<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 333-38879
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ Information contained herein is subject to completion or amendment. Offers +
+ to buy these securities may not be accepted without the delivery of a final +
+ prospectus supplement and prospectus. This prospectus supplement and the +
+ accompanying prospectus shall not constitute an offer to sell or the +
+ solicitation of an offer to buy, nor shall there be any sale of these +
+ securities, in any State in which such offer, solicitation or sale would be +
+ unlawful prior to registration or qualification under the securities laws of +
+ any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 6, 1998
PRELIMINARY PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 6, 1998)
$276,460,000 (Approximate)
IMH ASSETS CORP.
[LOGO OF IMPAC]
IMPAC COMMERCIAL HOLDINGS, INC.
AS MORTGAGE LOAN SELLER
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
-----------------
The Impac CMB Trust 1998-C1, Collateralized Mortgage Bonds (the "Bonds"), will
consist of nine classes (each, a "Class"), to be designated as (i) the Class A-
1A Bonds and the Class A-1B Bonds (collectively, the "Class A-1 Bonds"), (ii)
the Class A-2 Bonds (together with the Class A-1 Bonds, the "Class A Bonds"),
(iii) the Class B Bonds, (iv) the Class C Bonds, (v) the Class D Bonds, (vi) the
Class E Bonds, (vii) the Class F Bonds and (viii) the Class G Bonds. Only the
Class A, Class B, Class C, Class D and Class E Bonds (collectively, the "Offered
Bonds") are offered hereby. The respective Classes of Bonds will be issued in
the aggregate principal balances (as to any Class, a "Bond Principal Balance"),
will accrue interest at the annual rates (as to any Class, a "Bond Interest
Rate") and will have the other characteristics set forth or otherwise described
in the table below.
The Bonds will be issued on the Closing Date by Impac CMB Trust 1998-C1 (the
"Owner Trust"), a Delaware business trust to be established by the Company
pursuant to an Owner Trust Agreement, dated as of August 1, 1998 (the "Owner
Trust Agreement"), between the Company and Wilmington Trust Company, as owner
trustee (the "Owner Trustee"). The Bonds will be issued pursuant to an
Indenture, dated as of August 1, 1998 (the "Indenture"), between the Owner Trust
and LaSalle National Bank, as indenture trustee (the "Indenture Trustee"), and
will be secured by a first priority security interest in, and will be payable
solely from, the assets of the Owner Trust (the "Owner Trust Estate"). The
Owner Trust Estate will consist primarily of a pool (the "Mortgage Pool") of 194
conventional, performing multifamily and commercial fixed and adjustable rate
mortgage loans (the "Mortgage Loans") each of which is secured by a first lien
on a fee simple and/or leasehold interest in multifamily, retail, office,
industrial, hotel, self storage, mobile home park or other commercial property.
Midland Loan Services, Inc. ("Midland") will service the Mortgage Loans on
behalf of the Owner Trust pursuant to a Servicing Agreement, dated as of August
1, 1998 (the "Servicing Agreement"), among the Owner Trust, Midland, as master
servicer (the "Master Servicer") and special servicer (the "Special Servicer"),
the Indenture Trustee and ABN AMRO Bank N.V., as fiscal agent (the "Fiscal
Agent"). In addition, Impac Commercial Holdings, Inc., in its capacity as
manager (the "Manager"), will perform certain administrative services for the
Owner Trust pursuant to a Management Agreement, dated as of August 1, 1998 (the
"Management Agreement"), between the Owner Trust and the Manager.
SEE "RISK FACTORS" AT PAGE S-19 HEREIN AND PAGE 15 IN THE PROSPECTUS FOR
CERTAIN FACTORS TO BE CONSIDERED IN PURCHASING THE OFFERED BONDS.
______________________
THE OFFERED BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________________
(cover continued on S-iii)
<TABLE>
<CAPTION>
INITIAL BOND INITIAL BOND ASSUMED FINAL RATINGS
CLASS PRINCIPAL BALANCE/(1)/ INTEREST RATE PAYMENT DATE/(2)//(3)/ MOODY'S/S&P/(4)/
- ----- ---------------------- --------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Class A-1A $ 43,000,000 6.27% 10/20/07 Aaa/AAA
Class A-1B $ 140,373,000 6.44% 04/20/08 Aaa/AAA
Class A-2 $ 32,710,000 5.90%/(5)/ 04/20/08 Aaa/AAA
Class B $ 15,889,000 6.57% 04/20/08 Aa2/AA
Class C $ 19,066,000 6.72% 06/20/08 A2/A
Class D $ 20,655,000 7.16% 06/20/08 Baa2/BBB
Class E $ 4,767,000 7.32% 06/20/08 Baa3/BBB-
- -------------
</TABLE>
(Footnotes to table on next page)
______________________
The Offered Bonds will be purchased from the Company by Morgan Stanley & Co.
Incorporated (the "Underwriter") and will be offered by the Underwriter from
time to time to the public in negotiated transactions or otherwise at varying
prices to be determined at the time of sale. The proceeds to the Company from
the sale of the Offered Bonds are expected to be approximately $___________,
before the deduction of expenses payable by the Company estimated to be
approximately $_______.
The Offered Bonds are offered by the Underwriter subject to prior sale, when,
as and if delivered to and accepted by the Underwriter and subject to certain
other conditions. The Underwriter reserves the right to withdraw, cancel or
modify such offer and to reject any order in whole or in part. It is expected
that delivery of the Offered Bonds will be made on or about August 21, 1998 in
book-entry form through the Same Day Funds Settlement System of The Depository
Trust Company, which may include delivery through Cedel Bank, societe anonyme
and the Euroclear System as participants of the Depository Trust Company, as
discussed herein, against payment therefor in immediately available funds.
______________________
MORGAN STANLEY DEAN WITTER
The date of this Prospectus Supplement is August __, 1998
<PAGE>
(Continued from previous page)
____________________________________
(1) The initial Bond Principal Balance of each Class of Offered Bonds is subject
to a permitted variance of plus or minus 5%.
(2) The "Assumed Final Payment Date" with respect to any Class of Offered Bonds
is the Payment Date on which the final payment would occur for such Class
based on the assumption that the Mortgage Loans are not voluntarily prepaid
while subject to a Lockout or while Principal Prepayments thereon generally
are required to be accompanied by a Yield Maintenance Premium and thereafter
are prepaid at a CPR percentage equal to 0.0%, and otherwise based on the
Decrement Table Assumptions (all as more fully described herein). The actual
performance of the Mortgage Loans, and accordingly the actual experience of
investors in the Offered Bonds, will likely differ from such assumptions.
See "Yield and Maturity Considerations" herein and in the Prospectus.
(3) The "Stated Maturity Date" for each Class of Bonds is the Payment Date in
August 2030.
(4) It is a condition to the issuance of the Offered Bonds that the respective
Classes of Offered Bonds be assigned the ratings not lower than those of
Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies,
Inc. ("S&P") and Moody's Investors Service, Inc. ("'Moody's," and together
with S&P, the "Rating Agencies") set forth in the table. The "Rated Final
Payment Date" for each such Class is the Payment Date in August 2030. See
"Ratings" herein.
(5) The Bond Interest Rate set forth in the table with respect to the Class A-2
Bonds is the initial Bond Interest Rate for such Class of Offered Bonds.
Thereafter, the Bond Interest Rate on such Class of Offered Bonds will be
adjusted on a monthly basis to equal the lesser of (a) the sum of LIBOR and
the Margin (as defined herein) and (b) a maximum rate equal to %.
______________________
ii
<PAGE>
The Mortgage Pool will consist of two separate sub-pools (each, a "Sub-Pool"),
to be designated as the "Fixed Rate Sub-Pool" and the "Adjustable Rate Sub-
Pool." The Fixed Rate Sub-Pool will consist of 164 Mortgage Loans having fixed
rates of interest, and the Adjustable Rate Sub-Pool will consist of 30 Mortgage
Loans providing for monthly adjustments to the interest rates thereon based on
London interbank offered rates for six-month United States dollar deposits
("Six-Month LIBOR"), subject to the limitations described herein. The Mortgage
Loans in the Fixed Rate Sub-Pool and the Adjustable Rate Sub-Pool will have
aggregate principal balances as of August 1, 1998 (the "Cut-off Date"), after
taking into account all payments of principal due on or before such date,
whether or not received, of approximately $285,060,190 (the "Initial Fixed Rate
Sub-Pool Balance") and $32,710,063 (the "Initial Adjustable Rate Sub-Pool
Balance"), respectively, with a combined aggregate principal balance of
approximately $317,770,252 (the "Initial Pool Balance"). References herein to
the related Sub-Pool when used with respect to any Bond will mean the Fixed Rate
Sub-Pool in the case of the Class A-1, Class B, Class C, Class D, Class E, Class
F and Class G Bonds and will mean the Adjustable Rate Sub-Pool in the case of
the Class A-2 Bonds.
Payment to holders of the Bonds ("Bondholders") will be made to the extent of
payments received on the Mortgage Loans, from available funds, on the 20/th/ day
of each month or, if any such day is not a business day, on the next succeeding
business day, beginning in September 1998 (each, a "Payment Date"). As more
fully described herein, payments allocable to interest accrued on each Class of
Bonds will be made on each Payment Date based on the Bond Interest Rate and Bond
Principal Balance then applicable to such Class. Payments allocable to principal
of the respective Classes of Bonds will be made in the amounts and in accordance
with the priorities described herein. See "Description of the Offered Bonds--
Distributions."
As and to the extent described herein, the Class B, Class C, Class D and Class
E Bonds will be subordinate in right of payment to the Class A Bonds; the Class
C, Class D and Class E Bonds will be subordinate in right of payment to the
Class B Bonds; the Class D Bonds and the Class E Bonds will be subordinate in
right of payment to the Class C Bonds; and the Class E Bonds will be subordinate
in right of payment to the Class D Bonds.
There is currently no secondary market for the Offered Bonds, and there can be
no assurance that such a secondary market will develop or, if it does develop,
that it will continue or will provide investors with a sufficient level of
liquidity of investment. The Underwriter intends to make a market in the
Offered Bonds, to the extent permitted by applicable law, but is under no
obligation to do so. See "Risk Factors--The Offered Bonds--Limited Liquidity"
in the Prospectus.
THE OFFERED BONDS CONSTITUTE INDEBTEDNESS OF THE ISSUER AND WILL NOT REPRESENT
OBLIGATIONS OF THE SELLER, THE COMPANY, THE MANAGER, THE OWNER TRUSTEE, THE
INDENTURE TRUSTEE, THE FISCAL AGENT, THE MASTER SERVICER, THE SPECIAL SERVICER,
THE UNDERWRITER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS,
PARTNERS, EMPLOYEES OR AGENTS. NONE OF THE OFFERED BONDS OR THE MORTGAGE LOANS
ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THE
OFFERED BONDS ARE PAYABLE SOLELY FROM THE OWNER TRUST ESTATE, AND PROSPECTIVE
INVESTORS SHOULD MAKE AN INVESTMENT DECISION BASED UPON AN ANALYSIS OF THE
SUFFICIENCY OF THE OWNER TRUST ESTATE.
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.
iii
<PAGE>
THE BONDS OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A SEPARATE
SERIES OF SECURITIES BEING OFFERED PURSUANT TO THE COMPANY'S PROSPECTUS DATED
AUGUST 6, 1998, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART AND WHICH
ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT
INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL. SALES OF THE OFFERED BONDS MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED BONDS, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
TRANSACTION OVERVIEW..................................... S-1
SUMMARY.................................................. S-2
RISK FACTORS............................................. S-19
The Mortgage Loans..................................... S-19
The Offered Bonds...................................... S-28
DESCRIPTION OF THE MORTGAGE POOL......................... S-30
General............................................... S-30
Certain Terms and Conditions of the Mortgage Loans.... S-31
Certain Characteristics of the Mortgage Loans......... S-35
Changes in Mortgage Pool Characteristics.............. S-38
ORIGINATION OF THE MORTGAGE LOANS........................ S-38
General................................................ S-38
Underwriting of the Mortgage Loans..................... S-38
ASSIGNMENT OF THE MORTGAGE LOANS......................... S-39
General................................................ S-39
Mortgage Loan Seller................................... S-39
Delivery of Mortgage Loan Files........................ S-39
Representations and Warranties......................... S-40
Cures, Repurchases and Substitutions................... S-42
SERVICING OF THE MORTGAGE LOANS.......................... S-42
General................................................ S-42
The Master Servicer and the Special Servicer........... S-44
Sub-Servicers.......................................... S-44
Servicing and Other Compensation and
Payment of Expenses.................................... S-44
Modifications, Waivers, Amendments and Consents........ S-47
Inspections; Collection of Operating Information....... S-48
Collection Account..................................... S-48
P&I Advances........................................... S-51
Appraisal Reductions................................... S-52
Realization Upon Defaulted Mortgage Loans.............. S-53
REOs................................................... S-55
Replacement of the Master Servicer
or Special Servicer.................................. S-56
The Directing Bondholder............................... S-57
Due-On-Sale and Due-On-Encumbrance Provisions.......... S-57
Evidence as to Compliance.............................. S-58
Certain Matters Regarding the Master Servicer
and Special Servicer................................. S-58
Servicing Events of Default............................ S-59
Rights Upon Servicing Event of Default................. S-60
DETERMINATION OF LIBOR................................... S-60
THE ISSUER............................................... S-62
General.................................................. S-62
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
The Private Bonds and Owner Trust Certificates........S-62
The Owner Trustee and Manager.........................S-63
Certain Matters Regarding the Owner Trustee
and Manager.........................................S-63
DESCRIPTION OF THE OFFERED BONDS........................S-64
General...............................................S-64
The Offered Bonds.....................................S-64
Registration and Denomination of Offered Bonds........S-64
Book-Entry Registration...............................S-64
Bond Principal Balances...............................S-65
Bond Interest Rates...................................S-66
Bond Account..........................................S-66
Payments..............................................S-67
Subordination.........................................S-72
Reports to Bondholders; Available Information.........S-72
Voting Rights.........................................S-73
Termination...........................................S-73
Amendments............................................S-74
List of Bondholders...................................S-75
Certain Covenants under the Indenture.................S-75
Compliance Statements.................................S-75
Indenture Events of Default...........................S-75
The Indenture Trustee and Fiscal Agent................S-77
Certain Matters Regarding the Indenture Trustee.......S-78
Resignation and Removal of the Indenture Trustee......S-78
YIELD AND MATURITY CONSIDERATIONS.......................S-79
Yield Considerations..................................S-79
Weighted Average Life.................................S-81
FEDERAL INCOME TAX CONSEQUENCES.........................S-87
ERISA CONSIDERATIONS....................................S-87
LEGAL INVESTMENT........................................S-88
METHOD OF DISTRIBUTION..................................S-88
RATINGS.................................................S-89
LEGAL MATTERS...........................................S-89
INDEX OF PRINCIPAL TERMS................................S-90
APPENDIX I Mortgage Pool Information (Tables)...... I-1
APPENDIX II Certain Characteristics of the
Mortgage Loans..........................II-1
APPENDIX III Significant Loan Summaries III-1
APPENDIX IV Preliminary Term Sheet.................. T-1
EXHIBIT A Sample Trustee Report................... A-1
</TABLE>
vi
<PAGE>
TRANSACTION OVERVIEW
Prospective investors are advised to carefully read, and should rely solely
on, the detailed information appearing elsewhere in this Prospectus Supplement
and in the Prospectus relating to the Offered Bonds in making their investment
decision. The following transaction overview (the "Transaction Overview") does
not include all relevant information relating to the securities and underlying
assets described herein, particularly with respect to the risks involved with an
investment in such securities, and is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus Supplement and
in the Prospectus. Prior to making an investment decision, a prospective
investor should carefully review this Prospectus Supplement and the Prospectus
in its entirety.
<TABLE>
<CAPTION>
CLASS INITIAL RATINGS WEIGHTED PRINCIPAL DESCRIPTION BOND
AGGREGATE BOND (MOODY'S/ AVG. LIFE(3) WINDOW(3) OF BOND INTEREST
PRINCIPAL S&P)(2) INTEREST RATE RATE(4)
BALANCE OR
CERTIFICATE
PRINCIPAL
BALANCE(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A-1A $ 43,000,000 Aaa/AAA 5.4 1-110 Fixed Rate 6.27%
- -------------------------------------------------------------------------------------------------------------------
A-1B $140,373,000 Aaa/AAA 9.5 110-116 Fixed Rate 6.44%
- -------------------------------------------------------------------------------------------------------------------
A-2 $ 32,710,000 Aaa/AAA 8.4 1-116 Variable Rate LIBOR + 0.30%
- -------------------------------------------------------------------------------------------------------------------
B $ 15,889,000 Aa2/AA 9.7 116-116 Fixed Rate 6.57%
- -------------------------------------------------------------------------------------------------------------------
C $ 19,066,000 A2/A 9.7 116-118 Fixed Rate 6.72%
- -------------------------------------------------------------------------------------------------------------------
D $ 20,655,000 Baa2/BBB 9.8 118-118 Fixed Rate 7.16%
- -------------------------------------------------------------------------------------------------------------------
E $ 4,767,000 Baa3/BBB- 9.8 118-118 Fixed Rate 7.32%
- -------------------------------------------------------------------------------------------------------------------
F(a) $ 18,271,000 Ba2/BB 9.8 118-118 Fixed Rate 6.27%
- -------------------------------------------------------------------------------------------------------------------
G(a) $ 11,122,000 B2/B 9.8 118-118 Fixed Rate 6.27%
- -------------------------------------------------------------------------------------------------------------------
Owner Trust $ 11,917,252 NR/NR 13.9 N/A N/A N/A
Certificates(a)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In each case, subject to a variance of plus or minus 5%.
(2) See "Ratings" herein.
(3) The weighted average life (expressed in years) and the period (expressed in
months following the Closing Date and commencing with the month of the
first Payment Date) during which distributions of principal would be
received (the "Principal Window") set forth in the foregoing table is based
on the Decrement Table Assumptions (as defined herein) and the assumption
that the Mortgage Loans are not voluntarily prepaid while subject to a
Lockout or while Principal Prepayments thereon are generally required to be
accompanied by a Yield Maintenance Premium (as defined herein). See "Yield
and Maturity Considerations" herein.
(4) The Bond Interest Rates for the Class A-1, Class B, Class C, Class D, Class
E, Class F and Class G Bonds, for each Payment Date, will be equal to the
fixed rates per annum set forth in the table. The Bond Interest Rate for
the Class A-2 Bonds is variable and, subsequent to the initial Payment
Date, will be determined as described under "Description of the Offered
Bonds--Bond Interest Rates" herein. The Bond Interest Rates shown are only
for indicative purposes and will be finalized at pricing.
____________________________________
(a) Not offered hereby.
S-1
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. An "Index
of Principal Terms" is included at the end of this Prospectus Supplement.
THE ISSUER................. Impac CMB Trust 1998-C1, a Delaware business trust
to be established by the Company pursuant to an
Owner Trust Agreement, dated as of August 1, 1998
(the "Owner Trust Agreement"), between the Company
and the Owner Trustee. See "The Issuer--General".
TITLE OF SECURITIES AND
DESIGNATION OF CLASSES..... Impac CMB Trust 1998-C1 Collateralized Mortgage
Bonds (the "Bonds"), will consist of nine classes
(each, a "Class"), designated as (i) the Class A-
1A Bonds and the Class A-1B Bonds (collectively,
the "Class A-1 Bonds"), (ii) the Class A-2 Bonds
(together with the Class A-1 Bonds, the "Class A
Bonds"), (iii) the Class B Bonds, (iv) the Class C
Bonds, (v) the Class D Bonds, (vi) the Class E
Bonds, (vii) the Class F Bonds and (viii) the
Class G Bonds. Only the Class A, Class B, Class C,
Class D and Class E Bonds (collectively, the
"Offered Bonds") are offered hereby.
COMPANY.................... IMH Assets Corp., a Delaware corporation. See "The
Company" in the Prospectus.
INDENTURE TRUSTEE.......... LaSalle National Bank, a national banking
association. See "Description of the Offered
Bonds--The Indenture Trustee and Fiscal Agent"
herein.
FISCAL AGENT............... ABN AMRO Bank N.V., a Netherlands banking
corporation and an affiliate of the Indenture
Trustee. See "Description of the Offered Bonds--
The Indenture Trustee and Fiscal Agent" herein.
OWNER TRUSTEE.............. Wilmington Trust Company, a Delaware banking
corporation. See "The Issuer--The Owner Trustee
and Manager" herein.
MASTER SERVICER AND
SPECIAL SERVICER........... Midland Loan Services, Inc. ("Midland"), a Delaware
corporation. Midland will service the Mortgage
Loans on behalf of the Owner Trust pursuant to a
Servicing Agreement, dated as of August 1, 1998
(the "Servicing Agreement"), between the Owner
Trust, Midland, as master servicer and special
servicer, and the Indenture Trustee. See "Servicing
of the Mortgage Loans" herein and under "Servicing
of Mortgage Loans" in the Prospectus.
S-2
<PAGE>
TRANSFER OF MORTGAGE LOANS....... On the Closing Date, Impac Commercial
Holdings, Inc. (in such capacity, the
"Seller") will transfer the Mortgage Loans to
Impac Commercial Assets Corp., which will
transfer the Mortgage Loans to the Company, in
each case pursuant to a Loan Sale Agreement,
dated as of August 1, 1998 (collectively, the
"Loan Sale Agreements"). The Company will
simultaneously transfer the Mortgage Loans to
the Issuer, which in turn will simultaneously
issue the Bonds and the Owner Trust
Certificates and grant a first priority
security interest in the Mortgage Loans to the
Indenture Trustee as security for the
repayment of the obligations evidenced by the
Bonds. See "Assignment of the Mortgage Loans"
herein.
The Seller will be required to deliver certain
documents with respect to the Mortgage Loans,
and will make certain representations and
warranties with respect to the Mortgage Loans.
If any such document is missing or otherwise
deficient or any such representation or
warranty is breached, and if such deficiency
or breach materially and adversely affects the
interests of the Issuer in the related
Mortgage Loan, the Seller will be required to
cure the deficiency or breach in all material
respects, repurchase the Mortgage Loan at the
Purchase Price (as defined herein) or
substitute one or more similar loans for such
Mortgage Loan. See "Assignment of the Mortgage
Loans--Delivery of Mortgage Loan Files," "--
Representations and Warranties" and "--Cures,
Repurchases and Substitutions" herein.
CUT-OFF DATE..................... August 1, 1998.
CLOSING DATE..................... On or about August 21, 1998.
PAYMENT DATE..................... The 20th day of each month or, if any such
20th day is not a business day, then the next
succeeding business day, commencing in
September 1998.
ACCRUAL PERIOD................... With respect to any Payment Date and the Class
A-2 Bonds, the period commencing on the
Payment Date preceding such Payment Date (or,
in the case of the initial Payment Date, the
period commencing on the Closing Date) and
ending on the day immediately preceding such
Payment Date. With respect to any Payment Date
and each Class of Bonds other than the Class
A-2 Bonds (collectively, the "Fixed Rate
Bonds"), the period commencing on the first
day of the calendar month preceding the month
in which such Payment Date occurs and ending
on the last day of such calendar month.
S-3
<PAGE>
INTEREST RATE ADJUSTMENT DATE........ With respect to the Bond Interest Rate on
the Class A-2 Bonds, the first day of
each Accrual Period.
INTEREST RATE DETERMINATION DATE..... With respect to each Interest Rate
Adjustment Date for the Class A-2 Bonds,
the second business day prior to such
Interest Rate Adjustment Date.
COLLECTION PERIOD.................... As to any Payment Date, the period
commencing on the day immediately after
the Determination Date in the month
preceding the month in which such Payment
Date occurs (or, in the case of the
initial Payment Date, the period
commencing on the day immediately after
the Cut-off Date) and ending on the
Determination Date related to such
Payment Date.
DETERMINATION DATE................... As to any Payment Date, the 13th day of
the month in which such Payment Date
occurs or, if such 13th day is not a
business day, the business day
immediately succeeding such 13th day.
RECORD DATE.......................... As to any Payment Date, the last business
day of the month immediately preceding
the month in which such Payment Date
occurs.
DENOMINATIONS AND REGISTRATION....... The Offered Bonds will be issued,
maintained and transferred on the book-
entry records of DTC and its Participants
(as defined in the Prospectus) which may
include Cedel Bank, societe anonyme
("Cedel") and Morgan Guaranty Trust
Company of New York, Brussels Office, as
operator of the Euroclear System
("Euroclear"). The Class A Bonds will be
offered in registered form, in minimum
denominations of $5,000 and integral
multiples of $1 in excess thereof. The
Class B, C, D and E Bonds will be issued
in registered form, in minimum
denominations of $50,000 and integral
multiples of $1 in excess thereof. The
Offered Bonds will be represented by one
or more bonds registered in the name of
Cede & Co., as nominee of DTC. No
Beneficial Owner will be entitled to
receive a Bond in fully registered,
certificated form (a "Definitive Bond"),
except under the limited circumstances
described herein. See "Description of the
Offered Bonds--Book-Entry Registration"
herein and under "Description of the
Bonds" in the Prospectus.
THE MORTGAGE LOANS................... General. The Owner Trust Estate will
consist primarily of a pool (the
"Mortgage Pool") of 194 fixed and
adjustable rate, monthly pay, first lien,
multifamily and commercial loans (the
"Mortgage Loans") each of which is
secured by a first lien on a fee simple
and/or leasehold interest in a
multifamily, retail, office, industrial,
hotel, self storage,
S-4
<PAGE>
mobile home park or other commercial
property (the "Mortgaged Properties").
The Mortgage Pool will consist of two
separate sub-pools (each, a "Sub-Pool"),
to be designated as the "Fixed Rate Sub-
Pool" and the "Adjustable Rate Sub-Pool."
The Fixed Rate Sub-Pool will consist of
164 Mortgage Loans having fixed rates of
interest, and the Adjustable Rate Sub-
Pool will consist of 30 Mortgage Loans
having adjustable rates of interest.
References herein to the related Sub-Pool
when used with respect to any Bond will
mean the Adjustable Rate Sub-Pool in the
case of the Class A-2 Bonds and will mean
the Fixed Rate Sub-Pool in the case of
any other Class of Bonds.
Balances. The Mortgage Loans in the Fixed
Rate Sub-Pool and the Adjustable Rate
Sub-Pool have aggregate Cut-off Date
Balances of approximately $285,060,190
(the "Initial Fixed Rate Sub-Pool
Balance") and $32,710,063 (the "Initial
Adjustable Rate Sub-Pool Balance"),
respectively, with a combined aggregate
Cut-off Date Balance of approximately
$317,770,252 (the "Initial Pool
Balance"). The "Cut-off Date Balance" of
each Mortgage Loan is the unpaid
principal balance thereof as of the Cut-
off Date, after application of all
payments due on or before such date,
whether or not received. All numerical
information provided herein with respect
to the Mortgage Loans is provided on an
approximate basis. Unless otherwise
indicated, all percentages of any of the
Mortgage Loans provided herein reflect
the percentages of such Mortgage Loans by
their Cut-off Date Balances, and all
weighted average information provided
herein with respect to any of the
Mortgage Loans reflects a weighting of
such Mortgage Loans by their Cut-off Date
Balances.
See Appendix I and II for statistical
information with respect to the Mortgage
Loans.
PREPAYMENTS.......................... The terms of all of the Mortgage Loans in
the Fixed Rate Sub-Pool and 71.4% of the
Mortgage Loans in the Adjustable Rate
Sub-Pool, respectively, provide that,
subject to certain exceptions and other
qualifications described herein,
voluntary prepayments of principal (each,
a "Principal Prepayment") are prohibited
(any such prohibition, a "Lockout"), or
are permitted but are required to be
accompanied by a specified charge (a
"Prepayment Charge") or by a yield
maintenance premium (a "Yield Maintenance
Premium" and together with Prepayment
Charges, "Prepayment Premiums") or a
pledge of defeasance collateral, during
all or certain portions of their
respective terms to maturity. See
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<PAGE>
Appendix I and II for additional
information regarding Prepayment Premiums
attributable to the Mortgage Loans and
"Description of the Mortgage Pool--
Certain Terms and Conditions of the
Mortgage Loans" and "--Certain
Characteristics of the Mortgage Loans"
herein.
THE PRIVATE BONDS AND
OWNER TRUST CERTIFICATES............. The Class F and Class G Bonds (the
"Private Bonds") will have initial Bond
Principal Balances equal to $18,271,000
and $11,122,000, respectively, and the
Owner Trust Certificates will have an
aggregate initial Certificate Principal
Balance equal to $11,917,252.32. The
Class F Bonds and the Class G Bonds will
bear interest at fixed percentage rates
equal to 6.27% and 6.27%, respectively,
per annum. The Owner Trust Certificates
will not bear interest at any particular
rate but will represent the right to
receive all interest, principal and
Prepayment Premiums collected on the
Mortgage Loans that is not otherwise
payable in respect of the Bonds. In
addition, at any date of determination,
the "Certificate Principal Balance" of
the Owner Trust Certificates will equal
the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage
Loans over the aggregate Bond Principal
Balance of the Bonds as of such date. The
maturity date specified in the Indenture
with respect to each Class of Private
Bonds will be the same as the Stated
Maturity Date for each Class of Offered
Bonds.
DESCRIPTION OF THE
OFFERED BONDS........................ The Offered Bonds will be issued pursuant
to the Indenture and will represent
indebtedness of the Issuer. The Offered
Bonds will be obligations of the Issuer
and will be payable solely from the Owner
Trust Estate. The Indenture will provide
a first priority security interest in the
Owner Trust Estate to the Indenture
Trustee as security for the repayment of
the obligations evidenced by both the
Offered Bonds and the Private Bonds, and
all Classes of Bonds will be equally and
ratably secured by the lien of the
Indenture without preference, priority or
distinction (other than as described
herein). The Offered Bonds will not
represent obligations of the Seller, the
Company, the Manager, the Owner Trustee,
the Indenture Trustee, the Master
Servicer, the Special Servicer, the
Underwriter or any of their respective
officers, directors, shareholders,
partners, employees or agents. Further,
the Offered Bonds will not be insured or
guaranteed by any of the foregoing
persons, by any government agency or
instrumentality or by any private insurer
or other person.
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<PAGE>
A. BOND PRINCIPAL BALANCES........... Upon initial issuance, the respective
Classes of the Offered Bonds will have
the aggregate principal balances (each, a
"Bond Principal Balance") set forth on
the cover page hereof. See "Description
of the Offered Bonds--Bond Principal
Balances" herein and "Description of the
Bonds" in the Prospectus.
B. BOND INTEREST RATES............... The respective Bond Interest Rates
applicable to the Class A-1A, Class A-1B,
Class B, Class C, Class D and Class E
Bonds for each Payment Date will be fixed
at the annual rates set forth on the
cover page hereof. The Bond Interest Rate
applicable to the Class A-2 Bonds will be
the annual rate set forth on the cover
page hereof for the initial Payment Date
and, with respect to each Payment Date
thereafter, will be an annual rate equal
to the lesser of (A) the sum of LIBOR, as
determined with respect to the related
Interest Rate Adjustment Date in the
month preceding the month in which such
Payment Date occurs, and the Margin (as
defined below) and (B) a maximum rate
equal to ______%. For a description of
the manner in which LIBOR is determined
and information with respect to the
historical levels of LIBOR, see
"Determination of LIBOR" herein.
The "Margin" for the Class A-2 Bonds will
be 0.30% per annum.
See "Description of the Offered Bonds--
Bond Interest Rates" herein and
"Description of the Bonds--Distribution
of Interest and Principal on the Bonds"
in the Prospectus.
C. PAYMENTS OF INTEREST
AND PRINCIPAL.................... Payments on the Offered Bonds will be
made by or on behalf of the Indenture
Trustee, to the extent of available
funds, on each Payment Date to the
holders of record of the Offered Bonds at
the close of business on the immediately
preceding Record Date. All distributions
made with respect to any Class of Offered
Bonds will be allocated pro rata among
the Offered Bonds of such Class based on
the respective Percentage Interests (as
defined herein) in such Class evidenced
by such Offered Bonds.
As more particularly described herein,
the total of all payments and other
collections (or advances in lieu thereof)
on or in respect of the Mortgage Loans
that are not otherwise payable as
described herein and are available for
payment to Bondholders on any Payment
Date (exclusive of any Prepayment
Premiums separately payable in respect of
Bond Prepayment Premium Amounts which
will be distributable on the Offered
Bonds as described herein) is referred to
herein as the "Available Amount" for such
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<PAGE>
Payment Date. See "Description of the Offered
Bonds--Payments--The Available Amount" herein.
On each Payment Date, the Available Amount for such
Payment Date will be distributed to the Bondholders
for the following purposes and in the following
order of priority:
(i) to the holders of the Class A Bonds in
respect of interest, pro rata based on
such amounts distributable thereon, up to
an amount equal to all Payable Bond
Interest (as defined below) in respect of
each such Class of Bonds for such Payment
Date and, to the extent not previously
paid, for all prior Payment Dates (plus
interest on such unpaid amount at the
then-applicable Bond Interest Rate);
(ii) to the holders of the Class A Bonds
related to each Sub-Pool in respect of
principal (allocated between the
respective Classes of Class A Bonds
related to each Sub-Pool as described
below), up to an amount equal to the
lesser of (a) the aggregate Bond
Principal Balance of such Classes of
Class A Bonds then outstanding and (b)
the related Sub-Pool Bond Principal
Payment Amount (as defined below) for
such Payment Date;
(iii) if, following distributions pursuant to
clause (ii) above, the aggregate Bond
Principal Balance of either class of
Class A Bonds has been reduced to zero
(the "Retired Class A Bonds"), to the
holders of the other class of Class A
Bonds, if such Class A Bonds are still
outstanding (the "Outstanding Class A
Bonds") in respect of principal
(allocated between the respective Classes
of such Outstanding Class A Bonds as
described below), up to an amount equal
to the lesser of (a) the aggregate Bond
Principal Balance of such Classes of
Outstanding Class A Bonds and (b) the
excess of the Sub-Pool Bond Principal
Payment Amount for such Payment Date
related to the Retired Class A Bonds over
the amount thereof paid on such Payment
Date as described in clause (ii) above.
(iv) to the holders of the Class B Bonds in
respect of interest, up to an amount
equal to all Payable Bond Interest in
respect of such Class of Bonds for such
Payment Date and, to the extent not
previously paid, for all prior Payment
Dates (plus interest on such unpaid
amount at the then-applicable Bond
Interest Rate);
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<PAGE>
(v) to the holders of the Class B Bonds in
respect of principal, up to an amount
equal to the lesser of (a) the then
outstanding Bond Principal Balance of the
Class B Bonds and (b) the excess, if any,
of the Aggregate Bond Principal Payment
Amount (as defined herein) for such
Payment Date over the amount thereof paid
on such Payment Date pursuant to clauses
(ii) and (iii) above;
(vi) to the holders of the Class C Bonds in
respect of interest, up to an amount
equal to all Payable Bond Interest in
respect of such Class of Bonds for such
Payment Date and, to the extent not
previously paid, for all prior Payment
Dates (plus interest on such unpaid
amount at the then-applicable Bond
Interest Rate);
(vii) to the holders of the Class C Bonds in
respect of principal, up to an amount
equal to the lesser of (a) the then
outstanding Bond Principal Balance of the
Class C Bonds and (b) the excess, if any,
of the Aggregate Bond Principal Payment
Amount for such Payment Date over the
amount thereof paid on such Payment Date
pursuant to clauses (ii), (iii) and (v)
above;
(viii) to the holders of the Class D Bonds in
respect of interest, up to an amount
equal to all Payable Bond Interest in
respect of such Class of Bonds for such
Payment Date and, to the extent not
previously paid, for all prior Payment
Dates (plus interest on such unpaid
amount at the then-applicable Bond
Interest Rate);
(ix) to the holders of the Class D Bonds in
respect of principal, up to an amount
equal to the lesser of (a) the then
outstanding Bond Principal Balance of the
Class D Bonds and (b) the excess, if any,
of the Aggregate Bond Principal Payment
Amount for such Payment Date over the
amount thereof paid on such Payment Date
pursuant to clauses (ii), (iii), (v) and
(vii) above;
(x) to the holders of the Class E Bonds in
respect of interest, up to an amount
equal to all Payable Bond Interest in
respect of such Class of Bonds for such
Payment Date and, to the extent not
previously paid, for all prior Payment
Dates (plus interest on such unpaid
amount at the then-applicable Bond
Interest Rate);
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<PAGE>
(xi) to the holders of the Class E Bonds in respect
of principal, up to an amount equal to the
lesser of (a) the then outstanding Bond
Principal Balance of the Class E Bonds and (b)
the excess, if any, of the Aggregate Bond
Principal Payment Amount for such Payment Date
over the amount thereof paid on such Payment
Date pursuant to clauses (ii), (iii), (v),
(vii) and (ix) above; and
(xii) after the foregoing distributions have been
made, to the holders of the Private Bonds and
the Owner Trust Certificates as provided in
the Indenture and the Owner Trust Agreement,
respectively, an amount equal to the balance
of the Available Amount for such Payment Date.
Distributions of principal to the holders of the Class A
Bonds related to each Sub-Pool will be allocated between
the respective Classes of Class A Bonds related to such
Sub-Pool as follows:
(i) prior to the Class A Credit Support
Depletion Date (as defined below):
(A) in the case of the Class A-1 Bonds,
first to the holders of the Class A-
1A Bonds until the Bond Principal
Balance thereof has been reduced to
zero and then to the holders of the
Class A-1B Bonds; and
(B) to the holders of the Class A-2
Bonds until the Bond Principal
Balance thereof has been reduced to
zero; and
(ii) on and after the Class A Credit Support
Depletion Date, the Aggregate Bond
Principal Payment Amount will be paid to
the holders of the Classes of Class A
Bonds pro rata based on their then
outstanding Bond Principal Balances.
The "Class A Credit Support Depletion Date" will be
the first Payment Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is
less than or equal to the aggregate Bond Principal
Balance of the Class A Bonds.
The "Payable Bond Interest" for any Class of Bonds
and any Payment Date will equal interest accrued
during the related Accrual Period at the Bond
Interest Rate applicable to such Class of Bonds for
such Payment Date on the Bond Principal Balance
thereof immediately prior to such
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<PAGE>
Payment Date. Payable Bond Interest for each
Payment Date will be calculated, in the case of the
Fixed Rate Bonds, on the basis of a 360-day year
consisting of twelve 30-day months and, in the case
of the Class A-2 Bonds, on the basis of a 360-day
year and the actual number of days in the related
Accrual Period.
The "Sub-Pool Bond Principal Payment Amount" for
each Sub-Pool and any Payment Date will equal the
sum of the following amounts:
(a) the principal portions of all Monthly Payments
(other than Balloon Payments) due or deemed
due in respect of the Mortgage Loans in such
Sub-Pool for their respective Due Dates
occurring during the related Collection
Period, to the extent received or advanced;
(b) all Principal Prepayments received on the
Mortgage Loans in such Sub-Pool during the
related Collection Period;
(c) the principal component of all Assumed
Scheduled Payments due on or before the
related Due Date (if received or advanced)
with respect to any Mortgage Loan in such Sub-
Pool that is delinquent in respect of its
Balloon Payment;
(d) the Stated Principal Balance of each Mortgage
Loan in such Sub-Pool that was, during the
related Collection Period, repurchased from
the Owner Trust Estate in connection with a
document deficiency or the breach of a
representation or warranty or purchased from
the Owner Trust Estate as described herein
under "Description of the Offered Bonds--
Termination";
(e) all Balloon Payments and, to the extent not
included in the preceding clauses, any other
principal payment on any Mortgage Loan in such
Sub-Pool received on or after the maturity
date thereof, to the extent received during
the related Collection Period; and
(f) to the extent not included in the preceding
clauses, all Liquidation Proceeds,
Condemnation Proceeds and Insurance Proceeds
that were received on the Mortgage Loans in
such Sub-Pool during the related Collection
Period and that were identified
S-11
<PAGE>
and applied by the Master Servicer as
recoveries of principal thereof.
The "Aggregate Bond Principal Payment Amount"
with respect to any Payment Date will equal
the sum of the Sub-Pool Bond Principal Payment
Amounts for such Payment Date.
The "Assumed Scheduled Payment" with respect
to any Mortgage Loan that is delinquent in
respect of its Balloon Payment (including any
REO as to which the Balloon Payment would have
been past due) is an amount equal to the sum
of (a) the principal portion of the Monthly
Payment that would have been due on such
Mortgage Loan on the related Due Date based on
the constant payment required by the related
Mortgage Note or the original amortization
schedule thereof (as calculated with interest
at the related Mortgage Rate), if applicable,
assuming such Balloon Payment has not become
due, after giving effect to any modification,
and (b) interest at the applicable Mortgage
Rate.
See "Description of the Offered Bonds --
Distributions" herein and "Description of the
Bonds--Distributions" in the Prospectus.
D. DISTRIBUTIONS OF BOND
PREPAYMENT PREMIUM AMOUNTS... All Prepayment Premiums collected during each
Collection Period with respect to any Mortgage
Loan in the Fixed Rate Sub-Pool will be
distributed on the immediately following
Payment Date to the holders of the Class A-1A,
A-1B, B, C, D and E Bonds as follows: The
holders of such Classes of Bonds then entitled
to distributions of principal from the Fixed
Rate Sub-Pool for such Payment Date will be
entitled to a "Bond Prepayment Premium Amount"
(allocable among such Classes, if more than
one, as described below) equal to the lesser
of (a) such Prepayment Premium, and (b) such
Prepayment Premium multiplied by a fraction,
the numerator of which is equal to the excess,
if any, of the Bond Interest Rate applicable
to the most senior of such Classes of Bonds
then outstanding, over the relevant Discount
Rate (as defined herein), and the denominator
of which is equal to the excess, if any, of
the Mortgage Rate for the prepaid Mortgage
Loan, over the relevant Discount Rate. If
there is more than one Class of Bonds entitled
to distributions of principal on such Payment
Date, the Bond Prepayment Premium Amount shall
be allocated among such Classes on a pro rata
basis in accordance with the relative amounts
of such distributions of principal. Any
portion of such Bond Prepayment Premium Amount
that is
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<PAGE>
not so distributed to the holders of such
Bonds will be distributed to the holders of
the Owner Trust Certificates. In addition,
all Prepayment Premiums collected during each
Collection Period with respect to any
Mortgage Loan in the Adjustable Rate Sub-Pool
will be distributed to the holders of the
Owner Trust Certificates.
For purposes of the foregoing, the "Discount
Rate" is the rate which, when compounded
monthly, is equivalent to the Treasury Rate
when compounded semi-annually. The "Treasury
Rate" is the yield calculated by the linear
interpolation of the yields, as reported in
Federal Reserve Statistical Release H.15-
Selected Interest Rates under the heading
"U.S. government securities/Treasury constant
maturities" for the week ending prior to the
date of the relevant principal payment, of
U.S. Treasury constant maturities with a
maturity date (one longer and one shorter)
most nearly approximating the maturity date
of the Mortgage Loan prepaid. If Release H.15
is no longer published, the Indenture Trustee
will select a comparable publication to
determine the Treasury Rate.
Any Bond Prepayment Premium Amount
distributed to the holders of a Class of
Bonds may not be sufficient to fully
compensate such Bondholders for any loss in
yield attributable to the related principal
prepayments.
See "Description of the Offered Bonds--
Payments--Allocation of Bond Prepayment
Premium Amounts" herein and "Description of
the Bonds--Distributions on the Bonds in
Respect of Prepayment Premiums" in the
Prospectus.
SUBORDINATION.................. To the extent described herein, the Class B,
Class C, Class D and Class E Bonds will be
subordinate in right of payment to the Class
A Bonds; the Class C, Class D and Class E
Bonds will be subordinate in right of payment
to the Class B Bonds; the Class D and Class E
Bonds will be subordinate in right of payment
to the Class C Bonds; and the Class E Bonds
will be subordinate in right of payment to
the Class D Bonds. The foregoing
subordination will be accomplished by the
application of the Available Amount on each
Payment Date in the order described under
"Description of the Offered Bonds--Payments"
herein.
In addition to such subordination, credit
support for the Offered Bonds will be
provided by the subordination of the Private
Bonds and the overcollateralization of the
Bonds by the Mortgage Loans. As of any date
of determination, the amount by which the
Bonds are overcollateralized will
S-13
<PAGE>
equal the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage
Loans over the aggregate Bond Principal
Balance of the Bonds.
See "Description of the Offered Bonds --
Subordination" herein and "Description of
Credit Enhancement --Subordinate Bonds" in
the Prospectus.
TREATMENT OF REO PROPERTIES.... Notwithstanding that the Mortgaged Property
related to any Mortgage Loan may be acquired
through foreclosure, deed in lieu of
foreclosure or otherwise on behalf of the
Issuer as "real estate owned" (upon
acquisition, an "REO"), such Mortgage Loan
will, for purposes of, among other things,
determining payments on the Bonds as well as
the Master Servicing Fees, Special Servicing
Fees, Indenture Trustee Fees and Management
Fees (each as defined herein), generally be
treated as having remained outstanding until
such REO is liquidated. Operating revenues
and other proceeds derived from each REO
(exclusive of related operating costs,
including certain reimbursements payable to
the Master Servicer or Special Servicer in
connection with the operation and disposition
of such REO) will be "applied" or treated by
the Master Servicer as principal, interest
and other amounts "due" on such Mortgage
Loan, and subject to a recoverability
determination as more fully described herein
(see "Servicing of the Mortgage Loans--P&I
Advances" herein), the Master Servicer will
make P&I Advances, as described below, in
respect of such Mortgage Loan in all cases as
if such Mortgage Loan had remained
outstanding.
P&I ADVANCES................... Subject to a recoverability determination as
described herein, and further subject to the
reduced advancing obligations in respect of
certain modified Mortgage Loans and Required
Appraisal Loans as described herein, the
Master Servicer will be required to make
advances (each, a "P&I Advance") with respect
to each Payment Date in an amount that is
generally equal to the aggregate of all
Monthly Payments (other than in respect of
any Balloon Payment), net of related Master
Servicing Fees, due on or in respect of the
Mortgage Loans during the related Collection
Period, in each case to the extent that such
amount was not paid by or on behalf of the
related borrower ("Borrower") or otherwise
collected as of the close of business on the
last day of the related Collection Period.
As more fully described herein, the Master
Servicer will be entitled to interest on any
P&I Advance made by it, and the Master
Servicer and the Special Servicer will be
entitled to interest on certain reimbursable
servicing expenses incurred
S-14
<PAGE>
by them. Such interest will accrue from the
date any such P&I Advance is made or such
servicing expense is incurred at an annual
rate equal to the "prime rate" published in
the "Money Rates" section of The Wall Street
Journal, as such "prime rate" may change from
time to time (the "Reimbursement Rate"), and
will be paid either out of default interest
collected in respect of the related Mortgage
Loan or, contemporaneously with the
reimbursement of such P&I Advance or
servicing expense, out of general collections
on the Mortgage Loans.
If the Master Servicer is required but fails
to make any P&I Advance, the Indenture
Trustee and Fiscal Agent will be required to
do so and will be entitled to reimbursement
of such P&I Advance, with interest thereon,
as described above with respect to the Master
Servicer. See "Servicing of the Mortgage
Loans--P&I Advances" herein.
ADMINISTRATIVE COST RATE....... Each of the Master Servicer and the Indenture
Trustee will be entitled to receive a monthly
fee (a "Master Servicing Fee" and an
"Indenture Trustee Fee", respectively) in
respect of each Mortgage Loan (payable out of
payments (or advances in lieu thereof) and
other collections of interest thereon) paid
from that portion of the interest accrued on
such Mortgage Loan from time to time. The
administrative costs on each Mortgage Loan
will equal the sum of the related Master
Servicing Fee and the Indenture Trustee Fee
(collectively, expressed as a per annum rate,
the "Administrative Cost Rate"). The
"Administrative Cost Rate" for each Mortgage
Loan is set forth in Appendix II hereto. As
of the Cut-off Date, the weighted average
Administrative Cost Rate for the Mortgage
Loans was 0.0801% per annum. The Master
Servicer will be obligated to pay the fees of
its subservicers out of its Master Servicing
Fees. For a discussion of additional Master
Servicer compensation, as well as Special
Servicer compensation, see "Servicing of the
Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses" herein.
CONTROLLING CLASS.............. The holders of the Bonds or the Owner Trust
Certificates representing a majority of the
Controlling Class will have the right,
subject to certain conditions described
herein, to replace the Master Servicer and/or
the Special Servicer and to approve certain
actions proposed to be taken by the Special
Servicer. The "Controlling Class" will be the
most subordinate of the Owner Trust
Certificates and the respective Classes of
Bonds then outstanding as to which the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans over
the aggregate Bond Principal Balance of any
Classes of Bonds with a higher payment
S-15
<PAGE>
priority is not less than 25% of the
aggregate initial Bond Principal Balance or
Certificate Principal Balance thereof. In
addition, as more particularly described
herein, any single holder of Bonds or Owner
Trust Certificates representing a majority of
the Controlling Class will have the option to
purchase from the Issuer, free and clear of
the lien of the Indenture, at the Purchase
Price (as described under "Assignment of the
Mortgage Loans--Cures, Repurchases and
Substitutions" herein) defaulted Mortgage
Loans that are not purchased by the Master
Servicer or the Special Servicer. See
"Servicing of the Mortgage Loans--Realization
Upon Defaulted Mortgage Loans" herein.
OPTIONAL TERMINATION........... The majority holder of the Owner Trust
Certificates will have an option (or, if the
majority holder of the Owner Trust
Certificates does not exercise such option,
the Master Servicer will have the option) to
purchase all of the Mortgage Loans and any
REOs, and thereby effect the redemption of
the Bonds on any Payment Date on which the
aggregate Stated Principal Balance of the
Mortgage Loans is less than or equal to 20%
of the Initial Pool Balance. See "Description
of the Offered Bonds--Termination" herein and
"The Agreements--Termination; Redemption of
Bonds" in the Prospectus.
CERTAIN YIELD CONSIDERATIONS... The yield to maturity on any Offered Bond
will be affected by the rate and timing of
principal payments and losses on the Mortgage
Loans. The yield to maturity on any Offered
Bond also will depend on other factors, such
as the purchase price for such Offered Bond
and the related Bond Interest Rate. An
investor should consider, in the case of any
Offered Bond purchased at a discount, the
risk that a slower than anticipated rate of
prepayments could result in a lower than
anticipated yield and, in the case of an
Offered Bond purchased at a premium, the risk
that a faster than anticipated rate of
prepayments could result in a lower than
anticipated yield. See "Risk Factors--The
Offered Bonds--Certain Yield and Maturity
Considerations" and "Yield and Maturity
Considerations" herein and "Yield and
Maturity Considerations" in the Prospectus.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES................... Upon the issuance of the Offered Bonds,
Thacher Proffitt & Wood, counsel to the
Company, will deliver its opinion to the
effect that, assuming compliance with all
provisions of the Indenture, the Owner Trust
Agreement, the Servicing Agreement and the
Management Agreement and based upon other
considerations more fully described herein,
for federal
S-16
<PAGE>
income tax purposes, the Offered
Bonds will be characterized as indebtedness.
For further information regarding certain
federal income tax consequences of an
investment in the Bonds, see "Federal Income
Tax Consequences" herein and "Federal Income
Tax Consequences" and "State and Other Tax
Consequences" in the Prospectus.
ERISA CONSIDERATIONS........... A fiduciary of any employee benefit plan or
other retirement arrangement subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975
of the Code (a "Plan") should review
carefully with its legal counsel whether the
purchase or holding of Offered Bonds could
give rise to a prohibited transaction under
Section 406 of ERISA or Section 4975 of the
Code or whether there exists a statutory or
administrative exemption applicable to an
investment therein.
Although there is no authority directly on
point, it is anticipated that on the Closing
Date the Offered Bonds should be treated as
indebtedness under local law without any
substantial equity features for purposes of
the Plan Asset Regulation (as defined
herein).
Any Plan fiduciary considering whether to
purchase any Offered Bonds on behalf of a
Plan should consult with its counsel
regarding the applicability of the provisions
of ERISA and the Code. See "ERISA
Considerations" herein and in the Prospectus.
RATINGS........................ It is a condition to the issuance of the
Offered Bonds that the respective Classes of
Offered Bonds receive credit ratings not
lower than the ratings of Standard & Poor's
Ratings Services, a Division of The McGraw-
Hill Companies, Inc. ("S&P") and Moody's
Investors Service, Inc. ("Moody's", and
together with S&P, the "Rating Agencies") set
forth on the cover page hereof.
The ratings of the Offered Bonds address the
timely payment of interest and the ultimate
payment of principal on or before the Rated
Final Payment Date. The ratings of the
Offered Bonds do not address certain other
matters as described under "Ratings" herein
and "Rating" in the Prospectus.
There can be no assurance that any rating of
a Class of Offered Bonds will not be lowered,
qualified or withdrawn by the Rating Agency
that assigned such rating if, in its
judgment, circumstances so warrant. In
addition, there can
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be no assurance whether any rating agency
other than the Rating Agencies will rate any
of the Offered Bonds or, if one does, what
rating such agency would assign. A security
rating is not a recommendation to buy, sell
or hold securities and may be subject to
revision or withdrawal at any time by the
assigning rating agency. See "Ratings" herein
and "Rating" in the Prospectus.
LEGAL INVESTMENT STATUS........ The Offered Bonds will not constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended ("SMMEA"). Accordingly,
investors should consult their own legal
advisors to determine whether and to what
extent the Offered Bonds may be purchased by
such investors. See "Legal Investment" herein
and "Legal Investment Matters" in the
Prospectus.
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<PAGE>
RISK FACTORS
In addition to the matters described elsewhere in this Prospectus
Supplement, prospective investors should carefully consider the matters
described under "Risk Factors" in the Prospectus and the following factors
before deciding to invest in any Class of the Offered Bonds.
THE MORTGAGE LOANS
Certain Risks Associated with Mortgage Loans Secured by Commercial and
Multifamily Properties. Mortgage loans made on the security of multifamily or
commercial property may entail risks of delinquency and foreclosure, and risks
of loss in the event thereof, that are greater than similar risks associated
with loans made on the security of single-family property. The ability of a
borrower to repay a loan secured by an income-producing property typically is
dependent primarily upon the successful operation of such property rather than
upon the existence of independent income or assets of the borrower; thus, the
value of an income-producing property is directly related to the net operating
income derived from such property. If the net operating income of the property
is reduced (for example, if rental or occupancy rates decline or real estate tax
rates or other operating expenses increase), the borrower's ability to repay the
loan may be impaired. Certain of the Mortgage Loans are secured by liens on
owner-occupied Mortgaged Properties or on Mortgaged Properties leased to a
single tenant. Accordingly, a decline in the financial condition of the Borrower
or single tenant, as applicable, may have a disproportionately greater effect on
the net operating income from such Mortgaged Properties than would be the case
with respect to Mortgaged Properties with multiple tenants. Furthermore, the
value of any Mortgaged Property may be adversely affected by risks generally
incident to interests in real property, including various events which the
related Borrower and/or manager of the Mortgaged Property, the Company, the
Master Servicer or the Special Servicer may be unable to predict or control,
such as changes in general or local economic conditions and/or specific industry
segments; declines in real estate values; declines in rental or occupancy rates;
increases in interest rates, real estate tax rates and other operating expenses;
changes in governmental rules, regulations and fiscal policies, including
environmental legislation; acts of God; environmental hazards; and social unrest
and civil disturbances.
Furthermore, a Mortgaged Property may not readily be converted to an
alternative use in the event that the operation of such Mortgaged Property for
its original purpose becomes unprofitable for any reason. In such cases, the
conversion of the Mortgaged Property to an alternative use would generally
require substantial capital expenditures. Thus, if the Borrower becomes unable
to meet its obligations under the related Mortgage Loan, the liquidation value
of any such Mortgaged Property may be substantially less, relative to the amount
outstanding on the related Mortgage Loan, than would be the case if such
Mortgaged Property were readily adaptable to other uses.
It is anticipated that 150 Mortgage Loans, representing 89.5% of the
Initial Pool Balance, will be nonrecourse loans and recourse in the event of
Borrower default will be limited to the specific real property and other assets,
if any, that were pledged to secure the Mortgage Loan. Further, with respect to
the Mortgage Loans that provide for recourse to the related Borrower, there can
be no assurance that the enforcement of the recourse provisions will be
practicable or that the assets of the related Borrowers will be sufficient to
permit a recovery on any such defaulted Mortgage Loan in excess of the
liquidation value of the related Mortgaged Property. None of the Mortgage Loans
are insured or guaranteed by any governmental agency or instrumentality or by
any other person.
Dependence on Tenants. In general, the Borrowers rely on periodic lease or
rental payments from tenants to pay for maintenance and other operating expenses
of the related Mortgaged Properties, to fund capital improvements and to service
the Mortgage Loans and any other outstanding debt or obligations they may have
outstanding. There can be no assurance that tenants will renew leases upon
expiration or, in the case of a commercial tenant, that it will continue
operations throughout the term of its lease. The Borrowers' income would be
adversely affected if tenants were unable to pay rent, if space were unable to
be rented on favorable
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terms or at all, or if a significant tenant were to become a debtor in a
bankruptcy case under the United States Bankruptcy Code. For example, if any
Borrower were to relet or renew the existing leases for a significant amount of
retail or office space at rental rates significantly lower than current rates,
then such Borrower's funds from operations would be adversely affected. Changes
in payment patterns by tenants may result from a variety of social, legal and
economic factors, including, without limitation, the rate of inflation and
unemployment levels and may be reflected in the rental rates offered for
comparable space. In addition, upon reletting or renewing existing leases at
commercial properties, Borrowers will likely be required to pay leasing
commissions and tenant improvement costs which may adversely affect cash flow
from the Mortgaged Property. There will be existing leases that expire during
the term of the Mortgage Loan and there can be no assurance that such leases
will be renewed or that the affected space can be rented at comparable rates to
a replacement tenant. There can be no assurances whether, or to what extent,
economic, legal or social factors will affect future rental or repayment
patterns.
In the case of retail, office and industrial properties, the performance
and liquidation value of such properties may be dependent upon the business
operated by tenants, the creditworthiness of such tenants and/or the number of
tenants. In some cases, a single tenant or a relatively small number of tenants
may account for all or a disproportionately large share of the rentable space or
rental income of such property. Accordingly, a decline in the financial
condition of a significant or sole tenant, as the case may be, or other adverse
circumstances of such a tenant (such as bankruptcy or insolvency), or the non-
renewal of a lease for a disproportionately large share of a property's rentable
space, may have a disproportionately greater effect on the net operating income
derived from such property than would be the case if rentable space or rental
income were more evenly distributed among a greater number of tenants at such
property.
Dependence on Management. Each Mortgaged Property is managed by a manager
(which may be the Borrower or an affiliate of the Borrower), which is
responsible for responding to changes in the local market for the facilities
offered at the property, planning and implementing the rental or pricing
structure, including staggering durations of leases and establishing levels of
rent payments, and causing maintenance and capital improvements to be carried
out in a timely fashion. Management errors may adversely affect the long-term
viability of a Mortgaged Property. Accordingly, concentration of property
management of Mortgaged Properties increases the risk that the poor performance
of a single property manager will have a widespread effect on the Mortgage Pool.
Property Location and Condition. The location and construction quality of
a particular building may affect the occupancy level as well as the rents that
may be charged. The characteristics of an area or neighborhood in which a
Mortgaged Property is located may change over time or in relation to competing
facilities. The effects of poor construction quality will increase over time in
the form of increased maintenance and capital improvements. Even good
construction will deteriorate over time if the management company does not
schedule and perform adequate maintenance in a timely fashion.
Competition. Other comparable multifamily/commercial properties located in
the same areas compete with the Mortgaged Properties of such types to attract
residents, retail sellers, tenants, customers and/or guests. The leasing of real
estate is highly competitive. The principal means of competition are price,
location and the nature and condition of the facility to be leased. A Borrower
competes with all lessors and developers of comparable types of real estate in
the area in which the Mortgaged Property is located. Such lessors or developers
could have lower rents, lower operating costs, more favorable locations, better
management or better facilities. While a Borrower may renovate, refurbish or
expand the Mortgaged Property to maintain the Mortgaged Property and remain
competitive, such renovation, refurbishment or expansion may itself entail
significant risks, such as increased costs that reduce cash flow available for
debt service. Increased competition could adversely affect income from and the
market value of the Mortgaged Properties. In addition, the business conducted at
each Mortgaged Property may face competition from other industries and industry
segments, affecting tenant income and, potentially, the Borrower's rental income
available to pay debt service.
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<PAGE>
Changes in Laws. Increases in income, service or other taxes (other than
real estate taxes) generally are not passed through to tenants under leases and
may adversely affect the Borrower's funds from operations. Similarly, changes in
laws increasing the potential liability for environmental conditions existing on
properties or increasing the restrictions on discharges or other conditions may
result in significant unanticipated expenditures, which could adversely affect
the Borrowers' funds from operations. See "--Environmental Risks" below and
"Certain Legal Aspects of Mortgage Loans--Environmental Considerations" in the
Prospectus. In addition, changes in zoning laws, which typically do not
interfere with currently conforming uses or improvements, may restrict an
operator's flexibility to make future design or structural changes or convert
the property to a different use.
Risks Associated with Particular Types of Mortgaged Properties. The
Mortgage Loans as a whole are primarily secured by liens on fee simple and/or
leasehold interests in one of the following property types: multifamily rental
properties; retail properties; office properties; industrial properties; hotel
and motel properties; self storage facilities; and mobile home parks.
Risks Particular to Multifamily Rental Properties. Adverse economic
--------------------------------------------------
conditions, either local, regional or national, may limit the amount of rent
that can be charged for rental units, may adversely affect tenants' ability to
pay rent and may result in a reduction in timely rent payments or a reduction in
occupancy levels without a corresponding decrease in expenses. Occupancy and
rent levels may also be affected by construction of additional housing units,
local military base closings, company relocations and plant or office closings
and national and local politics, including current or future rent stabilization
and rent control laws and agreements. Multifamily apartment units are typically
leased on a short-term basis, and consequently, the occupancy rate of a
multifamily rental property may be subject to rapid decline, including for some
of the foregoing reasons. In addition, the level of home mortgage interest rates
may encourage tenants in multifamily rental properties to purchase single-family
housing rather than continue to lease housing. Further, the cost of operating a
multifamily rental property may increase, including the cost of utilities and
the costs of required capital expenditures.
Risks Particular to Retail Properties. In addition to risks generally
--------------------------------------
associated with real estate, Mortgage Loans secured by retail properties are
also affected significantly by adverse changes in consumer spending patterns,
local competitive conditions (such as the supply of retail space or the
existence or construction of new competitive shopping centers or shopping
malls), alternative forms of retailing (such as direct mail, video shopping
networks and selling through the Internet, which reduce the need for retail
space by retail companies), the quality and philosophy of management, the
attractiveness of the properties and the surrounding neighborhood to tenants and
their customers, the public perception of the safety of customers (at shopping
malls and shopping centers, for example) and the need to make major repairs or
improvements to satisfy the needs of major tenants.
Retail properties may be adversely affected if a significant tenant ceases
operations at such locations (which may occur due to a voluntary decision not to
renew a lease, bankruptcy or insolvency of such tenant, such tenant's general
cessation of business activities or for other reasons). Significant tenants at a
retail property play an important part in generating customer traffic and making
a retail property a desirable location for other tenants at such property. In
addition, certain tenants at retail properties may be entitled to terminate
their leases if an anchor tenant ceases operations at such property. In such
cases, there can be no assurance that any such anchor tenants will continue to
occupy space in the related shopping centers and their failure to do so may
adversely affect the rental income attributable to additional tenants.
Risks Particular to Office Properties. In addition to risks generally
--------------------------------------
associated with real estate, Mortgage Loans secured by office properties are
also affected significantly by positive changes in population and employment
growth (which generally creates demand for office space), local competitive
conditions (such as the supply of office space or the existence or construction
of new competitive office buildings), the quality and philosophy of management,
the attractiveness of the properties to tenants and their customers or clients,
the
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attractiveness of the surrounding neighborhood and the need to make major
repairs or improvements to satisfy the needs of major tenants. Office properties
that are not equipped to accommodate the needs of modern business, for example
because of inadequate telecommunications or electronical systems, may become
functionally obsolete and thus non-competitive. In addition, office properties
may be adversely affected by an economic decline in the business operated by
their tenants. Such decline may result in one or more significant tenants
ceasing operations at such locations (which may occur due to a voluntary
decision not to renew a lease, bankruptcy or insolvency of such tenants, such
tenants' general cessation of business activities or for other reasons). The
risk of such an economic decline is increased if revenue is dependent on a
single tenant or if there is a significant concentration of tenants in a
particular business or industry.
Risks Particular to Industrial Properties. Significant factors determining
------------------------------------------
the value of industrial properties are the quality of tenants, building design
and adaptability, the functionality of the finish-out and the location of the
property. Industrial properties may be adversely affected by an economic decline
in the businesses operated by their tenants. Such decline may result in one or
more significant tenants ceasing operations at such locations (which may occur
due to a voluntary decision not to renew a lease, bankruptcy or insolvency of
such tenants, such tenants' general cessation of business activities or for
other reasons). The risk of such an economic decline is increased if revenue is
dependent on a single tenant as is frequently the case with an industrial
property.
Aspects of building site, design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include clear heights, column spacing, number of bays and bay depths,
divisibility, floor loading capacities, truck turning radius and overall
functionality and accessibility. Nevertheless, site characteristics of an
industrial property suitable for one tenant may not be appropriate for other
potential tenants, which may make it difficult to relet the property.
Location is also important because an industrial property requires the
availability of labor sources, proximity to supply sources and customers and
accessibility to rail lines, major roadways and other distribution channels.
Further, industrial properties may be adversely affected by economic declines in
the industry segment of their tenants.
Risks Particular to Hotel and Motel Properties. Hotel and motel properties
-----------------------------------------------
are subject to operating risks common to the lodging industry. These risks
include, among other things, a high level of continuing capital expenditures to
keep necessary furniture, fixtures and equipment updated, competition from other
hotels and motels, increases in operating costs (which increases may not
necessarily in the future be offset by increased room rates), dependence on
business and commercial travelers and tourism, increases in energy costs and
other expenses of travel and adverse effects of general and local economic
conditions. These factors could adversely affect the related Borrower's ability
to make payments on the related Mortgage Loans. Since limited service hotels and
motels are relatively quick and inexpensive to construct and may quickly reflect
a positive value, an over-building of such hotels and motels could occur in any
given region, which would likely adversely affect occupancy and daily room
rates. Further, because hotel and motel rooms are generally rented for short
periods of time, hotel and motel properties tend to be more sensitive to adverse
economic conditions and competition than many other commercial properties.
Additionally, the revenues of certain hotels and motels, particularly those
located in regions whose economies depend upon tourism, may be highly seasonal
in nature.
A hotel or motel property may present additional risks as compared to other
commercial property types in that: (i) hotels and motels may be operated
pursuant to franchise, management and operating agreements that may be
terminable by the franchisor, the manager or the operator; (ii) the
transferability of any operating, liquor and other licenses to the entity
acquiring such hotel or motel (either through purchase or foreclosure) is
subject to local law requirements, delays in approval for which may result in
interruption of operations and declines in income; (iii) it may be difficult to
terminate an ineffective operator of a hotel or motel property subsequent to a
foreclosure of such property; and (iv) future occupancy rates may be adversely
affected by, among other factors, any negative perception of a hotel or motel
based upon its historical reputation.
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Hotel and motel properties may be operated pursuant to franchise
agreements. The continuation of franchises is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hotel or motel property to maintain such standards
or adhere to such other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of certain capital expenditures that the related
borrower determines are too expensive or are otherwise unwarranted in light of
general economic conditions or the operating results or prospects of the
affected hotels. In that event, the related borrower may elect to allow the
franchise license to lapse. In any case, if the franchise is terminated, the
related borrower may seek to obtain a suitable replacement franchise or to
operate such hotel or motel property independently of a franchise license. The
loss of a franchise license could have a material adverse effect upon the
operations or the underlying value of the hotel or motel covered by the
franchise because of the loss of associated name recognition, marketing support
and centralized reservation systems provided by the franchisor. Furthermore, a
lender that acquires title to a hotel or motel property through foreclosure or
similar proceedings may be unable to succeed to the rights of the franchisee
under the related franchise agreement.
Risks Particular to Self-Storage Facilities. Warehouse, mini-warehouse and
--------------------------------------------
self-storage facilities are considered vulnerable to competition because both
acquisition costs and break-even occupancy are relatively low. The conversion of
self-storage facilities to alternative uses would generally require substantial
capital expenditures. Thus, if the operation of any of the self-storage
facilities becomes unprofitable due to decreased demand, competition, age of
improvements or other factors such that the Borrower becomes unable to meet its
obligation on the related Mortgage Loan, the liquidation value of that self-
storage facility may be substantially less, relative to the amount owing on the
Mortgage Loan, than would be the case if the self-storage facility were readily
adaptable to other uses. Tenant privacy, anonymity and efficient access are
important to the success of a self-storage facility, as is building design and
location. Tenant privacy and anonymity may, however, increase certain operating
risks for self-storage facilities, such as the risk that some self-storage units
may contain hazardous substances.
Risks Particular to Mobile Home Parks. The successful operation of a mobile
--------------------------------------
home park will generally depend upon the number of competing parks in the local
market, as well as upon other factors such as its age, appearance, reputation,
management and the types of facilities and services it provides. Mobile home
parks also compete against alternative forms of residential housing, including
multifamily rental properties, cooperatively-owned apartment buildings,
condominium complexes and single-family residential developments.
Mobile home parks are "special purpose" properties that could not be
readily converted to general residential, retail or office use. Thus, if the
operation of a mobile home park becomes unprofitable due to competition, age of
the improvements or other factors such that the Borrower becomes unable to meet
its obligations on the related Mortgage Loan, the liquidation value of that
property may be substantially less, relative to the amount owing on the Mortgage
Loan, than would be the case if the property were readily adaptable to other
uses.
Risks of Different Timing of Mortgage Loan Amortization. If and as
principal payments or prepayments are made on Mortgage Loans, the remaining
Mortgage Pool may be subject to more concentrated risks with respect to the
diversity of Mortgaged Properties, types of properties and property
characteristics and with respect to the number of unrelated Borrowers. See the
table entitled "Original Term to Maturity" in Appendix I hereto for a
description of the scheduled maturity dates of the Mortgage Loans. Because
principal on certain Classes of the Offered Bonds is payable only after certain
other Classes of Offered Bonds have been paid in full, Classes of Offered Bonds
having a lower sequential order of priority are more likely to be exposed to
such concentration risks than those having a higher payment priority. See
"Description of the Offered Bonds--Payments" and "--Subordination" herein.
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Certain Risks Associated with Mortgage Loans Secured by Condominium
Properties. One Mortgage Loan, representing 1.0% of the Initial Pool Balance,
is secured by the Borrower's interest in all of the units in a condominium
project and the related voting rights in the owners' association for such
project. Two Mortgage Loans, representing 4.1% of the Initial Pool Balance, are
secured by each Borrower's interest in less than all of the units in a
condominium project and the related voting rights in the owners' association for
such project. A condominium declaration established each condominium and created
an owners' association for the purpose of operating, maintaining and managing
the common elements of such projects. Unit owners own the interior of their
respective units and an undivided interest in the project's common elements. All
unit owners are members of the owners' association. With respect to the Mortgage
Loan that is secured by the Danis - Two Riverplace property, the Borrower has an
83.79% voting interest in the owners' association. With respect to the Mortgage
Loan that is secured by the Harvard Market property, the Borrower has a 43.93%
voting interest in the owners' association, although for certain purposes
related to budgetary approval for the commercial portions of that property, the
Borrower's voting interest is 46.30%, and, while the declaration's requirement
of a two-thirds majority for significant actions (including budget approval)
results in the Borrower's consent being required, the Borrower does not have
sufficient voting rights to affirmatively control the owners' association.
Due to the nature of condominiums and each Borrower's ownership interest
therein, a default on such Mortgage Loans will not allow the holder of the
Mortgage Loan the same flexibility in realizing upon the Mortgaged Property as
is generally available with respect to properties not involving condominiums.
The rights of other unit owners, the governing documents of the owners'
association and the state and local laws applicable to condominiums will have to
be considered and respected. Consequently, servicing and realizing upon the
collateral of such Mortgage Loans could subject the Owner Trust to greater
delay, expense and risk than a loan secured by a property that is not a
condominium.
Risks Associated with Additional Financing. Two of the Mortgaged
Properties are encumbered by subordinate debt held by third parties. No other
Mortgage Loans permit secured subordinate debt, although in certain cases such
Mortgage Loans do not expressly prohibit Borrowers from incurring unsecured
debt. Where an obligor encumbers a mortgaged property with one or more junior
liens, or incurs other debt, the senior lender may be subject to additional
risk. First, the obligor may have difficulty servicing and repaying multiple
loans and the existence of subordinate or other indebtedness may increase the
difficulty of refinancing the related Loan at maturity and the possibility that
reduced cash flow could result in deferred maintenance. Moreover, if the
subordinate financing permits recourse to the obligor and the senior loan does
not, an obligor may have more incentive to repay sums due on the subordinate
loan. Second, acts of the senior lender that prejudice the junior lender or
impair the junior lender's security may create a superior equity in favor of the
junior lender. For example, if the obligor 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 affected. Third, if the obligor 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.
Zoning Compliance. Due to, among other reasons, changes in applicable
building and zoning ordinances and codes ("Zoning Laws") affecting certain of
the Mortgaged Properties which have come into effect after the construction of
improvements on such Mortgaged Properties, certain improvements may not comply
fully with current Zoning Laws, including density, use, parking and set back
requirements, but qualify as permitted non-conforming uses and/or structures.
Such changes may limit the ability of the Borrower or a subsequent owner
following sale or foreclosure to rebuild the premises "as is" in the event of a
substantial casualty loss with respect thereto, to make significant design
changes or structural alterations or to convert the Mortgaged Property to
another use. While it is expected that insurance proceeds would be available
for application to the related Mortgage Loan if such event were to occur, no
assurance can be given that such proceeds would be sufficient to pay such
Mortgage Loan in full or that, if the Mortgaged Property were to be
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repaired or restored in conformity with current law, what its value would be
relative to the remaining balance on the related Mortgage Loan or what its
revenue-producing potential would be.
Adverse Effects on Property Performance Due to Litigation. There may be
legal proceedings pending and, from time to time, threatened against certain
Borrowers under the Mortgage Loans or managers of the Mortgaged Properties and
their respective affiliates arising out of the ordinary business of such
Borrowers, managers and affiliates. There can be no assurance that such
litigation may not have a material adverse effect on payments to holders of the
Offered Bonds.
Ground Leases and Other Leasehold Interests. Five Mortgage Loans,
representing 4.7% of the Initial Pool Balance, are secured by a leasehold
interest in their respective Mortgaged Properties. 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 the rejection of the
ground lease by the representative of such ground lessor's bankruptcy estate.
The leasehold mortgages generally provide that the Mortgagor may not elect to
treat the ground lease as terminated on account of any such bankruptcy of or
rejection by the ground lessor without the consent of the Master Servicer. In
the event of a bankruptcy of a ground lessee/Borrower, the ground
lessee/Borrower under the protection of the Bankruptcy Code has the right to
assume (continue) or reject (terminate) any and all of its ground leases. In the
event of concurrent bankruptcy proceedings involving the ground lessor and the
ground lessee/Borrower, the Master Servicer may be unable to enforce the
bankrupt ground lessee/Borrower'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.
Two Mortgage Loans, representing 1.7% of the Initial Pool Balance, are
secured by leasehold interests whose terms expire after the respective maturity
dates for the Mortgage Loans, but earlier than ten years after such maturity
dates. Certain Mortgage Loans are secured by leasehold interests where the
ground rent payable thereunder is not constant, although escalations are
established by reasonably determinable parameters. One Mortgage Loan,
representing 0.6% of the Initial Pool Balance, permits the City of Dayton, Ohio,
as ground lessor, to amend or terminate the Ground Lease following the
Borrower's default without the consent of the holder of the Mortgage Loan,
although the Borrower's agreement to any amendment would constitute a default
under the Mortgage Loan documents. One Mortgage Loan, representing 0.3% of the
Initial Pool Balance, does not afford the holder of the Mortgage Loan the right
to enter into a new Ground Lease with the ground lessor following the Borrower's
uncured default or bankruptcy. Escrows have not been established for ground rent
payments.
Environmental Risks. The presence of hazardous substances or violations of
environmental laws may materially impair successful operation of a Mortgaged
Property. Moreover, under the laws of certain states, contamination of real
property may give rise to a lien on the property to assure payment of the costs
of cleanup. In several states, such a lien has priority over an existing
mortgage lien on such property. In addition, under the laws of some states and
under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), a lender may be liable, as an "owner" or
"operator", for costs of addressing releases or threatened releases of hazardous
substances at a property, if agents or employees of the lender have become
sufficiently involved in the operations of the borrower, regardless of whether
or not the environmental damage or threat was caused by the borrower or a prior
owner. A lender also risks such liability on foreclosure of the mortgage. Delays
in foreclosure of a Mortgaged Property may occur as the Master Servicer or
Special Servicer, as the case may be, attempt to establish that there are no
material adverse environmental conditions at such Mortgaged Property. Moreover,
if the Master Servicer or the Special Servicer determines that any such
conditions exist and cannot be remedied at an acceptable cost, it will be
prohibited from acquiring title to the Mortgaged Property and may be unable
otherwise to realize its value through foreclosure. See "Certain Legal Aspects
of Mortgage Loans--Environmental Considerations" in the Prospectus.
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In connection with, and not earlier than one year prior to the closing of,
each Mortgage Loan in excess of $1.5 million, Impac Commercial Capital
Corporation ("ICCC"), a subsidiary of the Seller, generally obtained either a
"Phase I" environmental assessment or an update of an earlier assessment
covering the related Mortgaged Property. In connection with, and not earlier
than one year prior to the closing of, each Mortgage Loan of $1.5 million or
less, ICCC obtained an environmental database report covering the related
Mortgaged Property. See "Underwriting of the Mortgage Loans--Environmental
Assessments" herein. Certain of the environmental assessments indicated the
presence of asbestos-containing materials, lead-based paint, underground storage
tanks, polychlorinated biphenyls or other hazardous substances. In those cases
in which such assessment recommended either "operations and maintenance" plans
or other remedial action or periodic monitoring, the related Mortgage Loan
documents require the Borrower to take the recommended action and in some cases
establish an escrow of funds to cover related removal and remediation costs.
Seismic Risk. Mortgaged Properties located in certain regions of the
country are subject to increased risk of loss or damage due to earthquake. In
general, underwriting guidelines applicable at the origination of the Mortgage
Loans required that prospective borrowers seeking loans in excess of $1.5
million secured by properties located in California obtain a seismic engineering
report of the building, including an estimate of the probable maximum loss
("PML"), that is, an estimate of the loss that the property would sustain in a
"worst case" earthquake scenario. Generally, approval of any such loan for
which the related improvements' PML is estimated at more than 20% would be
conditioned upon either satisfactory earthquake insurance or reasonable
assurances by the borrower that it would make structural or other physical
enhancements to mitigate earthquake risk to levels comparable to or less than
those indicated by a PML of 20% or less.
Related Parties. Certain Borrowers may be affiliated or under common
control with one another ("Related Borrowers"). In the case of 14 Mortgage
Loans, representing 10.0% of the Initial Pool Balance, the Borrowers are Related
Borrowers (the Danis Portfolio). In the case of four Mortgage Loans,
representing 4.0% of the Initial Pool Balance, the Borrowers are Related
Borrowers (the Ghidorzi Portfolio). In the case of three Mortgage Loans,
representing 3.5% of the Initial Pool Balance, the Borrowers are Related
Borrowers (the Proctor Portfolio). There are ten other Related Borrower groups,
none of which constitutes more than 2.5% of the Initial Pool Balance. In
addition, commercial tenants in certain Mortgaged Properties also may be tenants
in other Mortgaged Properties, and certain commercial tenants may be owned by
affiliates of the Borrowers or otherwise related to or affiliated with a
Borrower. In the case of one Mortgage Loan, representing 1.6% of the Initial
Pool Balance, the Borrower is related to the Issuer (1401 Dove Street). In such
circumstances, any adverse circumstances relating to a Borrower or commercial
tenant or a respective affiliate and affecting one of the related Mortgage Loans
or Mortgaged Properties could arise in connection with the other related
Mortgage Loans or Mortgaged Properties. In particular, the bankruptcy or
insolvency of any such Borrowers or tenants or respective affiliates could have
an adverse effect on the operation of all of the related Mortgaged Properties
and on the ability of such related Mortgaged Properties to produce sufficient
cash flow to make required payments on the related Mortgage Loans. For example,
if a person that owns or directly or indirectly controls several Mortgaged
Properties experiences financial difficulty at one Mortgaged Property, it could
defer maintenance at one or more other Mortgaged Properties in order to satisfy
current expenses with respect to the Mortgaged Property experiencing financial
difficulty, or 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 the related Mortgage Loans. See "Certain Legal Aspects
of Mortgage Loans--Bankruptcy Laws" in the Prospectus. In addition, certain of
the Borrowers are limited or general partnerships. Under certain circumstances,
the bankruptcy of the general partner in a partnership may result in the
dissolution of such partnership. The dissolution of a Borrower partnership, the
winding-up of its affairs and the distribution of its assets could result in an
acceleration of its payment obligations under the related Mortgage Loan.
Other Concentrations. The ten largest individual Mortgage Loans, or groups
of cross-collateralized Mortgage Loans, have Cut-off Date Balances that
represent in the aggregate approximately 28.8% of the Initial Pool Balance. The
largest single Mortgage Loan has a Cut-off Date Balance that represents
approximately 2.8%
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of the Initial Pool Balance. The largest group of cross-collateralized Mortgage
Loans have Cut-off Date Balances that represent in the aggregate 6.1% of the
Initial Pool Balance. In general, concentrations in a mortgage pool of loans
with larger than average balances can result in losses that are more severe,
relative to the size of the pool, than would be the case if the aggregate
balance of such pool were more evenly distributed.
Geographic Concentration. Repayments by the Borrowers and the market value
of the Mortgaged Properties could be affected by economic conditions in regions
where the Borrowers and the Mortgaged Properties are located, other relevant
conditions in the real estate markets where the Mortgaged Properties are
located, changes in governmental rules and fiscal policies, acts of nature
(which may result in uninsured losses), and other factors which are beyond the
control of the Borrowers. Although the Mortgage Pool reflects varying geographic
concentrations in respect of the related Mortgaged Properties, of the 17 states
in which Mortgaged Properties are located, those which represent more than 5% of
the Initial Pool Balance, are: California (49.8% of the Initial Pool Balance);
Ohio (8.7% of the Initial Pool Balance); Texas (8.7% of the Initial Pool
Balance); Arizona (8.7% of the Initial Pool Balance); and Washington (5.3% of
the Initial Pool Balance).
The economy of any state or region in which a Mortgaged Property is located
may be adversely affected to a greater degree than that of other areas of the
country by certain developments affecting industries concentrated in such state
or region. To the extent that general economic or other relevant conditions in
states or regions in which Mortgaged Properties securing Mortgage Loans
representing significant portions of the Mortgage Pool are located decline and
result in a decrease in commercial property, housing or consumer demand in the
region, the income from and market value of the related Mortgaged Properties may
be adversely affected.
Purchase Options and Rights of First Refusal. Certain of the Mortgaged
Properties are subject to purchase options or rights of first refusal in favor
of tenants or other parties. No purchase option gives the holder the right to
purchase the Mortgaged Property for an amount less than the Cut-off Date Balance
of the related Mortgage Loan. Both purchase options and rights of first refusal
may increase the difficulty of selling the affected Mortgaged Property in order
to repay the Mortgage Loan at maturity or to liquidate the Mortgaged Property
following foreclosure. The existence of such rights may complicate negotiations
with potential purchasers other than the holder of the option or right of first
refusal, even if the purchase price under the terms of the option or right of
first refusal fairly reflects the market value of the Mortgaged Property.
Balloon Payments. Mortgage Loans representing 95.9% of the Initial Pool
Balance will have substantial payments of principal ("Balloon Payments") due at
their stated maturities unless previously prepaid ("Balloon Loans"). Loans that
require Balloon Payments involve a greater risk to the lender than fully
amortizing loans because the ability of a Borrower to make a Balloon Payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property at a price sufficient to permit the Borrower to
make the Balloon Payment. The ability of a Borrower to accomplish either of
these goals will be affected by all of the factors at the time of attempted sale
or refinancing, including the level of available mortgage rates, prevailing
economic conditions and the availability of credit for multifamily or commercial
properties (as the case may be) generally.
Prepayment Charges and Yield Maintenance Premiums. Certain of the Mortgage
Loans require that, during all or certain portions of their respective terms to
maturity (including, in some cases, for a time following the end of the period
during which such Mortgage Loans are subject to a Lockout), any Principal
Prepayment be accompanied by a Prepayment Charge or a Yield Maintenance Premium.
See "Description of the Mortgage Pools--Certain Terms and Conditions of the
Mortgage Loans--Prepayment Provisions" herein and "Description of the Bonds--
Distributions on the Bonds in Respect of Prepayment Premiums" in the Prospectus.
If and to the extent Prepayment Charges and Yield Maintenance Premiums are
received on the Mortgage Loans, the Bond Prepayment Premium Amount will be
distributed as described under "Description of the Offered Bonds--Payments--
Allocation of Bond Prepayment Premium Amounts" herein.
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The enforceability, under the laws of a number of states, of provisions
similar to the terms of the Mortgage Loans providing for the payment of a
Prepayment Charge or Yield Maintenance Premium upon prepayment is unclear. No
assurance can be provided that, at any time when a Prepayment Charge or Yield
Maintenance Premium is required to be made in connection with prepayment, the
obligation to pay such Prepayment Charge or Yield Maintenance Premium will be
enforceable under applicable law or, if enforceable, the related Liquidation
Proceeds will be sufficient to make such payment. Liquidation Proceeds recovered
in respect of any defaulted Mortgage Loan will, in general, be applied to cover
outstanding servicing expenses and unpaid principal and interest prior to being
applied to cover any Prepayment Charge or Yield Maintenance Premium due in
connection with the liquidation of such Mortgage Loan.
THE OFFERED BONDS
Limited Obligations. The Offered Bonds will represent indebtedness of the
Issuer and will not represent an interest in or obligation of the Seller, the
Company, the Manager, the Owner Trustee, the Indenture Trustee, the Master
Servicer, the Special Servicer, the Underwriter or any of their respective
affiliates or any other person. Distributions on any Class of Offered Bonds will
depend on the amount and timing of payments and other collections in respect of
the Mortgage Loans. Accordingly, in the event that Realized Losses or
Extraordinary Expenses exceed the sum of the initial amount by which the Offered
Bonds are overcollateralized it is unlikely that these amounts will be
sufficient to make full and timely distributions on all of the Offered Bonds.
The Issuer will not hold any assets other than those included in the Owner
Trust Estate. Accordingly, the obligations evidenced by the Offered Bonds will
be repayable solely from the Owner Trust Estate, and if the Owner Trust Estate
is insufficient to provide for the repayment of such obligations, either because
of losses on the Mortgage Loans or otherwise, no other assets will be available
for payment of the related deficiency. Neither the Indenture Trustee nor the
holders of the Offered Bonds will be permitted under the Indenture to file a
bankruptcy petition against, or commence similar proceedings in respect of, the
Issuer.
Certain Yield and Maturity Considerations. The yield to maturity on any
Offered Bond purchased at a discount or premium will be affected by the rate and
timing of principal payments applied in reduction of the Bond Principal Balance
of such Class of Offered Bond, which in turn will be affected (i) by the rate
and timing of principal payments and collections on the Mortgage Loans,
particularly unscheduled payments or collections in the form of voluntary
prepayments of principal or unscheduled recoveries of principal due to defaults,
whether before or after the scheduled maturity date of the related Mortgage
Loans, and (ii) by the order of priority in which such principal payments and
collections are distributed in reduction of the Bond Principal Balances of the
Offered Bonds.
The rate and timing of unscheduled payments and collections of principal on
the Mortgage Loans is impossible to accurately predict and will be affected by a
variety of factors, including, without limitation, the level of prevailing
interest rates, restrictions on voluntary prepayments contained in the Mortgage
Notes, the availability of mortgage credit and other economic, demographic,
geographic, tax and legal factors. In general, however, if prevailing interest
rates fall significantly below the Mortgage Rates on the Mortgage Loans, the
Mortgage Loans are likely to prepay at a higher rate than if prevailing rates
remain at or above those Mortgage Rates. As described herein, the Aggregate
Principal Payment Amount for each Payment Date will be distributable on such
Payment Date entirely in reduction of the Bond Principal Balances of the Class A
Bonds (allocated among the Class A Bonds as described herein) until they are
retired and, thereafter, entirely in reduction of the Bond Principal Balance of
the then outstanding Offered Bonds with the earliest alphabetical Class
designation (that is, Class B, then Class C, then Class D, then Class E), until
each such Class is, in turn, retired. Accordingly, any particular rate of
principal payments or recoveries on the Mortgage Loans will likely have
different effects on the yields of the respective Classes of Offered Bonds.
"See "Yield and Maturity Considerations" herein.
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Indenture Events of Default. With certain exceptions described herein,
neither the Indenture Trustee nor the holders of the Offered Bonds will have any
independent ability to declare a default under the Indenture unless the Issuer
fails to pay the Offered Bonds in full by their Stated Maturity Dates. Interest
will be payable on the Offered Bonds on each Payment Date only to the extent
that there are funds available for such purpose, and the failure of the Issuer
to make such funds available for paying interest on the Offered Bonds on a
current basis will not constitute an Indenture Event of Default. In addition, it
will not be an Indenture Event of Default if the aggregate Stated Principal
Balance of the Mortgage Loans declines below the aggregate Bond Principal
Balance of the Bonds or of any particular Class or Classes thereof. See
"Description of the Offered Bonds--Indenture Events of Default" herein and "The
Agreements--Events of Default; Rights Upon Event of Default" in the Prospectus.
Limited Ability to Force Sale of Owner Trust Estate. Acceleration of the
Offered Bonds and liquidation of the Owner Trust Estate will be the sole remedy
for the Indenture Trustee and the holders of the Offered Bonds upon an Indenture
Event of Default. However, the market value of the Owner Trust Estate may
fluctuate, and there can be no assurance that, following an Indenture Event of
Default, the market value of the Owner Trust Estate will be equal to or greater
than the aggregate of the undistributed principal and interest due on the
Offered Bonds and any other expenses or liabilities payable from the sale
proceeds.
Bankruptcy or Insolvency of the Issuer. The bankruptcy or insolvency of the
Issuer could adversely affect payments on the Offered Bonds. The automatic stay
imposed by Title 11 of the United States Code (the "Bankruptcy Code") could
prevent the enforcement of obligations of the Issuer, including those arising
under the Offered Bonds and the Indenture, or actions against any of the
property of the Issuer, including the Mortgage Loans, prior to modification of
the stay. In addition, the trustee in bankruptcy for the Issuer may be able to
accelerate payment of the Offered Bonds and liquidate the Owner Trust Estate. In
the event that the principal of the Offered Bonds is declared due and payable,
the holders of any Offered Bonds issued at a discount from par ("original issue
discount") may be entitled, under applicable provisions of the Bankruptcy Code,
to receive not more than an amount equal to the Bond Principal Balance thereof,
less unamortized original issue discount ("accreted value"). There can be no
assurance as to how such accreted value would be determined if such event
occurred. However, the Issuer has been structured so as to limit the likelihood
of bankruptcy or insolvency.
Subordination. As and to the extent described herein, the rights of the
holders of the Class B, Class C, Class D and Class E Bonds to receive
distributions of amounts collected or advanced in respect of the Mortgage Loans
will be subordinated to those of the holders of the Class A Bonds and the
holders of each other Class of such Offered Bonds, if any, with a higher payment
priority. See "Description of the Offered Bonds--Payments--Application of the
Available Amount" and "--Subordination" herein and "Description of the Bonds--
Distributions" and "Description of Credit Enhancement Subordinate Bonds" in the
Prospectus.
Special Servicer Actions with Respect to Specially Serviced Mortgage Loans.
In connection with the servicing of the Specially Serviced Mortgage Loans, the
Special Servicer may take actions with respect to such Specially Serviced
Mortgage Loans that could adversely affect the holders of some or all of the
Classes of Offered Bonds. The holders of Bonds and Owner Trust Certificates
representing a majority of the Controlling Class will have the right, subject to
certain conditions described herein, to replace the Special Servicer and to
approve certain actions proposed to be taken by the Special Servicer. The
"Controlling Class" will be the most subordinate of the Owner Trust Certificates
and the respective Classes of Bonds then outstanding as to which the excess, if
any, of the aggregate Stated Principal Balance of the Mortgage Loans over the
aggregate Bond Principal Balance of any Classes of Bonds with a higher payment
priority is not less than 25% of the aggregate initial Bond Principal Balance or
Certificate Principal Balance thereof. Seller will initially, and at all times
the Bonds are outstanding, own the Owner Trust Certificates and initially will
own the Class G Bonds subject to certain transfer restrictions.
Tax Considerations. It is anticipated that the Issuer will be characterized
as a taxable mortgage pool ("TMP") for federal income tax purposes. In general,
a TMP is treated as a "separate" corporation not
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includible with any other corporation in a consolidated income tax return, and
is subject to corporate income taxation. However, it is anticipated that for
federal income tax purposes one hundred percent of the equity interests in the
Issuer will at all times be owned by Seller, a "real estate investment trust" (a
"REIT") (as defined in Section 856(a) of the Code) either directly or indirectly
through one or more of its "qualified REIT subsidiaries" as defined in Section
856(i) of the Code (a "QRS") and that the Issuer either will be a qualified REIT
subsidiary or an entity that is disregarded as separate from the REIT that owns
(or the REIT and its QRS that together own) 100% of the equity interests in the
Issuer. So long as the Issuer is so owned and such owner or owners qualify as a
REIT and as a QRS, respectively, characterization of the Issuer as a TMP will
result only in the shareholders of Seller being required to treat a portion of
their dividends received from Seller as "excess inclusion" income, generally in
an amount equal to their shares of the Issuer's net income that would be "excess
inclusion" income if the Issuer were treated as a "real estate mortgage
investment conduit," or REMIC, within the meaning of Section 860D of the Code.
Characterization of the Issuer as an owner trust (if wholly owned by a REIT or a
REIT and its QRSs) or as a QRS would not result in entity-level, corporate
income taxation with respect to the Issuer. In the event of Seller's failure to
continue to qualify as a REIT (or the failure of the owner or owners of the
Issuer to continue to qualify as QRSs) for federal income tax purposes, the net
income (after the deduction of interest and original issue discount, if any, on
the Offered Bonds) of the Issuer would be subject to corporate income tax,
reducing cash flow of the Issuer available to make payments on the Offered
Bonds, and the Issuer would not be permitted to be included in a consolidated
income tax return of another corporate entity. Seller has covenanted to use its
best efforts to remain qualified as a REIT, and to cause any subsidiary owning
interests in the Issuer to be a REIT or a QRS within the meaning of Section
856(i) of the Code at all times the Bonds are outstanding. In addition, no
transfer of the Class G Bonds or Owner Trust Certificates by Seller or any such
subsidiary thereof will be permitted (in the case of the Class G Bonds, unless
they would be characterized as indebtedness for federal income tax purposes upon
the transfer thereof).
ERISA Considerations. Due to the complexity of regulations which govern
pension and other employee benefit plans subject to ERISA and plans and other
retirement arrangements subject to Section 4975 of the Code, prospective
investors that are using assets of such plans or arrangements are urged to
consult their own counsel regarding consequences under ERISA and the Code of the
acquisition, ownership and disposition of the Offered Bonds. See "ERISA
Considerations" herein and in the Prospectus.
Book-Entry Registration. The Offered Bonds initially will be represented by
one or more bonds registered in the name of a nominee for The Depository Trust
Company ("DTC"). The beneficial owners of the Offered Bonds (each, a "Bond
Owner") will be able to exercise their rights as Bondholders only indirectly
through DTC and its participating organizations ("DTC Participants"). In
addition, the access of Bond Owners to information regarding the Offered Bonds
in which they hold interests may be limited. The furnishing of notices and other
communications by DTC to the DTC Participants, and directly and indirectly
through the DTC Participants to Bond Owners, will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Furthermore, as described herein, Bond Owners may
suffer delays in the receipt of distributions on the Offered Bonds, and the
ability of any Bond Owner to pledge or otherwise take actions with respect to
its interest in the Offered Bonds may be limited due to the lack of a physical
certificate evidencing such interest. See "Description of the Offered Bonds--
Book-Entry Registration" herein.
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Owner Trust Estate will consist primarily of a pool (the "Mortgage
Pool") of 194 fixed and adjustable rate, monthly pay, commercial and multifamily
Mortgage Loans with an aggregate Cut-off Date balance of $317,770,252 (the
"Initial Pool Balance"). The Mortgage Pool will consist of two separate sub-
pools (each, a "Sub-Pool"), to be designated as the "Fixed Rate Sub-Pool" and
"Adjustable Rate Sub-Pool". The
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Fixed Rate Sub-Pool will consist of 164 Mortgage Loans having fixed rates of
interest, and the Adjustable Rate Sub-Pool will consist of 30 Mortgage Loans
having adjustable rates of interest. The Mortgage Loans in the Fixed Rate Sub-
Pool and the Adjustable Rate Sub-Pool have aggregate Cut-off Date Balances of
approximately $285,060,190 (the "Initial Fixed Rate Sub-Pool Balance") and
$32,710,063 (the "Initial Adjustable Rate Sub-Pool Balance"), respectively.
References herein to the related Sub-Pool when used with respect to any Bond
will mean the Fixed Rate Sub-Pool in the case of the Class A-1, Class B, Class
C, Class D, Class E, Class F and Class G Bonds and will mean the Adjustable Rate
Sub-Pool in the case of the Class A-2 Bonds. Each Mortgage Loan is evidenced by
a mortgage note (a "Mortgage Note") and secured by a mortgage, deed of trust or
other similar security instrument (a "Mortgage") that creates a first mortgage
lien on a fee simple and/or leasehold interest in multifamily, retail, office,
industrial, hotel, self storage, mobile home park or other commercial properties
(a "Mortgaged Property"). All percentages of the Mortgage Loans referred to
herein without further description are approximate percentages by aggregate Cut-
off Date Balance. The "Cut-off Date Balance" of any Mortgage Loan is the unpaid
principal balance thereof as of the Cut-off Date, after application of all
payments due on or before such date, whether or not received.
On the Closing Date, the Seller will transfer the Mortgage Loans to Impac
Commercial Assets Corp., which will transfer the Mortgage Loans to the Company,
in each case pursuant to a Loan Sale Agreement. The Company will thereupon
transfer its interests in the Mortgage Loans to the Issuer, which in turn will
simultaneously issue the Bonds and the Owner Trust Certificates and grant a
first priority security interest in the Mortgage Loans to the Indenture Trustee
as security for the repayment obligations evidenced by the Bonds. See
"Assignment of the Mortgage Loans" herein and "Description of the Bonds--
Assignment of Trust Fund Assets" in the Prospectus.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. All of the Mortgage Loans provide for scheduled payments of
principal and/or interest ("Monthly Payments") to be due on the first day of
each month (as to each Mortgage Loan, the "Due Date"). In the case of certain
Balloon Loans, the related Balloon Payment (as defined below) may be due on a
day other than its Due Date.
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans in the
Fixed Rate Sub-Pool bear interest at a rate per annum (a "Mortgage Rate") that
is fixed for the remaining term of the Mortgage Loan. As of the Cut-off Date,
the Mortgage Rates of the Mortgage Loans in the Fixed Rate Sub-Pool will range
from 7.101% to 10.000% per annum, and the weighted average Mortgage Rate of such
Mortgage Loans will be 7.922% per annum.
The Mortgage Rate on each Mortgage Loan in the Adjustable Rate Sub-Pool
will be adjusted semi-annually to equal the sum of Six-Month "LIBOR" as reported
in The Wall Street Journal, Western Edition, and the fixed percentage specified
in the related Mortgage (the "Gross Margin"), provided, however, that the
Mortgage Rate on such Mortgage Loan will not be greater than the maximum rate
(the "Maximum Loan Rate") or be less than the minimum rate (the "Minimum Loan
Rate") specified in the related Note, and may not be adjusted more than a
specified percentage on any adjustment date.
All of the Mortgage Loans accrue interest on the basis of the actual number
of days in the relevant accrual period and a 360-day year.
