<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration File No.:
Information contained in this prospectus supplement and the accompanying
prospectus is not complete and may be changed. We may not sell these
securities until the final prospectus supplement and prospectus are
delivered. This prospectus supplement and the accompanying prospectus are not
an offer to sell these securities and are not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 13, 2000
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 1, 2000)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
Depositor
$660,071,000 (Approximate)
Mortgage Pass-Through Certificates, Series 2000-C10
THE OFFERED CERTIFICATES:
o The trust fund will issue nineteen classes of certificates. Only the
following seven classes of "offered certificates" are offered hereby:
<TABLE>
<CAPTION>
INITIAL PASS-THROUGH RATE
APPROXIMATE INITIAL CLASS BALANCE (MAY BE SUBJECT TO
CLASS OR NOTIONAL BALANCE ADJUSTMENT)
---------- --------------------------------- ----------------------------
<S> <C> <C>
Class A1 $ 95,500,000 %
Class A2 $471,331,000 %
Class X $738,541,419(1) %
Class B $ 31,388,000 %
Class C $ 29,541,000 %
Class D $ 9,232,000 %
Class E $ 23,079,000 %
</TABLE>
------------
(1) Notional amount.
--------------------------------------------------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-10 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 9 IN THE ACCOMPANYING PROSPECTUS.
Neither the offered certificates nor the underlying mortgage loans are insured
or guaranteed by any governmental agency or instrumentality.
The offered certificates will represent interests in the trust fund only. They
will not represent interests in or obligations of the depositor, any of its
affiliates or any other entity.
This prospectus supplement may be used to offer and sell the offered
certificates only if accompanied by the prospectus dated January 1, 2000.
--------------------------------------------------------------------------------
o The offered certificates will represent beneficial ownership interests in the
trust fund only.
o Interest will be payable monthly, commencing in October 2000.
o Principal payments will also be payable monthly. The outstanding class with
the highest priority of distribution will receive all principal payments until
it is paid in full. This sequential payment will continue until all classes have
their respective class balances reduced to zero.
THE TRUST FUND:
o The trust fund will consist of fixed rate mortgage loans secured by mortgages
or deeds of trust on multifamily or commercial properties.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
We expect that the delivery of the offered certificates will be made in
book-entry form on or about September , 2000.
J.P. Morgan Securities Inc. and Salomon Smith Barney Inc. are acting as
co-lead managers and underwriters for the offering. J.P. Morgan Securities
Inc. is the sole bookrunner of all of 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. The
proceeds to the depositor from the initial sale of the offered certificates
will be approximately % of the initial principal balance thereof, plus
accrued interest from the cut-off date.
J.P. MORGAN & CO. SALOMON SMITH BARNEY
Prospectus Supplement dated September , 2000
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP. JPMORGAN
Mortgage Pass-Trough Certificates, Series 2000-C10
ALASKA PENNSYLVANIA GEORGIA
1 property 6 properties 2 properties
$4,855,437 $18,754,312 $4,412,902
0.7% Of total 2.5% Of total 0.6 Of total
WASHINGTON NEW YORK FLORIDA
2 properties 10 properties 18 properties
$6,060,150 $22,460,339 $37,863,163
0.8% of total 3.0% of total 5.1% of total
IDAHO MAINE MISSISSIPPI
1 property 9 properties 2 properties
$2,055,124 $2,505,214 $3,609,040
0.3% of total 0.3% of total 0.5% of total
MISSOURI VERMONT ARKANSAS
3 properties 1 property 1 property
$7,792,512 $7,388,975 $2,473,559
1.1% of total 1.0% of total 0.3% of total
IOWA MASSACHUSETTS LOUISIANA
2 properties 6 properties 4 properties
$18,991,967 $17,899,979 $10,287,571
2.6% of total 2.4% of total 1.4% of total
MINNESOTA RHODE ISLAND TEXAS
3 properties 1 property 19 properties
$3,632,110 $3,093,989 $62,513,635
0.5% of total 0.4% of total 8.5% of total
ILLINOIS CONNECTICUT COLORADO
10 properties 3 properties 3 properties
$40,119,893 $4,785,363 $10,428,196
5.4% of total 0.6% of total 1.4% of total
WISCONSIN NEW JERSEY ARIZONA
3 poperties 5 properties 7 properties
$9,909,169 $439,946,544 $29,938,636
1.3% of total 6.0% of total 4.1% of total
INDIANA MARYLAND UTAH
7 properties 2 properties 1 property
$19,204,668 $28,754,336 $997,340
2.6% of total 3.9% of total 0.1% of total
MICHIGAN VIRGINIA CALIFORNIA
5 properties 6 properties 39 properties
$20,941,902 $35,207,497 $203,147,004
2.8% of total 4.8% of total 27.5% of total
OHIO NORTH CAROLINA NEVADA
6 properties 4 properties 2 properties
$26,245,922 $16,431,634 $11,833,334
3.0% of total 2.2% of total 1.6% of total
PROPERTY TYPE [ ] (LESS THAN OR EQUAL TO) 1.00%
OF INITIAL POOL BALANCE
MULTIFAMILY 30.9%
RETAIL 26.5% [ ] 1.01% - 5.00%
OFFICE 17.2% OF INITIAL POOL BALANCE
INDUSTRIAL 12.6%
HOTEL 7.2% [ ] 5.01% - 10.00%
SELF-STORAGE 3.0% OF INITIAL POOL BALANCE
MIXED USE 1.4%
SKILLED NURING FACILITY 1.1% [ ] (GREATER THAN OR EQUAL TO) 10.00%
CONGREGATE CARE 0.2% OF INITIAL POOL BALANCE
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
WE PROVIDE INFORMATION TO YOU ABOUT THE OFFERED CERTIFICATES 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. YOU SHOULD
READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS BEFORE INVESTING IN
ANY OF THE OFFERED CERTIFICATES.
You should rely only on the information contained in this prospectus
supplement and accompanying prospectus. If the description of your
certificates in the prospectus and in this prospectus supplement varies, you
should rely on the information in this prospectus supplement.
We include cross-references in this prospectus supplement and the
prospectus to captions in these materials where you can find further related
discussions. The table of contents on page ii provides the page numbers on
which these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the prospectus are defined under the caption "Index
of Principal Terms" on page S-90 in this prospectus supplement.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
(A) if used in a jurisdiction in which such offer or solicitation is
not authorized;
(B) if the person making such offer or solicitation is not qualified
to do so; or
(C) if such offer or solicitation is made to anyone to whom it is
unlawful to make such offer or solicitation.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is
legal to sell these securities. The information in this document may only be
accurate as of the date of this document.
UNTIL 90 DAYS AFTER 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. THIS IS IN ADDITION
TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
i
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
<S> <C>
Executive Summary ...................................................................... S-1
Summary of the Prospectus Supplement ................................................... S-2
Risk Factors ........................................................................... S-10
Description of the Mortgage Pool ....................................................... S-28
Description of the Certificates ........................................................ S-59
Certain Prepayment, Maturity and Yield Considerations .................................. S-71
Master Servicer and Special Servicer ................................................... S-75
Description of the Pooling and Servicing Agreement ..................................... S-81
Use of Proceeds ........................................................................ S-83
Certain Federal Income Tax Consequences ................................................ S-83
State Tax Considerations ............................................................... S-85
ERISA Considerations ................................................................... S-85
Legal Investment ....................................................................... S-87
Plan of Distribution ................................................................... S-88
Legal Matters .......................................................................... S-89
Rating ................................................................................. S-89
Index of Principal Terms ............................................................... S-90
Annex A: Certain Characteristics of the Mortgage Loans .............................. A-1
Annex B: Certain Characteristics of Multifamily and Other Residential Loans ......... B-1
Annex C: Certain Characteristics of Office, Industrial and Retail Loans ............. C-1
Annex D: Special Amortization Schedules ............................................. D-1
Annex E: Sales Memorandum ........................................................... E-1
Annex F: Certificateholder Reports .................................................. F-1
Annex G: Global Clearance, Settlement and Tax Documentation Procedures .............. G-1
PROSPECTUS
Prospectus.............................................................................. 1
Important Notice About Information Presented in this Prospectus and the Accompanying
Prospectus Supplement.................................................................. 2
Additional Information.................................................................. 3
Incorporation of Certain Information by Reference....................................... 3
Summary of Prospectus................................................................... 4
Risk Factors............................................................................ 9
Description of the Trust Funds.......................................................... 19
Use of Proceeds......................................................................... 24
Yield Considerations.................................................................... 24
The Depositor........................................................................... 27
Description of the Certificates......................................................... 28
Description of the Agreements........................................................... 35
Description of Credit Support........................................................... 50
Certain Legal Aspects of Mortgage Loans and the Leases.................................. 52
Federal Income Tax Consequences......................................................... 68
ERISA Considerations.................................................................... 96
Legal Investment........................................................................ 98
Plan of Distribution.................................................................... 100
Legal Matters........................................................................... 100
Financial Information................................................................... 100
Rating.................................................................................. 101
Glossary of Terms....................................................................... 102
</TABLE>
ii
<PAGE>
EXECUTIVE SUMMARY
You should read carefully the detailed information appearing elsewhere in
this prospectus supplement and the accompanying prospectus in making your
investment decision. The following executive summary does not include
important information relating to the offered certificates, particularly with
respect to the risks and special considerations involved with an investment
in the offered certificates. The table does not describe the Class Q
Certificates which represent the subordinate component of one of the mortgage
loans. See "Description of the Mortgage Pool -- The Suburban Lodge Loan". The
initial principal amount of the Class Q Certificates will be $1,542,452 and
the pass-through rate will be 8.727% per annum. The Class Q Certificates are
not offered hereby. Unless otherwise indicated, references in this prospectus
supplement to the certificates or a class of certificates are not references
to the Class Q Certificates.
<TABLE>
<CAPTION>
INITIAL
AGGREGATE
CERTIFICATE
PRINCIPAL DESCRIPTION INITIAL WEIGHTED
AMOUNT OF THE PASS- AVERAGE PRINCIPAL
RATING BY OR NOTIONAL % OF % CREDIT PASS-THROUGH THROUGH LIFE(2) WINDOW(2)
CLASS FITCH/MOODY'S AMOUNT TOTAL SUPPORT RATE RATE(1) (YEARS) (MONTHS)
------- --------------- --------------- -------- ------------ -------------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
A1 AAA/Aaa $ 95,500,000 12.93% 23.250%(3) (4) % 5.50 1-105
A2 AAA/Aaa $471,331,000 63.82% 23.250%(3) (4) % 9.12 105-114
X AAA/Aaa $738,541,419(5) N/A N/A (6) % 5.50(7) N/A
B AA/Aa2 $ 31,388,000 4.25% 19.000% (4) % 9.51 114-115
C A/A2 $ 29,541,000 4.00% 15.000% (4) % 9.57 115-116
D A-/A3 $ 9,232,000 1.25% 13.750% (4) % 9.64 116-116
E BBB/Baa2 $ 23,079,000 3.12% 10.625% (4) % 9.64 116-116
Private Certificates(8)
F BBB-/Baa3 $ 10,155,000 1.38% 9.250% (4)
G BB+/Ba1 $ 14,771,000 2.00% 7.250% (4)
H BB/Ba2 $ 14,771,000 2.00% 5.250% (4)
J BB-/Ba3 $ 7,385,000 1.00% 4.250% (4)
K B+/B1 $ 5,539,000 0.75% 3.500% (4)
L B/B2 $ 7,386,000 1.00% 2.500% (4)
M B-/B3 $ 5,539,000 0.75% 1.750% (4)
NR NR/NR $ 12,924,419 1.75% 0.000% (4)
</TABLE>
------------
(1) In addition to distributions of interest and principal, holders of the
offered certificates will be entitled to receive a portion of any
prepayment premiums as described herein.
(2) Assumes no prepayments, defaults or early termination. See "Certain
Prepayment, Maturity and Yield Considerations -- Weighted Average Life
of Offered Certificates" herein.
(3) Represents the approximate credit support for the Class A-1 and Class
A-2 Certificates in the aggregate.
(4) The pass-through rate for this Class of Certificates will be equal to
either a fixed rate or a rate based on the weighted average of the
remittance rates on the mortgage loans.
(5) Notional amount.
(6) The pass-through rate for the Class X Certificates will be equal to the
weighted average of the remittance rates on the mortgage loans minus
the weighted average of the pass-through rates on all other classes of
certificates. The remittance rates on the mortgage loans will represent
accrued interest on the mortgage loans net of certain servicing and
trustee fees. The initial pass-through rate on the Class X Certificates
will be approximately % per annum.
(7) Implied weighted average life.
(8) Not offered hereby.
S-1
<PAGE>
SUMMARY OF THE PROSPECTUS SUPPLEMENT
The following summary is a brief description of the main terms of the
offered certificates. For this reason, the summary does not contain all the
information that may be important to you. You will find a detailed
description of the terms of the offered certificates following this summary
and in the prospectus. Certain capitalized terms used in this summary are
defined elsewhere in this prospectus supplement.
TITLE OF CERTIFICATES Mortgage Pass-Through Certificates, Series
2000-C10.
THE PARTIES
-----------
DEPOSITOR J.P. Morgan Commercial Mortgage Finance
Corp., a Delaware corporation, an indirect
wholly-owned limited purpose finance
subsidiary of J.P. Morgan & Co. Incorporated
and an affiliate of J.P. Morgan Securities
Inc., one of the underwriters. See "The
Depositor" in the prospectus.
SELLER Morgan Guaranty Trust Company of New York,
an affiliate of the depositor and one of the
underwriters.
MASTER SERVICER Midland Loan Services, Inc., a Delaware
corporation. See "Master Servicer and
Special Servicer" herein.
SPECIAL SERVICER ORIX Real Estate Capital Markets, LLC, a
Delaware limited liability company. The
special servicer may be removed without
cause under certain circumstances described
herein under "Master Servicer and Special
Servicer" herein.
TRUSTEE State Street Bank and Trust Company, a
Massachusetts trust company. See
"Description of the Pooling and Servicing
Agreement -- Trustee" herein.
DEAL INFORMATION/ANALYTICS It is anticipated that certain mortgage pool
and certificate information will be
available from the following services:
Bloomberg, L.P., Intex Solutions, Inc.,
Conquest and The Trepp Group, LLC.
SIGNIFICANT DATES
-----------------
CUT-OFF DATE September 1, 2000 (except for one mortgage
loan which has a cut-off date of September
10, 2000 and two mortgage loans which have a
cut-off date of September 11, 2000).
DELIVERY DATE On or about September , 2000.
DISTRIBUTION DATE The 15th day of each month or, if such 15th
day is not a business day, on the next
succeeding business day, beginning in
October 2000.
DETERMINATION DATE For any distribution date, the fourth
business day prior to the related
distribution date.
S-2
<PAGE>
RATED FINAL DISTRIBUTION DATE The distribution date in August 2032.
REMITTANCE PERIOD For any distribution date, the period
beginning on the day after a determination
date in the immediately preceding month (or
the related cut-off date, in the case of the
first remittance period) through and
including the related determination date;
provided, that with respect to mortgage loan
numbers 9, 63, and 66, that may have due
dates after the determination date and with
respect to any mortgage loan with a grace
period expiring after the determination date
but prior to the ensuing distribution date,
the remittance period will be deemed to end
on such due dates or at the end of those
grace periods, as applicable.
THE CERTIFICATES
----------------
REGISTRATION OF THE OFFERED The offered certificates initially will be
CERTIFICATES issued in book-entry form.
Certificateholders acquiring beneficial
ownership interests in the offered
certificates may elect to hold their
book-entry certificate interests either
through The Depository Trust Company, in the
United States, or through Cedelbank or the
Clearstream System, in Europe. See
"Description of the Certificates --
Book-Entry Registration of the Offered
Certificates" in this prospectus supplement
and in the prospectus under "Description of
the Certificates -- Book-Entry Registration
and Definitive Certificates."
DENOMINATIONS The certificates will be issuable in
book-entry form in denominations of (except
in the case of the Class X Certificates)
$25,000 and integral multiples of $1 in
excess thereof. The Class X Certificates
will be issuable in denominations of
$100,000 notional amount and integral
multiples of $1 notional amount in excess
thereof.
THE MORTGAGE LOANS
------------------
THE MORTGAGE POOL The trust fund will consist of a mortgage
pool of 168 fixed rate mortgage loans
secured by first liens on fee simple and/or
leasehold interests in multifamily, retail,
office, industrial, hotel, self storage,
mixed use, nursing home, and congregate care
properties, collectively the "mortgaged
properties," located in 33 states. All the
mortgage loans were originated or purchased
by Morgan Guaranty Trust Company of New
York. See "Description of the Mortgage Pool
-- General." One mortgage loan (the Suburban
Lodge loan), with a balance as of the
cut-off date of $13,542,452, will have a
senior component and a subordinate component
having cut-off date balances of $12,000,000
and $1,542,452, respectively. Unless
otherwise indicated, references to, and all
amounts and calculations with respect to,
the mortgage loans and the mortgage pool
S-3
<PAGE>
shall be references to, and shall be with
respect to, the mortgage loans, other than
the Suburban Lodge loan, and the senior
component of the Suburban Lodge loan.
Holders of the offered certificates will
only be entitled to distributions on the
senior component. See "Description of the
Mortgage Pool -- The Suburban Lodge Loan."
General Mortgage Loan Characteristics
(as of the Cut-off Date, unless otherwise indicated)
<TABLE>
<CAPTION>
<S> <C>
Initial Pool Balance................... $738,541,419
Number of Mortgage Loans............... 168
Number of Mortgaged Properties......... 194
Average Mortgage Loan Balance.......... $4,396,080
Maximum Mortgage Loan Balance.......... $24,701,611
Minimum Mortgage Loan Balance.......... $220,965
Weighted Average Mortgage Rate......... 8.33%
Range of Mortgage Rates................ 7.47% -9.88%
Weighted Average Remaining Term to the
Earlier of Maturity or Anticipated
Repayment Date........................ 116 months
Range of Remaining Term to the Earlier
of Maturity or Anticipated Repayment
Date.................................. 100 -235 months
Weighted Average UW DSCR(1)(2)......... 1.33x
Weighted Average LTV(1)(2)............. 68.9%
Percentage of Initial Pool Balance
made up of:
Balloon Loans.......................... 49.9%
ARD Loans.............................. 40.0%
Interest Only Loans.................... 6.5%
Fully Amortizing Loans (other than ARD
Loans)................................ 3.7%
Multi-Property Loans................... 13.3%
Crossed Loans.......................... 7.9%
</TABLE>
For a further description of the mortgage
loans, see "Description of the Mortgage
Pool" herein.
------------------
(1) Excludes 3 credit tenant lease mortgage loans representing 1.3% of the
initial pool balance.
(2) The underwritten debt service coverage ratio and the loan-to-value ratio for
the Suburban Lodge loan were calculated based on the original principal balance
of the loan; however, the weighted average value indicated was weighted for this
loan based on the senior component of this loan. See "Description of the
Mortgage Pool -- The Suburban Lodge Loan."
S-4
<PAGE>
THE CERTIFICATES
----------------
THE OFFERED CERTIFICATES Only the Class A1, Class A2, Class B, Class
C, Class D, Class E and Class X Certificates
are offered hereby. The offered certificates
will have the initial class balances set
forth on the cover hereof. The Class X
Certificates will not have a class balance.
PASS-THROUGH RATES ON THE The pass-through rate on the offered
OFFERED CERTIFICATES certificates (except the Class X
Certificates) will be equal to either a
fixed rate or a rate based on the weighted
average of the remittance rates on the
mortgage loans. The pass-through rate on the
Class X Certificates is not fixed and will
be equal to the weighted average of the
remittance rates on the mortgage loans minus
the weighted average (by class balance) of
the pass-through rates on all other classes
of certificates. The remittance rates on the
mortgage loans will represent accrued
interest on the mortgage loans net of
certain servicing and trustee fees. The
pass-through rate on the offered
certificates for the initial distribution
date is set forth above under "Executive
Summary."
DISTRIBUTIONS
-------------
INTEREST DISTRIBUTIONS ON THE In general, holders of each class of
CERTIFICATES certificates will be entitled to receive on
each distribution date in the order of their
priority, to the extent available,
distributions allocable to interest equal to
the interest accrued during the interest
accrual period on the related class balance
(or notional amount) immediately prior to
such distribution date at the
then-applicable pass-through rate. The
notional amount of the Class X Certificates
will equal the aggregate class balance of
all the certificates. The notional amount
does not entitle the Class X Certificates to
any distributions of principal.
Distributions will be made on each
distribution date. The chart below sets
forth the priority of each class for the
payment of interest to each class in
descending order.
S-5
<PAGE>
Class A1
Class A2 and Class X
Class B
Class C
Class D
Class E
Private Certificates
See "Description of the Certificates --
Distributions --Interest Distributions on
the Certificates" herein. See "Description
of the "Mortgage Pool -- The Suburban Lodge
Loan" for a description of the allocation of
collections with respect to the Suburban
Lodge loan.
PRINCIPAL DISTRIBUTIONS ON THE In general, holders of a class of
CERTIFICATES certificates will be entitled to receive on
each distribution date principal in the
order set forth in the chart below, until
the related class balance is reduced to
zero, to the extent available after the
payment of interest for such class of
certificates.
Class A1
Class A2
Class B
Class C
Class D
Class E
Private Certificates
See "Description of the Certificates --
Distributions --Principal Distributions on
the Offered Certificates" herein. The Class
X Certificates do not have a class balance
and are therefore not entitled to any
principal distributions.
S-6
<PAGE>
See "Description of the Mortgage Pool -- The
Suburban Lodge Loan" for a description of
the allocation of collections with respect
to the Suburban Lodge loan.
P&I ADVANCES Generally, the master servicer is required
to make advances for delinquent monthly
payments on the mortgage loans and for
certain other expenses to the extent
described herein. To the extent that the
master servicer fails to make any such
advance required of it, the trustee shall
make such required advance as provided in
the pooling and servicing agreement. As more
fully described herein, if either the master
servicer or the trustee makes an advance it
will be entitled to reimbursement of and
interest on such advance. Such advance will
facilitate in making regular monthly
distributions of principal and interest on
the certificates. See "Description of the
Certificates -- Advances" herein. See
"Description of the Mortgage Pool -- The
Suburban Lodge Loan" for a description of
advances on the Suburban Lodge loan.
OTHER CONSIDERATIONS
--------------------
ALLOCATION OF REALIZED LOSSES Realized losses on the mortgage loans will
be allocated, first, to the private
certificates, second, to the Class E
Certificates, third, to the Class D
Certificates, fourth, to the Class C
Certificates, fifth, to the Class B
Certificates and thereafter, to the Class A1
and Class A2 Certificates, on a pro rata
basis, based on class balance, in each case
until the related class balance is reduced
to zero. The allocation of losses will
reduce the value of the affected
certificates. See "Description of the
Mortgage Pool -- The Suburban Lodge Loan"
for a description of the allocation of
realized losses on the Suburban Lodge loan.
SPECIAL PRINCIPAL PREPAYMENT Certain of the mortgage loans have a
CONSIDERATIONS prepayment premium period. If certain
voluntary prepayments are made during such
period, a prepayment premium will be
required to be paid during such period. See
"Description of the Mortgage Pool" herein.
Distributions of principal on classes having
an earlier priority of payment will be
directly affected by the rates of
prepayments of the mortgage loans. The
timing of commencement of principal
distributions and the weighted average lives
of classes of certificates will be affected
by the rates of prepayments experienced.
SPECIAL YIELD CONSIDERATIONS A higher than anticipated rate of
prepayments (including voluntary prepayments
and prepayments resulting from defaults,
liquidations and purchases of mortgage loans
due to a breach of a representation or
warranty) would reduce the aggregate
principal balance of the mortgage loans more
quickly than expected, thereby reducing the
aggregate
S-7
<PAGE>
interest payments with respect to such
mortgage loans. Therefore, a higher rate of
principal prepayments could result in a
lower than expected yield to maturity on
classes of certificates purchased at a
premium. Conversely, a lower than
anticipated rate of principal prepayments
could result in a lower than expected yield
to maturity on classes of certificates
purchased at a discount since payments of
principal with respect to the mortgage loans
would occur later than anticipated. The
yield to investors on the Class X
Certificates will be especially sensitive to
the rate and timing of prepayments, defaults
and liquidations on the mortgage loans and
could result in the failure of investors in
the Class X Certificates to recover their
initial investments. The yield on the Class
X Certificates and any class of offered
certificates with a pass-through rate
subject to the weighted average remittance
rate will be materially and adversely
affected to a greater extent than the yields
on other offered certificates, if the
mortgage loans with higher mortgage interest
rates prepay faster than the mortgage loans
with lower mortgage interest rates. See
"Certain Prepayment, Maturity and Yield
Considerations," especially "--Class X
Certificates Yield Considerations" herein.
CERTAIN FEDERAL INCOME TAX Three separate real estate mortgage
CONSEQUENCES investment conduit elections will be made
with respect to the trust fund for federal
income tax purposes. Upon the issuance of
the offered certificates, Brown & Wood LLP,
counsel to the depositor, will deliver its
opinion generally to the effect that for
federal income tax purposes, REMIC I, REMIC
II and REMIC III will each qualify as a real
estate mortgage investment conduit under
Sections 860A through 860G of the Internal
Revenue Code of 1986, as amended.
The Class X Certificates will, and the other
offered certificates may, be treated as
having been issued with original issue
discount for federal income tax purposes.
For further information regarding the
federal income tax consequences of investing
in the offered certificates, see "Certain
Federal Income Tax Consequences" herein and
"Federal Income Tax Consequences" in the
prospectus.
ERISA CONSIDERATIONS Subject to important considerations
described under "ERISA Considerations" in
this prospectus supplement and in the
accompanying prospectus, the Class A1, Class
A2 and Class X Certificates will generally
be eligible for purchase by persons
investing assets of employee benefit plans
or individual retirement accounts. The
Department of Labor has proposed amendments
to the applicable exemption that, if
finalized in current form, would permit
plans to also purchase the Class B, Class C,
Class D and Class E Certificates. It is not
certain if and
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<PAGE>
when these amendments will be issued or
whether they will contain the same relief as
is currently proposed.
RATING The offered certificates are required to
receive the ratings from Fitch, Inc. and
Moody's Investors Service, Inc., indicated
above under "Executive Summary." The ratings
on the offered certificates address the
likelihood of timely receipt of interest and
ultimate receipt of principal by the rated
final distribution date by the holders of
offered certificates. They do not address
the likely actual rate of prepayments. Such
rate of prepayments, if different than
originally anticipated, could adversely
affect the yield realized by holders of the
offered certificates or cause the Class X
Certificateholders to fail to recover their
initial investments. See "Rating" in this
prospectus supplement and in the prospectus
for a discussion of the basis upon which
ratings are given, the limitations and
restrictions on the ratings, and conclusions
that should not be drawn from a rating.
LEGAL INVESTMENT The certificates will not be "mortgage
related securities" within the meaning of
the Secondary Mortgage Market Enhancement
Act of 1984, as amended.
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<PAGE>
RISK FACTORS
Prospective purchasers of the offered certificates should consider, among
other things, the following risk factors (as well as the risk factors set
forth under "Risk Factors" in the prospectus) in connection with an
investment in the offered certificates.
THE MORTGAGE LOANS
RISKS ASSOCIATED WITH Commercial and multifamily lending is
COMMERCIAL LENDING MAY BE generally thought to be riskier than
DIFFERENT THAN RESIDENTIAL single-family residential lending for a
LENDING variety of reasons, including the likelihood
that larger loans are made to single
borrowers or groups of related mortgagors.
The mortgage loans are secured by the
following income-producing property types:
o multifamily properties (including mobile
home parks);
o retail properties;
o office properties;
o industrial properties;
o hotel properties;
o self storage facilities;
o mixed use properties;
o nursing home properties; and
o congregate care properties.
Repayment of loans secured by commercial and
multifamily properties typically depends on
the cash flow produced by such properties.
The ratio of net cash flow to debt service
of a loan secured by income-producing
property is an important measure of the risk
of default on such a loan. Most of the
mortgage loans were originated within twelve
months of the cut-off date. Consequently,
the mortgage loans generally do not have a
long-standing payment history.
NET CASH FLOW PRODUCED BY A Payment on each mortgage loan is dependent
MORTGAGED PROPERTY MAY BE primarily on:
INADEQUATE TO REPAY THE
MORTGAGE LOAN o the net operating income of the related
mortgaged property; and
o at maturity (whether at scheduled
maturity or, in the event of a default
under the mortgage loan, upon the
acceleration of such maturity), the
market value of the related mortgaged
property (taking into account any adverse
effect of a foreclosure proceeding on
such market value) or the ability of the
related mortgagor to refinance the
mortgage loan.
If a mortgage loan has a relatively high
loan to value ratio or relatively low debt
service coverage ratio, a foreclosure sale
is less likely to provide enough money to
satisfy the outstanding debt. Therefore, the
special servicer may have
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to modify the mortgage loans that it is
servicing in order to try to maximize
recoveries. However, such flexibility may
not result in a greater recovery on a net
present value basis than liquidation.
LOANS NOT INSURED OR GUARANTEED The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any mortgage
insurer, or by the depositor, the seller,
the underwriters, the master servicer, the
special servicer, the trustee or any of
their respective affiliates.
NONRECOURSE LOANS LIMIT THE Each mortgage loan generally is a
REMEDIES AVAILABLE FOLLOWING A nonrecourse loan. If there is a default
MORTGAGOR DEFAULT there will generally only be recourse
against the specific properties and other
assets that have been pledged to secure such
mortgage loan. Even if a mortgage loan
provides for recourse to a mortgagor or its
affiliates, it is unlikely the trust fund
ultimately could recover any amounts not
covered by the mortgaged property.
FUTURE CASH FLOWS AND PROPERTY Commercial and multifamily property values
VALUES ARE NOT PREDICTABLE and cash flows are volatile and may be
insufficient to cover debt service on the
related mortgage loan at any given time. If
the cash flow from a mortgaged property is
reduced (for example, if leases are not
obtained or renewed), the mortgagor may not
be able to repay the loan. Cash flow will
determine the mortgagor's ability to cover
debt service and property values affect the
ability to refinance the property and the
amount of the recovery of proceeds upon
foreclosure. Cash flow and property value
depend upon a number of factors, including:
o national, regional and local economic
conditions;
o local real estate conditions, such as an
oversupply of space similar to the
related mortgaged property;
o changes or weakness in a specific
industry segment;
o the nature of expenses:
o as a percentage of revenue;
o whether expenses are fixed or vary with
revenue;
o the level of required capital
expenditures for proper maintenance and
demanded by tenants;
o demographic factors;
o changes required by retroactive building
or similar codes;
o capable management and adequate
maintenance;
o location;
o with respect to properties with uses
subject to significant regulation,
changes in applicable laws;
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<PAGE>
o perceptions by prospective tenants and,
if applicable, their customers, of the
safety, convenience, services and
attractiveness of the property;
o the age, construction quality and design
of a particular property; and
o whether the mortgaged properties are
readily convertible to alternative uses.
POOR PROPERTY MANAGEMENT WILL The successful operation of a real estate
LOWER THE PERFORMANCE OF THE project also depends on the performance and
RELATED MORTGAGED PROPERTY viability of the property manager.
Properties deriving revenues primarily from
short-term sources (such as hotels, nursing
homes and self-storage facilities) generally
are more management intensive than
properties leased to creditworthy tenants
under long-term leases. The property manager
is generally responsible for:
o operating the properties;
o providing building services;
o establishing and implementing the rental
structure;
o managing operating expenses;
o responding to changes in the local
market; and
o advising the mortgagor with respect to
maintenance and capital improvements.
Property managers may not be in a financial
condition to fulfill their management
responsibilities.
Certain of the mortgaged properties are
managed by affiliates of the applicable
mortgagor. If a mortgage loan is in default
or undergoing special servicing, such
relationship could disrupt the management of
the underlying property. This may adversely
affect cash flow. However, the mortgage
loans generally permit the lender to remove
the property manager upon the occurrence of
an event of default, a decline in cash flow
below a specified level or the failure to
satisfy some other specified performance
trigger.
THE FAILURE OF A TENANT WILL Thirty-two of the mortgaged properties
HAVE A NEGATIVE IMPACT ON representing approximately 16.1% of the
SINGLE TENANT PROPERTIES initial pool balance are secured by
mortgaged properties leased to a single
tenant. The performance of mortgage loans
secured by single tenant properties will
depend principally on the payment by the
related tenant of monthly rental payments
under a lease. Therefore, mortgage loans
secured by single tenant properties (or a
small number of tenants) are more likely to
experience interruptions of cash flow
because there would be no (or significantly
less) rental income if the single tenant (or
one of a small number of tenants) failed to
meet its obligations, or otherwise
terminated, the lease. Income from and the
market value of retail, office and
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<PAGE>
industrial mortgaged properties occupied by
a single tenant would be adversely affected
under the following circumstances:
o if vacated space in such mortgaged
properties could not be leased or relet
on terms comparable to the prior lease;
o if the tenant were unable to meet its
obligations;
o if the tenant were to become a debtor in
a bankruptcy case; and
o if for any other reason rental payments
could not be collected.
Even if vacated space is successfully relet,
the costs associated with reletting,
including tenant improvements, leasing
commissions and free rent, could exceed the
amount of any reserves maintained for such
purpose and could reduce cash flow from the
mortgaged properties. Although certain of
the mortgage loans require the mortgagor to
maintain escrows for such expenses, there
can be no assurance that such factors will
not adversely affect the ability of a
mortgagor to repay a mortgage loan.
Mortgage loans secured by retail and office
properties may also be adversely affected if
one or more tenants represent a significant
percentage of rental income and rental
payments cannot be collected from such
tenant.
THE FAILURE OF AN ANCHOR TENANT Twenty of the mortgaged properties
WILL HAVE A NEGATIVE IMPACT ON representing approximately 16.5% of the
RETAIL PROPERTIES initial pool balance are secured by anchored
retail properties. The success of its anchor
tenant is important to a shopping center
property. An anchor tenant attracts and
maintains other stores and generates
consumer traffic. The failure of one or more
specified tenants, such as an anchor tenant,
to operate from its premises may give
certain tenants the right to terminate or
reduce rents under their leases. Under
certain circumstances, the failure of an
anchor tenant to meet its obligations under,
or otherwise terminate, its lease may result
in risks to the holder of the related
mortgage note similar to those associated
with mortgage loans secured by single tenant
properties. See "The Failure of a Tenant
will have a Negative Impact on Single Tenant
Properties" above.
SPECIAL RISKS ASSOCIATED WITH Ten of the mortgage loans, representing
HOSPITALITY PROPERTIES approximately 7.2% of the initial pool
balance, are secured by extended stay, full
service hotels or limited service hotels.
See "Description of the Mortgage Pool --
Certain Characteristics of the Mortgage
Loans." In addition to some of the factors
discussed under "--Future Cash Flows and
Property Values are not Predictable" above,
the value and cash flow of such hospitality
properties will depend on the following
factors:
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<PAGE>
o adverse economic conditions; because
hotel rooms generally are rented for
short periods of time, hotels tend to be
more sensitive to adverse economic
conditions and competition than are other
commercial properties;
o the physical condition of such
hospitality property;
o the financial strength and capabilities
of the owner and operator of a hotel;
o financial strength and public perception
of the franchise service mark and the
continued existence of the franchise
license agreement; and
o the continued existence of a liquor
license.
Most of the hospitality properties have
liquor licenses. Some states do not permit
liquor licenses to be held other than by a
natural person. Consequently, liquor
licenses for hospitality properties located
in such jurisdictions are held by an
individual affiliated with the related
mortgagor or manager. Generally, a liquor
license may not be transferred without the
approval of the relevant licensing
authority. In the event of a foreclosure of
a hospitality property, it is unlikely that
the trustee (or master servicer or special
servicer) or purchaser in any such sale
would be entitled to the rights under the
liquor license for such hospitality
property. Such party would be required to
apply in its own name for such license.
SPECIAL RISKS ASSOCIATED WITH Four of the mortgage loans representing
NURSING HOMES AND CONGREGATE approximately 1.2% of the initial pool
CARE PROPERTIES balance are secured by nursing homes and
congregate care properties. Mortgage loans
secured by liens on such residential health
care facilities have risks not associated
with loans secured by liens on other types
of income-producing real estate. These risks
may lead to adverse consequences which may
have a negative impact on the payments of
the offered certificates.
Providers of long-term nursing care and
other medical services are subject to
federal and state laws that relate to:
o the adequacy of medical care;
o distribution of pharmaceuticals;
o rate setting;
o equipment;
o personnel;
o operating policies and additions to
facilities and services; and
o the reimbursement policies of government
programs and insurers.
The failure of any of the mortgagors to
maintain or renew any required license or
regulatory approval could prevent it from
continuing operations (in which case no
revenues
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<PAGE>
would be received from the related mortgaged
property or the portion thereof requiring
licensing) or bar it from participation in
certain reimbursement programs. In the event
of foreclosure, the trustee or any other
purchaser at a foreclosure sale may not be
entitled to the rights under such licenses
and such party may have to apply in its own
right for such a license. There can be no
assurance that a new license could be
obtained.
To the extent any nursing home receives a
significant portion of its revenues from
government reimbursement programs, primarily
Medicaid and Medicare, such revenue may be
subject to:
o statutory and regulatory changes;
o retroactive rate adjustments;
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
Governmental payors have employed
cost-containment measures that limit
payments to health care providers, and there
are various proposals that could materially
change or curtail those payments. There can
be no assurances that payments under
government programs will, in the future, be
sufficient to fully reimburse the cost of
caring for program beneficiaries. Net
operating income of the mortgaged properties
that receive substantial revenues from those
sources, and consequently, the ability of
the related mortgagors to meet their
mortgage loan obligations, could be
adversely affected.
Under applicable federal and state laws and
regulations, including those that govern
Medicare and Medicaid programs, only the
provider who actually furnished the related
medical goods and services may sue for or
enforce its rights to reimbursement. In the
event of foreclosure, none of the trustee,
the master servicer, the special servicer or
a subsequent lessee or operator of the
property would generally be entitled to
obtain from federal or state governments any
outstanding reimbursement payments relating
to services furnished at the respective
properties prior to such foreclosure.
ADVERSE CONSEQUENCES ASSOCIATED The average principal balance of the
WITH CONCENTRATION OF MORTGAGE mortgage loans as of the cut-off date is
LOANS AND RELATED BORROWERS approximately $4,396,080, which is equal to
approximately 0.6% of the initial pool
balance. Several of the mortgage loans have
principal balances as of the cut-off date
that are substantially higher than the
average principal balance as of the cut-off
date. In addition, there are several groups
of mortgage loans with related mortgagors.
In general, such concentrations can result
in
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<PAGE>
losses that are more severe than would be
the case if the aggregate balance of such
pool were more evenly distributed among the
mortgage loans in such pool. No mortgage
loan represents more than 3.3% of the
initial pool balance and no group of
mortgage loans with related mortgagors
represent in the aggregate more than 4.9% of
the initial pool balance unless
cross-collateralized and cross-defaulted
with another mortgage loan.
Mortgage loans with the same borrower or
related mortgagors pose certain risks. For
example, if an entity that owns or controls
several mortgaged properties experiences
financial difficulty at one mortgaged
property, it could defer maintenance at
another mortgaged property in order to
satisfy current expenses with respect to the
troubled mortgaged property. Alternatively,
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.
LIMITATIONS ON THE BENEFITS OF Twelve of the mortgage loans, representing
CROSS-COLLATERALIZED AND approximately 7.9% of the initial pool
CROSS-DEFAULTED PROPERTIES balance, are cross-collateralized and
cross-defaulted with other mortgage loans in
the mortgage pool. No group of
cross-collateralized and cross-defaulted
mortgage loans represents in the aggregate
more than 6.5% of the initial pool balance.
These arrangements attempt to reduce the
risk that one mortgaged property may not
generate enough net operating income to pay
debt service. Securing a mortgage loan with
multiple properties generally reduces the
risk that the net operating income generated
by such properties will not be sufficient to
pay debt service and result in defaults and
ultimate losses. However, such crossed
mortgaged properties generally will be
managed by the same managers or affiliated
managers or will be subject to the
management of the same borrowers or
affiliated borrowers.
Cross-collateralization arrangements
involving more than one mortgagor could be
challenged as a fraudulent conveyance if:
o one of the mortgagors were to become a
debtor in a bankruptcy case;
o such borrower did not receive fair
consideration or reasonably equivalent
value in exchange for allowing its
mortgaged property to be encumbered; and
o at the time the lien was granted, the
mortgagor were: (A) insolvent, (B)
inadequately capitalized or (C) unable to
pay its debts.
TIMING OF PRINCIPAL PREPAYMENTS If principal payments, property releases, or
MAY LEAD TO DIFFERENT ASSET prepayments are made on a mortgage loan, the
CONCENTRATIONS THAN IN THE remaining mortgage pool may be subject to
INITIAL MORTGAGE POOL more concentrated risk with respect
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to the diversity of properties, types of
properties and property characteristics and
with respect to the number of mortgagors.
See the table entitled "Year of Scheduled
Maturity/Anticipated Repayment Date" under
"Description of the Mortgage Pool -- Certain
Characteristics of the Mortgage Loans"
herein for a description of the respective
maturity dates of the mortgage loans.
Because principal on the offered
certificates is payable in sequential order,
and no class receives principal until the
class balance of the preceding class or
classes has been reduced to zero, classes
that have a lower sequential priority are
more likely to be exposed to the risk of
concentration discussed under "--Adverse
Consequences Associated with Concentration
of Mortgage Loans and Related Borrowers"
above than classes with a higher sequential
priority.
THE GEOGRAPHIC CONCENTRATION OF Except as indicated in the following table,
MORTGAGED PROPERTIES SUBJECTS less than 5.0% of the mortgage loans, by
THE TRUST FUND TO A GREATER initial pool balance are secured by
EXTENT TO STATE OR REGIONAL mortgaged properties in any one state.
CONDITIONS
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF INITIAL
STATE PROPERTIES POOL BALANCE
-------------- -------------- ----------------
<S> <C> <C>
California..... 39 27.5%
Texas.......... 19 8.5%
New Jersey..... 5 6.0%
Illinois....... 10 5.4%
Florida........ 18 5.1%
</TABLE>
The concentration of mortgaged properties in
a specific state or region will make the
performance of the mortgage pool as a whole,
more sensitive to the following in the state
or region where the mortgagors and the
mortgaged properties are located:
o economic conditions;
o conditions in the real estate market;
o changes in governmental rules and fiscal
policies;
o acts of God (which may result in
uninsured losses); and
o other factors which are beyond the
control of the mortgagors.
EXERCISE OF LEGAL REMEDIES MAY The mortgage loans may contain a due-on-sale
BE LIMITED FOLLOWING A DEFAULT clause. Such clause permits the holder of
ON A MORTGAGE LOAN the mortgage loan to accelerate the maturity
of the mortgage loan if the related
mortgagor sells or otherwise transfers or
conveys the related mortgaged property or
its interest in the mortgaged property in
violation of the terms of the mortgage loan.
The mortgage loans may also include a
debt-acceleration clause, which permits the
lender to accelerate the debt upon specified
monetary or non-monetary defaults of the
mortgagor. The courts of all states will
enforce clauses
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providing for acceleration in the event of a
material payment default. The equity courts
of any state, however, may refuse the
foreclosure or other sale of a mortgaged
property or refuse to permit the
acceleration of the indebtedness as a result
of a default deemed to be immaterial or if
the exercise of such remedies would be
inequitable or unjust or the circumstances
would render the acceleration
unconscionable.
Certain of the mortgage loans will be
secured by an assignment of leases and rents
from the mortgagor, however, the mortgagor
generally may collect rents for so long as
there is no default. As a result, the trust
fund's rights to such rents will be limited
because:
o it may not have a perfected security
interest in the rent payments until the
master servicer collects them;
o the master servicer may not be entitled
to collect the rent payments without
court action; and
o the bankruptcy of the related mortgagor
could limit the master servicer's ability
to collect the rents.
See "Certain Legal Aspects of Mortgage Loans
and the Leases -- Leases and Rents" in the
prospectus.
ENVIRONMENTAL LAWS MAY Under various federal, state and local
ADVERSELY AFFECT THE VALUE OF environmental laws, ordinances and
AND CASH FLOW FROM A MORTGAGED regulations, a current or previous owner or
PROPERTY operator of real property may be liable for
the costs of cleanup of environmental
contamination on, under, adjacent to or in
such property. Such laws often impose
liability whether or not the owner or
operator knew of, or was responsible for,
the presence of such contamination. The cost
of any required cleanup and the owner's
liability for these costs are generally not
limited under these laws and could exceed
the value of the property and/or the
aggregate assets of the owner. In addition,
the presence of hazardous or toxic
substances, or the failure to properly clean
up contamination on such property, may
adversely affect the owner's or operator's
ability to borrow using such property as
collateral.
Certain environmental laws impose liability
for releases of asbestos into the air. Third
parties may seek recovery from owners or
operators of real property for personal
injury associated with exposure to asbestos.
Under some environmental laws, such as the
federal Comprehensive Environmental
Response, Compensation and Liability Act as
well as certain state laws, a secured lender
(such as the trust fund) may be liable as an
"owner" or "operator," for the costs of
responding to a release or threatened
release of hazardous substances on or from a
mortgagor's property. Such liability may be
imposed on the lender if its agents or
employees are deemed to have participated in
the management of the mortgagor's
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property, regardless of whether a previous
owner caused the environmental damage. The
trust fund's potential exposure to liability
for cleanup costs may increase if the trust
fund actually takes possession of a
mortgagor's property, or control of its
day-to-day operations, as, for example,
through the appointment of a receiver.
Either an environmental site assessment of
each of the mortgaged properties was
performed (in some cases, prior assessments
were updated) or an environmental insurance
policy was obtained in lieu of an
environmental site assessment in connection
with the initial underwriting and
origination of the mortgage loans. Such
assessments do not generally include
environmental testing. In certain cases,
additional environmental testing was
performed.
The information in such assessments has not
been independently verified by the seller,
the depositor, the servicers, the trustee,
the underwriters, or by any of their
respective affiliates. With respect to a
number of the mortgaged properties, the
assessments revealed the presence or
possible presence of asbestos-containing
materials, radon gas or other environmental
concerns. None of these issues constituted a
material violation of any environmental law
in the judgment of the assessor. In these
cases, the mortgagors agreed to establish
and implement operations and maintenance
programs or had other remediation agreements
or escrows in place.
It is possible that the environmental site
assessments did not reveal all environmental
liabilities, that there are material
environmental liabilities of which neither
the seller nor the depositor are aware or
that the environmental condition of the
mortgaged properties could be affected in
the future by tenants, occupants, or third
parties unrelated to the mortgagors.
Each mortgagor has represented that, except
as described in the environmental reports
referred to above, each mortgaged property
was, or to the best of the mortgagor's
knowledge was, in compliance with applicable
environmental laws and regulations on the
date of the origination of the related
mortgage loan. Each mortgagor has also
represented that, except as described in the
environmental reports, no actions, suits or
proceedings have been commenced or are
pending or, to the best of the mortgagor's
knowledge are threatened, with respect to
any applicable environmental laws. Each
mortgagor has represented that such
mortgagor has not received any notice of
violation of any legal requirement related
to the use and occupancy of any mortgaged
property and has agreed not to use, cause or
permit the presence on the related mortgaged
property of any hazardous materials in a
manner which violates any applicable law.
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<PAGE>
The principal security for the obligations
under each mortgage loan consists of the
mortgaged property. Therefore, if any of the
representations described in the preceding
paragraph are breached, there can be no
assurance that any other assets of the
mortgagor would be available in connection
with any exercise of remedies in response to
such a breach. In addition, most mortgagors
are structured as single asset entities and
therefore have no assets other than the
mortgaged property.
SPECIAL RISKS ASSOCIATED WITH One hundred and eight mortgage loans
BALLOON LOANS (including 2 interest-only mortgage loans),
representing approximately 56.4% of the
initial pool balance, are balloon loans. The
balloon loans do not fully amortize over
their terms to maturity and, thus, require
substantial principal payments (i.e.,
balloon payments) at their stated maturity.
Mortgage loans with balloon payments are
riskier because the ability of a mortgagor
to make a balloon payment will depend upon
its ability either to refinance the loan or
to sell the related mortgaged property in a
timely fashion. The ability of a mortgagor
to accomplish either of these goals will be
affected by a number of factors, including:
o the level of available mortgage interest
rates at the time of sale or refinancing;
o the mortgagor's equity in the related
mortgaged property;
o the financial condition and operating
history of the mortgagor and the related
mortgaged property;
o tax laws;
o rent control laws (with respect to
certain multifamily properties);
o renewability of operating licenses;
o prevailing general economic conditions;
and
o the availability of credit for commercial
or multifamily real properties.
SPECIAL RISKS ASSOCIATED WITH Fifty-four mortgage loans, representing
ANTICIPATED REPAYMENT DATE approximately 40.0% of the initial pool
LOANS balance, are mortgage loans with anticipated
repayment dates. After the anticipated
repayment date, any excess cash flow will be
required to be applied to payments of
principal and interest on such loan. All of
the anticipated repayment date loans will
have substantial principal balances on their
anticipated repayment date. The failure to
pay such loan by the related anticipated
repayment date will not result in an event
of default or acceleration.
The ability of a mortgagor to repay a
mortgage loan on the anticipated repayment
date will depend on its ability either to
refinance the mortgage loan or to sell the
related
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<PAGE>
mortgaged property. The ability of a
mortgagor to accomplish either of these
goals will be affected by a number of
factors, including:
o the level of available mortgage interest
rates at the time of sale or refinancing;
o the mortgagor's equity in the related
mortgaged property;
o the financial condition and operating
history of the mortgagor and the related
mortgaged property;
o tax laws;
o rent control laws (with respect to
certain multifamily properties);
o renewability of operating licenses;
o prevailing general economic conditions;
and
o the availability of credit for commercial
or multifamily real properties.
ONE ACTION JURISDICTION MAY Several states have laws that prohibit more
LIMIT THE ABILITY OF THE than one "judicial action" to enforce a
SPECIAL SERVICER TO FORECLOSE mortgage obligation, and some courts have
ON A MORTGAGED PROPERTY construed the term "judicial action"
broadly. The special servicer may need to
obtain advice of counsel prior to enforcing
any of the trust fund's rights under any of
the mortgage loans that include mortgaged
properties where the rule could be
applicable.
In the case of a mortgage loan secured by
mortgaged properties located in multiple
states, the special servicer may be required
to foreclose first on 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.
See "Certain Legal Aspects of Mortgage Loans
and the Leases -- Foreclosure" in the
prospectus.
APPRAISALS AND MARKET STUDIES An appraisal of the value for each of the
OF MORTGAGED PROPERTIES mortgaged properties was made between
October 6, 1998 and June 28, 2000. It is
possible that the market value of a
mortgaged property securing a mortgage loan
has declined since the most recent appraisal
for such mortgaged property. Appraisals
represent the analysis and opinion of the
respective appraisers at or before the time
made and are not guarantees, and may not be
indicative, of present or future value.
Another appraiser may have arrived at a
different valuation, even if such appraiser
used the same general approach to, and the
same method of, appraising the property.
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
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obtained from the sale of a mortgaged
property under a distress or liquidation
sale. Information regarding the values of
the mortgaged properties as of the cut-off
date is presented under "Description of the
Mortgage Pool" herein for illustrative
purposes only.
CERTAIN PARTIES MAY HAVE A substantial number of the mortgaged
CONFLICTS OF INTEREST WITH properties are managed by property managers
RESPECT TO THE MORTGAGED affiliated with the respective mortgagors.
PROPERTIES These property managers may also manage
additional properties, including properties
that may compete with the mortgaged
properties. Affiliates of the managers
and/or the mortgagors, or the managers
and/or the mortgagors themselves, may also
own other properties, including competing
properties. Therefore, the managers of the
mortgaged properties and the mortgagors may
experience conflicts of interest in the
management and/or ownership of such
properties. In addition, the seller or
affiliates thereof may have other financing
arrangements with affiliates of the
mortgagors and may enter into additional
financing relationships in the future.
SPECIAL SERVICER MAY TAKE In connection with the servicing of
ACTIONS WHICH ARE ADVERSE TO specially serviced mortgage loans, the
YOU special servicer may take actions with
respect to such mortgage loans that could
adversely affect you. As described herein
under "Master Servicer and Special Servicer
-- Responsibilities of Special Servicer,"
the actions of the special servicer will be
subject to review by a representative of the
holders of the monitoring certificates, who
may have interests that conflict with those
of the holders of the other classes of
certificates. As a result, it is possible
that such representative may influence the
special servicer to take actions which
conflict with the interests of certain
classes of certificates; provided, however,
that the special servicer shall in all cases
be required to act in accordance with the
servicing standard. In addition, the special
servicer may be removed without cause by the
directing certificateholders as described
under "Master Servicer and Special Servicer
-- Responsibilities of Special Servicer,"
herein.
THE STATUS OF A GROUND LEASE Five mortgaged properties, representing
MAY BE UNCERTAIN IN A approximately 5.4% of the initial pool
BANKRUPTCY PROCEEDING balance (calculated based on allocated value
in the case of multi-property loans), are
secured in part by a leasehold interest in
their respective mortgaged properties. For
the purposes of this prospectus supplement,
any mortgaged property, a material portion
of which consists of a leasehold estate, is
considered a leasehold interest unless the
trust fund also holds a mortgage on the fee,
in which case it is considered a fee
interest. Pursuant to Section 365(h) of the
Bankruptcy Code, ground lessees are
currently afforded rights not to treat a
ground lease as terminated and to remain in
possession of their leased premises upon the
bankruptcy of their ground lessor and
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the rejection of the ground lease by the
representative of such ground lessor's
bankruptcy estate.
The leasehold mortgages provide that the
mortgagor may not elect to treat the ground
lease as terminated on account of any such
bankruptcy of, and rejection by, the ground
lessor without the consent of the related
mortgagee. In the event of a bankruptcy of a
ground lessee/mortgagor, the ground
lessee/mortgagor under the protection of the
Bankruptcy Code has the right to assume
(i.e., continue) or reject (i.e., terminate)
any or all of its ground leases.
In the event of concurrent bankruptcy
proceedings involving the ground lessor and
the ground lessee/mortgagor, either servicer
may be unable to enforce the bankrupt ground
lessee/mortgagor's obligation to refuse to
treat a ground lease rejected by a bankrupt
ground lessor as terminated. In such
circumstances, a ground lease could be
terminated notwithstanding lender protection
provisions contained therein or in the
mortgage.
SPECIAL RISKS ASSOCIATED WITH Some of the tenant leases contain provisions
ATTORNMENT that require the tenant to attorn to (that
is, recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be
either subordinate to the liens created by
the mortgage loans or else contain a
provision that requires the tenant to
subordinate the lease if the mortgagee
agrees to enter into a non-disturbance
agreement.
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not
contain attornment provisions, such leases
may terminate upon the transfer of the
property to a foreclosing lender or
purchaser at foreclosure. Accordingly, in
the case of the foreclosure of a mortgaged
property located in such a state and leased
to one or more desirable tenants under
leases that do not contain attornment
provisions, such mortgaged property could
experience a further decline in value if
such tenants' leases were terminated (e.g.,
if such tenants were paying above-market
rents).
If a mortgage is subordinate to a lease, the
lender will not (unless it has otherwise
agreed with the tenant) possess the right to
dispossess the tenant upon foreclosure of
the property, and if the lease contains
provisions inconsistent with the mortgage
(e.g., provisions relating to application of
insurance proceeds or condemnation awards),
the provisions of the lease will take
precedence over the provisions of the
mortgage.
THE MORTGAGED PROPERTIES MAY Due to changes in applicable building and
NOT BE IN COMPLIANCE WITH zoning ordinances and codes which have come
CURRENT ZONING LAWS into effect after the construction of
improvements on certain of the mortgaged
properties, some improvements may not comply
fully with
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<PAGE>
current zoning laws (including density, use,
parking and set-back requirements) but
qualify as permitted non-conforming uses.
Such changes may limit the ability of the
related mortgagor to rebuild the premises
"as is" in the event of a substantial
casualty loss. Such limitations may
adversely affect the ability of the
mortgagor to meet its mortgage loan
obligations from cash flow. Insurance
proceeds may not be sufficient to pay off
such mortgage loan in full. In addition, if
the mortgaged property were to be repaired
or restored in conformity with then current
law, its value could be less than the
remaining balance on the mortgage loan and
it may produce less revenue than before such
repair or restoration.
INSPECTIONS MADE OF THE The mortgaged properties were inspected by
MORTGAGED PROPERTY MAY HAVE licensed engineers at the time the mortgage
MISSED NECESSARY REPAIRS loans were originated to assess the
structure, exterior walls, roofing, interior
construction, mechanical and electrical
systems and general condition of the site,
buildings and other improvements located on
the mortgaged properties. There can be no
assurance that all conditions requiring
repair or replacement have been identified
in such inspections.
COMPLIANCE WITH AMERICANS WITH Under the Americans with Disabilities Act of
DISABILITIES ACT MAY RESULT IN 1990, all public accommodations are required
ADDITIONAL LOSSES to meet certain federal requirements related
to access and use by disabled persons. To
the extent the mortgaged properties do not
comply with such laws, the mortgagors may be
required to incur costs to comply with such
laws. In addition, noncompliance could
result in the imposition of fines by the
federal government or an award of damages to
litigants.
LITIGATION CONCERNS There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to
the business of or arising out of the
ordinary course of business of the
mortgagors and their affiliates. There can
be no assurance that such litigation will
not have a material adverse effect on the
distributions to certificateholders.
THE OFFERED CERTIFICATES
ONLY TRUST FUND ASSETS ARE If the assets of the trust fund are
AVAILABLE TO PAY YOU insufficient to make payments on the offered
certificates, no other assets will be
available for payment of the deficiency. See
"Risk Factors -- The assets of the trust
fund may not be sufficient to pay your
certificates" in the prospectus.
PREPAYMENTS WILL AFFECT YOUR Prepayments. The yield to maturity on the
YIELD offered certificates will depend on the rate
and timing of principal payments (including
both voluntary prepayments, in the case of
mortgage loans that permit voluntary
prepayment, and involuntary prepayments,
such as prepayments
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<PAGE>
resulting from casualty or condemnation,
defaults, liquidations or repurchases for
breaches of representations or warranties)
on the mortgage loans and how such payments
are allocated among the offered certificates
entitled to distributions of principal. The
yield to maturity of the Class X
Certificates will be particularly sensitive
to the rate and timing of receipt of
principal since its sole distribution is
interest based upon the aggregate principal
balance of all the certificates.
In addition, upon the occurrence of certain
limited events, a party may be required to
repurchase a mortgage loan from the trust
fund and the money paid would be passed
through to the holders of the certificates
with the same effect as if such mortgage
loan had been prepaid in full (except that
no prepayment premium would be payable with
respect to any such repurchase). No
representation is made as to the anticipated
rate of prepayments (voluntary or
involuntary) on the mortgage loans or as to
the anticipated yield to maturity of any
certificate. See "Certain Prepayment,
Maturity and Yield Considerations" herein
and "Yield Considerations" in the
prospectus.
Yield. In general, if you purchase an
offered certificate at a premium and
principal distributions occur at a rate
faster than you anticipated at the time of
purchase, and no prepayment premiums are
collected, your actual yield to maturity may
be lower than that you assumed at the time
of purchase. In the case of the Class X
Certificates, this could result in the
failure of investors in the Class X
Certificates to recover their initial
investment. Conversely, if you purchase an
offered certificate at a discount and
principal distributions thereon occur at a
rate slower than that you assumed at the
time of purchase, your actual yield to
maturity may be lower than that you assumed
at the time of purchase.
The investment performance of the offered
certificates may be materially different
from what you expected if the rate of
prepayments on the mortgage loans is higher
or lower than what you assumed at the time
of investment. The yield on the Class X
Certificates will be adversely affected if
mortgage loans with higher mortgage interest
rates pay faster than mortgage loans with
lower mortgage interest rates.
Interest Rate Environment. In general,
mortgagors are less likely to prepay if
prevailing interest rates are at or above
the rates borne by such mortgage loans. On
the other hand, mortgagors are more likely
to prepay if prevailing rates fall
significantly below the mortgage rates of
the mortgage loans. Mortgagors are less
likely to prepay mortgage loans with a
lockout period or prepayment premium
provision, to the extent enforceable, than
otherwise identical mortgage loans without
such provisions,
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<PAGE>
with shorter lockout periods or with lower
prepayment premiums.
Premiums. Provisions requiring prepayment
premiums may not be enforceable in some
states and under federal bankruptcy law, and
may constitute interest for usury purposes.
Accordingly, no assurance can be given that
the obligation to pay a prepayment premium
will be enforceable or, if enforceable, that
the foreclosure proceeds will be sufficient
to pay such prepayment premium.
Additionally, although the collateral
substitution provisions related to
defeasance are not intended to be, and do
not have the same effect on the
certificateholders as a prepayment, there
can be no assurance that a court would not
interpret such provisions as requiring a
prepayment premium and thus unenforceable or
usurious under applicable law. Prepayment
premiums are generally not charged for
prepayments resulting from casualty or
condemnation and would not be paid in
connection with repurchases of mortgage
loans for breaches of representations or
warranties.
BORROWER DEFAULTS MAY ADVERSELY The aggregate amount of distributions on the
AFFECT YOUR YIELD offered certificates, the yield to maturity
of the offered certificates, the rate of
principal payments on the offered
certificates and the weighted average life
of the offered certificates will be affected
by the rate and timing of delinquencies and
defaults on the mortgage loans.
Delinquencies on the mortgage loans, if the
delinquent amounts are not advanced, may
result in shortfalls in distributions of
interest and/or principal to the offered
certificates for the current month. Any late
payments received on or in respect of the
mortgage loans will be distributed to the
certificates in the priorities described
more fully herein, but no interest will
accrue on such shortfall during the period
of time such payment is delinquent.
If you calculate your anticipated yield
based on an assumed rate of default and an
assumed amount of losses on the mortgage
loans that are lower than the default rate
and the amount of losses actually
experienced, and if such losses are
allocated to your class of certificates,
your actual yield to maturity will be lower
than the yield so calculated and could,
under certain scenarios, be negative. Losses
on the mortgage loans will reduce the
notional amount of the Class X Certificates.
This could result in the failure of
investors in the Class X Certificates to
recover their initial investment. The timing
of any loss on a liquidated mortgage loan
also will affect the actual yield to
maturity of the offered certificates to
which all or a portion of such loss is
allocable, even if the rate of defaults and
severity of losses are consistent with your
expectations. In general, the earlier you
bear a loss, the greater the effect on your
yield to maturity. See "Certain Prepayment,
Maturity and Yield Considerations."
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<PAGE>
Even if losses on the mortgage loans are
allocated to a particular class of offered
certificates, such losses may affect the
weighted average life and yield to maturity
of other certificates. Losses on the
mortgage loans, to the extent not allocated
to such class of offered certificates, may
result in a higher percentage ownership
interest evidenced by such certificates than
would otherwise have resulted absent such
loss. The consequent effect on the weighted
average life and yield to maturity of the
offered certificates will depend upon the
characteristics of the remaining mortgage
loans.
DELINQUENCIES WILL ENTITLE As and to the extent described herein, the
SERVICER TO RECEIVE CERTAIN master servicer, the special servicer or the
ADDITIONAL COMPENSATION WHICH trustee, as applicable, will be entitled to
TAKES PRECEDENCE OVER YOUR receive interest on unreimbursed advances
RIGHT TO RECEIVE DISTRIBUTIONS and unreimbursed servicing expenses. The
right of the master servicer, the special
servicer or the trustee, as applicable, to
receive such payments of interest is senior
to the rights of certificateholders to
receive distributions on the offered
certificates and, consequently, may result
in losses being allocated to the offered
certificates that would not have resulted
absent the accrual of such interest. In
addition, the special servicer will receive
a fee with respect to each specially
serviced mortgage loan and any collections
thereon, including specially serviced
mortgage loans which have been returned to
performing status. This will result in
shortfalls which may be allocated to the
offered certificates. See "Master Servicer
and Special Servicer --Servicing and Other
Compensation and Payment of Expenses."
VOTES OF OTHER Under certain circumstances, the consent or
CERTIFICATEHOLDERS MAY approval of the holders of a specified
ADVERSELY AFFECT YOUR INTERESTS percentage of the aggregate certificate
balance of all outstanding certificates will
be required to direct, and will be
sufficient to bind all certificateholders
to, certain actions, including directing the
special servicer or the master servicer with
respect to actions to be taken with respect
to certain mortgage loans and real estate
owned properties and amending the pooling
and servicing agreement in certain
circumstances. See "Description of the
Pooling and Servicing Agreement -- Voting
Rights" herein.
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<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Trust Fund will consist primarily of a pool (the "Mortgage Pool") of
fixed rate mortgage loans (the "Mortgage Loans") with an aggregate principal
balance as of the Cut-off Date, after deducting payments of principal due on
such date and the Subordinate Component in the amount of $1,542,452 with
respect to one mortgage loan (See "--The Suburban Lodge Loan"), of
approximately $738,541,419 (the "Initial Pool Balance"). Except as otherwise
indicated, all amounts and calculations presented in this Prospectus
Supplement with respect to the Mortgage Loans will exclude the Subordinate
Component. Each Mortgage Loan is evidenced by a promissory note (a "Mortgage
Note") and secured by a mortgage, deed of trust or other similar security
instrument (a "Mortgage") creating a first lien on a fee simple and/or
leasehold interests in multifamily properties, retail properties, office
properties, industrial properties, hotel properties, mixed use properties,
nursing home properties, congregate care properties and self storage
facilities (each, a "Mortgaged Property"). Except as otherwise indicated, all
percentages of the Mortgage Loans described herein are approximate
percentages by aggregate principal balance as of the Cut-off Date. The
Mortgage Loans provide for scheduled payments of principal and/or interest
(the "Monthly Payments") to be due on the first day of each month, except for
one Mortgage Loan which has scheduled payments due on the 10th day of each
month and two Mortgage Loans which have scheduled payments due on the 11th
day of each month (each, a "Due Date").
All of the Mortgage Loans were originated or purchased by Morgan Guaranty
Trust Company of New York ("MGT"). Sixty-three of the Mortgage Loans,
representing 30.2% by Initial Principal Balance, were purchased by MGT from
Finova Realty Capital Inc. (the "Finova Loans"). MGT is an affiliate of the
Depositor and of J.P. Morgan Securities Inc., one of the Underwriters.
The Mortgage Loans were underwritten generally in conformity with the
guidelines described below. See "--Underwriting Guidelines and Processes"
below. The Seller will sell the Mortgage Loans to the Depositor on or prior
to the Delivery Date pursuant to a mortgage loan purchase agreement between
the Seller and the Depositor (the "Mortgage Loan Purchase Agreement"). The
Depositor will cause the Mortgage Loans in the Mortgage Pool to be assigned
to the Trustee pursuant to the Pooling and Servicing Agreement.
See Annex A, Annex B, Annex C, Annex D and the Diskette for additional
information with respect to the Mortgage Loans.
THE SELLER
Morgan Guaranty Trust Company of New York is a wholly-owned subsidiary and
the principal asset of J.P. Morgan & Co. Incorporated, a Delaware corporation
whose principal office is located in New York, New York. MGT is a commercial
bank offering a wide range of banking services to its customers both
domestically and internationally. Its business is subject to examination and
regulation by Federal and New York State banking authorities. J.P. Morgan &
Co. Incorporated and Chase Manhattan Corporation announced on September 13,
2000 that they have agreed to merge. The merger is subject to approval by
shareholders of both companies as well as by federal, state and foreign
regulatory authorities.
REPRESENTATIONS AND WARRANTIES
Under the Mortgage Loan Purchase Agreement, the Seller will make certain
representations and warranties to the Depositor. Pursuant to the terms of the
Mortgage Loan Purchase Agreement, the Seller will be obligated to cure any
breach of such representations and warranties or to repurchase any of the
Mortgage Loans it sold to the Depositor as to which there exists a breach of
any such representation or warranty that materially and adversely affects the
interests of the Certificateholders in such Mortgage Loan. The Seller will
covenant with the Depositor to repurchase any Mortgage Loan from the
Depositor or cure any such breach within 90 days of receiving notice thereof.
Under the Pooling and Servicing Agreement, the Depositor will assign its
rights under the Mortgage Loan Purchase Agreement to the Trustee for the
benefit of the Certificateholders. The sole remedy available to the Trustee
or the
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<PAGE>
Certificateholders is the obligation of the Seller to cure or repurchase any
Mortgage Loan in connection with which there has been a breach of any such
representation or warranty which materially and adversely affects the
interest of the Certificateholders in such Mortgage Loan.
The Seller will generally represent and warrant as of the Delivery Date
with respect to each of the Mortgage Loans it sold to, among other things,
subject to certain exceptions set forth in the related Mortgage Loan Purchase
Agreement, that: (i) the Mortgage Loan is not one month or more delinquent in
payment of principal and interest and has not been so delinquent in the
twelve-month period prior to the Delivery Date and there is no payment
default and no other default under the Mortgage Loan which has a material
adverse effect on the Mortgage Loan; (ii) the Mortgage Loan is secured by a
Mortgage that is a valid and subsisting first priority lien on the Mortgaged
Property (or a leasehold interest therein) free and clear of any liens,
claims or encumbrances, subject only to certain permitted encumbrances; (iii)
the Mortgage, together with any separate security agreements, establishes a
first priority security interest in favor of the Seller in all the related
Mortgagor's personal property used in, and reasonably necessary to operate
the Mortgaged Property, and to the extent a security interest may be created
therein, the proceeds arising from the Mortgaged Property and any other
collateral securing the Mortgage subject only to certain permitted
encumbrances; (iv) there is an assignment of leases and rents provision or
agreement creating a first priority security interest in leases and rents
arising in respect of the related Mortgaged Property, subject only to certain
permitted encumbrances; (v) to the Seller's actual knowledge, there are no
mechanics' or other similar liens affecting the Mortgaged Property which are
or may be prior or equal to the lien of the Mortgage, except those insured
against pursuant to the applicable title insurance policy; (vi) the related
Mortgagor has good and indefeasible fee simple or leasehold title to the
Mortgaged Property; (vii) the Mortgaged Property is covered by a title
insurance policy insuring that the Mortgage is a valid first lien, subject
only to certain permitted encumbrances; (viii) no claims have been made under
the related title insurance policy and such policy is in full force and
effect and will provide that the insured includes the owner of the Mortgage
Loan; (ix) at the time of the assignment of the Mortgage Loan to the
Depositor, the Seller had good title to and was the sole owner of the
Mortgage Loan free and clear of any pledge, lien or encumbrance and such
assignment validly transfers ownership of the Mortgage Loan to the Depositor
free and clear of any pledge, lien or encumbrance; (x) the related assignment
of mortgage and related assignment of the assignment of leases and rents is
legal, valid and binding and has been recorded or submitted for recording in
the applicable jurisdiction; (xi) the Seller's endorsement of the related
Mortgage Note constitutes the legal and binding assignment of the Mortgage
Note and together with an assignment of mortgage and the assignment of the
assignment of leases and rents, legally and validly conveys all right, title
and interest in the Mortgage Loan and related Mortgage Loan documents; (xii)
each Mortgage Loan document is a legal, valid and binding obligation of the
parties thereto, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by applicable state law and by
bankruptcy, insolvency, reorganization or other laws relating to creditors'
rights and general equitable principles and except that certain provisions of
the Mortgage Loan documents are or may be unenforceable in whole or in part,
but the inclusion of such provisions does not render the Mortgage Loan
documents invalid as a whole, and the Mortgage Loan documents taken as a
whole are enforceable to the extent necessary and customary for the practical
realization of the rights and benefits afforded thereby; (xiii) the Mortgage
Loan and related Mortgage Loan documents have not been modified or waived in
any material respect except as set forth in the related Mortgage Loan file;
(xiv) the Mortgage Loan has not been satisfied, canceled, subordinated,
released or rescinded and the related Mortgagor has not been released from
its obligations under any Mortgage Loan document; (xv) none of the Mortgage
Loan documents is subject to any right of rescission, set-off, valid
counterclaim or defense; (xvi) each Mortgage Loan document complied in all
material respects with all applicable state or federal laws including usury
to the extent non-compliance would have a material adverse effect on the
Mortgage Loan; (xvii) to the Seller's knowledge, as of the date of
origination of the Mortgage Loan, based on inquiry customary in the industry,
and to the Seller's actual knowledge, as of the Delivery Date, the related
Mortgaged Property is, in all material respects, in compliance with, and is
used and occupied in accordance with applicable law; (xviii) to the Seller's
knowledge, (a) in reliance on an engineering report, the related Mortgaged
Property is in good repair and (b) no condemnation proceedings are pending;
(xix) the ESA reviewed in connection with the origination thereof reveals no
known circumstances or conditions with respect to the Mortgaged
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Property that would constitute or result in a material violation of any
environmental laws, require any expenditure material in relation to the
principal balance of the Mortgage Loan to achieve or maintain compliance in
all material respects with any environmental laws or require substantial
cleanup or remedial action or any other extraordinary action in excess of the
amount escrowed for such purposes; (xx) as of the date of origination of the
Mortgage Loan, and to Seller's actual knowledge, as of the Delivery Date,
after consultation with the loan servicer, the Mortgaged Property is covered
by insurance policies providing coverage against certain losses or damage;
(xxi) all amounts required to be deposited by the Mortgagor at origination
have been deposited; and (xxii) to the Seller's knowledge, as of the date of
origination of the Mortgage Loan, and to Seller's actual knowledge, as of the
Delivery Date, there are no pending actions, suits or proceedings by or
before any court or other governmental authority against or affecting the
related Mortgagor under the Mortgage Loan or the Mortgaged Property which, if
determined against the Mortgagor or property would materially and adversely
affect the value of such property or ability of the Mortgagor to pay
principal, interest and other amounts due under the Mortgage Loan.
THE SUBURBAN LODGE LOAN
One of the Mortgage Loans with a Cut-off Date Balance of $13,542,452 (the
"Suburban Lodge Loan") will have a senior component (the "Senior Component")
and a subordinate component (the "Subordinate Component") having a balance as
of the Cut-off Date of $12,000,000 and $1,542,452, respectively. The Senior
Component will represent 1.6% of the Initial Pool Balance. The Initial Pool
Balance was calculated without including the Subordinate Component. The Class
Q Certificates will represent the Subordinate Component of the Suburban Lodge
Loan.
Amounts payable with respect to the Subordinate Component will not be
included in the Available Distribution Amount. The pass-through rate on each
component will be 8.727% per annum. Scheduled interest payments in respect of
the Suburban Lodge Loan (including the Subordinate Component thereof)
received during any Remittance Period will be allocated between the Senior
Component and the Subordinate Component in proportion to the respective
amounts of each component prior to giving effect to any related collections
of principal. Any interest shortfalls, other than Prepayment Interest
Shortfalls, will be allocated first to the Subordinate Component and then to
the Senior Component. Prepayment Interest Shortfalls and the portion of the
trustee and servicing fee allocable to the Suburban Lodge Loan (including the
Subordinate Component) will be allocated to both components, pro rata, based
on the amount of each component. The Master Servicer will not be required to
offset any portion of the Prepayment Interest Shortfall allocated to the
Subordinate Component. See "Description of the Certificates --
Distributions."
Principal collections with respect to the Suburban Lodge Loan will be
allocated solely to the Senior Component in reduction of the amount thereof
until reduced to zero. Thereafter, all principal collections on the Suburban
Lodge Loan will be payable to the Subordinate Component. This allocation of
principal collections will result in a remaining amortization term as of the
Cut-off Date of 274 months for the Senior Component, while the remaining
amortization term as of the Cut-off Date of the Suburban Lodge Loan is 286
months.
Advances with respect to delinquent Monthly Payments on the Suburban Lodge
Loan will only be made with respect to any excess of the portion of the
Monthly Payments (net of the Master Servicing Fee) due and payable on the
Senior Component over the amount actually received, subject to the
limitations described under "Description of the Certificates -- Advances." To
the extent a Collateral Value Adjustment is required to be made with respect
to the Suburban Lodge Loan, the interest portion of the P&I Advance in
respect of the Suburban Lodge Loan will be reduced to be equal to the product
of (i) the amount of the interest portion of the P&I Advance that would
otherwise be required to be made for the Distribution Date without regard to
this sentence, multiplied by (ii) a fraction, the numerator of which is equal
to the balance of the Senior Component, net of the excess, if any, of the
Collateral Value Adjustment over the balance of the Subordinate Component,
and the denominator of which is equal to the balance of the Senior Component.
See "Description of the Certificates -- Collateral Value Adjustment" and
"--Advances."
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Realized losses on the Suburban Lodge Loan will be allocated, first, to
the Subordinate Component and then to the Senior Component. See "Description
of the Certificates -- Subordination."
Subject to the terms of the Pooling and Servicing Agreement, the Directing
Certificateholder will not be entitled to exercise any of the rights and
powers of the Directing Certificateholder described herein, with respect to
the Suburban Lodge Loan and instead the holders of the Class Q Certificates
will be entitled to appoint an operating advisor (an "Operating Advisor") to
exercise similar rights with respect to the Suburban Lodge Loan. If the
Operating Advisor replaces the Special Servicer, the replacement Special
Servicer will act as a Special Servicer only as to the Suburban Lodge Loan,
and the replaced Special Servicer will continue to act as Special Servicer
for the remainder of the Mortgage Loans.
The Special Servicer will be required (i) to consult with the related
Operating Advisor with respect to proposals to take any significant action
with respect to the Suburban Lodge Loan or the related Mortgage Property, and
to consider alternative actions recommended by the Operating Advisor and (ii)
prior to taking any of the following actions, to receive the written approval
of such Operating Advisor for (a) any modification of, or waiver with respect
to, the Suburban Lodge Loan that would result in the extension of the
Maturity Date thereof, a reduction in the Mortgage Interest Rate borne
thereby or Monthly Payment payable thereon or a forgiveness of interest on or
principal of the Suburban Lodge Loan, (b) any foreclosure upon or comparable
conversion (which may include acquisition of a foreclosed property) of the
ownership of the related Mortgaged Property or any acquisition of the related
Mortgaged Property by deed-in-lieu of foreclosure; (c) any sale of a related
Mortgaged Property; (d) any action to bring the related Mortgaged Property
into compliance with environmental laws; (e) any substitution or release of
the related Mortgaged Property (other than a substitution or release
permitted to be made by the terms of the Suburban Lodge Loan) without the
consent of the mortgagee; (f) any legal action to enforce the related
Mortgage Loan Documents; or (g) any waiver or release of a material claim,
right or remedy with respect to the Suburban Lodge Loan.
Following an event of default with respect to the Suburban Lodge Loan, the
holders of the Class Q Certificates may purchase the Suburban Lodge Loan at a
price equal to the outstanding principal balance of the Suburban Lodge Loan,
plus accrued interest thereon (together with unreimbursed advances and
interest thereon).
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
All of the Mortgage Loans are secured by first liens on a fee simple
and/or leasehold interest in the related Mortgaged Properties. As of the
Cut-off Date, the Mortgage Loans had characteristics set forth below. The
totals in the following tables may not add up to 100% due to rounding. Unless
otherwise indicated, reference to the Mortgage Loans will not include the
Subordinate Component of the Suburban Lodge Loan. See "--The Suburban Lodge
Loan" above. Accordingly, the values indicated below under "Weighted Average
UW DSCR" and "Weighted Average LTV" were weighted for the Suburban Lodge Loan
based on the Senior Component thereof. However, the UW DSCR and Loan-to-Value
Ratio for the Suburban Lodge Loan set forth or factored in below were
calculated based on the original principal balance of the Suburban Lodge
Loan. In addition, the values indicated below under "Weighted Average UW
DSCR" and "Weighted Average LTV" exclude 3 credit tenant lease Mortgage Loans
representing 1.3% of the Initial Pool Balance. For a Mortgage Loan secured by
more than one Mortgaged Property the original principal balance of the
Mortgage Loan is allocated to each related Mortgaged Property based on (1)
the related appraisal values, (2) the square footage provided in the
appraisal or (3) as otherwise provided in the Mortgage Loan documentation.
The principal balance as of the Cut-off Date of a Mortgage Loan is allocated
to each related Mortgaged Property based on the allocation of the original
principal balance.
S-31
<PAGE>
MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
MORTGAGE INTEREST RATES LOANS BALANCE BALANCE UW DSCR LTV
----------------------- ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
7.2501% -7.5000%........ 2 $ 47,696,650 6.5% 1.70x 58.9%
7.5001% -7.7500%........ 4 38,212,995 5.2 1.30 72.7
7.7501% -8.0000%........ 17 111,676,454 15.1 1.30 71.8
8.0001% -8.2500%........ 37 155,499,004 21.1 1.29 71.7
8.2501% -8.5000%........ 29 107,251,690 14.5 1.29 68.3
8.5001% -8.7500%........ 35 139,341,719 18.9 1.31 69.3
8.7501% -9.0000%........ 27 107,935,833 14.6 1.32 67.7
9.0001% -9.2500%........ 11 25,474,319 3.4 1.44 59.2
9.2501% -9.5000%........ 4 4,666,210 0.6 1.43 61.4
9.5001% or more......... 2 786,546 0.1 1.30 74.1
---------- -------------- ------------ ---------- ----------
Total/Weighted
Average:.............. 168 $738,541,419 100.0% 1.33x 68.9%
========== ============== ============ ========== ==========
</TABLE>
Weighted Average Mortgage Interest Rate: 8.33%
Minimum Mortgage Interest Rate: 7.470%
Maximum Mortgage Interest Rate: 9.875%
CURRENT PRINCIPAL BALANCE
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
CURRENT PRINCIPAL BALANCE LOANS BALANCE BALANCE UW DSCR LTV
------------------------- ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
$0 -$500,000.............. 5 $ 1,714,244 0.2% 1.30x 71.1%
$500,001 -$750,000........ 13 7,898,383 1.1 1.29 69.6
$750,001 -$1,000,000 ..... 8 7,539,356 1.0 1.39 65.5
$1,000,001 -$1,500,000 ... 28 34,972,053 4.7 1.34 70.0
$1,500,001 -$2,000,000 ... 12 21,037,517 2.8 1.28 68.8
$2,000,001 -$2,500,000 ... 16 35,810,151 4.8 1.43 65.9
$2,500,001 -$3,000,000 ... 11 30,033,878 4.1 1.37 69.2
$3,000,001 -$3,500,000 ... 9 29,679,926 4.0 1.30 75.1
$3,500,001 -$4,000,000 ... 10 37,873,486 5.1 1.33 67.9
$4,000,001 -$4,500,000 ... 8 33,997,386 4.6 1.25 69.6
$4,500,001 -$5,000,000 ... 4 18,838,900 2.6 1.26 71.5
$5,000,001 -$6,000,000 ... 8 44,278,128 6.0 1.28 72.7
$6,000,001 -$7,500,000 ... 9 62,900,116 8.5 1.34 67.4
$7,500,001 -$10,000,000 .. 8 67,565,181 9.1 1.26 71.7
$10,000,001 -$12,500,000 . 6 66,549,982 9.0 1.32 68.1
$12,500,001 -$15,000,000 . 3 39,928,859 5.4 1.30 71.3
$15,000,001 -$17,500,000 . 3 49,548,357 6.7 1.30 73.3
$17,500,001 -$20,000,000 . 2 36,528,558 4.9 1.29 69.6
$20,000,001 -$25,000,000 . 5 111,846,955 15.1 1.45 62.8
---------- -------------- ------------ ---------- ----------
Total/Weighted Average: . 168 $738,541,419 100.0% 1.33x 68.9%
========== ============== ============ ========== ==========
</TABLE>
Average Principal Balance per Mortgage Loan: $4,396,080
Average Principal Balance per Mortgaged Property: $3,806,915
Smallest Loan Balance: $220,965
Largest Loan Balance: $24,701,611
S-32
<PAGE>
ORIGINAL TERM TO MATURITY/ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ORIGINAL TERM IN MONTHS PROPERTIES BALANCE BALANCE UW DSCR LTV
-------------------------- ------------ -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balloon
109 -120.................. 104 $363,465,485 49.2% 1.32x 70.1%
217 -228.................. 1 2,057,277 0.3 0.00 0.0
229 -240.................. 1 2,974,994 0.4 0.00 0.0
------------ -------------- ------------ ---------- ----------
Subtotal:................ 106 $368,497,756 49.9% 1.32x 70.1%
Anticipated Repayment Date
109 -120.................. 53 $290,994,457 39.4% 1.30x 69.5%
169 -180.................. 1 4,338,163 0.6 1.20 70.0
------------ -------------- ------------ ---------- ----------
Subtotal:................ 54 $295,332,620 40.0% 1.30x 69.5%
Interest Only
109 -120.................. 2 $ 47,696,650 6.5% 1.70x 58.9%
------------ -------------- ------------ ---------- ----------
Subtotal:................ 2 $ 47,696,650 6.5% 1.70x 58.9%
Fully Amortizing
109 -120.................. 1 $ 2,055,124 0.3% 1.29x 46.7%
169 -180.................. 1 2,555,432 0.3 1.10 77.4
229 -240.................. 4 22,403,837 3.0 1.31 63.3
------------ -------------- ------------ ---------- ----------
Subtotal:................ 6 $ 27,014,393 3.7% 1.28x 63.4%
------------ -------------- ------------ ---------- ----------
Total/Weighted Average: ... 168 $738,541,419 100.0% 1.33x 68.9%
============ ============== ============ ========== ==========
</TABLE>
Weighted Average Original Term to Maturity/Anticipated Repayment Date in
Months: 125
S-33
<PAGE>
REMAINING TERM TO MATURITY/ANTICIPATED REPAYMENT DATE IN MONTHS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
REMAINING TERM TO MATURITY/ MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ANTICIPATED REPAYMENT DATE IN MONTHS PROPERTIES BALANCE BALANCE UW DSCR LTV
------------------------------------ ------------ -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Balloon
97 -108............................. 30 $123,272,291 16.7% 1.34x 68.1%
109 -120............................ 74 240,193,194 32.5 1.31 71.1
217 -228............................ 2 5,032,271 0.7 0.00 0.0
------------ -------------- ------------ ---------- ----------
Subtotal:.......................... 106 $368,497,756 49.9% 1.32x 70.1%
Anticipated Repayment Date
97 -108............................. 3 $ 11,673,243 1.6% 1.36x 73.0%
109 -120............................ 50 279,321,214 37.8 1.30 69.3
169 -180............................ 1 4,338,163 0.6 1.20 70.0
------------ -------------- ------------ ---------- ----------
Subtotal:.......................... 54 $295,332,620 40.0% 1.30x 69.5%
Interest Only
97 -108............................. 2 $ 47,696,650 6.5% 1.70x 58.9%
------------ -------------- ------------ ---------- ----------
Subtotal:.......................... 2 $ 47,696,650 6.5% 1.70x 58.9%
Fully Amortizing
109 -120............................ 1 $ 2,055,124 0.3% 1.29x 46.7%
157 -168............................ 1 2,555,432 0.3 1.10 77.4
229 -240............................ 4 22,403,837 3.0 1.31 63.3
------------ -------------- ------------ ---------- ----------
Subtotal:.......................... 6 $ 27,014,393 3.7% 1.28x 63.4%
------------ -------------- ------------ ---------- ----------
Total/Weighted Average:.............. 168 $738,541,419 100.0% 1.33x 68.9%
============ ============== ============ ========== ==========
</TABLE>
Weighted Average Remaining Term to Maturity/Anticipated Repayment Date in
Months: 116
S-34
<PAGE>
REMAINING AMORTIZATION TERM IN MONTHS (1)(2)
<TABLE>
<CAPTION>
PERCENT BY
NUMBER AGGREGATE AGGREGATE WEIGHTED WEIGHTED
OF PRINCIPAL PRINCIPAL AVERAGE AVERAGE
REMAINING TERM IN MONTHS MORTGAGE LOANS BALANCE BALANCE UW DSCR LTV
--------------------------------- -------------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Balloon Loans ....................
253-264.......................... 1 $ 2,057,277 0.3% 0.00x 0.0%
265-276.......................... 3 18,535,058 2.7 1.26 62.4
277-288.......................... 19 33,211,752 4.8 1.52 65.9
289-300.......................... 20 62,910,837 9.1 1.36 68.5
325-336.......................... 5 5,617,825 0.8 1.25 72.2
337-348.......................... 14 78,203,520 11.3 1.28 70.5
349-360.......................... 44 167,961,488 24.3 1.29 72.0
-------------- -------------- ------------ ---------- ----------
Subtotal........................ 106 $368,497,756 53.3% 1.32x 70.1%
Anticipated Repayment Date Loans
229-240.......................... 2 $ 4,500,919 0.7% 1.37x 63.6%
253-264.......................... 1 4,338,163 0.6 1.20 70.0
265-276.......................... 1 2,100,000 0.3 1.24 75.0
277-288.......................... 3 4,178,410 0.6 1.64 67.4
289-300.......................... 10 54,387,889 7.9 1.33 68.1
313-324.......................... 1 6,820,989 1.0 1.32 60.4
337-348.......................... 1 5,573,634 0.8 1.14 74.5
349-360.......................... 35 213,432,617 30.9 1.29 70.1
-------------- -------------- ------------ ---------- ----------
Subtotal........................ 54 $295,332,620 42.7% 1.30x 69.5%
Fully Amortizing Loans ...........
109-120.......................... 1 $ 2,055,124 0.3% 1.29x 46.7%
157-168.......................... 1 2,555,432 0.4 1.10 77.4
217-228.......................... 1 2,435,723 0.4 1.82 57.7
229-240.......................... 3 19,968,114 2.9 1.23 64.2
-------------- -------------- ------------ ---------- ----------
Subtotal........................ 6 $ 27,014,393 3.9% 1.28x 63.4%
Total/Weighted Average: 166 $690,844,769 100.0% 1.31x 69.6%
============== ============== ============ ========== ==========
</TABLE>
Weighted Average Remaining Amortization Term in Months: 328
------------
(1) Excludes the interest only loans (Loan Numbers 1 and 2).
(2) The remaining amortization term for the Suburban Lodge Loan, one of the
Balloon Loans, is 286 months. The table was prepared using the
remaining amortization term of the Senior Component thereof which is
274 months.
S-35
<PAGE>
MONTH AND YEAR OF ORIGINATION
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
MONTH AND YEAR OF ORIGINATION LOANS BALANCE BALANCE UW DSCR LTV
----------------------------- ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
December 1998................. 1 $ 3,912,996 0.5% 1.54x 69.3%
March 1999.................... 2 2,591,397 0.4 1.83 72.0
April 1999.................... 3 7,210,171 1.0 1.25 71.9
May 1999...................... 2 4,048,113 0.5 1.29 68.9
June 1999..................... 6 32,272,863 4.4 1.33 66.3
July 1999..................... 8 28,923,054 3.9 1.41 71.9
August 1999................... 12 99,297,526 13.4 1.49 63.2
September 1999................ 17 72,541,633 9.8 1.27 70.0
October 1999.................. 11 33,443,427 4.5 1.31 71.8
November 1999................. 30 138,375,077 18.7 1.29 70.5
December 1999................. 23 111,027,249 15.0 1.33 69.7
January 2000.................. 6 10,730,902 1.5 1.30 66.6
February 2000................. 10 24,648,800 3.3 1.29 64.1
March 2000.................... 11 64,051,043 8.7 1.27 72.7
April 2000.................... 9 42,947,944 5.8 1.25 69.9
May 2000...................... 6 32,578,566 4.4 1.37 67.5
June 2000..................... 4 16,897,197 2.3 1.42 63.0
July 2000..................... 5 9,319,093 1.3 1.28 72.7
August 2000................... 2 3,724,369 0.5 1.23 76.8
---------- -------------- ------------ ---------- ----------
Total/Weighted Average: .... 168 $738,541,419 100.0% 1.33x 68.9%
========== ============== ============ ========== ==========
</TABLE>
Weighted Average Months Since Origination: 9
YEAR OF MATURITY/ANTICIPATED REPAYMENT DATE
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
YEAR OF MATURITY/ MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ANTICIPATED REPAYMENT DATE LOANS BALANCE BALANCE UW DSCR LTV
-------------------------- ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
2009....................... 91 $426,262,980 57.7% 1.36x 68.6%
2010....................... 69 277,948,736 37.6 1.31 69.6
2014....................... 1 2,555,432 0.3 1.10 77.4
2015....................... 1 4,338,163 0.6 1.20 70.0
2018....................... 1 2,057,277 0.3 0.00 0.0
2019....................... 2 5,410,717 0.7 1.82 57.7
2020....................... 3 19,968,114 2.7 1.23 64.2
---------- -------------- ------------ ---------- ----------
Total/Weighted Average: .. 168 $738,541,419 100.0% 1.33x 68.9%
========== ============== ============ ========== ==========
</TABLE>
S-36
<PAGE>
The following two tables set forth the range of Cut-off Date LTV Ratios
and Maturity Date/ Anticipated Repayment Date LTV Ratios of the Mortgage
Loans. A "Cut-off Date LTV Ratio" is a fraction, expressed as a percentage,
the numerator of which is the Cut-off Date principal balance of a Mortgage
Loan, and the denominator of which is the appraised value of the related
Mortgaged Property as determined by an appraisal thereof obtained in
connection with the origination of such Mortgage Loan. A "Maturity
Date/Anticipated Repayment Date LTV Ratio" is a fraction, expressed as a
percentage, the numerator of which is the principal balance of a Mortgage
Loan on the related Maturity Date or, in the case of an ARD Loan, the related
Anticipated Repayment Date assuming all scheduled payments due prior thereto
are made and there are no principal prepayments, and the denominator of which
is the appraised value of the related Mortgaged Property as determined by an
appraisal thereof obtained in connection with the origination of such
Mortgage Loan. Because the value of Mortgaged Properties at the Maturity Date
or, in the case of an ARD Loan, the Anticipated Repayment Date may be
different than such appraised value, there can be no assurance that the
loan-to-value ratio for any Mortgage Loan determined at any time following
origination thereof will be lower than the Cut-off Date LTV Ratio,
notwithstanding any positive amortization of such Mortgage Loan. It is
possible that the market value of a Mortgaged Property securing a Mortgage
Loan may decline between the origination thereof and the related Maturity
Date or, in the case of an ARD Loan the Anticipated Repayment Date.
An appraisal of the value for each of the Mortgaged Properties was made
between October 6, 1998 and June 28, 2000. It is possible that the market
value of a Mortgaged Property securing a Mortgage Loan has declined since the
most recent appraisal for such Mortgaged Property. All appraisals were
obtained in accordance with the requirements of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, as amended ("FIRREA").
CUT-OFF DATE LTV RATIOS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
CUT-OFF DATE LTV RATIOS LOANS BALANCE BALANCE UW DSCR LTV
------------------------ ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
50.00% or less........... 2 $ 3,683,318 0.5% 1.36x 44.2%
50.01% -55.00%........... 3 11,954,316 1.6 1.41 53.2
55.01% -60.00%........... 14 99,050,685 13.6 1.52 58.5
60.01% -65.00%........... 21 104,099,726 14.3 1.32 63.0
65.01% -70.00%........... 40 141,139,716 19.4 1.36 68.5
70.01% -75.00%........... 57 247,924,509 34.0 1.29 72.6
75.01% -80.00%........... 27 120,103,716 16.5 1.26 77.7
80.01% or more........... 1 1,297,487 0.2 1.25 82.4
---------- -------------- ------------ ---------- ----------
Total/Weighted Average: 165 $729,253,473 100.0% 1.33x 68.9%
========== ============== ============ ========== ==========
</TABLE>
Weighted Average Cut-off Date LTV Ratio: 68.9%
S-37
<PAGE>
MATURITY DATE OR ANTICIPATED REPAYMENT DATE
LTV RATIOS (1)
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MATURITY DATE OR MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
ANTICIPATED REPAYMENT DATE LTV RATIOS LOANS BALANCE BALANCE UW DSCR LTV
------------------------------------- ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
50.00% or less........................ 12 $ 33,388,466 4.69% 1.36x 57.6%
50.01% -55.00%........................ 18 73,973,220 10.4 1.35 60.3
55.01% -60.00%........................ 36 184,212,014 25.89 1.45 64.5
60.01% -65.00%........................ 44 182,657,465 25.67 1.29 70.5
65.01% -70.00%........................ 39 170,261,471 23.93 1.28 74.4
70.01% -75.00%........................ 13 67,034,390 9.42 1.27 78.8
---------- -------------- ------------ ---------- ----------
Total/Weighted Average: ............. 162 $711,527,026 100.0% 1.34x 69.1%
========== ============== ============ ========== ==========
</TABLE>
Weighted Average Maturity Date LTV Ratio: 61.4%
------------
(1) Excludes fully amortizing Mortgage Loans.
The following table sets forth the range of Underwritten Cash Flow Debt
Service Coverage Ratios for the Mortgage Loans. The "Underwritten Cash Flow
Debt Service Coverage Ratio" or "UW DSCR" for any Mortgage Loan for any
period as presented in the table below or Annex A, is the ratio of
Underwritten Cash Flow calculated for the related Mortgaged Property to the
amounts of principal and interest due under such Mortgage Loan during the
12-month period that includes October 1, 2000 and September 1, 2001.
"Underwritten Cash Flow" or "UW Cash Flow" means the Underwritten NOI (as
defined below) for the Mortgaged Property decreased by an amount that the
Seller has determined to be an appropriate allowance for average annual
tenant improvements, leasing commissions, and replacement reserves for
capital items based upon its underwriting guidelines. "Debt Service Coverage
Ratio" for a period, on the other hand, is the ratio of the NOI for the
period to the amounts of principal and interest due under the related
Mortgage Loan for the same period.
