VANDERBILT MORT & FINANCE INC SR SB PS TH CT SR 1996-B, 424B2, 1996-07-22

VANDERBILT MORT & FINANCE INC SR SB PS TH CT SR 1996-B
424B2, 1996-07-22

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION AND HAS BECOME EFFECTIVE.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
PRIOR TO THE TIME THE INFORMATION HEREIN HAS BEEN COMPLETED.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED 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 JULY 16, 1996
Prospectus Supplement
(To Prospectus dated July 16, 1996)
$_________ (APPROXIMATE)
VANDERBILT MORTGAGE AND FINANCE, INC.
SELLER AND SERVICER
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES, SERIES 1996B
$__________ (APPROXIMATE) CLASS A-1
$__________ (APPROXIMATE) CLASS A-2
$__________ (APPROXIMATE) CLASS A-3
$__________ (APPROXIMATE) CLASS A-4
$__________ (APPROXIMATE) CLASS A-5
$__________ (APPROXIMATE) CLASS A-6
$__________ (APPROXIMATE) CLASS B-1
$__________ (APPROXIMATE) CLASS B-2

(Principal and interest payable on the 7th day of each month, beginning
August 1996)

The Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1996B (the "Certificates") will represent interests in
a trust fund (the "Trust Fund") consisting of a pool (the "Contract Pool")
of manufactured housing installment sales contracts and installment loan
agreements (the "Contracts") and certain related property conveyed by
Vanderbilt Mortgage and Finance, Inc. (the "Company"). The Company will
serve as servicer of the Contracts (together with any successor servicer,
herein referred to as the "Servicer"). The Contracts were originated or
purchased by the Company in the ordinary course of its business. The term
"Approximate," with respect to the aggregate principal amount of any
Certificates, means that the amount is subject to a permitted variance of
plus or minus 5%. Terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Prospectus, dated July 16,
1996, attached hereto (the "Prospectus").
(Continued on next page)
/________________/
CERTAIN FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
CERTIFICATES. SEE "RISK FACTORS" HEREIN AND IN THE PROSPECTUS.

THE OFFERED CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS
OF THE COMPANY OR ANY OF ITS AFFILIATES. THE OFFERED CERTIFICATES WILL NOT
BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY, THE
UNDERWRITERS OR ANY OF THEIR AFFILIATES OR THE COMPANY OR, EXCEPT FOR THE
LIMITED GUARANTEE APPLICABLE TO THE CLASS B-2 CERTIFICATES, ANY OF ITS
AFFILIATES, AND, EXCEPT FOR PAYMENTS, IF ANY, UNDER THE LIMITED GUARANTEE OR
ALTERNATE CREDIT ENHANCEMENT IN RESPECT OF THE CLASS B-2 CERTIFICATES, WILL
BE PAYABLE ONLY FROM COLLECTIONS ON THE CONTRACTS AS DESCRIBED HEREIN.

THE 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.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Proceeds to
Price to Public(1) Underwriting Discount Company(1)(2)
Class A-1 Certificates . . . . . . . % % %
Class A-2 Certificates . . . . . . . % % %
Class A-3 Certificates . . . . . . . % % %
Class A-4 Certificates . . . . . . . % % %
Class A-5 Certificates . . . . . . . % % %
Class A-6 Certificates . . . . . . . % % %

Class B-1 Certificates . . . . . . . % % %
Class B-2 Certificates . . . . . . . % % %
Total . . . . . . . . . . . . . . . $ $ $

</TABLE>

(1) Plus accrued interest, if any, at the applicable rate from .
(2) Before deducting expenses, estimated to be $___________.

The Offered Certificates will be purchased by the Underwriters from the
Company and will be offered by the Underwriters from time to time to the
public in negotiated transactions or otherwise at varying prices to be
determined, in each case, at the time of sale.

The Offered Certificates are offered subject to receipt and acceptance
by the Underwriters, to prior sale and to the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of the Offered Certificates
will be made in book-entry form through the facilities of DTC, on or about
July __, 1996, against payment therefor in immediately available funds.
2

PRUDENTIAL SECURITIES INCORPORATED J.P. MORGAN & CO.

The date of this Prospectus Supplement is July __, 1996.
<PAGE>
(Continued from the cover page)

The Certificates will consist of five classes of Senior Certificates
(the "Class A-1 Certificates," the "Class A-2 Certificates," the "Class A-3
Certificates", the "Class A-4 Certificates" and the "Class A-5 Certificates")
and four classes of Subordinated Certificates (the "Class A-6 Certificates,"
the "Class B-1 Certificates," the "Class B-2 Certificates" and the "Class R
Certificate"). The Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates and Class A-6
Certificates will evidence in the aggregate approximate initial _____%,
_____%, _____%, _____%, _____% and ______% undivided interests, respectively,
in the Trust Fund. The Class B-1 Certificates and Class B-2 Certificates
will evidence in the aggregate approximate initial ____% and _____% undivided
interests, respectively, in the Trust Fund. The Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5 and Class A-6 Certificates are referred to
collectively as "Class A Certificates" herein. The Class B-1 and Class B-2
Certificates are referred to collectively as "Class B Certificates" herein.
Only the Class A and Class B Certificates (collectively, the "Offered
Certificates") are being offered hereby. The Trust Fund will be created
pursuant to a Pooling and Servicing Agreement between the Company, as Seller
and Servicer of the Contracts, The Chase Manhattan Bank, as trustee (the
"Trustee") and Clayton Homes, Inc. ("CHI") as provider of the Limited
Guarantee. The Trust Fund property will include all rights to payments
received on each Contract on or after July 1, 1996 (the "Cut-off Date"),
security interests in the manufactured homes securing the Contracts, any
related mortgages or deeds of trust, all rights under certain hazard
insurance policies with respect to the manufactured homes and the amounts in
the Certificate Account.

Payments of principal and interest on the Offered Certificates will be
distributed to Certificateholders on the 7th day of each month (or if the 7th
day is not a business day, the next business day) (each, a "Remittance
Date"), beginning in August 1996. The Class A-1 Certificates will have a
fixed Remittance Rate of _____% per annum, computed on the basis of a 360-day
year of twelve 30-day months. The Remittance Rates for the Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class B-1 and Class B-2 Certificates
will be the lesser of (i) _____%, _____%, _____%, _____%, _____%, _____% and
_____% per annum, respectively, computed on the basis of a 360-day year of
twelve 30-day months, or (ii) the Weighted Average Net Contract Rate (as
defined herein) for such Remittance Date. The rights of the holders of the
Class A-6 Certificates to receive distributions of interest and principal are
subordinated to such rights of the Senior Certificateholders to the extent
provided herein. The rights of the holders of the Class B Certificates to
receive distributions of amounts collected on the Contracts will be
subordinated to the rights of the Class A Certificateholders to receive the
distributions due thereon to the extent provided herein. See "Description
of the Certificates."

The Class B-2 Certificateholders will initially have the benefit of a
limited guarantee (the "Limited Guarantee") of CHI to protect against losses
that would otherwise be absorbed by the Class B-2 Certificateholders.
Pursuant to the Limited Guarantee, to the extent that funds in the
Certificate Account are insufficient to distribute to the holders of the
Class B-2 Certificates the Class B-2 Formula Distribution Amount (as
described herein), CHI will be obligated to pay an Enhancement Payment (as
defined herein). See "Description of the Certificates-Limited Guarantee of
CHI" herein. The Limited Guarantee may be replaced by an Alternate Credit
Enhancement (as defined herein).

An election will be made to treat the Trust Fund as a real estate
mortgage investment conduit (a "REMIC") for federal income tax purposes. See
"Certain Federal Income Tax Consequences" herein and in the Prospectus. The
Class A and Class B Certificates will represent "regular interests" in the
REMIC, and the Class R Certificate will represent the residual interest in
the REMIC.

The obligations of the Servicer (including the Company as initial
Servicer) with respect to the Certificates are limited to its contractual
servicing obligations. The Company, as seller, however, will make certain
representations and warranties relating to the Contracts. In the event of
an uncured breach of any such representation or warranty that materially
adversely affects a Contract, the Company may, under certain circumstances,
be obligated to repurchase such Contract or substitute another Contract
therefor, as described herein.

The interests of the owners of the Offered Certificates (the
"Certificate Owners") will be represented by book-entries on the records of
The Depository Trust Company and participating members thereof. See
"Description of the Certificates--Registration of the Offered Certificates"
herein. Prudential Securities Incorporated and J.P.
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Morgan Securities Inc. (the "Underwriters") intend to make a secondary market
in the Offered Certificates, but have no obligation to do so. There can be
no assurance that a secondary market for the Offered Certificates will
develop, or if it does develop, that it will continue or provide sufficient
liquidity.

--------------------
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE OFFERED CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PURCHASERS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE OFFERED
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.

UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS
TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

____________________

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SUMMARY OF TERMS OF THE CERTIFICATES

This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings assigned them in the
Prospectus or elsewhere in this Prospectus Supplement.

Securities Offered

The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class B-1 and Class B-2 Certificates (the "Offered
Certificates") of the Manufactured Housing Contract Senior/Subordinate Pass-
Through Certificates, Series 1996B. The Class R Certificate is not being
offered hereby. The Class R Certificate and the Offered Certificates, are
collectively referred to as the "Certificates" herein.

Seller

Vanderbilt Mortgage and Finance, Inc. (the "Company"), a
wholly-owned subsidiary of Clayton Homes, Inc. ("CHI"). Neither CHI nor any
of its affiliates, including the Company, has guaranteed or is otherwise
obligated with respect to the Certificates, except to the extent of the
Limited Guarantee of CHI or the Alternate Credit Enhancement with respect to
the Class B-2 Certificates. See "Risk Factors" herein and in the Prospectus.

Servicer

Vanderbilt Mortgage and Finance, Inc. (in such capacity
referred to herein as the "Servicer"). The Servicer may perform any of its
obligations under the Agreement through one or more subservicers.
Notwithstanding any such subservicing arrangement, the Servicer will remain
liable for its servicing duties and obligations under the Agreement as if the
Servicer alone were servicing the Contracts.

Trustee

The Chase Manhattan Bank, a New York banking corporation (the
"Trustee").

Cut-off Date Pool Principal
Balance

$137,865,912.02 (Approximate, subject to a permitted variance
of plus or minus 5%).

Certificates Offered

$ Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 1996B, to be issued in
the following Classes (each, a "Class"):

Original Certificate Remittance
Principal Balance(1) Rate Class
$ Class A-1 Certificates
$ Class A-2 Certificates
$ Class A-3 Certificates
$ Class A-4 Certificates
$ Class A-5 Certificates
$ Class A-6 Certificates
$ Class B-1 Certificates
$ Class B-2 Certificates

</TABLE>

(1) Approximate, subject to a permitted variance of plus or minus
5%.
(2) Subject to a maximum rate equal to the Weighted Average Net
Contract Rate (as defined herein) for such Remittance Date.

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Remittance Date

The 7th day of each month (or if such 7th day is
not a business day, the next succeeding business day), commencing in August
1996.

Record Date

The last business day of the month preceding the month
of the related Remittance Date.

Cut-off Date

July 1, 1996.

Agreement

The Pooling and Servicing Agreement, dated as of July 1, 1996
(the "Agreement"), between the Company, as Seller and Servicer, CHI, as
provider of the Limited Guarantee, with respect to the Class B-2
Certificates, and the Trustee.

Description of the
Offered Certificates

The Offered Certificates evidence undivided
interests in the Contract Pool and certain other property held in trust for
the benefit of the Certificateholders (the "Trust Fund"). The Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-5 Certificates are Senior Certif-
icates and the Class A-6, Class B-1 and Class B-2 Certificates are
Subordinated Certificates, all as described herein. The Offered Certificates
will be offered in denominations of $50,000 and integral multiples of $1,000
in excess thereof. The undivided percentage interest (the "Percentage
Interest") of a Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class B-1 or Class B-2 Certificate in the distributions on such
Certificates will be equal to the percentage obtained from dividing the
denomination of such Certificate by the Original Certificate Principal
Balance of such Class of Certificates.

Distributions

Distributions to the holders of Certificates of a Class
will be made in an amount equal to their respective Percentage Interests
multiplied by the aggregate amount distributed on such Class of Certificates
for the related Remittance Date, commencing in August 1996. Distributions
will be made on each Remittance Date to holders of record on the preceding
Record Date, except that the final distribution in respect of the
Certificates will only be made upon presentation and surrender of the
Certificates at the office or agency appointed by the Trustee for that
purpose in New York, New York. Distributions to the Certificateholders of
a Class will be applied first to the payment of interest and, if any
principal is then due, then to the payment of principal. The funds available
in the Certificate Account for distribution on a Remittance Date (the
"Available Distribution Amount") will be applied in the amounts and the order
of priority set forth below. See "Description of the
Certificates/__/Distributions" for a detailed description of the amounts on
deposit in the Certificate Account that will constitute the Available Distri-
bution Amount on each Remittance Date. The aggregate amounts distributed to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
B-1 and Class B-2 Certificateholders from the Available Distribution Amount
in respect of a Remittance Date are the Class A-1 Distribution Amount, the
Class A-2 Distribution Amount, the Class A-3 Distribution Amount, the Class
A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class A-6
Distribution Amount,
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the Class B-1 Distribution Amount and the Class B-2 Distribution
Amount, respectively.

A. On each Remittance Date on which the Class B Principal
Distribution Test is not met, the Available Distribution Amount will be
distributed in the following amounts in the following order of priority:

(i) one month's interest on the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, at their respective Remittance Rates
on the outstanding Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Principal Balances, respectively, together with any previously undistributed
shortfalls in interest due on the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates, respectively, in respect of prior Remittance
Dates; if the Available Distribution Amount is not sufficient to distribute
the full amount of interest due on the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates, the Available Distribution Amount will be
distributed on such Classes of Certificates pro rata on the basis of the
interest due thereon;

(ii) the Formula Principal Distribution Amount in the following
order of priority:

(a) to the Class A-1 Certificateholders until the Class A-1
Principal Balance is reduced to zero;

(b) to the Class A-2 Certificateholders until the Class A-2
Principal Balance is reduced to zero;

(d) to the Class A-4 Certificateholders until the Class A-4
Principal Balance is reduced to zero; and

(e) to the Class A-5 Certificateholders until the Class A-5
Principal Balance is reduced to zero;

(iii) one month's interest on the Class A-6 Principal Balance to
the Class A-6 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class A-6 Certificates in respect of prior
Remittance Dates;

(iv) the remainder of the Formula Principal Distribution Amount,
if any, to the Class A-6 Certificates until the Class A-6 Principal Balance
is reduced to zero;

(v) one month's interest on the Class B-1 Principal Balance to the
Class B-1 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class B-1 Certificates in respect of prior
Remittance Dates;

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(vi) the remainder of the Formula Principal Distribution Amount,
if any, to the Class B-1 Certificates until the Class B-1 Principal Balance
is reduced to zero;

(vii) one month's interest on the Class B-2 Principal Balance to
the Class B-2 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class B-2 Certificates in respect of prior
Remittance Dates;

(viii) the remainder of the Formula Principal Distribution Amount,
if any, to the Class B-2 Certificates until the Class B-2 Principal Balance
is reduced to zero;

(ix) so long as the Company is the Servicer, any remainder up to
the amount equal to 1/12th of the product of 1.25% and the Pool Scheduled
Principal Balance for the immediately preceding Remittance Date (the "Monthly
Servicing Fee") to the Servicer;

(x) the amount of any reimbursement to CHI for Enhancement
Payments with respect to the Class B-2 Certificates as provided in the
Agreement; and

(xi) any remainder to the holder of the Class R Certificate, which
will initially be a special purpose subsidiary of the Company.

B. On each Remittance Date on which the Class B Principal
Distribution Test is met, the Available Distribution Amount will be
distributed in the following amounts in the following order of priority:

(ii) the Class A Percentage of the Formula Principal Distribution
Amount in the following order of priority:

(a) to the Class A-1 Certificateholders until the Class
A-1 Principal Balance is reduced to zero;

(b) to the Class A-2 Certificateholders until the Class
A-2 Principal Balance is reduced to zero;

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(d) to the Class A-4 Certificateholders until the Class
A-4 Principal Balance is reduced to zero; and

(e) to the Class A-5 Certificateholders until the Class
A-5 Principal Balance is reduced to zero;

(iv) the remainder of the Class A Percentage of the Formula
Principal Distribution Amount, if any, to the Class A-6 Certificates until
the Class A-6 Principal Balance is reduced to zero;

(vi) the Class B Percentage of the Formula Principal Distribution
Amount to the Class B-1 Certificates until the Class B-1 Principal Balance
is reduced to zero;

(viii) the remainder of the Formula Principal Distribution Amount
to the Class B-2 Certificates until the Class B-2 Principal Balance is
reduced to zero;

(ix) so long as the Company is the Servicer, any remainder up to
the Monthly Servicing Fee to the Servicer;

(x) the amount of any reimbursement to CHI for Enhancement
Payments with respect to the Class B-2 Certificates as provided in the
Agreement; and

(xi) any remainder to the holder of the Class R Certificate.

The "Class B Principal Distribution Test" is met in respect of a
Remittance Date on which each of the following requirements is satisfied:

(1) such Remittance Date is on or after the August 2001 Remittance
Date;

(2) the Class B Percentage for such Remittance Date is equal to
at least _______% (which is 1.75 times the original Class B Percentage);

(iii) the Performance Tests are satisfied; and

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(iv) the Class B-2 Principal Balance is not less than
$___________ (which represents 2% of the Total Original Contract
Pool Principal Balance).

The "Performance Tests" are satisfied in respect of a Remittance
Date if all of the following conditions are met:

(i) the Average Sixty-Day Delinquency Ratio (as defined in the
Agreement) as of such Remittance Date does not exceed 5%;

(ii) the Average Thirty-Day Delinquency Ratio (as defined in the
Agreement) as of such Remittance Date does not exceed 7%;

(iii) the Cumulative Realized Losses (as defined in the Agreement)
as of such Remittance Date do not exceed a certain specified percentage of
the Total Original Contract Pool Principal Balance, depending on the year in
which such Remittance Date occurs; and

(iv) the Current Realized Loss Ratio (as defined in the Agreement)
as of such Remittance Date does not exceed 2.75%.

The "Total Original Contract Pool Principal Balance" is equal to
the aggregate principal balance of the Contracts as of the Cut-off Date.

The Principal Balance of each Class of Certificates is its original
Principal Balance reduced by all distributions on such Class in reduction of
its Principal Balance. The Class A Principal Balance is the sum of the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Principal
Balances. The Class B Principal Balance is the sum of the Class B-1
Principal Balance and the Class B-2 Principal Balance.

The Class A Percentage for a Remittance Date is the percentage
derived from the fraction (which shall not be greater than 1), the numerator
of which is the aggregate Principal Balance of the Class A Certificates
immediately prior to such Remittance Date and the denominator of which is the
Pool Scheduled Principal Balance. The Class B Percentage is equal to 100%
less the Class A Percentage.

The Formula Principal Distribution Amount in respect of a
Remittance Date equals the sum of (i) all scheduled payments of principal due
on each outstanding Contract during the Due Period preceding the month in
which the Remittance Date occurs, (ii) the Scheduled Principal Balance (as
defined below) of each Contract which, during the Due Period preceding the
month of such Remittance Date, was purchased by the Company pursuant to the
Agreement on account of certain breaches of its representations and
warranties, (iii) all Partial Prepayments (as defined in the Agreement)
received during such preceding Due Period, (iv) the Scheduled Principal
Balance of each Contract that was prepaid in full during such preceding Due
Period, (v) the Scheduled Principal Balance of each Contract that became a
Liquidated Contract during such preceding Due Period and (vi) any previously
undistributed shortfalls in the amounts in clauses (i) through (v) in respect
of the prior Remittance Dates (other than any
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such shortfall with respect to which an Enhancement Payment has
been made to the Class B-2 Certificateholders). The Due Period with respect
to any Remittance Date (other than the first Remittance Date) is the period
beginning on the 26th day of the second month preceding the month of such
Remittance Date and ending on the 25th day of the month preceding the month
of such Remittance Date. The Due Period with respect to the first Remittance
Date is the period beginning on July 1, 1996 and ending on July 25, 1996.

The Scheduled Principal Balance of a Contract for any Due Period
is its principal balance after giving effect to any previous Partial
Prepayments and after giving effect to all previous scheduled principal
payments (whether or not paid) and the scheduled principal payment, or
payments, in the case of Bi-weekly Contracts, due on the Due Date (or Due
Dates, as applicable) in that Due Period, but without giving effect to any
adjustments due to bankruptcy or similar proceedings.

In general, a Liquidated Contract is a defaulted Contract as to
which all amounts that the Servicer expects to recover through the date of
disposition of the Manufactured Home and any real property securing such
Contract have been received.

Notwithstanding the prioritization of the distribution of the
Formula Principal Distribution Amount among the Senior Certificates pursuant
to clauses A(ii) and B(ii) above, on each Remittance Date, on and after the
Remittance Date, if any, on which the Deficiency Event occurs, the Available
Distribution Amount remaining after making the distributions of interest to
the Senior Certificateholders required by clauses A(i) and B(i) above will
be applied to distribute the Formula Principal Distribution Amount on each
Class of Senior Certificates pro rata in accordance with the outstanding
Principal Balance of each Class of Senior Certificates. The "Deficiency
Event" will occur if the sum of the Principal Balances of each Class of
Senior Certificates becomes equal to or greater than the Pool Scheduled
Principal Balance. The "Pool Scheduled Principal Balance" as of a Remittance
Date is equal to (i) the Total Original Contract Pool Principal Balance less
(ii) the aggregate of the Formula Principal Distribution Amounts (exclusive
of the amounts in clause (vi) of the definition thereof) for all prior
Remittance Dates.

In no event will the aggregate distributions of principal to the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class B-1
or Class B-2 Certificateholders (including, in the case of the Class B-2
Certificates, any principal amounts included in any Enhancement Payments)
exceed the Original Class A-1 Principal Balance, the Original Class A-2
Principal Balance, the Original Class A-3 Principal Balance, the Original
Class A-4 Principal Balance, the Original Class A-5 Principal Balance, the
Original Class A-6 Principal Balance, the Original Class B-1 Principal
Balance or the Original Class B-2 Principal Balance, respectively.

Any undistributed interest shortfalls which are carried forward
will, to the extent legally permissible, bear interest at the Remittance Rate
applicable to the affected Class or Classes of Certificates.

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Effect of Priority Sequence of
Principal Distributions

The principal amounts described in clause
A(ii) above will be distributed, if the Class B Principal Distribution Test
is not met, to the extent of the Available Distribution Amount after payment
of interest on the Senior Certificates, to the Senior Certificateholders (but
only to the extent of the outstanding principal balance of the Senior
Certificates). This should, unless offset by other cash flow insufficiencies
due to delinquencies and liquidation losses, have the effect of accelerating
the amortization of the Senior Certificates, and delaying the amortization
of the Subordinate Certificates, from what it would be without such
prioritization, thereby increasing the respective interest in the Trust Fund
evidenced by the Subordinate Certificates. Increasing the respective
interest of the Subordinate Certificates relative to that of the Senior
Certificates is intended to preserve as provided herein the availability on
each Remittance Date of the subordination provided by the Subordinate
Certificates. See "Description of the Certificates."

Prepayment Considerations and
Risks

In general, the Contracts may be prepaid at any time without
penalty and, accordingly, the rate of principal payments thereon is likely
to vary considerably from time to time. The Offered Certificates may be sold
at a discount to their principal amounts. A slower than anticipated rate of
principal payments on the Contracts is likely to result in a lower than
anticipated yield on the Offered Certificates if they are purchased at a
discount. See "Yield Considerations" and "Maturity and Prepayment
Considerations" in the Prospectus and "Yield and Prepayment Considerations"
herein.

Subordination of the Class A-6,
Class B and Class R
Certificates

The rights of the holders of the Class A-6 Certificates
to receive distributions of amounts collected on the Contracts in the Trust
Fund will be subordinated, to the extent described herein, to such rights of
the holders of the Senior Certificates. This subordination is intended to
enhance the likelihood of receipt by the holders of the Senior Certificates
of the full amount of the scheduled monthly payments of interest and the
ultimate receipt by such holders of principal equal to the applicable
Original Certificate Principal Balance.

The protection afforded to the holders of Senior Certificates by
means of the subordination of the Class A-6 Certificates will be accomplished
(i) by the application of the Available Distribution Amount in the order
specified under "Distributions" above, and (ii) if the Available Distribution
Amount on any Remittance Date is not sufficient to permit the distribution
of the entire specified portion of the Formula Principal Distribution Amount,
as applicable, to the Senior Certificateholders, by the right of the Senior
Certificateholders to receive, until any such shortfall is distributed, a
portion of the future distributions of Available Distribution Amounts that
would otherwise have been distributable to the holders of the Class A-6,
Class B or Class R Certificates.

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<PAGE>
The rights of holders of the Class B Certificates and Class R
Certificate to receive distributions of amounts collected on the Contracts
in the Trust Fund will be subordinated, to the extent described herein, to
such rights of the holders of the Class A Certificates. This subordination
is intended to enhance the likelihood of receipt by the holders of the Class
A Certificates of the full amount of the scheduled monthly payments of
interest and the ultimate receipt by such holders of principal equal to the
Original Class A Principal Balance.

The protection afforded to the holders of Class A Certificates by
means of the subordination, to the extent provided herein, of the Class B and
Class R Certificates will be accomplished (i) by the application of the
Available Distribution Amount in the order specified under "Distributions"
above and (ii) if the Available Distribution Amount on such Remittance Date
is not sufficient to permit the distribution of the entire specified portion
of the Formula Principal Distribution Amount, as applicable, to the Class A
Certificateholders, by the right of the Class A Certificateholders to
receive, until, if ever, any such shortfall is distributed, a portion of the
future distributions of Available Distribution Amounts that would otherwise
have been payable to the holders of the Class B and Class R Certificates.

The rights of the holders of the Class B-2 Certificates to receive
distributions of amounts collected on the Contracts in the Trust Fund will
be subordinated, to the extent described herein, to such rights of the Class
B-1 Certificates. This subordination is intended to enhance the likelihood
of receipt by the holders of the Class A Certificates and the Class B-1
Certificates of the full amount of the scheduled monthly payments of interest
and the ultimate receipt by such holders of principal equal to the applicable
Original Certificate Principal Balance.

The protection afforded to the Class B-1 Certificates by means of
the subordination of the Class B-2 Certificates will be accomplished by (i)
the application of the Available Distribution Amount in the order specified
under "Distributions" above and (ii) if the Available Distribution Amount on
such Remittance Date is not sufficient to permit the distribution of the
entire specified portion of the Formula Principal Distribution Amount, as
applicable, to the Class B-1 Certificateholders and the subordination
provided by the Class B-2 Certificates has not been exhausted, by the right
of the Class B-1 Certificateholders to receive, until, if ever, any such
shortfall is distributed, a portion of the future distributions of Available
Distribution Amounts that would otherwise have been distributable to the
holders of the Class B-2 Certificates.

See "Description of the Certificates--Subordination of Class A-6
Certificates," "--Subordination of the Class B and Class R Certificates" and
"--Subordination of the Class B-2 Certificates" herein.

Losses on Liquidated Contracts

As described above, the distribution
of principal to the Senior Certificateholders is intended to include the
Scheduled Principal Balance of each Contract that became a Liquidated
Contract during the
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<PAGE>
Due Period immediately preceding the month of such distribution.
If the Liquidation Proceeds, net of related Liquidation Expenses, from such
Liquidated Contract are less than the Scheduled Principal Balance of such
Liquidated Contract, and accrued and unpaid interest thereon, then to the
extent such deficiency is not covered by any excess interest collections on
nondefaulted Contracts, the deficiency may, in effect, be absorbed by the
Class A-6 or Class B Certificateholders since a portion of future Available
Distribution Amounts funded by future principal collections on the Contracts,
up to the aggregate amount of such deficiencies, that would otherwise have
been distributable to them may be paid to the Senior Certificateholders. If
the protection afforded to the holders of a Class of Subordinate Certificates
by the subordination of one or more Classes of more junior Subordinate
Certificates is exhausted, the holders of such Class of Subordinate
Certificates will incur a loss on their investment.

If the Available Distribution Amount for any Remittance Date is not
sufficient to cover, in addition to interest distributable to the Class A
Certificateholders, the entire specified portion of the Formula Principal
Distribution Amount distributable to the Class A Certificateholders then
entitled to such payment on such Remittance Date, then the amount of the Pool
Scheduled Principal Balance available to the Class B Certificates (i.e., such
Pool Scheduled Principal Balance less the Class A Principal Balance) on
future Remittance Dates will be reduced. If, because of liquidation losses,
the Pool Scheduled Principal Balance were to decrease proportionately faster
than distributions to the Class A Certificateholders reduce the Class A
Principal Balance, the level of protection afforded by the subordination of
the Class B Certificates (i.e., the percentage of the Pool Scheduled
Principal Balance available to the Class B Certificates) would be reduced.
On each Remittance Date, if any, on or after the date on which the Class A
Principal Balance equals or becomes greater than the Pool Scheduled Principal
Balance, and so long as the Class A-6 Certificates are outstanding, the Class
A-6 Certificateholders will bear all losses on Liquidated Contracts (with no
ability to recover the amount of any liquidation loss from future principal
collections on the Contracts) and incur a loss on their investment in the
Class A-6 Certificates. On each Remittance Date, if any, on or after the
date on which the Deficiency Event occurs, the Senior Certificateholders will
receive only their respective percentage interest of Liquidation Proceeds
(net of Liquidation Expenses) realized in respect of Liquidated Contracts,
rather than the Scheduled Principal Balances thereof, and will therefore bear
all losses on Liquidated Contracts (with no ability to recover the amount of
any liquidation loss from future principal collections on the Contracts) and
incur a loss on their investment in the Senior Certificates. See
"Description of the Certificates--Subordination of the Class B and Class R
Certificates" and "--Subordination of the Class A-6 Certificates" and "Yield
and Prepayment Considerations."

Enhancement Payments to Class
B-2 Certificateholders under
the Limited Guarantee of CHI

In order to mitigate the effect of
the subordination of the Class B-2 Certificates and liquidation losses and
delinquencies on the Contracts,
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<PAGE>
CHI will initially provide a Limited Guarantee. Such Limited
Guarantee may be replaced by an Alternate Credit Enhancement. See "Alternate
Credit Enhancement" herein and "Description of the Certificates -- Alternate
Credit Enhancement." Pursuant to the Limited Guarantee, the Class B-2
Certificateholders are entitled to receive on each Remittance Date the amount
equal to the Enhancement Payment, if any. Prior to the Remittance Date (the
"Initial Class B-2 Principal Remittance Date") on which the Class B-1 Prin-
cipal Balance is reduced to zero, the Enhancement Payment will equal the
amount, if any, by which (a) the sum of (i) the Class B-2 Formula
Distribution Amount (which will be equal to one month's interest on the Class
B-2 Principal Balance) for such Remittance Date and (ii) the Class B-2
Principal Liquidation Loss Amount, if any, exceeds (b) the amount (other than
the Enhancement Payment) that will otherwise be distributed on the Class B-2
Certificates on such Remittance Date (the "Class B-2 Distribution Amount").
On each Remittance Date on or after the Initial Class B-2 Principal
Remittance Date, the Enhancement Payment will equal the amount, if any, by
which the Class B-2 Formula Distribution Amount (which will include both
interest and principal) exceeds the Class B-2 Distribution Amount for such
Remittance Date.

The "Class B-2 Principal Liquidation Loss Amount" for any
Remittance Date will equal the amount, if any, by which (a) the Formula
Principal Distribution Amount (exclusive of the portion thereof specified in
clause (vi) of the definition of Formula Principal Distribution Amount) for
such Remittance Date exceeds (b) the amount (exclusive of the Enhancement
Payment) distributed on the Certificates on account of principal on such
Remittance Date. The Class B-2 Principal Liquidation Loss Amount represents
future principal payments on the Contracts that, because of the subordination
of the Class B-2 Certificates and liquidation losses on the Contracts, will
not be paid to the Class B-2 Certificateholders from the assets of the Trust
Fund but may be paid to the Class B-2 Certificateholders in the form of an
Enhancement Payment.

The Limited Guarantee, if applicable, will be an unsecured general
obligation of CHI and will not be supported by any letter of credit or other
enhancement arrangement.

In the event that, on a particular Remittance Date, the Class B-2
Distribution Amount in the Certificate Account plus any amounts actually paid
under the Limited Guarantee or Alternative Credit Enhancement are not
sufficient to make a full distribution of interest to the Class B-2
Certificateholder, the amount of the deficiency will be carried forward as
an amount that the Class B-2 Certificateholders are entitled to receive on
the next Remittance Date.

Alternate Credit Enhancement

In the event that, at CHI's option,
Alternate Credit Enhancement (as defined herein) is provided and, upon prior
written notice to Moody's (as defined herein), Moody's shall have notified
CHI, the Company, the Servicer and the Trustee in writing that substitution
of such Alternate Credit Enhancement for the Limited Guarantee will not
result in the downgrade or withdrawal of the then current rating of
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<PAGE>
any class of the Certificates, and upon the delivery by CHI to the
Trustee of an opinion of counsel, acceptable to the Trustee, that such action
would not cause the Trust to fail to qualify as a REMIC, the Limited
Guarantee shall be released and shall terminate. The Alternate Credit
Enhancement may consist of cash or securities deposited by CHI or any other
person in a segregated escrow, trust or collateral account or a letter of
credit, certificate insurance policy or surety bond provided by a third party
(an "Alternate Credit Enhancement"). On each Remittance Date after delivery
of the Alternate Credit Enhancement, an amount, equal to the lesser of the
amount which would have been payable under the Limited Guarantee and the
amount available under such Alternate Credit Enhancement, shall be
transferred from such account to the Certificate Account to make payments to
the Class B-2 Certificateholders (an "Enhancement Payment"). CHI shall have
no obligation to replace such enhancement once it has been exhausted.

Monthly Advance

For each Remittance Date, the Servicer will be
obligated to make advances ("Monthly Advances") in respect of delinquent
scheduled payments on the Contracts that were due in the preceding Due Period
and would, in the Servicer's judgment, be recoverable from related late
payments, Liquidation Proceeds or otherwise. Assuming that in the judgment
of the Servicer all delinquent payments on the Contracts were recoverable,
the amount of the Monthly Advance paid out of the funds of the Servicer is
calculated such that, if it is made, it will permit a distribution to both
the Class A Certificateholders and Class B Certificateholders undiminished
by such delinquent payments. Monthly Advances are reimbursable to the
Servicer as described under "Description of the Certificates--Advances."

Optional Repurchase of the
Contracts by the Servicer

The Company (if it is no longer the
Servicer) and the Servicer will each have the option to purchase, on any
Remittance Date, from the Trust Fund all Contracts then outstanding and all
other property in the Trust Fund if on the preceding Remittance Date the Pool
Scheduled Principal Balance was less than 10% of the Total Original Contract
Pool Principal Balance. See "Description of the Certificates--Optional
Termination" herein.

The Contracts

Fixed rate manufactured housing installment sales
contracts and installment loan agreements (collectively, the "Contracts")
secured by security interests in manufactured homes, as defined herein (the
"Manufactured Homes"), purchased with the proceeds of the Contracts and, with
respect to certain of the Contracts ("Land-and-Home Contracts"), secured by
liens on the real estate on which the related Manufactured Homes are located.
The Contract Pool conveyed to the Trust Fund on the Closing Date (the
"Contract Pool") will consist of approximately 4,762 Contracts having an
aggregate unpaid principal balance as of the Cut-off Date of approximately
$137,865,912.02. 4,486 of the Contracts, having an aggregate unpaid
principal balance of approximately $128,637,258 as of the Cut-off Date, are
manufactured housing installment sales contracts originated by manufactured
housing dealers and purchased by the Company from such dealers or originated
by the Company. Certain
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<PAGE>
of these dealers are affiliates of CHI, the parent of the Company.
The Company purchased the remaining 276 Contracts (the "Acquired Contracts")
having an aggregate unpaid principal balance of approximately $9,228,654 as
of the Cut-off Date, from different financial institutions, as described
under "The Contract Pool" herein. Approximately 233 of the Acquired Contracts
having an aggregate unpaid principal balance of approximately $8,659,839 as
of the Cut-off Date were originated or acquired by 21st Century Mortgage
Corporation. The Contracts, as of origination, were secured by Manufactured
Homes located in 38 states and the District of Columbia and have been
selected by the Company from the Company's portfolio of manufactured housing
installment sale contracts and installment loans on the basis of criteria
specified in the Agreement. Substantially all of the Contracts bear interest
at an annual percentage rate ("APR") which is equal to or higher than the
Class A-1 Remittance Rate plus 1.25%. Monthly or bi-weekly payments of prin-
cipal and interest on the Contracts will be due on various days (each a "Due
Date") throughout each Due Period, as defined herein. Approximately 24.45%
of the Contracts by Cut-off Date principal balance have scheduled level
payments of principal and interest due every two weeks (the "Bi-weekly
Contracts") and the remainder have one such payment due each month. The APRs
on the Contracts range from 7.75% to 18.00% with a weighted average of
approximately 10.978% each as of the Cut-off Date. The Contracts had a
weighted average term to scheduled maturity as of origination of
approximately 186 months and a weighted average term to scheduled maturity
as of the Cut-off Date of approximately 184 months. The final scheduled
payment date on the Contract with the latest maturity is May 15, 2026. The
Contracts in the Contract Pool were originated from September 26, 1980
through June 28, 1996, inclusive. See "The Contract Pool" herein and "Yield
Considerations" in the Prospectus. The Agreement requires the Servicer to
maintain one or more standard hazard insurance policies with respect to each
Manufactured Home (other than a Manufactured Home in repossession) in an
amount at least equal to the lesser of its maximum insurable value or the
remaining principal balance on the related Contract. The standard hazard
insurance policies, at a minimum, are required to provide fire and extended
coverage on terms and conditions customary in manufactured housing hazard
insurance policies, with customary deductible amounts. No other insurance
policies will be provided with respect to any Contract or the Contract Pool.
See "Description of the Certificates--Servicing" in the Prospectus.

Security Interests and Mortgages
on the Manufactured Homes;
Repurchase or Substitution
Obligations

In connection with the transfer of the Contracts to the
Trustee, the Company will assign the security interests in the Manufactured
Homes and (with respect to the Land-and-Home Contracts) the liens on the real
property on which the Manufactured Homes are located to the Trustee. Assign-
ments in recordable form for the mortgages or deeds of trust (each, a
"Mortgage") evidencing the liens on real property that secure the
Land-and-Home Contracts will not be delivered by the Company. However, the
Company will deliver to the Trustee a
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<PAGE>
power of attorney to enable the Trustee to execute such assignments
of such Mortgages securing the Land-and-Home Contracts, in the event that the
recordation of such assignments becomes necessary to foreclose upon the
related real property. The Servicer, with the cooperation of the Company,
is required to take such steps as are necessary to perfect and maintain
perfection of the security interest in each Manufactured Home, but as long
as the Company is the Servicer, the Servicer will not be required to cause
notations to be made on any document of title relating to any Manufactured
Home or to execute any instrument relating to any Manufactured Home (other
than a notation or a transfer instrument necessary to show the Company as the
lienholder or legal titleholder).

Consequently, the security interests in the Manufactured Homes in
certain states may not be effectively transferred to the Trustee or
perfected. See "Risk Factors--Security Interests and Mortgages on the
Manufactured Homes" in the Prospectus. To the extent such security interest
is perfected and is effectively transferred to the Trustee, the Trustee will
have a prior claim over subsequent purchasers of the Manufactured Home,
holders of subsequently perfected security interests and creditors of the
Company. Under the laws of most states, Manufactured Homes constitute
personal property, and perfection of a security interest in the Manufactured
Home is obtained, depending on applicable state law, either by noting the
security interest on the certificate of title for the Manufactured Home or
by filing a financing statement under the Uniform Commercial Code. If the
Manufactured Home were relocated to another state without reperfection of the
security interests, or if the Manufactured Home were to become attached to
its site and a determination were made that the security interest was subject
to real estate title and recording laws, or as a result of fraud or
negligence, the Trustee could lose its prior perfected security interest in
a Manufactured Home. Federal and state consumer protection laws impose
requirements upon creditors in connection with extensions of credit and
collections on installment sales contracts, and certain of these laws make
an assignee of such a contract, such as the Trust Fund, liable to the obligor
thereon for any violation by the lender. The Company is obligated, subject
to certain conditions described under "Description of the Certificates--
Conveyance of Contracts" to repurchase or, at its option, to substitute
another contract for, any Contract as to which it has failed to perfect a
security interest in the Manufactured Home securing such Contract, or as to
which a breach of federal or state laws exists if such breach materially
adversely affects the Trustee's interest in the Contract, unless such failure
or breach has been cured within 90 days from notice of such breach. See
"Risk Factors--Security Interests and Mortgages on the Manufactured Homes,"
"--Consumer Protection Laws and Other Limitations on Lenders" and "--Priority
of Possible Tennessee Tax Lien" in the Prospectus.

The discussion in the previous paragraph as it relates to
maintaining a security interest in a Manufactured Home does not apply to any
Mortgages securing Land-and-Home Contracts. See "Risk Factors--Security
Interests and Certain Other Aspects of the
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<PAGE>
Contracts" herein for a description of certain considerations
relating to the assignment of liens on the real property securing
Land-and-Home Contracts.

Certain Federal Income Tax
Consequences

For federal income tax purposes, the Trust Fund will be
treated as a real estate mortgage investment conduit ("REMIC"). The Class
A and Class B Certificates will constitute "regular interests" in the REMIC
and generally will be treated as debt instruments of the Trust Fund for
federal income tax purposes with payment terms equivalent to the terms of
such Certificates. The Class R Certificate will be treated as the residual
interest for federal income tax purposes. The Offered Certificates may be
issued with original issue discount for federal income tax purposes. For
purposes of determining the amount and the rate of accrual of original issue
discount and market discount, the Company intends to assume that there will
be prepayments on the Contracts at a rate equal to 175% of the Prepayment
Model as defined herein. No representation is made as to whether the
Contracts will prepay at that rate or any other rate. See "Certain Federal
Income Tax Consequences" herein and in the Prospectus.

ERISA Considerations

A fiduciary of an employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), should carefully review with its legal advisors whether the
purchase or holding of Class A-1, Class A-2, Class A-3, Class A-4 or Class
A-5 Certificates could give rise to a transaction prohibited or not otherwise
permissible under ERISA or the Code. See "ERISA Considerations" herein and
in the Prospectus.

An employee benefit plan or other plan subject to ERISA and/or
Section 4975 of the Code will not be permitted to purchase or hold the Class
A-6, Class B-1 or Class B-2 Certificates unless the certification or opinion
of counsel described under "ERISA Considerations" is delivered to the
Trustee. See "ERISA Considerations" herein and in the Prospectus.

Legal Investment Considerations

The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates will constitute "mortgage
related securities" under the Secondary Mortgage Market Enhancement Act of
1984 and, as such, will be "legal investments" for certain types of
institutional investors to the extent provided in that Act.

Since the Class B Certificates will not be rated by a nationally
recognized rating agency in one of its two highest rating categories, the
Class B Certificates will not constitute "mortgage related securities" under
the Secondary Mortgage Market Enhancement Act of 1984. No representation is
made as to the appropriate characterization of the Class B Certificates under
any laws relating to investment restrictions, as to which investors should
consult their legal advisors. See "Legal Investment Considerations" herein
and in the Prospectus.

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<PAGE>

Rating

It is a condition to the issuance of the Senior Certificates
that they be rated "Aaa" by Moody's Investors Service, Inc. ("Moody's"). It
is a condition to the issuance of the Class A-6 Certificates that they be
rated at least "Aa3" by Moody's. It is a condition to the issuance of the
Class B Certificates that they be rated at least "Baa2" by Moody's. The
Company has not requested a rating on the Certificates by any rating agency
other than Moody's. However, there can be no assurance as to whether any
other rating agency will rate the Certificates, or if it does, what rating
would be assigned by any such other rating agency. A rating on any or all
of the Offered Certificates by certain other rating agencies, if assigned at
all, may be lower than the rating assigned to such Certificates by Moody's.
A security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time. The rating of the
Class B-2 Certificates is based in part on an assessment of CHI's ability to
make payments under the Limited Guarantee. Any reduction in Moody's rating
of CHI's debt securities may result in a similar reduction of the rating of
the Class B-2 Certificates. See "Ratings" in the Prospectus.

Registration of the Offered
Certificates

The Offered Certificates initially will be represented
by certificates registered in the name of Cede & Co. ("Cede") as the nominee
of The Depository Trust Company ("DTC"), and will only be available in the
form of book-entries on the records of DTC and participating members thereof.

Certificates representing the Offered Certificates will be issued
in definitive form only under the limited circumstances described herein.
All references herein to "holders" or "holders of the Offered Certificates"
shall reflect the rights of Owners of the Offered Certificates as they may
indirectly exercise such rights through DTC and participating members
thereof, except as otherwise specified herein. See "Risk Factors" and
"Description of the Certificates--Registration of the Offered Certificates"
herein and "Description of the Certificates--Global Certificates" in the
Prospectus.
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<PAGE>
RISK FACTORS

Prospective investors in the Offered Certificates should consider among
other things, the following special considerations and the special
considerations in the Prospectus in connection with the purchase of the
Offered Certificates. See "Risk Factors" in the Prospectus.

