<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-08328-01
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
OFFERS TO BUY THESE SECURITIES MAY NOT BE ACCEPTED WITHOUT THE DELIVERY OF A
FINAL PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES, IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 16, 1998
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED MARCH 16, 1998)
$[ ]
(APPROXIMATE)
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION,
DEPOSITOR
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-C1
CONTITRADE SERVICES L.L.C., GERMAN AMERICAN CAPITAL CORPORATION,
MORGAN STANLEY MORTGAGE CAPITAL INC., RED MOUNTAIN FUNDING, L.L.C.,
AND BOSTON CAPITAL MORTGAGE COMPANY LIMITED PARTNERSHIP,
MORTGAGE LOAN SELLERS
The Commercial Mortgage Pass-Through Certificates, Series 1998-C1 (the
"Certificates") will represent beneficial ownership interests in a trust fund
(the "Trust Fund") to be created by Deutsche Mortgage & Asset Receiving
Corporation (the "Depositor"). The Trust Fund will consist primarily of a
pool (the "Mortgage Pool") of 379 fixed-rate mortgage loans (which will
include six participations) with original terms to maturity of generally
(cover page continued on page S-3)
<TABLE>
<CAPTION>
INITIAL CERTIFICATE ASSUMED FINAL FITCH/MOODY'S
CLASS BALANCE (1) PASS-THROUGH RATE DISTRIBUTION DATE (2) RATINGS
- ------------- ----------------------- --------------------- ----------------------- -----------------
<S> <C> <C> <C> <C>
Class X (3)
Class A-1
Class A-2
Class B
Class C
Class D
Class E (4)
</TABLE>
(footnotes on page S-3)
THE CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
DEPOSITOR, DEUTSCHE BANK AG, THE MORTGAGE LOAN SELLERS, THE SERVICER, THE
SPECIAL SERVICER, THE TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THE CERTIFICATES NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING UNDER THE
CAPTIONS "RISK FACTORS" HEREIN COMMENCING ON PAGE S-21 AND "RISK FACTORS" IN
THE PROSPECTUS COMMENCING ON PAGE 9.
The Offered Certificates will be purchased from the Depositor by Deutsche
Morgan Grenfell Inc., Morgan Stanley & Co. Incorporated and Llama Company,
L.P. (the "Underwriters" with Deutsche Morgan Grenfell Inc. and Morgan
Stanley & Co. Incorporated as co-bookrunners and co-lead managers) and will
be offered by the Underwriters from time to time to the public in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. Proceeds to the Depositor from the sale of the Offered Certificates
will be approximately [ ]% of the initial aggregate principal balance
thereof as of the date on which the Certificates are issued plus accrued
interest from March 1, 1998 as described herein before deducting expenses
payable by the Depositor.
The Offered Certificates are offered by the Underwriters subject to prior
sale, when, as and if issued, delivered to and accepted by the Underwriters.
It is expected that delivery of the Offered Certificates will be made through
the facilities of The Depository Trust Company ("DTC") in the United States
and Cedel Bank, societe anonyme ("CEDEL") and The Euroclear System
("Euroclear") in Europe, on or about March [ ], 1998.
DEUTSCHE MORGAN GRENFELL MORGAN STANLEY DEAN WITTER
LLAMA COMPANY, L.P.
and solely as members of the selling group
CONTIFINANCIAL SERVICES CORPORATION SOUTHTRUST SECURITIES, INC.
The date of this Prospectus Supplement is March [ ], 1998
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
-----------------------------------------------
Commercial Mortgage Pass-Through Certificates Series 1998-C1
Geographic Overview of Mortgage Pool
WASHINGTON IDAHO UTAH MISSOURI
10 properties 2 properties 6 properties 15 properties
$38,871,873 $3,787,298 $5,095,155 $26,583,313
2.10% of total 0.20% of total 0.27% of total 1.43% of total
IOWA MINNESOTA ILLINOIS WISCONSIN
3 properties 2 properties 8 properties 5 properties
$6,851,663 $3,698,139 $29,830,907 $16,734,678
0.37% of total 0.20% of total 1.61% of total 0.90% of total
VERMONT NEW HAMPSHIRE OREGON
2 properties 9 properties 7 properties
$10,281,722 $25,823,694 $15,416,719
0.55% of total 1.39% of total 0.83% of total
MICHIGAN INDIANA NEW YORK MASSACHUSETTS
22 properties 1 property 49 properties 19 properties
$29,978,582 $1,939,366 $189,911,727 $153,316,040
1.62% of total 0.10% of total 10.24% of total 8.27% of total
OHIO CONNECTICUT RHODE ISLAND PENNSYLVANIA
6 properties 6 properties 2 properties 27 properties
$18,639,717 $19,018,060 $2,442,810 $85,106,381
1.00% of total 1.03% of total 0.13% of total 4.59% of total
NEW JERSEY WEST VIRGINIA MARYLAND VIRGINIA
5 properties 1 property 10 properties 11 properties
$11,631,289 $6,400,000 $44,698,713 $48,752,389
0.63% of total 0.35% of total 2.41% of total 2.63% of total
CALIFORNIA NEVADA ARIZONA TENNESSEE
56 properties 3 properties 9 properties 15 properties
$303,807,858 $31,744,969 $25,451,684 $73,898,329
16.38% of total 1.71% of total 1.37% of total 3.98% of total
NORTH CAROLINA GEORGIA SOUTH CAROLINA NEW MEXICO
13 properties 34 properties 2 properties 5 properties
$21,077,871 $97,658,251 $1,487,462 $10,044,035
1.14% of total 5.27% of total 0.08% of total 0.54% of total
COLORADO OKLAHOMA ARKANSAS MISSISSIPPI
14 properties 5 properties 19 properties 2 properties
$74,848,481 $9,843,750 $14,474,667 $1,367,666
4.04% of total 0.53% of total 0.78% of total 0.07% of total
KENTUCKY ALABAMA FLORIDA TEXAS
2 properties 4 properties 35 properties 68 properties
$10,029,153 $34,543,983 $148,923,539 $121,107,985
0.54% of total 1.86% of total 8.03% of total 6.53% of total
KANSAS LOUISIANA HAWAII PUERTO RICO
2 properties 11 properties 1 property 1 property
$2,891,305 $47,334,819 $1,488,442 $27,955,965
0.16% of total 2.55% of total 0.08% of total 1.51% of total
<PAGE>
(The footnotes to the table on the cover page are as follows)
- ------------
(1) Approximate, subject to adjustment as described herein.
(2) The Rated Final Distribution Date is June 15, 2031. See "Prepayment and
Yield Considerations -- Rated Final Distribution Date" and "Rating"
herein.
(3) The Class X Certificates will not have a Certificate Balance and will
not be entitled to receive distributions of principal. Interest will
accrue on such Class of Certificates at the Pass-Through Rate thereof
on the Notional Balance thereof. The Notional Balance of the Class X
Certificates is initially $[ ], which is equal to the aggregate
principal balance of the Mortgage Loans as of the Cut-Off Date. See
"Description of the Offered Certificates" herein.
(4) The Pass-Through Rate on the Class E Certificates will equal the lesser
of [ ]% and the Weighted Average Net Mortgage Pass-Through Rate.
(continuation of cover page)
not more than thirty years (the "Mortgage Loans") secured by first liens on
529 commercial and multifamily residential properties (the "Mortgaged
Properties"). The Mortgaged Properties consist primarily of anchored and
unanchored retail properties, multifamily residential housing, office
buildings, healthcare facilities, full and limited service hotels, industrial
properties, self-storage facilities and mobile home parks. As of March 1,
1998 (the "Cut-Off Date"), the Mortgage Loans are expected to have an
aggregate principal balance of approximately $1,854,790,449 (the "Initial
Pool Balance") after application of all payments of principal due on or
before such date, whether or not received. The characteristics of the
Mortgage Loans and the Mortgaged Properties are more fully described herein
under "Description of the Mortgage Pool" and in Annex A hereto. Each of the
Mortgage Loans was either purchased or originated by ContiTrade Services
L.L.C., German American Capital Corporation, Morgan Stanley Mortgage Capital
Inc., Boston Capital Mortgage Company Limited Partnership, or Red Mountain
Funding, L.L.C. (collectively, the "Mortgage Loan Sellers") and will be sold
to the Depositor on or prior to the date of initial issuance of the
Certificates.
The Certificates will consist of 17 classes (each, a "Class"), designated
as the Class X Certificates, Class A-1 Certificates, Class A-2 Certificates,
Class B Certificates, Class C Certificates, Class D Certificates, Class E
Certificates, Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates, Class L
Certificates, Class Q-1 Certificates, Class Q-2 Certificates, Class R
Certificates and Class LR Certificates. Only the Class X, Class A-1, Class
A-2, Class B, Class C, Class D and Class E Certificates (collectively, the
"Offered Certificates") are offered hereby; the Class F, Class G, Class H,
Class J, Class K, Class L, Class Q-1, Class Q-2, Class R and Class LR
Certificates (collectively, the "Private Certificates") are not offered
hereby.
Distributions on the Offered Certificates will be made, to the extent of
Available Funds, on the 15th day of each month, or, if any such 15th day is
not a business day, on the next succeeding business day, beginning in April
1998 (each, a "Distribution Date"). Distributions allocable to interest on
the Offered Certificates on each Distribution Date will be based on the
pass-through rate for the respective Class as described herein (the
"Pass-Through Rate") and the aggregate principal balance (the "Certificate
Balance") or notional balance (the "Notional Balance"), as applicable, of
such Class outstanding immediately prior to such Distribution Date.
Distributions in respect of principal of the Offered Certificates will be
made as described herein under "Description of the Offered Certificates --
Distributions -- Payment Priorities."
The rights of the holders of the Class B, Class C, Class D and Class E
Certificates to receive distributions with respect to the Mortgage Loans will
be subordinate to the rights of the holders of the Class X, Class A-1 and
Class A-2 Certificates and, further, in the case of any of the Class B, Class
C, Class D and Class E Certificates, to the rights of the holders of each
such other Class of Offered Certificates, if any, with an earlier
alphabetical Class designation, in each case to the extent described herein.
See "Description of the Offered Certificates -- Realized Losses" and
"--Subordination" herein.
S-3
<PAGE>
THE YIELD TO INVESTORS, IN PARTICULAR INVESTORS IN SUBORDINATE CLASSES,
WILL BE SENSITIVE TO THE TIMING OF PREPAYMENTS, REPURCHASES OR PURCHASES OF
MORTGAGE LOANS, AND THE MAGNITUDE OF LOSSES ON THE MORTGAGE LOANS DUE TO
LIQUIDATIONS. NO REPRESENTATION IS MADE AS TO THE RATE OF PREPAYMENTS ON, OR
RATE OR AMOUNT OF LIQUIDATIONS OF, THE MORTGAGE LOANS OR AS TO THE
ANTICIPATED YIELD TO MATURITY OF ANY OFFERED CERTIFICATE. THE YIELD TO
MATURITY ON EACH CLASS OF THE OFFERED CERTIFICATES WILL BE SENSITIVE TO, AND
THE YIELD TO MATURITY OF THE CLASS X CERTIFICATES WILL BE EXTREMELY SENSITIVE
TO, THE RATE AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING BOTH VOLUNTARY AND
INVOLUNTARY PREPAYMENTS, DEFAULTS AND LIQUIDATIONS) ON THE MORTGAGE LOANS AND
PAYMENTS WITH RESPECT TO PURCHASES OR REPURCHASES THEREOF THAT ARE APPLIED IN
REDUCTION OF THE CERTIFICATE BALANCE OR NOTIONAL BALANCE OF SUCH CLASS. A
RAPID RATE OF SUCH PRINCIPAL PAYMENTS COULD RESULT IN THE FAILURE OF
INVESTORS IN THE CLASS X CERTIFICATES TO RECOVER THEIR INITIAL INVESTMENT.
SEE "RISK FACTORS -- SPECIAL PREPAYMENT AND YIELD CONSIDERATIONS" AND
"PREPAYMENT AND YIELD CONSIDERATIONS" HEREIN AND "YIELD AND MATURITY
CONSIDERATIONS" IN THE PROSPECTUS.
Banc One Mortgage Capital Markets, LLC will act as servicer of the
Mortgage Loans (the "Servicer"). The obligations of the Servicer with respect
to the Certificates will be limited to its contractual servicing obligations
and the obligation under certain circumstances to make Advances in respect of
the Mortgage Loans. With respect to Specially Serviced Mortgage Loans, Banc
One Mortgage Capital Markets, LLC, in its capacity as the special servicer
(the "Special Servicer"), may be required to make Property Advances. If the
Servicer is not the Special Servicer and the Special Servicer fails to make
the required Property Advance, the Servicer, subject to a recoverability
determination, will be required to make the Property Advance. Neither the
Servicer nor the Special Servicer will act as an insurer or credit enhancer
of the Mortgage Pool. If the Servicer fails to make a required Advance,
LaSalle National Bank (the "Trustee"), subject to a recoverability
determination, will be required to make such Advance. If the Trustee fails to
make a required Advance, ABN AMRO Bank N.V., as the fiscal agent of the
Trustee (the "Fiscal Agent"), subject to a recoverability determination, will
be required to make the Advance. See "The Pooling and Servicing Agreement --
Advances" herein.
It is a condition to the issuance of the Offered Certificates that such
Certificates be rated as indicated on the cover by each of Fitch IBCA, Inc.
("Fitch") and Moody's Investors Service, Inc. ("Moody's," and together with
Fitch, the "Rating Agencies").
Elections will be made to treat designated portions of the Trust Fund
(other than Excess Interest and Default Interest) (such portions of the Trust
Fund, the "Trust REMICs" as two separate "real estate mortgage investment
conduits" (each a "REMIC" and the "Upper-Tier REMIC" and the "Lower-Tier
REMIC," respectively) for federal income tax purposes. The Class X, Class
A-1, Class A-2, Class B, Class C, Class D, Class E, Class F, Class G, Class
H, Class J, Class K and Class L Certificates will constitute "regular
interests" in the Upper-Tier REMIC, and the Class R and Class LR Certificates
will constitute the sole Classes of "residual interests" in the Upper-Tier
REMIC and Lower-Tier REMIC, respectively. The Certificates, other than the
Class Q-1, Class Q-2, Class R and Class LR Certificates, are sometimes
collectively referred to herein as the "Regular Certificates." The Class Q-1
Certificates will represent the right to receive Net Default Interest and the
Class Q-2 Certificates will represent the right to receive Excess Interest,
which portions of the Trust Fund will be treated as a grantor trust for
federal income tax purposes. See "Certain Federal Income Tax Consequences"
herein and "Certain Federal Income Tax Consequences" in the Prospectus.
There is currently no secondary market for the Offered Certificates. The
Underwriters currently expect to make a secondary market in the Offered
Certificates, but have no obligation to do so. There can be no assurance that
such a market will develop or, if it does develop, that it will continue. See
"Method of Distribution" herein.
THE OFFERED CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE
PART OF A SEPARATE SERIES OF CERTIFICATES ISSUED BY THE DEPOSITOR AND ARE
BEING OFFERED PURSUANT TO ITS PROSPECTUS DATED MARCH 16, 1998, OF WHICH THIS
PROSPECTUS SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS PROSPECTUS
SUPPLEMENT.
S-4
<PAGE>
THE PROSPECTUS CONTAINS IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH
IS NOT CONTAINED HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO READ THE
PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE OFFERED
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL
DEALERS EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
___________________
FORWARD-LOOKING STATEMENTS
IF AND WHEN INCLUDED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS OR IN DOCUMENTS INCORPORATED HEREIN OR THEREIN BY REFERENCE, THE
WORDS "EXPECTS," "INTENDS," "ANTICIPATES," "ESTIMATES" AND ANALOGOUS
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ANY SUCH
STATEMENTS, WHICH MAY INCLUDE STATEMENTS CONTAINED IN "RISK FACTORS,"
INHERENTLY ARE SUBJECT TO A VARIETY OF RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. SUCH RISKS
AND UNCERTAINTIES INCLUDE, AMONG OTHERS, GENERAL ECONOMIC AND BUSINESS
CONDITIONS, COMPETITION, CHANGES IN FOREIGN POLITICAL, SOCIAL AND ECONOMIC
CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL
REGULATIONS, CUSTOMER PREFERENCES AND VARIOUS OTHER MATTERS, MANY OF WHICH
ARE BEYOND THE DEPOSITOR'S CONTROL. THESE FORWARD-LOOKING STATEMENTS SPEAK
ONLY AS OF THE DATE OF THIS PROSPECTUS SUPPLEMENT. THE DEPOSITOR EXPRESSLY
DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR
REVISIONS TO ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN TO REFLECT ANY
CHANGE IN THE DEPOSITOR'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN
EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.
S-5
<PAGE>
EXECUTIVE SUMMARY
Prospective investors are advised to carefully read, and should rely
solely on, the detailed information appearing elsewhere in this Prospectus
Supplement and the Prospectus relating to the Offered Certificates in making
their investment decision. The following Executive Summary does not include
all relevant information relating to the securities and assets described
herein, particularly with respect to the risks involved with an investment in
such securities, and is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
the Prospectus. Capitalized terms used and not otherwise defined herein have
the respective meanings assigned to them in this Prospectus Supplement and
the Prospectus. See "Index of Significant Definitions" in this Prospectus
Supplement and "Index of Principal Definitions" in the Prospectus.
The Offered Certificates ...... The following table sets forth certain
summary information regarding the Offered
Certificates. See "Description of the
Offered Certificates" herein.
<TABLE>
<CAPTION>
INITIAL
CERTIFICATE
OR NOTIONAL PERCENT OF
CLASS RATINGS(1) BALANCE(2) TOTAL
- ------- ---------- ------------- ------------
<S> <C> <C> <C>
Offered Certificates (Investment Grade
Certificates)
X ...... (4)
A-1.....
A-2.....
B.......
C.......
D.......
E.......
Non-Offered Certificates (Non-Investment Grade
Certificates)
F ......
G ......
H.......
J.......
K.......
L.......
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PASS-THROUGH
APPROXIMATE DESCRIPTION OF RATE AS OF WEIGHTED
CREDIT PASS-THROUGH CUT-OFF AVG. LIFE PRINCIPAL
CLASS SUPPORT RATE DATE (YRS.)(3) WINDOW(3)
- ------- ------------- -------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Offered Certificates (Investment Grade Certificates)
X ......
A-1.....
A-2.....
B.......
C.......
D.......
E.......
Non-Offered Certificates (Non-Investment Grade Certificates)
F ......
G ......
H.......
J.......
K.......
L.......
</TABLE>
- ------------
The Class Q-1, Class Q-2, Class R and Class LR Certificates are not
represented in this table.
(1) Rating Agencies (Fitch/Moody's)
(2) Approximate, subject to adjustment as described herein.
(3) The weighted average life ("Weighted Avg. Life") and period during
which distributions of principal (or cash flow in the case of the Class
X Certificates) would be received (the "Principal Window") set forth in
the foregoing table with respect to each Class of Certificates is based
on the Modeling Assumptions and on the Prepayment Assumptions and on
the assumptions that there are no prepayments (other than on the
Anticipated Repayment Date, if any) or losses on the Mortgage Loans and
no extensions of maturity dates of Mortgage Loans that do not have
Anticipated Repayment Dates.
(4) Notional Balance
S-6
<PAGE>
The Mortgage Pool ............ The following table sets forth certain
summary information regarding the Mortgage
Loans. See "Description of the Mortgage Pool
-- Changes in Mortgage Pool Characteristics"
herein and see Annex A hereto for additional
information.
<TABLE>
<CAPTION>
<S> <C>
Initial Pool Balance (1) .........................$1,854,790,449
Number of Mortgage Loans ......................... 379
Number of Mortgaged Properties ................... 529
Average Mortgage Loan Balance .................... $ 4,893,906
Weighted Average Mortgage Rate ................... 7.79%
Weighted Average Remaining Term to the Earlier of
Maturity or Anticipated Repayment Date .......... 136 months
Weighted Average DSCR (2) ........................ 1.39x
Weighted Average LTV ............................. 72.7%
ARD Loans (3) .................................... 50.4%
Fully Amortizing Loans (other than ARD Loans) ... 6.9%
Balloon Loans .................................... 42.7%
</TABLE>
- ------------
(1) Subject to a permitted variance of plus or minus 5%.
(2) Debt Service Coverage Ratio ("DSCR") for any Mortgage Loan is equal to
the Underwritten Cash Flow from the related Mortgaged Property divided
by the Annual Debt Service for such Mortgaged Property (as such terms
are defined under "Definitions" in Annex A hereto).
(3) "ARD Loans" are Mortgage Loans that, although they substantially fully
amortize by their respective maturity dates, they provide that
commencing on or within three months after a certain date (the
"Anticipated Repayment Date") prior to maturity, the outstanding
principal balance of the related ARD Loan will bear interest at a rate
which, in most cases, will be higher than the rate previously in effect
unless and until the borrower elects to prepay the Mortgage Loan in
full. A substantial amount of the principal balance is expected to be
outstanding on each ARD Loan on the related Anticipated Repayment Date.
See "Description of the Mortgage Pool -- Certain Terms and Conditions
of the Mortgage Loans" herein.
S-7
<PAGE>
PROSPECTUS SUPPLEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
EXECUTIVE SUMMARY................................................................. S-6
SUMMARY OF PROSPECTUS SUPPLEMENT.................................................. S-10
RISK FACTORS...................................................................... S-21
The Mortgage Loans............................................................... S-21
The Certificates................................................................. S-31
DESCRIPTION OF THE MORTGAGE POOL.................................................. S-33
General.......................................................................... S-33
Security for the Mortgage Loans.................................................. S-34
The Mortgage Loan Sellers........................................................ S-35
Certain Underwriting Matters..................................................... S-36
Certain Terms and Conditions of the Mortgage Loans............................... S-38
Changes in Mortgage Pool Characteristics......................................... S-42
DESCRIPTION OF THE OFFERED CERTIFICATES........................................... S-42
General.......................................................................... S-42
Distributions.................................................................... S-43
Realized Losses.................................................................. S-52
Prepayment Interest Shortfall.................................................... S-53
Subordination.................................................................... S-54
Appraisal Reductions............................................................. S-54
Delivery, Form and Denomination.................................................. S-55
Book-Entry Registration.......................................................... S-56
Definitive Certificates.......................................................... S-58
Transfer Restrictions............................................................ S-59
PREPAYMENT AND YIELD CONSIDERATIONS............................................... S-60
Yield............................................................................ S-60
Yield on the Class X Certificates................................................ S-62
Rated Final Distribution Date.................................................... S-63
Weighted Average Life of Offered Certificates.................................... S-63
THE POOLING AND SERVICING AGREEMENT............................................... S-67
General.......................................................................... S-67
Assignment of the Mortgage Loans................................................. S-67
Representations and Warranties; Repurchase; Substitution......................... S-67
Servicing of the Mortgage Loans; Collection of Payments.......................... S-69
Advances......................................................................... S-70
Accounts......................................................................... S-72
Withdrawals from the Collection Account.......................................... S-73
Enforcement of "Due-on-Sale" and "Due-on-Encumbrance" Clauses.................... S-73
Inspections...................................................................... S-74
Insurance Policies............................................................... S-74
Evidence as to Compliance........................................................ S-76
Certain Matters Regarding the Depositor, the Servicer and the Special Servicer .. S-76
Events of Default................................................................ S-78
Rights Upon Event of Default..................................................... S-78
Amendment........................................................................ S-79
Voting Rights.................................................................... S-80
Realization Upon Mortgage Loans.................................................. S-80
S-8
<PAGE>
PAGE
---------
Modifications.................................................................... S-82
Optional Termination............................................................. S-83
The Trustee...................................................................... S-84
Duties of the Trustee............................................................ S-85
The Fiscal Agent................................................................. S-85
Duties of the Fiscal Agent....................................................... S-85
The Servicer..................................................................... S-86
Servicing Compensation and Payment of Expenses................................... S-86
Special Servicing................................................................ S-87
The Healthcare Adviser........................................................... S-90
Servicer and Special Servicer Permitted to Buy Certificates...................... S-91
Reports to Certificateholders; Available Information............................. S-91
Trustee Reports................................................................. S-91
Servicer Reports................................................................ S-93
Other Information............................................................... S-94
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS ...................................... S-95
USE OF PROCEEDS................................................................... S-96
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........................................... S-96
General.......................................................................... S-96
ERISA CONSIDERATIONS.............................................................. S-98
LEGAL INVESTMENT.................................................................. S-101
METHOD OF DISTRIBUTION............................................................ S-101
LEGAL MATTERS..................................................................... S-103
RATING............................................................................ S-103
Annex A Certain Characteristics of the Mortgage Loans ............................ A-1
Annex B Form of Trustee Reports .................................................. B-1
</TABLE>
S-9
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
Prospective investors are advised to carefully read, and should rely
solely on, the detailed information appearing elsewhere in this Prospectus
Supplement and in the accompanying Prospectus. The following Summary of
Prospectus Supplement does not include all relevant information relating to
the securities and assets described herein, particularly with respect to the
risks and special considerations involved with an investment in such
securities, and is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
Prospectus. Prior to making an investment decision, a prospective investor
should carefully review this Prospectus Supplement and the Prospectus.
Capitalized terms used and not otherwise defined herein have the respective
meanings assigned to them in this Prospectus Supplement and in the
Prospectus. See "Index of Significant Definitions" in this Prospectus
Supplement and "Index of Principal Definitions" in the Prospectus.
Title of Certificates ......... Deutsche Mortgage & Asset Receiving
Corporation, Commercial Mortgage
Pass-Through Certificates, Series 1998-C1
(the "Certificates"). The Certificates will
be issued pursuant to a Pooling and
Servicing Agreement to be dated as of March
1, 1998 (the "Pooling and Servicing
Agreement") among the Depositor, the
Servicer, the Special Servicer, the Trustee
and the Fiscal Agent.
Depositor ..................... Deutsche Mortgage & Asset Receiving
Corporation, a Delaware corporation. See
"The Depositor" in the Prospectus.
Servicer ...................... Banc One Mortgage Capital Markets, LLC, a
Delaware limited liability company (the
"Servicer"). See "The Pooling and Servicing
Agreement -- The Servicer" herein and
"Description of the Pooling Agreements --
Subservicers" in the Prospectus. See "Risk
Factors -- The Certificates --Servicer or
Special Servicer May Purchase Certificates"
herein.
Special Servicer .............. Banc One Mortgage Capital Markets, LLC, a
Delaware limited liability company (in such
capacity, the "Special Servicer"). See "The
Pooling and Servicing Agreement --Special
Servicing" and "Risk Factors -- The
Certificates --Servicer or Special Servicer
May Purchase Certificates" herein.
Trustee ....................... LaSalle National Bank, a national banking
association (the "Trustee"). See "The
Pooling and Servicing Agreement -- The
Trustee" herein.
Fiscal Agent .................. ABN AMRO Bank N.V., a Netherlands banking
corporation (the "Fiscal Agent") and the
corporate parent of the Trustee.
Mortgage Loan Sellers ......... ContiTrade Services L.L.C. ("ContiTrade");
German American Capital Corporation
("GACC"), an affiliate of Deutsche Morgan
Grenfell Inc., an Underwriter; Morgan
Stanley Mortgage Capital Inc. ("MSMC"), an
affiliate of Morgan Stanley & Co.
Incorporated, an Underwriter; Red Mountain
S-10
<PAGE>
Funding, L.L.C. ("RMF"); and Boston Capital
Mortgage Company Limited Partnership ("BCMC"
and together with ContiTrade, GACC, MSMC and
RMF, the "Mortgage Loan Sellers"), an
affiliate of Llama Company, L.P. ("LCLP"),
an Underwriter. ContiTrade and Survey LLC,
the initial Healthcare Adviser, hold
ownership interests in RMF. The Mortgage
Loan Sellers will sell the Mortgage Loans to
the Depositor and, in connection therewith,
will each make certain representations and
warranties, as more fully described herein.
The Depositor will assign the Mortgage
Loans, together with its rights and remedies
in respect of breaches of each of the
Mortgage Loan Sellers' representations and
warranties to the Trustee for the benefit of
Certificateholders. See "The Pooling and
Servicing Agreement -- Representations and
Warranties; Repurchase; Substitution"
herein.
The Mortgage Loans were originated or
purchased by the Mortgage Loan Sellers as
follows:
<TABLE>
<CAPTION>
% OF CUT-OFF
INITIAL DATE
POOL PRINCIPAL
MORTGAGE LOAN SELLER BALANCE BALANCE
- ------------------------------- --------- --------------
<S> <C> <C>
ContiTrade Services L.L.C. .... 36.8% $682,577,438
German American Capital
Corporation ................... 24.4 452,581,252
Morgan Stanley Mortgage Capital
Inc. .......................... 16.1 299,073,774
Red Mountain Funding, L.L.C. .. 14.0 259,994,067
Boston Capital Mortgage Company
Limited Partnership ........... 8.7 160,563,918
</TABLE>
Cut-Off Date .................. March 1, 1998.
Closing Date .................. On or about March [ ], 1998.
Distribution Date ............. The 15th day of each month, or if such 15th
day is not a business day, the business day
immediately following such 15th day,
commencing in April 1998.
Record Date ................... With respect to any Distribution Date, the
last business day of the calendar month
immediately preceding the month in which
such Distribution Date occurs.
Interest Accrual Period ....... With respect to any Distribution Date, the
calendar month immediately preceding the
month in which such Distribution Date
occurs.
Rated Final Distribution Date . June 15, 2031. See "Prepayment and Yield
Considerations -- Rated Final Distribution
Date" herein.
S-11
<PAGE>
Denominations;
Clearance and Settlement ..... The Offered Certificates will be issuable in
registered form, in minimum denominations of
Certificate Balance of $50,000 and multiples
of $1 in excess thereof and, in the case of
the Class X Certificates, in minimum
denominations of Notional Balance of
$1,000,000 and multiples of $1 in excess
thereof. Holders of Offered Certificates may
elect to hold their Certificates through any
of The Depository Trust Company ("DTC") (in
the United States) or Cedel Bank, societe
anonyme ("CEDEL") or The Euroclear System
("Euroclear") (in Europe). Transfers within
DTC, CEDEL or Euroclear, as the case may be,
will be in accordance with the usual rules
and operating procedures of the relevant
system. The Depositor may elect to terminate
the book-entry system through DTC with
respect to all or any portion of any Class
of the Offered Certificates. See
"Description of the Offered Certificates --
Delivery, Form and Denomination,"
"--Book-Entry Registration" and
"--Definitive Certificates" herein and
"Description of the Certificates
--Book-Entry Registration and Definitive
Certificates" in the Prospectus.
The Mortgage Loans ............ The Mortgage Pool will consist of 379
Mortgage Loans, with an Initial Pool Balance
of $1,854,790,449, subject to a variance of
plus or minus 5%. All numerical information
provided herein with respect to the Mortgage
Loans is provided on an approximate basis.
The principal balances of the Mortgage Loans
as of the Cut-Off Date (each, a "Cut-Off
Date Principal Balance") will range from
$149,134 to $63,109,462 and the average
Cut-Off Date Principal Balance will be
$4,893,906.
Security for the Mortgage Loans
Each Mortgage Loan is secured by one or more
first priority mortgages, deeds of trust, or
other similar security instruments on the
borrower's interest (as set forth below) in
certain land used for commercial or
multifamily residential purposes, all
buildings and improvements thereon and
certain personal property located thereon
(each a "Mortgaged Property"). Mortgage
Loans representing 96.3% of the Initial Pool
Balance were secured by liens encumbering a
fee simple interest of the related borrowers
and Mortgage Loans representing 3.7% of the
Initial Pool Balance were secured by liens
encumbering a leasehold interest of the
related borrower.
Payment Terms
Each Mortgage Loan accrues interest at the
per annum rate set forth for such Mortgage
Loan on Annex A (the "Mortgage Rate") that
is fixed for the entire term of such
Mortgage Loan, except that most of the ARD
Loans accrue interest at a higher rate after
the related Anticipated Re-
S-12
<PAGE>
payment Date. An "ARD Loan" is a Mortgage
Loan which provides that, commencing on a
specified date prior to maturity (the
"Anticipated Repayment Date"), all Excess
Cash Flow is diverted to repay principal.
See "Description of the Mortgage Pool --
Certain Terms and Conditions of the Mortgage
Loans -- Excess Interest" herein.
As used herein, the term "Mortgage Rate"
does not include the portion of the interest
rate attributable to any such rate increase;
with respect to each ARD Loan, the excess,
if any, of interest at such higher rate over
interest at the Mortgage Rate (together with
interest thereon) is referred to herein as
"Excess Interest". As described below, all
of the ARD Loans permit the related borrower
to prepay such ARD Loan without payment of a
Prepayment Premium for a period beginning on
or, in the case of certain of these Mortgage
Loans generally one to six months prior to,
the Anticipated Repayment Date and ending on
the related maturity date. The Anticipated
Repayment Date for each ARD Loan is set
forth on Annex A. If the related borrower
elects to prepay an ARD Loan in full on the
related Anticipated Repayment Date, a
substantial amount of principal will be due.
With respect to any ARD Loan, payment of
Excess Interest, if any, will be deferred
until the principal of such Mortgage Loan
has been paid in full. All of the ARD Loans
for which a lock box is not already
established provide that a lock box be
established generally on, or prior to, the
applicable Anticipated Repayment Date. See
"Description of the Mortgage Pool -- Certain
Terms and Conditions of the Mortgage Loans
-- Excess Interest" herein.
Certain of the Mortgage Loans provide for
Monthly Payments based on amortization
schedules longer than the remaining stated
terms of such Mortgage Loans (such Mortgage
Loans, the "Balloon Loans"), such that
substantial amounts of principal are due and
payable on the respective maturity dates
(each such amount, after application of all
constant Monthly Payments due on or prior to
the respective maturity date, a "Balloon
Payment"), unless prepaid prior thereto.
Call Protection Characteristics of the
Mortgage Loans
All of the Mortgage Loans impose some
restriction on voluntary Principal
Prepayments during certain periods of time,
whether in the form of an absolute
prohibition or a requirement that any
voluntary principal prepayment be
accompanied by a prepayment premium. The
prepayment terms of each of the Mortgage
Loans are described herein. See "Description
of the Mortgage Pool -- Certain Terms and
Conditions of the Mortgage Loans --
Prepayment Provisions" and "--Property
Releases" herein and on Annex A hereto.
S-13
<PAGE>
The following table sets forth certain
information regarding prepayment
restrictions contained in the Mortgage
Loans.
OVERVIEW OF PREPAYMENT RESTRICTIONS
<TABLE>
<CAPTION>
% OF
INITIAL
POOL
PREPAYMENT RESTRICTION BALANCE
- ---------------------------------------------- ---------
<S> <C>
Lock-Out Period with yield maintenance ....... 42.17%
Lock-Out Period with defeasance ............... 36.32
Lock-Out Period with yield maintenance and
prepayment premium............................ 7.63
Lock-Out Period with defeasance and prepayment
premium....................................... 4.15
Lock-Out Period with prepayment premium ...... 3.69
Yield maintenance with prepayment premium ..... 2.24
Yield maintenance only......................... 1.66
Lock-Out Period only........................... 1.63
Other (1) ..................................... 0.52%
</TABLE>
(1) Includes Mortgage Loans with other types
and combinations of prepayment
restrictions.
Certificate Balances and
Notional Balances ............ Each Class of Offered Certificates has the
approximate aggregate initial Certificate
Balance or Notional Balance set forth on the
cover page of this Prospectus Supplement,
subject to a permitted variance of plus or
minus 5%.
The Private Certificates (other than the
Class Q-1, Class Q-2, Class R and Class LR
Certificates) will have the initial
aggregate Certificate Balances as set forth
under "Executive Summary" herein.
The Class Q-1, Class Q-2, Class R and Class
LR Certificates will not have Certificate
Balances or Notional Balances.
See "Description of the Offered Certificates
-- General" and "--Distributions" herein.
Pass-Through Rates ............ The per annum rate at which interest accrues
on the Regular Certificates is herein
referred to as the "Pass-Through Rate." The
Pass-Through Rate applicable to the Class X
Certificates for the initial Distribution
Date will equal [ ]% per annum. The
Pass-Through Rate applicable to the Class X
Certificates for each Distribution Date
subsequent to the initial Distribution Date
will be equal to the Weighted Average Net
Mortgage Pass-Through Rate minus the
Weighted Average Pass-Through Rate.
The Pass-Through Rates applicable to the
Class A-1, Class A-2, Class B, Class C and
Class D Certificates will be fixed and, at
all times, will be equal to the respective
Pass-
S-14
<PAGE>
Through Rates specified for each such Class
on the cover page hereof.
The Pass-Through Rates applicable to the
Class E, Class F, Class G, Class H, Class J,
Class K and Class L Certificates will, at
all times, be equal to the lesser of a
specified fixed rate and the Weighted
Average Net Mortgage Pass-Through Rate, each
with the initial Pass-Through Rate described
in the "Executive Summary" herein. The Class
Q-1, Class Q-2, Class R and Class LR
Certificates will not have Pass-Through
Rates. See "Description of the Offered
Certificates -- Distributions -- Method,
Timing and Amount" and "--Payment
Priorities" herein.
Distributions ................. On each Distribution Date, each Class of
Offered Certificates will be entitled to
receive interest distributions in an amount
equal to the Interest Accrual Amount for
such Class and Distribution Date, together
with any Interest Shortfalls remaining from
prior Distribution Dates, in each case to
the extent of Available Funds, if any,
remaining after (i) payment of the Interest
Accrual Amounts and Interest Shortfalls for
each outstanding Regular Certificates, if
any, bearing an earlier alphabetical
designation than such Class (except in
respect of the distribution of interest
among the Class X, Class A-1 and Class A-2
Certificates, which will have the same
priority), and (ii), if applicable, payment
of the Principal Distribution Amount for
such Distribution Date and an amount equal
to the aggregate unreimbursed Realized
Losses previously allocated to any such
outstanding Classes of Regular Certificates
having an earlier alphabetical designation.
See "Description of the Offered Certificates
-- Distributions -- Method, Timing and
Amount," "--Payment Priorities" and
"--Distribution of Available Funds" herein.
The Principal Distribution Amount for each
Distribution Date (prior to the Crossover
Date) will be distributed to the Offered
Certificates (other than the Class X
Certificates) in alphabetical order (and,
among Classes with the same alphabetical
designation, numerical order), until the
Certificate Balance of such Class is reduced
to zero, and then to the Private
Certificates (other than the Class Q-1,
Class Q-2, Class R and Class LR
Certificates) in accordance with the Pooling
and Servicing Agreement, in each case to the
extent of Available Funds remaining after
required distributions of interest to such
Class and after making interest and
principal distributions to any more senior
Class of Certificates. See "Description of
the Offered Certificates --Distributions --
Method, Timing and Amount," "--Payment
Priorities" and "--Distribution of Available
Funds" herein.
S-15
<PAGE>
The Class X Certificates will not be
entitled to any distributions of principal.
The Class Q-1, Class Q-2, Class R and Class
LR Certificates will not be entitled to
distributions of interest or principal.
For more information, see "Description of
the Offered Certificates -- Distributions"
herein.
Prepayment and Yield
Considerations ............... The yield to investors, in particular
investors in subordinate Classes, will be
sensitive to the timing of prepayments,
repurchases or purchases of Mortgage Loans,
and the magnitude of losses on the Mortgage
Loans due to liquidations. The yield to
maturity on each Class of the Offered
Certificates will be sensitive to, and the
yield to maturity of the Class X
Certificates will be extremely sensitive to,
the rate and timing of principal payments
(including both voluntary and involuntary
prepayments, defaults and liquidations) on
the Mortgage Loans and payments with respect
to repurchases thereof that are applied in
reduction of the Certificate Balance or
Notional Balance of such Class. A rapid rate
of such principal payments could result in
the failure of investors in the Class X
Certificates to recover their initial
investment. See "Risk Factors -- Special
Prepayment and Yield Considerations" and
"Prepayment and Yield Considerations" herein
and "Yield and Maturity Considerations" in
the Prospectus.
Subordination; Allocation of
Losses and Certain Expenses .. The rights of the holders of the Class B,
Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K and Class L
Certificates to receive distributions with
respect to the Mortgage Loans will be
subordinate to the rights of the holders of
the Class X, Class A-1 and Class A-2
Certificates and, further, in the case of
any of the Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class
K and Class L Certificates, to the rights of
the holders of each such other Class of
Certificates, if any, with an earlier
alphabetical Class designation, in each case
to the extent described herein and in the
Prospectus. This subordination will be
effected in two ways: (i) by the
preferential right of holders of a Class of
Certificates to receive on any Distribution
Date the amounts of interest and principal
distributable in respect of such
Certificates, on such date prior to any
distribution being made on such Distribution
Date in respect of any Classes of
Certificates subordinate thereto and (ii) by
the allocation of Realized Losses, in the
priority set forth in the prior sentence and
among the Class A-1 and Class A-2
Certificates, pro rata, based on their
respective outstanding Certificate Balances.
No other form of credit enhancement will be
available for the benefit of the holders of
the Offered Certificates. See "Description
of the Offered
S-16
<PAGE>
Certificates" herein. See "Description of
the Offered Certificates -- Realized Losses"
and "--Subordination" herein.
Prepayment Interest Shortfalls in excess of
the sum of (x) the Master Servicing Fee and
(y) Prepayment Interest Excess (such excess,
"Excess Prepayment Interest Shortfall"),
will be allocated to, and be deemed
distributed to, each Class of Certificates,
pro rata, based upon amounts distributable
in respect of interest to each such Class.
See "Description of the Offered Certificates
-- Prepayment Interest Shortfalls" herein.
P&I Advances .................. The Servicer is required to make advances
("P&I Advances") with respect to delinquent
Monthly Payments on the Mortgage Loans,
subject to the limitations described herein.
P&I Advances will generally equal the
delinquent portion of the Monthly Payment as
specified in the related Note. If a borrower
defaults on its obligation to pay amounts
due on the maturity date of the related
Mortgage Loan, the Servicer will be required
on such date and thereafter until final
liquidation thereof, to advance only an
amount equal to the interest and principal
portion of the constant Monthly Payment due
immediately prior to the maturity date, with
interest adjusted to the Mortgage
Pass-Through Rate (less the Master Servicing
Fee) to the extent not received. The
Servicer will not be required or permitted
to advance Default Interest or Excess
Interest. If the Servicer fails to make a
required P&I Advance, the Trustee will be
required to make the P&I Advance, and if the
Trustee fails to make a required P&I
Advance, the Fiscal Agent will be required
to make such P&I Advance, in each case
subject to a determination of
recoverability. See "The Pooling and
Servicing Agreement -- Advances" herein. P&I
Advances are intended to maintain a regular
flow of scheduled interest and principal
payments to the Certificateholders and are
not intended to guarantee or insure against
losses. Advances which cannot be reimbursed
out of collections on, or in respect of, the
related Mortgage Loans will be reimbursable
directly from any other collections on the
Mortgage Loans as provided herein and this
will cause losses to be borne by
Certificateholders in the priority specified
herein.
The Servicer, the Trustee and the Fiscal
Agent, as the case may be, will be entitled
to interest on any Advances made, such
interest accruing at the rate and payable
under the circumstances described herein.
Interest accrued on outstanding Advances may
result in reductions in amounts otherwise
payable on the Certificates. See "The
Offered Certificates -- Realized Losses",
"--Subordination" and "The Pooling and
Servicing Agreement -- Advances" herein and
"Description of the Certificates -- Advances
in Respect of Delinquencies" and
"Description of the Pooling Agreements --
Certificate Account" in the Prospectus.
S-17
<PAGE>
Optional Termination ......... At its option, on any Distribution Date on
which the remaining aggregate Stated
Principal Balance of the Mortgage Loans is
less than 1% of the Initial Pool Balance,
the Depositor, and if the Depositor does not
exercise the option, the Servicer, may
purchase, and if neither the Servicer nor
the Depositor exercises the option, any
holder of the Class LR Certificates
representing greater than a 50% Percentage
Interest of the Class LR Certificates may
purchase, all of the Mortgage Loans and REO
Properties, and thereby effect termination
of the Trust Fund and early retirement of
the then outstanding Certificates. See "The
Pooling and Servicing Agreement -- Optional
Termination" herein and "Description of the
Certificates -- Termination" in the
Prospectus.
Certain Federal Income Tax
Consequences ................. Elections will be made to treat the Trust
REMICs, and the Trust REMICs will qualify,
as two separate real estate mortgage
investment conduits (each, a "REMIC" or, in
the alternative, the "Upper-Tier REMIC" and
the "Lower-Tier REMIC," respectively) for
federal income tax purposes. The Class X,
Class A-1, Class A-2, Class B, Class C,
Class D, Class E, Class F, Class G, Class H,
Class J, Class K and Class L Certificates
(collectively, the "Regular Certificates")
will constitute "regular interests" in the
Upper-Tier REMIC, and the Class R and Class
LR Certificates (collectively the "Residual
Certificates") will be designated as the
sole Classes of "residual interests" in the
Upper-Tier REMIC and Lower-Tier REMIC,
respectively. The Class Q-1 Certificates
will represent the right to receive Default
Interest, subject to the obligation to
reimburse the Servicer, the Trustee or the
Fiscal Agent, as applicable, for interest on
Advances, and the Class Q-2 Certificates
will represent the right to receive Excess
Interest, which portions of the Trust Fund
will be treated as a grantor trust for
federal income tax purposes.
The Offered Certificates will be treated as
newly originated debt instruments for
federal income tax purposes. Beneficial
owners of the Offered Certificates will be
required to report income thereon in
accordance with the accrual method of
accounting. It is anticipated that the Class
X Certificates will be treated as issued
with original issue discount in an amount
equal to all distributions of interest
expected to be received thereon over their
respective issue prices (including accrued
interest). It is also anticipated that the
Class [ ], Class [ ] and Class [ ]
Certificates will be issued with original
issue discount for federal income tax
purposes. See "Certain Federal Income Tax
Consequences" herein and "Certain Federal
Income Tax Consequences -- Federal Income
Tax Consequences for REMIC Certificates" in
the Prospectus. Although not free from
doubt, it is
S-18
<PAGE>
anticipated that any Prepayment Premiums
allocable to the Offered Certificates will
be ordinary income to a Certificateholder as
such amounts accrue. See "Description of the
Offered Certificates -- Distributions"
herein.
ERISA Considerations .......... A fiduciary of a Plan should review with its
legal advisors whether the purchase or
holding of Offered Certificates could give
rise to a transaction that is prohibited or
is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether
there exists any statutory or administrative
exemption applicable thereto. The United
States Department of Labor has granted to
each of the Co-Lead Managers an
administrative exemption (Deutsche Morgan
Grenfell Inc. as Department exemption
application number E-0003 (the "DMG
Exemption") and Morgan Stanley & Co.
Incorporated as Prohibited Transaction
Exemption ("PTE") 90-24, as amended by PTE
92-34, (the "MSCI Exemption" and,
collectively with the DMG Exemption, the
"Exemption") which generally exempts from
the application of certain of the prohibited
transaction provisions of Section 406 of
ERISA and the excise taxes imposed on such
prohibited transactions by Sections 4975(a)
and (b) of the Code, transactions relating
to the purchase, sale and holding of
pass-through certificates underwritten by
the Co-Lead Managers and the servicing and
operation of related asset pools, provided
that certain conditions are satisfied.
The Depositor expects that the Exemption
will generally apply to the Class A-1, Class
A-2 and Class X Certificates but they will
not apply to the other Classes of Offered
Certificates. ACCORDINGLY, THE CLASS B,
CLASS C, CLASS D AND CLASS E CERTIFICATES
SHOULD NOT BE ACQUIRED BY, ON BEHALF OF OR
WITH ASSETS OF A PLAN, UNLESS THE PURCHASE
AND HOLDING OF SUCH CERTIFICATE OR INTEREST
THEREIN IS EXEMPT FROM THE PROHIBITED
TRANSACTION PROVISIONS OF SECTION 406 OF
ERISA AND THE RELATED EXCISE TAX PROVISIONS
OF SECTION 4975 OF THE CODE UNDER PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60, WHICH
PROVIDES AN EXEMPTION FROM THE PROHIBITED
TRANSACTION RULES FOR CERTAIN TRANSACTIONS
INVOLVING AN INSURANCE COMPANY GENERAL
ACCOUNT. See "ERISA Considerations" herein
and in the Prospectus.
Ratings ....................... It is a condition to their issuance that the
Offered Certificates receive from Fitch
IBCA, Inc. ("Fitch") and Moody's Investors
Service, Inc. ("Moody's", and together with
Fitch the "Rating Agencies") the credit
ratings indicated herein. The ratings of the
Offered Certificates address the timely
payment thereon of interest and, to the
extent applicable, the ultimate payment
thereon of principal on or before the Rated
Final Distribution Date. The ratings of the
Offered Certificates do not, however,
represent any assessment of (i) the
likelihood or frequency of principal
prepayments
S-19
<PAGE>
(whether voluntary or involuntary) on the
Mortgage Loans, (ii) the corresponding
effect on yield to investors or (iii) the
possibility that, as a result of
prepayments, investors in the Class X
Certificates may realize a lower than
anticipated yield or may not fully recover
their initial investment. In general, the
ratings address credit risk and not
prepayment risk. The ratings of the Offered
Certificates also do not address certain
other matters as described under "Ratings"
herein. A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning
rating agency. See "Risk Factors" and
"Rating" herein and "Yield Considerations"
in the Prospectus.
Legal Investment .............. The appropriate characterization of the
Offered Certificates under various legal
investment restrictions, and thus the
ability of investors subject to these
restrictions to purchase the Offered
Certificates, may be subject to significant
interpretative uncertainties. NONE OF THE
CERTIFICATES WILL CONSTITUTE "MORTGAGE
RELATED SECURITIES" WITHIN THE MEANING OF
THE SECONDARY MORTGAGE MARKET ENHANCEMENT
ACT OF 1984, AS AMENDED. Investors should
consult their own legal advisors to
determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the Prospectus.
S-20
<PAGE>
RISK FACTORS
Prospective holders of Offered Certificates should consider, among other
things, the following factors (as well as the risk factors set forth under
"Risk Factors" in the Prospectus) in connection with the purchase of the
Offered Certificates.
THE MORTGAGE LOANS
Risks Associated with Commercial and Multifamily Lending Generally. The
Mortgage Loans are primarily secured by multifamily residential housing,
anchored and unanchored retail properties, office buildings, nursing homes
and healthcare facilities, full and limited service hotels, industrial
properties, self-storage facilities and mobile home parks. The repayment of
loans secured by commercial or multifamily properties is typically dependent
upon the successful operation of the related real estate project, the
businesses operated by the tenants and the creditworthiness of such tenants.
Even the liquidation value of a commercial or multifamily residential
property is determined more by capitalization of the property's cash flow
than any absolute value of buildings and improvements thereon. Lenders
typically look to the debt service coverage ratio (that is the ratio of net
cash flow to debt service) of a loan secured by income-producing property as
an important measure of the risk of default on such a loan. Commercial and
multifamily lending also typically involves larger loans to a single obligor
than one-to-four-family residential lending.
Volatility. Cash flows on commercial and multifamily properties are
subject to volatility and may be sufficient or insufficient to cover debt
service on the related Mortgage Loan at any given time. The volatility of
cash flows available to cover debt service and the property values depend
upon a number of factors, including (i) the volatility of property revenue,
and (ii) the property's "operating leverage," which generally refers to (a)
the percentage of total property operating expenses in relation to property
revenue, (b) the breakdown of property operating expenses between those that
are fixed and those that vary with revenue and (c) the level of capital
expenditures required to maintain the property and retain or replace tenants.
The net operating income and value of the Mortgaged Properties may be
adversely affected by a number of factors, including but not limited to,
national, regional and local economic conditions; local real estate
conditions (such as an oversupply of housing, retail space, office space or
hotel rooms); changes or continued weakness in specific industry segments;
changes in applicable healthcare regulations, including reimbursement
requirements; perceptions by prospective tenants and, in the case of retail
properties, retailers and shoppers, of the safety, convenience, services and
attractiveness of the property; the willingness and ability of the property's
owner to provide capable management and adequate maintenance; demographic
factors; retroactive changes to building or similar codes; increases in
operating expenses (such as energy costs); the number of tenants or, if
applicable, the diversity of types of business operated by such tenants; and
laws regulating the maximum rental rates permitted to be charged to a
residential tenant. Properties with short-term, less creditworthy revenue
sources and/or relatively high operating leverage, such as health care
related facilities, hotels and motels can be expected to have more volatile
cash flows than properties with medium to long-term tenant commitments from
creditworthy tenants and/or relatively low operating leverage. A decline in
the real estate market, in the financial condition of a major tenant or a
general decline in the local or national economy will tend to have a more
immediate effect on the net operating income of such properties and may lead
to higher rates of delinquency or defaults. Historical operating results of
the Mortgaged Properties may not be comparable to future operating results.
The age, construction quality and design of a particular property may
affect the occupancy level as well as the rents that may be charged for
individual leases. If, during the terms of the Mortgage Loans, competing
properties of a similar type are built in the areas where the Mortgaged
Properties are located or similar properties in the vicinity of the Mortgaged
Properties are substantially updated and refurbished, the value and net
operating income of such Mortgaged Properties could be reduced. Increased
competition frequently leads to lowering of rents in a
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market and could adversely affect income from and market value of the
Mortgaged Properties. There is no assurance that the value of any Mortgaged
Property during the term of the related Mortgage Loan will equal or exceed
the appraised value determined in connection with the origination of such
Mortgage Loan.
Additionally, some of the Mortgaged Properties may not readily be
converted to alternative uses if such Mortgaged Properties were to become
unprofitable due to competition, age of the improvements, decreased demand or
other factors. The conversion of healthcare facilities or hotels to
alternative uses would generally require substantial capital expenditures.
Thus, if the operation of any such Mortgaged Properties becomes unprofitable
such that the borrower becomes unable to meet its obligations on the related
loan, the liquidation value of any such property may be substantially less,
relative to the amount owing on the related loan, than would be the case if
such property were readily adaptable to other uses.
Borrower Default; Nonrecourse Mortgage Loans. The Mortgage Loans are not
insured or guaranteed by any governmental entity, by any private mortgage
insurer, or by the Depositor, the Mortgage Loan Sellers, the Servicer, the
Special Servicer, the Trustee, the Fiscal Agent or any of their respective
affiliates.
Except with respect to the Conti Small Loans (as defined herein), each
Mortgage Loan is generally a non-recourse loan as to which, in the event of a
default under such Mortgage Loan, recourse generally may be had only against
the specific properties and other assets that have been pledged to secure the
Mortgage Loan. See "Description of the Mortgage Pool" herein. Consequently,
payment on each Mortgage Loan prior to maturity is dependent primarily on the
sufficiency of the net operating income of the related Mortgaged Property,
and at maturity (whether at scheduled maturity or, in the event of a default
under the related Mortgage Loan, upon the acceleration of such maturity),
upon the then market value of the related Mortgaged Property (taking into
account any adverse effect of a foreclosure proceeding on the market value of
the Mortgaged Property) or the ability of the related borrower to refinance
the Mortgaged Property. All of the Mortgage Loans were originated within 16
months prior to the Cut-Off Date. Consequently, the Mortgage Loans do not
have as long standing a payment history as mortgage loans originated on
earlier dates.
Property Management. The successful operation of a real estate project is
also dependent on the performance and viability of the property manager of
such project. Different property types vary in the extent to which the
property manager is involved in property marketing, leasing and operations on
a daily basis. Properties deriving revenues primarily from short-term sources
(such as hotels) are generally more management intensive than properties
leased to creditworthy tenants under long-term leases. The property manager
is responsible for responding to changes in the local market, planning and
implementing the rental structure, including establishing levels of rent
payments, operating the properties and providing building services, managing
operating expenses and advising the borrowers so that maintenance and capital
improvements can be carried out in a timely fashion. There can be no
assurance that the property managers will at all times be in a financial
condition to continue to fulfill their management responsibilities under the
related management agreements throughout the terms thereof. The property
managers are operating companies and unlike limited purpose entities, may not
be restricted from incurring debt and other liabilities in the ordinary
course of business or otherwise.
Retail Properties. 23.5% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Retail Properties. See Annex A hereto for additional
information. Significant factors determining the value of Retail Properties
are the quality of the tenants as well as fundamental aspects of real estate
such as location and market demographics. The correlation between the success
of tenant businesses and property value is more direct with respect to retail
properties than other types of commercial property because a significant
component of the total rent paid by retail tenants is often tied to a
percentage of gross sales. Whether a retail property is "anchored" or
"unanchored" is also an important distinction. Retail properties that are
anchored have tradition-
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ally been perceived to be less risky. While there is no strict definition of
an anchor, it is generally understood that a retail anchor tenant is
proportionately large in size and is vital in attracting customers to the
property. 15.9% of the Mortgage Loans, based on Initial Pool Balance, are
"anchored" Retail Loans and 7.6% are "unanchored" Retail Loans. Furthermore,
there is a greater correlation between the success of tenant businesses and
property value when the property is a single tenant Retail Property. Certain
of the Mortgage Loans are secured by single tenant properties.
Unlike Office or Hotel Properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through electronic media, telemarketing and
outlet centers all compete with more traditional retail properties for
consumer dollars. Continued growth of these alternative retail outlets (which
are often characterized by lower operating costs) could adversely affect the
rents collectible at the Retail Properties included in the Mortgage Pool.
Multifamily Properties. 22.5% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Multifamily Properties. See Annex A hereto for
additional information.
Significant factors determining the value and successful operation of a
Multifamily Property are the location of the property, the number of
competing residential developments in the local market (such as apartment
buildings, manufactured housing communities and site-built single family
homes), the physical attributes of the Multifamily Property (such as its age
and appearance) and state and local regulations affecting such property. In
addition, the successful operation of a Multifamily Property will depend upon
other factors, such as its reputation, the ability of management to provide
adequate maintenance and insurance, and the types of services it provides.
Adverse economic conditions, either local or national, may limit the amount
of rent that can be charged and may result in a reduction in timely rent
payments or a reduction in occupancy levels.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord
may terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or to increases determined through
mediation or binding arbitration. In many cases, the rent control laws do not
permit vacancy decontrol. Local authority to impose rent control is
pre-empted by state law in certain states, and rent control is not imposed at
the state level in those states. In some states, however, local rent control
ordinances are not pre-empted for tenants having short-term or month-to-month
leases, and properties there may be subject to various forms of rent control
with respect to those tenants. Any limitations on a borrower's ability to
raise property rents may impair such borrower's ability to repay its
Multifamily Loan from its net operating income or the proceeds of a sale or
refinancing of the related Multifamily Property.
The rent limitations imposed on Section 42 Properties (as defined herein)
may adversely affect the ability of the applicable borrowers to increase
rents to maintain such Multifamily Properties in proper condition during
periods of rapid inflation or declining market value of such Multifamily
Properties. In addition, the income restrictions on tenants imposed by
Section 42 of the Code may reduce the number of eligible tenants in such
Multifamily Properties and result in a reduction in occupancy rates
applicable thereto.
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In addition, four of the Mortgage Loans, representing 1.8% of the Initial
Pool Balance secured by Multifamily Properties, are eligible under the
Section 8 program administered by HUD. This low income rent subsidy program
authorizes the payment by the federal government of rental subsidies to
owners of qualified housing. There may be differing default and prepayment
rate experiences between loans receiving Section 8 rent subsidies and
mortgage loans secured by multifamily properties but not receiving Section 8
rent subsidies. In addition, upon expiration of coverage under the Section 8
program, the related Mortgaged Properties are subject to market influences
that may bear upon the ability of such Mortgaged Properties to produce
sufficient income to service the Mortgage Loan and maintain the property. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans -- Low Income Housing Tax Credits" herein.
Office Properties. 12.9% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Office Properties. See Annex A hereto for additional
information. Significant factors determining the value of office properties
are the quality of the tenants in the building, the physical attributes of
the building in relation to competing buildings (such as age, condition, size
and access to transportation) and the strength and stability of the market
area as a desirable business location. Office Properties may be adversely
affected if there is an economic decline in the business operated by the
tenants. The risk of such an adverse effect is increased if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry. Certain of the Mortgage Loans
are secured by single tenant Office Properties.
Healthcare Properties. 11.3% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Healthcare Properties. A group of the 16 Healthcare
Loans (the "Health Care Capital Loans"), representing 5.0% of the Initial
Pool Balance in the aggregate, are cross-collateralized and cross-defaulted,
and, if considered as a single mortgage loan, would constitute the largest
mortgage loan included in the Mortgage Pool. However, for purposes of this
Prospectus Supplement, this group of Mortgage Loans is treated as 16 separate
Mortgage Loans. See Annex A hereto for additional information. Significant
factors determining the value of Healthcare Properties include federal and
state laws, competition with similar properties on a local and regional basis
and the continued availability of revenue from government reimbursement
programs, primarily Medicaid and Medicare.
The successful operation of a Healthcare Property will generally depend
upon the number of competing facilities in the local market, as well as upon
other factors such as its age, appearance, reputation and management, the
types of services it provides and the quality of care and the cost of that
care.
Providers of long-term nursing care and other medical services are subject
to federal and state laws that relate to the adequacy of medical care,
distribution of pharmaceuticals, rate setting, equipment, personnel,
operating policies and additions to facilities and services and, to the
extent dependent on patients whose fees are reimbursed by private insurers,
to the reimbursement policies of such insurers. The failure of any of such
borrowers to maintain or renew any required license or regulatory approval
could prevent it from continuing operations at a Healthcare Property (in
which case no revenues would be received from such property or portion
thereof requiring licensing) or, if applicable, bar it from participation in
government reimbursement programs (such as Medicaid and Medicare).
Furthermore, in the event of foreclosure, there can be no assurance that the
Trustee (or Servicer or Special Servicer) or purchaser in a foreclosure sale
would be entitled to the rights under such licenses and such party may have
to apply in its own right for such a license. There can be no assurance that
a new license could be obtained.
Under applicable federal and state laws and regulations, Medicare, and
Medicaid, only the provider who actually furnished the related medical goods
and services generally may sue for or enforce its rights to reimbursement.
Accordingly, in the event of foreclosure, none of the Trustee,
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the Servicer, the Special Servicer or a subsequent lessee or operator of the
property would generally be entitled to obtain from federal or state
governments any outstanding reimbursement payments relating to services
furnished at the respective properties prior to such foreclosure.
Healthcare Properties may receive a substantial portion of their revenues
from government reimbursement programs, primarily Medicaid and Medicare.
Medicaid and Medicare are subject to statutory and regulatory changes,
retroactive rate adjustments, administrative rulings, policy interpretations,
delays by fiscal intermediaries and government funding restrictions.
Moreover, governmental payors have employed cost-containment measures that
limit payments to health care providers, and there are currently under
consideration various proposals for national health care reform that could
further limit those payments. Accordingly, there can be no assurance that
payments under government reimbursement programs will, in the future, be
sufficient to fully reimburse the cost of caring for program beneficiaries.
Nursing homes also receive a substantial portion of their revenues from other
third-party payors such as private health insurance plans. There can be no
assurance that third-party reimbursement will continue to be available for
nursing home services, or at what such rate it will be available.
Hotel Properties. 13.9% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Hotel Properties. See Annex A hereto for additional
information. These Hotel Properties are comprised of hotels associated with
national franchise chains, hotels associated with regional franchise chains
and hotels that are not affiliated with any franchise chain but may have
their own brand identity.
Various factors, including location, quality and franchise affiliation
affect the economic performance of a Hotel Property. Adverse economic
conditions, either local, regional or national, may limit the amount that can
be charged for a hotel room and may result in a reduction in occupancy
levels. The construction of competing hotels can have similar effects.
Because hotel rooms generally are rented for short periods of time, Hotel
Properties tend to respond more quickly to adverse economic conditions and
competition than do other commercial properties. Furthermore, the financial
strength and capabilities of the owner and operator of a Hotel Property is
likely to have a substantial impact on such hotel's quality of service and
economic performance. Additionally, the hotel and lodging industry is
generally seasonal in nature and this seasonality can be expected to cause
periodic fluctuations in room and other revenues, occupancy levels, room
rates and operating expenses.
Certain of the Hotel Properties are franchisees of national or regional
hotel chains. The viability of any such Hotel Property depends in large part
on the continued existence and financial strength of the franchisor, the
public perception of the franchise service mark and the duration of the
franchise license agreements. The transferability of franchise license
agreements may be restricted and, in the event of a foreclosure on any such
Hotel Property, the mortgagee may not have the right to use the franchise
license without the franchisor's consent. Conversely, a lender may be unable
to remove a franchisor that it desires to replace following a foreclosure and
it is thus unlikely that the Trustee (or Servicer or Special Servicer) or
purchaser of such Hotel Property would be entitled to the rights under any
liquor license for such Hotel Property and such party would be required to
apply in its own right for such license or licenses. There can be no
assurance that a new license could be obtained or that it could be obtained
promptly.
Certain of the Hotel Properties have liquor licenses. In the event of a
foreclosure of a Hotel Property, it is unlikely that the Trustee (or Servicer
or Special Servicer) or purchaser in any such sale would be entitled to the
rights under the liquor license for such hotel property and such party would
be required to apply in its own right for such a license. There can be no
assurance that a new liquor license could be obtained.
Industrial Properties. 5.2% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Industrial Properties. See Annex A hereto for
additional information. Significant factors determining the value of
industrial properties are the quality of tenants, building design
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and adaptability and the location of the property. Concerns about the quality
of tenants, particularly major tenants, are similar in both Office Properties
and Industrial Properties, although Industrial Properties are more frequently
dependent on a single tenant.
Building site design and adaptability affect the value of an Industrial
Property. Site characteristics which are valuable to an industrial property
include clear heights, column spacing, number of bays and bay depths,
divisibility, truck turning radius and overall functionality and
accessibility. Location is also important because an Industrial Property
requires the availability of labor sources, proximity to supply sources and
customers and accessibility to rail lines, major roadways and other
distribution channels.
Self-Storage Property. 5.2% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Self-Storage Properties. See Annex A hereto for
additional information. Self-Storage Properties are considered vulnerable to
competition, because both acquisition costs and break-even occupancy are
relatively low. The conversion of a Self-Storage Property to alternative uses
would generally require substantial capital expenditures. Thus, if the
operation of any of the Self-Storage Properties becomes unprofitable due to
decreased demand, competition, age of improvements or other factors such that
the borrower becomes unable to meet its obligations on the related
Self-Storage Loan, the liquidation value of that Self-Storage Property may be
substantially less, relative to the amount owing on the Self-Storage Loan,
than would be the case if the Self-Storage Property were readily adaptable to
other uses.
Tenant privacy, anonymity and efficient access may heighten environmental
risks. No environmental assessment of a Self-Storage Property included an
inspection of the contents of the self-storage units included in the
Self-Storage Properties and there is no assurance that all of the units
included in the Self-Storage Properties are free from hazardous substances or
other pollutants or contaminants or will remain so in the future.
Lessee Credit Risk. Income from and the market value of the Retail
Properties, the Office Properties and the Industrial Properties would be
adversely affected if space in such Mortgaged Properties could not be leased,
if lessees were unable to meet their lease obligations, if a significant
lessee were to become a debtor in a bankruptcy case under the United States
Bankruptcy Code or if for any other reason rental payments could not be
collected. If lessee sales in the Mortgaged Properties that contain retail
space were to decline, rents based upon such sales would decline and lessees
may be unable to pay their rent or other occupancy costs. Upon the occurrence
of an event of default by a lessee, delays and costs in enforcing the
lessor's rights could be experienced. Repayment of the Mortgage Loans will be
affected by the expiration of space leases and the ability of the respective
borrowers to renew the leases or relet the space on comparable terms. Even if
vacated space is successfully relet, the costs associated with reletting,
including lessee improvements, leasing commissions and free rent, could be
substantial and could reduce cash flow from the Mortgaged Properties.
In the case of Retail Properties, the failure of an anchor lessee to renew
its lease, the termination of an anchor lessee's lease, the bankruptcy or
economic decline of an anchor lessee, or the cessation of the business of an
anchor (notwithstanding its continued payment of rent) can have a
particularly negative effect on the economic performance of a shopping center
property given the importance of anchor lessees in attracting traffic to
other stores. In addition, the failure of any anchor lessee to operate from
its premises may give certain lessees the right to terminate or reduce rents
under their leases.
Limitations on Enforceability of Cross-Collateralization. 48 of the
Mortgage Loans, representing 12.9% of the Initial Pool Balance, are secured
by more than one Mortgaged Property. See Annex A hereto for additional
information. These arrangements seek to reduce the risk that the inability of
a Mortgaged Property securing each such Mortgage Loan to generate net
operating income sufficient to pay debt service will result in defaults and
ultimate losses. The Health Care Capital Loans, representing 5.0% of the
Initial Pool Balance in the aggregate, are cross-collateralized and
cross-defaulted. See "Risk Factors -- The Mortgage Loans -- Healthcare
Properties."
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Cross-collateralization arrangements involving more than one borrower
could be challenged as a fraudulent conveyance by creditors of a borrower or
by the representative of the bankruptcy estate of a borrower, if a borrower
were to become a debtor in a bankruptcy case. Generally, under federal and
most state fraudulent conveyance statutes, the incurring of an obligation or
the transfer of property by a person will be subject to avoidance under
certain circumstances if the person did not receive fair consideration or
reasonably equivalent value in exchange for such obligation or transfer and
(i) was insolvent or was rendered insolvent by such obligation or transfer,
(ii) was engaged in business or a transaction, or was about to engage in
business or a transaction, for which any property remaining with the person
was an unreasonably small capital or (iii) intended to, or believed that it
would, incur debts that would be beyond the person's ability to pay as such
debts matured. Accordingly, a lien granted by a borrower to secure repayment
of another borrower's Mortgage Loan could be avoided if a court were to
determine that (i) such borrower was insolvent at the time of granting the
lien, was rendered insolvent by the granting of the lien, or was left with
inadequate capital, or was not able to pay its debts as they matured and (ii)
the borrower did not, when it allowed its Mortgaged Property to be encumbered
by a lien securing the entire indebtedness represented by the other Mortgage
Loan, receive fair consideration or reasonably equivalent value for pledging
such Mortgaged Property for the equal benefit of the other borrower.