"Underwritten NOI" or "UW NOI" means the NOI for the Mortgaged Property as
determined by the Seller in accordance with its underwriting guidelines for
similar properties. Revenue from a Mortgaged Property ("Effective Gross
Income") is generally calculated as follows: rental revenue is calculated
using actual rental rates, in some cases, adjusted downward to market rates
with vacancy rates equal to the higher of the Mortgaged Property's historical
rate, the market rate or an assumed vacancy rate; other revenue, such as
parking fees, laundry and other income items are included only if supported
by a trend and/or is likely to be recurring. Operating expenses generally
reflect the Mortgaged Property's historical expenses, adjusted to account for
inflation, significant occupancy increases and a market rate management fee.
Generally, "Net Operating Income" ("NOI") for a Mortgaged Property equals the
operating revenues (consisting principally of rental and related revenue) for
such Mortgaged Property minus the operating expenses (such as utilities,
repairs and maintenance, general and administrative, management fees,
marketing and advertising, insurance and real estate tax expenses) for the
Mortgaged Property. NOI generally does not reflect replacement reserves,
capital expenditures, debt service, tenant improvements, leasing commissions,
depreciation, amortization and similar non-operating items.
The amounts representing "Net Operating Income," "Underwritten NOI" and
"Underwritten Cash Flow" are not a substitute for or an improvement upon net
income as determined in accordance with generally accepted accounting
principles as a measure of the results of the Mortgaged Property's operations
or a substitute for cash flows from operating activities determined in
accordance with generally accepted accounting principles as a measure of
liquidity. No representation is made as to the future net cash flow of the
properties, nor is "Net Operating Income," "Underwritten NOI" and
"Underwritten Cash Flow" set forth herein intended to represent such future
net cash flow.
The UW Cash Flows and UW NOIs used as a basis for calculating the UW DSCRs
presented in the following table and in Annex A attached hereto, were derived
principally from operating statements
S-38
<PAGE>
obtained from the respective Mortgagors (the "Operating Statements"). The
Operating Statements were not audited and in most cases were not prepared in
accordance with generally accepted accounting principles. To increase the level
of consistency between the Operating Statements, in some instances, adjustments
were made to such Operating Statements. These adjustments were principally for
real estate tax and insurance expenses (e.g., adjusting for the payment of two
years of expense in one year), and to eliminate obvious items not related to the
operation of the Mortgaged Property. However, such adjustments were subjective
in nature and may not have been made in a uniform manner.
UNDERWRITTEN DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
UNDERWRITTEN DEBT SERVICE COVERAGE MORTGAGE PRINCIPAL PRINCIPAL AVERAGE AVERAGE
RATIOS LOANS BALANCE BALANCE UW DSCR LTV
---------------------------------------- ---------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
1.201 or less ........................... 7 $ 20,263,916 2.8% 1.13x 68.9%
1.201x -1.250x........................... 43 164,846,565 22.6 1.23 71.8
1.251x -1.300x........................... 48 235,116,880 32.2 1.27 70.5
1.301x -1.400x........................... 38 170,518,347 23.4 1.35 68.3
1.401x -1.500x........................... 13 61,297,228 8.4 1.43 66.5
1.501x -1.600x........................... 7 37,678,937 5.2 1.56 61.5
1.601x -1.700x........................... 1 997,340 0.1 1.60 57.0
1.701x -1.800x........................... 1 1,100,631 0.2 1.78 73.4
1.801x -1.900x........................... 5 33,967,564 4.7 1.82 60.8
1.901x -2.000x........................... 1 992,506 0.1 1.91 55.1
2.001x -2.100x........................... 1 2,473,559 0.3 2.06 64.2
---------- -------------- ------------ ---------- ----------
Total/Weighted Average: ................ 165 $729,253,473 100.0% 1.33x 68.9%
========== ============== ============ ========== ==========
</TABLE>
Weighted Average UW DSCR: 1.33x
S-39
<PAGE>
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
GEOGRAPHIC DISTRIBUTION PROPERTIES BALANCE BALANCE UW DSCR LTV
----------------------- ------------ -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
California.............. 39 $203,147,004 27.5% 1.40x 67.8%
Texas................... 19 62,513,635 8.5 1.32 66.8
New Jersey.............. 5 43,946,544 6.0 1.27 68.6
Illinois................ 10 40,119,893 5.4 1.34 69.6
Florida................. 18 37,863,163 5.1 1.31 72.8
Virginia................ 6 35,207,497 4.8 1.26 62.3
Arizona................. 7 29,938,636 4.1 1.31 65.1
Maryland................ 2 28,754,336 3.9 1.26 75.4
Ohio.................... 6 26,245,922 3.6 1.34 71.0
New York................ 10 22,460,339 3.0 1.26 72.9
Michigan................ 5 20,941,902 2.8 1.28 75.3
Indiana................. 7 19,204,668 2.6 1.25 69.5
Iowa.................... 2 18,991,967 2.6 1.26 69.8
Pennsylvania............ 6 18,754,312 2.5 1.26 70.1
Massachusetts........... 6 17,899,979 2.4 1.34 71.7
North Carolina.......... 4 16,431,634 2.2 1.31 71.5
Nevada.................. 2 11,833,334 1.6 1.29 74.2
Colorado................ 3 10,428,196 1.4 1.38 67.1
Louisiana............... 4 10,287,571 1.4 1.31 70.9
Wisconsin............... 3 9,909,169 1.3 1.29 72.2
Missouri................ 3 7,792,512 1.1 1.40 62.2
Vermont................. 1 7,388,975 1.0 1.31 68.4
Washington.............. 2 6,060,150 0.8 1.21 75.1
Alaska.................. 1 4,855,437 0.7 1.25 74.4
Connecticut............. 3 4,785,363 0.6 1.70 68.5
Georgia................. 2 4,412,902 0.6 1.49 54.8
Minnesota............... 3 3,632,110 0.5 1.42 67.5
Mississippi............. 2 3,609,040 0.5 1.27 64.6
Rhode Island............ 1 3,093,989 0.4 1.29 75.1
Maine................... 9 2,505,214 0.3 1.32 88.8
Arkansas................ 1 2,473,559 0.3 2.06 64.2
Idaho................... 1 2,055,124 0.3 1.29 46.7
Utah.................... 1 997,340 0.1 1.60 57.0
------------ -------------- ------------ ---------- ----------
Total/Weighted
Average:.............. 194 $738,541,419 100.0% 1.33x 68.9%
============ ============== ============ ========== ==========
</TABLE>
S-40
<PAGE>
PROPERTY TYPE
<TABLE>
<CAPTION>
WEIGHTED
% OF WEIGHTED WEIGHTED AVERAGE
NUMBER OF PRINCIPAL PRINCIPAL AVERAGE AVERAGE OCC.
PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE UW DSCR LTV RATE
----------------------- ------------ -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Multifamily
Multifamily............ 55 $157,826,081 21.4% 1.30x 74.0% 96.9%
Mobile Home Park....... 18 70,189,579 9.5 1.31 71.2 93.7
------------ -------------- ----------- ---------- ---------- ----------
Subtotal.............. 73 $228,015,661 30.9% 1.30x 73.2% 95.9%
Retail
Anchored............... 20 $122,204,325 16.5% 1.27x 69.9% 96.4%
Unanchored............. 30 71,657,687 9.7 1.41 64.5 91.9
Shadow Anchored........ 1 1,563,013 0.2 1.29 68.0 89.0
------------ -------------- ----------- ---------- ---------- ----------
Subtotal.............. 51 $195,425,024 26.5% 1.32x 67.8% 94.7%
Office
Suburban............... 21 $ 87,568,745 11.9% 1.33x 66.5% 96.3%
CBD.................... 3 39,226,178 5.3 1.28 68.8 97.4
------------ -------------- ----------- ---------- ---------- ----------
Subtotal.............. 24 $126,794,922 17.2% 1.32x 67.2% 96.7%
Industrial
Flex Space............. 16 $ 87,439,269 11.8% 1.37x 66.1% 96.9%
Warehouse/Distribution. 3 5,564,382 0.8 1.31 67.7 100.0
------------ -------------- ----------- ---------- ---------- ----------
Subtotal.............. 19 $ 93,003,651 12.6% 1.37x 66.2% 97.1%
Hotel
Extended Stay.......... 7 $ 19,731,759 2.7% 1.34x 58.3% N/A
Limited Service........ 2 16,929,209 2.3 1.40 67.8 N/A
Full Service........... 1 16,523,281 2.2 1.40 69.7 N/A
------------ -------------- ----------- ---------- ---------- ----------
Subtotal.............. 10 $ 53,184,250 7.2% 1.38x 64.9% N/A
Self Storage............ 10 $ 22,502,695 3.0% 1.42x 67.5% 89.6%
Mixed Use............... 3 $ 10,594,843 1.4% 1.37x 64.8% 98.1%
Nursing Home............ 3 $ 7,813,023 1.1% 1.90x 67.0% 96.1%
Congregate Care......... 1 $ 1,207,349 0.2% 1.50x 74.5% 90.0%
------------ -------------- ----------- ---------- ---------- ----------
Total/Weighted
Average:................ 194 $738,541,419 100.0% 1.33x 68.9% 95.7%
============ ============== =========== ========== ========== ==========
</TABLE>
S-41
<PAGE>
YEARS SINCE THE MORTGAGED PROPERTIES WERE BUILT
<TABLE>
<CAPTION>
NUMBER PERCENT BY
OF AGGREGATE AGGREGATE WEIGHTED WEIGHTED
YEARS SINCE THE MORTGAGED PROPERTIES WERE MORTGAGED PRINCIPAL PRINCIPAL AVERAGE AVERAGE
BUILT PROPERTIES BALANCE BALANCE UW DSCR LTV
---------------------------------------------- ------------ -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
5 or less..................................... 51 $173,776,291 23.5% 1.32x 68.7%
6 - 10........................................ 10 43,094,156 5.8 1.44 65.0
11 - 15........................................ 36 150,689,479 20.4 1.36 66.3
16 - 20........................................ 12 58,924,594 8.0 1.36 66.5
21 - 25........................................ 9 31,484,650 4.3 1.27 66.8
26 - 30........................................ 16 76,045,990 10.3 1.28 74.0
31 or more..................................... 60 204,526,258 27.7 1.33 70.9
------------ -------------- ------------ ---------- ----------
Total/Weighted Average:....................... 194 $738,541,418 100.0% 1.33x 68.9%
============ ============== ============ ========== ==========
</TABLE>
Weighted Average Property Age in years: 18.28
------------
(1) For Properties constructed in stages, the earliest date was used.
(2) Nineteen properties originally construcuted prior to 1930 were excluded
from the weighted average calculations due to significant renovations
that have occurred since then.
With certain limited exceptions relating to casualty and condemnation
proceeds, or other prepayments beyond the Mortgagor's control, all of the
Mortgage Loans prohibit the prepayment thereof until a date specified in the
related Mortgage Note (such period, the "Lock-out Period" and the date of
expiration thereof, the "Lock-out Date"). Thereafter, each Mortgage Loan
provides that until a date specified in the related Mortgage Note the related
Mortgagor will be required to pay a yield maintenance penalty (a "Prepayment
Premium") upon any voluntary principal prepayment of a Mortgage Loan or
provide for Defeasance, in whole and/or in part. The following table sets
forth the percentage of the declining aggregate principal balance of all the
Mortgage Loans that on September 1 of each of the years indicated will be
within their related Lock-out Period, are subject to Defeasance and/or in
which a principal prepayment must be accompanied by a Prepayment Premium.
S-42
<PAGE>
PREPAYMENT PROTECTION
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING
PRINCIPAL BALANCE AS OF THE CUT-OFF DATE THAT HAVE
PREPAYMENT LOCK-OUTS OR PENALTIES (ASSUMING NO PREPAYMENTS)*
<TABLE>
<CAPTION>
SEPT. SEPT. SEPT. SEPT. SEPT. SEPT. SEPT. SEPT. SEPT. SEPT.
CURRENT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
--------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lock-Out/
Defeasance(1) ...... 100.0% 100.0% 100.0% 100.0% 99.8% 99.4% 99.4% 99.4% 99.4% 55.8% 100.0%
YM(2) .............. 0.0 0.0 0.0 0.0 0.2 0.6 0.6 0.6 0.6 0.3 0.0
--------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Lock-Out/
Defeasance and YM .. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 56.1 100.0
No Prepayment
Premium ............ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 43.9 0.0
--------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total .............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========= ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Aggregate Mortgage
Loan Balance(3) ... $738.5 $732.1 $725.0 $717.3 $709.1 $700.0 $690.1 $679.3 $667.7 $489.0 $ 23.8
Percentage of
Balance
Outstanding ........ 100.0% 99.1% 98.2% 97.1% 96.0% 94.8% 93.4% 92.0% 90.4% 66.2% 3.2%
</TABLE>
------------
(1) Certain Mortgage Loans permit the applicable Mortgagor after a
specified period (not less than two years from the Delivery Date) to
obtain the release of the related Mortgaged Property from the lien of
the related Mortgage upon substitution of direct non-callable
obligations of the United States providing payments in amounts equal
to the scheduled payments due on such Mortgage Loan to the related
Maturity Date or, in the case of certain of the ARD Loans, the
Anticipated Repayment Date. The Master Servicer shall, on behalf of
the related Mortgagor, purchase such obligations of the United States
for deposit into the Trust Fund. Any such substitution shall be
subject to, among other things, certain conditions set forth in the
Pooling and Servicing Agreement. Such substitution of collateral is
referred to herein as "Defeasance." For purposes of this table, to
the extent a Mortgagor may elect to defease the related Mortgage
Loan, such Mortgage Loan will be reflected in the
"Lock-Out/Defeasance" category.
(2) The Mortgage Loan generally requires the payment of a Prepayment
Premium in connection with any principal prepayment, in whole or in
part. Any Prepayment Premium will equal the present value, as of the
date of prepayment, of the remaining Monthly Payments from such date
of prepayment through the related stated maturity (including the
Balloon Payment), determined by discounting such payments at a U.S.
Treasury rate specified therein, minus the then outstanding principal
balance, subject to a minimum Prepayment Premium equal to 1% of the
principal balance of such Mortgage Loan being prepaid ("Yield
Maintenance" or "YM").
(3) Millions of dollars.
* See Annex A and the Diskette for additional, detailed information on
the Mortgage Loans' Prepayment Penalties.
S-43
<PAGE>
TEN LARGEST MORTGAGE LOANS
The following tables and summaries describe the ten largest Mortgage Loans
by Cut-off Date Principal Balance.
<TABLE>
<CAPTION>
NUMBER OF CUT-OFF DATE % OF POOL UW
PROPERTY NAME PROPERTIES BALANCE BALANCE DSCR LTV PROPERTY TYPE
--------------------------- ------------ -------------- ----------- ------- ------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Abbey Company Portfolio
III........................ 6 $ 24,701,611 3.3% 1.84x 58.9% Office/Industrial/Retail
Abbey Company Portfolio IV . 6 22,995,039 3.1 1.58 58.9 Unanchored Retail
Atlantic Development
Portfolio.................. 2 22,013,205 3.0 1.27 61.8 Industrial Flex
Covina Hills Mobile Home
Country Club............... 1 21,587,115 2.9 1.27 71.9 Mobile Home Park
Liberty Fair Mall........... 1 20,549,985 2.8 1.26 63.4 Regional Mall
Wilshire Financial.......... 1 18,576,294 2.5 1.32 68.8 CBD Office
Hub Tower................... 1 17,952,264 2.4 1.26 70.4 CBD Office
Gerry Buildings............. 1 16,824,504 2.3 1.25 71.9 Industrial Flex
Embassy Suites -Chicago .... 1 16,523,281 2.2 1.40 69.7 Full Service Hotel
Fairgrounds Plaza........... 1 16,200,572 2.2 1.27 78.3 Anchored Retail
------------ -------------- ----------- ------- -------
Total/Weighted Average ..... 21 $197,923,870 26.7% 1.39x 66.1%
============ ============== ===========
Deal Total/Weighted
Average.................... 194 $738,541,419 100.00% 1.33x 68.9%
</TABLE>
THE ABBEY COMPANY LOANS
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $47,696,650 Property Type Office/Industrial/Retail
Origination Date August 31, 1999 Location Southern California
Maturity Date September 1, 2009 Square Footage 945,590
Mortgage Rate 7.47% Year Built/Renovated Various
Annual Debt Service $3,612,425 Appraised Value $81,040,000
UW DSCR 1.70x Occupancy 91.2%
Cut-off Date LTV 58.9% Occupancy Date June 1, 2000
Balloon LTV 58.9% UW NOI $7,222,349
Lockbox Yes UW NCF $6,141,767
------------------------ --------------------- ------------------------ ----------------------------
</TABLE>
The Loans. Two of the Mortgage Loans (individually, the "Abbey Portfolio
III Loan" and the "Abbey Portfolio IV Loan" and collectively, the "Abbey
Company Loans"), were originated by MGT and are secured by first mortgages
encumbering twelve properties located in Southern California (collectively,
the "Abbey Company Properties"). The Abbey Company Loans are cross-defaulted
and cross-collateralized with each other. The Abbey Company Loans were made
to special purpose California limited liability companies (each, an "Abbey
Company Borrower" and collectively, the "Abbey Company Borrowers") which are
wholly-owned by Abbey Properties, LLC, the managing member. Abbey Properties,
LLC is owned by Donald G. Abbey and a wholly owned subsidiary of Rodamco
North America NV ("RNA"). RNA is a real estate investment company that is
listed on the Amsterdam stock exchange. RNA reported a market value for RNA's
real estate assets of $3.2 billion at February 29, 2000. RNA primarily owns
super-regional and regional shopping malls located in the United States. In
addition, RNA has investments in several private real estate companies,
including The Abbey Company, an affiliate of the Abbey Company Borrowers, and
equity holdings in public real estate companies. The Abbey Company owns or
manages a portfolio of properties totaling approximately 3.1 million square
feet in Southern California as of June 1, 2000.
The Abbey Company Loans are Balloon Mortgage Loans which require
interest-only payments through August 1, 2009 and mature on September 1,
2009. The Abbey Company Loans may not be
S-44
<PAGE>
prepaid prior to June 1, 2009 and may be prepaid, in whole but not in part,
without payment of a Prepayment Premium, at any time thereafter. The Abbey
Company Loans are subject to Defeasance, in whole or in part, at any time
after the second anniversary of the Delivery Date.
The Properties. The Abbey Company Properties consists of twelve
industrial, office and retail properties:
ABBEY PORTFOLIO III
<TABLE>
<CAPTION>
LOAN SQUARE APPRAISED
NUMBER PROPERTY NAME LOCATION FOOTAGE PROPERTY TYPE OCCUPANCY (1) VALUE
-------- ----------------------- ------------------------- --------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1.1 Long Beach Airport Long Beach, CA 205,257 Industrial -Flex 100.0% $12,200,000
1.2 Sierra Gateway Business Palmdale, CA 130,838 Office 96.0 10,865,000
Center
1.3 Nevada Street Plaza Redlands, CA 126,292 Industrial -Flex 93.0 6,000,000
1.4 Gardena Commerce Center Gardena, CA 39,405 Unanchored Retail 96.0 5,770,000
1.5 Moreno Valley Commerce Moreno Valley, CA 111,060 Industrial -Flex 86.0 4,850,000
Center
1.6 Mount Vernon Commerce Colton, CA 29,600 Office 91.0 2,285,000
Center
--------- ------------- -------------
Subtotal/Weighted Average 642,452 94.7%(2) $41,970,000
ABBEY PORTFOLIO IV
2.1 Aliso Viejo Commerce Aliso Viejo, CA 64,137 Unanchored Retail 95.0 $13,250,000
Center
2.2 Wimbledon Business Victorville, CA 123,225 Unanchored Retail 92.0 12,000,000
Center
2.3 Upland Commerce Center Upland, CA 44,957 Unanchored Retail 29.0 5,500,000
2.4 AP Rancho Carmel San Diego, CA 26,978 Unanchored Retail 92.0 3,775,000
2.5 Atlantic Plaza Long Beach, CA 31,281 Unanchored Retail 100.0 2,895,000
2.6 Garden Grove Commerce Garden Grove, CA 12,560 Unanchored Retail 81.0 1,650,000
Center
--------- ------------- -------------
Subtotal/Weighted Average 303,138 83.6%(2) $39,070,000
--------- ------------- -------------
Total/Weighted Average 945,590 91.2%(2) $81,040,000
</TABLE>
------------
(1) Occupancy percentages as of June 1, 2000.
(2) Based upon weighted average square footage.
Property Management. The Abbey Company Properties are managed by The Abbey
Company. The Abbey Company currently manages a portfolio of properties
totaling approximately 3.1 million square feet. The Abbey Company has offices
in Los Angeles, Orange, Riverside and San Bernardino counties.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL(1) 1998 ACTUAL(2) 1999 ACTUAL(2) UNDERWRITTEN
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............... $6,807,508 $8,111,803 $8,897,451 $9,532,531
Expenses............................. $2,008,947 $2,173,766 $2,248,252 $2,310,182
-------------- -------------- -------------- --------------
NOI.................................. $4,798,561 $5,938,037 $6,649,199 $7,222,349
============== ============== ============== ==============
UW Cash Flow......................... N/A N/A N/A $6,141,767
Debt Service Coverage Ratio based on
NOI(3).............................. 1.33x 1.64x 1.84x 2.00x
UW DSCR based on UW Cash Flow(3) .... N/A N/A N/A 1.70x
</TABLE>
------------
(1) 1997 actual operating history does not reflect the operations of the
Long Beach Airport and Aliso Viejo Commerce Center properties.
(2) 1998 and 1999 actual operating history does not reflect the operations
of the Long Beach Airport property.
(3) The Abbey Company Loans require interest-only payments until their
maturity date.
Lockbox and Reserves. All rents payable by the tenants of the Abbey
Company Properties are deposited by the property manager directly into a
lockbox account. Provided that no event of default has
S-45
<PAGE>
occurred, all deposits in the lockbox account are remitted back to the Abbey
Company Borrower. The Abbey Portfolio IV Loan documents provide for reserves
for taxes, insurance and on-going replacements.
Additional terms and escrows for the Abbey Portfolio IV Loan are set forth
on Annex A.
THE ATLANTIC DEVELOPMENT PORTFOLIO LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $22,013,205 Property Type Industrial -Flex
Origination Date September 15, 1999 Location Warren, NJ
Anticipated Repayment Date October 1, 2009 Square Footage 273,061
Mortgage Rate 8.05% Year Built 1979 & 1985
Annual Debt Service $1,959,619 Appraised Value $35,615,000
UW DSCR 1.27x Occupancy 100.0%
Cut-off Date LTV 61.8% Occupancy Date August 7, 2000
Balloon LTV 55.7% UW NOI $2,790,516
Lockbox Yes UW NCF $2,493,559
----------------------------- ---------------------- ------------------- ---------------------
</TABLE>
The Loan. The Atlantic Development Portfolio Loan was originated by MGT
and is secured by a first mortgage encumbering two industrial/office
buildings which are located at 7 Powderhorn Drive and 35 Technology Drive in
Warren, New Jersey (each, individually, an "Atlantic Portfolio Development
Property" and collectively, the "Atlantic Portfolio Development Properties").
The Atlantic Development Portfolio Loan was made to MBCC East, LLC and MBCC
35, LLC, each a special purpose New Jersey limited liability company
(collectively, the "Atlantic Development Borrowers"), which are owned by
Atlantic Development and Management Corporation ("ADMC"). ADMC owns and
manages a portfolio of office and industrial properties totaling
approximately 1.0 million square feet.
The Atlantic Development Portfolio Loan has a remaining amortization term
of 349 months and matures on October 1, 2029. The Atlantic Development
Portfolio Loan is an ARD loan with an Anticipated Repayment Date of October
1, 2009. The Atlantic Development Portfolio Loan may not be prepaid prior to
July 1, 2009. The Atlantic Development Portfolio Loan may be prepaid, in
whole, but not in part, without payment of a Prepayment Premium at any time
thereafter, and in whole or in part, without payment of a Prepayment Premium
after the Anticipated Repayment Date. The Atlantic Development Portfolio Loan
is subject to Defeasance, in whole, in whole or in part, at any time after
the second anniversary of the Delivery Date.
The Property. The Atlantic Development Portfolio Properties consist of two
Industrial-Flex buildings:
7 Powderhorn Drive is a two-story, 180,500 square foot office, lab and
warehouse facility located in Warren, New Jersey and was built in 1979. The
property is 100% leased to two tenants: Cordis Corporation ("Cordis") which
occupies 107,000 square feet and Celegene Corporation ("Celegene") which
occupies the remaining 73,500 square feet. Cordis, a developer and
manufacturer of products for interventional medicine, minimal invasive
imaging, and electrophysiology with approximately 3,500 employees worldwide,
is a wholly-owned subsidiary of Johnson & Johnson (NYSE: JNJ). Johnson &
Johnson is rated Aaa and AAA by Moody's and Standard & Poor's, respectively.
Celegene (NASDAQ: CLEG) develops and commercializes human pharmaceuticals and
agro-chemicals.
35 Technology Drive is a two-story, 92,561 square foot office, lab and
warehouse facility located in Warren, New Jersey and was built in 1985. The
property is 100% leased to Anadigics, Inc. (NASDAQ: ANAD) ("Anadigics").
Anadigics designs and manufactures radio frequency integrated circuit
solutions for the growing broadband and wireless communications markets.
Property Management. The Atlantic Development Properties is managed by
ADMC.
S-46
<PAGE>
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $3,886,173 $3,782,747 $3,726,032 $3,984,380
Expenses.......................... 1,064,287 1,008,804 829,323 1,193,865
------------- ------------- ------------- --------------
NOI............................... $2,821,886 $2,773,943 $2,896,709 $2,790,515
============= ============= ============= ==============
UW Cash Flow...................... N/A N/A N/A $2,493,559
Debt Service Coverage Ratio based
on NOI .......................... 1.44x 1.42x 1.48x 1.42x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.27x
</TABLE>
Release. Either Atlantic Development Portfolio Property may be released
from the lien of its mortgage provided (a) an amount equal to 125% of the
release amount of such Atlantic Development Portfolio Property is defeased
and (b) after giving effect to such release (i) the Debt Service Coverage
Ratio for the remaining Atlantic Development Portfolio Property is greater
than or equal to 1.25x and (ii) the loan to value ratio is less than or equal
to 75%.
Lockbox and Reserves. All rents payable by the tenants of the Atlantic
Development Portfolio Properties are paid directly into a lockbox account
which is subject to the sole dominion, control and discretion of the Atlantic
Development Loan lender. Funds in the lockbox account are allocated monthly
to a tax and insurance account, a debt service account and a recurring
replacement reserve account. The Atlantic Development Portfolio Loan
documents provided for reserves for taxes, insurance and on-going
replacements.
Additional terms and escrows for the Atlantic Development Portfolio Loan
are set forth on Annexes A and C.
THE COVINA HILLS MOBILE HOME COUNTRY CLUB LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------------- -----------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $21,587,115 Property Type Mobile Home Park
Origination Date August 4, 1999 Location La Puente, CA
Maturity Date September 1, 2009 Number of Pads 500
Mortgage Rate 7.73% Year Built 1972
Annual Debt Service $1,866,230 Appraised Value $30,030,000
UW DSCR 1.27x Occupancy 100.0%
Cut-off Date LTV 71.9% Occupancy Date April 1, 2000
Balloon LTV 64.4% UW NOI $2,399,584
Lockbox No UW NCF $2,374,584
------------------------ --------------------- ------------------- --------------------
</TABLE>
The Loan. The Covina Hills Loan was purchased by MGT and is secured by a
first mortgage encumbering the mobile home park located at 17350 East Temple
Avenue in La Puente, California (the "Covina Hills Property"). The Covina
Hills Loan was made to Juanita Springs Associates Limited Partnership, a
special purpose Washington limited partnership (the "Covina Hills Borrower")
owned by Morgan Partners Inc. and Covina Hills Equities Inc. Morgan Partners
manages a portfolio of five mobile home parks and four apartment communities
totaling 1,500 units in three states.
The Covina Hills Loan has a remaining amortization term of 348 months and
matures on September 1, 2009. The Covina Hills Loan may not be prepaid prior
to June 1, 2009. The Covina Hills Loan may be prepaid, in whole, but not in
part, without payment of a Prepayment Premium at any time thereafter. The
Covina Hills Loan is subject to Defeasance, in whole, but not in part, at any
time after the second anniversary of the Delivery Date.
The Property. The Covina Hills Property is a 500 pad mobile home park
located on a 73 acre site in La Puente, California. The total site density is
approximately 6.8 pads per acre. The Covina Hills
S-47
<PAGE>
Property was built in 1972 and contains 19 single-wide and 481 double-wide
mobile homes. Amenities include two clubhouses, two swimming pools, two
laundry room facilities, recreational facilities, and twenty-two spaces for
RV storage. As of April 1, 2000, the Covina Hills Property was 100% occupied.
Property Management. The Covina Hills Property is managed by Bessire &
Casenhiser, Inc.
Operating History.
<TABLE>
<CAPTION>
TRAILING
12 MOS. ENDED ORIGINATOR'S
1998 ACTUAL 1999 ACTUAL 3/31/00 UNDERWRITTEN
------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $3,774,340 $3,849,560 $3,892,561 $3,892,561
Expenses.......................... 1,489,419 1,392,499 1,485,626 1,492,977
------------- ------------- --------------- --------------
NOI............................... $2,284,921 $2,457,062 $2,406,936 $2,399,584
============= ============= =============== ==============
UW Cash Flow...................... N/A N/A N/A $2,374,584
Debt Service Coverage Ratio based
on NOI .......................... 1.22x 1.32x 1.29x 1.29x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.27x
</TABLE>
Lockbox and Reserves. The Covina Hills Loan documents do not require the
establishment of a lockbox or cash collateral account. The Covina Hills Loan
documents provide for reserves for taxes, insurance and on-going
replacements.
Additional terms and escrows for the Covina Hills Loan are set forth on
Annexes A and B.
THE LIBERTY FAIR MALL LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
---------------------------------------------------- ----------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $20,549,985 Property Type Regional Mall
Origination Date November 30, 1999 Location Martinsville, VA
Anticipated Repayment Date December 1, 2009 Square Footage 435,402
Mortgage Rate 8.46% Year Built/Renovated 1989/1997
Annual Debt Service $1,953,505 Appraised Value $32,400,000
UW DSCR 1.26x Occupancy 92.0%
Cut-off Date LTV 63.4% Occupancy Date April 26, 2000
Balloon LTV 55.2% UW NOI $2,700,271
Lockbox Yes UW NCF $2,469,357
----------------------------- --------------------- ------------------------ --------------------
</TABLE>
The Loan. The Liberty Fair Mall Loan was originated by MGT and is secured
by a first mortgage encumbering the regional mall located at 240 Commonwealth
Boulevard, in Martinsville, Virginia (the "Liberty Fair Mall Property"). The
Liberty Fair Mall Loan was made to Liberty Fair VA LP, a special purpose
Virginia limited partnership (the "Liberty Fair Mall Borrower") which is
owned 50% by Developers Diversified Realty Corporation ("DDR"), as general
partner, and 50% by The Lester Group, as limited partner. DDR is a real
estate investment trust based in Cleveland, Ohio which owns and manages a
portfolio of 206 retail shopping centers totaling approximately 49 million
square feet of gross leasable area in 40 states. DDR reported a total market
capitalization of $2.6 billion as of June 30, 2000.
The Liberty Fair Mall Loan has a remaining amortization term of 351 months
and matures on December 1, 2029. The Liberty Fair Mall Loan is an ARD loan
with an Anticipated Repayment Date of December 1, 2009. The Liberty Fair Mall
Loan may not be prepaid prior to September 1, 2009. The Liberty Fair Mall
Loan may be prepaid, in whole, but not in part, without payment of a
Prepayment Premium at any time thereafter. The Liberty Fair Mall Loan is
subject to Defeasance, in whole, but not in part, at any time after the
second anniversary of the Delivery Date.
The Property. The Liberty Fair Mall Property is an enclosed, single-story,
regional mall containing 435,402 square foot of gross leasable area ("GLA")
and was built in 1989 and renovated in 1997. Primary tenants include Sears
(58,760 square feet; rated A3/A-), Kroger (55,969 square feet; rated
Baa3/BBB-),
S-48
<PAGE>
JC Penney (50,232 square feet, rated Baa2/BBB) (each of such ratings by
Moody's and Standard & Poor's, respectively), Belks (85,000 square feet),
Office Max (23,523 square feet) and Goody's (29,687 square feet). Other
tenants include Footlocker, Bath & Body Works, Walden Books and Jo-Ann
Fabrics.
Property Management. The Liberty Fair Mall Property is managed by
Developers Diversified Management, Inc., an affiliate of the Liberty Fair
Mall Borrower.
Operating History.
<TABLE>
<CAPTION>
TRALING
12 MOS. ENDED ORIGINATOR'S
1998 ACTUAL 1999 ACTUAL 3/31/00 UNDERWRITTEN
------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $3,732,747 $3,837,314 $3,811,789 $3,673,059
Expenses.......................... 1,020,581 946,823 968,742 972,788
------------- ------------- --------------- --------------
NOI............................... $2,712,166 $2,890,491 $2,843,047 $2,700,271
============= ============= =============== ==============
UW Cash Flow...................... N/A N/A N/A $2,469,357
Debt Service Coverage Ratio based
on NOI .......................... 1.39x 1.48x 1.46x 1.38x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.26x
</TABLE>
Lockbox and Reserves. All rents payable by the tenants of the Liberty Fair
Mall Property are paid directly into a lockbox account. Provided that no
event of default has occurred, all deposits in excess of $2,000 in the
lockbox account are remitted back to the Liberty Fair Mall Borrower. The
Liberty Fair Mall Loan loan documents provide for reserves for taxes,
insurance and on-going replacements. Additionally, a reserve of $50,000 per
year for the first five years of the loan term and $75,000 per year from year
six until the principal balance is reduced to zero will be escrowed for
tenant improvement/leasing commissions.
Additional terms and escrows for the Liberty Fair Mall Loan are set forth
on Annexes A and C.
THE WILSHIRE FINANCIAL TOWER LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------------- ---------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $18,576,294 Property Type CBD Office
Origination Date November 17, 1999 Location Los Angeles, CA
Maturity Date December 1, 2009 Square Footage 375,614
Mortgage Rate 8.86% Year Built/Renovated 1961/1992
Annual Debt Service $1,778,247 Appraised Value $27,000,000
UW DSCR 1.32x Occupancy 94.6%
Cut-off Date LTV 68.8% Occupancy Date August 1, 2000
Balloon LTV 63.0% UW NOI $2,751,158
Lockbox No UW NCF $2,349,908
------------------------ --------------------- ------------------------ -------------------
</TABLE>
The Loan. The Wilshire Financial Tower Loan was originated by MGT and is
secured by a first mortgage encumbering the regional mall located at 3600
Wilshire Boulevard in Los Angeles, California (the "Wilshire Financial Tower
Property"). The Wilshire Financial Tower Loan was made to 3600 Wilshire LLC,
a special purpose California limited liability company (the "Wilshire
Financial Borrower").
The Wilshire Financial Tower Loan has a remaining amortization term of 351
months and matures on December 1, 2009. The Wilshire Financial Tower Loan may
not be prepaid prior to September 1, 2009. The Wilshire Financial Tower Loan
may be prepaid, in whole, or in part, without payment of a Prepayment Premium
at any time thereafter. The Wilshire Financial Tower Loan is subject to
Defeasance, in whole, but not in part, at any time after the second
anniversary of the Delivery Date.
The Property. The Wilshire Financial Tower Property is a 21-story office
building containing 375,614 square feet located in the Mid-Wilshire district
of Los Angeles and was built in 1961 and
S-49
<PAGE>
renovated in 1992. The Wilshire Financial Tower Property includes an
adjoining 2-story parking garage containing 850 spaces which is leased and
managed by a third party operator. As of August 1, 2000, the Wilshire
Financial Tower Property was 94.6% occupied by more than 175 tenants. No
single tenant accounts for more than 5% of the square footage or gross
potential rent.
Property Management. The Wilshire Financial Tower Property is managed by
Jamison Properties, Inc., an affiliate of the Wilshire Financial Tower
Borrower, which manages a portfolio of 14 office buildings totaling
approximately 4 million square feet.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $4,543,848 $4,562,174 $4,492,992 $4,954,824
Expenses.......................... 2,108,806 2,549,478 2,062,383 2,203,666
------------- ------------- ------------- --------------
NOI............................... $2,435,042 $2,012,696 $2,430,609 $2,751,158
============= ============= ============= ==============
UW Cash Flow...................... N/A N/A N/A $2,349,908
Debt Service Coverage Ratio based
on NOI .......................... 1.37x 1.13x 1.37x 1.55x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.32x
</TABLE>
Lockbox and Reserves. The Wilshire Financial Tower Loan documents do not
require the establishment of a lockbox or cash collateral account. The
Wilshire Financial Tower Loan documents provide for reserves for taxes and
insurance. Additionally, the Wilshire Financial Tower Borrower is required to
deposit $30,000 monthly into a reserve account for tenants
improvements/leasing commissions for so long as there are any unpaid amounts
under the Wilshire Financial Tower Loan.
Additional terms and escrows for the Wilshire Financial Tower Loan are set
forth on Annexes A and C.
THE HUB TOWER LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
------------------------------------------------- --------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $17,952,264 Property Type CBD Office
Origination Date March 17, 2000 Location Des Moines, IA
Anticipated Repayment Date April 1, 2010 Square Footage 281,028
Mortgage Rate 8.10% Year Built/Renovated 1985/1998
Annual Debt Service $1,600,015 Appraised Value $25,500,000
UW DSCR 1.26x Occupancy 100.0%
Cut-off Date LTV 70.4% Occupancy Date March 13, 2000
Balloon LTV 63.3% UW NOI $2,496,817
Lockbox Yes UW NCF $2,007,895
----------------------------- ------------------ ------------------------ ------------------
</TABLE>
The Loan. The Hub Tower Loan was originated by MGT and is secured by a
first mortgage encumbering the regional mall located at 699 Walnut Street in
Des Moines, Iowa (the "Hub Tower Property"). The Hub Tower Loan was made to
MR No. 17, LLC, a special purpose Iowa limited liability company (the "Hub
Tower Borrower") which is owned 90% by the Tetrad Corporation and 10% by
MRI-Hub Tower, Inc. The Tetrad Corporation consists of four family trusts,
each formed by Walter Scott, Jr.
The Hub Tower Loan has a remaining amortization term of 355 months and
matures on April 1, 2030. The Hub Tower Loan is an ARD loan with an
Anticipated Repayment Date of April 1, 2010. The Hub Tower Loan may not be
prepaid prior to January 1, 2010. The Hub Tower Loan may be prepaid, in
whole, but not in part, without payment of a Prepayment Premium at any time
thereafter. The Hub Tower Loan is subject to Defeasance, in whole, but not in
part, at any time after the second anniversary of the Delivery Date.
S-50
<PAGE>
The Property. The Hub Tower Property is a 20-story Class A office
building containing 281,028 square feet and seventy-four underground parking
spaces located in the Des Moines central business district. The building is
connected to the city's covered skywalk system and was developed in 1985 in
conjunction with the two-story retail pavilion, "The Kaleidoscope," which has
a central food court and additional parking, but does not serve as collateral
for the Hub Tower Loan. The primary tenants in the Hub Tower Property include
Principal Mutual Life Insurance, AmerUS Life Holdings and Invista Capital. As
of March 13, 2000, the Hub Tower Property was 100.0% occupied.
Property Management. The Hub Tower Property is managed Magnum Resources,
Inc., an affiliate of the Hub Tower Borrower.
Operating History.
<TABLE>
<CAPTION>
TRAILING
12 MOS. ENDED ORIGINATOR'S
1998 ACTUAL 1999 ACTUAL 3/31/2000 UNDERWRITTEN
------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $4,918,486 $5,352,449 $5,383,124 $5,043,586
Expenses.......................... 2,356,227 2,416,070 2,398,469 2,546,769
------------- ------------- --------------- --------------
NOI............................... $2,562,259 $2,936,379 $2,984,655 $2,496,817
============= ============= =============== ==============
UW Cash Flow...................... N/A N/A N/A $2,007,895
Debt Service Coverage Ratio based
on NOI .......................... 1.60x 1.84x 1.87x 1.56x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.25x
</TABLE>
Lockbox and Reserves. All rents payable by the tenants of the Hub Tower
Property are paid directly into a lockbox account. Provided that no event of
default has occurred, all deposits in excess of $2,000 in the lockbox account
are remitted back to the Hub Tower Borrower. The Hub Tower Loan documents
provide for reserves for taxes, insurance and on-going replacements.
Additionally, the Hub Tower Borrower is required to deposit $20,140 monthly
into a reserve account for tenants improvements/ leasing commissions for so
long as there are any unpaid amounts under the Hub Tower Loan.
Additional terms and escrows for the Hub Tower Loan are set forth on
Annexes A and C.
THE GERRY BUILDINGS LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $16,824,504 Property Type Industrial -Flex
Origination Date November 30, 1999 Location Los Angeles, CA
Anticipated Repayment Date December 1, 2009 Square Footage 707,125
Mortgage Rate 8.73% Year Built/Renovated 1912-46/1999
Annual Debt Service $1,669,477 Appraised Value $23,400,000
UW DSCR 1.25x Occupancy 90.0%
Cut-off Date LTV 71.9% Occupancy Date April 24, 2000
Balloon LTV 61.0% UW NOI $2,398,182
Lockbox Yes UW NCF $2,079,950
------------------------------ --------------------- ------------------------ ---------------------
</TABLE>
The Loan. The Gerry Buildings Loan was originated by MGT and is secured by
a first mortgage encumbering nine buildings located in the Fashion District
in Los Angeles, California (collectively, the "Gerry Buildings Properties").
The Gerry Buildings Loan was made to 714-910 S. Los Angeles, LLC, a special
purpose California limited liability company (the "Gerry Buildings
Borrower").
The Gerry Buildings Loan has a remaining amortization term of 291 months
and matures on December 1, 2024. The Gerry Buildings Loan is an ARD loan with
an Anticipated Repayment Date of December 1, 2009. The Gerry Buildings Loan
may not be prepaid prior to November 1, 2009. The Gerry Buildings Loan may be
prepaid, in whole, but not in part, without payment of a Prepayment Premium
at any time thereafter. The Gerry Buildings Loan is subject to Defeasance, in
whole, but not in part, at any time after the second anniversary of the
Delivery Date.
S-51
<PAGE>
The Property. The Gerry Buildings Properties consist of nine industrial,
manufacturing and office buildings totaling 707,125 square feet. The Gerry
Buildings Properties are located in the "Fashion District" of Los Angeles,
which primarily caters to retailers and wholesalers of clothing. The Gerry
Building Properties were built between the years 1912 and 1946 with
renovations as recently as 1999. Each of the nine buildings is located within
two square blocks of each other and two of the buildings are contiguous.
Property Management. The Gerry Buildings Property is managed by MJW
Investments, Inc., an affiliate of the Gerry Buildings Borrower.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $3,662,804 $3,913,326 $3,983,038 $4,075,890
Expenses.......................... 1,380,951 1,429,187 1,660,168 1,677,708
------------- ------------- ------------- --------------
NOI............................... $2,281,853 $2,484,139 $2,322,870 $2,398,182
============= ============= ============= ==============
UW Cash Flow...................... N/A N/A N/A $2,079,950
Debt Service Coverage Ratio based
on NOI .......................... 1.37x 1.49x 1.39x 1.44x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.25x
</TABLE>
Lockbox and Reserves. All rents payable by the tenants of the Gerry
Buildings Properties are deposited by the Gerry Buildings Borrower or the
property manager into a lockbox account. Provided that no event of default
has occurred, all deposits in excess of $2,000 in the lockbox account are
remitted back to the Gerry Buildings Borrower. The Gerry Buildings Loan
documents provide for reserves for taxes, insurance and on-going
replacements. Additionally, a reserve of $100,000 was required at closing and
monthly collections of $8,333 capped at a total reserve of $200,000 will be
escrowed for tenant improvement/leasing commissions.
Additional terms and escrows for the Gerry Buildings Loan are set forth on
Annexes A and C.
THE EMBASSY SUITES CHICAGO LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
------------------------------------ ------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $16,523,281 Property Type Hotel -full service
Origination Date May 2, 2000 Location Deerfield, IL
Maturity Date May 10, 2010 Number of Rooms 237
Mortgage Rate 8.615% Year Built/Renovated 1987/1997
Annual Debt Service $1,617,040 Appraised Value $23,700,000
UW DSCR 1.40x Occupancy 75.0%
Cut-off Date LTV 69.7% Occupancy Date February 29, 2000
Balloon LTV 58.7% UW NOI $2,677,957
Lockbox No UW NCF $2,263,542
-------------------- -------------- -------------------- --------------------
</TABLE>
The Loan. The Embassy Suites Chicago Loan was purchased by MGT and is
secured by a first mortgage encumbering the regional mall located at 1445
Lake Cook Drive in Deerfield, Illinois (the "Embassy Suites Chicago
Property"). The Embassy Suites Chicago Loan was made to Felcor/CMB Deerfield
Hotel, LLC, a Delaware special purpose limited liability company (the
"Embassy Suites Chicago Borrower") which is owned by Felcor Lodging Trust,
Inc. (NYSE: FCH) ("Felcor"). Felcor is one of the nation's largest hotel real
estate investment trusts with a reported total market capitalization of
approximately $3.4 billion. Felcor owns 188 hotels with nearly 50,000 rooms
and suites in 35 states and Canada. Felcor is the owner of the largest number
of Embassy Suites, Crown Plaza, Holiday Inn, and independently owned
Doubletree branded hotels.
S-52
<PAGE>
The Embassy Suites Chicago Loan has a remaining amortization term of 296
months and matures on May 10, 2010. The Embassy Suites Chicago Loan may not
be prepaid prior to February 10, 2010. The Embassy Suites Chicago Loan may be
prepaid, in whole, but not in part, without payment of a Prepayment Premium
at any time thereafter. The Embassy Suites Chicago Loan is subject to
Defeasance, in whole, but not in part, at any time after the second
anniversary of the Delivery Date.
The Property. The Embassy Suites Chicago Property is a seven-story,
237-room full service hotel located in Deerfield, Illinois, a northern suburb
of Chicago and was built in 1987. Amenities include an indoor pool, sauna,
whirlpool, fitness center, gift shop, meeting/banquet space and restaurant.
The operating performance in terms of average daily rate, occupancy and
revenue per available room for the Embassy Suites Chicago Property is
described in the table below:
<TABLE>
<CAPTION>
1997 1998 1999 UW
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Average Daily Rate (ADR)............ $111.76 $122.53 $122.85 $122.69
Occupancy........................... 74.4% 71.6% 74.3% 73.0%
Revenue Per Available Room
(RevPAR)........................... $ 83.20 $ 87.75 $ 91.32 $ 89.56
</TABLE>
Property Management. The Embassy Suites Chicago Property is managed by
Coastal Hotel Group, Inc. ("Coastal"), a privately held Chicago based hotel
management company. Founded in 1987, Coastal manages approximately
twenty-five hotels totaling over 2,300 rooms. Coastal was named one of the
top ten hotel management companies in 1999 by Hotel Business.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1997 ACTUAL 1998 ACTUAL 1999 ACTUAL UNDERWRITTEN
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Effective Gross Income............ $7,811,375 $8,216,875 $8,472,105 $8,288,300
Expenses.......................... 5,008,278 5,052,595 5,555,059 5,610,343
------------- ------------- ------------- --------------
NOI............................... $2,803,097 $3,164,280 $2,917,046 $2,677,957
============= ============= ============= ==============
UW Cash Flow...................... N/A N/A N/A $2,263,542
Debt Service Coverage Ratio based
on NOI .......................... 1.73x 1.96x 1.80x 1.66x
UW DSCR based on UW Cash Flow .... N/A N/A N/A 1.40x
</TABLE>
Lockbox and Reserves. The Embassy Suites Chicago Loan documents do not
require the establishment of a lockbox or cash collateral account. The
Embassy Suites Chicago Loan documents provide for reserves for taxes and
insurance.
Additional terms and escrows for the Embassy Suites Chicago Loan are set
forth on Annexes A.
THE FAIRGROUNDS PLAZA LOAN
<TABLE>
<CAPTION>
LOAN INFORMATION PROPERTY INFORMATION
----------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance $16,200,572 Property Type Anchored Retail
Origination Date September 2, 1999 Location Timonium, MD
Maturity Date October 1, 2009 Square Footage 107,060
Mortgage Rate 7.99% Year Built 1999
Annual Debt Service $1,434,243 Appraised Value $20,700,000
UW DSCR 1.27x Occupancy 99.0%
Cut-off Date LTV 78.3% Occupancy Date March 6, 2000
Balloon LTV 76.1% UW NOI $1,867,163
Lockbox No UW NCF $1,814,696
------------------------ --------------------- ------------------- -------------------
</TABLE>
The Loan. The Fairgrounds Plaza Loan was originated by MGT and is secured
by a first mortgage encumbering the regional mall located at 37-63 West
Aylesbury Road in Timonium, Maryland (the "Fairgrounds Plaza Property"). The
Fairgrounds Plaza Loan was made to M.O.R. Aylesbury, Inc., a
S-53
<PAGE>
special purpose Maryland corporation (the "Fairgrounds Plaza Borrower")
which is controlled by Manekin, LLC ("Manekin"). Manekin is a full service
real estate company providing brokerage, development, construction, asset
management and investment services throughout the Baltimore and Washington
D.C. metropolitan regions.
The Fairgrounds Plaza Loan has a remaining amortization term of 349 months
and matures on October 1, 2009. The Fairgrounds Plaza Loan may not be prepaid
prior to July 1, 2009. The Fairgrounds Plaza Loan may be prepaid, in whole,
but not in part, without payment of a Prepayment Premium at any time
thereafter. The Fairgrounds Plaza Loan is subject to Defeasance, in whole,
but not in part, at any time after the second anniversary of the Delivery
Date.
The Property. The Fairgrounds Plaza Property is a 107,060 square foot
anchored shopping center located approximately 10 miles from downtown
Baltimore was built in 1999. The center is anchored by a SuperFresh
supermarket with reported sales per square foot of $492 in 1999. SuperFresh
is owned by The Great Atlantic & Pacific Tea Company (NYSE: GAP), currently
rated Ba1 and BBB-by Moody's and Standard & Poor's, respectively. The Great
Atlantic & Pacific Tea Company operates food chains in the United States and
Canada under the trade names A&P, Super Fresh, Sav-A-Center and Food
Emporium, among others. The Fairgrounds Plaza Property includes eight in-line
tenants and one pad site and was 99.0% occupied as of March 6, 2000.
Property Management. The Fairgrounds Plaza Property is managed by Manekin,
LLC an affiliate of the Fairgrounds Plaza Borrower.
Operating History.
<TABLE>
<CAPTION>
ORIGINATOR'S
1999 ACTUAL (1) APPRAISAL UNDERWRITTEN
--------------- ------------ --------------
<S> <C> <C> <C>
Effective Gross Income.................... $1,651,099 $2,323,515 $2,316,899
Expenses.................................. 258,993 396,241 449,736
--------------- ------------ --------------
NOI....................................... $1,392,106 $1,927,274 $1,867,163
=============== ============ ==============
UW Cash Flow.............................. N/A N/A $1,814,696
Debt Service Coverage Ratio based on NOI N/A 1.34x 1.30x
UW DSCR based on UW Cash Flow............. N/A N/A 1.27x
</TABLE>
------------
(1) 1999 Actual operating history does not represent a full year because
the property was constructed in 1999.
Lockbox and Reserves. The Fairgrounds Plaza Loan documents do not require
the establishment of a lockbox or cash collateral account. The Fairgrounds
Plaza Loan documents provide for reserves for taxes, insurance and on-going
replacements.
Additional terms and escrows for the Fairgrounds Plaza Loan are set forth
on Annexes A and C.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
ARD Loans. Fifty-four of the Mortgage Loans representing approximately
40.0% of the Initial Pool Balance are "ARD Loans." The ARD Loans
substantially fully amortize over their stated terms, which are at least 60
months after their related Anticipated Repayment Dates (as defined below). If
the related borrower thereunder (the "Mortgagor") elects to prepay an ARD
Loan in full on the related Anticipated Repayment Date, a substantial amount
of principal will be due. If a Mortgagor elects not to prepay an ARD Loan on
or before its Anticipated Repayment Date, all or a substantial portion of
Excess Cash Flow (as defined below) collected after such date shall be
applied towards the prepayment of such ARD Loan. ARD Loans generally accrue
interest at a higher rate following the applicable Anticipated Repayment
Date. As used herein, the term "Mortgage Interest Rate" does not include the
portion of the interest rate attributable to the rate increase. The excess of
interest at such higher rate over interest at the Mortgage Interest Rate
(together with interest thereon) is referred to herein as Excess Interest.
The date on which all or substantially all of any Excess Cash Flow is
required to be applied toward prepayment of such loan and on which any such
Mortgage Loan begins accruing Excess Interest is referred to herein as the
"Anticipated Repayment Date."
S-54
<PAGE>
Once the principal balance of an ARD Loan has been reduced to zero, all
Excess Cash Flow will be applied to the payment of accrued Excess Interest.
With respect to any ARD Loan, payment of Excess Interest will be deferred
until the principal of such ARD Loan has been paid in full.
Commencing on the respective Anticipated Repayment Date each ARD Loan
generally will bear interest at a fixed rate (the "Revised Rate") per annum
equal to the Mortgage Interest Rate plus a specified percentage (no more than
2%, so long as the Mortgage Loan is included in the Trust Fund). 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 Interest
Rate and the interest accrued at the excess of the related Revised Rate over
the related Mortgage Interest Rate will be deferred (such accrued and
deferred interest and interest thereon, if any, is "Excess Interest"). Excess
Interest so accrued will, except where limited by applicable law, not be
added to the principal balance of the related Mortgage Loan but will accrue
interest at the Revised Rate. Each Mortgagor under the ARD Loans has agreed
to have all revenue from the related Mortgaged Property deposited after the
Anticipated Repayment Date into a Lockbox Account controlled by the Master
Servicer.
From and after the Anticipated Repayment Date, in addition to paying
interest (at the Mortgage Interest Rate) and principal (based on the
amortization schedule), the related Mortgagor generally will be required to
apply all monthly cash flow from the related Mortgaged Property to pay the
following amounts in the following order of priority: (i) required payments
for the tax and insurance fund and ground lease escrows fund, (ii) payment of
monthly debt service, (iii) payments to any other required escrow funds, (iv)
payment of operating expenses pursuant to the terms of an annual budget
approved by the Master Servicer or in an amount which is capped at 1/12 of
105% of the prior year's operating expenses, (v) principal on the Mortgage
Loan until such principal is paid in full and (vi) Excess Interest. The cash
flow from the Mortgaged Property securing an ARD Loan after payments of items
(i) through (iv) above is referred to herein as "Excess Cash Flow." Each ARD
Loan provides that the related Mortgagor is prohibited from prepaying the
Mortgage Loan until 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 failure to pay an ARD
Loan, including any Excess Interest due, by the related Anticipated Repayment
Date will not result in an event of default or acceleration of the related
Mortgage Loan. The Anticipated Repayment Date for each ARD Loan is listed in
Annex A.
Balloon Mortgage Loans. One hundred and eight of the Mortgage Loans
(including 2 interest-only mortgage loans) representing approximately 56.4%
of the Initial Pool Balance provide for monthly payments of principal based
on an amortization schedule longer, and in some cases significantly longer,
than the remaining term of such Mortgage Loan (each, a "Balloon Mortgage
Loan"), thereby leaving a substantial outstanding principal amount due and
payable (the "Balloon Payment") on its Maturity Date, unless prepaid prior
thereto. See Annex A for additional information regarding the Balloon
Mortgage Loans.
Crossed Loans. Twelve Mortgage Loans representing approximately 7.9% of
the Initial Pool Balance are cross-defaulted and cross-collateralized with
another Mortgage Loan (the "Crossed Loans"). No group of Crossed Loans
represents in the aggregate more than 6.5% of the Initial Pool Balance. A
default under one of the Crossed Loans will result in a default under all of
the other Mortgage Loans which are cross-collateralized and cross-defaulted
with such Crossed Loan. See Annex A for additional information regarding the
Crossed Loans.
Additional Debt. Except with respect to 2 Mortgage Loans representing
approximately 2.2% of the Initial Pool Balance, the Mortgage Loans were made
to Mortgagors which are generally restricted under the related loan documents
or by its governing documents from incurring any indebtedness other than the
related Mortgage Loan, normal trade accounts payable and certain purchase
financing debt. The Mortgaged Properties for 3 Mortgage Loans representing
approximately 1.0% of the Initial Pool Balance are collateral for junior
indebtedness of the related Mortgagor. The Mortgagor for one Mortgage Loan
representing approximately 2.8% of the Initial Pool Balance has one
outstanding unsecured loan.
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The existence of such other debt could:
o adversely affect the financial viability of the Mortgagor;
o adversely affect the security interest of the lender in the
equipment or other assets acquired through such financings;
o complicate bankruptcy proceedings; and
o delay foreclosure on the Mortgaged Property.
In cases where one or more junior liens are imposed on a mortgaged
property or the mortgagor incurs other unsecured indebtedness, the trust fund
is subjected to additional risks, including, the risks that the mortgagor may
have greater incentives to repay the junior or unsecured indebtedness first
and that it may be more difficult for the mortgagor to refinance the mortgage
loan or to sell the mortgaged property for purposes of making a balloon
payment upon the maturity of the mortgage loan.
The owners of the Mortgaged Property with respect to one Mortgage Loan
representing 0.5% of the Initial Pool Balance have pledged their ownership
interest in such Mortgaged Property as collateral for "mezzanine debt." Such
"mezzanine debt" is separately secured by a lien on the corresponding
ownership interest in the borrower.
Escrows. One hundred and sixty-five Mortgage Loans which represent
approximately 98.3% of the Initial Pool Balance, provide for monthly escrows
to cover property taxes on the Mortgaged Properties and 164 of the Mortgage
Loans, which represent approximately 97.9% of the Initial Pool Balance,
provide for monthly escrows to cover insurance premiums on the Mortgaged
Properties. With respect to the Mortgage Loans which do not require monthly
escrows to cover insurance premiums, if the Mortgagor does not maintain the
required insurance, then (i) the Master Servicer may obtain such coverage at
the cost of the Mortgagor or (ii) with respect to most of the Mortgage Loans,
the Master Servicer may require monthly escrows in addition to providing
force-placed coverage.
One hundred and thirty-five of the Mortgage Loans, which represent
approximately 87.4% of the Initial Pool Balance, also require monthly escrows
to cover ongoing replacements of furniture, fixtures and equipment and/or
capital expenditures.
Fifty-six of the Mortgage Loans, which represent approximately 65.2% of
the Initial Pool Balance for office, retail, industrial and mixed use
properties, also required upfront or monthly escrows for the full term or a
portion of the term of the related Mortgage Loan to cover anticipated
re-leasing costs, including tenant improvements and leasing commissions.
Thirty-one of the Mortgage Loans, which represent approximately 29.6% of the
Initial Pool Balance, have front-end escrows to cover various other
contingencies.
See Annex A for additional information pertaining to Mortgage Loan
escrows.
Related Borrowers. Thirty-seven of the Mortgage Loans, representing 17.4%
of the Initial Pool Balance, have Mortgagors which are related to one or more
other Mortgagors but are not cross-collateralized or cross-defaulted with
other mortgage loans. There are 12 such groups of related Mortgagors. No
group of Mortgage Loans with related Mortgagors represents in the aggregate
more than 4.9% of the Initial Pool Balance. See Annex A for a description of
the related loan groups.
Earthquake Analysis. Forty-four of the Mortgaged Properties are located in
seismic zones three and four. An architectural and engineering consultant
performed an analysis on all of such Mortgaged Properties, except for 6
mobile home park properties, in order to evaluate the structural and seismic
condition of such properties and to assess, based on a 475-year return
period, a 50-year window and a 10% probability of exceedance, the probable
maximum loss ("PML") for such properties in a hypothetical earthquake
scenario. The resulting analysis indicated that in a hypothetical earthquake
scenario, four of the Mortgage Loans are likely to suffer a PML in excess of
20% of the amount of the estimated replacement cost of the improvements. Six
of the Mortgaged Properties described above, which represent 4.7% of the
allocated Initial Pool Balance are covered by earthquake insurance in an
amount at least equal to the outstanding principal balance of the related
Mortgage Loan.
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UNDERWRITING GUIDELINES AND PROCESSES
The Seller has developed guidelines establishing certain procedures with
respect to underwriting the mortgage loans originated or purchased by it, as
described more fully below. All of the Mortgage Loans were generally
originated in accordance with such guidelines. In some instances, one or more
provisions of the guidelines were waived or modified where it was determined
not to adversely affect the Mortgage Loans in any material respect. With
respect to the Finova Loans, the Mortgage Loans generally conformed to the
underwriting standards established by the Seller.
Property Analysis. The Seller performs a site inspection to evaluate the
location and quality of the related mortgaged properties. Such inspection
includes an evaluation of functionality, design, attractiveness, visibility
and accessibility, as well as convenience to major thoroughfares,
transportation centers, employment sources, retail areas and educational or
recreational facilities. The Seller assesses the submarket in which the
property is located to evaluate competitive or comparable properties as well
as market trends. In addition, the Seller evaluates the property's age,
physical condition, operating history, leases and tenant mix, and management.
Cash Flow Analysis. The Seller reviews operating statements provided by
the mortgagor and makes adjustments in order to determine a debt service
coverage ratio. See "Description of the Mortgage Pool -- Certain
Characteristics of the Mortgage Loans" herein.
Appraisal and Loan-to-Value Ratio. For each mortgaged property, the Seller
obtains a current full narrative appraisal conforming at least to the
requirements of FIRREA. The appraisal must be based on the highest and best
use of the mortgaged property and must include an estimate of the current
market value of the property in its current condition. The Seller determines
the loan-to-value ratio of the mortgage loan at the date of origination based
on the value set forth in the appraisal.
Evaluation of Mortgagor. The Seller evaluates the mortgagor and its
principals with respect to credit history and prior experience as an owner
and operator of commercial real estate properties. The evaluation will
generally include obtaining and reviewing a credit report or other reliable
indication of the mortgagor's financial capacity; obtaining and verifying
credit references and/or business and trade references; and obtaining and
reviewing certifications provided by the mortgagor as to prior real estate
experience and current contingent liabilities. Finally, although the mortgage
loans generally are non-recourse in nature, in the case of certain mortgage
loans, the mortgagor and certain principals thereof may be required to assume
legal responsibility for liabilities relating to fraud, misrepresentation,
misappropriation of funds, breach of environmental or hazardous waste
requirements and unauthorized transfer of title to the property. The Seller
evaluates the financial capacity of the mortgagor and such principals to meet
any obligations that may arise with respect to such liabilities.
Environmental Site Assessment. At origination, the Seller either (i)
obtains or updates an environmental site assessment ("ESA") for a Mortgaged
Property prepared by a qualified environmental firm or (ii) obtains an
environmental insurance policy for a Mortgaged Property. If an ESA is
obtained or updated, the Seller reviews the ESA to verify the absence of
reported violations of applicable laws and regulations relating to
environmental protection and hazardous waste. In cases in which the ESA
identifies such violations, the Seller requires the mortgagor to carry out
satisfactory remediation activities prior to the origination of the mortgage
loan, or to establish an operations and maintenance plan and to place
sufficient funds in escrow at the time of origination of the mortgage loan to
complete such remediation within twelve months.
In the case of 21 Mortgage Loans securing 3.1% of the Initial Pool
Balance, environmental insurance was obtained from an affiliate of American
International Group, Inc. and the underlying Mortgaged Property was not
subject to an environmental site assessment. Each environmental insurance
policy insures the trust fund against losses resulting from certain known and
unknown environmental conditions at the related Mortgaged Property during the
applicable policy period. Subject to certain conditions and exclusions, the
insurance policies generally provide coverage against (i) losses resulting
from default under the applicable Mortgage Loan, up to the outstanding
balance of the Mortgage Loan, if on-site environmental conditions are
discovered at the Mortgaged Property during the policy period and no
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foreclosure of the Mortgaged Property has taken place, (ii) losses from
third-party claims against the lender during the policy period for bodily
injury, property damage or clean-up costs resulting from environmental
conditions at or emanating from the Mortgaged Property and (iii) after
foreclosure, costs of clean-up of environmental conditions discovered during
the policy period to the extent required by applicable law, including any
court order or other governmental directive.
Physical Assessment Report. At origination, the Seller obtains a physical
assessment report ("PAR") for each mortgaged property prepared by a qualified
structural engineering firm. The Seller reviews the PAR to verify that the
property is reported to be in satisfactory physical condition, and to
determine the anticipated costs of necessary repair, replacement and major
maintenance or capital expenditure needs over the term of the mortgage loan.
In cases in which the PAR identifies material repairs or replacements needed
immediately, the Seller generally requires the mortgagor to carry out such
repairs or replacements prior to the origination of the mortgage loan, or to
place sufficient funds in escrow at the time of origination of the mortgage
loan to complete such repairs or replacements within not more than twelve
months.
Title Insurance Policy. The mortgagor is required to provide, and the
Seller reviews, a title insurance policy for each mortgaged property. The
title insurance policy must meet the following requirements: (a) the policy
must be written by a title insurer licensed to do business in the
jurisdiction where the mortgaged property is located, (b) the policy must be
in an amount equal to the original principal balance of the mortgage loan,
(c) the protection and benefits must run to the mortgagee and its successors
and assigns, (d) the policy should be written on a standard policy form of
the American Land Title Association or equivalent policy promulgated in the
jurisdiction where the mortgaged property is located and (e) the legal
description of the mortgaged property in the title policy must conform to
that shown on the survey of the mortgaged property, where a survey has been
required.
Property Insurance. The mortgagor is required to provide, and the Seller
reviews, certificates of required insurance with respect to the mortgaged
property. Such insurance generally may include: (1) commercial general
liability insurance for bodily injury or death and property damage; (2) an
"All Risk of Physical Loss" policy; (3) if applicable, boiler and machinery
coverage; (4) if the mortgaged property is located in a flood hazard area,
flood insurance; and (5) such other coverage as the Seller may require based
on the specific characteristics of the mortgaged property.
ADDITIONAL INFORMATION
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates and will be filed, together with the
Pooling and Servicing Agreement, with the Securities and Exchange Commission
within 15 days after the initial issuance of the Offered Certificates.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Mortgage Pass-Through Certificates, Series 2000-C10 (the
"Certificates") will be issued pursuant to the Pooling and Servicing
Agreement and will include the following seven classes of Certificates
designated as the Class A1, Class A2 (together, the "Class A Certificates"),
Class B, Class C, Class D, Class E and Class X Certificates (the "Offered
Certificates"). In addition to the Offered Certificates, the Certificates
will also include the Class F, Class G, Class H, Class J, Class K, Class L,
Class M, Class NR, Class R-I, Class R-II and Class R-III Certificates. Only
the Offered Certificates are offered hereby. The Class Q Certificates will
represent the Subordinate Component of the Suburban Lodge Loan. Unless
otherwise indicated, references in this Prospectus Supplement to the
Certificates or a Class of Certificates are not references to the Class Q
Certificates. See the Executive Summary for a description of some of the
terms of the Offered Certificates. The Certificates represent in the
aggregate the entire beneficial ownership interest in a Trust Fund consisting
of: (i) a pool of fixed rate Mortgage Loans and all payments under and
proceeds of the Mortgage Loans received after the Cut-off Date (exclusive of
payments of principal and interest due on or before the Cut-off Date); (ii)
any Mortgaged Property acquired on behalf of the Trust Fund 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 or Certificate Accounts or any account established in
connection with REO Properties (the "REO Account"); and (iv) the rights of
the mortgagee under all insurance policies with respect to the Mortgage
Loans.
The Offered Certificates (the "DTC Registered Certificates") will be
issued, maintained and transferred on the book-entry records of The
Depository Trust Company ("DTC") and its Participants. The DTC Registered
Certificates (other than the Class X Certificates) will be issued in minimum
denominations of $25,000 and integral multiples of $1 in excess thereof. The
Class X Certificates will be issued in denominations of $100,000 Notional
Amount and integral multiples of $1 Notional Amount in excess thereof.
The DTC Registered Certificates will be represented by one or more
certificates registered in the name of the nominee of DTC. The Company has
been informed by DTC that DTC's nominee will be Cede & Co. ("Cede"). No
person acquiring an interest in the DTC Registered Certificates (a
"Beneficial Owner") will be entitled to receive a Definitive Certificate (as
defined below) representing such person's interest, except as set forth below
under "--Book-Entry Registration of the Offered Certificates -- Definitive
Certificates." Unless and until Definitive Certificates are issued for the
DTC Registered Certificates under the limited circumstances described herein,
all references to actions by Certificateholders with respect to the DTC
Registered Certificates shall refer to actions taken by DTC upon instructions
from its Participants, and all references herein to distributions, notices,
reports and statements to Persons acquiring beneficial ownership interests in
the Certificates (the "Certificateholders") with respect to the DTC
Registered Certificates shall refer to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the DTC Registered
Certificates, for distribution to Beneficial Owners by DTC in accordance with
DTC procedures. The Beneficial Owners may elect to hold their Certificates
through DTC, in the United States, or Cedelbank or the Clearstream system
("Clearstream"), in Europe, through participants of such systems, or
indirectly through organizations which are participants in such systems.
BOOK-ENTRY REGISTRATION OF THE OFFERED CERTIFICATES
Book-Entry Registration. The Offered Certificates will be initially issued
to investors through the book-entry facilities of DTC, Cedelbank or
Clearstream if they are participants of such systems, or indirectly through
organizations which are participants in such systems. As to any such class of
Offered Certificates, the record holder of such Certificates will be DTC's
nominee. Cedelbank and Clearstream will hold omnibus positions on behalf of
their participants through customers' securities accounts in Cedelbank's and
Clearstream's names on the books of their respective depositories (the
"Depositories"), which in turn will hold such positions in customers'
securities accounts in Depositories' names on the books of DTC.
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DTC is a limited-purpose trust company organized under the laws of the
State of New York, which holds securities for its participating organizations
("DTC Participants," and together with the Cedelbank and Clearstream
participating organizations, the "Participants") and facilitates the
clearance and settlement of securities transactions between Participants
through electronic book-entry changes in the accounts of Participants.
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations and may include certain other organizations. Other
institutions that are not Participants but clear through or maintain a
custodial relationship with Participants (such institutions, "Indirect
Participants") have indirect access to DTC's clearance system.
Because of time zone differences, the securities account of a Cedelbank or
Clearstream Participant (each as defined below) as a result of a transaction
with a DTC Participant (other than a depository holding on behalf of
Cedelbank or Clearstream) will be credited during the securities settlement
processing day (which must be a business day for Cedelbank or Clearstream, as
the case may be) immediately following the DTC settlement date. Such credits
or any transactions in such securities settled during such processing will be
reported to the relevant Clearstream Participant or Cedelbank Participant on
such business day. Cash received in Cedelbank or Clearstream as a result of
sales of securities by or through a Cedelbank Participant or Clearstream
Participant to a DTC Participant (other than the depository for Cedelbank or
Clearstream) will be received with value on the DTC settlement date, but will
be available in the relevant Cedelbank or Clearstream cash account only as of
the business day following settlement in DTC.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedelbank Participants or Clearstream Participants will
occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Participants or Clearstream Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the relevant Depositories; 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 and within its established
deadlines (European time). The relevant European international clearing
system will, if the transaction meets its settlement requirements, deliver
instructions to its Depository to take action to effect final settlement on
its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same day funds
settlement applicable to DTC. Cedelbank Participants or Clearstream
Participants may not deliver instructions directly to the Depositories.
Cedelbank, as a professional depository, holds securities for its
participating organizations ("Cedelbank Participants") and facilitates the
clearance and settlement of securities transactions between Cedelbank
Participants through electronic book-entry changes in accounts of Cedelbank
Participants, thereby eliminating the need for physical movement of
certificates. As a professional depository, Cedelbank is subject to
regulation by the Luxembourg Monetary Institute.
Clearstream was created to hold securities for participants of Clearstream
("Clearstream Participants") and to clear and settle transactions between
Clearstream Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities
and cash. The "Clearstream Operator" is the Belgian branch of a New York
banking corporation which is a member bank of the Federal Reserve System.
Clearstream is under contract with Clearstream Clearance Systems S.C., a
Belgian co-operative corporation (the "Clearance Cooperative"). All
operations are conducted by the Clearstream Operator, and all Clearstream
securities clearance accounts and Clearstream cash accounts are accounts with
the Clearstream Operator, not the Clearance Cooperative. The Clearance
Cooperative establishes policies for Clearstream on behalf of Clearstream
Participants. As such, it is regulated and examined by the Board of Governors
of the Federal Reserve System and the New York State Banking Department, as
well as the Belgian Banking Commission. Securities clearance accounts and
cash accounts with the Clearstream Operator are governed by the Terms and
Conditions Governing Use of Clearstream
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and the related Operating Procedures of the Clearstream System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Clearstream,
withdrawals of securities and cash from Clearstream, and receipts of payments
with respect to securities in Clearstream. All securities in Clearstream are
held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts.
Distributions in respect of the DTC Registered Certificates will be
forwarded by the Trustee to DTC, and DTC will be responsible for forwarding
such payments to Participants, each of which will be responsible for
disbursing such payments to the Beneficial Owners it represents or, if
applicable, to Indirect Participants. Accordingly, Beneficial Owners may
experience delays in the receipt of payments in respect of their
Certificates. Under DTC's procedures, DTC will take actions permitted to be
taken by holders of any class of DTC Registered Certificates under the
Pooling and Servicing Agreement only at the direction of one or more
Participants to whose account the DTC Registered Certificates are credited
and whose aggregate holdings represent no less than any minimum amount of
Percentage Interests or voting rights required therefor. DTC may take
conflicting actions with respect to any action of Certificateholders of any
class to the extent that Participants authorize such actions. None of the
Depositor, the Trustee or any of their respective affiliates will have any
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the DTC Registered Certificates
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Beneficial Owners will not be recognized by the Trustee as
Certificateholders, as such term is used in the Pooling and Servicing
Agreement; provided, however, that Beneficial Owners will be permitted to
request and receive information furnished to Certificateholders by the
Trustee subject to receipt by the Trustee of a certification in form and
substance acceptable to the Trustee stating that the person requesting such
information is a Beneficial Owner. Otherwise, the Beneficial Owners will be
permitted to receive information furnished to Certificateholders and to
exercise the rights of Certificateholders only indirectly through DTC, its
Participants and Indirect Participants.
Although DTC, Cedelbank and Clearstream have agreed to the foregoing
procedures in order to facilitate transfers of the Offered Certificates among
Participants of DTC, Cedelbank and Clearstream, they are under no obligation
to perform or continue to perform such procedures and such procedures may be
discontinued at any time.
See Annex G for additional information regarding global clearance,
settlement and tax documentation procedures.
Definitive Certificates. Certificates initially issued in book-entry form
will be issued in fully registered, certificated form to Beneficial Owners or
their nominees ("Definitive Certificates"), 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 properly discharge its responsibilities as
depository with respect to the 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.
Upon the occurrence of an event described in the preceding paragraph, the
Trustee is required to notify, through DTC, Participants who have ownership
of DTC Registered Certificates as indicated on the records of DTC of the
availability of Definitive Certificates for their DTC Registered
Certificates. Upon surrender by DTC of the definitive certificates
representing the DTC Registered Certificates and upon receipt of instructions
from DTC for re-registration, the Trustee will reissue the DTC Registered
Certificates as Definitive Certificates issued in the respective principal
amounts owned by individual Beneficial Owners, and thereafter the Trustee
will recognize the holders of such Definitive Certificates as
Certificateholders under the Pooling and Servicing Agreement.
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 October 2000 (each, a
"Distribution Date"). All distributions (other than the final distribution on
any
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Certificate), including distributions on the Class Q Certificates, 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 month
preceding the month in which the related Distribution Date occurs (the
"Record Date"). Such distributions will be made by wire transfer in
immediately available funds to the account specified by the Certificateholder
at a bank or other entity having appropriate facilities therefor, if such
Certificateholder will have provided the Trustee with wiring instructions as
provided in the Pooling and Servicing Agreement or, if no such instructions
have been provided, by check mailed to the address listed for such
Certificateholder on the Certificate Register. The final distribution on any
Certificate will be made in like manner, but only upon presentment or
surrender 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 Certificate is equal to the initial denomination thereof as of the
Delivery Date, divided by the initial Class Balance or Notional Amount, as
applicable, for such class. The aggregate distribution to be made on the
Certificates on any Distribution Date shall equal the Available Distribution
Amount.
The "Available Distribution Amount" for any Distribution Date is an amount
equal to (a) the sum of (i) the amount on deposit in the Collection Account
(as defined herein) as of the close of business on the related Determination
Date, which amount will include scheduled payments on the Mortgage Loans due
on or prior to the Due Date occurring in the Remittance Period immediately
preceding, and collected as of, such Determination Date (to the extent not
distributed on previous Distribution Dates) and unscheduled payments and
other collections on the Mortgage Loans collected during the related
Remittance Period, (ii) the aggregate amount of any P&I Advances made by a
Servicer or the Trustee in respect of such Distribution Date and payments
made by the Master Servicer to cover related Prepayment Interest Shortfalls
(not otherwise included in clause (i) above) and (iii) for Distribution Dates
occurring in March the Withheld Amounts for the immediately preceding
January, if applicable, and February net of (b) the portion of the amount
described in clause (a)(i) hereof that represents (i) Monthly Payments due on
a Due Date subsequent to the end of the related Remittance Period, (ii) any
amounts payable or reimbursable therefrom to any Servicer or the Trustee,
(iii) any servicing and trustee compensation, (iv) for Distribution Dates
occurring in February and, if in a year that is not a leap year, January, the
Withheld Amounts (as defined herein) with respect to the Interest Reserve
Loans (as defined herein) to be deposited into the Interest Reserve Account
(as defined herein) and held for future distribution or (v) any amounts
payable with respect to the Subordinate Component of the Suburban Lodge Loan
(see "The Mortgage Pool -- The Suburban Lodge Loan").
Pass-Through Rate on the Offered Certificates. The rate per annum at which
any class of Certificates accrues interest from time to time is herein
referred to as its "Pass-Through Rate."
The Pass-Through Rate for each class of Certificates (except the Class X
Certificates) will be equal to either a fixed rate or a rate based on the
weighted average of the remittance rates on the Mortgage Loans. The
Pass-Through Rate on the Class X Certificates for the initial Distribution
Date will be approximately % per annum. The "Remittance Rate" for any
Mortgage Loan is equal to the excess of the Mortgage Interest Rate thereon
(without giving effect to any modification or other reduction thereof
following the Cut-off Date) over the sum of the applicable Master Servicing
Fee Rate and the Trustee Fee Rate; provided, however, that with respect to
each Interest Reserve Loan, (i) the Remittance 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 Remittance 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. See "--Interest Reserve Account" herein. For purposes of
calculating the Remittance Rate, the Mortgage Interest Rate for each of the
Mortgage Loans which provide for the computation of interest other than on
the basis of a 360-day year consisting of twelve 30-day months (a "30/360
basis") (that is the basis on which interest on the Certificates accrues)
will be adjusted to reflect that difference.
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Interest Distributions on the Certificates. Subject to the distribution of
the Principal Distribution Amount to the holders of classes of Certificates
of a higher priority, if any, as described under "Priority of Distributions"
below, holders of each class of Certificates will be entitled to receive on
each Distribution Date, to the extent of the Available Distribution Amount
for such Distribution Date (net of any Net Prepayment Premium) (the "Adjusted
Available Distribution Amount"), distributions allocable to interest in an
amount (the "Interest Distribution Amount") equal to (a) the sum of (i)
interest accrued during the period from and including the first day of the
month preceding the month of the Distribution Date (or from the Cut-off Date
in the case of the initial Distribution Date) to and including the last day
of the month preceding the month of the Distribution Date (calculated on the
basis of a 360-day year consisting of twelve 30-day months) on the Class
Balance (or the Notional Amount, in the case of the Class X Certificates) of
such class of Certificates outstanding immediately prior to such Distribution
Date, at the then-applicable Pass-Through Rate (the "Interest Accrual
Amount"), and (ii) any unpaid Interest Distribution Amount shortfall for a
prior Distribution Date together with interest thereon, less (b) such class'
pro rata share, based on the Interest Accrual Amount, of any interest
shortfall not related to a Mortgagor delinquency or default, such as
Prepayment Interest Shortfalls (as defined herein) and shortfalls associated
with exemptions provided by the Relief Act (as defined in the Prospectus).
The "Notional Amount" of the Class X Certificates will equal the aggregate of
the Class Balances of all the Private Certificates. The Notional Amount does
not entitle the Class X to any distributions of principal. If the Adjusted
Available Distribution Amount for any Distribution Date is less than the
Interest Distribution Amount for such Distribution Date, the shortfall will
be part of the Interest Distribution Amount distributable to holders of
Certificates affected by such shortfall on subsequent Distribution Dates. Any
such shortfall will bear interest at the Pass-Through Rate in effect for
subsequent Distribution Dates.
In addition, to the extent not necessary to reimburse the Master Servicer
for reductions in its compensation to cover Prepayment Interest Shortfalls,
each class of Certificates (other than the Class X Certificates) will receive
on each Distribution Date the product of (a) any Allocated Net Prepayment
Premium (as defined below) paid with respect to the Mortgage Loans if such
Allocated Net Prepayment Premium is calculated by reference to a U.S.
Treasury rate, (b) the related Class Prepayment Fraction and (c) the related
Allocation Fraction. On each Distribution Date, the Allocated Net Prepayment
Premium not payable to the Master Servicer or the holders of a class of
Certificates, other than the Class X Certificates, will be paid to the
holders of the Class X Certificates. On each Distribution Date, any Allocated
Net Prepayment Premium not payable to the Master Servicer or the holders of
the Offered Certificates will be paid the holders of one or more classes of
the Private Certificates. The "Class Prepayment Fraction" for any class of
Offered Certificates and any Distribution Date will equal a fraction the
numerator of which is the amount of principal paid to such class in reduction
of the Class Balance thereof on such Distribution Date and the denominator of
which is the amount of principal paid to all classes of Certificates in
reduction of their respective Class Balances on such Distribution Date. The
"Allocation Fraction" for any class of Offered Certificates, any Mortgage
Loan and any Distribution Date will equal a fraction (not greater than one
and not less than zero) (x) the numerator of which is the excess of (a) the
Pass-Through Rate of such class of Offered Certificates over (b) the discount
rate used to calculate the related Prepayment Premium and (y) the denominator
of which is the excess of (a) the Mortgage Interest Rate on the related
Mortgage Loan over (b) the discount rate referenced in clause (x) above. To
the extent not necessary to reimburse the Master Servicer, as described
above, any Allocated Net Prepayment Premium paid with respect to a Mortgage
Loan which is not calculated by reference to a U.S. Treasury rate will be
distributed solely to the holders of the Class X Certificates.
To the extent any Mortgage Loan is prepaid in full or in part between a
Determination Date and the related Due Date immediately following such
Determination Date, an interest shortfall may result on the second
Distribution Date following such Determination Date because interest on
prepayments in full or in part will only accrue to the date of payment (such
shortfall, a "Prepayment Interest Shortfall"). To the extent any Mortgage
Loan is prepaid in full or in part between the related Due Date and the
Determination Date immediately following such Due Date, the interest paid in
connection with such prepayment will be included in the Available
Distribution Amount for the immediately following Distribution Date (the
"Prepayment Interest Excess"). If a Mortgage Loan is prepaid in full or in
part
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during any Remittance Period, any related Prepayment Interest Shortfall shall
be offset to the extent of any Prepayment Interest Excess and any Prepayment
Premium collected during such Remittance Period. If the Prepayment Interest
Shortfall for any Remittance Period exceeds any Prepayment Interest Excess
and any Prepayment Premiums collected during such period, such shortfall
shall only be offset by an amount up to the portion of the Master Servicing
Fee payable to the Master Servicer on the related Distribution Date
calculated assuming a Master Servicing Fee Rate of 0.02% per annum. To the
extent that any such shortfall shall have been offset by a portion of the
Master Servicing Fee, the Master Servicer shall be entitled to any excess of
the Prepayment Interest Excess and Prepayment Premiums over the Prepayment
Interest Shortfall for any subsequent period. See "Description of the
Mortgage Pool -the Suburban Lodge Loan" for a description of the allocation
of any Prepayment Interest Shortfalls with respect thereto.
The "Net Prepayment Premium" with respect to any Distribution Date will
equal the excess of (a) all Prepayment Premiums received during the related
Remittance Period over (b) (i) all Prepayment Interest Shortfalls to the
extent not offset by all Prepayment Interest Excesses for such Remittance
Period and (ii) any amounts paid to the Master Servicer pursuant to the last
sentence of the preceding paragraph.
The "Allocated Net Prepayment Premium" with respect to any Distribution
Date and any Mortgage Loan, will equal the excess (but not less than zero) of
(a) any Prepayment Premium on such Mortgage Loan received prior to the
business day preceding the Distribution Date and not previously distributed
over (b) the pro rata portion, based on the Prepayment Premium collected on
each of the Mortgage Loans during the same period, of the sum of (i) the
excess (but not less than zero) of any Prepayment Interest Shortfall over any
Prepayment Interest Excess for such Distribution Date and (ii) any amounts
required to reimburse the Master Servicer on such Distribution Date for
reductions in its compensation.
The Pass-Through Rate on the Certificates will not be affected by the
deferral of interest or reduction of the Mortgage Interest Rate on any
Mortgage Loan by the Special Servicer or by the occurrence of either such
event in connection with any bankruptcy proceeding involving the related
Mortgagor. The amount of any resulting interest shortfall will be allocated
to the Certificates, in the order described under "Subordination" below.
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 which does not provide for the computation of interest on
a 30/360 basis (the "Interest Reserve Loans"), an amount equal to one day's
interest at the related Mortgage Interest Rate (net of the Master Servicing
Fee payable therefrom) on the respective Stated Principal Balances 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.
Principal Distributions on the Offered Certificates. Holders of a class of
Certificates will be entitled to receive on each Distribution Date in
reduction of the related Class Balance in the order described herein until
the related Class Balance is reduced to zero, to the extent of the balance of
the Adjusted Available Distribution Amount remaining after the payment of the
Interest Distribution Amount for such Distribution Date for such class of
Certificates and each other class of Certificates with a higher priority for
interest payments (as described under "Priority of Distributions" below),
distributions in respect of principal in an amount (the "Principal
Distribution Amount") equal to, in each case to the extent not previously
advanced, the aggregate of (i) all scheduled payments of principal (other
than Balloon Payments) due on the Mortgage Loans on the related Due Date
whether or not received and all scheduled Balloon Payments received on or
before the related Determination Date, (ii) if the scheduled Balloon Payment
is not received, with respect to any Balloon Mortgage Loans on and after the
date on which the related Mortgage Loan becomes due (the "Maturity Date")
thereof, the principal payment that would
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need to be received in the related month in order to fully amortize such
Balloon Mortgage Loan with level monthly payments by the end of the term used
to derive scheduled payments of principal due prior to the related Maturity
Date, (iii) any unscheduled principal recoveries received during the related
Remittance Period in respect of the Mortgage Loans, whether in the form of
liquidation proceeds, insurance proceeds, condemnation proceeds or amounts
received as a result of the purchase of any Mortgage Loan out of the Trust
Fund and (iv) any other portion of the Adjusted Available Distribution Amount
remaining undistributed after payment of any interest payable on the
Certificates for the related or any prior Distribution Date, including any
principal prepayments received during the related Remittance Period and
Prepayment Interest Excess not offset by any Prepayment Interest Shortfall
occurring during the related Remittance Period or otherwise required to
reimburse the Master Servicer, as described herein, and interest
distributions on the Mortgage Loans, in excess of interest distributions on
the Certificates, resulting from the allocation of certain amounts described
in this clause (iv) to principal distributions on the Certificates. For
purposes of calculating the Principal Distribution Amount for any
Distribution Date, the Principal Distribution Amount will not include amounts
payable to the Subordinate Component. See "Description of the Mortgage Pool
-- The Suburban Lodge Loan." The "Class Balance" for any class of
Certificates on any Distribution Date will equal the initial principal
balance thereof reduced by distributions in reduction thereof and Realized
Losses allocated thereto, as described under "--Subordination" below. The
Class X Certificates do not have a Class Balance and are therefore not
entitled to any principal distributions.
PRIORITY OF DISTRIBUTIONS
The Adjusted Available Distribution Amount for each Distribution Date will
be applied in the following order of priority:
(a) to distributions of the Interest Distribution Amounts for such
Distribution Date on the Class A1, Class A2 and Class X Certificates, pro
rata, based on their respective Interest Distribution Amounts;
(b) to distributions of the Principal Distribution Amount for such
Distribution Date to Class A1 Certificates until the Class Balance thereof
is reduced to zero;
(c) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class A1
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class A2 Certificates, until the Class Balance
thereof is reduced to zero;
(d) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class B Certificates;
(e) to distribution of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class A2
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date to the Class B Certificates, until the Class Balance
thereof is reduced to zero;
(f) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class C Certificates;
(g) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class B
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date to the Class C Certificates until the Class Balance
thereof is reduced to zero;
(h) to the distributions of the Interest Distribution Amount for such
Distribution Date on the Class D Certificates;
(i) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class C
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class D Certificates, until the Class Balance
thereof is reduced to zero;
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(j) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class E Certificates;
(k) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class D
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class E Certificates, until the Class Balance
thereof is reduced to zero;
(l) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class F Certificates;
(m) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class E
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class F Certificates, until the Class Balance
thereof is reduced to zero;
(n) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class G Certificates;
(o) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class F
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class G Certificates, until the Class Balance
thereof is reduced to zero;
(p) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class H Certificates;
(q) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class G
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class H Certificates, until the Class Balance
thereof is reduced to zero;
(r) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class J Certificates;
(s) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class H
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class J Certificates, until the Class Balance
thereof is reduced to zero;
(t) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class K Certificates;
(u) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class J
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class K Certificates, until the Class Balance
thereof is reduced to zero;
(v) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class L Certificates;
(w) to distribution of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class K
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class L Certificates, until the Class Balance
thereof is reduced to zero;
(x) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class M Certificates;
(y) to distributions of the Principal Distribution Amount (or the portion
thereof remaining after the distribution thereof to the Class L
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class M Certificates, until the Class Balance
thereof is reduced to zero;
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(z) to distributions of the Interest Distribution Amount for such
Distribution Date on the Class NR Certificates; and
(aa) to distributions of the Principal Distribution Amount (or the
portion thereof remaining after the distribution thereof to the Class M
Certificates in reduction of the Class Balance thereof to zero) for such
Distribution Date on the Class NR Certificates, until the Class Balance
thereof is reduced to zero.
To the extent only the Class A1 and Class A2 Certificates are outstanding
on any Distribution Date, the Adjusted Available Distribution Amount
remaining after application pursuant to clause (a) above shall be applied to
distribution of the Principal Distribution Amount for such Distribution Date
to the Class A1 and Class A2 Certificates pro rata based on their respective
Class Balances.
PRIVATE CERTIFICATES
The Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class
NR, Class R-I, Class R-II and Class R-III Certificates (the "Private
Certificates") are not offered hereby. The Pass-Through Rates on the Class F,
Class G, Class H, Class J, Class K, Class L, Class M and Class NR
Certificates for any Distribution Date will equal %, %, %, %, % and
%, respectively, per annum. The Class Balances for the Class F, Class G,
Class H, Class J, Class K, Class L, Class M and Class NR Certificates will
equal the amounts set forth in "Executive Summary."
The Class R-I, Class R-II and Class R-III Certificates will not have a
Pass-Through Rate or a Class Balance and are not entitled to distribution of
principal or interest.
The Class P Certificates are not offered hereby. The Class P Certificates
will receive any distribution on the Subordinate Component of the Suburban
Lodge Loan. See "Description of the Mortgage Pool -- The Suburban Lodge
Loan."
An affiliate of the Depositor intends to purchase and make an investment
in the Private Certificates. The Private Certificates may be sold in whole or
in part by such affiliate at any time and from time to time.
SUBORDINATION
Neither the Offered Certificates nor the Mortgage Loans are insured or
guaranteed against losses suffered on the Mortgage Loans by any government
agency or instrumentality or by the Depositor, the Seller, the Trustee, the
Master Servicer, the Special Servicer, the Underwriters, or any affiliate
thereof.
In addition to the payment priorities described under "--Priority of
Distributions" above, certain Certificates will be subordinated to other
Certificates with respect to the allocation of Realized Losses. Except as
described below, Realized Losses on the Mortgage Loans will be allocated,
first, to the Class NR, Class M, Class L, Class K, Class J, Class H, Class G
and Class F Certificates, in that order, second, to the Class E Certificates,
third, to the Class D Certificates, fourth, to the Class C Certificates,
fifth, to the Class B Certificates and thereafter, to the Class A1 and Class
A2 Certificates, on a pro rata basis, based on Class Balance, in each case
until the related Class Balance is reduced to zero. Realized Losses will be
allocated to a class of Certificate by reducing its Class Balance on the
Distribution Date in the month following the occurrence of the Realized Loss
by the excess of the aggregate Class Balance of the Certificates over the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect
to all distributions on such Distribution Date.
In addition to Realized Losses, shortfalls will also occur as a result of
each Servicer's and the Trustee's right to receive payments of interest with
respect to unreimbursed advances, the related Special Servicer's right to
compensation with respect to Mortgage Loans which are or have been Specially
Serviced Mortgage Loans and as a result of other Trust Fund expenses. Except
as described below, such shortfalls will be allocated as described above to
the classes of Certificates with the lowest payment priority for purposes of
the application of Available Distribution Amount in the order described
herein.
No Realized Losses on the Suburban Lodge Loan will be allocated to the
amount of the Senior Component until the aggregate amount of these Realized
Losses exceeds the amount of the Subordinate
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Component. Therefore, Realized Losses on the Suburban Lodge Loan will be
allocated solely to the Class P Certificate in reduction of the Class Balance
thereof until reduced to zero. Thereafter Realized Losses on the Suburban
Lodge Loan will be allocated as described above to the other Classes of
Certificates. On the other hand, no Realized Losses on any other Mortgage
Loan will be allocated to the Subordinate Component or the Class P
Certificates at any time. In addition shortfalls with respect to the Suburban
Lodge Loan will be allocated first to the Class P Certificates and then to
the other Classes of Certificates, as described above, and no shortfalls with
respect to other Mortgage Loans will be allocated to the Class P
Certificates.
A "Realized Loss," (a) in the case of any Mortgage Loan described in
clause (a) or clause (b) of the succeeding sentence, is equal to the sum of
(i) the Stated Principal Balance of any Loss Mortgage Loan, (ii) interest
thereon not previously distributed or advanced to Certificateholders through
the last day of the month in which such Mortgage Loan was liquidated, (iii)
any advances made by a Servicer or the Trustee which remain unreimbursed and
(iv) any interest accrued on such advances (see "--Advances" below) as of
such time, reduced by any amounts recovered thereon as of such time and (b),
in the case of any Mortgage Loan described in clause (c) of the succeeding
sentence, is the amount determined to have been permanently forgiven as
described in such clause (c). A "Loss Mortgage Loan" is any Mortgage Loan (a)
which is finally liquidated, (b) with respect to which a determination has
been made that an advance which has been made or would otherwise be required
to be made, is not, or, if made, would not be, recoverable out of proceeds on
such Mortgage Loan or (c) with respect to which a portion of the principal
balance thereof has been permanently forgiven, whether pursuant to a
modification or a valuation resulting from a proceeding initiated under the
Bankruptcy Code. The "Stated Principal Balance" of any Mortgage Loan as of
any date of determination is the principal balance as of the Cut-off Date
minus the sum of (i) the principal portion of each Monthly Payment due on
such Mortgage Loan after the Cut-off Date, to the extent received from the
Mortgagor or advanced and distributed to Certificateholders, (ii) any
unscheduled amounts of principal received with respect to such Mortgage
Loans, to the extent distributed to Certificateholders and (iii) any Realized
Loss previously allocated with respect to such Mortgage Loan.
COLLATERAL VALUE ADJUSTMENT
Within 30 days after the earliest to occur of (i) 90 days after the date
on which an uncured delinquency occurs in respect of a Mortgage Loan, (ii)
the date on which a receiver is appointed in respect of a Mortgaged Property,
(iii) the date on which a Mortgaged Property becomes an REO Property, (iv)
the date on which a borrower declares bankruptcy or (v) the date on which a
change in the payment rate, Mortgage Interest Rate, principal balance,
amortization terms or Maturity Date of any Specially Serviced Mortgage Loan
becomes effective (the earliest of such dates, a "Required Appraisal Date"),
the Special Servicer will use reasonable efforts to obtain an appraisal from
an independent MAI appraiser, (except if an appraisal has been conducted
within the twelve-month period preceding such event) the cost of which shall
be advanced by the Special Servicer and reimbursed thereto from the Trust
Fund. As a result of such appraisal, a Collateral Value Adjustment may
result, which Collateral Value Adjustment will be allocated, for purposes of
determining distributions of interest to the Certificates, in the manner and
priority described below. Notwithstanding the foregoing, a Collateral Value
Adjustment will be zero with respect to such a Mortgage Loan if (i) the event
giving rise to such Collateral Value Adjustment is the extension of the
maturity of such Mortgage Loan, (ii) the payments on such Mortgage Loan were
not delinquent during the twelve-month period immediately preceding such
extension and (iii) the payments on such Mortgage Loan are then current,
provided, that if at any later date there occurs a delinquency in payment
with respect to such Mortgage Loan, the Collateral Value Adjustment will be
recalculated and applied as described above. In addition, in any case, upon
the occurrence of any event giving rise to a subsequent Collateral Value
Adjustment (including the delinquency referred to in the immediately
preceding sentence) more than twelve months after an appraisal was obtained
with respect to a Collateral Value Adjustment, the Special Servicer will
order a new appraisal as described above, within 30 days of the occurrence of
any such event giving rise to a subsequent Collateral Value Adjustment and
will adjust the amount of the Collateral Value Adjustment in accordance
therewith.