1. General. An investment in the Offered Certificates evidencing
interests in Contracts may be affected by, among other things, a downturn in
regional or local economic conditions. These regional or local economic
conditions are often volatile and historically have affected the delinquency,
loan loss and repossession experience of manufactured housing installment
sales contracts. The geographic location of the Manufactured Homes is set
forth under "The Contract Pool" herein. As set forth under "The Contract
Pool," approximately 22.96%, 18.56% and 16.59% of the Contracts by
outstanding principal balance are located in Texas, North Carolina and
Tennessee, respectively. See "The Trust Fund--The Contract Pools" in the
Prospectus. Moreover, regardless of its location, manufactured housing
generally depreciates in value. Consequently, the market value of the
Manufactured Homes could be or become lower than the principal balances of
the related Contracts. See "The Contract Pool" herein. High delinquencies
and liquidation losses on the Contracts will have the effect of reducing, and
could eliminate, the protection against loss afforded by, with respect to the
Senior Certificates, the subordination of the Class A-6, Class B and Class
R Certificates, and with respect to the Class A-6 Certificates, the
subordination of the Class B and Class R Certificates. If such protection
is eliminated, the Senior Certificateholders will bear the risk of losses on
the Contracts and must rely on the value of the Manufactured Homes for
recovery of the outstanding principal of and unpaid interest on any defaulted
Contracts. See "/__/Subordination of the Class A-6 Certificates" and
"/__/Subordination of the Class B and Class R Certificates." With respect
to the Class A-6 Certificates, sufficiently high delinquencies and
liquidation losses on the Contracts will have the effect of reducing, and
could eliminate, the protection against loss afforded the Class A-6
Certificates by the subordination of the Class B and Class R Certificates.
If such protection is eliminated, the Class A-6 Certificateholders will bear
the risk of losses on the Contracts and must rely on the value of the
Manufactured Homes for recovery of the outstanding principal of and unpaid
interest on any defaulted Contracts. With respect to the Class B-1
Certificates, sufficiently high delinquencies and liquidation losses on the
Contracts will have the effect of reducing and could eliminate the protection
against loss afforded the Class B-1 Certificates by the subordination of the
Class B-2 Certificates. If such protection is eliminated, the Class B-1
Certificateholders will bear the risk of losses on the Contracts and must
rely on the value of the Manufactured Homes for recovery of the outstanding
principal of and unpaid interest on any defaulted Contracts. With respect
to the Class B-2 Certificates, sufficiently high delinquencies and
liquidation losses on the Contracts will have the effect of reducing, and
could eliminate, the protection against loss afforded by the collections of
interest, if any, on the Contracts in excess of the aggregate amount of
interest due to be distributed on the Offered Certificates, which excess
interest amount, if any, would otherwise be distributable on the Class R
Certificate. If such protection is eliminated and CHI fails to make payments
as required under the Limited Guarantee or the Alternate Credit Enhancement
is less than the Class B-2 Formula Distribution Amount, the Class B-2
Certificateholders will bear the risk of losses on the Contracts.

Certain statistical information relating to the losses experienced by
the Company and its affiliates upon the liquidation of certain manufactured
housing contracts is set forth herein under "Vanderbilt Mortgage and Finance,
Inc." Such statistical information relates only to certain manufactured
housing contracts serviced by the Company during the periods indicated and
is included herein only for illustrative purposes. There is no assurance
that the Contracts will have the characteristics that are similar to the
manufactured housing contracts to which such statistical information relates.
In addition, the losses experienced upon recovery of principal upon the
liquidation of manufactured housing contracts historically have been sharply
affected by downturns in regional or local economic conditions. These
regional or local economic conditions are often volatile, and no predictions
can be made regarding future economic loss upon liquidation. In light of the
foregoing, no assurance can be given that the losses experienced upon the
liquidation of defaulted Contracts will be similar to any statistical
information contained herein under "Vanderbilt Mortgage and Finance, Inc."
See "The Trust Fund--The Contract Pools" in the Prospectus.

2. Prepayment Considerations. The prepayment experience on the
Contracts may affect the average life of the Offered Certificates. In the
event a Contract is prepaid in full, interest on such Contract will cease to
accrue on the date of prepayment. If such prepayments and related interest
shortfalls were sufficiently high in a month, the Available Distribution
Amount for the next Remittance Date could be less than the amount of
principal and interest that would be distributable to the Class A and Class
B Certificateholders in the absence of such shortfalls.
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<PAGE>
See "Yield and Prepayment Considerations" herein and "Maturity and Prepayment
Considerations" in the Prospectus.

3. Limited Obligations. The Offered Certificates will not represent
an interest in or obligation of the Company or any Servicer. The Offered
Certificates will not be insured or guaranteed by any governmental agency or
instrumentality, the Underwriters or any of their affiliates, or the Company
or any of its affiliates (except to the extent of the Limited Guarantee of
CHI in respect of the Class B-2 Certificates) and will be payable only from
amounts held in the Trust Fund.

4. Limited Liquidity. There can be no assurance that a secondary
market will develop for any Class of Offered Certificates or, if it does
develop, that it will provide the holders of the Offered Certificates with
liquidity of investment or that it will remain for the term of the Offered
Certificates. Issuance of the Offered Certificates in book-entry form may
reduce the liquidity of such Certificates in the secondary trading market
since investors may be unwilling to purchase Offered Certificates for which
they cannot obtain physical certificates. See "Description of the
Certificates--Registration of the Offered Certificates" herein. The Class
B Certificates will not constitute "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
Accordingly, many institutions with legal authority to invest in SMMEA
securities will not be able to invest in the Class B Certificates, limiting
the market for such securities.

5. Security Interests and Certain Other Aspects of the Contracts. A
variety of factors may limit the ability of the Certificateholders to realize
upon the Manufactured Homes securing the contracts or may limit the amount
realized to less than the amount due. See "Risk Factors--Security Interests
and Mortgages on the Manufactured Homes" and "--Consumer Protection Laws and
Other Limitations on Lenders" in the Prospectus.

6. Certain Matters Relating to Insolvency. The bankruptcy or
insolvency of the Company could have certain consequences for the holders of
the Offered Certificates. See "Risk Factors--Certain Matters Relating to
Insolvency" in the Prospectus.

7. Priority of Possible Tennessee Tax Lien. See "Risk Factors--
Priority of Possible Tennessee Tax Lien" in the Prospectus.

8. Louisiana Law. See "Risk Factors--Louisiana Law" in the Prospectus.

9. Limitations on Subordination. See "Risk Factors--Limitations on
Subordination" in the Prospectus.

10. Difficulty in Pledging. Since transactions in the Offered
Certificates can be effected only through The Depository Trust Company
("DTC"), participating organizations, indirect participants and certain
banks, the ability of an Owner of the Offered Certificates to pledge an
Offered Certificate to persons or entities that do not participate in the DTC
system, or otherwise to take action in respect of such Certificates, may be
limited due to lack of a physical certificate representing the Offered
Certificates. See "Description of the Certificates--Registration of the
Offered Certificates" herein.

11. Potential Delays in Receipt of Distributions. Owners of the
Offered Certificates may experience some delay in their receipt of
distributions of interest and principal on the Offered Certificates since
such distributions will be forwarded by the Trustee to DTC and DTC will
credit such distributions to the accounts of its Participants (as defined
herein), which will thereafter credit them to the accounts of Owners of the
Offered Certificates either directly or indirectly through indirect
participants. See "Description of the Certificates--Registration of the
Offered Certificates" herein.

12. Limited Guarantee of CHI. The Limited Guarantee, if applicable,
will be an unsecured general obligation of CHI and will not be supported by
any letter of credit or other enhancement arrangement. See "Incorporation
of Certain Documents of CHI by Reference" in the Prospectus.

13. Alternate Credit Enhancement. If CHI has replaced the Limited
Guarantee with an Alternate Credit Enhancement and such Alternate Credit
Enhancement is exhausted, CHI has no obligation to replace such
21
<PAGE>
enhancement. Consequently, the Class B-2 Certificates may bear a greater
risk of loss on the Contracts than if the Limited Guarantee was in place and
CHI was able to make payments pursuant to the Limited Guarantee.

THE CONTRACT POOL

All of the Contracts in the Trust Fund (the "Contract Pool") will be
purchased or originated by the Company. Each Contract will be a manufactured
housing installment sales contract or installment loan agreement
(manufactured housing installment sales contracts and installment loan
agreements being collectively referred to herein as "manufactured housing
contracts" or "contracts"). The statistical information presented in this
Prospectus Supplement concerning the Contract Pool is based on the Contract
Pool of Contracts as of the Cut-off Date.

A description of the Company's general practice with respect to the
origination or purchase, on an individual basis, of manufactured housing
contracts is set forth under "Underwriting Policies" in the Prospectus.

Under the Agreement, the manufactured homes securing the Contracts (the
"Manufactured Homes") are required to comply with the requirements of certain
federal statutes which generally would require the Manufactured Homes to have
a minimum of 400 square feet of living space and a minimum width of 102
inches and to be of a kind customarily used at a fixed location. Such
statutes would also require the Manufactured Homes to be transportable in one
or more sections, built on a permanent chassis and designed to be used as
dwellings, with or without permanent foundations, when connected to the
required utilities. The Manufactured Homes are also required to include the
plumbing, heating, air conditioning, and electrical systems therein.
Management of the Company estimates that in excess of 95% of the Manufactured
Homes are used as primary residences by the Obligors under the Contracts
secured by such Manufactured Homes.

The Agreement requires the Servicer to maintain hazard insurance
policies with respect to each Manufactured Home in the amounts and manner set
forth herein under "Description of the Certificates-- Servicing" in the
Prospectus. Generally, no other insurance will be maintained with respect
to the Manufactured Homes, the Contracts or the Contract Pool.

The Company will cause to be conveyed to the Trustee the Contracts and
all rights to receive payments on the Contracts that have not been received
prior to July 1, 1996, including any such payments that were due prior to
such date but were not received prior to such date. Payments due on or after
July 1, 1996, that have been received by the Company prior to July 1, 1996
will be the property of the Company and will not be part of the Trust Fund.
The Servicer will retain physical possession of the Contract documents. See
"Description of the Certificates--Conveyance of Contracts."

The Contract Pool will consist of approximately 4,762 Contracts having
an aggregate principal balance as of the Cut-off Date of approximately
$137,865,912.02. Each Contract was originated on or after September 26,
1980. 4,486 of the Contracts, having an aggregate unpaid principal balance
of approximately $128,637,258 as of the Cut-off Date, are manufactured
housing installment sale contracts originated by manufactured housing dealers
and purchased by the Company from such dealers or originated by the Company.
Certain of these dealers are affiliates of CHI, the parent of the Company.
The Company purchased the remaining 276 Contracts (the "Acquired Contracts")
from different financial institutions. Approximately 233 of the Acquired
Contracts (the "21st Century Contracts") having an aggregate unpaid principal
balance of approximately $8,659,839 as of the Cut-off Date were originated
or acquired by 21st Century Mortgage Corporation, a Delaware corporation
("21st Century"). The 21st Century Contracts constitute approximately 6.28%
of the Contract Pool. 21st Century was founded in 1995 for the origination,
acquisition and servicing of manufactured housing contracts like the
Contracts. Certain of the officers of 21st Century were previously officers
of the Company and the President of the Company is on the Board of Directors
of 21st Century. CHI is a minority stockholder of 21st Century. 21st
Century will act as subservicer for the 21st Century Contracts. The
Servicer, however, will remain primarily liable for the servicing of the 21st
Century Contracts. See "Vanderbilt Mortgage and Finance, Inc." in the
Prospectus.

Based solely upon the Company's review of a sample of the Acquired
Contracts undertaken in connection with its purchase of such Contracts from
such institutions, the Company's management does not believe that the
Acquired Contracts, as a whole, were underwritten in accordance with
underwriting standards that are as strict as
22
<PAGE>
those used by the Company in underwriting contracts that it originates or
purchases on an individual basis. See "Underwriting Policies" in the
Prospectus.

Approximately 24.45% of the Contracts (the "Bi-weekly Contracts") by
principal balance as of the Cut-off Date have bi-weekly scheduled payments
of principal and interest, and the remainder of the Contracts have monthly
scheduled payments of principal and interest. Under a Bi-weekly Contract the
obligor authorizes the Company to automatically debit the obligor's account
for the payment of each scheduled payment. If the obligor terminates such
account or the authorization of the Company to debit such account, then such
Bi-weekly Contract is converted to a Contract with scheduled monthly
payments.

Approximately 13.09% of the Contracts (the "Escalating Principal Payment
Contracts") by principal balance as of the Cut-off Date provide for an annual
increase in monthly payments over the first five years of the term of the
Contract. Under an Escalating Principal Payment Contract, the original term
of the contract is 36 years, providing initially for lower monthly payments
than if the contract were of a shorter term. Each year for a period of five
years, the term of the Escalating Principal Payment Contract automatically
converts to a shorter term, and the monthly payment increases accordingly.
At year six, the monthly payment increases to a level monthly payment which
fully amortizes the remaining principal over a twelve year term. There is
no period in which the Escalating Principal Payment Contracts have negative
amortization.

Each Contract has a fixed annual percentage rate of interest (the "APR")
and, except for the Escalating Principal Payment Contracts, generally
provides for level payments over the term of such Contract. Each Contract
fully amortizes the principal balance of the Contract over the term of the
Contract. All of the Contracts are actuarial obligations. The portion of
each scheduled payment for any Contract allocable to principal is equal to
the total amount thereof less the portion allocable to interest. The portion
of each scheduled payment due in a particular month that is allocable to
interest is a precomputed amount equal to one month's interest (or 14 days'
interest in the case of a Bi-weekly Contract) on the principal balance of the
Contract, which principal balance is determined by reducing the initial
principal balance by the principal portion of all scheduled payments that
were due in prior months (whether or not such scheduled payments were timely
made) and all prior partial principal prepayments. Thus, each payment
allocated to a scheduled monthly or bi-weekly payment of a Contract will be
applied to interest and to principal in accordance with such precomputed
allocation whether such scheduled payments are received in advance of or
subsequent to their Due Dates. All payments received on the Contracts (other
than payments allocated to items other than principal and interest or
payments sufficient to pay the outstanding principal balance of and all
accrued and unpaid interest on such Contracts) will be applied when received
to current and any previously unpaid scheduled monthly payments in the order
of the Due Dates of such payments and any payments that exceed the amount
necessary to bring the Contract current are applied to the partial prepayment
of principal of the Contract.

Except as otherwise provided herein with respect to certain Acquired
Contracts, for each Land-and-Home Contract, the Company financed the purchase
of the Manufactured Home and either took as additional security a Mortgage
on the property on which the Manufactured Home is located or, in certain
cases, the Company took a Mortgage on other property pledged on behalf of the
Obligor, or took a Mortgage on the property on which the Manufactured Home
is located in lieu of a down payment in the form of cash or the value of a
trade-in unit, or as additional security. Approximately 6.56% of the
Contracts by outstanding principal balance as of the Cut-off Date are secured
by a Mortgage on the Property on which the Manufactured Home is located in
lieu of a down payment in the form of cash or the value of a trade-in unit.
See "Certain Legal Aspects of the Contracts" in the Prospectus.

80.53% of the Contracts by outstanding principal balance as of the
Cut-off Date are secured by Manufactured Homes which were new at the time the
related Contracts were originated and 19.47% of the Contracts by outstanding
principal balance as of the Cut-off Date are secured by Manufactured Homes
which were used at the time the related Contracts were originated. Each
Contract has an APR of at least 7.75% and not more than 18.00%. The weighted
average APR of the Contracts as of the Cut-off Date is approximately 10.978%.
The Contracts have remaining maturities as of the Cut-off Date of at least
48 months but not more than 360 months and original maturities of at least
48 months but not more than 360 months. As of the Cut-off Date, the
Contracts had a weighted average original term to scheduled maturity of
approximately 186 months, and a weighted average remaining term to scheduled
maturity of approximately 184 months. The remaining term to stated maturity
of a Contract is calculated as the number of months from the Cut-off Date to
the original scheduled maturity date of such Contract. The average
outstanding principal balance of the Contracts as of the Cut-off Date was
approximately
23
<PAGE>
$28,951.26. The weighted average loan-to-value ratio at the time of
origination of the Contracts was approximately 85.749%. "Value" in such
calculation is equal to the sum of the down payment (which includes the value
of any trade-in unit), the original amount financed on the related Contract,
which may include sales and other taxes, and, in the case of a Land-and-Home
Contract, the value of the land securing the Contract as estimated by the
dealer. Manufactured Homes, unlike site-built homes, generally depreciate
in value, and it has been the Company's experience that, upon repossession,
the market value of a Manufactured Home securing a manufactured housing
contract is generally lower than the principal balance of the related
manufactured housing contract. The Contracts are secured by Manufactured
Homes and real estate located in 38 states and the District of Columbia.
Approximately 22.96%, 16.59%, and 18.56% of the Contracts by outstanding
principal balance as of the Cut-off Date were secured by Manufactured Homes
or real estate located in Texas, Tennessee and North Carolina, respectively;
9.43% in South Carolina; 7.38% in Virginia; and 5.12% in Kentucky. No other
state represented more than 4.66% of the Contracts.
24
<PAGE>
Set forth below is a description of certain additional characteristics
of the Contracts as of the Cut-off Date. Percentages may not add to 100.00%
due to rounding. Totals may not add to aggregate balances due to rounding.

GEOGRAPHICAL DISTRIBUTION OF MANUFACTURED HOMES AS OF ORIGINATION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percentage of
Contract Pool
Aggregate Principal by Outstanding
Number of Contracts Balance Outstanding Principal Balance
State As of Cut-off Date As of Cut-off Date As of Cut-off Date
Alabama 33 $ 827,540 .60%
Alaska 1 17,040 .01
Arizona 53 2,194,727 1.59
Arkansas 17 490,577 .36
California 4 144,372 .10
Colorado 57 1,786,894 1.30
Connecticut 3 86,033 .06
Delaware 18 585,658 .42
District of Columbia 1 9,973 .01
Florida 225 6,422,275 4.66
Georgia 89 2,044,133 1.48
Hawaii 1 9,196 .01
Illinois 6 192,948 .14
Indiana 31 750,895 .54
Iowa 9 230,450 .17
Kansas 4 79,288 .06
Kentucky 256 7,063,079 5.12
Louisiana 79 2,283,810 1.66
Maryland 12 325,704 .24
Michigan 5 91,998 .07
Mississippi 65 1,749,673 1.27
Missouri 30 954,770 .69
Nevada 5 136,357 .10
New Jersey 7 201,053 .15
New Mexico 47 1,545,465 1.12
New York 15 297,661 .22
North Carolina 890 25,597,048 18.56
Ohio 43 1,194,649 .87
Oklahoma 65 2,228,812 1.62
Pennsylvania 10 195,057 .14
Rhode Island 1 64,181 .05
South Carolina 440 13,004,807 9.43
Tennessee 819 22,875,605 16.59
Texas 1,087 31,669,335 22.96
Vermont 1 42,621 .03
Virginia 321 10,173,970 7.38
West Virginia 9 245,337 .18
Wisconsin 2 36,140 .03
Wyoming 1 16,778 .01
Total . . . . . . . 4,762 $137,865,912 100.00%

</TABLE>

25
<PAGE>

YEARS OF ORIGINATION OF CONTRACTS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percentage of
Number of Contract Pool
Contracts Aggregate Principal by Outstanding
Year of As of Balance Outstanding Principal Balance
Origination Cut-off Date As of Cut-off Date As of Cut-off Date
1980 . . . . . . . . . . . 1 $ 12,673 .01%
1985 . . . . . . . . . . . 9 105,549 .08
1986 . . . . . . . . . . . 4 41,950 .03
1987 . . . . . . . . . . . 1 19,769 .01
1988 . . . . . . . . . . . 13 159,357 .12
1989 . . . . . . . . . . . 18 318,322 .23
1990 . . . . . . . . . . . 13 141,621 .10
1991 . . . . . . . . . . . 23 396,926 .29
1992 . . . . . . . . . . . 22 451,309 .33
1993 . . . . . . . . . . . 18 522,024 .38
1994 . . . . . . . . . . . 10 265,557 .19
1995 . . . . . . . . . . . 233 7,408,988 5.37
1996 . . . . . . . . . . . 4,397 128,021,867 92.86
Total . . . . . . . . . . . 4,762 $137,865,912 100.00%

</TABLE>

DISTRIBUTION OF ORIGINAL CONTRACT AMOUNTS(1)

<S> <C> <C> <C>
Percentage of
Number of Aggregate Contract Pool
Original Contract Amount Contracts Principal Balance by Outstanding
(in Dollars) As of Outstanding Principal Balance
Cut-off Date As of Cut-off Date As of Cut-off Date
$ 0 - 5,000 . . . . . . . 1 $ 4,758 *
$ 5,001 - 10,000 . . . . . 161 1,321,653 .96%
$10,001 - 15,000 . . . . . 392 4,779,421 3.47
$15,001 - 20,000 . . . . . 625 10,740,592 7.79
$20,001 - 25,000 . . . . . 821 18,400,219 13.35
$25,001 - 30,000 . . . . . 864 23,439,331 17.00
$30,001 - 35,000 . . . . . 623 19,933,250 14.46
$35,001 - 40,000 . . . . . 374 13,888,278 10.07
$40,001 - 45,000 . . . . . 289 12,147,359 8.81
$45,001 - 50,000 . . . . . 255 12,037,239 8.73
$50,001 - 55,000 . . . . . 138 7,189,461 5.21
$55,001 - 60,000 . . . . . 82 4,684,176 3.40
$60,001 - 65,000 . . . . . 73 4,567,685 3.31
$65,001 - 70,000 . . . . . 30 2,011,553 1.46
$70,001 - 75,000 . . . . . 13 935,333 .68
$75,001 - 80,000 . . . . . 8 613,549 .45
$80,001 - 85,000 . . . . . 6 494,077 .36
$85,001 - 90,000 . . . . . 3 264,054 .19
$90,001 - 95,000 . . . . . 1 90,609 .07
$95,000 - 100,000 . . . . . 1 94,702 .07
$100,000 - 105,000 . . . . 1 101,677 .07
$125,000 - 130,000 . . . . 1 126,934 .09
Total . . . . . . . . . . . 4,762 $137,865,912 100.00%

</TABLE>
________________
* Indicates an amount greater than zero but less than 0.005% of Contract
Pool by Outstanding Principal Balance as of Cut-off Date.
(1) The greatest original Contract amount is $127,815.27, which represents
0.09% of the aggregate principal balance of the Contracts at origination.
26
<PAGE>

DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS(1)

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percentage of
Number Contract Pool
of Contracts Aggregate Principal by Outstanding
Original As of Balance Outstanding Principal Balance
Loan-to-Value Ratio Cut-off Date As of Cut-off Date As of Cut-off Date

Less than 60.01% . . . . . . . 190 $ 4,033,746 2.93%
60.01% - 65% . . . . . . . . 118 3,308,251 2.40
65.01% - 70% . . . . . . . . 171 4,850,989 3.52
70.01% - 75% . . . . . . . . 262 8,513,265 6.18
75.01% - 80% . . . . . . . . 350 10,743,085 7.79
80.01% - 85% . . . . . . . . 594 16,209,784 11.76
85.01% - 90% . . . . . . . . 703 21,272,025 15.43
90.01% - 91% . . . . . . . . 833 24,770,367 17.97
91.01% - 94% . . . . . . . . 371 9,333,017 6.77
94.01% - 96% . . . . . . . . 1,061 32,553,277 23.60
96.01% or greater . . . . . . 109 2,278,106 1.65
Total . . . . . . . . . . . 4,762 $137,865,912 100.00%

</TABLE>
__________
(1) The definition of "Value" is set forth above. Manufactured Homes,
unlike site-built homes, generally depreciate in value, and it should
generally be expected, especially with Contracts with high loan-to-value
ratios at origination, that any time after the origination of a Contract, the
market value of the Manufactured Home securing such Contract may be lower
than the outstanding principal balance of such Contract.

CONTRACT RATES

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Number of Percentage of
Contracts Contract Pool
As of Aggregate Principal by Outstanding
Ranges of Contracts by Cut-off Balance Outstanding Principal Balance
Contract Rate Date As of Cut-off Date As of Cut-off Date

7.000% - 8.00% . . . . . . . . 12 $ 635,521 .46%
8.001% - 9.00% . . . . . . . . 117 4,367,274 3.17
9.001% - 10.00% . . . . . . . . 745 25,975,033 18.84
10.001% - 11.00% . . . . . . . 1,445 47,176,588 34.23
11.001% - 12.00% . . . . . . . 1,431 40,056,121 29.05
12.001% - 13.00% . . . . . . . 731 15,430,296 11.19
13.001% - 14.00% . . . . . . . 197 3,135,533 2.27
14.001% - 15.00% . . . . . . . 51 724,622 .53
15.001% - 16.00% . . . . . . . 9 103,177 .07
16.001% - 17.00% . . . . . . . 4 42,322 .03
17.001% - 18.00% . . . . . . . 20 219,426 .16
Total . . . . . . . . . . . . 4,762 $137,865,912 100.00%

</TABLE>

27
<PAGE>
REMAINING MONTHS TO MATURITY

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percentage of
Contract Pool
Number of Aggregate Principal by Outstanding
Months Remaining As of Contracts Balance Outstanding Principal Balance
Cut-off Date As of Cut-off Date As of Cut-off Date As of Cut-off Date

36-48 . . . . . . . . . . . . 20 $ 169,879 .12%
49-60 . . . . . . . . . . . . 157 1,571,117 1.14
61-72 . . . . . . . . . . . . 33 370,608 .27
73-84 . . . . . . . . . . . . 387 6,273,305 4.55
85-96 . . . . . . . . . . . . 40 616,777 .45
97-108 . . . . . . . . . . . 271 5,875,023 4.26
109-120 . . . . . . . . . . . 371 7,161,031 5.19
121-132 . . . . . . . . . . . 79 1,974,097 1.43
133-144 . . . . . . . . . . . 362 8,516,221 6.18
145-156 . . . . . . . . . . . 181 5,457,168 3.96
157-168 . . . . . . . . . . . 63 1,547,273 1.12
169-180 . . . . . . . . . . . 940 26,398,124 19.14
181-192 . . . . . . . . . . . 389 14,058,342 10.20
193-204 . . . . . . . . . . . 531 19,820,837 14.38
205-216 . . . . . . . . . . . 58 2,298,818 1.67
217-228 . . . . . . . . . . . 124 4,950,805 3.59
229-240 . . . . . . . . . . . 635 24,169,473 17.53
241-252 . . . . . . . . . . . 4 248,255 .18
253-264 . . . . . . . . . . . 6 356,721 .26
265-276 . . . . . . . . . . . 3 129,230 .09
277-288 . . . . . . . . . . . 4 200,159 .15
289-300 . . . . . . . . . . . 92 4,997,937 3.63
348-360 . . . . . . . . . . . 12 704,714 .51
Total . . . . . . . . . . . 4,762 $137,865,912 100.00%

</TABLE>

28
<PAGE>
VANDERBILT MORTGAGE AND FINANCE, INC.

The following information supplements the information in the Prospectus
under the heading "Vanderbilt Mortgage and Finance, Inc." and "Underwriting
Policies" in the Prospectus.

The volume of manufactured housing contracts originated by the Company
for the periods indicated below and certain other information at the end of
such periods are as follows:

CONTRACT ORIGINATION

<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended June 30, March 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996
Principal Balance of
Contracts
Originated (in $90,041 $102,717 $119,071 $156,340 $177,311 $230,733 $292,435 $345,260 $312,690
thousands) . . .
Number of Contracts
Originated . . . 5,692 6,629 6,719 8,346 9,230 10,880 12,401 13,857 11,277
Average Contract
Size(1) . . . . . $15,819 $15,495 $17,722 $18,732 $19,210 $21,207 $ 23,582 $24,916 $27,728
Average Interest
Rate(1) . . . . . 13.85% 14.26% 13.95% 13.74% 13.40% 11.61% 10.84% 12.24% 10.741%

</TABLE>

__________________
(1) As of period end.

The following table shows the size of the portfolio of manufactured
housing contracts serviced by the Company on the dates indicated:

CONTRACT SERVICING PORTFOLIO

<TABLE>
<CAPTION>
At
At June 30, March 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996
Total Number of
Contracts Being
serviced(1) . . . . 16,794 21,140 28,745 41,346 46,623 52,433 60,165 66,960 71,895
Originated by the
Company . . . . . 16,794 20,645 24,565 31,007 36,335 42,656 47,944 55,923 61,674
Acquired from other
institutions . . . -- 495 4,180 10,339 10,288 9,777 12,221 11,037 10,221

</TABLE>

____________________

(1) Excludes contracts serviced by the Company on behalf of the Resolution
Trust Corporation trust and other trusts previously serviced by First
Manufactured Housing Credit Corporation.

29
<PAGE>
DELINQUENCY EXPERIENCE(1)

<TABLE>
<CAPTION>
At
AT JUNE 30, March 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996
Total Number of Contracts 16,794 21,140 28,745 41,346 46,623 52,433 60,165 66,960 71,895
Outstanding(2)(3) . . . . . . . .
Company Originations . . . . 16,794 20,645 24,565 31,007 36,335 42,656 47,944 55,923 61,674
Acquisitions from other -- 495 4,180 10,339 10,288 9,777 12,221 11,037 10,221
institutions . . . . . . . .
Number of Contracts Delinquent(4):
Total 30 to 59 days past due . . . 268 270 406 734 680 610 772 819 799
Company Originations . . . . . 268 270 274 415 452 391 353 565 567
Acquisitions from other -- -- 132 319 228 219 419 254 232
institutions . . . . . . . . .
Total 60 to 89 days past due . . . 81 86 125 218 206 136 209 227 233
Company Originations . . . . . 81 86 81 122 117 97 109 167 187
Acquisitions from other -- -- 44 96 89 39 100 60 46
institutions . . . . . . . . .
Total 90 days or more past due . . 68 157 218 452 569 407 498 625 672
Company Originations . . . . . 68 157 155 239 243 213 203 315 438
Acquisitions from other -- -- 63 213 326 194 295 310 234
institutions . . . . . . . . .
Total Contracts Delinquent(5) . . . 417 513 749 1,404 1,455 1,153 1,479 1,671 1,704
Company Originations . . . . . 417 513 510 776 812 701 665 1,047 1,192
Acquisitions from other -- -- 239 628 643 452 814 624 512
institutions. . . . . . . . . .
Total Contracts Delinquent(6) . . . 369 436 654 1,134 1,119 857 1,184 1,208 1,386
Company Originations . . . . . 369 436 449 669 713 595 556 873 1,027
Acquisitions from other -- -- 205 465 406 262 628 335 359
institutions. . . . . . . . . .
Total Delinquencies as a Percent(7)
of Contracts Outstanding (5) . 2.48% 2.43% 2.61% 3.40% 3.12% 2.20% 2.46% 2.50% 2.37%
Company Originations . . . . 2.48% 2.48% 2.08% 2.50% 2.23% 1.64% 1.39% 1.87% 1.93%
Acquisitions from other -- N/A 5.72% 6.07% 6.25% 4.62% 6.66% 5.65% 5.01%
institutions . . . . . . . . .
Total Delinquencies as a Percent(7)
of Contracts Outstanding(6) . . . . 2.20% 2.06% 2.27% 2.74% 2.40% 1.63% 1.97% 1.80% 1.93%
Company Originations . . . . . 2.20% 2.11% 1.83% 2.16% 1.96% 1.39% 1.16% 1.56% 1.67%
Acquisitions from other -- N/A 4.90% 4.50% 3.95% 2.68% 5.14% 3.04% 3.51%
institutions . . . . . . . . .

</TABLE>

__________________
(1) Includes data on contracts originated by the Company and portfolios
acquired by the Company from other financial institutions, as described above
under "Vanderbilt Mortgage and Finance, Inc."
(2) Excludes contracts serviced by others for which the Company is
contingently liable.
(3) Excludes contracts serviced by the Company on behalf of the Resolution
Trust Corporation trust and other trusts previously serviced by First
Manufactured Housing Credit Corporation.
(4) Including contracts that were repossessed during the prior 30-day
period, and based on number of days payments are contractually past due
(assuming 30-day months). Consequently, a payment due on the first day of
a month is not 30 days delinquent until the first day of the following month.
(5) Including contracts that were repossessed during the prior 30-day
period; figures for Acquisitions from other institutions at June 30, 1995
also include all such repossessed contracts on hand.
(6) Excluding contracts that were repossessed during the prior 30-day
period.
(7) By number of contracts.

The following table sets forth the loan loss/repossession experience of
the Company and its affiliates for the manufactured housing contracts
serviced by the Company.

30
<PAGE>
LOAN LOSS/REPOSSESSION EXPERIENCE(1)

<TABLE>
<CAPTION> AT OR
FOR
NINE
MONTHS
ENDED
MARCH
AT OR FOR YEAR ENDED JUNE 30, 31,

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996

(DOLLARS IN THOUSANDS)

Total Number of Contracts 16,794 21,140 28,745 41,346 46,623 52,433 60,165 66,960 71,895
Serviced(2)(3) . . . . . . .
Company Originations . . . . 16,794 20,645 24,565 31,007 36,335 42,656 47,944 55,923 61,674
Acquisitions from other __ 495 4,180 10,339 10,288 9,777 12,221 11,037 10,221
institutions . . . . . . . .
Aggregate Principal Balance of $274,000 $331,000 $446,000 $622,675 $707,273 $812,430 $1,006,794 $1,200,893 $1,360,443
Contracts Serviced(4). . . . . .
Company Originations . . . $274,000 $323,777 $386,176 $479,336 $569,475 $691,052 $852,536 $1,074,302 $1,249,258
Acquisitions from other __ $7,223 $ 59,824 $143,339 $137,798 $121,378 $154,258 $126,591 $111,185
institutions . . . . . . .
Net Losses from Contract
Liquidations(5): Total Dollars . $830 $1,599 $ 2,404 $ 5,075 $7,248 $5,220 $2,758 $2,262 $2,527
Total Dollars . . . . . . . . .
Company Originations . . . . $830 $1,057 $ 1,478 $ 1,361 $2,141 $1,129 $528 $362 $329
Acquisitions from other -- $ 542 $ 926 $ 3,714 $5,107 $4,091 $2,230 $1,900 $2,198
institutions . . . . . . . .
Percentage of Average Principal 0.34% 0.53% 0.59% 0.89% 1.10% 0.64% 0.30% 0.20% 0.26%
Balance(6) . . . . . . . . . .
Company Originations . . . . 0.34% 0.35% 0.42% 0.32% 0.41% 0.17% 0.07% 0.04% 0.04%
Acquisitions from other -- 7.50% 1.63% 2.59% 3.83% 2.96% 1.62% 1.35% 4.48%
institutions . . . . . . . .
Total Number of Contracts in 189 228 312 617 652 523 565 540 621
Repossession(3) . . . . . . . . .
Company Originations(7) . . . 189 228 275 349 379 333 388 422 542
Acquisitions from Other -- N/A 37 268 273 190 177 118 79
Institutions . . . . . . . .

</TABLE>
___________________
(1) Includes data on contracts originated by the Company and portfolios
acquired by the Company from other financial institutions, as described above
under "Vanderbilt Mortgage and Finance, Inc."
(2) As of period end. Excludes contracts serviced by others for which the
Company is contingently liable.
(3) Excludes contracts serviced by the Company on behalf of the Resolution
Trust Corporation trust and the other trusts previously serviced by First
Manufactured Housing Credit Corporation.
(4) As of period end. Includes principal balances of contracts serviced by
others for which the Company is contingently liable.
(5) Includes net losses on contracts serviced by others for which the
Company is contingently liable. The calculation of net losses is determined
after all accrued and unpaid interest is written off and does not include
repossession and other liquidation expenses. In general, data with respect
to repossession and other liquidation expenses are not maintained by dealers
on a separately identifiable basis, and, therefore, this information is not
available to the Company. The Company believes that it would not be unusual
for such expenses to be equal to 15% of the Scheduled Principal Balance of
a defaulted Contract. However, actual expenses may be higher or lower.
(6) As a percentage of the average principal balance of all contracts being
serviced during the period.
(7) Includes repossessions from contracts serviced by others for which the
Company is contingently liable.

The Company believes that its historical loss experience has been
favorably affected by its capacity to resell repossessed units through
dealers owned by CHI and to make needed repairs on repossessed units through
the facilities of such dealers, rather than paying the rates charged by
unaffiliated parties. If the Company is replaced as Servicer of the
Contracts, the successor Servicer may not have access to the CHI dealer
network and, as a consequence, the loss experience on the Contracts may be
adversely affected.

The data presented in the preceding tables are for illustrative purposes
only, and there is no assurance that the delinquency, loan loss and
repossession experience of Contracts in the Contract Pool will be similar to
that set forth above. The delinquency, loan loss and repossession experience
of manufactured housing contracts historically has been sharply affected by
a downturn in regional or local economic conditions. For instance, such a
downturn and higher levels of delinquency, loan loss and repossession were
experienced in areas dependent on the oil and gas industry. These regional
or local economic conditions are often volatile, and no predictions can be
made regarding future economic loss upon repossession. In addition, an
increased supply of used units in one region may in turn affect the supply
in other regions, thus affecting economic loss upon liquidation in such other
regions. Information regarding the geographic location, at origination, of
the Manufactured Homes securing the Contracts in the Contract Pool is set
forth under "The Contract Pool" herein.

31
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES FOR CHI

Set forth below are CHI's ratios of earnings to fixed charges for the
past five years. For the purposes of compiling these ratios, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense and the interest portion of rent expense.

<TABLE>
<CAPTION> Nine
Months
Ended
Year Ended June 30, March 31,
<S> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1996
Ratio of Earnings to Fixed Charges . . . . . 3.00 3.88 6.12 10.12 21.64 32.97
</TABLE>

YIELD AND PREPAYMENT CONSIDERATIONS

The Contracts have maturities at origination from 48 to 360 months, but
may be prepaid in full or in part at any time. The prepayment experience of
the Contracts (including prepayments due to liquidations of defaulted
contracts) will affect the life of the Certificates. Based on the Company's
experience with the portfolio of conventional manufactured housing contracts
serviced by it, the Company anticipates that a number of Contracts will be
prepaid in full prior to their maturity. A number of factors, including
homeowner mobility, general and regional economic conditions and prevailing
interest rates may influence prepayments. In addition, repurchases of
Contracts on account of certain breaches of representations and warranties
as described below under "Descriptions of the Certificates--Conveyance of
Contracts" will have the effect of prepayment of such Contracts and therefore
will affect the life of the Certificates. Most of the Contracts contain
provisions that prohibit the owner from selling the Manufactured Home without
the prior consent of the holder of the related Contract. Such provisions are
similar to the "due-on-sale" clauses and may not be enforceable in some
states. See "Certain Legal Aspects of the Contracts--Transfers of
Manufactured Homes; Enforceability of 'Due-on-Sale' Clauses" in the
Prospectus. The initial Servicer's policy is to permit most sales of
Manufactured Homes where the proposed buyer meets the initial Servicer's then
current underwriting standards and enters into an assumption agreement. See
"Weighted Average Life of the Offered Certificates" below and "Maturity and
Prepayment Considerations" in the Prospectus.

The allocation of distributions to the Certificateholders in accordance
with the Agreement will have the effect of accelerating the amortization of
the Senior Certificates in the sequence indicated under "Description of the
Certificates--Distributions" from the amortization that would be applicable
if distributions in respect of the Formula Principal Distribution Amount were
made pro rata according to the respective Principal Balances of each Class
of Certificates. As described under "Description of the Certificates--
Subordination of the Class A-6 Certificates," "/__/Subordination of the Class
B and Class R Certificates" and "/__/Subordination of the Class B-2
Certificates," to the extent that, on any Remittance Date, the Available
Distribution Amount is not sufficient to permit a full distribution of the
Formula Principal Distribution Amount or the portion thereof due on such
Remittance Date to the Class of Offered Certificates entitled to such
distribution, the effect will be to delay the amortization of such Class of
Offered Certificates. If a purchaser of a Class of Offered Certificates
purchases them at a discount and calculates its anticipated yield to maturity
based on an assumed rate of payment of principal on such Offered Certificates
that is faster than the rate actually realized, such purchaser's actual yield
to maturity will be lower than the yield so calculated by such purchaser.

The effective yield to each holder of an Offered Certificate will be
below that otherwise produced by the applicable Remittance Rate and the
purchase price of such holder's Certificate because, while interest will
accrue in respect of each calendar month, the distribution of such interest
to such holders will be made on the 7th day (or, if such day is not a
business day, the next succeeding business day) of the month following the
Due Period in which it accrues.

32
<PAGE>
The rate of distributions of principal of the Offered Certificates and
the yield to maturity of the Offered Certificates also will be directly
related to the rate of payment of principal (including prepayments) of the
Contracts. The rate of principal distributions on the Offered Certificates
will be affected by the amortization schedules of the Contracts and the rate
of principal payments on the Contracts (including prepayments due to
liquidations upon default). The Contracts may be prepaid by the Obligors at
any time without payment of any prepayment fee or penalty.

The Class B-1 Certificateholders will not receive any distributions of
principal until the Class B Principal Distribution Test is met or the Class
A Principal Balance is reduced to zero. The rate of principal payments on
the Class B-1 Certificates, the aggregate amount of distributions on the
Class B-1 Certificates and the yield to maturity of the Class B-1
Certificates will be affected by the rate of Obligor defaults resulting in
losses on Liquidated Contracts, by the severity of those losses and by the
timing of those losses. If a purchaser of Class B-1 Certificates calculates
its anticipated yield based on an assumed rate of default and an assumed
amount of losses that are lower than the default rate and amount of losses
actually incurred and such amount of losses actually incurred is not entirely
covered by the subordination of the Class B-2 Certificates, its actual yield
to maturity will be lower than that so calculated. The timing of losses on
Liquidated Contracts will also affect an investor's actual yield to maturity,
even if the rate of defaults and severity of losses are consistent with an
investor's expectations. If the protection afforded to the Class B-1
Certificateholders by the subordination of the Class B-2 Certificates is
exhausted, the Class B-1 Certificateholders will bear all losses and
delinquencies on the Contracts and will incur a loss on their investment.
There can be no assurance that the delinquency or repossession experience set
forth under "Vanderbilt Mortgage and Finance, Inc." will be representative
of the results that may be experienced with respect to the Contracts. There
can be no assurance as to the delinquency, repossession or loss experience
with respect to the Contracts.

As described herein under the "Description of the Certificates--
Subordination of the Class A-6 Certificates," on any Remittance Date on or
after the Remittance Date, if any, on which the Class A Principal Balance is
greater than the Pool Scheduled Principal Balance, if the Available
Distribution Amount is not sufficient to permit a full distribution of the
Formula Principal Distribution Amount to the Class of Class A
Certificateholders then entitled to such amount, the Class A-6
Certificateholders will absorb (i) all losses on each Liquidated Contract in
the amount by which its Liquidation Proceeds (net of Liquidation Expenses and
applicable Advances) are less than its unpaid principal balance plus accrued
and unpaid interest thereon at the weighted average Remittance Rate and the
percentage rate used to calculate the monthly servicing fee and (ii) other
shortfalls in the Available Distribution Amount and will incur a loss on
their investments. See "Description of the Certificates--Distributions"
herein.

On any Remittance Date on or after the Remittance Date, if any, on which
the Principal Balance of the Senior Certificates is greater than the Pool
Scheduled Principal Balance, if the Available Distribution Amount is not
sufficient to permit a full distribution of the Formula Principal
Distribution Amount to the Senior Certificateholders, the Senior
Certificateholders will absorb (i) all losses on each Liquidated Contract in
the amount by which its Liquidation Proceeds (net of Liquidation Expenses and
applicable Advances) are less than its unpaid principal balance plus accrued
and unpaid interest thereon at the weighted average Remittance Rate and the
percentage rate used to calculate the monthly servicing fee and (ii) other
shortfalls in the Available Distribution Amount and will incur a loss on
their investments. See "Description of the Certificates--Distributions"
herein.

The Company (if it is no longer the Servicer) and the Servicer (whether
or not the Company remains the Servicer) each has the option to repurchase
the Contracts and any other property constituting the Trust Fund if on any
Remittance Date the Pool Scheduled Principal Balance is less than 10% of the
Total Original Contract Pool Principal Balance. See "Description of the
Certificates--Optional Termination" herein. The exercise of such option
would effect the early retirement of the then outstanding Offered
Certificates.

In the event that there were a sufficiently large number of
delinquencies on the Contracts in any Due Period that were not covered by
Monthly Advances as described herein, the amounts paid to Certificateholders
could be less than the amount of principal and interest that would otherwise
be payable on the Offered Certificates with respect to such Due Period. In
such event, even if delinquent payments on the Contracts were eventually
recovered
33
<PAGE>
upon liquidation, since the amounts received would not include interest on
delinquent interest payments, the effective yield on the Contracts would be
reduced, and under certain circumstances it is possible that sufficient
amounts might not be available for the ultimate payment of all principal of
the Offered Certificates plus accrued interest thereon at the related
Remittance Rate, thus also reducing the effective yield on the Offered
Certificates.

Although APRs on the Contracts vary, prepayments on Contracts generally
will not affect the Remittance Rate on the Class A-1 Certificates, because
such Remittance Rate is fixed. The Class A-2 Remittance Rate will be
________% per annum (computed on the basis of a 360-day year of twelve 30-day
months), unless the Contracts prepay in such a manner that the applicable
Weighted Average Net Contract Rate is less than ________%, in which case the
Class A-2 Remittance Rate will equal such Weighted Average Net Contract Rate.