Other Financing. The Mortgage Loans generally prohibit incurring any debt
that is secured by the related Mortgaged Property. Most of the Mortgage Loans
do, however, permit the related borrower to incur secured indebtedness in
limited circumstances for the purchase of certain items used in the ordinary
course of business, such as equipment, and in the case of certain of the
Mortgage Loans, limited amounts of unsecured debt, or debt secured by other
assets of the borrower, is permitted for other purposes. The existence of
such other indebtedness could adversely affect the financial viability of the
related borrowers or the security interest of the lender in the equipment or
other assets acquired through such financings or could complicate bankruptcy
proceedings and delay foreclosure on the Mortgaged Property. See "Certain
Legal Aspects of Mortgage Loans -- Subordinate Financing" in the Prospectus.
With respect to certain of the Mortgage Loans, the related borrower does not
currently owe additional debt, but the terms of such Mortgage Loans would
allow the related borrowers to incur additional financing under certain
circumstances. See Annex A hereto for additional information regarding
additional financing.
Tax Considerations Related to Foreclosure. If the Trust Fund were to
acquire a Mortgaged Property subsequent to a default on the related Mortgage
Loan pursuant to a foreclosure or deed in lieu of foreclosure, the Special
Servicer would be required to retain an independent contractor to operate and
manage the Mortgaged Property. Any net income from such operation and
management, other than qualifying "rents from real property," or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
service that is non-customary in the area and for the type of building
involved, will subject the Lower-Tier REMIC to federal (and possibly state or
local) tax on such income at the highest marginal corporate tax rate
(currently 35%), thereby reducing net proceeds available for distribution to
Certificateholders. See "Certain Federal Income Tax Consequences -- Federal
Income Tax Consequences for REMIC Certificates -- Taxes That May Be Imposed
on the REMIC Pool -- Net Income From Foreclosure Property" in the Prospectus
and "The Pooling and Servicing Agreement -- Realization Upon Mortgage Loans."
Geographic Concentration. The Mortgaged Properties are located in 42
states and Puerto Rico. Mortgaged Properties securing Mortgage Loans
representing 16.4% of the Initial Pool Balance are located in California and
Mortgaged Properties securing Mortgage Loans representing 10.2% of the
Initial Pool Balance are located in New York. See the table entitled
"Geographic Distribution of the Mortgaged Properties" on Annex A hereto for a
description of geographic location of the Mortgaged Properties. Except as set
forth above, no state contains more than 10% of the Mortgaged Properties
(based on the principal balance as of the Cut-Off Date (the "Cut-Off Date
Principal Balance") of the related Mortgage Loans or in the case of Mortgage
Loans secured
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by multiple Mortgaged Properties, on the portion of principal amount of the
related Mortgage Loan allocated to such Mortgaged Property (such amount, the
"Allocated Loan Amount")). The Allocated Loan Amount for each such Mortgage
Loan has been determined as provided in the related Mortgage Loan, or, if
such Mortgage Loan does not provide for any such allocation, the Allocated
Loan Amount for each related Mortgaged Property has been allocated pro rata
based on Underwritten Cash Flow, except with respect to one Mortgage Loan
where the Allocated Loan Amount has been allocated based upon Appraised
Value.
The economy of any state or region in which a Mortgaged Property is
located may be adversely affected to a greater degree than that of other
areas of the country by certain developments affecting industries
concentrated in such state or region conditions in the real estate markets
where the Mortgaged Properties are located, changes in governmental rules and
fiscal policies, acts of nature (which may result in uninsured losses), and
other factors which are beyond the control of the borrowers. For example,
improvements on Mortgaged Properties located in California may be more
susceptible to certain types of special hazards not fully covered by
insurance (such as earthquakes) than properties located in other parts of the
country. To the extent that general economic or other relevant conditions in
states or regions in which concentrations of Mortgaged Properties securing
significant portions of the aggregate principal balance of the Mortgage Loans
are located decline and result in a decrease in commercial property, housing
or consumer demand in the region, the income from and market value of the
Mortgaged Properties and repayment by borrowers may be adversely affected.
Environmental Law Considerations. The Mortgage Loan Sellers have
represented to the Depositor that all of the Mortgaged Properties have been
subject to environmental site assessments or an update of a previously
conducted assessment or an update of an assessment based upon information in
an established database or studies within the 16 months preceding the Cut-Off
Date, except with respect to certain of the Conti Small Loans for which a
more limited environmental review was performed. See "Description of the
Mortgage Pool -- Certain Underwriting Matters -- Environmental Assessments"
herein. There can be no assurance that any such assessment, study or review
revealed all possible environmental hazards. Each Mortgage Loan Seller has
informed the Depositor that no assessment, study or review revealed any
environmental condition or circumstance that such Mortgage Loan Seller
believes will have a material adverse impact on the value of the related
Mortgaged Property or the borrower's ability to pay its debt. In the cases
where the environmental assessments revealed the existence of friable or
non-friable asbestos containing materials ("ACMs"), or of lead-based paint,
the borrowers agreed to establish and maintain operations and maintenance or
abatement programs and/or environmental reserves. The environmental studies
and assessments revealed that a large portion of the Mortgaged Properties,
based on Initial Pool Balance, contained ACMs. Other material identified
conditions were addressed through monitoring, escrows for abatement or
remediation, environmental insurance, or agreements of third parties to
indemnify, guaranty or otherwise cover the cost of abatement or remediation.
For more information regarding environmental considerations, see "Certain
Legal Aspects of the Mortgage Loans -- Environmental Considerations" in the
Prospectus.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers any condition on the
property that causes exposure to lead-based paint. In addition, every
contract for the purchase and sale of any interest in residential housing
constructed prior to 1978 must contain a "Lead Warning Statement" that
informs the purchaser of the potential hazards to pregnant women and young
children associated with exposure to lead-based paint. The ingestion of
lead-based paint chips and/or the inhalation of dust particles from
lead-based paint by children can cause permanent injury, even at low levels
of exposure. Property owners can be held liable for injuries to their tenants
resulting from exposure to lead-based paint under various state and local
laws and regulations that impose affirmative obligations on property owners
of residential housing containing lead-based paint.
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The environmental assessments revealed the existence of lead-based paint at
certain of the multifamily residential properties. In these cases the
borrowers have either implemented operations and maintenance programs or are
in the process of removing the lead-based paint.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a Mortgaged Property prior to
acquiring title thereto on behalf of the Trust Fund or assuming its
operation. Such requirement may effectively preclude enforcement of the
security for the related Note until a satisfactory environmental site
assessment is obtained (or until any required remedial action is thereafter
taken), but will decrease the likelihood that the Trust Fund will become
liable under any environmental law. However, there can be no assurance that
the requirements of the Pooling and Servicing Agreement will effectively
insulate the Trust Fund from potential liability under environmental laws.
See "The Pooling and Servicing Agreement -- Realization Upon Mortgage Loans"
herein and "Certain Legal Aspects of Mortgage Loans -- Environmental
Considerations" in the Prospectus.
Balloon Payments. Mortgage Loans representing 42.7% of the Initial Pool
Balance, are Balloon Loans which will have substantial payments of principal
("Balloon Payments") due at their stated maturities unless previously
prepaid. Mortgage Loans representing 50.4% of the Initial Pool Balance have
Anticipated Repayment Dates, and have substantial scheduled principal
balances as of such date. Loans that require Balloon Payments involve a
greater risk to the lender than fully amortizing loans because the ability of
a borrower to make a Balloon Payment typically will depend upon its ability
either to refinance the loan or to sell the related Mortgaged Property at a
price sufficient to permit the borrower to make the Balloon Payment.
Similarly, the ability of a borrower to repay a loan on the Anticipated
Repayment Date will depend on its ability to either refinance the Mortgage
Loan or to sell the related Mortgaged Property. The ability of a borrower to
accomplish either of these goals will be affected by all of the factors
described above affecting property value and cash flow, as well as a number
of other factors at the time of attempted sale or refinancing, including the
level of available mortgage rates, prevailing economic conditions and the
availability of credit for multifamily or commercial properties (as the case
may be) generally.
One Action Considerations. Several states (including California) have laws
that prohibit more than one "judicial action" to enforce a mortgage
obligation, and some courts have construed the term "judicial action"
broadly. Accordingly, the Pooling and Servicing Agreement will require the
Servicer to obtain advice of counsel prior to enforcing any of the Trust
Fund's rights under any of the Mortgage Loans that include properties where
the rule could be applicable. In addition, in the case of a Pool Loan secured
by Mortgaged Properties located in multiple states, the Servicer may be
required to foreclose first on properties located in states where such "one
action" rules apply (and where non-judicial foreclosure is permitted) before
foreclosing on properties located in states where judicial foreclosure is the
only permitted method of foreclosure. See "Certain Legal Aspects of Mortgage
Loans -- Foreclosure" in the Prospectus.
Limitations of Appraisals and Market Studies. In general, appraisals
represent the analysis and opinion of the respective appraisers at or before
the time made and are not guarantees of, and may not be indicative of,
present or future value. There can be no assurance that another appraiser
would not have arrived at a different valuation, even if such appraiser used
the same general approach to and same method of appraising the property.
Moreover, appraisals seek to establish the amount a typically motivated buyer
would pay a typically motivated seller. Such amount could be significantly
higher than the amount obtained from the sale of a Mortgaged Property under a
distress or liquidation sale. Information regarding the values of the
Mortgaged Properties as of the Cut-Off Date is presented under "Description
of the Mortgage Pool" herein and on Annex A hereto for illustrative purposes
only.
Conflicts of Interest. A substantial number of the Mortgaged Properties
are managed by property managers affiliated with the respective borrowers.
Such relationship could raise additional difficulties in connection with a
Mortgage Loan in default or undergoing special
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servicing and a dispute between the partners or members of a borrower could
disrupt the management of the underlying property which may cause an adverse
effect on cash flow. These property managers may also manage and/or franchise
additional properties, including properties that may compete with the
Mortgaged Properties. Moreover, affiliates of the managers, or the managers
themselves, may also own other properties, including competing properties.
Accordingly, the managers of the Mortgaged Properties may experience
conflicts of interest in the management of such properties. However, many of
the Mortgage Loans permit the lender to remove the manager upon the
occurrence of an event of default, a decline in cash flow below specified
levels or other specified triggers. The principal of the borrowers under the
Health Care Capital Loans is an indirect owner of approximately a 2% interest
in RMF. Such individual is not an officer or manager of RMF.
Ground Leases. Mortgage Loans representing 3.7% of the Initial Pool
Balance are secured by leasehold interests where a material portion of the
Mortgaged Property contains a ground lease and the ground lessor is not a
party to the Mortgage. For any Mortgaged Property where the ground lessee and
ground lessor are both parties to the Mortgage, the Mortgaged Property has
been categorized as a fee simple estate. Each of the Mortgage Loans secured
by mortgages on leasehold estates were underwritten taking into account
payment of the ground lease rent, except in cases where the Mortgage Loan has
a lien on both the ground lessor's and ground lessee's interest in the
Mortgaged Property. See "The Pooling and Servicing Agreement --
Representations and Warranties; Repurchase; Substitution."
Generally, on the bankruptcy of a lessor or a lessee under a ground lease,
the debtor entity has the right to assume (continue) or reject (terminate)
the ground lease. Pursuant to Section 365(h) of the Bankruptcy Code, as it is
presently in effect, a ground lessee whose ground lease is rejected by a
debtor ground lessor has the right to remain in possession of its leased
premises under the rent reserved in the lease for the term (including
renewals) of the ground lease but is not entitled to enforce the obligation
of the ground lessor to provide any services required under the ground lease.
In the event a ground lessee/borrower in bankruptcy rejects any or all of its
ground leases, the leasehold mortgagee may have the right to succeed to the
ground lessee/ borrower's position under the lease only if the ground lessor
had specifically granted the mortgagee such right. In the event of concurrent
bankruptcy proceedings involving the ground lessor and the ground
lessee/borrower, the Trustee may be unable to enforce the bankrupt ground
lessee/borrower's obligation to refuse to treat a ground lease rejected by a
bankrupt ground lessor as terminated. In such circumstances, a ground lease
could be terminated notwithstanding lender protection provisions contained
therein or in the mortgage.
Clipper Loan Participation. Six of the Mortgage Loans (collectively, the
"Clipper Loan Participation"), representing 1.1% of the Initial Pool Balance
in the aggregate, constitute 50% pari passu participation interests in six
mortgage loans (collectively, the "Clipper Loan") which are not included in
the Trust Fund. An equal 50% pari passu participation interest in the Clipper
Loan was conveyed to a trust fund in connection with the securitization of
such other participation interest. As a result of such securitization, the
Clipper Loan is serviced and will be specially serviced, subject to its
customary servicing discretion, by SouthTrust Capital Funding Corporation.
There can be no assurance that SouthTrust Capital Funding Corporation will
exercise its servicing discretion in a manner which does not conflict with
the interests of the Certificateholders. In addition, SouthTrust Capital
Funding Corporation is not required to advance delinquent payments with
respect to the Clipper Loan Participation. Pursuant to the terms of the
Pooling and Servicing Agreement, the Servicer will be obligated to make P&I
Advances with respect to the Clipper Loan Participation.
Zoning Compliance. Due to changes in applicable building and zoning
ordinances and codes ("Zoning Laws") affecting certain of the Mortgaged
Properties which have come into effect after the construction of improvements
on such Mortgaged Properties and to other reasons, certain improvements may
not comply fully with current Zoning Laws, including density, use, parking
and set back requirements, but qualify as permitted non-conforming uses. Such
changes
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may limit the ability of the borrower to rebuild the premises "as is" in the
event of a substantial casualty loss with respect thereto and may adversely
affect the ability of the borrower to meet its Mortgage Loan obligations from
cash flow. While it is expected that insurance proceeds would be available
for application to the related Mortgage Loan if a substantial casualty were
to occur, no assurance can be given that such proceeds would be sufficient to
pay off such Mortgage Loan in full or that, if the Mortgaged Property were to
be repaired or restored in conformity with current law, what its value would
be relative to the remaining balance on the related Mortgage Loan, whether
the property would have a value equal to that before the casualty, or what
its revenue-producing potential would be.
Costs of Compliance with Americans with Disabilities Act. Under the
Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. To the extent the Mortgaged Properties do
not comply with the ADA, the borrowers may have to incur costs of complying
with the ADA. In addition, noncompliance could result in the imposition of
fines by the federal government or an award of damages to private litigants.
Litigation. There may be legal proceedings pending and, from time to time,
threatened against the borrowers and their affiliates relating to the
business of or arising out of the ordinary course of business of the
borrowers and their affiliates. There can be no assurance that such
litigation will not have a material adverse effect on the distributions to
Certificateholders.
THE CERTIFICATES
Special Prepayment and Yield Considerations. The yield to maturity on the
Offered Certificates will depend on, among other things, the rate and timing
of principal payments (including both voluntary prepayments, in the case of
the Mortgage Loans that permit voluntary prepayment, and involuntary
prepayments, such as prepayments resulting from casualty or condemnation,
defaults and liquidations) on the Mortgage Loans and the allocation thereof
to reduce the Certificate Balances of the Offered Certificates entitled to
distributions of principal. In general, if an Offered Certificate is
purchased at a premium and principal distributions thereon occur at a rate
faster than anticipated at the time of purchase, to the extent that the
required Prepayment Premiums are not received, the investor's actual yield to
maturity may be lower than that assumed at the time of purchase. Conversely,
if an Offered Certificate is purchased at a discount and principal
distributions thereon occur at a rate slower than that assumed at the time of
purchase, the investor's actual yield to maturity may be lower than assumed
at the time of purchase. No representation is made as to the anticipated rate
of prepayments (voluntary or involuntary) on the Mortgage Loans or as to the
anticipated yield to maturity of any Certificate. See "Prepayment and Yield
Considerations" herein.
Servicer or Special Servicer May Purchase Certificates. It is anticipated
that Banc One Mortgage Capital Markets, LLC, which is the initial Servicer
and the initial Special Servicer, will purchase all of the Class J, Class K
and Class L Certificates. Following any such purchase of Certificates, the
Servicer or Special Servicer will have rights as a holder of Certificates,
including certain Voting Rights, which are in addition to such entity's
rights as Servicer or Special Servicer under the Pooling and Servicing
Agreement. Consequently, any purchase of Certificates by the Servicer or
Special Servicer, as the case may be, could cause a conflict between such
entity's duties pursuant to the Pooling and Servicing Agreement and its
interest as a holder of a Certificate, especially to the extent that certain
actions or events have a disproportionate effect on one or more Classes of
Certificates.
Limited Liquidity and Market Value. There is currently no secondary market
for the Offered Certificates. While the Underwriters have advised that they
currently intend to make a secondary market in the Offered Certificates, they
are under no obligation to do so. Accordingly, there can be no assurance that
a secondary market for the Offered Certificates will develop. Moreover, if a
secondary market does develop, there can be no assurance that it will provide
holders of Offered Certificates with liquidity of investment or that it will
continue for the life of the Offered
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Certificates. The Offered Certificates will not be listed on any securities
exchange. Lack of liquidity could result in a precipitous drop in the market
value of the Offered Certificates. In addition, the market value of the
Offered Certificates at any time may be affected by many factors, including
then prevailing interest rates, and no representation is made by any person
or entity as to the market value of any Offered Certificate at any time.
Controlling Class. The holders of greater than 50% of the Controlling
Class will be entitled, at their option, to remove the Special Servicer with
or without cause, and appoint a successor Special Servicer, provided that
each Rating Agency confirms in writing that such removal and appointment, in
and of itself, would not cause a downgrade, qualification or withdrawal of
the then current ratings assigned to any Class of Certificates. The
Controlling Class will initially be the Class K Certificates. It is
anticipated that the initial Holder of the Class K Certificates will be Banc
One Mortgage Capital Markets, LLC, the initial Servicer and initial Special
Servicer. The Controlling Class may have interests in conflict with those of
the holders of the other Classes of Certificates. In connection with the
servicing of the Mortgage Loans that become Specially Serviced Mortgage
Loans, the Special Servicer may, at the direction of the Controlling Class,
take actions with respect to such Specially Serviced Mortgage Loans that
could adversely affect the holders of some or all of the Classes of Offered
Certificates. As a result, it is possible that the Controlling Class may
direct the Special Servicer to take actions which conflict with the interests
of certain Classes of the Offered Certificates; provided, however, that any
such actions taken by the Special Servicer must be consistent with the
Servicing Standard. In addition, the Controlling Class will have the right to
appoint and to remove the Healthcare Adviser. Survey LLC, the initial
Healthcare Adviser, holds an ownership interest in RMF, one of the Mortgage
Loan Sellers which is conveying Healthcare Loans to the Depositor. See "The
Pooling and Servicing Agreement -- Realization Upon Mortgage Loans" and
"--The Healthcare Adviser" herein.
Pass-Through Rate Considerations. The Pass-Through Rate on the Class X
Certificates will be based upon the Weighted Average Net Mortgage
Pass-Through Rate, and the Pass-Through Rate on the Class E Certificates will
be partially based upon the Weighted Average Net Mortgage Pass-Through Rate,
and such Classes will be affected by disproportionate principal payments on
the Mortgage Loans. Because certain Mortgage Loans will amortize their
principal more quickly than others, such rate will fluctuate over the life of
such Classes of Certificates. See "Prepayment and Yield Considerations --
Yield" herein.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 379 fixed-rate mortgage loans (which
will include six participation interests) (the "Mortgage Loans") secured by
first liens on 529 multifamily and commercial properties (the "Mortgaged
Properties"). The Mortgage Pool has an aggregate principal balance as of the
Cut-Off Date of approximately $1,854,790,449 (the "Initial Pool Balance"),
subject to a variance of plus or minus 5%. As used herein with respect to the
participation interests that are assets of the Trust Fund, "Mortgage Loan"
means the percentage interest in the underlying mortgage loans. All numerical
information provided herein with respect to the Mortgage Loans is provided on
an approximate basis. All percentages of the Mortgage Pool, or of any
specified sub-group thereof, referred to herein without further description
are approximate percentages of the Initial Pool Balance. Descriptions of the
terms and provisions of the Mortgage Loans are generalized descriptions of
the terms and provisions of the Mortgage Loans in the aggregate. Many of the
individual Mortgage Loans have specific terms and provisions that deviate
from the general description.
Each Mortgage Loan is evidenced by one or more promissory notes (each, a
"Note") and secured by one or more mortgages, deeds of trust or other similar
security instruments (a "Mortgage"). Each of the Mortgages creates a first
lien on the interests of the related borrower in the related Mortgaged
Property, as set forth on the following table:
SECURITY FOR THE MORTGAGE LOANS
<TABLE>
<CAPTION>
% OF
INITIAL POOL
INTEREST OF BORROWER ENCUMBERED BALANCE (1)
- --------------------------------- ------------
<S> <C>
Fee Simple Estate (2)........... 96.3%
Leasehold (3)................... 3.7
------------
Total ........................ 100.0%
============
</TABLE>
- ------------
(1) Based on the Allocated Loan Amount of the related Mortgaged Property.
(2) For any Mortgaged Property where the ground lessee and ground lessor
are both parties to the Mortgage, the Mortgaged Property was
categorized as a fee simple estate.
(3) Includes any Mortgaged Property where a material portion of such
property is subject to a ground lease and the ground lessor is not a
party to the Mortgage.
Each Mortgaged Property consists of land improved by (i) a retail property
(a "Retail Property," and any Mortgage Loan secured thereby, a "Retail
Loan"), (ii) an apartment building or complex consisting of five or more
rental units (a "Multifamily Property," and any Mortgage Loan secured
thereby, a "Multifamily Loan"), (iii) an office building (an "Office
Property," and any Mortgage Loan secured thereby, an "Office Loan"), (iv) a
nursing home, assisted living or a congregate care facility (each, a
"Healthcare Property," and any Mortgage Loan secured thereby, a "Healthcare
Loan"), (v) a full or limited service or extended stay hotel or other
hospitality facility (a "Hotel Property," and any Mortgage Loan secured
thereby, a "Hotel Loan"), (vi) an industrial property (an "Industrial
Property," and any Mortgage Loan secured thereby, an "Industrial Loan"),
(vii) a mini-warehouse or self-storage facility (a "Self-Storage Property"
and any Mortgage Loan secured thereby, a "Self-Storage Loan", (viii) a mobile
home community (a "Mobile Home Property," and any Mortgage Loan secured
thereby, a "Mobile Home Loan") or (ix) other commercial properties). Certain
statistical information relating to the various types of Mortgaged Properties
is set forth at Annex A hereto.
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Certain of the Mortgage Loans are secured by two or more Mortgaged
Properties, either pursuant to cross-collateralization with other Mortgage
Loans in the Mortgage Pool or pursuant to a single Note by a single borrower
secured by multiple Mortgaged Properties, or both. See Annex A hereto for
additional information.
The Clipper Loan Participation, representing 1.1% of the Initial Pool
Balance, constitutes six 50% pari passu participation interests in six
mortgage loans (collectively, the "Clipper Loan") which are not included in
the Trust Fund. An equal 50% pari passu interest in such mortgage loans (the
"RMF Participation") was conveyed to a trust fund (the "RMF Trust") in
connection with the securitization of such RMF Participation. As a result,
the Clipper Loan is serviced and will be specially serviced by SouthTrust
Capital Funding Corporation (the "RMF Servicer"). Payments by the related
borrower are made to the RMF Servicer for the entire Clipper Loan, 50% of
which will be remitted to the RMF Trust as holder of the RMF Participation
and 50% of which are remitted to the holder of the Clipper Loan
Participation. Under the pooling and servicing agreement relating to the RMF
Trust, the RMF Servicer has customary discretion regarding the servicing of
the Clipper Loan. In addition, under the pooling and servicing agreement
governing the RMF Trust, the RMF Servicer is required to advance delinquent
payments only with respect to the RMF Participation but not with respect to
the Clipper Loan Participation. Pursuant to the terms of the Pooling and
Servicing Agreement, the Servicer will be required to make P&I Advances with
respect to the Clipper Loan Participation. See "Risk Factors -- The Mortgage
Loans -- The Clipper Loan Participation".
SECURITY FOR THE MORTGAGE LOANS
None of the Mortgage Loans is insured or guaranteed by the United States,
any governmental agency or instrumentality, any private mortgage insurer or
by the Depositor, any of the Mortgage Loan Sellers, the Servicer, the Special
Servicer, the Trustee or the Fiscal Agent or any of their respective
affiliates. Except for certain of the Conti Small Loans, each Mortgage Loan
is generally non-recourse and is secured by one or more Mortgages encumbering
the related borrower's interest in the applicable Mortgaged Property or
Properties so that, in the event of a borrower default on any Mortgage Loan,
recourse may generally be had only against the specific Mortgaged Property or
Mortgaged Properties securing such Mortgage Loan and such limited other
assets as have been pledged to secure such Mortgage Loan, and not against the
borrower's other assets. However, generally, the Mortgage Loans may become
recourse (full or limited) upon the occurrence of certain events of default
under the Mortgage Loans, including, in most cases, the transfer or voluntary
encumbrance of the Mortgaged Property without the consent of the mortgagee.
Each Mortgage Loan is also secured by an assignment of the related borrower's
interest in the leases, rents, issues and profits of the related Mortgaged
Properties. In certain instances, additional collateral exists in the nature
of partial indemnities or guaranties, or the establishment and pledge of one
or more reserve or escrow accounts for, among other things, necessary
repairs, replacements and environmental remediation, real estate taxes and
insurance premiums, deferred maintenance and/or scheduled capital
improvements, re-leasing reserves and seasonal working capital reserves (such
accounts, "Reserve Accounts"). The Mortgage Loans generally provide for the
indemnification of the mortgagee by the borrower for the presence of any
hazardous substances affecting the Mortgaged Property. Each Mortgage
constitutes a first lien on a Mortgaged Property, subject generally only to
(i) liens for real estate and other taxes and special assessments not yet due
and payable, (ii) covenants, conditions, restrictions, rights of way,
easements and other encumbrances whether or not of public record as of the
date of recording of the related Mortgage, such exceptions having been
acceptable to the related Mortgage Loan Seller in connection with the
purchase or origination of the related Mortgage Loan, and (iii) such other
exceptions and encumbrances on Mortgaged Properties as are reflected in the
related title insurance policies. See "Description of the Mortgage Pool --
Certain Terms and Conditions of the Mortgage Loans -- Escrows", herein.
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<PAGE>
THE MORTGAGE LOAN SELLERS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from the Mortgage Loan Sellers
pursuant to certain Mortgage Loan Purchase Agreements (collectively, the
"Mortgage Loan Purchase Agreements"), each to be dated as of the Cut-Off
Date, and each between the related Mortgage Loan Seller and the Depositor.
ContiTrade. 191 of the Mortgage Loans, representing 36.8% of the Initial
Pool Balance, were sold to the Depositor by ContiTrade. ContiTrade was
organized in the State of Delaware on June 1, 1995 and is a wholly-owned
indirect subsidiary of ContiFinancial Corporation, a Delaware corporation.
ContiFinancial Corporation is a majority-owned subsidiary of Continental
Grain Company. ContiTrade is also an affiliate of ContiFinancial Services
Corporation, a member of the selling group. ContiFinancial Corporation
engages in the consumer and commercial finance business by originating and
servicing home equity mortgage loans, providing financing and asset
securitization expertise to originators of a broad range of loans, leases and
receivables and acquiring and selling commercial and home equity mortgage
loans. ContiTrade was organized, among other things, for the purposes of
acquiring and selling mortgage assets. Through its commercial and multifamily
mortgage conduit program, ContiMAP(Registered Trademark), ContiTrade
purchases commercial mortgage loans from its select correspondent network,
then pools loans for securitization. Each of the Mortgage Loans sold to the
Depositor by ContiTrade was originated by one of the participants in
ContiTrade's ContiMAP(Registered Trademark) conduit program. The principal
executive offices of ContiTrade are located at 277 Park Avenue, New York, New
York 10172. Its telephone number is (212) 207-2800.
German American Capital Corporation. 57 of the Mortgage Loans,
representing 24.4% of the Initial Pool Balance, were sold to the Depositor by
GACC. GACC is a wholly-owned subsidiary of Deutsche Bank North America
Holding Corp., which in turn is a wholly-owned subsidiary of Deutsche Bank
AG, a German corporation. GACC is also an affiliate of Deutsche Morgan
Grenfell Inc., one of the Underwriters. GACC engages primarily in the
business of purchasing and holding mortgage loans pending securitization,
repackaging or other disposition. GACC also acts from time to time as the
originator of mortgage loans. Although GACC purchases and sells mortgage
loans for its own account, it does not act as a broker or dealer in
connection with any such loans. The principal offices of GACC are located at
31 West 52nd Street, New York, New York 10019. Its telephone number is (212)
469-7280.
Morgan Stanley Mortgage Capital Inc. 39 of the Mortgage Loans,
representing 16.1% of the Initial Pool Balance, were sold to the Depositor by
MSMC. MSMC is a subsidiary of Morgan Stanley & Co., Inc. formed as a New York
corporation to originate and acquire loans secured by mortgages on commercial
and multifamily real estate. Each of the Mortgage Loans sold by MSMC to the
Depositor was originated by one of the participants in MSMC's commercial and
multifamily mortgage loan conduit program, was originated directly by MSMC or
was purchased in the secondary market. All loans were underwritten by MSMC
underwriters. The principal office of MSMC are located at 1585 Broadway, New
York, New York 10036. Its telephone number is (212) 761-4700.
Red Mountain Funding, L.L.C. 55 of the Mortgage Loans, representing 14.0%
of the Initial Pool Balance, were sold to the Depositor by RMF. RMF is a
limited liability company organized under the laws of the State of Delaware
in 1997. It is owned by ContiTrade, Health Care Capital Finance, L.L.C.
("HCCF"), based in Atlanta, Georgia, and Survey, L.L.C. ("Survey LLC"). RMF
was created to originate and/or purchase, aggregate and warehouse commercial
mortgage loans for eventual securitization. As a vehicle that exists only to
fund loans, RMF works in conjunction with PRN Mortgage Capital, L.L.C.
("PRN"), which operates as RMF's exclusive underwriting agent for healthcare
loans. PRN is an Alabama limited liability company, which operates as a
commercial mortgage bank specializing in lending to the long-term care and
senior housing industry by placing loans with various outside funding
sources. It is owned by HCCF, Survey LLC, ContiTrade and SouthTrust
Corporation, a publicly held bank holding company based in Birmingham,
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Alabama. SouthTrust Capital Funding Corporation, a Delaware corporation
("SouthTrust Capital Funding"), an affiliate of SouthTrust Corporation,
provides various administrative services under contract with PRN and RMF,
including loan closing services for RMF. Administrative services are also
provided to PRN by HCCF and by PRN to RMF. In 1995, SouthTrust Capital
Funding, ContiTrade, Survey LLC and HCCF formulated a business plan to
develop a network through which mortgage loans related to long-term care
facilities could be underwritten, originated, funded and serviced. These
loans were then to be placed with appropriate funding sources and a number of
them have been or are to be securitized, including the Mortgage Loans
hereunder for which RMF was the Mortgage Loan Seller. Under the business
plan, PRN was formed in 1996 to facilitate (i) a comprehensive range of
mortgage products to long-term care and senior housing borrowers, (ii)
underwriting, processing and delivering loan commitments, and (iii)
effectively reaching a large, nationwide borrower base. RMF has also
purchased multi-family and commercial mortgage loans from SouthTrust Capital
Funding, some of which are being conveyed to the Depositor for inclusion in
the Trust Fund. The principal offices of RMF are located at 420 North 20th
Street, 9th floor, Birmingham, Alabama 35203. Its telephone number is (205)
254-5771.
Boston Capital Mortgage Company Limited Partnership. 37 of the Mortgage
Loans, representing 8.7% of the Initial Pool Balance, were sold to the
Depositor by BCMC. BCMC is a joint venture between Boston Capital Mortgage
Corporation, an affiliate of Boston Capital Partners, Inc., and Llama
Mortgage Services Corp., a wholly owned subsidiary of Llama Capital Services
LLC, which is an affiliate of Llama Company, LP, one of the Underwriters.
BCMC originates and purchases mortgages for its own account, holding the
mortgage loans until securitization or other disposition. Loans are primarily
sourced through a network of mortgage bankers, and fully underwritten by
BCMC. Certain of the Mortgage Loans being sold by BCMC were underwritten by
Llama Capital Services, LLC and purchased by BCMC. The principal offices of
BCMC are located at One Boston Place, 22nd Floor, Boston, Massachusetts
02108. Its telephone number is (800) 719-2262.
The information set forth herein concerning the Mortgage Loan Sellers and
the underwriting conducted by each of the Mortgage Loan Sellers with respect
to the related Mortgage Loans has been provided by the respective Mortgage
Loan Sellers, and none of the Depositor, the Underwriters or the other
Mortgage Loan Sellers make any representation or warranty as to the accuracy
or completeness of such information.
CERTAIN UNDERWRITING MATTERS
Environmental Assessments. Each of the Mortgage Loan Sellers has
represented to the Depositor that each of the related Mortgaged Properties
was subject to a "Phase I" environmental site assessment or similar study (or
an update of a previously conducted assessment or an update of an assessment
based upon information in an established database), which was performed on
behalf of the related Mortgage Loan Seller, or as to which the related report
was delivered to the related Mortgage Loan Seller in connection with its
origination or acquisition of the related Mortgage Loan. In the case of the
Conti Small Loans, a more limited environmental review was performed. Such
environmental assessments, updates or reviews were conducted within the
16-month period prior to the Cut-Off Date. The Mortgage Loan Sellers have
informed the Depositor that no such environmental assessment revealed any
material adverse environmental condition or circumstance with respect to any
Mortgaged Property, except for: (i) those cases in which an operations and
maintenance plan or periodic monitoring of such Mortgaged Property or nearby
properties was recommended or an escrow reserve to cover the estimated cost
of remediation was established; (ii) those cases involving a leaking
underground storage tank or groundwater contamination at a nearby property,
which condition has not yet affected such Mortgaged Property and as to which
a responsible party has been identified under applicable law; (iii) those
cases where such conditions were either (x) remediated or abated prior to the
Closing Date or as to which the property is the subject of an administrative
consent order with a party that has established a remediation fund pursuant
to such order or as to which the responsible party has provided an indemnity
or guaranty, or (y) the borrower has otherwise agreed to bear the costs
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of such abatement or remediation; and (iv) those cases in which groundwater
or soil contamination was identified or suspected, and either environmental
insurance was obtained or a letter of credit was provided to cover estimated
costs of continued monitoring or remediation.
The information contained herein is based on the environmental assessments
or similar studies and has not been independently verified by the Depositor,
the Mortgage Loan Sellers, the Underwriters, or any of their respective
affiliates.
Property Condition Assessments. The Mortgage Loan Sellers have informed
the Depositor that (except with respect to the Healthcare Loans sold to the
Depositor by RMF) inspections of the Mortgaged Properties (or updates of
previously conducted inspections) were conducted by independent licensed
engineers or other representatives or designees of the related Mortgage Loan
Seller within 19 months of the Cut-Off Date. Such inspections were
commissioned to inspect the exterior walls, roofing, interior construction,
mechanical and electrical systems (in most cases) and general condition of
the site, buildings and other improvements located at a Mortgaged Property.
With respect to certain of the Mortgage Loans, the resulting reports
indicated a variety of deferred maintenance items and recommended capital
expenditures. The estimated cost of the necessary repairs or replacements at
a Mortgaged Property was included in the related property condition
assessment. In some (but not all) instances, cash reserves were established
to fund such deferred maintenance and/or replacement items.
Appraisals and Market Analysis. The Mortgage Loan Sellers have informed
the Depositor that a n appraisal or market analysis for most of the Mortgaged
Properties was performed (or an existing appraisal updated) on behalf of the
related Mortgage Loan Seller within 18 months of the Cut-Off Date. See Annex
A hereto. Each such appraisal was conducted by an independent appraiser that
is state certified and/or designated as a Member of the Appraisal Institute
("MAI"), in order to establish that the appraised value of the related
Mortgaged Property or Properties exceeded the original principal balance of
the Mortgage Loan (or, in the case of a set of related Pool Loans (as defined
herein), the aggregate original principal balance of such set). In general,
such appraisals represent the analysis and opinions of the respective
appraisers at or before the time made, and are not guarantees of, and may not
be indicative of, present or future value. There can be no assurance that
another appraiser would not have arrived at a different valuation, even if
such appraiser used the same general approach to and same method of
appraising the property. In addition, appraisals seek to establish the amount
a typically motivated buyer would pay a typically motivated seller. Such
amount could be significantly higher than the amount obtained from the sale
of a Mortgaged Property under a distress or liquidation sale. Furthermore,
not all of the above-described appraisals of the Mortgaged Properties
conformed to the appraisal guidelines set forth in Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989. See "Risk Factors
- -- The Mortgage Loans -- Limitations of Appraisals and Market Studies"
herein.
Hazard, Liability and Other Insurance. The Mortgage Loans require that
either: (i) in most cases, the Mortgaged Property be insured by a hazard
insurance policy in an amount (subject to a customary deductible) at least
equal to the lesser of the outstanding principal balance of the related
Mortgage Loan, 100% of the full insurable replacement cost of the
improvements located on the related Mortgaged Property or, with respect to
certain Mortgage Loans, the full insurable actual cash value of the Mortgaged
Property; or (ii) in certain cases, the Mortgaged Property be insured by
hazard insurance in such other amounts as was required by the related
originators and if applicable, the related hazard insurance policy contains
appropriate endorsements to avoid the application of co-insurance and does
not permit reduction in insurance proceeds for depreciation. In addition, if
any portion of a Mortgaged Property securing any Mortgage Loan was, at the
time of the origination of such Mortgage Loan, in an area identified in the
"Federal Register" by the Federal Emergency Management Agency as having
special flood hazards, and flood insurance was available, a flood insurance
policy meeting any requirements of the then current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable insurance
carrier, in an amount representing coverage not less than the least of (1)
the outstanding principal
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balance of such Mortgage Loan, (2) the full insurable actual cash value of
such Mortgaged Property, (3) the maximum amount of insurance required by the
terms of the related Mortgage and available for the related Mortgaged
Property under the National Flood Insurance Act of 1968, as amended and (4)
100% of the replacement cost of the improvements located in the special flood
hazard area on the related Mortgaged Property except in certain cases where
self insurance was permitted. In general, the standard form of hazard
insurance policy covers physical damage to, or destruction of, the
improvements on the Mortgaged Property by fire, lightning, explosion, smoke,
windstorm and hail, riot or strike and civil commotion, subject to the
conditions and exclusions set forth in each policy.
Each Mortgage generally also requires the related borrower to maintain
comprehensive general liability insurance against claims for personal and
bodily injury, death or property damage occurring on, in or about the related
Mortgaged Property in an amount customarily required by institutional
lenders. Each Mortgage generally further requires the related borrower to
maintain business interruption or rent loss insurance in an amount not less
than 100% of the projected rental income from the related Mortgaged Property
for not less than six months. In general, the Mortgaged Properties are not
insured for earthquake risk, floods and other water-related causes,
landslides and mudflow, vermin, nuclear reaction or war.
ContiTrade Small Loan Program. 36 Mortgage Loans representing 1.2% of the
Initial Pool Balance were originated for the ContiTrade Small Loan Program
(the "Conti Small Loans"). Mortgage Loans made under the ContiTrade Small
Loan Program are often with full recourse to the borrower or guarantor, and
borrowers under the program are not required to be single purpose entities or
bankruptcy remote and may be revocable trusts. In addition, some of the
Mortgaged Properties are borrower-occupied.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Calculation of Interest. 46.6% of the Mortgage Loans based on the Initial
Pool Balance accrue interest on the basis of a 360 day year consisting of
twelve 30-day months, 52.9% of the Mortgage Loans, based on the Initial Pool
Balance, accrue interest on the basis of the actual number of days elapsed
and a 360 day year and 0.5% of the Mortgage Loans, based on Initial Pool
Balance accrue interest on the basis of the actual number of days elapsed and
a 365 day year.
Excess Interest. 128 of the Mortgage Loans, representing approximately
50.4% of the Initial Pool Balance, are ARD Loans. Commencing on or within
three months of the respective Anticipated Repayment Date, each such Mortgage
Loan generally will bear interest at a fixed rate (the "Revised Rate") per
annum, equal to the Mortgage Rate plus a percentage ranging from 0% to 5%.
However, notwithstanding the foregoing, pursuant to the Pooling and Servicing
Agreement, the Servicer will be directed not to enforce any provision that
would increase the interest rate by more than 2% per annum. Until the
principal balance of each such Mortgage Loan has been reduced to zero, such
Mortgage Loan will only be required to pay interest at the Mortgage Rate and
the interest accrued at the excess, if any, of the related Revised Rate over
the related Mortgage Rate will be deferred (such accrued and deferred
interest and interest thereon, if any, the "Excess Interest"). Except where
limited by applicable law, Excess Interest so accrued will generally earn
interest at the Revised Rate. Prior to the Anticipated Repayment Date,
borrowers under ARD Loans will be required to enter into an agreement
establishing an account in the name of the Lender (a "Lock Box Account")
whereby all revenue will be deposited directly into the Lock Box Account
which will be controlled by the Servicer. From and after the Anticipated
Repayment Date, in addition to paying interest (at the Mortgage Rate) and
principal (based on the amortization schedule) (together, the "Monthly Debt
Service Payment"), the related borrower generally will be required to apply
all monthly cash flow from the related Mortgaged Property or Properties to
pay the following amounts in the following order of priority: (i) required
payments to the tax and insurance escrow fund and any ground lease escrow
fund, (ii) payments to any other required escrow funds, (iii) payments of any
amounts due under the Note or other documents securing the related Mortgage
Loan, (iv) payment of operating expenses pursuant to
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the terms of an annual budget approved by the Servicer, (v) payment of
approved extraordinary operating expenses or capital expenses not set forth
in the approved annual budget or allotted for in any escrow fund, (vi)
principal on the Mortgage Loan until such principal is paid in full and
(viii) to Excess Interest. The cash flow from the Mortgaged Property or
Properties securing an ARD Loan after payments of the Monthly Debt Service
Payment and items (i) through (v) above is referred to herein as "Excess Cash
Flow". As described below, ARD Loans generally provide that the related
borrower is prohibited from prepaying the Mortgage Loan without penalties
until generally one to six months prior to the Anticipated Repayment Date
but, upon the commencement of such period, may prepay the loan, in whole or
in part, without payment of a Prepayment Premium. The Anticipated Repayment
Date for each ARD Loan is listed in Annex A.
Amortization of Principal. Certain of the Mortgage Loans, representing
8.2% of the Initial Pool Balance, provide for payment of interest only for
initial periods of 12 to 24 months after the origination date of such
Mortgage Loans. Certain Mortgage Loans (the "Balloon Loans") provide for
monthly payments of principal based on amortization schedules longer than
their original terms thereby leaving substantial principal amounts due and
payable (each such payment, a "Balloon Payment") on their respective maturity
dates, unless previously prepaid. The remaining Mortgage Loans have remaining
amortization terms that are generally the same as their respective remaining
terms to maturity. See Annex A hereto for additional information regarding
the amortization characteristics of the Mortgage Loans.
Prepayment Provisions. All of the Mortgage Loans either (i) prohibit
voluntary prepayment for a specified period (each, a "Lock-Out Period")
and/or (ii) require the payment of a premium or fee (a "Prepayment Premium")
upon the voluntary prepayment of such Mortgage Loans during a specified
period described on Annex A hereto. The weighted average Lock-Out Period
remaining from the Cut-Off Date for the Mortgage Loans is approximately 47
months.
In the case of most of the Mortgage Loans, if an award or loss resulting
from an event of condemnation or casualty is less than a specified percentage
of the original principal balance of the Mortgage Loan and if in the
reasonable judgment of the mortgagee (i) the Mortgaged Property can be
restored within six months prior to the maturity of the related Note to a
property no less valuable or useful than it was prior to the condemnation or
casualty, (ii) after a restoration the Mortgaged Property would adequately
secure the outstanding balance of the Note and (iii) no event of default has
occurred or is continuing, the proceeds or award may be applied by the
borrower to the costs of repairing or replacing the Mortgaged Property. In
all other circumstances, the Mortgage Loans provide generally that in the
event of a condemnation or casualty, the mortgagee may apply the condemnation
award or insurance proceeds to the repayment of debt, without payment of a
Prepayment Premium. In general, in the event that a condemnation award or
insurance proceeds are used to prepay a Specially Serviced Mortgage Loan, the
constant monthly payment due under the related note shall be reamortized
based on the remaining amortization term and the applicable interest rate.
Certain Mortgage Loans provide that if casualty or condemnation proceeds
are above a specified amount, the borrower will be permitted to supplement
such proceeds with an amount sufficient to prepay the entire principal
balance of the Mortgage Loan. In such event, no Prepayment Premium would be
required to be paid.
Neither the Depositor nor any of the Mortgage Loan Sellers makes any
representation as to the enforceability of the provision of any Mortgage Loan
requiring the payment of a Prepayment Premium, or of the collectability of
any Prepayment Premium. See "Risk Factors -- The Certificates -- Special
Prepayment and Yield Considerations" herein and "Certain Legal Aspects of
Mortgage Loans -- Default Interest and Limitations on Prepayments" in the
Prospectus.
Property Releases. Certain of the Mortgage Loans contain provisions which
permit the related borrower to release some or all of the Mortgaged
Properties securing such Mortgage Loans.
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Certain of the Mortgage Loans, representing 40.5% of the Initial Pool
Balance, permit the applicable borrower at any time after a specified period
(the "Defeasance Lock-Out Period"), which is generally the greater of
approximately three years from the date of origination and two years from the
Closing Date, provided no event of default exists, to obtain a release of a
Mortgaged Property from the lien of the related Mortgage (a "Defeasance
Option"), provided that, among other conditions, the borrower (a) pays on any
Due Date (the "Release Date") (i) all interest accrued and unpaid on the
principal balance of the Note to and including the Release Date, (ii) all
other sums, excluding scheduled interest or principal payments, due under the
Mortgage Loan and all other loan documents executed in connection therewith,
(iii) an amount (the "Collateral Substitution Deposit") that will be
sufficient to purchase direct non-callable obligations of the United States
of America providing payments (1) on or prior to, but as close as possible
to, all successive scheduled payment dates from the Release Date to the
related maturity date, assuming, in the case of an ARD Loan, that such loan
prepays on the related Anticipated Repayment Date and (2) in amounts equal to
the scheduled payments due on such dates under the Mortgage Loan or the
defeased amount thereof in the case of a partial defeasance, and (z) any
costs and expenses incurred in connection with the purchase of such U.S.
government obligations and (b) delivers a security agreement granting the
Trust Fund a first priority lien on the Collateral Substitution Deposit and
the U.S. government obligations purchased with the Collateral Substitution
Deposit and an opinion of counsel to such effect. The Pool Loans generally
require that (i) in the case of a partial defeasance, prior to the release of
a related Mortgaged Property, a specified percentage (generally 125%) of the
Allocated Loan Amount for such Mortgaged Property be defeased and (ii) that
the DSCR with respect to the remaining Mortgaged Properties after the
defeasance be no less than the greater of (x) the DSCR at origination and (y)
the DSCR immediately prior to such defeasance. Any amount in excess of the
amount necessary to purchase such U.S. government obligations will be
returned to the borrower. Simultaneously with such actions, the related
Mortgaged Property will be released from the lien of the Mortgage Loan and
the pledged U.S. government obligations (together with any Mortgaged Property
not released, in the case of a partial defeasance) will be substituted as the
collateral securing the Mortgage Loan.
In general, a successor borrower established or designated by the related
Mortgage Loan Seller will assume all of the defeased obligations of a
borrower exercising a Defeasance Option under a Mortgage Loan and the
borrower will be relieved of all of the defeased obligations thereunder. If a
Mortgage Loan is partially defeased, the related Note will be split and only
the defeased portion of the borrower's obligations will be transferred to the
successor borrower.
The Depositor makes no representation as to the enforceability of the
defeasance provisions of any Mortgage Loan. See "Risk Factors -- The
Certificates -- Special Prepayment and Yield Considerations" herein.
Certain of the Mortgage Loans, representing 11.2% of the Initial Pool
Balance, are secured, pursuant to a single note by a single borrower, by
multiple Mortgaged Properties. Such Mortgage Loans permit the borrower at any
time after a specified period from the date of origination, to obtain a
partial release of a Mortgaged Property from the lien of the related Mortgage
(a "Partial Release"), provided that (i) no event of default exists and (ii)
among other conditions, (a) the borrower pays a partial release payment (the
"Release Payment") in an amount equal to at least 125% of the Allocated Loan
Amount (as reduced by amortization of the related Mortgage Loan as of the
date of the Release Payment) (except for the Mortgage Loans originated by
RMF), and (b) satisfaction of certain tests regarding DSCR and/or LTV.
Escrows. Certain of the Mortgage Loans provide for monthly escrows to
cover property taxes. Certain of the Mortgage Loans provide for monthly
escrows to cover insurance premiums on the Mortgaged Properties and in
certain cases from three months to one year of insurance premiums are
required to be escrowed. Certain of the Mortgage Loans secured by leasehold
interests also provide for escrows to make ground lease payments. Certain of
the Mortgage Loans require monthly escrows to cover ongoing replacements and
capital repairs. Certain of the Mortgage Loans have debt service escrows
funded with an amount equal to one or more months of debt service payments.
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"Due-on-Sale" and "Due-on-Encumbrance" Provisions. The Mortgage Loans
generally contain "due-on-sale" and "due-on-encumbrance" clauses that, in
each case, permit the holder of the Mortgage Loan to accelerate the maturity
of the Mortgage Loan if the borrower sells or otherwise transfers or
encumbers the related Mortgaged Property without the consent of the
mortgagee. The Special Servicer will determine, in a manner consistent with
the Servicing Standard, whether to exercise any right the mortgagee may have
under any such clause to accelerate payment of the related Mortgage Loan
upon, or to withhold its consent to, any transfer or further encumbrance of
the related Mortgaged Property. Certain of the Mortgage Loans provide that
the mortgagee may condition an assumption of the loan on the receipt of an
assumption fee, which is in some cases equal to one percent of the then
unpaid principal balance of the applicable Note, in addition to the payment
of all costs and expenses incurred in connection with such assumption.
Certain of the Mortgage Loans permit either: (i) a one-time transfer of the
related Mortgaged Property if certain specified conditions are satisfied or
if the transfer is to a borrower reasonably acceptable to the lender; or (ii)
transfers to parties related to the borrower. The Servicer will determine, in
accordance with the Servicing Standard, whether to exercise any right the
holder of any Mortgage may have under any such clause to accelerate payment
of the related Mortgage Loan upon, or to withhold its consent to, any
transfer or further encumbrance of the related Mortgaged Property. See
"Description of the Pooling Agreements -- Due-on-Sale and Due-on-Encumbrance
Provisions" and "Certain Legal Aspects of Mortgage Loans -- Due-on-Sale and
Due-on-Encumbrance Provisions" in the Prospectus. Certain of the Mortgage
Loans provide that such consent may not be unreasonably withheld provided
that (i) no event of default has occurred, (ii) the proposed transferee is
creditworthy and has sufficient experience in the ownership and management of
properties similar to the Mortgaged Property, (iii) Moody's, and with respect
to Mortgage Loans that represent more than 2% of the then-current aggregate
Stated Principal Balance of the Mortgage Pool, Fitch have confirmed in
writing that such transfer or further encumbrance will not result in a
qualification, reduction or withdrawal of the then current rating of the
Certificates, (iv) the transferee has executed and delivered an assumption
agreement evidencing its agreement to abide by the terms of the Mortgage Loan
together with legal opinions and title insurance endorsements and (v) the
assumption fee has been received (which assumption fee will be paid to the
Servicer and the Special Servicer, as provided in the Pooling and Servicing
Agreement, and will not be paid to the Certificateholders). See "Risk Factors
- -- The Mortgage Loans -- Exercise of Remedies" herein and "Certain Legal
Aspects of Mortgage Loans -- Due-on-Sale and Due-on-Encumbrance Provisions"
in the Prospectus. The Depositor makes no representation as to the
enforceability of any due-on-sale or due-on-encumbrance provision in any
Mortgage Loan.
Cross-Collateralization and Cross-Default of Certain Mortgage Loans. 48 of
the Mortgage Loans (the "Pool Loans") representing 12.9% of the Initial Pool
Balance, are secured by more than one Mortgaged Property. However, because
certain states require the payment of a mortgage recording or documentary
stamp tax based upon the principal amount of debt secured by a mortgage, the
Mortgages recorded with respect to certain Mortgaged Properties do not secure
the full amount of the related Mortgage Loan, but rather secure only 150% of
the Allocated Loan Amount of each Mortgaged Property located in such states.
See "Risk Factors -- The Mortgage Loans -- Limitations on Enforceability of
Cross-Collateralization" herein and "Loan Characteristics" in Annex A.
Low Income Housing Tax Credits. Certain of the Multifamily Properties are
eligible to receive low-income housing tax credits ("Tax Credits") pursuant
to Section 42 of the Code (such Multifamily Properties, the "Section 42
Properties"). Section 42 of the Code provides a Tax Credit for owners of
residential rental property meeting the definition of low-income housing who
have received a tax credit allocation from the state or local allocating
agency.
In the event a Section 42 Property does not maintain compliance with the
Tax Credit restrictions on tenant income or rental rates, the owners of the
Section 42 Property project may lose the Tax Credits related to the period of
the noncompliance and face the partial recapture of previously taken Tax
Credits.
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HUD Section 8 Loans. Certain of the Multifamily Properties, representing
1.8% of the Initial Pool Balance, are eligible for low income rent subsidies
under the United States Department of Housing and Urban Development ("HUD")
"Section 8" program ("Section 8"). Section 8 rent subsidies provide for the
direct or indirect payment of rental subsidies by HUD to owners of certain
types of low income multifamily housing properties on behalf of eligible
tenants. Tenant eligibility is determined based upon family income and size,
as well as the median income for the area. The subsidy paid by HUD is based
on the difference between the rent charged to the tenant (which rent is
established by HUD) and the tenant's ability to pay. The payment of subsidies
to a particular project owner is made pursuant to a Housing Assistance
Payment contract (a "HAP Contract") between HUD and the owner of the project
or a local public housing authority. Upon expiration of a HAP Contract, the
rental subsidies terminate.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the close of business on the Cut-Off Date, as adjusted for the
scheduled principal payments due on the Mortgage Loans on or before the
Cut-Off Date. Prior to the issuance of the Offered Certificates, a Mortgage
Loan may be removed from the Mortgage Pool if the Depositor deems such
removal necessary or appropriate or if it is prepaid. This may cause the
range of Mortgage Rates and maturities as well as the other characteristics
of the Mortgage Loans to vary from those described herein.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates and will be filed by the Depositor,
together with the Pooling and Servicing Agreement with the Securities and
Exchange Commission within fifteen days after the initial issuance of the
Offered Certificates. In the event Mortgage Loans are removed from the
Mortgage Pool as set forth in the preceding paragraph, such removal will be
noted in the Form 8-K. Such Form 8-K will be available to purchasers and
potential purchasers of the Offered Certificates.
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 17 Classes to be designated as the Class X
Certificates, Class A-1 Certificates, Class A-2 Certificates, Class B
Certificates, Class C Certificates, Class D Certificates, Class E
Certificates, Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates, Class L
Certificates, Class Q-1 Certificates, Class Q-2 Certificates, Class R
Certificates and Class LR Certificates. Only the Class X, Class A-1, Class
A-2, Class B , Class C , Class D and Class E Certificates (the "Offered
Certificates") are offered hereby. The Class F, Class G, Class H, Class J,
Class K, Class L, Class Q-1, Class Q-2, Class R and Class LR Certificates
(the "Private Certificates") are not offered hereby.
The Certificates represent in the aggregate the entire beneficial
ownership interest in a Trust Fund consisting of: (i) the Mortgage Loans and
all payments under and proceeds of the Mortgage Loans due after the Cut-Off
Date; (ii) any Mortgaged Property acquired on behalf of the Trust Fund
through foreclosure or deed in lieu of foreclosure (upon acquisition, an "REO
Property"); (iii) such funds or assets as from time to time are deposited in
the Collection Account, the Distribution Account, the Upper-Tier Distribution
Account, the Excess Interest Distribution Account, the Default Interest
Distribution Account and any account established in connection with REO
Properties (an "REO Account"); (iv) the rights of the mortgagee under all
insurance policies with respect to the Mortgage Loans; (iv) the Depositor's
rights and remedies under each Mortgage Loan Purchase Agreement; and (v) all
of the mortgagee's right, title and interest in the Reserve Accounts and Lock
Box Accounts.
The Class A-1, Class A-2, Class B, Class C Class D and Class E
Certificates will have initial Certificate Balances of $[ ], $[ ], $[ ],
$[ ], $[ ] and $[ ], respectively. The Class F, Class G,
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Class H, Class J, Class K and Class L Certificates will have initial
Certificate Balances of $[ ], $[ ], $[ ], $[ ], $[ ] and $[ ],
respectively. The Class X Certificates will have an initial Notional Balance
equal to $[ ], which is equal to the aggregate Stated Principal Balance of
the Mortgage Loans as of the Cut-Off Date.
The Class Q-1, Class Q-2, Class R and Class LR Certificates will not have
Certificate Balances or Notional Balances.
The Certificate Balance of any Class of Certificates outstanding at any
time represents the maximum amount which the holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans and the other assets in the Trust Fund; provided, however,
that in the event that Realized Losses previously allocated to a Class of
Certificates in reduction of the Certificate Balance thereof are recovered
subsequent to the reduction of the Certificate Balance of such Class to zero,
such Class may receive distributions in respect of such recoveries in
accordance with the priorities set forth under "--Distributions --
Priorities" herein.
The respective Certificate Balance of each Class of Certificates (other
than the Class Q-1, Class Q-2, Class X, Class R and Class LR Certificates)
will in each case be reduced by amounts actually distributed thereon that are
allocable to principal and by any Realized Losses allocated to such Class of
Certificates. The Notional Balance of the Class X Certificates will for
purposes of distributions on each Distribution Date equal the aggregate
Stated Principal Balance of the Mortgage Loans immediately prior to such
Distribution Date. The Notional Balance of the Class X Certificates will be
reduced to the extent of all reductions in the aggregate Stated Principal
Balance of such Mortgage Loans.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Certificates will be made
on the 15th day of each month or, if such 15th day is not a business day,
then on the next succeeding business day, commencing in April 1998 (each, a
"Distribution Date"). All distributions (other than the final distribution on
any Certificate) will be made by the Trustee to the persons in whose names
the Certificates are registered at the close of business on the last business
day of the calendar month immediately preceding the month in which such
Distribution Date occurs (the "Record Date"). Such distributions will be made
(a) by wire transfer in immediately available funds to the account specified
by the Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder provides the Trustee with
wiring instructions no less than five business days prior to the related
Record Date, or otherwise (b) by check mailed to such Certificateholder. The
final distribution on any Offered Certificates will be made in like manner,
but only upon presentment or surrender (for notation that the Certificate
Balance thereof has been reduced to zero) of such Certificate at the location
specified in the notice to the holder thereof of such final distribution. All
distributions made with respect to a Class of Certificates on each
Distribution Date will be allocated pro rata among the outstanding
Certificates of such Class based on their respective Percentage Interests.
The "Percentage Interest" evidenced by any Offered Certificate is equal to
the initial denomination thereof as of the Closing Date divided by the
initial Certificate Balance or Notional Balance, as applicable, of the
related Class.
The aggregate distribution to be made with respect to the Certificates on
any Distribution Date will equal the Available Funds. The "Available Funds"
for any Distribution Date will be the sum of (i) all previously undistributed
Monthly Payments or other receipts on account of principal and interest on or
in respect of the Mortgage Loans (including Unscheduled Payments and Net REO
Proceeds, if any) received by the Servicer in the related Collection Period,
(ii) all P&I Advances made by the Servicer, the Trustee or the Fiscal Agent,
as applicable, in respect of such Distribution Date, (iii) all other amounts
required to be deposited in the Collection Account by the Servicer pursuant
to the Pooling and Servicing Agreement allocable to the Mortgage Loans, (iv)
any late payments of Monthly Payments received after the end of the
Collection Period relating to such Distribution Date but prior to the related
Servicer Remittance Date and (v) any amounts
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representing Prepayment Interest Shortfalls remitted by the Servicer to the
Collection Account (as described under "--Prepayment Interest Shortfalls"),
but excluding the following:
(a) amounts permitted to be used to reimburse the Servicer, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, for previously
unreimbursed Advances and interest thereon as described herein under "The
Pooling and Servicing Agreement -- Advances";
(b) the aggregate amount of the Servicing Fee (which includes the fees
for the Servicer, the Trustee, the Healthcare Adviser and fees for primary
servicing functions), and the other Servicing Compensation (e.g., Net
Prepayment Interest Excess, late fees, assumption fees, loan modification
fees, extension fees, loan service transaction fees, demand fees,
beneficiary statement charges, and similar fees) payable to the Servicer
and the Special Servicing Fee, (and other amounts payable to the Special
Servicer described under "The Pooling and Servicing Agreement -- Special
Servicing" herein), and reinvestment earnings on payments received with
respect to the Mortgage Loans which the Servicer or Special Servicer is
entitled to receive as additional servicing compensation, in each case in
respect of such Distribution Date;
(c) all amounts representing scheduled Monthly Payments due after the
related Due Date;
(d) to the extent permitted by the Pooling and Servicing Agreement, that
portion of liquidation proceeds, insurance proceeds and condemnation
proceeds with respect to a Mortgage Loan which represents any unpaid
Servicing Fee and special servicing compensation together with interest
thereon as described herein, to which the Servicer, the Special Servicer,
the Healthcare Adviser, any subservicer and the Trustee are entitled;
(e) all amounts representing certain expenses reimbursable or payable to
the Servicer, the Special Servicer, the Trustee or the Fiscal Agent and
other amounts permitted to be retained by the Servicer or withdrawn
pursuant to the Pooling and Servicing Agreement in respect of various
items, including interest thereon as provided in the Pooling and Servicing
Agreement;
(f) Prepayment Premiums;
(g) Default Interest;
(h) Excess Interest;
(i) all amounts received with respect to each Mortgage Loan previously
purchased or repurchased pursuant to the Pooling and Servicing Agreement
or any Mortgage Loan Purchase Agreement during the related Collection
Period and subsequent to the date as of which the amount required to
effect such purchase or repurchase was determined; and
(j) the amount reasonably determined by the Trustee to be necessary to
pay any applicable federal, state or local taxes imposed on the Upper-Tier
REMIC or the Lower-Tier REMIC under the circumstances and to the extent
described in the Pooling and Servicing Agreement.
The "Monthly Payment" with respect to any Mortgage Loan (other than any
REO Mortgage Loan) and any Due Date is the scheduled monthly payment of
principal (if any) and interest at the Mortgage Rate, excluding any Balloon
Payment (but not excluding any constant Monthly Payment due on a Balloon
Date), which is payable by the related borrower on the related Due Date. The
Monthly Payment with respect to an REO Mortgage Loan for any Distribution
Date is the monthly payment that would otherwise have been payable on the
related Due Date had the related Note not been discharged, determined as set
forth in the Pooling and Servicing Agreement.
"Unscheduled Payments" are all net liquidation proceeds, net insurance
proceeds and net condemnation proceeds payable under the Mortgage Loans, the
repurchase price of any
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Mortgage Loan repurchased by any of the Mortgage Loan Sellers due to a breach
of a representation or warranty made by them or the purchase price paid by
the parties described under "The Pooling and Servicing Agreement -- Optional
Termination" and "--Realization Upon Mortgage Loans", and any other payments
under or with respect to the Mortgage Loans not scheduled to be made,
including Principal Prepayments, but excluding Prepayment Premiums.
"Net REO Proceeds" with respect to any REO Property and any related REO
Mortgage Loan are all revenues received by the Special Servicer with respect
to such REO Property or REO Mortgage Loan net of any insurance premiums,
taxes, assessments and other costs and expenses permitted to be paid
therefrom pursuant to the Pooling and Servicing Agreement.
"Principal Prepayments" are payments of principal made by a borrower on a
Mortgage Loan which are received in advance of the scheduled Due Date for
such payments and which are not accompanied by an amount of interest
representing the full amount of scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment, other than any
amount paid in connection with the release of the related Mortgaged Property
through defeasance.
The "Collection Period" with respect to a Distribution Date, is the period
that begins immediately following the Determination Date in the calendar
month preceding the month in which such Distribution Date occurs (or, in the
case of the initial Distribution Date, immediately following the Cut-Off
Date) and ends on the Determination Date in the calendar month in which such
Distribution Date occurs. The "Determination Date" will be the 5th day of
each month or, if any such 5th day is not a business day, the immediately
following business day.
"Net Default Interest" with respect to any Mortgage Loan is any Default
Interest accrued on such Mortgage Loan less amounts required to pay the
Servicer, the Trustee or Fiscal Agent, as applicable, interest on Advances at
the Advance Rate.
"Default Interest" with respect to any Mortgage Loan is interest accrued
on such Mortgage Loan at the excess of (i) the related Default Rate over (ii)
the sum of the related Mortgage Rate and, if applicable, the related Excess
Rate.
The "Default Rate" with respect to any Mortgage Loan is the per annum rate
at which interest accrues on such Mortgage Loan following any event of
default on such Mortgage Loan including a default in the payment of a Monthly
Payment or a Balloon Payment.
"Excess Interest" with respect to each of the Mortgage Loans that has a
Revised Rate, interest accrued on such Mortgage Loan allocable to the Excess
Rate.
"Excess Rate" with respect to each of the Mortgage Loans that has a
Revised Rate, the difference between (a) the applicable Revised Rate and (b)
the applicable Mortgage Rate.
Payment Priorities. As used below in describing the priorities of
distribution of Available Funds for each Distribution Date, the terms set
forth below will have the following meanings.
The "Interest Accrual Amount" with respect to any Distribution Date and
any Class of Certificates (other than the Class Q-1, Class Q-2, Class R and
Class LR Certificates), is equal to interest for the related Interest Accrual
Period at the Pass-Through Rate for such Class on the related Certificate
Balance or Notional Balance (provided, that for interest accrual purposes any
distributions in reduction of Certificate Balance or reductions in
Certificate Balance as a result of allocations of Realized Losses on the
Distribution Date occurring in an Interest Accrual Period will be deemed to
have been made on the first day of such Interest Accrual Period), as
applicable, minus the amount of any Excess Prepayment Interest Shortfall
allocated to such Class with respect to such Distribution Date. Calculations
of interest due in respect of the Certificates will be made on the basis of a
360-day year consisting of twelve 30-day months.
"Appraisal Reduction Amount" is the amount described under "--Appraisal
Reductions."
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"Delinquency" means any failure of the borrower to make a scheduled
payment on a Due Date.
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month immediately preceding the month in which such Distribution
Date occurs.
An "Interest Shortfall" with respect to any Distribution Date for any
Class of Offered Certificates is any shortfall in the amount of interest
required to be distributed on such Class on such Distribution Date (other
than as a result of any Excess Prepayment Interest Shortfall allocated to
such Class). No interest accrues on Interest Shortfalls.
The "Pass-Through Rate" for any Class of Offered Certificates is the per
annum rate at which interest accrues on the Certificates of such Class during
any Interest Accrual Period. The Pass-Through Rate on the Class A-1, Class
A-2, Class B, Class C and Class D Certificates is a per annum rate equal to
[ ]%, [ ]%, [ ]%, [ ]%, and [ ]%, respectively. The Pass-Through Rate on
the Class E Certificates will, at all times, be equal to the lesser of [ ]%
and the Weighted Average Net Mortgage Pass-Through Rate. The Pass-Through
Rates applicable to the Class F, Class G, Class H, Class J, Class K and Class
L Certificates will, at all times, be equal to the lesser of a fixed rate
specified in the Pooling and Servicing Agreement and the Weighted Average Net
Mortgage Pass-Through Rate. The Pass-Through Rate on the Class X Certificates
is a per annum rate equal to the Weighted Average Net Mortgage Pass-Through
Rate minus the Weighted Average Pass-Through Rate. Each of the Class Q-1,
Class Q-2, Class R and Class LR Certificates will not have a Pass-Through
Rate.
The "Weighted Average Pass-Through Rate" for purposes of calculating the
Pass-Through Rate on the Class X Certificates, with respect to any Interest
Accrual Period, is the amount (expressed as a percentage), the numerator of
which is the sum of the products of (A) the Pass-Through Rate with respect to
each Class of Certificates having a Pass-Through Rate (other than the Class X
Certificates) and (B) the Certificate Balance of such Class as of the first
day of such Interest Accrual Period and the denominator of which is the sum
of the Certificate Balances of each Class included in (A) above as of such
date (provided in each case, any reductions in Certificate Balance as a
result of distributions or allocations of Realized Losses to such Class or
the related Class, respectively, occurring in an Interest Accrual Period will
be deemed to have been made on the first day of such Interest Accrual
Period).
The "Weighted Average Net Mortgage Pass-Through Rate" for any Distribution
Date is the amount (expressed as a percentage) the numerator of which is the
sum for all Mortgage Loans of the products of (i) the Net Mortgage
Pass-Through Rate of each such Mortgage Loan as of the immediately preceding
Distribution Date and (ii) the Stated Principal Balance of each such Mortgage
Loan and the denominator of which is the sum of the Stated Principal Balances
of all such Mortgage Loans as of the immediately preceding Distribution Date.