Amortization of Principal. 187 of the Mortgage Loans (the "Balloon Loans"),
which represent 95.9% of the Initial Pool Balance, provide for monthly payments
of principal based on amortization schedules significantly longer than their
remaining terms, thereby leaving substantial principal amounts due and payable
(each such payment, together with the corresponding interest payment, a "Balloon
Payment") on their respective maturity dates, unless previously prepaid. Seven
of the Mortgage Loans, which represent 4.1% of the Initial Pool Balance, are
fully amortizing. The original term to scheduled maturity of each Mortgage Loan
was
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between 60 and 360 months. The original amortization schedules of the Mortgage
Loans ranged from 144 to 360 months. As of the Cut-off Date, the remaining terms
to scheduled maturity of the Mortgage Loans will range from 49 to 352 months,
and the weighted average remaining term to scheduled maturity of the Mortgage
Loans will be 119 months. As of the Cut-off Date, the remaining amortization
terms of the Mortgage Loans will range from 133 to 358 and the weighted average
remaining amortization term of the Mortgage Loans will be 325 months. See "Risk
Factors--The Mortgage Loans--Balloon Payments" herein and "Risk Factors--Certain
Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--
Increased Risk of Default Associated with Balloon Payments" in the Prospectus.
No Mortgage Loan permits negative amortization or the deferral of accrued
interest.
Prepayment Provisions. As of the Cut-off Date, (a) 167 Mortgage Loans,
which represent 90.9% of the Initial Pool Balance, prohibit Principal
Prepayments, in whole or in part, prior to a specified date followed by a
specified period during which any Principal Prepayment is required to be
accompanied by a Prepayment Charge or a Yield Maintenance Premium, (b) (without
duplication of clause (a) above) 21 Mortgage Loans, which represent 4.7% of the
Initial Pool Balance, prohibit Principal Prepayments, in whole or in part, prior
to a specified date followed by a specified period during which a Principal
Prepayment of up to a cumulative total of 20% of the original principal balance
of the Mortgage Loan may be made without penalty and principal prepayments in
excess of the 20% threshold during this period accompanied by a Prepayment
Charge equal to six months interest based on the Mortgage Loan interest rate in
place at the time of the applicable Principal Prepayment, (c) (without
duplication of clause (a) and (b) above) one Mortgage Loan, which represents
0.5% of the Initial Pool Balance, requires for a specified period that any
Principal Prepayment be accompanied by a Yield Maintenance Premium or a
Prepayment Charge, (d) (without duplication of clauses (a), (b) or (c) above)
three Mortgage Loans, which represent 2.9% of the Initial Pool Balance, permit
Principal Prepayments to be made in full or in part at any time without any such
payment or other penalty, (e) (without duplication of clauses (a), (b), (c) or
(d) above) one Mortgage Loan, which represents 0.4% of the Initial Pool Balance,
permits up to 10% of the original principal balance of the Mortgage Loan to be
prepaid without penalty during a lockout period and (f) (without duplication of
clauses (a), (b), (c), (d) or (e) above) one Mortgage Loan, which represents
0.6% of the Initial Pool Balance, provides for a specified period during which
the Borrower is permitted to defease the Mortgage Loan. In such case, the
Borrower may substitute a pledge of "defeasance collateral" in exchange for a
release of the Mortgaged Property from the lien of the related Mortgage Loan. In
general, "defeasance collateral" is required to consist of direct, noncallable
United States Treasury obligations that provide for payments, on or before, as
achievable, all successive Due Dates and the scheduled maturity date, with each
such payment being equal to or greater than the scheduled payment due on such
date, with any excesses returned to the Borrower. The prepayment terms of each
of the Mortgage Loans are more particularly described in Appendix II hereto.
See "Risk Factors--The Mortgage Loans--Prepayment Charges and Yield Maintenance
Premiums" herein.
Partial Releases of Mortgaged Property. 19 Mortgage Loans, representing
14.4% of the Initial Pool Balance, permit either (i) partial releases of the
related Mortgaged Properties or (ii) payment in full of some, but not all, of a
group of cross-collateralized and cross-defaulted Mortgage Loans to related
Borrowers, with the Mortgaged Properties securing the paid-off Mortgage Loans
released from all liens securing the related Mortgage Loans. With respect to
such Mortgage Loans, either the related Mortgage Loan documents generally
require that the remainder of the Mortgaged Property (or, in the case of cross-
collateralized and cross-defaulted Mortgage Loans to related Borrowers, the
remaining Mortgaged Properties in the aggregate) maintain a minimum debt service
ratio as specified in the Mortgage Loan documents, which varies from 1.15 to
1.00 to 1.3 to 1.00, the partial release provisions apply only to undeveloped
portions of the Mortgaged Property to which were attributed no or nominal values
in the related appraisal, or the related Mortgage Loan documents require payment
of a release price equal to 125% of an allocated portion of the outstanding
principal balance of the Mortgage Loan. Two Mortgage Loans permitting releases,
however, generally do not contain release requirements other than payment of the
portion of the principal amount attributable to the portion released.
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ASSESSMENT OF PROPERTY VALUE AND CONDITION
In connection with the origination of the Mortgage Loans, various third
party vendors are retained to assess certain aspects of the Mortgaged Property,
including value, condition and compliance with environment and zoning laws. See
"Origination of the Mortgaged Loans" herein.
Environmental Assessments. Each of the Mortgaged Properties securing a
-------------------------
Mortgage Loan of less than $1.5 million was subject to an environmental database
report that was conducted generally in accordance with industry-wide standards.
The environmental database report contains any available public record
information pertaining to the release of material hazardous waste within one
mile of the property including, to the extent publicly available, status reports
and information concerning remediation of the release.
Substantially all of the Mortgaged Properties securing Mortgage Loans above
$1.5 million were subject to a Phase I environmental assessment or an update of
a previously conducted assessment, which assessment or update was conducted
generally in accordance with industry-wide standards, within one year prior to
the loan closing. No such assessment or update revealed any material adverse
environmental condition or circumstance at any Mortgaged Property, except in
those cases in which an operations and maintenance plan (including, in several
cases, in respect of asbestos containing materials and lead based paint),
periodic monitoring of nearby properties or the establishment of an escrow
reserve to cover the estimated cost of remediation was recommended, and which
recommended actions have been or are expected to be implemented in the manner
and within the time frames specified in the related Mortgage Loan documents.
Property Condition Assessments. Each of the Mortgaged Properties securing a
------------------------------
Mortgage Loan greater than $1.5 million was subject to an inspection (or an
update of previously conducted inspections) by independent licensed engineers in
connection with or subsequent to the origination of the related Mortgage Loans.
Such inspections were generally commissioned to inspect the exterior walls,
roofing, interior construction, mechanical and electrical systems and general
condition of the site, buildings and other improvements located at a Mortgaged
Property. With respect to certain of the Mortgage Loans, the resulting reports
indicated a variety of deferred maintenance items and recommended capital
improvements. The estimated cost of the necessary repairs or replacements at a
Mortgaged Property was included in the related property condition assessment. In
some (but not all) instances, cash reserves were established to fund such
deferred maintenance or replacement items, generally in an amount equal to 125%
of the estimated cost of such items. In addition, various Mortgage Loans require
monthly deposits into cash reserve accounts to fund property maintenance
expenses.
Appraisal and Market Studies. An appraisal of each of the related
----------------------------
Mortgaged Properties was performed (or an existing appraisal updated), in
connection with or subsequent to the origination of each Mortgage Loan, by an
independent MAI or state-certified appraiser to establish that the appraised
value of the related Mortgaged Property or Properties exceeded the original
principal balance of the Mortgage Loan (or, in the case of a group of related
cross-collateralized Mortgage Loans, the aggregate original principal balance of
such group). Each such appraisal was prepared on or about the "Appraisal Date"
indicated on Appendix II hereto and conforms to the appraisal guidelines set
forth in Title XI of the Federal Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"). In general, such appraisals represent the
analysis and opinions of the respective appraisers at or before the time made,
and are not guarantees of, and may not be indicative of, present or future
value. There can be no assurance that another appraiser would not have arrived
at a different valuation, even if such appraiser used the same general approach
to and same method of appraising the property. In addition, appraisals seek to
establish the amount a typically motivated buyer would pay a typically motivated
seller. Such amount could be significantly higher than the amount obtained from
the sale of a Mortgaged Property under a distress or liquidation sale.
Mortgage Loans of $1.5 million and above require a complete, self-contained
appraisal based on the highest and best use of the Mortgaged Property and must
include an estimate of the current market value of the
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Mortgaged Property in its current condition. Mortgage Loans of less than $1.5
million are appraised utilizing the "complete summary report" appraisal based on
the highest and best use of the Mortgaged Property and must include an estimate
of the current market value of the Mortgaged Property in its current condition.
Zoning and Building Code Compliance. With respect to all of the Mortgage
-----------------------------------
Loans, the originator has examined whether the use and operation of the related
Mortgaged Properties were in compliance in all material respects with all
applicable zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders applicable to such Mortgaged
Properties at the time such Mortgage Loans were originated. Establishment of
such compliance may have been supported by appraisal information, legal
opinions, certifications from government officials and/or representations by the
related Borrower contained in the related Mortgage Loan documents. Certain
nonconformities may exist, but the originator does not consider them to be
material. In many cases, the use, operation and/or structure of the related
Mortgaged Property constitutes a permitted nonconforming use and/or structure,
which may not be rebuilt to its current state in the event of a material
casualty event; however, while it is expected that insurance proceeds would be
available for application to the related Mortgage Loan if such event were to
occur, no assurance can be given that such proceeds would be sufficient to pay
off such Mortgage Loan in full or that, if the Mortgaged Property were to be
repaired or restored in conformity with current law, its value would be equal to
or greater than the remaining balance on the related Mortgage Loan or its
revenue-producing potential would be undiminished.
HAZARD, LIABILITY AND OTHER INSURANCE
Substantially all of the Mortgages require that each Mortgaged Property be
insured by a hazard insurance policy in an amount (subject to customary
deductible) at least equal to the lesser of the outstanding principal balance of
the related Mortgage Loan and 100% of the full insurable replacement cost of the
improvements located on the related Mortgaged Property, and if applicable, the
related hazard insurance policy contains appropriate endorsements to avoid the
application of co-insurance and does not permit reduction in insurance proceeds
for depreciation; provided that, in the case of certain of the Mortgage Loans,
the hazard insurance may be in such other amounts as required by the related
originators. In addition, except for mobile home parks, if any portion of a
Mortgaged Property securing any Mortgage Loan was, at the time of the
origination of such Mortgage Loan, in an area identified in the Federal Register
by the Flood Emergency Management Agency as having special flood hazards, and
flood insurance was available, a flood insurance policy meeting any requirements
of the then current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of
such Mortgage Loan, (2) the full insurable value of such Mortgaged Property, (3)
the maximum amount of insurance available under the National Flood Insurance Act
of 1968, as amended and (4) 100% of the replacement cost of the improvements
located on the related Mortgaged Property. In general, the standard form of
hazard insurance policy covers physical damage to, or destruction of, the
improvements on the Mortgaged Property by fire, lightning, explosion, smoke,
windstorm and hail, riot or strike and civil commotion, subject to the
conditions and exclusions set forth in each policy. In addition, the Mortgages,
where applicable, require earthquake insurance for Mortgaged Properties located
in known high seismic risk areas.
Each Mortgage generally also requires the related Borrower to maintain
comprehensive general liability insurance against claims for personal and bodily
injury, death or property damage occurring on, in or about the related Mortgaged
Property in an amount customarily required by institutional lenders.
Each Mortgage generally further requires the related Borrower to maintain
business interruption insurance in an amount not less than 100% of the projected
rental income from the related Mortgaged Property for not less than six months.
In addition to the foregoing and to certain other policies required to be
maintained by each Borrower pursuant to the related Mortgage, each Mortgage
generally further requires the Borrower thereunder to maintain
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insurance covering the major components of the boilers, other pressure vessels,
high pressure piping and machinery, if any, and any other similar equipment
installed in the improvements against physical damage thereto and loss of
occupancy and use of the improvements arising out of an accident or breakdown of
such equipment, in an amount at least equal to the full replacement cost of the
building(s) housing the equipment or, in the case of certain of the Mortgage
Loans, in amounts which are customarily required by institutional lenders.
ESCROWS
Most of the Mortgage Loans of $1.5 million or above provide for monthly
escrows to cover property taxes on the Mortgaged Properties. Monthly escrows to
cover insurance premiums on the Mortgaged Properties are also generally
required. If proof of coverage is not provided by the Borrower, the Master
Servicer, may make premium payments to prevent any cancellation, endorsement,
alteration or reissuance of insurance pursuant to the terms of the related
Mortgage. Generally, Mortgage Loans of less than $1.5 million do not provide
for monthly escrows for property taxes or insurance unless factors such as a
higher loan-to-value ratio or poor record of tax payments by the Borrower
indicate that an escrow is warranted.
Most of the Mortgage Loans of $1.5 million or above also require monthly
escrows to cover ongoing replacements of capital repairs and have upfront
escrows to cover various future economic risks. Mortgage Loans secured by
retail, industrial, warehouse or office properties also require upfront or
monthly escrows for the full term or a portion of the term of the related
Mortgaged Loan to cover anticipated re-leasing costs, including tenant
improvements and leasing commissions. Generally, Mortgage Loans of less than
$1.5 million do not require escrows for replacements or escrows for tenant
improvements and leasing commissions.
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
The tables in Appendix I and II set forth certain information with respect
to the Mortgage Loans and Mortgaged Properties. Unless otherwise indicated, such
information is presented as of the Cut-off Date. The statistics in such tables
were derived, in many cases, from information and operating statements furnished
by or on behalf of the respective borrowers. Such information and operating
statements were generally unaudited and have not been independently verified by
the Company or the Underwriter or any of their respective affiliates or any
other person.
For purposes of this Prospectus Supplement, including the tables set forth
in Appendix I and II, the indicated terms shall have the following meanings:
1. "Underwritable Cash Flow" or "UCF" as used herein with respect to any
Mortgaged Property means an estimate, made at origination of the related
Mortgage Loan, of the total cash flow anticipated to be available for annual
debt service on such Mortgage Loan, calculated as the excess of U/W Revenues
over U/W Expenses, each of which was generally derived in the following manner:
(i) "Underwriting Revenues" or "U/W Revenues" were generally
assumed to equal (subject to the assumptions and adjustments specified in
the following two sentences): (a) the actual amounts of gross rents (in the
case of the multifamily Mortgaged Properties) received during the latest
full calendar year (on a rolling 12-month basis, or annualized or estimated
in certain cases); and (b) monthly contractual base rents (in the case of
the Mortgaged Properties other than the multifamily and hotel Mortgaged
Properties) for a 12-month period under leases in effect as reflected on a
rent roll provided by the borrower in connection with the origination of
the related Mortgage Loan; and (c) annual amounts consistent with
historical operating trends and market and competitive conditions, in the
case of hotel Mortgaged Properties. Such Underwriting Revenues were
generally modified by (x) assuming that the occupancy rate for the
Mortgaged Property was consistent with the relevant market if the relevant
market occupancy rate was less than the occupancy rate reflected in the
most recent rent
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roll or operating statements, as the case may be, furnished by the related
Borrower, and (y) in the case of retail, office and industrial Mortgaged
Properties, assuming a level of reimbursements from tenants consistent with
the terms of the lease or historical trends at the property, and in certain
cases, assuming that a specified percentage of rent will become defaulted
or otherwise uncollectible.
Underwriting Revenues generally include: (x) for the multifamily
Mortgaged Properties, rental and other revenues; (y) for the retail, office
and industrial Mortgaged Properties, base rent (less mark-to-market
adjustments in some cases), percentage rent, expense reimbursements and
other revenues; and (z) for the hotel Mortgaged Properties, guest room
rates, food and beverage charges, telephone charges and other revenues.
(ii) "Underwriting Expenses" or "U/W Expenses" were generally
assumed to be equal to historical annual expenses reflected in the
operating statements and other information furnished by the Borrower,
except that such expenses were generally modified by (a) if there was no
management fee or a below market management fee, assuming that a management
fee was payable with respect to the Mortgaged Property in an amount
generally equal to between 4% and 5% of assumed gross revenues for the
year, (b) adjusting certain historical expense items upwards or downwards
to amounts that reflect industry norms for the particular type of property
and/or taking into consideration material changes in the operating position
of the related Mortgaged Property (such as newly signed leases and market
data) and (c) adjusting for non-recurring items (such as capital
expenditures), and tenant improvement and leasing commissions, if
applicable (in the case of certain retail, office and industrial Mortgaged
Properties, adjustments may have been made to account for tenant
improvements and leasing commissions at costs consistent with historical
trends or prevailing market conditions and, in other cases, operating
expenses did not include such costs and replacement reserves).
Underwriting Expenses generally include salaries and wages, the costs
or fees of utilities, repairs and maintenance, marketing, insurance,
management, landscaping, security (if provided at the Mortgaged Property)
and the amount of real estate taxes, general and administrative expenses,
ground lease payments, and other costs but without any deductions for debt
service, depreciation and amortization or capital expenditures therefor
(except as described above). In the case of certain retail, office and/or
industrial Mortgaged Properties, Underwriting Expenses may have included
leasing commissions and tenant improvements. In the case of hotel Mortgaged
Properties, Underwriting Expenses included such expenses as guest rooms,
food and beverage, telephone, and rental and other expenses, and such
undistributed operating expenses as general and administrative, marketing
and franchise fee.
The historical expenses with respect to any Mortgaged Property were
generally obtained (x) from operating statements relating to the latest
full calendar year or trailing twelve month period (or, annualized or
estimated in certain cases), (y) by analyzing the amount of expenses for
previous partial periods for which operating statements were available,
with certain adjustments for items deemed inappropriate for annualization,
and/or (z) by reviewing the amounts of expenses for periods prior to the
latest full calendar year, where such information was available.
The management fees used in calculating Underwritable Cash Flow differ in
many cases from the management fees provided for under the loan documents for
the Mortgage Loans. Further, actual conditions at the Mortgaged Properties will
differ, and may differ substantially, from the assumed conditions used in
calculating Underwritable Cash Flow. In particular, the assumptions regarding
tenant vacancies, tenant improvements and leasing commissions, future rental
rates, future expenses and other conditions if and to the extent used in
calculating Underwritable Cash Flow for a Mortgaged Property, may differ
substantially from actual conditions with respect to such Mortgaged Property.
There can be no assurance that the actual costs of reletting and capital
improvements will not exceed those estimated or assumed in connection with the
origination or purchase of the Mortgage Loans.
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No representation is made as to the future net cash flow of the properties,
nor is "Underwritable Cash Flow" or "UCF" set forth herein intended to represent
such future net cash flow.
Underwritable Cash Flow and the Underwriting Revenues and Underwriting
Expenses used to determine Underwritable Cash Flow for each Mortgaged Property
are derived from information furnished by the respective Borrowers. Net income
for a Mortgaged Property as determined under generally accepted accounting
principles ("GAAP") would not be the same as the stated Underwritable Cash Flow
for such Mortgaged Property as set forth in Appendix I and II. In addition,
Underwritable Cash Flow is not a substitute for or comparable to operating
income as determined in accordance with GAAP as a measure of the results of a
property's operations or a substitute for cash flows from operating activities
determined in accordance with GAAP as a measure of liquidity.
2. "Debt Service Coverage Ratio" or "DSCR" as used herein with respect to
any Mortgage Loan means (a) the Underwritable Cash Flow for the related
Mortgaged Property or Properties, divided by (b) the Annual Debt Service for
such Mortgage Loan.
3. "Property Valuation" means, for any Mortgaged Property, the
appraiser's adjusted value as stated in the most recent third party appraisal
available to the Company.
4. "Loan-to-Value Ratio" or "LTV" means, with respect to any Mortgage
Loan, the Cut-off Date Balance of such Mortgage Loan divided by the Property
Valuation of the related Mortgaged Property.
5. "Units/NSF" means: (i) in the case of a Mortgaged Property operated as
an office, retail or industrial property, the number of net square feet; (ii) in
the case of a Mortgaged Property operated as multifamily housing, the number of
apartments, regardless of the size of or number of rooms in such apartment;
(iii) in the case of a Mortgaged Property operated as a hotel, the number of
rooms; and (iv) in the case of a Mortgaged Property constituting a mobile home
park, the number of pads.
6. "Percent Leased" means the percentage of net square footage or total
Units/NSF, as the case may be, of the Mortgaged Property that was occupied as of
a specified date, or in the case of hotel properties, generally the average of
the twelve month period prior to such date, as specified by the Borrower, or as
derived from the Mortgaged Property's rent rolls, which generally are calculated
by physical presence or, alternatively, collected rents as a percentage of
potential rental revenues.
7. "Admin. Cost Rate" means the aggregate per annum rate at which the
monthly Master Servicing Fee is payable to the Master Servicer and the monthly
Indenture Trustee Fee is payable to the Indenture Trustee.
8. "Scheduled Balloon Balance" means, with respect to any Mortgage Loan,
the balance due at maturity pursuant to the payment schedule for such Mortgage
Loan and assuming no prepayments, defaults or extensions.
9. "Original Principal Balance" means, with respect to any Mortgage Loan,
its principal balance at origination.
10. "Seasoning" means, with respect to any Mortgage Loan, the number of
Due Dates from and including the first Due Date of such Mortgage Loan through
and including the Cut-off Date.
11. "Lockout Period" means, with respect to any Mortgage Loan, the number
of months, if any, from the origination of such Mortgage Loan during which
prepayments are prohibited under the terms of such Mortgage Loan.
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Additional information regarding the Mortgage Loans is contained herein
under "Origination of the Mortgage Loans--Underwriting of the Mortgage Loans"
and "Assignment of the Mortgage Loans--Representations and Warranties" and "--
Cures, Repurchases and Substitutions".
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Bonds are issued, as adjusted for the
scheduled principal payments due on or before the Cut-off Date. Prior to the
issuance of the Offered Bonds, a Mortgage Loan may be removed from the Mortgage
Pool if the Company deems such removal necessary or appropriate or if it is
prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Bonds, unless including such
Mortgage Loans would materially alter the characteristics of the Mortgage Pool
as described herein. The Company believes that the information set forth herein
will be representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Offered Bonds are issued, although the range of
Mortgage Rates and maturities and certain other characteristics of the Mortgage
Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Bonds on or shortly after the Closing Date and will be
filed, together with the Indenture and Servicing Agreement, with the Securities
and Exchange Commission within fifteen days after the initial issuance of the
Bonds. In the event Mortgage Loans are removed from or added to the Mortgage
Pool as set forth in the preceding paragraph, such removal or addition will be
noted in the Form 8-K.
DESCRIPTION OF THE LARGEST BORROWER GROUPS AND RELATED MORTGAGE LOANS
Set forth in Appendix III hereto is a description of the Mortgage Loans
which represent at least 2.5% of the Initial Pool Balance, certain other
significant Mortgage Loans, and the primary terms, conditions and collateral of
such Mortgage Loans. For purposes of Appendix III, cross-collateralized Mortgage
Loans are considered as a single Mortgage Loan.
ORIGINATION OF THE MORTGAGE LOANS
GENERAL
The Mortgage Loans were originated by ICCC, a subsidiary of the Seller.
The Mortgage Pool consists of loans originated under (1) the Commercial Express
Loan Program with original principal balances of between $500,000 to $1.5
million, and (2) the Conduit Express Loan Program with original principal
balances of between $1.5 million to $15 million, in each case secured by retail,
multifamily, office, industrial, mixed use, hotel/motel, self-storage, mobile
home community and other commercial properties.
The Mortgage Loans were generally originated in accordance with the
underwriting guidelines described below. In some instances, one or more
provisions of the guidelines were waived or modified where it was determined not
to adversely affect the related Mortgage Loan in any material respect.
UNDERWRITING OF THE MORTGAGE LOANS
ICCC's underwriting department is separate from its origination department,
and conducts an independent review of each loan request. The ultimate decision
to extend a loan is made by ICCC's loan committee.
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Upon acceptance of a prospective borrower's application, the following
third party reports are obtained in respect of the proposed mortgaged property:
Appraisal (complete, self-contained appraisal for Conduit Express Loan Program
and complete summary appraisal report for Commercial Express Loan Program),
Engineering (for Conduit Express Loan Program only), Environmental (Phase I for
Conduit Express Loan Program and environmental database report for Commercial
Express Loan Program), Flood Certification and credit reports. As deemed
appropriate by the underwriting department, additional information is obtained
from the borrower. The underwriting department also reviews the cash flow of the
property, both historical and current, and compares it to industry averages and
current market performance. For Mortgage Loans of $1.0 million or more, the
underwriting department will cause each property to be inspected by ICCC
personnel prior to completion of due diligence.
ICCC also reviews the proposed borrower and its management, which
encompasses three areas: (1) financial strength, (2) management experience and
(3) credit history.
ASSIGNMENT OF THE MORTGAGE LOANS
GENERAL
On the Closing Date, Impac Commercial Holdings, Inc. (in such capacity, the
"Seller") will transfer the Mortgage Loans to Impac Commercial Assets Corp.
pursuant to a Loan Sale Agreement, dated as of August 1, 1998 (the "IMPAC Loan
Sale Agreement"), between Impac Commercial Assets Corp. and the Seller, and
Impac Commercial Assets Corp. will simultaneously transfer the Mortgage Loans to
the Company pursuant to a Loan Sale Agreement, dated as of August 1, 1998 (the
"IMH Loan Sale Agreement"), between Impac Commercial Assets Corp. and the
Company. The Company will simultaneously transfer the Mortgage Loans to the
Issuer pursuant to the Owner Trust Agreement, which in turn will simultaneously
issue the Bonds and the Owner Trust Certificates and grant a first priority
security interest in the Mortgage Loans to the Indenture Trustee pursuant to the
Indenture as security for the repayment of the obligations evidenced by the
Bonds.
MORTGAGE LOAN SELLER
Impac Commercial Holdings, Inc., a Maryland corporation, is a publicly
traded, recently formed specialty finance company which originates and purchases
commercial mortgage loans secured by commercial properties, such as industrial
and warehouse space, office buildings, retail space, hotels and motels, nursing
homes, hospitals, multifamily, congregate care facilities and senior living
centers. The Seller has elected to be taxed at the corporate level as a REIT
for federal income tax purposes, which generally allows the Seller to pass
through income to stockholders without payment of federal income tax at the
corporate level. Since its initial public offering in March, 1997, the Seller
has originated and purchased commercial loans with an aggregate original
principal balance in excess of $400 million.
The Seller's executive offices are located at 20371 Irvine Avenue, Santa
Ana Heights, California 92707 and its telephone number is (714) 556-0122.
DELIVERY OF MORTGAGE LOAN FILES
Pursuant to the terms of the Loan Sale Agreement, the Seller, on behalf of
the Company and the Issuer, will be required to deliver or cause to be delivered
to the Indenture Trustee, among other things, the following documents with
respect to each Mortgage Loan (collectively, a "Mortgage Loan File"):
(i) the original Mortgage Note endorsed, without recourse, to the
order of the Indenture Trustee and bearing all intervening endorsements;
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(ii) the original or a copy of the related Mortgage, together with
originals or copies of any intervening assignments of such Mortgage, in
each case with evidence of recording indicated thereon;
(iii) originals or copies of the other related Mortgage Loan
Documents (as defined below) and copies of any related financing statements
("Financing Statements") filed under the Uniform Commercial Code as in
effect in any jurisdiction (the "UCC"), together with originals or copies
of any intervening assignments of such Mortgage Loan Documents and
Financing Statements, with evidence of filing indicated thereon;
(iv) an original assignment of the related Mortgage, in favor of
the Indenture Trustee and in recordable form;
(v) an original assignment of the other related Mortgage Loan
Documents in favor of the Indenture Trustee, together with original
assignments of any related Financing Statements in favor of the Indenture
Trustee and in a form suitable for filing;
(vi) originals or copies of all assumption, modification and
substitution agreements in those instances where the terms of any related
Mortgage Loan Document have been modified or the Mortgage Loan has been
assumed; and
(vii) the original or a copy of the lender's title insurance policy
(or a marked-up title insurance commitment subject to delivery of the
original title policy upon issuance) issued on the date of origination of
such Mortgage Loan.
The Indenture Trustee will be required to hold such documents on behalf of
the holders of the Bonds, and will be required to review (or cause to be
reviewed) each Mortgage Loan File within a specified period following its
receipt thereof. If any of the documents required to be included in a Mortgage
Loan File is determined during such review or at any other time to be missing or
otherwise deficient, the Indenture Trustee will be required to proceed in the
manner described below under "--Cures, Repurchases and Substitutions."
"Mortgage Loan Documents" shall mean, collectively, with respect to any
Mortgage Loan, the related Mortgage and Mortgage Note, ground lease, security
agreement, assignment of leases and rents (if separate from the Mortgage),
assignment or other agreement or instrument, to the extent made for the benefit
of the related mortgagee.
REPRESENTATIONS AND WARRANTIES
The Seller will make, as of the Closing Date (except as otherwise stated),
certain representations and warranties, subject to certain exceptions, with
respect to each Mortgage Loan, including those generally to the effect that: (1)
the information set forth in the schedule of the mortgage loans attached to the
Impac Loan Sale Agreement (which contains certain of the information set forth
in Appendix II) is true and correct in all material respects; (2) Seller owns
the Mortgage Loan free and clear of any and all pledges, liens and/or other
encumbrances; (3) no scheduled payment of principal and interest under the
Mortgage Loan was 30 days or more past due as of the Cut-off Date, and the
Mortgage Loan has not been 30 days or more delinquent in the twelve-month period
immediately preceding the Cut-off Date; (4) the related Mortgage constitutes a
valid and, subject to certain creditors' rights exceptions, enforceable first
priority mortgage lien (subject to certain permitted encumbrances) upon the
related Mortgaged Property; (5) the assignment of the related Mortgage in favor
of the Indenture Trustee constitutes a legal, valid and binding assignment; (6)
the related assignment of leases establishes and creates a valid and, subject to
certain creditors' rights exceptions, enforceable first priority lien in the
related borrower's interest in all leases of the Mortgaged Property; (7) the
Mortgage has not been satisfied, cancelled, rescinded or subordinated in whole
or in material part, and the related Mortgaged Property has not been released
from the lien of such Mortgage, in whole or in material part; (8) except as set
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forth in a property inspection report prepared in connection with the
origination of certain of the Mortgage Loans, the related Mortgaged Property is,
to the Seller's knowledge, free and clear of any damage that would materially
and adversely affect its value as security for the Mortgage Loan (normal wear
and tear excepted); (9) to the Seller's knowledge, there is no proceeding
pending for the condemnation of all or any material portion of any Mortgaged
Property; (10) the related Mortgaged Property is covered by an American Land
Title Association (or an equivalent form of ) lender's title insurance policy
that insures that the related Mortgage is a valid, first priority lien on such
Mortgaged Property, subject only to the exceptions stated therein; (11) the
proceeds of the Mortgage Loan have been fully disbursed and there is no
obligation for future advances with respect thereto; (12) an environmental site
assessment or database search was performed with respect to the Mortgaged
Property, a report of each such assessment or database search has been delivered
to the Company, and the Seller has no knowledge of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property that
was not disclosed in such report or database search; (13) each Mortgage Note,
Mortgage and other agreement that evidences or secures the Mortgage Loan is,
subject to certain creditors' rights exceptions and other exceptions of general
application, the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, and there is no valid defense,
counterclaim or right of offset or rescission available to the related borrower
with respect to such Mortgage Note, Mortgage or other agreement; (14) the
related Mortgaged Property is, and is required pursuant to the related Mortgage
to be, insured by casualty and liability insurance policies of a type specified
in the related Loan Sale Agreement; (15) there are no delinquent taxes,
assessments or other outstanding charges affecting the related Mortgaged
Property that are or may become a lien of priority equal to or higher than the
lien of the related Mortgage; (16) the related borrower is not, to the Seller's
knowledge, a debtor in any state or federal bankruptcy or insolvency proceeding;
(17) the related Mortgaged Property consists of the related Borrower's fee
simple estate in real estate or, if the related Mortgage encumbers the interest
of a Borrower as a lessee under a ground lease of the Mortgaged Property (a)
such ground lease or a memorandum thereof has been or will be duly recorded and
permits the interest of the lessee thereunder to be encumbered by the related
Mortgage; (b) the Borrower's interest in such ground lease is assignable to the
Company and its successors and assigns upon notice to, but without the consent
of, the lessor thereunder (except in the case of two leases where the landlord's
consent is required to transfer but the landlord is required to consent to
certain qualified transferees); (c) such ground lease is in full force and
effect and, to the knowledge of the Seller, no material default has occurred
thereunder; (d) such ground lease, or an estoppel letter related thereto,
requires the lessor under such ground lease to give notice of any default by the
lessee to the holder of the Mortgage (provided any required notice of the lien
is given to lessor), and further provides (except for one ground lease) that no
notice of termination given under such ground lease is effective against such
holder unless a copy has been delivered to such holder; (e) the holder of the
Mortgage is permitted a reasonable opportunity (including, where necessary,
sufficient time to gain possession of the interest of the lessee under such
ground lease) to cure any default under such ground lease, which is curable
after the receipt of notice of any such default, before the lessor thereunder
may terminate such ground lease; and (f) with the exception of two Mortgage
Loans, such ground lease has an original term (including any extension options
set forth therein) which extends not less than ten years beyond the scheduled
maturity date of the Mortgage Loan; (18) the Mortgage Loan is not cross-
collateralized or cross-defaulted with any loan other than one or more other
Mortgage Loans; (19) no Mortgage requires the holder thereof to release all or
any material portion of the related Mortgaged Property from the lien thereof
except upon payment in full of the Mortgage Loan, or in certain cases, upon (a)
the satisfaction of certain legal and, except in the case of two Mortgage Loans,
underwriting requirements and (b) except where the portion of the Mortgaged
Property permitted to be released was not considered by the Seller in
underwriting the Mortgage Loan, the payment of a release price and prepayment
consideration in connection therewith; and (20) to Seller's knowledge, there
exists no material default, breach, violation or event of acceleration (and no
event which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the related Mortgage Note or Mortgage in
any such case to the extent the same materially and adversely affects the value
of the Mortgage Loan and the related Mortgaged Property.
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CURES, REPURCHASES AND SUBSTITUTIONS
The Servicing Agreement requires each party thereto to notify the other
parties thereto upon becoming aware that any document required to be included in
any Mortgage Loan File is missing or otherwise deficient or that there exists a
breach of any of the representations and warranties made by the Seller with
respect to any Mortgage Loan and, in addition, requires the Master Servicer to
notify the Seller upon becoming aware of any such deficiency or breach. If such
deficiency or breach materially and adversely affects the interests of the
Issuer therein, the Seller is obligated pursuant to the Loan Sale Agreement,
within 90 days following such notice, to (a) deliver the missing document or
cure the deficiency or breach, as the case may be, in all material respects, (b)
repurchase such Mortgage Loan (the "Deleted Mortgage Loan") from the Issuer,
free and clear of the lien of the Indenture, at a price (the "Purchase Price")
generally equal to the sum of (i) the unpaid principal balance of such Deleted
Mortgage Loan, (ii) accrued and unpaid interest on such Deleted Mortgage Loan to
but not including the Due Date occurring in the Collection Period in which such
repurchase occurs and (iii) to the extent not included in the preceding items,
the amount of any unreimbursed Servicing Advances with respect to such Deleted
Mortgage Loan with interest thereon at the Reimbursement Rate and, to the extent
not paid pursuant to clause (ii) above, any interest on Advances at the
Reimbursement Rate, or (c) to substitute a similar loan (a "Qualified Substitute
Mortgage Loan") for such Deleted Mortgage Loan. Notwithstanding the foregoing,
in the event a missing or deficient document or a breach of a representation or
warranty is capable of being cured but not within such 90-day period and the
Seller has commenced and is diligently proceeding with such cure, the Seller
will have an additional 90 days to complete such cure.
Any Qualified Substitute Mortgage Loan substituted for a Deleted Mortgage
Loan, among other things, is required to comply as of the date of substitution
with all of the representations and warranties set forth above, not to result in
the withdrawal, downgrade or qualification of the rating assigned by the Rating
Agencies to any Class of Bonds and otherwise to be acceptable to the Rating
Agencies (as confirmed in writing by the Rating Agencies).
The foregoing cure, repurchase or substitution obligation will constitute
the sole remedy available to the Bondholders and to the Indenture Trustee on
their behalf in respect of any missing or deficient document in a Mortgage Loan
File or any breach of the Seller's representations and warranties regarding the
Mortgage Loans. Neither the Company or any of its affiliates nor any other
person will be obligated to repurchase or substitute for any Mortgage Loan as to
which there is a missing or deficient document in the related Mortgage Loan File
or a breach of any of the Seller's representations and warranties if the Seller
fails to effect such repurchase or substitution.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The servicing of the Mortgage Pool will be governed by the terms of the
Servicing Agreement dated as of August 1, 1998 (the "Servicing Agreement"),
among the Owner Trust, the Indenture Trustee, the Fiscal Agent, the Master
Servicer and the Special Servicer. The Master Servicer and the Special Servicer,
either directly or through sub-servicers, will be required to service and
administer the Mortgage Loans in accordance with applicable law, the terms of
the Servicing Agreement and the terms of the respective Mortgage Loans and, to
the extent consistent with the foregoing, in accordance with the following
standards (collectively, the "Servicing Standard"): (a) with the same care,
skill and diligence with which prudent institutional commercial mortgage lenders
and loan servicers service comparable mortgage loans or, if higher, with the
same care, skill and diligence with which the Master Servicer or Special
Servicer, as the case may be, generally services comparable mortgage loans owned
by it; (b) with a view to the timely collection of all scheduled payments of
principal and interest under the Mortgage Loans or, if a Mortgage Loan comes
into and continues in default and no satisfactory arrangements can be made for
the collection of the delinquent payments, the maximization of the net recovery
on such Mortgage Loan on a present value basis; and (c) without regard to: (i)
any relationship
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that it or any of its affiliates may have with the related Borrower or any other
party to the Servicing Agreement; (ii) its ownership (or that of an affiliate)
of any Bond or Owner Trust Certificate; (iii) any obligation to make Advances
(as defined below); (iv) its right or the right of any affiliate to receive
compensation for its services or reimbursement of costs under the Servicing
Agreement or with respect to any particular transaction; and (v) its ownership,
servicing or management for others of any other mortgage loans or mortgaged
properties.
The Master Servicer initially will be responsible for the master servicing
and administration of the entire Mortgage Pool. The Special Servicer will be
responsible for special servicing and administering any Mortgage Loan as to
which any of the following events (each, a "Servicing Transfer Event") occurs:
(a) the related Borrower fails to make when due any Balloon Payment, which
failure continues unremedied, or the Master Servicer determines, in its
reasonable good faith judgment, will continue, for at least 30 days; (b) the
related Borrower fails to make when due any other Monthly Payment (other than a
Balloon Payment) or any other payment required under the related Mortgage, which
failure continues unremedied for 60 days; (c) the Master Servicer determines, in
its reasonable good faith judgment, that a default in making any Monthly Payment
(including a Balloon Payment) or any other payment required under the related
Mortgage Note and Mortgage is likely to occur within 30 days and is likely to
remain unremedied for at least 60 days or, in the case of a Balloon Payment, for
at least 30 days; (d) the Master Servicer determines, in its reasonable good
faith judgment, that a default (other than as described in clause (a) or (b)
above) has occurred that may materially impair the value of the related
Mortgaged Property as security for the Mortgage Loan and such default continues
unremedied for the applicable grace period under the terms of the Mortgage Loan
(or, if no grace period is specified, for 30 days); (e) certain events of
insolvency, readjustment of debt, marshaling of assets and liabilities, or
similar proceedings occur in respect of the related Borrower or the related
Mortgaged Property, or for the winding-up or liquidation of its affairs, which
shall not have been dismissed for a period of 60 days; (f) the related Borrower
shall have consented to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to such Borrower or of or
relating to all or substantially all of its property; (g) the related Borrower
shall have admitted in writing its inability to pay its debts generally as they
become due, filed a petition to take advantage of any applicable statute, made
assignment for the benefit of its creditors, or voluntarily suspended payment of
its obligations; or (h) the Master Servicer receives notice of the commencement
of foreclosure or similar proceedings with respect to the related Mortgaged
Property.
If a Servicing Transfer Event occurs with respect to any Mortgage Loan, the
Master Servicer is required to use reasonable efforts to effect or to cooperate
in effecting the transfer of the servicing responsibilities with respect thereto
to the Special Servicer within five business days. Notwithstanding such
transfer, the Master Servicer will continue to receive payments on such Mortgage
Loan (including amounts collected by the Special Servicer), to make certain
calculations with respect to such Mortgage Loan, and to make remittances to
(including, if necessary, P&I Advances) and prepare certain reports for, the
Indenture Trustee with respect to such Mortgage Loan. If title to the related
Mortgaged Property is acquired as part of the Owner Trust Estate (upon
acquisition, an "REO"), whether through foreclosure, deed in lieu of foreclosure
or otherwise, the Special Servicer will continue to be responsible for the
operation and management thereof. Mortgage Loans serviced by the Special
Servicer are referred to herein as "Specially Serviced Mortgage Loans." The
Master Servicer will have no responsibility for the Special Servicer's
performance of its duties under the Servicing Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will re-
assume servicing responsibilities) at such time as no circumstance identified in
clauses (a) through (h) of the second preceding paragraph exists that would
cause the Mortgage Loan to continue to be characterized as a Specially Serviced
Mortgage Loan and such of the following as are applicable occur: (w) with
respect to the circumstances described in clause (a) and (b) of the second
preceding paragraph, the related Borrower has made three consecutive full and
timely Monthly Payments under the terms of such Mortgage Loan (as such terms may
be changed or modified in connection with a bankruptcy or similar proceeding
involving the related Borrower or by reason of a modification, waiver or
amendment granted or agreed to by the Special Servicer); (x) with respect to the
circumstances described
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in clauses (c), (e), (f) and (g) of the second preceding paragraph, such
circumstances cease to exist in the reasonable good faith judgment of the
Special Servicer; (y) with respect to the circumstances described in clause (d)
of the second preceding paragraph, such default is cured; and (z) with respect
to the circumstances described in clause (h) of the second preceding paragraph,
such proceedings are terminated.
THE MASTER SERVICER AND THE SPECIAL SERVICER
Midland Loan Services, L.P. was organized under the laws of the State of
Missouri in 1992 as a limited partnership. On April 3, 1998, substantially all
of the assets of Midland Loan Services, L.P., were acquired by Midland Loan
Services, Inc. ("Midland"), a newly formed, wholly owned subsidiary of PNC Bank,
National Association. Midland is a real estate financial services company that
provides loan servicing and asset management for large pools of commercial and
multifamily real estate assets and that originates commercial real estate loans.
Midland's address is 210 West 10th Street, 6th Floor, Kansas City, Missouri
64105. Midland will serve as the Master Servicer and the Special Servicer under
the Servicing Agreement.
As of June 30, 1998, Midland was responsible for the servicing of
approximately 12,234 commercial and multifamily loans with an aggregate
principal balance of approximately $27.9 billion, the collateral for which is
located in all 50 states, Puerto Rico and the District of Columbia. With
respect to such loans, approximately 10,164 loans with an aggregate principal
balance of approximately $19.5 billion pertain to commercial and multifamily
mortgage-backed securities. Property type concentrations within the portfolio
include multifamily, office, retail, hospitality and other types of income
producing properties. Midland also provides commercial loan servicing for
newly-originated loans and loans acquired in the secondary market on behalf of
issuers of commercial and multifamily mortgage-backed securities, financial
institutions and private investors.
SUB-SERVICERS
The Master Servicer and Special Servicer may each delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that the Master
Servicer or Special Servicer, as the case may be, will remain obligated under
the Servicing Agreement. Each sub-servicing agreement between the Master
Servicer or Special Servicer, as the case may be, and a Sub-Servicer (a "Sub-
Servicing Agreement") must be consistent with the Servicing Agreement and must
provide, among other things, that, if for any reason such Master Servicer or
Special Servicer is no longer acting in such capacity, the Indenture Trustee or
any successor to such Master Servicer or Special Servicer may assume such
party's rights and obligations under such Sub-Servicing Agreement. The Master
Servicer and Special Servicer will each be required to monitor the performance
of Sub-Servicers retained by it.
The Master Servicer or Special Servicer will be solely liable for all fees
and any reimbursable expenses owed by it to any Sub-Servicer. See "--Servicing
and Other Compensation and Payment of Expenses" below and "Servicing of Mortgage
Loans--Servicing Compensation and Payment of Expenses" in the Prospectus.
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 on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan (including Specially Serviced Mortgage
Loans and Mortgage Loans as to which the related Mortgaged Property has become
an REO), and will be computed on the basis of the same principal amount and for
the same period respecting which any related interest payment on the Mortgage
Loan is computed. The administrative costs on each Mortgage Loan will equal the
sum of the related Master Servicing Fee and the Indenture Trustee Fee
(collectively, expressed as a per annum rate, the "Administrative Cost Rate").
As of the Cut-off Date, the weighted average Administrative Cost Rate for the
Mortgage Loans was 0.0801% per annum. As additional servicing compensation, the
Master Servicer will be
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entitled to (x) Prepayment Interest Excesses (as defined below) actually
collected on the Mortgage Loans and (y) any "Default Interest" (that is,
interest in excess of interest at the related Mortgage Rate, accrued on any
Mortgage Loan by reason of a default thereunder) and late payment charges
actually collected on the Mortgage Loans, but only to the extent that (i) such
items are allocable to the period when the related Mortgage Loan did not
constitute a Specially Serviced Mortgage Loan or REO and (ii) such Default
Interest is not allocable to pay any portion of a Workout Fee or Liquidation Fee
(each as defined below) payable to the Special Servicer with respect to the
related Mortgage Loan or to cover interest payable to the Master Servicer,
Special Servicer or Indenture Trustee with respect to any Advances made in
respect of the related Mortgage Loan. In addition, the Master Servicer will be
authorized to invest or direct the investment of funds held in any accounts
maintained by it that constitute part of the Collection Account, in Permitted
Investments, and the Master Servicer will be entitled to retain any interest or
other income earned on such funds, but will be required to cover any losses from
its own funds without any right to reimbursement. See "--Collection Account"
below and "Description of the Bonds--Collection Account" in the Prospectus.
If a Borrower prepays a Mortgage Loan in whole or in part prior to the
related Due Date in any Collection Period, the amount of interest (net of
related Master Servicing Fees) that would have accrued on the amount of such
Principal Prepayment from the date of such Principal Prepayment to, but not
including, such Due Date, to the extent not collected (without regard to any
related Prepayment Premium), will constitute a "Prepayment Interest Shortfall".
If such a Principal Prepayment is made after the related Due Date in any
Collection Period, the amount of interest (net of related Master Servicing Fees)
that accrues on the amount of such Principal Prepayment from such Due Date to,
but not including, the date of such Principal Prepayment, to the extent
collected (exclusive of any related Prepayment Premium), will constitute a
"Prepayment Interest Excess". Any Prepayment Interest Excesses collected will be
paid to the Master Servicer as additional servicing compensation. However, with
respect to each Payment Date, the Master Servicer will be required to deposit
into the Collection Account (such deposit, a "Compensating Interest Payment"),
without any right of reimbursement therefor, an amount equal to the lesser of
(i) the aggregate Master Servicing Fees for the related Collection Period, plus
any Prepayment Interest Excesses received during such Collection Period, and
(ii) the aggregate of any Prepayment Interest Shortfalls experienced during the
related Collection Period. The Master Servicer is not required to make
Compensating Interest Payments to cover comparable shortfalls in Mortgage Loan
interest accruals that result from any liquidation of a defaulted Mortgage Loan
or an REO acquired in respect thereof.
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. Solely as to Specially Serviced Mortgage Loans and
Mortgage Loans as to which the related Mortgaged Property has become an REO, the
Special Servicer shall be entitled to the "Special Servicing Fee" which will
accrue at a rate equal to 0.25% per annum for each such Mortgage Loan with a
Stated Principal Balance equal to or greater than $2.0 million as of the
applicable Servicing Transfer Event and 0.35% per annum for any other Specially
Serviced Mortgage Loan or REO (as applicable, the "Special Servicing Fee Rate")
and will be computed on the basis of the same principal amount and for the same
period respecting which any related interest payment on any such Mortgage Loan
is computed. The Special Servicing Fee with respect to any such Mortgage Loan
will cease to accrue if such loan (or the related REO) is liquidated or if, in
the case of a Specially Serviced Mortgage Loan, it becomes a Corrected Mortgage
Loan. Earned but unpaid Special Servicing Fees will be payable monthly out of
general collections on the Mortgage Loans and any REOs on deposit in the
Collection Account. A "Workout Fee" will generally be payable with respect to
each Corrected Mortgage Loan. As to each Corrected Mortgage Loan, the Workout
Fee will be payable out of the Collection Account, and will be calculated by
application of a "Workout Fee Rate" of 0.50% to the outstanding principal
balance of such Mortgage Loan as of the date it became a Corrected Mortgage
Loan; provided that the Workout Fee for any Mortgage Loan may not exceed
$50,000. With respect to each Corrected Mortgage Loan, 50% of the Workout Fee
will be due to the Special Servicer on the date such Mortgage Loan becomes a
Corrected Mortgage Loan and 50% of the Workout Fee will be due to the Special
Servicer on the first date thereafter on which such Mortgage Loan has not been
30 days or more delinquent or otherwise in default for six continuous months.
If the Special Servicer is terminated other than
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for cause, or resigns, it shall retain the right to receive any and all Workout
Fees payable in respect of Mortgage Loans that became Corrected Mortgage Loans
during the period that it acted as Special Servicer and were not 30 days or more
delinquent or otherwise in default at the time of such termination or
resignation (and the successor Special Servicer shall not be entitled to any
portion of such Workout Fees), in each case until such Mortgage Loan becomes a
Specially Serviced Mortgage Loan or the related Mortgaged Property has become an
REO. A "Liquidation Fee" will be payable with respect to each Specially Serviced
Mortgage Loan or REO as to which the Special Servicer receives any full or
discounted payoff from the related Borrower or any Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds (other than as a result of the
purchase of any such Specially Serviced Mortgage Loan or REO by the Seller in
connection with a document deficiency or a material breach of representation or
warranty or any purchase thereof by the Special Servicer or the Master
Servicer). As to each such Specially Serviced Mortgage Loan or REO, the
Liquidation Fee shall be payable out of, and shall be calculated by application
of a "Liquidation Fee Rate" of 1.00% to, such full or discounted payoff,
Liquidation Proceeds, Condemnation Proceeds and/or Insurance Proceeds, in each
case net of any portion of such payment or proceeds payable or reimbursable to
the Master Servicer or the Special Servicer to cover related unpaid or
unreimbursed Master Servicing Fees, Special Servicing Fees and Advances;
provided that the Liquidation Fee for any Mortgage Loan may not exceed $100,000.
The Liquidation Fee with respect to any such Specially Serviced Mortgage Loan
will not be payable if such Mortgage Loan becomes a Corrected Mortgage Loan.
Notwithstanding anything herein to the contrary, no Liquidation Fee will be
payable in connection with the receipt of, or out of, Liquidation Proceeds
collected as a result of the purchase of any Specially Serviced Mortgage Loan or
REO by the Seller in connection with a document deficiency or a material breach
of representation or warranty or any purchase thereof by the Special Servicer or
the Master Servicer. As additional servicing compensation, the Special Servicer
will be entitled to Default Interest and late payment charges actually collected
on the Specially Serviced Mortgage Loans, but only to the extent that such items
are not allocable to pay any portion of a Workout Fee or Liquidation Fee payable
to the Special Servicer with respect to the related Mortgage Loan or to cover
interest payable to the Master Servicer, Special Servicer or Indenture Trustee
with respect to any Advances made in respect of the related Mortgage Loan.
In addition, the Special Servicer will be authorized to invest or direct
the investment of funds held in any REO Accounts maintained by it in Permitted
Investments, and the Special Servicer will be entitled to retain any interest or
other income earned on such funds, but will be required to cover any losses from
its own funds without any right to reimbursement.
Assumption fees, extension fees, modification fees and similar processing
fees actually collected on or with respect to the Mortgage Loans will allocated
between the Master Servicer and the Special Servicer as provided in the
Servicing Agreement and will be paid to each as additional servicing
compensation. In addition, the Master Servicer will be entitled to all fees
received in connection with payments returned for non-sufficient funds.
The Master Servicer and the Special Servicer will, in general, each be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Servicing Agreement, including the fees of any
Sub-Servicers retained by it, and will not be entitled to reimbursement therefor
except as expressly provided in the Servicing Agreement. In general, customary,
reasonable and necessary "out of pocket" costs and expenses required to be
incurred by the Master Servicer or Special Servicer in connection with the
servicing of a Mortgage Loan after a default, delinquency or other unanticipated
event, or in connection with the administration of any REO, will constitute
"Servicing Advances" (Servicing Advances and P&I Advances, collectively,
"Advances") and, in all cases, will be reimbursable from future payments and
other collections, including in the form of Insurance Proceeds, Condemnation
Proceeds and Liquidation Proceeds, on or in respect of the related Mortgage Loan
or REO ("Related Proceeds"). Notwithstanding the foregoing, the Master Servicer
and the Special Servicer will each be permitted to pay, or to direct the payment
of, certain servicing expenses directly out of the Collection Account and at
times without regard to the relationship between the expense and the funds from
which it is being paid.
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If the Master Servicer or Special Servicer is required under the Servicing
Agreement to make a Servicing Advance, but neither does so within ten days after
such Servicing Advance is required to be made, then the Indenture Trustee will,
if it has actual knowledge of such failure, be required to give the defaulting
party notice of such failure and, if such failure continues for five more days,
the Indenture Trustee will be required to make such Servicing Advance.
Any Servicing Advance required to be made by the Special Servicer in
accordance with the terms of the Servicing Agreement shall, at the Special
Servicer's option, either (i) be made by the Master Servicer upon the request of
the Special Servicer or (ii) be made by the Special Servicer and shall be
reimbursed by the Master Servicer on a monthly basis, and in each case such
payments and reimbursements by the Master Servicer shall be treated for all
purposes as a Servicing Advance. The Special Servicer shall not submit more
than one such request in each calendar month unless any such additional request
relates to an Extraordinary Expense.
The Master Servicer, the Special Servicer, the Indenture Trustee and the
Fiscal Agent will each be obligated to make Servicing Advances only to the
extent that such Servicing Advances are, in its reasonable good faith judgment,
ultimately recoverable from Related Proceeds. With respect to any Servicing
Advance, the Indenture Trustee is entitled to conclusively rely on the non-
recoverability determination made by the Master Servicer or Special Servicer.
As and to the extent described herein, the Master Servicer, the Special
Servicer and the Indenture Trustee are each entitled to receive interest on
Servicing Advances made thereby. See "Servicing of the Mortgage Loans--P&I
Advances" herein.
MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
The Master Servicer and the Special Servicer may, consistent with the
Servicing Standard, agree to any modification, waiver or amendment of any term
of, forgive interest (including, without limitation, Default Interest and late
payment fees) on and principal of, capitalize interest on, permit the release,
addition or substitution of collateral securing, and/or permit the release of
the Borrower on or any guarantor of, any Mortgage Loan it is required to service
and administer, without the consent of the Issuer, Owner Trustee and the
Indenture Trustee or any holder of Bonds or Owner Trust Certificates, subject,
however, to each of the following limitations, conditions and restrictions: (i)
with limited exception, the Master Servicer may not agree to any modification,
waiver or amendment of any term of, or take any of the other above referenced
actions with respect to, any Mortgage Loan it is required to service and
administer that would affect the amount or timing of any related payment of
principal, interest or other amount payable thereunder or, in the Master
Servicer's reasonable good faith judgment, would materially impair the security
for such Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon; the Special Servicer may, however, agree to any modification, waiver or
amendment of any term of, or take any other acts with respect to, a Specially
Serviced Mortgage Loan that would have any such effect, but only if a material
default on such Mortgage Loan has occurred or, in the Special Servicer's
reasonable good faith judgment, a default in respect of payment on such Mortgage
Loan is reasonably foreseeable, and such modification, waiver, amendment or
other action is reasonably likely to produce a greater net recovery on a present
value basis than would liquidation; (ii) the Special Servicer may not extend the
date on which any Balloon Payment is scheduled to be due on any Specially
Serviced Loan for more than one year beyond its scheduled maturity date as set
forth in the related Mortgage Note as in effect on the Closing Date; (iii)
neither the Master Servicer nor the Special Servicer shall permit any Borrower
to add or substitute any collateral unless the Special Servicer shall have first
determined in accordance with the Servicing Standard, based upon an
environmental assessment prepared by an independent person who regularly
conducts environmental assessments, at the expense of the Borrower, that such
additional or substitute collateral is in compliance with applicable
environmental laws and regulations and that there are no circumstances or
conditions present with respect to such new collateral relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or remediation would be required
under any then applicable environmental laws and/or regulations, and such
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addition or substitution of collateral will not result in the downgrading,
qualification or withdrawal of the rating then assigned to any Class of Bonds
(as confirmed in writing by each Rating Agency); (iv) neither the Master
Servicer nor the Special Servicer shall extend the maturity date of any Mortgage
Loan secured by the Borrower's interest in a Ground Lease to a date which is
less than ten years prior to the termination date of such Ground Lease
(including any extension options set forth therein); (v) neither the Master
Servicer nor the Special Servicer shall extend the maturity date of any Mortgage
Loan to a date which is less than two years prior to the Rated Final Payment
Date; and (vi) with limited exceptions, neither the Master Servicer nor the
Special Servicer shall release any collateral securing an outstanding Mortgage
Loan; provided that (x) the limitations, conditions and restrictions set forth
in clauses (i) through (vi) above will not apply to any modification of any term
of any Mortgage Loan that is required under the terms of such Mortgage Loan as
in effect on the Closing Date or that is solely within the control of the
related Borrower; and (y) notwithstanding clauses (i) through (vi) above,
neither the Master Servicer nor the Special Servicer will be required to oppose
the confirmation of a plan in any bankruptcy or similar proceeding involving a
Borrower if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.
See also, "--The Directing Bondholder" below.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
As a part of its property level servicing duties, the Special Servicer will
be required to perform a physical inspection of each Mortgaged Property as soon
as practicable after the related Mortgage Loan becomes a Specially Serviced
Mortgage Loan. If the Special Servicer has not already done so as described in
the preceding sentence, the Master Servicer will be required to inspect each
Mortgaged Property securing a Mortgage Loan with an outstanding principal
balance in excess of $1 million at least once every year and each Mortgaged
Property securing a Mortgage Loan with an outstanding principal balance of less
than or equal to $1 million at least once every other year. The Master Servicer
and Special Servicer will each be required to prepare a written report of each
such inspection performed by it that describes the condition of the Mortgaged
Property and that specifies (i) any sale, transfer or abandonment of the
property of which the Master Servicer or the Special Servicer is aware or (ii)
any change in the property's condition, occupancy or value that the Master
Servicer or the Special Servicer considers material.
Also as part of its property level servicing duties, the Special Servicer,
with respect to each Specially Serviced Mortgage Loan, and the Master Servicer,
in the case of all other Mortgage Loans, will be required to make reasonable
efforts to promptly collect from the related Borrower and review the annual
operating statements, budgets and rent rolls of the related Mortgaged Property,
and the financial statements of such Borrower, whether or not delivery of such
item is required pursuant to the terms of the related Mortgage Note or Mortgage
or otherwise. In addition, the Special Servicer will be required to cause
annual operating statements, budgets and rent rolls to be prepared for each REO
and shall collect all such items promptly following their preparation. However,
there can be no assurance that any operating statements required to be delivered
will in fact be delivered, and the Master Servicer and the Special Servicer are
not likely to have any practical means of compelling such delivery.
COLLECTION ACCOUNT
General
The Master Servicer will be required to establish and maintain one or more
separate accounts, held on behalf of the Indenture Trustee for the benefit of
the holders of the Bonds and Owner Trust Certificates (collectively, the
"Collection Account"), which will be established in such manner and with such a
depository as are specified in the Servicing Agreement or which would not cause
a qualification, downgrade or withdrawal of any of the then current ratings on
any of the Offered Bonds or Private Bonds by either Rating Agency as confirmed
in writing by each Rating Agency (and, accordingly, constitute an "Eligible
Account"). The funds held in the Collection Account may be held as cash or
invested in Permitted Investments.
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Any interest or other income earned on funds in the Collection Account will
be retained by the Master Servicer subject to the limitations set forth in the
Servicing Agreement.
Deposits
The Master Servicer will be required to deposit or cause to be deposited in
the Collection Account, within one business day after receipt (in the case of
collections and payments), the following payments and collections received or
made by or on behalf of the Master Servicer subsequent to the Cut-off Date
(other than payments due on or before the Cut-off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Prepayment Premiums;
(iv) all proceeds received under any hazard, flood, title,
environmental or other insurance policy (including any payments required
with respect to any deductible clause in any blanket policy if such
deductible exceeds the deductible in the related Mortgage Loan) that
provides coverage with respect to any Mortgaged Property ("Insurance
Proceeds") other than proceeds applied to the restoration or remediation of
property or released to the related Borrower in accordance with the
Servicing Standard, all proceeds received in connection with the
condemnation of any Mortgaged Property ("Condemnation Proceeds") other than
proceeds applied to the restoration of property or released to the related
Borrower in accordance with the Servicing Standard, and all other amounts
received and retained in connection with the liquidation of defaulted
Mortgage Loans by foreclosure or otherwise (collectively with any amounts
received in connection with the sale of an REO and the amounts described in
clause (v) below, "Liquidation Proceeds");
(v) all proceeds from the purchase or substitution of any Mortgage
Loan as described under "Assignment of the Mortgage Loans--Cures,
Repurchases and Substitutions" herein, all proceeds of the purchase of any
defaulted Mortgage Loan by any party as described below under "--
Realization Upon Defaulted Mortgage Loans" and "The Agreements--Events of
Default; Rights Upon Event of Default" in the Prospectus, and all proceeds
of the purchase of the Mortgage Loans and REOs in connection with the
termination of the Indenture and the early retirement of the Bonds as
described under "Description of the Offered Bonds--Termination" herein and
"The Agreement--Termination; Redemption of Bonds" in the Prospectus;
(vi) any amounts required to be deposited by the Master Servicer in
connection with losses incurred with respect to Permitted Investments of
funds held in the Collection Account;
(vii) any amount required to be transferred from the REO Account (if
established);
(viii) any P&I Advances required to be made by the Master Servicer;
(ix) any required Compensating Interest Payment; and
(x) any other amounts required to be so deposited under the
Servicing Agreement.
Upon receipt of any of the amounts described in clauses (i), (ii) and (iv)
above with respect to any Specially Serviced Mortgage Loan, the Special Servicer
generally is required to promptly remit such amounts to the Master Servicer for
deposit in the Collection Account.
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Withdrawals
The Master Servicer may make withdrawals from the Collection Account for
any of the following purposes:
(i) to remit to the Indenture Trustee one business day preceding
each Payment Date (each, a "Master Servicer Remittance Date") an amount
(the "Master Servicer Remittance Amount") equal to (A) the aggregate of all
amounts on deposit in the Collection Account as of the commencement of
business on such Master Servicer Remittance Date and all amounts required
to be deposited in the Collection Account on such Master Servicer
Remittance Date, net of (B) any portion of the amounts described in the
immediately preceding clause (A) that represents one or more of the
following: (1) collected Monthly Payments that are due on a Due Date
following the end of the related Collection Period, (2) any Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds received after the end of the related Collection Period, (3) any
amounts payable or reimbursable from the Collection Account pursuant to
clauses (ii) through (xv) below, and (4) any amounts deposited in the
Collection Account in error;
(ii) to reimburse the Fiscal Agent, the Indenture Trustee and
itself, in that order, for unreimbursed P&I Advances, such reimbursement to
be made out of amounts received which were identified and applied by the
Master Servicer as late collections of interest (net of the related Master
Servicing Fees) on and principal of the particular Mortgage Loans or REOs
with respect to such P&I Advance was made;
(iii) to reimburse itself for unpaid Master Servicing Fees earned by
it in respect of each Mortgage Loan, such reimbursement being limited to
amounts received on or in respect of such Mortgage Loan that are allocable
as a recovery of interest thereon;
(iv) to pay to the Special Servicer earned and unpaid Special
Servicing Fees in respect of each Specially Serviced Mortgage Loan and each
Mortgage Loan as to which the related Mortgaged Property has become an REO;
(v) to pay to the Special Servicer earned and unpaid Workout Fees
and Liquidation Fees to which it is entitled as described above under "--
Servicing and Other Compensation and Payment of Expenses" herein;
(vi) to reimburse the Fiscal Agent, the Indenture Trustee, itself
and the Special Servicer, in that order, for any unreimbursed Servicing
Advances, such reimbursement to be made out of (A) payments made by the
related Borrower that are allocable to cover the item in respect of which
such Servicing Advance was made, and (B) Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and any other amounts received in respect of
the particular Mortgage Loan or REO as to which such Servicing Advance was
made;
(vii) to reimburse the Fiscal Agent, the Indenture Trustee, itself
and the Special Servicer, in that order, for any unreimbursed Advances that
have been or are determined to be not ultimately recoverable from late
payments, Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds
or any other recovery on or in respect of such Mortgage Loan or REO;
(viii) to pay to the Fiscal Agent, the Indenture Trustee, itself and
the Special Servicer, in that order, interest at the Reimbursement Rate
accrued and payable on any Advance made thereby, the right to payment as
described in this clause (viii) being limited to Default Interest collected
in respect of the Mortgage Loan (or related REO) as to which such Advance
was made;
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(ix) at or following such time as it reimburses the Fiscal Agent,
the Indenture Trustee, itself or the Special Servicer for any unreimbursed
Advance as described in clause (ii), (vi) or (vii) above or otherwise, and
insofar as payment has not already been made as contemplated by clause
(viii) above, to pay to the Fiscal Agent, the Indenture Trustee, itself or
the Special Servicer, in that order, any interest at the Reimbursement Rate
accrued and payable thereon;
(x) to pay itself, as additional servicing compensation, interest
and investment income earned in respect of amounts held in the Collection
Account, subject to the limitations set forth in the Servicing Agreement,
Prepayment Interest Excesses, and any Default Interest collected on the
Mortgage Loans to the extent (A) allocable to the period when any Mortgage
Loan did not constitute a Specially Serviced Mortgage Loan or REO and (B)
not applied to pay Workout Fees, Liquidation Fees or interest on Advances;
(xi) to pay itself, the Special Servicer, the Company, the Manager,
the Owner Trustee, the Fiscal Agent, the Indenture Trustee or any of their
respective directors, officers, employees, agents and Controlling Persons
(as defined herein), amounts for certain legal expenses and liability
resulting from legal actions;
(xii) to pay for the advice of counsel, the cost of certain opinions
of counsel and the cost of recording the Owner Trust Agreement, the
Indenture or the Servicing Agreement as set forth therein, as well as for
certain other Extraordinary Expenses chargeable to the Collection Account
as described herein;
(xiii) with respect to each Mortgage Loan purchased pursuant to the
Loan Sale Agreement or the Servicing Agreement, to pay to such purchaser
all amounts related to the periods after the date of such repurchase
received thereon subsequent to the date of purchase;
(xiv) to pay to the Manager, the Owner Trustee and the Indenture
Trustee their respective earned and unpaid Management Fees, Owner Trustee
Fees and Indenture Trustee Fees; and
(xv) to clear and terminate the Collection Account at the
termination of the Servicing Agreement and pay such remaining amounts in
accordance with the Indenture.
P&I ADVANCES
On each Master Servicer Remittance Date, the Master Servicer will be
obligated, subject to the recoverability determination described in the second
succeeding paragraph, to make advances (each, a "P&I Advance") out of its own
funds or, subject to the replacement thereof as provided in the Servicing
Agreement, from funds held in the Collection Account that are not required to be
withdrawn from the Collection Account on such Master Servicer Remittance Date,
in an amount that is generally equal to the aggregate of all Monthly Payments
(other than Balloon Payments), net of Master Servicing Fees, due or deemed due,
as the case may be, on or in respect of the Mortgage Loans during the related
Collection Period, in each case to the extent such amount was not paid by or on
behalf of the related Borrower or otherwise collected as of the close of
business on the related Determination Date. Notwithstanding the foregoing, if
the Monthly Payment on any Mortgage Loan has been reduced in connection with a
bankruptcy or similar proceeding or a modification, waiver or amendment granted
or agreed to by the Special Servicer, the Master Servicer will be required in
the event of subsequent delinquencies to advance in respect of such Mortgage
Loan only the amount of the reduced Monthly Payment (net of related Master
Servicing Fees). Notwithstanding the foregoing, if it is determined that an
Appraisal Reduction Amount (as defined below) exists with respect to any
Required Appraisal Loan (as defined below), then, with respect to the Payment
Date immediately following the date of such determination and with respect to
each subsequent Payment Date for so long as such Appraisal Reduction Amount
exists, in the event of subsequent delinquencies thereon, the interest portion
of the P&I Advance in respect of such Mortgage Loan
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will be reduced (no reduction to be made in the principal portion, however) to
an amount equal to the product of (i) the amount of the interest portion of such
P&I Advance that would otherwise be required to be made for such Payment Date
without regard to this sentence, multiplied by (ii) a fraction (expressed as a
percentage), the numerator of which is equal to the Stated Principal Balance of
such Mortgage Loan, net of such Appraisal Reduction Amount, and the denominator
of which is equal to the Stated Principal Balance of such Mortgage Loan. See "--
Appraisal Reductions" below.
If the full amount of all P&I Advances, if any, required to be made by the
Master Servicer in respect of any Payment Date is not made, then the Indenture
Trustee will make the portion of such P&I Advances that was required to be, but
not, made by the Master Servicer, and any such P&I Advances so made by the
Indenture Trustee will be deemed to have been made by the Indenture Trustee in
its capacity as successor master servicer. If the Indenture Trustee fails to
make such Advance, the Fiscal Agent is required to make such Advance. Any such
Advance timely made by the Fiscal Agent will cure the Indenture Trustee's
failure to make such Advance.
Each of the Master Servicer, the Indenture Trustee and the Fiscal Agent
will be entitled to recover any P&I Advance made out of its own funds from any
amounts collected in respect of the Mortgage Loan as to which such P&I Advance
was made, whether such amounts are collected in the form of late payments,
Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds or otherwise
("Related Proceeds"). Neither the Master Servicer nor the Indenture Trustee or
the Fiscal Agent will be obligated to make any P&I Advance that it determines in
accordance with the Servicing Standard, would, if made, not be recoverable out
of Related Proceeds (a "Nonrecoverable P&I Advance"), and each of the Master
Servicer, the Fiscal Agent and the Indenture Trustee will be entitled to recover
any P&I Advance plus interest thereon made that it later determines to be a
Nonrecoverable P&I Advance out of general funds on deposit in the Collection
Account.
The Master Servicer (and the Indenture Trustee or Fiscal Agent) will be
entitled, with respect to any Advance made thereby, and the Special Servicer
will be entitled, with respect to any Servicing Advance made thereby, to
interest accrued on the amount of such Advance for so long as it is outstanding
at an annual rate (the "Reimbursement Rate") equal to the "prime rate" published
in the "Money Rates" section of The Wall Street Journal, as such "prime rate"
may change from time to time. Such interest on any Advance made thereby will be
payable to the Master Servicer or the Special Servicer, as the case may be (or,
if applicable, the Indenture Trustee or Fiscal Agent), out of default interest
collected in respect of the related Mortgage Loan or, in connection with the
reimbursement of such Advance, out of any amounts then on deposit in the
Collection Account.
APPRAISAL REDUCTIONS
Within 30 days (or within such longer period as the Master Servicer or the
Special Servicer, as applicable, is diligently and in good faith proceeding to
obtain such) after the earliest of (i) the date on which any Mortgage Loan
becomes a Modified Mortgage Loan (as defined below), (ii) the 90th day following
the occurrence of any uncured delinquency in Monthly Payments with respect to
any Mortgage Loan, (iii) the date 90 days after the date on which a receiver is
appointed and continues in such capacity in respect of a Mortgaged Property
securing any Mortgage Loan, (iv) the date 90 days after the date on which the
borrower under any Mortgage Loan becomes the subject of bankruptcy or insolvency
proceedings, and (v) the date on which a Mortgaged Property securing any
Mortgage Loan becomes an REO Property (each such Mortgage Loan, a "Required
Appraisal Loan"), the Master Servicer or the Special Servicer, as applicable,
will be required to obtain an appraisal of the related Mortgaged Property from
an independent MAI-designated appraiser, unless such an appraisal had previously
been obtained within the prior twelve months. The cost of such appraisal will be
advanced by the Master Servicer or the Special Servicer, as the case may be,
subject to its right to be reimbursed therefor as a Servicing Advance. As a
result of any such appraisal, it may be determined that an Appraisal Reduction
Amount exists with respect to the related Required Appraisal Loan. The
"Appraisal Reduction Amount" for any Required Appraisal Loan will generally
equal the excess, if any, of (a) the sum, as calculated as of the Determination
Date immediately succeeding the date on which the appraisal is obtained,
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of (i) the Stated Principal Balance of such Required Appraisal Loan, (ii) to the
extent not previously advanced by or on behalf of the Master Servicer, the
Indenture Trustee or the Fiscal Agent, all unpaid interest on the Required
Appraisal Loan through the most recent Due Date prior to such Determination Date
at a per annum rate equal to the related net Mortgage Rate, (iii) all accrued
but unpaid Master Servicing Fees and Special Servicing Fees in respect of such
Required Appraisal Loan, (iv) all related unreimbursed Advances made by or on
behalf of the Master Servicer, the Special Servicer or the Indenture Trustee
with respect to such Required Appraisal Loan plus interest accrued thereon at
the Reimbursement Rate and (v) all currently due and unpaid real estate taxes
and assessments, insurance premiums, and, if applicable, ground rents in respect
of the related Mortgaged Property, net of any escrow reserves held by the Master
Servicer or Special Servicer to cover any such item, over (b) 90% of an amount
equal to (i) the appraised value of the related Mortgaged Property or REO
Property as determined by such appraisal, net of (ii) the amount of any liens on
such property (not otherwise taken into account in clause (a)(v) above) that are
prior to the lien of the Required Appraisal Loan.
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during the preceding twelve months), the Special Servicer is
required, within 30 days of each anniversary of such loan's becoming a Required
Appraisal Loan, to order an update of the prior appraisal (the cost of which
will be covered by and reimbursable as a Servicing Advance). Based upon such
appraisal, the Special Servicer is to redetermine and report to the Indenture
Trustee the Appraisal Reduction Amount, if any, with respect to such Mortgage
Loan.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
in a manner that: (A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (B) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding principal prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (C) in the reasonable good
faith judgment of the Special Servicer, otherwise materially impairs the
security for such Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A Borrower's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the loan debt, or may reflect the
diversion of that income from the servicing of the loan debt. In addition, a
Borrower that is unable to make Mortgage Loan payments may also be unable to
make timely payments of taxes and to otherwise maintain and insure the related
Mortgaged Property. In general, the Special Servicer will be required to monitor
any Mortgage Loan that is in default, evaluate whether the causes of the default
can be corrected over a reasonable period without significant impairment of the
value of the related Mortgaged Property, initiate corrective action in
cooperation with the Borrower if cure is likely, inspect the related Mortgaged
Property and take such other actions as are consistent with the Servicing
Standard. A significant period of time may elapse before the Special Servicer is
able to assess the success of any such corrective action or the need for
additional initiatives.
The time within which the Master Servicer or Special Servicer, as the case
may be, can make the initial determination of appropriate action, evaluate the
success of corrective action, develop additional initiatives, institute
foreclosure or similar proceedings and actually foreclose upon or comparably
convert title to Mortgaged Property (or accept title to Mortgaged Property in
lieu of foreclosure or similar proceedings) on behalf of the Issuer may vary
considerably depending on the particular Mortgage Loan, the Mortgaged Property,
the Borrower, the presence of an acceptable party to assume the Mortgage Loan
and the laws of the jurisdiction in which the Mortgaged Property is located. If
a Borrower files a bankruptcy petition, the Master Servicer or Special Servicer,
as the case may be, may not be permitted to accelerate the maturity of the
related Mortgage
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Loan or to foreclose upon or comparably convert title to the related Mortgaged
Property for a considerable period of time. See "Certain Legal Aspects of
Mortgage Loans" in the Prospectus.
The Servicing Agreement grants to the Master Servicer, the Special Servicer
and any single holder of Bonds, Private Bonds or Owner Trust Certificates
evidencing a majority of the Controlling Classes a right to purchase from the
Issuer, free and clear of the lien of the Indenture, certain defaulted Mortgage
Loans in the priority described below. If the Special Servicer has determined,
in its good faith and reasonable judgment, that any defaulted Mortgage Loan will
become subject to foreclosure or similar proceedings (other than any such
Mortgage Loan that it determines, in its reasonable good faith judgment, is in
default to avoid prepayment restrictions), the Special Servicer will be required
to promptly so notify in writing the Owner Trustee, the Indenture Trustee and
the Master Servicer, and either the Master Servicer or the Special Servicer may,
at its option, purchase such defaulted Mortgage Loan from the Issuer at a price
equal to the applicable Purchase Price. If neither the Master Servicer nor the
Special Servicer has purchased such defaulted Mortgage Loan within the 30-day
period after the receipt by the Master Servicer of the notice in respect
thereof, the Special Servicer will be required, within 10 days after the end of
such 30-day period (or after the waiver by the Master Servicer and the Special
Servicer of any such purchase rights), to notify the Indenture Trustee, which
shall in turn notify any single holder of Bonds, Private Bonds or Owner Trust
Certificates evidencing a majority of the Controlling Classes, and such holder
may at its option purchase from the Issuer, at a price equal to the applicable
Purchase Price, such defaulted Mortgage Loan within 30 days after such notice.
The Special Servicer shall, consistent with the Servicing Standard and based
upon its determination of the best economic interests of the Bondholders, offer
to sell, free and clear of the lien of the Indenture, any such defaulted
Mortgage Loan not otherwise purchased as described in the two preceding
sentences or, as described below, foreclose upon or otherwise realize upon the
Mortgaged Property. Such offer will be required to be made in a commercially
reasonable manner for a period of not less than 10 days, and unless the Special
Servicer determines that acceptance of any bid would not be in the best economic
interests of the Issuer, the Special Servicer will be required to accept the
highest cash bid received from any person that constitutes a fair price for such
Mortgage Loan.
Notwithstanding any of the foregoing, the Special Servicer will not be
obligated to accept the highest cash bid if the Special Servicer determines, in
accordance with the Servicing Standard, that rejection of such bid would be in
the best interests of the Issuer, and the Special Servicer may accept a lower
cash bid if it determines, in accordance with the Servicing Standard, that
acceptance of such bid would be in the best interests of the Issuer (for
example, if the prospective buyer making the lower bid is more likely to perform
its obligations or the terms offered by the prospective buyer making the lower
bid are more favorable).
Neither the Owner Trustee nor the Indenture Trustee in their respective
individual capacities nor any of their respective affiliates, may bid for or
purchase any defaulted Mortgage Loan or REO.
In connection with the sale of any defaulted Mortgage Loan or REO, the
Special Servicer may charge prospective bidders, and may retain, fees that
approximate the Special Servicer's actual costs in the preparation and delivery
of information pertaining to such sales or evaluating bids without obligation to
deposit such amounts into the Collection Account.
The Special Servicer will exercise reasonable efforts, consistent with the
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments and which are not sold as described above.
Notwithstanding the foregoing, neither the Master Servicer nor the Special
Servicer will, on behalf of the Issuer, obtain title to any Mortgaged Property
by deed in lieu of foreclosure or otherwise, or take any other action with
respect to any Mortgaged Property, if, as a result of any such action, the
Issuer, the Indenture Trustee or the Owner Trustee could, in the reasonable
judgment of the Special Servicer, made in accordance with the Servicing
Standard, be considered
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to hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of certain
environmental laws, unless:
(A) the Special Servicer has previously determined in accordance
with the Servicing Standard, based on a report prepared by a person who
regularly conducts environmental assessments (which report will be an
expense of the Issuer payable out of the Collection Account) that:
(i) the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that taking such
actions as are necessary to bring the Mortgaged Property into
compliance therewith is reasonably likely to produce a greater
recovery on a present value basis than not taking such actions; and
(ii) there are no circumstances or conditions present at the
Mortgaged Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any applicable environmental laws
and regulations or, if such circumstances or conditions are present
for which any such action could be required, taking such actions with
respect to the Mortgaged Property is reasonably likely to produce a
greater recovery on a present value basis than not taking such actions
(see "Certain Legal Aspects of Mortgage Loans--Environmental
Considerations" in the Prospectus); and
(B) the Special Servicer has previously determined in accordance
with the Servicing Standard, that, if the Issuer, the Indenture Trustee or
the Owner Trustee could reasonably be considered to be a "potentially
responsible party" with respect to the Mortgaged Property under applicable
environmental laws and regulations, its interests are adequately protected,
by indemnification or otherwise, from any failure of the Mortgaged Property
to be in compliance with such environmental laws and regulations and from
any circumstances or conditions described in clause (A)(ii) above with
respect to the Mortgaged Property.
If the environmental testing contemplated by the preceding paragraph
establishes that any of the conditions set forth in clauses (A)(i) and (ii)
thereof has not been satisfied with respect to any Mortgaged Property securing a
defaulted Mortgage Loan, the Special Servicer is to take such action as is in
accordance with the Servicing Standard (other than proceeding against the
Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of
the Issuer, release all or a portion of such Mortgaged Property from the lien of
the related Mortgage, provided that prior to the release of all or a portion of
the related Mortgaged Property from the lien of the related Mortgage (i) the
Special Servicer shall have notified the Owner Trustee and the Indenture Trustee
in writing of its intention to so release all or a portion of such Mortgaged
Property, (ii) the Indenture Trustee shall have provided written notice of such
intention to the Bondholders and (iii) neither the holders of a majority of the
Owner Trust Certificates nor the holders of a majority of the Bonds, voting
separately, shall have objected to such release within 30 days of the
distribution of the last of such notices.
REOs
If title to any Mortgaged Property is acquired by the Special Servicer on
behalf of the Issuer or a wholly-owned subsidiary of the Issuer, such Mortgaged
Property will be subject to the lien of the Indenture and the Special Servicer,
on behalf of the Issuer, generally will be required to solicit bids for such
Mortgaged Property in such a manner as will be reasonably likely to realize a
fair price for such Mortgaged Property. The Special Servicer may retain an
independent contractor to operate and manage any REO. However, the retention of
an independent contractor will not relieve the Special Servicer of its
obligations with respect to such REO.
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In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO in a manner that would, to the extent
commercially feasible, maximize the net after-tax proceeds from such property to
the Issuer. After the Special Servicer reviews the operation of such property
and consults with the Owner Trustee and the Indenture Trustee to determine the
federal income tax reporting position with respect to the income it is
anticipated that the Issuer would derive from such property, the Special
Servicer could determine that it would not be commercially feasible to manage
and operate any such property previously constituting Mortgaged Property in a
manner that would avoid the imposition of a tax on "net income from foreclosure
property" within the meaning of Section 857(b)(4)(B) of the Code (such tax
referred to herein as an "REO Tax"). To the extent that income the Issuer
receives from an REO is subject to a tax on "net income from foreclosure
property," such income would be subject to federal tax at the highest marginal
corporate tax rate (currently 35%). The determination as to whether income from
an REO would be subject to an REO Tax will depend on the specific facts and
circumstances relating to the management and operation of each REO. Generally,
income from an REO that previously constituted Mortgaged Property and that is
operated by the Special Servicer directly, rather than leased to a tenant that
conducts business on the premises, would be subject to federal income tax as
"net income from foreclosure property." Any REO Tax imposed on the Issuer's
income from an REO would be chargeable to the Collection Account. Bondholders
are advised to consult their tax advisors regarding the possible imposition of
REO Taxes in connection with the operation of commercial REOs by the Issuer. See
"Certain Federal Income Tax Consequences" in the Prospectus.
The Special Servicer will be required to segregate and hold all funds
collected and received in connection with any REO separate and apart from its
own funds and general assets. If an REO is acquired, the Special Servicer is to
establish and maintain one or more accounts (collectively, the "REO Account"),
held on behalf of the Indenture Trustee, for the retention of revenues and other
proceeds derived from each REO. The REO Account is required to be an Eligible
Account, and the Special Servicer will be required to deposit, or cause to be
deposited, in the REO Account, within one business day of receipt, all net
income, Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds
received in respect of an REO. Funds in the REO Account may be invested in
Permitted Investments, and the Special Servicer will be entitled to retain, as
additional servicing compensation, interest and investment income earned in
respect of amounts held in the REO Account, subject to the limitations of the
Servicing Agreement, but will be required to cover any losses from its own funds
without any right to reimbursement.
The Special Servicer will be required to withdraw from the REO Account
funds necessary for the proper operation, management, maintenance and
disposition of any REO, but only to the extent of amounts on deposit in the REO
Account relating to such REO. Within two business days following the end of each
Collection Period, the Special Servicer will be required to withdraw from the
REO Account and deliver to the Master Servicer for deposit into the Collection
Account the aggregate of all amounts received in respect of each REO during such
Collection Period, net of any withdrawals made out of such amounts as described
in the preceding sentence, provided that the Special Servicer may, subject to
certain limitations set forth in the Servicing Agreement, retain in the REO
Account such portion of such proceeds and collections as may be necessary to
maintain a reserve of sufficient funds for the proper operation, management,
maintenance and disposition of the related REO (including the creation of a
reasonable reserve for repairs, replacements and necessary capital improvements
and other related expenses).
REPLACEMENT OF THE MASTER SERVICER OR SPECIAL SERVICER
The Servicing Agreement will permit the holders of the Bonds or the Owner
Trust Certificates representing a majority of the Controlling Class to appoint a
Master Servicer or a Special Servicer and to replace an existing Master Servicer
or Special Servicer, as applicable. Any such appointment of a Master Servicer or
a Special Servicer will be subject to, among other things, (i) written
confirmation from each Rating Agency that the appointment will not result in a
downgrade, qualification or withdrawal of any of its then current ratings
assigned to any Class of Bonds, (ii) the written agreement of the replacement
Master Servicer or Special Servicer, as applicable, to be bound by the terms and
conditions of the Servicing Agreement, together
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with an opinion of counsel regarding the enforceability of such agreement, and
(iii) the reimbursement of all outstanding Advances with interest thereon at the
Reimbursement Rate and other amounts payable under the Servicing Agreement. The
Master Servicer may not be replaced in such a manner, without cause, until after
February 1, 2002. Subject to the foregoing, any holder of Bonds or Owner Trust
Certificates or any affiliate thereof may be appointed as Master Servicer or
Special Servicer.
THE DIRECTING BONDHOLDER
The Special Servicer will be required to prepare a report (an "Asset
Strategy Report") for each Mortgage Loan which becomes a Specially Serviced
Mortgage Loan not later than sixty (60) days after the servicing of such
Mortgage Loan is transferred to the Special Servicer. The majority holder of
the Controlling Class will designate one Bondholder pursuant to the Indenture
(the "Directing Bondholder"). Each Asset Strategy Report will be delivered to
the Directing Bondholder. The Directing Bondholder may object to any Asset
Strategy Report within 10 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 in accordance
with the Servicing Standard that such objection is not in the best interest of
all the Bondholders. In connection with making such affirmative determination,
the Special Servicer, by notice to the Indenture Trustee, may request a vote by
all the Bondholders. If the Directing Bondholder does not disapprove an Asset
Strategy Report within 10 business days, the Special Servicer shall implement
the recommended action as outlined in such Asset Strategy Report. If the
Directing Bondholder 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
Bondholder fails to disapprove such revised Asset Strategy Report as described
above, provided that the Special Servicer shall not be under any obligation to
perform any actions which are not consistent with the Servicing Standard,
applicable laws and the related Mortgage Loan documents. Any Bondholder may
request and obtain a copy (at its expense) of any Asset Strategy Report except
to the extent prohibited by applicable law or the related Mortgage Loan
documents.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
All of the Mortgage Loans contain a due-on-sale clause that permits the
lender to accelerate the maturity of the Mortgage Loan upon any sale or other
transfer of the related Mortgaged Property or a change of control of the related
Borrower made without the lender's consent. All of the Mortgage Loans also
contain a due-on-encumbrance clause that entitles the lender to accelerate the
maturity of the Mortgage Loan upon the creation of any other lien or encumbrance
upon the Mortgaged Property. The Mortgage Loans generally permit, however,
transfers of interests in the borrowing entity for estate planning purposes so
long as no effective change of control results. In addition, in certain cases,
a one-time transfer to an affiliate of the Borrower is permitted without
approval by the mortgagee. With respect to those Mortgage Loans it is obligated
to service, each of the Master Servicer and the Special Servicer, on behalf of
the Issuer, will be required to enforce the restrictions contained in the
related Loan Documents on transfers or further encumbrances of the related
Mortgaged Property and on transfers of interests in the related Borrower, unless
(i) it has determined, consistent with the Servicing Standard, that waiver of
such restrictions would be in accordance with the Servicing Standard; (ii) with
respect to the enforcement of any due-on-sale clause, it has obtained written
confirmation from each Rating Agency that the waiver of such provision with
respect to any Mortgage Loan representing more than 5% of the outstanding
principal balance of the Mortgage Loans, including any other Mortgage Loans to
the same Borrower, will not result in the downgrading, qualification or
withdrawal of the ratings then assigned to any Class of Bonds; and (iii) with
respect to the enforcement of any due-on-encumbrance provision, it has obtained
written confirmation from each Rating Agency that the waiver of such provision
will not result in the downgrading, qualification or withdrawal of the ratings
then assigned to any Class of Bonds.
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EVIDENCE AS TO COMPLIANCE
The Servicing Agreement requires each of the Master Servicer and the
Special Servicer to deliver to the Owner Trustee and the Indenture Trustee, on
or before March 31 of each year, beginning March 31, 1999, a certificate signed
by one of its officers generally to the effect that such servicer fulfilled in
all material respects throughout the preceding calendar year its obligations
under the Servicing Agreement, or if there was noncompliance with such standards
or a default in the fulfillment of any such obligation in any material respect,
such certificate will include a description of such noncompliance or specify
such default, as the case may be, and the nature and status thereof. In
addition, on or before April 30 of each year, beginning April 30, 1999, each of
the Master Servicer and the Special Servicer, at its expense, will be required
to cause a firm of independent public accountants to furnish a report to the
Owner Trustee and the Indenture Trustee containing such firm's opinion that, on
the basis of an examination conducted by such firm substantially in accordance
with the procedures set forth in the Uniform Single Attestation Program for
Mortgage Bankers, as applicable, the officer's assertion to the effect set forth
in the Servicing Agreement, is fairly stated in all material respects, subject
to such exceptions and other qualifications that, in the opinion of such firm,
such institute's standards require it to report.
Copies of the annual officer's certificate and accountants' report of each
of the Master Servicer and Special Servicer will be made available to holders of
the Bonds upon written request to the Indenture Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND SPECIAL SERVICER
The Servicing Agreement will permit the Master Servicer and the Special
Servicer to resign from its obligations thereunder only upon a determination
that such obligations are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it. No such resignation will become effective until the Indenture Trustee
or other successor has assumed the obligations and duties of the resigning
Master Servicer or Special Servicer, as the case may be, under the Servicing
Agreement. The Master Servicer and the Special Servicer will be required to
maintain a fidelity bond and errors and omissions policy or their equivalent
that provides coverage against losses that may be sustained as a result of an
officer or employee's misappropriation of funds or errors and omissions, subject
to certain limitations as to amount of coverage, deductible amounts, conditions,
exclusions and exceptions permitted by the Servicing Agreement.
The Servicing Agreement will provide that none of the Master Servicer or
the Special Servicer, any director, officer, employee or agent of either of such
parties or any person who has control (a "Controlling Person") over either of
them within the meaning of the Securities Act will be under any liability to the
Issuer, the Owner Trustee, the Indenture Trustee or the holders of the Bonds or
the Owner Trust Certificates for any action taken, or not taken, in good faith
pursuant to the Servicing Agreement or for errors in judgment, provided,
however, that neither of the Master Servicer nor the Special Servicer will be
protected against any liability that would otherwise be imposed by reason of
misfeasance, bad faith or negligence in the performance of obligations or duties
thereunder. The Servicing Agreement will further provide that the Master
Servicer, the Special Servicer and any director, officer, employee, agent or
Controlling Person of either of them will be entitled to indemnification by the
Issuer, payable out of the Collection Account, against any loss, liability or
expense incurred in connection with any legal action that relates to the
Servicing Agreement, the Owner Trust Agreement or the Indenture or to the Owner
Trust Certificates or the Bonds, 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
under the Servicing Agreement. In addition, the Servicing Agreement will provide
that neither the Master Servicer nor the Special Servicer will be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective responsibilities under the Servicing Agreement and
that in its opinion may involve it in any expense or liability. However, each of
the Master Servicer and the Special Servicer will be permitted, in the exercise
of its discretion, to undertake any such action that it may deem necessary or
desirable with respect to the enforcement
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or protection of the rights and duties of the parties to the Servicing Agreement
or the interests of the Issuer 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 Issuer and the Master Servicer or the Special
Servicer, as the case may be, will be entitled to charge the Collection Account
therefor.
Any person into which the Master Servicer or the Special Servicer may be
merged or consolidated, or any person resulting from any merger or consolidation
to which the Master Servicer or the Special Servicer is a party, or any person
succeeding to the business of the Master Servicer or the Special Servicer, will
be the successor of the Master Servicer or the Special Servicer, as the case may
be, under the Servicing Agreement and the Master Servicer and the Special
Servicer may each transfer its rights and obligations under the Servicing
Agreement to an affiliate; provided, however, that no such successor, surviving
person or affiliate will succeed to the rights of the Master Servicer or the
Special Servicer unless it shall have furnished to the Owner Trustee and the
Indenture Trustee written confirmation from each Rating Agency to the effect
that the related merger, consolidation or transfer will not cause such Rating
Agency to downgrade, qualify or withdraw its then current ratings on the Bonds.
The Servicing Agreement will permit each of the Master Servicer, the
Special Servicer and their respective affiliates to be the holder of any Bond or
any Owner Trust Certificate with the same rights as it would have if it were not
the Master Servicer, the Special Servicer or any such affiliate. If, at any time
during which the Master Servicer, the Special Servicer or any of their
respective affiliates is the holder of any Bond or Owner Trust Certificate, the
Master Servicer or the Special Servicer proposes to take or omit to take action
(i) which action or omission is not expressly prohibited by the Servicing
Agreement and would not, in its good faith judgment, violate the Servicing
Standard and (ii) which action, if taken, or omission, if made, might
nonetheless, in its good faith judgment, be considered by others to violate the
Servicing Standard, it may, but need not, seek the approval of the holders of
the Bonds and the Owner Trust Certificates to such action or omission by
delivering to the Owner Trustee and the Indenture Trustee a notice in writing
that identifies the portion of each Class of Bonds and Owner Trust Certificates
beneficially owned by it and its affiliates and describes the action that it
proposes to take or omit. Upon receipt of such notice, the Owner Trustee will be
required to forward such notice to the holders of the Owner Trust Certificates
and the Indenture Trustee will be required to forward such notice to the holders
of the Bonds, in each case together with instructions for response. If, at any
time, the holders of a majority of the Owner Trust Certificates and a majority
of the Bonds (calculated without regard to the Owner Trust Certificates or Bonds
beneficially owned by the Master Servicer and its affiliates or the Special
Servicer and its affiliates, as applicable) separately consent in writing to the
proposal described in the related notices, and if the Master Servicer or Special
Servicer, as the case may be, takes action or omits to take action as proposed
in such notices, such action or omission will be deemed under the Servicing
Agreement to comply with the Servicing Standard.
SERVICING EVENTS OF DEFAULT
"Servicing Events of Default" include (i) any failure by the Master
Servicer to deposit into the Collection Account any amount (other than a P&I
Advance) required to be so deposited on the date on which such deposit was
required to be made, (ii) any failure by the Special Servicer or the Master
Servicer to deposit with, or remit to, the Owner Trustee or the Indenture
Trustee any amount (other than a P&I Advance) required to be so deposited or
remitted, (iii) any failure by the Master Servicer to deposit into the
Collection Account, or to deposit with the Indenture Trustee, on any Master
Servicer Remittance Date the full amount of P&I Advances required to be made on
such date, which failure continues unremedied until 5:00 p.m. New York City time
on the date on which such deposit was required to be made, (iv) any failure by
the Special Servicer to deposit into the REO Account or to deposit into, or
remit to the Master Servicer for deposit into, the Collection Account any amount
required to be so deposited which continues unremedied for one day following the
date on which such deposit or remittance was required to be made, (v) any
failure by the Master Servicer or the Special Servicer duly to observe or
perform in any material respect any of its other material covenants or
obligations under the Servicing Agreement which continues unremedied for 30 days
(or, in the case of payment
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of insurance premiums, for a period of 15 days) after written notice of such
failure has been given to the Master Servicer or the Special Servicer, as
applicable, by any other party to the Servicing Agreement or to the Master
Servicer or the Special Servicer, as applicable, by holders of not less than 25%
of the Owner Trust Certificates or the holders of not less than 25% of the
Bonds, (vi) any breach by the Master Servicer or the Special Servicer of any
representation or warranty contained in the Servicing Agreement that materially
and adversely affects the interests of the Issuer and that continues unremedied
for 30 days after written notice of such breach has been given to the Master
Servicer or the Special Servicer, as applicable, by any other party to the
Servicing Agreement or to the Master Servicer or the Special Servicer, as
applicable, by holders of not less than 25% of the Owner Trust Certificates or
holders of not less than 25% of the Bonds, (vii) certain events of insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings in respect of or relating to the Master Servicer or the Special
Servicer and certain actions by or on behalf of the Master Servicer or the
Special Servicer indicating its insolvency or inability to pay its obligations
or (viii) the Owner Trustee or the Indenture Trustee shall have received written
notice from either Rating Agency that the continuation of the Master Servicer or
the Special Servicer in such capacity would result in a downgrade, qualification
or withdrawal of any of the ratings then assigned by such Rating Agency to any
Class of Bonds.
RIGHTS UPON SERVICING EVENT OF DEFAULT
So long as a Servicing Event of Default with respect to the Master Servicer
or the Special Servicer under the Servicing Agreement remains unremedied, the
Owner Trustee and the Indenture Trustee will be authorized and, at the direction
of the holders of 25% of the Owner Trust Certificates or the holders of 25% of
the Bonds, or, if the Servicing Event of Default is the one described in clause
(viii) under "--Servicing Events of Default" above, the Owner Trustee and the
Indenture Trustee will be required to terminate all of the rights and
obligations of the defaulting party under the Servicing Agreement (other than
any rights that may have accrued under the Servicing Agreement prior to such
termination), whereupon the Indenture Trustee will succeed to all of the
responsibilities, duties and liabilities of the Master Servicer or Special
Servicer, as the case may be, under the Servicing Agreement and will be entitled
to the same compensation as the defaulting party under the Servicing Agreement.
If the Indenture Trustee is unwilling or unable so to act, it may, or, at the
written request of holders of at least 51% of the Owner Trust Certificates or
the holders of 51% of the Bonds, it will be required to, appoint, or petition a
court of competent jurisdiction to appoint, an established commercial loan
servicing institution that is acceptable to each Rating Agency, and that will
not result in the downgrading, withdrawal or qualification of any rating then
assigned to any Class of Bonds, to act as successor Master Servicer or Special
Servicer, as the case may be, under the Servicing Agreement. Pending such
appointment, the Indenture Trustee will be obligated to act in such capacity.
DETERMINATION OF LIBOR
With respect to each Interest Rate Adjustment Date, "LIBOR" will be the
annual rate appearing on Telerate Page 3750 (as defined below) as the London
interbank offered rate for one-month United States dollar deposits at
approximately 11:00 a.m., London time, on the related Interest Rate
Determination Date (as defined below), and if such rate is not available, LIBOR
will be the annual rate, rounded as aforesaid, appearing on the Reuters Screen
LIBO Page (as defined below) as the London interbank offered rate for one-month
United States dollar deposits at approximately 11:00 a.m., London time, on the
related Interest Rate Determination Date or, if more than one such rate appears,
the arithmetic mean of all such rates.
With respect to the Bond Interest Rate on the Class A-2 Bonds, the
"Interest Rate Adjustment Date" will be the first day of each Accrual Period.
With respect to each Interest Rate Adjustment Date, the "Interest Rate
Determination Date" will be the second business day prior to such Interest Rate
Adjustment Date. "Telerate Page 3750" means the display designated as page
"3750" on the Associated Press-Dow Jones Telerate Service (or such other page as
may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks), and "Reuters Screen LIBO Page" means
the display designated as page
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"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
Set forth in the table below are the historical closing levels of LIBOR for
the months indicated, as appearing on Telerate Page 3750 and published by
Bloomberg L.P.