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The "Collateral Value Adjustment" with respect to any Mortgage Loan will
be an amount equal to the excess of (a) the principal balance of such
Mortgage Loan over (b) the excess of (i) 90% of the current appraised value
of the related Mortgaged Property as determined by an independent MAI
appraisal of such Mortgaged Property over (ii) the sum of (A) to the extent
not previously advanced by a Servicer, all unpaid interest on such Mortgage
Loan at a per annum rate equal to the Mortgage Interest Rate, (B) all
unreimbursed Advances and interest thereon, (C) all currently due and
delinquent real estate taxes and assessments, insurance premiums and, if
applicable, ground rents in respect of such Mortgaged Property (net of any
amount escrowed or otherwise available for payment of the amount due on such
Mortgage Loan) and (D) the Master Servicer's good faith estimate of the items
in clauses (B) and (C) that will be incurred during the next twelve months.
The excess of the principal balance of any Mortgage Loan over the related
Collateral Value Adjustment is referred to herein as the "Adjusted Collateral
Value." A Collateral Value Adjustment may result in a reduction of the
Interest Distribution Amount of one or more classes of Certificates, but
shall not be a permanent reduction of the Class Balance (or Notional Amount)
of any class of Certificates prior to the occurrence of a Realized Loss.
The resulting Collateral Value Adjustment for a Mortgage Loan will be
netted from the related principal balance for purposes of calculating P & I
Advances. This will reduce any P&I Advance otherwise required for such
Mortgage Loan. This will have the effect of reducing the amount of interest
available for distribution to the Certificates (other than the Class A and
Class X Certificates) in reverse alphabetical order of the Classes. See
"--Advances" below. In addition, any Collateral Value Adjustment will be
allocated to the Certificates (other than the Class A and Class X
Certificates) in reverse alphabetical order of the Classes for purposes of
determining Voting Rights and the Monitoring Certificateholders. See
"Description of the Pooling and Servicing Agreement -- Voting Rights" below
and "Master Servicer and Special Servicer -- Responsibilities of the Special
Servicer" below. The Special Servicer is required, within 30 days of each
anniversary of the Required Appraisal Date, to order an update of the prior
appraisal (the cost of which will be advanced by the Special Servicer and
reimbursed thereto from the Trust Fund). The Special Servicer will determine
and report to the Master Servicer and the Trustee the updated appraisal. A
lower appraisal value will increase the Collateral Value Adjustment. Such
increase will further reduce any P&I Advances for the related Mortgage Loan.
A higher appraised value will reverse the Collateral Value Adjustment by the
amount of the reported increase.
See "Description of the Mortgage Pool -- The Suburban Lodge Loan" for a
discussion of the effect of a Collateral Value Adjustment on the Suburban
Lodge Loan.
ADVANCES
On the business day immediately preceding each Distribution Date, the
Master Servicer will be obligated to make advances out of its own funds or
funds held in the Collection Account (as defined herein) that are not
required to be part of the Available Distribution Amount for such
Distribution Date (each, a "P&I Advance"), in an amount equal to the excess
of all Monthly Payments (net of the Master Servicing Fee) due over the amount
actually received, subject to the limitations described herein. See
"Description of the Mortgage Pool -- The Suburban Lodge Loan" for a
description of advances with respect to the Suburban Lodge Loan.
Notwithstanding the foregoing, if a Collateral Value Adjustment has been
made with respect to any Mortgage Loan, then, with respect to the
Distribution Date immediately following the date of such determination and
with respect to each subsequent Distribution Date, to the extent such
Collateral Value Adjustment has not been reversed, in the event of subsequent
delinquencies thereon, the interest portion of the P&I Advance in respect of
such Mortgage Loan will be reduced (no reduction to be made in the principal
portion, however) to equal the product of (i) the amount of the interest
portion of the P&I Advance that would otherwise be required to be made for
the Distribution Date without regard to this sentence, multiplied by (ii) a
fraction, the numerator of which is equal to the Stated Principal Balance of
such Mortgage Loan, net of such Collateral Value Adjustment, and the
denominator of which is equal to the Stated Principal Balance of such
Mortgage Loan. See "--Subordination" above.
To the extent that the Master Servicer fails to make a P&I Advance
required of it prior to such Distribution Date, the Trustee shall make such
required P&I Advance on such Distribution Date, as
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provided in the Pooling and Servicing Agreement. In addition, the Master
Servicer will be required to advance certain property related expenses. The
Servicers generally may not advance any amounts, other than P&I Advances
advanced by the Master Servicer, unless such advance (a "Property Protection
Advance") is contemplated in the related Asset Strategy Report (as defined
herein) for the related Mortgage Loan or such advance is for one of several
purposes specified in the Pooling and Servicing Agreement as "Property
Protection Expenses." All such advances with interest thereon will be
reimbursable to a Servicer and the Trustee from late payments, insurance
proceeds, liquidation proceeds, condemnation proceeds or amounts paid in
connection with the purchase of such Mortgage Loan to the extent such amounts
are not required to be otherwise applied pursuant to the terms of the related
Mortgage Loan or, as to any such advance that is deemed not otherwise
recoverable, from any amounts required to be deposited in the Collection
Account. Notwithstanding the foregoing, a Servicer and the Trustee will be
obligated to make any such advance only to the extent that it determines in
its reasonable good faith judgment that such advance, if made, would be
recoverable out of late payments, insurance proceeds, liquidations,
condemnation proceeds or certain other collections on the related Mortgage
Loan. Neither the Master Servicer nor the Trustee will be required to advance
the full amount of any Balloon Payment not made by the related Mortgagor. To
the extent the Master Servicer and the Trustee are required to make a P&I
Advance on and after the Due Date for such Balloon Payment, such P&I Advance
shall not exceed the amount necessary to fully amortize the related Mortgage
Loan over the period used for purposes of calculating the scheduled monthly
payments thereon prior to the related Maturity Date. Any failure by the
Master Servicer to make a P&I Advance or a Servicer to make a Property
Protection Advance as required under the Pooling and Servicing Agreement will
constitute an event of default thereunder, in which case the Trustee will be
obligated to make any required advance, in accordance with the terms of the
Pooling and Servicing Agreement. The Trustee will be entitled to a
reimbursement for each P&I Advance or Property Protection Advance (together
with interest thereon) made by it in the same manner and to the same extent,
but prior to, the respective Servicer.
Each Servicer and the Trustee shall be entitled to interest on the
aggregate amount of all advances made by such Servicer or the Trustee at a
per annum rate equal to the Prime Rate reported in The Wall Street Journal.
See "Risk Factors -- Delinquencies Will Entitle Servicer to Receive Certain
Additional Compensation Which Takes Precedence Over Your Right to Receive
Distributions" herein.
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CERTAIN PREPAYMENT, MATURITY AND YIELD CONSIDERATIONS
GENERAL
The yield to maturity on the Offered Certificates will be affected by the
rate of principal payments on the Mortgage Loans including, for this purpose,
prepayments, which may include amounts received by virtue of the
curtailments, voluntary repayment in full, repurchases by the Seller,
condemnation or casualty with respect to the Mortgaged Property or
foreclosure pursuant to a default on a Mortgage Loan ("Prepayment"). The rate
of principal payments on the Offered Certificates will correspond to the rate
of principal payments (including prepayments) on the related Mortgage Loans.
Each Mortgage Loan either prohibits voluntary prepayments during a certain
number of years following the origination thereof and/or allows the related
Mortgagor to prepay the principal balance thereof in whole or in part during
a certain number of years following the origination if accompanied by payment
of a Prepayment Premium. See Annex A hereto and the table entitled
"Prepayment Protection" under "Description of the Mortgage Pool -- Certain
Characteristics of the Mortgage Loans" herein. Any Net Prepayment Premium
collected on a Mortgage Loan will be distributed to the holders of the
Certificates as described herein. See "Risk Factors -- Prepayments Will
Affect Your Yield" herein, "Description of the Certificates -- Distributions
-- Interest Distributions on the Certificates" and "Certain Prepayment,
Maturity and Yield Considerations" herein, and "Yield Considerations" in the
Prospectus.
The yield to maturity on each class of the Offered Certificates will
depend on, among other things, the rate and timing of principal payments
(including prepayments, defaults, liquidations and purchases of Mortgage
Loans due to a breach of a representation and warranty) on the Mortgage Loans
and the allocation thereof to reduce the Class Balance or Notional Amount of
such class and the collection and allocation of any Prepayment Premium
thereon. The yield to investors on any Class of Offered Certificates will be
adversely affected by any allocation thereto of Prepayment Interest
Shortfalls on the Mortgage Loans, which may result from the distribution of
interest only to the date of a prepayment occurring during any month
following the related Determination Date (rather than a full month's
interest) to the extent any such interest shortfall is not offset by
Prepayment Premiums, any Prepayment Interest Excess or the Master Servicing
Fee for such Distribution Date.
The Pass-Through Rate for the Offered Certificates will be either a fixed
rate or a rate based on the weighted average of the Remittance Rates on the
Mortgage Loans. The Pass-Through Rate for the Class X Certificates for any
Distribution Date will be variable and will be based on the weighted average
Remittance Rates on the Mortgage Loans for such Distribution Date.
Accordingly, the yield on the Offered Certificates, to the extent the related
Pass-Through Rate is calculated based on the weighted average of the
Remittance Rates, 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 Remittance Rates could result in a reduction in the weighted average
of the Remittance Rates on the Mortgage Loans reducing the Pass-Through Rates
on such classes of Offered Certificates.
See "Description of the Certificates -- Pass-Through Rates" and
"Description of the Mortgage Pool -- Certain Characteristics of the Mortgage
Loans" herein.
ARD Loans may be prepaid in full on or after the Anticipated Repayment
Date without the payment of any Prepayment Premium. Excess Cash Flow on an
ARD Loan will be applied to reduce the principal thereof after its
Anticipated Repayment Date and the related Mortgage Interest Rate will be
reset at the related Revised Rate. There can be no assurance that any of such
Mortgage Loan will be prepaid on that date or any date prior to maturity. The
failure to pay an ARD Loan by the related Anticipated Repayment Date is not
an event of default.
In general, if a class of Offered Certificates is purchased at a premium
and principal distributions thereon occur at a rate faster than anticipated
at the time of purchase, the investor's actual yield to maturity will be
lower than that assumed at the time of purchase. Conversely, if a class of
Offered
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Certificates is purchased at a discount and principal distributions thereon
occur at a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that assumed at the
time of purchase.
If a Mortgage Loan becomes a Specially Serviced Mortgage Loan, the Special
Servicer may adopt a servicing strategy which affects the yield to maturity
of one or more classes of Offered Certificates.
The "Rated Final Distribution Date" for the Certificates will be the
Distribution Date in August 2032, which is the first Distribution Date
succeeding the second anniversary of the date at which all the Mortgage Loans
are scheduled to have zero balances, assuming no prepayments, defaults or
delinquencies, and that the Mortgage Loans which are Balloon Loans or ARD
Loans fully amortize according to their amortization schedule without a
Balloon Payment or final payment on the Anticipated Repayment Date,
respectively.
WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES
Weighted average life refers to the average amount of time from the date
of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average life of the Offered
Certificates will be influenced by the rate at which principal payments
(including scheduled payments, principal prepayments, condemnation proceeds
and payments made pursuant to any applicable policies of insurance) on the
Mortgage Loans are made. Principal payments on the Mortgage Loans may be in
the form of scheduled amortization or prepayments (for this purpose, the term
"prepayment" includes prepayments, partial prepayments and liquidations due
to a default or other dispositions of the Mortgage Loans).
Prepayments on loans are commonly measured relative to a prepayment
standard or model, such as the constant prepayment rate prepayment model
("CPR"). CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans. Neither CPR 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 pool of loans,
including the Mortgage Loans.
The table of Percent of Initial Class Balance Outstanding for each class
of the Offered Certificates at each CPR set forth below indicates the
weighted average life of such Certificates and sets forth the percentage of
the initial principal amount of such Certificates that would be outstanding
after each of the dates shown at the indicated CPR. The table has been
prepared on the basis of the characteristics of the Mortgage Loans in Annex A
and on the basis of the following assumptions: (i) the Mortgage Loans prepay
at the indicated CPR; (ii) the Maturity Date of each of the Balloon Mortgage
Loans is not extended; (iii) distributions on the Offered Certificates are
received in cash, on the 15th day of each month, commencing in October 2000;
(iv) no defaults or delinquencies in, or modifications, waivers or amendments
respecting, the payment by the Mortgagors of principal and interest on the
Mortgage Loans occur; (v) prepayments represent payment in full of individual
Mortgage Loans and are received on the respective Due Dates and include a
month's interest thereon; (vi) there are no repurchases of Mortgage Loans due
to breaches of any representation and warranty, or pursuant to an optional
termination as described under "Description of the Pooling and Servicing
Agreement --Termination" or otherwise; (vii) the Offered Certificates are
purchased on September 25, 2000; (viii) all of the ARD Loans are fully
prepaid on their related Anticipated Repayment Date and all of the other
Mortgage Loans are paid in full on their Maturity Date; and (ix) any
Prepayment Premium payable pursuant to a Mortgage Loan and not calculated by
reference to a U.S. rate is collected.
Variations in the actual prepayment experience and the balance of the
Mortgage Loans that prepay may increase or decrease the percentage of initial
Class Balance (and weighted average life) shown in the following table. Such
variations may occur even if the average prepayment experience of all such
Mortgage Loans is the same as any of the specified assumptions.
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<PAGE>
PERCENT OF INITIAL CLASS BALANCE OUTSTANDING
AT THE FOLLOWING PERCENTAGES OF CPR (1)
<TABLE>
<CAPTION>
CLASS A1 CLASS A2 CLASS B
----------------------------------------------------------------- ---------------------------------
DISTRIBUTION DATE 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% 25% 50% 75% 100%
------------------ ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial
percentage........ 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2001..... 93 93 93 93 93 100 100 100 100 100 100 100 100 100 100
September 2002..... 86 86 86 86 86 100 100 100 100 100 100 100 100 100 100
September 2003..... 78 78 78 78 78 100 100 100 100 100 100 100 100 100 100
September 2004..... 69 69 69 69 69 100 100 100 100 100 100 100 100 100 100
September 2005..... 60 60 60 60 60 100 100 100 100 100 100 100 100 100 100
September 2006..... 49 49 49 49 49 100 100 100 100 100 100 100 100 100 100
September 2007..... 38 38 38 38 38 100 100 100 100 100 100 100 100 100 100
September 2008..... 26 26 26 26 26 100 100 100 100 100 100 100 100 100 100
September 2009..... 0 0 0 0 0 67 65 62 58 22 100 100 100 100 100
September 2010..... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life in years (2)
............... 5.5 5.5 5.5 5.5 5.4 9.1 9.1 9.1 9.1 8.9 9.5 9.5 9.5 9.4 9.2
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D CLASS E
----------------------------------------------------------------- ---------------------------------
DISTRIBUTION DATE 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% 25% 50% 75% 100%
------------------ ----- ----- ----- ----- ------ ----- ----- ----- ----- ------ ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial
percentage........ 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2001..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2002..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2003..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2004..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2005..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2006..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2007..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2008..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2009..... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
September 2010..... 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life in years (2)
............... 9.6 9.6 9.6 9.5 9.3 9.6 9.6 9.6 9.6 9.4 9.6 9.6 9.6 9.6 9.4
</TABLE>
------------
(1) Prepayments are assumed to occur after the Lock-out/Defeasance period
and/or Yield Maintenance penalty period.
(2) The weighted average life of a class of Offered Certificates is
determined by (i) multiplying the amount of each distribution of
principal by the number of years from the date of issuance to the
related Distribution Date, (ii) adding the results and (iii) dividing
the sum by the total principal distributions on such class of Offered
Certificates.
CLASS X CERTIFICATES YIELD CONSIDERATIONS
The following table indicates the sensitivity of the pre-tax yield to
maturity on the Class X Certificates to various constant rates of prepayment
on the Mortgage Loans by projecting the monthly aggregate payments on the
Class X Certificates and computing the corresponding pre-tax yields to
maturity on a corporate bond equivalent basis, based on the assumptions
described in the second paragraph preceding the table entitled "Percent of
Initial Class Balance Outstanding at the Following Percentages of CPR" under
the heading "Certain Prepayment, Maturity and Yield Considerations --
Weighted Average Life of the Offered Certificates" herein, including the
assumptions regarding the performance of the Mortgage Loans which may differ
from the actual performance thereof and assuming the aggregate purchase price
and Pass-Through Rate set forth below and assuming further that the initial
Notional Amount of the Class X Certificates is as set forth herein. Any
differences between such assumptions and the actual characteristics and
performance of the Mortgage Loans and of the 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.
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<PAGE>
PRE-TAX YIELD TO MATURITY OF THE CLASS X CERTIFICATES
<TABLE>
<CAPTION>
ASSUMED
PURCHASE PRICE CPR PREPAYMENT ASSUMPTION RATE (2)
AS A PERCENTAGE ASSUMED ----------------------------------------------
OF THE NOTIONAL AMOUNT PASS-THROUGH RATE (1) 0% 25% 50% 75% 100%
-------------------------- ----------------------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
%.......................... % % % % % %
</TABLE>
------------
(1) Calculated based on the weighted average of the Remittance Rates on the
Mortgage Loans as of the Cut-off Date and the initial weighted average
of the Pass-Through Rates of the Certificates. The Pass-Through Rate on
the Class X Certificates will be subject to adjustment on each
Distribution Date.
(2) Prepayments are assumed to occur after the Lock-out/Defeasance period
and/or Yield Maintenance penalty period.
Each pre-tax yield to maturity set forth in the preceding table was
calculated by determining the monthly discount rate which, when applied to
the assumed stream of cash flows to be paid on the Class X Certificates would
cause the discounted present value of such assumed stream of cash flows to
equal the assumed purchase price listed in the table, and by converting such
monthly rates to semi-annual corporate bond equivalent rates. Accrued
interest is included in the assumed purchase price of the Class X
Certificates and is used in computing the corporate bond equivalent yields
shown. These yields do not take into account the different interest rates at
which investors may be able to reinvest funds received by them as
distributions on the Class X Certificates, and thus do not reflect the return
on any investment in the Class X Certificates when, as applicable, any
reinvestment rates other than the discount rates set forth in the preceding
table are considered.
Notwithstanding the assumed prepayment rates reflected in the preceding
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 table, even if all of the Mortgage Loans prepay at the indicated constant
percentages of CPR over any given time period or over the entire life of the
Certificates.
There can be no assurance that the Mortgage Loans will prepay at any
particular rate or that the yield on the Class X Certificates will conform to
the yields described herein. Moreover, the various remaining terms to
maturity of the Mortgage Loans could produce slower or faster principal
distributions than indicated in the preceding table at the various constant
percentages of CPR specified, even if the weighted average remaining term to
maturity of the Mortgage Loans is as assumed. Investors are urged to make
their investment decisions based on their determinations as to anticipated
rates of prepayment under a variety of scenarios. Investors in the Class X
Certificates should fully consider the risk that an extremely 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 Interest Rates;
thus, the yield on the Class X Certificates will be materially and adversely
affected to a greater extent than the yield on the other Offered Certificates
if the Mortgage Loans with higher Mortgage Interest Rates prepay faster than
the Mortgage Loans with lower Mortgage Rates.
For additional considerations relating to the yield on the Certificates,
see "Yield Considerations" in the Prospectus.
The yield to maturity on the Class X Certificates will be extremely
sensitive to losses on the Mortgage Loans (and the timing thereof) because
any such losses will be allocated to reduce the Class Balance of the
Certificates and therefore will reduce the Notional Amount of the Class X
Certificates.
Investors in the Class X Certificates should fully consider the risk that
Realized Losses on the Mortgage Loans could result in a failure of such
investors to fully recover their investments.
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<PAGE>
MASTER SERVICER AND SPECIAL SERVICER
THE MASTER SERVICER AND THE SPECIAL SERVICER
Midland Loan Services, Inc. will be acting as the Master Servicer under
the Pooling and Servicing Agreement.
Midland Loan Services, L.P. was organized under the laws of Missouri in
1992 as a limited partnership. On April 3, 1998, Midland Loan Services, Inc.
("Midland"), a newly formed, wholly-owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan
Services, L.P. Midland is a real estate financial services company that
provides loan servicing and asset management for large pools of commercial
and multifamily real estate assets. Midland's address is 210 West 10th
Street, 6th Floor, Kansas City, Missouri 64105.
As of August 31, 2000, Midland was servicing approximately 14,000
commercial and multifamily loans with a total principal balance of
approximately $48.8 billion. The collateral for these loans is located in all
50 states, the District of Columbia, Puerto Rico and Canada. Approximately
10,000 of the loans, with a total principal balance of approximately $39.3
billion, pertain to commercial and multifamily mortgage-backed securities.
The portfolio includes multifamily, office, retail, hospitality and other
types of income producing properties. Midland also services newly-originated
loans and loans acquired in the secondary market for issuers of commercial
and multifamily mortgage-backed securities, financial institutions and
investors.
Fitch and Moody's have approved Midland as a master servicer and special
servicer for investment grade-rated commercial and multi-family
mortgage-backed securities. Midland is also a HUD/FHA-approved mortgagee and
a Fannie Mae-approved multifamily loan servicer.
Midland currently maintains an Internet-based investor reporting system,
CMBS Investor Insight (Service Mark), that contains updated performance
information at the portfolio, loan and property levels on the various
commercial mortgage-backed securities transactions that it services.
Certificateholders, prospective transferees and other appropriate parties may
obtain access to CMBS Investor Insight (Service Mark) through Midland's
website, www.midlandls.com. Midland may require registration and the
execution of an access agreement in connection with providing access to CMBS
Investor Insight (Service Mark). Specific questions about portfolio, loan and
property performance may be sent to Midland via e-mail at
[email protected].
The information set forth above concerning the Master Servicer has been
provided by Midland. The Depositor, the Underwriters, the Trustee and the
Seller make no representations or warranties as to its accuracy.
ORIX Real Estate Capital Markets, LLC ("ORECM") will be acting as the
Special Servicer (together, the "Servicers") under the Pooling and Servicing
Agreement. ORECM is a Delaware limited liability company. ORECM manages a
servicing portfolio of commercial and multifamily loans encompassing in
excess of 11,000 assets with an aggregate principal balance, as of June 30,
2000, of approximately $38.5 billion, the collateral for which is located in
50 states, Puerto Rico, the District of Columbia, Canada, the Dominican
Republic and the Virgin Islands. As of June 30, 2000, ORECM served as the
named special servicer on 86 securitized transactions encompassing in excess
of 17,000 loans, with an aggregate principal balance of approximately $54.5
billion. ORECM's servicing operations are located at 1717 Main Street,
Dallas, Texas 75201.
The information set forth above concerning the Special Servicer has been
provided by ORECM. The Depositor, the Underwriters, the Trustee and the
Seller make no representations or warranties as to its accuracy.
RESPONSIBILITIES OF MASTER SERVICER
Under the Pooling and Servicing Agreement, the Master Servicer is required
to service and administer the Mortgage Loans solely on behalf of and in the
best interests of and for the benefit of the Certificateholders, in
accordance with the terms of the Pooling and Servicing Agreement and the
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<PAGE>
Mortgage Loans and to the extent consistent with such terms, with the higher
of (a) the standard of care, skill, prudence and diligence with which the
Master Servicer services and administers mortgage loans that are held for
other portfolios that are similar to the Mortgage Loans and (b) the standard
of care, skill, prudence and diligence with which the Master Servicer
services and administers mortgage loans for its own portfolio that are
similar to the Mortgage Loans, in either case, giving due consideration to
customary and usual standards of practice of prudent institutional
multifamily and commercial mortgage lenders, loan servicers and asset
managers (with respect to the Master Servicer, the "Servicing Standard") and
without regard to (a) any relationship between itself or its affiliates and
any Mortgagor, (b) any ownership of the Certificates, (c) its obligation to
make advances, (d) any debt that it extended to any Mortgagor and (e) any
servicing compensation to which the Master Servicer may be entitled.
The Master Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining (or using
its best efforts to cause the Mortgagor under each Mortgage Loan to maintain)
hazard, business interruption and general liability insurance policies (and,
if applicable, rental interruption policies) as described herein to the
extent such insurance is available at commercially reasonable rates and
filing and settling claims thereunder; maintaining escrow or impoundment
accounts of Mortgagors for payment of taxes, insurance and other items
required to be paid by any Mortgagor pursuant to the Mortgage Loan;
processing, subject to the consent of the Special Servicer, assumptions or
substitutions in accordance with the Servicing Standard; demanding that the
Mortgagor cure delinquencies; inspecting Mortgaged Properties under certain
circumstances; and maintaining records relating to the Mortgage Loans.
RESPONSIBILITIES OF SPECIAL SERVICER
The servicing responsibility on a particular Mortgage Loan will be
generally transferred to the Special Servicer upon the occurrence of certain
servicing transfer events (each, a "Servicing Transfer Event"), including the
following: (i) the Mortgage Loan becomes a "Defaulted Mortgage Loan" because
it is more than 60 days delinquent in whole or in part in respect of any
monthly payment or is more than 30 days delinquent in whole or in part in
respect of the related Balloon Payment; (ii) the related Mortgagor has
entered into or consented to bankruptcy, appointment of a receiver or
conservator or a similar insolvency or similar proceeding, or the Mortgagor
has become the subject of a decree or order for such a proceeding; (iii) the
Master Servicer shall have received notice of the foreclosure or proposed
foreclosure of any other lien on the Mortgaged Property; (iv) the related
Mortgagor admits in writing its inability to pay its debts generally as they
become due, files a petition to take advantage of any applicable insolvency
or reorganization statute, makes an assignment for the benefit of its
creditors, or voluntarily suspends payment of its obligations; (v) any other
default has occurred which has materially and adversely affected the value of
the related Mortgage Loan and has continued unremedied for the applicable
grace period specified in the related Mortgage Note; (vi) the related
Mortgaged Property becomes an REO Property; or (vii) if for any reason an
assumption agreement cannot be entered into upon the transfer by the related
Mortgagor of the Mortgaged Property. A Mortgage Loan serviced by the Special
Servicer is referred to herein as a "Specially Serviced Mortgage Loan." The
Special Servicer will collect certain payments on such Specially Serviced
Mortgage Loans and make certain remittances to, and prepare certain reports
for the Master Servicer with respect to such Mortgage Loans. The Master
Servicer shall have no responsibility for the performance by the Special
Servicer of its duties under the Pooling and Servicing Agreement provided
that the Master Servicer continues to perform certain servicing functions on
such Specially Serviced Mortgage Loans and, based on the information provided
to it by the Special Servicer, prepares certain reports for the Trustee with
respect to such Specially Serviced Mortgage Loans. To the extent that any
Mortgage Loan, in accordance with its original terms or as modified in
accordance with the Pooling and Servicing Agreement, becomes a performing
Mortgage Loan for at least three consecutive months, the Special Servicer
will cease to service such Mortgage Loan.
Under the Pooling and Servicing Agreement the Special Servicer is required
to service, administer and dispose of Specially Serviced Mortgage Loans
solely in the best interests of and for the benefit of the
Certificateholders, in accordance with the Pooling and Servicing Agreement
and the Mortgage Loans and to the extent consistent with such terms, with the
higher of (a) the standard of care, skill, prudence and diligence with which
the Special Servicer services, administers and disposes of, distressed
mortgage loans
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<PAGE>
and related real property that are held for other portfolios that are similar
to the Mortgage Loans, Mortgaged Properties and REO Properties and (b) the
standard of care, skill, prudence and diligence with which the Special
Servicer services, administers and disposes of distressed mortgage loans and
related real property for its own portfolio that are similar to the Mortgage
Loans, Mortgaged Properties and REO Properties, giving due consideration to
customary and usual standards of practice of prudent institutional
multifamily and commercial mortgage lenders, loan servicers and asset
managers, so as to maximize the net present value of recoveries on the
Mortgage Loans (with respect to the Special Servicer, the "Servicing
Standard") and without regard to (a) any relationship between itself or its
Affiliates and any Mortgagor, (b) any ownership of the Certificates, (c) any
debt that it extended to any Mortgagor and (d) any servicing compensation to
which the Special Servicer may be entitled.
The Special Servicer, on behalf of the Trust Fund, may at any time
institute foreclosure proceedings, exercise any power of sale contained in
any Mortgage Note, obtain a deed in lieu of foreclosure, or otherwise
acquire, on behalf of the Trust Fund, title to a Mortgaged Property securing
a Specially Serviced Mortgage Loan by operation of law or otherwise, if such
action is consistent with the Servicing Standard. The Special Servicer may
not acquire title to any related Mortgaged Property or take any other action
that would cause the Trustee, for the benefit 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 determined, based on a report
prepared by a person who regularly conducts environmental audits (the costs
of which report will be paid as an expense of the Trust Fund), that: (i) the
Mortgaged Property is in compliance with applicable environmental laws; or if
not, that taking such actions as are necessary to bring the Mortgaged
Property in compliance therewith is reasonably likely to produce a greater
recovery on a present value basis, after taking into account any risks
associated therewith, than not taking such actions; and (ii) there are no
circumstances present at the Mortgaged Property relating to the use,
management or disposal of any hazardous substances, hazardous materials,
wastes, or petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under any
federal, state or local law or regulation or that, if any such materials are
present, taking such action with respect to the affected Mortgaged Property
is reasonably likely to produce a greater recovery on a present value basis,
after taking into account any risks associated therewith, than not taking
such actions.
The Special Servicer, on behalf of the Trust Fund, will use its best
efforts to sell the Mortgaged Property not later than the end of the third
calendar year following the year of acquisition, unless (i) the Internal
Revenue Service grants an extension of time to sell such property or (ii) the
Special Servicer provides to the Trustee an opinion of independent counsel to
the effect that the holding of the property by the Trust Fund subsequent to
the end of the third year following the year in which such acquisition
occurred will not result in the imposition of a tax on the Trust Fund or
cause the Trust Fund to fail to qualify as a REMIC under the Code at any time
that any Certificate is outstanding. Subject to the foregoing, the Special
Servicer will be required to (i) solicit offers for any Mortgaged Property so
acquired in such a manner as will be reasonably likely to realize a fair
price for such property and (ii) accept an offer received from any person
that constitutes a fair price and which is in the best interest of the
Certificateholders as determined by the Special Servicer in accordance with
Servicing Standard.
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 any of its
obligations with respect to the management and operation of such Mortgaged
Property. Any such property acquired by the Trust Fund will be managed in a
manner consistent with the Servicing Standard.
The Special Servicer will be obligated to follow or cause to be followed
such normal practices and procedures as it deems necessary or advisable to
realize upon Specially Serviced Mortgage Loans. If the proceeds of any
liquidation of the property securing the Specially Serviced Mortgage Loan are
less than the outstanding principal balance of the Specially Serviced
Mortgage Loan plus interest accrued thereon at the Mortgage Interest Rate
plus the aggregate amount of expenses incurred by the Special Servicer in
connection with such proceedings and which are reimbursable under the Pooling
and Servicing
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<PAGE>
Agreement, the Trust Fund will realize a loss in the amount of such
difference. The Special Servicer will be entitled to be paid from the amounts
on deposit in the Collection Account, prior to the distribution to
Certificateholders, amounts representing its servicing compensation on the
Specially Serviced Mortgage Loans. The Special Servicer may purchase a
Defaulted Mortgage Loan at a purchase price equal to the outstanding
principal balance thereof together with accrued interest thereby, plus any
amounts payable to the Servicer or the Trustee in respect of the Mortgage
Loan.
The Special Servicer shall have full power and authority to do any and all
things in connection with servicing and administering a Specially Serviced
Mortgage Loan that it may deem in its best judgment necessary or advisable,
including, without limitation, to execute and deliver on behalf of the Trust
Fund any and all instruments of satisfaction or cancellation or of partial
release or full release or discharge and all other comparable instruments, to
reduce the related Mortgage Interest Rate, and to defer or forgive payment of
interest and/or principal with respect to any Specially Serviced Mortgage
Loan or any Mortgaged Property. The Special Servicer may not permit a
modification or extension of any Mortgage Loan to a date later than three
years prior to the Rated Final Distribution Date or ten years prior to the
expiration of any Ground Lease. Notwithstanding the foregoing, the Special
Servicer may not permit any such modification with respect to a Balloon
Mortgage Loan if it results in the extension of such Maturity Date beyond the
amortization term of such Balloon Mortgage Loan absent the related Balloon
Payment. The Special Servicer will prepare a report (an "Asset Strategy
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. The holders of the fewest number of
classes of Certificates representing the most subordinate interests in the
Trust Fund that equals at least a 2.0% interest (by Class Balance (adjusted
for Collateral Value Adjustments)) in the Trust Fund (the "Monitoring
Certificateholders") will designate one Monitoring Certificateholder pursuant
to the Pooling and Servicing Agreement (the "Directing Certificateholder").
Each Asset Strategy Report will be delivered to the Directing
Certificateholder. The Directing Certificateholder may object to any Asset
Strategy Report within ten business days of receipt; provided, however, that
the Special Servicer shall implement the recommended action as outlined in
such Asset Strategy Report if it makes an affirmative determination that such
objection is not in the best interest of all the Certificateholders. In
connection with making such affirmative determination, the Special Servicer,
by notice to the Trustee, may request a vote by all the Certificateholders.
If the Directing Certificateholder does not disapprove an Asset Strategy
Report within ten business days, the Special Servicer shall implement the
recommended action as outlined in such Asset Strategy Report. If the
Directing Certificateholder disapproves such Asset Strategy Report and the
Special Servicer has not made the affirmative determination described above,
the Special Servicer will revise such Asset Strategy Report as soon as
practicable. The Special Servicer will revise such Asset Strategy Report
until the Directing Certificateholder fails to disapprove such revised Asset
Strategy Report except as described above, provided, however, the Special
Servicer will implement the last submitted report if 60 days have elapsed
since the Mortgage Loan has become a Specially Serviced Mortgage Loan,
provided that the Special Servicer shall not be under any obligation to
perform any actions which are not consistent with applicable laws and the
related Mortgage Loan documents. Any Certificateholder, other than the
Mortgagor on the related Specially Serviced Mortgage Loan, an affiliate
thereof or a person acting on behalf of the Mortgagor, may request and obtain
a copy of any Asset Strategy Report, except to the extent prohibited by
applicable law or the related Mortgage Loan documents, upon execution of a
confidentiality agreement.
The Directing Certificateholder may at any time terminate the Special
Servicer and appoint a replacement (a "Replacement Special Servicer") 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. 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 or ratings
of all outstanding classes of the Certificates would be qualified (if
applicable), downgraded or withdrawn as a result thereof; (ii) a written
acceptance of all obligations of the Special Servicer, executed by the
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designated replacement; and (iii) an opinion of counsel (obtained at the
expense of the Directing Certificateholder) to the effect that the
designation of such replacement to serve as Replacement 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 Special Servicer
shall be deemed to have resigned from its duties simultaneously with such
designated replacement's becoming the Replacement Special Servicer under the
Pooling and Servicing Agreement. Any Replacement Special Servicer may be
similarly so replaced by the Directing Certificateholder.
Notwithstanding such replacement, the resigning Special Servicer shall be
entitled to receive the Workout Fee for any Mortgage Loan which became a
Specially Serviced Mortgage Loan and was subsequently returned to a
performing status prior to such resignation; provided that if such Mortgage
Loan once again becomes a Specially Serviced Mortgage Loan, the Replacement
Special Servicer shall thereafter be entitled to such fee. The Replacement
Special Servicer shall be entitled to the Special Servicing Fee, the Workout
Fee and the Liquidation Fee for all other Specially Serviced Mortgage Loans.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the "Master Servicing Fee." The Master
Servicing Fee will be payable monthly and will accrue at the applicable
Master Servicing Fee Rate (as defined below) and will be computed on the
basis of the same principal balance and for the same period respecting which
any related interest payment on each Mortgage Loan is computed. The "Basic
Master Servicing Fee Rate" will be 0.07% per annum. The Master Servicer will
also receive as part of its Master Servicing Fee an additional fee calculated
based on the following rates (each, an "Additional Servicing Fee Rate"): (i)
a primary servicing fee rate of 0.03% per annum with respect to 2.2% of the
Mortgage Loans by aggregate principal balance as of the Cut-off Date, (ii) a
primary servicing fee rate of 0.05% per annum with respect to 12.5% of the
Mortgage Loans by aggregate principal balance as of the Cut-off Date, (iii) a
primary servicing fee rate of 0.06% per annum with respect to 2.3% of the
Mortgage Loans by aggregate principal balance as of the Cut-off Date, (iv) a
primary servicing fee of 0.07% per annum with respect to 6.9% of the Mortgage
Loans by aggregate principal balance as of the Cut-off Date and (v) a primary
servicing fee of 0.10% per annum with respect to 3.5% of the Mortgage Loans
by aggregate principal balance as of the Cut-off Date. With respect to each
Mortgage Loan, the sum of the Basic Master Servicing Fee Rate and the related
Additional Servicing Fee Rate, if any, is referred to herein as the "Master
Servicing Fee Rate."
In the event that the initial Master Servicer shall resign or be
terminated as the Master Servicer and a successor Master Servicer shall agree
to perform the services of the Master Servicer for an amount less than the
Master Servicing Fee, no part of any excess of such portion of the Master
Servicing Fee over the amount payable to such successor will be available for
payment to Certificateholders.
The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities will be the Special Servicing Fee, the
Workout Fee and the Liquidation Fee. The "Special Servicing Fee" will equal
0.25% per annum. The Special Servicing Fee will be computed on the basis of
the same principal balance and for the same period respecting which any
interest payment on each Specially Serviced Mortgage Loan is computed. The
"Workout Fee" will equal 1.00% of all amounts collected with respect to any
Mortgage Loan that became a Specially Serviced Mortgage Loan and was
subsequently returned to, and remains in, a performing status. The
"Liquidation Fee" will equal 1.00% of the net payments or net proceeds
obtained by the Special Servicer in connection with payment in full, partial
or discounted payoff from the borrower or, except under circumstances
described in the Pooling and Servicing Agreement, 1.00% of the net proceeds
in connection with any liquidation of the Mortgage Loan.
The Master Servicer or, with respect to the Specially Serviced Mortgaged
Loans, the Special Servicer will be entitled to retain any other fees or
charges (other than late payment charges to the extent necessary to cover
interest on Advances on the related Mortgage Loan) actually paid by a
Borrower.
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The Pooling and Servicing Agreement will provide that the Servicers will
be entitled to indemnification from the Trust Fund for any and all costs,
expenses, losses, damages, claims and liabilities incurred in connection with
any legal action or claim relating to any Mortgage Loan and the Pooling and
Servicing Agreement, other than any cost, expense, damage, claim or liability
incurred by reason of willful misfeasance, bad faith or negligence of such
Servicer in the performance of duties thereunder or by reason of reckless
disregard of such obligations and duties.
CONFLICTS OF INTEREST
The Master Servicer, Special Servicer or their respective affiliates own
and are in the business of acquiring assets similar to the Mortgage Loans
held by the Trust Fund. To the extent that any mortgage loans owned and/or
serviced by the Master Servicer, the Special Servicer or their respective
affiliates are similar to the Mortgage Loans held by the Trust Fund, the
mortgaged properties related to such mortgage loans may, depending upon
certain circumstances such as the location of the mortgaged property, compete
with the Mortgaged Properties related to the Mortgage Loans held by the Trust
Fund for tenants, purchasers, financing and similar resources.
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DESCRIPTION OF THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement to be dated as of September 1, 2000 (the "Pooling and Servicing
Agreement"), by and among the Depositor, the Master Servicer, the Special
Servicer and the Trustee. Following are summaries of certain provisions of
the Pooling and Servicing Agreement. The summaries do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, the provisions of the Pooling and Servicing Agreement. The Trustee will
provide or make available to a prospective or actual Certificateholder, upon
written request and at the expense of the requesting party, a copy (without
exhibits) of the Pooling and Servicing Agreement. Requests should be
addressed to State Street Bank and Trust Company 2 Avenue de Lafayette,
Boston, Massachusetts 02111, Attention: J.P. Morgan Commercial Mortgage
Finance Corp., Series 2000-C10.
ASSIGNMENT OF THE MORTGAGE LOANS
On or prior to the Delivery Date, the Depositor will assign or cause to be
assigned the Mortgage Loans, without recourse, to the Trustee for the benefit
of the Certificateholders. On or prior to the Delivery Date, the Depositor
will, as to each Mortgage Loan, deliver to the Trustee or a custodian, acting
on behalf of the Trustee, among other things, the following documents
(collectively, as to such Mortgage Loan, the "Mortgage Loan File"): (i) the
original Mortgage, and any intervening assignments thereof, in each case with
evidence of recording thereon or in case such documents have not been
returned by the applicable recording office, certified copies thereof; (ii)
the original or, if accompanied by a "lost note" affidavit, a copy of the
Mortgage Note, endorsed by the Seller, without recourse, in blank or to the
order of Trustee; (iii) an assignment of the Mortgage, executed by the
Seller, in blank or to the order of the Trustee, in complete and recordable
form; (iv) originals or certified copies of any related assignment of leases,
rents and profits and any related security agreement (if, in either case,
such item is a document separate from the Mortgage) and any intervening
assignments of each such document or instrument; (v) assignments of any
related assignment of leases, rents and profits and any related security
agreement (if, in either case, such item is a document separate from the
Mortgage), executed by the Seller, in blank or to the order of the Trustee,
in complete and recordable form; (vi) originals or certified copies of all
assumption, modification and substitution agreements in those instances where
the terms or provisions of the Mortgage or Mortgage Note have been modified
or the Mortgage or Mortgage Note has been assumed; (vii) the originals or
certificates of a lender's title insurance policy issued on the date of the
origination of such Mortgage Loan or, with respect to each Mortgage Loan not
covered by a lender's title insurance policy, an attorney's opinion of title
given by an attorney licensed to practice law in the jurisdiction where the
Mortgaged Property is located; (viii) originals or copies of any UCC
financing statements (including originals of assignments thereof to the
Trustee in form that is complete and suitable for filing); (ix) originals or
copies of any guaranties related to such Mortgage Loan; (x) originals or
copies of insurance policies related to the Mortgaged Property; (xi)
originals or certified copies of any environmental liabilities agreement;
(xii) originals or copies of any escrow agreements; (xiii) originals or
certified copies of any prior assignments of mortgage if the Originator is
not the originator of record and (xiv) any collateral assignments of property
management agreements and other servicing agreements. The Pooling and
Servicing Agreement will require the Depositor to cause each assignment of
the Mortgage described in clause (iii), clause (v), and clause (viii) above
to be submitted for recording in the real property records of the
jurisdiction in which the related Mortgaged Property is located. Any such
assignment delivered in blank will be completed to the order of the Trustee
prior to recording. The Pooling and Servicing Agreement will also require the
Depositor to cause the endorsements on the Mortgage Notes delivered in blank
to be completed to the order of the Trustee.
TRUSTEE
State Street Bank and Trust Company, a Massachusetts Trust Company shall
serve as Trustee under the Pooling and Servicing Agreement pursuant to which
the Certificates are being issued. Except in
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circumstances such as those involving defaults (when it might request
assistance from other departments in the bank), its responsibilities as
trustee are carried out by its Corporate Trust Department. The Trustee's fee
will equal the fee calculated at the Trustee Fee Rate as described in the
Pooling and Servicing Agreement. The "Trustee Fee Rate" will equal 0.0027%
per annum of the outstanding principal balance of the Mortgage Loans. The
offices of the Trustee's corporate trust department with respect to this
trust are located at 2 Avenue de Lafayette, Boston, Massachusetts 02111,
Attention: Corporate Trust Service (CMBS) -- J.P. Morgan Commercial Mortgage
Finance Corp. Mortgage Pass-Through Certificates, Series 2000-C10.
ACCOUNTS
The Master Servicer is required to deposit all amounts received with
respect to the Mortgage Loans, net of certain amounts retained by the Master
Servicer as additional servicing compensation and certain amounts to be
deposited into escrow accounts, into a separate Collection Account (the
"Collection Account") maintained by the Master Servicer on behalf of the
Trust Fund. The Master Servicer is required to remit to the Trustee for
deposit on the business day preceding each Distribution Date all amounts
received with respect to the Mortgage Loans into a separate account (the
"Certificate Account") maintained with the Trustee. The Trustee will be
entitled to make withdrawals from the Certificate Account to pay the Trustee
its portion of the fee calculated at the Trustee Fee Rate or to reimburse the
Trustee for expenses not otherwise reimbursed from a Collection Account.
Interest or other income earned on funds in the Collection Account will be
paid to the Master Servicer maintaining such account as additional servicing
compensation. See "Description of the Trust Funds -- Mortgage Loans" and
"Description of the Agreements -- Accounts" in the Prospectus.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, based upon information provided by the
Servicers, the Trustee shall make available to each Certificateholder, the
Seller, the Depositor and each Rating Agency a statement setting forth
certain information with respect to the Mortgage Loans and the Certificates
required pursuant to the Pooling and Servicing Agreement. In addition, within
a reasonable period of time after each calendar year, the Trustee shall
furnish to each person who at any time during such calendar year was the
holder of a Certificate a statement containing certain information with
respect to the Certificates required pursuant to the Pooling and Servicing
Agreement, aggregated for such calendar year or portion thereof during which
such person was a Certificateholder. Unless and until Definitive Certificates
are issued, such statements or reports will be furnished only to Cede, as
nominee for DTC; provided, however, that the Trustee shall furnish a copy of
any such statement or report to any Beneficial Owner which requests such copy
and provides to the Trustee a certification, in form acceptable to the
Trustee, stating that it is the Beneficial Owner of a Certificate. The
Trustee may provide access to the information available on the monthly
statement to Certificateholders and certain other information through its
Corporate Trust home page on the world wide web. The web page is located at
"corporatetrust.statestreet.com." CMBS information is available by clicking
the "Investor Information & Reporting" button, and selecting the appropriate
transaction. Any Asset Strategy Report that has been delivered to the Trustee
shall be made available by the Trustee, upon written request and at the
expense of the requesting party, to any Beneficial Owner of an Offered
Certificate subject to receipt by the Trustee of evidence satisfactory to it
that the request is made by a Beneficial Owner and the receipt by the Trustee
of a certificate acknowledging certain limitations with respect to the use of
such statement or report. See "Description of the Certificates -- Reports to
Certificateholders" in the Prospectus. The Directing Certificateholder shall
receive all reports prepared or received by the Master Servicer or the
Special Servicer. In addition, if the Depositor so directs the Trustee and on
terms acceptable to the Trustee, the Trustee will make certain information
and certain financial reports related to the mortgage loans available through
its Corporate Trust web site.
VOTING RIGHTS
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates ("Voting Rights") will be required to direct,
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and will be sufficient to bind all Certificateholders to, certain actions,
including directing the Trustee, the Special Servicer or the Master Servicer
with respect to actions to be taken with respect to certain Mortgage Loans
and REO Properties and amending the Pooling and Servicing Agreement in
certain circumstances. 98.0% of all Voting Rights shall be allocated among
the classes of Certificates, including the Private Certificates, (other than
the Class X, Class R-I, Class R-II and Class R-III Certificates) in
proportion to the respective Class Balances, 1.00% of all Voting Rights shall
be allocated to the Class X Certificates and 0.33 1/3% of all Voting Rights
shall be allocated to each of the Class R-I, Class R-II and Class R-III
Certificates. Voting Rights allocated to a class of Certificates shall be
allocated among the holders of such class in proportion to the Percentage
Interests evidenced by their respective Certificates. Allocations of Realized
Losses and Collateral Value Adjustments to a Class of Certificates and any
other event which changes such Class Balance will result in a corresponding
change to such Class' Voting Rights.
As described under "Description of the Certificates -- Book-Entry
Registration and Definitive Certificates" in the Prospectus, unless and until
Definitive Certificates are issued, except as otherwise expressly provided
herein, Certificate Owners may only exercise their rights as owners of
Certificates indirectly through DTC or their respective Participant or
Indirect Participant.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment or other liquidation
of the last Mortgage Loan or REO Property subject thereto, and (ii) the
purchase of all of the assets of the Trust Fund by and at the option of any
holder of a Class R-I Certificate, the holders of an aggregate Percentage
Interest in excess of 50% of the Most Subordinate Class of Certificates, the
Master Servicer and (to the extent all of the remaining Mortgage Loans are
being serviced by the Special Servicer) the Special Servicer (in that order).
The "Most Subordinate Class of Certificates" at the time of determination
shall be the class of Certificates to which Realized Losses would be
allocated at such time as described under "Description of the Certificates --
Subordination" herein. Written notice of termination of the Pooling and
Servicing Agreement will be given to each Certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at the office of the Certificate Registrar specified in such
notice of termination.
Any such purchase of all the Mortgage Loans and other assets in the Trust
Fund is required to be made at a price equal to the greater of (1) the
aggregate fair market value of all the Mortgage Loans and REO Properties then
included in the Trust Fund, determined pursuant to the Pooling and Servicing
Agreement, and (2) the aggregate Class Balance of all the Certificates plus
accrued and unpaid interest thereon together with any unreimbursed advances
(including any interest thereon). Such purchase will effect early retirement
of the then outstanding Certificates, but the right to effect such
termination is subject to the requirements, among other things, that (i) the
aggregate Stated Principal Balance of the Mortgage Loans then in the Trust
Fund is less than 1% of the Initial Pool Balance and (ii) the purchaser
provides to the Trustee an opinion of independent counsel, addressed to the
Trustee, to the effect that the resulting termination will be a "qualified
liquidation" under Section 860F(a)(4) of the Code with respect to REMICs I,
II and III.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be used by
the Depositor to pay the purchase price of the Mortgage Loans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered
Certificates is based on the advice of Brown & Wood LLP, counsel to the
Depositor. This summary is based on laws, regulations, including the REMIC
regulations promulgated by the Treasury Department (the "REMIC Regulations"),
rulings and decisions now in effect or (with respect to regulations)
proposed, all of which are subject to change either prospectively or
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retroactively. This summary does not address the federal income tax
consequences of an investment in Offered Certificates applicable to all
categories of investors, some of which (for example, banks and insurance
companies) may be subject to special rules. Prospective investors should
consult their tax advisors regarding the federal, state, local and any other
tax consequences to them of the purchase, ownership and disposition of
Offered Certificates.
Three separate real estate mortgage investment conduit ("REMIC") elections
will be made with respect to the Trust Fund for federal income tax purposes.
Upon the issuance of the Certificates, Brown & Wood LLP, counsel to the
Depositor, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Pooling and Servicing Agreement, for
federal income tax purposes, REMIC I, REMIC II and REMIC III (each as defined
in the Pooling and Servicing Agreement) will each qualify as a REMIC under
the Internal Revenue Code of 1986, as amended (the "Code").
For federal income tax purposes, the Class R-I Certificates will be the
sole class of "residual interests" in REMIC I, the Class R-II Certificates
will be the sole class of "residual interests" in REMIC II, and the Class
R-III Certificates will be the sole class of "residual interests" in REMIC
III. The Offered Certificates (other than the Class X Certificates), the
Private Certificates (other than the Class R-I, Class R-II and Class R-III
Certificates), the Class Q Certificates and each component of the Class X
Certificates will be "regular interests" of REMIC III and will be treated as
debt instruments of REMIC III. See "Certain Federal Income Tax Consequences
-- REMICs" in the Prospectus.
The Class X Certificates will, and the other classes of Offered
Certificates may, be treated as having been issued with original issue
discount for federal income tax reporting purposes. For purposes of computing
the rate of accrual of original issue discount, market discount and premium,
if any, for federal income tax purposes it will be assumed that there are no
prepayments on the Mortgage Loans, except that ARD Loans prepay on their
Anticipated Repayment Dates. No representation is made that the Mortgage
Loans will not prepay at another rate. See "Federal Income Tax Consequences
-- REMICs -- Taxation of Owners of REMIC Regular Certificates" and
"--Original Issue Discount and Premium" in the Prospectus.
Net Prepayment Premiums allocated to the Certificates will be taxable to
the holders of such Certificates on the date the amount of such premiums
becomes fixed.
The Offered Certificates may be treated for federal income tax purposes as
having been issued at a premium. Whether any holder of such a 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 such class of Certificates
should consult their own tax advisors regarding the possibility of making an
election to amortize such premium. See "Federal Income Tax Consequences --
REMICs -- Taxation of Owners of REMIC Regular Certificates" and "--Original
Issue Discount and Premium" in the Prospectus.
The Offered Certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code generally in the same
proportion that the assets of the REMIC underlying such Certificates would be
so treated. In addition, interest (including original issue discount) on the
Offered Certificates will be interest described in Section 856(c)(3)(B) of
the Code to the extent that such Offered Certificates are treated as "real
estate assets" under Section 856(c)(5)(B) of the Code. Moreover, the Offered
Certificates will be "obligation[s] . . . which . . . [are] principally
secured by an interest in real property" within the meaning of Section
860G(a)(3)(C) of the Code. The Offered Certificates will not be considered to
represent an interest in "loans . . . secured by an interest in real property
which is . . . residential real property" within the meaning of Section
7701(a)(19)(C)(v) of the Code except in the proportion that the assets of the
Trust Fund are represented by Mortgage Loans secured by multifamily apartment
buildings. See "Federal Income Tax Consequences -- REMICs" in the Prospectus.
For further information regarding the federal income tax consequences of
investing in the Certificates, see "Federal Income Tax Consequences" in the
Prospectus.
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STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the
state income tax consequences of the acquisition, ownership, and disposition
of the Offered Certificates. State income tax law may differ substantially
from the corresponding federal law, and this discussion does not purport to
describe any aspect of the income tax laws of any state. Therefore, potential
investors should consult their own tax advisors with respect to the various
tax consequences of investments in the Offered Certificates.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement (including individual retirement accounts and annuities and Keogh
plans) that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or to Section 4975 of the Code, or of any
collective investment fund or separate account or other entity in which such
plans are invested (each, a "Plan"), should carefully review with its legal
advisors whether the purchase or holding of any Offered Certificate could
give rise to a transaction that is prohibited or is not otherwise permitted
either under ERISA or Section 4975 of the Code.
The U.S. Department of Labor has issued an individual exemption
(Prohibited Transaction Exemption 90-23 (May 17, 1990) to J.P. Morgan
Securities Inc., which was amended by Prohibited Transaction Exemption 97-34
(July 21, 1997) (collectively, the "Exemption")), which generally exempts
from the application of the prohibited transaction provisions of Section 406
of ERISA, and the excise taxes and other penalties imposed on such prohibited
transactions pursuant to Sections 4975(a) and (b) of the Code and Section
502(i) of ERISA, certain transactions, among others, relating to the
servicing and operation of mortgage pools and the purchase, sale and holding
of mortgage pass-through certificates underwritten by an Underwriter,
provided that certain conditions set forth in such exemptions are satisfied.
For purposes of this Section "ERISA Considerations," the term "Underwriter"
shall include (a) J.P. Morgan Securities Inc., (b) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with J.P. Morgan Securities Inc. and (c) any member of
the underwriting syndicate or selling group of which a person described in
(a) or (b) is a manager or co-manager with respect to the Offered
Certificates.
The obligations covered by the Exemption include mortgage loans such as
the Mortgage Loans. If mortgage loans are secured by leasehold interests,
each lease term must be at least 10 years longer than the term of the
relevant Mortgage Loan. Under the Exemption, trust assets must generally be
limited to certain secured obligations. However, trust assets may also
include cash or investments made therewith which are credited to an account
to provide payments to certificateholders pursuant to a yield supplement
agreement or similar yield maintenance arrangement to supplement the interest
rates otherwise payable on obligations contained in the trust, provided that
such arrangements do not involve swap agreements or other notional principal
contracts.
The Exemption sets forth six general conditions which must be satisfied,
among others, for a transaction involving the purchase, sale and holding of
Offered Certificates to be eligible for exemptive relief thereunder. First,
the acquisition of Offered Certificates by a Plan must be on terms (including
the price) that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party. Second, the rights and
interests evidenced by such Offered Certificates must not be subordinate to
the rights and interests evidenced by other certificates of the same trust.
Third, such Offered Certificates at the time of acquisition by the Plan must
be rated in one of the three highest generic rating categories by Standard &
Poor's Ratings Services, Moody's or Fitch. Fourth, the Trustee cannot be an
affiliate of any other member of the "Restricted Group" which consists of the
Trustee, the Underwriters, the Depositor, the Seller, the Master Servicer,
the Special Servicer, any insurer and any Mortgagor with respect to Mortgage
Loans constituting more than 5% of the aggregate unamortized principal
balance of the Mortgage Loans as of the date of initial issuance of such
Offered Certificates. Fifth, the sum of all payments made to and retained by
the Underwriters must represent not more than reasonable compensation for
underwriting such Offered Certificates; the sum of all payments made to and
retained by the Depositor pursuant to the assignment of the Mortgage Loans to
the Trust Fund must
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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, any
Sub-Servicer and the Special Servicer must represent 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. Sixth, the investing Plan must be 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 Exemption also applies to transactions in connection with the
servicing, management and operation of the Trust Fund, provided that, in
addition to the general requirements described above, (a) such transactions
are carried out in accordance with the terms of a binding pooling and
servicing agreement and (b) the pooling and servicing agreement is provided
to, or described in all material respects in the prospectus or private
placement memorandum provided to, investing Plans before their purchase of
Offered Certificates issued by the Trust Fund. The Pooling and Servicing
Agreement is a pooling and servicing agreement as defined in the Exemption.
The Pooling and Servicing Agreement provides that all transactions relating
to the servicing, management, and operations of the Trust Fund must be
carried out in accordance with the Pooling and Servicing Agreement.
Because the Class A1, Class A2 and Class X Certificates are not
subordinate to any other class of Certificates, the second general condition
set forth above is likely to be satisfied with respect to such Offered
Certificates as of the initial closing date. It is a condition of the
issuance of the Class A1, Class A2 and Class X Certificates that they be
rated "AAA" by Fitch and "Aaa" by Moody's. The Depositor expects that the
fourth general condition set forth above will be satisfied with respect to
each of such classes of Offered Certificates. A fiduciary of a Plan
contemplating purchasing any of such class of Offered Certificate must make
its own determination that all of the general conditions set forth above will
be satisfied with respect to any such class of Offered Certificates. Each
purchaser purchasing Class A1, Class A2 or Class X Certificates with the
assets of a Plan shall be deemed to represent and warrant that it is an
"accredited investor" as described in the sixth general condition set forth
above.
The Class B, Class C, Class D and Class E Certificates do not satisfy the
second condition described above because they are subordinated to the Class
A1, Class A2 and Class X Certificates; furthermore the Class E Certificates
are not expected to satisfy the third condition described above. Because the
characteristics of the Class B, Class C, Class D and Class E Certificates
will not meet the requirements of the Exemption and may not meet the
requirements of any other exemption issued under ERISA, the purchase and
holding of the Class B, Class C, Class D and Class E Certificates by a Plan
may result in a prohibited transaction or the imposition of excise taxes or
civil penalties. Consequently, transfers of the Class B, Class C, Class D and
Class E Certificates will not be registered by the Trustee unless the Trustee
receives: (i) a representation from the transferee of such Offered
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not a Plan or a person
investing on behalf of or using the assets of a Plan to effect such transfer;
(ii) if the purchaser is an insurance company, a representation that the
purchaser is an insurance company which is purchasing such Offered
Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of the Prohibited Transaction Class
Exemption 95-60 (60 Fed. Reg. 35925, July 12, 1995) ("PTCE 95-60")) and that
the purchase and holding of such Offered Certificates by such transferee is
eligible for, and meets all of the requirements of, relief under Sections I
and III of PTCE 95-60; or (iii) an opinion of counsel satisfactory to the
Trustee that the purchase and holding of such Offered Certificate by a Plan,
any person acting on behalf of a Plan or using a Plan's assets will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction requirements of ERISA and the Code and
will not subject the Trustee to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement. Such representation as
described above in (i) or (ii) shall be deemed to have been made to the
Trustee by the transferee's acceptance of a Class B, Class C, Class D, Class
E or Class F Certificate. In the event that such representation is violated
or any attempt to transfer to a Plan or person acting on behalf of a Plan or
using a Plan's assets is attempted without such opinion of counsel, such
attempted transfer or acquisition shall be void and of no effect.
The Department of Labor has proposed amendments to the Exemption that, if
finalized in current form, would permit Plans to also purchase the Class B,
Class C, Class D and Class E Certificates. It is not certain if and when
these amendments will be issued or whether they will contain the same relief
as is currently proposed.
S-86
<PAGE>
Before purchasing any of such Offered Certificates, a fiduciary of a Plan
should itself confirm (a) that such Offered Certificates constitute
"certificates" for purposes of the Exemption and (b) that the specific and
general conditions of the Exemption and the other requirements set forth in
the Exemption would be satisfied. In addition to making its own determination
as to the availability of the exemptive relief provided in the Exemption, the
Plan fiduciary should consider the availability of any other prohibited
transaction exemptions.
Purchasers using insurance company general account funds to effect such
purchase should consider the availability of PTCE 95-60 issued by the U.S.
Department of Labor.
Any Plan fiduciary considering whether to purchase any Offered
Certificates on behalf of a Plan should consult with its counsel regarding
the applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code to such investment. Furthermore, any Plan
fiduciary considering a purchase of Offered Certificates should consider
whether, under the general fiduciary standards of investment prudence and
diversification, such an investment is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the composition of the
Plan's investment portfolio. See "ERISA Considerations" in the Prospectus.
LEGAL INVESTMENT
The Certificates will not be "mortgage related securities" within the
meaning of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA").
In addition, institutions whose investment activities are subject to
review by certain regulatory authorities may be or may become subject to
restrictions, which may be retroactively imposed by such regulatory
authorities, on the investment by such institutions in certain forms of
mortgaged backed securities. Furthermore, certain states have enacted
legislation overriding the legal investment provisions of SMMEA.
The Depositor and the Underwriters make no representations as to the
proper characterization of the Offered Certificates for legal investment or
other purposes, or as to the ability of particular investors to purchase the
Offered Certificates under applicable legal investment restrictions. These
uncertainties may adversely affect the legal 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 is subject to investment,
capital or other restrictions. See "Legal Investment" in the Prospectus.
S-87
<PAGE>
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting
agreement among the Depositor, J.P. Morgan Securities Holdings Inc., J.P.
Morgan Securities Inc. and Salomon Smith Barney, Inc. (the "Underwriting
Agreement"), the Depositor has agreed to sell to J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. (together with J.P. Morgan Securities Inc., the
"Underwriters") and each of the Underwriters has severally, but not jointly,
agreed to purchase from the Depositor, the portion of the Offered
Certificates of each class listed opposite its name in the table below.
J.P. Morgan Securities Inc. and Salomon Smith Barney Inc. are acting as
co-lead managers for the offering. J.P. Morgan Securities Inc. is the sole
bookrunner of all of the Offered Securities.
ALLOCATION TABLE
<TABLE>
<CAPTION>
UNDERWRITER CLASS A1 CLASS A2 CLASS X CLASS B CLASS C CLASS D CLASS E
------------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
J.P. Morgan
Securities Inc..... % % % % % % %
Salomon Smith
Barney Inc......... % % % % % % %
------------ ------------ ----------- ----------- ----------- ----------- -----------
Total............... 100% 100% 100% 100% 100% 100% 100%
============ ============ =========== =========== =========== =========== ===========
</TABLE>
In the event of default by either Underwriter, the Underwriting Agreement
provides that, in certain circumstances, the underwriting commitment of the
nondefaulting Underwriter may be increased or the underwriting may be
terminated.
The obligations of the Underwriters under the Underwriting Agreement are
subject to certain conditions precedent.
Distribution of the Offered Certificates will be made by the Underwriters
from time to time in negotiated transactions or otherwise at varying prices
to be determined at the time of sale. Proceeds to the Depositor from the
Offered Certificates will be % of the initial aggregate principal balance
thereof, plus accrued interest from the Cut-off Date.
The Depositor also has been advised by the Underwriters that they
currently expect to make a market in the Offered Certificates; however, they
have no obligation to do so, any market making may be discontinued at any
time, and there can be no assurance that an active public market for the
Offered Certificates will develop, or if it does develop, that it will
continue. The Underwriters may effect the transactions by selling the Offered
Certificates to or through dealers, and the dealers may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Underwriters. In connection with the purchase and sale of the Offered
Certificates offered hereby, the Underwriters may be deemed to have received
compensation from the Depositor in the form of underwriting discounts.
The Depositor and J.P. Morgan Securities Holdings Inc. have agreed to
indemnify the Underwriters against, or make contributions with respect to,
certain liabilities, including liabilities under the Securities Act of 1933.
The Underwriters have agreed severally, but not jointly, to indemnify the
Depositor against, or make contributions to the Depositor with respect to,
certain liabilities, including liabilities under the Securities Act of 1933,
under limited circumstances.
The Seller has agreed to pay the expenses of the Depositor incurred in
connection with the purchase of the Mortgage Loans and the issuance of the
Certificates. J.P. Morgan Securities Inc. is an affiliate of the Depositor
and the Seller.
S-88
<PAGE>
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriters by Brown & Wood LLP, New York, New York.
RATING
It is a condition of the issuance of the Class A1, Class A2 and Class X
Certificates that they be rated "AAA" by Fitch, Inc. ("Fitch") and "Aaa" by
Moody's Investors Service, Inc. ("Moody's," and together with Fitch, the
"Rating Agencies"). It is a condition of the issuance of the Class B
Certificates that they be rated not lower than "AA" by Fitch and "Aa2" by
Moody's. It is a condition of the issuance of the Class C Certificates that
they be rated not lower than "A" by Fitch and "A2" by Moody's. It is a
condition of the issuance of the Class D Certificates that they be rated not
lower than "A-" by Fitch and "A3" by Moody's. It is a condition of the
issuance of the Class E Certificates that they be rated not lower than "BBB"
by Fitch and "Baa2" by Moody's.
A rating on mortgage pass-through certificates addresses the likelihood of
the receipt of distributions of principal and interest to which
Certificateholders are entitled, including payment of all principal on the
Certificates by the Rated Final Distribution Date. The ratings take into
consideration the credit quality of the Mortgage Loans in the Trust Fund,
structural and legal aspects associated with the Certificates, and the extent
to which the payment stream from the pool of Mortgage Loans is adequate to
make required payments on the Certificates. The ratings on the Certificates
do not represent any assessment of (i) the likelihood or frequency of
principal prepayments on the Mortgage Loans, (ii) the degree to which such
prepayments might differ from those originally anticipated or (iii) whether
and to what extent Prepayment Premiums, Yield Maintenance charges, Excess
Interest and default interest will be received or net aggregate Prepayment
Interest Shortfalls will be realized. 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 investment in the event of rapid prepayments of
the Mortgage Loans (including both voluntary and involuntary prepayments).
In general, the ratings thus address credit risk and not prepayment risk.
As described herein, the amounts payable with respect to the Class X
Certificates consist only of interest. 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 nevertheless will have
been paid, and such result is consistent with the "AAA" and "Aaa" ratings
received on the Class X Certificates by Fitch and Moody's, respectively. The
Class X Certificate notional amount upon which interest is calculated is
reduced by the allocation of Realized Losses and prepayments, whether
voluntary or involuntary. The rating does not address the timing or magnitude
of reductions of such notional amount, but only the obligation to pay
interest timely on the notional amount as so reduced from time to time.
Accordingly, the ratings of the Class X Certificates should be evaluated
independently from similar ratings on other types of securities.
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 Fitch or Moody's 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
downgrade, qualification (if applicable) or withdrawal at any time by the
assigning rating agency. Each security rating should be evaluated
independently of any other security rating. A security rating does not
address the frequency or likelihood of prepayments (whether voluntary or
involuntary) of Mortgage Loans, or the corresponding effect on the yield to
investors.
S-89
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
<S> <C>
30/360 basis ............................................ S-62
Abbey Company Borrower ................................. S-44
Abbey Company Borrowers ................................ S-44
Abbey Company Loans .................................... S-44
Abbey Company Properties ............................... S-44
Abbey Portfolio III Loan ............................... S-44
Abbey Portfolio IV Loan ................................ S-44
Additional Servicing Fee Rate .......................... S-79
Adjusted Available Distribution Amount ................. S-63
Adjusted Collateral Value .............................. S-69
ADMC ................................................... S-46
Allocated Net Prepayment Premium ....................... S-64
Allocation Fraction .................................... S-63
Anadigics .............................................. S-46
Anticipated Repayment Date ............................. S-54
ARD Loans .............................................. S-54
Asset Strategy Report .................................. S-78
Atlantic Development Borrowers ......................... S-46
Atlantic Portfolio Development Properties .............. S-46
Atlantic Portfolio Development Property ................ S-46
Available Distribution Amount .......................... S-62
Balloon Mortgage Loan .................................. S-55
Balloon Payment ........................................ S-55
Basic Master Servicing Fee Rate ........................ S-79
Beneficial Owner ....................................... S-59
Cede ................................................... S-59
Cedelbank Participants ................................. S-60
Celegene ............................................... S-46
Certificate Account .................................... S-82
Certificateholders ..................................... S-59
Certificates ........................................... S-59
Class A Certificates ................................... S-59
Class Balance .......................................... S-65
Class Prepayment Fraction .............................. S-63
Clearance Cooperative .................................. S-60
Clearstream ............................................ S-59
Clearstream Operator ................................... S-60
Clearstream Participants ............................... S-60
Coastal ................................................ S-53
Code ................................................... S-84
Collateral Value Adjustment ............................ S-69
Collection Account ..................................... S-82
Cordis ................................................. S-46
Covina Hills Borrower .................................. S-47
Covina Hills Property .................................. S-47
CPR .................................................... S-72
Crossed Loans .......................................... S-55
Cut-off Date LTV Ratio ................................. S-37
DDR .................................................... S-48
S-90
<PAGE>
Debt Service Coverage Ratio ............................ S-38
Defaulted Mortgage Loan ................................ S-76
Defeasance ............................................. S-43
Definitive Certificates ................................ S-61
Depositories ........................................... S-59
Directing Certificateholder ............................ S-78
Distribution Date ...................................... S-61
DTC .................................................... S-59
DTC Participants ....................................... S-60
DTC Registered Certificates ............................ S-59
Due Date ............................................... S-28
Effective Gross Income ................................. S-38
Embassy Suites Chicago Borrower ........................ S-52
Embassy Suites Chicago Property ........................ S-52
ERISA .................................................. S-85
ESA .................................................... S-57
Excess Cash Flow ....................................... S-55
Excess Interest ........................................ S-55
Exemption .............................................. S-85
Fairgrounds Plaza Borrower ............................. S-54
Fairgrounds Plaza Property ............................. S-53
Felcor ................................................. S-52
Finova Loans ........................................... S-28
FIRREA ................................................. S-37
Fitch .................................................. S-89
Form 8-K ............................................... S-58
Gerry Buildings Borrower ............................... S-51
Gerry Buildings Properties ............................. S-51
GLA .................................................... S-48
Global Securities ...................................... G-1
Hub Tower Borrower ..................................... S-50
Hub Tower Property ..................................... S-50
Indirect Participants .................................. S-60
Initial Pool Balance ................................... S-28
Interest Accrual Amount ................................ S-63
Interest Distribution Amount ........................... S-63
Interest Reserve Account ............................... S-64
Interest Reserve Loans ................................. S-64
Liberty Fair Mall Borrower ............................. S-48
Liberty Fair Mall Property ............................. S-48
Lock-out Date .......................................... S-42
Lock-out Period ........................................ S-42
Loss Mortgage Loan ..................................... S-68
Manekin ................................................ S-54
Master Servicing Fee ................................... S-79
Maturity Date .......................................... S-64
Maturity Date/Anticipated Repayment Date LTV Ratio .... S-37
MGT .................................................... S-28
Midland ................................................ S-75
Monitoring Certificateholders .......................... S-78
Monthly Payments ....................................... S-28
S-91
<PAGE>
Moody's ................................................ S-89
Mortgage ............................................... S-28
Mortgage Interest Rate ................................. S-54
Mortgage Loan File ..................................... S-81
Mortgage Loan Purchase Agreement ....................... S-28
Mortgage Loans ......................................... S-28
Mortgage Note .......................................... S-28
Mortgage Pool .......................................... S-28
Mortgaged Property ..................................... S-28
Mortgagor .............................................. S-54
Net Operating Income ................................... S-38
Net Prepayment Premium ................................. S-64
NOI .................................................... S-38
Notional Amount ........................................ S-63
Offered Certificates ................................... S-59
Operating Advisor ...................................... S-31
Operating Statements ................................... S-39
ORECM .................................................. S-75
P&I Advance ............................................ S-69
PAR .................................................... S-58
Participants ........................................... S-60
Pass-Through Rate ...................................... S-62
Percentage Interest .................................... S-62
Plan ................................................... S-85
PML .................................................... S-56
Pooling and Servicing Agreement ........................ S-81
Prepayment ............................................. S-71
Prepayment Interest Excess ............................. S-63
Prepayment Interest Shortfall .......................... S-63
Prepayment Premium ..................................... S-42
Principal Distribution Amount .......................... S-64
Priority of Distributions .............................. S-64
Private Certificates ................................... S-67
Property Protection Advance ............................ S-70
PTCE 95-60 ............................................. S-86
Rated Final Distribution Date .......................... S-72
Rating Agencies ........................................ S-89
Realized Loss .......................................... S-68
Record Date ............................................ S-62
REMIC .................................................. S-84
REMIC Regulations ...................................... S-83
Remittance Rate ........................................ S-62
REO Account ............................................ S-59
REO Property ........................................... S-59
Replacement Special Servicer ........................... S-78
Required Appraisal Date ................................ S-68
Revised Rate ........................................... S-55
Risk Factors ........................................... S-10
RNA .................................................... S-44
Senior Component ....................................... S-30
Servicers .............................................. S-75
S-92
<PAGE>
Servicing Standard ..................................... S-76, S-77
Servicing Transfer Event ............................... S-76
SMMEA .................................................. S-87
Special Servicing Fee .................................. S-79
Specially Serviced Mortgage Loan ....................... S-76
Stated Principal Balance ............................... S-68
Subordinate Component .................................. S-30
Suburban Lodge Loan .................................... S-30
Terms and Conditions ................................... S-61
The Kaleidoscope ....................................... S-51
The Suburban Lodge Loan ................................ S-28
Trustee Fee Rate ....................................... S-82
U.S. Person ............................................ G-4
Underwriters ........................................... S-88
Underwriting Agreement ................................. S-88
Underwritten Cash Flow ................................. S-38
Underwritten Cash Flow Debt Service Coverage Ratio .... S-38
Underwritten NOI ....................................... S-38
UW Cash Flow ........................................... S-38
UW DSCR ................................................ S-38
UW NOI ................................................. S-38
Voting Rights .......................................... S-82
Wilshire Financial Borrower ............................ S-49
Wilshire Financial Tower Property ...................... S-49
Withheld Amounts ....................................... S-64
Workout Fee ............................................ S-79
Yield Maintenance ...................................... S-43
YM ..................................................... S-43
</TABLE>
S-93
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX A
<TABLE>
<CAPTION>
LOAN NO. PROPERTY NAME ADDRESS
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Abbey Portfolio III Various
1.1 Long Beach Airport 3205 Lakewood Blvd
1.2 Sierra Gateway Business Center 39959 & 40015 Sierra Highway
1.3 Nevada Street Plaza 1915 West Redlands Blvd & 721 Nevada St.
1.4 Gardena Commerce Center 15500 So Western Ave / 1741-1751 W. Redondo Beach
1.5 Moreno Valley Commerce Center 23880-23962 Alessandro Boulevard
1.6 Mount Vernon Commerce Center 851 South Mount Vernon Avenue
2 Abbey Portfolio IV Various
2.1 Aliso Viejo Commerce Center 27782-27832 Aliso Creek Road
2.2 Wimbledon Business Center 12276-12550 Hesperia Road
2.3 Upland Commerce Center 1379-1399 Foothill Boulevard
2.4 AP Rancho Carmel 12125-12165 Alta Carmel Court
2.5 Atlantic Plaza 5166-5190 Atlantic Avenue
2.6 Garden Grove Commerce Center 9918 W. Katella Ave. & 11201 Brookhurst St.
3 Atlantic Development II 35 Technology Drive
3.1 7 Powderhorn Drive 7 Powderhorn Drive
3.2 35 Technology Drive 35 Technology Drive
4 Covina Hills Mobile Home Country Club 17350 East Temple Avenue
5 Liberty Fair Mall 240 Commonwealth Boulevard
6 Wilshire Financial 3600 Wilshire Blvd.
7 Hub Tower 699 Walnut Street
8 Gerry Buildings S. Los Angeles,Santee, & E. 8th Streets
9 Embassy Suites - Chicago 1445 Lake Cook Drive
10 Fairgrounds Plaza 37-63 West Aylesbury Road
11 Comfort Inn & Suites 2485 Hotel Circle Place
12 Suburban Lodge Portfolio Various
12.1 Suburban Lodge - Hazelwood 9067 Dunn Road
12.2 Suburban Lodge - Jackson 5731 I-55 North Frontage Road
12.3 Suburban Lodge - East Indianapolis 2301 Post Road
12.4 Suburban Lodge - St. Charles 1769 Fairlane Drive
12.5 Suburban Lodge - Newport News 12015 Jefferson Street
13 Northrop Grumman Building 793 Elkridge Landing Road
14 One Riverview Drive One Riverview Drive
15 Willo Arms Apartments 27181 Euclid Avenue
16 Rincon Country West Resort 4555 S Mission Road
17 Pavillion East SEC Coit & Campbell
18 Royal Lane Village Apartments 11323 Newkirk Street
19 Heritage Square Apartments 451 Fulton Ave, 14& 34 Elk Street
20 West Acre Commons 5080 Corunna Road
21 Vista Del Valle 4051 West Viking Road
22 Henson Productions 1416 N. La Brea
23 Creekside Shopping Center 1715-1725 Hacienda Drive
24 Concourse Building 2044 Concourse Drive
25 Computer Learning Center Building 10021 Balls Ford Road
26 Whispering Pines Apartments 201 S. Kolb Road
27 Transbulk Industrial Center 400 North Highland (Office)/901 Plum Street (Industrial)
28 TeleService Office Building 7050 Fairgrounds Parkway
29 Highridge Plaza Route 7A
30 Campus Edge - Phase II 1200 Mallard Creek Church Road
31 Brookshire Partners 11500 Dolan St. (CONG) & 11525 Brookshire (MOB)
32 Mall de las Aguilas 455 S. Bibb Ave.
33 Hampshire Heights / University Park Apartments 3045 Ilger Ave. / 1517 Secor Road
33.1 Village of Hampshire Heights Apts 3045 Ilger Avenue
33.2 University Park Apartments 1517 Secor Rd.
34 Anderson Apartments 204 South Harris Road
35 Temecula Corporate Plaza 27450 Ynez Road
36 Sunny Dale Apartments 5875 N. Yermo Dr
37 Del Prado Mobile Home Park 1616 South Euclid Street
38 West Dixie Towers 13865 West Dixie Highway
39 McData Building 1722 Boxelder Street
40 Brookside Sr. Apartments 2605 Brookside Drive
41 The Meadows Apartments 3506 Meadowview Boulevard
42 The Vail Estates Apartments 2100 South Richland Creek Drive
43 Auburn Center 905 Auburn Way North
44 Barnegat Village Square 912 West Bay Avenue
45 Manoog's Isle Mobile Home Park 2611 Pago Pago Street
46 Pavilion West 7512 & 7632 Campbell Road
47 11th Street Plaza 3134 Eleventh Street
48 Rotunda Apartments 330 Julia Street
49 North Philadelphia Station 2900 North Broad Street
50 Attleboro Crossing Shopping Center 217 South Main Street
51 Thomas Jefferson II Apartments 72-78 Jefferson St
52 Eckerd - Media 510 East Baltimore Pike
53 Westward Ho Manor Mobile Home Park 12044 Royal Road
54 River Center Plaza & Apts. 400 King Street
55 Golden Hills Mobile Home Park 720 East Worth Avenue
56 El Dorado Square 1200 North El Dorado Place
57 Nextel Building , Elmhurst IL 400 West Grand Avenue
58 Glendale Townhomes 2620 S. Stoughton Road
59 Stor Gard Self Storage 500 Providence Highway
60 Suburban Lodge - South Raleigh 1491 US Highway 70
61 Village at Southpark 3550 Pinhook Road
62 Guest House Inn - Decatur 4649 Memorial Drive
63 U-Store - Buena Park 6812 Stanton Avenue
64 Silk Oak Lodge Mobile Home Park 28488 US Highway 19 North
65 University Office Park 5400 South University Drive
66 Industrial Self Storage 1820 Pacheco Way
67 Appleseed Square 48-54 Dodge Sreet (Route 1A)
68 Lake Eden Gardens Mobile Home Park 3499 Stirling Road
69 Meadow Brook Plaza 4221, 4225, 4229 South US Highway 41
70 Surfside Apartments 9-11, 16, 20, 24 and 30 Surfside Road
71 South Daytona Self Storage 2090 South Nova Road
72 The Fields Apartments Ph III 1333 Fenbrook Lane
73 Hidden Forest Mobile Home Park 6602 Holder-Inman Raod
74 300 Metro Center Warwick 300 Metro Center
75 King Portfolio Various
75.1 King Plaza Shopping Center 1346-1376 E. Court St. and 330-380 State Hwy. 123
75.2 King Square Shopping Center 1117 East Court Street and 110-128 Moss Street
76 Kachina Village Shopping Center 3110-3192 East Indian School Road
77 Eckerd's Drug Store - Belton 409 East North Avenue
78 300 East 96th Street 300 E. 96th Street
79 Belmont Shopping Center 1106-1204 Bonforte Boulevard
80 Vermont Care Center 22035 S. Vermont Avenue
81 Grand Avenue Office Building 3500 Grand Avenue
82 Rainbow Express Village 1750 South Rainbow Boulevard
83 Country Villa East Nursing Center 2415 South Western Boulevard
84 ROS Centre 770 Ponce de Leon Blvd
85 Rite Aid - Bronx 650 East Tremont Avenue
86 Elk Properties 3012 Mobile Drive
87 Arkansas Pediatric Facility 4100 Heritage Drive
88 Signal Hill Business Park 2800 & 2900 Orange Ave & 1200 East 29th Street
89 Safe N Sound Self Storage 451 Bridge Street
90 Amazing Savings 19 Star Industrial Park
91 Asylum Apartments 1021 Asylum Avenue; 950 Asylum Avenue
91.1 Asylum Apts. - Asylum 950 Asylum Avenue
91.2 Asylum Apts. - Executive House 1021 Asylum Avenue
92 International Shops 7670 International Drive
93 Mirror Lake Apartments 1751 South Clyde Morris Boulevard
94 Aldine Mail Crossing 5415 Aldine Mail Route
95 El Paso Linens N Things 801 Sunland Park Dr
96 Valley Oaks Apartments 198 Goodson Drive
97 Santa Fe Apartments 5211& 5231- Blanco- 119 Dresden- 1004 Allena
98 First Miller Tech Center 310-370 Miller Avenue / 307-313 North 1st Street
99 Holiday Inn Express - Clute 809 Hwy 332 W
100 Eckerd - Clayton, NC 11360 US Highway 70
101 Idaho Building 280 N 8th Street
102 1717 Precinct Line Road 1717 Precinct Line Road
103 Eckerd-Johnstown,PA 1501 Scalp Avenue
104 Office Max 1411 Center Aveune West
105 Layton Square 841-881 West Layton Avenue
106 Pacific Place 4880-4920 E. Pacific Place & 4950 E. Asbury Avenue
107 Cimino Lane & Pine Grove Apartments Various
107.1 Pine Grove Apartments 3107, 3109 Carman Road
107.2 Cimino Lane Apartments 2, 3, 5 Cimino Lane
108 4212 Technology Court 4212 Technology Court
109 Sixth Avenue Mobile Home Park 39345 6th Avenue
110 Crenshaw Self Storage 6725 Crenshaw Boulevard
111 Sierra Sorrento I 9535 Waples Street
112 Lorain Point Apartments 615 John Anderson Court
113 Target Center 1304 and 1410 Wible Road
114 Sheltering Palms 2545 West 8th Street
115 Westwood Apartments 2631 Bachman Drive
116 Lakehurst Plaza 942-50 Lakehurst Drive
117 NCCS Portfolio I Various
117.1 133 Grant Street 133 Grant Street
117.2 193 Congress Street 193 Congress Street
117.3 6-8 May Street 6-8 May Street
117.4 142 Grant Street 142 Grant Street
117.5 149 Brackett Street 149 Brackett Street
118 Southernaire Mobile Home Park 1700 Sanford Road
119 Gateway - Springfield 537 Baltimore Pike
120 Gateway - Mesa 1036 West Southern Avenue
121 Parker Hill Apartments 11 Parker Hill Avenue
122 Palm Shadows Apartments 125 South 10th Avenue
123 Carriage Square Apartments 1017 W. Pioneer Parkway
124 Lafayette Apartments 825 Lafayette Street
125 Westlake Office Center 805 Beachway Drive
126 Heritage Business Park 1200 Millbury Street
127 Downtown Plaza Apartments 1010 Newton Street
128 Gateway - Lakeland 3756 US Highway 98
129 276-284 Broadway 276-284 Broadway
130 Tampico Retirement Center ALF 100 East Base Avenue
131 Valley Self Storage 37221 East Richardson Lane
132 Williamsburg Square Apartments 2101 Eden Street
133 Crystal Lake Mobile Home Park 3499 Stirling Road
134 Suburban Villas 1003 Perry Court
135 Hallmark - Naperville 1995 West Jefferson Avenue
136 Hilltopper Apartments 1019 Hilltop Drive
137 Panorama Pointe Villas 14610 Plummer Street
138 NCCS Portfolio II Various
138.1 696 Congress Street 696 Congress St.
138.2 316 & 316A Congress Street 316 & 316A Congress St.
138.3 190-192 State Street 190-192 State St.
138.4 469 Cumberland 469 Cumberland Ave.