The Class A-3 Remittance Rate will be _________% per annum (computed on the
basis of a 360-day year of twelve 30-day months), unless the Contracts prepay
in such a manner that the applicable Weighted Average Net Contract Rate is
less than ________%, in which case the Class A-3 Remittance Rate will equal
such Weighted Average Net Contract Rate. The Class A-4 Remittance Rate will
be _______% per annum (computed on the basis of a 360-day year of twelve
30-day months), unless the Contracts prepay in such a manner that the
applicable Weighted Average Net Contract Rate is less than _________%, in
which case the Class A-4 Remittance Rate will equal such Weighted Average Net
Contract Rate. The Class A-5 Remittance Rate will be ______% per annum
(computed on the basis of a 360-day year of twelve 30-day months), unless the
Contracts prepay in such a manner that the applicable Weighted Average Net
Contract Rate is less than ______%, in which case the Class A-5 Remittance
Rate will equal such Weighted Average Net Contract Rate. The Class A-6
Remittance Rate will be _______% per annum (computed on the basis of a
360-day year of twelve 30-day months), unless the Contracts prepay in such
a manner that the applicable Weighted Average Net Contract Rate is less than
_______%, in which case the Class A-6 Remittance Rate will equal such
Weighted Average Net Contract Rate. The Class B-1 Remittance Rate will be
______% per annum (computed on the basis of a 360-day year of twelve 30-day
months), unless the Contracts prepay in such a manner that the applicable
Weighted Average Net Contract Rate is less than _______%, in which case the
Class B-1 Remittance Rate will equal such Weighted Average Net Contract Rate.

The Class B-2 Remittance Rate will be ______% per annum (computed on the
basis of a 360-day year of twelve 30-day months), unless the Contracts prepay
in such a manner that the applicable Weighted Average Net Contract Rate is
less than _______%, in which case the Class B-2 Remittance Rate will equal
such Weighted Average Net Contract Rate.

While partial prepayments of the principal on the Contracts are applied
on Due Dates, Obligors are not required to pay interest on the Contracts
after the date of a full prepayment of principal. As a result, full
prepayments in advance of the related Due Dates for such Contracts in any Due
Period will reduce the amount of interest received from Obligors during such
Due Period to less than one month's interest. On the other hand, when a
Contract (other than a Bi-weekly Contract) is prepaid in full during any
period, but after the Due Date for such Contract in such Due Period, the
effect will be to increase the amount of interest received from the related
Obligor during such Due Period to more than one month's interest. If a
sufficient number of Contracts are prepaid in full in a given Due Period in
advance of their respective Due Dates, interest payable on all of the
Contracts during that Due Period may be less than the interest payable on the
Class A and Class B Certificates with respect to such Due Period. In
addition, because the principal balance of the Bi-weekly Contracts is reduced
on a bi-weekly basis, the amount of interest due from Obligors on such
Contracts is less than that which would have accrued if such Contracts were
amortized on a monthly basis. As a result, the Trust Fund may not receive
sufficient monies to pay the interest on the Senior and/or Subordinate
Certificates in the amounts set forth herein under "Description of the
Certificates--Distributions" and to make a full distribution to the Senior
and/or Subordinate Certificateholders of the Formula Principal Distribution
Amounts respectively allocable to them. Although no assurance can be given
in this matter, the Company does not anticipate that the net shortfall of
interest received because of prepayments in full or the amortization of the
Bi-weekly Contracts in any Due Period would be great enough, in the absence
of delinquencies and Liquidation Losses, to reduce the Available Distribution
Amount for a Remittance Date below the amount required to be distributed to
Class A and Class B Certificateholders on that Remittance Date in the absence
of such prepayment interest shortfalls.

Each scheduled payment on a Bi-weekly Contract in any Due Period will
contain only two weeks of interest, rather than one month's interest. In
addition, the second, and in some Due Periods the third, scheduled payment
in each Due Period will be calculated on a principal balance that is lower
than the principal balance at the
34
<PAGE>
beginning of that Due Period. These characteristics may result in the
interest due on a Bi-weekly Contract in a particular Due Period being less
than thirty days' interest on the principal balance thereof at the beginning
of the Due Period.

WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES

The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Offered
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.

Weighted average life refers to the average amount of time from the date
of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average life of the Offered
Certificates will be affected by the rate at which principal on the Contracts
is paid. Principal payments on Contracts may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
repayments and liquidations due to default or other dispositions of
Contracts). Prepayments on contracts may be measured by a prepayment
standard or model. The model used in this Prospectus Supplement ("Prepayment
Model") is based on an assumed rate of prepayment each month of the then
unpaid principal balance of a pool of new Contracts. 100% of the Prepayment
Model assumes prepayment rates of 3.7% per annum of the then unpaid principal
balance of such Contracts in the first month of the life of the Contracts and
an additional 0.1% per annum in each month thereafter until the 24th month.
Beginning in the 24th month and in each month thereafter during the life of
the Contracts, 100% of the Prepayment Model assumes a constant prepayment
rate of 6.00% per annum.

As used in the following tables "0% of the Prepayment Model" assumes no
prepayments on the Contracts; "100% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 100% of the Prepayment Model assumed
prepayment rates; "175% of the Prepayment Model" assumes the Contracts will
prepay at rates equal to 175% of the Prepayment Model assumed prepayment
rates; "250% of the Prepayment Model" assumes the Contracts will prepay at
rates equal to 250% of the Prepayment Model assumed prepayment rates; and
"350% of the Prepayment Model" assumes the Contracts will prepay at rates
equal to 350% of the Prepayment Model assumed prepayment rates.

There is no assurance, however, that prepayments of the Contracts will
conform to any level of the Prepayment Model, and no representation is made
that the Contracts will prepay at the prepayment rates shown or any other
prepayment rate. The rate of principal payments on pools of manufactured
housing contracts is influenced by a variety of economic, geographic, social
and other factors, including the level of interest rates and the rate at
which manufactured homeowners sell their manufactured homes or default on
their contracts. Other factors affecting prepayment of contracts include
changes in obligors' housing needs, job transfers, unemployment and obligors'
net equity in the manufactured homes. In the case of mortgage loans secured
by site-built homes, in general, if prevailing interest rates fall
significantly below the interest rates on such mortgage loans, the mortgage
loans are likely to be subject to higher prepayment rates than if prevailing
interest rates remain at or above the rates borne by such mortgage loans.
Conversely, if prevailing interest rates rise above the interest on such
mortgage loans, the rate of prepayment would be expected to decrease. In the
case of manufactured housing contracts, however, because the outstanding
principal balances are, in general, much smaller than mortgage loan balances
and the original term to maturity of each such contract is generally shorter,
the reduction or increase in the size of the monthly payments on contracts
of the same maturity and principal balance arising from a change in the
interest rate thereon is generally much smaller. Consequently, changes in
prevailing interest rates may not have a similar effect, or may have a
similar effect, but to a smaller degree, on the prepayment rates on
manufactured housing contracts.

The tables set forth below assume that there are no delinquencies on the
Contracts and that there will be a sufficient Available Distribution Amount
to distribute interest on the Offered Certificates and the Formula Principal
Distribution Amount to the Certificateholders then entitled thereto and to
pay the Monthly Servicing Fee to the Company.

The percentages and weighted average lives in the following tables were
determined assuming that (i) scheduled interest and principal payments on the
Contracts are received in a timely manner and prepayments are
35
<PAGE>
made at the indicated percentages of the Prepayment Model set forth in the
tables; (ii) neither the Servicer nor the Company exercises its right of
optional termination described above; (iii) the Contracts will, as of the
Cut-off Date, be grouped into five pools having the additional
characteristics set forth below under "Assumed Contract Characteristics";
(iv) the Class A-1 Certificates initially represent _______% of the entire
ownership interest in the Trust Fund and have a Class A-1 Remittance Rate of
_______% per annum, the Class A-2 Certificates initially represent ________%
of the entire ownership interest in the Trust Fund and have a Class A-2
Remittance Rate of _______% per annum, the Class A-3 Certificates initially
represent ________% of the entire ownership interest in the Trust Fund and
have a Class A-3 Remittance Rate of ________% per annum, the Class A-4
Certificates initially represent ______% of the entire ownership interest in
the Trust Fund and have a Class A-4 Remittance Rate of _______% per annum,
the Class A-5 Certificates initially represent _______% of the entire
ownership interest in the Trust Fund and have a Class A-5 Remittance Rate of
_______% per annum, the Class A-6 Certificates initially represent ______%
of the entire ownership interest in the Trust Fund and have a Class A-6
Remittance Rate of ________% per annum, the Class B-1 Certificates initially
represent ________% of the entire ownership interest in the Trust Fund and
have a Class B-1 Remittance Rate of ________% per annum and the Class B-2
Certificates initially represent ______% of the entire ownership interest in
the Trust Fund and have a Class B-2 Remittance Rate of ________% per annum;
(v) no interest shortfalls will arise in connection with prepayment in full
of the Contracts; (vi) there will be no losses on the Contract Pool; (vii)
a servicing fee of 1.25% per annum will be paid to the Servicer; and (viii)
the Class B Principal Distribution Test is satisfied. No representation is
made that the Contracts will experience delinquencies or losses at the
respective rates assumed above or at any other rates.

ASSUMED CONTRACT CHARACTERISTICS
<S> <C> <C> <C> <C>
REMAINING ORIGINAL
CURRENT TERM TERM TO
PRINCIPAL TO MATURITY MATURITY
POOL BALANCE APR (MONTHS) (MONTHS)

1 . . . . . . . . . . . . . . $ %
2 . . . . . . . . . . . . . .
3 . . . . . . . . . . . . . .
4 . . . . . . . . . . . . . .
5 . . . . . . . . . . . . . .
Total . . . . . . . . . $

</TABLE>

Since the tables were prepared on the basis of the assumptions in the
preceding paragraph, there are discrepancies between the characteristics of
the actual Contracts and the characteristics of the Contracts assumed in
preparing the tables. Any such discrepancy may have an effect upon the
percentages of the Original Class A-1 Principal Balance, Original Class A-2
Principal Balance, Original Class A-3 Principal Balance, Original Class A-4
Principal Balance, Original Class A-5 Principal Balance, Original Class A-6
Principal Balance, Original Class B-2 Principal Balance and Original Class
B-2 Principal Balance outstanding and weighted average lives of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates, Class A-6 Certificates, Class B-1
Certificates and Class B-2 Certificates set forth in the tables. In
addition, since the actual Contracts and the Trust Fund have characteristics
which differ from those assumed in preparing the tables set forth below, the
distributions of principal on the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class B-1 Certificates and Class B-2
Certificates may be made earlier or later than as indicated in the tables.

It is not likely that Contracts will prepay at any constant percentage
of the Prepayment Model to maturity or that all Contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the
Contracts (which include recently originated Contracts) could produce slower
distributions of principal than as
36
<PAGE>
indicated in the tables at the various percentages of the Prepayment Model
specified even if the weighted average remaining term to maturity of the
Contracts is the same as the weighted average remaining term to maturity of
the Assumed Contract Characteristics.

Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a
variety of the assumptions discussed herein.

Based on the foregoing assumptions, the following tables indicate the
resulting weighted average lives of the Offered Certificates and set forth
the percentage of the Original Class A-1 Principal Balance, Original Class
A-2 Principal Balance, Original Class A-3 Principal Balance, Original Class
A-4 Principal Balance, Original Class A-5 Principal Balance, Original Class
A-6 Principal Balance, Original Class B-1 Principal Balance and Original
Class B-2 Principal Balance that would be outstanding after each of the dates
shown at the indicated percentages of the Prepayment Model.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-1
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION> Prepayments (% of Prepayment Model)

<S> <C> <C> <C> <C>
0% 100% 175% 250% 350%
Initial Percentage . . . . 100 100 100 100 100
July 7, 1997 . . . . . . .
July 7, 1998 . . . . . . .
July 7, 1999 . . . . . . .
July 7, 2000 . . . . . . .
July 7, 2001 . . . . . . .
July 7, 2002 . . . . . . .
July 7, 2003 . . . . . . .
July 7, 2004 . . . . . . .
July 7, 2005 . . . . . . .
July 7, 2006 . . . . . . .
July 7, 2007 . . . . . . .
July 7, 2008 . . . . . . .
July 7, 2009 . . . . . . .
July 7, 2010 . . . . . . .
July 7, 2011 . . . . . . .
July 7, 2012 . . . . . . .
July 7, 2013 . . . . . . .
Weighted Average Life
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-1 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class A-1 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class A-1 Principal Balance.

37
<PAGE>
PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-2
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION> Prepayments (% of Prepayment Model)

<S> <C> <C> <C> <C> <C>
0% 100% 175% 250% 350%
Initial Percentage . . . . 100 100 100 100 100
July 7, 1997 . . . . . . .
July 7, 1998 . . . . . . .
July 7, 1999 . . . . . . .
July 7, 2000 . . . . . . .
July 7, 2001 . . . . . . .
July 7, 2002 . . . . . . .
July 7, 2003 . . . . . . .
July 7, 2004 . . . . . . .
July 7, 2005 . . . . . . .
July 7, 2006 . . . . . . .
July 7, 2007 . . . . . . .
July 7, 2008 . . . . . . .
July 7, 2009 . . . . . . .
July 7, 2010 . . . . . . .
July 7, 2011 . . . . . . .
July 7, 2012 . . . . . . .
July 7, 2013 . . . . . . .
Weighted Average Life
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-2 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class A-2 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class A-2 Principal Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-3
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)

</TABLE>
___________________________
(1) The weighted average life of the Class A-3 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class A-3 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class A-3 Principal Balance.

38
<PAGE>
PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-4
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
<S> <C> <C> <C> <C>
0% 100% 175% 250% 350%
Initial Percentage . . . . 100 100 100 100 100
July 7, 1997 . . . . . . .
July 7, 1998 . . . . . . .
July 7, 1999 . . . . . . .
July 7, 2000 . . . . . . .
July 7, 2001 . . . . . . .
July 7, 2002 . . . . . . .
July 7, 2003 . . . . . . .
July 7, 2004 . . . . . . .
July 7, 2005 . . . . . . .
July 7, 2006 . . . . . . .
July 7, 2007 . . . . . . .
July 7, 2008 . . . . . . .
July 7, 2009 . . . . . . .
July 7, 2010 . . . . . . .
July 7, 2011 . . . . . . .
July 7, 2012 . . . . . . .
July 7, 2013 . . . . . . .
Weighted Average Life
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-4 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class A-4 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class A-4 Principal Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-5
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION> Prepayments (% of Prepayment Model)
<S> <C> <C> <C> <C> <C>
0% 100% 175% 250% 350%
Initial Percentage . . . . 100 100 100 100 100
July 7, 1997 . . . . . . .
July 7, 1998 . . . . . . .
July 7, 1999 . . . . . . .
July 7, 2000 . . . . . . .
July 7, 2001 . . . . . . .
July 7, 2002 . . . . . . .
July 7, 2003 . . . . . . .
July 7, 2004 . . . . . . .
July 7, 2005 . . . . . . .
July 7, 2006 . . . . . . .
July 7, 2007 . . . . . . .
July 7, 2008 . . . . . . .
July 7, 2009 . . . . . . .
July 7, 2010 . . . . . . .
July 7, 2011 . . . . . . .
July 7, 2012 . . . . . . .
July 7, 2013 . . . . . . .
Weighted Average Life
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-5 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class A-5 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class A-5 Principal Balance.

39
<PAGE>

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-6
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

</TABLE>
___________________________
(1) The weighted average life of the Class A-6 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class A-6 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class A-6 Principal Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS B-1
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION> Prepayments (% of Prepayment Model)
<S> <C> <C> <C> <C>
0% 100% 175% 250% 350%
Initial Percentage . . . . 100 100 100 100 100
July 7, 1997 . . . . . . .
July 7, 1998 . . . . . . .
July 7, 1999 . . . . . . .
July 7, 2000 . . . . . . .
July 7, 2001 . . . . . . .
July 7, 2002 . . . . . . .
July 7, 2003 . . . . . . .
July 7, 2004 . . . . . . .
July 7, 2005 . . . . . . .
July 7, 2006 . . . . . . .
July 7, 2007 . . . . . . .
July 7, 2008 . . . . . . .
July 7, 2009 . . . . . . .
July 7, 2010 . . . . . . .
July 7, 2011 . . . . . . .
July 7, 2012 . . . . . . .
July 7, 2013 . . . . . . .
Weighted Average Life
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class B-1 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class B-1 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class B-1 Principal Balance.

40
<PAGE>

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS B-2
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)

</TABLE>
___________________________
(1) The weighted average life of the Class B-2 Certificates is determined
by (i) multiplying the amount of each principal distribution by the number
of years from the initial date of issuance of the Class B-2 Certificates to
the related Remittance Date, (ii) summing the results and (iii) dividing the
sum by the Original Class B-2 Principal Balance.

DESCRIPTION OF THE CERTIFICATES

The Certificates will be issued pursuant to the Agreement. A copy of
a general form of a Pooling and Servicing Agreement has been filed with the
Securities and Exchange Commission. A copy of the execution form of the
Agreement (without certain exhibits) will be filed with the Securities and
Exchange Commission after the initial issuance of the Certificates. The
following description supplements the description of the Agreement and the
Certificates under the caption "Description of the Certificates" in the
Prospectus and must be read together therewith. The following summaries
describe certain terms of the Agreement, do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, the
provisions of the Agreement. When particular provisions or terms used in the
Agreement are referred to, the actual provisions (including definitions of
terms) are incorporated by reference.

GENERAL

The Certificates will be issued in fully registered form only, in
denominations of $50,000 and integral multiples of $1,000 in excess thereof,
except for a denomination representing the remainder of a Class of
Certificates. The Percentage Interest of a Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class B-1 or Class B-2 Certificate is the
percentage obtained from dividing its denomination by the Original Class A-1
Principal Balance, the Original Class A-2 Principal Balance, the Original
Class A-3 Principal Balance, the Original Class A-4 Principal Balance, the
Original Class A-5 Principal Balance, the Original Class A-6 Principal
Balance, the Original Class B-1 Principal Balance and the Original Class B-2
Principal Balance, respectively. Definitive Certificates, if issued, will
be transferable and exchangeable at the corporate trust office of the
Trustee. No service charge will be made for any registration of exchange or
transfer, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge.

41
<PAGE>
The Trust Fund includes (i) the Contract Pool, including all rights to
receive payments on the Contracts received on or after the Cut-off Date, (ii)
the amounts held from time to time in an account (the Certificate Account")
maintained by the Trustee pursuant to the Agreement, (iii) any property which
initially secured a Contract and which is acquired in the process of
realizing thereon and (iv) the proceeds of all insurance policies described
herein.

The Company will cause the Contracts to be assigned to the Trustee or
a co-trustee. The Company, as Servicer, will service the Contracts pursuant
to the Agreement. The Contract documents will be held for the benefit of the
Trustee by the Servicer.

Distributions of principal and interest on the Certificates will be made
on the 7th day of each month, or, if such day is not a business day, the next
succeeding business day (each, a "Remittance Date") beginning in August 1996,
to the persons in whose names the Certificates are registered at the close
of business on the last business day of the month preceding the month of the
related Remittance Date (the "Record Date"). With respect to each Remittance
Date, the Offered Certificates will accrue interest in respect of each
calendar month preceding such Remittance Date. If definitive Offered
Certificates are issued, distributions will be made by check mailed to the
address of the person entitled thereto as it appears on the Certificate
Register, except that a holder of Offered Certificates with original
denominations aggregating at least $5 million may request payment by wire
transfer of funds pursuant to written instructions delivered to the Trustee
at least five business days prior to the Record Date. The final distribution
in retirement of the Certificates will be made only upon presentation and
surrender of the Certificates at the office or agency of the Trustee
specified in the final distribution notice to Certificateholders.

CONVEYANCE OF CONTRACTS

In addition to the representations and warranties described in the
Prospectus under "Description of Certificates--Conveyance of Contracts," the
Company has also made certain warranties with respect to the Contracts in the
aggregate, including that (i) the aggregate principal amount payable by the
Obligors as of the Cut-off Date equals the Cut-off Date Pool Principal
Balance; (ii) approximately 80.53% of the Cut-off Date Pool Principal Balance
is attributable to loans to purchase new Manufactured Homes and approximately
19.47% of the Cut-off Date Pool Principal Balance is attributable to loans
to purchase used Manufactured Homes; (iii) no Contract has a remaining
maturity of more than 360 months; (iv) the date of each Contract is on or
after September 26, 1980; and (v) no adverse selection procedures were
employed in selecting the Contracts.

PAYMENTS ON CONTRACTS

The Trustee will establish and maintain the Certificate Account (i) at
a depository institution organized under the laws of the United States or any
state, the deposits of which are insured to the full extent permitted by law
by the Federal Deposit Insurance Corporation (the "FDIC") whose commercial
paper or unsecured long-term debt has a rating of P-1 by Moody's of unsecured
long-term debt, and which is subject to examination by federal or state
authorities or a depository institution otherwise acceptable to Moody's, (ii)
in the corporate trust department of the Trustee or (iii) at an institution
otherwise acceptable to Moody's (an "Eligible Institution"). Funds in the
Certificate Account will be invested in Eligible Investments (as defined in
the Agreement) that will mature or be subject to redemption not later than
the business day preceding the applicable monthly Remittance Date. Eligible
Investments include, among other investments, obligations of the United
States or of any agency thereof backed by the full faith and credit of the
United States; federal funds, certificates of deposit, time deposits and
bankers' acceptances sold by eligible financial institutions; commercial
paper rated P-1 by Moody's; money market funds acceptable to Moody's; and
other obligations acceptable to Moody's.

All payments in respect of principal and interest on the Contracts
received by the Servicer, including Principal Prepayments and Liquidation
Proceeds (net of Liquidation Expenses), will be paid into the Certificate
Account no later than the second business day following receipt thereof.
Amounts received as late payment fees, extension fees, assumption fees or
similar fees will be retained by the Servicer as part of its servicing fees.
See "Description of Certificates--Servicing Compensation and Payment of
Expenses" in the Prospectus. In addition, amounts paid by the Company for
Contracts repurchased as a result of breach of a representation or warranty
under
42
<PAGE>
the Agreement and amounts required to be deposited upon substitution of an
Eligible Substitute Contract because of breach of a representation or
warranty, as described under "Conveyance of Contracts" above, will be paid
into the Certificate Account. The Servicer will deposit the Monthly Advance
(described under "Advances" below), if any, in the Certificate Account on or
before each Determination Date.

On the fifth business day prior to each Remittance Date (the
"Determination Date"), the Servicer will determine the Available Distribution
Amount and the amounts to be distributed on the Certificates for the
following Remittance Date. The Available Distribution Amount is the sum of
(a) the Monthly Advance for such Remittance Date and (b) the amount in the
Certificate Account on the close of business on the last day of the
immediately preceding Due Period less the sum of (i) scheduled payments that
are due in a Due Period subsequent to such Due Period; (ii) payments on
Contracts that have been repurchased as a result of a breach of a
representation or warranty and any other payments not required to be
deposited in the Certificate Account; (iii) reimbursements to the Servicer
in the amount of Liquidation Expenses incurred and taxes and insurance
premiums advanced by the Servicer in respect of Manufactured Homes; (iv) if
Vanderbilt is no longer the Servicer, the Monthly Servicing Fee equal to
1/12th of the product of 1.25% and the Pool Scheduled Principal Balance for
the immediately preceding Remittance Date; (v) reimbursements to the Servicer
for Nonrecoverable Advances and Monthly Advances in respect of Liquidated
Contracts, to the extent permitted by the Agreement; and (vi) certain
expenses reimbursable to the Company as provided in the Agreement.

The Trustee or its Paying Agent will withdraw funds from the Certificate
Account (but only to the extent of the related Available Distribution Amount)
to make payments to Certificateholders as specified under "Distributions"
below. From time to time, as provided in the Agreement, the Servicer will
also withdraw funds from the Certificate Account to make payments to it as
permitted by the Agreement and described in clauses (ii), (iii), (iv), (v)
and (vi) in the previous paragraph.

DISTRIBUTIONS

Distributions of principal and interest to holders of a Class of
Certificates will be made on each Remittance Date in an amount equal to the
respective Percentage Interests multiplied by the aggregate amount
distributed on such Class of Certificates on such Remittance Date.
Distributions to a Class of Certificateholders will be applied first to the
payment of interest and then to the payment of principal. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.

Each distribution with respect to a Book-Entry Certificate will be paid
to DTC, which will credit the amount of such distribution to the accounts of
its Participants in accordance with its normal procedures. Each Participant
will be responsible for disbursing such distribution to the Certificate
Owners that it represents and to each indirect participating brokerage firm
(a "brokerage firm" or "indirect participating firm") for which it acts as
agent. Each brokerage firm will be responsible for disbursing funds to the
Certificate Owners that it represents. All such credits and disbursements
with respect to Book-Entry Certificates are to be made by DTC and the
Participants in accordance with DTC's rules.

A. On each Remittance Date on which the Class B Principal Distribution
Test is not met, the Available Distribution Amount will be distributed in the
following amounts in the following order of priority:

(i) one month's interest on the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates, at their respective Remittance Rates on the
outstanding Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Principal Balances, respectively, together with any previously undistributed
shortfalls in interest due on the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates, respectively, in respect of prior Remittance
Dates; if the Available Distribution Amount is not sufficient to distribute
the full amount of interest due on the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates, the Available Distribution Amount will be
distributed on such Classes of Certificates pro rata on the basis of the
interest due thereon;

(ii) the Formula Principal Distribution Amount in the following order
of priority:

43
<PAGE>

(a) to the Class A-1 Certificateholders until the Class A-1
Principal Balance is reduced to zero;

(b) to the Class A-2 Certificateholders until the Class A-2
Principal Balance is reduced to zero;

(d) to the Class A-4 Certificateholders until the Class A-4
Principal Balance is reduced to zero; and

(e) to the Class A-5 Certificateholders until the Class A-5
Principal Balance is reduced to zero;

(iii) one month's interest on the Class A-6 Principal Balance to the
Class A-6 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class A-6 Certificates in respect of prior
Remittance Dates;

(iv) the remainder of the Formula Principal Distribution Amount, if
any, to the Class A-6 Certificates until the Class A-6 Principal Balance is
reduced to zero;

(vi) the remainder of the Formula Principal Distribution Amount, if
any, to the Class B-1 Certificates until the Class B-1 Principal Balance is
reduced to zero;

(vii) one month's interest on the Class B-2 Principal Balance to the
Class B-2 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class B-2 Certificates in respect of prior
Remittance Dates;

(viii) the remainder of the Formula Principal Distribution Amount, if
any, to the Class B-2 Certificates until the Class B-2 Principal Balance is
reduced to zero;

(ix) the remainder up to the Monthly Servicing Fee to the Servicer so
long as the Company is the Servicer;

(x) the amount of any reimbursement to CHI for Enhancement Payments
with respect to the Class B-2 Certificates as provided in the Agreement; and

(xi) any remainder to the holder of the Class R Certificate, which will
initially be a special purpose subsidiary of the Company.

B. On each Remittance Date on which the Class B Principal Distribution
Test is met, the Available Distribution Amount will be distributed in the
following amounts in the following order of priority:

(i) one month's interest on the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates, at their respective Remittance Rates on the
outstanding Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Principal Balances, respectively, together with any previously undistributed
shortfalls in interest due on the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates, respectively, in respect of prior Remittance
Dates; if the Available Distribution Amount is not sufficient to distribute
the full amount of interest due on the Class A-1, Class A-2, Class A-3, Class

A-4 and Class A-5 Certificates, the Available Distribution Amount will be
distributed on such Classes of Certificates pro rata on the basis of the
interest due thereon;

(ii) the Class A Percentage of the Formula Principal Distribution Amount
in the following order of priority:

44
<PAGE>

(a) to the Class A-1 Certificateholders until the Class A-1
Principal Balance is reduced to zero;

(b) to the Class A-2 Certificateholders until the Class A-2
Principal Balance is reduced to zero;

(d) to the Class A-4 Certificateholders until the Class A-4
Principal Balance is reduced to zero; and

(e) to the Class A-5 Certificateholders until the Class A-5
Principal Balance is reduced to zero;

(iii) one month's interest on the Class A-6 Principal Balance to the
Class A-6 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class A-6 Certificates in respect of prior
Remittance Dates;

(iv) the remainder of the Class A Percentage of the Formula Principal
Distribution Amount, if any, to the Class A-6 Certificates until the Class
A-6 Principal Balance is reduced to zero;

(vi) the Class B Percentage of the Formula Principal Distribution
Amount to the Class B-1 Certificates until the Class B-1 Principal Balance
is reduced to zero;

(vii) one month's interest on the Class B-2 Principal Balance to the
Class B-2 Certificateholders, together with any previously undistributed
shortfalls in interest due on the Class B-2 Certificates in respect of prior
Remittance Dates;

(viii) the remainder of the Formula Principal Distribution Amount to
the Class B-2 Certificates until the Class B-2 Principal Balance is reduced
to zero;

(ix) the remainder up to the Monthly Servicing Fee to the Servicer so
long as the Company is the Servicer;

(x) the amount of any reimbursement to CHI for Enhancement Payments
with respect to the Class B-2 Certificates as provided in the Agreement; and

(xi) any remainder to the holder of the Class R Certificate.

The Class B-2 Certificateholders will be entitled to receive Enhancement
Payments as described under "Limited Guarantee of CHI" or under "Alternate
Credit Enhancement."

The "Class B Principal Distribution Test" is met in respect of a
Remittance Date on which each of the following requirements is satisfied:

(i) such Remittance Date is on or after the August 2001 Remittance
Date;

(ii) the Class B Percentage for such Remittance Date is equal to at
least _________% (which is 1.75 times the original Class B Percentage);

(iii) the Performance Tests are satisfied; and

45
<PAGE>
(iv) the Class B-2 Principal Balance is not less than $___________
(which represents 2% of the Total Original Contract Pool Principal Balance).

The "Performance Tests" are satisfied in respect of a Remittance Date
if all of the following conditions are met:

(i) the Average Sixty-Day Delinquency Ratio (as defined in the
Agreement) as of such Remittance Date does not exceed 5%;

(ii) the Average Thirty-Day Delinquency Ratio (as defined in the
Agreement) as of such Remittance Date does not exceed 7%;

(iii) the Cumulative Realized Losses (as defined in the Agreement) as
of such Remittance Date do not exceed a certain specified percentage of the
Total Original Contract Pool Principal Balance, depending on the year in
which such Remittance Date occurs; and

(iv) the Current Realized Loss Ratio (as defined in the Agreement) as
of such Remittance Date does not exceed 2.75%.

The "Total Original Contract Pool Principal Balance" is equal to the
aggregate principal balance of the Contracts as of the Cut-off Date.

The Class A Percentage for a Remittance Date is the percentage derived
from the fraction (which shall not be greater than 1), the numerator of which
is the Principal Balance of the Class A Certificates immediately prior to
such Remittance Date and the denominator of which is the Pool Scheduled
Principal Balance. The Class B Percentage is 100% less the Class A
Percentage.

The Average Sixty-Day Delinquency Ratio and the Average Thirty-Day
Delinquency Ratio are, in general, the ratios of the average of the aggregate
principal balances of Contracts delinquent 60 days or more and 30 days or
more, respectively, for the preceding three Due Periods (determined as of the
last day of each such Due Period) to the average Pool Scheduled Principal
Balance for such periods. Cumulative Realized Losses are, in general, the
aggregate net liquidation losses (calculated as specified in the Agreement)
in respect of Liquidated Contracts since the Cut-off Date. The Current
Realized Loss Ratio is, in general, the ratio of the aggregate net
liquidation losses in respect of Liquidated Contracts for the periods
specified in the Agreement to an average Pool Scheduled Principal Balance
specified in the Agreement.

The "Formula Principal Distribution Amount" in respect of a Remittance
Date is the sum of (i) all scheduled payments of principal due on each
outstanding Contract during the Due Period preceding the month in which the
Remittance Date occurs, (ii) the Scheduled Principal Balance (as defined
below) of each Contract which, during the Due Period preceding the month of
such Remittance Date, was purchased by the Company pursuant to the Agreement
on account of certain breaches of its representation and warranties, (iii)
all Partial Prepayments received during such preceding Due Period, (iv) the
Scheduled Principal Balance of each Contract that was prepaid in full during
such preceding Due Period; (v) the Scheduled Principal Balance of each
Contract that became a Liquidated Contract (as defined below) during such
preceding Due Period and (vi) any previously undistributed shortfalls in the
amounts in clauses (i) through (v) in respect of prior Remittance Dates
(other than any such shortfall with respect to which an Enhancement Payment
has been made to the Class B-2 Certificateholders).

The "Scheduled Principal Balance" of a Contract as of any Remittance
Date is its principal balance (before any adjustment by reason of bankruptcy,
moratorium or similar waiver or grace period) as of the Due Date (or latest
46
<PAGE>
occurring Due Date, in the case of a Bi-weekly Contract) in the Due Period
next preceding such Remittance Date, after giving effect to any previous
Partial Prepayments and after giving effect to all previous scheduled
principal payments and to the scheduled payment of principal due on such Due
Date (whether or not paid and before any adjustment by reason of bankruptcy,
moratorium or similar waiver or grace period).

The "Pool Scheduled Principal Balance" for any Remittance Date is equal
to (i) the Total Original Contract Pool Principal Balance less (ii) the
aggregate of the Formula Principal Distribution Amounts (exclusive of the
amounts in clause (vi) of the definition thereof) for all prior Remittance
Dates.

A "Liquidated Contract" is a defaulted Contract as to which all amounts
that the Servicer expects to recover through the date of disposition of the
Manufactured Home have been received.

In no event will the aggregate distributions of principal to the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class B-1 or
Class B-2 Certificateholders (including, in the case of the Class B-2
Certificateholders, any principal amounts included in any Enhancement
Payments) exceed the Original Class A-1 Principal Balance, the Original Class
A-2 Principal Balance, the Original Class A-3 Principal Balance, the Original
Class A-4 Principal Balance, the Original Class A-5 Principal Balance, the
Original Class A-6 Principal Balance, the Original Class B-1 Principal
Balance or the Original Class B-2 Principal Balance, respectively.

The Class A-1 Remittance Rate is _____% per annum, computed on the basis
of a 360-day year of twelve 30-day months. The Class A-2 Remittance Rate for
a Remittance Date is the lesser of (i) ______% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The Class A-3 Remittance Rate
for a Remittance Date is the lesser of (i) ______% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The Class A-4 Remittance Rate
for a Remittance Date is the lesser of (i) _____% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The Class A-5 Remittance Rate
for a Remittance Date is the lesser of (i) _____% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The Class A-6 Remittance Rate
for a Remittance Date is the lesser of (i) ______% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The Class B-1 Remittance Rate
for a Remittance Date is the lesser of (i) _____% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The Class B-2 Remittance Rate
for a Remittance Date is the lesser of (i) ______% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate for such Remittance Date. The "Weighted Average Net
Contract Rate" for a Remittance Date is equal to (i) the weighted average of
the Contract Rates applicable to the scheduled payments due on the
outstanding Contracts in the Due Period preceding such Remittance Date less
(ii) ____%. Any undistributed interest shortfalls which are carried forward
will, to the extent legally permissible, bear interest at the Remittance Rate
applicable to the affected Class or Classes of Certificates.

SUBORDINATION OF THE CLASS A-6 CERTIFICATES

The rights of the holders of the Class A-6 Certificates to receive
distributions of amounts collected on the Contracts in the Trust Fund will
be subordinated, to the extent described herein, to such rights of the Senior
Certificates. This subordination is intended to enhance the likelihood of
receipt by the holders of the Senior
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Certificates of the full amount of their scheduled monthly payments of
interest and the ultimate receipt by such holders of principal equal to the
applicable Original Certificate Principal Balance.

The protection afforded to the Senior Certificates by means of the
subordination of the Class A-6 Certificates will be accomplished by the
application of the Available Distribution Amount in the order specified under
"--Distributions" above. In addition, if the Available Distribution Amount
on any Remittance Date is not sufficient to permit the distribution of the
entire specified portion of the Formula Principal Distribution Amount, as
applicable, to the Senior Certificateholders, the subordination feature will
protect the Senior Certificateholders, by the right of such
Certificateholders to receive, until, if ever, any such shortfall is
distributed, a portion of the future distributions of Available Distribution
Amounts that would otherwise have been distributable to the holders of the
Class A-6 Certificates, Class B Certificates or the Class R Certificate.

SUBORDINATION OF THE CLASS B AND CLASS R CERTIFICATES

The rights of holders of the Class B and Class R Certificates to receive
distributions of amounts collected on the Contracts will be subordinated, to
the extent described herein, to such rights of the holders of the Class A
Certificates. This subordination is intended to enhance the likelihood of
receipt by the holders of the Class A and Class B-1 Certificates of the full
amount of their scheduled monthly payments of interest and the ultimate
receipt by such holders of principal equal to the applicable Original
Certificate Principal Balance.

The protection afforded to the holders of Class A Certificates by means
of the subordination, to the extent provided herein, of the Class B and Class
R Certificates will be accomplished (i) by the application of the Available
Distribution Amount in the order specified under "/__/Distributions" above
and (ii) if the Available Distribution Amount on such Remittance Date is not
sufficient to permit the distribution of the entire specified portion of the
Formula Principal Distribution Amount, as applicable, to the Class of Class
A Certificateholders then entitled to such distribution, by the right of such
Class A Certificateholders to receive, until, if ever, any such shortfall is
distributed, a portion of future Available Distribution Amounts that would
otherwise have been payable to the holders of the Class B Certificates or the
Class R Certificate. On each Remittance Date before the Class A Principal
Balance is reduced to zero, the holders of the Class B Certificates will
receive the amounts specified under "--Distributions" above.

SUBORDINATION OF THE CLASS B-2 CERTIFICATES

The rights of the holders of the Class B-2 Certificates to receive
distributions of amounts collected on the Contracts in the Trust Fund will
be subordinated, to the extent described herein, to such rights of the Class
B-1 Certificates. This subordination is intended to enhance the likelihood
of receipt by the holders of the Class A and Class B-1 Certificates of the
full amount of their scheduled monthly payments of interest and the ultimate
receipt by such holders of principal equal to the applicable Original
Certificate Principal Balance.

The protection afforded to the Class B-1 Certificates by means of the
subordination of the Class B-2 Certificates will be accomplished by the
application of the Available Distribution Amount in the order specified under
"--Distributions" above. In addition, if the Available Distribution Amount
on any Remittance Date is not sufficient to permit the distribution of the
entire specified portion of the Formula Principal Distribution Amount, as
applicable, to the Class B-1 Certificateholders and the subordination
provided by the Class B-2 Certificates has not been exhausted, the
subordination feature will protect the Class B-1 Certificateholders by the
right of the Class B-1 Certificateholders to receive, until, if ever, any
such shortfall is distributed, a portion of the future distributions of
Available Distribution Amounts that would otherwise have been distributable
to the holders of the Class B-2 Certificates or the Class R Certificate.

However, the Class B-2 Certificates will have the benefit of the Limited
Guarantee from CHI or the Alternate Credit Enhancement. Neither the Limited
Guarantee nor the Alternate Credit Enhancement will benefit or result in any
payments on any other Offered Certificates.

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LOSSES ON LIQUIDATED CONTRACTS

As described above, the distribution of principal to the Senior
Certificateholders is intended to include the Scheduled Principal Balance of
each Contract that became a Liquidated Contract during the Due Period
preceding the month of such distribution. If the Liquidation Proceeds, net
of related Liquidation Expenses, from such Liquidated Contract are less than
the principal balance of such Liquidated Contract, then to the extent such
deficiency is not covered by any excess interest collections, the deficiency
may, in effect, be absorbed by the Class A-6 or Class B Certificateholders
since a portion of future Available Distribution Amounts funded by future
principal collections on the Contracts, up to the aggregate amount of such
deficiencies, that would otherwise have been distributed to the Class A-6 or
Class B Certificateholders, may be paid to the Senior Certificateholders.

On each Remittance Date, if any, on or after the date on which the sum
of the Principal Balances of the Senior Certificates equals or becomes
greater than the Pool Scheduled Principal Balance, the Senior
Certificateholders will receive only their respective percentage interests
of Liquidation Proceeds (net of Liquidation Expenses) realized in respect of
Liquidated Contracts, rather than the Scheduled Principal Balances thereof,
and will therefore bear all losses on Liquidated Contracts (with no ability
to recover the amount of any liquidation loss from future principal
collections on the Contracts) and incur a loss on their investment in the
Senior Certificates.

But for the subordination of the Class B-2 Certificates, the Class B-1
Certificateholders would absorb (i) all losses on each Liquidated Contract
(to the extent such loss is not covered by excess interest collections) and
(ii) other shortfalls in the Available Distribution Amount. If, on any
Remittance Date, the sum of the Class A Principal Balance and the Class B-1
Principal Balance becomes equal to or greater than the Pool Scheduled
Principal Balance, then the Class B-1 Certificateholders will bear all losses
on Liquidated Contracts (with no ability to recover the amount of any
Liquidation Loss from future principal collections on the Contracts) and
incur a loss on their investment in the Class B-1 Certificates.

LIMITED GUARANTEE OF CHI

In order to mitigate the effect of the subordination of the Class B-2
Certificates and liquidation losses and delinquencies on the Contracts borne
by the Class B-2 Certificates, CHI will initially provide a guarantee (the
"Limited Guarantee") against losses that would otherwise be absorbed by the
Class B-2 Certificates. Such Limited Guarantee may be replaced by an
Alternate Credit Enhancement. See "Alternate Credit Enhancement" herein.
Each payment required to be made under the Limited Guarantee is referred to
as an "Enhancement Payment." Prior to the Remittance Date (the "Initial
Class B-2 Principal Remittance Date") on which the Class B-1 Principal
Balance is reduced to zero, the Enhancement Payment will equal the amount,
if any, by which (a) the sum of (i) the Class B-2 Formula Distribution Amount
(which will be equal to one month's interest on the Class B-2 Principal
Balance) for such Remittance Date and (ii) the Class B-2 Principal
Liquidation Loss Amount, if any, exceeds (b) the amount (other than the
Enhancement Payment) that will otherwise be distributed on the Class B-2
Certificates on such Remittance Date (the "Class B-2 Distribution Amount").
On each Remittance Date on or after the Initial Class B-2 Principal
Remittance Date, the Enhancement Payment will equal the amount, if any, by
which the Class B-2
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Formula Distribution Amount (which will include both interest and principal)
exceeds the Class B-2 Distribution Amount for such Remittance Date.

The "Class B-2 Principal Liquidation Loss Amount" for any Remittance
Date will equal the amount, if any, by which (a) the Formula Principal
Distribution Amount (exclusive of the portion thereof specified in clause
(vi) of the definition of Formula Principal Distribution Amount) for such
Remittance Date exceeds (b) the amount (exclusive of the Guarantee Payment)
distributed on the Certificates on account of principal on such Remittance
Date. The Class B-2 Principal Liquidation Loss Amount represents future
principal payments on the Contracts that, because of the subordination of the
Class B-2 Certificates and liquidation losses on the Contracts, will not be
paid to the Class B-2 Certificateholders from the assets of the Trust Fund
but may be paid in the form of an Enhancement Payment.

In the event that, on a particular Remittance Date, the Class B-2
Distribution Amount in the Certificate Account plus any amounts actually paid
under the Limited Guarantee are not sufficient to make a full distribution
of interest to the Class B-2 Certificateholder the amount of the deficiency
will be carried forward as an amount that the Class B-2 Certificateholders
are entitled to receive on the next Remittance Date.

The Limited Guarantee will be an unsecured general obligation of CHI and
will not be supported by any letter of credit or other enhancement
arrangement.

The Limited Guarantee is for the benefit of the Class B-2 Certificates
only and will not result in any payments on the Offered Certificates.

As reimbursement to CHI for Enhancement Payments made by CHI pursuant
to the Limited Guarantee, CHI will be entitled to receive on each Remittance
Date an amount equal to the lesser of (a) the Available Distribution Amount,
less the portion of the Available Distribution Amount distributed on the
Certificates (other than the Class R Certificate), and (b) the aggregate
amount of Enhancement Payments outstanding which remain unreimbursed as of
such Remittance Date.

ALTERNATE CREDIT ENHANCEMENT

In the event that, at CHI's option, Alternate Credit Enhancement (as
defined herein) is provided and, upon prior written notice to Moody's,
Moody's shall have notified CHI, the Company, the Servicer and the Trustee
in writing that substitution of such Alternate Credit Enhancement for the
Limited Guarantee will not result in the downgrade or withdrawal of the then
current rating of any class of the Certificates, and upon the delivery by CHI
to the Trustee of an opinion of counsel, acceptable to the Trustee, that such
action would not cause the Trust to fail to qualify as a REMIC, the Limited
Guarantee shall be released and shall terminate. The Alternate Credit
Enhancement may consist of cash or securities deposited by CHI or any other
person in a segregated escrow, trust or collateral account or a letter of
credit, certificate insurance policy or surety bond provided by a third party
(an "Alternate Credit Enhancement"). On each Remittance Date after delivery
of the Alternate Credit Enhancement, an amount, equal to the lesser of the
amount which would have been payable under the Limited Guarantee and the
amount available under such Alternate Credit Enhancement, shall be
transferred from such account to the Certificate Account to make payments to
the Class B-2 Certificateholders (the "Enhancement Payment"). CHI shall have
no obligation to replace such enhancement once it has been exhausted.

ADVANCES

On or prior to each Determination Date, the Servicer will either (i)
deposit from its own funds the Monthly Advance into the Certificate Account,
(ii) cause appropriate entries to be made in the records of the Certificate
Account that funds in the Certificate Account that are not part of the
Available Distribution Amount for the related Remittance Date have been used
to make the Monthly Advance or (iii) make the Monthly Advance through any
combination of clauses (i) and (ii). Any funds held for future distribution
and used in accordance with clause (ii) must be restored by the Servicer from
its own funds or advance payments on the Contracts when they become part of
a future Available Distribution Amount. The Monthly Advance is the sum of
delinquent scheduled payments due
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in the related Due Period, exclusive of all Nonrecoverable Advances, except
that the Monthly Advance will not exceed the amount necessary to bring the
Available Distribution Amount up to the sum of the amounts specified in
clauses A(i)-(viii) or B(i)-(viii), as the case may be, under
"/__/Distributions" above. A Nonrecoverable Advance is any advance made or
proposed to be made that the Servicer believes is not, or if made would not
be, ultimately recoverable from related Liquidation Proceeds or otherwise.

