SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 22, 1998
TRUST CREATED BY BLOCK MORTGAGE FINANCE, INC.
Delaware
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(State or other jurisdiction of incorporation)
333-14041 48-1758633
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(Commission File Number) (IRS Employer Identification No.)
One Main Plaza, 4435 Main Street, Suite 500, Kansas City, Missouri 64111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 932-4960
Not applicable
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(Former name or former address, if changed since last report)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
Exhibit 5.1 Opinion of Morrison & Hecker L.L.P. re Legality Relating to
Block Mortgage Finance, Inc. Asset Backed Certificates, Series
1998-2
Exhibit 8.1 Opinion of Brown & Wood L.L.P. re Tax Matters Relating to Block
Mortgage Finance, Inc. Asset Backed Certificates, Series 1998-2
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BLOCK MORTGAGE FINANCE, INC.
By:/s/ Mark Keller
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Name: Mark Keller
Title: Vice President
Date: July 22, 1998
EXHIBIT INDEX
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Exhibit No. Description
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5.1 Opinion of Morrison & Hecker L.L.P. re Legality
Relating to Block Mortgage Finance, Inc. Asset
Backed Certificates, Series 1998-2
8.1 Opinion of Brown & Wood L.L.P. re Tax Matters
Relating to Block Mortgage Finance, Inc. Asset
Backed Certificates, Series 1998-2
Exhibit 5.1
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MORRISON & HECKER L.L.P.
ATTORNEYS AT LAW
2600 Grand Avenue
Kansas City, Missouri 64108-4606
Telephone (816) 691-2600
Telefax (816) 474-4208
July 22, 1998
TO: THE OPINION RECIPIENTS LISTED ON SCHEDULE I ATTACHED HERETO
Re: Block Mortgage Finance Asset Backed Certificates, Series 1998-2
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Ladies and Gentlemen:
We have acted as counsel to H&R Block, Inc. ("HRB"), Block Financial
Corporation ("Block Financial") and Companion Mortgage Corporation
("Companion") in connection with (i) the Pooling and Servicing Agreement dated
as of July 1, 1998 (the "Pooling and Servicing Agreement"), among Block
Mortgage Finance, Inc., as Depositor (the "Depositor"), Companion, as Seller,
Block Financial, as Master Servicer, and The First National Bank of Chicago,
as Trustee (the "Trustee"), relating to the issuance of the Block Mortgage
Finance Asset Backed Certificates, Series 1998-2 Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Certificates
(collectively, the "Class A Certificates," and together with the Class R
Certificates, the "Certificates"), (ii) the Underwriting Agreement dated July
, 1998 (the "Underwriting Agreement"), among the Depositor, Companion,
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Block Financial and Morgan Stanley & Co. Incorporated as representative of the
several underwriters listed therein (collectively, the "Underwriters") and
(iii) the transactions contemplated thereby. This opinion letter is being
furnished to you at the request of Companion and Block Financial pursuant to
Section 6(b) of the Underwriting Agreement. Capitalized terms not otherwise
defined herein that are defined in the Pooling and Servicing Agreement shall
have the same meanings herein as therein.
The opinions expressed herein are given only with respect to the present
status of the General Corporation Law of the State of Delaware, the laws of
the State of Missouri, the laws of the State of New York and the federal law
of the United States. We express no opinion as to any matter arising under the
laws of any other jurisdiction, including, without limitation, the statutes,
ordinances, rules and regulations of counties, towns, municipalities and
special political subdivisions of the State of Missouri, the State of New York
or the State of Delaware.