The "Due Date" with respect to any Distribution Date and/or any Mortgage
Loan, as the case may be, either the first day (368 Mortgage Loans
representing 97.5% of the Initial Pool Balance) or the tenth day (2 Mortgage
Loans representing 0.9% of the Initial Pool Balance) or the fifteenth day (9
Mortgage Loans representing 1.6% of the Initial Pool Balance) of the month in
the related Collection Period.
The "Net Mortgage Pass-Through Rate" with respect to any Mortgage Loan and
any Distribution Date is the Mortgage Pass-Through Rate for such Mortgage
Loan for the related Interest Accrual Period minus the Servicing Fee Rate.
The "Mortgage Pass-Through Rate" with respect to any Mortgage Loan is the
Mortgage Rate in each case without giving effect to any default rate.
Notwithstanding the foregoing, if any Mortgage Loan does not accrue interest
on the basis of a 360-day year consisting of twelve 30-day months, then the
Mortgage Pass-Through Rate of such Mortgage Loan for any Mortgage Loan
interest accrual period will be the annualized rate at which interest would
have to accrue in
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respect of such Mortgage Loan on the basis of a 360-day year consisting of
twelve 30-day months in order to produce the aggregate amount of interest
actually accrued in respect of such Mortgage Loan during such Mortgage Loan
interest accrual period at the related Mortgage Rate.
The "Mortgage Rate" with respect to each Mortgage Loan and any Interest
Accrual Period is the annual rate, not including any Excess Rate, at which
interest accrues on such Mortgage Loan during such period (in the absence of
a default), as set forth in the related Note and on Annex A. The Mortgage
Rate for purposes of calculating the Weighted Average Net Mortgage
Pass-Through Rate will be the Mortgage Rate of such Mortgage Loan without
taking into account any reduction in the interest rate by a bankruptcy court
pursuant to a plan of reorganization or pursuant to any of its equitable
powers or a reduction of interest or principal due to a modification as
described under "The Pooling and Servicing Agreement -- Modifications."
The "Principal Distribution Amount" for any Distribution Date will be
equal to the sum of the following items without duplication:
(i) the principal component of all scheduled Monthly Payments (other than
Balloon Payments) due on the Mortgage Loans on or before the related Due
Date (if received or advanced);
(ii) the principal component of all Assumed Scheduled Payments due on or
before the related Due Date (if received or advanced) with respect to any
Mortgage Loan that is delinquent in respect of its Balloon Payment;
(iii) the Stated Principal Balance of each Mortgage Loan that was, during
the related Collection Period, repurchased from the Trust Fund in
connection with the breach of a representation or warranty or purchased
from the Trust Fund as described herein under "The Pooling and Servicing
Agreement -- Optional Termination";
(iv) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan which was liquidated during the related Collection Period;
(v) all Balloon Payments and, to the extent not included in the preceding
clauses, any other principal payment on any Mortgage Loan received on or
after the Maturity Date thereof, to the extent received during the related
Collection Period;
(vi) to the extent not included in the preceding clause (iii) or (iv),
all other Principal Prepayments received in the related Collection Period;
and
(vii) to the extent not included in the preceding clauses, any other full
or partial recoveries in respect of principal, including net insurance
proceeds, net liquidation proceeds and Net REO Proceeds received in the
related Collection Period (in the case of clauses (i) through (vii) net of
any related outstanding P&I Advances allocable to principal).
The "Assumed Scheduled Payment" with respect to any Mortgage Loan that is
delinquent in respect of its Balloon Payment (including any REO Mortgage Loan
as to which the Balloon Payment would have been past due) is an amount equal
to the sum of (a) the principal portion of the Monthly Payment that would
have been due on such Mortgage Loan on the related Due Date based on the
constant payment required by the related Note or the original amortization
schedule thereof (as calculated with interest at the related Mortgage Rate),
if applicable, assuming such Balloon Payment has not become due after giving
effect to any modification, and (b) interest at the applicable Net Mortgage
Pass-Through Rate.
An "REO Mortgage Loan" is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
Distribution of Available Funds. On each Distribution Date, prior to the
Crossover Date, the Available Funds for such Distribution Date will be
distributed in the following amounts and order of priority:
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(i) First, pro rata, in respect of interest, to the Class A-1, Class A-2
and Class X Certificates, up to an amount equal to the aggregate Interest
Accrual Amounts of such Classes;
(ii) Second, pro rata, to the Class A-1, Class A-2 and Class X
Certificates, in respect of interest, up to an amount equal to the
aggregate unpaid Interest Shortfalls previously allocated to such Classes;
(iii) Third, to the Class A-1 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount until the Certificate Balance thereof is reduced to zero;
(iv) Fourth, to the Class A-2 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance thereof is reduced to
zero;
(v) Fifth, to the Class B Certificates in respect of interest, up to an
amount equal to the aggregate Interest Accrual Amount of such Class;
(vi) Sixth, to the Class B Certificates, in respect of interest, up to an
amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(vii) Seventh, to the Class B Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(viii) Eigth, to the Class B Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized
Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(ix) Ninth, to the Class C Certificates in respect of interest, up to an
amount equal to the aggregate Interest Accrual Amount of such Class;
(x) Tenth, to the Class C Certificates, in respect of interest, up to an
amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(xi) Eleventh, to the Class C Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xii) Twelfth, to the Class C Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized
Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xiii) Thirteenth, to the Class D Certificates in respect of interest, up
to an amount equal to the aggregate Interest Accrual Amount of such Class;
(xiv) Fourteenth, to the Class D Certificates, in respect of interest, up
to an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(xv) Fifteenth, to the Class D Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xvi) Sixteenth, to the Class D Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
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(xvii) Seventeenth, to the Class E Certificates in respect of interest,
up to an amount equal to the aggregate Interest Accrual Amount of such
Class;
(xviii) Eighteenth, to the Class E Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xix) Nineteenth, to the Class E Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xx) Twentieth, to the Class E Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxi) Twenty-first, to the Class F Certificates in respect of interest,
up to an amount equal to the aggregate Interest Accrual Amount of such
Class;
(xxii) Twenty-second, to the Class F Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest
Shortfalls previously allocated to such Class;
(xxiii) Twenty-third, to the Class F Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxiv) Twenty-fourth, to the Class F Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxv) Twenty-fifth, to the Class G Certificates in respect of interest,
up to an amount equal to the aggregate Interest Accrual Amount of such
Class;
(xxvi) Twenty-sixth, to the Class G Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxvii) Twenty-seventh, to the Class G Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxviii) Twenty-eighth, to the Class G Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxix) Twenth-ninth, to the Class H Certificates in respect of interest,
up to an amount equal to the aggregate Interest Accrual Amount of such
Class;
(xxx) Thirtieth, to the Class H Certificates, in respect of interest, up
to an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(xxxi) Thirty-first, to the Class H Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxxii) Thirty-second, to the Class H Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxxiii) Thirty-third, to the Class J Certificates in respect of
interest, up to an amount equal to the aggregate Interest Accrual Amount
of such Class;
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(xxxiv) Thirty-fourth, to the Class J Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest
Shortfalls previously allocated to such Class;
(xxxv) Thirty-fifth, to the Class J Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxxvi) Thirty-sixth, to the Class J Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxxvii) Thirty-seventh, to the Class K Certificates in respect of
interest, up to an amount equal to the aggregate Interest Accrual Amount
of such Class;
(xxxviii) Thirty-eighth, to the Class K Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest
Shortfalls previously allocated to such Class;
(xxxix) Thirty-ninth, to the Class K Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xl) Fortieth, to the Class K Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized
Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class; and
(xli) Forty-first, to the Class L Certificates in respect of interest, up
to an amount equal to the aggregate Interest Accrual Amount of such Class;
(xlii) Forty-second, to the Class L Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xliii) Forty-third, to the Class L Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xliv) Forty-fourth, to the Class L Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class; and
(xlv) Forty-fifth, to the Class R and Class LR Certificates as specified
in the Pooling and Servicing Agreement.
All references to "pro rata" in the preceding clauses unless otherwise
specified mean pro rata based upon the amount distributable pursuant to such
clause.
Notwithstanding the foregoing, on each Distribution Date occurring on or
after the Crossover Date, the Principal Distribution Amount will be
distributed to the Class A-1 and Class A-2 Certificates, pro rata, based on
their respective Certificate Balances, in reduction of their respective
Certificate Balances, until the Certificate Balance of each such Class is
reduced to zero, and any unreimbursed amounts of Realized Losses previously
allocated to such classes, if available, will be distributed pro rata based
on their respective Certificate Balances. The "Crossover Date" is the
Distribution Date on which the Certificate Balance of each Class of
Certificates other than the Class A-1 and Class A-2 Certificates have been
reduced to zero. The Class X Certificates will not be entitled to any
distribution of principal.
Prepayment Premiums. In the event a borrower is required to pay any
Prepayment Premium, (which shall include any Yield Maintenance Premium or any
other fees paid or payable, as the context requires, as a result of a
prepayment of principal on a Mortgage Loan which are
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calculated based upon a specified percentage (which may decline over time) of
the amount prepaid are considered) the amount of such payments actually
collected will be distributed in respect of the Offered Certificates as set
forth below.
On each Distribution Date, any Prepayment Premium collected on a Mortgage
Loan during the related Collection Period will be distributed as follows:
first, to the holders of the Class X Certificates and the holders of the
Class A-1 and Class A-2 Certificates then entitled to distributions of
principal, pro rata, in accordance with their corresponding respective PV
Yield Loss Amount, in an amount up to the corresponding PV Yield Loss Amount
for each such Class of Certificates; second, sequentially, to the holders of
the remaining Classes of Offered Certificates in an amount up to the
corresponding PV Yield Loss Amount for each such Class of Certificates; and
third, to the holders of the Class X Certificates any remaining amount so
collected.
The "PV Yield Loss Amount" with respect any Distribution Date and any
prepayment of principal of a Mortgage Loan that is distributable (together
with a Prepayment Premium) to Certificateholders on such Distribution Date,
means: (a) with respect to any Class of Offered Certificates (other than the
Class X Certificates) as to which such prepayment is payable, in whole or in
part, in reduction of the Certificate Balance thereof on such Distribution
Date, an amount equal to the present value of a series of monthly payments,
each equal to the related Fixed Interest Payment Adjustment deemed payable on
each subsequent Distribution Date to and including the applicable Final
Adjustment Distribution Date, and each discounted at the applicable
Reinvestment Yield (compounding monthly) for the number of months remaining
from the then current Distribution Date to the applicable subsequent
Distribution Date; and (b) with respect to the Class X Certificates, an
amount equal to the present value of a series of monthly payments, which may
vary over time, each equal to the applicable related Variable Interest
Payment Adjustment deemed payable on each subsequent Distribution Date to and
including the applicable Final Adjustment Distribution Date, and each
discounted at the applicable Reinvestment Yield (compounding monthly) for the
number of months remaining from the then current Distribution Date to the
applicable subsequent Distribution Date.
For purposes of computing the PV Yield Loss Amount for any Class of
Offered Certificates, the following definitions shall apply:
The "Final Adjustment Distribution Date" for such Class of Certificates in
respect of any prepayment means, the Assumed Final Distribution Date for such
Class. The "Assumed Final Distribution Date" with respect to a Class of
Certificates is the last Distribution Date on which such Class of
Certificates would receive a payment of principal based on the assumption
that there are no prepayments on the Mortgage Loans (other than the ARD
Loans) and otherwise on the Mortgage Loan Assumptions (as defined herein).
With respect to any Class of Offered Certificates (other than the Class X
Certificates) and any prepayment of principal that is applied, in whole or in
part, in reduction of the Certificate Balance of such Class on any
Distribution Date, the "Fixed Interest Payment Adjustment" shall equal
one-twelfth of the product of (a) the amount, if any, by which the
Pass-Through Rate for such Class exceeds the applicable Reinvestment Yield
(compounding monthly), multiplied by (b) the applicable Prepayment Amount.
With respect to the Class X Certificates and any particular prepayment of
principal distributable on any Distribution Date, the "Variable Interest
Payment Adjustment" deemed payable on any particular subsequent Distribution
Date through and including the related Final Adjustment Distribution Date
shall vary with the occurrence of each Assumed Final Distribution Date that
occurs prior to such Final Adjustment Distribution Date, and shall equal
one-twelfth of (a) the applicable Adjustment Rate, multiplied by (b) the
amount of such prepayment of principal. The "Adjustment Rate" applicable to
any subsequent Distribution Date shall be a percentage equal to the Weighted
Average Net Mortgage Pass-Through Rate for the current Distribution Date less
the Pass-Through Rate for the Class A-1 Certificates if such subsequent
Distribution Date occurs on or before the Assumed Final Distribution Date for
the Class A-1 Certificates if such subsequent
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Distribution Date occurs on or before the Assumed Final Distribution Date for
the Class A-1 Certificates, the Pass-Through Rate for the Class A-2
Certificates if such subsequent Distribution Date occurs after the Assumed
Final Distribution Date for the Class A-1 Certificates and on or before the
Assumed Final Distribution Date for the Class A-2 Certificates and, if such
subsequent Distribution Date occurs thereafter, the Pass-Through Rate for the
most senior class of Regular Certificates (other than the Class X
Certificates) for which the Assumed Final Distribution Date coincides with or
follows such subsequent Distribution Date.
The "Reinvestment Yield" applicable to any Class of Regular Certificates
will be the yield for "This Week" as reported by the Federal Reserve Board in
Federal Reserve Statistical Release H.15 (519) for the constant maturity
treasury having a maturity coterminius with the applicable Final Adjustment
Distribution Date. If there is no Reinvestment Yield for instruments having a
maturity coterminus with the remaining term (to maturity or Anticipated
Repayment Date, where applicable) of the applicable Mortgage Loan, then the
Reinvestment Yield will be equal to the interpolation of the yields of the
constant maturity treasuries with maturities next longer and shorter than
such remaining term to maturity or Anticipated Repayment Date.
With respect to any Class of Regular Certificates (other than the Class X
Certificates) for any Distribution Date and any prepayment of principal
distributable to Certificateholders on such Distribution Date, the
"Prepayment Amount" shall be the product of (x) the full amount of such
prepayment of principal, multiplied by (y) a fraction, the numerator of which
is the portion of the Principal Distribution Amount for such Distribution
Date that is payable in respect of such Class, and the denominator of which
is the entire Principal Distribution Amount for such Distribution Date. For
purposes of the calculation of the Prepayment Amount, in respect of an ARD
Loan any principal payment amount on or after the ARD Date will not be
considered a prepayment of principal.
Default Interest and Excess Interest. On each Distribution Date, Net
Default Interest and Excess Interest received in the related Collection
Period with respect to a default on a Mortgage Loan will be distributed
solely to the Class Q-1 and Class Q-2 Certificates, respectively, to the
extent set forth in the Pooling and Servicing Agreement, and will not be
available for distribution to holders of the Offered Certificates. The Class
Q-1 and Class Q-2 Certificates are not entitled to any other distributions of
interest, principal or Prepayment Premiums.
REALIZED LOSSES
The Certificate Balance of the Certificates will be reduced without
distribution on any Distribution Date as a write-off to the extent of any
Realized Loss allocated to the applicable Class of Certificates with respect
to such Distribution Date. As referred to herein, the "Realized Loss" with
respect to any Distribution Date shall mean the amount, if any, by which the
aggregate Certificate Balance of the Regular Certificates (other than the
Class X Certificates) after giving effect to distributions made on such
Distribution Date exceeds the aggregate Stated Principal Balance of the
Mortgage Loans as of the Due Date occurring in the month prior to which such
Distribution Date occurs. Except as described in the next sentence, any such
Realized Losses will be applied to the Classes of Certificates in the
following order, until the Certificate Balance of each is reduced to zero:
first, to the Class L Certificates, second, to the Class K Certificates,
third, to the Class J Certificates, fourth, to the Class H Certificates,
fifth, to the Class G Certificates, sixth, to the Class F Certificates,
seventh, to the Class E Certificates, eighth, to the Class D Certificates,
ninth, to the Class C Certificates, tenth, to the Class B Certificates, and
finally, pro rata, to the Class A-1 and Class A-2 Certificates based on their
respective Certificate Balances. Any amounts recovered in respect of any such
amounts previously written-off as Realized Losses will be distributed to the
Classes of Regular Certificates in reverse order of allocation of such
Realized Losses thereto. Shortfalls in Available Funds resulting from
Servicing Compensation (other than the Master Servicing Fee), interest on
Advances to the extent not covered by Default Interest, extraordinary
expenses of the Trust Fund, a reduction of the interest rate of a Mortgage
Loan by a bankruptcy court pursuant to a plan of reorganization or pursuant
to any of its equitable powers, a reduction
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in interest rate or a forgiveness of principal of a Mortgage Loan as
described under "The Pooling and Servicing Agreement -- Modifications,"
herein or otherwise, will be allocated in the same manner as Realized Losses.
Excess Prepayment Interest Shortfalls, as described under "--Prepayment
Interest Shortfalls" herein, will be allocated to, and be deemed distributed
to, each Class of Certificates, pro rata, based upon amounts distributable in
respect of interest to each such Class (without giving effect to any such
allocation of Excess Prepayment Interest Shortfall). The Notional Balance of
the Class X Certificates will be reduced to reflect reductions in the Stated
Principal Balances of the Mortgage Loans as a result of write-offs in respect
of final recovery determinations in respect of liquidation of defaulted
Mortgage Loans.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-Off Date Principal Balance thereof (or in the case of a Replacement
Mortgage Loan, the outstanding principal balance as of the related date of
substitution), reduced (to not less than zero) on each Distribution Date by
(i) any payments or other collections (or Advances in lieu thereof) of
principal of such Mortgage Loan that have been distributed on the
Certificates on such date and (ii) the principal portion of any Realized Loss
incurred in respect of or allocable to such Mortgage Loan during the related
Collection Period.
PREPAYMENT INTEREST SHORTFALL
For any Distribution Date, a "Prepayment Interest Shortfall" will arise
with respect to any Mortgage Loan if a mortgagor makes a full Principal
Prepayment or a Balloon Payment during the related Collection Period, and the
date such payment was made (or, in the case of a Balloon Payment, the date
through which interest thereon accrues) occurred prior to the Due Date for
such Mortgage Loan in the related Collection Period. Such a shortfall arises
because the amount of interest which accrues on the amount of such Principal
Prepayment or the principal portion of a Balloon Payment, as the case may be,
will be less than the corresponding amount of interest accruing on the
Certificates and fees payable to the Trustee and the Servicer. In such case,
the Prepayment Interest Shortfall will generally equal the excess of (a) the
aggregate amount of interest which would have accrued on the Stated Principal
Balance of such Mortgage Loan for the one month period ending on such Due
Date if such Principal Prepayment or Balloon Payment had not been made over
(b) the aggregate interest that did so accrue through the date such payment
was made.
In any case in which a full or Principal Prepayment or a Balloon Payment
is made during any Collection Period after the Due Date for a Mortgage Loan
in the related Collection Period, "Prepayment Interest Excess" will arise
since the amount of interest which accrues on the amount of such Principal
Prepayment or the principal portion of a Balloon Payment will exceed the
corresponding amount of interest accruing on the Certificates and fees
payable to the Trustee and the Servicer.
To the extent that the aggregate of such Prepayment Interest Shortfalls
for all Mortgage Loans exceed such Prepayment Interest Excess for such
Mortgage Loans as of any Distribution Date ("Net Prepayment Interest
Shortfall"), such amount will reduce the Master Servicing Fee (but not the
fees payable to the Special Servicer in the case of Specially Serviced
Mortgage Loans in an amount necessary to offset such Net Prepayment Interest
Shortfalls. See "The Pooling and Servicing Agreement -- Servicing
Compensation and Payment of Expenses" herein. With respect to any Mortgage
Loan, any Prepayment Interest Shortfall in excess of the sum of (i) the
Prepayment Interest Excess and (ii) the Master Servicing Fee ("Excess
Prepayment Interest Shortfall") will generally be allocated to each Class of
Certificates , pro rata, based on interest amounts distributable (without
giving effect to any such allocation of Excess Prepayment Interest Shortfall)
to each such Class.
To the extent that such Prepayment Interest Excess for all Mortgage Loans
exceeds such Prepayment Interest Shortfalls for all Mortgage Loans as of any
Distribution Date, such excess amount (the "Net Prepayment Interest Excess")
will be payable to the Servicer as additional compensation.
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SUBORDINATION
As a means of providing a certain amount of protection to the holders of
the Class A-1, Class A-2 and Class X Certificates (except as set forth below)
against losses associated with delinquent and defaulted Mortgage Loans, the
rights of the holders of the Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K and Class L Certificates to receive
distributions of interest and principal with respect to the Mortgage Loans,
as applicable, will be subordinated to such rights of the holders of the
Class A-1, Class A-2 and Class X Certificates. The Class B Certificates will
be likewise protected by the subordination of the Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K and Class L Certificates. The
Class C Certificates will be likewise protected by the subordination of the
Class D, Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates. The Class D Certificates will be likewise protected by the
subordination of the Class E, Class F, Class G, Class H, Class J, Class K and
Class L Certificates. The Class E Certificates will be likewise protected by
the subordination of the Class F, Class G, Class H, Class J, Class K and
Class L Certificates. The Class F Certificates will be likewise protected by
the subordination of the Class G, Class H, Class J, Class K and Class L
Certificates. This subordination will be effected in two ways: (i) by the
preferential right of the holders of a Class of Regular Certificates to
receive on any Distribution Date the amounts of interest and principal,
distributable in respect of such Regular Certificates on such date prior to
any distribution being made on such Distribution Date in respect of any
Classes of Regular Certificates subordinate thereto, and (ii) by the
allocation of Realized Losses (as defined herein), first, to the Class L
Certificates, second, to the Class K Certificates, third, to the Class J
Certificates, fourth, to the Class H Certificates, fifth, to the Class G
Certificates, sixth, to the Class F Certificates, seventh, to the Class E
Certificates, eighth, to the Class D Certificates, ninth, to the Class C
Certificates, tenth, to the Class B Certificates, and finally, pro rata, to
the Class A-1 and Class A-2 Certificates based on their respective
Certificate Balances. No other form of credit enhancement will be available
for the benefit of the holders of the Offered Certificates.
APPRAISAL REDUCTIONS
With respect to the first Distribution Date following the earliest of (i)
the first anniversary of the date on which an extension of the maturity date
of a Mortgage Loan becomes effective as a result of a modification of such
Mortgage Loan which extension does not change the Mortgage Rate, principal
balance or amortization terms of any Mortgage Loan or the amount of Monthly
Payments on the Mortgage Loan, (ii) 30 days after an uncured delinquency
occurs in respect of a Mortgage Loan, (iii) immediately after the date on
which a reduction in the amount of Monthly Payments on a Mortgage Loan, or a
change in the Mortgage Rate, principal balance or amortizing terms of any
Mortgage Loan or the amount of the Monthly Payment of the Mortgage Loan,
becomes effective as a result of a modification of such Mortgage Loan by the
Special Servicer, (iv) immediately after a receiver has been appointed, (v)
immediately after a borrower declares bankruptcy, (vi) immediately after a
Mortgage Loan becomes an REO Mortgage Loan, (vii) upon a default in the
payment of a Balloon Payment, (viii) immediately after an occurrence of an
event for which a Property Advance would be required to be made by the
Servicer or (ix) any other event which, in the discretion of the Servicer and
of which the Servicer becomes aware in performing its obligations in
accordance with the Servicing Standard would materially and adversely impair
the value of the Mortgaged Property and security for the related Mortgage
Loan (any of (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix), an
"Appraisal Reduction Event"), an Appraisal Reduction Amount will be
calculated. The "Appraisal Reduction Amount" for any Distribution Date and
for any Mortgage Loan as to which any Appraisal Reduction Event has occurred
will be an amount equal to the excess of (a) the outstanding Stated Principal
Balance of such Mortgage Loan over (b) the excess of (i) 90% of the sum of
the appraised values of the related Mortgaged Properties as determined by
independent MAI appraisals (the costs of which shall be paid by the Servicer
as an Advance) over (ii) the sum of (A) all unpaid interest on such Mortgage
Loan at a per annum rate equal to the Mortgage Rate, (B) all unreimbursed
Property Advances, the principal portion of all unreimbursed P&I Advances and
all unpaid interest on Advances at the Advance
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Rate in respect of such Mortgage Loan and (C) all currently due and unpaid
real estate taxes, ground rents and assessments and insurance premiums and
all other amounts due and unpaid under the Mortgage Loan (which tax, premiums
and other amounts have not been the subject of an Advance by the Servicer).
If no independent MAI appraisal has been obtained within twelve months prior
to the first Distribution Date on or after an Appraisal Reduction Event has
occurred, the Servicer will be required to estimate the value of the related
Mortgaged Properties (the "Servicer's Appraisal Estimate") and such estimate
will be used for purposes of the Appraisal Reduction Amount. Within 30 days
after the Appraisal Reduction Event, the Servicer will be required to obtain
an independent MAI appraisal. On the first Distribution Date occurring on or
after the delivery of such independent MAI appraisal, the Servicer will be
required to adjust the Appraisal Reduction Amount to take into account such
appraisal (regardless of whether the independent MAI appraisal is higher or
lower than the Servicer's Appraisal Estimate). Appraisal Reduction Amounts
will be recalculated annually based on Updated Appraisals.
Contemporaneously with the earliest of (i) the effective date of any
modification of the stated maturity, Mortgage Rate, principal balance or
amortization terms of any Mortgage Loan, any extension of the Maturity Date
of a Mortgage Loan or consent to the release of any Mortgaged Property or REO
Property from the lien of the related Mortgage, (ii) the occurrence of an
Appraisal Reduction Event, or (iii) the date on which the Special Servicer,
consistent with the Servicing Standard, requests an Updated Appraisal, the
Servicer (after consultation with the Special Servicer) will obtain an
appraisal (or a letter update for an existing appraisal which is less than
two years old) of the Mortgaged Property, or REO Property, as the case may
be, from an independent appraiser who is a member of the Appraiser Institute
(an "Updated Appraisal") provided, that, the Servicer will not be required to
obtain an Updated Appraisal of any Mortgaged Property with respect to which
there exists an appraisal which is less than twelve months old.
In the event that an Appraisal Reduction Event occurs with respect to a
Mortgage Loan, the amount advanced by the Servicer with respect to delinquent
payments of interest for such Mortgage Loan will be reduced as described
under "The Pooling Agreement -- Advances" herein. In addition, the
Certificate Balance of each of the Class L, Class K, Class J, Class H, Class
G, Class F, Class E, Class D, Class C and Class B Certificates will be
notionally reduced (solely for purposes of determining the Voting Rights of
the related Classes) on any Distribution Date to the extent of any Appraisal
Reduction Amounts allocated to such Class on such Distribution Date. To the
extent that the aggregate of the Appraisal Reduction Amounts for any
Distribution Date exceed such Certificate Balance, such excess will be
applied to notionally reduce the Certificate Balance of the next most
subordinate Class of Certificates on the next Distribution Date. Any such
reductions will be applied in the following order of priority: first, to the
Class L Certificates; second, to the Class K Certificates; third, to the
Class J Certificates; fourth, to the Class H Certificates; fifth, to the
Class G Certificates; sixth, to the Class F Certificates; seventh, to the
Class E Certificates; eighth, to the Class D Certificates; ninth, to the
Class C Certificates; and finally, to the Class B Certificates (provided in
each case that no Certificate Balance in respect of any such Class may be
notionally reduced below zero).
DELIVERY, FORM AND DENOMINATION
The Offered Certificates will be issuable in registered form, in minimum
denominations of Certificate Balance of $50,000 and multiples of $1 in excess
thereof and, in the case of the Class X Certificates, in minimum
denominations of Notional Balance of $1,000,000 and multiples of $1 in excess
thereof.
The Offered Certificates will initially be represented by one or more
global Certificates for each such Class registered in the name of the nominee
of DTC. The Depositor has been informed by DTC that DTC's nominee will be
Cede & Co. No holder of an Offered Certificate will be entitled to receive a
certificate issued in fully registered, certificated form (each, a
"Definitive Certificate") representing its interest in such Class, except
under the limited circumstances described in the Prospectus under
"Description of the Certificates -- Book Entry Registration and Definitive
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Certificates." Unless and until Definitive Certificates are issued, all
references to actions by holders of the Offered Certificates will refer to
actions taken by DTC upon instructions received from holders of Offered
Certificates through its participating organizations (together with CEDEL and
Euroclear participating organizations, the "Participants", and all references
herein to payments, notices, reports, statements and other information to
holders of Offered Certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder of the Offered
Certificates, for distribution to holders of Offered Certificates through its
Participants in accordance with DTC procedures; provided, however, that to
the extent that the party responsible for distributing any report, statement
or other information has been provided with the name of the beneficial owner
of a Certificate (or the prospective transferee of such beneficial owner),
such report, statement or other information will be provided to such
beneficial owner (or prospective transferee).
Until Definitive Certificates are issued in respect of the Offered
Certificates, interests in the Offered Certificates will be transferred on
the book-entry records of DTC and its Participants. The Trustee will
initially serve as certificate registrar (in such capacity, the "Certificate
Registrar") for purposes of recording and otherwise providing for the
registration of the Offered Certificates.
A "Certificateholder" under the Pooling and Servicing Agreement will be
the person in whose name a Certificate is registered in the certificate
register maintained pursuant to the Pooling and Servicing Agreement, except
that solely for the purpose of giving any consent or taking any action
pursuant to the Pooling and Servicing Agreement, any Certificate registered
in the name of the Depositor, the Servicer, the Special Servicer, the Trustee
(in its individual capacity), a manager of a Mortgaged Property, a mortgagor
or any person affiliated with the Depositor, the Servicer, the Special
Servicer, the Trustee, such manager or a mortgagor will be deemed not to be
outstanding and the Voting Rights to which it is entitled will not be taken
into account in determining whether the requisite percentage of Voting Rights
necessary to effect any such consent or take any such action has been
obtained; provided, however, that for purposes of obtaining the consent of
Certificateholders to an amendment to the Pooling and Servicing Agreement,
any Certificates beneficially owned by the Servicer or Special Servicer or an
affiliate will be deemed to be outstanding, provided that such amendment does
not relate to compensation of the Servicer or Special Servicer or otherwise
benefit the Servicer or the Special Servicer in any material respect; and,
provided, further, that for purposes of obtaining the consent of
Certificateholders to any action proposed to be taken by the Special Servicer
with respect to a Specially Serviced Mortgage Loan, any Certificates
beneficially owned by the Servicer or an affiliate will be deemed to be
outstanding, provided that, the Special Servicer is not the Servicer.
Notwithstanding the foregoing, solely for purposes of providing or
distributing any reports, statements or other information pursuant to the
Pooling and Servicing Agreement, a Certificateholder will include any
beneficial owner (or prospective transferee of a beneficial owner) to the
extent that the party required or permitted to provide or distribute such
report, statement or other information has been provided with the name of
such beneficial owner (or prospective transferee). The Percentage Interest of
any Class of Offered Certificate will be equal to the percentage obtained by
dividing the denomination of such Certificate by the aggregate initial
Certificate Balance of such Class of Certificates. See "Description of the
Certificates -- Book-Entry Registration and Definitive Certificates" in the
Prospectus.
BOOK-ENTRY REGISTRATION
Holders of Offered Certificates may hold their Certificates through DTC
(in the United States) or CEDEL or Euroclear (in Europe) if they are
Participants of such system, or indirectly through organizations that are
participants in such systems. CEDEL and Euroclear will hold omnibus positions
on behalf of the CEDEL Participants and the Euroclear Participants,
respectively, through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositaries
(collectively, the "Depositaries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of
DTC. DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the
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meaning of the New York Banking Law, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to Section 17A of
the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
computerized book-entries, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through CEDEL Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing
system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures. If the transaction complies with all relevant
requirements, Euroclear or CEDEL, as the case may be, will then deliver
instructions to the Depository to take action to effect final settlement on
its behalf.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions
in such securities settled during such processing will be reported to the
relevant CEDEL Participant or Euroclear Participant on such business day.
Cash received in CEDEL or Euroclear as a result of sales of securities by or
through a CEDEL Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available
in the relevant CEDEL or Euroclear cash account only as of the business day
following settlement in DTC.
The holders of Offered Certificates that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interests in, Offered Certificates may do so only through
Participants and Indirect Participants. In addition, holders of Offered
Certificates will receive all distributions of principal and interest from
the Trustee through the Participants who in turn will receive them from DTC.
Under a book-entry format, holders of Offered Certificates may experience
some delay in their receipt of payments, reports and notices, since such
payments, reports and notices will be forwarded by the Trustee to Cede & Co.,
as nominee for DTC. DTC will forward such payments, reports and notices to
its Participants, which thereafter will forward them to Indirect
Participants, CEDEL, Euroclear or holders of Offered Certificates.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect
to the Offered Certificates and to receive and transmit distributions of
principal of, and interest on, the Offered Certificates. Participants and
Indirect Participants with which the holders of Offered Certificates have
accounts with respect to the Offered Certificates similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
their respective holders of Offered Certificates. Accordingly, although the
holders of Offered Certificates will not possess the Offered Certificates,
the Rules provide a mechanism by which Participants will receive payments on
Offered Certificates and will be able to transfer their interest.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such
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Certificates to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Certificates, may be limited
due to the lack of a physical certificate for such Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations
("CEDEL Participants") and facilitates the clearance and settlement of
securities transactions between CEDEL Participants through electronic
book-entry changes in accounts of CEDEL Participants, thereby eliminating the
need for physical movement of certificates.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear system ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear
system, withdrawal of securities and cash from the Euroclear system, and
receipts of payments with respect to securities in the Euroclear system.
Although DTC, Euroclear and CEDEL have implemented the foregoing
procedures in order to facilitate transfers of interests in Global
Certificates among Participants of DTC, Euroclear and CEDEL, they are under
no obligation to perform or to continue to comply with such procedures, and
such procedures may be discontinued at any time. None of the Depositor, the
Trustee, the Servicer, the Special Servicer or the Underwriters will have any
responsibility for the performance by DTC, Euroclear or CEDEL or their
respective direct or indirect Participants of their respective obligations
under the rules and procedures governing their operations.
The information herein concerning DTC, CEDEL and Euroclear and their
book-entry systems has been obtained from sources believed to be reliable,
but the Depositor takes no responsibility for the accuracy or completeness
thereof.
DEFINITIVE CERTIFICATES
Definitive Certificates will be delivered to beneficial owners of the
Offered Certificates ("Certificate Owners") (or their nominees) only if (i)
DTC is no longer willing or able properly to discharge its responsibilities
as depository with respect to the Book-Entry Certificates, and the Trustee is
unable to locate a qualified successor, (ii) the Depositor, at its sole
option, elects to terminate the book-entry system through DTC with respect to
some or all of any Class or Classes of Certificates, or (iii) after the
occurrence of an Event of Default under the Pooling and Servicing Agreement,
Certificate Owners representing a majority in principal amount of the
Book-Entry Certificates then outstanding advise the Trustee and DTC through
DTC Participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the best interest of
Certificate Owners.
Upon the occurrence of any of the events described in clauses (i) through
(iii) in the immediately preceding paragraph, the Trustee is required to
notify all affected Certificateholders (through DTC and related DTC
Participants) of the availability through DTC of Definitive Certificates.
Upon delivery of Definitive Certificates, the Trustee, Certificate Registrar,
and Servicer will recognize the holders of such Definitive Certificates as
holders under the Pooling and
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Servicing Agreement ("Holders"). Distributions of principal and interest on
the Definitive Certificates will be made by the Trustee directly to Holders
of Definitive Certificates in accordance with the procedures set forth in the
Prospectus and the Pooling and Servicing Agreement.
Upon the occurrence of any of the events described in clauses (i) through
(iii) of the second preceding paragraph, requests for transfer of Definitive
Certificates will be required to be submitted directly to the Certificate
Registrar in a form acceptable to the Certificate Registrar (such as the
forms which will appear on the back of the certificate representing a
Definitive Certificate), signed by the Holder or such Holder's legal
representative and accompanied by the Definitive Certificate or Certificates
for which transfer is being requested. The Trustee will be appointed as the
initial Certificate Registrar.
TRANSFER RESTRICTIONS
In the event that holders of the Class B, Class C, Class D or Class E
Certificates (the "Subordinated Offered Certificates") become entitled to
receive Definitive Certificates under the circumstances described under
"--Definitive Certificates", each prospective transferee of a Subordinated
Offered Certificate that is a Definitive Certificate will be required to (i)
deliver to the Depositor, the Certificate Registrar and the Trustee a
representation letter substantially in the form set forth as an exhibit to
the Pooling and Servicing Agreement stating that such transferee is not an
employee benefit plan or other retirement arrangement subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
or a governmental plan (as defined in Section 3(32) of ERISA) subject to any
federal, state or local law which is, to a material extent, similar to the
foregoing provisions of ERISA or the Code (each, a "Plan"), or a person
acting on behalf of or investing the assets of a Plan, other than an
insurance company investing the assets of its general account under
circumstances whereby the purchase and subsequent holding of a Subordinated
Offered Certificate would be exempt from the prohibited transaction
restrictions of ERISA and the Code under Sections I and III of PTE 95-60, or
(ii) provide an opinion of counsel and such other documentation as described
under "ERISA Considerations" herein. The purchaser or transferee of any
interest in a Subordinated Offered Certificate that is not a Definitive
Certificate shall be deemed to represent that it is not a person described in
clause (i) above.
The Subordinated Offered Certificates will contain a legend describing
such restrictions on transfer and the Pooling and Servicing Agreement will
provide that any attempted or purported transfer in violation of these
transfer restrictions will be null and void.
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PREPAYMENT AND YIELD CONSIDERATIONS
YIELD
The yield to maturity on the Offered Certificates will depend upon the
price paid by the Certificateholder, the rate and timing of the distributions
in reduction of Certificate Balance or Notional Balance of such Certificates,
the rate, timing and severity of losses on the Mortgage Loans and the extent
to which such losses are allocable in reduction of the Certificate Balance of
such Certificates, and the extent to which Prepayment Premiums are received
in connection with voluntary prepayments, liquidations on default, or other
early returns of principal, as well as prevailing interest rates at the time
of prepayment or default.
The rate of distributions in reduction of the Certificate Balance of any
Class of Offered Certificates, the aggregate amount of distributions on any
Class of Offered Certificates and the yield to maturity of any Class of
Offered Certificates will be directly related to the rate of payments of
principal (both scheduled and unscheduled) on the Mortgage Loans and the
amount and timing of borrower defaults. In addition, such distributions in
reduction of Certificate Balance may result from repurchases by a Mortgage
Loan Seller due to missing or defective documentation or breaches of
representations and warranties with respect to the Mortgage Loans as
described herein under "The Pooling and Servicing Agreement --
Representations and Warranties; Repurchase," or purchases of the Mortgage
Loans in the manner described under "The Pooling and Servicing Agreement --
Optional Termination".
Disproportionate principal payments (whether resulting from differences in
amortization terms, prepayments following expirations of the respective
Lock-Out Periods or otherwise) on the Mortgage Loans having Net Mortgage
Pass-Through Rates that are higher or lower than the Weighted Average Net
Mortgage Pass-Through Rate will affect the Weighted Average Net Mortgage
Pass-Through Rate and accordingly the Pass-Through Rate of the Class X
Certificates and, to a certain degree, the Pass-Through Rate on the Class E
Certificates, for future periods and therefore the yield on such Classes.
The Certificate Balance of any Class of Offered Certificates may be
reduced without distributions thereon as a result of the allocation of
Realized Losses to such Class, reducing the maximum amount distributable to
such Class in respect of Certificate Balance, as well as the amount of
interest from that which would have accrued thereon in the absence of such
reduction. In general, a Realized Loss occurs when the aggregate principal
balance of a Mortgage Loan is reduced without an equal distribution to
Certificateholders in reduction of the Certificate Balances of the
Certificates. Realized Losses are likely to occur in connection with a
default on a Mortgage Loan and the liquidation of the related Mortgaged
Properties or a reduction in the principal balance of a Mortgage Loan by a
bankruptcy court.
Because the ability of a borrower to make a Balloon Payment will depend
upon its ability either to refinance the Mortgage Loan or to sell the related
Mortgaged Property, there is a risk that a borrower may default at the
maturity date. In connection with a default on the Balloon Payment, the
Special Servicer may agree to extend the maturity date thereof as described
under "The Pooling and Servicing Agreement -- Modifications". In the case of
any such default, recovery of proceeds may be delayed by and until, among
other things, work-outs are negotiated, foreclosures are completed or
bankruptcy proceedings are resolved. Certificateholders are not entitled to
receive distributions of Monthly Payments or the Balloon Payment when due
except to the extent they are either covered by an Advance or actually
received. Consequently, any defaulted Monthly Payment for which no such
Advance is made and a defaulted Balloon Payment will tend to extend the
weighted average lives of the Certificates, whether or not a permitted
extension of the due date of the related Mortgage Loan has been effected.
The rate of payments (including voluntary and involuntary prepayments) on
pools of Mortgage Loans is influenced by a variety of economic, demographic,
geographic, social, tax, legal and other factors, including the level of
mortgage interest rates and the rate at which borrowers default on their
mortgage loans.
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The timing of changes in the rate of prepayment on the Mortgage Loans may
significantly affect the actual yield to maturity experienced by an investor
even if the average rate of principal payments experienced over time is
consistent with such investor's expectation. In general, the earlier a
prepayment of principal on the Mortgage Loans is applied in reduction of the
Certificate Balance of a Class of Offered Certificates, the greater the
effect on such investor's yield to maturity.
All of the Mortgage Loans either (i) prohibit voluntary prepayment during
a Lock-Out Period and/or (ii) require the payment of a Prepayment Premium
upon the voluntary prepayment of such Mortgage Loans during a certain period.
The weighted average remaining Lock-Out Period for the Mortgage Loans is
approximately 47 months. See Annex A hereto for additional information on
prepayment restrictions of the Mortgage Loans. Nevertheless, any such
Mortgage Loan may be prepaid prior to the expiration of any such Lock-Out
Period in connection with certain events of casualty or condemnation. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans -- Prepayment Provisions" herein. In addition, investors may
receive early return of principal in connection with defaults, repurchases
for breach of representations and warranties, and optional redemption.
No representation is made as to the rate of principal payments on the
Mortgage Loans or as to the yield to maturity of any Class of Offered
Certificates. In addition, although Excess Cash Flow is applied to reduce the
principal of the ARD Loans after their respective Anticipated Repayment
Dates, there can be no assurance that any of such Mortgage Loans will be
prepaid on that date or any date prior to maturity. The failure of the
related borrower to prepay an ARD Loan on the Anticipated Repayment Date will
not be an event of default under the terms of such Mortgage Loan, and
pursuant to the terms of the Pooling and Servicing Agreement, neither the
Servicer nor the Special Servicer will be permitted to take any enforcement
action with respect to the related borrower's failure to pay Excess Interest
or principal in excess of the principal component of the constant Monthly
Payment, other than requests for collection, until the scheduled maturity of
the related Mortgage Loan, provided that the Servicer or the Special
Servicer, as the case may be, may take action to enforce the Trust Fund's
right to apply excess cash flow to principal in accordance with the terms of
the related Mortgage Loan documents. An investor is urged to make an
investment decision with respect to any Class of Offered Certificates based
on the anticipated yield to maturity of such Class of Offered Certificates
resulting from its purchase price and such investor's own determination as to
anticipated Mortgage Loan prepayment rates under a variety of scenarios. The
extent to which any Class of Offered Certificates is purchased at a discount
or a premium and the degree to which the timing of payments on such Class of
Offered Certificates is sensitive to prepayments will determine the extent to
which the yield to maturity of such Class of Offered Certificates may vary
from the anticipated yield. An investor should carefully consider the
associated risks, including, in the case of any Offered Certificates
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans could result in an actual yield to
such investor that is lower than the anticipated yield and, in the case of
any Offered Certificates purchased at a premium, the risk that a faster than
anticipated rate of principal payments could result in an actual yield to
such investor that is lower than the anticipated yield.
An investor should consider the risk that rapid rates of prepayments on
the Mortgage Loans, and therefore of amounts distributable in reduction of
the principal balance of the Offered Certificates entitled to distributions
of principal may coincide with periods of low prevailing interest rates.
During such periods, the effective interest rates on securities in which an
investor may choose to reinvest amounts distributed in reduction of the
principal balance of such investor's Offered Certificate may be lower than
the Pass-Through Rate. Conversely, slower rates of prepayments on the
Mortgage Loans, and therefore of amounts distributable in reduction of
principal balance of the Offered Certificates entitled to distributions of
principal, may coincide with periods of high prevailing interest rates.
During such periods, the amount of principal distributions resulting from
prepayments available to an investor in such Certificates for reinvestment at
such high prevailing interest rates may be relatively small.
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The effective yield to holders of Offered Certificates will be lower than
the yield otherwise produced by the applicable Pass-Through Rate and purchase
prices because while interest is required to be paid by the mortgagor on the
applicable day of each month, the distribution of such interest will not be
made until the Distribution Date following such Due Date, and principal paid
on any Distribution Date will not bear interest during the period after the
related Due Date and before the Distribution Date occurs. Additionally, as
described under "Description of the Offered Certificates -- Distributions"
herein, if the portion of the Available Funds distributable in respect of
interest on any Class of Offered Certificates on any Distribution Date is
less than the amount of interest required to be paid to the holders of such
Class, the shortfall will be distributable to holders of such Class of
Certificates on subsequent Distribution Dates, to the extent of Available
Funds on such Distribution Dates. Any such shortfall will not bear interest,
however, and will therefore negatively affect the yield to maturity of such
Class of Certificates for so long as it is outstanding.
YIELD ON THE CLASS X CERTIFICATES
Because distributions on the Class X Certificates consist only of a
portion of the interest received on the Mortgage Loans, the yield to maturity
of such Certificates will be extremely sensitive to the rate and timing of
principal payments (including voluntary and involuntary prepayments), any
repurchase of a Mortgage Loan by a Mortgage Loan Seller, delinquencies and
liquidations on such Mortgage Loans. As the principal amount of each Mortgage
Loan is reduced, the interest accruing on such Mortgage Loans shall also be
reduced. Investors should fully consider the associated risks, including the
risk that a rapid rate of principal payments on and liquidations or
repurchases of the Mortgage Loans could result in the failure of investors in
the Class X Certificates to fully recoup their initial investments.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant
Prepayment Rate" or "CPR" model. The CPR model represents an assumed constant
annual rate of prepayment each month, expressed as a per annum percentage of
the then-scheduled principal balance of the pool of mortgage loans. As used
in the following table, the column headed "0% CPR" assumes that none of the
Mortgage Loans is prepaid before the related Anticipated Repayment Date or
maturity date, as applicable. The columns headed "4% CPR", "8% CPR" and "12%
CPR" assume that prepayments on the Mortgage Loans are made at those levels
of CPR following the expiration of any Lock-Out Period, Defeasance Lock-Out
Period or yield maintenance period until the related Anticipated Repayment
Date or maturity date, as applicable. All columns in the following table
assume that all of the ARD Loans are fully prepaid on their related
Anticipated Repayment Date and all of the other Mortgage Loans are paid in
full on their maturity date. There is no assurance, however, that prepayments
of the Mortgage Loans will conform to any level of CPR, and no representation
is made that the Mortgage Loans will prepay at the levels of CPR shown or at
any other prepayment rate. The foregoing assumptions are referred to herein
as the "Prepayment Assumptions."
The following tables indicate the assumed purchase price (including
accrued interest) and the pre-tax yield on the Class X Certificates to
maturity, stated on a corporate bond equivalent basis. The tables have been
prepared on the information set forth on Annex A, the Prepayment Assumptions
and the following additional assumptions: and (i) each Mortgage Loan will pay
principal and interest in accordance with its terms and scheduled payments
will be timely received on the 1st day of each month; (ii) each Mortgage Loan
Seller does not repurchase any of its respective Mortgage Loans as described
under "The Pooling and Servicing Agreement -- Representations and Warranties
- -- Repurchase"; (iii) there are no delinquencies or losses in respect of the
Mortgage Loans, there are no extensions of maturity in respect of the
Mortgage Loans, there are no Appraisal Reduction Amounts with respect to the
Mortgage Loans and there are no casualties or condemnations affecting the
Mortgaged Properties; (iv) the ARD Loans mature on the Anticipated Repayment
Date; (v) all Mortgage Loans accrue interest under the applicable Accrual
Method as specified in Annex A; (vi) neither the Servicer nor the Depositor
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<PAGE>
exercises its right of optional termination described herein; (vii) no
Prepayment Interest Shortfalls are incurred and no Prepayment Premiums are
collected; (viii) there are no additional Trust Fund expenses; (ix)
distributions on the Certificates are made on the 15th day of each month,
commencing in April 1998; (x) the prepayment provisions for each Mortgage
Loan as set forth on Annex A are assumed to begin on the first due date of
such Mortgage Loan; (xi) the Certificates are issued on March , 1998; (xii)
for Loans #1006-I, II, III, IV, the Borrower does not exercise his option to
partially prepay 25% of the loan amount after the lockout period; (xiii) for
Loan MSMFO1, its prepayment provision where the penalty was the lesser of
yield maintenance or a fixed percentage, it was assumed the that penalty will
be calculated as a fixed percentage; and (xiv) for Loan TSA301, no partial
prepayment due to an earn out occurs. These assumptions are collectively
referred to as the "Modeling Assumptions".
SENSITIVITY TO PRINCIPAL PREPAYMENTS OF THE PRE-TAX YIELD TO MATURITY
CLASS X
<TABLE>
<CAPTION>
ASSUMED PURCHASE PRICE 0% CPR 4% CPR 8% CPR 12% CPR
- -------------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
</TABLE>
The pre-tax yields to maturity set forth in the preceding tables were
calculated by determining the monthly discount rate that, when applied to the
assumed stream of cash flows to be paid on the Class X Certificates, would
cause the discounted present value of such assumed cash flows to equal the
assumed purchase price thereof, and by converting such monthly rates to
corporate bond equivalent rates. Such calculations do not take into account
variations that may occur in the interest rates at which investors may be
able to reinvest funds received by them as distributions on the Class X
Certificates and consequently do not purport to reflect the return on any
investment in the Class X Certificates when such reinvestment rates are
considered.
There can be no assurance that the Mortgage Loans will prepay at any of
the times assumed for purposes of calculating the yields shown in the tables
or at any other particular time, that the pre-tax yields on the Class X
Certificates will correspond to any of the pre-tax yields shown herein or
that the aggregate purchase prices of the Class X Certificates will be as
assumed. Investors must make their own decisions as to the appropriate
prepayment assumptions to be used in deciding whether to purchase the Class X
Certificates.
RATED FINAL DISTRIBUTION DATE
The "Rated Final Distribution Date," June 15, 2031, is the Distribution
Date occurring two years after the latest Assumed Maturity Date of any of the
Mortgage Loans. Because certain of the Mortgage Loans have maturity dates
that occur earlier than the latest maturity date, and because certain of the
Mortgage Loans may be prepaid prior to maturity, it is possible that the
Certificate Balance of each Class of Offered Certificates will be reduced to
zero significantly earlier than the Rated Final Distribution Date. The
"Assumed Maturity Date" of (a) any Mortgage Loan that is not a Balloon Loan
is the maturity date of such Mortgage Loan and (b) any Balloon Loan is the
date on which such Mortgage Loan would be deemed to mature in accordance with
its original amortization schedule absent its Balloon Payment.
WEIGHTED AVERAGE LIFE OF OFFERED CERTIFICATES
Weighted average life refers to the average amount of time that will
elapse from the date of determination to the date of distribution or
allocation to the investor of each dollar in reduction of Certificate Balance
that is distributed or allocated, respectively. For purposes of this
Prospectus
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<PAGE>
Supplement, the weighted average life of an Offered Certificate (other than
the Class X Certificates) is determined by (i) multiplying the amount of each
principal distribution thereon by the number of years from the Closing Date
to the related Distribution Date, (ii) summing the results and (iii) dividing
the sum by the aggregate amount of the reductions in the principal balance of
such Certificate. The weighted average lives of the Offered Certificates will
be influenced by, among other things, the rate at which principal of the
Mortgage Loans is paid, which may occur as a result of scheduled
amortization, Balloon Payments, voluntary or involuntary prepayments or
liquidations.
The weighted average lives of the Offered Certificates may also be
affected to the extent that additional distributions in reduction of the
Certificate Balance of such Certificates occur as a result of the repurchase
or purchase of Mortgage Loans from the Trust Fund as described under "The
Pooling and Servicing Agreement -- Representations and Warranties;
Repurchase" or "--Optional Termination" herein. Such a repurchase or purchase
from the Trust Fund will have the same effect on distributions to the holders
of Certificates as if the related Mortgage Loans had prepaid in full, except
that no Prepayment Premiums are made in respect thereof.
The tables of "Percentages of Initial Certificate Balance Outstanding for
the Offered Certificates" set forth below indicate the weighted average life
of each Class of Offered Certificates and set forth the percentage of the
initial Certificate Balance of such Offered Certificates that would be
outstanding after each of the dates shown at the various CPRs and based on
the Prepayment Assumptions. The tables have also been prepared on the basis
of the Modeling Assumptions. The Modeling Assumptions made in preparing the
previous and following tables are expected to vary from the actual
performance of the Mortgage Loans. It is highly unlikely that principal of
the Mortgage Loans will be repaid consistent with assumptions underlying any
one of the scenarios. Investors are urged to conduct their own analysis
concerning the likelihood that the Mortgage Loans may pay or prepay on any
particular date.
Based on the Modeling Assumptions, the Prepayment Assumptions and the
various CPRs, the tables indicate the weighted average life of the Offered
Certificates (other than Class X Certificates) and set forth the percentages
of the initial Certificate Balance of the Offered Certificates that would be
outstanding after the Distribution Date in March of each of the years
indicated, at the indicated CPRs.
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<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-1
----------------------------------------------
DISTRIBUTION DATE 0% CPR 4% CPR 8% CPR 12% CPR
- ----------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Initial Percentage .... 100% 100% 100% 100%
Weighted Average Life
(years) ............... % % % %
</TABLE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-2
----------------------------------------------
DISTRIBUTION DATE 0% CPR 4% CPR 8% CPR 12% CPR
- ----------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Initial Percentage .... 100% 100% 100% 100%
Weighted Average Life
(years) ...............
</TABLE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
DISTRIBUTION DATE 0% CPR 4% CPR 8% CPR 12% CPR
- ----------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Initial Percentage .... 100% 100% 100% 100%
Weighted Average Life
(years) ............... % % % %
</TABLE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------
DISTRIBUTION DATE 0% CPR 4% CPR 8% CPR 12% CPR
- ----------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Initial Percentage .... 100% 100% 100% 100%
Weighted Average Life
(years) ...............
</TABLE>
S-65
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS D
----------------------------------------------
DISTRIBUTION DATE 0% CPR 4% CPR 8% CPR 12% CPR
- ----------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Initial Percentage .... 100% 100% 100% 100%
Weighted Average Life
(years) ...............
</TABLE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS E
----------------------------------------------
DISTRIBUTION DATE 0% CPR 4% CPR 8% CPR 12% CPR
- ----------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Initial Percentage .... 100% 100% 100% 100%
Weighted Average Life
(years) ...............
</TABLE>
S-66
<PAGE>
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, to be dated as of March 1, 1998 (the "Pooling and Servicing
Agreement"), by and among the Depositor, the Servicer, the Special Servicer,
the Trustee and the Fiscal Agent.
Reference is made to the Prospectus for important information in addition
to that set forth herein regarding the terms of the Pooling and Servicing
Agreement and terms and conditions of the Offered Certificates. The Depositor
will provide to a prospective or actual holder of an Offered Certificate
without charge, upon written request, a copy (without exhibits) of the
Pooling and Servicing Agreement. Requests should be addressed to Deutsche
Mortgage & Asset Receiving Corporation, One International Place, Room 520,
Boston, Massachusetts 02110.
ASSIGNMENT OF THE MORTGAGE LOANS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from the Mortgage Loan Sellers
pursuant to the related Mortgage Loan Purchase Agreement. See "Description of
the Mortgage Loan Pool -- The Mortgage Loan Sellers" herein.
On the Closing Date, the Depositor will sell, transfer or otherwise
convey, assign or cause the assignment of the Mortgage Loans, without
recourse, together with the Depositor's rights and remedies against the
related Mortgage Loan Seller in respect of breaches of representations and
warranties regarding the related Mortgage Loans to the Trustee for the
benefit of the holders of Certificates. On or prior to the Closing Date, the
Depositor will deliver to the Trustee, with respect to each Mortgage Loan,
certain documents and instruments including, among other things, the
following: (i) the original Note endorsed in blank and delivered to the
Trustee, (ii) the original mortgage or counterpart thereof; (iii) the
assignment of the mortgage in recordable form in favor of the Trustee; (iv)
if applicable, preceding assignments of mortgages; (v) the related security
agreement, if applicable, (vi) to the extent not contained in the Mortgages,
the original assignments of leases and rents or counterpart thereof; (vii) if
applicable, the original assignments of assignments of leases and rents to
the Trustee; (viii) if applicable, preceding assignments of assignments of
leases and rents; (ix) where applicable, a "filed"-marked copy of the UCC-1
financing statements, if any, including UCC-3 continuation statements and
UCC-3 assignments; (x) if any, the original loan agreements; and (xi) the
original lender's title insurance policy (or marked commitments to insure).
The Trustee will hold such documents in trust for the benefit of the holders
of Certificates. The Trustee is obligated to review such documents for each
Mortgage Loan within 45 days after the later of delivery or the Closing Date
and report any missing documents or certain types of defects therein to the
Depositor.
REPRESENTATIONS AND WARRANTIES; REPURCHASE; SUBSTITUTION
In the Pooling and Servicing Agreement, the Depositor will assign the
representations and warranties made by each of the Mortgage Loan Sellers to
the Depositor in the related Mortgage Loan Purchase Agreement to the Trustee
for the benefit of Certificateholders.
In each Mortgage Loan Purchase Agreement, the related Mortgage Loan Seller
will represent and warrant with respect to each of its Mortgage Loans subject
to certain exceptions set forth in the related Mortgage Loan Purchase
Agreement, as of the Closing Date, or as of such other date specifically
provided in the representation and warranty, among other things, generally to
the effect that: (i) such Mortgage Loan Seller owns such Mortgage Loan free
and clear of any and all liens, encumbrances and other encumbrances; (ii)
such Mortgage Loan Seller has full right and authority to sell, assign and
transfer such Mortgage Loan; (iii) the information set forth in the Mortgage
Loan Schedule attached to the related Mortgage Loan Purchase Agreement was
true and correct in all material respects as of the Cut-Off Date; (iv) no
payment of principal and interest
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under such Mortgage Loan was, as of the Cut-Off Date, and has been during the
twelve-month period prior thereto, 30 days or more past due; (v) the lien of
the related Mortgage is insured by an American Land Title Association, or an
equivalent form of, lender's title insurance policy, insuring the first
priority lien of the Mortgage, subject only to the exceptions stated therein;
(vi) such Mortgage Loan Seller has not waived any material default, breach,
violation or event of acceleration existing under the related Mortgage or
Note; (vii) there is no valid offset, defense or counterclaim to such
Mortgage Loan; (viii) such Mortgage Loan Seller has not received actual
notice that there is any proceeding pending or threatened for the total or
partial condemnation of the related Mortgaged Property and, to the Mortgage
Loan Seller's knowledge, the related Mortgaged Property is free and clear of
any damage that would materially and adversely affect the value of such
Mortgaged Property as security for the related Mortgage Loan; (ix) at
origination, such Mortgage Loan complied with all applicable usury laws
except for provisions relating to default interest, yield maintenance charges
or prepayment premiums; (x) the proceeds of such Mortgage Loan have been
fully disbursed and there is no requirement for future advances thereunder;
(xi) the Note and Mortgage for such Mortgage Loan and all other documents and
instruments evidencing or securing such Mortgage Loan is the legal, valid and
binding obligation of the maker thereof (subject to certain creditors' rights
exceptions and other exceptions of general application) except with respect
to provisions relating to default interest, yield maintenance charges or
prepayment premiums; (xii) the Mortgage requires the mortgagor to maintain in
respect of each Mortgaged Property comprehensive general liability insurance
in amounts generally required by the related Mortgaged Loan Seller, and at
least six months' rental or business interruption insurance and all of such
insurance required under the Mortgage for such Mortgage Loan is in full force
and effect; (xiii) each related Mortgaged Property was subject to an
environmental site assessment or similar review (or an update of a previously
conducted assessment or review) as to which the related report was delivered
to such Mortgage Loan Seller in connection with its origination or
acquisition of such Mortgage Loan (in the case of the Conti Small Loans, a
more limited environmental review was performed); and such Mortgage Loan
Seller has no knowledge of any material and adverse environmental condition
or circumstance affecting such Mortgaged Property that was not disclosed in
the related report(s); (xiv) except in the case of the Clipper Loan
Participation, such Mortgage Loan is not cross-collateralized with any
mortgage loan that is not included in the Trust Fund; (xv) all escrow
deposits relating to such Mortgage Loan that as of the Closing Date were
required to be deposited with the mortgagee or its agent under the terms of
the related loan documents, have been so deposited; (xvi) as of the date of
origination of such Mortgage Loan and, to the actual knowledge of the related
Mortgage Loan Seller, as of the Closing Date, each related Mortgaged Property
was and is free and clear of any mechanics' and materialmen's liens or liens
in the nature thereof which create a lien prior to that created by the
related Mortgage; (xvii) no holder of the Mortgage Loan has, to the Mortgage
Loan Seller's knowledge, advanced funds or induced, solicited or knowingly
received any advance of funds from a party other than the owner or, in the
case of certain Healthcare Loans, of the tenant, of the related Mortgaged
Property, directly or indirectly, for the payment of any amount required by
the Mortgage Loan; (xviii) to such Mortgage Loan Seller's knowledge, based on
due diligence customarily performed in the origination of comparable mortgage
loans by such Mortgage Loan Seller, as of the date of origination of the
Mortgage Loan, the related mortgagor or operator (with respect to certain
healthcare properties) was in possession of all material licenses, permits
and authorizations required by applicable laws for the ownership and
operation of each related Mortgaged Property as it was then operated; and
(xix) the related Mortgage or Note, together with applicable state law,
contains customary and enforceable provisions such as to render the rights
and remedies of the holders thereof adequate for the practical realization
against the related Mortgaged Property of the principal benefits of the
security intended to be provided thereby.
The Pooling and Servicing Agreement requires that the Servicer, the
Special Servicer or the Trustee notify the related Mortgage Loan Seller and
the Depositor upon its becoming aware of any breach of any representation or
warranty contained in the above clauses that materially and
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<PAGE>
adversely affects the value of such Mortgage Loan or the interests of the
holders of the Certificates therein. Each Mortgage Loan Purchase Agreement
provides that, with respect to any such Mortgage Loan, within 90 days after
notice from the Servicer, the Special Servicer or the Trustee, the related
Mortgage Loan Seller shall either (a) repurchase such Mortgage Loan at an
amount equal to (i) the outstanding principal balance of the Mortgage Loan as
of the Due Date as to which a payment was last made by the borrower (less any
Advances previously made on account of principal), (ii) accrued interest up
to the Due Date in the month following the month in which such repurchase
occurs (less P&I Advances previously made on account of interest), (iii) the
amount of any unreimbursed Advances (with interest thereon) and any
unreimbursed servicing compensation relating to such Mortgage Loan and (iv)
any expenses reasonably incurred or to be incurred by the Servicer, the
Special Servicer or the Trustee in respect of the breach or defect giving
rise to the repurchase obligation, including any expenses arising out of the
enforcement of the repurchase obligation (such price the "Repurchase Price");
(b) substitute a new mortgage loan (a "Replacement Mortgage Loan") for the
affected Mortgage Loan (the "Removed Mortgage Loan"); provided that the
following criteria are met: (i) the Replacement Mortgage Loan has certain
financial terms substantially similar to the Removed Mortgage Loan, (ii) the
Replacement Mortgage Loan is a Qualifying Substitute Mortgage Loan, (iii) the
Replacement Mortgage Loan is a "qualified replacement mortgage" within the
meaning of 860G(a)(4) of the Code and (iv) the respective Mortgage Loan
Seller deposits in the Distribution Account the amount, if any, by which the
Stated Principal Balance of the Removed Mortgage Loan exceeds the Stated
Principal Balance of the Replacement Mortgage Loan (the "Substitution
Shortfall Amount"); or (c) promptly cure such breach in all material
respects.
A "Qualifying Substitute Mortgage Loan" is a Mortgage Loan that, among
other things: (i) has a Stated Principal Balance of not more than the Stated
Principal Balance of the related Removed Mortgage Loan, (ii) accrues interest
at a rate of interest at least equal to that of the related Removed Mortgage
Loan, (iii) is a fixed-rate Mortgage Loan, (iv) has a remaining term to
stated maturity of not greater than, and not more than two years less than,
the related Removed Mortgage Loan.
The obligations of the Mortgage Loan Sellers to repurchase, substitute or
cure constitute the sole remedies available to holders of Certificates or the
Trustee for a breach of a representation or warranty by the related Mortgage
Loan Seller with respect to a Mortgage Loan. None of the Depositor the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent will be
obligated to purchase or substitute a Mortgage Loan if the related Mortgage
Loan Seller defaults on its obligation to repurchase, substitute or cure, and
no assurance can be given that the Mortgage Loan Sellers will fulfill such
obligations. No assurance can be given that the Depositor will perform any
obligation to cure or repurchase a Mortgage Loan for a breach of any
representation referred to in the preceding paragraph. If such obligation is
not met, as to a Mortgage Loan that is not a "qualified mortgage," the
Upper-Tier REMIC and Lower-Tier REMIC may be disqualified.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
The Pooling and Servicing Agreement requires the Servicer and Special
Servicer to service and administer the Mortgage Loans on behalf of the Trust
Fund solely in the best interests of and for the benefit of all of the
holders of Certificates (as determined by the Servicer or Special Servicer in
the exercise of its reasonable judgment) in accordance with applicable law,
the terms of the Pooling and Servicing Agreement and the Mortgage Loans and
to the extent not inconsistent with the foregoing, in the same manner in
which, and with the same care, skill, prudence and diligence with which, it
(a) services and administers similar mortgage loans comparable to the
Mortgage Loans and held for other third party portfolios or (b) administers
mortgage loans for its own account, whichever standard is higher, but without
regard to (i) any known relationship that the Servicer or Special Servicer,
or an affiliate of the Servicer or Special Servicer, may have with the
borrowers or any other party to the Pooling and Servicing Agreement; (ii) the
ownership of any Certificate by the Servicer or Special Servicer or any
affiliate of the Servicer or Special Servicer, as applicable; (iii) the
Servicer's or Special Servicer's obligation
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<PAGE>
to make Advances or to incur servicing expenses with respect to the Mortgage
Loans; (iv) the Servicer's or Special Servicer's right to receive
compensation for its services under the Pooling and Servicing Agreement or
with respect to any particular transaction; or (v) the ownership, or
servicing or management for others, by the Servicer or Special Servicer of
any other mortgage loans or property (the "Servicing Standard"). The Servicer
and the Special Servicer are permitted, at their own expense, to employ
subservicers, agents or attorneys in performing any of their respective
obligations under the Pooling and Servicing Agreement, but will not thereby
be relieved of any such obligation, and will be responsible for the acts and
omissions of any such subservicers, agents or attorneys. The Pooling and
Servicing Agreement provides, however, that neither the Servicer, the Special
Servicer nor any of their respective directors, officers, employees or agents
shall have any liability to the Trust Fund or the Certificateholders for
taking any action or refraining from taking an action in good faith, or for
errors in judgment. The foregoing provision would not protect the Servicer or
the Special Servicer for the breach of its representations or warranties in
the Pooling and Servicing Agreement, the breach of certain specified
covenants therein or any liability by reason of willful misconduct, bad
faith, fraud or gross negligence in the performance of its duties or by
reason of its reckless disregard of obligations or duties under the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement requires the Servicer or the Special
Servicer, as applicable, to make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and to the
extent such procedures shall be consistent with the Servicing Standard.
Consistent with the above, the Servicer or Special Servicer may, in its
discretion, waive any late payment charge in connection with any delinquent
Monthly Payment or Balloon Payment with respect to any Mortgage Loan. With
respect to the ARD Loans, the Servicer and Special Servicer will be directed
in the Pooling and Servicing Agreement not to take any enforcement action
with respect to payment of Excess Interest or principal in excess of the
principal component of the constant Monthly Payment prior to the final
maturity date.
ADVANCES
The Servicer will be obligated to advance, on the business day immediately
preceding a Distribution Date (the "Servicer Remittance Date") an amount
(each such amount, a "P&I Advance") equal to the amount not received in
respect of the Monthly Payment or Assumed Monthly Payment on a Mortgage Loan
(with interest at the Mortgage Pass-Through Rate minus the Master Servicing
Fee Rate) that was delinquent as of the close of business on the immediately
preceding Due Date (and which delinquent payment has not been cured as of the
Servicer Remittance Date), or, in the event of a default in the payment of
amounts due on the maturity date of a Mortgage Loan, the amount equal to the
Monthly Payment or portion thereof not received that was due prior to the
maturity date provided, however, the Servicer will not be required to make an
Advance to the extent it determines that such advance would not be ultimately
recoverable from late payments, net insurance proceeds, net liquidation
proceeds and other collections with respect to the related Mortgage Loan. P&I
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the Certificates entitled thereto, rather
than to guarantee or insure against losses. The Servicer will not be required
or permitted to make a P&I Advance for Excess Interest or Default Interest.
The amount required to be advanced in respect of delinquent Monthly Payments
or Assumed Scheduled Payments on a Mortgage Loan that has been subject to an
Appraisal Reduction Event will equal the product of (a) the amount that would
be required to be advanced by the Servicer without giving effect to such
Appraisal Reduction Event and (b) a fraction, the numerator of which is the
Stated Principal Balance of the Mortgage Loan (as of the last day of the
related Collection Period) less any Appraisal Reduction Amounts thereof and
the denominator of which is the Stated Principal Balance (as of the last day
of the related Collection Period).
