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: April 15, 1998
(Date of earliest event reported)
Commission File No. 333-40467
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV (as depositor under the Sale and
Servicing Agreement, dated as of February 1, 1997, relating to the Empire
Funding Home Loan Owner Trust 1998-1, Home Loan Asset Backed Notes, Series
1998-1)
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
- --------------------------------------------------------------------------------
Delaware 06-1204982
- --------------------------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1285 Avenue of the Americas
New York, New York 10019
- --------------------------------------------------------------------------------
Address of principal executive offices (Zip Code)
(212) 713-2000
- --------------------------------------------------------------------------------
Registrant's Telephone Number, including area code
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
ITEM 5. Other Events
On April 15, 1998 Empire Funding Home Loan Owner Trust 1998-1 (the
"Issuer") completed the purchase of the Subsequent Loans pursuant to Section
2.06 of the Sale and Servicing Agreement, dated as of February 1, 1997 (the
"Sale and Servicing Agreement") among the Issuer, PaineWebber Mortgage
Acceptance Corporation IV, a Delaware corporation (the "Registrant"), Empire
Funding Corp. (the "Transferor"), and U.S. Bank National Association (the
"Indenture Trustee"). The Subsequent Loans were transferred to the Issuer
pursuant to the Subsequent Transfer Agreement, dated as of April 15, 1998 (the
"Subsequent Transfer Agreement"), among the Transferor, the Issuer and the
Indenture Trustee. Attached as Exhibit 99 are certain characteristics of all the
Loans as of March 31, 1998 (the "Cut-Off Date").
Capitalized terms used herein and not defined herein have the same meanings
ascribed to such terms in the Sale and Servicing Agreement.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
Item 601(a)
of Regulation S-K
Exhibit No. Description
- ----------- -----------
99 Description of the Loans
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
April 29, 1998
By: /s/ Joseph Piscina
------------------
Joseph Piscina
Director
1<PAGE>
Paper (P) or
Exhibit No. Description Electronic(E)
- ----------- ----------- -------------
99 Description of the Loans E
The Loans included in the Pool have the characteristics set forth below and
in the tables beginnings on the following page. Unless otherwise indicated, all
percentages and weighted averages are percentages and weighted averages of the
Cut-Off Date Pool Principal Balance.
Loan Statistics
As of March 31, 1998 (the "Cut-Off Date"), the Loans consisted of 5,924
Loans with an aggregate Principal Balance totaling $225,721,533 (the "Cut-Off
Date Pool Principal Balance"). The Loans bear interest at fixed Loan Rates which
range from 10.99% per annum to 17.99% per annum and have a weighted average Loan
Rate of approximately 13.77% per annum. The Cut-Off Date Principal Balances of
the Loans range from $519 to $74,934 and average $38,103. As of the Cut-Off
Date, the weighted average remaining term to stated maturity of the Loans was
approximately 191 months and the weighted average number of months that have
elapsed since origination was 7 months. As of the Cut-Off Date, the weighted
average Combined Loan-to-Value Ratio of the Loans which were Mortgage Loans was
approximately 118.32%, with the highest Combined Loan-to-Value Ratio being 125%.
As of the Cut-Off Date, 5,815 of the Loans (representing approximately 98.58% of
the Cut-Off Date Pool Principal Balance) had a Combined Loan-to-Value Ratio in
excess of 100%. All of the Loans are fully amortizing loans having original
stated maturities of not more than 25 years. No Loan is scheduled to mature
later than March 23, 2018.
As of the Cut-Off Date, all of the Loans (by Cut-Off Date Pool Principal
Balance) were Mortgage Loans secured by Mortgaged Properties located in 49
states and the District of Columbia. As of the Cut-Off Date, all of the Loans
(by Cut-Off Date Pool Principal Balance) were secured by Mortgaged Properties
represented by the related Obligors to be owner-occupied.
As of the Cut-Off Date, 42 Loans, representing approximately 0.73% of
the Cut-Off Date Pool Principal Balance, were 30 days or more past due. The
weighted average Credit Score for the Loans was 678.
789 Subsequent Loans with an aggregate Principal Balance of $31,919,007
were originated by Preferred or acquired from correspondents by Preferred. The
remaining 824 Subsequent Loans with an aggregate Principal Balance of
$25,759,927 were originated or purchased by the Transferor, the majority of
which were underwritten by the Transferor pursuant to its "Equalizer" program.