In reaching the conclusions expressed in this opinion letter, in our
capacity as counsel to Block Financial and Companion, we have examined
originals, or copies certified or otherwise identified to our satisfaction as
being true copies, of those corporate and other records and documents we
considered appropriate, including the following:
(a) the Pooling and Servicing Agreement;
(b) the Underwriting Agreement;
(c) the Insurance Agreement dated as of July 1, 1998 (the "Insurance
Agreement") among MBIA Insurance Corporation, Block Financial,
Companion, the Depositor, and the Trustee;
(d) the Indemnification Agreement dated as of July 22, 1998 (the
Indemnification Agreement") among MBIA Insurance Corporation,
Companion, Block Financial and the Underwriters;
(e) the Subservicing Agreement, dated as of July 1, 1998 (the
"Subservicing Agreement"), between Block Financial and Companion
Servicing Company, L.L.C.;
(f) the Certificate of Incorporation and Bylaws of Block Financial;
(g) corporate resolutions of Block Financial authorizing the
transactions provided for by, or in connection with, the Pooling and
Servicing Agreement, the Underwriting Agreement, the Insurance
Agreement, the Indemnification Agreement and the Subservicing
Agreement;
(h) the Certificate of Incorporation and Bylaws of Companion;
(i) corporate resolutions of Companion authorizing the transactions
provided for by, or in connection with, the Pooling and Servicing
Agreement, the Underwriting Agreement, the Insurance Agreement and
the Indemnification Agreement; and
(j) such other certificates, documents, records and papers as we have
deemed necessary and relevant as a basis for this opinion letter.
The Pooling and Servicing Agreement, the Underwriting Agreement, the
Insurance Agreement, the Indemnification Agreement and the Subservicing
Agreement are sometimes referred to herein collectively as the "Agreements."
As to all factual matters relevant to this opinion letter that have not
been independently established, we have relied upon, among other things, the
factual representations and warranties contained in or incorporated into the
Agreements and certificates and statements of officers and other
representatives of Block Financial and Companion, all of which we have
assumed, without independent investigation, to be true and correct as of the
date hereof. In addition, we have obtained and relied upon those certificates
of public officials we considered appropriate.
In issuing this opinion letter, with your permission, we have assumed,
without independent investigation on our part, that (a) each document
submitted to us as an original is authentic; (b) each document submitted to us
as a certified, conformed or photostatic copy conforms to the authentic
original of such document; (c) all signatures (excluding signatures on behalf
of the Depositor, Block Financial or Companion) appearing on the documents
furnished to us are genuine; (d) the execution, delivery and performance of
each Agreement has been duly authorized by all requisite action on the part
of, and each Agreement has been duly executed and delivered by, each party
thereto (excluding the Depositor, Block Financial and Companion) in the form
executed by Block Financial and Companion and is, under all applicable laws,
the valid and binding obligation of each of such parties (excluding the
Depositor, Block Financial and Companion) enforceable against each of such
parties in accordance with its respective terms; (e) all natural persons who
have signed, or will sign, any document furnished to us had, or will have, as
the case may be, the legal capacity to do so at the time of such signature;
and (f) there are no understandings, waivers or amendments (other than
documents which we have reviewed) which would vary the terms of any of the
Agreements. For purposes of this opinion letter, we have made no examination
of the existence, validity or condition of any title to or any interest in, or
the possession of, any property affected by any of the Agreements (e.g., the
Mortgage Loans), and, accordingly, we express no opinion as to the existence,
validity or condition of any title to or any interest in, or the possession
of, any such property, and to the extent required for any opinions expressed
herein, we have assumed that as of the execution and delivery of the
Agreements, Companion has good and marketable title to, and is delivering to
the Trustee on its own behalf and on behalf of the Depositor possession of,
such property.
On the basis of such examination, our reliance upon the assumptions
contained herein and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications set forth in this
opinion letter, we are of the opinion as of this date that:
1. Block Financial is a duly incorporated, validly existing corporation
and in good standing under the laws of the State of Delaware. Companion is a
duly incorporated, validly existing corporation and in good standing under the
laws of the State of Delaware. HRB is a duly incorporated, validly existing
corporation and in good standing under the laws of the State of Missouri.
2. Block Financial has all requisite power and authority under the
General Corporation Law of the State of Delaware to execute, deliver and
perform its obligations under each of the Agreements. Companion has all
requisite power and authority under the General Corporation Law of the State
of Delaware to execute, deliver and perform its obligations under each of the
Agreements to which it is a party. HRB has all requisite power and authority
under the laws of the State of Missouri to execute, deliver and perform its
obligations under the Insurance Agreement.