In addition to P&I Advances, the Servicer (and with respect to Specially
Serviced Mortgage Loans, the Special Servicer) will also be obligated
(subject to the limitations described herein) to make cash advances
("Property Advances," and together with P&I Advances, "Advances") to pay
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delinquent real estate taxes, assessments and hazard insurance premiums and
to cover other similar costs and expenses necessary to preserve the priority
of the related Mortgage, enforce the terms of any Mortgage Loan or to
maintain each related Mortgaged Property.
To the extent the Servicer fails to make an Advance it is required to make
under the Pooling and Servicing Agreement, the Trustee, subject to a
determination of recoverability, will make such required Advance or, in the
event the Trustee fails to make such Advance, the Fiscal Agent, subject to a
determination of recoverability, will make such Advance, in each case
pursuant to the terms of the Pooling and Servicing Agreement. To the extent
the Special Servicer fails to make an Advance it is required to make under
the Pooling and Servicing Agreement, the Servicer, subject to a determination
of recoverability, will make such an Advance. Both the Trustee and the Fiscal
Agent will be entitled to rely conclusively on any non-recoverability
determination of the Servicer or the Special Servicer, as the case may be.
See "--Trustee" and "--Fiscal Agent" below.
The Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, will be entitled to reimbursement for any Advance made by it in
an amount equal to the amount of such Advance and interest accrued thereon at
the Advance Rate (i) from Default Interest and late payments on the Mortgage
Loan by the mortgagor, (ii) from insurance proceeds, condemnation proceeds,
liquidation proceeds from the sale of the Specially Serviced Mortgage Loan or
the related Mortgaged Property or other collections relating to the Mortgage
Loan or (iii) upon determining in good faith that such Advance or interest is
not recoverable in the manner described in the preceding two clauses, from
any other amounts from time to time on deposit in the Collection Account.
The Servicer, the Special Servicer, the Trustee and the Fiscal Agent will
each be entitled to receive interest on Advances at a per annum rate equal to
the Prime Rate (the "Advance Rate"), compounded monthly, as of each Servicer
Remittance Date and the Servicer will be authorized to pay itself, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, such
interest monthly from general collections with respect to all of the Mortgage
Loans prior to any payment to holders of Certificates. To the extent that the
payment of such interest at the Advance Rate results in a shortfall in
amounts otherwise payable on one or more Classes of Certificates on the next
Distribution Date, the Servicer, the Trustee or the Fiscal Agent, as
applicable, will be obligated to make a cash advance to cover such shortfall,
but only to the extent the Servicer, the Trustee or the Fiscal Agent, as
applicable, concludes that, with respect to each such Advance, such Advance
can be recovered from amounts payable on or in respect of the Mortgage Loan
to which the Advance is related. If the interest on such Advance is not
recovered from Default Interest on such Mortgage Loan, a shortfall will
result which will have the same effect as a Realized Loss. The "Prime Rate"
is the rate, for any day, set forth as such in the "Money Rates" section of
The Wall Street Journal, Eastern Edition.
The obligation of the Servicer, the Special Servicer, the Trustee or the
Fiscal Agent, as applicable, to make Advances with respect to any Mortgage
Loan pursuant to the Pooling and Servicing Agreement continues through the
foreclosure of such Mortgage Loan and until the liquidation of the Mortgage
Loan or related Mortgaged Properties. P&I Advances are intended to provide a
limited amount of liquidity, not to guarantee or insure against losses. None
of the Servicer, the Special Servicer, the Trustee or the Fiscal Agent will
be required to make any Advance that it determines in its good faith business
judgment will not be recoverable by the Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, as applicable, out of related late payments,
insurance proceeds, liquidation proceeds and other collections with respect
to the Mortgage Loan as to which such Advances were made. In addition, if the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, determines in its good faith business judgment that any Advance
previously made will not be recoverable from the foregoing sources, then the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, will be entitled to reimburse itself for such Advance, plus
interest thereon, out of amounts payable on or in respect of all of the
Mortgage Loans prior to distributions on the Certificates. Any such judgment
or determination with respect to the recoverability of Advances must be
evidenced by
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an officers' certificate delivered to the Trustee, Fiscal Agent and Depositor
in the case of the Servicer, the Servicer, in the case of the Special
Servicer, the Depositor, in the case of the Trustee or the Fiscal Agent, and
the Trustee in the case of the Fiscal Agent, setting forth such judgment or
determination of nonrecoverability and the considerations of the Servicer,
the Special Servicer, the Trustee or the Fiscal Agent, as applicable, forming
the basis of such determination (including but not limited to information
selected by the person making such determination in its good faith discretion
such as related income and expense statements, rent rolls, occupancy status,
property inspections, inquiries by the Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, as applicable, and an independent appraisal
performed in accordance with Appraiser Institute standards conducted within
the past twelve months on the applicable Mortgaged Property).
ACCOUNTS
Collection Account. The Servicer will establish and maintain a segregated
account (the "Collection Account") pursuant to the Pooling and Servicing
Agreement, and will be required to deposit into the Collection Account all
payments in respect of the Mortgage Loans, other than amounts permitted to be
withheld by the Servicer or amounts to be deposited into any Reserve Account.
Distribution Accounts. The Trustee will establish and maintain one or more
segregated accounts (the "Distribution Account") in the name of the Trustee
for the benefit of the holders of Certificates. With respect to each
Distribution Date, the Servicer will deposit in the Distribution Account, to
the extent of funds on deposit in the Collection Account, on the Servicer
Remittance Date an aggregate amount of immediately available funds equal to
the sum of (i) the Available Funds and (ii) the Trustee Fee. The Servicer
will deposit all P&I Advances into the Distribution Account on the related
Servicer Remittance Date. To the extent the Servicer fails to do so, the
Trustee or the Fiscal Agent will deposit all P&I Advances into the
Distribution Account as described herein. See "Description of the Offered
Certificates -- Distributions" herein.
The Trustee will also establish and maintain one or more segregated
accounts for the "Upper-Tier Distribution Account," the "Excess Interest
Distribution Account" and the "Default Interest Distribution Account" each in
the name of the Trustee for the benefit of the holders of the Certificates.
The Collection Account, the Distribution Account, the Upper-Tier
Distribution Account, the Excess Interest Distribution Account and the
Default Interest Distribution Account will be held in the name of the Trustee
(or the Servicer on behalf of the Trustee) on behalf of the holders of
Certificates and the Servicer will be authorized to make withdrawals from the
Collection Account. Each of the Collection Account, any REO Account, the
Distribution Account, the Upper-Tier Distribution Account, the Excess
Interest Distribution Account and the Default Interest Distribution Account
will be either (i) (A) an account or accounts maintained with a depository
institution or trust company the short term unsecured debt obligations or
commercial paper of which are rated at least P-1 by Moody's and F-1 by Fitch
(if rated by Fitch) in the case of accounts in which funds are held that
mature in 30 days or less (or, in the case of accounts in which funds are
held for more than 30 days, the long term unsecured debt obligations of which
are rated at least "Aa2" by Fitch (if rated by Fitch) and "Aa2" by Moody's)
or (B) as to which the Trustee has received written confirmation from each of
the Rating Agencies that holding funds in such account would not cause any
Rating Agency to qualify, withdraw or downgrade any of its ratings on the
Certificates or (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in
its fiduciary capacity which, in the case of a state chartered depository
institution, is subject to regulations substantially similar to 12 C.F.R.
Section 9.10(b), having in either case a combined capital surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority, or any other account that, as evidenced by a written confirmation
from each Rating Agency that such account would not, in and of itself, cause
a downgrade, qualification or withdrawal of the then current ratings assigned
to the Certificates, which may be an account maintained with the Trustee or
the Servicer (an "Eligible
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Bank"). Amounts on deposit in the Collection Account and any REO Account may
be invested in certain United States government securities and other
high-quality investments specified in the Pooling and Servicing Agreement
("Permitted Investments"). Interest or other income earned on funds in the
Collection Account will be paid to the Servicer (except to the extent
required to be paid to the related borrower) as additional servicing
compensation and interest or other income earned on funds in any REO Account
will be payable to the Special Servicer.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Servicer may make withdrawals from the Collection Account for the
following purposes, to the extent permitted and in the priorities provided in
the Pooling and Servicing Agreement: (i) to remit on or before each Servicer
Remittance Date (A) to the Distribution Account an amount equal to the sum of
(I) Available Funds and any Prepayment Premiums and (II) the Trustee Fee for
such Distribution Date and (B) to the Default Interest Distribution Account
an amount equal to the Net Default Interest received in the related
Collection Period and (C) to the Excess Interest Distribution Account an
amount equal to the Excess Interest received in the related Collection
Period, if any; (ii) to pay or reimburse the Servicer, the Special Servicer,
the Trustee or the Fiscal Agent, as applicable, for Advances made by any of
them and, if applicable, interest on Advances (provided, that the Trustee and
Fiscal Agent will have priority with respect to such payment or
reimbursement), the Servicer's right to reimbursement for items described in
this clause (ii) being limited as described herein under "--Advances"; (iii)
to pay on or before each Servicer Remittance Date to the Servicer and the
Special Servicer as compensation, the aggregate unpaid Servicing
Compensation, Special Servicing Fee, Workout Fee, Liquidation Fee, and any
other servicing or special servicing compensation in respect of the
immediately preceding calendar month; (iv) to pay on or before each
Distribution Date to the Depositor or the Mortgage Loan Sellers with respect
to each Mortgage Loan or REO Property that has previously been purchased or
repurchased by it pursuant to the Pooling and Servicing Agreement, all
amounts received thereon during the related Collection Period and subsequent
to the date as of which the amount required to effect such purchase or
repurchase was determined; (v) to the extent not reimbursed or paid pursuant
to any of the above clauses, to reimburse or pay the Servicer, the Special
Servicer, the Trustee, the Fiscal Agent and/or the Depositor for unpaid
servicing compensation (in the case of the Servicer, the Special Servicer or
the Trustee) and certain other unreimbursed expenses incurred by such persons
pursuant to and to the extent reimbursable under the Pooling and Servicing
Agreement and to satisfy any indemnification obligations of the Trust Fund
under the Pooling and Servicing Agreement; (vi) to pay to the Trustee amounts
requested by it to pay taxes on certain net income with respect to REO
Properties; (vii) to withdraw any amount deposited into the Collection
Account that was not required to be deposited therein; and (viii) to clear
and terminate the Collection Account pursuant to a plan for termination and
liquidation of the Trust Fund.
ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
In general, the Mortgage Loans contain provisions in the nature of
"due-on-sale" clauses, which by their terms (a) provide that the Mortgage
Loans shall (or may at the mortgagee's option) become due and payable upon
the sale or other transfer of an interest in the related Mortgaged Property
or (b) provide that the Mortgage Loans may not be assumed without the consent
of the related mortgagee in connection with any such sale or other transfer.
The Servicer or the Special Servicer, as applicable, will not be required to
enforce any such due-on-sale clauses and in connection therewith will not be
required to (i) accelerate payments thereon or (ii) withhold its consent to
such an assumption if (x) such provision is not exercisable under applicable
law or such provision is reasonably likely to result in meritorious legal
action by the borrower or (y) the Servicer or the Special Servicer, as
applicable, determines, in accordance with the Servicing Standard, that
granting such consent would be likely to result in a greater recovery, on a
present value basis (discounting at the related Mortgage Rate), than would
enforcement of such clause. If the Servicer or the Special Servicer, as
applicable, determines that granting such consent would
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be likely to result in a greater recovery, the Servicer or the Special
Servicer, as applicable, is authorized to take or enter into an assumption
agreement from or with the proposed transferee as obligor thereon provided
that (a) the credit status of the prospective transferee is in compliance
with the Servicer's or Special Servicer's, as applicable, regular commercial
mortgage origination or servicing standards and criteria and the terms of the
related Mortgage and (b) the Servicer or the Special Servicer, as applicable,
has received written confirmation from Moody's and, with respect to Mortgage
Loans that represent more than 2% of the then-current aggregate Stated
Principal of the Mortgage Loans, Fitch that such assumption or substitution
would not, in and of itself, cause a downgrade, qualification or withdrawal
of the then current ratings assigned to the Certificates. No assumption
agreement may contain any terms that are different from any term of any
Mortgage or related Note, except pursuant to the provisions described under
"--Realization Upon Mortgage Loans" and "--Modifications," herein.
The Mortgage Loans contain provisions in the nature of a
"due-on-encumbrance" clause which by their terms (a) provide that the
Mortgage Loans shall (or may at the mortgagee's option) become due and
payable upon the creation of any lien or other encumbrance on the related
Mortgaged Property, or (b) require the consent of the related mortgagee to
the creation of any such lien or other encumbrance on the related Mortgaged
Property. The Servicer or the Special Servicer, as applicable, will not be
required to enforce such due-on-encumbrance clauses and in connection
therewith will not be required to (i) accelerate payments thereon or (ii)
withhold its consent to such lien or encumbrance if the Servicer or the
Special Servicer, as applicable, (x) determines, in accordance with the
Servicing Standard, that such enforcement would not be in the best interests
of the Trust Fund and (y) receives prior written confirmation from Moody's,
and, with respect to Mortgage Loans that represent more than 2% of the then
current aggregate Stated Principal of the Mortgage Loans, Fitch that granting
such consent would not, in and of itself, cause a downgrade, qualification or
withdrawal of any of the then-current ratings assigned to the Certificates.
See "Certain Legal Aspects of the Mortgage Loans -- Due-on-Sale and
Due-on-Encumbrance Provisions" in the Prospectus.
INSPECTIONS
The Servicer (or with respect to any Specially Serviced Mortgage Loan, the
Special Servicer) is required to inspect or cause to be inspected each
Mortgaged Property at such times and in such manner as are consistent with
the Servicing Standards described herein, but in any event (i) is required to
inspect each Mortgaged Property securing a Note, with a Stated Principal
Balance (or in the case of a Note secured by more than one Mortgaged
Property, having an Allocated Loan Amount) of (a) $2,000,000 or more at least
once every twelve months and (b) less than $2,000,000 at least once every 24
months, in each case commencing in December 1998 (or at such lesser
frequency, provided each Rating Agency has confirmed in writing to the
Servicer that such schedule will not result in the withdrawal, downgrading or
qualification of the then-current ratings assigned to the Certificates) and
(ii) if the Mortgage Loan (a) becomes a "Specially Serviced Mortgage Loan,"
(b) is delinquent for 60 days or (c) has a debt service coverage ratio of
less than 1.0, the Special Servicer is required to inspect the related
Mortgaged Properties as soon as practicable and thereafter at least every
twelve months.
INSURANCE POLICIES
The Pooling and Servicing Agreement requires the Servicer (or the Special
Servicer in the case of an REO Property) to obtain or cause the mortgagor on
each Mortgage Loan to maintain fire and hazard insurance with extended
coverage on each related Mortgaged Property in an amount which is at least
equal to the lesser of (A) one hundred percent (100%) of the then "full
insurable replacement cost" of the improvements, (B) the actual cash value of
such improvements, and (C) the outstanding principal balance of the related
Mortgage Loan, or such greater amount or such endorsement as is necessary to
prevent any reduction, by reason of the application of co-insurance and to
prevent the Trustee thereunder from being deemed a
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co-insurer. The Pooling and Servicing Agreement also requires the Servicer
(or the Special Servicer in the case of an REO Property) to obtain or cause
the mortgagor on each Mortgaged Property to maintain insurance providing
coverage against at least six months of rent interruptions (24 months with
respect to an REO Property) and any other insurance as is required in the
related Mortgage Loan and customarily obtained at commercially reasonable
rates. In the case of an REO Property, if the Special Servicer fails to
maintain fire and hazard insurance as described above or flood insurance as
described below, the Servicer shall maintain such insurance, and if the
Servicer does not maintain such insurance, the Trustee shall maintain such
insurance and if the Trustee does not maintain such insurance, the Fiscal
Agent shall do so, subject to the provisions concerning nonrecoverable
Advances. Any cost incurred by the Servicer, Special Servicer, Trustee or
Fiscal Agent in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
In general, the standard form of fire and hazard extended coverage policy
covers physical damage to or destruction of the improvements of the property
by fire, lightning, explosion, smoke, windstorm, hail, riot, strike and civil
commotion, subject to certain conditions and exclusions in each policy.
Although the policies relating to the Mortgage Loans will be underwritten by
different insurers in different states and therefore will not contain
identical terms and conditions, most such policies will not cover any
physical damage resulting from war, revolution, governmental actions, floods
and other water-related causes, earth movement (including earthquakes,
landslides and mudflows), wet or dry rot, vermin, domestic animals and
certain other kinds of uninsured risks. When improvements on a Mortgaged
Property are located in a federally designated flood area, the Pooling and
Servicing Agreement requires the Servicer to use its best efforts to cause
the related borrower to maintain, or if not maintained, to itself obtain
(subject to the provisions concerning nonrecoverable Advances) flood
insurance. Such flood insurance shall be in an amount equal to the lesser of
(i) the outstanding principal balance of the related Mortgage Loan, (ii) the
full insurable actual cash value of such Mortgaged Property, (iii) the
maximum amount of such insurance required by the terms of the related
Mortgage and as is available for the related property under the National
Flood Insurance Act of 1968, as amended, if available and (iv) 100% of the
replacement cost of the improvements located in the special flood hazard area
on the related Mortgaged Property, except in certain documents where
self-insurance is permitted. If an REO Property (i) is located in an area
identified in the Federal Register by the Federal Emergency Management Agency
as having special flood hazards or (ii) is related to a Mortgage Loan
pursuant to which earthquake insurance was in place at the time of
origination and continues to be available at commercially reasonable rates,
the Pooling and Servicing Agreement requires that the Special Servicer obtain
(subject to the issues concerning nonrecoverable Advances) flood insurance
and/or earthquake insurance. If a recovery due to a flood or earthquake is
not available for an REO Property but would have been available if such
insurance were maintained, the Special Servicer will be required (subject to
the provisions concerning nonrecoverable Advances) to (i) immediately deposit
into the Collection Account from its own funds the amount that would have
been recovered or (ii) apply to the restoration and repair of the property
from its own funds the amount that would have been recovered, if such
application is consistent with the Servicing Standard; provided, however,
that the Special Servicer shall not be responsible for any shortfall in
insurance proceeds resulting from an insurer's refusal or inability to pay a
claim.
The Servicer or the Special Servicer may obtain and maintain a blanket or
mortgage impairment insurance policy insuring against fire and hazard losses
on all of the Mortgaged Properties (other than REO Properties) as to which
the related borrower has not maintained insurance to satisfy its obligations
concerning the maintenance of insurance coverage. Any such blanket insurance
policy shall be maintained with an insurer qualified under the terms of the
Pooling and Servicing Agreement. Additionally, the Servicer or the Special
Servicer may obtain a master force placed insurance policy, as long as such
policy is issued by an insurer qualified under the terms of the Pooling and
Servicing Agreement and provides no less coverage in scope and amount than
otherwise required to be maintained as described in the preceding paragraphs.
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The ability of the Servicer to assure that fire and hazard, flood or
earthquake insurance proceeds are appropriately applied may be dependent upon
its being named as an additional insured under such policy, or upon the
extent to which information in this regard is furnished by mortgagors.
Under the terms of the Mortgage Loans, the borrowers will be required to
present claims to insurers under hazard insurance policies maintained on the
related Mortgaged Properties. The Servicer or Special Servicer, as
applicable, on behalf of itself, the Trustee and Certificateholders, is
obligated to present or cause to be presented claims under any blanket
insurance policy insuring against hazard losses on Mortgaged Properties
securing the Mortgage Loans. However, the ability of the Servicer or Special
Servicer, as applicable, to present or cause to be presented such claims is
dependent upon the extent to which information in this regard is furnished to
the Servicer or Special Servicer, as applicable, by the borrowers.
All insurance policies required shall name the Trustee or the Servicer or
the Special Servicer, on behalf of the Trustee as the mortgagee, as loss
payee.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement requires the Servicer to cause a
nationally recognized firm of independent public accountants, which is a
member of the American Institute of Certified Public Accountants, to furnish
to the Trustee, the Depositor and the Rating Agencies on or before March 15
of each year, beginning March 15, 1999, a statement to the effect that such
firm has examined certain documents and records relating to the servicing of
similar mortgage loans for the preceding twelve months and that on the basis
of their examination, conducted substantially in compliance with generally
accepted auditing standards and the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC, such
servicing has been conducted in compliance with similar agreements except for
such significant exceptions or errors in records that, in the opinion of such
firm, generally accepted auditing standards and the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC require it to report, in which case such exceptions and
errors shall be so reported.
The Pooling and Servicing Agreement also requires the Servicer to deliver
to the Trustee, the Depositor and the Rating Agencies on or before March 15
of each year, beginning March 15, 1999, an officer's certificate of the
Servicer stating that, to the best of such officer's knowledge, the Servicer
has fulfilled its obligations under the Pooling and Servicing Agreement
throughout the preceding year or, if there has been a default, specifying
each default known to such officer and the action proposed to be taken with
respect thereto.
CERTAIN MATTERS REGARDING THE DEPOSITOR, THE SERVICER AND THE SPECIAL
SERVICER
Each of the Servicer and Special Servicer may assign its rights and
delegate its duties and obligations under the Pooling and Servicing Agreement
in connection with the sale or transfer of a substantial portion of its
mortgage servicing or asset management portfolio, provided that certain
conditions are satisfied including obtaining the consent of the Trustee and
written confirmation of each Rating Agency that such assignment or delegation
will not cause a qualification, withdrawal or downgrading of the then-current
ratings assigned to the Certificates. The Pooling and Servicing Agreement
provides that the Servicer or Special Servicer may not otherwise resign from
its obligations and duties as Servicer or Special Servicer thereunder, except
upon the determination that performance of its duties is no longer
permissible under applicable law and provided that such determination is
evidenced by an opinion of counsel delivered to the Trustee. No such
resignation may become effective until the Trustee or a successor Servicer or
Special Servicer has assumed the obligations of the Servicer or Special
Servicer under the Pooling and Servicing Agreement. The Trustee or any other
successor Servicer or Special Servicer assuming the obligations of the
Servicer or Special Servicer under the Pooling
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and Servicing Agreement will be entitled to the compensation to which the
Servicer or Special Servicer would have been entitled. If no successor
Servicer or Special Servicer can be obtained to perform such obligations for
such compensation, additional amounts payable to such successor Servicer or
Special Servicer will be treated as Realized Losses. In addition, the Pooling
and Servicing Agreement provides that the Depositor is permitted to remove
the Servicer upon receipt of notice from any Rating Agency that if such
Servicer is not removed there is the risk of a downgrade, qualification or
withdrawal of the then current rating of any Class of Certificates.
The Pooling and Servicing Agreement also provides that neither the
Depositor, the Servicer, the Special Servicer, the Healthcare Adviser nor any
director, officer, employee or agent (including subservicers) of the
Depositor, the Servicer, the Special Servicer or the Healthcare Adviser will
be under any liability to the Trust Fund, or the holders of Certificates for
any action taken or for refraining from the taking of any action in good
faith pursuant to the Pooling and Servicing Agreement (including actions take
at the direction of the Controlling Class), or for errors in judgment;
provided, however, that neither the Depositor, the Servicer, the Special
Servicer nor any such person will be protected against any breach of its
representations and warranties made in the Pooling and Servicing Agreement or
any liability which would otherwise be imposed by reason of willful
misconduct, bad faith, fraud or gross negligence (or in the case of the
Servicer, by reason of any specific liability imposed for a breach of the
Servicing Standard) in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. The Pooling and
Servicing Agreement further provides that the Depositor, the Servicer, the
Special Servicer, the Healthcare Adviser and any director, officer, employee
or agent (including subservicers) of the Depositor, the Servicer, the Special
Servicer and the Healthcare Adviser will be entitled to indemnification by
the Trust Fund for any loss, liability or expense incurred in connection with
any legal action relating to the Pooling and Servicing Agreement or the
Certificates, other than any loss, liability or expense (i) incurred by
reason of willful misconduct, bad faith, fraud or negligence (or in the case
of the Servicer, by reason of any specific liability imposed for a breach of
the Servicing Standard) in the performance of duties thereunder or by reason
of reckless disregard of obligations and duties thereunder or (ii) imposed by
any taxing authority if such loss, liability or expense is not specifically
reimbursable pursuant to the terms of the Pooling and Servicing Agreement.
In addition, the Pooling and Servicing Agreement provides that neither the
Depositor, the Servicer, nor the Special Servicer will be under any
obligation to appear in, prosecute or defend any legal action unless such
action is related to its duties under the Pooling and Servicing Agreement and
which in its opinion does not expose it to any expense or liability. The
Depositor, the Servicer or the Special Servicer may, however, in its
discretion undertake any such action which it may deem necessary or desirable
with respect to the Pooling and Servicing Agreement and the rights and duties
of the parties thereto and the interests of the holders of Certificates
thereunder. In such event, the legal expenses and costs of such action and
any liability resulting therefrom will be expenses, costs and liabilities of
the Trust Fund, and the Depositor, the Servicer and the Special Servicer will
be entitled to be reimbursed therefor and to charge the Collection Account.
The Depositor is not obligated to monitor or supervise the performance of
the Servicer, the Special Servicer or the Trustee under the Pooling and
Servicing Agreement. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer or the Special Servicer under the Pooling and
Servicing Agreement and may, but is not obligated to, perform or cause a
designee to perform any defaulted obligation of the Servicer or the Special
Servicer or exercise any right of the Servicer or the Special Servicer under
the Pooling and Servicing Agreement. In the event the Depositor undertakes
any such action, it will be reimbursed by the Trust Fund from the Collection
Account to the extent not recoverable from the Servicer or Special Servicer
as applicable. Any such action by the Depositor will not relieve the Servicer
or the Special Servicer of its obligations under the Pooling and Servicing
Agreement.
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Any person into which the Servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the Servicer is a
party, or any person succeeding to the business of the Servicer, will be the
successor of the Servicer under the Pooling and Servicing Agreement, and
shall be deemed to have assumed all of the liabilities and obligations of the
Servicer under the Pooling and Servicing Agreement if each of the Rating
Agencies has confirmed in writing that such merger or consolidation or
transfer of assets or succession, in and of itself, will not cause a
downgrade, qualification or withdrawal of the then current ratings assigned
by such Rating Agency for any Class of Certificates.
EVENTS OF DEFAULT
Events of default of the Servicer (each, an "Event of Default") under the
Pooling and Servicing Agreement consist, among other things, of (i) any
failure by the Servicer to remit to the Collection Account or any failure by
the Servicer to remit to the Trustee for deposit into the Upper-Tier
Distribution Account, Distribution Account, Excess Interest Distribution
Account or Default Interest Distribution Account any amount required to be so
remitted pursuant to the Pooling and Servicing Agreement or (ii) any failure
by the Servicer duly to observe or perform in any material respect any of its
other covenants or agreements or the breach of its representations or
warranties under the Pooling and Servicing Agreement which continues
unremedied for thirty days after the giving of written notice of such failure
to the Servicer by the Depositor or the Trustee, or to the Servicer and to
the Depositor and the Trustee by the holders of Certificates evidencing
Percentage Interests of at least 25% of any affected Class; or (iii) any
failure by the Servicer to make any Advances as required pursuant to the
Pooling and Servicing Agreement; or (iv) confirmation in writing by any
Rating Agency that not terminating the Servicer would, in and of itself,
cause the then-current rating assigned to any Class of Certificates to be
qualified, withdrawn or downgraded; (v) certain events of insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings and certain actions by, on behalf of or against the Servicer
indicating its insolvency or inability to pay its obligations or (vi) the
Servicer shall no longer be an "approved" servicer by each of the Rating
Agencies for mortgage pools similar to the Trust Fund.
Events of Default of the Special Servicer under the Pooling and Servicing
Agreement include the items specified in clauses (i) through (vi) above with
respect to, and to the extent applicable to, the Special Servicer.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default with respect to the Servicer occurs, then the
Trustee may, and at the direction of the holders of Certificates evidencing
at least 25% of the aggregate Voting Rights of all Certificateholders, the
Trustee will, terminate all of the rights and obligations of the Servicer as
servicer under the Pooling and Servicing Agreement and in and to the Trust
Fund. Notwithstanding the foregoing, upon any termination of the Servicer
under the Pooling and Servicing Agreement the Servicer will continue to be
entitled to receive all accrued and unpaid servicing compensation through the
date of termination plus all Advances and interest thereon as provided in the
Pooling and Servicing Agreement. In the event that the Servicer is also the
Special Servicer and the Servicer is terminated, the Servicer will also be
terminated as Special Servicer.
On and after the date of termination following an Event of Default by the
Servicer, the Trustee will succeed to all authority and power of the Servicer
(and the Special Servicer if the Special Servicer is also the Servicer) under
the Pooling and Servicing Agreement and will be entitled to the compensation
arrangements to which the Servicer (and the Special Servicer if the Servicer
is also the Special Servicer) would have been entitled. If the Trustee is
unwilling or unable so to act, or if the holders of Certificates evidencing
at least 25% of the aggregate Voting Rights of all Certificateholders so
request, or if the long-term unsecured debt rating of the Trustee or the
Fiscal Agent is not at least "AA" by Fitch and "Aa2" by Moody's or if the
Rating Agencies do not provide written confirmation that the succession of
the Trustee as Servicer, will not cause a qualification,
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withdrawal or downgrading of the then-current ratings assigned to the
Certificates, the Trustee must appoint, or petition a court of competent
jurisdiction for the appointment of, a mortgage loan servicing institution
the appointment of which will not result in the downgrading, qualification or
withdrawal of the rating or ratings then assigned to any Class of
Certificates as evidenced in writing by each Rating Agency to act as
successor to the Servicer under the Pooling and Servicing Agreement. Pending
such appointment, the Trustee is obligated to act in such capacity. The
Trustee and any such successor may agree upon the servicing compensation to
be paid.
If the Special Servicer is not the Servicer and an Event of Default with
respect to the Special Servicer occurs, the Trustee will terminate the
Special Servicer and the Servicer will succeed to all the power and authority
of the Special Servicer under the Pooling and Servicing Agreement (provided
that such termination would not result in the downgrading, qualification or
withdrawal of the rating or ratings assigned to any Class of Certificates as
evidenced in writing by each Rating Agency) and will be entitled to the
compensation to which the Special Servicer would have been entitled.
No Certificateholder will have any right under the Pooling and Servicing
Agreement to institute any proceeding with respect to the Pooling and
Servicing Agreement or the Mortgage Loans, unless, with respect to the
Pooling and Servicing Agreement, such holder previously shall have given to
the Trustee a written notice of a default under the Pooling and Servicing
Agreement, and of the continuance thereof, and unless also the holders of
Certificates of any Class affected thereby evidencing Percentage Interests of
at least 25% of such Class shall have made written request of the Trustee to
institute such proceeding in its own name as Trustee under the Pooling and
Servicing Agreement and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or
refused to institute such proceeding.
The Trustee will have no obligation to make any investigation of matters
arising under the Pooling and Servicing Agreement or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order
or direction of any of the holders of Certificates, unless such holders of
Certificates shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
AMENDMENT
The Pooling and Servicing Agreement may be amended at any time by the
Depositor, the Servicer, the Special Servicer, the Trustee and the Fiscal
Agent without the consent of any of the holders of Certificates (i) to cure
any ambiguity; (ii) to correct or supplement any provisions therein which may
be defective or inconsistent with any other provisions therein; (iii) to
amend any provision thereof to the extent necessary or desirable to maintain
the rating or ratings assigned to each Class of Certificates; (iv) to amend
or supplement a provision which will not adversely affect in any material
respect the interests of any Certificateholder not consenting thereto, as
evidenced in writing by an opinion of counsel or confirmation in writing from
each Rating Agency that such amendment will not result in a qualification,
withdrawal or downgrading of the then current ratings assigned to the
Certificates; and (v) to amend or supplement any provisions therein to the
extent not inconsistent with the provisions of the Pooling and Servicing
Agreement and will not result in a downgrade, qualification or withdrawal of
the then current ratings assigned to any Class of Certificates as confirmed
in writing by each Rating Agency. The Pooling and Servicing Agreement
requires that no such amendment shall cause the Upper-Tier REMIC or the
Lower-Tier REMIC to fail to qualify as a REMIC.
The Pooling and Servicing Agreement may also be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Trustee and the
Fiscal Agent with the consent of the holders of Certificates evidencing at
least 66 2/3% of the Percentage Interests of each Class of Certificates
affected thereby for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or modifying
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in any manner the rights of the holders of Certificates; provided, however,
that no such amendment may (i) reduce in any manner the amount of, or delay
the timing of, payments received on the Mortgage Loans which are required to
be distributed on any Certificate; (ii) alter the obligations of the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent to make a P&I
Advance or Property Advance or alter the servicing standards set forth in the
Pooling and Servicing Agreement; (iii) change the percentages of Voting
Rights of holders of Certificates which are required to consent to any action
or inaction under the Pooling and Servicing Agreement; or (iv) amend the
section in the Pooling and Servicing Agreement relating to the amendment of
the Pooling and Servicing Agreement, in each case, without the consent of the
holders of all Certificates representing all the Percentage Interests of the
Class or Classes affected thereby.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 98%
of the voting rights for the Certificates (the "Voting Rights") shall be
allocated among the holders of the respective Classes of Regular Certificates
(other than the Class X Certificates) in proportion to the Certificate
Balances of their Certificates, 2% of the Voting Rights shall be allocated
among the holders of the Class X Certificates. Voting Rights allocated to a
Class of Certificateholders shall be allocated among such Certificateholders
in proportion to the Percentage Interests in such Class evidenced by their
respective Certificates. Appraisal Reduction Amounts will be allocated in
reduction of the respective Certificate Balances as described under
"Description of the Offered Certificates -- Appraisal Reductions" herein for
the purpose of calculating Voting Rights.
REALIZATION UPON MORTGAGE LOANS
The Pooling and Servicing Agreement grants to the Servicer, the Special
Servicer and the holder or holders of Certificates evidencing a majority
interest in the Controlling Class a right to purchase from the Trust Fund
certain defaulted Mortgage Loans. If the Special Servicer has determined, in
its good faith and reasonable judgment, that any defaulted Mortgage Loan will
become the subject of a foreclosure, the Special Servicer will be required to
promptly so notify in writing the Trustee, and the Trustee will be required,
within 10 days after receipt of such notice, to notify the holders of the
Controlling Class.
Any holder or holders of Certificates evidencing a majority interest in
the Controlling Class may, at its or their option, purchase from the Trust
Fund, at a price at least equal to the unpaid principal balance of such
Mortgage Loan, together with any accrued but unpaid interest thereon to but
not including the Due Date in the Collection Period of the purchase and any
related unreimbursed Advances (the "Purchase Price") any such defaulted
Mortgage Loan. If such Certificateholders have not purchased such defaulted
Mortgage Loan within 15 days of their having received notice in respect
thereof, either the Servicer or the Special Servicer may, at its option,
purchase such defaulted Mortgage Loan from the Trust Fund, at a price equal
to the applicable Purchase Price.
Pursuant to the terms of the Pooling and Servicing Agreement, the Special
Servicer may, to the extent consistent with the related Asset Status Report,
offer to sell any such defaulted Mortgage Loan not otherwise purchased
pursuant to the prior paragraph, if and when the Special Servicer determines,
consistent with the Servicing Standard, that such a sale would be in the best
economic interests of the Trust Fund. Such offer is required to be made in a
commercially reasonable manner for a period of not less than 10 days. Unless
the Special Servicer determines, in its good faith and reasonable judgment,
that acceptance of any offer would not be in the best economic interests of
the Trust Fund, the Special Servicer, to the extent consistent with the
related Asset Status Report, is required to accept the highest cash offer
received from any person that constitutes a fair price (which may be less
than the Purchase Price) for such Mortgage Loan; provided that none of the
Servicer, the Special Servicer, the Depositor, the holder of any Certificate
or an affiliate of any such party may purchase such Mortgage Loan for less
than the Purchase Price unless at least two other offers are received from
independent third parties.
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If a default on a Mortgage Loan has occurred or, in the Special
Servicer's judgment, a payment default is imminent, then, pursuant to the
Pooling and Servicing Agreement, the Special Servicer, on behalf of the
Trustee, may, to the extent consistent with the related Asset Status Report,
at any time institute foreclosure proceedings, exercise any power of sale
contained in the related Mortgage, obtain a deed in lieu of foreclosure, or
otherwise acquire title to the related Mortgaged Property, by operation of
law or otherwise. The Special Servicer is not permitted, however, to acquire
title to any Mortgaged Property, have a receiver of rents appointed with
respect to any Mortgaged Property or take any other action with respect to
any Mortgaged Property that would cause the Trustee, for the benefit of the
related series of Certificateholders, or any other specified person to be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be
an "owner" or an "operator" of such Mortgaged Property within the meaning of
certain federal environmental laws, unless the Special Servicer has
previously received a report prepared by a person who regularly conducts
environmental audits (which report will be an expense of the Trust Fund) and
either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b)
there are no circumstances or conditions present at the Mortgaged Property
that have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters and
related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value
of money, than not taking such actions.
If title to any Mortgaged Property is acquired by a Trust Fund, the
Special Servicer, on behalf of the Trust Fund, will be required to sell the
Mortgaged Property prior to the close of the third calendar year following
the year in which the Trust Fund acquires such Mortgaged Property, unless (i)
the Internal Revenue Service grants an extension of time to sell such
property or (ii) the Trustee receives an opinion of independent counsel to
the effect that the holding of the property by the Trust Fund beyond such
period will not result in the imposition of a tax on the Trust Fund or cause
the Trust Fund (or any designated portion thereof) to fail to qualify as a
REMIC under the Code at any time that any Certificate is outstanding. Subject
to the foregoing and any other tax-related limitations, the Special Servicer
will generally be required to attempt to sell any Mortgaged Property so
acquired on the same terms and conditions it would if it were the owner. If
title to any Mortgaged Property is acquired by the Trust Fund, the Special
Servicer will also be required to ensure that the Mortgaged Property is
administered so that it constitutes "foreclosure property" within the meaning
of Code Section 860G(a)(8) at all times that the sale of such property does
not result in the receipt by the Trust Fund of any income from non-permitted
assets as described in Code Section 860F(a)(2)(B) with respect to such
property. If the Trust Fund acquires title to any Mortgaged Property, the
Special Servicer, on behalf of the Trust Fund, may be required to retain an
independent contractor to manage and operate such property. The retention of
an independent contractor, however, will not relieve the Special Servicer of
its obligation to manage such Mortgaged Property as required under the
Pooling and Servicing Agreement.
In general, the Special Servicer will be obligated to (or may contract
with a third party to) operate and manage any Mortgaged Property acquired as
REO Property in a manner that would, in its good faith and reasonable
judgment and to the extent commercially feasible, maximize the Trust Fund's
net after-tax proceeds from such property. After the Special Servicer reviews
the operation of such property and consults with the Trustee to determine the
Trust Fund's federal income tax reporting position with respect to income it
is anticipated that the Trust Fund would derive from such property, the
Special Servicer could determine, pursuant to the Pooling and Servicing
Agreement, that it would not be commercially feasible to manage and operate
such
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property in a manner that would avoid the imposition of a tax on "net income
from foreclosure property" within the meaning of the REMIC Regulations (such
tax referred to herein as the "REO Tax"). To the extent that income the Trust
Fund receives from an REO Property is subject to a tax on "net income from
foreclosure property", such income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%). The determination as to
whether income from an REO Property would be subject to an REO Tax will
depend on the specific facts and circumstances relating to the management and
operation of each REO Property. Any REO Tax imposed on the Trust Fund's
income from an REO Property would reduce the amount available for
distribution to Certificateholders. Certificateholders are advised to consult
their own tax advisors regarding the possible imposition of the REO Tax in
connection with the operation of commercial REO Properties by REMICs. The
Special Servicer will be required to sell any REO Property acquired on behalf
of the Trust Fund within the time period and in the manner described above.
Under the Pooling and Servicing Agreement, the Special Servicer is
required to establish and maintain one or more REO Accounts, to be held on
behalf of the Trustee in trust for the benefit of the Certificateholders, for
the retention of revenues, Liquidation Proceeds (net of related liquidation
expenses) and insurance proceeds derived from each REO Property. The Special
Servicer is required to use the funds in the REO Account to pay for the
proper operation, management, maintenance, disposition and liquidation of any
REO Property, but only to the extent of amounts on deposit in the REO Account
relate to such REO Property. To the extent that amounts in the REO Account in
respect of any REO Property are insufficient to make such payments, the
Special Servicer is required to make a Property Advance, unless it determines
such Property Advance would be nonrecoverable. Within one business day
following the end of each Collection Period, the Special Servicer is required
to deposit all amounts received in respect of each REO Property during such
Collection Period, net of any amounts withdrawn to make any permitted
disbursements, to the Collection Account, provided that the Special Servicer
may retain in the REO Account permitted reserves.
MODIFICATIONS
The Special Servicer may agree to any modification, waiver or amendment of
any term of, forgive interest on and principal of, capitalize interest on,
permit the release, addition or substitution of collateral securing, and/or
permit the release of the borrower on or any guarantor of any Mortgage Loan
without the consent of the Trustee or any Certificateholder, subject,
however, to each of the following limitations, conditions and restrictions:
(i) the Special Servicer may not agree to any modification, waiver or
amendment of any term of, or take any of the other above referenced
actions with respect to, any Mortgage Loan that would affect the amount or
timing of any related payment of principal, interest or other amount
payable thereunder or, in the Special Servicer's good faith and reasonable
judgment, would materially impair the security for such Mortgage Loan or
reduce the likelihood of timely payment of amounts due thereon, unless, in
the Special Servicer's judgment, a material default on such Mortgage Loan
has occurred or a default in respect of payment on such Mortgage Loan is
reasonably foreseeable, and such modification, waiver, amendment or other
action is reasonably likely to produce a greater recovery to
Certificateholders on a present value basis than would liquidation;
(ii) the Special Servicer may not extend the maturity of any Mortgage
Loan beyond the date that is two years prior to the Rated Final
Distribution Date;
(iii) the Special Servicer shall not make or permit any modification,
waiver or amendment of any term of, or take any of the other above
referenced actions with respect to, any Mortgage Loan that would (A) cause
any of the Upper-Tier REMIC or the Lower-Tier REMIC to fail to qualify as
a REMIC under the Code or, except as otherwise described in "--Realization
Upon Mortgage Loans" above, result in the imposition of any tax on
"prohibited transactions" or "contributions" after the startup date of any
such REMIC under the REMIC Regulations or (B) cause any Mortgage Loan to
cease to be a "qualified mortgage" within the
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meaning of Section 860G(a)(3) of the Code (provided that the Special
Servicer shall not be liable for judgments as regards decisions made under
this subsection which were made in good faith and, unless it would
constitute bad faith or negligence to do so, the Special Servicer may rely
on opinions of counsel in making such decisions);
(iv) the Special Servicer shall not permit any borrower to add or
substitute any collateral for an outstanding Mortgage Loan, which
collateral constitutes real property, unless the Special Servicer shall
have first determined in its good faith and reasonable judgment, based
upon a Phase I environmental assessment (and such additional environmental
testing as the Special Servicer deems necessary and appropriate), that
such additional or substitute collateral is in compliance with applicable
environmental laws and regulations and that there are no circumstances or
conditions present with respect to such new collateral relating to the
use, management or disposal of any hazardous materials for which
investigation, testing, monitoring, containment, clean-up or remediation
would be required under any then applicable environmental laws and/or
regulations; and
(v) with limited exceptions, the Special Servicer shall not release any
collateral securing an outstanding Mortgage Loan;
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (v) above will not apply to any modification of any term
of any Mortgage Loan that is required under the terms of such Mortgage Loan
in effect on the Closing Date or that is solely within the control of the
related borrower, and (y) notwithstanding clauses (i) through (v) above, the
Special Servicer will not be required to oppose the confirmation of a plan in
any bankruptcy or similar proceeding involving a borrower if in its
reasonable and good faith judgment such opposition would not ultimately
prevent the confirmation of such plan or one substantially similar.
OPTIONAL TERMINATION
The Depositor, and if the Depositor does not exercise the option, the
Servicer, and, if neither the Depositor nor the Servicer exercises its
option, any holder of the Class LR Certificates representing greater than 50%
of the Percentage Interest of the Class LR Certificates will have the option
to purchase all of the Mortgage Loans and all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund, and thereby effect termination
of the Trust Fund and early retirement of the then outstanding Certificates,
on any Distribution Date on which the aggregate Stated Principal Balance of
the Mortgage Loans remaining in the Trust Fund is less than 1% of the
aggregate principal balance of such Mortgage Loans as of the Cut-Off Date.
The purchase price payable upon the exercise of such option on such a
Distribution Date will be an amount equal to the greater of (i) the sum of
(A) 100% of the outstanding principal balance of each Mortgage Loan included
in the Trust Fund as of the last day of the month preceding such Distribution
Date (less any P&I Advances previously made on account of interest); (B) the
fair market value of all other property included in the Trust Fund as of the
last day of the month preceding such Distribution Date, as determined by an
independent appraiser as of a date not more than 30 days prior to the last
day of the month preceding such Distribution Date; (C) all unpaid interest
accrued on such principal balance of each such Mortgage Loan (including any
Mortgage Loans as to which title to the related Mortgaged Property has been
acquired) at the Mortgage Rate (plus the Excess Rate, to the extent
applicable) to the last day of the month preceding such Distribution Date
(less any P&I Advances previously made on account of interest), and (D)
unreimbursed Advances (with interest thereon) and unpaid Trust Fund expenses
and (ii) the aggregate fair market value of the Mortgage Loans and all other
property acquired in respect of any Mortgage Loan in the Trust Fund, on the
last day of the month preceding such Distribution Date, as determined by an
independent appraiser acceptable to the Servicer, together with one month's
interest thereon at the Mortgage Rate. Notwithstanding the foregoing, such
Mortgage Loan may not be purchased if the fair market value of the Mortgage
Loan is greater than 100% of the outstanding principal balance of such
Mortgage Loan.
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THE TRUSTEE
LaSalle National Bank, a national banking association with its principal
offices in Chicago, Illinois, will act as Trustee pursuant to the Pooling and
Servicing Agreement. The Trustee's corporate trust office is located at 135
South LaSalle Street, Suite 1625, Chicago, Illinois 60674-4107, Attention:
Asset Backed Securities Trust Services Group, DMARC 1998-C1.
The Trustee may resign at any time by giving written notice to the
Depositor, the Servicer, Special Servicer and the Rating Agencies, provided
that no such resignation shall be effective until a successor has been
appointed. Upon such notice, the Servicer will appoint a successor trustee.
If no successor trustee is appointed within one month after the giving of
such notice of resignation, the resigning Trustee may petition the court for
appointment of a successor trustee.
The Servicer or the Depositor may remove the Trustee and the Fiscal Agent
if, among other things, the Trustee ceases to be eligible to continue as such
under the Pooling and Servicing Agreement or if at any time the Trustee
becomes incapable of acting, or is adjudged bankrupt or insolvent, or a
receiver of the Trustee or its property is appointed or any public officer
takes charge or control of the Trustee or of its property. The holders of
Certificates evidencing aggregate Voting Rights of at least 50% of all
Certificateholders may remove the Trustee and the Fiscal Agent upon written
notice to the Depositor, the Servicer, the Trustee and the Fiscal Agent. Any
resignation or removal of the Trustee and the Fiscal Agent and appointment of
a successor trustee and, if such trustee is not rated at least "AA" or the
equivalent by each Rating Agency, fiscal agent, will not become effective
until acceptance of the appointment by the successor trustee and, if
necessary, fiscal agent. Notwithstanding the foregoing, upon any termination
of the Trustee and Fiscal Agent under the Pooling and Servicing Agreement,
the Trustee and Fiscal Agent will continue to be entitled to receive from the
Trust Fund all accrued and unpaid compensation and expenses through the date
of termination plus all Advances and interest thereon as provided in the
Pooling and Servicing Agreement. Any successor trustee must have a combined
capital and surplus of at least $50,000,000 and such appointment must not
result in the downgrade, qualification or withdrawal of the then-current
ratings assigned to the Certificates, as evidenced in writing by the Rating
Agencies.
Pursuant to the Pooling and Servicing Agreement, the Trustee will be
entitled to withdraw from the Distribution Account a monthly fee (the
"Trustee Fee"), which constitutes a portion of the Servicing Fee.
The Trust Fund will indemnify the Trustee and the Fiscal Agent against any
and all losses, liabilities, damages, claims or unanticipated expenses
(including reasonable attorneys' fees) arising in respect of the Pooling and
Servicing Agreement or the Certificates other than those resulting from the
negligence, bad faith or willful misconduct of the Trustee or the Fiscal
Agent, as applicable. Neither the Trustee nor the Fiscal Agent will be
required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties under the Pooling and
Servicing Agreement, or in the exercise of any of its rights or powers, if in
the Trustee's or the Fiscal Agent's opinion, as applicable, the repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Each of the Servicer, the Special Servicer, the
Depositor, the Paying Agent, the Certificate Registrar and the Custodian will
indemnify the Trustee, the Fiscal Agent, and certain related parties for
similar losses incurred related to the willful misconduct, bad faith, fraud
and/or negligence in the performance of each such party's respective duties
under the Pooling and Servicing Agreement or by reason of reckless disregard
of its obligations and duties under the Pooling and Servicing Agreement.
At any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing the
same is located, the Depositor and the Trustee acting jointly will have the
power to appoint one or more persons or entities approved by the Trustee to
act (at the expense of the Trustee) as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any
part of the Trust Fund, and to vest in such co-trustee or separate trustee
such powers, duties, obligations, rights and trusts as the Depositor
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and the Trustee may consider necessary or desirable. Except as required by
applicable law, the appointment of a co-trustee or separate trustee will not
relieve the Trustee of its responsibilities, obligations and liabilities
under the Pooling and Servicing Agreement to the extent set forth therein.
DUTIES OF THE TRUSTEE
The Trustee (except for the information under the first paragraph of
"--The Trustee") will make no representation as to the validity or
sufficiency of the Pooling and Servicing Agreement, the Certificates or the
Mortgage Loans, this Prospectus or related documents. The Trustee will not be
accountable for the use or application by the Depositor, the Servicer or the
Special Servicer of any Certificates issued to it or of the proceeds of such
Certificates, or for the use of or application of any funds paid to the
Depositor, the Servicer or the Special Servicer in respect of the assignment
of the Mortgage Loans to the Trust Fund, or any funds deposited in or
withdrawn from the Lock Box Accounts, Reserve Accounts, Collection Account,
Excess Interest Distribution Account and Default Interest Distribution
Account or any other account maintained by or on behalf of the Servicer or
Special Servicer, nor will the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer or Special Servicer under the Pooling and Servicing Agreement.
In the event that the Servicer fails to make a required Advance, the
Trustee will make such Advance, provided that the Trustee shall not be
obligated to make any Advance it deems to be nonrecoverable. The Trustee
shall be entitled to rely conclusively on any determination by the Servicer
or the Special Servicer that an Advance, if made, would not be recoverable.
The Trustee will be entitled to reimbursement for each Advance, with
interest, made by it in the same manner and to same extent as the Servicer or
the Special Servicer.
If no Event of Default has occurred, and after the curing of all Events of
Default which may have occurred, the Trustee is required to perform only
those duties specifically required under the Pooling and Servicing Agreement.
Upon receipt of the various certificates, reports or other instruments
required to be furnished to it, the Trustee is required to examine such
documents and to determine whether they conform on their face to the
requirements of the Pooling and Servicing Agreement to the extent set forth
therein.
The Trustee will be the REMIC Administrator, as described in the
Prospectus. See "Description of the Pooling Agreements -- Certain Matters
Regarding the Master Servicer, the Special Servicer, the REMIC Administrator
and the Depositor."
THE FISCAL AGENT
ABN AMRO Bank N.V., a banking corporation organized under the laws of The
Netherlands, will act as Fiscal Agent pursuant to the Pooling and Servicing
Agreement. The Fiscal Agent's office is located at 135 South LaSalle Street,
Chicago, Illinois 60674-4107. The Fiscal Agent will be deemed to have been
removed in the event of the resignation or removal of the Trustee.
DUTIES OF THE FISCAL AGENT
The Fiscal Agent will make no representation as to the validity or
sufficiency of the Pooling and Servicing Agreement, the Certificates, the
Mortgage Loan, this Prospectus Supplement (except for the information above,
see "--The Fiscal Agent") or related documents. The duties and obligations of
the Fiscal Agent consist only of making Advances as described below and in
"--Advances" above; the Fiscal Agent shall not be liable except for the
performance of such duties and obligations.
In the event that the Servicer and the Trustee fail to make a required
Advance, the Fiscal Agent will make such Advance, provided that the Fiscal
Agent will not be obligated to make any Advance that it deems to be
nonrecoverable. The Fiscal Agent shall be entitled to rely conclusively on
any
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determination by the Servicer or the Trustee, as applicable, that an Advance,
if made, would not be recoverable. The Fiscal Agent will be entitled to
reimbursement for each Advance made by it in the same manner and to the same
extent as the Trustee and the Servicer.
THE SERVICER
Banc One Mortgage Capital Markets, LLC ("Banc One"), a Delaware limited
liability company, will be the Servicer and in such capacity will be
responsible for servicing the Mortgage Loans. The principal offices of Banc
One Mortgage Capital Markets, LLC are located at 1717 Main Street, Dallas,
Texas 75201.
As of December 31, 1997, Banc One and its affiliates were responsible for
servicing approximately 5,829 commercial and multifamily loans with an
aggregate principal balance of approximately $7.38 billion, the collateral
for which is located in 49 states, Puerto Rico and the District of Columbia.
With respect to such loans, approximately 4,441 loans with an aggregate
principal balance of approximately $4.34 billion pertain to commercial and
multifamily mortgage-backed securities.
The information concerning the Servicer set forth herein has been provided
by the Servicer, and none of the Mortgage Loan Sellers, the Special Servicer,
the Depositor, the Trustee, the Fiscal Agent or the Underwriters makes any
representation or warranty as to the accuracy thereof. The Servicer (except
for the information under this heading) will make no representation as to the
validity or sufficiency of the Pooling and Servicing Agreement, the
Certificates or the Mortgage Loans, this Prospectus or related documents.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
entitled to withdraw the Master Servicing Fee monthly from the Collection
Account. The "Master Servicing Fee" will be payable monthly and will accrue
at a percentage rate per annum equal to .015% (the "Master Servicing Fee
Rate."). The "Servicing Fee" will be payable monthly on a loan-by-loan basis
and will accrue at a percentage rate per annum (the "Servicing Fee Rate") set
forth on Annex A for each Mortgage Loan and will include the Master Servicing
fee, the Trustee Fee, the Healthcare Adviser Fee, if any, and any fee for
primary servicing functions. The Master Servicing Fee will be retained by the
Servicer from payments and collections (including insurance proceeds,
condemnation proceeds and liquidation proceeds) in respect of such Mortgage
Loan. The Servicer will also be entitled to retain as additional servicing
compensation (together with the Master Servicing Fee "Servicing
Compensation") (i) all investment income earned on amounts on deposit in the
Collection Account and certain Reserve Accounts (to the extent consistent
with the related Mortgage Loan), (ii) to the extent permitted by applicable
law and the related Mortgage Loans, and loan modification, extension and
assumption fees (for as long as the Mortgage Loan is not a Specially Serviced
Mortgage Loan), late payment charges, loan service transaction fees,
beneficiary statement changes, or similar items (but not including Prepayment
Premiums) and (iii) Net Prepayment Interest Excess, if any. If the Mortgage
Loan is a Specially Serviced Mortgage Loan, the Special Servicer will be
entitled to the full amount of any modification, extension or assumption
fees, as described below under "--Special Servicing." The Master Servicing
Fee and the Servicing Fee will accrue on a basis of twelve months of 30 days
each.
In connection with any Net Prepayment Interest Shortfall, the Servicer
will be obligated to reduce its Servicing Compensation as provided above
under "Description of the Offered Certificates -- Distributions -- Prepayment
Interest Shortfalls."
The Servicer will pay all expenses incurred in connection with its
responsibilities under the Pooling and Servicing Agreement (subject to
reimbursement as described herein). The Trustee will withdraw monthly from
the Distribution Account the portion of the Servicing Fee representing the
Trustee Fee.
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SPECIAL SERVICING
Banc One Mortgage Capital Markets, LLC will initially be appointed as
special servicer (the "Special Servicer") to, among other things, oversee the
resolution of non-performing Mortgage Loans and act as disposition manager of
REO Properties. The Special Servicer will be required, as and to the extent
described herein, to seek advice and approval and take direction from the
Controlling Class to the extent consistent with the Servicing Standard. The
Pooling and Servicing Agreement will provide that more than one Special
Servicer may be appointed, but only one Special Servicer may specially
service any Mortgage Loan.
In addition to its loan servicing capabilities, Banc One Mortgage Capital
Markets, LLC has expertise in all areas of asset management including loan
workouts, asset valuation, environmental reviews, and REO management and
disposition and is an active purchaser of unrated and sub-investment grade
interests in commercial mortgage backed securities. The principal task of
Banc One Mortgage Capital Markets, LLC's asset management division is the
management, turnaround, and capital recovery of distressed and
underperforming real estate loans and foreclosed real estate assets. The
asset management division of Banc One Mortgage Capital Markets, LLC is also
responsible for the valuation of portfolios in connection with the purchase
of commercial mortgage backed securities.
The holder or holders of Certificates entitled to more than 50% of the
Voting Rights allocated to the Controlling Class may at any time terminate
substantially all of the rights and duties of the Special Servicer and
appoint a replacement to perform such duties under substantially the same
terms and conditions as applicable to the Special Servicer. Such holder(s)
shall designate a replacement to so serve by the delivery to the Trustee of a
written notice stating such designation. The Trustee shall, promptly after
receiving any such notice, so notify the Rating Agencies. If the designated
replacement is acceptable to the Trustee, which approval may not be
unreasonably withheld, the designated replacement shall become the
Replacement Special Servicer as of the date the Trustee shall have received:
(i) written confirmation from each Rating Agency stating that if the
designated replacement were to serve as Special Servicer under the Pooling
and Servicing Agreement, none of the then-current rating of all outstanding
Classes of the Certificates would be qualified, downgraded or withdrawn as a
result thereof; (ii) a written acceptance of all obligations of such
replacement Special Servicer, executed by the designated replacement; and
(iii) an opinion of counsel to the effect that the designation of such
replacement to serve as Special Servicer is in compliance with the Pooling
and Servicing Agreement, that the designated replacement will be bound by the
terms of the Pooling and Servicing Agreement and that the Pooling and
Servicing Agreement will be enforceable against such designated replacement
in accordance with its terms. The prior Special Servicer shall be deemed to
have resigned from its duties under the Pooling and Servicing Agreement in
respect of Specially Serviced Mortgage Loans and REO Properties
simultaneously with such designated replacement's becoming the Special
Servicer under the Pooling and Servicing Agreement. Any replacement Special
Servicer may be similarly so replaced by the holder or holders of
Certificates entitled to more than 50% of the Voting Rights allocated to the
Controlling Class.
The "Controlling Class" will be, as of any date of determination, the
Class of Regular Certificates (other than the Class X Certificates) with the
latest alphabetical Class designation that has a then aggregate Certificate
Balance (net of any Appraisal Reduction Amount) at least equal to the lesser
of (i) 25% of the initial aggregate Certificate Balance of such Class of
Regular Certificates as of the Closing Date and (ii) 2% of the aggregate
Certificate Balance (net of any Appraisal Reduction Amount) of all the
Regular Certificates (other than the Class X Certificates) as of such date of
determination. As of the Closing Date, the Controlling Class will be the
Class L Certificates. For purposes of determining the Controlling Class, the
Class A-1 and Class A-2 Certificates collectively will be treated as one
Class.
DMG and the Special Servicer currently contemplate entering into an
arrangement pursuant to which, during a period of 60 to 180 days following
the Closing Date, DMG may, at its option,
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purchase from the Special Servicer, and on the 180th day following the
Closing Date, the Special Servicer may, at its option, sell to DMG, the Class
J, Class K and Class L Certificates if purchased on the Closing Date, in each
case based on a price calculated at a predetermined formula. If such purchase
or sale were to occur, it is likely that a replacement special servicer would
be appointed by DMG or the successor holder of such Certificates, subject to
confirmation by the Rating Agencies, as described above.
The duties of the Special Servicer relate to Specially Serviced Mortgage
Loans and to any REO Property. The Pooling and Servicing Agreement will
define a "Specially Serviced Mortgage Loan" to include any Mortgage Loan with
respect to which: (i) the related borrower has not made two consecutive
Monthly Payments (and has not cured at least one such delinquency by the next
due date under the related Mortgage Loan) or (ii) the Servicer, the Trustee
and/or the Fiscal Agent has made four consecutive P&I Advances (regardless of
whether such P&I Advances have been reimbursed); (iii) the borrower has
expressed to the Servicer an inability to pay or a hardship in paying the
Mortgage Loan in accordance with its terms; (iv) the Servicer has received
notice that the borrower has become the subject of any bankruptcy, insolvency
or similar proceeding, admitted in writing the inability to pay its debts as
they come due or made an assignment for the benefit of creditors; (v) the
Servicer has received notice of a foreclosure or threatened foreclosure of
any lien on the Mortgaged Property securing the Mortgage Loan; (vi) a default
of which the Servicer has notice (other than a failure by the borrower to pay
principal or interest) and which materially and adversely affects the
interests of the Certificateholders has occurred and remained unremedied for
the applicable grace period specified in the Mortgage Loan (or, if no grace
period is specified, 60 days); provided, that a default requiring a Property
Advance will be deemed to materially and adversely affect the interests of
Certificateholders; (vii) the Special Servicer proposes to commence
foreclosure or other workout arrangements; (viii) (A) in the case of a
Healthcare Loan in which the related Healthcare Property is a nursing
facility (1) the license or certificate of need to operate the related
Mortgaged Property as a Healthcare Property, (2) the certification of the
related Healthcare Property to participate as a nursing home provider in
Medicare or Medicaid (and their successor programs), (3) the right to admit
residents and/or receive payments under Medicare or Medicaid (and their
successor programs) has been terminated, revoked, surrendered or suspended;
or (B) in the case of Healthcare Loan in which the related Healthcare
Property is an assisted living facility, the right to admit residents or the
license to operate as an assisted living facility has been terminated,
revoked, surrendered or suspended; (C) in the case of any Healthcare Loan,
the related Healthcare Property has been cited for a material deficiency for
which its license or certification can be revoked and which is not cured
within the earlier of the time permitted by the applicable regulatory
authority or 180 days; (D) in the case of any Healthcare Loan, more than ten
percent (10%) of the licensed beds of the related Healthcare Property becomes
unavailable for use either (1) through a taking by condemnation or eminent
domain, or (2) through a casualty loss; provided, however, that the Servicer
has determined that as a result of (1) or (2) above the related mortgagor
ability to pay the debt service on such Healthcare Loan has been impaired; or
(ix) the related mortgagor has failed to make a Balloon Payment as and when
due; provided, however, that a Mortgage Loan will cease to be a Specially
Serviced Mortgage Loan (each, a "Corrected Mortgage Loan") (i) with respect
to the circumstances described in clauses (i), (ii), and (ix) above, when the
borrower thereunder has brought the Mortgage Loan current (or, with respect
to the circumstances described in clause (vii), pursuant to a work-out
implemented by the Special Servicer) and thereafter made three consecutive
full and timely monthly payments, including pursuant to any workout of the
Mortgage Loan, (ii) with respect to the circumstances described in clause
(iii), (iv), (v) and (vii) above, when such circumstances cease to exist in
the good faith judgment of the Servicer, (iii) with respect to the
circumstances described in clause (vi) above, when such default is cured or
(iv) with respect to the circumstances described in clause (viii) above, when
the Healthcare Adviser has provided confirmation in writing to the Servicer
that such default is cured; provided, in each case, that at that time no
circumstance exists (as described above) that would cause the Mortgage Loan
to continue to be characterized as a Specially Serviced Mortgage Loan.
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The Special Servicer will prepare a report (an "Asset Status Report") for
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan not later
than 30 days after the servicing of such Mortgage Loan is transferred to the
Special Servicer. Each Asset Status Report will be delivered to the Directing
Certificateholder (and, with respect to any Healthcare Loan, the Healthcare
Adviser) and the Rating Agencies. If the Directing Certificateholder does not
disapprove an Asset Status Report within 10 business days, the Special
Servicer shall implement the recommended action as outlined in such Asset
Status Report. The Directing Certificateholder may object to any Asset Status
Report within 10 business days of receipt; provided, however, that the
Special Servicer shall implement the recommended action as outlined in such
Asset Status Report if it makes an affirmative determination, consistent with
the Servicing Standard, that such objection is not in the best interest of
all the Certificateholders. If the Directing Certificateholder disapproves
such Asset Status Report and the Special Servicer has not made the
affirmative determination described above, the Special Servicer will revise
such Asset Status Report as soon as practicable thereafter, but in no event
later than 30 days after such disapproval. The Special Servicer will revise
such Asset Status Report until the Directing Certificateholder fails to
disapprove such revised Asset Status Report as described above or until the
Special Servicer makes a determination, consistent with the Servicing
Standard, that such objection is not in the best interests of the
Certificateholders.
The "Directing Certificateholder" will be the Controlling Class
Certificateholder selected by more than 50% of the Controlling Class
Certificateholders, by Certificate Balance, as certified by the Trustee from
time to time; provided, however, that (i) absent such selection, or (ii)
until a Directing Certificateholder is so selected or (iii) upon receipt of a
notice from a majority of the Controlling Class Certificateholders, by
Certificate Balance, that a Directing Certificateholder is no longer
designated, the Controlling Class Certificateholder that owns the largest
aggregate Certificate Balance of the Controlling Class will be the Directing
Certificateholder.
A "Controlling Class Certificateholder" is each holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified
to the Trustee from time to time by such holder (or Certificate Owner).
The Special Servicer will not be required to take or refrain from taking
any action pursuant to instructions from the Directing Certificateholder that
would cause it to violate applicable law, the Pooling and Servicing
Agreement, including the Servicing Standard, or the REMIC Regulations.
Pursuant to the Pooling and Servicing Agreement, the Special Servicer will
be entitled to certain fees including a special servicing fee, payable with
respect to each Interest Accrual Period, equal to 0.25% of the Stated
Principal Balance of each related Specially Serviced Mortgage Loan (the
"Special Servicing Fee"). A "Workout Fee" will in general be payable to the
Special Servicer with respect to each Mortgage Loan that ceases to be a
Specially Serviced Mortgage Loan pursuant to the definition thereof. As to
each such Mortgage Loan, the Workout Fee will be payable out of, and will be
calculated by application of a "Workout Fee Rate" of 1.0% to, each collection
of interest and principal (including scheduled payments, prepayments, Balloon
Payments and payments at maturity) received on such Mortgage Loan for so long
as it remains a Corrected Mortgage Loan. The Workout Fee with respect to any
such Mortgage Loan will cease to be payable if such loan again becomes a
Specially Serviced Mortgage Loan or if the related Mortgaged Property becomes
an REO Property; provided that a new Workout Fee will become payable if and
when such Mortgage Loan again ceases to be a Specially Serviced Mortgage
Loan. If the Special Servicer is terminated (other than for cause) or resigns
with respect to any or all of its servicing duties, it shall retain the right
to receive any and all Workout Fees payable with respect to Mortgage Loans
that ceases to be a Specially Serviced Mortgage Loans during the period that
it had responsibility for servicing Specially Serviced Mortgage Loans and
that had ceased being Specially Serviced Mortgage Loans at the time of such
termination or resignation (and the successor Special Servicer shall not be
entitled to any portion of such Workout Fees), in each case until the Workout
Fee for any such loan ceases to be payable in accordance with the preceding
sentence. A "Liquidation Fee" will be payable to the Special Servicer with
respect to
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each Specially Serviced Mortgage Loan as to which the Servicer obtains a full
or discounted payoff from the related borrower and, except as otherwise
described below, with respect to any Specially Serviced Mortgage Loan or REO
Property as to which the Special Servicer recovered any proceeds
("Liquidation Proceeds" ). As to each such Specially Serviced Mortgage Loan
and REO Property, the Liquidation Fee will be payable from, and will be
calculated by application of a "Liquidation Fee Rate" of 1.0% to, the related
payment or proceeds. Notwithstanding anything to the contrary described
above, no Liquidation Fee will be payable based on, or out of, Liquidation
Proceeds received in connection with the purchase of any Specially Serviced
Mortgage Loan or REO Property by the Servicer, the Special Servicer, any
Mortgage Loan Seller or any holder of Certificates evidencing a majority
interest in the Controlling Class or the purchase of all of the Mortgage
Loans and REO Properties by the Servicer or the Depositor in connection with
the termination of the Trust Fund. If, however, Liquidation Proceeds are
received with respect to any Specially Serviced Mortgage Loan to which the
Special Servicer is properly entitled to a Workout Fee, such Workout Fee will
be payable based on and out of the portion of such Liquidation Proceeds that
constitute principal and/or interest. In addition, the Special Servicer will
be entitled to receive (i) any loan modification, extension and assumption
fees related to the Specially Serviced Mortgage Loans, (ii) Net Default
Interest and (iii) any income earned on deposits in the REO Accounts.
THE HEALTHCARE ADVISER
Election of the Healthcare Adviser. On the Closing Date and as otherwise
provided, the Controlling Class will be entitled to elect a consultant with
respect to the Healthcare Loans and the Healthcare Properties (the
"Healthcare Adviser"), who shall be appointed by the Trust to provide the
Servicer, the Special Servicer and the Controlling Class with advice with
respect to Healthcare Loans and Healthcare Properties. Upon (i) the receipt
by the Trustee of written requests for an election of a Healthcare Adviser
from the Controlling Class, (ii) the resignation or removal of the person
acting as Healthcare Adviser or (iii) a determination by the Trustee that the
Controlling Class has changed, an election of a successor Healthcare Adviser
will be held commencing as soon as practicable thereafter. The Healthcare
Adviser may be removed at any time by the written vote of the Controlling
Class.