The Transferor's "Equalizer" program is designed for homeowners who may
have little or no equity in their property, but who possess good to excellent
credit histories and provable income and use the proceeds for home improvements
and/or debt consolidation. Under the "Equalizer" program, the Transferor obtains
credit information with respect to each applicant from several sources and
generally does not permit the ratio of total monthly debt obligations to monthly
gross income to exceed 45%. Generally, the applicant will have a Credit Score of
620 or greater. A credit score (the "Credit Score") is derived based on a
methodology developed by Fair, Isaac and Company, a consulting firm specializing
in creating default predictive models through scoring mechanisms. The Credit
Scores, which are obtained from national credit reporting organizations, are
numerical representations of borrowers' estimated default probabilities, and
generally range from a low of 200 to a high of 800. A borrower with a Credit
Score of 700 or higher would be assigned the highest classification for credit
quality by the Transferor. The principal amount of the "Equalizer" loan
originated or purchased by the Transferor generally does not exceed $75,000.
Other than on an exception basis, the loans originated under the "Equalizer"
program will not have a Combined Loan-to-Value Ratio in excess of 125%. In
general, the loan is secured by a first, second or third lien on the related
property or is unsecured. In most instances the property is improved with an
owner-occupied one- or two-family residence.
The Transferor's underwriting standards are designed to provide a program
for all qualified applicants in an amount and for a period of time consistent
with their ability to repay. All the Transferor's underwriting determinations
are made without regard to sex, marital status, race, color, religion, age or
national origin. Each application is evaluated on its individual merits,
applying the stated guidelines to ensure that each application is considered
equitably.
The "Equalizer" program allows for "stated value" (i.e., independent
verification of property values are not required) on loans of $35,000 and less.
Generally, the Transferor bases the loan decision on the creditworthiness of the
borrower, rather than the underlying collateral. However, the Transferor
reserves the right to require an appraisal or other documentation verifying
values in each and every transaction.
For loans in excess of $35,000, property values are generally substantiated
by one of the following: an appraisal dated within 12 months of application, a
FHLMC Form 704 drive-by inspection, a tax bill assessment if the value has been
established within the last 12 months, or a HUD-1 statement if dated within six
months of the application. On a case by case basis, the Transferor reserves the
right to accept other forms of documentation.
A credit report by an independent, nationally recognized credit reporting
agency reflecting the applicant's complete credit history is required. The
credit report typically contains information reflecting delinquencies,
repossessions, judgments, foreclosures, bankruptcies and similar instances of
adverse credit that can be discovered by a search of public records. An
applicant's recent credit report is used to evaluate the borrower's payment
record and must be current at the time of application. A lack of credit history
payment will not necessarily preclude a loan if the borrower has sufficient
equity in the property.
Generally, the Transferor requires a title report by an approved title
company or legal firm on all property securing loans it originates or purchases.
Title reports indicate the lien position of any related senior mortgage loans.
The applicant is also required to secure hazard and, in certain instances, flood
insurance in an amount sufficient to cover replacement cost or full insurable
value of the mortgaged property (or in the case of flood insurance, the maximum
amount available under the Flood Disaster Protection Act of 1973). The
underwriting guidelines of the Transferor do not require borrowers to obtain
title insurance in connection with a Loan.
Generally, the Transferor has established classifications with respect to
the credit profiles of applicants based on Credit Scores and debt to income
ratios. The criteria currently being used by the Transferor to classify loan
applicants are generally as follows:
Maximum
Loan Minimum Debt-to-income
Amount Credit Score Ratio
------ ------------ -----
$70,0001-$75,000......................... 700 45%
$60,001-$70,000.......................... 680 45%
$50,001-$60,000.......................... 660 45%
$40,001-$50,000.......................... 640 45%
$40,000 or less.......................... 620 45%
The maximum loan amount for self-employed borrowers is $50,000 and the
maximum loan amount for first time homebuyers or borrowers with less than six
months mortgage history is $35,000.
Currently, the Transferor allows the following compensating factors for
exceeding the maximum debt-to-income ratio by a maximum of 5 percentage points:
(1) high income with substantial disposable income--if the Credit
Score is equal to or greater than 660, $2,500 in disposable income is
required; if the Credit Score is less than 660, $3,000 in disposable income
is required (disposable income being defined for this purpose as monthly
gross income less monthly debt service); and
(2) documented savings pattern.
In addition to Credit Score and debt-to-income ratio parameters, the
Transferor also requires that each loan applicant be a generally acceptable
credit risk as measured by the following:
Existing mortgage loans--Required to be current at time of application
being submitted, with generally a maximum of one 30-day late in the past 12
months.