<TABLE>
<CAPTION>
YEAR
---------------------------------------------------------------
MONTH 1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
January...... 5.59766% 5.43750% 5.43750% 6.09375% 3.12500% 3.18750%
February..... 5.68750% 5.43750% 5.31250% 6.12500% 3.56250% 3.18750%
March........ 5.68750% 5.68750% 5.43750% 6.12500% 3.68750% 3.18750%
April........ 5.65625% 5.68750% 5.43750% 6.06250% 4.00000% 3.12500%
May.......... 5.65625% 5.68750% 5.43750% 6.06250% 4.37500% 3.25000%
June......... 5.66016% 5.68750% 5.49609% 6.12500% 4.56250% 3.18750%
July......... 5.65625% 5.62500% 5.46484% 5.87500% 4.50000% 3.18750%
August....... N/A 5.65625% 5.43750% 5.87500% 4.87500% 3.18750%
September.... N/A 5.65625% 5.43359% 5.87500% 5.06250% 3.18750%
October...... N/A 5.64844% 5.37500% 5.83203% 5.06250% 3.18750%
November..... N/A 5.96875% 5.56250% 5.97656% 6.06250% 3.56250%
December..... N/A 5.71875% 5.50000% 5.68750% 6.00000% 3.25000%
</TABLE>
The levels of LIBOR set forth in the foregoing table may differ from the
related levels of LIBOR determined as described above.
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THE ISSUER
GENERAL
Impac CMB Trust 1998-C1 (the "Issuer") is a business trust to be
established under the laws of the State of Delaware on or about August 21, 1998
(the "Closing Date") pursuant to an Owner Trust Agreement, dated as of August 1,
1998 (the "Owner Trust Agreement"), between the Company and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"). The Issuer will be treated as a
QRS under the Code and will be formed for the purposes of consummating the
transactions and engaging in the activities described herein, including the
issuance of the Impac CMB Trust 1998-C1, Collateralized Mortgage Bonds (the
"Bonds"), to be designated as the Class A-1A, Class A-1B, Class A-2, Class B,
Class C, Class D, Class E, Class F and Class G Bonds, and the issuance of the
Impac CMB Trust 1998-C1 Secured Commercial Loan Certificates of Beneficial
Ownership (the "Owner Trust Certificates"). The Issuer is not expected to
conduct any further business other than that incidental to or necessary in
connection with the transactions and activities described herein. Impac
Commercial Holdings, Inc. will perform certain administrative services for the
Issuer pursuant to a Management Agreement, dated as of August 1, 1998 (the
"Management Agreement"), between the Issuer and Impac Commercial Holdings, Inc.,
as manager (the "Manager"). However, the Owner Trust Agreement will constitute
the governing instrument of the Issuer under the laws of the State of Delaware
relating to business trusts.
The assets of the Issuer (the "Owner Trust Estate") will consist primarily
of (i) the Mortgage Loans and all payments and other collections in respect of
the Mortgage Loans received or due after the Cut-off Date (exclusive of
Principal Prepayments received on or prior to the Cut-off Date and scheduled
payments of interest and principal due on or before the Cut-off Date), (ii) any
REO acquired on behalf of the Issuer and (iii) such funds as from time to time
are deposited in the Collection Account, the REO Account and the accounts
established under the Indenture and the Owner Trust Agreement for purposes of
making payments to the holders of the Bonds and making distributions to the
holders of the Owner Trust Certificates. The Mortgage Loans will be acquired by
the Issuer with the proceeds of the issuance of the Bonds and the Owner Trust
Certificates. The Issuer will not have any assets other than those included in
the Owner Trust Estate. Accordingly, the Bonds and the Owner Trust Certificates
will be payable solely from the Owner Trust Estate.
THE PRIVATE BONDS AND OWNER TRUST CERTIFICATES
The Bonds will be issued by the Issuer on the Closing Date pursuant to an
Indenture, dated as of August 1, 1998 (the "Indenture"), between the Issuer and
the Indenture Trustee, and the Owner Trust Certificates will be issued by the
Issuer on the Closing Date pursuant to the Owner Trust Agreement. The Indenture
Trustee will have a first priority security interest in the Owner Trust Estate
as security for the repayment of the obligations evidenced by the Bonds, and the
Bonds will be equally and ratably secured by the lien of the Indenture without
preference, priority or distinction (other than as described herein). The Owner
Trust Certificates will evidence beneficial ownership interests in the Owner
Trust Estate, subject to the lien of the Indenture. The Indenture Trustee
generally will have possession of the Owner Trust Estate, and the Issuer will
not have the right to the return thereof until after the obligations evidenced
by the Bonds have been satisfied and the lien of the Indenture has been
discharged.
The Class F Bonds and Class G Bonds (together, the "Private Bonds") will
have initial Bond Principal Balances equal to $18,271,000 and $11,122,000,
respectively, and will bear interest at fixed percentage rates equal to 6.27%
and 6.27%, respectively, per annum. The Owner Trust Certificates will have an
aggregate initial Certificate Principal Balance equal to $11,917,252.32. At any
later date of determination, the Certificate Principal Balance of the Owner
Trust Certificates will equal the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans over the aggregate Bond Principal
Balance of the Bonds as of such date, and all principal and interest collected
on the Mortgage Loans and not payable in respect of the Bonds will be allocable
to the Owner Trust Certificates.
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THE OWNER TRUSTEE AND MANAGER
Wilmington Trust Company, a Delaware banking corporation, will be the Owner
Trustee under the Owner Trust Agreement, and Impac Commercial Holdings, Inc.
will be the Manager under the Management Agreement. Each of the Company, the
Manager, the Indenture Trustee, the Master Servicer, the Special Servicer, the
Fiscal Agent and their respective affiliates may from time to time enter into
normal banking relationships with the Owner Trustee and its affiliates, and the
Owner Trustee and its affiliates may hold Offered Bonds in their own names.
As compensation for the performance of their respective duties, the Owner
Trustee will be paid an annual fee equal to approximately $5,500 (the "Owner
Trustee Fee") on the Master Servicer Remittance Date in August of each calendar
year, commencing in August 1999, and the Manager will be paid a fee (the
"Management Fee") on every Master Servicer Remittance Date. The Management Fee
will be payable on a loan-by-loan basis, will accrue at a percentage rate equal
to 0.005% per annum (the "Management Fee Rate") and, as to each Mortgage Loan,
will be computed on the basis of the same principal amount and for the same
period respecting which any related interest payment on such Mortgage Loan is
computed. The Owner Trustee Fee and the Management Fee will be payable from the
Collection Account under the Servicing Agreement.
The corporate trust office of the Owner Trustee will be located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, or such
other address as the Owner Trustee may designate from time to time. The address
for the corporate offices of the Manager is 20371 Irvine Avenue, Santa Ana
Heights, California 92707 and its telephone number is (714) 556-0122.
CERTAIN MATTERS REGARDING THE OWNER TRUSTEE AND MANAGER
The Owner Trustee and the Manager will each be entitled to indemnification
from the Issuer, payable out of the Collection Account, for any loss, liability
or expense incurred by it in connection with any act or omission on its part
with respect to the Owner Trust Agreement, the Indenture, the Servicing
Agreement, the Management Agreement or the Loan Sale Agreement, provided,
however, that such indemnification will not extend to any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence on
the part of the Owner Trustee or the Manager in the performance of its duties or
obligations.
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DESCRIPTION OF THE OFFERED BONDS
GENERAL
THE OFFERED BONDS
As discussed under "The Issuer" herein, the Offered Bonds will consist of
the Bonds issued by the Issuer on the Closing Date pursuant to the Indenture and
designated as the Class A-1A, Class A-1B, Class A-2, Class B, Class C, Class D
and Class E Bonds. The Offered Bonds will be payable solely from the Owner Trust
Estate on each Payment Date by the Indenture Trustee in an aggregate amount
equal to the portion of the Available Amount and the Bond Prepayment Premium
Amounts on the Offered Bonds described below under "--Payments" and under
"Description of the Bonds--Distributions" in the Prospectus as being
distributable to the holders of the Offered Bonds for such Payment Date.
The Offered Bonds will be obligations of the Issuer and will not represent
obligations of the Seller, the Company, the Manager, the Owner Trustee, the
Indenture Trustee, the Master Servicer or the Special Servicer. The Indenture
provides that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer on the Offered Bonds or under the Indenture
against (i) any such person, (ii) any holder of Owner Trust Certificates or
(iii) any of their respective affiliates, officers, directors, shareholders,
partners, employees, agents, beneficiaries or Controlling Persons. In addition,
the Offered Bonds will not be insured or guaranteed by any of the foregoing
persons, by any government agency or instrumentality or by any private insurer
or other person. The Indenture Trustee and the holders of the Offered Bonds,
will have no rights or claims against the Issuer directly and may look only to
the Owner Trust Estate to satisfy the obligations of the Issuer on the Offered
Bonds and under the Indenture. Further, neither the Indenture Trustee nor the
holders of the Offered Bonds will be permitted to file or join in filing any
petition in bankruptcy or commence any similar proceeding in respect of the
Issuer.
REGISTRATION AND DENOMINATION OF OFFERED BONDS
The Offered Bonds will be issued, maintained and transferred on the book-
entry records of DTC and its Participants (as defined in the Prospectus). The
Class A Bonds will be offered in registered form, in minimum denominations of
$5,000 and integral multiples of $1 in excess thereof. The Class B, C, D, E, F
and G Bonds will be offered in registered form, in minimum denominations of
$50,000 and integral multiples of $1 in excess thereof. The Offered Bonds will
be represented by one or more bonds registered in the name of Cede & Co., as
nominee of DTC. No Beneficial Owner will be entitled to receive a Bond in fully
registered, certificated form (a "Definitive Bond"), except under the limited
circumstances described herein.
For purposes of the discussion contained herein, the "Percentage Interest"
in the related Class evidenced by any Offered Bond will be a fraction, expressed
as a percentage, the numerator of which is the initial Bond Principal Balance of
such Offered Bond on the Closing Date as set forth on the face thereof, and the
denominator of which is the initial Bond Principal Balance of the related Class
of Offered Bonds on the Closing Date.
BOOK-ENTRY REGISTRATION
General. Beneficial Owners (as defined in the Prospectus) that are not
Participants or Intermediaries (as defined in the Prospectus) but desire to
purchase, sell or otherwise transfer ownership of, or other interests in, the
related Book-Entry Bonds may do so only through Participants and Intermediaries.
In addition, Beneficial Owners will receive all payments of principal of and
interest on the related Book-Entry Bonds from the Paying Agent (as defined in
the Prospectus) through DTC and Participants which may include Cedel Bank,
societe anonyme ("Cedel") and Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System ("Euroclear"). Accordingly,
Beneficial Owners may experience delays in their receipt
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of payments. Unless and until Definitive Bonds are issued for the related Book-
Entry Bonds, it is anticipated that the only registered Bondholder of such Book-
Entry Bonds will be Cede, as nominee of DTC. Beneficial Owners will not be
recognized by the Indenture Trustee or the Master Servicer as Bondholders, as
such term is used in the Indenture, and Beneficial Owners will be permitted to
receive information furnished to Bondholders and to exercise the rights of
Bondholders only indirectly through DTC, its Participants and Intermediaries.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Book-Entry Bonds among Participants and to receive and transmit payments of
principal of, and interest on, such Book-Entry Bonds. Participants and
Intermediaries with which Beneficial Owners have accounts with respect to such
Book-Entry Bonds similarly are required to make book-entry transfers and receive
and transmit such payments on behalf of their respective Beneficial Owners.
Accordingly, although Beneficial Owners will not possess physical certificates
evidencing their interests in the Book-Entry Bonds, the Rules provide a
mechanism by which Beneficial Owners, through their Participants and
Intermediaries, will receive payments and will be able to transfer their
interests in the Book-Entry Bonds.
None of the Company, the Master Servicer, the Special Servicer or the
Indenture Trustee will have any liability for any actions taken by DTC or its
nominee, including, without limitation, for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Book-
Entry Bonds held by Cede, as nominee for DTC, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Definitive Bonds. Definitive Bonds will be issued to Beneficial Owners or
their nominees, respectively, rather than to DTC or its nominee, only under the
limited conditions set forth in the Prospectus under "Description of the Bonds--
Form of Bonds."
Upon the occurrence of an event described in the Prospectus in the third
paragraph under "Description of the Bonds--Form of Bonds," the Indenture Trustee
is required to notify, through DTC, Participants who have ownership of Book-
Entry Bonds as indicated on the records of DTC of the availability of Definitive
Bonds for their Book-Entry Bonds. Upon surrender by DTC of the definitive
certificates representing the Book-Entry Bonds and upon receipt of instructions
from DTC for re-registration, the Indenture Trustee will reissue the Book-Entry
Bonds as Definitive Bonds issued in the respective principal amounts owned by
individual Beneficial Owners, and thereafter the Indenture Trustee will
recognize the holders of such Definitive Bonds as Bondholders under the
Indenture.
For additional information regarding DTC and the Book-Entry Bonds, see
"Description of the Bonds--Form of Bonds" in the Prospectus.
BOND PRINCIPAL BALANCES
The Bond Principal Balance of any Offered Bond, as of any date of
determination, will equal the product of the Percentage Interest evidenced by
such Offered Bond in the related Class, multiplied by the Bond Principal Balance
of such Class then outstanding.
The "Bond Principal Balance" of any Class of Offered Bonds outstanding at
any time represents the maximum amount that the holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans. The Bond Principal Balance of each Class of Offered Bonds will
be reduced on each Payment Date by any distributions of principal actually made
on such Class of Offered Bonds on such Payment Date. See "--Payments" below and
"Description of the Bonds--Distributions" in the Prospectus.
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Upon initial issuance, the Offered Bonds will have the respective Bond
Principal Balances and other characteristics set forth below, in each case,
subject to a permitted variance of plus or minus 5%:
<TABLE>
<CAPTION>
APPROXIMATE
INITIAL BOND APPROXIMATE PERCENTAGE OF
CLASS PRINCIPAL BALANCE CREDIT SUPPORT INITIAL POOL BALANCE
- -------- ----------------- -------------- ---------------------
<S> <C> <C> <C>
A-1A $ 43,000,000 32.0% 13.5%
A-1B $140,373,000 32.0% 44.2%
A-2 $ 32,710,000 32.0% 10.3%
B $ 15,889,000 27.0% 5.0%
C $ 19,066,000 21.0% 6.0%
D $ 20,655,000 14.5% 6.5%
E $ 4,767,000 13.0% 1.5%
</TABLE>
BOND INTEREST RATES
The respective Bond Interest Rates applicable to the Class A-1A, Class A-
1B, Class B, Class C, Class D and Class E Bonds for each Payment Date will be
fixed at the annual rates set forth on the cover page hereof. The Bond Interest
Rate applicable to the Class A-2 Bonds will be the annual rate set forth on the
cover page hereof for the initial Payment Date and, with respect to each Payment
Date thereafter, will be an annual rate equal to the lesser of (A) the sum of
LIBOR, as determined with respect to the related Interest Rate Adjustment Date
in the month preceding the month in which such Payment Date occurs, and the
Margin (as defined below) and (B) a maximum rate equal to ______%.
The "Margin" for the Class A-2 Bonds will be 0.30% per annum.
For a description of the manner in which LIBOR is determined and
information with respect to the historical levels of LIBOR, see "Determination
of LIBOR" herein.
BOND ACCOUNT
General
The Indenture Trustee will be required to establish and maintain one or
more accounts (collectively, the "Bond Account") for distributions to the
holders of Offered Bonds. Each such account will be required to be an Eligible
Account, and the funds held in the Bond Account are required to be held as cash.
Deposits and Withdrawals
On each Master Servicer Remittance Date, the Master Servicer will be
required to deliver to the Indenture Trustee, for deposit in the Bond Account,
an aggregate amount payable in immediately available funds and equal to the
Master Servicer Remittance Amount for the related Master Servicer Remittance
Date. The Indenture Trustee may, from time to time, make withdrawals from the
Bond Account for any of the following purposes, among others: (i) to make
distributions to the holders of the Offered Bonds on each Payment Date, and (ii)
to clear and terminate the Bond Account upon termination of the Indenture.
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PAYMENTS
General
Distributions on the Offered Bonds will be made, to the extent of
available funds, on the 20/th/ day of each month or, if any such 20/th/ day is
not a business day, then on the next succeeding business day, commencing in
September 1998 (each, a "Payment Date"). Except as described below, all such
distributions will be made to the persons in whose names the Offered Bonds are
registered (the "Bondholders") at the close of business on the last business day
of the month preceding the month in which the related Payment Date occurs (each,
a "Record Date"). As to each Bondholder, such distributions will be made by or
on behalf of the Indenture Trustee by wire transfer in immediately available
funds to the account specified by such Bondholder at a bank or other entity
having appropriate facilities therefor, if such Bondholder shall have provided
the Indenture Trustee with wiring instructions not later than the related Record
Date, or otherwise by check mailed to such Bondholder. Cede & Co. will be the
registered holder of the Book-Entry Bonds until Definitive Certificates are
issued in respect thereof. See "--Registration and Denomination of Offered
Bonds" above. The final distribution on any Offered Bond will be made only upon
presentation and surrender of such Offered Bond at the location that will be
specified in a notice of the pendency of such final distribution. All
distributions made with respect to a Class of Offered Bonds will be allocated
pro rata among the outstanding Offered Bonds of such Class based on their
respective Percentage Interests in such Class.
The Available Amount
With respect to any Payment Date, distributions of interest on and
principal of the Offered Bonds will be made from the Available Amount for such
Payment Date. The "Available Amount" for any Payment Date will, in general,
equal the related Master Servicer Remittance Amount, exclusive of any portion
thereof that represents any Prepayment Charges and Yield Maintenance Premiums
distributable in respect of Bond Prepayment Premium Amounts as described herein.
Application of the Available Amount
On each Payment Date, the Available Amount for such Payment Date will
be distributed to the Bondholders for the following purposes and in the
following order of priority:
(i) to the holders of the Class A Bonds in respect of interest, pro
rata based on such amounts distributable thereon, up to an amount equal to
all Payable Bond Interest (as defined below) in respect of each such Class
of Bonds for such Payment Date and, to the extent not previously paid, for
all prior Payment Dates (plus interest on such unpaid amount at the then-
applicable Bond Interest Rate);
(ii) to the holders of the Class A Bonds related to each Sub-Pool in
respect of principal (allocated between the respective Classes of Class A
Bonds related to each Sub-Pool as described below), up to an amount equal
to the lesser of (a) the aggregate Bond Principal Balance of such Classes
of Class A Bonds then outstanding and (b) the related Sub-Pool Bond
Principal Payment Amount (as defined below) for such Payment Date;
(iii) if, following distributions pursuant to clause (ii) above, the
aggregate Bond Principal Balance of either group of Class A Bonds has been
reduced to zero (the "Retired Class A Bonds"), to the holders of the other
class of Class A Bonds, if such Class A Bonds are still outstanding (the
"Outstanding Class A Bonds") in respect of principal (allocated between the
respective Classes of such Outstanding Class A Bonds as described below) up
to an amount equal to the lesser of (a) the aggregate Bond Principal
Balance of such Classes of Outstanding Class A Bonds and (b) the excess of
the Sub-
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Pool Bond Principal Payment Amount for such Payment Date related to the
Retired Class A Bonds over the amount thereof paid on such Payment Date as
described in clause (ii) above.
(iv) to the holders of the Class B Bonds in respect of interest, up to
an amount equal to all Payable Bond Interest in respect of such Class of
Bonds for such Payment Date and, to the extent not previously paid, for all
prior Payment Dates (plus interest on such unpaid amount at the then-
applicable Bond Interest Rate);
(v) to the holders of the Class B Bonds in respect of principal, up to
an amount equal to the lesser of (a) the then outstanding Bond Principal
Balance of the Class B Bonds and (b) the excess, if any, of the Aggregate
Bond Principal Payment Amount for such Payment Date over the amount thereof
paid on such Payment Date pursuant to clauses (ii) and (iii) above;
(vi) to the holders of the Class C Bonds in respect of interest, up to
an amount equal to all Payable Bond Interest in respect of such Class of
Bonds for such Payment Date and, to the extent not previously paid, for all
prior Payment Dates (plus interest on such unpaid amount at the then-
applicable Bond Interest Rate);
(vii) to the holders of the Class C Bonds in respect of principal, up to
an amount equal to the lesser of (a) the then outstanding Bond Principal
Balance of the Class C Bonds and (b) the excess, if any, of the Aggregate
Bond Principal Payment Amount for such Payment Date over the amount thereof
paid on such Payment Date pursuant to clauses (ii), (iii) and (v) above;
(viii) to the holders of the Class D Bonds in respect of interest, up to
an amount equal to all Payable Bond Interest in respect of such Class of
Bonds for such Payment Date and, to the extent not previously paid, for all
prior Payment Dates (plus interest on such unpaid amount at the then-
applicable Bond Interest Rate);
(ix) to the holders of the Class D Bonds in respect of principal, up to
an amount equal to the lesser of (a) the then outstanding Bond Principal
Balance of the Class D Bonds and (b) the excess, if any, of the Aggregate
Bond Principal Payment Amount for such Payment Date over the amount thereof
paid on such Payment Date pursuant to clauses (ii), (iii), (v) and (vii)
above;
(x) to the holders of the Class E Bonds in respect of interest, up to
an amount equal to all Payable Bond Interest in respect of such Class of
Bonds for such Payment Date and, to the extent not previously paid, for all
prior Payment Dates (plus interest on such unpaid amount at the then-
applicable Bond Interest Rate);
(xi) to the holders of the Class E Bonds in respect of principal, up to
an amount equal to the lesser of (a) the then outstanding Bond Principal
Balance of the Class E Bonds and (b) the excess, if any, of the Aggregate
Bond Principal Payment Amount for such Payment Date over the amount thereof
paid on such Payment Date pursuant to clauses (ii), (iii), (v), (vii) and
(ix) above; and
(xii) after the foregoing distributions have been made, to the holders of
the Private Bonds and the Owner Trust Certificates as provided in the
Indenture and the Owner Trust Agreement, respectively, an amount equal to
the balance of the Available Amount for such Payment Date.
Distributions of principal to the holders of the Class A Bonds related to
each Sub-Pool will be allocated between the respective Classes of Class A Bonds
related to such Sub-Pool as follows:
(i) prior to the Class A Credit Support Depletion Date (as defined
below):
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(A) in the case of the Class A-1 Bonds, first to the holders of
the Class A-1A Bonds until the Bond Principal Balance thereof has been
reduced to zero and then to the holders of the Class A-1B Bonds; and
(B) to the holders of the Class A-2 Bonds until the Bond
Principal Balance thereof has been reduced to zero; and
(ii) on and after the Class A Credit Support Depletion Date, the
Aggregate Bond Principal Payment Amount will be paid to the holders of the
Classes of Class A Bonds pro rata based on their then outstanding Bond
Principal Balances .
The "Class A Credit Support Depletion Date" will be the first Payment Date
on which the aggregate Stated Principal Balance of the Mortgage Loans is less
than or equal to the aggregate Bond Principal Balance of the Class A Bonds.
The "Payable Bond Interest" for any Class of Offered Bonds and any Payment
Date will equal interest accrued during the related Accrual Period at the Bond
Interest Rate applicable to such Class of Offered Bonds for such Payment Date on
the related Bond Principal Balance immediately prior to such Payment Date.
Payable Bond Interest for each Payment Date will be calculated in the case of
the Fixed Rate Bonds on the basis of a 360-day year consisting of twelve 30-day
months and, in the case of the Class A-2 Bonds, on the basis of a 360-day year
and the actual number of days in the related Accrual Period.
The "Accrual Period" will be, with respect to any Payment Date and the
Offered Bonds related to the Fixed Rate Sub-Pool, the period commencing on the
first day of the calendar month preceding the month in which such Payment Date
occurs and ending on the last day of such calendar month and, with respect to
any Payment Date and the Offered Bonds related to the Adjustable Rate Sub-Pool,
the period commencing on the Payment Date preceding such Payment Date (or, in
the case of the initial Payment Date, the period commencing on the Closing Date)
and ending on the day immediately preceding such Payment Date.
The "Sub-Pool Bond Principal Payment Amount" for either Sub-Pool and any
Payment Date will equal the sum of the following amounts:
(a) the principal portions of all Monthly Payments (other than Balloon
Payments) due or deemed due in respect of the Mortgage Loans in such Sub-
Pool for their respective Due Dates occurring during the related Collection
Period, to the extent received or advanced;
(b) all Principal Prepayments received on the Mortgage Loans in such Sub-
Pool during the related Collection Period;
(c) the principal component of all Assumed Scheduled Payments due on or
before the related Due Date (if received or advanced) with respect to any
Mortgage Loan in such Sub-Pool that is delinquent in respect of its Balloon
Payment;
(d) the Stated Principal Balance of each Mortgage Loan in such Sub-Pool
that was, during the related Collection Period, repurchased from the Owner
Trust Estate in connection with a document deficiency or the breach of a
representation or warranty or purchased from the Owner Trust Estate as
described herein under "Description of the Offered Bonds--Termination" and
"The Agreements--Termination; Redemptions of Bonds" in the Prospectus;
(e) all Balloon Payments and, to the extent not included in the preceding
clauses, any other principal payment on any Mortgage Loan in such Sub-Pool
received on or after the maturity date thereof, to the extent received
during the related Collection Period;
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(f) to the extent not included in the preceding clauses, all Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds that were received
on the Mortgage Loans in such Sub-Pool during the related Collection Period
and that were identified and applied by the Master Servicer as recoveries
of principal thereof.
The "Aggregate Bond Principal Payment Amount" with respect to any Payment
Date will equal the sum of the Sub-Pool Bond Principal Payment Amounts for such
Payment Date.
The "Assumed Scheduled Payment" with respect to any Mortgage Loan that is
delinquent in respect of its Balloon Payment (including any REO as to which the
Balloon Payment would have been past due) is an amount equal to the sum of (a)
the principal portion of the Monthly Payment that would have been due on such
Mortgage Loan on the related Due Date based on the constant payment required by
the related Mortgage Note or the original amortization schedule thereof (as
calculated with interest at the related Mortgage Rate), if applicable, assuming
such Balloon Payment has not become due after giving effect to any modification,
and (b) interest at the applicable Mortgage Rate.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-off Date Balance thereof, reduced (to not less than zero) on each
Payment Date by any payments or other collections (or advances in lieu thereof)
of principal of such Mortgage Loan that have been (or, if they had not been
applied to cover Extraordinary Expenses, would have been) paid to the holders of
the Offered Bonds, the Private Bonds or the Owner Trust Certificates on such
date and the principal portion of any Realized Loss incurred in respect of such
Mortgage Loan during the related Collection Period.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage Loan. The Realized Loss, if
any, in respect of a liquidated Mortgage Loan (or related REO Property) will
generally equal the excess, if any, of (a) the unpaid principal balance of such
Mortgage Loan as of the date of liquidation, together with all accrued and
unpaid interest thereon at the related Mortgage Rate, over (b) the aggregate
amount of Liquidation Proceeds, if any, recovered in connection with such
liquidation (net of any portion of such Liquidation Proceeds that is payable or
reimbursable in respect of related liquidation and other servicing expenses). If
any portion of the debt due under a Mortgage Loan is forgiven, whether in
connection with a modification, waiver or amendment granted or agreed to by the
Special Servicer or in connection with a bankruptcy or similar proceeding
involving the related Borrower, the amount so forgiven also will be treated as a
Realized Loss.
"Extraordinary Expenses" include, among other things: (i) any interest paid
to the Master Servicer or Special Servicer in respect of unreimbursed Advances;
(ii) Special Servicing Fees and Workout Fees payable to the Special Servicer in
connection with a Specially Serviced Mortgage Loan or an REO; (iii) the costs of
the opinions of counsel, appraisals and environmental assessments required to be
obtained in connection with the servicing of the Mortgage Loans; and (iv) any of
certain unanticipated, non-Mortgage Loan specific expenses of the Issuer,
including but not limited to, (A) certain reimbursements and indemnification to
the Company, the Manager, the Owner Trustee, the Indenture Trustee, the Master
Servicer, the Special Servicer, (B) certain taxes payable from the assets of the
Issuer as described under "Servicing of the Mortgage Loans--REOs" and "Federal
Income Tax Consequences" herein and in the Prospectus, (C) the costs and
expenses of any tax audits with respect to the Issuer, (D) certain other tax-
related expenses and (E) the cost of various opinions of counsel required to be
obtained in connection with the administration of the Issuer.
The "Collection Period" with respect to any Payment Date will be the period
commencing immediately after the Determination Date in the month preceding the
month in which such Payment Date occurs (or, in the case of the initial Payment
Date, commencing immediately after the Cut-off Date) and ending with the
Determination Date related to such Payment Date.
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The "Determination Date" with respect to any Payment Date will be the 13th
day of the month in which such Payment Date occurs or, if such 13/th/ day is not
a business day, the business day immediately succeeding such 13/th/ day.
Treatment of REOs
Notwithstanding that any Mortgaged Properties may be acquired through
foreclosure, deed in lieu of foreclosure or otherwise on behalf of the Issuer as
real estate owned or equipment held for sale, the related Mortgage Loan will be
treated, for purposes of, among other things, determining payments on the
Offered Bonds as well as the Master Servicing Fees, Special Servicing Fees,
Indenture Trustee Fees and Management Fees, as having remained outstanding until
the related REO is liquidated. In connection therewith, operating revenues and
other proceeds derived from such REO (exclusive of related operating costs) will
be "applied" by the Master Servicer as principal, interest and other amounts
"due" on such Mortgage Loan, and subject to the recoverability determination
described under "Servicing of the Mortgage Loans--P&I Advances," the Master
Servicer will be required to make P&I Advances in respect of such Mortgage Loan,
in all cases as if such Mortgage Loan had remained outstanding.
Allocation of Bond Prepayment Premium Amounts
All Prepayment Charges and Yield Maintenance Premiums required to be paid
with respect to the Mortgage Loans in the Fixed Rate Sub-Pool by the related
Borrowers and actually collected by the Master Servicer will be available to pay
Bond Prepayment Premium Amounts on the Offered Bonds related to such Sub-Pool,
which amounts will be distributable to the holders of the Class A-1A, A-1B, B,
C, D and E Bonds as set forth below. A "Yield Maintenance Premium" is paid or
payable, as the context requires, on a Mortgage Loan as a result of a prepayment
of principal not otherwise due thereon, which has been calculated to compensate
the holder of such Mortgage Loan for reinvestment losses based on the value of a
discount rate at or near the time of prepayment. Any other fees paid or payable,
as the context requires, as a result of a prepayment of principal on a Mortgage
Loan which are calculated based upon a specified percentage (which may decline
over time) of the amount prepaid are considered "Prepayment Charges."
Any Prepayment Premium collected with respect to a Mortgage Loan in the
Fixed Rate Sub-Pool will be distributed on the following Payment Date to the
holders of the Class A-1A, A-1B, B, C, D and E Bonds as follows: The holders of
such Classes of Bonds then entitled to distributions of principal from the Fixed
Rate Sub-Pool for such Payment Date will be entitled to a "Bond Prepayment
Premium Amount" (allocable among such Classes, if more than one, as described
below) equal to the lesser of (a) such Prepayment Premium, and (b) such
Prepayment Premium multiplied by a fraction, the numerator of which is equal to
the excess, if any, of the Bond Interest Rate applicable to the most senior of
such Classes of Bonds then outstanding, over the relevant Discount Rate (as
defined herein), and the denominator of which is equal to the excess, if any, of
the Mortgage Rate for the prepaid Mortgage Loan, over the relevant Discount
Rate. If there is more than one Class of Bonds entitled to distributions of
principal on such Payment Date, the Bond Prepayment Premium Amount shall be
allocated among such Classes on a pro rata basis in accordance with the relative
amounts of such distributions of principal. Any portion of such Bond Prepayment
Premium Amount that is not so distributed to the holders of such Bonds will be
distributed to the holders of the Owner Trust Certificates. In addition, all
Prepayment Premiums collected during each Collection Period with respect to any
Mortgage Loan in the Adjustable Rate Sub-Pool will be distributed to the holders
of the Owner Trust Certificates.
For purposes of the foregoing, the "Discount Rate" is the rate which, when
compounded monthly, is equivalent to the Treasury Rate when compounded semi-
annually. The "Treasury Rate" is the yield calculated by the linear
interpolation of the yields, as reported in Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading "U.S. government
securities/Treasury constant maturities" for the week ending prior to the date
of the relevant principal payment, of U.S. Treasury constant maturities with a
maturity date (one longer and one shorter) most nearly approximating the
maturity date of the Mortgage Loan prepaid. If Release
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H.15 is no longer published, the Indenture Trustee will select a comparable
publication to determine the Treasury Rate.
Any Bond Prepayment Premium Amount distributed to the holders of a Class of
Bonds may not be sufficient to fully compensate such Bondholders for any loss in
yield attributable to the related principal prepayments.
SUBORDINATION
The rights of holders of the Class B, Class C, Class D and Class E Bonds to
receive amounts collected or advanced on the Mortgage Loans will be
subordinated, to the extent described herein, to the rights of holders of the
Class A Bonds and each such Class, if any, with a higher payment priority (as
reflected above under "--Distributions--Application of the Available Amount").
This subordination is intended to enhance the likelihood of timely receipt by
the holders of the Class A Bonds of the full amount of Payable Bond Interest
payable in respect of such Classes of Offered Bonds on each Payment Date, and
the ultimate receipt by the holders of the Class A Bonds of principal in an
amount equal to the aggregate of the Bond Principal Balances of such Classes of
Offered Bonds. Similarly, but to decreasing degrees, subordination is also
intended to enhance the likelihood of timely receipt by the holders of the Class
B, Class C and Class D Bonds of the full amount of Payable Bond Interest payable
on such Classes on each Payment Date and the ultimate receipt by the holders of
such Classes of Offered Bonds of principal equal to the entire respective Bond
Principal Balances thereof. Such subordination will be accomplished by the
application of the Available Amount on each Payment Date in accordance with the
order of priority described above under "--Payments--Application of the
Available Amount" and "Description of the Bonds--Distributions" in the
Prospectus.
In addition to the subordination described above, credit support for the
Offered Bonds will be provided by the overcollateralization of the Offered
Bonds. As of any date of determination, the amount by which the Offered Bonds
are overcollateralized will equal the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans over the aggregate Bond Principal Amount
of the Offered Bonds.
REPORTS TO BONDHOLDERS; AVAILABLE INFORMATION
On each Payment Date, the Indenture Trustee will provide or make available
either electronically or by first class mail to each Bondholder a statement (a
"Payment Date Statement"), based on information provided to the Indenture
Trustee by the Master Servicer who will provide various items of information
related to the distributions on such Payment Date and the recent status of the
Mortgage Loans, based on the data in monthly reports prepared by the Master
Servicer and the Special Servicer. In addition, within a reasonable period of
time after the end of each calendar year, the Indenture Trustee will be required
to furnish to each person that at any time during the calendar year was a holder
of an Offered Bond a statement containing certain information in respect of such
Offered Bonds, aggregated for such calendar year or the portion thereof during
which such person was a Bondholder. Such requirement shall be deemed to be
satisfied to the extent that substantially comparable information shall be
provided by the Indenture Trustee pursuant to any requirements of the Code.
For investors that have obtained an account number on the Indenture
Trustee's Automatic Statements Accessed by Phone ("ASAP") System, the foregoing
report or a summary report of bond factors may be obtained from the Indenture
Trustee via automated facsimile by placing a telephone call to (312) 904-2200
and following the voice prompts to request "statement number 355." Account
numbers on the ASAP System may be obtained by calling the same telephone number
and following the voice prompts for obtaining account numbers. Separately, bond
factor information may be obtained from the Indenture Trustee by calling (800)
246-5761. In addition, if the Issuer so directs the Indenture Trustee, and on
terms acceptable to the Indenture Trustee, the Indenture Trustee will make
available through its electronic bulletin board systems, on a confidential
basis, certain information related to the Mortgage Loans. The bulletin board is
located at (714) 282-
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3990. Investors that have an account on the bulletin board may retrieve the loan
level data file for each transaction in the directory which has been set up on
the bulletin board and which includes an electronic file containing monthly
servicer data. An account number may be obtained by typing "new" upon logging
into the bulletin board. All files are compressed before being put into the
directory and are password protected. Passwords to each file will be released by
the Indenture Trustee. Additionally, certain information regarding the Mortgage
Loans will be made available at the website maintained by LaSalle National Bank
at www.lnbabs.com.
The foregoing information will be available to the Bond Owners of Book-
Entry Bonds through DTC and its Participants. The manner in which notices and
other communications are conveyed by DTC to Participants, and by Participants to
the Bond Owners of Book-Entry Certificates, will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. The Issuer, the Manager, the Owner Trustee, the
Indenture Trustee, the Fiscal Agent, the Master Servicer and the Special
Servicer are required to recognize as holders of Offered Bonds only those
persons in whose names such Offered Bonds are registered on the books and
records of the Bond Registrar.
VOTING RIGHTS
At all times during the term of the Indenture, voting rights for the Bonds
(the "Voting Rights") will be allocated among the holders of the respective
Classes of Bonds in proportion to the Bond Principal Balances of their Bonds.
Voting Rights allocated to the holders of a Class of Bonds will be allocated
among such Bondholders in proportion to the Percentage Interests in such Class
evidenced by their respective Bonds.
TERMINATION
The obligations created by the Indenture will terminate following the final
payment in respect of the Bonds as a result of (i) the final payment (or advance
in respect thereof) or other liquidation of the last Mortgage Loan or REO
remaining in the Owner Trust Estate, (ii) the purchase of all of the Mortgage
Loans and REOs remaining in the Owner Trust Estate by the majority holder of the
Owner Trust Certificates or Master Servicer or (iii) the allocation of payments
and other collections on the Mortgage Loans in full satisfaction of the
indebtedness evidenced by the Bonds. Written notice of termination of the
Indenture will be given to each Bondholder, and the final distribution with
respect to each such Bond will be made only upon surrender and cancellation of
such Bond at the office of the Bond Registrar or at such other location
specified in such notice of termination.
Any such purchase by the majority holder of the Owner Trust Certificates or
Master Servicer of all of the Mortgage Loans and REOs remaining in the Owner
Trust Estate is required to be made at a price equal to (a) the sum of (i) the
aggregate Purchase Price of all of the Mortgage Loans then included in the Owner
Trust Estate (other than the Mortgage Loans as to which the related Mortgaged
Properties has become REO) and (ii) the fair market value of all REO then
included in the Owner Trust Estate, as determined by an appraiser mutually
agreed upon by the Master Servicer, the Indenture Trustee and the Owner Trustee,
minus, if the Master Servicer is the purchaser (b) the aggregate of all amounts
payable or reimbursable to the Master Servicer under the Servicing Agreement.
Such purchase will effect the redemption of the Offered Bonds, but the right of
the majority holder of the Owner Trust Certificates or Master Servicer to effect
such termination is subject to the requirement that the then aggregate Stated
Principal Balance of the Mortgage Loans be less than or equal to 20% of the
Initial Pool Balance. The purchase price paid by the majority holder of the
Owner Trust Certificates or Master Servicer, exclusive of any portion thereof
payable or reimbursable to any person other than the Bondholders, will
constitute part of the Available Amount for the final Payment Date. There can be
no assurance that the purchase price will provide sufficient proceeds to pay the
full Bond Principal Balance of the Bonds then outstanding.
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The Available Amount for the final Payment Date will be distributed by the
Indenture Trustee generally as described herein under "--Payments--Application
of the Available Amount," and under "Servicing of Mortgage Loans--Distributions"
in the Prospectus, provided that the distributions of principal on any Class of
Bonds described thereunder will be made, subject to available funds, in an
amount equal to the entire Bond Principal Balance thereof remaining outstanding.
AMENDMENTS
The Indenture, the Servicing Agreement and the Loan Sale Agreements may be
amended without the consent of the Bondholders (i) to correct any typographical
error or cure any ambiguity, or to cure, correct or supplement any defective or
inconsistent provision in the Indenture or in the Bonds, the Servicing Agreement
or the Loan Sale Agreements, provided that such action does not materially
adversely affect the interests of the holders of the Bonds, (ii) to convey,
transfer, assign, mortgage or pledge any property to the Indenture Trustee so
long as the interests of the holders of the Bonds would not be materially
adversely affected and such action is consistent with such documents, (iii) to
correct any manifestly incorrect description, or amplify the description, of any
property subject to the lien of the Indenture, (iv) to modify the Indenture, the
Servicing Agreement or the Loan Sale Agreements as required or made necessary by
any change in applicable law, so long as the interests of the holders of the
Bonds would not be materially adversely affected, (v) to add to the covenants of
the Issuer or any other party for the benefit of the holders of the Bonds, or to
surrender any right or power conferred upon the Issuer in the Indenture, the
Servicing Agreement or the Loan Sale Agreements, (vi) to add any additional
Indenture Events of Default or Servicing Events of Default, provided that such
action does not materially adversely affect the interests of the holders of the
Bonds and will not result in the downgrading, withdrawal or qualification of the
ratings then assigned to any Class of Bonds (as confirmed in writing by each
Rating Agency), or (vii) to evidence and provide for the acceptance of
appointment by a successor indenture trustee, master servicer or special
servicer meeting the requirements of such documents. The Indenture, the
Servicing Agreement and the Loan Sale Agreements may also be amended, with the
consent of holders of not less than 66 2/3% in aggregate principal amount of the
Bonds, for the purpose of adding any provisions thereto or changing in any
manner or eliminating any of the provisions thereof, or of modifying in any
manner the rights of the holders of the Bonds thereunder, provided that no such
amendment may, without the consent of the holders of 100% in aggregate principal
amount of the Bonds affected thereby (i) change the stated maturity or the
Payment Date of any principal, interest or other amount on the Bonds, (ii)
reduce the aggregate principal amount of any Class of Bonds, or the interest
rate thereon, (iii) authorize the Indenture Trustee to agree to delay the timing
of, or reduce the payments to be made on, the Mortgage Loans except as described
herein, (iv) change the coin or currency in which the principal of any Bond or
interest thereon is payable, (v) impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity thereof, (vi)
reduce the percentage of the then aggregate principal amount of the Bonds of any
Class or Classes, the consent of whose holders is required for such amendment,
or the consent of whose holders is required for any waiver of defaults or for
any other reason under the Indenture, (vii) change any obligation of the Issuer
or the Owner Trustee to maintain an office or agency in the places and for the
purposes set forth in the Indenture, (viii) deprive the Indenture Trustee of the
benefit of a first priority security interest in the Owner Trust Estate, (ix)
modify the provisions of the Indenture relating to payments on the Bonds, or (x)
release from the lien of the Indenture all or any part of the Owner Trust Estate
except as described herein. However, the amendment of the Indenture, the
Servicing Agreement and the Loan Sale Agreements will be prohibited unless the
Indenture Trustee shall first have received an opinion of counsel to the effect
that such amendment is permitted under the applicable document and will not (i)
cause the Bonds to be characterized other than as indebtedness for federal
income tax purposes, (ii) cause any of the Bonds to be deemed to have been
exchanged for a new debt instrument pursuant to Treasury regulation (S)1.1001-3
or (iii) cause the Issuer to fail to be a QRS or an entity that is disregarded
for Federal income tax purposes.
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LIST OF BONDHOLDERS
Upon written request of any record holder of Bonds made for purposes of
communicating with other holders of the Bonds with respect to their rights under
the Indenture, the Bond Registrar will furnish such Bondholder with a list of
the holders of the Bonds of record at the time of such request.
CERTAIN COVENANTS UNDER THE INDENTURE
For so long as the Bonds are outstanding, the Issuer may not (i) sell,
transfer, exchange or otherwise dispose of any assets of the Issuer, except as
described herein, (ii) dissolve or liquidate in whole or in part, (iii) engage,
directly or indirectly, in any business other than that arising out of the issue
of the Bonds and the actions contemplated or required to be performed under the
Owner Trust Agreement, the Indenture, the Servicing Agreement or the Management
Agreement, (iv) incur, create or assume any indebtedness for borrowed money
other than the Bonds, (v) make, or permit to remain outstanding, any loan or
advance to, or own or acquire any stock or securities of, any person other than
the Mortgage Loans and any other instruments constituting part of the Owner
Trust Estate, (vi) voluntarily file a petition for bankruptcy or reorganization,
make an assignment for the benefit of creditors or commence any similar
proceeding, (vii) permit transfers of the Owner Trustee Certificates except as
provided in Owner Trust Agreement, or (viii) act or fail to act in a manner that
would endanger its status as a QRS under Section 856(i) of the Code. In
addition, the Issuer will be required to maintain its existence, rights and
franchises under the laws of its jurisdiction of organization.
For so long as the Bonds are outstanding, the Issuer may not consolidate or
merge with or into any other person or, except as described herein, convey or
transfer its properties and assets substantially as an entirety, without the
consent of holders of Bonds representing not less than 66 2/3% in aggregate
principal amount and unless (a) the person (if other than the Issuer) formed by
or surviving such consolidation or merger, or that acquires such assets, is (or
is, in its entirety, treated as part of) a REIT or a QRS (as defined in Section
856(i) of the Code), is organized under the laws of the United States of America
or of any State and shall have expressly assumed the obligation to make payments
of principal, interest and other amounts on the Bonds and the performance of
every covenant of the Indenture to be performed by the Issuer, (b) immediately
after giving effect to such transaction, no default or Indenture Event of
Default shall have occurred and be continuing, (c) the Issuer shall have caused
the Indenture Trustee to have received written confirmation from each Rating
Agency to the effect that the consummation of such transaction will not cause
such Rating Agency to qualify, downgrade or withdraw its then-current rating of
any Class of Bonds and (d) the Indenture Trustee shall have received from the
Issuer an officers' certificate and an opinion of counsel, each to the effect
that, among other things, such transaction complies with the foregoing
requirements.
COMPLIANCE STATEMENTS
The Indenture provides for the Issuer to deliver to the Indenture Trustee
and each Rating Agency, within 120 days after the end of each calendar year, a
certificate signed by a corporate trust officer of the Owner Trustee having
direct responsibility for the administration of the Indenture and stating that,
to the best of the officer's knowledge (a) the Issuer has fulfilled all of its
obligations under the Indenture in all material respects throughout such year,
or, if there has been a default in the fulfillment of any such obligation in any
material respect, specifying each such default known to such officer and the
nature and status thereof, and (b) no event has occurred and is continuing which
is, or after notice or lapse of time or both would become, an Indenture Event of
Default, or, if such an event has occurred and is continuing, specifying each
such event known to such officer and the nature and status thereof.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any of the following will constitute an
"Indenture Event of Default" with respect to the Bonds: (i) any failure to pay
all interest on and principal of any Bond when the same shall have
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become due and payable (which, prior to the Stated Maturity Date or a
Declaration of Acceleration, shall only be due to the extent of the Available
Amount); (ii) any material default in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture (other than a covenant
or agreement, a default in the observance or performance of which is described
separately), which default shall continue unremedied for a period of 60 days
after there shall have been given to the Issuer by the Indenture Trustee, or to
the Issuer and the Indenture Trustee by the holders of at least 25% of the
Bonds, a written notice specifying such default and requiring it to be remedied;
(iii) the impairment of the validity or effectiveness of the Indenture or the
lien thereof, the subordination of the lien of the Indenture, the creation of
any lien or other encumbrance on any part of the Owner Trust Estate in addition
to the lien of the Indenture or the failure of the lien of the Indenture to
constitute a valid first priority security interest in the Owner Trust Estate,
in each case to the extent that such impairment, subordination, encumbrance or
failure materially interferes with the practical realization of the benefits or
security provided by the Indenture, provided that if any such impairment,
subordination, encumbrance or failure shall be susceptible of cure, no Indenture
Event of Default shall arise until the continuation of any such default
unremedied for a period of 30 days after receipt of notice thereof; (iv) a
material breach of the representations and warranties of the Issuer with respect
to the due authorization and enforceability of the Indenture or the Bonds, the
lien of the Indenture or other matters; (v) any failure by a holder of the Class
G Bonds or the Owner Trustee Certificates (unless, in the case of the Class G
Bonds, they are classified as indebtedness for federal income tax purposes) to
maintain its status as a REIT or a QRS, which failure shall continue unremedied
for a period of 60 days after there shall have been given to the Issuer by the
Indenture Trustee, or to the Issuer and the Indenture Trustee by the holders of
at least 25% of the Bonds then outstanding, a written notice specifying such
default and requiring it to be remedied; or (vi) certain events of bankruptcy,
insolvency and reorganization or similar proceedings with respect to the Issuer.
If an Indenture Event of Default should occur and be continuing, the
Indenture Trustee may, and at the direction of holders representing a majority
of the Bonds affected by such Indenture Event of Default will be required to,
declare all of the Bonds to be immediately due and payable, and upon any such
declaration (a "Declaration of Acceleration"), the aggregate principal amount of
all of the Bonds, together with accrued and unpaid interest thereon through the
date of acceleration, will become immediately due and repayable. However, at any
time after a Declaration of Acceleration has been made and before a judgment or
decree for payment of the money due in respect of the Bonds has been obtained by
the Indenture Trustee, the holders representing a majority of the Bonds, by
written notice to the Owner Trustee on behalf of the Issuer and the Indenture
Trustee may rescind and annul such Declaration of Acceleration and its
consequences if (i) the Issuer has paid or deposited with the Indenture Trustee
a sum sufficient to pay all payments of principal of and interest on the Bonds
and all other amounts that would then be due under the Indenture if the
Indenture Event of Default giving rise to such Declaration of Acceleration had
not occurred, as well as all amounts paid or advanced by the Indenture Trustee
under the Indenture including, without limitation, all costs and expenses
incurred by the Indenture Trustee in connection with an Indenture Event of
Default and prior to its waiver, and (ii) all Indenture Events of Default, other
than the non-payment of the principal of the Bonds that became due solely by
virtue of such Declaration of Acceleration, have been cured or waived.
If the Issuer fails to pay all amounts due upon a Declaration of
Acceleration forthwith upon demand and such declaration and its consequences
shall not have been rescinded and annulled, the Indenture Trustee may (i)
institute proceedings for the collection of the sums due and unpaid, prosecute
such proceedings, enforce any judgment obtained and collect from the Owner Trust
Estate the monies adjudged to be payable, (ii) liquidate all or any portion of
the Owner Trust Estate at one or more public or private sales, (iii) institute
proceedings for the foreclosure of all or part of the Owner Trust Estate, (iv)
exercise any remedies of a secured party under the Uniform Commercial Code, (v)
maintain possession of the Owner Trust Estate and collect and otherwise receive
in accordance with the Servicing Agreement any money or property at any time
payable or receivable on account of or in exchange for the Mortgage Loans and
any REO in the Owner Trust Estate and (vi) take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee under the
Indenture. However, the Indenture Trustee will not be permitted to liquidate all
or any portion of the Owner Trust Estate unless either (x) the holders of a
majority of the Bonds consent to or direct the Indenture Trustee
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to make the related sales or (y) the proceeds of such liquidation would be
greater than or equal to the aggregate Bond Principal Balance of the Bonds then
outstanding plus all accrued and unpaid interest thereon. In addition, subject
to the provisions of the Indenture relating to the duties of the Indenture
Trustee, the Indenture Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of the
holders of the Bonds unless such holders shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by the Indenture Trustee in compliance with
such request or direction.
The Indenture will require the Indenture Trustee to notify the Owner
Trustee, the holders of the Bonds and the Rating Agencies of any default which
is, or after notice or lapse of time or both would become, an Indenture Event of
Default promptly after a corporate trust officer having direct responsibility
for the administration of the Indenture acquires actual knowledge of the
occurrence of such default. Subject to certain conditions and limitations set
forth in the Indenture, the holders of a majority of the affected Classes of
Bonds, will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or exercising
any trust or power conferred on the Indenture Trustee, under the Indenture on
behalf of such holders. Further, prior to any related Declaration of
Acceleration and upon payment to the Indenture Trustee of all costs and expenses
incurred by it in connection with such Indenture Event of Default and prior to
its waiver, the holders of a majority of the affected Classes of Bonds may, on
behalf of all of the holders of the Bonds, waive any past default under the
Indenture except (i) a default in payment of principal of or interest on any
Bond, for which a waiver will require the consent of all of the holders of the
affected Classes of Bonds, (ii) a default in respect of a covenant or provision
of the Indenture which cannot be modified or amended without the consent of the
holders of the Bonds affected thereby, for which a waiver will require the
consent of each such holder, (iii) a default depriving the Indenture Trustee of
a lien on any part of the Owner Trust Estate, for which a waiver will require
the consent of the Indenture Trustee or such holder or (iv) a default depriving
the Indenture Trustee of any fees, reimbursement or indemnification to which it
is entitled, for which a waiver will require the consent of the Indenture
Trustee.
THERE CAN BE NO ASSURANCE THAT THE NET PROCEEDS FROM ANY LIQUIDATION OR
FORECLOSURE OF THE OWNER TRUST ESTATE WILL BE SUFFICIENT TO PAY ALL AMOUNTS DUE
AND UNPAID ON THE OFFERED BONDS FOLLOWING ANY DECLARATION OF ACCELERATION, AND
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THE ISSUER WILL HAVE NO ASSETS OTHER
THAN THOSE COMPRISING THE OWNER TRUST ESTATE FROM WHICH TO SATISFY ANY RELATED
DEFICIENCY JUDGMENT. NO PERSON OTHER THAN THE ISSUER WILL BE LIABLE FOR THE
REPAYMENT OF THE OBLIGATIONS EVIDENCED BY THE OFFERED BONDS. CONSEQUENTLY, THE
EXERCISE OF ANY REMEDY PROVIDED BY THE INDENTURE FOR AN INDENTURE EVENT OF
DEFAULT MAY NOT RESULT IN THE PAYMENT IN FULL OF ALL AMOUNTS PAYABLE ON THE
OFFERED BONDS.
THE INDENTURE TRUSTEE AND FISCAL AGENT
LaSalle National Bank, a national banking association, will be the
"Indenture Trustee" under the Indenture and Servicing Agreement. ABN AMRO Bank
N.V., a Netherlands banking corporation and an affiliate of the Indenture
Trustee, will be the "Fiscal Agent" under the Servicing Agreement. The Company,
the Manager, the Owner Trustee, the Master Servicer, the Special Servicer and
their respective affiliates may from time to time enter into normal banking
relationships with the Indenture Trustee and its affiliates may hold Bonds in
their own names.
As compensation for the performance of its duties, the Indenture Trustee
will be paid a fee (the "Indenture Trustee Fee") on each Master Servicer
Remittance Date. The Indenture Trustee Fee will be payable on a loan-by-loan
basis and, as to each Mortgage Loan, will be computed on the basis of the same
principal amount and for the same period respecting which any related interest
payment on such Mortgage Loan is computed. The Indenture Trustee Fee will be
payable from the Collection Account under the Servicing Agreement.
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The corporate trust office of the Indenture Trustee will be located at 135
South LaSalle Street, Suite 1625, Chicago, Illinois 60674-4107 or such other
address as the Indenture Trustee may designate from time to time.
CERTAIN MATTERS REGARDING THE INDENTURE TRUSTEE
The Indenture Trustee will be entitled to indemnification from the Issuer,
payable out of the Collection Account, for any loss, liability or expense
incurred by it in connection with any act or omission on its part with respect
to the Indenture or the Servicing Agreement, provided, however, that such
indemnification will not extend to any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence on the part of the
Indenture Trustee in the performance of its duties or obligations under any such
agreement.
RESIGNATION AND REMOVAL OF THE INDENTURE TRUSTEE
The Indenture Trustee and the Fiscal Agent, acting jointly, may resign at
any time from their respective obligations and duties under the Indenture and
the Servicing Agreement, in which event the Manager, acting on behalf of the
Issuer, will be obligated to appoint a successor as indenture trustee and fiscal
agent as set forth in the Indenture and the Servicing Agreement. If no successor
indenture trustee and fiscal agent shall have accepted an appointment within a
specified period after the giving of such notice of resignation, the resigning
Indenture Trustee and Fiscal Agent may petition any court of competent
jurisdiction to appoint a successor as indenture trustee and fiscal agent.
If at any time the Indenture Trustee or the Fiscal Agent ceases to be
eligible to continue as such under the Indenture or the Servicing Agreement and
fails to resign after the written request therefor by Manager on behalf of the
Issuer, or if at any time the Indenture Trustee or the Fiscal Agent becomes
incapable of acting, or if certain events of (or proceedings in respect of)
bankruptcy or insolvency occur with respect to the Indenture Trustee or the
Fiscal Agent, the Manager, acting on behalf of the Issuer, will be authorized to
remove the Indenture Trustee and to appoint a successor as indenture trustee,
unless the removal of the Fiscal Agent without the removal of the Indenture
Trustee will not result in the downgrade, withdrawal or qualification of the
ratings then assigned to any Class of Bonds, as confirmed in writing by the
Rating Agencies, in which case the Fiscal Agent shall be removed but the
Indenture Trustee shall remain as Indenture Trustee. In addition, holders of a
majority of the Bonds may simultaneously remove the Indenture Trustee and Fiscal
Agent and appoint a successor as indenture trustee and fiscal agent. In the
case of any such removal without cause, the successor indenture trustee shall
reimburse the Indenture Trustee and Fiscal Agent so removed for any P&I Advances
and/or other fees owed to or incurred by such Indenture Trustee and/or Fiscal
Agent and not previously reimbursed, as well as any costs and expenses incurred
by the Indenture Trustee and the Fiscal Agent in connection with such removal.
Any resignation or removal of the Indenture Trustee and Fiscal Agent and
appointment of a successor as indenture trustee and fiscal agent will not become
effective until acceptance of appointment by the successor indenture trustee and
fiscal agent.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General
The yield on any Offered Bond will depend on (a) the price at which such
Offered Bond is purchased by an investor and (b) the rate, timing and amount of
distributions on such Offered Bond. The rate, timing and amount of distributions
on any Offered Bond will in turn depend on, among other things, (i) the Bond
Interest Rate for such Offered Bond, (ii) the rate and timing of principal
payments (including principal prepayments) and other principal collections on
the Mortgage Loans and the extent to which such amounts are to be applied to
principal of such Offered Bond and (iii) the rate, timing and severity of
Realized Losses and Extraordinary Expenses and the extent to which such
shortfalls, losses and expenses cause the aggregate Stated Principal Balance of
the Mortgage Loans to be less than the aggregate Bond Principal Balance of the
Offered Bonds.
Rate and Timing of Principal Payments
The yield to holders of any Offered Bonds purchased at a discount or
premium will be affected by the rate and timing of principal distributions made
in reduction of the Bond Principal Balances of such Offered Bonds. As described
herein, principal payable on each Class of Offered Bonds will be payable
sequentially in respect of the Class A, Class B, Class C, Class D and Class E
Bonds, in that order, in each case until the aggregate Bond Principal Balance of
such Class or Classes of Offered Bonds is reduced to zero. Consequently, the
rate and timing of principal payments that are paid or otherwise result in
reduction of the Bond Principal Balance of each Class of Offered Bonds will be
directly related to the rate and timing of principal payments on or in respect
of the Mortgage Loans, which in turn will be affected by the amortization
schedules thereof and the rate and timing of principal prepayments and other
unscheduled collections thereon (including for this purpose, collections made in
connection with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of Mortgage
Loans). Prepayments and, assuming the respective maturity dates therefor have
not occurred, liquidations of the Mortgage Loans will result in payments on the
Offered Bonds of principal that would otherwise be paid over the remaining terms
of the Mortgage Loans and will tend to shorten the weighted average lives of the
Offered Bonds in respect of which such principal is payable. Defaults on the
Mortgage Loans, particularly at or near their maturity dates, may result in
significant delays in payments of principal on the Mortgage Loans (and,
accordingly, on such Offered Bonds) while workouts are negotiated or
foreclosures or similar proceedings are completed, and such delays will tend to
lengthen the weighted average lives of such Offered Bonds. See "Servicing of the
Mortgage Loans--Modifications, Waivers, Amendments and Consents" herein and
"Servicing of Mortgage Loans--Modifications, Waivers and Amendments of Mortgage
Loans" in the Prospectus.
The extent to which the yield to maturity of any Class of Offered Bonds may
vary from the anticipated yield will also depend upon the degree to which such
Offered Bonds are purchased at a discount or premium and when, and to what
degree, payments of principal on the Mortgage Loans are paid or otherwise result
in a reduction of the Bond Principal Balance of such Offered Bonds. An investor
should consider, in the case of any Offered Bond purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield and, in the case of any Offered Bond purchased at a premium,
the risk that a faster than anticipated rate of principal payments on the
Mortgage Loans could result in an actual yield to such investor that is lower
than the anticipated yield. In general, the earlier a payment of principal on
the Mortgage Loans is paid on the Offered Bonds purchased at a discount or
premium, the greater will be the effect on an investor's yield to maturity. As a
result, the effect on an investor's yield of principal payments on the Mortgage
Loans occurring at a rate higher (or lower) than the rate anticipated by the
investor during any particular period would not be fully offset by a subsequent
like reduction (or increase) in the rate of such principal payments. Because
the rate of principal payments on the Mortgage Loans will depend on future
events and a variety of factors (as described more fully
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below), no assurance can be given as to such rate or the rate of principal
prepayments in particular. The Company is not aware of any relevant publicly
available or authoritative statistics with respect to the historical prepayment
experience of a large group of loans comparable to the Mortgage Loans.
Losses and Shortfalls
The yield to holders of the Offered Bonds will also depend on the extent to
which such holders are required to bear the effects of any losses or shortfalls
on the Mortgage Loans. Losses and other shortfalls on the Mortgage Loans will
have the effect of reducing the amount by which the Offered Bonds are
overcollateralized. If the aggregate of any losses and other shortfalls on the
Mortgage Loans exceed the sum of the initial amount by which the Offered Bonds
are overcollateralized, it is likely that the holders of one or more Classes of
Offered Bonds will not receive in its entirety the aggregate Bond Principal
Balance of such Class or Classes of Offered Bonds.
Certain Relevant Factors
The rate and timing of principal payments and defaults and the severity of
losses on the Mortgage Loans may be affected by a number of factors, including,
without limitation, prevailing interest rates, the terms of the Mortgage Loans
(for example, provisions requiring Lockouts or the payment of Prepayment Charges
or Yield Maintenance Premiums), the demographics and relative economic vitality
of the areas in which the Mortgaged Properties are located, the servicing of the
Mortgage Loans, possible changes in tax laws and other opportunities for
investment. See "Risk Factors" herein.
The rate of prepayment on the Mortgage Loans is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below an interest
rate being charged, the related Borrower has an incentive to refinance its
Mortgage Loan. A requirement that a prepayment be accompanied by a Prepayment
Charge or Yield Maintenance Premium may not provide a sufficient economic
disincentive to deter a Borrower from refinancing at a more favorable interest
rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some Borrowers may sell or
refinance the related Mortgaged Properties in order to realize their equity
therein, to meet cash flow needs or to make other investments. In addition, some
Borrowers may be motivated by federal and state tax laws (which are subject to
change) to sell Mortgaged Properties prior to the exhaustion of tax depreciation
benefits.
The Company makes no representation as to the particular factors that will
affect the rate and timing of prepayments and defaults on the Mortgage Loans, as
to the relative importance of such factors, as to the percentage of the
aggregate principal balance of the Mortgage Loans that will be prepaid or as to
whether a default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
Unpaid Payable Bond Interest
As described under "Description of the Offered Bonds--Payments--Application
of the Available Amount" herein and "Description of the Bonds--Distributions" in
the Prospectus, if the portion of the Available Amount distributable in respect
of interest on any Class of Offered Bonds on any Payment Date is less than the
Payable Bond Interest then payable for such Class, the shortfall will be
distributable to holders of such Class of Offered Bonds on subsequent Payment
Dates, to the extent of funds available therefor. Although such subsequent
distributions will bear interest, any such shortfall may negatively affect the
yield to maturity of such Class of Offered Bonds.
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WEIGHTED AVERAGE LIFE
Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of distribution to the
investor of each dollar distributed in reduction of principal of such security
(assuming no losses). The weighted average life of any Offered Bond will be
influenced by, among other things, the rate at which principal of the Mortgage
Loans is paid, which may be in the form of scheduled amortization, prepayments
or liquidations as described herein. The weighted average life of any Offered
Bond may also be affected to the extent that additional distributions in
reduction of the Bond Principal Balance of such Offered Bond occur as a result
of the repurchase of a Mortgage Loan or the optional retirement of the Offered
Bonds as described under "Assignment of the Mortgage Loans--Cures, Repurchases
and Substitutions" and "Description of the Offered Bonds--Termination" herein
and "The Agreements--Termination; Redemption of Bonds" in the Prospectus. Such a
purchase or retirement will have the same effect on distributions to the holders
of Offered Bonds as if the related Mortgage Loans had been prepaid in full,
except that no Prepayment Charges or Yield Maintenance Premiums are made in
respect thereof.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the constant prepayment
rate ("CPR") model, which assumes that a pool of mortgage loans is prepaid each
month at a constant annual rate, expressed as a percentage of the aggregate
scheduled principal balance of such pool. To assume a specified CPR percentage
with respect to a pool of secured loans is to assume that prepayments on such
mortgage loans are made each month at the specified CPR percentage. No
representation is made that the Mortgage Loans will prepay at the rate of any
CPR percentage specified herein or at any other rate.
The tables set forth below demonstrate certain effects that prepayments on
the Mortgage Loans would have on the respective maturities and weighted average
lives of the Offered Bonds. Such tables were prepared on the basis of the
following assumptions (the "Decrement Table Assumptions"): (i) the Initial Fixed
Rate Sub-Pool Balance and the Initial Adjustable Rate Sub-Pool Balance are as
set forth herein, (ii) the initial Bond Principal Balances of the Offered Bonds
are as set forth herein, (iii) LIBOR is equal to 5.65234% per annum, (iv) there
are no delinquencies, Realized Losses or Extraordinary Expenses, (v) prepayments
are made on the first day of each month, (vi) partial prepayments on the
Mortgage Loans are permitted but are assumed not to affect the amortization
schedules of the Mortgage Loans, (vii) no person exercises its right to purchase
Mortgage Loans from the Issuer, (viii) no Mortgage Loan is required to be
purchased from the Issuer, (ix) distributions on the Offered Bonds are made on
the 20th day of each month, commencing in September 1998, (x) the Offered Bonds
are issued on August 21, 1998 and (xi) the Mortgage Loans are not prepaid while
subject to a Lockout or while Principal Prepayments are required to be
accompanied by a Yield Maintenance Premium.
The information contained in the tables set forth below constitute forward-
looking statements. Prospective investors in the Offered Bonds should be aware,
however, that, to the extent the Mortgage Loans or the Offered Bonds have
characteristics that differ from those assumed in the Decrement Table
Assumptions, the Offered Bonds may mature earlier or later than indicated by the
tables set forth below. The Mortgage Loans are not likely to prepay at any
constant rate. Variations in the actual prepayment experience and the balances
of the Mortgage Loans that prepay may increase or decrease the percentages of
the initial Bond Principal Balances (and shorten or extend the weighted average
lives) shown in the tables set forth below. Prospective investors are urged to
conduct their own analysis of the rates at which the Mortgage Loans may be
expected to prepay.
Subject to the foregoing discussions, assumptions and cautionary
statements, the tables set forth below indicate the weighted average lives of
each Class of Offered Bonds and sets forth the percentages of the initial Bond
Principal Balance of each such Class of Offered Bonds that would be outstanding
after the Payment Dates indicated in the tables. For purposes of such tables,
the weighted average life of each such Class of Offered Bonds is determined by
(i) multiplying the amount of each principal distribution thereon by the number
of years
S-81
<PAGE>
from August 21, 1998 to the related Payment Date, (ii) summing the
results and (iii) dividing the sum by the aggregate amount of the reductions in
the principal balance of such Class.
S-82
<PAGE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS A-1A BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date........................... 100 100 100 100 100 100
August 20, 1999........................ 93 93 93 93 93 93
August 20, 2000........................ 85 84 84 84 83 82
August 20, 2001........................ 76 75 74 74 72 70
August 20, 2002........................ 67 65 64 63 61 58
August 20, 2003........................ 57 54 52 51 48 44
August 20, 2004........................ 47 42 40 37 34 29
August 20, 2005........................ 35 30 26 24 20 14
August 20, 2006........................ 22 16 12 9 4 0
August 20, 2007........................ 8 1 0 0 0 0
August 20, 2008........................ 0 0 0 0 0 0
Weighted Average Life (in years)....... 5.4 5.2 5.0 4.9 4.7 4.5
</TABLE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS A-1B BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date.......................... 100 100 100 100 100 100
August 20, 1999....................... 100 100 100 100 100 100
August 20, 2000....................... 100 100 100 100 100 100
August 20, 2001....................... 100 100 100 100 100 100
August 20, 2002....................... 100 100 100 100 100 100
August 20, 2003....................... 100 100 100 100 100 100
August 20, 2004....................... 100 100 100 100 100 100
August 20, 2005....................... 100 100 100 100 100 100
August 20, 2006....................... 100 100 100 100 100 99
August 20, 2007....................... 100 100 99 98 96 94
August 20, 2008....................... 0 0 0 0 0 0
Weighted Average Life (in years)...... 9.5 9.5 9.4 9.4 9.4 9.4
</TABLE>
S-83
<PAGE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS A-2 BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date........................... 100 100 100 100 100 100
August 20, 1999........................ 99 96 95 93 91 87
August 20, 2000........................ 97 93 90 87 83 76
August 20, 2001........................ 96 89 84 80 74 64
August 20, 2002........................ 94 84 78 73 65 53
August 20, 2003........................ 88 77 70 63 54 42
August 20, 2004........................ 86 73 65 57 48 35
August 20, 2005........................ 84 68 60 52 42 29
August 20, 2006........................ 81 64 55 47 37 24
August 20, 2007........................ 76 59 49 41 31 19
August 20, 2008........................ 0 0 0 0 0 0
Weighted Average Life (in years)....... 8.4 7.5 6.9 6.4 5.7 4.8
</TABLE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS B BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date.......................... 100 100 100 100 100 100
August 20, 1999....................... 100 100 100 100 100 100
August 20, 2000....................... 100 100 100 100 100 100
August 20, 2001....................... 100 100 100 100 100 100
August 20, 2002....................... 100 100 100 100 100 100
August 20, 2003....................... 100 100 100 100 100 100
August 20, 2004....................... 100 100 100 100 100 100
August 20, 2005....................... 100 100 100 100 100 100
August 20, 2006....................... 100 100 100 100 100 100
August 20, 2007....................... 100 100 100 100 100 100
August 20, 2008....................... 0 0 0 0 0 0
Weighted Average Life (in years)...... 9.7 9.7 9.7 9.7 9.7 9.7
</TABLE>
S-84
<PAGE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS C BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date.......................... 100 100 100 100 100 100
August 20, 1999....................... 100 100 100 100 100 100
August 20, 2000....................... 100 100 100 100 100 100
August 20, 2001....................... 100 100 100 100 100 100
August 20, 2002....................... 100 100 100 100 100 100
August 20, 2003....................... 100 100 100 100 100 100
August 20, 2004....................... 100 100 100 100 100 100
August 20, 2005....................... 100 100 100 100 100 100
August 20, 2006....................... 100 100 100 100 100 100
August 20, 2007....................... 100 100 100 100 100 100
August 20, 2008....................... 0 0 0 0 0 0
Weighted Average Life (in years)...... 9.7 9.7 9.7 9.7 9.7 9.7
</TABLE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS D BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date........................... 100 100 100 100 100 100
August 20, 1999........................ 100 100 100 100 100 100
August 20, 2000........................ 100 100 100 100 100 100
August 20, 2001........................ 100 100 100 100 100 100
August 20, 2002........................ 100 100 100 100 100 100
August 20, 2003........................ 100 100 100 100 100 100
August 20, 2004........................ 100 100 100 100 100 100
August 20, 2005........................ 100 100 100 100 100 100
August 20, 2006........................ 100 100 100 100 100 100
August 20, 2007........................ 100 100 100 100 100 100
August 20, 2008........................ 0 0 0 0 0 0
Weighted Average Life (in years)....... 9.8 9.8 9.8 9.8 9.8 9.8
</TABLE>
S-85
<PAGE>
PERCENTAGE OF THE INITIAL CLASS PRINCIPAL BALANCE OF THE
CLASS E BONDS UNDER EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
(0% CPR) (3% CPR) (5% CPR) (7% CPR) (10% CPR) (15% CPR)
DATE 1 2 3 4 5 6
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Closing Date.......................... 100 100 100 100 100 100
August 20, 1999....................... 100 100 100 100 100 100
August 20, 2000....................... 100 100 100 100 100 100
August 20, 2001....................... 100 100 100 100 100 100
August 20, 2002....................... 100 100 100 100 100 100
August 20, 2003....................... 100 100 100 100 100 100
August 20, 2004....................... 100 100 100 100 100 100
August 20, 2005....................... 100 100 100 100 100 100
August 20, 2006....................... 100 100 100 100 100 100
August 20, 2007....................... 100 100 100 100 100 100
August 20, 2008....................... 0 0 0 0 0 0
Weighted Average Life (in years)...... 9.8 9.8 9.8 9.8 9.8 9.8
</TABLE>
S-86
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, the Offered Bonds will [not] be treated as
having been issued with "original issue discount" (as defined in the
Prospectus). See "Federal Income Tax Consequences" in the Prospectus. The
prepayment assumption that will be used in determining the rate of accrual of
original issue discount, market discount and premium, if any, for federal income
tax purposes will be 0.0%. No representation is made that the Mortgage Loans
will prepay at that rate or any other rate.
The Offered Bonds will not be treated as assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(4)(A)
of the Code. In addition, interest on the Offered Bonds will not be treated as
"interest on obligations secured by mortgages on real property" under Section
856(c)(3)(B) of the Code. The Offered Bonds also will not be treated as
"qualified mortgages" under Section 860G(a)(3)(C) of the Code.
Prospective investors in the Offered Bonds should see "Federal Income Tax
Consequences" and "State and Other Tax Consequences" in the Prospectus for a
discussion of the application of certain federal income and state and local tax
laws to the Issuer and purchasers of the Offered Bonds.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code, impose certain restrictions on (a) employee
benefit plans (as defined in Section 3(3) of ERISA) that are subject to Title I
of ERISA, (b) plans described in Section 4975(e)(1) of the Code that are subject
to Section 4975 of the Code, including individual retirement accounts or Keogh
plans, (c) any entities whose underlying assets include "plan assets" by reason
of a plan's investment in such entities (each of (a), (b) and (c), a "Plan") and
(d) persons who have certain specified relationships to such Plans ("Parties in
Interest" under ERISA and "Disqualified Persons" under the Code). Moreover,
based on the reasoning of the United States Supreme Court in John Hancock Life
Ins. Co. v. Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of the Plans
investing in the general account (e.g., through the purchase of an annuity
contract), and such insurance company might be treated as a Party in Interest or
Disqualified Person with respect to a Plan by virtue of such investment. ERISA
also imposes certain duties on persons who are fiduciaries of Plans subject to
ERISA, and ERISA and the Code prohibit certain transactions between a Plan and
Parties in Interest or Disqualified Persons with respect to such Plan.
Violation of these rules may result in the imposition of excise taxes and other
penalties and liabilities under ERISA and the Code.
The Seller, Company, Manager, Owner Trustee, Indenture Trustee, Master
Servicer, Special Servicer, Underwriter or their respective affiliates may be
the sponsor of or investment advisor with respect to one or more Plans. Because
such parties may receive certain benefits in connection with the sale of the
Offered Bonds, the purchase of Offered Bonds using Plan assets over which any of
such parties has investment authority might be deemed to be a violation of the
prohibited transaction rules of ERISA or Section 4975 of the Code for which no
exemption may be available. Accordingly, the Offered Bonds may not be purchased
using the assets of any Plan if any of the Seller, Company, Manager, Owner
Trustee, Indenture Trustee, Master Servicer, Special Servicer, Underwriter or
their respective affiliates has investment authority with respect to such
assets.
In addition, under a regulation issued by the Department of Labor at 29
C.F.R. (S) 2510.3-101 (the "Plan Asset Regulation"), if a Plan makes an "equity"
investment in a corporation, partnership, trust or certain other entities, the
underlying assets and properties of such entity will be deemed for purposes of
ERISA and Section 4975 of the Code to be assets of the investing Plan unless
certain exceptions set forth in the regulation apply. The Plan Asset Regulation
defines an "equity interest" as any interest in an entity other than an
instrument that is treated as indebtedness under applicable local law and which
has no substantial equity features. Although there is no authority directly on
point, it is anticipated that on the Closing Date the Offered Bonds should be
S-87
<PAGE>
treated as indebtedness under local law without any substantial equity features
for purposes of the Plan Asset Regulation. If, however, the Offered Bonds were
treated as "equity interests" for purposes of the Plan Asset Regulation, a Plan
purchasing the Offered Bonds could be treated as holding the assets of the Owner
Trust, including without limitation the Mortgage Pool, and prohibited
transactions could occur involving the Mortgage Pool and otherwise in connection
with the operation of the Owner Trust.
Prior to making an investment in the Offered Bonds, prospective Plan
investors should consult with their legal advisors concerning the impact of
ERISA and the Code and the potential consequences of such investment with
respect to their specific circumstances. Moreover, each Plan fiduciary should
take into account, among other considerations, whether the fiduciary has the
authority to make the investment; whether the investment constitutes a direct or
indirect transaction with a Party in Interest or Disqualified Person; the
composition of the Plan's portfolio with respect to diversification by type of
asset; the Plan's funding objectives; the tax effects of the investment; and
whether under the general fiduciary standards of investment prudence and
diversification an investment in the Offered Bonds is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Governmental plans and certain church plans are generally not subject to
the fiduciary responsibility provisions of ERISA or the provisions of Section
4975 of the Code. However, such plans may be subject to substantially similar
rules under state or other federal law.
The sale of Offered Bonds to a Plan shall not be deemed a representation by
the Company or the Underwriter that such an investment meets all relevant legal
requirements with respect to Plans generally or any particular Plan.
LEGAL INVESTMENT
The Offered Bonds will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, investors should consult their own legal advisor
to determine whether and to what extent the Offered Bonds may be purchased by
such investors. See "Legal Investment Matters" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase from the Company, the Offered Bonds.
The Offered Bonds will be purchased from the Company by the Underwriter and
will be offered by the Underwriter from time to time to the public in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriter may effect such transactions by selling the Offered Bonds
to or through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter. In
connection with the sale of the Offered Bonds, the Underwriter may be deemed to
have received compensation from the Company in the form of underwriting
compensation. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the Offered Bonds may be deemed to be
underwriters and any profit on the resale of the Offered Bonds positioned by
them may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.
The Company has been advised by the Underwriter that it presently intends
to make a market in the Offered Bonds; however, it is not obligated 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 Bonds will develop.
S-88
<PAGE>
The Underwriting Agreement provides that the Company and the Seller will
indemnify the Underwriter against certain liabilities, including liabilities
under the Securities Act of 1933, or contribute payments the Underwriter may be
required to make in respect thereof.
RATINGS
It is a condition to the issuance of the Offered Bonds that the respective
Classes of Offered Bonds receive credit ratings not lower than those of S&P and
Moody's set forth on the cover page hereof.
The ratings on the Offered Bonds address the likelihood of the timely
receipt by holders thereof of all distributions of interest to which they are
entitled and the receipt by the holders thereof of all distributions of
principal to which they are entitled by the Payment Date in August 2030 (the
"Rated Final Payment Date"). The ratings take into consideration the credit
quality of the Mortgage Loans, structural and legal aspects associated with the
Offered Bonds, and the extent to which the payment stream from the Mortgage
Loans is adequate to make distributions of principal and interest required under
the Offered Bonds. The ratings on the Offered Bonds do not, however, constitute
a statement regarding frequency of prepayments on the Mortgage Loans, the
likelihood that Prepayment Charges or Yield Maintenance Premiums will be
collected in connection with such prepayments or the corresponding effect on
yield to investors.
The ratings on the Offered Bonds should be evaluated independently from
similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. Each security
rating should be evaluated independently of any other security rating.
LEGAL MATTERS
Certain legal matters related to the Offered Bonds will be passed upon for
the Seller and the Company by Thacher Proffitt & Wood, New York, New York and by
Andrews & Kurth, L.L.P., Dallas, Texas and Washington, D.C.
Certain legal matters related to the Offered Bonds will be passed upon for
the Underwriter by Latham & Watkins, New York, New York.
S-89
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
<S> <C>
Accrual Period............................... S-69
Adjustable Rate Sub-Pool..................... iii, S-5, S-30
Administrative Cost Rate..................... S-15, S-44
Advances..................................... S-46
Aggregate Bond Principal Payment Amount...... S-12, S-70
Appraisal Reduction Amount................... S-52
ASAP......................................... S-72
Asset Strategy Report........................ S-57
Assumed Final Payment Date................... ii
Assumed Scheduled Payment.................... S-12, S-70
Available Amount............................. S-7, S-67
Balloon Loans................................ S-27, S-31
Balloon Payment.............................. S-31
Balloon Payments............................. S-27
Bankruptcy Code.............................. S-29
Bond Account................................. S-66
Bond Interest Rate........................... i
Bond Owner................................... S-30
Bond Prepayment Premium Amount............... S-12, S-71
Bond Principal Balance....................... i, S-7, S-65
Bondholders.................................. iii, S-67
Bonds........................................ i, S-2, S-62
Borrower..................................... S-14
Cedel........................................ S-4, S-64
CERCLA....................................... S-25
Certificate Principal Balance................ S-6
Class........................................ i, S-2
Class A Bonds................................ i, S-2
Class A Credit Support Depletion Date........ S-10, S-69
Class A-1 Bonds.............................. i, S-2
Class A-2 Bonds.............................. i
Closing Date................................. S-62
Collection Account........................... S-48
Collection Period............................ S-70
Compensating Interest Payment................ S-45
Condemnation Proceeds........................ S-49
Controlling Class............................ S-15, S-29
Controlling Person........................... S-58
Corrected Mortgage Loan...................... S-43
CPR.......................................... S-81
Cut-off Date................................. iii
Cut-off Date Balance......................... S-5, S-31
Declaration of Acceleration.................. S-76
Decrement Table Assumptions.................. S-81
Default Interest............................. S-45
Deleted Mortgage Loan........................ S-42
Determination Date........................... S-71
Directing Bondholder......................... S-57
Discount Rate................................ S-13, S-71
DTC.......................................... S-30
DTC Participants............................. S-30
Due Date..................................... S-31
Eligible Account............................. S-48
ERISA........................................ S-17
Euroclear.................................... S-4, S-64
Extraordinary Expenses....................... S-70
Financing Statements......................... S-40
Fixed Rate Sub-Pool.......................... iii, S-5, S-30
Form 8-K..................................... S-38
Gross Margin................................. S-31
IMH Loan Sale Agreement...................... S-39
Indenture.................................... i, S-62
Indenture Event of Default................... S-75
Indenture Trustee............................ i, S-77
Indenture Trustee Fee........................ S-15, S-77
Initial Adjustable Rate Sub-Pool Balance..... iii, S-5, S-31
Initial Fixed Rate Sub-Pool Balance.......... iii, S-5, S-31
Initial Pool Balance......................... iii, S-5, S-30
Insurance Proceeds........................... S-49
Investment Margin............................ S-66
Issuer....................................... S-62
LIBOR........................................ S-60
Liquidation Fee.............................. S-46
Liquidation Fee Rate......................... S-46
Liquidation Proceeds......................... S-49
Loan Sale Agreement.......................... S-3
Lockout...................................... S-5
Management Agreement......................... i, S-62
Management Fee............................... S-63
Management Fee Rate.......................... S-63
Manager...................................... i, S-62
Margin....................................... S-7
Master Servicer.............................. i
Master Servicer Remittance Amount............ S-50
Master Servicer Remittance Date.............. S-50
Master Servicing Fee......................... S-15, S-44
Maximum Loan Rate............................ S-31
Midland...................................... i, S-2
Minimum Loan Rate............................ S-31
Modified Mortgage Loan....................... S-53
Monthly Payments............................. S-31
Moody's...................................... ii, S-17
Moody's...................................... ii
Mortgage..................................... S-31
Mortgage Loan Documents...................... S-40
Mortgage Loan File........................... S-39
Mortgage Loans............................... i, S-4, S-5
Mortgage Note................................ S-31
Mortgage Pool................................ i, S-4, S-30
Mortgage Rate................................ S-31
Mortgaged Properties......................... S-5
Mortgaged Property........................... S-31
Nonrecoverable P&I Advance................... S-52
Offered Bonds................................ i, S-2
Outstanding Class A Bonds.................... S-8, S-67
Owner Trust.................................. i
Owner Trust Agreement........................ i, S-2, S-62
Owner Trust Certificates..................... S-62
Owner Trust Estate........................... i, S-62
Owner Trustee................................ i, S-62
Owner Trustee Fee............................ S-63
P&I Advance.................................. S-14, S-51
Payable Bond Interest........................ S-10, S-69
Payment Date................................. iii, S-67
Payment Date Statement....................... S-72
Percentage Interest.......................... S-64
Plan......................................... S-17
Prepayment Charge............................ S-5
Prepayment Charges........................... S-71
Prepayment Interest Excess................... S-45
Prepayment Interest Shortfall................ S-45
Prepayment Premiums.......................... S-5
Principal Prepayment......................... S-5
Private Bonds................................ S-6, S-62
Purchase Price............................... S-42
QRS.......................................... S-30
Qualified Substitute Mortgage Loan........... S-42
Rated Final Payment Date..................... ii, S-89
Rating Agencies.............................. ii, S-17
Realized Losses.............................. S-70
Record Date.................................. S-67
Reimbursement Rate........................... S-15, S-52
REIT......................................... S-30
Related Proceeds............................. S-46, S-52
REO.......................................... S-14, S-43
REO Account.................................. S-56
</TABLE>
S-90
<PAGE>
<TABLE>
<S> <C>
REO Tax...................................... S-56
Required Appraisal Loan...................... S-52
Retired Class A Bonds........................ S-8
Retired Class A Certificates................. S-67
Reuters Screen LIBO Page..................... S-60
S&P.......................................... ii, S-17
Seller....................................... S-3, S-39
Servicing Advances........................... S-46
Servicing Agreement.......................... i, S-2, S-42
Servicing Events of Default.................. S-59
Servicing Standard........................... S-42
Servicing Transfer Event..................... S-43
Six-Month LIBOR.............................. iii
SMMEA........................................ S-18
Special Servicer............................. i
Special Servicing Fee........................ S-45
Special Servicing Fee Rate................... S-45
Specially Serviced Mortgage Loans............ S-43
Stated Maturity Date......................... ii
Stated Principal Balance..................... S-70
Sub-Pool..................................... iii, S-5, S-30
Sub-Pool Bond Principal Payment Amount....... S-11, S-69
Sub-Servicer................................. S-44
Sub-Servicing Agreement...................... S-44
Telerate Page 3750........................... S-60
Treasury Rate................................ S-13, S-71
UCC.......................................... S-40
Underwriter.................................. i
Voting Rights................................ S-73
Workout Fee.................................. S-45
Workout Fee Rate............................. S-45
Yield Maintenance Premium.................... S-5, S-71
Zoning Laws.................................. S-24
</TABLE>
S-91
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE BALANCES MORTGAGE POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Cut-Off Date Balance ($) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 1,000,000 90 $ 60,763,000 19.12 8.626
1,000,001 to 2,000,000 62 89,378,583 28.13 8.394
2,000,001 to 3,000,000 15 38,365,471 12.07 7.990
3,000,001 to 4,000,000 12 40,463,009 12.73 7.621
4,000,001 to 5,000,000 3 12,714,853 4.00 7.830
5,000,001 to 6,000,000 6 32,256,043 10.15 7.830
6,000,001 to 7,000,000 2 12,312,767 3.87 7.187
7,000,001 to 8,000,000 2 14,210,542 4.47 7.442
8,000,001 to 9,000,000 2 17,305,984 5.45 7.406
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Cut-Off Date Balance ($) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 1,000,000 120 1.44 67.4 57.0
1,000,001 to 2,000,000 116 1.35 70.4 58.5
2,000,001 to 3,000,000 113 1.32 69.0 58.0
3,000,001 to 4,000,000 115 1.30 70.9 60.4
4,000,001 to 5,000,000 181 1.54 67.9 19.4
5,000,001 to 6,000,000 117 1.45 63.8 53.8
6,000,001 to 7,000,000 117 1.24 73.8 61.9
7,000,001 to 8,000,000 115 1.40 73.1 63.8
8,000,001 to 9,000,000 114 1.32 76.2 66.4
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
======================================================================================
</TABLE>
Min: $198,547
Max: $8,973,365
Average: $1,637,991
CUT-OFF DATE BALANCES FIXED POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Cut-Off Date Balance ($) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 1,000,000 72 $ 50,496,883 17.71 8.446
1,000,001 to 2,000,000 52 75,029,713 26.32 8.212
2,000,001 to 3,000,000 14 35,436,509 12.43 7.875
3,000,001 to 4,000,000 12 40,463,009 14.19 7.621
4,000,001 to 5,000,000 3 12,714,853 4.46 7.830
5,000,001 to 6,000,000 5 27,089,930 9.50 7.607
6,000,001 to 7,000,000 2 12,312,767 4.32 7.187
7,000,001 to 8,000,000 2 14,210,542 4.99 7.442
8,000,001 to 9,000,000 2 17,305,984 6.07 7.406
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Cut-Off Date Balance ($) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 1,000,000 116 1.46 67.1 57.7
1,000,001 to 2,000,000 118 1.37 71.0 60.2
2,000,001 to 3,000,000 113 1.33 69.4 59.0
3,000,001 to 4,000,000 115 1.30 70.9 60.4
4,000,001 to 5,000,000 181 1.54 67.9 19.4
5,000,001 to 6,000,000 117 1.41 64.2 54.3
6,000,001 to 7,000,000 117 1.24 73.8 61.9
7,000,001 to 8,000,000 115 1.40 73.1 63.8
8,000,001 to 9,000,000 114 1.32 76.2 66.4
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
========================================================================================
</TABLE>
Min: $398,176
Max: $8,973,365
Average: $1,738,172
CUT-OFF DATE BALANCES - ARM POOL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Cut-Off Date Balance ($) Loans BALANCE BALANCE (%) RATE (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 1,000,000 18 $10,266,118 31.39 9.510
1,000,001 to 2,000,000 10 14,348,870 43.87 9.344
2,000,001 to 3,000,000 1 2,928,962 8.95 9.375
5,000,001 to 6,000,000 1 5,166,113 15.79 9.000
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Cut-Off Date Balance ($) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 1,000,000 141 1.34 68.7 53.7
1,000,001 to 2,000,000 108 1.22 67.5 49.4
2,000,001 to 3,000,000 111 1.20 64.5 45.2
5,000,001 to 6,000,000 113 1.64 61.8 51.6
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=======================================================================================
</TABLE>
Min: $198,547
Max: $5,166,113
Average: $1,090,335
I-1
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
MORTGAGE RATES MORTGAGE POOL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Mortgage Rate (%) Loans BALANCE BALANCE (%) RATE (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.001 to 8.000 61 $169,974,934 53.49 7.514
8.001 to 9.000 94 112,662,535 35.45 8.476
9.001 to 10.000 36 34,045,945 10.71 9.414
10.001 to 11.000 3 1,086,838 0.34 10.256
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Mortgage Rate (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.001 to 8.000 121 1.38 70.2 57.1
8.001 to 9.000 114 1.37 69.6 60.0
9.001 to 10.000 122 1.32 65.6 47.7
10.001 to 11.000 112 1.18 67.8 62.3
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
======================================================================================
</TABLE>
Min: 7.101%
Max: 10.375%
Weighted Average Coupon: 8.068%
MORTGAGE RATES FIXED POOL
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Mortgage Rate (%) Loans BALANCE BALANCE (%) RATE (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.001 to 8.000 61 $169,974,934 59.63 7.514
8.001 to 9.000 91 105,369,439 36.96 8.445
9.001 to 10.000 12 9,715,816 3.41 9.372
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Mortgage Rate (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.001 to 8.000 121 1.38 70.2 57.1
8.001 to 9.000 114 1.35 69.9 60.3
9.001 to 10.000 124 1.48 62.7 46.0
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
======================================================================================
</TABLE>
Min: 7.101%
Max: 10.000%
Weighted Average Coupon: 7.922%
MORTGAGE RATES - ARM POOL
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Mortgage Rate (%) Loans BALANCE BALANCE (%) RATE (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8.001 to 9.000 3 $ 7,293,096 22.30 8.923
9.001 to 10.000 24 24,330,129 74.38 9.430
10.001 to 11.000 3 1,086,838 3.32 10.256
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Mortgage Rate (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8.001 to 9.000 113 1.55 66.1 56.6
9.001 to 10.000 122 1.26 66.8 48.4
10.001 to 11.000 112 1.18 67.8 62.3
- -------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=====================================================================================
</TABLE>
Min: 8.500%
Max: 10.375%
Weighted Average Coupon: 9.345%
I-2
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
PROPERTY TYPES MORTGAGE POOL
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Property Type Loans BALANCE BALANCE (%) RATE (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Family 68 $ 75,728,177 23.83 8.107
Retail 39 70,884,189 22.31 7.976
Office 31 59,668,563 18.78 8.264
Industrial 27 50,045,272 15.75 7.982
Mixed Use 15 37,477,278 11.79 7.794
Hotel 5 11,225,294 3.53 8.243
Self Storage 3 4,457,545 1.40 8.340
Other 3 3,596,546 1.13 9.375
Healthcare 1 3,193,658 1.01 7.750
Mobile Home Community 2 1,493,730 0.47 7.813
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Property Type MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Family 124 1.39 73.0 58.7
Retail 116 1.33 71.2 60.2
Office 122 1.35 68.6 54.1
Industrial 113 1.33 68.9 58.5
Mixed Use 116 1.38 70.0 61.0
Hotel 126 1.58 56.4 39.2
Self Storage 113 1.65 50.1 41.3
Other 111 1.20 64.5 45.2
Healthcare 118 1.34 62.6 51.4
Mobile Home Community 116 2.10 40.9 33.1
- -------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
===================================================================================
</TABLE>
PROPERTY TYPES FIXED POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Property Type Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Family 59 $ 68,996,198 24.20 7.977
Retail 37 67,914,895 23.82 7.922
Office 27 52,348,099 18.36 8.140
Industrial 17 39,595,416 13.89 7.597
Mixed Use 13 35,835,354 12.57 7.723
Hotel 5 11,225,294 3.94 8.243
Self Storage 3 4,457,545 1.56 8.340
Healthcare 1 3,193,658 1.12 7.750
Mobile Home Community 2 1,493,730 0.52 7.813
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Property Type MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Family 121 1.39 73.0 59.2
Retail 116 1.34 71.2 60.3
Office 123 1.33 69.3 55.2
Industrial 115 1.36 70.0 60.6
Mixed Use 116 1.37 70.2 61.1
Hotel 126 1.58 56.4 39.2
Self Storage 113 1.65 50.1 41.3
Healthcare 118 1.34 62.6 51.4
Mobile Home Community 116 2.10 40.9 33.1
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
======================================================================================
</TABLE>
PROPERTY TYPES - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Property Type Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial 10 $10,449,855 31.95 9.441
Office 4 7,320,465 22.38 9.153
Multi-Family 9 6,731,978 20.58 9.440
Other 3 3,596,546 11.00 9.375
Retail 2 2,969,294 9.08 9.220
Mixed Use 2 1,641,925 5.02 9.349
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Property Type MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial 104 1.22 64.8 50.6
Office 116 1.50 63.7 46.1
Multi-Family 157 1.35 72.5 53.7
Other 111 1.20 64.5 45.2
Retail 113 1.23 71.7 58.0
Mixed Use 112 1.51 64.4 58.4
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=======================================================================================
</TABLE>
I-3
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
STATES MORTGAGE POOL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
State Loans BALANCE BALANCE (%) RATE (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California 97 $158,133,909 49.76 8.069
Southern 91 148,440,133 46.71 8.078
Northern 6 9,693,776 3.05 7.927
Ohio 12 27,603,025 8.69 8.615
Texas 19 27,597,150 8.68 7.870
Arizona 25 27,510,197 8.66 8.335
Washington 3 16,667,375 5.25 7.354
Oregon 6 15,076,551 4.74 7.380
Wisconsin 4 12,833,053 4.04 7.384
Nevada 6 7,857,110 2.47 8.258
Minnesota 3 4,930,739 1.55 7.750
Connecticut 5 4,476,871 1.41 8.625
Florida 2 4,178,653 1.31 9.375
Colorado 3 3,161,673 0.99 8.404
Utah 4 3,043,570 0.96 8.747
Nebraska 2 2,396,104 0.75 8.750
Mississippi 1 1,320,831 0.42 8.000
Pennsylvania 1 669,687 0.21 9.125
Maine 1 313,755 0.10 10.375
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
State MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California 118 1.38 70.3 58.3
Southern 118 1.38 70.5 58.3
Northern 114 1.41 67.7 58.5
Ohio 111 1.20 70.1 56.2
Texas 138 1.46 66.4 48.4
Arizona 126 1.41 67.6 54.5
Washington 116 1.35 73.1 61.2
Oregon 114 1.36 70.5 60.6
Wisconsin 118 1.33 70.7 62.4
Nevada 112 1.50 59.2 51.7
Minnesota 116 1.22 72.7 58.8
Connecticut 115 1.51 65.4 58.3
Florida 111 1.20 64.5 45.2
Colorado 116 1.43 69.0 56.7
Utah 115 1.35 72.7 65.5
Nebraska 118 1.36 67.7 57.1
Mississippi 115 1.35 77.7 68.5
Pennsylvania 112 1.35 73.6 60.4
Maine 111 1.27 61.5 56.6
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
========================================================================================
</TABLE>
STATES FIXED POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
State Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California 79 $140,165,406 49.17 7.917
Southern 73 130,471,630 45.77 7.916
Northern 6 9,693,776 3.40 7.927
Texas 18 25,956,706 9.11 7.767
Arizona 22 24,924,584 8.74 8.210
Ohio 8 22,022,177 7.73 8.422
Washington 3 16,667,375 5.85 7.354
Oregon 6 15,076,551 5.29 7.380
Wisconsin 4 12,833,053 4.50 7.384
Nevada 6 7,857,110 2.76 8.258
Minnesota 3 4,930,739 1.73 7.750
Connecticut 5 4,476,871 1.57 8.625
Colorado 3 3,161,673 1.11 8.404
Utah 3 2,601,322 0.91 8.534
Nebraska 2 2,396,104 0.84 8.750
Mississippi 1 1,320,831 0.46 8.000
Pennsylvania 1 669,687 0.23 9.125
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
State MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California 118 1.38 70.7 58.9
Southern 118 1.38 70.9 58.9
Northern 114 1.41 67.7 58.5
Texas 139 1.47 66.3 48.3
Arizona 120 1.43 67.3 55.5
Ohio 111 1.20 71.5 59.0
Washington 116 1.35 73.1 61.2
Oregon 114 1.36 70.5 60.6
Wisconsin 118 1.33 70.7 62.4
Nevada 112 1.50 59.2 51.7
Minnesota 116 1.22 72.7 58.8
Connecticut 115 1.51 65.4 58.3
Colorado 116 1.43 69.0 56.7
Utah 115 1.35 74.0 66.6
Nebraska 118 1.36 67.7 57.1
Mississippi 115 1.35 77.7 68.5
Pennsylvania 112 1.35 73.6 60.4
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
=======================================================================================
</TABLE>
I-4
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
STATES - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
State Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (Southern) 18 $17,968,503 54.93 9.251
Ohio 4 5,580,847 17.06 9.375
Florida 2 4,178,653 12.77 9.375
Arizona 3 2,585,613 7.90 9.543
Texas 1 1,640,444 5.02 9.500
Utah 1 442,248 1.35 10.000
Maine 1 313,755 0.96 10.375
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
State MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (Southern) 115 1.41 67.4 54.2
Ohio 111 1.20 64.5 45.2
Florida 111 1.20 64.5 45.2
Arizona 189 1.26 69.6 45.1
Texas 113 1.20 69.2 50.6
Utah 113 1.34 65.0 59.6
Maine 111 1.27 61.5 56.6
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=======================================================================================
</TABLE>
I-5
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS MORTGAGE POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Debt Service Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Coverage Ratio (x) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 8 $ 6,723,911 2.12 9.051
1.15 to 1.24 39 65,528,608 20.62 8.480
1.25 to 1.34 56 101,686,232 32.00 7.865
1.35 to 1.49 47 87,699,852 27.60 7.872
1.50 to 1.74 33 42,913,474 13.50 8.204
1.75 or greater 11 13,218,177 4.16 7.943
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Debt Service TERM TO AVERAGE APPRAISED BALLOON
Coverage Ratio (x) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 116 1.10 73.8 56.5
1.15 to 1.24 112 1.19 71.1 59.2
1.25 to 1.34 116 1.31 72.0 61.7
1.35 to 1.49 123 1.40 70.8 56.2
1.50 to 1.74 118 1.57 64.3 54.6
1.75 or greater 153 2.02 48.9 26.4
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
=======================================================================================
</TABLE>
Min: 1.08x
Max: 2.92x
Weighted Average: 1.37x
DEBT SERVICE COVERAGE RATIOS FIXED POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Debt Service Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Coverage Ratio (x) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 4 $ 4,562,484 1.60 8.757
1.15 to 1.24 28 50,214,660 17.62 8.202
1.25 to 1.34 51 97,174,577 34.09 7.792
1.35 to 1.49 41 83,965,997 29.46 7.810
1.50 to 1.74 29 35,924,296 12.60 8.026
1.75 or greater 11 13,218,177 4.64 7.943
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Debt Service TERM TO AVERAGE APPRAISED BALLOON
Coverage Ratio (x) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 113 1.10 77.6 68.9
1.15 to 1.24 114 1.19 72.3 61.7
1.25 to 1.34 116 1.31 72.1 61.7
1.35 to 1.49 121 1.40 70.9 56.5
1.50 to 1.74 116 1.57 64.5 55.6
1.75 or greater 153 2.02 48.9 26.4
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
=======================================================================================
</TABLE>
Min: 1.08x
Max: 2.92x
Weighted Average: 1.38x
DEBT SERVICE COVERAGE RATIOS - ARM POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Debt Service Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Coverage Ratio (x) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 4 $ 2,161,427 6.61 9.673
1.15 to 1.24 11 15,313,948 46.82 9.394
1.25 to 1.34 5 4,511,656 13.79 9.439
1.35 to 1.49 6 3,733,855 11.42 9.263
1.50 to 1.74 4 6,989,178 21.37 9.117
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Debt Service TERM TO AVERAGE APPRAISED BALLOON
Coverage Ratio (x) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 122 1.11 65.8 30.4
1.15 to 1.24 106 1.20 67.0 51.3
1.25 to 1.34 114 1.28 70.5 61.9
1.35 to 1.49 168 1.43 68.6 48.8
1.50 to 1.74 127 1.62 63.0 49.6
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
========================================================================================
</TABLE>
Min: 1.09x
Max: 1.71x
Weighted Average: 1.32x
I-6
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL TERM TO STATED MATURITIES MORTGAGE POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Original Term Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
to Stated Maturity (Mos) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 1 $ 1,386,856 0.44 9.125
85 to 120 185 301,569,655 94.90 8.064
121 to 180 4 4,987,395 1.57 8.749
181 to 240 2 8,551,976 2.69 7.443
301 to 360 2 1,274,371 0.40 9.459
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Original Term TERM TO AVERAGE APPRAISED BALLOON
to Stated Maturity (Mos) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 49 1.22 69.9 66.0
85 to 120 115 1.36 69.7 59.6
121 to 180 167 1.37 63.7 16.3
181 to 240 216 1.71 66.0 0.0
301 to 360 352 1.45 66.0 0.0
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
========================================================================================
</TABLE>
Min: 60
Max: 360
Weighted Average: 124
ORIGINAL TERM TO STATED MATURITIES FIXED POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Original Term Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
to Stated Maturity (Mos) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
85 to 120 159 $272,573,995 95.62 7.927
121 to 180 3 3,934,219 1.38 8.582
181 to 240 2 8,551,976 3.00 7.443
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Original Term TERM TO AVERAGE APPRAISED BALLOON
to Stated Maturity (Mos) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
85 to 120 115 1.36 70.1 60.2
121 to 180 177 1.45 63.1 20.7
181 to 240 216 1.71 66.0 0.0
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
=======================================================================================
</TABLE>
Min: 119
Max: 240
Weighted Average: 124
ORIGINAL TERMS TO MATURITY - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Original Term Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
to Maturity (mos) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 1 $ 1,386,856 4.24 9.125
85 to 120 26 28,995,660 88.64 9.349
121 to 180 1 1,053,176 3.22 9.375
301 to 360 2 1,274,371 3.90 9.459
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Original Term TERM TO AVERAGE APPRAISED BALLOON
to Maturity (mos) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 49 1.22 69.9 66.0
85 to 120 112 1.33 66.6 54.1
121 to 180 133 1.09 65.8 0.0
301 to 360 352 1.45 66.0 0.0
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=======================================================================================
</TABLE>
Min: 60
Max: 360
Weighted Average: 128
I-7
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
REMAINING TERMS TO MATURITY MORTGAGE POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Remaining Term Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
to Maturity (mos) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 1 $ 1,386,856 0.44 9.125
85 to 120 185 301,569,655 94.90 8.064
121 to 180 4 4,987,395 1.57 8.749
181 to 240 2 8,551,976 2.69 7.443
301 to 360 2 1,274,371 0.40 9.459
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Remaining Term TERM TO AVERAGE APPRAISED BALLOON
to Maturity (mos) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 49 1.22 69.9 66.0
85 to 120 115 1.36 69.7 59.6
121 to 180 167 1.37 63.7 16.3
181 to 240 216 1.71 66.0 0.0
301 to 360 352 1.45 66.0 0.0
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
======================================================================================
</TABLE>
Min: 49
Max: 352
Weighted Average: 119
REMAINING TERMS TO MATURITY FIXED POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Remaining Term Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
to Maturity (mos) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
85 to 120 159 $272,573,995 95.62 7.927
121 to 180 3 3,934,219 1.38 8.582
181 to 240 2 8,551,976 3.00 7.443
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Remaining Term TERM TO AVERAGE APPRAISED BALLOON
to Maturity (mos) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
85 to 120 115 1.36 70.1 60.2
121 to 180 177 1.45 63.1 20.7
181 to 240 216 1.71 66.0 0.0
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
======================================================================================
</TABLE>
Min: 110
Max: 233
Weighted Average: 119
REMAINING TERMS TO MATURITY - ARM POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Remaining Term Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
to Maturity (mos) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 1 $ 1,386,856 4.24 9.125
85 to 120 26 28,995,660 88.64 9.349
121 to 180 1 1,053,176 3.22 9.375
301 to 360 2 1,274,371 3.90 9.459
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Remaining Term TERM TO AVERAGE APPRAISED BALLOON
to Maturity (mos) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 to 60 49 1.22 69.9 66.0
85 to 120 112 1.33 66.6 54.1
121 to 180 133 1.09 65.8 0.0
301 to 360 352 1.45 66.0 0.0
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
======================================================================================
</TABLE>
Min: 49
Max: 352
Weighted Average: 119
I-8
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
CURRENT LOAN-TO-VALUE RATIOS MORTGAGE POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Current Loan-to-Value Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Ratio (%) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20.1 to 30.0 1 $ 738,187 0.23 9.375
30.1 to 40.0 3 4,008,810 1.26 8.148
40.1 to 50.0 3 1,636,050 0.51 8.089
50.1 to 60.0 20 25,849,276 8.13 8.023
60.1 to 70.0 65 92,825,196 29.21 8.395
70.1 to 80.0 102 192,712,733 60.65 7.910
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Current Loan-to-Value TERM TO AVERAGE APPRAISED BALLOON
Ratio (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20.1 to 30.0 113 2.92 29.5 26.7
30.1 to 40.0 113 1.99 36.4 29.8
40.1 to 50.0 133 1.73 45.5 27.8
50.1 to 60.0 138 1.58 55.5 36.8
60.1 to 70.0 116 1.39 66.1 54.2
70.1 to 80.0 118 1.31 74.1 62.2
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
======================================================================================
</TABLE>
Min: 29.5%
Max: 79.9%
Weighted Average: 69.5%
CURRENT LOAN-TO-VALUE RATIOS FIXED POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Current Loan-to-Value Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Ratio (%) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20.1 to 30.0 1 $ 738,187 0.26 9.375
30.1 to 40.0 3 4,008,810 1.41 8.148
40.1 to 50.0 3 1,636,050 0.57 8.089
50.1 to 60.0 16 24,852,011 8.72 7.953
60.1 to 70.0 48 68,714,699 24.11 8.067
70.1 to 80.0 93 185,110,433 64.94 7.851
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Current Loan-to-Value TERM TO AVERAGE APPRAISED BALLOON
Ratio (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20.1 to 30.0 113 2.92 29.5 26.7
30.1 to 40.0 113 1.99 36.4 29.8
40.1 to 50.0 133 1.73 45.5 27.8
50.1 to 60.0 140 1.60 55.5 36.4
60.1 to 70.0 115 1.40 66.5 56.7
70.1 to 80.0 117 1.31 74.1 62.2
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
======================================================================================
</TABLE>
Min: 29.5%
Max: 79.9%
Weighted Average: 69.8%
CURRENT LOAN-TO-VALUE RATIOS - ARM POOL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Current Loan-to-Value Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Ratio (%) Loans BALANCE BALANCE (%) RATE (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
50.1 to 60.0 4 $ 997,265 3.05 9.773
60.1 to 70.0 17 24,110,497 73.71 9.333
70.1 to 80.0 9 7,602,300 23.24 9.326
- ----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Current Loan-to-Value TERM TO AVERAGE APPRAISED BALLOON
Ratio (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
50.1 to 60.0 110 1.22 54.7 47.4
60.1 to 70.0 118 1.33 64.7 46.9
70.1 to 80.0 125 1.30 74.6 63.4
- ------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
====================================================================================
</TABLE>
Min: 53.0%
Max: 79.8%
Weighted Average: 66.7%
I-9
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
BALLOON LOAN-TO-VALUE RATIOS MORTGAGE POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Balloon Loan-to-Value Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Ratio (%) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.0 7 $ 13,037,393 4.10 8.115
20.1 to 30.0 2 1,484,143 0.47 8.495
30.1 to 40.0 4 4,480,649 1.41 8.260
40.1 to 50.0 21 25,656,075 8.07 8.536
50.1 to 60.0 64 107,750,778 33.91 8.185
60.1 to 70.0 81 149,689,763 47.11 7.845
70.1 to 80.0 15 15,671,451 4.93 8.494
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Balloon Loan-to-Value TERM TO AVERAGE APPRAISED BALLOON
Ratio (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.0 216 1.62 64.2 0.0
20.1 to 30.0 114 2.73 31.7 27.0
30.1 to 40.0 113 1.79 42.2 32.2
40.1 to 50.0 118 1.35 59.5 45.1
50.1 to 60.0 115 1.38 67.3 56.5
60.1 to 70.0 114 1.33 73.4 64.3
70.1 to 80.0 115 1.29 79.6 71.1
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5 57.1%
======================================================================================
</TABLE>
Min: 0.0%
Max: 73.0%
Weighted Average: 57.1%
BALLOON-LOAN-TO-VALUE RATIOS FIXED POOL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Balloon Loan-to-Value Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Ratio (%) Loans BALANCE BALANCE (%) RATE (%)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.0 4 $ 10,709,847 3.76 7.831
20.1 to 30.0 2 1,484,143 0.52 8.495
30.1 to 40.0 4 4,480,649 1.57 8.260
40.1 to 50.0 11 14,899,309 5.23 7.904
50.1 to 60.0 56 96,685,701 33.92 8.056
60.1 to 70.0 74 142,435,304 49.97 7.771
70.1 to 80.0 13 14,365,237 5.04 8.432
- ------------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 164 $285,060,190 100.00% 7.922%
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Balloon Loan-to-Value TERM TO AVERAGE APPRAISED BALLOON
Ratio (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.0 208 1.69 63.9 0.0
20.1 to 30.0 114 2.73 31.7 27.0
30.1 to 40.0 113 1.79 42.2 32.2
40.1 to 50.0 124 1.45 56.5 45.0
50.1 to 60.0 115 1.36 67.6 56.7
60.1 to 70.0 115 1.34 73.5 64.2
70.1 to 80.0 115 1.29 79.6 71.0
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.38x 69.8% 57.9%
======================================================================================
</TABLE>
Min: 0.0%
Max: 72.8%
Weighted Average: 57.9%
BALLOON LOAN-TO-VALUE RATIOS - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Balloon Loan-to-Value Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Ratio (%) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.0 3 $ 2,327,546 7.12 9.421
40.1 to 50.0 10 10,756,766 32.89 9.412
50.1 to 60.0 8 11,065,077 33.83 9.314
60.1 to 70.0 7 7,254,459 22.18 9.296
70.1 to 80.0 2 1,306,214 3.99 9.181
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Balloon Loan-to-Value TERM TO AVERAGE APPRAISED BALLOON
Ratio (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.0 253 1.29 65.9 0.0
40.1 to 50.0 111 1.20 63.6 45.4
50.1 to 60.0 113 1.49 64.3 53.9
60.1 to 70.0 99 1.26 73.0 66.1
70.1 to 80.0 115 1.35 79.6 71.8
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
======================================================================================
</TABLE>
Min: 0.0%
Max: 73.0%
Weighted Average: 50.7%
I-10
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
INDEX (6 MONTH LIBOR) MARGINS - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Index Margin (%) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.501 to 3.000 2 $ 6,494,962 19.86 8.974
3.001 to 3.500 14 17,174,136 52.50 9.348
3.501 to 4.000 11 7,954,126 24.32 9.516
4.001 to 4.500 3 1,086,838 3.32 10.256
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Index Margin (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.501 to 3.000 113 1.56 64.4 54.8
3.001 to 3.500 119 1.24 66.2 45.9
3.501 to 4.000 126 1.32 69.5 56.2
4.001 to 4.500 112 1.18 67.8 62.3
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=======================================================================================
</TABLE>
Min: 3.000%
Max: 4.500%
Weighted Average: 3.468%
MAXIMUM LIFETIME MORTGAGE RATES - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Maximum Lifetime Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Mortgage Rate (%) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
14.001 to 14.500 1 $ 994,521 3.04 9.250
14.501 to 15.000 2 6,494,962 19.86 8.974
15.001 to 15.500 16 19,265,597 58.90 9.336
15.501 to 16.000 8 4,868,145 14.88 9.690
16.001 to 16.500 3 1,086,838 3.32 10.256
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Maximum Lifetime TERM TO AVERAGE APPRAISED BALLOON
Mortgage Rate (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
14.001 to 14.500 111 1.52 64.2 58.1
14.501 to 15.000 113 1.56 64.4 54.8
15.001 to 15.500 119 1.24 67.1 47.2
15.501 to 16.000 134 1.32 68.5 55.3
16.001 to 16.500 112 1.18 67.8 62.3
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
======================================================================================
</TABLE>
Min: 14.375%
Max: 16.375%
Weighted Average: 15.345%
MINIMUM LIFETIME MORTGAGE RATES - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
Minimum Lifetime Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
Mortgage Rate (%) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8.001 to 8.500 2 $ 1,739,221 5.32 9.411
8.501 to 9.000 2 6,494,962 19.86 8.974
9.001 to 9.500 16 19,265,597 58.90 9.336
9.501 to 10.000 7 4,123,444 12.61 9.701
10.001 to 10.500 3 1,086,838 3.32 10.256
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
Minimum Lifetime TERM TO AVERAGE APPRAISED BALLOON
Mortgage Rate (%) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8.001 to 8.500 109 1.36 67.5 61.9
8.501 to 9.000 113 1.56 64.4 54.8
9.001 to 9.500 119 1.24 67.1 47.2
9.501 to 10.000 139 1.35 67.9 53.2
10.001 to 10.500 112 1.18 67.8 62.3
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
======================================================================================
</TABLE>
Min: 8.250%
Max: 10.375%
Weighted Average: 9.311%
I-11
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS AT FLOOR RATES - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
Debt Service Number of AGGREGATE AGGREGATE AVERAGE
Coverage Ratio Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
@ Floor Rate (x) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 2 $ 1,388,343 4.24 9.375
1.15 to 1.24 11 13,701,887 41.89 9.415
1.25 to 1.34 5 4,814,108 14.72 9.417
1.35 to 1.49 7 5,169,143 15.80 9.371
1.50 to 1.74 5 7,636,582 23.35 9.149
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
Debt Service REMAINING WEIGHTED CURRENT AVERAGE
Coverage Ratio TERM TO AVERAGE APPRAISED BALLOON
@ Floor Rate (x) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.00 to 1.14 128 1.10 63.3 11.2
1.15 to 1.24 105 1.20 66.6 51.3
1.25 to 1.34 113 1.26 71.2 62.9
1.35 to 1.49 152 1.34 69.0 49.0
1.50 to 1.74 126 1.61 63.1 50.3
- ---------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
=======================================================================================
</TABLE>
Min: 1.10x
Max: 1.72x
Weighted Average: 1.35x
DEBT SERVICE COVERAGE RATIOS AT CEILING RATES - ARM POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
Debt Service Number of AGGREGATE AGGREGATE AVERAGE
Coverage Ratio Mortgage CUT-OFF DATE CUT-OFF DATE MORTGAGE
@ Ceiling Rate (x) Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.70 to 0.79 4 $ 1,852,952 5.66 9.823
0.80 to 0.89 17 20,932,212 63.99 9.361
0.90 to 0.99 5 2,935,721 8.97 9.470
1.00 to 1.14 3 6,589,116 20.14 9.078
1.15 to 1.24 1 400,062 1.22 9.750
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 30 $32,710,063 100.00% 9.345%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
Debt Service REMAINING WEIGHTED CURRENT AVERAGE
Coverage Ratio TERM TO AVERAGE APPRAISED BALLOON
@ Ceiling Rate (x) MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.70 to 0.79 110 1.14 68.3 62.3
0.80 to 0.89 109 1.23 68.0 51.2
0.90 to 0.99 182 1.41 65.5 42.7
1.00 to 1.14 128 1.62 62.9 49.2
1.15 to 1.24 112 1.71 64.5 54.9
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.32x 66.7% 50.7%
====================================================================================
</TABLE>
Min: 0.74x
Max: 1.15x
Weighted Average: 0.89x
LOAN TYPES MORTGAGE POOL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT BY WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE
Loan Type Loans BALANCE BALANCE (%) RATE (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arm 30 $ 32,710,063 10.29 9.345
Fixed 164 285,060,190 89.71 7.922
- -----------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 194 $317,770,252 100.00% 8.068%
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
REMAINING WEIGHTED CURRENT AVERAGE
TERM TO AVERAGE APPRAISED BALLOON
Loan Type MATURITY (MOS) DSCR (X) LTV (%) LTV (%)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arm 119 1.32 66.7 50.7
Fixed 119 1.38 69.8 57.9
- --------------------------------------------------------------------------------------
TOTAL OR WEIGHTED AVERAGE: 119 1.37x 69.5% 57.1%
======================================================================================
</TABLE>
I-12
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
PREPAYMENT RESTRICTIONS - MORTGAGE POOL
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION ASSUMING NO PREPAYMENT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION CURRENT 12 MO. 24 MO. 36 MO. 48 MO. 60 MO.
