other
things, those Mortgage Loans which, as of the close of business on the
Determination Date immediately preceding the respective Distribution Date,
have been modified pursuant to the Pooling and Servicing Agreement (i)
during the related Collection Period and (ii) since the Cut-Off Date,
showing the original and the revised terms thereof.
(d) An "Historical Loss Estimate Report" setting forth, among other
things, as of the close of business on the Determination Date immediately
preceding the respective Distribution Date, (i) the aggregate amount of
liquidation proceeds and liquidation expenses, both for the current period
and historically, and (ii) the amount of Realized Losses occurring during
the related Collection Period, set forth on a Mortgage Loan-by-Mortgage
Loan basis.
(e) An "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust as of the close
of business on the Determination Date
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immediately preceding the respective Distribution Date, (i) the acquisition
date of such REO Property, (ii) the amount of income collected with respect
to any REO Property net of related expenses and other amounts, if any,
received on such REO Property during the related Collection Period and
(iii) the value of the REO Property based on the most recent appraisal or
other valuation thereof available to the Servicer as of such date of
determination (including any prepared internally by the Special Servicer).
(f) A "Watch List" as of the close of business on the Determination Date
immediately preceding the respective Distribution Date setting forth, among
other things, any Mortgage Loan that is in jeopardy of becoming a Specially
Serviced Mortgage Loan.
Commencing in May 1999, subject to the receipt of necessary information
from any subservicer, such loan-by-loan listing will be made available
electronically in the form of the standard CSSA Reports; provided, however, the
Trustee will provide Certificateholders with a written copy of such report upon
request. The information that pertains to Specially Serviced Mortgage Loans and
REO Properties reflected in such reports shall be based solely upon the reports
delivered by the Special Servicer to the Servicer no later than one business
day after the Determination Date. Absent manifest error, none of the Servicer,
the Special Servicer or the Trustee shall be responsible for the accuracy or
completeness of any information supplied to it by a borrower or third party
that is included in any reports, statements, materials or information prepared
or provided by the Servicer, the Special Servicer or the Trustee, as
applicable.
The Trustee, the Servicer, the Special Servicer and the Automobile Adviser
will be indemnified by the Trust against any loss, liability or expense
incurred in connection with any legal action relating to any statement or
omission based upon information supplied by a borrower or third party under a
Mortgage Loan and reasonably relied upon by such party.
The Servicer is also required to deliver to the Trustee the following
materials:
(a) Annually, on or before June 30 of each year, commencing with June 30,
2000, with respect to each Mortgaged Property and REO Property, an
"Operating Statement Analysis" together with copies of the operating
statements and rent rolls (but only to the extent the related borrower is
required by the Mortgage to deliver, or otherwise agrees to provide such
information) for such Mortgaged Property or REO Property as of the end of
the preceding calendar year. The Servicer (or the Special Servicer in the
case of Specially Serviced Mortgage Loans and REO Properties) is required
to use its best reasonable efforts to obtain said annual operating
statements and rent rolls.
(b) Within thirty days of receipt by the Servicer (or within ten days of
receipt by the Special Servicer with respect to any Specially Serviced
Mortgage Loan or REO Property) of annual operating statements, if any, with
respect to any Mortgaged Property or REO Property, an "Underwritten Cash
Flow Adjustment Worksheet" for such Mortgaged Property (with the annual
operating statements attached thereto as an exhibit), presenting the
computations made in accordance with the methodology described in the
Pooling and Servicing Agreement to "normalize" the full year net operating
income and debt service coverage numbers used by the Servicer in the other
reports referenced above.
The Trustee is to deliver a copy of each Operating Statement Analysis
Report and Underwritten Cash Flow Adjustment Worksheet that it receives from
the Servicer upon request to the Depositor, each Underwriter, the Automobile
Adviser, the Directing Certificateholder, each Rating Agency, the
Certificateholders and the Special Servicer promptly after its receipt thereof.
Any Certificateholder and any potential investor in the Certificates may obtain
a copy of any Underwritten Cash Flow Adjustment Worksheet for a Mortgaged
Property or REO Property in the possession of the Trustee upon request.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report
summarizing on an annual basis (if appropriate) certain items provided
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to Certificateholders in the monthly Distribution Date Statements and such
other information as may be reasonably required to enable such
Certificateholders to prepare their federal income tax returns. Such
information is to include the amount of original issue discount accrued on each
Class of Certificate held by persons other than holders exempted from the
reporting requirements and information regarding the expenses of the Trust.
Other Information
The Pooling and Servicing Agreement requires that the Trustee make
available at its offices, during normal business hours, for review by any
Holder of a Certificate, the Depositor, the Special Servicer, the Servicer, any
Rating Agency, any potential investor in the Certificates or any other Person
to whom the Trustee believes such disclosure is appropriate, originals or
copies of, among other things, the following items (except to the extent not
permitted by applicable law or under any of the Mortgage Loan documents): (i)
the Pooling and Servicing Agreement and any amendments thereto, (ii) all
Distribution Date Statements delivered to holders of the relevant Class of
Offered Certificates since the Closing Date, (iii) all annual officers'
certificates and accountants' reports delivered by the Servicer and Special
Servicer to the Trustee since the Closing Date regarding compliance with the
relevant agreements, (iv) the most recent property inspection report prepared
by or on behalf of the Servicer or the Special Servicer with respect to each
Mortgaged Property and delivered to the Trustee, (v) the most recent annual
operating statements, rent rolls (to the extent such rent rolls have been made
available by the related borrower) and retail "sales information", if any,
collected by or on behalf of the Servicer or the Special Servicer with respect
to each Mortgaged Property and delivered to the Trustee, (vi) any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Servicer and/or the Special Servicer and delivered to the Trustee,
and (vii) any and all officers' certificates and other evidence delivered to or
by the Trustee to support the Servicer's, the Trustee's or the Fiscal Agent's,
as the case may be, determination that any Advance, if made, would not be
recoverable. Copies of any and all of the foregoing items will be available
from the Trustee upon request; however, the Trustee will be permitted to
require payment of a sum sufficient to cover the reasonable costs and expenses
of providing such copies.
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CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans in California (approximately 18.45% of the Mortgage Loans by
Allocated Loan Amount). The summaries do not purport to be complete and are
qualified in their entirety by reference to the applicable federal and state
laws governing the Mortgage Loans.
California and various other states have imposed statutory prohibitions or
limitations that limit the remedies of a mortgagee under a mortgage or a
beneficiary under a deed of trust. Generally all of the Mortgage Loans are
nonrecourse loans as to which, in the event of default by a borrower, recourse
may be had only against the specific property pledged to secure the Mortgage
Loan and not against the borrower's other assets. Even if recourse is available
pursuant to the terms of the Mortgage Loan, certain states have adopted
statutes which impose prohibitions against or limitations on such recourse. The
limitations described below and similar or other restrictions in other
jurisdictions where Mortgaged Properties are located may restrict the ability
of the Servicer or the Special Servicer, as applicable, to realize on the
Mortgage Loans and may adversely affect the amount and timing of receipts on
the Mortgage Loans.
California statutes limit the right of the beneficiary to obtain a
deficiency judgment against the trustor (i.e., obligor) following a
non-judicial foreclosure sale under a deed of trust. A deficiency judgment is a
personal judgment against obligor in most cases equal to the difference between
the amount due to the beneficiary and the fair market value of collateral. No
deficiency judgment is permitted under California law following a nonjudicial
sale under the power of a provision in a deed of trust. Other California
statutes require the beneficiary to exhaust the security afforded under the
deed of trust by foreclosure in an attempt to satisfy the full debt before
bringing a personal action (if otherwise permitted) against the obligor for
recovery of the debt except in certain cases involving environmentally impaired
real property. California case law has held that acts such as an offset of an
unpledged account of the application of rents from secured property prior to
foreclosure, under some circumstances, constitute violations of such statutes.
Violations of such statutes may result in the loss of some or all of the
security under the loan. Finally, other statutory provisions in California
limit any deficiency judgment (if otherwise permitted) against the former
trustor following a judicial sale to the excess of the outstanding debt over
the greater of (i) the fair market value of the property at the time of the
public sale or (ii) the amount of the winning bid in foreclosure, and give the
borrower a one-year period within which to redeem the property. California
statutes also provide priority to certain tax liens over the lien of previously
recorded deeds of trust.
In some states, foreclosure may result in automatic termination of
subordinate leases in the absence of either (i) an agreement to the contrary
between the foreclosing lender and the tenant or (ii) circumstances in which it
would be equitable to permit such termination. In addition, in all states, real
property taxes have priority over the lien of previously recorded mortgages or
deeds of trust and in some states and under certain circumstances, mechanics'
liens and materialmen's liens may also take priority over the lien of
previously recorded mortgages or deeds of trust.
Foreclosure under either a mortgage or a deed of trust or the sale by the
referee or other designated official or by trustee is often a public sale.
However, because of the difficulty a potential buyer at the sale might have in
determining the exact status of title to the property subject to the lien of
the mortgage or deed of trust and the redemption rights that may exist, and
because the physical condition and financial performance of the property may
have deteriorated during foreclosure proceedings and/or for a variety of other
reasons, a third party may be unwilling to purchase the property at foreclosure
sale. Some states require that the lender disclose to potential bidders at a
trustee's sale all known facts materially affecting the value of the property.
Such disclosure may have an adverse effect on the trustee's or mortgagee's
ability to sell the property or upon the sale price.
USE OF PROCEEDS
The net proceeds from the sale of Offered Certificates will be used by the
Depositor to pay part of the purchase price of the Mortgage Loans.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary and the discussion in the Prospectus under the
heading "Certain Federal Income Tax Consequences -- Federal Income Tax
Consequences for REMIC Certificates" are a general discussion of the
anticipated material federal income tax consequences of the purchase, ownership
and disposition of the Offered Certificates and constitute the opinion of
Latham & Watkins as to the accuracy of matters discussed herein and therein.
The summary below and such discussion in the Prospectus do not purport to
address all federal income tax consequences that may be applicable to
particular categories of investors, some of which may be subject to special
rules. In addition, such summary and such discussion do not address state,
local or foreign tax issues with respect to the acquisition, ownership or
disposition of the Offered Certificates. The authorities on which such summary
and such discussion are based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. Such summary and such discussion are based on the applicable
provisions of the Code, as well as regulations (the "REMIC Regulations")
promulgated by the U.S. Department of the Treasury as of the date hereof.
Investors should consult their own tax advisors in determining the federal,
state, local, foreign or any other tax consequences to them of the purchase,
ownership and disposition of Certificates.
Elections will be made to treat the Trust, exclusive of the Reserve
Accounts, the Lock Box Accounts, the Excess Interest and the Default Interest
in respect of the Mortgage Loans (such nonexcluded portion of the Trust, the
"Trust REMICs"), as three separate REMICs (the "Upper-Tier REMIC," the
"Middle-Tier REMIC" and the "Lower-Tier REMIC," respectively) within the
meaning of Code Section 860D. The Reserve Accounts and the Lock Box Accounts
will be beneficially owned by the respective borrowers for federal income tax
purposes and will not be part of the Trust assets. The Lower-Tier REMIC will
hold the Mortgage Loans (exclusive of the Excess Interest and the Default
Interest), proceeds therefrom, the Collection Account (exclusive of any sub-
account thereof established for the collection of Excess Interest or Default
Interest under the provisions of the Pooling and Servicing Agreement), the
Distribution Account and any REO Property, and will issue (i) 221
uncertificated classes of regular interests (the "Lower-Tier Regular
Interests") to the Upper-Tier REMIC (one corresponding to each Mortgage Loan)
and (ii) the Class LR Certificates, which will represent the sole class of
residual interests in the Lower-Tier REMIC. The Middle-Tier REMIC will hold the
Lower-Tier Regular Interests and the Middle-Tier Distribution Account in which
distributions on the Lower-Tier Regular Interests will be deposited, and will
issue the uncertificated Class A-1M, Class A-2M, Class B-M, Class C-M, Class
D-M, Class E-M, Class F-M, Class G-M, Class H-M, Class J-M, Class K-M and Class
L-M regular interests (the "Middle-Tier Regular Interests"), as classes of
regular interests in the Middle-Tier REMIC, and the Class MR Certificates as
the sole class of "residual interests" in the Middle-Tier REMIC. The Upper-Tier
REMIC will hold the Middle-Tier Regular Interests and the Upper-Tier
Distribution Account in which distributions on the Middle-Tier Regular
Interests will be deposited, and will issue the Class X, Class A-1, Class A-2,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K
and Class L Certificates (the "Regular Certificates") as classes of regular
interests and the Class R Certificates as the sole class of residual interests
in the Upper-Tier REMIC. The Class X Certificates will represent an investment
in 12 separate classes of "regular interests" in the Upper-Tier REMIC. Each
such component Class comprising the Class X Certificates (each, a "Class X
Component") represents a right to a specified portion of interest payable on a
corresponding Middle-Tier Regular Interest held as an asset of the Upper-Tier
REMIC. Qualification as a REMIC requires ongoing compliance with certain
conditions. Assuming (i) the making of appropriate elections, (ii) compliance
with the Pooling and Servicing Agreement and (iii) compliance with any changes
in the law, including any amendments to the Code or applicable temporary or
final regulations of the United States Department of the Treasury ("Treasury
Regulations") thereunder, in the opinion of Latham & Watkins, the Trust
(exclusive of Excess Interest and Default Interest and any sub-account of the
Collection Account established for
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the collection thereof) will qualify as three separate REMICs. References in
this discussion to the "REMIC" will, unless the context dictates otherwise,
refer to each of the Upper-Tier REMIC, the Middle-Tier REMIC and the Lower-Tier
REMIC. The Class Q-1 and Class Q-2 Certificates will represent pro rata
undivided beneficial interests in the portion of the Trust consisting of Excess
Interest and Default Interest (subject to the obligation to pay interest on
Advances) in respect of the Mortgage Loans, respectively, and any sub-account
of the Collection Account established for the collection thereof and such
portions of the Trust, for which no REMIC election will be made, will be
treated as a grantor trust for federal income tax purposes.
The Offered Certificates will be treated as "loans . . . secured by an
interest in real property which is . . . residential real property" or "loans
secured by an interest in . . . health . . . institutions or facilities,
including structures designed or used primarily for residential purposes for .
. . persons under care," within the meaning of Section 7701(a)(19)(C) of the
Code, for domestic building and loan associations (but only to the extent of
the allocable portion of the Mortgage Loans secured by Multifamily Properties
and Mobile Home Properties, or healthcare properties, respectively). As of the
Cut-Off Date, Mortgage Loans secured by Multifamily Properties, Mobile Home
Properties and healthcare properties represent approximately 24.48%, 0.35% and
6.56%, respectively, of the Mortgage Loans by Initial Pool Balance.
The Offered Certificates will be treated as "real estate assets," within
the meaning of Section 856(c)(4)(A) of the Code, for real estate investment
trusts and interest thereon will be treated as "interest on mortgages on real
property," within the meaning of Section 856(c)(3)(B) of the Code, to the
extent described in the Prospectus under the heading "Certain Federal Income
Tax Consequences -- Federal Income Tax Consequences for REMIC Certificates --
Status of Certificates." Mortgage Loans which have been defeased with U.S.
Treasury obligations will not qualify for the foregoing treatments.
The Offered Certificates (other than the Class X Certificates) and each
Class X Component will be treated as "regular interests" in the Upper-Tier
REMIC and therefore generally will be treated as newly originated debt
instruments for federal income tax purposes. Beneficial owners of the Offered
Certificates will be required to report income on such regular interests in
accordance with the accrual method of accounting. It is anticipated that the
Class , Class , Class , Class and Class Certificates will be
issued at a premium and that the Class Certificates will be issued with de
minimis original issue discount for federal income tax purposes. See "Certain
Federal Income Tax Consequences -- Federal Income Tax Consequences for REMIC
Certificates" "-- Taxation of Regular Certificates -- Premium" in the
Prospectus.
The IRS has issued Treasury Regulations under Sections 1271 to 1275 of the
Code generally addressing the treatment of debt instruments issued with
original issue discount (the "OID Regulations"). Purchasers of the Offered
Certificates should be aware that the OID Regulations and Section 1272(a)(6) of
the Code do not adequately address certain issues relevant to, or are not
applicable to, prepayable securities such as the Offered Certificates. In
addition, there is considerable uncertainty concerning the application of
Section 1272(a)(6) of the Code and the OID Regulations to REMIC regular
interests such as those represented by the Class X Certificates. The IRS could
assert that income derived from a Class X Certificate (or each Class X
Component) should be calculated as if the Class X Certificate (or Class X
Component) were a Certificate purchased at a premium equal to the price paid by
the holder for the Class X Certificate (or portion thereof allocated to each
such Class X Component). Under this approach, a holder would be entitled to
amortize such premium only if it has in effect an election under Section 171 of
the Code with respect to all taxable debt instruments held by such holder, as
described in the Prospectus under "Federal Income Tax Considerations--Taxation
of Certificates Other Than Class Q and Class R--Premium." Alternatively, the
IRS could assert that the Class X Certificates should be taxable under
regulations governing debt instruments having one or more contingent payments.
Prospective purchasers of the Offered Certificates are advised to consult their
tax advisors concerning the tax treatment of the Certificates.
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Assuming the Class X Certificates are treated as having been issued with
original issue discount, it appears that a reasonable method of reporting
original issue discount with respect to the Class X Certificates generally
would be to report all income with respect to such Certificates as original
issue discount for each period, computing such original issue discount (i) by
assuming that the value of the applicable index will remain constant for
purposes of determining the original yield to maturity of, and projecting
future distributions on, such Certificates, thereby treating such Certificates
as fixed rate instruments to which the original issue discount computation
rules described in the Prospectus can be applied, and (ii) by accounting for
any positive or negative variation in the actual value of the applicable index
in any period from its assumed value as a current adjustment to original issue
discount with respect to such period. See "Federal Income Tax
Considerations--Taxation of Certificates Other Than Class Q and Class
R--Original Issue Discount" in the Prospectus.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a holder
of a Class X Certificate, the amount of original issue discount allocable to
such period would be zero and such Certificateholder will be permitted to
offset such negative amount only against future original issue discount (if
any) attributable to such Certificate. Although the matter is not free from
doubt, a holder of a Class X Certificate may be permitted to deduct a loss to
the extent that his or her respective remaining basis in such Certificate
exceeds the maximum amount of future payments to which such Certificateholder
is entitled, assuming no further prepayments of the Mortgage Loans. Any such
loss might be treated as a capital loss.
The OID Regulations in some circumstances permit the holder of a debt
instrument to recognize original issue discount under a method that differs
from that of the issuer. Accordingly, it is possible that holders of
Certificates may be able to select a method for recognizing original issue
discount that differs from that used by the Trustee in preparing reports to
Certificateholders and the IRS. Prospective purchasers of Certificates are
advised to consult their tax advisors concerning the treatment of any original
issue discount with respect to purchased Certificates.
For purposes of accruing original issue discount, determining whether such
original issue discount is de minimis and amortizing any premium, the
Prepayment Assumption will be 0% CPR, with all ARD Loans prepaying on their
related Anticipated Repayment Dates. See "Prepayment and Yield Considerations
- -- Yield on the Class X Certificates" herein. No representation is made as to
the rate, if any, at which the Mortgage Loans will prepay.
Prepayment Premiums actually collected on the Mortgage Loans will be
distributed to the holders of each Class of Certificates entitled thereto as
described herein. It is not entirely clear under the Code when the amount of a
Prepayment Premium should be taxed to the holder of a Class of Certificates
entitled to a Prepayment Premium. For federal income tax reporting purposes,
Prepayment Premiums will be treated as income to the holders of a Class of
Certificates entitled to Prepayment Premiums only after the Servicer's actual
receipt of a Prepayment Premium as to which such Class of Certificates is
entitled under the terms of the Pooling and Servicing Agreement. It appears
that Prepayment Premiums are to be treated as ordinary income rather than
capital gain. However, the correct characterization of such income is not
entirely clear and Certificateholders should consult their tax advisors
concerning the treatment of Prepayment Premiums.
Certain Classes of Certificates may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of any such
Class of Certificates will be treated as holding a Certificate with amortizable
bond premium will depend on such Certificateholder's purchase price and the
distributions remaining to be made on such Certificate at the time of its
acquisition by such Certificateholder. Holders of each such Class of
Certificates should consult their tax advisors regarding the possibility of
making an election to amortize such premium. See "Federal Income Tax
Considerations--Taxation of Certificates Other Than Class Q and Class R--
Premium" in the Prospectus.
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<PAGE>
The current administration's budget proposal for the fiscal year 2000,
released February 1, 1999, proposes legislation that would amend the market
discount provisions of the Code to require holders of debt instruments, such as
Regular Certificates, that use an accrual method of accounting to include
market discount in income as it accrues. For purposes of determining and
accruing market discount, the proposed legislation would provide that a
Certificateholder's yield can not exceed 5 percentage points over the greater
of (1) the original yield to maturity of the Certificate, or (2) the applicable
Federal rate in effect at the time the Certificateholder acquired the
Certificate. It is unclear how this proposal would apply to instruments, such
as the Regular Certificates, which have uncertain yields to maturity
attributable to possible prepayments on an underlying pool of prepayable
securities. This proposal is intended to be effective for debt instruments
acquired on or after the date the proposed legislation is enacted.
For a discussion of the tax consequences of the acquisition ownership and
disposition of Offered Certificates by any person who is not a citizen or
resident of the United States, a corporation or partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof or is a foreign estate or trust, see "Certain Federal
Income Tax Consequences -- Federal Income Tax Consequences for REMIC
Certificates" and "-- Taxation of Certain Foreign Investors -- Regular
Certificates" in the Prospectus. For a discussion of certain state and local
tax consequences of the acquisition, ownership and disposition of Offered
Certificates, see "State and Other Tax Consequences" in the Prospectus.
ERISA CONSIDERATIONS
The purchase by or transfer to an employee benefit plan or other
retirement arrangement, including an individual retirement account or a Keogh
plan, which is subject to Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or a
governmental plan (as defined in Section 3(32) of ERISA) that is subject to any
federal, state or local law ("Similar Law") which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (each, a "Plan"), or a
collective investment fund in which such Plans are invested, an insurance
company using the assets of separate accounts or general accounts which include
assets of Plans (or which are deemed pursuant to ERISA or any Similar Law to
include assets of Plans) or other Persons acting on behalf of any such Plan or
using the assets of any such Plan to acquire the Subordinated Offered
Certificates is restricted. See "Description of the Offered Certificates --
Transfer Restrictions" herein. Accordingly, except as specifically referenced
herein, the following discussion does not purport to discuss the considerations
under ERISA, Section 4975 of the Code or Similar Law with respect to the
purchase, holding or disposition of the Subordinated Offered Certificates and
for purposes of the following discussion all references to the Offered
Certificates are deemed to exclude the Subordinated Offered Certificates.
As described in the Prospectus under "Certain ERISA Considerations," ERISA
and the Code impose certain duties and restrictions on Plans and certain
persons who perform services for Plans. For example, unless exempted,
investment by a Plan in the Offered Certificates may constitute or give rise to
a prohibited transaction under ERISA or the Code. There are certain exemptions
issued by the United States Department of Labor (the "Department") that may be
applicable to an investment by a Plan in the Offered Certificates. The
Department has granted to each of the Co-Lead Managers an administrative
exemption (Deutsche Bank Securities Inc. as Department Final Authorization
Number 97-03E, as amended by Prohibited Transaction Exemption ("PTE") 97-34
(the "DBS Exemption"), Lehman Brothers Inc. as PTE 91-14 (the "LBI Exemption")
and J.P. Morgan Securities Inc. as PTE 90-23, (the "JPM Exemption" and,
collectively with the DBS Exemption and the LBI Exemption, the "Exemption") for
certain mortgage-backed and asset backed certificates underwritten in whole or
in part by the Co-Lead Managers. The Exemption might be applicable to the
initial purchase, the holding, and the subsequent resale by a Plan of certain
certificates, such as the Offered Certificates, underwritten by the Co-Lead
Managers, representing interests in pass-through trusts that consist of certain
receivables, loans and other obligations, provided that the conditions and
requirements of the Exemption are satisfied. The loans described in the
Exemption include mortgage loans such as the Mortgage
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<PAGE>
Loans. However, it should be noted that in issuing the Exemption, the
Department may not have considered interests in pools of the exact nature as
some of the Offered Certificates.
Among the conditions that must be satisfied for the Exemption to apply to
the acquisition, holding and resale of the Offered Certificates are the
following:
(1) The acquisition of Offered Certificates by a Plan is on terms
(including the price for the 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 Offered Certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by the
other Certificates of the Trust;
(3) The Offered Certificates acquired by the Plan have received a rating
at the time of such acquisition that is one of the three highest generic rating
categories from any of Standard & Poor's Rating Services ("S&P"), Moody's,
Fitch or Duff & Phelps Credit Rating Co. ("DCR");
(4) The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below);
(5) The sum of all payments made to and retained by the Co-Lead Managers
in connection with the distribution of Offered Certificates represents not more
than reasonable compensation for underwriting the Certificates. The sum of all
payments made to and retained by the Depositor pursuant to the assignment of
the Mortgage Loans to the Trust represents not more than the fair market value
of such Mortgage Loans. The sum of all payments made to and retained by the
Servicer and any other servicer represents not more than reasonable
compensation for such person's services under the Pooling and Servicing
Agreement and reimbursement of such person's reasonable expenses in connection
therewith; and
(6) The Plan investing in the certificates 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.
The Trust must also meet the following requirements:
(a) the corpus of the Trust must consist solely of assets of the type that
have been included in other investment pools;
(b) certificates in such other investment pools must have been rated in
one of the three highest rating categories of S&P, Moody's, Fitch or DCR for at
least one year prior to the Plan's acquisition of the Offered Certificates
pursuant to the Exemption; and
(c) certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year prior
to any Plan's acquisition of the Offered Certificates pursuant to the
Exemption.
If all of the conditions of the Exemption are met, whether or not a Plan's
assets would be deemed to include an ownership interest in the Mortgage Loans
in the Mortgage Pool, the acquisition, holding and resale of the Offered
Certificates by Plans would be exempt from the prohibited transaction
provisions of ERISA and the Code.
Moreover, the Exemption can provide relief from certain
self-dealing/conflict of interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables, loans or
obligations held in the trust, provided that, among other requirements, (a) in
the case of an acquisition in connection with the initial issuance of
certificates, at least fifty percent of each class of certificates in which
Plans have invested is acquired by persons independent of the Restricted Group
(as defined below) and at least fifty percent of the aggregate interest in the
trust is acquired by persons independent of the Restricted Group (as defined
below); (b) such fiduciary (or its affiliate) is an obligor with respect to
five percent or less of the fair market value of the obligations
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contained in the trust; (c) the Plan's investment in certificates of any class
does not exceed twenty-five percent of all of the certificates of that class
outstanding at the time of the acquisitions; and (d) immediately after the
acquisition no more than twenty-five percent of the assets of the Plan with
respect to which such person is a fiduciary are invested in certificates
representing an interest in one or more trusts containing assets sold or
serviced by the same entity.
The Exemption does not apply to the purchasing or holding of Offered
Certificates by Plans sponsored by the Depositor, the Underwriters, the
Trustee, the Servicer, any obligor with respect to Mortgage Loans included in
the Trust constituting more than five percent of the aggregate unamortized
principal balance of the assets in the Trust, or any affiliate of such parties
(the "Restricted Group").
The Co-Lead Managers believe that the conditions to the applicability of
their respective Exemption will generally be met with respect to the Offered
Certificates, other than possibly those conditions which are dependent on facts
unknown to the Co-Lead Managers or which it cannot control, such as those
relating to the circumstances of the Plan purchaser or the Plan fiduciary
making the decision to purchase any such Certificates. However, before
purchasing an Offered Certificate, a fiduciary of a Plan should make its own
determination as to the availability of the exemptive relief provided by the
Exemption or the availability of any other prohibited transaction exemptions,
and whether the conditions of any such exemption will be applicable to the
Offered Certificates. As noted above, the Department, in granting the Exemption
may not have considered interests in pools of the exact nature as some of the
Offered Certificates. A fiduciary of a Plan that is a governmental plan should
make its own determination as to the need for and the availability of any
exemptive relief under any Similar Law. See "Description of the Offered
Certificates -- Transfer Restrictions" herein.
Any fiduciary of a Plan considering whether to purchase an Offered
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 "Certain ERISA Considerations" in
the Prospectus.
BECAUSE THE SUBORDINATED OFFERED CERTIFICATES ARE SUBORDINATE TO ONE OR
MORE CLASSES OF CERTIFICATES, THE PURCHASE AND HOLDING OF THE SUBORDINATED
OFFERED CERTIFICATES BY OR ON BEHALF OF A PLAN MAY RESULT IN "PROHIBITED
TRANSACTIONS" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW. ACCORDINGLY, EACH PROSPECTIVE TRANSFEREE OF A SUBORDINATED OFFERED
CERTIFICATE THAT IS A DEFINITIVE CERTIFICATE WILL BE REQUIRED TO (A) DELIVER TO
THE DEPOSITOR, THE CERTIFICATE REGISTRAR AND THE TRUSTEE A REPRESENTATION
LETTER SUBSTANTIALLY IN THE FORM SET FORTH AS AN EXHIBIT TO THE POOLING AND
SERVICING AGREEMENT STATING THAT SUCH TRANSFEREE IS NOT A PLAN OR A PERSON
ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, OTHER THAN AN INSURANCE
COMPANY INVESTING THE ASSETS OF ITS GENERAL ACCOUNT UNDER CIRCUMSTANCES WHEREBY
THE PURCHASE AND SUBSEQUENT HOLDING OF THE OFFERED CERTIFICATE WOULD BE EXEMPT
FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND THE CODE UNDER
SECTIONS I AND ILL OF PTE 95-60, OR (B) PROVIDE (I) AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR THAT THE PURCHASE
OF THE SUBORDINATED OFFERED CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE
TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED
TRANSACTION RESTRICTIONS OF ERISA, THE CODE OR ANY SIMILAR LAW AND WILL NOT
SUBJECT THE DEPOSITOR, THE SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, OR THE
FISCAL AGENT TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING
AND SERVICING AGREEMENT AND (II) SUCH OTHER OPINIONS OF COUNSEL, OFFICERS'
CERTIFICATES AND AGREEMENTS AS THE CERTIFICATE REGISTRAR MAY REQUIRE IN
CONNECTION WITH SUCH TRANSFER. THE PURCHASER OR TRANSFEREE OF ANY INTEREST IN A
SUBORDINATED OFFERED CERTIFICATE THAT IS NOT A DEFINITIVE CERTIFICATE SHALL BE
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DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN CLAUSE (A) ABOVE. THE
SUBORDINATED OFFERED CERTIFICATES WILL CONTAIN A LEGEND DESCRIBING SUCH
RESTRICTIONS ON TRANSFER AND THE POOLING AND SERVICING AGREEMENT WILL PROVIDE
THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE TRANSFER
RESTRICTIONS WILL BE NULL AND VOID AB INITIO.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Depositor or the Underwriters that this investment meets
all relevant legal requirements with respect to investments by Plans generally
or any particular Plan, or that this investment is appropriate for Plans
generally or any particular Plan.
LEGAL INVESTMENT
The Certificates will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended.
No representation is made as to the proper characterization of the Offered
Certificates for legal investment purposes, financial institution regulatory
purposes, or other purposes, or as to the ability of particular investors to
purchase the Offered Certificates under applicable legal investment or other
restrictions. These uncertainties may adversely affect the liquidity of the
Offered Certificates. Accordingly, all institutions whose investment activities
are subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Offered
Certificates constitute a legal investment or are subject to investment,
capital or other restrictions.
See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting
Agreement, dated February , 1999 (the "Underwriting Agreement"), Deutsche
Bank Securities Inc. ("DBS"), Lehman Brothers Inc. ("LBI") and J.P. Morgan
Securities Inc. ("JPM") have agreed to purchase and the Depositor has agreed to
sell to the Underwriters the Offered Certificates. It is expected that delivery
of the Offered Certificates will be made only in book-entry form through the
Same Day Funds Settlement System of DTC on or about March , 1999, against
payment therefor in immediately available funds. DBS, LBI and JPM will act as
co-lead managers of the offering of the Offered Certificates, except that DBS
is acting as sole underwriter of the Class X Certificates. DBS is also acting
as the sole bookrunner of the offering.
In the Underwriting Agreement, DBS has agreed, subject to the terms and
conditions set forth therein, to purchase all of the Offered Certificates if
any are purchased. LBI and JPM have not agreed to sell any specific amount of
the Offered Certificates but have agreed in the Underwriting Agreement to use
their best efforts to sell the Offered Certificates. Each of LBI and JPM is
entitled pursuant to the Underwriting Agreement to receive a fee equal to
0.125% of the aggregate principal balance of the Offered Certificates as of the
Cut-off Date, whether or not it sells any Offered Certificates.
The Underwriting Agreement provides that the obligation of each
Underwriter to pay for and accept delivery of its Certificates is subject to,
among other things, the receipt of certain legal opinions and to the
conditions, among others, that no stop order suspending the effectiveness of
the Depositor's Registration Statement shall be in effect, and that no
proceedings for such purpose shall be pending before or threatened by the
Securities and Exchange Commission.
The distribution of the Offered Certificates by the Underwriters may be
effected from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds to
the Depositor from the sale of the Offered Certificates, before
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deducting expenses payable by the Depositor, will be approximately % of the
aggregate Certificate Balance of the Offered Certificates, plus accrued
interest. Each Underwriter may effect such transactions by selling its
Certificates to or through dealers, and such dealers may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Underwriter for whom they act as agent. In connection with the sale of the
Offered Certificates, each Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting compensation. Each
Underwriter and any dealers that participate with such Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act of
1933, as amended.
DBS is an affiliate of GACC, a Mortgage Loan Seller.
The Underwriting Agreement provides that the Depositor and GACC will
indemnify the Underwriters, and that under limited circumstances the
Underwriters will indemnify the Depositor, against certain civil liabilities
under the Securities Act of 1933, as amended, or contribute to payments to be
made in respect thereof.
There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will continue. The
primary source of ongoing information available to investors concerning the
Offered Certificates will be the Trustee Reports discussed herein under
"Description of the Certificates -- Reports to Certificateholders; Certain
Available Information." Except as described herein under "Description of the
Certificates -- Reports to Certificateholders; Certain Available Information",
there can be no assurance that any additional information regarding the Offered
Certificates will be available through any other source. In addition, the
Depositor is not aware of any source through which price information about the
Offered Certificates will be generally available on an ongoing basis. The
limited nature of such information regarding the Offered Certificates may
adversely affect the liquidity of the Offered Certificates, even if a secondary
market for the Offered Certificates becomes available.
LEGAL MATTERS
The validity of the Offered Certificates and the material federal income
tax consequences of investing in the Offered Certificates will be passed upon
for the Depositor by Latham & Watkins, New York, New York. Certain legal
matters with respect to the Offered Certificates will be passed upon for the
Underwriters by Cadwalader, Wickersham & Taft.
RATING
It is a condition to the issuance of the Offered Certificates that (i) the
Class A-1, Class A-2 and Class X Certificates be rated "AAA" by Fitch ("Fitch")
and "Aaa" by Moody's ("Moody's", and together with Fitch, the "Rating
Agencies"), (ii) the Class B Certificates be rated "AA" by Fitch and "Aa2" by
Moody's, (iii) the Class C Certificates be rated "AA" by Fitch and "Aa3" by
Moody's, (iv) the Class D Certificates be rated "A" by Fitch and "A2" by
Moody's, (v) the Class E Certificates be rated "BBB" by Fitch and "Baa2" by
Moody's, and (vi) the Class F Certificates be rated "BBB--" by Fitch and
"`Baa3" by Moody's. The Rated Final Distribution Date of each Class of Offered
Certificates is May 2032.
The Rating Agencies' ratings on mortgage pass-through certificates address
the likelihood of the timely payment of interest and the ultimate repayment of
principal by the Rated Final Distribution Date. The Rating Agencies' ratings
take into consideration the credit quality of the Mortgage Pool, structural and
legal aspects associated with the Certificates, and the extent to which the
payment stream in the Mortgage Pool is adequate to make payments required under
the Certificates. Ratings on mortgage pass-through certificates do not,
however, represent an assessment of the likelihood, timing or frequency of
principal prepayments (both voluntary and involuntary) by mortgagors, or the
degree to which such prepayments might differ from those originally
anticipated. The security ratings do not address the possibility that
Certificateholders
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might suffer a lower than anticipated yield. In addition, ratings on mortgage
pass-through certificates do not address the likelihood of receipt of
Prepayment Premiums, Net Default Interest or Excess Interest or the timing or
frequency of the receipt thereof. In general, the ratings thus address credit
risk and not prepayment risk. Also, a security rating does not represent any
assessment of the yield to maturity that investors may experience or the
possibility that the holders of the Class X Certificates might not fully
recover their initial investment in the event of delinquencies or rapid
prepayments of the Mortgage Loans (including both voluntary and involuntary
prepayments). As described herein, the amounts payable with respect to the
Class X Certificates consist only of interest. If the entire pool were to
prepay in the initial month, with the result that the Class X
Certificateholders receive only a single month's interest and thus suffer a
nearly complete loss of their investment, all amounts "due" to such holders
will nevertheless have been paid, and such result is consistent with the rating
received on the Class X Certificates. Accordingly, the ratings of the Class X
Certificates should be evaluated independently from similar ratings on other
types of securities. The ratings do not address the fact that the Pass-Through
Rates of the Offered Certificates to the extent that they are based on the
Weighted Average Net Mortgage Pass-Through Rate may be affected by changes
thereon.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating and, if so, what
such rating would be. A rating assigned to the Offered Certificates by a rating
agency that has not been requested by the Depositor to do so may be lower than
the rating assigned by the Rating Agencies pursuant to the Depositor's request.
The rating of the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency.
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<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
<S> <C>
ACMs ..................................... S-33
ADA ...................................... S-40
Advance Rate ............................. S-90
Advances ................................. S-90
Amortization Type ........................ A-3
Amortizing Balloon ....................... A-4
Annual Debt Service ...................... A-2
Anticipated Repayment Date ............... S-49
Appraised Value .......................... A-2
ARD Loans ................................ S-49
ARD LTV .................................. A-3
Asset Status Report ...................... S-108
Automobile Adviser ....................... S-109
Automobile Adviser Standard .............. S-109
Automobile Loan .......................... S-31
Balloon or ARD Balance ................... A-3
Balloon Payments ......................... S-34
Banc One ................................. S-105
Bayview Management Agreement ............. D-7
Bayview Manager .......................... D-7
Bayview Owner ............................ D-7
BOMCM .................................... S-46
Borrower ................................. D-8
CBE ...................................... S-80
CEDEL .................................... S-22
CEDEL Participants ....................... S-70
Certificate Balance ...................... S-55
Certificate Owners ....................... S-70
Certificate Registrar .................... S-68
Class .................................... S-55
Class X Component ........................ S-20
CLTV ..................................... A-3
Code ..................................... S-71
Collateral Substitution Deposit .......... S-51
Collection Account ....................... S-91
Columbia Office .......................... D-10
Corrected Mortgage Loan .................. S-108
CPR ...................................... S-74
Current LTV .............................. A-3
Cut-off Date ............................. S-45
Cut-off Date Loan-to-Value Ratio ......... A-3
Cut-off Date LTV ......................... A-3
DBS ...................................... S-121
DBS Exemption ............................ S-21, S-118
DCR ...................................... S-119
Debt Service Coverage Ratio .............. A-2
Def ...................................... A-3
Defeasance Option ........................ S-51
Definitions .............................. S-5
Definitive Certificate ................... S-68
Department ............................... S-118
Depositaries ............................. S-69
Depositor ................................ S-45
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Distribution Account .................................... S-91
Distribution Date ....................................... S-56
Distribution Date Statement) ............................ S-111
Doral Corporate Property ................................ D-6
Doral Management Agreement .............................. D-6
Doral Manager ........................................... D-6
Doral Owner ............................................. D-6
DSCR .................................................... S-5, A-2, D-9
DTC ..................................................... S-22
Eligible Bank ........................................... S-92
ERISA ................................................... S-71, S-118
Euroclear ............................................... S-22
Euroclear Participants .................................. S-70
Event of Default ........................................ S-97
Excess Interest ......................................... S-49
Excess Prepayment Interest Shortfall .................... S-66
Exemption ............................................... S-21, S-118
FBEC-Bayview ............................................ D-5
FBEC-Doral .............................................. D-5
FBEC-Metro .............................................. D-5
FBEC-System One ......................................... D-5
FBEC-Urban .............................................. D-5
GAAP .................................................... A-1
GACC .................................................... S-46
GGP ..................................................... D-1
(greater than) YM or 1%
HAP Contract ............................................ S-53
Healthcare Loans ........................................ S-29
Holders ................................................. S-71
HUD ..................................................... S-53
Hyperamortizing ......................................... A-4
Indirect Participants ................................... S-69
Initial Pool Balance .................................... S-45
I/O ..................................................... A-3
I/O, then Amortizing .................................... A-4
I/O, then Hyperamortizing ............................... A-3
Jefferson at Sunset Valley Management Agreement ......... D-4
Jefferson Coral Springs ................................. D-3
Jefferson Sunset Valley ................................. D-3
Jefferson Village ....................................... D-3
Jefferson Village Management Agreement .................. D-4
JPI Borrower ............................................ D-3
JPI Credit Agreement .................................... D-3
JPI Investment Company .................................. D-3
JPI Loans ............................................... D-3
JPI Mortgage ............................................ D-3
JPI Mortgagor ........................................... D-3
JPI Note ................................................ D-3
JPI Portfolio I ......................................... D-3
JPM ..................................................... S-121
JPM Exemption ........................................... S-21, S-118
LaSalle Credit Agreement ................................ D-5
LaSalle Loan ............................................ D-5
LaSalle Notes ........................................... D-5
</TABLE>
S-125
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
LBI ....................................... S-121
LBI Exemption ............................. S-21, S-118
Liquidation Proceeds ...................... S-109
Loan ...................................... D-10
Loan-to-Value Ratio ....................... A-3
Lock ...................................... A-3
Lock Box Account .......................... S-49
MAI ....................................... S-48
Manager ................................... D-4
Master Servicing Fee Rate ................. S-106
Metro Business Property ................... D-6
Metro Management Agreement ................ D-7
Metro Manager ............................. D-7
Mezzanine Lender .......................... D-3
Modeling Assumptions ...................... S-75
Monthly Debt Service Payment .............. S-49
Mortgage .................................. S-45
Mortgage Loan Purchase Agreement .......... S-47
Mortgage Loan Sellers ..................... S-46
Mortgage Loans ............................ S-45
Mortgage Pool ............................. S-45
Mortgage Rate ............................. A-3
Mortgaged Properties ...................... S-45
Mortgaged Property ........................ S-45
Neshaminy Borrower ........................ D-1
Neshaminy Loan ............................ D-1
Neshaminy Mall ............................ D-1
Neshaminy Management Agreement ............ D-2
Neshaminy Manager ......................... D-2
Neshaminy Mortgage ........................ D-1
Neshaminy Note ............................ D-1
Net Prepayment Interest Excess ............ S-66
Net Prepayment Interest Shortfall ......... S-65
Note ...................................... S-45
Notional Balance .......................... S-55
Occupancy ................................. A-3
Occupancy as of Date ...................... A-3
Offered Certificates ...................... S-9, S-55
One Urban Management Agreement ............ D-6
One Urban Manager ......................... D-6
One Urban Owner ........................... D-6
One Urban Property ........................ D-6
Partial Release ........................... S-51
Participants .............................. S-68
Permitted Investments ..................... S-92
P&I Advance ............................... S-18, S-89
Plan ...................................... S-71, S-118
Pool Loans ................................ S-52
Pooling and Servicing Agreement ........... S-86
Prepayment Premium ........................ S-50
Prepayment Provisions ..................... A-3
Private Certificates ...................... S-9, S-55
Property Advances ......................... S-90
PTE ....................................... S-21, S-118
Purchase Price ............................ S-99
</TABLE>
S-126
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Rating Agencies ........................... S-122
Record Date ............................... S-56
Regular Certificates ...................... S-115
Related Borrower Loan Groups .............. S-53
Release Date .............................. S-51
Release Payment ........................... S-51
REMIC Regulations ......................... S-115
Removed Mortgage Loan ..................... S-88
REO Account ............................... S-55
REO Property .............................. S-55
REO Tax ................................... S-101
Replacement Mortgage Loan ................. S-88
Repurchase Price .......................... S-88
Reserve Accounts .......................... S-46
Restricted Group .......................... S-120
Revised Rate .............................. S-49
Rules ..................................... S-69
Scheduled Maturity Date LTV ............... A-3
Section 8 ................................. S-53
Servicer Remittance Date .................. S-89
Servicing Compensation .................... S-106
Servicing Fee Rate ........................ S-106, A-3
Servicing Standard ........................ S-89
Similar Law ............................... S-118
Single-Tenant Mortgage Loan ............... S-32, S-53
S&P ....................................... S-119
Special Servicer .......................... S-106
Special Servicing Fee ..................... S-108
Sq Ft ..................................... A-3
Square Feet ............................... A-3
Subordinated Offered Certificates ......... S-71
Substitution Shortfall Amount ............. S-88
System One Management Agreement ........... D-7
System One Property ....................... D-6
System One Manager ........................ D-7
System One Owner .......................... D-7
Term to Maturity .......................... A-3
Terms and Conditions ...................... S-70
Treasury Regulations ...................... S-115
Trust ..................................... S-45
Trust REMICs .............................. S-115
Trustee Fee ............................... S-104
Underwriting Agreement .................... S-121
Underwritten NCF .......................... A-1
Underwritten NCF DSCR ..................... A-2
Underwritten Net Cash Flow ................ A-1
Units ..................................... A-3
Updated Appraisal ......................... S-67
UW NCF .................................... A-1
UW NCF DSCR ............................... A-2
Voting Rights ............................. S-99
</TABLE>
S-127
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
GENERAL
The schedule and tables appearing in this Annex A set forth certain
information with respect to the Mortgage Loans and Mortgaged Properties. Such
information is presented, where applicable, as of the Cut-off Date for each
Mortgage Loan and the related Mortgaged Properties. The statistics in such
schedule and tables were derived, in many cases, from information and operating
statements furnished by or on behalf of the respective borrowers. Such
information and operating statements were generally unaudited and have not been
independently verified by the Depositor, the Mortgage Loan Seller or the
Underwriters or any of their respective affiliates or any other person. The sum
of the amounts in any column of any of the tables of this Annex A may not equal
the indicated total under such column due to rounding.
Net income for a Mortgaged Property as determined in accordance with
generally accepted accounting principles ("GAAP") would not be the same as the
stated Underwritten Net Cash Flow for such Mortgaged Property as set forth in
the following schedule or tables. In addition, Underwritten Net Cash Flow is
not a substitute for or comparable to operating income as determined in
accordance with GAAP as a measure of the results of a property's operations or
a substitute for cash flows from operating activities determined in accordance
with GAAP as a measure of liquidity. No representation is made as to the future
net cash flow of the Mortgaged Properties, nor is the Underwritten Net Cash
Flow set forth herein with respect to any Mortgaged Property intended to
represent such future net cash flow.
In the schedule and tables set forth in this Annex A, with respect to
Mortgage Loans evidenced by one Mortgage Note, but secured by multiple
Mortgaged Properties, for certain purposes, separate amounts for each such
related Mortgaged Property are shown.
DEFINITIONS
For purposes of the Prospectus Supplement, including the schedule and
tables in this Annex A, the indicated terms shall have the following meanings,
modified accordingly, by reference to the "Certain Loan Payment Terms" below
and footnotes to the schedules that follow:
1. "Underwritten Net Cash Flow", "Underwritten NCF" or "UW NCF" with
respect to any Mortgaged Property, means an estimate of cash flow available for
debt service in a typical year of stable, normal operations as determined by
the related Mortgage Loan Seller. In general, it is the estimated revenue
derived from the use and operation of such Mortgaged Property less the sum of
estimated (a) operating expenses (such as utilities, administrative expenses,
repairs and maintenance, management and franchise fees and advertising), (b)
fixed expenses (such as insurance, real estate taxes and, if applicable, ground
lease payments), (c) with the exception of skilled nursing,
independent/assisted living/congregate care, hospital, multifamily and
hospitality properties, capital expenditures and reserves for capital
expenditures, including tenant improvement costs and leasing commissions, as
applicable, and (d) an allowance for vacancies and losses. Underwritten Net
Cash Flow generally does not reflect interest expense and non-cash items such
as depreciation and amortization. The Underwritten Net Cash Flow for each
Mortgaged Property is calculated on the basis of numerous assumptions and
subjective judgments, which, if ultimately proven erroneous, could cause the
actual net cash flow for such Mortgaged Property to differ materially from the
Underwritten Net Cash Flow set forth herein. Certain such assumptions and
subjective judgements relate to future events, conditions and circumstances,
including future expense levels, the re-leasing of vacant space and the
continued leasing of occupied space, which will be affected by a variety of
complex factors over which none of the Depositor, the Mortgage Loan Seller or
the Servicer have control. In some cases, the Underwritten Net Cash Flow set
forth herein for any Mortgaged Property is higher, and may be materially
higher, than the annual net cash flow for such Mortgaged Property based on
historical operating statements.
A-1
<PAGE>
In determining Underwritten Net Cash Flow for a Mortgaged Property, the
Mortgage Loan Seller generally relied on rent rolls and/or other generally
unaudited financial information provided by the respective borrowers; in some
cases the appraisal and/or local market information was the primary basis for
the determination. From that information, the Mortgage Loan Seller calculated
stabilized estimates of cash flow that took into consideration historical
financial statements (where available), material changes in the operating
position of a Mortgaged Property of which the applicable Mortgage Loan Seller
was aware (e.g., current rent roll information including newly signed leases,
near term market rent steps, expirations of "free rent" periods, market rents,
and market vacancy data), and estimated capital expenditures, leasing
commission and tenant improvement reserves. In certain cases, the applicable
Mortgage Loan Seller's estimate of Underwritten Net Cash Flow reflected
differences from the information contained in the operating statements obtained
from the respective borrowers (resulting in either an increase or decrease in
the estimate of Underwritten Net Cash Flow derived therefrom) based upon the
Mortgage Loan Seller's own analysis of such operating statements and the
assumptions applied by the respective borrowers in preparing such statements
and information. In certain instances, for example, property management fees
and other expenses may have been taken into account in the calculation of
Underwritten Net Cash Flow even though such expenses may not have been
reflected in actual historic operating statements. In most of those cases, the
information was annualized, with certain adjustments for items deemed not
appropriate to be annualized, before using it as a basis for the determination
of Underwritten Net Cash Flow. No assurance can be given with respect to the
accuracy of the information provided by any borrowers, or the adequacy of the
procedures used by any Mortgage Loan Seller in determining the presented
operating information.
2. "Annual Debt Service" generally means, for any Mortgage Loan 12 times
the monthly payment in effect as of the Cut-off Date for such Mortgage Loan or,
for certain Mortgage Loans that pay interest only for a period of time, 12
times the monthly payment in effect at the end of such period.
3. "UW NCF DSCR," "Underwritten NCF DSCR," "Debt Service Coverage Ratio"
or "DSCR" means, with respect to any Mortgage Loan, (a) the Underwritten Net
Cash Flow for the Mortgaged Property, divided by (b) the Annual Debt Service
for such Mortgage Loan. With respect to the Cross-Collateralized Groups, the
Cross-Collateralized DSCR is (a) the aggregate Underwritten Net Cash Flow for
the Mortgaged Property, divided by (b) the aggregate Annual Debt Service for
such Mortgage Loan.
In general, debt service coverage ratios are used by income property
lenders to measure the ratio of (a) cash currently generated by a property that
is available for debt service to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. If a property does not possess a stable
operating expectancy (for instance, if it is subject to material leases that
are scheduled to expire during the loan term and that provide for above-market
rents and/or that may be difficult to replace), a debt service coverage ratio
may not be a reliable indicator of a property's ability to service the mortgage
debt over the entire remaining loan term. The Underwritten NCF DSCRs are
presented herein for illustrative purposes only and, as discussed above, are
limited in their usefulness in assessing the current, or predicting the future,
ability of a Mortgaged Property to generate sufficient cash flow to repay the
related Mortgage Loan. Accordingly, no assurance can be given, and no
representation is made, that the Underwritten NCF DSCRs accurately reflects
that ability. The Underwritten NCF DSCR with respect to the interest-only
Mortgage Loans is based on the payment due after the interest-only period, and
with respect to the step amortization Mortgage Loans is based on the payment
due as of the Cut-off Date.
4. "Appraised Value" means, for any Mortgaged Property, the appraiser's
adjusted value as stated in the most recent third party appraisal available to
the Depositor. In certain cases, the appraiser's adjusted value takes into
account certain repairs or stabilization of operations. In certain cases in
which the appraiser assumed the completion of repairs, such repairs were, in
A-2
<PAGE>
general, either completed prior to the Delivery Date or the Mortgage Loan
Seller has taken reserves sufficient to complete such repairs. No
representation is made that any such value would approximate either the value
that would be determined in a current appraisal of the related Mortgaged
Property or the amount that would be realized upon a sale.
5. "Cut-off Date Loan-to-Value Ratio," "Loan-to-Value Ratio," "Cut-off
Date LTV," "Current LTV," or "CLTV" means, with respect to any Mortgage Loan,
(a) the Cut-off Date Balance of such Mortgage Loan divided (b) by the Appraised
Value of the Mortgaged Property or Mortgaged Properties. With respect to the
Cross-Collateralized Groups, the Crossed-Collateralized LTV is (a) the
aggregate Cut-off Date Balance of such Cross-Collateralized Group, divided by
the aggregate Appraised Values of the Mortgaged Properties in the
Cross-Collateralized Group.
6. "Square Feet" or "Sq Ft." means, in the case of a Mortgaged Property
operated as a retail center, office or medical office complex,
industrial/warehouse facility, combination retail office facility or other
special purpose property, the square footage of the net rentable or leasable
area.
7. "Units" means: (i) in the case of a Mortgaged Property operated as
multifamily housing, the number of apartments, regardless of the size of or
number of rooms in such apartment; (ii) in the case of a Mortgaged Property
operated as a skilled nursing or congregate care facility, the number of beds;
(iii) in the case of a Mortgaged Property constituting a manufactured housing
property, the number of pads; and (iv) in the case of a Mortgaged Property
operated as a hospitality property, the number of guest rooms.
8. "Occupancy" means the percentage of Square Feet or Units, as the case
may be, of the Mortgaged Property that was occupied or leased or, in the case
of certain properties, average units so occupied over a specified period, as of
a specified date (identified on this Annex A as the "Occupancy as of Date") or
as specified by the borrower or as derived from the Mortgaged Property's rent
rolls or, with respect to certain skilled nursing, congregate care and assisted
living facilities, census reports, operating statements or appraisals or as
determined by a site inspection of the Mortgaged Property. Information in this
Annex A concerning the "Largest Tenant" is presented as of the same date as of
which the Occupancy Percentage is specified.
9. "Balloon or ARD Balance" means, with respect to any Balloon Loan or ARD
Loan, the principal amount that will be due at maturity or on the Anticipated
Repayment Date for such Balloon Loan or ARD Loan.
10. "Scheduled Maturity Date LTV" or "ARD LTV" means, with respect to any
Balloon Loan or ARD Loan, the Balloon or ARD Balance for such Mortgage Loan
divided by the Appraised Value of the related Mortgaged Property.
11. "Mortgage Rate" means, with respect to any Mortgage Loan, the Mortgage
Rate in effect as of the Cut-off Date for such Mortgage Loan.
12. "Servicing Fee Rate" for each Mortgage Loan is the percentage rate per
annum set forth in Annex A for such Mortgage Loan is payable in respect of the
servicing of such Mortgage Loan (which includes the Master Servicing Fee Rate)
and payable to the Trustee.
13. "Prepayment Provisions" for each Mortgage Loan are: "Lock," which
means the duration of lockout period; "Def," which means the duration of any
defeasance period; " (greater than) YM or 1%," which means the greater of the
applicable yield maintenance charge or one percent of the amount being prepaid
at such time. The number following the "/" is the number of payment months for
which the related call protection provision is in effect, inclusive of the
maturity date for calculation purpose only.
14. "Term to Maturity" means, with respect to any Mortgage Loan, the
remaining term, in months, from the Cut-off Date for such Mortgage Loan to the
earlier of the related Maturity Date or Anticipated Repayment Date.
15. "Amortization Type" for each Mortgage Loan is indicated as: "I/O" for
loans that are interest only for the duration of the loan term; "I/O, then
Hyperamortizing" for loans that are
A-3
<PAGE>
initially interest only, then amortize according to a specified schedule until
the Anticipated Repayment Date, at which time all excess cash flow after
payment of debt service is used to pay down principal; "I/O, then Amortizing"
for loans that are initially interest only and then amortize according to a
specified schedule until a maturity date at which time the remaining balance is
due; "Amortizing Balloon" for loans that amortize according to a specified
schedule until a maturity date at which time the remaining balance is due; and
"Hyperamortizing" for loans that amortize according to a specified schedule
until the Anticipated Repayment Date, at which time all excess cash flow after
payment of debt service is used to pay down principal.
INTEREST ONLY LOANS
o Loan Number GA5631. The Mortgage Loan requires Monthly Payments of interest
only for the full term of the loan.
o Loan Number GA5952. The Mortgage Loan requires Monthly Payments of interest
only (calculated using an Actual/360 interest accrual method) from January
1, 1999 through February 1, 2000. Commencing March 1, 2000 and through
maturity, Monthly Payments of principal and interest in the amount of
$335,828.64 are required.
o Loan Number GA4985. The Mortgage Loan requires Monthly Payments of interest
only (calculated using an Actual/360 interest accrual method) from
November 1, 1998 through October 1, 1999. Commencing November 1, 1999 and
through maturity, Monthly Payments of principal and interest in the amount
of $99,500.76 are required.
o Loan Number GA6037. The Mortgage Loan requires Monthly Payments of interest
only (calculated using an Actual/360 interest accrual method) from
November 1, 1998 through October 1, 1999. Commencing November 1, 1999 and
through maturity, Monthly Payments of principal and interest in the amount
of $77,133.43 are required.
o Loan Number GA6038. The Mortgage Loan requires Monthly Payments of interest
only (calculated using an Actual/360 interest accrual method) from
November 1, 1998 through October 1, 1999. Commencing November 1, 1999 and
through maturity, Monthly Payments of principal and interest in the amount
of $221,911.10 are required.
o Loan Number GA5996. The Mortgage Loan requires Monthly Payments of interest
only (calculated using an Actual/360 interest accrual method) from March
1, 1998 through February 1, 1999. Commencing March 1, 2000 and through
maturity, Monthly Payments of principal and interest in the amount of
$18,420.62 are required.
o Loan Number GA5997. The Mortgage Loan requires Monthly Payments of interest
only (calculated using a 30/360 interest accrual method) from March 1,
1998 through February 1, 1999. Commencing March 1, 2000 and through
maturity, Monthly Payments of principal and interest in the amount of
$110,864.85 are required.
o Loan Number GA5998. The Mortgage Loan requires Monthly Payments of interest
only (calculated using a 30/360 interest accrual method) from March 1,
1998 through February 1, 1999. Commencing March 1, 2000 and through
maturity, Monthly Payments of principal and interest in the amount of
$21,490.73 are required.
o Loan Number GA5999. The Mortgage Loan requires Monthly Payments of interest
only (calculated using a 30/360 interest accrual method) from March 1,
1998 through February 1, 1999. Commencing March 1, 2000 and through
maturity, Monthly Payments of principal and interest in the amount of
$52,874.01 are required.
o Loan Number GA6010. The Mortgage Loan requires Monthly Payments of interest
only (calculated using a 30/360 interest accrual method) from March 1,
1998 through February 1, 1999. Commencing March 1, 2000 and through
maturity, Monthly Payments of principal and interest in the amount of
$91,366.29 are required.
A-4
<PAGE>
STEP AMORITZATION LOAN
o Loan Number TA2026. The Mortgage Loan requires Monthly Payments due
beginning March 1, 1999 in the amount of $30,150.46 per month and continuing
at this level through January 1, 2003. Beginning February 1, 2003, and
continuing through its Maturity Date, such monthly payments will be
increased to $33,083.96.
OTHER NOTES
o Loan Number 1436. The Cut-off Date balance reflects a principal paydown of
$70,000 in November 1998.
o The amortization terms reported on Annex A reflect the actual amortization
payments that would be required to fully amortize the mortgage loan. Because
the debt service payments for most loans which accrue interest on an
Actual/360 schedule are calculated on a 30/360 schedule, the reported
amortization schedules on Annex A may exceed 360 months.
YIELD MAINTENANCE CALCULATION TYPE
Mortgage Loans with Yield Maintenance Type1 take the present value of the
remaining monthly payments to the maturity or ARD date as applicable (assuming
no prepayment has been made) and discount the monthly payments by the
applicable Treasury Yield.
Mortgage Loans with Yield Maintenance Type2 take the present value of a stream
of Yield Loss Amounts (generally, either to the remaining term to maturity, the
weighted average life or to a stated date) discounted by the applicable
Treasury Yield. The "Yield Loss Amount" means 1/12 of the product of (1) the
principal amount of the prepayment and (2) the difference between (a) the
Mortgage Rate and (b) the sum of the applicable Treasury Yield.
<TABLE>
<CAPTION>
LOAN NUMBER YIELD MAINTENANCE TYPE
<S> <C>
1599 1
1690 1
1836 1
1842 1
1867 1
1979 1
2287 1
GA5398 1
1645 2
1870 2
TA3878 2
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
CONTROL LOAN
NUMBER NUMBER PROPERTY NAME PROPERTY TYPE ADDRESS
====================================================================================================================================
<S> <C> <C> <C> <C>
1 GA5631 Neshaminy Mall Anchored Retail 3900 Rockhill Drive
2 JPI
2 GA4985 Jefferson Village Apartments Multifamily 12840 Kirkwood Drive
2 GA6037 Jefferson At Sunset Valley Multifamily 5800 Brodie Lane
2 GA6038 Jefferson at Coral Square Multifamily 9111 Ramblewood Drive
- ------------------------------------------------------------------------------------------------------------------------------------
3 LaSalle Portfolio
3 GA5996 Bayview Executive Plaza Office 3225 Aviation Avenue
3 GA5997 Doral Corporate Center Office 8750 NW 36th St & 3750 NW 87thAve.
3 GA5998 Metro Center One and Metro Center
Business Plaza Office 2891 & 4110 Center Pointe Dr.
3 GA5999 System One Center Office 9250 NW 36th Street
- ------------------------------------------------------------------------------------------------------------------------------------
3 GA6010 One Urban Centre Office 4830 West Kennedy Boulevard
4 GA5952 Capital Automotive Portfolio Special Purpose
4 GA5952-A Capital Automotive -
Rosenthal Honda/Jaguar Special Purpose 1580-1592 Spring Hill Road
4 GA5952-B Capital Automotive - Rosenthal
Isuzu/Mazda/Acura Special Purpose 619-625 North Frederick Avenue
4 GA5952-C Capital Automotive - Rosenthal
Chevrolet & Jeep Eagle Special Purpose 3400 South Columbia Pike
- ------------------------------------------------------------------------------------------------------------------------------------
4 GA5952-D Capital Automotive - Rosenthal Mazda Special Purpose 750 N. Glebe Road
4 GA5952-E Capital Automotive - Geneva Management Special Purpose 2700 Shirley Highway
4 GA5952-F Capital Automotive - Rosenthal
Body Shop Special Purpose 1548 Spring Hill Road
4 GA5952-G Capital Automotive - Rosenthal
Infinity-Mazda-Nissan Special Purpose 8525 Leesburg Pike
5 GA5571 Columbia Office Center Office 201 Big Beaver Road
- ------------------------------------------------------------------------------------------------------------------------------------
6 GA5168 3655 North First Street Office 3655 North First Street
7 GA5848 Eldertrust Meridian 6 Nursing Home, Skilled
7 GA5848-A Severna Park Center Nursing Home, Skilled 24 Truckhouse Road
7 GA5848-B Heritage Center Nursing Home, Skilled 7232 German Hill Road
7 GA5848-C Westfield Center Nursing Home, Skilled 1515 Lanberts Mill Road
- ------------------------------------------------------------------------------------------------------------------------------------
7 GA5848-D Multi-Medical Center Nursing Home, Skilled 7700 York Road
7 GA5848-E La Plata Nursing Center Nursing Home, Skilled 1 Magnolia Drive
7 GA5848-F Corsica Hills Center Nursing Home, Skilled 205 Armstrong Avenue
8 GA5824 Prime Care Six
8 GA5824-A Green Park Nursing Home Nursing Home, Skilled 9350 Green Park Road
- ------------------------------------------------------------------------------------------------------------------------------------
8 GA5824-B Green Park Resident Center Congregate Care 9300 Green Park Road
8 GA5824-C Northgate Park Nursing Home Nursing Home, Skilled 250 S. New Florissant Road
8 GA5824-D Park Terrace Resident Center Congregate Care 300 S. New Florissant Road
9 GA5395 Blockbuster Distribution Center Industrial 3000 Redbud Boulevard
10 TA2186 200 East 87th Street Mixed Use 200 & 206 East 87th Street
- ------------------------------------------------------------------------------------------------------------------------------------
11 GA5735 Pine Island Ridge Plaza Anchored Retail 8800-9200 State Route 84
12 TA2778 Charleston Commons Anchored Retail 15-201 North Nellis Boulevard
13 GA6039 Sunrise Portfolio Assisted Living Facility
13 GA6039-A Sunrise of Annapolis Assisted Living Facility 800 Bestgate Road
13 GA6039-B Sunrise of Pikesville Assisted Living Facility 3800 Old Court Road
- ------------------------------------------------------------------------------------------------------------------------------------
14 Brookhaven & Parkside Partners
14 2338a Springs Apts. - Phase I Multifamily 8201 Camino Media
14 2338b Springs Apts. - Phase II Multifamily 8101 Camino Media
15 1671 Isles Park Place & Jefferson West
Portfolio Office
15 1671-A Iles Park Place Office Park Office 2100 South Sixth Street
- ------------------------------------------------------------------------------------------------------------------------------------
15 1671-B Jefferson West Office Complex Office 525 - 535 West Jefferson Street
16 TA2350 Trainer Shopping Center Portfolio
16 TA2350-A Trainer - Duryea Anchored Retail Phoenix and Main Street
16 TA2350-B Village Center at Lords Valley Anchored Retail Route 739
16 TA2350-C Village Center at Hamlin Anchored Retail Route 590
- ------------------------------------------------------------------------------------------------------------------------------------
16 TA2350-D Emmaus Valley Farm Market Center Anchored Retail 704 - 732 W. Emmaus Avenue
16 TA2350-E Allentown Center Unanchored Retail 2101 - 2130 Union Street
17 TA4553 Princeton Corporate Plaza and
One Naylon Place Industrial
17 TA4553-A Princeton Corporate Plaza Industrial 1, 7, 9, 11 Deer Park Drive
17 TA4553-B One Naylon Place Industrial One Naylon Place
- ------------------------------------------------------------------------------------------------------------------------------------
18 TA3471 Jefferson at Windward Apartments Multifamily 3080 Market Place
19 TA5556 Grand Tri-State Corporate Center Office 1275, 1325, 1375 & 1425 Tri-State Parkway
20 TA3884 274 Brannan Street Office 274 Brannan Street
21 WWK, Ltd
21 2151a Willow Oaks Apartments Multifamily 3902 East 29th
- ------------------------------------------------------------------------------------------------------------------------------------
21 2151b Windhill/Sunset/Kent Apartments Multifamily 2300/2301 Broadmoor & 2920 Kent Street
22 TA1766 636-642 Greenwich Street Special Purpose 636-642 Greenwich Street
23 Howard C. Nolan
23 TA3709 Plattsburgh Plaza Unanchored Retail 316 Cornelia Street
23 TA5311 Delaware Plaza Anchored Retail 180 Delaware Avenue, Suite 200
- ------------------------------------------------------------------------------------------------------------------------------------
24 TA4235 Cal Oaks Plaza Anchored Retail 40930-41090 California Oaks Road
25 GA5624 Wilshire Park Place Office 3700 Wilshire Boulevard
26 TA2210 Best Buy Plaza Anchored Retail 11400 Pines Boulevard
27 TA3743 Chesapeake Rodeo Apartments Multifamily 4502-4715 Rodeo Road
28 TA3923 Hotel Stanford Lodging 43 West 32nd Street
- ------------------------------------------------------------------------------------------------------------------------------------
29 TA3193 311 West 43rd Street Office 311 West 43rd Street
30 GA5941 Winstone Park Apartments Multifamily 4280 Mt. Hood Road
31 GA5293 Sandcastle Apartments Multifamily 6701 Everhart Road
32 GA5885 Shaker Run Apartments Multifamily 601 Sand Creek Road
33 TA5434 Settlers Landing Shopping Center Anchored Retail 1800-1900 Douglas Road
- ------------------------------------------------------------------------------------------------------------------------------------
34 TA4604 Synergy Portfolio Multifamily
34 TA4604-A Clearwater Apartments Multifamily 1702-12 Clearwater Ave.
34 TA4604-B 2001 S. Morris Multifamily 2001 S. Morris Ave.
34 TA4604-C 400 S. Kingsley Ave. Multifamily 400 S. Kingsley Ave.
34 TA4604-D 215 E. Vernon Multifamily 215 E. Vernon
- ------------------------------------------------------------------------------------------------------------------------------------
34 TA4604-E 608 S. Kingsley Street Multifamily 608 S. Kingsley Street
34 TA4604-F 209 West Willow Street Multifamily 209 West Willow Street
34 TA4604-G 401 E. Vernon Ave. Multifamily 401 E. Vernon Ave.
34 TA4604-H 706 S. Main St. Multifamily 706 S. Main St.
35 2592 Pecan Valley Office Building Office 4243 East Southcross Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
36 GA5892 4751 Wilshire Boulevard Office 4751 Wilshire Boulevard
37 TA3974 77 North Washington Office 77 North Washington
38 TA3470 Apartments at Pinebrook Multifamily 1314 Wharton Drive
39 TA3241 AMC Hollywood Theatre Parking Mixed Use 333 Harrison Street
40 TA1948 Rockwood Four Office Ctr. Office 25 Rockwood Place
- ------------------------------------------------------------------------------------------------------------------------------------
41 TA3162 The Haros Portfolio Multifamily
41 TA3162-A The Diamente Multifamily 75 West 190th Street
41 TA3162-B The Banco Multifamily 2500 University Avenue
41 TA3162-C The Jinete Multifamily 3018 Heath Avenue
41 TA3162-D The Aragon Multifamily 2505 Aqueduct Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
42 2478 Bradford Run Apartments Multifamily 3604 Briarwick Drive
43 TA4234 Plaza Rancho Del Oro Unanchored Retail 4110-4196 Oceanside Blvd.
44 TA3878 First Virginia Tower Office 555 Main Street
45 TA1140 Lewis Tower Office 225 South 15th Street
46 TA3397 Stonebridge Properties Portfolio Office
- ------------------------------------------------------------------------------------------------------------------------------------
46 TA3397-A Lakeland Oaks Office 3900 Lakeland Drive
46 TA3397-B East Pointe Business Park Office 3010 Lakeland Cove
46 TA3397-C LeFleur's Bluff Office 2525 Lakeward Drive
47 TA2470 Timber Business Park Industrial 44358-44388 Old Warm Springs Boulevard
48 TA3655 Seven Hills Plaza Unanchored Retail 18511-18883 East Hampden Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
49 TA0545 Shops at Randall Square Unanchored Retail 1772-1792 Randall Road
50 TA2894 Pennington Place Office 1855 W. Baseline Road
51 2242 Holiday Inn - Holyoke Lodging 245 Whiting Farms Road
52 TA5150 Village Oaks Shopping Center Anchored Retail 1145 Arnold Drive
53 GA5397 Fortress Self Storage Self-Storage 52F-1 Estate Thomas
- ------------------------------------------------------------------------------------------------------------------------------------
54 1870 CrossRoads Shopping Center Anchored Retail 39405 Fremont Boulvard
55 TA3418 Woodstone Apartments Multifamily 310 Crestone Lane
56 TA3230 Kmart Plaza Anchored Retail 7401 Tonnelle Avenue
57 TA4380 Amerivest Properties Texas, Inc. Office
57 TA4380-A El Paso Parole Office Office 5929 Brook Hollow Drive
- ------------------------------------------------------------------------------------------------------------------------------------
57 TA4380-B El Paso Human Services Office 9206 McComb Street
57 TA4380-C Lubbock TDCJ Parole Office Office 409 50th Street
57 TA4380-D Clint Human Services Office 190 San Elizario Road
57 TA4380-E Temple Soil & Water Conservation Office 311 North 5th Street
57 TA4380-F Bellville Protective and Regulatory
Services Office 800 East Wendt Drive
- ------------------------------------------------------------------------------------------------------------------------------------
57 TA4380-G Hempstead Human Services Office 1739 Highway 159 South (13th Street)
57 TA4380-H Arlington Human Services Office 2561 Matlock Road
57 TA4380-I Marshall Human Services Office 4105 Victory Drive
57 TA4380-J Amarillo Protective & Regulatory
Services Office 6200 Interstate 40 West
57 TA4380-K Paris Human Services Office 400 West Sherman Street
- ------------------------------------------------------------------------------------------------------------------------------------
57 TA4380-L Mission Human Services Office 102 S. Bryan Road
57 TA4380-M Columbus Human Services Office 1460 Walnut Street (Highway 90)
58 TA2757 Bethany Village Apartments Multifamily 6565 West Bethany Home Road
59 TA4051 Hillside Gardens Apartments Multifamily 6060 Crescentville Road
60 TA3416 Sunchase Apartments Multifamily 5445 South Alameda Street
- ------------------------------------------------------------------------------------------------------------------------------------
61 TA2908 Centre Point I and III Office 11300-11500 West Theodore Trecker Way
62 TA2387 The Village Shopping Center Anchored Retail 1100 Miami Boulevard
63 GA5418 450 North Bedford Medical Office 450 North Bedford Avenue
64 TA3981 Morgan Lofts Multifamily 142 Stuben Street
65 TA5135 Appalachian Trail Inn Lodging 1825 Harrisburg Pike
- ------------------------------------------------------------------------------------------------------------------------------------
66 TA2895 Fiesta Crossing Unanchored Retail 1660 South Alma School Road
67 TA3904 Bailey Avenue Apartments Multifamily 3138, 3150, 3300 Bailey Avenue
68 TA4330 Kmart Center - Austin Anchored Retail 18th Ave. & State Rd. 218
69 2057 Windsong Apartments Multifamily 2929 Hirshfield Road
70 TA5595 Canterbury Court Apartments Multifamily 336 "C" Street
- ------------------------------------------------------------------------------------------------------------------------------------
71 TA3886 La Mirada Plaza Unanchored Retail 3501 West Vine Street
72 TA4609 Airplaza 22 Special Purpose 7201-7331 South Peoria Street
73 TA3868 Bear Valley Plaza Anchored Retail 15208-15290 Bear Valley Road
74 TA3202 Everett Marina Village Mixed Use 1722-1728 West Marina View Drive
75 2050 Century Park Apartments Multifamily 20430 Imperial Valley Drive
- ------------------------------------------------------------------------------------------------------------------------------------
76 TA4381 Comfort Suites - Aurora Lodging 111 North Broadway
77 TA3772 Marlboro Plaza Properties
77 TA3772-A Marlboro Plaza Unanchored Retail 106-108 Marlboro Road
77 TA3772-B Bay Street Plaza Unit 1 Office 301 Bay Street
77 TA3772-C Bay Street Unit 4 Office 301 Bay Street
- ------------------------------------------------------------------------------------------------------------------------------------
78 TA2079 The Hearthside Multifamily 4704 W. Plano Parkway
79 1632 Former Wal-Mart - Arlington Anchored Retail 4915 S. Cooper Street
80 TA4006 Danville Center Office 375 - 383 Diablo Road
81 GA5164 Westhill Plaza Shopping Center Anchored Retail 601-621 & 697 Westhill Boulevard
82 TA3227 336 West 37th Street Industrial 336 West 37th Street
- ------------------------------------------------------------------------------------------------------------------------------------
83 2188 Raymour & Flanigan Distribution
Center Industrial 7230 Morgan Road
84 TA2026 Staples Bayside Unanchored Retail 20930-20934 Northern Boulevard
85 TA3854 Brookside Plaza Shopping Center Anchored Retail 1500-1580 Barton Road
86 TA4171 York Hotel Lodging 940 Sutter Street
87 GA5394 Grand Forest Apartments Multifamily 1643- 1725 Forest Ave and 1714Grand Ave
- ------------------------------------------------------------------------------------------------------------------------------------
88 TA2588 Golden Plaza Industrial 2559 U.S. Highway 130
89 GA5503 Beachside Resort and Conference
Center Lodging 14 Via De Luna Drive
90 TA2724 Vicksburg Factory Outlet Mall Anchored Retail 4000 South Frontage Road
91 TA4112 Torrance Medical Plaza Office 3655 Lomita Boulevard
92 2055 The Preakness Apartments Multifamily 210 Wells Fargo Drive
- ------------------------------------------------------------------------------------------------------------------------------------
93 TA2651 Planet Self Storage Self-Storage 100 Southhampton St
94 2056 St. Gregory's Beach Apartments Multifamily 5450 Timber Creek Place
95 TA3997 Greystone Apartments Multifamily 7912 Olde English Road
96 GA5838 Park Place and Boardwalk Apartments Multifamily 7270-7300 8th Street
97 TA2332 Westborough Arms Apartments Multifamily 556 North 88th Plaza
- ------------------------------------------------------------------------------------------------------------------------------------
98 TA2819 Commerce Pointe Office Building Office 1818 South Australian Avenue
99 2373 Summit Executive Ctr & Quail Creek
Portfolio Office
99 2373-A Quail Creek Professional Center
Office Building Office 9411 Parkfield Drive
99 2373-B Summit Executive Center Office 13706 Research Boulevard
100 TA2142 Comfort Inn - Clemson Lodging 1305 Tiger Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
101 TA3415 Mesa Verde Apartments Multifamily 3800 Madison Avenue
102 TA4563 South Ridge Apartments Multifamily 235-265 Jaycee Court
103 2113 Crossroads of Oakdale Industrial 7200 Hudson Boulevard
104 TA1420 188 Montague Street Office 188 Montague Street
105 TA0768 Sierra View Medical Plaza Office 263 North Pearson Drive
- ------------------------------------------------------------------------------------------------------------------------------------
106 1436 San Marcos Self Storage Self-Storage 4087 State Street
107 TA2586 Raymour & Flanigan Plaza Anchored Retail 480 Balltown Road
108 TA5060 Lake Forest One Stop Autoplex Unanchored Retail 20702-20742 Lake Forest Drive
109 TA4678 Rainbow Luxury Apartments Multifamily 2716-2806 Rainbow Avenue
110 TA4704 Virginia Hills Mobile Home Park Mobile Home Park West Allegheny Road
- ------------------------------------------------------------------------------------------------------------------------------------
111 GA5294 Veranda Apartments Multifamily 6433 South Staples Road
112 TA3073 Naamans Road Business Park Industrial 100 Naamans Rd., Brandywine Hundred
113 TA4952 5755-5775 Rossi Lane Industrial 5755-5775 Rossi Lane
114 TA4007 Truxtun Financial Building Office 5601 Truxtun Avenue
115 TA1237 La Jolla Retail Mixed Use 1261 and 1271-77 Prospect St.
- ------------------------------------------------------------------------------------------------------------------------------------
116 TA5719 Warner Business Park Industrial 21200 Van Owen Street
117 2118 West Bloomfield Tech Center Industrial 3160 Haggerty Road
118 TA1838 Fairfax Apartments Multifamily 7801 NE 10th Street
119 1569 Heritage Apartments Multifamily 2140 Richmond Rd.