Existing non-mortgage credit--Minor derogatory items are acceptable. In
some cases, Letters of Explanation ("LOE's") may be required in explaining
derogatory items. Generally, collections and/or charge-offs must be brought
current with satisfactory LOE's. Installment credit histories can show one
30-day delinquency in the last 12 months and two 30-day delinquencies in the
last 24 months, while revolving credit histories can show two 30-day
delinquencies in the last 12 months and three 30-day delinquencies in the last
24 months. On a case by case basis, the Transferor will allow for deviation from
these parameters if satisfactory LOE's are obtained.
In response to changes and developments in the consumer finance area as
well as the refinement of the Transferor's credit evaluation methodology, the
Transferor's underwriting requirements for certain types of loans may change
from time to time resulting sometimes in more stringent and sometimes in less
stringent underwriting requirements. Depending upon the date on which the Loans
were originated or purchased by the Transferor, the Loans included in the Pool
may have been originated or purchased by the Transferor under different
underwriting requirements, and accordingly, certain Loans included in the Pool
may be of a different credit quality and have different loan characteristics
from those of other Loans. Furthermore, to the extent that certain Loans were
originated or purchased by the Transferor in accordance with less stringent
underwriting requirements, such Loans may be more likely to experience higher
rates of delinquencies, defaults and losses than those Loans originated or
purchased in accordance with more stringent underwriting requirements.
<PAGE>
The sum of the dollar amounts and percentages in the following tables may
not equal the totals due to rounding.
Geographic Distribution of Loans
<TABLE>
<CAPTION>
% of Cut-Off
Aggregate Cut-Off Date Pool
Number Date Principal Principal
State of Loans Balance Balance
----- -------- ------- -------
<S> <C> <C> <C>
Alabama.......................... 1 $ 48,773 0.02%
Alaska........................... 66 2,868,883 1.27
Arizona.......................... 239 8,624,577 3.82
Arkansas......................... 59 2,006,416 0.89
California....................... 1,176 48,580,395 21.52
Colorado......................... 118 4,449,183 1.97
Connecticut...................... 111 4,803,675 2.13
Delaware......................... 20 784,018 0.35
District of Columbia............. 1 40,437 0.02
Florida.......................... 353 13,305,300 5.89
Georgia.......................... 241 8,699,857 3.85
Hawaii........................... 32 1,343,188 0.60
Idaho............................ 91 3,343,111 1.48
Illinois......................... 61 2,145,969 0.95
Indiana.......................... 267 9,603,036 4.25
Iowa............................. 126 4,514,624 2.00
Kansas........................... 164 5,807,813 2.57
Kentucky......................... 100 3,626,675 1.61
Louisiana........................ 61 2,392,583 1.06
Maine............................ 15 655,170 0.29
Maryland......................... 72 2,910,445 1.29
Massachusetts.................... 1 34,947 0.02
Michigan......................... 93 3,848,767 1.71
Minnesota........................ 226 8,234,959 3.65
Mississippi...................... 42 1,520,078 0.67
Missouri......................... 217 7,679,614 3.40
Montana.......................... 45 1,584,403 0.70
Nebraska......................... 133 5,028,822 2.23
Nevada........................... 82 3,204,260 1.42
New Hampshire.................... 5 181,191 0.08
New Jersey....................... 2 68,628 0.03
New Mexico....................... 49 1,793,328 0.79
New York......................... 15 538,813 0.24
North Carolina................... 215 7,804,980 3.46
North Dakota..................... 23 790,127 0.35
Ohio............................. 253 9,330,498 4.13
Oklahoma......................... 200 7,234,710 3.21
Oregon........................... 87 3,694,450 1.64
Pennsylvania..................... 27 822,678 0.36
Rhode Island..................... 13 469,211 0.21
South Carolina................... 163 6,296,681 2.79
South Dakota..................... 43 1,563,592 0.69
Tennessee........................ 86 3,007,463 1.33
Texas............................ 3 100,012 0.04
Utah............................. 54 2,244,974 0.99
Vermont.......................... 1 22,482 0.01
Virginia......................... 95 3,225,362 1.43
Washington....................... 201 8,071,766 3.58
Wisconsin........................ 122 4,642,624 2.06
Wyoming.......................... 54 2,127,984 0.94