Monthly Advances are intended to maintain a regular flow of scheduled
interest and principal payments to Certificateholders rather than to
guarantee or insure against losses. The Servicer will reimburse itself for
Monthly Advances out of collections of the late scheduled payments. In
addition, upon the determination that a Nonrecoverable Advance has been made
in respect of a Contract or upon a Contract becoming a Liquidated Contract,
the Servicer will reimburse itself out of funds in the Certificate Account
for the delinquent scheduled payments on such Contract (exclusive of any
scheduled payment (i) for which no advance was made because the Servicer
determined that such an advance would be a Nonrecoverable Advance if an
advance were made or (ii) that was recovered out of Net Liquidation Proceeds
for the related Contract).

The Servicer will also be obligated to make advances, to the extent
recoverable out of Liquidation Proceeds or otherwise, in respect of certain
taxes and insurance premiums not paid by an Obligor on a timely basis. Funds
so advanced are reimbursable to the Servicer as provided in the Agreement.

REPORTS TO CERTIFICATEHOLDERS

The Trustee will include with each distribution to each
Certificateholder a statement as of such Remittance Date setting forth, among
other things:

(a) the aggregate amount distributed on the Class A-1 Certificates on
such Remittance Date;
(b) the amount of such distribution which constitutes principal;
(c) the amount of such distribution which constitutes interest;
(d) the remaining Class A-1 Principal Balance;
(e) the aggregate amount distributed on the Class A-2 Certificates on
such Remittance Date;
(f) the amount of such distribution which constitutes principal;
(g) the amount of such distribution which constitutes interest;
(h) the remaining Class A-2 Principal Balance;
(i) the aggregate amount distributed on the Class A-3 Certificates on
such Remittance Date;
(j) the amount of such distribution which constitutes principal;
(k) the amount of such distribution which constitutes interest;
(l) the remaining Class A-3 Principal Balance;
(m) the aggregate amount distributed on the Class A-4 Certificates on
such Remittance Date;
(n) the amount of such distribution which constitutes principal;
(o) the amount of such distribution which constitutes interest;
(p) the remaining Class A-4 Principal Balance;
(q) the aggregate amount distributed on the Class A-5 Certificates on
such Remittance Date;
(r) the amount of such distribution which constitutes principal;
(s) the amount of such distribution which constitutes interest;
(t) the remaining Class A-5 Principal Balance;
(u) the aggregate amount distributed on the Class A-6 Certificates on
such Remittance Date;
(v) the amount of such distribution which constitutes principal;
(w) the amount of such distribution which constitutes interest;
(x) the remaining Class A-6 Principal Balance;
(y) the aggregate amount distributed on the Class B-1 Certificates on
such Remittance Date;
(z) the amount of such distribution which constitutes principal;
(aa) the amount of such distribution which constitutes interest;
(bb) the remaining Class B-1 Principal Balance;
(cc) the aggregate amount distributed on the Class B-2 Certificates on
such Remittance Date;
(dd) the amount of such distribution which constitutes principal;

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(ee) the amount of such distribution which constitutes interest;
(ff) the amount, if any, by which the Class B-2 Formula Distribution
Amount exceeds the Class B-2 Remaining Amount Available for such Remittance
Date;
(gg) the Class B-2 Liquidation Loss Amount, if any, for such Remittance
Date;
(hh) the Enhancement Payment, if any, for such Remittance Date;
(ii) the remaining Class B-2 Principal Balance;
(jj) the number of and aggregate unpaid principal balance of Contracts
with payments delinquent 31 to 59, 60 to 89 and 90 or more days,
respectively; and
(kk) the amount of fees payable out of the Trust Fund.

In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will furnish a report to each Certificateholder
of record at any time during such calendar year as to the aggregate of
amounts reported pursuant to (b) and (c), (f) and (g), (j) and (k), (n) and
(o), (r) and (s), (v) and (w), (z) and (aa) or (dd) and (ee), as the case may
be, for such calendar year.

OPTIONAL TERMINATION

The Agreement provides that on any Remittance Date after the first
Remittance Date on which the Pool Scheduled Principal Balance is less than
10% of the Total Original Contract Pool Principal Balance, the Company (if
it is no longer the Servicer) and the Servicer will each have the option to
repurchase, upon the Company or the Servicer giving notice mailed no later
than the first day of the month next preceding the month of the exercise of
such option, all outstanding Contracts at a price equal to the greater of (a)
the sum of (x) 100% of the outstanding principal balance of each Contract
(other than any Contract as to which the related Manufactured Home has been
acquired in realizing thereon and whose fair market value is included
pursuant to clause (y) below) as of the final Remittance Date, and (y) the
fair market value of such acquired property (as determined by the Company or
the Servicer, as the case may be) and (b) the aggregate fair market value (as
determined by the Company or the Servicer, as the case may be) of all of the
assets of the Trust Fund, plus, in each case, any unpaid interest on the
Certificates due on prior Remittance Dates as well as one month's interest
at the Net Contract Rate on the Scheduled Principal Balance of each Contract
(including any Contract as to which the related Manufactured Homes has been
repossessed and not yet disposed of). Notwithstanding the foregoing, the
option referred to in this paragraph shall not be exercisable unless there
will be distributed to the Certificateholders an amount equal to 100% of the
outstanding principal balance of each Certificate plus one month's interest
thereon at the related Remittance Rate, and any previously undistributed
shortfalls in interest due thereon.

THE TRUSTEE

The Chase Manhattan Bank, has its corporate trust offices at 450 West
33rd Street, 15th Floor, New York, New York 10001. The Company and its
affiliates may have commercial transactions with the Trustee from time to
time.

The Trustee may resign at any time, in which event the Company will be
obligated to appoint a successor Trustee. The Company may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement or if the Trustee becomes insolvent. In such circumstances, the
Company will also be obligated to appoint a successor Trustee. Any
resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by the
successor Trustee.

REGISTRATION OF THE OFFERED CERTIFICATES

The Offered Certificates will initially be registered in the name of
Cede & Co., the nominee of DTC. DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the 1934 Act. DTC accepts securities for
deposit from its participating organizations ("Participants") and facilitates
the clearance and settlement of securities transactions between Participants
in such securities through electronic book-entry changes in accounts of
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Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks and
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants").

Owners of the Offered Certificates who are not Participants but desire
to purchase, sell or otherwise transfer ownership of the Offered Certificates
may do so only through Participants (unless and until Definitive Offered
Certificates, as defined below, are issued). In addition, Offered
Certificate Owners will receive all distributions of principal of, and
interest on, the Offered Certificates from the Trustee through DTC and
Participants. Offered Certificate Owners will not receive or be entitled to
receive certificates representing their respective interest in the Offered
Certificates, except under the limited circumstances described below.

Unless and until Definitive Offered Certificates (as defined below) are
issued, it is anticipated that the only "Certificateholder" of the Offered
Certificates will be Cede & Co., as nominee of DTC. Owners of the Offered
Certificates will not be Certificateholders as that term is used in the
Agreement. Owners of the Offered Certificates are only permitted to exercise
the rights of Owners of the Offered Certificates indirectly through
Participants and DTC.

While the Offered Certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required
to make book-entry transfers among Participants on whose behalf it acts with
respect to the Offered Certificates and is required to receive and transmit
distributions of principal of, and interest on, the Offered Certificates.
Unless and until Definitive Offered Certificates are issued, Offered
Certificate Owners who are not Participants may transfer ownership of the
Offered Certificates only through Participants by instructing such
Participants to transfer the Offered Certificates, by book-entry transfer,
through DTC for the account of the purchasers of such Certificates, which
account is maintained with their respective Participants. Under the Rules
and in accordance with DTC's normal procedures, transfers of ownership of the
Offered Certificates will be executed through DTC and the accounts of the
respective Participants at DTC will be debited and credited.

The Certificates will be issued in registered form to Offered
Certificate Owners, or their nominees, rather than to DTC (such Certificates
being referred to herein as "Definitive Offered Certificates"), only if (i)
DTC or the Company advises the Trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as nominee and
depository with respect to the Offered Certificates and the Company or the
Trustee is unable to locate a qualified successor, (ii) the Company, at its
sole option and with the consent of the Trustee, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Default, DTC, at the direction of Offered Certificate Owners having a
majority in Percentage Interests of the Offered Certificates, advises the
Trustee in writing that the continuation of a book-entry system through DTC
(or a successor thereto) to the exclusion of any physical certificates being
issued to Offered Certificate Owners is no longer in the best interests of
Certificate Owners. Upon issuance of Definitive Offered Certificates to
Offered Certificate Owners, such Certificates will be transferable directly
(and not exclusively on a book-entry basis) and registered holders will deal
directly with the Trustee with respect to transfers, notices and
distributions.

DTC has advised the Company and the Trustee that, unless and until
Definitive Offered Certificates are issued, DTC will take any action
permitted to be taken by a Offered Certificateholder under the Agreement only
at the direction of one or more Participants to whose DTC accounts the
Offered Certificates are credited. DTC has advised the Company that DTC will
take such action with respect to any Percentage Interests of the Offered
Certificates only at the direction of and on behalf of such Participants with
respect to such Percentage Interests of the Offered Certificates. DTC may
take actions, at the direction of the related participants, with respect to
some Offered Certificates which conflict with actions taken with respect to
other Offered Certificates.

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USE OF PROCEEDS

Substantially all of the net proceeds to be received from the sale of
the Offered Certificates will be added to the general funds of the Company.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

An election will be made to treat the Trust Fund as a "real estate
mortgage investment conduit" (a "REMIC") for federal income tax purposes.
The Class A and Class B Certificates will constitute "regular interests" in
the REMIC, and the Class R Certificate will constitute the sole class of
"residual interest" in the REMIC.

ORIGINAL ISSUE DISCOUNT

The Offered Certificates may be issued with original issue discount for
federal income tax purposes. For purposes of determining the amount and the
rate of accrual of original issue discount and market discount, the Company
intends to assume that there will be prepayments on the Contracts at a rate
equal to 175% of the Prepayment Model as defined herein. No representation
is made as to whether the Contracts will prepay at that rate or any other
rate. See "Yield and Prepayment Considerations" herein and "Certain Federal
Income Tax Consequences" in the Prospectus.

EFFECT OF LOSSES AND DELINQUENCIES

As described above under "Description of the Certificates," the Class
A-6, Class B-1 and Class B-2 Certificates are subordinated to the Senior
Certificates. In the event there are losses or delinquencies on the
Contracts, amounts that otherwise would be distributed on the Class A-6 or
Class B Certificates may instead be distributed on the Senior Certificates.
Holders of the Class A-6 and Class B Certificates nevertheless will be
required to report interest with respect to such Class A-6 or Class B
Certificates under an accrual method without giving effect to delays and
reductions in distributions on such Certificates attributable to losses and
delinquencies on the Contracts in the Contract Pool, except to the extent it
can be established, for tax purposes, that such amounts are uncollectible.
As a result, the amount of income reported by holders of the Class A-6 or
Class B Certificates in any period could significantly exceed the amount of
cash distributed to such holders in that period. The holders of Class A-6
or Class B Certificates will eventually be allowed a loss (or will be allowed
to report a lesser amount of income) to the extent that the aggregate amount
of distributions on such Certificates is reduced as a result of losses and
delinquencies on the Contracts in the Contract Pool. However, the timing and
character of such losses or reductions in income are uncertain. Although not
entirely clear, it appears that holders of the Class A-6 or Class B
Certificates that are corporations should in general be allowed to deduct as
an ordinary loss any loss sustained during the taxable year on account of any
such Certificates becoming wholly or partially worthless, and that, in
general, holders of Certificates that are not corporations should be allowed
to deduct as short-term capital loss any loss sustained during the taxable
year on account of any such Certificates becoming wholly worthless. Although
the matter is unclear, non-corporate holders of Certificates may be allowed
a bad debt deduction at such time that the principal balance of any such
Certificate is reduced to reflect realized losses resulting from any
liquidated Contracts. The Internal Revenue Service, however, could take the
position that non-corporate holders will be allowed a bad debt deduction to
reflect realized losses only after all Contracts remaining in the related
Trust Fund have been liquidated or the Certificates have been otherwise
retired. Potential investors and Holders of the Certificates are urged to
consult their own tax advisors regarding the appropriate timing, amount and
character of any loss sustained with respect to such Certificates, including
any loss resulting from the failure to recover previously accrued interest
or discount income. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. Such
taxpayers are advised to consult their tax advisors regarding the treatment
of losses on Certificates.

For further information regarding the federal income tax consequences
of investing in the Certificates, see "Certain Federal Income Tax
Consequences" in the Prospectus.

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ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain restrictions on employee benefit plans that are
subject to ERISA ("Plans") and on persons who are fiduciaries with respect
to such Plans. See "ERISA Considerations" in the Prospectus.

CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4 AND CLASS A-5 CERTIFICATES

As discussed in the Prospectus under "ERISA Considerations" and subject
to the limitations discussed thereunder, the Company believes that the
Exemption (as defined in the Prospectus) granted to Prudential Securities
Incorporated, will apply to the acquisition and holding by Plans of Senior
Certificates sold by the Underwriters and that all conditions of the
Exemption other than those within the control of the investors have been met.

See "ERISA Considerations" in the Prospectus. In addition, as of the date
hereof, no obligor with respect to Contracts included in the Trust Fund
constitutes more than five percent of the aggregate unamortized principal
balance of the assets of the Trust Fund.

Employee benefit plans that are governmental plans (as defined in
section 3(32) of ERISA) and 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 the Senior Certificates without regard to the ERISA
restrictions described above, subject to applicable provisions of other
federal and state laws.

Any Plan fiduciary who proposes to cause a Plan to purchase Senior
Certificates should consult with its own counsel with respect to the
potential consequences under ERISA and the Internal Revenue Code of 1986, as
amended (the "Code") of the Plan's acquisition and ownership of Senior
Certificates. Assets of a Plan or individual retirement account should not
be invested in the Senior Certificates unless it is clear that the assets of
the Trust Fund will not be plan assets or unless it is clear that the
Exemption or a prohibited transaction class exemption will apply and exempt
all potential prohibited transactions.

CLASS A-6 AND CLASS B CERTIFICATES

As discussed in the Prospectus, because Subordinated Certificates such
as the Class A-6 and Class B Certificates are subordinated to the Senior
Certificates, the Exemption will not apply to the Class A-6 and Class B
Certificates. See "ERISA Considerations--Subordinated Certificates" in the
Prospectus.

As such, no transfer of a Class A-6 or B Certificate shall be registered
unless the prospective transferee provides the Trustee and the Company with
(a) a certification to the effect that (1) such transferee is neither an
employee benefit plan subject to section 406 or section 407 of ERISA, or
section 4975 of the Code, the trustee of any such plan nor a person acting
on behalf of any such plan nor a person using the assets of any such plan and
(2) if such transferee is an insurance company, it is purchasing such
certificates with funds contained in an "insurance company general account"
(as such term is defined in section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
certificates are covered under PTCE 95-60; or (b) an opinion of counsel (a
"benefit plan opinion") satisfactory to the Trustee and the Company, and upon
which the Trustee and the Company shall be entitled to rely, to the effect
that the purchase or holding of such Class A-6 or Class B Certificate by the
prospective transferee will not result in the assets of the Trust Fund being
deemed to be plan assets and subject to the prohibited transaction provisions
of ERISA or the Code and will not subject the Trustee or the Company to any
obligation in addition to those undertaken by such entities in the agreement,
which opinion of counsel shall not be an expense of the Trustee or the
Company. Unless such certification or opinion is delivered, Certificate
Owners of the Class A-6 and Class B Certificates will be deemed to make the
representations in clause (a)(1). See "ERISA Considerations" in the
Prospectus.

55
<PAGE>
LEGAL INVESTMENT CONSIDERATIONS

The Class A Certificates will constitute "mortgage related securities"
under the Secondary Mortgage Market Enhancement Act of 1984 and, as such,
will be "legal investments" for certain types of institutional investors to
the extent provided in that Act.

The Class B Certificates will not constitute "mortgage related
securities" under the Secondary Mortgage Market Enhancement Act of 1984. The
appropriate characterization of the Class B Certificates under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase Class B Certificates, may be subject to significant
interpretive uncertainties. All investors whose investment authority is
subject to legal restrictions should consult their own legal advisors to
determine whether, and to what extent, the Class B Certificates will
constitute legal investments for them.

The Company makes no representation as to the proper characterization
of the Class B Certificates for legal investment or financial institution
regulatory purposes, or as to the ability of particular investors to purchase
Class B Certificates under applicable legal investment restrictions. The
uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory
characteristics of the Class B Certificates) may adversely affect the
liquidity of the Class B Certificates.

See "Legal Investment Considerations" in the Prospectus.

UNDERWRITING

Each of the Underwriters has severally agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company the
respective principal amounts of the Offered Certificates set forth opposite
its name below.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT
CLASS A-1 CLASS CLASS OF
UNDERWRITER CERTIFICATE A-2 A-3 CLASS A-4
S CERTIFICATE CERTIFICATE CERTIFICATES
S S
Prudential Securities $ $ $ $
Incorporated . . . . . . . .
J.P. Morgan Securities Inc. . $ $ $ $
Total . . . . . . . . . $ $ $ $

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
CLASS CLASS CLASS CLASS B-2
UNDERWRITER A-5 A-6 B-1 CERTIFICATE
CERTIFICATES CERTIFICATES CERTIFICATES S
Prudential Securities $ $ $ $
Incorporated
J.P. Morgan Securities Inc. . . $ $ $ $
Total . . . . . . . . . . $ $ $ $

</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Offered
Certificates offered hereby if any Offered Certificates are purchased. In
the event of default by an Underwriter, the Underwriting Agreement provides
that, in certain circumstances, the Underwriting Agreement may be terminated.

56
<PAGE>
The Company has been advised by the Underwriters that they propose
initially to offer the Offered Certificates to the public at the price set
forth herein, and to certain dealers at such price less the initial
concession not in excess of ____% of the Class A-1 Principal Balance, ____%
of the Class A-2 Principal Balance, ____% of the Class A-3 Principal Balance,
____% of the Class A-4 Principal Balance, ____% of the Class A-5 Principal
Balance, ___% of the Class A-6 Principal Balance, ____% of the Class B-1
Principal Balance and ___% of the Class B-2 Principal Balance. The
Underwriters may allow and such dealers may reallow a concession not in
excess of ___% of the Class A-1 Principal Balance, ____% of the Class A-2
Principal Balance, ___% of the Class A-3 Principal Balance, ___% of the Class
A-4 Principal Balance, ___% of the Class A-5 Principal Balance, ___% of the
Class A-6 Principal Balance, ___% of the Class B-1 Principal Balance and ___%
of the Class B-2 Principal Balance to certain other dealers. After the
initial public offering of the Offered Certificates, the public offering
price and such concessions may be changed.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or contribute to payments the Underwriters may be
required to make in respect thereof.

The Company has agreed that for a period of 30 days from the date of
this Prospectus Supplement it will not offer or sell publicly any other
manufactured housing contract pass-through certificates without the
Underwriters' consent.

LEGAL MATTERS

The validity of the Offered Certificates will be passed upon for the
Company by Boult, Cummings, Conners & Berry, PLC. Certain legal matters will
be passed upon for the Underwriters by Brown & Wood LLP, New York, New York.
The material federal income tax consequences of the Offered Certificates will
be passed upon for the Company by Brown & Wood LLP.
57
<PAGE>
PROSPECTUS
- ----------

VANDERBILT MORTGAGE AND FINANCE, INC.,
SELLER AND SERVICER
MANUFACTURED HOUSING CONTRACT PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)

Manufactured Housing Contract Pass-Through Certificates ("Certificates")
of one or more series (each, a "Series") may be offered and sold from time
to time under this Prospectus and a Prospectus Supplement for each such
Series. The Certificates of each Series may be issued in one or more classes
or subclasses (each, a "Class"), as further described herein. If the
Certificates of a Series are issued in more than one Class, all or less than
all of such Classes may be offered and sold under this Prospectus, and there
may be separate Prospectus Supplements for one or more of such Classes so
offered and sold (the "Offered Certificates"). Any reference herein to the
Prospectus Supplement relating to a Series comprised of more than one Class
should be understood to refer to each of the Prospectus Supplements relating
to the Classes sold hereunder.

The Certificates evidence specified interests in separate pools of
manufactured housing installment sales contracts, installment loan agreements
and mortgage loans (the "Contracts"), as more particularly described herein,
and in certain other property conveyed by Vanderbilt Mortgage and Finance,
Inc. (the "Company"). The Contracts included in any Contract Pool will be
described in the related Prospectus Supplement. The Contracts will have been
originated or purchased in the ordinary course of business by the Company.
Specific information, to the extent available, regarding the size and
composition of the pool of Contracts relating to each Series of Certificates
will be set forth in the related Prospectus Supplement. In addition, if so
specified in the related Prospectus Supplement, the property of the Trust
Fund will include monies on deposit in a trust account (the "Pre-Funding
Account") to be established with the Trustee, which will be used to purchase
additional manufactured housing installment sales contracts and installment
loan agreements (the "Subsequent Contracts") from the Company from time to
time during the Funding Period specified in the related Prospectus
Supplement. A pool insurance policy, letter of credit, limited guarantee of
Clayton Homes, Inc., surety bond, cash reserve fund, or other form of credit
enhancement, or any combination thereof, may be provided with respect to a
Series of Certificates, or one or more Classes of such Series, evidencing
interests in the Contracts. The Company will act as Servicer (in such
capacity referred to herein as the "Servicer") of the Contracts.

Each Series of Certificates will consist of one or more Classes of
Certificates, which may include one or more senior classes of Certificates
(the "Senior Certificates") and one or more Classes or sub-classes
representing interests in specified percentages (which may be 0%) of
principal or interest, or both, in distributions on the pool of Contracts
relating to such Series, as specified in the related Prospectus Supplement.
Each Prospectus Supplement will describe the Series and Class or Classes of
Certificates offered hereby.

The Prospectus Supplement will set forth the Remittance Rate that will
be paid to Certificateholders of each Class or sub-class of such Series.
Such Remittance Rate may be fixed, variable or adjustable, as specified in
the related Prospectus Supplement.

The related Prospectus Supplement will describe the limited
representations and warranties of the Company in the Pooling and Servicing
Agreement applicable to each class or series of Certificates. Except for
certain representations and warranties relating to the Contracts and certain
other exceptions, the Servicer's obligations with respect to the Certificates
evidencing interests in a pool of Contracts are limited to its contractual
servicing obligations. If so specified in the related Prospectus Supplement,
the Servicer may be obligated, under certain terms and conditions, to advance
the amount of any delinquent
58
<PAGE>
payments of principal and interest during the immediately preceding Due
Period (as defined herein), but only to the extent the Servicer determines
such advances are recoverable from future payments and collections on the
Contracts or otherwise. See "Description of the Certificates /__/ Advances"
and "/__/ Distributions on Certificates."

There will have been no public market for any Certificates sold
hereunder prior to the offering thereof and there is no assurance that any
such market will develop. The Underwriters named in the Prospectus
Supplement relating to a Series may from time to time buy and sell
Certificates of such Series, but there can be no assurance that an active
secondary market therefor will develop, and there is no assurance that any
such market, if established, will continue.

The Company may elect to cause the Trust Fund relating to a Series of
Certificates to be treated as a "Real Estate Mortgage Investment Conduit" (a
"REMIC") for federal income tax purposes. See "Certain Federal Income Tax
Consequences" herein.

Capitalized terms used herein and not defined shall have the respective
meanings assigned to such terms in the Glossary.

CERTAIN FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
CERTIFICATES. SEE "RISK FACTORS" HEREIN AND IN THE RELATED PROSPECTUS
SUPPLEMENT.

THE CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE
COMPANY OR, UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT,
ANY OF ITS AFFILIATES. THE CERTIFICATES WILL NOT BE INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF A SERIES OF
CERTIFICATES, UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.

_______________

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 date of this Prospectus is July 16, 1996.
59
<PAGE>
REPORTS TO CERTIFICATEHOLDERS

The Company will cause to be provided to the holders of the Certificates
of each Class or Series certain monthly and annual reports concerning such
Certificates and the related Trust Funds as further described in the related
Prospectus Supplement under "Description of the Certificates /__/ Reports to
Certificateholders."

AVAILABLE INFORMATION

This Prospectus contains, and the Prospectus Supplement for each Class
or Series of Certificates will contain, a summary of certain material terms
of certain of the documents referred to herein and therein, but neither
contains nor will contain all of the information set forth in the
Registration Statement of which this Prospectus is a part (the "Registration
Statement"). For further information, reference is made to such Registration
Statement and the exhibits thereto which the Company has filed with the
Securities and Exchange Commission (the "Commission"), under the Securities
Act of 1933, as amended. Statements contained in this Prospectus and any
Prospectus Supplement describing a provision of any contract or other
document referred to are summaries, and if this Prospectus or such Prospectus
Supplement indicates that such contract or other document has been filed as
an exhibit to the Registration Statement, reference is made to the copy of
the contract or other document filed as an exhibit, each such statement being
qualified in all respects by reference to the actual provision being
described. Copies of the Registration Statement can be inspected and, upon
payment of the Commission's prescribed charges, copied at the public
reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at certain of its Regional
Offices located as follows: Northeast Regional Office, Seven World Trade
Center, Suite 1300, New York, New York 10048, and Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661.

INCORPORATION OF CERTAIN DOCUMENTS OF THE COMPANY BY REFERENCE

All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to
the date of this Prospectus and prior to the termination of the offering of
the Certificates shall be deemed to be incorporated by reference into this
Prospectus and the Prospectus Supplement and to be a part thereof from the
respective dates of filing of such documents, except that reports relating
to the operation of a specific Trust Fund shall not be incorporated by
reference hereinto or made part hereof. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than certain exhibits to such documents). Requests for such
copies should be directed to David Jordan, Controller, 4726 Airport Highway,
Louisville, Tennessee 37777, telephone number (423) 970-7200, the above
mailing address and telephone number being that of the Company's principal
executive office.

60
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS OF CHI BY REFERENCE

With respect to any Class of Offered Certificates that is supported by
a guarantee of CHI, CHI's Annual Report on Form 10-K for the year ended June
30, 1995 and CHI's quarterly report on Form 10-Q for the quarter ended
December 31, 1996, which have been filed with the Commission, are hereby
incorporated by reference in this Prospectus and the related Prospectus
Supplement.

With respect to any Class of Offered Certificates that is supported by
a guarantee of CHI, all documents filed by CHI pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates shall be deemed to be incorporated by reference
into this Prospectus and the related Prospectus Supplement and to be a part
thereof from the respective dates of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

CHI will provide without charge to any person to whom this Prospectus
is delivered, upon the written or oral request of such person, a copy of any
or all of the foregoing documents incorporated herein by reference (other
than certain exhibits to such documents). Requests for such copies should
be directed to Joseph H. Stegmayer, President, 623 Market Street, Knoxville,
Tennessee 37902, telephone number (423) 595-4700, the above mailing address
and telephone number being that of CHI's principal executive office.

61
<PAGE>
SUMMARY OF TERMS

This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and in the accompanying
Prospectus Supplement. Capitalized terms used herein shall have the
respective meanings assigned them in the "Glossary."

Securities

Manufactured Housing Contract Pass-Through Certificates
evidencing interests in pools of Contracts (defined below) issuable in series
pursuant to separate Pooling and Servicing Agreements (each, an "Agreement")
among Vanderbilt Mortgage and Finance, Inc. (the "Company"), as servicer (in
such capacity, together with any successor servicer, the "Servicer") and the
Trustee (the "Trustee") specified in the related Prospectus Supplement for
such Series of Certificates (the "Certificates").

Seller

Vanderbilt Mortgage and Finance, Inc. (in such capacity
referred to herein as the "Company"), a wholly-owned subsidiary of Clayton
Homes, Inc. ("CHI").

Servicer

Vanderbilt Mortgage and Finance, Inc. (in such capacity
referred to herein as the "Servicer").

Special Considerations

Certain factors are particularly relevant to
a decision to invest in any Certificates sold hereunder. See "Risk Factors"
herein.

The Contracts

The Contracts evidenced by a Series of Certificates (the
"Contract Pool") will be fixed or variable rate Contracts. Such Contracts,
as specified in the related Prospectus Supplement, will consist of
manufactured housing installment sales contracts and installment loan
agreements and may include modular home installment sales contracts and
installment loan agreements. The Contracts will be conventional contracts
or contracts insured by the Federal Housing Administration ("FHA") or
partially guaranteed by the Veterans Administration ("VA"). Each Contract
will be secured by a new or used Manufactured Home (as defined herein) or
Modular Home (as defined herein). Each Contract secured by a Modular Home,
and some of the Contracts secured by Manufactured Homes, will be further
secured by a mortgage or deed of trust on the real estate to which the
Modular Home or the Manufactured Home is affixed (a "Land-and-Home
Contract").

The Prospectus Supplement for each Series will provide information with
respect to (i) the aggregate principal balance of the Contracts comprising
the Contract Pool, as of the date specified in the Prospectus Supplement (the
"Cut-off Date"); (ii) the weighted average contractual rate of interest (the
"Contract Rate") on the Contracts; (iii) the weighted average term to
scheduled maturity as of origina
3
<PAGE>
tion; (iv) the weighted average term to scheduled maturity as of the
Cut-off Date and the range of terms to maturity; (v) the percentage amount
of Contracts secured by new or used Manufactured Homes; (vi) the average
outstanding principal balance of the Contracts as of the Cut-off Date;
(vii) the range of Loan-to-Value Ratios; and (viii) the geographic location
of Manufactured Homes securing the Contracts.

The Contracts will have been originated or purchased by the Company in
the ordinary course of its business.

Description of
Certificates

Each Class of Certificates within a Series will
evidence the interest specified in the related Prospectus Supplement in the
Contract Pool and certain other property held in trust for the benefit of the
Certificateholders (the "Trust Fund").

Each Series of Certificates may consist of one or more Classes, one or
more of which may be Senior Certificates ("Senior Certificates") and one or
more of which may be Subordinated Certificates ("Subordinated Certificates").

A Class of Certificates of a Series may be divided into two or more sub-
classes, as and on the terms specified in the related Prospectus Supplement.
Each Class or sub-class of a Series may evidence the right to receive a
specified portion (which may be 0%) of each distribution of principal or
interest or both, on the Contracts. Each Class or sub-class of a Series may
be assigned a principal balance (the "Stated Balance") based on the cash flow
from the assets in the Trust Fund, and a fixed, variable or adjustable stated
annual interest rate, and may be entitled to receive distributions in
reduction of Stated Balance to the extent available therefor in the manner,
priority and amounts specified in the related Prospectus Supplement. A Class
or sub-class of Certificates may be Compound Interest Certificates on which
interest will accrue, but not be paid for the period set forth in the related
Prospectus Supplement. The Certificates will be issuable in fully registered
form in the authorized denominations specified in the related Prospectus
Supplement. See "Description of the Certificates." The Subordinated
Certificates of a Series will be subordinated in certain respects to the
Senior Certificates of the same Series. If a Series of Certificates contains
more than one Class of Subordinated Certificates, distributions and losses
will be allocated among such Classes in the manner specified in the related
Prospectus Supplement. The Certificates will not be guaranteed or insured
by any government agency or instrumentality.

4
<PAGE>
Subordinated Certificates
and Reserve Fund

One or more Classes of any Series may be
Subordinated Certificates, as specified in the related Prospectus Supplement.
The rights of the Subordinated Certificateholders to receive any or a
specified portion of distributions with respect to the Contracts will be
subordinated to the rights of Senior Certificateholders to the extent and in
the manner specified in the related Prospectus Supplement. If a Series of
Certificates contains more than one Class of Subordinated Certificates,
distributions and losses will be allocated among such classes in the manner
specified in the related Prospectus Supplement. The rights of the
Subordinated Certificateholders, to the extent not subordinated, may be on
a parity with those Senior Certificateholders. This subordination is
intended to enhance the likelihood of regular receipt by Senior
Certificateholders of the full amount of scheduled monthly payments of prin-
cipal and interest due them and to protect the Senior Certificateholders
against losses. The Available Subordination Amount, if any, for each Class
of Subordinated Certificates of a Series will be dependent upon certain
Contract Pool characteristics which will be set forth in the related
Prospectus Supplement.

The protection afforded to the Senior Certificateholders by the
subordination feature described above may be effected both by the
preferential right of the Senior Certificateholders to receive current
distributions from the Contract Pool and, to the extent specified in the
related Prospectus Supplement, by the establishment of a reserve fund (the
"Reserve Fund"). The Reserve Fund may be funded, to the extent specified in
the related Prospectus Supplement, by one or more of an initial cash deposit,
the retention of specified periodic distributions of principal or interest
or both otherwise payable to Subordinated Certificateholders, or the
provision of a letter of credit, limited guarantee of CHI, insurance policy
or other form of credit enhancement or any combination thereof. Unless
otherwise specified in the related Prospectus Supplement, the Reserve Fund
will be part of the Trust Fund.

The subordination features and the Reserve Fund described above are
intended to enhance the likelihood of timely payment of principal and
interest and to protect the Senior Certificateholders and, to the extent
specified in the related Prospectus Supplement, Subordinated Certificate-
holders against loss. However, in certain circumstances the Reserve Fund
could be depleted and shortfalls could result. If, on a particular date when
a distribution is due such Certificateholders, the aggregate amount of
payments received from the obligors on the Contracts and Advances by the
Servicer (as described below), if any, and from the
5
<PAGE>
Reserve Fund of a Series, if any, do not provide sufficient funds to
make full distributions to such Certificateholders of a Series, the amount
of the shortfall may be added to the amount such Certificateholders are
entitled to receive on the next Remittance Date. In the event the Reserve
Fund, if any, is depleted, such Senior Certificateholders and, to the extent
specified in the related Prospectus Supplement, Subordinated Certificate-
holders nevertheless will have a preferential right to receive current
distributions from the Contract Pool. Such Certificateholders will bear
their proportionate share of losses realized on Contracts to the extent such
Reserve Fund and subordination feature are exhausted.

Credit Enhancement

As an alternative, or in addition, to the credit
enhancement afforded by subordination of the Subordinated Certificates,
credit enhancement with respect to a Series of Certificates may be provided
by pool insurance, letters of credit, surety bonds, a limited guarantee of
CHI, cash reserve funds or other forms of enhancement acceptable to each
nationally recognized rating agency rating a Series of Certificates, in each
case as described in the related Prospectus Supplement.

Advances

If the amount eligible for distribution to the Certificate-
holders of a Series of Certificates (or to Senior Certifi-
cateholders only if so specified in the case of a Series of
Certificates having a Class of Subordinated Certificates) on any Remittance
Date is less than the amount which is due such Certificateholders on such
Remittance Date, the related Agreement will provide that the Servicer is
obligated to make advances of cash (the "Advances") to such
Certificateholders subject to the limitations described in the applicable
Prospectus Supplement, to the extent that such deficiency is due to
delinquent payments of principal and interest during the immediately
preceding Due Period (as defined herein) and only to the extent the Servicer
determines such Advances are recoverable from future payments and collections
on the Contracts or otherwise. See "Description of the Certificates."

Interest

Interest on the Certificates will be paid on the dates
specified in the related Prospectus Supplement (each a "Remittance Date"),
commencing on the date specified in the related Prospectus Supplement. The
related Prospectus Supplement will set forth for each Class or sub-class of
Certificates the interest rate, if any, for each such Class or sub-class or
the method of determining such interest rate. See "Yield Considerations" and
"Description of the Certificates." As specified in the related Prospectus
Supplement, Classes of a Series of Certificates or sub-classes within a Class
may be entitled to receive no inter
6
<PAGE>
est or interest which is not proportionate to the principal
allocable to such Certificates.

Principal (Including
Prepayments)

Principal collected on each Contract, including any prin-
cipal prepayments, will be passed through on each
Remittance Date, unless such principal has previously been passed through.
See "Maturity and Prepayment Considerations" and "Description of the
Certificates." With respect to a Class or sub-class of a Series having a
Stated Balance, such distributions may be made in the reduction of the Stated
Balance, or in an amount equal to the Certificate Remittance Amount or such
other amounts as are specified in the related Prospectus Supplement. See
"Maturity and Prepayment Considerations" and "Description of the Certificates
/__/ Distributions on Certificates" and "/__/ Payments on Contracts."

Optional Termination

The Company or the Servicer may at its option
repurchase all Contracts relating to a series of Certificates remaining
outstanding at such time and under the circumstances specified in such
Prospectus Supplement. See "Description of the Certificates /__/ Termination
of the Agreement."

Global Certificates

If so specified in the related Prospectus
Supplement, the Certificates of a Series, or of one or more Classes within
a Series, will be issuable in the form of one or more global certificates
(each, a "Global Certificate") to be held by a depositary (each, a
"Depositary") on behalf of the beneficial owner of the Certificates, as
described herein under "Description of the Certificates /__/ Global Certifi-
cates." The description of the Certificates in this Prospectus assumes that
the Certificates of a Series will not be issued in the form of Global
Certificates. If some or all of the Certificates of a Series are issued in
the form of one or more Global Certificates, the term "Global Certificate-
holder," as used herein, will refer to such beneficial owners of such
Certificates, and the rights of such Certificateholders will be limited as
described herein under "Description of the Certificates /__/ Global
Certificates."

Representations and Warranties
of the Company

As a condition to the Company's conveyance of any
Contract Pool to the Trust Fund, the Company will be required to make certain
representations and warranties in the related Agreement regarding the
Contracts. Under the terms of the Agreement, if the Company becomes aware
of a breach of any such representation or warranty that materially adversely
affects the Trust Fund's interest in any Contract or receives written notice
of such a breach from the Trustee or the Servicer, then the Company will be
obligated either to cure such breach or to repurchase or
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substitute for the affected Contract, in each case under the
conditions further described herein. See "Description of the
Certificates /__/ Conveyance of Contracts" herein.

Federal Income Tax
Considerations

If an election (a "REMIC Election") is made to the Trust
Fund represented by a series of Certificates or a segregated portion thereof
as a "real estate mortgage investment conduit" (a "REMIC") under the Internal
Revenue code of 1986, as amended (the "Code"), each class of Certificates
which are offered hereby may constitute "regular interests" or "residual
interests" in such REMIC under the Code, with the tax consequences under the
Code described herein and in such Prospectus Supplement. Generally, holders
of Certificates that are REMIC regular interests will be treated as if they
hold a debt obligation for federal income tax purposes. A Class of
Certificates offered hereby may represent interests in a "two-tier" REMIC,
but all interests in the first and second tier REMIC will be created under
the same Agreement. See "Certain Federal Income Tax Consequences /__/ REMIC
Series."

If a REMIC Election is not made with respect to a Series of
Certificates, the Trust Fund represented by such Certificates will be treated
as a grantor trust for federal income tax purposes and will not be classified
as an association taxable as a corporation. In such event, each Certificate-
holder will be treated as the owner of an undivided pro rata interest in
income and corpus attributable to the related Contract Pool and any other
assets held by the Trust Fund and will be considered the equitable owner of
an undivided interest in the Contracts included in such Contract Pool. See
"Certain Federal Income Tax Consequences /__/ Non-REMIC Series."

ERISA Considerations

A fiduciary of any employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Code, should review carefully with its legal advisors
whether the purchase or holding of Certificates could give rise to a
transaction prohibited or otherwise impermissible under ERISA or the Code.
See "ERISA Considerations" herein.

Legal Investment

Unless otherwise indicated in the applicable
Prospectus Supplement, any Certificates offered hereby that are rated by at
least one nationally recognized statistical rating organization in one of its
two highest rating categories will constitute "mortgage related securities"
under the Secondary Mortgage Market Enhancement Act of 1984, as amended, and
as such (unless otherwise indicated in the applicable Prospectus Supplement)
will be "legal investments" for certain types of institutional investors to
the
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extent provided in that Act, subject, in any case, to any other
regulations that may govern investments by such institutional investors. See
"Legal Investment Considerations" herein.

Ratings

It is a condition precedent to the issuance of any Class of
Certificates sold under this Prospectus that they be rated in one of the four
highest rating categories (within which there may be sub-categories or
gradations indicating relative standing) of at least one nationally
recognized statistical rating organization. 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.

Ratings of the Certificates address the likelihood of the receipt
of all distributions on the contracts by the related certificateholders under
the agreements pursuant to which such certificates are issued. The ratings
take into consideration the credit quality of the related contract pool,
including any credit support providers, structural and legal aspects
associated with such certificates, and the extent to which payment stream on
such contract pool is adequate to make payments required by such
certificates. The ratings on such certificates do not, however, constitute
a statement regarding frequency of prepayments on the related contracts. See
"Ratings" herein.
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RISK FACTORS

Prospective investors in the Certificates should consider, among other
things, the following risk factors in connection with the purchase of the
Certificates:

1. General. An investment in the Certificates may be affected by, among
other things, a downturn in regional or local economic conditions. These
regional or local economic conditions are often volatile, and historically
have affected the delinquency, loan loss and repossession experience of the
Contracts. Moreover, regardless of its location, manufactured housing
generally depreciates in value. Consequently, the market value of certain
Manufactured Homes could be or become lower than the outstanding principal
balances of the Contracts that they secure. To the extent that losses on the
Contracts are not covered by the subordination of other Classes of
Certificates, if any, or by any other form of credit enhancement, holders of
the Certificates of a Series evidencing interests in such Contracts will bear
all risk of loss resulting from default by obligors and will have to look
primarily to the value of the Manufactured Homes for recovery of the
outstanding principal and unpaid interest on the defaulted Contracts. See
"The Trust Fund /__/ The Contract Pools."

2. Prepayment Considerations. The prepayment experience on the
Contracts will affect the average life of each Class of Certificates.
Prepayments on the Contracts (which include both voluntary prepayments and
liquidations following default) may be influenced by a variety of economic,
geographic, social and other factors, including repossessions, aging,
seasonality, market interest rates, changes in housing needs, job transfers
and unemployment. In the event a Contract is prepaid in full, interest on
such Contract will accrue only to the date of prepayment. If the
Certificates of any Series are purchased at a discount and the purchaser
calculates its anticipated yield to maturity based on an assumed rate of
payment of principal on such Certificates that is faster than the rate
actually realized, such purchaser's actual yield to maturity will be lower
than the yield so calculated by such purchaser.

3. Limited Obligations. The Certificates will not represent an interest
in or obligation of the Company. The Certificates will not be insured or
guaranteed by any governmental agency or instrumentality, the Underwriter or
any of its affiliates, or by the Company or (except as otherwise specified
in the related Prospectus Supplement) any of its affiliates, and will be
payable only from amounts collected on the Contracts.

4. Limited Liquidity. There can be no assurance that a secondary market
will develop for the Certificates of any Series, or, if it does develop, that
it will provide the holders of any of the Certificates with liquidity of
investment or that it will remain for the term of any Series of Certificates.
Liquidity of investment in the Certificates would be adversely affected by,
among other factors, the failure of a Trust Fund that has made a REMIC
election to continue to qualify as a REMIC and may be adversely affected by,
among other things, the absence of Certificates in physical form.

5. Security Interests and Mortgages on the Manufactured Homes.
Substantially all Contracts are secured by a separately evidenced security
interest in a Manufactured Home. Perfection of such security interests in
the Manufactured Homes and enforcement of rights to realize upon the value
of the Manufactured Homes as collateral for the Contracts are subject to a
number of federal and state laws, including the Uniform Commercial Code (the
"UCC") as adopted in each state and each state's certificate of title
statutes, but generally not its real estate laws. The steps necessary to
perfect the security interest in a Manufactured Home will vary from state to
state. Because of the expense and administrative inconvenience involved, the
Company will not amend any certificates of title to change the lienholder
specified therein from the Company (or the applicable originator in the case
of an Acquired Contract) to the Trustee or file any UCC-3 assignments and
will not deliver any certificate of title to the Trustee or note thereon the
Trustee's interest. Consequently, in some states, in the absence of such an
amendment, the
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assignment to the Trustee of the security interest in the Manufactured Home
may not be effective or such security interest may not be perfected and, in
the absence of such notation or delivery to the Trustee, the assignment of
the security interest in the Manufactured Home may not be effective against
creditors of the Company (or the applicable originator in the case of an
Acquired Contract) or a trustee in bankruptcy of the Company (or the
applicable originator in the case of an Acquired Contract). Certain
Contracts (as specified herein and in the related Prospectus Supplement) may
be secured by a mortgage or deed of trust on the property on which a
Manufactured Home or Modular Home is placed. Because of the expense and
administrative inconvenience involved, the Company will not deliver to the
Trustee assignments in recordable form of the mortgage or deed of trust
(each, a "Mortgage") securing each Land-and-Home Contract. The Company will,
however, deliver to the Trustee a power of attorney enabling the Trustee to
effect such assignments. In some states in the absence of the recordation
of such an assignment to the Trustee of the Mortgage securing a Land-and-Home
Contract, the assignment of the Mortgage to the Trustee may not be effective
against creditors of or purchasers from the Company (or the applicable
originator in the case of an Acquired Contract) or a trustee in bankruptcy
of the Company (or the applicable originator in the case of an Acquired
Contract).