3. The execution, delivery and performance of the Underwriting
Agreement and the Indemnification Agreement have been duly authorized by all
requisite corporate action on the part of Block Financial, and the
Underwriting Agreement and the Indemnification Agreement have been duly
executed and delivered by Block Financial. The execution, delivery and
performance of the Pooling and Servicing Agreement, the Insurance Agreement
and the Subservicing Agreement have been duly authorized by all requisite
corporate action on the part of Block Financial, and each of the Pooling and
Servicing Agreement, the Insurance Agreement and the Subservicing Agreement
has been duly executed and delivered by Block Financial and is the legal,
valid and binding obligation of Block Financial enforceable against Block
Financial in accordance with its terms. The execution, delivery and
performance of the Underwriting Agreement and the Indemnification Agreement
have been duly authorized by all requisite corporate action on the part of
Companion, and the Underwriting Agreement and the Indemnification Agreement
have been duly executed and delivered by Companion. The execution, delivery
and performance of the Pooling and Servicing Agreement and the Insurance
Agreement have been duly authorized by all requisite corporate action on the
part of Companion, and each of the Pooling and Servicing Agreement and the
Insurance Agreement has been duly executed and delivered by Companion and is
the legal, valid and binding obligation of Companion enforceable against
Companion in accordance with its terms. The execution, delivery and
performance by HRB of its guaranty made part of the Insurance Agreement has
been duly authorized by all requisite corporate action on the part of HRB, and
the guaranty by HRB made part of the Insurance Agreement has been duly
executed and delivered by HRB and is the legal, valid and binding obligation
of HRB enforceable against HRB in accordance with its terms.
4. Block Financial's execution, delivery and performance of its
obligations under the Agreements will not (A) conflict with the Certificate of
Incorporation or Bylaws of Block Financial or (B) violate applicable
provisions of federal, Missouri or New York statutory law or regulation or the
General Corporation Law of the State of Delaware, the violation of which would
have a material adverse effect on the ability of Block Financial to perform
its obligations under the Agreements. Companion's execution, delivery and
performance of its obligations under the Agreements to which it is a party
will not (M) conflict with the Certificate of Incorporation or Bylaws of
Companion or (N) violate applicable provisions of federal, Missouri or New
York statutory law or regulation or the General Corporation Law of the State
of Delaware, the violation of which would have a material adverse effect on
the ability of Companion to perform its obligations under such Agreements the
Agreements to which it is a party. HRB's execution, delivery and performance
of its obligation under its guaranty contained in the Insurance Agreement will
not (Y) conflict with the Certificate of Incorporation or Bylaws of HRB or (Z)
violate applicable provisions of federal, Missouri or New York statutory law
or regulation, the violation of which would have a material adverse effect on
the ability of HRB to perform its obligations under the Agreements to which it
is a party.