The initial Healthcare Adviser will be Survey, LLC, an Alabama limited
liability company, formed in 1995. Survey, LLC is an entity specializing in
providing oversight management services and consulting services to lenders to
long-term care facilities in areas of regulatory compliance and program
effectiveness.
In the event that after the Closing Date an Healthcare Adviser shall have
resigned or been removed and a successor Healthcare Adviser shall not have
been elected, there shall be no Healthcare Adviser; and, notwithstanding
anything to the contrary described herein, the Servicer and the Special
Servicer shall not have any right or obligation to consult with or to seek
and/or receive advice from the Healthcare Adviser, and the provisions of the
Pooling and Servicing Agreement relating thereto shall be of no effect,
during any such period that there is no Healthcare Adviser.
Duties of the Healthcare Adviser. The Trustee, the Servicer and the
Special Servicer will be required to deliver to the Healthcare Adviser all
reports and other information they receive with respect to any Healthcare
Property and Healthcare Loan. The Healthcare Adviser will monitor such
Healthcare Loans and Healthcare Properties and will provide advise to the
Servicer, the Special Servicer and the Controlling Class with respect
thereto. The Special Servicer is required to consult with the Healthcare
Adviser with respect to the preparation of each Asset Status Report
pertaining to any Healthcare Loan or Healthcare Property. The Servicer and
the Special Servicer will be restricted from taking any material actions with
respect to Healthcare Loans and the Healthcare Properties without first
providing notice to, and consulting with, the Healthcare Adviser. The
Healthcare Adviser in turn will recommend to the Servicer or Special
Servicer, as the case may be, what action should be taken with respect to
such Healthcare Loan or Healthcare Property.
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Pursuant to the Pooling and Servicing Agreement, the Healthcare Adviser
will be entitled to receive from the Distribution Account a monthly fee with
respect to each Healthcare Loan (the "Healthcare Adviser Fee"), which
constitutes a portion of the Servicing Fee.
Limitation on Liability of Healthcare Adviser. The Healthcare Adviser will
have no responsibility or liability to the Trust or any Class of
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to the Pooling and Servicing Agreement, or
for errors in judgment; provided that the Healthcare Adviser will not be
protected against any liability which would otherwise be imposed by reason of
willful misconduct, bad faith, fraud or gross negligence in the performance
of duties or by reason of reckless disregard of obligations or duties. By its
acceptance of a Certificate, each Certificateholder confirms its
understanding that the Healthcare Adviser may advise actions that favor the
interests of one or more Classes of the Certificates over other Classes of
the Certificates, and that the Healthcare Adviser may have special
relationships and interests that conflict with those of Holders of some
Classes of the Certificates and, absent willful misconduct, bad faith, fraud
or gross negligence on the part of the Healthcare Adviser, agree to take no
action against the Healthcare Adviser or any of its officers, directors,
employees, principals or agents as a result of such special relationship or
conflict.
SERVICER AND SPECIAL SERVICER PERMITTED TO BUY CERTIFICATES
It is anticipated that Banc One Mortgage Capital Markets LLC, the initial
Servicer and the initial Special Servicer, will purchase the Class J, Class K
and Class L Certificates. Such a purchase by the Servicer or Special Servicer
could cause a conflict relating to the Servicer's or Special Servicer's
duties pursuant to the Pooling and Servicing Agreement and the Servicer's or
Special Servicer's interest as a holder of Certificates, especially to the
extent that certain actions or events have a disproportionate effect on one
or more Classes of Certificates. The Pooling and Servicing Agreement provides
that the Servicer or Special Servicer shall administer the Mortgage Loans in
accordance with the servicing standard set forth therein without regard to
ownership of any Certificate by the Servicer or Special Servicer or any
affiliate thereof.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports
Based on information provided in monthly reports prepared by the Servicer
and the Special Servicer and delivered to the Trustee, the Trustee will
prepare and forward on each Distribution Date to each Certificateholder, the
Depositor, the Servicer, the Special Servicer, each Underwriter, each Rating
Agency, the Healthcare Adviser, the Directing Certificateholder and, if
requested, any potential investors in the Certificates:
1. A statement (a "Distribution Date Statement") setting forth, among
other things: (i) the amount of distributions, if any, made on such
Distribution Date to the holders of each Class of Certificates applied to
reduce the respective Certificate Balances thereof; (ii) the amount of
distributions, if any, ade on such Distribution Date to holders of each
Class of Certificates allocable to (A) the Interest Accrual Amount less
any Excess Prepayment Interest Shortfalls and/or (B) Prepayment Premiums;
(iii) the number of outstanding Mortgage Loans, the aggregate unpaid
principal balance of the Mortgage Loans at the close of business on the
related Due Date; (iv) the number and aggregate unpaid principal balance
of Mortgage Loans (A) delinquent one Collection Period, (B) delinquent two
Collection Periods, (C) delinquent three or more Collection Periods, (D)
that are Specially Serviced Mortgage Loans that are not delinquent, or (E)
as to which foreclosure proceedings have been commenced; (v) with respect
to any Mortgage Loan as to which the related Mortgaged Property became a
REO Property during the preceding calendar month, the Stated Principal
Balance and unpaid principal balance of such Mortgage Loan as of the date
such Mortgaged Property became an REO Property; (vi) as to any Mortgage
Loan repurchased by its respective Mortgage Loan Seller or otherwise
liquidated or disposed of during the related Collection Period, the loan
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number thereof and the amount of proceeds of any repurchase of a Mortgage
Loan, Liquidation Proceeds and/or other amounts, if any, received thereon
during the related Collection Period and the portion thereof included in
the Available Funds for such Distribution Date; (vii) with respect to any
REO Property included in the Trust Fund as of the close of business on the
related Due Date, the loan number of the related Mortgage Loan, the value
of such REO Property based on the most recent appraisal or valuation and
the amount of any other income collected with respect to any REO Property
net of related expenses and other amounts, if any, received on such REO
Property during the related Collection Period and the portion thereof
included in the Available Funds for such Distribution Date; (viii) with
respect to any REO Property sold or otherwise disposed of during the
related Collection Period, (A) the loan number of the related Mortgage
Loan and the amount of sale proceeds and other amounts, if any, received
in respect of such REO Property during the related Collection Period and
the portion thereof included in the Available Funds for such Distribution
Date and (B) the date of the related determination by the Special Servicer
that it has recovered all payments which it expects to be finally
recoverable (the "Final Recovery Determination"); (ix) the aggregate
Certificate Balance of each Class of Certificates before and after giving
effect to the distributions made on such Distribution Date, separately
identifying any reduction in the aggregate Certificate Balance of each
such Class due to Realized Losses and/or Trust Fund expenses; (x) the
aggregate amount of Principal Prepayments made during the related
Collection Period and the aggregate amount of any Excess Prepayment
Interest Shortfalls for such Distribution Date; (xi) the Pass-Through Rate
applicable to each Class of Certificates for such Distribution Date; (xii)
the aggregate amount of the Master Servicing Fee, the Servicing Fee,
Special Servicing Fee, Workout Fee, Liquidation Fee and any other
servicing or special servicing compensation retained by or paid to the
Servicer, the Special Servicer or the Healthcare Adviser during the
related Collection Period; (xiii) the amount of Realized Losses, Trust
Fund expenses and Interest Shortfalls, if any, incurred with respect to
the Mortgage Loans during the related Collection Period and in the
aggregate for all prior Collection Periods (except to the extent
reimbursed or paid); (xiv) the aggregate amount of Property Advances and
P&I Advances outstanding which have been made by the Servicer, the Special
Servicer, the Trustee and the Fiscal Agent; (xv) the amount of any
Appraisal Reduction Amounts allocated during the related Collection Period
on a loan-by-loan basis and the total Appraisal Reduction Amounts as of
such Distribution Date on a loan-by-loan basis. In the case of information
furnished pursuant to subclauses (i), (ii) and (ix) above, the amounts
shall be expressed as a dollar amount in the aggregate for all
Certificates of each applicable Class and per single Certificate of a
specified minimum denomination.
2. A report containing information regarding the Mortgage Loans as of the
end of the related Collection Period, which report shall contain
substantially the categories of information regarding the Mortgage Loans
set forth in this Prospectus Supplement in the tables under the caption
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans" (calculated, where applicable, on the basis of the most
recent relevant information provided by the borrowers to the Servicer or
the Special Servicer and by the Servicer or the Special Servicer, as the
case may be, to the Trustee) and such information shall be presented in a
tabular format substantially similar to the format utilized in this
Prospectus Supplement under such caption and a loan-by-loan listing (in
descending balance order) showing loan number, property type, location,
unpaid principal balance, Mortgage Rate, paid through date, maturity date,
net interest portion of the Monthly Payment, principal portion of the
Monthly Payment and any Prepayment Premiums received. Such loan-by-loan
listing will be made available electronically; provided, however, the
Trustee will provide Certificateholder with a written copy of such report
upon request.
Certain information made available in the Distribution Date Statements
referred to in item (1) above may be obtained by calling LaSalle National
Bank's ASAP System at (312) 904-2200 and requesting statement number 321.
Additionally, certain information regarding the Mortgage
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Loans will be made accessible at the website maintained by LaSalle National
Bank at www.lnbabs.com or their electronic bulletin board service at
714-282-3990 or such other mechanism as the Trustee may have in place from
time-to-time.
After all of the Certificates have been sold by the Underwriters, certain
information will be made accessible at the website maintained by the Servicer
at www.bomcm.com.
Servicer Reports
The Servicer is required to deliver to the Trustee prior to each
Distribution Date, and the Trustee is to deliver to each Certificateholder,
the Depositor, each Underwriter, each Rating Agency, the Healthcare Adviser,
the Directing Certificateholder and, if requested, any potential investor in
the Certificates, on each Distribution Date, the following six reports:
(a) A "Comparative Financial Status Report" setting forth, to the extent
such information is provided by the related borrowers, among other things,
the occupancy, revenue, underwritten cash flow and DSCR for the Mortgage
Loans as of the current Due Date for each of the following three periods;
(i) the most current available year-to-date, (ii) the previous two full
fiscal years (if made available to the Servicer), and (iii) the "base
year" (representing the original underwriting information used as of the
Cut-Off Date).
(b) A "Delinquent Loan Status Report" setting forth, among other things,
those Mortgage Loans which, as of the close of business on the Due Date
immediately preceding the preparation of such report, were delinquent one
Collection Period, delinquent two Collection Periods, delinquent three or
more Collection Periods, current but specially serviced, or in foreclosure
but not REO Property.
(c) An "Historical Loan Modification Report" setting forth, among other
things, those Mortgage Loans which, as of the close of business on the Due
Date immediately preceding the preparation of such report, have been
modified pursuant to the Pooling and Servicing Agreement (i) during the
related Collection Period and (ii) since the Cut-Off Date, showing the
original and the revised terms thereof.
(d) An "Historical Loss Estimate Report" setting forth, among other
things, as of the close of business on the Due Date immediately preceding
the preparation of such report, (i) the aggregate amount of liquidation
proceeds and liquidation expenses, both for the current period and
historically, and (ii) the amount of Realized Losses occurring during the
related Collection Period, set forth on a Mortgage Loan-by-Mortgage Loan
basis.
(e) An "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust Fund as of the
close of business on the Due Date immediately preceding the preparation of
such report, (i) the acquisition date of such REO Property, (ii) the
amount of income collected with respect to any REO Property net of related
expenses and other amounts, if any, received on such REO Property during
the related Collection Period and (iii) the value of the REO Property
based on the most recent appraisal or other valuation thereof available to
the Servicer as of such date of determination (including any prepared
internally by the Special Servicer).
(f) A "Watch List" setting forth, among other things, any Mortgage Loan
that is in jeopardy of becoming a Specially Serviced Mortgage Loan.
Commencing in May 1998, subject to the receipt of necessary information
from any subservicer, such loan-by-loan listing will be made available
electronically in the form of the standard CSSA loan file and CSSA property
file; provided, however, the Trustee will provide Certificateholders with a
written copy of such report upon request. The information that pertains to
Specially Serviced Mortgage Loans and REO Properties reflected in such
reports shall be based solely upon the reports delivered by the Special
Servicer to the Servicer at least one business day prior to the Servicer
Remittance Date. Absent manifest error, none of the Servicer, the Special
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Servicer or the Trustee shall be responsible for the accuracy or completeness
of any information supplied to it by a borrower or third party that is
included in any reports, statements, materials or information prepared or
provided by the Servicer, the Special Servicer or the Trustee, as applicable.
The Trustee, the Servicer and the Special Servicer will be indemnified by
the Trust Fund against any loss, liability or expense incurred in connection
with any legal action relating to any statement or omission based upon
information supplied by a borrower under a Mortgage Loan.
The Servicer is also required to deliver to the Trustee the following
materials:
(a) Annually, on or before June 30 of each year, commencing with June,
1998, with respect to each Mortgaged Property and REO Property, an
"Operating Statement Analysis" together with copies of the operating
statements and rent rolls (but only to the extent the related borrower is
required by the Mortgage to deliver, or otherwise agrees to provide such
information) for such Mortgaged Property or REO Property as of the end of
the preceding calendar year. The Servicer (or the Special Servicer in the
case of Specially Serviced Mortgage Loans and REO Properties) is required
to use its best reasonable efforts to obtain said annual operating
statements and rent rolls.
(b) Within thirty days of receipt by the Servicer (or within ten days of
receipt by the Special Servicer with respect to any Specially Serviced
Mortgage Loan or REO Property) of annual operating statements, if any,
with respect to any Mortgaged Property or REO Property, an "Underwritten
Cash Flow Adjustment Worksheet" for such Mortgaged Property (with the
annual operating statements attached thereto as an exhibit), presenting
the computations made in accordance with the methodology described in the
Pooling and Servicing Agreement to "normalize" the full year net operating
income and debt service coverage numbers used by the Servicer in the other
reports referenced above.
The Trustee is to deliver a copy of each Operating Statement Analysis
report and Underwritten Cash Flow Adjustment Worksheet that it receives from
the Servicer to the Depositor, each Underwriter, the Healthcare Adviser, the
Directing Certificateholder and each Rating Agency promptly after its receipt
thereof. Upon request, the Trustee will make such reports available to the
Certificateholders and the Special Servicer. Any Certificateholder and any
potential investor in the Certificates may obtain a copy of any Underwritten
Cash Flow Adjustment Worksheet for a Mortgaged Property or REO Property in
the possession of the Trustee upon request.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report
summarizing on an annual basis (if appropriate) certain items provided to
Certificateholders in the monthly Distribution Date Statements and such other
information as may be reasonably required to enable such Certificateholders
to prepare their federal income tax returns. Such information is to include
the amount of original issue discount accrued on each Class of Certificate
held by persons other than holders exempted from the reporting requirements
and information regarding the expenses of the Trust Fund.
Other Information
The Pooling and Servicing Agreement requires that the Trustee make
available at its offices, during normal business hours, for review by any
Holder of a Certificate, the Depositor, the Special Servicer, the Servicer,
any Rating Agency, any potential investor in the Certificates or any other
Person to whom the Depositor believes such disclosure is appropriate,
originals or copies of, among other things, the following items (except to
the extent not permitted by applicable law or under any of the Mortgage Loan
documents): (i) the Pooling and Servicing Agreement and any amendments
thereto, (ii) all Distribution Date Statements delivered to holders of the
relevant Class of Offered Certificates since the Closing Date, (iii) all
annual officers' certificates and accountants' reports delivered by the
Servicer and Special Servicer to the Trustee since the Closing Date regarding
compliance with the relevant agreements, (iv) the most recent property
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inspection report prepared by or on behalf of the Servicer or the Special
Servicer with respect to each Mortgaged Property and delivered to the
Trustee, (v) the most recent annual operating statements, rent rolls (to the
extent such rent rolls have been made available by the related borrower) and
retail "sales information", if any, collected by or on behalf of the Servicer
or the Special Servicer with respect to each Mortgaged Property and delivered
to the Trustee, (vi) any and all modifications, waivers and amendments of the
terms of a Mortgage Loan entered into by the Servicer and/or the Special
Servicer and delivered to the Trustee, and (vii) any and all officers'
certificates and other evidence delivered to or by the Trustee to support the
Servicer's, the Trustee's or the Fiscal Agent's, as the case may be,
determination that any Advance, if made, would not be recoverable. Copies of
any and all of the foregoing items will be available from the Trustee upon
request; however, the Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such
copies.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans in California (approximately 16.4% of the Mortgage Loans by
Allocated Loan Amount) and New York (approximately 10.2% of the Mortgage
Loans by Allocated Loan Amount). The summaries do not purport to be complete
and are qualified in their entirety by reference to the applicable federal
and state laws governing the Mortgage Loans.
California, New York and various other states have imposed statutory
prohibitions or limitations that limit the remedies of a mortgagee under a
mortgage or a beneficiary under a deed of trust. Generally all of the
Mortgage Loans are nonrecourse loans as to which, in the event of default by
a borrower, recourse may be had only against the specific property pledged to
secure the Mortgage Loan and not against the borrower's other assets. Even if
recourse is available pursuant to the terms of the Mortgage Loan, certain
states have adopted statutes which impose prohibitions against or limitations
on such recourse. The limitations described below and similar or other
restrictions in other jurisdictions where Mortgaged Properties are located
may restrict the ability of the Servicer or the Special Servicer, as
applicable, to realize on the Mortgage Loans and may adversely affect the
amount and timing of receipts on the Mortgage Loans.
California statutes limit the right of the beneficiary to obtain a
deficiency judgment against the trustor (i.e., obligor) following a
non-judicial foreclosure sale under a deed of trust. A deficiency judgment is
a personal judgment against obligor in most cases equal to the difference
between the amount due to the beneficiary and the fair market value of
collateral. No deficiency judgment is permitted under California law
following a nonjudicial sale under the power of a provision in a deed of
trust. Other California statutes require the beneficiary to exhaust the
security afforded under the deed of trust by foreclosure in an attempt to
satisfy the full debt before bringing a personal action (if otherwise
permitted) against the obligor for recovery of the debt except in certain
cases involving environmentally impaired real property. California case law
has held that acts such as an offset of an unpledged account of the
application of rents from secured property prior to foreclosure, under some
circumstances, constitute violations of such statutes. Violations of such
statutes may result in the loss of some or all of the security under the
loan. Finally, other statutory provisions in California limit any deficiency
judgment (if otherwise permitted) against the former trustor following a
judicial sale to the excess of the outstanding debt over the greater of (i)
the fair market value of the property at the time of the public sale or (ii)
the amount of the winning bid in foreclosure, and give the borrower a
one-year period within which to redeem the property. California statutes also
provide priority to certain tax liens over the lien of previously recorded
deeds of trust.
Under New York law, while a foreclosure may proceed either judicially or
non-judicially, nonjudicial foreclosures are virtually unused today. Under
New York law, upon default of a mortgage, a mortgagee is generally presented
with the choice of either proceeding in equity to foreclose upon the
mortgaged property or to proceed at law and sue on the note. New York law
does not require that the mortgagee bring a foreclosure action before being
entitled to sue on the
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note. However, once having begun a foreclosure action or an action to sue on
the note or guaranty, a mortgagee is generally not permitted to initiate the
other without leave of court. New York does not restrict a mortgagee from
seeking a deficiency judgment. In order to obtain a deficiency judgment, a
series of procedural and substantive requirements must be satisfied. In New
York liens for unpaid real estate taxes take priority over the lien of a
previously recorded mortgage.
In some states, foreclosure may result in automatic termination of
subordinate leases in the absence of either (i) an agreement to the contrary
between the foreclosing lender and the tenant or (ii) circumstances in which
it would be equitable to permit such termination. In addition, in all states,
real property taxes have priority over the lien of previously recorded
mortgages or deeds of trust and in some states and under certain
circumstances, mechanics' liens and materialmen's liens may also take
priority over the lien of previously recorded mortgages or deeds of trust.
Foreclosure under either a mortgage or a deed of trust or the sale by the
referee or other designated official or by trustee is often a public sale.
However, because of the difficulty a potential buyer at the sale might have
in determining the exact status of title to the property subject to the lien
of the mortgage or deed of trust and the redemption rights that may exist,
and because the physical condition and financial performance of the property
may have deteriorated during foreclosure proceedings and/or for a variety of
other reasons, a third party may be unwilling to purchase the property at
foreclosure sale. Some states require that the lender disclose to potential
bidders at a trustee's sale all known facts materially affecting the value of
the property. Such disclosure may have an adverse effect on the trustee's or
mortgagee's ability to sell the property or upon the sale price.
USE OF PROCEEDS
The net proceeds from the sale of Offered Certificates will be used by the
Depositor to pay part of the purchase price of the Mortgage Loans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary and the discussion in the Prospectus under the
heading "Certain Federal Income Tax Consequences -- Federal Income Tax
Consequences for REMIC Certificates" are a general discussion of the
anticipated material federal income tax consequences of the purchase,
ownership and disposition of the Offered Certificates and constitute the
opinion of Cadwalader, Wickersham & Taft as to the accuracy of matters
discussed herein and therein. The summary below and such discussion in the
Prospectus do not purport to address all federal income tax consequences that
may be applicable to particular categories of investors, some of which may be
subject to special rules. In addition, such summary and such discussion do
not address state, local or foreign tax issues with respect to the
acquisition, ownership or disposition of the Offered Certificates. The
authorities on which such summary and such discussion are based are subject
to change or differing interpretations, and any such change or interpretation
could apply retroactively. Such summary and such discussion reflect the
applicable provisions of the Code, as well as regulations (the "REMIC
Regulations") promulgated by the U.S. Department of the Treasury. Investors
should consult their own tax advisors in determining the federal, state,
local, foreign or any other tax consequences to them of the purchase,
ownership and disposition of Certificates.
Elections will be made to treat the Trust Fund, exclusive of the Reserve
Accounts, the Lock Box Accounts, the Excess Interest and the Default Interest
in respect of the Mortgage Loans (such portion of the Trust Fund, the "Trust
REMICs"), as two separate REMICs (the "Upper-Tier REMIC" and the "Lower-Tier
REMIC," respectively) within the meaning of Code Section 860D. The Reserve
Accounts and the Lock Box Accounts will be beneficially owned by the
respective borrowers for
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federal income tax purposes. The Lower-Tier REMIC will hold the Mortgage
Loans (exclusive of the Excess Interest and the Default Interest), proceeds
therefrom, the Collection Account, the Distribution Account and any REO
Property, and will issue (i) certain uncertificated classes of regular
interests (the "Lower-Tier Regular Interests") to the Upper-Tier REMIC and
(ii) the Class LR Certificates, which will represent the sole class of
residual interests in the Lower-Tier REMIC. The Upper-Tier REMIC will hold
the Lower-Tier Regular Interests and the Upper-Tier Distribution Account in
which distributions thereon will be deposited, and will issue the Class X,
Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K and Class L Certificates (the "Regular
Certificates") as classes of regular interests and the Class R Certificates
as the sole class of residual interests in the Upper-Tier REMIC.
Qualification as a REMIC requires ongoing compliance with certain conditions.
Assuming (i) the making of appropriate elections, (ii) compliance with the
Pooling and Servicing Agreement and (iii) compliance with any changes in the
law, including any amendments to the Code or applicable temporary or final
regulations of the United States Department of the Treasury ("Treasury
Regulations") thereunder, in the opinion of Cadwalader, Wickersham & Taft,
the Trust Fund (exclusive of Excess Interest and Default Interest) will
qualify as two separate REMICs. References in this discussion to the "REMIC"
will, unless the context dictates otherwise, refer to each of the Upper-Tier
REMIC and the Lower-Tier REMIC. The Class Q-1 and Class Q-2 Certificates will
represent pro rata undivided beneficial interests in the portion of the Trust
Fund consisting of Excess Interest and Default Interest (subject to the
obligation to pay interest on Advances) in respect of the Mortgage Loans,
respectively, and such portions will be treated as a grantor trust for
federal income tax purposes.
The Offered Certificates will be treated as "loans . . . secured by an
interest in real property which is . . . residential real property" or "loans
secured by an interest in . . . health . . . institutions or facilities,
including structures designed or used primarily for residential purposes for
. . . persons under care," within the meaning of Section 7701(a)(19)(C) of
the Code, for domestic building and loan associations (but only to the extent
of the allocable portion of the Mortgage Loans secured by Multifamily
Properties and Mobile Home Properties, or Healthcare Properties,
respectively). As of the Cut-Off Date, Mortgage Loans secured by Multifamily
Properties, Mobile Home Properties and Healthcare Properties represent
approximately 22.5%, 2.1% and 11.3%, respectively, of the Mortgage Loans by
Initial Pool Balance.
The Offered Certificates will be treated as "real estate assets," within
the meaning of Section 856(c)(4)(A) of the Code, for real estate investment
trusts and interest thereon will be treated as "interest on mortgages on real
property," within the meaning of Section 856(c)(3)(B) of the Code, to the
extent described in the Prospectus under the heading "Certain Federal Income
Tax Consequences -- Federal Income Tax Consequences for REMIC Certificates
- --Status of Certificates." Mortgage Loans which have been defeased with U.S.
Treasury obligations will not qualify for the foregoing treatments. The
Offered Certificates will constitute "qualified mortgages" for a REMIC,
within the meaning of Section 860G(a)(3) of the Code, and "permitted assets"
for a financial asset securitization investment trust, within the meaning of
Section 860L(c) of the Code.
The Offered Certificates generally will be treated as newly originated
debt instruments for federal income tax purposes. Beneficial owners of the
Offered Certificates will be required to report income on such regular
interests in accordance with the accrual method of accounting. It is
anticipated that the Class [ ], Class [ ], Class [ ], Class [ ],
Class [ ], Class [ ], Class [ ], Class [ ], Class [ ], Class [ ]
and Class [ ] Certificates will [not] be issued with original issue
discount for federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Federal Income Tax Consequences for REMIC Certificates"
"--Taxation of Regular Certificates -- Premium" in the Prospectus.
Although unclear for federal income tax purposes, it is anticipated that
the Class X Certificates will be considered to be issued with original issue
discount in an amount equal to the excess of all distributions of interest
expected to be received thereon (assuming the Weighted Average Net Mortgage
Pass-Through Rate changes in accordance with the Prepayment Assump-
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tion (as described below)), over their respective issue prices (including
accrued interest, if any). Any "negative" amounts of original issue discount
on the Class X Certificates attributable to rapid prepayments with respect to
the Mortgage Loans will not be deductible currently, but may be offset
against future positive accruals of original issue discount, if any. Finally,
a holder of a Class X Certificate may be entitled to a loss deduction to the
extent it becomes certain that such holder will not recover a portion of its
basis in such Certificate, assuming no further prepayments. In the
alternative, it is possible that rules similar to the "noncontingent bond
method" of the OID Regulations, as amended on June 12, 1996, may be
promulgated with respect to the Certificates. See "Certain Federal Income Tax
Consequences -- Federal Income Tax Consequences for REMIC Certificates" and
"--Taxation of Regular Certificates -- Original Issue Discount" in the
Prospectus. Under the noncontingent bond method, if the interest payable for
any period is greater or less than the amount projected, the amount of income
included for that period would be either increased or decreased accordingly.
Any reduction in the income accrual for a period below zero (a "Negative
Adjustment") would be treated by a Certificateholder as ordinary loss to the
extent of prior income accruals and may be carried forward to offset future
interest accruals. At maturity, any remaining Negative Adjustment would be
treated as a loss on retirement of the Certificate. The legislative history
of relevant Code provisions indicates, however, that negative amount of
original issue discount on an instrument such as a REMIC regular interest may
not give rise to taxable losses in any accrual period prior to the
instrument's disposition or retirement. Thus, it is not clear whether any
losses resulting from a Negative Adjustment would be recognized currently or
be carried forward until disposition or retirement of the debt obligation.
For purposes of accruing original issue discount, determining whether such
original issue discount is de minimis and amortizing any premium, the
Prepayment Assumption will be 0% CPR, with all ARD Loans prepaying on their
related Anticipated Repayment Dates. See "Prepayment and Yield Considerations
- -- Yield on the Class X Certificates" herein. No representation is made as to
the rate, if any, at which the Mortgage Loans will prepay.
Although not free from doubt, it is anticipated that any Prepayment
Premiums will be treated as ordinary income to the extent allocable to
beneficial owners of the Offered Certificates as such amounts become due to
such beneficial owners.
For a discussion of the tax consequences of the ownership of Offered
Certificates by any person who is not a citizen or resident of the United
States, a corporation or partnership or other entity created or organized in
or under the laws of the United States or any political subdivision thereof
or is a foreign estate or trust, see "Certain Federal Income Tax Consequences
- -- Federal Income Tax Consequences for REMIC Certificates" and "--Taxation of
Certain Foreign Investors -- Regular Certificates" in the Prospectus.
ERISA CONSIDERATIONS
The purchase by or transfer to an employee benefit plan or other
retirement arrangement, including an individual retirement account or a Keogh
plan, which is subject to Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or a
governmental plan (as defined in Section 3(32) of ERISA) that is subject to
any federal, state or local law ("Similar Law") which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code (each, a
"Plan"), or a collective investment fund in which such Plans are invested, an
insurance company using the assets of separate accounts or general accounts
which include assets of Plans (or which are deemed pursuant to ERISA or any
Similar Law to include assets of Plans) or other Persons acting on behalf of
any such Plan or using the assets of any such Plan to acquire the
Subordinated Offered Certificates is restricted. See "Description of the
Offered Certificates -- Transfer Restrictions" herein. Accordingly, except as
specifically referenced herein, the following discussion does not purport to
discuss the considerations under ERISA, Section 4975 of the Code or Similar
Law with respect to the purchase, holding or disposition of the Subordinated
Offered Certificates and for purposes of the following discussion all
references to the Offered Certificates are deemed to exclude the Subordinated
Offered Certificates.
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As described in the Prospectus under "Certain ERISA Considerations,"
ERISA and the Code impose certain duties and restrictions on Plans and
certain persons who perform services for Plans. For example, unless exempted,
investment by a Plan in the Offered Certificates may constitute or give rise
to a prohibited transaction under ERISA or the Code. There are certain
exemptions issued by the United States Department of Labor (the "Department")
that may be applicable to an investment by a Plan in the Offered
Certificates. The Department has granted to each of the Co-Lead Managers an
administrative exemption (Deutsche Morgan Grenfell Inc. as Department
exemption application number E-0003 (the "DMG Exemption") and Morgan Stanley
& Co. Incorporated as Prohibited Transaction Exemption ("PTE") 90-24, as
amended by PTE 92-34, (the "MSCI Exemption" and, collectively with the DMG
Exemption, the "Exemption") for certain mortgage-backed and asset backed
certificates underwritten in whole or in part by the Co-Lead Managers. The
Exemption might be applicable to the initial purchase, the holding, and the
subsequent resale by a Plan of certain certificates, such as the Offered
Certificates, underwritten by the Co-Lead Managers, representing interests in
pass-through trusts that consist of certain receivables, loans and other
obligations, provided that the conditions and requirements of the Exemption
are satisfied. The loans described in the Exemption include mortgage loans
such as the Mortgage Loans. However, it should be noted that in issuing the
Exemption, the Department may not have considered interests in pools of the
exact nature as some of the Offered Certificates.
Among the conditions that must be satisfied for the Exemption to apply to
the acquisition, holding and resale of the Offered Certificates are the
following:
(1) The acquisition of Offered Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as favorable to
the Plan as they would be in an arm's length transaction with an unrelated
party;
(2) The rights and interests evidenced by Offered Certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by the
other Certificates of the Trust Fund;
(3) The Offered Certificates acquired by the Plan have received a rating
at the time of such acquisition that is one of the three highest generic
rating categories from any of Standard & Poor's Rating Services ("S&P"),
Moody's, Fitch or Duff & Phelps Credit Rating Co. ("DCR");
(4) The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below);
(5) The sum of all payments made to and retained by the Co-Lead Managers
in connection with the distribution of Offered Certificates represents not
more than reasonable compensation for underwriting the Certificates. The sum
of all payments made to and retained by the Depositor pursuant to the
assignment of the Mortgage Loans to the Trust Fund represents not more than
the fair market value of such Mortgage Loans. The sum of all payments made to
and retained by the Servicer and any other servicer represents not more than
reasonable compensation for such person's services under the Pooling and
Servicing Agreement and reimbursement of such person's reasonable expenses in
connection therewith; and
(6) The Plan investing in the certificates is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.
The Trust Fund must also meet the following requirements:
(a) the corpus of the Trust Fund must consist solely of assets of the type
that have been included in other investment pools;
(b) certificates in such other investment pools must have been rated in
one of the three highest rating categories of S&P, Moody's, Fitch or DCR for
at least one year prior to the Plan's acquisition of the Offered Certificates
pursuant to the Exemption; and
(c) certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year prior
to any Plan's acquisition of the Offered Certificates pursuant to the
Exemption.
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If all of the conditions of the Exemption are met, whether or not a
Plan's assets would be deemed to include an ownership interest in the
Mortgage Loans in the Mortgage Pool, the acquisition, holding and resale of
the Offered Certificates by Plans would be exempt from the prohibited
transaction provisions of ERISA and the Code.
Moreover, the Exemption can provide relief from certain
self-dealing/conflict of interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables, loans or
obligations held in the trust, provided that, among other requirements, (a)
in the case of an acquisition in connection with the initial issuance of
certificates, at least fifty percent of each class of certificates in which
Plans have invested is acquired by persons independent of the Restricted
Group (as defined below) and at least fifty percent of the aggregate interest
in the trust is acquired by persons independent of the Restricted Group (as
defined below); (b) such fiduciary (or its affiliate) is an obligor with
respect to five percent or less of the fair market value of the obligations
contained in the trust; (c) the Plan's investment in certificates of any
class does not exceed twenty-five percent of all of the certificates of that
class outstanding at the time of the acquisitions; and (d) immediately after
the acquisition no more than twenty-five percent of the assets of the Plan
with respect to which such person is a fiduciary are invested in certificates
representing an interest in one or more trusts containing assets sold or
serviced by the same entity.
The Exemption does not apply to the purchasing or holding of Offered
Certificates by Plans sponsored by the Depositor, the Underwriters, the
Trustee, the Servicer, any obligor with respect to Mortgage Loans included in
the Trust Fund constituting more than five percent of the aggregate
unamortized principal balance of the assets in the Trust Fund, or any
affiliate of such parties (the "Restricted Group").
The Co-Lead Managers believe that the conditions to the applicability of
their respective Exemption will generally be met with respect to the Offered
Certificates, other than possibly those conditions which are dependent on
facts unknown to the Co-Lead Managers or which it cannot control, such as
those relating to the circumstances of the Plan purchaser or the Plan
fiduciary making the decision to purchase any such Certificates. However,
before purchasing an Offered Certificate, a fiduciary of a Plan should make
its own determination as to the availability of the exemptive relief provided
by the Exemption or the availability of any other prohibited transaction
exemptions, and whether the conditions of any such exemption will be
applicable to the Offered Certificates. As noted above, the Department, in
granting the Exemption may not have considered interests in pools of the
exact nature as some of the Offered Certificates. A fiduciary of a Plan that
is a governmental plan should make its own determination as to the need for
and the availability of any exemptive relief under any Similar Law. See
"Description of the Offered Certificates -- Transfer Restrictions" herein.
Any fiduciary of a Plan considering whether to purchase an Offered
Certificate should also carefully review with its own legal advisors the
applicability of the fiduciary duty and prohibited transaction provisions of
ERISA and the Code to such investment. See "Certain ERISA Considerations" in
the Prospectus.
BECAUSE THE SUBORDINATED OFFERED CERTIFICATES ARE SUBORDINATE TO ONE OR
MORE CLASSES OF CERTIFICATES, THE PURCHASE AND HOLDING OF THE SUBORDINATED
OFFERED CERTIFICATES BY OR ON BEHALF OF A PLAN MAY RESULT IN "PROHIBITED
TRANSACTIONS" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW. ACCORDINGLY, EACH PROSPECTIVE TRANSFEREE OF A SUBORDINATED
OFFERED CERTIFICATE THAT IS A DEFINITIVE CERTIFICATE WILL BE REQUIRED TO (A)
DELIVER TO THE DEPOSITOR, THE CERTIFICATE REGISTRAR AND THE TRUSTEE A
REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM SET FORTH AS AN EXHIBIT TO
THE POOLING AND SERVICING AGREEMENT STATING THAT SUCH TRANSFEREE IS NOT A
PLAN OR A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, OTHER
THAN AN INSURANCE
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<PAGE>
COMPANY INVESTING THE ASSETS OF ITS GENERAL ACCOUNT UNDER CIRCUMSTANCES
WHEREBY THE PURCHASE AND SUBSEQUENT HOLDING OF THE OFFERED CERTIFICATE WOULD
BE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND THE CODE
UNDER SECTIONS I AND III OF PTE 95-60, OR (B) PROVIDE (I) AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR THAT
THE PURCHASE OF THE SUBORDINATED OFFERED CERTIFICATE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
PROHIBITED TRANSACTION RESTRICTIONS OF ERISA, THE CODE OR ANY SIMILAR LAW AND
WILL NOT SUBJECT THE DEPOSITOR, THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, OR THE FISCAL AGENT TO ANY OBLIGATION IN ADDITION TO THOSE
UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT AND (II) SUCH OTHER
OPINIONS OF COUNSEL, OFFICERS' CERTIFICATES AND AGREEMENTS AS THE CERTIFICATE
REGISTRAR MAY REQUIRE IN CONNECTION WITH SUCH TRANSFER. THE PURCHASER OR
TRANSFEREE OF ANY INTEREST IN A SUBORDINATED OFFERED CERTIFICATE THAT IS NOT
A DEFINITIVE CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSE (A) ABOVE. THE SUBORDINATED OFFERED CERTIFICATES WILL
CONTAIN A LEGEND DESCRIBING SUCH RESTRICTIONS ON TRANSFER AND THE POOLING AND
SERVICING AGREEMENT WILL PROVIDE THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN
VIOLATION OF THESE TRANSFER RESTRICTIONS WILL BE NULL AND VOID AB INITIO.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Depositor or the Underwriters that this investment
meets all relevant legal requirements with respect to investments by Plans
generally or any particular Plan, or that this investment is appropriate for
Plans generally or any particular Plan.
LEGAL INVESTMENT
The Certificates will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
No representation is made as to the proper characterization of the Offered
Certificates for legal investment purposes, financial institution regulatory
purposes, or other purposes, or as to the ability of particular investors to
purchase the Offered Certificates under applicable legal investment or other
restrictions. These uncertainties may adversely affect the liquidity of the
Offered Certificates. Accordingly, all institutions whose investment
activities are subject to legal investment laws and regulations, regulatory
capital requirements or review by regulatory authorities should consult with
their own legal advisors in determining whether and to what extent the
Offered Certificates constitute a legal investment or are subject to
investment, capital or other restrictions.
See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting
Agreement, dated March [ ], 1998 (the "Underwriting Agreement"), Deutsche
Morgan Grenfell Inc. ("DMG"), Morgan Stanley & Co. Incorporated ("MSC") and
Llama Company, L.P. ("LCLP") have agreed to purchase and the Depositor has
agreed to sell to the Underwriters the Offered Certificates. It is expected
that delivery of the Offered Certificates will be made only in book-entry
form through the Same Day Funds Settlement System of DTC on or about March
[ ], 1998, against payment therefor in immediately available funds. DMG and
MSC will act as co-lead managers (each, a "Co-Lead Manager") of the offering
of the Offered Certificates.
S-101
<PAGE>
In the Underwriting Agreement, each Underwriters have agreed to purchase
Certificates as set forth below.
ALLOCATION TABLE
<TABLE>
<CAPTION>
UNDERWRITER CLASS X CLASS A-1 CLASS A-2 CLASS B
- --------------------------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Deutsche Morgan Grenfell Inc. .... % % % %
Morgan Stanley & Co. Incorporated % % % %
Llama Company, L.P. .............. % % % %
----------- ------------- ------------- -----------
Total ............................ 100% 100% 100% 100%
=========== ============= ============= ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
UNDERWRITER CLASS C CLASS D CLASS E
- --------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Deutsche Morgan Grenfell Inc. .... % % %
Morgan Stanley & Co. Incorporated % % %
Llama Company, L.P. .............. % % %
----------- ----------- -----------
Total ............................ 100% 100% 100%
=========== =========== ===========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Offered
Certificates if any are purchased. In the event of default by either
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitment of the nondefaulting Underwriters may
be increased or the underwriting may be terminated.
The Underwriting Agreement provides that the obligation of each
Underwriter to pay for and accept delivery of its Certificates is subject to,
among other things, the receipt of certain legal opinions and to the
conditions, among others, that no stop order suspending the effectiveness of
the Depositor's Registration Statement shall be in effect, and that no
proceedings for such purpose shall be pending before or threatened by the
Securities and Exchange Commission.
The distribution of the Offered Certificates by the Underwriters may be
effected from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds
to the Depositor from the sale of the Offered Certificates, before deducting
expenses payable by the Depositor, will be approximately [ ]% of the
aggregate Certificate Balance of the Offered Certificates, plus accrued
interest. Each Underwriter may effect such transactions by selling its
Certificates to or through dealers, and such dealers may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Underwriter for whom they act as agent. In connection with the sale of the
Offered Certificates, each Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting compensation.
Each Underwriter and any dealers that participate with such Underwriter in
the distribution of the Offered Certificates may be deemed to be underwriters
and any profit on the resale of the Offered Certificates positioned by them
may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933, as amended.
Deutsche Morgan Grenfell Inc. is an affiliate of each of GACC and the
Depositor. Morgan Stanley & Co. Incorporated is an affiliate of MSMC. Llama
Company, L.P. is an affiliate of BCMC.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriters, and that under limited circumstances the Underwriters will
indemnify the Depositor, against certain civil liabilities under the
Securities Act of 1933, as amended, or contribute to payments to be made in
respect thereof. ContiFinancial Services Corporation and SouthTrust
Securities, Inc. are members of the selling group. ContiFinancial Services
Corporation is an affiliate of ContiTrade, a Mortgage Loan Seller, and
SouthTrust Securities, Inc. is an affiliate of SCMC, the subservicer.
There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will continue. The
primary source of ongoing information available to investors concerning the
Offered Certificates will be the Trustee Reports discussed herein under
"Description of the Certificates -- Reports to Certificateholders; Certain
Available Information." Except as described herein under "Description of the
Certificates -- Reports to Certificateholders; Certain Available
Information", there can be no assurance that any additional information
regarding the Offered Certificates will be available through any other
source. In addition, the Depositor is not aware of any source through which
price information about the Offered Certificates will be generally available
on an ongoing basis. The limited nature of such information regarding the
Offered Certificates may adversely affect the liquidity of the Offered
Certificates, even if a secondary market for the Offered Certificates becomes
available.
S-102
<PAGE>
LEGAL MATTERS
The validity of the Certificates will be passed upon for the Depositor by
Cadwalader, Wickersham & Taft, New York, New York, and for the Underwriters
by Thacher Proffitt & Wood, New York, New York. In addition, certain federal
income tax matters will be passed upon for the Depositor by Cadwalader,
Wickersham & Taft.
RATING
It is a condition to the issuance of the Offered Certificates that (i) the
Class A-1, Class A-2 and Class X Certificates be rated "[ ]" by Fitch IBCA,
Inc. ("Fitch") and "[ ]" by Moody's Investors Service, Inc. ("Moody's", and
together with Fitch, the "Rating Agencies"), (ii) the Class B Certificates be
rated "[ ]" by Fitch and "[ ]" by Moody's, (iii) the Class C Certificates
be rated "[ ]" by Fitch and "[ ]" by Moody's, (iv) the Class D
Certificates be rated "[ ]" by Fitch and "[ ]" by Moody's, and (v) the
Class E Certificates be rated "[ ]" by Fitch and "[ ]" by Moody's. The
Rated Final Distribution Date of each Class of Offered Certificates is June
15, 2031.
The Rating Agencies' ratings on mortgage pass-through certificates address
the likelihood of the timely payment of interest and the ultimate repayment
of principal by the Rated Final Distribution Date. The Rating Agencies'
ratings take into consideration the credit quality of the Mortgage Pool,
structural and legal aspects associated with the Certificates, and the extent
to which the payment stream in the Mortgage Pool is adequate to make payments
required under the Certificates. Ratings on mortgage pass-through
certificates do not, however, represent an assessment of the likelihood,
timing or frequency of principal prepayments (both voluntary and involuntary)
by mortgagors, or the degree to which such prepayments might differ from
those originally anticipated. The security ratings do not address the
possibility that Certificateholders might suffer a lower than anticipated
yield. In addition, ratings on mortgage pass-through certificates do not
address the likelihood of receipt of Prepayment Premiums, Net Default
Interest or Excess Interest or the timing or frequency of the receipt
thereof. In general, the ratings thus address credit risk and not prepayment
risk. Also, a security rating does not represent any assessment of the yield
to maturity that investors may experience or the possibility that the holders
of the Class X Certificates might not fully recover their initial investment
in the event of delinquencies or rapid prepayments of the Mortgage Loans
(including both voluntary and involuntary prepayments). As described herein,
the amounts payable with respect to the Class X Certificates consist only of
interest. If the entire pool were to prepay in the initial month, with the
result that the Class X Certificateholders receive only a single month's
interest and thus suffer a nearly complete loss of their investment, all
amounts "due" to such holders will nevertheless have been paid, and such
result is consistent with the rating received on the Class X Certificates.
Accordingly, the ratings of the Class X Certificates should be evaluated
independently from similar ratings on other types of securities. The ratings
do not address the fact that the Pass-Through Rates of the Offered
Certificates to the extent that they are based on the Weighted Average Net
Mortgage Pass-Through Rate may be affected by changes thereon.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating and, if so,
what such rating would be. A rating assigned to the Offered Certificates by a
rating agency that has not been requested by the Depositor to do so may be
lower than the rating assigned by the Rating Agencies pursuant to the
Depositor's request.
The rating of the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency.
S-103
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
<S> <C>
ACMs S-28
ADA S-31
Adjustment Rate S-51
Advance Rate S-71
Advances S-70
Allocated Loan Amount S-28
Annual Debt Service A-2
Anticipated Repayment Date S-7, S-13, A-4
Appraisal Reduction Amount S-45, S-54
Appraisal Reduction Event S-54
Appraised Value A-2
ARD Loan S-13
ARD Loans S-7
ARD LTV A-3
Asset Status Report S-89
Assumed Maturity Date S-63
Assumed Scheduled Payment S-47
Available Funds S-43
Balloon Loans S-13, S-39
Balloon Payment S-13, S-39
Balloon Payments S-29
Banc One S-86
BCMC S-11
CEDEL S-1, S-12
CEDEL Participants S-58
Certificate Balance S-3
Certificate Owners S-58
Certificate Registrar S-56
Certificateholder S-56
Certificates S-1, S-10
Class S-3
Clipper Loan S-30, S-34
Code S-59
Co-Lead Manager S-101
Collateral Substitution Deposit S-40
Collection Account S-72
Collection Period S-45
Comparative Financial Status Report S-93
Constant Prepayment Rate S-62
Conti Small Loans S-38
ContiTrade S-10
Controlling Class S-87
Controlling Class Certificateholder S-89
Corrected Mortgage Loan S-88
CPR S-62
Crossover Date S-50
Cut-Off Date S-3
Cut-Off Date Loan-to-Value Ratio A-2
Cut-Off Date Principal Balance S-12, S-27
S-104
<PAGE>
DCR S-99
Debt Service Coverage Ratio A-2
Default Interest S-45
Default Interest Distribution Account S-72
Default Rate S-45
Defeasance Lock-Out Period S-40
Defeasance Option S-40
Definitive Certificate S-55
Delinquency S-46
Delinquent Loan Status Report S-93
Department S-99
Depositaries S-56
Depositor S-1
Determination Date S-45
Directing Certificateholder S-89
Distribution Account S-72
Distribution Date S-3, S-43
Distribution Date Statement S-91
DMG S-101
DMG Exemption S-19, S-99
DSCR S-7
DTC S-1, S-12
Due Date S-46
Eligible Bank S-72
ERISA S-59, S-98
Euroclear S-1, S-12
Euroclear Participants S-58
Event of Default S-78
Excess Cash Flow S-39
Excess Interest S-13, S-38, S-45
Excess Interest Distribution Account S-72
Excess Prepayment Interest Shortfall S-17, S-53
Excess Rate S-45
Exemption S-19, S-99
Final Adjustment Distribution Date S-51
Final Recovery Determination S-92
Fiscal Agent S-4, S-10
Fitch S-4, S-19, S-103
Fixed Interest Payment Adjustment S-51
Form 8-K S-42
GAAP A-1
GACC S-10
HAP Contract S-42
HCCF S-35
Health Care Capital Loans S-24
Healthcare Adviser S-90
Healthcare Adviser Fee S-91
Healthcare Loan S-33
Healthcare Property S-33
Historical Loan Modification Report S-93
Historical Loss Estimate Report S-93
S-105
<PAGE>
Holders S-59
Hotel Loan S-33
Hotel Property S-33
HUD S-42
Indirect Participants S-57
Industrial Loan S-33
Industrial Property S-33
Initial Pool Balance S-3, S-33
Interest Accrual Amount S-45
Interest Accrual Period S-46
Interest Shortfall S-46
Largest Tenant A-3
LCLP S-11, S-101
Lead Warning Statement S-28
Liquidation Fee S-89
Liquidation Fee Rate S-90
Liquidation Proceeds S-90
Loan-to-Value Ratio A-2
Lock Box Account S-38
Lock-Out Period S-39
Lower-Tier Regular Interests S-97
Lower-Tier REMIC S-4, S-18, S-96
LTV A-2
MAI S-37
Master Servicing Fee S-86
Master Servicing Fee Rate S-86
Maturity Date A-3
Maturity or ARD Balance A-3
Mobile Home Loan S-33
Mobile Home Property S-33
Modeling Assumptions S-63
Monthly Debt Service Payment S-38
Monthly Payment S-44
Moody's S-4, S-19, S-103
Mortgage S-33
Mortgage Loan S-33
Mortgage Loan Purchase Agreements S-35
Mortgage Loan Sellers S-3, S-11
Mortgage Loans S-3, S-33
Mortgage Pass-Through Rate S-46
Mortgage Pool S-1
Mortgage Rate S-12, S-13, S-47
A-3
Mortgaged Properties S-3, S-33
Mortgaged Property S-12
MSC S-101
MSCI Exemption S-19, S-99
MSMC S-10
Multifamily Loan S-33
Multifamily Property S-33
Negative Adjustment S-98
S-106
<PAGE>
Net Default Interest S-45
Net Mortgage Pass-Through Rate S-46
Net Prepayment Interest Excess S-53
Net Prepayment Interest Shortfall S-53
Net REO Proceeds S-45
Note S-33
Notional Balance S-3
Occupancy as of Date A-3
Occupancy Percentage A-3
Offered Certificates S-3, S-42
Office Loan S-33
Office Property S-33
Operating Statement Analysis S-94
Original Amortization Term A-3
Partial Release S-40
Participants S-56
Pass-Through Rate S-3, S-14, S-46
Percentage Interest S-43
Permitted Investments S-73
P&I Advance S-70
P&I Advances S-17
Plan S-59, S-98
Pool Loans S-41
Pooling and Servicing Agreement S-10, S-67
Prepayment Amount S-52
Prepayment Assumptions S-62
Prepayment Interest Excess S-53
Prepayment Interest Shortfall S-53
Prepayment Premium S-39
Prepayment Provisions A-3
Prime Rate S-71
Principal Distribution Amount S-47
Principal Prepayments S-45
Principal Window S-6
Private Certificates S-3, S-42
PRN S-35
Property Advances S-70
PTE S-19
Purchase Price S-80
PV Yield Loss Amount S-51
Qualifying Substitute Mortgage Loan S-69
Rated Final Distribution Date S-63
Rating Agencies S-4, S-19, S-103
Realized Loss S-52
Record Date S-43
Regular Certificates S-4, S-18, S-97
Reinvestment Yield S-52
Release Date S-40
Release Payment S-40
Remaining Amortization Term A-4
REMIC S-4, S-18, S-97
S-107
<PAGE>
REMIC Regulations S-96
Removed Mortgage Loan S-69
REO Account S-42
REO Mortgage Loan S-47
REO Property S-42
REO Status Report S-93
REO Tax S-82
Replacement Mortgage Loan S-69
Repurchase Price S-69
Reserve Accounts S-34
Residual Certificates S-18
Restricted Group S-100
Retail Loan S-33
Retail Property S-33
Revised Rate S-38
RMF S-11
RMF Participation S-34
RMF Servicer S-34
RMF Trust S-34
Rules S-57
Section 42 Properties S-41
Section 8 S-42
Self-Storage Loan S-33
Self-Storage Property S-33
Servicer S-4, S-10
Servicer Remittance Date S-70
Servicer's Appraisal Estimate S-55
Servicing Compensation S-86
Servicing Fee S-86, A-3
Servicing Fee Rate S-86
Servicing Standard S-70
Similar Law S-98
SouthTrust Capital Funding S-36
S&P S-99
Special Servicer S-4, S-10, S-87
Special Servicing Fee S-89
Specially Serviced Mortgage Loan S-74, S-88
Sq. Ft. A-2
Square Feet A-2
Stated Principal Balance S-53
Subordinated Offered Certificates S-59
Substitution Shortfall Amount S-69
Survey LLC S-35
Tax Credits S-41
Terms and Conditions S-58
Total Required Annual Reserves A-4
Total Required Annual Reserves per Unit A-4
Treasury Regulations S-97
Trust Fund S-1
Trust REMICs S-4, S-96
Trustee S-4, S-10
S-108
<PAGE>
Trustee Fee S-84
Underwriters S-1
Underwriting Agreement S-101
Underwritten Cash Flow A-1
Underwritten Cash Flow Adjustment Worksheet S-94
Underwritten Debt Service Coverage Ratio A-2
Underwritten DSCR A-2
Underwritten Reserves A-3
Units A-2
Unscheduled Payments S-44
Updated Appraisal S-55
Upper-Tier Distribution Account S-72
Upper-Tier REMIC S-4, S-18, S-96
Variable Interest Payment Adjustment S-51
Voting Rights S-80
Watch List S-93
Weighted Average Net Mortgage Pass-Through Rate S-46
Weighted Average Pass-Through Rate S-46
Weighted Avg. Life S-6
Workout Fee S-89
Workout Fee Rate S-89
Yield Maintenance Calculation Type 1 A-3
Yield Maintenance Calculation Type 2 A-3
Zoning Laws S-30
</TABLE>
S-109
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
GENERAL
The schedule and tables appearing in this Annex A set forth certain
information with respect to the Mortgage Loans and Mortgaged Properties. Such
information is presented, where applicable, as of the Cut-Off Date. The
statistics in such schedule and tables were derived, in many cases, from
information and operating statements furnished by or on behalf of the
respective borrowers. Such information and operating statements were
generally unaudited and have not been independently verified by the Depositor
or the Underwriters or any of their respective affiliates or any other
person. The sum of the amounts in any column of any of the tables of this
Annex A may not equal the indicated total under such column due to rounding.
Net income for a Mortgaged Property as determined in accordance with
generally accepted accounting principles ("GAAP") would not be the same as
the stated Underwritten Cash Flow for such Mortgaged Property as set forth in
the following schedule or tables. In addition, Underwritten Cash Flow is not
a substitute for or comparable to operating income as determined in
accordance with GAAP as a measure of the results of a property's operations
or a substitute for cash flows from operating activities determined in
accordance with GAAP as a measure of liquidity. No representation is made as
to the future net cash flow of the Mortgaged Properties, nor is the
Underwritten Cash Flow set forth herein with respect to any Mortgaged
Property intended to represent such future net cash flow.
In the schedule and tables set forth in this Annex A, with respect to
Mortgage Loans evidenced by one Note, but secured by multiple Mortgaged
Properties, for certain purposes, including Underwritten Cash Flow, separate
amounts for each such related Mortgaged Property are shown.
Definitions
For purposes of the Prospectus Supplement, including the schedule and
tables in this Annex A, the indicated terms shall have the following
meanings, modified accordingly, by reference to the "Certain Loan Payment
Terms" below and footnotes to the schedules that follow:
1. "Underwritten Cash Flow", with respect to any Mortgaged Property,
means an estimate of cash flow available for debt service in a typical
year of stable, normal operations. In general, it is the estimated revenue
derived from the use and operation of such Mortgaged Property less the sum
of (a) estimated operating expenses (such as utilities, administrative
expenses, repairs and maintenance, management and franchise fees and
advertising), (b) fixed expenses (such as insurance, real estate taxes
and, if applicable, ground lease payments) and (c) capital expenditures
and reserves for capital expenditures, including tenant improvement costs
and leasing commissions. Underwritten Cash Flow generally does not reflect
interest expense and non-cash items such as depreciation and amortization.
In determining Underwritten Cash Flow for a Mortgaged Property, the
Mortgage Loan Sellers generally relied on rent rolls and/or other
generally unaudited financial information provided by the respective
borrowers; in some cases the appraisal and/or local market information was
the primary basis for the determination. From that information, the
Mortgage Loan Sellers calculated stabilized estimates of cash flow that
took into consideration historical financial statements, material changes
in the operating position of a Mortgaged Property of which the applicable
Mortgage Loan Seller was aware (e.g., newly signed leases, expirations of
"free rent" periods and market rent and market vacancy data), and
estimated capital expenditures, leasing commission and tenant improvement
reserves. In certain cases, the applicable Mortgage Loan Seller's estimate
of Underwritten Cash Flow reflected differences from the information
contained in the operating statements obtained
A-1
<PAGE>
from the respective borrowers (resulting in either an increase or decrease
in the estimate of Underwritten Cash Flow derived therefrom) based upon
the Mortgage Loan Seller's own analysis of such operating statements and
the assumptions applied by the respective borrowers in preparing such
statements and information. In certain instances, for example, property
management fees and other expenses may have been included in the
calculation of Underwritten Cash Flow even though such expense may not
have been reflected in actual historic operating statements. In some
cases, the information was annualized, (excluding certain items deemed not
appropriate to be annualized) before using it as a basis for the
determination of Underwritten Cash Flow. No assurance can be given with
respect to the accuracy of the information provided by any borrowers, or
the adequacy of the procedures used by any Mortgage Loan Seller in
determining the presented operating information.
2. "Annual Debt Service" means, for any Mortgage Loan 12 times the
Monthly Payment in effect as of the Cut-Off Date or, for any Mortgage
Loans that pay interest only for a period of time, 12 times the Monthly
Payment in effect once the amortization commences.
3. "Debt Service Coverage Ratio," "Underwritten Debt Service Coverage
Ratio" or "Underwritten DSCR" means, with respect to any Mortgage Loan, or
with respect to a Mortgage Loan evidenced by one Note, but secured by
multiple Mortgaged Properties, (a) the Underwritten Cash Flow for the
Mortgaged Property or Properties divided by (b) the Annual Debt Service
for such Mortgage Loan. With respect to Cross-Collateralized Loans, the
Underwritten DSCR set forth in Annex A is based upon the combined
Underwritten DSCR and Annual Debt Service for the Cross-Collateralized
Loan on an aggregate basis.
In general, debt service coverage ratios are used by income property
lenders to measure the ratio of (a) cash currently generated by a property
that is available for debt service to (b) required debt service payments.
However, debt service coverage ratios only measure the current, or recent,
ability of a property to service mortgage debt. If a property does not
possess a stable operating expectancy (for instance, if it is subject to
material leases that are scheduled to expire during the loan term and that
provide for above-market rents and/or that may be difficult to replace), a
debt service coverage ratio may not be a reliable indicator of a
property's ability to service the mortgage debt over the entire remaining
loan term. The Underwritten DSCRs are presented herein for illustrative
purposes only and, as discussed above, are limited in their usefulness in
assessing the current, or predicting the future, ability of a Mortgaged
Property to generate sufficient cash flow to repay the related Mortgage
Loan. Accordingly, no assurance can be given, and no representation is
made, that the Underwritten DSCR accurately reflects that ability.
4. "Appraised Value" means, for any Mortgaged Property, the appraiser's
adjusted value as stated in the most recent third party appraisal or
market analysis available to the Depositor. No representation is made that
any such value would approximate either the value that would be determined
in a current appraisal of the related Mortgaged Property or the amount
that would be realized upon a sale.
5. "Cut-Off Date Loan-to-Value Ratio," "Loan-to-Value Ratio" or "LTV"
means, with respect to any Mortgage Loan, or with respect to a Mortgage
Loan evidenced by one Note, but secured by multiple Mortgaged Properties,
(a) the Cut-Off Date Principal Balance of such Mortgage Loan divided (b)
by the Appraised Value of the Mortgaged Property or Mortgaged Properties.
6. "Square Feet" or "Sq. Ft." means, in the case of a Mortgaged Property
operated as a retail center, office or medical office complex,
industrial/warehouse facility, self-storage facility, combination retail
office facility, the square footage of the net rentable or leaseable area.
7. "Units" means: (i) in the case of a Mortgaged Property operated as
multifamily housing, the number of apartments, regardless of the size of
or number of rooms in such
A-2
<PAGE>
apartment; (ii) in the case of a Mortgaged Property operated as a
self-storage facility, the number of self-storage units; (iii) in the case
of a Mortgaged Property operated as a skilled nursing or congregate care
facility, the number of beds; (iv) in case of a Mortgaged Property
constituting a mobile home park, the number of pads; and (v) in the case
of a Mortgaged Property operated as a hospitality property, the number of
guest rooms.
8. "Occupancy Percentage" means the percentage of Square Feet or Units,
as the case may be, of the Mortgaged Property that was occupied or leased
as of a specified date (identified on this Annex A as the "Occupancy as of
Date"), as specified by the borrower or as derived from the Mortgaged
Property's rent rolls or, with respect to certain skilled nursing,
congregate care and assisted living facilities, census reports, operating
statements or appraisals or as determined by a site inspection of the
Mortgaged Property. Information in this Annex A concerning the "Largest
Tenant" is presented as of the same date as of which the Occupancy
Percentage is specified.
9. "Maturity or ARD Balance" means, with respect to any Balloon Loan or
ARD Loan, the principal amount that will be due at maturity or on the
Anticipated Repayment Date for such Balloon Loan based on the Maturity
Assumptions and a 0% CPR.
10. "Maturity Date" or "ARD LTV" means, with respect to any Balloon Loan
or ARD Loan, the Maturity Balance for such Balloon Loan or ARD Balance
divided by the Appraised Value of the related Mortgaged property.
11. "Mortgage Rate" means, with respect to any Mortgage Loan, the
Mortgage Rate in effect as of the Cut-Off Date.
12. "Underwritten Reserves" as used herein with respect to any Mortgaged
Property means an estimate, determined by the related Mortgage Loan Seller
prior to the Closing Date, of replacement reserves of capital expenditures
and tenant improvement and leasing commissions.
13. "Servicing Fee" for each Mortgage Loan includes the compensation
payable in respect of the servicing of such Mortgage Loan, the
compensation payable to the Trustee and the compensation payable to the
Healthcare Adviser.
14. "Prepayment Provisions" for each Mortgage Loan are: "LO" means the
duration of lockout period; "Def" means the duration of any defeasance
period; "YM1" means the greater of the applicable yield maintenance charge
and one percent of the outstanding principal balance at such time; "YM"
means the yield maintenance charge and " less than YM3", " less than YM2"
and " less than YM1" means the lesser of the applicable yield maintenance
charge and the indicated percent of the outstanding principal balance at
such time. The number following the "/" is the number of periods for which
the related call protection provision is in effect.
15. "Yield Maintenance Calculation Type 1" means a yield maintenance
premium equal to the present value of the remaining monthly payments to
the maturity or ARD date as applicable (assuming no prepayment has been
made) and discount the monthly payments by the applicable Treasury Yield
plus the applicable spread as shown.
16. "Yield Maintenance Calculation Type 2" means a yield maintenance
equal to the present value of a stream of Yield Loss Amounts (generally,
either to the remaining term to maturity, the weighted average life or to
a stated date) discounted by the applicable Treasury Yield plus any spread
as shown in this take. The "Yield Loss Amount" means 1/12 of the product
of (1) the principal amount of the prepayment and (2) the difference
between (a) the Mortgage Rate and (b) the sum of the applicable Treasury
Yield and the spread as shown in this table.
17. "Original Amortization Term" means, with respect to any Mortgage
Loan, the number of principal and interest payments from the date of
origination until the Mortgage Loan is amortized to a zero balance under
the actual amortization terms of the Mortgage Loan.
A-3
<PAGE>
18. "Remaining Amortization Term" means, with respect to any Mortgage
Loan, the number of principal and interest payments from the Cut-Off Date
until the Mortgage Loan is amortized to a zero balance under the actual
amortization terms of the Mortgage Loan.
19. "Total Required Annual Reserves" and "Total Required Annual Reserves
per Unit" shown for hospitality Mortgage Loans, are based on the
applicable percentages of underwritten total revenue. Reserve amounts will
vary according to actual total revenue.
Certain Loan Payment Terms:
The indicated Mortgage Loans have the following payment terms:
Split Amortization Loans
Loan #2727: Payments of principal and interest are due beginning 2/1/98 in
the amount of $129,418.76 per month through 1/1/2005. Beginning with the
2/1/2005 payment, payments increase to $153,365.01 per month through 1/1/2010
(the "Anticipated Repayment Date"). If the loan is not paid in full at that
time, the payment amount beginning 2/1/2010 changes to $137,947.02 per month,
allocated according to the terms of the Note (2/1/2010 is the start of the
hyperamortization period). These payments will continue until the loan is
paid in full.
Loan #TA1093: Payments of principal and interest are due beginning 3/1/98
in the amount of $50,217.87 per month through 2/1/02. Beginning with the
3/1/02 payment, payments of principal and interest are reduced to $37,246.01
per month through 2/1/08 (the Anticipated Repayment Date).
Interest Only Loans
Loan #MS3. The Mortgage Loan requires monthly payments of interest only
from January1, 1998 through December 1, 1999. Commencing on January 1, 2000
and through maturity, Monthly Payments of principal and interest in the
amount of $155,343.49 are required.
Loan #TA0289. The Mortgage Loan requires monthly payments of interest only
from January 1, 1998 through December 1, 1999. Commencing on January 1, 2000
and through maturity, Monthly Payments of principal and interest in the
amount of $436,803.88 are required.
Loan #97-61HSPA. The Mortgage Loan requires monthly payments of interest
only from April 1, 1998 through March 1, 1999. Commencing on April 1, 1999
and through maturity, Monthly Payments of principal and interest in the
amount of $144,929.55 are required.
Loan #97-61HSPB. The Mortgage Loan requires monthly payments of interest
only from April 1, 1998 through March 1, 1999. Commencing on April 1, 1999
and through maturity, Monthly Payments of principal and interest in the
amount of $74,701.10 are required.
Loan #97-61HSPC. The Mortgage Loan requires monthly payments of interest
only from April 1, 1998 through March 1, 1999. Commencing on April 1, 1999
and through maturity, Monthly Payments of principal and interest in the
amount of $78,781.41 are required.
Loan #97-61HSPD. The Mortgage Loan requires monthly payments of interest
only from April 1, 1998 through March 1, 1999. Commencing on April 1, 1999
and through maturity, Monthly Payments of principal and interest in the
amount of $69,286.84 are required.
Loan #97-61HSPE. The Mortgage Loan requires monthly payments of interest
only from April 1, 1998 through March 1, 1999. Commencing on April 1, 1999
and through maturity, Monthly Payments of principal and interest in the
amount of $59,949.20 are required.
Loan #97-60C. The Mortgage Loan requires monthly payments of interest only
from March 1, 1998 through February 1, 1999. Commencing on March 1, 1999 and
through maturity, Monthly Payments of principal and interest in the amount of
$98,628.98 are required.
A-4
<PAGE>
Lockout/Prepayment
Loan #1006-I, II, III & IV. After the lockout period, the borrower under
the Mortgage Loan is permitted to partially prepay a total of 25% of the loan
amount without penalty or yield maintenance over a maximum of three separate
payments. The remaining 75% of the loan amount may be repaid in whole only
with a penalty equal to the greater of yield maintenance or 1% of the
outstanding balance.
Earnout Loans
Loan No. DMV001. The Mortgage Loan requires $150,000 of the Cut-Off Date
Principal Balance to be reserved in an earn out escrow which is eligible to
be drawn upon by the borrower upon achievement of certain debt service
coverage ratios. The related Loan Documents do not provide that the escrow be
applied to principal, if the draw requirements are not met.
Loan No. TSAR01. The Mortgage Loan requires $500,000 of the Cut-Off Date
Principal Balance to be reserved in an earn out escrow which is eligible to
be drawn upon by the borrower's achievement of certain debt service coverage
ratios. The earn out escrow will be used to partially prepay the Mortgage
Loan (including a prepayment premium of 1% of the amount prepaid) to the
extent that the Mortgaged Property does not satisfy the draw requirements
after 12 months.
Certain Other Terms
Loan Nos. MS22, MS23, MS27, MS30, MS31 and MS40: Future subordinate
financing secured by the related Mortgaged Property is permitted, subject to
the following conditions:
(a) the combined LTV is no greater than 70%;
(b) the combined DSCR is at least 1.45x;
(c) subordinate debt may be used only for related property operating
expenses or related property capital improvements; and
(d) subordinate debt maturity date must extend beyond the maturity date
of the Mortgage Loans.
Loan No. MS34: Future subordinate financing secured by the related
Mortgaged Property is permitted, subject to the following conditions:
(a) subordinate debt to be used for construction of additional rooms and
meeting space;
(b) subordinated debt will not exceed (i) cost incurred, (ii) $7,000,000
or (iii) $85,000 or $60,000 per newly constructed 2-bedroom or 1-bedroom
suite, respectively.