139 Madison Community Bank Tower 33 West Tenth St
140 Gateway - Davenport 3260 East 53rd Street
141 Legacy Drive 6901 Avenue K
142 3 Pennsylvania Self Storage Various
143 Silver Creek Flex Building 6427 N. Business Park Loop Road
144 Bahia Harbor Beach Apartments 3019 Harbor Drive
145 Acorn Mini Storage 4652 Lyndale Avenue North
146 Masonic Arms Apartments 31681-31745 Hoover Road
147 Tobias Garden Apartments 8938 Tobias Avenue
148 Sunrise Villa 200 S. Union
149 9662-9684 NW 25th Street 9662-9684 NW 25th Street
150 Blockbuster - Chicago 3951 North Kimball Avenue
151 Blockbuster - Fairborn 1171 East Dayton-Yellow Springs Road
152 Blockbuster - Miamisburg 120 Heincke Road
153 3200 - 3204 Collinsworth Street 3200-3204 Collinsworth Street
154 Blockbuster - Waukegan 2728 W. Belvidere Rd.
155 Allstate Self Storage 5900 Esperanza Avenue
156 Tapestry Apartments 395 NE 8th Street
157 Mattress Giant - Berwyn 7044-7050 Cermak Road
158 Buckner Warehouse 10300 Airline Highway
159 4610 Peachtree Industrial Blvd 4610 Peachtree Industrial Blvd
160 Health South - Port Richey 11425 US 19 North
161 Country Club MHP 10125 Rt 16 & Martin Road
162 Gold Hill Mobile Home Park 771 Gold Hill Road
163 Pleasure Point Mobile Manor 720 26th Avenue
164 Kintner Estates Mobile Home Park 2942 NY Route 26 South
165 Health South - Bradenton 1300 E. Manatee Avenue
166 Blue Ridge Mobile Home Park New York State Route 7
167 M & M Apartments 564 Jose Marti Street
168 4029 29th Street 4029 49th Street
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NO. CITY STATE ZIP CODE COUNTY PROPERTY TYPE
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Various CA Various Various Various
1.1 Long Beach CA 90808 Los Angeles Industrial
1.2 Palmdale CA 93550 Los Angeles Office
1.3 Redlands CA 92373 San Bernardino Industrial
1.4 Gardena CA 90249 Los Angeles Retail
1.5 Moreno Valley CA 92553 Riverside Industrial
1.6 Colton CA 92324 San Bernardino Office
2 Various CA Various Various Various
2.1 Aliso Viejo CA 92656 Orange Retail
2.2 Victorville CA 92392 San Bernardino Retail
2.3 Upland CA 91786 San Bernardino Retail
2.4 San Diego CA 92128 San Diego Retail
2.5 Long Beach CA 90805 Los Angeles Retail
2.6 Garden Grove CA 92840 Orange Retail
3 Warren NJ 07059 Somerset Industrial
3.1 Warren NJ 07059 Somerset Industrial
3.2 Warren NJ 07959 Somerset Industrial
4 La Puente CA 91744 Los Angeles Multifamily
5 Martinsville VA 24112 Martinsville Retail
6 Los Angeles CA 90010 Los Angeles Office
7 Des Moines IA 50309 Polk Office
8 Los Angeles CA 90014 Los Angeles Industrial
9 Deerfield IL 60015 Cook Hotel
10 Timonium MD 21093 Baltimore Retail
11 San Diego CA 92108 San Diego Hotel
12 Various Various Various Various Hotel
12.1 Hazelwood MO 63042 St. Louis Hotel
12.2 Jackson MS 39213 Hinds Hotel
12.3 Indianapolis IN 46219 Marion Hotel
12.4 St. Charles MO 63301 St. Charles Hotel
12.5 Newport News VA 23602 Newport News Hotel
13 Linthicum MD 21075 Anne Arundel Office
14 Franklin Township NJ 08873 Somerset Industrial
15 Euclid OH 44132 Cuyahoga Multifamily
16 Tucson AZ 85746 Pima Multifamily
17 Richardson TX 75080 Dallas Retail
18 Dallas TX 75229 Dallas Multifamily
19 Hempstead NY 11550 Nassau Multifamily
20 Flint MI 48532 Genesee Retail
21 Las Vegas NV 89103 Clark Multifamily
22 Los Angeles CA 90028 Los Angeles Office
23 Vista CA 92083 San Diego Retail
24 San Jose CA 95131 Santa Clara Office
25 Manassas VA 20109 Prince William Office
26 Tucson AZ 85710 Pima Multifamily
27 Aurora IL 60506 Kane Industrial
28 San Antonio TX 78238 Bexar Office
29 Manchester VT 05255 Bennington Retail
30 Charlotte NC 28262 Mecklenburg Multifamily
31 Downey CA 90241 Los Angeles Mixed Use
32 Eagle Pass TX 78853 Maverick Retail
33 Toledo OH 43602 Lucas Multifamily
33.1 Toledo OH 43606 Lucas Multifamily
33.2 Toledo OH 43602 Lucas Multifamily
34 Ypsilanti MI 48198 Washtenaw Multifamily
35 Temecula CA 92591 Riverside Office
36 Toledo OH 43613 Lucas Multifamily
37 Anaheim CA 92802 Orange Multifamily
38 North Miami FL 33161 Dade Multifamily
39 Louisville CO 80027 Boulder Industrial
40 Bakersfield CA 93311 Kern Multifamily
41 New Castle PA 16105 Lawrence Multifamily
42 Princeton IN 47670 Gibson Multifamily
43 Auburn WA 98002 Kings Retail
44 Barnegat NJ 08005 Ocean Retail
45 Anchorage AK 99507 Anchorage Multifamily
46 Dallas TX 75248 Dallas Retail
47 Rockford IL 61109 Winnebago Retail
48 New Orleans LA 70130 Orleans Multifamily
49 Philadelphia PA 19132 Philadelphia Retail
50 Attleboro MA 02703 Bristol Retail
51 Hoboken NJ 07030 Hudson Multifamily
52 Media Borough PA 19063 Delaware Retail
53 El Cajon CA 92021 San Diego Multifamily
54 La Crosse WI 54601 La Crosse Multifamily
55 Porterville CA 93257 Tulare Multifamily
56 Tucson AZ 85715 Pima Office
57 Elmhurst IL 60126 DuPage Office
58 Madison WI 53716 Dane Multifamily
59 Walpole MA 02081 Norfolk Self Storage
60 Garner NC 27529 Wake Hotel
61 Lafayette LA 71360 Lafayette Retail
62 Decatur GA 30032 Dekalb Hotel
63 Buena Park CA 90621 Orange Self Storage
64 Clearwater FL 33761 Pinellas Multifamily
65 Davie FL 33328 Broward Office
66 Hayward CA 94544 Aleneda Self Storage
67 Beverly MA 01915 Essex Retail
68 Hollywood FL 33312 Broward Multifamily
69 Terra Haute IN 47802 Vigo Retail
70 Lynn MA 01902 Essex Multifamily
71 South Daytona FL 32019 Volusia Self Storage
72 Bloomington IN 47401 Monroe Multifamily
73 Randolph NC 27317 Randolph Multifamily
74 Warwick RI 02886 Kent Office
75 Seguin TX 78122 Guadalupe Retail
75.1 Seguin TX 78155 Guadalupe Retail
75.2 Seguin TX 78155 Guadalupe Retail
76 Phoenix AZ 85016 Maricopa Retail
77 Belton MO 64012 Cass Retail
78 New York NY 10128 New York Multifamily
79 Pueblo CO 81001 Pueblo Retail
80 Torrance CA 60502 Los Angeles Nursing Home
81 Chicago IL 60651 Cook Office
82 Las Vegas NV 89146 Clark Retail
83 Los Angeles CA 90018 Los Angeles Nursing Home
84 Coral Gables FL 33134 Miami Dade Office
85 Bronx NY 10457 Bronx Retail
86 Elkhart IN 46514 Elkhart Industrial
87 North Little Rock AR 72117 Pulaski Nursing Home
88 Signal Hill CA 90806 Los Angeles Office
89 Groton CT 06340 New London Self Storage
90 Mountainville NY 10953 Orange Industrial
91 Hartford CT 06105 Hartford Multifamily
91.1 Hartford CT 06105 Hartford Multifamily
91.2 Hartford CT 06105 Hartford Multifamily
92 Orlando FL 32819 Orange Retail
93 Daytona Beach FL 32119 Volusia Multifamily
94 Houston TX 77039 Harris Retail
95 El Paso TX 79912 El Paso Retail
96 Houston TX 77050 Harris Multifamily
97 San Antonio TX 78216 Bexar Multifamily
98 Ann Arbor MI 48103 Washtenaw Office
99 Clute TX 77531 Brazoria Hotel
100 Clayton NC 27520 Johnson Retail
101 Boise ID 83702 Ada Mixed Use
102 Hurst TX 76054 Tarrant Office
103 Richland Township PA 15904 Cambria Retail
104 Dilworth MN 56529 Clay Retail
105 Milwaukee WI 53321 Milwaukee Retail
106 Denver CO 80222 Denver Industrial
107 Rotterdam NY 12306 Schenectady Multifamily
107.1 Rotterdam NY 12306 Schenectady Multifamily
107.2 Rotterdam NY 12306 Schenectady Multifamily
108 Chantilly VA 22021 Fairfax Industrial
109 Zephyrhills FL 33540 Pasco Multifamily
110 Los Angeles CA 90043 Los Angeles Self Storage
111 San Diego CA 92121 San Diego Industrial
112 Monroe MI 48162 Monroe Multifamily
113 Bakersfield CA 93304 Kern Retail
114 Yuma AZ 85364 Yuma Multifamily
115 Dallas TX 75220 Dallas Multifamily
116 Waukegan IL 60085 Lake Retail
117 Portland ME Various Cumberland Multifamily
117.1 Portland ME 04101 Cumberland Multifamily
117.2 Portland ME 04101 Cumberland Multifamily
117.3 Portland ME 04102 Cumberland Multifamily
117.4 Portland ME 04101 Cumberland Multifamily
117.5 Portland ME 04102 Cumberland Multifamily
118 Mt. Dora FL 34757 Lake Multifamily
119 Springfield PA 19064 Delaware Retail
120 Mesa AZ 85210 Maricopa Retail
121 Boston MA 02120 Suffolk Multifamily
122 Yuma AZ 85364 Yuma Multifamily
123 Arlington TX 76013 Tarrant Multifamily
124 New Orleans LA 70113 Orleans Multifamily
125 Indianapolis IN 46224 Marion Office
126 Worcester MA 01607 Worcester Industrial
127 Bristol VA 24201 Bristol Multifamily
128 Lakeland FL 33809 Polk Retail
129 Brooklyn NY 11211 Kings Mixed Use
130 Venice FL 34285 Sarasota Congregate Care
131 Purcellville VA 20132 Loudoun Self Storage
132 Pascagoula MS 39581 Jackson Multifamily
133 Hollywood FL 33312 Broward Multifamily
134 Brandon FL 33511 Hillsborough Multifamily
135 Naperville IL 60540 Dupage Retail
136 Irving TX 75060 Dallas Multifamily
137 Panorama City CA 91402 Los Angeles Multifamily
138 Portland ME Various Cumberland Multifamily
138.1 Portland ME 04102 Cumberland Multifamily
138.2 Portland ME 04101 Cumberland Multifamily
138.3 Portland ME 04101 Cumberland Multifamily
138.4 Portland ME 04101 Cumberland Multifamily
139 Anderson IN 46016 Madison Office
140 Davenport IA 52807 Scott Retail
141 Plano TX 75074 Collin Industrial
142 Various PA Various Westmoreland/Fayette Self Storage
143 Park City UT 84098 Summit Industrial
144 Fort Lauderdale FL 33316 Broward Multifamily
145 Minneapolis MN 55412 Henresin Self Storage
146 Warren MI 48093 Macomb Multifamily
147 Panorama City CA 91402 Los Angeles Multifamily
148 Kennewick WA 99336 Benton Multifamily
149 Miami FL 33172 Miami Dade Retail
150 Chicago IL 60618 Cook Retail
151 Fairborn OH 45324 Greene Retail
152 Miamisburg OH 45342 Montgomery Retail
153 Fort Worth TX 76107 Tarrant Office
154 Waukegan IL 60085 Lake Retail
155 Whittier CA 90606 Los Angeles Self Storage
156 Milaca MN 56353 Mille Lacs Multifamily
157 Berwyn IL 60402 Cook Retail
158 St. Rose LA 70087 St. Charles Industrial
159 Norcross GA 30071 Gwinnett Industrial
160 Port Richey FL 33568 Pasco Office
161 Machias NY 14042 Cattaraugus Multifamily
162 Newcastle CA 95658 Placer Multifamily
163 Santa Cruz CA 95062 Santa Cruz Multifamily
164 Vestal NY 13850 Broome Multifamily
165 Bradenton FL 34205 Manatee Office
166 Conklin NY 13748 Broome Multifamily
167 Brownsville TX 78521 Cameron Multifamily
168 San Diego CA 92105 San Diego Multifamily
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF OCCUPANCY
LOAN NO. SUB PROPERTY TYPE YEAR BUILT YEAR RENOVATED UNITS/SQ. FT. RATE (1)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Various 642,452 94.7
1.1 Flex Space 1998 205,257 100.0
1.2 Suburban 1990 130,838 96.0
1.3 Flex Space 1989 126,292 93.0
1.4 Unanchored 1985 1995 39,405 96.0
1.5 Flex Space 1986 111,060 86.0
1.6 Suburban 1989 29,600 91.0
2 Various 303,138 83.7
2.1 Unanchored 1993 64,137 95.0
2.2 Unanchored 1988 1999 123,225 92.0
2.3 Unanchored 1959 1987 44,957 29.0
2.4 Unanchored 1988 26,978 92.0
2.5 Unanchored 1944 1958 31,281 100.0
2.6 Unanchored 1987 1995 12,560 81.0
3 Flex Space 273,061 100.0
3.1 Flex Space 1979 180,500 100.0
3.2 Flex Space 1985 92,561 100.0
4 Mobile Home Park 1972 500 100.0
5 Anchored 1989 1997 435,402 92.0
6 CBD 1961 1992 375,614 94.6
7 CBD 1985 1998 281,028 100.0
8 Flex Space 1912-1946 1999 707,125 90.0
9 Full Service 1987 1997 237 75.0
10 Anchored 1999 107,060 99.0
11 Limited Service 1969 1988-1996 200 78.1
12 Extended Stay 667 77.4
12.1 Extended Stay 1997 136 79.4
12.2 Extended Stay 1997 132 76.5
12.3 Extended Stay 1998 135 68.4
12.4 Extended Stay 1997 130 80.0
12.5 Extended Stay 1997 134 82.6
13 Suburban 1974 1999 194,457 100.0
14 Flex Space 1985 136,000 100.0
15 Multifamily 1962-1967 1998 736 91.0
16 Mobile Home Park 1984 1999 1,101 77.0
17 Anchored 1987 1998 171,157 98.0
18 Multifamily 1970 1999 320 97.5
19 Multifamily 1963 1997 346 97.0
20 Anchored 1998 95089 92.0
21 Multifamily 1983 261 98.0
22 Suburban 1918-1971 2000 83,000 100.0
23 Anchored 1992 135,949 100.0
24 Suburban 1980 1999 57,244 100.0
25 Suburban 1999 95,210 75.2
26 Multifamily 1973 1999 272 98.0
27 Flex Space 1951-1957 1997 408,842 95.0
28 Suburban 1991 86,000 100.0
29 Unanchored 1997 46,200 86.7
30 Multifamily 1999 84 100.0
31 Medical Office/Assisted Living Facility 1983 38,359 / 252 100.0
32 Anchored 1982 1996 347,254 91.0
33 Multifamily 1951 1999 403 95.2
33.1 Multifamily 1951 1999 304 94.0
33.2 Multifamily 1966 1999 99 99.0
34 Multifamily 1972 302 100.0
35 Suburban 1990 82,645 99.0
36 Multifamily 1969-1971 1998 266 97.0
37 Mobile Home Park 1968 130 96.9
38 Multifamily 1969 1997 199 96.0
39 Flex Space 2000 91,497 100.0
40 Multifamily 1998 120 100.0
41 Multifamily 1998 120 96.0
42 Multifamily 1999 144 97.0
43 Anchored 1998 46,260 96.1
44 Anchored 1999 70,491 96.0
45 Mobile Home Park 1976 365 87.4
46 Unanchored 1979 84,250 98.0
47 Anchored 1960 1998 109,401 100.0
48 Multifamily 1905 1989 68 100.0
49 Anchored 1999 70,057 100.0
50 Anchored 1969 1987 98,013 97.0
51 Multifamily 1999-2000 23 100.0
52 Anchored 2000 12,739 100.0
53 Mobile Home Park 1964 1969 129 98.0
54 Multifamily 1999 62 98.0
55 Mobile Home Park 1972 223 97.0
56 Suburban 1981 69,955 88.5
57 Suburban 1979 58,076 100.0
58 Multifamily 1969 1995 93 91.0
59 Self Storage 1997 75,415 85.6
60 Extended Stay 1998 140 88.3
61 Anchored 1985 1998 68,348 90.5
62 Extended Stay 1997 172 95.4
63 Self Storage 1986 1998-1999 62,182 91.0
64 Mobile Home Park 1960 182 93.5
65 Suburban 1999 45,468 100.0
66 Self Storage 1997 66,715 88.2
67 Unanchored 1800/1960 1985 25,185 88.0
68 Mobile Home Park 1961 140 97.2
69 Anchored 1999 36,024 100.0
70 Multifamily 1920 1999 68 96.0
71 Self Storage 1985 102,586 91.0
72 Multifamily 1999 48 96.0
73 Mobile Home Park 1988 1997 194 95.0
74 Suburban 1984 1989 36,614 100.0
75 Unanchored 45,333 100.0
75.1 Unanchored 1978-1979 1995-1999 28,169 100.0
75.2 Unanchored 1950s 1995 17,164 100.0
76 Unanchored 1960 1999 47,601 93.0
77 Anchored 1999 11,200 100.0
78 Multifamily 1926 1986 25 100.0
79 Anchored 1967 1974 81,289 99.0
80 Skilled Nursing Facility 1965 1997 200 96.3
81 CBD 1953 1999 34888 100.0
82 Unanchored 1985 30,665 94.5
83 Skilled Nursing Facility 1969 98 93.0
84 Suburban 1996 28,506 100.0
85 Unanchored 1931 1999 11,250 100.0
86 Warehouse/Distribution 1967 1999 138,833 100.0
87 Skilled Nursing Facility 1983 1988 53 99.1
88 Suburban 1991 42,610 90.0
89 Self Storage 1986 1997 68,120 83.0
90 Warehouse/Distribution 1965 1997 123,000 100.0
91 Multifamily 1970 1993 152 94.3
91.1 Multifamily 1965 1993 70 90.0
91.2 Multifamily 1970 1993 82 98.0
92 Unanchored 1996 10,430 100.0
93 Multifamily 1986 92 100.0
94 Anchored 1982 1998 78,452 100.0
95 Unanchored 1999 33,000 100.0
96 Multifamily 1970 2000 147 93.0
97 Multifamily 1968 1999 110 97.0
98 Suburban 1925 1981 21,976 100.0
99 Limited Service 1995 60 71.0
100 Anchored 1998 10,908 100.0
101 Multifamily/Office/Retail 1910 1989 57,809 90.0
102 Suburban 1985 31,269 100.0
103 Anchored 1999 10,908 100.0
104 Anchored 1999 23,500 100.0
105 Unanchored 1986 27,382 91.2
106 Flex Space 1965 and 1972 65,939 100.0
107 Multifamily 83 97.6
107.1 Multifamily 1987 40 95.0
107.2 Multifamily 1985 43 100.0
108 Flex Space 1988 2000 30,830 100.0
109 Mobile Home Park 1976 140 96.0
110 Self Storage 1987 35,180 99.0
111 Flex Space 1986 43,100 100.0
112 Multifamily 1969 1998 56 93.0
113 Shadow Anchored 1984 21,955 89.0
114 Mobile Home Park 1940-1980 162 90.0
115 Multifamily 1964 1998 103 94.2
116 Unanchored 1989 27,007 100.0
117 Multifamily 1910 1996 49 98.1
117.1 Multifamily 1900 1999 19 95.0
117.2 Multifamily 1900 1996 12 100.0
117.3 Multifamily 1910 1992 6 100.0
117.4 Multifamily 1910 1998 6 100.0
117.5 Multifamily 1900 1998 6 100.0
118 Mobile Home Park 1970 115 95.7
119 Unanchored 1998 1999 8,000 100.0
120 Unanchored 1983 1999 7,983 100.0
121 Multifamily 1964 1994 24 100.0
122 Multifamily 1986 1999 76 98.0
123 Multifamily 1970 1998 71 99.0
124 Multifamily 1906 1999 12 100.0
125 Suburban 1984 1995 29,259 100.0
126 Flex Space 1990 32,400 98.3
127 Multifamily 1973 1999 76 91.0
128 Unanchored 1999 8,000 100.0
129 Multifamily/Retail 1920 15,400 100.0
130 Assisted Living Facility 1970 34 90.0
131 Self Storage 1994 1994-1997 31,055 98.0
132 Multifamily 1970 60 87.0
133 Mobile Home Park 1961 51 98.0
134 Multifamily 1973 36 100.0
135 Unanchored 1999 7,000 100.0
136 Multifamily 1969 65 100.0
137 Multifamily 1991 43 100.0
138 Multifamily 32 96.9
138.1 Multifamily 1916 1997 5 80.0
138.2 Multifamily 1900 1999 7 100.0
138.3 Multifamily 1915 1999 14 100.0
138.4 Multifamily 1910 1997 6 100.0
139 Suburban 1970 1989 70,724 90.0
140 Unanchored 1999 8,000 100.0
141 Flex Space 1999 20,000 100.0
142 Self Storage 1989 61,071 81.0
143 Flex Space 1999 13,382 100.0
144 Multifamily 1950 1994 14 100.0
145 Self Storage 1988 44,175 97.6
146 Multifamily 1975 Various Dates 34 100.0
147 Multifamily 1988 52 100.0
148 Multifamily 1976 1993 32 100.0
149 Unanchored 1997 9,000 100.0
150 Unanchored 1999 1999 4,800 100.0
151 Unanchored 1999 5,000 100.0
152 Unanchored 1999 5,005 100.0
153 Suburban 1970 1998 12,650 100.0
154 Unanchored 1999 3,900 100.0
155 Self Storage 1987 1997 20,240 93.0
156 Multifamily 1998 18 100.0
157 Unanchored 1951 9,500 100.0
158 Warehouse/Distribution 1998 9,145 100.0
159 Flex Space 1986 2000 14,632 100.0
160 Suburban 1997 6,000 100.0
161 Mobile Home Park 1985 1998 60 100.0
162 Mobile Home Park 1965 32 100.0
163 Mobile Home Park 1966 33 100.0
164 Mobile Home Park 1975 58 93.1
165 Suburban 1999 4,200 100.0
166 Mobile Home Park 1985 1993 70 84.3
167 Multifamily 1992 1999 10 100.0
168 Multifamily 1955 1998 8 100.0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL
PRINCIPAL CROSSED
APPRAISAL APPRAISAL CURRENT BALANCE ($) CURRENT PRINCIPAL LOAN GROUP
LOAN NO. OCCUPANCY DATE VALUE ($)(2) DATE LTV (2) BALANCE ($)(2) (3)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6/1/00 41,970,000 Various 58.9 24,701,611 24,701,611 1
1.1 6/1/00 12,200,000 7/2/99 7,180,180
1.2 6/1/00 10,865,000 6/17/99 6,394,704
1.3 6/1/00 6,000,000 6/23/99 3,531,360
1.4 6/1/00 5,770,000 7/14/99 3,395,991
1.5 6/1/00 4,850,000 7/16/99 2,854,516
1.6 6/1/00 2,285,000 7/16/99 1,344,860
2 6/1/00 39,070,000 Various 58.9 22,995,039 22,995,039 1
2.1 6/1/00 13,250,000 7/21/99 7,798,420
2.2 6/1/00 12,000,000 6/22/99 7,062,720
2.3 6/1/00 5,500,000 7/19/99 3,237,080
2.4 6/1/00 3,775,000 7/9/99 2,221,814
2.5 6/1/00 2,895,000 7/20/99 1,703,881
2.6 6/1/00 1,650,000 7/28/99 971,124
3 4/1/00 35,615,000 6/8/99 61.8 22,150,000 22,013,205
3.1 8/7/00 22,140,000 6/8/99 11,500,000
3.2 8/7/00 13,475,000 6/8/99 10,650,000
4 4/1/00 30,030,000 6/8/99 71.9 21,750,000 21,587,115
5 4/26/00 32,400,000 9/23/99 63.4 21,250,000 20,549,985
6 8/1/00 27,000,000 10/1/99 68.8 18,650,000 18,576,294
7 3/13/00 25,500,000 3/28/00 70.4 18,000,000 17,952,264
8 4/24/00 23,400,000 10/26/99 71.9 16,950,000 16,824,504
9 2/29/00 23,700,000 4/1/00 69.7 16,575,000 16,523,281
10 3/6/00 20,700,000 4/21/99 78.3 15,300,000 16,200,572
11 12/31/99 21,700,000 8/31/99 68.5 14,950,000 14,855,262
12 3/31/00 22,675,000 Various 52.9 13,700,000 12,000,000
12.1 3/31/00 4,550,000 4/29/99 2,800,000
12.2 3/31/00 4,775,000 4/27/99 2,800,000
12.3 3/31/00 4,750,000 4/28/99 2,700,000
12.4 3/31/00 4,200,000 4/29/99 2,700,000
12.5 3/31/00 4,400,000 4/14/99 2,700,000
13 7/1/00 17,500,000 12/2/99 71.7 12,600,000 12,553,764
14 8/17/00 16,900,000 6/8/99 74.1 12,600,000 12,519,833
15 7/1/00 16,000,000 11/19/99 74.6 12,000,000 11,938,863
16 6/30/00 19,000,000 4/12/00 57.8 11,000,000 10,989,210
17 6/1/00 16,900,000 9/7/99 64.9 11,100,000 10,967,877
18 6/19/00 13,200,000 12/10/99 79.2 10,500,000 10,458,138
19 2/1/00 13,850,000 11/12/99 73.6 10,225,000 10,195,894
20 3/29/00 12,000,000 1/17/00 79.0 9,500,000 9,475,093
21 12/31/99 11,960,000 5/12/99 76.5 9,230,000 9,152,820
22 5/25/00 13,900,000 2/22/00 64.9 9,050,000 9,028,031
23 1/1/00 12,200,000 4/26/99 69.9 8,600,000 8,531,358
24 3/3/00 10,750,000 7/8/99 76.8 8,300,000 8,259,155
25 4/6/00 14,200,000 3/1/00 56.2 8,000,000 7,985,364
26 2/21/00 9,950,000 3/13/00 76.2 7,600,000 7,584,167
27 11/2/99 10,400,000 11/8/99 72.6 7,600,000 7,549,192
28 10/7/99 12,055,000 11/1/99 62.0 7,500,000 7,468,980
29 1/1/00 10,800,000 10/1/99 68.4 7,425,000 7,388,975
30 4/1/00 9,850,000 4/14/00 74.5 7,350,000 7,335,521
31 11/18/99 10,500,000 10/11/99 69.2 7,310,000 7,263,580
32 2/11/00 13,225,000 12/27/99 53.5 7,100,000 7,069,557
33 12/31/99 11,290,000 11/18/99 60.4 6,863,000 6,820,989
33.1 11/10/99 8,650,000 11/18/99 5,460,000
33.2 11/10/99 2,640,000 11/18/99 1,403,000
34 11/18/99 9,300,000 11/12/99 72.8 6,800,000 6,766,663
35 6/23/00 9,400,000 6/1/99 70.7 6,700,000 6,649,142
36 1/12/00 8,000,000 2/15/00 76.7 6,155,000 6,136,709
37 12/31/99 8,170,000 9/21/99 73.1 6,000,000 5,971,635
38 1/31/00 7,300,000 1/29/00 79.8 5,840,000 5,825,724
39 3/15/00 9,300,000 4/1/00 62.2 5,800,000 5,781,674
40 2/1/00 7,570,000 2/23/00 75.7 5,740,000 5,727,747
41 7/23/99 7,480,000 7/31/99 74.5 5,900,000 5,573,634
42 12/14/99 7,400,000 1/1/00 70.6 5,250,000 5,225,565
43 1/31/00 6,850,000 8/13/99 74.4 5,120,000 5,096,807
44 2/28/00 7,100,000 11/1/99 71.5 5,100,000 5,075,343
45 2/29/00 6,525,000 3/4/99 74.4 4,900,000 4,855,437
46 6/1/00 7,600,000 9/7/99 62.4 4,800,000 4,744,562
47 3/16/00 6,200,000 7/20/99 76.2 4,750,000 4,727,035
48 8/23/00 6,200,000 2/23/99 72.8 4,545,000 4,511,866
49 12/31/99 6,500,000 5/1/99 68.7 4,500,000 4,468,178
50 11/30/99 6,200,000 8/4/99 71.1 4,430,000 4,408,522
51 3/10/00 6,200,000 12/27/99 70.0 4,365,000 4,338,163
52 3/29/00 4,900,000 1/20/00 86.9 4,286,000 4,255,675
53 2/25/00 5,650,000 8/4/99 74.0 4,200,000 4,180,032
54 3/1/00 6,050,000 3/1/00 68.4 4,150,000 4,139,705
55 1/31/00 5,360,000 9/29/99 77.1 4,152,000 4,132,261
56 3/31/00 7,070,000 6/16/99 57.6 4,100,000 4,074,851
57 1/12/00 6,000,000 2/1/00 66.5 4,000,000 3,987,300
58 6/8/00 5,200,000 5/11/00 75.7 3,938,000 3,934,821
59 3/16/00 5,650,000 11/17/98 69.3 4,000,000 3,912,996
60 10/31/99 6,550,000 6/15/99 59.4 3,930,000 3,893,084
61 12/31/99 5,500,000 5/3/99 70.0 3,875,000 3,848,995
62 1/31/00 7,250,000 7/6/99 52.9 3,875,000 3,838,676
63 3/1/00 5,100,000 12/17/99 71.8 3,745,000 3,660,430
64 4/1/00 5,060,000 8/5/99 72.3 3,675,000 3,657,232
65 12/31/99 5,035,000 6/28/99 71.1 3,600,000 3,579,888
66 2/29/00 5,000,000 6/16/99 71.2 3,601,415 3,560,064
67 11/1/99 4,700,000 11/1/99 74.4 3,510,000 3,496,085
68 1/24/00 4,320,000 8/27/99 79.6 3,455,000 3,438,389 2
69 10/14/99 4,750,000 10/21/99 72.1 3,442,000 3,426,941
70 8/1/99 4,600,000 2/7/00 73.5 3,400,000 3,381,433
71 8/10/99 4,750,000 7/6/99 71.0 3,400,000 3,373,327
72 9/21/99 4,200,000 10/8/99 78.2 3,300,000 3,283,141
73 4/20/00 3,950,000 11/5/99 79.6 3,160,000 3,145,752
74 3/8/00 4,120,000 2/24/00 75.1 3,100,000 3,093,989
75 12/31/99 4,200,000 6/11/99 72.4 3,070,000 3,040,869
75.1 12/31/99 3,120,000 6/11/99 2,330,000
75.2 12/31/99 1,080,000 6/11/99 740,000
76 4/1/00 4,300,000 12/28/99 69.4 2,990,000 2,985,510
77 8/24/99 3,400,000 8/9/99 87.5 3,016,000 2,974,994
78 10/14/99 3,900,000 9/15/99 72.7 2,850,000 2,835,616
79 3/1/00 3,800,000 5/13/99 74.1 2,840,000 2,817,394
80 12/31/99 3,925,000 5/18/99 69.3 2,750,000 2,718,176
81 12/31/99 4,600,000 10/1/99 58.6 3,000,000 2,697,619
82 4/30/00 4,050,000 2/19/99 66.2 2,700,000 2,680,513
83 12/31/99 3,900,000 3/26/99 67.2 2,650,000 2,621,288
84 7/18/00 3,900,000 5/10/00 66.6 2,600,000 2,599,128
85 8/16/99 3,300,000 7/6/99 77.4 2,625,000 2,555,432
86 7/25/00 3,650,000 6/7/00 69.8 2,550,000 2,548,207
87 3/31/00 3,850,000 5/12/99 64.2 2,500,000 2,473,559
88 3/16/00 3,400,000 12/18/99 71.9 2,450,000 2,443,669
89 1/27/00 4,220,000 10/6/98 57.7 2,468,866 2,435,723
90 1/31/00 3,800,000 11/1/99 63.9 2,450,000 2,426,972
91 10/1/99 2,950,000 8/10/99 79.6 2,360,000 2,349,641
91.1 4/1/00 1,100,000 8/10/99 880,000
91.2 4/30/00 1,850,000 8/10/99 1,480,000
92 1/31/00 3,500,000 6/9/99 66.4 2,350,000 2,325,649
93 3/24/00 3,100,000 7/1/99 74.2 2,325,000 2,301,562
94 1/1/00 3,500,000 5/22/99 65.0 2,300,000 2,275,247
95 4/25/00 3,950,000 4/10/00 56.8 2,250,000 2,244,478
96 6/30/00 2,800,000 6/22/00 77.1 2,160,000 2,159,188
97 7/28/00 2,800,000 6/7/00 75.0 2,100,000 2,100,000
98 3/1/00 3,200,000 9/15/99 65.1 2,100,000 2,083,960
99 10/7/99 3,280,000 10/8/99 63.2 2,100,000 2,073,947
100 2/17/00 2,540,000 1/20/00 81.0 2,073,000 2,057,277
101 6/2/00 4,400,000 12/1/99 46.7 2,122,000 2,055,124
102 1/13/00 3,400,000 7/8/99 58.9 2,015,000 2,004,156
103 1/14/00 2,845,000 12/10/99 70.1 2,000,000 1,993,524
104 12/31/99 2,700,000 8/12/99 73.5 1,995,000 1,983,951
105 12/6/99 2,500,000 3/8/99 73.4 1,846,000 1,834,644
106 3/15/00 2,550,000 9/24/99 71.7 1,837,500 1,829,128
107 4/15/00 2,440,000 5/7/00 74.7 1,825,000 1,822,814
107.1 4/6/00 1,260,000 4/15/00 940,000
107.2 4/1/00 1,180,000 5/15/00 885,000
108 5/19/00 2,900,000 3/7/00 62.8 1,825,000 1,822,547
109 4/1/00 2,370,000 8/4/99 73.0 1,740,000 1,729,802
110 1/31/00 2,510,000 3/8/99 67.5 1,720,000 1,694,198
111 12/31/99 3,960,000 5/11/99 41.1 1,637,500 1,628,194
112 6/1/00 2,050,000 5/24/00 79.2 1,625,000 1,624,369
113 3/1/00 2,300,000 5/5/99 68.0 1,575,000 1,563,013
114 1/13/00 2,200,000 6/3/99 68.7 1,520,000 1,511,333
115 2/29/00 2,100,000 3/2/99 71.0 1,517,000 1,490,766 3
116 9/16/99 2,045,000 9/3/99 71.7 1,475,000 1,467,116
117 5/1/00 1,835,000 8/11/99 79.3 1,468,000 1,455,987
117.1 5/1/00 760,000 8/11/99 608,000
117.2 5/1/00 390,000 8/11/99 312,000
117.3 5/1/00 275,000 8/11/99 220,000
117.4 5/1/00 205,000 8/11/99 164,000
117.5 5/1/00 205,000 8/11/99 164,000
118 4/1/00 2,160,000 8/6/99 67.2 1,460,000 1,451,443
119 6/1/00 2,250,000 10/28/99 63.9 1,443,000 1,437,534
120 6/1/00 2,150,000 10/25/99 65.1 1,405,000 1,399,844
121 6/3/00 2,100,000 5/12/00 66.6 1,400,000 1,398,940
122 3/1/00 2,000,000 10/8/99 69.7 1,400,000 1,393,721
123 7/20/00 1,840,000 3/31/99 74.3 1,380,000 1,367,600
124 3/8/00 2,040,000 6/1/99 65.6 1,345,000 1,337,507 4
125 4/10/00 1,785,000 9/8/99 73.4 1,317,000 1,309,767
126 7/1/00 1,750,000 5/27/99 74.4 1,312,500 1,302,003
127 3/19/00 1,575,000 3/13/00 82.4 1,300,000 1,297,487
128 12/9/99 1,975,000 10/22/99 65.3 1,295,000 1,290,344
129 5/8/00 1,850,000 9/23/99 69.0 1,285,000 1,276,139
130 5/3/00 1,620,000 10/14/99 74.5 1,215,000 1,207,349
131 8/10/00 1,830,000 4/21/99 64.9 1,200,000 1,187,149
132 3/1/00 1,470,000 1/25/00 78.7 1,160,000 1,156,485
133 1/25/00 1,450,000 8/27/99 78.6 1,145,000 1,139,495 2
134 3/1/00 1,600,000 10/6/99 71.1 1,140,000 1,137,414
135 11/29/99 1,670,000 11/21/99 66.2 1,110,000 1,105,395
136 12/1/99 1,500,000 3/2/99 73.4 1,120,000 1,100,631 3
137 12/31/99 1,600,000 6/16/99 66.9 1,075,000 1,069,788
138 6/1/00 1,315,000 5/10/00 79.8 1,050,000 1,049,227
138.1 6/1/00 300,000 2/21/00 430,000
138.2 5/19/00 245,000 2/21/00 240,000
138.3 6/1/00 540,000 2/21/00 196,000
138.4 6/1/00 230,000 2/21/00 184,000
139 3/8/00 2,000,000 1/13/00 52.3 1,050,000 1,046,084
140 12/21/99 1,750,000 11/22/99 59.4 1,042,000 1,039,703
141 1/1/00 1,450,000 8/5/99 71.1 1,035,000 1,031,366
142 5/4/00 1,700,000 12/3/99 60.3 1,031,000 1,025,767
143 6/15/00 1,750,000 2/23/00 57.0 1,000,000 997,340
144 2/28/00 1,600,000 8/30/99 62.1 1,000,000 994,106
145 1/31/00 1,800,000 6/14/99 55.1 1,000,000 992,506
146 2/29/00 1,380,000 9/27/99 71.9 1,000,000 991,817
147 2/29/00 1,500,000 7/10/99 64.7 975,000 970,947
148 8/22/00 1,225,000 6/28/00 78.6 964,000 963,343
149 3/1/00 1,150,000 1/7/00 71.1 820,000 817,688
150 11/17/99 1,250,000 11/21/99 64.9 815,000 811,609
151 11/17/99 1,040,000 10/21/99 65.3 682,000 679,162
152 11/17/99 1,020,000 10/28/99 65.7 673,000 670,200
153 2/20/00 900,000 5/20/99 74.1 675,000 667,329
154 12/6/99 1,010,000 10/22/99 65.4 663,000 660,539
155 1/30/00 1,020,000 3/3/99 64.8 670,000 660,536
156 3/31/00 962,000 3/12/00 68.2 659,000 655,654
157 6/1/00 960,000 10/21/99 61.5 594,000 590,806
158 2/29/00 790,000 6/1/99 74.6 595,000 589,203 4
159 5/26/00 850,000 3/3/00 67.6 575,000 574,226
160 7/14/99 755,000 7/30/99 74.2 566,000 560,155 5
161 1/1/00 675,000 1/6/00 79.6 540,000 537,603
162 2/23/00 680,000 10/5/99 79.0 540,000 537,433
163 2/29/00 760,000 9/22/99 67.8 518,000 515,537
164 3/2/00 640,000 6/4/99 74.3 480,000 475,519 6
165 9/1/99 600,000 7/8/99 72.4 439,000 434,467 5
166 6/2/00 450,000 6/4/99 74.3 337,500 334,350 6
167 2/15/00 400,000 12/1/99 62.2 250,000 248,943
168 10/1/99 330,000 12/20/99 67.0 222,300 220,965
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW MORTGAGE MORTGAGE
RELATED LOAN CURRENT MORTGAGE INTEREST RATE INTEREST RATE ANNUAL DEBT
LOAN NO. GROUP (4) INTEREST RATE (%) (%)(5) ACTUAL BASIS (6) SERVICE ($)(7)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 7.470 7.3973 Actual/360 1,870,838.26
1.1
1.3
1.4
1.5
1.6
2 7.470 7.3973 Actual/360 1,741,586.77
2.1
2.2
2.3
2.4
2.5
2.6
3 A 8.050 7.9773 Actual/360 1,959,618.84
3.1
3.2
4 7.730 7.6573 Actual/360 1,866,230.04
5 8.460 8.3373 Actual/360 1,953,505.20
6 8.860 8.7173 Actual/360 1,778,247.24
7 8.100 7.9573 Actual/360 1,600,014.96
8 8.730 8.5973 Actual/360 1,669,477.20
9 8.615 8.5123 Actual/360 1,617,040.32
10 7.990 7.8673 Actual/360 1,434,242.52
11 8.980 8.9073 Actual/360 1,503,061.92
12 8.800 8.7273 Actual/360 1,357,193.40
12.1
12.2
12.3
12.4
12.5
13 B 8.810 8.6373 Actual/360 1,195,976.28
14 A 7.940 7.8673 Actual/360 1,103,134.32
15 7.980 7.8573 Actual/360 1,054,614.00
16 7.760 7.6873 Actual/360 946,576.44
17 C 8.630 8.5573 Actual/360 1,166,923.44
18 8.520 8.4473 Actual/360 970,617.48
19 8.380 8.3073 Actual/360 933,041.76
20 8.140 8.0173 Actual/360 847,644.24
21 7.570 7.4973 Actual/360 779,765.88
22 8.550 8.4773 Actual/360 878,138.88
23 7.990 7.9173 Actual/360 756,525.72
24 8.590 8.5173 Actual/360 772,199.64
25 B 8.340 8.2673 Actual/360 727,298.88
26 7.930 7.8073 Actual/360 664,748.28
27 8.720 8.6473 Actual/360 747,937.08
28 8.710 8.6373 Actual/360 705,460.80
29 8.640 8.5673 Actual/360 693,961.80
30 8.110 8.0373 Actual/360 653,956.56
31 8.970 8.8973 Actual/360 734,341.80
32 9.150 9.0773 Actual/360 723,767.16
33 E 7.880 7.8073 Actual/360 611,309.64
33.1
33.2
34 8.120 8.0473 Actual/360 605,592.12
35 7.940 7.8673 Actual/360 586,587.24
36 E 8.240 8.1673 Actual/360 554,366.40
37 8.250 8.1773 Actual/360 540,912.00
38 8.380 8.2373 Actual/360 532,908.00
39 8.560 8.4873 Actual/360 563,255.04
40 7.850 7.6773 Actual/360 498,233.04
41 7.960 7.8373 Actual/360 517,532.40
42 7.950 7.8273 Actual/360 460,077.60
43 8.400 8.3273 Actual/360 468,073.08
44 8.170 8.0273 30/360 456,337.80
45 8.040 7.9673 Actual/360 433,094.28
46 C 8.840 8.7673 Actual/360 512,329.92
47 8.170 8.0973 Actual/360 425,020.44
48 8.090 8.0173 Actual/360 403,622.40
49 8.420 8.3473 Actual/360 412,155.60
50 8.160 8.0873 Actual/360 396,014.88
51 8.240 8.1673 Actual/360 430,342.92
52 8.780 8.7073 30/360 455,495.04
53 8.230 8.1573 Actual/360 377,929.92
54 8.330 8.1573 Actual/360 376,935.24
55 I 8.230 8.1573 Actual/360 373,610.76
56 8.480 8.4073 Actual/360 377,608.32
57 8.980 8.8573 Actual/360 385,528.32
58 8.290 8.2173 Actual/360 356,348.28
59 7.630 7.5573 Actual/360 358,784.52
60 9.110 9.0373 Actual/360 399,323.40
61 8.150 8.0773 Actual/360 346,075.44
62 9.120 9.0473 Actual/360 394,054.56
63 7.980 7.9073 Actual/360 348,085.44
64 F 8.170 8.0973 Actual/360 328,831.68
65 8.410 8.3373 Actual/360 329,419.08
66 7.690 7.6173 Actual/360 330,964.92
67 8.540 8.4673 30/360 325,061.16
68 H 8.190 8.1173 Actual/360 309,728.04
69 D 8.520 8.4473 Actual/360 318,177.60
70 8.420 8.3473 Actual/360 311,882.16
71 G 8.450 8.3773 Actual/360 327,159.00
72 7.970 7.8973 Actual/360 289,743.00
73 8.070 7.9973 Actual/360 280,096.20
74 8.160 8.0873 Actual/360 277,121.04
75 8.550 8.4773 Actual/360 297,888.00
75.1
75.2
76 8.910 8.7873 Actual/360 286,378.08
77 8.350 8.2773 30/360 295,035.00
78 8.500 8.4273 Actual/360 262,968.36
79 8.000 7.9273 Actual/360 250,066.92
80 8.440 8.3673 Actual/360 264,391.92
81 8.820 8.7473 Actual/360 285,013.92
82 8.670 8.5973 Actual/360 253,041.96
83 9.080 9.0073 Actual/360 268,608.72
84 8.730 8.6573 Actual/360 245,004.96
85 8.460 8.3873 30/360 288,986.64
86 8.660 8.5873 Actual/360 249,707.52
87 8.880 8.8073 Actual/360 249,298.32
88 8.190 8.1173 Actual/360 219,633.48
89 8.170 8.0973 Actual/360 253,562.28
90 9.410 9.2373 Actual/360 272,321.04
91 8.170 8.0973 Actual/360 211,168.08
91.1
91.2
92 8.630 8.5573 Actual/360 229,549.80
93 G 8.250 8.1773 Actual/360 219,977.64
94 8.440 8.3673 Actual/360 221,127.84
95 8.500 8.3773 Actual/360 217,411.32
96 8.460 8.3373 Actual/360 198,568.08
97 8.240 8.1173 Actual/360 205,414.32
98 8.580 8.5073 Actual/360 204,277.56
99 9.110 8.9873 Actual/360 228,516.72
100 8.820 8.7473 30/360 213,711.48
101 8.500 8.4273 Actual/360 315,717.12
102 8.540 8.4673 Actual/360 186,609.12
103 8.910 8.8373 Actual/360 191,557.32
104 8.190 8.1173 Actual/360 178,844.40
105 8.885 8.8123 Actual/360 176,410.08
106 8.380 8.2373 Actual/360 167,673.72
107 8.880 8.7373 Actual/360 174,324.72
107.1
107.2
108 8.530 8.4573 Actual/360 168,857.88
109 F 8.240 8.1673 Actual/360 156,717.72
110 K 8.200 8.1273 Actual/360 162,047.04
111 8.750 8.6773 Actual/360 154,586.64
112 8.380 8.3073 Actual/360 148,282.92
113 7.930 7.8573 Actual/360 137,760.36
114 8.940 8.8673 Actual/360 152,320.68
115 7.840 7.7673 Actual/360 138,577.44
116 9.000 8.9273 Actual/360 144,086.40
117 J 8.750 8.6773 Actual/360 146,368.20
117.1
117.2
117.3
117.4
117.5
118 F 8.240 8.1673 Actual/360 131,498.76
119 D 8.700 8.6273 Actual/360 135,607.20
120 D 8.810 8.7373 Actual/360 133,360.80
121 8.450 8.3773 Actual/360 128,582.64
122 8.090 8.0173 Actual/360 124,328.16
123 A 8.500 8.4273 Actual/360 128,808.24
124 8.420 8.3473 Actual/360 123,188.76
125 8.875 8.8023 Actual/360 127,207.20
126 8.970 8.8973 Actual/360 131,850.00
127 8.170 8.0973 Actual/360 116,321.40
128 D 8.880 8.8073 Actual/360 123,698.88
129 9.125 9.0523 Actual/360 132,129.72
130 9.010 8.9373 Actual/360 122,454.72
131 8.820 8.7473 Actual/360 119,074.32
132 8.750 8.6773 Actual/360 114,461.88
133 H 8.190 8.1173 Actual/360 102,645.00
134 8.875 8.8023 Actual/360 113,679.96
135 D 8.700 8.6273 Actual/360 104,313.24
136 7.840 7.7673 Actual/360 102,311.64
137 L 8.160 8.0873 Actual/360 96,098.40
138 J 8.480 8.4073 Actual/360 101,288.88
138.1
138.2
138.3
138.4
139 9.050 8.8773 Actual/360 106,170.48
140 D 9.150 9.0773 Actual/360 101,962.44
141 8.960 8.8873 Actual/360 99,576.84
142 9.500 9.4273 Actual/360 109,262.52
143 8.090 8.0173 Actual/360 88,805.76
144 H 8.220 8.1473 Actual/360 89,899.08
145 9.280 9.2073 Actual/360 103,014.36
146 8.750 8.6773 Actual/360 99,705.84
147 L 8.370 8.2973 Actual/360 88,887.12
148 8.780 8.7073 Actual/360 95,341.44
149 9.125 9.0523 Actual/360 81,020.28
150 D 8.690 8.6173 Actual/360 76,520.64
151 D 8.690 8.6173 Actual/360 64,033.20
152 D 8.690 8.6173 Actual/360 63,188.16
153 8.530 8.4573 Actual/360 65,387.28
154 D 8.770 8.6973 Actual/360 62,703.60
155 K 8.500 8.4273 Actual/360 64,740.24
156 8.625 8.5523 Actual/360 62,220.48
157 D 9.230 9.1573 Actual/360 60,944.52
158 8.420 8.3473 Actual/360 57,108.84
159 8.840 8.7673 Actual/360 57,150.48
160 8.625 8.5523 Actual/360 55,848.60
161 9.625 9.5523 Actual/360 57,824.16
162 I 8.230 8.1573 Actual/360 48,591.00
163 I 8.230 8.1573 Actual/360 46,611.36
164 8.630 8.5573 Actual/360 46,886.76
165 8.625 8.5523 Actual/360 43,317.24
166 8.630 8.5573 Actual/360 32,967.24
167 9.875 9.8023 Actual/360 27,305.40
168 9.375 9.3023 30/360 23,075.40
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MATURITY
REMAINING REMAINING REMAINING DATE/ANTICIPATED
INTEREST ONLY TERM AMORTIZATON TERM ORIGINATION REPAYMENT DATE
LOAN NO. PERIOD (MONTHS) (MONTHS) (MONTHS) DATE (8)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 108 108 8/31/99 9/1/09
1.1
1.2
1.3
1.4
1.5
1.6
2 108 108 8/31/99 9/1/09
2.1
2.2
2.3
2.4
2.5
2.6
3 109 349 9/15/99 10/1/09
3.1
3.2
4 108 348 8/4/99 9/1/09
5 111 351 11/30/99 12/1/09
6 111 351 11/17/99 12/1/09
7 115 355 3/17/00 4/1/10
8 111 291 11/30/99 12/1/09
9 116 296 5/2/00 5/10/10
10 109 349 9/2/99 10/1/09
11 112 292 12/7/99 1/1/10
12 106 274 6/7/99 7/1/09
12.1
12.2
12.3
12.4
12.5
13 112 352 12/30/99 1/1/10
14 109 349 9/13/99 10/1/09
15 111 351 11/30/99 12/1/09
16 118 358 6/2/00 7/1/10
17 232 232 12/23/99 1/1/20
18 112 352 12/23/99 1/1/10
19 114 354 3/1/00 3/1/10
20 115 355 3/31/00 4/1/10
21 107 347 7/14/99 8/1/09
22 117 297 5/31/00 6/1/10
23 106 346 6/1/99 7/1/09
24 110 350 10/20/99 11/1/09
25 116 356 4/10/00 5/1/10
26 116 356 4/12/00 5/1/10
27 112 292 12/16/99 1/1/10
28 111 351 11/2/99 12/1/09
29 110 350 10/18/99 11/1/09
30 116 356 4/18/00 5/1/10
31 112 292 12/8/99 1/1/10
32 114 294 2/16/00 3/1/10
33 112 322 12/20/99 1/1/10
33.1
33.2
34 111 351 12/1/99 12/1/09
35 107 347 7/15/99 8/1/09
36 114 354 2/29/00 3/1/10
37 111 351 11/1/99 12/1/09
38 115 355 3/10/00 4/1/10
39 116 296 4/14/00 5/1/10
40 116 356 4/4/00 5/1/10
41 108 348 8/9/99 9/1/09
42 112 352 12/22/99 1/1/10
43 111 351 11/1/99 12/1/09
44 111 351 11/22/99 12/1/09
45 104 344 4/12/99 5/1/09
46 232 232 12/23/99 1/1/20
47 111 351 11/5/99 12/1/09
48 107 347 7/28/99 8/1/09
49 106 346 6/23/99 7/1/09
50 111 351 11/30/99 12/1/09
51 175 259 3/10/00 4/1/15
52 235 235 3/30/00 4/1/20
53 111 351 11/4/99 12/1/09
54 115 355 3/13/00 4/1/10
55 111 351 11/17/99 12/1/09
56 108 348 8/12/99 9/1/09
57 113 353 1/18/00 2/1/10
58 118 358 6/29/00 7/1/10
59 100 280 12/8/98 1/1/09
60 108 288 8/3/99 9/1/09
61 108 348 8/20/99 9/1/09
62 108 288 8/25/99 9/1/09
63 113 289 2/22/00 2/11/10
64 111 351 11/3/99 12/1/09
65 109 349 9/7/99 10/1/09
66 107 275 10/20/99 8/11/09
67 112 352 12/10/99 1/1/10
68 111 351 11/1/99 12/1/09
69 111 351 11/24/99 12/1/09
70 108 355 3/30/00 9/1/09
71 111 291 10/25/99 12/1/09
72 111 351 11/18/99 12/1/09
73 112 352 12/6/99 1/1/10
74 116 356 4/3/00 5/1/10
75 109 289 9/2/99 10/1/09
75.1
75.2
76 116 356 4/10/00 5/1/10
77 226 267 9/10/99 7/1/19
78 110 350 10/20/99 11/1/09
79 106 346 6/10/99 7/1/09
80 107 287 7/15/99 8/1/09
81 112 352 12/22/99 1/1/10
82 105 345 5/27/99 6/1/09
83 106 286 6/8/99 7/1/09
84 119 359 7/28/00 8/1/10
85 167 166 8/31/99 8/1/14
86 119 299 7/31/00 8/1/10
87 107 287 7/27/99 8/1/09
88 115 355 3/28/00 4/1/10
89 231 226 12/14/99 12/1/19
90 113 233 1/31/00 2/1/10
91 112 352 12/15/99 1/1/10
91.1
91.2
92 108 288 8/18/99 9/1/09
93 109 289 9/9/99 10/1/09
94 108 288 8/19/99 9/1/09
95 117 297 5/8/00 6/1/10
96 119 359 7/20/00 8/1/10
97 120 270 8/1/00 9/1/10
98 111 291 11/17/99 12/1/09
99 111 231 11/15/99 12/1/09
100 217 258 2/24/00 10/1/18
101 114 114 2/15/00 3/1/10
102 109 349 9/14/99 10/1/09
103 113 353 1/26/00 2/1/10
104 110 350 10/22/99 11/1/09
105 106 346 6/23/99 7/1/09
106 111 351 11/19/99 12/1/09
107 117 357 5/25/00 6/1/10
107.1
107.2
108 117 357 5/23/00 6/1/10
109 109 349 9/20/99 10/1/09
110 104 284 4/5/99 5/1/09
111 108 348 8/16/99 9/1/09
112 119 359 8/1/00 8/1/10
113 107 347 7/12/99 8/1/09
114 113 293 1/31/00 2/1/10
115 103 283 3/19/99 4/1/09
116 110 330 10/29/99 11/1/09
117 111 280 11/22/99 12/1/09
117.1
117.2
117.3
117.4
117.5
118 109 349 9/20/99 10/1/09
119 112 352 12/15/99 1/1/10
120 112 352 12/20/99 1/1/10
121 118 358 6/28/00 7/1/10
122 112 352 12/16/99 1/1/10
123 105 327 5/28/99 6/1/09
124 109 349 9/21/99 10/1/09
125 110 331 10/21/99 11/1/09
126 110 290 10/18/99 11/1/09
127 116 356 4/17/00 5/1/10
128 112 352 12/27/99 1/1/10
129 112 280 12/22/99 1/1/10
130 112 292 12/3/99 1/1/10
131 107 287 7/12/99 8/1/09
132 116 296 4/17/00 5/1/10
133 111 351 11/1/99 12/1/09
134 117 297 5/1/00 6/1/10
135 111 351 11/30/99 12/1/09
136 103 283 3/19/99 4/1/09
137 111 351 11/2/99 12/1/09
138 119 299 7/24/00 8/1/10
138.1
138.2
138.3
138.4
139 115 295 3/22/00 4/1/10
140 114 354 2/1/00 3/1/10
141 112 352 12/9/99 1/1/10
142 114 282 2/25/00 3/1/10
143 115 355 3/29/00 4/1/10
144 109 349 9/30/99 10/1/09
145 110 290 10/6/99 11/1/09
146 111 280 11/15/99 12/1/09
147 112 352 10/20/99 1/1/10
148 119 299 7/12/00 8/1/10
149 114 334 2/24/00 3/1/10
150 111 351 11/23/99 12/1/09
151 111 351 11/23/99 12/1/09
152 111 351 11/23/99 12/1/09
153 107 287 7/22/99 8/1/09
154 112 352 12/7/99 1/1/10
155 104 284 4/5/99 5/1/09
156 111 332 11/9/99 12/1/09
157 113 293 1/18/00 2/1/10
158 109 289 9/21/99 10/1/09
159 118 298 6/15/00 7/1/10
160 109 278 9/20/99 10/1/09
161 114 281 2/17/00 3/1/10
162 111 351 11/17/99 12/1/09
163 111 351 11/17/99 12/1/09
164 109 289 9/1/99 10/1/09
165 109 278 9/20/99 10/1/09
166 109 289 9/1/99 10/1/09
167 114 280 2/16/00 3/1/10
168 113 293 1/13/00 2/1/10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YIELD
ARD FINAL BALLOON LOCK-OUT END DEFEASANCE MAINTENANCE
LOAN NO. MATURITY DATE BALANCE ($)(9) ENDING LTV DATE (10) END DATE END DATE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 24,701,611.00 58.9 9/30/02 5/31/09
1.1
1.2
1.3
1.4
1.5
1.6
2 22,995,039.00 58.9 9/30/02 5/31/09
2.1
2.2
2.3
2.4
2.5
2.6
3 10/1/29 19,838,226.61 55.7 9/30/02 6/30/09
3.1
3.2
4 19,327,184.07 64.4 9/30/02 5/31/09
5 12/1/29 17,878,482.76 55.2 9/30/02 8/31/09
6 17,014,019.39 63.0 9/30/02 8/31/09
7 4/1/30 16,134,821.57 63.3 9/30/02 12/31/09
8 12/1/24 14,263,444.23 61.0 9/30/02 10/31/09
9 13,901,887.53 58.7 9/30/02 1/31/10
10 14,579,090.08 70.4 9/30/02 6/30/09
11 12,662,167.18 58.4 9/30/02 9/30/09
12 10,012,244.00 51.0 9/30/02 2/28/09
12.1
12.2
12.3
12.4
12.5
13 1/1/30 11,479,520.86 65.6 9/30/02 9/30/09
14 10/1/29 11,255,307.12 66.6 9/30/02 6/30/09
15 12/1/29 10,729,211.94 67.1 9/30/02 8/31/09
16 9,780,928.28 51.5 9/30/02 3/31/10
17 571,485.77 3.4 9/30/02 1/31/17
18 1/1/30 9,504,775.36 72.0 9/30/02 9/30/09
19 3/1/30 9,227,238.71 66.6 9/30/02 11/30/09
20 4/1/30 8,523,622.10 71.0 9/30/02 12/31/09
21 8,170,777.10 68.3 9/30/02 1/31/09
22 6/1/25 7,575,041.21 54.5 9/30/02 2/28/10
23 7,693,135.69 63.1 9/30/02 5/31/09
24 7,525,485.90 70.0 9/30/02 7/31/09
25 5/1/30 7,212,383.85 50.8 9/30/02 1/31/10
26 6,785,942.58 68.2 9/30/02 1/31/10
27 1/1/25 6,392,049.47 61.5 9/30/02 9/30/09
28 12/1/29 6,819,540.90 56.6 9/30/02 8/31/09
29 6,739,667.42 62.4 9/30/02 7/31/09
30 5/1/30 6,590,927.56 66.9 9/30/02 1/31/10
31 1/1/25 6,189,682.77 59.0 9/30/02 9/30/09
32 6,041,682.66 45.7 9/30/02 11/30/09
33 7/1/27 5,908,685.47 52.3 9/30/02 9/30/09
33.1
33.2
34 12/1/29 6,100,147.40 65.6 9/30/02 8/31/09
35 5,985,196.20 63.7 9/30/02 1/31/09
36 3/1/30 5,536,436.54 69.2 9/30/02 11/30/09
37 5,398,902.53 66.1 9/30/02 5/31/09
38 5,269,007.25 72.2 9/30/02 12/31/09
39 5/1/25 4,857,251.46 52.2 9/30/02 1/31/09
40 5,115,279.79 67.6 9/30/02 1/31/10
41 9/1/29 4,684,590.13 62.6 9/30/02 5/30/09
42 1/1/30 4,689,788.52 63.4 9/30/02 9/30/09
43 4,623,048.35 67.5 9/30/02 8/31/09
44 4,502,041.08 63.4 9/30/02 8/31/09
45 4,388,703.51 67.3 9/30/02 2/28/09
46 261,809.21 3.4 9/30/02 1/31/17
47 4,266,149.16 68.8 9/30/02 8/31/09
48 4,074,669.48 65.7 9/30/02 4/30/09
49 4,066,277.78 62.6 9/30/02 3/31/09
50 12/1/29 3,977,810.37 64.2 9/30/02 8/31/09
51 4/1/22 2,416,697.16 39.0 9/30/02 12/31/14
52 17,497.83 0.4 9/30/02 12/31/19
53 3,777,472.56 66.9 9/30/02 8/31/09
54 4/1/30 3,739,968.17 61.8 9/30/02 12/31/09
55 3,734,300.86 69.7 9/30/02 8/31/09
56 3,708,362.26 52.5 9/30/02 5/31/09
57 2/1/30 3,656,891.35 61.0 9/30/02 10/31/09
58 7/1/30 3,546,033.21 68.2 9/30/02 3/31/10
59 3,261,313.81 57.7 9/30/02 9/30/08
60 3,340,467.30 51.0 9/30/02 5/31/09
61 3,478,253.21 63.2 9/30/02 5/31/09
62 3,294,585.61 45.4 9/30/02 5/31/09
63 2,932,975.60 57.5 9/30/02 7/31/09
64 3,300,651.06 65.2 9/30/02 8/31/09
65 3,251,468.66 64.6 9/30/02 6/30/09
66 2,876,534.95 57.5 9/30/02 4/30/09
67 3,119,821.24 66.4 9/30/02 9/30/09
68 3,104,517.23 71.9 9/30/02 8/31/09
69 12/1/29 3,116,420.81 65.6 9/30/02 8/31/09
70 9/1/29 3,070,292.37 66.8 9/30/02 5/31/09
71 2,839,129.16 59.8 9/30/02 8/31/09
72 2,949,827.13 70.2 9/30/02 8/31/09
73 1/1/30 2,830,884.19 71.7 9/30/02 9/30/09
74 2,783,120.67 67.6 9/30/02 1/31/09
75 2,570,817.21 61.2 9/30/02 5/31/09
75.1
75.2
76 2,730,230.32 63.5 9/30/02 1/31/10
77 857,188.73 25.2 9/30/02 3/31/19
78 11/1/29 2,578,819.20 66.1 9/30/02 7/31/09
79 2,541,133.45 66.9 9/30/02 3/31/09
80 8/1/24 2,295,943.62 58.5 9/30/02 4/30/09
81 2,064,127.13 44.9 9/30/02 9/30/09
82 2,453,184.57 60.6 9/30/02 2/28/09
83 2,251,916.28 57.7 9/30/02 3/31/09
84 2,364,105.40 60.6 9/30/02 4/30/10
85 0.00 0.0 9/30/02 4/30/14
86 8/1/25 2,140,733.67 58.7 9/30/02 4/30/10
87 2,112,546.92 54.9 9/30/02 4/30/09
88 2,200,774.27 64.7 9/30/02 12/31/09
89 0 0.0 9/30/02 8/31/19
90 2/1/20 1,810,231.46 47.6 9/30/02 12/31/09
91 1/1/30 2,119,187.81 71.8 9/30/02 9/30/09
91.1
91.2
92 1,971,846.68 56.3 9/30/02 5/31/09
93 1,930,689.58 62.3 9/30/02 6/30/09
94 1,919,789.22 54.9 9/30/02 5/31/09
95 6/1/25 1,880,699.12 47.6 9/30/02 2/28/10
96 8/1/30 1,952,194.33 69.7 9/30/02 4/30/10
97 3/1/23 1,634,880.70 58.4 9/30/02 5/31/10
98 1,759,905.54 55.0 9/30/02 8/31/09
99 12/1/19 1,537,758.44 46.9 9/30/02 8/31/09
100 631,042.11 24.8 9/30/02 6/30/18
101 27,383.44 0.6 9/30/02 11/30/09
102 1,825,308.91 53.7 9/30/02 6/30/09
103 2/1/30 1,825,689.81 64.2 9/30/02 10/31/09
104 1,792,159.52 66.4 9/30/02 7/31/09
105 1,685,540.18 67.4 9/30/02 3/31/09
106 1,658,390.54 65.0 9/30/02 8/31/09
107 1,664,967.70 68.2 9/30/02 2/28/10
107.1
107.2
108 1,652,118.20 57.0 9/30/02 2/28/10
109 1,565,383.00 66.1 9/30/02 6/30/09
110 1,426,717.71 56.8 9/30/02 10/31/08
111 1,490,058.76 37.6 9/30/02 5/31/09
112 1,465,989.78 71.5 9/30/02 4/30/10
113 1,406,628.42 61.2 9/30/02 4/30/09
114 2/1/25 1,285,672.70 58.4 9/30/02 10/31/09
115 1,245,112.00 59.3 9/30/02 12/31/08
116 1,322,344.75 64.7 10/31/04 7/31/09
117 1,211,341.74 66.0 11/30/03 8/31/09
117.1
117.2
117.3
117.4
117.5
118 1,313,482.54 60.8 9/30/02 6/30/09
119 1/1/30 1,311,495.71 58.3 9/30/02 9/30/09
120 1/1/30 1,280,058.46 59.5 9/30/02 9/30/09
121 1,265,291.20 60.3 9/30/02 3/31/10
122 1,254,781.81 62.7 9/30/02 9/30/09
123 1,225,756.99 66.6 5/31/03 2/28/09
124 1,215,062.00 59.6 9/30/02 6/30/09
125 1,178,036.64 66.0 10/31/03 7/31/09
126 1,111,412.35 63.5 9/30/02 7/31/09
127 1,167,389.18 74.1 9/30/02 1/31/10
128 1/1/30 1,181,644.26 59.8 9/30/02 9/30/09
129 1,069,578.16 57.8 12/31/03 9/30/09
130 1,029,887.22 63.6 9/30/02 9/30/09
131 1,012,380.52 55.3 9/30/02 4/30/09
132 976,206.75 66.4 4/30/04 1/31/10
133 1,028,849.27 71.0 9/30/02 8/31/09
134 961,927.69 60.1 5/31/04 2/28/10
135 12/1/29 1,009,067.36 60.4 9/30/02 8/31/09
136 919,265.01 61.3 9/30/02 12/31/08
137 965,270.32 60.3 9/30/02 8/31/09
138 877,124.87 66.7 9/30/02 4/30/10
138.1
138.2
138.3
138.4
139 4/1/25 890,883.00 44.5 9/30/02 12/31/09
140 3/1/30 956,438.41 54.7 9/30/02 11/30/09
141 946,040.52 65.2 9/30/02 9/30/09
142 3/1/25 864,397.63 50.9 2/29/04 11/30/09
143 896,167.97 51.2 9/30/02 12/31/09
144 899,225.15 56.2 9/30/02 6/30/09
145 853,738.91 47.4 9/30/02 7/31/09
146 825,164.97 59.8 11/30/03 8/31/09
147 879,579.83 58.6 9/30/02 9/30/09
148 811,925.22 66.3 9/30/02 4/30/10
149 736,582.42 64.1 2/28/05 11/30/09
150 12/1/29 740,726.85 59.3 9/30/02 8/31/09
151 12/1/29 619,847.84 59.6 9/30/02 8/31/09
152 12/1/29 611,668.47 60.0 9/30/02 8/31/09
153 564,960.06 62.8 9/30/02 4/30/09
154 1/1/30 603,510.80 59.8 9/30/02 9/30/09
155 560,469.05 55.0 9/30/02 10/31/08
156 586,740.68 61.0 11/30/03 8/31/09
157 2/1/25 506,285.10 52.7 9/30/02 10/31/09
158 496,456.31 62.8 9/30/02 6/30/09
159 485,202.28 57.1 9/30/02 3/31/10
160 465,658.21 61.7 9/30/03 6/30/09
161 454,341.44 67.3 2/28/05 11/30/09
162 485,674.86 71.4 9/30/02 8/31/09
163 465,888.24 61.3 9/30/02 8/31/09
164 402,838.92 62.9 9/30/02 6/30/09
165 11/1/29 361,172.45 60.2 9/30/03 6/30/09
166 283,246.36 62.9 9/30/02 6/30/09
167 211,461.13 52.9 2/29/04 11/30/09
168 185,487.52 56.2 10/31/09
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TYPE OF MOST
MOST RECENT DATE OF MOST RECENT NOI UW UW UNDERWRITTEN
LOAN NO. NOI 99 ($) NOI RECENT NOI (11) NOI ($) CASH FLOW ($) DSCR (12)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,001,120 4,140,895 3,389,589 1.81
1.1 1,173,991 1,049,116
1.2 1,034,361 967,088 723,913
1.3 630,990 611,037 454,487
1.4 542,858 533,085 485,728
1.5 538,435 613,409 491,814
1.6 254,476 242,285 184,531
2 3,648,079 3,081,454 2,752,178 1.58
2.1 1,110,480 1,199,614 1,112,903
2.2 1,163,955 1,130,576 977,081
2.3 531,022 67,762 45,387
2.4 342,591 361,617 328,615
2.5 327,673 270,365 244,472
2.6 172,358 51,520 43,720
3 2,896,709 2,790,516 2,493,559 1.27
3.1 1,565,398 1,500,782 1,274,448
3.2 1,331,311 1,289,734 1,219,111
4 2,457,062 2,406,936 3/31/00 Trailing 12 2,399,584 2,374,584 1.27
5 2,890,491 2,843,047 3/31/00 Trailing 12 2,700,271 2,469,357 1.26
6 2,430,609 2,751,158 2,349,908 1.32
7 2,936,379 2,984,655 3/1/00 Trailing 12 2,496,817 2,007,895 1.26
8 2,322,870 2,398,182 2,079,950 1.25
9 2,917,046 2,677,957 2,263,542 1.40
10 1,392,106 1,867,163 1,814,696 1.27
11 2,721,865 2,353,398 2,093,887 1.39
12 1,935,139 1,725,540 1.27
12.1 449,436 463,007 2/29/00 Trailing 12 486,887 441,668
12.2 431,534 408,956 2/29/00 Trailing 12 401,920 361,173
12.3 327,205 296,361 2/29/00 Trailing 12 294,938 254,234
12.4 391,708 367,575 2/29/00 Trailing 12 363,875 322,244
12.5 407,325 418,047 2/29/00 Trailing 12 387,519 346,221
13 1,408,600 1,502,554 3/31/00 Annualized 1,724,294 1,493,015 1.25
14 1,534,322 1,523,517 1,384,289 1.26
15 1,639,335 1,703,134 1,478,999 1.40
16 1,451,690 1,441,445 3/31/00 Trailing 12 1,458,668 1,403,618 1.48
17 1,258,583 1,555,969 1,437,302 1.23
18 1,173,753 1,239,397 3/31/00 Trailing 12 1,308,495 1,228,495 1.27
19 1,451,395 1,266,547 1,180,047 1.27
20 931,188 963,667 4/30/00 Trailing 12 1,055,389 1,022,110 1.21
21 1,064,112 1,060,283 995,033 1.28
22 1,255,702 1,195,969 1.36
23 1,035,478 978,338 917,146 1.21
24 856,014 1,040,519 974,688 1.26
25 1,007,329 895,487 1.23
26 805,039 813,395 1/31/00 Trailing 12 870,200 802,200 1.21
27 1,280,004 1,211,490 1,010,472 1.35
28 1,057,556 998,056 1.42
29 790,499 964,877 912,293 1.32
30 833,791 3/30/00 Annualized 841,922 816,722 1.25
31 1,234,792 1,388,617 3/31/00 Trailing 12 1,150,456 1,031,288 1.40
32 1,112,677 1,641,018 1/1/99 Trailing 12 1,216,784 993,841 1.37
33 961,020 921,437 3/31/00 Trailing 12 931,695 806,736 1.32
33.1 754,047 716,911 3/31/00 Trailing 12 720,400 629,200
33.2 206,973 204,526 3/31/00 Trailing 12 211,295 177,536
34 747,707 821,400 3/31/00 Trailing 12 938,090 860,174 1.42
35 777,835 884,998 767,974 1.31
36 769,529 769,609 703,109 1.27
37 664,000 722,507 715,221 1.32
38 810,589 754,201 692,726 1.30
39 893,578 785,246 1.39
40 731,661 628,099 598,099 1.20
41 538,453 591,618 3/31/00 Trailing 12 621,437 591,437 1.14
42 184,474 677,256 641,256 1.39
43 481,474 581,236 6/30/00 Trailing 12 591,885 564,452 1.21
44 633,472 601,495 1.32
45 624,853 560,582 539,867 1.25
46 596,584 715,353 623,267 1.22
47 621,841 622,808 554,056 1.30
48 586,166 551,604 521,326 1.29
49 654,592 613,212 583,302 1.42
50 552,794 564,729 1/31/00 Trailing 12 537,434 482,985 1.22
51 606,000 2/1/00 Annualized 522,146 517,546 1.20
52 473,055 470,667 1.03
53 536,258 531,869 1/31/00 Trailing 12 486,964 480,414 1.27
54 406,920 560,606 2/29/00 Annualized 535,472 503,356 1.34
55 473,439 474,351 1/31/00 Trailing 12 463,211 452,061 1.21
56 616,372 2/29/00 Trailing 12 541,201 422,060 1.12
57 546,629 519,975 1.35
58 481,639 519,296 4/30/00 Trailing 12 468,219 444,969 1.25
59 625,290 563,117 551,805 1.54
60 706,946 593,817 545,107 1.37
61 576,212 521,161 468,083 1.35
62 1,092,073 657,239 598,559 1.52
63 399,733 399,733 390,406 1.12
64 436,378 425,828 416,728 1.27
65 421,328 497,492 438,123 1.33
66 440,309 444,565 2/27/00 Trailing 12 414,708 404,440 1.22
67 404,144 416,304 3/31/00 Trailing 12 422,680 399,551 1.23
68 332,304 380,540 373,290 1.21
69 262,104 418,129 396,591 1.25
70 372,120 411,647 3/31/00 Annualized 446,511 421,623 1.35
71 546,253 499,347 483,937 1.48
72 185,621 364,121 352,121 1.22
73 387,119 398,813 389,113 1.39
74 414,884 415,105 357,626 1.29
75 417,907 375,701 1.26
75.1 329,610 309,311 279,680
75.2 120,312 108,596 96,021
76 428,516 441,534 2/29/00 Annualized 402,024 360,298 1.26
77 303,856 303,856 1.03
78 339,531 344,778 338,233 1.29
79 419,111 395,835 342,524 1.37
80 963,751 529,906 479,906 1.82
81 367,287 386,444 322,734 1.13
82 317,643 370,431 337,070 1.33
83 806,324 521,235 496,985 1.85
84 279,486 354,069 5/31/00 Trailing 12 344,331 307,238 1.25
85 296,361 3/31/00 Annualized 320,983 318,639 1.10
86 387,150 327,367 1.31
87 836,079 955,848 3/31/00 Annualized 536,571 512,700 2.06
88 335,877 341,495 5/31/00 Trailing 12 318,204 279,243 1.27
89 541,273 470,400 462,064 1.82
90 409,139 353,591 1.30
91 336,618 371,258 333,258 1.58
91.1 127,055 148,799 131,299 1.67
91.2 209,563 222,459 201,959 1.53
92 381,598 369,804 355,003 1.55
93 291,580 291,269 2/29/00 Trailing 12 299,840 274,891 1.25
94 362,021 1/31/00 Trailing 12 317,050 277,779 1.26
95 321,932 304,952 1.40
96 239,811 310,541 6/30/00 Annualized 290,614 253,614 1.28
97 286,560 284,577 5/21/00 Trailing 12 281,994 254,494 1.24
98 259,995 288,840 256,818 1.26
99 372,430 382,238 332,671 1.46
100 220,123 220,123 1.03
101 436,895 381,301 3/31/00 Trailing 12 435,735 406,584 1.29
102 343,051 295,741 248,837 1.33
103 231,555 229,919 1.20
104 241,514 228,726 221,206 1.24
105 257,617 254,341 228,847 1.30
106 249,513 313,737 3/15/00 Annualized 269,934 223,139 1.33
107 279,961 280,293 3/31/00 Annualized 243,592 222,842 1.28
107.1 156,659 132,957 3/31/00 Annualized 136,039 126,039
107.2 123,302 147,336 3/31/00 Annualized 107,553 96,803
108 209,030 9,634 2/29/00 Annualized 231,856 210,313 1.25
109 212,377 201,982 194,982 1.24
110 231,310 207,509 202,232 1.25
111 261,401 259,878 226,065 1.46
112 205,096 196,830 180,684 1.22
113 222,007 199,369 177,688 1.29
114 234,423 206,225 198,125 1.30
115 297,635 2/29/00 Trailing 12 284,090 258,340 1.86
116 216,614 216,348 3/31/00 Annualized 199,613 179,236 1.24
117 219,910 251,736 4/30/00 Annualized 210,496 196,868 1.35
117.1 97,899 109,649 4/30/00 Annualized 89,465 84,175
117.2 37,464 46,811 4/30/00 Annualized 35,490 32,490
117.3 35,612 39,607 4/30/00 Annualized 37,433 35,245
117.4 24,028 28,417 4/30/00 Annualized 24,759 23,109
117.5 24,907 27,252 4/30/00 Annualized 23,349 21,849
118 203,246 171,970 166,220 1.26
119 77,394 185,489 176,033 1.30
120 202,403 202,403 12/31/99 Annualized 181,417 173,161 1.30
121 147,761 199,392 4/30/00 Annualized 186,948 180,948 1.41
122 201,319 185,651 162,326 1.31
123 184,964 197,488 3/28/00 Annualized 171,726 153,976 1.20
124 148,416 1/31/00 Trailing 12 157,514 154,814 1.26
125 236,988 231,481 3/25/00 Annualized 196,542 157,827 1.24
126 179,136 188,941 168,685 1.28
127 143,022 163,928 144,928 1.25
128 70,538 168,760 160,745 1.30
129 228,218 221,007 4/28/00 Annualized 185,616 173,020 1.31
130 245,986 193,500 183,300 1.50
131 206,370 183,278 178,620 1.50
132 151,576 138,076 1.21
133 98,087 127,505 124,904 1.22
134 175,548 177,397 2/29/00 Trailing 12 150,314 141,314 1.24
135 167,945 140,246 135,108 1.30
136 208,600 198,151 181,901 1.78
137 157,442 159,232 147,057 1.53
138 119,669 153,152 5/31/00 Trailing 12 139,358 131,358 1.30
138.1 22,483 38,799 5/31/00 Trailing 12 26,042 24,792
138.2 21,024 29,714 5/31/00 Trailing 12 25,861 24,111
138.3 50,058 53,884 5/31/00 Trailing 12 61,247 57,747
138.4 26,104 30,755 5/31/00 Trailing 12 26,208 24,708
139 50,875 193,513 130,145 1.23
140 142,548 134,359 1.32
141 161,845 2/29/00 Trailing 12 137,152 129,152 1.30
142 156,884 177,525 2/28/00 Trailing 12 152,491 143,234 1.31
143 162,305 142,355 1.60
144 122,420 2/28/00 Trailing 12 111,425 108,081 1.20
145 216,932 202,884 196,261 1.91
146 160,152 174,198 2/29/00 Annualized 134,559 127,759 1.28
147 81,600 117,806 107,406 1.21
148 134,930 147,058 4/30/00 Annualized 125,210 117,210 1.23
149 130,479 122,539 111,175 1.37
150 103,950 99,164 1.30
151 88,040 83,028 1.30
152 95,678 86,884 81,879 1.30
153 119,166 107,671 87,767 1.34
154 85,126 81,231 1.30
155 91,272 83,100 80,064 1.24
156 104,722 87,973 2/29/00 Annualized 81,288 77,688 1.25
157 99,982 99,982 11/16/99 Annualized 86,123 79,726 1.31
158 75,261 2/29/00 Trailing 12 84,433 76,934 1.35
159 80,242 74,023 1.30
160 75,142 76,997 4/30/00 Annualized 71,658 67,770 1.21
161 91,568 95,228 3/31/00 Annualized 79,350 76,350 1.32
162 61,794 61,500 59,950 1.23
163 67,400 63,774 62,041 1.33
164 69,966 73,651 70,151 1.50
165 64,638 79,667 3/31/00 Annualized 58,319 55,206 1.27
166 33,164 4/30/00 Trailing 12 39,618 36,118 1.10
167 51,072 36,944 34,194 1.25
168 20,677 31,517 29,517 1.28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UPFRONT ESCROWS ($)
----------------------------------------------------------------------
REPAIRS
& REMEDIATION ENVIRONMENTAL OTHER UPFRONT
LOAN NO. DEPOSIT TI/LC DEPOSIT DEPOSIT DEPOSIT
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 10,250 2,000 96,369
1.1 30,789
1.2 19,626
1.3 2,500 18,944
1.4 1,000 5,911
1.5 6,750 2,000 16,659
1.6 4,440
2 11,250 45,472
2.1 9,621
2.2 18,484
2.3 6,744
2.4 11,250 4,047
2.5 375 4,692
2.6 1,884
3 37,500
3.1 37,500
3.2
4
5
6 64,290 4,000
7
8 31,125 100,000
9 438,949
10 50,000
11 300,000
12
12.1
12.2
12.3
12.4
12.5
13
14
15
16 200,000
17
18 45,750
19 100,000
20 10,875 30,000
21
22 565,597 800,000
23 1,313 150,000
24 875,000
25 310,000 363,649
26 3,938
27 125,000 38,458
28 500,000 17,000
29
30
31 1,688 3,000
32 37,875
33 20,156
33.1 20,156
33.2
34 2,500
35 1,377 6,824
36
37 5,938
38 53,675
39 5,000
40
41 275,000
42
43 15,500
44 215,000
45 7,031
46
47 1,000
48 18,245
49 1,000
50 3,094 7,990
51
52
53
54
55 3,889 10,875
56 10,909 50,000
57 201,716
58 17,500
59 20,890
60
61 16,250 150,000
62 59,490
63
64
65
66
67 2,688 2,688
68 1,063
69
70 64,000 1,800 25,990
71
72
73
74
75 40,000 20,000 100,000
75.1 40,000 20,000 100,000
75.2
76 5,000 21,410
77 5,600
78 66,125
79 82,875 200,000
80 1,625
81 350,000
82 3,125 50,000
83
84
85 8,500 2,344
86 12,500
87 23,871
88 5,601
89
90 10,700
91 6,000
91.1 6,000
91.2
92 25,000
93
94 50,000
95
96 5,069
97 6,571
98
99
100
101 4,750 8,680
102 25,000
103
104
105 5,000
106 7,188
107 2,500
107.1 2,500
107.2
108 3,125
109
110
111 3,125 600 3,808
112
113 22,500
114 160,500
115 2,000
116 2,000
117
117.1
117.2
117.3
117.4
117.5
118 5,350
119
120
121 1,035
122 28,750
123 13,375 17,750
124
125
126 10,000
127 1,563
128
129 56,906
130 3,750
131
132
133 6,820
134
135
136 22,213
137
138 25,938
138.1
138.2
138.3
138.4
139
140
141
142
143
144
145 1,250
146
147 1,625
148 16,525
149
150
151
152
153
154
155
156
157 50,000
158
159
160
161 66,000
162
163 1,100
164
165
166
167
168
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONTHLY ESCROWS
--------------------------------------------------------------------------------------------------
CAPITAL
LOAN NO. EXPENSES ($) TI/LC ($) OTHER MONTHLY TAX INSURANCE
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 8,031 1/12 of annual 1/12 of annual
1.1 2,566
1.2 1,635
1.3 1,579
1.4 493
1.5 1,388
1.6 370
2 3,789 1/12 of annual 1/12 of annual
2.1 802
2.2 1,540
2.3 562
2.4 337
2.5 391
2.6 157
3 1/12 of annual 1/12 of annual 1/12 of annual
3.1 1/12 of annual
3.2 1/12 of annual
4 2,083 1/12 of annual 1/12 of annual
5 3,626 4,167 1/12 of annual 1/12 of annual
6 30,000 1/12 of annual 1/12 of annual
7 3,165 20,140 1/12 of annual 1/12 of annual
8 9,473 8,333 1/12 of annual 1/12 of annual
9 1/12 of annual 1/12 of annual
10 450 1/12 of annual 1/12 of annual
11 21,683 1/12 of annual 1/12 of annual
12 16,688 1/12 of annual 1/12 of annual
12.1 3,466
12.2 3,259
12.3 3,392
12.4 3,353
12.5 3,218
13 3,241 10,000 1/12 of annual 1/12 of annual
14 1/12 of annual 23,333 1/12 of annual 1/12 of annual
15 18,678 1/12 of annual 1/12 of annual
16 4,588 1/12 of annual 1/12 of annual
17 1,360 1/12 of annual 1/12 of annual
18 6,666 1/12 of annual 1/12 of annual
19 8,333 1/12 of annual 1/12 of annual
20 504 4,934 1/12 of annual 1/12 of annual
21 5,438 1/12 of annual 1/12 of annual
22 1,392 1/12 of annual 1/12 of annual
23 1,700 3,400 1/12 of annual 1/12 of annual
24 716 4,770 1/12 of annual 1/12 of annual
25 282 2,778 1/12 of annual 1/12 of annual
26 5,100 1/12 of annual 1/12 of annual
27 6,667 14,167 1/12 of annual 1/12 of annual
28
29 641 5,209 1/12 of annual 1/12 of annual
30 2,100 1/12 of annual 1/12 of annual
31 5,733 4,173 13,334 1/12 of annual 1/12 of annual
32 8,133 1/12 of annual 1/12 of annual
33 10,413 1/12 of annual 1/12 of annual
33.1
33.2
34 6,493 1/12 of annual 1/12 of annual
35 1,377 6,824 1/12 of annual 1/12 of annual
36 5,497 1/12 of annual 1/12 of annual
37 607 1/12 of annual 1/12 of annual
38 5,123 1/12 of annual 1/12 of annual
39 1,525 7,625 1/12 of annual 1/12 of annual
40 2,500 1/12 of annual 1/12 of annual
41 2,500 1/12 of annual 1/12 of annual
42 1/12 of annual 1/12 of annual
43 284 1,912 1/12 of annual 1/12 of annual
44 395 1/12 of annual 1/12 of annual
45 1,726 1/12 of annual 1/12 of annual
46 1,050 1/12 of annual 1/12 of annual
47 1,395 4,362 1/12 of annual 1/12 of annual
48 1,625 900 1/12 of annual 1/12 of annual
49 872 1,621 1/12 of annual 1/12 of annual
50 1,354 2,450 1/12 of annual 1/12 of annual
51 441 1/12 of annual 1/12 of annual
52 199 1/12 of annual 1/12 of annual
53 546 1/12 of annual 1/12 of annual
54 889 625 1/12 of annual 1/12 of annual
55 929 1/12 of annual 1/12 of annual
56 2,040 5,830 1/12 of annual 1/12 of annual
57 358 726 1/12 of annual 1/12 of annual
58 1,907 1/12 of annual 1/12 of annual
59 1/12 of annual 1/12 of annual
60 4,000 1/12 of annual 1/12 of annual
61 854 3,304 1/12 of annual 1/12 of annual
62 1/12 of annual 1/12 of annual
63 777 1/12 of annual 1/12 of annual
64 379 1/12 of annual 1/12 of annual
65 763 3,788 1/12 of annual 1/12 of annual
66 1/12 of annual 1/12 of annual
67 307 1/12 of annual 1/12 of annual
68 604 1/12 of annual 1/12 of annual
69 226 7,205 1/12 of annual 1/12 of annual
70 2,074 1/12 of annual 1/12 of annual
71 1,284 1/12 of annual 1/12 of annual
72 600 1/12 of annual 1/12 of annual
73 672 1/12 of annual 1/12 of annual
74 650 3,702 1/12 of annual 1/12 of annual
75 1,418 2,007 1/12 of annual 1/12 of annual
75.1 1,204 1,174
75.2 215 833
76 793 2,000 1/12 of annual 1/12 of annual
77
78 545 1/12 of annual 1/12 of annual
79 1,016 3,350 1/12 of annual 1/12 of annual
80 1/12 of annual
81 1,908 3,402 1/12 of annual 1/12 of annual
82 425 2,355 1/12 of annual 1/12 of annual
83 2,020 1/12 of annual 1/12 of annual
84 1/12 of annual 1/12 of annual
85 195 1/12 of annual 1/12 of annual
86 2,055 5,366 1/12 of annual 1/12 of annual
87 1/12 of annual 1/12 of annual
88 658 1/12 of annual 1/12 of annual
89 642 1/12 of annual 1/12 of annual
90 1,966 2,052 1/12 of annual 1/12 of annual
91 3,167 1/12 of annual 1/12 of annual
91.1 1,458
91.2 1,708
92 124 1,102 1/12 of annual 1/12 of annual
93 2,079 1/12 of annual 1/12 of annual
94 981 1,217 1/12 of annual 1/12 of annual
95 253 1/12 of annual 1/12 of annual
96 3,083 1/12 of annual 1/12 of annual
97 2,292 1/12 of annual 1/12 of annual
98 366 2,302 1/12 of annual 1/12 of annual
99 4,130 1/12 of annual 1/12 of annual
100 1/12 of annual 1/12 of annual
101 1,423 1/12 of annual 1/12 of annual
102 521 3,387 1/12 of annual 1/12 of annual
103 136
104 235 1/12 of annual 1/12 of annual
105 537 1,588 1/12 of annual 1/12 of annual
106 1,410 1,631 1/12 of annual 1/12 of annual
107 1/12 of annual 1/12 of annual
107.1
107.2
108 476 1,281 1/12 of annual 1/12 of annual
109 292 1/12 of annual 1/12 of annual
110 439 1/12 of annual 1/12 of annual
111 718 2,622 1/12 of annual 1/12 of annual
112 1/12 of annual 1/12 of annual
113 540 1,225 1/12 of annual 1/12 of annual
114 457 1/12 of annual 1/12 of annual
115 2,146 1/12 of annual 1/12 of annual
116 400 2,119 1/12 of annual 1/12 of annual
117 1/12 of annual 1/12 of annual
117.1
117.2
117.3
117.4
117.5
118 240 1/12 of annual 1/12 of annual
119 49 1/12 of annual 1/12 of annual
120 54 1/12 of annual 1/12 of annual
121 1/12 of annual 1/12 of annual
122 1,944 1/12 of annual 1/12 of annual
123 1/12 of annual 1/12 of annual
124 250 1/12 of annual 1/12 of annual
125 1/12 of annual 1/12 of annual
126 540 1,148 1/12 of annual 1/12 of annual
127 1,305 1/12 of annual 1/12 of annual
128 36 1,600 1/12 of annual 1/12 of annual
129 1/12 of annual 1/12 of annual
130 1,175 1/12 of annual 1/12 of annual
131 388 1/12 of annual 1/12 of annual
132 1/12 of annual 1/12 of annual
133 213 1/12 of annual 1/12 of annual
134 479 1/12 of annual 1/12 of annual
135 30 1,400 1/12 of annual 1/12 of annual
136 1,354 1/12 of annual 1/12 of annual
137 1,015 1/12 of annual 1/12 of annual
138 1/12 of annual 1/12 of annual
138.1
138.2
138.3
138.4
139 1,179 4,025 1/12 of annual 1/12 of annual
140 65 1,600 1/12 of annual 1/12 of annual
141 167 500 1/12 of annual 1/12 of annual
142 1/12 of annual 1/12 of annual
143 1/12 of annual 1/12 of annual
144 307 1/12 of annual 1/12 of annual
145 552 1/12 of annual 1/12 of annual
146 1/12 of annual 1/12 of annual
147 1,083 1/12 of annual 1/12 of annual
148 644 1/12 of annual 1/12 of annual
149 1/12 of annual 1/12 of annual
150 38 1/12 of annual 1/12 of annual
151 23 1/12 of annual 1/12 of annual
152 42 1/12 of annual 1/12 of annual
153 211 1,651 1/12 of annual 1/12 of annual
154 25 1/12 of annual 1/12 of annual
155 253 1/12 of annual 1/12 of annual
156 1/12 of annual 1/12 of annual
157 78 360 1/12 of annual 1/12 of annual
158 152 473 1/12 of annual 1/12 of annual
159 1/12 of annual 1/12 of annual
160 117 1/12 of annual 1/12 of annual
161 1/12 of annual 1/12 of annual
162 129 1/12 of annual 1/12 of annual
163 144 1/12 of annual 1/12 of annual
164 292 1/12 of annual 1/12 of annual
165 163 1/12 of annual 1/12 of annual
166 292 1/12 of annual 1/12 of annual
167 1/12 of annual 1/12 of annual
168 1/12 of annual 1/12 of annual 1/12 of annual
</TABLE>
<PAGE>
FOOTNOTES TO ANNEX A
(1) With respect to Mortgage Loans secured by multiple Mortgaged
Properties, the Occupancy Rate thereof is the weighted average
Occupancy Rate for each Mortgaged Property based on square footage or
number of units thereof.
(2) For Mortgage Loans secured by multiple Mortgaged Properties, the
Mortgage Loan's principal balance is allocated to the respective
Mortgaged Properties based on the Mortgage Loan documentation or the
Seller's determination of the appropriate allocation.
(3) Each number identifies one of six groups of Crossed Loans.
(4) Each letter identifies one of twelve groups of related Mortgagors
with respect to Mortgage Loans that are not Crossed Loans.
(5) For each Mortgage Loan, the excess of the related Mortgage Interest
Rate over the related Master Servicing Fee Rate and the Trustee Fee
Rate.
(6) "ACT/360" means interest accrues on the basis of the actual number of
days elapsed and a 360-day year.
(7) For Loan Numbers 1 and 2, calculated as the aggregate of the 12
Monthly Payments beginning on September 1, 2000 and ending on August
1, 2001; for all other Mortgage Loans, calculated as 12 times the
Monthly Payment in effect as of the Cut-off Date.
(8) For ARD Loans, the related Anticipated Repayment Date.
(9) For ARD Loans, calculated as of the related Anticipated Repayment
Date.
(10) Certain of the Mortgage Loans allow for Defeasance from and after the
second anniversary of the Delivery Date.
(11) "Trailing 12" indicates Most Recent NOI is based on NOI for the
twelve months preceding the Date of Most Recent NOI. "Annualized"
indicates Most Recent NOI has been annualized based on NOI for the
number of months from January 1, 2000 to Date of Most Recent NOI.
(12) Calculated as the ratio of UW Cash Flow to the Annual Debt Service.
A-3
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX B
<TABLE>
<CAPTION>
LOAN NO. PROPERTY NAME CITY STATE ZIP CODE COUNTY DETAILED PROPERTY TYPE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4 Covina Hills Mobile Home Country Club La Puente CA 91744 Los Angeles Mobile Home Park
15 Willo Arms Apartments Euclid OH 44132 Cuyahoga Multifamily
16 Rincon Country West Resort Tucson AZ 85746 Pima Mobile Home Park
18 Royal Lane Village Apartments Dallas TX 75229 Dallas Multifamily
19 Heritage Square Apartments Hempstead NY 11550 Nassau Multifamily
21 Vista Del Valle Las Vegas NV 89103 Clark Multifamily
26 Whispering Pines Apartments Tucson AZ 85710 Pima Multifamily
30 Campus Edge - Phase II Charlotte NC 28262 Mecklenburg Multifamily
33.1 Village of Hampshire Heights Apts Toledo OH 43606 Lucas Multifamily
33.2 University Park Apartments Toledo OH 43602 Lucas Multifamily
34 Anderson Apartments Ypsilanti MI 48198 Washtenaw Multifamily
36 Sunny Dale Apartments Toledo OH 43613 Lucas Multifamily
37 Del Prado Mobile Home Park Anaheim CA 92802 Orange Mobile Home Park
38 West Dixie Towers North Miami FL 33161 Dade Multifamily
40 Brookside Sr. Apartments Bakersfield CA 93311 Kern Multifamily
41 The Meadows Apartments New Castle PA 16105 Lawrence Multifamily
42 The Vail Estates Apartments Princeton IN 47670 Gibson Multifamily
45 Manoog's Isle Mobile Home Park Anchorage AK 99507 Anchorage Mobile Home Park
48 Rotunda Apartments New Orleans LA 70130 Orleans Multifamily
51 Thomas Jefferson II Apartments Hoboken NJ 07030 Hudson Multifamily
53 Westward Ho Manor Mobile Home Park El Cajon CA 92021 San Diego Mobile Home Park
54 River Center Plaza & Apts. La Crosse WI 54601 La Crosse Multifamily
55 Golden Hills Mobile Home Park Porterville CA 93257 Tulare Mobile Home Park
58 Glendale Townhomes Madison WI 53716 Dane Multifamily
64 Silk Oak Lodge Mobile Home Park Clearwater FL 33761 Pinellas Mobile Home Park
68 Lake Eden Gardens Mobile Home Park Hollywood FL 33312 Broward Mobile Home Park
70 Surfside Apartments Lynn MA 01902 Essex Multifamily
72 The Fields Apartments Ph III Bloomington IN 47401 Monroe Multifamily
73 Hidden Forest Mobile Home Park Randolph NC 27317 Randolph Mobile Home Park
78 300 East 96th Street New York NY 10128 New York Multifamily
80 Vermont Care Center Torrance CA 60502 Los Angeles Skilled Nursing Facility
91.1 Asylum Apts. - Asylum Hartford CT 06105 Hartford Multifamily
91.2 Asylum Apts. - Executive House Hartford CT 06105 Hartford Multifamily
93 Mirror Lake Apartments Daytona Beach FL 32119 Volusia Multifamily
96 Valley Oaks Apartments Houston TX 77050 Harris Multifamily
97 Santa Fe Apartments San Antonio TX 78216 Bexar Multifamily
107.1 Pine Grove Apartments Rotterdam NY 12306 Schenectady Multifamily
107.2 Cimino Lane Apartments Rotterdam NY 12306 Schenectady Multifamily
109 Sixth Avenue Mobile Home Park Zephyrhills FL 33540 Pasco Mobile Home Park
112 Lorain Point Apartments Monroe MI 48162 Monroe Multifamily
114 Sheltering Palms Yuma AZ 85364 Yuma Mobile Home Park
115 Westwood Apartments Dallas TX 75220 Dallas Multifamily
117.1 133 Grant Street Portland ME 04101 Cumberland Multifamily
117.2 193 Congress Street Portland ME 04101 Cumberland Multifamily
117.3 6-8 May Street Portland ME 04102 Cumberland Multifamily
117.4 142 Grant Street Portland ME 04101 Cumberland Multifamily
117.5 149 Brackett Street Portland ME 04102 Cumberland Multifamily
118 Southernaire Mobile Home Park Mt. Dora FL 34757 Lake Mobile Home Park
121 Parker Hill Apartments Boston MA 02120 Suffolk Multifamily
122 Palm Shadows Apartments Yuma AZ 85364 Yuma Multifamily
123 Carriage Square Apartments Arlington TX 76013 Tarrant Multifamily
124 Lafayette Apartments New Orleans LA 70113 Orleans Multifamily
127 Downtown Plaza Apartments Bristol VA 24201 Bristol Multifamily
130 Tampico Retirement Center ALF Venice FL 34285 Sarasota Assisted Living Facility
132 Williamsburg Square Apartments Pascagoula MS 39581 Jackson Multifamily
133 Crystal Lake Mobile Home Park Hollywood FL 33312 Broward Mobile Home Park
134 Suburban Villas Brandon FL 33511 Hillsborough Multifamily
136 Hilltopper Apartments Irving TX 75060 Dallas Multifamily
137 Panorama Pointe Villas Panorama City CA 91402 Los Angeles Multifamily
138.1 696 Congress Street Portland ME 04102 Cumberland Multifamily
138.2 316 & 316A Congress Street Portland ME 04101 Cumberland Multifamily
138.3 190-192 State Street Portland ME 04101 Cumberland Multifamily
138.4 469 Cumberland Portland ME 04101 Cumberland Multifamily
144 Bahia Harbor Beach Apartments Fort Lauderdale FL 33316 Broward Multifamily
146 Masonic Arms Apartments Warren MI 48093 Macomb Multifamily
147 Tobias Garden Apartments Panorama City CA 91402 Los Angeles Multifamily
148 Sunrise Villa Kennewick WA 99336 Benton Multifamily
156 Tapestry Apartments Milaca MN 56353 Mille Lacs Multifamily
161 Country Club MHP Machias NY 14042 Cattaraugus Mobile Home Park
162 Gold Hill Mobile Home Park Newcastle CA 95658 Placer Mobile Home Park
163 Pleasure Point Mobile Manor Santa Cruz CA 95062 Santa Cruz Mobile Home Park
164 Kintner Estates Mobile Home Park Vestal NY 13850 Broome Mobile Home Park
166 Blue Ridge Mobile Home Park Conklin NY 13748 Broome Mobile Home Park
167 M & M Apartments Brownsville TX 78521 Cameron Multifamily
168 4029 29th Street San Diego CA 92105 San Diego Multifamily
</TABLE>
(1) Number of studios with respect to multifamily properties, number of beds
with respect to nursing homes and congregate care facilities and number of
pads with respect to mobile home parks.
(2) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on the Mortgage Loan documentation or the Seller's
determination of the appropriate allocation.
(3) Average rents were determined based on an average of the current asking
rents set forth in the appraisal for the related Mortgaged Property.
<PAGE>
<TABLE>
<CAPTION>
STUDIOS/BEDS/PADS (1)
---------------------------------------------------
CUT-OFF DATE/
CUT-OFF DATE/ ALLOCATED UTILITIES AVG RENT
ALLOCATED LOAN BALANCE LOAN PAID BY # OF PER MO. ($) MIN. RENT MAX. RENT
LOAN NO. BALANCE (2) PER UNIT PURPOSE TENANT UNITS (3) PER MO. ($) PER MO. ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4 21,587,115 43,174 Aquisition E, G, W 500 576 550 610
15 11,938,863 16,221 Refinance W
16 10,989,210 9,981 Refinance E 1,101 208 204 212
18 10,458,138 32,682 Refinance E, G
19 10,195,894 29,468 Aquisition E 106 750 505 792
21 9,152,820 35,068 Refinance
26 7,584,167 27,883 Refinance E
30 7,335,521 87,328 Refinance E, W
33.1 5,426,577 17,851 Aquisition E, G
33.2 1,394,412 14,085 Aquisition E
34 6,766,663 22,406 Aquisition E, G
36 6,136,709 23,070 Aquisition E 13 322 320 325
37 5,971,635 45,936 Refinance E, G 130 673 513 1,037
38 5,825,724 29,275 Refinance E 13 410 395 425
40 5,727,747 47,731 Refinance E
41 5,573,634 46,447 Refinance E, G
42 5,225,565 36,289 Refinance E
45 4,855,437 13,303 Aquisition E, G, W
48 4,511,866 66,351 Refinance
51 4,338,163 188,616 Refinance E, G
53 4,180,032 32,403 Refinance E, G, W 129 442 375 459
54 4,139,705 66,769 Refinance E, G
55 4,132,261 18,530 Refinance E, G 223 241 241 241
58 3,934,821 42,310 Refinance E, G
64 3,657,232 20,095 Aquisition E, G 182 323 322 327
68 3,438,389 24,560 Aquisition E, G, W 140 370 361 392
70 3,381,433 49,727 Refinance E, G 4 631 575 650
72 3,283,141 68,399 Refinance E, G, W
73 3,145,752 16,215 Refinance E, G 194 227 230 250
78 2,835,616 113,425 Refinance E, G
80 2,718,176 13,591 Refinance 200 175
91.1 876,137 12,516 Refinance E
91.2 1,473,503 17,970 Refinance E, G 3 385 365 405
93 2,301,562 25,017 Refinance
96 2,159,188 14,688 Aquisition E
97 2,100,000 19,091 Refinance E, G
107.1 938,874 23,472 Aquisition W
107.2 883,940 20,557 Refinance W
109 1,729,802 12,356 Aquisition E, G, W 140 173 173 173
112 1,624,369 29,007 Aquisition E 1 400 400 400
114 1,511,333 9,329 Refinance E 162 169 125 180
115 1,490,766 14,473 Aquisition E 4 400 400 400
117.1 603,025 31,738 Refinance E
117.2 309,447 25,787 Refinance
117.3 218,200 36,367 Refinance W
117.4 162,658 27,110 Refinance E, G
117.5 162,658 27,110 Refinance E, G
118 1,451,443 12,621 Aquisition E, G 115 239 239 239
121 1,398,940 58,289 Aquisition E, W 8 700 650 700
122 1,393,721 18,338 Aquisition E
123 1,367,600 19,262 Refinance 8 375 375 375
124 1,337,507 111,459 Refinance
127 1,297,487 17,072 Refinance E, G, W
130 1,207,349 35,510 Refinance 34 1,816 1,350 1,995
132 1,156,485 19,275 Refinance G
133 1,139,495 22,343 Aquisition E, G, W 51 365 342 388
134 1,137,414 31,595 Refinance E
136 1,100,631 16,933 Refinance
137 1,069,788 24,879 Refinance E, G
138.1 429,683 85,937 Refinance E, G
138.2 239,823 34,260 Refinance E, G 1 300
138.3 195,856 13,990 Refinance E, G 8 558 440 900
138.4 183,864 30,644 Refinance E, G
144 994,106 71,008 Aquisition G 3 865 865 865
146 991,817 29,171 Refinance E, G
147 970,947 18,672 Refinance E
148 963,343 30,104 Aquisition E, G
156 655,654 36,425 Aquisition
161 537,603 8,960 Refinance E, G 78 193 187 207
162 537,433 16,795 Refinance E, G 31 247 242 266
163 515,537 15,622 Refinance E, G, W 33 234 234 234
164 475,519 8,199 Refinance E, G 55 216 214 254
166 334,350 4,776 Refinance E, G 70 201 197 205
167 248,943 24,894 Refinance E, G
168 220,965 27,621 Refinance E, G
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 BEDROOM 2 BEDROOM
------------------------------------------------------- -------------------------------------------------------
AVG RENT AVG RENT
# OF PER MO. ($) MIN. RENT MAX. RENT # OF PER MO. ($) MIN. RENT MAX. RENT
LOAN NO. UNITS (3) PER MO. ($) PER MO. ($) UNITS (3) PER MO. ($) PER MO. ($)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4
15 175 391 380 400 391 484 475 515
16
18 72 475 508 168 600 642
19 204 900 546 1,041 20 1,000 958 1,238
21 100 568 565 850 161 647 610 995
26 176 426 410 445 96 579 574 589
30
33.1 88 434 390 440 216 463 440 465
33.2 78 440 419 454 21 617 584 634
34 3 375 365 375 299 410 400 410
36 55 409 406 412 198 485 471 506
37
38 116 508 465 550 70 700 650 750
40 40 585 585 585 80 719 675 745
41 120 666 605 757
42 4 595 595 595 140 658 650 675
45 313 290 290 290 52 300 300 300
48 45 758 840 19 1,000 1,089
51 15 2,503 2,200 2,800
53
54 25 740 595 900 31 942 850 1,125
55
58 16 499 470 525 59 708 655 745
64
68
70 18 735 600 850 24 826 750 925
72 12 720 720 720 30 936 875 995
73
78 25 1,425 1,121 1,887
80
91.1 70 485 400 575
91.2 60 498 410 650 19 658 650 683
93 92 550 550 550
96 53 335 260 425 84 430 360 525
97 48 413 389 450 59 535 214 605
107.1 25 478 450 510 15 523 500 555
107.2 43 416 370 488
109
112 55 517 490 530
114
115 24 450 450 450 71 588 550 625
117.1 7 496 482 498 3 585 625 650
117.2 12 480 375 525
117.3 6 828 795 900
117.4 3 516 487 537 3 625 600 634
117.5 4 500 425 575 2 610 595 625
118
121 8 895 850 895 8 1,100 1,000 1,200
122 12 362 340 390 64 442 440 460
123 27 489 400 500 36 650 650 650
124 12 1,488 1,350 1,575
127 36 280 280 280 32 346 320 350
130
132 44 499 455 525
133
134 8 475 400 475 10 575 530 575
136 12 500 500 500 32 575 550 600
137 27 535 535 535 14 675 675 675
138.1 3 545 450 595 1 725 725 725
138.2 6 542 537 550
138.3 6 588 500 650
138.4 4 541 495 595 2 695 695 695
144 9 873 830 1,025 1 1,600 1,600 1,600
146 34 535 530 585
147 44 475 465 485 8 650 650 650
148 32 530 525 600
156 4 465 435 475 12 568 560 585
161
162
163
164 3 325 325 325
166
167 8 500 500 500 2 600 600 600
168 1 410 410 410 7 509 500 525
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3 BEDROOM 3 BEDROOM
------------------------------------------------------- ---------------------------------------------------------
AVG RENT AVG RENT
# OF PER MO. ($) MIN. RENT MAX. RENT # OF PER MO. ($) MIN. RENT MAX. RENT ELEVATOR
LOAN NO. UNITS (3) PER MO. ($) PER MO. ($) UNITS (3) PER MO. ($) PER MO. ($) (YES/NO)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4 No
15 170 554 550 565 No
16 No
18 80 675 722 No
19 16 1,200 871 1,352 Yes
21 No
26 No
30 84 1,280 1,240 1,320 No
33.1 No
33.2 No
34 No
36 No
37 No
38 Yes
40 No
41 No
42 No
45 No
48 4 1,686 1,686 Yes
51 8 3,325 3,200 3,400 Yes
53 No
54 4 1,200 1,100 1,250 2 3,000 3,000 3,000 Yes
55 No
58 18 785 760 825 No
64 No
68 No
70 22 915 800 975 No
72 6 1,085 1,085 1,085 No
73 No
78 Yes
80 No
91.1 Yes
91.2 Yes
93 No
96 10 550 500 565 No
97 3 708 700 715 No
107.1 No
107.2 No
109 No
112 No
114 No
115 4 675 675 675 No
117.1 9 736 650 802 No
117.2 No
117.3 No
117.4 No
117.5 No
118 No
121 No
122 No
123 No
124 Yes
127 8 410 410 410 No
130 No
132 16 576 545 595 No
133 No
134 18 675 600 675 No
136 21 650 650 650 No
137 2 800 800 800 No
138.1 No
138.2 No
138.3 No
138.4 No
144 1 2,000 2,000 2,000 No
146 No
147 Yes
148 No
156 2 625 625 625 No
161 No
162 No
163 No
164 No
166 No
167 No
168 No
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX C
<TABLE>
<CAPTION>
LOAN NO. PROPERTY NAME CITY STATE ZIP CODE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.1 Long Beach Airport Long Beach CA 90808
1.2 Sierra Gateway Business Center Palmdale CA 93550
1.3 Nevada Street Plaza Redlands CA 92373
1.4 Gardena Commerce Center Gardena CA 90249
1.5 Moreno Valley Commerce Center Moreno Valley CA 92553
1.6 Mount Vernon Commerce Center Colton CA 92324
2.1 Aliso Viejo Commerce Center Aliso Viejo CA 92656
2.2 Wimbledon Business Center Victorville CA 92392
2.3 Upland Commerce Center Upland CA 91786
2.4 AP Rancho Carmel San Diego CA 92128
2.5 Atlantic Plaza Long Beach CA 90805
2.6 Garden Grove Commerce Center Garden Grove CA 92840
3.1 7 Powderhorn Drive Warren NJ 07059
3.2 35 Technology Drive Warren NJ 07959
5 Liberty Fair Mall Martinsville VA 24112
6 Wilshire Financial Los Angeles CA 90010
7 Hub Tower Des Moines IA 50309
8 Gerry Buildings Los Angeles CA 90014
10 Fairgrounds Plaza Timonium MD 21093
13 Northrop Grumman Building Linthicum MD 21075
14 One Riverview Drive Franklin Township NJ 08873
17 Pavillion East Richardson TX 75080
20 West Acre Commons Flint MI 48532
22 Henson Productions Los Angeles CA 90028
23 Creekside Shopping Center Vista CA 92083
24 Concourse Building San Jose CA 95131
25 Computer Learning Center Building Manassas VA 20109
27 Transbulk Industrial Center Aurora IL 60506
28 TeleService Office Building San Antonio TX 78238
29 Highridge Plaza Manchester VT 05255
31 Brookshire Partners Downey CA 90241
32 Mall de las Aguilas Eagle Pass TX 78853
35 Temecula Corporate Plaza Temecula CA 92591
39 McData Building Louisville CO 80027
43 Auburn Center Auburn WA 98002
44 Barnegat Village Square Barnegat NJ 08005
46 Pavilion West Dallas TX 75248
47 11th Street Plaza Rockford IL 61109
49 North Philadelphia Station Philadelphia PA 19132
50 Attleboro Crossing Shopping Center Attleboro MA 02703
52 Eckerd - Media Media Borough PA 19063
56 El Dorado Square Tucson AZ 85715
57 Nextel Building , Elmhurst IL Elmhurst IL 60126
61 Village at Southpark Lafayette LA 71360
65 University Office Park Davie FL 33328
67 Appleseed Square Beverly MA 01915
69 Meadow Brook Plaza Terra Haute IN 47802
74 300 Metro Center Warwick Warwick RI 02886
75.1 King Plaza Shopping Center Seguin TX 78155
75.2 King Square Shopping Center Seguin TX 78155
76 Grand Avenue Office Building Chicago IL 60651
77 Kachina Village Shopping Center Phoenix AZ 85016
79 Eckerd's Drug Store - Belton Belton MO 64012
81 Belmont Shopping Center Pueblo CO 81001
82 Rainbow Express Village Las Vegas NV 89146
84 ROS Centre Coral Gables FL 33134
85 Rite Aid - Bronx Bronx NY 10457
86 Elk Properties Elkhart IN 46514
88 Signal Hill Business Park Signal Hill CA 90806
90 Amazing Savings Mountainville NY 10953
92 International Shops Orlando FL 32819
94 Aldine Mail Crossing Houston TX 77039
95 El Paso Linens N Things El Paso TX 79912
98 First Miller Tech Center Ann Arbor MI 48103
100 Eckerd - Clayton, NC Clayton NC 27520
101 Idaho Building Boise ID 83702
102 1717 Precinct Line Road Hurst TX 76054
103 Eckerd-Johnstown,PA Richland Township PA 15904
104 Office Max Dilworth MN 56529
105 Layton Square Milwaukee WI 53321
106 Pacific Place Denver CO 80222
108 4212 Technology Court Chantilly VA 22021
111 Sierra Sorrento I San Diego CA 92121
113 Target Center Bakersfield CA 93304
116 Lakehurst Plaza Waukegan IL 60085
119 Gateway - Springfield Springfield PA 19064
120 Gateway - Mesa Mesa AZ 85210
125 Westlake Office Center Indianapolis IN 46224
126 Heritage Business Park Worcester MA 01607
128 Gateway - Lakeland Lakeland FL 33809
129 276-284 Broadway Brooklyn NY 11211
135 Hallmark - Naperville Naperville IL 60540
139 Madison Community Bank Tower Anderson IN 46016
140 Gateway - Davenport Davenport IA 52807
141 Legacy Drive Plano TX 75074
143 Silver Creek Flex Building Park City UT 84098
149 9662-9684 NW 25th Street Miami FL 33172
150 Blockbuster - Chicago Chicago IL 60618
151 Blockbuster - Fairborn Fairborn OH 45324
152 Blockbuster - Miamisburg Miamisburg OH 45342
153 3200 - 3204 Collinsworth Street Fort Worth TX 76107
154 Blockbuster - Waukegan Waukegan IL 60085
157 Mattress Giant - Berwyn Berwyn IL 60402
158 Buckner Warehouse St. Rose LA 70087
159 4610 Peachtree Industrial Blvd Norcross GA 30071
160 Health South - Port Richey Port Richey FL 33568
165 Health South - Bradenton Bradenton FL 34205
</TABLE>
(1) For Mortgage Loans secured by multiple Mortgaged Properties, the Mortgage
Loan's principal balance is allocated to the respective Mortgaged
Properties based on the Mortgage Loan documentation or the Seller's
determination of the appropriate allocation.