5. To our knowledge, and based in part upon Block Financial's written
representations to us, Block Financial's execution and delivery of, and its
performance of its obligations under, the Agreements will not conflict with,
result in a breach or violation of, constitute a default or an event of
acceleration under, or result in the creation or imposition of any lien,
charge or encumbrance upon the property or assets of Block Financial pursuant
to the terms of, (A) any indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument known to us to which Block Financial is
a party or by which it or its property is bound or (B) any order, judgment or
decree of any State of Delaware, State of Missouri, State of New York or
United States court, administrative agency or governmental instrumentality
applicable to Block Financial which is known to us, the conflict with which,
or the breach, violation, default, acceleration or creation or imposition of
which, would have a material adverse effect on the ability of Block Financial
to perform its obligations under the Agreements. To our knowledge, and based
in part upon Companion's representations to us, Companion's execution and
delivery of, and its performance of its obligations under, the Agreements to
which it is a party will not conflict with, result in a breach or violation
of, constitute a default or an event of acceleration under, or result in the
creation or imposition of any lien, charge or encumbrance upon the property or
assets of Companion pursuant to the terms of, (M) any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument known
to us to which Companion is a party or by which it or its property is bound or
(N) any order, judgment or decree of any State of Delaware, State of Missouri,
State of New York or United States court, administrative agency or
governmental instrumentality applicable to Companion which is known to us, the
conflict with which, or the breach, violation, default, acceleration or
creation or imposition of which, would have a material adverse effect on the
ability of Companion to perform its obligations under such Agreements the
Agreements to which it is a party. To our knowledge, and based in part upon
HRB's written representations to us, HRB's execution and delivery of, and its
performance of its obligation under its guaranty contained in the Insurance
Agreement will not conflict with, result in a breach or violation of,
constitute a default or an event of acceleration under, or result in the
creation or imposition of any lien, charge or encumbrance upon the property or
assets of HRB pursuant to the terms of, (Y) any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument known to us to
which HRB is a party or by which it or its property is bound or (Z) any order,
judgment or decree of any State of Missouri, State of New York or United
States court, administrative agency or governmental instrumentality applicable
to HRB which is known to us, the conflict with which, or the breach,
violation, default, acceleration or creation or imposition of which, would
have a material adverse effect on the ability of HRB to perform its
obligations under its guaranty in the Insurance Agreement.
6. To our knowledge, and based in part upon Block Financial's written
representations to us, Block Financial is not required to obtain the consent,
approval, authorization or order of, to register or file with, or to give
notice to, any court or governmental agency or body of the State of Delaware
(under the General Corporation Law thereof), the State of Missouri, the State
of New York or the United States of America in order to execute, deliver,
perform and comply with the terms of, or for the consummation of the
transactions of Block Financial contemplated by, the Agreements except any
consent, approval, authorization, order, registration, filing or notice (A) as
may be required under state securities, real estate syndication or Blue Sky
laws in connection with the offering and sale of the Class A Certificates (as
to which we express no opinion whatsoever) or (B) which is a future obligation
of Block Financial pursuant to the terms of any such Agreement, such as, by
way of illustration, but not in limitation of the generality of the foregoing,
filing or recording an Uniform Commercial Code assignment of a financing
statement or an assignment of Mortgage with respect to a Mortgage Loan or
obtaining a consent, approval, order, etc. approval or order in connection with
a foreclosure; or if any such consent, approval, authorization, order,
registration, filing or notice (not described in the exception to the
immediately preceding clause) is required, Block Financial has obtained, made
or given the same. To our knowledge, and based in part upon Companion's
written representations to us, Companion is not required to obtain the
consent, approval, authorization or order of, to register or file with, or to
give notice to, any court or governmental agency or body of the State of
Delaware (under the General Corporation Law thereof), the State of Missouri,
the State of New York or the United States of America in order to execute,
deliver, perform and comply with the terms of, or for the consummation of the
transactions of Companion contemplated by, the Agreements to which it is a
party except any consent, approval, authorization, order, registration, filing
or notice (A) as may be required under state securities, real estate
syndication or Blue Sky laws in connection with the offering and sale of the
Class A Certificates (as to which we express no opinion whatsoever) or (B)
which is a future obligation of Companion pursuant to the terms of any such
Agreement, Agreement to which it is a party, such as, by way of illustration,
but not in limitation of the generality of the foregoing, filing or recording
an Uniform Commercial Code assignment of a financing statement or an
assignment of Mortgage with respect to a Mortgage Loan; or if any such
consent, approval, authorization, order, registration, filing or notice (not
described in the exception to the immediately preceding clause) is required,
Companion has obtained, made or given the same.
