UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
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) October 27, 1999
Block Mortgage Finance, Inc.
(Exact name of registrant as specified in its charter)
Delaware 333-65215 43-1758633
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification)
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
----------------------
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
Exhibit 5.1 Opinion of Morrison & Hecker L.L.P. re: Legality
relating to the Block Mortgage Finance Asset Backed
Certificates, Series 1999-2.
Exhibit 8.1 Opinion of Brown & Wood, L.L.P. re: Tax Matters
relating to the Block Mortgage Finance Asset Backed
Certificates, Series 1999-2.
Exhibit 23.1 Consent of Counsel Morrison & Hecker L.L.P.
Contained in Document under Exhibit 5.1.
Exhibit 23.2 Consent of Counsel Brown & Wood, L.L.P. Contained
in Document under Exhibit 8.1.
Exhibit 23.3 Consent of PricewaterhouseCoopers LLP.
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/ Bernard J. Rhoads
--------------------------------------
Name: Bernard J. Rhoads
Title: Vice President
Date: October 27, 1999
_______________________
MORRISON & HECKER L.L.P.
ATTORNREYS AT LAW
2600 Grand Avenue
Kansas City, Missouri 64108-4606
Telephone (816) 691-2600
Telefax (816) 474-4208
October 27, 1999
Chase Securities Inc. MBIA Insurance Corporation
270 Park Avenue, 7th Floor 113 King Street
New York, NY 10017 Armonk, New York 10504
Attn: Insurance Portfolio Management-
Structured Finance (IPM-SF)
Salomon Smith Barney Inc.
390 Greenwich Street, 6th Floor
New York, NY 10013
Re: Block Mortgage Finance Asset Backed Certificates, Series 1999-2
Ladies and Gentlemen:
We have acted as counsel to Block Mortgage Finance, Inc., a Delaware
corporation (the "Depositor"), in connection with the Underwriting Agreement
dated October 22, 1999 (the "Underwriting Agreement"), among the Depositor,
Companion Mortgage Corporation ("Companion"), Block Financial Corporation
("Block Financial") and Chase Securities Inc. as Representative of the several
underwriters listed therein (collectively, the "Underwriters") relating to the
offer and sale by the Depositor of the Block Mortgage Finance Asset Backed
Certificates, Series 1999-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 Certificates (collectively, the "Class A Certificates", and
together with the Class R Certificates, the "Certificates"), and the
transactions contemplated thereby. The Certificates are being issued pursuant to
a Pooling and Servicing Agreement dated as of October 1, 1999 (the "Pooling and
Servicing Agreement"), among the Depositor, as Depositor, Block Financial, as
Master Servicer, Companion, as Seller, and Bank One, National Association, as
Trustee (the "Trustee"). This opinion letter is being furnished to you at the
request of the Depositor pursuant to Section 6(b) of the Underwriting Agreement.
We have also acted as counsel to the Depositor in connection with the
preparation by the Depositor of a registration statement on Form S-3 (No.
333-65215) filed with the Securities and Exchange Commission (the "Commission")
on September 30, 1998, and a prospectus and final prospectus supplement relating
to the Class A Certificates. Such registration statement, prospectus and final
prospectus supplement (in each case, exclusive of any exhibits or annexes
thereto) are herein called the "Registration Statement," the "Base Prospectus"
and the "Prospectus Supplement," respectively; and the Base Prospectus and the
Prospectus Supplement are herein collectively called the "Prospectus."
Washington, D.C. / Phoenix, Arizona / Overland Park, Kansas / Wichita, Kansas
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 2
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 the Depositor, 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 October 1, 1999 (the "Insurance
Agreement") among MBIA Insurance Corporation, Block Financial,
Companion, the Depositor, H&R Block, Inc. and the Trustee;
(d) the Registration Statement and the Prospectus;
(e) the Certificate of Incorporation and Bylaws of the Depositor;
(f) corporate resolutions of the Depositor authorizing the transactions
provided for by, or in connection with, the Pooling and Servicing
Agreement, the Underwriting Agreement and the Insurance Agreement;
and
(g) 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 and the
Insurance Agreement are sometimes referred to herein collectively as the
"Agreements." Capitalized terms not otherwise defined herein that are defined in
the Pooling and Servicing Agreement shall have the same meanings herein as
therein.