120 TA2174 Centennial Park View Apartments Multifamily 3350 Harrison Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
121 TA3412 Country Village Apartments Multifamily 8802 West Peoria Road
122 TA1182 Drew Business Center Industrial 192-252 West Larch Road
123 TA4928 Oceanside Commerce Center Industrial 4747-4751 Oceanside Blvd
124 TA3846 Oakwood Square Unanchored Retail 1400 Hwy 101 & 17405 - 17435 County Road 6
125 GA5276 Villa De Oro Apartments Multifamily 14430 Mulberry Drive
- ------------------------------------------------------------------------------------------------------------------------------------
126 TA2057 Pelican's Landing Multifamily 6819 Cook Road
127 TA2653 Sure-Lock Storage Self-Storage 39R Medford Street
128 TA5706 Burleson Business Park Industrial 5214 Burleson Road
129 TA3602 Westland Plaza Apartments Multifamily 7300 Central Road
130 1808 Strohecker's Grocery Anchored Retail 2855 S. W. Patton Road
- ------------------------------------------------------------------------------------------------------------------------------------
131 TA2989 Executive Plaza Office 2111 New Road
132 TA0522 Roundtree Shopping Center Anchored Retail 2203-99 Ellsworth Road
133 TA3721 One Grand Center Office 1800 Teague Drive
134 GA5295 Armon Bay Apartments Multifamily 6925 South Padre Island Drive
135 TA2118 Business Park Plaza Office 2881 Business Park Court
- ------------------------------------------------------------------------------------------------------------------------------------
136 1690 1950 Addison Street Office Building Office 1950 Addison Street
137 2064 Executive Center Office 2300 Palm Beach Lakes Blvd
138 TA4590 Manchester Industrial Park Industrial 1301 South Jason Street
139 TA1654 TAWA Center Office Building Office 13430 North Scottsdale Road
140 TA4424 15 Mile and Gratiot Center Anchored Retail 35679-35691 Gratiot Road
- ------------------------------------------------------------------------------------------------------------------------------------
141 TA4858 1336-46 Park Street Mixed Use 1336-46 Park Street
142 2059 Comfort Inn - Breezewood Lodging U. S. Route 30
143 1944 Shopko Plaza - Wausau Anchored Retail Grand Avenue & Volkman Street
144 TA4309 Avondale Shopping Center Anchored Retail 1450 N. Dysart Road
145 2125 Brentwood Towncentre Plaza Anchored Retail 1155-1185 Second Street
- ------------------------------------------------------------------------------------------------------------------------------------
146 TA2822 Hickory Square Apartments Multifamily 1820 20th Avenue Drive NE
147 TA4605 The Castle on Locust Multifamily 1007 South Locust Street
148 TA3060 Damschen-Parkview Apartments Multifamily 2590 & 2594 California Park Dr.
149 2197 2010 South Arlington Heights Medical
Office Bldg Office 2010 S. Arlington Heights Road
150 GA5843 Casa Royale Apartments Multifamily 8133 Sepulveda Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
151 2155 Anchorage Building Office 1900 Q Street, N. W.
152 TA4776 PRI Warehouse Industrial 701 North Levee Road
153 TA2130 19355-19365 Business Center Dr. Industrial 19355-19365 Business Center Dr.
154 GA5846 Spring Creek Apartments Multifamily 1108 South Riverside Avenue
155 TA5210 Penthouse Apartments Multifamily
- ------------------------------------------------------------------------------------------------------------------------------------
155 TA5210-A 24 Flats Multifamily 1515 Palma Plaza
155 TA5210-B Penthouse Apartments Multifamily 1801 Rio Grande Street
156 1855 Fairmont & Eastwood Apartments Multifamily 4982 Tippecanoe Drive
157 TA5707 Willowick & Park Place Apartments Multifamily
157 TA5707-A Willowick Apartments Multifamily 600 South 1st Street
- ------------------------------------------------------------------------------------------------------------------------------------
157 TA5707-B Park Place Apartments Multifamily 809 Winflo Drive
158 1523 Rodney D. Young Insurance Office 4445 W. Ledbetter Drive
159 TA2974 Southampton Apartments Multifamily 4118 Southway Lane
160 TA4834 Hamline Park Plaza Office 570 Asbury Street
161 TA4882 Choe Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
161 TA4882-A 2500 Galen Office 2500 Galen
161 TA4882-B 905 South Locust Multifamily 905 South Locust
162 TA2169 Syracuse Stor-All Self-Storage 901 West Hiawatha Blvd.
163 TA3252 Mountain 60 Crossroads Unanchored Retail 12346 Mountain Avenue
164 TA5244 Brazos Office Building Office 815 Brazos Street
- ------------------------------------------------------------------------------------------------------------------------------------
165 TA2758 United States Forest Service Office 1600 Tollhouse Road
166 TA5207 Design Center Office 1119 Colorado Avenue
167 TA3875 Rockbridge Shopping Center Unanchored Retail 5050 Jimmy Carter Boulevard
168 TA3898 Garvey Avenue Apartments Multifamily 7709 East Garvey Avenue
169 GA5281 Adams Hoover Plaza Unanchored Retail 1105-1115 West Adams Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
170 TA3619 Crown Point V Office 2234-2210 Northwest 40th Terrace
171 TA1285 Air Park La Guardia Special Purpose 100-15 Ditmars Boulevard
172 TA4054 Hampshire House Apartments Multifamily 195 Mt. Lebanon Blvd.
173 TA3414 Love Field Mobile Home Park Mobile Home Park 2232 Empire Central Drive
174 TA5906 Hyde Park Office Court Office 4315 Guadalupe Street
- ------------------------------------------------------------------------------------------------------------------------------------
175 1828 Carole Financial Plaza Office 75 N.E. 6th Avenue
176 TA3621 Anderson Lakes Center Unanchored Retail 8767-8795 Columbine Road
177 GA5398 Southside Design Center Unanchored Retail 5442 Frontage Road
178 1935 Brookfield Trails Apts. Multifamily 4712-4718 Beechwood Road
179 TA3492 Minnesota Valley Building Industrial 10800 Normandale Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
180 TA2652 All Best Storage Self-Storage 156 Danbury Road
181 GA4889 Oak Hill Storage Facility Self-Storage 5100 Roadrunner Lane
182 TA3994 Hungerford Professional Building Office 13305 Reeck Road
183 GA5396 Wilcrest/Westheimer Shopping Center Unanchored Retail 11112 Westheimer Road
184 2143 Seven Eleven Convenience Store Anchored Retail 3055 West New Haven Ave.
- ------------------------------------------------------------------------------------------------------------------------------------
185 TA4832 Richards Gordon Office Bldg. Office 1619 Dayton Avenue
186 TA2942 Copley Manor Apartments Multifamily 121-123 West Tulpehocken Street
187 TA2728 Astoria Terrace Retirement Center Assisted Living Facility 14060 Astoria Street
188 TA3203 Palomar Square Unanchored Retail 1327 - 1355 Broadway
189 TA2838 Lassen-DeSoto Unanchored Retail 9901-9911 DeSoto Ave. & 20910-20911
Lassen Street
- ------------------------------------------------------------------------------------------------------------------------------------
190 TA4306 La Jolla Galleria Unanchored Retail 905-915 Pearl St/7455 Fay Ave.
191 TA3513 73 Grove Street Multifamily 73 Grove Street
192 2292 West Wells Apartments Multifamily 5107 N. Hammond Avenue
193 TA2008 Rockville Center Retail Unanchored Retail 266-274 Merrick Road
194 1943 Shopko Plaza - Eau Claire Anchored Retail 1005 West Clairmont Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
195 TA4669 Madison Avenue Anchored Retail 25090-25098 Madison Avenue
196 TA2949 Del Monte Partners Mixed Use 7800 Arroyo Circle
197 1842 Oak Park Office Building Office 9801 Anderson Mill Road
198 2667 Great Southwest Crossing Anchored Retail 4045 S. Great Southwest Freeway
199 2134 Village Oaks Shopping Center Anchored Retail 8302 - 8348 Pat Booker Rd.
- ------------------------------------------------------------------------------------------------------------------------------------
200 GA5940 Evergreene Apartments Multifamily 17, 25, and 33 7th Avenue SE
201 1568 Canterbury Apartments Multifamily 1950 Richmond Rd
202 TA5083 CVS/REVCO/Concordia Office 821 Atlanta Street
203 TA3684 Minnetonka Park Mall Unanchored Retail 6312-20 Minnetonka Boulevard
204 TA4160 Southdale Apartments Multifamily 907 Dale Street
- ------------------------------------------------------------------------------------------------------------------------------------
205 TA4833 Hamline Office Building Office 2845 Hamline Avenue, North
206 TA2465 Don Pablo's Restaurant Special Purpose 780 Jefferson Road
207 1979 Sheffield Ridge Apts Multifamily 1901-1957 Graybrook Lane
208 2287 Diamond Springs Shoppes Unanchored Retail 1270 Diamond Springs Road
209 1645 Normandie Heights Apartments Multifamily 2100 North Meadow
- ------------------------------------------------------------------------------------------------------------------------------------
210 1867 Sherwood Glen Apartments Multifamily 3805 Sherwood Lane
211 1599 Commerce Center Office 942 Calle Negocio
212 1836 State of Texas Building Office 1500 Arkansas Avenue
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSS -
CONTROL ZIP COLLATERALIZED RELATED ORIGINAL
NUMBER CITY STATE CODE GROUPS GROUPS BALANCE ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 Bensalem Pennsylvania 37287 - - 60,000,000
2 JPI JPI 58,800,000
2 Stafford Texas 77477 JPI JPI 14,680,000
2 Austin Texas 78745 JPI JPI 11,380,000
2 Coral Springs Florida 33071 JPI JPI 32,740,000
- ------------------------------------------------------------------------------------------------------------------------------------
3 LaSalle Portfolio 43,242,000
3 Miami Florida 33131 LaSalle Portfolio 2,700,000
3 Miami Florida 33178 LaSalle Portfolio 16,250,000
3 Fort Myers Florida 33916 LaSalle Portfolio 3,150,000
3 Miami Florida 33172 LaSalle Portfolio 7,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
3 Tampa Florida 33609 LaSalle Portfolio 13,392,000
4 - - 38,050,000
4 Vienna Virginia 22182 - - -
4 Gaithersburg Maryland 20879 - - -
4 Arlington Virginia 22204 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
4 Arlington Virginia 22182 - - -
4 Arlington Virginia 22204 - - -
4 Vienna Virginia 22182 - - -
4 Vienna Virginia 22182 - - -
5 Troy Michigan 48084 - - 35,250,000
- ------------------------------------------------------------------------------------------------------------------------------------
6 San Jose California 95134 - - 34,875,000
7 - - 33,025,000
7 Severna Park Maryland 21146 - - -
7 Dundalk Maryland 21222 - - -
7 Westfield New Jersey 07090 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
7 Towson Maryland 21204 - - -
7 La Plata Maryland 20646 - - -
7 Centreville Maryland 21617 - - -
8 - Prime Care 30,000,000
8 St. Louis Missouri 63123 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
8 St. Louis Missouri 63123 - - -
8 Florissant Missouri 63013 - - -
8 Florissant Missouri 63031 - - -
9 McKinney Texas 75069 - - 29,589,000
10 New York New York 10128 - - 27,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
11 Davie Florida 33324 - - 26,500,000
12 Las Vegas Nevada 89110 - - 23,350,000
13 - Prime Care 22,125,000
13 Annapolis Maryland 21401 - - -
13 Pikesville Maryland 21208 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
14 Brookhaven & Parkside Partners 19,095,000
14 Bakersfield California 93311 Brookhaven & Parkside Partners 9,430,500
14 Bakersfield California 93311 Brookhaven & Parkside Partners 9,664,500
15 - - 17,850,000
15 Springfield Illinois 62703 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
15 Springfield Illinois 62702 - - -
16 - - 17,275,000
16 Duryea Pennsylvania 18643 - - -
16 Lord's Valley Pennsylvania 18428 - - -
16 Hamlin Pennsylvania 18427 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
16 Allentown Pennsylvania 18103 - - -
16 Allentown Pennsylvania 18195 - - -
17 - - 16,750,000
17 Monmouth Junction New Jersey 08852 - - -
17 Livingston New Jersey 07039 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
18 Alpharetta Georgia 30004 - - 16,750,000
19 Gurnee Illinois 60031 - - 16,000,000
20 San Francisco California 94107 - - 15,750,000
21 WWK, Ltd 14,800,000
21 Bryan Texas 77802 WWK, Ltd 8,300,000
- ------------------------------------------------------------------------------------------------------------------------------------
21 Bryan Texas 77802 WWK, Ltd 6,500,000
22 New York New York 10014 - - 14,500,000
23 Howard C. Nolan 14,100,000
23 Plattsburgh New York 12901 Howard C. Nolan 4,500,000
23 Bethlehem New York 12054 Howard C. Nolan 9,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
24 Murrieta California 92562 - Joe Lacko 13,900,000
25 Los Angeles California 90010 - David Y. Lee 12,500,000
26 Pembroke Pines Florida 33026 - - 11,925,000
27 Los Angeles California 90016 - Nijjar Portfolio 10,880,000
28 New York New York 10001 - - 10,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
29 New York New York 10036 - - 9,500,000
30 Memphis Tennessee 38118 - - 9,200,000
31 Corpus Christi Texas 78413 - Alan Ferris 8,900,000
32 Colonie New York 12205 - - 8,750,000
33 Montgomery Illinois 60538 - - 8,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
34 - - 8,450,000
34 Bloomington Illinois 61702 - - -
34 Bloomington Illinois 61702 - - -
34 Normal Illinois 61761 - - -
34 Normal Illinois 61761 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
34 Normal Illinois 61761 - - -
34 Normal Illinois 61761 - - -
34 Normal Illinois 61761 - - -
34 Normal Illinois 61761 - - -
35 San Antonio Texas 78222 - - 7,990,000
- ------------------------------------------------------------------------------------------------------------------------------------
36 Los Angeles California 90010 - David Y. Lee 8,000,000
37 Boston Massachusetts 02114 - - 7,600,000
38 Newark Delaware 19711 - - 7,420,000
39 Hollywood Florida 33019 - - 7,400,000
40 Englewood New Jersey 07361 - - 7,347,000
- ------------------------------------------------------------------------------------------------------------------------------------
41 - - 7,250,000
41 Bronx New York 10452 - - -
41 Bronx New York 10452 - - -
41 Bronx New York 10452 - - -
41 Bronx New York 10452 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
42 Kokomo Indiana 46904 - - 7,190,000
43 Oceanside California 92056 - - 7,200,000
44 Norfolk Virginia 23510 - - 7,200,000
45 Philadelphia Pennsylvania 19102 - - 7,200,000
46 - MP, L. Rodney Chamblee 7,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
46 Flowood Mississippi 39208 - - -
46 Jackson Mississippi 39296 - - -
46 Jackson Mississippi 39216 - - -
47 Fremont California 94538 - - 6,950,000
48 Aurora Colorado 80013 - - 6,450,000
- ------------------------------------------------------------------------------------------------------------------------------------
49 Geneva Illinois 60134 - - 6,400,000
50 Mesa Arizona 85202 - Dan Unger 6,250,000
51 Holyoke Massachusetts 01040 - - 6,250,000
52 Martinez California 94553 - - 6,150,000
53 St. Thomas Virgin Islands 00802 - - 6,140,000
- ------------------------------------------------------------------------------------------------------------------------------------
54 Fremont California 94538 - - 6,100,000
55 Colorado Springs Colorado 80906 - Fowler Shore Flanagan 6,080,000
56 North Bergen New Jersey 07047 - - 6,000,000
57 - MP, James F. Etter 6,000,000
57 El Paso Texas 79925 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 El Paso Texas 79924 - - -
57 Lubbock Texas 79404 - - -
57 Clint Texas 79836 - - -
57 Temple Texas 76502 - - -
57 Bellville Texas 77418 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 Hempstead Texas 77445 - - -
57 Arlington Texas 76014 - - -
57 Marshall Texas 75671 - - -
57 Amarillo Texas 79106 - - -
57 Paris Texas 75460 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 Mission Texas 78572 - - -
57 Columbus Texas 78934 - - -
58 Glendale Arizona 85301 - - 6,000,000
59 Philadelphia Pennsylvania 19120 - - 5,830,000
60 Corpus Christi Texas 78412 - Fowler Shore Flanagan 5,800,000
- ------------------------------------------------------------------------------------------------------------------------------------
61 West Allis Wisconsin 53227 - - 5,500,000
62 Durham North Carolina 27703 - - 5,500,000
63 Beverly Hills California 90210 - - 5,475,000
64 Jersey City New Jersey 07302 - James J. Licata 5,400,000
65 Carlisle Pennsylvania 17013 - - 5,400,000
- ------------------------------------------------------------------------------------------------------------------------------------
66 Mesa Arizona 85210 - Dan Unger 5,150,000
67 Bronx New York 10463 - Thomas John 5,100,000
68 Austin Minnesota 55912 - - 5,000,000
69 Spring Texas 77373 - Alan Ferris 5,000,000
70 Chula Vista California 91910 - - 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
71 Kissimmee Florida 34741 - - 5,000,000
72 Englewood Colorado 80112 - - 4,800,000
73 Victorville California 92392 - Joe Lacko 4,800,000
74 Everett Washington 98201 - - 4,700,000
75 Houston Texas 76006 - Alan Ferris 4,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
76 Aurora Illinois 60505 - - 4,600,000
77 - MP, E. Stephen Whelan 4,600,000
77 Easton Maryland 21601 - - -
77 Easton Maryland 21601 - - -
77 Easton Maryland 21601 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
78 Plano Texas 75093 - - 4,600,000
79 Arlington Texas 76017 - - 4,590,000
80 Danville California 94526 - - 4,500,000
81 Grand Chute Wisconsin 54915 - - 4,500,000
82 New York New York 10018 - - 4,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
83 Clay New York 13090 - - 4,466,000
84 Bayside New York 11361 - - 4,500,000
85 Redlands California 92373 - - 4,360,000
86 San Francisco California 94109 - - 4,354,000
87 Knoxville Tennessee 37916 - - 4,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
88 Cranbury New Jersey 08512 - - 4,100,000
89 Pensacola Beach Florida 32561 - - 4,110,000
90 Vicksburg Mississippi 39180 - - 4,100,000
91 Torrance California 90505 - - 4,050,000
92 Houston Texas 77090 - Alan Ferris 4,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
93 Boston Massachusetts 02118 - R, Bryce Grefe 3,925,000
94 Houston Texas 77084 - Alan Ferris 3,750,000
95 St. Louis Missouri 63123 - - 3,700,000
96 Buena Park California 90509 - Haresh J. Jogani 3,640,000
97 Omaha Nebraska 68114 - Dennis J. Makielski 3,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
98 West Palm Beach Florida 33401 - - 3,400,000
99 - - 3,345,600
99 Austin Texas 78758 - - -
99 Austin Texas 78750 - - -
100 Clemson South Carolina 29631 - Thomas Talley 3,350,000
- ------------------------------------------------------------------------------------------------------------------------------------
101 North Highlands California 95660 - Fowler Shore Flanagan 3,300,000
102 Mankato Minnesota 56002 - - 3,280,000
103 Oakdale Minnesota 55128 - - 3,250,000
104 Brooklyn New York 11201 - - 3,200,000
105 Porterville California 93257 - - 3,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
106 Santa Barbara California 93110 - - 3,170,000
107 Niskayuna New York 12309 - - 3,100,000
108 Lake Forest California 92630 - - 3,075,000
109 Bloomington Illinois 61704 - - 3,000,000
110 Imperial Pennsylvania 15126 - - 3,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
111 Corpus Christi Texas 78413 - Alan Ferris 3,000,000
112 Claymont Delaware 19703 - - 3,000,000
113 Gilroy California 95020 - - 3,000,000
114 Bakersfield California 93309 - - 2,975,000
115 La Jolla California 92037 - - 2,975,000
- ------------------------------------------------------------------------------------------------------------------------------------
116 Canoga Park California 91303 - - 2,950,000
117 West Bloomfield Michigan 48390 - - 2,950,000
118 Oklahoma City Oklahoma 73110 - - 2,900,000
119 Lexington Kentucky 40502 - Richard Stone 2,900,000
120 Kingman Arizona 86401 - - 2,825,000
- ------------------------------------------------------------------------------------------------------------------------------------
121 Peoria Arizona 85345 - Fowler Shore Flanagan 2,824,000
122 Tracy California 95376 - - 2,800,000
123 Oceanside California 92056 - - 2,775,000
124 Plymouth Minnesota 55447 - - 2,760,000
125 Whittier California 90604 - - 2,720,000
- ------------------------------------------------------------------------------------------------------------------------------------
126 Houston Texas 77072 - - 2,700,000
127 Somerville Massachusetts 02143 - R, Bryce Grefe 2,650,000
128 Austin Texas 78744 - Jeffrey T. Blatt 2,625,000
129 Westland Michigan 48185 - - 2,616,000
130 Portland Oregon 97201 - - 2,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
131 Northfield New Jersey 08037 - - 2,550,000
132 Ypsilanti Michigan 48197 - - 2,530,000
133 Sherman Texas 75090 - - 2,500,000
134 Corpus Christi Texas 78412 - Alan Ferris 2,500,000
135 Las Vegas Nevada 89128 - - 2,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
136 Berkeley California 94704 - - 2,490,000
137 West Palm Beach Florida 33409 - - 2,450,000
138 Denver Colorado 80223 - - 2,440,000
139 Phoenix Arizona 85254 - - 2,450,000
140 Clinton Twp. Michigan 48035 - - 2,425,000
- ------------------------------------------------------------------------------------------------------------------------------------
141 Alameda California 94501 - - 2,405,000
142 Breezewood Pennsylvania 15533 - - 2,352,000
143 Rothschild Village Wisconsin 54476 - - 2,310,000
144 Avondale Arizona 85323 - - 2,300,000
145 Brentwood California 94513 - - 2,300,000
- ------------------------------------------------------------------------------------------------------------------------------------
146 Hickory North Carolina 28601 - - 2,290,000
147 Champaign Illinois 61820 - - 2,250,000
148 Chico California 95928 - - 2,245,000
149 Arlington Heights Illinois 60005 - - 2,160,000
150 Van Nuys California 91402 - Haresh J. Jogani 2,160,000
- ------------------------------------------------------------------------------------------------------------------------------------
151 Washington District of Columbia 20009 - - 2,148,000
152 Puyallup Washington 98371 - - 2,100,000
153 Northridge California 91324 - Andrew Sutantyo 2,100,000
154 Rialto California 92376 - Haresh J. Jogani 2,050,000
155 - Jeffrey T. Blatt 2,040,000
- ------------------------------------------------------------------------------------------------------------------------------------
155 Austin Texas 78703 - - -
155 Austin Texas 78701 - - -
156 Evansville Indiana 47715 - - 2,000,000
157 - Jeffrey T. Blatt 2,000,000
157 Austin Texas 78704 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
157 Austin Texas 78703 - - -
158 Dallas Texas 75236 - - 2,000,000
159 Triangle Virginia 22172 - - 2,000,000
160 St. Paul Minnesota 55104 - Van Landschoot Portfolio 1,950,000
161 - - 1,940,000
- ------------------------------------------------------------------------------------------------------------------------------------
161 Champaign Illinois 61820 - - -
161 Champaign Illinois 61820 - - -
162 Syracuse New York 13204 - - 1,950,000
163 Chino California 91710 - - 1,925,000
164 Austin Texas 78701 - Jeffrey T. Blatt 1,900,000
- ------------------------------------------------------------------------------------------------------------------------------------
165 Clovis California 93612 - - 1,900,000
166 Santa Monica California 90401 - - 1,875,000
167 Norcross Georgia 30093 - - 1,850,000
168 Rosemead California 91770 - Nijjar Portfolio 1,850,000
169 Los Angeles California 90007 - David Y. Lee 1,840,000
- ------------------------------------------------------------------------------------------------------------------------------------
170 Gainsville Florida 32605 - - 1,825,000
171 Astoria New York 11369 - - 1,820,000
172 Mt. Lebanon Pennsylvania 15228 - - 1,760,000
173 Dallas Texas 75235 - Fowler Shore Flanagan 1,680,000
174 Austin Texas 78751 - Jeffrey T. Blatt 1,650,000
- ------------------------------------------------------------------------------------------------------------------------------------
175 Delray Beach Florida 33444 - - 1,650,000
176 Eden Prairie Minnesota 55344 - - 1,644,000
177 Forest Park Georgia 30050 - - 1,625,000
178 Cincinnati (Union Twsp) Ohio 45244 - - 1,600,000
179 Bloomington Minnesota 55437 - - 1,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
180 New Milford Connecticut 06776 - R, Bryce Grefe 1,500,000
181 Austin Texas 78749 - - 1,500,000
182 Southgate Michigan 48915 - - 1,450,000
183 Houston Texas 77042 - - 1,425,000
184 Melbourne Florida 32904 - - 1,325,000
- ------------------------------------------------------------------------------------------------------------------------------------
185 St. Paul Minnesota 55104 - Van Landschoot Portfolio 1,325,000
186 Philadelphia Pennsylvania 19144 - - 1,300,000
187 Sylmar California 91342 - - 1,300,000
188 Chula Vista California 91911 - William D. Russo Portfolio 1,280,000
189 Chatsworth California 91311 - - 1,250,000
- ------------------------------------------------------------------------------------------------------------------------------------
190 La Jolla California 92037 - William D. Russo Portfolio 1,250,000
191 Montclair New Jersey 07042 - - 1,200,000
192 Warr Acres Oklahoma - - 1,200,000
193 Rockville Centre New York 11570 - - 1,200,000
194 Eau Claire Wisconsin 54701 - - 1,192,000
- ------------------------------------------------------------------------------------------------------------------------------------
195 Murrieta California 92562 - Joe Lacko 1,150,000
196 Gilroy California 95020 - - 1,150,000
197 Austin Texas 78750 - - 1,100,000
198 Grand Prairie Texas 75052 - - 1,088,000
199 Live Oak Texas 78233 - - 1,082,000
- ------------------------------------------------------------------------------------------------------------------------------------
200 Osseo Minnesota 58369 - - 1,065,000
201 Lexington Kentucky 40502 - Richard Stone 1,000,000
202 Roswell Georgia 30075 - - 1,000,000
203 St. Louis Park Minnesota 55416 - - 1,000,000
204 Hutchinson Minnesota 55350 - - 976,000
- ------------------------------------------------------------------------------------------------------------------------------------
205 Roseville Minnesota 55113 - Van Landschoot Portfolio 975,000
206 Henrietta New York 14467 - - 975,000
207 New Albany Indiana 47150 - - 965,500
208 Virginia Beach Virginia 23445 - - 825,000
209 Laredo Texas 78040 - - 800,000
- ------------------------------------------------------------------------------------------------------------------------------------
210 Houston Texas 77092 - - 650,000
211 San Clemente California 92672 - - 607,000
212 Laredo Texas 78043 - - 500,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
% OF AGGREGATE CUMULATIVE SERVICING INTEREST
CONTROL CUT-OFF DATE INITIAL % OF INITIAL MORTGAGE FEE ACCRUAL
NUMBER BALANCE ($) POOL BALANCE POOL BALANCE RATE (%) RATE (%) METHOD
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 60,000,000 4.58 4.58 6.6600 0.0320 30 Month-Days / 360 Year-Days
2 58,800,000 4.48 9.06 - - -
2 14,680,000 1.12 - 6.9825 0.0320 Actual Days / 360 Year-Days
2 11,380,000 0.87 - 6.9825 0.0320 Actual Days / 360 Year-Days
2 32,740,000 2.50 - 6.9825 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
3 43,242,000 3.30 12.36 - - -
3 2,700,000 0.21 - 7.0400 0.0320 Actual Days / 360 Year-Days
3 16,250,000 1.24 - 7.0400 0.0320 30 Month-Days / 360 Year-Days
3 3,150,000 0.24 - 7.0400 0.0320 30 Month-Days / 360 Year-Days
3 7,750,000 0.59 - 7.0400 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
3 13,392,000 1.02 - 7.0400 0.0320 30 Month-Days / 360 Year-Days
4 38,050,000 2.90 15.26 7.5900 0.0320 Actual Days / 360 Year-Days
4 - - - - - -
4 - - - - - -
4 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
4 - - - - - -
4 - - - - - -
4 - - - - - -
4 - - - - - -
5 35,018,169 2.67 17.93 7.0900 0.0620 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
6 34,639,734 2.64 20.57 7.1300 0.0320 Actual Days / 360 Year-Days
7 32,827,463 2.50 23.08 7.0600 0.0320 Actual Days / 360 Year-Days
7 - - - - - -
7 - - - - - -
7 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
7 - - - - - -
7 - - - - - -
7 - - - - - -
8 29,819,346 2.27 25.35 7.3800 0.0320 Actual Days / 360 Year-Days
8 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
8 - - - - - -
8 - - - - - -
8 - - - - - -
9 29,349,944 2.24 27.59 7.2100 0.0620 Actual Days / 360 Year-Days
10 26,829,956 2.05 29.64 6.8500 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
11 26,335,358 2.01 31.65 6.9100 0.0620 Actual Days / 360 Year-Days
12 23,176,048 1.77 33.41 7.0700 0.0320 30 Month-Days / 360 Year-Days
13 22,000,441 1.68 35.09 7.8300 0.0320 Actual Days / 360 Year-Days
13 - - - - - -
13 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
14 19,014,590 1.45 36.54 - - -
14 9,390,788 0.72 - 6.6900 0.0320 Actual Days / 360 Year-Days
14 9,623,802 0.73 - 6.6900 0.0320 Actual Days / 360 Year-Days
15 17,799,705 1.36 37.90 7.8000 0.0320 Actual Days / 360 Year-Days
15 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
15 - - - - - -
16 17,110,383 1.31 39.20 7.3300 0.0320 30 Month-Days / 360 Year-Days
16 - - - - - -
16 - - - - - -
16 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
16 - - - - - -
16 - - - - - -
17 16,686,031 1.27 40.48 7.1500 0.0320 Actual Days / 360 Year-Days
17 - - - - - -
17 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
18 16,648,162 1.27 41.75 7.0050 0.0320 Actual Days / 360 Year-Days
19 15,946,618 1.22 42.96 6.9500 0.0320 Actual Days / 360 Year-Days
20 15,609,875 1.19 44.15 7.2200 0.0320 30 Month-Days / 360 Year-Days
21 14,742,499 1.12 45.28 - - -
21 8,267,753 0.63 - 7.0700 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
21 6,474,746 0.49 - 7.0700 0.0445 Actual Days / 360 Year-Days
22 14,329,185 1.09 46.37 7.4700 0.0320 30 Month-Days / 360 Year-Days
23 14,015,735 1.07 47.44 - - -
23 4,473,107 0.34 - 7.0800 0.0320 Actual Days / 360 Year-Days
23 9,542,628 0.73 - 7.0800 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
24 13,829,953 1.05 48.49 6.9500 0.0320 30 Month-Days / 360 Year-Days
25 12,388,357 0.94 49.44 7.2000 0.0320 30 Month-Days / 360 Year-Days
26 11,829,398 0.90 50.34 7.2500 0.0320 30 Month-Days / 360 Year-Days
27 10,801,434 0.82 51.17 7.2300 0.0320 30 Month-Days / 360 Year-Days
28 10,501,039 0.80 51.97 7.4900 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
29 9,432,332 0.72 52.69 7.3000 0.0320 30 Month-Days / 360 Year-Days
30 9,153,307 0.70 53.38 6.7200 0.0620 Actual Days / 360 Year-Days
31 8,836,785 0.67 54.06 6.9000 0.1120 Actual Days / 360 Year-Days
32 8,568,506 0.65 54.71 7.4000 0.0320 30 Month-Days / 360 Year-Days
33 8,562,398 0.65 55.36 6.5100 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
34 8,405,815 0.64 56.01 6.7600 0.0320 30 Month-Days / 360 Year-Days
34 - - - - - -
34 - - - - - -
34 - - - - - -
34 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
34 - - - - - -
34 - - - - - -
34 - - - - - -
34 - - - - - -
35 7,965,756 0.61 56.61 7.4300 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
36 7,964,656 0.61 57.22 6.8400 0.0320 Actual Days / 360 Year-Days
37 7,563,536 0.58 57.80 6.9900 0.0320 Actual Days / 360 Year-Days
38 7,370,241 0.56 58.36 6.9900 0.0320 30 Month-Days / 360 Year-Days
39 7,324,331 0.56 58.92 7.6800 0.0320 30 Month-Days / 360 Year-Days
40 7,284,869 0.56 59.47 7.4800 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
41 7,195,682 0.55 60.02 7.0200 0.0320 30 Month-Days / 360 Year-Days
41 - - - - - -
41 - - - - - -
41 - - - - - -
41 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
42 7,173,100 0.55 60.57 7.2500 0.0445 Actual Days / 360 Year-Days
43 7,147,087 0.55 61.11 7.1400 0.0320 30 Month-Days / 360 Year-Days
44 7,141,489 0.54 61.66 7.1800 0.0320 30 Month-Days / 360 Year-Days
45 7,093,526 0.54 62.20 7.2200 0.0320 30 Month-Days / 360 Year-Days
46 6,962,866 0.53 62.73 7.1100 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
46 - - - - - -
46 - - - - - -
46 - - - - - -
47 6,815,586 0.52 63.25 7.1600 0.0320 30 Month-Days / 360 Year-Days
48 6,405,037 0.49 63.74 7.4100 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
49 6,363,063 0.49 64.23 7.0600 0.0320 30 Month-Days / 360 Year-Days
50 6,225,326 0.47 64.70 7.2500 0.0320 30 Month-Days / 360 Year-Days
51 6,205,339 0.47 65.17 7.1400 0.0445 Actual Days / 360 Year-Days
52 6,131,598 0.47 65.64 7.5000 0.0320 Actual Days / 360 Year-Days
53 6,068,238 0.46 66.10 7.6800 0.1120 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
54 6,066,559 0.46 66.57 7.4500 0.1120 Actual Days / 360 Year-Days
55 6,040,324 0.46 67.03 7.1300 0.0320 30 Month-Days / 360 Year-Days
56 5,975,260 0.46 67.48 6.7900 0.0320 Actual Days / 360 Year-Days
57 5,969,231 0.46 67.94 7.6600 0.0320 30 Month-Days / 360 Year-Days
57 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
57 - - - - - -
57 - - - - - -
57 - - - - - -
57 - - - - - -
57 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
57 - - - - - -
57 - - - - - -
57 - - - - - -
57 - - - - - -
57 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
57 - - - - - -
57 - - - - - -
58 5,942,661 0.45 68.39 6.8500 0.0320 30 Month-Days / 360 Year-Days
59 5,796,581 0.44 68.83 7.2600 0.0320 Actual Days / 360 Year-Days
60 5,740,395 0.44 69.27 6.9400 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
61 5,456,508 0.42 69.69 7.3200 0.0320 30 Month-Days / 360 Year-Days
62 5,450,877 0.42 70.10 7.2000 0.0320 30 Month-Days / 360 Year-Days
63 5,439,790 0.41 70.52 7.3400 0.1120 Actual Days / 360 Year-Days
64 5,378,704 0.41 70.93 7.0000 0.0320 Actual Days / 360 Year-Days
65 5,368,609 0.41 71.34 7.2300 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
66 5,130,649 0.39 71.73 7.5000 0.0320 30 Month-Days / 360 Year-Days
67 5,066,130 0.39 72.12 7.0400 0.0320 30 Month-Days / 360 Year-Days
68 4,985,769 0.38 72.50 7.7500 0.0320 Actual Days / 360 Year-Days
69 4,975,144 0.38 72.88 6.8200 0.0520 Actual Days / 360 Year-Days
70 4,972,714 0.38 73.25 6.4100 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
71 4,972,306 0.38 73.63 7.2700 0.0320 30 Month-Days / 360 Year-Days
72 4,779,617 0.36 74.00 6.6500 0.0320 Actual Days / 360 Year-Days
73 4,768,799 0.36 74.36 7.1500 0.0320 30 Month-Days / 360 Year-Days
74 4,658,416 0.36 74.72 7.5300 0.0320 30 Month-Days / 360 Year-Days
75 4,577,132 0.35 75.07 6.8200 0.0620 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
76 4,577,050 0.35 75.42 6.9900 0.0320 30 Month-Days / 360 Year-Days
77 4,570,964 0.35 75.76 7.3000 0.0320 30 Month-Days / 360 Year-Days
77 - - - - - -
77 - - - - - -
77 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
78 4,568,794 0.35 76.11 7.6500 0.0320 30 Month-Days / 360 Year-Days
79 4,563,070 0.35 76.46 7.1600 0.0620 Actual Days / 360 Year-Days
80 4,471,706 0.34 76.80 7.3200 0.0320 30 Month-Days / 360 Year-Days
81 4,468,876 0.34 77.14 7.4500 0.0320 30 Month-Days / 360 Year-Days
82 4,464,388 0.34 77.48 7.3400 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
83 4,451,256 0.34 77.82 7.7500 0.1370 Actual Days / 360 Year-Days
84 4,450,998 0.34 78.16 7.0700 0.0320 30 Month-Days / 360 Year-Days
85 4,325,455 0.33 78.49 7.3100 0.0320 30 Month-Days / 360 Year-Days
86 4,313,479 0.33 78.82 7.5100 0.0320 30 Month-Days / 360 Year-Days
87 4,129,352 0.31 79.14 7.1200 0.1120 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
88 4,077,111 0.31 79.45 7.3730 0.0320 Actual Days / 360 Year-Days
89 4,075,381 0.31 79.76 7.6600 0.0620 Actual Days / 360 Year-Days
90 4,052,452 0.31 80.07 7.5700 0.0320 30 Month-Days / 360 Year-Days
91 4,026,438 0.31 80.37 7.7700 0.0320 Actual Days / 360 Year-Days
92 3,980,115 0.30 80.68 6.8200 0.0620 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
93 3,877,960 0.30 80.97 7.3600 0.0320 30 Month-Days / 360 Year-Days
94 3,731,358 0.28 81.26 6.8200 0.0920 Actual Days / 360 Year-Days
95 3,669,401 0.28 81.54 7.0900 0.0320 30 Month-Days / 360 Year-Days
96 3,622,899 0.28 81.81 7.0900 0.0820 Actual Days / 360 Year-Days
97 3,568,269 0.27 82.09 6.7600 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
98 3,377,983 0.26 82.34 7.3100 0.0320 Actual Days / 360 Year-Days
99 3,331,776 0.25 82.60 6.7800 0.0870 Actual Days / 360 Year-Days
99 - - - - - -
99 - - - - - -
100 3,328,607 0.25 82.85 7.8100 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
101 3,269,480 0.25 83.10 7.0200 0.0320 30 Month-Days / 360 Year-Days
102 3,252,087 0.25 83.35 7.2100 0.0320 30 Month-Days / 360 Year-Days
103 3,216,709 0.25 83.59 6.4000 0.0870 Actual Days / 360 Year-Days
104 3,185,124 0.24 83.84 7.1400 0.0320 Actual Days / 360 Year-Days
105 3,167,056 0.24 84.08 7.3600 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
106 3,081,964 0.24 84.31 7.2800 0.0870 Actual Days / 360 Year-Days
107 3,073,630 0.23 84.55 7.4500 0.0320 30 Month-Days / 360 Year-Days
108 3,059,118 0.23 84.78 7.2300 0.0320 Actual Days / 360 Year-Days
109 2,984,764 0.23 85.01 6.9100 0.0320 30 Month-Days / 360 Year-Days
110 2,983,185 0.23 85.24 6.8600 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
111 2,978,692 0.23 85.46 6.9000 0.1120 Actual Days / 360 Year-Days
112 2,976,918 0.23 85.69 7.4600 0.0320 30 Month-Days / 360 Year-Days
113 2,969,759 0.23 85.92 6.5300 0.0320 Actual Days / 360 Year-Days
114 2,951,567 0.23 86.14 7.3400 0.0320 30 Month-Days / 360 Year-Days
115 2,949,743 0.22 86.37 7.4600 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
116 2,940,158 0.22 86.59 6.9500 0.0320 Actual Days / 360 Year-Days
117 2,937,785 0.22 86.82 6.7700 0.1120 Actual Days / 360 Year-Days
118 2,878,057 0.22 87.04 6.9900 0.0320 30 Month-Days / 360 Year-Days
119 2,877,507 0.22 87.25 6.6400 0.1120 Actual Days / 360 Year-Days
120 2,807,488 0.21 87.47 6.9200 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
121 2,798,532 0.21 87.68 7.1500 0.0320 30 Month-Days / 360 Year-Days
122 2,774,846 0.21 87.89 7.1700 0.0320 30 Month-Days / 360 Year-Days
123 2,755,769 0.21 88.10 7.4400 0.0320 30 Month-Days / 360 Year-Days
124 2,748,146 0.21 88.31 6.8200 0.0320 30 Month-Days / 360 Year-Days
125 2,699,854 0.21 88.52 7.1000 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
126 2,657,476 0.20 88.72 7.3500 0.0320 30 Month-Days / 360 Year-Days
127 2,621,904 0.20 88.92 7.4500 0.0320 30 Month-Days / 360 Year-Days
128 2,605,899 0.20 89.12 7.0300 0.0320 Actual Days / 360 Year-Days
129 2,594,197 0.20 89.32 7.0500 0.0320 30 Month-Days / 360 Year-Days
130 2,581,205 0.20 89.52 7.0700 0.0920 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
131 2,535,039 0.19 89.71 7.1600 0.0320 Actual Days / 360 Year-Days
132 2,511,652 0.19 89.90 7.7600 0.0320 30 Month-Days / 360 Year-Days
133 2,484,738 0.19 90.09 7.4700 0.0320 30 Month-Days / 360 Year-Days
134 2,482,243 0.19 90.28 6.9000 0.1120 Actual Days / 360 Year-Days
135 2,479,920 0.19 90.47 7.2400 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
136 2,468,411 0.19 90.66 7.5000 0.0620 Actual Days / 360 Year-Days
137 2,432,724 0.19 90.84 7.2200 0.1120 Actual Days / 360 Year-Days
138 2,430,357 0.19 91.03 6.9900 0.0320 Actual Days / 360 Year-Days
139 2,429,862 0.19 91.21 7.1200 0.0320 Actual Days / 360 Year-Days
140 2,412,945 0.18 91.40 6.8200 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
141 2,391,406 0.18 91.58 7.3200 0.0320 Actual Days / 360 Year-Days
142 2,335,680 0.18 91.76 7.9000 0.1120 Actual Days / 360 Year-Days
143 2,300,773 0.18 91.93 6.9400 0.1120 Actual Days / 360 Year-Days
144 2,292,401 0.17 92.11 7.0000 0.0320 Actual Days / 360 Year-Days
145 2,282,477 0.17 92.28 6.7500 0.1120 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
146 2,271,354 0.17 92.46 7.1700 0.0320 30 Month-Days / 360 Year-Days
147 2,238,483 0.17 92.63 6.8700 0.0320 30 Month-Days / 360 Year-Days
148 2,228,501 0.17 92.80 7.1400 0.0320 30 Month-Days / 360 Year-Days
149 2,150,519 0.16 92.96 7.7900 0.1120 Actual Days / 360 Year-Days
150 2,149,745 0.16 93.12 7.0400 0.0820 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
151 2,143,496 0.16 93.29 7.8200 0.1120 Actual Days / 360 Year-Days
152 2,087,078 0.16 93.45 6.8900 0.0320 Actual Days / 360 Year-Days
153 2,085,129 0.16 93.61 7.3300 0.0320 30 Month-Days / 360 Year-Days
154 2,040,164 0.16 93.76 6.9900 0.0820 Actual Days / 360 Year-Days
155 2,030,005 0.15 93.92 7.1000 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
155 - - - - - -
155 - - - - - -
156 1,990,181 0.15 94.07 6.8800 0.0620 Actual Days / 360 Year-Days
157 1,986,962 0.15 94.22 6.5400 0.0320 Actual Days / 360 Year-Days
157 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
157 - - - - - -
158 1,986,834 0.15 94.37 6.4800 0.1370 Actual Days / 360 Year-Days
159 1,986,140 0.15 94.52 7.4400 0.0320 30 Month-Days / 360 Year-Days
160 1,939,517 0.15 94.67 7.0500 0.0320 Actual Days / 360 Year-Days
161 1,933,591 0.15 94.82 7.0000 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
161 - - - - - -
161 - - - - - -
162 1,924,691 0.15 94.97 7.4800 0.0320 30 Month-Days / 360 Year-Days
163 1,918,628 0.15 95.11 6.9900 0.0320 Actual Days / 360 Year-Days
164 1,886,669 0.14 95.26 7.2500 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
165 1,884,709 0.14 95.40 7.2300 0.0320 30 Month-Days / 360 Year-Days
166 1,867,137 0.14 95.54 6.7100 0.0320 Actual Days / 360 Year-Days
167 1,841,051 0.14 95.68 7.5200 0.0320 Actual Days / 360 Year-Days
168 1,832,037 0.14 95.82 7.2400 0.0320 30 Month-Days / 360 Year-Days
169 1,829,865 0.14 95.96 7.4300 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
170 1,816,450 0.14 96.10 6.3700 0.0320 30 Month-Days / 360 Year-Days
171 1,801,390 0.14 96.24 7.6800 0.0320 30 Month-Days / 360 Year-Days
172 1,749,396 0.13 96.37 7.0450 0.0320 Actual Days / 360 Year-Days
173 1,668,690 0.13 96.50 6.9700 0.0320 30 Month-Days / 360 Year-Days
174 1,646,083 0.13 96.62 7.2000 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
175 1,637,694 0.12 96.75 6.8800 0.1370 Actual Days / 360 Year-Days
176 1,633,418 0.12 96.87 7.2000 0.0320 30 Month-Days / 360 Year-Days
177 1,612,350 0.12 97.00 7.4000 0.0320 30 Month-Days / 360 Year-Days
178 1,584,170 0.12 97.12 6.7500 0.0620 Actual Days / 360 Year-Days
179 1,486,837 0.11 97.23 7.2900 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
180 1,482,023 0.11 97.34 7.3600 0.0320 30 Month-Days / 360 Year-Days
181 1,474,587 0.11 97.46 7.7000 0.0620 Actual Days / 360 Year-Days
182 1,445,349 0.11 97.57 7.1500 0.0320 Actual Days / 360 Year-Days
183 1,407,740 0.11 97.67 7.4800 0.1120 Actual Days / 360 Year-Days
184 1,319,605 0.10 97.77 6.8500 0.1370 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
185 1,317,877 0.10 97.87 7.0500 0.0320 Actual Days / 360 Year-Days
186 1,291,517 0.10 97.97 7.1300 0.0320 30 Month-Days / 360 Year-Days
187 1,286,592 0.10 98.07 8.3100 0.0320 30 Month-Days / 360 Year-Days
188 1,269,427 0.10 98.17 7.4000 0.0320 30 Month-Days / 360 Year-Days
189 1,240,439 0.09 98.26 7.4900 0.0320 30 Month-Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
190 1,239,675 0.09 98.36 7.4000 0.0320 30 Month-Days / 360 Year-Days
191 1,193,302 0.09 98.45 6.8790 0.0320 Actual Days / 360 Year-Days
192 1,191,773 0.09 98.54 6.2300 0.1370 Actual Days / 360 Year-Days
193 1,191,608 0.09 98.63 7.2700 0.0320 Actual Days / 360 Year-Days
194 1,187,239 0.09 98.72 6.9400 0.1370 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
195 1,145,147 0.09 98.81 6.9100 0.0320 30 Month-Days / 360 Year-Days
196 1,141,841 0.09 98.89 7.3200 0.0320 30 Month-Days / 360 Year-Days
197 1,088,805 0.08 98.98 7.7100 0.0920 30 Month-Days / 360 Year-Days
198 1,084,550 0.08 99.06 8.0000 0.1370 Actual Days / 360 Year-Days
199 1,077,591 0.08 99.14 8.2500 0.1370 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
200 1,056,992 0.08 99.22 6.8300 0.0620 Actual Days / 360 Year-Days
201 992,307 0.08 99.30 6.6900 0.1370 Actual Days / 360 Year-Days
202 990,642 0.08 99.37 7.0700 0.0320 Actual Days / 360 Year-Days
203 988,565 0.08 99.45 7.6600 0.0320 30 Month-Days / 360 Year-Days
204 969,881 0.07 99.52 6.8700 0.0320 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
205 969,758 0.07 99.60 7.0500 0.0320 Actual Days / 360 Year-Days
206 969,513 0.07 99.67 7.8800 0.0320 30 Month-Days / 360 Year-Days
207 961,577 0.07 99.75 6.8600 0.1370 Actual Days / 360 Year-Days
208 819,345 0.06 99.81 7.3900 0.1370 Actual Days / 360 Year-Days
209 784,421 0.06 99.87 6.7200 0.1370 Actual Days / 360 Year-Days
- -------------------------------------------------------------------------------------------------------------------------------
210 644,673 0.05 99.92 7.4500 0.0620 30 Month-Days / 360 Year-Days
211 600,618 0.05 99.96 8.1900 0.0920 30 Month-Days / 360 Year-Days
212 493,521 0.04 100.00 7.4500 0.0620 30 Month-Days / 360 Year-Days
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL REMAINING
ORIGINAL REMAINING TERM TO TERM TO ORIGINAL REMAINING
CONTROL AMORTIZATION INTEREST-ONLY INTEREST-ONLY MATURITY MATURITY AMORTIZATION AMORTIZATION
NUMBER TYPE PERIOD (MOS.) PERIOD (MOS.) (MOS.) (MOS.) TERM (MOS.) TERM (MOS.)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 Interest Only 120 112 120 112 - -
2 - - - - - - -
2 Interest Only ,Then Amortizing 12 7 120 115 348 348
2 Interest Only ,Then Amortizing 12 7 120 115 348 348
2 Interest Only ,Then Amortizing 12 7 120 115 348 348
- ------------------------------------------------------------------------------------------------------------------------------------
3 - - - - - - -
3 Interest Only ,Then Hyperamortizing 24 11 120 107 346 346
3 Interest Only ,Then Hyperamortizing 24 11 120 107 336 336
3 Interest Only ,Then Hyperamortizing 24 11 120 107 336 336
3 Interest Only ,Then Hyperamortizing 24 11 120 107 336 336
- ------------------------------------------------------------------------------------------------------------------------------------
3 Interest Only ,Then Hyperamortizing 24 11 120 107 336 336
4 Interest Only ,Then Amortizing 14 11 120 117 200 200
4 - - - - - - -
4 - - - - - - -
4 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
4 - - - - - - -
4 - - - - - - -
4 - - - - - - -
4 - - - - - - -
5 Hyperamortizing - - 126 118 360 352
- ------------------------------------------------------------------------------------------------------------------------------------
6 Hyperamortizing - - 120 111 374 365
7 Amortizing Balloon - - 120 115 307 302
7 - - - - - - -
7 - - - - - - -
7 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
7 - - - - - - -
7 - - - - - - -
7 - - - - - - -
8 Amortizing Balloon - - 120 115 300 295
8 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
8 - - - - - - -
8 - - - - - - -
8 - - - - - - -
9 Hyperamortizing - - 120 109 374 363
10 Hyperamortizing - - 120 112 373 365
- ------------------------------------------------------------------------------------------------------------------------------------
11 Amortizing Balloon - - 120 112 373 365
12 Hyperamortizing - - 120 111 360 351
13 Amortizing Balloon - - 120 115 300 295
13 - - - - - - -
13 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
14 - - - - - - -
14 Amortizing Balloon - - 120 115 372 367
14 Amortizing Balloon - - 120 115 372 367
15 Amortizing Balloon - - 120 116 376 372
15 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
15 - - - - - - -
16 Hyperamortizing - - 120 108 360 348
16 - - - - - - -
16 - - - - - - -
16 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
16 - - - - - - -
16 - - - - - - -
17 Hyperamortizing - - 120 115 374 369
17 - - - - - - -
17 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
18 Hyperamortizing - - 120 112 373 365
19 Hyperamortizing - - 120 116 373 369
20 Hyperamortizing - - 120 109 360 349
21 - - - - - - -
21 Amortizing Balloon - - 120 115 373 368
- ------------------------------------------------------------------------------------------------------------------------------------
21 Amortizing Balloon - - 120 115 373 368
22 Hyperamortizing - - 120 110 300 290
23 - - - - - - -
23 Hyperamortizing - - 120 112 373 365
23 Hyperamortizing - - 120 112 373 365
- ------------------------------------------------------------------------------------------------------------------------------------
24 Hyperamortizing - - 120 114 360 354
25 Hyperamortizing - - 119 108 360 349
26 Hyperamortizing - - 120 110 359 349
27 Hyperamortizing - - 120 111 360 351
28 Hyperamortizing - - 120 112 300 292
- ------------------------------------------------------------------------------------------------------------------------------------
29 Hyperamortizing - - 120 111 360 351
30 Amortizing Balloon - - 120 114 372 366
31 Amortizing Balloon - - 120 111 373 364
32 Hyperamortizing - - 113 102 240 229
33 Hyperamortizing - - 120 115 371 366
- ------------------------------------------------------------------------------------------------------------------------------------
34 Hyperamortizing - - 120 114 360 354
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
35 Amortizing Balloon - - 120 116 375 371
- ------------------------------------------------------------------------------------------------------------------------------------
36 Hyperamortizing - - 120 115 360 355
37 Hyperamortizing - - 120 114 373 367
38 Hyperamortizing - - 120 112 360 352
39 Hyperamortizing - - 120 111 300 291
40 Hyperamortizing - - 120 109 360 349
- ------------------------------------------------------------------------------------------------------------------------------------
41 Hyperamortizing - - 120 114 300 294
41 - - - - - - -
41 - - - - - - -
41 - - - - - - -
41 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
42 Amortizing Balloon - - 120 117 374 371
43 Amortizing Balloon - - 120 111 360 351
44 Hyperamortizing - - 120 110 360 350
45 Hyperamortizing - - 120 108 300 288
46 Hyperamortizing - - 120 113 373 366
- ------------------------------------------------------------------------------------------------------------------------------------
46 - - - - - - -
46 - - - - - - -
46 - - - - - - -
47 Hyperamortizing - - 180 170 240 230
48 Hyperamortizing - - 120 111 360 351
- ------------------------------------------------------------------------------------------------------------------------------------
49 Hyperamortizing - - 120 113 360 353
50 Hyperamortizing - - 120 115 360 355
51 Amortizing Balloon - - 120 114 308 302
52 Amortizing Balloon - - 120 116 375 371
53 Amortizing Balloon - - 120 109 309 298
- ------------------------------------------------------------------------------------------------------------------------------------
54 Amortizing Balloon - - 120 112 375 367
55 Hyperamortizing - - 120 112 360 352
56 Hyperamortizing - - 120 115 372 367
57 Hyperamortizing - - 120 113 360 353
57 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - - - - - -
57 - - - - - - -
57 - - - - - - -
57 - - - - - - -
57 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - - - - - -
57 - - - - - - -
57 - - - - - - -
57 - - - - - - -
57 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - - - - - -
57 - - - - - - -
58 Hyperamortizing - - 120 109 360 349
59 Hyperamortizing - - 120 112 374 366
60 Hyperamortizing - - 120 108 359 347
- ------------------------------------------------------------------------------------------------------------------------------------
61 Hyperamortizing - - 120 110 360 350
62 Hyperamortizing - - 120 109 360 349
63 Amortizing Balloon - - 120 111 374 365
64 Amortizing Balloon - - 120 115 373 368
65 Hyperamortizing - - 120 115 308 303
- ------------------------------------------------------------------------------------------------------------------------------------
66 Hyperamortizing - - 120 115 360 355
67 Hyperamortizing - - 120 112 360 352
68 Hyperamortizing - - 120 116 376 372
69 Amortizing Balloon - - 120 114 372 366
70 Amortizing Balloon - - 120 116 306 302
- ------------------------------------------------------------------------------------------------------------------------------------
71 Hyperamortizing - - 120 113 360 353
72 Hyperamortizing - - 120 115 372 367
73 Hyperamortizing - - 120 112 360 352
74 Hyperamortizing - - 120 113 288 281
75 Amortizing Balloon - - 120 114 372 366
- ------------------------------------------------------------------------------------------------------------------------------------
76 Hyperamortizing - - 120 116 300 296
77 Hyperamortizing - - 120 112 360 352
77 - - - - - - -
77 - - - - - - -
77 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
78 Hyperamortizing - - 60 54 300 294
79 Amortizing Balloon - - 120 112 374 366
80 Hyperamortizing - - 120 112 360 352
81 Hyperamortizing - - 180 171 360 351
82 Hyperamortizing - - 120 113 308 301
- ------------------------------------------------------------------------------------------------------------------------------------
83 Amortizing Balloon - - 180 177 309 306
84 Hyperamortizing - - 120 107 298 285
85 Hyperamortizing - - 120 110 360 350
86 Hyperamortizing - - 120 112 300 292
87 Amortizing Balloon - - 120 111 244 235
- ------------------------------------------------------------------------------------------------------------------------------------
88 Hyperamortizing - - 120 112 375 367
89 Amortizing Balloon - - 120 112 309 301
90 Hyperamortizing - - 120 110 300 290
91 Hyperamortizing - - 120 111 377 368
92 Amortizing Balloon - - 120 114 372 366
- ------------------------------------------------------------------------------------------------------------------------------------
93 Hyperamortizing - - 120 110 300 290
94 Amortizing Balloon - - 120 114 372 366
95 Hyperamortizing - - 120 110 360 350
96 Hyperamortizing - - 120 114 373 367
97 Amortizing Balloon - - 120 110 360 350
- ------------------------------------------------------------------------------------------------------------------------------------
98 Hyperamortizing - - 120 111 374 365
99 Amortizing Balloon - - 120 115 372 367
99 - - - - - - -
99 - - - - - - -
100 Hyperamortizing - - 120 114 309 303
- ------------------------------------------------------------------------------------------------------------------------------------
101 Hyperamortizing - - 120 109 360 349
102 Hyperamortizing - - 120 113 300 293
103 Amortizing Balloon - - 120 115 243 238
104 Amortizing Balloon - - 120 114 373 367
105 Hyperamortizing - - 120 107 360 347
- ------------------------------------------------------------------------------------------------------------------------------------
106 Amortizing Balloon - - 120 115 308 303
107 Hyperamortizing - - 120 109 360 349
108 Hyperamortizing - - 120 113 374 367
109 Hyperamortizing - - 120 114 360 354
110 Hyperamortizing - - 120 113 372 365
- ------------------------------------------------------------------------------------------------------------------------------------
111 Amortizing Balloon - - 120 111 373 364
112 Hyperamortizing - - 120 110 360 350
113 Hyperamortizing - - 120 115 243 238
114 Hyperamortizing - - 120 110 360 350
115 Hyperamortizing - - 120 109 360 349
- ------------------------------------------------------------------------------------------------------------------------------------
116 Amortizing Balloon - - 120 116 373 369
117 Amortizing Balloon - - 120 115 372 367
118 Hyperamortizing - - 120 111 360 351
119 Amortizing Balloon - - 120 114 307 301
120 Hyperamortizing - - 120 112 373 365
- ------------------------------------------------------------------------------------------------------------------------------------
121 Hyperamortizing - - 120 109 360 349
122 Hyperamortizing - - 120 109 360 349
123 Hyperamortizing - - 119 110 360 351
124 Hyperamortizing - - 120 115 360 355
125 Hyperamortizing - - 120 111 360 351
- ------------------------------------------------------------------------------------------------------------------------------------
126 Hyperamortizing - - 120 107 300 287
127 Hyperamortizing - - 120 111 300 291
128 Hyperamortizing - - 120 114 307 301
129 Hyperamortizing - - 120 110 360 350
130 Amortizing Balloon - - 120 114 307 301
- ------------------------------------------------------------------------------------------------------------------------------------
131 Hyperamortizing - - 120 112 374 366
132 Hyperamortizing - - 120 110 360 350
133 Hyperamortizing - - 120 112 360 352
134 Amortizing Balloon - - 120 111 373 364
135 Hyperamortizing - - 120 110 360 350
- ------------------------------------------------------------------------------------------------------------------------------------
136 Amortizing Balloon - - 120 112 309 301
137 Amortizing Balloon - - 120 114 308 302
138 Hyperamortizing - - 120 115 373 368
139 Hyperamortizing - - 120 113 308 301
140 Hyperamortizing - - 120 114 372 366
- ------------------------------------------------------------------------------------------------------------------------------------
141 Hyperamortizing - - 120 112 375 367
142 Fully Amortizing - - 240 236 245 241
143 Amortizing Balloon - - 120 115 373 368
144 Hyperamortizing - - 120 116 373 369
145 Amortizing Balloon - - 120 114 307 301
- ------------------------------------------------------------------------------------------------------------------------------------
146 Hyperamortizing - - 120 110 360 350
147 Hyperamortizing - - 120 114 360 354
148 Hyperamortizing - - 120 111 360 351
149 Amortizing Balloon - - 120 116 309 305
150 Hyperamortizing - - 120 114 373 367
- ------------------------------------------------------------------------------------------------------------------------------------
151 Amortizing Balloon - - 120 117 377 374
152 Hyperamortizing - - 120 115 307 302
153 Hyperamortizing - - 120 111 360 351
154 Hyperamortizing - - 120 114 373 367
155 Amortizing Balloon - - 120 116 307 303
- ------------------------------------------------------------------------------------------------------------------------------------
155 - - - - - - -
155 - - - - - - -
156 Amortizing Balloon - - 120 114 372 366
157 Hyperamortizing - - 120 115 306 301
157 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
157 - - - - - - -
158 Amortizing Balloon - - 120 115 306 301
159 Hyperamortizing - - 120 111 360 351
160 Hyperamortizing - - 120 113 373 366
161 Hyperamortizing - - 120 116 373 369
- ------------------------------------------------------------------------------------------------------------------------------------
161 - - - - - - -
161 - - - - - - -
162 Hyperamortizing - - 120 109 300 289
163 Hyperamortizing - - 120 116 373 369
164 Hyperamortizing - - 120 114 308 302
- ------------------------------------------------------------------------------------------------------------------------------------
165 Hyperamortizing - - 120 110 360 350
166 Hyperamortizing - - 120 115 372 367
167 Hyperamortizing - - 120 113 375 368
168 Hyperamortizing - - 120 112 300 292
169 Hyperamortizing - - 120 112 375 367
- ------------------------------------------------------------------------------------------------------------------------------------
170 Hyperamortizing - - 120 115 360 355
171 Hyperamortizing - - 120 111 300 291
172 Hyperamortizing - - 120 112 373 365
173 Hyperamortizing - - 120 112 360 352
174 Hyperamortizing - - 119 116 374 371
- ------------------------------------------------------------------------------------------------------------------------------------
175 Amortizing Balloon - - 120 114 307 301
176 Hyperamortizing - - 120 112 360 352
177 Amortizing Balloon - - 119 109 360 350
178 Amortizing Balloon - - 120 112 307 299
179 Hyperamortizing - - 120 109 360 349
- ------------------------------------------------------------------------------------------------------------------------------------
180 Hyperamortizing - - 120 110 300 290
181 Amortizing Balloon - - 179 171 219 211
182 Hyperamortizing - - 120 116 373 369
183 Hyperamortizing - - 120 109 308 297
184 Amortizing Balloon - - 120 115 372 367
- ------------------------------------------------------------------------------------------------------------------------------------
185 Hyperamortizing - - 120 113 373 366
186 Hyperamortizing - - 120 112 360 352
187 Hyperamortizing - - 120 110 300 290
188 Hyperamortizing - - 120 113 300 293
189 Hyperamortizing - - 120 110 360 350
- ------------------------------------------------------------------------------------------------------------------------------------
190 Hyperamortizing - - 120 113 300 293
191 Hyperamortizing - - 120 113 372 365
192 Amortizing Balloon - - 120 115 306 301
193 Hyperamortizing - - 120 114 308 302
194 Amortizing Balloon - - 120 115 373 368
- ------------------------------------------------------------------------------------------------------------------------------------
195 Hyperamortizing - - 120 115 360 355
196 Hyperamortizing - - 120 111 360 351
197 Amortizing Balloon - - 120 111 300 291
198 Amortizing Balloon - - 120 117 310 307
199 Amortizing Balloon - - 120 116 310 306
- ------------------------------------------------------------------------------------------------------------------------------------
200 Amortizing Balloon - - 120 114 307 301
201 Amortizing Balloon - - 120 114 307 301
202 Hyperamortizing - - 120 112 308 300
203 Hyperamortizing - - 120 110 300 290
204 Hyperamortizing - - 120 112 373 365
- ------------------------------------------------------------------------------------------------------------------------------------
205 Hyperamortizing - - 120 113 373 366
206 Hyperamortizing - - 120 112 360 352