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF DATE/
DETAILED CUT-OFF DATE/ ALLOCATED
PROPERTY ALLOCATED LOAN BALANCE PER
LOAN NO. COUNTY TYPE BALANCE ($)(1) SQ. FT. ($)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.1 Los Angeles Flex Space 7,180,180.00 34.98
1.2 Los Angeles Suburban 6,394,704.00 48.87
1.3 San Bernardino Flex Space 3,531,360.00 27.96
1.4 Los Angeles Unanchored 3,395,991.00 86.18
1.5 Riverside Flex Space 2,854,516.00 25.70
1.6 San Bernardino Suburban 1,344,860.00 45.43
2.1 Orange Unanchored 7,798,420.00 121.59
2.2 San Bernardino Unanchored 7,062,720.00 57.32
2.3 San Bernardino Unanchored 3,237,080.00 72.00
2.4 San Diego Unanchored 2,221,814.00 82.36
2.5 Los Angeles Unanchored 1,703,881.00 54.47
2.6 Orange Unanchored 971,124.00 77.32
3.1 Sumerset Flex Space 11,428,977.90 63.32
3.2 Somerset Flex Space 10,584,227.35 114.35
5 Martinsville Anchored 20,549,985.33 47.20
6 Los Angeles CBD 18,576,294.47 49.46
7 Polk CBD 17,952,263.94 63.88
8 Los Angeles Flex Space 16,824,503.93 23.79
10 Baltimore Anchored 16,200,571.93 151.32
13 Anne Arundel Suburban 12,553,763.91 64.56
14 Somerset Flex Space 12,519,833.02 92.06
17 Dallas Anchored 10,967,876.90 64.08
20 Genesee Anchored 9,475,093.00 99.64
22 Los Angeles Suburban 9,028,031.04 108.77
23 San Diego Anchored 8,531,358.46 62.75
24 Santa Clara Suburban 8,259,155.10 144.28
25 Prince William Suburban 7,985,364.46 83.87
27 Kane Flex Space 7,549,192.21 18.46
28 Bexar Suburban 7,468,980.28 86.85
29 Bennington Unanchored 7,388,975.01 159.93
31 Los Angeles Mixed Use 7,263,580.43 28,823.73
32 Maverick Anchored 7,069,556.52 20.36
35 Riverside Suburban 6,649,141.85 80.45
39 Boulder Flex Space 5,781,673.57 63.19
43 Kings Anchored 5,096,806.64 110.18
44 Ocean Anchored 5,075,342.86 72.00
46 Dallas Unanchored 4,744,562.33 56.32
47 Winnebago Anchored 4,727,035.06 43.21
49 Philadelphia Anchored 4,468,177.71 63.78
50 Bristol Anchored 4,408,522.32 44.98
52 Delaware Anchored 4,255,674.62 334.07
56 Pima Suburban 4,074,850.88 58.25
57 DuPage Suburban 3,987,300.40 68.66
61 Lafayette Anchored 3,848,995.02 56.31
65 Broward Suburban 3,579,888.40 78.73
67 Essex Unanchored 3,496,084.72 138.82
69 Vigo Anchored 3,426,940.68 95.13
74 Kent Suburban 3,093,989.20 84.50
75.1 Guadalupe Unanchored 2,307,890.74 81.93
75.2 Guadalupe Unanchored 732,978.18 42.70
76 Cook CBD 2,697,619.41 77.32
77 Maricopa Unanchored 2,985,509.79 62.72
79 Cass Anchored 2,974,994.02 265.62
81 Pueblo Anchored 2,817,394.38 34.66
82 Clark Unanchored 2,680,513.42 87.41
84 Miami Dade Suburban 2,599,128.42 91.18
85 Bronx Unanchored 2,555,431.92 227.15
86 Elkhart Warehouse/Distribution 2,548,206.96 18.35
88 Los Angeles Suburban 2,443,668.51 57.35
90 Orange Warehouse/Distribution 2,426,972.34 19.73
92 Orange Unanchored 2,325,648.53 222.98
94 Harris Anchored 2,275,247.41 29.00
95 El Paso Unanchored 2,244,478.07 68.01
98 Washtenaw Suburban 2,083,959.60 94.83
100 Johnson Anchored 2,057,277.11 188.60
101 Ada Mixed Use 2,055,123.97 35.55
102 Tarrant Suburban 2,004,156.05 64.09
103 Cambria Anchored 1,993,524.49 182.76
104 Clay Anchored 1,983,950.55 84.42
105 Milwaukee Unanchored 1,834,643.75 67.00
106 Denver Flex Space 1,829,128.34 27.74
108 Fairfax Flex Space 1,822,547.41 59.12
111 San Diego Flex Space 1,628,193.59 37.78
113 Kern Shadow Anchored 1,563,012.53 71.19
116 Lake Unanchored 1,467,116.48 54.32
119 Delaware Unanchored 1,437,533.63 179.69
120 Maricopa Unanchored 1,399,844.35 175.35
125 Marion Suburban 1,309,767.36 44.76
126 Worcester Flex Space 1,302,003.20 40.19
128 Polk Unanchored 1,290,344.36 161.29
129 Kings Mixed Use 1,276,138.99 82.87
135 Dupage Unanchored 1,105,395.28 157.91
139 Madison Suburban 1,046,083.67 14.79
140 Scott Unanchored 1,039,703.12 129.96
141 Collin Flex Space 1,031,366.07 51.57
143 Summit Flex Space 997,340.43 74.53
149 Miami Dade Unanchored 817,687.50 90.85
150 Cook Unanchored 811,608.91 169.09
151 Greene Unanchored 679,162.31 135.83
152 Montgomery Unanchored 670,199.78 133.91
153 Tarrant Suburban 667,329.02 52.75
154 Lake Unanchored 660,538.63 169.37
157 Cook Unanchored 590,806.00 62.19
158 St. Charles Warehouse/Distribution 589,202.96 64.43
159 Gwinnett Flex Space 574,226.04 39.24
160 Pasco Suburban 560,155.49 93.36
165 Manatee Suburban 434,466.86 103.44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGEST TENANT
---------------------------------------------------------------------------------------
LEASE EXP.
LOAN NO. NAME SQ. FT. DATE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 AASI,Inc. 205,257 5/20/17
1.2 Lockheed Corp 51,856 6/30/00
1.3 Primecare Medical 22,464 12/31/99
1.4 Marie Callenders 4,500 1/14/07
1.5 Exper Tire&Service Cntr 6,467 5/31/03
1.6 County of San Bernardino 15,600 1/31/02
2.1 Aliso Foreign Car 5,280 10/11/00
2.2 U.S. Family Care 13,610 10/31/04
2.3 The Salvation Army 9,862 12/31/07
2.4 ABC Children's Center 4,600 12/31/02
2.5 Value Village 10,757 4/30/05
2.6 CSK Auto 5,400 10/31/02
3.1 Cordis (Johnson & Johnson) 107,000 12/31/06
3.2 Anadigics, Inc. 92,561 5/1/05
5 Belks 85,000 8/29/09
6 California Family Health 17,872 9/30/02
7 Principal Mutual Life Ins. 139,662 12/31/04
8 PAK Trading 28,001 12/31/02
10 SuperFresh 56,795 1/31/19
13 Northrop Grumman 194,457 10/31/04
14 Union Carbide 136,000 11/30/05
17 Albertsons Inc. 58,629 10/11/11
20 Farmer Jack 59,889 8/31/18
22 Jim Henson Co. 83,000 4/30/15
23 Home Base 103,904 10/31/12
24 Computer Associates 36,532 1/31/04
25 Computer Learning Center 71,563 2/24/20
27 Dynaweld 143,520 5/31/01
28 TeleService Resources 86,000 10/31/19
29 Liz Clairborne - Vermont, Inc. 8,000 5/31/02
31 Kaiser Foundation 14,339 7/31/04
32 J C Penny 67,578 11/30/02
35 Brookstone Telecom 19,207 5/31/04
39 McData 91,497 3/7/03
43 Office Max 23,500 12/31/13
44 Genuardi's 50,008 10/31/19
46 24 Hour Fitness 25,600 12/31/03
47 Eagle Foods 42,500 11/1/06
49 Pathmark 50,388 5/31/19
50 Ro-Jacks Supermarket 34,571 8/31/04
52 Eckerd 12,739 3/21/20
56 Girvin, DeVeies, & Assoc. 4,000 1/31/04
57 Nextel West 58,076 12/1/14
61 Adriens (Fleming) 31,292 8/31/05
65 Kaleidoscope 8,180 12/31/09
67 Hunneman 5,200 1/31/05
69 Petco 15,000 1/31/10
74 US Coast Guard 10,980 4/20/02
75.1 Davila's BBQ 6,480 2/28/09
75.2 Bio-Medical App. 6,500 11/26/02
76 Employment Security 13,200 3/31/03
77 Maroney's 6,600 6/30/00
79 Eckerd's 11,200 6/29/19
81 Sav-A-Lot/Leevers Supermarket 24,510 3/31/05
82 Danny's II 5,140 3/31/01
84 ROS Alternative STS 10,279 2/1/15
85 Rite Aid 11,250 8/15/14
86 Elk Automotive 80,865 6/30/15
88 Headstart 10,193 11/30/03
90 Amazing Savings 123,000 1/31/15
92 Nagina Enterprises 4,218 2/28/03
94 Ace Hardware 63,853 12/31/18
95 Linens 'N Things 33,000 1/31/20
98 Career Site.Com (form. Virt. Res.) 4,000 12/1/00
100 Eckerd 10,908 10/26/18
101 Claudia Goltry Toycrafters 4,272 3/31/02
102 Southwest Surgery 7,625 12/31/03
103 Eckerd 10,908 10/12/19
104 Office Max 23,500 9/30/14
105 Andrew Seter, MD 6,210 11/30/03
106 Premier Floors 14,948 2/28/05
108 Aardvark 19,300 2/28/10
111 Cubic Corporation 43,100 4/30/03
113 Rusty's Pizza Parlor 4,029 2/14/04
116 LA-Z-Boy Showroom 14,907 12/31/03
119 Gateway Companies 8,000 8/31/04
120 Gateway 7,983 6/30/04
125 Dept of Workforce Development 11,700 3/22/03
126 Roads 6,081 12/31/00
128 Gateway 8,000 7/31/04
129 Kim Farmers Market 2,200 3/1/04
135 Hallmark 7,000 2/28/10
139 Payless Supermarkets 15,829 6/30/02
140 Gateway 8,000 11/30/04
141 Premier Aftermarket 4,000 12/31/02
143 Familian Northwest 9,981 9/6/04
149 Becca Inv., Inc. 2,250 3/31/17
150 Blockbuster 4,800 8/31/04
151 Blockbuster 5,000 7/31/04
152 Blockbuster 5,005 5/31/04
153 Employee Res. Network 6,549 2/28/02
154 Blockbuster 3,900 9/30/04
157 Mattress Giant 7,700 9/30/14
158 Neff Rental, Inc. dba Buckner Rental Service 9,145 10/31/08
159 Tree Sound Studios 14,632
160 Health South 6,000 10/31/04
165 Health South 4,200 8/29/06
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2ND LARGEST TENANT
------------------------------------------------------------------------
LEASE EXP.
LOAN NO. NAME SQ. FT. DATE
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1
1.2 Pacific Bell 14,845 4/14/02
1.3 Loma Linda Cherrco 7,728 9/30/00
1.4 Hee Kyeong Chung Song 2,433 8/31/05
1.5 Manuel Rocha 6,175 6/30/03
1.6 County of San Bernardino 5,800 3/31/99
2.1 La Paz Service Center 5,097 6/30/02
2.2 Eyes Online 10,548 4/30/05
2.3 Jiffy Lube 2,100 12/31/07
2.4 Graziano's Pizza 4,000 9/30/00
2.5 Medimanager Inc. 7,940 11/14/01
2.6 Video Giant 4,800 4/30/02
3.1 Celgene Corp 73,500 7/31/10
3.2
5 Sears 58,760 11/10/09
6 Philippine Consulate 12,824 9/30/04
7 AmerUs Life Holdings 68,592 12/31/07
8 Sook Kim Sowuri Gar 14,500 1/31/02
10 BGE Home Products 11,549 1/31/04
13
14
17 Richardson Bike 25,000 12/31/12
20 Hollywood Video 6,000 3/31/09
22
23 Circuit City 32,045 1/19/09
24 Computer Associates 20,712 7/31/06
25
27 Shamrock 67,265 5/31/05
28
29 Tommy Hilfiger 6,000 12/31/04
31 Family Planning Assoc. 5,712 2/1/97
32 Beall's 29,837 1/31/07
35 Pickford Realty 6,244 10/31/03
39
43 Paper Warehouse 8,500 10/31/08
44 Burger King 3,143 11/30/20
46 Salons by JC 8,400 9/30/08
47 State of Illinois 28,920 8/31/02
49 Lot Stores 7,500 4/30/09
50 Big Value Outlet 30,000 3/31/01
52
56 Tour Connection 3,765 4/30/02
57
61 Eckerd Drugs 8,640 9/16/05
65 Accu-Med 3,202 7/31/01
67 River's Edge 3,400 7/31/03
69 Shoe Carnival 12,015 1/31/10
74 CableRep Advertising 7,333 12/31/04
75.1 EZ Pawn 4,437 5/7/06
75.2 Touch of Elegance 2,500 4/30/03
76 Department of Corrections 8,488 4/30/08
77 Purcell Tire Company 5,870 11/14/03
79
81 Pueblo Goodwill Industries 13,533 8/31/03
82 Bear's Spas 3,780 1/31/02
84 Auxis Inc. 7,422 4/1/03
85
86 Elkhart Truck & Body 48,720 6/30/15
88 APS 4,863 3/31/01
90
92 Awad's Son 2,836 12/31/01
94 Godfather's Pizza 3,166 12/17/01
95
98 Sheffield Pharmaceuticals (St.5) 2,421 4/30/01
100
101 Sandra Evans Idaho State Board 3,183 6/30/03
102 Health Images TX 5,526 3/31/03
103
104
105 Lutz's Sports Bar and Night Club 5,786 4/30/01
106 Office Liquidators 10,353 2/28/02
108 Baptist Church 6,740 2/28/05
111
113 The Clothestime 3,890 7/31/02
116 Power House Gym 12,100 4/30/01
119
120
125 Indiana State-Animal Health 11,517 5/31/01
126 Worm's Way 6,000
128
129 Marcy Inc. 1,600 3/1/08
135
139 Madison Community Bank 7,348 4/30/09
140
141 Borna, Inc. 2,000 7/14/02
143 Dr. Randy Barbe 2,038 11/30/04
149 Donato Dry Cleaners 2,250 2/28/12
150
151
152
153 DVI/ Ft. Worth Imaging 6,101 4/30/03
154
157 Title Loans Express 1,800 10/31/01
158
159
160
165
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3RD LARGEST TENANT
-------------------------------------------------------------------
LEASE EXP.
LOAN NO. NAME SQ. FT. DATE
---------------------------------------------------------------------------------
<S> <C> <C> <C>
1.1
1.2 International Church 14497 8/31/01
1.3 Apostolic 6912 8/14/00
1.4 Young Suk Woo 2300 2/28/05
1.5 Certified Tire & Service 4830 6/30/02
1.6 County of San Bernardino 2000 5/31/00
2.1 Sports Tavern 5028 9/14/02
2.2 Citizens Business Bank 5120 3/31/05
2.3 Pro-Cut Barber 1257 2/28/04
2.4 My Gym 2600 7/31/01
2.5 Quality Food Market 4189 12/31/01
2.6
3.1
3.2
5 Kroger 55969 7/12/17
6 Southwestern Pacific Land Gro 12160 6/6/04
7 Invista Capital 31272 9/14/02
8 Man Jae Hong 14500 7/31/00
10 Gateway Companies 10272 1/31/04
13
14
17 Dress Barn 9123 6/30/04
20 Hallmark 5000 2/28/03
22
23
24
25
27 Excel Container 63811 4/30/03
28
29 Pisces Corp. (Jasper's Cafe) 4,000 1/31/09
31 Downey Community 4344 12/31/01
32 Weiner's 25099 11/30/04
35 RSP Microfilming 5160 4/14/03
39
43 UW Physicians 8,000 11/20/08
44 Joey's Pizza 2400 10/31/04
46 Cindi's 3860 6/30/03
47 Osco Drug 16,853 4/30/04
49 Blockbuster Video 4,669 3/31/04
50 Family Dollar 13750 12/31/03
52
56 Interline Design Group 3328 12/31/02
57
61 Louisiana Health 4,160 4/30/01
65 Stephanos 2,500 4/30/04
67 Symes Associates 3017 11/30/04
69 Pier 1 Imports 9009 5/31/09
74 Eastern Telecom 6427 10/31/04
75.1 Texas State Optical 3,000 10/31/07
75.2 Lil Caesar's 2,000 9/2/03
76 Department of Rehabilitation 7,200 8/31/08
77 Jiffy Copy 5400 9/30/03
79
81 Auto Zone 7,200 9/30/01
82 Rainbow Chinese 3,441 4/30/01
84 Adobe 2736 8/1/01
85
86 Image Truck & Accessory 9248 7/31/03
88 Payroll 1 4548 11/30/02
90
92 Inca Beachwear 1,443 2/28/02
94 Jed's Feed and Pet 2,973 12/31/18
95
98 DV Technology (340 Miller) 2,348 11/1/00
100
101 Geoengineers, Inc. 2800 3/30/03
102 Med-Tex 5,279 4/30/03
103
104
105 Radio Shack 2,400 6/30/00
106 Efficiency Garage 6321 6/30/02
108 Sennett Security Products 4790 5/31/01
111
113 Paradise Valley Holdings 3,725 8/23/02
116
119
120
125 Renal Care Group 5265 9/30/04
126 Meister Grinding 2400 11/30/00
128
129 Amvet, Inc. 1500 3/1/07
135
139 R.W. Baird 3849 12/31/07
140
141 Computer Outlet, Inc. 2,000 1/31/03
143 Stein Eriksen 1363 8/31/04
149 Twinkle Twinkle 750 10/1/00
150
151
152
153
154
157
158
159
160
165
</TABLE>
<PAGE>
ANNEX D
<TABLE>
<CAPTION>
Loan No. 12: Suburban Lodge Portfolio
--------------------------------------------------------------
Period Date Total P&I Payment Interest Principal
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0 09/01/00
1 10/01/00 101,788.14 88,000.00 13,788.14
2 11/01/00 101,411.10 90,828.85 10,582.25
3 12/01/00 101,788.13 87,821.28 13,966.85
4 01/01/01 101,411.09 90,642.82 10,768.27
5 02/01/01 101,411.09 90,561.22 10,849.87
6 03/01/01 102,542.22 81,722.97 20,819.25
7 04/01/01 101,411.09 90,321.24 11,089.85
8 05/01/01 101,788.14 87,326.33 14,461.81
9 06/01/01 101,411.10 90,127.62 11,283.48
10 07/01/01 101,788.14 87,137.53 14,650.61
11 08/01/01 101,411.09 89,931.09 11,480.00
12 09/01/01 101,411.09 89,844.10 11,566.99
13 10/01/01 101,788.14 86,861.08 14,927.06
14 11/01/01 101,411.09 89,643.33 11,767.76
15 12/01/01 101,788.14 86,665.32 15,122.82
16 01/01/02 101,411.09 89,439.56 11,971.53
17 02/01/02 101,411.10 89,348.85 12,062.25
18 03/01/02 102,542.22 80,619.62 21,922.60
19 04/01/02 101,411.10 89,091.32 12,319.78
20 05/01/02 101,788.14 86,127.06 15,661.08
21 06/01/02 101,411.09 88,879.28 12,531.81
22 07/01/02 101,788.14 85,920.31 15,867.83
23 08/01/02 101,411.10 88,664.08 12,747.02
24 09/01/02 101,411.09 88,567.48 12,843.61
25 10/01/02 101,788.14 85,616.28 16,171.86
26 11/01/02 101,411.09 88,347.61 13,063.48
27 12/01/02 101,788.14 85,401.89 16,386.25
28 01/01/03 101,411.10 88,124.45 13,286.65
29 02/01/03 101,411.09 88,023.76 13,387.33
30 03/01/03 102,542.23 79,413.71 23,128.52
31 04/01/03 101,411.10 87,747.06 13,664.04
32 05/01/03 101,788.14 84,816.30 16,971.84
33 06/01/03 101,411.09 87,514.90 13,896.19
34 07/01/03 101,788.14 84,589.94 17,198.20
35 08/01/03 101,411.10 87,279.28 14,131.82
36 09/01/03 101,411.10 87,172.19 14,238.91
37 10/01/03 101,788.13 84,255.76 17,532.37
38 11/01/03 101,411.09 86,931.43 14,479.66
39 12/01/03 101,788.14 84,021.01 17,767.13
40 01/01/04 101,411.09 86,687.07 14,724.02
41 02/01/04 101,411.10 86,575.50 14,835.60
42 03/01/04 102,165.18 80,884.81 21,280.37
43 04/01/04 101,411.09 86,301.82 15,109.27
44 05/01/04 101,788.14 83,407.09 18,381.05
45 06/01/04 101,411.10 86,048.04 15,363.06
46 07/01/04 101,788.14 83,159.63 18,628.51
47 08/01/04 101,411.10 85,790.46 15,620.64
48 09/01/04 101,411.10 85,672.09 15,739.01
49 10/01/04 101,788.14 82,793.05 18,995.09
50 11/01/04 101,411.09 85,408.88 16,002.21
51 12/01/04 101,788.14 82,536.41 19,251.73
52 01/01/05 101,411.09 85,141.73 16,269.36
53 02/01/05 101,411.10 85,018.45 16,392.65
54 03/01/05 102,542.23 76,678.66 25,863.57
55 04/01/05 101,411.09 84,698.24 16,712.85
56 05/01/05 101,788.14 81,843.48 19,944.66
57 06/01/05 101,411.10 84,420.46 16,990.64
58 07/01/05 101,788.14 81,572.62 20,215.52
59 08/01/05 101,411.10 84,138.52 17,272.58
60 09/01/05 101,411.10 84,007.63 17,403.47
61 10/01/05 101,788.14 81,170.08 20,618.06
62 11/01/05 101,411.09 83,719.51 17,691.58
63 12/01/05 101,788.14 80,889.14 20,899.00
64 01/01/06 101,411.09 83,427.08 17,984.01
65 02/01/06 101,411.09 83,290.80 18,120.29
66 03/01/06 102,542.23 75,106.38 27,435.85
67 04/01/06 101,411.10 82,945.59 18,465.51
68 05/01/06 101,788.14 80,134.51 21,653.63
69 06/01/06 101,411.09 82,641.57 18,769.52
70 07/01/06 101,788.14 79,838.07 21,950.07
71 08/01/06 101,411.10 82,333.01 19,078.09
72 09/01/06 101,411.10 82,188.44 19,222.66
73 10/01/06 101,788.14 79,396.23 22,391.91
74 11/01/06 101,411.09 81,873.09 19,538.00
75 12/01/06 101,788.14 79,088.75 22,699.39
76 01/01/07 101,411.10 81,553.03 19,858.07
77 02/01/07 101,411.10 81,402.55 20,008.55
78 03/01/07 102,542.22 73,387.93 29,154.29
79 04/01/07 101,411.09 81,030.00 20,381.09
80 05/01/07 101,788.14 78,266.67 23,521.47
81 06/01/07 101,411.10 80,697.32 20,713.78
82 07/01/07 101,788.14 77,942.28 23,845.86
83 08/01/07 101,411.10 80,359.66 21,051.44
84 09/01/07 101,411.09 80,200.13 21,210.96
85 10/01/07 101,788.13 77,457.48 24,330.65
86 11/01/07 101,411.10 79,855.03 21,556.07
87 12/01/07 101,788.14 77,120.98 24,667.16
88 01/01/08 101,411.10 79,504.76 21,906.34
89 02/01/08 101,411.10 79,338.76 22,072.34
90 03/01/08 102,165.18 74,063.66 28,101.52
91 04/01/08 101,411.09 78,958.55 22,452.54
92 05/01/08 101,788.14 76,246.85 25,541.29
93 06/01/08 101,411.10 78,594.87 22,816.23
94 07/01/08 101,788.14 75,892.23 25,895.91
95 08/01/08 101,411.10 78,225.74 23,185.36
96 09/01/08 101,411.09 78,050.04 23,361.05
97 10/01/08 101,788.13 75,360.98 26,427.15
98 11/01/08 101,411.10 77,672.76 23,738.34
99 12/01/08 101,788.13 74,993.10 26,795.03
100 01/01/09 101,411.10 77,289.83 24,121.27
101 02/01/09 101,411.09 77,107.04 24,304.05
102 03/01/09 102,542.22 69,478.72 33,063.50
103 04/01/09 101,411.09 76,672.32 24,738.77
104 05/01/09 101,788.13 74,017.60 27,770.53
105 06/01/09 101,411.10 76,274.42 25,136.68
106 07/01/09 10,114,032.13 73,629.62 10,040,402.51
107 08/01/09
108 09/01/09
109 10/01/09
110 11/01/09
111 12/01/09
112 01/01/10
113 02/01/10
114 03/01/10
115 04/01/10
116 05/01/10
117 06/01/10
118 07/01/10
119 08/01/10
120 09/01/10
121 10/01/10
122 11/01/10
123 12/01/10
124 01/01/11
125 02/01/11
126 03/01/11
127 04/01/11
128 05/01/11
129 06/01/11
130 07/01/11
131 08/01/11
132 09/01/11
133 10/01/11
134 11/01/11
135 12/01/11
136 01/01/12
137 02/01/12
138 03/01/12
139 04/01/12
140 05/01/12
141 06/01/12
142 07/01/12
143 08/01/12
144 09/01/12
145 10/01/12
146 11/01/12
147 12/01/12
148 01/01/13
149 02/01/13
150 03/01/13
151 04/01/13
152 05/01/13
153 06/01/13
154 07/01/13
155 08/01/13
156 09/01/13
157 10/01/13
158 11/01/13
159 12/01/13
160 01/01/14
161 02/01/14
162 03/01/14
163 04/01/14
164 05/01/14
165 06/01/14
166 07/01/14
167 08/01/14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Loan No. 85: Rite Aid - Bronx
------------------------------------------------------------------
Period Total P&I Payment Interest Principal
----------------------------------------------------------------------------------
<S> <C> <C> <C>
0
1 24,082.22 18,015.80 6,066.42
2 24,082.22 17,973.03 6,109.19
3 24,082.22 17,929.96 6,152.26
4 24,082.22 17,886.58 6,195.64
5 24,082.22 17,842.90 6,239.32
6 24,082.22 17,798.92 6,283.30
7 24,082.22 17,754.62 6,327.60
8 24,082.22 17,710.01 6,372.21
9 24,082.22 17,665.09 6,417.13
10 24,082.22 17,619.85 6,462.37
11 24,082.22 17,574.29 6,507.93
12 24,082.22 17,528.40 6,553.82
13 24,082.22 17,482.20 6,600.02
14 24,082.22 17,435.67 6,646.55
15 24,082.22 17,388.81 6,693.41
16 24,082.22 17,341.62 6,740.60
17 24,082.22 17,294.10 6,788.12
18 24,082.22 17,246.25 6,835.97
19 24,082.22 17,198.05 6,884.17
20 24,082.22 17,149.52 6,932.70
21 24,082.22 17,100.64 6,981.58
22 24,082.22 17,051.42 7,030.80
23 24,082.22 17,001.86 7,080.36
24 24,082.22 16,951.94 7,130.28
25 24,082.22 16,901.67 7,180.55
26 24,082.22 16,851.05 7,231.17
27 24,082.22 16,800.07 7,282.15
28 24,082.22 16,748.73 7,333.49
29 24,082.22 16,697.03 7,385.19
30 24,082.22 16,644.96 7,437.26
31 24,082.22 16,592.53 7,489.69
32 24,082.22 16,539.73 7,542.49
33 24,082.22 16,486.55 7,595.67
34 24,082.22 16,433.00 7,649.22
35 24,082.22 16,379.08 7,703.14
36 24,082.22 16,324.77 7,757.45
37 24,082.22 16,270.08 7,812.14
38 24,082.22 16,215.00 7,867.22
39 24,082.22 16,159.54 7,922.68
40 24,082.22 16,103.69 7,978.53
41 24,082.22 16,047.44 8,034.78
42 24,082.22 15,990.79 8,091.43
43 24,082.22 15,933.75 8,148.47
44 24,082.22 15,876.30 8,205.92
45 24,082.22 15,818.45 8,263.77
46 24,082.22 15,760.19 8,322.03
47 26,509.41 15,701.52 10,807.89
48 26,509.41 15,625.32 10,884.09
49 26,509.41 15,548.59 10,960.82
50 26,509.41 15,471.32 11,038.09
51 26,509.41 15,393.50 11,115.91
52 26,509.41 15,315.13 11,194.28
53 26,509.41 15,236.21 11,273.20
54 26,509.41 15,156.73 11,352.68
55 26,509.41 15,076.70 11,432.71
56 26,509.41 14,996.10 11,513.31
57 26,509.41 14,914.93 11,594.48
58 26,509.41 14,833.19 11,676.22
59 26,509.41 14,750.87 11,758.54
60 26,509.41 14,667.97 11,841.44
61 26,509.41 14,584.49 11,924.92
62 26,509.41 14,500.42 12,008.99
63 26,509.41 14,415.76 12,093.65
64 26,509.41 14,330.50 12,178.91
65 26,509.41 14,244.63 12,264.78
66 26,509.41 14,158.17 12,351.24
67 26,509.41 14,071.09 12,438.32
68 26,509.41 13,983.40 12,526.01
69 26,509.41 13,895.09 12,614.32
70 26,509.41 13,806.16 12,703.25
71 26,509.41 13,716.60 12,792.81
72 26,509.41 13,626.42 12,882.99
73 26,509.41 13,535.59 12,973.82
74 26,509.41 13,444.12 13,065.29
75 26,509.41 13,352.01 13,157.40
76 26,509.41 13,259.25 13,250.16
77 26,509.41 13,165.84 13,343.57
78 26,509.41 13,071.77 13,437.64
79 26,509.41 12,977.03 13,532.38
80 26,509.41 12,881.63 13,627.78
81 26,509.41 12,785.55 13,723.86
82 26,509.41 12,688.80 13,820.61
83 26,509.41 12,591.37 13,918.04
84 26,509.41 12,493.24 14,016.17
85 26,509.41 12,394.43 14,114.98
86 26,509.41 12,294.92 14,214.49
87 26,509.41 12,194.71 14,314.70
88 26,509.41 12,093.79 14,415.62
89 26,509.41 11,992.16 14,517.25
90 26,509.41 11,889.81 14,619.60
91 26,509.41 11,786.74 14,722.67
92 26,509.41 11,682.95 14,826.46
93 26,509.41 11,578.42 14,930.99
94 26,509.41 11,473.16 15,036.25
95 26,509.41 11,367.15 15,142.26
96 26,509.41 11,260.40 15,249.01
97 26,509.41 11,152.89 15,356.52
98 26,509.41 11,044.63 15,464.78
99 26,509.41 10,935.60 15,573.81
100 26,509.41 10,825.81 15,683.60
101 26,509.41 10,715.24 15,794.17
102 26,509.41 10,603.89 15,905.52
103 26,509.41 10,491.76 16,017.65
104 26,509.41 10,378.83 16,130.58
105 26,509.41 10,265.11 16,244.30
106 26,509.41 10,150.59 16,358.82
107 29,179.31 10,035.26 19,144.05
108 29,179.31 9,900.29 19,279.02
109 29,179.31 9,764.38 19,414.93
110 29,179.31 9,627.50 19,551.81
111 29,179.31 9,489.66 19,689.65
112 29,179.31 9,350.85 19,828.46
113 29,179.31 9,211.06 19,968.25
114 29,179.31 9,070.28 20,109.03
115 29,179.31 8,928.51 20,250.80
116 29,179.31 8,785.75 20,393.56
117 29,179.31 8,641.97 20,537.34
118 29,179.31 8,497.18 20,682.13
119 29,179.31 8,351.37 20,827.94
120 29,179.31 8,204.54 20,974.77
121 29,179.31 8,056.67 21,122.64
122 29,179.31 7,907.75 21,271.56
123 29,179.31 7,757.79 21,421.52
124 29,179.31 7,606.76 21,572.55
125 29,179.31 7,454.68 21,724.63
126 29,179.31 7,301.52 21,877.79
127 29,179.31 7,147.28 22,032.03
128 29,179.31 6,991.96 22,187.35
129 29,179.31 6,835.53 22,343.78
130 29,179.31 6,678.01 22,501.30
131 29,179.31 6,519.38 22,659.93
132 29,179.31 6,359.62 22,819.69
133 29,179.31 6,198.75 22,980.56
134 29,179.31 6,036.73 23,142.58
135 29,179.31 5,873.58 23,305.73
136 29,179.31 5,709.27 23,470.04
137 29,179.31 5,543.81 23,635.50
138 29,179.31 5,377.18 23,802.13
139 29,179.31 5,209.37 23,969.94
140 29,179.31 5,040.38 24,138.93
141 29,179.31 4,870.20 24,309.11
142 29,179.31 4,698.83 24,480.48
143 29,179.31 4,526.24 24,653.07
144 29,179.31 4,352.43 24,826.88
145 29,179.31 4,177.40 25,001.91
146 29,179.31 4,001.14 25,178.17
147 29,179.31 3,823.64 25,355.67
148 29,179.31 3,644.88 25,534.43
149 29,179.31 3,464.86 25,714.45
150 29,179.31 3,283.57 25,895.74
151 29,179.31 3,101.01 26,078.30
152 29,179.31 2,917.16 26,262.15
153 29,179.31 2,732.01 26,447.30
154 29,179.31 2,545.55 26,633.76
155 29,179.31 2,357.79 26,821.52
156 29,179.31 2,168.69 27,010.62
157 29,179.31 1,978.27 27,201.04
158 29,179.31 1,786.50 27,392.81
159 29,179.31 1,593.38 27,585.93
160 29,179.31 1,398.90 27,780.41
161 29,179.31 1,203.05 27,976.26
162 29,179.31 1,005.82 28,173.49
163 29,179.31 807.19 28,372.12
164 29,179.31 607.17 28,572.14
165 29,179.31 405.74 28,773.57
166 28,980.76 202.88 28,777.88
167
</TABLE>
D-1
<PAGE>
ANNEX E
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C10
$660,071,000
J.P. MORGAN & CO. SALOMON SMITH BARNEY
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 1
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C10
$660,071,000
J.P. MORGAN:
TRADING Brian Baker (212) 648-1413
Andrew Taylor (212) 648-1413
Leland Bunch (212) 648-1413
STRUCTURING Thomas Doherty (212) 648-1414
Theresa Dooley (212) 648-0651
BANKING Clive Bull (212) 648-9496
Dennis Schuh (212) 648-3060
RESEARCH Patrick Corcoran (212) 648-6130
SALOMON SMITH BARNEY:
TRADING Paul Vanderslice (212) 723-6156
Jeff Lewis (212) 723-6156
Jeff Sturdevant (212) 723-6156
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 2
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-C10
$660,071,000
TRANSACTION OVERVIEW
<TABLE>
<CAPTION>
INITIAL
CLASS CERTIFICATES AVG.
BALANCE OR TO LIFE PRINCIPAL
RATING NOTIONAL % OF % CREDIT VALUE (%) (YEARS) WINDOW COUPON ERISA
CLASS (FITCH/MOODY'S) AMOUNT TOTAL SUPPORT (1) (2) (MONTHS)(2) DESCRIPTION ELIGIBLE(3)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 AAA / Aaa $95,500,000 12.93% 23.250%(4) 52.3% 5.50 1 - 105 [Fixed/WAC] Yes
A-2 AAA / Aaa 471,331,000 63.82 23.250 (4) 52.3 9.12 105 - 114 [Fixed/WAC] Yes
X AAA / Aaa 738,541,419(5) NA NA NA 5.50(6) NA WAC(7) Yes
B AA / Aa2 31,388,000 4.25 19.000 55.2 9.51 114 - 116 [Fixed/WAC] No
C A / A2 29,541,000 4.00 15.000 58.0 9.57 115 - 116 [Fixed/WAC] No
D A- / A3 9,232,000 1.25 13.750 58.8 9.64 116 - 116 [Fixed/WAC] No
E BBB / Baa2 23,079,000 3.12 10.625 60.9 9.64 116 - 116 [Fixed/WAC] No
Private Certificates(8) 78,470,419(8)
TOTAL 738,541,419 100.0% 68.2% 8.98
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The sum of the principal balance of the related class and classes senior to
it, divided by the aggregate appraised value of the properties
collateralizing the mortgage pool
(2) Assumes no prepayments, defaults, early termination, and a closing date of
September 25, 2000
(3) See "Certain ERISA Considerations" in the prospectus supplement for certain
ERISA eligibility limitations and proposed changes effecting eligibility
for the classes B, C, D, and E
(4) Represents the credit support for the Class A-1 and Class A-2 Certificates
in the aggregate.
(5) Notional balance
(6) Implied average life
(7) The Class X Certificates will receive the net interest on the mortgage
loans less the interest paid on the other certificates
(8) Not offered hereby
MORTGAGE POOL CHARACTERISTICS
The mortgage pool consists of 168 fixed rate mortgage loans secured by one or
more first liens on fee simple and/or leasehold interests in 194 multifamily,
retail, office, hotel and other commercial properties located in 33 states. The
information set forth herein with respect to the mortgage loans does not
generally include the subordinate component of the Suburban Lodge Loan. See
"Description of the Mortgage Pool - The Suburban Lodge Loan" in the prospectus
supplement. The three largest geographic concentrations are California (27.5%),
Texas (8.5%) and New Jersey (6.0%). The mortgage loans will have an initial pool
balance of $738,541,419 and individual principal balances as of the Cut-off Date
of at least $220,965 but not more than $24,701,611 with an average principal
balance of approximately $4,396,080. The values indicated under "WA UW DSCR" and
"WA LTV Ratio" herein exclude 3 credit tenant lease mortgage loans representing
1.3% of the initial pool balance. The mortgage pool has a weighted average
loan-to-value of 68.9% and a weighted average debt service coverage ratio of
1.33x.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 3
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
DEAL SUMMARY
CO-LEAD MANAGERS J.P. Morgan Securities Inc. (Bookrunner)
Salomon Smith Barney Inc.
PRICING SPEED 0% CPR
DEPOSITOR J.P. Morgan Commercial Mortgage Finance
Corp., an indirect wholly-owned limited
purpose finance subsidiary of J.P. Morgan
& Co. Incorporated and an affiliate of
J.P. Morgan Securities Inc. ("JPMSI"), an
Underwriter
SELLER Morgan Guaranty Trust Company of New York
(100%)
MASTER SERVICER Midland Loan Services, Inc.
SPECIAL SERVICER ORIX Real Estate Capital Markets, LLC
TRUSTEE State Street Bank and Trust Company
RATING AGENCIES Fitch, Inc.
Moody's Investors Service, Inc.
----------------------------------------
LEGAL STATUS All offered certificates are public
CUT-OFF DATE September 1, 2000
SETTLEMENT DATE On or about September , 2000
DELIVERY DTC, Clearstream System and Cedel
RATED FINAL MATURITY DATE The distribution date in August 2032
MONTHLY DISTRIBUTION DATES Pays monthly on the 15th day of every
month or, if any such 15th day is not a
business day, then the next succeeding
business day
FIRST PAYMENT DATE October 15, 2000, 14 day delay
OPTIONAL REDEMPTION When pool pays down to 1% of original pool
balance
DEAL INFORMATION / ANALYTICS Bloomberg, L.P., Conquest, Intex
Solutions, Inc. and The Trepp Group
ERISA ELIGIBLE(1) Classes A1, A2 and X (other classes TBD)
(1) ERISA eligibility is subject to certain limitations described in the
prospectus supplement under "Certain ERISA Considerations"
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 4
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
STRUCTURAL OVERVIEW
o Interest payments will be pro-rata to the Class A1, A2 and X Certificates
and then, after payment of the principal distribution amount, interest will
be paid sequentially to the Class B, C, D, E, F, G, H, J, K, L, M and NR
Certificates.
o The pass-through rate for the Class A1, A2, B, C, D, E, F, G, H, J, K, L, M
and NR Certificates will be equal to either a fixed rate or a rate based on
the weighted average of the remittance rates on the mortgage loans. The
Class X Certificates will receive the net interest on the mortgage loans
less the interest paid on the other certificates.
o All Classes offered will pay interest on a 30/360 basis.
o The Class X Certificates will have the same interest payment priority as
the Class A1 and A2 Certificates.
o Principal payments will be paid sequentially to the Class A1, A2, B, C, D,
E, F, G, H, J, K, L, M and NR Certificates, until each class is retired.
The Class X Certificates do not have a class principal balance and are
therefore not entitled to any principal distributions.
o Losses will be born by the Classes in reverse sequential order, from the
Class NR Certificates up to the Class B Certificates and then pro-rata to
the Class A1 and A2 Certificates.
o If the principal balance of the mortgage pool is less than or equal to the
aggregate bond balance of the Class A1 and A2 Certificates, the principal
will be allocated pro-rata to the Class A1 and A2 Certificates.
o Net prepayment premiums calculated by reference to a U.S. Treasury rate to
the extent received will be allocated first to the interest bearing
certificates, according to a specified formula, with any remaining amount
paid to the Class X Certificates. For the amount payable to any
interest-bearing Class, the formula is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Paid to Class (Pass-Through Rate on Class -- Disount Rate)
Prepayment Premium x ----------------------- x --------------------------------------------
Total Principal Paid (Mortgage Rate on Loan -- Discount Rate)
</TABLE>
o Net prepayment premiums not calculated by reference to a U.S. Treasury rate
to the extent received will be allocated solely to the Class X
Certificates.
o The deal will provide for the standard collateral value adjustment feature
for problem or delinquent loans. Generally, when a loan becomes 90 days
delinquent, the special servicer obtains a new appraisal. To the extent any
such adjustment is not reversed, the interest portion of any P&I Advance
will be reduced in proportion to such adjustment.
COLLATERAL CHARACTERISTICS
PRINCIPAL BALANCE $738,541,419
NUMBER OF LOANS 168
NUMBER OF MORTGAGED PROPERTIES 194
AVG. PRINCIPAL BALANCE
PER LOAN $4,396,080
PER PROPERTY $3,806,915
WA MORTGAGE RATE 8.33%
WA REMAINING TERM 116 months
WA REMAINING AMORTIZATION TERM 328 months
WA UNDERWRITTEN DSCR 1.33x
WA CUT-OFF DATE LTV RATIO 68.9%
WA SEASONING 9 months
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 5
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
AVERAGE LIFE SENSITIVITIES
PREPAYMENT SPEEDS (CPR) 1
<TABLE>
<CAPTION>
AVERAGE LIFE (YEARS) 2
---------------------------------------------------------------------
CLASS 0% 25% 50% 75% 100%
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A1 5.50 5.49 5.48 5.47 5.44
A2 9.12 9.11 9.09 9.06 8.86
B 9.51 9.49 9.45 9.42 9.25
C 9.57 9.56 9.55 9.52 9.31
D 9.64 9.64 9.57 9.56 9.38
E 9.64 9.64 9.64 9.61 9.39
X(3) 5.50 5.49 5.47 5.45 5.31
</TABLE>
(1) Assumes no prepayment during the lockout and yield maintenance periods and
optional redemption is not exercised
(2) Assumes a closing date of September 25, 2000
(3) Implied average life
PREPAYMENT PROTECTION
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE THAT HAVE PREPAYMENT LOCKOUTS OR PENALTIES (ASSUMING NO PREPAYMENTS)
<TABLE>
<CAPTION>
CURRENT 9/01 9/02 9/03 9/04 9/05 9/06 9/07 9/08 9/09 9/10
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 100.0 100.0 100.0 100.0 99.8 99.4 99.4 99.4 99.4 55.8 100.0
Yield Maintenance(1) 0.0 0.0 0.0 0.0 0.2 0.6 0.6 0.6 0.6 0.3 0.0
Total Lockout and YM 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 56.1 100.0
No Prepayment Premium 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 43.9 0.0
-------------------------------------------------------------------------------------------------------------------------------
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
-------------------------------------------------------------------------------------------------------------------------------
AGGREGATE MORTGAGE BALANCE ($) 738.5 732.1 725.0 717.3 709.1 700.0 690.1 679.3 667.7 489.0 23.8
% OF CUT-OFF DATE BALANCE 100.0 99.1 98.2 97.1 96.0 94.8 93.4 92.0 90.4 66.2 3.2
</TABLE>
(1) U.S. Treasury rate; 1% floor
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 6
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
DEAL SUMMARY BY PROPERTY TYPE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
% OF GROSS REM. WA WA WA OCC.
NO. OF PRINCIPAL RINCIPAL AVERAGE WAC WAM UW LTV RATE
PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE BALANCE ($) (%) (MONTHS) DSCR RATIO (%) (%) % BALLOON(1)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MULTIFAMILY 73 $228,015,661 30.9% $ 3,123,502 8.12% 113 1.30x 73.2% 95.9% 100.0%
Multifamily 55 157,826,081 21.4 2,869,565 8.18 114 1.30 74.0 96.9 100.0
MHP 2 18 70,189,579 9.5 3,899,421 8.01 111 1.31 71.2 93.7 100.0
RETAIL 51 $195,425,024 26.5% $ 3,831,863 8.32% 126 1.32x 67.8% 94.7% 88.5%
Anchored 20 122,204,325 16.5 6,110,216 8.36 130 1.27 69.9 96.4 87.5
Unanchored 30 71,657,687 9.7 2,388,590 8.26 120 1.41 64.5 91.9 89.8
Shadow anchored 1 1,563,013 0.2 1,563,013 7.93 107 1.29 68.0 89.0 100.0
OFFICE 24 $126,794,922 17.2% $ 5,283,122 8.47% 112 1.32x 67.2% 96.7% 100.0%
Suburban 21 87,568,745 11.9 4,169,940 8.45 112 1.33 66.5 96.3 100.0
CBD 2 3 39,226,178 5.3 13,075,393 8.51 113 1.28 68.8 97.4 100.0
INDUSTRIAL 19 $ 93,003,651 12.6% $ 4,894,929 8.27% 111 1.37x 66.2% 97.1% 100.0%
Flex Space 16 87,439,269 11.8 5,464,954 8.23 110 1.37 66.1 96.9 100.0
Warehouse/Distribution 3 5,564,382 0.8 1,854,794 8.96 115 1.31 67.7 100.0 100.0
HOTEL 10 $ 53,184,250 7.2% $ 5,318,425 8.85% 111 1.38x 64.9% NA 100.0%
Extended Stay 7 19,731,759 2.7 2,818,823 8.92 107 1.34 58.3 NA 100.0
Limited Service 2 16,929,209 2.3 8,464,605 9.00 112 1.40 67.8 NA 100.0
Full Service 1 16,523,281 2.2 16,523,281 8.62 116 1.40 69.7 NA 100.0
MIXED USE 3 $ 10,594,843 1.4% $ 3,531,614 8.90% 112 1.37x 64.8% 98.1% 80.6%
NURSING HOME 3 $ 7,813,023 1.1% $ 2,604,341 8.79% 107 1.90x 67.0% 96.1% 100.0%
CONGREGATE CARE 1 $ 1,207,349 0.2% $ 1,207,349 9.01% 112 1.50x 74.5% 90.0% 100.0%
SELF-STORAGE 10 $ 22,502,695 3.0% $ 2,250,269 8.17% 121 1.42x 67.5% 89.6% 89.2%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/AVG./WA: 194 $738,541,419 100.0% $ 3,806,915 8.33% 116 1.33x 68.9% 95.7% 96.3%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Balloon loans deemed to be any loans which are not fully amortizing 2 "MHP"
means mobile home park and "CBD" means central business district 3 Weighted
average deal occupancy excludes hotel properties
RESERVES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
% OF LOANS BY PRINCIPAL
BALANCE WITH ANNUAL ESCROWS CURRENT BALANCE(1) ANNUAL DEPOSIT
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Replacement Reserves 87.4% $3,040,771 $3,253,748
Tenant Improvement /Leasing Commissions(2) 60.2 3,941,317 2,820,885
Taxes 98.3 7,238,730 10,062,975
Insurance 97.9 1,249,271 1,290,592
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Current balance as of September 12, 2000 may include any balance associated
with up-front deposits that have not been completely disbursed
(2) Balances and percentages are for commercial properties only
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 7
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
COLLATERAL SUMMARY
In the following tables, Principal Balance refers to
Aggregate Cut-off Date Principal Balance
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
PROPERTY STATE NO. OF PROPERTIES PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
California 39 $203,147,004 27.5% 1.40x 67.8%
Southern 35 190,274,815 25.8 1.41 67.3
Northern 4 12,872,189 1.7 1.25 75.0
Texas 19 62,513,635 8.5 1.32 66.8
New Jersey 5 43,946,544 6.0 1.27 68.6
Illinois 10 40,119,893 5.4 1.34 69.6
Florida 18 37,863,163 5.1 1.31 72.8
Virginia 6 35,207,497 4.8 1.26 62.3
Arizona 7 29,938,636 4.1 1.31 65.1
Maryland 2 28,754,336 3.9 1.26 75.4
Ohio 6 26,245,922 3.6 1.34 71.0
New York 10 22,460,339 3.0 1.26 72.9
Michigan 5 20,941,902 2.8 1.28 75.3
Indiana 7 19,204,668 2.6 1.25 69.5
Iowa 2 18,991,967 2.6 1.26 69.8
Pennsylvania 6 18,754,312 2.5 1.26 70.1
Massachusetts 6 17,899,979 2.4 1.34 71.7
North Carolina 4 16,431,634 2.2 1.31 71.5
Nevada 2 11,833,334 1.6 1.29 74.2
Colorado 3 10,428,196 1.4 1.38 67.1
Louisiana 4 10,287,571 1.4 1.31 70.9
Wisconsin 3 9,909,169 1.3 1.29 72.2
Missouri 3 7,792,512 1.1 1.40 62.2
Vermont 1 7,388,975 1.0 1.31 68.4
Washington 2 6,060,150 0.8 1.21 75.1
Alaska 1 4,855,437 0.7 1.25 74.4
Connecticut 3 4,785,363 0.6 1.70 68.5
Georgia 2 4,412,902 0.6 1.49 54.8
Minnesota 3 3,632,110 0.5 1.42 67.5
Mississippi 2 3,609,040 0.5 1.27 64.6
Rhode Island 1 3,093,989 0.4 1.29 75.1
Maine 9 2,505,214 0.3 1.32 88.8
Arkansas 1 2,473,559 0.3 2.06 64.2
Idaho 1 2,055,124 0.3 1.29 46.7
Utah 1 997,340 0.1 1.60 57.0
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 194 $738,541,419 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 8
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
CUT-OFF BALANCES
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
PRINCIPAL BALANCE ($) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$200,000 - $500,000 5 $1,714,244 0.2% 1.30x 71.1%
$500,001 - $750,000 13 7,898,383 1.1 1.29 69.6
$750,001 - $1,000,000 8 7,539,356 1.0 1.39 65.5
$1,000,001 - $1,500,000 28 34,972,053 4.7 1.34 70.0
$1,500,001 - $2,000,000 12 21,037,517 2.8 1.28 68.8
$2,000,001 - $2,500,000 16 35,810,151 4.8 1.43 65.9
$2,500,001 - $3,000,000 11 30,033,878 4.1 1.37 69.2
$3,000,001 - $3,500,000 9 29,679,926 4.0 1.30 75.1
$3,500,001 - $4,000,000 10 37,873,486 5.1 1.33 67.9
$4,000,001 - $4,500,000 8 33,997,386 4.6 1.25 69.6
$4,500,001 - $5,000,000 4 18,838,900 2.6 1.26 71.5
$5,000,001 - $6,000,000 8 44,278,128 6.0 1.28 72.7
$6,000,001 - $7,500,000 9 62,900,116 8.5 1.34 67.4
$7,500,001 - $10,000,000 8 67,565,181 9.1 1.26 71.7
$10,000,001 - $12,500,000 6 66,549,982 9.0 1.32 68.1
$12,500,001 - $15,000,000 3 39,928,859 5.4 1.30 71.3
$15,000,001 - $17,500,000 3 49,548,357 6.7 1.30 73.3
$17,500,001 - $20,000,000 2 36,528,558 4.9 1.29 69.6
$20,000,001 - $25,000,000 5 111,846,955 15.1 1.45 62.8
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
AVERAGE PER LOAN: $4,396,080
AVERAGE PER PROPERTY: $3,806,915
</TABLE>
MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
MORTGAGE INTEREST RATE (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
7.2501% - 7.5000% 2 $47,696,650 6.5% 1.70x 58.9%
7.5001% - 7.7500% 4 38,212,995 5.2 1.30 72.7
7.7501% - 8.0000% 17 111,676,454 15.1 1.30 71.8
8.0001% - 8.2500% 37 155,499,004 21.1 1.29 71.7
8.2501% - 8.5000% 29 107,251,690 14.5 1.29 68.3
8.5001% - 8.7500% 35 139,341,719 18.9 1.31 69.3
8.7501% - 9.0000% 27 107,935,833 14.6 1.32 67.7
9.0001% - 9.2500% 11 25,474,319 3.4 1.44 59.2
9.2501% - 9.5000% 4 4,666,210 0.6 1.43 61.4
9.5001% or more 2 786,546 0.1 1.30 74.1
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE: 8.33%
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 9
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
UNDERWRITTEN DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
UW DSCR (x) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.201 or less(1) 7 $20,263,916 2.8% 1.13x 68.9%
1.201x - 1.250x 43 164,846,565 22.6 1.23 71.8
1.251x - 1.300x 48 235,116,880 32.2 1.27 70.5
1.301x - 1.400x 38 170,518,347 23.4 1.35 68.3
1.401x - 1.500x 13 61,297,228 8.4 1.43 66.5
1.501x - 1.600x 7 37,678,937 5.2 1.56 61.5
1.601x - 1.700x 1 997,340 0.1 1.60 57.0
1.701x - 1.800x 1 1,100,631 0.2 1.78 73.4
1.801x - 1.900x 5 33,967,564 4.7 1.82 60.8
1.901x - 2.000x 1 992,506 0.1 1.91 55.1
2.001x - 2.100x 1 2,473,559 0.3 2.06 64.2
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 165 $729,253,473 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE: 1.33X
</TABLE>
(1) The Meadows Apartment ($5,573,634), El Dorado Square ($4,074,851 ), U-store
($3,660,430), Grand Avenue ($2,697,619), Rite Aid ($2,555,432 ), Carriage
Square Apartments ($1,367,600), and Blue Ridge MHP ($334,350).
LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
LTV (%) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50.00% or less 2 $3,683,318 0.5% 1.36x 44.2%
50.01% - 55.00% 3 11,954,316 1.6 1.41 53.2
55.01% - 60.00% 14 99,050,685 13.6 1.52 58.5
60.01% - 65.00% 21 104,099,726 14.3 1.32 63.0
65.01% - 70.00% 40 141,139,716 19.4 1.36 68.5
70.01% - 75.00% 57 247,924,509 34.0 1.29 72.6
75.01% - 80.00% 27 120,103,716 16.5 1.26 77.7
80.01% or more(1) 1 1,297,487 0.2 1.25 82.4
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 165 $729,253,473 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE: 68.9%
</TABLE>
(1) Downtown Plaza Apartments ($1,297,487).
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 10
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
REMAINING TERM TO MATURITY/ARD (MONTHS)
<TABLE>
<CAPTION>
REMAINING TERM TO % OF PRINCIPAL WA
MATURITY/ARD (MONTHS) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALLOON
97 - 108 30 $123,272,291 16.7% 1.34x 68.1%
109 - 120 74 $240,193,194 32.5 1.31 71.1
217 - 228 2 $5,032,271(1) 0.7 0.00 0.0
TOTAL: 106 $368,497,756 49.9% 1.32x 70.1%
FULLY AMORTIZING
109 - 120 1 $2,055,124 0.3% 1.29x 46.7%
157 - 168 1 $2,555,432 0.3 1.10 77.4
229 - 240 4 $22,403,8371 3.0 1.31 63.3
TOTAL: 6 $27,014,393 3.7% 1.28x 63.4%
ADR
97 - 108 3 $11,673,243 1.6% 1.36x 73.0%
109 - 120 50 $279,321,214 37.8 1.30 69.3
169 - 180 1 $4,338,163 0.6 1.20 70.0
TOTAL: 54 $295,332,620 40.0% 1.30x 69.5%
INTEREST ONLY
97- 180 2 $47,696,650 6.5% 1.70x 58.9%
TOTAL: 2 $47,696,650 6.5% 1.70x 58.9%
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE: 116 MONTHS
</TABLE>
(1) Includes credit tenant leases.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 11
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
REMAINING AMORTIZATION TERM (MONTHS)(1)
<TABLE>
<CAPTION>
REMAINING AMORTIZATION TERM % OF PRINCIPAL WA
(MONTHS) NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALLOON
253 - 264 1 $2,057,277(2) 0.3% 0.00x 0.0%
265 - 276 3 $18,535,058(2) 2.7 1.26 62.4
277 - 288 19 $33,211,752 4.8 1.52 65.9
289 - 300 20 $62,910,837 9.1 1.36 68.5
325 - 336 5 $5,617,825 0.8 1.25 72.2
337 - 348 14 $78,203,520 11.3 1.28 70.5
349 - 360 44 $167,961,488 24.3 1.29 72.0
TOTAL: 106 $368,497,756 53.3% 1.32x 70.1%
FULLY AMORTIZING
109 - 120 1 $2,055,124 0.3% 1.29x 46.7%
157 - 168 1 $2,555,432 0.4 1.10 77.4
217 - 228 1 $2,435,723 0.4 1.82 57.7
229 - 240 3 $19,968,114 2.9 1.23 64.2
TOTAL: 6 $27,014,393 3.9% 1.28X 63.4%
ARD
229 - 240 2 $4,500,919 0.7% 1.37x 63.6%
253 - 264 1 $4,338,163 0.6 1.20 70.0
265 - 276 1 $2,100,000 0.3 1.24 75.0
277 - 288 3 $4,178,410 0.6 1.64 67.4
289 - 300 10 $54,387,889 7.9 1.33 68.1
313 - 324 1 $6,820,989 1.0 1.32 60.4
337 - 348 1 $5,573,634 0.8 1.14 74.5
349 - 360 35 $213,432,617 30.9 1.29 70.1
TOTAL: 54 $295,332,620 42.7% 1.30x 69.5%
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 166 $690,844,769 100.0% 1.31x 69.6%
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE: 328 MONTHS
</TABLE>
(1) Two loans, Abbey Portfolio III ($24,701,611) and Abbey Portfolio IV
($22,995,039) are interest only loans and have been excluded from this
table.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 12
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
MONTH AND YEAR OF ORIGINATION
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
MONTH AND YEAR OF ORIGINATION NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1998 1 $3,912,996 0.5% 1.54x 69.3%
March 1999 2 2,591,397 0.4 1.83 72.0
April 1999 3 7,210,171 1.0 1.25 71.9
May 1999 2 4,048,113 0.5 1.29 68.9
June 1999 6 32,272,863 4.4 1.33 66.3
July 1999 8 28,923,054 3.9 1.41 71.9
August 1999 12 99,297,526 13.4 1.49 63.2
September 1999 17 72,541,633 9.8 1.27 70.0
October 1999 11 33,443,427 4.5 1.31 71.8
November 1999 30 138,375,077 18.7 1.29 70.5
December 1999 23 111,027,249 15.0 1.33 69.7
January 2000 6 10,730,902 1.5 1.30 66.6
February 2000 10 24,648,800 3.3 1.29 64.1
March 2000 11 64,051,043 8.7 1.27 72.7
April 2000 9 42,947,944 5.8 1.25 69.9
May 2000 6 32,578,566 4.4 1.37 67.5
June 2000 4 16,897,197 2.3 1.42 63.0
July 2000 5 9,319,093 1.3 1.28 72.7
August 2000 2 3,724,369 0.5 1.23 76.8
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SEASONING: 9 MONTHS
</TABLE>
YEAR OF SCHEDULED MATURITY/ARD
<TABLE>
<CAPTION>
% OF PRINCIPAL WA
YEAR OF SCHEDULED MATURITY/ARD NO. OF LOANS PRINCIPAL BALANCE ($) BALANCE WA UW DSCR LTV
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2009 91 $426,262,980 57.7% 1.36x 68.6%
2010 69 277,948,736 37.6 1.31 69.6
2014 1 2,555,432 0.3 1.10 77.4
2015 1 4,338,163 0.6 1.20 70.0
2018 1 2,057,277 0.3 0.00 0.0
2019 2 5,410,717 0.7 1.82 57.7
2020 3 19,968,114 2.7 1.23 64.2
----------------------------------------------------------------------------------------------------------------------------
TOTAL: 168 $738,541,419 100.0% 1.33x 68.9%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 13
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
TEN LARGEST INDIVIDUAL LOANS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
CUT-OFF DATE % OF UW
LOAN BALANCE ($) POOL BALANCE DSCR LTV PROPERTY TYPE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Abbey Company Portfolio III $24,701,611 3.3% 1.84x 58.9% Office/Industrial/Retail
The Abbey Company Portfolio IV 22,995,039 3.1 1.58 58.9 Unanchored Retail
Atlantic Development Portfolio 22,013,205 3.0 1.27 61.8 Industrial Flex
Covina Hills Mobile Home Country Club 21,587,115 2.9 1.27 71.9 Mobile Home Park
Liberty Fair Mall 20,549,985 2.8 1.26 63.4 Regional Mall
Wilshire Financial 18,576,294 2.5 1.32 68.8 CBD Office
Hub Tower 17,952,264 2.4 1.26 70.4 CBD Office
Gerry Buildings 16,824,504 2.3 1.25 71.9 Industrial Flex
Embassy Suites Chicago 16,523,281 2.2 1.40 69.7 Full Service Hotel
Fairgrounds Plaza 16,200,572 2.2 1.27 78.3 Anchored Retail
----------------------------------------------------------------------------------------------------------------------------------
TOTAL / WEIGHTED AVERAGE $197,923,870 26.7% 1.39X 66.1%
----------------------------------------------------------------------------------------------------------------------------------
DEAL TOTAL / WEIGHTED AVERAGE $738,541,419 100.0% 1.33X 68.9%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: any credit ratings referenced included in the following loan descriptions
for any tenant at a mortgaged property are those reported by Moody's Investors
Service, Inc. and, if two ratings are shown, by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., in that order, as
listed by Bloomberg, L.P.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 14
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
ABBEY PORTFOLIO III
--------------------------------------------------------------
LOAN IFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $24,701,611
CUT-OFF DATE $24,701,611
ORIGINATION DATE August 31, 1999
INTEREST RATE 7.47%
MATURITY DATE September 1, 2009
AMORTIZATION Interest only
REMAINING AMORTIZATION N/A
BORROWER/SPONSOR(1) Six individual special
purpose borrowers, each a
special purpose limited
liability company wholly
owned by Abbey Properties,
LLC. Abbey Properties, LLC
is owned by Donald G. Abbey
and a wholly owned
subsidiary of Rodamco North
America NV.
CALL PROTECTION Prepayment locked out until
on or after June 1, 2009.
U.S. Treasury defeasance
allowed, in whole or in
part, on any payment date
on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Abbey
Company properties are
deposited by the property
manager into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Abbey Company
Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $8,031 ($96,372 per year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Portfolio of six assets
PROPERTY TYPE Office/Industrial/Retail
LOCATION Various Southern California
YEARS BUILT 1985 - 1998
THE COLLATERAL
Abbey Portfolio III consists of six office/industrial/retail
properties containing 642,452 square feet:
PROPERTY NAME SQUARE
(City, State) FOOTAGE OCCUPANCY
------------- ------- ---------
LONG BEACH AIRPORT 205,257 100.0%
(Long Beach, CA)
SIERRA GATEWAY 130,838 96.0
BUSINESS CENTER
(Palmdale, CA)
NEVADA STREET PLAZA 126,292 93.0
(Redlands, CA)
GARDENA COMMERCE 39,405 96.0
CENTER
(Gardena, CA)
MORENO VALLEY COMMERCE 111,060 86.0
CENTER (Moreno Valley,
CA)
MOUNT VERNON COMMERCE 29,600 91.0
CENTER
(Colton, CA)
PROPERTY MANAGEMENT The Abbey Company
OCCUPANCY(2) 94.7%
OCCUPANCY DATE June 1, 2000
BORROWER 1999 NOI(3) $3,001,120
UNDERWRITTEN
NOI $4,140,895
NCF $3,389,589
APPRAISED VALUE $41,970,000
APPRAISAL DATE June 17 - July 16, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $38.45
LTV 58.9%
UW DSCR 1.84x
--------------------------------------------------------------
(1) This loan is secured by six cross-collateralized and cross-defaulted
mortgages, deeds of trust or deeds encumbering the properties.
(2) Weighted average occupancy based on square footage.
(3) Does not include the actual operating history of the Long Beach Airport
property.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 15
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
ABBEY PORTFOLIO IV
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $22,995,039
CUT-OFF DATE $22,995,039
ORIGINATION DATE August 31, 1999
INTEREST RATE 7.47%
MATURITY DATE September 1, 2009
ORIGINAL AMORTIZATION Interest Only
REMAINING AMORTIZATION N/A
BORROWER/SPONSOR 1 Six individual special
purpose borrowers, each a
special purpose limited
liability company wholly
owned by Abbey Properties,
LLC. Abbey Properties, LLC
is owned by Donald G. Abbey
and by a wholly owned
subsidiary of Rodamco North
America NV.
CALL PROTECTION Prepayment locked out until
on or after June 1, 2009.
U.S. Treasury defeasance
allowed, in whole or in
part, on any payment date
on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Abbey
Company properties are
deposited by the property
manager into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Abbey Company
Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $3,789 ($45,468 per year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Portfolio of six assets
PROPERTY TYPE Unanchored Retail
LOCATION Southern California
YEARS BUILT 1944 - 1993
THE COLLATERAL
Abbey Portfolio IV consists of six unanchored retail
properties containing 303,138 square feet:
PROPERTY NAME SQUARE
(City, State) FOOTAGE OCCUPANCY
ALISO VIEJO COMMERCE 64,137 95.0%
CENTER
(Aliso Viejo, CA)
WIMBLEDON BUSINESS 123,225 92.0
CENTER
(Victorville, CA)
UPLAND COMMERCE CENTER 44,957 29.0
(Upland, CA)
AP RANCHO CARMEL 26,978 92.0
(San Diego, CA)
ATLANTIC PLAZA 31,281 100.0
(Long Beach, CA)
GARDEN GROVE COMMERCE 12,560 81.0
CENTER
(Garden Grove, CA)
PROPERTY MANAGEMENT The Abbey Company
OCCUPANCY 2 83.6%
OCCUPANCY DATE June 1, 2000
BORROWER 1999 NOI $3,648,079
UNDERWRITTEN
NOI $3,081,454
NCF $2,752,178
APPRAISED VALUE $39,070,000
APPRAISAL DATE June 22 - July 28, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $75.86
LTV 58.9%
UW DSCR 1.58x
--------------------------------------------------------------
1 This loan is secured by six collateralized and cross-defaulted mortgages,
deeds of trust or deeds to secure debt encumbering the six retail centers.
2 Weighted average occupancy based on square footage.
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 16
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
ATLANTIC DEVELOPMENT PORTFOLIO
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $22,150,000
CUT-OFF DATE $22,013,205
ORIGINATION DATE September 15, 1999
INTEREST RATE 8.05%
ANTICIPATED REPAYMENT DATE October 1, 2009
MATURITY DATE October 1, 2029
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 349 months
BORROWER/SPONSOR MBCC East, LLC and MBCC 35,
LLC, each a special purpose
New Jersey limited
liability company, which
are owned by Atlantic
Development and Management
Corp. (ADMC). ADMC owns
and manages a portfolio of
office and industrial
properties totaling
approximately 1.0 million
square feet.
CALL PROTECTION Prepayment locked out until
on or after July 1, 2009.
U.S. Treasury defeasance
allowed, in whole or in
part, on any payment date
on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT Hard Lockbox. All rents
payable by tenants are
deposited into a lockbox
account and allocated
monthly to a tax and
insurance account, a debt
service account, and a
recurring replacement
reserve account.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves 1/12th of Annual
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Portfolio of two assets
PROPERTY TYPE Industrial - Flex
LOCATION Warren, New Jersey
Somerset County
YEARS BUILT 1979 & 1985
THE COLLATERAL
Atlantic Development Portfolio consists of two Industrial Flex buildings
totaling 273,061 square feet:
7 Powderhorn Drive is a two-story 180,500 square foot facility built in
1979 and leased to two tenants: Cordis Corp (107,000 square feet), a wholly
owned subsidiary of Johnson & Johnson (NYSE: JNJ) rated Aaa/AAA and Celegene
Corporation (NASDAQ: CLEG), 73,000 square feet..
35 Technology Drive is a two-story 92,561 square foot facility built in
1985 and 100% leased to Anadigics, Inc.
(NASDAQ: ANAD).
PROPERTY MANAGEMENT Atlantic Development
Management Company
OCCUPANCY 100.0%
OCCUPANCY DATE August 7, 2000
BORROWER 1999 NOI $2,896,709
UNDERWRITTEN
NOI $2,790,515
NCF $2,493,558
APPRAISED VALUE 35,615,000
APPRAISAL DATE June 8, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $80.61
LTV 61.8%
UW DSCR 1.27x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 17
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
COVINA HILLS MOBILE HOME COUNTRY CLUB
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $21,750,000
CUT-OFF DATE $21,587,115
ORIGINATION DATE August 4, 1999
INTEREST RATE 7.73%
MATURITY DATE September 1, 2009
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 348 months
BORROWER/SPONSOR Juanita Springs Associates
LP, a special purpose
Washington limited
partnership owned by Morgan
Partners Inc. and Covina
Hills Equities Inc. Morgan
Partners manages a
portfolio of five mobile
home parks and four
apartment communities
totaling 1,500 units in
three states.
CALL PROTECTION Prepayment locked out until
on or after June 1, 2009.
U.S. Treasury defeasance
allowed, in whole but not
in part, on any payment
date on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $2,083 ($24,996 per year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Mobile Home Park
LOCATION La Puente, California
YEARS BUILT 1972
THE COLLATERAL
The Covina Hills property is a 500-pad mobile home park located on a 73 acre
site and contains 19 single-wide and 481 double-wide mobile homes. The total
site density is approximately 6.8 pads per acre. Property amenities include two
clubhouses, two swimming pools, two laundry room facilities, recreational
facilities, and twenty-two spaces for RV storage.
PROPERTY MANAGEMENT Bessire & Casenhiser, Inc.
OCCUPANCY 100.0%
OCCUPANCY DATE April 1, 2000
BORROWER TRAILING 12 NOI AS OF $2,406,936
3/31/00
UNDERWRITTEN
NOI $2,399,584
NCF $2,374,584
APPRAISED VALUE $30,030,000
APPRAISAL DATE June 8, 1999
CUT-OFF DATE
LOAN PER PAD $43,174
LTV 71.9%
UW DSCR 1.27x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 18
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
LIBERTY FAIR MALL
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $21,250,000
CUT-OFF DATE $20,549,985
ORIGINATION DATE November 30, 1999
INTEREST RATE 8.46%
ANTICIPATED REPAYMENT DATE December 1, 2009
MATURITY DATE December 1, 2029
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 351 months
BORROWER/SPONSOR Liberty Fair VA LP, a
special purpose Virginia
limited partnership owned
50% by Developers
Diversified Realty
Corporation (DDR), as
general partner and 50% by
the Lester Group, as
limited partner. DDR owns
and manages a portfolio of
206 shopping centers
totaling 49 million square
feet in 40 states.
CALL PROTECTION Prepayment locked out until
on or after September 1,
2009. U.S. Treasury
defeasance allowed, in
whole, but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Liberty Fair
Mall are deposited directly
into a lockbox account.
Provided no event of
default has occurred, all
deposits in the lockbox
account are remitted back
to the Liberty Fair Mall
Borrower.
MEZZANINE LOANS/PREFERRED
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $3,626 ($43,512 per year)
TI/LC $4,167 ($50,000 per year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Regional Mall
LOCATION Martinsville, Virginia
YEARS BUILT/RENOVATED 1989/1997
THE COLLATERAL
The Liberty Fair Mall Property is an enclosed, single-story,
regional mall containing 435,402 square feet. Primary
tenants include:
TENANT (Rating) SQUARE FOOTAGE
--------------- --------------
KROGER (Baa3/BBB-) 55,969
SEARS (A3/A) 58,760
JC PENNEY (Baa2/BBB) 50,232
BELKS 85,000
OFFICE MAX 23,523
GOODY'S 29,687
PROPERTY MANAGEMENT Developers Diversified
Management, Inc.
OCCUPANCY 92.0%
OCCUPANCY DATE April 26, 2000
BORROWER TRAILING 12 NOI AS OF $2,843,047
3/31/00
UNDERWRITTEN
NOI $2,700,271
NCF $2,469,357
APPRAISED VALUE 32,400,000
APPRAISAL DATE September 23, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $47.20
LTV 63.4%
UW DSCR 1.26x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 19
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
WILSHIRE FINANCIAL TOWER
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $18,650,000
CUT-OFF DATE $18,576,294
ORIGINATION DATE November 17, 1999
INTEREST RATE 8.86%
MATURITY DATE December 1, 2009
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 351 months
BORROWER/SPONSOR 3600 Wilshire LLC, a special
purpose California
limited liability company.
CALL PROTECTION Prepayment locked out until
on or after September 1,
2009. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves None
TI/LC $30,000 ($360,000 per year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFOMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE CBD Office
LOCATION Los Angeles, California
YEARS BUILT/RENOVATED 1961/1992
THE COLLATERAL
The Wilshire Financial Tower property is a 21-story office
building containing 375,614 square feet located in the
Mid-Wilshire district of Los Angeles. The property included an
adjoining 2-story parking garage containing 850 spaces.
PROPERTY MANAGEMENT Jamison Properties, Inc.
OCCUPANCY 94.6%
OCCUPANCY DATE August 1, 2000
BORROWER 1999 NOI $2,430,609
UNDERWRITTEN
NOI $2,751,158
NCF $2,349,908
APPRAISED VALUE $27,000,000
APPRAISAL DATE October 1, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $49.46
LTV 68.8%
UW DSCR 1.32x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 20
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
HUB TOWER
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $18,000,000
CUT-OFF DATE $17,952,264
ORIGINATION DATE March 17, 2000
INTEREST RATE 8.10%
ANTICIPATED REPAYMENT DATE April 1, 2010
MATURITY DATE April 1, 2030
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 355 months
BORROWER/SPONSOR MR No. 17, LLC, a special
purpose Iowa limited
liability company that is
owned 90% by the Tetrad
Corp. and 10% by MRI-Hub
Tower, Inc. The Tetrad
Corp. consists of four
family trust, each formed
by Walter Scott, Jr.
CALL PROTECTION Prepayment locked out until
on or after January 1,
2010. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Hub Tower
property are deposited
directly into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Hub Tower Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $3,165 ($37,980 per year)
TI/LC $20,140 ($241,680 per
year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE CBD Office
LOCATION Des Moines, Iowa
YEARS BUILT/RENOVATED 1985/1998
THE COLLATERAL
The Hub Tower property is a 20-story Class A office building
containing 281,028 square feet and 74 underground parking
spaces. The building is connected to the city's covered skywalk
system. The primary tenants include Principal Mutual Life
Insurance, AmerUS Life Holdings and Invista Capital.
PROPERTY MANAGEMENT Magnum Resources, Inc.
OCCUPANCY 100.0%
OCCUPANCY DATE March 13, 2000
BORROWER TAILING 12 NOI AS OF $2,984,655
3/31/00
UNDERWRITTEN
NOI $2,496,817
NCF $2,007,895
APPRAISED VALUE $25,500,000
APPRAISAL DATE March 28, 2000
CUT-OFF DATE
LOAN PER SQUARE FOOT $63.88
LTV 70.4%
UW DSCR 1.26x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 21
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
GERRY BUILDINGS
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $16,950,000
CUT-OFF DATE $16,824,504
ORIGINATION DATE November 30, 1999
INTEREST RATE 8.73%
ANTICIPATED REPAYMENT DATE December 1, 2009
MATURITY DATE December 1, 2024
ORIGINAL AMORTIZATION 300 months
REMAINING AMORTIZATION 291 months
BORROWER/SPONSOR 714-910 S. Los Angeles, LLC,
a special purpose California
limited liability company.
CALL PROTECTION Prepayment locked out until
on or after November 1,
2009. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT All rents payable by the
tenants of the Gerry
Buildings are deposited
directly into a lockbox
account. Provided no event
of default has occurred,
all deposits in the lockbox
account are remitted back
to the Gerry Buildings
Borrower.
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $9,473 ($113,676 per year)
TI/LC $8,333 ($100,000 at
closing; capped at $200,000)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Industrial Flex
LOCATION Los Angeles, California
YEARS BUILT/RENOVATED 1912-46/1999
THE COLLATERAL
The Gerry Buildings consist of nine industrial, manufacturing,
and office properties totaling 707,125 square feet. The
properties are located in the Fashion District of Los Angeles,
which primarily caters to retailers and wholesalers of
clothing. Each of the nine buildings is located with two square
blocks of each other and two of the buildings are contiguous.
PROPERTY MANAGEMENT MJW Investments, Inc.
OCCUPANCY 90.0%
OCCUPANCY DATE April 24, 2000
BORROWER 1999 NOI $2,322,870
UNDERWRITTEN
NOI $2,398,182
NCF $2,079,950
APPRAISED VALUE $23,400,000
APPRAISAL DATE October 26, 1999
CUT-OFF DATE
LOAN PER SQUARE FOOT $23.79
LTV 71.9%
UW DSCR 1.25x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 22
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
EMBASSY SUITES CHICAGO
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $16,575,000
CUT-OFF DATE $16,523,281
ORIGINATION DATE May 2, 2000
INTEREST RATE 8.615%
MATURITY DATE May 10, 2010
ORIGINAL AMORTIZATION 300 months
REMAINING AMORTIZATION 296 months
BORROWER/SPONSOR Felcor/CMB Deerfield Hotel,
LLC, a Delaware special
purpose limited liability
company which is owned by
Felcor Lodging Trust, Inc.
Felcor owns 188 hotels with
nearly 50,000 rooms and
suites in 35 states and
Canada. Felcor is the
owner of the largest number
of Embassy Suites, Crown
Plaza, Holiday Inn, and
independently owned
Doubletree branded hotels.
CALL PROTECTION Prepayment locked out until
on or after February 10,
2010. U.S. Treasury
defeasance allowed, in
whole but not in part, on
any payment date on or
after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Full Service Hotel
LOCATION Deerfield, Illinois
YEARS BUILT/RENOVATED 1987/1997
THE COLLATERAL
The Embassy Suites Chicago property is a 7-story, 237-room full
service hotel located in Deerfield, Illinois, a northern suburb
of Chicago. Amenities include an indoor pool, sauna, whirlpool,
fitness center, gift shop, meeting/banquet space and
restaurant.
PROPERTY MANAGEMENT Coastal Hotel Group, Inc.
OCCUPANCY 75.0%
OCCUPANCY DATE February 29, 2000
BORROWER 1999 NOI $2,917,046
UNDERWRITTEN
NOI $2,677,957
NCF $2,263,542
APPRAISED VALUE $23,700,000
APPRAISAL DATE April 1, 2000
CUT-OFF DATE
LOAN PER ROOM $69,718
LTV 69.7%
UW DSCR 1.40x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 23
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
FAIRGROUNDS PLAZA
--------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------
PRINCIPAL BALANCE
ORIGINAL $15,300,000
CUT-OFF DATE $16,200,572
ORIGINATION DATE September 2, 1999
INTEREST RATE 7.99%
MATURITY DATE October 1, 2009
ORIGINAL AMORTIZATION 360 months
REMAINING AMORTIZATION 349 months
BORROWER/SPONSOR M.O.R Aylesbury, Inc., a
special purpose Maryland
corporation which is
controlled by Manekin, LLC
a full service real estate
company providing
brokerage, development,
asset management, and
investment services
throughout the Baltimore
and Washington DC
metropolitan areas.
CALL PROTECTION Prepayment locked out until
on or after July 1, 2009.
U.S. Treasury defeasance
allowed, in whole but not
in part, on any payment
date on or after the second
anniversary of
securitization.
COLLECTION ACCOUNT None
MEZZANINE LOANS/PREFERRED None
EQUITY
MONTHLY ESCROWS
Taxes 1/12th of Annual
Insurance 1/12th of Annual
Replacement Reserves $450 ($5,400 per year)
--------------------------------------------------------------
--------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------
SINGLE ASSET/PORTFOLIO Single Asset
PROPERTY TYPE Anchored Retail
LOCATION Timonium, Maryland
Baltimore County
YEAR BUILT 1999
THE COLLATERAL
The Fairgrounds Plaza property is a 107,060 square foot
anchored shopping center located approximately 10 miles from
downtown Baltimore. The center is anchored by a SuperFresh
supermarket with reported sales per square foot of $492 in 1999
and includes eight in-line tenants and one pad site. SuperFresh
is owned by The Great Atlantic & Pacific Tea Company (NYSE:
GAP; Ba1/BB).
PROPERTY MANAGEMENT Manekin, LLC
OCCUPANCY 99.0%
OCCUPANCY DATE March 6, 2000
BORROWER 1999 NOI $1,392,106
UNDERWRITTEN
NOI $1,867,163
NCF $1,814,696
APPRAISED VALUE $20,700,00
APPRAISAL DATE April 21, 2000
CUT-OFF DATE
LOAN PER SQUARE FOOT $151.32
LTV 78.3%
UW DSCR 1.27x
--------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 24
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
COLLATERAL PERFORMANCE OF PREVIOUS JP MORGAN FIXED-RATE CONDUIT TRANSACTIONS
<TABLE>
<CAPTION>
30 TO 90 DAYS DELINQUENT(1)
-----------------------------
# OF LOANS AT SECURITIZED LOAN BALANCE % OF TOTAL
DEAL PRICING DATE ISSUANCE BALANCE ($000) ($000) BALANCE # OF LOANS FORECLOSURE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
C1 Jul-95 36 $172,165 $12,797(2) 7.43% 1 $0
C2 Jan-96 91 304,650 0 0.00 1 0
C3 Jun-96 124 400,936 0 0.00 0 0
C4 Jan-97 127 400,985 0 0.00 1 0
C5 Sep-97 93(3) 401,244(3) 0 0.00 1 1.860(4)
C6 Mar-98 91 794,414 14,410(5) 1.81 0 0
MC2(6) Jun-98 25(3) 138,896(3) 0 0.00 0 0
C7 Apr-99 145 801,352 0 0.00 0 0
C8 Aug-99 128 731,517 0 0.00 0 0
C9 Jan-00 140 814,388 4,550(7) 0.56 0
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL 1,000 $4,968,546 $31,757 0.64% 4 $1,860
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 As of September 2000 remittances
2 A retail outlet mall in Martinsburg, VA secures this delinquent loan.
Tenant occupancy has dropped due to competing outlet centers in nearby
Baltimore, MD and Washington, DC
3 Represents J.P. Morgan's contribution to the total pool
4 Quality Inn and Suites, located in Jacksonville, NC. The property went into
default due to the proximate construction of several other limited service
hotels that severely impacted net operating income. We anticipate that
there will be a loss on this loan in the amount of approximately $846,000
5 Burns Medical Center, located in Petosky, Michigan, was originally
master-leased to PhyCor of Northern Michigan, Inc. (NYSE: PHY), a public
physician practice management company. Due to severe financial
difficulties, PhyCor terminated its lease payments in April 1999. The owner
is working on several options for infusing capital into the property
including selling the property. Partial payments have been made on the loan
each month since February 2000 and the loan is current through the June
payment.
6 Mortgage Capital Funding, Inc., Multifamily/Commercial Mortgage
Pass-Through Certificates, Series 1998-MC2
7 Howard Johnson -- Cutler Ridge is presently delinquent by two payments
(approximately 45 days). The servicer does not believe there has been any
deterioration in property conditions, however, the borrower has not been
cooperative in making timely debt service payments or forwarding updated
financial statements
J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C10
Page 25
Additional information is available upon request. Information herein is believed
to be reliable but J.P. Morgan and Salomon Smith Barney Inc. do not warrant its
completeness or accuracy. These materials are subject to change from time to
time without notice. Past performance is not indicative of future results. All
information contained herein, whether regarding the mortgage loans or otherwise,
supersedes any previous such information delivered to you and will be superseded
by any such information subsequently delivered and ultimately by the final
prospectus relating to the securities. These materials are not intended as an
offer or solicitation with respect to the purchase or sale of any security, and
have been provided to you for informational purposes only and may not be relied
upon by you in evaluating the merits of investing in the securities. Any
investment decision with respect to the securities should be made by you based
solely upon the information contained in the final prospectus relating to the
securities. No assurance or representation can be made as to the actual rate or
timing of principal payments or prepayments on any of the mortgage loans or the
performance characteristics of the securities. This information was prepared in
reliance on information regarding the mortgage loans furnished by the seller of
the mortgage loans. J.P. Morgan and Salomon Smith Barney Inc. and/or their
affiliates and employees may hold a position or act as market maker in the
financial instruments of any issuer discussed herein or act as underwriter,
placement agent, advisor or lender to such issuer. J.P. Morgan Securities Inc.
and Salomon Smith Barney Inc. are members of SIPC. Copyright 2000 J.P. Morgan &
Co. Incorporated. Clients should contact analysts at and execute transactions
through a J.P. Morgan or Salomon Smith Barney Inc. entity in their home
jurisdiction unless governing law permits otherwise.
<PAGE>
[THIS PAGE INTENTIONALLY BLANK.]
<PAGE>
ANNEX F
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
STATE STREET CORPORATION
CORPORATE TRUST
2 AVENUE DE LAFAYETTE
BOSTON, MA 02111-1724
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
TABLE OF CONTENT
<TABLE>
<CAPTION>
REPORT SECTIONS PREPARER PAGE NUMBER
--------------- -------- -----------
<S> <C> <C>
Distribution Date Statement Trustee 1-5
Loan Schedule Trustee 6-8
Loan Portfolio Stratifications Trustee 9-11
REO Status Report Servicer 12-13
Watch List Servicer 14
Historical Loan Modification Report Servicer 15
Deliquent Loan Status Servicer 16-17
Historical Loss Estimate Report Servicer 18
Specially Serviced Loan Detail Servicer 19
Comparative Financial Report Servicer 20-22
ADDITIONAL REPORT/FILE
----------------------
CSSA Periodic Loan Update File Servicer Delivery Through Web Site
Operating Statement Analysis Servicer Upon Reqest
NOI Adjustment Worksheet Servicer Upon Reqest
STATE STREET INFORMATION DELIVERY VEHICLES
------------------------------------------
Web Site: http://corporatetrust.statestreet.com
For other information delivery requests: [email protected]
DEAL-SPECIFIC CONTACTS
----------------------
Account Officer (trustee and paying agent questions):
Account Administrator (analytics and collateral questions):
Servicer
Special Servicer
RATING AGENCY CONTACTS
----------------------
</TABLE>
This report has been prepared by, or is based on information furnished to State
Street Bank and Trust Company ("State Street") by, one or more third parties
(e.g. Servicers, Master Servicer, etc.), and State Street has not independently
verified information received from or prepared by any such third party. State
Street shall not and does not undertake responsibility for the accuracy,
completeness, or sufficiency of this report or the information contained herein
for any purpose, and State Street makes no representations or warranties with
respect thereto. The information in this report is presented here with the
approval of the Issuer soley as a convience for the user, and should not be
reiled upon without further investigation by any user contemplating an
investment decision with respect to the related securities.
Page 1 of 5
F-1
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PAYMENT SUMMARY
<TABLE>
<CAPTION>
Pass-Through Interest Original Beginning Principal Interest Total Ending
Class CUSIP Rate Type Balance Balance Paid Paid Paid Balance
----- ----- ------------ -------- -------- --------- --------- -------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTALS:
</TABLE>
*Based on a Notional Balance
DISTRIBUTIONS PER CERTIFICATE
<TABLE>
<CAPTION>
Beginning Principal Interest Ending
Class Certificate Factor Distribution(1) Distribution(1) Certificate Factor
----- ------------------ --------------- --------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
(1) represents net payment per cerficiate
Page 2 of 5
F-2
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PRINCIPAL DETAIL
<TABLE>
<CAPTION>
Beginning Scheduled Unscheduled Other Principal/ Total Principal Realized Losses/ Appraisal
Class Balance Principal Principal Cash Adjustments Distribution Amount Balance Adj. Reduction Amount
----- --------- --------- ----------- ---------------- ------------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTALS:
<CAPTION>
Ending Cumulative Cumulative
Class Balance Realized Losses Appraisal Red.
----- ------- --------------- --------------
<S> <C> <C> <C>
</TABLE>
INTEREST DETAIL
<TABLE>
<CAPTION>
Accrued Beginning Unpaid Prepayment Current Interest Yield Main. Prepayment Payments to
Class Certificate Interest Interest Int. Shortfall Shortfalls Charge Premiums Interest Shortfall
----- -------------------- ---------------- -------------- ---------------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTALS:
<CAPTION>
Interest on Total Interest Cumulative Unpaid
Class Unpaid Interest Distr. Amount Interest Shortfall
----- --------------- -------------- ------------------
<S> <C> <C> <C>
</TABLE>
Page 3 of 5
F-3
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
REPORT TO CERTIFICATEHOLDERS:
ADDITIONAL REPORTING INFORMATION
MORTGAGE LOAN ACTIVITY FOR RELATED PAYMENT DATE:
<TABLE>
<CAPTION>
# of Mortgage Weighted Average Beginning Agg Stated Ending Agg Stated Ending Actual Unpaid Available
Loans Note Mortgage Rate Principal Balance Principal Balance Principal Balance Distribution Amt
------------- ------------------ -------------------- ----------------- -------------------- ----------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
Current Current Additional Principal
Realized Losses Trust Fund Exp # of Payoffs Prepayments
--------------- ------------------ ------------ -----------
<S> <C> <C> <C>
</TABLE>
APPRAISAL REDUCTION INFORMATION:
<TABLE>
Loan # SPB of Apr Red Loan All Unpd Int & Fees Appraised Value P&I Advance on Loan ASER Date
------ ------------------- ------------------- --------------- ------------------- ---------
<S> <C> <C> <C> <C> <C>
</TABLE>
AGGREGATE DELINQUENCY INFORMATION FOR RELATED PAYMENT DATE:
<TABLE>
<CAPTION>
One Month Two Months 3 Months + Foreclosures Sp. Serviced
--------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
# of Loans
Agg Prin Balance
</TABLE>
REO PROPERTY WITH FINAL RECOVERY DETERMINATION:
<TABLE>
<CAPTION>
Mortgage Basis for Final All Proceeds Portion Proceeds Amount of
Loan # Recovery Determination Received to Certificates Realized Loss
-------- ---------------------- ------------ ---------------- -------------
<S> <C> <C> <C> <C>
</TABLE>
SUBORDINATION LEVELS
<TABLE>
<CAPTION>
Class Current Original
----- ------- --------
<S> <C> <C>
</TABLE>
P&I ADVANCE & FEE INFORMATION:
------------------------------
Advances:
- Outstanding P&I
- Servicing
- Nonrecoverable P&I
Interest on:
- P&I Advances
- Servicing Advances
Servicing Compensation:
- to Master Servicer
- to Special Servicer
<TABLE>
<CAPTION>
Class Maturity Date @0% CPR
----- ---------------------
<S> <C>
</TABLE>
PREPAYMENT SPEED HISTORY
------------------------
<TABLE>
<CAPTION>
CPR*
%
----
<S> <C>
1 MONTH
3 MONTH
6 MONTH
12 MONTH
LIFE
</TABLE>
* Principal received within 1 month of maturity is not considered prepayment
in the calculation of CPR.