6. Consumer Protection Laws and Other Limitations on Lenders. Numerous
federal and state consumer protection laws impose requirements on lending
under installment sales contracts and installment loan agreements such as the
Contracts, and the failure by the lender or seller of goods to comply with
such requirements could give rise to liabilities of assignees for amounts due
under such agreements and the right of set-off against claims by such
assignees. From time to time the Company is involved in litigation under
consumer protection laws. These laws would apply to the Trust Fund as
assignee of the Contracts. Pursuant to the Agreement, the Company will
represent and warrant that each Contract complies with all requirements of
law and will provide certain warranties relating to the validity, perfection
and priority of the security interest in each Manufactured Home securing a
Contract. A breach of any such warranty that materially adversely affects
any Contract may, subject to certain conditions described under "Description
of Certificates /__/ Conveyance of Contracts," create an obligation by the
Company to repurchase, or at its option substitute another contract for, such
Contract unless such breach is cured within 90 days after notice thereof.
If the Company does not honor its repurchase obligation in respect of a
Contract and such Contract were to become defaulted, recovery of amounts due
on such Contract would be dependent on repossession and resale of the
Manufactured Home securing such Contract. Certain other factors, such as the
bankruptcy of an obligor or the application of equitable principles by a
court, may limit the ability of the Certificateholders to receive payments
on the Contracts or to realize upon the Manufactured Homes or may limit the
amount realized to less than the amount due. See "Certain Legal Aspects of
the Contracts" herein.

In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
-----------------------------------
the court's decision included language to the effect that accounts sold by
an entity which subsequently became bankrupt remained property of the
debtor's bankruptcy estate. Although the Contracts constitute chattel paper
rather than accounts under the UCC, sales of chattel paper, like sales of
accounts, are governed by Article 9 of the UCC. If the Company (or the
dealer that sold the related Manufactured Home) were to become a debtor under
the federal bankruptcy code and a court were to follow the reasoning of the
Tenth Circuit and apply such reasoning to chattel paper, Certificateholders
could experience a delay in or reduction of distributions (in the case of the
dealer, only with respect to the Contracts in respect of which it sold the
related Manufactured Home).

7. Certain Matters Relating to Insolvency. The Company intends that
each transfer of Contracts to the related Trust Fund constitutes a sale,
rather than a pledge of the Contracts to secure indebtedness of the Company.
However, if the Company were to become a debtor under the federal bankruptcy
code, it is possible that a creditor or trustee in bankruptcy of the Company
or the Company as debtor-in-possession may argue that the sale of the
Contracts by the Company was a pledge of the Contracts rather
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<PAGE>
than a sale. This position, if presented to or accepted by a court, could
result in a delay in or reduction of distributions to the Certificateholders.

8. Priority of Possible Tennessee Tax Lien. Under Tennessee law, a tax
is due in connection with the public recordation of instruments evidencing
indebtedness. The Company will treat the transfers of the Contracts to the
Trustee as sales rather than secured financings, and therefore will not pay
any tax in respect of the recordation of instruments evidencing such
transfers. See "Certain Legal Aspects of the Contracts /__/ Certain Matters
Relating to Insolvency". Nonpayment or underpayment of the Tennessee
indebtedness tax does not affect or impair the effectiveness, validity,
priority or enforceability of the security interest created or evidenced by
the instrument, but (a) subjects the holder of the indebtedness to a penalty,
in addition to the tax, in the amount of the greater of $250 or double the
unpaid tax due, (b) results in the imposition of a tax lien in favor of the
Tennessee Department of Revenue, in the amount of any tax and penalties
unpaid and owing that attaches to the collateral until the lien or security
interest is released and thereafter attaches to the proceeds, and
(c) precludes the holder of the indebtedness from maintaining an action on
the indebtedness (other than an action limited to the enforcement of the
security interests or lien) against the debtor until the nonpayment is cured.

In such event, and in addition to the statutory disability described above,
collections on the Contracts could be applied to pay such tax and penalty
prior to being applied to make distributions to Certificateholders and the
Tennessee Department of Revenue would have a lien on the Contracts prior to
the security interests and liens of the Trustee.

9. Louisiana Law. Any Contract secured by a Manufactured Home located
in the State of Louisiana will be governed by Louisiana law in addition to
Article 9 of the UCC. Louisiana law provides special mechanisms for the
enforcement of security interests in manufactured housing used as collateral
for an installment sales contract or installment loan agreement. Under
Louisiana law, so long as a manufactured home remains subject to the
Louisiana motor vehicle laws, repossession can be accomplished by voluntary
consent of the obligor, executory process (repossession proceedings which
must be initiated through the courts but which involve minimal court
supervision) or a civil suit for possession. In connection with a voluntary
surrender, the obligor must be given a full release from liability for all
amounts due under the contract. In executory process repossessions, a
sheriff's sale (with court supervision) is permitted, unless the owner brings
suit to enjoin the sale, and the lender is prohibited from seeking a
deficiency judgment against the obligor unless the lender obtained an
appraisal of the manufactured home prior to the sale and the property was
sold for at least two-thirds of its appraised value.

10. Limitations on Subordination. With respect to Certificates of a
Series having a Class of Subordinated Certificates, while the subordination
feature is intended to enhance the likelihood of timely payment of principal
and interest to the Senior Certificateholders, the Available Subordination
Amount may be limited, as specified in the Prospectus Supplement, and the
Reserve Fund, if any, could be depleted in certain circumstances. In either
case, shortfalls could result for both the Senior Certificates and the
Subordinated Certificates. Prospective purchasers of a Class of Certificates
should carefully review the credit risks to be absorbed by such Class of
Certificates on account of its subordination or the timing of the
distributions intended to be made on such Class of Certificates.

11. Limited Guarantee of CHI. If the related Prospectus Supplement so
specifies, the Certificates may be entitled to the benefits of a limited
guarantee of CHI which would be an unsecured general obligation of CHI and
would not be supported by any letter of credit or other enhancement
arrangement.

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THE TRUST FUND

GENERAL

Each Trust Fund will include (i) a Contract Pool, (ii) the amounts held
from time to time in a trust account (the "Certificate Account") maintained
by the Trustee pursuant to the Agreement, and (iii) proceeds from certain
hazard insurance on individual Manufactured Homes and Manufactured Homes
acquired by repossession, and may include a letter of credit, limited
guarantee of CHI, surety bond, insurance policy, cash reserve fund or other
credit enhancement security payment of all or part of a series of
Certificates or other property. If so specified in the related prospectus
supplement, a limited guarantee of CHI may exist and may not be a part of the
Trust Fund.

Each Certificate will evidence the interest specified in the related
Prospectus Supplement in one Trust Fund, containing one Contract Pool
comprised of Contracts having the aggregate principal balance as of the
specified day of the month of the creation of the pool (the "Cut-off Date")
specified in the related Prospectus Supplement. Holders of Certificates of
a Series will have interests only in such Contract Pool and will have no
interest in the Contract Pool created with respect to any other Series of
Certificates.

All of the Contracts will have been purchased by the Company or an
affiliate of the Company in the open market or in privately negotiated
transactions, including transactions with affiliates of the Company. The
following is a brief description of the Contracts expected to be included in
the Trust Fund. Specific information respecting the Contracts will be
provided in the Prospectus Supplement or in a report on Form 8-K to be filed
with the Securities and Exchange Commission after the initial issuance of
such Certificates. A copy of the Agreement with respect to each Series of
Certificates will be attached to the Form 8-K and will be available for
inspection at the corporate trust office of the Trustee specified in the
related Prospectus Supplement. A schedule of the Contracts relating to such
Series will be attached to the Agreement delivered to the Trustee upon
delivery of the Certificates.

Whenever in this Prospectus terms such as "Contract Pool," "Trust Fund,"
"Agreement" or "Remittance Rate" are used, those terms respectively apply,
unless the context otherwise indicates, to one specific Contract Pool, Trust
Fund, each Agreement and the Remittance Rate applicable to the related Series
of Certificates.

THE CONTRACT POOLS

Each pool of Contracts with respect to a Series of Certificates (the
"Contract Pool") will consist of manufactured housing installment sales
contracts and installment loan agreements and may include modular home
installment sales contracts and installment loan agreements (collectively,
the "Contracts") originated by a manufactured housing dealer or a lender in
the ordinary course of business and purchased by the Company. The Contracts
will be conventional manufactured housing contracts or contracts insured by
the FHA or partially guaranteed by the VA. Each Contract will be secured by
a new or used Manufactured Home or Modular Home. Each Contract secured by
a Modular Home will, and some of the Contracts secured by Manufactured Homes
may, be further secured by a mortgage or deed of trust on the real estate to
which the Modular Home or the Manufactured Home is affixed (a "Land-and-Home
Contract"). Except as otherwise specified in the related Prospectus
Supplement, the Contracts will be fully amortizing and will bear interest at
a fixed or variable annual percentage rate (the "Contract Rate") or at a
Contract Rate which steps up on a particular date (a "step-up rate").

The Company, as seller of the Contracts, will represent that the
Manufactured Homes securing the Contracts consist of manufactured homes
within the meaning of 42 United States Code, Section 5402(6), which defines
a "manufactured home" as "a structure, transportable in one or more sections,

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<PAGE>
which in the traveling mode, is eight body feet or more in width or forty
body feet or more in length, or, when erected on site, is three hundred
twenty or more square feet, and which is built on a permanent chassis
designed to be used as a dwelling with or without a permanent foundation when
connected to the required utilities, and includes the plumbing, heating, air-
conditioning, and electrical systems contained therein; except that such term
shall include any structure which meets all the requirements of (this)
paragraph except the size requirements and with respect to which the
manufacturer voluntarily files a certification required by the Secretary of
Housing and Urban Development and complies with the standards established
under (this) chapter."

For each Series of Certificates, the Company will assign the Contracts
constituting the Contract Pool to the trustee named in the related Prospectus
Supplement (the "Trustee"). The Company, as Servicer (in such capacity
referred to herein as the "Servicer"), will service the Contracts pursuant
to the Agreement. See "Description of the Certificates /__/ Servicing."
Unless otherwise specified in the related Prospectus Supplement, the contract
documents (including the documents relating to Land-and-Home Contracts) will
be held for the benefit of the Trustee by the Servicer.

Each Contract Pool will be composed of Contracts bearing interest at the
annual fixed or variable Contract Rates or step-up rates specified in the
Prospectus Supplement. The Monthly Payments for Contracts bearing interest
at a step-up rate (sometimes referred to herein as "step-up rate Contracts")
will increase on the dates on which the Contract Rates are stepped up. Each
registered holder of a Certificate will be entitled to receive periodic
distributions, which will typically be monthly, of all or a portion of
principal on the underlying Contracts or interest on the principal balance
of such Certificate at the Remittance Rate, or both.

The related Prospectus Supplement will disclose in summary form for the
Contracts contained in the related Contract Pool, among other things, the
year of origination of the contracts; the range of Contract Rates on the
Contracts; the range of Loan-to-Value Ratios; the minimum and maximum out-
standing principal balances as of the Cut-off Date and the average
outstanding principal balance; the range of outstanding principal balances
of the Contracts included in the Contract Pool; and the original maturities
of the Contracts and the last maturity date of any Contract. The Trust Fund
may include a Pre-Funding Account which would be used to purchase additional
Contracts ("Subsequent Contracts") from the Company during the Funding Period
specified in the related Prospectus Supplement. The related Prospectus
Supplement will specify the conditions that must be satisfied prior to any
transfer of Subsequent Contracts, including the requisite characteristics of
the Subsequent Contracts.

The Company will make representations and warranties as to the types and
geographical distribution of the Contracts included in a Contract Pool and
as to the accuracy in all material respects of certain information furnished
to the Trustee in respect of each such Contract. Upon a breach of any
representation that materially and adversely affects the interests of the
Certificateholders in a Contract, the Company will be obligated either to
cure the breach in all material respects, to purchase the Contract or to
substitute another Contract as described below. This repurchase or
substitution obligation constitutes the sole remedy available to the
Certificateholders or the Trustee for a breach of representation by the
Company. See "Description of the Certificates /__/ Conveyance of Contracts."

USE OF PROCEEDS

Substantially all of the net proceeds to be received from the sale of
each Series of Certificates will be used by the Company for general corporate
purposes, including the purchase of the Contracts, cost of carrying the
Contracts until sale of the related Certificates and to pay other expenses
connected with pooling the Contracts and issuing the Certificates.

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VANDERBILT MORTGAGE AND FINANCE, INC.

Vanderbilt Mortgage and Finance, Inc. (the "Company") was incorporated
in 1977 in the State of Tennessee. As of December 31, 1995, the Company had
total assets of approximately $378 million and stockholder's equity of
approximately $136 million. The Company, a wholly-owned subsidiary of
Clayton Homes, Inc. ("CHI"), is engaged in the business of, among other
things, purchasing, originating, selling and servicing installment sales
contracts and installment loan agreements for manufactured housing and
modular housing (hereinafter referred to as "contracts" or "manufactured
housing contracts"). CHI manufacturers and sells manufactured homes and
modular homes, and owns, manages and markets manufactured housing
communities. The Company's principal office is located at 4726 Airport
Highway, Louisville, Tennessee 37777 (telephone 615-970-7200). An affiliate
of CHI acts as an insurance broker for certain types of insurance, including
hazard and credit life insurance policies, some of which may cover certain
of the Contracts. Other affiliates of CHI reinsure hazard and credit life
insurance policies, including policies that may cover certain of the
Contracts. Two separate wholly-owned subsidiaries of CHI, Vanderbilt Life
and Casualty Insurance Co., Ltd. and Vanderbilt Property and Casualty
Insurance Co., Ltd. may act as reinsurer of insurance coverage relating to
the Contracts.

The Company purchases and originates manufactured housing contracts on
an individual basis from its principal office. The Company arranges to
purchase manufactured housing installment sales contracts originated by
manufactured housing dealers located in approximately (21) states, primarily
southern and midwestern. Most of these purchases are from dealers owned by
CHI. Dealers which are not owned by CHI must make an application to the
Company for dealer approval. Upon satisfactory results of the Company's
investigation of the dealer's creditworthiness and general business
reputation, the Company and the dealer enter into a dealer agreement.

In addition to purchasing manufactured housing contracts from dealers
on an individual basis, the Company makes bulk purchases of manufactured
housing contracts and services on behalf of other owners manufactured housing
contracts that were not originally purchased or originated by the Company.
These purchases may be from, and these servicing arrangements may be made
with respect to, the portfolios of other lenders or finance companies, the
portfolios of governmental agencies or instrumentalities or the portfolios
of other entities that purchase and hold manufactured housing contracts.

The Company is actively seeking arrangements by which it would service
manufactured housing contracts originated by other lenders. The Company's
management currently anticipates it will only seek servicing responsibilities
which relate to manufactured housing contracts.

UNDERWRITING POLICIES

GENERAL

Customers desiring to obtain financing from the Company complete a
credit application form. In the case of those dealers owned by CHI, the
manager initially evaluates the application and then forwards it to the
Company for consideration. In the case of dealers that are not owned by CHI,
the application is transmitted to the Company for consideration.

Credit applications are then evaluated by the Company's credit officers.
With respect to those customers determined to be creditworthy, the Company
requires a down payment in the form of cash, the trade-in value of a
previously owned manufactured home, and/or the estimated value of equity in
real property pledged as additional collateral. For previously owned homes,
the trade-in allowance accepted by the dealer must be consistent with the
value of such home determined by the Company in light of
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<PAGE>
current market conditions. The value of real property pledged as additional
collateral is estimated by personnel of the dealer, who are not appraisers
but are familiar with the area in which the property is located. The minimum
amount of the down payment is typically 5% of the purchase price. The
purchase price includes the stated cash sale price of the manufactured home,
sales or other taxes and certain fees and set-up costs. The balance of the
purchase price and certain insurance premiums (including up to five years of
premiums on required hazard insurance) are financed by an installment sales
contract providing for a purchase money security interest in the manufactured
home and a mortgage on real property, if any, pledged as additional
collateral. Normally, the contracts provide for equal monthly payments,
generally over a period of five to twenty years at fixed rates of interest.
The Company believes the typical manufactured home purchaser is primarily
sensitive to the amount of the monthly payment, and not to the interest rate.

The Company's underwriting guidelines generally require that each
applicant's credit history, residence history, employment history and income
to debt payment ratios be examined. There are no requirements on the basis
of which, if met, credit is routinely approved; or if they are not met,
credit is routinely denied. If in the judgment of the Company's credit
manager an applicant does not meet minimum underwriting criteria, there
generally must be compensating higher ratings with respect to other criteria
in order for an applicant to be approved. Credit managers must confirm that
the credit investigation gave a complete and up-to-date accounting of the
applicant's creditworthiness. Credit managers are encouraged to obtain
second opinions on loans for relatively larger dollar amounts or those which,
in their judgment, tend to rank lower in terms of underwriting criteria.
Generally, the sum of the monthly obligation for installment obligations,
including the manufactured home loan payment and monthly site costs, should
not exceed 45% of the applicant's gross monthly income. Since January 1989
the Company has, in addition to the above considerations, used a credit
scoring system to evaluate credit applicants. The credit score of an
applicant is used as a further guide in determining whether to extend credit
to the applicant.

In the case of a Contract Pool containing Contracts originated by other
originators and acquired by the Company ("Acquired Contracts"), the related
Prospectus Supplement will describe such Contracts.

BULK TRANSACTIONS

In fiscal 1990, the Company purchased a portfolio of manufactured home
contracts originated by an unaffiliated entity. This portfolio, originally
consisting of approximately 4,000 installment sales contracts, was purchased
at a discount from its outstanding principal balance. The Company services
the contracts acquired. The Company intends to consider, from time to time,
the selective acquisition of additional portfolios of installment sales
contracts consistent with the Company's views of appropriate pricing in
return for certain portfolios and servicing capacity.

In fiscal 1991, the Company became the servicer for approximately
$100 million of installment sales contracts for manufactured homes acquired
by a REMIC trust. The trust issued approximately $70 million of senior
certificates which received the highest rating from both Standard & Poor's
Corporation and Moody's Investors Service, Inc. and are guaranteed as to
principal and interest by a financial guarantee policy issued by Financial
Security Assurance, Inc. ("FSA"). CHI purchased the junior certificates
representing the residual interest in the REMIC by establishing a
$12.5 million reserve fund for the senior certificates and by agreeing to pay
the premium on the FSA policy. Most of the homes financed by these contracts
are located in Texas and were originated by savings institutions which were
subsequently placed into receivership.

In fiscal 1992, the Company became the servicer for 15,409 installment
sales contracts for manufactured homes with an approximate current principal
balance of $148 million acquired by a REMIC
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trust from the Resolution Trust Corporation. The Company did not acquire
these contracts and is acting solely as servicer with respect to these
contracts.

In fiscal 1994, the Company acquired a portfolio of manufactured home
contracts originated by an unaffiliated entity. This portfolio originally
consisted of approximately 3,300 installment sales contracts and was
purchased at a discount from its outstanding principal balance of
approximately $56 million. Also in fiscal 1994, the Company became servicer
for approximately 16,500 contracts for manufactured homes with an approximate
aggregate principal balance of $222 million owned by three REMIC trusts. The
Company is acting solely as servicer with respect to these contracts.

VARIOUS FINANCING TERMS

The Company has developed financing options such as contracts with a
7 year term (compared to the industry norm of 15 to 20 years), which provides
financing to its customers at a relatively low cost. In January 1990, the
Company introduced a bi-weekly payment contract which provides for
26 payments a year, which are made by electronically drafting the purchaser's
checking account.

During the last six fiscal years, the Company has become the most
important source of financing for purchasers of CHI's homes. In fiscal 1988,
the Company originated 5,692 contracts, in fiscal 1993, the Company
originated 10,880 contracts and in fiscal 1994, the Company originated 12,401
contracts. At December 31, 1994, the Company was servicing approximately
88,000 contracts and an aggregate dollar amount of $1.4 billion, of which the
Company purchased from dealers or acquired from other institutions
approximately 63,000 contracts with an aggregate dollar amount of $1.08
billion. The Company expects it will continue to originate a significant
portion of the financing for purchasers of homes sold by CHI owned retail
centers, consistent with the overall level of CHI's retail sales.

YIELD CONSIDERATIONS

The Remittance Rates and the weighted average Contract Rate of the
Contracts relating to each Series of Certificates will be set forth in the
related Prospectus Supplement.

Unless otherwise specified in the related Prospectus Supplement, each
monthly accrual of interest on a Contract is calculated at one-twelfth of the
product of the Contract Rate and the principal balance outstanding on the
scheduled payment date for such Contract in the preceding month. The
Remittance Rate with respect to each Certificate will be calculated
similarly.

The Prospectus Supplement for each Series will indicate that a lower
rate of principal prepayments than anticipated would negatively affect the
total return to investors of any Class or such sub-class of Certificates that
is offered at a discount to its principal amount, and a higher rate of
principal prepayments than anticipated would negatively affect the total
return to investors of any such Class or sub-class of Certificates that is
offered at a premium to its principal amount or without any principal amount.

If a Series of Certificates contains Classes or sub-classes of
Certificates entitled to receive distributions of principal or interest or
both, in a specified order other than as a specified percentage of each
distribution of principal or interest or both, the Prospectus Supplement will
set forth information, measured relative to a prepayment standard or model
specified in such Prospectus Supplement, with respect to the projected
weighted average life of each such Class or sub-class and the percentage of
the original Stated Balance of each such Class or sub-class that would be
outstanding on specified Remittance Dates for such Series based on the
assumptions stated in such Prospectus Supplement, including
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assumptions that prepayments on the Contracts in the related Trust Fund are
made at rates corresponding to the various percentage of such prepayment
standard or model.

MATURITY AND PREPAYMENT CONSIDERATIONS

MATURITY

The Contracts will have maturities at origination of not more than
30 years.

PREPAYMENT CONSIDERATIONS

Contracts generally may be prepaid in full or in part without penalty.
Based on the Company's experience with the portfolio of manufactured housing
contracts serviced by it, the Company anticipates that a number of the
contracts will be prepaid prior to their maturity. A number of factors,
including homeowner mobility, general and regional economic conditions and
prevailing interest rates, may influence prepayments. In addition,
repurchase of Contracts on account of certain breaches of representations and
warranties have the effect of prepaying such Contracts and therefore would
affect the average life of the Certificates. Most of the Contracts contain
a "due-on-sale" clause that would permit the Servicer to accelerate the
maturity of a Contract upon the sale of the related Manufactured Home. In
the case of those Contracts that do contain due-on-sale clauses, the Servicer
will permit assumptions of such Contracts if the purchaser of the related
Manufactured Home satisfies the Company's then-current underwriting
standards.

Information regarding the Prepayment Model or any other rate of assumed
prepayment, as applicable, will be set forth in the Prospectus Supplement
with respect to a Series of Certificates.

See "Description of the Certificates /__/ Termination of the Agreement"
for a description of the Company's or Servicer's option to repurchase the
Contracts comprising part of a Trust Fund when the aggregate outstanding
principal balance of such Contracts is less than a specified percentage of
the initial aggregate outstanding principal balance of such Contracts as of
the related Cut-off Date. See also "The Trust Fund /__/ The Contract Pools"
for a description of the obligations of the Company to repurchase a Contract
in case of a breach of a representation or warranty relative to such
Contract.

DESCRIPTION OF THE CERTIFICATES

Each Series of Certificates will be issued pursuant to a separate
pooling and servicing agreement (each, an "Agreement") to be entered into
among the Company, as Seller and Servicer, and the trustee named in the
related Prospectus Supplement (the "Trustee"), and such other parties, if
any, as are described in the applicable Prospectus Supplement. The following
summaries describe certain provisions expected to be common to each Agreement
and the related Certificates, but do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the
provisions of the related Agreement and the description set forth in the
related Prospectus Supplement. Section references, if any, contained herein
refer to sections of the form of Agreement filed as an exhibit to the
Registration Statement of which this Prospectus is a part (the "Registration
Statement"). The portions of such sections described herein may be contained
in different numbered sections in the actual Agreement pursuant to which any
Series of Certificates is issued. The provisions of the form of Agreement
filed as an exhibit to the Registration Statement that are not described
herein may differ from the provisions of any actual Agreement. The material
differences will be described in the related Prospectus Supplement.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the form of Agreement filed as an exhibit to the
Registration Statement.

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GENERAL

The Certificates may be issued in one or more Classes or sub-classes
(each referred to in this Prospectus as a "Class"). If the Certificates of
a Series are issued in more than one Class, the Certificates of all or less
than all of such Classes may be sold pursuant to this Prospectus, and there
may be separate Prospectus Supplements relating to one or more of such
Classes so sold. Any reference herein to the Prospectus Supplement relating
to a Series comprised of more than one Class should be understood as a
reference to each of the Prospectus Supplements relating to the Classes sold
hereunder. Any reference herein to the Certificates of a Class should be
understood to refer to the Certificates of a Class within a Series, the
Certificates of a sub-class within a Series or all of the Certificates of a
single-Class Series, as the context may require.

The Certificates of each Series will be issued in fully registered form
only and will represent the interest specified in the related Prospectus
Supplement in a separate trust fund (the "Trust Fund") created pursuant to
the related Agreement. The Trust Fund will be held by the Trustee for the
benefit of the Certificateholders. Each Trust Fund will generally include
(i) Contracts (the "Contract Pool") which are subject to the Agreement from
time to time, (ii) the amounts held in the Certificate Account from time to
time and (iii) proceeds from certain hazard insurance on individual
Manufactured Homes or Modular Homes and Manufactured Homes or Modular Homes
(or the related real estate, in the case of Land-and-Home Contracts) acquired
by repossession, and may include a letter of credit, a limited guarantee of
CHI, surety bond, insurance policy, cash reserve fund or other credit
enhancement security payment of all or part of a Series of Certificates or
other property. Except as otherwise specified in the related Prospectus
Supplement, the Certificates will be freely transferable and exchangeable at
the corporate trust office of the Trustee at the address set forth in the
related Prospectus Supplement. No service charge will be made for any
registration of exchange or transfer of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge.

Ownership of each Contract Pool may be evidenced by one or more classes
of Certificates, each representing the interest in the Contract Pool
specified in the related Prospectus Supplement. One or more Classes of
Certificates evidencing interests in Contracts may be Subordinated
Certificates, evidencing the right of the holders thereof to receive any or
a portion of distributions of principal or interest or both on the Contracts
subordinate to the rights of the holders of other Classes of Certificates
("Senior Certificates") as provided in the related Prospectus Supplement.
If a Series of Certificates contains more than one Class of Subordinated
Certificates, losses will be allocated among such Classes in the manner
described in the Prospectus Supplement.

A Series of Certificates may consist of Classes of Certificates
evidencing the right to receive distributions of principal or interest or
both in the order specified in the related Prospectus Supplement. A Class
of Certificates of a Series may be divided into two or more sub-classes. The
related Prospectus Supplement will specify whether a Class has been so
divided and the terms of each sub-class. The holders of each sub-class of
a Class of Certificates will be entitled to the percentages (which may be 0%)
of principal or interest payments or both on the related Contracts as
specified in the related Prospectus Supplement. The related Prospectus
Supplement will specify the minimum denomination or initial principal amount
of Contracts evidenced by a single Certificate of each Class of Certificates
of a Series (a "Single Certificate").

Distributions of principal and interest on the Certificates will be made
on the payment dates set forth in the related Prospectus Supplement (each,
a "Remittance Date") to the persons in whose names the Certificates are
registered at the close of business on the related record date specified in
the related Prospectus Supplement (the "Record Date"). Distributions will
be made by check mailed to the address of the person entitled thereto as it
appears on the Certificate Register, or, to the extent described in the
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related Agreement, by wire transfer, except that the final distribution in
retirement of Certificates will be made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee specified in the
final distribution notice to Certificateholders.

GLOBAL CERTIFICATES

The Certificates of a Class may be issued in whole or in part in the
form of one or more global certificates (each, a "Global Certificate") that
will be deposited with, or on behalf of, and registered in the name of a
nominee for, a depositary (the "Depositary") identified in the related
Prospectus Supplement. The description of the Certificates contained in this
Prospectus assumes that the Certificates will be issued in definitive form.
If the Certificates of a Class are issued in the form of one or more Global
Certificates, the term "Certificateholder" should be understood to refer to
the beneficial owners of the Global Certificates, and the rights of such
Certificateholders will be limited as described under this subheading.

Global Certificates will be issued in registered form. Unless and until
it is exchanged in whole or in part for Certificates in definitive form, a
Global Certificate may not be transferred except as a whole by the Depositary
for such Global Certificate to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary
or by such Depositary or any such nominee to a successor of such Depositary
or a nominee of such successor.

The specific terms of the depositary arrangement with respect to any
Certificates of a Class will be described in the related Prospectus
Supplement. It is anticipated that the following provisions will apply to
all depositary arrangements:

Upon the issuance of a Global Certificate, the Depositary for such
Global Certificate will credit, on its book-entry registration and transfer
system, the respective denominations of the Certificates represented by such
Global Certificate to the accounts of institutions that have accounts with
such Depositary ("participants"). Ownership of beneficial interests in a
Global Certificate will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in such
Global Certificate will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the Depositary for such
Global Certificate or by participants or persons that hold through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Certificate.

So long as the Depositary for a Global Certificate, or its nominee, is
the owner of such Global Certificate, such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the Certificates
represented by such Global Certificate for all purposes under the Agreement
relating to such Certificates. Except as set forth below, owners of
beneficial interests in a Global Certificate will not be entitled to have
Certificates of the Series represented by such Global Certificate registered
in their names, will not receive or be entitled to receive physical delivery
of Certificates of such Series in definitive form and will not be considered
the owners or holders thereof under the Agreement governing such
Certificates.

Distributions or payments on Certificates registered in the name of or
held by a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner for the holder of the
Global Certificate representing such Certificates. In addition, all reports
required under the applicable Agreement to be made to Certificateholders (as
described below under "Reports to Certificateholders") will be delivered to
the Depositary or its nominee, as the case may be. None of the Company,
Servicer, Trustee, or any agent thereof (including any applicable Certificate
Registrar or Paying Agent), will have any responsibility or liability for any
aspect of the records relating to or
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payments made on account of beneficial ownership interest in a Global
Certificate or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests or for providing reports to the
related beneficial owners.

The Company expects that the Depositary for Certificates of a Class,
upon receipt of any distribution or payment in respect of a Global
Certificate, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interest in such Global
Certificate as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in
such Global Certificate held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name,"
and will be the responsibility of such participants.

If a Depositary for Certificates of a Class is at any time unwilling or
unable to continue as Depositary and a successor depositary is not appointed
by or on behalf of the Company within the time period specified in the
Agreement, the Company will cause to be issued Certificates of such Class in
definitive form in exchange for the related Global Certificate or
Certificates. In addition, the Company may at any time and in its sole
discretion determine not to have any Certificates of a Class represented by
one or more Global Certificates and, in such event, will cause to be issued
Certificates of such Class in definitive form in exchange for the related
Global Certificate or Certificates. Further, if the Company so specifies
with respect to the Certificates of a Class, an owner of a beneficial
interest in a Global Certificate representing Certificates of such Class may,
on terms acceptable to the Company and the Depositary for such Global
Certificate, receive Certificates of such Class in definitive form. In any
such instance, an owner of a beneficial interest in a Global Certificate will
be entitled to physical delivery in definitive form of Certificates of the
Class represented by such Global Certificate equal in denominations to such
beneficial interest and to have such Certificates registered in its name.

CONVEYANCE OF CONTRACTS

The Company will transfer, assign, set over and otherwise convey to the
Trustee all right, title and interest of the Company in the Contracts,
including all security interests created thereby and any related mortgages
or deeds of trust, all principal and interest received on or with respect to
the Contracts (other than receipts of principal and interest due on the
Contracts before the Cut-off Date), all rights under certain hazard insurance
policies on the related Manufactured Homes or Modular Homes, all documents
contained in the Contract files and all proceeds derived from any of the
foregoing. On behalf of the Trust Fund, as the issuer of the related Series
of Certificates, the Trustee, concurrently with such conveyance, will execute
and deliver the Certificates to the order of the Company. The Contracts will
be as described on a list attached to the Agreement. Such list will include
the current amount of monthly payments due on each Contract as of the date
of issuance of the Certificates and the Contract Rate on each Contract. Such
list will be available for inspection by any Certificateholder at the
principal executive office of the Servicer. Prior to the conveyance of the
Contracts to the Trustee, the Company's operations department will complete
a review of all of the Contract files, including the certificates of title
to, or other evidence of a perfected security interest in, the Manufactured
Homes, confirming the accuracy of the list of Contracts delivered to the
Trustee. Any Contract discovered not to agree with such list in a manner
that is materially adverse to the interests of the Certificateholders will
be repurchased by the Company or replaced with another Contract, or, if the
discrepancy relates to the unpaid principal balance of a Contract, the
Company may deposit cash in the separate account maintained at an Eligible
Institution in the name of the Trustee (the "Certificate Account") in an
amount sufficient to offset such discrepancy.

The Agreement will designate the Servicer as custodian to maintain
possession, as the Trustee's agent, of the Contracts and any other documents
related to the Manufactured Homes or Modular Homes. To facilitate servicing
and save administrative costs, the documents will not be physically
segregated from other similar documents that are in the Company's possession.
In order to give notice of the right, title
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and interest of the Certificateholders to the Contracts, the Company will
cause a UCC-1 financing statement to be executed by the Company identifying
the Company as the seller and the Trustee as the buyer of the Contracts, and
the Company's accounting records and computer systems will also reflect such
sale and assignment. In addition, within one week after the initial delivery
of the Certificates, the Contracts will be stamped to reflect their
assignment to the Trustee. However, if through fraud, negligence or other-
wise, a subsequent purchaser were able to take physical possession of the
Contracts without knowledge of the assignment, the Trustee's interest in the
Contracts could be defeated. See "Risk Factors/__/ Security Interests and
Mortgages on the Manufactured Homes" and "/__/ Consumer Protection Laws and
Other Limitations on Lenders."

In general, the Company will make certain warranties in the Agreement
with respect to each Contract as of the Closing Date, including that: (a) as
of the Cut-off Date, or the date of origination, if later, the most recent
scheduled payment was made or was not delinquent more than 59 days (or such
other number of days specified in the related Prospectus Supplement); (b) no
provision of a Contract has been waived, altered or modified in any respect,
except by instruments or documents contained in the Contract file or the
Land-and-Home Contract file; (c) each Contract is a legal, valid and binding
obligation of the Obligor and is enforceable in accordance with its terms
(except as may be limited by laws affecting creditors' rights generally);
(d) no Contract is subject to any right of rescission, set-off, counterclaim
or defense; (e) each Contract is covered by hazard insurance described under
"/__/ Servicing /__/ Hazard Insurance"; (f) each Contract has been originated
by a manufactured housing dealer or the Company in the ordinary course of
such dealer's or the Company's business and, if originated by a manufactured
housing dealer, was purchased by the Company in the ordinary course of
business; (g) no Contract was originated in or is subject to the laws of any
jurisdiction whose laws would make the transfer of the Contract or an
interest therein to the Trustee pursuant to the Agreement or pursuant to the
Certificates unlawful; (h) each Contract complies with all requirements of
law; (i) no Contract has been satisfied, subordinated in whole or in part or
rescinded and the Manufactured Home securing the Contract has not been
released from the lien of the Contract in whole or in part; (j) each Contract
creates a valid and enforceable first priority security interest in favor of
the Company in the Manufactured Home covered thereby and, with respect to
each Land-and-Home Contract, the lien created thereby has been recorded or
will be recorded within six months, and such security interest or lien has
been assigned by the Company to the Trustee; (k) all parties to each Contract
had capacity to execute such Contract; (l) no Contract has been sold,
assigned or pledged to any other person and prior to the transfer of the
Contracts by the Company to the Trustee, the Company had good and marketable
title to each Contract free and clear of any encumbrance, equity, loan,
pledge, charge, claim or security interest, and was the sole owner and had
full right to transfer such Contract to the Trustee; (m) as of the Cut-off
Date, or the date of origination, if later, there was no default, breach,
violation or event permitting acceleration under any Contract (except for
payment delinquencies permitted by clause (a) above), no event which with
notice and the expiration of any grace or cure period would constitute a
default, breach, violation or event permitting acceleration under such
Contract, and the Company has not waived any of the foregoing; (n) as of the
Closing Date there were, to the best of the Company's knowledge, no liens or
claims which have been filed for work, labor or materials affecting a
Manufactured Home or any related Mortgaged Property securing a Contract,
which are or may be liens prior or equal to the lien of the Contract;
(o) each Contract other than a step-up rate Contract is a fully-amortizing
loan with a fixed Contract Rate and provides for level payments over the term
of such Contract; (p) each Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for realization against the collateral of the benefits of the
security; (q) the description of each Contract set forth in the list
delivered to the Trustee is true and correct; (r) there is only one original
of each Contract; (s) none of the Contracts had a Loan-to-Value Ratio at
origination greater than 100% (or such other percentage amount specified in
the related Prospectus Supplement); (t) at the time of origination of each
Contract the Obligor was the primary resident of the related Manufactured
Home; (u) other than the Land-and-Home Contracts, the related Manufactured
Home is not considered or classified as part of the real estate on which it
is located under the laws of the jurisdiction in which it is located as would
render
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unperfected or impair the priority of the security interest in such
Manufactured Home, and as of the Closing Date such Manufactured Home was, to
the best of the Company's knowledge, free of damage and in good repair;
(v) the related Manufactured Home is a "manufactured home" within the meaning
of 42 United States Code, Section 5402(6); and (w) each Contract is a
"qualified mortgage" under Section 860G(a)(3) of the Code and each
Manufactured Home is "manufactured housing" within the meaning of Section
25(e)(10) of the Code.

Under the terms of the Agreement, and subject to the conditions
specified in the preceding paragraph and to the Company's option to effect
a substitution as described in the next paragraph, the Company will be
obligated to repurchase for the Repurchase Price (as defined below) any
Contract on the first business day after the first Determination Date which
is more than 90 days after the Company becomes aware, or should have become
aware, or the Company's receipt of written notice from the Trustee or the
Servicer, of a breach of any representation or warranty of the Company in the
Agreement that materially adversely affects the Trust Fund's interest in any
Contract if such breach has not been cured. The Repurchase Price for any
Contract will be the remaining principal amount outstanding on such Contract
on the date of repurchase plus accrued and unpaid interest thereon at its
Contract Rate to the date of such repurchase. This repurchase obligation
constitutes the sole remedy available to the Trust Fund and the
Certificateholders for a breach of a warranty under the Agreement with
respect to the Contracts (but not with respect to any other breach by the
Company of its obligations under the Agreement). If a prohibited transaction
tax under the REMIC provisions of the Code is incurred in connection with
such repurchase, distributions otherwise payable to Residual
Certificateholders will be applied to pay such tax. The Company will be
required to pay the amount of such tax that is not funded out of such
distributions.

In lieu of purchasing a Contract as specified in the preceding
paragraph, during the two-year period following the Closing Date, the Company
may, at its option, substitute an Eligible Substitute Contract (as defined
below) for the Contract that it is otherwise obligated to repurchase
(referred to herein as the "Replaced Contract"). An Eligible Substitute
Contract is a Contract that satisfies, as of the date of its substitution,
the representations and warranties specified the Agreement, has a Scheduled
Principal Balance that is not greater than the Scheduled Principal Balance
of the Replaced Contract, has a Contract Rate that is at least equal to the
Contract Rate of the Replaced Contract, and has a remaining term to scheduled
maturity that is not greater than the remaining term to scheduled maturity
of the Replaced Contract. In the event that more than one Contract is
substituted, the above requirements with respect to Scheduled Principal
Balance, APR and remaining term to scheduled maturity may be satisfied on an
aggregate or weighted average basis, as applicable. The Company will be
required to deposit in the Certificate Account cash in the amount, if any,
by which the Scheduled Principal Balance of the Replaced Contract exceeds the
Scheduled Principal Balance of the Contract being substituted. Such deposit
will be deemed to be a Partial Principal Prepayment.

PAYMENTS ON CONTRACTS

Each Certificate Account will be a trust account established by the
Servicer as to each Series of Certificates in the name of the Trustee
(i) with a depository institution, the long-term unsecured debt obligations
of which at the time of any deposit therein are rated within the two highest
rating categories or such other rating category as will not adversely affect
the rating assigned to the Certificates by each rating agency rating the
Certificates of such Series, (ii) with the trust department of a depositary
institution, (iii) in an account or accounts the deposits in which are fully
insured by the Federal Deposit Insurance Corporation ("FDIC"), (iv) in an
account or accounts the deposits in which are insured by the FDIC (to the
limits established by the FDIC), the uninsured deposits in which are
otherwise secured such that, as evidenced by an opinion of counsel, the
Certificateholders have a claim with respect to the funds in the Certificate
Account or a perfected first priority security interest against any
collateral securing such funds that is superior to the claims of any other
depositors or general creditors of the depository
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institution with which the Certificate Account is maintained or (v) otherwise
acceptable to the rating agency without reduction or withdrawal of the rating
assigned to the relevant Certificates. The collateral eligible to secure
amounts in the Certificate Account is limited to United States government
securities and other high-quality investments ("Eligible Investments"). A
Certificate Account may be maintained as an interest bearing account, or the
funds held therein may be invested pending each succeeding Remittance Date
in Eligible Investments.

As described in the Prospectus Supplement, the Servicer will deposit in
the Certificate Account the following payments and collections received or
made by it subsequent to the Cut-off Date:

(i) all Obligor payments on account of principal, including principal
prepayments, on the Contracts;

(ii) all Obligor payments on account of interest on the Contracts;

(iii) all amounts received and retained in connection with the
liquidation of defaulted Contracts, net of liquidation expenses ("Net
Liquidation Proceeds");

(iv) all proceeds received under any hazard or other insurance policy
covering any Contract, other than proceeds to be applied to the restoration
or repair of the Manufactured Home or released to Obligor;

(v) any Advances made as described under "Advances" and certain other
amounts required under the Agreement to be deposited in the Certificate
Account;

(vi) all amounts received from any credit enhancement provided with
respect to a Series of Certificates;

(vii) all proceeds of any Contract or property acquired in respect
thereof repurchased by the Servicer, or the Company, or otherwise as
described above or under "Termination" below; and

(viii) all amounts, if any, required to be transferred to the
Certificate Account from a Reserve Fund pursuant to the Agreement.

DISTRIBUTIONS ON CERTIFICATES

As described in the related Prospectus Supplement, on each Remittance
Date, the Trustee will withdraw from the applicable Certificate Account and
distribute to the Certificateholders of each Class (other than a Series
having a Class of Subordinated Certificates, as described below), either the
specified interest of such Class in the Contract Pool times the aggregate of
all amounts on deposit in the Certificate Account as of the third Business
Day preceding the Remittance Date or such other date as may be specified in
the related Prospectus Supplement (the "Determination Date"), or, in the case
of a Series of Certificates comprised of Classes which have been assigned a
Stated Balance, payments of interest and payments in reduction of the Stated
Balance from all amounts on deposit in the Certificate Account on the
Determination Date, in the priority and calculated in the manner set forth
in the related Prospectus Supplement, except, in each case: (i) all payments
or collections due after the Due Period preceding the month in which the
Remittance Date occurs; (ii) all scheduled payments of principal and interest
due on a date or dates subsequent to the Due Period preceding the
Determination Date; (iii) amounts representing reimbursement for Advances,
such reimbursement being limited, as described in the related Prospectus
Supplement, to amounts received on particular Contracts as late collections
of principal or interest as to which the Servicer has made an unreimbursed
Advance; and (iv) amounts representing reimbursement for any unpaid Servicing
Fee and expenses from Liquidation Proceeds, condemnation proceeds and pro
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<PAGE>
ceeds of insurance policies with respect to the related Contracts. The
amount of principal and interest specified in the related Prospectus
Supplement to be distributed to Certificateholders is referred to herein as
the "Certificate Distribution Amount." The amounts on deposit in the
Certificate Account on a Determination Date, less the amounts specified in
(i) through (iv) above, with respect to a Series of Certificates having a
Class of Subordinated Certificates, are referred to herein as the "Available
Distribution Amount."

On each Remittance Date, the Trustee will withdraw the Available
Distribution Amount from the applicable Certificate Account and distribute
such amount to the Certificateholders of each Class or other specified
persons in the amounts and order of priority specified in the related
Prospectus Supplement.

Within the time specified in the Agreement and described in the related
Prospectus Supplement, the Servicer will furnish a statement to the Trustee
setting forth the amount to be distributed on the related Remittance Date on
account of principal and interest, stated separately, and a statement setting
forth certain information with respect to the Contracts.

If there are not sufficient funds in the Certificate Account to make the
full distribution to Certificateholders described above on any Remittance
Date, the Servicer will distribute the funds available for distribution to
the Certificateholders of each Class in accordance with the respective
interests therein, except that Subordinated Certificateholders, if any, will
not, subject to the limitations described in the related Prospectus
Supplement, receive any distributions until Senior Certificateholders receive
the Senior Distribution Amount plus the Outstanding Senior Shortfall. Unless
otherwise provided in the related Prospectus Supplement, the difference
between the amount which the Certificateholders would have received if there
had been sufficient eligible funds in the Certificate Account and the amount
actually distributed, will be added to the amount which the
Certificateholders are entitled to receive on the next Remittance Date.

Special Distributions. To the extent specified in the Prospectus
Supplement relating to a Series of Certificates, one or more Classes or
subclasses of which have been assigned a Stated Balance and having less
frequent than monthly Remittance Dates, such Classes or sub-classes may
receive Special Distributions in reduction of Stated Balance ("Special
Distributions") in any month, other than a month in which a Remittance Date
occurs, if, as a result of principal prepayments on the Contracts in the
related Contract Pool or low reinvestment yields, the Trustee determines,
based on assumptions specified in the related Agreement, that the amount of
cash anticipated to be on deposit in the Certificate Account on the next
Remittance Date for such Series and available to be distributed to the
Holders of the Certificates of such Classes or sub-classes may be less than
the sum of (i) the interest scheduled to be distributed to holders of the
Certificates of such Classes or sub-classes and (ii) the amount to be
distributed in reduction of Stated Balance of such Certificates on such
Remittance Date. Any such Special Distributions will be made in the same
priority and manner as distributions in reduction of Stated Balance would be
made on the next Remittance Date.