207 Amortizing Balloon - - 120 115 372 367
208 Amortizing Balloon - - 120 114 308 302
209 Fully Amortizing - - 180 174 181 175
- ------------------------------------------------------------------------------------------------------------------------------------
210 Amortizing Balloon - - 120 113 300 293
211 Amortizing Balloon - - 120 110 300 290
212 Amortizing Balloon - - 120 113 240 233
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MATURITY BALLOON UNDERWRITTEN
CONTROL ORIGINATION OR ARD OR ARD MONTHLY NET
NUMBER DATE DATE BALANCE ($) PREPAYMENT PROVISIONS PAYMENT ($) CASH FLOW ($)
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 6/17/98 7/1/08 60,000,000 Lock/36_Def/78_0%/6 333,000 7,687,177
2 - - - - - 5,736,087
2 9/28/98 9/28/08 12,751,420 Lock/28_Def/92 99,501 1,452,453
2 9/28/98 9/28/08 9,884,955 Lock/28_Def/92 77,133 1,168,532
2 9/28/98 9/28/08 28,438,792 Lock/28_Def/92 221,911 3,115,102
- -----------------------------------------------------------------------------------------------------------------------------
3 - - - - - 5,348,534
3 2/1/98 2/1/08 2,396,517 Lock/36_Def/84 18,421 271,293
3 2/1/98 2/1/08 14,255,447 Lock/36_Def/84 110,865 1,884,743
3 2/1/98 2/1/08 2,763,363 Lock/36_Def/84 21,491 445,013
3 2/1/98 2/1/08 6,798,751 Lock/36_Def/84 52,874 868,378
- -----------------------------------------------------------------------------------------------------------------------------
3 2/1/98 2/1/08 11,748,241 Lock/36_Def/84 91,366 1,879,107
4 11/18/98 12/1/08 24,184,480 Lock/26_Def/91_0%/3 335,829 7,157,802
4 - - - NAP - 1,199,594
4 - - - NAP - 1,384,784
4 - - - NAP - 764,898
- -----------------------------------------------------------------------------------------------------------------------------
4 - - - NAP - 619,930
4 - - - NAP - 561,835
4 - - - NAP - 127,365
4 - - - NAP - 2,499,396
5 6/12/98 1/1/09 29,962,118 Lock/48_Def/72_0%/6 236,654 3,676,390
- -----------------------------------------------------------------------------------------------------------------------------
6 5/21/98 6/1/08 30,525,479 Lock/48_Def/69_0%/3 235,077 3,901,028
7 9/3/98 10/1/08 26,470,558 Lock/37_Def/83 234,679 9,025,285
7 - - - NAP - 1,903,155
7 - - - NAP - 1,962,202
7 - - - NAP - 2,428,584
- -----------------------------------------------------------------------------------------------------------------------------
7 - - - NAP - 522,285
7 - - - NAP - 1,052,189
7 - - - NAP - 1,156,870
8 9/25/98 10/1/08 23,909,701 Lock/40_Def/80 221,460 3,683,582
8 - - - NAP - 885,772
- -----------------------------------------------------------------------------------------------------------------------------
8 - - - NAP - 1,210,196
8 - - - NAP - 765,546
8 - - - NAP - 822,068
9 3/27/98 4/1/08 25,953,599 Lock/36_Def/81_0%/3 201,047 3,015,714
10 6/25/98 7/1/08 23,460,017 Lock/31_Def/86_0%/3 176,920 2,618,611
- -----------------------------------------------------------------------------------------------------------------------------
11 6/18/98 7/1/08 23,062,783 Lock/36_Def/81_0%/3 174,706 2,626,332
12 5/11/98 6/1/08 20,070,064 Lock/32_Def/82_0%6 156,447 2,361,300
13 9/29/98 10/1/08 17,845,339 Lock/40_Def/80 169,951 2,609,387
13 - - - NAP - 1,241,628
13 - - - NAP - 1,367,759
- -----------------------------------------------------------------------------------------------------------------------------
14 - - - - - 1,949,689
14 9/29/98 10/1/08 8,157,141 Lock/48_Def/69_0%/3 60,790 961,712
14 9/29/98 10/1/08 8,359,545 Lock/48_Def/69_0%/3 62,299 987,977
15 10/30/98 11/1/08 15,886,653 Lock/48_Def/66_0%/6 128,497 1,939,618
15 - - - NAP - 806,783
- -----------------------------------------------------------------------------------------------------------------------------
15 - - - NAP - 1,132,835
16 2/24/98 3/1/08 14,937,153 Lock/60_Def/57_0%/3 118,785 1,928,933
16 - - - NAP - 304,380
16 - - - NAP - 347,276
16 - - - NAP - 588,295
- -----------------------------------------------------------------------------------------------------------------------------
16 - - - NAP - 483,495
16 - - - NAP - 205,487
17 9/18/98 10/1/08 14,667,735 Lock/48_Def/69_0%/3 113,131 2,006,984
17 - - - NAP - 1,847,322
17 - - - NAP - 159,662
- -----------------------------------------------------------------------------------------------------------------------------
18 6/26/98 7/1/08 14,614,433 Lock/31_Def/86_0%/3 111,494 1,682,084
19 10/9/98 11/1/08 13,935,236 Lock/60_Def/57_0%/3 105,912 1,738,016
20 3/26/98 4/1/08 13,584,579 Lock/36_Def/81_0%/3 107,122 1,858,295
21 - - - - - 1,501,779
21 9/16/98 10/1/08 7,252,962 Lock/36_Def/78_0%/6 55,611 836,303
- -----------------------------------------------------------------------------------------------------------------------------
21 9/16/98 10/1/08 5,680,029 Lock/36_Def/78_0%/6 43,551 665,476
22 4/14/98 5/1/08 11,549,764 Lock/60_Def/57_0%/3 106,871 2,270,204
23 - - - - - 1,531,557
23 6/18/98 7/1/08 3,934,063 Lock/60_Def/57_0%/3 30,181 468,209
23 6/18/98 7/1/08 8,392,669 Lock/60_Def/57_0%/3 64,386 1,063,348
- -----------------------------------------------------------------------------------------------------------------------------
24 7/30/98 9/1/08 11,913,854 Lock/36_Def/81_0%/3 92,011 1,452,178
25 3/12/98 3/1/08 10,796,547 Lock/48_Def/65_0%/6 84,849 1,472,072
26 4/14/98 5/1/08 10,292,425 Lock/36_Def/78_0%/6 81,350 1,202,788
27 3/9/98 6/1/08 9,386,286 Lock/60_Def/57_0%/3 74,073 1,153,094
28 6/22/98 7/1/08 8,447,797 Lock/31_Def/86_0%/3 78,264 1,500,263
- -----------------------------------------------------------------------------------------------------------------------------
29 5/20/98 6/1/08 8,208,792 Lock/36_Def/81_0%/3 65,129 1,226,506
30 8/12/98 9/1/08 7,963,466 Lock/36_Def/81_0%/3 59,488 974,210
31 5/11/98 6/1/08 7,742,675 Lock/36_Def/78_0%/6 58,615 868,577
32 3/24/98 9/1/07 6,147,862 Lock/60_Def/53 69,955 1,025,782
33 9/29/98 10/1/08 7,401,821 Lock/28_Def/89_0%/3 54,414 855,942
- -----------------------------------------------------------------------------------------------------------------------------
34 8/26/98 9/1/08 7,209,685 Lock/60_Def/57_0%/3 54,863 932,937
34 - - - NAP - 346,904
34 - - - NAP - 159,294
34 - - - NAP - 93,461
34 - - - NAP - 87,203
- -----------------------------------------------------------------------------------------------------------------------------
34 - - - NAP - 84,188
34 - - - NAP - 60,316
34 - - - NAP - 51,831
34 - - - NAP - 49,740
35 10/30/98 11/1/08 7,046,171 Lock/36_Def/81_0%/3 55,485 829,759
- -----------------------------------------------------------------------------------------------------------------------------
36 9/15/98 10/1/08 6,855,856 Lock/48_Def/69_0%/3 52,902 834,974
37 8/24/98 9/1/08 6,626,483 Lock/48_Def/69_0%/3 50,512 848,374
38 6/8/98 7/1/08 6,365,781 Lock/36_Def/79_0%/5 49,316 938,884
39 5/1/98 6/1/08 5,927,286 Lock/60_Def/54_0%/6 55,555 879,207
40 3/11/98 4/1/08 6,374,015 Lock/36_Def/81_0%/3 51,271 789,879
- -----------------------------------------------------------------------------------------------------------------------------
41 8/11/98 9/1/08 5,704,118 Lock/60_Def/57_0%/3 51,334 775,712
41 - - - NAP - 176,853
41 - - - NAP - 172,913
41 - - - NAP - 251,662
41 - - - NAP - 174,284
- -----------------------------------------------------------------------------------------------------------------------------
42 11/24/98 12/1/08 6,312,343 Lock/36_Def/81_0%/3 49,048 707,604
43 5/21/98 6/1/08 6,198,688 Lock/48_Def/70_0%/2 48,581 729,504
44 4/16/98 5/1/08 6,204,403 Lock/36_>YM or 1%/78_0%/6 48,775 756,086
45 1/30/98 3/1/08 5,696,288 Lock/60_Def/57_0%/3 51,903 742,677
46 7/27/98 8/1/08 6,123,583 Lock/48_Def/69_0%/3 47,089 701,893
- -----------------------------------------------------------------------------------------------------------------------------
46 - - - NAP - 186,438
46 - - - NAP - 394,227
46 - - - NAP - 121,228
47 4/9/98 5/1/13 2,744,550 Lock/84_Def/94_0%/2 54,553 989,993
48 5/14/98 6/1/08 5,587,121 Lock/48_Def/66_0%/6 44,703 734,604
- -----------------------------------------------------------------------------------------------------------------------------
49 7/10/98 8/1/08 5,499,717 Lock/60_Def/57_0%/3 42,838 686,709
50 9/1/98 10/1/08 5,394,396 Lock/48_Def/69_0%/3 42,636 688,060
51 8/31/98 9/1/08 5,021,306 Lock/48_Def/69_0%/3 44,733 895,241
52 10/23/98 11/1/08 5,433,104 Lock/36_Def/81_0%/3 43,002 658,984
53 3/30/98 4/1/08 5,015,346 Lock/48_ Def/69_0%/3 46,095 707,361
- -----------------------------------------------------------------------------------------------------------------------------
54 6/2/98 7/1/08 5,384,086 Lock/48_>YM or 1%/69_0%/3 42,443 674,543
55 6/16/98 7/1/08 5,233,238 Lock/36_Def/81_0%/3 40,983 689,249
56 9/18/98 10/1/08 5,204,017 Lock/48_Def/69_0%/3 39,076 742,203
57 6/30/98 8/1/08 5,225,892 Lock/48_Def/66_0%/6 42,612 639,454
57 - - - NAP - 25,890
- -----------------------------------------------------------------------------------------------------------------------------
57 - - - NAP - 54,809
57 - - - NAP - 9,607
57 - - - NAP - 63,846
57 - - - NAP - 2,110
57 - - - NAP - 51,199
- -----------------------------------------------------------------------------------------------------------------------------
57 - - - NAP - 6,056
57 - - - NAP - 81,953
57 - - - NAP - 54,036
57 - - - NAP - 107,703
57 - - - NAP - 112,973
- -----------------------------------------------------------------------------------------------------------------------------
57 - - - NAP - 48,722
57 - - - NAP - 20,550
58 3/25/98 4/1/08 5,130,431 Lock/48_Def/69_0%/3 39,316 581,952
59 6/29/98 7/1/08 5,120,803 Lock/36_Def/81_0%/3 39,810 662,406
60 2/27/98 3/1/08 4,970,023 Lock/36_Def/81_0%/3 38,354 592,229
- -----------------------------------------------------------------------------------------------------------------------------
61 4/30/98 5/1/08 4,754,607 Lock/60_Def/56_0%/4 37,781 630,819
62 3/19/98 4/1/08 4,741,651 Lock/34_Def/83_0%/3 37,333 628,388
63 5/26/98 6/1/08 4,818,302 Lock/48_Def/66_0%/6 37,684 582,573
64 9/18/98 10/1/08 4,710,073 Lock/48_Def/69_0%/3 35,926 669,006
65 9/5/98 10/1/08 4,351,021 Lock/60_Def/57_0%/3 38,962 674,936
- -----------------------------------------------------------------------------------------------------------------------------
66 9/1/98 10/1/08 4,469,941 Lock/48_Def/69_0%/3 36,010 564,950
67 6/12/98 7/1/08 4,380,541 Lock/36_Def/81_0%/3 34,068 499,121
68 10/28/98 11/1/08 4,444,618 Lock/48_Def/69_0%/3 35,821 592,483
69 8/3/98 9/1/08 4,339,737 Lock/36_Def/78_0%/6 32,663 604,895
70 10/1/98 11/1/08 3,924,937 Lock/36_Def/81_0%/3 33,480 555,725
- -----------------------------------------------------------------------------------------------------------------------------
71 7/8/98 8/1/08 4,317,480 Lock/36_Def/81_0%/3 34,177 554,378
72 9/18/98 10/1/08 4,147,319 Lock/36_Def/81_0%/3 30,814 521,105
73 6/15/98 7/1/08 4,133,414 Lock/48_Def/69_0%/3 32,420 594,299
74 7/23/98 8/1/08 3,661,002 Lock/48_Def/69_0%/3 35,322 573,702
75 8/3/98 9/1/08 3,992,558 Lock/36_Def/78_0%/6 30,050 551,940
- -----------------------------------------------------------------------------------------------------------------------------
76 10/16/98 11/1/08 3,616,120 Lock/48_Def/69_0%/3 32,483 640,767
77 6/26/98 7/1/08 3,974,784 Lock/31_Def/86_0%/3 31,536 514,748
77 - - - NAP - 273,147
77 - - - NAP - 66,432
77 - - - NAP - 175,169
- -----------------------------------------------------------------------------------------------------------------------------
78 7/28/98 9/1/03 4,227,307 Lock/30_Def/27_0%/3 34,444 597,113
79 6/24/98 7/1/08 4,021,178 Lock/48_Def/69_0%/3 31,032 593,483
80 6/2/98 7/1/08 3,890,132 Lock/48_Def/69_0%/3 30,912 468,383
81 5/1/98 6/1/13 3,387,970 Lock/48_Def/129_0%/3 31,311 472,569
82 7/28/98 8/1/08 3,638,181 Lock/36_Def/81_0%/3 32,788 494,003
- -----------------------------------------------------------------------------------------------------------------------------
83 11/20/98 12/1/13 2,938,135 Lock/36_Def/141_0%/3 33,733 566,720
84 1/15/98 2/1/08 3,660,640 Lock/60_Def/57_0%/3 30,150 461,492
85 3/20/98 5/1/08 3,768,255 Lock/48_Def/70_0%/2 29,921 455,199
86 6/8/98 7/1/08 3,471,828 Lock/48_Def/69_0%/3 32,204 518,119
87 5/5/98 6/1/08 2,871,969 Lock/60_Def/57_0%/3 32,866 573,980
- -----------------------------------------------------------------------------------------------------------------------------
88 6/3/98 7/1/08 3,611,728 Lock/36_Def/81_0%/3 28,312 452,153
89 6/1/98 7/1/08 3,355,583 Lock/36_Def/81_0%/3 30,802 485,672
90 4/14/98 5/1/08 3,274,515 Lock/33_Def/84_0%/3 30,486 509,927
91 5/8/98 6/1/08 3,602,803 Lock/36_Def/81_0%/3 29,071 451,125
92 8/3/98 9/1/08 3,471,790 Lock/36_Def/78_0%/6 26,130 511,752
- -----------------------------------------------------------------------------------------------------------------------------
93 4/6/98 5/1/08 3,117,149 Lock/33_Def/84_0%/3 28,649 556,884
94 8/3/98 9/1/08 3,254,804 Lock/36_Def/78_0%/6 24,497 485,478
95 4/17/98 5/1/08 3,181,746 Lock/60_Def/57_0%/3 24,840 485,774
96 8/27/98 9/1/08 3,182,122 Lock/48_Def/66_0%/6 24,437 378,246
97 4/6/98 5/1/08 3,071,581 Lock/60_Def/60 23,373 397,088
- -----------------------------------------------------------------------------------------------------------------------------
98 5/15/98 6/1/08 2,989,886 Lock/60_Def/60 23,333 379,035
99 9/29/98 10/1/08 2,900,972 Lock/36_Def/81_0%/3 21,766 362,721
99 - - - NAP - 97,076
99 - - - NAP - 265,645
100 7/28/98 9/1/08 2,746,094 Lock/60_Def/60 25,436 443,205
- -----------------------------------------------------------------------------------------------------------------------------
101 3/30/98 4/1/08 2,833,139 Lock/36_Def/81_0%/3 21,999 362,331
102 7/31/98 8/1/08 2,594,263 Lock/60_Def/57_0%/3 23,624 346,905
103 9/21/98 10/1/08 2,163,769 Lock/36_Def/81_0%/3 24,040 396,588
104 8/4/98 9/1/08 2,801,133 Lock/48_Def/70_0%/2 21,591 282,453
105 1/26/98 2/1/08 2,768,804 Lock/46_Def/71_0%/3 22,069 365,874
- -----------------------------------------------------------------------------------------------------------------------------
106 9/16/98 10/1/08 2,500,619 Lock/60_Def/57_0%/3 22,471 353,198
107 3/30/98 4/1/08 2,687,673 Lock/36_Def/81_0%/3 21,570 329,073
108 7/16/98 8/1/08 2,698,430 Lock/48_Def/69_0%/3 20,935 367,132
109 8/6/98 9/1/08 2,568,894 Lock/60_Def/57_0%/3 19,778 308,892
110 7/31/98 8/1/08 2,607,012 Lock/60_Def/57_0%/3 19,678 406,395
- -----------------------------------------------------------------------------------------------------------------------------
111 5/11/98 6/1/08 2,609,891 Lock/36_Def/78_0%/6 19,758 295,766
112 4/30/98 5/1/08 2,601,550 Lock/36_Def/81_0%/3 20,894 334,039
113 9/3/98 10/1/08 2,007,104 Lock/48_Def/69_0%/3 22,420 354,743
114 4/23/98 5/1/08 2,572,976 Lock/48_Def/69_0%/3 20,477 310,518
115 3/30/98 4/1/08 2,579,870 Lock/60_Def/57_0%/3 20,720 387,966
- -----------------------------------------------------------------------------------------------------------------------------
116 10/14/98 11/1/08 2,569,310 Lock/36_Def/78_0%/6 19,527 309,931
117 9/30/98 10/1/08 2,557,252 Lock/48_Def/69_0%/3 19,173 339,014
118 5/28/98 6/1/08 2,487,968 Lock/60_Def/57_0%/3 19,274 287,403
119 8/31/98 9/1/08 2,293,545 Lock/36_Def/81_0%/3 19,835 329,569
120 6/19/98 7/1/08 2,459,239 Lock/48_Def/69_0%/3 18,643 276,801
- -----------------------------------------------------------------------------------------------------------------------------
121 3/31/98 4/1/08 2,431,824 Lock/36_Def/81_0%/3 19,073 302,403
122 3/31/98 4/1/08 2,412,267 Lock/36_Def/81_0%/3 18,949 291,127
123 5/14/98 5/1/08 2,409,716 Lock/48_Def/68_0%/3 19,289 316,972
124 9/2/98 10/1/08 2,358,297 Lock/36_Def/81_0%/3 18,030 319,917
125 5/28/98 6/1/08 2,339,558 Lock/48_Def/69_0%/3 18,279 248,511
- -----------------------------------------------------------------------------------------------------------------------------
126 1/30/98 2/1/08 2,143,700 Lock/36_Def/81_0%/3 19,690 306,801
127 5/11/98 6/1/08 2,109,687 Lock/32_Def/85_0%/3 19,497 293,472
128 8/26/98 9/1/08 2,101,780 Lock/60_Def/57_0%/3 18,603 278,056
129 4/24/98 5/1/08 2,247,485 Lock/60_Def/57_0%/3 17,492 298,875
130 8/18/98 9/1/08 2,084,348 Lock/48_Def/69_0%/3 18,493 295,532
- -----------------------------------------------------------------------------------------------------------------------------
131 6/18/98 7/1/08 2,233,989 Lock/36_Def/81_0%/3 17,240 262,625
132 4/2/98 5/1/08 2,208,309 Lock/36_Def/81_0%/3 18,143 303,997
133 5/28/98 7/1/08 2,168,438 Lock/36_Def/84 17,429 271,591
134 5/11/98 6/1/08 2,174,909 Lock/36_Def/78_0%/6 16,465 251,872
135 4/27/98 5/1/08 2,157,268 Lock/48_Def/69_0%/3 17,037 326,355
- -----------------------------------------------------------------------------------------------------------------------------
136 6/12/98 7/1/08 2,023,255 Lock/24_>YM or 1%/93_0%/3 18,401 277,672
137 8/31/98 9/1/08 1,973,197 Lock/36_Def/81_0%/3 17,661 286,827
138 8/28/98 10/1/08 2,127,689 Lock/36_Def/81_0%/3 16,217 247,183
139 7/13/98 8/1/08 1,967,477 Lock/48_Def/70_0%/2 17,504 283,683
140 8/19/98 9/1/08 2,104,774 Lock/36_Def/81_0%/3 15,842 305,674
- -----------------------------------------------------------------------------------------------------------------------------
141 6/30/98 7/1/08 2,115,711 Lock/48_Def/69_0%/3 16,521 253,666
142 10/19/98 11/1/18 98,211 Lock/48_Def/189_0%/3 19,527 373,317
143 9/29/98 10/1/08 2,011,649 Lock/48_Def/69_0%/3 15,276 229,249
144 10/19/98 11/1/08 2,005,852 Lock/48_Def/69_0%/3 15,302 231,378
145 8/31/98 9/1/08 1,825,418 Lock/36_Def/81_0%/3 15,891 274,687
- -----------------------------------------------------------------------------------------------------------------------------
146 4/2/98 5/1/08 1,972,891 Lock/36_Def/81_0%/3 15,498 230,931
147 8/11/98 9/1/08 1,924,827 Lock/36_Def/81_0%/3 14,773 243,604
148 4/24/98 6/1/08 1,932,785 Lock/48_Def/70_0%/2 15,148 219,526
149 10/30/98 11/1/08 1,769,502 Lock/36_Def/81_0%/3 16,372 285,064
150 8/24/98 9/1/08 1,885,808 Lock/48_Def/66_0%/6 14,429 174,959
- -----------------------------------------------------------------------------------------------------------------------------
151 11/30/98 12/1/08 1,912,936 Lock/36_Def/81_0%/3 15,493 231,928
152 8/21/98 10/1/08 1,674,293 Lock/36_Def/81_0%/3 14,695 220,664
153 5/21/98 6/1/08 1,815,804 Lock/60_Def/57_0%/3 14,440 222,532
154 8/24/98 9/1/08 1,787,406 Lock/48_Def/66_0%/6 13,625 194,083
155 10/9/98 11/1/08 1,636,872 Lock/60_Def/57_0%/3 14,549 235,859
- -----------------------------------------------------------------------------------------------------------------------------
155 - - - NAP - 80,194
155 - - - NAP - 155,665
156 8/7/98 9/1/08 1,738,701 Lock/48_Def/69_0%/3 13,145 239,589
157 9/18/98 10/1/08 1,576,855 Lock/60_Def/57_0%/3 13,554 262,723
157 - - - NAP - 146,318
- -----------------------------------------------------------------------------------------------------------------------------
157 - - - NAP - 116,405
158 9/30/98 10/1/08 1,573,789 Lock/36_Def/81_0%/3 13,479 270,797
159 5/7/98 6/1/08 1,733,598 Lock/32_Def/85_0%/3 13,902 205,779
160 7/16/98 8/1/08 1,703,169 Lock/36_Def/81_0%/3 13,039 210,444
161 10/28/98 11/1/08 1,691,892 Lock/36_Def/81_0%/3 12,907 195,981
- -----------------------------------------------------------------------------------------------------------------------------
161 - - - NAP - 76,499
161 - - - NAP - 119,482
162 3/3/98 4/1/08 1,553,660 Lock/46_Def/71_0%/3 14,385 221,146
163 10/10/98 11/1/08 1,678,366 Lock/48_Def/66_0%/6 12,794 250,482
164 8/7/98 9/1/08 1,531,639 Lock/60_Def/57_0%/3 13,733 201,542
- -----------------------------------------------------------------------------------------------------------------------------
165 4/17/98 5/1/08 1,639,150 Lock/60_Def/57_0%/3 12,936 194,107
166 8/28/98 10/1/08 1,622,716 Lock/36_Def/81_0%/3 12,111 195,975
167 7/14/98 8/1/08 1,635,499 Lock/60_Def/60 12,961 206,771
168 6/11/98 7/1/08 1,464,433 Lock/48_Def/69_0%/3 13,360 235,114
169 6/10/98 7/1/08 1,623,228 Lock/48_Def/66_0%/6 12,777 220,926
- -----------------------------------------------------------------------------------------------------------------------------
170 9/23/98 10/1/08 1,542,084 Lock/36_Def/81_0%/3 11,380 185,602
171 5/4/98 6/1/08 1,457,791 Lock/32_Def/85_0%/3 13,663 210,598
172 6/30/98 7/1/08 1,537,216 Lock/31_Def/86_0%/3 11,763 195,161
173 6/30/98 7/1/08 1,440,630 Lock/36_Def/81_0%/3 11,143 189,159
174 11/2/98 11/1/08 1,449,220 Lock/60_Def/56_0%/3 11,200 171,860
- -----------------------------------------------------------------------------------------------------------------------------
175 8/27/98 9/1/08 1,314,935 Lock/48_Def/69_0%/3 11,536 191,403
176 6/12/98 7/1/08 1,417,327 Lock/60_Def/57_0%/3 11,159 191,733
177 3/31/98 4/1/08 1,409,852 Lock/60_>YM or 1%/56_0%/3 11,251 244,462
178 6/25/98 7/1/08 1,270,254 Lock/36_Def/78_0%/6 11,055 205,423
179 3/24/98 4/1/08 1,295,857 Lock/60_Def57_0%/3 10,273 152,955
- -----------------------------------------------------------------------------------------------------------------------------
180 4/6/98 5/1/08 1,191,268 Lock/33_Def/84_0%/3 10,949 244,902
181 6/3/98 6/1/13 459,607 Lock/48_Def/128_0%/3 12,854 218,878
182 10/16/98 11/1/08 1,269,549 Lock/36_Def/81_0%/3 9,793 144,213
183 3/20/98 4/1/08 1,157,062 Lock/48_Def/69_0%/3 10,512 166,125
184 9/24/98 10/1/08 1,151,087 Lock/36_Def/81_0%/3 8,682 145,654
- -----------------------------------------------------------------------------------------------------------------------------
185 7/20/98 8/1/08 1,157,271 Lock/36_Def/81_0%/3 8,860 155,555
186 6/11/98 7/1/08 1,118,949 Lock/48_Def/69_0%/3 8,763 159,269
187 4/30/98 5/1/08 1,058,100 Lock/33_Def/84_0%/3 10,302 172,709
188 7/23/98 8/1/08 1,017,647 Lock/48_Def/70_0%/2 9,376 201,946
189 3/5/98 5/1/08 1,084,699 Lock/60_Def/57_0%/3 8,732 126,685
- -----------------------------------------------------------------------------------------------------------------------------
190 7/23/98 8/1/08 993,796 Lock/48_Def/70_0%/2 9,156 207,345
191 7/16/98 8/1/08 1,043,339 Lock/60_Def/57_0%/3 7,886 149,078
192 9/21/98 10/1/08 936,556 Lock/36_Def/81_0%/3 7,901 158,855
193 8/19/98 9/1/08 967,942 Lock/48_Def/69_0%/3 8,689 148,460
194 9/29/98 10/1/08 1,038,046 Lock/48_Def/69_0%/3 7,882 119,436
- -----------------------------------------------------------------------------------------------------------------------------
195 9/10/98 10/1/08 984,742 Lock/36_Def/81_0%/3 7,582 118,793
196 5/8/98 6/1/08 994,145 Lock/60_Def/57_0%/3 7,900 119,309
197 5/21/98 6/1/08 881,776 Lock/48_>YM or 1%/69_0%/3 8,280 154,730
198 11/4/98 12/1/08 896,903 Lock/36_Def/81_0%/3 8,397 148,441
199 10/28/98 11/1/08 898,182 Lock/36_Def/81_0%/3 8,531 138,292
- -----------------------------------------------------------------------------------------------------------------------------
200 8/12/98 9/1/08 847,393 Lock/36_Def/81_0%/3 7,412 122,357
201 8/31/98 9/1/08 792,145 Lock/36_Def/81_0%/3 6,871 107,574
202 6/30/98 7/1/08 801,944 Lock/31_Def/86_0%/3 7,113 111,929
203 4/23/98 5/1/08 800,558 Lock/60_Def/57_0%/3 7,494 117,352
204 7/1/98 7/1/08 848,495 Lock/117_0%/3 6,408 103,265
- -----------------------------------------------------------------------------------------------------------------------------
205 7/17/98 8/1/08 851,577 Lock/36_Def/81_0%/3 6,520 97,898
206 6/9/98 7/1/08 853,187 Lock/60_Def/57_0%/3 7,073 115,278
207 9/9/98 10/1/08 838,999 Lock/48_>YM or 1%/69_0%/3 6,333 106,024
208 8/31/98 9/1/08 667,889 Lock/48_>YM or 1%/66_0%/6 6,038 95,355
209 8/31/98 9/1/13 13,434 Lock/84_>YM or 1%/93_0%/3 7,066 135,094
- -----------------------------------------------------------------------------------------------------------------------------
210 7/13/98 8/1/08 517,471 Lock/48_>YM or 1%/69_0%/3 4,782 72,906
211 4/22/98 4/22/08 492,584 Lock/48_>YM or 1%/69_0%/3 4,762 71,929
212 7/31/98 8/1/08 338,793 Lock/48_>YM or 1%/69_0%/3 4,013 137,246
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNDERWRITTEN CROSS - CUT-OFF SCHEDULED CROSS -
CONTROL NCF COLLATERALIZED APPRAISED APPRAISAL DATE MATURITY OR ARD COLLATERALIZED
NUMBER DSCR (X) DSCR (X) VALUE ($) DATE LTV (%) DATE LTV (%) LTV RATIO (%)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 1.92 - 102,200,000 8/31/98 58.71 58.71 -
2 - 1.20 76,850,000 - - - 77.00
2 1.22 1.20 18,350,000 7/21/98 80.00 69.49 77.00
2 1.26 1.20 15,500,000 8/3/98 73.42 63.77 77.00
2 1.17 1.20 43,000,000 7/28/98 76.14 66.14 77.00
- ------------------------------------------------------------------------------------------------------------------------------------
3 - 1.51 86,900,000 - - - 50.00
3 1.23 1.51 5,400,000 8/5/97 50.00 44.38 50.00
3 1.42 1.51 32,500,000 8/26/97 50.00 43.86 50.00
3 1.73 1.51 6,300,000 8/8/97 50.00 43.86 50.00
3 1.37 1.51 15,500,000 8/5/97 50.00 43.86 50.00
- ------------------------------------------------------------------------------------------------------------------------------------
3 1.71 1.51 27,200,000 7/29/97 49.24 43.19 50.00
4 1.78 - 67,000,000 - 56.79 36.10 -
4 - - 12,400,000 10/15/98 - - -
4 - - 12,200,000 10/15/98 - - -
4 - - 7,700,000 10/15/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
4 - - 5,600,000 10/15/98 - - -
4 - - 5,000,000 10/15/98 - - -
4 - - 1,100,000 10/15/98 - - -
4 - - 23,000,000 10/15/98 - - -
5 1.29 - 49,800,000 6/8/98 70.32 60.16 -
- ------------------------------------------------------------------------------------------------------------------------------------
6 1.38 - 46,500,000 4/1/98 74.49 65.65 -
7 1.60 - 87,600,000 - 74.95 60.44 -
7 - - 17,200,000 6/1/98 - - -
7 - - 17,900,000 6/1/98 - - -
7 - - 21,900,000 6/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
7 - - 5,100,000 6/1/98 - - -
7 - - 12,200,000 6/1/98 - - -
7 - - 13,300,000 6/1/98 - - -
8 1.39 - 37,700,000 - 79.10 63.42 -
8 - - 7,900,000 7/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
8 - - 11,800,000 7/1/98 - - -
8 - - 8,900,000 7/1/98 - - -
8 - - 9,100,000 7/1/98 - - -
9 1.25 - 37,800,000 1/27/98 77.65 68.66 -
10 1.23 - 36,200,000 2/19/98 74.12 64.81 -
- ------------------------------------------------------------------------------------------------------------------------------------
11 1.25 - 36,200,000 4/1/98 72.75 63.71 -
12 1.26 - 30,600,000 1/12/98 75.74 65.59 -
13 1.28 - 31,300,000 - 70.29 57.01 0.00
13 - - 15,700,000 9/1/98 - - -
13 - - 15,600,000 9/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
14 - 1.32 24,842,000 - - - 77.00
14 1.32 1.32 12,236,000 7/8/98 76.75 66.67 77.00
14 1.32 1.32 12,606,000 7/8/98 76.34 66.31 77.00
15 1.26 - 23,600,000 - 75.42 67.32 -
15 - - 10,200,000 6/10/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
15 - - 13,400,000 6/9/98 - - -
16 1.35 - 22,400,000 - 76.39 66.68 -
16 - - 3,800,000 12/27/97 - - -
16 - - 4,100,000 12/27/97 - - -
16 - - 6,290,000 12/27/97 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
16 - - 5,710,000 12/27/97 - - -
16 - - 2,500,000 12/27/97 - - -
17 1.48 - 22,600,000 - 73.83 64.90 -
17 - - 20,700,000 4/28/98 - - -
17 - - 1,900,000 4/23/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
18 1.26 - 20,900,000 4/14/98 79.66 69.93 -
19 1.37 - 21,345,000 7/31/98 74.71 65.29 -
20 1.45 - 21,000,000 2/27/98 74.33 64.69 -
21 - 1.26 18,880,000 - - - 78.00
21 1.25 1.26 10,430,000 7/9/98 79.27 69.54 78.00
- ------------------------------------------------------------------------------------------------------------------------------------
21 1.27 1.26 8,450,000 7/9/98 76.62 67.22 78.00
22 1.77 - 19,000,000 1/1/98 75.42 60.79 -
23 - 1.35 18,800,000 - - - 75.00
23 1.29 1.35 6,500,000 3/19/98 68.82 60.52 75.00
23 1.38 1.35 12,300,000 3/4/98 77.58 68.23 75.00
- ------------------------------------------------------------------------------------------------------------------------------------
24 1.32 - 18,550,000 7/1/98 74.56 64.23 -
25 1.45 - 17,300,000 1/23/98 71.61 62.41 -
26 1.23 - 14,900,000 5/1/98 79.39 69.08 -
27 1.30 - 13,600,000 1/8/98 79.42 69.02 -
28 1.60 - 15,000,000 3/18/98 70.01 56.32 -
- ------------------------------------------------------------------------------------------------------------------------------------
29 1.57 - 12,600,000 2/5/98 74.86 65.15 -
30 1.36 - 11,500,000 7/28/98 79.59 69.25 -
31 1.23 - 12,000,000 3/20/98 73.64 64.52 -
32 1.22 - 12,100,000 12/16/97 70.81 50.81 -
33 1.31 - 11,600,000 7/15/98 73.81 63.81 -
- ------------------------------------------------------------------------------------------------------------------------------------
34 1.42 - 10,380,000 - 80.98 69.46 -
34 - - 3,460,000 4/20/98 - - -
34 - - 1,870,000 4/20/98 - - -
34 - - 1,100,000 4/20/98 - - -
34 - - 1,055,000 4/20/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
34 - - 965,000 4/20/98 - - -
34 - - 775,000 4/20/98 - - -
34 - - 595,000 4/20/98 - - -
34 - - 560,000 4/20/98 - - -
35 1.25 - 10,700,000 9/4/98 74.45 65.85 -
- ------------------------------------------------------------------------------------------------------------------------------------
36 1.32 - 11,200,000 7/13/98 71.11 61.21 -
37 1.40 - 10,600,000 3/26/98 71.35 62.51 -
38 1.59 - 10,500,000 3/4/98 70.19 60.63 -
39 1.32 - 9,250,000 12/19/97 79.18 64.08 -
40 1.28 - 9,450,000 1/5/98 77.09 67.45 -
- ------------------------------------------------------------------------------------------------------------------------------------
41 1.26 - 9,060,000 - 79.42 62.96 -
41 - - 2,080,000 5/28/98 - - -
41 - - 1,970,000 5/28/98 - - -
41 - - 2,870,000 5/28/98 - - -
41 - - 2,140,000 5/28/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
42 1.20 - 9,190,000 9/28/98 78.05 68.69 -
43 1.25 - 9,600,000 3/15/98 74.45 64.57 -
44 1.29 - 9,600,000 2/20/98 74.39 64.63 -
45 1.19 - 9,800,000 1/9/98 72.38 58.13 -
46 1.24 - 10,214,000 - 68.17 59.95 -
- ------------------------------------------------------------------------------------------------------------------------------------
46 - - 2,750,000 6/15/98 - - -
46 - - 5,800,000 6/15/98 - - -
46 - - 1,664,000 6/15/98 - - -
47 1.51 - 10,400,000 12/15/97 65.53 26.39 -
48 1.37 - 8,730,000 3/2/98 73.37 64.00 -
- ------------------------------------------------------------------------------------------------------------------------------------
49 1.34 - 7,900,000 6/1/98 80.55 69.62 -
50 1.34 - 9,250,000 7/31/98 67.30 58.32 -
51 1.67 - 11,000,000 11/1/98 56.41 45.65 -
52 1.28 - 8,350,000 9/1/98 73.43 65.07 -
53 1.28 - 9,300,000 1/16/98 65.25 53.93 -
- ------------------------------------------------------------------------------------------------------------------------------------
54 1.32 - 7,650,000 3/25/98 79.30 70.38 -
55 1.40 - 7,600,000 4/15/98 79.48 68.86 -
56 1.58 - 9,650,000 3/19/98 61.92 53.93 -
57 1.25 - 8,825,000 - 67.64 59.22 -
57 - - 300,000 4/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - 690,000 4/1/98 - - -
57 - - 270,000 4/1/98 - - -
57 - - 755,000 4/1/98 - - -
57 - - 150,000 4/1/98 - - -
57 - - 660,000 4/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - 200,000 4/1/98 - - -
57 - - 1,420,000 4/1/98 - - -
57 - - 740,000 4/1/98 - - -
57 - - 1,340,000 4/1/98 - - -
57 - - 1,350,000 4/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - 600,000 4/1/98 - - -
57 - - 350,000 4/1/98 - - -
58 1.23 - 7,500,000 2/26/98 79.24 68.41 -
59 1.39 - 7,100,000 6/4/98 81.64 72.12 -
60 1.29 - 7,600,000 1/29/98 75.53 65.40 -
- ------------------------------------------------------------------------------------------------------------------------------------
61 1.39 - 7,400,000 3/20/98 73.74 64.25 -
62 1.40 - 7,750,000 12/26/97 70.33 61.18 -
63 1.29 - 7,300,000 4/3/98 74.52 66.00 -
64 1.55 - 7,000,000 5/7/98 76.84 67.29 -
65 1.44 - 7,350,000 6/29/98 73.04 59.20 -
- ------------------------------------------------------------------------------------------------------------------------------------
66 1.31 - 7,000,000 7/31/98 73.29 63.86 -
67 1.22 - 6,500,000 5/11/98 77.94 67.39 -
68 1.38 - 6,360,000 10/1/98 78.39 69.88 -
69 1.54 - 6,300,000 6/16/98 78.97 68.88 -
70 1.38 - 8,700,000 8/14/98 57.16 45.11 -
- ------------------------------------------------------------------------------------------------------------------------------------
71 1.35 - 8,100,000 3/13/98 61.39 53.30 -
72 1.41 - 6,830,000 6/16/98 69.98 60.72 -
73 1.53 - 6,400,000 4/30/98 74.51 64.58 -
74 1.35 - 6,970,000 5/4/98 66.84 52.53 -
75 1.53 - 6,180,000 6/16/98 74.06 64.60 -
- ------------------------------------------------------------------------------------------------------------------------------------
76 1.64 - 6,165,000 8/26/98 74.24 58.66 -
77 1.36 - 6,350,000 - 71.98 62.60 -
77 - - 3,250,000 5/26/98 - - -
77 - - 1,160,000 5/26/98 - - -
77 - - 1,940,000 5/26/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
78 1.44 - 7,000,000 3/26/98 65.27 60.39 -
79 1.59 - 7,150,000 3/16/98 63.82 56.24 -
80 1.26 - 6,100,000 3/19/98 73.31 63.77 -
81 1.26 - 6,000,000 3/5/98 74.48 56.47 -
82 1.26 - 6,000,000 1/23/98 74.41 60.64 -
- ------------------------------------------------------------------------------------------------------------------------------------
83 1.40 - 6,100,000 10/1/98 72.97 48.17 -
84 1.28 - 6,000,000 7/28/97 74.18 61.01 -
85 1.27 - 5,900,000 3/1/98 73.31 63.87 -
86 1.34 - 6,750,000 4/7/98 63.90 51.43 -
87 1.46 - 6,000,000 1/18/98 68.82 47.87 -
- ------------------------------------------------------------------------------------------------------------------------------------
88 1.33 - 5,800,000 2/9/98 70.30 62.27 -
89 1.31 - 6,500,000 2/18/98 62.70 51.62 -
90 1.39 - 7,300,000 8/6/97 55.51 44.86 -
91 1.29 - 6,600,000 3/7/98 61.01 54.59 -
92 1.63 - 6,330,000 6/16/98 62.88 54.85 -
- ------------------------------------------------------------------------------------------------------------------------------------
93 1.62 - 5,500,000 3/2/98 70.51 56.68 -
94 1.65 - 5,130,000 6/16/98 72.74 63.45 -
95 1.63 - 5,100,000 2/15/98 71.95 62.39 -
96 1.29 - 4,550,000 6/17/98 79.62 69.94 -
97 1.42 - 4,500,000 1/29/98 79.29 68.26 -
- ------------------------------------------------------------------------------------------------------------------------------------
98 1.35 - 4,500,000 2/12/98 75.07 66.44 -
99 1.39 - 4,650,000 - 71.65 62.39 -
99 - - 1,350,000 9/20/98 - - -
99 - - 3,300,000 9/20/98 - - -
100 1.45 - 5,200,000 5/25/98 64.01 52.81 -
- ------------------------------------------------------------------------------------------------------------------------------------
101 1.37 - 4,600,000 1/20/98 71.08 61.59 -
102 1.22 - 4,100,000 3/19/98 79.32 63.27 -
103 1.37 - 4,500,000 8/5/98 71.48 48.08 -
104 1.09 - 5,000,000 6/1/98 63.70 56.02 -
105 1.38 - 4,325,000 10/8/97 73.23 64.02 -
- ------------------------------------------------------------------------------------------------------------------------------------
106 1.31 - 4,600,000 1/23/98 67.00 54.36 -
107 1.27 - 4,500,000 2/6/98 68.30 59.73 -
108 1.46 - 5,170,000 4/6/98 59.17 52.19 -
109 1.30 - 3,500,000 4/20/98 85.28 73.40 -
110 1.72 - 5,130,000 5/18/98 58.15 50.82 -
- ------------------------------------------------------------------------------------------------------------------------------------
111 1.25 - 5,090,000 3/20/98 58.52 51.27 -
112 1.33 - 4,400,000 3/11/98 67.66 59.13 -
113 1.32 - 4,650,000 4/29/98 63.87 43.16 -
114 1.26 - 3,950,000 3/10/98 74.72 65.14 -
115 1.56 - 4,725,000 12/15/97 62.43 54.60 -
- ------------------------------------------------------------------------------------------------------------------------------------
116 1.32 - 4,100,000 7/28/98 71.71 62.67 -
117 1.47 - 4,000,000 7/31/98 73.44 63.93 -
118 1.24 - 3,800,000 1/25/98 75.74 65.47 -
119 1.38 - 4,400,000 6/8/98 65.40 52.13 -
120 1.24 - 3,610,000 12/15/97 77.77 68.12 -
- ------------------------------------------------------------------------------------------------------------------------------------
121 1.32 - 3,530,000 1/29/98 79.28 68.89 -
122 1.28 - 3,750,000 9/25/97 74.00 64.33 -
123 1.37 - 3,700,000 4/16/98 74.48 65.13 -
124 1.48 - 3,750,000 3/17/98 73.28 62.89 -
125 1.13 - 3,400,000 4/22/98 79.41 68.81 -
- ------------------------------------------------------------------------------------------------------------------------------------
126 1.30 - 4,360,000 9/30/98 60.95 49.17 -
127 1.25 - 4,150,000 3/2/98 63.18 50.84 -
128 1.25 - 3,545,000 6/13/98 73.51 59.29 -
129 1.42 - 4,000,000 2/18/98 64.85 56.19 -
130 1.33 - 3,500,000 5/11/98 73.75 59.55 -
- ------------------------------------------------------------------------------------------------------------------------------------
131 1.27 - 3,450,000 1/26/98 73.48 64.75 -
132 1.40 - 3,250,000 2/18/98 77.28 67.95 -
133 1.30 - 3,350,000 3/1/98 74.17 64.73 -
134 1.27 - 3,930,000 3/20/98 63.16 55.34 -
135 1.60 - 3,800,000 2/26/98 65.26 56.77 -
- ------------------------------------------------------------------------------------------------------------------------------------
136 1.26 - 3,500,000 4/7/98 70.53 57.81 -
137 1.35 - 4,100,000 7/21/98 59.33 48.13 -
138 1.27 - 3,340,000 6/30/98 72.77 63.70 -
139 1.35 - 3,700,000 3/19/98 65.67 53.18 -
140 1.61 - 3,650,000 5/20/98 66.11 57.67 -
- ------------------------------------------------------------------------------------------------------------------------------------
141 1.28 - 3,100,000 5/1/98 77.14 68.25 -
142 1.59 - 3,360,000 8/5/98 69.51 2.92 -
143 1.25 - 3,395,000 6/16/98 67.77 59.25 -
144 1.26 - 3,100,000 9/23/98 73.95 64.70 -
145 1.44 - 3,450,000 6/22/98 66.16 52.91 -
- ------------------------------------------------------------------------------------------------------------------------------------
146 1.24 - 2,880,000 1/8/98 78.87 68.50 -
147 1.37 - 3,000,000 4/17/98 74.62 64.16 -
148 1.21 - 2,920,000 2/27/98 76.32 66.19 -
149 1.45 - 3,200,000 8/19/98 67.20 55.30 -
150 1.01 - 2,700,000 6/2/98 79.62 69.84 -
- ------------------------------------------------------------------------------------------------------------------------------------
151 1.25 - 2,900,000 6/19/98 73.91 65.96 -
152 1.25 - 3,100,000 2/12/98 67.33 54.01 -
153 1.28 - 2,800,000 1/19/98 74.47 64.85 -
154 1.19 - 2,600,000 6/26/98 78.47 68.75 -
155 1.35 - 3,100,000 - 65.48 52.80 -
- ------------------------------------------------------------------------------------------------------------------------------------
155 - - 925,000 7/23/98 - - -
155 - - 2,175,000 7/28/98 - - -
156 1.52 - 2,900,000 3/20/98 68.63 59.96 -
157 1.62 - 3,440,000 - 57.76 45.84 -
157 - - 2,200,000 7/10/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
157 - - 1,240,000 7/9/80 - - -
158 1.67 - 3,050,000 12/22/97 65.14 51.60 -
159 1.23 - 2,500,000 3/27/98 79.45 69.34 -
160 1.34 - 2,800,000 5/28/98 69.27 60.83 -
161 1.27 - 2,450,000 - 78.92 69.06 -
- ------------------------------------------------------------------------------------------------------------------------------------
161 - - 1,150,000 6/17/98 - - -
161 - - 1,300,000 8/5/98 - - -
162 1.28 - 2,700,000 12/12/97 71.28 57.54 -
163 1.63 - 2,850,000 6/1/98 67.32 58.89 -
164 1.22 - 3,450,000 6/6/98 54.69 44.40 -
- ------------------------------------------------------------------------------------------------------------------------------------
165 1.25 - 2,550,000 3/9/98 73.91 64.28 -
166 1.35 - 2,650,000 8/3/98 70.46 61.23 -
167 1.33 - 2,600,000 5/5/98 70.81 62.90 -
168 1.47 - 2,800,000 2/9/98 65.43 52.30 -
169 1.44 - 2,450,000 5/19/98 74.69 66.25 -
- ------------------------------------------------------------------------------------------------------------------------------------
170 1.36 - 2,300,000 9/2/98 78.98 67.05 -
171 1.28 - 2,800,000 8/19/97 64.34 52.06 -
172 1.38 - 2,200,000 5/13/98 79.52 69.87 -
173 1.41 - 2,100,000 2/15/98 79.46 68.60 -
174 1.28 - 2,350,000 12/1/98 70.05 61.67 -
- ------------------------------------------------------------------------------------------------------------------------------------
175 1.38 - 2,200,000 5/22/98 74.44 59.77 -
176 1.43 - 2,170,000 3/10/98 75.27 65.31 -
177 1.81 - 2,550,000 2/10/98 63.23 55.29 -
178 1.55 - 2,135,000 3/12/98 74.20 59.50 -
179 1.24 - 2,000,000 1/30/98 74.34 64.79 -
- ------------------------------------------------------------------------------------------------------------------------------------
180 1.86 - 2,100,000 3/14/98 70.57 56.73 -
181 1.42 - 2,240,000 3/23/98 65.83 20.52 -
182 1.23 - 2,010,000 7/22/98 71.91 63.16 -
183 1.32 - 1,975,000 12/7/97 71.28 58.59 -
184 1.40 - 1,800,000 7/9/98 73.31 63.95 -
- ------------------------------------------------------------------------------------------------------------------------------------
185 1.46 - 1,850,000 5/28/98 71.24 62.56 -
186 1.51 - 1,825,000 3/12/98 70.77 61.31 -
187 1.40 - 1,800,000 11/11/97 71.48 58.78 -
188 1.79 - 2,650,000 4/28/98 47.90 38.40 -
189 1.21 - 1,700,000 12/2/97 72.97 63.81 -
- ------------------------------------------------------------------------------------------------------------------------------------
190 1.89 - 2,800,000 4/25/98 44.27 35.49 -
191 1.58 - 1,950,000 4/21/98 61.19 53.50 -
192 1.68 - 1,700,000 7/20/98 70.10 55.09 -
193 1.42 - 1,900,000 6/5/98 62.72 50.94 -
194 1.26 - 1,950,000 6/15/98 60.88 53.23 -
- ------------------------------------------------------------------------------------------------------------------------------------
195 1.31 - 1,500,000 6/1/98 76.34 65.65 -
196 1.26 - 1,570,000 2/4/98 72.73 63.32 -
197 1.56 - 1,880,000 3/18/98 57.92 46.90 -
198 1.47 - 1,360,000 10/2/98 79.75 65.95 -
199 1.35 - 1,700,000 7/28/98 63.39 52.83 -
- ------------------------------------------------------------------------------------------------------------------------------------
200 1.38 - 1,500,000 6/5/98 70.47 56.49 -
201 1.30 - 1,400,000 6/8/98 70.88 56.58 -
202 1.31 - 1,315,000 6/15/98 75.33 60.98 -
203 1.30 - 1,330,000 2/24/98 74.33 60.19 -
204 1.34 - 1,120,000 5/7/98 86.60 75.76 -
- ------------------------------------------------------------------------------------------------------------------------------------
205 1.25 - 1,600,000 5/28/98 60.61 53.22 -
206 1.36 - 1,300,000 3/6/98 74.58 65.63 -
207 1.40 - 1,250,000 6/4/98 76.93 67.12 -
208 1.32 - 1,125,000 7/21/98 72.83 59.37 -
209 1.59 - 1,480,000 3/14/98 53.00 0.91 -
- ------------------------------------------------------------------------------------------------------------------------------------
210 1.27 - 880,000 4/22/98 73.26 58.80 -
211 1.26 - 875,000 2/24/98 68.64 56.30 -
212 2.85 - 1,970,000 5/13/98 25.05 17.20 -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF
SQ. FT, UNITS SQ. FT, UNIT
CONTROL YEAR YEAR BEDS, PADS BED, PAD OCCUPANCY
NUMBER BUILT RENOVATED OR ROOMS OR ROOM ($) OCCUPANCY (%) DATE
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 1968 1995-1998 642,249 Sq Ft 93 86 11/11/98
2 - - - - -
2 1995 - 274 Units 53,577 94 10/2/98
2 1996 - 210 Units 54,190 94 10/2/98
2 1996 - 480 Units 68,208 89 10/2/98
- -----------------------------------------------------------------------------------------------------------------------------------
3 - - - - -
3 1986 - 54,663 Sq Ft 49 97 11/7/98
3 1985 & 1990 - 276,079 Sq Ft 59 95 10/27/98
3 1990 - 79,217 Sq Ft 40 86 12/7/98
3 1984 - 185,226 Sq Ft 42 100 12/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
3 1984 - 278,614 Sq Ft 48 100 10/31/98
4 302,464 Sq Ft 126 - -
4 1981 1995 46,836 Sq Ft 150 100 10/15/98
4 1984 1994 68,898 Sq Ft 101 100 10/15/98
4 1951 - 71,000 Sq Ft 62 100 10/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
4 1968 1987 16,176 Sq Ft 197 100 10/15/98
4 1930 - 0 Sq Ft - 100 10/15/98
4 1967 1982 15,170 Sq Ft 41 100 10/15/98
4 1979 - 84,384 Sq Ft 155 100 10/15/98
5 1989 - 253,953 Sq Ft 138 99 11/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
6 1983 1995 206,816 Sq Ft 167 100 9/30/98
7 1,004 Beds 32,697 - -
7 1981, 1995 - 141 Beds 45,677 94 9/30/98
7 1982 - 181 Beds 37,024 95 9/30/98
7 1970, 1980 1994-95 233 Beds 35,160 96 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
7 1973, 1993 - 120 Beds 16,084 87 9/30/98
7 1983 - 149 Beds 30,716 98 9/30/98
7 1979, 1983, 1991 - 180 Beds 27,704 84 9/30/98
8 550 Beds 54,217 - -
8 1992 - 120 Beds 52,072 93 11/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
8 1991 - 140 Beds 66,667 76 11/23/98
8 1977, 1981 - 165 Beds 42,664 87 6/30/98
8 1985 - 125 Beds 57,582 75 11/23/98
9 1997 - 844,377 Sq Ft 35 100 11/16/98
10 1991 & 1920 - 194,131 Sq Ft 138 97 6/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
11 1983 1997 409,670 Sq Ft 64 88 4/22/98
12 1990-1991 - 329,438 Sq Ft 70 87 5/11/98
13 192 Units 114,586 - -
13 1995 - 96 Units 114,952 100 7/31/98
13 1996 - 96 Units 114,220 100 7/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
14 - - - - -
14 1984-1985 241 Units 38,966 95 8/19/98
14 1987 246 Units 39,121 95 8/19/98
15 259,221 Sq Ft 69 - -
15 1964-1968 1988, 1991, 1996 126,118 Sq Ft 61 100 10/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
15 1968/1969 - 133,103 Sq Ft 76 100 10/15/98
16 323,010 Sq Ft 53 - -
16 1991 - 1992 - 56,310 Sq Ft 52 95 2/24/98
16 1992 - 55,870 Sq Ft 56 95 2/24/98
16 1989 - 1990 - 111,670 Sq Ft 43 100 2/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
16 1964,1989 - 71,160 Sq Ft 61 96 2/16/98
16 1955,1980,1989 - 28,000 Sq Ft 68 91 2/16/98
17 253,542 Sq Ft 66 - -
17 1984, 1986, 1987 - 227,076 Sq Ft 71 86 9/30/98
17 1962 1988 26,466 Sq Ft 24 85 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
18 1995 - 288 Units 57,806 92 8/19/98
19 1993, 96, 97, 98 - 158,250 Sq Ft 101 100 1/13/99
20 1923 1985 100,982 Sq Ft 155 100 1/13/99
21 - - - - -
21 1962, 1971/1972 1994 299 Units 27,651 99 8/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
21 1978-1983 248 Units 26,108 98 9/14/98
22 1906 1997 79 Units 181,382 100 1/1/99
23 - - - - -
23 1954 1964 157,397 Sq Ft 28 90 9/30/98
23 1975 1984 149,379 Sq Ft 64 93 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
24 1997-1998 - 140,356 Sq Ft 99 100 8/5/98
25 1966 - 288,507 Sq Ft 43 98 10/30/98
26 1998 - 95,905 Sq Ft 123 100 8/11/98
27 1951 1997, 1998 425 Units 25,415 95 8/8/98
28 1905 1985 TO 1998 126 Rooms 83,342 90 4/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
29 1907 1982-85 151,773 Sq Ft 62 97 10/31/98
30 1975 1997 374 Units 24,474 94 8/1/98
31 1982-1984 1996-1998 432 Units 20,456 86 9/23/98
32 1994,1995, & 1997 - 185 Units 46,316 98 11/4/98
33 1983 - 158,001 Sq Ft 54 100 7/13/98
- -----------------------------------------------------------------------------------------------------------------------------------
34 207 Units 40,608 - -
34 1998 - 66 Units 42,454 98 10/13/98
34 1996 - 36 Units 42,065 100 10/14/98
34 1995 - 22 Units 40,490 100 10/13/98
34 1997 - 30 Units 28,478 100 10/13/98
- -----------------------------------------------------------------------------------------------------------------------------------
34 1995 - 18 Units 43,415 100 10/13/98
34 1980 1995 12 Units 52,300 100 10/13/98
34 1997 - 13 Units 37,064 100 10/13/98
34 1995 - 10 Units 45,349 100 10/13/98
35 1998 - 60,073 Sq Ft 133 100 10/28/98
- -----------------------------------------------------------------------------------------------------------------------------------
36 1984 - 105,455 Sq Ft 76 91 9/15/98
37 LATE 1800'S 1988 124,547 Sq Ft 61 93 8/17/98
38 1969-1970 1994-1995 308 Units 23,929 99 6/30/98
39 1987 - 38,825 Sq Ft 189 95 12/17/98
40 1987 - 88,019 Sq Ft 83 100 3/3/98
- -----------------------------------------------------------------------------------------------------------------------------------
41 244 Units 29,491 - -
41 1928 MID 1980'S 50 Units 32,951 100 5/31/98
41 1922 MID-1980'S 58 Units 27,037 96 5/31/98
41 1927 MID-1980'S 87 Units 26,239 96 5/31/98
41 1930'S MID-1980'S 49 Units 34,637 96 5/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
42 1995/1996 - 172 Units 41,704 91 11/14/98
43 1989 - 58,647 Sq Ft 122 89 12/11/98
44 1974 1992 112,790 Sq Ft 63 92 11/20/98
45 1929 - 158,724 Sq Ft 45 87 1/30/98
46 117,608 Sq Ft 59 - -
- -----------------------------------------------------------------------------------------------------------------------------------
46 1989 - 28,504 Sq Ft 66 100 7/1/98
46 1989-1990 - 73,123 Sq Ft 54 92 7/1/98
46 1995/1996 - 15,981 Sq Ft 71 100 7/1/98
47 1983 - 171,360 Sq Ft 40 100 2/1/99
48 1984 - 135,084 Sq Ft 47 99 10/9/98
- -----------------------------------------------------------------------------------------------------------------------------------
49 1997 - 41,614 Sq Ft 153 89 10/8/98
50 1988 - 66,914 Sq Ft 93 100 8/28/98
51 1973 & 1988 1996 212 Rooms 29,270 68 9/30/98
52 1982 - 35,556 Sq Ft 172 100 10/27/98
53 1991-1995 1996 89,725 Sq Ft 68 76 6/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
54 1984 36,576 Sq Ft 166 100 9/30/98
55 1973-1974 1997-98 189 Units 31,959 94 11/19/98
56 1960 1971,1980,1998 134,533 Sq Ft 44 100 9/1/98
57 193,826 Sq Ft 31 - -
57 1989 1997 7,024 Sq Ft 66 100 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
57 1978 1996 14,825 Sq Ft 14 100 9/30/98
57 1986 - 6,070 Sq Ft 30 100 9/30/98
57 1990 - 11,905 Sq Ft 49 100 9/30/98
57 1985 - 6,020 Sq Ft 17 100 9/30/98
57 1994 & 1996 - 13,327 Sq Ft 33 100 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
57 1988 1992 6,580 Sq Ft 20 100 9/30/98
57 1984 & 1990 1996 33,925 Sq Ft 28 67 9/30/98
57 1983 1989/1995 21,857 Sq Ft 23 100 9/30/98
57 1982 1996 22,542 Sq Ft 40 100 9/30/98
57 1986 & 1996 29,656 Sq Ft 30 100 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
57 1983 1996 14,420 Sq Ft 28 100 9/30/98
57 1996 - 5,675 Sq Ft 41 100 9/30/08
58 1983 - 276 Units 21,531 92 6/30/98
59 1962 - 201 Units 28,839 100 11/2/98
60 1965 1989 224 Units 25,627 91 11/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
61 1986, 1989 - 91,790 Sq Ft 59 100 9/24/98
62 1959-1974 1988 213,575 Sq Ft 26 97 12/30/98
63 1950 1986 26,258 Sq Ft 207 100 9/30/98
64 1925 1997/1998 36 Units 149,408 97 9/9/98
65 1988 - 196 Rooms 27,391 81 4/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
66 1985 - 79,252 Sq Ft 65 94 8/28/98
67 1920,1940,1950 ONGOING 218 Units 23,239 90 5/12/98
68 1991,1992,1994 - 141,985 Sq Ft 35 100 9/22/98
69 1984 - 168 Units 29,614 97 11/30/98
70 1985 ONGOING 207 Units 24,023 99 9/18/98
- -----------------------------------------------------------------------------------------------------------------------------------
71 1986 1994/1996 116,266 Sq Ft 43 80 6/30/98
72 1986 1997 113,190 Sq Ft 42 97 11/4/98
73 1990 - 53,001 Sq Ft 90 95 6/23/98
74 1984 - 44,661 Sq Ft 104 100 4/30/98
75 1983 - 208 Units 22,005 97 12/17/98
- -----------------------------------------------------------------------------------------------------------------------------------
76 1995/1996 - 82 Rooms 55,818 78 10/31/98
77 62,256 Sq Ft 73 - -
77 1990 - 30,200 Sq Ft 77 100 6/24/98
77 1991 - 12,000 Sq Ft 70 100 6/24/98
77 1995, 1998 - 20,056 Sq Ft 70 100 6/24/98
- -----------------------------------------------------------------------------------------------------------------------------------
78 1997 - 158 Units 28,916 93 2/28/98
79 1992 1996 133,880 Sq Ft 34 100 9/30/98
80 1979 1997 47,492 Sq Ft 94 100 4/30/98
81 1987 1997 108,407 Sq Ft 41 98 6/30/98
82 1928 - 140,500 Sq Ft 32 97 6/24/98
- -----------------------------------------------------------------------------------------------------------------------------------
83 1970/1986/1998 1994 202,955 Sq Ft 22 100 11/17/98
84 1983 1997 25,637 Sq Ft 174 100 1/15/98
85 1988/89 - 62,360 Sq Ft 69 99 8/22/98
86 1925 1994-1996 96 Rooms 44,932 63 12/31/97
87 1989-1990 1995 99 Units 41,711 99 1/19/99
- -----------------------------------------------------------------------------------------------------------------------------------
88 1990 - 117,052 Sq Ft 35 100 1/8/99
89 1972/1973 1995/1996 100 Rooms 40,754 55 3/31/98
90 1995 - 86,646 Sq Ft 47 100 9/28/98
91 1975 1996 56,687 Sq Ft 71 74 6/24/98
92 1983 1997 224 Units 17,768 92 10/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
93 1946 1984 51,007 Sq Ft 76 98 9/30/98
94 1983 - 186 Units 20,061 90 12/18/98
95 1973-74 1997 228 Units 16,094 97 6/30/98
96 1959 - 100 Units 36,229 89 9/1/98
97 1968 1984 133 Units 26,829 86 10/20/98
- -----------------------------------------------------------------------------------------------------------------------------------
98 1987 - 55,327 Sq Ft 61 100 9/28/98
99 59,684 Sq Ft 56 - -
99 1981 - 19,733 Sq Ft 49 100 8/31/98
99 1984 - 39,951 Sq Ft 59 97 9/21/98
100 1989 1994-1997 122 Rooms 27,284 60 10/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
101 1984-1985 - 144 Units 22,705 92 10/31/98
102 1987 - 104 Units 31,270 98 5/29/98
103 1997 - 60,695 Sq Ft 53 96 9/17/98
104 1924 1993/94 54,297 Sq Ft 59 85 8/1/98
105 1997 - 29,051 Sq Ft 109 91 10/5/98
- -----------------------------------------------------------------------------------------------------------------------------------
106 1958,1987,1997 - 66,077 Sq Ft 47 98 8/31/98
107 1985 1994 103,270 Sq Ft 30 100 7/31/98
108 1991 - 31,548 Sq Ft 97 91 9/30/98
109 1995-1998 - 64 Units 46,637 100 10/9/98
110 1969 - 338 Pads 8,826 98 10/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
111 1973 1997 & 1998 196 Units 15,197 78 9/23/98
112 1989-98 - 85,600 Sq Ft 35 81 4/30/98
113 1983 - 120,665 Sq Ft 25 100 9/30/98
114 1985 - 29,102 Sq Ft 101 100 3/6/98
115 1925 & 1954 1982 & 1989 12,047 Sq Ft 245 100 3/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
116 1973 - 64,339 Sq Ft 46 93 10/1/98
117 1988 - 81,232 Sq Ft 36 100 9/1/98
118 1971 1990-1994 252 Units 11,421 89 9/30/98
119 1970 - 180 Units 15,986 99 1/15/99
120 1988 1996 118 Units 23,792 87 9/20/98
- -----------------------------------------------------------------------------------------------------------------------------------
121 1973 1995 118 Units 23,716 95 9/30/98
122 1987 - 102,608 Sq Ft 27 95 9/23/98
123 1987-1989 - 73,254 Sq Ft 38 96 9/10/98
124 1963 & 1988 1988 30,751 Sq Ft 89 92 8/11/98
125 1972 - 82 Units 32,925 99 5/22/98
- -----------------------------------------------------------------------------------------------------------------------------------
126 1981 1997/98 145 Units 18,327 96 10/20/98
127 1913 1988, 1996-1997 38,783 Sq Ft 68 90 9/30/98
128 1980 - 93,750 Sq Ft 28 98 8/18/98
129 1967 - 135 Units 19,216 96 8/31/98
130 1920's 1950'S AND 1986 33,684 Sq Ft 77 100 4/22/98
- -----------------------------------------------------------------------------------------------------------------------------------
131 1990 - 29,116 Sq Ft 87 100 9/1/98
132 1975 1996/1997 70,465 Sq Ft 36 100 10/1/98
133 1982 - 55,102 Sq Ft 45 97 4/29/98
134 1974 1996 - CURRENT 148 Units 16,772 91 9/23/98
135 1997 - 22,224 Sq Ft 112 100 9/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
136 1915 1997 22,271 Sq Ft 111 100 10/31/98
137 1972 - 34,058 Sq Ft 71 100 11/30/98
138 1997 - 49,575 Sq Ft 49 100 10/28/98
139 1985 - 36,182 Sq Ft 67 100 2/1/98
140 1978 1996 24,620 Sq Ft 98 100 7/27/98
- -----------------------------------------------------------------------------------------------------------------------------------
141 1902 1998 26,850 Sq Ft 89 100 10/15/98
142 1963 1998 118 Rooms 19,794 55 11/30/98
143 1979 - 47,547 Sq Ft 48 100 9/1/98
144 1987 - 46,008 Sq Ft 50 100 6/24/98
145 1991 & 1996 - 23,995 Sq Ft 95 95 9/2/98
- -----------------------------------------------------------------------------------------------------------------------------------
146 1984-1988 1998 108 Units 21,031 95 3/26/98
147 1997 - 29 Units 77,189 100 8/15/98
148 1988 - 84 Units 26,530 100 9/30/98
149 1971 - 38,969 Sq Ft 55 100 10/15/98
150 1978 1994 80 Units 26,872 94 10/2/98
- -----------------------------------------------------------------------------------------------------------------------------------
151 1924 1988 15,880 Sq Ft 135 91 10/31/98
152 1998 - 53,500 Sq Ft 39 100 1/4/99
153 1977 1994 47,242 Sq Ft 44 100 6/1/98
154 1987 - 78 Units 26,156 92 10/20/98
155 74 Units 27,433 - -
- -----------------------------------------------------------------------------------------------------------------------------------
155 1972 - 24 Units 25,239 100 10/1/98
155 1963/1964/1966/1969 - 50 Units 28,486 100 10/1/98
156 PHASES 1966-1975 - 120 Units 16,585 98 7/31/98
157 147 Units 13,517 - -
157 1969 - 97 Units 13,100 99 9/14/98
- -----------------------------------------------------------------------------------------------------------------------------------
157 1958-1962 - 50 Units 14,325 88 9/14/98
158 1977 1995 48,676 Sq Ft 41 100 6/30/98
159 1963-1968 1992-1996 83 Units 23,929 100 10/1/98
160 1985 1996 36,063 Sq Ft 54 100 6/2/98
161 30,190 Sq Ft 64 - -
- -----------------------------------------------------------------------------------------------------------------------------------
161 1976 - 13,290 Sq Ft 68 100 5/1/98
161 1990 - 26 Units 39,461 100 5/1/98
162 1986,1990,& 1998 - 63,025 Sq Ft 31 75 6/30/98
163 1979 - 35,977 Sq Ft 53 92 10/15/98
164 1951 1982 41,447 Sq Ft 46 100 8/5/98
- -----------------------------------------------------------------------------------------------------------------------------------
165 1991 - 30,854 Sq Ft 61 100 11/24/98
166 1964 1978 15,839 Sq Ft 118 99 6/29/98
167 1968 - 72,559 Sq Ft 25 90 7/14/98
168 1958 - 74 Units 24,757 100 5/30/98
169 1995 - 21,406 Sq Ft 85 70 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
170 1995-97 - 19,926 Sq Ft 91 100 8/19/98
171 NAP - 36,517 Sq Ft 49 100 5/4/98
172 1968 1989 55 Units 31,807 100 6/17/98
173 1960 - 149 Pads 11,199 97 11/5/98
174 1985 - 24,692 Sq Ft 67 100 10/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
175 1974 - 29,590 Sq Ft 55 89 12/30/98
176 1987 - 20,953 Sq Ft 78 100 9/25/98
177 1988 1997 49,854 Sq Ft 32 93 1/4/99
178 1993-1995 - 44 Units 36,004 100 10/31/98
179 1982 - 44,482 Sq Ft 33 98 3/16/98
- -----------------------------------------------------------------------------------------------------------------------------------
180 1989 1995/1996 40,400 Sq Ft 37 94 9/30/98
181 1984 - 61,375 Sq Ft 24 96 11/20/98
182 1988 - 23,849 Sq Ft 61 100 7/30/98
183 1977 - 26,138 Sq Ft 54 89 3/18/98
184 1998 - 2,993 Sq Ft 441 100 1/31/99
- -----------------------------------------------------------------------------------------------------------------------------------
185 1911 1987 32,785 Sq Ft 40 100 6/20/98
186 1925 1994 92 Units 14,038 98 6/8/98
187 1972 - 128 Units 10,052 81 11/11/97
188 1986 - 20,995 Sq Ft 60 95 11/23/98
189 1979 - 11,138 Sq Ft 111 80 10/5/98
- -----------------------------------------------------------------------------------------------------------------------------------
190 1987 - 14,650 Sq Ft 85 100 11/23/98
191 1923 - 49 Units 24,353 94 7/13/98
192 1972 - 84 Units 14,188 96 10/1/98
193 1940 - 16,500 Sq Ft 72 100 9/1/97
194 1979 - 30,234 Sq Ft 39 96 9/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
195 1998 - 10,000 Sq Ft 115 100 9/9/98
196 1985 - 30,624 Sq Ft 37 100 5/8/98
197 1984 1985-1990 19,566 Sq Ft 56 100 9/30/98
198 1997 - 11,500 Sq Ft 94 100 10/26/98
199 1980 - 23,048 Sq Ft 47 88 10/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
200 1969 1994-1997 45 Units 23,489 100 9/30/98
201 1970 1994 64 Units 15,505 100 1/15/99
202 1995 1997 10,400 Sq Ft 95 100 6/12/98
203 1996 - 9,840 Sq Ft 100 100 9/12/98
204 1975/1977/1980 - 40 Units 24,247 100 6/21/98
- -----------------------------------------------------------------------------------------------------------------------------------
205 1984 1997 21,363 Sq Ft 45 100 7/1/98
206 1997 - 7,800 Sq Ft 124 100 3/3/98
207 1994 - 28 Units 34,342 100 12/31/98
208 1986 & 1987 - 18,840 Sq Ft 43 100 11/30/98
209 1965 & 1971 1996-1997 52 Units 15,085 90 11/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
210 1972 - 56 Units 11,512 93 11/30/98
211 1990 - 9,310 Sq Ft 65 100 11/30/98
212 1976 1998 21,721 Sq Ft 23 90 7/29/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANNUAL LARGEST
REPLACEMENT ANNUAL LARGEST TENANT
CONTROL OWNERSHIP LOCKBOX RESERVE TI/LC TENANT AREA LEASE EXP.
NUMBER INTEREST TYPE DEPOSIT ($) DEPOSIT ($) LARGEST TENANT NAME LEASED (SQ. FT.) DATE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 Fee Modified, Springing - - Boscovs 185,000 10/31/15
2 - - - - - -
2 Fee Modified, In-Place 68,499 - - - -
2 Fee Modified, In-Place 52,500 - - - -
2 Fee Hard, In-Place 120,000 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
3 - - - - - -
3 Fee Hard, Springing - - Montenay Power 10,849 10/31/01
3 Fee Hard, Springing - - CitiBank 138,605 12/31/00
3 Fee Hard, Springing - - Internal Revenue Service 12,896 3/5/02
3 Fee Hard, Springing - - System One Amadeus 152,701 9/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
3 Fee Hard, Springing - - Dean Witter Reynolds, Inc. 20,230 6/30/04
4 Fee Hard, In-Place - - - - -
4 - - - - Geneva Enterprises, Inc
(Rosenthal Jaguar) 46,836 2/18/08
4 - - - - Geneva Enterprises, Inc.
(Rosenthal Nissan) 68,898 2/18/08
4 - - - - Geneva Enterprises, Inc.
(Rosenthal Chev.) 71,000 2/18/08
- ------------------------------------------------------------------------------------------------------------------------------------
4 - - - - Geneva Enterprises, Inc.
(Rosenthal Mazda) 16,176 2/18/08
4 - - - - Geneva Enterprises, Inc.
(Geneva Management) - 2/18/08
4 - - - - Geneva Enterprises, Inc.
(Rosenthal Honda) 15,170 2/18/08
4 - - - - Geneva Enterprises, Inc.