-------- ------------ -------
Total....................... 5,924 $225,721,533 100.00%
===== ============ ======
</TABLE>
<PAGE>
Cut-Off Date Principal Balances
<TABLE>
<CAPTION>
% of Cut-Off
Range of Cut-Off Aggregate Cut-Off Date Pool
Date Principal Number Date Principal Principal
Balances of Loans Balance Balance
-------- -------- ------- -------
<S> <C> <C> <C>
$10,000 or less.................................. 8 $ 66,227 0.03%
$10,000.01 - $20,000............................. 454 7,671,251 3.40
$20,000.01 - $30,000............................. 1,339 34,799,117 15.42
$30,000.01 - $40,000............................. 1,827 64,605,043 28.62
$40,000.01 - $50,000............................. 1,315 60,440,346 26.78
$50,000.01 - $60,000............................. 609 33,126,363 14.68
$60,000.01 - $70,000............................. 256 16,443,142 7.28
$70,000.01 - $80,000............................. 116 8,570,045 3.80
------- ------------ --------
Total....................................... 5,924 $225,721,533 100.00%
===== ============ ======
</TABLE>
As of the Cut-Off Date, the average Cut-Off Date Principal Balance of the
Loans was $38,103
Loan Rates
<TABLE>
<CAPTION>
% of Cut-Off
Aggregate Cut-Off Date Pool
Range of Loan Number Date Principal Principal
Rates of Loans Balance Balance
----- -------- ------- -------
<S> <C> <C> <C>
10.501% - 11.000%............................. 26 $ 1,088,831 0.48%
11.001% - 11.500% ............................ 26 950,348 0.42
11.501% - 12.000%............................. 382 15,893,378 7.04
12.001% - 12.500%............................. 411 16,633,639 7.37
12.501% - 13.000%............................. 942 39,258,478 17.39
13.001% - 13.500%............................. 492 20,270,189 8.98
13.501% - 14.000%............................. 1,687 63,651,409 28.20
14.001% - 14.500%............................. 526 20,410,497 9.04
14.501% - 15.000%............................. 780 26,703,739 11.83
15.001% - 15.500%............................. 321 10,606,475 4.70
15.501% - 16.000%............................. 189 6,000,826 2.66
16.001% - 16.500%............................. 65 2,015,323 0.89
16.501% - 17.000%............................. 50 1,439,435 0.64
17.001% - 17.500%............................. 15 438,483 0.19
17.501% - 18.000%............................. 12 360,481 0.16
------- ------------ ----
Total...................................... 5,924 $225,721,533 100.00%
===== ============ ======
</TABLE>
As of the Cut-Off Date, the weighted average Loan Rate of the Loans was
approximately 13.77% per annum.
<PAGE>
Lien Priority
<TABLE>
<CAPTION>
% of Cut-Off
Aggregate Cut-Off Date Pool
Number Date Principal Principal
Lien Priority of Loans Balance Balance
- ------------- -------- ------- -------
<S> <C> <C> <C>
First Lien....................................... 13 $ 541,350 0.24%
Second Lien...................................... 5,911 225,180,182 99.76
----- ------------ -------
Total....................................... 5,924 $225,721,533 100.00%
====== ============ =======
</TABLE>
Combined Loan-to-Value Ratios
<TABLE>
<CAPTION>
% of Cut-Off
Aggregate Cut-Off Date Pool
Range of Combined Number Date Principal Principal
Loan-to-Value Ratios of Loans Balance Balance
-------------------- -------- ------- -------
<S> <C> <C> <C>
30.01% - 35.00%............................. 1 $ 31,641 0.01%
40.01% - 45.00%............................. 1 39,514 0.02
50.01% - 55.00%............................. 2 40,851 0.02
60.01% - 65.00%............................. 2 56,579 0.03
65.01% - 70.00%............................. 2 81,497 0.04
70.01% - 75.00%............................. 2 59,221 0.03
75.01% - 80.00%............................. 2 64,281 0.03
80.01% - 85.00%............................. 10 326,989 0.14
85.01% - 90.00%............................. 19 612,218 0.27
90.01% - 95.00%............................. 23 625,161 0.28
95.01% - 100.00%............................. 45 1,261,653 0.56
100.01% - 105.00%............................. 416 13,293,848 5.89
105.01% - 110.00%............................. 554 18,634,818 8.26
110.01% - 115.00%............................. 828 29,533,848 13.08
115.01% - 120.00%............................. 1,035 40,592,423 17.98
120.01% - 125.00%............................. 2,982 120,466,990 53.37
------ ------------ -------
Total...................................... 5,924 $225,721,533 100.00%
===== ============ ======
</TABLE>
As of the Cut-Off Date, the weighted average Combined Loan-to-Value Ratio
of the Loans (excluding the Unsecured Loans) was approximately 118.32%.