7. To our knowledge, and based in part upon Block Financial's
representations to us, there are no actions, suits or proceedings against
Block Financial (or to which the property of Block Financial is subject)
pending or overtly threatened in writing before any court, governmental agency
or arbitrator which (A) question, directly or indirectly, the validity or
enforceability of any of the Agreements or (B) could be reasonably expected to
materially and adversely affect Block Financial's financial condition,
business or properties taken as a whole or the validity or enforceability of
any of the Agreements or the Certificates or (C) could be reasonably expected
to materially and adversely affect the ability of Block Financial to perform
its obligations under the Agreements. To our knowledge, there are no actions,
suits or proceedings against Companion (or to which the property of Companion
is subject) pending or overtly threatened in writing before any court,
governmental agency or arbitrator which (X) question, directly or indirectly,
the validity or enforceability of any of the Agreements to which it is a party
or (Y) could be reasonably expected to materially and adversely affect
Companion's financial condition, business or properties taken as a whole or
the validity or enforceability of any of such the Agreements to which it is a
party or the Certificates or (Z) could be reasonably expected to materially
and adversely affect the ability of Companion to perform its obligations under
such Agreements the Agreements to which it is a party.
The opinions and other statements set forth herein are subject to the
following:
A. The enforceability of each of the Pooling and Servicing Agreement,
the Insurance Agreement and the Subservicing Agreement and the
opinions regarding no violation of law in opinion paragraph 4 are
subject to the effect of applicable bankruptcy, insolvency,
reorganization, receivership, arrangement, moratorium, assignment for
the benefit of creditors and other similar laws affecting the rights
and remedies of creditors. This qualification includes, without
limitation, the avoidance, fraudulent transfer and preference
provisions of the federal Bankruptcy Code of 1978 (11 U.S.C.ss.ss.
101 et seq.), as amended, the fraudulent transfer and conveyance laws
of the State of New York and the fraudulent transfer and conveyance
laws of the State of Missouri, and we render no opinion herein that
any transaction provided for in any of such agreements would not be
subject to avoidance or otherwise adversely affected under such
provisions or laws.
B. The enforceability of each of the Pooling and Servicing Agreement,
the Insurance Agreement and the Subservicing Agreement is subject to
the effect of principles of equity (including those respecting the
availability of specific performance), whether considered in a
proceeding at law or in equity, and the limitations imposed by
applicable procedural requirements of applicable state or federal
law.
C. The enforceability of each of the Pooling and Servicing Agreement,
the Insurance Agreement and the Subservicing Agreement is subject to
the effect of applicable rules of law that limit or deny the
enforceability of provisions (i) purporting to waive defenses or
rights or the obligations of good faith, fair dealing, diligence and
reasonableness; (ii) purporting to invalidate or limit the effect of
any oral amendment thereof or any applicable trade practice or any
course of dealing between the parties thereto; (iii) purporting to
release, exculpate or exempt a party from, or to require
indemnification or contribution in favor of a party against,
liability for its own action or inaction to the extent such action or
inaction involves negligence, recklessness, willful misconduct or
unlawful conduct or when the enforcement thereof would violate public
policy under any applicable law; or (iv) purporting to authorize the
Trustee to take discretionary independent actions for the account of,
or as agent or attorney-in-fact for, Block Financial as the Master
Servicer under the Pooling and Servicing Agreement.
D. We express no opinion as to the enforceability of (i) any contractual
provision which either directly or indirectly limits or tends to
limit the time in which any suit or action may be instituted by a
party; (ii) any contractual provision which requires a party to
execute and deliver additional agreements or instruments other than
agreements or instruments which are limited in effect to effectuating
the express terms of an agreement and do not expand or modify such
terms; (iii) any contractual provision whereby a party or parties
submit to the jurisdiction of a particular court or forum for the
adjudication of disputes or waive any claim, defense or right of
appeal based upon a lack of jurisdiction, inconvenient forum, venue
or the like; (iv) any waiver by a party of personal service of
process or any consent of a party to service of process upon it by
service of process upon another party or person; (v) any waiver of a
party of its right to a jury trial; and (vi) any contractual
provision which prohibits a party from assigning or encumbering its
rights under an agreement separate and apart from its duties and
obligations thereunder other than in connection with such party's
assignment of such agreement as a whole.