Subordinated Certificates. The rights of a Class of Certificateholders
of a Series to receive any or a specified portion of distributions of
principal or interest or both with respect to the Contracts, to the extent
specified in the related Agreement and described in the related Prospectus
Supplement, may be subordinated to such rights of other Certificateholders.
The Prospectus Supplement with respect to a Series of Certificates having a
Class of Subordinated Certificates will set forth, among other things, the
extent to which such Class is subordinated (which may include a formula for
determining the subordinated amount or for determining the allocation of the
Available Distribution Amount among Senior Certificates and Subordinated
Certificates), the allocation of losses among the Classes of Subordinated
Certificates (which may include a reduction of the principal balance of the
Classes of Subordinated Certificates in the event of such losses), the period
or periods of such subordination, the minimum subordinated amount, if any,
and any distributions or payments which will not be affected by such
subordination. The protec
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tion afforded to the Senior Certificateholders from the subordination feature
described above will be effected by the preferential right of such
Certificateholders to receive current distributions from the Contract Pool.

ADVANCES

To the extent provided in the related Prospectus Supplement, the
Servicer is obligated to make periodic Advances of cash from its own funds
or from excess funds in the Certificate Account not then required to be
distributed to Certificateholders, for distribution to the Certificateholders
(other than Subordinated Certificateholders) in an amount equal to the
difference between the amount due to them and the amount in the Certificate
Account, eligible for distribution to them pursuant to the Agreement, but
only to the extent such difference is due to delinquent payments of principal
and interest for the preceding Due Period and only to the extent the Servicer
determines such advances are recoverable from future payments and collections
on the Contracts. The Servicer's obligation to make Advances, if any, may,
be limited in amount and the Servicer may not be obligated to make Advances
until all or a specified portion of the Reserve Fund, if any, is depleted.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to the Senior Certificateholders, not to guarantee or
insure against losses. Accordingly, any funds so advanced are recoverable
by the Servicer out of amounts received on particular Contracts which
represent late recoveries of principal or interest respecting which any such
Advances was made or from other funds in the Certificate Account.

EXAMPLE OF DISTRIBUTIONS

The following chart sets forth an example of the flow of funds on the
Certificates for the Remittance Date occurring in August, 1996.

July 1, 1996. . . . (A) Cut-off Date.

July 1-April 25. . . (B) Due Period. Servicer receives scheduled
payments on the Contracts and any Principal Prepayments made by Obligors and
applicable interest thereon.

July 31 (C) Record Date.

August 2 (D) Determination Date. Distribution amounts determined.

August 7 (E) Remittance Date. (Each Remittance Date is the 7th day
of each month or, if the 7th day is not a business day, the next business
day.)

Succeeding months generally follow the pattern of (B) through (E), but with
respect to any Remittance Date (other than the first Remittance Date) is the
period beginning on the 26th day of the second month preceding the month of
such Remittance Date and ending on the 25th day of the month preceding the
month of such Remittance Date.

(A) The Original Contract Pool Principal Balance will be the aggregate
Scheduled Principal Balance of the Contracts on Jun 30, 1996 after deducting
principal payments received before such date. Principal payments received
before June 30, and the accompanying interest payments, are not part of the
Trust Fund and will not be passed through to Certificateholders.

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(B) Scheduled payments, Principal Prepayments and Net Liquidation Proceeds
may be received at any time during this period and will be distributed to
Certificateholders on August 7. When a Contract is prepaid in full, interest
on the amount prepaid is collected from the Obligor only to the date of
payment. The Available Distribution Amount for the distribution on August
7 is described under "/___/ Payments on Contracts" and "/___/ Distributions
on the Certificates" above.

(D) On August 2 (three business days prior to the Remittance Date), the
Servicer will determine the amounts of principal and interest which will be
passed through on August 7 to Certificateholders.

(E) On August 7, the amounts determined on August 2 will be distributed to
Certificateholders. If a payment due in the Due Period ending July 25 is
received in the Due Period ending in August, such late payment will be taken
into account in determining the Available Distribution Amount for September
9.

INDEMNIFICATION

The Agreement requires the Servicer to defend and indemnify the Trust
Fund, the Trustee (including any agent of the Trustee) and the
Certificateholders (which indemnification will survive any removal of the
Servicer as servicer of the Contracts) against any and all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation (a) arising out of or
resulting from the use or ownership by the Servicer or any affiliate thereof
of any Manufactured Home and (b) for any taxes which may at any time be
asserted with respect to, and as of the date of, the conveyance of the
Contracts to the Trust Fund (but not including any federal, state or other
tax arising out of the creation of the Trust Fund and the issuance of the
Certificates).

The Agreement also requires the Servicer, in connection with its duties
as servicer of the Contracts, to defend and indemnify the Trust Fund, the
Trustee and the Certificateholders (which indemnification will survive any
removal of the Servicer as servicer of the Contracts) against any and all
costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, in
respect of any action taken by the Servicer with respect to any Contract
while it was the Servicer.

SERVICING

Pursuant to the Agreement, the Servicer will service and administer the
Contracts assigned to the Trustee as more fully set forth below. The
Servicer will perform diligently all services and duties specified in each
Agreement, in the same manner as prudent lending institutions of manufactured
housing installment sales contracts of the same type as the contracts in
those jurisdictions where the related Manufactured Homes are located or as
otherwise specified in the Agreement. The duties to be performed by the
Servicer will include collection and remittance of principal and interest
payments, collection of insurance claims and, if necessary, repossession.

The Servicer will make reasonable efforts to collect all payments called
for under the Contracts and, consistent with the Agreement and any FHA
insurance and VA guaranty, will follow such collection procedures as it
follows with respect to mortgage loans or contracts serviced by it that are
comparable to the Contracts.

Hazard Insurance. The terms of the Agreement will generally require the
Servicer to cause to be maintained with respect to each Contract one or more
Hazard Insurance Policies which provide, at a
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minimum, the same coverage as a standard form fire and extended coverage
insurance policy that is customary for manufactured housing, issued by a
company authorized to issue such policies in the state in which the
Manufactured Home or Modular Home is located, and in an amount which is not
less than the maximum insurable value of such Manufactured Home or Modular
Home or the principal balance due from the Obligor on the related Contract,
whichever is less; provided, however, that the amount of coverage provided
by each Hazard Insurance Policy shall be sufficient to avoid the application
of any coinsurance clause contained therein. When a Manufactured Home or
Modular Home's location was, at the time of origination of the related
Contract, within a federally-designated special flood hazard area, the
Servicer shall also cause such flood insurance to be maintained, which
coverage shall be at least equal to the minimum amount specified in the
preceding sentence or such lesser amount as may be available under the
federal flood insurance program. Each Hazard Insurance Policy caused to be
maintained by the Servicer shall contain a standard loss payee clause in
favor of the Servicer and its successors and assigns. If any Obligor is in
default in the payment of premiums on its Hazard Insurance Policy or
Policies, the Servicer shall pay such premiums out of its own funds, and may
add separately such premium to the Obligor's obligation as provided by the
Contract, but may not add such premium to the remaining principal balance of
the Contract.

The Servicer may maintain, in lieu of causing individual Hazard
Insurance Policies to be maintained with respect to each Manufactured Home
or Modular Home, and shall maintain, to the extent that the related Contract
does not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related Manufactured Home or Modular Home, one or more blanket
insurance policies covering losses on the Obligor's interest in the Contracts
resulting from the absence or insufficiency of individual Hazard Insurance
Policies. Any such blanket policy shall be substantially in the form and in
the amount carried by the Servicer as of the date of this Agreement. The
Servicer shall pay the premium for such policy on the basis described therein
and shall pay any deductible amount with respect to claims under such policy
relating to the Contracts. If the insurer thereunder shall cease to be
acceptable to the Servicer, the Servicer shall exercise its best reasonable
efforts to obtain from another insurer a placement policy comparable to such
policy.

If the Servicer shall have repossessed a Manufactured Home on behalf of
the Trustee, the Servicer shall either (i) maintain at its expense hazard
insurance with respect to such Manufactured Home, or (ii) indemnify the
Trustee against any damage to such Manufactured Home prior to resale or other
disposition.

Evidence as to Compliance. Each Agreement will require the Servicer to
deliver to the Trustee a monthly report prior to each Remittance Date,
setting forth certain information regarding the Contract Pool and
Certificates of such Series as is specified in the related Prospectus
Supplement. Each such report to the Trustee will be accompanied by a
statement from an appropriate officer of the Servicer certifying the accuracy
of such report and stating that the Servicer has not defaulted in the
performance of its obligations under the Agreement. The Servicer will
deliver to the Trustee an annual report of a nationally recognized accounting
firm stating that such firm has examined certain documents and records
relating to the servicing of manufactured housing contracts serviced by the
Servicer under pooling and servicing agreements similar to the Agreement and
stating that, on the basis of such procedures, such servicing has been
conducted in compliance with the Agreement, except for any exceptions set
forth in such report.

Certain Matters Regarding the Servicer. The Servicer may not resign
from its obligations and duties under an Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. No such resignation will become effective until the Trustee
or a successor servicer has assumed the Servicer's obligations and duties
under such Agreement. The Servicer can only be removed as servicer pursuant
to an Event of Termination as discussed below. Any person with which the
Servicer is merged or consolidated, or any corporation resulting from any
merger,
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conversion or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Agreement so long as such successor services at least $100
million of manufactured housing contracts.

Each Agreement will also generally provide that neither the Servicer,
nor any director, officer, employee or agent of the Servicer, will be under
any liability to the Trust Fund or the Certificateholders for any action
taken or for restraining from the taking of any action in good faith pursuant
to the Agreement, or for errors in judgment; provided, however, that neither
the Servicer nor any such person will be protected against any liability
which would otherwise be imposed by reason of the failure to perform its
obligations in strict compliance with the standards of care set forth in the
Agreement. The Servicer may, in its discretion, undertake any such action
which it may deem necessary or desirable with respect to the Agreement and
the rights and duties of the parties thereto and the interests of the
Certificateholders thereunder. In such event, the legal expenses and costs
of such action and any liability resulting therefrom will be expenses, costs
and liabilities of the Trust Fund and the Servicer will be entitled to be
reimbursed therefor out of the Certificate Account.

The Servicer shall keep in force throughout the term of this Agreement
(i) a policy or policies of insurance covering errors and omissions for
failure to maintain insurance as required by this Agreement, and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in
such form and amount as is generally customary among persons which service
a portfolio of manufactured housing contracts having an aggregate principal
amount of $100 million or more and which are generally regarded as servicers
acceptable to institutional investors.

The Servicer, to the extent practicable, shall cause the Obligors to pay
all taxes and similar governmental charges when and as due. To the extent
that nonpayment of any taxes or charges would result in the creation of a
lien upon any Manufactured Home having a priority equal or senior to the lien
of the related Contract, the Servicer shall advance any such delinquent tax
or charge.

Servicing Compensation and Payment of Expenses. For its servicing of
the Contracts, the Servicer will receive servicing fees ("Servicing Fees")
which include a Monthly Servicing Fee (which the Servicer may assign) for
each Due Period (paid on the next succeeding Remittance Date) which, unless
otherwise stated in the related Prospectus Supplement, will be equal to
1/12th of the product of 1.25% and the Pool Scheduled Principal Balance for
such Remittance Date.

The Monthly Servicing Fee provides compensation for customary
manufactured housing contract third-party servicing activities to be
performed by the Servicer for the Trust Fund and for additional admin-
istrative services performed by the Servicer on behalf of the Trust Fund.
Customary servicing activities include collecting and recording payments,
communicating with obligors, investigating payment delinquencies, providing
billing and tax records to obligors and maintaining internal records with
respect to each Contract. Administrative services performed by the Servicer
on behalf of the Trust Fund include calculating distributions of
Certificateholders and providing related data processing and reporting
services for Certificateholders and on behalf of the Trustee. Expenses
incurred in connection with the servicing of the Contracts and paid by the
Servicer from its Servicing Fees include, without limitation, payment of fees
and expenses of accountants, payments of all fees and expenses incurred in
connection with the enforcement of Contracts (except Liquidation Expenses)
and payment of expenses incurred in connection with distributions and reports
to Certificateholders. The Servicer will be reimbursed out of the
Liquidation Proceeds of a Liquidated Contract for all ordinary and necessary
Liquidation Expenses incurred by it in realization upon the related
Manufactured Home.

So long as the Company is the Servicer, the Servicer, in its sole
discretion, may, but is not obligated to, liquidate a defaulted Contract by
depositing into the Certificate Account an amount equal to (i) the
outstanding principal balance of such Contract plus accrued and unpaid
interest thereon to the
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Due Date in the Due Period in which such deposit is made less (ii) $2,000.
The Company will not be reimbursed for any Liquidation Expenses incurred in
connection with any such Contract and will retain any liquidation proceeds
in respect thereof. The Company has such option to liquidate defaulted
Contracts in that manner because such manner of liquidation is more
compatible with its record keeping systems.

As part of its Servicing Fees the Servicer will also be entitled to
retain, as compensation for the additional services provided in connection
therewith, any fees for late payments made by Obligors, extension fees paid
by Obligors for the extension of scheduled payments and assumption fees for
permitted assumptions of Contracts by purchasers of the related Manufactured
Homes.

Any person with which the Servicer is merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Servicer is a party, or any person succeeding to the business of the
Servicer, will be the successor to the Servicer under the Agreement so long
as such successor has a net worth of at least $10 million and has serviced
at least $100 million of manufactured housing contracts for at least one
year. The Servicer may assign its rights and delegate its duties under the
Agreement (with the prior written consent of the Company if the Company is
not the Servicer), provided that any rating of the Certificates then in
effect will not be reduced because of such assignment and delegation. Upon
any such assignment and delegation, the assigning Servicer will not be liable
for obligations of the Servicer after such assignment.

Events of Termination. Events of Termination under each Agreement will
include (i) any failure by the Servicer to distribute to the
Certificateholders any required payment which continues unremedied for 5 days
(or such other period specified in the related Prospectus Supplement) after
the giving of written notice; (ii) any failure by the Servicer duly to
observe or perform in any material respect any other of its covenants or
agreements in the Agreement that materially and adversely affects the
interests of Certificateholders, which, in either case, continues unremedied
for 30 days after the giving of written notice of such failure of breach;
(iii) any assignment or delegation by the Servicer of its duties or rights
under the Agreement, except as specifically permitted under the Agreement,
or any attempt to make such an assignment or delegation; and (iv) certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings regarding the Servicer. Notice as used
herein shall mean notice to the Servicer by the Trustee or the Company, or
to the Company, the Servicer, if any, and the Trustee by the Holders of
Certificates representing interests aggregating not less than 25% of the
Trust Fund.

Rights Upon Event of Termination. So long as an Event of Termination
remains unremedied, the Trustee may, and at the written direction of the
Certificateholders of a Series evidencing interests aggregating 25% or more
of the related Trust Fund, shall terminate all of the rights and obligations
of the Servicer under the related Agreement and in and to the Contracts, and
the proceeds thereof, whereupon (subject to applicable law regarding the
Trustee's ability to make advances) the Trustee or a successor Servicer under
the Agreement will succeed to all the responsibilities, duties and
liabilities of the Servicer under the Agreement and will be entitled to
similar compensation arrangements; provided, however, that neither the
Trustee nor any successor servicer will assume any obligation of the Company
to repurchase Contracts for breaches of representations or warranties, and
the Trustee will not be liable for any acts or omissions of the Servicer
occurring prior to a transfer of the Servicer's servicing and related
functions or for any breach by the Servicer of any of its obligations
contained in the Agreement. Notwithstanding such termination, the Servicer
shall be entitled to payment of certain amounts payable to it prior to such
termination, for services rendered prior to such termination. No such
termination will affect in any manner the Company's obligation to repurchase
certain Contracts for breaches of representations or warranties under the
Agreement. In the event that the Trustee would be obligated to succeed the
Servicer but is unwilling or unable so to act, it may appoint, or petition
to a court of competent jurisdiction for the appointment of a Servicer.
Pending such appointment, the Trustee is obligated to act in such
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capacity. The 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 Servicer under the Agreement. If the trustee in
bankruptcy or similar official is appointed for the Servicer, and no Event
of Termination other than the Servicer's insolvency has occurred, such
trustee or other official may have the power to prevent the Trustee from
effecting a transfer of servicing.

No Certificateholder will have any right under an Agreement to institute
any proceeding with respect to such Agreement unless such Holder previously
has given to the Trustee written notice of default and unless the Holders of
Certificates evidencing interests aggregating not less than 25% of the
related Trust Fund requested the Trustee in writing to institute such
proceeding in its own name as Trustee and have offered to the Trustee
reasonable indemnity and the Trustee for 60 days has neglected or refused to
institute any such proceeding. The Trustee will be under no obligation to
take any action or institute, conduct or defend any litigation under the
Agreement at the request, order or direction of any of the Holders of
Certificates, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which the Trustee may incur.

REPORTS TO CERTIFICATEHOLDERS

The Servicer or the Trustee, as applicable, will forward to each
Certificateholder on each Remittance Date, or as soon thereafter as is
practicable, as specified in the related Prospectus Supplement, a statement
setting forth, among other things:

(i) the amount of such distribution allocable to principal on the
Certificates;

(ii) the amount of such distribution allocable to interest on the
Certificates;

(iii) if the distribution to the Certificateholders is less than
the full amount that would be distributable to such Certificateholders if
there were sufficient eligible funds in the Certificate Account, the
difference between the aggregate amounts of principal and interest which
Certificateholders would have received if there were sufficient eligible
funds in the Certificate Account and the amounts actually distributed;

(iv) the aggregate amount of Advances, if any, by the Servicer
included in the amounts actually distributed to the Certificateholders;

(v) the outstanding principal balance of the Contracts; and

(vi) the approximate weighted average Remittance Rate of the
Contracts during the Due Period immediately preceding such Remittance Date.

In addition, not more than 90 days after the end of each calendar year,
the Servicer will furnish a report to each Certificateholder of record at any
time during such calendar year (a) as to the aggregate of amounts reported
pursuant to (i) and (ii) above for such calendar year or, in the event such
person was a Certificateholder of record during a portion of such calendar
year, for the applicable portion of such year, and (b) such information as
the Servicer deems necessary or desirable for Certificateholders to prepare
their tax returns. Information in the monthly and annual reports provided
to the Certificateholders will not have been examined and reported upon by
an independent public accountant. However, the Servicer will provide to the
Trustee annually a report by independent public accountants with respect to
the servicing of the Contracts as described under "Evidence as to Compliance"
above.

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AMENDMENT

The Agreement may be amended by the Company and the Trustee without the
consent of the Certificateholders, (i) to cure any ambiguity, (ii) to correct
or supplement any provision therein that may be inconsistent with any other
provision therein, (iii) if an election has been made with respect to a
particular Series of Certificates to treat the Trust Fund as a real estate
mortgage investment conduit ("REMIC") within the meaning of Section 860D(a)
of the Internal Revenue Code of 1986, as amended, to maintain the REMIC
status of the Trust Fund and to avoid the imposition of certain taxes on the
REMIC or (iv) to make any other provisions with respect to matters or
questions arising under such Agreement that are not inconsistent with the
provisions thereof, provided that such action will not adversely affect in
any material respect the interests of the Certificateholders of the related
Series. The Agreement may also be amended by the Company, the Servicer and
the Trustee with the consent of the Certificateholders (other than holders
of Residual Certificates) evidencing interests aggregating not less than 51%
of the Trust Fund for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Agreement or of
modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment that reduces in any manner the amount of, or
delay the timing of, any payment received on or with respect to Contracts
which are required to be distributed on any Certificate may be effective
without the consent of the holders of each such Certificate.

TERMINATION OF THE AGREEMENT

The obligations created by each Agreement will terminate upon the date
calculated as specified in the Agreement, generally upon (i) the later of the
final payment or other liquidation of the last Contracts subject thereto and
the disposition of all property acquired upon foreclosure of any Land-and-
Home Contract or repossession of any Manufactured Home and (ii) the payment
to the Certificateholders of all amounts held by the Servicer or the Trustee
and required to be paid to it pursuant to the Agreement. In addition, the
Company or the Servicer may at its option with respect to any Series of
Certificates, repurchase all Certificates or Contracts remaining outstanding
at such time as the aggregate unpaid principal balance of such Contracts is
less than the percentage of the aggregate unpaid principal balance of the
Contracts on the Cut-off Date specified with respect to such Series in the
related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, the repurchase price will equal the principal amount
of such Contracts plus accrued interest from the first day of the month of
repurchase to the first day of the next succeeding month at the Contract
Rates borne by such Contracts.

THE TRUSTEE

The Prospectus Supplement for a Series of Certificates will specify the
Trustee under the related Agreement. The Trustee may have normal banking
relationships with the Company or its affiliates and the Servicer or its
affiliates.

The Trustee may resign at any time, in which event the Company will be
obligated to appoint a successor Trustee. The Company may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement or if the Trustee becomes insolvent. The Trustee may also be
removed at any time by the holders of Certificates evidencing interests
aggregating over 50% of the related Trust Fund as specified in the Agreement.

Any resignation or removal of the Trustee and appointment of a successor
Trustee will not become effective until acceptance of the appointment by the
successor Trustee.

The Trustee will make no representation as to the validity or
sufficiency of the Agreement, the Certificates, any Contract, Contract file
or related documents, and will not be accountable for the use or application
by the Company of any funds paid to the Company, as Seller, in consideration
of the
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conveyance of the Contracts, or deposited into or withdrawn from the
Certificate Account by the Company, as Servicer. If no Event of Termination
has occurred, the Trustee will be required to perform only those duties
specifically required of it under the Agreement. However, upon receipt of
the various certificates, reports or other instruments required to be
furnished to it, the Trustee will be required to examine them to determine
whether they conform as to form to the requirements of the Agreement.
Whether or not an Event of Termination has occurred, the Trustee is not
required to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of its powers if
it has reasonable grounds to believe that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

Under the Agreement, the Company, as Servicer, agrees to pay to the
Trustee on each Remittance Date (a) reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of any express
trust) and (b) reimbursement for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
the Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith. The Company has agreed to indemnify the Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust Fund and the Trustee's duties
thereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
the Trustee's powers or duties thereunder.

DESCRIPTION OF FHA INSURANCE AND VA GUARANTEES

Certain of the Contracts, may be FHA-insured or VA-guaranteed, the
payments upon which, subject to the following discussion, are insured by the
FHA under Title I of the National Housing Act or partially guaranteed by the
VA.

The regulations governing FHA manufactured home insurance provide that
insurance benefits are payable upon the repossession and resale of the
collateral and assignment of the contract to the United States Department of
Housing and Urban Development ("HUD"). With respect to a defaulted FHA
contract, the servicer must follow applicable regulations before initiating
repossession procedures. These regulations include requirements that the
lender arrange a face-to-face meeting with the borrower, initiate a
modification or repayment plan, if feasible, and give the borrower 30 days'
notice of default prior to any repossession. The insurance claim is paid in
cash by HUD. For manufactured housing contracts, the amount of insurance
benefits generally paid by FHA is equal to 90% of the sum of (i) the unpaid
principal amount of the Contract at the date of default and uncollected
interest earned to the date of default computed at the Contract Rate, after
deducting the best price obtainable for the collateral (based in part on a
HUD-approved appraisal) and all amounts retained or collected by the lender
from other sources with respect to the Contract, (ii) accrued and unpaid
interest on the unpaid amount of the Contract from the date of default to the
date of submission of the claim plus 15 calendar days (but in no event more
than nine months) computed at a rate of 7% annum, (iii) costs paid to a
dealer or other third party to repossess and preserve the Manufactured Home,
(iv) the amount of any sales commission paid to a dealer or other third party
for the resale of the property, (v) with respect to a Land-and-Home Contract,
property taxes, special assessments and other similar charges and hazard
insurance premiums, prorated to the date of disposition of the property,
(vi) uncollected court costs, (vii) legal fees, not to exceed $500, and
(viii) expenses for recording the assignment of the lien on the collateral
to the United States.

The insurance available to a lender under FHA Title I insurance is
subject to the limit of a reserve amount equal to ten percent of the original
principal balance of all Title I insured loans originated by the
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lender, which amount is reduced by all claims paid to the lender and by an
annual reduction in the reserve amount of ten percent of the reserve amount,
and which is increased by an amount equal to ten percent of the original
principal balance of insured loans subsequently originated by the lender.
As of June 30, 1994, the Company's Title I reserve amount was approximately
$13,198,000, which amount was available to pay claims in respect of
approximately $149,535,000 of FHA-insured manufactured housing contracts
serviced by the Company. If the Company were replaced as Servicer of the
Contracts under the Agreement, it is not clear from the FHA regulations what
portion of this reserve amount would be available for claims in respect of
the FHA-insured Contracts. The obligation to pay insurance premiums to FHA
is the obligation of the Company, as servicer of the FHA-insured Contracts.

The maximum guarantee that may be issued by the VA for a VA-guaranteed
contract is the lesser of (a) the lesser of $20,000 and 40% of the principal
amount of the contract and (b) the maximum amount of guaranty entitlement
available to the obligor veteran (which may range from $20,000 to zero). The
amount payable under the guarantee will be a percentage of the VA contract
originally guaranteed applied to indebtedness outstanding as of the
applicable date of computation specified in the VA regulations, interest
accrued on the unpaid balance of the loan to the appropriate date of
computation and limited expenses of the contract holder, but in each case
only to the extent that such amounts have not been recovered through resale
of the manufactured home. The amount payable under the guarantee may in no
event exceed the original guarantee.

CERTAIN LEGAL ASPECTS OF THE CONTRACTS

The following discussion contains summaries of certain legal aspects of
manufactured housing contracts, including Land-and-Home Contracts, which are
general in nature. Because such legal aspects are governed by applicable
state law (which laws may differ substantially), the summaries do not purport
to be complete nor reflect the laws of any particular state, nor to encompass
the laws of all states in which the security for the Contracts or Land-and-
Home Contracts is situated. The summaries are qualified in their entirety
by reference to the applicable federal and state laws governing the Contracts
or Land-and-Home Contracts.

THE CONTRACTS (OTHER THAN LAND-AND-HOME CONTRACTS)

General. As a result of the assignment of the Contracts to the Trustee,
the Trust Fund will succeed collectively to all of the rights (including the
right to receive payment on the Contacts) and will assume the obligations of
the obligee under the Contracts. Each Contract evidences both (a) the
obligation of the Obligor to repay the loan evidenced thereby, and (b) the
grant of a security interest in the Manufactured Home to secure repayment of
such loan. Certain aspects of both features of the Contracts are described
more fully below.

The Contracts generally are "chattel paper" as defined in the Uniform
Commercial Code (the "UCC") in effect in the states in which the Manufactured
Homes initially were registered. Pursuant to the UCC, the sale of chattel
paper is treated in a manner similar to perfection of a security interest in
chattel paper. Under the Agreement, the Company will retain possession of
the Contracts as custodian for the Trustee, and will make an appropriate
filing of a UCC-1 financing statement in Tennessee to give notice of the
Trustee's ownership of the Contracts. The Contracts will be stamped to
reflect their assignment from the Company to the Trustee. However, if
through negligence, fraud, or otherwise, a subsequent purchaser were able to
take physical possession of the Contracts without notice of such assignment,
the Trustee's interest in the Contracts could be defeated.

Security Interests in the Manufactured Homes. The Manufactured Homes
securing the Contracts may be located in all 50 states and the District of
Columbia. Security interests in manufactured homes
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may be perfected either by notation of the secured party's lien on the
certificate of title or by delivery of the required documents and payment of
a fee to the state motor vehicle authority, depending on state law. In some
nontitle states, perfection pursuant to the provisions of the UCC is
required. The Company effects such notation or delivery of the required
documents and fees, and obtains possession of the certificate of title, as
appropriate under the laws of the state in which a Manufactured Home is
registered. In the event the Company fails, due to clerical errors, to
effect such notation or delivery, or files the security interest under the
wrong law (for example, under a motor vehicle title statute rather than under
the UCC, in a few states), the Certificateholders may not have a first
priority security interest in the Manufactured Home securing a Contract. As
manufactured homes have become larger and have been attached to their sites
without any apparent intention to move them, courts in many states have held
that manufactured homes, under certain circumstances, may become subject to
real estate title and recording laws. As a result, a security interest in
a manufactured home could be rendered subordinate to the interests of other
parties claiming an interest in the home under applicable state real estate
law. In order to perfect a security interest in a manufactured home under
real estate laws, the holder of the security interest must file either a
"fixture filing" under the provision of the UCC or a real estate mortgage
under the real estate laws of the state where the home is located. See
"Land-and-Home Contracts" below. These filings must be made in the real
estate records office of the county where the home is located. Substantially
all of the Contracts contain provisions prohibiting the borrower from
attaching the Manufactured Home to its site. So long as the borrower does
not violate this agreement, a security interest in the Manufactured Home will
be governed by the certificate of title laws or the UCC, and the notation of
the security interest on the certificate of title or the filing of the UCC
financing statement will be effective to maintain the priority of the
security interest in the Manufactured Home. If, however, a Manufactured Home
becomes attached to its site, other parties could obtain an interest in the
Manufactured Home which is prior to the security interest originally retained
by the seller of the Contracts and transferred to the Company. The Company
will represent that at the date of the initial issuance of the related
Certificates it has obtained a perfected first priority security interest by
proper notation or delivery of the required documents and fees with respect
to substantially all of the Manufactured Homes securing the Contracts.

The Company will assign the security interest in the Manufactured Homes
to the Trustee on behalf of the Certificateholders. Neither the Company nor
the Trustee will amend the certificates of title to identify the Trustee as
the new secured party, and neither the Company nor the Servicer will deliver
the certificates of title to the Trustee or note thereon the interest of the
Trustee. Accordingly, the Company, or such other originator of the Contracts
as provided herein, will continue to be named as the secured party on the
certificates of title relating to the Manufactured Homes. In some states,
such assignment is an effective conveyance of such security interest without
amendment of any lien noted on the related certificate of title and the new
secured party succeeds to the Company's rights as the secured party.
However, in some states in the absence of an amendment to the certificate of
title, such assignment of the security interest in the Manufactured Home may
not be held effective or such security interests may not be perfected and in
the absence of such notation or delivery to the Trustee, the assignment of
the security interest in the Manufactured Home may not be effective against
creditors of the Company or a trustee in bankruptcy of the Company.

In the absence of fraud, forgery or affixation of the Manufactured Home
to its site by the Manufactured Home owner, or administrative error by state
recording officials, the notation of the lien of the Company on the
certificate of title or delivery of the required documents and fees will be
sufficient to protect the Certificateholders against the rights of subsequent
purchasers of a Manufactured Home or subsequent lenders who take a security
interest in the Manufactured Home. If there are any Manufactured Homes as
to which the Company's security interest is not perfected, such security
interest would be subordinate to, among others, subsequent purchasers for
value of the Manufactured Homes and holders of perfected security interests.
There also exists a risk in not identifying the Trustee as the new
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secured party on the certificate of title that, through fraud or negligence,
the security interest of the Trustee could be released.

In the event that the owner of a Manufactured Home moves it to a state
other than the state in which such Manufactured Home initially is registered,
under the laws of most states the perfected security interest in the
Manufactured Home would continue for four months after such relocation and
thereafter only if and after the owner re-registers the Manufactured Home in
such state. If the owner were to relocate a Manufactured Home to another
state and not re-register the Manufactured Home in such state, and if steps
were not taken to re-perfect the Trustee's security interest in such state,
the security interest in the Manufactured Home would cease to be perfected.
A majority of states generally require surrender of a certificate of title
to re-register a Manufactured Home; accordingly, the Company must surrender
possession if it holds certificate of title to such Manufactured Home or, in
the case of Manufactured Homes registered in states which provide for
notation of lien, the Company would receive notice of surrender if the
security interest in the Manufactured Home is noted on the certificate of
title. Accordingly, the Company would have the opportunity to re-perfect its
security interest in the Manufactured Home in the state of relocation. In
states which do not require a certificate of title for registration of a
Manufactured Home, re-registration could defeat perfection. In the ordinary
course of servicing the manufactured housing conditional sales contracts, the
Company takes steps to effect such re-perfection upon receipt of notice of
re-registration or information from the obligor as to relocation. Similarly
when an Obligor under a Contract sells a Manufactured Home, the Company must
surrender possession of the certificate of title or will receive notice as
a result of its lien noted thereon and accordingly will have an opportunity
to require satisfaction of the related manufactured housing conditional sales
contract before release of the lien. Under the Agreement, the Company is
obligated to take such steps, at the Company's expense, as are necessary to
maintain perfection of security interests in the Manufactured Homes.

Under the laws of most states, liens for repairs performed on a
Manufactured Home and liens for personal property taxes take priority over
perfected security interests. The Company will represent in the Agreement
that it has no knowledge of any such liens with respect to any Manufactured
Home securing payment on any Contract. However, such liens could arise at
any time during the term of the Contract. No notice will be given to the
Trustee or Certificateholders in the event such a lien arises.

Enforcement of Security Interests in Manufactured Homes. The Servicer
on behalf of the Trustee, to the extent required by the related Agreement,
may take action to enforce the Trustee's security interest with respect to
Contracts in default by repossession and resale of the Manufactured Homes
securing such Defaulted Contracts. So long as the Manufactured Home has not
become subject to real estate laws, a creditor can repossess a Manufactured
Home securing a Contract by voluntary surrender, by "self-help" repossession
that is "peaceful" (i.e., without breach of the peace) or, in the absence of
voluntary surrender and the ability to repossess without breach of the peace,
by judicial process. The holder of a Contract must give the debtor a number
of days' notice, which varies from 10 to 30 days depending on the state,
prior to commencement of any repossession. The UCC and consumer protection
laws in most states place restrictions on repossession sales, including
requiring prior notice to the debtor and commercial reasonableness in
effecting such a sale. The law in most states also requires that the debtor
be given notice of any sale prior to resale of the unit so that the debtor
may redeem at or before such resale. In the event of such repossession and
resale of a Manufactured Home, the Trustee would be entitled to be paid out
of the sale proceeds before such proceeds could be applied to the payment of
the claims of unsecured creditors or the holders of subsequently perfected
security interests or, thereafter, to the debtor.

Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the manufactured home securing such a debtor's loan. However,
some states impose prohibitions or limitations on definitions or limitations
on
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deficiency judgments, and in many cases the defaulting borrower would have
no assets with which to pay a judgment.

Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit
or delay the ability of a lender to repossess and resell collateral or
enforce a deficiency judgment.

Under the terms of the federal Soldiers' and Sailors' Civil Relief Act
of 1940, as amended (the "Relief Act"), an Obligor who enters military
service after the origination of such Obligor's Contract (including an
Obligor who is a member of the National Guard or is in reserve status at the
time of the origination of the Contract and is later called to active duty)
may not be charged interest above an annual rate of 6% during the period of
such Obligor's active duty status, unless a court orders otherwise upon
application of the lender. It is possible that such action could have an
effect, for an indeterminate period of time, on the ability of the Servicer
to collect full amounts of interest on certain of the Contracts. Any
shortfall in interest collections resulting from the application of the
Relief Act, to the extent not covered by the subordination of a Class of
Subordinated Certificates, could result in losses to the holders of a Series
of Certificates. In addition, the Relief Act imposes limitations which would
impair the ability of the Servicer to foreclose on an affected Contract
during the Obligor's period of active duty status. Thus, in the event that
such a Contract goes into default, there may be delays and losses occasioned
by the inability to realize upon the Manufactured Home in a timely fashion.

LAND-AND-HOME CONTRACTS

General. The Land-and-Home Contracts will be secured by either first
mortgages or deeds of trust, depending upon the prevailing practice in the
state in which the underlying property is located. A mortgage creates a lien
upon the real property described in the mortgage. There are two parties to
a mortgage: the mortgagor, who is the borrower, and the mortgagee, who is the
lender. In a mortgage state, the mortgagor delivers to the mortgagee a note
or bond evidencing the loan and the mortgage. Although a deed of trust is
similar to a mortgage, a deed of trust has three parties: the borrower, a
lender as beneficiary, and a third-party grantee called the trustee. Under
the deed of trust, the borrower grants the property, irrevocably until the
debt is paid, in trust, generally with a power of sale, to the trustee to
secure payment of the loan. The trustee's authority under a deed of trust
and the mortgagee's authority under a mortgage are governed by the express
provisions of the deed of trust or mortgage, applicable law, and, in some
cases, with respect to the deed of trust, the directions of the beneficiary.

Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. Generally, the action is initiated by service of legal
pleadings upon all parties having an interest of record in the real property.
Delays in completion of the foreclosure occasionally may result from
difficulties in locating necessary parties. When the mortgagee's right to
foreclosure is contested, the legal proceedings necessary to resolve the
issue can be time-consuming and expensive. After the completion of a
judicial foreclosure proceeding, the court may issue a judgment of
foreclosure and appoint a receiver or other officer to conduct the sale of
the property. In some states, mortgages may also be foreclosed by
advertisement, pursuant to a power of sale provided in the mortgage.
Foreclosure of mortgage by advertisement is essentially similar to
foreclosure of a deed of trust by non-judicial power of sale.

Foreclosure of a deed of trust is generally accomplished by a non-
judicial trustee's sale under a specific provision in the deed of trust that
authorizes the trustee to sell the property to a third party upon any default
by the borrower under the terms of the note or deed of trust. In certain
states, such foreclosure also may be accomplished by judicial action in the
manner provided for by foreclosure of mortgages. In some states the trustee
must record a notice of default and send a copy to the borrower-trustor and
to any person who has recorded a request for a copy of a notice of sale. In
addition, the trustee must provide notice in some states to any other
individual having an interest of record in the real
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property, including any junior lienholders. If the deed of trust is not
reinstated within any applicable cure period, a notice of sale must be posted
in a public place and, in most states, published for a specified period of
time in one or more newspapers. In addition, some state laws require that
a copy of the notice of sale be posted on the property and sent to all
parties having an interest in the property.

In some states, the borrower-trustor has the right to reinstate the loan
at any time following default until shortly before the trustee's sale. In
general, the borrower, or any other person having a junior encumbrance on the
real estate, may, during a reinstatement period cure the default by paying
the entire amount in arrears plus the costs and expenses incurred in
enforcing the obligation. Certain state laws control the amount of
foreclosure expenses and costs, including attorneys' fees, that may be
recovered by a lender.

In the case of foreclosure under either a mortgage or a deed of trust,
the sale by the receiver or other designated officer, or by the trustee, is
a public sale. However, because of the difficulty of a potential buyer at
the sale would have in determining the exact status of title and because the
physical condition of the property may have deteriorated during the
foreclosure proceedings, it is not common for a third party to purchase the
property at the foreclosure sale. Rather, the lender generally purchases the
property from the trustee or receiver for an amount equal to the unpaid
principal amount of the note, accrued and unpaid interest and the expenses
of foreclosure. Thereafter, subject to the right of the borrower in some
states to remain in possession during the redemption period, the lender will
assume the burden of ownership, including obtaining hazard insurance and
making such repairs at its own expense as are necessary to render the
property suitable for sale. The lender commonly will obtain the services of
a real estate broker and pay the broker a commission in connection with the
sale of the property. Depending upon market conditions, the ultimate
proceeds of the sale of the property may not equal the lender's investment
in the property.

Rights of Redemption. In some states, after the sale pursuant to a deed
of trust or foreclosure of a mortgage, the borrower and certain foreclosed
junior lienors are given a statutory period in which to redeem the property
from the foreclosure sale. In certain other states, this right of redemption
applies only to sale following judicial foreclosure, and not sale pursuant
to a non-judicial power of sale. In most states where the right of
redemption is available, statutory redemption may occur upon payment of the
foreclosure purchase price, accrued interest and taxes. In some states the
right to redeem is an equitable right. The effect of a right of redemption
is to diminish the ability of the lender to sell the foreclosed property.
The exercise of a right of redemption would defeat the title of any purchaser
at a foreclosure sale, or of any purchaser from the lender subsequent to
judicial foreclosure or sale under a deed of trust. Consequently, the
practical effect of the redemption right is to force the lender to maintain
property and pay the expenses of ownership until the redemption period has
run.

Anti-Deficiency Legislation and Other Limitations on Lenders. Certain
states have imposed statutory restrictions that limit the remedies of a
beneficiary under a deed of trust or a mortgage under a mortgage relating to
a single family residence. In some states, statutes limit the right of the
beneficiary or mortgagee to obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment
is a personal judgment against the borrower equal in most cases to the
difference between the amount due to the lender and the net amount realized
upon the foreclosure sale.

Some state statutes may require the beneficiary or mortgagee to exhaust
the security afforded under a deed of trust or mortgage by foreclosure in an
attempt to satisfy the full debt before bringing a personal action against
the borrower. In certain other states, the lender has the option of bringing
a personal action against the borrower on the debt without first exhausting
such security; however, in some of these states, the lender, following
judgment on such personal action, may be deemed to have elected a remedy and
may be precluded from exercising remedies with respect to the security.
Consequently,
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the practical effect of the election requirement, when applicable, is that
lenders will usually proceed first against the security rather than bringing
a personal action against the borrower.

Other statutory provisions may limit any deficiency judgment against a
former borrower following a foreclosure sale to the excess of the outstanding
debt over the fair market value of the property at the time of such sale.
The purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result
of low or no bids at the foreclosure sale.

In some states, exceptions to the anti-deficiency statutes are provided
for in certain instances where the value of the lender's security has been
impaired by acts or omissions of the borrower, for example, in the event of
waste of the property.

In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy
laws, the federal Soldier's and Sailor's Civil Relief Act of 1940 and state
laws affording relief to debtors, may interfere with or affect the ability
of a secured mortgage lender to realize upon its security. For example, with
respect to a Land-and-Home Contract, in a Chapter 13 proceeding under the
federal bankruptcy code, when a court determines that the value of a home is
less than the principal balance of the loan, the court may prevent a lender
from foreclosing on the home, and, as part of the rehabilitation plan, reduce
the amount of the secured indebtedness to the value of the home as it exists
at the time of the proceeding, leaving the lender as a general unsecured
creditor for the difference between that value and the amount of outstanding
indebtedness. A bankruptcy court may grant the debtor a reasonable time to
cure a payment default, and in the case of a mortgage loan not secured by the
debtor's principal residence, also may reduce the monthly payments due under
such mortgage loan, change the rate of interest and alter the mortgage loan
repayment schedule. Certain court decisions have applied such relief to
claims secured by the debtor's principal residence.

The Code provides priority to certain tax liens over the lien of the
mortgage or the deed of trust. The laws of some states provide priority to
certain tax liens over the lien of the mortgage or the deed of trust.
Numerous federal and state consumer protection laws impose substantive
requirements upon mortgage lenders in connection with the origination,
servicing and the enforcement of mortgage loans. These laws include the
federal Truth in Lending Act, Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act,
and related statutes and regulations. These federal laws and state laws
impose specific statutory liabilities upon lenders who originate or service
mortgage loans and who fail to comply with the provisions of the law. In
some cases, this liability may affect assignees of the Contracts.

CERTAIN MATTERS RELATING TO INSOLVENCY

The Company intends that each transfer of the Contracts to a Trust Fund
will constitute a sale rather than a pledge of the Contracts to secure
indebtedness of the Company. However, if the Company (or one of its
affiliates) were to become a debtor under the federal bankruptcy code, it is
possible that a creditor, receiver, conservator or trustee in bankruptcy of
the Company (or one of its affiliates) or the Company as a debtor-in-
possession may argue the sale of the Contracts by the Company (or one of its
affiliates) was a pledge of the Contracts rather than a sale. This position,
if argued or accepted by a court, could result in a delay or reduction of
distributions to the related Certificateholders.

CONSUMER PROTECTION LAWS

The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission is intended to defeat the ability of the transferor of a consumer
credit contract which is the seller of goods which gave rise to the
transaction (and certain related lenders and assignees) to transfer such
contract free of notice of claims
39
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by the debtor thereunder. The effect of this rule is to subject the assignee
of such a Contract (such as the Trust Fund) to all claims and defenses which
the Obligor could assert against the seller of the Manufactured Home.
Liability under this rule is limited to amounts paid under a Contract;
however, the Obligor also may be able to assert the rule to set off remaining
amounts due as a defense against a claim brought by the Trust Fund against
the Obligor. Numerous other federal and state consumer protection laws
impose requirements applicable to the origination and lending pursuant to the
Contracts, including the Truth in Lending Act, the Federal Trade Commission
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal
Credit Opportunity Act, the Fair Debt Collection Practices Act and the
Uniform Consumer Credit Code. In the case of some of these laws, the failure
to comply with their provisions may affect the enforceability of the related
Contract.

TRANSFERS OF MANUFACTURED HOMES; ENFORCEABILITY OF "DUE-ON-SALE" CLAUSES

The Contracts, in general, prohibit the sale or transfer of the related
Manufactured Homes or Modular Homes without the consent of the Servicer and
permit the acceleration of the maturity of the Contracts by the Servicer upon
any such sale or transfer that is not consented to. The Servicer expects
that it will permit most transfers of Manufactured Homes or Modular Homes and
not accelerate the maturity of the related Contracts. In certain cases, the
transfer may be made by a delinquent Obligor in order to avoid a repossession
proceeding with respect to a Manufactured Home or Modular Home.

In the case of a transfer of a Manufactured Home or Modular Home after
which the Servicer desires to accelerate the maturity of the related
Contract, the Servicer's ability to do so will depend on the enforceability
under state law of the "due-on-sale" clause. The Garn-St. Germain Depository
Institutions Act of 1982 preempts, subject to certain exceptions and
conditions, state laws prohibiting enforcement of "due-on-sale" clauses
applicable to the Manufactured Homes or Modular Homes. Consequently, in some
states the Servicer may be prohibited from enforcing a "due-on-sale" clause
in respect of certain Manufactured Homes or Modular Homes.