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 91.90% 91.92% 88.64% 85.98% 84.95% 4.01%
Yield Maintenance 0.00% 0.00% 0.00% 0.28% 1.34% 79.80%
Penalty Points
5.00% and greater 0.46% 0.00% 0.00% 0.00% 0.00% 1.04%
4.00% to 4.99% 0.00% 0.46% 0.00% 0.20% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 2.86% 1.76% 0.20% 1.14%
2.00% to 2.99% 0.00% 0.00% 0.91% 2.30% 1.76% 0.21%
1.00% to 1.99% 0.00% 0.00% 0.00% 1.91% 1.91% 2.06%
Open 7.64% 7.62% 7.59% 7.56% 9.84% 11.74%
- ----------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool Balance $317.77 $314.20 $310.42 $306.24 $301.70 $295.47
Outstanding (in millions)
% of Initial Pool Balance 100.00% 98.88% 97.69% 96.37% 94.94% 92.98%
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION 72 MO. 84 MO. 96 MO. 108 MO. 120 MO.
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Locked Out/Defeasance 3.91% 3.80% 2.75% 1.64% 0.00%
Yield Maintenance 79.93% 80.08% 81.18% 72.61% 85.27%
Penalty Points
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 1.04% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 1.04% 0.00% 0.00% 0.00%
2.00% to 2.99% 1.15% 0.00% 1.05% 0.00% 0.00%
1.00% to 1.99% 2.27% 3.21% 3.22% 0.76% 0.00%
Open 11.70% 11.86% 11.80% 24.99% 14.73%
- ------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool Balance $290.20 $284.41 $278.12 $270.60 $ 8.93
Outstanding (in millions)
% of Initial Pool Balance 91.32% 89.50% 87.52% 85.16% 2.81%
================================================================================================
</TABLE>
PREPAYMENT RESTRICTIONS FIXED POOL
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION ASSUMING NO PREPAYMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION CURRENT 12 MO. 24 MO. 36 MO. 48 MO. 60 MO.
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 100.00% 100.00% 96.32% 95.77% 94.59% 4.44%
Yield Maintenance 0.00% 0.00% 0.00% 0.32% 1.49% 88.42%
Penalty Points
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00% 1.15%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.23% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 2.67% 0.00% 0.23% 1.27%
2.00% to 2.99% 0.00% 0.00% 1.01% 2.05% 0.00% 0.23%
1.00% to 1.99% 0.00% 0.00% 0.00% 1.64% 1.61% 0.32%
Open 0.00% 0.00% 0.00% 0.00% 2.09% 4.17%
- ---------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool Balance $285.06 $281.93 $278.60% $274.94 $270.96 $266.66
Outstanding (in millions)
% of Initial Pool Balance 100.00% 98.90% 97.73% 96.45% 95.06% 93.55%
=========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION 72 MO. 84 MO. 96 MO. 108 MO. 120 MO.
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Locked Out/Defeasance 4.33% 4.20% 3.04% 1.80% 0.00%
Yield Maintenance 88.52% 88.62% 89.75% 79.99% 100.00%
Penalty Points
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 1.15% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 1.16% 0.00% 0.00% 0.00%
2.00% to 2.99% 1.27% 0.00% 1.16% 0.00% 0.00%
1.00% to 1.99% 0.55% 1.60% 1.60% 0.84% 0.00%
Open 4.18% 4.43% 4.44% 17.37% 0.00%
- ------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool Balance $262.06 $257.02 $251.56 $245.64 $ 7.61
Outstanding (in millions)
% of Initial Pool Balance 91.93% 90.16% 88.25% 86.17% 2.67%
================================================================================================
</TABLE>
PREPAYMENT RESTRICTIONS ARM POOL
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION ASSUMING NO PREPAYMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION CURRENT 12 MO. 24 MO. 36 MO. 48 MO. 60 MO.
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 21.30% 21.36% 21.43% 0.00% 0.00% 0.00%
Yield Maintenance 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Penalty Points
5.00% and greater 4.47% 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 4.49% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 4.50% 17.23% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 4.53% 17.30% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.00% 4.27% 4.55% 18.16%
Open 74.23% 74.15% 74.07% 73.97% 78.15% 81.84%
- ---------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool Balance $ 32.71 $ 32.27 $ 31.82 $ 31.30 $ 30.73 $ 28.80
Outstanding (in millions)
% of Initial Pool Balance 100.00% 98.67% 97.27% 95.70% 93.95% 88.06%
=========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION 72 MO. 84 MO. 96 MO. 108 MO. 120 MO.
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Locked Out/Defeasance 0.00% 0.00% 0.00% 0.00% 0.00%
Yield Maintenance 0.00% 0.00% 0.00% 0.00% 0.00%
Penalty Points
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 0.00% 0.00%
1.00% to 1.99% 18.26% 18.37% 18.51% 0.00% 0.00%
Open 81.74% 81.63% 81.49% 100.00% 100.00%
- ------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool Balance $ 28.14 $ 27.39 $ 26.56 $ 24.97 $ 1.32
Outstanding (in millions)
% of Initial Pool Balance 86.02% 83.73% 81.21% 76.33% 4.02%
================================================================================================
</TABLE>
I-13
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
RELATED BORROWER ORIGINAL CUT-OFF
LOAN LOAN GROUPS PRINCIPAL CUT-OFF DATE BAL./ NOTE
NO. PROPERTY NAME (BY LOAN NO.) BALANCE DATE BALANCE UNIT OR SF(3) DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 2 River Place (1A) 2, 3, 4, 5, 6, 7, $4,200,000 $ 4,162,878 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
2 Apple Valley I (1A) 1, 3, 4, 5, 6, 7, $3,800,000 $ 3,765,067 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
3 Alex Bell Plaza (1A) 1, 2, 4, 5, 6, 7, $3,300,000 $ 3,269,664 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
4 Apple Valley III (1A) 1, 2, 3, 5, 6, 7, $2,500,000 $ 2,477,018 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
5 Dryden II (1A) 1, 2, 3, 4, 6, 7, $2,300,000 $ 2,278,857 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
6 Apple Valley II (1A) 1, 2, 3, 4, 5, 7, $2,000,000 $ 1,981,614 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
7 Dayton Towne Center (1A) 1, 2, 3, 4, 5, 6, $1,325,000 $ 1,312,820 $ 59 10/28/97
47, 12, 13, 14, 15,
16, 17
8 CAG Industrial (1B) 9, 10, 11 $5,129,000 $ 5,122,236 $ 32 5/28/98
9 Galleria I, II, III (1B) 8, 10, 11 $3,655,000 $ 3,650,180 $ 32 5/28/98
10 Stewart Center (1B) 8, 9, 11 $3,091,000 $ 3,086,924 $ 32 5/28/98
11 Wausau Container (1B) 8, 9, 10 $ 975,000 $ 973,714 $ 32 5/28/98
12 Cypress Park Bldg. 4 (1C) 1, 2, 3, 4, 5, 6, 7, $3,000,000 $ 2,928,962 $ 31 10/28/97
47, 13, 14, 15, 16,
17
13 Delco K-2 (1C) 1, 2, 3, 4, 5, 6, 7, $2,000,000 $ 1,984,301 $ 31 10/28/97
47, 12, 14, 15, 16,
17
14 3975 Dayton Park (1C) (2A) 1, 2, 3, 4, 5, 6, 7, $1,825,000 $ 1,810,675 $ 31 10/28/97
47, 12, 13, 15, 16,
17
15 TrailsEnd (1C) 1, 2, 3, 4, 5, 6, 7, $1,400,000 $ 1,389,011 $ 31 10/28/97
47, 12, 13, 14, 16,
17
16 Cypress Park Bldg. 3 (1C) 1, 2, 3, 4, 5, 6, 7, $1,280,000 $ 1,249,691 $ 31 10/28/97
47, 12, 13, 14, 15,
17
17 Blue Dog Cafe (1C) 1, 2, 3, 4, 5, 6, 7, $ 400,000 $ 396,860 $ 31 10/28/97
47, 12, 13, 14, 15,
16
18 The Harvard Market $9,000,000 $ 8,973,365 $ 218 3/31/98
19 Pavilions at Rancho Mirage $8,383,899 $ 8,332,619 $ 99 11/7/97
20 Del Rayo Village $7,200,000 $ 7,178,736 $ 129 3/27/98
21 Irvine Spectrum Auto Center $7,070,000 $ 7,031,805 $ 169 12/31/97
22 710 Euclid-Park San Dimas 65 $6,250,000 $ 6,241,210 $45,556 5/28/98
23 Cedar Plaza Shopping Ctr $6,100,000 $ 6,071,556 $ 67 3/26/98
24 909 Ocean Front Walk $5,940,000 $ 5,932,127 $ 167 4/28/98
25 Pioneer Center & DIHO Plaza $5,600,000 $ 5,574,940 $ 76 3/31/98
26 Select Suites - Airport Center $5,440,000 $ 5,428,691 $19,669 5/28/98
27 1401 Dove Street $5,200,000 $ 5,166,113 $ 69 12/18/97
28 600 South Lake Financial Ctr $5,050,000 $ 5,031,937 $ 94 3/11/98
29 Upper Main Street Apartments(1D) (2B) 30, 31, 32, 33 $1,257,380 $ 1,253,946 $30,046 2/19/98
30 Westland Place Apartments (1D) 29, 31, 32, 33 $1,000,000 $ 997,269 $30,046 2/19/98
31 87 - 101 Spring Street (1D) 29, 30, 32, 33 $ 874,250 $ 871,863 $30,046 2/19/98
32 124-128 Collins Street (1D) 29, 30, 31, 33 $ 697,500 $ 695,595 $30,046 2/19/98
33 22 Huntington (1D) 29, 30, 31, 32 $ 660,000 $ 658,198 $30,046 2/19/98
34 Paradise Garden Apartments $4,500,000 $ 4,456,415 $14,014 3/24/98
35 Beaumont Tower Venture, Ltd. 36, 41 $4,150,000 $ 4,095,561 $ 26 12/31/97
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ORIG. ORIG. REM.
INITIAL TERM TO REM. TERM AMORT. AMORT.
LOAN DUE MATURITY MATURITY TO MATURITY TERM(4) TERM SECURITY
NO. PROPERTY NAME DATE DATE (MOS) (MOS) (MOS) (MOS) TYPE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple (5)
2 Apple Valley I (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple
3 Alex Bell Plaza (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple
4 Apple Valley III (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple
5 Dryden II (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple
6 Apple Valley II (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple
7 Dayton Towne Center (1A) 2/1/97 11/1/07 120 111 300 291 Fee Simple
8 CAG Industrial (1B) 7/1/98 6/1/08 120 118 360 358 Fee Simple
9 Galleria I, II, III (1B) 7/1/98 6/1/08 120 118 360 358 Fee Simple
10 Stewart Center (1B) 7/1/98 6/1/08 120 118 360 358 Fee Simple
11 Wausau Container (1B) 7/1/98 6/1/08 120 118 360 358 Fee Simple
12 Cypress Park Bldg. 4 (1C) 2/1/97 11/1/07 120 111 180 171 Fee Simple
13 Delco K-2 (1C) 2/1/97 11/1/07 120 111 300 291 Fee Simple
14 3975 Dayton Park (1C) (2A) 2/1/97 11/1/07 120 111 300 291 Leasehold
15 TrailsEnd (1C) 2/1/97 11/1/07 120 111 300 291 Fee Simple
16 Cypress Park Bldg. 3 (1C) 2/1/97 11/1/07 120 111 180 171 Fee Simple
17 Blue Dog Cafe (1C) 2/1/97 11/1/07 120 111 300 291 Fee Simple
18 The Harvard Market 5/1/98 4/1/08 120 116 360 356 Fee Simple
19 Pavilions at Rancho Mirage 1/1/98 12/1/07 120 112 360 352 Fee Simple
20 Del Rayo Village 5/1/98 4/1/08 120 116 360 356 Fee Simple
21 Irvine Spectrum Auto Center 2/1/98 1/1/08 120 113 360 353 Fee Simple
22 710 Euclid-Park San Dimas 7/1/98 6/1/08 120 118 360 358 Fee Simple
23 Cedar Plaza Shopping Ctr 5/1/98 4/1/08 120 116 300 296 Fee Simple
24 909 Ocean Front Walk 7/1/98 6/1/08 120 118 360 358 Leasehold
25 Pioneer Center & DIHO Plaza 5/1/98 4/1/08 120 116 300 296 Fee Simple
26 Select Suites - Airport Center 7/1/98 6/1/08 120 118 300 298 Fee Simple
27 1401 Dove Street 2/1/98 1/1/08 120 113 300 293 Fee Simple
28 600 South Lake Financial Ctr 5/1/98 4/1/08 120 116 324 320 Fee Simple
29 Upper Main Street Apartments 4/1/98 3/1/08 120 115 360 355 Fee Simple
(1D) (2B)
30 Westland Place Apartments (1D) 4/1/98 3/1/08 120 115 360 355 Fee Simple
31 87 - 101 Spring Street (1D) 4/1/98 3/1/08 120 115 360 355 Fee Simple
32 124-128 Collins Street (1D) 4/1/98 3/1/08 120 115 360 355 Fee Simple
33 22 Huntington (1D) 4/1/98 3/1/08 120 115 360 355 Fee Simple
34 Paradise Garden Apartments 5/1/98 4/1/15 204 200 204 200 Leasehold
35 Beaumont Tower Venture, Ltd. 2/1/98 1/1/18 240 233 240 233 Fee Simple
</TABLE>
II-1
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
RELATED BORROWER ORIGINAL CUT-OFF
LOAN LOAN GROUPS PRINCIPAL CUT-OFF DATE BAL./ NOTE
NO. PROPERTY NAME (BY LOAN NO.) BALANCE DATE BALANCE UNIT OR SF(3) DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
36 Woodlands Medical Building 35, 41 $3,750,000 $ 3,736,095 $ 113 2/27/98
37 Allentowne Village Apartments $3,600,000 $ 3,586,218 $33,516 2/25/98
38 Artisan Components Building $3,400,000 $ 3,381,130 $ 104 12/22/97
39 Barstow Road Center $3,300,000 $ 3,295,638 $ 42 5/29/98
40 Berry Hill Shopping Center $3,250,000 $ 3,233,247 $ 77 12/26/97
41 Ridgewood Retirement Center 35, 36 $3,200,000 $ 3,193,658 $32,259 5/28/98
42 Central Village 100, 152 $3,184,000 $ 3,170,330 $ 115 3/26/98
43 Lankershim 113 $3,120,000 $ 3,094,860 $ 36 12/31/97
44 900 Calle Negocio Industrial $3,000,000 $ 2,984,536 $ 59 12/22/97
45 The Inland Atrium $2,885,000 $ 2,873,129 $ 59 1/27/98
46 Robins Lane Apartments $2,850,000 $ 2,831,916 $35,399 11/26/97
47 Airport Corporate Center 1, 2, 3, 4, 5, 6, 7, $2,800,000 $ 2,774,260 $ 59 10/28/97
12, 13, 14, 15, 16,
17
48 Whitney Mesa Mini Storage $3,500,000 $ 2,642,507 $ 23 11/14/97
49 Tercek Property/Johns Westside $2,520,000 $ 2,512,542 $ 42 3/18/98
50 Garden Estates Apartments $2,500,000 $ 2,493,335 $12,467 3/23/98
51 Carlton Way Towers $2,480,000 $ 2,467,991 $70,514 11/5/97
52 Lincoln Business Center $2,340,000 $ 2,327,651 $ 41 12/19/97
53 Centerpoint Business Park $2,325,000 $ 2,317,787 $ 58 3/23/98
54 Jordano's Marketplace $2,300,000 $ 2,290,125 $ 126 3/9/98
55 Chardonnay Apartments $2,175,000 $ 2,164,853 $33,826 2/23/98
56 Rediger Investment Corp. $2,000,000 $ 1,997,281 $ 51 5/18/98
57 1700 SL Investors-South Lamar $2,000,000 $ 1,997,206 $ 38 5/28/98
58 Westgate Center $1,950,000 $ 1,939,828 $ 60 11/13/97
59 Burke Junction Shopping Center $1,929,000 $ 1,924,990 $ 53 5/22/98
60 Rosecrans Industrial $1,850,000 $ 1,846,062 $ 23 5/26/98
61 1010 First Street $1,838,000 $ 1,830,334 $ 93 12/3/97
62 Thunder Canyon Plaza $1,825,000 $ 1,820,626 $ 86 3/25/98
63 441 State Highway 71 $1,800,000 $ 1,796,258 $ 31 5/27/98
64 Tomball Plaza Shopping Center $1,782,000 $ 1,776,349 $ 27 4/22/98
65 8 Studebaker 22 $1,780,000 $ 1,776,300 $ 62 5/18/98
66 Norfolk County Inn $1,750,000 $ 1,747,159 $13,757 5/7/98
67 Towne Park I & II Apartments $1,725,000 $ 1,717,094 $35,773 12/17/97
68 ACE Market Place $1,700,000 $ 1,693,060 $ 125 1/26/98
69 Flagstaff Inn Partnership $1,680,000 $ 1,667,772 $16,678 3/18/98
70 Ft. Collins Sleep Inn Motel $1,650,000 $ 1,643,485 $26,087 3/20/98
71 Alvin Towne Center $1,659,000 $ 1,640,444 $ 22 12/22/97
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ORIG. ORIG. REM.
INITIAL TERM TO REM. TERM AMORT. AMORT.
LOAN DUE MATURITY MATURITY TO MATURITY TERM(4) TERM SECURITY
NO. PROPERTY NAME DATE DATE (MOS) (MOS) (MOS) (MOS) TYPE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
36 Woodlands Medical Building 4/1/98 3/1/08 120 115 360 355 Fee Simple
37 Allentowne Village Apartments 4/1/98 3/1/08 120 115 360 355 Fee Simple
38 Artisan Components Building 2/1/98 1/1/08 120 113 360 353 Fee Simple
39 Barstow Road Center 7/1/98 6/1/08 120 118 360 358 Fee Simple
40 Berry Hill Shopping Center 2/1/98 1/1/08 120 113 360 353 Fee Simple
41 Ridgewood Retirement Center 7/1/98 6/1/08 120 118 300 298 Fee Simple
42 Central Village 5/1/98 4/1/08 120 116 300 296 Fee Simple
43 Lankershim 2/1/98 1/1/08 120 113 300 293 Fee Simple
44 900 Calle Negocio Industrial 2/1/98 1/1/08 120 113 360 353 Fee Simple
45 The Inland Atrium 3/1/98 2/1/08 120 114 360 354 Fee Simple
46 Robins Lane Apartments 1/1/98 12/1/07 120 112 360 352 Fee Simple
47 Airport Corporate Center 12/1/97 11/1/07 120 111 300 291 Fee Simple
48 Whitney Mesa Mini Storage 1/1/98 12/1/07 120 112 300 292 Fee Simple
49 Tercek Property/Johns Westside 5/1/98 4/1/08 120 116 360 356 Fee Simple
50 Garden Estates Apartments 5/1/98 4/1/08 120 116 360 356 Fee Simple
51 Carlton Way Towers 1/1/98 12/1/07 120 112 360 352 Fee Simple
52 Lincoln Business Center 2/1/98 1/1/08 120 113 360 353 Fee Simple
53 Centerpoint Business Park 6/1/98 5/1/08 120 117 300 297 Fee Simple
54 Jordano's Marketplace 5/1/98 4/1/08 120 116 300 296 Fee Simple
55 Chardonnay Apartments 5/1/98 4/1/08 120 116 300 296 Fee Simple
56 Rediger Investment Corp. 7/1/98 6/1/08 120 118 360 358 Fee Simple
57 1700 SL Investors-South Lamar 7/1/98 6/1/08 120 118 360 358 Fee Simple
58 Westgate Center 1/1/98 12/1/07 120 112 360 352 Fee Simple
59 Burke Junction Shopping Center 7/1/98 6/1/08 120 118 300 298 Fee Simple
60 Rosecrans Industrial 7/1/98 6/1/08 120 118 300 298 Fee Simple
61 1010 First Street 2/1/98 1/1/08 120 113 360 353 Fee Simple
62 Thunder Canyon Plaza 5/1/98 4/1/08 120 116 360 356 Fee Simple
63 441 State Highway 71 7/1/98 6/1/08 120 118 300 298 Fee Simple
64 Tomball Plaza Shopping Center 6/1/98 5/1/13 180 177 300 297 Fee Simple
65 8 Studebaker 7/1/98 6/1/08 120 118 300 298 Fee Simple
66 Norfolk County Inn 7/1/98 6/1/08 120 118 300 298 Fee Simple
67 Towne Park I & II Apartments 2/1/98 1/1/08 120 113 360 353 Fee Simple
68 ACE Market Place 3/1/98 2/1/08 120 114 360 354 Fee Simple
69 Flagstaff Inn Partnership 6/1/98 5/1/13 180 177 180 177 Leasehold
70 Ft. Collins Sleep Inn Motel 5/1/98 4/1/08 120 116 300 296 Fee Simple
71 Alvin Towne Center 2/1/98 1/1/08 120 113 360 353 Fee Simple
</TABLE>
II-2
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
RELATED BORROWER ORIGINAL CUT-OFF
LOAN LOAN GROUPS PRINCIPAL CUT-OFF DATE BAL./ NOTE
NO. PROPERTY NAME (BY LOAN NO.) BALANCE DATE BALANCE UNIT OR SF(3) DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
72 Brentwood Plaza $1,631,250 $ 1,622,454 $ 60 2/19/98
73 The Granary $1,612,500 $ 1,599,507 $ 82 12/30/97
74 The Village Apartments $1,500,000 $ 1,496,593 $23,755 3/24/98
75 15441 Nordhoff Street Apts. $1,500,000 $ 1,496,105 $26,716 3/25/98
76 Yukon Square Shopping Ctr $1,500,000 $ 1,495,410 $ 68 1/28/98
77 Emerald Park Apartments $1,500,000 $ 1,495,280 $20,206 2/4/98
78 111 Elm 124 $1,500,000 $ 1,492,062 $ 52 10/22/97
79 La Fiesta Center $1,481,250 $ 1,477,205 $ 61 2/23/98
80 Courtsyde Square $1,462,500 $ 1,461,067 $ 50 5/13/98
81 Grand Avenue R&D $1,462,500 $ 1,460,532 $ 48 5/7/98
82 Cypress Chemical Bldg. $1,450,000 $ 1,444,231 $ 34 12/24/97
83 16307-16331 Arthur Street $1,400,000 $ 1,386,856 $ 34 8/14/97
84 Roscoe Sepulveda Center $1,372,500 $ 1,367,935 $ 76 2/17/98
85 Universal Care (17660 Lakewood) 170, 177, 187 $1,350,000 $ 1,344,020 $ 72 2/19/98
86 New Hampshire Office Bldg. $1,350,000 $ 1,343,027 $ 67 10/27/97
87 Madison Square Retail Center $1,335,000 $ 1,328,850 $ 92 11/12/97
88 Beaujolais Village $1,325,000 $ 1,320,831 $35,698 2/6/98
89 Mountainview $1,320,000 $ 1,318,516 $23,545 4/27/98
90 Jackovics, Thomas & Judit $1,300,000 $ 1,291,128 $ 93 10/27/97
91 5900 Reseda Blvd. $1,280,000 $ 1,276,849 $31,921 3/12/98
92 Southgate Towne Center $1,275,000 $ 1,272,104 $ 53 3/9/98
93 Portola Road Office Building $1,250,000 $ 1,246,923 $ 208 3/25/98
94 Fox Crossing Shopping Center $1,200,000 $ 1,198,782 $ 69 5/6/98
95 PV Oasis Shopping Center $1,200,000 $ 1,194,227 $ 33 12/1/97
96 111 and 125 S. Main Street $1,200,000 $ 1,193,307 $ 239 11/19/97
97 Carlton Court Apartments $1,150,000 $ 1,144,730 $25,438 11/26/97
98 6232 Manchester $1,125,000 $ 1,123,898 $ 88 5/19/98
99 Palm Terrace Apartments $1,125,000 $ 1,118,427 $25,419 9/22/97
100 Grand Rapids Shopping Center 42, 152 $1,100,000 $ 1,095,277 $ 87 3/26/98
101 Rainbow Flag Apartments $1,100,000 $ 1,094,839 $45,618 12/5/97
102 Sea Fox Apartments $1,070,000 $ 1,064,979 $44,374 12/18/97
103 Woodstock Plaza $1,060,500 $ 1,057,819 $ 84 3/18/98
104 Parkview Village Apartments $1,060,000 $ 1,055,477 $17,591 1/23/98
105 Seashore Investment Company $1,100,000 $ 1,053,176 $ 62 8/8/97
106 Sierra Grove Apartments $1,050,000 $ 1,045,520 $21,782 1/21/98
107 10356 Commerce $1,050,000 $ 1,045,335 $24,889 12/12/97
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ORIG. ORIG. REM.
INITIAL TERM TO REM. TERM AMORT. AMORT.
LOAN DUE MATURITY MATURITY TO MATURITY TERM(4) TERM SECURITY
NO. PROPERTY NAME DATE DATE (MOS) (MOS) (MOS) (MOS) TYPE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
72 Brentwood Plaza 4/1/98 3/1/08 120 115 300 295 Fee Simple
73 The Granary 2/1/98 1/1/08 120 113 300 293 Fee Simple
74 The Village Apartments 5/1/98 4/1/08 120 116 360 356 Fee Simple
75 15441 Nordhoff Street Apts. 5/1/98 4/1/08 120 116 360 356 Fee Simple
76 Yukon Square Shopping Ctr 4/1/98 3/1/08 120 115 360 355 Fee Simple
77 Emerald Park Apartments 4/1/98 3/1/08 120 115 360 355 Fee Simple
78 111 Elm 12/1/97 11/1/07 120 111 360 351 Fee Simple
79 La Fiesta Center 4/1/98 3/1/08 120 115 360 355 Fee Simple
80 Courtsyde Square 7/1/98 6/1/08 120 118 360 358 Fee Simple
81 Grand Avenue R&D 7/1/98 6/1/08 120 118 300 298 Fee Simple
82 Cypress Chemical Bldg. 2/1/98 1/1/08 120 113 360 353 Fee Simple
83 16307-16331 Arthur Street 10/1/97 9/1/02 60 49 300 289 Fee Simple
84 Roscoe Sepulveda Center 4/1/98 3/1/08 120 115 360 355 Fee Simple
85 Universal Care (17660 Lakewood) 4/1/98 3/1/08 120 115 300 295 Fee Simple
86 New Hampshire Office Bldg. 12/1/97 11/1/07 120 111 360 351 Fee Simple
87 Madison Square Retail Center 1/1/98 12/1/07 120 112 360 352 Fee Simple
88 Beaujolais Village 4/1/98 3/1/08 120 115 360 355 Fee Simple
89 Mountainview 7/1/98 6/1/08 120 118 360 358 Fee Simple
90 Jackovics, Thomas & Judit 12/1/97 11/1/07 120 111 360 351 Fee Simple
91 5900 Reseda Blvd. 5/1/98 4/1/08 120 116 360 356 Fee Simple
92 Southgate Towne Center 5/1/98 4/1/08 120 116 360 356 Fee Simple
93 Portola Road Office Building 5/1/98 4/1/08 120 116 360 356 Fee Simple
94 Fox Crossing Shopping Center 7/1/98 6/1/08 120 118 360 358 Fee Simple
95 PV Oasis Shopping Center 2/1/98 1/1/08 120 113 360 353 Fee Simple
96 111 and 125 S. Main Street 1/1/98 12/1/07 120 112 360 352 Fee Simple
97 Carlton Court Apartments 2/1/98 1/1/08 120 113 360 353 Fee Simple
98 6232 Manchester 7/1/98 6/1/08 120 118 360 358 Fee Simple
99 Palm Terrace Apartments 11/1/97 10/1/07 120 110 342 332 Fee Simple
100 Grand Rapids Shopping Center 5/1/98 4/1/08 120 116 300 296 Fee Simple
101 Rainbow Flag Apartments 2/1/98 1/1/08 120 113 360 353 Fee Simple
102 Sea Fox Apartments 2/1/98 1/1/08 120 113 360 353 Fee Simple
103 Woodstock Plaza 5/1/98 4/1/08 120 116 360 356 Fee Simple
104 Parkview Village Apartments 3/1/98 2/1/08 120 114 360 354 Fee Simple
105 Seashore Investment Company 10/1/97 9/1/09 144 133 144 133 Leasehold
106 Sierra Grove Apartments 3/1/98 2/1/08 120 114 360 354 Fee Simple
107 10356 Commerce 2/1/98 1/1/08 120 113 360 353 Fee Simple
</TABLE>
II-3
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
RELATED BORROWER ORIGINAL CUT-OFF
LOAN LOAN GROUPS PRINCIPAL CUT-OFF DATE BAL./ NOTE
NO. PROPERTY NAME (BY LOAN NO.) BALANCE DATE BALANCE UNIT OR SF(3) DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
108 Cactus Place Apartments 111, 145 $1,040,000 $ 1,037,440 $21,613 3/27/98
109 Temple Plaza Associates-Apts $1,020,000 $ 1,018,291 $40,732 4/27/98
110 762-808 N. Gordon Street $1,008,000 $ 1,003,270 $15,676 12/15/97
111 Garden Villa Apts. 108, 145 $1,000,000 $ 995,025 $20,730 11/4/97
112 601-6091/2 N.Western $1,000,000 $ 994,521 $ 56 10/7/97
Av./4905-4913 W.Clinton St
113 West Valley Mini Storage 43 $ 987,000 $ 979,775 $ 54 12/31/97
114 8910 Washington Boulevard $ 975,000 $ 974,010 $ 94 5/15/98
115 Roscoe Plaza Apartments 193, 194 $ 975,000 $ 966,271 $28,420 9/11/97
116 Michael Boardman-Lake Terrace $ 947,000 $ 945,298 $22,507 5/15/98
117 Rockhill/ Broadway Shop Center $ 930,000 $ 929,056 $ 129 5/21/98
118 Villa Mira Monte Apts $ 930,000 $ 928,197 $23,205 4/14/98
119 981 Calle Negocio $ 925,000 $ 922,661 $ 54 3/24/98
120 Tahquitz Square $ 905,000 $ 901,223 $ 75 1/15/98
121 Sweetwater Apartments (2C) $ 900,000 $ 897,168 $16,021 2/2/98
122 Orange East & Orange West Apts $ 900,000 $ 895,854 $19,908 11/1/97
123 1937 Sunset Circle (2D) $ 895,000 $ 889,655 $18,534 10/20/97
124 Old Colorado Square 78 $ 862,500 $ 860,145 $ 50 2/6/98
125 Blythe Oceanview Apts $ 862,500 $ 860,053 $ 8,601 4/17/98
126 Keen Apartments $ 850,000 $ 845,888 $15,105 11/12/97
127 Tower Center Court $ 845,000 $ 843,447 $ 45 4/27/98
128 Chapman Apts $ 840,000 $ 838,509 $34,938 4/6/98
129 United Stor-All 167 $ 840,000 $ 835,262 $ 26 1/22/98
130 Stewart Court $ 826,000 $ 824,478 $12,492 5/7/98
131 1150 South Bristol Street $ 825,000 $ 823,626 $ 149 5/26/98
132 3315-3345 Newport Boulevard $ 825,000 $ 822,614 $ 67 1/28/98
133 Office Building (Yale Avenue) $ 815,000 $ 811,056 $ 46 2/2/98
134 Imperial Apartments $ 800,000 $ 798,133 $26,604 3/24/98
135 Park Plaza Center $ 800,000 $ 797,170 $ 46 12/15/97
136 Bali Hai Apartments $ 795,000 $ 791,455 $26,382 1/22/98
137 140 E. Commonwealth Ave. $ 791,250 $ 787,422 $ 55 11/6/97
138 Millcreek Shoppes $ 768,000 $ 764,933 $ 49 1/9/98
139 Paradise Plaza $ 761,300 $ 754,766 $ 17 9/19/97
140 Holly Tree Mobile Home Park $ 750,000 $ 747,775 $13,119 4/27/98
141 Vista Dunes Mobile Home Park $ 750,000 $ 745,956 $ 8,021 2/23/98
142 Casa Hermosa $ 750,000 $ 744,700 $16,925 6/12/97
143 Peakwood Medical Office Bldg $ 742,500 $ 741,256 $ 52 4/9/98
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ORIG. ORIG. REM.
INITIAL TERM TO REM. TERM AMORT. AMORT.
LOAN DUE MATURITY MATURITY TO MATURITY TERM(4) TERM SECURITY
NO. PROPERTY NAME DATE DATE (MOS) (MOS) (MOS) (MOS) TYPE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
108 Cactus Place Apartments 5/1/98 4/1/08 120 116 360 356 Fee Simple
109 Temple Plaza Associates-Apts 6/1/98 5/1/08 120 117 360 357 Fee Simple
110 762-808 N. Gordon Street 2/1/98 1/1/08 120 113 360 353 Fee Simple
111 Garden Villa Apts. 1/1/98 12/1/07 120 112 360 352 Fee Simple
112 601-6091/2 N.Western 12/1/97 11/1/07 120 111 360 351 Fee Simple
Av./4905-4913 W.Clinton St
113 West Valley Mini Storage 2/1/98 1/1/08 120 113 300 293 Fee Simple
114 8910 Washington Boulevard 7/1/98 6/1/08 120 118 360 358 Fee Simple
115 Roscoe Plaza Apartments 11/1/97 10/1/07 120 110 300 290 Fee Simple
116 Michael Boardman-Lake Terrace 7/1/98 6/1/08 120 118 300 298 Fee Simple
117 Rockhill/ Broadway Shop Center 7/1/98 6/1/08 120 118 360 358 Fee Simple
118 Villa Mira Monte Apts 6/1/98 5/1/08 120 117 360 357 Fee Simple
119 981 Calle Negocio 5/1/98 4/1/08 120 116 360 356 Fee Simple
120 Tahquitz Square 3/1/98 2/1/08 120 114 360 354 Fee Simple
121 Sweetwater Apartments (2C) 4/1/98 3/1/08 120 115 360 355 Fee Simple
122 Orange East & Orange West Apts 1/1/98 11/1/07 119 111 360 352 Fee Simple
123 1937 Sunset Circle (2D) 12/1/97 11/1/07 120 111 360 351 Fee Simple
124 Old Colorado Square 4/1/98 3/1/08 120 115 360 355 Fee Simple
125 Blythe Oceanview Apts 6/1/98 5/1/08 120 117 300 297 Fee Simple
126 Keen Apartments 1/1/98 12/1/27 360 352 360 352 Fee Simple
127 Tower Center Court 7/1/98 6/1/08 120 118 300 298 Fee Simple
128 Chapman Apts 6/1/98 5/1/08 120 117 360 357 Fee Simple
129 United Stor-All 3/1/98 2/1/08 120 114 300 294 Fee Simple
130 Stewart Court 7/1/98 6/1/08 120 118 300 298 Fee Simple
131 1150 South Bristol Street 7/1/98 6/1/08 120 118 300 298 Fee Simple
132 3315-3345 Newport Boulevard 4/1/98 3/1/08 120 115 360 355 Fee Simple
133 Office Building (Yale Avenue) 4/1/98 3/1/08 120 115 300 295 Fee Simple
134 Imperial Apartments 5/1/98 4/1/08 120 116 360 356 Fee Simple
135 Park Plaza Center 2/1/98 1/1/08 120 113 360 353 Fee Simple
136 Bali Hai Apartments 3/1/98 2/1/08 120 114 360 354 Fee Simple
137 140 E. Commonwealth Ave. 1/1/98 12/1/07 120 112 360 352 Fee Simple
138 Millcreek Shoppes 3/1/98 2/1/08 120 114 360 354 Fee Simple
139 Paradise Plaza 11/1/97 10/1/07 120 110 300 290 Fee Simple
140 Holly Tree Mobile Home Park 6/1/98 5/1/08 120 117 300 297 Fee Simple
141 Vista Dunes Mobile Home Park 4/1/98 3/1/08 120 115 300 295 Fee Simple
142 Casa Hermosa 8/1/97 6/30/07 120 107 360 347 Fee Simple
143 Peakwood Medical Office Bldg 6/1/98 5/1/08 120 117 360 357 Fee Simple
</TABLE>
II-4
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
RELATED BORROWER ORIGINAL CUT-OFF
LOAN LOAN GROUPS PRINCIPAL CUT-OFF DATE BAL./ NOTE
NO. PROPERTY NAME (BY LOAN NO.) BALANCE DATE BALANCE UNIT OR SF(3) DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
144 Costa Mesa Super 8 Motel $ 741,000 $ 738,187 $10,397 12/5/97
145 Ocotillo Terrace 108, 111 $ 730,000 $ 729,206 $22,788 5/27/98
146 The Pines Apts $ 705,000 $ 701,358 $21,917 2/24/98
147 Russell Avenue Apartments $ 699,000 $ 697,233 $24,901 3/18/98
148 Centrifugal Casting Co.-10714 $ 698,000 $ 696,932 $ 39 4/24/98
149 5151 Commerce Avenue $ 681,000 $ 675,214 $ 36 10/17/97
150 35 North Alboni Place $ 675,000 $ 673,247 $16,421 3/2/98
151 555 Virginia Drive $ 675,000 $ 669,687 $ 62 11/10/97
152 Audubon Center 42, 100 $ 668,000 $ 665,132 $ 60 3/26/98
153 Bryan Apartments $ 665,000 $ 664,277 $22,143 5/21/98
154 1645-55 Grant Street $ 660,000 $ 658,043 $ 43 5/14/98
155 5408 North 99th Street $ 650,000 $ 648,945 $ 28 5/26/98
156 10960 Bluffside Drive $ 650,000 $ 648,704 $54,059 4/8/98
157 Whitehall Apartments $ 650,000 $ 648,703 $22,369 4/10/98
158 Progress Bulletin Building $ 650,000 $ 647,404 $ 18 1/23/98
159 Aida Renta-Squire Apts $ 640,000 $ 639,328 $35,518 5/13/98
160 2263-2273 Harbor Boulevard $ 640,000 $ 638,424 $ 68 3/17/98
161 Park Towne Place Apts. $ 641,000 $ 637,608 $26,567 10/29/97
162 Eugie Terrace Apts $ 635,000 $ 633,437 $25,337 3/26/98
163 Firestone Tire Store $ 626,500 $ 625,346 $ 66 5/22/98
164 The Singer Building $ 625,000 $ 620,347 $ 33 11/4/97
165 La Verne Shopping Center $ 625,000 $ 620,191 $ 38 10/7/97
166 Chambers Plaza Shopping Center $ 612,500 $ 611,253 $ 34 3/9/98
167 AAA Mini Max Storage 129 $ 610,000 $ 606,559 $ 12 1/22/98
168 Montego & Wyndham Apts. $ 600,000 $ 597,236 $20,594 11/19/97
169 Mayfair Terrace $ 592,500 $ 591,447 $ 9,857 4/21/98
170 Universal Care (2360 Pacific) 85, 177, 187 $ 590,000 $ 587,387 $ 63 2/19/98
171 Cinnibar Square Apartments $ 545,250 $ 542,145 $19,362 9/24/97
172 2500 East Ball Road $ 525,000 $ 524,555 $ 57 5/6/98
173 Eckerd Drug Store $ 525,000 $ 523,193 $ 60 9/15/97
174 ParadiseArbor Apartments 181 $ 522,000 $ 520,358 $18,584 1/28/98
175 Los Porticos Apartments $ 510,000 $ 509,288 $21,220 5/4/98
176 11737 Vanowen St. $ 510,000 $ 508,081 $22,090 12/1/97
177 Universal Care (1820 Lincoln) 85, 170, 187 $ 507,000 $ 504,754 $ 89 2/19/98
178 Billy's Cove Apartments $ 500,000 $ 498,549 $15,580 4/15/98
179 2612 Van Patten St. $ 500,000 $ 497,354 $22,607 10/2/97
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ORIG. ORIG. REM.
INITIAL TERM TO REM. TERM AMORT. AMORT.
LOAN DUE MATURITY MATURITY TO MATURITY TERM(4) TERM SECURITY
NO. PROPERTY NAME DATE DATE (MOS) (MOS) (MOS) (MOS) TYPE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
144 Costa Mesa Super 8 Motel 2/1/98 1/1/08 120 113 360 353 Fee Simple
145 Ocotillo Terrace 7/1/98 6/1/08 120 118 360 358 Fee Simple
146 The Pines Apts 4/1/98 3/1/08 120 115 300 295 Fee Simple
147 Russell Avenue Apartments 5/1/98 4/1/08 120 116 360 356 Fee Simple
148 Centrifugal Casting Co.-10714 6/1/98 5/1/08 120 117 360 357 Fee Simple
149 5151 Commerce Avenue 12/1/97 11/1/07 120 111 300 291 Fee Simple
150 35 North Alboni Place 5/1/98 4/1/08 120 116 360 356 Fee Simple
151 555 Virginia Drive 1/1/98 12/1/07 120 112 278 270 Fee Simple
152 Audubon Center 5/1/98 4/1/08 120 116 300 296 Fee Simple
153 Bryan Apartments 7/1/98 6/1/08 120 118 360 358 Fee Simple
154 1645-55 Grant Street 7/1/98 6/1/08 120 118 240 238 Fee Simple
155 5408 North 99th Street 7/1/98 6/1/08 120 118 300 298 Fee Simple
156 10960 Bluffside Drive 6/1/98 5/1/08 120 117 360 357 Fee Simple
157 Whitehall Apartments 6/1/98 5/1/08 120 117 360 357 Fee Simple
158 Progress Bulletin Building 3/1/98 2/1/08 120 114 360 354 Fee Simple
159 Aida Renta-Squire Apts 7/1/98 6/1/08 120 118 360 358 Fee Simple
160 2263-2273 Harbor Boulevard 5/1/98 4/1/08 120 116 360 356 Fee Simple
161 Park Towne Place Apts. 12/1/97 11/1/07 120 111 360 351 Fee Simple
162 Eugie Terrace Apts 5/1/98 4/1/08 120 116 360 356 Fee Simple
163 Firestone Tire Store 7/1/98 6/1/08 120 118 300 298 Fee Simple
164 The Singer Building 1/1/98 12/1/07 120 112 300 292 Fee Simple
165 La Verne Shopping Center 12/1/97 11/1/07 120 111 300 291 Fee Simple
166 Chambers Plaza Shopping Center 5/1/98 4/1/08 120 116 360 356 Fee Simple
167 AAA Mini Max Storage 3/1/98 2/1/08 120 114 300 294 Fee Simple
168 Montego & Wyndham Apts. 1/1/98 12/1/07 120 112 360 352 Fee Simple
169 Mayfair Terrace 6/1/98 5/1/08 120 117 360 357 Fee Simple
170 Universal Care (2360 Pacific) 4/1/98 3/1/08 120 115 300 295 Fee Simple
171 Cinnibar Square Apartments 11/1/97 10/1/07 120 110 342 332 Fee Simple
172 2500 East Ball Road 7/1/98 6/1/08 120 118 360 358 Fee Simple
173 Eckerd Drug Store 11/1/97 10/1/07 120 110 360 350 Fee Simple
174 ParadiseArbor Apartments 4/1/98 3/1/08 120 115 360 355 Fee Simple
175 Los Porticos Apartments 7/1/98 6/1/08 120 118 360 358 Fee Simple
176 11737 Vanowen St. 2/1/98 1/1/08 120 113 360 353 Fee Simple
177 Universal Care (1820 Lincoln) 4/1/98 3/1/08 120 115 300 295 Fee Simple
178 Billy's Cove Apartments 6/1/98 5/1/08 120 117 300 297 Fee Simple
179 2612 Van Patten St. 12/1/97 11/1/07 120 111 360 351 Fee Simple
</TABLE>
II-5
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION - I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
RELATED BORROWER ORIGINAL CUT-OFF
LOAN LOAN GROUPS PRINCIPAL CUT-OFF DATE BAL./ NOTE
NO. PROPERTY NAME (BY LOAN NO.) BALANCE DATE BALANCE UNIT OR SF(3) DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
180 18312 Collins Street $ 500,000 $ 490,099 $11,398 12/1/97
181 Orangewood Apartments 174 $ 480,000 $ 478,572 $17,725 1/28/98
182 Ocean View Apartments $ 472,500 $ 470,021 $13,824 5/7/98
183 101-109 West Foothill Blvd $ 450,000 $ 447,546 $ 75 9/26/97
184 Salcorp $ 444,000 $ 442,248 $ 28 12/1/97
185 318 N. Mariposa $ 438,750 $ 436,134 $13,629 1/21/98
186 320 N. Ardmore Avenue $ 431,250 $ 428,483 $11,902 10/30/97
187 Universal Care (1814 Lincoln) 85, 170, 177 $ 412,500 $ 410,673 $ 91 2/19/98
188 5742-5766 Camerford Avenue $ 403,000 $ 400,062 $16,669 11/13/97
189 Ocean Village Cottages (2E) $ 400,000 $ 398,176 $44,242 1/26/98
190 Oso Home Care $ 340,000 $ 335,168 $ 45 10/2/97
191 Cox Office Building $ 315,000 $ 313,755 $ 57 10/10/97
192 13931 Enterprise Drive $ 266,000 $ 265,003 $ 37 9/4/97
193 RIMO Manufacturing 115, 194 $ 200,000 $ 198,547 $ 33 9/11/97
194 Promatic Industries 115, 193 $ 200,000 $ 198,547 $ 33 9/11/97
Total/Weighted Average: 317770252.32
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ORIG. ORIG. REM.
INITIAL TERM TO REM. TERM AMORT. AMORT.
LOAN DUE MATURITY MATURITY TO MATURITY TERM(4) TERM SECURITY
NO. PROPERTY NAME DATE DATE (MOS) (MOS) (MOS) (MOS) TYPE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
180 18312 Collins Street 2/1/98 1/1/13 180 173 180 173 Fee Simple
181 Orangewood Apartments 4/1/98 3/1/08 120 115 360 355 Fee Simple
182 Ocean View Apartments 7/1/98 6/1/08 120 118 180 178 Fee Simple
183 101-109 West Foothill Blvd 11/1/97 10/1/07 120 110 360 350 Fee Simple
184 Salcorp 2/1/98 1/1/08 120 113 360 353 Fee Simple
185 318 N. Mariposa 3/1/98 2/1/08 120 114 300 294 Fee Simple
186 320 N. Ardmore Avenue 12/1/97 11/1/27 360 351 360 351 Fee Simple
187 Universal Care (1814 Lincoln) 4/1/98 3/1/08 120 115 300 295 Fee Simple
188 5742-5766 Camerford Avenue 1/1/98 12/1/07 120 112 300 292 Fee Simple
189 Ocean Village Cottages (2E) 3/1/98 2/1/08 120 114 360 354 Fee Simple
190 Oso Home Care 12/1/97 11/1/07 120 111 300 291 Fee Simple
191 Cox Office Building 12/1/97 11/1/07 120 111 360 351 Fee Simple
192 13931 Enterprise Drive 11/1/97 10/1/07 120 110 360 350 Fee Simple
193 RIMO Manufacturing 11/1/97 10/1/07 120 110 300 290 Fee Simple
194 Promatic Industries 11/1/97 10/1/07 120 110 300 290 Fee Simple
Total/Weighted Average: 124 119 330 325
</TABLE>
II-6
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION- II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate Lifetime
Loan Loan Mortgage Gross --------------------------
No. Property Name Type Rate (6) Index Margin Ceiling Floor
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) Fixed 8.625%
2 Apple Valley I (1A) Fixed 8.375%
3 Alex Bell Plaza (1A) Fixed 8.375%
4 Apple Valley III (1A) Fixed 8.375%
5 Dryden II (1A) Fixed 8.375%
6 Apple Valley II (1A) Fixed 8.375%
7 Dayton Towne Center (1A) Fixed 8.375%
8 CAG Industrial (1B) Fixed 7.384%
9 Galleria I, II, III (1B) Fixed 7.384%
10 Stewart Center (1B) Fixed 7.384%
11 Wausau Container (1B) Fixed 7.384%
12 Cypress Park Bldg. 4 (1C) ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
13 Delco K-2 (1C) ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
14 3975 Dayton Park (1C) (2A) ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
15 TrailsEnd (1C) ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
16 Cypress Park Bldg. 3 (1C) ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
17 Blue Dog Cafe (1C) ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
18 The Harvard Market Fixed 7.375%
19 Pavilions at Rancho Mirage Fixed 7.440%
20 Del Rayo Village Fixed 7.385%
21 Irvine Spectrum Auto Center Fixed 7.500%
22 710 Euclid-Park San Dimas Fixed 7.125%
23 Cedar Plaza Shopping Ctr Fixed 7.250%
24 909 Ocean Front Walk Fixed 7.875%
25 Pioneer Center & DIHO Plaza Fixed 7.500%
26 Select Suites - Airport Center Fixed 7.500%
27 1401 Dove Street ARM 9.000% 6 Mo. LIBOR 3.000% 15.000% 9.000%
28 600 South Lake Financial Ctr Fixed 7.750%
29 Upper Main Street Apartments (1D) (2B) Fixed 8.625%
30 Westland Place Apartments (1D) Fixed 8.625%
31 87 - 101 Spring Street (1D) Fixed 8.625%
32 124-128 Collins Street (1D) Fixed 8.625%
33 22 Huntington (1D) Fixed 8.625%
34 Paradise Garden Apartments Fixed 7.500%
35 Beaumont Tower Venture, Ltd. Fixed 7.380%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate
Periodic (7) Rate Reset Next
Loan ------------------------------ Date Rate Reset Loan
No. Property Name Max. Increase Max. Decrease Frequency Date Constant
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) 9.865%
2 Apple Valley I (1A) 9.659%
3 Alex Bell Plaza (1A) 9.659%
4 Apple Valley III (1A) 9.659%
5 Dryden II (1A) 9.659%
6 Apple Valley II (1A) 9.659%
7 Dayton Towne Center (1A) 9.659%
8 CAG Industrial (1B) 8.295%
9 Galleria I, II, III (1B) 8.295%
10 Stewart Center (1B) 8.295%
11 Wausau Container (1B) 8.295%
12 Cypress Park Bldg. 4 (1C) 1.500% 1.500% 6 11/1/98 12.537%
13 Delco K-2 (1C) 1.500% 1.500% 6 11/1/98 10.492%
14 3975 Dayton Park (1C) (2A) 1.500% 1.500% 6 11/1/98 10.492%
15 TrailsEnd (1C) 1.500% 1.500% 6 11/1/98 10.492%
16 Cypress Park Bldg. 3 (1C) 1.500% 1.500% 6 11/1/98 12.537%
17 Blue Dog Cafe (1C) 1.500% 1.500% 6 11/1/98 10.492%
18 The Harvard Market 8.377%
19 Pavilions at Rancho Mirage 8.430%
20 Del Rayo Village 8.385%
21 Irvine Spectrum Auto Center 8.479%
22 710 Euclid-Park San Dimas 8.085%
23 Cedar Plaza Shopping Ctr 8.756%
24 909 Ocean Front Walk 8.798%
25 Pioneer Center & DIHO Plaza 8.954%
26 Select Suites - Airport Center 8.868%
27 1401 Dove Street 1.500% 1.500% 6 1/1/99 10.176%
28 600 South Lake Financial Ctr 8.941%
29 Upper Main Street Apartments (1D) (2B) 9.443%
30 Westland Place Apartments (1D) 9.443%
31 87 - 101 Spring Street (1D) 9.443%
32 124-128 Collins Street (1D) 9.443%
33 22 Huntington (1D) 9.443%
34 Paradise Garden Apartments 10.503%
35 Beaumont Tower Venture, Ltd. 9.656%
<CAPTION>
- ---------------------------------------------------------------------------------------
Interest Scheduled
Loan Accrual Balloon Balloon
No. Property Name Method Balance (8) LTV (3) (8)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 2 River Place (1A) Actual/360 $3,454,524 59.3%
2 Apple Valley I (1A) Actual/360 $3,106,675 59.3%
3 Alex Bell Plaza (1A) Actual/360 $2,697,902 59.3%
4 Apple Valley III (1A) Actual/360 $2,043,866 59.3%
5 Dryden II (1A) Actual/360 $1,880,357 59.3%
6 Apple Valley II (1A) Actual/360 $1,635,092 59.3%
7 Dayton Towne Center (1A) Actual/360 $1,083,249 59.3%
8 CAG Industrial (1B) Actual/360 $4,518,881 62.4%
9 Galleria I, II, III (1B) Actual/360 $3,220,219 62.4%
10 Stewart Center (1B) Actual/360 $2,723,310 62.4%
11 Wausau Container (1B) Actual/360 $ 859,020 62.4%
12 Cypress Park Bldg. 4 (1C) Actual/360 $1,492,001 45.2%
13 Delco K-2 (1C) Actual/360 $1,673,580 45.2%
14 3975 Dayton Park (1C) (2A) Actual/360 $1,527,141 45.2%
15 TrailsEnd (1C) Actual/360 $1,171,506 45.2%
16 Cypress Park Bldg. 3 (1C) Actual/360 $ 636,587 45.2%
17 Blue Dog Cafe (1C) Actual/360 $ 334,717 45.2%
18 The Harvard Market Actual/360 $7,809,280 63.7%
19 Pavilions at Rancho Mirage Actual/360 $7,283,706 69.4%
20 Del Rayo Village Actual/360 $6,248,825 61.6%
21 Irvine Spectrum Auto Center Actual/360 $6,150,413 66.1%
22 710 Euclid-Park San Dimas Actual/360 $5,469,799 65.9%
23 Cedar Plaza Shopping Ctr Actual/360 $4,844,366 57.7%
24 909 Ocean Front Walk Actual/360 $5,209,318 58.2%
25 Pioneer Center & DIHO Plaza Actual/360 $4,477,597 51.7%
26 Select Suites - Airport Center Actual/360 $4,419,621 41.6%
27 1401 Dove Street Actual/360 $4,314,734 51.6%
28 600 South Lake Financial Ctr Actual/360 $4,227,286 57.9%
29 Upper Main Street Apartments (1D) (2B) Actual/360 $1,119,487 58.3%
30 Westland Place Apartments (1D) Actual/360 $ 890,333 58.3%
31 87 - 101 Spring Street (1D) Actual/360 $ 778,374 58.3%
32 124-128 Collins Street (1D) Actual/360 $ 621,008 58.3%
33 22 Huntington (1D) Actual/360 $ 587,620 58.3%
34 Paradise Garden Apartments Actual/360 $ 0 0.0%
35 Beaumont Tower Venture, Ltd. Actual/360 $ 0 0.0%
</TABLE>
II-7
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION- II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate Lifetime
Loan Loan Mortgage Gross --------------------------
No. Property Name Type Rate (6) Index Margin Ceiling Floor
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
36 Woodlands Medical Building Fixed 7.250%
37 Allentowne Village Apartments Fixed 7.101%
38 Artisan Components Building Fixed 7.356%
39 Barstow Road Center Fixed 7.375%
40 Berry Hill Shopping Center Fixed 7.750%
41 Ridgewood Retirement Center Fixed 7.750%
42 Central Village Fixed 7.750%
43 Lankershim Fixed 7.625%
44 900 Calle Negocio Industrial Fixed 7.750%
45 The Inland Atrium Fixed 7.750%
46 Robins Lane Apartments Fixed 7.250%
47 Airport Corporate Center Fixed 8.375%
48 Whitney Mesa Mini Storage Fixed 8.125%
49 Tercek Property/Johns Westside Fixed 7.375%
50 Garden Estates Apartments Fixed 7.875%
51 Carlton Way Towers Fixed 8.625%
52 Lincoln Business Center Fixed 7.625%
53 Centerpoint Business Park Fixed 7.750%
54 Jordano's Marketplace Fixed 7.750%
55 Chardonnay Apartments Fixed 7.251%
56 Rediger Investment Corp. Fixed 7.262%
57 1700 SL Investors-South Lamar Fixed 7.152%
58 Westgate Center Fixed 8.250%
59 Burke Junction Shopping Center Fixed 7.500%
60 Rosecrans Industrial Fixed 7.375%
61 1010 First Street Fixed 8.875%
62 Thunder Canyon Plaza Fixed 8.375%
63 441 State Highway 71 Fixed 7.500%
64 Tomball Plaza Shopping Center Fixed 7.625%
65 8 Studebaker Fixed 7.500%
66 Norfolk County Inn Fixed 8.750%
67 Towne Park I & II Apartments Fixed 8.375%
68 ACE Market Place Fixed 8.375%
69 Flagstaff Inn Partnership Fixed 9.625%
70 Ft. Collins Sleep Inn Motel Fixed 8.250%
71 Alvin Towne Center ARM 9.500% 6 Mo. LIBOR 3.550% 15.500% 9.500%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate
Periodic (7) Rate Reset Next
Loan ------------------------------ Date Rate Reset Loan
No. Property Name Max. Increase Max. Decrease Frequency Date Constant
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
36 Woodlands Medical Building 8.274%
37 Allentowne Village Apartments 8.151%
38 Artisan Components Building 8.359%
39 Barstow Road Center 8.288%
40 Berry Hill Shopping Center 8.689%
41 Ridgewood Retirement Center 9.064%
42 Central Village 9.154%
43 Lankershim 9.051%
44 900 Calle Negocio Industrial 8.689%
45 The Inland Atrium 8.688%
46 Robins Lane Apartments 8.272%
47 Airport Corporate Center 9.659%
48 Whitney Mesa Mini Storage 7.199%
49 Tercek Property/Johns Westside 8.377%
50 Garden Estates Apartments 8.798%
51 Carlton Way Towers 9.440%
52 Lincoln Business Center 8.584%
53 Centerpoint Business Park 9.155%
54 Jordano's Marketplace 9.154%
55 Chardonnay Apartments 8.758%
56 Rediger Investment Corp. 8.196%
57 1700 SL Investors-South Lamar 8.107%
58 Westgate Center 9.116%
59 Burke Junction Shopping Center 8.868%
60 Rosecrans Industrial 8.771%
61 1010 First Street 9.657%
62 Thunder Canyon Plaza 9.226%
63 441 State Highway 71 8.868%
64 Tomball Plaza Shopping Center 9.055%
65 8 Studebaker 8.868%
66 Norfolk County Inn 9.866%
67 Towne Park I & II Apartments 9.223%
68 ACE Market Place 9.221%
69 Flagstaff Inn Partnership 12.727%
70 Ft. Collins Sleep Inn Motel 9.559%
71 Alvin Towne Center 1.500% 1.500% 6 1/1/99 11.273%
<CAPTION>
- ---------------------------------------------------------------------------------------
Interest Scheduled
Loan Accrual Balloon Balloon
No. Property Name Method Balance (8) LTV (3) (8)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
36 Woodlands Medical Building Actual/360 $3,244,683 63.6%
37 Allentowne Village Apartments Actual/360 $3,104,230 61.7%
38 Artisan Components Building Actual/360 $2,948,314 57.8%
39 Barstow Road Center Actual/360 $2,906,781 62.8%
40 Berry Hill Shopping Center Actual/360 $2,842,615 62.5%
41 Ridgewood Retirement Center Actual/360 $2,619,162 51.4%
42 Central Village Actual/360 $2,562,752 59.6%
43 Lankershim Actual/360 $2,502,460 61.2%
44 900 Calle Negocio Industrial Actual/360 $2,623,954 61.4%
45 The Inland Atrium Actual/360 $2,526,069 65.6%
46 Robins Lane Apartments Actual/360 $2,465,467 64.9%
47 Airport Corporate Center Actual/360 $2,289,130 57.2%
48 Whitney Mesa Mini Storage Actual/360 $2,165,181 30.2%
49 Tercek Property/Johns Westside Actual/360 $2,186,600 60.6%
50 Garden Estates Apartments Actual/360 $2,192,878 64.8%
51 Carlton Way Towers Actual/360 $2,207,503 71.2%
52 Lincoln Business Center Actual/360 $2,041,202 64.8%
53 Centerpoint Business Park Actual/360 $1,871,358 60.4%
54 Jordano's Marketplace Actual/360 $1,851,234 48.1%
55 Chardonnay Apartments Actual/360 $1,727,028 57.6%
56 Rediger Investment Corp. Actual/360 $1,756,583 62.7%
57 1700 SL Investors-South Lamar Actual/360 $1,751,572 51.5%
58 Westgate Center Actual/360 $1,723,195 59.4%
59 Burke Junction Shopping Center Actual/360 $1,567,178 62.3%
60 Rosecrans Industrial Actual/360 $1,497,342 52.1%
61 1010 First Street Actual/360 $1,643,630 63.2%
62 Thunder Canyon Plaza Actual/360 $1,617,080 66.3%
63 441 State Highway 71 Actual/360 $1,462,373 60.9%
64 Tomball Plaza Shopping Center Actual/360 $1,120,953 45.8%
65 8 Studebaker Actual/360 $1,446,127 51.9%
66 Norfolk County Inn Actual/360 $1,473,460 58.9%
67 Towne Park I & II Apartments Actual/360 $1,528,117 70.7%
68 ACE Market Place Actual/360 $1,505,970 65.5%
69 Flagstaff Inn Partnership Actual/360 $ 0 0.0%
70 Ft. Collins Sleep Inn Motel Actual/360 $1,345,104 56.0%
71 Alvin Towne Center Actual/360 $1,200,160 50.6%
</TABLE>
II-8
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION- II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate Lifetime
Loan Loan Mortgage Gross --------------------------
No. Property Name Type Rate (6) Index Margin Ceiling Floor
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
72 Brentwood Plaza Fixed 7.625% 9.055% Actual/360 $1,308,653 60.2%
73 The Granary Fixed 7.625% 9.051% Actual/360 $1,293,339 60.2%
74 The Village Apartments Fixed 8.625% 9.442% Actual/360 $1,335,501 70.3%
75 15441 Nordhoff Street Apts. Fixed 8.000% 8.904% Actual/360 $1,319,148 66.0%
76 Yukon Square Shopping Ctr Fixed 8.125% 9.012% Actual/360 $1,322,516 66.1%
77 Emerald Park Apartments Fixed 8.000% 8.905% Actual/360 $1,319,145 66.0%
78 111 Elm Fixed 8.875% 9.658% Actual/360 $1,341,376 64.6%
79 La Fiesta Center Fixed 8.625% 9.443% Actual/360 $1,318,805 66.8%
80 Courtsyde Square Fixed 8.500% 9.227% Actual/360 $1,323,585 52.7%
81 Grand Avenue R&D ARM 9.625% 10.589% Actual/360 $1,260,052 58.5%
82 Cypress Chemical Bldg. Fixed 9.125% 9.877% Actual/360 $1,302,462 60.6%
83 16307-16331 Arthur Street ARM 9.125% 10.280% Actual/360 $1,310,428 66.0%
84 Roscoe Sepulveda Center Fixed 7.750% 8.693% Actual/360 $1,200,714 65.6%
85 Universal Care (17660 Lakewood) Fixed 8.750% 9.972% Actual/360 $1,113,945 59.9%
86 New Hampshire Office Bldg. Fixed 9.000% 9.767% Actual/360 $1,209,961 67.2%
87 Madison Square Retail Center ARM 8.875% 9.659% Actual/360 $1,193,824 67.1%
88 Beaujolais Village Fixed 8.000% 8.905% Actual/360 $1,165,247 68.5%
89 Mountainview Fixed 8.000% 8.805% Actual/360 $1,180,797 71.6%
90 Jackovics, Thomas & Judit Fixed 8.625% 9.439% Actual/360 $1,153,464 57.0%
91 5900 Reseda Blvd. Fixed 8.250% 9.118% Actual/360 $1,131,381 70.7%
92 Southgate Towne Center Fixed 8.625% 9.442% Actual/360 $1,135,175 49.1%
93 Portola Road Office Building Fixed 8.250% 9.118% Actual/360 $1,104,863 58.2%
94 Fox Crossing Shopping Center Fixed 8.375% 9.121% Actual/360 $1,082,924 67.7%
95 PV Oasis Shopping Center Fixed 8.125% 9.009% Actual/360 $1,057,562 50.4%
96 111 and 125 S. Main Street Fixed 8.375% 9.224% Actual/360 $1,061,748 63.6%
97 Carlton Court Apartments Fixed 8.375% 9.223% Actual/360 $1,018,744 65.7%
98 6232 Manchester Fixed 8.500% 9.227% Actual/360 $1,018,142 64.4%
99 Palm Terrace Apartments Fixed 8.750% 9.545% Actual/360 $1,004,606 67.0%
100 Grand Rapids Shopping Center Fixed 7.750% 9.154% Actual/360 $ 885,372 59.0%
101 Rainbow Flag Apartments Fixed 8.250% 9.115% Actual/360 $ 972,057 57.9%
102 Sea Fox Apartments Fixed 8.250% 9.115% Actual/360 $ 945,547 70.0%
103 Woodstock Plaza Fixed 8.125% 9.011% Actual/360 $ 935,020 61.7%
104 Parkview Village Apartments Fixed 8.125% 9.007% Actual/360 $ 934,367 70.5%
105 Seashore Investment Company ARM 9.375% 14.001% Actual/360 $ 0 0.0%
106 Sierra Grove Apartments Fixed 8.125% 9.007% Actual/360 $ 925,552 52.1%
107 10356 Commerce ARM 9.375% 10.084% Actual/360 $ 947,850 65.6%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate
Periodic (7) Rate Reset Next
Loan ------------------------------ Date Rate Reset Loan
No. Property Name Max. Increase Max. Decrease Frequency Date Constant
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
72 Brentwood Plaza Fixed 7.625%
73 The Granary Fixed 7.625%
74 The Village Apartments Fixed 8.625%
75 15441 Nordhoff Street Apts. Fixed 8.000%
76 Yukon Square Shopping Ctr Fixed 8.125%
77 Emerald Park Apartments Fixed 8.000%
78 111 Elm Fixed 8.875%
79 La Fiesta Center Fixed 8.625%
80 Courtsyde Square Fixed 8.500%
81 Grand Avenue R&D ARM 9.625% 6 Mo. LIBOR 3.750% 15.625% 9.625%
82 Cypress Chemical Bldg. Fixed 9.125%
83 16307-16331 Arthur Street ARM 9.125% 6 Mo. LIBOR 3.250% 15.125% 9.125%
84 Roscoe Sepulveda Center Fixed 7.750%
85 Universal Care (17660 Lakewood) Fixed 8.750%
86 New Hampshire Office Bldg. Fixed 9.000%
87 Madison Square Retail Center ARM 8.875% 6 Mo. LIBOR 3.000% 14.875% 8.875%
88 Beaujolais Village Fixed 8.000%
89 Mountainview Fixed 8.000%
90 Jackovics, Thomas & Judit Fixed 8.625%
91 5900 Reseda Blvd. Fixed 8.250%
92 Southgate Towne Center Fixed 8.625%
93 Portola Road Office Building Fixed 8.250%
94 Fox Crossing Shopping Center Fixed 8.375%
95 PV Oasis Shopping Center Fixed 8.125%
96 111 and 125 S. Main Street Fixed 8.375%
97 Carlton Court Apartments Fixed 8.375%
98 6232 Manchester Fixed 8.500%
99 Palm Terrace Apartments Fixed 8.750%
100 Grand Rapids Shopping Center Fixed 7.750%
101 Rainbow Flag Apartments Fixed 8.250%
102 Sea Fox Apartments Fixed 8.250%
103 Woodstock Plaza Fixed 8.125%
104 Parkview Village Apartments Fixed 8.125%
105 Seashore Investment Company ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
106 Sierra Grove Apartments Fixed 8.125%
107 10356 Commerce ARM 9.375% 6 Mo. LIBOR 3.300% 15.375% 9.375%
<CAPTION>
- ---------------------------------------------------------------------------------------
Interest Scheduled
Loan Accrual Balloon Balloon
No. Property Name Method Balance (8) LTV (3) (8)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
72 Brentwood Plaza Actual/360 $1,308,653 60.2%
73 The Granary Actual/360 $1,293,339 60.2%
74 The Village Apartments Actual/360 $1,335,501 70.3%
75 15441 Nordhoff Street Apts. Actual/360 $1,319,148 66.0%
76 Yukon Square Shopping Ctr Actual/360 $1,322,516 66.1%
77 Emerald Park Apartments Actual/360 $1,319,145 66.0%
78 111 Elm Actual/360 $1,341,376 64.6%
79 La Fiesta Center Actual/360 $1,318,805 66.8%
80 Courtsyde Square Actual/360 $1,323,585 52.7%
81 Grand Avenue R&D Actual/360 $1,260,052 58.5%
82 Cypress Chemical Bldg. Actual/360 $1,302,462 60.6%
83 16307-16331 Arthur Street Actual/360 $1,310,428 66.0%
84 Roscoe Sepulveda Center Actual/360 $1,200,714 65.6%
85 Universal Care (17660 Lakewood) Actual/360 $1,113,945 59.9%
86 New Hampshire Office Bldg. Actual/360 $1,209,961 67.2%
87 Madison Square Retail Center Actual/360 $1,193,824 67.1%
88 Beaujolais Village Actual/360 $1,165,247 68.5%
89 Mountainview Actual/360 $1,180,797 71.6%
90 Jackovics, Thomas & Judit Actual/360 $1,153,464 57.0%
91 5900 Reseda Blvd. Actual/360 $1,131,381 70.7%
92 Southgate Towne Center Actual/360 $1,135,175 49.1%
93 Portola Road Office Building Actual/360 $1,104,863 58.2%
94 Fox Crossing Shopping Center Actual/360 $1,082,924 67.7%
95 PV Oasis Shopping Center Actual/360 $1,057,562 50.4%
96 111 and 125 S. Main Street Actual/360 $1,061,748 63.6%
97 Carlton Court Apartments Actual/360 $1,018,744 65.7%
98 6232 Manchester Actual/360 $1,018,142 64.4%
99 Palm Terrace Apartments Actual/360 $1,004,606 67.0%
100 Grand Rapids Shopping Center Actual/360 $ 885,372 59.0%
101 Rainbow Flag Apartments Actual/360 $ 972,057 57.9%
102 Sea Fox Apartments Actual/360 $ 945,547 70.0%
103 Woodstock Plaza Actual/360 $ 935,020 61.7%
104 Parkview Village Apartments Actual/360 $ 934,367 70.5%
105 Seashore Investment Company Actual/360 $ 0 0.0%
106 Sierra Grove Apartments Actual/360 $ 925,552 52.1%
107 10356 Commerce Actual/360 $ 947,850 65.6%
</TABLE>
II-9
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION- II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate Lifetime
Loan Loan Mortgage Gross --------------------------
No. Property Name Type Rate (6) Index Margin Ceiling Floor
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
108 Cactus Place Apartments Fixed 8.250%
109 Temple Plaza Associates-Apts Fixed 8.375%
110 762-808 N. Gordon Street Fixed 8.250%
111 Garden Villa Apts. ARM 9.625% 6 Mo. LIBOR 3.750% 15.625% 9.625%
112 601-6091/2 N.Western Av./4905-4913 W.Clinton ARM 9.250% 6 Mo. LIBOR 3.500% 14.375% 8.375%
St
113 West Valley Mini Storage Fixed 8.250%
114 8910 Washington Boulevard Fixed 8.375%
115 Roscoe Plaza Apartments ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
116 Michael Boardman-Lake Terrace Fixed 8.250%
117 Rockhill/ Broadway Shop Center Fixed 8.375%
118 Villa Mira Monte Apts Fixed 7.750%
119 981 Calle Negocio Fixed 8.125%
120 Tahquitz Square Fixed 8.250%
121 Sweetwater Apartments (2C) Fixed 8.000%
122 Orange East & Orange West Apts Fixed 8.875%
123 1937 Sunset Circle (2D) Fixed 8.250%
124 Old Colorado Square Fixed 8.625%
125 Blythe Oceanview Apts Fixed 8.250%
126 Keen Apartments ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
127 Tower Center Court Fixed 8.625%
128 Chapman Apts Fixed 8.125%
129 United Stor-All Fixed 9.125%
130 Stewart Court Fixed 8.125%
131 1150 South Bristol Street Fixed 8.625%
132 3315-3345 Newport Boulevard Fixed 8.375%
133 Office Building (Yale Avenue) Fixed 8.250%
134 Imperial Apartments ARM 8.500% 6 Mo. LIBOR 3.750% 15.500% 9.500%
135 Park Plaza Center Fixed 9.750%
136 Bali Hai Apartments Fixed 7.875%
137 140 E. Commonwealth Ave. ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
138 Millcreek Shoppes Fixed 8.500%
139 Paradise Plaza Fixed 9.375%
140 Holly Tree Mobile Home Park Fixed 8.000%
141 Vista Dunes Mobile Home Park Fixed 7.625%
142 Casa Hermosa ARM 9.625% 6 Mo. LIBOR 3.750% 15.750% 8.250%
143 Peakwood Medical Office Bldg Fixed 8.375%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate
Periodic (7) Rate Reset Next
Loan ------------------------------ Date Rate Reset Loan
No. Property Name Max. Increase Max. Decrease Frequency Date Constant
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
108 Cactus Place Apartments 9.118%
109 Temple Plaza Associates-Apts 9.226%
110 762-808 N. Gordon Street 9.115%
111 Garden Villa Apts. 1.500% 1.500% 6 12/1/98 10.305%
112 601-6091/2 N.Western Av./4905-4913 W.Clinton 1.500% 1.500% 6 11/1/98 9.974%
St
113 West Valley Mini Storage 9.556%
114 8910 Washington Boulevard 9.121%
115 Roscoe Plaza Apartments 1.500% 1.500% 6 10/1/98 10.483%
116 Michael Boardman-Lake Terrace 9.461%
117 Rockhill/ Broadway Shop Center 9.121%
118 Villa Mira Monte Apts 8.693%
119 981 Calle Negocio 9.011%
120 Tahquitz Square 9.114%
121 Sweetwater Apartments (2C) 8.905%
122 Orange East & Orange West Apts 9.659%
123 1937 Sunset Circle (2D) 9.115%
124 Old Colorado Square 9.443%
125 Blythe Oceanview Apts 9.560%
126 Keen Apartments 1.500% 1.500% 6 12/1/98 10.086%
127 Tower Center Court 9.867%
128 Chapman Apts 9.011%
129 United Stor-All 10.280%
130 Stewart Court 9.361%
131 1150 South Bristol Street 9.764%
132 3315-3345 Newport Boulevard 9.227%
133 Office Building (Yale Avenue) 9.560%
134 Imperial Apartments 1.500% 1.500% 6 10/1/98 9.334%
135 Park Plaza Center 10.433%
136 Bali Hai Apartments 8.794%
137 140 E. Commonwealth Ave. 1.500% 1.500% 6 12/1/98 10.086%
138 Millcreek Shoppes 9.329%
139 Paradise Plaza 10.494%
140 Holly Tree Mobile Home Park 9.357%
141 Vista Dunes Mobile Home Park 9.055%
142 Casa Hermosa 1.500% 1.500% 6 12/1/98 10.192%
143 Peakwood Medical Office Bldg 9.226%
<CAPTION>
- ---------------------------------------------------------------------------------------
Interest Scheduled
Loan Accrual Balloon Balloon
No. Property Name Method Balance (8) LTV (3) (8)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
108 Cactus Place Apartments Actual/360 $ 919,247 65.7%
109 Temple Plaza Associates-Apts Actual/360 $ 903,793 70.9%
110 762-808 N. Gordon Street Actual/360 $ 890,759 67.2%
111 Garden Villa Apts. Actual/360 $ 906,005 67.1%
112 601-6091/2 N.Western Av./4905-4913 W.Clinton Actual/360 $ 900,880 58.1%
St
113 West Valley Mini Storage Actual/360 $ 804,431 56.7%
114 8910 Washington Boulevard Actual/360 $ 879,877 67.7%
115 Roscoe Plaza Apartments Actual/360 $ 816,538 62.8%
116 Michael Boardman-Lake Terrace Actual/360 $ 786,371 50.7%
117 Rockhill/ Broadway Shop Center Actual/360 $ 839,267 67.7%
118 Villa Mira Monte Apts Actual/360 $ 813,600 58.1%
119 981 Calle Negocio Actual/360 $ 815,553 60.9%
120 Tahquitz Square Actual/360 $ 799,739 60.1%
121 Sweetwater Apartments (2C) Actual/360 $ 791,487 68.8%
122 Orange East & Orange West Apts Actual/360 $ 806,108 71.7%
123 1937 Sunset Circle (2D) Actual/360 $ 790,903 55.1%
124 Old Colorado Square Actual/360 $ 767,913 66.8%
125 Blythe Oceanview Apts Actual/360 $ 703,123 58.6%
126 Keen Apartments Actual/360 $ 0 0.0%
127 Tower Center Court Actual/360 $ 695,184 51.5%
128 Chapman Apts Actual/360 $ 740,725 70.5%
129 United Stor-All Actual/360 $ 698,985 58.2%
130 Stewart Court Actual/360 $ 683,461 55.1%
131 1150 South Bristol Street Actual/360 $ 692,262 62.9%
132 3315-3345 Newport Boulevard Actual/360 $ 731,008 66.5%
133 Office Building (Yale Avenue) Actual/360 $ 664,400 61.1%
134 Imperial Apartments Actual/360 $ 710,576 71.1%
135 Park Plaza Center Actual/360 $ 726,171 66.9%
136 Bali Hai Apartments Actual/360 $ 697,182 65.8%
137 140 E. Commonwealth Ave. Actual/360 $ 714,115 67.7%
138 Millcreek Shoppes Actual/360 $ 681,990 60.9%
139 Paradise Plaza Actual/360 $ 637,049 55.4%
140 Holly Tree Mobile Home Park Actual/360 $ 607,576 38.8%
141 Vista Dunes Mobile Home Park Actual/360 $ 601,679 27.3%
142 Casa Hermosa Actual/360 $ 691,915 66.9%
143 Peakwood Medical Office Bldg Actual/360 $ 657,907 63.9%
</TABLE>
II-10
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION- II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate Lifetime
Loan Loan Mortgage Gross --------------------------
No. Property Name Type Rate (6) Index Margin Ceiling Floor
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
144 Costa Mesa Super 8 Motel Fixed 9.375%
145 Ocotillo Terrace Fixed 8.125%
146 The Pines Apts Fixed 7.875%
147 Russell Avenue Apartments Fixed 8.125%
148 Centrifugal Casting Co.-10714 Fixed 8.750%
149 5151 Commerce Avenue Fixed 8.875%
150 35 North Alboni Place Fixed 8.000%
151 555 Virginia Drive Fixed 9.125%
152 Audubon Center Fixed 7.750%
153 Bryan Apartments Fixed 8.125%
154 1645-55 Grant Street Fixed 8.500%
155 5408 North 99th Street Fixed 8.750%
156 10960 Bluffside Drive Fixed 7.625%
157 Whitehall Apartments Fixed 7.625%
158 Progress Bulletin Building ARM 9.500% 6 Mo. LIBOR 3.750% 15.500% 9.500%
159 Aida Renta-Squire Apts Fixed 8.250%
160 2263-2273 Harbor Boulevard Fixed 8.250%
161 Park Towne Place Apts. Fixed 8.875%
162 Eugie Terrace Apts Fixed 8.250%
163 Firestone Tire Store Fixed 8.125%
164 The Singer Building Fixed 8.875%
165 La Verne Shopping Center Fixed 9.500%
166 Chambers Plaza Shopping Center Fixed 9.125%
167 AAA Mini Max Storage Fixed 9.125%
168 Montego & Wyndham Apts. Fixed 8.875%
169 Mayfair Terrace Fixed 8.125%
170 Universal Care (2360 Pacific) Fixed 8.750%
171 Cinnibar Square Apartments Fixed 8.875%
172 2500 East Ball Road Fixed 9.000%
173 Eckerd Drug Store Fixed 10.000%
174 ParadiseArbor Apartments Fixed 8.000%
175 Los Porticos Apartments Fixed 7.625%
176 11737 Vanowen St. ARM 10.250% 6 Mo. LIBOR 4.250% 16.250% 10.250%
177 Universal Care (1820 Lincoln) Fixed 8.750%
178 Billy's Cove Apartments Fixed 8.125%
179 2612 Van Patten St. Fixed 8.875%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate
Periodic (7) Rate Reset Next
Loan ------------------------------ Date Rate Reset Loan
No. Property Name Max. Increase Max. Decrease Frequency Date Constant
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
144 Costa Mesa Super 8 Motel 10.098%
145 Ocotillo Terrace 8.910%
146 The Pines Apts 9.256%
147 Russell Avenue Apartments 9.011%
148 Centrifugal Casting Co.-10714 9.552%
149 5151 Commerce Avenue 10.072%
150 35 North Alboni Place 8.904%
151 555 Virginia Drive 10.388%
152 Audubon Center 9.154%
153 Bryan Apartments 8.910%
154 1645-55 Grant Street 10.414%
155 5408 North 99th Street 9.866%
156 10960 Bluffside Drive 8.587%
157 Whitehall Apartments 8.587%
158 Progress Bulletin Building 1.500% 1.500% 6 2/1/99 9.329%
159 Aida Renta-Squire Apts 9.015%
160 2263-2273 Harbor Boulevard 9.118%
161 Park Towne Place Apts. 9.658%
162 Eugie Terrace Apts 9.118%
163 Firestone Tire Store 9.361%
164 The Singer Building 10.073%
165 La Verne Shopping Center 10.598%
166 Chambers Plaza Shopping Center 9.880%
167 AAA Mini Max Storage 10.280%
168 Montego & Wyndham Apts. 9.659%
169 Mayfair Terrace 9.012%
170 Universal Care (2360 Pacific) 9.972%
171 Cinnibar Square Apartments 9.654%
172 2500 East Ball Road 9.655%
173 Eckerd Drug Store 10.531%
174 ParadiseArbor Apartments 8.905%
175 Los Porticos Apartments 8.586%
176 11737 Vanowen St. 1.500% 1.500% 6 1/1/99 10.869%
177 Universal Care (1820 Lincoln) 9.972%
178 Billy's Cove Apartments 9.458%
179 2612 Van Patten St. 9.658%
<CAPTION>
- ---------------------------------------------------------------------------------------
Interest Scheduled
Loan Accrual Balloon Balloon
No. Property Name Method Balance (8) LTV (3) (8)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
144 Costa Mesa Super 8 Motel Actual/360 $ 668,477 26.7%
145 Ocotillo Terrace Actual/360 $ 654,956 66.8%
146 The Pines Apts Actual/360 $ 569,290 47.4%
147 Russell Avenue Apartments Actual/360 $ 616,293 65.6%
148 Centrifugal Casting Co.-10714 Actual/360 $ 622,909 56.6%
149 5151 Commerce Avenue Actual/360 $ 563,435 50.1%
150 35 North Alboni Place Actual/360 $ 593,615 60.6%
151 555 Virginia Drive Actual/360 $ 550,064 60.4%
152 Audubon Center Actual/360 $ 537,663 54.3%
153 Bryan Apartments Actual/360 $ 596,638 62.8%
154 1645-55 Grant Street Actual/360 $ 473,630 45.1%
155 5408 North 99th Street Actual/360 $ 547,286 52.1%
156 10960 Bluffside Drive Actual/360 $ 567,121 59.7%
157 Whitehall Apartments Actual/360 $ 567,120 51.6%
158 Progress Bulletin Building Actual/360 $ 587,873 58.8%
159 Aida Renta-Squire Apts Actual/360 $ 575,892 72.0%
160 2263-2273 Harbor Boulevard Actual/360 $ 565,690 47.9%
161 Park Towne Place Apts. Actual/360 $ 573,215 71.2%
162 Eugie Terrace Apts Actual/360 $ 561,271 66.0%
163 Firestone Tire Store Actual/360 $ 518,388 57.6%
164 The Singer Building Actual/360 $ 517,103 30.9%
165 La Verne Shopping Center Actual/360 $ 524,428 43.7%
166 Chambers Plaza Shopping Center Actual/360 $ 550,317 65.5%
167 AAA Mini Max Storage Actual/360 $ 507,596 46.1%
168 Montego & Wyndham Apts. Actual/360 $ 536,550 67.1%
169 Mayfair Terrace Actual/360 $ 522,395 66.1%
170 Universal Care (2360 Pacific) Actual/360 $ 486,837 58.7%
171 Cinnibar Square Apartments Actual/360 $ 488,026 66.9%
172 2500 East Ball Road Actual/360 $ 480,413 72.8%
173 Eckerd Drug Store Actual/360 $ 490,092 65.3%
174 ParadiseArbor Apartments Actual/360 $ 459,063 61.2%
175 Los Porticos Apartments Actual/360 $ 444,972 49.4%
176 11737 Vanowen St. Actual/360 $ 466,979 73.0%
177 Universal Care (1820 Lincoln) Actual/360 $ 418,350 59.8%
178 Billy's Cove Apartments Actual/360 $ 406,336 65.0%
179 2612 Van Patten St. Actual/360 $ 447,125 54.9%
</TABLE>
II-11
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION- II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate Lifetime
Loan Loan Mortgage Gross --------------------------
No. Property Name Type Rate (6) Index Margin Ceiling Floor
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
180 18312 Collins Street Fixed 8.500%
181 Orangewood Apartments Fixed 8.250%
182 Ocean View Apartments Fixed 8.625%
183 101-109 West Foothill Blvd Fixed 9.125%
184 Salcorp ARM 10.000% 6 Mo. LIBOR 4.000% 16.000% 10.000%
185 318 N. Mariposa Fixed 8.750%
186 320 N. Ardmore Avenue ARM 9.625% 6 Mo. LIBOR 3.750% 15.625% 9.625%
187 Universal Care (1814 Lincoln) Fixed 8.750%
188 5742-5766 Camerford Avenue ARM 9.750% 6 Mo. LIBOR 3.750% 15.750% 9.750%
189 Ocean Village Cottages (2E) Fixed 7.750%
190 Oso Home Care ARM 9.375% 6 Mo. LIBOR 3.500% 15.375% 9.375%
191 Cox Office Building ARM 10.375% 6 Mo. LIBOR 4.500% 16.375% 10.375%
192 13931 Enterprise Drive ARM 10.125% 6 Mo. LIBOR 4.250% 16.125% 10.125%
193 RIMO Manufacturing ARM 9.875% 6 Mo. LIBOR 4.000% 15.875% 9.875%
194 Promatic Industries ARM 9.875% 6 Mo. LIBOR 4.000% 15.875% 9.875%
TOTAL/WEIGHTED AVERAGE: 8.068%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mortgage Rate
Periodic (7) Rate Reset Next
Loan ------------------------------ Date Rate Reset Loan
No. Property Name Max. Increase Max. Decrease Frequency Date Constant
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
180 18312 Collins Street 11.902%
181 Orangewood Apartments 9.119%
182 Ocean View Apartments 11.905%
183 101-109 West Foothill Blvd 9.879%
184 Salcorp 1.500% 1.500% 6 1/1/99 10.643%
185 318 N. Mariposa 9.967%
186 320 N. Ardmore Avenue 1.500% 1.500% 6 11/1/98 10.294%
187 Universal Care (1814 Lincoln) 9.972%
188 5742-5766 Camerford Avenue 1.500% 1.500% 6 12/1/98 10.797%
189 Ocean Village Cottages (2E) 8.688%
190 Oso Home Care 1.500% 1.500% 6 11/1/98 10.436%
191 Cox Office Building 1.500% 1.500% 6 11/1/98 10.998%
192 13931 Enterprise Drive 1.500% 1.500% 6 10/1/98 10.773%
193 RIMO Manufacturing 1.500% 1.500% 6 10/1/98 10.920%
194 Promatic Industries 1.500% 1.500% 6 10/1/98 10.920%
TOTAL/WEIGHTED AVERAGE: 9.204%
<CAPTION>
- ---------------------------------------------------------------------------------------
Interest Scheduled
Loan Accrual Balloon Balloon
No. Property Name Method Balance (8) LTV (3) (8)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
180 18312 Collins Street Actual/360 $ 0 0.0%
181 Orangewood Apartments Actual/360 $ 424,268 70.7%
182 Ocean View Apartments Actual/360 $ 235,617 34.9%
183 101-109 West Foothill Blvd Actual/360 $ 404,214 57.7%
184 Salcorp Actual/360 $ 404,972 59.6%
185 318 N. Mariposa Actual/360 $ 361,944 53.6%
186 320 N. Ardmore Avenue Actual/360 $ 0 0.0%
187 Universal Care (1814 Lincoln) Actual/360 $ 340,373 61.9%
188 5742-5766 Camerford Avenue Actual/360 $ 340,100 54.9%
189 Ocean Village Cottages (2E) Actual/360 $ 349,862 41.2%
190 Oso Home Care Actual/360 $ 282,137 46.6%
191 Cox Office Building Actual/360 $ 288,675 56.6%
192 13931 Enterprise Drive Actual/360 $ 243,352 48.7%
193 RIMO Manufacturing Actual/360 $ 169,494 47.1%
194 Promatic Industries Actual/360 $ 169,494 47.1%
TOTAL/WEIGHTED AVERAGE: 57.1%
</TABLE>
II-12
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME ADDRESS CITY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 2 River Place (1A) 2 River Place Dayton