As to all factual matters relevant to this opinion letter that have not
been independently established, we have relied upon, among other things, the
representations and warranties contained in or incorporated into the Agreements
and certificates and statements of officers and other representatives of the
Depositor, 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.
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 3
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, H&R Block, Inc., 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, H&R Block, Inc. and
Companion) in the form executed by the Depositor and is, under all applicable
laws, the valid and binding obligation of each of such parties (excluding the
Depositor, Block Financial, H&R Block, Inc. 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. The Depositor is a duly incorporated, validly existing corporation and
in good standing under the laws of the State of Delaware.
2. The Depositor 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.
3. The execution, delivery and performance of the Underwriting Agreement
have been duly authorized by all requisite corporate action on the part of the
Depositor, and the Underwriting Agreement has been duly executed and delivered
by the Depositor. 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 the Depositor, and each of the Pooling
and Servicing Agreement and the Insurance Agreement has been duly executed and
delivered by the Depositor and is the legally valid and binding obligation of
the Depositor enforceable against the Depositor in accordance with its terms.
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 4
4. The Depositor's execution, delivery and performance of its obligations
under the Agreements will not (A) conflict with the Certificate of Incorporation
or By-laws of the Depositor 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 the Depositor to perform its obligations under any of
the Agreements.
5. To our knowledge, and based in part upon the Depositor's written
representations to us, the Depositor'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 the Depositor 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 the Depositor 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 the
Depositor 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 the Depositor to perform its
obligations under any of the Agreements.
6. The direction by the Depositor to the Trustee to authenticate, issue
and deliver the Certificates has been duly authorized by the Depositor, and the
Certificates, when duly authorized, authenticated, issued and delivered by the
Trustee and paid for by the Underwriters in accordance with the Pooling and
Servicing Agreement and the Underwriting Agreement, will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
7. To our knowledge, and based in part upon the Depositor's written
representations to us, the Depositor is not required to obtain the consent,
approval, authorization or order of, or 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 the
Depositor 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 the Depositor
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 if any such consent, approval,
authorization, order, registration, filing or notice (not described in the
exception to the immediately preceding clause) is required, the Depositor has
obtained, made or given the same.
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 5
8. The Registration Statement is effective under the Securities Act of
1933, as amended (the "1933 Act"), and to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued under
the 1933 Act or proceedings therefor initiated or threatened by the Commission.
9. The conditions to the use by the Depositor of a registration statement
on Form S-3 under the 1933 Act, as set forth in the General Instructions to Form
S-3, have been satisfied with respect to the Registration Statement. To our
knowledge, and based in part upon the Depositor's representations to us, there
are no contracts or documents of the Depositor, Block Financial or Companion
which are required to be filed as exhibits to the Registration Statement
pursuant to the 1933 Act or the rules and regulations of the Commission
thereunder which have not been so filed. The statements set forth in the Base
Prospectus under the captions "RISK FACTORS-Legal Considerations," "ERISA
CONSIDERATIONS" and "CERTAIN LEGAL ASPECTS OF THE PRIMARY ASSETS," and in the
Prospectus Supplement under "RISK FACTORS-Uncertainties whether particular
consumer protection laws apply to the mortgage loans" and "ERISA Considerations"
in each case insofar as such statements purport to summarize matters of state or
federal law or legal conclusions with respect thereto, have been prepared or
reviewed by us and provide a fair summary of such law or conclusions.
10. To our knowledge, and based in part upon the Depositor's
representations to us, there are no actions, suits or proceedings against the
Depositor (or to which the property of the Depositor 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 the Depositor'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 reasonably be expected to materially
and adversely affect the ability of the Depositor to perform its obligations
under any of the Agreements.
11. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended, and neither the Depositor nor
the Trust is required to be registered under the Investment Company Act of 1940,
as amended.
The opinions and other statements set forth herein are subject to the
following:
A. The enforceability of each of the Pooling and Servicing Agreement
and the Insurance Agreement and the opinion regarding no violation
of law in opinion paragraph 4(B) 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
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 6
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 the Pooling and Servicing Agreement and the Insurance
Agreement 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 and
the Insurance 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
and the Insurance 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; or (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.