Page 4 of 5
F-4
<PAGE>
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-C10
[STATE STREET LOGO] PAYMENT DATE:
RECORD DATE:
REPORT TO CERTIFICATEHOLDERS:
HISTORICAL INFORMATION ROLLING 24 MONTHS
<TABLE>
<CAPTION>
One Month Del. Two Months Del. Three Plus Del. Pre-Payments Mod./REO/Workouts Liquidations
Date Count Balance Count Balance Count Balance Count Balance Count Balance Count Balance
---- ----- ------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL/CURRENT RATINGS
Class Original Current Original Current Original Current Original Current
----- -------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Page 5 of 5
F-5
<PAGE>
[THIS PAGE INTENTIONALLY BLANK.]
<PAGE>
ANNEX G
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered J.P. Morgan
Commercial Mortgage Finance Corp. Mortgage Pass-Through Certificates, Series
2000-C10, Class A1, Class A2, Class B, Class C, Class D and Class E (the "Global
Securities") will be available only in book-entry form. Investors in the Global
Securities may hold interests in such Global Securities through any of DTC,
Cedelbank or Euroclear. Initial settlement and all secondary trades will settle
in same day funds. Capitalized terms used but not defined in this Annex G have
the meanings assigned to them in the Prospectus Supplement and the Prospectus.
Secondary market trading between investors holding interests in Global
Securities through Cedelbank and Euroclear will be conducted in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice. Secondary market trading between investors holding interests
in Global Securities through DTC will be conducted according to the rules and
procedures applicable to U.S. corporate debt obligations.
Secondary cross-market trading between investors holding interests in
Global Securities through Cedelbank or Euroclear and investors holding interests
in Global Securities through DTC Participants will be effected on a
delivery-against-payment basis through the respective depositories of Cedelbank
and Euroclear (in such capacity) and other DTC Participants.
Although DTC, Euroclear and Cedelbank are expected to follow the procedures
described below in order to facilitate transfers of interests in the Global
Securities among participants of DTC, Euroclear and Cedelbank, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Issuer nor the Trustee
will have any responsibility for the performance by DTC, Euroclear and Cedelbank
or their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their obligations.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
The Global Securities will be registered in the name of Cede & Co. as
nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. Cedelbank and Euroclear will hold positions on
behalf of their participants through their respective depositories, which in
turn will hold such positions in accounts as DTC Participants.
Investors electing to hold interests in Global Securities through DTC
Participants, rather than through Cedelbank or Euroclear accounts, will be
subject to the settlement practices applicable to similar issues of pass-through
certificates. Investors' securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold interests in Global Securities through Cedelbank
or Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Interests in Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
G-1
<PAGE>
Transfers between DTC Participants. Secondary market trading between DTC
Participants will be settled using the DTC procedures applicable to similar
issues of pass-through certificates in same-day funds.
Transfers between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank Participants or Euroclear Participants and/or
investors holding interests in Global Securities through them will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Transfers between DTC seller and Cedelbank or Euroclear purchaser. When
interests in Global Securities are to be transferred on behalf of a seller from
the account of a DTC Participant to the account of a Cedelbank Participant or a
Euroclear Participant for a purchaser, the purchaser will send instructions to
Cedelbank or Euroclear through a Cedelbank Participant or Euroclear Participant
at least one business day prior to settlement. Cedelbank or the Euroclear
Operator will instruct its respective depository to receive an interest in the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last distribution date to but excluding
the settlement date. Payment will then be made by the respective depository to
the DTC Participant's account against delivery of an interest in the Global
Securities. After such settlement has been completed, such interest will be
credited to the respective clearing system, and by the clearing system, in
accordance with its usual procedures, to the Cedelbank Participant's or
Euroclear Participant's account. The credit of such interest will appear on the
next business day and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed through DTC on the intended value date (i.e., the trade fails), the
Cedelbank or Euroclear cash debit will be valued instead as of the actual
settlement date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing system the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement from cash on hand, in which case such Cedelbank
Participants or Euroclear Participants will take on credit exposure to Cedelbank
or the Euroclear Operator until interests in the Global Securities are credited
to their accounts one day later.
As an alternative, if Cedelbank or the Euroclear Operator has extended a
line of credit to them, Cedelbank Participants or Euroclear Participants can
elect not to pre-position funds and allow that credit line to be drawn upon.
Under this procedure, Cedelbank Participants or Euroclear Participants receiving
interests in Global Securities for purchasers would incur overdraft charges for
one day, to the extent they cleared the overdraft when interests in the Global
Securities were credited to their accounts. However, interest on the Global
Securities would accrue from the value date. Therefore, the investment income on
the interest in the Global Securities earned during that one-day period would
tend to offset the amount of such overdraft charges, although this result will
depend on each Cedelbank Participant's or Euroclear Participant's particular
cost of funds.
Since the settlement through DTC will take place during New York business
hours, DTC Participants are subject to DTC procedures for transferring interests
in Global Securities to the respective depository of Cedelbank or Euroclear for
the benefit of Cedelbank Participants or Euroclear Participants. The sale
proceeds will be available to the DTC seller on the settlement date. Thus, to
the seller settling the sale through a DTC Participant, a cross-market
transaction will settle no differently than a sale to a purchaser settling
through a DTC Participant.
Finally, intra-day traders that use Cedelbank Participants or Euroclear
Participants to purchase interests in Global Securities from DTC Participants or
sellers settling through them for delivery to Cedelbank Participants or
Euroclear Participants should note that these trades will automatically fail on
the sale side unless affirmative action is taken. At least three techniques
should be available to eliminate this potential condition:
(a) borrowing interests in Global Securities through Cedelbank or
Euroclear for one day (until the purchase side of the intra-day trade is
reflected in the relevant Cedelbank or Euroclear accounts) in accordance
with the clearing system's customary procedures;
G-2
<PAGE>
(b) borrowing interests in Global Securities in the United States from
a DTC Participant no later than one day prior to settlement, which would
give sufficient time for such interests to be reflected in the relevant
Cedelbank or Euroclear accounts in order to settle the sale side of the
trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedelbank
Participant or Euroclear Participant.
Transfers between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank Participants and Euroclear
Participants may employ their customary procedures for transactions in which
interests in Global Securities are to be transferred by the respective clearing
system, through the respective depository, to a DTC Participant. The seller will
send instructions to Cedelbank or the Euroclear Operator through a Cedelbank
Participant or Euroclear Participant at least one business day prior to
settlement. Cedelbank or Euroclear will instruct its respective depository, to
credit an interest in the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last distribution date to but excluding the settlement
date. The payment will then be reflected in the account of the Cedelbank
Participant or Euroclear Participant the following business day, and receipt of
the cash proceeds in the Cedelbank Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred through DTC in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedelbank Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A Beneficial Owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
United States) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless (i) each clearing system, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
Beneficial Owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8BEN). Beneficial Owners of
Certificates that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8BEN (Certificate of Foreign Status).
If the information shown on Form W-8BEN changes, a new Form W-8BEN must be filed
within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States can obtain an exemption from the
withholding tax by filing Form W-8ECI (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form W-8BEN). Non-U.S. Persons that are Beneficial Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form W-8BEN (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8BEN. Form W-8BEN may be filed by the Beneficial
Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
G-3
<PAGE>
U.S. Federal Income Tax Reporting Procedure. The Beneficial Owner of a
Global Security or, in the case of a Form W-8BEN or a Form W-8ECI filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the books
of the clearing agency). Form W-8BEN is effective for three calendar years and
Form W-8ECI is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership or other entity treated as a
corporation or partnership for federal income tax purposes created or organized
in or under the laws of the United States, any State thereof or the District of
Columbia or (iii) an estate the income of which is includable in gross income
for United States tax purposes, regardless of its source or (iv) a trust if a
court within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States fiduciaries have the
authority to control all substantial decisions of the trust. This summary does
not deal with all aspects of U.S. Federal income tax withholding that may be
relevant to foreign holders of the Global Securities. Investors are advised to
consult their own tax advisors for specific tax advice concerning their holding
and disposing of the Global Securities.
G-4
<PAGE>
PROSPECTUS
Mortgage Pass-Through Certificates
(Issuable in Series)
J.P. MORGAN COMMERCIAL MORTGAGE FINANCE CORP.
DEPOSITOR
J.P. Morgan Commercial Mortgage Finance Corp. will periodically offer
certificates in one or more series. Each series of certificates will
represent the entire beneficial ownership interest in a trust fund.
Distributions on the certificates of any series will be made only from the
assets of the related trust fund.
The certificates of each series will not represent an obligation of the
depositor, any servicer or any of their respective affiliates. Neither the
certificates nor any assets in the related trust fund will be guaranteed or
insured by any governmental agency or instrumentality or by any other person,
unless otherwise provided in the prospectus supplement.
The primary asset of the trust fund may include:
o multifamily and commercial mortgage loans, including participations
therein;
o mortgage-backed securities evidencing interest in or secured by
multifamily and commercial mortgage loans, including participations
therein, and other mortgage-backed securities;
o direct obligations of the United States or other government
agencies; or
o a combination of the assets described above
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. YOU SHOULD REVIEW THE
INFORMATION APPEARING UNDER THE CAPTION "RISK FACTORS" ON PAGE 9 AND IN THE
RELATED PROSPECTUS SUPPLEMENT BEFORE PURCHASING ANY OFFERED CERTIFICATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
January 1, 2000
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that provide progressively more detail:
o this prospectus, which provides general information, some of which
may not apply to your series of certificates; and
o the accompanying prospectus supplement, which describes the
specific terms of your series of certificates.
IF THE DESCRIPTION OF YOUR CERTIFICATES IN THE ACCOMPANYING PROSPECTUS
SUPPLEMENT DIFFERS FROM THE RELATED DESCRIPTION IN THIS PROSPECTUS, YOU
SHOULD RELY ON THE INFORMATION IN THAT PROSPECTUS SUPPLEMENT.
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.
Some capitalized terms used in this prospectus are defined in the Glossary
attached hereto.
-----------------------
Until 90 days after the date of each prospectus supplement, all dealers
effecting transactions in the offered certificates covered by such prospectus
supplement may be required to deliver such prospectus supplement and this
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus and prospectus supplement when acting as underwriters and with
respect to their unsold allotments or subscriptions.
You should rely only on any information or representations contained or
incorporated by reference in this prospectus and the related prospectus
supplement. This prospectus and any prospectus supplement do not constitute
an offer to sell or a solicitation of an offer to buy any securities in any
state or other jurisdiction in which such offer would be unlawful.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Prospectus .................................................................... 1
Important Notice about Information Presented in this Prospectus and the
Accompanying Prospectus Supplement ........................................... 2
Additional Information ........................................................ 3
Incorporation of Certain Information by Reference ............................. 3
Summary of Prospectus ......................................................... 4
Risk Factors .................................................................. 9
Description of the Trust Funds ................................................ 19
Use of Proceeds ............................................................... 24
Yield Considerations .......................................................... 24
The Depositor ................................................................. 27
Description of the Certificates ............................................... 28
Description of the Agreements ................................................. 35
Description of Credit Support ................................................. 50
Certain Legal Aspects of the Mortgage Loans and the Leases .................... 52
Federal Income Tax Consequences ............................................... 68
ERISA Considerations .......................................................... 96
Legal Investment .............................................................. 98
Plan of Distribution .......................................................... 100
Legal Matters ................................................................. 100
Financial Information ......................................................... 100
Rating ........................................................................ 101
Glossary of Terms.............................................................. 102
</TABLE>
2
<PAGE>
ADDITIONAL INFORMATION
The depositor has filed with the Securities and Exchange 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 do not contain all of the
information set forth in the registration statement. For further information,
you should refer to the registration statement and the exhibits attached
thereto. Such registration statement and exhibits can be inspected and copied
at prescribed rates at the public reference facilities maintained by the
Securities and Exchange 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, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, New York, New York 10048. The Securities and Exchange Commission
maintains a web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
J.P. Morgan Commercial Mortgage Finance Corp., that file electronically with
the Securities and Exchange Commission.
The depositor will file or cause to be filed with the Securities and
Exchange Commission such periodic reports with respect to each trust fund as
are required under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder.
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
We are incorporating herein by reference all documents and reports 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. You may obtain, without charge, a
copy of any or all documents or reports incorporated herein by reference, to
the extent such documents or reports relate to an offered certificate.
Exhibits to those documents will be provided to you only if such exhibits
were specifically incorporated by reference in those documents. Requests to
the depositor should be directed in writing to J.P. Morgan Commercial
Mortgage Finance Corp., c/o J.P. Morgan Securities Inc., 60 Wall Street, New
York, New York 10260-0060, Attention: Secretary.
3
<PAGE>
SUMMARY OF PROSPECTUS
The following summary is a brief description of the main terms of the
offered certificates. For this reason, the summary does not contain all the
information that may be important to you. You will find a detailed
description of the terms of the offered certificates following this summary
and in the accompanying prospectus supplement.
The Trust Assets .............. Each series of certificates will represent
in the entire beneficial ownership interest
in a trust fund consisting primarily of any
of the following:
o mortgage assets;
o collection accounts;
o forms of credit support; and
o cash flow agreements.
The Mortgage Assets ........... The mortgage assets with respect to each
series of certificates may consist of any of
the following:
o multifamily and commercial mortgage
loans, including participations therein;
o direct obligations of the United States
or other government agencies; and
o mortgage-backed securities.
The mortgage loans will not be guaranteed or
insured by the depositor or any of its
affiliates or, unless otherwise provided in
the prospectus supplement, by any
governmental agency or instrumentality or
other person. The mortgage loans will be
primarily secured by first or junior liens
on, or security interests in fee simple,
leasehold or a similar interest in any of
the following types of properties:
o residential properties consisting of five
or more rental or cooperatively owned
dwelling units;
o office buildings;
o retail buildings or centers;
o hotels and motels;
o nursing homes;
o congregate care facilities;
o assisted living facilities;
o industrial properties;
o mini-warehouse facilities or self-storage
facilities;
o mobile home parks; and
o mixed use and other types of commercial
properties.
4
<PAGE>
The mortgage loans may also be secured by
additional collateral.
Some or all of the mortgage loans may also
be secured by an assignment of one or more
leases of one or more lessees of all or a
portion of the related mortgaged properties.
A significant or the sole source of payments
on certain commercial loans will be the
rental payments due under the related
leases.
A mortgage loan may have an interest rate
that has any of the following features:
o is fixed over its term,
o adjusts from time to time,
o is partially fixed and partially
floating,
o is floating based on one or more indices,
o may be converted from a floating to a
fixed interest rate,
o may be converted from a fixed to a
floating interest rate, or
o interest is not paid currently but is
accrued and added to the principal
balance.
A mortgage loan may provide for any of the
following:
o scheduled payments to maturity,
o payments that adjust from time to time,
o negative amortization or accelerated
amortization,
o full amortization or require a balloon
payment due on its stated maturity date,
o prohibitions on prepayment,
o releases or substitutions of collateral,
including defeasance thereof with direct
obligation of the United States, and
o payment of a premium or a yield
maintenance penalty in connection with a
principal prepayment.
The mortgaged properties may be located
anywhere in the world. All mortgage loans
will have original terms to maturity of not
more than 40 years. All mortgage loans will
have been originated by persons other than
the depositor. All mortgage assets will have
been purchased, either directly or
indirectly, by the depositor on or before
the date of initial issuance of the related
series of certificates.
The mortgage-backed securities will evidence
ownership interests in or be secured by
mortgage loans similar to those described
above and other mortgage-backed securities.
Some mortgage-backed securities may be
guaranteed or insured by an affiliate of the
depositor, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage
Association, the Government National
Mortgage Association, or any other person
specified in the prospectus supplement.
5
<PAGE>
Collection Accounts ........... Each trust fund will include one or more
accounts established and maintained on
behalf of the certificateholders. All
payments and collections received or
advanced with respect to the mortgage assets
and other assets in the trust fund will be
deposited into those accounts. The accounts
may be maintained as an interest bearing or
a non-interest bearing account, and funds
may be held as cash or reinvested.
Credit Support ................ The following types of credit support may be
used to enhance the likelihood of
distributions on certain classes of
certificates:
o subordination of junior certificates,
o letters of credit,
o insurance policies,
o guarantees,
o reserve funds, or
o other types of credit support described
in the prospectus supplement and a
combination of any of the above.
Cash Flow Agreements .......... Cash flow agreements are used to reduce the
effects of interest rate or currency
exchange rate fluctuations on the underlying
mortgage assets and increase the likelihood
of timely distributions on the certificates.
The trust fund may include any of the
following types of cash flow agreements:
o guaranteed investment contracts,
o interest rate swap or exchange
agreements,
o interest rate cap or floor agreements,
o currency exchange agreements,
o yield supplement agreements.
Description of Certificates ... Each series of certificates will include one
or more classes. Each series of certificates
will represent in the aggregate the entire
beneficial ownership interest in the trust
fund. The offered certificates are the
classes of certificates being offered to you
pursuant to the prospectus supplement. The
non-offered certificates are the classes of
certificates not being offered to you
pursuant to the prospectus supplement.
Information on the non-offered certificates
is being provided solely to assist you in
your understanding of the offered
certificates.
Distributions on Certificates . The certificates may provide for different
methods of distributions to specific
classes. Any class of certificates may:
o provide for the accrual of interest
thereon based on fixed, variable or
floating rates;
6
<PAGE>
o be senior or subordinate to one or more
other classes of certificates with
respect to interest or principal
distribution and the allocation of losses
on the assets of the trust fund;
o be entitled to principal distributions,
with disproportionately low, nominal or
no interest distributions;
o be entitled to interest distributions,
with disproportionately low, nominal or
no principal distributions;
o provide for distributions of accrued
interest only after the occurrence of
certain events, such as the retirement of
one or more other classes of
certificates;
o provide for distributions of principal
sequentially, based on specified payment
schedules or other methodologies; and
o provide for distributions based on a
combination of any of the above features.
Interest on each class of offered
certificates of each series will accrue at
the applicable pass-through rate on the
outstanding certificate balance or notional
balance. Distributions of interest with
respect to one or more classes of
certificates may be reduced to the extent of
certain delinquencies, losses, prepayment
interest shortfalls, and other contingencies
described herein
The certificate balance of a certificate
outstanding from time to time represents the
maximum amount that the holder thereof is
then entitled to receive in respect of
principal from future cash flow on the
assets in the related trust fund.
Distributions of principal will be made on
each distribution date to the class or
classes of certificates entitled thereto
until the certificate balance of such
certificates is reduced to zero.
Distributions of principal to any class of
certificates will be made on a pro rata
basis among all of the certificates of such
class.
Advances ...................... A servicer may be obligated as part of its
servicing responsibilities to make certain
advances with respect to delinquent
scheduled payments and property related
expenses which it deems recoverable. The
trust fund may be charged interest for any
advance. Neither the depositor nor any of
its affiliates will have any responsibility
to make such advances.
Termination ................... A series of certificates may be subject to
optional early termination through the
repurchase of the mortgage assets in the
related trust fund.
Registration of Certificates .. One or more classes of the offered
certificates may initially be represented by
one or more certificates registered in the
name of Cede & Co., as the nominee of The
Depository Trust Company. If your offered
certificates is so registered, you will not
be entitled to receive a definitive
certificate representing your interest
except in the event that physical
certificates are issued under the limited
circumstances.
7
<PAGE>
Tax Status of the
Certificates .................. The certificates of each series will
constitute either:
o "regular interests" or "residual
interests" in a trust fund treated as a
"real estate mortgage investment conduit"
under the Internal Revenue Code of 1986,
or
o interests in a trust fund treated as a
grantor trust under applicable provisions
of the Internal Revenue Code of 1986.
ERISA Considerations .......... If you are a fiduciary of an employee
benefit plan or other retirement plan or
arrangement that is subject to the Employee
Retirement Income Security Act of 1974, as
amended, or Section 4975 of the Internal
Revenue Code of 1986, as amended, or any
person which proposes to use "plan assets"
of any of these plans to acquire any offered
certificates, you should carefully review
with your legal counsel whether the purchase
or holding of any offered certificates could
give rise to transactions not permitted
under these laws. The prospectus supplement
will specify if investment in some
certificates may require a representation
that the investor is not a plan or similar
arrangement or investing on behalf of a plan
or similar arrangement.
Legal Investment .............. The prospectus supplement will specify
whether the offered certificates will
constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market
Enhancement Act of 1984. If your investment
authority is subject to legal restrictions
you should consult your legal counsel to
determine whether and to what extent the
offered certificates constitute legal
investments for you.
Rating ........................ At the date of issuance, as to each series,
each class of offered certificates will not
be rated lower than investment grade by one
or more nationally recognized statistical
rating agencies. 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.
8
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE RISK
FACTORS IN THE PROSPECTUS SUPPLEMENT, IN DECIDING TO PURCHASE ANY OF THE
OFFERED CERTIFICATES. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW, TOGETHER
WITH THOSE DESCRIBED IN THE PROSPECTUS SUPPLEMENT UNDER "RISK FACTORS,"
SUMMARIZE THE MATERIAL RISKS RELATING TO YOUR CERTIFICATES.
Your ability to resell
certificates may be limited
because of their
characteristics ............... You may not be able to resell your
certificates and the value of your
certificates may be less than you
anticipated for a variety of reasons
including:
o A secondary market for your certificates
does not develop;
o Interest rate fluctuations;
o The absence of redemption rights;
o The availability of other mortgage-backed
securities including those backed by
loans on single family residential
properties; and
o The request for information in addition
to that provided in the prospectus, the
prospectus supplement and the monthly
report to certificateholders.
The assets of the trust fund
may not be sufficient to pay
your certificates ............. The certificates will not represent an
interest in or obligation of the depositor,
any servicer, or any of their affiliates.
The only obligations with respect to the
certificates or the mortgage assets will be
the obligations of the depositor pursuant to
certain limited representations and
warranties made with respect to the mortgage
loans. Since certain representations and
warranties with respect to the mortgage
assets may have been made and/or assigned in
connection with transfers of such mortgage
assets prior to the closing date, the rights
of the trustee and the certificateholders
with respect to such representations or
warranties will be limited to their rights
as an assignee thereof. None of the
depositor, any servicer or any affiliate
thereof will have any obligation with
respect to representations or warranties
made by any other entity. Neither the
certificates nor the underlying mortgage
assets will be guaranteed or insured by any
governmental agency or instrumentality, or
by the depositor, any servicer or any of
their affiliates. Proceeds of the assets
included in the related trust fund for each
series of certificates will be the sole
source of payments on the certificates, and
there will be no recourse to the depositor
or any other entity in the event that such
proceeds are insufficient or otherwise
unavailable to make all payments provided
for under the certificates.
Unless otherwise specified in the prospectus
supplement, a series of certificates will
not have any claim against or security
interest in the trust funds for any other
series. If the related trust fund is
insufficient to make payments on such
certificates, no other assets will be
available for payment of the deficiency.
Additionally, certain amounts remaining in
certain funds or
9
<PAGE>
accounts may be withdrawn under certain
conditions. In the event of such withdrawal,
such amounts will not be available for
future payment of principal of or interest
on the certificates. If 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 trust
assets have been incurred, 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 the prospectus
supplement.
Prepayments and repurchases of
the mortgage assets will affect
the timing of your cash flow
and may affect your yield ..... Prepayments (including those caused by
defaults on the mortgage loans and
repurchases for breach of representation or
warranty) on the mortgage assets in any
trust fund generally will result in a faster
rate of principal payments on one or more
classes of the related certificates than if
payments on such mortgage assets were made
as scheduled. Thus, the prepayment
experience on the mortgage assets may affect
the average life of each class of related
certificates. The rate of principal payments
on pools of mortgage loans varies between
pools and from time to time is influenced by
a variety of economic, demographic,
geographic, social, tax, legal and other
factors.
There can be no assurance as to the rate of
voluntary prepayments on the mortgage assets
in any trust fund will conform to any model
described herein or in any prospectus
supplement.
The rate of voluntary prepayments will also
be affected by:
o the voluntary prepayment terms of the
mortgage loan including prepayment
lock-out periods and prepayment premiums
o the ability of a servicer to collect
prepayment premiums
o then-current interest rates being charged
on similar mortgage loans
o the availability of mortgage credit.
If a mortgage loan is in default it may not
be possible to collect a prepayment premium.
No person will be required to pay any
premium if a mortgage loan is repurchased
for a breach of representation or warranty.
The yield on your certificates may be less
than anticipated because the prepayment
premium or yield maintenance required under
certain prepayment scenarios may not be
enforceable in some states or under federal
bankruptcy laws.
o Some courts may consider the prepayment
premium to be usurious.
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o Even if the prepayment premium is
enforceable, we cannot assure you that
foreclosure proceeds will be sufficient
to pay the prepayment premium.
o Although the collateral substitution
provisions related to defeasance are not
suppose to be treated as a prepayment and
should not affect your certificates, we
cannot assure you that a court will not
interpret the defeasance provisions as
requiring a prepayment premium; nor can
we assure you that if it is treated as a
prepayment premium, the court will find
the defeasance income stream enforceable.
As a result, the actual maturity of your
certificates could occur significantly
earlier than expected and additional cash
flow may not be available to offset any
effect this may have on your yield. A series
of certificates may include one or more
classes of certificates with priorities of
payment and, as a result, yields on other
classes of certificates, including classes
of offered certificates, of such series may
be more sensitive to prepayments on mortgage
assets. A series of certificates may include
one or more classes offered at a significant
premium or discount. Yields on such classes
of certificates will be sensitive, and in
some cases extremely sensitive, to
prepayments on mortgage assets and, where
the amount of interest payable with respect
to a class is disproportionately high, as
compared to the amount of principal, a
holder might, in some prepayment scenarios,
fail to recoup its original investment.
Ratings do not guarantee
payment and do not address
prepayment
risks ......................... Any rating assigned by a rating agency to a
class of certificates will reflect such
rating agency's assessment solely of the
likelihood that holders of certificates of
such class will receive payments to which
such certificateholders are entitled under
the related agreement. Ratings do not
address:
o the likelihood that principal prepayment
(including those caused by defaults) on
the related mortgage assets will be made,
o the degree to which the rate of such
prepayments might differ from that
originally anticipated,
o the likelihood of early optional
termination of the series of
certificates,
o the possibility that prepayment at higher
or lower rates than anticipated by an
investor may cause such investor to
experience a lower than anticipated
yield, or
o that an investor purchasing a certificate
at a significant premium might fail to
recoup its initial investment under
certain prepayment scenarios.
The amount, type and nature of credit
support, if any, established with respect to
a series of certificates will be determined
on the basis of criteria established by each
rating agency rating classes of such series.
Such criteria are sometimes based upon
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an actuarial analysis of the behavior of
mortgage loans in a larger group. Such
analysis is often the basis upon which each
rating agency determines the amount of
credit support required with respect to each
such class. There can be no assurance that
the historical data supporting any such
actuarial analysis will accurately reflect
future experience nor any assurance that the
data derived from a large pool of mortgage
loans accurately predicts the delinquency,
foreclosure or loss experience of any
particular pool of mortgage assets. No
assurance can be given that values of any
mortgaged properties have remained or will
remain at their levels on the respective
dates of origination of the related mortgage
loans. Moreover, there is no assurance that
appreciation of real estate values generally
will limit loss experiences on the mortgaged
properties. If the commercial or multifamily
residential real estate markets should
experience an overall decline in property
values such that the outstanding principal
balances of the mortgage loans underlying or
comprising the mortgage assets in a
particular trust fund and any secondary
financing on the related mortgaged
properties become equal to or greater than
the value of the mortgaged properties, the
rates of delinquencies, foreclosures and
losses could be higher than those now
generally experienced by institutional
lenders. In addition, adverse economic
conditions (which may or may not affect real
property values) may affect the timely
payment by mortgagors of scheduled payments
of principal and interest on the mortgage
loans and, accordingly, the rates of
delinquencies, foreclosures and losses with
respect to any trust fund. To the extent
that such losses are not covered by the
credit support, if any, described in the
prospectus supplement, such losses will be
borne, at least in part, by the holders of
one or more classes of the certificates of
the related series.
Net cash flow produced by a
mortgaged property may be
inadequate to repay the
mortgage loan ................. Payment on each mortgage loan is dependent
primarily on:
o the net operating income of the related
mortgaged property; and
o at maturity (whether at scheduled
maturity or, in the event of a default
under the mortgage loan, upon the
acceleration of such maturity), the
market value of the related mortgaged
property (taking into account any adverse
effect of a foreclosure proceeding on
such market value) or the ability of the
related mortgagor to refinance the
mortgage loan.
If a mortgage loan has a relatively high
loan to value ratio or relatively low debt
service coverage ratio, a foreclosure sale
is less likely to provide enough money to
satisfy the outstanding debt. Therefore, the
servicer may have to modify the mortgage
loans that it is servicing in order to try
to maximize recoveries. However, such
flexibility may not result in a greater
recovery on a net present value basis than
liquidation.
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Nonrecourse loans limit the
remedies available following a
mortgagor default ............. The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any private mortgage
insurer, or by the depositor, the
originators, the Servicers, the Trustee or
any of their respective affiliates.
Each mortgage loan generally is a
nonrecourse loan. If there is a default
(other than a default resulting from
voluntary bankruptcy, fraud or willful
misconduct) there will generally only be
recourse against the specific properties and
other assets that have been pledged to
secure such mortgage loan. Even if a
mortgage loan provides for recourse to a
mortgagor or its affiliates, it is unlikely
the trust fund ultimately could recover any
amounts not covered by the mortgaged
property.
Future cash flows and property
values are not predictable .... Commercial and multifamily property values
and cash flows are volatile and may be
insufficient to cover debt service on the
related mortgage loan at any given time. If
the cash flow from a mortgaged property is
reduced (for example, if leases are not
obtained or renewed), the mortgagor may not
be able to repay the loan. Cash flow will
determine the mortgagor's ability to cover
debt service and property values affect the
ability to refinance the property and the
amount of the recovery of proceeds upon
foreclosure. Cash flow and property value
depend upon a number of factors, including:
o national, regional and local economic
conditions;
o local real estate conditions, such as an
oversupply of space similar to the
related mortgaged property;
o changes or weakness in a specific
industry segment;
o the nature of expenses:
o as a percentage of revenue;
o whether expenses are fixed or vary with
revenue; and
o the level of required capital
expenditures for proper maintenance and
demanded by tenants;
o demographic factors;
o changes required by retroactive building
or similar codes;
o capable management and adequate
maintenance;
o location;
o with respect to properties with uses
subject to significant regulation,
changes in applicable laws;
o perceptions by prospective tenants and,
if applicable, their customers, of the
safety, convenience, services and
attractiveness of the property;
o the age, construction quality and design
of a particular property; and
o whether the mortgaged properties are
readily convertible to alternative uses.
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Poor property management will
adversely affect the
performance of the related
mortgaged property ............ The successful operation of a real estate
project also depends on the performance and
viability of the property manager.
Properties deriving revenues primarily from
short-term sources generally are more
management intensive than properties leased
to creditworthy tenants under long-term
leases. The property manager is generally
responsible for:
o operating the properties;
o providing building services;
o establishing and implementing the rental
structure;
o managing operating expenses;
o responding to changes in the local
market; and
o advising the mortgagor with respect to
maintenance and capital improvements.
Property managers may not be in a financial
condition to fulfill their management
responsibilities.
Certain of the mortgaged properties are
managed by affiliates of the applicable
mortgagor. If a mortgage loan is in default
or undergoing special servicing, such
relationship could disrupt the management of
the underlying property. This may adversely
affect cash flow. However, the mortgage
loans generally permit the lender to remove
the property manager upon the occurrence of
an event of default, a decline in cash flow
below a specified level or the failure to
satisfy some other specified performance
trigger.
The servicer will have
discretion to handle or avoid
obligor defaults in
a manner which may be adverse
to your interests ............. In order to maximize recoveries on defaulted
mortgage loans, a servicer will be permitted
(within prescribed parameters) to extend and
modify mortgage loans that are in default or
as to which a payment default is imminent.
In addition, a servicer may receive a
workout fee based on receipts from or
proceeds of such mortgage loans. While the
servicer will be required to follow accepted
servicing standards, there can be no
assurance that such flexibility will
increase the present value of receipts from
or proceeds of mortgage loans that are in
default or as to which a payment default is
imminent.
Mortgagors of commercial
mortgage loans are
sophisticated and may take
actions adverse to your
interests ..................... Mortgage loans made to partnerships,
corporations or other entities may entail
risks of loss from delinquency and
foreclosure that are greater than those of
mortgage loans made to individuals. The
mortgagor's sophistication and form of
organization may increase the likelihood of
protracted litigation or bankruptcy in
default situations.
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Credit support may not cover
losses or risks which could
adversely affect payment on
your certificates ............. The prospectus supplement for a series of
certificates will describe any credit
support in the related trust fund. Any
credit support will be limited in amount and
coverage and will not cover all potential
risks. Use of credit support will be subject
to the conditions and limitations described
herein and in the prospectus supplement.
Moreover, such credit support may not cover
all potential losses or risks; for example,
credit support may or may not cover fraud or
negligence by a mortgage loan originator or
other parties.
A series of certificates may include one or
more classes of subordinate certificates, if
so provided in the prospectus supplement.
Although subordination is intended to reduce
the risk to holders of senior certificates
of delinquent distributions or ultimate
losses, the amount of subordination will be
limited and may decline under certain
circumstances. In addition, if principal
payments on one or more classes of
certificates of a series are made in a
specified order of priority, any limits with
respect to the aggregate amount of claims
under any related credit support may be
exhausted before the principal of the lower
priority classes of certificates of such
series has been repaid. As a result, the
impact of significant losses and shortfalls
on the trust assets may fall primarily upon
those classes of certificates having a lower
priority of payment. Moreover, if a form of
credit support covers more than one series
of certificates, holders of certificates
evidencing an interest in one covered trust
will be subject to the risk that the credit
support will be exhausted by the claims of
other covered trusts.
The amount of any applicable credit support
supporting one or more classes of offered
certificates, including the subordination of
one or more classes of certificates, will be
determined on the basis of criteria
established by each rating agency rating
such classes of certificates based on an
assumed level of defaults, delinquencies,
other losses or other factors. There can,
however, be no assurance that the loss
experience on the related mortgage assets
will not exceed such assumed levels.
Regardless of the form of credit enhancement
provided, the amount of coverage will be
limited in amount and in most cases will be
subject to periodic reduction in accordance
with a schedule or formula. The master
servicer will generally be permitted to
reduce, terminate or substitute all or a
portion of the credit enhancement for any
series of certificates, if the applicable
rating agency indicates that the
then-current rating thereof will not be
adversely affected. The rating of any series
of certificates by any applicable rating
agency may be lowered following the initial
issuance thereof as a result of the
downgrading of the obligations of any
applicable credit support provider, or as a
result of losses on the related mortgage
assets substantially in excess of the levels
contemplated by such rating agency at the
time of its initial rating analysis. None of
the
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depositor, the master servicer or any of
their affiliates will have any obligation to
replace or supplement any credit
enhancement, or to take any other action to
maintain any rating of any series of
certificates.
Some actions allowed by the
mortgage may be limited
by law ........................ The mortgages may contain a due-on-sale
clause, which permits the lender to
accelerate the maturity of the mortgage loan
if the mortgagor sells, transfers or conveys
the related mortgaged property or its
interest in the mortgaged property. The
mortgages may also include a
debt-acceleration clause, which permits the
lender to accelerate the debt upon a
monetary or non-monetary 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.
Some of the mortgage loans will be secured
by an assignment of leases and rents
pursuant to which the mortgagor typically
assigns its right, title and interest as
landlord under the leases on the related
mortgaged property and the income derived
therefrom to the lender as further security
for the related mortgage loan, while
retaining a license to collect rents for so
long as there is no default. In the event
the mortgagor defaults, the license
terminates and the lender is entitled to
collect the rents. Such assignments are
typically not perfected as security
interests prior to actual possession of the
cash flow. 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 mortgagor,
the lender's ability to collect the rents
may be adversely affected.
One action jurisdiction may
limit the ability of the
servicer to foreclose on
a mortgaged property .......... Several states (including California) have
laws that prohibit more than one "judicial
action" to enforce a mortgage obligation,
and some courts have construed the term
"judicial action" broadly. The special
servicer may need to obtain advice of
counsel prior to enforcing any of the trust
fund's rights under any of the mortgage
loans that include mortgaged properties
where the rule could be applicable.
In the case of a mortgage loan secured by
mortgaged properties located in multiple
states, the special servicer may be required
to foreclose first on 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.
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Rights against tenants may be
limited if leases are not
subordinate to mortgage or do
not contain attornment
provisions .................... Some of the tenant leases contain provisions
that require the tenant to attorn to (that
is, recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be
either subordinate to the liens created by
the mortgage loans or else contain a
provision that requires the tenant to
subordinate the lease if the mortgagee
agrees to enter into a non-disturbance
agreement.
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not
contain attornment provisions, such leases
may terminate upon the transfer of the
property to a foreclosing lender or
purchaser at foreclosure. Accordingly, in
the case of the foreclosure of a mortgaged
property located in such a state and leased
to one or more desirable tenants under
leases that do not contain attornment
provisions, such mortgaged property could
experience a further decline in value if
such tenants' leases were terminated (e.g.,
if such tenants were paying above-market
rents).
If a mortgage is subordinate to a lease, the
lender will not (unless it has otherwise
agreed with the tenant) possess the right to
dispossess the tenant upon foreclosure of
the property, and if the lease contains
provisions inconsistent with the mortgage
(e.g., provisions relating to application of
insurance proceeds or condemnation awards),
the provisions of the lease will take
precedence over the provisions of the
mortgage.
If mortgaged properties are not
in compliance with current
zoning laws you may not be able
to restore it following a
casualty loss ................. Due to changes in applicable building and
zoning ordinances and codes which have come
into effect after the construction of
improvements on certain of the mortgaged
properties, some improvements may not comply
fully with current zoning laws (including
density, use, parking and set-back
requirements) but qualify as permitted
non-conforming uses. Such changes may limit
the ability of the related mortgagor to
rebuild the premises "as is" in the event of
a substantial casualty loss. Such
limitations may adversely affect the ability
of the mortgagor to meet its mortgage loan
obligations from cash flow. Insurance
proceeds may not be sufficient to pay off
such mortgage loan in full. In addition, if
the mortgaged property were to be repaired
or restored in conformity with then current
law, its value could be less than the
remaining balance on the mortgage loan and
it may produce less revenue than before such
repair or restoration.
Inspections of the mortgaged
properties were limited ....... The mortgaged properties were inspected by
licensed engineers at the time the mortgage
loans were originated to assess the
structure, exterior walls, roofing interior
construction, mechanical and electrical
systems and general condition of the site,
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buildings and other improvements located on
the mortgaged properties. There can be no
assurance that all conditions requiring
repair or replacement have been identified
in such inspections.
Compliance with Americans with
Disabilities Act may result in
additional losses ............. Under the Americans with Disabilities Act of
1990, all public accommodations are required
to meet certain federal requirements related
to access and use by disabled persons. To
the extent the mortgaged properties do not
comply with the act, the mortgagors may be
required to incur costs to comply with the
act. In addition, noncompliance could result
in the imposition of fines by the federal
government or an award of damages to private
litigants.
Litigation Concerns ........... There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to
the business of or arising out of the
ordinary course of business of the
mortgagors and their affiliates. There can
be no assurance that such litigation will
not have a material adverse effect on the
distributions to certificateholders.
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DESCRIPTION OF THE TRUST FUNDS
ASSETS
The primary assets of each trust fund are mortgage assets which include
(i) one or more multifamily and/or commercial mortgage loans and
participations therein, (ii) CMBS, or (iii) a combination of mortgage loans
and CMBS. Mortgage loans refers to both whole mortgage loans, participations
therein and mortgage loans underlying CMBS. No CMBS originally issued in a
private placement will be included as an asset of a trust fund until the
holding period provided for under Rule 144(k) promulgated under the
Securities Act of 1933, as amended, has expired or such CMBS have been
registered under the Securities Act of 1933, as amended. The mortgage assets
will not be guaranteed or insured by the depositor or any of its affiliates
or, unless otherwise provided in the prospectus supplement, by any
governmental agency or instrumentality or by any other person. 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, which may be an affiliate of the depositor and may or may not be the
originator of the mortgage loan or the issuer of the CMBS.
Unless otherwise specified in the prospectus supplement, the certificates
will be entitled to payment only from the assets of the related trust fund
and will not be entitled to payments on the assets of any other trust fund
established by the depositor. If specified in the prospectus supplement, the
assets of a trust fund will consist of certificates representing beneficial
ownership interests in another trust fund that contains the mortgage assets.
MORTGAGE LOANS
General
The mortgage loans will be secured by liens on mortgaged properties
consisting of (i) multifamily properties which are residential properties
consisting of five or more rental or cooperatively owned dwelling units in
high-rise, mid-rise or garden apartment buildings or (ii) commercial
properties which are office buildings, retail centers, hotels or motels,
nursing homes, congregate care facilities, industrial properties,
mini-warehouse facilities or self-storage facilities, mobile home parks,
mixed use or other types of commercial properties located in any one of the
fifty states, the District of Columbia or the Commonwealth of Puerto Rico
and, if so specified in the related prospectus supplement, anywhere else in
the world. To the extent specified in the prospectus supplement, the mortgage
loans will be secured by first mortgages or deeds of trust or other similar
security instruments creating a first lien on the mortgaged property. A
multifamily property may include mixed commercial and residential structures
and may include apartment buildings owned by Cooperatives. The mortgaged
properties may include leasehold interests in properties, the title to which
is held by third party lessors. Each mortgage loan will be originated by an
originator who is a person other than the depositor. The prospectus
supplement will indicate if any originator is an affiliate of the depositor.
The mortgage loans will be evidenced by mortgage notes secured by mortgages
creating a lien on the mortgaged properties. Mortgage loans will generally
also be secured by an assignment of leases and rents and/or operating or
other cash flow guarantees relating to the mortgage loan.
Leases
To the extent specified in the prospectus supplement, the commercial
properties may be leased to lessees that occupy all or a portion of these
properties. Pursuant to a lease assignment, a mortgagor may assign its
rights, title and interest as lessor along with the income derived under each
lease to the mortgagee, while retaining a license to collect the rents for so
long as there is no default. If the mortgagor defaults, the license
terminates and the mortgagee or its agent is entitled to collect the rents
from the lessee for application to the monetary obligations of the mortgagor.
State law may limit or restrict the enforcement of the lease assignments by a
mortgagee until it takes possession of the mortgaged property and/or a
receiver is appointed. See "Certain Legal Aspects of the Mortgage Loans and
the Leases--Leases and Rents." Alternatively, to the extent specified in the
prospectus supplement, the mortgagor and the mortgagee may agree that
payments under leases are to be made directly to a servicer.
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To the extent described in the prospectus supplement, the leases may
require the lessees to pay rent that is sufficient in the aggregate to cover
all scheduled payments of principal and interest on the mortgage loans and,
in certain cases, their pro rata share of the operating expenses, insurance
premiums and real estate taxes associated with the mortgaged properties. Some
leases may require the mortgagor to bear costs associated with structural
repairs and/or the maintenance of the exterior or other portions of the
mortgaged property or provide for certain limits on the aggregate amount of
operating expenses, insurance premiums, taxes and other expenses that the
lessees are required to pay. If so specified in the prospectus supplement,
the lessees may be permitted to set off their rental obligations against the
obligations of the mortgagors under the leases. In those cases where payments
under the leases (net of any operating expenses by the mortgagors) are
insufficient to pay all of the scheduled principal and interest on the
mortgage loans, the mortgagors must rely on other income including security
deposits generated by the mortgaged property to make payments on the mortgage
loan. To the extent specified in the prospectus supplement, some commercial
properties may be leased entirely to one lessee. In such cases, absent the
availability of other funds, the mortgagor must rely entirely on rent paid by
such lessee in order for the mortgagor to pay all of the scheduled principal
and interest on the related commercial loan. To the extent specified in the
prospectus supplement, some leases may expire prior to the stated maturity of
the mortgage loan. In such cases, upon expiration of the leases the
mortgagors will have to look to alternative sources of income, including rent
payment by any new lessees or proceeds from the sale or refinancing of the
mortgaged property, to cover the payments of principal and interest due on
the mortgage loans unless the lease is renewed. As specified in the
prospectus supplement, some leases may provide that upon the occurrence of a
casualty affecting a mortgaged property, the lessee will have the right to
terminate its lease, unless the mortgagor, as lessor, is able to cause the
mortgaged property to be restored within a specified period of time. Some
leases may provide that it is the lessor's responsibility to restore the
mortgaged property after a casualty to its original condition. Some leases
may provide a right of termination to the lessee if a taking of a material or
specified percentage of the leased space in the mortgaged property occurs, or
if the access to the leased space is materially impaired.
Default and Loss Considerations with Respect to the Mortgage Loans
Mortgage loans secured by commercial and multifamily properties are
markedly different from owner-occupied single family mortgage loans. The
repayment of loans secured by commercial or multifamily properties is
typically dependent upon the successful operation of such property rather
than upon the liquidation value of the real estate. Unless otherwise
specified in the prospectus supplement, the mortgage loans will be
non-recourse loans, which means that the mortgagee may look only to the Net
Operating Income from the property for repayment of the mortgage debt, and
not to any other of the mortgagor's assets, in the event of the mortgagor's
default. Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important measure of the risk of
default on such a loan.
As the primary component of Net Operating Income, rental income (as well
as maintenance payments from tenant-stockholders of a Cooperative) is subject
to the vagaries of the applicable real estate market and/or business climate.
Properties typically leased, occupied or used on a short-term basis, such as
health care-related facilities, hotels and motels, and mini-warehouse and
self-storage facilities, tend to be affected more rapidly by changes in
market or business conditions than do properties leased, occupied or used for
longer periods, such as retail centers, office buildings and industrial
properties. Commercial loans may be secured by owner-occupied mortgaged
properties or mortgaged properties leased to a single tenant. Accordingly, a
decline in the financial condition of the mortgagor or single tenant, as
applicable, may have a disproportionately greater effect on the Net Operating
Income from such mortgaged properties than in the case of mortgaged
properties with multiple tenants.
Changes in the expense components of Net Operating Income due to the
general economic climate or economic conditions in a locality or industry
segment, such as increases in interest rates, real estate and personal
property tax rates and other operating expenses, including energy costs;
changes in governmental rules, regulations and fiscal policies, including
environmental legislation; and acts of God may also affect the risk of
default on the mortgage loan. In some cases, leases of mortgaged properties
may provide that the lessee rather than the mortgagor, is responsible for
payment of some or all of these expenses;
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however, because leases are also subject to default risks when a tenant's
income is insufficient to cover its rent and operating expenses, the
existence of such "net of expense" provisions will only temper, not
eliminate, the impact of expense increases on the performance of the mortgage
loan. See "--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily
properties and mobile home parks, which may be subject to state or local rent
control regulation and, in certain cases, restrictions on changes in use of
the property. Low-and moderate-income housing in particular may be subject to
legal limitations and regulations but, because of such regulations, may also
be less sensitive to fluctuations in market rents generally.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default of any loan, however, since other factors may
outweigh a high Debt Service Coverage Ratio. With respect to a balloon
mortgage loan, for example, the risk of default as a result of the
unavailability of a source of funds to finance the related balloon payment at
maturity on terms comparable to or better than those of the balloon mortgage
loans could be significant even though the related Debt Service Coverage
Ratio is high.
The liquidation value of any mortgaged property may be adversely affected
by risks generally incident to interests in real property, including declines
in rental or occupancy rates. Lenders generally use the Loan-to-Value Ratio
of a mortgage loan as a measure of risk of loss if a property must be
liquidated upon a default by the mortgagor.
Appraised values of income-producing properties may be 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 the date of appraisal), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or
upon an interpolation of the values derived from such methods. Each of these
appraisal methods presents analytical challenges. 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. Where more than one of these appraisal methods are used and create
significantly different results, or where a high Loan-to-Value Ratio
accompanies a high Debt Service Coverage Ratio (or vice versa), the analysis
of default and loss risks is even more difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish the multifamily and commercial
loans from single family mortgage loans and provide insight to the risks
associated with income-producing real estate, there is no assurance that such
factors will in fact be considered by the Originators of the multifamily and
commercial loans, or that, for any of the mortgage loans, they are complete
or relevant. See "Risk Factors." Net cash flow produced by a mortgaged
property may be inadequate to repay the mortgage loan," "Nonrecourse loans
limit the remedies available following a mortgagor default. Prepayments and
repurchases of the mortgage assets will affect the timing of your cashflow
and may affect your yield. The assets of the trust fund may not be sufficient
to pay your certificates. The servicer will have discretion to handle or
avoid obligor defaults in a manner which may be adverse to your interests.
Mortgagors of commercial loans are sophisticated and may take actions adverse
to your interests.
Mortgage Loan Information in Prospectus Supplements
Each prospectus supplement will contain information with respect to the
mortgage loans, including (i) the aggregate outstanding principal balance and
the largest, smallest and average outstanding principal balance of the
mortgage loans as of the applicable Cut-off Date, (ii) the type of property
securing the
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mortgage loans (e.g., multifamily property or commercial property and the
type of property in each such category), (iii) the weighted average (by
principal balance) of the original and remaining terms to maturity of the
mortgage loans, (iv) the earliest and latest origination date and maturity
date of the mortgage loans, (v) the weighted average (by principal balance)
of the Loan-to-Value Ratios at origination of the mortgage loans, (vi) the
mortgage interest rates or range of mortgage interest rates and the weighted
average mortgage interest rate borne by the mortgage loans, (vii) the state
or states in which most of the mortgaged properties are located, (viii)
information with respect to the prepayment provisions, if any, of the
mortgage loans, (ix) the weighted average retained interest, if any, (x) with
respect to ARM Loans, the index, the frequency of the adjustment dates, the
highest, lowest and weighted average note margin and pass-through margin, and
the maximum mortgage interest rate or monthly payment variation at the time
of any adjustment thereof and over the life of the ARM Loan and the frequency
of such monthly payment adjustments, (xi) the Debt Service Coverage Ratio
either at origination or as of a more recent date (or both) and (xii)
information regarding the payment characteristics of the mortgage loans,
including without limitation balloon payment and other amortization
provisions. The prospectus supplement will also contain certain information
available to the Depositor with respect to the provisions of leases and the
nature of tenants of the mortgaged properties and other information referred
to in a general manner under "--Mortgage Loans--Default and Loss
Considerations with Respect to the Mortgage Loans" above. If specific
information respecting the mortgage loans is not known to the Depositor at
the time the certificates are initially offered, more general information of
the nature described above will be provided in the prospectus supplement, and
specific information will be set forth in a report which will be available to
purchasers of the related certificates at or before the initial issuance
thereof and will be filed as part of a Current Report on Form 8-K with the
Securities and Exchange Commission within fifteen days after such initial
issuance.
Payment Provisions of the Mortgage Loans
Unless otherwise specified in the prospectus supplement, all of the
mortgage loans will (i) have original terms to maturity of not more than 40
years and (ii) provide for payments of principal, interest or both, on due
dates that occur monthly, quarterly or semi-annually or at such other
interval as is specified in the prospectus supplement. Each mortgage loan may
provide for no accrual of interest or for accrual of interest thereon at an
interest rate that is fixed over its term or that adjusts from time to time,
or that is partially fixed and partially floating, or that may be converted
from a floating to a fixed interest rate, or from a fixed to a floating
interest rate, from time to time pursuant to an election or as otherwise
specified on the related Mortgage Note, in each case as described in the
related prospectus supplement. Each mortgage loan may provide for scheduled
payments to maturity or payments that adjust from time to time to accommodate
changes in the mortgage interest rate or to reflect the occurrence of certain
events, and may provide for negative amortization or accelerated
amortization, in each case as described in the prospectus supplement. Each
mortgage loan may be fully amortizing or require a balloon payment due on its
stated maturity date, in each case as described in the prospectus supplement.
Each mortgage loan may contain a Lock-out Period and a Lock-out Date, or
require a Prepayment Premium in connection with a prepayment, in each case as
described in the prospectus supplement. In the event that holders of any
class or classes of certificates will be entitled to all or a portion of any
Prepayment Premiums collected in respect of the mortgage loans, the
prospectus supplement will specify the method or methods by which any such
amounts will be allocated. A mortgage loan may also contain provisions
entitling the mortgagee to Equity Participations, as described in the
prospectus supplement. In the event that holders of any class or classes of
certificates will be entitled to all or a portion of an Equity Participation,
the prospectus supplement will specify the terms and provisions of the Equity
Participation and the method or methods by which distributions in respect
thereof will be allocated among such certificates.
CMBS
Distributions of any principal or interest, as applicable, will be made on
CMBS on the dates specified in the prospectus supplement. The CMBS may be
issued in one or more classes with characteristics similar to the classes of
certificates described in this prospectus.
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Enhancement in the form of reserve funds, subordination or other forms of
credit support similar to that described for the certificates under
"Description of Credit Support" may be provided with respect to the CMBS. The
type, characteristics and amount of such credit support will be a function of
certain characteristics of the mortgage loans or underlying CMBS and other
factors and generally will be established for the CMBS on the basis of
requirements of either any rating agency that may have assigned a rating to
the CMBS or the initial purchasers of the CMBS.
The prospectus supplement for a series of certificates evidencing
interests in mortgage assets that include CMBS will specify, to the extent
available, (i) the aggregate approximate initial and outstanding principal
amount or notional amount, as applicable, and type of the CMBS to be included
in the trust fund, (ii) the original and remaining term to stated maturity of
the CMBS, if applicable, (iii) whether such CMBS is entitled only to interest
payments, only to principal payments or to both, (iv) the pass-through or
bond rate of the CMBS or formula for determining such rates, if any, (v) the
applicable payment provisions for the CMBS, including, but not limited to,
any priorities, payment schedules and subordination features, (vi) the
related issuer, servicer and trustee, as applicable, (vii) certain
characteristics of the credit support, if any, such as subordination, reserve
funds, insurance policies, letters of credit or guarantees relating to the
underlying mortgage loans, the underlying CMBS or directly to such CMBS,
(viii) the terms on which the underlying mortgage loans or underlying CMBS or
the CMBS may, or are required to, be purchased prior to their maturity, (ix)
the terms on which mortgage loans or underlying CMBS may be substituted for
those originally underlying the CMBS, (x) the servicing fees payable under
the related servicing agreement, (xi) to the extent available to the
depositor, the type of information in respect of the underlying mortgage
loans described under "--Mortgage Loans--Mortgage Loan Information in
Prospectus Supplements" above, and the type of information in respect of the
CMBS described in this paragraph, (xii) the characteristics of any cash flow
agreements that are included as part of the trust fund evidenced or secured
by the CMBS and (xiii) whether the CMBS is in certificated form, book-entry
form or held through a depository such as The Depository Trust Company or the
Participants Trust Company.
ACCOUNTS
Each trust fund will include one or more accounts established and
maintained on behalf of the certificateholders into which the person or
persons designated in the prospectus supplement will deposit all payments and
collections received or advanced with respect to the mortgage assets and
other assets in the trust fund. Such an account may be maintained as an
interest bearing or a non-interest bearing account, and funds held therein
may be held as cash or reinvested. See "Description of the Agreement --
Distribution account and Other Collection Accounts."
CREDIT SUPPORT
If so provided in the prospectus supplement, partial or full protection
against some types of defaults and losses on the trust assets in the related
trust fund may be provided to one or more classes of certificates in the
related series in the form of subordination of one or more other classes of
certificates in the series or by one or more other types of credit support,
such as a letter of credit, insurance policy, guarantee, reserve fund or
another type of credit support, or a combination thereof. The amount and
types of coverage, the identification of the entity providing the coverage
(if applicable) and related information with respect to each type of credit
support, if any, will be described in the prospectus supplement for each
series of certificates. See "Risk Factors--Credit support may not cover
losses or risks which could adversely affect payment on your certificates"
and "Description of Credit Support."
CASH FLOW AGREEMENTS
If so provided in the related prospectus supplement, the trust fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related series will be invested at a
specified rate. The trust fund may also include certain other agreements,
such as interest rate exchange agreements, interest rate cap or floor
agreements, currency exchange agreements or similar agreements provided to
reduce the effects of interest rate or currency exchange rate
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fluctuations on the mortgage assets or 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 prospectus supplement for the related series. In
addition, the related prospectus supplement will provide certain information
with respect to the obligor under any such cash flow agreement.
USE OF PROCEEDS
The net proceeds to be received from the sale of the certificates will be
applied by the depositor to the purchase of trust assets and to pay for
certain expenses incurred in connection with such purchase of trust assets
and sale of certificates. 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.
YIELD CONSIDERATIONS
GENERAL
The yield on any offered certificate will depend on the price paid by the
certificateholder, the Pass-Through Rate of the certificate, the receipt and
timing of receipt of distributions on the certificate and the weighted
average life of the mortgage assets in the related trust fund (which may be
affected by prepayments, defaults, liquidations or repurchases). See "Risk
Factors."
PASS-THROUGH RATE
Certificates of any class within a series may have fixed, variable or
floating Pass-Through Rates, which may or may not be based upon the interest
rates borne by the mortgage assets 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 certificates or, in the case of a
variable or floating Pass-Through Rate, the method of determining the
Pass-Through Rate; the effect, if any, of the prepayment of any mortgage
asset on the Pass-Through Rate of one or more classes of certificates; and
whether the distributions of interest on the certificates of any class will
be dependent, in whole or in part, on the performance of any obligor under a
cash flow agreement.
The effective yield to maturity to each holder of certificates entitled to
payments of interest will be below that otherwise produced by the applicable
Pass-Through Rate and purchase price of such certificate because, while
interest may accrue on each mortgage asset during a certain period, the
distribution of such interest will be made on a day which may be several
days, weeks or months following the period of accrual.
TIMING OF PAYMENT OF INTEREST
Each payment of interest on the certificates (or addition to the
certificate balance of a class of Accrual Certificates) on a distribution
date will include interest accrued during the interest accrual period for
such distribution date. As indicated above under "The Pass-Through Rate," if
the interest accrual period ends on a date other than a distribution date for
the related series, the yield realized by the holders of such certificates
may be lower than the yield that would result if the interest accrual period
ended on a distribution date. In addition, if so specified in the prospectus
supplement, interest accrued for an interest accrual period for one or more
classes of certificates may be calculated on the assumption that
distributions of principal (and additions to the certificate balance of
Accrual Certificates) and allocations of losses on the mortgage assets may be
made on the first day of the interest accrual period for a distribution date
and not on the distribution date. Such method would produce a lower effective
yield than if interest were calculated on the basis of the actual principal
amount outstanding during an interest accrual period. The interest accrual
period for any class of offered certificates will be described in the
prospectus supplement.
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PAYMENTS OF PRINCIPAL; PREPAYMENTS
The yield to maturity on the certificates will be affected by the rate of
principal payments on the mortgage assets (including principal prepayments on
mortgage loans resulting from voluntary prepayments by the mortgagors,
insurance proceeds, condemnations and involuntary liquidations). Such
payments may be directly dependent upon the payments on leases underlying the
mortgage loans. The rate at which principal prepayments occur on the mortgage
loans will be affected by a variety of factors, including, without
limitation, the terms of the mortgage loans, the level of prevailing interest
rates, the availability of mortgage credit and economic, demographic,
geographic, tax, legal and other factors. In general, however, if prevailing
interest rates fall significantly below the mortgage interest rates on the
mortgage loans comprising or underlying the mortgage assets in a particular
trust fund, the mortgage loans are likely to be the subject of higher
principal prepayments than if prevailing rates remain at or above the rates
borne by the mortgage loans. In this regard, it should be noted that some
mortgage assets may consist of mortgage loans with different mortgage
interest rates and the stated pass-through or pay-through interest rate of
some CMBS may be a number of percentage points higher or lower than certain
of the underlying mortgage loans. The rate of principal payments on some or
all of the classes of certificates of a series will correspond to the rate of
principal payments on the mortgage assets in the related trust fund and is
likely to be affected by the existence of Lock-out Periods and Prepayment
Premium provisions of the mortgage loans underlying or comprising the
mortgage assets, and by the extent to which the servicer of any mortgage loan
is able to enforce these provisions. Mortgage loans with a Lock-out Period or
a Prepayment Premium provision, to the extent enforceable, generally would be
expected to experience a lower rate of principal prepayments than otherwise
identical mortgage loans without such provisions, with shorter Lock-out
Periods or with lower Prepayment Premiums.
If the purchaser of a certificate offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is faster than the rate actually experienced on the mortgage
assets, the actual yield to maturity will be lower than the rate thus
calculated. Conversely, if the purchaser of a certificate offered at a
premium calculates its anticipated yield to maturity based on an assumed rate
of distributions of principal that is slower than the rate actually
experienced on the mortgage assets, the actual yield to maturity will be
higher than that so calculated. In either case, if so provided in the
prospectus supplement for a series of certificates, the effect on yield on
one or more classes of the series of prepayments of the mortgage assets in
the related trust fund may be mitigated or exacerbated by any provisions for
sequential or selective distribution of principal to these classes.
When a full prepayment is made on a mortgage loan, the mortgagor is
charged interest on the principal amount of the mortgage loan prepaid for the
number of days in the month actually elapsed up to the date of the
prepayment. Unless otherwise specified in the prospectus supplement, the
effect of prepayments in full will be to reduce the amount of interest paid
in the following month to holders of certificates entitled to payments of
interest because interest on the principal amount of any mortgage loan so
prepaid will be paid only to the date of prepayment rather than for a full
month. Unless otherwise specified in the prospectus supplement, a partial
prepayment of principal is applied so as to reduce the outstanding principal
balance of the related mortgage loan as of the due date in the month in which
such partial prepayment is received. As a result, unless otherwise specified
in the prospectus supplement, the effect of a partial prepayment on a
mortgage loan will be to reduce the amount of interest passed through to
holders of certificates in the month following the receipt of partial
prepayment by an amount equal to one month's interest at the applicable
Pass-Through Rate on the prepaid amount.
The timing of changes in the rate of principal payments on the mortgage
assets may significantly affect an investor's actual yield to maturity, even
if the average rate of distributions of principal is consistent with an
investor's expectation. In general, the earlier a principal payment is
received on the mortgage assets and distributed on a certificate, the greater
the effect on such investor's yield to maturity. The effect on an investor's
yield of principal payments occurring at a rate higher (or lower) than the
rate anticipated by the investor during a given period may not be offset by a
subsequent like decrease (or increase) in the rate of principal payments.
PREPAYMENTS--MATURITY AND WEIGHTED AVERAGE LIFE
The rates at which principal payments are received on the mortgage assets
included in a trust fund and the rate at which payments are made from any
credit support or cash flow agreement for a series of
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certificates may affect the ultimate maturity and the weighted average life
of each class of such certificates. Prepayments on the mortgage loans
comprising or underlying the mortgage assets in a particular trust fund will
generally accelerate the rate at which principal is paid on some or all of
the classes of the certificates.
If so provided in the prospectus supplement for a series of certificates,
one or more classes of certificates may have a final scheduled distribution
date, which is the date on or prior to which the certificate balance thereof
is scheduled to be reduced to zero, calculated on the basis of the
assumptions applicable to the Series.
Weighted average life refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
such security will be repaid to the investor. The weighted average life of a
class of certificates of a series will be influenced by the rate at which
principal on the mortgage loans comprising or underlying the mortgage assets
is paid to such class, which may be in the form of scheduled amortization or
prepayments.
In addition, the weighted average life of the certificates may be affected
by the varying maturities of the mortgage loans comprising or underlying the
CMBS. If any mortgage loans comprising or underlying the mortgage assets in a
particular trust fund have actual terms to maturity of less than those
assumed in calculating final scheduled distribution dates for the classes of
certificates of the related series, one or more classes of certificates may
be fully paid prior to their respective final scheduled distribution dates,
even in the absence of prepayments. Accordingly, the prepayment experience of
the mortgage assets will, to some extent, be a function of the mix of
mortgage interest rates and maturities of the mortgage loans comprising or
underlying the mortgage assets. See "Description of the Trust Funds."
Prepayments on loans are also commonly measured relative to a prepayment
standard or model such as CPR, a constant prepayment rate model. Neither CPR
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 pool of loans, including the mortgage loans underlying
or comprising the mortgage assets. Moreover, CPR was developed based upon
historical prepayment experience for single family loans. Thus, it is likely
that prepayment of any mortgage loans comprising or underlying the mortgage
assets for any series will not conform to any particular level of CPR.
The depositor is not aware of any meaningful publicly available prepayment
statistics for multifamily or commercial mortgage loans.
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 the series 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 the prospectus supplement, including assumptions that prepayments on the
mortgage loans comprising or underlying the related mortgage assets are made
at rates corresponding to various percentages of CPR or at such other rates
specified in the prospectus supplement. Such tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
certificates to various prepayment rates and will not be intended to predict
or to provide information that will enable investors to predict the actual
weighted average life of the certificates. It is unlikely that prepayment of
any mortgage loans comprising or underlying the mortgage assets for any
series will conform to any particular level of CPR or any other rate
specified in the related prospectus supplement.
OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
Type of Mortgage Asset
A number of mortgage loans may have balloon payments due at maturity, and
because the ability of a mortgagor to make a balloon payment typically will
depend upon its ability either to refinance the loan or to sell the mortgaged
property, there is a risk that a number of mortgage loans having balloon
payments may default at maturity, or that the servicer may extend the
maturity of such a mortgage loan in
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connection with a workout. In the case of defaults, recovery of proceeds may
be delayed by, among other things, bankruptcy of the mortgagor or adverse
conditions in the market where the property is located. In order to minimize
losses on defaulted mortgage loans, the servicer may, to the extent and under
the circumstances set forth in the prospectus supplement be permitted 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 will tend to extend the weighted average life of
the certificates, thereby lengthening the period of time elapsed from the
date of issuance of a certificate until it is retired.
Foreclosures and Payment Plans
The number of foreclosures and the principal amount of the mortgage loans
comprising or underlying the mortgage assets 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 life of the
mortgage loans and that of the related series of certificates. 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, may also have an effect upon the
payment patterns of particular mortgage loans and thus the weighted average
life of the certificates.
Due-on-Sale and Due-on-Encumbrance Clauses
Acceleration of mortgage payments as a result of certain transfers of or
the creation of encumbrances upon the underlying mortgaged property is
another factor affecting prepayment rates that may not be reflected in the
prepayment standards or models used in the relevant prospectus supplement. A
number of the mortgage loans comprising or underlying the mortgage assets may
include "due-on-sale" clauses or "due-on-encumbrance" clauses that allow the
holder of the mortgage loans to demand payment in full of the remaining
principal balance of the mortgage loans upon sale or certain other transfers
of or the creation of encumbrances upon the mortgaged property. With respect
to any whole loans, unless otherwise provided in the prospectus supplement,
the master servicer, on behalf of the trust fund, will be required to
exercise (or waive its right to exercise) any right that the trustee may have
as mortgagee to accelerate payment of the whole loan in a manner consistent
with the Servicing Standard. See "Certain Legal Aspects of the Mortgage Loans
and the Leases--Due-on-Sale and Due-on-Encumbrance" and "Description of the
Agreements--Due-on-Sale and Due-on-Encumbrance Provisions."
Single Mortgage Loan or Single Mortgagor
The mortgage assets in a particular trust fund may consist of a single
mortgage loan or obligations of a single mortgagor or related mortgagors as
specified in the related prospectus supplement. Assumptions used with respect
to the prepayment standards or models based upon analysis of the behavior of
mortgage loans in a larger group will not necessarily be relevant in
determining prepayment experience on a single mortgage loan or with respect
to a single mortgagor.
THE DEPOSITOR
J.P. Morgan Commercial Mortgage Finance Corp., the depositor, is an
indirect wholly-owned subsidiary of J.P. Morgan & Co. Incorporated and was
incorporated in the State of Delaware on September 19, 1994. The principal
executive offices of the Depositor are located at 60 Wall Street, New York,
New York 10260-0060. Its telephone number is (212) 648-3636.
The depositor does not have, nor is it expected in the future to have, any
significant assets.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The certificates of each series (including any class of certificates not
offered hereby) will represent the entire beneficial ownership interest in
the trust fund created pursuant to the related agreement. Each series of
certificates will consist of one or more classes of certificates that may (i)
provide for the accrual of interest based on fixed, variable or floating
rates; (ii) include senior certificates or subordinate certificates; (iii)
Stripped Principal Certificates; (iv) Stripped Interest Certificates; (v)
Accrual Certificates; (vi) provide for payments of principal sequentially,
based on specified payment schedules, from only a portion of the trust assets
in the trust fund or based on specified calculations, to the extent of
available funds, in each case as described in the related prospectus
supplement; and/or (vii) provide for distributions based on a combination of
two or more components thereof with one or more of the characteristics
described in this paragraph including a Stripped Principal Certificate
component and a Stripped Interest Certificate component. Any such classes may
include classes of offered certificates.
Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the certificate balances or, in case of
Stripped Interest Certificates, notional amounts or percentage interests
specified in the related prospectus supplement. The transfer of any offered
certificates may be registered and such certificates may be exchanged without
the payment of any service charge payable in connection with the registration
of a transfer or exchange, but the Depositor or the trustee or any agent
thereof may require payment of a sum sufficient to cover any tax or other
governmental charge. One or more classes of certificates of a series may be
issued as physical certificates or as book-entry certificates, as provided in
the related prospectus supplement. See "Description of the
Certificates--Book-Entry Registration and Physical Certificates." Physical
certificates will be exchangeable for other certificates of the same class
and series of a like aggregate certificate balance, notional amount or
percentage interest but of different authorized denominations. See "Risk
Factors--Your ability to resell certificates may be limited because of their
characteristics" and "The assets of the trust fund may not be sufficient to
pay your certificates."
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the trustee on each distribution date as specified in the related
prospectus supplement from the Available Distribution Amount for such series
and such distribution date. Except as otherwise specified in the prospectus
supplement, distributions (other than the final distribution) will be made to
the persons in whose names the certificates are registered at the close of
business on a record date specified in the prospectus supplement, and the
amount of each distribution will be determined as of the close of business on
the determination date specified in the 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 the
class or by random selection, as described in the prospectus supplement or
otherwise established by the trustee. 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 so notified the trustee or other person required to
make such payments no later than the date specified in the prospectus
supplement (and, if so provided in the prospectus supplement, holds
certificates in the requisite amount specified therein), or by check mailed
to the address of the person entitled to such payments as it appears on the
certificate register; provided, however, that the final distribution in
retirement of the certificates (whether physical certificates or book-entry
certificates) will be made only upon presentation and surrender of the
certificates at the location specified in the notice to certificateholders of
such final distribution.
AVAILABLE DISTRIBUTION AMOUNT
All distributions on the certificates of each series on each distribution
date will be made from the Available Distribution Amount, in accordance with
the terms described in the prospectus supplement. Unless provided otherwise
in the prospectus supplement, the Available Distribution Amount for each
distribution date equals the sum of the following amounts:
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(i) the total amount of all cash on deposit in the related distribution
account as of the corresponding determination date, including servicer
advances, net of any scheduled payments due and payable after the
distribution date;
(ii) interest or investment income on amounts on deposit in the
distribution account, including any net amounts paid under any cash flow
agreements; and
(iii) to the extent not on deposit in the related Distribution account as
of the corresponding Determination Date, any amounts collected under, from
or in respect of any credit support with respect to the distribution date.
As described below, the entire Available Distribution Amount will be
distributed among the related certificates (including any certificates not
offered hereby) on each distribution date, and accordingly will be released
from the trust fund and will not be available for any future distributions.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates may have a different Pass-Through Rate. The
prospectus supplement will specify the Pass-Through Rate for each class or
component or, in the case of a variable or floating Pass-Through Rate, the
method for determining the Pass-Through Rate. Unless otherwise specified in
the related supplement, interest on the certificates will be calculated on
the basis of a 360-day year consisting of twelve 30-day months.
Distributions of interest in respect of the certificates of any class will
be made on each distribution date (other than any 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 any class of Stripped
Principal Certificates that are not entitled to any distributions of
interest) based on the Accrued Certificate Interest for that class and
distribution date, subject to the sufficiency of the portion of the available
distribution amount allocable to the class on the distribution date. Prior to
the time interest is distributable on any class of Accrual Certificates, the
amount of Accrued Certificate Interest otherwise distributable on the class
will be added to the certificate balance thereof on each distribution date.
With respect to each class of certificates and each distribution date (other
than certain classes of Stripped Interest Certificates), the Accrued
Certificate Interest will be equal to interest accrued for a specified period
on the outstanding certificate balance thereof immediately prior to the
distribution date, at the applicable Pass-Through Rate, reduced as described
below. Unless otherwise provided in the prospectus supplement, the Accrued
Certificate Interest on Stripped Interest Certificates will be equal to
interest accrued for a specified period on the outstanding notional amount
thereof immediately prior to each distribution date, at the applicable
Pass-Through Rate, reduced as described below. The method of determining the
notional amount for any class of Stripped Interest Certificates will be
described in the related prospectus supplement. Reference to notional amount
is solely for convenience in certain calculations and does not represent the
right to receive any distributions of principal. Unless otherwise provided in
the prospectus supplement, the Accrued Certificate Interest on a series of
certificates will be reduced in the event of prepayment interest shortfalls,
which are shortfalls in collections of interest for a full accrual period
resulting from prepayments prior to the due date in the accrual period on the
mortgage loans comprising or underlying the mortgage assets in the trust fund
for the series. The particular manner in which such shortfalls are to be
allocated among some or all of the classes of certificates of that series
will be specified in the prospectus supplement.
The 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 loans comprising or
underlying the mortgage assets in the trust fund. Unless otherwise provided
in the prospectus supplement, any reduction in the amount of the Accrued
Certificate Interest otherwise distributable on a class of certificates by
reason of the allocation to that class of a portion of any deferred
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interest on the mortgage loans comprising or underlying the mortgage assets
in the trust fund will result in a corresponding increase in the certificate
balance of the class. See "Risk Factors--Prepayments and repurchases of the
mortgage assets will affect the timing of your cash flow and may affect your
yield."
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
The certificates of each series, other than certain classes of Stripped
Interest Certificates, will have a certificate balance which, at any time,
will equal the then maximum amount that the holder will be entitled to
receive in respect of 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 certificate will be reduced to the extent of
distributions of principal thereon from time to time and, if and to the
extent so provided in the prospectus supplement, by the amount of losses
incurred in respect of the related mortgage assets. The certificate balance
may be increased in respect of deferred interest on the mortgage loans to the
extent provided in the prospectus supplement and, in the case of Accrual
Certificates prior to the distribution date on which distributions of
interest are required to commence, will be increased by any Accrued
Certificate Interest. Unless otherwise provided in the prospectus supplement,
the initial aggregate certificate balance of all classes of certificates of a
series will not be greater than the outstanding aggregate principal balance
of the related mortgage assets as of the applicable Cut-off Date. The initial
aggregate certificate balance of a series and each class thereof will be
specified in the prospectus supplement. Unless otherwise provided in the
prospectus supplement, distributions of principal will be made on each
distribution date to the class or classes of certificates entitled thereto in
accordance with the provisions described in the prospectus supplement until
the certificate balance of that class has been reduced to zero. Stripped
Interest Certificates with no certificate balance are not entitled to any
distributions of principal.
COMPONENTS
To the extent specified in the prospectus supplement, distribution on a
class of certificates may be based on a combination of two or more different
components as described under "General" above. To that extent, the
descriptions set forth under "Distributions of Interests on the Certificates"
and "Distributions of Principal of the Certificates" above also relate to
components of such a class of certificates. In such case, reference in those
sections to certificate balance and Pass-Through Rate refer to the principal
balance, if any, of any of the components and the Pass-Through Rate, if any,
on any component, respectively.
DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS OR IN RESPECT OF
EQUITY PARTICIPATIONS
If so provided in the prospectus supplement, Prepayment Premiums or
payments in respect of Equity Participations that are collected on the
mortgage assets in the trust fund will be distributed on each distribution
date to the class or classes of certificates entitled thereto in accordance
with the provisions described in the prospectus supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
If 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, the amount of such losses or
shortfalls will be borne first by a class of subordinate certificates in the
priority and manner and subject to the limitations specified in the
prospectus supplement. See "Description of Credit Support" for a description
of the types of protection that may be included in shortfalls on mortgage
assets comprising the trust fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the prospectus supplement, a
servicer or another entity described therein will be required as part of its
servicing responsibilities to advance on or before each distribution date its
own funds or funds held in the distribution account that are not included in
the Available Distribution Amount for such
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distribution date, in an amount equal to the aggregate of payments of
principal (other than any balloon payments) and interest (net of related
servicing fees and Retained Interest) that were due on the whole loans in the
trust fund and were delinquent on the related determination date, subject to
the servicer's (or another entity's) good faith determination that such
advances will be reimbursable from the loan proceeds. In the case of a series
of certificates that includes one or more classes of subordinate certificates
and if so provided in the prospectus supplement, each servicer's (or another
entity's) advance obligation may be limited only to the portion of such
delinquencies necessary to make the required distributions on one or more
classes of senior certificates and/or may be subject to the servicer's (or
another entity's) good faith determination that such advances will be
reimbursable not only from the loan proceeds but also from collections on
other trust assets otherwise distributable on one or more classes of
Subordinate Certificates. See "Description of Credit Support."
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. Unless
otherwise provided in the prospectus supplement, advances of a servicer's (or
another entity's) funds will be reimbursable only out of recoveries on the
mortgage loans (including amounts received under any form of credit support)
respecting which advances were made and, if so provided in the prospectus
supplement, out of any amounts otherwise distributable on one or more classes
of subordinate certificates of such series; provided, however, that any
advance will be reimbursable from any amounts in the distribution account
prior to any distributions being made on the certificates to the extent that
a servicer (or such other entity) shall determine in good faith that such
advance is not ultimately recoverable from the Related Proceeds or, if
applicable, from collections on other trust assets otherwise distributable on
the Subordinate Certificates. If advances have been made by a servicer from
excess funds in the Distribution account, the servicer is required to replace
such funds in the Distribution account on any future distribution date to the
extent that funds in the Distribution account on that distribution date are
less than payments required to be made to certificateholders on such date. If
so specified in the prospectus supplement, the obligations of a servicer (or
another entity) to make advances may be secured by a cash advance reserve
fund, a surety bond, a letter of credit or another form of limited guaranty.
If applicable, information regarding the characteristics of, and the identity
of any obligor on, any such surety bond, will be set forth in the prospectus
supplement.
If and to the extent so provided in the prospectus supplement, a servicer
(or another entity) will be entitled to receive interest at the rate
specified therein on its outstanding advances and will be entitled to pay
itself such interest periodically from general collections on the trust
assets prior to any payment to certificateholders or as otherwise provided in
the related agreement and described in the prospectus supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes CMBS will describe any corresponding
advancing obligation of any person in connection with such CMBS.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise provided in the prospectus supplement, with each
distribution to holders of any class of certificates of a series, the master
servicer or the trustee, as provided in the prospectus supplement, will
forward to each certificateholder, to the Depositor and to such other parties
as may be specified in the related agreement, a statement setting forth, in
each case to the extent applicable and available:
(i) the amount of the distribution to holders of certificates of such
class applied to reduce the certificate balance thereof;
(ii) the amount of the distribution to holders of certificates of such
class allocable to Accrued Certificate Interest;
(iii) the amount of the distribution allocable to (a) Prepayment Premiums
and (b) payments on account of Equity Participations;
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(iv) the amount of related servicing compensation received by each
servicer and such other customary information as any such master servicer
or the trustee deems necessary or desirable, or that a certificateholder
reasonably requests, to enable certificateholders to prepare their tax
returns;
(v) the aggregate amount of advances included in the distribution, and
the aggregate amount of any unreimbursed advances at the close of business
on the distribution date;
(vi) the aggregate principal balance of the mortgage assets at the close
of business on the distribution date;
(vii) the number and aggregate principal balance of whole loans in
respect of which (a) one scheduled payment is delinquent, (b) two
scheduled payments are delinquent, (c) three or more scheduled payments
are delinquent and (d) foreclosure proceedings have been commenced;
(viii) with respect to each whole loan that is delinquent two or more
months, (a) the loan number, (b) the unpaid balance, (c) whether the
delinquency is in respect of any balloon payment, (d) the aggregate amount
of unreimbursed servicing expenses and unreimbursed advances, (e) if
applicable, the aggregate amount of any interest accrued and payable on
related servicing expenses and related advances assuming such mortgage
loan is subsequently liquidated through foreclosure, (f) whether a notice
of acceleration has been sent to the mortgagor and, if so, the date of
such notice, (g) whether foreclosure proceedings have been commenced and,
if so, the date so commenced and (h) if such mortgage loan is more than
three months delinquent and foreclosure has not been commenced, the reason
therefor;
(ix) with respect to any whole loan liquidated during the related Due
Period (other than by payment in full), (a) the loan number, (b) the
manner in which it was liquidated and (c) the aggregate amount of
liquidation proceeds received;
(x) with respect to any whole loan liquidated during the related Due
Period, (a) the portion of such liquidation proceeds payable or
reimbursable to each servicer (or any other entity) in respect of the
mortgage loan and (b) the amount of any loss to certificateholders;
(xi) with respect to each REO Property relating to a whole loan and
included in the trust fund as of the end of a reporting period, (a) the
loan number of the related mortgage loan and (b) the date of acquisition;
(xii) with respect to each REO Property relating to a whole loan and
included in the trust fund as of the end of a reporting period, (a) the
fair market value based on the most recent appraisal obtained by a
servicer, (b) the principal balance of the related mortgage loan
immediately following such distribution date (calculated as if such
mortgage loan were still outstanding taking into account certain limited
modifications to the terms thereof specified in the agreement), (c) the
aggregate amount of unreimbursed servicing expenses and unreimbursed
advances and (d) if applicable, the aggregate amount of interest accrued
and payable on related servicing expenses and related advances;
(xiii) with respect to any REO Property sold during a reporting period
(a) the loan number of the related mortgage loan, (b) the aggregate amount
of sale proceeds, (c) the portion of the sales proceeds payable or
reimbursable to each servicer in respect of such REO Property or the
related mortgage loan and (d) the amount of any loss to certificateholders
in respect of the related mortgage loan;
(xiv) the aggregate certificate balance or notional amount, as the case
may be, of each class of certificates (including any class of certificates
not offered hereby) at the close of business on the distribution date,
separately identifying any reduction in the certificate balance due to the
allocation of any loss and increase in the certificate balance of a class
of Accrual Certificates in the event that Accrued Certificate Interest has
been added to such balance;
(xv) the aggregate amount of principal prepayments made during a
reporting period;
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(xvi) the aggregate Accrued Certificate Interest and unpaid Accrued
Certificate Interest, if any, on each class of certificates at the close
of business on the distribution date;
(xvii) in the case of certificates with a variable Pass-Through Rate, the
Pass-Through Rate applicable to the distribution date, and, if available,
the immediately succeeding distribution date, as calculated in accordance
with the method specified in the prospectus supplement;
(xviii) in the case of certificates with a floating Pass-Through Rate,
for statements to be distributed in any month in which an adjustment date
occurs, the floating Pass-Through Rate applicable to such distribution
date and the immediately succeeding distribution date as calculated in
accordance with the method specified in the prospectus supplement;
(xix) as to any series which includes credit support, the amount of
coverage of each instrument of credit support included therein as of the
close of business on such distribution date; and
(xx) the aggregate amount of payments by the mortgagors of (a) default
interest, (b) late charges and (c) assumption and modification fees
collected during the related Due Period.
In the case of information furnished pursuant to subclauses (i)-(iv)
above, the amounts shall be expressed as a dollar amount per minimum
denomination of certificates or for such other specified portion thereof. In
addition, in the case of information furnished pursuant to subclauses (i),
(ii), (xiv), (xvi) and (xvii) above, such amounts shall also be provided with
respect to each component, if any, of a class of certificates. The master
servicer or the trustee, as specified in the prospectus supplement, will
forward to each holder and to the depositor, a copy of any statements or
reports received by the master servicer or the trustee, as applicable, with
respect to any CMBS. The prospectus supplement for each series of offered
certificates will describe any additional information to be included in
reports to the holders of such certificates.
Within a reasonable period of time after the end of each calendar year,
the master servicer or the trustee, as provided in the prospectus supplement,
shall furnish to each person who at any time during the calendar year was a
holder of a certificate a statement containing the information set forth in
subclauses (i)-(iv) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a certificateholder.
This obligation of the master servicer or the trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be provided by the master servicer or the trustee pursuant to any
requirements of the Internal Revenue Code as are from time to time in force.
Unless and until physical certificates are issued, or unless otherwise
provided in the prospectus supplement, such statements or reports will be
forwarded by the master servicer or the trustee to Cede & Co Such statements
or reports may be available to beneficial owners upon request to DTC or their
respective participant or indirect participant. In addition, the trustee
shall furnish a copy of any such statement or report to any beneficial owner
who requests a copy and certifies to the trustee or the master servicer, as
applicable, that he or she is the beneficial owner of a certificate. See
"Description of the Certificates--Book-Entry Registration and Physical
certificates."
TERMINATION
The obligations created by the agreements for each series of certificates
will terminate upon the payment to certificateholders of that series of all
amounts held in the Distribution account or by any servicer, if any, or the
trustee and required to be paid to them pursuant to those agreements
following the earlier of (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 whole loan subject thereto and (ii) the
purchase of all of the assets of the trust fund by the party entitled to
effect such termination, under the circumstances and in the manner set forth
in the prospectus supplement. In no event, however, will the trust created by
the agreements continue beyond the date specified in the prospectus
supplement. Written notice of termination of the agreements will be given to
each certificateholder, and the final distribution will be made only upon
presentation and surrender of the certificates at the location to be
specified in the notice of termination.
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If so specified in the prospectus supplement, a series of certificates may
be subject to optional early termination through the repurchase of the assets
in the related trust fund by the party specified therein, under the
circumstances and in the manner set forth therein. If so provided in the
prospectus supplement, upon the reduction of the certificate balance of a
specified class or classes of certificates by a specified percentage or
amount, the party specified therein will solicit bids for the purchase of all
assets of the trust fund, or of a sufficient portion of such assets to retire
such class or classes or purchase such class or classes at a price set forth
in the prospectus supplement, in each case, under the circumstances and in
the manner set forth therein.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the prospectus supplement, one or more classes of the
offered certificates of any series will be issued as book-entry certificates,
and each such class will be represented by one or more single certificates
registered in the name of a nominee for DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code ("UCC") and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participating organizations and facilitate the clearance
and settlement of securities transactions between participants through
electronic book-entry changes in their accounts, thereby eliminating the need
for physical movement of certificates. Participants include J.P. Morgan
Securities Inc., securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. 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.
Unless otherwise provided in the prospectus supplement, investors that are
not participants or indirect participants but desire to purchase, sell or
otherwise transfer ownership of, or other interests in Book-Entry
Certificates may do so only as beneficial owners, that is, through
participants and indirect participants. In addition, such beneficial owners
will receive all distributions on the Book-Entry Certificates through DTC and
its participants. Under a book-entry format, beneficial owners will receive
payments after the related distribution date because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each such date DTC
will forward payments to its participants which thereafter will be required
to forward them to indirect participants or beneficial owners. Unless
otherwise provided in the prospectus supplement, the only certificateholder
will be Cede & Co., as nominee of DTC, and the beneficial owners will not be
recognized by the trustee as certificateholders under the agreements.
Beneficial owners will be permitted to exercise the rights of
certificateholders under the related agreements only indirectly through the
participants who in turn will exercise their rights through DTC. Under the
rules, regulations and procedures creating and affecting DTC and its
operations, DTC is required to make book-entry transfers among participants
on whose behalf it acts with respect to the Book-Entry Certificates and is
required to receive and transmit distributions of principal of and interest
on the Book-Entry Certificates. Participants and indirect participants with
which beneficial owners have accounts with respect to the Book-Entry
Certificates similarly are required to make book-entry transfers and receive
and transmit such payments on behalf of their respective beneficial owners.
Because DTC can act only on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a
beneficial owner to pledge its interest in the 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 the Book-Entry Certificates, may
be limited due to the lack of a physical certificate evidencing such
interest.
DTC has advised the depositor that it will take any action permitted to be
taken by a certificateholder under an agreement only at the direction of one
or more participants to whose account with DTC interests in the Book-Entry
Certificates are credited. Under DTC's procedures, DTC will take actions
permitted to be taken by holders of any class of Book-Entry Certificates
under the pooling and servicing agreement only at the direction of one or
more participants to whose account the Book-Entry Certificates are
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credited and whose aggregate holdings represent no less than any minimum
amount of voting rights required therefor. Therefore, beneficial owners will
only be able to exercise their voting rights to the extent permitted, and
subject to the procedures established, by their participant and/or indirect
participant, as applicable. DTC may take conflicting actions with respect to
any action of certificateholders of any class to the extent that participants
authorize such actions. None of the servicers, the depositor, the trustee or
any of their respective affiliates will have any liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the Book-Entry Certificates, or for maintaining, supervising or
reviewing any records relating to those beneficial ownership interests.
Unless otherwise specified in the prospectus supplement, physical
certificates that are initially issued in book-entry form will be issued in
fully registered, certificated form to beneficial 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 properly
discharge its responsibilities as depository with respect to the 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.
Upon the occurrence of either of the events described in the immediately
preceding paragraph, DTC is required to notify all participants of the
availability through DTC of physical certificates for the beneficial owners.
Upon surrender by DTC of the certificate or certificates representing the
Book-Entry Certificates, together with instructions for reregistration, the
trustee will issue to the beneficial owners identified in the instructions
the physical certificates to which they are entitled, and thereafter the
trustee will recognize the holders of such physical certificates as
certificateholders under the agreement.
DESCRIPTION OF THE AGREEMENTS
The certificates of each series evidencing interests in a trust fund
including whole loans will be issued pursuant to a pooling and servicing
agreement among the depositor, a master servicer, if specified in the
prospectus supplement, a special servicer and the trustee. The certificates
of each series evidencing interests in a trust fund not including whole loans
will be issued pursuant to a trust agreement between the depositor and a
trustee. The master servicer, any special servicer and the trustee with
respect to any series of certificates will be named in the related prospectus
supplement. In lieu of appointing a master servicer, a servicer may be
appointed pursuant to the Pooling and Servicing Agreement for any trust fund.
The mortgage loans shall be serviced pursuant to the terms of the Pooling and
Servicing Agreement and, if specified in the prospectus supplement, a
servicing agreement among the depositor (or an affiliate thereof), a master
servicer, a special servicer and a primary servicer. A manager or
administrator may be appointed pursuant to the trust agreement for any trust
fund to administer the trust fund. The provisions of each agreement will vary
depending upon the nature of the certificates to be issued thereunder and the
nature of the related trust fund. 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. Any trust agreement will generally conform to the form
of pooling and servicing agreement filed herewith, but will not contain
provisions with respect to the servicing and maintenance of whole loans. The
following summaries describe certain provisions that may appear in each
agreement. The prospectus supplement for a series of certificates will
describe any provision of the agreements relating to such series that
materially differs from the description thereof contained in this prospectus.
The summaries 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
agreements for each trust fund and the description of such provisions in the
related prospectus supplement. As used herein with respect to any series, the
term "certificate" refers to all of the certificates of that series, whether
or not offered hereby and by the related prospectus supplement, unless the
context otherwise requires. The depositor will provide a copy of the
agreements (without exhibits) relating to any series of certificates without
charge upon written request of a holder of a certificate of such series
addressed to the trustee specified in the related prospectus supplement.
ASSIGNMENT OF ASSETS; REPURCHASES
At the time of issuance of any series of certificates, the depositor will
assign to the designated trustee the trust assets to be included in the
related trust fund, together with all principal and interest to be
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received on or with respect to such trust assets after the cut-off date
specified in the prospectus supplement, other than principal and interest due
on or before the cut-off date and other than any retained interest. The
trustee will, concurrently with such assignment, deliver the certificates to
the depositor in exchange for the trust assets and the other assets
comprising the trust fund for that series. Each mortgage asset will be
identified in a schedule appearing as an exhibit to the related agreement.
Unless otherwise provided in the related prospectus supplement, such schedule
will include detailed information (i) in respect of each whole loan included
in the related trust fund, including without limitation, the address of the
related mortgaged property and type of such property, the mortgage interest
rate and, if applicable, the applicable index, margin, adjustment date and
any rate cap information, the original and remaining term to maturity, the
original and outstanding principal balance and balloon payment, if any, the
Loan-to-Value Ratio as of the date indicated and prepayment provisions, if
applicable, and (ii) in respect of each CMBS included in the related trust
fund, including without limitation, the names of the issuer, servicer and
trustee, the pass-through or bond rate or formula for determining such rate,
the issue date and original and remaining term to maturity, if applicable,
the original and outstanding principal amount and payment provisions, if
applicable.
With respect to each mortgage loan, the Depositor will deliver to the
trustee (or to the custodian hereinafter referred to) certain loan documents,
which unless otherwise specified in the related prospectus supplement will
include the original mortgage note endorsed, without recourse, in blank or to
the order of the trustee, the original mortgage (or a certified copy thereof)
with evidence of recording indicated thereon and an assignment of the
mortgage to the trustee in recordable form. 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 to the trustee or the
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.
With respect to such mortgage loans, the trustee may not be able to enforce
the mortgage note against the related borrower. Unless otherwise provided in
the related prospectus supplement, the related agreements will require that
the depositor or another party specified therein promptly cause each such
assignment of mortgage to be recorded in the appropriate public office for
real property records, except in states where, in the opinion of counsel
acceptable to the trustee, such recording is not required to protect the
trustee's interest in the related mortgage loan against the claim of any
subsequent transferee or any successor to or creditor of the depositor, the
master servicer, the relevant asset sellers or any other prior holder of the
whole loan.
The trustee (or a custodian) will review such whole loan documents within
a specified period of days after receipt thereof, and the trustee (or a
custodian) will hold such documents in trust for the benefit of the
certificateholders. Unless otherwise specified in the related prospectus
supplement, if any such document is found to be missing or defective in any
material respect, the trustee (or such custodian) shall notify the depositor.
If the Depositor cannot cure the omission or defect within a specified number
of days after receipt of such notice, then unless otherwise specified in the
related prospectus supplement, the depositor will be obligated, within a
specified number of days of receipt of such notice, to repurchase the related
whole loan from the trustee at the purchase price or substitute for such
mortgage loan. Unless otherwise specified in the related prospectus
supplement, this repurchase or substitution obligation constitutes the sole
remedy available to the certificateholders or the trustee for omission of, or
a material defect in, a constituent document. To the extent specified in the
related prospectus supplement, in lieu of curing any omission or defect in
the mortgage asset or repurchasing or substituting for such mortgage asset,
the depositor may agree to cover any losses suffered by the trust fund as a
result of such breach or defect.
If so provided in the related prospectus supplement, the depositor will,
as to some or all of the mortgage loans, assign or cause to be assigned to
the trustee the related lease assignments. In certain cases, the trustee, or
servicer, as applicable, may collect all moneys under the related leases and
distribute amounts, if any, required under the lease for the payment of
maintenance, insurance and taxes, to the extent specified in the related
lease agreement. The trustee, or if so specified in the prospectus
supplement, the master servicer, as agent for the trustee, may hold the lease
in trust for the benefit of the certificateholders.
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With respect to each CMBS in certificated form, the depositor will deliver
or cause to be delivered to the trustee (or the custodian) the original
certificate or other definitive evidence of such CMBS together with bond
power or other instruments, certifications or documents required to transfer
fully such CMBS to the trustee for the benefit of the certificateholders.
With respect to each CMBS in uncertificated or book-entry form or held
through a "clearing corporation" the depositor and the trustee will cause
such CMBS to be registered directly or on the books of such clearing
corporation or of a financial intermediary in the name of the trustee for the
benefit of the certificateholders. Unless otherwise provided in the related
prospectus supplement, the related trust agreement will require that either
the depositor or the trustee promptly cause any CMBS in certificated form not
registered in the name of the trustee to be re-registered, with the
applicable persons, in the name of the trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the prospectus supplement the depositor, or
another party specified therein, will, with respect to each mortgage loan,
make as of a specified date covering, by way of example, the following types
of matters: (i) the accuracy of the information set forth for such mortgage
loan on the schedule of mortgage assets appearing as an exhibit to the
related agreement; (ii) the existence of title insurance insuring the lien
priority of the whole loan; (iii) the authority of the warranting party to
sell the mortgage loan; (iv) the payment status of the mortgage loan and the
status of payments of taxes, assessments and other charges affecting the
related mortgaged property; (v) the existence of customary provisions in the
related mortgage note and mortgage to permit realization against the
mortgaged property of the benefit of the security of the mortgage; and (vi)
the existence of hazard and extended perils insurance coverage on the
mortgaged property.
Any warranting party, if other than the depositor, shall be an asset
sellers or an affiliate thereof or such other person acceptable to the
depositor and shall be identified in the related prospectus supplement.
Representations and warranties made in respect of a mortgage loan may have
been made as of a date prior to the applicable cut-off date. A substantial
period of time may have elapsed between such date and the date of initial
issuance of the related series of certificates evidencing an interest in the
mortgage loan.