(Rosenthal Nissan) 84,384 2/18/08
5 Fee Hard, Springing 63,456 - Dana Commercial Credit 40,647 5/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
6 Fee Hard, Springing 41,362 - Samsung Semiconductor 206,816 5/21/23
7 Fee Hard, In-Place 248,508 - - - -
7 - - - - - - -
7 - - - - - - -
7 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
7 - - - - - - -
7 - - - - - - -
7 - - - - - - -
8 Fee Modified, In-Place 138,252 - - - -
8 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
8 - - - - - - -
8 - - - - - - -
8 - - - - - - -
9 Fee Hard, Springing - - Blockbuster Video
Distribution, Inc. 844,377 12/15/12
10 Both Fee/Lease Hard, Springing 40,128 - The Dalton School 57,913 7/9/19
- ------------------------------------------------------------------------------------------------------------------------------------
11 Fee No - 124,693 Expo Design Center #6308 86,156 1/31/14
12 Fee Hard, Springing 42,251 - Wal-Mart 116,792 10/26/10
13 Fee Soft, In-Place - - - - -
13 - - - - - - -
13 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
14 - - - - - -
14 Fee No 60,250 - - - -
14 Fee No 61,500 - - - -
15 Fee No 51,845 120,000 - - -
15 - - - - Illinois State Police 65,832 7/15/99
- ------------------------------------------------------------------------------------------------------------------------------------
15 - - - - IL Dept of Public Health 133,103 7/1/03
16 Fee Hard, Springing 48,456 90,000 - - -
16 - - - - Mr. Z's Food 33,550 11/30/11
16 - - - - Mr. Z's Food Mart 33,550 4/4/12
16 - - - - Ames Department Store 56,850 2/16/10
- ------------------------------------------------------------------------------------------------------------------------------------
16 - - - - Valley Farm Market 40,000 1/31/04
16 - - - - Star Technical 7,200 7/31/00
17 Fee Hard, Springing 38,028 144,000 - - -
17 - - - - Wyeth Ayerst 54,938 12/31/02
17 - - - - Amersham 6,145 5/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
18 Fee Hard, Springing - - - - -
19 Fee Hard, In-Place 28,619 - WW Grainger 39,813 7/31/03
20 Fee Hard, Springing 27,872 36,000 MCI 20,060 3/31/03
21 - - - - - -
21 Fee No 89,700 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
21 Fee No 74,400 - - - -
22 Fee Hard, Springing 24,000 80,004 New York University 74,615 8/15/98
23 - - - - - -
23 Fee Hard, Springing 31,467 60,000 Champlain Valley Physicians 35,000 1/31/12
23 Fee Hard, Springing 26,010 80,568 Grand Union 43,855 12/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
24 Fee Hard, Springing 21,046 38,777 Sanborn Theaters 53,398 9/30/12
25 Fee Hard, Springing - - State of California 55,946 12/31/02
26 Fee Hard, In-Place 7,528 - Best Buy Stores 45,720 2/28/18
27 Fee Hard, In-Place 106,612 - - - -
28 Fee Hard, Springing 227,100 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
29 Fee Hard, Springing 45,876 24,000 Manhattan Theater Club, Inc. 20,000 6/30/12
30 Fee No 74,800 - - - -
31 Fee No - - - - -
32 Fee Hard, Springing 24,000 - - - -
33 Fee Hard, Springing 40,719 27,300 K-Mart 68,337 3/31/09
- ------------------------------------------------------------------------------------------------------------------------------------
34 Fee Hard, Springing 37,465 - - - -
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
34 - - - - - - -
35 Fee No 12,015 19,160 Healthsouth Surgery Center 16,178 4/15/13
- ------------------------------------------------------------------------------------------------------------------------------------
36 Fee Modified, In-Place 21,180 104,400 Virgin Entertainment 31,857 1/31/02
37 Fee Hard, Springing 25,812 75,600 Atlantic Monthly 13,889 8/31/07
38 Fee Hard, Springing 67,144 - - - -
39 Fee Modified, In-Place 39,384 35,000 AMC MultiCinema 36,825 8/31/08
40 Fee Hard, Springing 13,200 99,996 Mobilecomm 22,500 10/31/02
- ------------------------------------------------------------------------------------------------------------------------------------
41 Fee Hard, Springing 69,212 - - - -
41 - - - - - - -
41 - - - - - - -
41 - - - - - - -
41 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
42 Fee No 36,959 - - - -
43 Both Fee/Lease No 3,110 60,000 Hollywood Video 7,000 2/18/08
44 Fee Hard, Springing 30,180 - Taylor & Walker 10,930 12/31/03
45 Fee Hard, Springing 23,584 162,000 Delaware Valley Investment 8,130 2/28/01
46 Fee Hard, Springing 24,969 84,000 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
46 - - - - Laborchex Companies 3,650 2/28/01
46 - - - - Polk Investments, Inc. 10,400 10/31/01
46 - - - - Missco Corporation 8,598 6/30/01
47 Fee Hard, Springing - - Iceoplex 86,400 8/31/08
48 Fee Hard, Springing 17,561 112,120 AMC 35,904 7/31/02
- ------------------------------------------------------------------------------------------------------------------------------------
49 Fee Hard, Springing 4,584 15,108 Re\Max Excels 8,400 4/30/08
50 Fee Hard, In-Place - 78,000 National Computer Systems 11,099 12/31/98
51 Fee No 151,186 - - - -
52 Fee No 10,177 30,000 Country Waffles 2,980 10/31/05
53 Fee No 13,556 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
54 Fee No 7,315 - Olson & Goldberg 3,250 2/28/04
55 Fee Hard, Springing 58,680 - - - -
56 Fee Hard, Springing 39,864 - Kmart 72,960 3/30/08
57 Fee Hard, Springing 29,086 151,716 - - -
57 - - - - El Paso Parole Office 6,630 6/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - - - Texas Department of Human Resources 14,825 4/30/06
57 - - - - Lubbock Parole Office 6,070 4/30/03
57 - - - - Texas Dept of Human Services 11,905 8/31/01
57 - - - - Temple Soil & Water Conservation 5,600 6/30/01
57 - - - - Bellville Protective and
Regulatory Service 13,327 12/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - - - Hempstead Human Services 5,583 3/31/00
57 - - - - Arlington Human Services 22,805 12/31/05
57 - - - - Marshall Human Services 18,903 6/5/02
57 - - - - Amarillo Protective & Regulatory
Services 22,542 8/31/03
57 - - - - Paris Human Services 28,682 8/31/02
- ------------------------------------------------------------------------------------------------------------------------------------
57 - - - - Mission Human Services 14,420 8/31/06
57 - - - - Columbus Human Services 5,675 2/28/01
58 Fee Hard, Springing 71,873 - - - -
59 Fee Hard, Springing 60,300 - - - -
60 Fee Hard, Springing 44,800 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
61 Fee Hard, Springing 13,769 62,500 Family Health Systems, Inc. 23,442 2/28/00
62 Fee Hard, Springing 37,500 37,500 Heilig-Meyers Furniture Company 30,000 4/8/05
63 Fee No 6,306 55,580 E. Hill, MD & P. Cornell, MD 2,838 6/30/01
64 Fee Hard, Springing 9,162 - - - -
65 Fee Hard, Springing 33,490 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
66 Fee Hard, Springing 88,369 50,000 BOVA Furniture 13,229 4/30/99
67 Fee Hard, Springing 54,500 - - - -
68 Fee Hard, Springing 21,300 50,000 Kmart 86,479 10/31/16
69 Fee No - - - - -
70 Fee No 41,400 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
71 Fee Hard, Springing 22,956 45,996 Cobb Theaters 19,736 4/1/08
72 Leasehold Hard, Springing - 79,236 Air Methods International 37,701 3/31/03
73 Fee Hard, Springing 7,950 29,160 Fashion Bug 9,900 1/31/05
74 Leasehold Hard, Springing - - Marina Inn 7,605 12/31/08
75 Fee No - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
76 Fee Hard, Springing 99,790 - - - -
77 Fee Hard, Springing 9,318 27,000 - - -
77 - - - - Sight & Sound (Coulby Investments) 8,500 1/31/06
77 - - - - Memorial Hospital at Easton 9,000 9/30/02
77 - - - - Delmarva Health Plan -
Bluecross/Blueshield 20,056 4/30/05
- ------------------------------------------------------------------------------------------------------------------------------------
78 Fee Soft, Springing 53,679 - - - -
79 Fee No 20,082 10,750 Burlington Coat Factory 80,880 1/31/15
80 Fee Hard, Springing 2,746 18,300 Blackhawk Business Ctr [Executive
Stes] 6,746 4/30/02
81 Fee Hard, Springing - 10,000 Jondex Corp(Burlington Coat
Factory) 62,874 6/30/08
82 Fee Hard, Springing 20,925 99,600 WSLS, Inc. 10,000 1/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
83 Leasehold No 20,296 61,032 Raymour & Flanigan 202,955 10/31/23
84 Fee Hard, Springing 10,872 35,400 Staples, Inc. 25,637 9/30/06
85 Fee Hard, Springing 15,358 36,960 Hancock Fabrics, Inc. 13,000 1/31/03
86 Fee Hard, Springing 101,888 - - - -
87 Fee No 29,700 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
88 Fee Hard, Springing 4,202 51,600 Hanwha International Corp. 68,493 5/31/13
89 Leasehold No 62,289 - - - -
90 Fee Soft, In-Place 13,927 57,692 GH Bass 8,500 5/13/00
91 Fee Hard, Springing 16,962 48,000 Ray U. Dugel, M.D. 2,654 1/31/03
92 Fee No - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
93 Fee Hard, Springing 11,943 - - - -
94 Fee No - - - - -
95 Fee Hard, Springing 57,000 - - - -
96 Fee Hard, Springing 25,000 - - - -
97 Fee No 41,560 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
98 Fee Hard, Springing 11,640 54,480 Chicago Title 11,645 2/10/04
99 Fee No 13,131 56,016 - - -
99 - - - - City of Austin 3,926 3/31/99
99 - - - - Century 21 - Ripley Realty 4,394 10/31/99
100 Fee Hard, Springing 72,276 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
101 Fee Hard, Springing 36,000 - - - -
102 Fee Hard, Springing 31,200 - - - -
103 Fee No 8,364 48,912 Pioneer Press 12,073 5/31/02
104 Fee No 11,500 72,000 Allen School 6,587 6/30/00
105 Leasehold Hard, Springing 4,356 21,565 Sierra Health Network 4,596 2/29/04
- ------------------------------------------------------------------------------------------------------------------------------------
106 Leasehold No 13,930 - - - -
107 Fee Hard, Springing 21,252 24,000 Raymour & Flanigan Furniture 42,170 3/31/08
108 Fee Hard, Springing 2,524 18,000 Purrfect Auto 4,880 11/14/01
109 Fee Hard, Springing 13,853 - - - -
110 Fee Hard, Springing 16,848 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
111 Fee No - - - - -
112 Fee Hard, Springing 17,976 24,000 Showorks Audio Visual Inc. 10,400 12/31/00
113 Fee Hard, Springing 18,100 39,996 California Kitchen 84,000 7/31/07
114 Fee Hard, Springing 6,107 34,027 CKS Business Services, Inc. 9,892 10/31/03
115 Both Fee/Lease Hard, Springing 4,772 - Benjamin Jewelers 1,300 3/14/00
- ------------------------------------------------------------------------------------------------------------------------------------
116 Fee No 12,224 - Televidio 8,800 12/31/99
117 Fee No 23,705 - Designs Unlimited 20,475 6/30/01
118 Fee Soft, Springing - - - - -
119 Fee No 45,720 - - - -
120 Fee Hard, Springing 31,152 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
121 Fee Hard, Springing 34,913 - - - -
122 Fee Hard, Springing - - Advantage Metal Products 15,488 6/30/00
123 Fee Hard, Springing 16,848 18,000 Dimitri Mondiadias DBA Sable
Industrial 4,900 1/31/99
124 Fee Hard, Springing 2,325 12,000 Herb's Service Center 7,500 8/31/99
125 Fee Hard, Springing 25,132 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
126 Fee Hard, Springing 33,660 - - - -
127 Fee Hard, Springing 10,000 - - - -
128 Fee Hard, Springing 14,063 19,908 Capital Spectrum 15,500 6/30/00
129 Fee Hard, Springing 33,750 - - - -
130 Fee No - - Strohecker's Grocery 33,684 7/30/17
- ------------------------------------------------------------------------------------------------------------------------------------
131 Fee Hard, Springing 5,823 27,768 Tomar Simonoff Adourian & O'Brien 10,046 10/31/02
132 Fee Hard, Springing 12,857 40,000 Big Lots 30,400 1/31/99
133 Fee Hard, Springing 17,076 36,000 U.S. Attorney & FBI 9,697 10/31/04
134 Fee No 37,008 - - - -
135 Fee Hard, Springing 3,762 - Gambro Healthcare Renal Care 7,572 10/31/02
- ------------------------------------------------------------------------------------------------------------------------------------
136 Fee No 4,454 26,800 Stephen Dunn & Assoc. 6,609 8/14/01
137 Fee No 6,816 24,960 Raindancer Restaurant 5,000 12/5/03
138 Fee Hard, Springing 7,436 19,830 Room & Board (Unit F) 5,310 10/31/02
139 Fee Hard, Springing 6,151 - Noraxon USA, Inc. 3,729 1/31/00
140 Fee Hard, Springing 3,900 18,000 MedMax Superstores 15,200 10/31/07
- ------------------------------------------------------------------------------------------------------------------------------------
141 Fee Hard, Springing 8,643 8,000 Aviso Communications 4,500 -
142 Fee No - - - - -
143 Fee No 7,128 10,000 Goodwill Industries 10,714 3/31/02
144 Fee Hard, Springing 11,042 22,544 Goodwill Store & Donations 14,000 8/1/01
145 Fee No 3,915 22,245 Action Video 3,124 2/28/00
- ------------------------------------------------------------------------------------------------------------------------------------
146 Fee Hard, Springing 23,631 - - - -
147 Fee Hard, Springing 13,050 - - - -
148 Fee Hard, Springing 23,323 - - - -
149 Fee No 7,794 63,648 Health Evaluation Programs 6,131 4/30/00
150 Fee Hard, Springing 20,000 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
151 Fee No 3,180 22,104 Rake: An Asian Diner 2,784 10/31/04
152 Fee Hard, Springing 8,025 - Pacific Retail Interiors 53,500 6/30/13
153 Fee Hard, Springing 8,876 35,436 Perrygraf 10,656 6/30/98
154 Fee Hard, Springing 19,500 - - - -
155 Fee Hard, Springing 20,364 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
155 - - - - - - -
155 - - - - - - -
156 Fee No - - - - -
157 Fee Hard, Springing 35,438 - - - -
157 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
157 - - - - - - -
158 Fee No 18,612 - F. Gaylon Young Insurance Agency,
Inc. 48,663 3/31/13
159 Fee Hard, Springing 24,900 - - - -
160 Fee Hard, Springing 7,075 - The Stevens Group, Inc. 5,159 9/30/00
161 Fee Hard, Springing 11,936 6,000 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
161 - - - - Cozad 7,304 1/1/01
161 - - - - - - -
162 Fee Hard, Springing 6,638 - - - -
163 Fee Hard, Springing 5,397 21,000 Convenience Store/Corral Bar and
Grill 5,750 9/15/07
164 Fee Hard, Springing - - Ravenwood Properties, Inc. 4,035 1/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
165 Fee Hard, Springing 11,416 16,667 USA General Services Administration 30,854 4/30/08
166 Fee Hard, Springing - 8,711 Modern Media 4,016 1/31/00
167 Fee Hard, Springing 19,602 - Bally's 26,700 10/31/02
168 Fee Hard, Springing 23,725 - - - -
169 Fee Hard, Springing 3,211 21,000 Social Security Admin. (GSA) 11,976 4/16/11
- ------------------------------------------------------------------------------------------------------------------------------------
170 Fee Hard, Springing 1,993 - U of F Health Services 3,683 6/14/00
171 Fee Soft, Springing - 24,000 Air Park LGA, Inc. 36,517 3/7/01
172 Fee Hard, Springing 16,500 - - - -
173 Fee Hard, Springing 29,870 - - - -
174 Leasehold Hard, Springing 4,082 20,400 Living Centers of America, Inc. 12,742 4/30/00
- ------------------------------------------------------------------------------------------------------------------------------------
175 Fee No 7,035 31,055 Health Exchange, Inc 2,654 4/30/02
176 Fee Hard, Springing 4,819 13,000 Tom Thumb 5,000 4/30/02
177 Fee No 10,643 30,411 Bell South Mobility, Inc. 16,184 8/31/02
178 Fee No 9,481 - - - -
179 Fee Hard, Springing 8,896 26,678 TEP Systems 8,737 5/31/00
- ------------------------------------------------------------------------------------------------------------------------------------
180 Fee Hard, Springing 8,500 - - - -
181 Fee No 9,206 - - - -
182 Fee Hard, In-Place 5,356 21,000 Hungerford & Co 7,538 6/1/99
183 Fee Hard, Springing 3,921 24,684 Nara Japanese Restaurant 4,400 6/30/01
184 Fee No - - Southland Corp. 2,993 6/30/13
- ------------------------------------------------------------------------------------------------------------------------------------
185 Fee Hard, Springing 7,027 - Family Tree 7,037 7/20/08
186 Fee Hard, Springing 20,643 - - - -
187 Fee Hard, Springing 23,040 - - - -
188 Fee Hard, Springing 2,746 - Spin Cycle Laundry 4,500 7/1/02
189 Fee Hard, Springing 2,348 8,086 Launder Land 2,640 10/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
190 Fee Hard, Springing - - Bruegger's Bagels 3,616 2/16/02
191 Fee Hard, Springing 11,028 - - - -
192 Fee No 23,100 - - - -
193 Fee Hard, Springing 3,980 24,000 Kids N Motion, Inc. 4,400 10/31/99
194 Fee No 15,144 10,000 Blockbuster Videos, Inc. 4,500 3/31/02
- ------------------------------------------------------------------------------------------------------------------------------------
195 Fee Hard, Springing 1,500 10,000 Carpeteria, Inc. 4,000 6/30/03
196 Fee Hard, Springing 4,594 7,200 Center For Employment Training 13,671 6/30/02
197 Fee No 6,935 13,361 Anderson Mill Dental 3,174 7/31/99
198 Fee No 1,725 10,361 GSW Cleaners 2,750 12/31/02
199 Fee No 9,079 11,156 Coldwell Banker 2,600 7/31/00
- ------------------------------------------------------------------------------------------------------------------------------------
200 Fee No 12,375 - - - -
201 Fee No 16,000 - - - -
202 Fee Hard, Springing 840 - CP Roswell, LLC 10,400 1/31/10
203 Fee Hard, Springing 1,968 5,575 Video Update 4,800 11/30/06
204 Fee Hard, Springing 10,000 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
205 Fee Hard, Springing 4,334 - System Management 2,859 6/30/01
206 Fee Hard, Springing - - Don Pablo's Mexican Kitchen
(ground) 7,800 8/31/12
207 Fee No 7,000 - - - -
208 Fee No 5,840 13,188 B & L Food Mart/Quick Stop 2,640 12/30/01
209 Fee No - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
210 Fee No 15,840 - - - -
211 Fee No 1,397 - Taylor Pharmaceuticals 6,418 3/1/03
212 Fee No 4,344 - State of Texas - Protective &
Regulatory 10,655 2/28/06
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGE OF CUT-OFF DATE MORTGAGE PRINCIPAL PRINCIPAL --------------------------------------------
PRINCIPAL BALANCES LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ------------------------------- ----------- ----------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$493,521 - 499,999............. 1 $ 493,521 0.04% $ 493,521 $ 493,521 $ 493,521
500,000 - 999,999 ............. 11 9,691,301 0.74 600,618 992,307 881,027
1,000,000 - 1,999,999 ......... 45 69,578,168 5.31 1,056,992 1,990,181 1,546,182
2,000,000 - 2,999,999 ......... 48 122,468,554 9.34 2,030,005 2,984,764 2,551,428
3,000,000 - 3,999,999 ......... 18 60,943,537 4.65 3,059,118 3,980,115 3,385,752
4,000,000 - 4,999,999 ......... 25 112,749,776 8.60 4,026,438 4,985,769 4,509,991
5,000,000 - 5,999,999 ......... 12 66,715,394 5.09 5,066,130 5,975,260 5,559,616
6,000,000 - 6,999,999 ......... 11 69,758,683 5.32 6,040,324 6,962,866 6,341,698
7,000,000 - 7,999,999 ......... 12 88,974,275 6.79 7,093,526 7,965,756 7,414,523
8,000,000 - 8,999,999 ......... 5 42,641,257 3.25 8,267,753 8,836,785 8,528,251
9,000,000 - 9,999,999 ......... 5 47,142,856 3.60 9,153,307 9,623,802 9,428,571
10,000,000 - 11,999,999 ....... 4 44,511,871 3.39 10,501,039 11,829,398 11,127,968
12,000,000 - 13,999,999 ....... 3 39,610,310 3.02 12,388,357 13,829,953 13,203,437
14,000,000 - 16,999,999 ....... 7 110,149,871 8.40 14,329,185 16,686,031 15,735,696
17,000,000 - 19,999,999 ....... 2 34,910,088 2.66 17,110,383 17,799,705 17,455,044
20,000,000 - 24,999,999 ....... 2 45,176,489 3.45 22,000,441 23,176,048 22,588,244
25,000,000 - 49,999,999 ....... 9 285,609,971 21.78 26,335,358 38,050,000 31,734,441
50,000,000 - 60,000,000 ....... 1 60,000,000 4.58 60,000,000 60,000,000 60,000,000
-- -------------- ------
Total ......................... 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CUT-OFF DATE LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGE OF CUT-OFF DATE WEIGHTED INTEREST MATURITY WEIGHTED
PRINCIPAL BALANCES MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ------------------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$493,521 - 499,999............. 2.85x 2.85x 2.85x 7.450% 113.0 25.05% 25.05% 25.05%
500,000 - 999,999 ............. 1.25 1.59 1.34 7.223 117.5 53.00 86.60 71.94
1,000,000 - 1,999,999 ......... 1.21 1.89 1.43 7.169 114.1 44.27 79.75 69.37
2,000,000 - 2,999,999 ......... 1.01 1.72 1.33 7.130 114.7 50.00 85.28 70.31
3,000,000 - 3,999,999 ......... 1.09 1.73 1.43 7.103 111.9 50.00 79.62 69.67
4,000,000 - 4,999,999 ......... 1.26 1.64 1.39 7.262 115.1 55.51 78.97 69.33
5,000,000 - 5,999,999 ......... 1.22 1.58 1.36 7.175 112.0 61.92 81.64 73.73
6,000,000 - 6,999,999 ......... 1.24 1.67 1.37 7.264 118.6 56.41 80.55 71.33
7,000,000 - 7,999,999 ......... 1.19 1.59 1.31 7.186 112.0 50.00 79.42 72.53
8,000,000 - 8,999,999 ......... 1.22 1.42 1.29 6.928 112.8 70.81 80.98 75.64
9,000,000 - 9,999,999 ......... 1.32 1.57 1.39 6.897 113.4 74.86 79.59 77.01
10,000,000 - 11,999,999 ....... 1.23 1.60 1.34 7.233 112.0 70.01 79.42 75.66
12,000,000 - 13,999,999 ....... 1.32 1.71 1.49 7.059 109.8 49.24 74.56 65.08
14,000,000 - 16,999,999 ....... 1.22 1.77 1.42 7.112 112.0 50.00 80.00 72.42
17,000,000 - 19,999,999 ....... 1.26 1.35 1.30 7.570 112.1 75.42 76.39 75.90
20,000,000 - 24,999,999 ....... 1.26 1.28 1.27 7.440 112.9 70.29 75.74 73.09
25,000,000 - 49,999,999 ....... 1.17 1.78 1.39 7.149 114.0 56.79 79.10 72.47
50,000,000 - 60,000,000 ....... 1.92 1.92 1.92 6.660 112.0 58.71 58.71 58.71
Total ......................... 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-11
<PAGE>
DISTRIBUTION OF PROPERTY TYPES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
MORTGAGE PRINCIPAL PRINCIPAL ------------------------------------------
PROPERTY TYPE PROPERTIES BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- --------------------------- ------------ ----------------- --------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Office .................... 72 $ 327,495,766 24.98% $ 100,043 $35,018,169 $4,548,552
Multifamily ............... 78 320,950,044 24.48 453,493 32,740,000 4,114,744
Anchored Retail ........... 33 242,534,455 18.50 1,077,591 60,000,000 7,349,529
Industrial ................ 19 97,111,558 7.41 637,556 29,349,944 5,111,135
Unanchored Retail ......... 23 65,986,430 5.03 819,345 7,147,087 2,868,975
Special Purpose ........... 11 59,929,704 4.57 624,702 14,329,185 5,448,155
Nursing Home, Skilled...... 8 46,115,660 3.52 1,930,053 8,192,370 5,764,457
Mixed Use ................. 6 45,295,693 3.45 1,141,841 26,829,956 7,549,282
Lodging ................... 8 40,705,184 3.10 2,335,680 10,501,039 5,088,148
Assisted Living Facility... 3 23,287,033 1.78 1,286,592 11,035,364 7,762,344
Self-Storage .............. 7 20,531,368 1.57 1,474,587 6,068,238 2,933,053
Congregate Care ........... 2 16,531,149 1.26 7,197,773 9,333,376 8,265,574
Mobile Home Park .......... 2 4,651,876 0.35 1,668,690 2,983,185 2,325,938
-- -------------- ------
Total ..................... 272 $1,311,125,920 100.00% 100,043 60,000,000 4,820,316
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
WEIGHTED INTEREST MATURITY WEIGHTED
PROPERTY TYPE MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- --------------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office .................... 1.09x 2.85x 1.36x 7.202% 112.2 25.05% 78.98% 69.09%
Multifamily ............... 1.01 1.68 1.32 6.982 112.4 53.00 86.60 75.35
Anchored Retail ........... 1.23 1.92 1.48 7.015 113.1 55.51 79.75 69.83
Industrial ................ 1.24 1.51 1.34 7.165 119.0 63.87 77.65 73.46
Unanchored Retail ......... 1.21 1.89 1.38 7.249 112.0 44.27 80.55 70.71
Special Purpose ........... 1.28 1.78 1.73 7.494 114.9 56.79 75.42 62.81
Nursing Home, Skilled...... 1.39 1.60 1.54 7.152 115.0 74.95 79.10 76.15
Mixed Use ................. 1.23 1.56 1.28 7.131 111.7 62.43 79.18 73.55
Lodging ................... 1.31 1.67 1.52 7.415 120.4 56.41 74.24 66.91
Assisted Living Facility... 1.28 1.40 1.29 7.857 114.7 70.29 71.48 70.36
Self-Storage .............. 1.25 1.86 1.40 7.490 114.9 63.18 71.28 67.23
Congregate Care ........... 1.39 1.39 1.39 7.380 115.0 79.10 79.10 79.10
Mobile Home Park .......... 1.41 1.72 1.61 6.899 112.6 58.15 79.46 65.79
Total ..................... 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-12
<PAGE>
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
MORTGAGE PRINCIPAL PRINCIPAL ------------------------------------------
PROPERTY STATE PROPERTIES BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- --------------------------- ------------ ----------------- --------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
California ................ 50 $ 241,871,974 18.45% $ 600,618 $34,639,734 $ 4,837,439
Texas ..................... 50 160,862,180 12.27 100,043 29,349,944 3,217,244
Florida ................... 16 141,103,230 10.76 1,319,605 32,740,000 8,818,952
New York .................. 21 121,451,162 9.26 969,513 26,829,956 5,783,389
Pennsylvania .............. 13 103,728,877 7.91 1,291,517 60,000,000 7,979,144
Illinois .................. 19 70,962,007 5.41 453,493 15,946,618 3,734,842
Maryland .................. 11 58,135,006 4.43 834,698 11,035,364 5,285,001
New Jersey ................ 9 51,322,685 3.91 637,556 16,048,475 5,702,521
Michigan .................. 6 46,920,097 3.58 1,445,349 35,018,169 7,820,016
Virginia .................. 9 41,068,467 3.13 624,702 13,061,940 4,563,163
Missouri .................. 5 33,488,746 2.55 3,669,401 9,333,376 6,697,749
Arizona ................... 7 27,626,919 2.11 2,292,401 6,225,326 3,946,703
Nevada .................... 2 25,655,967 1.96 2,479,920 23,176,048 12,827,984
Minnesota ................. 12 24,565,557 1.87 969,758 4,985,769 2,047,130
Georgia ................... 4 21,092,204 1.61 990,642 16,648,162 5,273,051
Massachusetts ............. 4 20,268,740 1.55 2,621,904 7,563,536 5,067,185
Colorado .................. 4 19,655,334 1.50 2,430,357 6,405,037 4,913,834
Wisconsin ................. 4 13,413,395 1.02 1,187,239 5,456,508 3,353,349
Tennessee ................. 2 13,282,659 1.01 4,129,352 9,153,307 6,641,329
Mississippi ............... 4 11,015,318 0.84 1,134,346 4,052,452 2,753,830
Delaware .................. 2 10,347,160 0.79 2,976,918 7,370,241 5,173,580
Indiana ................... 3 10,124,859 0.77 961,577 7,173,100 3,374,953
North Carolina ............ 2 7,722,231 0.59 2,271,354 5,450,877 3,861,116
Washington ................ 2 6,745,494 0.51 2,087,078 4,658,416 3,372,747
Virgin Islands ............ 1 6,068,238 0.46 6,068,238 6,068,238 6,068,238
Oklahoma .................. 2 4,069,830 0.31 1,191,773 2,878,057 2,034,915
Kentucky .................. 2 3,869,814 0.30 992,307 2,877,507 1,934,907
Nebraska .................. 1 3,568,269 0.27 3,568,269 3,568,269 3,568,269
South Carolina ............ 1 3,328,607 0.25 3,328,607 3,328,607 3,328,607
Oregon .................... 1 2,581,205 0.20 2,581,205 2,581,205 2,581,205
District of Columbia ...... 1 2,143,496 0.16 2,143,496 2,143,496 2,143,496
Ohio ...................... 1 1,584,170 0.12 1,584,170 1,584,170 1,584,170
Connecticut ............... 1 1,482,023 0.11 1,482,023 1,482,023 1,482,023
-- -------------- ------
Total ..................... 272 $1,311,125,920 100.00% 100,043 60,000,000 4,820,316
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
WEIGHTED INTEREST MATURITY WEIGHTED
PROPERTY STATE MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- --------------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California ................ 1.01x 1.89x 1.35x 7.142% 113.6 44.27% 79.62% 72.61%
Texas ..................... 1.22 2.85 1.33 7.115 111.9 25.05 80.00 72.84
Florida ................... 1.17 1.73 1.33 7.077 111.1 49.24 79.39 66.62
New York .................. 1.09 1.77 1.38 7.213 113.8 62.72 79.42 73.54
Pennsylvania .............. 1.19 1.92 1.69 6.918 114.0 58.15 81.64 65.31
Illinois .................. 1.26 1.64 1.35 7.123 115.2 67.20 85.28 76.34
Maryland .................. 1.28 1.78 1.48 7.433 115.0 56.79 74.95 70.79
New Jersey ................ 1.27 1.60 1.47 7.137 113.7 61.19 77.09 72.81
Michigan .................. 1.23 1.61 1.33 7.092 116.7 64.85 77.28 70.42
Virginia .................. 1.23 1.78 1.66 7.507 115.4 56.79 79.45 61.27
Missouri .................. 1.39 1.63 1.42 7.348 114.5 71.95 79.10 78.32
Arizona ................... 1.23 1.35 1.29 7.135 112.7 65.67 79.28 73.67
Nevada .................... 1.26 1.60 1.29 7.086 110.9 65.26 75.74 74.73
Minnesota ................. 1.22 1.48 1.35 7.135 113.7 60.61 86.60 74.60
Georgia ................... 1.26 1.81 1.31 7.083 111.9 63.23 79.66 77.43
Massachusetts ............. 1.25 1.67 1.51 7.166 112.8 56.41 71.35 65.56
Colorado .................. 1.27 1.41 1.38 7.087 112.8 69.98 79.48 74.35
Wisconsin ................. 1.25 1.39 1.31 7.264 131.6 60.88 74.48 71.82
Tennessee ................. 1.36 1.46 1.39 6.844 113.1 68.82 79.59 76.24
Mississippi ............... 1.24 1.39 1.30 7.279 111.9 55.51 68.17 63.51
Delaware .................. 1.33 1.59 1.52 7.125 111.4 67.66 70.19 69.46
Indiana ................... 1.20 1.52 1.28 7.140 116.2 68.63 78.05 76.09
North Carolina ............ 1.24 1.40 1.35 7.191 109.3 70.33 78.87 72.84
Washington ................ 1.25 1.35 1.32 7.332 113.6 66.84 67.33 66.99
Virgin Islands ............ 1.28 1.28 1.28 7.680 109.0 65.25 65.25 65.25
Oklahoma .................. 1.24 1.68 1.37 6.767 112.2 70.10 75.74 74.09
Kentucky .................. 1.30 1.38 1.36 6.653 114.0 65.40 70.88 66.81
Nebraska .................. 1.42 1.42 1.42 6.760 110.0 79.29 79.29 79.29
South Carolina ............ 1.45 1.45 1.45 7.810 114.0 64.01 64.01 64.01
Oregon .................... 1.33 1.33 1.33 7.070 114.0 73.75 73.75 73.75
District of Columbia ...... 1.25 1.25 1.25 7.820 117.0 73.91 73.91 73.91
Ohio ...................... 1.55 1.55 1.55 6.750 112.0 74.20 74.20 74.20
Connecticut ............... 1.86 1.86 1.86 7.360 110.0 70.57 70.57 70.57
Total ..................... 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-13
<PAGE>
DISTRIBUTION OF ANNUALIZED DEBT SERVICE COVERAGE RATIOS (NCF)
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGE OF DEBT SERVICE MORTGAGE PRINCIPAL PRINCIPAL -----------------------------------------
COVERAGE RATIO LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------------- ----------- ----------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1.00 - 1.10 ........... 2 $ 5,334,869 0.41% $ 2,149,745 $ 3,185,124 $ 2,667,434
1.11 - 1.20 ........... 5 51,746,645 3.95 2,040,164 32,740,000 10,349,329
1.21 - 1.30 ........... 79 484,604,299 36.96 600,618 35,018,169 6,134,232
1.31 - 1.40 ........... 68 360,129,663 27.47 819,345 34,639,734 5,296,024
1.41 - 1.50 ........... 25 122,888,203 9.37 1,084,550 16,686,031 4,915,528
1.51 - 1.60 ........... 20 112,882,509 8.61 784,421 32,827,463 5,644,125
1.61 - 1.70 ........... 11 35,538,366 2.71 1,191,773 6,205,339 3,230,761
1.71 - 1.80 ........... 6 73,173,798 5.58 1,269,427 38,050,000 12,195,633
1.81 - 1.90 ........... 3 4,334,048 0.33 1,239,675 1,612,350 1,444,683
1.91 - 2.00 ........... 1 60,000,000 4.58 60,000,000 60,000,000 60,000,000
2.51 - 2.85 ........... 1 493,521 0.04 493,521 493,521 493,521
-- -------------- ------
Total ................. 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGE OF DEBT SERVICE WEIGHTED INTEREST MATURITY WEIGHTED
COVERAGE RATIO MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ----------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.00 - 1.10 ........... 1.01x 1.09x 1.06x 7.100% 114.0 63.70% 79.62% 70.12%
1.11 - 1.20 ........... 1.13 1.20 1.18 7.059 114.1 72.38 79.41 76.15
1.21 - 1.30 ........... 1.21 1.30 1.26 7.199 113.0 50.00 85.28 73.90
1.31 - 1.40 ........... 1.31 1.40 1.36 7.145 113.6 50.00 86.60 73.22
1.41 - 1.50 ........... 1.41 1.48 1.44 7.136 110.2 50.00 80.98 69.20
1.51 - 1.60 ........... 1.51 1.60 1.57 7.119 119.7 53.00 78.97 71.39
1.61 - 1.70 ........... 1.61 1.68 1.64 6.939 113.7 56.41 74.24 66.56
1.71 - 1.80 ........... 1.71 1.79 1.76 7.409 113.1 47.90 75.42 58.67
1.81 - 1.90 ........... 1.81 1.89 1.85 7.386 110.5 44.27 70.57 60.32
1.91 - 2.00 ........... 1.92 1.92 1.92 6.660 112.0 58.71 58.71 58.71
2.51 - 2.85 ........... 2.85 2.85 2.85 7.450 113.0 25.05 25.05 25.05
Total ................. 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
DISTRIBUTION OF CURRENT LOAN TO VALUE RATIOS
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGES OF CURRENT MORTGAGE PRINCIPAL PRINCIPAL -------------------------------------------
LOAN-TO-VALUE RATIOS LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------------- ----------- ----------------- --------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
25.05 - 30.00 ......... 1 $ 493,521 0.04% $ 493,521 $ 493,521 $ 493,521
30.01 - 50.00 ......... 7 45,751,103 3.49 1,239,675 16,250,000 6,535,872
50.01 - 60.00 ......... 13 130,481,081 9.95 784,421 60,000,000 10,037,006
60.01 - 65.00 ......... 22 63,728,339 4.86 969,758 5,975,260 2,896,743
65.01 - 70.00 ......... 30 98,912,214 7.54 600,618 6,962,866 3,297,074
70.01 - 75.00 ......... 90 549,761,667 41.93 644,673 35,018,169 6,108,463
75.01 - 80.00 ......... 53 397,477,892 30.32 961,577 32,740,000 7,499,583
80.01 - 85.00 ......... 3 20,565,459 1.57 5,796,581 8,405,815 6,855,153
85.01 - 90.00 ......... 2 3,954,645 0.30 969,881 2,984,764 1,977,322
-- -------------- ------
Total ................. 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGES OF CURRENT WEIGHTED INTEREST MATURITY WEIGHTED
LOAN-TO-VALUE RATIOS MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ----------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25.05 - 30.00 ......... 2.85x 2.85x 2.85x 7.450% 113.0 25.05% 25.05% 25.05%
30.01 - 50.00 ......... 1.23 1.89 1.53 7.060 107.3 44.27 50.00 49.56
50.01 - 60.00 ......... 1.22 1.92 1.77 7.022 114.1 53.00 59.33 57.77
60.01 - 65.00 ......... 1.09 1.81 1.41 7.260 112.3 60.61 64.85 62.78
65.01 - 70.00 ......... 1.24 1.67 1.38 7.234 118.0 65.14 69.98 67.11
70.01 - 75.00 ......... 1.19 1.86 1.37 7.147 113.9 70.01 74.95 73.02
75.01 - 80.00 ......... 1.01 1.77 1.31 7.165 112.5 75.07 80.00 77.75
80.01 - 85.00 ......... 1.34 1.42 1.39 6.994 113.1 80.55 81.64 81.03
85.01 - 90.00 ......... 1.30 1.34 1.31 6.900 113.5 85.28 86.60 85.60
Total ................. 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-14
<PAGE>
DISTRIBUTION OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGE OF MORTGAGE PRINCIPAL PRINCIPAL -----------------------------------------
MORTGAGE RATES LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------------- ----------- ----------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
6.001 - 6.250 ......... 1 $ 1,191,773 0.09% $1,191,773 $ 1,191,773 $1,191,773
6.251 - 6.500 ......... 4 11,992,707 0.91 1,816,450 4,972,714 2,998,177
6.501 - 6.750 ......... 14 116,854,651 8.91 784,421 60,000,000 8,346,761
6.751 - 7.000 ......... 51 292,186,029 22.29 961,577 32,740,000 5,729,138
7.001 - 7.250 ......... 70 492,392,839 37.55 969,758 35,018,169 7,034,183
7.251 - 7.500 ......... 52 239,480,773 18.27 493,521 29,819,346 4,605,399
7.501 - 7.750 ......... 16 95,711,745 7.30 988,565 38,050,000 5,981,984
7.751 - 8.000 ......... 10 58,350,602 4.45 969,513 22,000,441 5,835,060
8.001 - 8.250 ......... 2 1,678,210 0.13 600,618 1,077,591 839,105
8.251 - 8.500 ......... 1 1,286,592 0.10 1,286,592 1,286,592 1,286,592
-- -------------- ------
Total ................. 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGE OF WEIGHTED INTEREST MATURITY WEIGHTED
MORTGAGE RATES MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ----------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.001 - 6.250 ......... 1.68x 1.68x 1.68x 6.230% 115.0 70.10% 70.10% 70.10%
6.251 - 6.500 ......... 1.36 1.67 1.42 6.413 115.4 57.16 78.98 65.63
6.501 - 6.750 ......... 1.30 1.92 1.65 6.657 113.7 53.00 79.59 65.70
6.751 - 7.000 ......... 1.17 1.72 1.33 6.911 113.6 58.15 86.60 73.84
7.001 - 7.250 ......... 1.01 1.73 1.37 7.124 112.7 49.24 80.55 71.76
7.251 - 7.500 ......... 1.21 2.85 1.39 7.390 112.7 25.05 81.64 73.42
7.501 - 7.750 ......... 1.25 1.78 1.52 7.625 115.1 55.51 79.18 63.75
7.751 - 8.000 ......... 1.25 1.59 1.31 7.818 119.7 61.01 79.75 71.39
8.001 - 8.250 ......... 1.26 1.35 1.32 8.229 113.9 63.39 68.64 65.27
8.251 - 8.500 ......... 1.40 1.40 1.40 8.310 110.0 71.48 71.48 71.48
Total ................. 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
<PAGE>
DISTRIBUTION OF AMORTIZATION TYPES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
MORTGAGE PRINCIPAL PRINCIPAL -------------------------------------------
AMORTIZATION TYPE LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ------------------------ ----------- ----------------- --------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hyperamortizing ........ 142 $ 749,989,877 57.20% $ 969,513 $35,018,169 $ 5,281,619
Amortizing Balloon ..... 67 357,923,941 27.30 493,521 32,827,463 5,342,148
Interest Only ,Then
Amortizing Balloon..... 4 96,850,000 7.39 11,380,000 38,050,000 24,212,500
Interest Only .......... 1 60,000,000 4.58 60,000,000 60,000,000 60,000,000
Interest Only ,Then
Hyperamortizing ....... 5 43,242,000 3.30 2,700,000 16,250,000 8,648,400
Fully Amortizing ....... 2 3,120,102 0.24 784,421 2,335,680 1,560,051
--- -------------- ------
Total .................. 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
WEIGHTED INTEREST MATURITY WEIGHTED
AMORTIZATION TYPE MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ------------------------ --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hyperamortizing ........ 1.01x 1.89x 1.36x 7.167% 112.5 44.27% 86.60% 73.29%
Amortizing Balloon ..... 1.09 2.85 1.37 7.172 115.0 25.05 79.75 72.65
Interest Only ,Then
Amortizing Balloon..... 1.17 1.78 1.43 7.221 115.8 56.79 80.00 68.80
Interest Only .......... 1.92 1.92 1.92 6.660 112.0 58.71 58.71 58.71
Interest Only ,Then
Hyperamortizing ....... 1.23 1.73 1.51 7.040 107.0 49.24 50.00 49.76
Fully Amortizing ....... 1.59 1.59 1.59 7.603 220.4 53.00 69.51 65.36
Total .................. 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-15
<PAGE>
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGE OF REMAINING MORTGAGE PRINCIPAL PRINCIPAL --------------------------------------------
AMORTIZATION TERMS LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------------- ----------- ----------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Interest Only ......... 1 $ 60,000,000 4.58% $60,000,000 $60,000,000 $60,000,000
171 - 190 ............. 1 784,421 0.06 784,421 784,421 784,421
191 - 210 ............. 1 38,050,000 2.90 38,050,000 38,050,000 38,050,000
211 - 230 ............. 3 16,858,679 1.29 1,474,587 8,568,506 5,619,560
231 - 250 ............. 5 13,145,021 1.00 493,521 4,129,352 2,629,004
271 - 290 ............. 12 47,402,504 3.62 600,618 14,329,185 3,950,209
291 - 310 ............. 50 221,734,684 16.91 644,673 32,827,463 4,434,694
331 - 360 ............. 75 469,957,471 35.84 969,513 35,018,169 6,266,100
361 - 374 ............. 73 443,193,140 33.80 961,577 34,639,734 6,071,139
-- -------------- ------
Total ................. 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGE OF REMAINING WEIGHTED INTEREST MATURITY WEIGHTED
AMORTIZATION TERMS MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ----------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Only ......... 1.92x 1.92x 1.92x 6.660% 112.0 58.71% 58.71% 58.71%
171 - 190 ............. 1.59 1.59 1.59 6.720 174.0 53.00 53.00 53.00
191 - 210 ............. 1.78 1.78 1.78 7.590 117.0 56.79 56.79 56.79
211 - 230 ............. 1.22 1.51 1.35 7.329 139.1 65.53 70.81 68.24
231 - 250 ............. 1.32 2.85 1.48 6.961 135.2 25.05 71.48 66.83
271 - 290 ............. 1.19 1.86 1.48 7.427 109.5 55.51 75.42 70.56
291 - 310 ............. 1.22 1.89 1.42 7.314 114.0 44.27 79.75 70.81
331 - 360 ............. 1.13 1.81 1.34 7.137 112.2 49.24 85.28 72.19
361 - 374 ............. 1.01 1.72 1.33 7.068 113.2 58.15 86.60 73.97
Total ................. 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
<PAGE>
DISTRIBUTION OF ORIGINAL TERMS TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGES OF ORIGINAL MORTGAGE PRINCIPAL PRINCIPAL -----------------------------------------
TERMS TO MATURITY LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- -------------------------- ----------- ---------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
51 - 70 months ........... 1 $ 4,568,794 0.35% $ 4,568,794 $ 4,568,794 $ 4,568,794
111 - 120 months ......... 213 1,251,208,550 95.43 493,521 60,000,000 5,874,219
121 - 130 months ......... 1 35,018,169 2.67 35,018,169 35,018,169 35,018,169
171 - 190 months ......... 5 17,994,726 1.37 784,421 6,815,586 3,598,945
231 - 250 months ......... 1 2,335,680 0.18 2,335,680 2,335,680 2,335,680
--- -------------- ------
Total .................... 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGES OF ORIGINAL WEIGHTED INTEREST MATURITY WEIGHTED
TERMS TO MATURITY MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- -------------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
51 - 70 months ........... 1.44x 1.44x 1.44x 7.650% 54.0 65.27% 65.27% 65.27%
111 - 120 months ......... 1.01 2.85 1.40 7.141 112.5 25.05 86.60 71.41
121 - 130 months ......... 1.29 1.29 1.29 7.090 118.0 70.32 70.32 70.32
171 - 190 months ......... 1.26 1.59 1.42 7.403 172.2 53.00 74.48 69.07
231 - 250 months ......... 1.59 1.59 1.59 7.900 236.0 69.51 69.51 69.51
Total .................... 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-16
<PAGE>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
RANGES OF REMAINING MORTGAGE PRINCIPAL PRINCIPAL -----------------------------------------
TERMS TO MATURITY LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- -------------------------- ----------- ---------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
51 - 70 months ........... 1 $ 4,568,794 0.35% $4,568,794 $ 4,568,794 $4,568,794
91 - 110 months .......... 50 279,697,451 21.33 600,618 29,349,944 5,593,949
111 - 120 months ......... 164 1,006,529,268 76.77 493,521 60,000,000 6,137,374
151 - 170 months ......... 1 6,815,586 0.52 6,815,586 6,815,586 6,815,586
171 - 190 months ......... 4 11,179,140 0.85 784,421 4,468,876 2,794,785
231 - 250 months ......... 1 2,335,680 0.18 2,335,680 2,335,680 2,335,680
--- -------------- ------
Total .................... 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
RANGES OF REMAINING WEIGHTED INTEREST MATURITY WEIGHTED
TERMS TO MATURITY MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- -------------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
51 - 70 months ........... 1.44x 1.44x 1.44x 7.650% 54.0 65.27% 65.27% 65.27%
91 - 110 months .......... 1.19 1.86 1.39 7.247 108.8 49.24 79.39 69.95
111 - 120 months ......... 1.01 2.85 1.40 7.109 113.7 25.05 86.60 71.77
151 - 170 months ......... 1.51 1.51 1.51 7.160 170.0 65.53 65.53 65.53
171 - 190 months ......... 1.26 1.59 1.36 7.551 173.6 53.00 74.48 71.23
231 - 250 months ......... 1.59 1.59 1.59 7.900 236.0 69.51 69.51 69.51
Total .................... 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
<PAGE>
DISTRIBUTION OF PREPAYMENT PROVISIONS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF
NUMBER OF DATE DATE CUT-OFF DATE PRINCIPAL BALANCE
MORTGAGE PRINCIPAL PRINCIPAL ----------------------------------------
PREPAYMENT PROVISION LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ---------------------- ----------- ----------------- --------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Defeasance ........... 209 $1,287,474,269 98.20% $969,513 $60,000,000 $6,160,164
Greater of YM or 1%
UPB ................. 11 22,681,770 1.73 493,521 7,141,489 2,061,979
Lockout .............. 1 969,881 0.07 969,881 969,881 969,881
--- -------------- ------
Total ................ 221 $1,311,125,920 100.00% 493,521 60,000,000 5,932,696
=== ============== ======
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE REMAINING CURRENT LTV RATIO
------------------------------ MORTGAGE TERM TO -----------------------------------
WEIGHTED INTEREST MATURITY WEIGHTED
PREPAYMENT PROVISION MINIMUM MAXIMUM AVERAGE RATE (IN MONTHS) MINIMUM MAXIMUM LTV
- ---------------------- --------- --------- ---------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Defeasance ........... 1.01x 1.92x 1.40x 7.143% 113.5 44.27% 85.28% 71.30%
Greater of YM or 1%
UPB ................. 1.26 2.85 1.39 7.347 113.4 25.05 79.30 71.75
Lockout .............. 1.34 1.34 1.34 6.870 112.0 86.60 86.60 86.60
Total ................ 1.01 2.85 1.40 7.146 113.5 25.05 86.60 71.32
</TABLE>
A-17
<PAGE>
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM/DEFEASANCE
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING PRINCIPAL BALANCE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
APR-99 APR-00 APR-01
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Locked out .............................. 100.00% 100.00% 79.31%
Defeasance .............................. 0.00 0.00 20.50
Greater of 1% or Yield Maintenance ...... 0.00 0.00 0.19
- ------------------------------------------------------------------------------------------
Subtotal ................................ 100.00% 100.00% 100.00%
Open .................................... 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------
Total ................................... 100.00% 100.00% 100.00%
Aggregate Balance($MM)................... $ 1,311.13 $ 1,298.08 $ 1,282.06
% of Initial Pool Balance ............... 100.00% 99.01% 97.78%
- ------------------------------------------------------------------------------------------
<CAPTION>
APR-02 APR-03 APR-04 APR-05
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Locked out .............................. 41.88% 13.39% 0.60% 0.58%
Defeasance .............................. 57.39 85.07 97.73 97.74
Greater of 1% or Yield Maintenance ...... 0.73 1.55 1.68 1.68
- ---------------------------------------------------------------------------------------------------------
Subtotal ................................ 100.00% 100.00% 100.00% 100.00%
Open .................................... 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------
Total ................................... 100.00% 100.00% 100.00% 100.00%
Aggregate Balance($MM)................... $ 1,264.83 $ 1,246.31 $ 1,222.32 $ 1,200.99
% of Initial Pool Balance ............... 96.47% 95.06% 93.23% 91.60%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
APR-06 APR-07
- ---------------------------------------------------------------------------
<S> <C> <C>
Locked Out ............................... 0.08% 0.08%
Defeasance ............................... 98.21 98.21
Greater of 1% or Yield Maintenance ....... 1.72 1.72
- ---------------------------------------------------------------------------
Subtotal ................................. 100.00% 100.00%
Open ..................................... 0.00% 0.00%
- ---------------------------------------------------------------------------
Total .................................... 100.00% 100.00%
Aggregate Balance($MM).................... $ 1,178.05 $ 1,153.40
% of Initial Pool Balance ................ 89.85% 87.97%
- ---------------------------------------------------------------------------
<CAPTION>
APR-08 APR-09 APR-10 APR-11
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Locked Out ............................... 0.08% 0.00% 0.00% 0.00%
Defeasance ............................... 63.61 97.70 98.02 98.41
Greater of 1% or Yield Maintenance ....... 0.92 2.30 1.98 1.59
- ----------------------------------------------------------------------------------------------------
Subtotal ................................. 64.61% 100.00% 100.00% 100.00%
Open ..................................... 35.39% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------
Total .................................... 100.00% 100.00% 100.00% 100.00%
Aggregate Balance($MM).................... $ 1,044.19 $ 14.69 $ 13.86 $ 12.97
% of Initial Pool Balance ................ 79.64% 1.12% 1.06% 0.99%
- ----------------------------------------------------------------------------------------------------
</TABLE>
A-18
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625 WAC:
Chicago, IL 60603 WAMM:
</TABLE>
Number of Pages
---------------
Table of Contents
REMIC Certificate Report
Other Related Information
Asset Backed Facts Sheets
Delinquency Loan Detail
Mortgage Loan Characteristics
Loan Level Listing
TOTAL PAGES INCLUDED IN THIS PACKAGE
Specially Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
INFORMATION IS AVAILABLE FOR THIS ISSUE FROM THE FOLLOWING SOURCES
LaSalle Web Site www.lnbabs.com
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (312) 904-2200
Bloomberg User Terminal
ASAP #: 389
Monthly Data File Name: 0389MMYY.EXE
B-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625 WAC:
Chicago, IL 60603 WAMM:
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL OPENING PRINCIPAL PRINCIPAL NEGATIVE CLOSING
CLASS FACE VALUE (1) BALANCE PAYMENT ADJ. OR LOSS AMORTIZATION BALANCE
CUSIP Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000
- ----- -------------- ---------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00 0.00 0.00
TOTAL P&I PAYMENT 0.00
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
INTEREST INTEREST PASS-THROUGH
CLASS PAYMENT ADJUSTMENT RATE (2)
CUSIP Per $1,000 Per $1,000 Next Rate (3)
- ----- ---------- ---------- --------------
<S> <C> <C> <C>
0.00 0.00
</TABLE>
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
B-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625 OTHER RELATED
Chicago, IL 60603 INFORMATION
</TABLE>
<TABLE>
<CAPTION>
ACCRUED EXCESS INTEREST PRIOR ENDING ACTUAL
CERTIFICATE DEFERRED PREPAYMENT REDUCTION UNPAID UNPAID DISTRIBUTION
CLASS INTEREST INTEREST INT. SHORTFALLS AMOUNTS INTEREST INTEREST OF INTEREST
- ----- ----------- -------- --------------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
COLLATERAL INFORMATION
COMPONENT SUB-POOL I SUB-POOL II SUB-POOL III POOL TOTAL
Beginning Loan Count:
Ending Loan Count:
Beginning Scheduled Balance of the Mortgage Loans:
Ending Scheduled Balance of the Mortgage Loans:
Weighted Average Remaining Term to Maturity
B-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
</TABLE>
<TABLE>
<CAPTION>
Distribution Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bankruptcy REO
Date # Balance # Balance # Balance # Balance # Balance
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/15/99 0 0 0 0 0 0 0 0 0 0
0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Distribution Modifications Prepayments Curr Weighted Avg.
Date # Balance # Balance Coupon Remit
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03/15/99 0 0 0 0
0.00% 0.000% 0.00% 0.000%
</TABLE>
Note: Foreclosure and REO Totals are Included in the Appropriate Delinquency
Aging Category
B-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
</TABLE>
DELIQUENT LOAN DETAIL
<TABLE>
<CAPTION>
Paid Outstanding Out. Property Special
Disclosure Doc Thru Current P&I P&I Protection Advance Servicer Foreclosure
Control # Date Advance Advances** Advances Description (1) Transfer Date Date
- -------------- ---- ----------- ----------- ------------- --------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Disclosure Doc Bankruptcy REO
Control # Date Date
- -------------- ---------- ----
<S> <C> <C>
</TABLE>
A. P&I Advance - Loan in Grace Period
B. P&I Advance - Late Payment but < one month delinq
1. P&I Advance - Loan delinquent 1 month
2. P&I Advance - Loan delinquent 2 months
3. P&I Advance - Loan delinquent 3 months or More
4. Matured Balloon/Assumed Scheduled Payment
** Outstanding P & I Advances include the current period P & I Advance
B-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625 POOL TOTAL
Chicago, IL 60603
</TABLE>
DISTRIBUTION OF PRINCIPAL BALANCES
- ---------------------------------------------------------------------
(2) Current Scheduled Number (2) Scheduled Based on
Balances of Loans Balance Balance
- ---------------------------- -------- ------------ --------
$0 to $500,000
$500,000 to $1,000,000
$1,000,000 to $1,500,000
$1,500,000 to $2,000,000
$2,000,000 to $2,500,000
$2,500,000 to $3,000,000
$3,000,000 to $3,500,000
$3,500,000 to $4,000,000
$4,000,000 to $5,000,000
$5,000,000 to $6,000,000
$6,000,000 to $7,000,000
$7,000,000 to $8,000,000
$8,000,000 to $9,000,000
$9,000,000 to $10,000,000
$10,000,000 to $11,000,000
$11,000,000 to $12,000,000
$12,000,000 to $13,000,000
$13,000,000 to $14,000,000
$14,000,000 to $15,000,000
$15,000,000 & Above
- -------------------------------------------------------------------
Total 0 0 0.00%
Average Scheduled Balance is 0
Maximum Scheduled Balance is 0
Minimum Scheduled Balance is 0
DISTRIBUTION OF PROPERTY TYPES
-------------------------------------------------------
Number (2) Scheduled Based on
Property Types of Loans Balance Balance
-------------- -------- ------------- --------
-----------------------------------------------------
Total 0 0 0.00%
DISTRIBUTION OF MORTGAGE INTEREST RATES
----------------------------------------------------------
Current Mortgage Number (2) Scheduled Based on
Interest Rate of Loans Balance Balance
---------------- -------- ------------- --------
7.000% or less
7.000% to 7.125%
7.125% to 7.375%
7.375% to 7.625%
7.625% to 7.875%
7.875% to 8.125%
8.125% to 8.375%
8.375% to 8.625%
8.625% to 8.875%
8.875% to 9.125%
9.125% to 9.375%
9.375% to 9.625%
9.625% to 9.875%
9.875% to 10.125%
10.125% & Above
------------------------------------------------------
Total 0 0 0.00%
W/Avg Mortgage Interest Rate is 0.0000%
Minimum Mortgage Interest Rate is 0.0000%
Maximum Mortgage Interest Rate is 0.0000%
GEOGRAPHIC DISTRIBUTION
----------------------------------------------------------------
Number (2) Scheduled Based on
Geographic Location of Loans Balance Balance
------------------- -------- ------------- --------
---------------------------------------------------------------
Total 0 0 0.00%
B-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625 POOL TOTAL
Chicago, IL 60603
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERM
LOAN SEASONING FULLY AMORTIZING
- ------------------------------------------------------- ---------------------------------------------------------
NUMBER (2) SCHEDULED BASED ON FULLY AMORTIZING NUMBER (2) SCHEDULED BASED ON
NUMBER OF YEARS OF LOANS BALANCE BALANCE MORTGAGE LOANS OF LOANS BALANCE BALANCE
- ----------------- ---------- --------------- ---------- ------------------- ---------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
60 months or less
61 to 120 months
121 to 180 months
181 to 240 months
241 to 360 months
- ------------------------------------------------------- ---------------------------------------------------------
Total 0 0 0.00%
- ------------------------------------------------------- ---------------------------------------------------------
Weighted Average Months to Maturity is 0
Weighted Average Seasoning is 0.0
<CAPTION>
DISTRIBUTION OF DSCR
- --------------------------------------------------------
DEBT SERVICE NUMBER (2) SCHEDULED BASED ON
COVERAGE RATIO(1) OF LOANS BALANCE BALANCE
- ------------------- ---------- --------------- ---------
<C> <C> <C> <C>
0.500 or less
0.500 to 0.625
0.625 to 0.750
0.750 to 0.875
0.875 to 1.000
1.000 to 1.125
1.125 to 1.250
1.250 to 1.375
1.375 to 1.500
1.500 to 1.625
1.625 to 1.750
1.750 to 1.875
1.875 to 2.000
2.000 to 2.125
2.125 & above
Unknown
- -------------------------------------------------------
Total 0 0 0.00%
- -------------------------------------------------------
Weighted Average Debt Service Coverage Ratio is 0.000
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERM
DISTRIBUTION OF AMORTIZATION TYPE BALLOON LOANS
- ---------------------------------------------------- ---------------------------------------------------------
AMORTIZATION NUMBER (2) SCHEDULED BASED ON BALLOON NUMBER (2) SCHEDULED BASED ON
TYPE OF LOANS BALANCE BALANCE MORTGAGE LOANS OF LOANS BALANCE BALANCE
- -------------- ---------- --------------- ---------- ------------------- ---------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
12 months or less
13 to 24 months
25 to 36 months
37 to 48 months
49 to 60 months
Total 0 0 0.00% 61 to 120 months
121 to 180 months
181 to 240 months
---------------------------------------------------------
Total 0 0 0.00%
---------------------------------------------------------
Weighted Average Months to Maturity is 0
<CAPTION>
NOI AGING
- ------------------------------------------------------
NUMBER (2) SCHEDULED BASED ON
NOI DATE OF LOANS BALANCE BALANCE
- ----------------- ---------- --------------- ---------
<C> <C> <C> <C>
1 year or less
1 to 2 years
2 Years or More
Unknown
- ------------------------------------------------------
Total 0 0 0.00%
- ------------------------------------------------------
</TABLE>
(1) Debt Service Coverage Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures became available from
borrowers on an asset level. Neither the Trustee, Servicer, Special
Servicer or Underwriter makes any representation as to the accuracy of the
data provided by the borrower for this calculation.
B-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
</TABLE>
LOAN LEVEL DETAIL
<TABLE>
<CAPTION>
Appraisal Property Operating Ending Loan
Disclosure Reduction Type Maturity Statement Principal Note Scheduled Prepayment Status
Control # Amounts Code Date DSCR NOI Date Balance Rate P&I Prepayment Date Code (1)
- --------- ------- ---- ---- ---- --- ---- ------- ---- --- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
- ---------------
* NOI and DSCR, if available and reportable under the terms of the trust
agreement, are based on information obtained from the related borrower, and
no other party to the agreement shall be held liable for the accuracy or
methodology used to determine such figures.
(1) Legend:
A. P&I Adv - in Grace Period
B. P&I Adv - < one month delinq
1. P&I Adv - delinquent 1 month
2. P&I ADV - delinquent 2 months
3. P&I ADV - delinquent 3+ months
4. Mat. Balloon/Assumed P&I
5. Prepaid in Full
6. Specially Serviced
7. Foreclosure
8. Bankruptcy
9. REO
10. DPO
11. Modification
B-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
</TABLE>
SPECIALLY SERVICED LOAN DETAIL
<TABLE>
<CAPTION>
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code (1) Comments
- --------- ------- ------- ---- ------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- -----------
(1) Legend:
1) Request for waiver of Prepayment Penalty
2) Payment Default
3) Request for Loan Modification or Workout
4) Loan with Borrower Bankruptcy
5) Loan in Process of Foreclosure
6) Loan now REO Property
7) Loans Paid Off
8) Loans Returned to Master Servicer
APPENDIX A
B-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
</TABLE>
MODIFIED LOAN DETAIL
Disclosure Modification Modification
Control # Date Description
- ------------- ------------------- ---------------------
APPENDIX B
B-10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO COMM 1999-1 Statement Date: 03/15/99
LaSalle National Bank COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 03/15/99
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION Prior Payment: NA
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER Record Date: 02/26/99
Administrator: BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SPECIAL SERVICER
Alyssa Stahl (800) 246-5761 ABN AMRO ACCT: 99-9999-99-9
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
</TABLE>
REALIZED LOSS DETAIL
<TABLE>
<CAPTION>
Beginning Gross Proceeds Aggregate Net Net Proceeds
Dist. Disclosure Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Date Control # Date Value Balance Poceeds Sched Principal Expenses* Proceeds Sched. Balance Loss
- ----- -------- --------- --------- ---------- ------- --------------- --------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
</TABLE>
APPENDIX C
* Aggregate liquidation expenses also include outstanding P&I advances and
unpaid servicing fees, unpaid trustee fees, etc..
B-11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
$1,153,788,000 (APPROXIMATE) FEBRUARY 12, 1999
COMM 1999-1
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
APPROXIMATE SECURITIES STRUCTURE:
APPROXIMATE EXPECTED
FACE/ EXPECTED WEIGHTED EXPECTED
NOTIONAL CREDIT AVERAGE PAYMENT
CLASS EXPECTED AMOUNT SUPPORT LIFE WINDOW
RATING (MM) (% OF UPB) (YEARS)(C) (C)
- ---------------------------------------------------------------
PUBLICLY OFFERED CLASSES
X AAA/AAA IO $1,311.1(a)
A1 AAA /Aaa 181.4 31.00% 5.00 4/99-2/08
A2 AAA /Aaa 723.2 31.00 9.25 2/08-9/08
B AA/Aa2 62.3 26.25 9.55 9/08-10/08
C AA /Aa3 22.9 24.50 9.58 10/08-10/08
D A/A2 62.3 19.75 9.58 10/08-10/08
E BBB/Baa2 81.9 13.50 9.58 10/08-10/08
F BBB-/Baa3 19.7 12.00 9.58 10/08-10/08
PRIVATELY OFFERED CLASSES (B)
- ---------------------------------------------------------------
G - - - - -
H - - - - -
J - - - - -
K - - - - -
L - - - - -
TOTAL SECURITIES: $1,311.1
- ---------------------------------------------------------------
(a) Notional amount on interest only class.
(b) Not offered hereby.
(c) Assuming no prepayments to maturity.
KEY FEATURES:
Co-Lead Managers: Deutsche Bank Securities
(bookrunner)
Lehman Brothers
JP Morgan
Mortgage Loan Sellers: German American Capital Corporation
Banc One Mortgage Capital Markets
Servicer: Banc One Mortgage Capital Markets
Special Servicer: Banc One Mortgage Capital Markets
Trustee: LaSalle National Bank
Fiscal Agent: ABN/AMRO
Anticipated Launch: February 22, 1999
Anticipated Pricing: February 23, 1999
Closing: Early March
Cut-Off Date: March 1, 1999
Distribution Date: 15th of each month, or following
business day (commencing April 1999)
Payment Delay: 14 days
ERISA Eligible: Classes A1, A2, X
SMMEA Eligible: No
Structure: Sequential pay
Day Count: 30/360
Tax Treatment: REMIC
Rated Final Distribution May 2032
Date:
Clean up Call: 1%
Minimum Denominations: Publicly offered classes except
Class X: $50,000
Class X: $1,000,000
Delivery: DTC
COLLATERAL FACTS:
Initial Pool Balance:
$1,311,125,920
Number of Mortgage Loans: 221
Number of Mortgaged Properties: 272
Average Cut-Off Date Balance: $5,932,696
Weighted Average Current Mortgage Rate: 7.146%
Weighted Average U/W DSCR: 1.40x
Weighted Average Cut-Off Date LTV Ratio: 71.32%
Weighted Average Remaining Term to Maturity 113.5
(months):
Weighted Average Remaining Amortization Term 321.2
(months):
Weighted Average Seasoning (months): 7.5
Balloon Loans as % of Total: 34.69%
Ten Largest Loans as % of Total: 29.64%
TEN LARGEST LOANS PROPERTY
LOAN BALANCE % BY UPB LTV DSCR TYPE
- ------------------------------------------------------------------
Neshaminy Mall 60,000,000 4.58%58.71% 1.92x Anchored
Retail
JPI Portfolio 58,800,000 4.48 76.58 1.20 Multifamily
LaSalle Office 43,242,000 3.30 49.76 1.51 Office
Portfolio
Capital Automotive 38,050,000 2.90 56.79 1.78 Special
Portfolio Purpose
Columbia Office 35,018,169 2.67 70.32 1.29 Office
Center
3655 N. First Street 34,639,734 2.64 74.49 1.38 Office
ElderTrust Meridian 32,827,463 2.50 74.95 1.60 Nursing Home
6 Portfolio
Prime Care Six 29,819,346 2.27 79.10 1.39 Various
Portfolio
Blockbuster 29,349,944 2.24 77.65 1.25 Industrial
Distribution Center
200 East 87th Street 26,829,956 2.05 74.12 1.23 Mixed Use
TOTAL $388,576,613 29.64% 68.11% 1.48x
- ------------------------------------------------------------------
SELECTED LOAN DATA:
NUMBER OF
GEOGRAPHIC MORTGAGED CUT-OFF DATE BALANCE
DISTRIBUTION PROPERTIES (MM) % BY UPB WTD. AVG. DSCR
- -----------------------------------------------------------------
California 50 $241.9 18.45% 1.35x
Texas 50 160.9 12.27 1.33
Florida 16 141.1 10.76 1.33
New York 21 121.5 9.26 1.38
Pennsylvania 13 103.7 7.91 1.69
Other 122 542.1 41.35 1.40x
--- ----- -----
TOTAL/WTD. AVG. 272 $1,311.1 100.00% 1.40x
- -----------------------------------------------------------------
NUMBER OF
MORTGAGED CUT-OFF DATE BALANCE
PROPERTY TYPE PROPERTIES (MM) % BY UPB WTD. AVG. DSCR
- -----------------------------------------------------------------
Office 72 $327.5 24.98% 1.36x
Multifamily 78 321.0 24.48 1.32
Anchored Retail 33 242.5 18.50 1.48
Industrial 19 97.1 7.41 1.34
Unanchored Retail 23 66.0 5.03 1.38
Special Purpose 11 59.9 4.57 1.73
Nursing Home, 8 46.1 3.52 1.54
Skilled
Mixed Use 6 45.3 3.45 1.28
Lodging 8 40.7 3.10 1.52
Assisted Living 3 23.3 1.78 1.29
Facility
Other 11 41.7 3.18 1.42x
-- ---- ----
TOTAL/WTD. AVG. 272 $1,311.1 100.00% 1.40x
- -----------------------------------------------------------------
PREPAYMENT RESTRICTIONS (MM) % BY UPB WTD. AVG. DSCR
- -----------------------------------------------------------------
Defeasance $1,287.5 98.20% 1.40
Greater of YM or 1% UPB 22.7 1.73 1.39
Lockout 1.0 0.07 1.34
TOTAL/WTD. AVG. $1,311.1 100.00% 1.40X
- -----------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-1
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
- -------------------------------------------------------------------------------
KEY STRUCTURAL TERMS
- -------------------------------------------------------------------------------
o For purposes of calculating principal distributions of the Certificates:
o Available principal will be allocated sequentially to the Class A1, A2,
B, C, D, E, F, G, H, J, K, L certificates.
o In case the principal balance of the Class L, K, J, H, G, F, E, D, C,
B, in that order, have been reduced to zero due to the allocation of
principal losses, then A1 and A2 will be allocated principal pro rata.
o Class X will be entitled to receive payments of interest only and will not
receive any payments of principal. Class X will be entitled to payments of
interest pro rata (based on interest entitlements) with the Class A1 and A2
Certificates each month.
o Each class will be subordinate to the Class A1, A2, and X and to each class
with an earlier alphabetic designation than such class. Each of the Class
A1, A2, and X Certificates will be of equal priority.
o All classes will pay interest on a 30/360 basis.
o Principal Losses will be allocated in reverse alphabetical order to Class L,
K, J, H, G, F, E, D, C, B, and then pro rata to Class A1 and A2.
o The Servicer will cover net prepayment interest shortfalls, provided that
with respect to any loans with due dates on or preceding the related
determination date the Servicer will only cover net prepayment interest
shortfalls up to the Servicing fee equal to 1 basis points per annum on the
principal balance of such loans. Net prepayment interest shortfalls (after
application of prepayment interest excesses and other Servicer coverage from
the Servicing Fee) will be allocated pro-rata (based on interest
entitlements) to all regular Certificates.
o Shortfalls resulting from Servicer and Special Servicer modifications,
Special Servicer compensation or other extraordinary trust fund expenses
will be allocated in reverse alphabetical order to classes of outstanding
regular Certificates other than to the Class X.
o An appraisal reduction generally will be created in the amount, if any, by
which the principal balance of a Specially Serviced Mortgage Loan (plus
other amounts overdue in connection with such loan) exceeds 90% of the
related Mortgaged Property. The Appraisal Reduction Amount will reduce
proportionately the amount of P&I Advances for such loan, which reduction
will result, in general, in a reduction of interest distributable to the
most subordinate class outstanding.
o Holders of more than 50% of the voting rights allocated to the Controlling
Class will have the right to replace the Special Servicer with the approval
of the rating agencies and will have the right to approve and direct certain
actions of the Special Servicer with respect to Specially Serviced Mortgage
Loans. Examples of such actions include the right to make certain
modifications, foreclose on a property, or sell a property. The "Controlling
Class" is generally the most subordinate class of certificates provided that
the certificate provided that the certificate balance is at least equal to
25% of such class's initial balance.
o In general, the Special Servicer has the right to modify the terms of a
Specially Serviced Mortgage Loan if it determines that such modification
would increase the net present value of the proceeds to the Trust, provided
that the Special Servicer generally may not extend the maturity date of a
Mortgage Loan beyond two years prior to the Final Rated Distribution Date or
reduce the likelihood of timely payment of amounts due on any Mortgage Loan.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-2
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
- -------------------------------------------------------------------------------
ALLOCATION OF PREPAYMENT PREMIUMS (A)
- -------------------------------------------------------------------------------
ALLOCATION OF PREPAYMENT PREMIUMS:
Prepayment premiums and yield maintenance amounts with respect to all loans will
be allocated between the related Certificates then entitled to principal
distributions and the Class X Certificates as follows:
o A percentage of all prepayment premiums (yield maintenance amounts) with
respect to all loans will be allocated to each class of the Certificates
then entitled to principal distributions, which percentage will be equal to
the product of (a) the percentage of the total principal distribution that
such Class receives, and (b) a percentage (which can be no greater than
100%), the numerator of which is the excess, if any, of the Pass-Through
Rate of the Class of the Certificates currently receiving principal over the
relevant Discount Rate, and the denominator of which is the excess, if any,
of the Mortgage Rate of the related Mortgage Loan over the Discount Rate.
--------------------------------------------------------------------
Prepayment (Pass-Through Rate - Discount Rate)
Premium Allocation = ---------------------------------
Percentage (Mortgage Rate - Discount Rate)
--------------------------------------------------------------------
o The remaining percentage of such prepayment premiums and yield maintenance
amounts will be allocated to the Class X Certificates.
o In general, this formula provides for an increase in the allocation of
prepayment premiums and yield maintenance premiums to the Certificates then
entitled to principal distributions relative to the Class X Certificates as
Discount Rates decrease and a decrease in the allocation to such Classes as
Discount Rates rise.
Allocation of Prepayment Premiums Example
Discount Rate Fraction Methodology:
Mortgage Rate = 8%
Bond Class Rate = 6%
Treasury Rate = 5%
% of Principal Distributed to Class = 100%
BOND CLASS ALLOCATION CLASS X ALLOCATION
------------------------------------------------------------------------
6% - 5% x 100% = 33 1/3% Receives excess premiums = 66 2/3% thereof
-------
8% - 5%
(a) For further information regarding the allocation of prepayment
premiums, refer to the Prospectus Supplement.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-3
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
- -------------------------------------------------------------------------------
PREPAYMENT PROVISIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PREPAYMENT LOCK-OUT/ PREPAYMENT PREMIUM ANALYSIS / DEFEASANCE
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION ASSUMING NO PREPAYMENT OF PRINCIPAL (A)(B)
- ------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT APRIL APRIL APRIL APRIL APRIL APRIL APRIL
RESTRICTIONS 1999 2000 2001 2002 2003 2004 2005
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Locked out 100.00% 100.00% 79.31% 41.88% 13.39% 0.60% 0.58%
Defeasance 0.00 0.00 20.50 57.39 85.07 97.73 97.74
Greater of 1% or Yield 0.00 0.00 0.19 0.73 1.55 1.68 1.68
Maintenance
- -----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
UPB ($MM) 1311.13 1298.08 1282.06 1264.83 1246.31 1222.32 1200.99
% OF INITIAL UPB 100.00% 99.01% 97.78% 96.47% 95.06% 93.23% 91.60%
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PREPAYMENT APRIL APRIL APRIL APRIL APRIL APRIL
RESTRICTIONS 2006 2007 2008 2009 2010 2011
- ----------------------------------------------------------------------------------------------------------------------
Locked Out 0.08% 0.08% 0.08% 0.00% 0.00% 0.00%
Defeasance 98.21 98.21 63.61 97.70 98.02 98.41
Greater of 1% or Yield 1.72 1.72 0.92 2.30 1.98 1.59
Maintenance
- ----------------------------------------------------------------------------------------------------------------------
SUBTOTAL 100.00% 100.00% 64.61% 100.00% 100.00% 100.00%
Open 0.00% 0.00% 35.39% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
UPB ($MM) 1178.05 1153.40 1044.19 14.69 13.86 12.97
% OF INITIAL UPB 89.85% 87.97% 79.64% 1.12% 1.06% 0.99%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Table calculated using modeling assumptions.
(b) Differences in totals may exist due to rounding.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-4
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AVERAGE LIFE TABLE (IN YEARS)
(PREPAYMENTS LOCKED OUT THROUGH LOCK OUT PERIOD, DEFEASANCE AND YIELD MAINTENANCE, THEN RUN AT THE INDICATED CPRS)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT ASSUMPTIONS (CPR)
0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
X 8.83 8.82 8.81 8.79 8.66
A1 5.00 5.00 5.00 4.99 4.99
A2 9.25 9.24 9.22 9.20 9.03
B 9.55 9.54 9.52 9.50 9.36
C 9.58 9.58 9.58 9.57 9.41
D 9.58 9.58 9.58 9.58 9.41
E 9.58 9.58 9.58 9.58 9.46
F 9.58 9.58 9.58 9.58 9.54
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
- -------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE BALANCES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
PERCENTAGE AVERAGE WEIGHTED
OF WEIGHTED REMAINING AVERAGE
NUMBER OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
BALANCES LOANS BALANCE DATE BALANCE BALANCE DSCR RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$493,521 - 499,999 1 $493,521 0.04% $493,521 2.85x 7.450% 113.0 25.05%
500,000 - 999,999 11 9,691,301 0.74 881,027 1.34 7.223 117.5 71.94
1,000,000 - 1,999,999 45 69,578,168 5.31 1,546,182 1.43 7.169 114.1 69.37
2,000,000 - 2,999,999 48 122,468,554 9.34 2,551,428 1.33 7.130 114.7 70.31
3,000,000 - 3,999,999 18 60,943,537 4.65 3,385,752 1.43 7.103 111.9 69.67
4,000,000 - 4,999,999 25 112,749,776 8.60 4,509,991 1.39 7.262 115.1 69.33
5,000,000 - 5,999,999 12 66,715,394 5.09 5,559,616 1.36 7.175 112.0 73.73
6,000,000 - 6,999,999 11 69,758,683 5.32 6,341,698 1.37 7.264 118.6 71.33
7,000,000 - 7,999,999 12 88,974,275 6.79 7,414,523 1.31 7.186 112.0 72.53
8,000,000 - 8,999,999 5 42,641,257 3.25 8,528,251 1.29 6.928 112.8 75.64
9,000,000 - 9,999,999 5 47,142,856 3.60 9,428,571 1.39 6.897 113.4 77.01
10,000,000 - 11,999,999 4 44,511,871 3.39 11,127,968 1.34 7.233 112.0 75.66
12,000,000 - 13,999,999 3 39,610,310 3.02 13,203,437 1.49 7.059 109.8 65.08
14,000,000 - 16,999,999 7 110,149,871 8.40 15,735,696 1.42 7.112 112.0 72.42
17,000,000 - 19,999,999 2 34,910,088 2.66 17,455,044 1.30 7.570 112.1 75.90
20,000,000 - 24,999,999 2 45,176,489 3.45 22,588,244 1.27 7.440 112.9 73.09
25,000,000 - 49,999,999 9 285,609,971 21.78 31,734,441 1.39 7.149 114.0 72.47
50,000,000 - 60,000,000 1 60,000,000 4.58 60,000,000 1.92 6.660 112.0 58.71
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5X 71.32%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-6
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
- -------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE WEIGHTED
OF AVERAGE WEIGHTED
AGGREGATE WEIGHTED REMAINING AVERAGE
NUMBER OF CUT-OFF AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
MORTGAGED CUT-OFF DATE DATE CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
STATE PROPERTIES BALANCE BALANCE BALANCE DSCR RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California 50 $241,871,974 18.45% $ 4,837,439 1.35x 7.142% 113.6 72.61%
Texas 50 160,862,180 12.27 3,217,244 1.33 7.115 111.9 72.84
Florida 16 141,103,230 10.76 8,818,952 1.33 7.077 111.1 66.62
New York 21 121,451,162 9.26 5,783,389 1.38 7.213 113.8 73.54
Pennsylvania 13 103,728,877 7.91 7,979,144 1.69 6.918 114.0 65.31
Illinois 19 70,962,007 5.41 3,734,842 1.35 7.123 115.2 76.34
Maryland 11 58,135,006 4.43 5,285,001 1.48 7.433 115.0 70.79
New Jersey 9 51,322,685 3.91 5,702,521 1.47 7.137 113.7 72.81
Michigan 6 46,920,097 3.58 7,820,016 1.33 7.092 116.7 70.42
Virginia 9 41,068,467 3.13 4,563,163 1.66 7.507 115.4 61.27
Missouri 5 33,488,746 2.55 6,697,749 1.42 7.348 114.5 78.32
Arizona 7 27,626,919 2.11 3,946,703 1.29 7.135 112.7 73.67
Nevada 2 25,655,967 1.96 12,827,984 1.29 7.086 110.9 74.73
Minnesota 12 24,565,557 1.87 2,047,130 1.35 7.135 113.7 74.60
Georgia 4 21,092,204 1.61 5,273,051 1.31 7.083 111.9 77.43
Massachusetts 4 20,268,740 1.55 5,067,185 1.51 7.166 112.8 65.56
Colorado 4 19,655,334 1.50 4,913,834 1.38 7.087 112.8 74.35
Wisconsin 4 13,413,395 1.02 3,353,349 1.31 7.264 131.6 71.82
Tennessee 2 13,282,659 1.01 6,641,329 1.39 6.844 113.1 76.24
Mississippi 4 11,015,318 0.84 2,753,830 1.30 7.279 111.9 63.51
Delaware 2 10,347,160 0.79 5,173,580 1.52 7.125 111.4 69.46
Indiana 3 10,124,859 0.77 3,374,953 1.28 7.140 116.2 76.09
North Carolina 2 7,722,231 0.59 3,861,116 1.35 7.191 109.3 72.84
Washington 2 6,745,494 0.51 3,372,747 1.32 7.332 113.6 66.99
Virgin Islands 1 6,068,238 0.46 6,068,238 1.28 7.680 109.0 65.25
Oklahoma 2 4,069,830 0.31 2,034,915 1.37 6.767 112.2 74.09
Kentucky 2 3,869,814 0.30 1,934,907 1.36 6.653 114.0 66.81
Nebraska 1 3,568,269 0.27 3,568,269 1.42 6.760 110.0 79.29
South Carolina 1 3,328,607 0.25 3,328,607 1.45 7.810 114.0 64.01
Oregon 1 2,581,205 0.20 2,581,205 1.33 7.070 114.0 73.75
District of Columbia 1 2,143,496 0.16 2,143,496 1.25 7.820 117.0 73.91
Ohio 1 1,584,170 0.12 1,584,170 1.55 6.750 112.0 74.20
Connecticut 1 1,482,023 0.11 1,482,023 1.86 7.360 110.0 70.57
TOTAL/WTD. AVG. 272 $1,311,125,920 100.00% $ 4,820,316 1.40x 7.146% 113.5 71.32%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-7
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
[MAP]
WA 0.51 MN 1.87 KY 0.30 MA 1.55
OR 0.20 MO 2.55 TN 1.01 CT 0.11%
CA 18.45% WI 1.02 PA 7.91 NJ 3.91
NV 1.96 IL 5.41 VA 3.13 DE 0.79
AZ 2.11% MS 0.84 NC 0.59 MD 4.43
CO 1.50 MI 3.58 SC 0.25 DISTRICT OF COLUMBIA 0.16%
NE 0.27 IN 0.77 GA 1.61 VIRGIN ISLANDS (U.S.) 0.46%
OK 0.31 TN 1.01 FL 10.76%
TX 12.27% OH 0.12 NY 9.26
[PIE CHART]
Other* 31.51%
CA 18.45%
TX 12.27%
FL 10.76%
NY 9.26%
PA 7.91%
IL 5.41%
MD 4.43%
* Other 24 states, the Virgin Islands and the District of Columbia
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-8
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
[PIE CHART]
Other 3.18%
Office 24.98%
Multifamily 24.48%
Anchored Retail 18.50%
Industrial 7.41%
Unanchored Retail 5.03%
Special Purpose 4.57%
Nursing Home, Skilled 3.52%
Mixed Use 3.45%
Lodging 3.10%
Assisted Living Family 1.78%
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE WEIGHTED REMAINING AVERAGE
NUMBER OF OF AGGREGATE WEIGHTED AVERAGE TERM TO CUT-OFF
MORTGAGED CUT-OFF DATE CUT-OFF DATE AVERAGE CUT-OFF AVERAGE MORTGAGE MATURITY DATE LTV
PROPERTY TYPE PROPERTIES BALANCE BALANCE DATE BALANCE DSCR RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office 72 $327,495,766 24.98% $4,548,552 1.36x 7.202% 112.2 69.09%
Multifamily 78 320,950,044 24.48 4,114,744 1.32 6.982 112.4 75.35
Anchored Retail 33 242,534,455 18.50 7,349,529 1.48 7.015 113.1 69.83
Industrial 19 97,111,558 7.41 5,111,135 1.34 7.165 119.0 73.46
Unanchored Retail 23 65,986,430 5.03 2,868,975 1.38 7.249 112.0 70.71
Special Purpose 11 59,929,704 4.57 5,448,155 1.73 7.494 114.9 62.81
Nursing Home, Skilled 8 46,115,660 3.52 5,764,457 1.54 7.152 115.0 76.15
Mixed Use 6 45,295,693 3.45 7,549,282 1.28 7.131 111.7 73.55
Lodging 8 40,705,184 3.10 5,088,148 1.52 7.415 120.4 66.91
Assisted Living 3 23,287,033 1.78 7,762,344 1.29 7.857 114.7 70.36
Facility
Self-Storage 7 20,531,368 1.57 2,933,053 1.40 7.490 114.9 67.23
Congregate Care 2 16,531,149 1.26 8,265,574 1.39 7.380 115.0 79.10
Mobile Home Park 2 4,651,876 0.35 2,325,938 1.61 6.899 112.6 65.79
TOTAL 272 $1,311,125,920 100.00% $4,820,316 1.40x 7.146% 113.5 71.32%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-9
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE OF WEIGHTED REMAINING AVERAGE
RANGE OF DEBT NUMBER OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
SERVICE COVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF AVERAGE MORTGAGE MATURITY DATE LTV
RATIOS LOANS BALANCE BALANCE DATE BALANCE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.00 - 1.10 2 $5,334,869 0.41% $2,667,434 1.06x 7.100% 114.0 70.12%
1.11 - 1.20 5 51,746,645 3.95 10,349,329 1.18 7.059 114.1 76.15
1.21 - 1.30 79 484,604,299 36.96 6,134,232 1.26 7.199 113.0 73.90
1.31 - 1.40 68 360,129,663 27.47 5,296,024 1.36 7.145 113.6 73.22
1.41 - 1.50 25 122,888,203 9.37 4,915,528 1.44 7.136 110.2 69.20
1.51 - 1.60 20 112,882,509 8.61 5,644,125 1.57 7.119 119.7 71.39
1.61 - 1.70 11 35,538,366 2.71 3,230,761 1.64 6.939 113.7 66.56
1.71 - 1.80 6 73,173,798 5.58 12,195,633 1.76 7.409 113.1 58.67
1.81 - 1.90 3 4,334,048 0.33 1,444,683 1.85 7.386 110.5 60.32
1.91 - 2.00 1 60,000,000 4.58 60,000,000 1.92 6.660 112.0 58.71
2.51 - 2.85 1 493,521 0.04 493,521 2.85 7.450 113.0 25.05
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE AT ORIGINATION RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE WEIGHTED REMAINING AVERAGE
NUMBER OF OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
LOAN TO VALUE RATIOS LOANS BALANCE BALANCE BALANCE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25.05 - 30.00% 1 $493,521 0.04% $493,521 2.85x 7.450% 113.0 25.05%
30.01 - 50.00 7 45,751,103 3.49 6,535,872 1.53 7.060 107.3 49.56
50.01 - 60.00 13 130,481,081 9.95 10,037,006 1.77 7.022 114.1 57.77
60.01 - 65.00 22 63,728,339 4.86 2,896,743 1.41 7.260 112.3 62.78
65.01 - 70.00 30 98,912,214 7.54 3,297,074 1.38 7.234 118.0 67.11
70.01 - 75.00 90 549,761,667 41.93 6,108,463 1.37 7.147 113.9 73.02
75.01 - 80.00 53 397,477,892 30.32 7,499,583 1.31 7.165 112.5 77.75
80.01 - 85.00 3 20,565,459 1.57 6,855,153 1.39 6.994 113.1 81.03
85.01 - 90.00 2 3,954,645 0.30 1,977,322 1.31 6.900 113.5 85.60
TOTAL/WTD.AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-10
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGE INTEREST RATES
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE OF WEIGHTED REMAINING AVERAGE
NUMBER OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
RANGE OF MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
MORTGAGE RATES LOANS BALANCE BALANCE BALANCE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.001 - 6.250% 1 $1,191,773 0.09% $1,191,773 1.68x 6.230% 115.0 70.10%
6.251 - 6.500 4 11,992,707 0.91 2,998,177 1.42 6.413 115.4 65.63
6.501 - 6.750 14 116,854,651 8.91 8,346,761 1.65 6.657 113.7 65.70
6.751 - 7.000 51 292,186,029 22.29 5,729,138 1.33 6.911 113.6 73.84
7.001 - 7.250 70 492,392,839 37.55 7,034,183 1.37 7.124 112.7 71.76
7.251 - 7.500 52 239,480,773 18.27 4,605,399 1.39 7.390 112.7 73.42
7.501 - 7.750 16 95,711,745 7.30 5,981,984 1.52 7.625 115.1 63.75
7.751 - 8.000 10 58,350,602 4.45 5,835,060 1.31 7.818 119.7 71.39
8.001 - 8.250 2 1,678,210 0.13 839,105 1.32 8.229 113.9 65.27
8.251 - 8.500 1 1,286,592 0.10 1,286,592 1.40 8.310 110.0 71.48
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40X 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE OF WEIGHTED REMAINING AVERAGE
RANGE OF REMAINING NUMBER OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
AMORTIZATION TERMS MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
(MONTHS) LOANS BALANCE BALANCE BALANCE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Only 1 $60,000,000 4.58% $60,000,000 1.92x 6.660% 112.0 58.71%
171 - 190 1 784,421 0.06 784,421 1.59 6.720 174.0 53.00
191 - 210 1 38,050,000 2.90 38,050,000 1.78 7.590 117.0 56.79
211 - 230 3 16,858,679 1.29 5,619,560 1.35 7.329 139.1 68.24
231 - 250 5 13,145,021 1.00 2,629,004 1.48 6.961 135.2 66.83
271 - 290 12 47,402,504 3.62 3,950,209 1.48 7.427 109.5 70.56
291 - 310 50 221,734,684 16.91 4,434,694 1.42 7.314 114.0 70.81
331 - 360 75 469,957,471 35.84 6,266,100 1.34 7.137 112.2 72.19
361 - 374 73 443,193,140 33.80 6,071,139 1.33 7.068 113.2 73.97
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-11
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF ORIGINAL TERMS TO MATURITY
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
PERCENTAGE AVERAGE WEIGHTED
OF WEIGHTED REMAINING AVERAGE
NUMBER OF AGGREGATE AVERAGE AVERAGE TERM TO CUT-OFF
RANGE OF ORIGINAL TERMS MORTGAGE CUT-OFF DATE CUT-OFF CUT-OFF DATE WEIGHTED MORTGAGE MATURITY DATE LTV
TO MATURITY (MONTHS) LOANS BALANCE DATE BALANCE BALANCE AVERAGE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
51 - 70 1 $4,568,794 0.35% $4,568,794 1.44x 7.650% 54.0 65.27%
111 - 120 213 1,251,208,550 95.43 5,874,219 1.40 7.141 112.5 71.41
121 - 130 1 35,018,169 2.67 35,018,169 1.29 7.090 118.0 70.32
171 - 190 5 17,994,726 1.37 3,598,945 1.42 7.403 172.2 69.07
231 - 250 1 2,335,680 0.18 2,335,680 1.59 7.900 236.0 69.51
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING TERMS TO MATURITY
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
PERCENTAGE AVERAGE WEIGHTED
OF WEIGHTED REMAINING AVERAGE
NUMBER OF AGGREGATE AVERAGE AVERAGE TERM TO CUT-OFF
RANGE OF ORIGINAL TERMS MORTGAGE CUT-OFF DATE CUT-OFF CUT-OFF DATE WEIGHTED MORTGAGE MATURITY DATE LTV
TO MATURITY (MONTHS) LOANS BALANCE DATE BALANCE BALANCE AVERAGE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
51 - 70 1 $4,568,794 0.35% $4,568,794 1.44x 7.650% 54.0 65.27%
91 - 110 50 279,697,451 21.33 5,593,949 1.39 7.247 108.8 69.95
111 - 120 164 1,006,529,268 76.77 6,137,374 1.40 7.109 113.7 71.77
151 - 170 1 6,815,586 0.52 6,815,586 1.51 7.160 170.0 65.53
171 - 190 4 11,179,140 0.85 2,794,785 1.36 7.551 173.6 71.23
231 - 250 1 2,335,680 0.18 2,335,680 1.59 7.900 236.0 69.51
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-12
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
STRUCTURAL AND COLLATERAL TERM SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF AMORTIZATION TYPES
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
PERCENTAGE AVERAGE WEIGHTED
OF WEIGHTED REMAINING AVERAGE
NUMBER OF AGGREGATE AVERAGE AVERAGE TERM TO CUT-OFF
MORTGAGE CUT-OFF DATE CUT-OFF CUT-OFF DATE WEIGHTED MORTGAGE MATURITY DATE LTV
AMORTIZATION TYPE LOANS BALANCE DATE BALANCE BALANCE AVERAGE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hyperamortizing 142 $749,989,877 57.20% $5,281,619 1.36x 7.167% 112.5 73.29%
Amortizing Balloon 67 357,923,941 27.30 5,342,148 1.37 7.172 115.0 72.65
Interest Only, Then 4 96,850,000 7.39 24,212,500 1.43 7.221 115.8 68.80
Amortizing Balloon
Interest Only 1 60,000,000 4.58 60,000,000 1.92 6.660 112.0 58.71
Interest Only ,Then 5 43,242,000 3.30 8,648,400 1.51 7.040 107.0 49.76
Hyperamortizing
Fully Amortizing 2 3,120,102 0.24 1,560,051 1.59 7.603 220.4 65.36
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF PREPAYMENT PROVISIONS
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
PERCENTAGE AVERAGE WEIGHTED
OF WEIGHTED REMAINING AVERAGE
NUMBER OF AGGREGATE AVERAGE AVERAGE TERM TO CUT-OFF
MORTGAGE CUT-OFF DATE CUT-OFF CUT-OFF DATE WEIGHTED MORTGAGE MATURITY DATE LTV
PREPAYMENT PROVISION LOANS BALANCE DATE BALANCE BALANCE AVERAGE DSCR RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Defeasance 209 $1,287,474,269 98.20% $6,160,164 1.40x 7.143% 113.5 71.30%
Greater of YM or 1% UPB 11 22,681,770 1.73 2,061,979 1.39 7.347 113.4 71.75
Lockout 1 969,881 0.07 969,881 1.34 6.870 112.0 86.60
TOTAL/WTD. AVG. 221 $1,311,125,920 100.00% $5,932,696 1.40x 7.146% 113.5 71.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-13
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
- -------------------------------------------------------------------------------
COLLATERAL TERM SHEET
NESHAMINY MALL
- -------------------------------------------------------------------------------
- -----------------------------------------------------------------
LOAN INFORMATION
- -----------------------------------------------------------------
- -----------------------------------------------------------------
ORIGINAL CUT-OFF DATE
-------- ------------
PRINCIPAL BALANCE: $60,000,000 $60,000,000
ORIGINATION DATE: June 17, 1998
INTEREST RATE: 6.660%
AMORTIZATION: Interest Only
MATURITY DATE: July 1, 2008
BORROWER/SPONSOR: Neshaminy Mall Joint Venture
CALL PROTECTION: Prepayment lockout; defeasance
permitted from June 30, 2001
CROSS-COLLATERALIZATION/ No/No
DEFAULT:
ADDITIONAL FINANCING: None
- -----------------------------------------------------------------
- -----------------------------------------------------------------
PROPERTY INFORMATION
- -----------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Anchored Retail
LOCATION: Bensalem, PA
YEARS BUILT/RENOVATED: 1968, 1995-1998
THE COLLATERAL: 1st Mortgage position in Borrower's
fee interest in Neshaminy Mall
PROPERTY MANAGEMENT: General Growth Management Inc.,
an affiliate of the owner
OCCUPANCY: 86%
UNDERWRITTEN NET CASH FLOW: $7,687,177
APPRAISAL VALUE: $102,200,000
APPRAISAL DATE: August 31, 1998
CUT-OFF DATE LOAN/SF: $93.42/sf
CUT-OFF DATE LTV: 58.71
BALLOON LTV: 58.71%
UWNCF DSCR: 1.92x
- -----------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-14
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
JPI PORTFOLIO
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------
LOAN INFORMATION
- -----------------------------------------------------------------
ORIGINAL CUT-OFF DATE
-------- ------------
PRINCIPAL BALANCE: $58,800,000 $58,800,000
ORIGINATION DATE: September 28, 1998
INTEREST RATE: 6.983%
AMORTIZATION: 29 years
MATURITY DATE: September 28, 2008
BORROWER/SPONSOR: JPI Coral Springs, L.P.