2 Apple Valley I (1A) 1430 Oak Court Beavercreek
3 Alex Bell Plaza (1A) 5674-5760 Springboro Pike Dayton
4 Apple Valley III (1A) 4021 Executive Blvd. Beavercreek
5 Dryden II (1A) 2912 Springboro West Moraine
6 Apple Valley II (1A) 4020 Executive Drive Beavercreek
7 Dayton Towne Center (1A) 1918 Needmore Road Dayton
8 CAG Industrial (1B) 8300 Highland & 305 S. 84th Wausau
9 Galleria I, II, III (1B) 501, 505, & 605 S. 24th Avenue Wausau
10 Stewart Center (1B) 2600 Stewart Avenue Wausau
11 Wausau Container (1B) 8000 Highland Drive Wausau
12 Cypress Park Bldg. 4 (1C) 9820 Satellite Blvd. Orlando
13 Delco K-2 (1C) 4991 Hempstead Station Kettering
14 3975 Dayton Park (1C) (2A) 3975 Dayton Park Dayton
15 TrailsEnd (1C) 3500 Governor's Trail Kettering
16 Cypress Park Bldg. 3 (1C) 9900 Satellite Drive Orlando
17 Blue Dog Cafe (1C) 4 River Place Dayton
18 The Harvard Market 1401 Broadway Ave. Seattle
19 Pavilions at Rancho Mirage 36101 Bob Hope Drive Rancho Mirage
20 Del Rayo Village 16077-16091 San Dieguito Rd. Rancho Santa Fe
21 Irvine Spectrum Auto Center 8767-8797 Irvine Center Drive Irvine
22 710 Euclid-Park San Dimas 265 West Foothill Blvd. San Dimas
23 Cedar Plaza Shopping Ctr 22803 44th Avenue W. Mountlake Terr.
24 909 Ocean Front Walk 909 Ocean Front Walk Los Angeles
25 Pioneer Center & DIHO Plaza 18403 Pioneer Blvd/11700 183rd St Artesia
26 Select Suites - Airport Center 4221 East McDowell Road Phoenix
27 1401 Dove Street 1401 Dove Street Newport Beach
28 600 South Lake Financial Ctr 600 So. Lake Avenue Pasadena
29 Upper Main Street Apartments (1D) (2B) 2602-2620 Main Street Hartford
30 Westland Place Apartments (1D) 275-285 Westland Street Hartford
31 87 - 101 Spring Street (1D) 87-101 Spring Street Hartford
32 124-128 Collins Street (1D) 124-128 Collins Street Hartford
33 22 Huntington (1D) 22-24 Huntington Street Hartford
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN ZIP PROPERTY SUB-PROPERTY
NO. PROPERTY NAME STATE CODE TYPE TYPE UNITS/NSF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) OH 45405 Office Mid/High-Rise Office 42,286
2 Apple Valley I (1A) OH 45430 Office Garden Office 54,927
3 Alex Bell Plaza (1A) OH 45439 Retail Unanchored Retail 75,890
4 Apple Valley III (1A) OH 45424 Office Garden Office 45,399
5 Dryden II (1A) OH 45439 Office Garden Office 42,526
6 Apple Valley II (1A) OH 45424 Office Garden Office 29,916
7 Dayton Towne Center (1A) OH 45414 Retail Anchored Retail 35,932
8 CAG Industrial (1B) WI 54401 Industrial Industrial Warehouse 258,664
9 Galleria I, II, III (1B) WI 55401 Mixed Use Mixed Use 52,149
10 Stewart Center (1B) WI 54401 Office Garden Office 57,367
11 Wausau Container (1B) WI 55401 Industrial Single- Tenant 35,362
12 Cypress Park Bldg. 4 (1C) FL 38327 Industrial Industrial Warehouse 69,000
13 Delco K-2 (1C) OH 45429 Industrial Industrial Warehouse 82,000
14 3975 Dayton Park (1C) (2A) OH 45414 Other Other 118,203
15 TrailsEnd (1C) OH 45409 Other Other 16,069
16 Cypress Park Bldg. 3 (1C) FL 32837 Industrial Industrial Warehouse 18,000
17 Blue Dog Cafe (1C) OH 45405 Other Other 10,000
18 The Harvard Market WA 98101 Mixed Use Mixed Use 41,146
19 Pavilions at Rancho Mirage CA 92270 Retail Anchored Retail 84,000
20 Del Rayo Village CA 92067 Mixed Use Mixed Use 55,832
21 Irvine Spectrum Auto Center CA 92618 Industrial Multi-Tenant 41,543
22 710 Euclid-Park San Dimas CA 91773 Multi-Family Multi-Family 137
23 Cedar Plaza Shopping Ctr WA 98043 Retail Anchored Retail 90,293
24 909 Ocean Front Walk CA 90291 Mixed Use Mixed Use 35,581
25 Pioneer Center & DIHO Plaza CA 90701 Retail Anchored Retail 73,489
26 Select Suites - Airport Center AZ 85008 Hotel Hotel/Motel - Other 276
27 1401 Dove Street CA 92660 Office Mid/High-Rise Office 74,405
28 600 South Lake Financial Ctr CA 91106 Office Low-Rise Office 53,610
29 Upper Main Street Apartments (1D) (2B) CT 06105 Multi-Family Multi-Family 49
30 Westland Place Apartments (1D) CT 06105 Multi-Family Multi-Family 32
31 87 - 101 Spring Street (1D) CT 06105 Multi-Family Multi-Family 29
32 124-128 Collins Street (1D) CT 06105 Multi-Family Multi-Family 20
33 22 Huntington (1D) CT 06105 Multi-Family Multi-Family 19
<CAPTION>
- ---------------------------------------------------------------------------------------
LOAN
No. Property Name YEAR BUILT YEAR RENOV.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 2 River Place (1A) 1985
2 Apple Valley I (1A) 1987
3 Alex Bell Plaza (1A) 1983
4 Apple Valley III (1A) 1987
5 Dryden II (1A) 1986
6 Apple Valley II (1A) 1986
7 Dayton Towne Center (1A) 1985
8 CAG Industrial (1B) 1996 1998
9 Galleria I, II, III (1B) 1994
10 Stewart Center (1B) 1988
11 Wausau Container (1B) 1993 1997
12 Cypress Park Bldg. 4 (1C) 1988
13 Delco K-2 (1C) 1988
14 3975 Dayton Park (1C) (2A) 1978
15 TrailsEnd (1C) 1916 1987
16 Cypress Park Bldg. 3 (1C) 1988
17 Blue Dog Cafe (1C) 1939 1997
18 The Harvard Market 1997
19 Pavilions at Rancho Mirage 1993
20 Del Rayo Village 1991 1996
21 Irvine Spectrum Auto Center 1997
22 710 Euclid-Park San Dimas 1989
23 Cedar Plaza Shopping Ctr 1980
24 909 Ocean Front Walk 1984
25 Pioneer Center & DIHO Plaza 1966
26 Select Suites - Airport Center 1981 1994
27 1401 Dove Street 1974 1973
28 600 South Lake Financial Ctr 1981
29 Upper Main Street Apartments (1D) (2B) 1925 1987
30 Westland Place Apartments (1D) 1959 1985
31 87 - 101 Spring Street (1D) 1925 1994
32 124-128 Collins Street (1D) 1969 1996
33 22 Huntington (1D) 1968 1995
</TABLE>
II-13
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME ADDRESS CITY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
34 Paradise Garden Apartments 6479 Atlantic Avenue Long Beach
35 Beaumont Tower Venture, Ltd. 2615 Calder Avenue Beaumont
36 Woodlands Medical Building 1011 Medical Plaza Drive The Woodlands
37 Allentowne Village Apartments 14100 SW Allen Boulevard Beaverton
38 Artisan Components Building 1195 Bordeaux Drive Sunnyvale
39 Barstow Road Center 512-580 Virginia Way Barstow
40 Berry Hill Shopping Center 19033 S. Beavercreek Rd. Oregon City
41 Ridgewood Retirement Center 2520 IH-10 East Beaumont
42 Central Village 101-135 E. Central Entrance Duluth
43 Lankershim 7239-7253 Lankershim Blvd. North Hollywood
44 900 Calle Negocio Industrial 900 Calle Negocio San Clemente
45 The Inland Atrium 3200 Inland Empire Boulevard Ontario
46 Robins Lane Apartments 2039-2091 Robins Lane SE Salem
47 Airport Corporate Center 303 Corporate Center Drive Vandalia
48 Whitney Mesa Mini Storage 1051 Stephanie Place Henderson
49 Tercek Property/Johns Westside 13921-27 Tualatin Sherwood Rd. Sherwood
50 Garden Estates Apartments 5618 Tilton Avenue Riverside
51 Carlton Way Towers 5623 Carlton Way Los Angeles
52 Lincoln Business Center 268 N.Lincoln Ave.& 271 Ott St Corona
53 Centerpoint Business Park 1202-16 W Avenue J Lancaster
54 Jordano's Marketplace 3025 De La Vina Street Santa Barbara
55 Chardonnay Apartments 600 SW Mill Street Sheridan
56 Rediger Investment Corp. 825 Western Avenue Glendale
57 1700 SL Investors-South Lamar 1700 South Lamar Austin
58 Westgate Center 995/999 Los Angeles Avenue Simi Valley
59 Burke Junction Shopping Center 3300 Coach Lane Cameron Park
60 Rosecrans Industrial 2040-2144 Rosecrans Blvd. Gardena
61 1010 First Street 1010 First Street Encinitas
62 Thunder Canyon Plaza 2510 W. Thunderbird Road Phoenix
63 441 State Highway 71 441 State Highway 71 Bastrop
64 Tomball Plaza Shopping Center 27706 State Highway 249 Tomball
65 8 Studebaker 8 Studebaker Irvine
66 Norfolk County Inn 1201 South 13th Street Norfolk
67 Towne Park I & II Apartments 611 Walnut & 1691 College Pkwy Elko
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN ZIP PROPERTY SUB-PROPERTY
NO. PROPERTY NAME STATE CODE TYPE TYPE UNITS/NSF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
34 Paradise Garden Apartments CA 90805 Multi-Family Multi-Family 318
35 Beaumont Tower Venture, Ltd. TX 77702 Office Mid/High-Rise Office 158,321
36 Woodlands Medical Building TX 77380 Office Garden Office 33,032
37 Allentowne Village Apartments OR 97005 Multi-Family Multi-Family 107
38 Artisan Components Building CA 94089 Industrial Single- Tenant 32,660
39 Barstow Road Center CA 92311 Retail Anchored Retail 77,950
40 Berry Hill Shopping Center OR 97045 Retail Shadow Retail 42,201
41 Ridgewood Retirement Center TX 77703 Healthcare Healthcare 99
42 Central Village MN 55811 Retail Unanchored Retail 27,507
43 Lankershim CA 91605 Industrial Industrial Warehouse 86,000
44 900 Calle Negocio Industrial CA 92672 Industrial Single- Tenant 50,678
45 The Inland Atrium CA 91764 Office Garden Office 48,856
46 Robins Lane Apartments OR 97302 Multi-Family Multi-Family 80
47 Airport Corporate Center OH 45377 Office Garden Office 47,139
48 Whitney Mesa Mini Storage NV 89014 Self Storage Self Storage 113,390
49 Tercek Property/Johns Westside OR 97140 Industrial Multi-Tenant 60,361
50 Garden Estates Apartments CA 92509 Multi-Family Multi-Family 200
51 Carlton Way Towers CA 90028 Multi-Family Multi-Family 35
52 Lincoln Business Center CA 91720 Industrial Multi- Tenant 57,090
53 Centerpoint Business Park CA 93534 Office Garden Office 40,237
54 Jordano's Marketplace CA 93105 Retail Single Tenant Retail 18,200
55 Chardonnay Apartments OR 97378 Multi-Family Multi-Family 64
56 Rediger Investment Corp. CA 91201 Industrial Multi-Tenant 39,400
57 1700 SL Investors-South Lamar TX 78704 Industrial Multi-Tenant 52,568
58 Westgate Center CA 93065 Retail Unanchored Retail 32,426
59 Burke Junction Shopping Center CA 95682 Retail Unanchored Retail 36,600
60 Rosecrans Industrial CA 90249 Industrial Multi-Tenant 80,000
61 1010 First Street CA 92024 Mixed Use Mixed Use 19,786
62 Thunder Canyon Plaza AZ 85023 Retail Unanchored Retail 21,210
63 441 State Highway 71 TX 78602 Retail Multi-Tenant Retail 58,203
64 Tomball Plaza Shopping Center TX 77375 Retail Unanchored Retail 64,890
65 8 Studebaker CA 92618 Industrial Single-Tenant 28,518
66 Norfolk County Inn NE 68701 Hotel Hotel/Motel - Other 127
67 Towne Park I & II Apartments NV 89801 Multi-Family Multi-Family 48
<CAPTION>
- ---------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME YEAR BUILT YEAR RENOV.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
34 Paradise Garden Apartments 1966
35 Beaumont Tower Venture, Ltd. 1984
36 Woodlands Medical Building 1997
37 Allentowne Village Apartments 1981 1996
38 Artisan Components Building 1976 1997
39 Barstow Road Center 1993
40 Berry Hill Shopping Center 1990
41 Ridgewood Retirement Center 1957 1988
42 Central Village 1998
43 Lankershim 1949
44 900 Calle Negocio Industrial 1997
45 The Inland Atrium 1990
46 Robins Lane Apartments 1997
47 Airport Corporate Center 1987
48 Whitney Mesa Mini Storage 1996
49 Tercek Property/Johns Westside 1997
50 Garden Estates Apartments 1960 1997
51 Carlton Way Towers 1992
52 Lincoln Business Center 1986
53 Centerpoint Business Park 1990
54 Jordano's Marketplace 1951 1996
55 Chardonnay Apartments 1997
56 Rediger Investment Corp. 1987
57 1700 SL Investors-South Lamar 1978
58 Westgate Center 1977
59 Burke Junction Shopping Center 1980
60 Rosecrans Industrial 1954
61 1010 First Street 1970 1997
62 Thunder Canyon Plaza 1988
63 441 State Highway 71 1987
64 Tomball Plaza Shopping Center 1992
65 8 Studebaker 1993
66 Norfolk County Inn 1964 1997
67 Towne Park I & II Apartments 1989
</TABLE>
II-14
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME ADDRESS CITY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
68 ACE Market Place 1501 Main St. / 185 Windward Venice
69 Flagstaff Inn Partnership 2285 E. Butler Avenue Flagstaff
70 Ft. Collins Sleep Inn Motel 3808 East Mulberry Street Fort Collins
71 Alvin Towne Center 200-340 E. House Street Alvin
72 Brentwood Plaza 22921-22941 Highway 99 Edmonds
73 The Granary 1111 Riverside Ave. Paso Robles
74 The Village Apartments 2020 N. 32nd Street Phoenix
75 15441 Nordhoff Street Apts. 15441 Nordhoff Street North Hills
76 Yukon Square Shopping Ctr 3560-3596 Redondo Beach Blvd Torrance
77 Emerald Park Apartments 3402 N 32nd Street Phoenix
78 111 Elm 111 Elm Street San Diego
79 La Fiesta Center 944 W. 6th St. Corona
80 Courtsyde Square 2150 Trawood Drive El Paso
81 Grand Avenue R&D 1350 Grand Avenue San Marcos
82 Cypress Chemical Bldg. 1380 N. Knollwood Circle Anaheim
83 16307-16331 Arthur Street 16307-16331 Arthur Street Cerritos
84 Roscoe Sepulveda Center 8243-8267 Sepulveda Blvd. Van Nuys
85 Universal Care (17660 Lakewood) 17660 Lakewood Boulevard Bellflower
86 New Hampshire Office Bldg. 639 S. New Hampshire Los Angeles
87 Madison Square Retail Center 3501 & 3511 Madison Avenue Riverside
88 Beaujolais Village 11263 Gorenflo Rd. Biloxi
89 Mountainview 1100 E. Whittier Avenue Hemet
90 Jackovics, Thomas & Judit 2 Fifer Avenue Corte Madera
91 5900 Reseda Blvd. 5900 Reseda Blvd. Tarzana
92 Southgate Towne Center 5831 Firestone Blvd. South Gate
93 Portola Road Office Building 150 Portola Road Portola Valley
94 Fox Crossing Shopping Center 1373-1411 West 9000 South St. West Jordan
95 PV Oasis Shopping Center 13825-13831 North 32nd Street Phoenix
96 111 and 125 S. Main Street 111 and 125 S. Main Street Orange
97 Carlton Court Apartments 5024 E. Thomas Road Phoenix
98 6232 Manchester 6232-6242 W. Manchester Ave. Los Angeles
99 Palm Terrace Apartments 1133 W. 5th Street Tempe
100 Grand Rapids Shopping Center 2020-2056 S. Pokegama Ave. Grand Rapids
101 Rainbow Flag Apartments 324 Larkin Street San Francisco
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN ZIP PROPERTY SUB-PROPERTY
NO. PROPERTY NAME STATE CODE TYPE TYPE UNITS/NSF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
68 ACE Market Place CA 90291 Retail Unanchored Retail 13,516
69 Flagstaff Inn Partnership AZ 86004 Hotel Hotel/Motel - Chain 100
70 Ft. Collins Sleep Inn Motel CO 80524 Hotel Hotel/Motel - Other 63
71 Alvin Towne Center TX 77511 Retail Anchored Retail 75,958
72 Brentwood Plaza WA 98026 Mixed Use Retail/Warehouse 27,007
73 The Granary CA 93446 Mixed Use Mixed Use 19,491
74 The Village Apartments AZ 85008 Multi-Family Multi-Family 63
75 15441 Nordhoff Street Apts. CA 91343 Multi-Family Multi-Family 56
76 Yukon Square Shopping Ctr CA 90504 Retail Unanchored Retail 21,975
77 Emerald Park Apartments AZ 85018 Multi-Family Multi-Family 74
78 111 Elm CA 92101 Office Low-Rise Office 28,706
79 La Fiesta Center CA 91720 Retail Unanchored Retail 24,200
80 Courtsyde Square TX 79935 Office Garden Office 29,444
81 Grand Avenue R&D CA 92069 Industrial Single-Tenant 30,374
82 Cypress Chemical Bldg. CA 92801 Industrial Single-Tenant 42,195
83 16307-16331 Arthur Street CA 90703 Industrial Industrial Warehouse 40,696
84 Roscoe Sepulveda Center CA 91402 Retail Unanchored Retail 17,983
85 Universal Care (17660 Lakewood) CA 90706 Office Medical Office 18,564
86 New Hampshire Office Bldg. CA 90005 Office Office 20,076
87 Madison Square Retail Center CA 92504 Retail Unanchored Retail 14,460
88 Beaujolais Village MS 39532 Multi-Family Multi-Family 37
89 Mountainview CA 92543 Multi-Family Multi-Family 56
90 Jackovics, Thomas & Judit CA 94925 Office Garden Office 13,921
91 5900 Reseda Blvd. CA 91356 Multi-Family Multi-Family 40
92 Southgate Towne Center CA 90280 Retail Shadow Retail 24,135
93 Portola Road Office Building CA 94028 Office Garden Office 6,000
94 Fox Crossing Shopping Center UT 84084 Retail Unanchored Retail 17,271
95 PV Oasis Shopping Center AZ 85032 Retail Unanchored Retail 36,228
96 111 and 125 S. Main Street CA 92867 Retail Anchored Retail 4,996
97 Carlton Court Apartments AZ 85018 Multi-Family Multi-Family 45
98 6232 Manchester CA 90045 Mixed Use Mixed Use 12,800
99 Palm Terrace Apartments AZ 85281 Multi-Family Multi-Family 44
100 Grand Rapids Shopping Center MN 55744 Retail Unanchored Retail 12,649
101 Rainbow Flag Apartments CA 94102 Multi-Family Multi-Family 24
<CAPTION>
- ---------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME YEAR BUILT YEAR RENOV.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
68 ACE Market Place 1989
69 Flagstaff Inn Partnership 1971 1997
70 Ft. Collins Sleep Inn Motel 1995
71 Alvin Towne Center 1964 1996
72 Brentwood Plaza 1986
73 The Granary 1889 1991
74 The Village Apartments 1974
75 15441 Nordhoff Street Apts. 1965 1996
76 Yukon Square Shopping Ctr 1977
77 Emerald Park Apartments 1969 1997
78 111 Elm 1971 1996
79 La Fiesta Center 1994
80 Courtsyde Square 1986 1988
81 Grand Avenue R&D 1972 1992
82 Cypress Chemical Bldg. 1977 1991
83 16307-16331 Arthur Street 1978
84 Roscoe Sepulveda Center 1985
85 Universal Care (17660 Lakewood) 1965 1997
86 New Hampshire Office Bldg. 1955 1997
87 Madison Square Retail Center 1990
88 Beaujolais Village 1994
89 Mountainview 1987 1995
90 Jackovics, Thomas & Judit 1981
91 5900 Reseda Blvd. 1976
92 Southgate Towne Center 1987
93 Portola Road Office Building 1995
94 Fox Crossing Shopping Center 1987
95 PV Oasis Shopping Center 1978
96 111 and 125 S. Main Street 1997
97 Carlton Court Apartments 1963 1996
98 6232 Manchester 1949 1997
99 Palm Terrace Apartments 1973
100 Grand Rapids Shopping Center 1997
101 Rainbow Flag Apartments 1922
</TABLE>
II-15
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME ADDRESS CITY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
102 Sea Fox Apartments 4409 Spencer Street Las Vegas
103 Woodstock Plaza 800 W. Torrance Blvd. Redondo Beach
104 Parkview Village Apartments 2323 Burke Road Pasadena
105 Seashore Investment Company 1901 Westcliff Drive Newport Beach
106 Sierra Grove Apartments 355 East Grove Street Reno
107 10356 Commerce 10356 Commerce Avenue Tujunga
108 Cactus Place Apartments 2040 W. Cactus Phoenix
109 Temple Plaza Associates-Apts 689 Temple Avenue Long Beach
110 762-808 N. Gordon Street 762-808 N. Gordon Street Pomona
111 Garden Villa Apts. 2028 W. Cactus Road Phoenix
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St 601-6091/2 N.Western Av./4905-4913 W.Clinton St Los Angeles
113 West Valley Mini Storage 630 Lawrence Drive Thousand Oaks
114 8910 Washington Boulevard 8910 Washington Boulevard Culver City
115 Roscoe Plaza Apartments 21901 Roscoe Blvd. Canoga Park
116 Michael Boardman-Lake Terrace 16465-73 Joy Street Lake Elsinore
117 Rockhill/ Broadway Shop Center 8600 & 8602 Broadway Houston
118 Villa Mira Monte Apts 1733 & 1737 W. Desert Cove Ave Phoenix
119 981 Calle Negocio 981 Calle Negocio San Clemente
120 Tahquitz Square 1700 E. Tahquitz Canyon Way Palm Springs
121 Sweetwater Apartments (2C) 200 McElroy Ave Wharton
122 Orange East & Orange West Apts 1010 & 1020 E. Orange Street Tempe
123 1937 Sunset Circle (2D) 1937 Sunset Circle Henderson
124 Old Colorado Square 2616 West Colorado Avenue Colorado Spring
125 Blythe Oceanview Apts 9510 East Hobson Way Blythe
126 Keen Apartments 16621 N. 25th Street Phoenix
127 Tower Center Court 2750-2760 Spring Street Long Beach
128 Chapman Apts 3316-3320 Chapman Street Los Angeles
129 United Stor-All 10833 S. Prairie Avenue Inglewood
130 Stewart Court 8020 Stewart Road Galveston
131 1150 South Bristol Street 1150 South Bristol Street Santa Ana
132 3315-3345 Newport Boulevard 3315-3345 Newport Boulevard Newport Beach
133 Office Building (Yale Avenue) 1507 W. Yale Avenue Orange
134 Imperial Apartments 10825-10841 St. James Ave. South Gate
135 Park Plaza Center 31703-31731 Riverside Drive Lake Elsinore
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN ZIP PROPERTY SUB-PROPERTY
NO. PROPERTY NAME STATE CODE TYPE TYPE UNITS/NSF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
102 Sea Fox Apartments NV 89119 Multi-Family Multi-Family 24
103 Woodstock Plaza CA 90277 Retail Unanchored Retail 12,552
104 Parkview Village Apartments TX 77052 Multi-Family Multi-Family 60
105 Seashore Investment Company CA 92660 Office Garden Office 16,973
106 Sierra Grove Apartments NV 89502 Multi-Family Multi-Family 48
107 10356 Commerce CA 91042 Multi-Family Multi-Family 42
108 Cactus Place Apartments AZ 85029 Multi-Family Multi-Family 48
109 Temple Plaza Associates-Apts CA 90804 Multi-Family Multi-Family 25
110 762-808 N. Gordon Street CA 91768 Multi-Family Multi-Family 64
111 Garden Villa Apts. AZ 85029 Multi-Family Multi-Family 48
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St CA 90004 Mixed Use Mixed Use 17,638
113 West Valley Mini Storage CA 91320 Self Storage Self Storage 18,271
114 8910 Washington Boulevard CA 90232 Mixed Use Mixed Use 10,400
115 Roscoe Plaza Apartments CA 91304 Multi-Family Multi-Family 34
116 Michael Boardman-Lake Terrace CA 92530 Multi-Family Multi-Family 42
117 Rockhill/ Broadway Shop Center TX 77061 Retail Unanchored Retail 7,188
118 Villa Mira Monte Apts AZ 85029 Multi-Family Multi-Family 40
119 981 Calle Negocio CA 92673 Industrial Single-Tenant 17,038
120 Tahquitz Square CA 92262 Mixed Use Mixed Use 11,949
121 Sweetwater Apartments (2C) TX 77488 Multi-Family Multi-Family 56
122 Orange East & Orange West Apts AZ 85281 Multi-Family Multi-Family 45
123 1937 Sunset Circle (2D) NV 89015 Multi-Family Multi-Family 48
124 Old Colorado Square CO 80904 Retail Unanchored Retail 17,347
125 Blythe Oceanview Apts CA 92225 Multi-Family Multi-Family 100
126 Keen Apartments AZ 85032 Multi-Family Multi-Family 56
127 Tower Center Court CA 90806 Office Garden Office 18,787
128 Chapman Apts CA 90065 Multi-Family Multi-Family 24
129 United Stor-All CA 90303 Self Storage Self Storage 31,715
130 Stewart Court TX 77551 Multi-Family Multi-Family 66
131 1150 South Bristol Street CA 92704 Retail Unanchored Retail 5,530
132 3315-3345 Newport Boulevard CA 92663 Mixed Use Office/Retail 12,206
133 Office Building (Yale Avenue) CA 92687 Industrial Single-Tenant 17,544
134 Imperial Apartments CA 90280 Multi-Family Multi-Family 30
135 Park Plaza Center CA 92530 Retail Unanchored Retail 17,180
<CAPTION>
- ---------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME YEAR BUILT YEAR RENOV.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
102 Sea Fox Apartments 1990
103 Woodstock Plaza 1987
104 Parkview Village Apartments 1970 1997
105 Seashore Investment Company 1963
106 Sierra Grove Apartments 1962
107 10356 Commerce 1983 1997
108 Cactus Place Apartments 1975
109 Temple Plaza Associates-Apts 1987
110 762-808 N. Gordon Street 1964 1997
111 Garden Villa Apts. 1963
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St 1921
113 West Valley Mini Storage 1981 1988
114 8910 Washington Boulevard 1950 1997
115 Roscoe Plaza Apartments 1977
116 Michael Boardman-Lake Terrace 1979 1997
117 Rockhill/ Broadway Shop Center 1987 1991
118 Villa Mira Monte Apts 1988
119 981 Calle Negocio 1987 1997
120 Tahquitz Square 1977
121 Sweetwater Apartments (2C) 1984
122 Orange East & Orange West Apts 1962
123 1937 Sunset Circle (2D) 1954
124 Old Colorado Square 1952 1982
125 Blythe Oceanview Apts 1964
126 Keen Apartments 1979
127 Tower Center Court 1956 1996
128 Chapman Apts 1991
129 United Stor-All 1977
130 Stewart Court 1972
131 1150 South Bristol Street 1962
132 3315-3345 Newport Boulevard 1956
133 Office Building (Yale Avenue) 1985
134 Imperial Apartments 1954
135 Park Plaza Center 1976 1985
</TABLE>
II-16
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME ADDRESS CITY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
136 Bali Hai Apartments 2015-2105 S. Granada Dr. Tempe
137 140 E. Commonwealth Ave. 140 E. Commonwealth Ave. Fullerton
138 Millcreek Shoppes 1100 East 3300 South Salt Lake City
139 Paradise Plaza 420-452 Paradise Rd Modesto
140 Holly Tree Mobile Home Park 8951 S.E. Fuller Road Clackamas
141 Vista Dunes Mobile Home Park 78990 Miles Avenue La Quinta
142 Casa Hermosa 1620 N. 51st Street Phoenix
143 Peakwood Medical Office Bldg 821 Peakwood Drive Houston
144 Costa Mesa Super 8 Motel 2645 Harbor Blvd. Costa Mesa
145 Ocotillo Terrace 1710-18 Ocotillo Phoenix
146 The Pines Apts 2501 Hibiscus Avenue McAllen
147 Russell Avenue Apartments 5350 Russell Avenue Los Angeles
148 Centrifugal Casting Co.-10714 10714 Reagan Street Los Alamitos
149 5151 Commerce Avenue 5151 Commerce Avenue Moorpark
150 35 North Alboni Place 35 North Alboni Place Long Beach
151 555 Virginia Drive 555 Virginia Drive Ft. Washington
152 Audubon Center 1340 Crystal Lane Chaska
153 Bryan Apartments 6741 North 45th Avenue Phoenix
154 1645-55 Grant Street 1645-55 Grant Street Denver
155 5408 North 99th Street 5408 North 99th Street Omaha
156 10960 Bluffside Drive 10960 Bluffside Drive Los Angeles
157 Whitehall Apartments 1903 Portsmouth Houston
158 Progress Bulletin Building 300 S. Thomas Street Pomona
159 Aida Renta-Squire Apts 1630 E. Georgia Avenue Phoenix
160 2263-2273 Harbor Boulevard 2263-2273 Harbor Boulevard Costa Mesa
161 Park Towne Place Apts. 2245 Jefferson Ogden
162 Eugie Terrace Apts 2216 E. Eugie Terrace Phoenix
163 Firestone Tire Store 6530 Van Nuys Blvd. Van Nuys
164 The Singer Building 16 South Oakland Ave. Pasadena
165 La Verne Shopping Center 1431-1457 Foothill Blvd. La Verne
166 Chambers Plaza Shopping Center 4203 Avenue H. Rosenberg
167 AAA Mini Max Storage 2431 Rubidoux Blvd. Riverside
168 Montego & Wyndham Apts. 3011 & 3025 N. 38th Street Phoenix
169 Mayfair Terrace 5171 East 29th Street Tucson
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN ZIP PROPERTY SUB-PROPERTY
NO. PROPERTY NAME STATE CODE TYPE TYPE UNITS/NSF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
136 Bali Hai Apartments AZ 85282 Multi-Family Multi-Family 30
137 140 E. Commonwealth Ave. CA 92632 Office Garden Office 14,405
138 Millcreek Shoppes UT 84106 Retail Unanchored Retail 15,540
139 Paradise Plaza CA 95351 Retail Anchored Retail 44,959
140 Holly Tree Mobile Home Park OR 97266 MHC MHC 57
141 Vista Dunes Mobile Home Park CA 92253 MHC MHC 93
142 Casa Hermosa AZ 85008 Multi-Family Multi-Family 44
143 Peakwood Medical Office Bldg TX 77090 Office Medical Office 14,371
144 Costa Mesa Super 8 Motel CA 92626 Hotel Hotel/Motel - Chain 71
145 Ocotillo Terrace AZ 85016 Multi-Family Multi-Family 32
146 The Pines Apts TX 78501 Multi-Family Multi-Family 32
147 Russell Avenue Apartments CA 90027 Multi-Family Multi-Family 28
148 Centrifugal Casting Co.-10714 CA 90720 Industrial Multi-Tenant 17,736
149 5151 Commerce Avenue CA 93021 Industrial Industrial Warehouse 18,737
150 35 North Alboni Place CA 90802 Multi-Family Multi-Family 41
151 555 Virginia Drive PA 19034 Office Garden Office 10,725
152 Audubon Center MN 55318 Retail Unanchored Retail 11,090
153 Bryan Apartments AZ 85301 Multi-Family Multi-Family 30
154 1645-55 Grant Street CO 80203 Office Garden Office 15,207
155 5408 North 99th Street NE 68134 Office Garden Office 22,908
156 10960 Bluffside Drive CA 91604 Multi-Family Multi-Family 12
157 Whitehall Apartments TX 77098 Multi-Family Multi-Family 29
158 Progress Bulletin Building CA 91766 Mixed Use Mixed Use 35,473
159 Aida Renta-Squire Apts AZ 85016 Multi-Family Multi-Family 18
160 2263-2273 Harbor Boulevard CA 92626 Retail Unanchored Retail 9,433
161 Park Towne Place Apts. UT 84401 Multi-Family Multi-Family 24
162 Eugie Terrace Apts AZ 85022 Multi-Family Multi-Family 25
163 Firestone Tire Store CA 91401 Retail Single Tenant Retail 9,544
164 The Singer Building CA 91101 Mixed Use Mixed Use 19,051
165 La Verne Shopping Center CA 91750 Retail Shadow Retail 16,200
166 Chambers Plaza Shopping Center TX 77471 Retail Unanchored Retail 17,880
167 AAA Mini Max Storage CA 92509 Mixed Use Mixed Use 52,122
168 Montego & Wyndham Apts. AZ 85018 Multi-Family Multi-Family 29
169 Mayfair Terrace AZ 85711 Multi-Family Multi-Family 60
<CAPTION>
- ---------------------------------------------------------------------------------------
LOAN
No. Property Name YEAR BUILT YEAR RENOV.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
136 Bali Hai Apartments 1958
137 140 E. Commonwealth Ave. 1983
138 Millcreek Shoppes 1987
139 Paradise Plaza 1960
140 Holly Tree Mobile Home Park 1960
141 Vista Dunes Mobile Home Park 1963
142 Casa Hermosa 1980
143 Peakwood Medical Office Bldg 1978 1991
144 Costa Mesa Super 8 Motel 1994
145 Ocotillo Terrace 1963
146 The Pines Apts 1995
147 Russell Avenue Apartments 1956
148 Centrifugal Casting Co.-10714 1986
149 5151 Commerce Avenue 1987
150 35 North Alboni Place 1925 1940
151 555 Virginia Drive 1968 1994
152 Audubon Center 1996
153 Bryan Apartments 1968 1983
154 1645-55 Grant Street 1951 1997
155 5408 North 99th Street 1976
156 10960 Bluffside Drive 1987
157 Whitehall Apartments 1964
158 Progress Bulletin Building 1932
159 Aida Renta-Squire Apts 1964
160 2263-2273 Harbor Boulevard 1961
161 Park Towne Place Apts. 1967
162 Eugie Terrace Apts 1984 1997
163 Firestone Tire Store 1946
164 The Singer Building 1926
165 La Verne Shopping Center 1978
166 Chambers Plaza Shopping Center 1984
167 AAA Mini Max Storage 1985
168 Montego & Wyndham Apts. 1971
169 Mayfair Terrace 1983
</TABLE>
II-17
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME ADDRESS CITY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
170 Universal Care (2360 Pacific) 2360 Pacific Ave. Long Beach
171 Cinnibar Square Apartments 1247 Cinnabar Avenue Phoenix
172 2500 East Ball Road 2500 East Ball Road Anaheim
173 Eckerd Drug Store 415 Northwest Loop 436 Carthage
174 ParadiseArbor Apartments 3102 - 3116 E. Paradise Lane Phoenix
175 Los Porticos Apartments 1221 N. 85th Place Scottsdale
176 11737 Vanowen St. 11737 Vanowen St. North Hollywood
177 Universal Care (1820 Lincoln) 1820 Lincoln Ave Anaheim
178 Billy's Cove Apartments 510 Billie Bess Lane Conroe
179 2612 Van Patten St. 2612 Van Patten St. Las Vegas
180 18312 Collins Street 18312 Collins Street Tarzana
181 Orangewood Apartments 2020 West Orangewood Ave. Phoenix
182 Ocean View Apartments 705 West Bayview Drive Portland
183 101-109 West Foothill Blvd 101-109 West Foothill Blvd Glendora
184 Salcorp 132 W. Crystal Ave. S. Salt Lake City
185 318 N. Mariposa 318 N. Mariposa Los Angeles
186 320 N. Ardmore Avenue 320 N. Ardmore Avenue Los Angeles
187 Universal Care (1814 Lincoln) 1814 West Lincoln Ave Anaheim
188 5742-5766 Camerford Avenue 5742-5766 Camerford Avenue Los Angeles
189 Ocean Village Cottages (2E) 486 Third Street Laguna Beach
190 Oso Home Care 17175 Gillette Avenue Irvine
191 Cox Office Building 226 York Street York
192 13931 Enterprise Drive 13931 Enterprise Drive Garden Grove
193 RIMO Manufacturing 6918 Deering Ave. Canoga Park
194 Promatic Industries 6926 Deering Avenue Canoga Park
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOAN Zip PROPERTY SUB-PROPERTY
NO. PROPERTY NAME State CODE TYPE TYPE UNITS/NSF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
170 Universal Care (2360 Pacific) CA 90806 Office Medical Office 9,263
171 Cinnibar Square Apartments AZ 85020 Multi-Family Multi-Family 28
172 2500 East Ball Road CA 92806 Office Garden Office 9,147
173 Eckerd Drug Store TX 75633 Retail Single Tenant Retail 8,768
174 ParadiseArbor Apartments AZ 85032 Multi-Family Multi-Family 28
175 Los Porticos Apartments AZ 85257 Multi-Family Multi-Family 24
176 11737 Vanowen St. CA 91605 Multi-Family Multi-Family 23
177 Universal Care (1820 Lincoln) CA 92801 Office Medical Office 5,700
178 Billy's Cove Apartments TX 77301 Multi-Family Multi-Family 32
179 2612 Van Patten St. NV 89109 Multi-Family Multi-Family 22
180 18312 Collins Street CA 91356 Multi-Family Multi-Family 43
181 Orangewood Apartments AZ 85021 Multi-Family Multi-Family 27
182 Ocean View Apartments TX 78374 Multi-Family Multi-Family 34
183 101-109 West Foothill Blvd CA 91741 Retail Unanchored Retail 6,000
184 Salcorp UT 84115 Industrial Single-Tenant 15,932
185 318 N. Mariposa CA 90004 Multi-Family Multi-Family 32
186 320 N. Ardmore Avenue CA 90004 Multi-Family Multi-Family 36
187 Universal Care (1814 Lincoln) CA 92801 Office Medical Office 4,500
188 5742-5766 Camerford Avenue CA 90038 Multi-Family Multi-Family 24
189 Ocean Village Cottages (2E) CA 92651 Multi-Family Multi-Family 9
190 Oso Home Care CA 92614 Industrial Industrial Warehouse 7,391
191 Cox Office Building ME 03909 Office Garden Office 5,551
192 13931 Enterprise Drive CA 92843 Industrial Industrial Warehouse 7,212
193 RIMO Manufacturing CA 91303 Industrial Industrial Warehouse 6,000
194 Promatic Industries CA 91303 Industrial Industrial Warehouse 6,000
<CAPTION>
- ---------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME YEAR BUILT YEAR RENOV.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
170 Universal Care (2360 Pacific) 1955
171 Cinnibar Square Apartments 1983
172 2500 East Ball Road 1985
173 Eckerd Drug Store 1985
174 ParadiseArbor Apartments 1985
175 Los Porticos Apartments 1984
176 11737 Vanowen St. 1978
177 Universal Care (1820 Lincoln) 1965
178 Billy's Cove Apartments 1984
179 2612 Van Patten St. 1962 1997
180 18312 Collins Street 1976
181 Orangewood Apartments 1986
182 Ocean View Apartments 1970 1997
183 101-109 West Foothill Blvd 1982
184 Salcorp 1977 1996
185 318 N. Mariposa 1929 1997
186 320 N. Ardmore Avenue 1927 1995
187 Universal Care (1814 Lincoln) 1970 1994
188 5742-5766 Camerford Avenue 1917
189 Ocean Village Cottages (2E) 1922
190 Oso Home Care 1990
191 Cox Office Building 1989
192 13931 Enterprise Drive 1979
193 RIMO Manufacturing 1972
194 Promatic Industries 1972
</TABLE>
II-18
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Monthly Property Valuation
No. Property Name Cash Flow Payment (8) DSCR(3) (8) Valuation Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) $ 488,014 $ 34,526 1.18 $ 5,620,000 1/2/98
2 Apple Valley I (1A) $ 424,553 $ 30,586 1.18 $ 5,060,000 11/2/97
3 Alex Bell Plaza (1A) $ 408,689 $ 26,562 1.18 $ 4,400,000 10/17/97
4 Apple Valley III (1A) $ 250,189 $ 20,123 1.18 $ 3,670,000 10/15/97
5 Dryden II (1A) $ 242,283 $ 18,513 1.18 $ 3,300,000 8/28/97
6 Apple Valley II (1A) $ 230,933 $ 16,098 1.18 $ 2,690,000 10/15/97
7 Dayton Towne Center (1A) $ 186,236 $ 10,665 1.18 $ 2,080,000 10/17/97
8 CAG Industrial (1B) $ 558,701 $ 35,456 1.33 $ 6,400,000 4/1/98
9 Galleria I, II, III (1B) $ 428,562 $ 25,267 1.33 $ 5,250,000 4/1/98
10 Stewart Center (1B) $ 324,895 $ 21,368 1.33 $ 5,200,000 4/1/98
11 Wausau Container (1B) $ 107,630 $ 6,740 1.33 $ 1,300,000 4/1/98
12 Cypress Park Bldg. 4 (1C) $ 465,714 $ 31,342 1.20 $ 4,960,000 8/27/98
13 Delco K-2 (1C) $ 242,209 $ 17,487 1.20 $ 2,825,000 4/2/98
14 3975 Dayton Park (1C) (2A) $ 240,246 $ 15,957 1.20 $ 2,935,000 8/6/97
15 TrailsEnd (1C) $ 173,706 $ 12,241 1.20 $ 2,000,000 8/22/97
16 Cypress Park Bldg. 3 (1C) $ 175,920 $ 13,373 1.20 $ 1,600,000 8/27/97
17 Blue Dog Cafe (1C) $ 55,057 $ 3,497 1.20 $ 805,000 8/22/97
18 The Harvard Market $ 1,030,997 $ 62,828 1.37 $12,250,000 3/17/98
19 Pavilions at Rancho Mirage $ 898,130 $ 58,897 1.27 $10,500,000 5/13/97
20 Del Rayo Village $ 862,531 $ 50,312 1.43 $10,150,000 1/2/98
21 Irvine Spectrum Auto Center $ 823,502 $ 49,956 1.37 $ 9,300,000 10/4/97
22 710 Euclid-Park San Dimas $ 585,918 $ 42,107 1.16 $ 8,300,000 4/27/98
23 Cedar Plaza Shopping Ctr $ 707,586 $ 44,512 1.33 $ 8,400,000 3/9/98
24 909 Ocean Front Walk $ 706,654 $ 43,552 1.35 $ 8,950,000 2/24/98
25 Pioneer Center & DIHO Plaza $ 728,513 $ 41,787 1.45 $ 8,660,000 3/1/98
26 Select Suites - Airport Center $ 723,636 $ 40,201 1.50 $10,630,000 4/7/98
27 1401 Dove Street $ 870,264 $ 44,097 1.65 $ 8,360,000 10/16/97
28 600 South Lake Financial Ctr $ 649,109 $ 37,628 1.44 $ 7,300,000 1/7/98
29 Upper Main Street Apartments (1D) (2B) $ 215,269 $ 9,895 1.51 $ 2,040,000 11/14/97
30 Westland Place Apartments (1D) $ 137,190 $ 7,869 1.51 $ 1,480,000 11/14/97
31 87 - 101 Spring Street (1D) $ 114,379 $ 6,880 1.51 $ 1,380,000 3/10/98
32 124-128 Collins Street (1D) $ 92,344 $ 5,489 1.51 $ 990,000 11/14/97
33 22 Huntington (1D) $ 80,064 $ 5,194 1.51 $ 960,000 11/14/97
34 Paradise Garden Apartments $ 695,291 $ 39,385 1.47 $ 5,700,000 2/10/98
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Percent Leased(9)
Loan ----------------------
No. Property Name LTV(3) Leased As of Date
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 2 River Place (1A) 71.8% 100.0% 3/31/98
2 Apple Valley I (1A) 71.8% 92.8% 3/31/98
3 Alex Bell Plaza (1A) 71.8% 98.8% 3/31/98
4 Apple Valley III (1A) 71.8% 73.1% 6/5/98
5 Dryden II (1A) 71.8% 96.4% 3/31/98
6 Apple Valley II (1A) 71.8% 100.0% 3/31/98
7 Dayton Towne Center (1A) 71.8% 78.2% 3/31/98
8 CAG Industrial (1B) 70.7% 100.0% 12/1/97
9 Galleria I, II, III (1B) 70.7% 97.1% 4/1/98
10 Stewart Center (1B) 70.7% 96.3% 4/1/98
11 Wausau Container (1B) 70.7% 100.0% 4/1/98
12 Cypress Park Bldg. 4 (1C) 64.5% 100.0% 2/18/98
13 Delco K-2 (1C) 64.5% 100.0% 8/17/94
14 3975 Dayton Park (1C) (2A) 64.5% 80.1% 3/31/98
15 TrailsEnd (1C) 64.5% 100.0% 3/31/98
16 Cypress Park Bldg. 3 (1C) 64.5% 100.0% 3/31/98
17 Blue Dog Cafe (1C) 64.5% 100.0% 5/7/98
18 The Harvard Market 73.3% 90.0% 3/10/98
19 Pavilions at Rancho Mirage 79.4% 91.0% 4/1/98
20 Del Rayo Village 70.7% 100.0% 1/15/98
21 Irvine Spectrum Auto Center 75.6% 100.0% 11/1/97
22 710 Euclid-Park San Dimas 75.2% 99.3% 5/22/98
23 Cedar Plaza Shopping Ctr 72.3% 95.7% 3/18/98
24 909 Ocean Front Walk 66.3% 100.0% 4/20/98
25 Pioneer Center & DIHO Plaza 64.4% 99.0% 12/31/97
26 Select Suites - Airport Center 51.1% 85.0% 1/13/98
27 1401 Dove Street 61.8% 67.0% 1/1/98
28 600 South Lake Financial Ctr 68.9% 100.0% 2/1/98
29 Upper Main Street Apartments (1D) (2B) 65.4% 100.0% 2/25/98
30 Westland Place Apartments (1D) 65.4% 100.0% 2/11/98
31 87 - 101 Spring Street (1D) 65.4% 100.0% 12/30/97
32 124-128 Collins Street (1D) 65.4% 100.0% 2/25/98
33 22 Huntington (1D) 65.4% 89.0% 2/11/98
34 Paradise Garden Apartments 78.2% 93.0% 2/1/98
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Tenant Information(10)
Loan ----------------------
No. Property Name Largest Tenant % NSF
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 2 River Place (1A) Danis Heavy Construction Company 29.6%
2 Apple Valley I (1A) Gasper Corp. 32.1%
3 Alex Bell Plaza (1A) Genescreen 16.5%
4 Apple Valley III (1A) Macallay Brown 37.0%
5 Dryden II (1A) Andrews University 34.9%
6 Apple Valley II (1A) Litton Industries 100.0%
7 Dayton Towne Center (1A) Blockbuster 56.9%
8 CAG Industrial (1B) Fiskars, Inc. 57.8%
9 Galleria I, II, III (1B) Silver Bullet Management 14.8%
10 Stewart Center (1B) State Farm 8.4%
11 Wausau Container (1B) Wausau Container Corp 100.0%
12 Cypress Park Bldg. 4 (1C) The Danis Companies 100.0%
13 Delco K-2 (1C) General Motors Corporation 100.0%
14 3975 Dayton Park (1C) (2A) The Exhibit House, Inc. 7.4%
15 TrailsEnd (1C) The Danis Companies 100.0%
16 Cypress Park Bldg. 3 (1C) Brinks, Inc. 100.0%
17 Blue Dog Cafe (1C) Blue Dog Cafe 100.0%
18 The Harvard Market Bartell Drugs 36.5%
19 Pavilions at Rancho Mirage Pavilions 59.4%
20 Del Rayo Village Arazzo 22.4%
21 Irvine Spectrum Auto Center Tuttle Click Ford 21.5%
22 710 Euclid-Park San Dimas
23 Cedar Plaza Shopping Ctr QFC (Fred Meyers) 41.1%
24 909 Ocean Front Walk Jerde Partnership 90.0%
25 Pioneer Center & DIHO Plaza Diho Market 31.4%
26 Select Suites - Airport Center
27 1401 Dove Street Infinity Capital 11.0%
28 600 South Lake Financial Ctr Freeburg, Judy & Nettels 20.2%
29 Upper Main Street Apartments (1D) (2B)
30 Westland Place Apartments (1D)
31 87 - 101 Spring Street (1D)
32 124-128 Collins Street (1D)
33 22 Huntington (1D)
34 Paradise Garden Apartments
</TABLE>
II-19
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Monthly Property Valuation
No. Property Name Cash Flow Payment (8) DSCR(3) (8) Valuation Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
35 Beaumont Tower Venture, Ltd. $ 788,239 $ 33,395 1.97 $ 7,750,000 12/10/97
36 Woodlands Medical Building $ 414,431 $ 25,856 1.34 $ 5,100,000 2/10/98
37 Allentowne Village Apartments $ 391,858 $ 24,452 1.34 $ 5,030,000 1/8/98
38 Artisan Components Building $ 386,038 $ 23,684 1.36 $ 5,100,000 10/21/97
39 Barstow Road Center $ 371,160 $ 22,792 1.36 $ 4,625,000 3/31/98
40 Berry Hill Shopping Center $ 360,540 $ 23,533 1.28 $ 4,550,000 11/10/97
41 Ridgewood Retirement Center $ 389,923 $ 24,171 1.34 $ 5,100,000 2/20/98
42 Central Village $ 346,875 $ 24,289 1.19 $ 4,300,000 4/1/98
43 Lankershim $ 378,396 $ 23,534 1.34 $ 4,090,000 12/10/97
44 900 Calle Negocio Industrial $ 341,426 $ 21,723 1.31 $ 4,275,000 10/31/97
45 The Inland Atrium $ 298,403 $ 20,888 1.19 $ 3,850,000 7/19/97
46 Robins Lane Apartments $ 336,833 $ 19,646 1.43 $ 3,800,000 9/8/97
47 Airport Corporate Center $ 361,892 $ 22,537 1.34 $ 4,000,000 8/21/97
48 Whitney Mesa Mini Storage $ 441,020 $ 20,998 1.75 $ 7,170,000 10/6/97
49 Tercek Property/Johns Westside $ 281,083 $ 17,592 1.33 $ 3,610,000 1/22/98
50 Garden Estates Apartments $ 350,328 $ 18,328 1.59 $ 3,382,500 2/19/98
51 Carlton Way Towers $ 253,184 $ 19,510 1.08 $ 3,100,000 9/30/97
52 Lincoln Business Center $ 248,483 $ 16,739 1.24 $ 3,150,000 11/20/97
53 Centerpoint Business Park $ 285,183 $ 17,738 1.34 $ 3,100,000 2/25/98
54 Jordano's Marketplace $ 266,070 $ 17,545 1.26 $ 3,850,000 2/4/98
55 Chardonnay Apartments $ 250,572 $ 15,874 1.32 $ 3,000,000 1/23/98
56 Rediger Investment Corp. $ 245,155 $ 13,660 1.50 $ 2,800,000 3/11/98
57 1700 SL Investors-South Lamar $ 262,351 $ 13,511 1.62 $ 3,400,000 4/14/98
58 Westgate Center $ 249,143 $ 14,814 1.40 $ 2,900,000 10/9/97
59 Burke Junction Shopping Center $ 254,941 $ 14,255 1.49 $ 2,515,000 4/16/98
60 Rosecrans Industrial $ 248,934 $ 13,521 1.53 $ 2,875,000 5/1/98
61 1010 First Street $ 213,009 $ 14,792 1.20 $ 2,600,000 11/5/97
62 Thunder Canyon Plaza $ 224,683 $ 14,030 1.33 $ 2,440,000 3/25/98
63 441 State Highway 71 $ 199,204 $ 13,302 1.25 $ 2,400,000 5/1/98
64 Tomball Plaza Shopping Center $ 203,649 $ 13,446 1.26 $ 2,450,000 4/1/98
65 8 Studebaker $ 204,952 $ 13,154 1.30 $ 2,789,000 4/3/98
66 Norfolk County Inn $ 239,085 $ 14,388 1.39 $ 2,500,000 3/25/98
67 Towne Park I & II Apartments $ 214,974 $ 13,258 1.35 $ 2,160,000 12/1/97
68 ACE Market Place $ 203,818 $ 13,064 1.30 $ 2,300,000 12/23/97
69 Flagstaff Inn Partnership $ 300,412 $ 17,817 1.41 $ 2,800,000 8/14/97
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percent Leased (9)
Loan ------------------------
No. Property Name LTV(13) Leased As of Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
35 Beaumont Tower Venture, Ltd. 52.8% 94.3% 2/23/9
36 Woodlands Medical Building 73.3% 95.2% 12/31/9
37 Allentowne Village Apartments 71.3% 94.0% 11/3/9
38 Artisan Components Building 66.3% 100.0% 5/31/9
39 Barstow Road Center 71.3% 97.4% 1/30/9
40 Berry Hill Shopping Center 71.1% 82.9% 3/27/9
41 Ridgewood Retirement Center 62.6% 98.0% 5/27/9
42 Central Village 73.7% 94.5% 5/6/9
43 Lankershim 75.7% 100.0% 4/28/9
44 900 Calle Negocio Industrial 69.8% 100.0% 10/31/9
45 The Inland Atrium 74.6% 82.2% 3/31/9
46 Robins Lane Apartments 74.5% 95.0% 9/30/9
47 Airport Corporate Center 69.4% 100.0% 3/31/9
48 Whitney Mesa Mini Storage 36.9% 68.5% 3/31/9
49 Tercek Property/Johns Westside 69.6% 100.0% 3/20/9
50 Garden Estates Apartments 73.7% 91.0% 3/11/9
51 Carlton Way Towers 79.6% 100.0% 12/31/9
52 Lincoln Business Center 73.9% 95.0% 3/30/9
53 Centerpoint Business Park 74.8% 84.2% 3/6/9
54 Jordano's Marketplace 59.5% 100.0% 2/4/9
55 Chardonnay Apartments 72.2% 97.7% 1/31/9
56 Rediger Investment Corp. 71.3% 86.0% 4/1/9
57 1700 SL Investors-South Lamar 58.7% 100.0% 5/31/9
58 Westgate Center 66.9% 100.0% 9/1/9
59 Burke Junction Shopping Center 76.5% 94.3% 4/13/9
60 Rosecrans Industrial 64.2% 100.0% 5/27/9
61 1010 First Street 70.4% 96.0% 10/1/9
62 Thunder Canyon Plaza 74.6% 100.0% 3/17/9
63 441 State Highway 71 74.8% 100.0% 5/29/9
64 Tomball Plaza Shopping Center 72.5% 100.0% 3/9/9
65 8 Studebaker 63.7% 100.0% 4/1/9
66 Norfolk County Inn 69.9% 48.7% 4/17/9
67 Towne Park I & II Apartments 79.5% 100.0% 12/1/9
68 ACE Market Place 73.6% 92.0% 4/1/9
69 Flagstaff Inn Partnership 59.6% 55.0% 3/24/9
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Tenant Information(10)
Loan ----------------------
No. Property Name Largest Tenant % NSF
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
35 Beaumont Tower Venture, Ltd. Mehaffy & Weber 21.0%
36 Woodlands Medical Building Columbia Conroe Regional Medical 29.1%
37 Allentowne Village Apartments
38 Artisan Components Building Artisan Components, Inc. 100.0%
39 Barstow Road Center Food-4-Less 64.3%
40 Berry Hill Shopping Center First Stop Video 13.5%
41 Ridgewood Retirement Center
42 Central Village Cara Collision & Glass 29.4%
43 Lankershim James B. Branch 86.8%
44 900 Calle Negocio Industrial Arnette Optic Illusions, Inc. 100.0%
45 The Inland Atrium Orthopedic Medical 17.1%
46 Robins Lane Apartments
47 Airport Corporate Center Emery 52.1%
48 Whitney Mesa Mini Storage
49 Tercek Property/Johns Westside John's Westside Auto Parts 85.1%
50 Garden Estates Apartments
51 Carlton Way Towers
52 Lincoln Business Center Inland Vineyard Church 19.6%
53 Centerpoint Business Park High Desert Medical 19.9%
54 Jordano's Marketplace Jordano's Incorporated 100.0%
55 Chardonnay Apartments
56 Rediger Investment Corp. Mohammed Usman 11.0%
57 1700 SL Investors-South Lamar Austin/Travis County MHMR 28.0%
58 Westgate Center BIG AL'S PET SHOP 34.2%
59 Burke Junction Shopping Center Snowline Hospice Thrift Store 15.0%
60 Rosecrans Industrial International Discount Outlet 25.0%
61 1010 First Street Seaside Church 19.0%
62 Thunder Canyon Plaza Zia Record Exchange 24.8%
63 441 State Highway 71 Tractor Supply Co. 50.6%
64 Tomball Plaza Shopping Center Hobby Lobby 69.1%
65 8 Studebaker The Orange County Register, Inc. 100.0%
66 Norfolk County Inn
67 Towne Park I & II Apartments
68 ACE Market Place West End Studios 12.9%
69 Flagstaff Inn Partnership
</TABLE>
II-20
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Monthly Property Valuation
No. Property Name Cash Flow Payment (8) DSCR(3) (8) Valuation Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
70 Ft. Collins Sleep Inn Motel $ 260,962 $ 13,144 1.66 $ 2,400,000 1/31/98
71 Alvin Towne Center $ 224,113 $ 15,585 1.20 $ 2,370,000 11/24/97
72 Brentwood Plaza $ 207,448 $ 12,309 1.40 $ 2,175,000 1/5/98
73 The Granary $ 191,434 $ 12,163 1.31 $ 2,150,000 10/31/97
74 The Village Apartments $ 185,542 $ 11,803 1.31 $ 1,900,000 2/20/98
75 15441 Nordhoff Street Apts. $ 187,945 $ 11,130 1.41 $ 2,000,000 2/27/98
76 Yukon Square Shopping Ctr $ 211,301 $ 11,265 1.56 $ 2,000,000 12/16/97
77 Emerald Park Apartments $ 179,106 $ 11,131 1.34 $ 2,000,000 1/6/98
78 111 Elm $ 183,268 $ 12,072 1.27 $ 2,075,000 10/1/97
79 La Fiesta Center $ 182,813 $ 11,657 1.31 $ 1,975,000 12/8/97
80 Courtsyde Square $ 169,571 $ 11,245 1.26 $ 2,510,000 4/24/98
81 Grand Avenue R&D $ 197,407 $ 12,905 1.28 $ 2,155,000 4/20/98
82 Cypress Chemical Bldg. $ 170,214 $ 11,935 1.19 $ 2,150,000 11/25/97
83 16307-16331 Arthur Street $ 175,005 $ 11,993 1.22 $ 1,985,000 6/18/97
84 Roscoe Sepulveda Center $ 163,946 $ 9,942 1.37 $ 1,830,000 1/7/98
85 Universal Care (17660 Lakewood) $ 162,505 $ 11,219 1.21 $ 1,860,000 1/6/98
86 New Hampshire Office Bldg. $ 164,315 $ 10,988 1.25 $ 1,800,000 10/13/97
87 Madison Square Retail Center $ 162,277 $ 10,745 1.26 $ 1,780,000 10/10/97
88 Beaujolais Village $ 158,758 $ 9,833 1.35 $ 1,700,000 1/8/98
89 Mountainview $ 147,794 $ 9,686 1.27 $ 1,650,000 1/5/98
90 Jackovics, Thomas & Judit $ 168,588 $ 10,226 1.37 $ 2,025,000 7/21/97
91 5900 Reseda Blvd. $ 136,500 $ 9,726 1.17 $ 1,600,000 2/19/98
92 Southgate Towne Center $ 198,580 $ 10,032 1.65 $ 2,310,000 2/2/98
93 Portola Road Office Building $ 180,686 $ 9,498 1.59 $ 1,900,000 12/3/97
94 Fox Crossing Shopping Center $ 143,552 $ 9,121 1.31 $ 1,600,000 3/11/98
95 PV Oasis Shopping Center $ 208,198 $ 9,009 1.93 $ 2,100,000 10/30/97
96 111 and 125 S. Main Street $ 141,120 $ 9,224 1.28 $ 1,670,000 11/3/97
97 Carlton Court Apartments $ 164,295 $ 8,838 1.55 $ 1,550,000 11/17/97
98 6232 Manchester $ 122,010 $ 8,650 1.18 $ 1,580,000 4/28/98
99 Palm Terrace Apartments $ 133,035 $ 8,948 1.24 $ 1,500,000 9/8/97
100 Grand Rapids Shopping Center $ 122,871 $ 8,391 1.22 $ 1,500,000 4/1/98
101 Rainbow Flag Apartments $ 125,718 $ 8,356 1.25 $ 1,680,000 11/10/97
102 Sea Fox Apartments $ 128,989 $ 8,128 1.32 $ 1,350,000 11/29/97
103 Woodstock Plaza $ 142,799 $ 7,963 1.49 $ 1,515,000 2/16/98
104 Parkview Village Apartments $ 151,827 $ 7,956 1.59 $ 1,325,000 12/23/97
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percent Leased (9)
Loan ------------------------
No. Property Name LTV(13) Leased As of Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
70 Ft. Collins Sleep Inn Motel 68.5% 58.0% 12/31/97
71 Alvin Towne Center 69.2% 86.0% 12/3/97
72 Brentwood Plaza 74.6% 100.0% 2/6/98
73 The Granary 74.4% 100.0% 3/31/98
74 The Village Apartments 78.8% 100.0% 3/1/98
75 15441 Nordhoff Street Apts. 74.8% 93.0% 2/27/98
76 Yukon Square Shopping Ctr 74.8% 96.1% 3/27/98
77 Emerald Park Apartments 74.8% 94.6% 2/10/98
78 111 Elm 71.9% 92.4% 10/1/97
79 La Fiesta Center 74.8% 100.0% 12/8/97
80 Courtsyde Square 58.2% 100.0% 4/27/98
81 Grand Avenue R&D 67.8% 100.0% 4/15/98
82 Cypress Chemical Bldg. 67.2% 100.0% 12/29/97
83 16307-16331 Arthur Street 69.9% 100.0% 8/12/97
84 Roscoe Sepulveda Center 74.8% 100.0% 11/1/97
85 Universal Care (17660 Lakewood) 72.3% 100.0% 2/13/98
86 New Hampshire Office Bldg. 74.6% 100.0% 4/23/98
87 Madison Square Retail Center 74.7% 87.2% 9/1/97
88 Beaujolais Village 77.7% 97.0% 1/1/98
89 Mountainview 79.9% 96.4% 1/20/98
90 Jackovics, Thomas & Judit 63.8% 100.0% 6/1/97
91 5900 Reseda Blvd. 79.8% 97.5% 3/31/98
92 Southgate Towne Center 55.1% 93.3% 3/3/98
93 Portola Road Office Building 65.6% 100.0% 4/1/98
94 Fox Crossing Shopping Center 74.9% 100.0% 4/25/98
95 PV Oasis Shopping Center 56.9% 100.0% 9/1/97
96 111 and 125 S. Main Street 71.5% 100.0% 5/14/98
97 Carlton Court Apartments 73.9% 93.0% 11/17/97
98 6232 Manchester 71.1% 81.1% 3/10/98
99 Palm Terrace Apartments 74.6% 95.0% 7/31/97
100 Grand Rapids Shopping Center 73.0% 90.8% 1/6/98
101 Rainbow Flag Apartments 65.2% 100.0% 4/24/98
102 Sea Fox Apartments 78.9% 96.0% 9/16/97
103 Woodstock Plaza 69.8% 100.0% 2/1/98
104 Parkview Village Apartments 79.7% 93.3% 12/1/97
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Tenant Information(10)
Loan ----------------------
No. Property Name Largest Tenant % NSF
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
70 Ft. Collins Sleep Inn Motel
71 Alvin Towne Center Dollar Cinema 20.0%
72 Brentwood Plaza German Autowerke 15.4%
73 The Granary Jolynn Food Concepts 40.3%
74 The Village Apartments
75 15441 Nordhoff Street Apts.
76 Yukon Square Shopping Ctr Top Liquor 16.4%
77 Emerald Park Apartments
78 111 Elm James Stakely, MD 15.1%
79 La Fiesta Center Mauricio Oliva 59.9%
80 Courtsyde Square Dr. Westbrook 27.3%
81 Grand Avenue R&D United States Logistics & Supply, 100.0%
Inc.
82 Cypress Chemical Bldg. Cypress Chemical Co.\Intercem 100.0%
Corp.
83 16307-16331 Arthur Street Barnes Group 24.5%
84 Roscoe Sepulveda Center George Baily 15.1%
85 Universal Care (17660 Lakewood) Universal Care Bellflower 100.0%
86 New Hampshire Office Bldg. LA Superintendent of Schools 100.0%
87 Madison Square Retail Center Yoshinoya 17.4%
88 Beaujolais Village
89 Mountainview
90 Jackovics, Thomas & Judit 200 - Fifer Group 22.1%
91 5900 Reseda Blvd.
92 Southgate Towne Center Sarinana Inc., dba Century 21 36.6%
(owner)
93 Portola Road Office Building 100.0%
The Pollack Corporation
94 Fox Crossing Shopping Center Mister 4X4 18.8%
95 PV Oasis Shopping Center A Second Look 48.0%
96 111 and 125 S. Main Street LA Cellular 44.0%
97 Carlton Court Apartments
98 6232 Manchester Tipapome Boerger 18.0%
99 Palm Terrace Apartments
100 Grand Rapids Shopping Center Bixby's Bagels 26.2%
101 Rainbow Flag Apartments
102 Sea Fox Apartments
103 Woodstock Plaza Kukkido Martial Arts 17.0%
104 Parkview Village Apartments
</TABLE>
II-21
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Monthly Property Valuation
No. Property Name Cash Flow Payment (8) DSCR(3) (8) Valuation Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
105 Seashore Investment Company $ 167,692 $ 12,834 1.09 $ 1,600,000 7/15/97
106 Sierra Grove Apartments $ 148,919 $ 7,881 1.58 $ 1,775,000 12/22/97
107 10356 Commerce $ 148,584 $ 8,823 1.40 $ 1,445,000 11/6/97
108 Cactus Place Apartments $ 119,728 $ 7,902 1.26 $ 1,400,000 3/6/98
109 Temple Plaza Associates-Apts $ 121,197 $ 7,842 1.29 $ 1,275,000 3/2/98
110 762-808 N. Gordon Street $ 145,694 $ 7,657 1.59 $ 1,325,000 11/24/97
111 Garden Villa Apts. $ 125,596 $ 8,588 1.22 $ 1,350,000 9/25/97
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St $ 151,327 $ 8,312 1.52 $ 1,550,000 9/24/97
113 West Valley Mini Storage $ 131,754 $ 7,860 1.40 $ 1,420,000 12/12/97
114 8910 Washington Boulevard $ 113,513 $ 7,411 1.28 $ 1,300,000 3/10/98
115 Roscoe Plaza Apartments $ 133,765 $ 8,517 1.31 $ 1,300,000 7/30/97
116 Michael Boardman-Lake Terrace $ 128,907 $ 7,467 1.44 $ 1,550,000 3/25/98
117 Rockhill/ Broadway Shop Center $ 115,286 $ 7,069 1.36 $ 1,240,000 4/7/98
118 Villa Mira Monte Apts $ 129,260 $ 6,737 1.60 $ 1,400,000 3/24/98
119 981 Calle Negocio $ 109,921 $ 6,946 1.32 $ 1,340,000 3/9/98
120 Tahquitz Square $ 124,038 $ 6,873 1.50 $ 1,330,000 10/20/97
121 Sweetwater Apartments (2C) $ 107,455 $ 6,679 1.34 $ 1,150,000 12/29/97
122 Orange East & Orange West Apts $ 96,570 $ 7,244 1.11 $ 1,125,000 10/13/97
123 1937 Sunset Circle (2D) $ 103,946 $ 6,799 1.27 $ 1,435,000 10/1/97
124 Old Colorado Square $ 98,300 $ 6,787 1.21 $ 1,150,000 12/18/97
125 Blythe Oceanview Apts $ 168,619 $ 6,871 2.05 $ 1,200,000 3/20/98
126 Keen Apartments $ 118,859 $ 7,144 1.39 $ 1,350,000 10/13/97
127 Tower Center Court $ 100,811 $ 6,948 1.21 $ 1,350,000 3/26/98
128 Chapman Apts $ 102,719 $ 6,307 1.36 $ 1,050,000 3/11/98
129 United Stor-All $ 139,326 $ 7,196 1.61 $ 1,200,000 12/11/97
130 Stewart Court $ 115,884 $ 6,444 1.50 $ 1,240,000 4/1/98
131 1150 South Bristol Street $ 100,537 $ 6,713 1.25 $ 1,100,000 4/14/98
132 3315-3345 Newport Boulevard $ 88,963 $ 6,343 1.17 $ 1,100,000 12/29/97
133 Office Building (Yale Avenue) $ 104,319 $ 6,493 1.34 $ 1,088,000 12/17/97
134 Imperial Apartments $ 111,405 $ 6,222 1.49 $ 1,000,000 2/13/98
135 Park Plaza Center $ 96,920 $ 6,955 1.16 $ 1,085,000 11/13/97
136 Bali Hai Apartments $ 101,851 $ 5,826 1.46 $ 1,060,000 12/10/97
137 140 E. Commonwealth Ave. $ 97,465 $ 6,651 1.22 $ 1,055,500 10/7/97
138 Millcreek Shoppes $ 90,631 $ 5,971 1.27 $ 1,120,000 11/4/97
139 Paradise Plaza $ 112,030 $ 6,657 1.40 $ 1,150,000 7/30/97
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percent Leased (9)
Loan ------------------------
No. Property Name LTV(13) Leased As of Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
105 Seashore Investment Company 65.8% 100.0% 7/30/97
106 Sierra Grove Apartments 58.9% 93.8% 5/13/98
107 10356 Commerce 72.3% 85.7% 10/22/97
108 Cactus Place Apartments 74.1% 100.0% 2/1/98
109 Temple Plaza Associates-Apts 79.9% 96.0% 4/2/98
110 762-808 N. Gordon Street 75.7% 73.0% 3/25/98
111 Garden Villa Apts. 73.7% 85.0% 9/1/97
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St 64.2% 100.0% 9/16/97
113 West Valley Mini Storage 69.0% 100.0% 12/12/97
114 8910 Washington Boulevard 74.9% 100.0% 5/11/98
115 Roscoe Plaza Apartments 74.3% 91.0% 9/2/97
116 Michael Boardman-Lake Terrace 61.0% 100.0% 1/1/98
117 Rockhill/ Broadway Shop Center 74.9% 100.0% 2/1/98
118 Villa Mira Monte Apts 66.3% 98.0% 2/24/98
119 981 Calle Negocio 68.9% 100.0% 2/12/98
120 Tahquitz Square 67.8% 100.0% 1/12/98
121 Sweetwater Apartments (2C) 78.0% 98.2% 4/1/98
122 Orange East & Orange West Apts 79.6% 100.0% 10/9/97
123 1937 Sunset Circle (2D) 62.0% 96.0% 10/2/97
124 Old Colorado Square 74.8% 89.4% 1/1/98
125 Blythe Oceanview Apts 71.7% 75.0% 1/1/98
126 Keen Apartments 62.7% 95.0% 10/14/97
127 Tower Center Court 62.5% 88.0% 4/9/98
128 Chapman Apts 79.9% 95.8% 3/24/98
129 United Stor-All 69.6% 83.0% 3/31/98
130 Stewart Court 66.5% 95.0% 4/21/98
131 1150 South Bristol Street 74.9% 100.0% 3/31/98
132 3315-3345 Newport Boulevard 74.8% 99.5% 1/29/98
133 Office Building (Yale Avenue) 74.5% 100.0% 12/9/97
134 Imperial Apartments 79.8% 89.9% 2/10/98
135 Park Plaza Center 73.5% 100.0% 1/1/98
136 Bali Hai Apartments 74.7% 97.0% 2/28/98
137 140 E. Commonwealth Ave. 74.6% 100.0% 7/9/97
138 Millcreek Shoppes 68.3% 100.0% 1/1/98
139 Paradise Plaza 65.6% 100.0% 7/11/97
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Tenant Information(10)
Loan ----------------------
No. Property Name Largest Tenant % NSF
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
105 Seashore Investment Company Vivanco Medical Group 13.5%
106 Sierra Grove Apartments
107 10356 Commerce
108 Cactus Place Apartments
109 Temple Plaza Associates-Apts
110 762-808 N. Gordon Street
111 Garden Villa Apts.
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St Herrera 12.6%
113 West Valley Mini Storage
114 8910 Washington Boulevard Bud Marjles, Inc. 100.0%
115 Roscoe Plaza Apartments
116 Michael Boardman-Lake Terrace
117 Rockhill/ Broadway Shop Center Stop-n-Go 37.4%
118 Villa Mira Monte Apts
119 981 Calle Negocio Capital Distribution 65.6%
120 Tahquitz Square PS International Film Festival 30.8%
121 Sweetwater Apartments (2C)
122 Orange East & Orange West Apts
123 1937 Sunset Circle (2D)
124 Old Colorado Square Jake & Telly's Restaurant & Bar 21.3%
125 Blythe Oceanview Apts
126 Keen Apartments
127 Tower Center Court GTE Customer Networks 19.0%
128 Chapman Apts
129 United Stor-All
130 Stewart Court
131 1150 South Bristol Street Payless Shoes 72.9%
132 3315-3345 Newport Boulevard Hassan 13.4%
133 Office Building (Yale Avenue) AEI Music Network, Inc. 100.0%
134 Imperial Apartments
135 Park Plaza Center Lakes Cafe 27.4%
136 Bali Hai Apartments
137 140 E. Commonwealth Ave. Pacific Bell 37.9%
138 Millcreek Shoppes Movie Buffs 32.4%
139 Paradise Plaza Safeway Store (New Deal Market) 58.6%
</TABLE>
II-22
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Monthly Property Valuation
No. Property Name Cash Flow Payment (8) DSCR(3) (8) Valuation Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
140 Holly Tree Mobile Home Park $ 116,839 $ 5,848 1.67 $ 1,564,000 4/14/98
141 Vista Dunes Mobile Home Park $ 172,468 $ 5,659 2.54 $ 2,200,000 1/14/98
142 Casa Hermosa $ 88,048 $ 6,370 1.15 $ 1,034,000 2/12/97
143 Peakwood Medical Office Bldg $ 81,865 $ 5,709 1.20 $ 1,030,000 3/13/98
144 Costa Mesa Super 8 Motel $ 218,333 $ 6,236 2.92 $ 2,500,000 10/9/97
145 Ocotillo Terrace $ 83,214 $ 5,420 1.28 $ 980,000 4/30/98
146 The Pines Apts $ 112,901 $ 5,438 1.73 $ 1,200,000 2/12/98
147 Russell Avenue Apartments $ 81,846 $ 5,249 1.30 $ 940,000 2/13/98
148 Centrifugal Casting Co.-10714 $ 81,940 $ 5,556 1.23 $ 1,100,000 12/8/97
149 5151 Commerce Avenue $ 100,803 $ 5,716 1.47 $ 1,125,000 9/11/97
150 35 North Alboni Place $ 106,757 $ 5,008 1.78 $ 980,000 1/30/98
151 555 Virginia Drive $ 94,723 $ 5,843 1.35 $ 910,000 9/18/97
152 Audubon Center $ 81,972 $ 5,096 1.34 $ 990,000 4/1/98
153 Bryan Apartments $ 72,382 $ 4,938 1.22 $ 950,000 4/16/98
154 1645-55 Grant Street $ 78,714 $ 5,728 1.15 $ 1,050,000 3/25/98
155 5408 North 99th Street $ 83,634 $ 5,344 1.30 $ 1,050,000 1/15/98
156 10960 Bluffside Drive $ 79,727 $ 4,651 1.43 $ 950,000 3/10/98
157 Whitehall Apartments $ 97,693 $ 4,651 1.75 $ 1,100,000 2/19/98
158 Progress Bulletin Building $ 98,884 $ 5,522 1.49 $ 1,000,000 11/14/97
159 Aida Renta-Squire Apts $ 71,641 $ 4,808 1.24 $ 800,000 4/30/98
160 2263-2273 Harbor Boulevard $ 80,787 $ 4,863 1.38 $ 1,180,000 2/2/98
161 Park Towne Place Apts. $ 94,687 $ 5,159 1.53 $ 805,000 10/15/97
162 Eugie Terrace Apts $ 74,329 $ 4,825 1.28 $ 850,000 3/7/98
163 Firestone Tire Store $ 96,916 $ 4,887 1.65 $ 900,000 3/27/98
164 The Singer Building $ 149,261 $ 5,247 2.37 $ 1,675,000 9/22/97
165 La Verne Shopping Center $ 115,487 $ 5,520 1.74 $ 1,200,000 8/1/97
166 Chambers Plaza Shopping Center $ 67,063 $ 5,043 1.11 $ 840,000 2/2/98
167 AAA Mini Max Storage $ 91,130 $ 5,225 1.45 $ 1,100,000 12/11/97
168 Montego & Wyndham Apts. $ 79,821 $ 4,829 1.38 $ 800,000 10/20/97
169 Mayfair Terrace $ 78,991 $ 4,449 1.48 $ 790,000 4/1/98
170 Universal Care (2360 Pacific) $ 65,783 $ 4,903 1.12 $ 830,000 1/6/98
171 Cinnibar Square Apartments $ 72,227 $ 4,387 1.37 $ 730,000 8/5/97
172 2500 East Ball Road $ 75,602 $ 4,224 1.49 $ 660,000 3/27/98
173 Eckerd Drug Store $ 71,877 $ 4,607 1.30 $ 750,000 6/2/97
174 ParadiseArbor Apartments $ 74,243 $ 3,874 1.60 $ 750,000 1/15/98
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percent Leased (9)
Loan ------------------------
No. Property Name LTV(13) Leased As of Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
140 Holly Tree Mobile Home Park 47.8% 100.0% 1/26/98
141 Vista Dunes Mobile Home Park 33.9% 95.7% 10/1/97
142 Casa Hermosa 72.0% 86.0% 5/27/97
143 Peakwood Medical Office Bldg 72.0% 100.0% 3/13/98
144 Costa Mesa Super 8 Motel 29.5% 67.0% 12/31/97
145 Ocotillo Terrace 74.4% 100.0% 3/1/98
146 The Pines Apts 58.4% 91.0% 2/12/98
147 Russell Avenue Apartments 74.2% 100.0% 3/18/98
148 Centrifugal Casting Co.-10714 63.4% 100.0% 4/23/98
149 5151 Commerce Avenue 60.0% 100.0% 10/1/97
150 35 North Alboni Place 68.7% 95.0% 3/3/98
151 555 Virginia Drive 73.6% 100.0% 3/1/98
152 Audubon Center 67.2% 100.0% 5/4/98
153 Bryan Apartments 69.9% 93.3% 4/13/98
154 1645-55 Grant Street 62.7% 100.0% 5/15/98
155 5408 North 99th Street 61.8% 100.0% 5/26/98
156 10960 Bluffside Drive 68.3% 92.0% 4/3/98
157 Whitehall Apartments 59.0% 100.0% 2/1/98
158 Progress Bulletin Building 64.7% 83.8% 12/29/97
159 Aida Renta-Squire Apts 79.9% 94.4% 3/31/98
160 2263-2273 Harbor Boulevard 54.1% 100.0% 1/19/98
161 Park Towne Place Apts. 79.2% 100.0% 9/30/97
162 Eugie Terrace Apts 74.5% 96.0% 3/1/98
163 Firestone Tire Store 69.5% 100.0% 5/8/98
164 The Singer Building 37.0% 100.0% 4/28/98
165 La Verne Shopping Center 51.7% 100.0% 4/3/98
166 Chambers Plaza Shopping Center 72.8% 100.0% 1/1/98
167 AAA Mini Max Storage 55.1% 64.0% 12/8/97
168 Montego & Wyndham Apts. 74.7% 96.6% 3/31/98
169 Mayfair Terrace 74.9% 100.0% 4/10/98
170 Universal Care (2360 Pacific) 70.8% 100.0% 2/1/98
171 Cinnibar Square Apartments 74.3% 100.0% 9/22/97
172 2500 East Ball Road 79.5% 90.2% 4/1/98
173 Eckerd Drug Store 69.8% 100.0% 6/6/97
174 ParadiseArbor Apartments 69.4% 92.9% 2/2/98
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Tenant Information(10)
Loan ----------------------
No. Property Name Largest Tenant % NSF
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
140 Holly Tree Mobile Home Park
141 Vista Dunes Mobile Home Park
142 Casa Hermosa
143 Peakwood Medical Office Bldg Drs M. White MD and D. Baker MD 50.8%
144 Costa Mesa Super 8 Motel
145 Ocotillo Terrace
146 The Pines Apts
147 Russell Avenue Apartments
148 Centrifugal Casting Co.-10714 TOA Medical Electronics 50.1%
149 5151 Commerce Avenue Glendee Corporation 100.0%
150 35 North Alboni Place
151 555 Virginia Drive Fidelity Federal Services, Inc. 100.0%
152 Audubon Center Big Wheel Rossi 54.1%
153 Bryan Apartments
154 1645-55 Grant Street Marquis Institute 46.0%
155 5408 North 99th Street Viatel 100.0%
156 10960 Bluffside Drive
157 Whitehall Apartments
158 Progress Bulletin Building Mabelle's Bakery 10.0%
159 Aida Renta-Squire Apts
160 2263-2273 Harbor Boulevard Phillips Tire Co. 57.4%
161 Park Towne Place Apts.
162 Eugie Terrace Apts
163 Firestone Tire Store Firestone Tires 100.0%
164 The Singer Building Tara R. Patel 15.5%
165 La Verne Shopping Center Mi Ranchito Rest. (1437-41) 21.3%
166 Chambers Plaza Shopping Center Fort Bend Council 34.6%
167 AAA Mini Max Storage
168 Montego & Wyndham Apts.
169 Mayfair Terrace
170 Universal Care (2360 Pacific) Universal Care, Inc. 100.0%
171 Cinnibar Square Apartments
172 2500 East Ball Road Advanced Isokenetic Rehab 37.0%
173 Eckerd Drug Store Eckerd Drug Store 100.0%
174 ParadiseArbor Apartments
</TABLE>
II-23
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Loan Underwritable Monthly Property Valuation
No. Property Name Cash Flow Payment (8) DSCR(3) (8) Valuation Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
175 Los Porticos Apartments $ 85,981 $ 3,649 1.96 $ 900,000 4/16/98
176 11737 Vanowen St. $ 63,202 $ 4,620 1.14 $ 640,000 10/7/97
177 Universal Care (1820 Lincoln) $ 63,773 $ 4,213 1.26 $ 700,000 1/6/98
178 Billy's Cove Apartments $ 65,465 $ 3,941 1.38 $ 625,000 3/17/98
179 2612 Van Patten St. $ 68,198 $ 4,024 1.41 $ 815,000 8/7/97
180 18312 Collins Street $ 134,039 $ 4,959 2.25 $ 1,200,000 9/17/97
181 Orangewood Apartments $ 62,545 $ 3,648 1.43 $ 600,000 1/15/98
182 Ocean View Apartments $ 79,206 $ 4,688 1.41 $ 675,000 2/18/98
183 101-109 West Foothill Blvd $ 62,568 $ 3,705 1.41 $ 700,000 7/14/97
184 Salcorp $ 63,371 $ 3,938 1.34 $ 680,000 11/4/97
185 318 N. Mariposa $ 71,336 $ 3,644 1.63 $ 675,000 12/22/97
186 320 N. Ardmore Avenue $ 69,387 $ 3,699 1.56 $ 590,000 9/17/97
187 Universal Care (1814 Lincoln) $ 54,030 $ 3,428 1.31 $ 550,000 1/6/98
188 5742-5766 Camerford Avenue $ 74,238 $ 3,626 1.71 $ 620,000 10/11/97
189 Ocean Village Cottages (2E) $ 42,153 $ 2,896 1.21 $ 850,000 1/12/98
190 Oso Home Care $ 39,675 $ 2,957 1.12 $ 605,000 5/20/97
191 Cox Office Building $ 44,036 $ 2,887 1.27 $ 510,000 9/8/97
192 13931 Enterprise Drive $ 32,625 $ 2,388 1.14 $ 500,000 7/8/97
193 RIMO Manufacturing $ 29,886 $ 1,820 1.37 $ 360,000 7/30/97
194 Promatic Industries $ 29,754 $ 1,820 1.36 $ 360,000 7/30/97
$40,385,499 $2,455,391 1.37
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percent Leased (9)
Loan ------------------------
No. Property Name LTV(13) Leased As of Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
175 Los Porticos Apartments 56.6% 95.8% 4/16/98
176 11737 Vanowen St. 79.4% 87.0% 12/31/97
177 Universal Care (1820 Lincoln) 72.1% 100.0% 1/6/98
178 Billy's Cove Apartments 79.8% 100.0% 4/1/98
179 2612 Van Patten St. 61.0% 86.4% 9/18/97
180 18312 Collins Street 40.8% 98.0% 3/31/98
181 Orangewood Apartments 79.8% 100.0% 12/17/97
182 Ocean View Apartments 69.6% 94.0% 3/30/98
183 101-109 West Foothill Blvd 63.9% 100.0% 7/1/97
184 Salcorp 65.0% 100.0% 11/24/97
185 318 N. Mariposa 64.6% 100.0% 10/31/97
186 320 N. Ardmore Avenue 72.6% 83.3% 8/21/97
187 Universal Care (1814 Lincoln) 74.7% 100.0% 1/6/98
188 5742-5766 Camerford Avenue 64.5% 91.7% 9/26/97
189 Ocean Village Cottages (2E) 46.8% 100.0% 1/5/98
190 Oso Home Care 55.4% 100.0% 9/15/97
191 Cox Office Building 61.5% 100.0% 9/11/97
192 13931 Enterprise Drive 53.0% 100.0% 4/1/98
193 RIMO Manufacturing 55.2% 100.0% 5/1/98
194 Promatic Industries 55.2% 100.0% 2/27/98
69.5%
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Tenant Information(10)
Loan ----------------------
No. Property Name Largest Tenant % NSF
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
175 Los Porticos Apartments
176 11737 Vanowen St.
177 Universal Care (1820 Lincoln) Universal Care 100.0%
178 Billy's Cove Apartments
179 2612 Van Patten St.
180 18312 Collins Street
181 Orangewood Apartments
182 Ocean View Apartments
183 101-109 West Foothill Blvd Fenderbenders 37.2%
184 Salcorp Salcorp, Inc. 100.0%
185 318 N. Mariposa
186 320 N. Ardmore Avenue
187 Universal Care (1814 Lincoln) Universal Care 100.0%
188 5742-5766 Camerford Avenue
189 Ocean Village Cottages (2E)
190 Oso Home Care Oso Home Care 100.0%
191 Cox Office Building York Village Cafe 32.1%
192 13931 Enterprise Drive Coast Chemical 100.0%
193 RIMO Manufacturing Rimo Manufacturing 100.0%
194 Promatic Industries Promatic Industries 100.0%
</TABLE>
II-24
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Partial
Loan Prepayment Lock-out 6 Mos.
No. Property Name Allowed Seasoning(12) Period Interest YM1 YM
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) No 9 59 0 57 0
2 Apple Valley I (1A) No 9 59 0 57 0
3 Alex Bell Plaza (1A) No 9 59 0 57 0
4 Apple Valley III (1A) No 9 59 0 57 0
5 Dryden II (1A) No 9 59 0 57 0
6 Apple Valley II (1A) No 9 59 0 57 0
7 Dayton Towne Center (1A) No 9 59 0 57 0
8 CAG Industrial (1B) No 2 60 0 56 0
9 Galleria I, II, III (1B) No 2 60 0 56 0
10 Stewart Center (1B) No 2 60 0 56 0
11 Wausau Container (1B) No 2 60 0 56 0
12 Cypress Park Bldg. 4 (1C) No 9 0 0 0 0
13 Delco K-2 (1C) No 9 35 0 0 0
14 3975 Dayton Park (1C) (2A) No 9 35 0 0 0
15 TrailsEnd (1C) No 9 35 0 0 0
16 Cypress Park Bldg. 3 (1C) No 9 0 0 0 0
17 Blue Dog Cafe (1C) No 9 35 0 0 0
18 The Harvard Market No 4 60 0 53 0
19 Pavilions at Rancho Mirage No 8 60 0 57 0
20 Del Rayo Village No 4 60 0 53 0
21 Irvine Spectrum Auto Center No 7 60 0 56 0
22 710 Euclid-Park San Dimas No 2 60 0 53 0
23 Cedar Plaza Shopping Ctr No 4 60 0 56 0
24 909 Ocean Front Walk No 2 60 0 56 0
25 Pioneer Center & DIHO Plaza No 4 60 0 56 0
26 Select Suites - Airport Center No 2 60 0 56 0
27 1401 Dove Street No 7 0 0 0 0
28 600 South Lake Financial Ctr No 4 60 0 56 0
29 Upper Main Street Apartments (1D) (2B) No 5 59 0 58 0
30 Westland Place Apartments (1D) No 5 59 0 58 0
31 87 - 101 Spring Street (1D) No 5 59 0 58 0
32 124-128 Collins Street (1D) No 5 59 0 58 0
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Loan Admin.
No. Property Name DEF 5.0% 4.0% 3.0% 2.0% 1.0% OPEN Cost Rate (BPS)(14)
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 River Place (1A) 0 0 0 0 0 0 4 5.65
2 Apple Valley I (1A) 0 0 0 0 0 0 4 5.65
3 Alex Bell Plaza (1A) 0 0 0 0 0 0 4 5.65
4 Apple Valley III (1A) 0 0 0 0 0 0 4 5.65
5 Dryden II (1A) 0 0 0 0 0 0 4 5.65
6 Apple Valley II (1A) 0 0 0 0 0 0 4 10.65
7 Dayton Towne Center (1A) 0 0 0 0 0 0 4 10.65
8 CAG Industrial (1B) 0 0 0 0 0 0 4 5.65
9 Galleria I, II, III (1B) 0 0 0 0 0 0 4 5.65
10 Stewart Center (1B) 0 0 0 0 0 0 4 5.65
11 Wausau Container (1B) 0 0 0 0 0 0 4 10.65
12 Cypress Park Bldg. 4 (1C) 0 0 0 0 0 0 120 5.65
13 Delco K-2 (1C) 0 0 0 12 12 54 7 10.65
14 3975 Dayton Park (1C) (2A) 0 0 0 12 12 54 7 10.65
15 TrailsEnd (1C) 0 0 0 12 12 54 7 10.65
16 Cypress Park Bldg. 3 (1C) 0 0 0 0 0 0 120 10.65
17 Blue Dog Cafe (1C) 0 0 0 12 12 54 7 10.65
18 The Harvard Market 0 0 0 0 0 0 7 5.65
19 Pavilions at Rancho Mirage 0 0 0 0 0 0 3 5.65
20 Del Rayo Village 0 0 0 0 0 0 7 5.65
21 Irvine Spectrum Auto Center 0 0 0 0 0 0 4 5.65
22 710 Euclid-Park San Dimas 0 0 0 0 0 0 7 5.65
23 Cedar Plaza Shopping Ctr 0 0 0 0 0 0 4 5.65
24 909 Ocean Front Walk 0 0 0 0 0 0 4 5.65
25 Pioneer Center & DIHO Plaza 0 0 0 0 0 0 4 5.65
26 Select Suites - Airport Center 0 0 0 0 0 0 4 5.65
27 1401 Dove Street 0 0 0 0 0 0 120 5.65
28 600 South Lake Financial Ctr 0 0 0 0 0 0 4 5.65
29 Upper Main Street Apartments (1D) (2B) 0 0 0 0 0 0 3 10.65
30 Westland Place Apartments (1D) 0 0 0 0 0 0 3 10.65
31 87 - 101 Spring Street (1D) 0 0 0 0 0 0 3 10.65
32 124-128 Collins Street (1D) 0 0 0 0 0 0 3 10.65
</TABLE>
II-25
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Partial
Loan Prepayment Lock-out 6 Mos.
No. Property Name Allowed Seasoning(12) Period Interest YM1 YM
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
33 22 Huntington (1D) No 5 59 0 58 0
34 Paradise Garden Apartments No 4 102 0 98 0
35 Beaumont Tower Venture, Ltd. No 7 120 0 116 0
36 Woodlands Medical Building No 5 60 0 56 0
37 Allentowne Village Apartments No 5 60 0 0 0
38 Artisan Components Building No 7 60 0 56 0
39 Barstow Road Center No 2 48 0 68 0
40 Berry Hill Shopping Center No 7 60 0 56 0
41 Ridgewood Retirement Center No 2 60 0 56 0
42 Central Village No 4 60 0 53 0
43 Lankershim No 7 60 0 56 0
44 900 Calle Negocio Industrial No 7 60 0 56 0
45 The Inland Atrium No 6 60 0 56 0
46 Robins Lane Apartments No 8 60 0 56 0
47 Airport Corporate Center No 9 59 0 57 0
48 Whitney Mesa Mini Storage No 8 60 0 56 0
49 Tercek Property/Johns Westside No 4 59 0 58 0
50 Garden Estates Apartments No 4 59 0 58 0
51 Carlton Way Towers No 8 59 0 58 0
52 Lincoln Business Center No 7 60 0 0 0
53 Centerpoint Business Park No 3 58 0 59 0
54 Jordano's Marketplace No 4 60 0 56 0
55 Chardonnay Apartments No 4 58 0 59 0
56 Rediger Investment Corp. No 2 59 0 58 0
57 1700 SL Investors-South Lamar No 2 60 0 56 0
58 Westgate Center No 8 59 0 58 0
59 Burke Junction Shopping Center No 2 59 0 58 0
60 Rosecrans Industrial No 2 47 0 0 0
61 1010 First Street No 7 59 0 58 0
62 Thunder Canyon Plaza No 4 59 0 58 0
63 441 State Highway 71 No 2 60 0 53 0
64 Tomball Plaza Shopping Center No 3 90 0 86 0
65 8 Studebaker No 2 59 0 58 0
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Loan Admin.