E. We express no opinion as to the validity or enforceability of the
Mortgage Loans or the validity, perfection or priority of any related
lien or security interest.
F. We express no opinion whether any provision of an agreement stating
that such agreement, the Certificates or the obligations and rights
of the parties thereunder shall be governed by, or construed or
determined in accordance with, the laws of the State of New York will
be given legal effect under any applicable law.
G. The enforceability of each of the Pooling and Servicing Agreement,
the Insurance Agreement and the Subservicing Agreement is subject to
the effect of generally applicable rules of law that may, where a
portion of the contract may be unenforceable, limit the
enforceability of the balance of the contract to circumstances in
which the unenforceable portion is not an essential part of the
transaction or contract.
H. In connection with matters confirmed by us in paragraphs 5, 6 and 7
above (the "confirmed matters"), the words "to our knowledge" and
words of similar import mean that in the course of performing legal
services on behalf of HRB, Block Financial or Companion, we are
without conscious awareness of facts or other information that the
confirmed matters are untrue, and in preparing this opinion letter,
we have not undertaken any independent verification of the confirmed
matters beyond our recollection of legal services previously
performed by us for HRB, Block Financial or Companion and have made
no investigation or inquiry with Block Financial or Companion or
other persons regarding the confirmed matters except as stated above.
As used in this opinion letter, the terms "we" and "our" refer to
only those lawyers of Morrison & Hecker L.L.P. who provided
substantive legal services to Block Financial or Companion in
connection with the transactions described herein.
I. Our opinions are given as of the date hereof, and we assume no
obligation to update or supplement our opinions in response to
subsequent changes in the law or future events or circumstances
affecting the transactions contemplated by the Agreements.
This opinion letter is issued to you for your sole benefit in connection
with the transactions described herein and may not be relied upon for any
other purpose or by any other person, nor may this opinion letter (or any copy
hereof) be circulated or distributed to, or quoted or referred to by, any
other person, without in each instance our prior written consent, but this
opinion letter may be included in closing binders with respect to the
transactions described herein, and MBIA Insurance Corporation may provide
copies to its reinsurers or to its accountants or attorneys for matters
related to the Insurance Agreement.
Respectfully submitted,
/s/ MORRISON & HECKER L.L.P.
SCHEDULE I
OPINION RECIPIENTS OF OPINION LETTER OF MORRISON & HECKER L.L.P. DATED JULY
22, 1998
RE: BLOCK MORTGAGE FINANCE ASSET BACKED CERTIFICATES, SERIES 1998-2
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Salomon Brothers Inc.
Seven World Trade Center, 32nd Floor
New York, New York 10048
Block Mortgage Finance, Inc.
4435 Main Street, Suite 500
Kansas City, Missouri 64111
Attention: Mark Keller
First National Bank of Chicago
One North State Street
Chicago, Illinois 60602
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attn: Insurance Portfolio
Management-Structured
Finance (IPM-SF)
Moody's Investor Services, Inc.
99 Church Street
New York, New York 10007
Standard & Poor's Ratings Services,
a Division of The McGraw-Hill Companies, Inc.
26 Broadway
New York, New York 10004
Exhibit 8.1
[Brown & Wood LLP Letterhead]
July 22, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Salomon Brothers Inc
Seven World Trade Center, 32nd Floor
New York, New York 10048
Block Mortgage Finance, Inc.
4435 Main Street, Suite 500
Kansas City, Missouri 64111
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Re: Block Mortgage Finance, Inc.
Asset Backed Certificates, Series 1998-2
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Ladies and Gentlemen:
We have acted as special tax counsel for Block Mortgage Finance, Inc. in
connection with the formation of the Block Mortgage Finance, Inc. Asset Backed
Certificates, Series 1998-2 ( the "TRUST FUND") created pursuant to a Pooling
and Servicing Agreement, dated as July 1, 1998 (the "POOLING AND SERVICING
AGREEMENT") among Block Mortgage Finance, Inc., as depositor (the
"DEPOSITOR"), Companion Mortgage Corporation, as seller (the "SELLER"), Block
Financial Corporation, as master servicer (the "MASTER SERVICER") and The
First National Bank of Chicago, as trustee (the "TRUSTEE"), and the issuance
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
A-7 Certificates and Class A-8 Certificates (collectively, the "CLASS A
CERTIFICATES") and the Class R Certificates (together with the Class A
Certificates, the "CERTIFICATES"). The Trust Fund will consist primarily of a
pool of mortgage loans secured by mortgages, deeds of trust or other
instruments creating a first or second lien on one- to four- family dwellings.