A second mortgage and a pledge of partnership interests as security is
permitted
Loan No. MS26 (San Antonio): Future subordinate financing secured by the
related Mortgaged Property is permitted subject to the following conditions:
(a) Subordinated debt will not exceed lesser of (i) $350,000, and (ii)
actual tenant improvement costs.
Loan Nos. HCC001-HCC016: These Mortgage Loans constitute a group of 16
Healthcare Loans, representing 5.0% of the Initial Pool Balance in the
aggregate, which are cross-collateralized and cross-defaulted, and, if
considered as a single mortgage loan, would constitute the largest mortgage
loan included in the Mortgage Pool.
A-5
<PAGE>
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<TABLE>
<CAPTION>
CON-
LOAN TROL
SEL- NUM- LOAN
LER BER SELLER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MS 1 MS1 Hancock Village Apartments 224 Independence Drive Brookline Massachusett 02167
GACC 2 TA0289 Aggregate Loan Level Information Various Various Various Various
GACC 2A TA02891 Chocolate Works Apartments 231 North 3rd Street Philadelphia Pennsylvania 19106
GACC 2B TA02892 The Clinton Apartments 1025 Clinton Street Philadelphia Pennsylvania 19107
GACC 2C TA02893 Portico Row 924 Spruce Street Philadelphia Pennsylvania 19107
GACC 2D TA02894 Roberts/Quay Apartments 1035 Spruce Street Philadelphia Pennsylvania 19107
GACC 2E TA02895 Locust Point 2429 Locust Street Philadelphia Pennsylvania 19103
GACC 2F TA02896 The Lofts at Logan View 1666 Callowhill Street Philadelphia Pennsylvania 19130
GACC 2G TA02897 Lowertown Commons 300 East 4th Street St. Paul Minnesota 55101
GACC 2H TA02898 Metropolitan Apartment Building 117-123 North 15th Street Philadelphia Pennsylvania 19102
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 2J TA02899 Old City Hall 423 Walnut Street Harrisburg Pennsylvania 17101
GACC 2K TA028910 Old Quaker Building 3514 Lancaster Avenue Philadelphia Pennsylvania 19104
GACC 2L TA028911 Packard Motor Car Building 317 North Broad Street Philadelphia Pennsylvania 19107
GACC 2M TA028912 Parkside Apartments 250 East 5th Street St. Paul Minnesota 55101
GACC 2N TA028913 Peach Alley Court 155 South Poplar Street Elizabethtow Pennsylvania 17022
GACC 2P TA028914 The Regal Apartments 651 Wells Street Chicago Illinois 60607
GACC 2Q TA028915 Shadyside Commons Apartments 401 Amberson Avenue Pittsburgh Pennsylvania 15232
GACC 2R TA028916 Sharples Works Apartments 300 East Evans Street West Chester Pennsylvania 19380
GACC 2S TA028917 The Shoe Factory Apartments 201 North Chestnut Street Palmyra Pennsylvania 17078
GACC 2T TA028918 The Touraine Apartments 1520 Spruce Street Philadelphia Pennsylvania 19102
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 2U TA028919 Trinity Row Apartments 2027-2029-2031 Arch Street Philadelphia Pennsylvania 19103
GACC 2V TA028920 Waterfront I Apartments 33 South Letitia Street Philadelphia Pennsylvania 19106
GACC 2W TA028921 Waterfront II Apartments 106 South Front Street Philadelphia Pennsylvania 19106
GACC 3 GA0178 Aggregate Loan Level Information Various Various Various Various
GACC 3A GA01781 #158 Atlanta 8457 Roswell Road Atlanta Georgia 30350
GACC 3B GA01782 #226 Atlanta 1515 Mt. Zion Road Morrow Georgia 30260
GACC 3C GA01783 #70 Durham 5311 Apex Highway Durham North Carolina 27713
GACC 3D GA01784 #71 Chapel Hill 5502 Chapel Hill Blvd. Chapel Hill North Carolina 27707
GACC 3E GA01785 #72 Durham 3472 Hillsborough Road Durham North Carolina 27705
GACC 3F GA01786 #74 Raleigh 4615 West Beryl Road Raleigh North Carolina 27606
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 3G GA01787 #156 Atlanta 4141 Snapfinger Woods Drive Atlanta Georgia 30035
GACC 3H GA01788 #215 Midland 1010 North Loop 250 West Midland Texas 79703
GACC 3J GA01789 #200 Arlington 3654 West Pioneer Parkway Arlington Texas 76013
GACC 3K GA017810 #75 Raleigh 7012 Glenwood Avenue Raleigh North Carolina 27612
GACC 3L GA017811 #222 Oklahoma City 7800 North Broadway Oklahoma City Oklahoma 73116
GACC 3M GA017812 #152 Atlanta 2960 South Cobb Smyra Georgia 30080
GACC 3N GA017813 #154 Stone Mountain 1440 North Hairston Road Stone Moutain Georgia 30083
GACC 3P GA017814 #77 Winston-Salem 2115 Silas Creek Parkway Winston-Sale North Carolina 27103
GACC 3Q GA017815 #172 Bedford 1320 Norwood Drive Bedford Texas 76022
GACC 3R GA017816 #153 Atlanta 3751 Longmire Way Atlanta Georgia 30340
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 3S GA017817 #78 Wilmington 426 South College Road Wilmington North Carolina 28403
GACC 3T GA017818 #168 Arlington 3208 East Park Row Arlington Texas 76010
GACC 3U GA017819 #207 El Paso 5717 Will Ruth Avenue El Paso Texas 79924
GACC 3V GA017820 #76 Winston-Salem 3125 University Boulevard Winston-Sale North Carolina 27105
GACC 3W GA017821 #175 Carrolton 2000 Country Club Drive Carrolton Texas 75006
GACC 3X GA017822 #171 Arlington 2306 North Collins Street Arlington Texas 76011
GACC 3Y GA017823 #202 Grand Prairie 914 North Beltline Road Grand Prairie Texas 75050
GACC 3Z GA017824 #213 San Angelo 3120 Knickerbocker Road San Angelo Texas 76901
GACC 3AA GA017825 #225 Greenville 2815 White Horse Road Greenville South Carolina 29611
GACC 3BB GA017826 #73 Greensboro 3730 West Wenddover Avenue Greensboro North Carolina 27407
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 3CC GA017827 #151 Jonesboro 7469 Tara Boulevard Jonesboro Georgia 30236
GACC 3DD GA017828 #185 Longview 1311 Northwest Loop 281 Longview Texas 75605
GACC 3EE GA017829 #155 Norcross 6046 Financial Drive Norcross Georgia 30071
GACC 3FF GA017830 #204 Abilene 2826 South Clack Street Abilene Texas 79605
GACC 3GG GA017831 #190 Meridian 2316 Highway 19 North Meridian Mississippi 39307
GACC 3HH GA017832 #169 Arlington 3016 South Cooper Street Arlington Texas 76015
GACC 3JJ GA017833 #192 Taxarkana 1808 Hampton Road Texarkana Texas 75503
GACC 3KK GA017834 #150 Albany 1604 Camp Lane Albany Georgia 31707
GACC 3LL GA017835 #189 Meridian 3415 Highway 45 North Meridian Mississippi 39301
GACC 3MM GA017836 #170 Arlington 2331 South Collins Arlington Texas 76014
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 3NN GA017837 #159 Fort Worth 5513 East lancaster Fort Worth Texas 76112
GACC 3PP GA017838 #176 Lewisville 1303 South Stemmons Lewisville Texas 75067
GACC 3QQ GA017839 #166 Savannah 218 Eisenhower Drive Savannah Georgia 31406
GACC 3RR GA017840 #224 Greenville 1412 Poinsett Highway Greenville South Carolina 29609
GACC 3SS GA017841 #162 Augusta 3121 Washington Road Augusta Georgia 30907
GACC 3TT GA017842 #163 Columbus 4155 Milgen Road Columbus Georgia 31907
GACC 3UU GA017843 #188 Tyler 2215 West Southwest Loop 323 Tyler Texas 75701
GACC 3VV GA017844 #161 Augusta 1881 Gordon Highway Augusta Georgia 30904
GACC 3WW GA017845 #201 Fort Worth 4917 E. California Parkway, Southwest Fort Worth Texas 76119
GACC 3XX GA017846 #173 Mesquite 3229 Highway 80 Mesquite Texas 75150
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 3YY GA017847 #211 Amarillo 6715 Wolflin Road Amarillo Texas 79106
GACC 3ZZ GA017848 #193 Fort Smith 4011 Midland Boulevard Fort Smith Arkansas 72904
GACC 3AAA GA017849 #164 Macon 2990 Pio Nono Avenue Macon Georgia 31206
GACC 3BBB GA017850 #210 Amarillo 831 North Forest Amarillo Texas 79106
GACC 3CCC GA017851 #223 Midwest City 5604 Tinker Diagonal Midwest City Oklahoma 73110
GACC 3DDD GA017852 #212 Amarillo 4000 I-40 East Amarillo Texas 79104
GACC 3EEE GA017853 #230 Springfield 3194 South Cambell Avenue Springfield Missouri 65807
GACC 3FFF GA017854 #195 Nacogdoches 5121 North Street Nacogdoches Texas 75961
GACC 3GGG GA017855 #165 Savannah 9303 Abercorn Extension Savannah Georgia 31406
GACC 3HHH GA017856 #214 Las Cruces 2305 East Lohman Avenue Las Cruces New Mexico 88001
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 3JJJ GA017857 #186 Longview 1005 West Cotton Street Longview Texas 75604
GACC 3KKK GA017858 #206 Abilene 818 South Clack Street Abilene Texas 79605
GACC 3LLL GA017859 #196 Lufkin 1513 Denman Street Lufkin Texas 75901
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE
ORIGINAL DATE CUT-OFF DATE SERVICING ORIGINAL REMAINING
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE TERM TO TERM TO
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE MATURITY OR ARD MATURITY OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily 63,187,490 63,109,462 3.40 Actual/360 6.760 0.02250 120 119
Various 61,500,000 61,500,000 3.32 30/360 7.461 0.02250 120 117
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
- -------------------------------------------------------------------------------------------------------
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
- ----------------------------------------------------------------------------------------------------------------------------
Multifamily
Multifamily
Multifamily
Various 52,150,000 52,061,172 2.81 Actual/360 7.472 0.02250 120 118
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- -----------------------------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- --------------------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- ------------------------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- -----------------------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- ----------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- -------------------------------------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Self-Storage
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
373 372 1/9/98 2/1/08 Hyper 54,729,623 LO/25_Def/89_0/6 NAP
336 336 11/20/97 12/1/07 Hyper 54,480,338 LO/60_Def/57_0/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
376 374 12/22/97 1/1/08 Hyper 46,023,562 LO/26_Def/88_0/6 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
UNDER- SQ FT, LOAN PER
ANNUAL WRITTEN CUT-OFF SCHEDULED UNIT, SQ FT, UNIT,
DEBT UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD BED, PAD OCCUPANCY OCCUPANCY
SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM UNIT TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4,923,036 6,541,381 1.33 82,900,00 11/11/97 76.13 66.02 789 Units 79,986.64 97.10 12/1/97
5,241,647 6,793,864 1.30 82,600,000 74.46 65.96 1,685 Units 36,498.52
508,705 5,900,000 6/6/97 135 Units 96.00 11/14/97
90,698 1,100,000 6/11/97 16 Units 100.00 11/14/97
26,207 450,000 6/11/97 8 Units 100.00 11/14/97
90,206 1,200,000 6/11/97 20 Units 100.00 11/14/97
663,618 6,500,000 6/6/97 110 Units 95.00 11/14/97
480,420 5,800,000 6/10/97 108 Units 91.00 11/14/97
293,111 3,800,000 6/5/97 115 Units 93.00 11/14/97
251,680 4,000,000 6/10/97 120 Units 97.00 11/14/97
- ---------------------------------------------------------------------------------------------------------------------------------
137,323 1,900,000 6/11/97 82 Units 82.00 11/14/97
249,879 3,000,000 6/11/97 78 Units 91.00 11/14/97
727,105 8,700,000 6/10/97 151 Units 99.00 11/14/97
115,783 1,850,000 6/5/97 53 Units 94.00 11/14/97
141,486 1,750,000 6/11/97 72 Units 96.00 11/14/97
341,097 4,500,000 6/11/97 84 Units 93.00 11/14/97
756,855 8,500,000 6/24/97 148 Units 97.00 11/14/97
721,945 7,500,000 6/12/97 155 Units 95.00 11/14/97
106,105 1,100,000 6/11/97 41 Units 90.00 11/14/97
866,840 11,600,00 6/11/97 131 Units 96.00 11/14/97
- ---------------------------------------------------------------------------------------------------------------------------------
54,096 650,000 6/10/97 18 Units 100.00 11/14/97
96,226 1,800,000 6/6/97 27 Units 94.00 11/14/97
74,479 1,000,000 6/6/97 13 Units 100.00 11/14/97
4,363,692 6,475,863 1.48 65,500,000 79.48 70.26 1,855,972 Sq Ft 28.05
380,901 3,790,000 12/20/97 60,240 Sq Ft 90.00 9/30/97
283,702 2,875,000 12/20/97 64,541 Sq Ft 96.00 9/30/97
124,472 1,275,000 12/20/97 23,000 Sq Ft 92.00 9/30/97
202,380 2,060,000 12/20/97 26,800 Sq Ft 94.00 9/30/97
179,203 1,910,000 12/20/97 31,600 Sq Ft 79.00 9/30/97
183,151 1,900,000 12/20/97 28,750 Sq Ft 78.00 9/30/97
- --------------------------------------------------------------------------------------------------------------------------------
180,164 1,825,000 12/20/97 36,580 Sq Ft 98.00 9/30/97
139,208 1,425,000 12/20/97 42,528 Sq Ft 98.00 9/30/97
128,574 1,400,000 12/20/97 34,064 Sq Ft 93.00 9/30/97
139,587 1,375,000 12/20/97 25,200 Sq Ft 93.00 9/30/97
134,392 1,360,000 12/20/97 35,920 Sq Ft 98.00 9/30/97
128,838 1,350,000 12/20/97 28,768 Sq Ft 96.00 9/30/97
132,284 1,325,000 12/20/97 30,117 Sq Ft 87.00 9/30/97
130,612 1,300,000 12/20/97 25,350 Sq Ft 95.00 9/30/97
129,090 1,225,000 12/20/97 29,212 Sq Ft 91.00 9/30/97
129,093 1,210,000 12/20/97 29,780 Sq Ft 83.00 9/30/97
- --------------------------------------------------------------------------------------------------------------------------------
110,102 1,175,000 12/20/97 28,113 Sq Ft 86.00 9/30/97
117,201 1,175,000 12/20/97 35,586 Sq Ft 73.00 9/30/97
113,137 1,150,000 12/20/97 33,056 Sq Ft 90.00 9/30/97
109,672 1,145,000 12/20/97 21,500 Sq Ft 91.00 9/30/97
113,892 1,125,000 12/20/97 34,959 Sq Ft 82.00 9/30/97
117,135 1,120,000 12/20/97 26,098 Sq Ft 83.00 9/30/97
109,576 1,100,000 12/20/97 27,972 Sq Ft 89.00 9/30/97
106,214 1,100,000 12/20/97 38,107 Sq Ft 97.00 9/30/97
108,415 1,100,000 12/20/97 31,500 Sq Ft 85.00 9/30/97
97,694 1,020,000 12/20/97 30,600 Sq Ft 83.00 9/30/97
- --------------------------------------------------------------------------------------------------------------------------------
93,281 1,000,000 12/20/97 29,182 Sq Ft 79.00 9/30/97
93,519 960,000 12/20/97 24,980 Sq Ft 98.00 9/30/97
94,216 950,000 12/20/97 34,708 Sq Ft 75.00 9/30/97
83,229 925,000 12/20/97 32,038 Sq Ft 92.00 9/30/97
91,101 890,000 12/20/97 27,880 Sq Ft 85.00 9/30/97
93,115 875,000 12/20/97 24,912 Sq Ft 90.00 9/30/97
86,798 875,000 12/20/97 28,620 Sq Ft 89.00 9/30/97
82,577 865,000 12/20/97 35,422 Sq Ft 91.00 9/30/97
85,296 850,000 12/20/97 25,080 Sq Ft 94.00 9/30/97
86,767 840,000 12/20/97 31,396 Sq Ft 0.00 9/30/97
- --------------------------------------------------------------------------------------------------------------------------------
86,129 825,000 12/20/97 22,104 Sq Ft 91.00 9/30/97
80,406 825,000 12/20/97 21,900 Sq Ft 84.00 9/30/97
81,855 810,000 12/20/97 21,716 Sq Ft 93.00 9/30/97
82,079 800,000 12/20/97 19,300 Sq Ft 91.00 9/30/97
71,060 790,000 12/20/97 28,138 Sq Ft 86.00 9/30/97
85,309 785,000 12/20/97 22,624 Sq Ft 86.00 9/30/97
80,047 785,000 12/20/97 28,009 Sq Ft 90.00 9/30/97
70,141 725,000 12/20/97 22,384 Sq Ft 89.00 9/30/97
75,872 725,000 12/20/97 27,132 Sq Ft 79.00 9/30/97
72,260 710,000 12/20/97 31,125 Sq Ft 82.00 9/30/97
- --------------------------------------------------------------------------------------------------------------------------------
66,757 640,000 12/20/97 21,080 Sq Ft 78.00 9/30/97
62,312 625,000 12/20/97 26,580 Sq Ft 84.00 9/30/97
67,052 600,000 12/20/97 26,998 Sq Ft 76.00 9/30/97
58,235 600,000 12/20/97 23,379 Sq Ft 87.00 9/30/97
53,393 575,000 12/20/97 27,886 Sq Ft 78.00 9/30/97
53,545 550,000 12/20/97 21,860 Sq Ft 86.00 9/30/97
56,132 550,000 12/20/97 25,360 Sq Ft 81.00 9/30/97
50,790 540,000 12/20/97 17,483 Sq Ft 94.00 9/30/97
60,913 535,000 12/20/97 34,300 Sq Ft 71.00 9/30/97
48,058 510,000 12/20/97 17,380 Sq Ft 77.00 9/30/97
- --------------------------------------------------------------------------------------------------------------------------------
44,581 475,000 12/20/97 24,000 Sq Ft 72.00 9/30/97
42,863 440,000 12/20/97 16,341 Sq Ft 92.00 9/30/97
40,952 425,000 12/20/97 14,362 Sq Ft 87.00 9/30/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MS 1 MS1 Hancock Village Apartments 197,250 250.00
GACC 2 TA0289 Aggregate Loan Level Information 491,136 0.33
GACC 2A TA02891 Chocolate Works Apartments
GACC 2B TA02892 The Clinton Apartments
GACC 2C TA02893 Portico Row
GACC 2D TA02894 Roberts/Quay Apartments
GACC 2E TA02895 Locust Point
GACC 2F TA02896 The Lofts at Logan View
GACC 2G TA02897 Lowertown Commons
GACC 2H TA02898 Metropolitan Apartment Building
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 2J TA02899 Old City Hall
GACC 2K TA028910 Old Quaker Building
GACC 2L TA028911 Packard Motor Car Building
GACC 2M TA028912 Parkside Apartments Experienced Travel Consultants 3,090
GACC 2N TA028913 Peach Alley Court
GACC 2P TA028914 The Regal Apartments
GACC 2Q TA028915 Shadyside Commons Apartments
GACC 2R TA028916 Sharples Works Apartments
GACC 2S TA028917 The Shoe Factory Apartments
GACC 2T TA028918 The Touraine Apartments
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 2U TA028919 Trinity Row Apartments
GACC 2V TA028920 Waterfront I Apartments Home Warranty Plans 6,690
GACC 2W TA028921 Waterfront II Apartments Vacant 1,267
GACC 3 GA0178 Aggregate Loan Level Information 325,475 0.18
GACC 3A GA01781 #158 Atlanta
GACC 3B GA01782 #226 Atlanta
GACC 3C GA01783 #70 Durham
GACC 3D GA01784 #71 Chapel Hill
GACC 3E GA01785 #72 Durham
GACC 3F GA01786 #74 Raleigh
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3G GA01787 #156 Atlanta
GACC 3H GA01788 #215 Midland
GACC 3J GA01789 #200 Arlington
GACC 3K GA017810 #75 Raleigh
GACC 3L GA017811 #222 Oklahoma City
GACC 3M GA017812 #152 Atlanta
GACC 3N GA017813 #154 Stone Mountain
GACC 3P GA017814 #77 Winston-Salem
GACC 3Q GA017815 #172 Bedford
GACC 3R GA017816 #153 Atlanta
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3S GA017817 #78 Wilmington
GACC 3T GA017818 #168 Arlington
GACC 3U GA017819 #207 El Paso
GACC 3V GA017820 #76 Winston-Salem
GACC 3W GA017821 #175 Carrolton
GACC 3X GA017822 #171 Arlington
GACC 3Y GA017823 #202 Grand Prairie
GACC 3Z GA017824 #213 San Angelo
GACC 3AA GA017825 #225 Greenville
GACC 3BB GA017826 #73 Greensboro
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3CC GA017827 #151 Jonesboro
GACC 3DD GA017828 #185 Longview
GACC 3EE GA017829 #155 Norcross
GACC 3FF GA017830 #204 Abilene
GACC 3GG GA017831 #190 Meridian
GACC 3HH GA017832 #169 Arlington
GACC 3JJ GA017833 #192 Taxarkana
GACC 3KK GA017834 #150 Albany
GACC 3LL GA017835 #189 Meridian
GACC 3MM GA017836 #170 Arlington
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3NN GA017837 #159 Fort Worth
GACC 3PP GA017838 #176 Lewisville
GACC 3QQ GA017839 #166 Savannah
GACC 3RR GA017840 #224 Greenville
GACC 3SS GA017841 #162 Augusta
GACC 3TT GA017842 #163 Columbus
GACC 3UU GA017843 #188 Tyler
GACC 3VV GA017844 #161 Augusta
GACC 3WW GA017845 #201 Fort Worth
GACC 3XX GA017846 #173 Mesquite
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3YY GA017847 #211 Amarillo
GACC 3ZZ GA017848 #193 Fort Smith
GACC 3AAA GA017849 #164 Macon
GACC 3BBB GA017850 #210 Amarillo
GACC 3CCC GA017851 #223 Midwest City
GACC 3DDD GA017852 #212 Amarillo
GACC 3EEE GA017853 #230 Springfield
GACC 3FFF GA017854 #195 Nacogdoches
GACC 3GGG GA017855 #165 Savannah
GACC 3HHH GA017856 #214 Las Cruces
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3JJJ GA017857 #186 Longview
GACC 3KKK GA017858 #206 Abilene
GACC 3LLL GA017859 #196 Lufkin
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- -----------------------------------------------
<C> <C> <C> <C>
1948 1987
1902 - 1919 1983 - 1984
1892 1980
LATE 1800'S 1980
LATE 1800'S 1980
1915 1987
1903 1985
1905 1987
1928 1985
- -----------------------------------------------
1910 1983 - 1984
CIRCA 1900 1987
1912 - 1918 1986
6.79 9/30/98 1892 1986
1900 1984
1906 1984
1903 1986
1890 1986
1886 1984
1917 1984
- -----------------------------------------------
1800'S 1983
14.37 7/31/02 1900 1981
7.56 1900 1985
1980 NAP
1980 NAP
1982 NAP
1977 NAP
1978 NAP
1978 NAP
- -----------------------------------------------
1979 NAP
1980 NAP
1972 NAP
1978 NAP
1972 NAP
1977 NAP
1978 NAP
1977 NAP
1978 NAP
1978 NAP
- -----------------------------------------------
1982 NAP
1978 NAP
1979 NAP
1977 NAP
1972 NAP
1978 NAP
1973 NAP
1969 NAP
1982 NAP
1977, 1978 NAP
- -----------------------------------------------
1973 NAP
1974, 1977 NAP
1979 NAP
1979 NAP
1977 NAP
1975 NAP
1978 NAP
1978 NAP
1975, 1977 NAP
1977 NAP
- -----------------------------------------------
1976 NAP
1979 NAP
1976 NAP
1981 NAP
1977 NAP
1977 NAP
1973, 1975 NAP
1976 NAP
1974 NAP
1972 NAP
- -----------------------------------------------
1976 NAP
1974 NAP
1974 NAP
1973 NAP
1973 NAP
1980 NAP
1974 NAP
1975 NAP
1973 NAP
1977 NAP
- -----------------------------------------------
1972, NAP
1973, 1975
1975 NAP
1975 NAP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CON-
LOAN TROL
SEL- NUM- LOAN
LER BER NUMBER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GACC 3MMM GA017860 #208 El Paso 4701 Osborne Drive El Paso Texas 79922
GACC 3NNN GA017861 #191 Texarkana 3107 South Lake Drive Texarkana Texas 75501
GACC 3PPP GA017862 #216 Odessa 3233 Odessa Texas 79761
GACC 3QQQ GA017863 #167 Warner-Robins 95 Green Street Warner-Robin Georgia 31093
GACC 3RRR GA017864 #194 Fort Smith 5808 Highway 271 South Fort Smith Arkansas 72908
GACC 3SSS GA017865 #205 Abilene 1850 North Clack Abilene Texas 79603
GACC 3TTT GA017866 #209 Amarillo 8400 canyon Drive Amarillo Texas 79109
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3UUU GA017867 #217 Clovis 1510 West 7th Street Clovis New Mexico 88101
GACC 3VVV GA017868 #203 Lubbock 132 Slaton Highway Lubbock Texas 79404
GACC 4 GA0177 Equitable Plaza 3435 Wilshire Boulevard Los Angeles California 90005
MS 5 MS2 Elm Ridge Center 3600 West Ridge Rd. Greece New York 14626
GACC 6 GA0084 Plaza Centro I State Rd #30 & Rafael Cordero Avenue Puerto Rico 00625
GACC 7 TA0977 110 Fifth Avenue 110 Fifth Avenue New York New York 10022
MS 8 MS3 Meadowglen Apartments 3609 Pleasantdale Road Doraville Georgia 30340
GACC 9 TA1578 Sun Harbor Budget Suites 2219 North Rancho Drive Las Vegas Nevada 89130
Conti 10 ST001 Perdido Beach Resort 27200 Perdido Beach Blvd. Orange Alabama 36561
Beach
Conti 11 MP-1022 Brea Union Plaza Imperial Highway at Kraemer Blvd. Brea California 92821
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 12 9510172 Hyatt Arlington 1325 Wilson Boulevard Arlington Virginia 22209
BCMC 13 2727 One Alewife Place 35 Cambidge Park Drive Cambridge Massachusetts 02140
Conti 14 9761-HSP(A) Homewood Suites- San Jose 10 W. Trimble Road San Jose California 95131
Conti 15 97-27C Foxdale Manor Apartments 1250 Foxdale Loop San Jose California 95122
GACC 16 TA2206 641 Avenue of the Americas 641 Avenue of the Americas New York New York 10011
BCMC 17 2831 MetroNorth Business Center 74-110 Commerce Way Woburn Massachusetts 01801
GACC 18 TA1369 Gertz Plaza 162-10 Jamaica Avenue & Jamaica New York 11432
163-25Archer Avenue
BCMC 19 2638 Aggregate Loan Level Information Various Various Various Various
BCMC 19A 26381 Springdale Manor 331, 335-363 Bolivar Street Canton Massachusetts 02021
BCMC 19B 26382 333 Bolivar Street Office 333 Bolivar Street Canton Massachusetts 02021
Building
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 20 A970027 Southwestern Bell Call Center 1801 Valley View Lane Farmers Texas 75234
Branch
Conti 21 9810050 Consolidated Wash Depot Car Washes A Consolidation of Nine Car Wash Various Various Various
Properties
Conti 21A 9810050A Sonny's Car Wash - Hollywood 1214 N. State Road 7 Hollywood Florida 33021
Conti 21B 9810050B Sonny's Car Wash - Lauderhill 1890 N.W. 40th Avenue Lauderhill Florida 33313
Conti 21C 9810050C Sonny's Car Wash - 5190 N. Federal Highway Lighthouse Florida 33064
Lighthouse Point Point
Conti 21D 9810050D Sonny's Car Wash - Malden 339-435 Eastern Avenue Malden Massachusetts 02148
Conti 21E 9810050E Sonny's Car Wash - Nashua 204 Daniel Webster Highway Nashua New 03060
Hampshire
Conti 21F 9810050F Sonny's Car Wash - Lake 5699 Lake Margaret Dr. Orlando Florida 32822
Margaret/Orlando
Conti 21G 9810050G Sonny's Car Wash - 6475 Raleigh Street Orlando Florida 32835
Raleigh/Orlando
Conti 21H 9810050H Sonny's Car Wash - Pompano Beach 1500 S. Federal Highway Pompano Florida 33062
Beach
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 21J 9810050I Sonny's Car Wash - Reading 374 Main Street Reading Massachusetts 01867
Conti 21K 9510228 Best Western Creekside Inn 3400 El Camino Real Palo Alto California 94306
Conti 21L 25012 The Imeson Center One Imeson Park Boulevard, Jacksonville Florida 32218
Building 100
Conti 21M MP-1041 Alameda Market Square 12031-12093 West Alameda Parkway Lakewood Colorado 80228
Conti 25 MP-1042 Wadsworth Market Square 8031 Wadsworth Blvd. Arvada Colorado 80003
Conti 26 97-60C Homewood Suites- San Antonio 432 West Market Street San Antonio Texas 78205
GACC 27 TA2719 Isles of Vero Beach 1700 Waterford Road Vero Beach Florida 32966
RMF 28 TSAR01 Trolley Station Shopping Center 2650 Thousand Oaks Blvd. Memphis Tennessee 38118
RMF 29 VDC001 Las Villas De Carlsbad 1088 Laguna Drive Carlsbad California 92008
GACC 30 TA1632 Aggregate Loan Level Information Various Various Various Various
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 30A TA16321 Harvard House Apartments 14570-14610 Greenfield Detroit Michigan 48227
GACC 30B TA16322 West Broghram Apartments 23230 Fenkell Detroit Michigan 48223
GACC 30C TA16323 15097-15101 Greenfield 15097-15101 Greenfield Detroit Michigan 48227
GACC 30D TA16324 14897-14941 Greenfield 14897-14941 Greenfield Detroit Michigan 48227
GACC 30E TA16325 16501-16561 Greenfield 16501-16561 Greenfield Detroit Michigan 48227
GACC 30F TA16326 Covington Terrace 17500-17550 2nd, 398-420 Whitmore, Detroit Michigan 48226
387-409 Covington
GACC 30G TA16327 Whitmore Plaza 300 Whitmore Detroit Michigan 48226
GACC 30H TA16328 Slattor Building 653-681-701 Whitmore Detroit Michigan 48226
GACC 30J TA16329 Blair House 831-841 Merton Detroit Michigan 48226
GACC 30K TA163210 Merton Manor 361 Merton Road Detroit Michigan 48226
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 30L TA163211 Balmoral/Fairlane 361-381 Covington Detroit Michigan 48226
GACC 30M TA163212 Our Place Apartments 13600, 13620, 13640 LaSalle Detroit Michigan 48238
GACC 30N TA163213 Tyler Place Apartments 20830 Joy Road Detroit Michigan 48228
GACC 30P TA163214 Parkway Apartments 641-711 Covington Detroit Michigan 48226
GACC 30Q TA163215 James Couzens 18637-18719 James Couzens Detroit Michigan 48235
GACC 30R TA163216 Claridge House Apartments 1514 Washington Boulevard Detroit Michigan 48226
MS 31 MS4 Harbor Place Shopping Center 100 East Imperial Highway Fullerton California 92835
MS 32 MS5 Shadowbrook Apartments 1034-1060 S. Winchester Blvd. San Jose California 95128
MS 33 MS6 Tiburon Lodge 1651 Tiburon Boulevard Tiburon California 94920
Conti 34 9761-HSP(C) Homewood Suites- Kissimmee 3100 Parkway Blvd. Kissimmee Florida 34747
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 35 MP-1013 Homebase, Brea Union Plaza 2455 E. Imperial Highway Brea California 92821
Conti 36 28001 Topflight Industrial Airpark 18450 Showalter Road Hagerstown Maryland 21742
RMF 37 HCC011 Easthaven Care Center Lake Forest Boulevard New Orleans Louisiana 70127
Conti 38 A970044 Gateway Center 128 N. Fair Avenue Yakima Washington 98901
Conti 39 9761-HSP(B) Homewood Suites- Jacksonville 8737 Baymeadows Road Jacksonville Florida 32256
MS 40 MS7 Collegiate Village Inn Apartments 11850 University Boulevard Orlando Florida 32817
Conti 41 MP-1043 Havana Market Square 1155 South Havana Street Aurora Colorado 80012
RMF 42 WMAR01 Wal-Mart Supercenter 768 Jefferson Avenue Cookeville Tennessee 38501
RMF 43 SCA001 Stonecourt Apartments 6980 Roswell Road Atlanta Georgia 30328
Conti 44 9761-HSP(D) Homewood Suites-Seattle/Tukwila 6955 Fort Dent Way Seattle/Tukw Washington 98188
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 45 TA1564 Embarcadero Business Park 1900-2000 Embarcadero Oakland California 94606
RMF 46 HCC005 Rivermont Convalescent 210 East 10th Street South Tennessee 37380
and Nursing Center Pittsburg
Conti 47 MP-1015 Rusty Leaf Plaza Shopping Center 2512 - 2642 E. Chapman Ave. Orange California 92869
Conti 48 A970030 Quince Diamond Executive Center 555 Quince Orchard Road Gaithersburg Maryland 20878
RMF 49 HCC002 Sycamore View Nursing Home Dovecreast Road Memphis Tennessee 38134
Conti 50 A970009 Old Town Center 5770 US Highway 192 Kissimmee Florida 34746
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE ORIGINAL
ORIGINAL DATE CUT-OFF DATE SERVICING TERM TO REMAINING
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE MATURITY TERM TO
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE OR ARD MATURITY OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- -----------------------------------------------------------------------------------------------------------------------------------
Self-Storage
Self-Storage
Office 30,500,000 30,429,599 1.64 30/360 7.350 0.02250 120 117
Anchored Retail 30,000,000 29,965,579 1.62 Actual/360 7.625 0.11000 120 119
Anchored Retail 28,000,000 27,955,965 1.51 30/360 7.225 0.02250 120 118
Office 23,500,000 23,417,541 1.26 30/360 7.843 0.02250 120 115
Multifamily 23,000,000 23,000,000 1.24 Actual/360 7.150 0.11000 120 117
Hospitality 22,500,000 22,425,612 1.21 30/360 7.750 0.02250 119 116
Hospitality 22,500,000 22,386,920 1.21 Actual/360 8.540 0.09750 240 237
Anchored Retail 20,000,000 19,968,453 1.08 30/360 7.210 0.09750 240 238
- -----------------------------------------------------------------------------------------------------------------------------------
Hospitality 19,500,000 19,406,230 1.05 Actual/360 8.875 0.09750 300 295
Office 19,200,000 19,169,231 1.03 30/360 7.130 0.03500 144 142
Hospitality 9761-HSP(A), 18,470,000 18,470,000 1.00 30/360 8.040 0.09750 120 120
(B), (C),
(D), (E)
Multifamily 18,500,000 18,429,585 0.99 Actual/360 7.660 0.09750 120 115
Office 17,200,000 17,187,107 0.93 30/360 7.450 0.02250 120 119
Industrial 16,950,000 16,950,000 0.91 30/360 7.140 0.03500 120 120
Office TA1369 & 16,500,000 16,487,755 0.89 30/360 7.500 0.02250 119 118
TA1029
Various 16,365,000 16,338,514 0.88 30/360 7.080 0.03500 120 118
Multifamily
Office
- -----------------------------------------------------------------------------------------------------------------------------------
Office 15,500,000 15,436,550 0.83 30/360 8.000 0.09750 120 114
Various 14,850,000 14,587,046 0.79 30/360 9.750 0.09750 180 173
Special Purpose
Special Purpose
Special Purpose
Special Purpose
Special Purpose
Special Purpose
Special Purpose
Special Purpose
- -----------------------------------------------------------------------------------------------------------------------------------
Special Purpose
Hospitality 14,000,000 13,953,219 0.75 Actual/360 8.130 0.09750 120 117
Industrial 13,500,000 13,438,883 0.72 30/360 9.000 0.09750 60 55
Anchored Retail 13,380,000 13,335,747 0.72 Actual/360 7.470 0.09750 180 176
Anchored Retail 13,280,000 13,236,077 0.71 Actual/360 7.470 0.09750 180 176
Hospitality 12,750,000 12,750,000 0.69 30/360 7.870 0.09750 120 119
Assisted Living 12,750,000 12,719,170 0.69 30/360 7.150 0.02250 120 118
Anchored Retail 12,300,000 12,258,387 0.66 Actual/360 8.310 0.06750 180 175
Assisted Living 12,000,000 11,937,167 0.64 Actual/360 8.310 0.02825 300 295
Various 11,635,000 11,616,538 0.63 30/360 7.180 0.02250 180 178
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Multifamily
Anchored Retail 11,450,000 11,416,416 0.62 Actual/360 7.600 0.02250 120 116
Multifamily 11,000,000 10,979,428 0.59 Actual/360 6.890 0.02250 120 118
Hospitality 10,850,000 10,816,809 0.58 Actual/360 8.220 0.02250 180 177
Hospitality 9761-HSP(A), 10,040,000 10,040,000 0.54 30/360 8.040 0.09750 120 120
(B), (C),
(D), (E)
- -----------------------------------------------------------------------------------------------------------------------------------
Anchored Retail 10,000,000 9,987,302 0.54 Actual/360 7.060 0.09750 300 299
Industrial 10,000,000 9,954,489 0.54 Actual/360 8.000 0.09750 120 116
Skilled Nursing HCC001 to 9,920,000 9,898,453 0.53 Actual/360 8.260 0.27250 180 177
HCC016
Anchored Retail 9,700,000 9,684,970 0.52 30/360 7.300 0.09750 120 118
Hospitality 9761-HSP(A), 9,520,000 9,520,000 0.51 30/360 8.040 0.09750 120 120
(B), (C),
(D), (E)
Multifamily 9,300,000 9,256,343 0.50 Actual/360 7.370 0.02250 120 116
Anchored Retail 9,160,000 9,129,704 0.49 Actual/360 7.470 0.09750 180 176
Anchored Retail 9,200,000 9,122,871 0.49 Actual/360 8.350 0.06750 193 188
Multifamily 8,900,000 8,868,778 0.48 Actual/365 8.310 0.06750 120 114
Hospitality 9761-HSP(A), 8,830,000 8,830,000 0.48 30/360 8.040 0.09750 120 120
(B), (C),
(D), (E)
- -----------------------------------------------------------------------------------------------------------------------------------
Office 8,800,000 8,800,000 0.47 30/360 7.040 0.02250 120 120
Skilled Nursing HCC001 to 8,800,000 8,780,886 0.47 Actual/360 8.260 0.27250 180 177
HCC016
Anchored Retail 8,500,000 8,487,914 0.46 30/360 7.730 0.09750 240 238
Office 8,500,000 8,477,247 0.46 30/360 8.063 0.09750 120 116
Skilled Nursing HCC001 to 8,400,000 8,381,755 0.45 Actual/360 8.260 0.27250 180 177
HCC016
Special Purpose 8,375,000 8,327,355 0.45 30/360 9.300 0.09750 120 112
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
360 357 11/26/97 12/1/07 Hyper 26,384,26 LO/48_Def/66_0%/6 NAP
376 375 1/23/98 2/1/08 Balloon 26,572,24 LO/60_YM1/57_0/3 1
360 358 12/8/97 1/1/08 Hyper 24,153,12 LO/36_Def/81_0/3 NAP
360 355 9/9/97 10/1/07 Hyper 20,548,02 LO/60_greater than YMor1%/55_0%5 2
375 372 12/1/97 12/1/07 Balloon 20,887,89 LO/48_YM1/69_0/3 1
300 297 10/29/97 11/1/07 Hyper 18,108,17 LO/36_Def/81_0/2 NAP
240 237 11/20/97 12/1/17 Full 0 LO/120_YM1/114_0/6 2
360 358 12/2/97 1/1/18 Balloon 11,595,59 LO/60_YM1/120_0/60 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 295 9/30/97 10/1/22 Full 0 LO/120_YM1/60_0/120 2
360 358 12/24/97 1/1/10 Hyper 14,002,90 LO/84_YM/54_0/6 1
288 288 2/27/98 3/1/08 Hyper 15,128,93 LO/12_YM1/48_5/12_4/12_3/12_2/12_1 1
/6_0/6
360 355 9/30/97 10/1/07 Balloon 16,149,93 LO/36_YM/78_0/6 2
360 359 1/27/98 2/1/08 Hyper 14,912,24 LO/36_DEF/24_/5%/12_4%/12_3%_ NAP
12_2%/12_1%/9_0%3
324 324 2/26/98 3/1/08 Hyper 13,935,34 LO/48_YM/66_0/6 1
360 359 12/15/97 1/1/08 Hyper 14,346,87 LO/35_Def/81_0%/3 NAP
360 358 12/22/97 1/1/08 Hyper 14,069,51 LO/60_YM/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
360 354 8/20/97 9/1/07 Hyper 13,597,32 LO/30_Def/84_0/6 NAP
180 173 7/2/97 8/1/12 Full 0 LO/60_YM/60_4/12_3/12_2/12_1/12_0/12 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 297 11/14/97 12/1/07 Balloon 11,376,24 LO/60_YM1/54_0/6 2
300 295 9/30/97 10/1/02 Balloon 12,591,78 LO/24_3/12_2/12_1/6_0/6 NAP
360 356 10/30/97 11/1/12 Balloon 10,121,67 LO/28_Def/32_3/12_1/12_0/96 NAP
360 356 10/30/97 11/1/12 Balloon 10,046,02 LO/28_Def/32_3/12_1/12_0/96 NAP
288 288 1/30/97 2/1/08 Hyper 10,432,32 LO/12_YM/48_5/12_4/12_3/12_2/12_ 1
1/6_0/6
300 298 12/30/97 1/1/08 Hyper 10,067,73 LO/36_Def/81_0%/3 NAP
360 355 9/12/97 10/1/12 Hyper 9,583,068 LO/60_YM/60_2/12_1.5/12_1/12_.5/ 1
12_0/12
300 295 9/27/97 10/1/22 Full 0 YM1/156_5/12_4.5/12_4/12_3.5/
12_3/12_2.5/12_2/12_1.1/12_1/
12_.5/24_0/12
360 358 12/5/97 1/1/13 Hyper 8,671,765 LO/36_Def/141_0%/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
376 372 10/8/97 11/1/07 Balloon 10,137,65 LO/60_YM1/57_0/3 1
373 371 12/31/97 1/1/08 Balloon 9,562,341 LO/60_YM1/57_0/3 1
311 308 11/6/97 12/1/12 Balloon 7,309,353 LO/90_YM1/84_0/6 1
288 288 2/27/98 3/1/08 Hyper 8,223,849 LO/12_YM1/48_5/12_4/12_3/12_2/ 1
12_1/6_0/6
- -----------------------------------------------------------------------------------------------------------------------------------
360 359 1/30/98 2/1/23 Balloon 3,401,997 LO/120_YM1/168_0/12 2
300 296 10/16/97 11/1/07 Balloon 8,099,208 LO/60_YM1/54_0/6 2
360 357 11/24/97 12/1/12 Hyper 7,738,033 LO/84_Def/90_0/6 NAP
360 358 12/29/97 1/1/08 Hyper 8,381,609 LO/26_Def/88_0/6 NAP
288 288 2/27/98 3/1/08 Hyper 7,797,913 LO/12_YM1/48_5/12_4/12_3/12_2/ 1
12_1/6_0/6
309 305 10/24/97 11/1/07 Balloon 7,521,882 LO/60_YM1/57_0/3 1
360 356 10/30/97 11/1/12 Balloon 6,929,335 LO/28_Def/32_3/12_1/12_0/96 NAP
240 235 10/1/97 11/1/13 Balloon 3,177,821 LO/60_YM/60_2/12_1.5/12_1/ 1
12_.5/12_0/25
360 354 7/24/97 7/31/07 Balloon 7,868,487 LO/60_2/12_1.5/12_1/12_.5/12_0/12 NAP
288 288 2/27/98 3/1/08 Hyper 7,232,728 LO/12_YM1/48_5/12_4/12_3/12_2/ 1
12_1/6_0/6
- -----------------------------------------------------------------------------------------------------------------------------------
360 360 2/12/98 3/1/08 Hyper 7,558,580 LO/60_Def/57_0%/3 NAP
360 357 11/24/97 12/1/12 Hyper 6,864,384 LO/84_Def/90_0/6 NAP
360 358 12/31/97 1/1/18 Balloon 5,068,787 LO/84_YM1/144_0/12 2
360 356 10/6/97 11/1/07 Hyper 7,466,166 LO/28_Def/86_0/6 NAP
360 357 11/24/97 12/1/12 Hyper 6,552,366 LO/84_Def/90_0/6 NAP
324 316 5/29/97 6/15/07 Hyper 7,234,182 LO/32_Def/82_0/6 NAP
<PAGE>
<CAPTION>
UNDER- SQ FT, LOAN PER
ANNUAL WRITTEN CUT-OFF SCHEDULED UNIT, SQ FT, UNIT,
DEBT UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD UNIT BED, PAD OCCUPANCY OCCUPANCY
SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
43,458 425,000 12/20/97 18,740 Sq Ft 78.00 9/30/97
39,477 415,000 12/20/97 19,230 Sq Ft 84.00 9/30/97
41,037 410,000 12/20/97 22,450 Sq Ft 85.00 9/30/97
36,574 375,000 12/20/97 19,940 Sq Ft 73.00 9/30/97
34,888 350,000 12/20/97 14,680 Sq Ft 94.00 9/30/97
30,494 335,000 12/20/97 17,280 Sq Ft 90.00 9/30/97
16,971 225,000 12/20/97 17,572 Sq Ft 73.00 9/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
13,534 -- 150,000 12/20/97 13,640 Sq Ft 65.00 9/30/97
10,101 125,000 12/20/97 16,840 Sq Ft 67.00 9/30/97
2,521,638 3,474,737 1.38 41,000,00 11/1/97 74.22 64.35 632,738 Sq Ft 48.09 80.00 11/1/97
2,548,058 3,145,936 1.23 37,500,00 7/28/97 79.91 70.86 443,146 Sq Ft 67.62 99.64 1/9/98
2,286,418 2,998,610 1.31 33,000,00 10/7/97 84.72 73.19 280,540 Sq Ft 99.65 99.00 11/18/97
2,038,436 2,649,177 1.30 29,700,00 9/1/98 78.85 69.19 166,681 Sq Ft 140.49 91.00 9/9/97
1,864,123 2,301,003 1.23 28,800,00 10/30/97 79.86 72.53 646 Units 35,603.72 94.70 9/6/97
2,039,388 3,620,886 1.78 39,600,00 10/10/97 56.63 45.73 704 Rooms 31,854.56 92.00 9/22/97
2,371,159 3,213,385 1.36 31,000,00 7/10/97 72.22 345 Rooms 64,889.62 72.75 9/30/97
1,630,717 2,118,690 1.30 26,200,00 9/29/97 76.22 44.26 163,665 Sq Ft 122.01 98.03 11/22/97
- -----------------------------------------------------------------------------------------------------------------------------------
1,964,356 3,123,236 1.59 28,000,00 5/23/97 69.31 303 Rooms 64,046.96 72.70 9/30/97
1,553,025 1,949,772 1.26 25,725,00 11/26/97 74.52 54.43 136,420 Sq Ft 140.52 ` 11/25/97
1,739,155 2,291,473 1.32 23,780,00 10/24/97 79.63 63.62 140 Rooms 131,928.5 84.05 11/30/97
1,593,715 1,921,408 1.21 26,300,00 8/1/97 70.07 61.41 287 Units 64,214.58 95.47 9/30/97
1,436,119 1,874,650 1.31 23,600,00 11/1/97 72.83 63.19 157,552 Sq Ft 109.09 100.00 10/28/97
1,417,631 1,814,451 1.28 22,600,00 1/6/98 75.00 61.66 511,537 Sq Ft 33.14 98.00 12/31/97
1,384,445 1,775,583 1.29 22,000,00 9/29/97 74.94 65.21 410,011 Sq Ft 40.21 99.00 12/12/97
1,317,089 1,733,273 1.32 21,260,00 0 76.85 66.18 228 Units 71,660.15
1,667,311 20,600,00 10/21/97 227 Units 97.00 1/23/98
65,962 660,000 10/31/97 10,000 Sq Ft 0.00 2/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
1,364,802 1,960,587 1.44 24,900,00 6/4/97 61.99 54.61 6,200 Sq Ft 74.00 100.00 7/1/97
1,887,784 2,984,369 1.58 18,920,00 0 77.10 208,593 Sq Ft 199.13 0.00
311,222 2,210,000 4/24/97 73,254 Sq Ft 100.00 5/16/97
153,459 1,060,000 4/24/97 5,665 Sq Ft 100.00
232,570 1,910,000 4/24/97 3,650 Sq Ft 0.00
663,611 3,500,000 5/5/97 4,823 Sq Ft 0.00
471,890 2,550,000 5/5/97 18,860 Sq Ft 0.00
279,428 2,000,000 5/1/97 11,125 Sq Ft 100.00 5/16/97
368,983 2,300,000 5/1/97 9,165 Sq Ft 0.00
65,472 1,670,000 4/24/97 9,187 Sq Ft 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
437,734 1,720,000 5/5/97 4,579 Sq Ft 100.00 5/14/97
1,324,351 1,649,286 1.25 19,500,00 10/1/97 71.55 58.34 136 Rooms 102,597.2 92.00 9/30/97
1,359,498 1,974,379 1.45 29,500,00 6/1/97 45.56 42.68 1,675,056 Sq Ft 8.02 97.00 9/1/97
1,131,182 1,401,458 1.24 19,400,00 10/1/97 68.74 52.17 240,661 Sq Ft 55.41 100.00 10/28/97
1,122,728 1,295,144 1.15 17,100,00 10/1/97 77.40 58.75 141,486 Sq Ft 93.55 92.00 10/28/97
1,183,548 1,741,135 1.47 17,500,00 10/6/97 72.86 59.61 146 Rooms 87,328.77 68.65 12/31/97
1,096,056 1,384,408 1.26 17,600,00 12/9/97 72.27 57.20 210 Beds 60,567.48 100.00 12/2/97
1,127,686 1,398,876 1.24 16,500,00 7/1/97 74.29 58.08 154,718 Sq Ft 79.23 100.00 12/31/97
1,152,817 1,849,800 1.60 16,000,00 8/28/97 74.61 0.00 185 Beds 64,525.23 98.20 12/31/97
945,834 1,227,094 1.30 14,790,00 0 78.54 58.63 654 Units 17,762.29
- -----------------------------------------------------------------------------------------------------------------------------------
112,465 1,280,000 11/1/97 62 Units 92.00 8/31/97
42,859 600,000 11/1/97 31 Units 94.00 8/31/97
47,486 630,000 11/1/97 33 Units 100.00 8/31/97
62,087 980,000 11/1/97 48 Units 88.00 8/31/97
93,171 1,190,000 11/1/97 56 Units 91.00 8/31/97
69,142 740,000 11/1/97 24 Units 100.00 8/31/97
118,811 1,360,000 11/1/97 52 Units 98.00 8/31/97
66,323 600,000 11/1/97 29 Units 100.00 8/31/97
34,138 660,000 11/1/97 28 Units 86.00 8/31/97
88,358 1,060,000 11/1/97 46 Units 96.00 8/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
63,567 950,000 11/1/97 48 Units 91.00 8/31/97
11,378 430,000 11/1/97 27 Units 78.00 8/31/97
72,458 770,000 11/1/97 35 Units 100.00 8/31/97
138,773 1,260,000 11/1/97 47 Units 98.00 8/31/97
75,146 810,000 11/1/97 38 Units 97.00 8/31/97
130,932 1,470,000 11/1/97 50 Units 100.00 8/31/97
970,147 1,238,024 1.28 15,000,00 2/28/98 76.11 67.58 114,702 Sq Ft 99.53 90.06 9/30/97
868,469 1,269,563 1.46 17,200,00 11/18/97 63.83 55.60 176 Units 62,383.12 98.00 10/9/97
1,023,953 1,448,134 1.41 15,600,00 10/1/97 69.34 46.85 102 Rooms 106,047.1 85.80 8/31/97
945,377 1,256,690 1.32 12,500,00 10/21/97 79.63 65.79 156 Rooms 64,358.97 84.71 11/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
811,314 1,114,058 1.37 13,250,00 9/29/97 75.38 25.68 133,112 Sq Ft 75.03 100.00 12/7/97
935,325 1,343,684 1.44 22,200,00 8/22/97 44.84 36.48 882,575 Sq Ft 11.28 78.22 9/1/97
905,190 727,250 1.22 12,400,00 10/1/97 77.62 62.40 284 Beds 34,853.71 89.00 9/30/97
798,005 1,069,674 1.34 13,100,00 11/1/97 73.93 63.98 113,142 Sq Ft 85.60 95.00 11/1/97
896,413 1,170,004 1.32 12,000,00 10/18/97 79.63 64.98 116 Rooms 82,068.97 83.70 11/30/97
815,301 1,123,924 1.38 13,560,00 6/5/97 68.26 55.47 308 Units 30,053.06 94.00 12/31/97
774,412 973,086 1.26 12,600,00 10/1/97 72.46 54.99 120,671 Sq Ft 75.66 93.00 10/28/97
956,072 1,015,032 1.06 11,140,00 6/26/97 81.89 28.53 199,026 Sq Ft 45.84 100.00 12/31/97
807,286 803,939 1.00 11,585,00 6/1/97 76.55 67.92 147 Units 60,331.82 99.32 11/30/97
831,442 1,100,423 1.32 11,220,00 10/23/97 79.63 64.46 106 Rooms 83,301.89 83.55 11/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
705,399 915,995 1.30 11,250,00 9/22/97 78.22 67.19 154,174 Sq Ft 57.08 97.00 12/1/97
802,991 1,068,600 1.22 11,000,00 10/1/97 77.62 62.40 165 Beds 53,217.49 96.29 9/30/97
729,331 901,298 1.24 11,000,00 9/29/97 77.16 46.08 59,301 Sq Ft 143.13 93.00 12/23/97
752,889 1,058,700 1.41 13,500,00 7/29/97 62.79 55.30 108,445 Sq Ft 78.17 98.70 9/5/97
766,491 923,700 1.22 10,500,00 10/1/97 77.62 62.40 140 Beds 59,869.68 95.00 9/30/97
848,426 1,184,293 1.40 15,650,00 1/31/97 53.21 46.22 101,109 Sq Ft 82.36 95.00 12/31/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GACC 3MMM GA017860 #208 El Paso
GACC 3NNN GA017861 #191 Texarkana
GACC 3PPP GA017862 #216 Odessa
GACC 3QQQ GA017863 #167 Warner-Robins
GACC 3RRR GA017864 #194 Fort Smith
GACC 3SSS GA017865 #205 Abilene
GACC 3TTT GA017866 #209 Amarillo
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 3UUU GA017867 #217 Clovis
GACC 3VVV GA017868 #203 Lubbock
GACC 4 GA0177 Equitable Plaza 0 0.00 State of California 58,992
MS 5 MS2 Elm Ridge Center 35,452 0.08 Sam's Club 131,408
GACC 6 GA0084 Plaza Centro I 420,000 1.50 Kmart Corporation 91,742
GACC 7 TA0977 110 Fifth Avenue 50,004 0.30 Emporio Armani 8,441
MS 8 MS3 Meadowglen Apartments #REF! 320.74
GACC 9 TA1578 Sun Harbor Budget Suites 176,000 250
Conti 10 ST001 Perdido Beach Resort 778,068 2,255.27
Conti 11 MP-1022 Brea Union Plaza 24,550 0.15 Hughes Family Markets 43,255
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 12 9510172 Hyatt Arlington 590,607 1,949.20
BCMC 13 2727 One Alewife Place 27,284 0.20 Genetics Institute, Inc. 136,420
Conti 14 9761-HSP(A) Homewood Suites- San Jose 263,874 1,884.81
Conti 15 97-27C Foxdale Manor Apartments 100,450 350.00
GACC 16 TA2206 641 Avenue of the Americas 80,760 0.51 The LZA Group, Inc. 30,500
BCMC 17 2831 MetroNorth Business Center 102,307 0.20 Creative Office Interiors, Inc. 125,713
GACC 18 TA1369 Gertz Plaza 253,200 0.62 Housing & Community Renewal 123,484
BCMC 19 2638 Aggregate Loan Level Information 46,900 0.16
BCMC 19A 26381 Springdale Manor
BCMC 19B 26382 333 Bolivar Street Office Judge Rotenberg Educational 10,000
Building Center
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 20 A970027 Southwestern Bell Call Center 31,289 0.15 SBC Asset Management 208,593
Conti 21 9810050 Consolidated Wash Depot Car 245,425 3.35
Washes
Conti 21A 9810050A Sonny's Car Wash - Hollywood 19,068 3.37
Conti 21B 9810050B Sonny's Car Wash - Lauderhill 18,240 5.00
Conti 21C 9810050C Sonny's Car Wash - Lighthouse 18,416 3.82
Point
Conti 21D 9810050D Sonny's Car Wash - Malden 46,060 2.44
Conti 21E 9810050E Sonny's Car Wash - Nashua 35,169 3.16
Conti 21F 9810050F Sonny's Car Wash - Lake 35,734 3.90
Margaret/Orlando
Conti 21G 9810050G Sonny's Car Wash - 35,737 3.89
Raleigh/Orlando
Conti 21H 9810050H Sonny's Car Wash - Pompano Beach 18,379 4.01
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 21J 9810050I Sonny's Car Wash - Reading 18,622 3.00
Conti 21K 9510228 Best Western Creekside Inn 193,592 1,423.47
Conti 21L 25012 The Imeson Center 251,258 0.15 Laney & Duke 1,392,244
Conti 21M MP-1041 Alameda Market Square 38,506 0.16 General Services Administration 80,000
Conti 25 MP-1042 Wadsworth Market Square 25,467 0.18 King Soopers 72,473
Conti 26 97-60C Homewood Suites- San Antonio 206,341 1,413.29
GACC 27 TA2719 Isles of Vero Beach 51,480 245.143
RMF 28 TSAR01 Trolley Station Shopping Center Toys R Us 45,451
RMF 29 VDC001 Las Villas De Carlsbad
GACC 30 TA1632 Aggregate Loan Level Information 164,952 252.22
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 30A TA16321 Harvard House Apartments
GACC 30B TA16322 West Broghram Apartments
GACC 30C TA16323 15097-15101 Greenfield
GACC 30D TA16324 14897-14941 Greenfield
GACC 30E TA16325 16501-16561 Greenfield
GACC 30F TA16326 Covington Terrace
GACC 30G TA16327 Whitmore Plaza
GACC 30H TA16328 Slattor Building
GACC 30J TA16329 Blair House
GACC 30K TA163210 Merton Manor
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 30L TA163211 Balmoral/Fairlane
GACC 30M TA163212 Our Place Apartments
GACC 30N TA163213 Tyler Place Apartments
GACC 30P TA163214 Parkway Apartments
GACC 30Q TA163215 James Couzens
GACC 30R TA163216 Claridge House Apartments
MS 31 MS4 Harbor Place Shopping Center 25,234 0.22 Lucky's Stores 61,808
MS 32 MS5 Shadowbrook Apartments 44,810 254.60
MS 33 MS6 Tiburon Lodge 147,341 1,444.52
Conti 34 9761-HSP(C) Homewood Suites- Kissimmee 194,087 1,244.15
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 35 MP-1013 Homebase, Brea Union Plaza 13,311 0.10 Homebase 133,112
Conti 36 28001 Topflight Industrial Airpark 132,386 0.15 GSA (Interlog) 197,000
RMF 37 HCC011 Easthaven Care Center
Conti 38 A970044 Gateway Center 17,000 0.15 Food Pavilion (Associated 68,947
Grocers)
Conti 39 9761-HSP(B) Homewood Suites- Jacksonville 158,094 1,362.88
MS 40 MS7 Collegiate Village Inn Apartments 44,999 146.10
Conti 41 MP-1043 Havana Market Square 22,927 0.19 King Soopers 61,518
RMF 42 WMAR01 Wal-Mart Supercenter Wal-Mart Supercenter 199,026
RMF 43 SCA001 Stonecourt Apartments
Conti 44 9761-HSP(D) Homewood Suites- Seattle/Tukwila 148,545 1,401.37
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 45 TA1564 Embarcadero Business Park 150,000 0.97 County of Alameda-Behavorial 19,115
Care Services
RMF 46 HCC005 Rivermont Convalescent and
Nursing Center
Conti 47 MP-1015 Rusty Leaf Plaza Shopping Center 8,895 0.15 Ralphs Market 42,302
Conti 48 A970030 Quince Diamond Executive Center 21,689 0.20 Waste Policy Institute 60,903
RMF 49 HCC002 Sycamore View Nursing Home
Conti 50 A970009 Old Town Center 20,222 0.20
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- --------------------------------------------------
<C> <C> <C> <C>
1977 NAP
1973 NAP
1980 NAP
1975 NAP
1973 NAP
1970 NAP
1971 NAP
- --------------------------------------------------
1971 NAP
1970 NAP
9.32 11/19/05 1970 1988 -
1995
29.65 6/30/11 1989 NAP
32.7 8/31/12 1987 NAP
5.06 1/31/03 1888 1986
1985 NAP
1997 NAP
1987 NAP
26.43 2/14/23 1997 NAP
- --------------------------------------------------
1975 1994
100 6/30/09 1946 1982
1990 1991
1969 1978
19.36 1/31/06 1898 1990
24.58 11/30/07 1974-1978 Various
30.12 10/31/05 1921, 1936, 1984
1947,1971
1989-1992 NAP
100 1/31/01 1977 NAP
- --------------------------------------------------
100 7/31/07 1986 1997
NAP
1960's 1996
1960's NAP
1968, 1997 NAP
1965 1994
1989 NAP
1991 1995
1992, 1995 NAP
1968 1997
- --------------------------------------------------
1976 1988
1955 1994
83.116 12/31/00 1974 NAP
33.24 1/31/98 1978 1994
51.22 12/1/09 1974 1996
1911 1995, 1996
1989 NAP
48.38 9/1/18 1991-1997 NAP
1987 NAP
- --------------------------------------------------
1963 NAP
1959 NAP
1960 NAP
1958-1961 NAP
1958-1960 NAP
1958 NAP
1935 NAP
1956 NAP
1964 NAP
1940 NAP
- --------------------------------------------------
1937 NAP
1948 NAP
1969 NAP
1958 NAP
1970 NAP
1940 1968
53.89 10/31/18 1968 1988
1978 1997
1965 1998
1990 NAP
<PAGE>
- --------------------------------------------------
100 6/17/17 1997 NAP
22.32 2/15/05 1941, 1953 1988
1983 NAP
60.94 7/1/16 1996 NAP
1991 NAP
1989 NAP
50.98 12/1/19 1971 1996
100 10/26/13 1993 NAP
Circa 1968 1996, 1997
1992 NAP
- --------------------------------------------------
12.4 6/25/03 1986, 1987 1991
1979 1985
71.33 10/31/17 1962 1997
56.16 7/31/98 1990 NAP
1974 1995
1986 1996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CON-
LOAN TROL
SEL- NUM- LOAN
LER BER NUMBER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GACC 51 TA1355 Park Heights Apartments 5553 Wissahickon Avenue Philidelphia Pennsylvania 19144
Conti 52 97C-080137 Kendall Club Apartments 9956 North Kendall Drive Miami Florida 33176
RMF 53 HCC003 Woodland Village Care Center 5301 Tullis Drive New Orleans Louisiana 70131
RMF 54 HCC007 Fountain View Nursing Home First Street Springhill Louisiana 71075
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 55 2307 1400 Worcester Street 1400 Worcester Street (Route 9) Natick Massachusetts 01760
Conti 56 97-L022 1443 Park Avenue 1443 Park Avenue, 105, 111, 113 New York New York 10029
East 106th Street
BCMC 57 1006-I Aggregate Loan Level Information Various Various Various Various
BCMC 57A 1006-IA Town Center East 403-431 Town Center Blvd. Bella Vista Arkansas 72715
BCMC 57B 1006-IB Town Center Post Office 555 Memorial Dr. Bella Vista Arkansas 72714
BCMC 57C 1006-IC Highlands Post Office Lancshire Rd. Bella Vista Arkansas 72715
BCMC 57D 1006-ID Town Center West 301-313 Town Center Blvd. Bella Vista Arkansas 72714
BCMC 57E 1006-IE All-In-One-Convenience Bella Vista Way Bella Vista Arkansas 72715
BCMC 57F 1006-IF Hospitality Center 2829 Bella Vista Way Bella Vista Arkansas 72715
BCMC 57G 1006-IG Sugar Creek Center 10-44 Sugar Creek Center Bella Vista Arkansas 72715
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 57H 1006-IH A.G. Edwards and Sons 10 Riordan Road Bella Vista Arkansas 72715
BCMC 57J 1006-II Cunningham Corner 4-27 Cunningham Corner Bella Vista Arkansas 72715
BCMC 57K 1006-IJ Central Station Convenience 1806 Forest Hills Blvd. Bella Vista Arkansas 72715
MS 58 MS8 Wright State Housing 2030 Village Drive/2160 Zink Road Fairborn Ohio 45324
Conti 59 97C-080131 IGEN Building 16020 Industrial Drive Gaithersburg Maryland 20877
Conti 60 PMC01005 Lakeridge Tennis Club 6000 Plumas Street Reno Nevada 89509
GACC 61 TA2947 Wyngate Apartments 2504 Larkin Road Lexington Kentucky 40503
RMF 62 HCC013 Fentress County Nursing Home 208 Duncan Street North Jamestown Tennessee 38556
Conti 63 A970020 Evergreen Square Buckeystown Pike Frederick Maryland 21704
Conti 64 9761-HSP(E Homewood Suites- Savannah 5820 White Bluff Road Savannah Georgia 31405
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 65 LCC001 Life Care Centers of Scottsdale 9494 East Becker Lane Scottsdale Arizona 85260
MS 66 MS9 Village Park 3900 West Prospect Rd. Fort Lauderdale Florida 33309
MS 67 MS10 Park City West 10550 State Road 84 Fort Lauderdale Florida 33324
RMF 68 SHA003 Squire Hill Apartments, Phase I - 1000 Old Brook Road Charlottesville Virginia 22901
Charlottesville
GACC 69 TA1402 Old Lyme Marketplace 90 Halls Road (Route 1) Old Lyme Connecticut 06371
Marketplace
Conti 70 97C-080133 Fulton Loft Office Building 600 West Fulton Street Chicago Illinois 60661
RMF 71 HCC006 Greeneville West Health Care Center Holt Court Greeneville Tennessee 37743
MS 72 MS11 The Inn at Morgan Hill 16115 Condit Road Morgan Hill California 95037
Conti 73 NYU108 Lane Hill 50 St. Andrews Place Yonkers New York 10705
MS 74 MS12 Imperial Estates 5601 North State Road 7 Fort Lauderdale Florida 33319
- -----------------------------------------------------------------------------------------------------------------------------------
MS 75 MS13 Lawrence Square Manor Apts. 3760 & 3765 Tamarack Lane Santa Clara California 95051
RMF 76 HIFH01 Holiday Inn I -65/Oxmoor Road 260 Oxmoor Road Homewood Alabama 35209
GACC 77 TA1178 St. Albans Retail Center 1400 McCorkle Avenue St. Albans West 25711
Virginia
RMF 78 SOA001 Stanford Oaks Apartments 2035 Idlewood Road Atlanta Georgia 30084
RMF 79 PCAR01 Park Centre Commons 3500 S.W. College Road Ocala Florida 34474
RMF 80 SHA002 Squire Hill Apartments - 1405 Devon Lane Harrisonburg Virginia 22801
Harrisonburg
MS 81 MS14 Hacienda Heights Shopping Center 3127- 3139 Hacienda Blvd. Hacienda Heights California 90010
Conti 82 9510148 Oak Grove Institute Foundation 24275 Jefferson Avenue Murrieta California 92562
Conti 83 A970018 Raintree Village 2519-2567 S. Shields St. Fort Collins Colorado 80526
GACC 84 TA1093 Mohawk Apartments 369,373,& 379 Washington Ave. & New York New York 11238
76, 80, 84 St.James Pl
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 85 1004 Aggregate Loan Level Information Various Various Various Various
BCMC 85A 1004A Branson Executive Office Park I 1394 State Highway 248 Branson Missouri 65616
BCMC 85B 1004B Branson Executive Office Park II 1440 State Highway 248 Branson Missouri 65616
BCMC 85C 1004C The Station Retail Center 1494 Highway 248 Branson Missouri 65616
BCMC 85D 1004D McGuffey's Restaurant 1464 Highway 248 Branson Missouri 65616
BCMC 85E 1004E Corporate Woods 1756 Bee Creek Road Branson Missouri 65616
BCMC 85F 1004F 802 South Highway 13 802 South Highway 13 Lexington Missouri 64067
BCMC 85G 1004G 610 North Ridgeview Drive 610 North Ridgeview Drive Warrensburg Missouri 64093
BCMC 85H 1004H Springfield Probation and Parole 2872 South Meadowbrook Springfield Missouri 65807
Office Building
BCMC 85J 1004I Branson Probation/Parole Building 225 Church Road Branson Missouri 65616
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 86 HCC016 Bay St. Joseph Care Center 220 Ninth Street Port St. Joe Florida 32456
Conti 87 MP-1048 Jewell Market Square 1937 South Wadsworth Blvd. Lakewood Colorado 80227
GACC 88 TA0826 Technical Career Institute 320 West 31st Street New York New York 10001
GACC 89 TA2720 Vineyard Place 4017 SE Vineyard Road Milwaukie Oregon 97267
MS 90 MS16 820 Business Park 2700-3156 S. E. Loop 820 Fort Worth Texas 76140
Conti 91 9754-KMJ K-Mart- Jackson 3555 O'Neil Drive Blackman Michigan 49202
Township
BCMC 92 2397 Office Court at Walton Point 482-490 Norristown Road Whitpain Pennsylvania 19422
Township
Conti 93 97-36C Ramada Inn - Kansas City 7301 NW Tiffany Springs Rd. Kansas City Missouri 64153
RMF 94 HCC001 Heritage Manor of Abbeville 2403 Alonzo Drive Abbeville Louisiana 70510
MS 95 MS17 1700 DeAnza 1700 DeAnza Boulevard San Mateo California 94402
- -----------------------------------------------------------------------------------------------------------------------------------
MS 96 MS18 Kessler Hills Shopping Center 1050 N. Westmoreland Rd. Dallas Texas 75211
Conti 97 MP-1044 Leetsdale Market Square 890 South Monaco Street Parkway Denver Colorado 80224
MS 98 MS19 100 Dorset Street 100 Dorset St. South Burlington Vermont 05403
Conti 99 97C-070126 Princeton Square Apartments 13300 Princeton Avenue Taylor Michigan 48180
Conti 100 9410235 Combest Self Storage Consolidation A Consolidation of Five Self- Various Various Various
Storage Properties
Conti 100A 9410235A Lockup Self Storage 11702 Beechnut Street Houston Texas 77072
Conti 100B 9410235B Allspace Self Storage 1920 South FM 2818 Bryan Texas 77807
Conti 100C 9410235C Garth Road Self Storage 3412 Garth Road Baytown Texas 77521
Conti 100D 9410235D Storage Station - La Porte 10610 Fairmont Parkway La Porte Texas 77571
Conti 100E 9410235E Stow Away Self Storage 2150 Wirt Road Houston Texas 77055
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 101 TA0696 Aggregate Loan Level Information Various Various Various Various
GACC 101A TA06961 Best Western Choice Lodge 24415 Russell Road Kent Washington 98032
GACC 101B TA06962 Plaza by the Green 24415 Russell Road Kent Washington 98032
GACC 102 TA1197 30-60/68 Whitestone Expressway 30-60/68 Whitestone Expressway& New York New York 11354
131-23/35 31st Av
Conti 103 A970025 Peter Harris Plaza Consolidation Includes Four Individual Various Various Various