Unless otherwise specified in the prospectus supplement, in the event of a
breach of any representation or warranty, the warranting party will be
obligated to reimburse the trust fund for losses caused by any such breach or
either cure the breach or repurchase or replace the affected whole loan as
described below. Since the representations and warranties may not address
events that may occur following the date as of which they were made, the
warranting party will have a reimbursement, cure, repurchase or substitution
obligation in connection with a breach of such a representation and warranty
only if the relevant event that causes such breach occurs prior to such date.
The warranting party would have no such obligations if the relevant event
that causes such breach occurs after such date.
Unless otherwise provided in the related prospectus supplement, the
Agreements will provide that the master servicer and/or trustee will be
required to notify promptly the relevant warranting party of any breach of
any representation or warranty made by it in respect of a whole loan that
materially and adversely affects the value of the whole loan or the interests
therein of the certificateholders. If the warranting party cannot cure such
breach within a specified period following the date on which the party was
notified of the breach, then the warranting party will be obligated to
repurchase the whole loan from the trustee within a specified period from the
date on which the warranting party was notified of such breach, at the
purchase price therefor.
As to any mortgage loan, unless otherwise specified in the related
prospectus supplement, the purchase price is equal to the sum of the unpaid
principal balance thereof, plus unpaid accrued interest thereon at the
mortgage interest rate from the date as to which interest was last paid to
the due date in the period specified in the agreement in which the relevant
purchase is to occur, plus certain servicing expenses that are reimbursable
to each servicer. If so provided in the prospectus supplement for a series, a
warranting party, rather than repurchase a mortgage loan as to which a breach
has occurred, will have the option, within a specified period after initial
issuance of the series of certificates, to cause the removal of that mortgage
loan from the trust fund and substitute in its place one or more other
mortgage loans,
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in accordance with the standards described in the related prospectus
supplement. If so provided in the prospectus supplement for a series, a
warranting party, rather than repurchase or substitute a whole loan as to
which a breach has occurred, will have the option to reimburse the trust fund
or the certificateholders for any losses caused by the breach. Unless
otherwise specified in the related prospectus supplement, this reimbursement,
repurchase or substitution obligation will constitute the sole remedy
available to holders of certificates or the trustee for a breach of
representation by a warranting party.
Neither the depositor (except to the extent that it is the warranting
party) nor any servicer will be obligated to purchase or substitute for a
whole loan if a warranting party defaults on its obligation to do so, and no
assurance can be given that warranting parties will carry out such
obligations with respect to mortgage loans.
Unless otherwise provided in the related prospectus supplement the
warranting party will, with respect to a trust fund that includes CMBS, make
or assign certain representations or warranties, as of a specified date, with
respect to the CMBS, covering (i) the accuracy of the information set forth
therefor on the schedule of mortgage assets appearing as an exhibit to the
related agreement and (ii) the authority of the warranting party to sell such
mortgage assets. The related prospectus supplement will describe the remedies
for a breach thereof.
Each servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations
under, the related agreement. A breach of any such representation in a
pooling and servicing agreement of a master servicer or special servicer
which materially and adversely affects the interests of the
certificateholders and which continues unremedied for thirty days after the
giving of written notice of a breach to the servicer by the trustee or the
depositor, or to the servicer, the depositor and the trustee by the holders
of certificates evidencing not less than 25% of the voting rights (unless
otherwise specified in the related prospectus supplement), will constitute an
event of default under the pooling and servicing agreement. See "Events of
Default" and "Rights Upon Event of Default."
ACCOUNTS
General
Each servicer and/or the trustee will, as to each trust fund, establish
and maintain one or more separate accounts for the collection of payments on
the related mortgage assets, which must generally, among others be either (i)
an account or accounts the deposits in which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal
Deposit Insurance Corporation ("FDIC") (to the limits established by the
FDIC) and the uninsured deposits in which are otherwise secured so that the
certificateholders have a claim with respect to the funds on account or a
perfected first priority security interest against any collateral securing
these funds that is superior to the claims of any other depositors or general
creditors of the institution with which the account is maintained or (ii)
otherwise maintained with a bank or trust company, and in a manner,
satisfactory to the rating agency or agencies rating any class of
certificates of that series. The collateral eligible to secure amounts in an
account is limited to United States government securities and other
investment grade obligations specified in the agreement as permitted
investments. An account may be maintained as an interest bearing or a
non-interest bearing account and the funds held therein may be invested
pending each succeeding distribution date in permitted investments under the
agreement. Unless otherwise provided in the prospectus supplement, any
interest or other income earned on funds in an account will be paid to a
servicer or its designee as additional servicing compensation. An account may
be maintained with an institution that is an affiliate of a servicer provided
that such institution meets the standards imposed by the rating agency or
agencies. If permitted by the rating agency or agencies and so specified in
the related prospectus supplement, an account may contain funds relating to
more than one series of mortgage pass-through certificates and may contain
other funds respecting payments on mortgage loans belonging to a servicer or
serviced or master serviced by it on behalf of others.
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Deposits
Unless otherwise provided in the related prospectus supplement, the
primary servicer will deposit in an account on a daily basis, unless
otherwise provided in the related agreement, the following payments and
collections received, or advances made, by the primary servicer:
(i) all payments on account of principal, including principal
prepayments, on the mortgage assets;
(ii) all payments on account of interest on the mortgage assets,
including any default interest collected, in each case net of any portion
thereof retained by a servicer as its servicing compensation;
(iii) all proceeds of the hazard, business interruption and general
liability insurance policies to be maintained in respect of each mortgaged
property securing a whole loan in the trust fund (to the extent such
proceeds are not applied to the restoration of the property or released to
the mortgagor in accordance with the normal servicing procedures of a
servicer, subject to the terms and conditions of the related mortgage and
mortgage note) and all insurance proceeds of rental interruption policies,
if any, insuring against losses arising from the failure of lessees under
a lease to make timely rental payments because of certain casualty events
and all other liquidation proceeds received and retained in connection
with the liquidation of defaulted mortgage loans in the trust fund, by
foreclosure, condemnation or otherwise, together with the net proceeds on
a monthly basis with respect to any mortgaged properties acquired for the
benefit of certificateholders by foreclosure or by deed in lieu of
foreclosure or otherwise;
(iv) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(v) any amounts representing prepayment premiums;
(vi) any amounts received from a special servicer;but excluding any
proceeds from REO Properties and penalties or modification fees which may
be retained by the primary servicer. Proceeds shall be maintained in an
account by the special servicer.
Once a month the special servicer remits funds on deposit in the account
each maintains together with any advances to the master servicer for deposit
in an account maintained by the master servicer.
Withdrawals
A servicer may, from time to time, unless otherwise provided in the
related agreement and described in the prospectus supplement, make
withdrawals from an account for each trust fund for any of the following
purposes:
(i) to reimburse a servicer for unreimbursed amounts advanced as
described under "Description of the Certificates--Advances in Respect of
Delinquencies," such reimbursement to be made out of amounts received
which were identified and applied by the servicer as late collections of
interest on and principal of the particular whole loans with respect to
which the advances were made;
(ii) to reimburse a servicer for unpaid servicing fees earned and certain
unreimbursed servicing expenses incurred with respect to whole loans and
properties acquired in respect thereof, such reimbursement to be made out
of amounts that represent liquidation proceeds and insurance proceeds
collected on the particular whole loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were incurred;
(iii) to reimburse a servicer for any advances described in clause (i)
above and any servicing expenses described in clause (ii) above which, in
the master servicer's good faith judgment, will not be recoverable from
the amounts described in clauses (i) and (ii), respectively, such
reimbursement to be made from amounts collected on other trust assets or,
if and to the extent so provided by the related agreement and described in
the prospectus supplement, just from that portion of amounts collected on
other trust assets that is otherwise distributable on one or more classes
of subordinate certificates, if any, remain outstanding, and otherwise any
outstanding class of certificates, of the related series;
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(iv) if and to the extent described in the related prospectus supplement,
to pay a servicer interest accrued on the advances described in clause (i)
above and the servicing expenses described in clause (ii) above while
these remain outstanding and unreimbursed;
(v) unless otherwise provided in the related prospectus supplement, to
pay a servicer, as additional servicing compensation, interest and
investment income earned in respect of amounts held in the account; and
(vi) to make any other withdrawals permitted by the related agreement and
described in the related prospectus supplement.
If and to the extent specified in the prospectus supplement amounts may be
withdrawn from any account to cover additional costs, expenses or liabilities
associated with: the preparation of environmental site assessments with
respect to, and for containment, clean-up or remediation of hazardous wastes
and materials, the proper operation, management and maintenance of any
mortgaged property acquired for the benefit of certificateholders by
foreclosure or by deed in lieu of foreclosure or otherwise, such payments to
be made out of income received on such property; if one or more elections
have been made to treat the trust fund or designated portions thereof as a
"real estate mortgage investment conduit", 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"; retaining an independent appraiser or
other expert in real estate matters to determine a fair sale price for a
defaulted whole loan or a property acquired in respect thereof in connection
with the liquidation of that whole loan or property; and obtaining various
opinions of counsel pursuant to the related agreement for the benefit of
certificateholders.
Distribution Account
Unless otherwise specified in the related prospectus supplement, the
trustee will, as to each trust fund, establish and maintain, or cause to be
established and maintained, one or more distribution accounts. The trustee
will also deposit or cause to be deposited in a distribution account the
following amounts:
(i) any amounts paid under any instrument or drawn from any fund that
constitutes credit support for the related series of certificates as
described under "Description of credit support";
(ii) any amounts paid under any cash flow agreement, as described under
"Description of the trust funds--Cash Flow Agreements";
(iii) all proceeds of any trust asset or, with respect to a whole loan,
property acquired in respect thereof purchased by the depositor, any asset
sellers or any other specified person, and all proceeds of any mortgage
asset purchased as described under "Description of the
Certificates--Termination" (also, "Liquidation Proceeds");
(iv) any other amounts required to be deposited in the distribution
account as provided in the related agreement and described in the related
prospectus supplement.
The trustee may, from time to time, unless otherwise provided in the
related agreements and described in the related prospectus supplement, make a
withdrawal from a distribution account to make distributions to the
certificateholders on each distribution date.
Other Collection Accounts
Notwithstanding the foregoing, if so specified in the prospectus
supplement, the Agreement for any series of certificates may provide for the
establishment and maintenance of a separate collection account into which the
master servicer or any related primary servicer or special servicer will
deposit on a daily basis the amounts described under "--Deposits" above for
one or more series of certificates. Any amounts on deposit in any such
collection account will be withdrawn therefrom and deposited into the
appropriate Distribution account by a time specified in the related
prospectus supplement. To the extent specified in the prospectus supplement,
any amounts which could be withdrawn from the Distribution
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account as described under "--Withdrawals" above, may also be withdrawn from
any such collection account. The prospectus supplement will set forth any
restrictions with respect to any collection account, including investment
restrictions and any restrictions with respect to financial institutions with
which any such collection account may be maintained.
COLLECTION AND OTHER SERVICING PROCEDURES
Primary Servicer
The master servicer or if so specified in the property supplement, a
primary servicer is required to make reasonable efforts to collect all
scheduled payments under the mortgage loans and will follow such collection
procedures as it would follow with respect to mortgage loans that are
comparable to the mortgage loans and held for its own account, provided such
procedures are consistent with (i) the terms of the related agreement, (ii)
applicable law and (iii) the general servicing standard specified in the
related prospectus supplement or, if no such standard is so specified, its
normal servicing practices.
The servicer will also be required to perform other customary functions of
a servicer of comparable loans, including maintaining (or causing the
mortgagor or lessee on each mortgage or lease to maintain) hazard, business
interruption and general liability insurance policies (and, if applicable,
rental interruption policies) as described herein and in any related
prospectus supplement, and filing and settling claims thereunder; maintaining
escrow or impoundment accounts of mortgagors for payment of taxes, insurance
and other items required to be paid by any mortgagor pursuant to the mortgage
loan; processing assumptions or substitutions in accordance with the
servicing standard; attempting to cure delinquencies; supervising
foreclosures; inspecting mortgaged properties under certain circumstances;
and maintaining accounting records relating to the mortgage loans.
Master Servicer
If so specified in the related prospectus supplement, the master servicer
shall monitor the actions of the primary servicer and the special servicer to
confirm compliance with the agreements.
Unless otherwise specified in the related prospectus supplement, a master
servicer, as servicer of the mortgage loans, on behalf of itself, the trustee
and the certificateholders, will present claims to the obligor under each
instrument of credit support, and will take all reasonable steps necessary to
receive payment or to permit recovery thereunder with respect to defaulted
mortgage loans. See "Description of Credit Support."
If a master servicer or its designee recovers payments under any
instrument of credit support with respect to any defaulted mortgage loan, the
master servicer will be entitled to withdraw or cause to be withdrawn from
the Distribution account out of such proceeds, prior to distribution to
certificateholders, amounts representing its normal servicing compensation on
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. See "Hazard Insurance Policies" and
"Description of Credit Support."
Special Servicer
A mortgagor's failure to make required payments may reflect inadequate
income or the diversion of that income from the service of payments due under
the mortgage loan, and may call into question that mortgagor's ability to
make timely payment of taxes and to pay for necessary maintenance of the
related mortgaged property. Unless otherwise provided in the prospectus
supplement, upon the occurrence of any of the following servicing transfer
events with respect to a mortgage loan, servicing for such mortgage loan will
be transferred from the primary servicer to the special servicer and the loan
will thereafter be designated as a specially serviced mortgage loan:
(a) the mortgage loan becomes a defaulted mortgage loan,
(b) the occurrence of certain events indicating the possible insolvency
of the mortgagor,
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(c) the receipt by the primary servicer of a notice of foreclosure of any
other lien on the related mortgaged property,
(d) the master servicer or the primary servicer determines that a payment
default is imminent,
(e) with respect to a balloon mortgage loan, no assurances have been
given as to the ability of the mortgagor to make the final payment
thereon, or
(f) the occurrence of certain other events constituting defaults under
the terms of the mortgage loan.
The special servicer is required to monitor any mortgage loan which is in
default, contact the mortgagor concerning the default, evaluate whether the
causes of the default can be cured over a reasonable period without
significant impairment of the value of the mortgaged property, initiate
corrective action in cooperation with the mortgagor if cure is likely,
inspect the mortgaged property and take any other actions consistent with the
servicing standard. A significant period of time may elapse before the
special servicer is able to assess the success of such corrective action or
the need for additional initiatives.
The time within which the special servicer makes the initial determination
of appropriate action, evaluates the success of corrective action, develops
additional initiatives, institutes foreclosure proceedings and actually
forecloses (or takes a deed to a mortgaged property in lieu of foreclosure)
on behalf of the certificateholders, 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. Under federal
bankruptcy law, the special servicer in certain cases may not be permitted to
accelerate a mortgage loan or to foreclose on a mortgaged property for a
considerable period of time. See "Certain Legal Aspects of the Mortgage Loans
and the Leases."
Any agreement relating to a trust fund that includes mortgage loans may
grant to the master servicer and/or the holder or holders of certain classes
of certificates a right of first refusal to purchase from the trust fund at a
predetermined purchase price any such mortgage loan as to which a specified
number of scheduled payments thereunder are delinquent. Any such right
granted to the holder of an offered certificate will be described in the
prospectus supplement. The prospectus supplement will also describe any such
right granted to any person if the predetermined purchase price is less than
the purchase price described under "Representations and Warranties;
Repurchases."
The special servicer may agree to modify, waive or amend any term of any
specially serviced mortgage loan in a manner consistent with the servicing
standard so long as the modification, waiver or amendment will not (i) affect
the amount or timing of any scheduled payments of principal or interest on
the mortgage loan or (ii) in its judgment, materially impair the security for
the mortgage loan or reduce the likelihood of timely payment of amounts due
thereon. The special servicer also may agree to any modification, waiver or
amendment that would so affect or impair the payments on, or the security
for, a mortgage loan if, unless otherwise provided in the related prospectus
supplement, (i) in its judgment, a material default on the mortgage loan has
occurred or a payment default is imminent and (ii) in its judgment, such
modification, waiver or amendment is reasonably likely to produce a greater
recovery with respect to the mortgage loan on a present value basis than
would liquidation. The special servicer is required to notify the trustee in
the event of any modification, waiver or amendment of any mortgage loan.
The special servicer, on behalf of the trustee, may at any time institute
foreclosure proceedings, exercise any power of sale contained in any
mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire title to
a mortgaged property securing a mortgage loan by operation of law or
otherwise, if such action is consistent with the servicing standard and a
default on the mortgage loan has occurred or, in the special servicer's
judgment, is imminent. Unless otherwise specified in the related prospectus
supplement, the special servicer may not acquire title to any related
mortgaged property or take any other action that would cause the trustee, for
the benefit 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"
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of the mortgaged property within the meaning of certain federal environmental
laws, unless the special servicer has previously determined, based on a
report prepared by a person who regularly conducts environmental audits
(which report will be an expense of the trust fund), that:
(i) the mortgaged property is in compliance with applicable environmental
laws; or if not, that taking such actions as are necessary to bring the
mortgaged property in compliance therewith is reasonably likely to produce
a greater recovery on a present value basis, after taking into account any
risks associated therewith, than not taking such actions; and
(ii) and there are no circumstances present at the mortgaged property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or regulation or
that, if any such materials are present, taking such action with respect
to the affected mortgaged property is reasonably likely to produce a
greater recovery on a present value basis, after taking into account any
risks associated therewith, than not taking such actions.
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 not later than the end of the
third calendar year following the year of acquisition, 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 fund subsequent to the end of
the third year following the year in which such acquisition occurred will not
result in the imposition of a tax on the trust fund or cause the trust fund
to fail to qualify as a REMIC under the Code at any time that any certificate
is outstanding. Subject to the foregoing, the special servicer will be
required to (i) solicit bids or offers for any mortgaged property so acquired
in such a manner as will be reasonably likely to realize a fair price for
such property and (ii) accept the first (and, if multiple bids are
contemporaneously received, the highest) cash bid or offer received from any
person that constitutes a fair price.
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 the property. The retention of an independent
contractor, however, will not relieve the special servicer of any of its
obligations with respect to the management and operation of the mortgaged
property. Unless otherwise specified in the related prospectus supplement,
any property acquired by the trust fund will be managed in a manner
consistent with the management and operation of similar property by a prudent
lending institution.
The limitations imposed by the related Agreement and the REMIC provisions
of the Code (if a REMIC election has been made with respect to the related
trust fund) on the operations and ownership of any mortgaged property
acquired on behalf of the trust fund may result in the recovery of an amount
less than the amount that would otherwise be recovered. See "Certain Legal
Aspects of the Mortgage Loans and the Leases--Foreclosure."
If recovery on a defaulted mortgage loan under any related instrument of
credit support is not available, the special servicer nevertheless will be
obligated to follow or cause to be followed such normal practices and
procedures as it deems necessary or advisable to realize upon the defaulted
mortgage loan. If the proceeds of any liquidation of the property securing
the defaulted mortgage loan are less than the outstanding principal balance
of the defaulted mortgage loan plus interest accrued thereon at the mortgage
interest rate plus the aggregate amount of expenses incurred by the special
servicer in connection with such proceedings and which are reimbursable under
the agreement, the trust fund will realize a loss in the amount of that
difference. The servicers will be entitled to withdraw or cause to be
withdrawn from a related account out of the liquidation proceeds recovered on
any defaulted mortgage loan, prior to the distribution of the liquidation
proceeds to certificateholders, amounts representing its normal servicing
compensation on 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 with interest thereon.
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HAZARD INSURANCE POLICIES
Unless otherwise specified in the related prospectus supplement, each
agreement for a trust fund that includes whole loans will require the primary
servicer to cause the mortgagor on each whole loan to maintain a hazard
insurance policy providing for the coverage required under the related
mortgage. Unless otherwise specified in the prospectus supplement, the
coverage will be in general in an amount equal to the amount necessary to
fully compensate for any damage or loss to the improvements on the mortgaged
property on a replacement cost basis, but not less than the amount necessary
to avoid the application of any co-insurance clause contained in the hazard
insurance policy. The ability of the primary 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 in this regard is furnished by mortgagors. All amounts collected
by the primary servicer under any such policy (except for amounts to be
applied to the restoration or repair of the mortgaged property or released to
the mortgagor in accordance with the primary servicer's normal servicing
procedures, subject to the terms and conditions of the related mortgage and
Mortgage Note) will be deposited in a related account.
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 relating to the whole loans 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, the basic terms thereof are dictated by
respective state laws, and 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 uninsured risks.
The hazard insurance policies covering the mortgaged properties securing
the whole loans will typically contain a co-insurance clause that in effect
requires the 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, the co-insurance clause generally provides 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 the improvements.
The Agreements for a trust fund that includes whole loans will require the
primary servicer to cause the mortgagor on each whole loan, or, in certain
cases, the related lessee, to maintain all other insurance coverage with
respect to the related mortgaged property as is consistent with the terms of
the mortgage, which insurance may typically include flood insurance (if the
mortgaged property was located at the time of origination in a federally
designated flood area).
In addition, to the extent required by the related mortgage, the primary
servicer may require the mortgagor or lessee to maintain other forms of
insurance including, but not limited to, loss of rent endorsements, business
interruption insurance and comprehensive public liability insurance. Any cost
incurred by the master servicer in maintaining any such insurance policy will
be added to the amount owing under the mortgage loan where the terms of the
mortgage loan so permit; provided, however, that the addition of such cost
will not be taken into account for purposes of calculating the distribution
to be made to certificateholders. Such costs may be recovered by a servicer
from a related account, with interest thereon, as provided by the agreements.
RENTAL INTERRUPTION INSURANCE POLICY
If so specified in the related prospectus supplement, the primary servicer
or the mortgagors will maintain rental interruption insurance policies in
full force and effect with respect to some or all of the leases. Although the
terms of such policies vary to some degree, a rental interruption insurance
policy typically provides that, to the extent that a lessee fails to make
timely rental payments under the lease due
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to a casualty event, such losses will be reimbursed to the insured. If so
specified in the related prospectus supplement, the primary servicer will be
required to pay from its servicing compensation the premiums on the rental
interruption policy on a timely basis. If so specified in the prospectus
supplement, if the rental interruption policy is canceled or terminated for
any reason (other than the exhaustion of total policy coverage), the primary
servicer will exercise its best reasonable efforts to obtain from another
insurer a replacement policy comparable to the rental interruption policy
with a total coverage that is equal to the then existing coverage of the
terminated rental interruption policy; provided that if the cost of any such
replacement policy is greater than the cost of the terminated rental
interruption policy, the amount of coverage under the replacement policy
will, unless otherwise specified in the prospectus supplement, be reduced to
a level such that the applicable premium does not exceed, by a percentage
that may be set forth in the prospectus supplement, the cost of the rental
interruption policy that was replaced. Any amounts collected by the primary
servicer under the rental interruption policy in the nature of insurance
proceeds will be deposited in a related account.
FIDELITY BONDS AND ERRORS AND OMISSIONS INSURANCE
Unless otherwise specified in the related prospectus supplement, the
Agreements will require that the servicers obtain and maintain in effect a
fidelity bond or similar form of insurance coverage (which may provide
blanket coverage) or any combination thereof insuring against loss occasioned
by fraud, theft or other intentional misconduct of the officers and employees
of the servicer. The related agreements will allow a servicer to self-insure
against loss occasioned by the errors and omissions of the officers,
employees and agents of the master servicer or the special servicer so long
as certain criteria set forth in the agreements are met.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the whole loans may contain clauses requiring the consent of
the mortgagee to any sale or other transfer of the related mortgaged
property, or due-on-sale clauses entitling the mortgagee to accelerate
payment of the whole loan upon any sale or other transfer of the mortgaged
property. Certain of the whole loans may contain clauses requiring the
consent of the mortgagee to the creation of any other lien or encumbrance on
the mortgaged property or due-on-encumbrance clauses entitling the mortgagee
to accelerate payment of the whole loan upon the creation of any other lien
or encumbrance upon the mortgaged property. Unless otherwise provided in the
related prospectus supplement, the primary servicer, on behalf of the trust
fund, will exercise any right the trustee may have as mortgagee to accelerate
payment of any whole loan or to withhold its consent to any transfer or
further encumbrance. Unless otherwise specified in the related prospectus
supplement, any fee collected by or on behalf of the primary servicer for
entering into an assumption agreement will be retained by or on behalf of the
primary servicer as additional servicing compensation. See "Certain Legal
Aspects of the Mortgage Loans and the Leases--Due-on-Sale and
Due-on-Encumbrance."
RETAINED INTEREST; SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The prospectus supplement for a series of certificates will specify
whether there will be any Retained Interest in the mortgage assets, and, if
so, the initial owner thereof. If so, the Retained Interest will be
established on a loan-by-loan basis and will be specified on an exhibit to
the related Agreement. The Retained Interest will be deducted from mortgagor
payments as received and will not be part of the related trust fund.
Unless otherwise specified in the related prospectus supplement, each
servicer's primary servicing compensation with respect to a series of
certificates will come from the periodic payment to it of a portion of the
interest payment on each mortgage asset. Since any Retained Interest and a
servicer's primary compensation are percentages of the principal balance of
each mortgage asset, such amounts will decrease in accordance with the
amortization of the mortgage assets. The prospectus supplement with respect
to a series of certificates evidencing interests in a trust fund that
includes whole loans may provide that, as additional compensation, a servicer
may retain all or a portion of assumption fees, modification fees, late
payment charges or prepayment premiums collected from mortgagors and any
interest or other income which may be earned on funds held in a related
account.
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The master servicer may, to the extent provided in the related prospectus
supplement, pay from its servicing compensation certain expenses incurred in
connection with its servicing and managing of the mortgage assets, including,
without limitation, payment of the fees and disbursements of the trustee and
independent accountants, payment of expenses incurred in connection with
distributions and reports to certificateholders, and payment of any other
expenses described in the prospectus supplement. Certain other expenses,
including expenses relating to defaults and liquidations on the whole loans
and, to the extent so provided in the related prospectus supplement, interest
thereon at the rate specified therein, and the fees of any special servicer,
may be borne by the trust fund.
EVIDENCE AS TO COMPLIANCE
Each pooling and servicing agreement will provide that on or before a
specified date in each year, beginning on a date specified therein, a firm of
independent public accountants will furnish a statement to the trustee to the
effect that, on the basis of the examination by such firm conducted
substantially in compliance with either the Uniform Single Attestation
Program for Mortgage Bankers, the servicing by or on behalf of each servicer
was conducted in compliance with the terms of such agreements except for any
exceptions the Uniform Single Attestation Program for Mortgage Bankers
requires it to report.
Each pooling and servicing agreement will also provide for delivery to the
trustee, on or before a specified date in each year, of an annual statement
signed by an officer of each servicer to the effect that the servicer has
fulfilled its obligations in all material respects under the agreement
throughout the preceding calendar year or other specified twelve-month
period.
Unless otherwise provided in the related prospectus supplement, copies of
such annual accountants' statement and statements of officers will be
obtainable by certificateholders and beneficial owners without charge upon
written request to the master servicer at the address set forth in the
prospectus supplement; provided that such beneficial owner shall have
certified to the master servicer that he or she is the beneficial owner of a
certificate.
CERTAIN MATTERS REGARDING EACH SERVICER AND THE DEPOSITOR
The master servicer and the special servicer, or a servicer for
substantially all the whole loans under each agreement will be named in the
related prospectus supplement. Each entity serving as servicer (or as such
servicer) may be an affiliate of the depositor and may have other normal
business relationships with the depositor or the depositor's affiliates.
Reference herein to a servicer shall be deemed to be to the servicer of
substantially all of the whole loans, if applicable.
Unless otherwise specified in the prospectus supplement, the related
agreement will provide that any servicer may resign from its obligations and
duties thereunder only with the consent of the trustee, which may not be
unreasonably withheld or upon a determination that its duties under the
agreement are no longer permissible under applicable law. No such resignation
will become effective until a successor servicer has assumed that servicer's
obligations and duties under the related pooling and servicing agreement.
Unless otherwise specified in the prospectus supplement, the master servicer
shall assume the obligations of any other servicer which resigns.
Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement will further provide that none of the
servicers, or any officer, employee, or agent thereof will be under any
liability to the related trust fund or certificateholders for any action
taken, or for refraining from the taking of any action in accordance with the
servicing standards set forth in the pooling and servicing agreement, in good
faith pursuant to the related pooling and servicing agreement; provided,
however, that no servicer nor any of its officers, employees or agents will
be protected against any breach of a representation or warranty made in the
agreement, or against any liability specifically imposed thereby, or against
any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties thereunder
or by reason of reckless disregard of obligations and duties thereunder.
Unless otherwise specified in the prospectus supplement, the depositor shall
be liable only to the extent of its obligations specifically imposed upon and
undertaken by the depositor. Unless otherwise specified in the prospectus
supplement, each pooling and servicing agreement
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will further provide that each servicer will be entitled to indemnification
by the related trust fund against any loss, liability or expense incurred in
connection with any legal action relating to the pooling and servicing
agreement or the mortgage loans; provided, however, that such indemnification
will not extend to any loss, liability or expense incurred by reason of
misfeasance, bad faith or negligence in the performance of obligations or
duties thereunder, or by reason of reckless disregard of such obligations or
duties. In addition, each pooling and servicing agreement will provide that
no servicer will be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its responsibilities under the
pooling and servicing agreement and which in its opinion may involve it in
any expense or liability. Any servicer may, however, with the consent of the
trustee undertake any such action which it may deem necessary or desirable
with respect to the agreement and the rights and duties of the parties
thereto and the interests of the 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
certificateholders, and the servicer will be entitled to be reimbursed
therefor.
Any person into which a servicer or the depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to
which a servicer or the depositor is a party, or any person succeeding to the
business of a servicer or the depositor will be the successor of such
servicer or the depositor, as applicable, under the related agreements.
EVENTS OF DEFAULT
Unless otherwise provided in the prospectus supplement for a trust fund
that includes whole loans, events of default with respect to a servicer under
the related agreements will include (i) any failure by the servicer to
distribute to the trustee, another servicer or the certificateholders, any
required payment within one business day of the date due; (ii) any failure by
the servicer to timely deliver a report that continues unremedied for two
days after receipt of notice of such failure has been given to the servicer
by the trustee or another servicer; (iii) any failure by the servicer duly to
observe or perform in any material respect any of its other covenants or
obligations under the agreement which continues unremedied for thirty days
after written notice of such failure has been given to the servicer; (iv) any
breach of a representation or warranty made by the servicer under the
agreement which materially and adversely affects the interests of
certificateholders and which continues unremedied for thirty days after
written notice of such breach has been given to the servicer; (v) certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by or on behalf of the
servicer indicating its insolvency or inability to pay its obligations; and
(vi) any failure by the servicer to maintain a required license to do
business or service the mortgage loans pursuant to the related agreements
which remains uncured as specified in the agreement. Material variations to
the foregoing events of default (other than to shorten cure periods or
eliminate notice requirements) will be specified in the related prospectus
supplement. Unless otherwise specified in the prospectus supplement, the
trustee shall, not later than the later of 60 days after the occurrence of
any event which constitutes or, with notice or lapse of time or both, would
constitute an event of default and five days after certain officers of the
trustee become aware of the occurrence of such an event, transmit by mail to
the depositor and all certificateholders of the applicable series notice of
such occurrence, unless the default is cured or waived.
RIGHTS UPON EVENT OF DEFAULT
So long as an event of default under an agreement remains unremedied, the
depositor or the trustee may, and at the direction of holders of certificates
evidencing not less than 25% of the voting rights, the trustee shall,
terminate all of the rights and obligations of the related servicer under the
agreement and in and to the mortgage loans (other than as a certificateholder
or as the owner of any Retained Interest), whereupon the master servicer (or
if such servicer is the master servicer, the trustee) will succeed to all of
the responsibilities, duties and liabilities of the servicer under the
agreements (except that if the trustee is prohibited by law from obligating
itself to make advances regarding delinquent mortgage loans, or if the
related prospectus supplement so specifies, then 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, in the event that the trustee is unwilling or unable so to act,
it may or, at the
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written request of the holders of certificates entitled to at least 25% of
the voting rights, it shall appoint, or petition a court of competent
jurisdiction for the appointment of, a loan servicing institution acceptable
to the rating agency with a net worth at the time of such appointment of at
least $15,000,000 to act as successor to the master servicer under the
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, which in no event may be greater than the
compensation payable to the master servicer under the agreement.
Unless otherwise described in the related prospectus supplement, the
holders of certificates representing at least 66 2/3% of the voting rights
allocated to the respective classes of certificates affected by any event of
default will be entitled to waive such event of default; provided, however,
that an event of default involving a failure to distribute a required payment
to certificateholders described in clause (i) under "Events of Default" may
be waived only by all of the certificateholders. Upon any such waiver of an
event of default, such event of default shall cease to exist and shall be
deemed to have been remedied for every purpose under the agreement.
No certificateholder will have the right under any agreement to institute
any proceeding with respect thereto unless such holder previously has given
to the trustee written notice of default and unless the holders of
certificates evidencing not less than 25% of the voting rights have made
written request upon the trustee to institute such proceeding in its own name
as trustee and have offered to the trustee reasonable indemnity, and the
trustee for sixty days has neglected or refused to institute any such
proceeding. The trustee, however, is under no obligation to exercise any of
the trusts or powers vested in it by any agreement or to make any
investigation of matters arising thereunder 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 the agreement,
unless those certificateholders have offered to the trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
As described under "Description of the Certificates--Book-Entry
Registration and Physical certificates," unless and until Physical
certificates are issued, beneficial owners may only exercise their rights as
owners of certificates indirectly through DTC, or their respective
participants and indirect participants.
AMENDMENT
Each agreement may be amended by the parties thereto, without the consent
of any of the holders of certificates covered by the agreement, (i) to cure
any ambiguity, (ii) to correct, modify or supplement any provision therein
which may be inconsistent with any other provision therein, (iii) to make any
other provisions with respect to matters or questions arising under the
agreement which are not inconsistent with the provisions thereof, or (iv) to
comply with any requirements imposed by the Code; provided that such
amendment (other than an amendment for the purpose specified in clause (iv)
above) will not (as evidenced by an opinion of counsel to such effect)
adversely affect in any material respect the interests of any holder of
certificates covered by the agreement. Unless otherwise specified in the
related prospectus supplement, each agreement may also be amended by the
Depositor, the master servicer, if any, and the trustee, with the consent of
the holders of certificates affected thereby evidencing not less than 51% of
the voting rights, for any purpose; provided, however, that unless otherwise
specified in the related prospectus supplement, no such amendment may (i)
reduce in any manner the amount of or delay the timing of, payments received
or advanced on mortgage loans which are required to be distributed on any
certificate without the consent of the holder of such certificate, (ii)
adversely affect in any material respect the interests of the holders of any
class of certificates in a manner other than as described in (i), without the
consent of the holders of all certificates of such class or (iii) modify the
provisions of an agreement described in this paragraph without the consent of
the holders of all certificates covered by such agreement then outstanding.
However, with respect to any series of certificates as to which a REMIC
election is to be made, the trustee will not consent to any amendment of the
agreement unless it shall first have received an opinion of counsel to the
effect that such amendment will not result in the imposition of a tax on the
related trust fund or cause the related trust fund to fail to qualify as a
REMIC at any time that the certificates are outstanding.
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THE TRUSTEE
The trustee under each agreement will be named in the related prospectus
supplement. The commercial bank, national banking association, banking
corporation or trust company serving as trustee may have a banking
relationship with the Depositor and its affiliates and with any master
servicer and its affiliates.
DUTIES OF THE TRUSTEE
The trustee will make no representations as to the validity or sufficiency
of any agreement, the certificates or any trust asset or related document and
is not accountable for the use or application by or on behalf of any servicer
of any funds paid to such servicer or its designee in respect of the
certificates or the trust assets, or deposited into or withdrawn from any
account or any other account by or on behalf of any servicer. If no event of
default has occurred and is continuing, the trustee is required to perform
only those duties specifically required under the related agreements.
However, 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 to the
requirements of the agreements.
CERTAIN MATTERS REGARDING THE TRUSTEE
Unless otherwise specified in the prospectus supplement, the trustee and
any director, officer, employee or agent of the trustee shall be entitled to
indemnification out of the distribution account for any loss, liability or
expense (including costs and expenses of litigation, and of investigation,
counsel fees, damages, judgments and amounts paid in settlement) incurred in
connection with the trustee's (i) enforcing its rights and remedies and
protecting the interests, and enforcing the rights and remedies, of the
certificateholders during the continuance of an event of default, (ii)
defending or prosecuting any legal action in respect of the related agreement
or series of certificates, (iii) being the mortgagee of record with respect
to the mortgage loans in a trust fund and the owner of record with respect to
any mortgaged property acquired in respect thereof for the benefit of
certificateholders, or (iv) acting or refraining from acting in good faith at
the direction of the holders of the related series of certificates entitled
to not less than 25% (or such higher percentage as is specified in the
related agreement with respect to any particular matter) of the voting rights
for such series; provided, however, that such indemnification will not extend
to any loss, liability or expense that constitutes a specific liability of
the trustee pursuant to the related agreement, or to any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence on
the part of the trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of its obligations or
duties, or as may arise from a breach of any representation, warranty or
covenant of the trustee made therein.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee may at any time resign from its obligations and duties under
an agreement by giving written notice thereof to the depositor, the master
servicer, if any, and all certificateholders. Upon receiving such notice of
resignation, the depositor is required promptly to appoint a successor
trustee acceptable to the master servicer, if any. If no successor trustee
shall have been so appointed and have accepted appointment within 30 days
after the giving of notice of resignation, the resigning trustee may petition
any court of competent jurisdiction for the appointment of a successor
trustee.
If at any time the trustee shall cease to be eligible to continue as such
under the related agreements, or if at any time the trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the trustee or of its property shall be appointed, or any public
officer shall take charge or control of the trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the depositor may remove the trustee and appoint a successor trustee
acceptable to the master servicer, if any. Holders of the certificates of any
series entitled to at least 51% of the voting rights for the series may at
any time remove the trustee without cause and appoint a successor trustee.
Any resignation or removal of the trustee and appointment of a successor
trustee shall not become effective until acceptance of appointment by the
successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
For any series of certificates, credit support may be provided with
respect to one or more classes thereof or the related mortgage assets. Credit
support may be in the form of the subordination of one or more classes of
certificates, letters of credit, insurance policies, guarantees, the
establishment of one or more reserve funds or another method of credit
support described in the related prospectus supplement, or any combination of
the foregoing. If so provided in the prospectus supplement, any form of
credit support may be structured so as to be drawn upon by more than one
series to the extent described therein.
Unless otherwise provided in the prospectus supplement for a series of
certificates, the credit support will not provide protection against all
risks of loss and will not guarantee repayment of the entire certificate
balance of the certificates and interest thereon. If losses or shortfalls
occur that exceed the amount covered by credit support or that are not
covered by credit support, certificateholders will bear their allocable share
of deficiencies. Moreover, if more than one trust is covered by the same
credit support holders of certificates evidencing interests in the trusts
will be subject to the risk that that credit support will be exhausted by the
claims of other trusts prior to receiving any of its intended share of
coverage.
If credit support is provided with respect to one or more classes of
certificates of a series, or the related mortgage assets, the related
prospectus supplement will include a description of (a) the nature and amount
of coverage under such credit support, (b) any conditions to payment
thereunder not otherwise described herein, (c) the conditions (if any) under
which the amount of coverage under the credit support may be reduced and
under which such credit support may be terminated or replaced and (d) the
material provisions relating to such credit support. Additionally, the
prospectus supplement will set forth certain information with respect to the
obligor under any instrument of credit support, including (i) a brief
description of its principal business activities, (ii) its principal place of
business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies that exercise primary jurisdiction over the conduct of
its business and (iv) its total assets, and its stockholders' or
policyholders' surplus, if applicable, as of the date specified in the
prospectus supplement. See "Risk Factors--Credit support may not cover losses
or risks which could adversely affect payment on your certificates."
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 prospectus supplement, the rights of the holders of
Subordinate Certificates to receive distributions of principal and interest
from the Distribution account on any distribution date will be subordinated
to such 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 (or may be limited to) certain types of losses or shortfalls.
The related prospectus supplement will set forth information concerning the
amount of subordination of a class or classes of Subordinate Certificates in
a series, the circumstances in which such subordination will be applicable
and the manner, if any, in which the amount of subordination will be
effected.
CROSS-SUPPORT PROVISIONS
If the mortgage assets for a series are divided into separate groups, each
supporting a separate class or classes of certificates of a 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 THE MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
the mortgage loans in the related trust fund will be covered for various
default risks by insurance policies or guarantees.
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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 the certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in the prospectus supplement. Under a
letter of credit, the letter of credit issuer 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 the 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 in the
event of only 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 prospectus supplement. The obligations of the letter of
credit issuer under the letter of credit for each series of certificates will
expire at the earlier of the date specified in the prospectus supplement or
the termination of the trust fund. A copy of any such letter of credit for a
series will be filed with the Commission as an exhibit to a Current Report on
Form 8-K to be filed within 15 days of issuance of the certificates of the
related series.
INSURANCE POLICIES AND SURETY BONDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or certain
classes thereof will be covered by insurance policies and/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 and/or full 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. A
copy of any such instrument for a series will be filed with the Commission as
an exhibit to a Current Report on Form 8-K to be filed with the Commission
within 15 days of issuance of the certificates of the related series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or certain
classes thereof will be covered 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 so specified in the prospectus
supplement. The reserve funds for a series may also be funded over time by
depositing therein a specified amount of the distributions received on the
related trust assets as specified in the prospectus supplement.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related prospectus supplement. A
reserve fund may be provided to increase the likelihood of timely
distributions of principal of and interest on the certificates. If so
specified in the prospectus supplement, reserve funds may be established to
provide limited protection against only 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 and will not be available for further
application to the certificates.
Moneys deposited in any reserve funds will be invested in permitted
investments, except as otherwise specified in the related prospectus
supplement. Unless otherwise specified in the prospectus supplement, any
reinvestment income or other gain from such investments will be credited to
the reserve fund for the series, and any loss resulting from such investments
will be charged to the reserve fund. However, such income may be payable to
any master servicer or another service provider as additional compensation.
The reserve fund, if any, for a series will not be a part of the trust fund
unless otherwise specified in the prospectus supplement.
Additional information concerning any reserve fund will be set forth in
the related prospectus supplement, including the initial balance of such
reserve fund, the balance required to be maintained in
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the reserve fund, the manner in which such required balance will decrease
over time, the manner of funding the reserve fund, the purposes for which
funds in the reserve fund may be applied to make distributions to
certificateholders and use of investment earnings from the reserve fund, if
any.
CREDIT SUPPORT WITH RESPECT TO CMBS
If so provided in the prospectus supplement for a series of certificates,
the CMBS in the related trust fund and/or the mortgage loans underlying such
CMBS 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, to the extent such
information is material and available.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS AND THE LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties
that are general in nature. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries do
not purport to be complete nor to reflect the laws of any particular state,
nor to encompass the laws of all states in which the security for the
mortgage loans is situated. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the mortgage
loans. See "Description of the Trust Funds--Assets."
GENERAL
All of the mortgage loans are loans evidenced by a note or bond and
secured by instruments granting a security interest in real property which
may be mortgages, deeds of trust, security deeds or deeds to secure debt,
depending upon the prevailing practice and law in the state in which the
mortgaged property is located. Mortgages, deeds of trust and deeds to secure
debt are herein collectively referred to as "mortgages." Any of the foregoing
types of mortgages will create a lien upon, or grant a title interest in, the
subject property, the priority of which will depend on the terms of the
particular security instrument, as well as separate, recorded, contractual
arrangements with others holding interests in the mortgaged property, the
knowledge of the parties to such instrument as well as the order of
recordation of the instrument in the appropriate public recording office.
However, recording does not generally establish priority over governmental
claims for real estate taxes and assessments and other charges imposed under
governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of
real property between two parties--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 mortgagor), a trustee to whom the mortgaged property is conveyed, and a
beneficiary (the lender) for whose benefit the conveyance is made. As used in
this Prospectus, unless the context otherwise requires, "mortgagor" includes
the trustor under a deed of trust and a grantor under a security deed or a
deed to secure debt. Under a deed of trust, the mortgagor grants the
property, irrevocably until the debt is paid, in trust, generally with a
power of sale as security for the indebtedness evidenced by the related note.
A deed to secure debt typically has two parties. By executing a deed to
secure debt, the grantor conveys title to, as opposed to merely creating a
lien upon, the subject property to the grantee until such time as the
underlying debt is repaid, generally with a power of sale as security for the
indebtedness evidenced by the related mortgage note. In case the mortgagor
under a mortgage 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 mortgagor. At origination of a mortgage loan
involving a land trust, the mortgagor executes a separate undertaking to make
payments on the mortgage note. 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
mortgage, the law of the state in which the real property is located, certain
federal laws (including, without limitation, the Soldiers' and Sailors' Civil
Relief Act of 1940) and, in some cases, in deed of trust transactions, the
directions of the beneficiary.
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INTEREST IN REAL PROPERTY
The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, such an instrument may encumber other interests in real property
such as a tenant's interest in a lease of land or improvements, or both, and
the leasehold estate created by such lease. An instrument covering an
interest in real property other than the fee estate requires special
provisions in the instrument creating such interest or in the mortgage, deed
of trust, security deed or deed to secure debt, to protect the mortgagee
against termination of such interest before the mortgage, deed of trust,
security deed or deed to secure debt is paid. The asset sellers will make
certain representations and warranties in the Agreement with respect to the
mortgage loans which are secured by an interest in a leasehold estate. Such
representation and warranties will be set forth in the prospectus supplement
if applicable.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the mortgagor assigns its
right, title and interest as landlord under each lease and the income derived
therefrom to the lender, while the mortgagor retains a revocable license to
collect the rents for so long as there is no default. Under such assignments,
the mortgagor typically assigns its right, title and interest as lessor under
each lease and the income derived therefrom to the mortgagee, while retaining
a license to collect the rents for so long as there is no default under the
mortgage loan documentation. The manner of perfecting the mortgagee's
interest in rents may depend on whether the mortgagor's assignment was
absolute or one granted as security for the loan. Failure to properly perfect
the mortgagee's interest in rents may result in the loss of substantial pool
of funds, which could otherwise serve as a source of repayment for such loan.
If the mortgagor 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; generally
these rates are either assigned by the mortgagor, which remains entitled to
collect such rates absent a default, or pledged by the mortgagor, as security
for the loan. In general, the lender must file financing statements in order
to perfect its security interest in the rates and must file continuation
statements, generally every five years, to maintain perfection of such
security interest. Even if the lender's security interest in room rates is
perfected under the Uniform Commercial Code, the lender will generally be
required to commence a foreclosure or otherwise take possession of the
property in order to collect the room rates after a default.
Even after a foreclosure, the potential rent payments from the property
may be less than the periodic payments that had been due under the mortgage.
For instance, the net income that would otherwise be generated from the
property may be less than the amount that would have been needed to service
the mortgage debt if the leases on the property are at below-market rents, or
as the result of excessive maintenance, repair or other obligations which a
lender succeeds to as landlord.
Lenders that actually take possession of the property, however, may incur
potentially substantial risks attendant to being a mortgagee in possession.
Such risks include liability for environmental clean-up costs and other risks
inherent in property ownership. See "Environmental Legislation" below.
PERSONALTY
Certain types of mortgaged properties, such as hotels, motels and
industrial plants, are likely to derive a significant part of their value
from personal property which does not constitute fixtures under applicable
state real property law and, hence, would not be subject to the lien of a
mortgage. Such property is generally pledged or assigned as security to the
lender under the Uniform Commercial Code. In order to perfect its security
interest therein, the lender generally must file Uniform Commercial Code
financing statements and, to maintain perfection of such security interest,
file continuation statements generally every five years.
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COOPERATIVE LOANS
If specified in the prospectus supplement relating to a series of offered
certificates, the mortgage loans may also consist of cooperative apartment
loans secured by security interests in shares issued by a Cooperative and in
the related proprietary leases or occupancy agreements granting exclusive
rights to occupy specific dwelling units in the cooperatives' buildings. The
security agreement will create a lien upon, or grant a title interest in, the
property which it covers, the priority of which will depend on the terms of
the particular security agreement as well as the order of recordation of the
agreement in the appropriate recording office. Such a lien or title interest
is not prior to the lien for real estate taxes and assessments and other
charges imposed under governmental police powers.
Each Cooperative owns in fee or has a leasehold interest in all the real
property and owns in fee or leases the building and all separate dwelling
units therein. The Cooperative is directly responsible for property
management and, in most cases, payment of real estate taxes, other
governmental impositions and hazard and liability insurance. If there is a
blanket mortgage or mortgages on the cooperative apartment building or
underlying land, as is generally the case, or an underlying lease of the
land, as is the case in some instances, the Cooperative, as property
mortgagor, or lessee, as the case may be, is also responsible for meeting
these mortgage or rental obligations. A blanket mortgage is ordinarily
incurred by the cooperative in connection with either the construction or
purchase of the cooperative's apartment building or obtaining of capital by
the cooperative. The interest of the occupant under proprietary leases or
occupancy agreements as to which that Cooperative is the landlord are
generally subordinate to the interest of the holder of a blanket mortgage and
to the interest of the holder of a land lease. If the Cooperative is unable
to meet the payment obligations (i) arising under a blanket mortgage, the
mortgagee holding a blanket mortgage could foreclose on that mortgage and
terminate all subordinate proprietary leases and occupancy agreements or (ii)
arising under its land lease, the holder of the landlord's interest under the
land lease could terminate it and all subordinate proprietary leases and
occupancy agreements. Also, a blanket mortgage on a Cooperative may provide
financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at maturity.
The inability of the Cooperative to refinance a mortgage and its consequent
inability to make such final payment could lead to foreclosure by the
mortgagee. Similarly, a land lease has an expiration date and the inability
of the Cooperative to extend its term or, in the alternative, to purchase the
land could lead to termination of the Cooperative's interest in the property
and termination of all proprietary leases and occupancy agreements. In either
event, a foreclosure by the holder of a blanket mortgage or the termination
of the underlying lease could eliminate or significantly diminish the value
of any collateral held by whomever financed the purchase by an individual
tenant stockholder of cooperative shares or, in the case of the mortgage
loans, the collateral securing the cooperative loans.
The Cooperative is owned by tenant-stockholders who, through ownership of
stock or shares in the corporation, receive proprietary lease or occupancy
agreements which confer exclusive rights to occupy specific units. Generally,
a tenant-stockholder of a Cooperative must make a monthly payment to the
Cooperative representing such tenant-stockholder's pro rata share of the
Cooperative's payments for its blanket mortgage, real property taxes,
maintenance expenses and other capital or ordinary expenses. An ownership
interest in a Cooperative and accompanying occupancy rights are financed
through a cooperative share loan evidenced by a promissory note and secured
by an assignment of and a security interest in the occupancy agreement or
proprietary lease and a security interest in the related Cooperative shares.
The lender generally takes possession of the share certificate and a
counterpart of the proprietary lease or occupancy agreement and a financing
statement covering the proprietary lease or occupancy agreement and the
cooperative shares is filed in the appropriate state and local offices to
perfect the lender's interest in its collateral. Subject to the limitations
discussed below, upon default of the tenant-stockholder, the lender may sue
for judgment on the promissory note, dispose of the collateral at a public or
private sale or otherwise proceed against the collateral or
tenant-stockholder as an individual as provided in the security agreement
covering the assignment of the proprietary lease or occupancy agreement and
the pledge of cooperative shares. See "Foreclosure--Cooperative Loans" below.
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FORECLOSURE
General
Foreclosure is a legal procedure that allows the mortgagee to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the mortgagor defaults in payment or performance of its
obligations under the note or mortgage, the mortgagee has the right to
institute foreclosure proceedings to sell the mortgaged property at public
auction to satisfy the indebtedness.
Foreclosure procedures with respect to the enforcement of a mortgage vary
from state to state. Two primary methods of foreclosing a mortgage are
judicial foreclosure and non-judicial foreclosure pursuant to a power of sale
granted in the mortgage instrument. There are several other foreclosure
procedures available in some states that are either infrequently used or
available only in certain limited circumstances, such as strict foreclosure.
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 Limitations on Enforceability of Certain Provisions
United States courts have traditionally imposed general equitable
principles to limit the remedies available to a mortgagee in connection with
foreclosure. These equitable principles are generally designed to relieve the
mortgagor from the legal effect of mortgage defaults, to the extent that such
effect is 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 and expensive actions to
determine the cause of the mortgagor's default and the likelihood that the
mortgagor 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
mortgagors who are suffering from a temporary financial disability. In other
cases, courts have limited the right of the lender to foreclose if the
default under the mortgage is not monetary, e.g., the mortgagor failed to
maintain the mortgaged property adequately or the mortgagor executed a junior
mortgage on the mortgaged property. The exercise by the court of its equity
powers will depend on the individual circumstances of each case presented to
it. Finally, some courts have been faced with the issue of whether federal or
state constitutional provisions reflecting due process concerns for adequate
notice require that a mortgagor 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 afford constitutional protections to the
mortgagor.
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 require several years to complete. Moreover, as discussed below, a
non-collusive, regularly conducted foreclosure sale may be challenged as a
fraudulent conveyance, regardless of the parties' intent, if a court
determines that the sale was for less than fair consideration and such sale
occurred while the Mortgagor was insolvent (or the Mortgagor was rendered
insolvent as a result of such sale) and within one year (or within the state
statute of limitations if the trustee in bankruptcy elects to proceed under
state fraudulent conveyance law) of the filing of bankruptcy.
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Non-Judicial Foreclosure/Power of Sale
Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale pursuant to the power of sale granted in the deed of trust. A
power of sale is typically granted in a deed of trust. It may also be
contained in any other type of mortgage instrument. A power of sale allows a
non-judicial public sale to be conducted generally following a request from
the beneficiary/lender to the trustee to sell the property upon any default
by the mortgagor under the terms of the mortgage note or the mortgage
instrument and after notice of sale is given in accordance with the terms of
the mortgage instrument, as well as applicable state law. In some states,
prior to such sale, the trustee under a deed of trust must record a notice of
default and notice of sale and send a copy to the mortgagor 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 mortgagor 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 acceleration) plus the
expenses incurred in enforcing the obligation. In other states, the mortgagor
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, the procedure for public sale, the parties entitled to
notice, the method of giving notice and the applicable time periods are
governed by state law and vary among the states. Foreclosure of a deed to
secure debt is also generally accomplished by a non-judicial sale similar to
that required by a deed of trust, except that the lender or its agent, rather
than a trustee, is typically empowered to perform the sale in accordance with
the terms of the deed to secure debt and applicable law.
Public Sale
A third party may be unwilling to purchase a mortgaged property at a
public sale because of the difficulty in determining the value of such
property at the time of sale, due to, among other things, redemption rights
which may exist and the possibility of physical deterioration of the property
during the foreclosure proceedings. For these reasons, it is common for the
lender to purchase the mortgaged property for an amount equal to or less than
the underlying debt and accrued and unpaid interest plus the expenses of
foreclosure. Generally, state law controls the amount of foreclosure costs
and expenses which may be recovered by a lender. Thereafter, subject to the
mortgagor's right in some states to remain in possession during a redemption
period, if applicable, the lender will become the owner of the property and
have both the benefits and burdens of ownership of the mortgaged property.
For example, the lender will have the obligation to pay debt service on any
senior mortgages, to pay taxes, obtain casualty insurance and to make such
repairs at its own expense as are necessary to render the property suitable
for sale. Frequently, the lender employs a third party management company to
manage and operate the property. 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 costs of management
and operation of those mortgaged properties which are hotels, motels,
restaurants, nursing or convalescent homes or hospitals may be particularly
significant because of the expertise, knowledge and, with respect to nursing
or convalescent homes or hospitals, regulatory compliance, required to run
such operations and the effect which foreclosure and a change in ownership
may have on the public's and the industry's (including franchisors')
perception of the quality of such operations. The lender will commonly obtain
the services of a real estate broker and pay the broker's commission in
connection with the sale of the property. Depending upon market conditions,
the ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, a lender commonly incurs substantial
legal fees and court costs in acquiring a mortgaged property through
contested foreclosure and/or bankruptcy proceedings. Furthermore, a few
states require that any environmental contamination at certain types of
properties be cleaned up before a property may be resold. In addition, a
lender may be responsible under federal or state law for the cost of cleaning
up a mortgaged property that is environmentally contaminated. See
"Environmental Legislation." Generally state law controls the amount of
foreclosure expenses and costs, including attorneys' fees, that may be
recovered by a lender.
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A junior mortgagee may not foreclose on the property securing the junior
mortgage unless it forecloses subject to senior mortgages and any other prior
liens, in which case it may be obliged to make payments on the senior
mortgages to avoid their foreclosure. In addition, in the event that the
foreclosure of a junior mortgage triggers the enforcement of a "due-on-sale"
clause contained in a senior mortgage, the junior mortgagee may be required
to pay the full amount of the senior mortgage to avoid its foreclosure.
Accordingly, with respect to those mortgage loans which are junior mortgage
loans, if the lender purchases the property the lender's title will be
subject to all senior mortgages, prior liens and certain governmental liens.
The proceeds received by the referee or trustee from the sale are applied
first to the costs, fees and expenses of sale and then in satisfaction of the
indebtedness secured by the mortgage under which the sale was conducted. Any
proceeds remaining after satisfaction of senior mortgage debt are generally
payable to the holders of junior mortgages and other liens and claims in
order of their priority, whether or not the mortgagor is in default. Any
additional proceeds are generally payable to the mortgagor. The payment of
the proceeds to the holders of junior mortgages may occur in the foreclosure
action of the senior mortgage or a subsequent ancillary proceeding. In some
cases payment to the holders of junior mortgages may require the institution
of separate legal proceedings by such holders.
In connection with a series of certificates for which an election is made
to qualify the trust fund, or a portion thereof, as a REMIC, the REMIC
Provisions and the Agreement may require the master servicer to hire an
independent contractor to operate any foreclosed property.
Rights of Redemption
The purposes of a foreclosure action are to enable the mortgagee to
realize upon its security and to bar the mortgagor, and all persons who have
an interest in the property which is subordinate to the mortgage being
foreclosed, from exercising their "equity of redemption." The doctrine of
equity of redemption provides that, until the property covered by a mortgage
has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having an interest which is subordinate to that of
the foreclosing mortgagee may redeem the property by paying the entire debt
with interest. In addition, in some states, when a foreclosure action has
been commenced, the redeeming party must pay certain costs of such action.
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 (non-statutory) right which
exists prior to completion of the foreclosure, is not waivable by the
mortgagor and must be exercised prior to foreclosure sale. Equity of
redemption is different from the post-sale statutory rights of redemption. In
some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the mortgagor and foreclosed junior lienors are given a statutory
period in which to redeem the property from the foreclosure sale. In some
states, statutory redemption may occur only upon payment of the foreclosure
sale price. In other states, redemption may be authorized if the former
mortgagor 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. The exercise of a right of redemption would defeat the
title of any purchaser from a foreclosure sale or sale under a deed of trust.
As a result, the lender is forced 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.
Under the REMIC provisions currently in effect, property acquired by
foreclosure generally must not be held for more than three calendar years
following the year of acquisition. Unless otherwise provided in the related
prospectus supplement, with respect to a series of certificates for which an
election is made to qualify the trust fund or a part thereof as a REMIC, the
pooling and servicing agreement will permit foreclosed property to be held
for more than two years if the Internal Revenue Service grants an extension
of time within which to sell such property or independent counsel renders an
opinion to the effect that holding such property for such additional period
is permissible under the REMIC provisions.
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Anti-Deficiency Legislation
Some or all of the mortgage loans may be nonrecourse loans, as to which
recourse may be had only against the specific property securing the related
mortgage loan. A personal money judgment may not be obtained against the
mortgagor. Even if a mortgage loan by its terms provides for recourse to the
mortgagor, some states impose prohibitions or limitations on such recourse.
For example, statutes in some states limit the right of the lender to obtain
a deficiency judgment against the mortgagor following foreclosure or sale
under a deed of trust. A deficiency judgment would be a personal judgment
against the former mortgagor equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender.
Some states require the lender to exhaust the security afforded under a
mortgage by foreclosure in an attempt to satisfy the full debt before
bringing a personal action against the mortgagor. Other states give the
lender the option of bringing a personal action against the mortgagor on the
debt without first exhausting such security; however, in some of these
states, the lender, following judgment on such personal action, may be deemed
to have elected a remedy and may be precluded from exercising remedies with
respect to the security. In some cases, a lender will be precluded from
exercising any additional rights under the note or mortgage if it has taken
any prior enforcement action. Consequently, the practical effect of the
election requirement, in those states permitting such election, is that
lenders will usually proceed against the security first rather than bringing
a personal action against the mortgagor. Finally, other statutory provisions
limit any deficiency judgment against the former mortgagor following a
judicial sale to the excess of the outstanding debt over the fair market
value of the property at the time of the public sale. The purpose of these
statutes is generally to prevent a lender from obtaining a large deficiency
judgment against the former mortgagor as a result of low or no bids at the
judicial sale.
Leasehold Risks
Mortgage loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the mortgagor. The most significant of these
risks is that the ground lease creating the leasehold estate could terminate,
leaving the leasehold mortgagee without its security. The ground lease may
terminate if, among other reasons, the ground lessee breaches or defaults in
its obligations under the ground lease or there is a bankruptcy of the ground
lessee or the ground lessor. This risk may be minimized if the ground lease
contains certain provisions protective of the mortgagee such as:
o the right of the leasehold mortgagee to receive notices from the ground
lessor of any defaults by the mortgagor;
o the right to cure such defaults, with adequate cure periods; if a
default is not susceptible of cure by the leasehold mortgagee;
o the right to acquire the leasehold estate through foreclosure or
otherwise; the ability of the ground lease to be assigned to and by the
leasehold mortgagee or purchaser at a foreclosure sale and for the
concomitant release of the ground lessee's liabilities thereunder; and
o the right of the leasehold mortgagee to enter into a new ground lease
with the ground lessor on the same terms and conditions as the old
ground lease in the event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may
require that the ground lease or leasehold mortgage prohibit the ground
lessee from treating the ground lease as terminated in the event of the
ground lessor's bankruptcy and rejection of the ground lease by the trustee
for the debtor-ground lessor. As further protection, a leasehold mortgage may
provide for the assignment of the debtor-ground lessee's right to reject a
lease pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as
amended (Title 11 of the United States Code). The enforceability of such
clause has not been established.
Without the protections described above, a leasehold mortgagee may lose
the collateral securing its leasehold mortgage. The ground leases and the
mortgage that secures the mortgage loan may not contain some of these
provisions. In addition, terms and conditions of a leasehold mortgage are
subject to the terms and conditions of the ground lease. Although certain
rights given to a ground lessee can be limited
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by the terms of a leasehold mortgage, the rights of a ground lessee or a
leasehold mortgagee with respect to, among other things, insurance, casualty
and condemnation will be governed by the provisions of the ground lease.
Cooperative Loans
The cooperative shares owned by the tenant-stockholder and pledged to the
lender are, in almost all cases, subject to restrictions on transfer as set
forth in the Cooperative's Certificate of Incorporation and By-laws, as well
as the proprietary lease or occupancy agreement, and may be cancelled by the
cooperative for failure by the tenant-stockholder to pay rent or other
obligations or charges owed by such tenant-stockholder, including mechanics'
liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the Cooperative to terminate such lease or agreement in the an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the Cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder under the
proprietary lease or occupancy agreement will usually constitute a default
under the security agreement between the lender and the tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement is terminated, the Cooperative will recognize the lender's lien
against proceeds from the sale of the Cooperative apartment. This is subject
to the Cooperative's right to sums due under such proprietary lease or
occupancy agreement. The total amount owed to the Cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the cooperative loan and accrued and unpaid interest
thereon.
Recognition agreements also provide that in the event of a foreclosure on
a Cooperative loan, the lender must obtain the approval or consent of the
Cooperative as required by the proprietary lease before transferring the
Cooperative shares or assigning the proprietary lease. Generally, the lender
is not limited in any rights it may have to dispossess the
tenant-stockholders.
In some states, foreclosure on the Cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code and the security agreement relating to those shares. Article 9 of the
Uniform Commercial Code requires that a sale be conducted in a "commercially
reasonable" manner. Whether a foreclosure sale has been conducted in a
"commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given
the debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted.
Article 9 of the Uniform Commercial Code 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. The
recognition agreement, however, generally provides that the lender's right to
reimbursement is subject to the right of the Cooperatives to receive sums due
under the proprietary lease or occupancy agreement. If there are proceeds
remaining, the lender must account to the tenant-stockholder for the surplus.
Conversely, if a portion of the indebtedness remains unpaid, the
tenant-stockholder is generally responsible for the deficiency.
In the case of foreclosure on a building which was converted from a rental
building to a building owned by a Cooperative under a non-eviction plan, some
states require that a purchaser at a foreclosure sale take the property
subject to rent control and rent stabilization laws which apply to certain
tenants who elected to remain in the building was so converted.
BANKRUPTCY LAWS
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,
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virtually all actions (including foreclosure actions and deficiency judgment
proceedings) are automatically stayed upon the filing of the bankruptcy
petition, and, usually, 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 for the lender are met, the amount and terms of a mortgage secured
by property of the debtor may be modified under certain circumstances. In
many jurisdictions, the outstanding amount of the loan secured by the real
property 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. This leaves the
lender unsecured 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 in the form of a reduction in the rate of
interest and/or the alteration of the repayment schedule (with or without
affecting the unpaid principal balance of the loan), and/or an extension (or
reduction) of the final maturity date. Some courts with federal bankruptcy
jurisdiction have approved plans, based on the particular facts of the
reorganization case, that effected the curing of a mortgage loan default by
paying arrearages over a number of years. Also, under federal bankruptcy law,
a bankruptcy court may permit a debtor through its rehabilitative plan to
de-accelerate a secured loan and to reinstate the loan even though the lender
accelerated the mortgage loan and final judgment of foreclosure had been
entered in state court (provided no sale of the property had yet occurred)
prior to the filing of the debtor's petition. This may be done even if the
full amount due under the original loan is never repaid.
Federal bankruptcy law provides generally that rights and obligation under
an unexpired lease of the debtor/lessee may not be terminated or modified at
any time after the commencement of a case under the Bankruptcy Code solely on
the basis of a provision in the lease to such effect or because of certain
other similar events. This prohibition could limit the ability of the trustee
for a series of certificates to exercise certain contractual remedies with
respect to the leases. In addition, Section 362 of the Bankruptcy Code
operates as an automatic stay of, among other things, any act to obtain
possession of property from a debtor's estate. This may delay a trustee's
exercise of such remedies for a related series of certificates in the event
that a related lessee or a related mortgagor becomes the subject of a
proceeding under the Bankruptcy Code. For example, a mortgagee would be
stayed from enforcing a lease assignment by a mortgagor related to a
mortgaged property if the related mortgagor was in a bankruptcy proceeding.
The legal proceedings necessary to resolve the issues could be time-consuming
and might result in significant delays in the receipt of the assigned rents.
Similarly, the filing of a petition in bankruptcy by or on behalf of a lessee
of a mortgaged property would result in a stay 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.
Rents and other proceeds of a mortgage loan may also escape an assignment
thereof if the assignment is not fully perfected under state law prior to
commencement of the bankruptcy proceeding. See "--Leases and Rents" above.
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court, (a) assume the
lease and retain it or assign it to a third party or (b) reject the lease. If
the lease is assumed, the trustee in bankruptcy on behalf of the lessee, or
the lessee as debtor-in-possession, or the 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, however, as the lessor may be forced to
continue under the lease with a lessee that is a poor credit risk or an
unfamiliar tenant if the lease was assigned, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, such
rejection generally constitutes a breach of the executory contract or
unexpired lease immediately before the date of filing the petition. As a
consequence, the other party or parties to such lease, such as the mortgagor,
as lessor under a lease, would have only an unsecured claim against the
debtor for damages resulting from such breach, which could adversely affect
the security for the related mortgage loan. In addition, pursuant to Section
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502(b)(6) of the Bankruptcy Code, a lessor's damages for lease rejection in
respect of future rent installments are limited to the rent reserved by the
lease, without acceleration, for the greater of one year or 15% of the
remaining term of the lease, but not more than three years.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat such lease as terminated by such rejection or, in the alternative,
the lessee may remain in possession of the leasehold for the balance of such
term and for any renewal or extension of such term that is enforceable by the
lessee under applicable nonbankruptcy law. The Bankruptcy Code provides that
if a lessee elects to remain in possession after such a rejection of a lease,
the lessee may offset any damages occurring after such date caused by the
nonperformance of any obligation of the lessor under the lease after such
date against rents reserved under the lease. To the extent provided in the
related prospectus supplement, the lessee will agree under certain leases to
pay all amounts owing thereunder the master servicer without offset. To the
extent that such a contractual obligation remains enforceable against the
lessee, the lessee would not be able to avail itself of the rights of offset
generally afforded to lessees of real property under the Bankruptcy Code.
In a bankruptcy or similar proceeding of a mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the mortgagor, or made directly by the related lessee, under
the related mortgage loan to the trust fund. Payments on long-term debt may
be protected from recovery as preferences if they are payments in the
ordinary course of business made on debts incurred in the ordinary course of
business. Whether any particular payment would be protected depends upon the
facts specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may
have the power to grant liens senior to the lien of a mortgage, and analogous
state statutes and general principles of equity may also provide a mortgagor
with means to halt a foreclosure proceeding or sale and to force a
restructuring of a mortgage loan on terms a lender would not otherwise
accept. Moreover, the laws of certain states also give priority to certain
tax liens over the lien of a mortgage or deed of trust. Under the Bankruptcy
Code, if the court finds that actions of the mortgagee have been
unreasonable, the lien of the related mortgage may be subordinated to the
claims of unsecured creditors.
To the extent described in the related prospectus supplement, certain of
the mortgagors may be partnerships. The laws governing limited partnerships
in certain states provide that the commencement of a case under the
Bankruptcy Code with respect to a general partner will cause a person to
cease to be a general partner of the limited partnership, unless otherwise
provided in writing in the limited partnership agreement. This provision may
be construed as an "ipso facto" clause and, in the event of the general
partner's bankruptcy, may not be enforceable. To the extent described in the
related prospectus supplement, certain limited partnership agreements of the
mortgagors may provide that the commencement of a case under the Bankruptcy
Code with respect to the related general partner constitutes an event of
withdrawal (assuming the enforceability of the clause is not challenged in
bankruptcy proceedings or, if challenged, is upheld) that might trigger the
dissolution of the limited partnership, the winding up of its affairs and the
distribution of its assets, unless (i) at the time there was at least one
other general partner and the written provisions of the limited partnership
permit the business of the limited partnership to be carried on by the
remaining general partner and that general partner does so or (ii) the
written provisions of the limited partnership agreement permit the limited
partner to agree within a specified time frame (often 60 days) after such
withdrawal to continue the business of the limited partnership and to the
appointment of one or more general partners and the limited partners do so.
In addition, the laws governing general partnerships in certain states
provide that the commencement of a case under the Bankruptcy Code or state
bankruptcy laws with respect to a general partner of such partnerships
triggers the dissolution of such partnership, the winding up of its affairs
and the distribution of its assets. Such state laws, however, may not be
enforceable or effective in a bankruptcy case. The dissolution of a
mortgagor, the winding up of its affairs and the distribution of its assets
could result in an acceleration of its payment obligation under a related
mortgage loan, which may reduce the yield on the related series of
certificates in the same manner as a principal prepayment.
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In addition, the bankruptcy of the general partner of a mortgagor that is
a partnership may provide the opportunity for a trustee in bankruptcy for
such general partner, such general partner as a debtor-in-possession, or a
creditor of such general partner to obtain an order from a court
consolidating the assets and liabilities of the general partner with those of
the mortgagor pursuant to the doctrines of substantive consolidation or
piercing the corporate veil. In such a case, the mortgaged property could
become property of the estate of such bankrupt general partner. Not only
would the mortgaged property be available to satisfy the claims of creditors
of such general partner, but an automatic stay would apply to any attempt by
the trustee to exercise remedies with respect to such mortgaged property.
However, such an occurrence should not affect the trustee's status as a
secured creditor with respect to the mortgagor or its security interest in
the mortgaged property.
ENVIRONMENTAL LEGISLATION
Real property pledged as security to a lender may be subject to unforeseen
environmental liabilities. Of particular concern may be those mortgaged
properties which are, or have been, the site of manufacturing, industrial or
disposal activity. Such environmental liabilities may give rise to (i) a
diminution in value of property securing any mortgage loan, (ii) limitation
on the ability to foreclose against such property or (iii) in certain
circumstances as more fully described below, liability for clean up costs or
other remedial actions, which liability could exceed the value of the
principal balance of the related mortgage loan or of such mortgaged property.
Under the laws of many states, contamination on a property may give rise
to a lien on the property for cleanup costs. In several states, such a lien
has priority over all existing liens (a "superlien") including those of
existing mortgages; in these states, the lien of a mortgage contemplated by
this transaction may lose its priority to such a superlien.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), a lender may be liable either
to the government or to private parties for cleanup costs on a property
securing a loan, even if the lender does not cause or contribute to the
contamination. CERCLA imposes strict, as well as joint and several, liability
on several classes of potentially responsible parties, including current
owners and operators of the property, regardless of whether they caused or
contributed to the contamination. Many states have laws similar to CERCLA.
Lenders may be held liable under CERCLA as owners or operators. 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 exemption for
holders of a security interest such as a secured lender applies only in
circumstances where the lender acts to protect its security interest in the
contaminated facility or property. Thus, if a lender's activities encroach on
the actual management of such facility or property, the lender faces
potential liability as an "owner or operator" under CERCLA. Similarly, when a
lender forecloses and takes title to a contaminated facility or property
(whether it holds the facility or property as an investment or leases it to a
third party), the lender may incur potential CERCLA liability.
Whether actions taken by a lender would constitute such participation in
the management of a facility or property, so that the lender loses the
protection of this "second creditor exclusion," has been a matter of judicial
interpretation of the statutory language, and court decisions have
historically been inconsistent. In 1990, the United States Court of Appeals
for the Eleventh Circuit suggested, in United States v. Fleet Factors Corp.,
that the mere capacity of the lender to influence a borrower's decisions
regarding disposal of hazardous substances was sufficient participation in
the management of the borrower's business to deny the protection of the
secured creditor exclusion to the lender, regardless of whether the lender
actually exercised such influence. Other judicial decisions did not interpret
the secured creditor exclusion as narrowly as did the Eleventh Circuit.
This ambiguity appears to have been resolved by the enactment of the Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996
(the "Asset Conservation Act"), which took effect on September 30, 1996. The
Asset Conservation Act provides that in order to be deemed to have
participated in the management of a secured property, a lender must actually
participate in the
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operational affairs of the property or of the borrower. The Asset
Conservation Act also provides that participation in the management of the
property does not include "merely having the capacity to influence, or
unexercised right to control" operations. Rather, a lender will lose the
protection of the secured creditor exclusion 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 secured property.
The secured-creditor exemption does not protect a lender from liability
under CERCLA in cases where the lender arranges for disposal of hazardous
substances or for transportation of hazardous substances. The definition of
"hazardous substances" under CERCLA specifically excludes petroleum products,
and the secured-creditor exemption does not govern liability for cleanup
costs under federal laws other than CERCLA, in particular Subtitle I of the
federal Resource Conservation and Recovery Act ("RCRA"), which regulates
underground petroleum (other than heating oil) storage tanks. However, the
EPA has adopted a lender liability rule for underground storage tanks under
Subtitle I of RCRA. Under such rule, a holder of a security interest in an
underground storage tank or real property containing an underground storage
tank is not considered an operator of the underground storage tank as long as
petroleum is not added to, stored in or dispensed from the tank. It should be
noted, however, that liability for cleanup of petroleum contamination may be
governed by state law, which may not provide for any specific protections for
secured creditors.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental hazard, but that
person or entity may be bankrupt or otherwise judgment proof. It is possible
that cleanup costs could become a liability of the trust fund and occasion a
loss to certificateholders in certain circumstances described above if such
remedial costs were incurred.
The related pooling and servicing agreement will provide that the special
servicer, acting on behalf of the trustee, may not acquire title to a
mortgaged property or take over its operation unless the special servicer has
previously determined, based on a report prepared by a person who regularly
conducts environmental assessments, that: (i) such mortgaged property is in
compliance with applicable environmental laws, or, if not, that taking such
actions as are necessary to bring the mortgaged property in compliance
therewith is likely to produce a greater recovery on a present value basis,
after taking into account any risks associated therewith, than not taking
such actions and (ii) there are no circumstances present at the mortgaged
property relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation. This requirement effectively precludes enforcement of the
security for the related mortgage note until a satisfactory environmental
inquiry is undertaken, or that, if any hazardous materials are present for
which such action could be required, taking such actions with respect to the
affected mortgaged property is reasonably likely to produce a greater
recovery on a present value basis, after taking into account any risks
associated therewith, than not taking such actions, reducing the likelihood
that a given trust fund will become liable for any condition or circumstance
that may give rise to any environmental claim affecting a mortgaged property,
but making it more difficult to realize on the security for the mortgage
loan. However, there can be no assurance that any environmental assessment
obtained by the special servicer will detect all possible environmental
hazard conditions, that any estimate of the costs of effecting compliance at
any mortgaged property and the recovery thereon will be correct, or that the
other requirements of the pooling and servicing agreement, even if fully
observed by the master servicer or special servicer, as the case may be, will
in fact insulate a given trust fund from liability for environmental hazard
conditions. Any additional restrictions on acquiring titles to a mortgaged
property may be set forth in the related prospectus supplement.
Unless otherwise specified in the related prospectus supplement, the
depositor generally will not have determined whether environmental
assessments have been conducted with respect to the mortgaged properties. In
any event, it is likely that if any environmental assessments was conducted,
with respect to any of the mortgaged properties, it would have been conducted
at the time of the origination of the related mortgage loans and not
thereafter. If specified in the related prospectus supplement, the seller of
the mortgage loan or another person identified therein will represent and
warrant that based on an environmental audit, as of the date of the
origination of a mortgage loan, the related mortgaged property
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is not affected by a condition which would reasonably be expected to (1)
constitute or result in a violation of applicable environmental laws, (2)
require any expenditure material in relation to the principal balance of the
related mortgage loan to achieve or maintain compliance in all material
respects with any applicable environmental laws, or (3) require substantial
cleanup, remedial action or other extraordinary response under any applicable
environmental laws in excess of a specified escrowed amount.
No such person will however, be responsible for any such condition which
may arise on a mortgaged property after the date of origination of the
related mortgage loan, whether due to actions of the mortgagor, a servicer,
or any other person. It may not always be possible to determine whether such
a condition arose prior or subsequent to the date of the origination of the
related mortgage loan.
"Hazardous materials" are generally defined under several federal and
state statutes, and include dangerous toxic or hazardous pollutants,
chemicals, wastes or substances, including, without limitation, those so
identified pursuant to CERCLA, and specifically including, asbestos and
asbestos containing materials, polychlorinated biphenyls, radon gas,
petroleum and petroleum products and urea formaldehyde.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the mortgage loans may contain due-on-sale and
due-on-encumbrance clauses. These clauses generally provide that the lender
may accelerate the maturity of the loan if the mortgagor sells or otherwise
transfers or encumbers the mortgaged property. Certain of these clauses may
provide that, upon an attempted breach thereof by the mortgagor of an
otherwise non-recourse loan, the mortgagor becomes personally liable for the
mortgage debt. The enforceability of due-on-sale clauses has been the subject
of legislation or litigation in many states and, in some cases, the
enforceability of these clauses was limited or denied. However, with respect
to certain loans the Garn-St Germain Depository Institutions Act of 1982
preempts state constitutional, statutory and case law that prohibits the
enforcement of due-on-sale clauses and permits lenders to enforce these
clauses in accordance with their terms subject to certain limited exceptions.
Unless otherwise provided in the related prospectus supplement, a master
servicer, on behalf of the trust fund, will determine whether to exercise any
right the trustee may have as mortgagee to accelerate payment of any such
mortgage loan or to withhold its consent to any transfer or further
encumbrance in a manner consistent with the servicing standard.
In addition, under federal bankruptcy laws, due-on-sale clauses may not be
enforceable in bankruptcy proceedings and may, under certain circumstances,
be eliminated in any modified mortgage resulting from such bankruptcy
proceeding.
SUBORDINATE FINANCING
Where the mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the
mortgagor may have difficulty servicing and repaying multiple loans. In
addition, if the junior loan permits recourse to the mortgagor (as junior
loans often do) and the senior loan does not, a mortgagor may be more likely
to repay sums due on the junior loan than those on the senior 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 mortgagor and the senior lender agree to an
increase in the principal amount of or the interest rate payable on the
senior loan, the senior lender may lose its priority to the extent any
existing junior lender is harmed or the mortgagor is additionally burdened.
Third, if the mortgagor 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, PREPAYMENT CHARGES AND PREPAYMENTS
Forms of notes and mortgages used by lenders may contain provisions
obligating the mortgagor to pay a late charge or additional interest if
payments are not timely made, and in some circumstances may
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provide for prepayment fees or yield maintenance penalties if the obligation
is paid prior to maturity or prohibit such prepayment for a specified period.
In certain states, there are or may be specific limitations upon the late
charges which a lender may collect from a mortgagor for delinquent payments.
Certain states also limit the amounts that a lender may collect from a
mortgagor as an additional charge if the loan is prepaid. The enforceability,
under the laws of a number of states of provisions providing for prepayment
fees or penalties upon, or prohibition of, an involuntary prepayment is
unclear, and no assurance can be given that, at the time a Prepayment Premium
is required to be made on a mortgage loan in connection with an involuntary
prepayment, the obligation to make such payment, or the provisions of any
such prohibition, will be enforceable under applicable state law. The absence
of a restraint on prepayment, particularly with respect to mortgage loans
having higher mortgage interest rates, may increase the likelihood of
refinancing or other early retirements of the mortgage loans.
ACCELERATION ON DEFAULT
Unless otherwise specified in the related prospectus supplement, some of
the mortgage loans included in the mortgage pool for a series will include a
"debt-acceleration" clause, which permits the lender to accelerate the full
debt upon a monetary or nonmonetary default of the mortgagor. The courts of
all states will enforce clauses providing for acceleration in the event of a
material payment default after giving effect to any appropriate notices. The
equity courts of the state, however, may refuse to foreclose 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.
Furthermore, in some states, the mortgagor may avoid foreclosure and
reinstate an accelerated loan by paying only the defaulted amounts and the
costs and attorneys' fees incurred by the lender in collecting such defaulted
payments.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential (including
multifamily but not other commercial) first mortgage loans originated by
certain lenders after March 31, 1980. A similar federal statute was in effect
with respect to mortgage loans made during the first three months of 1980.
The statute 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.
The depositor has been advised by counsel that a court interpreting Title
V would hold that residential first mortgage loans that are originated on or
after January 1, 1980 are subject to federal preemption. Therefore, in a
state that has not taken the requisite action to reject application of Title
V or to adopt a provision limiting discount points or other charges prior to
origination of such mortgage loans, any such limitation under such state's
usury law would not apply to such mortgage loans.
In any state in which application of Title V has been expressly rejected
or a provision limiting discount points or other charges is adopted, no
mortgage loan originated after the date of such state action will be eligible
for inclusion in a trust fund unless (i) the mortgage loan provides for such
interest rate, discount points and charges as are permitted in such state or
(ii) the mortgage loan provides that the terms thereof shall 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 mortgagor's counsel
has rendered an opinion that such choice of law provision would be given
effect.
Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or impose a specified penalty. Under this
statutory scheme, the borrower may cancel the recorded mortgage or deed of
trust upon paying its debt with lawful interest, and the lender may
foreclose, but only for the debt plus lawful interest. A second group of
statutes is more severe. A violation of this type of usury law results in the
invalidation of the transaction, thereby permitting the borrower to cancel
the recorded mortgage or deed of trust without any payment or prohibiting the
lender from foreclosing.
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CERTAIN LAWS AND REGULATIONS; TYPES OF MORTGAGED PROPERTIES
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 (e.g., a nursing or convalescent home or hospital), result
in a failure to realize the full principal amount of the related mortgage
loan. Mortgages on mortgaged properties which are owned by the mortgagor
under a condominium form of ownership are subject to the declaration, by-laws
and other rules and regulations of the condominium association. Mortgaged
properties which are hotels or motels may present additional risk in that
hotels and motels are typically operated pursuant to franchise, management
and operating agreements which may be terminable by the operator, and the
transferability of the hotel's operating, liquor and other licenses to the
entity acquiring the hotel either through purchases or foreclosure is subject
to the vagaries of local law requirements. In addition, mortgaged properties
which are multifamily residential properties may be subject to rent control
laws, which could impact the future cash flows of such properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder 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 Disabilities Act, alterations to a place of public
accommodation or a commercial facility are to be made so that, to the maximum
extent feasible, such altered portions are readily accessible to and usable
by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a
possible financial burden on the mortgagor in its capacity as owner or
landlord, the Disabilities Act may also impose such requirements on a
foreclosing lender who succeeds to the interest of the mortgagor as owner of
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 mortgagor of complying with
the requirements of the Disabilities Act may be subject to more stringent
requirements than those to which the mortgagor 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, a mortgagor who enters military service after the origination of
such mortgagor's mortgage loan (including a mortgagor 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 mortgagor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies
to mortgagors 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
mortgagors 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 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 any 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
servicer to foreclose on an affected mortgage loan during the mortgagor's
period of active duty status, and, under certain circumstances, during an
additional three month period thereafter. Thus, in the event that such a
mortgage loan goes into default, there may be delays and losses occasioned
thereby.
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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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FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of offered
certificates is based on the advice of Brown & Wood LLP, counsel to the
depositor. This summary is based on laws, regulations, including REMIC
Regulations, rulings and decisions now in effect or with respect to
regulations, proposed, all of which are subject to change either
prospectively or retroactively. This summary does not address the federal
income tax consequences of an investment in certificates applicable to all
categories of investors, some of which for example, banks and insurance
companies--may be subject to special rules. Prospective investors should
consult their tax advisors regarding the federal, state, local and any other
tax consequences to them of the purchase, ownership and disposition of
certificates.
GENERAL
The federal income tax consequences to certificateholders will vary
depending on whether an election is made to treat the trust fund relating to
a particular series of certificates as a REMIC under the Code. The prospectus
supplement for each series of certificates will specify whether a REMIC
election will be made.
GRANTOR TRUST FUNDS
If a REMIC election is not made, Brown & Wood LLP will deliver its opinion
that the trust fund will not be classified as an association taxable as a
corporation and that the trust fund will be classified as a grantor trust
under subpart E, Part I of subchapter J of Chapter 1 of Subtitle A of the
Code. In this case, owners of certificates will be treated for federal income
tax purposes as owners of a portion of the trust fund's assets as described
in this section of the prospectus.
a. SINGLE CLASS OF GRANTOR TRUST CERTIFICATES
Characterization. The trust fund may be created with one class of grantor
trust certificates. In this case, each grantor trust certificateholder will
be treated as the owner of a pro rata undivided interest in the interest and
principal portions of the trust fund represented by the grantor trust
certificates and will be considered the equitable owner of a pro rata
undivided interest in each of the mortgage loans and/or MBS in the pool. Any
amounts received by a grantor trust certificateholder in lieu of amounts due
with respect to any mortgage loan and/or MBS because of a default or
delinquency in payment will be treated for federal income tax purposes as
having the same character as the payments they replace.
Each grantor trust certificateholder will be required to report on its
federal income tax return in accordance with the grantor trust
certificateholder's method of accounting its pro rata share of the entire
income from the mortgage loans in the trust fund represented by grantor trust
certificates, including interest, OID, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges
received by the master servicer. Under Code Sections 162 or 212 each grantor
trust certificateholder will be entitled to deduct its pro rata share of
servicing fees, prepayment fees, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the master servicer, provided
that the amounts are reasonable compensation for services rendered to the
trust fund. Grantor trust certificateholders that are individuals, estates or
trusts will be entitled to deduct their share of expenses as itemized
deductions only to the extent these expenses plus all other Code Section 212
expenses exceed two percent of its adjusted gross income. In addition, the
amount of itemized deductions otherwise allowable for the taxable year for an
individual whose adjusted gross income exceeds the applicable amount under
Code Section 68(b)--which amount will be adjusted for inflation--will be
reduced by the lesser of
o 3% of the excess of adjusted gross income over the applicable
amount and
o 80% of the amount of itemized deductions otherwise allowable for
such taxable year.
In general, a grantor trust certificateholder using the CASH METHOD OF
ACCOUNTING must take into account its pro rata share of income as and
deductions as and when collected by or paid to the master
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servicer or, with respect to original issue discount or certain other income
items for which the certificateholder has made an election, as the amounts
are accrued by the trust fund on a constant interest basis, and will entitled
to claim its pro rata share of deductions, subject to the foregoing
limitations, when the amounts are paid or the certificateholder would
otherwise be entitled to claim the deductions had it held the mortgage loans
and/or MBS directly. A grantor trust certificateholder using an ACCRUAL
METHOD OF ACCOUNTING must take into account its pro rata share of income as
payment becomes due or is made to the master servicer, whichever is earlier
and may deduct its pro rata share of expense items, subject to the foregoing
limitations, when the amounts are paid or the certificateholder otherwise
would be entitled to claim the deductions had it held the mortgage loans
and/or MBS directly. If the servicing fees paid to the master servicer are
deemed to exceed reasonable servicing compensation, the amount of the excess
could be considered as an ownership interest retained by the master servicer
or any person to whom the master servicer assigned for value all or a portion
of the servicing fees in a portion of the interest payments on the mortgage
loans and/or MBS. The mortgage loans and/or MBS would then be subject to the
"coupon stripping" rules of the Code discussed below under "--Stripped Bonds
and Coupons."
Unless otherwise specified in the related prospectus supplement or
otherwise provided below in this section of the prospectus, as to each series
of certificates, counsel to depositor will have advised depositor that:
o a grantor trust certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19)
representing principal and interest payments on mortgage loans
and/or MBS will be considered to represent "loans . . . secured by
an interest in real property which is . . . residential property"
within the meaning of Code Section 7701(a)(19)(C)(v), to the extent
that the mortgage loans and/or MBS represented by that grantor
trust certificate are of a type described in that Code section;
o a grantor trust certificate owned by a real estate investment trust
representing an interest in mortgage loans and/or MBS will be
considered to represent "real estate assets" within the meaning of
Code Section 856(c)(4)(A), and interest income on the mortgage loan
and/or MBS will be considered "interest on obligations secured by
mortgages on real property" within the meaning of Code Section
856(c)(3)(B), to the extent that the mortgage loans and/or MBS
represented by that grantor trust certificate are of a type
described in that Code section; and
o a grantor trust certificate owned by a REMIC will represent
"obligation[s] . . . which [are] principally secured by an interest
in real property" within the meaning of Code Section 860G(a)(3).
The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application
of Code Section 593(d) to any taxable year beginning after December 31, 1995.
Stripped Bonds and Coupons. Certain trust funds may consist of government
securities that constitute "stripped bonds" or "stripped coupons" as those
terms are defined in Section 1286 of the Code, and, as a result, these assets
would be subject to the stripped bond provisions of the Code. Under these
rules, these government securities are treated as having original issue
discount based on the purchase price and the stated redemption price at
maturity of each security. As such, grantor trust certificateholders would be
required to include in income their pro rata share of the original issue
discount on each Government Security recognized in any given year on an
economic accrual basis even if the grantor trust certificateholder is a cash
method taxpayer. Accordingly, the sum of the income includible to the grantor
trust certificateholder in any taxable year may exceed amounts actually
received during such year.
Premium. The price paid for a grantor trust certificate by a holder will
be allocated to the holder's undivided interest in each mortgage loan and/or
MBS based on each asset's relative fair market value, so that the holder's
undivided interest in each asset will have its own tax basis. A grantor trust
certificateholder that acquires an interest in mortgage loans and/or MBS at a
premium may elect to amortize the premium under a constant interest method,
provided that the underlying mortgage loans with respect to the mortgage
loans and/or MBS were originated after September 27, 1985. Premium
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allocable to mortgage loans originated on or before September 27, 1985 should
be allocated among the principal payments on such mortgage loans and allowed
as an ordinary deduction as principal payments are made. Amortizable bond
premium will be treated as an offset to interest income on such grantor trust
certificate. The basis for such grantor trust certificate will be reduced to
the extent that amortizable premium is applied to offset interest payments.
It is not clear whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Code Section 171. A
certificateholder that makes this election for a mortgage loan or MBS or any
other debt instrument that is acquired at a premium will be deemed to have
made an election to amortize bond premium with respect to all debt
instruments having amortizable bond premium that such certificateholder
acquires during the year of the election or thereafter.
If a premium is not subject to amortization using a reasonable prepayment
assumption, the holder of a grantor trust certificate representing an
interest in a mortgage loan or MBS acquired at a premium should recognize a
loss if a mortgage loan or an underlying mortgage loan with respect to an
asset prepays in full, equal to the difference between the portion of the
prepaid principal amount of such mortgage loan or underlying mortgage loan
that is allocable to the certificate and the portion of the adjusted basis of
the certificate that is allocable to such mortgage loan or underlying
mortgage loan. If a reasonable prepayment assumption is used to amortize the
premium, it appears that such a loss would be available, if at all, only if
prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be
required to reflect differences between an assumed prepayment rate and the
actual rate of prepayments.
The Internal Revenue Service has issued Amortizable Bond Premium
Regulations. The Amortizable Bond Premium Regulations specifically do not
apply to prepayable debt instruments or any pool of debt instruments the
yield on which may be affected by prepayments, such as the trust fund, which
are subject to Section 1272(a)(6) of the Code. Absent further guidance from
the IRS and to the extent set forth in the related prospectus supplement, the
trustee will account for amortizable bond premium in the manner described in
this section. Prospective purchasers should consult their tax advisors
regarding amortizable bond premium and the Amortizable Bond Premium
Regulations.
Original Issue Discount. The IRS has stated in published rulings that, in
circumstances similar to those described in this prospectus, the OID
Regulations will be applicable to a grantor trust certificateholder's
interest in those mortgage loans and/or MBS meeting the conditions necessary
for these sections to apply. Rules regarding periodic inclusion of OID income
are applicable to mortgages of corporations originated after May 27, 1969,
mortgages of noncorporate borrowers other than individuals originated after
July 1, 1982, and mortgages of individuals originated after March 2, 1984.
Such OID could arise by the financing of points or other charges by the
originator of the mortgages in an amount greater than a statutory de minimis
exception to the extent that the points are not currently deductible under
applicable Code provisions or are not for services provided by the lender.
OID generally must be reported as ordinary gross income as it accrues under a
constant interest method. See "--Multiple Classes of Grantor Trust
Certificates--Accrual of Original Issue Discount" below.
Market Discount. A grantor trust certificateholder that acquires an
undivided interest in mortgage loans or MBS may be subject to the market
discount rules of Code Sections 1276 through 1278 to the extent an undivided
interest in the asset is considered to have been purchased at a "market
discount." Generally, the amount of market discount is equal to the excess of
the portion of the principal amount of the mortgage loan or MBS allocable to
the holder's undivided interest over the holder's tax basis in such interest.
Market discount with respect to a grantor trust certificate will be
considered to be zero if the amount allocable to the grantor trust
certificate is less than 0.25% of the grantor trust certificate's stated
redemption price at maturity multiplied by the weighted average maturity
remaining after the date of purchase. Treasury regulations implementing the
market discount rules have not yet been issued; therefore, investors should
consult their own tax advisors regarding the application of these rules and
the advisability of making any of the elections allowed under Code Sections
1276 through 1278.
The Code provides that any principal payment, whether a scheduled payment
or a prepayment, or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986 shall
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be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be
reduced by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the holder
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest rate or according to one of the following
methods. If a grantor trust certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of
o the total remaining market discount and
o a fraction, the numerator of which is the OID accruing during the
period and the denominator of which is the total remaining OID at
the beginning of the accrual period.
For grantor trust certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of
o the total remaining market discount and
o a fraction, the numerator of which is the amount of stated interest
paid during the accrual period and the denominator of which is the
total amount of stated interest remaining to be paid at the
beginning of the accrual period.
For purposes of calculating market discount under any of the above methods
in the case of instruments, such as the grantor trust certificates, that
provide for payments that may be accelerated by reason of prepayments of
other obligations securing such instruments, the same prepayment assumption
applicable to calculating the accrual of OID will apply. Because the
regulations described above have not been issued, it is impossible to predict
what effect those regulations might have on the tax treatment of a grantor
trust certificate purchased at a discount or premium in the secondary market.
A holder who acquired a grantor trust certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry the grantor trust certificate purchased with market
discount. For these purposes, the de minimis rule referred to above applies.
Any such deferred interest expense would not exceed the market discount that
accrues during such taxable year and is, in general, allowed as a deduction
not later than the year in which the market discount is includible in income.
If such holder elects to include market discount in income currently as it
accrues on all market discount instruments acquired by such holder in that
taxable year or thereafter, the interest deferral rule described above will
not apply.
Election to Treat All Interest as OID. The OID Regulations permit a
certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method for certificates acquired on or after April
4, 1994. If this election were to be made with respect to a grantor trust
certificate with market discount, the certificateholder would be deemed to
have made an election to include in income currently market discount with
respect to all other debt instruments having market discount that such
certificateholder acquires during the year of the election or thereafter.
Similarly, a certificateholder that makes this election for a certificate
that is acquired at a premium will be deemed to have made an election to
amortize bond premium with respect to all debt instruments having amortizable
bond premium that such certificateholder owns or acquires. See "--Premium" in
this prospectus. The election to accrue interest, discount and premium on a
constant yield method with respect to a certificate is irrevocable without
consent of the IRS.