Unless otherwise indicated, all terms used herein shall have the meanings
assigned to such terms in the Pooling and Servicing Agreement.
In arriving at the opinions below, we have examined such documents and
records as we have deemed appropriate, including the following:
1. A signed copy of registration statement No. 333-14041 filed by the
Depositor on Form S-3 with the Securities and Exchange Commission (the
"COMMISSION") pursuant to the Securities Act of 1933, as amended (the
"ACT"). (The term "REGISTRATION STATEMENT" shall mean the registration
statement in the form in which the most recent post-effective amendment
thereto became effective under the Act.)
2. The prospectus dated January 27, 1998 (the "BASE PROSPECTUS") and the
supplement thereto dated July 21, 1998 (the "PROSPECTUS SUPPLEMENT")
relating to the offering of the Class A Certificates in the form in which
the Base Prospectus and the Prospectus Supplement were filed with the
Commission pursuant to Rule 424 of the rules and regulations of the
Commission under the Act. (The Base Prospectus as supplement by the
Prospectus Supplement is hereinafter referred to as the "PROSPECTUS".)
3. A signed copy of the Pooling and Servicing Agreement.
In addition, we have made such investigations of such matters of law as
we deemed appropriate as a basis for the opinions expressed below. Further, we
have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals. We have, for the purposes of rendering
the opinions, also relied on certain factual, numerical and statistical
information which is based on the assumptions used in pricing the
Certificates. Our opinions are also based on the assumption that there are no
agreements or understandings with respect to the transactions contemplated in
the Pooling and Servicing Agreement other than those contained in the Pooling
and Servicing Agreement and that all parties to the Pooling and Servicing
Agreement will comply with the terms thereof, including all tax reporting
requirements contained therein.
Based on the foregoing, we are of the opinion that, assuming compliance
with the pertinent provisions of the Pooling and Servicing Agreement, the
Trust will qualify as a real estate mortgage investment conduit ("REMIC") as
defined in the Internal Revenue Code of 1986, as amended (the "CODE"). Each
Class of the Class A Certificates will be treated as "regular interests" in a
REMIC, and the Class R Certificates will be treated as the beneficial
ownership of a single class of "residual interests" in a REMIC.
The opinions set forth herein are based upon the existing provisions of
the Code and Treasury regulations issued or proposed thereunder, published
Revenue Rulings and releases of the Internal Revenue Service and existing case
law, any of which could be changed at any time. Any such changes may be
retroactive in application and could modify the legal conclusions upon which
such opinions are based. The opinions expressed herein are limited as
described above, and we do not express an opinion on any legal or income tax
aspect of the transactions contemplated by the Documents relating to the
transaction.
In rendering the foregoing opinions, we express no opinion as to the laws
of any jurisdiction other than the federal income tax laws of the United
States. This opinion is rendered as of the date hereof and we undertake no
obligation to update this opinion or advise you of changes in the event there
is any change in legal authorities, facts, assumptions or documents on which
this opinion is based (including the taking of any action by any party to the
documents pursuant to any opinion of counsel or a waiver), or any inaccuracy
in any of the representations, warranties or assumptions upon which we have
relied in rendering this opinion, unless we are specifically engaged to do so.
This opinion is rendered only to those to whom it is addressed, may not be
relied upon in connection with any transactions other than the transactions
contemplated herein and may not be relied upon for any other purpose or by any
other person, firm or corporation for any purpose, without our prior written
consent.
Very truly yours,
/s/ Brown & Wood LLP