Jefferson at Sunset
Jefferson Village, L.P.
CALL PROTECTION: Prepayment lockout; defeasance
permitted 2 years from the
date of the REMIC.
CROSS-COLLATERALIZATION/ Yes/Yes
DEFAULT:
ADDITIONAL FINANCING: Mezzanine debt secured by
pledge of partnership
interests.
- -----------------------------------------------------------------
- -----------------------------------------------------------------
PROPERTY INFORMATION
- -----------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio of 3 assets
PROPERTY TYPE: Multifamily
LOCATION: Texas, Florida
YEARS BUILT/RENOVATED: 1995, 1996
THE COLLATERAL: 1st Lien Mortgages on the 3
properties
PROPERTY MANAGEMENT: JPI, an affiliate
of the owner
OCCUPANCY: see below
UNDERWRITTEN NET CASH FLOW: see below
APPRAISAL VALUE: see below
APPRAISAL DATE: see below
CUT-OFF DATE LOAN/UNIT: see below
CUT-OFF DATE LTV: see below
BALLOON LTV: see below
UWNCF DSCR: see below
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
CUT-OFF
ORIGINAL APPRAISAL APPRAISAL ORIGINAL DATE CUT-OFF BALLOON
PROPERTY BALANCE VALUE DATE LTV UWDSCR UWNCF $LOAN/UNIT DATE LTV LTV
-------- ------- ----- ---- --- ------ ----- ---------- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jefferson at $32,740,000 $43,000,000 07-28-98 76.14% 1.17 $3,115,102 $68,208 76.14% 66.14%
Coral Square
Jefferson $14,680,000 $18,350,000 07-21-98 80.00% 1.22 $1,452,453 $53.577 80.00% 69.49%
Village
Apartments
Jefferson at $11,380,000 $15,500,000 08-03-98 73.42% 1.26 $1,168,532 $54,190 73.42% 63.77%
Sunset Valley
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-15
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
LASALLE OFFICE PORTFOLIO
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------
LOAN INFORMATION
- -----------------------------------------------------------------
ORIGINAL CUT-OFF DATE
-------- ------------
PRINCIPAL BALANCE: $43,242,000 $43,242,000
ORIGINATION DATE: February 1, 1998
INTEREST RATE: 7.040%
AMORTIZATION: 28 years
MATURITY DATE: February 1, 2008 (Optional
Prepay Date)
BORROWER/SPONSOR: FBEC
- Bayview Executive Plaza
- Doral Corporate Center
- Metro Center
- System One Centre
- One Urban Centre
CALL PROTECTION: Prepayment lockout; defeasance
permitted 2 years from the date of
the REMIC
CROSS-COLLATERALIZATION/ Yes/Yes
DEFAULT:
ADDITIONAL FINANCING: None
- -----------------------------------------------------------------
- -----------------------------------------------------------------
PROPERTY INFORMATION
- -----------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio of 5 assets
PROPERTY TYPE: Office
LOCATION: Florida
YEARS BUILT/RENOVATED: 1984, 1985, 1986, 1990
THE COLLATERAL: 5 office buildings in
Florida
PROPERTY MANAGEMENT: LaSalle Advisors Limited
Lincoln Property Company
Faison & Associates
OCCUPANCY: see below
UNDERWRITTEN NET CASH FLOW: see below
APPRAISAL VALUE: see below
APPRAISAL DATE: see below
CUT-OFF DATE LOAN/SF: see below
CUT-OFF DATE LTV: see below
BALLOON LTV: see below
UWNCF DSCR: see below
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
CUT-OFF
ORIGINAL APPRAISAL APPRAISAL ORIGINAL DATE CUT-OFF BALLOON
PROPERTY BALANCE VALUE DATE LTV UWDSCR UWNCF $LOAN/UNIT DATE LTV LTV
-------- ------- ----- ---- --- ------ ----- ---------- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Doral $16,250,000 $32,500,000 08-26-97 50.00% 1.42 $1,884,743 $58.86 50.00% 43.86%
Corporate
Center
One Urban $13,392,000 $27,200,000 07-29-97 49.24% 1.71 $1,879,107 $48.07 49.24% 43.19%
Centre
System One $7,750,000 $15,500,000 08-05-97 50.00% 1.37 $868,378 $41.84 50.00% 43.86%
Centre
Metro Business $3,150,000 $6,300,000 08-08-97 50.00% 1.73 $445,013 $39.76 50.00% 43.86%
Park
Bayview $2,700,000 $5,400,000 08-05-97 50.00% 1.23 $271,293 $49.39 50.00% 44.38%
Executive Plaza
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-16
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
CAPITAL AUTOMOTIVE REIT
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------
LOAN INFORMATION
- -----------------------------------------------------------------
ORIGINAL CUT-OFF DATE
-------- ------------
PRINCIPAL BALANCE: $38,050,000 $38,050,000
ORIGINATION DATE: November 18, 1998
INTEREST RATE: 7.590%
AMORTIZATION: 25 years
MATURITY DATE: December 1, 2008
BORROWER/SPONSOR: Cars-DB1, LLC - special purpose
entity
CALL PROTECTION: Prepayment lockout; defeasance
permitted 2 years from the date of
the REMIC
CROSS-COLLATERALIZATION/ No/No
DEFAULT:
ADDITIONAL FINANCING: None
- -----------------------------------------------------------------
- -----------------------------------------------------------------
PROPERTY INFORMATION
- -----------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio of 7 assets
PROPERTY TYPE: Special Purpose (Automotive)
LOCATION: Virginia, Maryland
YEARS BUILT/RENOVATED: 1930-1984 / 1982-1995
THE COLLATERAL: 1st priority real estate
mortgage and assignment
to leases
PROPERTY MANAGEMENT: Various car dealerships
OCCUPANCY: 100%
UNDERWRITTEN NET CASH FLOW: $7,157,802
APPRAISAL VALUE: $67,000,000
CUT-OFF DATE LOAN/SF: $125.80
CUT-OFF DATE LTV: 56.79%
BALLOON LTV: 36.10%
UWNCF DSCR: 1.78x
- -----------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-17
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
COLUMBIA OFFICE CENTER
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------
LOAN INFORMATION
- -----------------------------------------------------------------
ORIGINAL CUT-OFF DATE
-------- ------------
PRINCIPAL BALANCE: $35,250,000 $35,018,169
ORIGINATION DATE: June 12, 1998
INTEREST RATE: 7.090%
AMORTIZATION: 30 years
MATURITY DATE: January 1, 2009 (Optional
Prepay Date)
BORROWER/SPONSOR: Columbia Center, LLC, a special
purpose entity
CALL PROTECTION: Prepayment lockout; defeasance
permitted 4 years from the
date of the Mortgage.
CROSS-COLLATERALIZATION/ No/No
DEFAULT:
ADDITIONAL FINANCING: None
- -----------------------------------------------------------------
- -----------------------------------------------------------------
PROPERTY INFORMATION
- -----------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office Building
LOCATION: Michigan
YEARS BUILT/RENOVATED: 1989
THE COLLATERAL: A 253,953 sf office building
located in Troy, Michigan
PROPERTY MANAGEMENT: Kirco Management Ltd.,
an affiliate of the owner
OCCUPANCY: 99%
UNDERWRITTEN NET CASH FLOW: $3,676,390
APPRAISAL VALUE: $49,800,000
APPRAISAL DATE: June 8, 1998
CUT-OFF DATE LOAN/SF: $137.89/sf
CUT-OFF DATE LTV: 70.32%
BALLOON LTV: 60.16%
UWNCF DSCR: 1.29x
- -----------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-18
<PAGE>
DEUTSCHE BANK SECURITIES INC.
31 WEST 52ND STREET
NEW YORK, NY 10019
REAL ESTATE FINANCE MORTGAGE TRADINCG AND ANALYTICS
- ------------------- -------------------------------
Jon Vaccaro Phone: (212) 469-6985 Justin Kennedy Phone: (212) 469-5149
Director Fax: (212) 469-8518 Director Fax: (212) 469-2740
Eric Schwartz Phone: (212) 469-4542 Scott Waynebern Phone: (212) 469-5149
Director Fax: (212) 469-8518 Vice President Fax: (212) 469-2740
Greg Hartch Phone: (212) 469-2748 Donville Reid Phone: (212) 469-5149
Vice President Fax: (212) 469-4579 Analyst Fax: (212) 469-2740
Tom Traynor Phone: (212) 469-5125 Adam Behlman Phone: (212) 469-8575
Associate Fax: (212) 469-4579 Vice President Fax: (212) 469-7558
Kyun Park Phone: (212) 469-8618 Jerry Wong Phone: (212) 469-8494
Associate Fax: (212) 469-4579 Associate Fax: (212) 469-8494
John Kim Phone: (212) 460,5705
Analyst Fax: (212) 469-8518
MORTGAGE UNDERWRITING
---------------------
Robert Burns Phone: (212) 469-3867
Director Fax: (212) 469-8523
Michael Kaplan Phone: (212) 469-7426
Vice President Fax: (212) 469-8523
Robert Kraus Phone: (212) 469-5973
Associate Fax: (212) 469-8523
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
This material is furnished to you by Deutsche Bank Securities and not by the
issuer of the securities. Deutsche Bank Securities is acting as Co-Lead
underwriter and not acting as an agent for the issuer or its affiliates in
connection with the proposed transaction. The issuer has not prepared or taken
part in the preparation of these materials.
C-19
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX D
DESCRIPTIONS OF SIGNIFICANT MORTGAGE LOANS AND
MORTGAGED PROPERTIES
1. Neshaminy Mall
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Cut-Off Date Balance: $60,000,000 Property Type: Anchored Retail
Interest Rate: 6.66% Number of Properties: 1
Interest Calculation Year Built/Renovated: 1968/(1995-1998)
Method: 30/360 Square Footage: 642,249
Maturity Date: 07/01/08 Underwritten NCF: $7,687,177
Original Term: 10 years DSCR (NCF): 1.92x
Original Amortization: Interest Only LTV: 58.71%
Prepayment Protection: Defeasance Occupancy: 86%
Lockbox: Modified, Springing Occupancy as of Date: 11/11/98
- ------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
General. The Neshaminy Mall Loan (the "Neshaminy Loan ") was originated by
GACC on June 17, 1998 in the amount of $60,000,000. The Neshaminy Loan is
evidenced by a Promissory Note (the "Neshaminy Note "), made by Neshaminy Mall
Joint Venture Limited Partnership (the "Neshaminy Borrower ") and is secured,
inter alia, by a Mortgage, Assignment of Leases and Rents and Security
Agreement (the "Neshaminy Mortgage ") made by the Neshaminy Borrower in favor
of GACC encumbering the property located at 3900 Rockhill Drive, Bensalem,
Pennsylvania ("Neshaminy Mall ") owned in fee simple by the Neshaminy Borrower.
The Borrower. The Neshaminy Borrower was formed for the purpose of
acquiring, owning, operating, leasing, managing, selling and/or financing
Neshaminy Mall. The Neshaminy Borrower partnership began January 31, 1992
between a subsidiary of Homart Development Co. and OTR (Ohio Teachers
Retirement System). On December 22, 1995, Homart Development sold its interest
in the Venture to a subsidiary of GGP/Homart Inc., a wholly owned subsidiary of
General Growth Properties ("GGP "). GGP owns, through affiliates, 31% of the
borrowing entity while OTR owns 69%. GGP is currently the second largest
regional mall REIT in the U.S. and owns or manages 121 regional mall shopping
centers with more than 96 million square feet of retail space.
Guaranty and Indemnification. While the Neshaminy Loan is non-recourse,
the Neshaminy Borrower, in accordance with the terms of the Neshaminy Mortgage,
may be held personally liable under the standard exceptions to non-recourse
provisions.
Lockbox/Reserve Accounts. The Neshaminy Loan requires the Neshaminy
Borrower after an Event of Default or so long as the DSCR falls below 1.20x to
establish the following accounts: (i) a rent account in the name of the
mortgagee into which all rents and other sums collected from the property shall
be deposited; (ii) a replacement reserve account in the name of the mortgagee
into which the Neshaminy Borrower shall make monthly payments based on
historical and annual budgeted replacement reserves; (iii) a tenant rollover
account into which the Neshaminy Borrower shall make monthly payments based on
historical and annual budgeted costs for tenant improvements and leasing
commissions; and (iv) a tax insurance impound account into which the Neshaminy
Borrower shall make monthly payments equal to 1/12 of the real estate tax
assessments.
Subordinate Debt. There is no subordinate debt secured by the Neshaminy
Mall Property or mezzanine financing provided to the principals of the
Neshaminy Borrower. The Neshaminy Mortgage does permit the Neshaminy Borrower
to borrow an additional $2,000,000 of unsecured debt provided certain
conditions are satisfied.
D-1
<PAGE>
THE PROPERTY
The Property. The Neshaminy Property was constructed in 1968 and underwent
a $9.3 million common area renovation and expansion in 1995. The Property is a
642,249 square foot, single story regional mall shopping center located at the
intersection of Route 1 and Rockhill Drive, approximately 16 miles northeast of
downtown Philadelphia.
Largest Anchors. The following table sets forth the four anchors at the
property. Two of the anchors, Sears and Strawbridge Clothiers, own their
padsites and are not part of the collateral.
<TABLE>
<CAPTION>
GROSS LEASABLE
AREA COLLATERAL
ANCHOR (SQUARE FEET) FOR LOAN LEASE EXPIRATION
------ ------------- -------- ----------------
<S> <C>
<S> <C> <C> <C>
Sears ......................... 200,445 No N/A
Strawbridge Clothiers ......... 218,150 No N/A
Boscovs ....................... 185,000 Yes 10-31-15
AMC Theatres .................. 90,906 Yes 08-31-18
</TABLE>
Largest Tenants. The following table sets forth the four largest tenants
based on annualized base rent as of November 11, 1998.
<TABLE>
<CAPTION>
GROSS LEASABLE PERCENTAGE
AREA OF GROSS PERCENTAGE BASE RENT LEASE
TENANT (SQUARE FEET) LEASABLE AREA BASE RENT OF BASE RENT PER SQUARE FOOT EXPIRATION
------ ------------- ------------- --------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
AMC Theaters ......... 90,906 14.15% $1,636,308 20.58% $ 18.00 08-31-18
Boscovs .............. 185,000 28.81% $ 500,000 6.29% $ 2.70 10-31-15
Modell's ............. 14,291 2.23% $ 200,074 2.52% $ 14.00 05-31-09
Express .............. 8,512 1.33% $ 153,216 1.93% $ 18.00 01-31-07
The Wall ............. 7,397 1.15% $ 137,940 1.74% $ 18.65 03-31-03
</TABLE>
Property Management. Neshaminy Mall is covered by a Manager's Consent and
Subordination of Management Agreement (the "Neshaminy Management Agreement ")
made by General Growth Management, Inc. (the "Neshaminy Manager "), in favor of
the Mortgage Loan Seller, with the joinder and consent of the Neshaminy
Borrower. Pursuant to the Neshaminy Management Agreement dated January 31,
1992, the term of the Neshaminy Management Agreement is to remain in effect on
a year-to-year basis unless either party shall give notice to the other not
less than sixty (60) days prior to the end of the then current term of its
decision to terminate and cancel this Agreement.
The Neshaminy Lender may terminate the Neshaminy Management Agreement upon
or at any time after an Event of Default or default by the Neshaminy Manager.
The Neshaminy Lender shall have the right to direct the Neshaminy Borrower to
terminate such new management upon 30 days' notice and to direct the Neshaminy
Borrower to retain a new management company approved by the Neshaminy Lender.
In no event shall any manager be removed or replaced or material terms of any
management agreement be modified or amended without prior consent of the
Neshaminy Lender.
D-2
<PAGE>
2. JPI Portfolio
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Cut-Off Date Balance: $58,800,000 Property Type: Multifamily
Interest Rate: 6.9825% Number of Properties: 3
Interest Calculation Year Built/Renovated: (a)
Method: Actual/360 Square Footage: (a)
Maturity Date: 9/28/08 Underwritten NCF: $5,736,087
Orig. Term: 10 years DSCR (NCF): 1.20x
Orig. Amort: 29 years LTV: 76.58%
Exit Fee: None Occupancy: (a)
Prepayment Protection: Defeasance Occupancy as of Date: (a)
Lockbox: Hard/Soft, In-place
- -----------------------------------------------------------------------------------------
</TABLE>
- ----------
(a) See "The Properties " below for individual property characteristics.
THE LOAN
General. The JPI Portfolio (the "JPI Loans ") was originated by GACC on
September 28, 1998 by execution of a Credit Agreement (the "JPI Credit
Agreement ") by GACC and the JPI Borrower (defined below) in the amount of
$58,800,000. The JPI Loans are evidenced by three promissory notes
(collectively, the "JPI Note "), each secured by, among other things, (i) a fee
mortgage encumbering one of three multifamily properties located in either
Texas or Florida (collectively, the "JPI Mortgage "); (ii) an assignment of
leases and rents for each such property and (iii) a security agreement covering
the personal property at each such property. The JPI Loans are
cross-collateralized and cross-defaulted with each other.
The Borrower. The borrowers on the JPI Loans are the following (each a
"JPI Mortgagor, " and collectively, the "JPI Borrower "): Jefferson Village,
L.P. ("Jefferson Village "), Jefferson Sunset Valley, L.P. ("Jefferson Sunset
Valley "), and Jefferson Coral Springs, L.P. ("Jefferson Coral Springs "). Each
of the JPI Mortgagors has JPI Portfolio I GPC L.L.C. ("JPI Portfolio I "), a
Texas limited liability company, as its general partner.
JPI Portfolio I is sponsored by JPI Investment Company, L.P. ("JPI
Investment Company "), a leading real estate investment opportunity fund that
has acquired or built over 43,000 apartment units, valued at $1.93 billion, in
nine states since 1990.
Guaranty and Indemnification. While the JPI Loans are non-recourse, the
JPI Borrower, in accordance with the terms of the JPI Credit Agreement, the JPI
Note, and the JPI Mortgage, may be held personally liable under the standard
exceptions to non-recourse provisions.
Lockbox/Reserve Accounts. The JPI Loans require the JPI Borrower to set up
a Deposit Account. The Deposit Account shall be under the sole dominion and
control of the Lender and the Lender shall have the sole right to make
withdrawals from the Deposit Account and to exercise all rights with respect to
the Account Collateral on deposit therein from time to time; provided, however,
that so long as no Default or Event of Default shall exist under the Loan
Documents, the Lender shall make disbursements of the Account Collateral from
time to time.
Subordinate Debt. A Mezzanine Note with a principal balance of $10,000,000
has been made by JPI Portfolio I in favor of Capital Trust (the "Mezzanine
Lender "). The Mezzanine Note is secured by (i) limited partnership interests
in the JPI Borrower, and (ii) a Guaranty of Payment by each of the JPI
Mortgagors. The principal balance of the Mezzanine Note is allocated to each
JPI Mortgagor as follows: Jefferson Village, $2,360,000; Jefferson Sunset
Valley, $2,490,000; and Jefferson Coral Springs, $5,150,000.
D-3
<PAGE>
THE PROPERTIES
The Properties. The JPI Portfolio consists of the following three
properties:
Jefferson Village Apartments. Jefferson Village Apartments is a 274 unit,
luxury, garden-style multifamily development contained in eleven three story
buildings. Completed in late 1995, the property completed its initial lease-up
in 1997 and, as of October 2, 1998, was 94% occupied. Located in Stafford,
Texas, approximately fifteen miles southwest of Houston, the property is
situated one mile north of Sugar Land, the home of several large corporations,
and which has a master plan excluding multifamily development.
Jefferson at Sunset Valley. Jefferson at Sunset Valley is a 210 unit,
luxury, garden-style multifamily development contained in eleven two and three
story buildings. Completed in 1996, the property recently completed its initial
lease-up, and, as of October 2, 1998, was 94% occupied. The property is located
in Austin, Texas, approximately eight miles south of the Austin central
business district.
Jefferson at Coral Square. Jefferson at Coral Square is a 480 unit,
luxury, garden-style multifamily development contained in twenty-six two and
three story buildings and two one story clubhouses. Completed in 1996, the
property recently completed its initial lease-up, and, as of October 2, 1998,
was 89% occupied. The property is located in Coral Springs, Florida,
approximately fifteen miles northwest of the Fort Lauderdale central business
district.
PROPERTY MANAGEMENT
Jefferson Village Apartments is covered by a Property Management and
Leasing Agreement (the "Jefferson Village Management Agreement ") between
Jefferson Village and JPI Multifamily, Inc. (the "Manager "). The Jefferson
Village Management Agreement is to remain in effect for a term of one year with
successive one year renewal terms. The Manager is entitled to a management fee
equal to 4% of the Monthly Gross Collections with a floor based on 75%
occupancy at Base Rent.
Jefferson at Sunset Valley is covered by a Property Management and Leasing
Agreement (the "Jefferson at Sunset Valley Management Agreement ") between
Jefferson at Sunset Valley and JPI Multifamily, Inc. (the "Manager "). The
Jefferson at Sunset Valley Management Agreement is to remain in effect for a
term of one year with successive one year renewal terms. The Manager is
entitled to a management fee equal to 4% of the Monthly Gross Collections with
a floor based on 75% occupancy at Base Rent. Eight months after the issuance of
a Certificate of Occupancy, the management fee shall be 3.75% of Monthly Gross
Collections.
Jefferson at Coral Springs is covered by a Property Management and Leasing
Agreement (the "Jefferson at Coral Springs Management Agreement ") between
Jefferson at Coral Springs and JPI Multifamily, Inc. (the "Manager "). The
Jefferson at Coral Springs Management Agreement is to remain in effect for a
term of one year with successive one year renewal terms. The Manager is
entitled to a management fee equal to 4% of the Monthly Gross Collections with
a floor based on 75% occupancy at Base Rent.
D-4
<PAGE>
3. LaSalle Office Portfolio
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Cut-Off Date Balance: $43,242,000 Property Type: Office
Interest Rate: 7.04% Number of Properties: 5
Interest Calculation Year Built/Renovated: 1984-1990
Method: 30/360 Square Footage: (a)
Maturity Date: 2/1/08 Underwritten NCF: $5,360,929
Original Term: 10 years DSCR (NCF): 1.51x
Original Amortization: 28 years LTV: 49.76%
Prepayment Premium: Defeasance Occupancy: 86%-100%
Lockbox: Hard, Springing Occupancy as of Date: 10/27/98 - 12/31/98
- -------------------------------------------------------------------------------------------
</TABLE>
- ----------
(a) See "The Properties " below for individual property characteristics.
THE LOAN
General. The LaSalle Office Portfolio (the "LaSalle Loan ") was originated
by the Mortgage Loan Seller on October 1997 by execution of a Credit Agreement
(the "LaSalle Credit Agreement ") by the Mortgage Loan Seller and the LaSalle
Borrower (defined below) in the amount of $42,242,000. The LaSalle Loan is
evidenced by five promissory notes (the "LaSalle Notes ") and is secured by (i)
five first mortgages (the "LaSalle Mortgages") on the properties (the "LaSalle
Properties") described below; (ii) an assignment of leases and rents for each
property and (iii) a cross guarantee covering the five properties.
The Borrower. The borrowers on the LaSalle Loan are the following (each a
"LaSalle Mortgagor, " and collectively, the "LaSalle Borrower "): FBEC-One
Urban Centre, L.P. ("FBEC-Urban "), FBEC-Metro Centre, L.P. ("FBEC-Metro "),
FBEC-Bayview Executive Plaza, L.P. ("FBEC-Bayview "), FBEC-System One Center,
L.P. ("FBEC-System One ") and FBEC-Doral Corporate Center, L.P. ("FBEC-Doral").
The LaSalle Florida Opportunity Fund is a wholly owned subsidiary of
LaSalle Partners, Inc. operated by LaSalle Advisors Limited. LaSalle Partners,
Inc. is a global leader in commercial real estate, providing investment
management and property services to public and private institutions throughout
the world. LaSalle Advisors Limited, the investment management subsidiary, has
more than $11 billion of assets under management and is an active investor
across a broad range of real estate markets. Through a series of commingling
funds and separate accounts, LaSalle Partners, Inc. invests in and manages
office, industrial, hotel, and multifamily assets. In recent years, LaSalle
Partners Inc. has invested in approximately 75 transactions totaling $1.3
billion and disposed of 58 assets totaling $742 million.
Guaranty and Indemnification. While the LaSalle Loan is non-recourse, the
LaSalle Borrower, in accordance with the terms of the LaSalle Credit Agreement,
may be held personally liable under the standard exceptions to non-recourse
provisions.
Lockbox/Reserve Accounts. The LaSalle Borrower was required to set up a
Reserve Account. The Reserve Account shall be under the sole dominion and
control of the LaSalle Lender, and the LaSalle Lender shall have the sole right
to make withdrawals from the Reserve Account and to exercise all rights with
respect to the Account Collateral on deposit therein from time to time;
provided, however, that so long as no Default or Event of Default shall exist
under the Loan Documents, the LaSalle Lender shall make disbursements of the
Account Collateral from time to time. After an Event of Default, the LaSalle
Borrower shall have the right to access funds on deposit in its Operating
Account, all Account Collateral on deposit from time to time in the Sweep
Accounts shall be immediately transferred to the Reserve Account and shall be
retained therein as security for the Obligations, and the LaSalle Lender shall
have no obligation to make any
D-5
<PAGE>
disbursement of funds from the Reserve Account to or on behalf of FOPC or any
LaSalle Borrower, and the LaSalle Lender shall have the immediate and
continuing right to exercise all rights and remedies afforded to the LaSalle
Lender under the LaSalle Credit Agreement and other Loan Documents.
Subordinate Debt. There is no subordinate debt secured on the LaSalle
Property or mezzanine financing provided to the principals of the LaSalle
Borrower.
THE PROPERTIES
The Properties. The LaSalle Loan consists of the following five
properties:
Doral Corporate Center. The Doral Corporate Center (the "Doral Corporate
Property ") is located in Miami, Florida, and consists of two seven-story,
class "A" suburban office buildings containing 138,605 square feet and 137,474
square feet of leaseable space, respectively, and was built in 1985 and 1990,
respectively. The property is currently 95% occupied. Citibank leases 138,605
square feet of space (one entire building) at a below market rent pursuant to a
lease expiring December 31, 2000.
One Urban Centre. One Urban Centre (the "One Urban Property ") is located
in Tampa, Florida, and is a nine-story, 278,614 square feet, class "A " office
building, built in 1984, approximately five miles from the central business
district. The property is 100% occupied by over seventy tenants and is
connected to the Grand Sheraton Hotel near the Tampa International Airport.
System One Centre. System One Centre (the "System One Property ") is
located in Miami, Florida, and is a seven-story suburban office building built
in 1984. The property contains 185,226 rentable square feet and is located
eight miles west of Miami's central business district, just west of Miami's
International Airport. The property is 100% occupied by three tenants, with one
tenant, System One Amadeus (an airline industry supplier) accounting for over
75% of the annual rent.
Metro Centre One and Metro Centre Business Plaza. Metro Business Park (the
"Metro Business Property ") consists of two properties in Fort Myers, Florida
built in 1990: the Metro Centre Business Plaza and Metro Centre One. Metro
Centre Business Plaza consists of two one-story buildings containing 44,266 of
rentable area that are 90% occupied. Metro Centre One is a three-story office
building containing 37,350 square feet of rentable area that is 95% occupied.
Bayview Executive Plaza. Bayview Executive Plaza (the "Bayview Property ")
is a seven-story, class "A " office building containing 54,633 square feet
which is located in Miami, Florida. The property was built in 1986 and is
currently 97% occupied.
PROPERTY MANAGEMENT
The Doral Corporate Property is covered by a Management and Leasing
Agreement (the "Doral Management Agreement ") between FBEC-Doral Corporate
Center, L.P. (the "Doral Owner ") and LaSalle Partners Management Limited
Partnership (the "Doral Manager "), a Florida limited partnership. The Doral
Management Agreement is to remain in effect for a term of one year with a
successive one year renewal term. The Doral Manager is entitled to a management
fee equal to 3% of the Effective Gross Income. Leasing commissions are based on
percentage of the Base Rent over the term lease with renewals at 2%, new leases
that do not involve a broker at 4%, and new leases that do involve a broker at
4% to the broker and 2% to the Doral Manager.
The One Urban Property is covered by a Project Management Agreement (the
"One Urban Management Agreement ") between LaSalle Florida Opportunity Fund,
L.P. (the "One Urban Owner ") and Lincoln Property Company of Florida, Inc.
(the "One Urban Manager "). The One Urban Management Agreement is to remain in
effect for a term of one year with a successive one year renewal term. The One
Urban Manager is entitled to a management fee equal to 3% of the Gross
Receipts. Leasing commissions are based on a percentage of the Base Rent over
the term of the lease with renewals at 2%, new leases that do not involve a
broker at 4%, and new leases that do involve a broker at 6%.
D-6
<PAGE>
The System One Property is covered by a Management and Leasing Agreement
(the "System One Management Agreement ") between FBEC-System One Centre, L.P.
(the "System One Owner ") and LaSalle Partners Management Limited Partnership
(the "System One Manager "), a Florida limited partnership. The System One
Management Agreement is to remain in effect for a term of one year with a
successive one year renewal term. The System One Manager is entitled to a
management fee equal to 3% of the Gross Effective Income. Leasing commissions
are based on a percentage of the Base Rent over the term of the lease with
renewals at 2%, new leases that do not involve a broker at 4%, and new leases
that do involve a broker at 4% to the broker and 2% to the System One Manager.
The Metro Business Property is covered by a Management and Leasing
Agreement (the "Metro Management Agreement ") between FBEC-Metro Centre, L.P.
and Faison & Associates (the "Metro Manager "). The Metro Management Agreement
is to remain in effect for a term of one year. The Metro Manager is entitled to
a management fee equal to the greater of $1,250 per month or 3.5% of the
Effective Gross Income. Leasing commissions are based on percentage of the Base
Rent over the term of the lease with renewals at 2%, new leases that do not
involve a broker at 3%, and new leases that do involve a broker at 3% to the
broker and 3% to the Metro Manager.
The Bayview Property is covered by a Management and Leasing Agreement (the
"Bayview Management Agreement ") between FBEC-Bayview (the "Bayview Owner ")
and LaSalle Partners Management Limited Partnership (the "Bayview Manager "), a
Florida limited partnership. The Bayview Management Agreement is to remain in
effect for a term of one year with a successive one year renewal term. The
Bayview Manager is entitled to a management fee equal to 3.5% of the Effective
Gross Income. Leasing commissions are based on a percentage of the Base Rent
over the term of the lease with renewals at 2%, new leases that do not involve
a broker at 4%, and new leases that do involve a broker at 4% to the broker and
2% to the Bayview Manager.
D-7
<PAGE>
4. CARS-DB1, L.L.C. Loan
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Cut-Off Date Balance: $38,050,000 Property Type: Special Purpose
Interest Rate: 7.59% Number of Properties: 7
Interest Calculation Year Built/Renovated: 1930-1984
Year Renovated: 1982-1995
Method: ACT/360 Square Footage: Variable
Maturity Date: 12/1/08 Underwritten NCF: $7,157,802
Original Term: 10 Years DSCR: 1.78x
Original Amortization: 16.7 Years LTV: 56.8%
Prepayment Protection: Defeasance Auto Dealerships: Rosenthal
Lockbox: Hard, In-place
- -------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
General
The CARS-DB1, L.L.C. Mortgage Loan was originated by an affiliate of GACC
on November 18, 1998 in the amount of $38,050,000. The loan is evidenced by a
Promissory Note, made by CARS-DB1, L.L.C. (the "Borrower "), and is secured,
inter alia, by first priority real estate mortgages and assignments of all
leases, rent lock-box accounts, security deposits, lease guarantees, and
Security Agreements made by the Borrower in favor of the lender encumbering 7
properties.
The Borrower
The Borrower is a single purpose bankruptcy remote entity, which is an
affiliate of Capital Automotive REIT.
Capital Automotive REIT was formed as a Maryland real estate investment
trust on October 20, 1997. The company is a self-advised, self managed equity
REIT that acquires real property and improvements used by multi-site,
multi-franchised automobile dealerships and related businesses located in major
metropolitan areas throughout the United States.
Capital Automotive's strategy is to acquire real estate from automotive
dealer groups. Acquired properties are leased back to the sellers under long
term triple net leases. Substantially all of the Company's revenues are derived
from (1) rents received under triple net leases; and (2) interest earned from
the temporary investment of funds in short-term investments. As of December 31,
1998, Capital Automotive has acquired 120 properties, used by 29 dealer groups
located in 18 states operated by 196 automotive franchises, totaling 4.3
million square feet of buildings on 709 acres of land.
Guaranty and Indemnification
The Loan will be non-recourse, except with respect to certain matters as
set forth in the Loan Documents which include, but are not limited to: (a)
fraud and willful misconduct, (b) gross negligence, (c) misappropriation of
funds and condemnation proceeds and (d) environmental representations,
covenants and indemnities. Recourse carveouts are guaranteed by Capital
Automotive REIT.
Lockbox Accounts
All monthly rents under the assigned leases are remitted directly to a
Borrower lock-box account controlled by lender or its designee. From this
account monthly loan payments will be transferred to a separate servicer
account. Provided there are no defaults, remaining unapplied funds within the
lock-boxes will be returned to the Borrower monthly.
D-8
<PAGE>
THE PROPERTIES
Tenants
Rosenthal Automotive Organization. The Rosenthal Organization has been in
business for over 40 years. With 19 dealerships, the Rosenthal Organization was
the 14th largest automotive group in the United States in terms of new vehicles
sold in 1997. This deal contains 7 properties occupied by the Rosenthal
Automotive Organization. The tenants on these properties had 1997 revenues of
approximately $486 million.
<TABLE>
<CAPTION>
ALLOCATED
ROSENTHAL PROPERTIES CITY STATE TENANT LOAN AMOUNT FRANCHISE
-------------------- ---- ----- ------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Rosenthal Honda/Jaguar Tysons Corner VA Geneva Enterprises, Inc. $ 7,042,090 Honda/Jaguar
Rosenthal Nissan/Acura/Mazda/Isuzu Gaithersburg MD Geneva Enterprises, Inc. $ 6,928,507 Nissan/Acura/Mazda/Isuzu
Rosenthal Chevrolet/Jeep/Eagle Arlington VA Geneva Enterprises, Inc. $ 4,372,910 Chevrolet/Jeep
Rosenthal Mazda Arlington VA Geneva Enterprises, Inc. $ 3,180,299 Mazda
Rosenthal Storage Lot Arlington VA Geneva Enterprises, Inc. $ 2,839,552 None
Rosenthal Body Shop Tysons Corner VA Geneva Enterprises, Inc. $ 624,701 None
Rosenthal Infiniti/Mazda/Nissan Tysons Corner VA Geneva Enterprises, Inc. $13,061,940 Infiniti/Mazda/Nissan
</TABLE>
Release Provisions
Subject to the Prepayment and Defeasance provisions listed above, the
Borrower may request properties to be released from the Collateral by paying a
release price equal to 125% of the loan balance for the properties at the time
of such release; provided that the aggregate debt service coverage ratio ("DSCR
") of total rent to annual debt service for the remaining properties is at
least 2:1 and EBTDAR/RENT for the remaining tenants is also at least 2:1.
Substitution Rights
The Borrower may obtain a release of the Lien of Mortgage encumbering an
individual property by substituting another automobile dealership property
acquired by the Borrower, provided that such substitution shall satisfy the
conditions outlined in the Loan Agreement including;
(a) Substitution shall not be allowed more than three (3) times during
the Term of the Loan.
(b) Borrower must deliver reasonable evidence establishing that an
environmental condition exists at the Substituted Property such that
the potential liability to Guarantor under the Recourse Guaranty
and/or the Environmental Indemnity exceeds two hundred and fifty
thousand dollars ($250,000).
(c) Opinion of counsel acceptable to the Rating Agencies that the
substitution does not constitute a "significant modification " of
the Loan under Section 1001 of the Code or otherwise cause a tax to
be imposed on a "prohibited transaction " by any REMIC Trust.
Mezzanine Debt
There is no subordinate debt secured by the Properties or mezzanine
financing provided to the Borrower.
D-9
<PAGE>
5. Columbia Office Center
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Cut-Off Date Balance: $35,018,169 Property Type: Office
Interest Rate: 7.09% Number of Properties: 1
Interest Calculation Year Built/Renovated: 1989
Method: 30/360 Square Footage: 253,953
Maturity Date: 01/01/09 Underwritten NCF: $3,676,390
Original Term: 10.5 years DSCR (NCF): 1.29x
Original Amortization: 30 years LTV: 70.32%
Prepayment Protection: Defeasance Occupancy: 99%
Lockbox: Hard, Springing Occupancy as of Date: 11/01/98
- -------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
General. The Columbia Office Center Loan (the "Loan ") was originated by
GACC on June 12, 1998 in the amount of $35,250,000. The Columbia Loan is
evidenced by a Promissory Note made by Columbia Center, LLC and is secured by a
Mortgage, Assignment of Leases and Rents and Security Agreement made by the
Columbia Borrower in favor of GACC encumbering the property located at 201 Big
Beaver Road, Troy, Michigan ("Columbia Office ") owned in fee simple by the
Columbia Center, LLC.
The Borrower. The Columbia Center, LLC consists of a 1% ownership interest
by Multi-Employer Investment Trust (MEPT) and a 99% interest by Columbia
Associates, LLC. Columbia Associates consists of MEPT with a 94.9495% interest
and GK Associates of Troy, LLC with a 5.0505% interest. The entity was formed
for the purpose of acquiring, owning, operating, leasing, managing, selling
and/or financing Columbia Office Center. MEPT is one of the largest pooled real
estate equity funds in the US. It is designed as an investment vehicle for
multi-employer and public employer pension plans. Its guidelines are to seek
competitive returns through investment in a diversified pool of high quality
commercial and multifamily residential real estate properties. The fund at year
end 1997 had 98 assets in 24 markets nationwide. The Trustee and Custodian of
MEPT is Riggs Bank, NA of Washington, DC and the real estate advisor is Kennedy
Associates Real Estate Counsel Of Seattle, WA. Landon Butler & Co. of
Washington, DC provides investor relations and marketing services MEPT. The
MEPT is governed by a Policy Board, comprised of representatives of each of the
three entities charged with managing the Fund, which is responsible for the
overall direction of the fund.
Guaranty and Indemnification. While the Columbia Loan is non-recourse, the
Columbia Borrower, in accordance with the terms of the Columbia Mortgage, may
be held personally liable under the standard exceptions to the non-recourse
provisions.
Lockbox/Reserve Accounts. The Loan requires the Borrower after an Event of
Default or so long as the DSCR falls below 1.20x to establish the following
accounts: (i) a rent account in the name of the mortgagee into which all rents
and other sums collected from the property shall be deposited; (ii) a
replacement reserve account in the name of the mortgagee into which the
Columbia Borrower shall make monthly payments based on historical and the
annual budgeted replacement reserves; (iii) a tenant rollover account into
which the Columbia Borrower shall make monthly payments based on historical and
annual budgeted costs for tenant improvements and leasing commissions; and (iv)
a tax insurance impound account into which the Neshaminy Borrower shall make
monthly payments equal to 1/12 of the real estate tax assessments.
Subordinate Debt. There is no subordinate debt secured on the Columbia
Property or mezzanine financing provided to the principals of the Columbia
Borrower.
THE PROPERTY
The Property. The Columbia Property is an 18.5 acre site consisting of one
condominium of four units located at 201 Big Beaver Road, Troy, Michigan. Units
1 and 3 constitute the entire
D-10
<PAGE>
security for the loan. Unit 1 consists of a 13 story, class "A" office
structure constructed in 1988 and containing approximately 256,457 net rentable
square feet. Unit 3 is a 31,456 square foot pad improved with a Bally's Fitness
Center with a lease until June 2012. Condominium Unit 2 consists of a "mirror
tower" to the building identified as Condominium Unit 1, and will include an
additional parking structure. Condominium 4 consists of the common area land
and amenities such as 3-story concrete parking structure and uncovered parking.
Property Management. Columbia Office Center is covered by a Property
Management and Leasing Agreement by and between Columbia Center, LLC, a
Michigan limited liability company ("Owner") and KIRCO Management Services,
LTD, a Michigan corporation ("Manager"). The initial term of the agreement
shall begin on the Commencement Date and shall end on the last day of the month
following the expiration of one year from the Commencement Date. This Agreement
shall automatically renew for succesive one-year periods unless terminated by
either party in accordance with this agreement. The Manager is entitled to a
management fee between 3% and 4% as specified in the management agreement.
D-11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX E
EXCEPTIONS TO THE MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES
<TABLE>
<S> <C>
(ix) Condition of Property; Condemnation
BEACHSIDE RESORT & CONFERENCE CENTER (GA 5503): The Property sustained
approximately $250,000 of damage related to a hurricane in September 1998.
The first installment of casualty proceeds has been received, and renovation
work is nearly completed. All debt service payments have been made
subsequent to the casualty.
(xxviii) Licenses and Permits
DREW BUSINESS CENTER (TA1182): Receipt of business licenses to occur post
close.
(xxxvi) Leasehold Estate
SAN MARCO'S SELF STORAGE (1436): The property securing this loan is subject to
a ground lease which expires on August 31, 2082. The Ground Lessor has a
right to repurchase the leasehold estate under certain circumstances. The
Ground Lessor has agreed to defer its right to repurchase the property for so
long as the Mortgage Loan is outstanding. Additionally, the ground lease
contains no express covenant of quiet enjoyment.
(xxxviii) Lien Releases
CARS-DB1 (GAF1): The Borrower is permitted to partially defease the loan
upon a partial release of a property. In addition, the Borrower may substitute
a property for the property secured by the loan in the event that an
environmental liability at the property exceeds $250,000 and satisfies other
customary conditions including confirmation from Rating Agencies that the
substitution will not result in the downgrade, withdrawal or qualification of
the rating then assigned to the securities.
ELDER TRUST LOANS (GA5848): (LAPLATA, CORSICA HILLS, SEVERENA PARK, HERITAGE
CENTER, WESTFIELD PLAZA) -- Borrower may substitute a property of like kind
and quality pursuant to the conditions set forth in Section 2.3 of the Loan
Agreement, including providing an opinion of counsel that such substitution
will not result in the downgrade, withdrawal or qualification of the rating
then assigned to the securities.
NESHAMINY MALL (GA5631): Certain non-income producing "Release Parcels"
may be transferred to a third party upon satisfaction of certain customary
conditions including confirmation from Rating Agencies that the release will
not result in a downgrade, withdrawal or qualification of the rating assigned
to the securities.
(xxxix) Junior Liens
LA JOLLA RETAIL (TA1237): Borrower was permitted to maintain a subordinated
loan in accordance with the Subordination and Standstill Agreement executed
by Brownian Funds, Inc., Borrower and Deutsche Bank. The outstanding
balance of the subordinated loan was $603,095 as of March 16, 1998.
</TABLE>
E-1
<PAGE>
<TABLE>
<S> <C>
(xl) Due on Sale; Due on Encumbrance
ASTORIA TERRACE RETIREMENT CENTER (TA2728): Property can be transferred if 1)
no EOD exists 2) 60 day notice to Lender and approval by Lender
(commercially reasonable std.), 3) fee to Lender. No limit to one time sale.
BLOCKBUSTER OFFICE/DISTRIBUTION CENTER (GA5395): Property may be transferred
multiple times upon payment of a transfer fee and lender consent.
TA NUMBERS 0545, 1838, 2908, 3127, 3492, 3602, 3621, 3684, 3997, 4160, 4832,
4833, 4834, 3619, 3846, 3987, 3994, 4381, 4424, 4563, 4604, 4605, 4678, 5556,
5907 AND 4882; GA NUMBERS 5293, 5294 AND 5295; AND NUMBERS 1632, 2055,
2050, 2056, 2057 AND 2151B: Interests in borrowing entity permitted to be
transferred. Many facilities contemplate two transfers but documents require
consent.
TAWA BUSINESS CENTER (TA1654): Mortgagor may transfer the property twice
without triggering the due on sale provision, provided that each transfer
complies with the requirements set forth in the mortgage.
TRUXTON FINANCIAL BUILDING (TA4007): Transfers between two individual
mortgagors will not trigger due on sale provision.
</TABLE>
E-2
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series. The Offered Certificates of any
series, together with any other mortgage pass-through certificates of such
series, are collectively referred to herein as the "Certificates".
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series, the
"Trust Fund") to be formed by Deutsche Mortgage & Asset Receiving Corporation
(the "Depositor") and including a segregated pool (a "Mortgage Asset Pool") of
various types of multifamily and commercial mortgage loans ("Mortgage Loans"),
mortgage-backed securities ("MBS") that evidence interests in, or that are
secured by pledges of, one or more of various types of multifamily or
commercial mortgage loans, or a combination of Mortgage Loans and MBS
(collectively, "Mortgage Assets"). The Mortgage Loans in (and the mortgage
loans underlying the MBS in) any Trust Fund will be secured by first or junior
liens on, or security interests in, one or more of the following types of real
property: (i) Multifamily Properties (as defined herein) units and mobile home
parks; and (ii) commercial properties consisting of office buildings, Retail
Properties (as defined herein), hotels and motels, health care-related
facilities, recreational vehicle parks, warehouse facilities, mini-warehouse
facilities, self-storage facilities, industrial facilities, parking lots,
restaurants, mixed use properties (that is, any combination of the foregoing),
and unimproved land. To the extent described in the Prospectus Supplement,
Retail Properties and Multifamily Properties will represent security for a
material concentration of the Mortgage Loans in (or the mortgage loans
underlying the MBS in) any Trust Fund, based on principal balance at the time
such Trust Fund is formed. If so specified in the related Prospectus
Supplement, the Trust Fund for a series of Certificates may also include
letters of credit, surety bonds, insurance policies, guarantees, reserve funds,
guaranteed investment contracts, interest rate exchange agreements or interest
rate cap or floor agreements designed to reduce the effects of interest rate
fluctuations on the Mortgage Assets. See "Description of the Trust Funds",
"Description of the Certificates" and "Description of Credit Support".
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments) on
the Mortgage Assets in the related Trust Fund and the timing of receipt of such
payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations". A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates--Termination;
Retirement of the Certificates".
(cover continued on next page)
----------------
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, DEUTSCHE BANK AG OR
ANY OF THEIR AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE
ASSETS WILL BE GUARANTEED OR INSURED BY THE DEPOSITOR OR ANY OF ITS AFFILIATES
OR, UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 9
HEREIN UNDER THE CAPTION "RISK FACTORS" AND SUCH INFORMATION AS MAY BE SET
FORTH UNDER THE CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT
BEFORE PURCHASING ANY OFFERED CERTIFICATE.
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, as described under
"Method of Distribution" and in the related Prospectus Supplement.
There will be no secondary market for the Offered Certificates of any
series prior to the offering thereof. There can be no assurance that a
secondary market for any Offered Certificates will develop or, if it does
develop, that it will continue. Unless otherwise provided in the related
Prospectus Supplement, the Certificates will not be listed on any securities
exchange.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any series unless
accompanied by the Prospectus Supplement for such series.
--------------------
The date of this Prospectus is September 29, 1998
<PAGE>
(cover continued)
As described in the related Prospectus Supplement, the Certificates of
each series, including the Offered Certificates of such series, may consist of
one or more classes of Certificates that: (i) provide for the accrual of
interest thereon based on a fixed, variable or adjustable interest rate; (ii)
are senior or subordinate to one or more other classes of Certificates in
entitlement to certain distributions on the Certificates; (iii) are entitled to
distributions of principal, with disproportionate, nominal or no distributions
of interest; (iv) are entitled to distributions of interest, with
disproportionate, nominal or no distributions of principal; (v) provide for
distributions of interest thereon or principal thereof that commence only
following the occurrence of certain events, such as the retirement of one or
more other classes of Certificates of such series; (vi) provide for
distributions of principal thereof to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology. Distributions in respect of
the Certificates of each series will be made on a monthly, quarterly,
semi-annual, annual or other periodic basis as specified in the related
Prospectus Supplement. See "Description of the Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as
a "real estate mortgage investment conduit" (each, a "REMIC") for federal
income tax purposes. If applicable, the Prospectus Supplement for a series of
Certificates will specify which class or classes of such series of Certificates
will be considered to be regular interests in the related REMIC and which class
of Certificates or other interests will be designated as the residual interest
in the related REMIC. See "Certain Federal Income Tax Consequences".
An Index of Principal Definitions is included at the end of this
Prospectus specifying the location of definitions of important or frequently
used defined terms.
ii
<PAGE>
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to each series of Offered Certificates will, among other things, set forth, as
and to the extent appropriate: (i) a description of the class or classes of
such Offered Certificates, including the payment provisions with respect to
each such class, the aggregate principal amount, if any, of each such class,
the rate at which interest accrues from time to time, if at all, with respect
to each such class or the method of determining such rate, and whether interest
with respect to each such class will accrue from time to time on its aggregate
principal amount, if any, or on a specified notional amount, if at all; (ii)
information with respect to any other classes of Certificates of the same
series; (iii) the respective dates on which distributions are to be made; (iv)
information as to the assets, including the Mortgage Assets, constituting the
related Trust Fund (all such assets, with respect to the Certificates of any
series, the "Trust Assets"); (v) the circumstances, if any, under which the
related Trust Fund may be subject to early termination; (vi) additional
information with respect to the method of distribution of such Offered
Certificates; (vii) whether one or more REMIC elections will be made and the
designation of the "regular interests" and "residual interests" in each REMIC
to be created and the identity of the person (the "REMIC Administrator")
responsible for the various tax-related duties in respect of each REMIC to be
created; (viii) the initial percentage ownership interest in the related Trust
Fund to be evidenced by each class of Certificates of such series; (ix)
information concerning the Trustee (as defined herein) of the related Trust
Fund; (x) if the related Trust Fund includes Mortgage Loans, information
concerning the Master Servicer and any Special Servicer (each as defined
herein) of such Mortgage Loans and the circumstances under which all or a
portion, as specified, of the servicing of a Mortgage Loan would transfer from
the Master Servicer to the Special Servicer; (xi) information as to the nature
and extent of subordination of any class of Certificates of such series,
including a class of Offered Certificates; and (xii) whether such Offered
Certificates will be initially issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
Regional Offices located as follows: Chicago Regional Office, 500 West Madison,
14th Floor, Chicago, Illinois 60661; New York Regional Office, Seven World
Trade Center, New York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates and electronically through
the Commission's Electronic Data Gathering, Analysis and Retrieval system at
the Commission's Web site (http://www.sec.gov).
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Depositor or any other person. Neither the delivery of this
Prospectus or any related Prospectus Supplement nor any sale made hereunder or
thereunder shall under any circumstances create an implication that there has
been no change in the information herein since the date hereof or therein since
the date thereof. This Prospectus and any related Prospectus Supplement are not
an offer to sell or a solicitation of an offer to buy any security in any
jurisdiction in which it is unlawful to make such offer or solicitation.
iii
<PAGE>
The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a class or series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository Trust
Company ("DTC") as described herein, then unless otherwise provided in the
related Prospectus Supplement, such reports will be sent on behalf of the
related Trust Fund to a nominee of DTC as the registered holder of the Offered
Certificates. Conveyance of notices and other communications by DTC to its
participating organizations, and directly or indirectly through such
participating organizations to the beneficial owners of the applicable Offered
Certificates, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. See
"Description of the Certificates--Reports to Certificateholders" and
"--Book-Entry Registration and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Depositor intends to make a
written request to the staff of the Commission that the staff either (i) issue
an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor
from certain reporting requirements under the Exchange Act with respect to each
Trust Fund or (ii) state that the staff will not recommend that the Commission
take enforcement action if the Depositor fulfills its reporting obligations as
described in its written request. If such request is granted, the Depositor
will file or cause to be filed with the Commission as to each Trust Fund the
periodic unaudited reports to holders of the Offered Certificates referenced in
the preceding paragraph; however, because of the nature of the Trust Funds, it
is unlikely that any significant additional information will be filed. In
addition, because of the limited number of Certificateholders expected for each
series, the Depositor anticipates that a significant portion of such reporting
requirements will be permanently suspended following the first fiscal year for
the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended,
prior to the termination of an offering of Offered Certificates evidencing
interests therein. The Depositor will provide or cause to be provided without
charge to each person to whom this Prospectus is delivered in connection with
the offering of one or more classes of Offered Certificates, upon written or
oral request of such person, a copy of any or all documents or reports
incorporated herein by reference, in each case to the extent such documents or
reports relate to one or more of such classes of such Offered Certificates,
other than the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Such requests to the
Depositor should be directed in writing to the Depositor at One International
Place, Room 520, Boston, Massachusetts 02110, Attention: Secretary, or by
telephone at (617) 951-7690.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT .................................................................. iii
AVAILABLE INFORMATION .................................................................. iii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ...................................... iv
SUMMARY OF PROSPECTUS .................................................................. 1
RISK FACTORS ........................................................................... 9
Limited Liquidity of Offered Certificates ............................................. 9
Limited Assets ........................................................................ 10
Credit Support Limitations ............................................................ 10
Effect of Prepayments on Average Life of Certificates ................................. 11
Effect of Prepayments on Yield of Certificates ........................................ 12
Limited Nature of Ratings ............................................................. 12
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans ..... 13
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset
Pool ................................................................................ 16
Termination ........................................................................... 16
Risks Associated With Multifamily Properties .......................................... 17
Risks Associated With Retail Properties ............................................... 17
DESCRIPTION OF THE TRUST FUNDS ......................................................... 17
General ............................................................................... 17
Mortgage Loans ........................................................................ 18
MBS ................................................................................... 23
Certificate Accounts .................................................................. 24
Credit Support ........................................................................ 24
Cash Flow Agreements .................................................................. 24
YIELD AND MATURITY CONSIDERATIONS ...................................................... 25
General ............................................................................... 25
Pass-Through Rate ..................................................................... 25
Payment Delays ........................................................................ 25
Certain Shortfalls in Collections of Interest ......................................... 25
Yield and Prepayment Considerations ................................................... 26
Weighted Average Life and Maturity .................................................... 27
Other Factors Affecting Yield, Weighted Average Life and Maturity ..................... 28
THE DEPOSITOR .......................................................................... 31
DEUTSCHE BANK AG ....................................................................... 31
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DESCRIPTION OF THE CERTIFICATES .......................................... 31
General ................................................................. 31
Distributions ........................................................... 32
Distributions of Interest on the Certificates ........................... 33
Distributions of Principal of the Certificates .......................... 34
Distributions on the Certificates in Respect of Prepayment Premiums or in
Respect of Equity Participations ...................................... 34
Allocation of Losses and Shortfalls ..................................... 35
Advances in Respect of Delinquencies .................................... 35
Reports to Certificateholders ........................................... 36
Voting Rights ........................................................... 37
Termination ............................................................. 37
Book-Entry Registration and Definitive Certificates ..................... 38
DESCRIPTION OF THE POOLING AGREEMENTS .................................... 40
General ................................................................. 40
Assignment of Mortgage Loans; Repurchases ............................... 40
Representations and Warranties; Repurchases ............................. 42
Collection and Other Servicing Procedures ............................... 43
Sub-Servicers ........................................................... 45
Certificate Account ..................................................... 45
Modifications, Waivers and Amendments of Mortgage Loans ................. 48
Realization Upon Defaulted Mortgage Loans ............................... 48
Hazard Insurance Policies ............................................... 50
Due-on-Sale and Due-on-Encumbrance Provisions ........................... 50
Servicing Compensation and Payment of Expenses .......................... 51
Evidence as to Compliance ............................................... 51
Certain Matters Regarding the Master Servicer, the Special Servicer,
the REMIC Administrator and the Depositor ............................. 52
Events of Default ....................................................... 53
Rights Upon Event of Default ............................................ 54
Amendment ............................................................... 55
List of Certificateholders .............................................. 56
The Trustee ............................................................. 56
Duties of the Trustee ................................................... 56
Certain Matters Regarding the Trustee ................................... 56
Resignation and Removal of the Trustee .................................. 57
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DESCRIPTION OF CREDIT SUPPORT ................................... 58
General ........................................................ 58
Subordinate Certificates ....................................... 58
Insurance or Guarantees with Respect to Mortgage Loans ......... 58
Letter of Credit ............................................... 59
Certificate Insurance and Surety Bonds ......................... 59
Reserve Funds .................................................. 59
Credit Support with respect to MBS ............................. 60
Interest Rate Exchange, Cap and Floor Agreements ............... 60
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS ......................... 60
General ........................................................ 60
Types of Mortgage Instruments .................................. 61
Leases and Rents ............................................... 61
Personalty ..................................................... 61
Foreclosure .................................................... 62
Bankruptcy Laws ................................................ 65
Environmental Considerations ................................... 66
Due-on-Sale and Due-on-Encumbrance Provisions .................. 68
Junior Liens; Rights of Holders of Senior Liens ................ 68
Subordinate Financing .......................................... 68
Default Interest and Limitations on Prepayments ................ 69
Applicability of Usury Laws .................................... 69
Certain Laws and Regulations ................................... 69
Americans with Disabilities Act ................................ 69
Soldiers' and Sailors' Civil Relief Act of 1940 ................ 70
Forfeitures in Drug and RICO Proceedings ....................... 70
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ......................... 71
Federal Income Tax Consequences for REMIC Certificates ......... 71
Taxation of Regular Certificates ............................... 74
Taxation of Residual Certificates .............................. 81
Taxes That May Be Imposed on the REMIC Pool .................... 88
Liquidation of the REMIC Pool .................................. 89
Administrative Matters ......................................... 89
Limitations on Deduction of Certain Expenses ................... 90
Taxation of Certain Foreign Investors .......................... 90
</TABLE>
vii
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Backup Withholding .......................................... 91
Reporting Requirements ...................................... 92
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO
REMIC ELECTION IS MADE ...................................... 92
Standard Certificates ....................................... 92
Stripped Certificates ....................................... 95
Reporting Requirements and Backup Withholding ............... 98
Taxation of Certain Foreign Investors ....................... 99
STATE AND OTHER TAX CONSEQUENCES .............................. 100
CERTAIN ERISA CONSIDERATIONS .................................. 100
General ..................................................... 100
Plan Asset Regulations ...................................... 100
Prohibited Transaction Exemptions ........................... 102
Tax Exempt Investors ........................................ 104
LEGAL INVESTMENT .............................................. 104
USE OF PROCEEDS ............................................... 106
METHOD OF DISTRIBUTION ........................................ 106
LEGAL MATTERS ................................................. 108
FINANCIAL INFORMATION ......................................... 108
RATING ........................................................ 108
INDEX OF PRINCIPAL DEFINITIONS ................................ 109
</TABLE>
viii
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
SECURITIES OFFERED.......... Mortgage pass-through certificates.
DEPOSITOR................... Deutsche Mortgage & Asset Receiving
Corporation, a Delaware corporation. See "The
Depositor".
TRUSTEE..................... The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee".
MASTER SERVICER............. If a Trust Fund includes Mortgage Loans, then
the master servicer (the "Master Servicer") for
the corresponding series of Certificates will be
named in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Certain
Matters Regarding the Master Servicer, the
Special Servicer, the REMIC Administrator and the
Depositor".
SPECIAL SERVICER............ If a Trust Fund includes Mortgage Loans, then
the special servicer (the "Special Servicer") for
the corresponding series of Certificates will be
named, or the circumstances under which a Special
Servicer may be appointed will be described, in
the related Prospectus Supplement. See
"Description of the Pooling
Agreements--Collection and Other Servicing
Procedures".
MBS ADMINISTRATOR........... If a Trust Fund includes MBS, then the entity
responsible for administering such MBS (the "MBS
Administrator") will be named in the related
Prospectus Supplement. If an entity other than
the Trustee and the Master Servicer is the MBS
Administrator, such entity will be herein
referred to as the "Manager".
REMIC ADMINISTRATOR......... The person (the "REMIC Administrator")
responsible for the various tax-related
administration duties for a series of
Certificates as to which one or more REMIC
elections have been made, will be named in the
related Prospectus Supplement. See "Description
of the Pooling Agreements--Certain Matters
Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the
Depositor".
THE MORTGAGE ASSETS......... The Mortgage Assets will be the primary assets
of any Trust Fund. The Mortgage Assets with
respect to each series of Certificates will, in
general, consist of a pool of mortgage loans
("Mortgage Loans") secured by first or
1
<PAGE>
junior liens on, or security interests in, one
or more of the following types of real property:
(i) residential properties (each, a "Multifamily
Property") consisting of five or more rental or
cooperatively-owned dwelling units in high-rise,
mid-rise or garden apartment buildings or other
residential structures, and mobile home parks;
and (ii) commercial properties ("Commercial
Properties") consisting of office buildings,
retail shopping facilities, such as shopping
centers, malls and individual stores (each, a
"Retail Property"), hotels and motels, health
care-related facilities (such as hospitals,
skilled nursing facilities, nursing homes,
congregate care facilities and senior housing),
recreational vehicle parks, warehouse
facilities, mini-warehouse facilities, self-
storage facilities, industrial facilities,
parking lots, restaurants, mixed use properties
(that is, any combination of the foregoing), and
unimproved land. To the extent described in the
Prospectus Supplement, Retail Properties and
Multifamily Properties will represent security
for a material concentration of the Mortgage
Loans in any Trust Fund, based on principal
balance at the time such Trust Fund is formed.
The Mortgage Loans will not be guaranteed or
insured by the Depositor or any of its
affiliates or, unless otherwise provided in the
related Prospectus Supplement, by any
governmental agency or instrumentality or by any
other person. If so specified in the related
Prospectus Supplement, some Mortgage Loans may
be delinquent or nonperforming as of the date
the related Trust Fund is formed.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for
accrual of interest thereon at an interest rate
(a "Mortgage Rate") that is fixed over its term
or that adjusts from time to time, or that may
be converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and
may permit negative amortization, (iii) may be
fully amortizing or may be partially amortizing
or nonamortizing, with a balloon payment due on
its stated maturity date, (iv) may prohibit over
its term or for a certain period prepayments
and/or require payment of a premium or a yield
maintenance payment in connection with certain
prepayments and (v) may provide for payments of
principal, interest or both, on due dates that
occur monthly, quarterly, semi-annually or at
such other interval as is specified in the
related Prospectus Supplement. Each Mortgage
Loan will have had an original term to maturity
of not more than 40 years. No Mortgage Loan will
have been
2
<PAGE>
originated by the Depositor. See "Description of
the Trust Funds--Mortgage Loans".
If any Mortgage Loan, or group of related
Mortgage Loans, constitutes a concentration of
credit risk, financial statements or other
financial information with respect to the
related Mortgaged Property or Mortgaged
Properties will be included in the related
Prospectus Supplement. See "Description of the
Trust Funds--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements".
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets with
respect to a series of Certificates may also
include, or consist of, mortgage participations,
mortgage pass-through certificates and/or other
mortgage-backed securities (collectively,
"MBS"), that evidence an interest in, or are
secured by a pledge of, one or more mortgage
loans that conform to the descriptions of the
Mortgage Loans contained herein and which may or
may not be issued, insured or guaranteed by the
United States or an agency or instrumentality
thereof. See "Description of the Trust
Funds--MBS".
THE CERTIFICATES............ Each series of Certificates will be issued in
one or more classes pursuant to a pooling and
servicing agreement or other agreement specified
in the related Prospectus Supplement (in any
case, a "Pooling Agreement") and will represent
in the aggregate the entire beneficial ownership
interest in the related Trust Fund.
As described in the related Prospectus
Supplement, the Certificates of each series,
including the Offered Certificates of such
series, may consist of one or more classes of
Certificates that, among other things: (i) are
senior (collectively, "Senior Certificates") or
subordinate (collectively, "Subordinate
Certificates") to one or more other classes of
Certificates in entitlement to certain
distributions on the Certificates; (ii) are
entitled to distributions of principal, with
disproportionate, nominal or no distributions of
interest (collectively, "Stripped Principal
Certificates"); (iii) are entitled to
distributions of interest, with
disproportionate, nominal or no distributions of
principal (collectively, "Stripped Interest
Certificates"); (iv) provide for distributions
of interest thereon or principal thereof that
commence only after the occurrence of certain
events, such as the retirement of one or more
other classes of Certificates of such series;
(v) provide for distributions of principal
thereof to be made, from time to time or for
designated periods, at a rate that is faster
(and, in some cases, substantially faster) or
slower (and, in some cases, substantially
slower) than the rate at which payments or other
collections of principal are received on the
Mortgage Assets in the related Trust Fund; (vi)
provide for distribu-
3
<PAGE>
tions of principal thereof to be made, subject
to available funds, based on a specified
principal payment schedule or other methodology;
or (vii) provide for distribution based on
collections on the Mortgage Assets in the
related Trust Fund attributable to prepayment
premiums, yield maintenance payments or equity
participations.
If so specified in the related Prospectus
Supplement, a series of Certificates may include
one or more "Controlled Amortization Classes",
which will entitle the holders thereof to
receive principal distributions according to a
specified principal payment schedule. Although
prepayment risk cannot be eliminated entirely
for any class of Certificates, a Controlled
Amortization Class will generally provide a
relatively stable cash flow so long as the
actual rate of prepayment on the Mortgage Loans
in the related Trust Fund remains relatively
constant at the rate, or within the range of
rates, of prepayment used to establish the
specific principal payment schedule for such
Certificates. Prepayment risk with respect to a
given Mortgage Asset Pool does not disappear,
however, and the stability afforded to a
Controlled Amortization Class comes at the
expense of one or more other classes of the same
series, any of which other classes may also be a
class of Offered Certificates. See "Risk
Factors--Effect of Prepayments on Average Life
of Certificates" and "--Effect of Prepayments on
Yield of Certificates".
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of REMIC Residual Certificates
(as defined herein), will have an initial stated
principal amount (a "Certificate Balance"); and
each class of Certificates, other than certain
classes of Stripped Principal Certificates and
certain classes of REMIC Residual Certificates,
will accrue interest on its Certificate Balance
or, in the case of certain classes of Stripped
Interest Certificates, on a notional amount (a
"Notional Amount"), based on a fixed, variable
or adjustable interest rate (a "Pass-Through
Rate"). The related Prospectus Supplement will
specify the Certificate Balance, Notional Amount
and/or Pass-Through Rate (or, in the case of a
variable or adjustable Pass-Through Rate, the
method for determining such rate), as
applicable, for each class of Offered
Certificates.
If so specified in the related Prospectus
Supplement, a class of Certificates may have two
or more component parts, each having
characteristics that are otherwise described
herein as being attributable to separate and
distinct classes.
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates, by any governmental agency or
instrumentality or by any other person or
entity, unless otherwise provided in the related
Prospectus Supplement. See "Risk
Factors--Limited Assets".
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<PAGE>
DISTRIBUTIONS OF INTEREST ON THE
CERTIFICATES............... Interest on each class of Offered Certificates
(other than certain classes of Stripped Principal
Certificates and certain classes of REMIC
Residual Certificates) of each series will accrue
at the applicable Pass-Through Rate on the
Certificate Balance or, in the case of certain
classes of Stripped Interest Certificates, the
Notional Amount thereof outstanding from time to
time and will be distributed to
Certificateholders as provided in the related
Prospectus Supplement (each of the specified
dates on which distributions are to be made, a
"Distribution Date"). Distributions of interest
with respect to one or more classes of
Certificates (collectively, "Accrual
Certificates") may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates, and interest accrued with respect
to a class of Accrual Certificates prior to the
occurrence of such an event will either be added
to the Certificate Balance thereof or otherwise
deferred as described in the related Prospectus
Supplement. Distributions of interest with
respect to one or more classes of Certificates
may be reduced to the extent of certain
delinquencies, losses and other contingencies
described herein and in the related Prospectus
Supplement. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates" and
"--Effect of Prepayments on Yield of
Certificates", "Yield and Maturity
Considerations--Certain Shortfalls in Collections
of Interest" and "Description of the
Certificates--Distributions of Interest on the
Certificates".
DISTRIBUTIONS OF PRINCIPAL OF
THE CERTIFICATES............ Each class of Certificates of each series
(other than certain classes of Stripped Interest
Certificates and certain classes of REMIC
Residual Certificates) will have a Certificate
Balance. The Certificate Balance of a class of
Certificates outstanding from time to time will
represent the maximum amount that the holders
thereof are then entitled to receive in respect
of principal from future cash flow on the assets
in the related Trust Fund. The initial aggregate
Certificate Balance of all classes of a series of
Certificates will not be greater than the
outstanding principal balance of the related
Mortgage Assets as of a specified date (the
"Cut-off Date"), after application of scheduled
payments due on or before such date, whether or
not received. As and to the extent described in
each Prospectus Supplement, distributions of
principal with respect to the related series of
Certificates will be made on each Distribution
Date to the holders of the class or classes of
Certificates of such series then entitled thereto
until the Certificate Balances of such
Certificates have been reduced to zero.
Distributions of principal with respect to one or
more classes of Certificates: (i) may be made at
a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some
cases,
5
<PAGE>
substantially slower) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (ii) may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates of the same series; (iii) may be
made, subject to certain limitations, based on a
specified principal payment schedule; or (iv)
may be contingent on the specified principal
payment schedule for another class of the same
series and the rate at which payments and other
collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless
otherwise specified in the related Prospectus
Supplement, distributions of principal of any
class of Offered Certificates will be made on a
pro rata basis among all of the Certificates of
such class. See "Description of the
Certificates--Distributions of Principal of the
Certificates".