Properties
Conti 103A A970025A Peter Harris Plaza I-Dewitt 6870 East Genessee Street Dewitt New York 13066
Conti 103B A970025B Peter Harris Plaza -East Greenbush 574 Columbia Turnpike East Greenbush New York 12061
Conti 103C A970025C Peter Harris Plaza III- Bethlehem 417 Kenwood Avenue Delmar New York 12054
Conti 103D A970025D Peter Harris Plaza IV- Greece 2695 West Ridge Rd. Greece New York 14622
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE ORIGINAL
ORIGINAL DATE CUT-OFF DATE SERVICING TERM TO REMAINING
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE MATURITY TERM TO
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE OR ARD MATURITY OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily 8,200,000 8,187,117 0.44 30/360 7.230 0.02250 120 118
Multifamily 8,200,000 8,173,567 0.44 Actual/360 7.625 0.09750 120 116
Skilled HCC001 to HCC016 8,160,000 8,142,276 0.44 Actual/360 8.260 0.27250 180 177
Nursing
Skilled HCC001 to HCC016 8,160,000 8,142,276 0.44 Actual/360 8.260 0.27250 180 177
Nursing
- -----------------------------------------------------------------------------------------------------------------------------------
Unanchored 8,000,000 7,983,324 0.43 30/360 7.860 0.03500 120 117
Retail
Office 8,000,000 7,959,882 0.43 30/360 8.375 0.09750 120 115
Various 1006-I, 1006-II, 7,960,000 7,948,840 0.43 30/360 7.800 0.03500 120 118
1006III, 1006IV
Unanchored
Retail
Special
Purpose
Special
Purpose
Unanchored
Retail
Unanchored
Retail
Unanchored
Retail
Anchored
Retail
- -----------------------------------------------------------------------------------------------------------------------------------
Unanchored
Retail
Unanchored
Retail
Unanchored
Retail
Multifamily 7,800,000 7,778,721 0.42 Actual/360 7.960 0.02250 120 116
Industrial 7,800,000 7,774,370 0.42 Actual/360 8.250 0.09750 120 117
Special 7,800,000 7,772,678 0.42 Actual/360 8.750 0.09750 120 118
Purpose
Multifamily 7,750,000 7,737,408 0.42 30/360 7.060 0.02250 120 118
Skilled HCC001 to HCC016 7,760,000 7,734,537 0.42 Actual/360 8.260 0.27250 120 117
Nursing
Unanchored 7,750,000 7,718,275 0.42 30/360 8.000 0.09750 180 174
Retail
Hospitality 9761-HSP(A) to 7,640,000 7,640,000 0.41 30/360 8.040 0.09750 120 120
9761-HSP(E)
- -----------------------------------------------------------------------------------------------------------------------------------
Skilled 7,500,000 7,484,433 0.40 Actual/360 8.541 0.28250 180 177
Nursing
Mobile Home 7,420,000 7,407,772 0.40 Actual/360 7.680 0.02250 120 118
Park
Mobile Home 7,300,000 7,287,970 0.39 Actual/360 7.680 0.02250 120 118
Park
Multifamily 7,250,000 7,226,803 0.39 Actual/360 7.670 0.06750 180 176
Anchored 7,200,000 7,188,665 0.39 30/360 7.220 0.02250 120 118
Retail
Office 7,200,000 7,162,166 0.39 30/360 8.086 0.09750 120 115
Skilled HCC001 to HCC016 7,040,000 7,024,709 0.38 Actual/360 8.260 0.27250 180 177
Nursing
Hospitality 7,000,000 6,982,686 0.38 Actual/360 7.560 0.02250 120 118
Multifamily 7,000,000 6,968,694 0.38 Actual/360 8.125 0.09750 180 176
Mobile Home 6,940,000 6,928,563 0.37 Actual/360 7.680 0.02250 120 118
Park
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily 6,700,000 6,687,984 0.36 Actual/360 7.150 0.02250 120 118
Hospitality 6,500,000 6,483,862 0.35 Actual/360 8.000 0.06750 120 118
Anchored 6,400,000 6,400,000 0.35 30/360 7.710 0.02250 120 120
Retail
Multifamily 6,200,000 6,174,569 0.33 30/360 7.990 0.06750 120 114
Anchored 6,000,000 5,984,328 0.32 Actual/360 7.570 0.06750 84 82
Retail
Multifamily 6,000,000 5,980,802 0.32 Actual/360 7.670 0.06750 180 176
Anchored 6,000,000 5,950,563 0.32 Actual/360 8.120 0.02250 240 235
Retail
Skilled 6,000,000 5,950,561 0.32 30/360 8.350 0.11750 120 115
Nursing
Unanchored 5,950,000 5,929,973 0.32 30/360 8.050 0.09750 180 175
Retail
Multifamily 5,900,000 5,886,215 0.32 30/360 7.410 0.02250 120 119
- -----------------------------------------------------------------------------------------------------------------------------------
Various 5,710,000 5,702,558 0.31 30/360 8.160 0.03500 120 118
Office
Office
Unanchored
Retail
Special
Purpose
Office
Office
Office
Office
Office
- -----------------------------------------------------------------------------------------------------------------------------------
Skilled HCC001 to HCC016 5,680,000 5,667,663 0.31 Actual/360 8.260 0.27250 180 177
Nursing
Anchored 5,610,000 5,591,445 0.30 Actual/360 7.470 0.09750 180 176
Retail
Office 5,500,000 5,492,519 0.30 30/360 7.950 0.02250 120 118
Assisted 5,500,000 5,486,701 0.30 30/360 7.150 0.02250 120 118
Living
Industrial 5,500,000 5,486,276 0.30 Actual/360 7.495 0.02250 120 118
Anchored 5,500,000 5,485,651 0.30 Actual/360 7.580 0.09750 120 118
Retail
Office 5,500,000 5,485,120 0.30 30/360 8.010 0.03500 120 116
Hospitality 5,500,000 5,478,421 0.30 30/360 8.490 0.09750 120 116
Skilled HCC001 to HCC016 5,440,000 5,428,184 0.29 Actual/360 8.260 0.27250 180 177
Nursing
Multifamily 5,400,000 5,389,770 0.29 Actual/360 6.810 0.02250 120 118
- -----------------------------------------------------------------------------------------------------------------------------------
Anchored 5,400,000 5,384,034 0.29 Actual/360 7.560 0.02250 120 116
Retail
Anchored 5,370,000 5,352,239 0.29 Actual/360 7.470 0.09750 180 176
Retail
Anchored 5,300,000 5,290,941 0.29 Actual/360 7.450 0.02250 120 118
Retail
Multifamily 5,300,000 5,280,184 0.28 Actual/360 7.330 0.09750 120 117
Various 5,245,000 5,231,589 0.28 Actual/360 7.750 0.09750 120 118
Self-Storage
Self-Storage
Self-Storage
Self-Storage
Self-Storage
- -----------------------------------------------------------------------------------------------------------------------------------
Various 5,200,000 5,189,970 0.28 30/360 8.550 0.02250 120 118
Hospitality
Mixed Use
Office 5,200,000 5,192,156 0.28 30/360 7.435 0.02250 84 82
Various 5,200,000 5,177,909 0.28 30/360 8.000 0.09750 120 116
Unanchored
Retail
Unanchored
Retail
Unanchored
Retail
Unanchored
Retail
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
360 358 12/30/97 1/1/08 Hyper 7,074,222 LO/36_Def/81_0%/3 NAP
360 356 10/14/97 11/1/07 Balloon 7,152,937 LO/60_YM1/54_0/6 2
360 357 11/24/97 12/1/12 Hyper 6,365,155 LO/84_Def/90_0/6 NAP
360 357 11/24/97 12/1/12 Hyper 6,365,155 LO/84_Def/90_0/6 NAP
- ------------------------------------------------------------------------------------------------------------------------------------
360 357 11/12/97 12/1/07 Hyper 6,997,573 LO/60_YM/54_0/6 1
300 295 9/15/97 10/1/07 Balloon 6,521,789 LO/60_YM1/54_0/6 2
360 358 12/31/97 1/1/08 Balloon 6,953,785 LO/60_YM1/54_0%/6 1
- ------------------------------------------------------------------------------------------------------------------------------------
378 374 10/27/97 11/1/07 Balloon 6,966,771 LO/60_YM1/57_0/3 1
300 297 11/26/97 12/1/07 Balloon 6,357,221 LO/60_YM1/54_0/6 2
240 238 12/29/97 1/1/08 Hyper 5,519,707 LO/60_YM1/54_0/6 NAP
360 358 12/23/97 1/1/08 Hyper 6,659,816 LO/36_Def/81_0%/3 NAP
300 297 11/24/97 12/1/07 Balloon 6,344,376 LO/84_Def/30_0/6 NAP
360 354 8/25/97 9/1/12 Hyper 5,950,571 LO/30_Def/144_0/6 NAP
288 288 2/27/98 3/1/08 Hyper 6,257,989 LO/12_YM1/48_5/12_4/12_3/12_2/12_1/6_0/6 1
- ------------------------------------------------------------------------------------------------------------------------------------
360 357 11/14/97 12/1/12 Balloon 5,904,499 YM1/180 1
377 375 12/9/97 1/1/08 Balloon 6,582,266 LO/36_YM1/81_0/3 1
377 375 12/9/97 1/1/08 Balloon 6,475,815 LO/36_YM1/81_0/3 1
360 356 10/24/97 11/1/12 Hyper 5,524,555 LO/60_YM/60_4/12_3/12_2/12_1/12_0/12 1
360 358 12/11/97 1/1/08 Hyper 6,210,094 LO/26_Def/91_0/3 NAP
300 295 9/18/97 10/1/07 Balloon 5,827,630 LO/60_YM1/54_0/6 2
360 357 11/24/97 12/1/12 Hyper 5,491,507 LO/84_Def/90_0/6 NAP
309 307 12/17/97 1/1/08 Balloon 5,693,701 LO/72_YM1/42_0/6 1
300 296 10/20/97 11/1/12 Balloon 4,498,834 LO/96_YM1/60_0/24 2
377 375 12/9/97 1/1/08 Balloon 6,156,459 LO/36_YM1/81_0/3 1
- ------------------------------------------------------------------------------------------------------------------------------------
374 372 12/12/97 1/1/08 Balloon 5,864,415 LO/60_YM1/54_0/6 1
300 298 12/19/97 1/1/08 Hyper 5,264,474 LO/60_3/12_2/12_1/24_0/12 NAP
360 360 2/3/98 3/1/08 Hyper 5,580,279 LO/36_Def/81_0%/3 NAP
360 354 8/25/97 9/1/07 Hyper 5,437,811 YM1/84_3/12_2/12_1/6_0/6 1
300 298 12/30/97 1/1/05 Hyper 5,264,263 LO/60_2/12_1/9_0/3 NAP
360 356 10/24/97 11/1/12 Hyper 4,572,047 LO/60_YM/60_4/12_3/12_2/12_1/12_0/12 1
246 241 9/16/97 10/1/17 Full 0 LO/108_YM1/126_0/6 1
240 235 9/4/97 10/1/07 Balloon 4,180,803 7/12_6/12_5/12_4/12_3/12_2/12_1/12_0/36 NAP
360 355 9/12/97 10/1/12 Hyper 4,576,390 LO/29_Def/145_0/6 NAP
210 209 1/30/98 2/1/08 Hyper 4,639,593 LO/36_Def/81_0%/3 NAP
- ------------------------------------------------------------------------------------------------------------------------------------
360 358 12/10/97 1/1/08 Balloon 5,025,440 LO/60_>YM or 1%/54_0%/6 1
- ------------------------------------------------------------------------------------------------------------------------------------
360 357 11/24/97 12/1/12 Hyper 4,430,647 LO/84_Def/90_0/6 NAP
360 356 10/30/97 11/1/12 Balloon 4,243,839 LO/28_Def/32_3/12_1/12_0/96 NAP
360 358 12/19/97 1/1/08 Hyper 4,819,875 LO/36_Def/78_0%/6 NAP
300 298 12/31/97 1/1/08 Hyper 4,342,945 LO/36_Def/81_0%/3 NAP
309 307 12/30/97 1/1/08 Balloon 4,464,980 LO/60_YM1/57_0/3 1
300 298 12/16/97 1/1/08 Balloon 4,406,124 LO/60_YM1/54_0/6 2
360 356 10/22/97 11/1/07 Balloon 4,825,852 LO/60_YM/54_0/6 1
300 296 10/2/97 11/1/07 Balloon 4,496,294 LO/60_YM1/54_0/6 2
360 357 11/24/97 12/1/12 Hyper 4,243,437 LO/84_Def/90_0/6 NAP
373 371 12/17/97 1/1/08 Balloon 4,684,166 LO/60_YM1/57_0/3 1
- ------------------------------------------------------------------------------------------------------------------------------------
376 372 10/31/97 11/1/07 Balloon 4,776,323 LO/60_YM1/57_0/3 1
360 356 10/30/97 11/1/12 Balloon 4,062,286 LO/28_Def/32_3/12_1/12_0/96 NAP
376 374 12/30/97 1/1/08 Balloon 4,674,783 LO/60_YM1/57_0/3 1
300 297 11/26/97 12/1/07 Balloon 4,217,422 LO/60_YM1/54_0/6 2
300 298 12/12/97 1/1/08 Balloon 4,220,712 LO/60_YM1/54_0/6 2
- ------------------------------------------------------------------------------------------------------------------------------------
300 298 12/4/97 1/1/08 Hyper 4,257,197 LO/60_Def/57_0%/3 NAP
360 358 12/18/97 1/1/05 Hyper 4,770,857 LO/36_Def/48 NAP
300 296 10/13/97 11/1/07 Hyper 4,199,692 LO/28_Def/86_0/6 NAP
<PAGE>
<CAPTION>
UNDER- SQ FT, LOAN PER
WRITTEN CUT-OFF SCHEDULED UNIT, SQ FT, UNIT,
ANNUAL UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD BED, PAD OCCUPANCY OCCUPANCY
DEBT SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM UNIT TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
669,927 839,812 1.25 10,700,000 9/1/97 76.52 66.11 255 Units 32,106.34 95.00 9/1/97
703,905 888,237 1.26 10,540,000 9/3/97 77.55 67.86 176 Units 46,440.72 94.32 10/1/97
744,592 545,200 1.22 10,200,000 10/1/97 77.62 62.40 186 Beds 43,775.68 90.70 9/30/97
744,592 922,450 1.22 10,200,000 10/1/97 77.62 62.40 153 Beds 53,217.49 93.90 9/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
695,067 985,507 1.42 11,750,000 10/24/97 67.94 59.55 64,797 Sq Ft 123.21 100.00 10/14/97
764,948 1,084,354 1.42 11,750,000 7/31/97 67.74 55.50 180,024 Sq Ft 44.22 100.00 6/30/97
687,620 1,044,134 1.53 10,990,000 72.66 63.27 164,975 Sq Ft 48.18
214,005 2,360,000 10/28/97 35,743 Sq Ft 93.00 11/30/97
21,312 300,000 10/28/97 4,730 Sq Ft 100.00 11/30/97
61,331 670,000 10/28/97 6,362 Sq Ft 100.00 11/30/97
50,842 700,000 10/28/97 13,118 Sq Ft 100.00 11/30/97
22,724 260,000 10/28/97 2,880 Sq Ft 100.00 11/30/97
7,254 170,000 10/28/97 3,596 Sq Ft 69.00 11/30/97
476,075 4,330,000 10/28/97 65,997 Sq Ft 92.00 11/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
30,056 260,000 10/28/97 3,000 Sq Ft 100.00 11/30/97
140,627 1,700,000 10/28/97 26,905 Sq Ft 100.00 11/30/97
19,908 240,000 10/28/97 2,644 Sq Ft 100.00 11/30/97
684,195 880,175 1.29 10,450,000 6/10/97 74.44 66.67 193 Units 40,304.25 99.46 7/31/97
745,482 1,001,764 1.34 10,000,000 9/18/97 77.74 63.57 83,541 Sq Ft 93.06 100.00 11/21/97
834,618 1,432,968 1.72 11,500,000 9/25/97 67.59 48.00 64,224 Sq Ft 121.02 0.00
622,483 890,358 1.43 8,500,000 12/9/97 91.03 78.35 312 Units 24,799.38 96.00 12/17/97
742,293 1,038,950 1.22 9,700,000 10/1/97 77.62 65.41 140 Beds 55,246.70 93.00 9/30/97
682,401 980,420 1.44 11,000,000 7/1/97 70.17 54.10 91,130 Sq Ft 84.70 93.15 6/20/97
719,390 935,584 1.32 9,000,000 10/20/97 79.63 69.53 106 Rooms 72,075.47 81.23 11/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
702,562 1,934,000 2.75 10,200,000 7/23/97 73.38 57.89 141 Beds 53,081.09 96.80 11/30/97
633,592 744,612 1.18 9,260,000 11/1/97 80.00 71.08 307 Pads 24,129.55 84.90 12/1/97
623,345 760,401 1.22 9,830,000 11/1/97 74.14 65.88 363 Pads 20,077.05 100.00 12/1/97
625,100 940,889 1.51 9,900,000 9/19/97 73.00 55.80 262 Units 27,583.22 90.08 12/31/97
587,643 793,640 1.35 9,000,000 9/12/97 79.87 69.00 98,904 Sq Ft 72.68 99.00 11/1/97
671,779 897,160 1.34 10,205,000 8/14/97 70.18 57.11 209,055 Sq Ft 34.26 94.66 9/8/97
642,393 789,100 1.22 8,800,000 10/1/97 77.62 62.40 144 Beds 48,782.70 95.00 9/30/97
624,035 1,143,162 1.83 12,000,000 11/21/97 58.19 47.45 101 Rooms 69,135.50 79.87 10/31/97
661,826 821,968 1.24 9,000,000 7/22/97 77.43 49.99 110 Units 63,351.77 100.00 10/1/97
592,605 714,917 1.21 8,630,000 11/1/97 80.28 71.34 261 Pads 26,546.22 95.80 12/1/97
- -----------------------------------------------------------------------------------------------------------------------------------
543,027 739,016 1.36 9,190,000 10/9/97 72.77 63.81 110 Units 60,799.85 98.29 10/27/97
607,943 775,105 1.27 9,400,000 7/21/97 68.98 56.01 193 Units 33,595.14 66.00 12/31/97
548,083 757,923 1.38 10,000,000 10/1/97 64.00 55.80 222,672 Sq Ft 28.74 100.00 1/12/98
545,402 738,326 1.35 8,100,000 8/5/97 76.23 67.13 202 Units 30,567.17 92.60 12/31/97
540,455 678,769 1.26 7,700,000 3/31/98 77.72 68.37 68,450 Sq Ft 87.43 90.00 1/31/98
517,324 734,511 1.42 7,730,000 9/19/97 77.37 59.15 219 Units 27,309.60 95.00 12/31/97
607,625 865,794 1.42 9,600,000 7/13/97 61.99 0.00 61,005 Sq Ft 97.54 97.54 1/28/98
618,014 856,188 1.39 9,900,000 4/21/97 60.11 42.23 76 Beds 78,296.85 97.40 4/21/97
526,399 710,356 1.35 8,600,000 8/13/97 68.95 53.21 101,697 Sq Ft 58.31 100.00 7/24/97
602,614 715,463 1.19 7,450,000 11/6/97 79.01 62.28 86 Units 68,444.36 98.00 1/7/98
- -----------------------------------------------------------------------------------------------------------------------------------
510,439 643,324 1.26 7,565,000 75.38 66.43 73,581 Sq Ft 77.50
373,469 675,000 10/1/97 6,500 Sq Ft 100.00 10/31/97
0 1,260,000 10/1/97 12,419 Sq Ft 100.00 10/31/97
0 700,000 9/22/97 6,500 Sq Ft 100.00 10/31/97
0 1,600,000 9/15/97 12,000 Sq Ft 100.00 10/31/97
148,431 1,800,000 10/1/97 17,680 Sq Ft 100.00 10/31/97
16,379 200,000 9/12/97 2,942 Sq Ft 100.00 10/31/97
30,459 400,000 9/11/97 6,148 Sq Ft 100.00 10/31/97
30,452 430,000 10/8/97 4,300 Sq Ft 100.00 10/31/97
44,134 500,000 10/1/97 5,092 Sq Ft 100.00 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
518,294 584,550 1.22 7,100,000 10/1/97 77.62 62.40 120 Beds 47,230.52 93.00 9/30/97
474,285 526,663 1.11 7,200,000 10/1/97 77.66 58.94 92,659 Sq Ft 60.34 83.61 10/28/97
481,986 688,202 1.43 7,400,000 7/2/97 74.22 65.13 117,900 Sq Ft 46.59 100.00 12/18/97
472,809 594,133 1.26 7,500,000 12/9/97 73.16 57.91 130 Units 42,205.39 92.00 10/16/97
487,520 687,298 1.41 8,820,000 10/22/97 62.20 50.62 444,000 Sq Ft 12.36 85.83 1/29/98
495,855 612,609 1.24 6,800,000 9/18/97 80.67 64.80 119,229 Sq Ft 46.01 100.00 12/12/97
484,745 624,244 1.29 7,400,000 8/6/97 74.12 65.21 55,906 Sq Ft 98.11 98.00 9/30/97
531,005 863,553 1.63 8,000,000 7/29/97 68.48 56.20 249 Rooms 22,001.69 81.60 8/31/97
496,394 657,750 1.22 6,800,000 10/1/97 77.62 62.40 120 Beds 45,234.87 94.00 9/30/97
422,879 666,961 1.58 8,310,000 10/10/97 64.86 56.37 43 Units 125,343.49 100.00 11/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
455,756 582,628 1.28 6,900,000 10/8/97 78.03 69.22 99,205 Sq Ft 54.27 96.95 1/27/98
453,995 552,275 1.22 7,300,000 10/1/97 73.32 55.65 83,243 Sq Ft 64.30 97.60 10/26/97
442,525 604,670 1.37 7,450,000 11/20/97 71.02 62.75 45,300 Sq Ft 91.45 80.67 12/7/97
467,364 641,471 1.37 6,470,000 7/23/97 81.61 65.18 74,850 Units 26,400.92 92.50 10/24/97
479,996 717,986 1.50 6,500,000 80.49 64.93 57,859 Sq Ft 16.29 0.00
244,204 2,040,000 8/20/97 0.00 200 Sq Ft 68.53 12/13/97
158,918 1,460,000 9/18/97 0.00 321,075 Sq Ft 64.52 12/16/97
85,802 800,000 8/23/97 0.00 101,100 Sq Ft 83.65 12/17/97
105,537 1,100,000 8/25/97 0.00 60,675 Sq Ft 57.00 12/17/97
123,524 1,100,000 8/20/97 0.00 39,150 Sq Ft 58.00 12/16/97
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
504,566 731,363 1.45 9,000,000 57.67 47.30 74,980 Sq Ft 66.97
438,654 4,700,000 11/1/97 77,496 Rooms 77.00 11/1/97
292,709 4,320,000 11/1/97 75 Sq Ft 100.00 11/20/97
433,536 549,348 1.27 7,000,000 11/1/97 74.17 68.16 40,110 Sq Ft 69.25 86.00 10/20/97
481,613 590,561 1.23 7,000,000 73.97 60.00 85,234 Sq Ft 60.75 0.00
190,903 2,300,000 7/15/97 0.00 23,100 Sq Ft 100.00 10/6/97
182,249 2,100,000 7/25/97 0.00 29,000 Sq Ft 100.00 10/6/97
77,494 800,000 7/25/97 0.00 13,134 Sq Ft 100.00 10/6/97
139,915 1,800,000 7/28/97 0.00 20,000 Sq Ft 100.00 10/6/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GACC 51 TA1355 Park Heights Apartments 30,819 120.86
Conti 52 97C-080137 Kendall Club Apartments 44,000 250.00
RMF 53 HCC003 Woodland Village Care Center
RMF 54 HCC007 Fountain View Nursing Home
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 55 2307 1400 Worcester Street 9,720 0.15 Milton's 11,424
Conti 56 97-L022 1443 Park Avenue 43,206 0.24 NYC Police Dept. 52,144
BCMC 57 1006-I Aggregate Loan Level Information 206,019 1.25
BCMC 57A 1006-IA Town Center East Vacation Rentals 7,575
BCMC 57B 1006-IB Town Center Post Office U.S.Postal Service 4,730
BCMC 57C 1006-IC Highlands Post Office U.S. Postal Service 6,362
BCMC 57D 1006-ID Town Center West Duffer's Cafe 2,304
BCMC 57E 1006-IE All-In-One-Convenience All-In-One-Convenience 2,880
BCMC 57F 1006-IF Hospitality Center Eye Center at Bella Vista 2,468
BCMC 57G 1006-IG Sugar Creek Center Consumers (Fleming Foods) 31,700
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 57H 1006-IH A.G. Edwards and Sons A.G. Edwards 3,000
BCMC 57J 1006-II Cunningham Corner Bank of Bentonville 3,000
BCMC 57K 1006-IJ Central Station Convenience Grand Central Station 2,644
MS 58 MS8 Wright State Housing 0 0.00
Conti 59 97C-080131 IGEN Building 12,531 0.15 IGEN, Inc. 83,541
Conti 60 PMC01005 Lakeridge Tennis Club 12,845 0.20
GACC 61 TA2947 Wyngate Apartments 78,000 250
RMF 62 HCC013 Fentress County Nursing Home Heritage Health Care Group, Inc. 39,596
Conti 63 A970020 Evergreen Square 19,137 0.21 Central Tractor 40,000
Conti 64 9761-HSP(E) Homewood Suites- Savannah 129,521 1,221.90
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 65 LCC001 Life Care Centers of Scottsdale
MS 66 MS9 Village Park 0 0.00
MS 67 MS10 Park City West 0 0.00
RMF 68 SHA003 Squire Hill Apartments, Phase I
- Charlottesville
GACC 69 TA1402 Old Lyme Marketplace 61,857 0.63 The Great Atlantic & Pacific 39,684
Tea Corp, Inc.
Conti 70 97C-080133 Fulton Loft Office Building 31,358 0.15 A. Epstein & Sons 70,791
RMF 71 HCC006 Greeneville West Health Care
Center
MS 72 MS11 The Inn at Morgan Hill 132,007 1,307.00
Conti 73 NYU108 Lane Hill 27,500 250.00
MS 74 MS12 Imperial Estates 0 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
MS 75 MS13 Lawrence Square Manor Apts. 27,500 250.00
RMF 76 HIFH01 Holiday Inn I -65/Oxmoor Road
GACC 77 TA1178 St. Albans Retail Center 123,401 0.55 Kmart 94,500
RMF 78 SOA001 Stanford Oaks Apartments
RMF 79 PCAR01 Park Centre Commons PetsMart 26,710
RMF 80 SHA002 Squire Hill Apartments -
Harrisonburg
MS 81 MS14 Hacienda Heights Shopping Center 9,151 0.15 Ralphs Grocery 41,855
Conti 82 9510148 Oak Grove Institute Foundation 19,000 250.00
Conti 83 A970018 Raintree Village 15,255 0.15 Pulse Health Club 31,375
GACC 84 TA1093 Mohawk Apartments 37,324 434
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 85 1004 Aggregate Loan Level Information 55,263 0.74
BCMC 85A 1004A Branson Executive Office Park I Kidney Center 3,500
BCMC 85B 1004B Branson Executive Office Park II Willis and Associates 2,840
BCMC 85C 1004C The Station Retail Center Day Star Church 2,530
BCMC 85D 1004D McGuffey's Restaurant McGuffey's 12,000
BCMC 85E 1004E Corporate Woods State of Missouri 9,000
BCMC 85F 1004F 802 South Highway 13 Office of Employment Security 2,942
(State of Mo.
BCMC 85G 1004G 610 North Ridgeview Drive Board of Probation/Parole 6,148
(State of Mo.)
BCMC 85H 1004H Springfield Probation and Parole Sringfield Probation/Parole 4,300
Office Building (Missouri)
BCMC 85J 1004I Branson Probation/Parole Building Branson Probation/Parole (State 5,092
of Mo.)
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 86 HCC016 Bay St. Joseph Care Center
Conti 87 MP-1048 Jewell Market Square 9,405 0.10 King Soopers 53,868
GACC 88 TA0826 Technical Career Institute 95,604 0.81 Technical Career Institutes 117,900
GACC 89 TA2720 Vineyard Place 49,258 378.906
MS 90 MS16 820 Business Park 66,600 0.15 7 - Muffler Mart 22,000
Conti 91 9754-KMJ K-Mart- Jackson 11,923 0.10 K-Mart 119,229
BCMC 92 2397 Office Court at Walton Point 86,184 1.54 Wisler Pearlstine 13,078
Conti 93 97-36C Ramada Inn - Kansas City 207,933 835.07
RMF 94 HCC001 Heritage Manor of Abbeville
MS 95 MS17 1700 DeAnza 10,897 253.43
- -----------------------------------------------------------------------------------------------------------------------------------
MS 96 MS18 Kessler Hills Shopping Center 14,881 0.15 Winn-Dixie 44,000
Conti 97 MP-1044 Leetsdale Market Square 16,649 0.20 King Soopers 62,229
MS 98 MS19 100 Dorset Street 29,508 0.51 Eastern Mountain Sports 13,042
Conti 99 97C-070126 Princeton Square Apartments 52,940 264.70
Conti 100 9410235 Combest Self Storage 48,162 0.15
Consolidation
Conti 100A 9410235A Lockup Self Storage 15,165 0.15
Conti 100B 9410235B Allspace Self Storage 9,101 0.15
Conti 100C 9410235C Garth Road Self Storage 5,873 0.15
Conti 100D 9410235D Storage Station - La Porte 6,795 0.15
Conti 100E 9410235E Stow Away Self Storage 11,228 0.15
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 101 TA0696 Aggregate Loan Level Information 115,272 2.67875
GACC 101A TA06961 Best Western Choice Lodge
GACC 101B TA06962 Plaza by the Green 2 Day Video 5,795
GACC 102 TA1197 30-60/68 Whitestone Expressway 64,579 0.86 Nexel Communications 9,360
Conti 103 A970025 Peter Harris Plaza Consolidation 14,371 0.17
Conti 103A A970025A Peter Harris Plaza I-Dewitt 4,851 0.21 Peter Harris Clothes 16,100
Conti 103B A970025B Peter Harris Plaza -East 4,350 0.15 Peter Harris Clothes 10,000
Greenbush
Conti 103C A970025C Peter Harris Plaza III- Bethlehem 1,970 0.15 Peter Harris Clothes 11,000
Conti 103D A970025D Peter Harris Plaza IV- Greece 3,200 0.16 Mulligan Golf 6,000
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- --------------------------------------------------
<C> <C> <C> <C>
1967 1988
1970 1992
1987 NAP
1964 1982, 1989
- --------------------------------------------------
17.63 8/31/03 1962 1992
28.97 7/1/07 1930 1947
21.19 8/31/99 1981 NAP
100 9/30/98 1988 NAP
100 9/13/16 1996 NAP
17.56 4/1/01 1971 NAP
100 12/1/05 1974 NAP
68.63 10/31/02 1988 NAP
48.03 11/15/17 1997 NAP
- --------------------------------------------------
100 9/30/98 1989 NAP
11.15 7/18/98 1986 NAP
100 10/17/01 1991 NAP
1991 NAP
100 2/1/05 1976 1980, 1981
1979, 1995 NAP
1971 NAP
100 9/30/18 1966 1983, 1995
43.89 2/28/00 1992 1995
1990 NAP
- --------------------------------------------------
1986 NAP
1970 NAP
1970 NAP
1975 NAP
40.12 4/30/11 1959 - 1991 1991, 1992
33.86 8/31/07 1903 1983
1980 1989
1993 NAP
1979 NAP
1970 NAP
- --------------------------------------------------
1970 NAP
1973 NAP
42.44 2/28/00 1975, 1976 1992
1968, 1972 1996
39.02 11/30/11 1995 - 1997 NAP
1975 NAP
68.61 3/31/15 1985 1995
1989 1991
30.85 1/31/99 1987 NAP
1905 1985
- --------------------------------------------------
50 2/13/02 1992 - 1994 1997
23.53 11/30/98 1993 NAP
39.81 3/31/01 1993 NAP
100 12/31/03 1993 NAP
51.69 6/30/98 1994 NAP
91.94 6/30/98 1990 1995
94.58 6/30/00 1990 1997
90.76 6/30/98 1993 NAP
100 6/30/01 1990 1995
- --------------------------------------------------
1983 NAP
58.14 3/30/17 1973 1995
100 12/31/03 1953 1987
1987 NAP
4.95 9/30/00 1976 NAP
100 11/30/18 1993 NAP
23.39 10/31/00 1990 NAP
1973 1997
1969 1993, 1995
1993 NAP
- --------------------------------------------------
44.35 12/3/06 1986 NAP
74.76 7/31/14 1973 1995
22.54 1/31/07 1972 1997
1967 1997
1977 NAP
1994 NAP
1981 1993
1984 NAP
1973 NAP
- --------------------------------------------------
1990 NAP
14.45 3/31/01 1990 NAP
12.48 8/31/99 1988 NAP
69.7 12/1/07 1982 1995
34.48 12/1/07 1960 NAP
83.75 12/1/07 1960 1983
30 3/1/02 1987 NAP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CON-
LOAN TROL
SEL- NUM- LOAN
LER BER NUMBER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MS 104 MS20 Branson Towers Inn 236 Shepherd of the Hills Exp. Branson Missouri 65616
- -----------------------------------------------------------------------------------------------------------------------------------
MS 105 MS21 Sea Venture 100 Ocean View Avenue Pismo Beach California 93449
GACC 106 TA1398 Hollis Gardens 102-01-65 185th Street Hollis New York 11423
Conti 107 97C090152 Park Place 2000 Mountain View Drive Colchester Vermont 05446
Conti 108 9510198SN Phoenix West Plaza 4344 W. Indian School Road Phoenix Arizona 85031
Conti 109 NY97003 Surrey Carlton Apts. 45 Ewing Place Spring Valley New York 10977
GACC 110 BL9702 Woodlake I Apartments 121 West Esplanade Avenue Kenner Louisiana 70065
MS 111 MS22 Hampton Inn, Rockford 615 Clark Dr Rockford Illinois 61107
Conti 112 97-H008 Southport Manor Convalescent 930 Mill Hill Terrace Southport Connecticut 06490
Center
Conti 113 A970037 Fremont Village Square 3601 Fremont Avenue Seattle Washington 98103
RMF 114 CLP001 Clipper Home of Portsmouth 188 Jones Avenue Portsmouth New 03801
Hampshire
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 115 SPUR01 South Pointe @ Town Lake 1105 Parkside Lane Woodstock Georgia 31089
Shopping Center
Conti 116 MP-1045 Pecos Market Place 1574 West 84th Ave. Federal Heights Colorado 80221
RMF 117 AVA002 The Bethany Health Care Center 421 Ocala Drive Nashville Tennessee 37211
Conti 118 HCCA1880 Holiday Inn - Lawton 3134 NW Cache Road Lawton Oklahoma 73505
MS 119 MS23 Hampton Inn, Madison 4820 Hays Rd Madison Wisconsin 53704
GACC 120 TA1866 Sharp Medical Office 25485 Medical Center Drive Murrieta California 92562
Conti 121 A960018 Duke Tower Residential Suites 807 West Trinity Ave. Durham North 27701
Carolina
Conti 122 97-L037 K-Mart, Des Moines 2535 Hubbel Ave. Des Moines Iowa 50317
MS 123 MS24 Carefree Cove 3273 Northwest 37th Street Lauderdale Lakes Florida 33309
GACC 124 TA1809 LCA Intimates 6100 South Malt Avenue Commerce California 90040
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 125 TA1565 Sierra Fountain Apartments 1325 North Sierra Bonita Avenue Los Angeles California 90046
RMF 126 HCC009 Heritgage Manor of Springfield West Grand Street Springfield Missouri 65802
Conti 127 9510211SN Auto Care Plaza 23041-23071 Antonio Parkway Rancho Santa California 92688
Margarita
Conti 128 97C-100155 Wing Park Shopping Center 551-589 N. McLean Blvd., et al Elgin Illinois 60123
Conti 129 A970075 Jefferson Smurfit Office 401 Alton Street Alton Illinois 62002
Building
BCMC 130 2655 Park Central Shopping Center 3220 South Clack Street Abilene Texas 79606
MS 131 MS25 North Main Place 2645 North Main Place High Point North 27265
Carolina
RMF 132 AVA001 The Trevecca Health Care Center 329 Murfreesboro Road Nashville Tennessee 37210
Conti 133 97-42-HBS Hannaford Brothers Supermarket 3001 Polo Parkway Richmond Virginia 23235
BCMC 134 2610 Wichita Square Shopping Center 3916 Kemp Boulevard Wichita Falls Texas 76308
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 135 TA1532 Gladstone Apts. (Howard Gardens) 500, 510, 520, 530, 540, 550 E. Azusa California 91702
Gladstone Street
RMF 136 HCC015 Belen Health Care Center 1831 Sosimo Padilla Boulevard Belen New Mexico 87002
GACC 137 TA1649 Shalamar Apartments 1640 Aquarena Springs Drive San Marcos Texas 78666
Conti 138 A970048 Capitol Steps Apartments 1633 Bellevue Avenue Seattle Washington 98122
MS 139 MS26 LeMans Village 5026 Dierker Road Columbus Ohio 43202
MS 140 MS27 Hampton Inn, Green Bay 2840 Ramada Way Green Bay Wisconsin 54304
Conti 141 9510239 Pacific Belgrave 6001-6021 Pacific Boulevard Huntington Park California 90255
Conti 142 9510164 Pacific Randolph 6041-6081 Pacific Blvd. Huntington Park California 90255
Conti 143 97C-080018 The Deerhaven/Sunset Comprised of Two Hospitality Various Various Various
Consolidation Properties
Conti 143A 97C-080018A The Larchwood and Deerhaven Inns 740 & 750 Crocker Avenue Pacific Grove California 93950
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 143B 97C-080018B The Sunset Motel 133 Asilomar Boulevard Pacific Grove California 93950
GACC 144 TA1942 Aggregate Loan Level Information Various Various Various Various
GACC 144A TA19421 KANDR Building 22 IBM Road Poughkeepsie New York 12601
GACC 144B TA19422 Hark II and Hark III 1440 Route 9 Wappinger New York 12590
GACC 145 TA1484 275-277 Forest Avenue 275-277 Forest Avenue Paramus New Jersey 07652
Conti 146 NYU107 The Waterview 28 Lamartine Terrace Yonkers New York 10701
RMF 147 CAN003 Cresthaven Nursing Residence 4400 Gulf Street Groves Texas 77619
BCMC 148 2600 Springbrook Commons Apartments 5500 North Haverhill Road West Palm Beach Florida 33407
RMF 149 HCC010 Panola Nursing Home 501 Cottage Road Carthage Texas 75633
BCMC 150 2639 Stonebridge Apartments 38-48 Dean Street Norwood Massachusetts 02062
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 151 TA0394 Michael's Plaza Shopping Ctr. 301 Blanding Boulevard Orange Park Florida 32073
GACC 152 TA2328 Holiday Inn Express 341 South Road Poughkeepsie New York 12601
BCMC 153 2511 The Willard Building 1266 Furnace Brook Parkway Quincy Massachusetts 02169
RMF 154 MSMF01 Madison Station Apartments, Inc. 1011 Stephens St. Smyrna Georgia 30080
RMF 155 CLP004 Langdon Place of Nashua 319 East Dunstable Road Nashua New 03602
Hampshire
GACC 156 TA0179 Clear Creek Office Park 4251 Kipling Street Wheat Ridge Colorado 80033
BCMC 157 1006-II Aggregate Loan Level Information Various Various Various Various
BCMC 157A 1006-II1 Cordoba Center 110 - 132 Cordorba Center Drive Hot Springs Arkansas 71909
BCMC 157B 1006-II2 Ponderosa Center 100-120 Ponderosa Lane Hot Springs Arkansas 71909
BCMC 157C 1006-II3 DeSoto Center 101-110 Catella - Arkansas 71909
101-121 Desota Drive
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 157D 1006-II4 Old Lot Sales Building 110 Cooper Circle Hot Springs Arkansas 71909
BCMC 158 2746 Lake Place Shopping Center 333 South State Street Lake Oswego Oregon 97034
RMF 159 TCAR01 Taylorville Corners 641 Bear Creek Road Tuscaloosa Alabama 35405
GACC 160 TA2073 McKendree Parking Center 140 6th Avenue North Nashville Tennessee 37203
RMF 161 CLP005 Clipper Home of Rochester 62 Rochester Hill Road Rochester New 03867
Hampshire
MS 162 MS28 Hickory Hills 1600 West Josephine Lakeland Florida 33803
GACC 163 TA2404 The Trend Companies 3721, 3722, & 3801 Catalina Street Los Alamitos California 90720
GACC 164 TA1534 Peck Road Apartments 4164 - 4242 Peck Road El Monte California 91732
&11618 -11639
Basye Street
Conti 165 28002 Tucker Street Warehouse 10726 Tucker Street Beltsville Maryland 20705
RMF 166 CAN006 Oakwood Manor 225 South Main Street Vidor Texas 77662
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 167 PVE001 Parc View Estates 1055 Holcomb Road Atlanta Georgia 30344
BCMC 168 2594 Northstar Center 429 Edwards Access Road Edwards Colorado 81632
GACC 169 TA1618 Pottsgrove Townhomes 201 Jay Street West Pottsgrove Pennsylvania 19464
Conti 170 97C-03121 Rosemeade Park Shopping Center 2515 E. Rosemeade Parkway Carrollton Texas 75007
RMF 171 MTV001 Mountview Retirement Residence 2640 Honolulu Avenue Montrose California 91020
RMF 172 BLR001 Chatsworth Health Care Center Hospital Road Chatsworth Georgia 30705
RMF 173 BLR002 Fairburn Health Care Center 178 West Campbellton Road Fairburn Georgia 30213
MS 174 MS29 Extra Space Self Storage 32455 W. Eight Mile Rd. Livonia Michigan 48152
RMF 175 CLP002 Clipper Home of Wolfeboro 39 Clipper Drive Wolfeboro New 03894
Hampshire
Conti 176 97-3C Hotel Colonial America 6483 Richmond Road Williamsburg Virginia 23188
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 177 HCC008 Standing Stone Health Care 410 West Crawford Avenue Monterey Tennessee 38574
Center
RMF 178 HCC004 Jackson Manor Nursing Home Highway 167 South Jonesboro Louisiana 71251
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE
ORIGINAL DATE CUT-OFF DATE SERVICING ORIGINAL REMAINING
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE TERM TO TERM TO
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE MATURITY OR ARD MATURITY OR ARD
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hospitality 5,200,000 5,174,373 0.28 Actual/360 8.190 0.02250 120 115
- ---------------------------------------------------------------------------------------------------------------------------------
Hospitality 5,100,000 5,088,018 0.27 Actual/360 7.940 0.02250 120 118
Multifamily 5,000,000 4,996,100 0.27 30/360 7.250 0.02250 120 119
Office 5,000,000 4,990,781 0.27 Actual/360 7.500 0.09750 120 118
Anchored 5,000,000 4,987,693 0.27 Actual/360 7.500 0.14250 120 117
Retail
Multifamily 5,000,000 4,956,956 0.27 Actual/360 8.125 0.09750 240 235
Multifamily 5,000,000 4,952,767 0.27 30/360 7.090 0.02250 120 117
Hospitality 4,900,000 4,880,948 0.26 Actual/360 7.360 0.11000 120 118
Skilled 4,900,000 4,873,824 0.26 30/360 9.125 0.11750 120 114
Nursing
Mixed Use 4,835,000 4,821,862 0.26 30/360 7.850 0.09750 180 177
Skilled CLP001 to CLP006 4,840,000 4,788,063 0.26 Actual/360 9.140 0.37880 36 24
Nursing
- ---------------------------------------------------------------------------------------------------------------------------------
Unanchored 4,800,000 4,782,819 0.26 Actual/360 7.640 0.06750 120 117
Retail
Anchored 4,660,000 4,644,587 0.25 Actual/360 7.470 0.09750 180 176
Retail
Skilled AVA001 and AVA002 4,628,000 4,616,083 0.25 Actual/360 7.690 0.27250 108 106
Nursing
Hospitality 4,600,000 4,588,744 0.25 Actual/360 8.125 0.09750 120 118
Hospitality 4,600,000 4,582,114 0.25 Actual/360 7.360 0.11000 120 118
Office 4,550,000 4,546,300 0.25 30/360 7.040 0.02250 120 119
Hospitality 4,600,000 4,494,343 0.24 30/360 9.250 0.09750 120 105
Anchored 4,500,000 4,486,742 0.24 Actual/360 7.200 0.09750 288 286
Retail
Mobile Home 4,400,000 4,392,749 0.24 Actual/360 7.680 0.02250 120 118
Park
Industrial 4,390,000 4,380,029 0.24 30/360 7.431 0.02250 120 117
- ---------------------------------------------------------------------------------------------------------------------------------
Multifamily 4,340,000 4,333,089 0.23 30/360 7.162 0.02250 120 118
Skilled HCC001 to HCC016 4,320,000 4,310,617 0.23 Actual/360 8.260 0.27250 180 177
Nursing
Unanchored 4,317,000 4,303,646 0.23 Actual/360 7.875 0.14250 120 116
Retail
Unanchored 4,300,000 4,292,947 0.23 Actual/360 7.375 0.09750 120 119
Retail
Office 4,300,000 4,292,202 0.23 Actual/360 7.625 0.09750 180 178
Unanchored 4,275,000 4,275,000 0.23 30/360 7.410 0.03500 120 120
Retail
Anchored 4,250,000 4,242,816 0.23 Actual/360 7.520 0.02250 180 178
Retail
Skilled AVA001 and AVA002 4,200,000 4,189,185 0.23 Actual/360 7.690 0.27250 108 106
Nursing
Anchored 4,165,000 4,145,452 0.22 Actual/360 7.780 0.09750 240 236
Retail
Unanchored 4,125,000 4,125,000 0.22 30/360 7.160 0.03500 120 120
Retail
- ---------------------------------------------------------------------------------------------------------------------------------
Multifamily 4,107,000 4,100,909 0.22 30/360 7.520 0.02250 180 178
Skilled HCC001 to HCC016 4,016,100 4,002,922 0.22 Actual/360 8.260 0.27250 60 57
Nursing
Multifamily 4,000,000 3,993,870 0.22 30/360 7.355 0.02250 120 118
Mixed Use 4,000,000 3,993,293 0.22 30/360 6.900 0.09750 180 178
Multifamily 4,000,000 3,989,353 0.22 Actual/360 7.020 0.02250 120 118
Hospitality 4,000,000 3,984,447 0.21 Actual/360 7.360 0.11000 120 118
Unanchored 9510239 & 9510164 4,000,000 3,983,007 0.21 30/360 8.000 0.09750 120 116
Retail
Unanchored 9510239 & 9510164 4,000,000 3,983,007 0.21 30/360 8.000 0.09750 120 116
Retail
Various 3,975,000 3,966,070 0.21 Actual/360 8.875 0.09750 120 118
Hospitality
- ---------------------------------------------------------------------------------------------------------------------------------
Hospitality
Various 3,900,000 3,896,936 0.21 30/360 7.214 0.02250 120 119
Office
Office
Office 3,900,000 3,894,199 0.21 30/360 7.505 0.02250 120 118
Multifamily 3,900,000 3,882,558 0.21 Actual/360 8.125 0.09750 180 176
Skilled CAN002, CAN003, 3,900,000 3,880,941 0.21 Actual/360 9.110 0.29250 120 114
Nursing CAN006
Multifamily 3,850,000 3,841,251 0.21 30/360 7.540 0.03500 172 170
Skilled HCC001 to HCC016 3,840,000 3,831,659 0.21 Actual/360 8.260 0.27250 180 177
Nursing
Multifamily 3,835,000 3,828,793 0.21 30/360 7.080 0.03500 120 118
- ---------------------------------------------------------------------------------------------------------------------------------
Anchored 3,830,000 3,818,233 0.21 30/360 8.500 0.02250 120 115
Retail
Hospitality 3,800,000 3,800,000 0.20 30/360 7.180 0.02250 120 120
Office 3,800,000 3,794,182 0.20 30/360 7.360 0.03500 120 118
Multifamily 3,800,000 3,792,994 0.20 Actual/360 7.500 0.06750 120 118
Assisted CLP001 to CLP006 3,800,000 3,759,223 0.20 Actual/360 9.140 0.37880 36 24
Living
Office 3,750,000 3,742,937 0.20 30/360 8.360 0.02250 120 117
Various 1006-I, 1006-II, 3,697,000 3,691,817 0.20 30/360 7.800 0.03500 120 118
1006-III, 1006-IV
Unanchored
Retail
<PAGE>
Unanchored
Retail
Unanchored
Retail
- -----------------------------------------------------------------------------------------------------------------------------
Office
Unanchored 3,690,000 3,686,056 0.20 30/360 7.900 0.03500 120 119
Retail
Anchored 3,700,000 3,682,444 0.20 Actual/360 7.530 0.06750 216 214
Retail
Special 3,650,000 3,645,700 0.20 30/360 7.340 0.02250 120 119
Purpose
Skilled CLP001 to CLP006 3,640,000 3,600,940 0.19 Actual/360 9.140 0.37880 36 24
Nursing
Mobile Home 3,600,000 3,593,757 0.19 Actual/360 7.360 0.02250 120 118
Park
Industrial 3,600,000 3,593,443 0.19 30/360 7.430 0.02250 240 239
Multifamily TA1534 & TA1533 3,600,000 3,591,967 0.19 30/360 7.520 0.02250 180 177
Industrial 3,596,851 3,583,721 0.19 Actual/360 7.500 0.09750 120 117
Skilled CAN002, CAN003, 3,600,000 3,582,407 0.19 Actual/360 9.110 0.29250 120 114
Nursing CAN006
- -----------------------------------------------------------------------------------------------------------------------------
Multifamily 3,600,000 3,570,786 0.19 30/360 8.370 0.06750 144 136
Unanchored 3,500,000 3,500,000 0.19 30/360 7.430 0.03500 120 120
Retail
Multifamily 3,500,000 3,497,162 0.19 30/360 7.055 0.02250 120 119
Unanchored 3,500,000 3,488,572 0.19 Actual/360 8.295 0.09750 120 117
Retail
Assisted 3,500,000 3,480,771 0.19 Actual/360 7.990 0.27250 300 295
Living
Skilled 3,450,000 3,421,604 0.18 Actual/360 8.506 0.28250 240 235
Nursing
Skilled 3,450,000 3,421,604 0.18 Actual/360 8.506 0.28250 240 235
Nursing
Self-Storage 3,412,500 3,403,768 0.18 Actual/360 7.310 0.02250 120 118
Skilled CLP001 to CLP006 3,440,000 3,403,086 0.18 Actual/360 9.140 0.37880 36 24
Nursing
Hospitality 3,300,000 3,292,729 0.18 Actual/360 9.050 0.09750 120 118
- -----------------------------------------------------------------------------------------------------------------------------
Skilled HCC001 to HCC016 3,285,900 3,275,118 0.18 Actual/360 8.260 0.27250 60 57
Nursing
Skilled HCC001 to HCC016 3,280,000 3,272,876 0.18 Actual/360 8.260 0.27250 180 177
Nursing
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
311 306 9/29/97 10/1/07 Balloon 4,308,814 LO/60_YM1/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
310 308 12/18/97 1/1/08 Balloon 4,194,698 LO/60_YM1/57_0/3 1
360 359 1/14/98 2/1/08 Hyper 4,315,518 LO/48_Def/69_0%/3 NAP
360 358 12/8/97 1/1/08 Balloon 4,349,656 LO/60_YM1/54_0/6 2
360 357 11/17/97 12/1/07 Balloon 4,349,659 LO/60_YM1/54_0/6 2
240 235 9/17/97 10/1/17 Full 0 LO/120_YM1/60_0/60 2
180 177 11/25/97 12/1/07 Hyper 2,277,468 LO/36_Def/84 NAP
245 243 12/4/97 1/1/08 Balloon 3,377,369 LO/48_YM1/69_0/3 1
300 294 8/15/97 9/1/07 Balloon 4,065,794 LO/60_YM1/54_0/6 2
324 321 11/5/97 12/1/12 Hyper 3,349,308 LO/27_Def/147_0/6 NAP
300 288 2/11/97 2/20/00 Balloon 4,673,363 LO/36 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
300 297 11/6/97 12/1/07 Hyper 3,851,469 LO/36_YM/48_3/12_2/12_1/6_0/6 1
360 356 10/30/97 11/1/12 Balloon 3,525,185 LO/28_Def/32_3/12_1/12_0/96 NAP
300 298 12/30/97 1/1/07 Hyper 3,854,017 LO/36_Def/66_0/6 NAP
300 298 12/16/97 1/1/08 Balloon 3,737,434 LO/60_YM1/54_0/6 2
245 243 12/4/97 1/1/08 Balloon 3,170,590 LO/48_YM1/69_0/3 1
360 359 1/7/98 2/1/08 Hyper 3,908,130 LO/60_Def/54_0%/6 NAP
240 225 11/21/96 12/1/06 Hyper 3,290,555 LO/39_Def/75_0/6 NAP
288 286 12/22/97 1/1/22 Full 0 LO/26_Def/256_0/6 NAP
377 375 12/9/97 1/1/08 Balloon 3,903,230 LO/36_YM1/81_0/3 1
360 357 10/24/97 12/1/07 Hyper 3,804,486 LO/60_Def/58_0%/2 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
360 358 12/11/97 1/1/08 Hyper 3,738,328 LO/36_Def/81_0%/3 NAP
360 357 11/24/97 12/1/12 Hyper 3,369,788 LO/84_Def/90_0/6 NAP
360 356 10/28/97 11/1/07 Balloon 3,785,844 LO/60_YM1/54_0/6 2
300 299 1/8/98 2/1/08 Balloon 3,425,867 LO/60_YM1/54_0/6 1
360 358 12/29/97 1/1/13 Hyper 3,271,321 LO/26_Def/148_0/6 NAP
360 360 2/24/98 3/1/08 Hyper 3,703,093 LO/60_YM/54_0/6 1
376 374 12/23/97 1/1/13 Balloon 3,326,368 LO/89_YM1/88_0/3 1
300 298 12/30/97 1/1/07 Hyper 3,497,596 LO/36_Def/66_0/6 NAP
300 296 10/15/97 11/1/17 Balloon 1,574,884 LO/120_YM1/114_0/6 2
360 360 2/24/98 3/1/08 Hyper 3,552,970 LO/60_YM/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
360 358 11/24/97 1/1/13 Hyper 3,100,041 LO/60_Def/117_0%/3 NAP
300 297 11/24/97 12/1/02 Balloon 3,727,730 LO/54_0/6 NAP
360 358 12/5/97 1/1/08 Hyper 3,460,621 LO/36_Def/81_0%/3 NAP
360 358 12/23/97 1/1/13 Hyper 2,949,242 LO/26_Def/148_0/6 NAP
308 306 12/5/97 1/1/08 Balloon 3,200,589 LO/60_YM1/57_0/3 1
245 243 12/4/97 1/1/08 Balloon 2,757,035 LO/48_YM1/69_0/3 1
300 296 10/15/97 11/1/07 Balloon 3,230,532 LO/60_YM1/54_0/6 2
300 296 10/15/97 11/1/07 Balloon 3,230,532 LO/60_YM1/54_0/6 2
300 298 12/4/97 1/1/08 Balloon 3,288,772 LO/60_YM1/54_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
360 359 1/30/98 2/1/08 Hyper 3,363,339 LO/60_Def/57_0%/3 NAP
360 358 12/22/97 1/1/08 Hyper 3,385,377 LO/36_Def/81_0%/3 NAP
300 296 10/20/97 11/1/12 Balloon 2,506,491 LO/96_YM1/60_0/24 2
300 294 8/4/97 8/20/07 Balloon 3,340,223 YM/36_5/12_4/12_2/12_1.5/12_1/12_.5/12_0/12 1
300 298 12/30/97 5/1/12 Balloon 2,505,814 LO/120_YM/40_0/12 1
360 357 11/24/97 12/1/12 Hyper 2,995,367 LO/84_Def/90_0/6 NAP
360 358 12/22/97 1/1/08 Hyper 3,297,072 LO/60_YM/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
360 355 9/2/97 10/1/07 Hyper 3,393,478 LO/60_Def/58_0%/2 NAP
300 300 2/10/98 3/1/08 Hyper 3,003,067 LO/36_Def/81_0%3 NAP
360 358 12/23/97 1/1/08 Balloon 3,287,958 LO/60_YM/54_0/6 1
360 358 12/19/97 1/1/08 Hyper 3,305,738 LO/36_YM/48_less than YM3/12_
less than YM2/12_less than YM1/6_0/6 1
300 288 2/11/97 2/20/00 Balloon 3,669,169 LO/36 NAP
360 357 11/6/97 12/1/07 Hyper 3,313,572 LO/48_Def/69_0%/3 NAP
360 358 12/31/97 1/1/08 Balloon 3,229,667 LO/60_YM1/54_0%/6 1
- ----------------------------------------------------------------------------------------------------------------------------------
300 299 1/26/98 2/1/08 Hyper 2,972,562 LO/60_YM/54_0/6 1
216 214 12/29/97 1/1/16 Full 0 LO/60_YM/120_2/12_1/12_0/12 1
299 298 1/8/98 2/1/08 Hyper 2,891,669 LO/48_Def/69_0%/3 NAP
300 288 2/11/97 2/20/00 Balloon 3,514,678 LO/36 NAP
375 373 12/30/97 1/1/08 Balloon 3,168,096 LO/60_YM1/57_0/3 1
240 239 1/21/98 2/1/18 Full 0 LO/84_Def/153_0%/3 NAP
360 357 11/14/97 12/1/12 Hyper 2,717,348 LO/60_Def/117_0%/3 NAP
300 297 11/21/97 12/1/07 Balloon 2,875,341 LO/60_YM1/54_0/6 2
300 294 8/4/97 8/20/07 Balloon 3,083,282 YM/36_5/12_4/12_2/12_1.5/12_1/12_.5/12_0/12 1
- ----------------------------------------------------------------------------------------------------------------------------------
300 292 6/27/97 7/1/09 Balloon 2,720,874 LO/24_YM1/84_2.5/12_1.5/12_1/6_0/6 1
300 300 2/20/98 3/1/08 Hyper 2,784,881 LO/60_YM/54_0/6 1
360 359 1/29/98 2/1/08 Hyper 3,007,308 LO/36_Def/81_0%3 NAP
300 297 11/10/97 12/1/07 Balloon 2,855,780 LO/36_YM1/78_0/6 2
300 295 9/16/97 10/1/22 Full 0 YM1/156_5/12_4.5/12_4/12_3.5/12_3/12_
2.5/12_2/12_1.5/12_1/121.5/24_0/12
240 235 9/29/97 10/1/17 Full 0 LO/84_5/12_4.5/12_4/12_3.5/12_3/12_
2.5/12_2/12_1.5/12_1/12_NAP36_0/12
240 235 9/29/97 10/1/17 Full 0 LO/84_5/12_4.5/12_4/12_3.5/12_3/12_
2.5/12_2/12_1.5/12_1/12_NAP36_0/12
309 307 12/3/97 1/1/08 Balloon 2,754,914 LO/36_YM1/81_0/3 2
300 288 2/11/97 2/20/00 Balloon 3,321,564 LO/36 NAP
300 298 12/15/97 1/1/08 Balloon 2,741,332 LO/36_YM/78_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 297 11/24/97 12/1/02 Balloon 3,049,961 LO/54_0/6 NAP
360 357 11/24/97 12/1/12 Hyper 2,558,545 LO/84_Def/90_0/6 NAP
<PAGE>
<CAPTION>
UNDER- SQ FT, LOAN PER
WRITTEN CUT-OFF SCHEDULED UNIT, SQ FT, UNIT,
ANNUAL UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD UNIT BED, PAD OCCUPANCY OCCUPANCY
DEBT SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
489,494 1,123,571 2.30 8,940,000 8/5/97 57.88 48.20 210 Rooms 24,639.87 67.94 6/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
469,922 768,347 1.64 8,000,000 1/1/98 63.60 52.43 50 Rooms 101,760.36 82.50 11/1/97
409,306 544,091 1.33 7,200,000 12/8/97 69.39 59.94 216 Units 23,130.09 98.00 2/22/98
423,957 552,474 1.30 6,400,000 11/1/97 77.98 67.96 59,385 Sq Ft 84.04 100.00 12/5/97
424,007 607,080 1.43 7,150,000 7/30/97 69.76 60.83 151,334 Sq Ft 32.96 96.18 11/6/97
510,977 870,058 1.70 8,290,000 6/23/97 59.79 176 Units 28,164.52 100.00 7/17/97
542,320 622,260 1.15 6,000,000 7/22/97 82.55 37.96 168 Units 29,480.76 77.00 6/28/97
468,668 866,985 1.85 7,000,000 11/8/97 69.73 48.25 122 Rooms 40,007.77 75.70 9/30/97
498,490 884,613 1.77 6,600,000 6/1/97 73.85 61.60 140 Beds 34,813.03 95.00 6/19/97
431,757 560,398 1.30 6,600,000 10/1/97 73.06 50.75 40,762 Sq Ft 118.29 100.00 10/24/97
498,112 709,575 1.18 6,050,000 11/1/96 79.07 77.25 134 Beds 35,731.81 95.00 9/30/97
- ---------------------------------------------------------------------------------------------------------------------------------
435,097 524,184 1.20 6,450,000 10/18/97 74.15 59.71 55,243 Sq Ft 86.58 99.00 12/31/97
393,969 461,695 1.17 7,800,000 10/1/97 59.55 45.19 96,057 Sq Ft 48.35 84.00 10/28/97
421,306 803,400 1.98 7,000,000 10/15/97 64.10 55.06 180 Beds 25,644.90 94.70 9/30/97
434,901 729,465 1.68 6,900,000 6/19/97 66.50 54.17 172 Rooms 26,678.75 73.63 10/30/97
439,974 784,003 1.78 6,600,000 10/30/97 69.43 48.04 116 Rooms 39,500.98 76.00 9/30/97
364,723 523,440 1.44 6,330,000 11/11/97 71.82 61.74 30,836 Sq Ft 147.43 100.00 12/31/97
505,558 778,499 1.54 7,500,000 9/9/96 59.92 43.87 110 Rooms 40,857.66 71.48 10/31/97
397,974 523,128 1.31 5,950,000 11/10/97 75.41 106,333 Sq Ft 42.20 100.00 11/10/97
375,715 467,826 1.25 5,470,000 11/1/97 80.31 71.36 166 Pads 26,462.34 97.30 12/1/97
365,860 458,642 1.25 5,850,000 9/17/97 74.87 65.03 107,392 Sq Ft 40.79 100.00 10/19/97
- ---------------------------------------------------------------------------------------------------------------------------------
352,174 430,320 1.22 5,400,000 9/29/97 80.24 69.23 73 Units 59,357.38 97.00 11/27/97
394,196 542,850 1.22 5,600,000 10/1/97 77.62 60.17 103 Beds 41,850.65 77.00 9/30/97
379,693 491,785 1.30 5,705,000 8/10/97 75.44 66.36 32,236 Sq Ft 133.50 96.55 8/10/97
380,624 483,617 1.27 5,750,000 11/12/97 74.66 59.58 86,674 Sq Ft 49.53 84.42 12/19/97
369,110 548,161 1.49 5,460,000 12/1/97 78.61 59.91 55,000 Sq Ft 78.04 100.00 12/1/97
355,541 469,162 1.32 5,700,000 11/20/97 75.00 64.97 68,351 Sq Ft 62.54 92.00 11/30/97
357,298 470,929 1.32 5,450,000 10/31/97 77.85 61.03 60,753 Sq Ft 69.84 100.00 10/27/97
382,344 784,200 1.98 6,750,000 10/16/97 64.10 51.82 240 Beds 17,454.94 93.00 9/30/97
382,174 399,476 1.05 4,600,000 9/2/97 90.12 34.24 57,211 Sq Ft 72.46 100.00 9/2/97
334,661 441,643 1.32 5,500,000 11/21/97 75.00 64.60 57,887 Sq Ft 71.26 91.00 11/30/97
- ---------------------------------------------------------------------------------------------------------------------------------
345,276 490,985 1.42 5,300,000 8/15/97 77.38 58.49 144 Units 28,478.54 95.00 8/14/97
384,165 687,950 1.22 6,600,000 10/1/97 77.62 56.48 120 Beds 33,357.68 90.00 9/30/97
330,870 417,468 1.26 5,350,000 9/18/97 74.65 64.68 162 Units 24,653.52 91.00 11/12/97
316,128 464,704 1.47 6,075,000 11/7/97 65.73 48.55 62 Units 64,407.95 96.10 9/26/97
339,867 594,344 1.75 7,167,500 11/6/97 55.66 44.65 228 Units 17,497.16 97.00 9/29/97
382,586 755,639 1.98 5,900,000 11/12/97 67.53 46.73 115 Rooms 34,647.37 68.90 9/30/97
370,472 520,966 1.33 5,000,000 5/20/97 79.66 64.61 36,181 Sq Ft 110.09 95.84 10/1/97
370,472 460,590 1.33 5,000,000 5/20/97 79.66 64.61 36,138 Sq Ft 110.22 100.00 10/1/97
400,358 518,279 1.29 6,800,000 58.32 48.36 69 Rooms 57,479.28 0.00
391,017 5,300,000 8/8/97 50 Rooms 85.90 10/31/97
- ---------------------------------------------------------------------------------------------------------------------------------
127,262 1,500,000 8/8/97 19 Rooms 56.03 10/31/97
318,117 405,948 1.28 5,325,000 73.18 63.16 64,202 Sq Ft 60.70
0 2,625,000 12/10/97 34,502 Sq Ft 100.00 10/1/97
405,948 2,700,000 12/10/97 29,700 Sq Ft 75.00 10/27/97
327,393 433,204 1.32 5,200,000 10/21/97 74.89 65.10 44,315 Sq Ft 87.88 100.00 10/22/97
368,732 507,574 1.38 5,500,000 7/22/97 70.59 45.57 83 Units 46,777.81 100.00 10/16/97
400,554 725,250 1.91 4,900,000 2/21/97 72.90 68.17 138 Beds 28,122.76 86.00 12/31/97
342,617 438,511 1.28 6,700,000 8/29/97 57.33 37.40 144 Units 26,675.36 97.00 8/27/97
350,396 427,350 1.22 4,800,000 10/1/97 79.83 62.40 108 Beds 35,478.33 86.00 9/30/97
308,649 417,945 1.35 4,830,000 10/21/97 79.27 68.26 69 Units 55,489.76 99.00 1/23/98
- ---------------------------------------------------------------------------------------------------------------------------------
353,393 441,247 1.25 5,300,000 7/18/97 72.04 64.03 101,986 Sq Ft 37.44 99.00 7/18/97
327,546 537,724 1.64 6,100,000 11/21/97 62.30 49.23 121 Rooms 31,404.96 0.00
314,482 415,674 1.32 5,240,000 10/9/97 72.41 62.75 44,997 Sq Ft 84.32 95.00 11/1/97
322,207 446,475 1.39 4,800,000 11/3/97 79.02 68.87 104 Units 36,471.09 100.00 10/31/97
391,079 516,200 1.18 4,750,000 11/1/96 79.07 77.25 82 Beds 45,844.18 96.00 9/30/97
341,556 435,357 1.27 5,000,000 6/17/97 74.86 66.27 74,448 Sq Ft 50.28 95.00 10/21/97
319,363 511,910 1.53 4,930,000 72.66 65.51 79,476 Sq Ft 46.45
193,912 1,650,000 10/27/97 24,012 Sq Ft 89.00 11/30/97
177,572 1,650,000 10/27/97 23,525 Sq Ft 97.00 11/30/97
123,684 1,400,000 10/27/97 24,739 Sq Ft 97.00 11/30/97
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
16,742 230,000 10/27/97 7,200 Sq Ft 100.00 11/30/97
338,832 453,519 1.34 4,950,000 12/11/97 74.47 60.05 50,168 Sq Ft 73.47 90.00 12/9/97
379,037 495,238 1.31 5,130,000 11/3/97 71.78 0.00 69,285 Sq Ft 53.15 100.00 1/31/98
319,508 423,293 1.32 5,100,000 11/4/97 71.48 56.70 174,394 Sq Ft 20.90 100.00 10/1/97
374,613 380,425 1.18 4,550,000 11/1/96 79.07 77.25 79 Beds 45,581.52 98.00 9/30/97
297,930 415,060 1.39 4,700,000 10/24/97 76.46 67.41 364 Pads 9,872.96 77.00 10/1/97
346,170 435,154 1.26 4,900,000 11/10/97 73.34 0.00 78,400 Sq Ft 45.83 100.00 11/6/97
302,652 406,512 1.30 4,800,000 8/15/97 75.62 56.61 116 Units 30,965.23 98.00 10/31/97
322,023 454,359 1.41 5,200,000 9/2/97 68.92 55.30 146,330 Sq Ft 24.49 100.00 10/21/97
369,742 670,550 1.91 4,700,000 2/21/97 72.90 65.60 101 Beds 35,469.38 82.00 12/31/97
- ---------------------------------------------------------------------------------------------------------------------------------
344,082 410,349 1.19 4,900,000 5/8/97 72.87 55.53 130 Units 27,467.59 97.00 12/31/97
308,466 437,178 1.42 4,700,000 12/29/97 74.47 59.25 25,617 Sq Ft 136.63 100.00 1/7/98
280,980 372,541 1.33 4,700,000 10/27/97 74.41 63.99 116 Units 30,147.95 97.00 1/13/98
335,799 415,167 1.24 4,720,000 6/30/97 73.91 60.50 49,554 Sq Ft 70.40 83.34 9/12/97
327,121 955,500 2.92 8,450,000 7/25/97 41.19 0.00 131 Beds 26,570.77 90.30 12/31/97
362,681 547,150 1.51 4,350,000 8/18/97 78.66 0.00 120 Beds 28,513.37 96.00 9/30/97
362,681 613,700 1.69 4,300,000 8/19/97 79.57 0.00 120 Beds 28,513.37 98.65 9/30/97
297,574 541,492 1.82 4,500,000 10/20/97 75.64 61.22 74,350 Sq Ft 45.78 88.50 10/22/97
354,030 419,875 1.18 4,300,000 11/1/96 79.07 77.25 87 Beds 39,115.93 98.00 9/30/97
337,199 500,425 1.48 5,600,000 6/1/97 58.80 48.95 189 Rooms 17,421.85 55.40 6/30/97
- ---------------------------------------------------------------------------------------------------------------------------------
314,317 618,850 1.22 5,400,000 10/1/97 77.62 56.48 115 Beds 28,479.29 91.36 9/30/97
299,297 351,750 1.22 4,100,000 10/1/97 77.62 62.40 84 Beds 38,962.81 86.40 9/30/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MS 104 MS20 Branson Towers Inn 106,260 506.00
- ----------------------------------------------------------------------------------------------------------------------------
MS 105 MS21 Sea Venture 95,369 1,907.38
GACC 106 TA1398 Hollis Gardens 48,600 225
Conti 107 97C090152 Park Place 9,600 0.16 Bombardier Capital, Ltd. 17,700
Conti 108 9510198SN Phoenix West Plaza 30,267 0.20 Mega Foods 66,118
Conti 109 NY97003 Surrey Carlton Apts. 45,408 258.00
GACC 110 BL9702 Woodlake I Apartments 44,004 261.929
MS 111 MS22 Hampton Inn, Rockford 93,086 763.00
Conti 112 97-H008 Southport Manor 35,000 250.00
Convalescent Center
Conti 113 A970037 Fremont Village Square 6,114 0.15 Payless 13,253
RMF 114 CLP001 Clipper Home of Portsmouth
- ----------------------------------------------------------------------------------------------------------------------------
RMF 115 SPUR01 South Pointe @ Town Lake Towne Athletic Club 12,220
Shopping Center
Conti 116 MP-1045 Pecos Market Place 14,409 0.15 Kroger dba King Soopers 53,872
RMF 117 AVA002 The Bethany Health Care
Center
Conti 118 HCCA1880 Holiday Inn - Lawton 163,276 949.28
MS 119 MS23 Hampton Inn, Madison 87,858 757.40
GACC 120 TA1866 Sharp Medical Office 0 0.00 Sharp Medical Administrative 6,798
Conti 121 A960018 Duke Tower Residential 64,570 587.00
Suites
Conti 122 97-L037 K-Mart, Des Moines 15,950 0.15 K-Mart 106,333
MS 123 MS24 Carefree Cove 0 0.00
GACC 124 TA1809 LCA Intimates 16,095 0.15 LCA Intimates 107,392
- ----------------------------------------------------------------------------------------------------------------------------
GACC 125 TA1565 Sierra Fountain Apartments 18,250 249.999
RMF 126 HCC009 Heritgage Manor of
Springfield
Conti 127 9510211SN Auto Care Plaza 4,835 0.15 Big O Tires 4,845
Conti 128 97C-100155 Wing Park Shopping Center 19,935 0.23 Card & Party Outlet, Ltd 12,832
Conti 129 A970075 Jefferson Smurfit Office 31,900 0.58 Jefferson Smurfit 55,000
Building
BCMC 130 2655 Park Central Shopping 15,720 0.23 Carmike Cinema 20,514
Center
MS 131 MS25 North Main Place 9,113 0.15 Carolina Thrift 24,200
RMF 132 AVA001 The Trevecca Health Care
Center
Conti 133 97-42-HBS Hannaford Brothers 2,861 0.05 Boney Wilson & Sons, Inc. 57,211
Supermarket
BCMC 134 2610 Wichita Square Shopping 10,999 0.19 Hollywood Video 7,500
Center
- ----------------------------------------------------------------------------------------------------------------------------
GACC 135 TA1532 Gladstone Apts. (Howard 36,000 250
Gardens)
RMF 136 HCC015 Belen Health Care Center Health Care Capital of the 38,616
Rockies
GACC 137 TA1649 Shalamar Apartments 40,500 250
Conti 138 A970048 Capitol Steps Apartments 19,096 308.00
MS 139 MS26 LeMans Village 72,732 319.00
MS 140 MS27 Hampton Inn, Green Bay 74,972 651.93
Conti 141 9510239 Pacific Belgrave 7,236 0.20 Medpartners (116-119) 5,340
Conti 142 9510164 Pacific Randolph 7,228 0.20 Banners Central Electric 33,978
Conti 143 97C-080018 The Deerhaven/Sunset 84,616 1,226.32
Consolidation
Conti 143A 97C-080018A The Larchwood and 65,309 1,306.18
Deerhaven Inns
- ----------------------------------------------------------------------------------------------------------------------------
Conti 143B 97C-080018B The Sunset Motel 19,307 1,016.16
GACC 144 TA1942 Aggregate Loan Level 14,400
Information
GACC 144A TA19421 KANDR Building Celluar One 5,500
GACC 144B TA19422 Hark II and Hark III Coldwell Banker 2,270
GACC 145 TA1484 275-277 Forest Avenue 21,383 0.48 Forest Healthcare Associates 8,356
Conti 146 NYU107 The Waterview 20,750 250.00
RMF 147 CAN003 Cresthaven Nursing
Residence
BCMC 148 2600 Springbrook Commons 28,800 0.21
Apartments
RMF 149 HCC010 Panola Nursing Home
BCMC 150 2639 Stonebridge Apartments 17,250 0.29
- ----------------------------------------------------------------------------------------------------------------------------
GACC 151 TA0394 Michael's Plaza Shopping 42,300 0.41 Michaels Stores, Inc. 18,364
Ctr.