<PAGE>
Months Since Origination
<TABLE>
<CAPTION>
% of Cut-Off
Aggregate Cut-Off Date Pool
Loan Age Number Date Principal Principal
(in months) of Loans Balance Balance
----------- -------- ------- -------
<S> <C> <C> <C>
Less than one.................................... 359 $ 10,127,717 4.49%
1 - 3............................................ 860 32,738,398 14.50
4 - 6............................................ 885 35,116,316 15.56
7 - 9............................................ 2,270 91,280,311 40.44
10 or greater.................................... 1,550 56,458,790 25.01
----- ------------ -------
Total....................................... 5,924 $225,721,533 100.00%
===== ============ =======
</TABLE>
As of the Cut-Off Date, the weighted average number of months since
origination of the Loans was 7 months.
Remaining Terms to Maturity
<TABLE>
<CAPTION>
Range of
Remaining % of Cut-Off
Terms to Aggregate Cut-Off Date Pool
Maturity Number Date Principal Principal
(in months) of Loans Balance Balance
----------- -------- ------- -------
<S> <C> <C> <C>
31 - 60......................................... 10 $ 267,450 0.12%
61 - 90......................................... 9 302,478 0.13
91 - 120........................................ 117 3,235,662 1.43
121 - 150........................................ 45 1,208,870 0.54
151 - 180........................................ 4,032 148,913,522 65.97
181 - 210........................................ 1 34,667 0.02
211 -240......................................... 1,710 71,758,883 31.79
----- ------------ -------
Total....................................... 5,924 $225,721,533 100.00%
===== ============ =======
</TABLE>
As of the Cut-Off Date, the weighted average remaining term to maturity of
the Loans was approximately 191 months.
<PAGE>
Original Terms to Maturity
<TABLE>
<CAPTION>
Original % of Cut-Off
Term to Aggregate Cut-Off Date Pool
Maturity Number Date Principal Principal
(in months) of Loans Balance Balance
----------- -------- ------- -------
<S> <C> <C> <C>
31 - 60......................................... 10 $ 267,450 0.12%
61 - 90......................................... 6 187,444 0.08
91 - 120........................................ 120 3,350,696 1.48
121 - 150........................................ 45 1,208,870 0.54
151 - 180........................................ 4,032 148,913,522 65.97
181 - 210........................................ 1 34,667 0.02
211 - 240........................................ 1,710 71,758,883 31.79
----- ------------ -------
Total....................................... 5,924 $225,721,533 100.00%
===== ============ =======
</TABLE>
As of the Cut-Off Date, the weighted average original term to maturity of
the Loans was approximately 198 months.
Credit Score
<TABLE>
<CAPTION>
% of Cut-Off
Aggregate Cut-Off Date Pool
Range of Credit Number Date Principal Principal
Scores of Loans Balance Balance
------ -------- ------- -------
<S> <C> <C> <C>
620 to 639....................................... 770 $ 23,725,050 10.51%
640 to 659....................................... 1,349 47,744,357 21.15
660 to 679....................................... 1,283 49,791,863 22.06
680 to 699....................................... 1,104 45,086,981 19.97
700 to 719....................................... 830 35,316,339 15.65
720 to 739....................................... 364 15,000,569 6.65
740 to 759....................................... 162 6,585,535 2.92
760 to 779....................................... 53 1,982,303 0.88
780 to 799....................................... 9 488,537 0.22
----- ------------ --------
Total....................................... 5,924 $225,721,533 100.00%
===== ============ =======
</TABLE>
As of the Cut-Off Date, the weighted average Credit Score of the Loans was
678.
<PAGE>
Debt-to-Income Ratio
<TABLE>
<CAPTION>
% of Cut-Off
Range of Aggregate Cut-Off Date Pool
Debt-to-Income Number Date Principal Principal
Ratios of Loans Balance Balance
<S> <C> <C> <C>
20.00 or less.................................... 94 $ 3,260,706 1.44%
20.01 to 25.00................................... 271 9,527,828 4.22
25.01 to 30.00................................... 741 26,485,425 11.73
30.01 to 35.00................................... 1,255 45,824,117 20.30
35.01 to 40.00................................... 1,606 59,715,749 26.46
40.01 to 45.00................................... 1,288 51,357,031 22.75
45.01 to 50.00................................... 663 29,342,214 13.00
Greater than 50.00............................... 6 208,463 0.09
----- ------------ -------
Total....................................... 5,924 $225,721,533 100.00%
===== ============ =======
</TABLE>
As of the Cut-Off Date, the weighted average debt-to-income ratio of the
Loans was approximately 37.43%.