CREDIT SUPPORT AND
CASH FLOW AGREEMENTS....... If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided
to one or more classes of Certificates of the
related series in the form of subordination of
one or more other classes of Certificates of such
series, which other classes may include one or
more classes of Offered Certificates, or by one
or more other types of credit support, which may
include a letter of credit, a surety bond, an
insurance policy, a guarantee, a reserve fund, or
a combination thereof (any such coverage with
respect to the Certificates of any series,
"Credit Support"). If so provided in the related
Prospectus Supplement, a Trust Fund may include:
(i) guaranteed investment contracts pursuant to
which moneys held in the funds and accounts
established for the related series will be
invested at a specified rate; or (ii) interest
rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to
reduce the effects of interest rate fluctuations
on the Mortgage Assets or on one or more classes
of Certificates (any such agreement, in the case
of clause (i) or (ii), a "Cash Flow Agreement").
Certain relevant information regarding any
applicable Credit Support or Cash Flow Agreement
will be set forth in the Prospectus Supplement
for a series of Offered Certificates. See "Risk
Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit Support"
and "--Cash Flow Agreements" and "Description of
Credit Support".
ADVANCES.................... If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund includes
Mortgage Loans, the Master Servicer, the Special
Servicer, the Trustee, any provider of Credit
Support and/or any other specified person may be
obligated to make, or have the option of
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<PAGE>
making, certain advances with respect to
delinquent scheduled payments of principal
and/or interest on such Mortgage Loans. Any such
advances made with respect to a particular
Mortgage Loan will be reimbursable from
subsequent recoveries in respect of such
Mortgage Loan and otherwise to the extent
described herein and in the related Prospectus
Supplement. See "Description of the
Certificates--Advances in Respect of
Delinquencies". If and to the extent provided in
the Prospectus Supplement for a series of
Certificates, any entity making such advances
may be entitled to receive interest thereon for
a specified period during which certain or all
of such advances are outstanding, payable from
amounts in the related Trust Fund. See
"Description of the Certificates--Advances in
Respect of Delinquencies". If a Trust Fund
includes MBS, any comparable advancing
obligation of a party to the related Pooling
Agreement, or of a party to the related MBS
Agreement, will be described in the related
Prospectus Supplement.
OPTIONAL TERMINATION........ If so specified in the related Prospectus
Supplement, a series of Certificates may be
subject to optional early termination through the
repurchase of the Mortgage Assets in the related
Trust Fund by the party or parties specified
therein, under the circumstances and in the
manner set forth therein. If so provided in the
related Prospectus Supplement, upon the reduction
of the Certificate Balance of a specified class
or classes of Certificates by a specified
percentage or amount or upon a specified date, a
party specified therein may be authorized or
required to solicit bids for the purchase of all
of the Mortgage Assets of the related Trust Fund,
or of a sufficient portion of such Mortgage
Assets to retire such class or classes, under the
circumstances and in the manner set forth
therein. See "Description of the
Certificates--Termination".
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... The Certificates of each series will constitute
or evidence ownership of either (i) "regular
interests" ("REMIC Regular Certificates") and
"residual interests" ("REMIC Residual
Certificates") in a Trust Fund, or a designated
portion thereof, treated as a REMIC under
Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests ("Grantor Trust Certificates") in a
Trust Fund treated as a grantor trust (or a
partnership) under applicable provisions of the
Code.
Investors are advised to consult their tax
advisors concerning the specific tax
consequences to them of the purchase, ownership
and disposition of the Offered Certificates and
to review "Certain Federal Income Tax
Consequences" herein and in the related
Prospectus Supplement.
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<PAGE>
ERISA CONSIDERATIONS........ Fiduciaries of employee benefit plans and
certain other retirement plans and arrangements,
including individual retirement accounts,
annuities, Keogh plans, and collective investment
funds and separate accounts in which such plans,
accounts, annuities or arrangements are invested,
that are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code, should
review with their legal advisors whether the
purchase or holding of Offered Certificates could
give rise to a transaction that is prohibited or
is not otherwise permissible either under ERISA
or Section 4975 of the Code. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
LEGAL INVESTMENT............ The Offered Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of
1984, as amended ("SMMEA"), only if so specified
in the related Prospectus Supplement. Investors
whose investment authority is subject to legal
restrictions should consult their legal advisors
to determine whether and to what extent the
Offered Certificates constitute legal investments
for them. See "Legal Investment" herein and in
the related Prospectus Supplement.
RATING...................... At their respective dates of issuance, each
class of Offered Certificates will be rated not
lower than investment grade by one or more
nationally recognized statistical rating agencies
(each, a "Rating Agency"). See "Rating" herein
and in the related Prospectus Supplement.
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<PAGE>
RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly
pertain to and be influenced by the characteristics or behavior of the mortgage
loans underlying any MBS included in such Trust Fund.
LIMITED LIQUIDITY OF OFFERED CERTIFICATES
General. The Offered Certificates of any series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time.
Furthermore, except to the extent described herein and in the related
Prospectus Supplement, Certificateholders will have no redemption rights, and
the Offered Certificates of each series are subject to early retirement only
under certain specified circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates--Termination".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Certificates of any series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for any series of Offered Certificates may indicate that
an underwriter specified therein intends to establish a secondary market in
such Offered Certificates; however, no underwriter will be obligated to do so.
Any such secondary market may provide less liquidity to investors than any
comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Certificates of any series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling Agreement as
described herein under the heading "Description of the Certificates--Reports to
Certificateholders". There can be no assurance that any additional ongoing
information regarding the Offered Certificates of any series will be available
through any other source. The limited nature of such information in respect of
a series of Offered Certificates may adversely affect the liquidity thereof,
even if a secondary market for such Certificates does develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to any series of Offered
Certificates or class thereof, the market value of such Certificates will be
affected by several factors, including the perceived liquidity thereof, the
anticipated cash flow thereon (which may vary widely depending upon the
prepayment and default assumptions applied in respect of the underlying
Mortgage Loans) and prevailing interest rates. The price payable at any given
time in respect of certain classes of Offered Certificates (in particular, a
class with a relatively long average life, a Companion Class (as defined
herein) or a class of Stripped Interest Certificates or Stripped Principal
Certificates) may be extremely sensitive to small fluctuations in prevailing
interest rates; and the relative change in price for an Offered Certificate in
response to an upward or downward movement in prevailing interest rates may not
necessarily equal the relative change in price for such Offered Certificate in
response to an equal but opposite movement in such rates. Accordingly, the sale
of Offered Certificates by a holder in any secondary market that may develop
may be at a discount from the price paid by such holder. The Depositor is not
aware of any source through which price information about the Offered
Certificates will be generally available on an ongoing basis.
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<PAGE>
LIMITED ASSETS
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other
person or entity; and no Offered Certificate of any series will represent a
claim against or security interest in the Trust Funds for any other series.
Accordingly, if the related Trust Fund has insufficient assets to make payments
on a series of Offered Certificates, no other assets will be available for
payment of the deficiency, and the holders of one or more classes of such
Offered Certificates will be required to bear the consequent loss. Furthermore,
certain amounts on deposit from time to time in certain funds or accounts
constituting part of a Trust Fund, including the Certificate Account and any
accounts maintained as Credit Support, may be withdrawn under certain
conditions, if and to the extent described in the related Prospectus
Supplement, for purposes other than the payment of principal of or interest on
the related series of Certificates. If and to the extent so provided in the
Prospectus Supplement for a series of Certificates consisting of one or more
classes of Subordinate Certificates, on any Distribution Date in respect of
which losses or shortfalls in collections on the Mortgage Assets have been
incurred, all or a portion of the amount of such losses or shortfalls will be
borne first by one or more classes of the Subordinate Certificates, and,
thereafter, by the remaining classes of Certificates in the priority and manner
and subject to the limitations specified in such Prospectus Supplement.
CREDIT SUPPORT LIMITATIONS
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for a series of Certificates will describe any Credit Support provided with
respect thereto. Use of Credit Support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement.
Moreover, such Credit Support may not cover all potential losses; for example,
Credit Support may or may not cover loss by reason of fraud or negligence by a
mortgage loan originator or other parties. Any such losses not covered by
Credit Support may, at least in part, be allocated to one or more classes of
Offered Certificates.
Disproportionate Benefits to Certain Classes and Series. A series of
Certificates may include one or more classes of Subordinate Certificates (which
may include Offered Certificates), if so provided in the related Prospectus
Supplement. Although subordination is intended to reduce the likelihood of
temporary shortfalls and ultimate losses to holders of Senior Certificates, the
amount of subordination will be limited and may decline under certain
circumstances. In addition, if principal payments on one or more classes of
Offered Certificates of a series are made in a specified order of priority, any
related Credit Support may be exhausted before the principal of the later paid
classes of Offered Certificates of such series has been repaid in full. As a
result, the impact of losses and shortfalls experienced with respect to the
Mortgage Assets may fall primarily upon those classes of Offered Certificates
having a later right of payment. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
the holders of Offered Certificates of one (or more) such series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable Credit Support supporting one or more classes of Offered
Certificates, including the subordination of one or more other classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and
certain other factors. There can, however, be no assurance that the loss
experience on the related Mortgage Assets will not exceed such assumed levels.
See "Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support". If the losses on the related Mortgage Assets
do exceed such assumed levels, the holders of one or more classes of Offered
Certificates will be required to bear such additional losses.
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<PAGE>
EFFECT OF PREPAYMENTS ON AVERAGE LIFE OF CERTIFICATES
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the Offered
Certificates of the related series may be highly unpredictable. Prepayments on
the Mortgage Loans in any Trust Fund will result in a faster rate of principal
payments on one or more classes of the related series of Certificates than if
payments on such Mortgage Loans were made as scheduled. Thus, the prepayment
experience on the Mortgage Loans in a Trust Fund may affect the average life of
one or more classes of Certificates of the related series, including a class of
Offered Certificates. The rate of principal payments on pools of mortgage loans
varies among pools and from time to time is influenced by a variety of
economic, demographic, geographic, social, tax and legal factors. For example,
if prevailing interest rates fall significantly below the Mortgage Rates borne
by the Mortgage Loans included in a Trust Fund, then, subject to the particular
terms of the Mortgage Loans (e.g., provisions that prohibit voluntary
prepayments during specified periods or impose penalties in connection
therewith) and the ability of borrowers to obtain new financing, principal
prepayments on such Mortgage Loans are likely to be higher than if prevailing
interest rates remain at or above the rates borne by those Mortgage Loans.
Conversely, if prevailing interest rates rise significantly above the Mortgage
Rates borne by the Mortgage Loans included in a Trust Fund, then principal
prepayments on such Mortgage Loans are likely to be lower than if prevailing
interest rates remain at or below the mortgage rates borne by those Mortgage
Loans. There can be no assurance as to the actual rate of prepayment on the
Mortgage Loans in any Trust Fund or that such rate of prepayment will conform
to any model described herein or in any Prospectus Supplement. As a result,
depending on the anticipated rate of prepayment for the Mortgage Loans in any
Trust Fund, the retirement of any class of Certificates of the related series
could occur significantly earlier or later, and the average life thereof could
be significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the related
series will depend on the terms and provisions of such Certificates. A class of
Certificates, including a class of Offered Certificates, may provide that on
any Distribution Date the holders of such Certificates are entitled to a pro
rata share of the prepayments on the Mortgage Loans in the related Trust Fund
that are distributable on such date, to a disproportionately large share
(which, in some cases, may be all) of such prepayments, or to a
disproportionately small share (which, in some cases, may be none) of such
prepayments. A class of Certificates that entitles the holders thereof to a
disproportionately large share of the prepayments on the Mortgage Loans in the
related Trust Fund increases the likelihood of early retirement of such class
("Call Risk") if the rate of prepayment is relatively fast; while a class of
Certificates that entitles the holders thereof to a disproportionately small
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of an extended average life of such class ("Extension
Risk") if the rate of prepayment is relatively slow. As and to the extent
described in the related Prospectus Supplement, the respective entitlements of
the various classes of Certificateholders of any series to receive payments
(and, in particular, prepayments) of principal of the Mortgage Loans in the
related Trust Fund may vary based on the occurrence of certain events (e.g.,
the retirement of one or more classes of Certificates of such series) or
subject to certain contingencies (e.g., prepayment and default rates with
respect to such Mortgage Loans).
A series of Certificates may include one or more Controlled Amortization
Classes, which will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule. Although
prepayment risk cannot be eliminated entirely for any class of Certificates, a
Controlled Amortization Class will generally provide a relatively stable cash
flow so long as the actual rate of prepayment on the Mortgage Loans in the
related Trust Fund remains relatively constant at the rate, or within the range
of rates, of prepayment used to establish the specific principal payment
schedule for such Certificates. Prepayment risk with respect to a given
Mortgage Asset Pool does not disappear, however, and the stability afforded to
a Controlled
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<PAGE>
Amortization Class comes at the expense of one or more Companion Classes of the
same series, any of which Companion Classes may also be a class of Offered
Certificates. In general, and as more specifically described in the related
Prospectus Supplement, a Companion Class may entitle the holders thereof to a
disproportionately large share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively fast, and/or may
entitle the holders thereof to a disproportionately small share of prepayments
on the Mortgage Loans in the related Trust Fund when the rate of prepayment is
relatively slow. As and to the extent described in the related Prospectus
Supplement, a Companion Class absorbs some (but not all) of the Call Risk
and/or Extension Risk that would otherwise belong to the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans in the
related Trust Fund were allocated on a pro rata basis.
EFFECT OF PREPAYMENTS ON YIELD OF CERTIFICATES
A series of Certificates may include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recover its original investment
under some prepayment scenarios. The extent to which the yield to maturity of
any class of Offered Certificates may vary from the anticipated yield will
depend upon the degree to which such Certificates are purchased at a discount
or premium and the amount and timing of distributions thereon. An investor
should consider, in the case of any Offered Certificate purchased at a
discount, the risk that a slower than anticipated rate of principal payments on
the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield and, in the case of any Offered Certificate
purchased at a premium, the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. See "Yield and Maturity Considerations".
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such Offered
Certificates will receive payments to which such Certificateholders are
entitled under the related Pooling Agreement. Such rating will not constitute
an assessment of the likelihood that principal prepayments on the related
Mortgage Loans will be made, the degree to which the rate of such prepayments
might differ from that originally anticipated or the likelihood of early
optional termination of the related Trust Fund. Furthermore, such rating will
not address the possibility that prepayment of the related Mortgage Loans at a
higher or lower rate than anticipated by an investor may cause such investor to
experience a lower than anticipated yield or that an investor that purchases an
Offered Certificate at a significant premium might fail to recover its initial
investment under certain prepayment scenarios. Hence, a rating assigned by a
Rating Agency does not guarantee or ensure the realization of any anticipated
yield on a class of Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of the Certificates of such
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no
assurance that the historical data supporting any such actuarial analysis will
accurately reflect future experience, or that the data derived from a large
pool of mortgage loans will accurately predict the delinquency, foreclosure or
loss experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. As a result, the
Credit Support required in respect of the Offered Certificates of any series
may be insufficient to fully protect the holders thereof from losses on the
related Mortgage Asset Pool. See "Description of Credit Support" and "Rating".
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<PAGE>
CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS
General. The payment performance of the Offered Certificates of any series
will be directly related to the payment performance of the underlying Mortgage
Loans. Set forth below is a discussion of certain factors that will affect the
full and timely payment of the Mortgage Loans in any Trust Fund. In addition, a
description of certain material considerations associated with investments in
mortgage loans is included herein under "Certain Legal Aspects of Mortgage
Loans".
The Offered Certificates will be directly or indirectly backed by mortgage
loans secured by multifamily and/or commercial properties. Mortgage loans made
on the security of multifamily or commercial property may have a greater
likelihood of delinquency and foreclosure, and a greater likelihood of loss in
the event thereof, than loans made on the security of an owner-occupied
single-family property. See "Description of the Trust Funds--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans". The
ability of a borrower to repay a loan secured by an income-producing property
typically is dependent primarily upon the successful operation of such property
rather than upon the existence of independent income or assets of the borrower;
thus, the value of an income-producing property is directly related to the net
operating income derived from such property. If the net operating income of the
property is reduced (for example, if rental or occupancy rates decline or real
estate tax rates or other operating expenses increase), the borrower's ability
to repay the loan may be impaired. A number of the Mortgage Loans may be
secured by liens on owner-occupied Mortgaged Properties or on Mortgaged
Properties leased to a single tenant or a small number of significant tenants.
Accordingly, a decline in the financial condition of the borrower or a
significant tenant, as applicable, may have a disproportionately greater effect
on the net operating income from such Mortgaged Properties than would be the
case with respect to Mortgaged Properties with multiple tenants. Furthermore,
the value of any Mortgaged Property may be adversely affected by factors
generally incident to interests in real property, including changes in general
or local economic conditions and/or specific industry segments; declines in
real estate values; declines in rental or occupancy rates; increases in
interest rates, real estate tax rates and other operating expenses; changes in
governmental rules, regulations and fiscal policies, including environmental
legislation; natural disasters and civil disturbances such as earthquakes,
hurricanes, floods, eruptions or riots; and other circumstances, conditions or
events beyond the control of a Master Servicer or a Special Servicer.
Additional considerations may be presented by the type and use of a particular
Mortgaged Property. For instance, Mortgaged Properties that operate as
hospitals and nursing homes are subject to significant governmental regulation
of the ownership, operation, maintenance and financing of health care
institutions. Hotel and motel properties are often operated pursuant to
franchise, management or operating agreements that may be terminable by the
franchisor or operator, and the transferability of a hotel's operating, liquor
and other licenses upon a transfer of the hotel, whether through purchase or
foreclosure, is subject to local law requirements.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited
to the specific real property and other assets, if any, that were pledged to
secure the Mortgage Loan. However, even with respect to those Mortgage Loans
that provide for recourse against the borrower and its assets generally, there
can be no assurance that enforcement of such recourse provisions will be
practicable, or that the assets of the borrower will
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be sufficient to permit a recovery in respect of a defaulted Mortgage Loan in
excess of the liquidation value of the related Mortgaged Property. See "Certain
Legal Aspects of Mortgage Loans--Foreclosure--Anti-Deficiency Legislation".
Limitations on Enforceability of Cross-Collateralization. A Mortgage Pool
may include groups of Mortgage Loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all
of the collateral pledged to secure the respective Mortgage Loans in a
cross-collateralized group, and the cash flows generated thereby, are available
to support debt service on, and ultimate repayment of, the aggregate
indebtedness evidenced by those Mortgage Loans. These arrangements thus seek to
reduce the risk that the inability of one or more of the Mortgaged Properties
securing any such group of Mortgage Loans to generate net operating income
sufficient to pay debt service will result in defaults and ultimate losses.
There may not be complete identity of ownership of the Mortgaged
Properties securing a group of cross-collateralized Mortgage Loans. In such an
instance, creditors of one or more of the related borrowers could challenge the
cross-collateralization arrangement as a fraudulent conveyance. Generally,
under federal and state fraudulent conveyance statutes, the incurring of an
obligation or the transfer of property by a person will be subject to avoidance
under certain circumstances if the person did not receive fair consideration or
reasonably equivalent value in exchange for such obligation or transfer and was
then insolvent or was rendered insolvent by such obligation or transfer.
Accordingly, a creditor seeking ownership of a Mortgaged Property subject to
such cross-collateralization to repay such creditor's claim against the related
borrower could assert (i) that such borrower was insolvent at the time the
cross-collateralized Mortgage Loans were made and (ii) that such borrower did
not, when it allowed its property to be encumbered by a lien securing the
indebtedness represented by the other Mortgage Loans in the group of
cross-collateralized Mortgage Loans, receive fair consideration or reasonably
equivalent value for, in effect, "guaranteeing" the performance of the other
borrowers. Although the borrower making such "guarantee" will be receiving
"guarantees" from each of the other borrowers in return, there can be no
assurance that such exchanged "guarantees" would be found to constitute fair
consideration or be of reasonably equivalent value, and no unqualified legal
opinion to that effect will be obtained.
The cross-collateralized Mortgage Loans constituting any group thereof may
be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise of
a power of sale and because, in general, foreclosure actions are brought in
state court, and the courts of one state cannot exercise jurisdiction over
property in another state, it may be necessary upon a default under any such
Mortgage Loan to foreclose on the related Mortgaged Properties in a particular
order rather than simultaneously in order to ensure that the lien of the
related Mortgages is not impaired or released.
Increased Risk of Default Associated With Balloon Payments. Certain of the
Mortgage Loans included in a Trust Fund may be nonamortizing or only partially
amortizing over their terms to maturity and, thus, will require substantial
payments of principal and interest (that is, balloon payments) at their stated
maturity. Mortgage Loans of this type involve a greater likelihood of default
than self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
value of the related Mortgaged Property, the level of available mortgage rates
at the time of sale or refinancing, the borrower's equity in the related
Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general
economic conditions and the availability of credit for loans secured by
multifamily or commercial, as the case may be, real properties generally.
Neither the Depositor nor any of its affiliates will be required to refinance
any Mortgage Loan.
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If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which
a payment default is imminent. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". While the Master
Servicer or the Special Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery than liquidation, taking into account the time value of money, there
can be no assurance that any such extension or modification will in fact
increase the present value of receipts from or proceeds of the affected
Mortgage Loans.
Lender Difficulty in Collecting Rents Upon the Default and/or Bankruptcy
of Borrower. Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases typically will be secured by an assignment
of leases and rents pursuant to which the borrower assigns to the lender its
right, title and interest as landlord under the leases of the related Mortgaged
Property, and the income derived therefrom, as further security for the related
Mortgage Loan, while retaining a license to collect rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect rents. Some state laws may require that the lender take
possession of the Mortgaged Property and obtain a judicial appointment of a
receiver before becoming entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are commenced by or in respect of the
borrower, the lender's ability to collect the rents may be adversely affected.
See "Certain Legal Aspects of Mortgage Loans--Leases and Rents".
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration
Clauses. Mortgages may contain a due-on-sale clause, which permits the lender
to accelerate the maturity of the Mortgage Loan if the borrower sells,
transfers or conveys the related Mortgaged Property or its interest in the
Mortgaged Property. Mortgages also may include a debt-acceleration clause,
which permits the lender to accelerate the debt upon a monetary or nonmonetary
default of the mortgagor. Such clauses are generally enforceable subject to
certain exceptions. The courts of all states will enforce clauses providing for
acceleration in the event of a material payment default. The equity courts of
any state, however, may refuse the foreclosure of a mortgage or deed of trust
when an acceleration of the indebtedness would be inequitable or unjust or the
circumstances would render the acceleration unconscionable.
Risk of Liability Arising From Environmental Conditions. Under the laws of
certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under
the laws of some states and under the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, a lender may be
liable, as an "owner" or "operator", for costs of addressing releases or
threatened releases of hazardous substances at a property, if agents or
employees of the lender have become sufficiently involved in the operations of
the borrower, regardless of whether the environmental damage or threat was
caused by the borrower or a prior owner. A lender also risks such liability on
foreclosure of the mortgage. See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, each of the Master
Servicer and the Special Servicer may satisfy its obligation to cause hazard
insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. In general, the standard form of fire and
extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm
and hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the
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policies covering the Mortgaged Properties will be underwritten by different
insurers under different state laws in accordance with different applicable
state forms, and therefore will not contain identical terms and conditions,
most such policies typically do not cover any physical damage resulting from
war, revolution, governmental actions, floods and other water-related causes,
earth movement (including earthquakes, landslides and mudflows), wet or dry
rot, vermin, domestic animals and certain other kinds of risks. Unless the
related Mortgage specifically requires the mortgagor to insure against physical
damage arising from such causes, then, to the extent any consequent losses are
not covered by Credit Support, such losses may be borne, at least in part, by
the holders of one or more classes of Offered Certificates of the related
series. See "Description of the Pooling Agreements--Hazard Insurance Policies".
Risks of Geographic Concentration. Certain geographic regions of the
United States from time to time will experience weaker regional economic
conditions and housing markets, and, consequently, will experience higher rates
of loss and delinquency than will be experienced on mortgage loans generally.
For example, a region's economic condition and housing market may be directly,
or indirectly, adversely affected by natural disasters or civil disturbances
such as earthquakes, hurricanes, floods, eruptions or riots. The economic
impact of any of these types of events may also be felt in areas beyond the
region immediately affected by the disaster or disturbance. The Mortgage Loans
securing certain series of Certificates may be concentrated in these regions,
and such concentration may present risk considerations in addition to those
generally present for similar mortgage-backed securities without such
concentration.
INCLUSION OF DELINQUENT AND NONPERFORMING MORTGAGE LOANS IN A MORTGAGE ASSET
POOL
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past due
or are nonperforming. However, Mortgage Loans which are seriously delinquent
loans (that is, loans more than 60 days delinquent or as to which foreclosure
has been commenced) will not constitute a material concentration of the
Mortgage Loans in any Trust Fund, based on principal balance at the time such
Trust Fund is formed. If so specified in the related Prospectus Supplement, the
servicing of such Mortgage Loans will be performed by the Special Servicer;
however, the same entity may act as both Master Servicer and Special Servicer.
Credit Support provided with respect to a particular series of Certificates may
not cover all losses related to such delinquent or nonperforming Mortgage
Loans, and investors should consider the risk that the inclusion of such
Mortgage Loans in the Trust Fund may adversely affect the rate of defaults and
prepayments in respect of the subject Mortgage Asset Pool and the yield on the
Offered Certificates of such series. See "Description of the Trust
Funds--Mortgage Loans--General".
TERMINATION
If so provided in the related Prospectus Supplement, upon the reduction of
the Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount or upon a specified date, a party designated
therein may be authorized or required to solicit bids for the purchase of all
the Mortgage Assets of the related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or classes, under the circumstances
and in the manner set forth therein. The solicitation of bids will be conducted
in a commercially reasonable manner and, generally, assets will be sold at
their fair market value. In addition, if so specified in the related Prospectus
Supplement, upon the reduction of the aggregate principal balance of some or
all of the Mortgage Assets by a specified percentage, a party or parties
designated therein may be authorized to purchase such Mortgage Assets,
generally at a price equal to, in the case of any Mortgage Asset, the unpaid
principal balance thereof plus accrued interest (or, in some cases, at fair
market value). However, circumstances may arise in which such fair market value
may be less than the unpaid balance of the related Mortgage Assets, together
with interest thereon, sold and therefore, as a result of such a sale or
purchase, the Certificateholders of one or more Classes of Certificates may
receive an amount less than the Certificate Balance of, and accrued unpaid
interest on, their Certificates. See "Description of the
Certificates--Termination."
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RISKS ASSOCIATED WITH MULTIFAMILY PROPERTIES
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or in increases determined through mediation
or binding arbitration. In many cases, the rent control laws do not permit
vacancy decontrol. Local authority to impose rent control is pre-empted by
state law in certain states, and rent control is not imposed at the state level
in those states. In some states, however, local rent control ordinances are not
pre-empted for tenants having short-term or month-to-month leases, and
properties there may be subject to various forms of rent control with respect
to those tenants. Any limitations on a borrower's ability to raise property
rents may impair such borrower's ability to repay its Mortgage Loan from its
net operating income or the proceeds of a sale of refinancing or the related
Mortgaged Property.
RISKS ASSOCIATED WITH RETAIL PROPERTIES
The correlation between the success of tenant businesses and property
value is more direct with respect to Retail Properties than other types of
commercial property because a significant component of the total rent paid by
retail tenants is often tied to a percentage of gross sales. Retail Properties
that are not "anchored" have traditionally been perceived to be more risky than
"anchored" Retail Proeprties. See "Mortgage Loans -- Mortgage Loans Secured by
Retail Properties" herein. Furthermore, there is a greater correlation between
the success of tenant businesses and property value when the property is a
single tenant Retail Property.
Unlike office or hotel properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through electronic media, telemarketing and outlet
centers all compete with more traditional Retail Properties for consumer
dollars. Continued growth of these alternative retail outlets (which are often
characterized by lower operating costs) could adversely affect the rents
collectible at the Retail Properties included in the Mortgage Pool.
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of (i) various types of
multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates or other mortgage-backed securities
("MBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans or (iii) a
combination of Mortgage Loans and MBS (collectively, "Mortgage Assets"). Each
Trust Fund will be established by the Depositor. Each Mortgage Asset will be
selected by the Depositor for inclusion in a Trust Fund from among those
purchased, either directly or indirectly, from a prior holder thereof (a
"Mortgage Asset Seller"), which prior holder may or may not be the originator
of such Mortgage Loan or the issuer of such MBS. The Mortgage Assets will not
be guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the
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related Prospectus Supplement, by any governmental agency or instrumentality or
by any other person. The discussion below under the heading "--Mortgage Loans",
unless otherwise noted, applies equally to mortgage loans underlying any MBS
included in a particular Trust Fund.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (each, a "Mortgaged Property") consisting of
one or more of the following types of real property: (i) residential properties
("Multifamily Properties") consisting of five or more rental or
cooperatively-owned dwelling units in high-rise, mid-rise or garden apartment
buildings or other residential structures, and mobile home parks; and (ii)
commercial properties ("Commercial Properties") consisting of office buildings,
retail shopping facilities, such as shopping centers, malls and individual
stores (each, a "Retail Property"), hotels or motels, health care-related
facilities (such as hospitals, skilled nursing facilities, nursing homes,
congregate care facilities and senior housing), recreational vehicle parks,
warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial facilities, parking lots, restaurants, mixed use properties (that
is, any combination of the foregoing), and unimproved land. However, neither
restaurants nor health care-related facilities will represent security for a
material concentration of the Mortgage Loans in any Trust Fund, based on
principal balance at the time such Trust Fund is formed. The Multifamily
Properties may include mixed commercial and residential structures and
apartment buildings owned by private cooperative housing corporations
("Cooperatives"). Unless otherwise specified in the related Prospectus
Supplement, each Mortgage will create a first priority mortgage lien on a fee
estate in a Mortgaged Property. If a Mortgage creates a lien on a borrower's
leasehold estate in a property, then, unless otherwise specified in the related
Prospectus Supplement, the term of any such leasehold will exceed the term of
the Mortgage Note by at least ten years. Unless otherwise specified in the
related Prospectus Supplement, each Mortgage Loan will have been originated by
a person (the "Originator") other than the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related senior liens ("Senior Liens") may not be
included in the Mortgage Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the related Senior Liens to
satisfy fully both the Senior Liens and the Mortgage Loan. In the event that a
holder of a Senior Lien forecloses on a Mortgaged Property, the proceeds of the
foreclosure or similar sale will be applied first to the payment of court costs
and fees in connection with the foreclosure, second to real estate taxes, third
in satisfaction of all principal, interest, prepayment or acceleration
penalties, if any, and any other sums due and owing to the holder of the Senior
Liens. The claims of the holders of the Senior Liens will be satisfied in full
out of proceeds of the liquidation of the related Mortgage Property, if such
proceeds are sufficient, before the Trust Fund as holder of the junior lien
receives any payments in respect of the Mortgage Loan. If the Master Servicer
were to foreclose on any Mortgage Loan, it would do so subject to any related
Senior Liens. In order for the debt related to such Mortgage Loan to be paid in
full at such sale, a bidder at the foreclosure sale of such Mortgage Loan would
have to bid an amount sufficient to pay off all sums due under the Mortgage
Loan and any Senior Liens or purchase the Mortgaged Property subject to such
Senior Liens. In the event that such proceeds from a foreclosure or similar
sale of the related Mortgaged Property are insufficient to satisfy all Senior
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of
the junior lien, and, accordingly, holders of one or more classes of the
Certificates of the related series bear (i) the risk of delay in distributions
while a deficiency judgment against the borrower is obtained and (ii) the risk
of loss if the deficiency judgment is not obtained and satisfied. Moreover,
deficiency judgments may not be available in certain jurisdic-
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tions, or the particular Mortgage Loan may be a nonrecourse loan, which means
that, absent special facts, recourse in the case of default will be limited to
the Mortgaged Property and such other assets, if any, that were pledged to
secure repayment of the Mortgage Loan.
If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular series of Certificates may include Mortgage Loans that are
delinquent or nonperforming as of the date such Certificates are issued. In
that case, the related Prospectus Supplement will set forth, as to each such
Mortgage Loan, available information as to the period of such delinquency or
nonperformance, any forbearance arrangement then in effect, the condition of
the related Mortgaged Property and the ability of the Mortgaged Property to
generate income to service the mortgage debt. However, Mortgage Loans which are
seriously delinquent loans (that is, loans more than 60 days delinquent or as
to which foreclosure has been commenced) will not constitute a material
concentration of the Mortgage Loans in any Trust Fund, based on principal
balance at the time such Trust Fund is formed.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of such property (that is, its ability to generate income). Moreover, as noted
above, some or all of the Mortgage Loans included in a particular Trust Fund
may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating the
likelihood of default on such a loan. Unless otherwise defined in the related
Prospectus Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at
any given time is the ratio of (i) the Net Operating Income derived from the
related Mortgaged Property for a twelve-month period to (ii) the annualized
scheduled payments of principal and/or interest on the Mortgage Loan and any
other loans senior thereto that are secured by the related Mortgaged Property.
Unless otherwise defined in the related Prospectus Supplement, "Net Operating
Income" means, for any given period, the total operating revenues derived from
a Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than
(i) noncash items such as depreciation and amortization, (ii) capital
expenditures and (iii) debt service on the related Mortgage Loan or on any
other loans that are secured by such Mortgaged Property. The Net Operating
Income of a Mortgaged Property will generally fluctuate over time and may or
may not be sufficient to cover debt service on the related Mortgage Loan at any
given time. As the primary source of the operating revenues of a nonowner
occupied, income-producing property, rental income (and, with respect to a
Mortgage Loan secured by a Cooperative apartment building, maintenance payments
from tenant-stockholders of a Cooperative) may be affected by the condition of
the applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain
health care-related facilities, hotels and motels, and mini-warehouse and
self-storage facilities, tend to be affected more rapidly by changes in market
or business conditions than do properties typically leased for longer periods,
such as warehouses, retail stores, office buildings and industrial facilities.
Commercial Properties may be owner-occupied or leased to a small number of
tenants. Thus, the Net Operating Income of such a Mortgaged Property may depend
substantially on the financial condition of the borrower or a tenant, and
Mortgage Loans secured by liens on such properties may pose a greater
likelihood of default and loss than loans secured by liens on Multifamily
Properties or on multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus Supplement, in some cases
leases of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is
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responsible for payment of operating expenses ("Net Leases"). However, the
existence of such "net of expense" provisions will result in stable Net
Operating Income to the borrower/landlord only to the extent that the lessee is
able to absorb operating expense increases while continuing to make rent
payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property must be liquidated
following a default. Unless otherwise defined in the related Prospectus
Supplement, the "Loan-to-Value Ratio" of a Mortgage Loan at any given time is
the ratio (expressed as a percentage) of (i) the then outstanding principal
balance of the Mortgage Loan and any other loans senior thereto that are
secured by the related Mortgaged Property to (ii) the Value of the related
Mortgaged Property. Unless otherwise specified in the related Prospectus
Supplement, the "Value" of a Mortgaged Property will be its fair market value
as determined by an appraisal of such property conducted by or on behalf of the
Originator in connection with the origination of such loan. The lower the
Loan-to-Value Ratio, the greater the percentage of the borrower's equity in a
Mortgaged Property, and thus (a) the greater the incentive of the borrower to
perform under the terms of the related Mortgage Loan (in order to protect such
equity) and (b) the greater the cushion provided to the lender against loss on
liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the likelihood of liquidation loss in a pool of Mortgage Loans. For example,
the value of a Mortgaged Property as of the date of initial issuance of the
related series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are
generally based on the market comparison method (recent resale value of
comparable properties at the date of the appraisal), the cost replacement
method (the cost of replacing the property at such date), the income
capitalization method (a projection of value based upon the property's
projected net cash flow), or upon a selection from or interpolation of the
values derived from such methods. Each of these appraisal methods can present
analytical difficulties. It is often difficult to find truly comparable
properties that have recently been sold; the replacement cost of a property may
have little to do with its current market value; and income capitalization is
inherently based on inexact projections of income and expense and the selection
of an appropriate capitalization rate and discount rate. Where more than one of
these appraisal methods are used and provide significantly different results,
an accurate determination of value and, correspondingly, a reliable analysis of
the likelihood of default and loss, is even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property
performance. As a result, if a Mortgage Loan defaults because the income
generated by the related Mortgaged Property is insufficient to cover operating
costs and expenses and pay debt service, then the value of the Mortgaged
Property will reflect such and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--General" and
"--Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans--Increased Risk of Default Associated With Balloon Payments".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than 40 years and (ii)
provide for scheduled payments of principal, interest or both, to be made on
specified dates ("Due Dates") that occur monthly,
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quarterly, semi-annually or annually. A Mortgage Loan (i) may provide for no
accrual of interest or for accrual of interest thereon at a Mortgage Rate that
is fixed over its term or that adjusts from time to time, or that may be
converted at the borrower's election from an adjustable to a fixed Mortgage
Rate, or from a fixed to an adjustable Mortgage Rate, (ii) may provide for
level payments to maturity or for payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to reflect the occurrence of
certain events, and may permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or nonamortizing, with a balloon
payment due on its stated maturity date, and (iv) may prohibit over its term or
for a certain period prepayments (the period of such prohibition, a "Lock-out
Period" and its date of expiration, a "Lock-out Date") and/or require payment
of a premium or a yield maintenance payment (a "Prepayment Premium") in
connection with certain prepayments, in each case as described in the related
Prospectus Supplement. A Mortgage Loan may also contain a provision that
entitles the lender to a share of appreciation of the related Mortgaged
Property, or profits realized from the operation or disposition of such
Mortgaged Property or the benefit, if any, resulting from the refinancing of
the Mortgage Loan (any such provision, an "Equity Participation"), as described
in the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment
of the Mortgage Loans, (iii) the earliest and latest origination date and
maturity date of the Mortgage Loans, (iv) the original and remaining terms to
maturity of the Mortgage Loans, or the respective ranges thereof, and the
weighted average original and remaining terms to maturity of the Mortgage
Loans, (v) the Loan-to-Value Ratios of the Mortgage Loans (either at
origination or as of a more recent date), or the range thereof, and the
weighted average of such Loan-to-Value Ratios, (vi) the Mortgage Rates borne by
the Mortgage Loans, or the range thereof, and the weighted average Mortgage
Rate borne by the Mortgage Loans, (vii) with respect to Mortgage Loans with
adjustable Mortgage Rates ("ARM Loans"), the index or indices upon which such
adjustments are based, the adjustment dates, the range of gross margins and the
weighted average gross margin, and any limits on Mortgage Rate adjustments at
the time of any adjustment and over the life of the ARM Loan, (viii)
information regarding the payment characteristics of the Mortgage Loans,
including, without limitation, balloon payment and other amortization
provisions, Lock-out Periods and Prepayment Premiums, (ix) the Debt Service
Coverage Ratios of the Mortgage Loans (either at origination or as of a more
recent date), or the range thereof, and the weighted average of such Debt
Service Coverage Ratios, and (x) the geographic distribution of the Mortgaged
Properties on a state-by-state basis. In appropriate cases, the related
Prospectus Supplement will also contain certain information available to the
Depositor that pertains to the provisions of leases and the nature of tenants
of the Mortgaged Properties. If the Depositor is unable to provide the specific
information described above at the time Offered Certificates of a series are
initially offered, more general information of the nature described above will
be provided in the related Prospectus Supplement, and specific information will
be set forth in a report which will be available to purchasers of those
Certificates at or before the initial issuance thereof and will be filed as
part of a Current Report on Form 8-K with the Commission within fifteen days
following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related
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Prospectus Supplement. However, many servicers do not maintain records
regarding such matters or, at least, not in a format that can be readily
aggregated. In addition, the relevant characteristics of a Master Servicer's
servicing portfolio may be so materially different from those of the related
Mortgage Asset Pool that such prepayment experience would not be meaningful to
an investor. For example, differences in geographic dispersion, property type
and/or loan terms (e.g., mortgage rates, terms to maturity and/or prepayment
restrictions) between the two pools of loans could render the Master Servicer's
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a Special Servicer, no comparable prepayment
information will be presented with respect to the Special Servicer's
multifamily and/or commercial mortgage loan servicing portfolio.
Mortgage Loans Secured by Multifamily Properties. Significant factors
determining the value and successful operation of a multifamily property are
the location of the property, the number of competing residential developments
in the local market (such as apartment buildings, manufactured housing
communities and site-built single family homes), the physical attributes of the
multifamily apartment building (such as its age and appearance) and state and
local regulations affecting such property. In addition, the successful
operation of an apartment building will depend upon other factors, such as its
reputation, the ability of management to provide adequate maintenance and
insurance, and the types of services it provides.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosures of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statues for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or to increases determined through mediation
or binding arbitration. In many cases, the rent control laws do not permit
vacancy decontrol. Local authority to impose rent control is pre-empted by
state law in certain states, and rent control is not imposed at the state level
in those states. In some states, however, local rent control ordinances are not
pre-empted for tenants having short-term or month-to-month leases, and
properties there may be subject to various forms of rent control with respect
to those tenants. Any limitations on a borrower's ability to raise property
rents may impair such borrower's ability to repay its Mortgage Loan from its
net operating income or the proceeds of a sale or refinancing of the related
Mortgaged Property.
Adverse economic conditions, either local or national, may limit the
amount of rent that can be charge and may result in a reduction in timely rent
payments or a reduction in occupancy levels. Occupancy and rent levels may also
be affected by construction of additional housing units, local military base or
factory closings and national and local politics, including current or future
rent stabilization and rent control laws and agreements. In addition, the level
of mortgage interest rates may encourage tenants to purchase single-family
housing. The location and construction quality of a particular building may
affect the occupancy level as well as the rents that may be charged for
individual units. The characteristics of a neighborhood may change over time or
in relation to newer developments.
Mortgage Loans Secured by Retail Properties. Significant factors
determining the value of Retail Properties are the quality of the tenants as
well as fundamental aspects of real estate such as location and market
demographics. The correlation between the success of tenant businesses
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and property value is more direct with respect to Retail Properties than other
types of commercial property because a significant component of the total rent
paid by retail tenants is often tied to a percentage of gross sales. Whether a
Retail Property is "anchored" or "unanchored" is also an important distinction.
Retail Properties that are anchored have traditionally been perceived to be
less risky. While there is no strict definition of an anchor, it is generally
understood that a retail anchor tenant is proportionately large in size and is
vital in attracting customers to the property. Furthermore, there is a greater
correlation between the success of tenant businesses and property value when
the property is a single tenant Retail Property.
Unlike office or hotel Properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through electronic media, telemarketing and outlet
centers all compete with more traditional Retail Properties for consumer
dollars. Continued growth of these alternative retail outlets (which are often
characterized by lower operating costs) could adversely affect the rents
collectible at the Retail Properties included in the Mortgage Pool.
MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates or other
mortgage-backed securities or (ii) certificates issued and/or insured or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal
National Mortgage Association ("FNMA"), the Governmental National Mortgage
Association ("GNMA") or the Federal Agricultural Mortgage Corporation ("FAMC"),
provided that, unless otherwise specified in the related Prospectus Supplement,
each MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage
Asset Pool: (a) either will (i) have been previously registered under the
Securities Act of 1933, as amended, (ii) be exempt from such registration
requirements or (iii) have been held for at least the holding period specified
in Rule 144(k) under the Securities Act of 1933, as amended; and (b) either (i)
will have been acquired (other than from the Depositor or an affiliate thereof)
in bona fide secondary market transactions or (ii) if so specified in the
related Prospectus Supplement, may be derived from the Depositor's (or an
affiliate's) unsold allotments from the Depositor (or an affiliate's) previous
offerings.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related
Prospectus Supplement may have the right or obligation to repurchase or
substitute assets underlying the MBS after a certain date or under other
circumstances specified in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
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The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify: (i) the aggregate approximate initial and
outstanding principal amount(s) and type of the MBS to be included in the Trust
Fund, (ii) the original and remaining term(s) to stated maturity of the MBS, if
applicable, (iii) the pass-through or bond rate(s) of the MBS or the formula
for determining such rate(s), (iv) the payment characteristics of the MBS, (v)
the MBS Issuer, MBS Servicer and MBS Trustee, as applicable, of each of the
MBS, (vi) a description of the related credit support, if any, (vii) the
circumstances under which the related underlying mortgage loans, or the MBS
themselves, may be purchased prior to their maturity, (viii) the terms on which
mortgage loans may be substituted for those originally underlying the MBS, (ix)
the type of mortgage loans underlying the MBS and, to the extent appropriate
under the circumstances, such other information in respect of the underlying
mortgage loans described under "--Mortgage Loans--Mortgage Loan Information in
Prospectus Supplements", and (x) the characteristics of any cash flow
agreements that relate to the MBS.
The Depositor will provide the same information regarding the MBS in any
Trust Fund in its reports filed under the Exchange Act with respect to such
Trust Fund as was provided by the related MBS Issuer in its own such reports if
such MBS was publicly offered or the reports the related MBS Issuer provides
the related MBS Trustee if such MBS was privately issued.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund will be
deposited to the extent described herein and in the related Prospectus
Supplement. See "Description of the Pooling Agreements--Certificate Account".
CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided to one or more classes of
Certificates of such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of Credit
Support, which may include a letter of credit, a surety bond, an insurance
policy, a guarantee, a reserve fund, or any combination thereof. The amount and
types of such Credit Support, the identity of the entity providing it (if
applicable) and related information with respect to each type of Credit
Support, if any, will be set forth in the Prospectus Supplement for a series of
Certificates. See "Risk Factors--Credit Support Limitations" and "Description
of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include interest rate
exchange agreements, interest rate cap or floor agreements, or other agreements
designed to reduce the effects of interest rate fluctuations on the Mortgage
Assets on one or more classes of Certificates. The principal terms of any such
Cash Flow Agreement, including, without limitation, provisions relating to the
timing, manner and amount of payments thereunder and provisions relating to the
termination thereof, will be described in the related Prospectus Supplement.
The related Prospectus Supplement will also identify the obligor under the Cash
Flow Agreement.
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YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a class of Certificates as will the characteristics and
behavior of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related
Prospectus Supplement will discuss the effect, if any, that the payment
characteristics of the MBS may have on the yield to maturity and weighted
average lives of the Offered Certificates of the related series.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable
or adjustable Pass-Through Rate, which may or may not be based upon the
interest rates borne by the Mortgage Loans in the related Trust Fund. The
Prospectus Supplement with respect to any series of Certificates will specify
the Pass-Through Rate for each class of Offered Certificates of such series or,
in the case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more classes of Offered Certificates; and whether the distributions of
interest on the Offered Certificates of any class will be dependent, in whole
or in part, on the performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed
through to Certificateholders. That delay will effectively reduce the yield
that would otherwise be produced if payments on such Mortgage Loans were
distributed to Certificateholders on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment
only through the date of such prepayment, instead of through the Due Date for
the next succeeding scheduled payment. However, interest accrued on any series
of Certificates and distributable thereon on any Distribution Date will
generally correspond to interest accrued on the Mortgage Loans to their
respective Due Dates during the related Due Period. A "Due Period" will be a
specified time period (generally corresponding in length to the period between
Distribution Dates) and all scheduled payments on the Mortgage Loans in the
related Trust Fund that are due during a given Due Period will, to the extent
received by a specified date (the "Determination Date") or otherwise advanced
by the related Master Servicer, Special Servicer or other specified person, be
distributed to the holders of the Certificates of such series on the next
succeeding Distribution Date. Consequently, if a prepayment on any Mortgage
Loan is distributable to Certificateholders on a particular Distribution Date,
but such prepayment is not accompanied by interest thereon to the Due Date for
such Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such
shortfall, a "Prepayment Interest Shortfall") than the corresponding amount of
interest accrued and otherwise payable on the Certificates of the related
series. If and to the extent that any such shortfall is allocated to a class of
Offered Certificates, the yield thereon will be adversely affected. The
Prospectus Supplement for each series of Certificates will describe the manner
in which any such shortfalls will be allocated among the classes of such
Certificates. The related Prospectus Supplement will also describe any amounts
available to offset such shortfalls.
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YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of
principal payments on the Mortgage Loans in the related Trust Fund and the
allocation thereof to reduce the principal balance (or notional amount, if
applicable) of such Certificate. The rate of principal payments on the Mortgage
Loans in any Trust Fund will in turn be affected by the amortization schedules
thereof (which, in the case of ARM Loans, may change periodically to
accommodate adjustments to the Mortgage Rates thereon), the dates on which any
balloon payments are due, and the rate of principal prepayments thereon
(including for this purpose, voluntary prepayments by borrowers and also
prepayments resulting from liquidations of Mortgage Loans due to defaults,
casualties or condemnations affecting the related Mortgaged Properties, or
purchases of Mortgage Loans out of the related Trust Fund). Because the rate of
principal prepayments on the Mortgage Loans in any Trust Fund will depend on
future events and a variety of factors (as described below), no assurance can
be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and
to what degree, payments of principal on the Mortgage Loans in the related
Trust Fund are in turn distributed on such Certificates (or, in the case of a
class of Stripped Interest Certificates, result in the reduction of the
Notional Amount thereof). An investor should consider, in the case of any
Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans in the related
Trust Fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any Offered Certificate purchased at
a premium, the risk that a faster than anticipated rate of principal payments
on such Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In addition, if an investor purchases an
Offered Certificate at a discount (or premium), and principal payments are made
in reduction of the principal balance or notional amount of such investor's
Offered Certificates at a rate slower (or faster) than the rate anticipated by
the investor during any particular period, any consequent adverse effects on
such investor's yield would not be fully offset by a subsequent like increase
(or decrease) in the rate of principal payments.
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same
series. Accordingly, the yield on such Stripped Interest Certificates will be
inversely related to the rate at which payments and other collections of
principal are received on such Mortgage Assets or distributions are made in
reduction of the Certificate Balances of such classes of Certificates, as the
case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates,
a lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in
Stripped Principal Certificates, and a higher than anticipated rate of
principal prepayments on such Mortgage Loans will negatively affect the yield
to investors in Stripped Interest Certificates. If the Offered Certificates of
a series include any such Certificates, the related Prospectus Supplement will
include a table showing the effect of various constant assumed levels of
prepayment on yields on such Certificates. Such tables will be intended to
illustrate the sensitivity of yields to various constant assumed prepayment
rates and will not be intended to predict, or to provide information that will
enable investors to predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors
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which increase the attractiveness of selling a Mortgaged Property or
refinancing a Mortgage Loan or which enhance a borrower's ability to do so, as
well as those factors which increase the likelihood of default under a Mortgage
Loan, would be expected to cause the rate of prepayment in respect of any
Mortgage Asset Pool to accelerate. In contrast, those factors having an
opposite effect would be expected to cause the rate of prepayment of any
Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent
enforceable, such provisions could constitute either an absolute prohibition
(in the case of a Lock-out Period) or a disincentive (in the case of a
Prepayment Premium) to a borrower's voluntarily prepaying its Mortgage Loan,
thereby slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be
affected by prevailing market interest rates for mortgage loans of a comparable
type, term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of
a different index, margin or rate cap or floor on another adjustable rate
mortgage loan. Therefore, as prevailing market interest rates decline,
prepayment speeds would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash
flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits. The
Depositor makes no representation as to the particular factors that will affect
the prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Unless otherwise
specified in the related Prospectus Supplement, weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar allocable as principal of such instrument is
repaid to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related
Mortgage Loans, whether in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes voluntary prepayments by
borrowers and also prepayments resulting from liquidations of Mortgage Loans
due to default, casualties or condemnations affecting the related Mortgaged
Properties and purchases of Mortgage Loans out of the related Trust Fund), is
paid to such class. Prepayment rates on loans are commonly measured relative to
a prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment
model. CPR represents an assumed constant rate of prepayment each month
(expressed as an annual percentage) relative to the then outstanding principal
balance of a pool of mortgage loans for the life of such loans. SPA represents
an assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans, with different prepayment assumptions often expressed as
percentages of SPA. For example, a prepayment assumption of 100% of
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SPA assumes prepayment rates of 0.2% per annum of the then outstanding
principal balance of such loans in the first month of the life of the loans and
an additional 0.2% per annum in each month thereafter until the thirtieth
month. Beginning in the thirtieth month, and in each month thereafter during
the life of the loans, 100% of SPA assumes a constant prepayment rate of 6% per
annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical
prepayment experience for single-family mortgage loans. Thus, it is unlikely
that the prepayment experience of the Mortgage Loans included in any Trust Fund
will conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average
life of each class of Offered Certificates of such series with a Certificate
Balance, and the percentage of the initial Certificate Balance of each such
class that would be outstanding on specified Distribution Dates, based on the
assumptions stated in such Prospectus Supplement, including assumptions that
prepayments on the related Mortgage Loans are made at rates corresponding to
various percentages of CPR or SPA, or at such other rates specified in such
Prospectus Supplement. Such tables and assumptions will illustrate the
sensitivity of the weighted average lives of the Certificates to various
assumed prepayment rates and will not be intended to predict, or to provide
information that will enable investors to predict, the actual weighted average
lives of the Certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a possibility that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such
a Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things,
bankruptcy of the borrower or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted Mortgage Loans,
the Master Servicer or the Special Servicer, to the extent and under the
circumstances set forth herein and in the related Prospectus Supplement, may be
authorized to modify Mortgage Loans that are in default or as to which a
payment default is imminent. Any defaulted balloon payment or modification that
extends the maturity of a Mortgage Loan may delay distributions of principal on
a class of Offered Certificates and thereby extend the weighted average life of
such Certificates and, if such Certificates were purchased at a discount,
reduce the yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative
amortization to occur (that is, Mortgage Loans that provide for the current
payment of interest calculated at a rate lower than the rate at which interest
accrues thereon, with the unpaid portion of such interest being added to the
related principal balance). Negative amortization on one or more Mortgage Loans
in any Trust Fund may result in negative amortization on the Offered
Certificates of the related series. The related Prospectus Supplement will
describe, if applicable, the manner in which negative amortization in respect
of the Mortgage Loans in any Trust Fund is allocated among the respective
classes of Certificates of the related series. The portion of any Mortgage Loan
negative amortization allocated to a class of Certificates may result in a
deferral of some or all of the interest payable thereon, which deferred
interest may be added to the Certificate Balance thereof. In addition, an ARM
Loan that permits negative amortization would be expected during a period of
increasing interest rates to amortize at a slower rate (and perhaps not at all)
than if interest rates were declining or were remaining constant. Such slower
rate of Mortgage Loan amortization would
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correspondingly be reflected in a slower rate of amortization for one or more
classes of Certificates of the related series. Accordingly, the weighted
average lives of Mortgage Loans that permit negative amortization (and that of
the classes of Certificates to which any such negative amortization would be
allocated or that would bear the effects of a slower rate of amortization on
such Mortgage Loans) may increase as a result of such feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (ii) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (iii) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during
a period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable
Mortgage Rate, thereby resulting in the accelerated amortization of such
Mortgage Loan. Any such acceleration in amortization of its principal balance
will shorten the weighted average life of such Mortgage Loan and,
correspondingly, the weighted average lives of those classes of Certificates
entitled to a portion of the principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate
was purchased at a premium or a discount and (ii) the extent to which the
payment characteristics of such Mortgage Loans delay or accelerate the
distributions of principal on such Certificate (or, in the case of a Stripped
Interest Certificate, delay or accelerate the reduction of the notional amount
thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance
with their terms will affect the weighted average lives of those Mortgage Loans
and, accordingly, the weighted average lives of and yields on the Certificates
of the related series. Servicing decisions made with respect to the Mortgage
Loans, including the use of payment plans prior to a demand for acceleration
and the restructuring of Mortgage Loans in bankruptcy proceedings or otherwise,
may also have an effect upon the payment patterns of particular Mortgage Loans
and thus the weighted average lives of and yields on the Certificates of the
related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority
and manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (ii)
establishing a priority of payments among such classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments
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received on the Mortgage Assets in the related Trust Fund, one or more classes
of Certificates of any series, including one or more classes of Offered
Certificates of such series, may provide for distributions of principal thereof
from (i) amounts attributable to interest accrued but not currently
distributable on one or more classes of Accrual Certificates, (ii) Excess Funds
or (iii) any other amounts described in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, "Excess Funds"
will, in general, represent that portion of the amounts distributable in
respect of the Certificates of any series on any Distribution Date that
represent (i) interest received or advanced on the Mortgage Assets in the
related Trust Fund that is in excess of the interest currently accrued on the
Certificates of such series, or (ii) Prepayment Premiums, payments from Equity
Participations or any other amounts received on the Mortgage Assets in the
related Trust Fund that do not constitute interest thereon or principal
thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
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THE DEPOSITOR
The Depositor is a special purpose corporation incorporated in the State
of Delaware on March 22, 1996, for the purpose of engaging in the business,
among other things, of acquiring and depositing mortgage assets in trust in
exchange for certificates evidencing interest in such trusts and selling or
otherwise distributing such certificates. The Depositor is not an affiliate of
Deutsche Bank AG. The principal executive offices of the Depositor are located
at One International Place, Room 520, Boston, Massachusetts 02110. Its
telephone number is (617) 951-7690. The Depositor's capitalization is nominal.
All of the shares of capital stock of the Depositor are held by The Deutsche
Mortgage & Asset Receiving Trust, a Massachusetts charitable lead trust (the
"DMARC Trust") formed by J H Management Corporation and J H Holdings
Corporation, both of which are Massachusetts corporations. J H Holdings
Corporation is the trustee of the DMARC Trust, which holds no assets other than
the stock of the Depositor. All of the stock of J H Holdings Corporation and of
J H Management Corporation is held by the 1960 Trust, an independent charitable
organization qualified under Section 501(c)(3) of the Code, and operated for
the benefit of a Massachusetts charitable institution.
None of the Depositor, J H Management Corporation, Deutsche Bank A.G. or
any of their respective affiliates will insure or guarantee distributions on
the Certificates of any series.
DEUTSCHE BANK AG
It is anticipated that the assets conveyed to the Trust Fund by the
Depositor will have been acquired by the Depositor from Deutsche Bank AG or an
affiliate thereof. Deutsche Bank AG is the largest banking institution in the
Federal Republic of Germany and one of the largest in the world. It is the
parent company of a group (the "Deutsche Bank Group") consisting of commercial
banks, investment banking and fund management companies, mortgage banks and
property finance companies, installment financing and leasing companies,
insurance companies, research and consultancy companies and other domestic and
foreign companies. The Deutsche Bank Group employs over 74,000 staff members at
more than 2,400 branches and offices around the world.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling Agreement.
As described in the related Prospectus Supplement, the Certificates of each
series, including the Offered Certificates of such series, may consist of one
or more classes of Certificates that, among other things: (i) provide for the
accrual of interest on the Certificate Balance or Notional Amount thereof at a
fixed, variable or adjustable rate; (ii) constitute Senior Certificates or
Subordinate Certificates; (iii) constitute Stripped Interest Certificates or
Stripped Principal Certificates; (iv) provide for distributions of interest
thereon or principal thereof that commence only after the occurrence of certain
events, such as the retirement of one or more other classes of Certificates of
such series; (v) provide for distributions of principal thereof to be made,
from time to time or for designated periods, at a rate that is faster (and, in
some cases, substantially faster) or slower (and, in some cases, substantially
slower) than the rate at which payments or other collections of principal are
received on the Mortgage Assets in the related Trust Fund; (vi) provide for
distributions of principal thereof to be made, subject to available funds,
based on a specified principal payment schedule or other methodology; or (vii)
provide for distributions based on collections on the Mortgage Assets in the
related Trust Fund attributable to Prepayment Premiums and Equity
Participations.
If so specified in the related Prospectus Supplement, a class of
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct classes. For example, a class of Certificates may have a Certificate
Balance on which it accrues interest at a fixed, variable or adjustable rate.
Such class
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of Certificates may also have certain characteristics attributable to Stripped
Interest Certificates insofar as it may also entitle the holders thereof to
distributions of interest accrued on a Notional Amount at a different fixed,
variable or adjustable rate. In addition, a class of Certificates may accrue
interest on one portion of its Certificate Balance at one fixed, variable or
adjustable rate and on another portion of its Certificate Balance at a
different fixed, variable or adjustable rate.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or REMIC Residual Certificates,
notional amounts or percentage interests, specified in the related Prospectus
Supplement. As provided in the related Prospectus Supplement, one or more
classes of Offered Certificates of any series may be issued in fully
registered, definitive form (such Certificates, "Definitive Certificates") or
may be offered in book-entry format (such Certificates, "Book-Entry
Certificates") through the facilities of DTC. The Offered Certificates of each
series (if issued as Definitive Certificates) may be transferred or exchanged,
subject to any restrictions on transfer described in the related Prospectus
Supplement, at the location specified in the related Prospectus Supplement,
without the payment of any service charges, other than any tax or other
governmental charge payable in connection therewith. Interests in a class of
Book-Entry Certificates will be transferred on the book-entry records of DTC
and its participating organizations. If so specified in the related Prospectus
Supplement, arrangements may be made for clearance and settlement through
CEDEL, S.A. or the Euroclear System, if they are participants in DTC.
DISTRIBUTIONS
Distributions on the Certificates of each series will be made on each
Distribution Date from the Available Distribution Amount for such series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any series of Certificates
and any Distribution Date will refer to the total of all payments or other
collections (or advances in lieu thereof) on, under or in respect of the
Mortgage Assets and any other assets included in the related Trust Fund that
are available for distribution to the holders of Certificates of such series on
such date. The particular components of the Available Distribution Amount for
any series and Distribution Date will be more specifically described in the
related Prospectus Supplement. In general, the Distribution Date for a series
of Certificates will be the 25th day of each month (or, if any such 25th day is
not a business day, the next succeeding business day), commencing in the month
immediately following the month in which such series of Certificates is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such
class in proportion to the respective Percentage Interests evidenced thereby
unless otherwise specified in the related Prospectus Supplement. Payments will
be made either by wire transfer in immediately available funds to the account
of a Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to
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Certificateholders of such final distribution. The undivided percentage
interest (the "Percentage Interest") represented by an Offered Certificate of a
particular class will be equal to the percentage obtained by dividing the
initial principal balance or notional amount of such Certificate by the initial
Certificate Balance or Notional Amount of such class.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each class of Offered Certificates. Unless otherwise
specified in the related Prospectus Supplement, interest on the Certificates of
each series will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than a class of Accrual Certificates, which will be entitled to distributions
of accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement, and other than
any class of Stripped Principal Certificates or REMIC Residual Certificates
that is not entitled to any distributions of interest) will be made on each
Distribution Date based on the Accrued Certificate Interest for such class and
such Distribution Date, subject to the sufficiency of that portion, if any, of
the Available Distribution Amount allocable to such class on such Distribution
Date. Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise
distributable on such class will be added to the Certificate Balance thereof on
each Distribution Date or otherwise deferred as described in the related
Prospectus Supplement. With respect to each class of Certificates (other than
certain classes of Stripped Interest Certificates and certain classes of REMIC
Residual Certificates), the "Accrued Certificate Interest" for each
Distribution Date will be equal to interest at the applicable Pass-Through Rate
accrued for a specified period (generally the most recently ended calendar
month) on the outstanding Certificate Balance of such class of Certificates
immediately prior to such Distribution Date. Unless otherwise provided in the
related Prospectus Supplement, the Accrued Certificate Interest for each
Distribution Date on a class of Stripped Interest Certificates will be
similarly calculated except that it will accrue on a Notional Amount that is
either (i) based on the principal balances of some or all of the Mortgage
Assets in the related Trust Fund or (ii) equal to the Certificate Balances of
one or more other classes of Certificates of the same series. Reference to a
Notional Amount with respect to a class of Stripped Interest Certificates is
solely for convenience in making certain calculations and does not represent
the right to receive any distributions of principal. If so specified in the
related Prospectus Supplement, the amount of Accrued Certificate Interest that
is otherwise distributable on (or, in the case of Accrual Certificates, that
may otherwise be added to the Certificate Balance of) one or more classes of
the Certificates of a series may be reduced to the extent that any Prepayment
Interest Shortfalls, as described under "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest", exceed the
amount of any sums that are applied to offset the amount of such shortfalls.
The particular manner in which such shortfalls will be allocated among some or
all of the classes of Certificates of that series will be specified in the
related Prospectus Supplement. The related Prospectus Supplement will also
describe the extent to which the amount of Accrued Certificate Interest that is
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the Certificate Balance of) a class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a class of Certificates by reason of the
allocation to such class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result in a corresponding
increase in the Certificate Balance of such class. See "Risk
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Factors--Effect of Prepayments on Average Life of Certificates" and "--Effect
of Prepayments on Yield of Certificates" and "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest".
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of REMIC Residual
Certificates) will have a Certificate Balance, which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will be
entitled to receive as principal out of the future cash flow on the Mortgage
Assets and other assets included in the related Trust Fund. The outstanding
Certificate Balance of a class of Certificates will be reduced by distributions
of principal made thereon from time to time and, if and to the extent so
provided in the related Prospectus Supplement, further by any losses incurred
in respect of the related Mortgage Assets allocated thereto from time to time.
In turn, the outstanding Certificate Balance of a class of Certificates may be
increased as a result of any deferred interest on or in respect of the related
Mortgage Assets being allocated thereto from time to time, and will be
increased, in the case of a class of Accrual Certificates prior to the
Distribution Date on which distributions of interest thereon are required to
commence, by the amount of any Accrued Certificate Interest in respect thereof
(reduced as described above). The initial aggregate Certificate Balance of all
classes of a series of Certificates will not be greater than the aggregate
outstanding principal balance of the related Mortgage Assets as of a specified
date (the "Cut-off Date"), after application of scheduled payments due on or
before such date, whether or not received. The initial Certificate Balance of
each class of a series of Certificates will be specified in the related
Prospectus Supplement. As and to the extent described in the related Prospectus
Supplement, distributions of principal with respect to a series of Certificates
will be made on each Distribution Date to the holders of the class or classes
of Certificates of such series entitled thereto until the Certificate Balances
of such Certificates have been reduced to zero. Distributions of principal with
respect to one or more classes of Certificates may be made at a rate that is
faster (and, in some cases, substantially faster) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund. Distributions of principal with respect to one or
more classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other classes of Certificates of
the same series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more classes of Certificates
(each such class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more other classes of Certificates (each
such class, a "Companion Class") may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same series and the
rate at which payments and other collections of principal on the Mortgage
Assets in the related Trust Fund are received. Unless otherwise specified in
the related Prospectus Supplement, distributions of principal of any class of
Offered Certificates will be made on a pro rata basis among all of the
Certificates of such class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums
or payments in respect of Equity Participations received on or in connection
with the Mortgage Assets in any Trust Fund will be distributed on each
Distribution Date to the holders of the class of Certificates of the related
series entitled thereto in accordance with the provisions described in such
Prospectus Supplement. Alternatively, such items may be retained by the
Depositor or any of its affiliates or by any other specified person and/or may
be excluded as Trust Assets.
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ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority
and manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (ii)
establishing a priority of payments among such classes of Certificates. See
"Description of Credit Support".
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related series of Certificates for such Distribution Date, an
amount up to the aggregate of any payments of principal (other than the
principal portion of any balloon payments) and interest that were due on or in
respect of such Mortgage Loans during the related Due Period and were
delinquent on the related Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts drawn under any
fund or instrument constituting Credit Support) respecting which such advances
were made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including,
in the case of a series that includes one or more classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more classes of such Subordinate Certificates. No advance will be required
to be made by a Master Servicer, Special Servicer or Trustee if, in the
judgment of the Master Servicer, Special Servicer or Trustee, as the case may
be, such advance would not be recoverable from Related Proceeds or another
specifically identified source (any such advance, a "Nonrecoverable Advance");
and, if previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the
related series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will
be required to replace such funds in such Certificate Account on or prior to
any future Distribution Date to the extent that funds in such Certificate
Account on such Distribution Date are less than payments required to be made to
the related series of Certificateholders on such date. If so specified in the
related Prospectus Supplement, the obligation of a Master Servicer, Special
Servicer, Trustee or other entity to make advances may be secured by a cash
advance reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all
of such advances for a specified period during which such advances are
outstanding at the rate specified in such Prospectus Supplement, and such
entity will be entitled to payment of such interest periodically from general
collections on the Mortgage Loans in the related Trust Fund prior to any
payment to the related series of Certificateholders or as otherwise provided in
the related Pooling Agreement and described in such Prospectus Supplement.
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The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling Agreement or of a party
to the related MBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders
of each class of the Offered Certificates of a series, a Master Servicer,
Manager or Trustee, as provided in the related Prospectus Supplement, will
forward to each such holder, a statement (a "Distribution Date Statement")
that, unless otherwise provided in the related Prospectus Supplement, will set
forth, among other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of such class of Offered
Certificates that was applied to pay Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of such class of
Offered Certificates that was allocable to (A) Prepayment Premiums and (B)
payments on account of Equity Participations;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are entitled;
(v) if the related Trust Fund includes Mortgage Loans, the aggregate
amount of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if payable
directly out of the related Trust Fund, by any Special Servicer and any
Sub-Servicer) and, if the related Trust Fund includes MBS, the amount of
administrative compensation received by the MBS Administrator;
(vii) information regarding the aggregate principal balance of the related
Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans, information
regarding the number and aggregate principal balance of such Mortgage Loans
that are delinquent;
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments
made with respect to such Mortgage Loans during the related Prepayment Period
(that is, the specified period, generally corresponding in length to the period
between Distribution Dates, during which prepayments and other unscheduled
collections on the Mortgage Loans in the related Trust Fund must be received in
order to be distributed on a particular Distribution Date);
(x) the Certificate Balance or Notional Amount, as the case may be, of
such class of Certificates at the close of business on such Distribution Date,
separately identifying any reduction in such Certificate Balance or Notional
Amount due to the allocation of any losses in respect of the related Mortgage
Assets, any increase in such Certificate Balance or Notional Amount due to the
allocation of any negative amortization in respect of the related Mortgage
Assets and any increase in the Certificate Balance of a class of Accrual
Certificates, if any, in the event that Accrued Certificate Interest has been
added to such balance;
(xi) if such class of Offered Certificates has a variable Pass-Through
Rate or an adjustable Pass-Through Rate, the Pass-Through Rate applicable
thereto for such Distribution Date and, if determinable, for the next
succeeding Distribution Date;
(xii) the amount deposited in or withdrawn from any reserve fund on such
Distribution Date, and the amount remaining on deposit in such reserve fund as
of the close of business on such Distribution Date;
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(xiii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a surety
bond, the amount of coverage under each such instrument as of the close of
business on such Distribution Date; and
(xiv) the amount of Credit Support being afforded by any classes of
Subordinate Certificates.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per specified
denomination of the relevant class of Offered Certificates or as a percentage.
The Prospectus Supplement for each series of Certificates may describe
additional information to be included in reports to the holders of the Offered
Certificates of such series.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer, Manager or Trustee for a series of Certificates, as the
case may be, will be required to furnish to each person who at any time during
the calendar year was a holder of an Offered Certificate of such series a
statement containing the information set forth in subclauses (i)-(iii) above,
aggregated for such calendar year or the applicable portion thereof during
which such person was a Certificateholder. Such obligation will be deemed to
have been satisfied to the extent that substantially comparable information is
provided pursuant to any requirements of the Code as are from time to time in
force. See, however, "-Book-Entry Registration and Definitive Certificates"
below.
If the Trust Fund for a series of Certificates includes MBS, the ability
of the related Master Servicer, Manager or Trustee, as the case may be, to
include in any Distribution Date Statement information regarding the mortgage
loans underlying such MBS will depend on the reports received with respect to
such MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that
series in connection with distributions made to them. The Depositor will
provide the same information with respect to any MBSs in its own reports that
were publicly offered and the reports the related MBS Issuer provides to the
Trustee if privately issued.
VOTING RIGHTS
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes of
such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the related Pooling
Agreement and as otherwise specified in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Amendment". The holders of specified
amounts of Certificates of a particular series will have the right to act as a
group to remove the related Trustee and also upon the occurrence of certain
events which if continuing would constitute an Event of Default on the part of
the related Master Servicer, Special Servicer or REMIC Administrator. See
"Description of the Pooling Agreements--Events of Default", "--Rights Upon
Event of Default" and "--Resignation and Removal of the Trustee".
TERMINATION
The obligations created by the Pooling Agreement for each series of
Certificates will terminate following (i) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of
all property acquired upon foreclosure of any Mortgage Loan subject thereto and
(ii) the payment (or provision for payment) to the Certificateholders of that
series of all amounts required to be paid to them pursuant to such Pooling
Agreement. Written notice of termination of a Pooling Agreement will be given
to each Certificateholder of the related series, and the final distribution
will be made only upon presentation and surrender of the Certificates of such
series at the location to be specified in the notice of termination.
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If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the
repurchase of the Mortgage Assets in the related Trust Fund by the party or
parties specified therein, under the circumstances and in the manner set forth
therein.
In addition, if so provided in the related Prospectus Supplement upon the
reduction of the Certificate Balance of a specified class or classes of
Certificates by a specified percentage or amount or upon a specified date, a
party designated therein may be authorized or required to solicit bids for the
purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set forth therein. The solicitation
of bids will be conducted in a commercially reasonable manner and, generally,
assets will be sold at their fair market value. Circumstances may arise in
which such fair market value may be less than the unpaid balance of the
Mortgage Loans sold and therefore, as a result of such a sale, the
Certificateholders of one or more Classes of Certificates may receive an amount
less than the Certificate Balance of, and accrued unpaid interest on, their
Certificates.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such series will be offered
in book-entry format through the facilities of DTC, and each such class will be
represented by one or more global Certificates registered in the name of The
Depository Trust Company ("DTC") or its nominee. If so provided in the
Prospectus Supplement, arrangements may be made for clearance and settlement
through the Euroclear System or CEDEL, S.A., if they are participants in DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations ("DTC
Participants") and facilitate the clearance and settlement of securities
transactions between DTC Participants through electronic computerized
book-entry changes in their accounts, thereby eliminating the need for physical
movement of securities certificates. DTC Participants that maintain accounts
with DTC include securities brokers and dealers, banks, trust companies and
clearing corporations and may include other organizations. DTC is owned by a
number of DTC Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
banks, brokers, dealers and trust companies that directly or indirectly clear
through or maintain a custodial relationship with a DTC Participant that
maintains as account with DTC. The rules applicable to DTC and DTC Participants
are on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for such purpose.
In turn, the Financial Intermediary's ownership of such Certificates will be
recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the beneficial owner's Financial Intermediary is not a DTC
Participant). Therefore, the beneficial owner must rely on the foregoing
procedures to evidence its beneficial ownership of such Certificates. The
beneficial ownership interest of the owner of a Book-Entry Certificate (a
"Certificate Owner") may only be transferred by compliance with the rules,
regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual Certificate Owners; DTC's records
reflect only the identity of the DTC Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners. The
DTC Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
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Conveyance of notices and other communications by DTC to DTC Participants
and by DTC Participants to Financial Intermediaries and Certificate Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by DTC Participants to Financial
Intermediaries and Certificate Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name", and will be the
responsibility of each such DTC Participant (and not of DTC, the Depositor or
any Trustee, Master Servicer, Special Servicer or Manager), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Accordingly, under a book-entry system, Certificate Owners may receive payments
after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement) of
Book-Entry Certificates will be the nominee of DTC, and the Certificate Owners
will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly through
the DTC Participants who in turn will exercise their rights through DTC. The
Depositor has been informed that DTC will take action permitted to be taken by
a Certificateholder under a Pooling Agreement only at the direction of one or
more DTC Participants to whose account with DTC interests in the Book-Entry
Certificates are credited. DTC may take conflicting actions with respect to the
Book-Entry Certificates to the extent that such actions are taken on behalf of
Financial Intermediaries whose holdings include such Certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of its interest in Book-Entry Certificates, may be
limited due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is
no longer willing or able to discharge properly its responsibilities as
depository with respect to such Certificates and the Depositor is unable to
locate a qualified successor or (ii) the Depositor, at its option, elects to
terminate the book-entry system through DTC with respect to such Certificates.
Upon the occurrence of either of the events described in the preceding
sentence, DTC will be required to notify all DTC Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the certificate or certificates representing a class of Book-Entry
Certificates, together with instructions for registration, the Trustee for the
related series or other designated party will be required to issue to the
Certificate Owners identified in such instructions the Definitive Certificates
to which they are entitled, and thereafter the holders of such Definitive
Certificates will be recognized as "Certificateholders" under and within the
meaning of the related Pooling Agreement.
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DESCRIPTION OF THE POOLING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a Pooling
Agreement. In general, the parties to a Pooling Agreement will include the
Depositor, the Trustee, the Master Servicer, the Special Servicer and, if one
or more REMIC elections have been made with respect to the Trust Fund, the
REMIC Administrator. However, a Pooling Agreement that relates to a Trust Fund
that includes MBS may include a Manager as a party, but may not include a
Master Servicer, Special Servicer or other servicer as a party. All parties to
each Pooling Agreement under which Certificates of a series are issued will be
identified in the related Prospectus Supplement. If so specified in the related
Prospectus Supplement, the Mortgage Asset Seller or an affiliate thereof may
perform the functions of Master Servicer, Special Servicer, Manager or REMIC
Administrator. If so specified in the related Prospectus Supplement, the Master
Servicer may also perform the duties of Special Servicer, and the Master
Servicer, the Special Servicer or the Trustee may also perform the duties of
REMIC Administrator. Any party to a Pooling Agreement or any affiliate thereof
may own Certificates issued thereunder; however, except in limited
circumstances (including with respect to required consents to certain
amendments to a Pooling Agreement), Certificates issued thereunder that are
held by the Master Servicer or Special Servicer for the related Series will not
be allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a
Pooling Agreement under which Certificates that evidence interests in Mortgage
Loans will be issued. The Prospectus Supplement for a series of Certificates
will describe any provision of the related Pooling Agreement that materially
differs from the description thereof contained in this Prospectus and, if the
related Trust Fund includes MBS, will summarize all of the material provisions
of the related Pooling Agreement. The summaries herein do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the Pooling Agreement for each series of
Certificates and the description of such provisions in the related Prospectus
Supplement. The Depositor will provide a copy of the Pooling Agreement (without
exhibits) that relates to any series of Certificates without charge upon
written request of a holder of a Certificate of such series addressed to it at
its principal executive offices specified herein under "The Depositor".