No. Property Name DEF 5.0% 4.0% 3.0% 2.0% 1.0% Open Cost Rate (BPS)(14)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
33 22 Huntington (1D) 0 0 0 0 0 0 3 10.65
34 Paradise Garden Apartments 0 0 0 0 0 0 4 5.65
35 Beaumont Tower Venture, Ltd. 0 0 0 0 0 0 4 5.65
36 Woodlands Medical Building 0 0 0 0 0 0 4 5.65
37 Allentowne Village Apartments 0 0 0 12 12 23 13 5.65
38 Artisan Components Building 0 0 0 0 0 0 4 5.65
39 Barstow Road Center 0 0 0 0 0 0 4 5.65
40 Berry Hill Shopping Center 0 0 0 0 0 0 4 5.65
41 Ridgewood Retirement Center 0 0 0 0 0 0 4 5.65
42 Central Village 0 0 0 0 0 0 7 5.65
43 Lankershim 0 0 0 0 0 0 4 5.65
44 900 Calle Negocio Industrial 0 0 0 0 0 0 4 5.65
45 The Inland Atrium 0 0 0 0 0 0 4 5.65
46 Robins Lane Apartments 0 0 0 0 0 0 4 5.65
47 Airport Corporate Center 0 0 0 0 0 0 4 5.65
48 Whitney Mesa Mini Storage 0 0 0 0 0 0 4 5.65
49 Tercek Property/Johns Westside 0 0 0 0 0 0 3 5.65
50 Garden Estates Apartments 0 0 0 0 0 0 3 5.65
51 Carlton Way Towers 0 0 0 0 0 0 3 5.65
52 Lincoln Business Center 0 12 12 12 12 8 4 5.65
53 Centerpoint Business Park 0 0 0 0 0 0 3 5.65
54 Jordano's Marketplace 0 0 0 0 0 0 4 5.65
55 Chardonnay Apartments 0 0 0 0 0 0 3 5.65
56 Rediger Investment Corp. 0 0 0 0 0 0 3 10.65
57 1700 SL Investors-South Lamar 0 0 0 0 0 0 4 10.65
58 Westgate Center 0 0 0 0 0 0 3 10.65
59 Burke Junction Shopping Center 0 0 0 0 0 0 3 10.65
60 Rosecrans Industrial 70 0 0 0 0 0 3 10.65
61 1010 First Street 0 0 0 0 0 0 3 10.65
62 Thunder Canyon Plaza 0 0 0 0 0 0 3 10.65
63 441 State Highway 71 0 0 0 0 0 0 7 10.65
64 Tomball Plaza Shopping Center 0 0 0 0 0 0 4 10.65
65 8 Studebaker 0 0 0 0 0 0 3 10.65
</TABLE>
II-26
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Partial
Loan Prepayment Lock-out 6 Mos.
No. Property Name Allowed Seasoning(12) Period Interest YM1 YM
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
66 Norfolk County Inn No 2 60 0 56 0
67 Towne Park I & II Apartments No 7 59 0 58 0
68 ACE Market Place No 6 59 0 58 0
69 Flagstaff Inn Partnership No 3 88 0 88 0
70 Ft. Collins Sleep Inn Motel No 4 59 0 58 0
71 Alvin Towne Center Yes 7 0 17 0 0
72 Brentwood Plaza No 5 60 0 56 0
73 The Granary No 7 60 0 56 0
74 The Village Apartments No 4 59 0 58 0
75 15441 Nordhoff Street Apts. No 4 59 0 58 0
76 Yukon Square Shopping Ctr No 5 58 0 59 0
77 Emerald Park Apartments No 5 23 0 0 0
78 111 Elm No 9 59 0 55 0
79 La Fiesta Center No 5 59 0 58 0
80 Courtsyde Square No 2 59 0 58 0
81 Grand Avenue R&D No 2 0 0 0 0
82 Cypress Chemical Bldg. No 7 59 0 58 0
83 16307-16331 Arthur Street No 11 36 0 0 0
84 Roscoe Sepulveda Center No 5 59 0 58 0
85 Universal Care (17660 Lakewood) No 5 59 0 58 0
86 New Hampshire Office Bldg. No 9 59 0 57 0
87 Madison Square Retail Center Yes 8 0 35 0 0
88 Beaujolais Village No 5 59 0 58 0
89 Mountainview No 2 59 0 57 0
90 Jackovics, Thomas & Judit Yes 9 59 0 0 0
91 5900 Reseda Blvd. No 4 59 0 58 0
92 Southgate Towne Center No 4 59 0 58 0
93 Portola Road Office Building No 4 59 0 58 0
94 Fox Crossing Shopping Center No 2 59 0 58 0
95 PV Oasis Shopping Center No 7 58 0 59 0
96 111 and 125 S. Main Street No 8 59 0 58 0
97 Carlton Court Apartments No 7 23 0 0 0
98 6232 Manchester No 2 59 0 58 0
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Loan Admin.
No. Property Name DEF 5.0% 4.0% 3.0% 2.0% 1.0% Open Cost Rate (BPS)(14)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
66 Norfolk County Inn 0 0 0 0 0 0 4 10.65
67 Towne Park I & II Apartments 0 0 0 0 0 0 3 10.65
68 ACE Market Place 0 0 0 0 0 0 3 10.65
69 Flagstaff Inn Partnership 0 0 0 0 0 0 4 10.65
70 Ft. Collins Sleep Inn Motel 0 0 0 0 0 0 3 10.65
71 Alvin Towne Center 0 0 0 0 0 0 103 10.65
72 Brentwood Plaza 0 0 0 0 0 0 4 10.65
73 The Granary 0 0 0 0 0 0 4 10.65
74 The Village Apartments 0 0 0 0 0 0 3 10.65
75 15441 Nordhoff Street Apts. 0 0 0 0 0 0 3 10.65
76 Yukon Square Shopping Ctr 0 0 0 0 0 0 3 10.65
77 Emerald Park Apartments 0 0 0 11 11 11 64 10.65
78 111 Elm 0 0 0 0 0 0 6 10.65
79 La Fiesta Center 0 0 0 0 0 0 3 10.65
80 Courtsyde Square 0 0 0 0 0 0 3 10.65
81 Grand Avenue R&D 0 12 12 12 12 12 60 10.65
82 Cypress Chemical Bldg. 0 0 0 0 0 0 3 10.65
83 16307-16331 Arthur Street 0 0 0 0 0 17 7 10.65
84 Roscoe Sepulveda Center 0 0 0 0 0 0 3 10.65
85 Universal Care (17660 Lakewood) 0 0 0 0 0 0 3 10.65
86 New Hampshire Office Bldg. 0 0 0 0 0 0 4 10.65
87 Madison Square Retail Center 0 0 0 0 0 0 85 10.65
88 Beaujolais Village 0 0 0 0 0 0 3 10.65
89 Mountainview 0 0 0 0 0 0 4 10.65
90 Jackovics, Thomas & Judit 0 0 0 0 0 0 61 10.65
91 5900 Reseda Blvd. 0 0 0 0 0 0 3 10.65
92 Southgate Towne Center 0 0 0 0 0 0 3 10.65
93 Portola Road Office Building 0 0 0 0 0 0 3 10.65
94 Fox Crossing Shopping Center 0 0 0 0 0 0 3 10.65
95 PV Oasis Shopping Center 0 0 0 0 0 0 3 10.65
96 111 and 125 S. Main Street 0 0 0 0 0 0 3 10.65
97 Carlton Court Apartments 0 0 0 11 11 11 64 10.65
98 6232 Manchester 0 0 0 0 0 0 3 10.65
</TABLE>
II-27
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Partial
Loan Prepayment Lock-out 6 Mos.
No. Property Name Allowed Seasoning(12) Period Interest YM1 YM
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
99 Palm Terrace Apartments No 10 23 0 0 0
100 Grand Rapids Shopping Center No 4 60 0 53 0
101 Rainbow Flag Apartments No 7 59 0 58 0
102 Sea Fox Apartments No 7 59 0 58 0
103 Woodstock Plaza No 4 59 0 58 0
104 Parkview Village Apartments No 6 59 0 58 0
105 Seashore Investment Company Yes 11 0 35 0 0
106 Sierra Grove Apartments No 6 59 0 58 0
107 10356 Commerce Yes 7 0 23 0 0
108 Cactus Place Apartments No 4 59 0 58 0
109 Temple Plaza Associates-Apts No 3 59 0 58 0
110 762-808 N. Gordon Street No 7 59 0 58 0
111 Garden Villa Apts. Yes 8 0 35 0 0
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St Yes 9 0 35 0 0
113 West Valley Mini Storage No 7 60 0 56 0
114 8910 Washington Boulevard No 2 59 0 58 0
115 Roscoe Plaza Apartments Yes 10 0 35 0 0
116 Michael Boardman-Lake Terrace No 2 59 0 58 0
117 Rockhill/ Broadway Shop Center No 2 59 0 58 0
118 Villa Mira Monte Apts No 3 59 0 58 0
119 981 Calle Negocio No 4 59 0 58 0
120 Tahquitz Square No 6 59 0 0 0
121 Sweetwater Apartments (2C) No 5 35 0 82 0
122 Orange East & Orange West Apts No 8 58 0 0 0
123 1937 Sunset Circle (2D) No 9 59 0 58 0
124 Old Colorado Square No 5 59 0 58 0
125 Blythe Oceanview Apts No 3 59 0 58 0
126 Keen Apartments Yes 8 0 35 0 0
127 Tower Center Court No 2 58 0 59 0
128 Chapman Apts No 3 59 0 58 0
129 United Stor-All No 6 59 0 58 0
130 Stewart Court No 2 59 0 58 0
131 1150 South Bristol Street No 2 59 0 58 0
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Loan Admin.
No. Property Name DEF 5.0% 4.0% 3.0% 2.0% 1.0% Open Cost Rate (BPS)(14)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99 Palm Terrace Apartments 0 0 0 11 11 11 64 10.65
100 Grand Rapids Shopping Center 0 0 0 0 0 0 7 10.65
101 Rainbow Flag Apartments 0 0 0 0 0 0 3 10.65
102 Sea Fox Apartments 0 0 0 0 0 0 3 10.65
103 Woodstock Plaza 0 0 0 0 0 0 3 10.65
104 Parkview Village Apartments 0 0 0 0 0 0 3 10.65
105 Seashore Investment Company 0 0 0 0 0 0 109 10.65
106 Sierra Grove Apartments 0 0 0 0 0 0 3 10.65
107 10356 Commerce 0 0 0 0 0 0 97 10.65
108 Cactus Place Apartments 0 0 0 0 0 0 3 10.65
109 Temple Plaza Associates-Apts 0 0 0 0 0 0 3 10.65
110 762-808 N. Gordon Street 0 0 0 0 0 0 3 10.65
111 Garden Villa Apts. 0 0 0 0 0 0 85 10.65
112 601-6091/2 N.Western Av./4905-4913 W.Clinton St 0 0 0 0 0 0 85 10.65
113 West Valley Mini Storage 0 0 0 0 0 0 4 10.65
114 8910 Washington Boulevard 0 0 0 0 0 0 3 10.65
115 Roscoe Plaza Apartments 0 0 0 0 0 0 85 10.65
116 Michael Boardman-Lake Terrace 0 0 0 0 0 0 3 10.65
117 Rockhill/ Broadway Shop Center 0 0 0 0 0 0 3 10.65
118 Villa Mira Monte Apts 0 0 0 0 0 0 3 10.65
119 981 Calle Negocio 0 0 0 0 0 0 3 10.65
120 Tahquitz Square 0 11 11 11 11 5 12 10.65
121 Sweetwater Apartments (2C) 0 0 0 0 0 0 3 10.65
122 Orange East & Orange West Apts 0 0 0 0 0 57 4 10.65
123 1937 Sunset Circle (2D) 0 0 0 0 0 0 3 10.65
124 Old Colorado Square 0 0 0 0 0 0 3 10.65
125 Blythe Oceanview Apts 0 0 0 0 0 0 3 10.65
126 Keen Apartments 0 0 0 0 0 0 325 10.65
127 Tower Center Court 0 0 0 0 0 0 3 10.65
128 Chapman Apts 0 0 0 0 0 0 3 10.65
129 United Stor-All 0 0 0 0 0 0 3 10.65
130 Stewart Court 0 0 0 0 0 0 3 10.65
131 1150 South Bristol Street 0 0 0 0 0 0 3 10.65
</TABLE>
II-28
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Partial
Loan Prepayment Lock-out 6 Mos.
No. Property Name Allowed Seasoning(12) Period Interest YM1 YM
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
132 3315-3345 Newport Boulevard No 5 58 0 59 0
133 Office Building (Yale Avenue) No 5 59 0 58 0
134 Imperial Apartments Yes 4 0 11 0 0
135 Park Plaza Center No 7 59 0 58 0
136 Bali Hai Apartments No 6 59 0 58 0
137 140 E. Commonwealth Ave. Yes 8 0 35 0 0
138 Millcreek Shoppes No 6 59 0 58 0
139 Paradise Plaza No 10 23 0 0 0
140 Holly Tree Mobile Home Park No 3 59 0 58 0
141 Vista Dunes Mobile Home Park No 5 59 0 58 0
142 Casa Hermosa Yes 13 0 35 0 0
143 Peakwood Medical Office Bldg No 3 59 0 58 0
144 Costa Mesa Super 8 Motel No 7 23 0 0 0
145 Ocotillo Terrace No 2 59 0 58 0
146 The Pines Apts No 5 59 0 58 0
147 Russell Avenue Apartments No 4 59 0 58 0
148 Centrifugal Casting Co.-10714 No 3 59 0 58 0
149 5151 Commerce Avenue No 9 23 0 0 0
150 35 North Alboni Place No 4 59 0 58 0
151 555 Virginia Drive No 8 23 0 0 0
152 Audubon Center No 4 60 0 53 0
153 Bryan Apartments No 2 59 0 58 0
154 1645-55 Grant Street No 2 59 0 58 0
155 5408 North 99th Street No 2 59 0 58 0
156 10960 Bluffside Drive No 3 59 0 58 0
157 Whitehall Apartments No 3 59 0 58 0
158 Progress Bulletin Building Yes 6 0 35 0 0
159 Aida Renta-Squire Apts No 2 59 0 58 0
160 2263-2273 Harbor Boulevard No 4 35 0 0 0
161 Park Towne Place Apts. No 9 59 0 58 0
162 Eugie Terrace Apts No 4 59 0 58 0
163 Firestone Tire Store No 2 59 0 58 0
164 The Singer Building No 8 23 0 0 0
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Loan Admin.
No. Property Name DEF 5.0% 4.0% 3.0% 2.0% 1.0% Open Cost Rate (BPS)(14)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
132 3315-3345 Newport Boulevard 0 0 0 0 0 0 3 10.65
133 Office Building (Yale Avenue) 0 0 0 0 0 0 3 10.65
134 Imperial Apartments 0 0 0 0 0 0 109 10.65
135 Park Plaza Center 0 0 0 0 0 0 3 10.65
136 Bali Hai Apartments 0 0 0 0 0 0 3 10.65
137 140 E. Commonwealth Ave. 0 0 0 0 0 0 85 10.65
138 Millcreek Shoppes 0 0 0 0 0 0 3 10.65
139 Paradise Plaza 0 0 0 11 11 11 64 10.65
140 Holly Tree Mobile Home Park 0 0 0 0 0 0 3 10.65
141 Vista Dunes Mobile Home Park 0 0 0 0 0 0 3 10.65
142 Casa Hermosa 0 0 0 0 0 0 85 10.65
143 Peakwood Medical Office Bldg 0 0 0 0 0 0 3 10.65
144 Costa Mesa Super 8 Motel 0 0 0 11 11 11 64 10.65
145 Ocotillo Terrace 0 0 0 0 0 0 3 10.65
146 The Pines Apts 0 0 0 0 0 0 3 10.65
147 Russell Avenue Apartments 0 0 0 0 0 0 3 10.65
148 Centrifugal Casting Co.-10714 0 0 0 0 0 0 3 10.65
149 5151 Commerce Avenue 0 0 0 11 11 11 64 10.65
150 35 North Alboni Place 0 0 0 0 0 0 3 10.65
151 555 Virginia Drive 0 0 0 11 11 11 64 10.65
152 Audubon Center 0 0 0 0 0 0 7 10.65
153 Bryan Apartments 0 0 0 0 0 0 3 10.65
154 1645-55 Grant Street 0 0 0 0 0 0 3 10.65
155 5408 North 99th Street 0 0 0 0 0 0 3 10.65
156 10960 Bluffside Drive 0 0 0 0 0 0 3 10.65
157 Whitehall Apartments 0 0 0 0 0 0 3 10.65
158 Progress Bulletin Building 0 0 0 0 0 0 85 10.65
159 Aida Renta-Squire Apts 0 0 0 0 0 0 3 10.65
160 2263-2273 Harbor Boulevard 0 0 11 11 11 11 41 10.65
161 Park Towne Place Apts. 0 0 0 0 0 0 3 10.65
162 Eugie Terrace Apts 0 0 0 0 0 0 3 10.65
163 Firestone Tire Store 0 0 0 0 0 0 3 10.65
164 The Singer Building 0 0 0 12 12 12 61 10.65
</TABLE>
II-29
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Partial
Loan Prepayment Lock-out 6 Mos.
No. Property Name Allowed Seasoning(12) Period Interest YM1 YM
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
165 La Verne Shopping Center No 9 23 0 0 0
166 Chambers Plaza Shopping Center No 4 59 0 58 0
167 AAA Mini Max Storage No 6 59 0 58 0
168 Montego & Wyndham Apts. No 8 23 0 0 0
169 Mayfair Terrace No 3 59 0 58 0
170 Universal Care (2360 Pacific) No 5 59 0 58 0
171 Cinnibar Square Apartments No 10 23 0 0 0
172 2500 East Ball Road No 2 59 0 58 0
173 Eckerd Drug Store No 10 23 0 0 0
174 ParadiseArbor Apartments No 5 58 0 59 0
175 Los Porticos Apartments No 2 59 0 58 0
176 11737 Vanowen St. Yes 7 0 34 0 0
177 Universal Care (1820 Lincoln) No 5 59 0 58 0
178 Billy's Cove Apartments No 3 59 0 58 0
179 2612 Van Patten St. No 9 23 0 0 0
180 18312 Collins Street No 7 58 0 119 0
181 Orangewood Apartments No 5 58 0 59 0
182 Ocean View Apartments No 2 59 0 58 0
183 101-109 West Foothill Blvd No 10 23 0 0 0
184 Salcorp Yes 7 0 34 0 0
185 318 N. Mariposa No 6 59 0 58 0
186 320 N. Ardmore Avenue Yes 9 0 35 0 0
187 Universal Care (1814 Lincoln) No 5 59 0 58 0
188 5742-5766 Camerford Avenue Yes 8 0 35 0 0
189 Ocean Village Cottages (2E) No 6 59 0 58 0
190 Oso Home Care Yes 9 0 35 0 0
191 Cox Office Building Yes 9 0 35 0 0
192 13931 Enterprise Drive Yes 10 0 35 0 0
193 RIMO Manufacturing Yes 10 0 35 0 0
194 Promatic Industries Yes 10 0 35 0 0
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Loan Admin.
No. Property Name DEF 5.0% 4.0% 3.0% 2.0% 1.0% Open Cost Rate (BPS)(14)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
165 La Verne Shopping Center 0 0 0 0 11 11 11 64 10.65
166 Chambers Plaza Shopping Center 0 0 0 0 0 0 0 3 10.65
167 AAA Mini Max Storage 0 0 0 0 0 0 0 3 10.65
168 Montego & Wyndham Apts. 0 0 0 0 11 11 11 64 10.65
169 Mayfair Terrace 0 0 0 0 0 0 0 3 10.65
170 Universal Care (2360 Pacific) 0 0 0 0 0 0 0 3 10.65
171 Cinnibar Square Apartments 0 0 0 0 11 11 11 64 10.65
172 2500 East Ball Road 0 0 0 0 0 0 0 3 10.65
173 Eckerd Drug Store 0 0 0 0 12 12 12 61 10.65
174 ParadiseArbor Apartments 0 0 0 0 0 0 0 3 10.65
175 Los Porticos Apartments 0 0 0 0 0 0 0 3 10.65
176 11737 Vanowen St. 0 0 0 0 0 0 0 86 10.65
177 Universal Care (1820 Lincoln) 0 0 0 0 0 0 0 3 10.65
178 Billy's Cove Apartments 0 0 0 0 0 0 0 3 10.65
179 2612 Van Patten St. 0 0 0 0 11 11 11 64 10.65
180 18312 Collins Street 0 0 0 0 0 0 0 3 10.65
181 Orangewood Apartments 0 0 0 0 0 0 0 3 10.65
182 Ocean View Apartments 0 0 0 0 0 0 0 3 10.65
183 101-109 West Foothill Blvd 0 0 0 0 11 11 11 64 10.65
184 Salcorp 0 0 0 0 0 0 0 86 10.65
185 318 N. Mariposa 0 0 0 0 0 0 0 3 10.65
186 320 N. Ardmore Avenue 0 0 0 0 0 0 0 325 10.65
187 Universal Care (1814 Lincoln) 0 0 0 0 0 0 0 3 10.65
188 5742-5766 Camerford Avenue 0 0 0 0 0 0 0 85 10.65
189 Ocean Village Cottages (2E) 0 0 0 0 0 0 0 3 10.65
190 Oso Home Care 0 0 0 0 0 0 0 85 10.65
191 Cox Office Building 0 0 0 0 0 0 0 85 10.65
192 13931 Enterprise Drive 0 0 0 0 0 0 0 85 10.65
193 RIMO Manufacturing 0 0 0 0 0 0 0 85 10.65
194 Promatic Industries 0 0 0 0 0 0 0 85 10.65
8.01
</TABLE>
II-30
<PAGE>
<TABLE>
<CAPTION>
Footnotes to Appendix II
<S> <C>
1 Sets of Mortgage Loans that have identical alphabetical coding designate multiple loans that are cross-collateralized and
cross-defaulted.
2 Mortgage Loan is secured by liens on multiple properties. Property type, address, year built and year renovated indicated are
for the largest of such properties. All other property information is aggregated for the multiple properties, which are
summarized below:
(2A) Secured by liens on 3949 and 3975 Dayton Park Drive and 3711, 3726, 3739 and 3759 Inpark Circle
(2B) Secured by liens on 2495-2515 Main Street and 2602-2620 Main Street
(2C) Secured by liens on 100-200 McElory Avenue and 101-201 Barclay Avenue
(2D) Secured by liens on 1638-44 Athol Avenue and 1937 Sunset Circle
(2E) Secured by liens on 486, 90, and 92 3rd Street and 485-487 Bent Street
3 Certain ratios including Cut-off Date Balance/Unit or SF, DSCR, LTV and Balloon LTV are calculated on a combined basis for
Mortgage Loans that are secured by multiple properties and/or are cross-collateralized and cross-defaulted.
4 The Amortization Term shown is the basis for determining the fixed monthly principal and interest payment as set forth in the
related note. Due to the actual/360 interest accrual method applied to certain Mortgage Loans, the actual amortization period
to a zero balance in certain cases will be longer.
5 Mortgage Loan secured by a condominium interest or partial condominium interest.
6 Mortgage Rates are as of the Cut-off Date.
7 The Mortgage Rate Periodic Maximum Increase and Maximum Decrease identifies the maximum increase and decrease in the Mortgage
Rate at each Rate Reset Date.
8 The Monthly Payment of the Adjustable Rate Mortgage Loans is determined on each respective Rate Reset Date based on the then
outstanding loan balance, the determined Index rate plus the Margin, subject to interest ceilings, floors and periodic maximum
increases and decreases and the applicable remaining amortization term. The identified Balloon Balance, Balloon LTV and DSCR
for each of the Adjustable Rate Mortgage Loans at each Rate Reset Date will be subject to the newly determined Monthly
Payment.
9 In general for each property, "Percent Leased" was determined based on a rent roll provided by the borrower. In certain cases,
"Percent Leased" was determined based on an appraisal, executed lease, operating statement or occupancy report. "Percent
Leased As of Date" indicates the date as of which "Percent Leased" was determined based on such information. For hospitality
properties, the data shown is the average daily occupancy rate, generally for 1997 or the preceding twelve month period.
10 For Office, Retail and Industrial Mortgage Properties, "Largest Tenant" refers to the tenant that represents the greatest
percentage, equal to the total net rentable square footage at the subject property.
</TABLE>
II-31
<PAGE>
FOOTNOTES TO APPENDIX II
<TABLE>
<C> <S>
11 Indicates prepayment provisions as stated in the Mortgage Loan from the first Due Date. "YM" represents yield maintenance and
"YM1" represents the greater of yield maintenance or one percent of the outstanding principal balance at such time. "DEF"
represents defeasance. "6 mos. Interest" represents a period during which prepayment of a cumulative 20% of the original
Mortgage Loan balance may be made without penalty and the prepayment amount that exceeds 20% shall be made with a penalty
equal to six months interest based on the Mortgage Loan interest rate in place at time of prepayment. The stated percentages
(e.g., 5%, 4%, 3%, 2%, 1%) represent percentage Prepayment Premiums. "Open" represents a period during which Principal
Prepayments are permitted without payment of a Prepayment Premium. For each Mortgage Loan, the number set forth under a
category of prepayment provision represents the number of payments in the original term to maturity for which such provision
applies.
12 "Seasoning" represents the approximate number of months elapsed from the date of the first regularly scheduled payment or Due
Date to and including the Cut-off Date.
13 Mortgage Loan Number 90 permits up to 10% of the original principal balance to be prepaid without penalty on any one payment
date each calendar year during the "Lockout" period.
14 The "Administrative Cost Rate" indicated for each Mortgage Loan will be calculated based on the same interest calculation
methodology (i.e., actual/360) that is applicable to such Mortgage Loan.
</TABLE>
II-32
<PAGE>
APPENDIX III
SIGNIFICANT LOAN SUMMARIES
LOAN NOS. 1-7, 12-17 AND 47- DANIS LOANS
----------------------------------------
<TABLE>
<CAPTION>
CUT-OFF DATE BALANCE: PROPERTY TYPE:
Fixed Rate Loan Group: Fixed Rate Loan Group:
- ------------------------------- ---------------------------
<S> <C> <C> <C>
Two Riverplace $ 4,162,878 Two Riverplace Office
Apple Valley I $ 3,765,067 Apple Valley I Office
Alex Bell Plaza $ 3,269,664 Alex Bell Plaza Retail
Apple Valley III $ 2,477,018 Apple Valley III Office
Dryden II $ 2,278,857 Dryden II Office
Apple Valley II $ 1,981,614 Apple Valley II Office
Dayton Towne Center $ 1,312,820 Dayton Towne Center Retail
Floating Rate Loan Group: Floating Rate Loan Group:
- ------------------------------- ---------------------------
Cypress Park 4 $ 2,928,962 Cypress Park 4 Industrial
Delco K-2 $ 1,984,301 Delco K-2 Industrial
3975 Dayton Park $ 1,810,675 3975 Dayton Park Other
Trails End $ 1,389,011 Trails End Other
Cypress Park 3 $ 1,249,691 Cypress Park 3 Industrial
Blue Dog Cafe $ 396,860 Blue Dog Cafe Other
Airport Corporate Center $ 2,774,260 Airport Corporate Center Office
- ------------------------------- ---------------------------
LOCATIONS: YEAR BUILT/RENOVATED:
Fixed Rate Loan Group: Fixed Rate Loan Group:
- ------------------------------- ---------------------------
Two Riverplace Dayton, Ohio Two Riverplace 1985
Apple Valley I Beavercreek, Ohio Apple Valley I 1987
Alex Bell Plaza Dayton, Ohio Alex Bell Plaza 1983
Apple Valley III Beavercreek, Ohio Apple Valley III 1987
Dryden II Moraine, Ohio Dryden II 1986
Apple Valley II Beavercreek, Ohio Apple Valley II 1986
Dayton Towne Center Dayton, Ohio Dayton Towne Center 1985
Floating Rate Loan Group: Floating Rate Loan Group:
- ------------------------------- ---------------------------
Cypress Park 4 Orlando, Florida Cypress Park 4 1988
Delco K-2 Kettering, Ohio Delco K-2 1988
3975 Dayton Park Dayton, Ohio 3975 Dayton Park 1978
Trails End Kettering, Ohio Trails End 1916/1987
Cypress Park 3 Orlando, Florida Cypress Park 3 1988
Blue Dog Cafe Dayton, Ohio Blue Dog Cafe 1939/1997
Airport Corporate Center Vandalia, Ohio Airport Corporate Center 1987
- ------------------------------- ---------------------------
</TABLE>
III-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SQUARE FEET: ANNUAL DEBT SERVICE:
Fixed Rate Loan Group: Fixed Rate Loan Group:
- ------------------------------- ---------------------------
Two Riverplace 42,286 Two Riverplace $ 414,316
Apple Valley I 54,927 Apple Valley I $ 367,035
Alex Bell Plaza 75,980 Alex Bell Plaza $ 318,741
Apple Valley III 45,399 Apple Valley III $ 241,470
Dryden II 42,526 Dryden II $ 222,153
Apple Valley II 29,916 Apple Valley II $ 193,176
Dayton Towne Center 35,932 Dayton Towne Center $ 127,979
Floating Rate Loan Group: Floating Rate Loan Group:
- ------------------------------- ---------------------------
Cypress Park 4 69,000 Cypress Park 4 $ 376,105
Delco K-2 82,000 Delco K-2 $ 209,844
3975 Dayton Park 118,203 3975 Dayton Park $ 191,482
Trails End 16,069 Trails End $ 146,891
Cypress Park 3 18,000 Cypress Park 3 $ 160,472
Blue Dog Cafe 10,000 Blue Dog Cafe $ 41,969
Airport Corporate Center 47,139 Airport Corporate Center $ 270,447
- ------------------------------- ---------------------------
PERCENT LEASED: BALANCE AT MATURITY:
Fixed Rate Loan Group: Fixed Rate Loan Group:
- ------------------------------- ---------------------------
Two Riverplace 100% Two Riverplace $3,454,524
Apple Valley I 92.8% Apple Valley I $3,106,675
Alex Bell Plaza 98.8% Alex Bell Plaza $2,697,902
Apple Valley III 73.1% Apple Valley III $2,043,866
Dryden II 96.4% Dryden II $1,880,357
Apple Valley II 100% Apple Valley II $1,635,092
Dayton Towne Center 78.2% Dayton Towne Center $1,083,249
Floating Rate Loan Group: Floating Rate Loan Group:
- ------------------------------- ---------------------------
Cypress Park 4 100% Cypress Park 4 $1,492,001
Delco K-2 100% Delco K-2 $1,673,580
3975 Dayton Park 80.1% 3975 Dayton Park $1,527,141
Trails End 100% Trails End $1,171,506
Cypress Park 3 100% Cypress Park 3 $ 636,587
Blue Dog Cafe 100% Blue Dog Cafe $ 334,717
Airport Corporate Center 100% Airport Corporate Center $2,289,130
- ------------------------------- ---------------------------
</TABLE>
III-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERCENT LEASED AS OF DATE: MORTGAGE RATE:
Fixed Rate Loan Group: Fixed Rate Loan Group:
- ------------------------------- ---------------------------
Two Riverplace March 31, 1998 Two Riverplace 8.625
Apple Valley I March 31, 1998 Apple Valley I 8.375%
Alex Bell Plaza March 31, 1998 Alex Bell Plaza 8.375%
Apple Valley III June 5, 1998 Apple Valley III 8.375%
Dryden II March 31, 1998 Dryden II 8.375%
Apple Valley II March 31, 1998 Apple Valley II 8.375%
Dayton Towne Center March 31, 1998 Dayton Towne Center 8.375%
Floating Rate Loan Group: Floating Rate Loan Group: 9.375%
- ------------------------------- ---------------------------
Cypress Park 4 February 18, 1998 Airport Corporate Center 8.375%
---------------------------
Delco K-2 August 17, 1994 ORIGINATION DATE:
3975 Dayton Park March 31, 1998 Fixed Rate Loan Group: October 28, 1997
---------------------------
Trails End March 31, 1998 Floating Rate Loan Group: October 28, 1997
---------------------------
Cypress Park 3 March 31, 1998 Airport Corporate Center October 28, 1997
---------------------------
Blue Dog Cafe May 7, 1998 CUT-OFF DATE BALANCE/UNIT:
Airport Corporate Center March 31, 1998 Fixed Rate Loan Group: $59
- ------------------------------- ---------------------------
LOAN TYPE: Floating Rate Loan Group: $31
---------------------------
Fixed Rate Loan Group: Fixed Airport Corporate Center $59
- ------------------------------- ---------------------------
Floating Rate Loan Group: ARM DSCR:
- -------------------------------
Airport Corporate Center Fixed Fixed Rate Loan Group: $ 1.18
- ------------------------------- ---------------------------
MATURITY DATE: Floating Rate Loan Group: $ 1.20
---------------------------
Fixed Rate Loan Group: November 1, 2007 Airport Corporate Center $ 1.34
- ------------------------------- ---------------------------
Floating Rate Loan Group: November 1, 2007 AGGREGATE UNDERWRITTEN
- ------------------------------- CASH FLOW:
Airport Corporate Center November 1, 2007 Fixed Rate Loan Group: $2,230,897
- ------------------------------- ---------------------------
APPRAISED VALUE: Floating Rate Loan Group: $1,352,851
---------------------------
Fixed Rate Loan Group: $26,820,000 Airport Corporate Center $ 361,892
- ------------------------------- ---------------------------
Floating Rate Loan Group: $15,125,000 BALANCE AT MATURITY LTV:
- -------------------------------
Airport Corporate Center $ 4,000,000 Fixed Rate Loan Group: 59.3%
- ------------------------------- ---------------------------
CURRENT LTV: Floating Rate Loan Group: 45.2%
---------------------------
Fixed Rate Loan Group: 71.8% Airport Corporate Center 57.2%
- ------------------------------- ---------------------------
Floating Rate Loan Group: 65.4%
- -------------------------------
Airport Corporate Center 69.4%
- -------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE LOANS
There are 14 Mortgage Loans (the "Danis Loans") in the portfolio secured by
office, retail, warehouse, industrial and restaurant properties (the
"Properties"). The Danis Loans were originated on October 28, 1997 and mature
November 1, 2007. There are seven fixed rate loans that are cross-
collateralized and cross-defaulted among themselves (the "Fixed Rate Loans");
six adjustable rate loans that are cross-collateralized and cross-defaulted
among themselves (the "Adjustable Rate Loans"); and an additional fixed rate
loan that is not cross-collateralized or cross-defaulted with the other Danis
Loans (the "Airport Corporate Center Loan"). The Fixed Rate Loans are: Two
Riverplace, Alex Bell Plaza, Apple Valley I, Apple Valley II, Apple Valley III,
Dayton Towne Center and Dryden II. The Adjustable Rate Loans are: Cypress Park
3, Cypress Park 4, Delco K-2, 3975 Dayton Park, TrailsEnd and Blue Dog Cafe.
THE BORROWER. The Danis Loans were made to various subsidiary corporations
of the Danis Companies. The Danis Loans are guaranteed by The Danis Companies.
III-3
<PAGE>
SECURITY. Each of the Danis Loans are secured by liens on fee simple
interests with an assignment of leases and rents and a first priority security
interest in any furniture, fixture and equipment owned by the Borrower and used
in the operation of the Properties, except the 3975 Dayton Park Loan, which is
secured by a leasehold mortgage on the Borrower's leasehold estate.
PAYMENT TERMS. The Danis Loans have an original term of 120 months. All
amortize over 300 months, except for Cypress Park 3 and Cypress Park 4, which
amortize over 180 months. The Danis Loans have monthly payments of principal
and interest until maturity on November 1, 2007, as follows: (a) Two Riverplace-
- -$34,526, (b) Alex Bell Plaza--$26,561, (c) Apple Valley I--$30,586, (d) Apple
Valley II--$16,098, (e) Apple Valley III--$20,123, (f) Dryden II--$18,513, (g)
Dayton Towne Center--$10,665, (h) Cypress Park 4--$31,342 (at 9.375%), (i) Delco
K-2--$17,487 (at 9.375%), (j) Cypress Park 3--$13,373 (at 9.375%), (k) the 3975
Dayton Park--$15,957 (at 9.375%), (l) Blue Dog Cafe--$3,497 (at 9.375%), (m)
TrailsEnd--$12,241 (at 9.375%), and (n) Airport Corporate Center--$22,537 (at
8.375%). Upon maturity, all unpaid principal and accrued but unpaid interest is
due. The Danis Loans accrue interest computed on the basis of the actual number
of days in a 360-day year.
The Adjustable Rate Loans have an initial annual rate of 9.375% as of the
Cut-off Date, which is adjusted semi-annually not to exceed 1.5% per adjustment.
The Adjustable Rate Loans have a minimum rate of 9.375% and a maximum rate of
15.375%. With the exception of Two Riverplace, all Fixed Rate Loans bear
interest at 8.375%. Two Riverplace bears interest at 8.625%. The Airport
Corporate Center Loan bears interest at 8.375%.
PREPAYMENT. The Fixed Rate Loans are subject to a lockout for the first
five years. The Fixed Rate Loans may be prepaid in years 6 through 10 if
accompanied by the greater of a 1.00% prepayment penalty or yield maintenance
and can be paid in full without penalty in the last 90 days of the loan term.
The Adjustable Rate Loans are, with the exception of the Cypress Park 3 and
Cypress Park 4 Loans, subject to a three year lockout, a 3% prepayment penalty
in year four, 2% in year five, and 1% from year six until the final 180 days of
the loan term. Prepayment may be made in the last 180 days of the loan term
without penalty. The Cypress Park 3 and Cypress Park 4 Loans may be prepaid in
full at any time without penalty.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Danis Loans become
immediately due and payable upon the transfer of the Property or any controlling
interest in the Borrower without the lender's prior written consent, except that
partial releases are obtainable generally among the Fixed Rate Loans and
Adjustable Rate Loans upon the Borrower's (i) payment in full, including any
applicable prepayment premium, of the unpaid balance for the applicable Loan,
and (ii) with the exception of the Cypress Park 3 and Cypress Park 4 Loans,
evidencing that the combined Debt Service Coverage Ratio ("DSCR") for the
remaining Loans among the Fixed Rate Loans or Adjustable Rate Loans, as the case
may be, is not less than the 1.15 to 1.00 as of the date of such prepayment.
ESCROW/RESERVES. All of the Danis Loans require reserves for taxes and
insurance and impounds for replacement reserves and tenant leasing and
commission ("TI & LC") reserves. The following are the replacement reserve and
TI & LC reserve requirements for the Danis Loans: (a) Two Riverplace, $.18/s.f.
or $7,571 annually for replacement reserves and TI & LC reserves of $1.12/s.f.
or $47,472 annually; (b) Alex Bell Plaza, $48,956 annually for replacement
reserves and TI & LC reserves of $142,890 annually; (c) Apple Valley I,
$.15/s.f. or $8,239 annually for replacement reserves and TI & LC reserves of
$1.15/s.f. or $63,403 annually; (d) Apple Valley II, $.15/s.f. or $4,487
annually for TI & LC reserves, capped at $69,922; (e) Apple Valley III,
$.15/s.f. or $7,024 annually for TI & LC reserves; (f) Dryden II, $.15/s.f. or
$6,363 annually for replacement reserves, capped at $12,726 and TI & LC reserves
of $47,201 annually, capped at $94,400; (g) Dayton Towne Center, $.20/s.f. or
$7,186 annually for replacement reserves and TI & LC reserves of $.83/s.f. or
$29,723 annually; (h) Cypress Park 4, $.10/s.f. or $7,080 annually for
replacement reserves and TI & LC reserves of $.26/s.f. or $17,769 annually; (i)
Delco K-2, $.30/s.f. or $24,600 annually for replacement reserves, capped at
$24,600, and TI & LC reserves of $.35/s.f. or $29,055 annually, capped at
$58,110; (j) Cypress Park 3, $.10/s.f. or
III-4
<PAGE>
$1,789 annually for replacement reserves and TI & LC reserves of $7,755
annually; (k) the 3975 Dayton Place, $.10/s.f. or $11,800 annually for
replacement reserves and TI & LC reserves of $.19/s.f. or $22,145 annually; (l)
Blue Dog Cafe, $.41/s.f. or $4,100 annually for reserve replacements and TI & LC
reserves of $10,568 annually; (m) TrailsEnd, $.30/s.f. or $4,760 annually for
replacement reserves and "other original hold back amount" of $3,000, and (n)
Airport Corporate Center, replacement reserve of $.15/s.f. or $7,061 annually,
and TI & LC reserves of $1.18/s.f. or $55,712 annually. Replacement reserves and
TI & LC reserves are impounded on a monthly basis. All reserves commenced
concurrently with the first loan payment and continue throughout the loan term.
Other reserves were required for the following: Apple Valley II ($2,800 for
re-sealing of surface parking lot), Apple Valley III ($70,000 withheld until
occupancy level reaches 93%), Dayton Towne Center ($48,000 for immediate needs
including roof repair and paving repairs), Cypress Park 4 ($13,300 for immediate
repairs), Delco K-2 ($21,350 for first year and immediate repair needs), the
3975 Dayton Park ($27,500 for immediate repairs), and Blue Dog Cafe ($9,500 for
repainting of the exterior).
SUBORDINATE/OTHER DEBT. Subordinate indebtedness (other than trade and
operational debt incurred in the ordinary course of business with trade
creditors) is prohibited.
THE PROPERTIES
Two Riverplace. Built in 1985, Two Riverplace is a 42,286 square foot,
four-story office building constructed over a two story, 105 vehicle parking
garage, in Dayton, Ohio. The site area contains a total of 1.83 acres. The
building is a condominium of which Danis owns 83.79% of the condominium units or
42,286 square feet of Net Leasable Area ("NLA") (the "Danis Interest"). As of
March 31, 1998, the Danis Interest is 100% occupied with four tenants. The
Danis Interest is 85.7% occupied by Danis or related entities under long-term
leases ("Danis Leases"). All Danis Leases extend beyond the loan term except
for Danis Building Construction Company (27.6% of NLA), which expires September
30, 2001. The other 14.3% of Danis Interest NLA is leased by Larry Stein Realty
until after the loan term. The average base rental, as of March 31, 1998, is
$15.75/s.f./year.
Blue Dog Cafe. The Mortgaged Property, located in downtown Dayton, Ohio,
is a three story apartment converted into a restaurant which occupies the entire
building containing 10,000 square feet of NLA. The third story is closed off
and not used. Parking is provided for 73 cars. The building was built in 1939
and renovated in 1997. The only tenant is the Blue Dog Cafe, under lease at the
rate of $5.92/s.f./year until February 28, 2002.
Alex Bell Plaza. Alex Bell Plaza is a 1-story retail strip shopping center
situated on a 7.56 acre site in Miami Township, Ohio. The U-shaped building was
built in two phases in 1983 and 1984. Alex Bell Plaza contains 75,890 square
feet of NLA and an asphalt paved parking area for 736 vehicles. As of March 31,
1998, Alex Bell Plaza was 99% occupied. The major tenant is Genescreen,
occupying 12,500 square feet of NLA or 16.5%. Genescreen is under lease until
October 31, 1999. Twenty-one tenants occupy the remaining 82.5% of non-vacant
NLA. Contractual lease expirations during the loan term for all tenants are as
follows: 5.1% in 1998, 43.8% in 1999, 31.4% in 2000, 11.6% in 2001, 3.0% in
2002, 3.9% in 2003, 0% in 2004 through 2007. As of March 31, 1998, the average
base rental, excluding vacancies, was $8.24/s.f./year.
Apple Valley I. Apple Valley I consists of a three story office building
with 54,927 square feet of NLA situated on 5.2 acres in Beavercreek, Ohio. The
building was constructed in 1987 and is 92.8% occupied as of March 31, 1998.
The major tenants are Digital Equipment (22.3% of NLA under lease until July 31,
1999), and Gasper Corp. (32.1% of NLA, under lease until August 31, 2001). Six
tenants occupy the remaining 38.4% of non-vacant NLA. Contractual lease
expirations during the loan term for all tenants are as follows: 15.1% in 1998,
30.0% in 1999, 0% in 2000, 38.6% in 2001, 9.2% in 2002, 0% in 2003 through 2007.
As of March 31, 1998, the average base rental, excluding vacancies, was
$15.74/s.f./year.
III-5
<PAGE>
Apple Valley II. Apple Valley II is a 2-story office building constructed
in 1985 in Beavercreek, Ohio. The building is on a 2.58 acre site and has a NLA
of 29,916 square feet. Litton Systems occupies 100% of the property at
$14.25/s.f./year under a one-year lease that expires on September 30, 1998.
Apple Valley III. Apple Valley III is a one-story, office building
situated on a 5.2 acre site in Beavercreek, Ohio. The 45,399 square foot
building was built in 1987 and is 73% occupied as of June 5, 1998. The average
base rental, excluding vacancies, is $12.45/s.f./year.
Cypress Park 3. Cypress Park 3 is an 18,000 square foot
warehouse/distribution facility in Orlando, Florida. The facility, built in
1988, was designed to suit the special needs of its only tenant, Brinks, Inc.
The site is used as a money processing facility with office, delivery, storage,
truck maintenance, processing and vault areas. Brinks is under lease until
March 31, 2008, at $11.40/s.f./year.
Cypress Park 4. Cypress Park 4 is a 69,000 square foot warehouse built in
1988 in the Cypress Lake Industrial Park in Orange County, Florida. The
warehouse is in an unincorporated section of Orange County, south of Orlando.
The Danis Companies (parent company of the Borrower) is the sole occupant of the
warehouse. The Danis Companies occupies the building at $8.20/s.f./year until
its lease expires on September 30, 2002.
Dayton Towne Center. Dayton Towne Center is a 35,932 square foot retail
strip shopping center built in 1985 in Dayton, Ohio. The center is physically
attached to a Kroger supermarket, which is not part of the collateral. The
center is situated on a 5.10 acre site with an asphalt paved parking area for
171 vehicles. As of March 31, 1998, the shopping center was 78.2% occupied with
Blockbuster Video being the major tenant, occupying 20,433 square feet or 56.9%
of NLA. Blockbuster is under lease until May 31, 2001 at the rate of
$10.37/s.f./year. Four other tenants occupy the remaining 22.3% of non-vacant
NLA. Contractual lease expirations during the loan term for all tenants are as
follows: 3.0% in 1998, 11.1% in 1999, 7.3% in 2000, 56.9% in 2001, 0% in 2002
through 2007. As of March 31, 1998, the average base rental, excluding
vacancies, was $9.78/s.f./year.
Delco K-2. Delco K-2 is one-story concrete warehouse facility, containing
82,000 square feet of NLA, of which 2,460 square feet is an office. The site is
built on 10 acres in Kettering, Ohio, and has parking for 200 vehicles. General
Motors is the sole occupant and is under lease until March 31, 2003 at
$4.00/s.f./year.
Dryden II. Dryden II is a 42,526 square foot, steel frame, three story
office building built in 1986 in Moraine, Ohio. Dryden II is located on a 2.509
acre parcel of land. The building, as of March 31, 1998, was 96% occupied. The
major tenant is Andrews University, occupying 34.9% of NLA. Andrews' lease
expires on December 31, 2004. Five other tenants occupy the remaining 61.1% of
non-vacant NLA. Contractual lease expirations during the loan term for all
tenants are as follows: 9.8% in 1998, 0% in 1999, 37.8% in 2000, 13.9% in 2001,
0% in 2002 and 2003, 34.9% in 2004, 0% in 2006 and 2007. As of March 31, 1998,
the average base rental, excluding vacancies, was $11.96/s.f./year.
3975 Dayton Park. 3975 Dayton Park consists of six properties consisting
of a vacant tract of land and five one-story industrial structures located at
3711, 3726, 3739, and 3757 Inpark Circle and 3949 and 3975 Dayton Park Drive,
all located in Dayton, Ohio. All of these properties are on ground leases from
the City of Dayton. Each of the ground leases have primary terms of thirty
years expiring in 2003, and are automatically renewable each year thereafter for
forty successive years. An additional thirty-five year option is available
thereafter at a rental rate to be determined by arbitration. The following is a
description of each property:
3711 Inpark. A 1.7 acre open parking lot leased, as of March 31,
1998, by a trucking company for truck storage. There is a gravel parking
area, 6-foot high fence, trailer and one egress/ingress. The trucking
company, Transport International, leases month-to-month at an annual lease
rate of $22,200.
III-6
<PAGE>
3726 Inpark. A 1-story, 5,000 square foot, industrial warehouse on a
concrete slab foundation, with asphalt paved parking for 13 vehicles. The
warehouse was constructed in 1977 and currently is occupied by American
Metal Works, Inc., at $4.32/s.f./year under a lease that expires on April
30, 1999.
3739 Inpark. A 1-story, 10,378 square foot industrial structure, with
a paved parking lot for 19 vehicles. The structure is occupied by The
Shur-Good Biscuit Company at $3.40/s.f./year under a lease that expires on
December 31, 1998.
3757 Inpark. A one-story, 23,200 square foot industrial structure,
with a paved parking lot for 40 vehicles. As of March 31, 1998, this
building, representing 11.3% of the 3975 Dayton Park NLA, was only
partially occupied by one tenant, Morning Pride Manufacturing, Inc. This
tenant leases the space at $3.00/s.f./year under a month-to-month lease.
12,450 square feet or an amount representing 6.1% of the Ohio Properties
NLA is currently vacant.
3949 Dayton Park. A 38,100 square foot, one-story metal distribution
center on a slab foundation constructed in 1976. The building consists of
five tenants with the majority of space used for storage. The building
represents a total of 16.5% of NLA of the 3975 Dayton Park. The major
tenant, Hammelmann Corp., representing 4.9% of total NLA, pays an annual
rate of $3.95/s.f. under a month-to-month lease. As of March 31, 1998, a
portion of the building remains vacant, representing 1.8% of the total NLA.
Two tenants, representing 4.7% of total NLA, are under lease until 1999,
and two tenants, representing 6.9% of total NLA, are under lease until
1998. As of March 31, 1998, the average base rental, excluding vacancies,
was $3.63/s.f./year.
3975 Dayton Park. A 42,000 square foot, one-story metal and brick
facing distribution center constructed in 1981 on a 3.4 acre site. As of
March 31, 1998, the building is occupied by three tenants, with the
majority of space being used for storage.
Trails End. A 16,069 square foot corporate retreat center used by
subsidiaries of The Danis Companies.
Airport Corporate Center. A 47,139 square foot, three story building
on an 8.61 acre site, containing three separate asphalt parking areas with
192 parking spaces. As of March 31, 1998, the property was 100% leased.
The average base rental is $13.51/s.f./year.
MANAGEMENT
The property manager for the Danis Properties is Larry Stein Realty.
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<PAGE>
LOANS NO. 8-11 - GHIDORZI PORTFOLIO
-----------------------------------
<TABLE>
<CAPTION>
CUT-OFF DATE BALANCE: LOCATIONS:
<S> <C> <C> <C>
CAG Industrial $5,122,236 CAG Industrial Wausau, Wisconsin
Stewart Center $3,086,924 Stewart Center Wausau, Wisconsin
Galleria $3,650,180 Galleria Wausau, Wisconsin
Wausau Container $ 973,714 Wausau Container Wausau, Wisconsin
YEAR BUILT/RENOVATED: SQUARE FEET:
CAG Industrial 1996/1998 CAG Industrial 258,664
Stewart Center 1988 Stewart Center 57,367
Galleria 1994 Galleria 52,149
Wausau Container 1993/1997 Wausau Container 35,362
ANNUAL DEBT SERVICE: BALANCE AT MATURITY:
CAG Industrial $425,474 CAG Industrial $ 4,518,881
Stewart Center $303,199 Stewart Center $ 2,723,310
Galleria $256,413 Galleria $ 3,220,219
Wausau Container $80,881 Wausau Container $859,020
PERCENT LEASED: PROPERTY TYPE:
CAG Industrial 100.0% CAG Industrial Industrial
Stewart Center 97.1% Stewart Center Office
Galleria 96.3% Galleria Mixed Use
Wausau Container 100.0% Wausau Container Industrial
PERCENT LEASED AS OF DATE: LOAN TYPE:
CAG Industrial December 1, 1997 ORIGINATION DATE: May 28, 1998
Stewart Center April 1, 1998 MATURITY DATE: June 1, 2008
Galleria April 1, 1998 MORTGAGE RATE: 7.384%
Wausau Container April 1, 1998 CUT-OFF DATE BALANCE/UNIT: $32
DSCR: 1.33 APPRAISED VALUE: $18,150,000
BALANCE AT MATURITY LTV: 62.4% CURRENT LTV: 70.7%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOANS
The "Ghidorzi Loans" consist of four separate Mortgage Loans (the "CAG
Industrial Loan", the "Stewart Center Loan", the "Galleria Loan" and the "Wausau
Container Loan") secured by liens on the related Mortgaged Properties. Each of
the Ghidorzi Loans was originated on May 28, 1998, and has a maturity date of
June 1, 2008.
THE BORROWER. There is a separate borrowing entity for each of the
Ghidorzi Loans. These entities are all Wisconsin corporations that are wholly
owned by Charles A. and Mary Ann Ghidorzi. The Borrower for the CAG Industrial
Loan is CAG Industrial, Inc. The Borrower for the Stewart Center Loan is Stewart
Center Corp. The Borrower for the Galleria Loan is Galleria, Inc. The Borrower
for the Wausau Container Loan is Employee Partnership, Inc.
SECURITY. The Ghidorzi Loans are secured by liens on the Mortgaged
Properties with an assignment of leases and rents and a first priority security
interest in any furniture, fixtures and equipment owned by the related Borrower
and used in the operation of the Mortgaged Property. In addition, the Stewart
Center Loan is further secured by the Borrower's proxy for its voting rights in
the condominium association owning the common elements of that condominium
project. The Ghidorzi Loans are cross-collateralized and cross-defaulted. Each
of the Ghidorzi Loans is non-recourse except for standard carve-outs which are
guaranteed by Charles A. and Mary Ann Ghidorzi.
III-8
<PAGE>
PAYMENT TERMS. Each Ghidorzi Loan has a Mortgage Rate fixed at 7.384%, an
original term of 120 months and an original amortization term of 360 months.
The Ghidorzi Loans require monthly payments of principal and interest until
maturity on June 1, 2008, as follows: (a) CAG Industrial Loan--$35,456, (b)
Stewart Center Loan--$21,367, (c) Galleria Loan--$25,266, (d) Wausau Container
Loan--$6,740. Upon maturity, all unpaid principal and accrued but unpaid
interest is due. The Ghidorzi Loans accrue interest computed on the basis of
the actual number of days in a 360-day year.
PREPAYMENT. Each of the Ghidorzi Loans is subject to a lockout period for
the first 60 monthly payments. The Ghidorzi Loans may be prepaid at the greater
of 1% or yield maintenance for the following 56 monthly payments. For the last
four payments, the loan may be paid in full with no penalty.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Ghidorzi Loans become
immediately due and payable upon the transfer of the Mortgaged Property or any
controlling interest in the Borrower without the lender's prior written consent,
except that partial releases are obtainable generally upon the Borrower's (i)
evidencing that the combined DSCR for the remaining Loans is not less than the
greater of (A) the combined DSCR on all parcels immediately prior to the request
for release, or (B) the combined DSCR on all four parcels at the time of loan
funding; and (ii) paying a release fee equal to 125% of the unpaid balance of
the related Mortgage Loans, including the applicable prepayment premium, at the
time of such release. In addition, the CAG Industrial Loan also permits release
of an undeveloped portion of the Mortgaged Property upon satisfaction of
subdivision and separate tax parcel requirements. This is not considered
material to the value of the collateral.
ESCROW/RESERVES. Each of the Ghidorzi Loans require impounded reserves for
taxes and insurance. Each of the Ghidorzi Loans require replacement reserves
and TI & LC reserves. The following are the reserve requirements for the
Ghidorzi Loans: (a) CAG Industrial Loan: $.10/s.f. or $25,866 annually for
replacement reserves, capped at $75,000, and TI & LC reserves of $30,973
annually, capped at $90,000; (b) Stewart Center Loan: $.20/s.f. or $11,474
annually for replacement reserves, capped at $35,000, and TI & LC reserves of
$52,586 annually, capped at $155,000; (c) Galleria Loan: $.15/s.f. or $7,822
annually for replacement reserves, capped at $30,000, and TI & LC reserves of
$58,964 annually, capped at $170,000, and (d) Wausau Container Loan: $.10/s.f.
or $3,536 annually for replacement reserves, capped at $10,000, and TI & LC
reserves of $11,043 annually, capped at $35,000. Replacement reserves and TI &
LC reserves are impounded on a monthly basis. All reserves commenced
concurrently with the first constant loan payment and continue throughout the
loan term.
SUBORDINATE/OTHER DEBT. Subject to certain permitted contingent
subordinate debt for the CAG Industrial Loan, subordinate indebtedness (other
than trade and operational debt incurred in the ordinary course of business with
trade creditors) is prohibited. The CAG Industrial Loan permits certain
contingent subordinate debt in the aggregate amount of $414,964 to the City of
Wausau, which debt matures November 6, 2007, and is secured by a mortgage. Upon
satisfaction of certain job creation criteria, the indebtedness is reduced
annually and, ultimately, extinguished. The City of Wausau entered into a
Subordination Agreement subordinating its rights under its mortgage to that of
the holder of the CAG Industrial Loan.
THE PROPERTIES
The CAG Industrial Loan. CAG is a 258,664 square foot, multi-tenant
industrial/warehouse and distribution facility built in 1996 in Wausau,
Wisconsin. Total office build-out accounts for approximately 21,986 square feet
or 8.5% of NLA, with the remaining NLA of 236,678 square feet as warehouse/
distribution use. As of December 1997, CAG is 100% occupied. The major tenants
include Fiskars, Inc., occupying 57.8% of NLA, and Innovative Quality Systems,
occupying 35.1% of NLA. Both these tenants are under long-term leases that
extend beyond the loan term. Innovative Quality Systems has an early termination
option allowing it to terminate its lease for $269,000 in 2001 or $221,940 in
2006. Two additional tenants occupy the remaining space, with one lease,
representing 2.6% of NLA, expiring in 1998, and the second, representing 4.5% of
NLA, expiring in 1999. The average rental rate as of December 1997 was
$2.83/s.f./year.
III-9
<PAGE>
The Stewart Center Loan. Stewart Center is a two-story office building,
located in Wausau, Wisconsin, with an NLA of 57,367 square feet. Stewart Center
was built in two phases; the first in 1985, and the second in 1988. The subject
site contains a gross area of approximately 116,315 square feet. The building is
divided into 37 suites with 422 parking spaces, some of which are shared with an
adjacent property. The major tenant, State Farm Insurance, occupies 4,829
square feet or 8.4% of total NLA. As of April 1, 1998, 3.7% of NLA remained
vacant and thirty-three tenants leased the remaining 87.9% of NLA. Contractual
lease expirations during the loan term for all tenants are as follows: 38.27% in
1998, 16.51% in 1999, 24.31% in 2000, 4.18% in 2001, 7.71% in 2002, 5.33% in
2003, and 0% in 2004 through 2007. Average base rental as of April 1998,
excluding vacancies, was $11.06/s.f.. The Mortgaged Property is a condominium
project. The Borrower owns 100% of the units in the condominium, as well as
100% of the voting rights in the owners' association. The Borrower cannot
transfer its ownership of any units in the condominium pursuant to the
provisions of the related Mortgage.
The Galleria Loan. The Galleria, located in Wausau, Wisconsin, is comprised
of three buildings known as Galleria I, II, and III. Galleria I, built in 1994,
is a retail/office property with 28,974 NLA located on a 3.09 acre parcel.
Galleria II, built in 1995, is a three-story office building with 19,650 NLA
located on a .56 acre parcel. Galleria III, built in 1996, is a two-tenant,
3,525 NLA office building located on a 1.035 acre parcel. The three properties
are contiguous and contain a total of 352 parking spaces. As of April 1998, the
major tenants included Silver Bullet Management, occupying 14.8% of NLA, and
Midwest Dental, occupying 11.9% of NLA. Midwest Dental's lease expires beyond
the loan term and Silver Bullet Management's lease ends in March of 2006. A
total of twenty-four tenants, none representing more than 10% of NLA, occupy
70.4% of NLA. Vacancies account for the remaining 2.89% of NLA. Contractual
lease expirations during the loan term for all tenants are as follows: 5.23% in
1998, 13.37% in 1999, 23.33% in 2000, 13.94% in 2001, 11.65% in 2002, 2.84% in
2003, 0% in 2004 through 2005, 14.84% in 2006, and 0% in 2007. As of April
1998, the average base rental, excluding vacancies, was $10.98/s.f./year.
The Wausau Container Loan. Wausau Container, located in Wausau, Wisconsin,
is a single-story, light industrial manufacturing facility which was built in
two phases, in 1993 and 1997. The second phase brought total NLA to 35,362
square feet. The subject site, set on 2.44 acres, is located within an
industrial park that is dominated by single-story, industrial properties,
ranging from 20,000 to 100,000 square feet. The property is 100% leased to
Wausau Container Corporation, which prints and assembles packaging containers
for the food industry. Wausau Container is under lease until April of 2003, and
has a ten-year option to renew. The average base rental for Wausau Container is
$3.82/s.f. Wausau Container has an option to purchase the property after the
lockout period at a price sufficient to pay off the Mortgage Loan.
MANAGEMENT
The Mortgaged Properties are managed by C.A. Ghidorzi, Incorporated, an
affiliate of the Borrowers. The Manager has been involved in the development
and management of office, retail and industrial properties in the subject market
area since 1971.
III-10
<PAGE>
LOAN NO. 18 - HARVARD MARKET
----------------------------
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $8,973,365 PROPERTY TYPE: Mixed Use
LOAN TYPE: Fixed LOCATION: Seattle,
Washington
ORIGINATION DATE: March 31, 1998 YEAR BUILT/RENOVATED: 1997
MATURITY DATE: April 1, 2008 UNITS/NSF: 41,146
MORTGAGE RATE: 7.375% CUT-OFF DATE $218
BALANCE/UNITS/NSF:
ANNUAL DEBT SERVICE: $753,933 APPRAISED VALUE: $12,250,000
DSCR: 1.37 CURRENT LTV: 73.3%
UNDERWRITTEN CASH FLOW: $1,030,997 BALANCE AT MATURITY LTV: 63.7%
BALANCE AT MATURITY: $7,809,280 PERCENT LEASED: 90.0%
PERCENT LEASED AS OF DATE: March 10, 1998
- ------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Harvard Joint Venture Loan (the "Harvard Loan") is secured by a lien on
a 41,146 square foot anchored urban retail center located in Seattle,
Washington. The Harvard Loan was originated on March 31, 1998.
THE BORROWER. The Borrower is The Harvard Joint Venture, a Washington
Joint Venture, which was formed on September 15, 1994 for the acquisition,
development, management and ownership of the Mortgaged Property. The Borrower
consists of two (2) joint venturers each with a 50% interest; Milliken Urban
Development Corporation ("Milliken") and Drumnacavney Road Investments, Inc
("Drumnacavney"). The principal of Milliken is Donald R. Milliken. The
principal of Drumnacavney is James Angus.
SECURITY. The Mortgage Loan is secured by a lien on the related Mortgaged
Property, an assignment of leases and rents and a first-priority security
interest in any furniture, fixtures, and equipment owned by the Borrower and
used in the operation of the Mortgaged Property. The Borrower has also granted
a "springing" proxy (exercisable upon the occurrence of an event of default) of
its voting rights in The Harvard Market Owners Association (the "Association").
The Borrower has 43.93% of the voting rights in the Association. The Harvard
Loan is generally non-recourse, except for standard non-recourse carve-outs.
MAJOR TENANTS. The major tenant at the Mortgaged Property is Bartell Drug
Store occupying 15,000 square feet or 36.5% of NLA. Other tenants include ten
(10) food service establishments and nine (9) service/merchandise
establishments.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.375%. The Harvard Loan
requires monthly payments of principal and interest of $62,828 until its
maturity on April 1, 2008, at which time all unpaid principal and accrued but
unpaid interest is due. The Harvard Loan accrues interest computed on the basis
of the actual number of days elapsed each month in a 360-day year.
PREPAYMENT. The Harvard Loan is subject to a lockout period for the first
60 monthly payments. The Harvard Loan may be prepaid at the greater of 1% or
yield maintenance for the following 53 monthly payments. For the last seven
payments, the loan may be paid in full with no penalty.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Harvard Loan becomes
immediately due and payable upon the transfer of the Mortgaged Property or any
controlling interest in the Borrower without the lender's prior written consent,
except that the loan documents allow the transfer of the
III-11
<PAGE>
Mortgaged Property to an affiliated party (Milliken Urban Development
Corporation), and including release of James Angus as guarantor in connection
with such permitted transfer.
ESCROW/RESERVES. An impound account for payment of taxes and insurance is
required. In addition, $.24/s.f. or $10,000 annually will be required and
impounded on a monthly basis as replacement reserves. $28,039 annually will be
required and impounded on a monthly basis for tenant improvements and leasing
commissions. All required and impounded payments will commence concurrently
with the first loan payment and continue through the loan term.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness (other than trade and
operational debt incurred in the ordinary course of business with trade
creditors) is prohibited.
THE PROPERTY
The Mortgaged Property is a condominium interest in a four-story, 91,929
square foot, mixed-use condominium project which was constructed in 1997. The
Mortgaged Property is comprised of a first level basement parking garage, 14,347
square feet of street-front retail space on the second level, and, on the third
level, the 15,000 square foot Bartell Drug Store, 11,799 square feet of in-line
retail space and an open parking lot. The Mortgaged Property contains 41,146
square feet or 44.76% of the gross building area of the related project (see
Fractional Condominium below).
As of March 1998, the Mortgaged Property was 90% occupied with twenty
tenants. The largest tenant, Bartell Drugs, is under lease until May 2012.
Lease terms for the in-line retail space ranges from 3 to 10 years with an
average of 6.25 years. Contractual lease expirations during the loan term for
all tenants are as follows: 6.83% of net rentable area in 2001, 20.42% in 2002,
6.29% in 2003, 0% in 2004 through 2006 and 9.39% in 2007.
MANAGEMENT
Milliken, one of the two venturers, is the property manager. The owner of
Milliken, Donald R. Milliken, has more than twenty years experience in managing
commercial real estate.
OTHER
Fractional Condominium. The Property is comprised of Units 2 and 3 of The
Harvard Market Condominium, which together are entitled to 43.93% of the voting
rights in the Association. Unit 1 (not part of the Mortgaged Property) is owned
by QFC, a regional grocery store operator, and is entitled to 50.94% of the
voting rights in the Association. The remaining portions of the condominium
project, Units 4 and 5 (not part of the Mortgaged Property), are residential
units entitled to 2.64% and 2.49%, respectively, of the voting rights in the
Association. The condominium declaration appoints Milliken as the property
manager for the condominium project for so long as a Milliken-related party owns
any Units in the condominium project. In addition to responsibility for the
maintenance of the condominium project's common elements (i.e., parking areas,
escalators and elevators), Milliken is responsible for the preparation of annual
budgets for the commercial portions of the condominium project (Units 1, 2 and
3), which must be approved by two-thirds of the voting rights of such commercial
Units. The Borrower's consent is required, therefore, to approve the condominium
project's annual budget, although the Borrower does not have the voting rights
necessary to approve the annual budget unilaterally. The Borrower also is
afforded self-help rights under the condominium declaration to make any
necessary repairs to common elements affecting its Units. Units 2 and 3 are each
a separate tax parcel.
III-12
<PAGE>
LOAN NO. 19 - PAVILIONS AT RANCHO MIRAGE
----------------------------------------
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $8,332,619 PROPERTY TYPE: Retail
LOAN TYPE: Fixed LOCATION: Rancho Mirage,
California
ORIGINATION DATE: November 7, YEAR BUILT/RENOVATED: 1993
1997
MATURITY DATE: December 1, UNITS/NSF: 84,000
2007
MORTGAGE RATE: 7.440% CUT-OFF DATE $99
BALANCE/UNITS/NSF:
ANNUAL DEBT SERVICE: $706,762 APPRAISED VALUE: $10,500,000
DSCR: 1.27 CURRENT LTV: 79.4%
UNDERWRITTEN CASH FLOW: $898,130 BALANCE AT MATURITY LTV: 69.4%
BALANCE AT MATURITY: $7,283,706 PERCENT LEASED: 91.0%
PERCENT LEASED AS OF DATE: April 1, 1998
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Pavilions at Rancho Mirage Loan (the "Rancho Mirage Loan") is secured
by a lien on an 84,000 square foot shopping center in Rancho Mirage, California.
The Rancho Mirage Loan was originated by Impac Commercial Capital Corporation on
November 7, 1997.
THE BORROWER. The Borrower is Rancho Mirage Bob Hope Associates, a
California limited partnership. The Borrower is a single-purpose, single-asset
entity. The general partner is Robert T. Best (50%). The limited partners are
Penny/Flip 3, a California general partnership (23.33%), and AMLGM IX, a
California general partnership (26.66%). The Borrower was the subject of a prior
bankruptcy filing, although the Mortgaged Property is no longer subject to
bankruptcy court jurisdiction. An amended plan of reorganization was approved
by the bankruptcy court in September 1996 that relinquished bankruptcy court
jurisdiction upon the payment and release of existing mortgage indebtedness.
The Rancho Mirage Loan effected such payment and release, and the Borrower was
subsequently discharged.
SECURITY. The Mortgage Loan is secured by a lien on the related Mortgaged
Properties, an assignment of leases and rents, and a first priority security
interest in any furniture, fixtures, and equipment owned by the Borrower and
used in the operation of the Mortgaged Property. The Rancho Mirage Loan is
generally non-recourse, except for standard non-recourse carve-outs.
MAJOR TENANTS. The major tenant at the Mortgaged Property is Vons Pavilion
occupying 49,900 square feet or 59% of NLA. As of April 1998, tenants other
than Vons Pavilion occupied an additional 32%. The remaining 9% of NLA was
vacant as of April 1998.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.44%. The Rancho Mirage
Loan requires monthly payments of principal and interest of $58,896 until its
maturity on December 1, 2007, at which time all unpaid principal and accrued but
unpaid interest is due. The Rancho Mirage Loan accrues interest computed on the
basis of the actual number of days elapsed each month in a 360-day year.
III-13
<PAGE>
PREPAYMENT. The Rancho Mirage Loan is subject to a lockout period for the
first 60 monthly payments. The Rancho Mirage Loan may be prepaid at the greater
of 1% or yield maintenance for the following 57 payments. For the last three
payments, the loan may be paid in full with no penalty.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Rancho Mirage Loan
becomes immediately due and payable upon the transfer of the Mortgaged Property
or any controlling interest in the Borrower without the lender's prior written
consent.
ESCROW/RESERVES. An impound account is required for the payment of
insurance and taxes. There are no reserves for replacement or tenant
improvements and leasing commissions. All required and impounded payments
commenced concurrently with the first loan payment and continue through the loan
term.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness (other than trade and
operational debt incurred in the ordinary course of business with trade
creditors or other unsecured indebtedness) is prohibited.
THE PROPERTY
The Mortgaged Property is composed of two, single story retail buildings
totaling 84,000 square feet of NLA. The Mortgaged Property, built in 1993 and
configured for 17 tenants, is a neighborhood shopping center with in-line
shopping (34,140 square feet) and anchored by Vons Pavilion (49,860 square
feet). There is an additional 19,500 square feet of future building area
available in three pad sites that have yet to be developed and are not included
in the subject loan collateral or the square footage recounted above. There is
on-site parking for 545 vehicles.
As of April 1998, the Mortgaged Property was 91% occupied with 12 tenants.
The largest tenant, Vons Pavilion, is under lease until December 31, 2017.
Contractual lease expirations during the loan term for all tenants are as
follows; 2.3% in 1998, 11% in 1999, 11.2% in 2000, 0% in 2001, 1.6% in 2002,
2.7% in 2003, 3.0% in 2004 and 0% in 2005 through 2007. As of April 1998,
average base rental for those units leased was $13.49 per square foot per year.
MANAGEMENT
Westar Associates, headquartered in Costa Mesa, California, is the property
manager. Westar is related to the Borrower and, as of April 1998, managed a
total of fifteen neighborhood, community and power shopping centers totaling
approximately 892,000 square feet. Robert Best, a 50% owner of the Borrower, is
the President of Westar Associates.
III-14
<PAGE>
LOAN NO. 27 - 1401 DOVE STREET
------------------------------
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $5,166,113 PROPERTY TYPE: Office
LOAN TYPE: ARM LOCATION: Newport Beach,
California
ORIGINATION DATE: December 18, YEAR BUILT/RENOVATED: 1974/1973
1997
MATURITY DATE: January 1, 2008 UNITS/NSF: 74,405
MORTGAGE RATE: 9.000% CUT-OFF DATE $69
BALANCE/UNITS/NSF:
ANNUAL DEBT SERVICE: $529,166 APPRAISED VALUE: $8,360,000
DSCR: 1.65 CURRENT LTV: 61.8%
UNDERWRITTEN CASH FLOW: $870,264 BALANCE AT MATURITY LTV: 51.6%
BALANCE AT MATURITY: $4,314,734 PERCENT LEASED: 67.0%
PERCENT LEASED AS OF DATE: January 1, 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The 1401 Dove Street Loan (the "Dove Street Loan") is secured by a lien on
a 74,405 square foot, multi-tenant office building in Newport Beach, California.
The Dove Street Loan was originated on December 18, 1997.
THE BORROWER. The Borrower, an affiliate of the Issuer, ICM/ICH Dove, LLC,
is a California limited liability company created for the sole purpose of
acquiring the Mortgaged Property. There are two members each holding a 50%
ownership interest in the Borrower. The members are Imperial Credit Mortgage
Holdings, Inc., a Maryland corporation ("IMH") and IMH Commercial Holdings,
Inc., a Maryland corporation ("ICH"). Both IMH and ICH are publicly held
mortgage real estate investment trusts affiliated with the Issuer. Imperial
Commercial Capital Corporation, the originator of this loan, is a wholly owned
subsidiary of ICH.
SECURITY. The Mortgage Loan is secured by a lien on the Mortgaged
Property, an assignment of leases and rents and a first priority security
interest in any furniture, fixtures, and equipment owned by the Borrower and
used in the operation of the Mortgaged Property.
MAJOR TENANTS. As of January 1, 1998, the major tenant at the Mortgaged
Property was Infinity Capital which occupies 11% of NSF. The Borrower has
entered into a lease agreement to lease a substantial portion of the Mortgaged
Property but has not yet taken occupancy as of the Cut-off Date. It is the
Borrower's intention to eventually occupy 100% of the space.
PAYMENT TERMS. The Mortgage Rate is adjustable with an initial funding
rate at 9.00%. The Mortgage Rate is adjusted every six months to 300 basis
points over the six-month LIBOR Index, with a maximum rate change of 1.50% per
adjustment, a minimum rate of 9.00% and a maximum rate of 15.00%. At the
initial interest rate of 9.00%, the Dove Street Loan requires monthly payments
of principal and interest of $44,097. The Dove Street Loan matures on January
1, 2008, at which time all unpaid principal and accrued but unpaid interest is
due. The Dove Street Loan accrues interest computed on the basis of the actual
number of days elapsed each month in a 360-day year.
PREPAYMENT. The Dove Street Loan may be prepaid at any time without
penalty.
III-15
<PAGE>
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Dove Street Loan becomes
immediately due and payable upon the transfer of the Mortgaged Property or any
controlling interest in the Borrower without the lender's prior written consent.
ESCROW/RESERVES. An impound account is not required for the payment of
insurance and taxes.
There is no escrow for immediate needs, replacement or tenant improvements
and leasing commissions. The engineering report indicates immediate needs in
the amount of $55,000, and capital expenditures of $44,010 per year. With
respect to such items, the Borrower has undertaken substantial renovation of the
Mortgaged Property at an estimated cost of approximately $4.2 million, which
includes asbestos removal or management in accordance with environmental
consultants' recommendation, sprinkler system installation, ADA-related
improvements, reinforcement and earthquake bracing of exterior walls, window
replacement, resurfacing and restriping of parking areas and various other
improvements. As of July 30, 1998, the interior work is approximately 20%
complete. By virtue of the renovation work being undertaken, no escrows were
required. Completion of the work and Borrower occupancy is targeted by
September 1999.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness (other than trade and
operational debt incurred in the ordinary course of business with trade
creditors or other unsecured debt) is prohibited.
THE PROPERTY
The Mortgaged Property, built in 1974, is a multi-tenant, six-story office
building totaling 74,405 square feet of NLA. The site is 3.596 acres in size and
has surface parking spaces adjacent to the building complying with zoning
requirements (4 parking spaces per 1,000 s.f.). Resurfacing and restriping of
the parking areas has been completed.
As of June 1998, the Mortgaged Property was 100% occupied with 12 tenants.
The Borrower, under lease until May 31, 2013, occupies 36,858 square feet of NLA
at an annual base rent of $906,707 ($24.60/s.f.). Excluding the Borrower,
average base rental as of June 1998 was $17.45/s.f. Contractual lease
expirations during the loan term for all tenants are as follows; 30.2% in 1998,
13.5% in 1999, 1.9% in 2000, 4.8% in 2001, 0% in 2002 through 2007.
MANAGEMENT
Meridian Pacific, an unaffiliated property management company, will manage
the Mortgaged Property.
OTHER
EARTHQUAKE RISK. A seismic study of the Mortgaged Property indicates an
estimated seismic loss assessment (based on Probable Maximum Loss statistical
calculations) at 22.2%. No earthquake insurance was required because the
planned renovations include reinforcement and earthquake bracing of exterior
walls, which would be expected to reduce the estimated seismic loss below 20%.
III-16
<PAGE>
<TABLE>
<S> <C> <C>
MORGAN STANLEY AUGUST 6, 1998
REAL ESTATE DEBT CAPITAL MARKETS
MORTGAGE/ASSET CAPITAL MARKETS [LOGO OF MORGAN STANLEY]
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
CMBS NEW ISSUE
PRELIMINARY TERM SHEET
----------------
EXPECTED PRICING DATE: AUGUST [ ], 1998
----------------
$276,460,000
(Approximate)
Impac CMB Trust 1998-C1
as Issuer
IMH Assets Corp.
as Company
Impac Commercial Holdings, Inc.
as Mortgage Loan Seller
Collateralized Mortgage Bonds
--------------------------------
MORGAN STANLEY DEAN WITTER
THE SECURITIES DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE
PROSPECTUS SUPPLEMENT AND PROSPECTUS AND PROSPECTIVE INVESTORS WHO CONSIDER
PURCHASING ANY SUCH SECURITIES SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY
UPON THE INFORMATION PROVIDED THEREIN. CAPITALIZED TERMS USED BUT NOT DEFINED
HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE PROSPECTUS SUPPLEMENT.
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
INITIAL BOND
PRINCIPAL RATING EXPECTED FINAL
BALANCE(1) SUBORDINATION (S&P/ AVERAGE PRINCIPAL PAYMENT BOND INTEREST
CLASS ($MM) LEVELS MOODY'S) LIFE(2) WINDOW(2)(3) DATE(2) RATE(4) (5)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A $ 43.0 32.00% AAA/Aaa 5.4 1-110 10/07 [6.27]%
- ------------------------------------------------------------------------------------------------------------------------------
A-1B 140.4 32.00 AAA/Aaa 9.5 110-116 04/08 [6.44]%
- ------------------------------------------------------------------------------------------------------------------------------
A-2 32.7 32.00 AAA/Aaa 8.4 1-116 04/08 LIBOR+[0.30]% (6)
- ------------------------------------------------------------------------------------------------------------------------------
B 15.9 27.00 AA/Aa2 9.7 116-116 04/08 [6.57]%
- ------------------------------------------------------------------------------------------------------------------------------
C 19.1 21.00 A/A2 9.7 116-118 06/08 [6.72]%
- ------------------------------------------------------------------------------------------------------------------------------
D 20.7 14.50 BBB/Baa2 9.8 118-118 06/08 [7.16]%
- ------------------------------------------------------------------------------------------------------------------------------
E 4.8 13.00 BBB-/Baa3 9.8 118-118 06/08 [7.32]%
- ------------------------------------------------------------------------------------------------------------------------------
F(7) 18.3 7.25 BB/Ba2 9.8 118-118 06/08 [6.27]%
- ------------------------------------------------------------------------------------------------------------------------------
G(8) 11.1 3.75 B/B2 9.8 118-118 06/08 [6.27]%
- ------------------------------------------------------------------------------------------------------------------------------
Owner Trust 11.9 NR/NR
Certificates (8)(9)
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
Notes: (1) The initial Bond Principal Balance of each Class is subject to a permitted variance of plus or minus 5%.
(2) Based on Decrement Table Assumptions described in the Prospectus Supplement.
(3) Principal Window is the period (expressed in terms of months and commencing with the month of the first Payment
Date) during which distributions of principal are expected to be made to the holders of each designated Class in
accordance with the Decrement Table Assumptions.
(4) Other than the Class A-2 Bonds, each Class of Bonds will accrue interest generally at a fixed rate of interest. The
Class A-2 Bonds will accrue interest generally at a variable rate as described below.
(5) The Bond Interest Rates shown are for indicative purposes. The Bond Interest Rates will be determined at pricing.
(6) The Bond Interest Rate with respect to the Class A-2 Bonds is the initial Bond Interest Rate for such Class of
Offered Bonds. Thereafter, the Bond Interest Rate on the Class A-2 Bonds will be adjusted on a monthly basis to
equal the lesser of (a) the sum of LIBOR and the Margin (each as defined in the Prospectus Supplement) and (b) a
maximum rate equal to ____%.
(7) Offered privately.
(8) Retained by the Issuer.
(9) The Certificate Principal Balance of the Owner Trust Certificates will at any time equal the excess, if any, of the
aggregate Stated Principal Balance of the Mortgage Loans over the aggregate Bond Principal Balance of the Bonds as
of such date. The holder of the Owner Trust Certificates will generally be entitled to receive all principal and
interest collected on the Mortgage Loans that is not payable in respect of the Bonds.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
T-1
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
I. ISSUE CHARACTERISTICS
---------------------
Issuer: Impac CMB Trust 1998-C1
Issue Type: Public: Class A-1A, A-1B, A-2, B, C, D and E
Private (Rule 144A): Class F
Retained: Class G, Owner Trust Certificates
Securities Offered: $276,460,000 monthly pay, multi-class,
sequential pay Collateralized Mortgage Bonds,
including six fixed-rate principal and
interest classes (A-1A, A-1B, B, C, D and E)
and one adjustable-rate principal and
interest class (A-2).
Other Bonds: $18,271,000 monthly pay, sequential pay,
fixed-rate principal and interest class
Collateralized Mortgage Bonds (Class F).
Retained Bonds/Certificates: $11,122,000 monthly pay, sequential pay
fixed-rate principal and interest class
Collateralized Mortgage Bonds (Class G) and
the Owner Trust Certificates with an initial
Certificate Balance of $11,917,252.
Mortgage Pool: The Mortgage Pool will consist primarily of a
$317,770,252 pool of 194 fixed and adjustable
rate first lien, multifamily and commercial
Mortgage Loans. The Mortgage Pool consists of
a Fixed Rate Sub-Pool (164 Mortgage Loans
representing 89.7% of the aggregate Cut-Off
Date Balance) and an Adjustable Rate Sub-Pool
(30 Mortgage Loans representing 10.3% of the
aggregate Cut-Off Date Balance).
Company: IMH Assets Corp. (will establish the Owner
Trust Issuer and deposit the Mortgage Loans
into such trust)
Sole Manager: Morgan Stanley & Co. Incorporated
Master Servicer: Midland Loan Services, Inc.
Special Servicer: Midland Loan Services, Inc.
Indenture Trustee: LaSalle National Bank
Fiscal Agent: ABN AMRO Bank N.V.
Owner Trustee: Wilmington Trust Company
Expected Pricing Date: On or about August [ ], 1998
Expected Closing Date: On or about August 21, 1998
T-2
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
Payment Dates: The 20/th/ of each month, or if any such day
is not a business day then the next
succeeding business day, commencing September
21, 1998
Minimum Denominations: $5,000 for Class A Bonds; $50,000 for all
other Bonds
Settlement Terms: For all Classes except Class A2: DTC,
Euroclear and Cedel, same day funds, with
accrued interest. For Class A2: DTC,
Euroclear and Cedel, same day funds settle
flat.
Legal/Regulatory Status: Classes A-1A, A-1B, A-2, B, C, D, E and F are
expected to be treated as indebtedness for
ERISA purposes. No Class of Bonds is SMMEA
eligible.
Risk Factors: THE BONDS INVOLVE A DEGREE OF RISK AND MAY
NOT BE SUITABLE FOR ALL INVESTORS. SEE THE
"RISK FACTORS" SECTION OF THE PROSPECTUS
SUPPLEMENT AND THE "RISK FACTORS" SECTION OF
THE PROSPECTUS.
T-3
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
II. STRUCTURE CHARACTERISTICS
-------------------------
The Bonds consist of fixed-rate (Class A-1A, A-1B, B, C, D, E, F and G Bonds)
and adjustable-rate (Class A-2 Bonds), monthly pay, multi-class, sequential pay
Collateralized Mortgage Bonds. Except for principal distributions derived from
the Mortgage Loan Sub-Pools and allocated to the Class A-1 and Class A-2 Bonds
respectively, as described herein and in the Prospectus Supplement, all Classes
of Bonds derive their cash flows from the entire pool of Mortgage Loans.
[LOGO OF CLASS A-1A, A-1B, B, C, D, E, F AND G BONDS]
T-4
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
Interest Payments: Each Class of Bonds will be entitled on each
Payment Date to interest accrued during the
related Accrual Period at its Bond Interest
Rate on the applicable Bond Principal of such
Class as of such date.
Bond Interest Rates: Class A-1A: [6.27]%
Class A-1B: [6.44]%
Class A-2: LIBOR+[0.30]%(1)
Class B: [6.57]%
Class C: [6.72]%
Class D: [7.16]%
Class E: [7.32]%
Class F: [6.27]%
Class G: [6.27]%
(1) The Bond Interest Rate applicable to the
Class A-2 Bonds fore each Payment Date will
be an annual rate equal to the lesser of (A)
the sum of LIBOR, as determined two business
days prior to the first day of each related
Accrual Period and the Margin as defined in
the Prospectus Supplement and (B) a maximum
rate equal to ___%.
Principal Distributions: Principal will be distributed on each Payment
Date to the most senior Class (i.e., the
Class with the earliest alphabetical/
numerical Class designation) of Bonds
outstanding, until its Bond Principal Balance
is reduced to zero (sequential order) except
as described below. The distribution of
principal to the holders of the Class A-1A,
A-1B and A-2 Bonds (collectively, the "Class
A Bonds") will be allocated from each
respective Sub-Pool of the Mortgage Pool,
such that the Sub-Pool Bond Principal Payment
Amounts for the fixed-rate Class A-1A and A-
1B Bonds are derived from the Fixed Rate Sub-
Pool Mortgage Loans and the Sub-Pool Bond
Principal Payment Amounts for the adjustable-
rate Class A-2 Bonds are derived from the
Adjustable Rate Sub-Pool Mortgage Loans. If
the aggregate Bond Principal Balance of
either class of Class A Bonds has been
reduced to zero, the Aggregate Sub-Pool Bond
Principal Payment Amounts will be allocated
to the Outstanding Class A Bonds until its
Bond Principal Balance is reduced to zero.
If, due to losses, the aggregate stated
Principal Balance of the Mortgage Loans is
less than or equal to the aggregate Bond
Principal Balances of the Class A Bonds,
payments of principal to the Class A-1A, A-1B
and A-2 Bonds will be made on a pro rata
basis.
T-5
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
Prepayment Premium
Allocation: All Prepayment Premiums collected during each
Collection Period with respect to any
Mortgage Loan in the Fixed Rate Sub-Pool will
be distributed to the holders of the Class A-
1A, A-1B, B, C, D and E Bonds as follows: The
holders of such Classes of Bonds then
entitled to distributions of principal from
the Fixed Ration Sub-Pool for such Payment
Date will be entitled to a "Bond Prepayment
Premium Amount" (allocable among such
Classes, if more than one, as described
below) equal to the lesser of (a) such
Prepayment Premium, and (b) such Prepayment
Premium multiplied by a fraction, the
numerator of which is equal to the excess, if
any, of the Bond Interest Rate applicable to
the most senior of such Class of Bonds then
outstanding, over the relevant Discount Rate
(as defined in the Prospectus Supplement),
and the denominator of which is equal to the
excess, if any, of the Mortgage Rate for the
prepaid Mortgage Loan, over the relevant
Discount Rate. If there is more than one
Class of Bonds entitled to distributions of
principal on such Payment Date, the Bond
Prepayment Premium Amount shall be allocated
among such Classes on a pro rata basis in
accordance with the relative amounts of such
distributions of principal. Any portion of
such Bond Prepayment Premium Amount that is
not so distributed to the holders of such
Bonds will be distributed to the holders of
the Owner Trust Certificates.
All Prepayment Premiums collected during each
Collection Period with respect to any
Mortgage Loan in the Adjustable Rate Sub-Pool
will be distributed to the holders of the
Owner Trust Certificates.
Credit Enhancement: Each Class of Bonds (other than Class A
Bonds) will be subordinate to all other
Classes with an earlier alphabetical Class
designation. The Owner Trust Certificates
will be subordinate to all Classes of Bonds.
Advancing: The Master Servicer, Indenture Trustee and
Fiscal Agent will each be obligated to make
P&I Advances and Servicing Advances, but only
to the extent that such Advances are deemed
recoverable.
T-6
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
Prepayment Interest
Shortfalls: If a Borrower prepays a Mortgage Loan prior
to a related due date, the amount of interest
(net of related Master Servicing Fees) that
would have accrued on the amount of the
Principal Prepayment from the date of such
Principal Prepayment to, but not including,
such Due Date will constitute a prepayment
interest shortfall. Any Prepayment Interest
Shortfall, to the extent not offset by
---
Prepayment Interest Excesses (as defined in
the Prospectus Supplement) will be deposited
into the Collection Account by the Master
Servicer.
Appraisal Reduction: An Appraisal Reduction Amount will generally
will be created in the amount, if any, by
which the Stated Principal Balance of a
Required Appraisal Loan (plus other amounts
unpaid and unreimbursed in connection with
such loan) exceeds 90% of the appraised value
of the related Mortgaged Property net of any
liens on such property (not inclusive of
unpaid taxes, insurance and ground rents net
of reserves). The Appraisal Reduction Amount
will reduce proportionately the amount of the
interest portion of P&I Advances for such
loan, which reduction will result, in
general, in a reduction of interest
distributable to Owner Trust Certificates and
then in reverse sequential order to the most
Subordinate Class of Bonds.
Controlling Class: The Controlling Class will be the most
subordinate of the Owner Trust Certificates
and the Classes of Bonds then outstanding as
to which the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage
Loans over the aggregate Bond Principal
Balance of any Classes of Bonds with a higher
payment priority is not less than 25% of the
aggregate initial Bond Principal Balance or
Certificate Principal Balance thereof.
The Bond or Owner Trust Certificate holders
representing a majority of the Controlling
Class will generally have the right to
replace the Special Servicer, approve certain
actions proposed to be taken by the Special
Servicer, as Directing Bondholder, and
purchase defaulted Mortgage Loans that are
not purchased by the Master Servicer and
Special Servicer.
T-7
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
Special Servicer: In general, the Special Servicer has the
right to modify, waive or amend the terms of
a Specially Serviced Loan upon the occurrence
of a material default or if it determines
that such modification, waiver or amendment
would produce a greater net recovery on a net
present value basis than would liquidation,
provided that the Special Servicer generally
may not extend the date on which any Balloon
Payment of a Mortgage Loan is scheduled to
occur for more than one year beyond its
scheduled maturity date. The Special Servicer
generally may not permit the substitution or
addition of collateral without rating agency
confirmation that such replacement or
addition will not result in a downgrade of
any Class of the Bonds and without an
environmental assessment of the Mortgaged
Property.
Optional Termination: The majority holder of the Owner Trust
Certificates and Master Servicer will have
the option to purchase, in whole but not in
part, the remaining assets of the Owner Trust
Estate on or after the date on which the then
aggregate Stated Principal Balance of the
Mortgage Loans is less than or equal to 20%
of the Initial Pool Balance. Such purchase
price will generally be at a price equal to
the aggregate unpaid principal balance of the
Mortgage Loans, plus accrued and unpaid
interest and unreimbursed Advances.
Reports to Bondholders: The Indenture Trustee will prepare and
deliver monthly Bondholder Reports. The
Master Servicer and Special Servicer will
prepare and deliver to the Indenture Trustee
a monthly report summarizing the status of
each Mortgage Loan. After the end of each
calendar year, the Indenture Trustee will be
required to furnish each person that at any
time during the calendar year was a holder of
an Offered Bond a statement containing
information, aggregated for such calendar
year or the portion thereof during which such
person was a Bondholder. A report containing
information regarding the Mortgage Loans will
be available electronically.
T-8
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
III. SELLER Impac Commercial Holdings, Inc.
------ -------------------------------
The Mortgage Pool includes 194 Mortgage Loans
to be sold by Impac Commercial Holdings, Inc.
("Impac"). Impac is a publicly-traded,
specialty commercial property finance company
(American Stock Exchange Symbol: ICH). The
Company has elected to be taxed at the
corporate level as a real estate investment
trust ("REIT") for federal income tax
purposes, which generally allows it to pass
through income to stockholders without
payment of federal income tax at the
corporate level. Since its initial public
offering in August 1997, Impac has
originated, through its subsidiary, in excess
of $400 million of commercial mortgage loans
secured by diverse property types.
The Mortgage Loans were originated by Impac
Commercial Capital Corporation Capital
("ICCC"), a wholly owned subsidiary of Impac.
ICCC operates through three divisions: The
ConduitExpress Division, the
CommercialExpress Division and The
CondoSelect Division. The ConduitExpress
Division generally markets commercial
mortgages with a principal balance ranging
from $1.5 million to $10.0 million through
specified correspondents such as banks,
savings and loan institutions, mortgage
bankers and mortgage brokers. The
CommercialExpress Division generally markets
commercial mortgages with a principal balance
ranging from $500,000 to $1.5 million
directly to property owners. The CondoSelect
Division markets commercial mortgages
directly to developers and project owners of
condominium complexes.
ICCC currently maintains loan production
offices in Los Angeles and Dallas. The
production group is staffed with
approximately 15 originators and
approximately 12 underwriters and is also
supported by Impac's Third Party Report
Review Group.
IV. COLLATERAL DESCRIPTION
----------------------
Summary: The Mortgage Pool consists of a $317,770,252
pool of 194 fixed-rate and adjustable-rate,
mortgage loans secured by first liens on
commercial and multifamily properties located
in 17 states. The Fixed-Rate Sub-Pool
consists of a pool of 164 loans, comprising
89.7% of the Initial Mortgage Pool. The
Adjustable-Rate Sub-Pool consists of a pool
of 30 loans, comprising 10.3% of the Initial
Mortgage Pool. As of the Cut-Off Date, the
Mortgage Loans have a weighted average
mortgage rate of 8.068% and a weighted
average remaining term to maturity of 119
months. See the Appendices to the Prospectus
Supplement for more detailed collateral
information.
T-9
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
PROPERTY SUMMARY
----------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
INITIAL POOL WEIGHTED AVERAGE AVERAGE WEIGHTED
AGGREGATE BALANCE AS AVERAGE REMAINING DEBT SERVICE AVERAGE
NUMBER BALANCE AS OF OF CUT-OFF MORTGAGE TERM TO COVERAGE LOAN
PROPERTY TYPE OF LOANS CUT-OFF DATE ($) DATE (%) RATE (%) MATURITY (MOS) RATIO (X)/(1/) TO VALUE (%)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily 68 75,728,177 23.8 8.107 124 1.39 58.7
- ---------------------------------------------------------------------------------------------------------------------------
Retail 39 70,884,189 22.3 7.976 116 1.33 60.2
- ---------------------------------------------------------------------------------------------------------------------------
Office 31 59,668,563 18.8 8.264 122 1.35 54.1
- ---------------------------------------------------------------------------------------------------------------------------
Industrial 27 50,045,272 15.8 7.982 113 1.33 58.5
- ---------------------------------------------------------------------------------------------------------------------------
Mixed Use 15 37,477,278 11.8 7.794 116 1.38 61.0
- ---------------------------------------------------------------------------------------------------------------------------
Hotel 5 11,225,294 3.5 8.243 126 1.58 39.2
- ---------------------------------------------------------------------------------------------------------------------------
Self Storage 3 4,457,545 1.4 8.340 113 1.65 41.3
- ---------------------------------------------------------------------------------------------------------------------------
Other 3 3,596,546 1.1 9.375 111 1.20 45.2
- ---------------------------------------------------------------------------------------------------------------------------
Health Care 1 3,193,658 1.0 7.750 118 1.34 51.4
- ---------------------------------------------------------------------------------------------------------------------------
MHC 2 1,493,730 0.5 7.813 116 2.10 33.1
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note (1) Based on the initial Mortgage Rate.
[MAP OF U.S.A. GEOGRAPHIC DISTRIBUTION]
T-10
<PAGE>
$276,460,000
(APPROXIMATE)
IMPAC CMB TRUST 1998-C1
COLLATERALIZED MORTGAGE BONDS
[CHARTS OF CUT-OFF DATE BALANCES, PROPERTY TYPES, DEBT SERVICE COVERAGE,
MORTGAGE RATES, ORIGINAL TERMS, REMAINING TERMS, STATES]
T-11
<PAGE>
Impac CMB Trust 1998-C1
Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Series 1998-C1
ABN AMRO Acct: 99-9999-99-9
ABN AMRO
LaSalle National Bank
Administrator: Statement Date: 09/21/98
Thomas Baumgart (800) 246-5761 Payment Date: 09/21/98
135 S. LaSalle Street Suite 1625 Prior Payment: NA
Chicago, IL 60603 Record Date: 08/31/98
<TABLE>
<CAPTION>
==================================================================================================================================
Number Of Pages
---------------
<S> <C>
Table Of Contents 1
Bond Report 1
Other Related Information 1
Asset Backed Facts Sheets 1
Deliquency Loan Detail 1
Mortgage Loan Characteristics 3
Loan Level Listing 1
---
TOTAL PAGES INCLUDED IN THIS PACKAGE 9
---
Specifically Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
===================================================================================
Information is available for this issue from the following sources
-----------------------------------------------------------------------------------
LaSalle Web Site www.Inbabs.com
Servicer Website www.servicer.com
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (312) 904-2200
ASAP #:
Monthly Data File Name:
===================================================================================
===================================================================================================================================
</TABLE>
Page 1 of 9
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
WAC:
WAMM:
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Original Opening Principal Principal Negative Closing Interest
Class Face Value (1) Balance Payment Adj. or Loss Amortization Balance Payment
CUSIP Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 0.00 0.00 0.00
====================================================================================================================================
Total P&I Payment 0.00
=======================
<CAPTION>
====================================================================================================================================
Interest Bond Interest
Adjustment Rate (2)
Per $1,000 Next Rate (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
0.00
====================================================================================================================================
Page 2 of 9
</TABLE>
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603 Other Related Information
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C>
====================================================================================================================================
Page 3 of 9
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Distribution Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bankruptcy
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Date # Balance # Balance # Balance # Balance
====================================================================================================================================
09/21/98 0 0 0 0 0 0 0 0
0.00% 0.000% 0.00% 0.00% 0.00% 0.00% 0.00% 0.000%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
<CAPTION>
====================================================================================================================================
REO Modifications Prepayments Curr Weighted Avg.
- ------------------------------------------------------------------------------------------------------------------------------------
# Balance # Balance # Balance Coupon Remit
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
0 0 0 0 0 0
0.00% 0.000% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Page 4 of 9
</TABLE>
Note: Foreclosure and REO Totals are Included in the Appropriate Aging Category.