APPLICABILITY OF USURY LAWS

Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("Title V"), provides that, subject to the following
conditions, state usury limitations shall not apply to any loan which is
secured by a first lien on certain kinds of manufactured housing. The
Contracts would be covered if they satisfy certain conditions, among other
things, governing the terms of any prepayments, late charges and deferral
fees and requiring a 30-day notice period prior to instituting any action
leading to repossession of or foreclosure with respect to the related unit.

Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen
states adopted such a law prior to the April 1, 1983 deadline. In addition,
even where the Title V was not so rejected, any state is authorized by law
to adopt a provision limiting discount points or other charges on loans
covered by Title V. The Company will represent in the applicable Agreement
that all of the Contracts comply with applicable usury laws.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended
("ERISA") imposes certain requirements on employee benefit plans subject to
ERISA ("Plans") and on persons who are fiduciaries with respect to such
Plans. Generally, ERISA applies to investments made by such Plans. Among
other requirements, ERISA mandates that the assets of Plans be held in trust
and that the trustee, or other duly authorized fiduciary, have exclusive
authority and discretion to manage and control the assets of such
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Plans. ERISA also imposes certain duties on persons who are fiduciaries of
such Plans. Under ERISA, any person who exercises any authority or control
with respect to the management or disposition of the assets of a Plan is
considered to be a fiduciary of such Plan, subject to the standards of
fiduciary conduct under ERISA. These standards include the requirements that
the assets of Plans be invested and managed for the exclusive benefit of Plan
participants and beneficiaries, a determination by the Plan fiduciary that
any such investment is permitted under the governing Plan instruments and is
prudent and appropriate for the Plan in view of its overall investment policy
and the composition and diversification of its portfolio. Certain employee
benefit plans, such as governmental plans (as defined in ERISA Section 3(32))
and church plans (as defined in ERISA Section 3(33)), are not subject to
ERISA. Accordingly, assets of such plans may be invested in Certificates
without regard to the ERISA considerations described above and below, subject
to the provisions of applicable state law. Any such plan which is qualified
and exempt from taxation under Sections 401(a) and 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), however, is subject to the
prohibited transaction rules set forth in Section 4975 of the Code.

Any Plan fiduciary considering the purchase of a Certificate should
consult with its counsel with respect to the potential applicability of ERISA
and the Code to such investment. Moreover, each Plan fiduciary should
determine whether, under the general fiduciary standards of investment
prudence and diversification, an investment in the Certificates is
appropriate for the Plan, taking into account the overall investment policy
of the Plan and composition of the Plan's investment portfolio.

In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA, and the corresponding
provisions of the Code, prohibit a broad range of transactions involving Plan
assets and persons having certain specified relationships to a Plan ("parties
in interest" and "disqualified persons"). Such transactions are treated as
"prohibited transactions" under Sections 406 and 407 of ERISA and excise
taxes are imposed upon such persons by Section 4975 of the Code. An
investment in the Certificates by a Plan might constitute prohibited
transactions under the foregoing provisions unless an administrative
exemption applies. In addition, if any investing Plan's assets were deemed
to include an interest in the assets of the Contract Pool and not merely an
interest in the Certificates, transactions occurring in the operation of the
Contract Pool might constitute prohibited transactions unless an
administrative exemption applies. Certain such exemptions which may be
applicable to the acquisition and holding of the Certificates or to the
servicing and operation of the Contract Pool are noted below.

The Department of Labor ("DOL") has issued a regulation (29 C.F.R.
Section 2510.3-101) (the "Regulation") concerning the definition of what
constitutes the assets of a Plan. This regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity" investment will be deemed for purposes of ERISA to be assets of the
investing plan unless certain exceptions apply. However, the Regulation
provides that, generally, the assets of a corporation or partnership in which
a Plan invests will not be deemed for purposes of ERISA to be assets of such
Plan if the equity interest acquired by the investing Plan is a publicly-
offered security. A publicly-offered security, as defined under the
Regulation, is a security that is widely held, freely transferable, and
either is (i) part of a class of securities registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, or (ii) sold to the Plan as
part of a securities offering to the public pursuant to an effective
registration statement under the Securities Act of 1933, and the class of
securities of which such security is a part is registered under the
Securities Exchange Act of 1934 within 120 days (or such later time as may
be allowed by the Securities and Exchange Commission) after the end of the
fiscal year of the issuer during which the offering of such securities to the
public occurred. The Certificates are not expected to be publicly-offered
securities under the terms of the Regulation.

Unless some administrative exemption under ERISA applies to the purchase
of Certificates offered hereby, and, as a result, an investing Plan's assets
could be considered to include an undivided interest
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<PAGE>
in the Contracts and any other assets held in the Contract Pool. In the
event that assets of a Contract Pool are considered assets of an investing
Plan, the Company, the Servicer, the Trustee and other persons, in providing
services with respect to the Contracts, may be considered fiduciaries to such
Plan and subject to the fiduciary responsibility provisions of Title I of
ERISA and the prohibited transaction provisions of Section 4975 of the Code
with respect to transactions involving such assets unless a statutory or
administrative exemption applies.

The U.S. Department of Labor has granted to the lead Underwriter named
in the Prospectus Supplement an exemption (the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Plans of certificates
representing interests in asset-backed pass-through trusts that consist of
certain receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The receivables covered by the Exemption
include manufactured housing installment sales contracts and installment loan
agreements such as the Contracts. The Exemption will apply to the
acquisition, holding and resale of the Senior Certificates by a Plan,
provided that certain conditions (certain of which are described below) are
met.

Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:

(1) The acquisition of the Senior Certificates by a Plan is on
terms (including the price for the Senior Certificates) that are at least as
favorable to the Plan as they would be in an arm's length transaction with
an unrelated party;

(2) The rights and interests evidenced by the Senior Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust Fund;

(3) The Senior Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from either Standard & Poor's Corporation, Moody's
Investors Service, Inc., Duff & Phelps Inc. or Fitch Investors Service, Inc.;

(4) The Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);

(5) The sum of all payments made to the Underwriter in connection
with the distribution of the Senior Certificates represents not more than
reasonable compensation for underwriting the Senior Certificates; the sum of
all payments made to and retained by the Company pursuant to the sale of the
Contracts to the Trust Fund represents not more than the fair market value
of such Contracts; and the sum of all payments made to and retained by the
Servicer represents not more than reasonable compensation for the Servicer's
services under the Agreement and reimbursement of the Servicer's reasonable
expenses in connection therewith; and

(6) The Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933.

Moreover, the Exemption would provide relief from certain self-
dealing/conflict of interest or prohibited transactions only if, among other
requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50) percent of the
Senior Certificates are acquired by persons independent of the Restricted
Group (as defined below), (ii) the Plan's investment in Senior Certificates
does not exceed twenty-five (25) percent of all of the Senior Certificates
outstanding
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at the time of the acquisition, and (iii) immediately after the acquisition,
no more than twenty-five (25) percent of the assets of the Plan are invested
in certificates representing an interest in one or more trusts containing
assets sold or serviced by the same entity. The Exemption does not apply to
Plans sponsored by the Company, any Underwriter, the Trustee, the Servicer,
any obligor with respect to Contracts included in the Trust Fund constituting
more than five percent of the aggregate unamortized principal balance of the
assets in the Trust Fund, or any affiliate of such parties (the "Restricted
Group").

The Company believes that the Exemption will apply to the acquisition
and holding by Plans of Senior Certificates sold by the Underwriter or
Underwriters named in the Prospectus Supplement and that all conditions of
the Exemption other than those within the control of the investors have been
met. In addition, as of the date hereof, no obligor with respect to
Contracts included in the Trust Fund constitutes more than five percent of
the aggregate unamortized principal balance of the assets of the Trust Fund.

Employee benefit plans that are governmental plans (as defined in
section 3(32) of ERISA) and church plans (as defined in section 3(33) of
ERISA) are not subject to ERISA requirements. Accordingly, unless otherwise
specified in the Prospectus Supplement, assets of such plans may be invested
in the Senior Certificates without regard to the ERISA restrictions described
above, subject to applicable provisions of other federal and state laws.

Any Plan fiduciary who proposes to cause a Plan to purchase Senior
Certificates should consult with its own counsel with respect to the
potential consequences under ERISA and the Code of the Plan's acquisition and
ownership of Senior Certificates. Assets of a Plan or individual retirement
account should not be invested in the Senior Certificates unless it is clear
that the assets of the Trust Fund will not be plan assets or unless it is
clear that the Exemption or a prohibited transaction class exemption will
apply and exempt all potential prohibited transactions.

SUBORDINATED CERTIFICATES

Because the Subordinated Certificates are subordinated to the Senior
Certificates, the Exemption will not apply to the acquisition, holding and
resale of the Subordinated Certificates by a Plan.

Any Plan fiduciary considering whether to purchase any Subordinated
Certificates on behalf of a Plan should consult with its counsel regarding
the applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code to such investment. Among other things,
before purchasing any Subordinated Certificates, a fiduciary of a Plan
subject to the fiduciary responsibility provisions of ERISA or an employee
benefit plan subject to the prohibited transaction provisions of the Code
should analyze whether any prohibited transaction exemptions are available.
In particular, there are three class exemptions issued by DOL that could
apply with respect to certain transactions involving the Certificates: PTCE
84-14 (Class Exemption for Plan Asset Transaction Determined by Independent
Qualified Professional Asset Managers), PTCE 91-38 (Class Exemption for
Certain Transactions Involving Bank Collective Investment Funds) and PTCE
90-1 (Class Exemption for Certain Transactions Involving Insurance Company
Pooled Separate Accounts). There is no assurance that these exemptions, even
if all of the conditions specified therein are satisfied, will apply to all
transactions involving the Trust Funds assets.

In light of the foregoing, unless otherwise specified in the Prospectus
Supplement, no transfer of a Subordinated Certificate will be permitted to
be made to a Plan unless such Plan, at its expense, delivers to the Trustee
and the Company an opinion of counsel to the effect that the purchase or
holding of a Subordinated Certificate by such Plan will not result in the
assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee, the Company or the Servicer to any obligation in addition to
those undertaken in the Agreement. Unless such opinion is delivered, each
person acquiring a Subordinated Certificate
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will be deemed to represent to the Trustee, the Company and the Servicer that
such person is not a Plan subject to ERISA or Section 4975 of the Code.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following is a general discussion of certain federal income tax
consequences relating to the purchase, ownership, and disposition of the
Certificates and is based on advice of Brown & Wood LLP, special tax counsel
to the Company. The discussion is also based upon laws, regulations,
rulings, and decisions now in effect, including Treasury Regulations issued
on December 23, 1992, and generally effective for REMICs with startup days
on or after November 12, 1991 (the "REMIC Regulations"), all of which are
subject to change or possibly differing interpretations. The discussion
below addresses all material federal income tax consequences generally
applicable to investors. However, the discussion does not purport to deal
with federal income tax consequences applicable to all categories of
investors, some of which may be subject to special rules. Investors should
consult their own tax advisors to determine the federal, state, local, and
any other tax consequences of the purchase, ownership, and disposition of the
Certificates.

Many aspects of the federal tax treatment of the purchase, ownership,
and disposition of the Certificates will depend upon whether an election is
made to treat the Trust Fund or a segregated portion thereof evidenced by a
particular series or sub-series of Certificates as a REMIC within the meaning
of Section 860D(a) of the Code. The Prospectus Supplement for each series
will indicate whether or not an election to be treated as a REMIC has been
or will be made with respect thereto. The following discussion deals first
with Series with respect to which a REMIC Election is made and then with
Series with respect to which a REMIC Election is not made.

REMIC SERIES

With respect to each Series of Certificates for which a REMIC Election
is made, Brown & Wood LLP, special tax counsel to the Company, will have
advised the Company that in its opinion, assuming (i) the making of that
election in accordance with the requirements of the Code and (ii) ongoing
compliance with the applicable Agreement, at the initial issuance of the
Certificates in such series the Trust Fund will qualify as a REMIC and the
Certificates in such a Series ("REMIC Certificates") will be treated either
as regular interests in the REMIC within the meaning of Section 860G(a)(1)
of the Code ("Regular Certificates") or as a residual interests in the REMIC
within the meaning of Section 860G(a)(2) of the Code ("Residual
Certificates").

Qualification as a REMIC. Qualification as a REMIC involves ongoing
compliance with certain requirements and the following discussion assumes
that such requirements will be satisfied by the Trust Fund so long as there
are any REMIC Certificates outstanding. Substantially all of the assets of
the REMIC must consist of "qualified mortgages" and "permitted investments"
as of the close of the third month beginning after the day on which the REMIC
issues all of its regular and residual interests (the "Startup Day") and at
all times thereafter. The term "qualified mortgage" means any obligation
(including a participation or certificate of beneficial ownership in such
obligation) which is principally secured by an interest in real property that
is transferred to the REMIC on the Startup Day in exchange for regular or
residual interests in the REMIC or is purchased by the REMIC within the
three-month period beginning on the Startup Day if such purchase is pursuant
to a fixed price contract in effect on the Startup Day. The REMIC
Regulations provide that a Contract is principally secured by an interest in
real property if the fair market value of the real property securing the
Contract is at least equal to either (i) 80% of the issue price (generally,
the principal balance) of the Contract at the time it was
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originated or (ii) 80% of the adjusted issue price (the then-outstanding
principal balance, with certain adjustments) of the Contract at the time it
is contributed to a REMIC. The fair market value of the underlying real
property is to be determined after taking into account other liens
encumbering that real property. Alternatively, a Contract is principally
secured by an interest in real property if substantially all of the proceeds
of the Contract were used to acquire or to improve or protect an interest in
real property that, at the origination date, is the only security for the
Contract (other than the personal liability of the obligor). The REMIC
Regulations provide that obligations secured by manufactured housing or
mobile homes (not including recreational vehicles, campers or similar
vehicles) which are "single family residences" under Section 25(e)(10) of the
Code will qualify as obligations secured by real property without regard to
state law classifications. See the discussion below under "REMIC Series
/__/ Status of Manufactured Housing Contracts." A qualified mortgage also
includes a qualified replacement mortgage that is used to replace any
qualified mortgage within three months of the Startup Day or to replace a
defective mortgage within two years of the Startup Day.

"Permitted investments" consist of (a) temporary investments of cash
received under qualified mortgages before distribution to holders of
interests in the REMIC ("cash-flow investments"), (b) amounts, such as a
Reserve Fund, if any, reasonably required to provide for full payment of
expenses of the REMIC, the principal and interest due on regular or residual
interests in the event of defaults on qualified mortgages, lower than
expected returns on cash-flow investments, prepayment interest shortfalls or
certain other contingencies ("qualified reserve assets"), and (c) certain
property acquired as a result of foreclosure of defaulted qualified mortgages
("foreclosure property"). A reserve fund will not be qualified if more than
30% of the gross income from the assets in the reserve fund is derived from
the sale or other disposition of property held for three months or less,
unless such sale is necessary to prevent a default in payment of principal
or interest on Regular Certificates. In accordance with Section 860G(a)(7)
of the Code, a reserve fund must be "promptly and appropriately" reduced as
payments on contracts are received. Foreclosure property will be a permitted
investment only to the extent that such property is not held for more than
two years.

The Code requires that in order to qualify as a REMIC an entity must
make reasonable arrangements designed to ensure that certain specified
entities, generally including governmental entities or other entities that
are exempt from United States tax, including the tax on unrelated business
income ("Disqualified Organizations"), not hold residual interest in the
REMIC. Consequently, it is expected that in the case of any Trust Fund for
which a REMIC Election is made the transfer, sale, or other disposition of
a Residual Certificate to a Disqualified Organization will be prohibited and
the ability of a Residual Certificate to be transferred will be conditioned
on the Trustee's receipt of a certificate or other document representing that
the proposed transferee is not a Disqualified Organization. The transferor
of a Residual Certificate must not, as of the time of the transfer, have
actual knowledge that such representation is false. The Code further
requires that reasonable arrangements must be made to enable a REMIC to
provide the Internal Revenue Service (the "Service") and certain other
parties, including transferors of residual interests in a REMIC, with the
information needed to compute the tax imposed by Section 860E(e)(1) of the
Code if, in spite of the steps taken to prevent Disqualified Organizations
from holding residual interests, such an organization does, in fact, acquire
a residual interest. See "REMIC Series /__/ Restrictions on Transfer of
Residual Certificates" below.

If the Trust Fund fails to comply with one or more of the ongoing
requirements for qualification as a REMIC, the Trust Fund will not be treated
as REMIC for the year during which such failure occurs and thereafter unless
the Service determines, in its discretion, that such failure was inadvertent
(in which case, the Service may require any adjustments which it deems
appropriate). If the ownership interests in the assets of the Trust Fund
consist of multiple classes, failure to treat the Trust Fund as a REMIC may
cause the Trust Fund to be treated as an association taxable as a
corporation. Such treatment could result in income of the Trust Fund being
subject to corporate tax in the hands of the Trust Fund and in
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a reduced amount being available for distribution to Certificateholders as
a result of the payment of such taxes.

Status of Manufactured Housing Contracts. The REMIC Regulations as well
as a Notice issued by the Service provide that obligations secured by
interests in manufactured housing, which qualify as "single family
residences" within the meaning of Section 25(e)(10) of the Code, are to be
treated as "qualified mortgages" for a REMIC. Under Section 25(e)(10) of the
Code, the term "single family residence" includes any manufactured home which
as a minimum of 400 square feet of living space and a minimum width in excess
of 102 inches and which is of a kind customarily used at a fixed location.
The Company will represent and warrant that each of the manufactured homes
securing the Contracts which are a part of a Trust Fund meets this definition
of a "single family residence." See the discussion above under "REMIC Series
/__/ Qualification as a REMIC."

Two-Tier REMIC Structures. For certain series of Certificates, two
separate elections may be made to treat segregated portions of the assets of
a single Trust Fund as REMICs for federal income tax purposes (respectively,
the "Subsidiary REMIC" and the "Master REMIC"). Upon the issuance of any
such series of Certificates, Brown & Wood LLP, special tax counsel to the
Company, will have advised the Company, as described above, that at the
initial issuance of the Certificates, the Subsidiary REMIC and the Master
REMIC will each qualify as a REMIC for federal income tax purposes, and that
the Certificates in such a series will be treated either as Regular
Certificates or Residual Certificates of the appropriate REMIC. Only REMIC
Certificates issued by the Master REMIC will be offered hereunder. Solely
for the purpose of determining whether such Regular Certificates will
constitute qualifying real estate or real property assets for certain
categories of financial institutions or real estate investment trusts as
described below, both REMICs in a two-tier REMIC structure will be treated
as one. See the discussion below under "REMIC Series /__/ Taxation of
Regular Interests."

Taxation of Regular Interests. Regular Certificates will be treated as
new debt instruments issued by the REMIC on the Startup Day. If a Regular
Certificate represents an interest in a REMIC that consists of a specified
portion of the interest payments on the REMIC's qualified mortgages, the
stated principal amount with respect to that Regular Certificate may be zero.

Such a specified portion may consist of a fixed number of basis points, a
fixed percentage of interest or a qualified variable rate on some or all of
the qualified mortgages. Stated interest on a Regular Certificate will be
taxable as ordinary income. Holders of Regular Certificates that would
otherwise report income under a cash method of accounting will be required
to report income with respect to such Regular Certificates under the accrual
method. Under Temporary Treasury Regulations, if a Trust Fund, with respect
to which a REMIC Election is made, is considered to be a "single-class
REMIC," a portion of the REMIC's servicing fees, administrative and other
non-interest expenses, including assumption fees and late payment charges
retained by the Company, will be allocated as a separate item to those
Regular Certificateholders that are "pass-through interest holders."
Generally, a single-class REMIC is defined as a REMIC that would be treated
as a fixed investment trust under applicable law but for its qualification
as a REMIC, or a REMIC that is substantially similar to an investment trust
but is structured with the principal purpose of avoiding this allocation
requirement imposed by the Temporary Treasury Regulations. Generally, a
pass-through interest holder refers to individuals, entities taxed as
individuals, such as certain trusts and estates, and regulated investment
companies. An individual, an estate, or a trust that holds a Regular
Certificate in such a REMIC will be allowed to deduct the foregoing expenses
under Section 212 of the Code only to the extent that, in the aggregate and
combined with certain other itemized deductions, they exceed 2% of the
adjusted gross income of the holder. In addition, Section 68 of the Code
provides that the amount of itemized deductions (including those provided for
in Section 212 of the Code) otherwise allowable for the taxable year for an
individual whose adjusted gross income exceeds a threshold amount specified
in the Code ($100,000 in the case of a joint return) will be reduced by the
lesser of (i) 3% of the excess of adjusted gross income over the specified
threshold amount or (ii) 80% of the amount of itemized deductions otherwise
allowable, for such taxable year. As a result of the foregoing limitations,
certain
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holders of Regular Certificates in "single-class REMICs" may not be entitled
to deduct all or any part of the foregoing expenses.

Tax Status of REMIC Certificates. In general, (i) Regular Certificates
held by a financial institution as described in Section 593(a) of the Code
will represent interest in "qualifying real property loans" within the
meaning of Section 593(d) of the Code; (ii) Regular Certificates held by a
thrift institution taxes as a "domestic building and loan association" within
the meaning of Section 7701(a)(19) of the Code will constitute "a regular .
. . interest in a REMIC" within the meaning of Section 7701(a)(19)(C)(xi)
of the Code: and (iii) Regular Certificates held by a real estate investment
trust will constitute "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code and interest thereon will be considered
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code, in each such case as long as the
portion of the assets of the Trust Fund qualifying for the corresponding
status is at least 95% of the assets of the REMIC. If less than 95% of the
average adjusted basis of the assets comprising the REMIC are assets
qualifying under any of the foregoing Sections of the Code (including assets
described in Section 7701(a)(19)(C) of the Code), then the Regular
Certificates will be qualifying assets only to the extent that the assets
comprising the REMIC are qualifying assets. Treasury Regulations promulgated
pursuant to Section 593 of the Code define "qualifying real property loans"
to include a loan secured by a mobile home unit "permanently fixed to real
property" except during a brief period in which the unit is transported to
its site. Section 7701(a)(19)(C)(v) of the Code provides that "loans secured
by an interest in real property" includes loans secured by mobile homes not
used on a transient basis. Treasury Regulations promulgated pursuant to
Section 856 of the Code state that local law definitions are not controlling
in determining the meaning of the term "Real Property" for purposes of that
section, and the Service has ruled that obligations secured by permanently
installed mobile home units qualify as "real estate assets" under this
provision. Entities affected by the foregoing provisions of the Code that
are considering the purchase of Certificates should consult their own tax
advisors regarding these provisions. Furthermore, interest paid with respect
to Certificates held by a real estate investment trust will be considered
"interest on obligations secured by mortgages on real property or on interest
in real property" within the meaning of Section 856(c)(3)(B) of the Code to
the same extent that the Certificates themselves are treated as real estate
assets. Regular Certificates held by a regulated investment company or a
real estate investment trust will not constitute "Government securities"
within the meaning of Sections 851(b)(4)(A)(i) and 856(c)(5)(A) of the Code,
respectively. In addition, the REMIC Regulations provide that payments on
Contracts qualifying for the corresponding status that are held and
reinvested pending distribution to Certificateholders will be considered to
be "qualifying real property loans" within the meaning of Section 593(b) of
the Code and "real estate assets" within the meaning of Section 856(c)(5)(A)
of the Code.

Original Issue Discount. Regular Certificates may be issued with
"original issue discount." Rules governing original issue discount are set
forth in Sections 1271-1273 and 1275 of the Code and the Treasury Regulations
issued thereunder in January 1994 (the "OID Regulations"). The discussion
herein is based in part on the OID Regulations, which generally apply to debt
instruments issued on or after April 4, 1994, but which generally may be
relied upon for debt instruments issued after December 21, 1992. Moreover,
although the rules relating to original issue discount contained in the Code
were modified by the Tax Reform Act of 1986 specifically to address the tax
treatment of securities, such as the Regular Certificates, on which principal
is required to be prepaid based on prepayments of the underlying assets,
regulations under that legislation have not yet been finalized.
Certificateholders also should be aware that the OID Regulations do not
address certain issues relevant to prepayable securities such as the Regular
Certificates.

In general, in the hands of the original holder of a Regular
Certificate, original issue discount, if any, is the difference between the
"stated redemption price at maturity" of the Regular Certificate and its
"issue price." The original issue discount with respect to a Regular
Certificate will be considered to
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be zero if it is less than .25% of the Regular Certificate's stated
redemption price at maturity multiplied by the number of complete years from
the date of issue of such Regular Certificate to its maturity date. The OID
Regulations, however, provide a special de minimis rule to apply to
obligations such as the Regular Certificates that have more than one
principal payment or that have interest payments that are not qualified
stated interest as defined in the OID Regulations, payable before maturity
("installment obligations"). Under the special rule, original issue discount
on an installment obligation is generally considered to be zero if it is less
than .25% of the principal amount of the obligation multiplied by the
weighted average maturity of the obligation as defined in the OID
Regulations. Because of the possibility of prepayments, it is not clear
whether or how the de minimis rules will apply to the Regular Certificates.
It is possible that the anticipated rate of prepayments assumed in pricing
the debt instrument (the "Prepayment Assumption") will be required to be used
in determining the weighted average maturity of the Regular Certificates.
In the absence of authority to the contrary, the Company expects to apply the
de minimis rule applicable to installment obligations by using the Prepayment
Assumption. The OID Regulations provide a further special de minimis rule
applicable to any Regular Certificates that are "self-amortizing installment
obligations," i.e., Regular Certificates that provide for equal payments
composed of principal and qualified stated interest payable unconditionally
at least annually during its entire term, with no significant additional
payment required at maturity. Under this special rule, original issue
discount on a self-amortizing installment obligation is generally considered
to be zero if it is less than .167% of the principal amount of the obligation
multiplied by the number of complete years from the date of issue of such a
Regular Certificate to its maturity date.

Generally, the original holder of a Regular Certificate that includes
a de minimis amount of original issue discount includes that original issue
discount in income as principal payments are made. The amount included in
income with respect to each principal payment equals a pro rata portion of
the entire amount of de minimis original issue discount with respect to that
Regular Certificate. Any de minimis amount of original issue discount
included in income by a holder of a Regular Certificate is generally treated
as a capital gain if the Regular Certificate is a capital asset in the hands
of the holder thereof. Pursuant to the OID Regulations, a holder of a
Regular Certificate that uses the accrual method of tax accounting or that
acquired such Regular Certificate on or after April 4, 1994, may, however,
elect to include in gross income all interest that accrues on a Regular
Certificate, including any de minimis original issue discount and market
discount, by using the constant yield method described below with respect to
original issue discount.

The stated redemption price at maturity of a Regular Certificate
generally will be equal to the sum of all payments, whether denominated as
principal or interest, to be made with respect thereto other than "qualified
stated interest." Pursuant to the OID Regulation, qualified stated interest
is stated interest that is unconditionally payable at least annually at a
single fixed rate of interest (or, under certain circumstances, a variable
rate tied to an objective index) during the entire term of the Regular
Certificate (including short periods). It is possible that the IRS could
assert that the stated rate of interest on the Certificates is not
unconditionally payable or otherwise does not qualify as qualified stated
interest. Such position, if successful, would require all holders of
Certificates to accrue all income on the Certificates under the OID
Regulations. The Company, however, intends to treat all stated interest on
the Certificates as qualified stated interest. Under the OID Regulations,
certain variable interest rates payable on Regular Certificates, including
rates based upon the weighted average interest rate of a Pool of Contracts,
may not be treated as qualified stated interest. In such case, the OID
Regulations would treat interest under such rates as contingent interest
which generally must be included in income by the Regular Certificateholder
when the interest becomes fixed, as opposed to when it accrues. Until
further guidance is issued concerning the treatment of such interest payable
on Regular Certificates, the REMIC will treat such interest as being payable
at a variable rate tied to a single objective index of market rates.
Prospective investors should consult their tax advisors regarding the
treatment of such interest under the OID Regulations. In the absence of
authority to the contrary and if otherwise appropriate, the Company
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expects to determine the stated redemption price at maturity of a Regular
Certificate by assuming that the anticipated rate of prepayment for all
Contracts will occur in such a manner that the initial Remittance Rate for
a Certificate will not change. Accordingly, interest at the initial
Remittance Rate will constitute qualified stated interest payments for
purposes of applying the original issue discount provisions of the Code. In
general, the issue price of a Regular Certificate is the first price at which
a substantial amount of the Regular Certificates of such class are sold for
money to the public (excluding bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers). If a portion of the initial offering price of a Regular
Certificate is allocable to interest that has accrued prior to its date of
issue, the issue price of such a Regular Certificate includes that pre-
issuance accrued interest.

If the Regular Certificates are determined to be issued with original
issue discount, a holder of a Regular Certificate must generally include the
original issue discount in ordinary gross income for federal income tax
purposes as it accrues in advance of the receipt of any cash attributable to
such income. The amount of original issue discount, if any, required to be
included in a Regular Certificateholder's ordinary gross income for federal
income tax purposes in any taxable year will be computed in accordance with
Section 1272(a) of the Code and the OID Regulations. Under such Section and
the OID Regulations, original issue discount accrues on a daily basis under
a constant yield method that takes into account the compounding of interest.
The amount of original issue discount to be included in income by a holder
of a debt instrument, such as a Regular Certificate, under which principal
payments may be subject to acceleration because of prepayments of other debt
obligations securing such instruments, is computed by taking into account the
Prepayment Assumption.

The amount of original issue discount included in income by a holder of
a Regular Certificate is the sum of the "daily portions" of the original
issue discount for each day during the taxable year on which the holder held
the Regular Certificate. The daily portions of original issue discount are
determined by allocating to each day in any "accrual period" a pro rata
portion of the excess, if any, of the same of (i) the present value of all
remaining payments to be made on the Regular Certificate as of the close of
the "accrual period" and (ii) the payments during the "accrual period" of
amounts included in the stated redemption price of the Regular Certificate
over the "adjusted issue price" of the Regular Certificate at the beginning
of the "accrual period." Generally, the "accrual period" for the Regular
Certificates corresponds to the intervals at which amounts are paid or
compounded with respect to such Regular Certificate, beginning with their
date of issuance and ending with the maturity date. The "adjusted issue
price" of a Regular Certificate at the beginning of any accrual period is the
sum of the issue price and accrued original issue discount for each prior
accrual period reduced by the amount of payments other than payments of
qualified stated interest made during each prior accrual period. The Code
requires the present value of the remaining payments to be determined on the
bases of (a) the original yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the
length of the accrual period), (b) events, including actual prepayments,
which have occurred before the close of the accrual period, and (c) the
assumption that the remaining payments will be made in accordance with the
original Prepayment Assumption. The effect of this method is to increase the
portions of original issue discount that a Regular Certificateholder must
include in income to take into account prepayments with respect to the
Contracts held by the Trust Fund that occur at a rate that exceeds the
Prepayment Assumption and to decrease (but not below zero for any period) the
portions of original issue discount that a Regular Certificateholder must
include in income to take into account prepayments with respect to the
Contracts that occur at a rate that is slower than the Prepayment Assumption.
Although original issue discount will be reported to Regular
Certificateholders based on the Prepayment Assumption, no representation is
made to Regular Certificateholders that the Contracts will be prepaid at that
rate or at any other rate.

A subsequent purchaser of a Regular Certificate will also be required
to include in such purchaser's ordinary gross income for federal income tax
purposes the original issue discount, if any,
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accruing with respect to such Regular Certificate, unless the price paid
equals or exceeds the Regular Certificate's outstanding principal amount.
If the price paid exceeds the sum of the Regular Certificate's issue price
plus the aggregate amount of original issue discount accrued with respect to
the Regular Certificate, but does not equal or exceed the outstanding
principal amount of the Regular Certificate, the amount of original issue
discount to be accrued will be reduced in accordance with a formula set forth
in Section 1272(a)(7)(B) of the Code.

The Company believes, upon the advice of Brown & Wood LLP, special tax
counsel to the Company, that the holder of a Regular Certificate determined
to be issued with non-de minimis original issue discount will be required to
include the original issue discount in ordinary gross income for federal
income tax purposes computed in the manner described above. However, the OID
Regulations either do not address or are subject to varying interpretations
with respect to several issues concerning the computation of original issue
discount for obligations such as the Regular Certificates.

Variable Rate Regular Certificates. Regular Certificates may bear
interest at a variable rate. Under the OID Regulations, if a variable rate
Regular Certificate provides for qualified stated interest payments computed
on the basis of certain qualified floating rates or objective rates, then any
original issue discount on such a Regular Certificate is computed and accrued
under the same methodology that applies to Regular Certificates paying
qualified stated interest at a fixed rate. See the discussion above under
"REMIC Series /__/ Original Issue Discount." Accordingly, if the issue price
of such a Regular Certificate is equal to its stated redemption price at
maturity, the Regular Certificate will not have any original issue discount.

For purposes of applying the original issue discount provisions of the
Code, all or a portion of the interest payable with respect to a variable
rate Regular Certificate may not be treated as qualified stated interest in
certain circumstances, including the following: (i) if the variable rate of
interest is subject to one or more minimum or maximum rate floors or ceilings
which are not fixed throughout the term of the Regular Certificate and which
are reasonably expected as of the issue date to cause the rate in certain
accrual periods to be significantly higher or lower than the overall expected
return on the Regular Certificate determined without such floor or ceiling;
(ii) if it is reasonably expected that the average value of the variable rate
during the first half of the term of the Regular Certificate will be either
significantly less than or significantly greater than the average value of
the rate during the final half of the term of the Regular Certificate; or
(iii) if interest is not payable in all circumstances. In these situations,
as well as others, it is unclear under the OID Regulations whether such
interest payments constitute qualified stated interest payments, or must be
treated either as part of a Regular Certificate's stated redemption price at
maturity resulting in original issue discount, or represent contingent
payments which are recognized as ordinary gross income for federal income tax
purposes only as the interest payments become fixed in each accrual period.

If a variable rate Regular Certificate is deemed to have been issued
with original issue discount, as described above, the amount of original
issue discount accrues on a daily basis under a constant yield method that
takes into account the compounding of interest; provided, however, that the
interest associated with such a Regular Certificate generally is assumed to
remain constant throughout the term of the Regular Certificate at a rate
that, in the case of a qualified floating rate, equals the value of such
qualified floating rate as of the issue date of the Regular Certificate, or,
in the case of an objective rate, at a fixed rate that reflects the yield
that is reasonably expected for the Regular Certificate. A holder of such
a Regular Certificate would then recognize original issue discount during
each accrual period which is calculated based upon such Regular Certificate's
assumed yield to maturity, adjusted to reflect the difference between the
assumed and actual interest rate.

The OID Regulations either do not address or are subject to varying
interpretations with respect to several issues concerning the computation of
original issue discount with respect to the Regular
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Certificates, including variable rate Regular Certificates. Additional
information regarding the manner of reporting original issue discount to the
Service and to holders of variable rate Regular Certificates will be set
forth in the Prospectus Supplement relating to the issuance of such Regular
Certificates.

Market Discount. Regular Certificates, whether or not issued with
original issue discount, will be subject to the market discount rules of the
Code. A purchaser of a Regular Certificate who purchases the Regular
Certificate at a market discount (i.e., a discount from its original issue
price plus any accrued original issue discount, if any, as described above)
will be required to recognize accrued market discount as ordinary
income as payments of principal are received on such Regular Certificate or
upon the sale or exchange of the Regular Certificate. In general, the holder
of a Regular Certificate may elect to treat market discount as accruing
either (i) under a constant yield method that is similar to the method for
the accrual of original issue discount or (ii) in proportion to accruals of
original issue discount (or, if there is no original issue discount, in
proportion to accruals of stated interest), in each case computed taking into
account the Prepayment Assumption.

The Code provides that the market discount in respect of a Regular
Certificate will be considered to be zero if the amount allocable to the
Regular Certificate is less than 0.25% of the Regular Certificate's stated
redemption price at maturity multiplied by the number of complete years
remaining to its maturity after the holder acquired the obligation. If
market discount is treated as de minimis under this rule, the actual discount
would be allocated among a portion of each scheduled distribution
representing the stated redemption price of such Regular Certificate and that
portion of the discount allocable to such distribution would be reported as
income when such distribution occurs or is due.

The Code further provides that any principal payment with respect to a
Regular Certificate acquired with market discount or any gain on disposition
of such a Regular Certificate shall be treated as ordinary income to the
extent it does not exceed the accrued market discount at the time of such
payment. The amount of accrued market discount for purposes of determining
the amount of ordinary income to be recognized with respect to subsequent
payments on such a Regular Certificate is to be reduced by the amount
previously treated as ordinary income.

The Code grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on debt
instruments such as the Regular Certificates. Until such time as regulations
are issued, rules described in the legislative history for these provisions
of the Code will apply. Under those rules, as described above, the holder
of a Regular Certificate with market discount may elect to accrue market
discount either on the basis of a constant interest rate or according to
certain other methods. Certificateholders who acquire a Regular Certificate
at a market discount should consult their tax advisors concerning various
methods which are available for accruing that market discount.

In general, limitations imposed by the Code that are intended to match
deductions with the taxation of income may require a holder of a Regular
Certificate having market discount to defer a portion of the interest
deductions attributable to any indebtedness incurred or continued to purchase
or carry such Regular Certificate. Alternatively, a holder of a Regular
Certificate may elect to include market discount in gross income as it
accrues and, if he makes such an election, is exempt from this rule. The
adjusted basis of a Regular Certificate subject to such election will be
increased to reflect market discount included in gross income, thereby
reducing any gain or increasing any loss on a sale or taxable disposition.

Amortizable Premium. A holder of a Regular Certificate who holds the
Regular Certificate as a capital asset and who purchased the Regular
Certificate at a cost greater than its outstanding principal amount will be
considered to have purchased the Regular Certificate at a premium. In
general, the Regular Certificateholder may elect to deduct the amortizable
bond premium as it accrues under a
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constant yield method. A Regular Certificateholder's tax basis in the
Regular Certificate will be reduced by the amount of the amortizable bond
premium deducted. In addition, it appears that the same methods which apply
to the accrual of market discount on installment obligations are intended to
apply in computing the amortizable bond premium deduction with respect to a
Regular Certificate. It is not clear, however, (i) whether the alternatives
to the constant-yield method which may be available for the accrual of market
discount are available for amortizing premium on Regular Certificates and
(ii) whether the Prepayment Assumption should be taken into account in
determining the term of a Regular Certificate for this purpose.
Certificateholders who pay a premium for a Regular Certificate should consult
their tax advisors concerning such an election and rules for determining the
method for amortizing bond premium.

Gain or Loss on Disposition. If a Regular Certificate is sold, the
seller will recognize gain or loss equal to the difference between the amount
realized from the sale and the seller's adjusted basis in such Regular
Certificate. The adjusted basis generally will equal the cost of such
Regular Certificate to the seller, increased by any original issue discount
included in the seller's ordinary gross income with respect to such Regular
Certificate and reduced (but not below zero) by any payments on the Regular
Certificate previously received or accrued by the seller (other than
qualified stated interest payment) and any amortizable premium. Similarly,
a Regular Certificateholder who receives a principal payment with respect to
a Regular Certificate will recognize gain or loss equal to the difference
between the amount of the payment and the holder's allocable portion of his
or her adjusted basis in the Regular Certificate. Except as discussed below
or with respect to market discount, any gain or loss recognized upon a sale,
exchange, retirement, or other disposition of a Regular Certificate will be
capital gain if the Regular Certificate is held as a capital asset.

Gain from the disposition of a Regular Certificate that might otherwise
be capital gain, including any gain attributable to de minimis original issue
discount, will be treated as ordinary income to the extent of the excess, if
any, of (i) the amount that would have been included in the holder's income
if the yield on such Regular Certificate had equaled 110% of the applicable
federal rate determined as of the beginning of such holder's holding period,
over (ii) the amount of ordinary income actually recognized by the holder
with respect to such Regular Certificate.

If the Company is determined to have intended on the date of issue of
the Regular Certificates to call all or any portion of the Regular
Certificates prior to their stated maturity within the meaning of Section
1271(a)(2)(A) of the Code, any gain realized upon a sale, exchange,
retirement, or other disposition of a Regular Certificate would be considered
ordinary income to the extent it does not exceed the unrecognized portion of
the original issue discount, if any, with respect to the Regular Certificate.

The OID Regulations provide that the intention to call rule will not be
applied to mortgage-backed securities such as the Regular Certificates. In
addition, under the OID Regulations, a mandatory sinking fund or call option
is not evidence of an intention to call.

Taxation of Residual Interests. Generally, the "daily portions" of the
taxable income or net loss of a REMIC will be included as ordinary income or
loss in determining the taxable income of holders of Residual Certificates
("Residual Holders"), and will not be taxed separately to the REMIC. The
daily portions are determined by allocating the REMIC's taxable income or net
loss for each calendar quarter ratably to each day in such quarter and by
allocating such daily portion among the Residual Holders in proportion to
their respective holdings of Residual Certificates in the REMIC on such day.

REMIC taxable income is generally determined in the same manner as the
taxable income of an individual using the accrual method of accounting except
that (i) the limitation on deductibility of investment interest expense and
expenses for the production of income do not apply, (ii) all bad loans will
be deductible as business bad debts, and (iii) the limitation on the
deductibility of interest and expenses related to tax-exempt income will
apply. REMIC taxable income generally means a REMIC's gross
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income, including interest, original issue discount income, and market
discount income, if any, on the Contracts, plus income on reinvestment of
cash flows and reserve assets, minus deductions, including interest and
original issue discount expense on the Regular Certificates, servicing fees
on the Contracts, other administrative expenses of a REMIC, and amortization
of premium, if any, with respect to the Contracts.

The taxable income recognized by a Residual Holder in any taxable year
will be affected by, among other factors, the relationship between the timing
of interest, original issue discount or market discount income, or
amortization of premium with respect to the Contracts, on the one hand, and
the timing of deductions for interest (including original issue discount) on
the Regular Certificates, on the other hand. In the event that an interest
in the Contracts is acquired by a REMIC at a discount, and one or more of
such Contracts is prepaid, the Residual Holder may recognize taxable income
without being entitled to receive a corresponding cash distribution because
(i) the prepayment may be used in whole or in part to make distributions on
Regular Certificates, and (ii) the discount on the Contracts which is
included in a REMIC's income may exceed its deduction with respect to the
distributions on those Regular Certificates. When there is more than one
class of Regular Certificates that receive payments sequentially (i.e., a
fast-pay, slow-pay structure), this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
Regular Certificates, when distributions are being made in respect of earlier
classes of Regular Certificates to the extent that such classes are not
issued with substantial discount. If taxable income attributable to such a
mismatching is realized, in general, losses would be allowed in later years
as distributions on the later classes of Regular Certificates are made.
Taxable income may also be greater in earlier years than in later years as
a result of the fact that interest expense deductions, expressed as a
percentage of the outstanding principal amount of Regular Certificates, may
increase over time as distributions are made on the lower yielding classes
of Regular Certificates, whereas interest income with respect to any given
Contract will remain constant over time as a percentage of the outstanding
principal amount of that loan (assuming it bears interest at a fixed rate).
Consequently, Residual Holders must have sufficient other sources of cash to
pay any federal, state, or local income taxes due as a result of such
mismatching, or such holders must have unrelated deductions against which to
offset such income, subject to the discussion of "excess inclusions" below
under "REMIC Series /__/ Limitations on Offset or Exemption of REMIC Income."
The mismatching of income and deductions described in this paragraph, if
present with respect to a series of Certificates, may have a significant
adverse effect upon the Residual Holder's after-tax rate of return.

The amount of any net loss of a REMIC that may be taken into account by
the Residual Holder is limited to the adjusted basis of the Residual
Certificate as of the close of the quarter (or time of disposition of the
Residual Certificate if earlier), determined without taking into account the
net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
reportable by the Residual Holder and decreased by the amount of loss of the
REMIC reportable by the Residual Holder. A cash distribution from the REMIC
also will reduce such adjusted basis (but not below zero). Any loss that is
disallowed on account of this limitation may be carried over indefinitely by
the Residual Holder for whom such loss was disallowed and may be used by such
Residual Holder only to offset any income generated by the same REMIC.

If a Residual Certificate has a negative value, it is not clear whether
its issue price would be considered to be zero or such negative amount for
purposes of determining the REMIC's basis in its assets. The REMIC
Regulations imply that residual interest cannot have a negative basis or a
negative issue price. However, the preamble to the REMIC Regulations
indicates that, while existing tax rules do not accommodate such concepts,
the Service is considering the tax treatment of these types of residual
interest, including the proper tax treatment of a payment made by the
transferor of such a residual interest to induce the transferee to acquire
that interest. Absent regulations or administrative guidance to the
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contrary, the Company does not intend to treat a class of Residual
Certificates as having a value of less than zero for purposes of determining
the basis of the related REMIC in its assets.

Further, to the extent that the initial adjusted basis of a Residual
Holder(other than an original holder) in the Residual Certificate is greater
than the corresponding portion of the REMIC's basis in the Contracts, the
Residual Holder will not recover a portion of such basis until termination
of the REMIC unless Treasury Regulations yet to be issued provide for
periodic adjustments to the REMIC income otherwise reportable by such holder.

Treatment of Certain Items of REMIC Income and Expense. Generally, a
REMIC's deductions for original issue discount will be determined in the same
manner as original issue discount income on Regular Certificates as described
above under "REMIC Series /__/ Original Issue Discount" and "--- Variable
Rate Regular Certificates," without regard to the de minimis rule described
therein.