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans
to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to
be received on or with respect to such Mortgage Loans after the Cut-off Date,
other than principal and interest due on or before the Cut-off Date. The
Trustee will, concurrently with such assignment, deliver the Certificates to or
at the direction of the Depositor in exchange for the Mortgage Loans and the
other assets to be included in the Trust Fund for such series. Each Mortgage
Loan will be identified in a schedule appearing as an exhibit to the related
Pooling Agreement. Such schedule generally will include detailed information
that pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include the address of the related Mortgaged
Property and type of such property; the Mortgage Rate and, if applicable, the
applicable index, gross margin, adjustment date and any rate cap information;
the original and remaining term to maturity; the amortization term; and the
original and outstanding principal balance.
In addition, unless otherwise specified in the related Prospectus
Supplement, the Depositor will, as to each Mortgage Loan to be included in a
Trust Fund, deliver, or cause to be delivered,
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to the related Trustee (or to a custodian appointed by the Trustee as described
below) the Mortgage Note endorsed, without recourse, either in blank or to the
order of such Trustee (or its nominee), the Mortgage with evidence of recording
indicated thereon (except for any Mortgage not returned from the public
recording office), an assignment of the Mortgage in blank or to the Trustee (or
its nominee) in recordable form, together with any intervening assignments of
the Mortgage with evidence of recording thereon (except for any such assignment
not returned from the public recording office), and, if applicable, any riders
or modifications to such Mortgage Note and Mortgage, together with certain
other documents at such times as set forth in the related Pooling Agreement.
Such assignments may be blanket assignments covering Mortgages on Mortgaged
Properties located in the same county, if permitted by law. Notwithstanding the
foregoing, a Trust Fund may include Mortgage Loans where the original Mortgage
Note is not delivered to the Trustee if the Depositor delivers, or causes to be
delivered, to the related Trustee (or such custodian) a copy or a duplicate
original of the Mortgage Note, together with an affidavit certifying that the
original thereof has been lost or destroyed. In addition, if the Depositor
cannot deliver, with respect to any Mortgage Loan, the Mortgage or any
intervening assignment with evidence of recording thereon concurrently with the
execution and delivery of the related Pooling Agreement because of a delay
caused by the public recording office, the Depositor will deliver, or cause to
be delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment as submitted for recording. The
Depositor will deliver, or cause to be delivered, to the related Trustee (or
such custodian) such Mortgage or assignment with evidence of recording
indicated thereon after receipt thereof from the public recording office. If
the Depositor cannot deliver, with respect to any Mortgage Loan, the Mortgage
or any intervening assignment with evidence of recording thereon concurrently
with the execution and delivery of the related Pooling Agreement because such
Mortgage or assignment has been lost, the Depositor will deliver, or cause to
be delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment with evidence of recording thereon.
Unless otherwise specified in the related Prospectus Supplement, assignments of
Mortgage to the Trustee (or its nominee) will be recorded in the appropriate
public recording office, except in states where, in the opinion of counsel
acceptable to the Trustee, such recording is not required to protect the
Trustee's interests in the Mortgage Loan against the claim of any subsequent
transferee or any successor to or creditor of the Depositor or the originator
of such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered
to it within a specified period of days after receipt thereof, and the Trustee
(or such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or
defective, and such omission or defect, as the case may be, materially and
adversely affects the interests of the Certificateholders of the related
series, the Trustee (or such custodian) will be required to notify the Master
Servicer, the Special Servicer and the Depositor, and one of such persons will
be required to notify the relevant Mortgage Asset Seller. In that case, and if
the Mortgage Asset Seller cannot deliver the document or cure the defect within
a specified number of days after receipt of such notice, then, except as
otherwise specified below or in the related Prospectus Supplement, the Mortgage
Asset Seller will be obligated to repurchase the related Mortgage Loan from the
Trustee at a price generally equal to the unpaid principal balance thereof,
together with accrued but unpaid interest through a date on or about the date
of purchase, or at such other price as will be specified in the related
Prospectus Supplement (in any event, the "Purchase Price"). If so provided in
the Prospectus Supplement for a series of Certificates, a Mortgage Asset
Seller, in lieu of repurchasing a Mortgage Loan as to which there is missing or
defective loan documentation, will have the option, exercisable upon certain
conditions and/or within a specified period after initial issuance of such
series of Certificates, to replace such Mortgage Loan with one or more other
mortgage loans, in accordance with standards that will be described in the
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, this repurchase or
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substitution obligation will constitute the sole remedy to holders of the
Certificates of any series or to the related Trustee on their behalf for
missing or defective Mortgage Loan documentation, and neither the Depositor
nor, unless it is the Mortgage Asset Seller, the Master Servicer or the Special
Servicer will be obligated to purchase or replace a Mortgage Loan if a Mortgage
Asset Seller defaults on its obligation to do so.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage
Loans in any Trust Fund and to maintain possession of and, if applicable, to
review the documents relating to such Mortgage Loans, in any case as the agent
of the Trustee. The identity of any such custodian to be appointed on the date
of initial issuance of the Certificates will be set forth in the related
Prospectus Supplement.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling Agreement; (ii)
the enforceability of the related Mortgage Note and Mortgage and the existence
of title insurance insuring the lien priority of the related Mortgage; (iii)
the Warranting Party's title to the Mortgage Loan and the authority of the
Warranting Party to sell the Mortgage Loan; and (iv) the payment status of the
Mortgage Loan. It is expected that in most cases the Warranting Party will be
the Mortgage Asset Seller; however, the Warranting Party may also be an
affiliate of the Mortgage Asset Seller, the Depositor or an affiliate of the
Depositor, the Master Servicer, the Special Servicer or another person
acceptable to the Depositor. The Warranting Party, if other than the Mortgage
Asset Seller, will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Certificateholders of the
related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will
be obligated to repurchase such Mortgage Loan from the Trustee at the
applicable Purchase Price. If so provided in the Prospectus Supplement for a
series of Certificates, a Warranting Party, in lieu of repurchasing a Mortgage
Loan as to which a breach has occurred, will have the option, exercisable upon
certain conditions and/or within a specified period after initial issuance of
such series of Certificates, to replace such Mortgage Loan with one or more
other mortgage loans, in accordance with standards that will be described in
the Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, this repurchase or substitution obligation will constitute the sole
remedy available to holders of the Certificates of any series or to the related
Trustee on their behalf for a breach of representation and warranty by a
Warranting Party, and neither the Depositor nor the Master Servicer, in either
case unless it is the Warranting Party, will be obligated to purchase or
replace a Mortgage Loan if a Warranting Party defaults on its obligation to do
so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the
related series of Certificates is issued, and thus may not address events that
may occur following the date as of which they were made. However, the Depositor
will not include any Mortgage Loan in the Trust Fund for any series of
Certificates if anything has come to the Depositor's attention that would cause
it to believe that the representations and warranties made in respect of such
Mortgage Loan will not be accurate in all material respects as of the date of
issuance. The date as of which the representations and warranties regarding the
Mortgage Loans in any Trust Fund were made will be specified in the related
Prospectus Supplement.
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COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer for any Mortgage Pool, directly or
through Sub-Servicers, will each be obligated under the related Pooling
Agreement to service and administer the Mortgage Loans in such Mortgage Pool
for the benefit of the related Certificateholders, in accordance with
applicable law and further in accordance with the terms of such Pooling
Agreement, such Mortgage Loans and any instrument of Credit Support included in
the related Trust Fund. Subject to the foregoing, the Master Servicer and the
Special Servicer will each have full power and authority to do any and all
things in connection with such servicing and administration that it may deem
necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that
it services and will be obligated to follow such collection procedures as it
would follow with respect to mortgage loans that are comparable to such
Mortgage Loans and held for its own account, provided (i) such procedures are
consistent with the terms of the related Pooling Agreement and (ii) do not
impair recovery under any instrument of Credit Support included in the related
Trust Fund. Consistent with the foregoing, the Master Servicer and the Special
Servicer will each be permitted, in its discretion, unless otherwise specified
in the related Prospectus Supplement, to waive any Prepayment Premium, late
payment charge or other charge in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling Agreement, for payment
of taxes, insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items; attempting to collect delinquent
payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
The related Prospectus Supplement will specify when and the extent to which
servicing of a Mortgage Loan is to be transferred from the Master Servicer to
the Special Servicer. In general, and subject to the discussion in the related
Prospectus Supplement, a Special Servicer will be responsible for the servicing
and administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) Mortgage Loans as to which the
related borrower has entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such a proceeding
which shall have remained in force undischarged or unstayed for a specified
number of days; and (iii) REO Properties. If so specified in the related
Prospectus Supplement, a Pooling Agreement also may provide that if a default
on a Mortgage Loan has occurred or, in the judgment of the related Master
Servicer, a payment default is reasonably foreseeable, the related Master
Servicer may elect to transfer the servicing thereof, in whole or in part, to
the related Special Servicer. Unless otherwise provided in the related
Prospectus Supplement, when the circumstances no longer warrant a Special
Servicer's continuing to service a particular Mortgage Loan (e.g., the related
borrower is paying in accordance with the forbearance arrangement entered into
between the Special Servicer and such borrower), the Master Servicer will
resume the servicing duties with respect thereto. If and to the extent provided
in the related Pooling Agreement and described in the related Prospectus
Supplement, a Special Servicer may perform certain limited duties in respect of
Mortgage Loans for which the Master Servicer is primarily responsible
(including, if so specified, performing property inspections and evaluating
financial statements); and a Master Servicer may perform certain limited duties
in respect of any Mortgage Loan for which the Special Servicer is primarily
responsible (including, if so specified, continuing to
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receive payments on such Mortgage Loan (including amounts collected by the
Special Servicer), making certain calculations with respect to such Mortgage
Loan and making remittances and preparing certain reports to the Trustee and/or
Certificateholders with respect to such Mortgage Loan. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer will be
responsible for filing and settling claims in respect of particular Mortgage
Loans under any applicable instrument of Credit Support. See "Description of
Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean
that operating income is insufficient to service the mortgage debt, or may
reflect the diversion of that income from the servicing of the mortgage debt.
In addition, a mortgagor that is unable to make Mortgage Loan payments may also
be unable to make timely payment of taxes and otherwise to maintain and insure
the related Mortgaged Property. In general, the related Special Servicer will
be required to monitor any Mortgage Loan that is in default, evaluate whether
the causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems
necessary and appropriate. A significant period of time may elapse before the
Special Servicer is able to assess the success of any such corrective action or
the need for additional initiatives. The time within which the Special Servicer
can make the initial determination of appropriate action, evaluate the success
of corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose (or accept a deed to a Mortgaged Property in
lieu of foreclosure) on behalf of the Certificateholders of the related series
may vary considerably depending on the particular Mortgage Loan, the Mortgaged
Property, the mortgagor, the presence of an acceptable party to assume the
Mortgage Loan and the laws of the jurisdiction in which the Mortgaged Property
is located. If a mortgagor files a bankruptcy petition, the Special Servicer
may not be permitted to accelerate the maturity of the Mortgage Loan or to
foreclose on the related Mortgaged Property for a considerable period of time.
See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectability of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that
a junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer will each be required to take, on
behalf of the related Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and/or to preserve the security of
the related Mortgage Loan, subject to the application of the REMIC Provisions.
Unless otherwise specified in
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the related Prospectus Supplement, the Master Servicer or Special Servicer, as
applicable, will be required to advance the necessary funds to cure the default
or reinstate the Senior Lien, if such advance is in the best interests of the
related Certificateholders and the Master Servicer or Special Servicer, as
applicable, determines such advances are recoverable out of payments on or
proceeds of the related Mortgage Loan.
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer and a Sub-Servicer (a "Sub-Servicing
Agreement") must provide for servicing of the applicable Mortgage Loans
consistent with the related Pooling Agreement. The Master Servicer and Special
Servicer in respect of any Mortgage Asset Pool will each be required to monitor
the performance of Sub-Servicers retained by it and will have the right to
remove a Sub-Servicer retained by it at any time it considers such removal to
be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling Agreement is sufficient
to pay such fees. Each Sub-Servicer will be reimbursed by the Master Servicer
or Special Servicer, as the case may be, that retained it for certain
expenditures which it makes, generally to the same extent such Master Servicer
or Special Servicer would be reimbursed under a Pooling Agreement. See
"--Certificate Account" and "--Servicing Compensation and Payment of Expenses".
CERTIFICATE ACCOUNT
General. The Master Servicer, the Trustee and/or the Special Servicer
will, as to each Trust Fund that includes Mortgage Loans, establish and
maintain or cause to be established and maintained the corresponding
Certificate Account, which will be established so as to comply with the
standards of each Rating Agency that has rated any one or more classes of
Certificates of the related series. A Certificate Account may be maintained as
an interest-bearing or a noninterest-bearing account and the funds held therein
may be invested pending each succeeding Distribution Date in United States
government securities and other investment grade obligations that are
acceptable to each Rating Agency that has rated any one or more classes of
Certificates of the related series ("Permitted Investments"). Such Permitted
Investments include federal funds, uncertificated certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements, certain United States
dollar-denominated commercial paper, units of money market funds that maintain
a constant net asset value and any other obligations or security acceptable to
each Rating Agency. Unless otherwise provided in the related Prospectus
Supplement, any interest or other income earned on funds in a Certificate
Account will be paid to the related Master Servicer, Trustee or Special
Servicer as additional compensation. A Certificate Account may be maintained
with the related Master Servicer, Special Servicer, Trustee or Mortgage Asset
Seller or with a depository institution that is an affiliate of any of the
foregoing or of the Depositor, provided that it complies with applicable Rating
Agency standards. If permitted by the applicable Rating Agency or Agencies, a
Certificate Account may contain funds relating to more than one series of
mortgage pass-through certificates and may contain other funds representing
payments on mortgage loans owned by the related Master Servicer or Special
Servicer or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the following payments and
collections received or made by the
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Master Servicer, the Trustee or the Special Servicer subsequent to the Cut-off
Date (other than payments due on or before the Cut-off Date) are to be
deposited in the Certificate Account for each Trust Fund that includes Mortgage
Loans, within a certain period following receipt (in the case of collections on
or in respect of the Mortgage Loans) or otherwise as provided in the related
Pooling Agreement:
(i) all payments on account of principal, including principal prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans, including
any default interest collected, in each case net of any portion thereof
retained by the Master Servicer or the Special Servicer as its servicing
compensation or as compensation to the Trustee;
(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan or in connection with the full or partial condemnation of
a Mortgaged Property (other than proceeds applied to the restoration of the
property or released to the related borrower) ("Insurance Proceeds" and
"Condemnation Proceeds", respectively) and all other amounts received and
retained in connection with the liquidation of defaulted Mortgage Loans or
property acquired in respect thereof, by foreclosure or otherwise (such
amounts, together with those amounts listed in clause (vii) below, "Liquidation
Proceeds"), together with the net operating income (less reasonable reserves
for future expenses) derived from the operation of any Mortgaged Properties
acquired by the Trust Fund through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
(v) any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement;
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or any
other specified person as described under "--Assignment of Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases", all proceeds
of the purchase of any defaulted Mortgage Loan as described under
"--Realization Upon Defaulted Mortgage Loans", and all proceeds of any Mortgage
Asset purchased as described under "Description of the
Certificates--Termination; Retirement of Certificates";
(viii) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or the Special Servicer and is
not otherwise retained by the Depositor or another specified person, any
payments on account of modification or assumption fees, late payment charges,
Prepayment Premiums or Equity Participations with respect to the Mortgage
Loans;
(ix) all payments required to be deposited in the Certificate Account with
respect to any deductible clause in any blanket insurance policy as described
under "--Hazard Insurance Policies";
(x) any amount required to be deposited by the Master Servicer, the
Special Servicer or the Trustee in connection with losses realized on
investments for the benefit of the Master Servicer, the Special Servicer or the
Trustee, as the case may be, of funds held in the Certificate Account; and
(xi) any other amounts received on or in respect of the Mortgage Loans
required to be deposited in the Certificate Account as provided in the related
Pooling Agreement and described in the related Prospectus Supplement.
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Withdrawals. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Master Servicer, Trustee
or Special Servicer may make withdrawals from the Certificate Account for each
Trust Fund that includes Mortgage Loans for any of the following purposes:
(i) to make distributions to the Certificateholders on each Distribution
Date;
(ii) to pay the Master Servicer or the Special Servicer any servicing fees
not previously retained thereby, such payment to be made out of payments and
other collections of interest on the particular Mortgage Loans as to which such
fees were earned;
(iii) to reimburse the Master Servicer, the Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled payments of
principal and interest made by it, and certain unreimbursed servicing expenses
incurred by it, with respect to Mortgage Loans in the Trust Fund and properties
acquired in respect thereof, such reimbursement to be made out of amounts that
represent late payments collected on the particular Mortgage Loans, Liquidation
Proceeds, Insurance Proceeds and Condemnation Proceeds collected on the
particular Mortgage Loans and properties, and net income collected on the
particular properties, with respect to which such advances were made or such
expenses were incurred or out of amounts drawn under any form of Credit Support
with respect to such Mortgage Loans and properties, or if in the judgment of
the Master Servicer, the Special Servicer or such other person, as applicable,
such advances and/or expenses will not be recoverable from such amounts, such
reimbursement to be made from amounts collected on other Mortgage Loans in the
same Trust Fund or, if and to the extent so provided by the related Pooling
Agreement and described in the related Prospectus Supplement, only from that
portion of amounts collected on such other Mortgage Loans that is otherwise
distributable on one or more classes of Subordinate Certificates of the related
series;
(iv) if and to the extent described in the related Prospectus Supplement,
to pay the Master Servicer, the Special Servicer or any other specified person
interest accrued on the advances and servicing expenses described in clause
(iii) above incurred by it while such remain outstanding and unreimbursed;
(v) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged Properties
that constitute security for defaulted Mortgage Loans, and for any containment,
clean-up or remediation of hazardous wastes and materials present on such
Mortgaged Properties, as described under "--Realization Upon Defaulted Mortgage
Loans";
(vi) to reimburse the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor, the Trustee, or any of their respective
directors, officers, employees and agents, as the case may be, for certain
expenses, costs and liabilities incurred thereby, as and to the extent
described under "--Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the Depositor" and "--Certain Matters
Regarding the Trustee";
(vii) if and to the extent described in the related Prospectus Supplement,
to pay the fees of the Trustee, the REMIC Administrator and any provider of
Credit Support;
(viii) if and to the extent described in the related Prospectus
Supplement, to reimburse prior draws on any form of Credit Support;
(ix) to pay the Master Servicer, the Special Servicer or the Trustee, as
appropriate, interest and investment income earned in respect of amounts held
in the Certificate Account as additional compensation;
(x) to pay any servicing expenses not otherwise required to be advanced by
the Master Servicer, the Special Servicer or any other specified person;
(xi) if one or more elections have been made to treat the Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or local
taxes imposed on the Trust Fund or its assets or transactions, as and to the
extent described under "Certain Federal Income Tax Consequences--
REMICs--Prohibited Transactions Tax and Other Taxes";
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(xii) to pay for the cost of various opinions of counsel obtained pursuant
to the related Pooling Agreement for the benefit of Certificateholders;
(xiii) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xiv) to clear and terminate the Certificate Account upon the termination
of the Trust Fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master Servicer and the Special Servicer may each agree to modify,
waive or amend any term of any Mortgage Loan serviced by it in a manner
consistent with the applicable Servicing Standard; provided that, unless
otherwise set forth in the related Prospectus Supplement, the modification,
waiver or amendment (i) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (ii) will not, in the
judgment of the Master Servicer or the Special Servicer, as the case may be,
materially impair the security for the Mortgage Loan or reduce the likelihood
of timely payment of amounts due thereon and (iii) will not adversely affect
the coverage under any applicable instrument of Credit Support. Unless
otherwise provided in the related Prospectus Supplement, the Special Servicer
also may agree to any other modification, waiver or amendment if, in its
judgment, (i) a material default on the Mortgage Loan has occurred or a payment
default is imminent, (ii) such modification, waiver or amendment is reasonably
likely to produce a greater recovery with respect to the Mortgage Loan, taking
into account the time value of money, than would liquidation and (iii) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of
foreclosure, or otherwise acquire title to the related Mortgaged Property, by
operation of law or otherwise. Unless otherwise specified in the related
Prospectus Supplement, the Special Servicer may not, however, acquire title to
any Mortgaged Property, have a receiver of rents appointed with respect to any
Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related series of
Certificateholders, or any other specified person to be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an
"operator" of such Mortgaged Property within the meaning of certain federal
environmental laws, unless the Special Servicer has previously received a
report prepared by a person who regularly conducts environmental audits (which
report will be an expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters and
related costs) on the information set forth in such report, determines that
taking such actions as are necessary to bring the Mortgaged Property into
compliance with applicable environmental laws and regulations and/or taking
the actions contemplated by clause (i)(b) above, is reasonably likely to
produce a greater recovery, taking into account the time value of money,
than not taking such actions. See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
A Pooling Agreement may grant to the Master Servicer, the Special
Servicer, a provider of Credit Support and/or the holder or holders of certain
classes of the related series of Certificates
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a right of first refusal to purchase from the Trust Fund, at a predetermined
price (which, if less than the Purchase Price, will be specified in the related
Prospectus Supplement), any Mortgage Loan as to which a specified number of
scheduled payments are delinquent. In addition, unless otherwise specified in
the related Prospectus Supplement, the Special Servicer may offer to sell any
defaulted Mortgage Loan if and when the Special Servicer determines, consistent
with its normal servicing procedures, that such a sale would produce a greater
recovery, taking into account the time value of money, than would liquidation
of the related Mortgaged Property. In the absence of any such sale, the Special
Servicer will generally be required to proceed against the related Mortgaged
Property, subject to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Special Servicer, on behalf of the Trust Fund, will
be required to sell the Mortgaged Property within two years of acquisition,
unless (i) the Internal Revenue Service (the "IRS") grants an extension of time
to sell such property or (ii) the Trustee receives an opinion of independent
counsel to the effect that the holding of the property by the Trust Fund for
more than two years after its acquisition will not result in the imposition of
a tax on the Trust Fund or cause the Trust Fund (or any designated portion
thereof) to fail to qualify as a REMIC under the Code at any time that any
Certificate is outstanding. Subject to the foregoing and any other tax-related
limitations, the Special Servicer will generally be required to attempt to sell
any Mortgaged Property so acquired on the same terms and conditions it would if
it were the owner. Unless otherwise provided in the related Prospectus
Supplement, if title to any Mortgaged Property is acquired by a Trust Fund as
to which a REMIC election has been made, the Special Servicer will also be
required to ensure that the Mortgaged Property is administered so that it
constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by the Trust Fund of any income from nonpermitted assets as described
in Code Section 860F(a)(2)(B), and that the Trust Fund does not derive any "net
income from foreclosure property" within the meaning of Code Section
860G(c)(2), with respect to such property. If the Trust Fund acquires title to
any Mortgaged Property, the Special Servicer, on behalf of the Trust Fund, may
retain an independent contractor to manage and operate such property. The
retention of an independent contractor, however, will not relieve the Special
Servicer of its obligation to manage such Mortgaged Property as required under
the related Pooling Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage
Loan are less than the outstanding principal balance of the defaulted Mortgage
Loan plus interest accrued thereon plus the aggregate amount of reimbursable
expenses incurred by the Special Servicer and/or the Master Servicer in
connection with such Mortgage Loan, then, to the extent that such shortfall is
not covered by any instrument or fund constituting Credit Support, the Trust
Fund will realize a loss in the amount of such shortfall. The Special Servicer
and/or the Master Servicer will be entitled to reimbursement out of the
Liquidation Proceeds recovered on any defaulted Mortgage Loan, prior to the
distribution of such Liquidation Proceeds to Certificateholders, any and all
amounts that represent unpaid servicing compensation in respect of the Mortgage
Loan, unreimbursed servicing expenses incurred with respect to the Mortgage
Loan and any unreimbursed advances of delinquent payments made with respect to
the Mortgage Loan. In addition, if and to the extent set forth in the related
Prospectus Supplement, amounts otherwise distributable on the Certificates may
be further reduced by interest payable to the Master Servicer and/or Special
Servicer on such servicing expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any,
of the related hazard insurance policy are insufficient to restore fully the
damaged property, neither the Special Servicer nor the Master Servicer will be
required to expend its own funds to effect such restoration unless (and to the
extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master
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Servicer, as the case may be, for its expenses and (ii) that such expenses will
be recoverable by it from related Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and/or amounts drawn on any instrument or fund
constituting Credit Support.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the Master Servicer (or the Special Servicer
with respect to Mortgage Loans serviced thereby) to use reasonable efforts to
cause each Mortgage Loan borrower to maintain a hazard insurance policy that
provides for such coverage as is required under the related Mortgage or, if the
Mortgage permits the holder thereof to dictate to the borrower the insurance
coverage to be maintained on the related Mortgaged Property, such coverage as
is consistent with the Master Servicer's (or Special Servicer's) normal
servicing procedures. Unless otherwise specified in the related Prospectus
Supplement, such coverage generally will be in an amount equal to the lesser of
the principal balance owing on such Mortgage Loan and the replacement cost of
the related Mortgaged Property. The ability of a Master Servicer (or Special
Servicer) to assure that hazard insurance proceeds are appropriately applied
may be dependent upon its being named as an additional insured under any hazard
insurance policy and under any other insurance policy referred to below, or
upon the extent to which information concerning covered losses is furnished by
borrowers. All amounts collected by a Master Servicer (or Special Servicer)
under any such policy (except for amounts to be applied to the restoration or
repair of the Mortgaged Property or released to the borrower in accordance with
the Master Servicer's (or Special Servicer's) normal servicing procedures
and/or to the terms and conditions of the related Mortgage and Mortgage Note)
will be deposited in the related Certificate Account. The Pooling Agreement may
provide that the Master Servicer (or Special Servicer) may satisfy its
obligation to cause each borrower to maintain such a hazard insurance policy by
maintaining a blanket policy insuring against hazard losses on the Mortgage
Loans in a Trust Fund. If such blanket policy contains a deductible clause, the
Master Servicer (or Special Servicer) will be required, in the event of a
casualty covered by such blanket policy, to deposit in the related Certificate
Account all additional sums that would have been deposited therein under an
individual policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a
Mortgaged Property may not be insured for losses arising from any such cause
unless the related Mortgage specifically requires, or permits the holder
thereof to require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of
the full replacement value of the improvements on the property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clauses generally provide that the
insurer's liability in the event of partial loss does not exceed the lesser of
(i) the replacement cost of the improvements less physical depreciation and
(ii) such proportion of the loss as the amount of insurance carried bears to
the specified percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related
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Mortgaged Property made without the lender's consent. Certain of the Mortgage
Loans may also contain a due-on-encumbrance clause that entitles the lender to
accelerate the maturity of the Mortgage Loan upon the creation of any other
lien or encumbrance upon the Mortgaged Property. Unless otherwise provided in
the related Prospectus Supplement, the Master Servicer (or Special Servicer)
will determine whether to exercise any right the Trustee may have under any
such provision in a manner consistent with the Master Servicer's (or Special
Servicer's) normal servicing procedures. Unless otherwise specified in the
related Prospectus Supplement, the Master Servicer or Special Servicer, as
applicable, will be entitled to retain as additional servicing compensation any
fee collected in connection with the permitted transfer of a Mortgaged
Property. See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale and
Due-on-Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion
of the interest payments on each Mortgage Loan in the related Trust Fund,
including Mortgage Loans serviced by the related Special Servicer. If and to
the extent described in the related Prospectus Supplement, a Special Servicer's
primary compensation with respect to a series of Certificates may consist of
any or all of the following components: (i) a specified portion of the interest
payments on each Mortgage Loan in the related Trust Fund, whether or not
serviced by it; (ii) an additional specified portion of the interest payments
on each Mortgage Loan then currently serviced by it; and (iii) subject to any
specified limitations, a fixed percentage of some or all of the collections and
proceeds received with respect to each Mortgage Loan which was at any time
serviced by it, including Mortgage Loans for which servicing was returned to
the Master Servicer. Insofar as any portion of the Master Servicer's or Special
Servicer's compensation consists of a specified portion of the interest
payments on a Mortgage Loan, such compensation will generally be based on a
percentage of the principal balance of such Mortgage Loan outstanding from time
to time and, accordingly, will decrease with the amortization of the Mortgage
Loan. As additional compensation, a Master Servicer or Special Servicer may be
entitled to retain all or a portion of late payment charges, Prepayment
Premiums, modification fees and other fees collected from borrowers and any
interest or other income that may be earned on funds held in the related
Certificate Account. A more detailed description of each Master Servicer's and
Special Servicer's compensation will be provided in the related Prospectus
Supplement. Any Sub-Servicer will receive as its sub-servicing compensation a
portion of the servicing compensation to be paid to the Master Servicer or
Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will provide that on or before a specified date in each year,
beginning the first such date that is at least a specified number of months
after the Cut-off Date, there will be furnished to the related Trustee a report
of a firm of independent certified public accountants stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Master
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Servicer which includes an assertion that the Master Servicer has complied with
certain minimum mortgage loan servicing standards (to the extent applicable to
commercial and multifamily mortgage loans), identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the Master Servicer's servicing of
commercial and multifamily mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that, in the
opinion of such firm, such standards require it to report. In rendering its
report such firm may rely, as to the matters relating to the direct servicing
of commercial and multifamily mortgage loans by Sub-Servicers, upon comparable
reports of firms of independent public accountants rendered on the basis of
examinations conducted in accordance the same standards (rendered within one
year of such report) with respect to those Sub-Servicers. The Prospectus
Supplement may provide that additional reports of independent certified public
accountants relating to the servicing of mortgage loans may be required to be
delivered to the Trustee.
Each Pooling Agreement will also provide that, on or before a specified
date in each year, beginning the first such date that is at least a specified
number of months after the Cut-off Date, the Master Servicer and Special
Servicer shall each deliver to the related Trustee an annual statement signed
by one or more officers of the Master Servicer or the Special Servicer, as the
case may be, to the effect that, to the best knowledge of each such officer,
the Master Servicer or the Special Servicer, as the case may be, has fulfilled
in all material respects its obligations under the Pooling Agreement throughout
the preceding year or, if there has been a material default in the fulfillment
of any such obligation, such statement shall specify each such known default
and the nature and status thereof. Such statement may be provided as a single
form making the required statements as to more than one Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER, THE REMIC
ADMINISTRATOR AND THE DEPOSITOR
Unless otherwise specified in the Prospectus Supplement for a series of
Certificates, the related Pooling Agreement will permit the Master Servicer,
the Special Servicer and any REMIC Administrator to resign from its obligations
thereunder only upon (a) the appointment of, and the acceptance of such
appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
Rating Agency to any class of Certificates of such series or (b) a
determination that such obligations are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it. No such resignation will become effective until
the Trustee or other successor has assumed the obligations and duties of the
resigning Master Servicer, Special Servicer or REMIC Administrator, as the case
may be, under the Pooling Agreement. The Master Servicer and Special Servicer
for each Trust Fund will be required to maintain a fidelity bond and errors and
omissions policy or their equivalent that provides coverage against losses that
may be sustained as a result of an officer's or employee's misappropriation of
funds or errors and omissions, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions permitted
by the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Master Servicer, the
Special Servicer, the REMIC Administrator, the Depositor or any director,
officer, employee or agent of any of them will be under any liability to the
related Trust Fund or Certificateholders for any action taken, or not taken, in
good
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faith pursuant to the Pooling Agreement or for errors in judgment; provided,
however, that none of the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor or any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties
thereunder or by reason of reckless disregard of such obligations and duties.
Unless otherwise specified in the related Prospectus Supplement, each Pooling
Agreement will further provide that the Master Servicer, the Special Servicer,
the REMIC Administrator, the Depositor and any director, officer, employee or
agent of any of them will be entitled to indemnification by the related Trust
Fund against any loss, liability or expense incurred in connection with any
legal action that relates to such Pooling Agreement or the related series of
Certificates; provided, however, that such indemnification will not extend to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties under
such Pooling Agreement, or by reason of reckless disregard of such obligations
or duties. In addition, each Pooling Agreement will provide that none of the
Master Servicer, the Special Servicer, the REMIC Administrator or the Depositor
will be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its respective responsibilities under the Pooling
Agreement and that in its opinion may involve it in any expense or liability.
However, each of the Master Servicer, the Special Servicer, the REMIC
Administrator and the Depositor will be permitted, in the exercise of its
discretion, to undertake any such action that it may deem necessary or
desirable with respect to the enforcement and/or protection of the rights and
duties of the parties to the Pooling Agreement and the interests of the related
series of Certificateholders thereunder. In such event, the legal expenses and
costs of such action, and any liability resulting therefrom, will be expenses,
costs and liabilities of the related series of Certificateholders, and the
Master Servicer, the Special Servicer, the REMIC Administrator or the
Depositor, as the case may be, will be entitled to charge the related
Certificate Account therefor.
Any person into which the Master Servicer, the Special Servicer, the REMIC
Administrator or the Depositor may be merged or consolidated, or any person
resulting from any merger or consolidation to which the Master Servicer, the
Special Servicer, the REMIC Administrator or the Depositor is a party, or any
person succeeding to the business of the Master Servicer, the Special Servicer,
the REMIC Administrator or the Depositor, will be the successor of the Master
Servicer, the Special Servicer, the REMIC Administrator or the Depositor, as
the case may be, under the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling Agreement either directly or by or through agents or attorneys, and the
REMIC Administrator will not be responsible for any willful misconduct or gross
negligence on the part of any such agent or attorney appointed by it with due
care.
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling Agreement will
include, without limitation, (i) any failure by the Master Servicer to
distribute or cause to be distributed to the Certificateholders of such series,
or to remit to the Trustee for distribution to such Certificateholders, any
amount required to be so distributed or remitted, which failure continues
unremedied for five days after written notice thereof has been given to the
Master Servicer by any other party to the related Pooling Agreement, or to the
Master Servicer, with a copy to each other party to the related Pooling
Agreement, by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series; (ii) any failure by the Special Servicer to remit to the
Master Servicer or the Trustee, as applicable, any amount required to be so
remitted, which failure continues unremedied for five days after written notice
thereof has been given to the Special Servicer by any other party to the
related Pooling Agreement, or to the Special Servicer, with a copy to each
other party to the related Pooling Agreement, by the Certificateholders
entitled to not less than 25% (or such other percentage specified in the
related
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Prospectus Supplement) of the Voting Rights of such series; (iii) any failure
by the Master Servicer or the Special Servicer duly to observe or perform in
any material respect any of its other covenants or obligations under the
related Pooling Agreement, which failure continues unremedied for sixty days
after written notice thereof has been given to the Master Servicer or the
Special Servicer, as the case may be, by any other party to the related Pooling
Agreement, or to the Master Servicer or the Special Servicer, as the case may
be, with a copy to each other party to the related Pooling Agreement, by
Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series; (iv) any failure by a REMIC Administrator (if other than the Trustee)
duly to observe or perform in any material respect any of its covenants or
obligations under the related Pooling Agreement, which failure continues
unremedied for sixty days after written notice thereof has been given to the
REMIC Administrator by any other party to the related Pooling Agreement, or to
the REMIC Administrator, with a copy to each other party to the related Pooling
Agreement, by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series; and (v) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings in respect of or
relating to the Master Servicer, the Special Servicer or the REMIC
Administrator (if other than the Trustee), and certain actions by or on behalf
of the Master Servicer, the Special Servicer or the REMIC Administrator (if
other than the Trustee) indicating its insolvency or inability to pay its
obligations. Material variations to the foregoing Events of Default (other than
to add thereto or shorten cure periods or eliminate notice requirements) will
be specified in the related Prospectus Supplement. Unless otherwise specified
in the related Prospectus Supplement, when a single entity acts as Master
Servicer, Special Servicer and REMIC Administrator, or in any two of the
foregoing capacities, for any Trust Fund, an Event of Default in one capacity
will constitute an Event of Default in each capacity.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer, the
Special Servicer or a REMIC Administrator under a Pooling Agreement, then, in
each and every such case, so long as the Event of Default remains unremedied,
the Depositor or the Trustee will be authorized, and at the direction of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, the Trustee will be required, to terminate all of the
rights and obligations of the defaulting party as Master Servicer, Special
Servicer or REMIC Administrator, as applicable, under the Pooling Agreement,
whereupon the Trustee will succeed to all of the responsibilities, duties and
liabilities of the defaulting party as Master Servicer, Special Servicer or
REMIC Administrator, as applicable, under the Pooling Agreement (except that if
the defaulting party is required to make advances thereunder regarding
delinquent Mortgage Loans, but the Trustee is prohibited by law from obligating
itself to make such advances, or if the related Prospectus Supplement so
specifies, the Trustee will not be obligated to make such advances) and will be
entitled to similar compensation arrangements. Unless otherwise specified in
the related Prospectus Supplement, if the Trustee is unwilling or unable so to
act, it may (or, at the written request of Certificateholders of the related
series entitled to not less than 51% (or such other percentage specified in the
related Prospectus Supplement) of the Voting Rights for such series, it will be
required to) appoint, or petition a court of competent jurisdiction to appoint,
a loan servicing institution or other entity that (unless otherwise provided in
the related Prospectus Supplement) is acceptable to each applicable Rating
Agency to act as successor to the Master Servicer, Special Servicer or REMIC
Administrator, as the case may be, under the Pooling Agreement. Pending such
appointment, the Trustee will be obligated to act in such capacity.
If the same entity is acting as both Trustee and REMIC Administrator, it
may be removed in both such capacities as described under "-Resignation and
Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling Agreement to
institute any proceeding with respect to such Pooling Agreement unless such
holder previously has given to
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the Trustee written notice of default and the continuance thereof and unless
the holders of Certificates of any class evidencing not less than 25% of the
aggregate Percentage Interests constituting such class have made written
request upon the Trustee to institute such proceeding in its own name as
Trustee thereunder and have offered to the Trustee reasonable indemnity and the
Trustee for sixty days after receipt of such request and indemnity has
neglected or refused to institute any such proceeding. However, the Trustee
will be under no obligation to exercise any of the trusts or powers vested in
it by the Pooling Agreement or to institute, conduct or defend any litigation
thereunder or in relation thereto at the request, order or direction of any of
the holders of Certificates covered by such Pooling Agreement, unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
AMENDMENT
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may be amended by the parties thereto, without the consent of
any of the holders of Certificates covered by such Pooling Agreement, (i) to
cure any ambiguity, (ii) to correct or supplement any provision therein which
may be inconsistent with any other provision therein or to correct any error,
(iii) to change the timing and/or nature of deposits in the Certificate
Account, provided that (A) such change would not adversely affect in any
material respect the interests of any Certificateholder, as evidenced by an
opinion of counsel, and (B) such change would not adversely affect the
then-current rating of any rated classes of Certificates, as evidenced by a
letter from each applicable Rating Agency, (iv) if a REMIC election has been
made with respect to the related Trust Fund, to modify, eliminate or add to any
of its provisions (A) to such extent as shall be necessary to maintain the
qualification of the Trust Fund (or any designated portion thereof) as a REMIC
or to avoid or minimize the risk of imposition of any tax on the related Trust
Fund, provided that the Trustee has received an opinion of counsel to the
effect that (1) such action is necessary or desirable to maintain such
qualification or to avoid or minimize such risk, and (2) such action will not
adversely affect in any material respect the interests of any holder of
Certificates covered by the Pooling Agreement, or (B) to restrict the transfer
of the REMIC Residual Certificates, provided that the Depositor has determined
that the then-current ratings of the classes of the Certificates that have been
rated will not be adversely affected, as evidenced by a letter from each
applicable Rating Agency, and that any such amendment will not give rise to any
tax with respect to the transfer of the REMIC Residual Certificates to a
non-permitted transferee (See "Certain Federal Income Tax
Consequences--REMICs--Tax and Restrictions on Transfers of REMIC Residual
Certificates to Certain Organizations" herein), (v) to make any other
provisions with respect to matters or questions arising under such Pooling
Agreement or any other change, provided that such action will not adversely
affect in any material respect the interests of any Certificateholder, or (vi)
to amend specified provisions that are not material to holders of any class of
Certificates offered hereunder.
The Pooling Agreement may also be amended by the parties thereto with the
consent of the holders of Certificates of each class affected thereby
evidencing, in each case, not less than 66-2/3% (or such other percentage
specified in the related Prospectus Supplement) of the aggregate Percentage
Interests constituting such class for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of such Pooling
Agreement or of modifying in any manner the rights of the holders of
Certificates covered by such Pooling Agreement, except that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on a
Certificate of any class without the consent of the holder of such Certificate
or (ii) reduce the aforesaid percentage of Certificates of any class the
holders of which are required to consent to any such amendment without the
consent of the holders of all Certificates of such class covered by such
Pooling Agreement then outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to consent
to any amendment to a Pooling Agreement
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without having first received an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Master Servicer, the
Special Servicer, the Depositor, the Trustee or any other specified person in
accordance with such amendment will not result in the imposition of a tax on
the related Trust Fund or cause such Trust Fund (or any designated portion
thereof) to fail to qualify as a REMIC.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that series
held by such person. If such list is as of a date more than 90 days prior to
the date of receipt of such Certificateholders' request, then such person, if
not the registrar for such series of Certificates, will be required to request
from such registrar a current list and to afford such requesting
Certificateholders access thereto promptly upon receipt.
THE TRUSTEE
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer, Special Servicer or REMIC Administrator and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling Agreement, such
Certificates or any underlying Mortgage Asset or related document and will not
be accountable for the use or application by or on behalf of any Master
Servicer or Special Servicer of any funds paid to the Master Servicer or
Special Servicer in respect of the Certificates or the underlying Mortgage
Assets. If no Event of Default has occurred and is continuing, the Trustee for
each series of Certificates will be required to perform only those duties
specifically required under the related Pooling Agreement. However, upon
receipt of any of the various certificates, reports or other instruments
required to be furnished to it pursuant to the related Pooling Agreement, a
Trustee will be required to examine such documents and to determine whether
they conform to the requirements of such agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling Agreement;
provided, however, that such indemnification will not extend to any loss
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence on the part of the Trustee in the performance of its
obligations and duties thereunder, or by reason of its reckless disregard of
such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling Agreement or perform any of this
duties thereunder either directly or by or through agents or attorneys, and the
Trustee will not be responsible for any willful misconduct or gross negligence
on the part of any such agent or attorney appointed by it with due care.
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RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling Agreement or if the Trustee becomes insolvent. Upon becoming aware of
such circumstances, the Depositor will be obligated to appoint a successor
Trustee. The Trustee may also be removed at any time by the holders of
Certificates of the applicable series evidencing not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance
of the appointment by the successor Trustee. Notwithstanding anything herein to
the contrary, if any entity is acting as both Trustee and REMIC Administrator,
then any resignation or removal of such entity as the Trustee will also
constitute the resignation or removal of such entity as REMIC Administrator,
and the successor trustee will serve as successor to the REMIC Administrator as
well.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a surety bond, an insurance
policy or a guarantee, the establishment of one or more reserve funds, or any
combination of the foregoing. If and to the extent so provided in the related
Prospectus Supplement, any of the foregoing forms of Credit Support may provide
credit enhancement for more than one series of Certificates.
The Credit Support may not provide protection against all risks of loss
and will not guarantee payment to Certificateholders of all amounts to which
they are entitled under the related Pooling Agreement. If losses or shortfalls
occur that exceed the amount covered by the related Credit Support or that are
of a type not covered by such Credit Support, Certificateholders will bear
their allocable share of deficiencies. Moreover, if a form of Credit Support
covers the Offered Certificates of more than one series and losses on the
related Mortgage Assets exceed the amount of such Credit Support, it is
possible that the holders of Offered Certificates of one (or more) such series
will be disproportionately benefited by such Credit Support to the detriment of
the holders of Offered Certificates of one (or more) other such series.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related
Prospectus Supplement will set forth certain information with respect to the
obligor, if any, under any instrument of Credit Support. See "Risk
Factors--Credit Support Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of
the holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of certain
types of losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the method and amount of subordination provided by a
class or classes of Subordinate Certificates in a series and the circumstances
under which such subordination will be available.
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of
such coverage.
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LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or other financial institution specified in such Prospectus Supplement
(the "Letter of Credit Bank"). Under a letter of credit, the Letter of Credit
Bank will be obligated to honor draws thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, generally equal to a
percentage specified in the related Prospectus Supplement of the aggregate
principal balance of some or all of the related Mortgage Assets on the related
Cut-off Date or of the initial aggregate Certificate Balance of one or more
classes of Certificates. If so specified in the related Prospectus Supplement,
the letter of credit may permit draws only in the event of certain types of
losses and shortfalls. The amount available under the letter of credit will, in
all cases, be reduced to the extent of the unreimbursed payments thereunder and
may otherwise be reduced as described in the related Prospectus Supplement. The
obligations of the Letter of Credit Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies or surety bonds provided
by one or more insurance companies or sureties. Such instruments may cover,
with respect to one or more classes of Certificates of the related series,
timely distributions of interest or distributions of principal on the basis of
a schedule of principal distributions set forth in or determined in the manner
specified in the related Prospectus Supplement. The related Prospectus
Supplement will describe any limitations on the draws that may be made under
any such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts
specified in such Prospectus Supplement. If so specified in the related
Prospectus Supplement, the reserve fund for a series may also be funded over
time by a specified amount of certain collections received on the related
Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for
the purposes, in the manner, and to the extent specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
reserve funds may be established to provide protection only against certain
types of losses and shortfalls. Following each Distribution Date, amounts in a
reserve fund in excess of any amount required to be maintained therein may be
released from the reserve fund under the conditions and to the extent specified
in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or
other gain from such investments will be credited to the related reserve fund
for such series, and any loss resulting from such investments will be charged
to such reserve fund. However, such income may be payable to any related Master
Servicer or another service provider as additional compensation for its
services. The reserve fund, if any, for a series will not be a part of the
Trust Fund unless otherwise specified in the related Prospectus Supplement.
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CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
INTEREST RATE EXCHANGE, CAP AND FLOOR AGREEMENTS
If so specified in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include interest rate exchange agreements or
interest rate cap or floor agreements. These types of agreements may be used to
limit the exposure of the Trust Fund or investors in the Certificates to
fluctuations in interest rates and to situations where interest rates become
higher or lower than specified thresholds. Generally, an interest rate exchange
agreement is a contract between two parties to pay and receive, with a set
frequency, interest payments determined by applying the differential between
two interest rates to an agreed-upon notional principal. Generally, an interest
rate cap agreement is a contract pursuant to which one party agrees to
reimburse another party for a floating rate interest payment obligation, to the
extent that the rate payable at any time exceeds a specified cap. Generally, an
interest rate floor agreement is a contract pursuant to which one party agrees
to reimburse another party in the event that amounts owing to the latter party
under a floating rate interest payment obligation are payable at a rate which
is less than a specified floor. The specific provisions of these types of
agreements will be described in the related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable local law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular jurisdiction, or to encompass
the laws of all jurisdictions in which the security for the Mortgage Loans (or
mortgage loans underlying any MBS) is situated. Accordingly, the summaries are
qualified in their entirety by reference to the applicable laws of those
jurisdictions. See "Description of the Trust Funds--Mortgage Loans". If a
significant percentage of Mortgage Loans (or mortgage loans underlying MBS), by
balance, are secured by properties in a particular jurisdiction, relevant local
laws, to the extent they vary materially from this discussion, will be
discussed in the Prospectus Supplement. For purposes of the following
discussion, "Mortgage Loan" includes a mortgage loan underlying an MBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of
separate subordination agreements or intercreditor agreements with others that
hold interests in the real property, the knowledge of the parties to the
mortgage and, generally, the order of recordation of the mortgage in the
appropriate public recording office. However, the lien of a recorded mortgage
will generally be subordinate to later-arising liens for real estate taxes and
assessments and other charges imposed under governmental police powers.
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TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a
deed of trust and the grantee's authority under a deed to secure debt are
governed by the express provisions of the related instrument, the law of the
state in which the real property is located, certain federal laws and, in some
deed of trust transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease
and the income derived therefrom, while (unless rents are to be paid directly
to the lender) retaining a revocable license to collect the rents for so long
as there is no default. If the borrower defaults, the license terminates and
the lender is entitled to collect the rents. Local law may require that the
lender take possession of the property and/or obtain a court-appointed receiver
before becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the
borrower as additional security for the loan. In general, the lender must file
financing statements in order to perfect its security interest in the room
rates and must file continuation statements, generally every five years, to
maintain perfection of such security interest. In certain cases, Mortgage Loans
secured by hotels or motels may be included in a Trust Fund even if the
security interest in the room rates was not perfected or the requisite UCC
filings were allowed to lapse. Even if the lender's security interest in room
rates is perfected under applicable nonbankruptcy law, it will generally be
required to commence a foreclosure action or otherwise take possession of the
property in order to enforce its rights to collect the room rates following a
default. In the bankruptcy setting, however, the lender will be stayed from
enforcing its rights to collect room rates, but those room rates (in light of
certain revisions to the Bankruptcy Code which are effective for all bankruptcy
cases commenced on or after October 22, 1994) constitute "cash collateral" and
therefore cannot be used by the bankruptcy debtor without a hearing or lender's
consent and unless the lender's interest in the room rates is given adequate
protection (e.g., cash payment for otherwise encumbered funds or a replacement
lien on unencumbered property, in either case equal in value to the amount of
room rates that the debtor proposes to use, or other similar relief). See
"--Bankruptcy Laws".
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the
borrower and not previously pledged) may constitute a significant portion of
the property's value as security. The creation and enforcement of liens on
personal property are governed by the UCC. Accordingly, if a borrower pledges
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personal property as security for a mortgage loan, the lender generally must
file UCC financing statements in order to perfect its security interest
therein, and must file continuation statements, generally every five years, to
maintain that perfection. In certain cases, Mortgage Loans secured in part by
personal property may be included in a Trust Fund even if the security interest
in such personal property was not perfected or the requisite UCC filings were
allowed to lapse.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure actions.
These principles are generally designed to relieve borrowers from the effects
of mortgage defaults perceived as harsh or unfair. Relying on such principles,
a court may alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or overreaching,
or may require the lender to undertake affirmative actions to determine the
cause of the borrower's default and the likelihood that the borrower will be
able to reinstate the loan. In some cases, courts have substituted their
judgment for the lender's and have required that lenders reinstate loans or
recast payment schedules in order to accommodate borrowers who are suffering
from a temporary financial disability. In other cases, courts have limited the
right of the lender to foreclose in the case of a nonmonetary default, such as
a failure to adequately maintain the mortgaged property or an impermissible
further encumbrance of the mortgaged property. Finally, some courts have
addressed the issue of whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that a borrower
receive notice in addition to statutorily-prescribed minimum notice. For the
most part, these cases have upheld the reasonableness of the notice provisions
or have found that a public sale under a mortgage providing for a power of sale
does not involve sufficient state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the right
of the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
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Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained
in any other type of mortgage instrument if applicable law so permits. A power
of sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to
sell the property upon default by the borrower and after notice of sale is
given in accordance with the terms of the mortgage and applicable state law. In
some states, prior to such sale, the trustee under the deed of trust must
record a notice of default and notice of sale and send a copy to the borrower
and to any other party who has recorded a request for a copy of a notice of
default and notice of sale. In addition, in some states the trustee must
provide notice to any other party having an interest of record in the real
property, including junior lienholders. A notice of sale must be posted in a
public place and, in most states, published for a specified period of time in
one or more newspapers. The borrower or junior lienholder may then have the
right, during a reinstatement period required in some states, to cure the
default by paying the entire actual amount in arrears (without regard to the
acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior
lienholder is not provided a period to reinstate the loan, but has only the
right to pay off the entire debt to prevent the foreclosure sale. Generally,
state law governs the procedure for public sale, the parties entitled to
notice, the method of giving notice and the applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore,
it is common for the lender to purchase the mortgaged property for an amount
equal to the secured indebtedness and accrued and unpaid interest plus the
expenses of foreclosure, in which event the borrower's debt will be
extinguished, or for a lesser amount in order to preserve its right to seek a
deficiency judgment if such is available under state law and under the terms of
the Mortgage Loan documents. (The Mortgage Loans, however, may be nonrecourse.
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss
of the Mortgage Loans--Limited Recourse Nature of the Mortgage Loans".)
Thereafter, subject to the borrower's right in some states to remain in
possession during a redemption period, the lender will become the owner of the
property and have both the benefits and burdens of ownership, including the
obligation to pay debt service on any senior mortgages, to pay taxes, to obtain
casualty insurance and to make such repairs as are necessary to render the
property suitable for sale. The costs of operating and maintaining a commercial
or multifamily residential property may be significant and may be greater than
the income derived from that property. The lender also will commonly obtain the
services of a real estate broker and pay the broker's commission in connection
with the sale or lease of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, because of the expenses associated with
acquiring, owning and selling a mortgaged property, a lender could realize an
overall loss on a mortgage loan even if the mortgaged property is sold at
foreclosure, or resold after it is acquired through foreclosure, for an amount
equal to the full outstanding principal amount of the loan plus accrued
interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the
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property that are subordinate to that of the foreclosing lender, from exercise
of their "equity of redemption". The doctrine of equity of redemption provides
that, until the property encumbered by a mortgage has been sold in accordance
with a properly conducted foreclosure and foreclosure sale, those having
interests that are subordinate to that of the foreclosing lender have an equity
of redemption and may redeem the property by paying the entire debt with
interest. Those having an equity of redemption must generally be made parties
and joined in the foreclosure proceeding in order for their equity of
redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms
provides for recourse to the borrower's other assets, a lender's ability to
realize upon those assets may be limited by state law. For example, in some
states a lender cannot obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal judgment against the former borrower equal to the difference between
the net amount realized upon the public sale of the real property and the
amount due to the lender. Other statutes may require the lender to exhaust the
security afforded under a mortgage before bringing a personal action against
the borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting such
security; however, in some of those states, the lender, following judgment on
such personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default,
the leasehold mortgagee would lose its security. This risk may be lessened if
the ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate
to be assigned to and by the leasehold mortgagee or the purchaser at a
foreclosure sale, and contains certain other protective provisions typically
included in a "mortgageable" ground lease. Certain Mortgage Loans, however, may
be secured by ground leases which do not contain these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate
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of a borrower in real property. Such a loan typically is subordinate to the
mortgage, if any, on the Cooperative's building which, if foreclosed, could
extinguish the equity in the building and the proprietary leases of the
dwelling units derived from ownership of the shares of the Cooperative.
Further, transfer of shares in a Cooperative are subject to various regulations
as well as to restrictions under the governing documents of the Cooperative,
and the shares may be cancelled in the event that associated maintenance
charges due under the related proprietary leases are not paid. Typically, a
recognition agreement between the lender and the Cooperative provides, among
other things, the lender with an opportunity to cure a default under a
proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor
and the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally
provides that the lender's right to reimbursement is subject to the right of
the Cooperative to receive sums due under the proprietary leases.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce
a deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced
to the then-current value of the property (with a corresponding partial
reduction of the amount of lender's security interest) pursuant to a confirmed
plan or lien avoidance proceeding, thus leaving the lender a general unsecured
creditor for the difference between such value and the outstanding balance of
the loan. Other modifications may include the reduction in the amount of each
scheduled payment, by means of a reduction in the rate of interest and/or an
alteration of the repayment schedule (with or without affecting the unpaid
principal balance of the loan), and/or by an extension (or shortening) of the
term to maturity. Some bankruptcy courts have approved plans, based on the
particular facts of the reorganization case, that effected the cure of a
mortgage loan default by paying arrearages over a number of years. Also, a
bankruptcy court may permit a debtor, through its rehabilitative plan, to
reinstate a loan mortgage payment schedule even if the lender has obtained a
final judgment of foreclosure prior to the filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability
to enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "--Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of
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certain states until the lender has taken some further action, such as
commencing foreclosure or obtaining a receiver prior to activation of the
assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that
ability may be impaired by the commencement of a bankruptcy case relating to a
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of
future performance. Such remedies may be insufficient, and any assurances
provided to the lessor may, in fact, be inadequate. If the lease is rejected,
the lessor will be treated as an unsecured creditor with respect to its claim
for damages for termination of the lease. The Bankruptcy Code also limits a
lessor's damages for lease rejection to the rent reserved by the lease (without
regard to acceleration) for the greater of one year, or 15%, not to exceed
three years, of the remaining term of the lease.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties
that are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to
such a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator"
of a contaminated mortgaged property if agents or employees of the lender have
participated in the management of such mortgaged property or the operations of
the borrower. Such liability may exist even if the lender did not cause or
contribute to the contamination and regardless of whether the lender has
actually taken possession of a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to
the original or unamortized principal balance of a loan or to the value of the
property securing a loan. Excluded from CERCLA's definition of "owner" or
"operator", however, is a person "who without participating in the management
of the facility, holds indicia of ownership primarily to protect his security
interest". This is the so called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Act") amended, among other things, the provisions of CERCLA with respect
to lender liability and the secured creditor exemption. The Act offers
substantial protection to lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property
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of the borrower. The Act provides that "merely having the capacity to
influence, or unexercised right to control" operations does not constitute
participation in management. A lender will lose the protection of the secured
creditor exemption only if it exercises decision-making control over the
borrower's environmental compliance and hazardous substance handling and
disposal practices, or assumes day-to-day management of all operational
functions of the mortgaged property. The Act also provides that a lender will
continue to have the benefit of the secured creditor exemption even if it
forecloses on a mortgaged property, purchases it at a foreclosure sale or
accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell
the mortgaged property at the earliest practicable commercially reasonable time
on commercially reasonable terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation
and Recovery Act.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean up the contamination before
selling or otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action (for example, actions based on nuisance or on toxic tort
resulting in death, personal injury or damage to property) related to hazardous
environmental conditions on a property. While it may be more difficult to hold
a lender liable in such cases, unanticipated or uninsured liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. Such costs may jeopardize
the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling Agreement will provide that neither
the Master Servicer nor the Special Servicer, acting on behalf of the Trustee,
may acquire title to a Mortgaged Property or take over its operation unless the
Special Servicer, based solely (as to environmental matters) on a report
prepared by a person who regularly conducts environmental audits, has made the
determination that it is appropriate to do so, as described under "Description
of the Pooling Agreements--Realization Upon Defaulted Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease
the ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related
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Mortgage Loan or at some time prior to the issuance of the related
Certificates. Environmental site assessments, however, vary considerably in
their content, quality and cost. Even when adhering to good professional
practices, environmental consultants will sometimes not detect significant
environmental problems because to do an exhaustive environmental assessment
would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate
the maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of
1982 (the "Garn Act") generally preempts state laws that prohibit the
enforcement of due-on-sale clauses and permits lenders to enforce these clauses
in accordance with their terms, subject to certain limitations as set forth in
the Garn Act and the regulations promulgated thereunder. Accordingly, a Master
Servicer may nevertheless have the right to accelerate the maturity of a
Mortgage Loan that contains a "due-on-sale" provision upon transfer of an
interest in the property, without regard to the Master Servicer's ability to
demonstrate that a sale threatens its legitimate security interest.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related Senior Liens may not be included in the
Mortgage Pool. The primary risk to holders of Mortgage Loans secured by junior
liens is the possibility that adequate funds will not be received in connection
with a foreclosure of the related Senior Liens to satisfy fully both the Senior
Liens and the Mortgage Loan. In the event that a holder of a Senior Lien
forecloses on a Mortgaged Property, the proceeds of the foreclosure or similar
sale will be applied first to the payment of court costs and fees in connection
with the foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any
other sums due and owing to the holder of the Senior Liens. The claims of the
holders of the Senior Liens will be satisfied in full out of proceeds of the
liquidation of the related Mortgage Property, if such proceeds are sufficient,
before the Trust Fund as holder of the junior lien receives any payments in
respect of the Mortgage Loan. In the event that such proceeds from a
foreclosure or similar sale of the related Mortgaged Property are insufficient
to satisfy all Senior Liens and the Mortgage Loan in the aggregate, the Trust
Fund, as the holder of the junior lien, and, accordingly, holders of one or
more classes of the Certificates of the related series bear (i) the risk of
delay in distributions while a deficiency judgment against the borrower is
obtained and (ii) the risk of loss if the deficiency judgment is not realized
upon. Moreover, deficiency judgments may not be available in certain
jurisdictions or the Mortgage Loan may be nonrecourse.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior
loan does not, a borrower may have more incentive to repay sums due on the
subordinate loan. Second, acts of the senior lender that prejudice the junior
lender or impair the junior lender's security may create a superior equity in
favor of the junior lender. For example, if the borrower and the senior lender
agree to an increase in the principal amount of or the interest rate payable on
the senior loan, the senior lender may
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lose its priority to the extent any existing junior lender is harmed or the
borrower is additionally burdened. Third, if the borrower defaults on the
senior loan and/or any junior loan or loans, the existence of junior loans and
actions taken by junior lenders can impair the security available to the senior
lender and can interfere with or delay the taking of action by the senior
lender. Moreover, the bankruptcy of a junior lender may operate to stay
foreclosure or similar proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply
to certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not so rejected, any state is
authorized by the law to adopt a provision limiting discount points or other
charges on mortgage loans covered by Title V. Certain states have taken action
to reimpose interest rate limits and/or to limit discount points or other
charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan
provides for such interest rate, discount points and charges as are permitted
in such state or (ii) such Mortgage Loan provides that the terms thereof are to
be construed in accordance with the laws of another state under which such
interest rate, discount points and charges would not be usurious and the
borrower's counsel has rendered an opinion that such choice of law provision
would be given effect.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a
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commercial facility are to be made so that, to the maximum extent feasible,
such altered portions are readily accessible to and usable by disabled
individuals. The "readily achievable" standard takes into account, among other
factors, the financial resources of the affected site, owner, landlord or other
applicable person. In addition to imposing a possible financial burden on the
borrower in its capacity as owner or landlord, the ADA may also impose such
requirements on a foreclosing lender who succeeds to the interest of the
borrower as owner or landlord. Furthermore, since the "readily achievable"
standard may vary depending on the financial condition of the owner or
landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies
to individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer
or Special Servicer to collect full amounts of interest on certain of the
Mortgage Loans. Any shortfalls in interest collections resulting from the
application of the Relief Act would result in a reduction of the amounts
distributable to the holders of the related series of Certificates, and would
not be covered by advances or, unless otherwise specified in the related
Prospectus Supplement, any form of Credit Support provided in connection with
such Certificates. In addition, the Relief Act imposes limitations that would
impair the ability of the Master Servicer or Special Servicer to foreclose on
an affected Mortgage Loan during the borrower's period of active duty status,
and, under certain circumstances, during an additional three month period
thereafter.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction.
The government must publish notice of the forfeiture proceeding and may give
notice to all parties "known to have an alleged interest in the property",
including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as regulations
(the "REMIC Regulations") promulgated by the U.S. Department of Treasury (the
"Treasury"). Investors should consult their own tax advisors in determining the
federal, state, local and other tax consequences to them of the purchase,
ownership and disposition of Certificates.
For purposes of this discussion, (i) references to the Mortgage Loans
include references to the mortgage loans underlying MBS included in the
Mortgage Assets and (ii) where the applicable Prospectus Supplement provides
for a fixed retained yield with respect to the Mortgage Loans underlying a
series of Certificates, references to the Mortgage Loans will be deemed to
refer to that portion of the Mortgage Loans held by the Trust Fund which does
not include the Retained Interest. References to a "holder" or
"Certificateholder" in this discussion generally mean the beneficial owner of a
Certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General
With respect to a particular series of Certificates, an election may be
made to treat the Trust Fund or one or more segregated pools of assets therein
as one or more REMICs within the meaning of Code Section 860D. A Trust Fund or
a portion thereof as to which a REMIC election will be made will be referred to
as a "REMIC Pool". For purposes of this discussion, Certificates of a series as
to which one or more REMIC elections are made are referred to as "REMIC
Certificates" and will consist of one or more Classes of "Regular Certificates"
and one Class of "Residual Certificates" in the case of each REMIC Pool.
Qualification as a REMIC requires ongoing compliance with certain conditions.
With respect to each series of REMIC Certificates, Cadwalader, Wickersham &
Taft or Latham & Watkins, counsel to the Depositor, has advised the Depositor
that in the firm's opinion, assuming (i) the making of such an election, (ii)
compliance with the Pooling Agreement and (iii) compliance with any changes in
the law, including any amendments to the Code or applicable Treasury
regulations thereunder, each REMIC Pool will qualify as a REMIC. In such case,
the Regular Certificates will be considered to be "regular interests" in the
REMIC Pool and generally will be treated for federal income tax purposes as if
they were newly originated debt instruments, and the Residual Certificates will
be considered to be "residual interests" in the REMIC Pool. The Prospectus
Supplement for each series of Certificates will indicate whether one or more
REMIC elections with respect to the related Trust Fund will be made, in which
event references to "REMIC" or "REMIC Pool" herein shall be deemed to refer to
each such REMIC Pool. If so specified in the applicable Prospectus Supplement,
the portion of a Trust Fund as to which a REMIC election is not made may be
treated as a grantor trust for federal income tax purposes. See "--Federal
Income Tax Consequences for Certificates as to Which No REMIC Election Is
Made".
Status of REMIC Certificates
REMIC Certificates held by a domestic building and loan association will
constitute "a regular or residual interest in a REMIC" within the meaning of
Code Section 7701(a)(19)(C)(xi), but only in the same proportion that the
assets of the REMIC Pool would be treated as "loans . . . secured by an
interest in real property which is . . . residential real property" (such as
single family or multifamily properties, but not commercial properties) within
the meaning of Code Section 7701(a)(19)(C)(v) or as other assets described in
Code Section 7701(a)(19)(C), and otherwise will
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not qualify for such treatment. REMIC Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(5)(A), and interest on the Regular Certificates and income
with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the REMIC Pool would be so
treated. If at all times 95% or more of the assets of the REMIC Pool qualify
for each of the foregoing respective treatments, the REMIC Certificates will
qualify for the corresponding status in their entirety. For purposes of Code
Section 856(c)(5)(A), payments of principal and interest on the Mortgage Loans
that are reinvested pending distribution to holders of REMIC Certificates
qualify for such treatment. Where two REMIC Pools are a part of a tiered
structure they will be treated as one REMIC for purposes of the tests described
above respecting asset ownership of more or less than 95%. In addition, if the
assets of the REMIC include Buy-Down Mortgage Loans, it is possible that the
percentage of such assets constituting "loans . . . secured by an interest in
real property which is . . . residential real property" for purposes of Code
Section 7701(a)(19)(C)(v) may be required to be reduced by the amount of the
related Buy-Down Funds. REMIC Certificates held by a regulated investment
company will not constitute "Government Securities" within the meaning of Code
Section 851(b)(4)(A)(i). REMIC Certificates held by certain financial
institutions will constitute an "evidence of indebtedness" within the meaning
of Code Section 582(c)(1). The Small Business Job Protection Act of 1996 (the
"SBJPA of 1996") repealed the reserve method for bad debts of domestic building
and loan associations and mutual savings banks, and thus has eliminated the
asset category of "qualifying real property loans" in former Code Section
593(d) for taxable years beginning after December 31, 1995. The requirement in
the SBJPA of 1996 that such institutions must "recapture" a portion of their
existing bad debt reserves is suspended if a certain portion of their assets
are maintained in "residential loans" under Code Section 7701(a)(19)(C)(v), but
only if such loans were made to acquire, construct or improve the related real
property and not for the purpose of refinancing. However, no effort will be
made to identify the portion of the Mortgage Loans of any Series meeting this
requirement, and no representation is made in this regard.
Qualification as a REMIC
In order for the REMIC Pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in the
Code. The REMIC Pool must fulfill an asset test, which requires that no more
than a de minimis portion of the assets of the REMIC Pool, as of the close of
the third calendar month beginning after the "Startup Day" (which for purposes
of this discussion is the date of issuance of the REMIC Certificates) and at
all times thereafter, may consist of assets other than "qualified mortgages"
and "permitted investments". The REMIC Regulations provide a safe harbor
pursuant to which the de minimis requirement is met if at all times the
aggregate adjusted basis of the nonqualified assets is less than 1% of the
aggregate adjusted basis of all the REMIC Pool's assets. An entity that fails
to meet the safe harbor may nevertheless demonstrate that it holds no more than
a de minimis amount of nonqualified assets. A REMIC also must provide
"reasonable arrangements" to prevent its residual interest from being held by
"disqualified organizations" and must furnish applicable tax information to
transferors or agents that violate this requirement. The Pooling Agreement for
each Series will contain a provision designed to meet this requirement. See
"Taxation of Residual Certificates--Tax-Related Restrictions on Transfer of
Residual Certificates--Disqualified Organizations".
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter pursuant to a fixed price contract in effect on the Startup Day.
Qualified mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, including certain of the MBS, regular interests in another REMIC, such
as MBS in a trust as to which a REMIC election has been made, loans secured by
timeshare interests and loans secured by shares held by a tenant stockholder in
a cooperative housing corporation, provided, in general, (i) the fair
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market value of the real property security (including buildings and structural
components thereof) is at least 80% of the principal balance of the related
Mortgage Loan or mortgage loan underlying the Mortgage Certificate either at
origination or as of the Startup Day (an original loan-to-value ratio of not
more than 125% with respect to the real property security) or (ii)
substantially all the proceeds of the Mortgage Loan or the underlying mortgage
loan were used to acquire, improve or protect an interest in real property
that, at the origination date, was the only security for the Mortgage Loan or
underlying mortgage loan. If the Mortgage Loan has been substantially modified
other than in connection with a default or reasonably foreseeable default, it
must meet the loan-to-value test in (i) of the preceding sentence as of the
date of the last such modification or at closing. A qualified mortgage includes
a qualified replacement mortgage, which is any property that would have been
treated as a qualified mortgage if it were transferred to the REMIC Pool on the
Startup Day and that is received either (i) in exchange for any qualified
mortgage within a three-month period thereafter or (ii) in exchange for a
"defective obligation" within a two-year period thereafter. A "defective
obligation" includes (i) a mortgage in default or as to which default is
reasonably foreseeable, (ii) a mortgage as to which a customary representation
or warranty made at the time of transfer to the REMIC Pool has been breached,
(iii) a mortgage that was fraudulently procured by the mortgagor, and (iv) a
mortgage that was not in fact principally secured by real property (but only if
such mortgage is disposed of within 90 days of discovery). A Mortgage Loan that
is "defective" as described in clause (iv) that is not sold or, if within two
years of the Startup Day, exchanged, within 90 days of discovery, ceases to be
a qualified mortgage after such 90-day period.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until the next scheduled distribution to holders of interests in the REMIC
Pool. A qualified reserve asset is any intangible property held for investment
that is part of any reasonably required reserve maintained by the REMIC Pool to
provide for payments of expenses of the REMIC Pool or amounts due on the
regular or residual interests in the event of defaults (including
delinquencies) on the qualified mortgages, lower than expected reinvestment
returns, prepayment interest shortfalls and certain other contingencies. The
reserve fund will be disqualified if more than 30% of the gross income from the
assets in such fund for the year is derived from the sale or other disposition
of property held for less than three months, unless required to prevent a
default on the regular interests caused by a default on one or more qualified
mortgages. A reserve fund must be reduced "promptly and appropriately" as
payments on the Mortgage Loans are received. Foreclosure property is real
property acquired by the REMIC Pool in connection with the default or imminent
default of a qualified mortgage and generally not held beyond the close of the
third calendar year following the acquisition of the property by the REMIC
Pool, with an extension that may be granted by the Internal Revenue Service
(the "Service").
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a REMIC
Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. Such a
specified portion may consist of a fixed number of basis points, a fixed
percentage of the total interest, or a fixed or qualified variable or inverse
variable rate on some or all of the qualified mortgages minus a different fixed
or qualified variable rate. The specified principal amount of a regular
interest that provides for interest payments consisting of a specified,
nonvarying portion of interest payments on qualified mortgages may be zero. A
residual interest is an interest in a REMIC Pool other than a regular interest
that is issued on the Startup Day and that is designated as a residual
interest. An interest
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in a REMIC Pool may be treated as a regular interest even if payments of
principal with respect to such interest are subordinated to payments on other
regular interests or the residual interest in the REMIC Pool, and are dependent
on the absence of defaults or delinquencies on qualified mortgages or permitted
investments, lower than reasonably expected returns on permitted investments,
unanticipated expenses incurred by the REMIC Pool or prepayment interest
shortfalls. Accordingly, the Regular Certificates of a series will constitute
one or more classes of regular interests, and the Residual Certificates with
respect to that series will constitute a single class of residual interests on
which distributions are made pro rata.
If an entity, such as the REMIC Pool, 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 the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue 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 the REMIC Pool 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 tax on all or a
portion of the REMIC Pool's income for the period of time in which the
requirements for REMIC status are not satisfied.
TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by such Regular Certificateholders.
Original Issue Discount
Accrual Certificates and principal-only Certificates will be, and other
Classes of Regular Certificates may be, issued with "original issue discount"
within the meaning of Code Section 1273(a). Holders of any Class of Regular
Certificates having original issue discount generally must include original
issue discount in ordinary income for federal income tax purposes as it
accrues, in accordance with the constant yield method that takes into account
the compounding of interest, in advance of receipt of the cash attributable to
such income. The following discussion is based in part on temporary and final
Treasury regulations issued on February 2, 1994, as amended on June 14, 1996
(the "OID Regulations") under Code Sections 1271 through 1273 and 1275 and in
part on the provisions of the 1986 Act. Regular Certificateholders should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities, such as the Regular Certificates. To
the extent such issues are not addressed in such regulations, the Depositor
intends to apply the methodology described in the Conference Committee Report
to the 1986 Act. No assurance can be provided that the Service will not take a
different position as to those matters not currently addressed by the OID
Regulations. Moreover, the OID Regulations include an anti-abuse rule allowing
the Service to apply or depart from the OID Regulations where necessary or
appropriate to ensure a reasonable tax result in light of the applicable
statutory provisions. A tax result will not be considered unreasonable under
the anti-abuse rule in the absence of a substantial effect on the present value
of a taxpayer's tax liability. Investors are advised to consult their own tax
advisors as to the discussion herein and the appropriate method for reporting
interest and original issue discount with respect to the Regular Certificates.
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Each Regular Certificate (except to the extent described below with
respect to a Regular Certificate on which principal is distributed by random
lot ("Random Lot Certificates")) will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption price
at maturity" of the Regular Certificate over its "issue price". The issue price
of a Class of Regular Certificates offered pursuant to this Prospectus
generally is the first price at which a substantial amount of Regular
Certificates of that Class is sold to the public (excluding bond houses,
brokers and underwriters). Although unclear under the OID Regulations, the
Depositor intends to treat the issue price of a Class as to which there is no
substantial sale as of the issue date or that is retained by the Depositor as
the fair market value of that Class as of the issue date. The issue price of a
Regular Certificate also includes the amount paid by an initial Regular
Certificateholder for accrued interest that relates to a period prior to the
issue date of the Regular Certificate, unless the Regular Certificateholder
elects on its federal income tax return to exclude such amount from the issue
price and to recover it on the first Distribution Date. The stated redemption
price at maturity of a Regular Certificate always includes the original
principal amount of the Regular Certificate, but generally will not include
distributions of stated interest if such interest distributions constitute
"qualified stated interest". Under the OID Regulations, qualified stated
interest generally means interest payable at a single fixed rate or a qualified
variable rate (as described below) provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the Regular Certificate. Because there is no penalty or default remedy in
the case of nonpayment of interest with respect to a Regular Certificate, it is
possible that no interest on any Class of Regular Certificates will be treated
as qualified stated interest. However, except as provided in the following
three sentences or in the applicable Prospectus Supplement, because the
underlying Mortgage Loans provide for remedies in the event of default, the
Depositor intends to treat interest with respect to the Regular Certificates as
qualified stated interest. Distributions of interest on an Accrual Certificate,
or on other Regular Certificates with respect to which deferred interest will
accrue, will not constitute qualified stated interest, in which case the stated
redemption price at maturity of such Regular Certificates includes all
distributions of interest as well as principal thereon. Likewise, the Depositor
intends to treat an "interest only" class, or a class on which interest is
substantially disproportionate to its principal amount (a so-called
"super-premium" class) as having no qualified stated interest. 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,
the interest attributable to the additional days will be included in the stated
redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until each
distribution is scheduled to be made by a fraction, the numerator of which is
the amount of each distribution included in the stated redemption price at
maturity of the Regular Certificate and the denominator of which is the stated
redemption price at maturity of the Regular Certificate. The Conference
Committee Report to the 1986 Act provides that the schedule of such
distributions should be determined in accordance with the assumed rate of
prepayment of the Mortgage Loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates.