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 the Pooling and
Servicing Agreement or the Insurance Agreement, as applicable, 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 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 the Pooling
and Servicing Agreement or the Insurance 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.
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 7
F. We express no opinion whether any provision of the Pooling and
Servicing Agreement or the Insurance Agreement, as applicable,
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 and
the Insurance 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, 7, 9
and 10 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 the Depositor, 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 the Depositor and have made no
investigation or inquiry with the Depositor 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 the Depositor 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.
In connection with our participation in the preparation of the
Registration Statement and the Prospectus, we have not independently verified
the accuracy, completeness or fairness of the statements contained therein, and,
without limiting the generality of the foregoing, we have not,
<PAGE>
Chase Securities Inc.
Salomon Smith Barney Inc.
MBIA Insurance Corporation
October 27, 1999
Page 8
with your consent, reviewed any loan files relating to the Mortgage Loans. The
limitations inherent in our participation in the preparation of the Registration
Statement and the Prospectus and the knowledge available to us are such that we
are unable to assume, and do not assume, any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus. On the basis of our participation in the
preparation of the Registration Statement and the Prospectus as described above
and our participation in conferences and telephone conversations with
representatives of the Depositor, Companion, Block Financial, the Underwriters
and others at which the contents of the Registration Statement and the
Prospectus were discussed, and relying as to facts necessary to the
determination of materiality to the extent we may do so in the exercise of our
professional responsibility upon the certificates and statements of officers and
other representatives of the Depositor, Companion, Block Financial and others,
no facts have come to our attention that lead us to believe that as of the date
hereof, the Registration Statement or the Prospectus (excluding any financial or
statistical data contained therein, the sections of the Base Prospectus and the
Prospectus Supplement captioned "FEDERAL INCOME TAX CONSEQUENCES," the section
of the Base Prospectus captioned "PLAN OF DISTRIBUTION" and the sections of the
Prospectus Supplement captioned "SUBSERVICERS," "CREDIT ENHANCEMENT" Certificate
Insurance Policy," "CREDIT ENHANCEMENT"?The Certificate Insurer," "UNDERWRITING"
and "REPORT OF EXPERTS," as to which we do not comment) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In addition, the
statements in the Prospectus and the Prospectus Supplement under the captions
"DESCRIPTION OF THE CERTIFICATES" and the "POOLING AND SERVICING AGREEMENT",
insofar as such statements purport to summarize certain terms of the Offered
Certificates and the Pooling and Servicing Agreement, constitute a fair summary
of the provisions purported to be summarized.
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.
October 27, 1999
Chase Securities Inc.
270 Park Avenue, 7th Floor
New York, New York 10017
Salomon Smith Barney 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 1999-2
----------------------------------------
Ladies and Gentlemen:
We have acted as special tax counsel for the depositor and counsel for the
Underwriters in connection with the formation of the Block Mortgage Finance,
Inc. Asset Backed Certificates, Series 1999-2 ( the "Trust Fund") created
pursuant to a Pooling and Servicing Agreement, dated as October 1, 1999 (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 Bank One, National Association, 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 and Class A-6
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. 333-65215 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 October 27, 1998 (the "Base
Prospectus") and the supplement thereto dated October 26,
1999 (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.
2
<PAGE>
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 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, without our prior written consent.
We hereby consent to references to this firm under the headings
"Summary-Federal Income Tax Consequences", "Federal Income Tax Consequences" and
"Legal Matters".
Very truly yours,
/s/ Brown & Wood, L.L.P.
3
PricewaterhouseCoopers
PricewaterhouseCoopers
1177 Avenue of the Americas
New York, NY 10036
Telephone (212) 596 8000
Facsimile (212) 596 8910
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement of
Block Mortgage Finance, Inc., relating to Asset Backed Certificates, Series
1999-2, of our report dated February 2, 1999 on our audits of the consolidated
financial statements of MBIA Insurance Corporation and Subsidiaries as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998. We also consent to the reference to our Firm under the
caption "Experts".
/s/ PricewaterhouseCoopers LLP
October 26, 1999