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1 Statement Date: 09/21/98
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer Payment Date: 09/21/98
Collateralized Mortgage Bonds Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 09/31/98
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
Delinquent Loan Detail
<CAPTION>
====================================================================================================================================
Paid Outstanding Out. Property Special
Disclosure Doc Thru Current P&I P&I Protection Advance Service Foreclosure
Control # Date Advance Advances** Advances Description (1) Transfer Date Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
A. P&I Advance - Loan in Grace Period 1. P&I Advance - Loan delinquent 1 month 3. P&I Advance - Loan delinquent
3 months or More
B. P&I Advance - Late Payment but less than 2. P&I Advance - Loan delinquent 2 months 4. Matured Balloon/Assumed
one month delinq Scheduled Payment
====================================================================================================================================
<CAPTION>
====================================================================================================================================
Bankruptcy REO
Date Date
====================================================================================================================================
====================================================================================================================================
A. P&I Advance - Loan in Grace Period 1. P&I Advance - Loan delinquent 1 month 3. P&I Advance - Loan delinquent
3 months or More
B. P&I Advance - Late Payment but less than 2. P&I Advance - Loan delinquent 2 months 4. Matured Balloon/Assumed
one month delinq Scheduled Payment
====================================================================================================================================
** Outstanding P&I Advances include the current period P&I Advance Page 5 of 9
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603 Pool Total
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF PRINCIPAL BALANCES
- ---------------------------------------------------------------------
(2) Current Scheduled Number (2) Scheduled Based on
Balances of Loans Balance Balance
=====================================================================
<S> <C> <C> <C>
$0 to $500,000
$500,000 to $1,000,000
$1,000,000 to $1,500,000
$1,500,000 to $2,000,000
$2,000,000 to $2,500,000
$2,500,000 to $3,000,000
$3,000,000 to $3,500,000
$3,500,000 to $4,000,000
$4,000,000 to $5,000,000
$5,000,000 to $6,000,000
$6,000,000 to $7,000,000
$7,000,000 to $8,000,000
$8,000,000 to $9,000,000
$9,000,000 to $10,000,000
$10,000,000 to $11,000,000
$11,000,000 to $12,000,000
$12,000,000 to $13,000,000
$13,000,000 to $14,000,000
$14,000,000 to $15,000,000
$15,000,000 to Above
=====================================================================
Total 0 0 0.00%
- ---------------------------------------------------------------------
Average Scheduled Balance is 0
Maximum Scheduled Balance is 0
Minimum Scheduled Balance is 0
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF PROPERTY TYPES
- ----------------------------------------------------------------------
Number (2) Scheduled Based on
Property Types of Loans Balance Balance
=====================================================================
<S> <C> <C> <C>
=====================================================================
Total 0 0 0.00%
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION
- ----------------------------------------------------------------------
Number (2) Scheduled Based on
Geographic Location of Loans Balance Balance
=====================================================================
<S> <C> <C> <C>
=====================================================================
Total 0 0 0.00%
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF MORTGAGE INTEREST RATES
- ----------------------------------------------------------------------
Current Mortgage Number (2) Scheduled Based on
Interest Rate of Loans Balance Balance
=====================================================================
<S> <C> <C> <C>
7.000% or less
7.000% to 7.125%
7.125% to 7.375%
7.375% to 7.625%
7.625% to 7.875%
7.875% to 8.125%
8.125% to 8.375%
8.375% to 8.625%
8.625% to 8.875%
8.875% to 9.125%
9.125% to 9.375%
9.375% to 9.625%
9.625% to 9.875%
9.875% to 10.125%
10.125% & Above
=====================================================================
Total 0 0 0.00%
- ---------------------------------------------------------------------
W/Avg Mortgage Interst Rate is 0.0000%
Minimum Mortgage Interest Rate is 0.0000%
Maximum Mortgage Interst Rate is 0.0000%
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
LOAN SEASONING
- -------------------------------------------------------------------
Number (2) Scheduled Based on
Number of Years of Loans Balance Balance
<S> <C> <C> <C>
====================================================================
====================================================================
- --------------------------------------------------------------------
Weighted Average Seasoning is 0.0
</TABLE>
DISTRIBUTION OF REMAINING TERM
FULLY AMORTIZING
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Fully Amortizing Number (2) Scheduled Based on
Mortgage Loans of Loans Balance Balance
====================================================================
<S> <C> <C> <C>
60 months or less
61 to 120 months
121 to 180 months
181 to 240 months
241 to 360 months
====================================================================
Total 0 0 0.00%
- --------------------------------------------------------------------
Weighted Average Months to Maturity is 0
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF DSCR
- ------------------------------------------------------------------
Debt Service Number (2) Scheduled Based on
Coverage Ratio (1) of Loans Balance Balance
====================================================================
<S> <C> <C> <C>
0.500 or less
0.500 or 0.625
0.625 to 0.750
0.750 to 0.875
0.875 to 1.000
1.000 to 1.125
1.125 to 1.250
1.250 to 1.375
1.375 to 1.500
1.500 to 1.625
1.625 to 1.750
1.750 to 1.875
1.875 to 2.000
2.000 to 2.125
2.125 & above
Unknown
====================================================================
Total 0 0 0.00%
- --------------------------------------------------------------------
Weighted Average Debt Service Coverage Ratio is 0.000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF AMORTIZATION TYPE
- --------------------------------------------------------------------
Number (2) Scheduled Based on
Amortization Type of Loans Balance Balance
====================================================================
<S> <C> <C> <C>
====================================================================
Total 0 0 0.00%
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERM
BALLOON LOANS
--------------------------------------------------------------------
Balloon Number (2) Scheduled Based on
Mortgage Loans of Loans Balance Balance
====================================================================
<S> <C> <C> <C>
12 months or less
13 to 24 months
25 to 36 months
37 to 48 months
49 to 60 months
61 to 120 months
121 to 180 months
181 to 240 months
====================================================================
Total 0 0 0.00%
- --------------------------------------------------------------------
Weighted Average Months to Maturity is 0
</TABLE>
<TABLE>
<CAPTION>
NOI AGING
- --------------------------------------------------------------------
Number (2) Scheduled Based on
NOI Date of Loans Balance Balance
====================================================================
<S> <C> <C> <C>
1 year or less
1 to 2 years
2 Years or More
Unknown
====================================================================
Total 0 0 0.00%
- --------------------------------------------------------------------
====================================================================================================================================
</TABLE>
(1) Debt Service Coverage Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures became available from
borrowers on an asset level. Neither the Trustee, Servicer, Special Servicer
or Underwriter makes any representation as to the accuracy of the data
provided by the borrower for this calculation.
Page 7 of 9
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603 Price Total
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF MAXIMUM RATES
- -------------------------------------------------------------------
Number (2) Scheduled Based on
Maximum Rates of Loans Balance Balance
===================================================================
<S> <C> <C> <C>
No Maximum
0.0% to 12.00%
12.01% to 12.50%
12.51% to 13.00%
13.01% to 13.50%
13.51% to 14.00%
14.01% to 14.50%
14.51% to 15.00%
15.01% to 15.50%
15.51% to 16.00%
16.01% to 16.50%
16.51% to 17.00%
17.01% to 17.50%
Fixed Rate Mortgage
===================================================================
0 0 0.00%
- -------------------------------------------------------------------
Weighted Average for Mtge with a Maximum Rate is 13.49%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF INDICES OF MORTGAGE LOANS
- -------------------------------------------------------------------
Number (2) Scheduled Based on
Indices of Loans Balance Balance
===================================================================
<S> <C> <C> <C>
===================================================================
Total 0 0 0.00%
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF MINIMUM RATES
- -------------------------------------------------------------------
Number (2) Scheduled Based on
Minimum Rates (1) of Loans Balance Balance
===================================================================
<S> <C> <C> <C>
No Minimum
0.010% to 3.000%
3.010% to 3.500%
3.510% to 4.000%
4.010% to 4.500%
4.510% to 5.000%
5.010% to 5.500%
5.510% to 6.000%
6.010% to 6.500%
6.510% to 7.000%
7.010% to 7.500%
7.510% to 8.000%
8.010% to 8.500%
8.510% to 99.000%
Fixed Rate Mortgage
===================================================================
0 0 0.00%
- --------------------------------------------------------------------
Weighted Average for Mtge with a Minimum Rate is 0.00%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF PAYMENT ADJUSTMENT
- -------------------------------------------------------------------
Interest Adjustment Number (2) Scheduled Based on
Frequency Loans Balance Balance
===================================================================
<S> <C> <C> <C>
===================================================================
Total 0 0 0.00%
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF MORTGAGE LOAN MARGINS
- -------------------------------------------------------------------
Mortgage Loan Number (2) Scheduled Based on
Margins Loans Balance Balance
===================================================================
<S> <C> <C> <C>
No Margin
0.000% to 0.000%
0.010% to 1.000%
1.010% to 1.500%
1.510% to 2.000%
2.010% to 2.500%
2.510% to 3.000%
3.010% to 3.500%
3.510% to 4.000%
4.010% to 4.500%
4.510% to Above
Fixed Rate Mortgage
===================================================================
Total 0 0 0.00%
- -------------------------------------------------------------------
Weighted Average for Mtge with a Margin is 0.00%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF INTEREST ADJUSTMENT
- -------------------------------------------------------------------
Payment Adjustment Number (2) Scheduled Based on
Frequency Loans Balance Balance
===================================================================
<S> <C> <C> <C>
===================================================================
0 0 0.00%
- -------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
Loan Level Detail
====================================================================================================================================
Appraisal Property Operating Ending
Disclosure Reduction Type Maturity Statement Principal
Control # Amounts Code Date DSCR NOT Date Balance
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
<CAPTION>
Loan Level Detail
====================================================================================================================================
Loan
Note Scheduled Prepayment Status
Rate P&I Prepayment Date Code (1)
====================================================================================================================================
<S> <C> <C> <C> <C>
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NOT and DSCR, if available and reportable under the terms of the trust agreement, are based on information obtained from the
related borrower, and no other party in the agreement shall be held liable for the accuracy or methodology used to determine
such figures.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Legend: A. P&I Adv - In Grace Period 1. P&I Adv - delinquent 1 month 3. P&I Adv - delinquent 3+ months
B. P&I Adv - less than one month delinq 2. P&I Adv - delinquent 2 months 4. Max. Balloon/Assumed P&I
====================================================================================================================================
<CAPTION>
====================================================================================================================================
<C> <C> <C> <C>
5. Prepaid in Full 7. Foreclosure 9. REO 11. Modification
6. Specially Serviced 8. Bankruptcy 10. DPO
====================================================================================================================================
</TABLE>
Page 9 of 9
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
SPECIALLY SERVICED LOAN DETAIL
====================================================================================================================================
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code (1) Comments
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
<CAPTION>
====================================================================================================================================
(1) Legend:
1) Request for waiver of Prepayment Penalty 4) Loan with Borrower Bankruptcy 7) Loan Paid Off
2) Payment default 5) Loan in Process of Foreclosure 8) Loans Returned to Master Servicer
3) Request for Loan Modification or Workout 6) Loan now REO Property
====================================================================================================================================
</TABLE>
APPENDIX A
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
MODIFIED LOAN DETAIL
====================================================================================================================================
Disclosure Modification Modification
Control # Date Description
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
====================================================================================================================================
APPENDIX B
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ABN AMRO Impac CMB Trust 1998-C1
LaSalle National Bank Midland Loan Services, Inc., as Master Servicer and Special Servicer
Collateralized Mortgage Bonds
Administrator: Series 1998-C1
Thomas Baumgart (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60603
</TABLE>
<TABLE>
<S> <C>
Statement Date: 09/21/98
Payment Date: 09/21/98
Prior Payment: NA
Record Date: 08/31/98
</TABLE>
<TABLE>
<CAPTION>
Realized Loss Detail
====================================================================================================================================
Beginning Gross Proceeds
Dist. Disclosure Appraisal Appraisal Scheduled Gross as a % of
Dare Control # Date Value Balance Proceeds Sched. Principal
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Current Total 0.00 0.00
Cumulative 0.00 0.00
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Realized Loss Detail
====================================================================================================================================
Aggregate Net Net Proceeds
Liquidation Liquidation as a % of Realized
Expenses * Proceeds Sched. Balance Loss
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current Total 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00
====================================================================================================================================
Appendix C
* Aggregate liquidation expenses also include outstanding P&I advances and unpaid servicing fees, unpaid trustee fees, etc..
</TABLE>
<PAGE>
PROSPECTUS
Collateralized Mortgage Bonds
IMH Assets Corp.
The collateralized mortgage bonds (the "Bonds") offered hereby and by the
supplements hereto (each, a "Prospectus Supplement") will be offered from time
to time in series.
Each series of Bonds will represent indebtedness of the related trust fund (with
respect to any series, the "Trust Fund") to be established by IMH Assets Corp.
(the "Company") pursuant to a trust agreement (the "Trust Agreement") and will
be secured by certain assets deposited therein. Each Trust Fund for a series of
Bonds and the related Certificates (as defined herein, and together with the
Bonds, the "Securities") will consist primarily of a segregated pool (a
"Mortgage Pool") of various types of multifamily and commercial mortgage loans
(collectively, the "Mortgage Loans") that evidence interests in, or that are
secured by pledges of, one or more of various types of multifamily or commercial
mortgage loans. The Mortgage Loans in (and the mortgage loans underlying the
Bonds in) any Trust Fund will be secured by first or junior liens on, or
security interests in, one or more of the following types of real property: (i)
residential properties consisting of five or more rental or cooperatively-owned
dwelling units and mobile home parks; and (ii) commercial properties consisting
of office buildings, retail shopping facilities, hotels and motels, health care-
related facilities, recreational vehicle parks, warehouse facilities, mini-
warehouse facilities, self-storage facilities, industrial facilities, parking
lots, restaurants, mixed use properties (that is, any combination of the
foregoing), and unimproved land. The Mortgage Loans were acquired by the
Company from one or more affiliated or unaffiliated institutions (the
"Sellers"). See "The Mortgage Pools." The Mortgage Loans and other assets in
each Trust Fund, which may only include, if applicable, reinvestment income,
reserve funds, cash accounts and various forms of credit enhancement as
described herein (collectively, the "Trust Fund Assets") will be pledged
pursuant to an indenture (the "Indenture") to secure a series of Bonds to the
extent and as more fully described herein under "The Agreements" and in the
related Prospectus Supplement. Information regarding the Bonds of a series, and
the general characteristics of the Mortgage Loans and other Trust Fund Assets in
the related Trust Fund, will be set forth in the related Prospectus Supplement.
Each series of Bonds will include one or more classes. Each class of Bonds of
any series will represent the right, which right may be senior or subordinate to
the rights of one or more of the other classes of Bonds to receive a specified
portion of payments of principal or interest (or both) on the Mortgage Loans and
the other Trust Fund Assets in the related Trust Fund in the manner described
herein under "Description of the Bonds" and in the related Prospectus
Supplement. A series may include one or more classes of Bonds entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. A series may include two or more classes of Bonds
which differ as to the timing, sequential order, priority of payment, pass-
through rate or amount of distributions of principal or interest or both.
THE COMPANY'S ONLY OBLIGATIONS WITH RESPECT TO A SERIES OF BONDS WILL BE
PURSUANT TO CERTAIN REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY, EXCEPT
AS PROVIDED IN THE RELATED PROSPECTUS SUPPLEMENT. THE MASTER SERVICER (THE
"MASTER SERVICER") FOR ANY SERIES OF BONDS WILL BE NAMED IN THE RELATED
PROSPECTUS SUPPLEMENT. THE PRINCIPAL OBLIGATIONS OF THE MASTER SERVICER WILL BE
PURSUANT TO ITS CONTRACTUAL SERVICING OBLIGATIONS (WHICH INCLUDE ITS LIMITED
OBLIGATION TO MAKE CERTAIN ADVANCES IN THE EVENT OF DELINQUENCIES IN PAYMENTS ON
THE RELATED MORTGAGE LOANS). SEE "DESCRIPTION OF THE BONDS."
If so specified in the related Prospectus Supplement, the Trust Fund for a
series of Bonds may include any one or any combination of a financial guaranty
insurance policy, mortgage pool insurance policy, letter of credit, bankruptcy
bond, special hazard insurance policy or reserve fund. In addition to or in
lieu of the foregoing, Credit Enhancement (as defined herein) may be provided by
means of subordination of one or more classes of Bonds or by
Overcollateralization (as defined herein). See "Description of Credit
Enhancement."
The rate of payment of principal of each class of Bonds entitled to a portion of
principal payments on the Mortgage Loans and the other Trust Fund Assets in the
related Mortgage Pool will depend on the priority of payment of such class and
the rate and timing of principal payments (including by reason of prepayments,
defaults, liquidations and repurchases of Mortgage Loans) on such Mortgage Loans
and other Trust Fund Assets. A rate of principal payment slower or faster than
that anticipated may affect the yield on a class of Bonds in the manner
described herein and in the related Prospectus Supplement. See "Yield and
Maturity Considerations."
Bonds of a series will be characterized for federal income tax purposes as debt
instruments. No election will be made to treat a Trust Fund or a designated
portion thereof as a real estate mortgage investment conduit ("REMIC") for
federal income tax purposes. See "Federal Income Tax Consequences" herein.
SEE "RISK FACTORS" BEGINNING ON PAGE 15 HEREIN AND IN THE RELATED PROSPECTUS
SUPPLEMENT FOR A DISCUSSION OF SIGNIFICANT MATTERS AFFECTING INVESTMENTS IN THE
BONDS.
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND AND PAYMENTS UNDER ANY BOND
INSURANCE POLICY ARE THE SOLE SOURCE OF PAYMENTS ON THE BONDS. THE BONDS DO NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE COMPANY, THE MASTER SERVICER OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE BONDS OF ANY SERIES NOR THE
UNDERLYING MORTGAGE LOANS WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY OR BY THE COMPANY, THE MASTER SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Bonds may be offered through one or more different methods, including
offerings through underwriters, as more fully described under "Methods of
Distribution" and in the related Prospectus Supplement.
There will be no secondary market for the Bonds of any series prior to the
offering thereof. There can be no assurance that a secondary market for any of
the Bonds will develop or, if it does develop, that it will continue. The Bonds
will not be listed on any securities exchange.
Retain this Prospectus for future reference. This Prospectus may not be used to
consummate sales of securities offered hereby unless accompanied by a Prospectus
Supplement.
The date of this Prospectus is August 6, 1998.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT WITH RESPECT HERETO AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT WITH RESPECT HERETO DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE BONDS OFFERED
HEREBY AND THEREBY OR AN OFFER OF SUCH BONDS TO ANY PERSON IN ANY STATE OR OTHER
JURISDICTION IN WHICH SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE; HOWEVER, IF ANY MATERIAL CHANGE OCCURS WHILE
THIS PROSPECTUS IS REQUIRED BY LAW TO BE DELIVERED, THIS PROSPECTUS WILL BE
AMENDED OR SUPPLEMENTED ACCORDINGLY.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Caption Page
- ------- ----
<S> <C>
SUMMARY OF PROSPECTUS.................................................................... 4
RISK FACTORS............................................................................. 15
Limited Liquidity................................................................... 15
Limited Obligations................................................................. 15
Credit Enhancement Limitations...................................................... 15
Limited Nature of Ratings........................................................... 16
Certain Factors Affecting Delinquency, Foreclosure and
Loss of the Mortgage Loans..................................................... 16
Inclusion of Delinquent and Nonperforming Mortgage
Loans in a Mortgage Pool....................................................... 16
Yield and Prepayment Considerations................................................. 19
ERISA Considerations................................................................ 20
THE MORTGAGE POOLS....................................................................... 20
General............................................................................. 20
Mortgage Loans...................................................................... 20
Collection Accounts................................................................. 24
Representations and Warranties; Repurchases......................................... 24
Credit Enhancement.................................................................. 25
Cash Flow Agreements................................................................ 25
SERVICING OF MORTGAGE LOANS.............................................................. 26
General............................................................................. 26
The Master Servicer................................................................. 26
Special Servicer.................................................................... 26
Collection and Other Servicing Procedures........................................... 26
Sub-Servicers....................................................................... 28
Modifications, Waivers and Amendments of Mortgage
Loans.......................................................................... 29
Realization Upon Defaulted Mortgage Loans........................................... 29
Hazard Insurance Policies........................................................... 30
Due-on-Sale and Due-on-Encumbrance Provisions....................................... 31
Servicing Compensation and Payment of Expenses...................................... 31
Evidence as to Compliance........................................................... 32
DESCRIPTION OF THE BONDS................................................................. 33
General............................................................................. 33
Form of Bonds....................................................................... 34
Assignment of Trust Fund Assets..................................................... 35
Collection Account.................................................................. 37
Distributions....................................................................... 40
Distributions of Interest and Principal on the Bonds................................ 41
Funding Account..................................................................... 42
Distributions on the Bonds in Respect of Prepayment
Premiums....................................................................... 43
Allocation of Losses and Shortfalls................................................. 43
Advances............................................................................ 43
Reports to Bondholders.............................................................. 44
DESCRIPTION OF CREDIT ENHANCEMENT........................................................ 45
General............................................................................. 45
Subordinate Bonds................................................................... 46
Insurance or Guarantees with Respect to Mortgage Loans.............................. 46
Letter of Credit.................................................................... 46
Bond Insurance and Surety Bonds..................................................... 47
Reserve Funds....................................................................... 47
THE COMPANY.............................................................................. 47
IMPAC FUNDING CORPORATION................................................................ 48
THE AGREEMENTS........................................................................... 48
Events of Default; Rights Upon Event of Default..................................... 48
Amendment........................................................................... 50
Termination; Redemption of Bonds.................................................... 50
The Owner Trustee................................................................... 51
The Indenture Trustee............................................................... 51
YIELD AND MATURITY CONSIDERATIONS........................................................ 51
</TABLE>
<TABLE>
<CAPTION>
Caption Page
- ------- ----
<S> <C>
General............................................................................. 51
Pass-Through Rate................................................................... 51
Payment Delays...................................................................... 52
Certain Shortfalls in Collections of Interest....................................... 52
Yield and Prepayment Considerations................................................. 52
Weighted Average Life and Maturity.................................................. 54
Other Factors Affecting Yield, Weighted Average Life and
Maturity....................................................................... 55
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS.................................................. 57
General............................................................................. 57
Types of Mortgage Instruments....................................................... 57
Leases and Rents.................................................................... 57
Personalty.......................................................................... 58
Foreclosure......................................................................... 58
Bankruptcy Laws..................................................................... 61
Environmental Considerations........................................................ 62
Due-on-Sale and Due-on-Encumbrance Provisions....................................... 64
Junior Liens; Rights of Holders of Senior Liens..................................... 65
Subordinate Financing............................................................... 65
Default Interest and Limitations on Prepayments..................................... 65
Applicability of Usury Laws......................................................... 66
Certain Laws and Regulations........................................................ 66
Americans with Disabilities Act..................................................... 66
Soldiers' and Sailors' Civil Relief Act of 1940..................................... 67
Forfeitures in Drug and RICO Proceedings............................................ 67
FEDERAL INCOME TAX CONSEQUENCES.......................................................... 67
General............................................................................. 67
STATE AND OTHER TAX CONSEQUENCES......................................................... 74
ERISA CONSIDERATIONS..................................................................... 75
Tax-Exempt Investors................................................................ 76
LEGAL INVESTMENT MATTERS................................................................. 76
USE OF PROCEEDS.......................................................................... 77
METHODS OF DISTRIBUTION.................................................................. 77
LEGAL MATTERS............................................................................ 79
FINANCIAL INFORMATION.................................................................... 79
RATING................................................................................... 79
INDEX OF PRINCIPAL DEFINITIONS........................................................... 80
</TABLE>
-2-
<PAGE>
UNTIL 90 DAYS AFTER THE DATE OF EACH PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE RELATED BONDS, WHETHER OR NOT PARTICIPATING IN THE
DISTRIBUTION THEREOF, MAY BE REQUIRED TO DELIVER THIS PROSPECTUS AND THE RELATED
PROSPECTUS SUPPLEMENT. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and its Regional
Offices located as follows: Chicago Regional Office, 500 West Madison, 14th
Floor, Chicago, Illinois 60661; New York Regional Office, Seven World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates and electronically through the
Commission's Electronic Data Gathering, Analysis and Retrieval system at the
Commission's Web site (http:\\www.sec.gov). The Company does not intend to send
any financial reports to Bondholders.
This Prospectus does not contain all of the information set forth in the
Registration Statement (of which this Prospectus forms a part) and exhibits
thereto which the Company has filed with the Commission under the Securities Act
of 1933 (the "Securities Act") and to which reference is hereby made.
REPORTS TO BONDHOLDERS
The Master Servicer or other designated person will be required to provide
periodic unaudited reports concerning each Trust Fund to all registered holders
of Bonds of the related series as are required under the Exchange Act and the
rules and regulations of the Commission thereunder. See "Description of the
Bonds--Reports to Bondholders."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein and in the related Prospectus Supplement by
reference all documents and reports filed or caused to be filed by the Company
with respect to a Trust Fund pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, prior to the termination of the offering of the Bonds of the
related series. The Company will provide or cause to be provided without charge
to each person to whom this Prospectus is delivered in connection with the
offering of one or more classes of Bonds, upon written or oral request of such
person, a copy of any or all such reports incorporated herein by reference, in
each case to the extent such reports relate to one or more of such classes of
such Bonds, other than the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents. Requests should be
directed in writing to IMH Assets Corp., 20371 Irvine Avenue, Suite 200, Santa
Ana Heights, California 92707, or by telephone at (714) 556-0122. The Company
has determined that its financial statements will not be material to the
offering of any Bonds.
-3-
<PAGE>
SUMMARY OF PROSPECTUS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to each series of Bonds contained in the Prospectus
Supplement to be prepared and delivered in connection with the offering of Bonds
of such series. Capitalized terms used in this summary that are not otherwise
defined shall have the meanings ascribed thereto elsewhere in this Prospectus.
An index indicating where certain capitalized terms used herein are defined
appears at the end of this Prospectus.
Securities Offered......... Collateralized mortgage bonds (the "Bonds"). The
Bonds offered hereby and by the various Prospectus
Supplements with respect hereto will be offered
from time to time in series.
Company.................... IMH Assets Corp. (the "Company"), a limited-
purpose wholly owned subsidiary of Impac Mortgage
Holdings, Inc. ("Impac Holdings") and an affiliate
of Impac Funding Corporation ("Impac Funding").
See "The Company."
Issuer..................... The Issuer with respect to a series of Bonds will
be the Company or an owner trust established by it
for the purpose of issuing one or more series of
Bonds. Each such owner trust will be created
pursuant to a trust agreement (the "Trust
Agreement") between the Company, acting as
depositor, and the Owner Trustee. Each series of
Bonds will represent indebtedness of the Issuer
and will be issued pursuant to an indenture
between the Issuer and the Indenture Trustee (the
"Indenture") whereby the Issuer will pledge the
Trust Fund to secure the Bonds under the lien of
the Indenture. As to each series of Bonds where
the Issuer is an owner trust, the ownership of the
Trust Fund will be evidenced by certificates (the
"Certificates," and together with the Bonds, the
"Securities") issued under the Trust Agreement,
which are not offered hereby. The Bonds will
represent nonrecourse obligations solely of the
Issuer, and the proceeds of the Trust Fund will be
the sole source of payments on the Bonds, except
as described herein under "Description of Credit
Enhancement" and in the related Prospectus
Supplement.
-4-
<PAGE>
Master Servicer............ The master servicer (the "Master Servicer"), if
any, for a series of Bonds will be specified in
the related Prospectus Supplement and may be Impac
Funding or another affiliate of the Company. See
"Impac Funding Corporation" and "Servicing of
Mortgage Loans--The Master Servicer."
Special Servicer........... The special servicer (the "Special Servicer"), if
any, for a series of Bonds will be specified, or
the circumstances under which a Special Servicer
will be appointed will be described, in the
related Prospectus Supplement. Any Special
Servicer may be an affiliate of the Company. See
"Servicing of Mortgage Loans--Special Servicers."
Administrator.............. An entity may be named as the Administrator in the
related Prospectus Supplement, if required in
addition to or in lieu of the Master Servicer or
Servicer for a series of Bonds (the
"Administrator").
Indenture Trustee.......... The Indenture Trustee for each series of Bonds
will be specified in the related Prospectus
Supplement (the "Indenture Trustee").
Owner Trustee.............. As to each series of Bonds where the Issuer in an
owner trust, the Owner Trustee for each related
Trust Fund will be specified in the related
Prospectus Supplement (the "Owner Trustee").
The Bonds.................. Each series of Bonds will include one or more
classes of Bonds which will represent indebtedness
secured by a segregated pool of Mortgage Loans
(exclusive of any portion of interest payments
(the "Spread") relating to each Mortgage Loan
retained by the Company or any of its affiliates)
or interests therein and certain other assets,
which may only include, if applicable,
reinvestment income, reserve funds, cash accounts
and various forms of Credit Enhancement as
described herein (collectively, the "Trust Fund
Assets," and the related trust fund, the "Trust
Fund").
Except for certain Strip Bonds (as hereinafter
described), each series of Bonds, or class of
Bonds
-5-
<PAGE>
in the case of a series consisting of two or more
classes, will have a stated principal balance and
will be entitled to distributions of interest
based on a specified interest rate or rates (each,
an "Interest Rate"). Each series or class of Bonds
may have a different Interest Rate, which may be a
fixed, variable or adjustable Interest Rate, or
any combination of two or more such Interest
Rates. The related Prospectus Supplement will
specify the Interest Rate or Rates for each series
or class of Bonds, or the initial Interest Rate or
Rates and the method for determining subsequent
changes to the Interest Rate or Rates.
A series may include one or more classes of Bonds
("Strip Bonds") entitled (i) to principal distribu
tions, with disproportionate, nominal or no
interest distributions, or (ii) to interest
distributions, with disproportionate, nominal or
no principal distribu tions. In addition, a series
may include two or more classes of Bonds which
differ as to timing, sequential order, priority of
payment, pass-through rate or amount of
distributions of principal or interest or both, or
as to which distributions of principal or interest
or both on any class may be made upon the
occurrence of specified events, in accordance with
a schedule or formula, or on the basis of
collections from designated portions of the
Mortgage Pool, which series may include one or
more classes of Bonds ("Accrual Bonds"), as to
which certain accrued interest will not be
distributed but rather will be added to the
principal balance thereof on each Payment Date, as
hereinafter defined, in the manner described in
the related Prospectus Supplement.
If so provided in the related Prospectus
Supplement, a series of Bonds may include one or
more classes of Bonds (collectively, the "Senior
Bonds") which are senior to one or more classes of
Bonds (collectively, the "Subordinate Bonds") in
respect of certain distributions of principal and
interest and allocations of losses on Mortgage
Loans. In addition, certain classes of Senior (or
Subordinate) Bonds may be senior to other classes
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of Senior (or Subordinate) Bonds in respect of
such distributions or losses. The Certificates,
insofar as they represent the beneficial ownership
interest in the Issuer, will be subordinate to the
Bonds. See "Description of the Bonds."
The Bonds will not be guaranteed or insured by any
governmental agency or instrumentality, by the
Company, the Master Servicer or any of their
respective affiliates.
Bonds of one or more classes of a series may be
issued in book-entry form. See "Description of the
Bonds--Form of Bonds."
The Mortgage Pools......... Each Trust Fund will consist primarily of a
segregated pool (a "Mortgage Pool") of mortgage
loans secured by first or junior liens on, or
security interests in, one or more of the
following types of real property: (i) residential
properties ("Multifamily Properties") consisting
of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden
apartment buildings or other residential
structures, and mobile home parks; and (ii)
commercial properties ("Commercial Properties")
consisting of office buildings, retail shopping
facilities (such as shopping centers, malls and
individual stores), hotels and motels, health
care-related facilities (such as hospitals,
skilled nursing facilities, nursing homes,
congregate care facilities and senior housing),
recreational vehicle parks, warehouse facilities,
mini-warehouse facilities, self-storage
facilities, industrial facilities, parking lots,
restaurants, mixed use properties (that is, any
combination of the foregoing), and unimproved
land. The Mortgaged Properties may be located in
any one of the 50 states, the District of Columbia
or the Commonwealth of Puerto Rico. For a
description of the types of Mortgage Loans that
may be included in the Mortgage Pools, see "The
Mortgage Pools--The Mortgage Loans." The Mortgage
Loans will not be guaranteed or insured by the
Company, any of its affiliates or by any
governmental agency or instrumentality.
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As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for accrual
of interest thereon at an interest rate (a
"Mortgage Rate") that is fixed over its term or
that adjusts from time to time, or that may be
converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may
permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or
nonamortizing, with a balloon payment due on its
stated maturity date, (iv) may prohibit over its
term or for a certain period prepayments and/or
require payment of a premium or a yield
maintenance payment in connection with certain
prepayments and (v) may provide for payments of
principal, interest or both, on due dates that
occur monthly, quarterly, semi-annually or at such
other interval as is specified in the related
Prospectus Supplement. Each Mortgage Loan will
have had an original term to maturity of not more
than 40 years. No Mortgage Loan will have been
originated by the Company. See "The Mortgage
Pools--Mortgage Loans".
If any Mortgage Loan, or group of related Mortgage
Loans, constitutes a concentration of credit risk
equal to or greater than 20% of the Pool Balance,
financial statements or other financial
information with respect to the related Mortgaged
Property or Mortgaged Properties will be included
in the related Prospectus Supplement. See "The
Mortgage Pools--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements".
If specified in the related Prospectus Supplement,
Mortgage Loans which are converting or converted
from an adjustable-rate to a fixed-rate or certain
Mortgage Loans for which the Mortgage Rate has
been reset may be repurchased by the Company or
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purchased by the related Master Servicer, the
applicable Seller or another party, or a
designated remarketing agent will use its best
efforts to arrange the sale thereof as further
described herein under "The Mortgage Pools--The
Mortgage Loans."
If so specified in the related Prospectus
Supplement, some Mortgage Loans may be delinquent
or non-performing as of the date of their deposit
in the related Trust Fund.
Each Mortgage Loan included in a Trust Fund will
have been selected by the Company from among those
purchased, either directly or indirectly, from a
prior holder thereof (a "Seller"), which prior
holder may or may not be the originator of such
Mortgage Loan and may be an affiliate of the
Company.
A Current Report on Form 8-K will be available
upon request to purchasers of the Bonds of the
related series and will be filed, together with
the related Servicing Agreement, Trust Agreement
(if any) and Indenture, with the Securities and
Exchange Commission within fifteen days after such
initial issuance.
Interest Distributions..... Except as otherwise specified herein or in the
related Prospectus Supplement, interest on each
class of Bonds of each series, other than Strip
Bonds or Accrual Bonds (prior to the time when
accrued interest becomes payable thereon), will
accrue at the applicable Interest Rate (which may
be a fixed, variable or adjustable rate or any
combination thereof) on such class's principal
balance outstanding from time to time and will be
remitted on the 20/th/ day (or, if such day is not
a business day, on the next succeeding business
day) of each month, commencing with the month
following the month in which the Cut-off Date (as
defined in the applicable Prospectus Supplement)
occurs (each, a "Payment Date"). Distributions, if
any, with respect to interest on Strip Bonds will
be calculated and made on each Payment Date as
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described herein under "Description of the Bonds--
Distribution of Interest and Principal on the
Bonds" and in the related Prospectus Supplement.
Interest that has accrued but is not yet payable
on any Accrual Bonds will be added to the
principal balance of such class on each Payment
Date, and will thereafter bear interest at the
applicable Interest Rate. Distributions of
interest with respect to one or more classes of
Bonds (or, in the case of a class of Accrual
Bonds, accrued interest to be added to the
principal balance thereof) may be reduced as a
result of the occurrence of certain delinquencies
not covered by advances, losses, prepayments and
other contingencies described herein and in the
related Prospectus Supplement. See "Yield and
Maturity Considerations" and "Description of the
Bonds--Distribution of Interest and Principal on
the Bonds."
Principal Distributions.... Except as otherwise specified in the related
Prospectus Supplement, principal distributions on
the Bonds of each series will be payable on each
Payment Date, commencing with the Payment Date in
the month following the month in which the Cut -
off Date occurs, to the holders of the Bonds of
such series, or of the class or classes of Bonds
then entitled thereto, on a pro rata basis among
all such Bonds or among the Bonds of any such
class, in proportion to their respective
outstanding principal balances, or in the priority
and manner otherwise specified in the related
Prospectus Supplement. Strip Bonds with no
principal balance will not receive distributions
in respect of principal. Distributions of
principal with respect to any series of Bonds, or
with respect to one or more classes included
therein, may be reduced to the extent of certain
delinquencies not covered by advances or losses
not covered by the applicable form of Credit
Enhancement. See "The Mortgage Pools," "Yield and
Maturity Considerations" and "Description of the
Bonds."
Funding Account............ If so specified in the related Prospectus
Supplement, a portion of the proceeds of the sale
of one or more Classes of Bonds of a series may be
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deposited in a segregated account to be applied to
acquire additional Mortgage Loans from the
Sellers, subject to the limitations set forth
herein under "Description of the Bonds-Funding
Account." Monies on deposit in the Funding Account
and not applied to acquire such additional
Mortgage Loans within the time set forth in the
related Trust Agreement or other applicable
agreement may be treated as principal and applied
in the manner described in the related Prospectus
Supplement.
Credit Enhancement......... If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage Loans
in the related Trust Fund may be provided to one
or more classes of Bonds of the related series in
the form of subordination of one or more other
classes of Bonds of such series, which other
classes may include one or more classes of Bonds,
or by one or more other types of credit
enhancement, such as a letter of credit, insurance
policy, guarantee, reserve fund or another type of
credit enhancement, or a combination thereof (any
such coverage with respect to the Bonds of any
series, "Credit Enhancement"). If so provided in
the related Prospectus Supplement, a Trust Fund
may include: (i) guaranteed investment contracts
pursuant to which moneys held in the funds and
accounts established for the related series will
be invested at a specified rate; or (ii) certain
other agreements, such as interest rate exchange
agreements, interest rate cap or floor agreements,
or other agreements designed to reduce the effects
of interest rate fluctuations on the Mortgage
Loans or on one or more classes of Bonds (any such
agreement, in the case of clause (i) or (ii), a
"Cash Flow Agreement"). Certain relevant
information regarding any applicable Credit
Enhancement or Cash Flow Agreement will be set
forth in the Prospectus Supplement for a series of
Bonds. See "Risk Factors--Credit Enhancement
Limitations", "Description of the Trust Funds--
Credit Enhancement" and "--Cash Flow Agreements"
and "Description of Credit Enhancement".
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<PAGE>
Advances................... If and to the extent described in the related
Prospectus Supplement, and subject to any
limitations specified therein, the Master Servicer
for any Trust Fund will be obligated to make, or
have the option of making, certain advances with
respect to delinquent scheduled payments on the
Mortgage Loans in such Trust Fund. Any such
advance made by the Master Servicer with respect
to a Mortgage Loan is recoverable by it as
described herein under "Description of the Bonds--
Advances" either from recoveries on or in respect
of the specific Mortgage Loan or, with respect to
any advance subsequently determined to be
nonrecoverable from recoveries on or in respect of
the specific Mortgage Loan, out of funds otherwise
distributable to the holders of the related series
of Bonds, which may include the holders of any
Senior Bonds of such series. If and to the extent
provided in the Prospectus Supplement for a series
of Bonds, the Master Servicer will be entitled to
receive interest on its advances for the period
that they are outstanding payable from amounts in
the related Trust Fund.
Optional Termination....... The Master Servicer, the Company or a person
specified in the related Prospectus Supplement
(other than any Bondholder) may at its option
either (i) effect early retirement of a series of
Bonds through the purchase of the assets in the
related Trust Fund or (ii) purchase, in whole but
not in part, the Bonds specified in the related
Prospectus Supplement; in each case under the
circumstances and in the manner set forth herein
under "The Agreements--Termination; Redemption of
Bonds" and in the related Prospectus Supplement.
Legal Investment........... At the date of issuance, as to each series, each
class of Bonds will be rated at the request of the
Company in one of the four highest rating
categories by one or more nationally recognized
statistical rating agencies (each, a "Rating
Agency"). Each class of Bonds that is rated in one
of the two highest rating categories by at least
one Rating Agency may constitute "mortgage related
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<PAGE>
securities" for purposes of the Secondary Mortgage
Market Enhancement Act of 1984, as amended
("SMMEA"), as specified in the related Prospectus
Supplement. Investors whose investment authority
is subject to legal restrictions should consult
their own legal advisors to determine whether and
to what extent the Bonds of any series constitute
legal investments for them. See "Legal Investment
Matters."
ERISA Considerations....... A fiduciary of an employee benefit plan and
certain other retirement plans and arrangements,
including individual retirement accounts and
annuities, Keogh plans, and collective investment
funds and separate accounts in which such plans,
accounts, annuities or arrangements are invested,
that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each, a "Plan") should
carefully review with its legal advisors whether
the purchase or holding of Bonds could give rise
to a transaction that is prohibited or is not
otherwise permissible either under ERISA or
Section 4975 of the Code. Investors are advised to
consult their counsel and to review "ERISA
Considerations" herein and in the related
Prospectus Supplement.
Federal Income
Tax Consequences.......... In the opinion of Tax Counsel (as defined herein),
for federal income tax purposes, the Bonds will
constitute indebtedness of the Issuer.
(i) Bonds held by a domestic building and loan
association will not constitute "loans...secured
by an interest in real property" within the
meaning of Code section 7701(a)(19)(C)(v); (ii)
Bonds held by a real estate investment trust will
not constitute "real estate assets" within the
meaning of Code section 856(c)(4)(A); and (iii)
interest on Bonds will not be considered "interest
on obligations secured by mortgages on real
property" within the meaning of Code section
856(c)(3)(B).
Investors are advised to consult their tax
advisors as to the tax consequences of an
investment in the
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Bonds in light of investors' individual
circumstances and to review "Federal Income Tax
Consequences" herein and in the related Prospectus
Supplement for a more general discussion of
material tax matters related to the Bonds. See
"Federal Income Tax Consequences."
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RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Bonds:
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Bonds of any
series will develop or, if it does develop, that it will provide Bondholders
with liquidity of investment or that it will continue for the life of the Bonds
of any series. The Prospectus Supplement for any series of Bonds may indicate
that an underwriter specified therein intends to establish a secondary market in
such Bonds, however no underwriter will be obligated to do so. As a result, any
resale prices that may be available for any Bond in any market that may develop
may be at a discount from the initial offering price or the fair market value
thereof. The Bonds will not be listed on any securities exchange.
LIMITED OBLIGATIONS
The Bonds will evidence an obligation of the related Issuer to remit
certain payments to the registered holder thereof. The Bonds will not represent
an interest in or obligation of the Company, the Master Servicer or any of their
respective affiliates. The only obligations of the foregoing entities with
respect to the Bonds and the Mortgage Loans will be the obligations (if any) of
the Company or the Master Servicer pursuant to certain limited representations
and warranties made with respect to the Mortgage Loans, the Master Servicer's
servicing obligations under the related Servicing Agreement (including, if and
to the extent described in the related Prospectus Supplement, its limited
obligation to make certain advances in the event of delinquencies on the
Mortgage Loans). Neither the Bonds nor the underlying Mortgage Loans will be
guaranteed or insured by any governmental agency or instrumentality, by the
Company, the Master Servicer or any of their respective affiliates. Proceeds of
the assets included in the related Trust Fund for each series of Bonds
(including the Mortgage Loans and any form of Credit Enhancement) will be the
sole source of payments on the Bonds, and there will be no recourse to the
Company, the Master Servicer or any other entity in the event that such proceeds
are insufficient or otherwise unavailable to make all payments provided for
under the Bonds.
CREDIT ENHANCEMENT LIMITATIONS
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for a series of Bonds will describe any Credit Enhancement provided with respect
thereto. Use of Credit Enhancement will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement. Moreover,
such Credit Enhancement may not cover all potential losses; for example, Credit
Enhancement may or may not cover loss by reason of fraud or negligence by a
mortgage loan originator or other parties. Any such losses not covered by Credit
Enhancement may, at least in part, be allocated to one or more classes of Bonds.
Disproportionate Benefits to Certain Classes and Series. A series of Bonds
may include one or more classes of Subordinate Bonds, if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce the
likelihood of temporary shortfalls and ultimate losses to holders of Senior
Bonds, the amount of subordination will be limited and may decline under certain
circumstances. In addition, if principal payments on one or more classes of
Bonds of a series are made in a specified order of priority, any related Credit
Enhancement may be exhausted before the principal of the later paid classes of
Bonds of such series has been repaid in full. As a result, the impact of losses
and shortfalls experienced with respect to the Mortgage Loans may fall primarily
upon those classes of Bonds having a later right of
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<PAGE>
payment. Moreover, if a form of Credit Enhancement covers the Bonds of more than
one series and losses on the related Mortgage Loans exceed the amount of such
Credit Enhancement, it is possible that the holders of Bonds of one (or more)
such series will be disproportionately benefitted by such Credit Enhancement to
the detriment of the holders of Bonds of one (or more) other such series.
Limitations Regarding the Amount of Credit Enhancement. The amount of any
applicable Credit Enhancement supporting one or more classes of Bonds, including
the subordination of one or more other classes of Bonds, will be determined on
the basis of criteria established by each Rating Agency rating such classes of
Bonds based on an assumed level of defaults, delinquencies and losses on the
underlying Mortgage Loans and certain other factors. There can, however, be no
assurance that the loss experience on the related Mortgage Loans will not exceed
such assumed levels. See "Description of the Bonds--Allocation of Losses and
Shortfalls" and "Description of Credit Enhancement". If the losses on the
related Mortgage Loans do exceed such assumed levels, the holders of one or more
classes of Bonds will be required to bear such additional losses.
LIMITED NATURE OF RATINGS
It is a condition to the issuance of the Bonds that each class of Bonds be
rated in one of the four highest rating categories by a nationally recognized
statistical rating agency. A security rating is not a recommendation to buy,
sell or hold securities and may be subject to revision or withdrawal at any
time. No person is obligated to maintain the rating on any Bond, and,
accordingly, there can be no assurance that the ratings assigned to any Bond on
the date on which such Bonds are initially issued will not be lowered or
withdrawn by a Rating Agency at any time thereafter. In the event any rating is
revised or withdrawn, the liquidity or the market value of the related Bonds may
be adversely affected. See "Rating" herein.
CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS
General. The payment performance of the Bonds of any series will be
directly related to the payment performance of the underlying Mortgage Loans.
Set forth below is a discussion of certain factors that will affect the full and
timely payment of the Mortgage Loans in any Trust Fund. In addition, a
description of certain material considerations associated with investments in
mortgage loans is included herein under "Certain Legal Aspects of Mortgage
Loans".
The Bonds will be directly or indirectly backed by mortgage loans secured
by multifamily and/or commercial properties. Mortgage loans made on the
security of multifamily or commercial property may have a greater likelihood of
delinquency and foreclosure, and a greater likelihood of loss in the event
thereof, than loans made on the security of an owner-occupied single-family
property. See "The Mortgage Pools-Mortgage Loans-Default and Loss
Considerations with Respect to the Mortgage Loans". The ability of a borrower
to repay a loan secured by an income-producing property typically is dependent
primarily upon the successful operation of such property rather than upon the
existence of independent income or assets of the borrower; thus, the value of an
income-producing property is directly related to the net operating income
derived from such property. If the net operating income of the property is
reduced (for example, if rental or occupancy rates decline or real estate tax
rates or other operating expenses increase), the borrower's ability to repay the
loan may be impaired. A number of the Mortgage Loans may be secured by liens on
owner-occupied Mortgaged Properties or on Mortgaged Properties leased to a
single tenant or a small number of significant tenants. Accordingly, a decline
in the financial condition of the borrower or a significant tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
Mortgaged Property may be adversely affected by factors generally incident to
interests in real property, including changes in general or local
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economic conditions and/or specific industry segments; declines in real estate
values; declines in rental or occupancy rates; increases in interest rates, real
estate tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters and civil disturbances such as earthquakes, hurricanes, floods,
eruptions or riots; and other circumstances, conditions or events beyond the
control of a Master Servicer or a Special Servicer. Additional considerations
may be presented by the type and use of a particular Mortgaged Property. For
instance, Mortgaged Properties that operate as hospitals and nursing homes are
subject to significant governmental regulation of the ownership, operation,
maintenance and financing of health care institutions. Hotel and motel
properties are often operated pursuant to franchise, management or operating
agreements that may be terminable by the franchisor or operator, and the
transferability of a hotel's operating, liquor and other licenses upon a
transfer of the hotel, whether through purchase or foreclosure, is subject to
local law requirements.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited to
the specific real property and other assets, if any, that were pledged to secure
the Mortgage Loan. However, even with respect to those Mortgage Loans that
provide for recourse against the borrower and its assets generally, there can be
no assurance that enforcement of such recourse provisions will be practicable,
or that the assets of the borrower will be sufficient to permit a recovery in
respect of a defaulted Mortgage Loan in excess of the liquidation value of the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans-
Foreclosure--Anti-Deficiency Legislation".
Limitations on Enforceability of Cross-Collateralization. A Mortgage Pool
may include groups of Mortgage Loans which are cross-collateralized and cross-
defaulted. These arrangements are designed primarily to ensure that all of the
collateral pledged to secure the respective Mortgage Loans in a cross-
collateralized group, and the cash flows generated thereby, are available to
support debt service on, and ultimate repayment of, the aggregate indebtedness
evidenced by those Mortgage Loans. These arrangements thus seek to reduce the
risk that the inability of one or more of the Mortgaged Properties securing any
such group of Mortgage Loans to generate net operating income sufficient to pay
debt service will result in defaults and ultimate losses.
There may not be complete identity of ownership of the Mortgaged Properties
securing a group of cross-collateralized Mortgage Loans. In such an instance,
creditors of one or more of the related borrowers could challenge the cross-
collateralization arrangement as a fraudulent conveyance. Generally, under
federal and state fraudulent conveyance statutes, the incurring of an obligation
or the transfer of property by a person will be subject to avoidance under
certain circumstances if the person did not receive fair consideration or
reasonably equivalent value in exchange for such obligation or transfer and was
then insolvent or was rendered insolvent by such obligation or transfer.
Accordingly, a creditor seeking ownership of a Mortgaged Property subject to
such cross-collateralization to repay such creditor's claim against the related
borrower could assert (i) that such borrower was insolvent at the time the
cross-collateralized Mortgage Loans were made and (ii) that such borrower did
not, when it allowed its property to be encumbered by a lien securing the
indebtedness represented by the other Mortgage Loans in the group of cross-
collateralized Mortgage Loans, receive fair consideration or reasonably
equivalent value for, in effect, "guaranteeing" the performance of the other
borrowers. Although the borrower making such "guarantee" will be receiving
"guarantees" from each of the other borrowers in return, there can be no
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assurance that such exchanged "guarantees" would be found to constitute fair
consideration or be of reasonably equivalent value, and no unqualified legal
opinion to that effect will be obtained.
The cross-collateralized Mortgage Loans constituting any group thereof may
be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise of
a power of sale and because, in general, foreclosure actions are brought in
state court, and the courts of one state cannot exercise jurisdiction over
property in another state, it may be necessary upon a default under any such
Mortgage Loan to foreclose on the related Mortgaged Properties in a particular
order rather than simultaneously in order to ensure that the lien of the related
Mortgages is not impaired or released.
Increased Risk of Default Associated With Balloon Payments. Certain of the
Mortgage Loans included in a Trust Fund may be nonamortizing or only partially
amortizing over their terms to maturity and, thus, will require substantial
payments of principal and interest (that is, balloon payments) at their stated
maturity. Mortgage Loans of this type involve a greater likelihood of default
than self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
value of the related Mortgaged Property, the level of available mortgage rates
at the time of sale or refinancing, the borrower's equity in the related
Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Company
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "Servicing of Mortgage Loans--Realization Upon
Defaulted Mortgage Loans". While the Master Servicer or the Special Servicer
generally will be required to determine that any such extension or modification
is reasonably likely to produce a greater recovery than liquidation, taking into
account the time value of money, there can be no assurance that any such
extension or modification will in fact increase the present value of receipts
from or proceeds of the affected Mortgage Loans.
Lender Difficulty in Collecting Rents Upon the Default and/or Bankruptcy of
Borrower. Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases typically will be secured by an assignment of
leases and rents pursuant to which the borrower assigns to the lender its right,
title and interest as landlord under the leases of the related Mortgaged
Property, and the income derived therefrom, as further security for the related
Mortgage Loan, while retaining a license to collect rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect rents. Some state laws may require that the lender take
possession of the Mortgaged Property and obtain a judicial appointment of a
receiver before becoming entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are commenced by or in respect of the
borrower, the lender's ability to collect the rents may be adversely affected.
See "Certain Legal Aspects of Mortgage Loans--Leases and Rents".
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration Clauses.
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the borrower sells, transfers or
conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages also may include a debt-acceleration clause, which permits
the lender to accelerate
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the debt upon a monetary or nonmonetary default of the mortgagor. Such clauses
are generally enforceable subject to certain exceptions. The courts of all
states will enforce clauses providing for acceleration in the event of a
material payment default. The equity courts of any state, however, may refuse
the foreclosure of a mortgage or deed of trust when an acceleration of the
indebtedness would be inequitable or unjust or the circumstances would render
the acceleration unconscionable.
Risk of Liability Arising From Environmental Conditions. To the extent the
Master Servicer or Special Servicer acquires title to any Mortgaged Property
contaminated with or affected by hazardous wastes or hazardous substances or not
in compliance with environmental laws and regulations, the Mortgage Loans may
incur losses. See "Servicing of Mortgage Loans--Realization Upon or Sale of
Defaulted Mortgage Loans" and "Certain Legal Aspects of Mortgage Loans--
Environmental Legislation." To the extent such environmental risks result in
losses on the mortgage loans, the yield to maturity of the Bonds, to the extent
not covered by Credit Enhancement, may be affected.
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to use reasonable efforts
to cause the borrower on each Mortgage Loan in such Trust Fund to maintain such
insurance coverage in respect of the related Mortgaged Property as is required
under the related Mortgage, including hazard insurance; provided that, as and to
the extent described herein and in the related Prospectus Supplement, each of
the Master Servicer and the Special Servicer may satisfy its obligation to cause
hazard insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. In general, the standard form of fire and
extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm and
hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the policies covering the
Mortgaged Properties will be underwritten by different insurers under different
state laws in accordance with different applicable state forms, and therefore
will not contain identical terms and conditions, most such policies typically do
not cover any physical damage resulting from war, revolution, governmental
actions, floods and other water-related causes, earth movement (including
earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals
and certain other kinds of risks. Unless the related Mortgage specifically
requires the mortgagor to insure against physical damage arising from such
causes, then, to the extent any consequent losses are not covered by Credit
Enhancement, such losses may be borne, at least in part, by the holders of one
or more classes of Bonds of the related series. See "Servicing of Mortgage
Loans--Hazard Insurance Policies".
INCLUSION OF DELINQUENT AND NONPERFORMING MORTGAGE LOANS IN A MORTGAGE POOL
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Bonds may include Mortgage Loans that are past due or are
nonperforming. If so specified in the related Prospectus Supplement, the
servicing of such Mortgage Loans will be performed by the Special Servicer;
however, the same entity may act as both Master Servicer and Special Servicer.
Credit Enhancement provided with respect to a particular series of Bonds may not
cover all losses related to such delinquent or nonperforming Mortgage Loans, and
investors should consider the risk that the inclusion of such Mortgage Loans in
the Trust Fund may adversely affect the rate of defaults and prepayments in
respect of the subject Mortgage Pool and the yield on the Bonds of such series.
See "The Mortgage Pools--Mortgage Loans."
YIELD AND PREPAYMENT CONSIDERATIONS
The yield to maturity of the Bonds of each series will depend on, among
other things, the rate and timing of principal payments (including prepayments,
liquidations due to defaults, and repurchases due to breaches of representations
and warranties) on the related Mortgage Loans and the price paid by Bondholders.
Such yield may be adversely affected by a higher or lower than anticipated rate
of
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prepayments on the related Mortgage Loans. The yield to maturity on Strip Bonds
will be extremely sensitive to the rate of prepayments on the related Mortgage
Loans. In addition, the yield to maturity on certain other types of classes of
Bonds, including Accrual Bonds, Bonds with a Interest Rate which fluctuates
inversely with an index or certain other classes in a series including more than
one class of Bonds, may be relatively more sensitive to the rate of prepayment
on the related Mortgage Loans than other classes of Bonds. In addition, to the
extent amounts in any Funding Account have not been used to purchase additional
Mortgage Loans, holders of the Bonds may receive an additional prepayment.
Prepayments are influenced by a number of factors, including prevailing mortgage
market interest rates, local and regional economic conditions and homeowner
mobility. See "Yield and Maturity Considerations" herein.
ERISA CONSIDERATIONS
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations that govern such plans, prospective investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Bonds of any series. See
"ERISA Considerations".
THE MORTGAGE POOLS
GENERAL
The primary assets of each Trust Fund will consist of a segregated pool (a
"Mortgage Pool") of various types of multifamily and commercial mortgage loans
(collectively, the "Mortgage Loans") that evidence interests in, or that are
secured by pledges of, one or more of various types of multifamily or commercial
mortgage loans. Each Trust Fund will be established by the Company. Each
Mortgage Loan will be selected by the Company for inclusion in a Trust Fund from
among those purchased, either directly or indirectly, from a prior holder
thereof (a "Seller"), which prior holder may or may not be the originator of
such Mortgage Loan. The Mortgage Loans will not be guaranteed or insured by the
Company or any of its affiliates or, unless otherwise provided in the related
Prospectus Supplement, by any governmental agency or instrumentality or by any
other person.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (the "Mortgaged Properties") consisting of (i)
residential properties consisting of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures ("Multifamily Properties") or (ii) office buildings,
retail centers, malls, stores and establishments, hotels or motels, nursing
homes, hospitals or other health care-related facilities, recreational vehicle
and mobile home parks, warehouse facilities, mini-warehouse facilities, self-
storage facilities, industrial facilities, parking lots, restaurants, mixed use
(that is, any combination of the foregoing) or unimproved land ("Commercial
Properties"). The Multifamily Properties may include mixed commercial and
residential structures and apartment buildings owned by private cooperative
housing corporations ("Cooperatives"). Unless otherwise specified in the
related Prospectus Supplement, each Mortgage will create a first priority
mortgage lien on a borrower's fee estate in a Mortgaged Property. If a Mortgage
creates a lien on a borrower's leasehold estate in a property, then, unless
otherwise specified in the related Prospectus Supplement, the term of any such
leasehold will exceed the term of the Mortgage Note by at least ten years.
Unless otherwise specified in
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the related Prospectus Supplement, each Mortgage Loan will have been originated
by a person (the "Originator") other than the Company.
If so provided in the related Prospectus Supplement, Mortgage Loans for a
series of Bonds may include Mortgage Loans secured by junior liens, and the
loans secured by the related senior liens ("Senior Liens") may not be included
in the Mortgage Pool. The primary risk to holders of Mortgage Loans secured by
junior liens is the possibility that adequate funds will not be received in
connection with a foreclosure of the related Senior Liens to satisfy fully both
the Senior Liens and the Mortgage Loan. In the event that a holder of a Senior
Lien forecloses on a Mortgaged Property, the proceeds of the foreclosure or
similar sale will be applied first to the payment of court costs and fees in
connection with the foreclosure, second to real estate taxes, third in
satisfaction of all principal, interest, prepayment or acceleration penalties,
if any, and any other sums due and owing to the holder of the Senior Liens. The
claims of the holders of the Senior Liens will be satisfied in full out of
proceeds of the liquidation of the related Mortgage Property, if such proceeds
are sufficient, before the Trust Fund as holder of the junior lien receives any
payments in respect of the Mortgage Loan. If the Master Servicer or any Special
Servicer were to foreclose on any Mortgage Loan, it would do so subject to any
related Senior Liens. In order for the debt related to such Mortgage Loan to be
paid in full at such sale, a bidder at the foreclosure sale of such Mortgage
Loan would have to bid an amount sufficient to pay off all sums due under the
Mortgage Loan and any Senior Liens or purchase the Mortgaged Property subject to
such Senior Liens. In the event that such proceeds from a foreclosure or
similar sale of the related Mortgaged Property are insufficient to satisfy all
Senior Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the
holder of the junior lien, and, accordingly, holders of one or more classes of
the Bonds of the related series bear (i) the risk of delay in distributions
while a deficiency judgment against the borrower is obtained and (ii) the risk
of loss if the deficiency judgment is not obtained and satisfied. Moreover,
deficiency judgments may not be available in certain jurisdictions, or the
particular Mortgage Loan may be a nonrecourse loan, which means that, absent
special facts, recourse in the case of default will be limited to the Mortgaged
Property and such other assets, if any, that were pledged to secure repayment of
the Mortgage Loan.
If so specified in the related Prospectus Supplement, the Mortgage Loans
for a particular series of Bonds may include Mortgage Loans that are delinquent
or nonperforming as of the date such Bonds are issued. In that case, the
related Prospectus Supplement will set forth, as to each such Mortgage Loan,
available information as to the period of such delinquency or nonperformance,
any forbearance arrangement then in effect, the condition of the related
Mortgaged Property and the ability of the Mortgaged Property to generate income
to service the mortgage debt.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, as noted above, some or all of the
Mortgage Loans included in a particular Trust Fund may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "Net Operating Income"
means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than
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(i) noncash items such as depreciation and amortization, (ii) capital
expenditures and (iii) debt service on the related Mortgage Loan or on any other
loans that are secured by such Mortgaged Property. The Net Operating Income of a
Mortgaged Property will generally fluctuate over time and may or may not be
sufficient to cover debt service on the related Mortgage Loan at any given time.
As the primary source of the operating revenues of a nonowner occupied, income-
producing property, rental income (and, with respect to a Mortgage Loan secured
by a Cooperative apartment building, maintenance payments from tenant-
stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, and mini-warehouse and self-storage
facilities, tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods, such as
warehouses, retail stores, office buildings and industrial facilities.
Commercial Properties may be owner-occupied or leased to a small number of
tenants. Thus, the Net Operating Income of such a Mortgaged Property may depend
substantially on the financial condition of the borrower or a tenant, and
Mortgage Loans secured by liens on such properties may pose a greater likelihood
of default and loss than loans secured by liens on Multifamily Properties or on
multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus Supplement, in some cases
leases of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will
result in stable Net Operating Income to the borrower/landlord only to the
extent that the lessee is able to absorb operating expense increases while
continuing to make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the "Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater
the percentage of the borrower's equity in a Mortgaged Property, and thus (a)
the greater the incentive of the borrower to perform under the terms of the
related Mortgage Loan (in order to protect such equity) and (b) the greater the
cushion provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example,
the value of a Mortgaged Property as of the date of initial issuance of the
related series of Bonds may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are
generally based on the market comparison method (recent resale value of
comparable properties at the date of the appraisal), the cost replacement method
(the cost of replacing the property at such date), the income capitalization
method (a projection of value based upon the property's projected net cash
flow), or upon a selection from or interpolation of the values derived from such
methods. Each of these appraisal methods can present analytical difficulties.
It is often difficult to find truly comparable properties that have recently
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been sold; the replacement cost of a property may have little to do with its
current market value; and income capitalization is inherently based on inexact
projections of income and expense and the selection of an appropriate
capitalization rate and discount rate. Where more than one of these appraisal
methods are used and provide significantly different results, an accurate
determination of value and, correspondingly, a reliable analysis of the
likelihood of default and loss, is even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Company believes that the foregoing considerations are important
factors that generally distinguish loans secured by liens on income-producing
real estate from single-family mortgage loans, there can be no assurance that
all of such factors will in fact have been prudently considered by the
Originators of the Mortgage Loans, or that, for a particular Mortgage Loan, they
are complete or relevant. See "Risk Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans--General" and "--Certain
Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--
Increased Risk of Default Associated With Balloon Payments".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than 40 years and (ii)
provide for scheduled payments of principal, interest or both, to be made on
specified dates ("Due Dates") that occur monthly, quarterly, semi-annually or
annually. A Mortgage Loan (i) may provide for no accrual of interest or for
accrual of interest thereon at a Mortgage Rate that is fixed over its term or
that adjusts from time to time, or that may be converted at the borrower's
election from an adjustable to a fixed Mortgage Rate, or from a fixed to an
adjustable Mortgage Rate, (ii) may provide for level payments to maturity or for
payments that adjust from time to time to accommodate changes in the Mortgage
Rate or to reflect the occurrence of certain events, and may permit negative
amortization, (iii) may be fully amortizing or may be partially amortizing or
nonamortizing, with a balloon payment due on its stated maturity date, and (iv)
may prohibit over its term or for a certain period prepayments (the period of
such prohibition, a "Lock-out Period" and its date of expiration, a "Lock-out
Date") and/or require payment of a premium or a yield maintenance payment (a
"Prepayment Premium") in connection with certain prepayments, in each case as
described in the related Prospectus Supplement. A Mortgage Loan may also
contain a provision that entitles the lender to a share of appreciation of the
related Mortgaged Property, or profits realized from the operation or
disposition of such Mortgaged Property or the benefit, if any, resulting from
the refinancing of the Mortgage Loan (any such provision, an "Equity
Participation"), as described in the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment of
the Mortgage Loans, (iii) the earliest and latest origination date and maturity
date of the Mortgage Loans, (iv) the original and remaining terms to maturity of
the Mortgage Loans, or the respective ranges thereof, and the weighted average
original and remaining terms to maturity of the Mortgage Loans, (v) the Loan-to-
Value Ratios of the Mortgage Loans (either at origination or as of a more recent
date), or the range thereof, and the weighted average of such Loan-to-Value
Ratios, (vi) the Mortgage Rates borne by the Mortgage Loans, or the range
thereof, and the weighted average Mortgage Rate borne by the Mortgage Loans,
(vii) with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based, the
adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits
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on Mortgage Rate adjustments at the time of any adjustment and over the life of
the ARM Loan, (viii) information regarding the payment characteristics of the
Mortgage Loans, including, without limitation, balloon payment and other
amortization provisions, Lock-out Periods and Prepayment Premiums, (ix) the Debt
Service Coverage Ratios of the Mortgage Loans (either at origination or as of a
more recent date), or the range thereof, and the weighted average of such Debt
Service Coverage Ratios, and (x) the geographic distribution of the Mortgaged
Properties on a state-by-state basis. In appropriate cases, the related
Prospectus Supplement will also contain certain information available to the
Company that pertains to the provisions of leases and the nature of tenants of
the Mortgaged Properties. If the Company is unable to provide the specific
information described above at the time Bonds of a series are initially offered,
more general information of the nature described above will be provided in the
related Prospectus Supplement, and specific information will be set forth in a
report which will be available to purchasers of those Bonds at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision in
the Bonds of the related series, information regarding the prepayment experience
of a Master Servicer's multifamily and/or commercial mortgage loan servicing
portfolio will be included in the related Prospectus Supplement. However, many
servicers do not maintain records regarding such matters or, at least, not in a
format that can be readily aggregated. In addition, the relevant
characteristics of a Master Servicer's servicing portfolio may be so materially
different from those of the related Mortgage Pool that such prepayment
experience would not be meaningful to an investor. For example, differences in
geographic dispersion, property type and/or loan terms (e.g., mortgage rates,
terms to maturity and/or prepayment restrictions) between the two pools of loans
could render the Master Servicer's prepayment experience irrelevant. Because of
the nature of the assets to be serviced and administered by a Special Servicer,
no comparable prepayment information will be presented with respect to the
Special Servicer's multifamily and/or commercial mortgage loan servicing
portfolio.
COLLECTION ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Collection Account") established and maintained on behalf of the Bondholders
into which all payments and collections received or advanced with respect to the
Mortgage Loans and other assets in the Trust Fund will be deposited to the
extent described herein and in the related Prospectus Supplement. See
"Description of the Bonds-Collection Account".
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Company will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Indenture; (ii) the
enforceability of the related Mortgage Note and Mortgage and the existence of
title insurance insuring the lien priority of the related Mortgage; (iii) the
Warranting Party's title to the Mortgage Loan and the authority of the
Warranting Party to sell the Mortgage Loan; and (iv) the payment status of the
Mortgage Loan. It is expected that in most cases the Warranting Party will be
the Seller; however, the Warranting Party may also be an affiliate of the
Seller, the Company or an affiliate of the Company, the Master
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Servicer, the Special Servicer or another person acceptable to the Company. The
Warranting Party, if other than the Seller, will be identified in the related
Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Indenture will provide that the Master Servicer and/or Indenture Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Bondholders of the related
series. If such Warranting Party cannot cure such breach within a specified
period following the date on which it was notified of such breach, then, unless
otherwise provided in the related Prospectus Supplement, it will be obligated to
repurchase such Mortgage Loan from the Indenture Trustee at the applicable
Purchase Price. If so provided in the Prospectus Supplement for a series of
Certificates, a Warranting Party, in lieu of repurchasing a Mortgage Loan as to
which a breach has occurred, will have the option, exercisable upon certain
conditions and/or within a specified period after initial issuance of such
series of Bonds, to replace such Mortgage Loan with one or more other mortgage
loans, in accordance with standards that will be described in the Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
this repurchase or substitution obligation will constitute the sole remedy
available to holders of the Bonds of any series or to the related Indenture
Trustee on their behalf for a breach of representation and warranty by a
Warranting Party, and neither the Company nor the Master Servicer, in either
case unless it is the Warranting Party, will be obligated to purchase or replace
a Mortgage Loan if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the related
series of Bonds is issued, and thus may not address events that may occur
following the date as of which they were made. However, the Company will not
include any Mortgage Loan in the Trust Fund for any series of Bonds if anything
has come to the Depositor's attention that would cause it to believe that the
representations and warranties made in respect of such Mortgage Loan will not be
accurate in all material respects as of the date of issuance. The date as of
which the representations and warranties regarding the Mortgage Loans in any
Trust Fund were made will be specified in the related Prospectus Supplement.
CREDIT ENHANCEMENT
If so provided in the Prospectus Supplement for a series of Bonds, partial
or full protection against certain defaults and losses on the Mortgage Loans in
the related Trust Fund may be provided to one or more classes of Bonds of such
series in the form of subordination of one or more other classes of Bonds of
such series or by one or more other types of Credit Enhancement, such as a
letter of credit, insurance policy, guarantee or reserve fund, among others, or
a combination thereof. The amount and types of Credit Enhancement, the identity
of the entity providing it (if applicable) and related information with respect
to each type of Credit Enhancement, if any, will be set forth in the Prospectus
Supplement for a series of Bonds. See "Risk Factors--Limitations, Reduction and
Substitution of Credit Enhancement" and "Description of Credit Enhancement".
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Bonds, the
related Trust Fund may include guaranteed investment contracts pursuant to which
moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include certain other
agreements, such as interest rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to reduce the effects of interest
rate fluctuations on the Mortgage Loans on one or more classes of Bonds. 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
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relating to the termination thereof, will be described in the related Prospectus
Supplement. The related Prospectus Supplement will also identify the obligor
under the Cash Flow Agreement.
SERVICING OF MORTGAGE LOANS
GENERAL
The Mortgage Loans included in each Mortgage Pool will be serviced and
administered pursuant to a Servicing Agreement. A form of Servicing Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. However, the provisions of each Servicing Agreement will
vary depending upon the nature of the related Mortgage Pool. The following
summaries describe certain servicing-related provisions that may appear in a
Servicing Agreement for a Mortgage Pool that includes Mortgage Loans. The
related Prospectus Supplement will describe any servicing-related provision of
such a Servicing Agreement that materially differs from the description thereof
contained in this Prospectus. The summaries herein do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the related Servicing Agreement and the description of such
provisions in the related Prospectus Supplement.
THE MASTER SERVICER
The master servicer (the "Master Servicer"), if any, for a series of Bonds
will be named in the related Prospectus Supplement and may be an affiliate of
the Company. The Master Servicer is require to maintain a fidelity bond and
errors and omissions policy with respect to its officers and employees in
connection with its activities under a Servicing Agreement.
SPECIAL SERVICER
If and to the extent specified in the related Prospectus Supplement, a
special servicer (a "Special Servicer") may be a party to the related Servicing
Agreement or may be appointed by the Master Servicer or another specified party
to perform certain specified duties in respect of servicing the related Mortgage
Loans that would otherwise be performed by the Master Servicer (for example, the
workout and/or foreclosure of defaulted Mortgage Loans). The rights and
obligations of any Special Servicer will be specified in the related Prospectus
Supplement, and the Master Servicer will be liable for the performance of a
Special Servicer only if, and to the extent, set forth in such Prospectus
Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer for any Mortgage Pool, directly or through
Sub-Servicers, will each be obligated under the related Servicing Agreement to
service and administer the Mortgage Loans in such Mortgage Pool for the benefit
of the related Bondholders, in accordance with applicable law and further in
accordance with the terms of such Servicing Agreement, such Mortgage Loans and
any instrument of Credit Enhancement included in the related Trust Fund.
Subject to the foregoing, the Master Servicer and the Special Servicer will each
have full power and authority to do any and all things in connection with such
servicing and administration that it may deem necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that it
services and will be obligated to follow such collection procedures as it would
follow with respect to mortgage loans that are comparable to such Mortgage Loans
and held for its own
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account, provided (i) such procedures are consistent with the terms of the
related Servicing Agreement and (ii) do not impair recovery under any instrument
of Credit Enhancement included in the related Trust Fund. Consistent with the
foregoing, the Master Servicer and the Special Servicer will each be permitted,
in its discretion, unless otherwise specified in the related Prospectus
Supplement, to waive any Prepayment Premium, late payment charge or other charge
in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Servicing Agreement, for payment
of taxes, insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items; attempting to collect delinquent
payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
The related Prospectus Supplement will specify when and the extent to which
servicing of a Mortgage Loan is to be transferred from the Master Servicer to
the Special Servicer. In general, and subject to the discussion in the related
Prospectus Supplement, a Special Servicer will be responsible for the servicing
and administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) Mortgage Loans as to which the
related borrower has entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such a proceeding which
shall have remained in force undischarged or unstayed for a specified number of
days; and (iii) REO Properties. If so specified in the related Prospectus
Supplement, a Servicing Agreement also may provide that if a default on a
Mortgage Loan has occurred or, in the judgment of the related Master Servicer, a
payment default is reasonably foreseeable, the related Master Servicer may elect
to transfer the servicing thereof, in whole or in part, to the related Special
Servicer. Unless otherwise provided in the related Prospectus Supplement, when
the circumstances no longer warrant a Special Servicer's continuing to service a
particular Mortgage Loan (e.g., the related borrower is paying in accordance
with the forbearance arrangement entered into between the Special Servicer and
such borrower), the Master Servicer will resume the servicing duties with
respect thereto. If and to the extent provided in the related Servicing
Agreement and described in the related Prospectus Supplement, a Special Servicer
may perform certain limited duties in respect of Mortgage Loans for which the
Master Servicer is primarily responsible (including, if so specified, performing
property inspections and evaluating financial statements); and a Master Servicer
may perform certain limited duties in respect of any Mortgage Loan for which the
Special Servicer is primarily responsible (including, if so specified,
continuing to receive payments on such Mortgage Loan (including amounts
collected by the Special Servicer), making certain calculations with respect to
such Mortgage Loan and making remittances and preparing certain reports to the
Indenture Trustee and/or Bondholders with respect to such Mortgage Loan. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be responsible for filing and settling claims in respect of particular
Mortgage Loans under any applicable instrument of Credit Enhancement. See
"Description of Credit Enhancement".
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the
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Special Servicer is able to assess the success of any such corrective action or
the need for additional initiatives. The time within which the Special Servicer
can make the initial determination of appropriate action, evaluate the success
of corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose (or accept a deed to a Mortgaged Property in
lieu of foreclosure) on behalf of the Bondholders of the related series may vary
considerably depending on the particular Mortgage Loan, the Mortgaged Property,
the mortgagor, the presence of an acceptable party to assume the Mortgage Loan
and the laws of the jurisdiction in which the Mortgaged Property is located. If
a mortgagor files a bankruptcy petition, the Special Servicer may not be
permitted to accelerate the maturity of the Mortgage Loan or to foreclose on the
related Mortgaged Property for a considerable period of time. See "Certain Legal
Aspects of Mortgage Loans--Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectability of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Indenture Trustee's interest,
where permitted by local law and whenever applicable state law does not require
that a junior lienholder be named as a party defendant in foreclosure
proceedings in order to foreclose such junior lienholder's equity of redemption.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer also will be required to notify any superior lienholder in writing of
the existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer will each be required to take, on
behalf of the related Trust Fund, whatever actions are necessary to protect the
interests of the related Bondholders and/or to preserve the security of the
related Mortgage Loan. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or Special Servicer, as applicable, will be
required to advance the necessary funds to cure the default or reinstate the
Senior Lien, if such advance is in the best interests of the related Bondholders
and the Master Servicer or Special Servicer, as applicable, determines such
advances are recoverable out of payments on or proceeds of the related Mortgage
Loan.
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Servicing Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer and a Sub-Servicer (a "Sub-Servicing
Agreement") must provide for servicing of the applicable Mortgage Loans
consistent with the related Servicing Agreement. The Master Servicer and
Special Servicer in respect of any Mortgage Pool will each be required to
monitor the performance of Sub-Servicers retained by it and will have the right
to remove a Sub-Servicer retained by it at any time it considers such removal to
be in the best interests of Bondholders.
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Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Servicing Agreement is
sufficient to pay such fees. Each Sub-Servicer will be reimbursed by the Master
Servicer or Special Servicer, as the case may be, that retained it for certain
expenditures which it makes, generally to the same extent such Master Servicer
or Special Servicer would be reimbursed under a Servicing Agreement. See "--
Collection Account" and "--Servicing Compensation and Payment of Expenses".
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master Servicer and the Special Servicer may each agree to modify,
waive or amend any term of any Mortgage Loan serviced by it in a manner
consistent with the applicable Servicing Standard; provided that, unless
otherwise set forth in the related Prospectus Supplement, the modification,
waiver or amendment (i) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (ii) will not, in the
judgment of the Master Servicer or the Special Servicer, as the case may be,
materially impair the security for the Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon and (iii) will not adversely affect the
coverage under any applicable instrument of Credit Enhancement. Unless
otherwise provided in the related Prospectus Supplement, the Special Servicer
also may agree to any other modification, waiver or amendment if, in its
judgment, (i) a material default on the Mortgage Loan has occurred or a payment
default is imminent, (ii) such modification, waiver or amendment is reasonably
likely to produce a greater recovery with respect to the Mortgage Loan, taking
into account the time value of money, than would liquidation and (iii) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Enhancement.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of the
Indenture Trustee, may at any time institute foreclosure proceedings, exercise
any power of sale contained in the related Mortgage, obtain a deed in lieu of
foreclosure, or otherwise acquire title to the related Mortgaged Property, by
operation of law or otherwise. Unless otherwise specified in the related
Prospectus Supplement, the Special Servicer may not, however, acquire title to
any Mortgaged Property, have a receiver of rents appointed with respect to any
Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Indenture Trustee, for the benefit of the related
series of Bondholders, or any other specified person to be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an
"operator" of such Mortgaged Property within the meaning of certain federal
environmental laws, unless the Special Servicer has previously received a report
prepared by a person who regularly conducts environmental audits (which report
will be an expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a
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greater recovery, taking into account the time value of money, than not
taking such actions. See "Certain Legal Aspects of Mortgage Loans--
Environmental Considerations".
A Servicing Agreement may grant to the Master Servicer, the Special
Servicer, a provider of Credit Enhancement and/or the holder or holders of
certain classes of the related series of Bonds a right of first refusal to
purchase from the Trust Fund, at a predetermined price (which, if less than the
Purchase Price, will be specified in the related Prospectus Supplement), any
Mortgage Loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may offer to sell any defaulted Mortgage Loan
if and when the Special Servicer determines, consistent with its normal
servicing procedures, that such a sale would produce a greater recovery, taking
into account the time value of money, than would liquidation of the related
Mortgaged Property. In the absence of any such sale, the Special Servicer will
generally be required to proceed against the related Mortgaged Property, subject
to the discussion above.
The Special Servicer will generally be required to attempt to sell any
Mortgaged Property so acquired on the same terms and conditions it would if it
were the owner. If the Trust Fund acquires title to any Mortgaged Property, the
Special Servicer, on behalf of the Trust Fund, may retain an independent
contractor to manage and operate such property. The retention of an independent
contractor, however, will not relieve the Special Servicer of its obligation to
manage such Mortgaged Property as required under the related Servicing
Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Special Servicer and/or the Master Servicer in connection with
such Mortgage Loan, then, to the extent that such shortfall is not covered by
any instrument or fund constituting Credit Enhancement, the Trust Fund will
realize a loss in the amount of such shortfall. The Special Servicer and/or the
Master Servicer will be entitled to reimbursement out of the Liquidation
Proceeds recovered on any defaulted Mortgage Loan, prior to the distribution of
such Liquidation Proceeds to Bondholders, any and all amounts that represent
unpaid servicing compensation in respect of the Mortgage Loan, unreimbursed
servicing expenses incurred with respect to the Mortgage Loan and any
unreimbursed advances of delinquent payments made with respect to the Mortgage
Loan. In addition, if and to the extent set forth in the related Prospectus
Supplement, amounts otherwise distributable on the Bonds may be further reduced
by interest payable to the Master Servicer and/or Special Servicer on such
servicing expenses and advances.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Servicing Agreement will require the Master Servicer (or the Special Servicer
with respect to Mortgage Loans serviced thereby) to use reasonable efforts to
cause each Mortgage Loan borrower to maintain a hazard insurance policy that
provides for such coverage as is required under the related Mortgage or, if the
Mortgage permits the holder thereof to dictate to the borrower the insurance
coverage to be maintained on the related Mortgaged Property, such coverage as is
consistent with the Master Servicer's (or Special Servicer's) normal servicing
procedures. Unless otherwise specified in the related Prospectus Supplement,
such coverage generally will be in an amount equal to the lesser of the
principal balance owing on such Mortgage Loan and the replacement cost of the
related Mortgaged Property. The ability of a Master Servicer (or Special
Servicer) to assure that hazard insurance proceeds are appropriately applied may
be dependent upon its being named as an additional insured or loss payee under
any hazard insurance policy and under any other insurance policy referred to
below, or upon the extent to which information concerning covered losses is
furnished by borrowers. All amounts collected by a Master Servicer (or Special
Servicer) under any such policy (except for amounts to be applied to the
restoration or repair of the Mortgaged Property or released to the
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borrower in accordance with the Master Servicer's (or Special Servicer's) normal
servicing procedures and/or to the terms and conditions of the related Mortgage
and Mortgage Note) will be deposited in the related Collection Account. The
Servicing Agreement may provide that the Master Servicer (or Special Servicer)
may satisfy its obligation to cause each borrower to maintain such a hazard
insurance policy by maintaining a blanket policy insuring against hazard losses
on the Mortgage Loans in a Trust Fund. If such blanket policy contains a
deductible clause, the Master Servicer (or Special Servicer) will be required,
in the event of a casualty covered by such blanket policy, to deposit in the
related Collection Account all additional sums that would have been deposited
therein under an individual policy but were not because of such deductible
clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other water-
related causes, earth movement (including earthquakes, landslides and mudflows),
wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged Property
may not be insured for losses arising from any such cause unless the related
Mortgage specifically requires, or permits the holder thereof to require, such
coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Indenture Trustee may have under any such provision in a manner consistent with
the Master Servicer's (or Special Servicer's) normal servicing procedures.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer or Special Servicer, as applicable, will be entitled to retain as
additional servicing compensation any fee collected in connection with the
permitted transfer of a Mortgaged Property. See "Certain Legal Aspects of
Mortgage Loans--Due-on-Sale and Due-on-Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of Bonds will
come from the periodic payment to it of a specified portion of the interest
payments on each Mortgage Loan in the related Trust Fund, including Mortgage
Loans serviced by the related Special Servicer. If and to the extent described
in the related
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Prospectus Supplement, a Special Servicer's primary compensation with respect to
a series of Bonds may consist of any or all of the following components: (i) a
specified portion of the interest payments on each Mortgage Loan in the related
Trust Fund, whether or not serviced by it; (ii) an additional specified portion
of the interest payments on each Mortgage Loan then currently serviced by it;
and (iii) subject to any specified limitations, a fixed percentage of some or
all of the collections and proceeds received with respect to each Mortgage Loan
which was at any time serviced by it, including Mortgage Loans for which
servicing was returned to the Master Servicer. Insofar as any portion of the
Master Servicer's or Special Servicer's compensation consists of a specified
portion of the interest payments on a Mortgage Loan, such compensation will
generally be based on a percentage of the principal balance of such Mortgage
Loan outstanding from time to time and, accordingly, will decrease with the
amortization of the Mortgage Loan. As additional compensation, a Master Servicer
or Special Servicer may be entitled to retain all or a portion of late payment
charges, Prepayment Premiums, modification fees and other fees collected from
borrowers and any interest or other income that may be earned on funds held in
the related Collection Account. A more detailed description of each Master
Servicer's and Special Servicer's compensation will be provided in the related
Prospectus Supplement. Any Sub-Servicer will receive as its sub-servicing
compensation a portion of the servicing compensation to be paid to the Master
Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Indenture Trustee and any custodians appointed thereby and payment of
expenses incurred in connection with distributions and reports to Bondholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, each
Servicing Agreement will provide that on or before a specified date in each
year, beginning the first such date that is at least a specified number of
months after the Cut-off Date, there will be furnished to the related Indenture
Trustee a report of a firm of independent certified public accountants stating
that (i) it has obtained a letter of representation regarding certain matters
from the management of the Master Servicer which includes an assertion that the
Master Servicer has complied with certain minimum mortgage loan servicing
standards (to the extent applicable to commercial and multifamily mortgage
loans), identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the Master Servicer's servicing of commercial and multifamily mortgage loans
during the most recently completed calendar year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that, in the opinion of such firm, such standards require it to
report. In rendering its report such firm may rely, as to the matters relating
to the direct servicing of commercial and multifamily mortgage loans by Sub-
Servicers, upon comparable reports of firms of independent public accountants
rendered on the basis of examinations conducted in accordance the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
The Prospectus Supplement may provide that additional reports of independent
certified public accountants relating to the servicing of mortgage loans may be
required to be delivered to the Indenture Trustee.
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Each Servicing Agreement will also provide that, on or before a specified
date in each year, beginning the first such date that is at least a specified
number of months after the Cut-off Date, the Master Servicer and Special
Servicer shall each deliver to the related Indenture Trustee an annual statement
signed by one or more officers of the Master Servicer or the Special Servicer,
as the case may be, to the effect that, to the best knowledge of each such
officer, the Master Servicer or the Special Servicer, as the case may be, has
fulfilled in all material respects its obligations under the Servicing Agreement
throughout the preceding year or, if there has been a material default in the
fulfillment of any such obligation, such statement shall specify each such known
default and the nature and status thereof. Such statement may be provided as a
single form making the required statements as to more than one Servicing
Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Bondholders upon written
request to the Indenture Trustee.
DESCRIPTION OF THE BONDS
GENERAL
The Bonds will be issued in series. Each series of Bonds (or, in certain
instances, two or more series of Bonds) will be issued pursuant to an Indenture
between the Company and the Indenture Trustee, similar to the form filed as an
exhibit to the Registration Statement of which this Prospectus is a part. Each
Indenture, Trust Agreement and Servicing Agreement will be filed with the
Securities and Exchange Commission as an exhibit to a Current Report on Form 8-
K. The following summaries (together with additional summaries under "The
Agreements" below) describe certain provisions relating to the Bonds common to
each of the Agreements. 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 related Prospectus
Supplement. Wherever particular sections or defined terms of the Agreements are
referred to herein, such sections or defined terms are thereby incorporated
herein by reference.
Bonds of each series covered by a particular Indenture will evidence
indebtedness of the related Issuer secured by a separate Trust Fund. A Trust
Fund will consist of, to the extent provided in the Indenture: (i) such Mortgage
Loans (and the related mortgage documents) or interests therein underlying a
particular series of Bonds as from time to time are subject to the Indenture,
exclusive of, if specified in the related Prospectus Supplement, any Spread or
other interest retained by the Company or any of its affiliates with respect to
each such Mortgage Loan; (ii) such assets including, without limitation, all
payments and collections in respect of the Mortgage Loans due after the related
Cut-off Date, as from time to time are identified as deposited in respect
thereof in the related Collection Account as described below; (iii) any property
acquired in respect of Mortgage Loans in the Trust Fund, whether through
foreclosure of such Mortgage Loans or by deed in lieu of foreclosure or
otherwise; (iv) hazard insurance policies and Primary Insurance Policies, if
any, maintained in respect of Mortgage Loans in the Trust Fund and certain
proceeds of such policies; (v) certain rights of the Company under any Mortgage
Loan Purchase Agreement, including in respect of any representations and
warranties therein; and (vi) any combination, as and to the extent specified in
the related Prospectus Supplement, of a Financial Guaranty Insurance Policy,
Letter of Credit, Purchase Obligation, Mortgage Pool Insurance Policy, Special
Hazard Insurance Policy or Bankruptcy Bond as described under "Description of
Credit Enhancement." To the extent that any Trust Fund includes participations
in Mortgage Loans, the related Prospectus Supplement will describe the material
terms and conditions of such participations.
Each series of Bonds may consist of any one or a combination of the
following: (i) a single class of Bonds; (ii) two or more classes of Bonds, one
or more classes of which will be senior ("Senior Bonds")
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in right of payment to one or more of the other classes of Bonds, if any
(collectively, the "Subordinate Bonds"), and as to which certain classes of
Bonds may be senior to other classes of Senior Bonds or Subordinate Bonds, as
described in the respective Prospectus Supplement (any such series, a
"Senior/Subordinate Series"); (iii) two or more classes of Bonds, one or more
classes ("Strip Bonds") of which will be entitled to (a) principal
distributions, with disproportionate, nominal or no interest distributions or
(b) interest distributions, with disproportionate, nominal or no principal
distributions; (iv) two or more classes of Bonds which differ as to the timing,
sequential order, rate, pass-through rate or amount of distributions of
principal or interest or both, or as to which distributions of principal or
interest or both on any such class may be made upon the occurrence of specified
events, in accordance with a schedule or formula (including "planned
amortization classes" and "targeted amortization classes"), or on the basis of
collections from designated portions of the Mortgage Pool, and which classes may
include one or more classes of Bonds ("Accrual Bonds") with respect to which
certain accrued interest will not be distributed but rather will be added to the
principal balance thereof on each Payment Date for the period described in the
related Prospectus Supplement; or (v) other types of classes of Bonds, as
described in the related Prospectus Supplement. The Certificates, insofar as
they represent the beneficial ownership interest in the Issuer, will be
subordinate to the Bonds. As to each series, all Bonds offered hereby (the
"Bonds") will be rated in one of the four highest rating categories by one or
more Rating Agencies. Credit Enhancement for the Bonds of each series may be
provided by a Financial Guaranty Insurance Policy, Mortgage Pool Insurance
Policy, Special Hazard Insurance Policy, Bankruptcy Bond, Letter of Credit,
Purchase Obligation, Overcollateralization or Reserve Fund as described under
"Description of Credit Enhancement," by the subordination of one or more other
classes of Subordinate Bonds or by any combination of the foregoing.
FORM OF BONDS
Except as described below, the Bonds of each series will be issued in
physical, fully registered form only in the denominations specified in the
related Prospectus Supplement, and will be transferrable and exchangeable at the
corporate trust office of the registrar (the "Bond Registrar") named in the
related Prospectus Supplement. No service charge will be made for any
registration of exchange or transfer of Bonds, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge. The term "Bondholder" or "Holder" as used herein refers to the entity
whose name appears on the records of the Bond Registrar (consisting of or
including the "Bond Register") as the registered holder of a Bond, except as
otherwise indicated in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, specified classes of
a series of Bonds will be initially issued through the book-entry facilities of
The Depository Trust Company ("DTC"). As to any such class of Bonds ("DTC
Registered Bonds"), the record Holder of such Bonds will be DTC's nominee. DTC
is a limited-purpose trust company organized under the laws of the State of New
York, which holds securities for its participating organizations
("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,
"Intermediaries") have indirect access to DTC's clearance system.
No person acquiring an interest in any DTC Registered Bonds (each such
person, a "Beneficial Owner") will be entitled to receive a Bond representing
such interest in registered, certificated form, unless either (i) DTC ceases to
act as depository in respect thereof and a successor depository is not obtained,
or (ii) the Company elects in its sole discretion to discontinue the
registration of such Bonds through DTC. Prior to any such event, Beneficial
Owners will not be recognized by the Indenture Trustee or the Master Servicer as
Holders of the related Bonds for purposes of the related Indenture, and
Beneficial Owners will
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be able to exercise their rights as owners of such Bonds only indirectly through
DTC, Participants and Intermediaries. Any Beneficial Owner that desires to
purchase, sell or otherwise transfer any interest in DTC Registered Bonds may do
so only through DTC, either directly if such Beneficial Owner is a Participant
or indirectly through Participants and, if applicable, Intermediaries. Pursuant
to the procedures of DTC, transfers of the beneficial ownership of any DTC
Registered Bonds will be required to be made in minimum denominations specified
in the related Prospectus Supplement. The ability of a Beneficial Owner to
pledge DTC Registered Bonds to persons or entities that are not Participants in
the DTC system, or to otherwise act with respect to such Bonds, may be limited
because of the lack of physical certificates evidencing such Bonds and because
DTC may act only on behalf of Participants.
Distributions in respect of the DTC Registered Bonds will be forwarded by
the Indenture Trustee or other specified person 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 Intermediaries. Accordingly, Beneficial Owners may
experience delays in the receipt of payments in respect of their Bonds. Under
DTC's procedures, DTC will take actions permitted to be taken by Holders of any
class of DTC Registered Bonds under the Indenture only at the direction of one
or more Participants to whose account the DTC Registered Bonds are credited and
whose aggregate holdings represent no less than any minimum amount of Percentage
Interests required therefor. DTC may take conflicting actions with respect to
any action of Holders of Bonds of any Class to the extent that Participants
authorize such actions. None of the Master Servicer, the Company, the Indenture
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 Bonds, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
ASSIGNMENT OF TRUST FUND ASSETS
At the time of issuance of a series of Bonds, the Company will assign, or
cause to be assigned, to the related Indenture Trustee (or its nominee), without
recourse, the Mortgage Loans being included in the related Trust Fund, together
with all principal and interest received on or with respect to such Mortgage
Loans after the Cut-off Date, other than principal and interest due on or before
the Cut-off Date. If specified in the related Prospectus Supplement, the
Company or any of its affiliates may retain the Spread, if any, for itself or
transfer the same to others. Each Mortgage Loan will be identified in a
schedule appearing as an exhibit to the related Servicing Agreement. Such
schedule will include, among other things, information as to the principal
balance of each Mortgage Loan in the related Trust Fund as of the Cut-off Date,
as well as information respecting the Mortgage Rate, the currently scheduled
monthly payment of principal and interest, the maturity of the Mortgage Note and
the Loan-to-Value Ratio at origination or modification (without regard to any
secondary financing).
As to each series of Bonds, the foregoing assignment of the Mortgage Loans
to the Indenture Trustee will be made for the purpose of granting a security
interest in the Mortgage Loans to the Indenture Trustee to secure the Bonds. As
to any series of Bonds where the Issuer is an owner trust, immediately prior to
such pledge to the Indenture Trustee, the Company will convey the Mortgage Loans
to the Owner Trustee pursuant to the Trust Agreement.
In addition, the Company will, as to each Mortgage Loan (other than
Contracts), deliver, or cause to be delivered, to the related Indenture Trustee
(or to the custodian described below) the Mortgage Note endorsed, without
recourse, either in blank or to the order of the Indenture Trustee (or a nominee
thereof), the Mortgage with evidence of recording indicated thereon (except for
any Mortgage not returned from the public recording office), an assignment of
the Mortgage in blank or to the Indenture Trustee (or a nominee thereof) in
recordable form, together with any intervening assignments of the Mortgage with
evidence of recording thereon (except for any such assignment not returned from
the public recording
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office), and, if applicable, any riders or modifications to such Mortgage Note
and Mortgage, together with certain other documents at such times as set forth
in the related Servicing Agreement. Such assignments may be blanket assignments
covering Mortgages on Mortgaged Properties located in the same county, if
permitted by law. Notwithstanding the foregoing, a Trust Fund may include
Mortgage Loans where the original Mortgage Note is not delivered to the
Indenture Trustee if the Company delivers, or causes to be delivered, to the
related Indenture 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. In addition, if the Company cannot deliver,
with respect to any Mortgage Loan, the Mortgage or any intervening assignment
with evidence of recording thereon concurrently with the execution and delivery
of the related Servicing Agreement because of a delay caused by the public
recording office, the Company will deliver, or cause to be delivered, to the
related Indenture Trustee (or the custodian) a true and correct photocopy of
such Mortgage or assignment as submitted for recording. The Company will
deliver, or cause to be delivered, to the related Indenture Trustee (or the
custodian) such Mortgage or assignment with evidence of recording indicated
thereon after receipt thereof from the public recording office. If the Company
cannot deliver, with respect to any Mortgage Loan, the Mortgage or any
intervening assignment with evidence of recording thereon concurrently with the
execution and delivery of the related Servicing Agreement because such Mortgage
or assignment has been lost, the Company will deliver, or cause to be delivered,
to the related Indenture Trustee (or the custodian) a true and correct photocopy
of such Mortgage or assignment with evidence of recording thereon. Assignments
of the Mortgage Loans to the Indenture Trustee (or a nominee thereof) will be
recorded in the appropriate public recording office, except in states where, in
the opinion of counsel acceptable to the Indenture Trustee, such recording is
not required to protect the Indenture Trustee's interests in the Mortgage Loan
against the claim of any subsequent transferee or any successor to or creditor
of the Company or the originator of such Mortgage Loan, or except as otherwise
specified in the related Prospectus Supplement as to any series of Bonds. In
addition, unless specified in the related Prospectus Supplement, the Company
will, as to each Contract, deliver, or cause to be delivered, the original
Contract endorsed, without recourse, to the order of the Indenture Trustee and
copies of documents and instruments related to the Contract and the security
interest in the Manufactured Home securing the Contract, together with a blanket
assignment to the Indenture Trustee of all Contracts in the related Trust Fund
and such documents and instruments. In order to give notice of the right, title
and interest of the Bondholders to the Contracts, the Company will cause to be
executed and delivered to the Indenture Trustee a UCC-1 financing statement
identifying the Indenture Trustee as the secured party and identifying all
Contracts as collateral.
The Indenture Trustee (or the custodian hereinafter referred to) will hold
such documents in trust for the benefit of the related Securityholders, and
generally will review such documents within 90 days after receipt thereof in the
case of documents delivered concurrently with the execution and delivery of the
related Indenture, and within the time period specified in the related Indenture
in the case of all other documents delivered. If any such document is found to
be missing or defective in any material respect, the Indenture Trustee (or such
custodian) will be required to promptly so notify the Master Servicer, the
Company, and the related Seller. If the related Seller does not cure the
omission or defect within a specified period after notice is given thereto by
the Indenture Trustee, and such omission or defect materially and adversely
affects the interests of Securityholders in the affected Mortgage Loan, then the
related Seller will be obligated to purchase such Mortgage Loan from the
Indenture Trustee at its Purchase Price (or, if and to the extent it would
otherwise be permitted to do so for a breach of representation and warranty as
described under "The Mortgage Pools--Representations and Warranties;
Repurchases," to substitute for such Mortgage Loan). The Indenture Trustee will
be obligated to enforce this obligation of the Seller to the extent described
above under "The Mortgage Pools--Representations and Warranties; Repurchases,"
but there can be no assurance that the applicable Seller will fulfill its
obligation to purchase (or substitute for) the affected Mortgage Loan as
described above. Except as described in the Prospectus Supplement, neither the
Master Servicer nor the Company will be obligated to purchase or substitute for
such Mortgage Loan if the Seller defaults on its obligation to do so. This
purchase or substitution
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obligation generally constitutes the sole remedy available to the related
Securityholders and the related Indenture Trustee for omission of, or a material
defect in, a constituent document. Any affected Mortgage Loan not so purchased
or substituted for shall remain in the related Trust Fund.
The Indenture Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Mortgage Pool, and to maintain possession of and, if applicable, to
review, the documents relating to such Mortgage Loans, in any case as the agent
of the Indenture Trustee. The identity of any such custodian to be appointed on
the date of initial issuance of the Bonds will be set forth in the related
Prospectus Supplement. Any such custodian may be an affiliate of the Company or
the Master Servicer.