The Prepayment Assumption with respect to a Series of Regular Certificates will
be set forth in the related Prospectus Supplement. Holders generally must
report de minimis original issue discount pro rata as principal payments are
received, and such income will be capital gain if the Regular Certificate is
held as a capital asset. However, under the OID Regulations, Regular
Certificateholders may elect to accrue all de minimis original issue discount
as well as market discount and market premium under the constant yield method.
See "Election to Treat All Interest Under the Constant Yield Method".
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A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Depositor will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. With respect to each Regular Certificate, a calculation will be made of
the original issue discount that accrues during each successive full accrual
period (or shorter period from the date of original issue) that ends on the day
before the related Distribution Date on the Regular Certificate. The Conference
Committee Report to the 1986 Act states that the rate of accrual of original
issue discount is intended to be based on the Prepayment Assumption. Other than
as discussed below with respect to a Random Lot Certificate, the original issue
discount accruing in a full accrual period would be the excess, if any, of (i)
the sum of (a) the present value of all of the remaining distributions to be
made on the Regular Certificate as of the end of that accrual period that are
included in the Regular Certificate's stated redemption price at maturity and
(b) the distributions made on the Regular Certificate during the accrual period
that are included in the Regular Certificate's stated redemption price at
maturity, over (ii) the adjusted issue price of the Regular Certificate at the
beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence is calculated based on (i)
the yield to maturity of the Regular Certificate at the issue date, (ii) events
(including actual prepayments) that have occurred prior to the end of the
accrual period and (iii) the Prepayment Assumption. For these purposes, the
adjusted issue price of a Regular Certificate at the beginning of any accrual
period equals the issue price of the Regular Certificate, increased by the
aggregate amount of original issue discount with respect to the Regular
Certificate that accrued in all prior accrual periods and reduced by the amount
of distributions included in the Regular Certificate's stated redemption price
at maturity that were made on the Regular Certificate in such prior periods.
The original issue discount accruing during any accrual period (as determined
in this paragraph) will then be divided by the number of days in the period to
determine the daily portion of original issue discount for each day in the
period. With respect to an initial accrual period shorter than a full accrual
period, the daily portions of original issue discount must be determined
according to an appropriate allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
In the case of a Random Lot Certificate, the Depositor intends to
determine the yield to maturity of such Certificate based upon the anticipated
payment characteristics of the Class as a whole under the Prepayment
Assumption. In general, the original issue discount accruing on each Random Lot
Certificate in a full accrual period would be its allocable share of the
original issue discount with respect to the entire Class, as determined in
accordance with the preceding paragraph. However, in the case of a distribution
in retirement of the entire unpaid principal balance of any Random Lot
Certificate (or portion of such unpaid principal balance), (a) the remaining
unaccrued original issue discount allocable to such Certificate (or to such
portion) will accrue at the time of such distribution, and (b) the accrual of
original issue discount allocable to each remaining Certificate of such Class
(or the remaining unpaid principal balance of a partially redeemed Random Lot
Certificate after a distribution of principal has been received) will be
adjusted by reducing the present value of the remaining payments on such Class
and the adjusted issue price of such Class to the extent attributable to the
portion of the unpaid principal balance thereof that was distributed. The
Depositor believes that the foregoing treatment is consistent
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with the "pro rata prepayment" rules of the OID Regulations, but with the rate
of accrual of original issue discount determined based on the Prepayment
Assumption for the Class as a whole. Investors are advised to consult their tax
advisors as to this treatment.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under
the constant yield method, as described below under the heading "Election to
Treat All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified amount and (ii) the interest compounds or is
payable at least annually at current values of (a) one or more "qualified
floating rates", (b) a single fixed rate and one or more qualified floating
rates, (c) a single "objective rate", or (d) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate". A floating rate is
a qualified floating rate if variations in the rate can reasonably be expected
to measure contemporaneous variations in the cost of newly borrowed funds,
where such rate is subject to a fixed multiple that is greater than 0.65, but
not more than 1.35. Such rate may also be increased or decreased by a fixed
spread or subject to a fixed cap or floor, or a cap or floor that is not
reasonably expected as of the issue date to affect the yield of the instrument
significantly. An objective rate (other than a qualified floating rate) is a
rate that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that such information is
not (i) within the control of the issuer or a related party or (ii) unique to
the circumstances of the issuer or a related party. A qualified inverse
floating rate is a rate equal to a fixed rate minus a qualified floating rate
that inversely reflects contemporaneous variations in the cost of newly
borrowed funds; an inverse floating rate that is not a qualified floating rate
may nevertheless be an objective rate. A Class of Regular Certificates may be
issued under this Prospectus that does not have a variable rate under the OID
Regulations, for example, a Class that bears different rates at different times
during the period it is outstanding such that it is considered significantly
"front-loaded" or "back-loaded" within the meaning of the OID Regulations. It
is possible that such a Class may be considered to bear "contingent interest"
within the meaning of the OID Regulations. The OID Regulations, as they relate
to the treatment of contingent interest, are by their terms not applicable to
Regular Certificates. However, if final regulations dealing with contingent
interest with respect to Regular Certificates apply the same principles as the
OID Regulations, such regulations may lead to different timing of income
inclusion than would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on
the sale of contingent interest Regular Certificates as ordinary income.
Investors should consult their tax advisors regarding the appropriate treatment
of any Regular Certificate that does not pay interest at a fixed rate or
variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or average of two or more
variable rates), including a rate based on the average cost of funds of one or
more financial institutions, or a positive or negative multiple of such a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the Mortgage Loans, including such
a rate that is subject to one or more caps or floors, or (ii) bearing one or
more such variable rates for one or more periods or one or more
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fixed rates for one or more periods, and a different variable rate or fixed
rate for other periods qualifies as a regular interest in a REMIC. Accordingly,
unless otherwise indicated in the applicable Prospectus Supplement, the
Depositor intends to treat Regular Certificates that qualify as regular
interests under this rule in the same manner as obligations bearing a variable
rate for original issue discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity and
future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant Class. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositor intends to
treat such variable interest as qualified stated interest, other than variable
interest on an interest-only or super-premium Class, which will be treated as
non-qualified stated interest includible in the stated redemption price at
maturity. Ordinary income reportable for any period will be adjusted based on
subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent
that initial "teaser" rates cause sufficiently "back-loaded" interest to create
more than de minimis original issue discount. The yield on such Regular
Certificates for purposes of accruing original issue discount will be a
hypothetical fixed rate based on the fixed rates, in the case of fixed rate
Mortgage Loans, and initial "teaser rates" followed by fully indexed rates, in
the case of adjustable rate Mortgage Loans. In the case of adjustable rate
Mortgage Loans, the applicable index used to compute interest on the Mortgage
Loans in effect on the pricing date (or possibly the issue date) will be deemed
to be in effect beginning with the period in which the first weighted average
adjustment date occurring after the issue date occurs. Adjustments will be made
in each accrual period either increasing or decreasing the amount of ordinary
income reportable to reflect the actual Pass-Through Rate on the Regular
Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be Deferred Interest is includible in the stated redemption
price at maturity thereof. Accordingly, any Deferred Interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such Deferred Interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated
redemption price at maturity thereof are received, in an amount not exceeding
any such distribution. Such market discount would accrue in a manner to be
provided in Treasury regulations and should take into account the Prepayment
Assumption. The Conference Committee Report to the 1986 Act provides that until
such regulations are issued, such market discount would accrue either (i) on
the basis of a constant interest rate or (ii) in the ratio of stated interest
allocable to the relevant period to the sum of the interest for such period
plus the remaining
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interest as of the end of such period, or in the case of a Regular Certificate
issued with original issue discount, in the ratio of original issue discount
accrued for the relevant period to the sum of the original issue discount
accrued for such period plus the remaining original issue discount as of the
end of such period. 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 market discount accrued to the date of
disposition under one of the foregoing methods, less any accrued market
discount previously reported as ordinary income as partial distributions in
reduction of the stated redemption price at maturity were received. Such
purchaser will be required to defer deduction of a portion of the excess of the
interest paid or accrued on indebtedness incurred to purchase or carry a
Regular Certificate over the interest distributable thereon. The deferred
portion of such interest expense in any taxable year generally will not exceed
the accrued market discount on the Regular Certificate for such year. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized or the
Regular Certificate is disposed of. As an alternative to the inclusion of
market discount in income on the foregoing basis, the Regular Certificateholder
may elect to include market discount in income currently as it accrues on all
market discount instruments acquired by such Regular Certificateholder in that
taxable year or thereafter, in which case the interest deferral rule will not
apply. See "Election to Treat All Interest Under the Constant Yield Method"
below regarding an alternative manner in which such election may be deemed to
be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount would be
reported in a manner similar to de minimis original issue discount. See
"Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. Investors
should also consult Revenue Procedure 92-67 concerning the elections to include
market discount in income currently and to accrue market discount on the basis
of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at
a premium. If the Regular Certificateholder holds such Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. Treasury Regulatons issued under Code Section
171 do not, by their terms, apply to REMIC Regular Certificates, which are
prepayable based on prepayments on the underlying Mortgage Loans. However, the
Conference Committee Report to the 1986 Act indicates a Congressional intent
that the same rules that will apply to the accrual of market discount on
installment obligations will also apply to amortizing bond premium under Code
Section 171 on installment obligations such as the Regular Certificates,
although it is unclear whether the alternatives to the constant yield method
described above under "Market Discount" are available. Amortizable bond premium
will be treated as an offset to interest income on a Regular Certificate rather
than as a separate deduction item. See "Election to Treat All Interest Under
the Constant Yield Method" below regarding an alternative manner in which the
Code Section 171 election may be deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being
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treated as qualified stated interest. For purposes of applying the constant
yield method to a debt instrument subject to such an election, (i) "interest"
includes stated interest, original issue discount, de minimis original issue
discount, market discount and de minimis market discount, as adjusted by any
amortizable bond premium or acquisition premium and (ii) the debt instrument is
treated as if the instrument were issued on the holder's acquisition date in
the amount of the holder's adjusted basis immediately after acquisition. It is
unclear whether, for this purpose, the initial Prepayment Assumption would
continue to apply or if a new prepayment assumption as of the date of the
holder's acquisition would apply. A holder generally may make such an election
on an instrument by instrument basis or for a class or group of debt
instruments. However, if the holder makes such an election with respect to a
debt instrument with amortizable bond premium or with market discount, the
holder is deemed to have made elections to amortize bond premium or to report
market discount income currently as it accrues under the constant yield method,
respectively, for all debt instruments acquired by the holder in the same
taxable year or thereafter. The election is made on the holder's federal income
tax return for the year in which the debt instrument is acquired and is
irrevocable except with the approval of the Service. Investors should consult
their own tax advisors regarding the advisability of making such an election.
Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by
previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
long-term capital gain holding period (currently more than one year). Such gain
will be treated as ordinary income (i) if a Regular Certificate is held as part
of a "conversion transaction" as defined in Code Section 1258(c), up to the
amount of interest that would have accrued on the Regular Certificateholder's
net investment in the conversion transaction at 120% of the appropriate
applicable Federal rate under Code Section 1274(d) in effect at the time the
taxpayer entered into the transaction minus any amount previously treated as
ordinary income with respect to any prior distribution of property that was
held as a part of such transaction, (ii) in the case of a non-corporate
taxpayer, to the extent such taxpayer has made an election under Code Section
163(d)(4) to have net capital gains taxed as investment income at ordinary
rates, or (iii) to the extent that such gain does not exceed the excess, if
any, of (a) the amount that would have been includible in the gross income of
the holder if its yield on such Regular Certificate were 110% of the applicable
Federal rate as of the date of purchase, over (b) the amount of income actually
includible in the gross income of such holder with respect to the Regular
Certificate. In addition, gain or loss recognized from the sale of a Regular
Certificate by certain banks or thrift institutions will be treated as ordinary
income or loss pursuant to Code Section 582(c). Capital gains of certain
non-corporate taxpayers generally are subject to a lower maximum tax rate (20%)
than ordinary income of such taxpayers (39.6%) for property held for more than
one year. The maximum tax rate for corporations is the same with respect to
both ordinary income and capital gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in
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distributions attributable to defaults or delinquencies on the Mortgage Loans
allocable to a particular class of Regular Certificates, except to the extent
it can be established that such losses are uncollectible. Accordingly, the
holder of a Regular Certificate may have income, or may incur a diminution in
cash flow as a result of a default or delinquency, but may not be able to take
a deduction (subject to the discussion below) for the corresponding loss until
a subsequent taxable year. In this regard, investors are cautioned that while
they may generally cease to accrue interest income if it reasonably appears
that the interest will be uncollectible, the Internal Revenue Service may take
the position that original issue discount must continue to be accrued in spite
of its uncollectibility until the debt instrument is disposed of in a taxable
transaction or becomes worthless in accordance with the rules of Code Section
166. To the extent the rules of Code Section 166 regarding bad debts are
applicable, it appears that holders of Regular Certificates that are
corporations or that otherwise hold the Regular Certificates in connection with
a trade or business should in general be allowed to deduct as an ordinary loss
any such loss sustained during the taxable year on account of any such Regular
Certificates becoming wholly or partially worthless, and that, in general,
holders of Regular Certificates that are not corporations and do not hold the
Regular Certificates in connection with a trade or business will be allowed to
deduct as a short-term capital loss any loss with respect to principal
sustained during the taxable year on account of a portion of any class or
subclass of such Regular Certificates becoming wholly worthless. Although the
matter is not free from doubt, non-corporate holders of Regular Certificates
should be allowed a bad debt deduction at such time as the principal balance of
any class or subclass of such Regular Certificates is reduced to reflect losses
resulting from any liquidated Mortgage Loans. The Service, however, could take
the position that non-corporate holders will be allowed a bad debt deduction to
reflect such losses only after all Mortgage Loans remaining in the Trust Fund
have been liquidated or such class of Regular Certificates has been otherwise
retired. The Service could also assert that losses on the Regular Certificates
are deductible based on some other method that may defer such deductions for
all holders, such as reducing future cash flow for purposes of computing
original issue discount. This may have the effect of creating "negative"
original issue discount which would be deductible only against future positive
original issue discount or otherwise upon termination of the Class. Holders of
Regular Certificates are urged to consult their own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
such Regular Certificates. While losses attributable to interest previously
reported as income should be deductible as ordinary losses by both corporate
and non-corporate holders, the Internal Revenue Service may take the position
that losses attributable to accrued original issue discount may only be
deducted as short-term capital losses by non-corporate holders not engaged in a
trade or business. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. Such taxpayers
are advised to consult their tax advisors regarding the treatment of losses on
Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"), and
will not be taxed separately to the REMIC Pool. The daily portions of REMIC
taxable income or net loss of a Residual Certificateholder are determined by
allocating the REMIC Pool's taxable income or net loss for each calendar
quarter ratably to each day in such quarter and by allocating such daily
portion among the Residual Certificateholders in proportion to their respective
holdings of Residual Certificates in the REMIC Pool on such day. 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
limitations 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.
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The REMIC Pool's gross income includes interest, original issue discount income
and market discount income, if any, on the Mortgage Loans, reduced by
amortization of any premium on the Mortgage Loans, plus income from
amortization of issue premium, if any, on the Regular Certificates, plus income
on reinvestment of cash flows and reserve assets, plus any cancellation of
indebtedness income upon allocation of realized losses to the Regular
Certificates. The REMIC Pool's deductions include interest and original issue
discount expense on the Regular Certificates, servicing fees on the Mortgage
Loans, other administrative expenses of the REMIC Pool and realized losses on
the Mortgage Loans. The requirement that Residual Certificateholders report
their pro rata share of taxable income or net loss of the REMIC Pool will
continue until there are no Certificates of any class of the related series
outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the Mortgage Loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the Regular Certificates or income from amortization of
issue premium on the Regular Certificates, on the other hand. In the event that
an interest in the Mortgage Loans is acquired by the REMIC Pool at a discount,
and one or more of such Mortgage Loans is prepaid, the Residual
Certificateholder may recognize taxable income without being entitled to
receive a corresponding amount of cash because (i) the prepayment may be used
in whole or in part to make distributions in reduction of principal on the
Regular Certificates and (ii) the discount on the Mortgage Loans which is
includible in income may exceed the deduction allowed upon such distributions
on those Regular Certificates on account of any unaccrued original issue
discount relating to those Regular Certificates. When there is more than one
class of Regular Certificates that distribute principal sequentially, this
mismatching of income and deductions is particularly likely to occur in the
early years following issuance of the Regular Certificates when distributions
in reduction of principal are being made in respect of earlier classes of
Regular Certificates to the extent that such classes are not issued with
substantial discount. If taxable income attributable to such a mismatching is
realized, in general, losses would be allowed in later years as distributions
on the later classes of Regular Certificates are made. Taxable income may also
be greater in earlier years than in later years as a result of the fact that
interest expense deductions, expressed as a percentage of the outstanding
principal amount of such a series of Regular Certificates, may increase over
time as distributions in reduction of principal are made on the lower yielding
classes of Regular Certificates, whereas to the extent that the REMIC Pool
includes fixed rate Mortgage Loans, interest income with respect to any given
Mortgage Loan will remain constant over time as a percentage of the outstanding
principal amount of that loan. Consequently, Residual Certificateholders must
have sufficient other sources of cash to pay any federal, state or local income
taxes due as a result of such mismatching or unrelated deductions against which
to offset such income, subject to the discussion of "excess inclusions" below
under "Limitations on Offset or Exemption of REMIC Income". The timing of such
mismatching of income and deductions described in this paragraph, if present
with respect to a series of Certificates, may have a significant adverse effect
upon the Residual Certificateholder's after-tax rate of return. In addition, a
Residual Certificateholder's taxable income during certain periods may exceed
the income reflected by such Residual Certificateholder for such periods in
accordance with generally accepted accounting principles. Investors should
consult their own accountants concerning the accounting treatment of their
investment in Residual Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of disposition
of the Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder
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and will be decreased (but not below zero), first, by a cash distribution from
the REMIC Pool and, second, by the amount of loss of the REMIC Pool reportable
by the Residual Certificateholder. Any loss that is disallowed on account of
this limitation may be carried over indefinitely with respect to the Residual
Certificateholder as to whom such loss was disallowed and may be used by such
Residual Certificateholder only to offset any income generated by the same
REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not include
cash received by the REMIC Pool that represents a recovery of the REMIC Pool's
basis in its assets. Such recovery of basis by the REMIC Pool will have the
effect of amortization of the issue price of the Residual Certificates over
their life. However, in view of the possible acceleration of the income of
Residual Certificateholders described above under "Taxation of REMIC Income",
the period of time over which such issue price is effectively amortized may be
longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a residual
interest as zero rather than such negative amount for purposes of determining
the REMIC Pool's basis in its assets. The preamble to the REMIC Regulations
states that the Service may provide future guidance on the proper tax treatment
of payments made by a transferor of such a residual interest to induce the
transferee to acquire the interest, and Residual Certificateholders should
consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
Mortgage Loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not so
provide. See "Treatment of Certain Items of REMIC Income and Expense--Market
Discount" below regarding the basis of Mortgage Loans to the REMIC Pool and
"Sale or Exchange of a Residual Certificate" below regarding possible treatment
of a loss upon termination of the REMIC Pool as a capital loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital
gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount income
on Regular Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates", without regard to the de minimis rule described therein, and
"--Premium".
Deferred Interest. Any Deferred Interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner similar to the Deferred Interest
that accrues with respect to Regular Certificates as described above under
"Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool allocable
to such Mortgage Loans is exceeded by their unpaid principal balances. The
REMIC Pool's basis in such Mortgage Loans is generally the fair market value of
the Mortgage Loans immediately after the transfer thereof to the REMIC Pool.
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The REMIC Regulations provide that such basis is equal in the aggregate to the
issue prices of all regular and residual interests in the REMIC Pool (or the
fair market value thereof at the Closing Date, in the case of a retained
Class). In respect of Mortgage Loans that have market discount to which Code
Section 1276 applies, the accrued portion of such market discount would be
recognized currently as an item of ordinary income in a manner similar to
original issue discount. Market discount income generally should accrue in the
manner described above under "Taxation of Regular Certificates--Market
Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the
amount of such excess. As stated above, the REMIC Pool's basis in Mortgage
Loans is the fair market value of the Mortgage Loans, based on the aggregate of
the issue prices (or the fair market value of retained Classes) of the regular
and residual interests in the REMIC Pool immediately after the transfer thereof
to the REMIC Pool. In a manner analogous to the discussion above under
"Taxation of Regular Certificates--Premium", a REMIC Pool that holds a Mortgage
Loan as a capital asset under Code Section 1221 may elect under Code Section
171 to amortize premium on whole mortgage loans or mortgage loans underlying
MBS that were originated after September 27, 1985 or MBS that are REMIC regular
interests under the constant yield method. Amortizable bond premium will be
treated as an offset to interest income on the Mortgage Loans, rather than as a
separate deduction item. To the extent that the mortgagors with respect to the
Mortgage Loans are individuals, Code Section 171 will not be available for
premium on Mortgage Loans (including underlying mortgage loans) originated on
or prior to September 27, 1985. Premium with respect to such Mortgage Loans may
be deductible in accordance with a reasonable method regularly employed by the
holder thereof. The allocation of such premium pro rata among principal
payments should be considered a reasonable method; however, the Service may
argue that such premium should be allocated in a different manner, such as
allocating such premium entirely to the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the "excess inclusion", is
equal to the excess of REMIC taxable income for the calendar quarter allocable
to a Residual Certificate over the daily accruals for such quarterly period of
(i) 120% of the long-term applicable Federal rate that would have applied to
the Residual Certificate (if it were a debt instrument) on the Startup Day
under Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the Residual
Certificateholder is an organization subject to the tax on unrelated business
income imposed by Code Section 511, the Residual Certificateholder's excess
inclusions will be treated as unrelated business taxable income of such
Residual Certificateholder for purposes of Code Section 511. In addition, REMIC
taxable income is subject to 30% withholding tax with respect to certain
persons who are not U.S. Persons (as defined below under "Tax-Related
Restrictions on Transfer of Residual Certificates--Foreign Investors"), and the
portion thereof attributable to excess inclusions is not eligible for any
reduction in the rate of withholding tax (by treaty or otherwise). See
"Taxation of Certain Foreign Investors--Residual Certificates" below. Finally,
if a real estate
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investment trust or a regulated investment company owns a Residual Certificate,
a portion (allocated under Treasury regulations yet to be issued) of dividends
paid by the real estate investment trust or a regulated investment company
could not be offset by net operating losses of its shareholders, would
constitute unrelated business taxable income for tax-exempt shareholders, and
would be ineligible for reduction of withholding to certain persons who are not
U.S. Persons. The SBJPA of 1996 has eliminated the special rule permitting
Section 593 institutions ("thrift institutions") to use net operating losses
and other allowable deductions to offset their excess inclusion income from
Residual Certificates that have "significant value" within the meaning of the
REMIC Regulations, effective for taxable years beginning after December 31,
1995, except with respect to Residual Certificates continuously held by thrift
institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions. These rules are effective for
taxable years beginning after December 31, 1996, unless a Residual
Certificateholder elects to have such rules apply only to taxable years
beginning after August 20, 1996.
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), 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. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department if
the Disqualified Organization promptly disposes of the residual interest and
the transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is 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 during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
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For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a Residual Certificate, all interests in the electing
large partnership are treated as held by Disqualified Organizations for
purposes of the tax imposed upon a Pass-Through Entity by section 860E(c) of
the Code. An exception to this tax, otherwise available to a Pass-Through
Entity that is furnished certain affidavits by record holders of interests in
the entity and that does not know such affidavits are false, is not available
to an electing large partnership.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if all
of its activities are subject to tax and a majority of its board of directors
is not selected by any such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless such organization is subject to the tax on
unrelated business income imposed by Code Section 511, (ii) "Pass-Through
Entity" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis (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) and (iii) an "electing large partnership" means any
partnership having more than 100 members during the preceding tax year (other
than certain service partnerships and commodity pools), which elect to apply
simplified reporting provisions under the Code.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void and will vest no rights in any purported
transferee. Each Residual Certificate with respect to a series will bear a
legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under the
Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must be
furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
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 Pool. Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" (as defined below) to a Residual Certificateholder (other than a
Residual Certificateholder who is not a U.S. Person, as defined below under
"Foreign Investors") is disregarded for all federal income tax purposes if a
significant purpose of the transferor is 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 the 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
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the accrued taxes. The anticipated excess inclusions and the present value rate
are determined in the same manner as set forth above under "Disqualified
Organizations". 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 found that the transferee historically had paid
its debts as they came due and found no significant evidence to indicate that
the transferee would not continue to pay its debts as they came due in the
future, and (ii) the transferee represents to the transferor that it
understands that, as the holder of the noneconomic residual interest, the
transferee may incur tax liabilities in excess of 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 Pooling Agreement with respect to
each series of Certificates will require the transferee of a Residual
Certificate to certify to the matters in the preceding sentence as part of the
affidavit described above under the heading "Disqualified Organizations". The
transferor must have no actual knowledge or reason to know that such statements
are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless
such transferee's income is effectively connected with the conduct of a trade
or business within the United States. A Residual Certificate is deemed to have
tax avoidance potential unless, at the time of the transfer, (i) the future
value of expected distributions equals at least 30% of the anticipated excess
inclusions after the transfer, and (ii) the transferor reasonably expects that
the transferee will receive sufficient distributions from the REMIC Pool at or
after the time at which the excess inclusions accrue and prior to the end of
the next succeeding taxable year for the accumulated withholding tax liability
to be paid. If the non-U.S. Person transfers the Residual Certificate back to a
U.S. Person, the transfer will be disregarded and the foreign transferor will
continue to be treated as the owner unless arrangements are made so that the
transfer does not have the effect of allowing the transferor to avoid tax on
accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person" means a citizen or resident of the United States, a corporation,
partnership (except to the extent provided in applicable Treasury regulations)
or other entity created or organized in or under the laws of the United States
or any political subdivision thereof, an estate that is subject to United
States federal income tax regardless of the source of its income or a trust if
a court within the United States is able to exercise primary supervision over
the administration of such trust, and one or more United States persons have
the authority to control all substantial decisions of such trust (or, to the
extent provided in applicable Treasury regulations, certain trusts in existence
on August 20, 1996 which are eligible to elect to be treated as U.S. Persons if
such election has been made).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under "Taxation
of Residual Certificates--Basis and Losses") of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition
to reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from
the REMIC Pool exceeds such adjusted basis on that Distribution Date. Such
income will be treated as gain from the sale or exchange of the Residual
Certificate. It is possible that the termination of the REMIC Pool may be
treated as a sale or exchange of a Residual Certificateholder's Residual
Certificate, in which case,
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if the Residual Certificateholder has an adjusted basis in such Residual
Certificateholder's Residual Certificate remaining when its interest in the
REMIC Pool terminates, and if such Residual Certificateholder holds such
Residual Certificate as a capital asset under Code Section 1221, then such
Residual Certificateholder will recognize a capital loss at that time in the
amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii) in
the case of a non-corporate taxpayer, to the extent such taxpayer has made an
election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 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) 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.
Mark to Market Regulations
The Service has issued regulations (the "Mark to Market Regulations")
under Code Section 475 relating to the requirement that a securities dealer
mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities of a dealer, except to the extent that
the dealer has specifically identified a security as held for investment. The
Mark to Market Regulations provide that, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked to market. The Mark to Market Regulations apply to all Residual
Certificates acquired on or after January 4, 1995.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage
other than for (a) substitution within two years of the Startup Day for a
defective (including a defaulted) obligation (or repurchase in lieu of
substitution of a defective (including a defaulted) obligation at any time) or
for any qualified mortgage within three months of the Startup Day, (b)
foreclosure, default or imminent default of a qualified mortgage, (c)
bankruptcy or insolvency of the REMIC Pool or (d) a qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction
to sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is
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outstanding). The REMIC Regulations indicate that the modification of a
Mortgage Loan generally will not be treated as a disposition if it is
occasioned by a default or reasonably foreseeable default, an assumption of the
Mortgage Loan, the waiver of a due-on-sale or due-on-encumbrance clause or the
conversion of an interest rate by a mortgagor pursuant to the terms of a
convertible adjustable rate Mortgage Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund
by a Residual Certificateholder, (iii) in the nature of a guarantee, (iv) made
to facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property", determined by
reference to the rules applicable to real estate investment trusts. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period ending with the third calendar year
following the year of acquisition of such property, with a possible extension.
Net income from foreclosure property generally means gain from the sale of a
foreclosure property that is inventory property and gross income from
foreclosure property other than qualifying rents and other qualifying income
for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
Trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Certificateholder for an
entire taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the Service of any adjustments to, among other things, items
of REMIC income, gain, loss, deduction or credit in a unified administrative
proceeding. The Residual Certificateholder owning the largest percentage
interest in the Residual Certificates will be obligated to act as "tax matters
person", as defined in applicable Treasury regulations, with respect to the
REMIC Pool. Each Residual Certificateholder
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will be deemed, by acceptance of such Residual Certificates, to have agreed (i)
to the appointment of the tax matters person as provided in the preceding
sentence and (ii) to the irrevocable designation of the Master Servicer as
agent for performing the functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a taxable
year of an individual taxpayer will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over $100,000 ($50,000 in the case of
a married individual filing a separate return) (subject to adjustments for
inflation) or (ii) 80% of the amount of itemized deductions otherwise allowable
for such year. In the case of a REMIC Pool, such deductions may include
deductions under Code Section 212 for the servicing fee and all administrative
and other expenses relating to the REMIC Pool, or any similar expenses
allocated to the REMIC Pool with respect to a regular interest it holds in
another REMIC. Such investors who hold REMIC Certificates either directly or
indirectly through certain pass-through entities may have their pro rata share
of such expenses allocated to them as additional gross income, but may be
subject to such limitation on deductions. In addition, such expenses are not
deductible at all for purposes of computing the alternative minimum tax, and
may cause such investors to be subject to significant additional tax liability.
Temporary Treasury regulations provide that the additional gross income and
corresponding amount of expenses generally are to be allocated entirely to the
holders of Residual Certificates in the case of a REMIC Pool that would not
qualify as a fixed investment trust in the absence of a REMIC election.
However, such additional gross income and limitation on deductions will apply
to the allocable portion of such expenses to holders of Regular Certificates,
as well as holders of Residual Certificates, where such Regular Certificates
are issued in a manner that is similar to pass-through certificates in a fixed
investment trust. In general, such allocable portion will be determined based
on the ratio that a REMIC Certificateholder's income, determined on a daily
basis, bears to the income of all holders of Regular Certificates and Residual
Certificates with respect to a REMIC Pool. As a result, individuals, estates or
trusts holding REMIC Certificates (either directly or indirectly through a
grantor trust, partnership, S corporation, REMIC, or certain other pass-through
entities described in the foregoing temporary Treasury regulations) may have
taxable income in excess of the interest income at the pass-through rate on
Regular Certificates that are issued in a single Class or otherwise
consistently with fixed investment trust status or in excess of cash
distributions for the related period on Residual Certificates. Unless otherwise
indicated in the applicable Prospectus Supplement, all such expenses will be
allocable to the Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S. Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States withholding
tax, provided that such Non-U.S. Person (i) is not a "10-percent shareholder"
within the meaning of Code Section 871(h)(3)(B) or a controlled foreign
corporation described in Code Section 881(c)(3)(C) and (ii) provides the
Trustee, or the person who would otherwise be required to withhold tax from
such distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial owner
and stating, among other things, that the beneficial owner of the Regular
Certificate is a Non-U.S. Person. If such statement, or any other required
statement, is not provided, 30% withholding will apply unless reduced or
eliminated pursuant to an applicable tax treaty or unless the interest on the
Regular
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Certificate is effectively connected with the conduct of a trade or business
within the United States by such Non-U.S. Person. In the latter case, such
Non-U.S. Person will be subject to United States federal income tax at regular
rates. Prepayment Premiums distributable to Regular Certificateholders who are
Non-U.S. Persons may be subject to 30% United States withholding tax. Investors
who are Non-U.S. Persons should consult their own tax advisors regarding the
specific tax consequences to them of owning a Regular Certificate. The term
"Non-U.S. Person" means any person who is not a U.S. Person.
The IRS recently issued final regulations (the "New Regulations") which
would provide alternative methods of satisfying the beneficial ownership
certification requirement described above. The New Regulations are effective
January 1, 2000, although valid withholding certificates that are held on
December 31, 1999, remain valid until the earlier of December 31, 2000 or the
due date of expiration of the certificate under the rules as currently in
effect. The New Regulations would require, in the case of Regular Certificates
held by a foreign partnership, that (x) the certification described above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. Non-U.S. Persons should consult their own tax advisors concerning
the application of the certification requirements in the New Regulations.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30%
withholding tax (or lower treaty rate) to the extent of that portion of REMIC
taxable income that constitutes an "excess inclusion". See "Taxation of
Residual Certificates--Limitations on Offset or Exemption of REMIC Income". If
the amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will
not apply. Instead, the amounts paid to such Non-U.S. Persons will be subject
to United States federal income tax at regular rates. If 30% (or lower treaty
rate) withholding is applicable, such amounts generally will be taken into
account for purposes of withholding only when paid or otherwise distributed (or
when the Residual Certificate is disposed of) under rules similar to
withholding upon disposition of debt instruments that have original issue
discount. See "Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors" above concerning the disregard of certain
transfers having "tax avoidance potential". Investors who are Non-U.S. Persons
should consult their own tax advisors regarding the specific tax consequences
to them of owning Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the
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provision of its taxpayer identification number to the Trustee, its agent or
the broker who effected the sale of the Regular Certificate, or such
Certificateholder is otherwise an exempt recipient under applicable provisions
of the Code. Any amounts to be withheld from distribution on the Regular
Certificates would be refunded by the Service or allowed as a credit against
the Regular Certificateholder's federal income tax liability. The New
Regulations change certain of the rules relating to certain presumptions
currently available relating to information reporting and backup withholding.
Non-U.S. Persons are urged to contact their own tax advisors regarding the
application to them of backup withholding and information reporting.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders
of record of Regular Certificates or beneficial owners who own Regular
Certificates through a broker or middleman as nominee. All brokers, nominees
and all other non-exempt holders of record of Regular Certificates (including
corporations, non-calendar year taxpayers, securities or commodities dealers,
real estate investment trusts, investment companies, common trust funds, thrift
institutions and charitable trusts) may request such information for any
calendar quarter by telephone or in writing by contacting the person designated
in Service Publication 938 with respect to a particular series of Regular
Certificates. Holders through nominees must request such information from the
nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service concerning
the percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "Status of REMIC Certificates".
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS
TO WHICH NO REMIC ELECTION IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates
that are not designated as "Stripped Certificates", as described below, as a
REMIC (Certificates of such a series hereinafter referred to as "Standard
Certificates"), in the opinion of Cadwalader, Wickersham & Taft or Latham &
Watkins, counsel to the Depositor, the Trust Fund will be classified as a
grantor trust under subpart E, Part 1 of subchapter J of the Code and not as an
association taxable as a corporation or a "taxable mortgage pool" within the
meaning of Code Section 7701(i). Where there is no fixed retained yield with
respect to the Mortgage Loans underlying the Standard Certificates, the holder
of each such Standard Certificate (a "Standard Certificateholder") in such
series will be treated as the owner of a pro rata undivided interest in the
ordinary income and corpus portions of the Trust Fund represented by its
Standard Certificate and will be considered the beneficial owner of a pro rata
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undivided interest in each of the Mortgage Loans, subject to the discussion
below under "Recharacterization of Servicing Fees". Accordingly, the holder of
a Standard Certificate of a particular series will be required to report on its
federal income tax return its pro rata share of the entire income from the
Mortgage Loans represented by its Standard Certificate, including interest at
the coupon rate on such Mortgage Loans, original issue discount (if any),
prepayment fees, assumption fees, and late payment charges received by the
Master Servicer, in accordance with such Standard Certificateholder's method of
accounting. A Standard Certificateholder generally will be able to deduct its
share of the servicing fee and all administrative and other expenses of the
Trust Fund in accordance with its method of accounting, provided that such
amounts are reasonable compensation for services rendered to that Trust Fund.
However, investors who are individuals, estates or trusts who own Standard
Certificates, either directly or indirectly through certain pass-through
entities, will be subject to limitation with respect to certain itemized
deductions described in Code Section 67, including deductions under Code
Section 212 for the servicing fee and all such administrative and other
expenses of the Trust Fund, to the extent that such deductions, in the
aggregate, do not exceed two percent of an investor's adjusted gross income. In
addition, Code Section 68 provides that itemized deductions otherwise allowable
for a taxable year of an individual taxpayer will be reduced by the lesser of
(i) 3% of the excess, if any, of adjusted gross income over $100,000 ($50,000
in the case of a married individual filing a separate return) (subject to
adjustments for inflation), or (ii) 80% of the amount of itemized deductions
otherwise allowable for such year. As a result, such investors holding Standard
Certificates, directly or indirectly through a pass-through entity, may have
aggregate taxable income in excess of the aggregate amount of cash received on
such Standard Certificates with respect to interest at the pass-through rate on
such Standard Certificates. In addition, such expenses are not deductible at
all for purposes of computing the alternative minimum tax, and may cause such
investors to be subject to significant additional tax liability. Moreover,
where there is fixed retained yield with respect to the Mortgage Loans
underlying a series of Standard Certificates or where the servicing fee is in
excess of reasonable servicing compensation, the transaction will be subject to
the application of the "stripped bond" and "stripped coupon" rules of the Code,
as described below under "Stripped Certificates" and "Recharacterization of
Servicing Fees", respectively.
Tax Status
Standard Certificates will have the following status for federal income
tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be considered
to represent "loans... secured by an interest in real property which is...
residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), provided that the real property securing the Mortgage Loans
represented by that Standard Certificate is of the type described in such
section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code Section
856(c)(5)(A) to the extent that the assets of the related Trust Fund consist of
qualified assets, and interest income on such assets will be considered
"interest on obligations secured by mortgages on real property" to such extent
within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to represent
an "obligation . . . which is principally secured by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) to the extent that
the assets of the related Trust Fund consist of "qualified mortgages" within
the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
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Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under "Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium".
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans
as to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable
to mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of an obligation that acquires
the obligation after its initial issuance at a price greater than the sum of
the original issue price and the previously accrued original issue discount,
less prior payments of principal. Accordingly, if such Mortgage Loans acquired
by a Standard Certificateholder are purchased at a price equal to the then
unpaid principal amount of such Mortgage Loans, no original issue discount
attributable to the difference between the issue price and the original
principal amount of such Mortgage Loans (i.e., points) will be includible by
such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be
determined and will be reported as ordinary income generally in the manner
described above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount", except that
the ratable accrual methods described therein will not apply and it is unclear
whether a Prepayment Assumption would apply. Rather, the holder will accrue
market discount pro rata over the life of the Mortgage Loans, unless the
constant yield method is elected. Unless indicated otherwise in the applicable
Prospectus Supplement, no prepayment assumption will be assumed for purposes of
such accrual.
Recharacterization of Servicing Fees
If the servicing fee paid to the Master Servicer were deemed to exceed
reasonable servicing compensation, the amount of such excess would represent
neither income nor a deduction to Certificateholders. In this regard, there are
no authoritative guidelines for federal income tax purposes as to either the
maximum amount of servicing compensation that may be considered reasonable in
the context of this or similar transactions or whether, in the case of the
Standard Certificate, the reasonableness of servicing compensation should be
determined on a weighted average or loan-by-loan basis. If a loan-by-loan basis
is appropriate, the likelihood that such amount would exceed reasonable
servicing compensation as to some of the Mortgage Loans would be increased.
Service guidance indicates that a servicing fee in excess of reasonable
compensation ("excess servicing") will cause the Mortgage Loans to be treated
under the "stripped bond" rules. Such guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that
the value of servicing fees in excess of such amounts is not greater than the
value of the services provided.
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Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage Loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
to receive some or all of the principal payments on the obligation would result
in treatment of such Mortgage Loans as "stripped coupons" and "stripped bonds".
Subject to the de minimis rule discussed below under "--Stripped Certificates",
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the holder thereof. While Standard Certificateholders would still be treated as
owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of such trust could be viewed as excluding the portion of
the Mortgage Loans the ownership of which is attributed to the Master Servicer,
or as including such portion as a second class of equitable interest.
Applicable Treasury regulations treat such an arrangement as a fixed investment
trust, since the multiple classes of trust interests should be treated as
merely facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See "Stripped Certificates" below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates
Upon sale or exchange of a Standard Certificate, a Standard
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its aggregate adjusted basis in the
Mortgage Loans and the other assets represented by the Standard Certificate. In
general, the aggregate adjusted basis will equal the Standard
Certificateholder's cost for the Standard Certificate, increased by the amount
of any income previously reported with respect to the Standard Certificate and
decreased by the amount of any losses previously reported with respect to the
Standard Certificate and the amount of any distributions received thereon.
Except as provided above with respect to market discount on any Mortgage Loans,
and except for certain financial institutions subject to the provisions of Code
Section 582(c), any such gain or loss would be capital gain or loss if the
Standard Certificate was held as a capital asset. However, gain on the sale of
a Standard Certificate will be treated as ordinary income (i) if a Standard
Certificate is held as part of a "conversion transaction" as defined in Code
Section 1258(c), up to the amount of interest that would have accrued on the
Standard Certificateholder's net investment in the conversion transaction at
120% of the appropriate applicable Federal rate in effect at the time the
taxpayer entered into the transaction minus any amount previously treated as
ordinary income with respect to any prior disposition of property that was held
as a part of such transaction or (ii) in the case of a non-corporate taxpayer,
to the extent such taxpayer has made an election under Code Section 163(d)(4)
to have net capital gains taxed as investment income at ordinary income rates.
Capital gains of certain non-corporate taxpayers generally are subject to a
lower maximum tax rate (20%) than ordinary income of such taxpayers (39.6%) for
property held for more than one year. The maximum tax rate for corporations is
the same with respect to both ordinary income and capital gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this
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discussion, Certificates that are subject to those rules will be referred to as
"Stripped Certificates". Stripped Certificates include "Stripped Interest
Certificates" and "Stripped Principal Certificates" (as defined in this
Prospectus) as to which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or
any of its affiliates retains (for its own account or for purposes of resale),
in the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than
reasonable consideration for servicing the Mortgage Loans (see "Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of the
principal payments on each Mortgage Loan and/or "stripped coupons" with respect
to its pro rata share of all or a portion of the interest payments on each
Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The holder of a
Stripped Certificate generally will be entitled to a deduction each year in
respect of the servicing fees, as described above under "Standard
Certificates--General", subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Fund will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i), and (ii) each Stripped Certificate should be treated as a
single installment obligation for purposes of calculating original issue
discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and
the OID Regulations. While under Code Section 1286 computations with respect to
Stripped Certificates arguably should be made in one of the ways described
below under "Taxation of Stripped Certificates--Possible Alternative
Characterizations," the OID Regulations state, in general, that two or more
debt instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The Pooling Agreement requires that the Trustee make and
report all computations described below using this aggregate approach, unless
substantial legal authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 provide for the
treatment of a Stripped Certificate as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount.
In addition, under these regulations, a Stripped Certificate that represents a
right to payments of both interest and principal may be viewed either as issued
with original issue discount or market discount (as described below), at a de
minimis original issue discount, or, presumably, at a premium. This treatment
suggests that the interest component of such a Stripped Certificate would be
treated as qualified stated interest under the OID Regulations. Further, these
final regulations provide that the purchaser of such a Stripped Certificate
will be required to account for any discount as market discount rather than
original issue discount if either (i) the initial discount with respect to the
Stripped Certificate was treated as zero under the de minimis rule, or (ii) no
more than 100 basis points in excess of reasonable
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servicing is stripped off the related Mortgage Loans. Any such market discount
would be reportable as described under "Certain Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates--Market Discount,"
without regard to the de minimis rule therein, assuming that a prepayment
assumption is employed in such computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt, counsel
has advised the Depositor that Stripped Certificates owned by applicable
holders should be considered to represent "real estate assets" within the
meaning of Code Section 856(c)(5)(A), "obligation[s] principally secured by an
interest in real property" within the meaning of Code Section 860G(a)(3)(A),
and "loans . . . secured by an interest in real property which is . . .
residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the Mortgage
Loans and interest on such Mortgage Loans qualify for such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General", each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into account
the compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the
income of a holder of a Stripped Certificate (referred to in this discussion as
a "Stripped Certificateholder") in any taxable year likely will be computed
generally as described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates". However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation, as described
above under "General", the issue price of a Stripped Certificate will be the
purchase price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than
qualified stated interest to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the
amount of such original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each Mortgage
Loan represented by such Stripped Certificateholder's Stripped Certificate.
While the matter is not free from doubt, the holder of a Stripped Certificate
should be entitled in the year that it becomes certain (assuming no further
prepayments) that the holder will not recover a portion of its adjusted basis
in such Stripped Certificate to recognize an ordinary loss equal to such
portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that
such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as
the Stripped Certificates. However, if final regulations dealing with
contingent interest with respect to the Stripped Certificates apply the same
principles as the OID Regulations, such regulations may lead
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to different timing of income inclusion that would be the case under the OID
Regulations. Furthermore, application of such principles could lead to the
characterization of gain on the sale of contingent interest Stripped
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate tax treatment of Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates". To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such
subsequent purchaser will be required for federal income tax purposes to accrue
and report such excess as if it were original issue discount in the manner
described above. It is not clear for this purpose whether the assumed
prepayment rate that is to be used in the case of a Stripped Certificateholder
other than an original Stripped Certificateholder should be the Prepayment
Assumption or a new rate based on the circumstances at the date of subsequent
purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of
such Stripped Certificate's pro rata share of the payments attributable to
principal on each Mortgage Loan and a second installment obligation consisting
of such Stripped Certificate's pro rata share of the payments attributable to
interest on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons
as there are scheduled payments of principal and/or interest on each Mortgage
Loan or (iii) a separate installment obligation for each Mortgage Loan,
representing the Stripped Certificate's pro rata share of payments of principal
and/or interest to be made with respect thereto. Alternatively, the holder of
one or more classes of Stripped Certificates may be treated as the owner of a
pro rata fractional undivided interest in each Mortgage Loan to the extent that
such Stripped Certificate, or classes of Stripped Certificates in the
aggregate, represent the same pro rata portion of principal and interest on
each such Mortgage Loan, and a stripped bond or stripped coupon (as the case
may be), treated as an installment obligation or contingent payment obligation,
as to the remainder. Final regulations issued on December 28, 1992 regarding
original issue discount on stripped obligations make the foregoing
interpretations less likely to be applicable. The preamble to those regulations
states that they are premised on the assumption that an aggregation approach is
appropriate for determining whether original issue discount on a stripped bond
or stripped coupon is de minimis, and solicits comments on appropriate rules
for aggregating stripped bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped Certificateholder
at any time during such year, such information (prepared on the basis described
above) as the Trustee deems to be necessary or desirable to enable such
Certificateholders to prepare their federal income tax returns. Such
information will include the amount of original issue discount accrued on
Certificates held by persons other than Certificateholders exempted from the
reporting requirements. The amounts
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required to be reported by the Trustee may not be equal to the proper amount of
original issue discount required to be reported as taxable income by a
Certificateholder, other than an original Certificateholder that purchased at
the issue price. In particular, in the case of Stripped Certificates, unless
provided otherwise in the applicable Prospectus Supplement, such reporting will
be based upon a representative initial offering price of each class of Stripped
Certificates. The Trustee will also file such original issue discount
information with the Service. If a Certificateholder fails to supply an
accurate taxpayer identification number or if the Secretary of the Treasury
determines that a Certificateholder has not reported all interest and dividend
income required to be shown on his federal income tax return, 31% backup
withholding may be required in respect of any reportable payments, as described
above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Backup Withholding".
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans
that are issued on or before July 18, 1984, interest or original issue discount
paid by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of
such a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
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STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of
the Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their tax advisors with respect
to the various tax consequences of investments in the Offered Certificates.
CERTAIN ERISA CONSIDERATIONS
GENERAL
Sections 404 and 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), impose certain fiduciary requirements and
prohibited transaction restrictions on employee pension and welfare benefit
plans subject to ERISA ("ERISA Plans") and on certain other retirement plans
and arrangements, including individual retirement accounts and annuities, Keogh
plans and bank collective investment funds and insurance company general and
separate accounts in which such ERISA Plans are invested. Section 4975 of the
Code imposes essentially the same prohibited transaction restrictions on
tax-qualified retirement plans described in Section 401(a) of the Code and on
Individual Retirement Accounts described in Section 408 of the Code
(collectively, "Tax Favored Plans").
Certain employee benefit plans, such as governmental plans (as defined in
ERISA Section 3(32)), and, if no election has been made under Section 410(d) of
the Code, church plans (as defined in Section 3(33) of ERISA) are not subject
to ERISA requirements. Accordingly, assets of such plans may be invested in
Offered Certificates without regard to the ERISA considerations described
below, subject to the provisions of other applicable federal and state law. Any
such plan which is qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code, however, is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and
the requirement that a Plan's investments be made in accordance with the
documents governing the Plan. In addition, Section 406 of ERISA and Section
4975 of the Code prohibit a broad range of transactions involving assets of a
Plan and persons ("parties in interest" within the meaning of ERISA and
"disqualified persons" within the meaning of the Code; collectively, "Parties
in Interest") who have certain specified relationships to the Plan, unless a
statutory or administrative exemption is available with respect to any such
transaction. Pursuant to Section 4975 of the Code, certain Parties in Interest
to a prohibited transaction may be subject to a nondeductible 15% per annum
excise tax on the amount involved in such transaction, which excise tax
increases to 100% if the Party in Interest involved in the transaction does not
correct such transaction during the taxable period. In addition, such Party in
Interest may be subject to a penalty imposed pursuant to Section 502(i) of
ERISA. The United States Department of Labor ("DOL") and participants,
beneficiaries and fiduciaries of ERISA Plans may generally enforce violations
of ERISA, including the prohibited transaction provisions. If the prohibited
transaction amounts to a breach of fiduciary responsibility under ERISA, a 20%
civil penalty may be imposed on the fiduciary or other person participating in
the breach.
PLAN ASSET REGULATIONS
Certain transactions involving the Trust Fund, including a Plan's
investment in Offered Certificates, might be deemed to constitute prohibited
transactions under ERISA and the Code if the underlying Mortgage Assets and
other assets included in a related Trust Fund are deemed to be assets of such
Plan. Section 2510.3-101 of the DOL regulations (the "Plan Asset Regulations")
defines the term "Plan Assets" for purposes of applying the general fiduciary
responsibility
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provisions of ERISA and the prohibited transaction provisions of ERISA and the
Code. Under the Plan Asset Regulations, generally, when a Plan acquires an
equity interest in an entity, the Plan's assets include both such equity
interest and an undivided interest in each of the underlying assets of the
entity, unless certain exceptions not applicable here apply, or unless the
equity participation in the entity by "benefit plan investors" (i.e., Plans and
certain employee benefit plans not subject to ERISA) is not "significant", both
as defined therein. For this purpose, in general, equity participation by
benefit plan investors will be "significant" on any date if 25% or more of the
value of any class of equity interests in the entity is held by benefit plan
investors. Equity participation in a Trust Fund will be significant on any date
if immediately after the most recent acquisition of any Certificate, 25% or
more of any class of Certificates is held by benefit plan investors.
The prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code may apply to a Trust Fund and cause the Depositor, the Master
Servicer, any Special Servicer, any Sub-Servicer, any Manager, the Trustee, the
obligor under any credit enhancement mechanism or certain affiliates thereof to
be considered or become Parties in Interest with respect to an investing Plan
(or of a Plan holding an interest in an investing entity). If so, the
acquisition or holding of Certificates by or on behalf of the investing Plan
could also give rise to a prohibited transaction under ERISA and the Code,
unless some statutory or administrative exemption is available. Certificates
acquired by a Plan may be assets of that Plan. Under the Plan Asset
Regulations, the Trust Fund, including the Mortgage Asset Loans and the other
assets held in the Trust Fund, may also be deemed to be Plan Assets of each
Plan that acquires Certificates. Special caution should be exercised before
Plan Assets are used to acquire a Certificate in such circumstances, especially
if, with respect to such assets, the Depositor, the Master Servicer, any
Special Servicer, any Sub-Servicer, any Manager, the Trustee, the obligor under
any credit enhancement mechanism or an affiliate thereof either (i) has
investment discretion with respect to the investment of Plan Assets; or (ii)
has authority or responsibility to give (or regularly gives) investment advice
with respect to Plan Assets for a fee pursuant to an agreement or understanding
that such advice will serve as a primary basis for investment decisions with
respect to such Plan Assets.
Any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides
investment advice with respect to such assets for a fee, is a fiduciary of the
investing Plan. If the Mortgage Assets and other assets included in a Trust
Fund constitute Plan Assets, then any party exercising management or
discretionary control regarding those assets, such as the Master Servicer, any
Special Servicer, any Sub-Servicer, the Trustee, the obligor under any credit
enhancement mechanism, or certain affiliates thereof may be deemed to be a Plan
"fiduciary" and thus subject to the fiduciary responsibility provisions and
prohibited transaction provisions of ERISA and the Code with respect to the
investing Plan. In addition, if the Mortgage Assets and other assets included
in a Trust Fund constitute Plan Assets, the purchase of Certificates by a Plan,
as well as the operation of the Trust Fund, may constitute or involve a
prohibited transaction under ERISA or the Code.
The Plan Asset Regulations provide that where a Plan acquires a
"guaranteed governmental mortgage pool certificate", the Plan's assets include
such certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" FHLMC Certificates, GNMA Certificates and FNMA
Certificates, but do not include FAMC Certificates. Accordingly, even if such
MBS (other than FAMC Certificates) included in a Trust Fund were deemed to be
assets of Plan investors, the mortgages underlying such MBS (other than FAMC
Certificates) would not be treated as assets of such Plans. Private label
mortgage participations, mortgage pass-through certificates, FAMC Certificates
or other mortgage-backed securities are not "guaranteed governmental mortgage
pool certificates" within the meaning of the Plan Asset Regulations. Potential
Plan investors should consult their counsel and review the ERISA discussion in
the related Prospectus Supplement before purchasing any such Certificates.
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PROHIBITED TRANSACTION EXEMPTIONS
The DOL granted an individual exemption, DOL exemption application number
E-0003 (the "Exemption"), to Deutsche Bank AG, New York Branch ("DBNY") and
Deutsche Morgan Grenfell Inc. ("DMG") which generally exempts from the
application of the prohibited transaction provisions of Section 406 of ERISA,
and the excise taxes imposed on such prohibited transactions pursuant to
Section 4975(a) and (b) of the Code, certain transactions, among others,
relating to the servicing and operation of mortgage pools and the initial
purchase, holding and subsequent resale of mortgage pass-through certificates
underwritten by an Underwriter (as hereinafter defined), provided that certain
conditions set forth in the Exemption are satisfied. For purposes of this
Section "ERISA Considerations," the term "Underwriter" shall include (a) DBNY
and DMG, (b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with DBNY
and DMG and (c) any member of the underwriting syndicate or selling group of
which a person described in (a) or (b) is a manager or co-manager with respect
to a class of Certificates.
The Exemption sets forth six general conditions which must be satisfied
for the Exemption to apply. First, the acquisition of Certificates by a Plan or
with Plan Assets must be on terms that are at least as favorable to the Plan as
they would be in an arm's-length transaction with an unrelated party. Second,
the Exemption only applies to Certificates evidencing rights and interests that
are not subordinated to the rights and interests evidenced by other
Certificates of the same trust. Third, the Certificates at the time of
acquisition by a Plan or with Plan Assets must be rated in one of the three
highest generic rating categories by Standard & Poor's Ratings Services, a
division of McGraw-Hill Companies, Inc., Moody's Investors Service, Inc., Duff
& Phelps Credit Rating Co. or Fitch IBCA, Inc. (collectively, the "Exemption
Rating Agencies"). Fourth, the Trustee cannot be an affiliate of any member of
the "Restricted Group" which consists of any Underwriter, the Depositor, the
Trustee, the Master Servicer, any Sub-Servicer and any obligor with respect to
assets included in the Trust Fund constituting more than 5% of the aggregate
unamortized principal balance of the assets in the Trust Fund as of the date of
initial issuance of the Certificates. Fifth, the sum of all payments made to
and retained by the Underwriter(s) must represent not more than reasonable
compensation for underwriting the Certificates; the sum of all payments made to
and retained by the Depositor pursuant to the assignment of the assets to the
related Trust Fund must represent not more than the fair market value of such
obligations; and the sum of all payments made to and retained by the Master
Servicer and any Sub-Servicer must represent not more than reasonable
compensation for such person's services under the related Agreement and
reimbursement of such person's reasonable expenses in connection therewith.
Sixth, the Exemption states that the investing Plan or Plan Asset investor must
be an accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act of 1933, as amended.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) Certificates evidencing
interests in such other investment pools must have been rated in one of the
three highest categories of one of the Exemption Rating Agencies for at least
one year prior to the acquisition of Certificates by or on behalf of a Plan or
with Plan Assets; and (iii) Certificates evidencing interests in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any acquisition of Certificates by or on behalf of a
Plan or with Plan Assets.
A fiduciary of a Plan or any person investing Plan Assets intending to
purchase a Certificate must make its own determination that the conditions set
forth above will be satisfied with respect to such Certificate.
If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA, and the excise taxes imposed by Sections 4975(a) and (b) of
the Code by reason of Sections 4975(c)(1)(A)
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through (D) of the Code, in connection with the direct or indirect sale,
exchange, transfer, holding or the direct or indirect acquisition or
disposition in the secondary market of Certificates by a Plan or with Plan
Assets. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
Certificate on behalf of an "Excluded Plan" by any person who has discretionary
authority or renders investment advice with respect to the assets of such
Excluded Plan. For purposes of the Certificates, an Excluded Plan is a Plan
sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA, and the excise taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code, in
connection with (1) the direct or indirect sale, exchange or transfer of
Certificates in the initial issuance of Certificates between the Depositor or
an Underwriter and a Plan when the person who has discretionary authority or
renders investment advice with respect to the investment of Plan Assets in the
Certificates is (a) a mortgagor with respect to 5% or less of the fair market
value of the Trust Fund Assets or (b) an affiliate of such a person, (2) the
direct or indirect acquisition or disposition in the secondary market of
Certificates by a Plan and (3) the holding of Certificates by a Plan or with
Plan Assets.
Further, if certain specific conditions of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by
Sections 406(a), 406(b) and 407 of ERISA, and the excise taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code
for transactions in connection with the servicing, management and operation of
the Trust Fund. The Depositor expects that the specific conditions of the
Exemption required for this purpose will be satisfied with respect to the
Certificates so that the Exemption would provide an exemption from the
restrictions imposed by Sections 406(a) and (b) of ERISA (as well as the excise
taxes imposed by Sections 4975(a) and (b) of the Code by reason of Section
4975(c) of the Code) for transactions in connection with the servicing,
management and operation of the Trust Fund, provided that the general
conditions of the Exemption are satisfied.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Section
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan by
virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Certificates.
Because the exemptive relief afforded by the Exemption (or any similar
exemption that might be available) will not apply to the purchase, sale or
holding of certain Certificates, such as Subordinate Certificates, Residual
Certificates or any Certificates which are not rated in one of the three
highest generic rating categories by the Exemption Rating Agencies, transfers
of such Certificates to a Plan, to a trustee or other person acting on behalf
of any Plan, or to any other person investing Plan Assets to effect such
acquisition will not be registered by the Trustee unless the transferee
provides the Depositor, the Trustee and the Master Servicer with an opinion of
counsel satisfactory to the Depositor, the Trustee and the Master Servicer,
which opinion will not be at the expense of the Depositor, the Trustee or the
Master Servicer, that the purchase of such Certificates by or on behalf of such
Plan is permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Depositor, the Trustee or the Master Servicer to any
obligation in addition to those undertaken in the Agreement.
In lieu of such opinion of counsel, the transferee may provide a
certification substantially to the effect that the purchase of Certificates by
or on behalf of such Plan is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under ERISA or
Section 4975 of the Code, will not subject the Depositor, the Trustee or the
Master Servicer to any obligation in addition to those undertaken in the
Agreement and the following conditions are
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satisfied: (i) the transferee is an insurance company and the source of funds
used to purchase such Certificates is an "insurance company general account"
(as such term is defined in PTCE 95-60); (ii) the conditions set forth in PTCE
95-60 Part I and III have been satisfied; and (iii) there is no Plan with
respect to which the amount of such general account's reserves and liabilities
for contracts held by or on behalf of such Plan and all other Plans maintained
by the same employer (or any "affiliate" thereof, as defined in PTCE 95-60) or
by the same employee organization exceed 10% of the total of all reserves and
liabilities of such general account (as determined under PTCE 95-60) as of the
date of the acquisition of such Certificates.
The purchaser or any transferee of any interest in a Class B Certificate
[or Class R Certificate] that is not a definitive certificate, by the act of
purchasing such Certificate, shall be deemed to represent that it is not a Plan
or directly or indirectly purchasing such Certificate or interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan. The
Class B Certificates [and Class R Certificates] will contain a legend
describing such restrictions on transfer and the Pooling and Servicing
Agreement will provide that any attempted or purported transfer in violation of
these transfer restrictions will be null and void.
There can be no assurance that any DOL exemption will apply with respect
to any particular Plan that acquires the Certificates or, even if all the
conditions specified therein were satisfied, that any such exemption would
apply to all transactions involving the Trust Fund. Prospective Plan investors
should consult with their legal counsel concerning the impact of ERISA and the
Code and the potential consequences to their specific circumstances prior to
making an investment in the Certificates. Neither the Depositor, the Trustee,
the Master Servicer nor any of their respective affiliates will make any
representation to the effect that the Certificates satisfy all legal
requirements with respect to the investment therein by Plans generally or any
particular Plan or to the effect that the Certificates are an appropriate
investment for Plans generally or any particular Plan.
BEFORE PURCHASING A CERTIFICATE (OTHER THAN A SUBORDINATE CERTIFICATE,
RESIDUAL CERTIFICATE OR ANY CERTIFICATE WHICH IS NOT RATED IN ONE OF THE THREE
HIGHEST GENERIC RATING CATEGORIES BY THE EXEMPTION RATING AGENCIES), A
FIDUCIARY OF A PLAN SHOULD ITSELF CONFIRM THAT (A) ALL THE SPECIFIC AND GENERAL
CONDITIONS SET FORTH IN THE EXEMPTION OR ONE OF THE CLASS EXEMPTIONS WOULD BE
SATISFIED AND (B) IN THE CASE OF A CERTIFICATE PURCHASED UNDER THE EXEMPTION,
THE CERTIFICATE CONSTITUTES A "CERTIFICATE" FOR PURPOSES OF THE EXEMPTION. IN
ADDITION, A PLAN FIDUCIARY SHOULD CONSIDER ITS GENERAL FIDUCIARY OBLIGATIONS
UNDER ERISA IN DETERMINING WHETHER TO PURCHASE A CERTIFICATE ON BEHALF OF A
PLAN.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to federal
income tax. See "Certain Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Residual
Certificates--Limitations on Offset or Exemption of REMIC Income".
LEGAL INVESTMENT
If so specified in the related Prospectus Supplement, the Offered
Certificates will constitute "mortgage related securities" for purposes of
SMMEA. Generally, only classes of Offered Certificates that (i) are rated in
one of the two highest rating categories by one or more Rating Agencies and
(ii) are part of a series evidencing interests in a Trust Fund consisting of
loans secured by first liens on real property and originated by certain types
of Originators specified in SMMEA, will be "mortgage related securities" for
purposes of SMMEA. As "mortgage related securities," such classes will
constitute legal investments for persons, trusts, corporations,
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partnerships, associations, business trusts and business entities (including
depository institutions, insurance companies and pension funds) created
pursuant to or existing under the laws of the United States or of any state
(including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulation, to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and
interest by the United States or any agency or instrumentality thereof
constitute legal investments for such entities. Pursuant to SMMEA, a number of
states enacted legislation, on or before the October 3, 1991 cutoff for such
enactments, limiting to varying extents the ability of certain entities (in
particular, insurance companies) to invest in "mortgage related securities"
secured by liens on residential, or mixed residential and commercial
properties, in most cases by requiring the affected investors to rely solely
upon existing state law, and not SMMEA. Pursuant to Section 347 of the Riegle
Community Development and Regulatory Improvement Act of 1994, which amended the
definition of "mortgage related security" to include, in relevant part, Offered
Certificates satisfying the rating and qualified Originator requirements for
"mortgage related securities," but evidencing interests in a Trust Fund
consisting, in whole or in part, of first liens on one or more parcels of real
estate upon which are located one or more commercial structures, states were
authorized to enact legislation, on or before September 23, 2001, specifically
referring to Section 347 and prohibiting or restricting the purchase, holding
or investment by state-regulated entities in such types of Offered
Certificates. Accordingly, the investors affected by any such state
legislation, when and if enacted, will be authorized to invest in Offered
Certificates qualifying as "mortgage related securities" only to the extent
provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, the Office of the Comptroller of the Currency (the "OCC") has
amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for
their own account, without limitation as to a percentage of the bank's capital
and surplus (but subject to compliance with certain general standards
concerning "safety and soundness" and retention of credit information in 12
C.F.R. Section 1.5), certain "Type IV securities," defined in 12 C.F.R.
Section 1.2(1) to include certain "commercial mortgage-related securities" and
"residential mortgage-related securities." As so defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, "mortgage related security" within the meaning of SMMEA,
provided that, in the case of a "commercial mortgage-related security," it
"represents ownership of a promissory note or certificate of interest or
participation that is directly secured by a first lien on one or more parcels
of real estate upon which one or more commercial structures are located and
that is fully secured by interests in a pool of loans to numerous obligors." In
the absence of any rule or administrative interpretation by the OCC defining
the term "numerous obligors," no representation is made as to whether any class
of Offered Certificates will qualify as "commercial mortgage-related
securities," and thus as "Type IV securities," for investment by national
banks. Federal credit unions should review 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. The NCUA has adopted
rules, codified at 12 C.F.R. Part 703, which permit federal credit unions to
invest in "mortgage related securities" under certain limited circumstances,
other than stripped mortgage related securities, residual interests in mortgage
related securities, and commercial mortgage related securities, unless the
credit union has obtained written approval from the NCUA to participate in the
"investment pilot program" described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as
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revised April 15, 1994 (the "Policy Statement") of the Federal Financial
Institutions Examination Council (the "FFIEC"). The Policy Statement, which has
been adopted by the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the OCC and the Office of Thrift
Supervision, and by the NCUA (with certain modifications), prohibits depository
institutions from investing in certain "high-risk mortgage securities"
(including securities such as certain series or classes of the Offered
Certificates), except under limited circumstances, and sets forth certain
investment practices deemed to be unsuitable for regulated institutions. On
September 29, 1997, the FFIEC released for public comment a proposed
"Supervisory Policy Statement on Investment Securities and End-User Derivatives
Activities" (the "1997 Statement"), which would replace the Policy Statement.
As proposed, the 1997 Statement would delete the specific "high-risk mortgage
securities" tests, and substitute general guidelines which depository
institutions should follow in managing risks (including market, credit,
liquidity, operational (transactional), and legal risks) applicable to all
securities (including mortgage pass-through securities and mortgage-derivative
products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Offered
Certificates, as certain series or classes may be deemed unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines (in certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any Offered Certificates
issued in book-entry form, provisions which may restrict or prohibit
investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representation is made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase Offered Certificates under
applicable legal investment restrictions. The uncertainties described above
(and any unfavorable future determinations concerning legal investment or
financial institution regulatory characteristics of the Offered Certificates)
may adversely affect the liquidity of the Offered Certificates.
Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their legal advisors in
determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to such investor.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor to cover expenses related thereto. The Depositor
expects to sell the Certificates from time to time, but the timing and amount
of offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the net proceeds to the
Depositor from such sale.
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The Depositor intends that Offered Certificates will be offered through
the following methods from time to time and that offerings may be made
concurrently through more than one of these methods or that an offering of the
Offered Certificates of a particular series may be made through a combination
of two or more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related Prospectus
Supplement;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the
Offered Certificates of a series may be offered in whole or in part to the
seller of the related Mortgage Assets that would comprise the Trust Fund for
such Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. The
managing underwriter or underwriters with respect to the offer and sale of
Offered Certificates of a particular series will be set forth on the cover of
the Prospectus Supplement relating to such series and the members of the
underwriting syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may
be deemed to be underwriters in connection with such Certificates, and any
discounts or commissions received by them from the Depositor and any profit on
the resale of Offered Certificates by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale
of the Offered Certificates of any series will provide that the obligations of
the underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, in connection with reoffers and sales by them of
Offered Certificates. Holders of Offered Certificates should consult with their
legal advisors in this regard prior to any such reoffer or sale.
As to any series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any unrated class may be initially retained by the Depositor, and may be sold
by the Depositor at any time to one or institutional investors.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by the Underwriter in connection with offers and sales
related to market-making transactions in the Offered Certificates with respect
to which the Underwriter acts as principal. The Underwriter may also act as
agent in such transactions. Sales may be made at negotiated prices determined
at the time of sales.
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LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each series, including
certain federal income tax consequences, will be passed upon for the Depositor
by Cadwalader, Wickersham & Taft or Latham & Watkins.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement. The Depositor has determined that its financial statements will not
be material to the offering of any Offered Certificates.
RATING
It is a condition to the issuance of any class of Offered Certificates
that they shall have been rated not lower than investment grade, that is, in
one of the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the
structural, legal and issuer-related aspects associated with such certificates,
the nature of the underlying mortgage assets and the credit quality of the
guarantor, if any. Ratings on mortgage pass-through certificates do not
represent any assessment of the likelihood of principal prepayments by
borrowers or of the degree by which such prepayments might differ from those
originally anticipated. As a result, Certificateholders might suffer a lower
than anticipated yield, and, in addition, holders of Stripped Interest
Certificates might, in extreme cases fail to recoup their initial investments.
Furthermore, ratings on mortgage pass-through certificates do not address the
price of such certificates or the suitability of such certificates to the
investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently of
any other security rating.
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INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<S> <C>
1986 Act .............................. 74
Act ................................... 66
ADA ................................... 69
ARM Loans ............................. 21
Book-Entry Certificates ............... 32
capital asset ......................... 79
CERCLA ................................ 66
Certificate Account ................... 24
Certificate Owner ..................... 38
Code .................................. 71
Commercial Properties ................. 18
Commission ............................ 3
Companion Class ....................... 34
Condemnation Proceeds ................. 46
Controlled Amortization Class ......... 34
Cooperatives .......................... 18
CPR ................................... 27
Crime Control Act ..................... 70
Cut-off Date .......................... 34
DBNY .................................. 102
Definitive Certificates ............... 32
Depositor ............................. 1
Determination Date .................... 25, 32
Deutsche Bank Group ................... 31
Disqualified Organization ............. 86
Disqualified Organizations ............ 87
Distribution Date Statement ........... 36
DMARC Trust ........................... 31
DMG ................................... 102
DOL ................................... 100
DTC ................................... 4, 38
DTC Participants ...................... 38
Due Dates ............................. 20
Equity Participation .................. 21
ERISA ................................. 100
ERISA Plans ........................... 100
Exchange Act .......................... 4
Exemption ............................. 102
Exemption Rating Agencies ............. 102
FAMC .................................. 23
FHLMC ................................. 23
Financial Intermediary ................ 38
FNMA .................................. 23
Foreign Investors ..................... 86
Garn Act .............................. 68
</TABLE>
<TABLE>
<S> <C>
GNMA .................................. 23
Insurance Proceeds .................... 46
IRS ................................... 49
Letter of Credit Bank ................. 59
Lock-out Date ......................... 21
Lock-out Period ....................... 21
Mark to Market Regulations ............ 88
Market Discount ....................... 78, 79
MBS ................................... 1, 17
MBS Agreement ......................... 23
MBS Issuer ............................ 23
MBS Servicer .......................... 23
MBS Trustee ........................... 23
Mortgage Asset Pool ................... 1
Mortgage Asset Seller ................. 17
Mortgage Assets ....................... 1, 17
Mortgage Loans ........................ 1, 17
Mortgage Notes ........................ 18
Mortgaged Property .................... 18
Mortgages ............................. 18
Multifamily Properties ................ 18
Multifamily Property .................. 2
Net Leases ............................ 20
Nonrecoverable Advance ................ 35
Non-U.S. Person ....................... 91
Offered Certificates .................. 1
OID Regulations ....................... 74
original issue discount ............... 74
Original Issue Discount ............... 78, 79
Originator ............................ 18
Parties in Interest ................... 100
Pass-Through Entity ................... 85, 86
Percentage Interest ................... 33
Permitted Investments ................. 45
Plan Asset Regulations ................ 100
Prepayment Assumption ................. 75
Prepayment Interest Shortfall ......... 25
Prepayment Premium .................... 21
Prospectus Supplement ................. 1
Purchase Price ........................ 41
Random Lot Certificates ............... 75
Rating Agency ......................... 8
Record Date ........................... 32
Regular Certificateholder ............. 74
Regular Certificates .................. 71, 91
</TABLE>
109
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<TABLE>
<S> <C>
Related Proceeds ........................ 35
Relief Act .............................. 70
REMIC ................................... 2, 71
REMIC Administrator ..................... 3
REMIC Certificates ...................... 71
REMIC Pool .............................. 71
REMIC Regulations ....................... 71
REO Property ............................ 43
Residual Certificateholders ............. 81
Residual Certificates ................... 71
Retail Property ......................... 2, 18
RICO .................................... 70
Senior Liens ............................ 18
Service ................................. 73
SMMEA ................................... 8
SPA ..................................... 27
Standard Certificateholder .............. 92
Startup Day ............................. 72
stripped bond ........................... 94
stripped bonds .......................... 95
Stripped Certificateholder .............. 97
</TABLE>
<TABLE>
<S> <C>
92, 93,
Stripped Certificates ................... 95, 96
stripped coupons ........................ 95
Stripped Interest Certificates .......... 96
Stripped Principal Certificates ......... 96
Sub-Servicer ............................ 45
Sub-Servicing Agreement ................. 45
Tax Exempt Investor ..................... 104
Tax Favored Plans ....................... 100
Title V ................................. 69
Treasury ................................ 71
Trust Assets ............................ 3
Trust Fund .............................. 1
UBTI .................................... 104
UCC ..................................... 61
U.S. Person ............................. 87
Voting Rights ........................... 37
Warranting Party ........................ 42
</TABLE>
110
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================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS AND
PROSPECTUS SUPPLEMENT. YOU MUST NOT RELY ON ANY AUTHORIZED INFORMATION OR
REPRESENTATIONS. THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT IS AN OFFER TO SELL
ONLY THE CERTIFICATES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN
JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS
PROSPECTUS AND PROSPECTUS SUPPLEMENT IS CURRENT ONLY AS OF ITS DATE.
-----------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Executive Summary ................................................... S-4
Summary of Prospectus Supplement .................................... S-8
Risk Factors ........................................................ S-23
Description of the Mortgage Pool .................................... S-45
Description of the Offered Certificates ............................. S-55
Yield and Maturity Considerations ................................... S-72
The Pooling and Servicing Agreement ................................. S-86
Certain Legal Aspects of the Mortgage Loans ......................... S-114
Use of Proceeds ..................................................... S-114
Certain Federal Income Tax Consequences ............................. S-115
ERISA Considerations ................................................ S-118
Legal Investment .................................................... S-121
Method of Distribution .............................................. S-121
Legal Matters ....................................................... S-122
Rating .............................................................. S-122
Index of Principal Terms ............................................ S-124
Annex A - Certain Characteristics of the
Mortgage Loans ................................................... A-1
Annex B - Form of Trustee Reports ................................... B-1
Annex C - Structural and Collateral Term Sheet....................... C-1
Annex D - Description of Significant Mortgage
Loans and Mortgaged Properties ................................... D-1
Annex E - Exceptions to the Mortgage Loan
Representations and Warranties ................................... E-1
PROSPECTUS
Prospectus Supplement ............................................... iii
Available Information ............................................... iii
Incorporation of Certain Information By
Reference ........................................................ iv
Summary of Prospectus ............................................... 1
Risk Factors ........................................................ 9
Description of the Trust Funds ...................................... 17
Yield and Maturity Considerations ................................... 25
The Depositor ....................................................... 31
Deutsche Bank AG .................................................... 31
Description of the Certificates ..................................... 31
Description of the Pooling Agreements ............................... 40
Description of Credit Support ....................................... 58
Certain Legal Aspects of Mortgage Loans ............................. 60
Certain Federal Income Tax Consequences ............................. 71
Federal Income Tax Consequences for
Certificates as to Which No REMIC Election is
Made ............................................................. 92
State and Other Tax Consequences .................................... 100
Certain ERISA Considerations ........................................ 100
Legal Investment .................................................... 104
Use of Proceeds ..................................................... 106
Method of Distribution .............................................. 106
Legal Matters ....................................................... 108
Financial Information ............................................... 108
Rating .............................................................. 108
Index of Principal Definitions ...................................... 109
UNTIL MAY , 1999, ALL DEALERS THAT BUY, SELL OR TRADE THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTI-CIPATING IN THIS OFFERING, MAY BE REQUIRED
TO DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. THIS IS IN
ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS SUPLEMENT AND THE
ACCOM-PANYING PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
$1,153,788,000
(APPROXIMATE)
COMM 1999-1
COMMERCIAL MORTGAGE
PASS-THROUGH
CERTIFICATES
--------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------
DEUTSCHE BANK SECURITIES
LEHMAN BROTHERS
J.P. MORGAN & CO.
FEBRUARY , 1999
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