The REMIC will have market discount income in respect of the Contracts
if, in general, the basis of the REMIC in such Contracts is exceeded by their
unpaid principal balances. The REMIC's basis in such Contracts is generally
the fair market value of the Contracts immediately after the transfer thereof
to the REMIC (which may equal a proportionate part of the aggregate fair
market value of the REMIC Certificates). In respect of the Contracts that
have market discount to which Code Section 1276 applies, the Market discount
income generally should accrue in the manner described above under "REMIC
Series /__/ Market Discount."

Generally, if the basis of a REMIC in the Contracts exceeds the unpaid
principal balances thereof, the REMIC will be considered to have acquired
such Contracts at a premium equal to the amount of such excess. As stated
above, the REMIC's basis in the Contracts is the fair market value of the
Contracts immediately after the transfer thereof to the REMIC. Generally,
a person that holds a Contract as a capital asset may elect to amortize
premium on the Contracts under a constant interest method. See the
discussion under "REMIC Series /__/ Amortizable Premium."

Limitations on Offset or Exemption of REMIC Income. If the aggregate
value of the Residual Certificates relative to the aggregate value of the
Regular Certificates and Residual Certificates is considered to be
"significant," as described below, then a portion (but not all) of the REMIC
taxable income included in determining the federal income tax liability of
a Residual Holder will be subject to special treatment. That portion,
referred to as the "excess inclusion," is equal to the excess of REMIC
taxable income for the calendar quarter allocable to a Residual Certificate
over the daily accruals for such quarterly period of (i) 120% of the long-
term applicable Federal rate that would have applied to the Residual
Certificate (if it were a debt instrument) on the Startup Day under Section
1274(d) of the Code, multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning
of a quarter is the issue price of the Residual Certificate, plus the amount
of such daily accruals of REMIC income described in this paragraph for all
prior quarters decreased by any distributions made with respect to such
Residual Certificate prior to the beginning of such quarterly period. The
value of the Residual Certificates would be significant in cases where the
aggregate issue price of the Residual Certificates is at least 2% of the
aggregate issue price of the Regular Certificates and Residual Certificates,
and the anticipated weighted average life of the Residual Certificates is at
least 20% of the anticipated weighted average life of the REMIC.

The portion of a Residual Holder's REMIC taxable income consisting of
the excess inclusions generally may not be offset by other deductions on such
Residual Holder's tax return, including net operating loss carry forwards.
Further, if the Residual Holder is an organization subject to the tax on
unrelated business income imposed by Section 511 of the Code, the Residual
Holder's excess inclusions will be treated an unrelated business taxable
income of such Residual Holder for purposes of Section 511.
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Finally, if a real estate investment trust or regulated investment company
owns a Residual Certificate, a portion (allocated under Treasury Regulations
yet to be issued) of dividends paid by such real estate investment trust or
regulated investment company could not be offset by net operating losses of
its shareholders, would constitute unrelated business taxable income for tax-
exempt shareholders, and would be ineligible for reduction of withholding to
certain persons who are not U.S. persons.

An exception to the inability of a Residual Holder to offset excess
inclusions with unrelated deductions and net operating losses applies to
certain financial institutions described in Section 593 of the Code ("thrift
institutions"). For purposes of applying this rule, all members of an
affiliated group filing a consolidated return are treated as one taxpayer,
except the thrift institutions to which Section 593 applies and each of their
subsidiaries formed to issue REMICs are treated as separate corporations.
Furthermore, the Code provides that regulations may be issued to disallow the
ability of a thrift institution to use deductions to offset excess inclusions
if necessary or appropriate to prevent the avoidance of tax. A thrift
institution may not so offset its excess inclusions unless the Residual
Certificates have "significant value," which requires that (i) the Residual
Certificates have an issue price that is at least equal to 2% of the
aggregate of the issue prices of all Residual Certificates and Regular
Certificate with respect to the REMIC, and (ii)the anticipated weighted
average life of the Residual Certificates is a least 20% of the anticipated
weighted average life of the REMIC. The anticipated weighted average life
of the Residual Certificates is based on all anticipated payments to be
received with respect thereto (using the Prepayment Assumption). The
anticipated weighted average life of the REMIC is the weighted average of the
anticipated weighted average lives of all classes of Certificates in the
REMIC (computed using all anticipated payments on a Regular Certificate with
nominal or no principal). Finally, an ordering rule under the REMIC
Regulations provides that a thrift institution may only offset its excess
inclusion income with deductions after it has first applied its deductions
against income that is not excess inclusion income. If applicable, the
Prospectus Supplement with respect to the series will set forth whether the
Residual Certificates are expected to have "significant value."

Restrictions on Transfer of Residual Certificates. As described above
under "REMIC Series /__/ Qualification as a REMIC," an interest in a Residual
Certificate may not be transferred to a Disqualified Organization. If any
legal or beneficial interest in a Residual Certificate is, nonetheless,
transferred to a Disqualified Organization, a tax would be imposed in an
amount equal to the product of (i) the present value of the total anticipated
excess inclusions with respect to such Residual Certificate for periods after
the transfer, and (ii) the highest marginal federal income tax rate
applicable to corporations. The anticipated excess inclusions are based on
actual prepayment experience to the date of the transfer and projected
payments based on the Prepayment Assumption. The present value rate equals
the applicable federal rate under Section 1274(d) of the Code as of the date
of the transfer for a term ending on the close of the last quarter in which
excess inclusions are expected to accrue. Such rate is applied to the
anticipated excess inclusions from the end of the remaining calendar quarters
in which they arise to the date of the transfer. Such a tax generally would
be imposed on the transferor of the Residual Certificate, except that where
such transfer is through an agent (including a broker, nominee, or other
middleman) for a Disqualified Organization, the tax would instead by imposed
on such agent. However, a transferor of a Residual Certificate would in no
event be liable for such tax with respect to a transfer if the transferee
furnishes to the transferor an affidavit, under penalties of perjury, that
the transferee is not a Disqualified Organization and, as of the time of the
transfer, the transferor does not have the actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department
if the Disqualified Organization promptly disposes of the residual interest
and the transferor pays such amount of tax as the Treasury Department may
require (presumably, a corporate tax on the excess inclusion for the period
the residual interest is actually held by the Disqualified Organization).

In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest
in such entity, then a tax is imposed on such entity equal to the product of
(i) the
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amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest
is held by such Disqualified Organization, and (ii) the highest marginal
federal income tax rate imposed on corporations. Such tax would be
deductible from the ordinary gross income of the Pass-Through Entity during
the period such interest is held by such Disqualified Organization, and
(iii) the highest marginal federal income tax rate imposed on corporations.
Such tax would be deductible from the ordinary gross income of the Pass-
Through Entity for the taxable year. The Pass-Through Entity would not be
liable for such tax if it has received an affidavit from such record holder
that it is not a Disqualified Organization and, during the period such person
is the record holder of the Residual Certificate, the Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization and, during the
period such person is the record holder of the Residual Certificate, the
Pass-Through Entity does not have actual knowledge that such affidavit is
false.

For these purposes, a "Pass-Through Entity" means any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust or estate and certain corporations operating on a
cooperative basis. Except as may be provided in Treasury Regulations, any
person holding an interest in a Pass-Through Entity as a nominee for another
will, with respect to such interest, be treated as a Pass-Through Entity.

Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor
would continue to be treated as the owner of the Residual Certificates and
thus would continue to be subject to tax on its allocable portion of the net
income of the REMIC. Under the REMIC Regulations, a transfer of a
"noneconomic residual interest" (as defined below) to a Residual Holder is
disregarded for all federal income tax purposed if a significant purpose of
the transfer is to enable the transferor to impede the assessment or
collection of tax. A residual interest in a REMIC (including a residual
interest with a positive value at issuance) is a "noneconomic residual
interest" unless, at the time of transfer, (i) the present value of the
expected future distributions on the residual interest at least equals the
product of the present value of the anticipated excess inclusions and the
highest corporate income tax rate in effect for the year in which the
transfer occurs, and (ii) the transferor reasonably expects that the
transferee will receive distributions from the REMIC at or after the time at
which taxes accrue on the anticipated excess inclusions in an amount
sufficient to satisfy the accrued taxes. The anticipated excess inclusions
and the present value rate are determined in the same manner as set forth
above. The REMIC Regulations explain that a significant purpose to impede
the assessment or collection of tax exists if the transferor, at the time of
the transfer, either knew or should have known that the transferee would be
unwilling or unable to pay taxes due on its share of the taxable income of
the REMIC. A safe harbor is provided if (i) the transferor conducted, at the
time of the transfer, a reasonable investigation of the financial condition
of the transferee and found at the time of the transferor that it understands
that, as the holder of a non-economic residual transferee represents to the
transferor that it understands that, as the holder of a non-economic residual
interest, the transferee may incur tax liabilities in excess of any cash
flows generated by the interest and that the transferee intends to pay taxes
associated with holding the residual interest as they become due. The Pool-
ing and Servicing Agreement with respect to each series of REMIC Certificates
will require the transferee of a Residual Certificate to certify to the
statements in clause (ii) of the preceding sentence as part of the affidavit
described above under "Restrictions on Transfer of Residual Certificates."

Mark-to-Market Rules. On December 28, 1993, the Service released
temporary regulations (the "Temporary Mark-to-Market Regulations") relating
to the requirement that a securities dealer mark to market securities held
for sale to customers. This mark-to-market requirement applies to all
securities owned by a dealer, except to the extent that the dealer has
specifically identified a security as held for investment. The Temporary
Mark-to-Market Regulations provide that, for purposes of this mark-to-market
requirement, a "negative value" REMIC Residual Certificate is not treated as
a security, and thus may not be marked to market. In general, a REMIC
Residual Certificate has negative value if, as of the
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date a taxpayer acquires the REMIC Residual Certificate, the present value
of the tax liabilities associated with holding the REMIC Residual Certificate
exceeds the sum of (i) the present value of the expected future distributions
on the REMIC Residual Certificate, and (ii) the present value of the
anticipated tax savings associated with holding the REMIC Residual
Certificate as the REMIC generates losses. The amounts and present values
of the anticipated tax liabilities, expected future distributions and
anticipated tax savings are all to be determined using (i) the prepayment and
reinvestment assumptions adopted under Section 1272(a)(6) of the Code, or
that would have been adopted had the REMIC's regular interests been issued
with original issue discount, (ii) any required or permitted clean-up calls,
or required qualified liquidation, provided for in the REMIC's organizational
documents, and (iii) a discount rate equal to the "applicable Federal rate"
(as specified in Section 1274(d)(1) of the Code) that would apply to a debt
instrument issued on the date of acquisition of the REMIC Residual
Certificate. The Temporary Mark-to-Market Regulations apply to taxable years
ending on or after December 31, 1993. Furthermore, the Temporary Mark-to-
Market Regulations provide the Service with the authority to treat any REMIC
Residual Certificate having substantially the same economic effect as a
"negative value" residual interest. In addition, the Service recently
released proposed regulations (the "Proposed Mark-to-Market Regulations")
which provide that a REMIC Residual Certificate acquired after January 3,
1995 cannot be marked-to-market. The Proposed Mark-to-Market Regulations
change the Temporary Mark-to-Market Regulations which, as noted above, permit
a REMIC Residual Certificate to be marked-to-market provided that it was not
a "negative value" residual interest and did not have the same economic
effect as a "negative value" residual interest. In addition, the Service
could issue subsequent regulations which could apply retroactively, providing
additional or different requirements with respect to such deemed negative
value residual interests. Any such regulations could also limit the
applicability of the mark-to-market requirements to residual interests having
economic value at the time of their acquisition. Prospective purchasers of
a REMIC Residual Certificate should consult their tax advisors regarding the
possible application of the Temporary Mark-to-Market Regulations and Proposed
Mark-to-Market Regulations to REMIC Residual Certificates.

Sale or Exchange of a Residual Certificate. Upon the sale or exchange
of a Residual Certificate, the Residual Holder will recognize gain or loss
equal to the excess, if any, of the amount realized over the adjusted basis
as described above of such Residual Holder in such Residual Certificate at
the time of the sale or exchange. In addition to reporting the taxable
income of the REMIC, a Residual Holder will have taxable income to the extent
that any cash distribution to him from the REMIC exceeds such adjusted basis
on that Distribution Date. Such income will be treated as gain from the sale
or exchange of the Residual Certificate. It is possible that the termination
of the REMIC may be treated as a sale or exchange of a Residual Holder's
Residual Certificate, in which case, if the Residual Holder has and adjusted
basis in his Residual Certificate remaining when his interest in the REMIC
terminates, and if he holds such Residual Certificate as a capital asset,
then he will recognize a capital loss at that time in the amount of such
remaining adjusted basis.

The Conference Committee Report to the Tax Reform Act of 1986 provides
that, except as provided in Treasury Regulations, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six
months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Code Section 1091) any
residual interest in any REMIC or any interest in a "taxable mortgage pool"
(such as a non-REMIC owner trust) that is economically comparable to a
Residual Certificate.

Certain Other Taxes on the REMIC. The REMIC provisions of the Code
impose a 100% tax on any net income derived by a REMIC from certain
prohibited transactions. Such transactions are: (i) any disposition of a
qualified mortgage, other than pursuant to the substitution of a qualified
replacement mortgage for a qualified mortgage (or the repurchase in lieu of
substitution of a defective obligation), a disposition incident to the
foreclosure, default, or imminent default of a mortgage, the bankruptcy or
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insolvency of the REMIC, or a qualified liquidation of the REMIC; (ii) the
receipt of income from assets other than qualified mortgages and permitted
investments; (iii) the receipt of compensation for services; and (iv) the
receipt of gain from the dispositions of cash flow investments. The REMIC
Regulations provide that the modification of the terms of a Contract
occasioned by default or a reasonably foreseeable default of the Contract,
the assumption of the Contract, the waiver of a due-on-sale clause or the
conversion of an interest rate by an Obligor pursuant to the terms of a
convertible adjustable-rate Contract will not be treated as a disposition of
the Contract. In the event that a REMIC holds Convertible ARM Loans which
are convertible at the option of the Obligor into fixed-rate, fully
amortizing, level payment Contracts, a sale of such Contracts by the REMIC
pursuant to a purchase agreement or other contract with the Company or other
party, if and when the Obligor elects to so convert the terms of the
Contract, is not expected to result in a prohibited transaction for the
REMIC. The Code also imposes a 100% tax on contributions to a REMIC made
after the Startup Day, unless such contributions are payments made to
facilitate a cleanup call or a qualified liquidation of the REMIC, payments
in the nature of a guaranty, contributions during the three-month period
beginning on the Startup Day or contributions to a qualified reserve fund of
the REMIC by a holder of a residual interest in the foreclosure property that
the REMIC derives at the highest corporate rate on certain net income from
foreclosure property that the REMIC derives from the management, sale, or
disposition of any real property, or any personal property incident thereto,
acquired by the REMIC in connection with the default or imminent default of
a loan. Generally, it is not anticipated that a REMIC will generate a
significant amount of such income.

Liquidation of the REMIC. A REMIC may liquidate without the imposition
of entity-level tax only in a "qualified liquidation." A liquidation is
considered qualified if a REMIC adopts a plan of complete liquidation (which
may be accomplished by designating in the REMIC's final tax return a date on
which such adoption is deemed to occur) and sells all of its assets (other
than cash) within the ninety-day period beginning on the date of the adoption
of the plan of liquidation, provided that it distributes to holders of
Regular or Residual Certificates, on or before the last day of the ninety-day
liquidation period, all the proceeds of the liquidation (including all cash),
less amounts retained to meet claims.

Taxation of Certain Foreign Investors. For purposes of this discussion,
a "Foreign Holder" is a Certificateholder who holds a Regular Certificate and
who is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership, or other entity organized in or under the laws of
the United States or a political subdivision thereof or (iii) an estate or
trust the income of which is included in gross income for United States tax
purposes regardless of its source. Unless the interest on a Regular
Certificate is effectively connected with the conduct by the Foreign Holder
of a trade or business within the United States, the Foreign Holder is not
subject to federal income or withholding tax on interest (or original issue
discount, if any) on a Regular Certificate (subject to possible backup
withholding of tax, discussed below), provided the Foreign Holder is not a
controlled foreign corporation related to the Company and does not own
actually or constructively 10% or more of the voting stock of the Company.
To qualify for this tax exemption, the Foreign Holder will be required to
provide periodically a statement signed under penalties of perjury certifying
that the Foreign Holder meets the requirements for treatment as a Foreign
Holder and providing the Foreign Holder's name and address. The statement,
which may be made on a Form W-8 or substantially similar substitute form,
generally must be provided in the year a payment occurs or it either of the
two preceding years. The intermediaries, to the person that otherwise would
withhold tax. This exemption may not apply to a Foreign Holder that owns
both Regular Certificates and Residual Certificates. If the interest on a
Regular Certificate is effectively connected with the conduct by a Foreign
Holder of a trade or business within the United States, then the Foreign
Holder will be subject to tax at regular graduated rates. Foreign Holders
should consult their own advisors regarding the specific tax consequences of
their owning a Regular Certificate.

Any gain recognized by a Foreign Holder upon a sale, retirement or other
taxable disposition of a Regular Certificate generally will not be subject
to United States federal income tax unless either (i) the Foreign Holder is
a non-resident alien individual who holds the Regular Certificate as a
capital asset
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and who is present in the United States for 183 days or more in the taxable
year of the disposition and either the gain is attributable to an office or
other fixed place of business maintained in the U.S. by the individual or
the individual has a "tax home" in the United States, or (ii) the gain is
effectively connected with the conduct by the Foreign Holder of a trade or
business within the United States.

A Regular Certificate will not be included in the estate of a Foreign
Holder who does not own actually or constructively 10% or more of the voting
stock of the Company.

Backup Withholding. Under certain circumstances, a REMIC
Certificateholder may be subject to "backup withholding" at a 31% rate.
Backup withholding may apply to a REMIC Certificateholder who is a United
States person if the holder, among other circumstances, fails to furnish his
Social Security number or other taxpayer identification number to the
Trustee. Backup withholding may apply, under certain circumstances, to a
REMIC Certificateholder who is a foreign person if the REMIC
Certificateholder fails to provide the Trustee or the REMIC
Certificateholder's securities broker with the statement necessary to
establish the exemption from federal income and withholding tax on interest
on the REMIC Certificates. Backup withholding, however, does not apply to
payments on a Certificate made to certain exempt recipients, such as
corporations and tax-exempt organizations, and to certain foreign persons.
REMIC Certificateholders should consult their tax advisors for additional
information concerning the potential application of backup withholding to
payments received by them with respect to a Certificate.

Reporting Requirements and Tax Administration. The Company will report
annually to the Service, holders of record of the Regular Certificates that
are not excepted from the reporting requirements and, to the extent required
by the Code, other interested parties, information with respect to the
interest paid or accrued on the Regular Certificates, original issue
discount, if any, accruing on the Regular Certificates and information
necessary to compute the accrual of any market discount or the amortization
of any premium on the Regular Certificates.

The Treasury Department has issued temporary regulations concerning
certain aspects of REMIC tax administration. Under those regulations, a
Residual Certificateholder must be designated as the REMICs "tax matters
person." The tax matters person, generally, has responsibility for overseeing
and providing notice to the other Residual Certificateholders of certain
administrative and judicial proceedings regarding the REMIC's tax affairs.
The Company will be designated as tax matters person for each REMIC, and in
conjunction with the Trustee will act as the agent of the Residual
Certificateholders in the preparation and filing of the REMIC's federal and
state income tax and other information returns.

NON-REMIC SERIES

Tax Status of the Trust Fund. In the case of a Trust Fund evidenced by
a series or sub-series of Certificates, or a segregated portion thereof, with
respect to which a REMIC Election is not made ("Non-REMIC Certificates"),
Brown & Wood LLP, special tax counsel to the Company, will have advised the
Company that, in their opinion, each Contract Pool and the arrangement to be
administered by the Company under which the Trustee will hold and the Company
will be obligated to service the Contracts and pursuant to which Non-REMIC
Certificates will be issued to Non-REMIC Certificateholders will not be
classified as an association taxable as a corporation or a "taxable mortgage
pool," within the meaning of Code Section 7701(i), but rather will be
classified as a grantor trust under Subpart E, Part 1 of Subchapter J of the
Code. Each Non-REMIC Certificateholder will be treated as the owner of a pro
rata undivided interest in the ordinary income and corpus portions of the
trust attributable to the Contract Pool in which its Certificate evidences
an ownership interest and will be considered the equitable owner of a pro
rata undivided interest in each of the Contracts included therein.

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Tax Status of Non-REMIC Certificates. In general, (i) Certificates held
by a financial institution taxed as described in Section 593(a) of the Code
may represent interests in "qualifying real property loans" within the
meaning of Section 593(d) of the Code; (ii) Certificates held by a "domestic
building and loan association" within the meaning of Section 7701(a)(19) of
the Code may be considered to represent "qualifying real property loans"
within the meaning of Section 7701(a)(19)(C)(v) of the Code; and
(iii) Certificates held by a real estate investment trust may constitute
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code
and interest thereon may be considered "interest on obligations secured by
mortgages on real property" within the meaning of Section 856(c)(3)(B) of the
Code. See the discussions of such Code provisions above under "REMIC Series
Tax Status of REMIC Certificates." Investors should review the related
Prospectus Supplement for a discussion of the treatment of Non-REMIC
Certificates and Contracts under these Code sections and should, in addition,
consult with their own tax advisors with respect to these matters.

Tax Treatment of Non-REMIC Certificates. Non-REMIC Certificateholders
will be required to report on their federal income tax returns, and in a
manner consistent with their respective methods of accounting, their pro rata
share of the entire income arising from the Contracts comprising such
Contract Pool, including interest, original issue discount, if any,
prepayment fees, assumption fees, and late payments charges received by the
Company, and any gain upon disposition of such Contracts. (For purposes of
this discussion, the term "disposition," when used with respect to the
Contracts, includes scheduled or prepaid collections with respect to the
Contracts, as well as the sale or exchange of a Non-REMIC Certificate.) Non-
REMIC Certificateholders will be entitled under Section 162 or 212 of the
Code to deduct their pro rata share of related servicing fees, administrative
and other non-interest expenses, including assumption fees and late payment
charges retained by the Company. An individual, an estate, or a trust that
holds a Non-REMIC Certificate either directly or through a pass-through
entity will be allowed to deduct such expenses under Section 212 of the Code
only to the extent that, in the Aggregate and combined with certain other
itemized deductions, they exceed 2% of the adjusted gross income of the
holder. In addition, Section 68 of the Code provides that the amount of
itemized deductions (including those provided for in Section 212 of the Code)
otherwise allowable for the taxable year for an individual whose adjusted
gross income exceeds a threshold amount specified in the Code ($100,000 in
the case of a joint return) will be reduced by the lesser of (i) 3% of the
excess of adjusted gross income over the specified threshold amount or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
taxable year. To the extent that a Non-REMIC Certificateholder is not
permitted to deduct servicing fees allocable to a Non-REMIC Certificate, the
taxable income of the Non-REMIC Certificateholder attributable to that Non-
REMIC Certificate will exceed the net cash distributions related to such
income. Non-REMIC Certificateholders may deduct any loss on disposition of
the Contracts to the extent permitted under the Code.

Under current Service interpretations of applicable Treasury Regulations
the Company would be able to sell or otherwise dispose of any subordinated
Non-REMIC Certificates. Accordingly, the Company expects to offer
subordinated Non-REMIC Certificates for sale to investors. In general, such
subordination should not affect the federal income tax treatment of either
the subordinated or senior Certificates. Holders of subordinated classes of
Certificates should be able to recognize any losses allocated to such class
when and if losses are realized.

To the extent that any of the Contracts comprising a Contract Pool were
originated on or after March 2, 1984 and under circumstances giving rise to
original issue discount, Certificateholders will be required to report
annually an amount of additional interest income attributable to such
discount in such Contracts prior to receipt of cash related to such discount.

See the discussion above under "REMIC Series /__/ Original Issue Discount."
Similarly, Code provisions concerning market discount and amortizable premium
will apply to the Contracts comprising a Contract Pool to the extent that the
loans were originated after July 18, 1984 and September 27, 1985,
respectively. See the discussions above under "REMIC Series /__/ Market
Discount" and "REMIC Series /__/ Amortizable Premium."

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Stripped Non-REMIC Certificates. Certain classes of Non-REMIC
Certificates may be subject to the stripped bond rules of Section 1286 of the
Code and for purposes of this discussion will be referred to as "Stripped
Certificates." In general, a Stripped Certificate will be subject to the
stripped bond rules where there has been a separation of ownership of the
right to receive some or all of the principal payments on a Contract from
ownership of the right to receive some or all of the related interest
payments. Non-REMIC Certificates will constitute Stripped Certificates and
will be subject to these rules under various circumstances, including the
following: (i) if any servicing compensation is deemed to exceed a reasonable
amount; (ii) if the Company or any other party retains a Retained Yield with
respect to the Contracts comprising a Contract Pool; (iii) if two or more
classes of Non-REMIC Certificates are issued representing the right to non-
pro rata percentages of the interest or principal payments on the Contracts;
or (iv) if Non-REMIC Certificates are issued which represent the right to
interest only payments or principal only payments.

Although not entirely clear, each Stripped Certificate should be
considered to be a single debt instrument issued on the day it is purchased
for purposes of calculating any original issue discount. Original issue
discount with respect to a Stripped Certificate, if any, must be included in
ordinary gross income for federal income tax purposes as it accrues in
accordance with the constant-yield method that takes into account the
compounding of interest and such accrual of income may be in advance of the
receipt of any cash attributable to such income. See "REMIC Series /__/
Original Issue Discount" above. For purposes of applying the original issue
discount provisions of the Code, the issue price of a Stripped Certificate
will be the purchase price paid by each holder thereof and the stated
redemption price at maturity may include the aggregate amount of all payments
to be made with respect to the Stripped Certificate whether or not
denominated as interest. The amount of original issue discount with respect
to a Stripped Certificate may be treated as zero under the original issue
discount de minimis rules described above. A purchaser of a Stripped
Certificate will be required to account for any discount on the certificate
as market discount rather than original issue discount if either (i) the
amount of original issue discount with respect to the certificate was treated
as zero under the original issue discount de minimis rule when the
certificate was stripped or (ii) no more than 100 basis points (including any
amount of servicing in excess of reasonable servicing) is stripped off of the
Contracts. See "REMIC Series /__/ Market Discount" above.

When an investor purchases more than one class of Stripped Certificates
it is currently unclear whether for federal income tax purposes such classes
of Stripped Certificates should be treated separately or aggregated for
purposes of applying the original issue discount rules described above.

It is possible that the Service may take a contrary position with
respect to some or all of the foregoing tax consequences. For example, a
holder of a Stripped Certificate may be treated as the owner of (i) as many
stripped bonds or stripped coupons as there are scheduled payments of
principal and/or interest on each Contract or (ii) a separate installment
obligation for each Contract representing the Stripped Certificate's pro rata
share of price; and/or interest payments to be made with respect thereto.
As a result of these possible alternative characterizations, investors should
consult their own tax advisors regarding the proper treatment of Stripped
Certificates for federal income tax purposes.

Gain or Loss on Disposition. Upon sale or exchange of a Non-REMIC
Certificate, a Non-REMIC Certificateholder will recognize gain or loss equal
to the difference between the amount realized in the sale and its aggregate
adjusted basis in the Contracts represented by the Non-REMIC Certificate.
Generally, the aggregate adjusted basis will equal the Non-REMIC
Certificateholder's cost for the Non-REMIC Certificate increased by the
amount of any previously reported gain with respect to the Non-REMIC
Certificate and decreased by the amount of any losses previously reported
with respect to the Non-REMIC Certificate and the amount of any distributions
received thereon. Except as provided above
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with respect to the original issue discount and market discount rules, any
such gain or loss would be capital gain or loss if the Non-REMIC Certificate
was held as a capital asset.

Recharacterization of Servicing Fees. The servicing compensation to be
received by the Servicer may be questioned by the Service with respect to
certain Certificates or Contracts as exceeding a reasonable fee for the
services being performed in exchange therefor, and a portion of such
servicing compensation could be recharacterized as an ownership interest
retained by the Servicer or other party in a portion of the interest payments
to be made pursuant to the Contracts. In this event, a Certificate might be
treated as a Stripped Certificate subject to the stripped bond rules of
Section 1286 of the Code and the original issue discount provisions rather
than to the market discount and premium rules. See the discussion above
under "Non-REMIC Series /__/ Stripped Non-REMIC Certificates."

Tax Treatment of Certain Foreign Investors. Generally, interest or
original issue discount paid to or accruing for the benefit of a Non-REMIC
Certificateholder who is a Foreign Holder (as defined in "REMIC Series /__/
Taxation of Certain Foreign Investors") will be treated as "portfolio
interest" and therefore will be exempt from the 30% withholding tax. Such
Non-REMIC Certificateholder will be entitled to receive interest payments and
original issue discount on the Non-REMIC Certificates free of United States
federal income tax, but only to the extent the Contracts were originated
after July 18, 1984 and provided that such Non-REMIC Certificateholder
periodically provides the Trustee (or other person who would otherwise be
required to withhold tax) with a statement certifying under penalty of
perjury that such Non-REMIC Certificateholder is not a United States person
and providing the name and address of such Non-REMIC Certificateholder. For
additional information concerning interest or original issue discount paid
by the Company to a Foreign Holder and the treatment of a sale or exchange
of a Non-REMIC Certificate by a Foreign Holder, which will generally have the
same tax consequences as the sale of a Regular Certificate, see the
discussion above under "REMIC Series /__/ Taxation of Certain Foreign
Investors".

Tax Administration and Reporting. The Company will furnish to each Non-
REMIC Certificateholder with each distribution a statement setting forth the
amount of such distribution allocable to principal and to interest. In
addition, the Company will furnish, within a reasonable time after the end
of each calendar year, to each Non-REMIC Certificateholder who was a
Certificateholder at any time during such year, information regarding the
amount of servicing compensation received by the Company and any sub-servicer
and such other customary factual information as the Company deems necessary
or desirable to enable Certificateholders to prepare their tax returns.
Reports will be made annually to the Service and to holders of record that
are not expected from the reporting requirements regarding information as may
be required with respect to interest and original issue discount, if any,
with respect to the Non-REMIC Certificates.

STATE AND LOCAL TAX CONSIDERATIONS

No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax effect
of ownership of Certificates in any state or locality. Certificateholders
are advised to consult their own tax advisors with respect to any state or
local income, franchise, personal property, or other tax consequences arising
out of their ownership of Certificates.

LEGAL INVESTMENT CONSIDERATIONS

Unless otherwise specified in the applicable Prospectus Supplement, any
Certificates offered hereby that are rated in one of the two highest rating
categories by at least one nationally recognized
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statistical rating organization 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 as, under applicable law, obligations issued
by or guaranteed as to principal and interest by the United States or any
such entities. Under SMMEA, certain states have created legislation
specifically limiting the legal investment authority of any such entities
with respect to "mortgage related securities," in which case such
Certificates will constitute legal investments for entities subject to such
legislation only to the extent provided therein. 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
Certificates, or require the sale or other disposition of Certificates, so
long as such contractual commitment was made or such Certificates were
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 in Certificates
without limitation as to the percentage of their assets represented thereby;
federal credit unions may invest in Certificates; and national banks may
purchase Certificates for their own account without regard to the limitations
generally applicable to investment securities set forth in 12 U.S.C. 24
(Seventh), subject in each case to such regulations as the applicable federal
regulatory authority may prescribe.

Some Classes of Certificates offered hereby may not be rated in one of
the two highest rating categories, or may not otherwise satisfy the
requirements of SMMEA, and thus would not constitute "mortgage related
securities" for purposes of SMMEA.

The Federal Financial Institutions Examination Council, The Federal
Deposit Insurance Corporation, the Office of Thrift Supervision, the Office
of the Comptroller of the Currency and the National Credit Union
Administration have proposed or adopted guidelines regarding investment in
various types of mortgage-backed securities. In addition, certain state
regulators have taken positions that may prohibit regulated institutions
subject to their jurisdiction from holding securities representing residual
interest, including securities previously purchased. There may be other
restrictions on the ability of certain investors, including depository
institutions, either to purchase Certificates or to purchase Certificates
representing more than a specified percentage of the investor's assets.
Investors should consult their own legal advisors in determining whether and
to what extent the Certificates constitute legal investments for such
investors.

RATINGS

It is a condition precedent to the issuance of any Class of Certificates
sold under this Prospectus that they be rated by at least one nationally
recognized statistical rating organization in one of its four highest rating
categories (within which there may be sub-categories or gradations indicating
relative standing). A security rating is not a recommendation to buy, sell
or hold securities and may be subject to revision or withdrawal at any time
by the assigning rating agency. The security rating of any Series of
Certificates should be evaluated independently of similar security ratings
assigned to other kinds of securities.

Ratings of the Certificates address the likelihood of the ultimate
receipt of all distributions on the contracts by the related
certificateholders under the agreements pursuant to which such certificates
are issued. The ratings take into consideration the credit quality of the
related contract pool, including any credit support providers, structural and
legal aspects associated with such certificates, and the extent to
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which payment stream on such contract pool is adequate to make payments
required by such certificates. The ratings on such certificates do not,
however, constitute a statement regarding frequency of prepayments on the
related contracts.

UNDERWRITING

The Company may sell Certificates of each Series to or through
underwriters (the "Underwriters") by a negotiated firm commitment
underwriting and public reoffering by the Underwriters, and also may sell and
place Certificates directly to other purchasers or through agents. The
Company intends that Certificates will be offered through such various
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular Series of
Certificates may be made through a combination of such methods.

The distribution of the Certificates may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.

In connection with the sale of the Certificates, Underwriters may
receive compensation from the Company or from purchasers of Certificates for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell the Certificates of a Series to or
through dealers and such dealers may receive compensation in the form of
discounts, concessions or commissions from the Underwriters and/or
commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of the
Certificates of a Series may be deemed to be Underwriters, and any discounts
or commissions received by them from the Company and any profit on the resale
of the Certificates by them may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933, as amended (the "Act"). Any
such Underwriters or agents will be identified, and any such compensation
received from the Company will be described, in the Prospectus Supplement.

Under agreements which may be entered into by the Company, Underwriters
and agents who participate in the distribution of the Certificates may be
entitled to indemnification by the Company against certain liabilities,
concluding liabilities under the Act.

The Company may authorize Underwriters or other persons acting as the
Company's agents to solicit offers by certain institutions to purchase the
Certificates from the Company pursuant to contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational charitable institutions and others,
but in all cases such institutions must be approved by the Company. The
obligation of any purchaser under any such contract will be subject to the
condition that the purchaser of the offered Certificates shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject from purchasing such Certificates. The
Underwriters and such other agents will not have responsibility in respect
of the validity or performance of such contracts.

The Underwriters may, from time to time, buy and sell Certificates, but
there can be no assurance that an active secondary market will develop and
there is no assurance that any such market, if established, will continue.

Certain of the Underwriters and their associates may engage in
transactions with and perform services for the Company in the ordinary course
of business.

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LEGAL MATTERS

The validity of the Certificates will be passed upon for the Company by
Boult, Cummings, Conners & Berry, PLC. The material federal income tax
consequences of the Certificates will be passed upon for the Company by Brown
& Wood LLP, New York, New York.

EXPERTS

The consolidated financial statements of CHI as of June 30, 1994 and
1995 and for each of the three years in the period ended June 30, 1995,
incorporated by reference herein, have been incorporated herein in reliance
on the report of Coopers & Lybrand, L.L.P., independent accountants, given
on the authority of that firm as experts in accounting and auditing.

GLOSSARY

There follows abbreviated definitions of certain capitalized terms used
in this Prospectus and the Prospectus Supplement. The Agreement may contain
a more complete definition of certain of the terms defined herein and
reference should be made to the Agreement for a more complete definition of
all such terms.

"Accrual Remittance Amount" means, with respect to the Compound Interest
Certificates of a Series of Certificates providing for sequential
distributions in reduction of the Stated Balance of the Classes of such
Series, as any Remittance Date, the amount of interest, calculated at the
Interest Rate, which has accrued on such Compound Interest Certificates from
the prior Remittance Date.

"Advances" means the advances made by a Servicer (including from
advances made by a Sub-servicer) on any Remittance Date pursuant to an
Agreement.

"Agreement" means each Pooling and Servicing Agreement by and among the
Company, the Trustee, the Servicer and any other party specified in the
related Prospectus Supplement.

"APR" means, with respect to any Contract and any time, the per annum
rate of interest then being borne by such Contract, as set forth on the face
thereof.

"Asset Value" means the Asset Value of the Contracts included in a Trust
Fund, determined in the manner set forth in the related Agreement.

"Available Distribution Amount" means, with respect to each Series of
Certificates, certain amounts on deposit in the Certificate Account on a
Determination Date.

"Available Subordination Amount" means, with respect to a Series of
Certificates having a Class of Subordinated Certificates, as of any
Remittance Date, the excess, if any, of the then applicable Maximum
Subordination Amount over the Cumulative Subordination Payments as of the
preceding Remittance Date.

"Certificate Account" means the account maintained by the Servicer or
the Trustee, as specified in the related Prospectus Supplement.

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"Certificate Distribution Amount" means with respect to a Series of
Certificates evidencing an interest in a Contract Pool the amount of interest
(calculated as specified in such Prospectus Supplement) and the amount of
Principal (calculated as specified in such Prospectus Supplement) to be
distributed to Certificateholders on each Remittance Date.

"Certificates" means the Manufactured Housing Contract Pass-Through
Certificates issued pursuant to an Agreement.

"CHI" means Clayton Homes, Inc.

"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.

"Company" means Vanderbilt Mortgage and Finance, Inc.

"Compound Interest Certificates" means Certificates on which interest
may accrue but not be paid for the period described in the related Prospectus
Supplement.

"Contract Pool" means, with respect to each Series of Certificate, the
pool of manufactured housing conditional sales contracts and installment loan
agreements transferred by the Company to the Trustee.

"Contract Rate" means, with respect to each Contract, the interest rate
specified in the Contract.

"Contracts" means manufactured housing installment sales contracts and
installment loan agreements, including any an all rights to receive payments
due thereunder on and after the Cut-off Date and security interest in
Manufactured Homes purchased with the proceeds of such contracts.

"Cumulative Subordination Payments" means, with respect to a Series of
Certificates having a class of Subordinated Certificates, as of any
Remittance Date, the cumulative amount equal to (i) the total of all amounts
distributed to the Senior Certificateholders, exclusive of Advances made by
the Servicer and the Initial Deposit to the Reserve Fund, up to and including
such Remittance Date minus (ii) the Senior Percentage times the Available
Distribution Amount for all Remittance Dates up to and including such
Remittance Date.

"Cut-off Date" means the date specified in the related Prospectus
Supplement as the date from which principal and interest payments on the
Contracts are included in the Trust Fund.

"Determination Date" means, unless otherwise specified in the related
Prospectus Supplement, the third Business Day immediately preceding the
related Remittance Date.

"Due Period" means, unless otherwise provided in a related Prospectus
Supplement, with respect to any Remittance Date, the period beginning on the
26th day of the second month preceding the month of the Remittance Date and
ending on the 25th day of the month preceding the month of the Remittance
Date.

"Eligible Investments" means one or more of the investments specified
in the Agreement in which moneys in the Certificate Account and certain other
accounts are permitted to be invested.

"Excess Interest or Excess Interest Rate" means, with respect to any
Contract, the per annum percentage of the principal balance from time to time
outstanding, which may be retained by the
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Company or the Servicer or allocated to a designated Class of Certificates,
as specified in the related Prospectus Supplement.

"FDIC" means the Federal Deposit Insurance Corporation.

"FHA" means the Federal Housing Administration.

"Final Scheduled Remittance Date" means, with respect to a Series of
Certificates providing for sequential distributions in reduction of the
Stated Balance of the Classes of each Series, the date, based on the
assumptions set forth in the related Prospectus Supplement, on which the
Stated Balance of all Certificates of each Class shall have been reduced to
zero.

"HUD" means the United States Department of Housing and Urban
Development.

"Initial Deposit" means, with respect to a Series of Certificates, the
amount, if any, deposited into the Reserve Fund on the date of the initial
issuance of the Certificates.

"Interest Rate" means, with respect to a Series of Certificates
providing for sequential distributions in reduction of the Stated Balance of
the Classes of such Series, the interest payable on the Principal Balance
outstanding of each such Class.

"Liquidation Proceeds" means cash (including insurance proceeds)
received in connection with the repossession of a Manufactured Home.

"Loan-to-Value Ratio" means the loan-to-value ratio at the time of
origination of the Contract.

"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the
related Contract.

"Maximum Subordination Amount" means, with respect to a Series of
Certificate having a Class of Subordinated Certificates, the amount specified
in the related Prospectus Supplement, representing the maximum amount of
Cumulative Subordination Payments which may be required to be made over the
term of the related Agreement.

"Modular Home" means a unit of manufactured housing that does not meet
the requirements of a "manufactured home" under 42 United States Code,
Section 5402(6), and which is further defined in a related Prospectus
Supplement.

"Monthly Payment" means the scheduled monthly payment of principal and
interest on a Contract.

"Obligor" means each person who is indebted under a Contract or who has
acquired a Manufactured Home subject to a Contract.

"Record Date" means the date specified in the related Prospectus
Supplement for the list of Certificateholders entitled to distributions on
the Certificates.

"REMIC" means a "real estate mortgage investment conduit" as defined in
the Code.

"Remittance Date" means the date specified in the related Prospectus
Supplement for payments on the Certificates.

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<PAGE>
"Remittance Rate" means, as to a Certificate, the rate or rates of
interest thereon specified in the related Prospectus Supplement.

"Seller" means, with respect to a Series of Certificates evidencing
interest in Contracts, the Seller specified in the Prospectus Supplement.

"Senior Certificates" means, with respect to each Series of
Certificates, the Class or Classes which have rights senior to another Class
or Classes in such Series.

"Servicer" means, with respect to each Series of Certificates evidencing
interests in Contacts, the Servicer specified in the related Prospectus
Supplement.

"Servicing Fee" means the amount of the annual fee paid to the Servicer
or the Trustee as specified in the related Prospectus Supplement.

"Single Certificate" means, for each Class of Certificates of any
Series, the initial principal amount of Contracts evidenced by a single
Certificate of such Class.

"Stated Balance" means, with respect to a Series of Certificates
providing for sequential distributions in reduction of Stated Balance of the
Classes of such Series, the maximum specified dollars amount (exclusive of
interest at the related Interest Rate) to which the Holder thereof is
entitled from the cash flow of the Trust Fund.

"Subordinated Certificates" means, with respect to each Series of
Certificates, the Class or Classes with rights subordinate to another Class
or Classes of such Series.

"Subordinated Percentage" means, with respect to a Series of
Certificates, the Class or Classes with rights subordinate to another Class
or Classes of such Series.

"Trust Fund" means, with respect to each Series of Certificates, the
corpus of the trust created by the related Agreement, to the extent described
in such Agreement, consisting of, among other things, Contracts, such assets
as shall from time to time be identified as deposited in the Certificate
Account, the Manufactured Home which secured a Contract, insurance, a reserve
fund and other forms of credit enhancement, if any.

"Trustee" means the Trustee for a Series of Certificates specified in
the related Prospectus Supplement.

"VA" means the Veterans' Administration.

"Variable Rate Regular Certificates" means Certificates which evidence
the right to receive distributions of income at a variable Remittance Rate.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE OFFERED CERTIFICATES OFFERED HEREBY, NOR AN OFFER
OF THE OFFERED CERTIFICATES IN ANY STATE OR JURISDICTION IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR ANY PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE; HOWEVER, IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS IS REQUIRED BY LAW TO BE DELIVERED, THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.

TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary of Terms of the Certificates . . . . . . . . . . . . . . . . . S-4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
The Contract Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Vanderbilt Mortgage and Finance, Inc . . . . . . . . . . . . . . . . . S-29
Ratio of Earnings to Fixed Charges for CHI . . . . . . . . . . . . . . S-32
Yield and Prepayment Considerations . . . . . . . . . . . . . . . . . . S-32
Description of the Certificates . . . . . . . . . . . . . . . . . . . . S-41
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
Certain Federal Income Tax
Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . S-54
Legal Investment Considerations . . . . . . . . . . . . . . . . . . . . S-55
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-56
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-57

PROSPECTUS
Reports to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 3
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents
of the Company by Reference . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents
of CHI by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Vanderbilt Mortgage and Finance, Inc. . . . . . . . . . . . . . . . . . . 17
Underwriting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Yield Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Maturity and Prepayment Consideration . . . . . . . . . . . . . . . . . . 20
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . 21
Description of FHA Insurance and VA
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Certain Legal Aspects of the Contracts . . . . . . . . . . . . . . . . . 37
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Certain Federal Income Tax
Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
State and Local Tax Consequences . . . . . . . . . . . . . . . . . . . . 66
Legal Investment Considerations . . . . . . . . . . . . . . . . . . . . . 66
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

$
(APPROXIMATE)

69
<PAGE>
VANDERBILT MORTGAGE
AND FINANCE, INC.

SELLER AND SERVICER

MANUFACTURED HOUSING CONTRACT
SENIOR / SUBORDINATE
PASS-THROUGH CERTIFICATES,
SERIES 1996B

$ ( APPROXIMATE ) CLASS A-1

$ ( APPROXIMATE ) CLASS A-2

$ ( APPROXIMATE ) CLASS A-3

$ ( APPROXIMATE ) CLASS A-4

$ ( APPROXIMATE ) CLASS A-5

$ ( APPROXIMATE ) CLASS A-6

$ ( APPROXIMATE ) CLASS B-1

$ ( APPROXIMATE ) CLASS B-2

PRUDENTIAL SECURITIES INCORPORATED

J.P. MORGAN & CO.

PROSPECTUS SUPPLEMENT
DATED JULY __, 1996