With respect to the Mortgage Loans in a Mortgage Pool, except in the case
of a Designated Seller Transaction, the Company will make certain
representations and warranties as to the types and geographical concentrations
of such Mortgage Loans and as to the accuracy, in all material respects, of
certain identifying information furnished to the related Indenture Trustee in
respect of each such Mortgage Loan (e.g., original Loan-to-Value Ratio,
principal balance as of the Cut-off Date, Mortgage Rate and maturity). Upon a
breach of any such representation which materially and adversely affects the
interests of the Securityholders in a Mortgage Loan, the Company will be
obligated to cure the breach in all material respects, to purchase the Mortgage
Loan at its Purchase Price or, if specified in the related Prospectus
Supplement, to substitute for such Mortgage Loan a Qualified Substitute Mortgage
Loan in accordance with the provisions for such substitution by Affiliated
Sellers as described above under "The Mortgage Pools--Representations by
Sellers." However, the Company will not be required to repurchase or substitute
for any Mortgage Loan in connection with a breach of a representation and
warranty if the substance of any such breach also constitutes fraud in the
origination of the related Mortgage Loan. This purchase or substitution
obligation generally constitutes the sole remedy available to Securityholders or
the Indenture Trustee for such a breach of representation by the Company. Any
Mortgage Loan not so purchased or substituted for shall remain in the related
Trust Fund.
Pursuant to the related Servicing Agreement, the Master Servicer for any
Mortgage Pool, either directly or through Subservicers, will service and
administer the Mortgage Loans included in such Mortgage Pool and assigned to the
related Indenture Trustee as more fully set forth under "Servicing of Mortgage
Loans." The Master Servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the Servicing Agreement.
COLLECTION ACCOUNT
General. The Master Servicer and/or the Indenture Trustee will, as to each
Trust Fund, establish and maintain or cause to be established and maintained one
or more separate accounts for the collection of payments on the related Mortgage
Loans constituting such Trust Fund (collectively, the "Collection Account"),
which will be established so as to comply with the standards of each Rating
Agency that has rated any one or more classes of Bonds of the related series. A
Collection Account may be maintained either as an interest-bearing or a non-
interest-bearing account, and the funds held therein may be held as cash or
invested in United States government securities and other investment grade
obligations specified in the related Servicing Agreement or Indenture
("Permitted Investments"). Any interest or other income earned on funds in the
Collection Account will be not paid to the related Master Servicer or Indenture
Trustee as additional compensation. If permitted by such Rating Agency or
Agencies and so specified in the related Prospectus Supplement, a Collection
Account may contain funds relating to more than one series of collateralized
mortgage bonds and may contain other funds representing payments on mortgage
loans owned by the related Master Servicer or serviced by it on behalf of
others.
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Deposits. The related Master Servicer, Indenture Trustee or Special
Servicer will be required to deposit or cause to be deposited in the Collection
Account for each Trust Fund within a certain period following receipt (in the
case of collections and payments), the following payments and collections
received, or advances made, by the Master Servicer, the Indenture Trustee or any
Special Servicer subsequent to the Cut-off Date with respect to the Mortgage
Loans in such Trust Fund (other than payments due on or before the Cut-off
Date):
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including any default interest collected, in each case net of any portion
thereof retained by the Master Servicer, any Special Servicer or Sub-
Servicer as its servicing compensation or as compensation to the Indenture
Trustee, and further net of any Spread;
(iii) all proceeds received under any hazard, title, primary mortgage
or other insurance policy that provides coverage with respect to a
particular Mortgaged Property or the related Mortgage Loan (other than
proceeds applied to the restoration of the property or released to the
related borrower in accordance with the customary servicing practices of
the Master Servicer (or, if applicable, a Special Servicer) and/or the
terms and conditions of the related Mortgage (collectively, "Insurance
Proceeds") and all other amounts received and retained in connection with
the liquidation of defaulted Mortgage Loans or property acquired in respect
thereof, by foreclosure or otherwise ("Liquidation Proceeds"), together
with the net operating income (less reasonable reserves for future
expenses) derived from the operation of any Mortgaged Properties acquired
by the Trust Fund through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund
that constitutes Credit Enhancement for the related series of Bonds as
described under "Description of Credit Enhancement";
(v) any advances made as described under "--Advances" below;
(vi) any amounts paid under any Cash Flow Agreement;
(vii) all proceeds of any Mortgage Loan purchased (or, in the case of
a substitution, certain amounts representing a principal adjustment) by the
Master Servicer, the Company, a Seller or any other person pursuant to the
terms of the related Servicing Agreement as described under "The Mortgage
Pools--Representations by Sellers," "Servicing of Mortgage Loans--
Realization Upon and Sale of Defaulted Mortgage Loans," "--Assignment of
Trust Fund Assets" above, "The Servicing Agreement--Termination" and
"Purchase Obligations";
(viii) any amounts paid by the Master Servicer to cover Prepayment
Interest Shortfalls arising out of the prepayment of Mortgage Loans as
described under "Servicing of Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses; Spread";
(ix) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or a Special Servicer, any
payments on account of modification or assumption fees, late payment
charges or Prepayment Premiums on the Mortgage Loans;
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(x) any amount required to be deposited by the Master Servicer or
the Indenture Trustee in connection with losses realized on investments for
the benefit of the Master Servicer or the Indenture Trustee, as the case
may be, of funds held in the Collection Account; and
(xi) any other amounts required to be deposited in the Collection
Account as provided in the related Servicing Agreement and described herein
or in the related Prospectus Supplement.
Withdrawals. A Master Servicer, Indenture Trustee or Special Servicer may
make withdrawals from the Collection Account for each Trust Fund for any of the
following purposes:
(i) to make distributions to the related Securityholders on each
Payment Date;
(ii) to reimburse the Master Servicer or any other specified person
for unreimbursed amounts advanced by it as described under "--Advances"
below in respect of Mortgage Loans in the Trust Fund, such reimbursement to
be made out of amounts received which were identified and applied by the
Master Servicer as late collections of interest (net of related servicing
fees) on and principal of the particular Mortgage Loans with respect to
which the advances were made or out of amounts drawn under any form of
Credit Enhancement with respect to such Mortgage Loans;
(iii) to reimburse the Master Servicer or a Special Servicer for
unpaid servicing fees earned by it and certain unreimbursed servicing
expenses incurred by it with respect to Mortgage Loans in the Trust Fund
and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent Liquidation Proceeds and Insurance Proceeds
collected on the particular Mortgage Loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were incurred or out of amounts drawn under
any form of Credit Enhancement with respect to such Mortgage Loans and
properties;
(iv) to reimburse the Master Servicer or any other specified person
for any advances described in clause (ii) above made by it and any
servicing expenses referred to in clause (iii) above incurred by it which,
in the good faith judgment of the Master Servicer or such other person,
will not be recoverable from the amounts described in clauses (ii) and
(iii), respectively, such reimbursement to be made from amounts collected
on other Mortgage Loans in the Trust Fund or, if and to the extent so
provided by the related Servicing Agreement and described in the related
Prospectus Supplement, only from that portion of amounts collected on such
other Mortgage Loans that is otherwise distributable on one or more classes
of Subordinate Bonds of the related series;
(v) if and to the extent described in the related Prospectus
Supplement, to pay the Master Servicer, a Special Servicer or another
specified entity (including a provider of Credit Enhancement) interest
accrued on the advances described in clause (ii) above made by it and the
servicing expenses described in clause (iii) above incurred by it while
such remain outstanding and unreimbursed;
(vi) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to a Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "Servicing of
Mortgage Loans--Realization Upon Defaulted Mortgage Loans";
(vii) to reimburse the Master Servicer, the Company, or any of their
respective directors, officers, employees and agents, as the case may be,
for certain expenses, costs and liabilities
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incurred thereby, as and to the extent described under "The Servicing
Agreement--Certain Matters Regarding the Master Servicer and the Company";
(viii) if and to the extent described in the related Prospectus
Supplement, to pay the fees of the Owner Trustee and the Indenture Trustee;
(ix) to reimburse the Owner Trustee or the Indenture Trustee or any
of its directors, officers, employees and agents, as the case may be, for
certain expenses, costs and liabilities incurred thereby, as and to the
extent described under "The Agreements";
(x) if specified in the related Prospectus Supplement, to pay the
Master Servicer or the Indenture Trustee, as additional compensation,
interest and investment income earned in respect of amounts held in the
Collection Account;
(xi) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any Mortgaged
Property acquired by the Trust Fund by foreclosure or otherwise;
(xii) to pay for the cost of an independent appraiser or other
expert in real estate matters retained to determine a fair sale price for a
defaulted Mortgage Loan or a property acquired in respect thereof in
connection with the liquidation of such Mortgage Loan or property;
(xiii) to pay for the cost of various opinions of counsel obtained
pursuant to the related Indenture for the benefit of the related
Bondholders;
(xiv) to pay to itself, the Company, a Seller or any other
appropriate person all amounts received with respect to each Mortgage Loan
purchased, repurchased or removed from the Trust Fund pursuant to the terms
of the related Servicing Agreement and not required to be distributed as of
the date on which the related Purchase Price is determined;
(xv) to make any other withdrawals permitted by the related
Servicing Agreement and described in the related Prospectus Supplement; and
(xvi) to clear and terminate the Collection Account upon the
termination of the Trust Fund.
DISTRIBUTIONS
Distributions on the Bonds of each series will be made by or on behalf of
the related Indenture Trustee or Master Servicer on each Payment Date as
specified in the related Prospectus Supplement from the Available Distribution
Amount for such series and such Payment Date. The "Available Distribution
Amount" for any series of Bonds and any Payment Date will generally refer to the
total of all payments or other collections (or advances in lieu thereof) on,
under or in respect of the Mortgage Loans and any other Trust Fund Assets
included in the related Trust Fund that are available for distribution to the
Bondholders of such series on such date. The particular components of the
Available Distribution Amount for any series on each Payment Date will be more
specifically described in the related Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Bonds of each series (other than the final distribution in
retirement of any such Bond) will be made to the persons in whose names such
Bonds are registered at the close of business on the last business day of the
month preceding the month in which the applicable Payment Date occurs (the
"Record Date"), and the amount
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of each distribution will be determined as of the close of business on the date
(the "Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Bonds on each Payment Date will be
allocated pro rata among the outstanding Bonds in such class. Payments will be
made either by wire transfer in immediately available funds to the account of a
Bondholder at a bank or other entity having appropriate facilities therefor, if
such Bondholder has provided the Indenture Trustee or other person required to
make such payments with wiring instructions no later than five business days
prior to the related Record Date or such other date specified in the related
Prospectus Supplement (and, if so provided in the related Prospectus Supplement,
such Bondholder holds Bonds in the requisite amount or denomination specified
therein), or by check mailed to the address of such Bondholder as it appears on
the Bond Register; provided, however, that the final distribution in retirement
of any class of Bonds will be made only upon presentation and surrender of such
Bonds at the location specified in the notice to Bondholders of such final
distribution. Payments will be made to each Bondholder in accordance with such
holder's Percentage Interest in a particular class. The ("Percentage Interest")
represented by a Bond of a particular class will be equal to the percentage
obtained by dividing the initial principal balance or notional amount of such
Bond by the aggregate initial amount or notional balance of all the Bonds of
such class. In addition, amounts remaining in the Payment Account on each
Payment Date after payments on the Bonds will be applied for the purposes set
forth in the Agreements, as described in the related Prospectus Supplement,
including distributions on the related Bonds or release to the Company. Any
amounts so distributed on the Bonds or released to the Company will be released
from the lien of the Indenture.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE BONDS
Each class of Bonds of each series may have a different Interest Rate,
which may be fixed, variable or adjustable, or any combination of two or more
such rates. The related Prospectus Supplement will specify the Interest Rate
or, in the case of a variable or adjustable Interest Rate, the method for
determining the Interest Rate, for each class. Interest on the Bonds of each
series will be calculated on the basis of a specified period (generally one
month) and a 360-day year.
Distributions of interest in respect of the Bonds of any class (other than
any class of Accrual Bonds and other than any class of Strip Bonds that is not
entitled to any distributions of interest) will be made on each Payment Date
based on the Accrued Bond Interest for such class and such Payment Date, subject
to the sufficiency of the portion of the Available Distribution Amount allocable
to such class on such Payment Date. Prior to the time interest is distributable
on any class of Accrual Bonds, the amount of Accrued Bond Interest otherwise
distributable on such class will be added to the principal balance thereof on
each Payment Date. With respect to each class of Bonds (other than certain
classes of Strip Bonds), "Accrued Bond Interest" for each Payment Date will be
equal to interest at the applicable Interest Rate accrued for a specified period
(generally one month) on the outstanding principal balance thereof immediately
prior to such Payment Date. Accrued Bond Interest for each Payment Date on
Strip Bonds entitled to distributions of interest will be similarly calculated
except that it will accrue on a notional amount that is either (i) based on the
principal balances of some or all of the Mortgage Loans in the related Trust
Fund or (ii) equal to the principal balances of one or more other classes of
Bonds of the same series. Reference to such a notional amount with respect to a
class of Strip Bonds is solely for convenience in making certain calculations
and does not represent the right to receive any distribution of principal. If
so specified in the related Prospectus Supplement, the amount of Accrued Bond
Interest that is otherwise distributable on (or, in the case of Accrual Bonds,
that may otherwise be added to the principal balance of) one or more classes of
the Bonds of a series will be reduced to the extent that any Prepayment Interest
Shortfalls, as described under "Yield and Maturity Considerations", exceed the
amount of any sums (including, if and to the extent specified in the related
Prospectus Supplement, the Master Servicer's servicing compensation) that are
applied to offset such shortfalls. The particular manner in which such
shortfalls will be allocated among some or all of the classes of Bonds of that
series will be specified in the related Prospectus Supplement. The related
Prospectus Supplement will also describe the extent to which the amount of
Accrued Bond
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Interest that is otherwise distributable on (or, in the case of Accrual Bonds,
that may otherwise be added to the principal balance of) a class of Bonds may be
reduced as a result of any other contingencies, including delinquencies, losses
and Deferred Interest on or in respect of the related Mortgage Loans or
application of the Relief Act with respect to such Mortgage Loans. Any reduction
in the amount of Accrued Bond Interest otherwise distributable on a class of
Bonds by reason of the allocation to such class of a portion of any Deferred
Interest on or in respect of the related Mortgage Loans will result in a
corresponding increase in the principal balance of such class.
As and to the extent described in the related Prospectus Supplement,
distributions of principal with respect to a series of Bonds will be made on
each Payment Date to the holders of the class or classes of Bonds of such series
entitled thereto until the principal balance(s) of such Bonds have been reduced
to zero. In the case of a series of Bonds which includes two or more classes of
Bonds, the timing, sequential order, priority of payment or amount of
distributions in respect of principal, and any schedule or formula or other
provisions applicable to the determination thereof (including distributions
among multiple classes of Senior Bonds or Subordinate Bonds), shall be as set
forth in the related Prospectus Supplement. Distributions of principal with
respect to one or more classes of Bonds may be made at a rate that is faster
(and, in some cases, substantially faster) than the rate at which payments or
other collections of principal are received on the Mortgage Loans in the related
Trust Fund, may not commence until the occurrence of certain events, such as the
retirement of one or more other classes of Bonds of the same series, or may be
made at a rate that is slower (and, in some cases, substantially slower) than
the rate at which payments or other collections of principal are received on
such Mortgage Loans. In addition, distributions of principal with respect to
one or more classes of Bonds may be made, subject to available funds, based on a
specified principal payment schedule and, with respect to one or more classes of
Bonds, may be contingent on the specified principal payment schedule for another
class of the same series and the rate at which payments and other collections of
principal on the Mortgage Loans in the related Trust Fund are received.
FUNDING ACCOUNT
If so specified in the related Prospectus Supplement, the Trust Agreement
or other agreement may provide for the transfer by the Sellers of additional
Mortgage Loans to the related Trust after the Closing Date. Such additional
Mortgage Loans will be required to conform to the requirements set forth in the
related Agreement or other agreement providing for such transfer, and will
generally be underwritten to the same standards as the Mortgage Loans initially
included in the Trust Fund. As specified in the related Prospectus Supplement,
such transfer may be funded by the establishment of a Funding Account (a
"Funding Account"). If a Funding Account is established, all or a portion of
the proceeds of the sale of one or more classes of Bonds of the related series
will be deposited in such account to be released as additional Mortgage Loans
are transferred. A Funding Account will be required to be maintained as an
Eligible Account, all amounts therein will be required to be invested in
Permitted Investments and the amount held therein shall at no time exceed 25% of
the aggregate outstanding principal balance of the Bonds. The related Agreement
or other agreement providing for the transfer of additional Mortgage Loans will
generally provide that all such transfers must be made within 3 months after the
Closing Date, and that amounts set aside to fund such transfers (whether in a
Funding Account or otherwise) and not so applied within the required period of
time will be deemed to be principal prepayments and applied in the manner set
forth in such Prospectus Supplement.
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The Company will be required to provide data regarding the additional
Mortgage Loans to the Rating Agencies and the Credit Enhancer, if any,
sufficiently in advance of the scheduled transfer to permit review by such
parties. Transfer of the additional Mortgage Loans will be further conditioned
upon confirmation by the Rating Agencies that the addition of such Mortgage
Loans to the Trust Fund will not result in the downgrading of the Bonds or, in
the case of a series guaranteed or supported by a Credit Enhancer, will not
adversely affect the capital requirements of such Credit Enhancer. Finally, a
legal opinion to the effect that the conditions to the transfer of the
additional Mortgage Loans have been satisfied.
DISTRIBUTIONS ON THE BONDS IN RESPECT OF PREPAYMENT PREMIUMS
If so provided in the related Prospectus Supplement, Prepayment Premiums
received on or in connection with the Mortgage Loans in any Trust Fund will be
distributed on each Payment Date to the holders of the class of Bonds of the
related series entitled thereto in accordance with the provisions described in
such Prospectus Supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage Loans
in any Trust Fund (to the extent not covered or offset by draws on any reserve
fund or under any instrument of Credit Enhancement or by overcollateralization)
will be allocated among the respective classes of Bonds of the related series in
the priority and manner, and subject to the limitations, specified in the
related Prospectus Supplement. As described in the related Prospectus
Supplement, such allocations may result in reductions in the entitlements to
interest and/or principal balances of one or more such classes of Bonds, or may
be effected simply by a prioritization of payments among such classes of Bonds.
ADVANCES
If and to the extent provided in the related Prospectus Supplement, and
subject to any limitations specified therein, the related Master Servicer may be
obligated to advance, or have the option of advancing, on or before each Payment
Date, from its or their own funds or from excess funds held in the related
Collection Account that are not part of the Available Distribution Amount for
the related series of Bonds for such Payment Date, an amount up to the aggregate
of any payments of principal (other than the principal portion of any Balloon
Payments) and interest that were due on or in respect of such Mortgage Loans
during the related Due Period and were delinquent on the related Determination
Date. A "Due Period" is the period between Payment Dates, and scheduled
payments on the Mortgage Loans in any Trust Fund that became due during a given
Due Period will, to the extent received by the related Determination Date or
advanced by the related Master Servicer or other specified person, be
distributed on the Payment Date next succeeding such Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Bonds entitled thereto,
rather than to guarantee or insure against losses. Accordingly, all advances
made from the Master Servicer's own funds will be reimbursable out of related
recoveries on the Mortgage Loans (including amounts received under any fund or
instrument constituting Credit Enhancement) respecting which such advances were
made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including in
the case of a series that includes one or more classes of Subordinate Bonds,
collections on other Mortgage Loans in the related Trust Fund that would
otherwise be distributable to the holders of one or more classes of such
Subordinate Bonds. No advance will be required to be made by the Master
Servicer if, in the good faith judgment of the Master Servicer, such advance
would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable
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Advance"); and, if previously made by a Master Servicer, a Nonrecoverable
Advance will be reimbursable from any amounts in the related Collection Account
prior to any distributions being made to the related series of Securities.
If advances have been made from excess funds in a Collection Account, the
Master Servicer that advanced such funds will be required to replace such funds
in the Collection Account on any future Payment Date to the extent that funds
then in the Collection Account are insufficient to permit full distributions to
Securityholders on such date. If so specified in the related Prospectus
Supplement, the obligation of a Master Servicer to make advances may be secured
by a cash advance reserve fund or a surety bond. If applicable, information
regarding the characteristics of, and the identity of any obligor on, any such
surety bond, will be set forth in the related Prospectus Supplement.
If any person other than the Master Servicer has any obligation to make
advances as described above, the related Prospectus Supplement will identify
such person.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest thereon for the
period that such advances are outstanding at the rate specified in such
Prospectus Supplement, and such entity will be entitled to payment of such
interest periodically from general collections on the Mortgage Loans in the
related Trust Fund prior to any payment to Securityholders or as otherwise
provided in the related Indenture and described in such Prospectus Supplement.
REPORTS TO BONDHOLDERS
With each distribution to Bondholders of a particular class of Bonds, the
related Master Servicer or Indenture Trustee will forward or cause to be
forwarded to each holder of record of such class of Bonds a statement or
statements with respect to the related Trust Fund setting forth the information
specifically described in the related Indenture, which generally will include
the following as applicable except as otherwise provided therein:
(i) the amount, if any, of such distribution allocable to
principal;
(ii) the amount, if any, of such distribution allocable to interest;
(iii) the amount, if any, of such distribution allocable to
Prepayment Premiums;
(iv) with respect to a series consisting of two or more classes, the
outstanding principal balance or notional amount of each class after giving
effect to the distribution of principal on such Payment Date;
(v) the amount of servicing compensation received by the related
Master Servicer (and, if payable directly out of the related Trust Fund, by
any Special Servicer and any Sub-Servicer);
(vi) the aggregate amount of advances included in the distributions
on such Payment Date, and the aggregate amount of unreimbursed advances at
the close of business on such Payment Date;
(vii) the aggregate principal balance of the Mortgage Loans in the
related Mortgage Pool on, or as of a specified date shortly prior to, such
Payment Date;
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(viii) the number and aggregate principal balance of any Mortgage
Loans in the related Mortgage Pool 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;
(ix) the appraised value (based on the most recent appraisal) of any
real estate acquired by such Trust Fund through foreclosure or grant of a
deed in lieu of foreclosure;
(x) the balance of the Reserve Fund, if any, at the close of
business on such Payment Date;
(xi) the amount of coverage under any Financial Guaranty Insurance
Policy, Letter of Credit or Mortgage Pool Insurance Policy covering default
risk as of the close of business on the applicable Determination Date and a
description of any Credit Enhancement substituted therefor;
(xii) the Special Hazard Amount, Fraud Loss Amount and Bankruptcy
Amount as of the close of business on the applicable Payment Date and a
description of any change in the calculation of such amounts; and
(xiii) in the case of Bonds benefitting from alternative Credit
Enhancement arrangements described in a Prospectus Supplement, the amount
of coverage under such alternative arrangements as of the close of business
on the applicable Determination Date.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per minimum denomination
of the relevant class of Bonds or per a specified portion of such minimum
denomination. In addition to the information described above, reports to
Bondholders will contain such other information as is set forth in the
applicable Indenture, which may include, without limitation, prepayments,
reimbursements to Subservicers and the Master Servicer and losses borne by the
related Trust Fund.
In addition, within a reasonable period of time after the end of each
calendar year, the Master Servicer or Indenture Trustee will furnish a report to
each holder of record of a class of Bonds at any time during such calendar year
which, among other things, will include information as to the aggregate of
amounts reported pursuant to subclauses (i)-(iii) above for such calendar year
or, in the event such person was a holder of record of a class of Bonds during a
portion of such calendar year, for the applicable portion of such a year.
DESCRIPTION OF CREDIT ENHANCEMENT
GENERAL
Credit Enhancement may be provided with respect to one or more classes of
the Bonds of any series or with respect to the related Mortgage Loans. Credit
Enhancement may be in the form of a letter of credit, the subordination of one
or more classes of Bonds, the use of a pool insurance policy or guarantee
insurance, the establishment of one or more reserve funds or another method of
Credit Enhancement described in the related Prospectus Supplement, or any
combination of the foregoing. If and to the extent so provided in the related
Prospectus Supplement, any of the foregoing forms of Credit Enhancement may
provide credit enhancement for more than one series of Bonds.
Unless otherwise provided in the related Prospectus Supplement for a series
of Bonds, the Credit
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Enhancement will not provide protection against all risks of loss and will not
guarantee payment to Bondholders of all amounts to which they are entitled under
the related Pooling Agreement. If losses or shortfalls occur that exceed the
amount covered by the related Credit Enhancement or that are of a type not
covered by such Credit Enhancement, Bondholders will bear their allocable share
of deficiencies. Moreover, if a form of Credit Enhancement covers the Bonds of
more than one series and losses on the related Mortgage Loans exceed the amount
of such Credit Enhancement, it is possible that the holders of Bonds of one (or
more) such series will be disproportionately benefitted by such Credit
Enhancement to the detriment of the holders of Bonds of one (or more) other such
series.
If Credit Enhancement is provided with respect to one or more classes of
Bonds of a series, or with respect to the related Mortgage Loans, the related
Prospectus Supplement will include a description of (i) the nature and amount of
coverage under such Credit Enhancement, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Enhancement may be reduced and
under which such Credit Enhancement may be terminated or replaced and (iv) the
material provisions relating to such Credit Enhancement. Additionally, the
related Prospectus Supplement will set forth certain information with respect to
the obligor, if any, under any instrument of Credit Enhancement. See "Risk
Factors--Credit Enhancement Limitations".
SUBORDINATE BONDS
If so specified in the related Prospectus Supplement, one or more classes
of Bonds of a series may be Subordinate Bonds. To the extent specified in the
related Prospectus Supplement, the rights of the holders of Subordinate Bonds to
receive distributions from the Bond Account on any Payment Date will be
subordinated to the corresponding rights of the holders of Senior Bonds. If so
provided in the related Prospectus Supplement, the subordination of a class may
apply only in the event of certain types of losses or shortfalls. The related
Prospectus Supplement will set forth information concerning the method and
amount of subordination provided by a class or classes of Subordinate Bonds in a
series and the circumstances under which such subordination will be available.
If the Mortgage Loans in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Bonds of the related series,
Credit Enhancement may be provided by cross-support provisions requiring that
distributions be made on Senior Bonds evidencing interests in one group of
Mortgage Loans prior to distributions on Subordinate Bonds evidencing interests
in a different group of Mortgage Loans within the Trust Fund. The Prospectus
Supplement for a series that includes a cross-support provision will describe
the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Bonds, Mortgage
Loans included in the related Trust Fund will be covered for certain default
risks by insurance policies or guarantees. The related Prospectus Supplement
will describe the nature of such default risks and the extent of such coverage.
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Bonds,
deficiencies in amounts otherwise payable on such Bonds or certain classes
thereof will be covered by one or more letters of credit, issued by a bank or
other financial institution specified in such Prospectus Supplement (the "Letter
of Credit Bank"). Under a letter of credit, the Letter of Credit Bank will be
obligated to honor draws thereunder in an aggregate fixed dollar amount, net of
unreimbursed payments thereunder, generally equal to a percentage specified in
the related Prospectus Supplement of the aggregate principal balance of some or
all of the related Mortgage Loans on the related Cut-off Date or of the initial
aggregate Bond Balance of
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one or more classes of Bonds. If so specified in the related Prospectus
Supplement, the letter of credit may permit draws only in the event of certain
types of losses and shortfalls. The amount available under the letter of credit
will, in all cases, be reduced to the extent of the unreimbursed payments
thereunder and may otherwise be reduced as described in the related Prospectus
Supplement. The obligations of the Letter of Credit Bank under the letter of
credit for each series of Bonds will expire at the earlier of the date specified
in the related Prospectus Supplement or the termination of the Trust Fund.
BOND INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Bonds,
deficiencies in amounts otherwise payable on such Bonds or certain classes
thereof will be covered by insurance policies or surety bonds provided by one or
more insurance companies or sureties. Such instruments may cover, with respect
to one or more classes of Bonds of the related series, timely distributions of
interest or distributions of principal on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the related
Prospectus Supplement. The related Prospectus Supplement will describe any
limitations on the draws that may be made under any such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Bonds,
deficiencies in amounts otherwise payable on such Bonds or certain classes
thereof will be covered (to the extent of available funds) by one or more
reserve funds in which cash, a letter of credit, Permitted Investments, a demand
note or a combination thereof will be deposited, in the amounts specified in
such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of certain collections received on the related Mortgage Loans.
Amounts on deposit in any reserve fund for a series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Payment Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
THE COMPANY
The Company is a limited-purpose wholly-owned subsidiary of Impac Mortgage
Holdings, Inc. ("Impac Holdings"), a publicly traded real estate investment
trust ("REIT"). The Company was incorporated in the State of California on
April 12, 1996. The Company was organized for the purpose of serving as a
private secondary mortgage market conduit.
The Company maintains its principal office at 20371 Irvine Avenue, Suite
200, Santa Ana Heights, California 92707. Its telephone number is (909) 788-
7808.
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IMPAC FUNDING CORPORATION
Impac Funding Corporation ("Impac Funding") is an affiliate of the
Company and may from time to time be a Seller or act as Master Servicer with
respect to a Mortgage Pool. Impac Funding is a mortgage banking conduit that
acquires conventional one-to four-family residential mortgage loans nationwide.
Impac Funding is a non-consolidating subsidiary of Impac Holdings. Impac
Funding primarily acquires mortgage loans from approved correspondents. Impac
Funding's executive offices are located at 20371 Irvine Avenue, Suite 200, Santa
Ana Heights, California 92707, and its telephone number is (714) 556-0122.
Prior to November 1995, Impac Funding was a division of Imperial
Credit Industries, Inc. ("ICII"), a California corporation. ICII is a publicly
traded mortgage banking company. In November 1995, ICII restructured its
operations pursuant to which Impac Funding became a separate corporation and
ICII contributed, among other things, all of the outstanding nonvoting preferred
stock of Impac Funding, which represents 99% of the economic interest in Impac
Funding, to Impac Holdings, in exchange for approximately 10% of the common
stock of Impac Holdings. The common stock of Impac Funding was retained by ICII
until March 1997 when it was distributed to certain officers and/or directors of
Impac Funding who are also officers and/or directors of the Company.
THE AGREEMENTS
The following summaries describe certain provisions of the Trust Agreement,
the Indenture and Servicing Agreement relating to a series of Bonds (each, an
"Agreement" and, collectively, the "Agreements"). The summaries do not purport
to be complete and are qualified entirely by reference to the actual terms of
the Agreements relating to a series of Bonds.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
Servicing Agreement
A "Servicing Default" under the Servicing Agreement in respect of a series
of Securities generally will include: (i) any failure by the Master Servicer to
make a required deposit to the Collection Account or, if the Master Servicer is
so required, to distribute to the holders of any class of Securities of such
series any required payment which continues unremedied for five business days
(or other period of time described in the related Prospectus Supplement) after
the giving of written notice of such failure to the Master Servicer by the
Indenture Trustee or the Issuer; (ii) any failure by the Master Servicer duly to
observe or perform in any material respect any other of its covenants or
agreements in the Servicing Agreement with respect to such series of Securities
which continues unremedied for 45 days after the giving of written notice of
such failure to the Master Servicer by the Indenture Trustee or the Issuer (or
the Pool Insurer, if applicable); (iii) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings regarding the Master Servicer and certain actions by the Master
Servicer indicating its insolvency or inability to pay its obligations and (iv)
any other Servicing Default as set forth in the Servicing Agreement.
So long as a Servicing Default remains unremedied, either the Company or
the Indenture Trustee may (except as otherwise provided for in the related
Agreement with respect to the Pool Insurer, if applicable), by written
notification to the Master Servicer and to the Issuer or the Indenture Trustee
or Trust Fund, as applicable, terminate all of the rights and obligations of the
Master Servicer under the
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Servicing Agreement (other than any right of the Master Servicer as
Securityholder and other than the right to receive servicing compensation and
expenses for servicing the Mortgage Loans during any period prior to the date of
such termination), whereupon the Indenture Trustee will succeed to all
responsibilities, duties and liabilities of the Master Servicer under such
Servicing Agreement (other than the obligation to purchase Mortgage Loans under
certain circumstances) and will be entitled to similar compensation
arrangements. In the event that the Indenture Trustee would be obligated to
succeed the Master Servicer but is unwilling so to act, it may appoint (or if it
is unable so to act, it shall appoint) or petition a court of competent
jurisdiction for the appointment of an approved mortgage servicing institution
with a net worth of at least $10,000,000 to act as successor to the Master
Servicer under the Servicing Agreement (unless otherwise set forth in the
Servicing Agreement). Pending such appointment, the Indenture Trustee is
obligated to act in such capacity. The Indenture Trustee and such successor may
agree upon the servicing compensation to be paid, which in no event may be
greater than the compensation to the initial Master Servicer under the Servicing
Agreement.
Indenture
An "Event of Default" under the Indenture in respect of each series of
Bonds shall be as described in the related Prospectus Supplement.
If an Event of Default under the Indenture with respect to the Bonds of any
series at the time outstanding occurs and is continuing, either the Indenture
Trustee, the Pool Insurer (if applicable) or the holders of a majority of the
then aggregate outstanding amount of the Bonds of such series may declare the
principal amount (or, if the Bonds of that series are Accrual Bonds, such
portion of the principal amount as may be specified in the terms of that series,
as provided in the related Prospectus Supplement) of all the Bonds of such
series to be due and payable immediately. Such declaration may, under certain
circumstances, be rescinded and annulled by the holders of a majority in
aggregate outstanding amount of the related Bonds.
If following an Event of Default with respect to any series of Bonds, the
Bonds of such series have been declared to be due and payable, the Indenture
Trustee (with the consent of the Pool Insurer, if applicable) may, in its
discretion, notwithstanding such acceleration, elect to maintain possession of
the collateral securing the Bonds of such series and to continue to apply
payments on such collateral as if there had been no declaration of acceleration
if such collateral continues to provide sufficient funds for the payment of
principal of and interest on the Bonds of such series as they would have become
due if there had not been such a declaration. In addition, the Indenture
Trustee may not sell or otherwise liquidate the collateral securing the Bonds of
a series following an Event of Default, unless either (a) the holders of a
majority percentage interest of the then aggregate outstanding amount of the
Bonds of such series consent to such sale, (b) the proceeds of such sale or
liquidation are sufficient to pay in full the principal of and accrued interest,
due and unpaid, on the outstanding Bonds of such series (and to reimburse the
Pool Insurer, if applicable) at the date of such sale.
In the event that the Indenture Trustee liquidates the collateral in
connection with an Event of Default, the Indenture provides that the Indenture
Trustee will have a prior lien on the proceeds of any such liquidation for
unpaid fees and expenses. As a result, upon the occurrence of such an Event of
Default, the amount available for payments to the Bondholders would be less than
would otherwise be the case. However, the Indenture Trustee may not institute a
proceeding for the enforcement of its lien except in connection with a
proceeding for the enforcement of the lien of the Indenture for the benefit of
the Bondholders after the occurrence of such an Event of Default.
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In the event the principal of the Bonds of a series is declared due and
payable, as described above, the holders of any such Bonds issued at a discount
from par may be entitled to receive no more than an amount equal to the unpaid
principal amount thereof less the amount of such discount that is unamortized.
No Securityholder generally will have any right under a Trust Agreement or
Indenture to institute any proceeding with respect to such Agreement unless (a)
such holder previously has given to the Indenture Trustee written notice of
default and the continuance thereof, (b) the holders of Securities of any class
evidencing not less than 25% of the aggregate Percentage Interests constituting
such class (i) have made written request upon the Indenture Trustee to institute
such proceeding in its own name as Indenture Trustee thereunder and (ii) have
offered to the Indenture Trustee reasonable indemnity, (c) the Indenture Trustee
has neglected or refused to institute any such proceeding for 60 days after
receipt of such request and indemnity and (d) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60 day
period by the Holders of a majority of the Bond Balances of such class (except
as otherwise provided for in the related Agreement with respect to the Pool
Insurer). However, the Indenture Trustee will be under no obligation to
exercise any of the trusts or powers vested in it by the applicable Agreement or
to institute, conduct or defend any litigation thereunder or in relation thereto
at the request, order or direction of any of the holders of Securities covered
by such Agreement, unless such Securityholders have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
AMENDMENT
Each Agreement may be amended by the parties thereto (except as otherwise
provided for in the related Agreement with respect to the Pool Insurer) as
described in the related Prospectus Supplement.
TERMINATION; REDEMPTION OF BONDS
Trust Agreement
The obligations created by the Trust Agreement for each series of
Securities (other than certain limited payment and notice obligations of the
Owner Trustee and the Company, respectively) will terminate upon the payment to
the related Securityholders (including, the Bonds issued pursuant to the related
Indenture) of all amounts held by the Master Servicer and required to be paid to
Securityholders following the earlier of (i) the final payment or other
liquidation or disposition (or any advance with respect thereto) of the last
Mortgage Loan subject thereto and all property acquired upon foreclosure or deed
in lieu of foreclosure of any such Mortgage Loan and (ii) the purchase, in whole
but not in part, by the Master Servicer or the Company or a person specified in
the related Prospectus Supplement (other than any Bondholder) of the Bonds of
such series or the Mortgage Loans; provided, however, that no such purchase
shall be made unless the aggregate Bond Principal Balance as of such date is
equal to or less than 25% (or other, lesser, percentage described in the related
Prospectus Supplement) of the aggregate Bond Principal Balance as of the
Delivery Date or a period of seven years (or other period of time described in
the related Prospectus Supplement) has elapsed since the initial Payment Date.
Any purchase pursuant to clause (ii) above will be at a purchase price equal to
the amount specified in the related Prospectus Supplement.
Indenture
The Indenture will be discharged with respect to a series of Bonds (except
with respect to certain continuing rights specified in the Indenture) upon the
distribution to Bondholders of all amounts required to be distributed pursuant
to the Indenture.
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THE OWNER TRUSTEE
The Owner Trustee under the Trust Agreement will be named in the related
Prospectus Supplement. The commercial bank or trust company serving as Owner
Trustee may have normal banking relationships with the Company and/or its
affiliates, including Impac Holdings.
The Owner Trustee may resign at any time, in which event the Administrator
or the Indenture Trustee will be obligated to appoint a successor owner trustee
as set forth in the Agreements. The Administrator or the Indenture Trustee may
also remove the Owner Trustee if the Owner Trustee ceases to be eligible to
continue as such under the Trust Agreement or if the Owner Trustee becomes
insolvent. Upon becoming aware of such circumstances, the Administrator or the
Indenture Trustee will be obligated to appoint a successor Owner Trustee. Any
resignation or removal of the Owner Trustee and appointment of a successor Owner
Trustee will not become effective until acceptance of the appointment by the
successor Owner Trustee.
THE INDENTURE TRUSTEE
The Indenture Trustee under the Indenture will be named in the related
Prospectus Supplement. The commercial bank or trust company serving as Indenture
Trustee may have normal banking relationships with the Company and/or its
affiliates, including Impac Holdings.
The Indenture Trustee may resign at any time, in which event the Company,
the Owner Trustee or the Administrator will be obligated to appoint a successor
indenture trustee as set forth in the Indenture. The Company, the Owner Trustee
or the Administrator as set forth in the Indenture may also remove the Indenture
Trustee if the Indenture Trustee ceases to be eligible to continue as such under
the Indenture or if the Indenture Trustee becomes insolvent. Upon becoming
aware of such circumstances, the Company, the Owner Trustee or the Administrator
will be obligated to appoint a successor Indenture Trustee. If so specified in
the Indenture, the Indenture Trustee may also be removed at any time by the
holders of a majority principal balance of the Bonds. Any resignation or
removal of the Indenture Trustee and appointment of a successor Indenture
Trustee will not become effective until acceptance of the appointment by the
successor Indenture Trustee.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Bond will depend on the price paid by the Bondholder, the
Interest Rate of the Bond and the amount and timing of distributions on the
Bond. See "Risk Factors--Effect of Prepayments on Average Life of Bonds".
PASS-THROUGH RATE
The Bonds of any class within a series may have a fixed, variable or
adjustable Interest Rate, which may or may not be based upon the interest rates
borne by the Mortgage Loans in the related Trust Fund. The Prospectus Supplement
with respect to any series of Bonds will specify the Interest Rate for each
class of Bonds of such series or, in the case of a class of Bonds with a
variable or adjustable Interest Rate, the method of determining the Interest
Rate; the effect, if any, of the prepayment of any Mortgage Loan on the Interest
Rate of one or more classes of Bonds; and whether the distributions of interest
on the Bonds of any class will be dependent, in whole or in part, on the
performance of any obligor under a Cash Flow Agreement.
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PAYMENT DELAYS
With respect to any series of Bonds, a period of time will elapse between
the date upon which payments on the Mortgage Loans in the related Trust Fund are
due and the Payment Date on which such payments are passed through to
Bondholders. That delay will effectively reduce the yield that would otherwise
be produced if payments on such Mortgage Loans were distributed to Bondholders
on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on any series of
Bonds and distributable thereon on any Payment Date will generally correspond to
interest accrued on the Mortgage Loans to their respective Due Dates during the
related Due Period. A "Due Period" will be a specified time period (generally
corresponding in length to the period between Payment Dates) and all scheduled
payments on the Mortgage Loans in the related Trust Fund that are due during a
given Due Period will, to the extent received by a specified date (the
"Determination Date") or otherwise advanced by the related Master Servicer,
Special Servicer or other specified person, be distributed to the holders of the
Bonds of such series on the next succeeding Payment Date. Consequently, if a
prepayment on any Mortgage Loan is distributable to Bondholders on a particular
Payment Date, but such prepayment is not accompanied by interest thereon to the
Due Date for such Mortgage Loan in the related Due Period, then the interest
charged to the borrower (net of servicing and administrative fees) may be less
(such shortfall, a "Prepayment Interest Shortfall") than the corresponding
amount of interest accrued and otherwise payable on the Bonds of the related
series. If and to the extent that any such shortfall is allocated to a class of
Bonds, the yield thereon will be adversely affected. The Prospectus Supplement
for each series of Bonds will describe the manner in which any such shortfalls
will be allocated among the classes of such Bonds. The related Prospectus
Supplement will also describe any amounts available to offset such shortfalls.
YIELD AND PREPAYMENT CONSIDERATIONS
A Bond's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the principal balance (or notional amount, if applicable) of
such Bond. The rate of principal payments on the Mortgage Loans in any Trust
Fund will in turn be affected by the amortization schedules thereof (which, in
the case of ARM Loans, may change periodically to accommodate adjustments to the
Mortgage Rates thereon), the dates on which any balloon payments are due, and
the rate of principal prepayments thereon (including for this purpose, voluntary
prepayments by borrowers and also prepayments resulting from liquidations of
Mortgage Loans due to defaults, casualties or condemnations affecting the
related Mortgaged Properties, or purchases of Mortgage Loans out of the related
Trust Fund). Because the rate of principal prepayments on the Mortgage Loans in
any Trust Fund will depend on future events and a variety of factors (as
described below), no assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Bonds of any series
may vary from the anticipated yield will depend upon the degree to which they
are purchased at a discount or premium and when, and to what degree, payments of
principal on the Mortgage Loans in the related Trust Fund are in turn
distributed on such Bonds (or, in the case of a class of Stripped Interest
Bonds, result in the reduction of the Notional Amount thereof). An investor
should consider, in the case of any Bond purchased at a discount, the risk that
a slower than anticipated rate of principal payments on the Mortgage Loans in
the related Trust Fund could result in an actual yield to such investor that is
lower than the anticipated yield
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and, in the case of any Bond purchased at a premium, the risk that a faster than
anticipated rate of principal payments on such Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield. In
addition, if an investor purchases a Bond at a discount (or premium), and
principal payments are made in reduction of the principal balance or notional
amount of such investor's Bonds at a rate slower (or faster) than the rate
anticipated by the investor during any particular period, any consequent adverse
effects on such investor's yield would not be fully offset by a subsequent like
increase (or decrease) in the rate of principal payments.
In general, the Notional Amount of a class of Stripped Interest Bonds will
either (i) be based on the principal balances of some or all of the Mortgage
Loans in the related Trust Fund or (ii) equal the Bond Balances of one or more
of the other classes of Bonds of the same series. Accordingly, the yield on
such Stripped Interest Bonds will be inversely related to the rate at which
payments and other collections of principal are received on such Mortgage Loans
or distributions are made in reduction of the Bond Balances of such classes of
Bonds, as the case may be.
Consistent with the foregoing, if a class of Bonds of any series consists
of Stripped Interest Bonds or Stripped Principal Bonds, a lower than anticipated
rate of principal prepayments on the Mortgage Loans in the related Trust Fund
will negatively affect the yield to investors in Stripped Principal Bonds, and a
higher than anticipated rate of principal prepayments on such Mortgage Loans
will negatively affect the yield to investors in Stripped Interest Bonds. If
the Offered Bonds of a series include any such Bonds, the related Prospectus
Supplement will include a table showing the effect of various constant assumed
levels of prepayment on yields on such Bonds. Such tables will be intended to
illustrate the sensitivity of yields to various constant assumed prepayment
rates and will not be intended to predict, or to provide information that will
enable investors to predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors
which increase the attractiveness of selling a Mortgaged Property or refinancing
a Mortgage Loan or which enhance a borrower's ability to do so, as well as those
factors which increase the likelihood of default under a Mortgage Loan, would be
expected to cause the rate of prepayment in respect of any Mortgage Loan Pool to
accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment of any Mortgage Loan Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent
enforceable, such provisions could constitute either an absolute prohibition (in
the case of a Lock-out Period) or a disincentive (in the case of a Prepayment
Premium) to a borrower's voluntarily prepaying its Mortgage Loan, thereby
slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or
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rate cap or floor on another adjustable rate mortgage loan. Therefore, as
prevailing market interest rates decline, prepayment speeds would be expected to
accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits. The
Depositor makes no representation as to the particular factors that will affect
the prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Bonds of such series. Unless otherwise specified
in the related Prospectus Supplement, weighted average life refers to the
average amount of time that will elapse from the date of issuance of an
instrument until each dollar allocable as principal of such instrument is repaid
to the investor.
The weighted average life and maturity of a class of Bonds of any series
will be influenced by the rate at which principal on the related Mortgage Loans,
whether in the form of scheduled amortization or prepayments (for this purpose,
the term "prepayment" includes voluntary prepayments by borrowers and also
prepayments resulting from liquidations of Mortgage Loans due to default,
casualties or condemnations affecting the related Mortgaged Properties and
purchases of Mortgage Loans out of the related Trust Fund), is paid to such
class. Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("SPA") prepayment model. CPR represents
an assumed constant rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the thirtieth month. Beginning in the thirtieth month, and in
each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of Bonds will contain
tables, if applicable, setting forth the projected weighted average life of each
class of Bonds of such series with a Bond Balance, and the percentage of the
initial Bond Balance of each such class that would be outstanding on specified
Payment Dates, based on the assumptions stated in such Prospectus Supplement,
including assumptions that prepayments on the related Mortgage Loans are made at
rates corresponding to various percentages of CPR or SPA, or at such other rates
specified in such Prospectus Supplement. Such tables and assumptions will
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illustrate the sensitivity of the weighted average lives of the Bonds to various
assumed prepayment rates and will not be intended to predict, or to provide
information that will enable investors to predict, the actual weighted average
lives of the Bonds.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a possibility that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or the Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized to
modify Mortgage Loans that are in default or as to which a payment default is
imminent. Any defaulted balloon payment or modification that extends the
maturity of a Mortgage Loan may delay distributions of principal on a class of
Bonds and thereby extend the weighted average life of such Bonds and, if such
Bonds were purchased at a discount, reduce the yield thereon.
Negative Amortization. The weighted average life of a class of Bonds can
be affected by Mortgage Loans that permit negative amortization to occur (that
is, Mortgage Loans that provide for the current payment of interest calculated
at a rate lower than the rate at which interest accrues thereon, with the unpaid
portion of such interest being added to the related principal balance).
Negative amortization on one or more Mortgage Loans in any Trust Fund may result
in negative amortization on the Bonds of the related series. The related
Prospectus Supplement will describe, if applicable, the manner in which negative
amortization in respect of the Mortgage Loans in any Trust Fund is allocated
among the respective classes of Bonds of the related series. The portion of any
Mortgage Loan negative amortization allocated to a class of Bonds may result in
a deferral of some or all of the interest payable thereon, which deferred
interest may be added to the Bond Balance thereof. In addition, an ARM Loan
that permits negative amortization would be expected during a period of
increasing interest rates to amortize at a slower rate (and perhaps not at all)
than if interest rates were declining or were remaining constant. Such slower
rate of Mortgage Loan amortization would correspondingly be reflected in a
slower rate of amortization for one or more classes of Bonds of the related
series. Accordingly, the weighted average lives of Mortgage Loans that permit
negative amortization (and that of the classes of Bonds to which any such
negative amortization would be allocated or that would bear the effects of a
slower rate of amortization on such Mortgage Loans) may increase as a result of
such feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (ii) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (iii) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during
a period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable Mortgage
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those classes of Bonds entitled to a portion of the principal
payments on such Mortgage Loan.
The extent to which the yield on any Bond will be affected by the inclusion
in the related Trust Fund of Mortgage Loans that permit negative amortization,
will depend upon (i) whether such Bond was
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purchased at a premium or a discount and (ii) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on such Bond (or, in the case of a Stripped Interest Bond, delay or
accelerate the reduction of the notional amount thereof). See "-Yield and
Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Bonds of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Bonds of the related series.
Losses and Shortfalls on the Mortgage Loans. The yield to holders of the
Bonds of any series will directly depend on the extent to which such holders are
required to bear the effects of any losses or shortfalls in collections arising
out of defaults on the Mortgage Loans in the related Trust Fund and the timing
of such losses and shortfalls. In general, the earlier that any such loss or
shortfall occurs, the greater will be the negative effect on yield for any class
of Bonds that is required to bear the effects thereof.
The amount of any losses or shortfalls in collections on the Mortgage Loans
in any Trust Fund (to the extent not covered or offset by draws on any reserve
fund or under any instrument of Credit Support) will be allocated among the
respective classes of Bonds of the related series in the priority and manner,
and subject to the limitations, specified in the related Prospectus Supplement.
As described in the related Prospectus Supplement, such allocations may be
effected by (i) a reduction in the entitlements to interest and/or the Bond
Balances of one or more such classes of Bonds and/or (ii) establishing a
priority of payments among such classes of Bonds.
The yield to maturity on a class of Subordinate Bonds may be extremely
sensitive to losses and shortfalls in collections on the Mortgage Loans in the
related Trust Fund.
Additional Bond Amortization. In addition to entitling the holders thereof
to a specified portion (which may during specified periods range from none to
all) of the principal payments received on the Mortgage Loans in the related
Trust Fund, one or more classes of Bonds of any series may provide for
distributions of principal thereof from (i) amounts attributable to interest
accrued but not currently distributable on one or more classes of Accrual Bonds,
(ii) Excess Funds or (iii) any other amounts described in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
"Excess Funds" will, in general, represent that portion of the amounts
distributable in respect of the Bonds of any series on any Payment Date that
represent (i) interest received or advanced on the Mortgage Loans in the related
Trust Fund that is in excess of the interest currently accrued on the Bonds of
such series, or (ii) Prepayment Premiums, payments from Equity Participations or
any other amounts received on the Mortgage Loans in the related Trust Fund that
do not constitute interest thereon or principal thereof.
The amortization of any class of Bonds out of the sources described in the
preceding paragraph would shorten the weighted average life of such Bonds and,
if such Bonds were purchased at a premium, reduce the yield thereon. The
related Prospectus Supplement will discuss the relevant factors to be considered
in determining whether distributions of principal of any class of Bonds out of
such sources is likely to have any material effect on the rate at which such
Bonds are amortized and the consequent yield with respect thereto.
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CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable state law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular state, or to encompass the laws
of all states in which the security for the Mortgage Loans is situated.
Accordingly, the summaries are qualified in their entirety by reference to the
applicable laws of those states. See "The Mortgage Pools-Mortgage Loans".
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a deed
of trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates
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and the lender is entitled to collect the rents. Local law may require that the
lender take possession of the property and/or obtain a court-appointed receiver
before becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels
or motels may be included in a Trust Fund even if the security interest in the
room rates was not perfected or the requisite UCC filings were allowed to lapse.
Even if the lender's security interest in room rates is perfected under
applicable nonbankruptcy law, it will generally be required to commence a
foreclosure action or otherwise take possession of the property in order to
enforce its rights to collect the room rates following a default. In the
bankruptcy setting, however, the lender will be stayed from enforcing its rights
to collect room rates, but those room rates (in light of certain revisions to
the Bankruptcy Code which are effective for all bankruptcy cases commenced on or
after October 22, 1994) constitute "cash collateral" and therefore cannot be
used by the bankruptcy debtor without a hearing or lender's consent and unless
the lender's interest in the room rates is given adequate protection (e.g., cash
payment for otherwise encumbered funds or a replacement lien on unencumbered
property, in either case equal in value to the amount of room rates that the
debtor proposes to use, or other similar relief). See "-Bankruptcy Laws".
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the
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property, under leases or otherwise, whose interests are subordinate to the
mortgage. Delays in completion of the foreclosure may occasionally result from
difficulties in locating defendants. When the lender's right to foreclose is
contested, the legal proceedings can be time-consuming. Upon successful
completion of a judicial foreclosure proceeding, the court generally issues a
judgment of foreclosure and appoints a referee or other officer to conduct a
public sale of the mortgaged property, the proceeds of which are used to satisfy
the judgment. Such sales are made in accordance with procedures that vary from
state to state.
Equitable and Other Limitations on Enforceability of Certain Provisions.
United States courts have traditionally imposed general equitable principles to
limit the remedies available to lenders in foreclosure actions. These
principles are generally designed to relieve borrowers from the effects of
mortgage defaults perceived as harsh or unfair. Relying on such principles, a
court may alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or overreaching,
or may require the lender to undertake affirmative actions to determine the
cause of the borrower's default and the likelihood that the borrower will be
able to reinstate the loan. In some cases, courts have substituted their
judgment for the lender's and have required that lenders reinstate loans or
recast payment schedules in order to accommodate borrowers who are suffering
from a temporary financial disability. In other cases, courts have limited the
right of the lender to foreclose in the case of a nonmonetary default, such as a
failure to adequately maintain the mortgaged property or an impermissible
further encumbrance of the mortgaged property. Finally, some courts have
addressed the issue of whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that a borrower
receive notice in addition to statutorily-prescribed minimum notice. For the
most part, these cases have upheld the reasonableness of the notice provisions
or have found that a public sale under a mortgage providing for a power of sale
does not involve sufficient state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained
in any other type of mortgage instrument if applicable law so permits. A power
of sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the acceleration of the
indebtedness), plus the lender's expenses incurred in enforcing the obligation.
In other states, the borrower or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore,
it is common for the lender to purchase the mortgaged property for an amount
equal to the secured indebtedness and accrued and unpaid interest
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plus the expenses of foreclosure, in which event the borrower's debt will be
extinguished, or for a lesser amount in order to preserve its right to seek a
deficiency judgment if such is available under state law and under the terms of
the Mortgage Loan documents. (The Mortgage Loans, however, may be nonrecourse.
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss
of the Mortgage Loans-Limited Recourse Nature of the Mortgage Loans".)
Thereafter, subject to the borrower's right in some states to remain in
possession during a redemption period, the lender will become the owner of the
property and have both the benefits and burdens of ownership, including the
obligation to pay debt service on any senior mortgages, to pay taxes, to obtain
casualty insurance and to make such repairs as are necessary to render the
property suitable for sale. The costs of operating and maintaining a commercial
or multifamily residential property may be significant and may be greater than
the income derived from that property. The lender also will commonly obtain the
services of a real estate broker and pay the broker's commission in connection
with the sale or lease of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, because of the expenses associated with
acquiring, owning and selling a mortgaged property, a lender could realize an
overall loss on a mortgage loan even if the mortgaged property is sold at
foreclosure, or resold after it is acquired through foreclosure, for an amount
equal to the full outstanding principal amount of the loan plus accrued
interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms
provides for recourse to the borrower's other assets, a lender's ability to
realize upon those assets may be limited by state law. For example, in some
states a lender cannot obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal
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judgment against the former borrower equal to the difference between the net
amount realized upon the public sale of the real property and the amount due to
the lender. Other statutes may require the lender to exhaust the security
afforded under a mortgage before bringing a personal action against the
borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting such
security; however, in some of those states, the lender, following judgment on
such personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate to
be assigned to and by the leasehold mortgagee or the purchaser at a foreclosure
sale, and contains certain other protective provisions typically included in a
"mortgageable" ground lease. Certain Mortgage Loans, however, may be secured by
ground leases which do not contain these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Such a loan typically is subordinate to the mortgage, if any,
on the Cooperative's building which, if foreclosed, could extinguish the equity
in the building and the proprietary leases of the dwelling units derived from
ownership of the shares of the Cooperative. Further, transfer of shares in a
Cooperative are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and the shares may be cancelled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the Cooperative provides, among other things, the lender with an opportunity to
cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally
provides that the lender's right to reimbursement is subject to the right of the
Cooperative to receive sums due under the proprietary leases.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences
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thereof caused by such automatic stay can be significant. Also, under the
Bankruptcy Code, the filing of a petition in bankruptcy by or on behalf of a
junior lienor may stay the senior lender from taking action to foreclose out
such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced
to the then-current value of the property (with a corresponding partial
reduction of the amount of lender's security interest) pursuant to a confirmed
plan or lien avoidance proceeding, thus leaving the lender a general unsecured
creditor for the difference between such value and the outstanding balance of
the loan. Other modifications may include the reduction in the amount of each
scheduled payment, by means of a reduction in the rate of interest and/or an
alteration of the repayment schedule (with or without affecting the unpaid
principal balance of the loan), and/or by an extension (or shortening) of the
term to maturity. Some bankruptcy courts have approved plans, based on the
particular facts of the reorganization case, that effected the cure of a
mortgage loan default by paying arrearages over a number of years. Also, a
bankruptcy court may permit a debtor, through its rehabilitative plan, to
reinstate a loan mortgage payment schedule even if the lender has obtained a
final judgment of foreclosure prior to the filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability to
enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "--Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of certain states until the lender has taken some further action,
such as commencing foreclosure or obtaining a receiver prior to activation of
the assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy case relating to a lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor with respect to its claim for damages
for termination of the lease. The Bankruptcy Code also limits a lessor's
damages for lease rejection to the rent reserved by the lease (without regard to
acceleration) for the greater of one year, or 15%, not to exceed three years, of
the remaining term of the lease.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties
that are or have been used for industrial, manufacturing,
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military or disposal activity. Such environmental risks include the possible
diminution of the value of a contaminated property or, as discussed below,
potential liability for clean-up costs or other remedial actions that could
exceed the value of the property or the amount of the lender's loan. In certain
circumstances, a lender may decide to abandon a contaminated mortgaged property
as collateral for its loan rather than foreclose and risk liability for clean-up
costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to
such a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator"
of a contaminated mortgaged property if agents or employees of the lender have
participated in the management of such mortgaged property or the operations of
the borrower. Such liability may exist even if the lender did not cause or
contribute to the contamination and regardless of whether the lender has
actually taken possession of a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to
the original or unamortized principal balance of a loan or to the value of the
property securing a loan. Excluded from CERCLA's definition of "owner" or
"operator", however, is a person "who without participating in the management of
the facility, holds indicia of ownership primarily to protect his security
interest".
In general, what constitutes participation in the management of a mortgaged
property or the business of a borrower to render the secured creditor exemption
unavailable to a lender is based upon judicial interpretation of the statutory
language, and court decisions have been inconsistent in this matter. The Court
of Appeals for the Eleventh Circuit has suggested that the mere capacity of the
lender to influence a borrower's disposal of hazardous substances was sufficient
participation in the management of the borrower's business to deny the secured
creditor exemption to the lender. However, the Court of Appeals for the Ninth
Circuit disagreed with the Eleventh Circuit and held that there must be some
degree of "actual management" of a facility on the part of a lender in order to
bar its reliance on the secured creditor exemption. In addition, certain cases
decided in the First Circuit and the Fourth Circuit have held that lenders were
entitled to the secured creditor exemption, notwithstanding a lender's taking
title to a mortgaged property through foreclosure or deed in lieu of
foreclosure.
CERCLA's "innocent landowner" defense may be available to a lender that has
taken title to a mortgaged property and has performed an appropriate
environmental site assessment that does not disclose existing contamination and
that meets other requirements of the defense. However, it is unclear whether
the environmental site assessment must be conducted upon loan origination, prior
to foreclosure, or both, and uncertainty exists as to what kind of environmental
site assessment must be performed in order to qualify for the defense.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
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Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender
liable in such cases, unanticipated or uninsured liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. Such costs may jeopardize the
borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Bondholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Servicing Agreement will provide that neither
the Master Servicer nor the Special Servicer, acting on behalf of the Trustee,
may acquire title to a Mortgaged Property or take over its operation unless the
Special Servicer, based solely (as to environmental matters) on a report
prepared by a person who regularly conducts environmental audits, has made the
determination that it is appropriate to do so, as described under "Servicing of
Mortgage Loans--Realization Upon Defaulted Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Bonds. Environmental site assessments, however, vary
considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain "due-on-sale" and "due-on-
encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of
1982 (the "Garn Act") generally preempts state laws that prohibit the
enforcement of due-on-sale clauses and permits lenders to enforce these clauses
in accordance with their terms, subject to certain limitations as set forth in
the Garn Act and the regulations promulgated thereunder. Accordingly, a Master
Servicer may nevertheless have the right to accelerate the maturity of a
Mortgage
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Loan that contains a "due-on-sale" provision upon transfer of an interest in the
property, without regard to the Master Servicer's ability to demonstrate that a
sale threatens its legitimate security interest.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
If so provided in the related Prospectus Supplement, Mortgage Loans for a
series of Bonds may include Mortgage Loans secured by junior liens, and the
loans secured by the related Senior Liens may not be included in the Mortgage
Pool. The primary risk to holders of Mortgage Loans secured by junior liens is
the possibility that adequate funds will not be received in connection with a
foreclosure of the related Senior Liens to satisfy fully both the Senior Liens
and the Mortgage Loan. In the event that a holder of a Senior Lien forecloses
on a Mortgaged Property, the proceeds of the foreclosure or similar sale will be
applied first to the payment of court costs and fees in connection with the
foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgage Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. In the event that such proceeds from a foreclosure or similar
sale of the related Mortgaged Property are insufficient to satisfy all Senior
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of
the junior lien, and, accordingly, holders of one or more classes of the Bonds
of the related series bear (i) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (ii) the risk of loss
if the deficiency judgment is not realized upon. Moreover, deficiency judgments
may not be available in certain jurisdictions or the Mortgage Loan may be
nonrecourse.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior loan
does not, a borrower may have more incentive to repay sums due on the
subordinate loan. Second, acts of the senior lender that prejudice the junior
lender or impair the junior lender's security may create a superior equity in
favor of the junior lender. For example, if the borrower and the senior lender
agree to an increase in the principal amount of or the interest rate payable on
the senior loan, the senior lender may lose its priority to the extent any
existing junior lender is harmed or the borrower is additionally burdened.
Third, if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders can
impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the
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enforceability of provisions that provide for prepayment fees or penalties upon
an involuntary prepayment is unclear under the laws of many states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not so rejected, any state is
authorized by the law to adopt a provision limiting discount points or other
charges on mortgage loans covered by Title V. Certain states have taken action
to reimpose interest rate limits and/or to limit discount points or other
charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
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SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies
to individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer or
Special Servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related series of Bonds, and would not be covered by advances or,
unless otherwise specified in the related Prospectus Supplement, any form of
Credit Enhancement provided in connection with such Bonds. In addition, the
Relief Act imposes limitations that would impair the ability of the Master
Servicer or Special Servicer to foreclose on an affected Mortgage Loan during
the borrower's period of active duty status, and, under certain circumstances,
during an additional three month period thereafter.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of drug-
related crimes or of criminal violations of the Racketeer Influenced and Corrupt
Organizations ("RICO") statute can be seized by the government if the property
was used in, or purchased with the proceeds of, such crimes. Under procedures
contained in the comprehensive Crime Control Act of 1984 (the "Crime Control
Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property", including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of the Bonds offered
hereunder to the extent it relates to matter of law or legal conclusions with
respect thereto, represents the opinion of counsel to the Company with respect
to that series on the material matters associated with such consequences,
subject to any qualifications set forth herein. This discussion has been
prepared with the advice of Thacher Proffitt & Wood, counsel to the Company.
This discussion is directed solely to Bondholders that hold the Bonds as capital
assets within the meaning of Section 1221 of the Code and does not purport to
discuss all federal income tax consequences that may be applicable to particular
categories of investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special rules. Further, the
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authorities on which this discussion, and the opinion referred to below, are
based are subject to change or differing interpretations, which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service ("IRS") with respect to any of
the federal income tax consequences discussed below, and no assurance can be
given the IRS will not take contrary positions. Taxpayers and preparers of tax
returns should be aware that under applicable Treasury regulations a provider of
advice on specific issues of law is not considered an income tax return preparer
unless the advice (i) is given with respect to events that have occurred at the
time the advice is rendered and is not given with respect to the consequences of
contemplated actions, and (ii) is directly relevant to the determination of an
entry on a tax return. Accordingly, taxpayers should consult their tax advisors
and tax return preparers regarding the preparation of any item on a tax return,
even where the anticipated tax treatment has been discussed herein. In addition
to the federal income tax consequences described herein, potential investors
should consider the state and local tax consequences, if any, of the purchase,
ownership and disposition of the Bonds. See "State and Other Tax Consequences."
Bondholders are advised to consult their tax advisors concerning the federal,
state, local or other tax consequences to them of the purchase, ownership and
disposition of the Bonds offered hereunder.
Taxable mortgage pool ("TMP") rules enacted as part of the Tax Reform Act
of 1986 treat certain arrangements that securitize real estate mortgages as
taxable corporations. An entity will be characterized as a TMP if (i)
substantially all of its assets are debt obligations and more than 50 percent of
such debt obligations consist of real estate mortgages or interests therein,
(ii) the entity is the obligor under debt obligations with two or more
maturities, and (iii) payments on the debt obligations referred to in (ii) bear
a relationship to payments on the debt obligations referred to in (i).
Furthermore, a group of assets held by an entity can be treated as a separate
TMP if the assets are expected to produce significant cash flow that will
support one or more of the entity's issues of debt obligation.
It is possible that the Issuer or a portion of the Issuer relating to the
ownership of the Mortgage Loans and the issuance of the Bonds could be treated
as a TMP. The related Prospectus Supplement for each series of Bonds will
discuss whether the Issuer is anticipated to be characterized as a TMP for
federal income tax purposes. Such characterization would require that the
Issuer be treated as a "separate" corporation and not includible with any other
corporation in a consolidated return, therefore subjecting the Issuer to
corporate income tax. However, it is anticipated that for federal income tax
purposes the Issuer will be disregarded as an entity separate from the Company
(a "Wholly Owned Entity") pursuant to Treasury regulation Section 301.7701-
2(c)(2) (the "Entity Classification Regulations"), because one hundred percent
of the equity of the Issuer will be owned by the Company which is a "qualified
REIT subsidiary" (as defined in Section 856(i)(2) of the Code) of Impac
Holdings, which itself is a REIT. Characterization of the Issuer as a TMP would
result only in the shareholders of Impac Holdings being required to include in
income, as "excess inclusion" income, some or all of their allocable share of
the Issuer's net income that would be excess inclusion income, if any, if the
Issuer were treated as a REMIC. Such characterization of the Issuer as a Wholly
Owned Entity or a "qualified REIT subsidiary" would not result in entity-level,
corporate income taxation with respect to the Issuer. If the Issuer were to
fail to qualify as a Wholly Owned Entity and fail to continue to be treated as
a "qualified REIT subsidiary" by reason of the Company's failure to continue to
qualify as a "qualified REIT subsidiary" for federal income tax purposes, or
for any other reason, the net income of the Issuer would be subject to
corporate income tax and if the Issuer were characterized as a TMP the Issuer
would not be permitted to be included on a consolidated income tax return of
another corporate entity. If the Company were to dispose of a portion of the
equity of the Issuer, the Issuer would be characterized as a partnership
pursuant to the Entity Classification Regulations, unless the Issuer was
characterized as a TMP, in which case the net income of the Issuer would be
subject to corporate income tax and the Issuer would not be permitted to be
included on a consolidated income tax return of another corporate entity. No
assurance can be given with regard to the prospective qualification of the
Issuer as either a Wholly Owned Entity or a "qualified REIT subsidiary" or of
the Company as a "qualified REIT subsidiary" for federal income tax purposes.
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Upon the issuance of the Bonds, Thacher Proffitt & Wood ("Tax Counsel"),
counsel to the Company, will deliver its opinion generally to the effect that,
for federal income tax purposes, assuming compliance with all provisions of the
Indenture and certain related documents, the Bonds will be treated as
indebtedness. The following discussion is based in part upon the rules
governing original issue discount that are set forth in Sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"). For purposes of this tax discussion, references to a
"Bondholder" or a "holder" are to the beneficial owner of a Bond.
Status as Real Property Loans. (i) Bonds held by a domestic building and
loan association will not constitute "loans...secured by an interest in real
property" within the meaning of Code section 7701(a)(19)(C)(v); (ii) Bonds held
by a real estate investment trust will not constitute "real estate assets"
within the meaning of Code section 856(c)(4)(A); and (iii) interest on Bonds
will not be considered "interest on obligations secured by mortgages on real
property" within the meaning of Code section 856(c)(3)(B).
Interest and Original Issue Discount. The related Prospectus Supplement for
a series of Bonds will disclose whether such Bonds are anticipated to be issued
with original issue discount. Any holders of Bonds issued with original issue
generally will be required to include original issue discount in income as it
accrues, in accordance with the method described below, in advance of the
receipt of the cash attributable to such income. In addition, Section 1272(a)(6)
of the Code provides special rules applicable to any class of Bonds issued with
original issue discount. Regulations have not been issued under that section.
Under the OID Regulations, a holder of a Bond issued with a de minimis
amount of original issue discount must include such de minimis discount in
income, on a pro rata basis, as principal payments are made on the Bond. Stated
interest on the Bonds will be taxable to a Bondholder as ordinary interest
income when received or accrued in accordance with such Bondholder's method of
tax accounting.
Section 1272(a)(6) of the Code requires that a prepayment assumption (the
"Prepayment Assumption") be used with respect to the collateral underlying debt
instruments in computing the accrual of original issue discount if payments
under such debt instruments may be accelerated by reason of prepayments of other
obligations securing such debt instruments, and that adjustments be made in the
amount and rate of accrual of such discount to reflect differences between the
actual prepayment rate and the Prepayment Assumption. The Prepayment Assumption
is to be determined in a manner prescribed in Treasury regulations; as noted
above, those regulations have not been issued. The Conference Committee Report
(the "Committee Report") accompanying the Tax Reform Act of 1986 indicates that
the regulations will provide that the Prepayment Assumption used with respect to
a Bond must be the same as that used in pricing the initial offering of such
Bond. The Prepayment Assumption used by the Issuer in reporting original issue
discount for each series of Bonds will be consistent with this standard and will
be disclosed in the related Prospectus Supplement. However, no representation
will be made that the Mortgage Loans will in fact prepay at a rate conforming to
the Prepayment Assumption or at any other rate.
The original issue discount, if any, on a Bond would be the excess of its
stated redemption price at maturity over its issue price. The issue price of a
particular class of Bonds will be the first cash price at which a substantial
amount of Bonds of that class is sold (excluding sales to bond houses, brokers
and underwriters). If less than a substantial amount of a particular class of
Bonds is sold for cash on or prior to the date of their initial issuance (the
"Closing Date"), the issue price for such class will be treated as the fair
market value of such class on the Closing Date. Under the OID Regulations, the
stated redemption price of a Bond is equal to the total of all payments to be
made on such Bond other than "qualified stated interest." "Qualified stated
interest" includes interest that is unconditionally payable at least annually at
a single fixed rate, or in the case of a variable rate debt instrument, at a
"qualified floating rate," an
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"objective rate," a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate," or a
combination of "qualified floating rates" that generally does not operate in a
manner that accelerates or defers interest payments on such Bond.
In the case of Bonds bearing adjustable interest rates, the determination
of the total amount of original issue discount and the timing of the inclusion
thereof will vary according to the characteristics of such Bonds. If the
original issue discount rules apply to such Bonds, the related Prospectus
Supplement will describe the manner in which such rules will be applied by the
Issuer with respect to those Bonds in preparing information returns to the
Bondholders and the IRS.
Certain classes of the Bonds may provide for the first interest payment
with respect to such Bonds to be made more than one month after the date of
issuance, a period which is longer than the subsequent monthly intervals between
interest payments. Assuming the "accrual period" (as defined below) for original
issue discount is each monthly period that ends on a Payment Date, in some
cases, as a consequence of this "long first accrual period," some or all
interest payments may be required to be included in the stated redemption price
of the Bond and accounted for as original issue discount.
In addition, if the accrued interest to be paid on the first Payment Date
is computed with respect to a period that begins prior to the Closing Date, a
portion of the purchase price paid for a Bond will reflect such accrued
interest. In such cases, information returns to the Bondholders and the IRS will
be based on the position that the portion of the purchase price paid for the
interest accrued with respect to periods prior to the Closing Date is treated as
part of the overall purchase price of such Bond (and not as a separate asset the
purchase price of which is recovered entirely out of interest received on the
next Payment Date) and that portion of the interest paid on the first Payment
Date in excess of interest accrued for a number of days corresponding to the
number of days from the Closing Date to the first Payment Date should be
included in the stated redemption price of such Bond. However, the OID
Regulations state that all or some portion of such accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first Payment Date. It is unclear how an election to do so
would be made under the OID Regulations and whether such an election could be
made unilaterally by a Bondholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a Bond will be considered to be de minimis if it is less than
0.25% of the stated redemption price of the Bond multiplied by its weighted
average maturity. For this purpose, the weighted average maturity of the Bond is
computed as the sum of the amounts determined, as to each payment included in
the stated redemption price of such Bond, by multiplying (i) the number of
complete years (rounding down for partial years) from the issue date until such
payment is expected to be made (presumably taking into account the Prepayment
Assumption) by (ii) a fraction, the numerator of which is the amount of the
payment, and the denominator of which is the stated redemption price at maturity
of such Bond. Under the OID Regulations, original issue discount of only a de
minimis amount (other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday) will be
included in income as each payment of stated principal is made, based on the
product of the total amount of such de minimis original issue discount and a
fraction, the numerator of which is the amount of such principal payment and the
denominator of which is the outstanding stated principal amount of the Bond. The
OID Regulations also would permit a Bondholder to elect to accrue de minimis
original issue discount into income currently based on a constant yield method.
See "--Market Discount" for a description of such election under the OID
Regulations.
If original issue discount on a Bond is in excess of a de minimis amount,
the holder of such Bond must include in ordinary gross income the sum of the
"daily portions" of original issue discount for each day during its taxable year
on which it held such Bond, including the purchase date but excluding the
disposition date. In the case of an original holder of a Bond, the daily
portions of original issue discount will be determined as follows.
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As to each "accrual period," that is each period that ends on a date that
corresponds to a Payment Date and begins on the first day following the
immediately preceding accrual period (or in the case of the first such period,
begins on the Closing Date), a calculation will be made of the portion of the
original issue discount that accrued during such accrual period. The portion of
original issue discount that accrues in any accrual period will equal the
excess, if any, of (i) the sum of (A) the present value, as of the end of the
accrual period, of all of the distributions remaining to be made on the Bond, if
any, in future periods and (B) the distributions made on such Bond during the
accrual period of amounts included in the stated redemption price, over (ii) the
adjusted issue price of such Bond at the beginning of the accrual period. The
present value of the remaining distributions referred to in the preceding
sentence will be calculated (1) assuming that distributions on the Bonds will be
received in future periods based on the Mortgage Loans being prepaid at a rate
equal to the Prepayment Assumption and (2) using a discount rate equal to the
original yield to maturity of the Bond. For these purposes, the original yield
to maturity of the Bond will be calculated based on its issue price and assuming
that distributions on the Bond will be made in all accrual periods based on the
Mortgage Loans being prepaid at a rate equal to the Prepayment Assumption. The
adjusted issue price of a Bond at the beginning of any accrual period will equal
the issue price of such Bond, increased by the aggregate amount of original
issue discount that accrued with respect to such Bond in prior accrual periods,
and reduced by the amount of any distributions made on such Bond in prior
accrual periods of amounts included in its stated redemption price. The original
issue discount accruing during any accrual period, computed as described above,
will be allocated ratably to each day during the accrual period to determine the
daily portion of original issue discount for such day.
A subsequent purchaser of a Bond that purchases such Bond at a price
(excluding any portion of such price attributable to accrued qualified stated
interest) less than its remaining stated redemption price will also be required
to include in gross income the daily portions of any original issue discount
with respect to such Bond. However, each such daily portion will be reduced, if
such cost is in excess of its "adjusted issue price," in proportion to the ratio
such excess bears to the aggregate original issue discount remaining to be
accrued on such Bond. The adjusted issue price of a Bond on any given day equals
the sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Bond at the beginning of the accrual period
which includes such day and (ii) the daily portions of original issue discount
for all days during such accrual period prior to such day.
Market Discount. A Bondholder that purchases a Bond at a market discount,
that is, in the case of a Bond issued without original issue discount, at a
purchase price less than its remaining stated principal amount, or in the case
of a Bond issued with original issue discount, at a purchase price less than its
adjusted issue price will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under Section 1276 of the
Code, such a Bondholder generally will be required to allocate the portion of
each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A Bondholder may elect to include market discount in
income currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, such election will apply to all market
discount bonds acquired by such Bondholder on or after the first day of the
first taxable year to which such election applies. In addition, the OID
Regulations permit a Bondholder 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. If such an election were made
with respect to a Bond with market discount, the Bondholder would be deemed to
have made an election to include currently market discount in income with
respect to all other debt instruments having market discount that such
Bondholder acquires during the taxable year of the election or thereafter, and
possibly previously acquired instruments. Similarly, a Bondholder that made this
election for a Bond that is acquired at a premium would be deemed to have made
an election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Bondholder owns or acquires. See "-Premium"
below. Each of these elections to accrue
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interest, discount and premium with respect to a Bond on a constant yield method
or as interest would be irrevocable.
However, market discount with respect to a Bond will be considered to be de
minimis for purposes Section 1276 of the Code if such market discount is less
than 0.25% of the remaining stated redemption price of such Bond multiplied by
the number of complete years to maturity remaining after the date of its
purchase. In interpreting a similar rule with respect to original issue discount
on obligations payable in installments, the OID Regulations refer to the
weighted average maturity of obligations, and it is likely that the same rule
will be applied with respect to market discount, presumably taking into account
the Prepayment Assumption. If market discount is treated as de minimis under
this rule, it appears that the actual discount would be treated in a manner
similar to original issue discount of a de minimis amount. See "-Original Issue
Discount" above. Such treatment would result in discount being included in
income at a slower rate than discount would be required to be included in income
using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on Bonds should accrue, at the
Bondholder's option: (i) on the basis of a constant yield method, (ii) in the
case of a Bond issued without original issue discount, in an amount that bears
the same ratio to the total remaining market discount as the stated interest
paid in the accrual period bears to the total amount of stated interest
remaining to be paid on the Bonds as of the beginning of the accrual period or
(iii) in the case of a Bond issued with original issue discount, in an amount
that bears the same ratio to the total remaining market discount as the original
issue discount accrued in the accrual period bears to the total original issue
discount remaining on the Bond at the beginning of the accrual period. Moreover,
the Prepayment Assumption used in calculating the accrual of original issue
discount is also used in calculating the accrual of market discount. Because the
regulations referred to in this paragraph have not been issued, it is not
possible to predict what effect such regulations might have on the tax treatment
of a Bond purchased at a discount in the secondary market.
To the extent that Bonds provide for monthly or other periodic
distributions throughout their term, the effect of these rules may be to require
market discount to be includible in income at a rate that is not significantly
slower than the rate at which such discount would accrue if it were original
issue discount. Moreover, in any event a holder of a Bond generally will be
required to treat a portion of any gain on the sale or exchange of such Bond as
ordinary income to the extent of the market discount accrued to the date of
disposition under one of the foregoing methods, less any accrued market discount
previously reported as ordinary income.
Further, under Section 1277 of the Code, a holder of a Bond may be required
to defer a portion of its interest deductions for the taxable year attributable
to any indebtedness incurred or continued to purchase or carry a Bond 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 Bond purchased at a cost (excluding any portion of such cost
attributable to accrued qualified stated interest) greater than its remaining
stated redemption price will be considered to be purchased at a premium. The
holder of such a Bond may elect under Section 171 of the Code to amortize such
premium under the constant yield method over the remaining term of the Bond. If
made, such an
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election will apply to all debt instruments having amortizable bond premium that
the holder owns or subsequently acquires. Amortizable premium will be treated as
an offset to interest income on the related Bond, rather than as a separate
interest deduction. The OID Regulations also permit Bondholders to elect to
include all interest, discount and premium in income based on a constant yield
method, further treating the Bondholder as having made the election to amortize
premium generally. See "-Market Discount" above. The Committee Report states
that the same rules that apply to accrual of market discount (which rules may
require use of a prepayment assumption in accruing market discount with respect
to Bonds without regard to whether such Bonds have original issue discount)
would also apply in amortizing bond premium under Section 171 of the Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the Bonds and noncorporate holders of the Bonds that acquire such Bonds in
connection with a trade or business should be allowed to deduct, as ordinary
losses, any losses sustained during a taxable year in which their Bonds become
wholly or partially worthless as the result of one or more realized losses on
the Mortgage Loans. However, it appears that a noncorporate holder that does not
acquire a Bond in connection with a trade or business will not be entitled to
deduct a loss under Section 166 of the Code until such holder's Bond becomes
wholly worthless (i.e., until its outstanding principal balance has been reduced
to zero) and that the loss will be characterized as a short-term capital loss.
Each holder of a Bond will be required to accrue interest and original
issue discount with respect to such Bond, without giving effect to any
reductions in distributions attributable to defaults or delinquencies on the
Mortgage Loans until it can be established that any such reduction ultimately
will not be recoverable. As a result, the amount of taxable income reported in
any period by the holder of a Bond could exceed the amount of economic income
actually realized by the holder in such period. Although the holder of a Bond
eventually will recognize a loss or reduction in income attributable to
previously accrued and included income that, as the result of a realized loss,
ultimately will not be realized, the law is unclear with respect to the timing
and character of such loss or reduction in income.
Sales of Bonds. If a Bond is sold, the selling Bondholder will recognize
gain or loss equal to the difference between the amount realized on the sale and
its adjusted basis in the Bond. The adjusted basis of a Bond generally will
equal the cost of such Bond to such Bondholder, increased by income reported by
such Bondholder with respect to such Bond (including original issue discount and
market discount income) and reduced (but not below zero) by any amortized
premium and any distributions on such bond received by such Bondholder. Except
as provided in the following two paragraphs, any such gain or loss will be
capital gain or loss, provided such Bond is held as a capital asset (generally,
property held for investment) within the meaning of Section 1221 of the Code. As
a result of the enactment of the Taxpayer Relief Act of 1997 on August 5, 1997,
long-term capital gains may be taxable at different rates depending upon when
they are realized, the holding period for the assets that produce the gain, and
the investor's tax bracket.
Gain recognized on the sale of a Bond by a seller who purchased such Bond
at a market discount will be taxable as ordinary income in an amount not
exceeding the portion of such discount that accrued during the period such Bond
was held by such holder, reduced by any market discount included in income under
the rules described above under "-Market Discount" and "-Premium."
A portion of any gain from the sale of a Bond that might otherwise be
capital gain may be treated as ordinary income to the extent that such Bond is
held as part of a "conversion transaction" within the meaning of Section 1258 of
the Code. A conversion transaction generally is one in which the taxpayer has
taken two or more positions in the same or similar property that reduce or
eliminate market risk, if substantially all of the taxpayer's return is
attributable to the time value of the taxpayer's net investment in such
transaction. The amount of gain so realized in a conversion transaction that is
recharacterized as
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ordinary income generally will not exceed the amount of interest that would have
accrued on the taxpayer's net investment at 120% of the appropriate "applicable
Federal rate" (which rate is computed and published monthly by the IRS) at the
time the taxpayer enters into the conversion transaction, subject to appropriate
reduction for prior inclusion of interest and other ordinary income items from
the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Backup Withholding and Information Reporting. Payments of interest and
principal, as well as payments of proceeds from the sale of Bonds, may be
subject to the "backup withholding tax" under Section 3406 of the Code at a rate
of 31% if recipients of such payments fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed by
the IRS on a recipient of payments that is required to supply information but
that does not do so in the proper manner.
The Issuer will report to the Holders and to the IRS for each calendar year
the amount of any "reportable payments" during such year and the amount of tax
withheld, if any, with respect to payments on the Bonds.
Tax Treatment of Foreign Investors. Interest paid on a Bond to a
nonresident alien individual, foreign partnership or foreign corporation that
has no connection with the United States other than holding Bonds
("Nonresidents"), such interest will normally qualify as portfolio interest
(except where (i) the recipient is a holder, directly or by attribution, of 10%
or more of the capital or profits interest in the Company, or (ii) the recipient
is a controlled foreign corporation to which the Company is a related person)
and will be exempt from federal income tax. Upon receipt of appropriate
ownership statements, the Issuer normally will be relieved of obligations to
withhold tax from such interest payments. These provisions supersede the
generally applicable provisions of United States law that would otherwise
require the issuer to withhold at a 30% rate (unless such rate were reduced or
eliminated by an applicable tax treaty) on, among other things, interest and
other fixed or determinable, annual or periodic income paid to Nonresidents. For
these purposes a Bondholder may be considered to be related to the Company by
holding a Bond or by having common ownership with any other holder of a Bond or
any affiliate thereof .
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences", potential investors should consider the state and
local tax consequences of the acquisition, ownership, and disposition of the
Bonds offered hereunder. State tax law may differ substantially from the
corresponding federal tax law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the Bonds offered
hereunder.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans and on
certain other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts (and, as applicable, insurance company general accounts) in which such
plans, accounts or arrangements are invested that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code ("Plans") and on
persons who are fiduciaries with respect to such Plans in connection with the
investment of Plan assets. Certain employee benefit plans, such as governmental
plans (as defined in ERISA Section 3(32)), and, if no election has been made
under Section 410(d) of the Code, church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements. Accordingly, assets of such plans
may be invested in Bonds without regard to the ERISA considerations described
below, subject to the provisions of other applicable federal and state law. Any
such plan which is qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code, however, is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons (parties in interest under ERISA and disqualified persons under the
Code, collectively, "Parties in Interest") who have certain specified
relationships to the Plan unless a statutory or administrative exemption is
available. Certain Parties in Interest that participate in a prohibited
transaction may be subject to an excise tax imposed pursuant to Section 4975 of
the Code or a penalty imposed pursuant to Section 502(i) of ERISA, unless a
statutory or administrative exemption is available. These prohibited
transactions generally are set forth in Section 406 of ERISA and Section 4975 of
the Code.
The Trust Fund, the Company, any underwriter, the Owner Trustee, the
Indenture Trustee, the Master Servicer, any Administrator, any Servicer, any
provider of Credit Enhancement or any of their affiliates may be considered to
be or may become Parties in Interest (or Disqualified Persons) with respect to
certain Plans. Prohibited transactions under Section 406 of ERISA and Section
4975 of the Code may arise if a Bond is acquired by a Plan with respect to which
such persons are Parties in Interest (or Disqualified Persons) unless such
transactions are subject to one or more statutory or administrative exemptions,
such as: Prohibited Transaction Class Exemption ("PTCE") 75-1, which exempts
certain transactions involving Plans and certain broker-dealers, reporting
dealers and banks; PTCE 90-1, which exempts certain transactions between
insurance company separate accounts and Parties in Interest (or Disqualified
Persons); PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest (or Disqualified Persons); PTCE 95-60,
which exempts certain transactions between insurance company general accounts
and Parties in Interest (or Disqualified Persons); or PTCE 84-14, which exempts
certain transactions effected on behalf of a Plan by a "qualified professional
asset manager". There can be no assurance that any of these class exemptions
will apply with respect to any particular Plan investment in Bonds or, even if
it were deemed to apply, that any exemption would apply to all prohibited
transactions that may occur in connection with such investment. Accordingly,
prior to making an investment in the Bonds, investing Plans should determine
whether the Trust Fund, the Company, any underwriter, the Owner Trustee, the
Indenture Trustee, the Master Servicer, any Administrator, any Servicer, any
provider of Credit Enhancement or any of their affiliates is a Party in Interest
(or Disqualified Person) with respect to such Plan and, if so, whether such
transaction is subject to one or more statutory or administrative exemptions.
Any Plan fiduciary considering whether to invest in Bonds on behalf of
a Plan should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction
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provisions of ERISA and the Code to such investment. Each Plan fiduciary also
should determine whether, under the general fiduciary standards of investment
prudence and diversification, an investment in the Bonds is appropriate for the
Plan considering the overall investment policy of the Plan and the composition
of the Plan's investment portfolio as well as whether such investment is
permitted under the governing Plan instruments.
TAX-EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section
501 of the Code (a "Tax-Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code.
LEGAL INVESTMENT MATTERS
Each class of Bonds offered hereby and by the related Prospectus Supplement
will be rated at the date of issuance in one of the four highest rating
categories by at least one Rating Agency. If so specified in the related
Prospectus Supplement each such class that is rated in one of the two highest
rating categories by at least one Rating Agency will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA"), and, as such, will be legal investments for persons,
trusts, corporations, partnerships, associations, business trusts and business
entities (including depository institutions, life insurance companies and
pension funds) created pursuant to or existing under the laws of the United
States or of any State whose authorized investments are subject to state
regulation to the same extent that, under applicable law, obligations issued by
or guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for such entities. Under
SMMEA, if a State enacted legislation on or prior to October 3, 1991
specifically limiting the legal investment authority of any such entities with
respect to "mortgage related securities," such securities will constitute legal
investments for entities subject to such legislation only to the extent provided
therein. Certain States have enacted legislation which overrides the preemption
provisions of SMMEA. SMMEA provides, however, that in no event will the
enactment of any such legislation affect the validity of any contractual
commitment to purchase, hold or invest in "mortgage related securities," or
require the sale or other disposition of such securities, so long as such
contractual commitment was made or such securities acquired prior to the
enactment of such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal 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.
The Federal Financial Institutions Examination Council has issued a
supervisory policy statement (the "Policy Statement") applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities." The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the OTS with an effective date of
February 10, 1992. The Policy Statement generally indicates that a mortgage
derivative product will be deemed to be high risk if it exhibits greater price
volatility than a standard fixed rate thirty-year mortgage security. According
to the Policy Statement, prior to purchase, a depository institution will be
required to determine whether a mortgage derivative product that it is
considering acquiring is high-risk, and if so that the proposed acquisition
would reduce the institution's overall interest rate risk. Reliance
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on analysis and documentation obtained from a securities dealer or other outside
party without internal analysis by the institution would be unacceptable. There
can be no assurance as to which classes of Bonds will be treated as high-risk
under the Policy Statement.
The predecessor to the Office of Thrift Supervision ("OTS") issued a
bulletin, entitled, "Mortgage Derivative Products and Mortgage Swaps", which is
applicable to thrift institutions regulated by the OTS. The bulletin established
guidelines for the investment by savings institutions in certain "high-risk"
mortgage derivative securities and limitations on the use of such securities by
insolvent, undercapitalized or otherwise "troubled" institutions. According to
the bulletin, such "high-risk" mortgage derivative securities include securities
having certain specified characteristics, which may include certain classes of
Bonds. In addition, the National Credit Union Administration has issued
regulations governing federal credit union investments which prohibit investment
in certain specified types of securities, which may include certain classes of
Bonds. Similar policy statements have been issued by regulators having
jurisdiction over other types of depository institutions.
Certain classes of Bonds offered hereby, including any class that is not
rated in one of the two highest rating categories by at least one Rating Agency,
will not constitute "mortgage related securities" for purposes of SMMEA. Any
such class of Bonds will be identified in the related Prospectus Supplement.
Prospective investors in such classes of Bonds, in particular, should consider
the matters discussed in the following paragraph.
There may be other restrictions on the ability of certain investors either
to purchase certain classes of Bonds or to purchase any class of Bonds
representing more than a specified percentage of the investors' assets. The
Company will make no representations as to the proper characterization of any
class of Bonds for legal investment or other purposes, or as to the ability of
particular investors to purchase any class of Bonds under applicable legal
investment restrictions. These uncertainties may adversely affect the liquidity
of any class of Bonds. Accordingly, all investors whose investment activities
are subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Bonds of any class
thereof constitute legal investments or are subject to investment, capital or
other restrictions, and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to such investor.
USE OF PROCEEDS
Substantially all of the net proceeds to be received from the sale of Bonds
will be applied by the Company to finance the purchase of, or to repay short-
term loans incurred to finance the purchase of, the Mortgage Loans in the
respective Mortgage Pools, and to pay other expenses. The Company expects that
it will make additional sales of securities similar to the Bonds from time to
time, but the timing and amount of any such additional offerings will be
dependent upon a number of factors, including the volume of mortgage loans
purchased by the Company, prevailing interest rates, availability of funds and
general market conditions.
METHODS OF DISTRIBUTION
The Bonds offered hereby and by the related Prospectus Supplements will be
offered in series through one or more of the methods described below. The
Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the net proceeds to the
Company from such sale.
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<PAGE>
The Company intends that Bonds will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of the Bonds of a particular
series may be made through a combination of two or more of these methods. Such
methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Company with institutional investors through
dealers; and
3. By direct placements by the Company with institutional investors.
If underwriters are used in a sale of any Bonds (other than in connection
with an underwriting on a best efforts basis), such Bonds will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at fixed public
offering prices or at varying prices to be determined at the time of sale or at
the time of commitment therefor. Such underwriters may be broker-dealers
affiliated with the Company whose identities and relationships to the Company
will be as set forth in the related Prospectus Supplement. The managing
underwriter or underwriters with respect to the offer and sale of the Bonds of a
particular series will be set forth on the cover of the Prospectus Supplement
relating to such series and the members of the underwriting syndicate, if any,
will be named in such Prospectus Supplement.
In connection with the sale of the Bonds, underwriters may receive
compensation from the Company or from purchasers of such Bonds in the form of
discounts, concessions or commissions. Underwriters and dealers participating in
the distribution of the Bonds may be deemed to be underwriters in connection
with such Bonds, and any discounts or commissions received by them from the
Company and any profit on the resale of Bonds by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended (the "Securities Act").
It is anticipated that the underwriting agreement pertaining to the sale of
Bonds of any series will provide that the obligations of the underwriters will
be subject to certain conditions precedent, that the underwriters will be
obligated to purchase all such Bonds if any are purchased (other than in
connection with an underwriting on a best efforts basis) and that, in limited
circumstances, the Company will indemnify the several underwriters and the
underwriters will indemnify the Company against certain civil liabilities,
including liabilities under the Securities Act or will contribute to payments
required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Company and purchasers of
Bonds of such series.
The Company anticipates that the Bonds offered hereby will be sold
primarily to institutional investors or sophisticated non-institutional
investors. Purchasers of Bonds, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
such Bonds. Holders of Bonds should consult with their legal advisors in this
regard prior to any such reoffer or sale.
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<PAGE>
LEGAL MATTERS
Certain legal matters, including certain federal income tax matters, in
connection with the Bonds of each series will be passed upon for the Company by
Thacher Proffitt & Wood, New York, New York.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of Bonds, 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 Bonds. Accordingly,
no financial statements with respect to any Trust Fund will be included in this
Prospectus or in the related Prospectus Supplement.
RATING
It is a condition to the issuance of any class of Bonds that they shall
have been rated not lower than investment grade, that is, in one of the four
highest rating categories, by at least one Rating Agency.
Ratings on collateralized mortgage bonds address the likelihood of receipt
by the holders thereof of all collections on the underlying mortgage assets to
which such holders are entitled. These ratings address the structural, legal
and issuer-related aspects associated with such bonds, the nature of the
underlying mortgage assets and the credit quality of the guarantor, if any.
Ratings on collateralized mortgage bonds do not represent any assessment of the
likelihood of principal prepayments by borrowers or of the degree by which such
prepayments might differ from those originally anticipated. As a result,
Bondholders might suffer a lower than anticipated yield, and, in addition,
holders of stripped interest bonds in extreme cases might fail to recoup their
initial investments.
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INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1986 Act............................................................................... 68
Accrual Bonds....................................................................... 6, 34
Accrued Bond Interest.................................................................. 41
ADA.................................................................................... 66
Administrator........................................................................... 5
Agreements............................................................................. 48
ARM Loans.............................................................................. 23
Available Distribution Amount.......................................................... 40
Beneficial Owner....................................................................... 34
Bond Register.......................................................................... 34
Bond Registrar......................................................................... 34
Bondholder............................................................................. 34
Bonds............................................................................ 1, 4, 34
Cash Flow Agreement.................................................................... 11
CERCLA................................................................................. 63
Certificate Account.................................................................... 24
Certificates............................................................................ 4
Closing Date........................................................................... 69
Collection Account..................................................................... 37
Commercial Properties............................................................ 1, 7, 20
Commission.............................................................................. 3
Company.............................................................................. 1, 4
Cooperatives........................................................................... 20
CPR.................................................................................... 54
Credit Support......................................................................... 11
Crime Control Act...................................................................... 67
Debt Service Coverage Ratio............................................................ 21
Determination Date................................................................. 41, 52
DTC.................................................................................... 34
DTC Registered Bonds................................................................... 34
Due Dates.............................................................................. 23
Due Period......................................................................... 43, 52
Entity Classification Regulations...................................................... 68
Equity Participation................................................................... 23
ERISA.............................................................................. 13, 75
Event of Default....................................................................... 49
Exchange Act............................................................................ 3
Funding Account........................................................................ 42
Garn Act............................................................................... 64
Holder................................................................................. 34
ICI Funding............................................................................. 4
ICII................................................................................... 48
Impac Funding.......................................................................... 48
Indenture............................................................................ 1, 4
Indenture Trustee....................................................................... 5
Insurance Proceeds..................................................................... 38
Interest Rate........................................................................... 6
</TABLE>
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<TABLE>
<S> <C>
Intermediaries......................................................................... 34
IRS.................................................................................... 68
Letter of Credit Bank.................................................................. 46
Liquidation Proceeds................................................................... 38
Loan-to-Value Ratio.................................................................... 22
Lock-out Date.......................................................................... 23
Lock-out Period........................................................................ 23
Master Servicer...................................................................... 1, 5
Mortgage............................................................................... 20
Mortgage Loans................................................................... 1, 5, 20
Mortgage Notes......................................................................... 20
Mortgage Pool.................................................................... 1, 7, 20
Mortgage Rate........................................................................... 8
Mortgaged Properties................................................................... 20
Mortgages.............................................................................. 57
Multifamily Properties........................................................... 1, 7, 20
Net Leases............................................................................. 22
Net Operating Income................................................................... 21
Nonrecoverable Advance................................................................. 43
Nonresidents........................................................................... 74
OID Regulations........................................................................ 69
Originator............................................................................. 21
OTS.................................................................................... 77
Owner Trust............................................................................. 4
Owner Trustee........................................................................... 4
Participants........................................................................... 34
Parties in Interest.................................................................... 75
Payment Date............................................................................ 9
Percentage Interest.................................................................... 41
Permitted Investments.................................................................. 37
Plan............................................................................... 13, 75
Policy Statement....................................................................... 76
Prepayment Interest Shortfall.......................................................... 52
Prepayment Premium..................................................................... 23
Prospectus Supplement................................................................... 1
PTCE................................................................................... 75
Rating Agency.......................................................................... 12
Record Date............................................................................ 40
REIT................................................................................... 48
Related Proceeds....................................................................... 43
Relief Act............................................................................. 67
REMIC................................................................................... 1
REO Property........................................................................... 27
RICO................................................................................... 67
Securities........................................................................... 1, 4
Securities Act...................................................................... 3, 78
Seller.................................................................................. 9
Sellers................................................................................. 1
Senior Bonds........................................................................ 6, 33
Senior Liens........................................................................... 21
Senior/Subordinate Series.............................................................. 34
</TABLE>
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<TABLE>
<S> <C>
Servicing Default...................................................................... 48
SMMEA.............................................................................. 13, 76
SPA.................................................................................... 54
Special Servicer........................................................................ 5
Spread.................................................................................. 5
Strip Bonds......................................................................... 6, 34
Sub-Servicer........................................................................... 28
Sub-Servicing Agreement................................................................ 28
Subordinate Securities.............................................................. 6, 34
Superlien.............................................................................. 63
Tax Counsel............................................................................ 69
Title V................................................................................ 66
TMP.................................................................................... 68
Trust Agreement...................................................................... 1, 4
Trust Fund........................................................................... 1, 5
Trust Fund Assets.................................................................... 1, 5
UCC.................................................................................... 58
Value.................................................................................. 22
Warranting Party....................................................................... 24
Wholly Owned Entity.................................................................... 68
</TABLE>
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