Anti-Abuse Rule. The IRS can apply or depart from the rules contained in
the OID Regulations as necessary or appropriate to achieve a reasonable
result where a principal purpose in structuring a
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mortgage loan, MBS, or grantor trust certificate or applying the otherwise
applicable rules is to achieve a result that is unreasonable in light of the
purposes of the applicable statues, which generally are intended to achieve
the clear reflection of income for both issuers and holders of debt
instruments.
b. MULTIPLE CLASSES OF GRANTOR TRUST CERTIFICATES
1. Stripped Bonds and Stripped Coupons
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the interest payments on an obligation from ownership
of the right to receive some or all of the principal payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of Code Section 1271
through 1288, Code Section 1286 treats a stripped bond or a stripped coupon
as an obligation issued on the date that such stripped interest is created.
Excess Servicing will be Treated Under the Stripped Bond Rules. If the
excess servicing fee is less than 100 basis points, i.e., 1% interest on the
principal balance of the assets in the trust fund, or the certificates are
initially sold with a de minimis discount, assuming no prepayment assumption
is required, any non-de minimis discount arising from a subsequent transfer
of the certificates should be treated as market discount. The IRS appears to
require that reasonable servicing fees be calculated on an asset by asset
basis, which could result in some mortgage loans and/or MBS being treated as
having more than 100 basis points of interest stripped off. See "--Non-REMIC
Certificates" and "Multiple Classes of Grantor Trust Certificates--Stripped
Bonds and Stripped Coupons".
Although not entirely clear, a stripped bond certificate generally should
be treated as an interest in mortgage loans and/or MBS issued on the day the
certificate is purchased for purposes of calculating any OID. Generally, if
the discount on a mortgage loan or MBS is larger than a de minimis amount, as
calculated for purposes of the OID rules, a purchaser of such a certificate
will be required to accrue the discount under the OID rules of the code. See
"--Non-REMIC Certificates" and "--Single Class of Grantor Trust
Certificates--Original Issue Discount". However, a purchaser of a stripped
bond certificate will be required to account for any discount on the mortgage
loans and/or MBS as market discount rather than OID if either
o the amount of OID with respect to the mortgage loans and/or MBS is
treated as zero under the OID de minimis rule when the certificate
was stripped or
o no more than 100 basis points, including any excess servicing, is
stripped off of the trust fund's mortgage loans and/or MBS.
Pursuant to Revenue Procedure 91-49, issued on August 8, 1991, purchasers of
stripped bond certificates using an inconsistent method of accounting must
change their method of accounting and request the consent of the IRS to the
change in their accounting method on a statement attached to their first
timely tax return filed after August 8, 1991.
The precise tax treatment of stripped coupon certificates is substantially
uncertain. The Code could be read literally to require that OID computations
be made for each payment from each mortgage loan or MBS. Unless otherwise
specified in the related prospectus supplement, all payments from a mortgage
loan or MBS underlying a stripped coupon certificate will be treated as a
single installment obligation subject to the OID rules of the Code, in which
case, all payments from the mortgage loan or MBS would be included in the
stated redemption price at maturity for the mortgage loan and/or MBS for
purposes of calculating income on the certificate under the OID rules of the
Code.
It is unclear under what circumstances, if any, the prepayment of mortgage
loans and/or MBS will give rise to a loss to the holder of a stripped bond
certificate purchased at a premium or a stripped coupon certificate. If the
certificate is treated as a single instrument rather than an interest in
discrete mortgage loans and the effect of prepayments is taken into account
in computing yield with respect to the grantor trust certificate, it appears
that no loss will be available as a result of any particular prepayment
unless prepayments occur at a rate sufficiently faster than the assumed
prepayment rate so that the certificateholder will not recover its
investment. However, if the certificate is treated as an interest in discrete
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mortgage loans or MBS, or if no prepayment assumption is used, then when a
mortgage loan or MBS is prepaid, the holder of the certificate should be able
to recognize a loss equal to the portion of the adjusted issue price of the
certificate that is allocable to the mortgage loan or MBS.
Holders of stripped bond certificates and striped coupon certificates are
urged to consult with their own tax advisors regarding the proper treatment
of these certificates for federal income tax purposes.
Treatment of Certain Owners. Several Code sections provide beneficial
treatment to certain taxpayers that invest in mortgage loans and/or MBS of
the type that make up the trust fund. With respect to these Code sections, no
specific legal authority exists regarding whether the character of the
grantor trust certificates, for federal income tax purposes, will be the same
as that of the underlying mortgage loans and/or MBS. While Code Section 1286
treats a stripped obligation as a separate obligation for purposes of the
Code provisions addressing OID, it is not clear whether such characterization
would apply with regard to these other Code sections. Although the issue is
not free from doubt, each class of grantor trust certificates, to the extent
set forth in the related prospectus supplement, should be considered to
represent "real estate assets" within the meaning of Code Section
856(c)(4)(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 income attributable to grantor trust
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 underlying mortgage loans and/or
MBS and interest on such mortgage loans and/or MBS qualify for such
treatment. Prospective purchasers to which such characterization of an
investment in certificates is material should consult their own tax advisors
regarding the characterization of the grantor trust certificates and the
income therefrom. Grantor trust certificates will be "obligation(s) . . .
which [are] principally secured by an interest in real property" within the
meaning of Code Section 860G(a)(3)(A) and "permitted assets" within the
meaning of Code Section 860L(c).
2. Grantor Trust Certificates Representing Interests in Loans Other Than
Adjustable Rate Loans
The original issue discount rules of Code Sections 1271 through 1275 will
be applicable to a certificateholder's interest in those mortgage loans
and/or MBS as to which the conditions for the application of those sections
are met. Rules regarding periodic inclusion of original issue discount in
income are applicable to mortgages of corporations originated after May 27,
1969, mortgages of noncorporate borrowers--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 mortgage in an amount greater
than the statutory de minimis exception, including a payment of points that
is currently deductible by the borrower under applicable Code provisions, or
under certain circumstances, by the presence of "teaser" rates on the
mortgage loans and/or MBS. OID on each grantor trust certificate must be
included in the owner's ordinary income for federal income tax purposes as it
accrues, in accordance with a constant interest method that takes into
account the compounding of interest, in advance of receipt of the cash
attributable to such income. The amount of OID required to be included in an
owner's income in any taxable year with respect to a grantor trust
certificate representing an interest in mortgage loans and/or MBS other than
adjustable rate loans likely will be computed as described below under
"--Accrual of Original Issue Discount" The following discussion is based in
part on the OID Regulations and in part on the provisions of the Tax Reform
Act of 1986. The OID Regulations generally are effective for debt instruments
issued on or after April 4, 1994, but may be relied upon as authority with
respect to debt instruments, such as the grantor trust certificates, issued
after December 21, 1992. Alternatively, proposed Treasury regulations issued
December 21, 1992 may be treated as authority for debt instruments issued
after December 21, 1992 and prior to April 4, 1994, and proposed Treasury
regulations issued in 1986 and 1991 may be treated as authority for
instruments issued before December 21, 1992. In applying these dates, the
issue date of the mortgage loans and/or MBS should be used, or, in the case
of stripped bond certificates or stripped coupon certificates, the date such
certificates are acquired. The holder of a certificate should be aware,
however, that neither the proposed OID Regulations nor the OID Regulations
adequately address certain issued relevant to prepayable securities.
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Under the Code, the mortgage loans and/or MBS underlying the grantor trust
certificate will be treated as having been issued on the date they were
originated with an amount of OID equal to the excess of such mortgage asset's
stated redemption price at maturity over its issue price. The issue price of
a mortgage loans and/or MBS is generally the amount lent to the lender, which
may be adjusted to take into account certain loans origination fees. The
stated redemption price at maturity of a mortgage loans and/or MBS is the sum
of all payments to be made on these assets other than payments that are
treated as qualified stated interest payments. The accrual of this OID, as
described below under "--Accrual of Original Issue Discount," will, to the
extent set forth in the related prospectus supplement, utilize the Prepayment
Assumption on the issue date of such grantor trust certificate and will take
into account events that occur during the calculation period. The Prepayment
Assumption will be determined in the manner prescribed by regulations that
have not yet been issued. In the absence of such regulations, the Prepayment
Assumption used will be the prepayment assumption that is used in determining
the offering price of such certificate. No representation is made that any
certificate will prepay at the Prepayment Assumption or at any other rate.
Accrual of Original Issue Discount. Generally, the owner of a grantor
trust certificate must include in gross income the sum of the "daily
portions," as defined below in this section, of the OID on the grantor trust
certificate for each day on which it owns the certificate, including the date
of purchase but excluding the date of disposition. In the case of the
original owner, the daily portions of OID with respect to each component
generally will be determined as set forth under the OID Regulations. A
calculation will be made by the master servicer or other entity specified in
the related prospectus supplement of the portion of OID that accrues during
each successive monthly accrual period, or shorter period from the date of
original issue, that ends on the day in the calendar year corresponding to
each of the distribution dates on the grantor trust certificates, or the day
prior to each such date. This will be done, in the case of each full month
accrual period, by
o adding (1) the present value at the end of the accrual
period--determined by using as a discount factor the original yield
to maturity of the respective component under the Prepayment
Assumption--of all remaining payments to be received under the
Prepayment Assumption on the respective component and (2) any
payments included in the stated redemption price at maturity
received during such accrual period, and
o subtracting from that total the "adjusted issued price" of the
respective component at the beginning of such accrual period.
The adjusted issue price of a grantor trust certificate at the beginning of
the first accrual period is its issue price; the adjusted issue price of a
grantor trust certificate at the beginning of a subsequent accrual period is
the adjusted issue price at the beginning of the immediately preceding
accrual period plus the amount of OID allocable to that accrual period
reduced by the amount of any payment other than a payment of qualified stated
interest made at the end of or during that accrual period. The OID accruing
during such accrual period will then be divided by the number of days in the
period to determine the daily portion of OID for each day in the period. With
respect to an initial accrual period shorter than a full monthly accrual
period, the daily portions of OID must be determined according to an
appropriate allocation under any reasonable method.
Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest as it accrues rather than when received. However,
the amount of original issue discount includible in the income of a holder of
an obligation is reduced when the obligation is acquired 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 the mortgage loans and/or MBS acquired by a certificateholder
are purchased at a price equal to the then unpaid principal amount of the
asset, no original issue discount attributable to the difference between the
issue price and the original principal amount of the asset--i.e.,
points--will be includible by the holder. Other original issue discount on
the mortgage loans and/or MBS--e.g., that arising from a "teaser" rate--would
still need to be accrued.
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3. Grantor Trust Certificates Representing Interests in Adjustable Rate
Loans
The OID Regulations do not address the treatment of instruments, such as
the grantor trust certificates, which represent interests in adjustable rate
loans. Additionally, the IRS has not issued guidance under the Code's coupon
stripping rules with respect to such instruments. In the absence of any
authority, the master servicer will report Stripped ARM Obligations to
holders in a manner it believes is consistent with the rules described above
under the heading "--Grantor Trust Certificates Representing Interests in
Loans Other Than Adjustable Rate Loans" and with the OID Regulations. In
general, application of these rules may require inclusion of income on a
Stripped ARM Obligation in advance of the receipt of cash attributable to
such income. Further, the addition of deferred interest to the principal
balance of an adjustable rate loan may require the inclusion of the amount in
the income of the grantor trust certificateholder when the amount accrues.
Furthermore, the addition of deferred interest to the grantor trust
certificate's principal balance will result in additional income, including
possibly OID income, to the grantor trust certificateholder over the
remaining life of such grantor trust certificates.
Because the treatment of Stripped ARM Obligations is uncertain, investors
are urged to consult their tax advisors regarding how income will be
includible with respect to such certificates.
c. SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE
Sale or exchange of a grantor trust certificate prior to its maturity will
result in gain or loss equal to the difference, if any, between the amount
received and the owner's adjusted basis in the grantor trust certificate.
Such adjusted basis generally will equal the seller's purchase price for the
grantor trust certificate, increased by the OID included in the seller's
gross income with respect to the grantor trust certificate, and reduced by
principal payments on the grantor trust certificate previously received by
the seller. Such gain or loss will be capital gain or loss to an owner for
which a grantor trust certificate is a "capital asset" within the meaning of
Code Section 1221, except to the extent described above with respect to
market discount and will generally be long-term capital gain if the grantor
trust certificate has been owned for more than one year. Long-term capital
gains of individuals are subject to reduced maximum tax rates while capital
gains recognized by individuals on capital assets held less than twelve
months are generally subject to ordinary income tax rates. The use of capital
losses is limited.
It is possible that capital gain realized by holders of one or more
classes of grantor trust certificates could be considered gain realized upon
the disposition of property that was part of a "conversion transaction." A
sale of a grantor trust certificate will be part of a conversion transaction
if substantially all of the holder's expected return is attributable to the
time value of the holder's net investment, and:
o the holder entered the contract to sell the grantor trust
certificate substantially contemporaneously with acquiring the
grantor trust certificate;
o the grantor trust certificate is part of a straddle;
o the grantor trust certificate is marketed or sold as producing
capital gain; or
o other transactions to be specified in Treasury regulations that
have not yet been issued. If the sale or other disposition of a
grantor trust certificate is part of a conversion transaction, all
or any portion of the gain realized upon the sale or other
disposition would be treated as ordinary income instead of capital
gain.
Grantor trust certificates will be "evidences of indebtedness" within the
meaning of Code Section 582(c)(1), so that gain or loss recognized from the
sale of a grantor trust certificate by a bank or a thrift institution to
which such section applies will be treated as ordinary income or loss.
d. NON-U.S. PERSONS
The term "U.S. Person" means
o a citizen or resident of the United States;
o a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the
United States or of any state;
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o a partnership (or entity treated as a partnership for tax purposes)
organized in the United States or under the laws of the United
States or of any state (unless provided otherwise by future
Treasury regulations);
o an estate whose income is includible in gross income for United
States income tax purposes regardless of its source; or,
o a trust, if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control all substantial
decisions of the trust. Notwithstanding the last clause of the
preceding sentence, to the extent provided in Treasury regulations,
certain trusts in existence on August 20, 1996, and treated as U.S.
Persons prior to such date, may elect to continue to be U.S.
Persons.
Generally, to the extent that a grantor trust certificate evidences
ownership in underlying mortgage loans and/or MBS that were issued on or
before July 18, 1984, interest or OID paid by the person required to withhold
tax under Code Section 1441 or 1442 to
o an owner that is not a U.S. Person or
o grantor trust certificateholder holding on behalf of an owner that
is not a U.S. Person will be subject to federal income tax,
collected by withholding, at a rate of 30% or such lower rate as
may be provided for interest by an applicable tax treaty, unless
such income is effectively connected with a U.S. trade or business
of such owner or beneficial owner.
Accrued OID recognized by the owner on the sale or exchange of such a grantor
trust certificate also will be subject to federal income tax at the same
rate. Generally, such payments would not be subject to withholding to the
extent that a grantor trust certificate evidences ownership in mortgage loans
and/or MBS issued after July 18, 1984, by natural persons if such grantor
trust certificateholder complies with certain identification requirements,
including delivery of a statement, signed by the grantor trust
certificateholder under penalties of perjury, certifying that the grantor
trust certificateholder is not a U.S. Person and providing the name and
address of the grantor trust certificateholder. To the extent payments to
grantor trust certificateholders that are not U.S. Persons are payments of
"contingent interest" on the underlying mortgage loans and/or MBS, or the
grantor trust certificateholder is ineligible for the exemption described in
the preceding sentence, the 30% withholding tax will apply unless such
withholding taxes are reduced or eliminated by an applicable tax treaty and
such holder meets the eligibility and certification requirements necessary to
obtain the benefits of such treaty. Additional restrictions apply to mortgage
loans and/or MBS where the borrower is not a natural person in order to
qualify for the exemption from withholding. If capital gain derived from the
sale, retirement or other disposition of a grantor trust certificate is
effectively connected with a U.S. trade or business of a grantor trust
certificateholder that is not a U.S. Person, certificateholder will be taxed
on the net gain under the graduated U.S. federal income tax rates applicable
to U.S. Persons and, with respect to grantor trust certificates held by or on
behalf of corporations, also may be subject to branch profits tax. In
addition, if the trust fund acquires a United States real property interest
through foreclosure, deed in lieu of foreclosure or otherwise on a mortgage
loan or MBS secured by such an interest, which for this purpose includes real
property located in the United States and the Virgin Islands, a grantor trust
certificateholder that is not a U.S. person will potentially be subject to
federal income tax on any gain attributable to such real property interest
that is allocable to such holder. Non-U.S. Persons should consult their tax
advisors regarding the application to them of the foregoing rules.
e. INFORMATION REPORTING AND BACKUP WITHHOLDING
The master servicer will furnish or make available, within a reasonable
time after the end of each calendar year, to each person who was a
certificateholder at any time during such year, the information as may be
deemed necessary or desirable to assist certificateholders in preparing their
federal income tax returns, or to enable holders to make the information
available to beneficial owners or financial intermediaries that hold such
certificates as nominees on behalf of beneficial owners. If a holder,
beneficial owner, financial intermediary or other recipient of a payment on
behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such
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person has not reported all interest and dividend income required to be shown
on its federal income tax return, 31% backup withholding may be required with
respect to any payments to registered owners who are not "exempt recipients."
In addition, upon the sale of a grantor trust certificate to, or through, a
broker, the broker must withhold 31% of the entire purchase price, unless
either
o the broker determines that the seller is a corporation or other
exempt recipient, or
o the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. person, certifies that
the seller is a Non-U.S. Person, and other conditions are met.
Such a sale must also be reported by the broker to the IRS, unless either
o the broker determines that the seller is an exempt recipient or
o the seller certifies its non-U.S. Person status and other
conditions are met.
Certification of the registered owner's non-U.S. Person status normally would
be made on IRS Form W-8 under penalties of perjury, although in some cases it
may be possible to submit other documentary evidence. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against the recipient's federal income tax liability.
On October 6, 1997, the Treasury Department issued new regulations which
make certain modifications to the withholding, backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
REMICs
The trust fund relating to a series of certificates may elect to be
treated as a REMIC. Qualification as a REMIC requires ongoing compliance with
certain conditions. Although a REMIC is not generally subject to federal
income tax (see, however "--Taxation of Owners of REMIC Residual
Certificates" and "--Prohibited Transactions and Other Taxes" below), if a
trust fund with respect to which a REMIC election is made fails to comply
with one or more of the ongoing requirements of the Code for REMIC status
during any taxable year, including the implementation of restrictions on the
purchase and transfer of the residual interests in a REMIC as described below
under "--Taxation of Owners of REMIC Residual Certificates," the Code
provides that a trust fund will not be treated as a REMIC for the year and
thereafter. In that event, the entity may be taxable as a separate
corporation, and the REMIC Certificates may not be accorded the status or
given the tax treatment described below in this section. While the Code
authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of the status of a trust fund as a
REMIC, no such regulations have been issued. Any relief, moreover, may be
accompanied by sanctions, such as the imposition of a corporate tax on all or
a portion of the REMIC's income for the period in which the requirements for
such status are not satisfied. With respect to each trust fund that elects
REMIC status, Brown & Wood LLP will deliver its opinion generally to the
effect that, under then existing law and assuming compliance with all
provisions of the related Agreement, the trust fund will qualify as a REMIC,
and the related certificates will be considered to be REMIC Regular
Certificates or a sole class of REMIC Residual Certificates. The related
prospectus supplement for each series of certificates will indicate whether
the trust fund will make a REMIC election and whether a class of certificates
will be treated as a regular or residual interest in the REMIC.
A "qualified mortgage" for REMIC purposes includes any obligation,
including certificates of participation in such an obligation and any
"regular interest" in another REMIC, that is principally secured by an
interest in real property and that is transferred to the REMIC within a
prescribed time period in exchange for regular or residual interests in the
REMIC.
In general, with respect to each series of certificates for which a REMIC
election is made,
o certificates held by a thrift institution taxed as a "domestic
building and loan association" will constitute assets described in
Code Section 7701(a)(19)(C);
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o certificates held by a real estate investment trust will constitute
"real estate assets" within the meaning of Code Section
856(c)(4)(A); and
o interest on certificates held by a real estate investment trust
will be considered "interest on obligations secured by mortgages on
real property" within the meaning of Code Section 856(c)(3)(B).
If less than 95% of the REMIC's assets are assets qualifying under any of the
foregoing Code sections, the certificates will be qualifying assets only to
the extent that the REMIC's assets are qualifying assets.
Tiered REMIC Structures. For certain series of certificates, two or more
separate elections may be made to treat designated portions of the related
trust fund as REMICs for federal income tax purposes. Upon the issuance of
any such series of certificates, Brown & Wood LLP, counsel to the depositor,
will deliver its opinion generally to the effect that, assuming compliance
with all provisions of the related Agreement, the Master REMIC as well as any
Subsidiary REMIC will each qualify as a REMIC, and the REMIC Certificates
issued by the Master REMIC and the Subsidiary REMIC or REMICs, respectively,
will be considered REMIC Regular Certificates or REMIC Residual Certificates
in the related REMIC within the meaning of the REMIC Provisions.
Other than the residual interest in a Subsidiary REMIC, only REMIC
Certificates issued by the Master REMIC will be offered hereunder. The
Subsidiary REMIC or REMICs and the Master REMIC will be treated as one REMIC
solely for purposes of determining whether the REMIC Certificates will be:
o "real estate assets" within the meaning of Section 856(c)(4)(A) of
the Code;
o "loans secured by an interest in real property" under Section
7701(a)(19)(C) of the Code; and
o whether the income on the certificates is interest described in
Section 856(c)(3)(B) of the Code.
a. TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt
instruments issued by the REMIC and not as ownership interests in the REMIC
or its assets. Moreover, holders of REMIC Regular Certificates that otherwise
report income under a cash method of accounting will be required to report
income with respect to REMIC Regular Certificates under an accrual method.
Original Issue Discount and Premium. The REMIC Regular Certificates may be
issued with OID. Generally, the OID, if any, will equal the difference
between the "stated redemption price at maturity" of a REMIC Regular
Certificate and its "issue price." Holders of any class of certificates
issued with OID will be required to include the OID in gross income for
federal income tax purposes as it accrues, in accordance with a constant
interest method based on the compounding of interest as it accrues rather
than in accordance with receipt of the interest payments. The following
discussion is based in part on the OID Regulations and in part on the
provisions of the Tax Reform Act of 1986. The REMIC Regular Certificates
should be aware, however, that the OID Regulations do not adequately address
certain issues relevant to prepayable securities, such as the REMIC Regular
Certificates.
Rules governing OID are set forth in Code Sections 1271 through 1273 and
1275. These rules require that the amount and rate of accrual of OID be
calculated based on the Prepayment Assumption and the anticipated
reinvestment rate, if any, relating to the REMIC Regular Certificates and
prescribe a method for adjusting the amount and rate of accrual of the
discount where the actual prepayment rate differs from the Prepayment
Assumption. Under the Code, the Prepayment Assumption must be determined in
the manner prescribed by regulations, which regulations have not yet been
issued. The legislative history provides, however, that Congress intended the
regulations to require that the Prepayment Assumption be the prepayment
assumption that is used in determining the initial offering price of such
REMIC Regular Certificates. The prospectus supplement for each series of
REMIC Regular Certificates will specify the Prepayment Assumption to be used
for the purpose of determining the amount and rate of accrual of OID. No
representation is made that the REMIC Regular Certificates will prepay at the
Prepayment Assumption or at any other rate.
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In general, each REMIC Regular Certificate will be treated as a single
installment obligation issued with an amount of OID equal to the excess of
its "stated redemption price at maturity" over its "issue price." The issue
price of a REMIC Regular Certificate is the first price at which a
substantial amount of REMIC Regular Certificates of that class are first sold
to the public (excluding bond houses, brokers, underwriters or wholesalers).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the closing date, the issue
price for that class will be treated as the fair market value of that class
on the closing date. The issue price of a REMIC Regular Certificate also
includes the amount paid by an initial certificateholder for accrued interest
that relates to a period prior to the issue date of the REMIC Regular
Certificate. The stated redemption price at maturity of a REMIC Regular
Certificate includes the original principal amount of the REMIC Regular
Certificate, but generally will not include distributions of interest if the
distributions constitute "qualified stated interest." Qualified stated
interest generally means interest payable at a single fixed rate or qualified
variable rate provided that the interest payments are unconditionally payable
at intervals of one year or less during the entire term of the REMIC Regular
Certificate. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
Distributions of interest on REMIC Regular Certificates with respect to which
Deferred Interest will accrue will not constitute qualified stated interest
payments, and the stated redemption price at maturity of the REMIC Regular
Certificates includes all distributions of interest as well as principal
thereon.
Where the interval between the issue date and the first distribution date
on a REMIC Regular Certificate is longer than the interval between subsequent
distribution dates, the greater of any original issue discount, disregarding
the rate in the first period, and any interest foregone during the first
period is treated as the amount by which the stated redemption price at
maturity of the certificates exceeds its issue price for purposes of the de
minimis rule described below in this section. The OID Regulations suggest
that all interest on a long first period REMIC Regular Certificate that is
issued with non-de minimis OID, as determined under the foregoing rule, will
be treated as OID. Where the interval between the issue date and the first
distribution date on a REMIC Regular Certificate is shorter than the interval
between subsequent distribution dates, interest due on the first distribution
date in excess of the amount that accrued during the first period would be
added to the certificate's stated redemption price at maturity. REMIC Regular
Certificateholders should consult their own tax advisors to determine the
issue price and stated redemption price at maturity of a REMIC Regular
Certificate.
Under the de minimis rule, OID on a REMIC Regular Certificate will be
considered to be zero if the OID is less than 0.25% of the stated redemption
price at maturity of the REMIC Regular Certificate multiplied by the weighted
average maturity of the REMIC Regular Certificate. For this purpose, the
weighted average maturity of the REMIC 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 in
reduction of stated redemption price at maturity 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 REMIC Regular Certificate
and the denominator of which is the stated redemption price at maturity of
the REMIC Regular Certificate. Although currently unclear, it appears that
the schedule of the distributions should be determined in accordance with the
Prepayment Assumption. The Prepayment Assumption with respect to a series of
REMIC Regular Certificates will be set forth in the related prospectus
supplement. Holders generally must report de minimis OID pro rata as
principal payments are received, and the income will be capital gain if the
REMIC Regular Certificate is held as a capital asset. However, accrual method
holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.
The prospectus supplement with respect to a trust fund may provide for
super premium certificates. The income tax treatment of such REMIC Regular
Certificates is not entirely certain. For information reporting purposes, the
trust fund intends to take the position that the stated redemption price at
maturity of such REMIC Regular Certificates is the sum of all payments to be
made on such REMIC Regular Certificates determined under the Prepayment
Assumption, with the result that such REMIC Regular Certificates would be
issued with OID. The calculation of income in this manner could result in
negative original issue discount, which delays future accruals of OID rather
than being immediately deductible
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when prepayments on the mortgage loans and/or MBS exceed those estimated
under the Prepayment Assumption. The IRS might contend, however, that certain
contingent payment rules contained in final regulations issued on June 11,
1996, with respect to original issue discount, should apply to such
certificates. Although such rules are not applicable to instruments governed
by Code Section 1272(a)(6), they represent the only guidance regarding the
current views of the IRS with respect to contingent payment instruments.
These proposed regulations, if applicable, generally would require holders of
Regular Interest Certificates to take the payments considered contingent
interest payments into income on a yield to maturity basis in accordance with
a schedule of projected payments provided by the depositor and to make annual
adjustments to income to account for the difference between actual payments
received and projected payment amounts accrued. In the alternative, the IRS
could assert that the stated redemption price at maturity of such REMIC
Regular Certificates should be limited to their principal amount, subject to
the discussion below under "--Accrued Interest Certificates", so that such
REMIC Regular Certificates would be considered for federal income tax
purposes to be issued at a premium. If such a position were to prevail, the
rules described below under "--Premium" would apply. It is unclear when a
loss may be claimed for any unrecovered basis for a Super-Premium
Certificate. It is possible that a holder of a super-premium certificate may
only claim a loss when its remaining basis exceeds the maximum amount of
future payments, assuming no further prepayments or when the final payment is
received with respect to such Super-Premium Certificate. Under the REMIC
Regulations, if the issue price of a REMIC Regular Certificate, other than
REMIC Regular Certificate based on a notional amount, does not exceed 125% of
its actual principal amount, the interest rate is not considered
disproportionately high. Accordingly, such REMIC Regular Certificate
generally should not be treated as a super-premium certificate and the rules
described below under "--Premium" should apply. However, it is possible that
holders or REMIC Regular Certificates issued at a premium, even if the
premium is less than 25% of such certificate's actual principal balance, will
be required to amortize the premium under an original issue discount method
or contingent interest method even though no election under Code Section 171
is made to amortize such premium.
Generally, a REMIC Regular certificateholder must include in gross income
the "daily portions" of the OID that accrues on a REMIC Regular Certificate
for each day a certificateholder holds the REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case
of an original holder of a REMIC Regular Certificate, a calculation will be
made of the portion of the OID that accrues during each successive
period--"an accrual period"--that ends on the day in the calendar year
corresponding to a distribution date, or if distribution dates are on the
first day or first business day of the immediately preceding month, interest
may be treated as payable on the last day of the immediately preceding month,
and begins on the day after the end of the immediately preceding accrual
period or on the issue date in the case of the first accrual period. This
will be done, in the case of each full accrual period, by
o adding (1) the present value at the end of the accrual
period--determined by using as a discount factor the original yield
to maturity of the REMIC Regular Certificates as calculated under
the Prepayment Assumption--of all remaining payments to be received
on the REMIC Regular Certificates under the Prepayment Assumption
and (2) any payments included in the stated redemption price at
maturity received during such accrual period, and
o subtracting from that total the adjusted issue price of the REMIC
Regular Certificates at the beginning of such accrual period.
The adjusted issue price of a REMIC Regular Certificate at the beginning of
the first accrual period is its issue price; the adjusted issue price of a
REMIC Regular Certificate at the beginning of a subsequent accrual period is
the adjusted issue price at the beginning of the immediately preceding
accrual period plus the amount of OID allocable to that accrual period and
reduced by the amount of any payment other than a payment of qualified stated
interest made at the end of or during that accrual period. The OID accrued
during an accrual period will then be divided by the number of days in the
period to determine the daily portion of OID for each day in the accrual
period. The calculation of OID under the method described above will cause
the accrual of OID to either increase or decrease--but never below zero--in
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a given accrual period to reflect the fact that prepayments are occurring
faster or slower than under the Prepayment Assumption. With respect to an
initial accrual period shorter than a full accrual period, the "daily
portions" of OID may be determined according to an appropriate allocation
under any reasonable method.
A subsequent purchaser of a REMIC Regular Certificate issued with OID who
purchases the REMIC Regular Certificate at a cost less than the remaining
stated redemption price at maturity will also be required to include in gross
income the sum of the daily portions of OID on that REMIC Regular
Certificate. In computing the daily portions of OID for such a purchaser, as
well as an initial purchaser that purchases at a price higher than the
adjusted issue price but less than the stated redemption price at maturity,
however, the daily portion is reduced by the amount that would be the daily
portion for such day, computed in accordance with the rules set forth above,
multiplied by a fraction, the numerator of which is the amount, if any, by
which the price paid by such holder for that REMIC Regular Certificate
exceeds the following amount:
(1) the sum of the issue price plus the aggregate amount of OID that
would have been includible in the gross income of an original REMIC
Regular Certificateholder, who purchased the REMIC Regular
Certificate at its issue price, less
(2) any prior payments included in the stated redemption price at
maturity, and the denominator of which is the sum of the daily
portions for that REMIC Regular Certificate for all days beginning
on the date after the purchase date and ending on the maturity date
computed under the Prepayment Assumption.
A holder who pays an acquisition premium instead may elect to accrue OID by
treating the purchase as a purchase at original issue.
Variable Rate REMIC Regular Certificates. REMIC Regular Certificates may
provide for interest based on a variable rate. Interest based on a variable
rate will constitute qualified stated interest and not contingent interest
if, generally:
o the interest is unconditionally payable at least annually;
o the issue price of the debt instrument does not exceed the total
noncontingent principal payments; and
o interest is based on a "qualified floating rate," an "objective
rate," a combination of a single fixed rate and one or more
"qualified floating rates," one "qualified inverse floating rate,"
or a combination of "qualified floating rates" that do not operate
in a manner that significantly accelerates or defers interest
payments on the REMIC Regular Certificates.
The amount of OID with respect to a REMIC Regular Certificate bearing a
variable rate of interest will accrue in the manner described above under
"--Original Issue Discount and Premium" by assuming generally that the Index
used for the variable rate will remain fixed throughout the term of the
certificate at the rate applicable on the date they are issued. Appropriate
adjustments are made for the actual variable rate.
Although unclear at present, the depositor intends to treat interest on a
REMIC Regular Certificate that is a weighted average of the net interest
rates on mortgage loans as qualified stated interest. In such case, the
weighted average rate used to compute the initial pass-through rate on the
REMIC Regular Certificates will be deemed to be the Index in effect through
the life of the REMIC Regular Certificates. It is possible, however, that the
IRS may treat some or all of the interest on REMIC Regular Certificates with
a weighted average rate as taxable under the rules relating to obligations
providing for contingent payments. No guidance is currently available as to
how OID would be determined for debt instruments subject to Code Section
1272(a)(6) that provide for contingent interest. The treatment of REMIC
Regular Certificates as contingent payment debt instruments may affect the
timing of income accruals on the REMIC Regular Certificates.
Election to Treat All Interest as OID. The OID Regulations permit a
certificateholder to elect to accrue all interest, discount (including de
minimis market discount or original issue discount) and
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premium in income as interest, based on a constant yield method. If such an
election were to be made with respect to a REMIC Regular Certificate with
market discount, the certificateholder would be deemed to have made an
election to include in income currently market discount with respect to all
other debt instruments having market discount that such certificateholder
acquires during the year of the election or thereafter. Similarly, a
certificateholder that makes this election for a certificate that is acquired
at a premium will be deemed to have made an election to amortize bond premium
with respect to all debt instruments having amortizable bond premium that
such certificateholder owns or acquires. See "--Premium" below. The election
to accrue interest, discount and premium on a constant yield method with
respect to a certificate is irrevocable without the consent of the IRS.
Market Discount. A purchaser of a REMIC Regular Certificate may also be
subject to the market discount provisions of Code Sections 1276 through 1278.
Under these provisions and the OID Regulations, "market discount" equals the
excess, if any, of (1) the REMIC Regular Certificate's stated principal
amount or, in the case of a REMIC Regular Certificate with OID, the adjusted
issue price, determined for this purpose as if the purchaser had purchased
such REMIC Regular Certificate from an original holder, over (2) the price
for such REMIC Regular Certificate paid by the purchaser. A certificateholder
that purchases a REMIC Regular Certificate at a market discount will
recognize income upon receipt of each distribution representing amounts
included in such certificate's stated redemption price at maturity. In
particular, under Section 1276 of the Code such a holder generally will be
required to allocate each such distribution first to accrued market discount
not previously included in income, and to recognize ordinary income to that
extent. A certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, the election will apply to all market
discount bonds acquired by the certificateholder on or after the first day of
the first taxable year to which the election applies.
Market discount with respect to a REMIC Regular Certificate will be
considered to be zero if the amount allocable to the REMIC Regular
Certificate is less than 0.25% of the REMIC Regular Certificate's stated
redemption price at maturity multiplied by the REMIC Regular Certificate's
weighted average maturity remaining after the date of purchase. If market
discount on a REMIC Regular Certificate is considered to be zero under this
rule, the actual amount of market discount must be allocated to the remaining
principal payments on the REMIC Regular Certificate, and gain equal to the
allocated amount will be recognized when the corresponding principal payment
is made. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any
of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment, whether a scheduled payment
or a prepayment, or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986, shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at
the time of the payment. The amount of accrued market discount for purposes
of determining the tax treatment of subsequent principal payments or
dispositions of the market discount bond is to be reduced by the amount so
treated as ordinary income.
The Code also grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury, rules described in
the legislative history will apply. Under those rules, the holder of a market
discount bond may elect to accrue market discount either on the basis of a
constant interest method rate or according to one of the following methods.
For REMIC Regular Certificates issued with OID, the amount of market discount
that accrues during a period is equal to the product of
1) the total remaining market discount and
2) a fraction, the numerator of which is the OID accruing during the
period and the denominator of which is the total remaining OID at
the beginning of the period.
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For REMIC Regular Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of
1) the total remaining market discount and
2) a fraction, the numerator of which is the amount of stated interest
paid during the accrual period and the denominator of which is the
total amount of stated interest remaining to be paid at the
beginning of the period.
For purposes of calculating market discount under any of the above methods in
the case of instruments (such as the REMIC Regular Certificates) that provide
for payments that may be accelerated by reason of prepayments of other
obligations securing such instruments, the same Prepayment Assumption
applicable to calculating the accrual of OID will apply.
A holder who acquired a REMIC Regular Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry the certificate purchased with market discount. For these
purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during
such taxable year and is, in general, allowed as a deduction not later than
the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year
or thereafter, the interest deferral rule described above will not apply.
Premium. A purchaser of a REMIC Regular Certificate that purchases the
REMIC Regular Certificate at a cost, not including accrued qualified stated
interest, greater than its remaining stated redemption price at maturity will
be considered to have purchased the REMIC Regular Certificate at a premium
and may elect to amortize the premium under a constant yield method. A
certificateholder that makes this election for a Certificate that is acquired
at a premium will be deemed to have made an election to amortize bond premium
with respect to all debt instruments having amortizable bond premium that
such certificateholder acquires during the year of the election or
thereafter. It is not clear whether the Prepayment Assumption would be taken
into account in determining the life of the REMIC Regular Certificate for
this purpose. However, the legislative history states that the same rules
that apply to accrual of market discount, which rules require use of a
Prepayment Assumption in accruing market discount with respect to REMIC
Regular Certificates without regard to whether such certificates have OID,
will also apply in amortizing bond premium under Code Section 171. The Code
provides that amortizable bond premium will be allocated among the interest
payments on such REMIC Regular Certificates and will be applied as an offset
against the interest payment. The Amortizable Bond Premium Regulations do not
apply to prepayable securities described in Section 1272(a)(6) of the Code,
such as the REMIC Regular Certificates. Certificateholders should consult
their tax advisors regarding the possibility of making an election to
amortize any such bond premium.
Deferred Interest. Certain classes of REMIC Regular Certificates may
provide for the accrual of deferred interest with respect to one or more
adjustable rate loans. Any deferred interest that accrues with respect to a
class of REMIC Regular Certificates will constitute income to the holders of
certificates prior to the time distributions of cash with respect to the
deferred interest are made. It is unclear, under the OID Regulations, whether
any of the interest on certificates will constitute qualified stated interest
or whether all or a portion of the interest payable on such certificates must
be included in the stated redemption price at maturity of the certificates
and accounted for as OID, which could accelerate such inclusion. Interest on
REMIC Regular Certificates must in any event be accounted for under an
accrual method by the holders of such certificates and, therefore, applying
the latter analysis may result only in a slight difference in the timing of
the inclusion in income of interest on such REMIC Regular Certificates.
Sale, Exchange or Redemption. If a REMIC Regular Certificate is sold,
exchanged, redeemed or retired, the seller will recognize gain or loss equal
to the difference between the amount realized on the sale, exchange,
redemption, or retirement and the seller's adjusted basis in the REMIC
Regular Certificate. Such adjusted basis generally will equal the cost of the
REMIC Regular Certificate to the seller, increased by any OID and market
discount included in the seller's gross income with respect to the
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REMIC Regular Certificate, and reduced, but not below zero, by payments
included in the stated redemption price at maturity previously received by
the seller and by any amortized premium. Similarly, a holder who receives a
payment that is part of the stated redemption price at maturity of a REMIC
Regular Certificate will recognize gain equal to the excess, if any, of the
amount of the payment over an allocable portion of the holder's adjusted
basis in the REMIC Regular Certificate. A REMIC Regular certificateholder who
receives a final payment that is less than the holder's adjusted basis in the
REMIC Regular Certificate will generally recognize a loss. Except as provided
in the following paragraph and as provided under "--Market Discount" above,
any such gain or loss will be capital gain or loss, provided that the REMIC
Regular Certificate is held as a "capital asset" (generally, property held
for investment) within the meaning of Code Section 1221.
Such capital gain or loss will generally be long-term capital gain or loss
if the REMIC Regular Certificate was held for more than one year. Long-term
capital gains of individuals are subject to reduced maximum tax rates while
capital gains recognized by individuals on capital assets held less than
twelve months are generally subject to ordinary income tax rates. The use of
capital losses is limited.
Gain from the sale or other disposition of a REMIC Regular Certificate
that might otherwise be capital gain will be treated as ordinary income to
the extent that the gain does not exceed the excess, if any, of
o the amount that would have been includible in the holder's income
with respect to the REMIC Regular Certificate had income accrued
thereon at a rate equal to 110% of the AFR as defined in Code
Section 1274(d) determined as of the date of purchase of such REMIC
Regular Certificate, over
o the amount actually includible in such holder's income.
Gain from the sale or other disposition of a REMIC Regular Certificate that
might otherwise be capital gain will be treated as ordinary income if the
REMIC 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 REMIC 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 disposition of property that was held as part of such
transaction, or if the REMIC Regular Certificate is held as part of a
straddle. Potential investors should consult their tax advisors with respect
to tax consequences of ownership and disposition of an investment in REMIC
Regular Certificates in their particular circumstances.
It is possible that capital gain realized by holders of one or more
classes of REMIC Regular Certificates could be considered gain realized upon
the disposition of property that was part of a "conversion transaction." A
sale of a REMIC Regular Certificate will be part of a "conversion
transaction" if substantially all of the holder's expected return is
attributable to the time value of the holder's net investment, and:
o the holder entered the contract to sell the REMIC Regular
Certificate substantially contemporaneously with acquiring the
REMIC Regular Certificate;
o the REMIC Regular Certificate is part of a straddle;
o the REMIC Regular Certificate is marketed or sold as producing
capital gains; or
o other transactions to be specified in Treasury regulations that
have not yet been issued. If the sale or other disposition of a
REMIC Regular Certificate is part of a conversion transaction, all
or a portion of the gain realized upon the sale or other
disposition of the REMIC Regular Certificate would be treated as
ordinary income instead of capital gain.
The certificates will be "evidences of indebtedness" within the meaning of
Code Section 582(c)(1), so that gain or loss recognized from the sale of a
REMIC Regular Certificate by a bank or a thrift institution to which this
section applies will be ordinary income or loss.
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The REMIC Regular Certificate information reports will include a statement
of the adjusted issue price of the REMIC Regular Certificate at the beginning
of each accrual period. In addition, the reports will include information
necessary to compute the accrual of any market discount that may arise upon
secondary trading of REMIC Regular Certificates. Because exact computation of
the accrual of market discount on a constant yield method would require
information relating to the holder's purchase price which the REMIC may not
have, it appears that the information reports will only provide information
pertaining to the appropriate proportionate method of accruing market
discount.
Accrued Interest Certificates. Certificates may provide for payments of
interest based on a period that corresponds to the interval between
distribution dates but that ends prior to each distribution date. The period
between the closing date for payment lag certificates and their first
distribution date may or may not exceed the interval. Purchasers of payment
lag certificates for which the period between the closing date and the first
distribution date does not exceed the interval could pay upon purchase of the
REMIC Regular Certificates accrued interest in excess of the accrued interest
that would be paid if the interest paid on the distribution date were
interest accrued from distribution date to distribution date. If a portion of
the initial purchase price of a REMIC Regular Certificate is allocable to
pre-issuance accrued interest and the REMIC Regular Certificate provides for
a payment of stated interest on the first payment date and the first payment
date is within one year of the issue date that equals or exceeds the amount
of the pre-issuance accrued interest, then the REMIC Regular Certificate's
issue price may be computed by subtracting from the issue price the amount of
pre-issuance accrued interest, rather than as an amount payable on the REMIC
Regular Certificate. However, it is unclear under this method how the OID
Regulations treat interest on payment lag certificates. Therefore, in the
case of a payment lag certificate, the trust fund intends to include accrued
interest in the issue price and report interest payments made on the first
distribution date as interest to the extent such payments represent interest
for the number of days that the certificateholder has held the payment lag
certificate during the first accrual period.
Investors should consult their own tax advisors concerning the treatment
for federal income tax purposes of payment lag certificates.
Non-Interest Expenses of the REMIC. Under temporary Treasury regulations,
if the REMIC is considered to be a "single-class REMIC," a portion of the
REMIC's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those REMIC Regular Certificateholders that
are "pass-through interest holders." Certificateholders that are pass-through
interest holders should consult their own tax advisors about the impact of
these rules on an investment in the REMIC Regular Certificates. See
"Pass-Through of Non-Interest Expenses of the REMIC" under "Taxation of
Owners of REMIC Residual Certificates" below.
Effects of Defaults, Delinquencies and Losses. Certain series of
certificates may contain one or more classes of subordinated certificates,
and in the event there are defaults or delinquencies on the mortgage loans
and/or MBS, amounts that would otherwise be distributed on the subordinated
certificates may instead be distributed on the senior certificates.
Subordinated certificateholders nevertheless will be required to report
income with respect to such certificates under an accrual method without
giving effect to delays and reductions in distributions on the subordinated
certificates attributable to defaults and delinquencies on the mortgage loans
and/or MBS, except to the extent that it can be established that the amounts
are uncollectible. As a result, the amount of income reported by a
subordinated certificateholder in any period could significantly exceed the
amount of cash distributed to the holder in that period. The holder will
eventually be allowed a loss (or will be allowed to report a lesser amount of
income) to the extent that the aggregate amount of distributions on the
subordinated certificate is reduced as a result of defaults and delinquencies
on the mortgage loans and/or MBS.
Although not entirely clear, it appears that holders of REMIC Regular
Certificates that are corporations should in general be allowed to deduct as
an ordinary loss any loss sustained during the taxable year on account of any
such certificates becoming wholly or partially worthless, and that, in
general, holders of certificates that are not corporations should be allowed
to deduct as a short-term capital loss any loss sustained during the taxable
year on account of any such certificates becoming wholly worthless. Potential
investors and holders of the certificates are urged to consult their own tax
advisors
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regarding the appropriate timing, amount and character of any loss sustained
with respect to such certificates, including any loss resulting from the
failure to recover previously accrued interest or discount income. Special
loss rules are applicable to banks and thrift institutions, including rules
regarding reserves for bad debts. These taxpayers are advised to consult
their tax advisors regarding the treatment of losses on certificates.
Non-U.S. Persons. Generally, payments of interest on the REMIC Regular
Certificates, including any payment with respect to accrued OID, to a REMIC
Regular certificateholder who is not a U.S. Person as defined in "--Grantor
Trust Funds; Non-U.S. Persons and is not engaged in a trade or business
within the United States will not be subject to federal withholding tax if:
o the REMIC Regular certificateholder does not actually or
constructively own 10 percent or more of the combined voting power
of all classes of equity in the issuer;
o the REMIC Regular certificateholder is not a controlled foreign
corporation, within the meaning of Code Section 957, related to the
issuer; and
o the REMIC Regular certificateholder complies with identification
requirements, including delivery of a statement, signed by the
REMIC Regular certificateholder under penalties of perjury,
certifying that the REMIC Regular certificateholder is a foreign
person and providing the name and address of the REMIC Regular
certificateholder.
If a REMIC Regular certificateholder is not exempt from withholding,
distributions of interest to the holder, including distributions in respect
of accrued OID, may be subject to a 30% withholding tax, subject to reduction
under any applicable tax treaty. If the interest on a REMIC Regular
Certificate is effectively connected with the conduct by the Non-U.S. REMIC
Regular Certificateholder of a trade or business within the United States,
then the Non-U.S. REMIC Regular Certificateholder will be subject to U.S.
income tax at regular graduated rates. Such a Non-U.S. REMIC Regular
Certificateholder also may be subject to the branch profits tax.
Further, a REMIC Regular Certificate will not be included in the estate of
a non-resident alien individual that does not actually or constructively own
10% or more of the combined voting power of all classes of equity in the
Issuer and will not be subject to United States estate taxes. However,
certificateholders who are non-resident alien individuals should consult
their tax advisors concerning this question.
REMIC Regular Certificateholders who are not U.S. Persons and persons
related to such holders should not acquire any REMIC Residual Certificates,
REMIC Residual Certificateholder and persons related to REMIC Residual
Certificateholders should not acquire any REMIC Regular Certificates without
consulting their tax advisors as to the possible adverse tax consequences of
doing so. In addition, the IRS may assert that non-U.S. Persons that own
directly or indirectly, a greater than 10% interest in any borrower, and
foreign corporations that are "controlled foreign corporations" as to the
United States of which such a borrower is a "United States shareholder"
within the meaning of Section 951(b) of the Code, are subject to United
States withholding tax on interest distributed to them to the extent of
interest concurrently paid by the related borrower.
Information Reporting and Backup Withholding. The master servicer will
furnish or make available, within a reasonable time after the end of each
calendar year, to each person who was a REMIC Regular Certificateholder at
any time during that year, the information as may be deemed necessary or
desirable to assist REMIC Regular Certificateholders in preparing their
federal income tax returns, or to enable holders to make the information
available to beneficial owners or financial intermediaries that hold the
REMIC Regular Certificates on behalf of beneficial owners. If a holder,
beneficial owner, financial intermediary or other recipient of a payment on
behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such person has not reported all interest and dividend income required to be
shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments to registered owners who are not
"exempt recipients." In addition, upon the sale of a REMIC Regular
Certificate to, or through, a broker, the broker must withhold 31% of the
entire purchase price, unless either:
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o the broker determines that the seller is a corporation or other
exempt recipient, or
o the seller provides, in the required manner, identifying
information and, in the case of a non-U.S. Person, certifies that
such seller is a non-U.S. Person, and other conditions are met.
o A sale of a REMIC Regular Certificate to, or through, a broker must
also be reported by the broker to the IRS, unless either:
o the broker determines that the seller is an exempt recipient, or
o the seller certifies its non-U.S. Person status and other
conditions are met.
Certification of the registered owner's non-U.S. Person status normally would
be made on IRS Form W-8 under penalties of perjury, although in certain cases
it may be possible to submit other documentary evidence. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax liability.
On October 6, 1997, the Treasury Department issued the New Regulations,
which make certain modifications to the withholding, backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
b. TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
Allocation of the Income of the REMIC to the REMIC Residual
Certificates. The REMIC will not be subject to federal income tax except with
respect to income from prohibited transactions and certain other
transactions. See "--Prohibited Transactions and Other Taxes" below. Instead,
each original holder of a REMIC Residual Certificate will report on its
federal income tax return, as ordinary income, its share of the taxable
income of the REMIC for each day during the taxable year on which the holder
owns any REMIC Residual Certificates. The taxable income of the REMIC for
each day will be determined by allocating the taxable income of the REMIC for
each calendar quarter ratably to each day in the quarter. Such a holder's
share of the taxable income of the REMIC for each day will be based on the
portion of the outstanding REMIC Residual Certificates that the holder owns
on that day. The taxable income of the REMIC will be determined under an
accrual method and will be taxable to the holders of REMIC Residual
Certificates without regard to the timing or amounts of cash distributions by
the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to the
limitations on the deductibility of "passive losses." As residual interests,
the REMIC Residual Certificates will be subject to tax rules, described
below, that differ from those that would apply if the REMIC Residual
Certificates were treated for federal income tax purposes as direct ownership
interests in the certificates or as debt instruments issued by the REMIC.
A REMIC Residual Certificateholder may be required to include taxable
income from the REMIC Residual Certificate in excess of the cash distributed.
For example, a structure where principal distributions are made serially on
regular interests, that is, a fast-pay, slow-pay structure, may generate such
a mismatching of income and cash distributions that is, "phantom income".
This mismatching may be caused by the use of certain required tax accounting
methods by the REMIC, variations in the prepayment rate of the underlying
mortgage loans and/or MBS and certain other factors. Depending upon the
structure of a particular transaction, the aforementioned factors may
significantly reduce the after-tax yield of a REMIC Residual Certificate to a
REMIC Residual Certificateholder or cause the REMIC Residual Certificate to
have negative "value." Investors should consult their own tax advisors
concerning the federal income tax treatment of a REMIC Residual Certificate
and the impact of the tax treatment on the after-tax yield of a REMIC
Residual Certificate.
A subsequent REMIC Residual Certificateholder also will report on its
federal income tax return amounts representing a daily share of the taxable
income of the REMIC for each day that the REMIC Residual Certificateholder
owns the REMIC Residual Certificate. Those daily amounts generally would
equal the amounts that would have been reported for the same days by an
original REMIC Residual
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Certificateholder, as described above. The legislative history indicates that
certain adjustments may be appropriate to reduce or increase the income of a
subsequent holder of a REMIC Residual Certificate that purchased the REMIC
Residual Certificate at a price greater than or less than the adjusted basis
the REMIC Residual Certificate would have in the hands of an original REMIC
Residual Certificateholder. See "--Sale or Exchange of REMIC Residual
Certificates" below. It is not clear, however, whether the adjustments will
in fact be permitted or required and, if so, how they would be made. The
REMIC Regulations do not provide for any such adjustments.
Taxable Income of the REMIC Attributable to Residual Interests. The
taxable income of the REMIC will reflect a netting of
o the income from the mortgage loans and/or MBS and the REMIC's other
assets and
o the deductions allowed to the REMIC for interest and OID on the
REMIC Regular Certificates and, except as described above under
"--Taxation of Owners of REMIC Regular Certificates--Non-Interest
Expenses of the REMIC," other expenses.
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:
o the limitations on deductibility of investment interest expense and
expenses for the production of income do not apply;
o all bad loans will be deductible as business bad debts; and
o the limitation on the deductibility of interest and expenses
related to tax-exempt income will apply.
The REMIC'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 on
reinvestment of cash flows and reserve assets, plus any cancellation of
indebtedness income upon allocation of realized losses to the REMIC Regular
Certificates. Note that the timing of cancellation of indebtedness income
recognized by REMIC Residual Certificateholders resulting from defaults and
delinquencies on mortgage loans and/or MBS may differ from the time of the
actual loss on the assets. The REMIC's deductions include interest and
original issue discount expense on the REMIC Regular Certificates, servicing
fees on the mortgage loans, other administrative expenses of the REMIC and
realized losses on the mortgage loans. The requirement that REMIC Residual
Certificateholders report their pro rata share of taxable income or net loss
of the REMIC will continue until there are no certificates of any class of
the related series outstanding.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue
prices of the REMIC Regular Certificates and the REMIC Residual Certificates,
or, if a class of certificates is not sold initially, its fair market value.
The aggregate basis will be allocated among the mortgage loans and/or MBS and
other assets of the REMIC in proportion to their respective fair market
value. A mortgage loan or MBS will be deemed to have been acquired with
discount or premium to the extent that the REMIC's basis therein is less than
or greater than its principal balance, respectively. Any such discount,
whether market discount or OID, will be includible in the income of the REMIC
as it accrues, in advance of receipt of the cash attributable to the income,
under a method similar to the method described above for accruing OID on the
REMIC Regular Certificates. The REMIC may elect under Code Section 171 to
amortize any premium on the mortgage loans and/or MBS. Premium on any
mortgage loan or MBS to which the election applies would be amortized under a
constant yield method. It is not clear whether the yield of a mortgage loan
or MBS would be calculated for this purpose based on scheduled payments or
taking account of the Prepayment Assumption. Additionally, such an election
would not apply to the yield with respect to any underlying mortgage loan
originated on or before September 27, 1985. Instead, premium with respect to
such a mortgage loan would be allocated among the principal payments thereon
and would be deductible by the REMIC as those payments become due.
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The REMIC will be allowed a deduction for interest and OID on the REMIC
Regular Certificates. The amount and method of accrual of OID will be
calculated for this purpose in the same manner as described above with
respect to REMIC Regular Certificates except that the 0.25% per annum de
minimis rule and adjustments for subsequent holders described therein will
not apply.
A REMIC Residual Certificateholder will not be permitted to amortize the
cost of the REMIC Residual Certificate as an offset to its share of the
REMIC's taxable income. However, REMIC taxable income will not include cash
received by the REMIC that represents a recovery of the REMIC's basis in its
assets, and, as described above, the issue price of the REMIC Residual
Certificates will be added to the issue price of the REMIC Regular
Certificates in determining the REMIC's initial basis in its assets. See
"--Sale or Exchange of REMIC Residual Certificates" below. For a discussion
of possible adjustments to income of a subsequent holder of a REMIC Regular
Certificate to reflect any difference between the actual cost of the REMIC
Residual Certificate to the holder and the adjusted basis the REMIC Residual
Certificate would have in the hands of an original REMIC Residual
Certificateholder, see "--Allocation of the Income of the REMIC to the REMIC
Residual Certificates" above.
Net Losses of the REMIC. The REMIC will have a net loss for any calendar
quarter in which its deductions exceed its gross income. The net loss would
be allocated among the REMIC Residual Certificateholders in the same manner
as the REMIC's taxable income. The net loss allocable to any REMIC Residual
Certificate will not be deductible by the holder to the extent that the net
loss exceeds the holder's adjusted basis in the REMIC Residual Certificate.
Any net loss that is not currently deductible by reason of this limitation
may only be used by the REMIC Residual Certificateholder to offset its share
of the REMIC's taxable income in future periods (but not otherwise). The
ability of REMIC Residual Certificateholders that are individuals or closely
held corporations to deduct net losses may be subject to additional
limitations under the Code.
Mark-to-Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that the IRS has finalized Mark-to-Market
Regulations which provide that a REMIC Residual Certificate acquired after
January 3, 1995 cannot be marked to market. The Mark-to-Market Regulations
replaced the temporary regulations which allowed a Residual Certificate to be
marked to market provided that it was not a "negative value" residual
interest and did not have the same economic effect as a "negative value"
residual interest.
Pass-Through of Non-Interest Expenses of the REMIC. As a general rule, all
of the fees and expenses of a REMIC will be taken into account by holders of
the REMIC Residual Certificates. In the case of a single class REMIC,
however, the expenses and a matching amount of additional income will be
allocated, under temporary Treasury regulations, among the REMIC Regular
Certificateholders and the REMIC Residual Certificateholders on a daily basis
in proportion to the relative amounts of income accruing to each
certificateholder on that day. In general terms, a single class REMIC is one
that either:
o would qualify, under existing Treasury regulations, as a grantor
trust if it were not a REMIC, treating all interests as ownership
interests, even if they would be classified as debt for federal
income tax purposes, or
o is similar to such a trust and is structured with the principal
purpose of avoiding the single class REMIC rules.
Unless otherwise stated in the applicable prospectus supplement, the expenses
of the REMIC will be allocated to holders of the related REMIC Residual
Certificates in their entirety and not to holders of the related REMIC
Regular Certificates.
In the case of individuals or trusts, estates or other persons that
compute their income in the same manner as individuals, who own an interest
in a REMIC Regular Certificate or a REMIC Residual Certificate directly or
through a pass-through interest holder that is required to pass miscellaneous
itemized deductions through to its owners or beneficiaries, e.g., a
partnership, an S corporation or a grantor trust, such expenses will be
deductible under Code Section 67 only to the extent that such expenses, plus
other "miscellaneous itemized deductions" of the individual, exceed 2% of
such individual's adjusted gross income. In addition, Code Section 68
provides that the applicable amount will be reduced by the lesser of
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o 3% of the excess of the individual's adjusted gross income over the
applicable amount or
o 80% of the amount of itemized deductions otherwise allowable for
the taxable year.
The amount of additional taxable income recognized by REMIC Residual
Certificateholders who are subject to the limitations of either Code Section
67 or Code Section 68 may be substantial. Further, holders other than
corporations subject to the alternative minimum tax may not deduct
miscellaneous itemized deductions in determining such holders' alternative
minimum taxable income. The REMIC is required to report to each pass-through
interest holder and to the IRS such holder's allocable share, if any, of the
REMIC's non-interest expenses. The term "pass-through interest holder"
generally refers to individuals, entities taxed as individuals and certain
pass-through entities, but does not include real estate investment trusts.
Accordingly, investment in REMIC Residual Certificates will in general not be
suitable for individuals or for certain pass-through entities, such as
partnerships and S corporations, that have individuals as partners or
shareholders.
Excess Inclusions. A portion of the income on a REMIC Residual
Certificate, referred to in the Code as an "excess inclusion", for any
calendar quarter will be subject to federal income tax in all events. Thus,
for example, an excess inclusion:
o may not, except as described below, be offset by any unrelated
losses, deductions or loss carryovers of a REMIC Residual
Certificateholder;
o will be treated as "unrelated business taxable income" within the
meaning of Code Section 512 if the REMIC Residual Certificateholder
is a pension fund or any other organization that is subject to tax
only on its unrelated business taxable income, as discussed under
"--Tax-Exempt Investors" below; and
o is not eligible for any reduction in the rate of withholding tax in
the case of a REMIC Residual Certificateholder that is a foreign
investor, as discussed under "--Residual Certificate
Payments--Non-U.S. Persons" below.
Except as discussed in the following paragraph, with respect to any REMIC
Residual Certificateholder, the excess inclusions for any calendar quarter is
the excess, if any, of (1) the income of such REMIC Residual
Certificateholder for that calendar quarter from its REMIC Residual
Certificate over (2) the sum of the "daily accruals" for all days during the
calendar quarter on which the REMIC Residual Certificateholder holds a REMIC
Residual Certificate. For this purpose, the daily accruals with respect to a
REMIC Residual Certificate are determined by allocating to each day in the
calendar quarter its ratable portion of the product of the "adjusted issue
price" of the REMIC Residual Certificate at the beginning of the calendar
quarter and 120 percent of the "Federal long-term rate" in effect at the time
the REMIC Residual Certificate is issued. For this purpose, the "adjusted
issue price" of a REMIC Residual Certificate at the beginning of any calendar
quarter equals the issue price of the REMIC Residual Certificate, increased
by the amount of daily accruals for all prior quarters, and decreased--but
not below zero--by the aggregate amount of payments made on the REMIC
Residual Certificate before the beginning of the quarter. The "federal
long-term rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by
the IRS.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to the REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Code Section
857(b)(2), excluding any net capital gain), will be allocated among the
shareholders of such trust in proportion to the dividends received by the
shareholders from such trust, and any amount so allocated will be treated as
an excess inclusion with respect to a REMIC Residual Certificate as if held
directly by the shareholder. Regulated investment companies, common trust
funds and certain cooperatives are subject to similar rules.
The Small Business Job Protection Act 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 REMIC 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 a thrift institution since November 1,
1995.
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In addition, the Small Business Job Protection Act of 1996 provides three
rules for determining the effect on excess inclusions on the alternative
minimum taxable income of a residual holder. First, alternative minimum
taxable income for the residual holder is determined without regard to the
special rule that taxable income cannot be less than excess inclusions.
Second, the amount of any alternative minimum tax net operating loss
deductions must be computed without regard to any excess inclusions. Third, a
residual holder's alternative minimum taxable income for a tax year cannot be
less than excess inclusions for the year. The effect of this last statutory
amendment is to prevent the use of nonrefundable tax credits to reduce a
taxpayer's income tax below its tentative minimum tax computed only on excess
inclusions. These rules are effective for tax years beginning after December
31, 1986, unless a residual holder elects to have such rules apply only to
tax years beginning after August 20, 1996.
Payments. Any distribution made on a REMIC Residual Certificate to a REMIC
Residual Certificateholder will be treated as a non-taxable return of capital
to the extent it does not exceed the REMIC Residual Certificateholder's
adjusted basis in the REMIC Residual Certificate. To the extent a
distribution exceeds the adjusted basis, it will be treated as gain from the
sale of the REMIC Residual Certificate.
Sale or Exchange of REMIC Residual Certificates. If a REMIC Residual
Certificate is sold or exchanged, the seller will generally recognize gain or
loss equal to the difference between the amount realized on the sale or
exchange and its adjusted basis in the REMIC Residual Certificate except that
the recognition of loss may be limited under the "wash sale" rules described
in the next paragraph. A holder's adjusted basis in a REMIC Residual
Certificate generally equals the cost of the REMIC Residual Certificate to
the REMIC Residual Certificateholder, increased by the taxable income of the
REMIC that was included in the income of the REMIC Residual Certificateholder
with respect to the REMIC Residual Certificate, and decreased--but not below
zero--by the net losses that have been allowed as deductions to the REMIC
Residual Certificateholder with respect to the REMIC Residual Certificate and
by the distributions received thereon by the REMIC Residual
Certificateholder. In general, the gain or loss will be capital gain or loss
provided the REMIC Residual Certificate is held as a capital asset. The
capital gain or loss will generally be long-term capital gain or loss if the
REMIC Regular Certificate was held for more than one year. Long-term capital
gains of individuals are subject to reduced maximum tax rates while capital
gains recognized by individuals on capital assets held less than twelve
months are generally subject to ordinary income tax rates. The use of capital
losses is limited. However, REMIC Residual Certificates will be "evidences of
indebtedness" within the meaning of Code Section 582(c)(1), so that gain or
loss recognized from sale of a REMIC Residual Certificate by a bank or thrift
institution to which such section applies would be ordinary income or loss.
In addition, a transfer of a REMIC Residual Certificate that is a
"noneconomic residual interest" may be subject to different rules. See "--Tax
Related Restrictions on Transfers of REMIC Residual Certificates--Noneconomic
REMIC Residual Certificates" below.
Except as provided in Treasury regulations yet to be issued, if the seller
of a REMIC Residual Certificate reacquires such REMIC Residual Certificate,
or acquires any other REMIC Residual Certificate, any residual interest in
another REMIC or similar interest in a "taxable mortgage pool", as defined in
Code Section 7701(i), during the period beginning six months before, and
ending six months after, the date of such sale, such sale will be subject to
the "wash sale" rules of Code Section 1091. In that event, any loss realized
by the REMIC Residual Certificateholder on the sale will not be deductible,
but, instead, will increase such REMIC Residual Certificateholder's adjusted
basis in the newly acquired asset.
PROHIBITED TRANSACTIONS AND OTHER TAXES
The Code imposes a tax on REMICs equal to 100% of the net income derived
from "prohibited transactions". In general, subject to certain specified
exceptions, a prohibited transaction means:
o the disposition of a mortgage loan or MBS,
o the receipt of income from a source other than a mortgage loan or
MBS or certain other permitted investments,
o the receipt of compensation for services, or
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o gain from the disposition of an asset purchased with the payments
on the mortgage loans and/or MBS for temporary investment pending
distribution on the certificates.
It is not anticipated that the trust fund for any series of certificates will
engage in any prohibited transactions in which it would recognize a material
amount of net income.
In addition, certain contributions to a trust fund as to which an election
has been made to treat the trust fund as a REMIC made after the day on which
the trust fund issues all of its interests could result in the imposition of
the Contributions Tax. No trust fund for any series of certificates will
accept contributions that would subject it to such tax.
In addition, a trust fund as to which an election has been made to treat
the trust fund as a REMIC may also 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. "Net
income from foreclosure property" generally means income from foreclosure
property other than qualifying income for a real estate investment trust.
Where any prohibited transactions tax, contributions tax, tax on net
income from foreclosure property or state or local income or franchise tax
that may be imposed on a REMIC relating to any series of certificate arises
out of or results from
o a breach of the servicer's, trustee's or depositor's obligations,
as the case may be, under the related Agreement for such series,
such tax will be borne by the servicer, trustee or depositor, as
the case may be, out of its own funds or
o J.P. Morgan Commercial Mortgage Finance Corp.'s obligation to
repurchase a mortgage loan,
such tax will be borne by J.P. Morgan Commercial Mortgage Finance Corp. In
the event that the servicer, trustee or depositor, as the case may be, fails
to pay or is not required to pay any prohibited transactions tax,
contributions tax, tax on net income from foreclosure property or state or
local income or franchise tax, the tax will be payable out of the trust fund
for the series and will result in a reduction in amounts available to be
distributed to the certificateholders of the series.
LIQUIDATION AND TERMINATION
If the REMIC 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'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 such date, the REMIC will not be subject to any prohibited
transaction tax, provided that the REMIC credits or distributes in
liquidation all of the sale proceeds plus its cash, other than the amounts
retained to meet claims, to holders of Regular and REMIC Residual
Certificates within the 90-day period.
The REMIC will terminate shortly following the retirement of the REMIC
Regular Certificates. If a REMIC Residual Certificateholder's adjusted basis
in the REMIC Residual Certificate exceeds the amount of cash distributed to
such REMIC Residual Certificateholder in final liquidation of its interest,
then it would appear that the REMIC Residual Certificateholder would be
entitled to a loss equal to the amount of such excess. It is unclear whether
such a loss, if allowed, will be a capital loss or an ordinary loss.
ADMINISTRATIVE MATTERS
Solely for the purpose of the administrative provisions of the Code, the
REMIC generally will be treated as a partnership and the REMIC Residual
Certificateholders will be treated as the partners. Information will be
furnished quarterly to each REMIC Residual Certificateholder who held a REMIC
Residual Certificate on any day in the previous calendar quarter.
Each REMIC Residual Certificateholder is required to treat items on its
return consistently with their treatment on the REMIC's return, unless the
REMIC Residual Certificateholder either files a
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statement identifying the inconsistency or establishes that the inconsistency
resulted from incorrect information received from the REMIC. The IRS may
assert a deficiency resulting from a failure to comply with the consistency
requirement without instituting an administrative proceeding at the REMIC
level. The REMIC does not intend to register as a tax shelter pursuant to
Code Section 6111 because it is not anticipated that the REMIC will have a
net loss for any of the first five taxable years of its existence. Any person
that holds a REMIC Residual Certificate as a nominee for another person may
be required to furnish the REMIC, in a manner to be provided in Treasury
regulations, with the name and address of such person and other information.
TAX-EXEMPT INVESTORS
Any REMIC Residual Certificateholder that is a pension fund or other
entity that is subject to federal income taxation only on its "unrelated
business taxable income" within the meaning of Code Section 512 will be
subject to such tax on that portion of the distributions received on a REMIC
Residual Certificate that is considered an excess inclusion. See "--Taxation
of Owners of REMIC Residual Certificates--Excess Inclusions" above.
RESIDUAL CERTIFICATE PAYMENTS--NON-U.S. PERSONS
Amounts paid to REMIC Residual Certificateholders who are not U.S. Persons
(see "--Taxation of Owners of REMIC Regular Certificates--Non-U.S. Persons"
above) are treated as interest for purposes of the 30% or lower treaty rate,
United States withholding tax. Amounts distributed to holders of REMIC
Residual Certificates should qualify as "portfolio interest," subject to the
conditions described in "--Taxation of Owners of REMIC Regular Certificates"
above, but only to the extent that the underlying mortgage loans were
originated after July 18, 1984. Furthermore, the rate of withholding on any
income on a REMIC Residual Certificate that is excess inclusion income will
not be subject to reduction under any applicable tax treaties. See
"--Taxation of Owners of REMIC Residual Certificates--Excess Inclusions"
above. If the portfolio interest exemption is unavailable, such amount will
be subject to United States withholding tax when paid or otherwise
distributed, or when the REMIC Residual Certificate is disposed of, under
rules similar to those for withholding upon disposition of debt instruments
that have OID. The Code, however, grants the Treasury Department authority to
issue regulations requiring that those amounts be taken into account earlier
than otherwise provided where necessary to prevent avoidance of tax, for
example, where the REMIC Residual Certificates do not have significant value.
See "--Taxation of Owners of REMIC Residual Certificates--Excess Inclusions"
above. If the amounts paid to REMIC Residual Certificateholders that are not
U.S. Persons are effectively connected with their conduct of a trade or
business within the United States, the 30%, or lower treaty rate, withholding
will not apply. Instead, the amounts paid to such non-U.S. Person will be
subject to U.S. federal income taxation at regular graduated rates. For
special restrictions on the transfer of REMIC Residual Certificates, see
"--Tax Related Restrictions on Transfers of REMIC Residual Certificates"
below.
REMIC Regular Certificateholders and persons related to such holders
should not acquire any REMIC Residual Certificates, and REMIC Residual
Certificateholders and persons related to REMIC Residual Certificateholders
should not acquire any REMIC Regular Certificates, without consulting their
tax advisors as to the possible adverse tax consequences of such acquisition.
TAX RELATED RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES
Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests
in the entity are not held by "disqualified organizations". Further, a tax is
imposed on the transfer of a residual interest in a REMIC to a "disqualified
organization." The amount of the tax equals the product of (A) an amount, as
determined under the REMIC Regulations, equal to the present value of the
total anticipated "excess inclusions" with respect to such interest for
periods after the transfer and (B) the highest marginal federal income tax
rate applicable to corporations. The tax is imposed on the transfer unless
the transfer is through an agent, including a broker or other middleman, for
a disqualified organization, in which event the tax is imposed
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on the agent. The person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnished to such person an affidavit
that the transferee is not a disqualified organization and, at the time of
the transfer, such person does not have actual knowledge that the affidavit
is false. A "disqualified organization" means:
(A) the United States, any State, possession or political subdivision
thereof, any foreign government, any international organization
or any agency or instrumentality of any of the foregoing
(provided that such term does not include an instrumentality if
all its activities are subject to tax and, except for FHLMC, a
majority of its board of directors is not selected by any such
government agency);
(B) any organization, other than certain farmers' cooperatives,
generally exempt from federal income taxes unless such
organization is subject to the tax on "unrelated business taxable
income"; and
(C) a rural electric or telephone cooperative.
A tax is imposed on a "pass-through entity" holding a residual interest in
a REMIC if at any time during the taxable year of the pass-through entity a
disqualified organization is the record holder of an interest in such entity,
provided that all partners of an "electing large partnership" as defined in
Section 775 of the Code, are deemed to be disqualified organizations. The
amount of the tax is equal to the product of (A) the amount of excess
inclusions for the taxable year allocable to the interest held by the
disqualified organization and (B) the highest marginal federal income tax
rate applicable to corporations. The pass-through entity otherwise liable for
the tax, for any period during which the disqualified organization is the
record holder of an interest in such entity, will be relieved of liability
for the tax if such record holder furnishes to such entity an affidavit that
such record holder is not a disqualified organization and, for such period,
the pass-through entity does not have actual knowledge that the affidavit is
false. For this purpose, a "pass-through entity" means:
o a regulated investment company, real estate investment trust or
common trust fund;
o a partnership, trust or estate; and
o certain cooperatives.
Except as may be provided in Treasury regulations not yet issued, 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. Electing
large partnerships--generally, non-service partnerships with 100 or more
members electing to be subject to simplified IRS reporting provisions under
Code sections 771 through 777--will be taxable on excess inclusion income as
if all partners were disqualified organizations.
In order to comply with these rules, the Agreement will provide that no
record or beneficial ownership interest in a REMIC Residual Certificate may
be purchased, transferred or sold, directly or indirectly, without the
express written consent of the master servicer. The master servicer will
grant consent to a proposed transfer only if it receives the following:
o an affidavit from the proposed transferee to the effect that it is
not a disqualified organization and is not acquiring the REMIC
Residual Certificate as a nominee or agent for a disqualified
organization, and
o a covenant by the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the REMIC Residual Certificate.
Noneconomic REMIC Residual Certificates. The REMIC Regulations disregard,
for federal income tax purposes, any transfer of a Noneconomic REMIC Residual
Certificate to a U.S. Person unless no significant purpose of the transfer is
to enable the transferor to impede the assessment or collection of tax. A
Noneconomic REMIC Residual Certificate is any REMIC Residual Certificate,
including a REMIC Residual Certificate with a positive value at issuance,
unless, at the time of transfer, taking into account the Prepayment
Assumption and any required or permitted clean up calls or required
liquidation provided for in the REMIC's organizational documents,
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o the present value of the expected future distributions on the REMIC
Residual Certificate 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
o the transferor reasonably expects that the transferee will receive
distributions from the REMIC at or after the time at which taxes
accrue on the anticipated excess inclusions in an amount sufficient
to satisfy the accrued taxes.
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 transferor is presumed not to
have such knowledge if:
o the transferor conducted a reasonable investigation of the
transferee, and
o the transferee acknowledges to the transferor that the residual
interest may generate tax liabilities in excess of the cash flow
and the transferee represents that it intends to pay such taxes
associated with the residual interest as they become due.
If a transfer of a Noneconomic REMIC Residual Certificate is disregarded, the
transferor would continue to be treated as the owner of the REMIC Residual
Certificate and would continue to be subject to tax on its allocable portion
of the net income of the REMIC.
Foreign Investors. The REMIC Regulations provide that the transfer of a
REMIC Residual Certificate that has a "tax avoidance potential" to a "foreign
person" will be disregarded for federal income tax purposes. This rule
appears to apply to a transferee who is not a U.S. Person unless the
transferee's income in respect of the REMIC Residual Certificate is
effectively connected with the conduct of a United States trade or business.
A REMIC Residual Certificate is deemed to have a tax avoidance potential
unless, at the time of transfer, the transferor reasonably expects that the
REMIC will distribute to the transferee amounts that will equal at least 30
percent of each excess inclusion, and that such amounts will be distributed
at or after the time the excess inclusion accrues and not later than the end
of the calendar year following the year of accrual. If the non-U.S. Person
transfers the REMIC Residual Certificate to a U.S. Person, the transfer will
be disregarded, and the foreign transferor will continue to be treated as the
owner, if the transfer has the effect of allowing the transferor to avoid tax
on accrued excess inclusions. The provisions in the REMIC Regulations
regarding transfers of REMIC Residual Certificates that have tax avoidance
potential to foreign persons are effective for all transfers after June 30,
1992. The Agreement will provide that no record or beneficial ownership
interest in a REMIC Residual Certificate may be transferred, directly or
indirectly, to a non-U.S. Person unless the person provides the trustee with
a duly completed IRS Form 4224 or applicable successor form adopted by the
IRS for such purpose and the trustee consents to the transfer in writing.
Any attempted transfer or pledge in violation of the transfer restrictions
shall be absolutely null and void and shall vest no rights in any purported
transferee. Investors in REMIC Residual Certificates are advised to consult
their own tax advisors with respect to transfers of the REMIC Residual
Certificates and, in addition, pass-through entities are advised to consult
their own tax advisors with respect to any tax which may be imposed on a
pass-through entity.
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ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain restrictions on employee benefit
plans subject to ERISA and on certain other retirement plans and arrangements
(including, but not limited to individual retirement accounts and Keogh
plans) ("Plans") and on persons who are parties in interest or disqualified
persons ("parties in interest") with respect to such Plans. Certain employee
benefit plans, such as governmental plans and church plans (if no election
has been made under Section 410(d) of the Code), are not subject to the
restrictions of ERISA or Section 4975 of the Code, and assets of these plans
may be invested in the certificates without regard to the ERISA
considerations described below, subject to other applicable federal and state
law. However, any governmental or church plan that is not subject to ERISA
but is qualified under Section 401(a) of the Code and exempt from taxation
under Section 501(a) of the Code is subject to the prohibited transaction
rules set forth in Section 503 of the Code.
Investments by Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan.
PROHIBITED TRANSACTIONS
General
Section 406 of ERISA prohibits parties in interest with respect to a Plan
from engaging in certain transactions involving a Plan and its assets unless
a statutory, regulatory or administrative exemption applies to the
transaction. Section 4975 of the Code imposes excise taxes (or, in some
cases, a civil penalty may be assessed pursuant to Section 502(i) of ERISA)
on parties in interest which engage in nonexempt prohibited transactions.
The United States Department of Labor ("Labor") has issued a final
regulation (29 C.F.R. Section 2510.3-101) containing rules for determining
what constitutes the assets of a Plan. This regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity investment" will be deemed for purposes of ERISA to be assets of the
Plan unless exception applies.
Under the terms of the regulation, the Trust may be deemed to hold plan
assets by reason of a Plan's investment in a certificate; such plan assets
would include an undivided interest in the mortgage loans and any other
assets held by the trust. In this event, the Depositor, the servicers, the
trustee, any insurer of the mortgage assets and other persons, in providing
services with respect to the assets of the Trust, may be parties in interest,
subject to the fiduciary responsibility provisions of Title I of ERISA,
including the prohibited transaction provisions of Section 406 of ERISA (and
of Section 4975 of the Code), with respect to transactions involving the plan
assets unless such transactions are subject to a statutory, regulatory or
administrative exemption.
The regulations contain a de minimis safe-harbor rule that exempts any
entity from plan assets status as long as the aggregate equity investment in
such entity by Plans is not significant. For this purpose, equity
participation in the entity will be significant if immediately after any
acquisition of any equity interest in the entity, "benefit plan investors" in
the aggregate, own 25% or more of the value of any class of equity interest
(excluding from the calculation the value of equity interests held by persons
who have discretionary authority or control with respect to the assets of the
entity (or held by affiliates of such persons)). "Benefit plan investors"
include Plans and employee benefit plans not subject to ERISA (e.g.,
governmental and foreign plans) and entities whose underlying assets include
plan assets by reason of Plan investment in such entities. To fit within this
safe harbor, benefit plan investors must own less than 25% of each class of
certificates, regardless of the portion of total equity value represented by
such class, on an ongoing basis.
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Availability of Underwriter's Exemption for Certificates
Labor has granted to J.P. Morgan Securities Inc. Prohibited Transaction
Exemption 90-23 (the "Exemption"), which exempts from the application of the
prohibited transaction rules transactions relating to: (1) the acquisition,
sale and holding by Plans of certain certificates representing an undivided
interest in certain asset-backed pass-through trusts, with respect to which
J.P. Morgan Securities Inc. or any of its affiliates is the sole underwriter
or the manager or co-manager of the underwriting syndicate; and (2) the
servicing, operation and management of these asset-backed pass-through
trusts, provided that the general conditions and certain other conditions set
forth in the Exemption are satisfied.
The Exemption sets forth the following general conditions which must be
satisfied before a transaction involving the acquisition, sale and holding of
the certificates or a transaction in connection with the servicing, operation
and management of the trust fund may be eligible for exemptive relief
thereunder:
(1) The acquisition of the certificates by a Plan is on terms (including
the price for such certificates) that are at least as favorable to the
investing Plan as they would be in an arm's-length transaction with an
unrelated party;
(2) The rights and interests evidenced by the certificates acquired by the
Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust fund;
(3) The certificates acquired by the Plan have received a rating at the
time of such acquisition that is in one of the three highest rating
categories from any of Duff & Phelps Inc., Fitch IBCA, Inc., Moody's
Investors Service, Inc. and Standard & Poor's Ratings Group (each, a "rating
agency");
(4) The trustee is not an affiliate of the underwriters, the Depositor,
the servicers, any borrower whose obligations under one or more mortgage
loans constitute more than 5% of the aggregate unamortized principal balance
of the assets in the trust, or any of their respective affiliates (the
"Restricted Group");
(5) The sum of all payments made to and retained by the underwriters in
connection with the distribution of the certificates represents not more than
reasonable compensation for underwriting such certificates; the sum of all
payments made to and retained by the Depositor pursuant to the sale 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
servicers represent not more than reasonable compensation for the servicers'
services under the agreements and reimbursement of the servicer'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 as amended.
The trust fund must also meet the following requirements:
(i) the corpus of 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 rating categories of a rating
agency for at least one year prior to the Plan's acquisition of the
certificates; and
(iii) certificates evidencing interests in such other investment pools
must have been purchased by investors other than Plans for at least one year
prior to any Plan's acquisition of the certificates.
On July 21, 1997, Labor published in the Federal Register an amendment to
the Exemption, which extends exemptive relief to certain mortgage-backed and
asset-backed securities transactions using pre-funding accounts for trusts
issuing pass-through certificates. The amendment generally allows mortgage
loans or other secured receivables supporting payments to certificateholders,
and having a value equal to no more than twenty-five percent (25%) of the
total principal amount of the certificates being offered by the trust, to be
transferred to the trust within a 90-day or three-month period following the
closing date, instead of requiring that all such receivables be either
identified or transferred on or before the closing date. The relief is
available when certain conditions are met.
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Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when any person who has
discretionary authority or renders investment advice with respect to the
investment of plan assets causes a Plan to acquire certificates in a trust,
provided that, among other requirements: (i) such person (or its affiliate)
is an obligor with respect to five percent or less of the fair market value
of the obligations or receivables contained in the trust; (ii) the Plan is
not a plan with respect to which any member of the Restricted Group is the
"plan sponsor" (as defined in Section 3(16)(B) of ERISA); (iii) 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 and at
least fifty percent of the aggregate interest in the trust fund is acquired
by persons independent of the Restricted Group; (iv) a 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 acquisition; and
(v) immediately after the acquisition, no more than twenty-five percent of
the assets of any Plan with respect to which such person has discretionary
authority or renders investment advice 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 Plans sponsored
by any member of the Restricted Group.
Before purchasing a certificate, a fiduciary of a Plan should itself
confirm (a) that the certificates constitute "certificates" for purposes of
the Exemption and (b) that the specific and general conditions set forth in
the Exemption and the other requirements set forth in the Exemption would be
satisfied.
REVIEW BY PLAN FIDUCIARIES
Any Plan fiduciary considering whether to purchase any certificates on
behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of
ERISA and the Code to such investment. Among other things, before purchasing
any certificates, a fiduciary of a Plan subject to the fiduciary
responsibility provisions of ERISA or an employee benefit plan subject to the
prohibited transaction provisions of the Code should make its own
determination as to the availability of the exemptive relief provided in the
Exemption, and also consider the availability of any other prohibited
transaction exemptions. The prospectus supplement with respect to a series of
certificates may contain additional information regarding the application of
the Exemption, or another exemption with respect to the certificates offered
thereby.
LEGAL INVESTMENT
The prospectus supplement for each series of offered certificates will
identify those classes of offered certificates, if any, which constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Such classes will constitute "mortgage
related securities" for so long as they are rated in one of the two highest
rating categories by at least one nationally recognized statistical rating
organization (the "SMMEA Certificates"). As "mortgage related securities,"
the SMMEA Certificates will constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business
entities (including, but not limited to, state chartered savings banks,
commercial banks, savings and loan associations and insurance companies, as
well as trustees and state government employee retirement systems) 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. Alaska, Arkansas, Colorado,
Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Maryland,
Michigan, Missouri, Nebraska, New Hampshire, New York, North Carolina, Ohio,
South Dakota, Utah, Virginia and West Virginia enacted legislation, on or
before the October 4, 1991 cutoff established by SMMEA for such enactments,
limiting to varying extents the ability of certain entities (in particular,
insurance companies) to invest in mortgage related securities, in most cases
by requiring the affected investors to rely solely upon existing state law,
and not SMMEA. Accordingly, the investors affected by such legislation will
be authorized to invest in SMMEA Certificates only to the extent provided in
the legislation. Accordingly, investors whose investment authority is subject
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to legal restrictions should consult their own legal advisors to determine
whether and to what extent the offered certificates constitute legal
investments for them.
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 with "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. 24 (Seventh), subject in each case to such regulations as
the applicable federal regulatory authority may prescribe.
Institutions where investment activities are subject to legal investment
laws or regulations or review by certain regulatory authorities may be
subject to restrictions on investment in certain classes of offered
certificates. Any financial institution which is subject to the jurisdiction
of the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation ("FDIC"), the
Office of Thrift Supervision ("OTS"), the National Credit Union
Administration ("NCUA") or other federal or state agencies with similar
authority should review any applicable rules, guidelines and regulations
prior to purchasing any offered certificate. The Federal Financial
Institutions Examination Council, for example, has issued a Supervisory
Policy Statement on Securities Activities effective February 10, 1992 (the
"Policy Statement"). The Policy Statement has been adopted by the Comptroller
of the Currency, the Federal Reserve Board, the FDIC, the OTS and the NCUA
(with certain modifications), with respect to the depository institutions
that they regulate. The Policy Statement prohibits depository institutions
from investing in certain "high-risk mortgage securities" (including
securities such as certain classes of offered certificates), except under
limited circumstances, and sets forth certain investment practices deemed to
be unsuitable for regulated institutions. The NCUA issued final regulations
effective December 2, 1991 that restrict and in some instances prohibit the
investment by federal credit unions in certain types of mortgage related
securities.
In September 1993 the National Association of Insurance Commissioners
released a draft model investment law (the "Model Law") which sets forth
model investment guidelines for the insurance industry. Institutions subject
to insurance regulatory authorities may be subject to restrictions on
investment similar to those set forth in the Model Law and other
restrictions.
If specified in the related prospectus supplement, other classes of
offered certificates offered pursuant to this prospectus will not constitute
"mortgage related securities" under SMMEA. The appropriate characterization
of this offered certificate under various legal investment restrictions, and
thus the ability of investors subject to these restrictions to purchase such
offered certificates, may be subject to significant interpretive
uncertainties.
Notwithstanding SMMEA, there may be other restrictions on the ability of
certain investors, including depository institutions, either to purchase any
offered certificates or to purchase offered certificates representing more
than a special percentage of the investors' assets.
Except as to the status of SMMEA certificates identified in the prospectus
supplement for a series as "mortgage related securities" under SMMEA, the
Depositor will make no representations as to the proper characterization of
the certificates for legal investment or financial institution regulatory
purposes, or as to the ability of particular investors to purchase any
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 certificates) may adversely affect the liquidity of
the certificates.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not
limited to, "prudent investor" provisions, percentage-of-assets limits and
provisions which may restrict or prohibit investment in securities which are
not "interest bearing" or "income paying."
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase offered certificates or
to purchase offered certificates representing more than a specified
percentage of the investor's assets. Investors should consult their own legal
advisors in determining whether and to what extent the offered certificates
constitute legal investments for them.
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PLAN OF DISTRIBUTION
The offered certificates offered hereby and by the Supplements to this
prospectus will be offered in series. The distribution of the certificates
may be effected from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices to be determined at the time of sale or at the time of commitment
therefor. If so specified in the prospectus supplement, the offered
certificates will be distributed in a firm commitment underwriting, subject
to the terms and conditions of the underwriting agreement, by J.P. Morgan
Securities Inc. ("JPMSI") acting as underwriter with other underwriters, if
any, named therein. In such event, the prospectus supplement may also specify
that the underwriters will not be obligated to pay for any offered
certificates agreed to be purchased by purchasers pursuant to purchase
agreements acceptable to the depositor. In connection with the sale of
offered certificates, underwriters may receive compensation from the
depositor or from purchasers of offered certificates in the form of
discounts, concessions or commissions. The prospectus supplement will
describe any such compensation paid by the depositor.
Alternatively, the prospectus supplement may specify that offered
certificates will be distributed by JPMSI acting as agent or in some cases as
principal with respect to offered certificates that it has previously
purchased or agreed to purchase. If JPMSI acts as agent in the sale of
offered certificates, JPMSI will receive a selling commission with respect to
such offered certificates, depending on market conditions, expressed as a
percentage of the aggregate certificate balance or notional amount of the
offered certificates as of the Cut-off Date. The exact percentage for each
series of certificates will be disclosed in the related prospectus
supplement. To the extent that JPMSI elects to purchase offered certificates
as principal, JPMSI may realize losses or profits based upon the difference
between its purchase price and the sales price. The prospectus supplement
with respect to any series offered other than through underwriters 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 the series.
The depositor will indemnify JPMSI and any underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, or
will contribute to payments JPMSI and any underwriters may be required to
make in respect thereof.
In the ordinary course of business, JPMSI and the depositor may engage in
various securities and financing transactions, including repurchase
agreements to provide interim financing of the Depositor's mortgage loans
pending the sale of such mortgage loans or interests therein, including the
certificates.
The offered certificates will be sold primarily to institutional
investors. Purchasers of the offered certificates, including dealers, may,
depending on the facts and circumstances of such purchases, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with reoffers and sales by them of offered certificates. Certificateholders
should consult with their legal advisors in this regard prior to any such
reoffer or sale.
As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered hereby.
Any non-investment grade class may be initially retained by the Depositor,
and may be sold by the depositor at any time in private transactions.
LEGAL MATTERS
Certain legal matters in connection with the certificates, including
certain federal income tax consequences, will be passed upon for the
depositor by Brown & Wood llp, New York, New York.
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 he included in this prospectus or in the related prospectus
supplement.
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RATING
It is a condition to the issuance of any class of offered certificates
that they shall have been rated not lower than investment grade, that is, in
one of the four highest rating categories, by a rating agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates, the nature of the underlying mortgage
loans 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 mortgagors 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 in extreme cases might
fail to recoup their initial investments.
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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GLOSSARY OF TERMS
"Accrual Certificates" means certificates which provide for distributions
of accrued interest thereon commencing only following the occurrence of
certain events, such as the retirement of one or more other classes of
certificates of such series
"Accrued Certificate Interest" means, with respect to each class of
certificates and each distribution date, other than certain classes of
Stripped Interest Certificates, the amount equal to the interest accrued for
a specified period on the outstanding certificate balance immediately prior
to the distribution date, at the applicable pass-through rate, as described
in "Distributions of Interest on the Certificates" in this prospectus.
"ARM Loans" means mortgage loans with floating mortgage interest rates.
"Available Distribution Amount" means the sum of the following amounts:
(i) the total amount of all cash on deposit in the related Distribution
account as of the corresponding Determination Date, including servicer
advances, net of any scheduled payments due and payable after such
Distribution Date;
(ii) interest or investment income on amounts on deposit in the
Distribution account, including any net amounts paid under any Cash Flow
Agreements; and
(iii) to the extent not on deposit in the related Distribution account as
of the corresponding Determination Date, any amounts collected under, from
or in respect of any Credit Support with respect to such Distribution
Date.
"Cede" means Cede & Company.
"CMBS" means pass-through certificates or other mortgage-backed securities
evidencing interests in or secured by one or more mortgage loans,
certificates or securities.
"CMBS Trustee" means a trustee or a custodian under the CMBS Agreement.
"Constant Prepayment Rate" or "CPR" means a rate that represents an
assumed constant rate of prepayment each month (which is expressed on a per
annum bases) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such mortgage loans. CPR does not purport to
be either a historical description of the prepayment experience of any pool
of mortgage loans or a prediction of the anticipated rate of prepayment of
any mortgage loans.
"Cooperative" means a private cooperative housing corporation.
"Covered Trust" means a form of credit support that covers more than one
series of certificates.
"Debt Service Coverage Ratio" means, with respect to a mortgage loan at
any given time, the ratio of the Net Operating Income for a twelve-month
period to the annualized scheduled payments on the mortgage loan.
"DTC" means The Depository Trust Company.
"Equity Participations" means provisions entitling the lender to a share
of profits realized from the operation or disposition of a mortgaged
property.
"Loan-to-Value Ratio" means, with respect to a mortgage loan at any given
time, the ratio (expressed as a percentage) of the then outstanding principal
balance of the mortgage loan to the value of the related mortgaged property.
The "value" of a mortgaged property, other than with respect to refinance
loans, is generally the lesser of (a) the appraised value determined in an
appraisal obtained by the originator at origination of such loan and (b) the
sales price for such property. "Refinance loans" are loans made to refinance
existing loans. Unless otherwise set forth in the related prospectus
supplement, the value of the mortgaged property securing a refinance loan is
the appraised value thereof determined in an appraisal obtained at the time
of origination of the refinance loan. 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 at origination and will fluctuate from time to time based
upon changes in economic conditions and the real estate market.
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"Lock-out Date" means the date of expiration of the Lockout Period.
"Lock-out Period" means a period during which prepayments on a mortgage
loan are prohibited.
"Net Operating Income" means, for any given period, unless otherwise
specified in the related prospectus supplement, the total operating revenues
derived from a mortgaged property during that period, minus the total
operating expenses incurred in respect of the mortgaged property during that
period other than (i) non-cash items such as depreciation and amortization,
(ii) capital expenditures and (iii) debt service on loans secured by the
mortgaged property. The Net Operating Income of a mortgaged property will
fluctuate over time and may be sufficient or insufficient to cover debt
service on the related mortgage loan at any given time.
"Pass-Through Rate" means the fixed, variable or floating rate per annum
at which any class of certificates accrues interest.
"REMIC" means a "real estate mortgage investment conduit" under the
Internal Revenue Code of 1986.
"REMIC certificates" means a certificate issued by a trust fund relating
to a series of certificate where an election is made to treat the trust fund
as a REMIC.
"RED Property" means any mortgaged property acquired on behalf of the
trust fund in respect of a defaulted mortgage loan through foreclosure, deed
in lieu of foreclosure or otherwise.
"Retained Interest" means an interest in an asset which represents a
specified portion of the interest payable. the Retained Interest will be
deducted from borrower payments as received and will not be part of the
related trust fund.
"Senior Certificates" means certificates which are senior to one or more
other classes of certificates in respect of certain distributions on the
certificates.
"Stripped Interest Certificates" means certificates which are entitled to
interest distributions with disproportionately low, nominal or no principal
distributions.
"Stripped Principal Certificates" means certificates which are entitled to
principal distributions with disproportionately low, nominal or no interest
distributions.
"Subordinate Certificates" means certificates which are subordinate to one
or more other classes of certificates in respect of certain distributions on
the certificates.
"Warranting Party" means the person making or assigning representations
and warranties.
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The attached diskette contains a Microsoft Excel,(1) Version 5.0
spreadsheet file (the "Spreadsheet File") that can be put on a user-specified
hard drive or network drive. The Spreadsheet File is "2000C10.XLS". It
provides, in electronic format, certain statistical information that appears
under the caption "Description of the Mortgage Pool--Certain Characteristics
of the Mortgage Loans" in the Prospectus Supplement and in Annex A, Annex B,
Annex C and Annex D to the Prospectus Supplement. Defined terms used in the
Spreadsheet File but not otherwise defined therein shall have the respective
meanings assigned to them in the Prospectus Supplement. All the information
contained in the Spreadsheet File is subject to the same limitations and
qualifications contained in this Prospectus Supplement. To the extent that
the information in electronic format contained in the attached diskette is
different from the caption "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Loans" in the Prospectus Supplement and in
Annex A, Annex B, Annex C and Annex D to the Prospectus Supplement, the
information in electronic format is superseded by the related information in
print format. Prospective investors are strongly urged to read the Prospectus
Supplement in its entirety prior to accessing the Spreadsheet File.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. Before the file is displayed, a message will appear notifying you that
the file is Read Only. Click the "READ ONLY" button, and after the file is
opened, a securities law legend will be displayed. READ THE LEGEND CAREFULLY.
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(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