GACC 152 TA2328 Holiday Inn Express 43,197 357.003
BCMC 153 2511 The Willard Building 9,000 0.20 John Hancock Mutual Life 9,821
Insurance Company
RMF 154 MSMF01 Madison Station
Apartments, Inc.
RMF 155 CLP004 Langdon Place of Nashua
GACC 156 TA0179 Clear Creek Office Park 42,119 0.57 Martin and Martin 27,141
BCMC 157 1006-II Aggregate Loan Level 0 0.00
Information
BCMC 157A 1006-II1 Cordoba Center Ace/Cooper Building Material 4,900
BCMC 157B 1006-II2 Ponderosa Center Village Pet Clinic 3,660
BCMC 157C 1006-II3 DeSoto Center Village Food Mart 2,824
- ----------------------------------------------------------------------------------------------------------------------------
BCMC 157D 1006-II4 Old Lot Sales Building Village Hospitality and 7,200
Guest Check In
BCMC 158 2746 Lake Place Shopping Center 10,800 0.22 Scan Design Furniture, Inc. 13,038
RMF 159 TCAR01 Taylorville Corners FoodWorld 45,720
GACC 160 TA2073 McKendree Parking Center 17,439 0.10
RMF 161 CLP005 Clipper Home of Rochester
MS 162 MS28 Hickory Hills 18,200 50.00
GACC 163 TA2404 The Trend Companies 12,544 0.16 Trend Offset Printing 45,500
Services, Inc.
GACC 164 TA1534 Peck Road Apartments 34,800 300
Conti 165 28002 Tucker Street Warehouse 29,266 0.20 GSA 55,450
RMF 166 CAN006 Oakwood Manor
- ----------------------------------------------------------------------------------------------------------------------------
RMF 167 PVE001 Parc View Estates
BCMC 168 2594 Northstar Center 10,832 0.42 Northstar Lumber 13,261
GACC 169 TA1618 Pottsgrove Townhomes 6,844 58.9997
Conti 170 97C-03121 Rosemeade Park Shopping 11,397 0.23 Cosmopolitan Holding 13,000
Center
RMF 171 MTV001 Mountview Retirement
Residence
RMF 172 BLR001 Chatsworth Health Care
Center
RMF 173 BLR002 Fairburn Health Care Center
MS 174 MS29 Extra Space Self Storage 0 0.00
RMF 175 CLP002 Clipper Home of Wolfeboro
Conti 176 97-3C Hotel Colonial America 145,140 767.94
- ----------------------------------------------------------------------------------------------------------------------------
RMF 177 HCC008 Standing Stone Health Care Heritage Health Care Group, 32,592
Center Inc.
RMF 178 HCC004 Jackson Manor Nursing Home
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- -----------------------------------------------
<C> <C> <C> <C>
1993 NAP
- --------------------------------------------
1983 1993
1950 1995 -
1997
29.81 2/28/99 1990 NAP
43.69 1/31/07 1987 NAP
1966 1983
1987 NAP
1989 1995
1968 NAP
32.51 1996 NAP
1979 1985,
1986
- --------------------------------------------
22.12 5/31/07 1997 NAP
56.08 7/31/98 1973 1995
1981 NAP
1962, 1982 1993
1988 1996
22.05 12/31/98 1992 NAP
1972 1995
100 8/31/22 1966 1997
1969 NAP
100 10/6/12 1993 NAP
- --------------------------------------------
1989 NAP
1970 1989
15.03 6/30/06 1996 NAP
14.81 3/31/08 1959 1996
100 1/2/08 1970 NAP
30.01 5/31/06 1986 NAP
39.83 6/30/12 1986 1997
1978 NAP
100 12/12/17 1990 1995
12.96 12/31/07 1984 NAP
- --------------------------------------------
1969 NAP
100 12/31/12 1986 NAP
1964 - 1980 NAP
1997 NAP
1970 NAP
1989 1996
14.76 4/1/02 1985 NAP
94.02 12/31/02 1985 NAP
1973 1994
- --------------------------------------------
1940 1996
15.91 5/31/01 1964 1995,
1996
7.64 9/30/98 1986 - 1987 1995,
1996
18.86 6/30/07 1972 1997
1962 1979
1962 NAP
1995 - 1996 NAP
1966 1971
1983 NAP
- --------------------------------------------
18.01 2/28/02 1965 NAP
1971 1990,
1996
21.83 11/30/00 1891 1984
1974 1997
1989 NAP
36.46 10/26/99 1982 NAP
20.41 10/31/98 1983 NAP
15.56 3/27/00 1978 NAP
11.42 4/30/98 1972 NAP
- --------------------------------------------
100 10/31/02 1970 NAP
25.99 12/31/99 1986, 1987 NAP
65.99 6/30/15 1995 NAP
1957 1996
1986 1995
1970 NAP
58.04 1/14/18 1976, 1995, 1997 1993
1959 - 1964 1996,
1997
37.89 11/1/97 1965, 1975, 1978 NAP
1993 NAP
- --------------------------------------------
1972 1996
51.77 4/30/12 1996, 1997 NAP
1971, 1972 1996 -
1997
26.23 7/31/08 1986 1996
1974 NAP
1980 NAP
1978 NAP
1976 1986
1984 1996
1985, 1986 NAP
- --------------------------------------------
100 3/12/12 1977 NAP
1968 1977
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CON-
LOAN TROL LOAN
SEL- NUM- NUM-
LER BER BER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BCMC 179 2601 Metropolitan Center North 1753, 1755, 1759 Euclid Avenue San Diego California 92105
Conti 180 26585 Baychester Shopping Center 1197-1215 East 233rd Street Bronx New York 10466
Conti 181 97C-090144 Kedzie Plaza South 4754-70 South Kedzie Avenue, Chicago Illinois 60632
3201-43 W.47th Place
BCMC 182 2571 Borders Books and Music 162 East Main Street Mount Kisco New York 10549
BCMC 183 2697 189 Dean Street 189 Dean Street Norwood Massachusetts 02062
GACC 184 TA1521 Pacific Plaza 2380-2396 Crenshaw Boulevard Torrance California 90501
MS 185 MS31 Hampton Inn, LaCrosse 2110 Rose Street LaCrosse Wisconsin 54603
MS 186 MS30 Hampton Inn, Milwaukee 5601 N. Lovers Lane Rd Milwaukee Wisconsin 53225
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 187 TA0542 Sunset Colony Mobile Home Park 2400 West Broward Boulevard Ft. Lauderdale Florida 33312
RMF 188 JFFR01 Just For Feet - Shafer Plaza 8373 Westheimer Houston Texas 77063
Conti 189 97-H013 Santa Fe Trail Health Care Highway 13 South Lexington Missouri 64067
Center
Conti 190 9410243 The Vault 35 South Dove Street Alexandria Virginia 22314
Conti 191 97C-070125 Vallejo Village Shopping 1601 Marine World Parkway Vallejo California 94589
Center
GACC 192 TA2107 Fairmont Square Office Bldg. 3875 North 44th Street Phoenix Arizona 85018
MS 193 MS32 Comfort Suites - Atlanta 4820 Massachusetts Boulevard College Park Georgia 30337
RMF 194 YVMF01 Yorkshire Village Duplexes SEC N. Frankford Ave. Lubbock Texas 79416
and Townhomes and Ershine St.
BCMC 195 2793 Souderton Square Shopping Rt 113 & 309 Souderton Pennsylvania 18964
Center
BCMC 196 2794 Morrisville Square Shopping 330-344 West Trenton Avenue Morrisville Pennsylvania 19067
Center
- -----------------------------------------------------------------------------------------------------------------------------------
GACC 197 TA1012 Salem Industrial Park 7 Industrial Way Salem New 03079
Hampshire
Conti 198 25018 Abba Apartments 720 Carrollwood Village Drive Gretna Louisiana 70056
GACC 199 TA0746 Best Western Cottonwood Inn 993 South Main Street Cottonwood Arizona 86326
Conti 200 97C-0999 Summertree Shopping Center 12300 Inwood Road Dallas Texas 75244
BCMC 201 2391 253 Williams Street 253 Williams Street Chelsea Massachusetts 02150
Conti 202 A960040 International Plaza Shopping 5979 Buford Highway Doraville Georgia 30340
Center
MS 203 MS33 Arbor Glen Apartments 2727 Godby Road College Park Georgia 30349
Conti 204 9510192 Avalon Apartments 2920 South Chautauqua Avenue Norman Oklahoma 73072
RMF 205 CLP006 Clipper Home of North Conway 1251 White Mountain Highway North Conway New 03860
Hampshire
GACC 206 TA1790 95th Street & 1st Avenue 335-37 East 95th Street & 1841-45 New York New York 10128
First Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
BCMC 207 2403 Mitsubishi 300 Third Avenue Waltham Massachusetts 02154
Conti 208 97-H012 Red Rocks Care Center 3720 Church Rock Road Gallup New Mexico 87301
Conti 209 A960038 Montefiore Medical Center 1500 Blondell Avenue Bronx New York 10461
RMF 210 HCC014 West Mesa Health Care Center McMahon Blvd. Albuquerque New Mexico 87114
BCMC 211 1006-IV Aggregate Loan Level Various Various Various Various
Information
BCMC 211A 1006-IV1 Chota Center 142 - 144 Chota Road Tellico Village Tennessee 37774
BCMC 211B 1006-IV2 Tennessee Mountain Market 200 Chota Road Tellico Village Tennessee 37774
BCMC 211C 1006-IV3 Village Square 202 - 228 Chota Road Tellico Village Tennessee 37774
BCMC 211D 1006-IV4 Mialaquo Center 200 Mailaquo Center Tellico Village Tennessee 37774
Conti 212 9510221SN Veterans Road Apartments 91 Veterans Road Winthrop Massachusetts 02152
- -----------------------------------------------------------------------------------------------------------------------------------
MS 213 MS34 Genesis Square 1285-1295 Broadway Chula Vista California 91911
Conti 214 A970066 Folsom @12th Street 1585 Folsom St./329-333 12th St. San Francisco California 94103
Conti 215 9410239 A Storage Inn #1 & #4 Consolidation of Two Self-Storage Various Various Various
Properties
Conti 215A 9410239A A Storage Inn # 1 1709 Gause Blvd. West Slidell Louisiana 70460
Conti 215B 9410239B A Storage Inn # 4 2355 East Gause Blvd. Slidell Louisiana 70461
BCMC 216 2675 Chart House Office Building 115 South Acacia Ave. Solana Beach California 92075
Conti 217 9510195SN Tunkhannock Village Center Route 29 Tunkhannock Pennsylvania 18657
GACC 218 TA0809 577 Broadway 577 Broadway New York New York 10012
BCMC 219 2289 Groton Townhouse Apartments 52 Litton Avenue Groton Connecticut 06340
GACC 220 TA1745 Pompano Plaza 401-435 North Federal Highway Pompano Beach Florida 33062
- -----------------------------------------------------------------------------------------------------------------------------------
RMF 221 DMV001 Des Moines Vista Retirement 21202 Pacific Highway South Sea Tac Washington 98198
Center
Conti 222 97-H025 Cascade Terrace Nursing Home 5601 Southeast 122nd Street Portland Oregon 97238
Conti 223 HCCA2035 Ramada Inn-Cocoa, FL 900 Friday Road Cocoa Florida 32926
Conti 224 MP-1050 Gerbes Shopping Center 3805 Truman Blvd Jefferson City Missouri 65109
Conti 225 9410249 Budget Self Storage- Marlow 5061 Beech Place Temple Hills Maryland 20748
BCMC 226 2437 260 Second Street 260 Second Street Chelsa Massachusetts 02150
Conti 227 96-L014 Springhill Shopping Center 25 South Main Street Hellertown Pennsylvania 18055
BCMC 228 2795 Doubletree/Blockbuster Center 698 North Delsea Drive Glassboro, New Jersey 08028
RMF 229 HLA001 Hidden Lake Townhomes 4241 Hendrix Drive Forest Park Georgia 30297
Conti 230 A970063 Governor's Plaza 600-624 Pennsylvania Street Denver Colorado 80203
- ----------------------------------------------------------------------------------------------------------------------- -------
Conti 231 HCCA1975 Ramada Inn-Florence 7915 U.S. 42 Florence Kentucky 41042
BCMC 232 2158 Regency Plaza 6710 West Central Avenue Toledo Ohio 43617
Conti 233 9410222 Atlantic Mini Storage - San 13951 Beach Boulevard Jacksonville Florida 32224
Pablo
Conti 234 9410227 Arizona Storage Inns 20001 North 35th Avenue Phoenix Arizona 85027
GACC 235 TA2144 239 Washington Street 239 Washington Street Jersey City New Jersey 07303
MS 236 MS35 Mini U Storage 3900 E. 45th Ave. Denver Colorado 80216
Conti 237 MP-1049 Table Mesa Center 3600 Table Mesa Drive Boulder Colorado 80303
Conti 238 2255- Pine Ridge Apartments 40 Sitterly Road Half Moon New York 12065
09144CM1
MS 239 MS36 Aggregate Loan Level Various Various Various Various
Information
MS 239A MS36A United Plumbing - 582 Quaker 582 Quaker Highway Uxbridge Massachusetts 01569
Hwy.
- -----------------------------------------------------------------------------------------------------------------------------------
MS 239B MS36B United Plumbing - 361 361 Jefferson Boulevard Warwick Rhode 02886
Jefferson Blvd. Island
Conti 240 97-L018 9300 East Hampton Drive 9300 East Hampton Drive Capitol Heights Maryland 20743
GACC 241 TA1394 4906 El Camino Real 4906 El Camino Real Los Altos California 94022
Conti 242 A960047 Coit Medical Building 1630 & 1640 Coit Road Plano Texas 75075
Conti 243 A960033 Commercial Point 3601 W. Commercial Blvd. Ft. Lauderdale Florida 33309
RMF 244 HCC012 Pickett County Nursing Home 129 Hillcrest Drive Byrdstown Tennessee 38549
Conti 245 9610072 Blue Valley Mobile Home Park South Eisenman Road Boise Idaho 83705
Conti 246 MP-1047 Southgate Plaza Shopping 2012 South Ohio Street Salina Kansas 67401
Center
GACC 247 TA1029 Guy Brewer Plaza 92-19 to 92-45 Guy Brewer Jamaica New York 11433
Blvd.,a/k/a 163-05 Archer Av
BCMC 248 2528 West Crest Apartments 1370 Calle Jules Vista California 92084
- -----------------------------------------------------------------------------------------------------------------------------------
MS 249 MS38 Oak Harbor Best Western 33175 State Route 20 Oak Harbor Washington 98277
Conti 250 9510147 Pico Blvd 10510-10526 West Pico Blvd Los Angeles California 90064
Conti 251 90145 Terrace Club Apartments 7402 Heritage Hill Drive Temple Terrace Florida 33637
BCMC 252 2516 Granite Mall 485 Granite Street Braintree Massachusetts 02184
GACC 253 TA1951 Cal-Abco Building 2975 Bowers Avenue Santa Clara California 95051
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE ORIGINAL
ORIGINAL DATE CUT-OFF DATE SERVICING TERM TO REMAINING
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE MATURITY TERM TO
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE OR ARD MATURITY OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unanchored 3,250,000 3,250,000 0.18 30/360 7.750 0.03500 120 120
Retail
Anchored 3,250,000 3,241,264 0.17 Actual/360 7.330 0.09750 180 178
Retail
Unanchored 3,250,000 3,238,745 0.17 Actual/360 7.875 0.09750 120 117
Retail
Anchored 3,225,000 3,219,943 0.17 30/360 7.240 0.03500 120 118
Retail
Industrial 3,200,000 3,200,000 0.17 30/360 7.540 0.03500 120 120
Unanchored 3,200,000 3,195,302 0.17 30/360 7.570 0.02250 120 118
Retail
Hospitality 3,200,000 3,187,558 0.17 Actual/360 7.360 0.11000 120 118
Hospitality 3,200,000 3,187,558 0.17 Actual/360 7.360 0.11000 120 118
- -----------------------------------------------------------------------------------------------------------------------------------
Mobile Home 3,140,000 3,137,716 0.17 30/360 7.600 0.02250 120 119
Park
Anchored 3,150,000 3,129,039 0.17 Actual/360 7.800 0.06750 101 97
Retail
Skilled 3,100,000 3,086,049 0.17 Actual/360 8.080 0.11750 120 116
Nursing
Self-Storage 3,100,000 3,079,636 0.17 30/360 8.350 0.09750 120 116
Unanchored 3,080,000 3,076,237 0.17 Actual/360 7.625 0.09750 120 119
Retail
Office 3,069,000 3,064,282 0.17 30/360 7.340 0.02250 120 118
Hospitality 3,050,000 3,042,883 0.16 Actual/360 7.990 0.02250 120 118
Multifamily 3,040,000 3,034,541 0.16 Actual/360 7.700 0.06750 120 118
Unanchored 3,000,000 3,000,000 0.16 Actual/360 7.130 0.03500 120 120
Retail
Unanchored 3,000,000 3,000,000 0.16 Actual/360 7.130 0.03500 120 120
Retail
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial 3,000,000 2,997,776 0.16 30/360 7.505 0.02250 120 119
Multifamily 3,000,000 2,994,280 0.16 Actual/360 7.250 0.09750 120 118
Hospitality 3,000,000 2,988,995 0.16 Actual/360 8.890 0.02250 120 116
Unanchored 3,000,000 2,986,583 0.16 Actual/360 8.125 0.09750 120 116
Retail
Industrial 2,950,000 2,950,000 0.16 30/360 7.160 0.03500 180 180
Unanchored 3,000,000 2,946,349 0.16 30/360 9.375 0.09750 120 108
Retail
Multifamily 2,900,000 2,892,152 0.16 Actual/360 8.000 0.11000 84 80
Multifamily 2,900,000 2,890,903 0.16 Actual/360 7.790 0.09750 120 116
Skilled CLP001 to CLP006 2,920,000 2,888,666 0.16 Actual/360 9.140 0.37880 36 24
Nursing
Multifamily 2,800,000 2,800,000 0.15 30/360 7.200 0.02250 120 120
- -----------------------------------------------------------------------------------------------------------------------------------
Office 2,800,000 2,793,814 0.15 30/360 7.570 0.03500 82 79
Skilled 2,800,000 2,792,983 0.15 Actual/360 7.920 0.11750 120 118
Nursing
Office 2,800,000 2,734,302 0.15 30/360 9.500 0.09750 180 171
Skilled HCC001 to HCC016 2,738,000 2,729,016 0.15 Actual/360 8.260 0.27250 60 57
Nursing
Various 1006-I, 1006-II, 2,720,000 2,716,187 0.15 30/360 7.800 0.03500 120 118
1006III, 1006IV
Office
Unanchored
Retail
Unanchored
Retail
Anchored
Retail
Multifamily 2,700,000 2,691,818 0.15 Actual/360 8.000 0.14250 60 56
- -----------------------------------------------------------------------------------------------------------------------------------
Unanchored 2,656,000 2,647,870 0.14 Actual/360 8.150 0.02250 120 115
Retail
Mixed Use 2,650,000 2,643,743 0.14 30/360 7.300 0.09750 120 118
Various 2,605,000 2,598,485 0.14 Actual/360 7.938 0.09750 180 178
Self-Storage
Self-Storage
Office 2,600,000 2,594,130 0.14 30/360 7.580 0.03500 120 118
Anchored 2,600,000 2,591,790 0.14 Actual/360 7.750 0.14250 120 116
Retail
Mixed Use 2,600,000 2,591,251 0.14 30/360 7.640 0.02250 119 116
Multifamily 2,575,000 2,566,596 0.14 30/360 7.830 0.03500 120 117
Unanchored 2,500,000 2,496,351 0.13 30/360 7.600 0.02250 120 118
Retail
- -----------------------------------------------------------------------------------------------------------------------------------
Assisted 2,500,000 2,490,099 0.13 Actual/360 9.000 0.29250 120 116
Living
Skilled 2,500,000 2,489,389 0.13 Actual/360 8.500 0.11750 120 116
Nursing
Hospitality 2,460,000 2,454,768 0.13 Actual/360 9.375 0.09750 120 118
Anchored MP-1050 & MP-1047 2,410,000 2,402,029 0.13 Actual/360 7.470 0.09750 180 176
Retail
Self-Storage 2,400,000 2,391,601 0.13 Actual/360 7.800 0.09750 120 117
Industrial 2,400,000 2,391,035 0.13 30/360 7.250 0.03500 120 118
Anchored 2,400,000 2,388,604 0.13 30/360 8.710 0.09750 120 115
Retail
Unanchored 2,362,500 2,362,500 0.13 Actual/360 7.130 0.03500 120 120
Retail
Multifamily 2,350,000 2,341,929 0.13 30/360 7.950 0.06750 120 115
Multifamily 2,320,000 2,314,478 0.12 30/360 7.250 0.09750 120 118
- -----------------------------------------------------------------------------------------------------------------------------------
Hospitality 2,300,000 2,291,745 0.12 Actual/360 8.500 0.09750 240 238
Unanchored 2,296,030 2,291,627 0.12 30/360 8.200 0.03500 120 116
Retail
Self-Storage 2,300,000 2,280,793 0.12 30/360 8.500 0.09750 180 177
Self-Storage 2,250,000 2,243,678 0.12 30/360 8.750 0.09750 120 117
Office 2,230,000 2,230,000 0.12 30/360 7.490 0.02250 120 120
Self-Storage 2,210,000 2,204,345 0.12 Actual/360 7.310 0.02250 120 118
Anchored 2,210,000 2,202,691 0.12 Actual/360 7.470 0.09750 180 176
Retail
Multifamily 2,205,000 2,198,179 0.12 Actual/360 7.875 0.09750 120 116
Various 2,200,000 2,195,187 0.12 Actual/360 8.470 0.10750 180 178
Industrial
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial
Industrial 2,200,000 2,188,806 0.12 Actual/360 8.500 0.09750 120 115
Office 2,175,000 2,173,297 0.12 30/360 7.230 0.02250 120 119
Office 2,175,000 2,166,047 0.12 30/360 8.750 0.09750 120 113
Industrial 2,180,000 2,161,965 0.12 30/360 9.000 0.09750 120 111
Skilled HCC001 to HCC016 2,160,000 2,152,912 0.12 Actual/360 8.260 0.27250 180 177
Nursing
Mobile Home 2,150,000 2,140,919 0.12 30/360 8.036 0.09750 120 116
Park
Anchored MP-1050 & MP-1047 2,130,000 2,122,955 0.11 Actual/360 7.470 0.09750 180 176
Retail
Unanchored TA1369 & TA1029 2,100,000 2,097,737 0.11 30/360 7.850 0.02250 119 118
Retail
Multifamily 2,100,000 2,095,026 0.11 30/360 7.280 0.03500 120 118
- -----------------------------------------------------------------------------------------------------------------------------------
Hospitality 2,100,000 2,094,938 0.11 Actual/360 7.750 0.02250 120 118
Mixed Use 2,100,000 2,093,977 0.11 30/360 8.625 0.09750 84 81
Multifamily 2,080,000 2,072,539 0.11 Actual/360 7.625 0.09750 120 117
Unanchored 2,000,000 2,000,000 0.11 30/360 7.250 0.03500 120 120
Retail
Office 2,000,000 1,998,328 0.11 30/360 6.900 0.02250 60 59
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
240 240 2/12/98 3/1/08 Balloon 2,223,205 LO/60_YM/54_0/6 1
300 298 12/23/97 1/1/13 Balloon 2,017,786 LO/96_YM1/60_0/24 1
300 297 11/13/97 12/1/07 Balloon 2,623,817 LO/60_YM1/54_0/6 2
360 358 12/22/97 1/1/08 Balloon 2,782,876 LO/60_YM/54_0/6 1
300 300 2/20/98 3/1/08 Hyper 2,553,683 LO/48_2/12_1/12_0/48 NAP
360 358 12/23/97 1/1/08 Hyper 2,781,706 LO/60_Def/57_0%/3 NAP
245 243 12/4/97 1/1/08 Balloon 2,205,629 LO/48_YM1/69_0/3 1
245 243 12/4/97 1/1/08 Balloon 2,205,629 LO/48_YM1/69_0/3 1
- -----------------------------------------------------------------------------------------------------------------------------------
360 359 12/17/97 2/1/08 Hyper 2,731,333 LO/60_Def/56_0%/4 NAP
252 248 10/3/97 4/1/06 Hyper 2,449,395 LO/12_YM/72_2/12_1/5 1
300 296 10/31/97 11/1/07 Balloon 2,515,856 LO/36_4/12_3/12_2/12_1/12_0/36 NAP
240 236 10/21/97 11/1/07 Balloon 2,160,082 LO/60_YM1/54_0/6 2
360 359 1/5/98 2/1/08 Balloon 2,686,706 LO/60_YM1/54_0/6 2
360 358 12/31/97 1/1/08 Hyper 2,654,266 LO/36_Def/81_0%/3 NAP
310 308 12/23/97 1/1/08 Balloon 2,512,209 LO/36_4/12_3/12_2/12_1/42_0/6 NAP
360 358 12/30/97 1/1/08 Hyper 2,656,102 YM1/84_3/12_2/12_1/6_0/6 2
360 360 2/20/98 3/1/08 Hyper 2,626,315 LO/60_YM/54_0/6 1
360 360 2/20/98 3/1/08 Hyper 2,626,315 LO/60_YM/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
360 359 1/15/98 2/1/08 Hyper 2,604,136 LO/36_Def/81_0%/3 NAP
360 358 12/19/97 1/1/08 Hyper 2,595,228 LO/26_Def/88_0/6 NAP
313 309 10/2/97 11/1/07 Hyper 2,533,630 LO/60_Def/54_0%/6 NAP
300 296 10/26/97 11/1/07 Balloon 2,437,462 LO/60_YM1/54_0/6 2
360 360 2/19/98 3/1/13 Hyper 2,197,014 LO/60_YM/114_0/6 1
240 228 2/11/97 3/1/07 Hyper 2,153,571 LO/36_Def/78_0/6 NAP
378 374 10/2/97 11/1/04 Balloon 2,712,394 LO/30_YM1/51_0/3 1
360 356 10/24/97 11/1/07 Balloon 2,538,646 LO/60_YM1/54_0/6 2
300 288 2/11/97 2/20/00 Balloon 2,819,467 LO/36 NAP
360 360 2/6/98 3/1/08 Hyper 2,413,931 LO/48_Def/69_0%/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
360 357 11/13/97 10/1/04 Hyper 2,580,832 LO/60_YM/16_0/6 1
300 298 12/23/97 1/1/08 Balloon 2,263,138 LO/36_4/12_3/12_2/12_1/12_0/36 NAP
180 171 5/2/97 6/1/12 Full 0 LO/33_Def/141_0/6 NAP
300 297 11/24/97 12/1/02 Balloon 2,541,402 LO/54_0/6 NAP
360 358 12/31/97 1/1/08 Balloon 2,376,167 LO/60_YM1/54_0%6 1
360 356 10/10/97 11/1/02 Balloon 2,569,466 LO/18_1/6_0/36 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
379 374 9/30/97 10/1/07 Balloon 2,383,424 LO/60_YM1/57_0/3 1
300 298 12/29/97 1/1/08 Hyper 2,101,144 LO/26_Def/88_0/6 NAP
300 298 12/30/97 1/1/13 Balloon 1,660,961 LO/60_YM1/60_0/60 1
300 298 12/19/97 1/1/08 Hyper 2,077,073 LO/24_YM/90_0/6 1
360 356 10/22/97 11/1/07 Balloon 2,274,096 LO/60_YM1/54_0/6 2
300 297 11/7/97 11/1/07 Hyper 2,086,536 LO/60_Def/53_0%/6 NAP
300 297 11/14/97 12/1/07 Balloon 2,070,610 LO/60_YM/54_0/6 1
360 358 12/31/97 1/1/08 Hyper 2,174,623 LO/36_Def/81_0%/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
300 296 10/3/97 10/3/07 Balloon 2,079,481 YM1/60_2/12_1.5/12_1/12_.5/12_0/12 1
300 296 10/31/97 11/1/07 Balloon 2,050,095 5/36_4/24_0/60 NAP
300 298 12/30/97 1/1/08 Balloon 2,058,497 LO/60_3/12_2/12_1/30_0/6 NAP
360 356 10/30/97 11/1/12 Balloon 1,823,110 LO/28_Def/32_3/12_1/12_0/96 NAP
300 297 11/21/97 12/1/07 Balloon 1,933,827 LO/60_YM1/54_0/6 2
240 238 12/18/97 1/1/08 Hyper 1,615,746 LO/60_YM/54_0/6 1
300 295 9/19/97 10/1/07 Balloon 1,972,370 LO/12_YM1/102_0/6 1
360 360 2/20/98 3/1/08 Hyper 2,068,223 LO/60_YM/54_0/6 1
360 355 9/22/97 10/1/07 Hyper 2,059,400 LO/36_YM1/48_3/12_2/12_1/6_0/6 1
300 298 12/30/97 1/1/08 Hyper 1,836,981 LO/26_Def/88_0/6 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
240 238 12/30/97 1/1/18 Full 0 LO/120_YM1/114_0/6 2
300 293 10/14/97 11/1/07 Balloon 1,866,493 LO/60_YM/54_0/6 1
180 177 11/12/97 12/1/12 Full 0 YM1/156_0/24 2
300 297 11/7/97 12/1/07 Balloon 1,850,844 YM1/36_3/12_2/12_1/24_0/36 2
360 360 2/6/98 3/1/08 Hyper 1,935,102 LO/36_Def/81_0%/3 NAP
309 307 12/3/97 1/1/08 Balloon 1,784,135 LO/36_YM1/81_0/3 2
360 356 10/30/97 11/1/12 Balloon 1,671,816 LO/28_Def/32_3/12_1/12_0/96 NAP
360 356 10/14/97 11/1/07 Balloon 1,933,700 LO/60_YM1/54_0/6 2
312 310 12/19/97 1/1/13 Balloon 1,499,881 LO/60_YM1/117_0/3 1
- -----------------------------------------------------------------------------------------------------------------------------------
300 295 9/23/97 10/1/07 Balloon 1,804,086 LO/60_YM1/54_0/6 2
360 359 1/29/98 2/1/08 Hyper 1,876,394 LO/60_Def/57_0%/3 NAP
360 353 7/3/97 8/1/07 Hyper 1,936,237 LO/31_Def/83_0/6 NAP
300 291 5/19/97 6/1/07 Hyper 1,803,715 LO/33_Def/81_0/6 NAP
300 297 11/24/97 12/1/12 Balloon 1,403,624 LO/84_Def/90_0/6 NAP
300 296 10/23/97 11/1/07 Balloon 1,737,998 LO/60_YM1/54_0/6 2
360 356 10/30/97 11/1/12 Balloon 1,611,298 LO/28_Def/32_3/12_1/12_0/96 NAP
300 299 12/15/97 1/1/08 Hyper 1,694,441 LO/35_Def/81_0%/3 NAP
300 298 12/15/97 1/1/08 Balloon 1,664,149 LO/60_YM/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
310 308 12/17/97 1/1/08 Balloon 1,717,716 LO/60_YM1/57_0/3 1
300 297 11/7/97 12/1/04 Balloon 1,871,201 LO/36_YM1/42_0/6 2
300 297 11/6/97 12/1/07 Balloon 1,668,307 LO/60_YM1/54_0/6 2
300 300 2/6/98 3/1/08 Balloon 1,583,604 LO/60_YM/54_0/6 1
360 359 1/7/98 2/1/03 Hyper 1,880,606 LO/36_Def/21_0%/3 NAP
<PAGE>
<CAPTION>
UNDER- SQ FT, LOAN PER
WRITTEN CUT-OFF SCHEDULED UNIT, SQ FT, UNIT,
ANNUAL UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD BED, PAD OCCUPANCY OCCUPANCY
DEBT SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM UNIT TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
320,170 485,999 1.52 5,500,000 10/16/97 59.09 40.42 69,400 Sq Ft 46.83 100.00 12/31/97
286,558 459,774 1.60 4,600,000 11/21/97 70.46 43.86 42,600 Sq Ft 76.09 97.64 12/1/97
300,728 391,295 1.30 4,100,000 9/12/97 78.99 64.00 51,765 Sq Ft 62.57 84.35 10/1/97
263,740 346,378 1.31 4,300,000 10/24/97 74.88 64.72 22,586 Sq Ft 142.56 100.00 10/24/97
284,772 354,771 1.25 4,000,000 12/29/97 80.00 63.84 48,750 Sq Ft 65.64 100.00 1/1/98
270,341 340,924 1.26 4,280,000 9/22/97 74.66 64.99 23,389 Sq Ft 136.62 100.00 11/1/97
306,069 643,321 2.10 5,000,000 10/30/97 63.75 44.11 101 Rooms 31,559.98 70.90 9/30/97
306,069 534,328 1.75 5,300,000 11/12/97 60.14 41.62 108 Rooms 29,514.43 68.10 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
266,049 380,133 1.43 4,100,000 9/26/97 76.53 66.62 409 Pads 7,671.68 94.00 11/1/97
308,021 388,436 1.26 4,200,000 8/20/97 74.50 58.32 15,200 Sq Ft 205.86 100.00 8/25/97
291,961 894,266 3.06 4,900,000 8/1/97 62.98 51.34 155 Beds 19,909.99 86.25 10/24/97
319,307 579,952 1.82 6,150,000 8/22/97 50.08 35.12 69,647 Sq Ft 44.22 98.10 9/12/97
264,354 394,849 1.49 4,000,000 8/15/97 76.91 67.17 42,876 Sq Ft 71.75 90.90 12/1/97
253,484 315,607 1.25 4,200,000 11/1/97 72.96 63.20 41,733 Sq Ft 73.43 98.00 12/31/97
282,242 458,112 1.62 4,000,000 10/10/97 76.07 62.81 70 Rooms 43,469.76 70.90 10/31/97
262,872 328,860 1.25 3,800,000 8/7/97 79.86 69.90 52 Units 58,356.55 89.00 1/27/98
242,660 323,350 1.33 4,000,000 1/8/98 75.00 65.66 26,054 Sq Ft 115.15 100.00 12/15/97
242,660 341,979 1.41 4,300,000 1/8/98 69.77 61.08 31,230 Sq Ft 96.06 100.00 8/15/97
- -----------------------------------------------------------------------------------------------------------------------------------
251,841 321,506 1.28 4,100,000 11/25/97 73.12 63.52 75,563 Sq Ft 39.67 100.00 12/1/97
248,128 304,220 1.23 4,100,000 11/7/97 73.03 63.30 204 Units 14,677.84 98.00 11/7/97
299,404 441,521 1.47 4,000,000 7/11/97 74.72 63.34 77 Rooms 38,818.12 65.00 12/31/96
283,640 387,945 1.37 4,700,000 8/1/97 63.54 51.86 45,620 Sq Ft 65.47 89.00 7/9/97
239,333 305,451 1.28 3,950,000 9/16/97 74.68 55.62 52,153 Sq Ft 56.56 100.00 9/22/97
332,634 461,723 1.39 4,800,000 12/10/96 61.38 44.87 58,813 Sq Ft 50.10 94.90 2/10/97
255,350 389,258 1.52 3,900,000 9/10/97 74.16 69.55 134 Units 21,583.22 96.30 8/28/97
252,976 316,096 1.25 3,675,000 8/1/97 78.66 69.08 80 Units 36,136.29 100.00 8/31/97
300,514 170,250 1.18 3,650,000 11/1/96 79.07 77.25 91 Beds 31,743.58 92.00 9/30/97
228,073 290,782 1.27 3,650,000 11/7/97 76.71 66.14 54 Units 51,851.85 97.00 8/13/97
- -----------------------------------------------------------------------------------------------------------------------------------
236,549 320,085 1.35 3,830,000 7/30/97 72.95 67.38 22,000 Sq Ft 126.99 100.00 7/22/97
260,073 488,934 1.88 3,800,000 8/1/97 73.50 59.56 102 Beds 27,382.18 97.00 8/31/97
350,859 370,113 1.05 4,700,000 1/8/97 58.18 18,450 Sq Ft 148.20 100.00 2/19/97
261,907 387,400 1.22 4,500,000 10/1/97 77.62 56.48 120 Beds 22,741.80 93.90 9/30/97
234,966 353,167 1.53 3,880,000 72.66 61.24 73,338 Sq Ft 37.04
45,839 550,000 10/29/97 7,902 Sq Ft 100.00 11/30/97
49,025 520,000 10/29/97 2,000 Sq Ft 100.00 11/30/97
112,076 1,220,000 10/29/97 17,283 Sq Ft 75.00 11/30/97
146,227 1,590,000 10/29/97 46,153 Sq Ft 100.00 11/30/97
240,342 297,125 1.24 3,400,000 8/1/97 79.17 75.57 61 Units 44,128.16 91.80 12/1/97
- -----------------------------------------------------------------------------------------------------------------------------------
237,207 313,234 1.32 3,320,000 1/1/98 79.76 71.79 24,968 Sq Ft 106.05 94.70 9/1/97
230,878 310,001 1.34 4,200,000 11/20/97 62.95 50.03 60,201 Sq Ft 43.92 100.00 12/1/97
242,328 305,901 1.26 3,075,000 84.50 54.01 108,493 Sq Ft 23.95 0.00
201,611 1,900,000 9/5/97 0.00 71,898 Sq Ft 69.00 8/12/97
104,290 1,175,000 9/5/97 0.00 36,595 Sq Ft 82.65 11/18/97
232,191 290,325 1.25 3,500,000 11/5/97 74.12 59.34 24,441 Sq Ft 106.14 100.00 10/31/97
225,927 290,313 1.28 3,450,000 9/3/97 75.12 65.92 68,095 Sq Ft 38.06 92.65 9/25/97
233,414 295,024 1.26 3,500,000 9/15/97 74.04 59.62 28,906 Sq Ft 89.64 100.00 11/6/97
235,022 286,231 1.22 4,200,000 6/30/97 61.11 49.30 141 Units 18,202.81 86.00 10/31/97
211,823 263,016 1.24 3,300,000 12/16/97 75.65 65.90 32,062 Sq Ft 77.86 100.00 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
254,415 344,350 1.35 2,950,000 5/4/97 84.41 70.49 72 Beds 34,584.72 98.00 9/30/97
244,038 444,262 1.82 3,300,000 7/1/97 75.44 62.12 105 Beds 23,708.47 88.57 8/31/97
258,099 406,784 1.58 3,390,000 5/15/98 72.41 60.72 151 Rooms 16,256.74 60.00 11/30/97
203,748 243,129 1.19 3,200,000 10/1/97 73.29 56.97 56,430 Sq Ft 42.57 99.00 10/28/97
220,627 276,815 1.25 2,950,000 10/13/97 81.07 65.55 63,339 Sq Ft 37.76 68.49 9/30/97
227,628 329,101 1.45 4,050,000 9/16/97 59.04 39.89 67,738 Sq Ft 35.30 99.00 11/30/97
235,995 318,491 1.35 3,550,000 6/10/97 67.28 55.56 57,235 Sq Ft 41.73 96.80 11/25/97
191,095 269,829 1.41 3,150,000 1/8/98 75.00 65.66 12,340 Sq Ft 191.45 100.00 12/15/97
205,940 281,928 1.37 3,100,000 8/21/97 75.55 66.43 105 Units 22,304.09 96.19 12/31/97
201,229 267,282 1.33 2,900,000 11/20/97 79.81 63.34 53 Units 43,669.41 100.00 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
241,641 424,858 1.76 4,000,000 8/27/97 57.29 119 Rooms 19,258.36 48.41 7/31/97
216,884 299,887 1.38 3,700,000 5/29/97 61.94 50.45 44,302 Sq Ft 51.73 100.00 10/1/97
271,788 390,555 1.44 3,725,000 5/27/97 61.23 97,250 Sq Ft 23.45 87.00 10/31/97
221,979 293,929 1.32 2,800,000 7/11/97 80.13 66.10 71,515 Sq Ft 31.37 88.96 10/25/97
186,927 236,828 1.27 2,980,000 10/17/97 74.83 64.94 18,356 Sq Ft 121.49 100.00 10/31/97
192,715 345,897 1.79 3,525,000 10/31/97 62.53 50.61 66,940 Sq Ft 32.93 86.00 9/1/97
186,840 224,924 1.20 3,400,000 10/1/97 64.79 49.17 42,459 Sq Ft 51.88 100.00 10/28/97
193,936 241,144 1.24 2,800,000 8/7/97 78.51 69.06 48 Units 45,795.40 100.00 10/6/97
212,047 272,566 1.29 2,775,000 8/28/97 79.11 54.05 93,120 Sq Ft 23.57
143,713 1.29 1,400,000 8/28/97 79.97 54.64 50,600 Sq Ft 22.13 100.00 8/28/97
- -----------------------------------------------------------------------------------------------------------------------------------
128,853 1.29 1,375,000 8/28/97 78.23 53.45 42,520 Sq Ft 25.30 100.00 8/28/97
214,782 275,023 1.28 2,840,000 6/23/97 77.07 63.52 78,256 Sq Ft 27.97 100.00 9/30/97
177,694 230,641 1.30 2,900,000 12/11/97 74.94 64.70 11,750 Sq Ft 184.96 95.00 1/1/98
205,329 256,087 1.25 2,900,000 4/10/97 74.69 66.77 21,630 Sq Ft 100.14 100.00 5/29/97
219,534 295,764 1.35 3,200,000 3/7/97 67.56 56.37 61,772 Sq Ft 35.00 93.10 5/15/97
206,618 178,550 1.22 2,700,000 10/1/97 77.62 51.99 63 Beds 34,173.21 97.00 9/30/97
199,744 336,490 1.68 3,800,000 5/28/97 56.34 45.74 200 Pads 10,704.60 97.00 9/5/97
180,076 215,325 1.19 3,000,000 10/1/97 73.29 53.71 60,446 Sq Ft 35.12 100.00 10/28/97
192,000 262,075 1.29 2,800,000 9/29/97 74.94 60.52 27,377 Sq Ft 76.62 100.00 12/3/97
182,635 232,040 1.27 2,900,000 10/9/97 72.24 57.38 63 Units 33,254.38 100.00 11/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
190,343 421,636 2.22 4,100,000 11/14/97 51.10 41.90 80 Rooms 26,186.73 65.00 9/30/97
205,044 287,003 1.40 3,000,000 3/10/97 69.80 62.37 19,550 Sq Ft 107.11 91.05 10/1/97
188,293 252,298 1.34 2,600,000 6/19/97 79.71 64.17 90 Units 23,028.21 96.51 10/17/97
173,474 225,540 1.30 2,700,000 10/6/97 74.07 58.65 9,914 Sq Ft 201.73 100.00 10/7/97
158,064 244,280 1.55 2,900,000 11/4/97 68.91 64.85 18,118 Sq Ft 110.30 100.00 1/1/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BCMC 179 2601 Metropolitan Center North 10,416 0.15 Fam Mart 61,500
Conti 180 26585 Baychester Shopping Center 12,780 0.30 Bay City Food Corp. 15,300
Conti 181 97C-090144 Kedzie Plaza South 10,353 0.20 Fashion Bug 9,000
BCMC 182 2571 Borders Books and Music 3,388 0.15 Borders Books and Music 22,586
BCMC 183 2697 189 Dean Street 80,943 1.66 Praxair, Inc. 48,750
GACC 184 TA1521 Pacific Plaza 95,400 4.08 Little Co. Mary Hospital 6,346
MS 185 MS31 Hampton Inn, LaCrosse 69,459 687.71
MS 186 MS30 Hampton Inn, Milwaukee 73,704 682.44
- -------------------------------------------------------------------------------------------------------------------------------
GACC 187 TA0542 Sunset Colony Mobile Home 18,252 44.6259
Park
RMF 188 JFFR01 Just For Feet - Shafer Just For Feet 15,200
Plaza
Conti 189 97-H013 Santa Fe Trail Health Care 38,750 250.00
Center
Conti 190 9410243 The Vault 10,447 0.15
Conti 191 97C-070125 Vallejo Village Shopping 12,863 0.30 United Furniture 7,031
Center
GACC 192 TA2107 Fairmont Square Office 0 0.00 Omega Legal Systems 7,761
Bldg.
MS 193 MS32 Comfort Suites - Atlanta 51,923 741.76
RMF 194 YVMF01 Yorkshire Village Duplexes
and Townhomes
BCMC 195 2793 Souderton Square Shopping 4,692 0.18 Esposito Enterprises d/b/a 6,114
Center West Coast Video
BCMC 196 2794 Morrisville Square 6,876 0.22 Burger King 4,515
Shopping Center
- -------------------------------------------------------------------------------------------------------------------------------
GACC 197 TA1012 Salem Industrial Park 15,868 0.21 Ecco USA, Inc. 29,563
Conti 198 25018 Abba Apartments 51,000 250.00
GACC 199 TA0746 Best Western Cottonwood Inn 59,580 773.766
Conti 200 97C-0999 Summertree Shopping Center 10,493 0.23 Tupinamba Restaurant 8,315
BCMC 201 2391 253 Williams Street 10,431 0.20 The Restaurant Depot 52,153
Conti 202 A960040 International Plaza 11,763 0.20 Intl Health & Sauna Club 10,000
Shopping Center
MS 203 MS33 Arbor Glen Apartments 38,324 286.00
Conti 204 9510192 Avalon Apartments 24,000 300.00
RMF 205 CLP006 Clipper Home of North
Conway
GACC 206 TA1790 95th Street & 1st Avenue 16,665 308.618 Hogs & Heifers Bar 1,500
- -------------------------------------------------------------------------------------------------------------------------------
BCMC 207 2403 Mitsubishi 35,414 1.61 Mitsubishi Electric ITA 22,000
Conti 208 97-H012 Red Rocks Care Center 25,500 250.00
Conti 209 A960038 Montefiore Medical Center 4,428 0.24 Montefiore Medical Center 18,450
RMF 210 HCC014 West Mesa Health Care Health Care Capital of the 38,614
Center Southwest
BCMC 211 1006-IV Aggregate Loan Level 0 0.00
Information
BCMC 211A 1006-IV1 Chota Center Tellico POA 4,126
BCMC 211B 1006-IV2 Tennessee Mountain Market Tennessee Mountain Markets 2,000
BCMC 211C 1006-IV3 Village Square Dr. John Burns, DDS 2,034
BCMC 211D 1006-IV4 Mialaquo Center Ace Retail Center/CBM 46,153
Conti 212 9510221SN Veterans Road Apartments 15,250 250.00
- -------------------------------------------------------------------------------------------------------------------------------
MS 213 MS34 Genesis Square #REF! 0.15 Hollywood Video 8,050
Conti 214 A970066 Folsom @12th Street 9,030 0.15 City Lights 33,004
Conti 215 9410239 A Storage Inn #1 & #4 16,274 0.15
Conti 215A 9410239A A Storage Inn # 1 10,785 0.15
Conti 215B 9410239B A Storage Inn # 4 5,489 0.15
BCMC 216 2675 Chart House Office Building 34,884 1.43 Bridge Medical, Inc. 24,441
Conti 217 9510195SN Tunkhannock Village Center 10,214 0.15 Weis Markets (Mr. Z's) 50,875
GACC 218 TA0809 577 Broadway 0 0 Nine West Shoe Store 2,800
BCMC 219 2289 Groton Townhouse Apartments 42,300 0.38
GACC 220 TA1745 Pompano Plaza 31,185 0.97 Bromo Distributors 10,000
(Blockbuster Music)
- -------------------------------------------------------------------------------------------------------------------------------
RMF 221 DMV001 Des Moines Vista
Retirement Center
Conti 222 97-H025 Cascade Terrace Nursing 26,250 250.00
Home
Conti 223 HCCA2035 Ramada Inn-Cocoa, FL 91,885 608.51
Conti 224 MP-1050 Gerbes Shopping Center 11,286 0.20 Dillon's # 315 47,190
Conti 225 9410249 Budget Self Storage- Marlow 9,501 0.15
BCMC 226 2437 260 Second Street 13,548 0.20 Rudi Foods Inc. 33,545
Conti 227 96-L014 Springhill Shopping Center 8,585 0.15 A & P 20,295
BCMC 228 2795 Doubletree/Blockbuster 2,592 0.21 Blockbuster 6,000
Center
RMF 229 HLA001 Hidden Lake Townhomes
Conti 230 A970063 Governor's Plaza 14,575 275.00
- -------------------------------------------------------------------------------------------------------------------------------
Conti 231 HCCA1975 Ramada Inn-Florence 58,367 490.48
BCMC 232 2158 Regency Plaza 6,636 0.15 AirTouch Cellular, Sales 7,302
Conti 233 9410222 Atlantic Mini Storage - 14,588 0.15
San Pablo
Conti 234 9410227 Arizona Storage Inns 10,727 0.15
GACC 235 TA2144 239 Washington Street 45,178 2.46 Rosenfield/Dentino, Inc. 5,765
MS 236 MS35 Mini U Storage 0 0.00
Conti 237 MP-1049 Table Mesa Center 4,246 0.10 King Soopers 42,459
Conti 238 2255-09144CM1Pine Ridge Apartments 13,728 286.00
MS 239 MS36 Aggregate Loan Level 11,438 0.12
Information
MS 239A MS36A United Plumbing - 582 5,060 0.10 United Plumbing 50,600
Quaker Hwy.
- -------------------------------------------------------------------------------------------------------------------------------
MS 239B MS36B United Plumbing - 361 6,378 0.15 United Plumbing 42,520
Jefferson Blvd.
Conti 240 97-L018 9300 East Hampton Drive 15,651 0.20 Johnson Controls 44,638
GACC 241 TA1394 4906 El Camino Real 7,200 0.61 Los Altos Medical Clinic 6,200
Conti 242 A960047 Coit Medical Building 5,191 0.24 Texas Regional Heart Assoc. 6,200
Conti 243 A960033 Commercial Point 9,266 0.15 Regency Financial 3,630
RMF 244 HCC012 Pickett County Nursing Home Heritage Health Care Group, 21,950
Inc.
Conti 245 9610072 Blue Valley Mobile Home 10,000 50.00
Park
Conti 246 MP-1047 Southgate Plaza Shopping 12,089 0.20 Dillon's 36,016
Center
GACC 247 TA1029 Guy Brewer Plaza 28,939 1.06 Lane Bryant, Inc. 6,391
BCMC 248 2528 West Crest Apartments 17,016 0.29
- -------------------------------------------------------------------------------------------------------------------------------
MS 249 MS38 Oak Harbor Best Western 52,400 655.00
Conti 250 9510147 Pico Blvd 2,933 0.15
Conti 251 90145 Terrace Club Apartments 22,500 250.00
BCMC 252 2516 Granite Mall 2,676 0.27 Mattress Discounters 3,282
GACC 253 TA1951 Cal-Abco Building 17,721 0.98 SV Dental 3,248
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- -----------------------------------------------
<C> <C> <C> <C>
88.62 5/31/08 1958, 1988 1988
35.92 12/31/13 1958 1996
17.39 3/31/00 1987 NAP
100 12/31/07 1956 1996 -
1997
100 6/24/03 1959, 1961 1985
27.13 1/14/98 1993 NAP
1985 1996
1987 1996
- --------------------------------------------
1960'S NAP
100 8/31/12 1997 NAP
1969 1995
1989 NAP
16.4 6/30/99 1988 NAP
18.6 3/31/01 1975, 1986 NAP
1988 NAP
1980 1996
23.47 4/30/00 1988 NAP
14.46 3/31/07 1986 NAP
- --------------------------------------------
39.12 3/31/00 1984 NAP
1976 1991
1984 1993
18.23 10/31/05 1981 NAP
100 12/31/12 1997 NAP
17 7/31/02 1996 NAP
1973 1998
1996 NAP
1988 1996
3.68 9/30/05 1910 1995
- --------------------------------------------
100 4/30/04 1967 1997
1978 NAP
100 12/31/12 1996 NAP
100 12/31/12 1986 NAP
52.21 9/30/98 1988 NAP
100 7/31/12 1988 NAP
11.77 5/4/99 1993 NAP
100 6/30/02 1995 NAP
1970 NAP
- --------------------------------------------
32.24 5/24/06 1991 NAP
54.82 9/30/07 1926, 1950 1990
1979 1990
1993 NAP
100 9/4/03 1984 NAP
74.71 3/18/09 1989 1995
9.69 12/31/04 1898 1994
CIRCA 1954 NAP
31.19 1/18/06 1970 1988
- --------------------------------------------
1975 NAP
1987 1987
1975 1997
83.63 7/1/06 1972 1993
1978 NAP
49.52 12/31/98 1987 - 1989 NAP
35.46 8/31/00 1970 NAP
48.62 11/30/02 1992 NAP
1970 1997
1960, 1962 1997
- --------------------------------------------
1975 1996
16.48 9/30/01 1987 NAP
1995 NAP
1996 NAP
31.41 1/31/01 1890 1987
1984 NAP
100 7/1/07 1975 1995
1996 NAP
100 11/30/22 1990 NAP
<PAGE>
- --------------------------------------------
100 11/30/22 1968 NAP
57.04 9/30/00 1980 NAP
52.77 1/1/03 1972, 1985 NAP
28.66 6/30/07 1988 NAP
5.88 8/31/01 1986 NAP
100 5/31/25 1982 1990
1970, 1979 1996
59.58 3/31/01 1972 1993
23.34 1/31/99 1972 NAP
1973 - 1986 NAP
- --------------------------------------------
1985 NAP
1935, 1950, 1963 1963
1983 1995
33.1 4/14/05 1989, 1990 NAP
17.93 3/1/99 1984 NAP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CON-
LOAN TROL
SEL- NUM- LOAN
LER BER NUMBER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RMF 254 CAN002 Renaissance Care Center Highway 51 Blacks Hill Drive Gainesville Texas 76240
RMF 255 FRH001 Forest Hills Care Center 71-44 Yellowstone Boulevard Forest Hills New York 11375
Conti 256 97-L019 Airborne Complex/Jo-Ann 732-736 Vestal Parkway East Vestal New York 13850
Fabrics Center
RMF 257 BWA001 Bremner Woods Apartments 4501 Sprenkle Lane Richmond Virginia 23228
Phase I
Conti 258 9410252 Sun City RV & Mini Storage 18900 North 107th Avenue Sun City Arizona 85373
- ------------------------------------------------------------------------------------------------------------------------------------
Conti 259 9410209 Commerce Freeway Center 7250 Bandini Blvd Commerce California 90040
Conti 260 97-H009 Crowne Health Care of 408 Country Club Drive Greenville Alabama 36037
Greenville
Conti 261 9510150 Holiday Inn Express - 2070 N. State Street Greenfield Indiana 46140
Greenfield
Conti 262 9410241 A Storage Inn #3 & #5 Consolidation of Two Various Various Various
Self-Storage
Properties
Conti 262A 9410241A A Storage Inn #3 14500 Chef Menteur Highway New Orleans Louisiana 70129
Conti 262B 9410241B A Storage Inn #5 2500 Archbishop Hannan Blvd. Meraux Louisiana 70075
BCMC 263 2385 428 Hudson River Road 428 Hudson River Road Half Moon New York 12188
BCMC 264 2157 Colonial Village Shopping 4400 Heatherdowns Boulevard Toledo Ohio 43617
Center
MS 265 MS39 AAA County Line Self Storage 1400 E. County Line Rd. Littleton Colorado 80126
Conti 266 9410219 Tanglewood Self Storage 9910 Slaughter Creek Drive Austin Texas 78748
- ------------------------------------------------------------------------------------------------------------------------------------
RMF 267 EDFR02 Eckerd Drugs Store 7941 Tara Boulevard Jonesboro Georgia 30274
RMF 268 CLP003 Goodwin's of Exeter 8 Hampton Road Exeter New 03833
Hampshire
Conti 269 9410216 Security Public Storage - 701 Bliss Avenue Pittsburg California 94565
Pittsburg
Conti 270 97C-0128 Briarwood Apartments 7413-7437 Southwest Highway Worth Illinois 60482
GACC 271 TA1335 Tower Apartments 1150 South Highway 395 Hermiston Oregon 97838
MS 272 MS40 Super 8, Appleton 3624 W.College Avenue Grand Chute Wisconsin 54914
Conti 273 MP-1046 Capitol Hill Center 1155 East 9th Avenue Denver Colorado 80218
Conti 274 9510181 Holly-Norm Plaza 5065 Hollywood Boulevard Hollywood California 90038
GACC 275 TA2143 84 Washington Street 82-84 Washington Street Hoboken New 07030
Jersey
Conti 276 HCCA1800 River Valley Motor Inn 1611 Highway 71 West LaGrange Texas 78945
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 277 TA1050 392-94 West Broadway 392-94 West Broadway New York New York 10012
Conti 278 9510170 Woodstone Plaza 18907-18919 Nordhoff Street Northridge California 91324
GACC 279 TA2477 Rancho Mission Plaza 10415-10497 San Diego San Diego California 92108
Mission Road
Conti 280 9410232 Secure Self Storage-Livonia 12851 Inkster Rd. Livonia Michigan 48150
Conti 281 9410251 Crocker's Lockers 455 Herman Avenue Watsonville California 95076
Conti 282 A970024 Montefiore Medical Center 1516-1518 Jarret Place Bronx New York 10461
Conti 283 1022 Checkered Flag Car Wash 5289 Alton Parkway Irvine California 92714
Conti 284 HCCA2049 Super 8 - Nampa 624 Nampa Blvd. Nampa Idaho 83687
Conti 285 NYU106 Setre Corp. 170-190 Jericho Turnpike Syosset New York 11791
GACC 286 TA1533 Park Alamitas Apartments 1415 Alamitas Avenue Monrovia California 91016
- ------------------------------------------------------------------------------------------------------------------------------------
GACC 287 TA1043 October Hills 905 Burnside Avenue East Hartford Connecticut 06108
Conti 288 97-S020 One Elliot Place One Elliot Place Fairfield Connecticut 06430
Conti 289 NYU115 Quaker Villa Shopping Center 301-399 West Broad Street Quakertown Pennsylvania 18951
Conti 290 97-H006 The Pointe Assisted Living 5890 Southwest 8th Street West Miami Florida 33144
Facilities
BCMC 291 1755 Ruffin Road Office Park 3625 & 3665 Ruffin Road San Diego California 92123
Conti 292 97-S075 South Towne Business Park #4 135 South State Lindon Utah 84042
Conti 293 HCCA2050 Super 8 - Winnemucca 1157 Winnemucca Boulevard Winnemucca Nevada 89446
Conti 294 A970049 Oswego Midtown Center First & Cayuga Streets Oswego New York 13126
GACC 295 TA0999 Grand Concourse Apartments 3175 Grand Concourse at New York New York 10458
206th Street
GACC 296 TA1666 Coral Reef Motel 400 Park Street Alameda California 94501
- ------------------------------------------------------------------------------------------------------------------------------------
MS 297 MS41 All Storage 400 Cove Terrace Copperas Cove Texas 76522
Conti 298 9410250 Stonebrook Self-Storage 8680 Stonebrook Parkway Frisco Texas 75034
Conti 299 NYU109 Inwood Properties Comprised of Three Individual Various Various Various
Properties
Conti 299A NYU109A 10 Vermilyea 10 Vermilyea Avenue New York New York 10034
Conti 299B NYU109B 17-19 Vermilyea 17-19 Vermilyea Avenue New York New York 10034
Conti 299C NYU109C 530 Isham Street 530 Isham Street New York New York 10034
Conti 300 9510158 Sam Sung Plaza 655/661 Keeaumoku Street Honolulu Hawaii 96814
Conti 301 A970023 Pacific Sales 29900 Hawthorne Blvd. Rolling Hills California 90274
Estates
Conti 302 HCCA2048 Super 8 - Clearfield 572 North Main Street Clearfield Utah 84015
GACC 303 TA1024 Silk Greenhouse Building 340-350 South Federal Highway Deerfield Beach Florida 33441
- ------------------------------------------------------------------------------------------------------------------------------------
Conti 304 NYU117 Kensington Apartments 17-25 Kensington Avenue Jersey City New 07304
Jersey
Conti 305 97-L023 K-Mart - Toledo 2244 South Reynolds Road Toledo Ohio 43614
Conti 306 2243-09108 Airborne Freight 33 Sharpe Drive Cranston Rhode 02920
Island
Conti 307 9410217 Newport Business Plaza 2925 SE Ferry Slip Road Newport Oregon 97365
Conti 308 9510149 Aldine Westfield Road 16723 and 16727 Aldine Houston Texas 77032
Westfield Road
Conti 309 HCCA2046 Super 8 - Ankeny 206 SE Delaware Avenue Ankeny Iowa 50021
Conti 310 MM005 Lake Worth Village 4551 Boat Club Road Lake Worth Texas 76135
Conti 311 PMC1003 Edwards Cinema 7986 Haven Avenue Rancho California 91730
Cucamonga
Conti 312 9410233 Secure Self Storage-Waterford 4303 Highland Road Waterford Michigan 48328
Conti 313 HCCA1925 Econo Lodge- Warrensville 4353 Northfield Road Warrensville Ohio 44128
Heights
- ------------------------------------------------------------------------------------------------------------------------------------
Conti 314 97-S088 Westador Shopping Center 1020 FM 1960 West Houston Texas 77090
Conti 315 26583 845 Gerard Ave. 845 Gerard Ave. Bronx New York 10451
Conti 316 MM002 Normandy Manor Apartments 3013 Northridge Street Sherman Texas 75090
Conti 317 9510205 Payless Foods Supermarket 12301 Norwalk Blvd. Norwalk California 90650
Conti 318 NYU111 39 Queens Boulevard 39-07 - 39-19 Queens Boulevard Long Island New York 11104
City
BCMC 319 1001 Moberly Center I & II 1720-1806Moberly Lane Bentonville Arkansas 72712
Conti 320 97-L026 Pier 1 Imports- Larchmont 1329 Boston Post Road Mamaroneck New York 10538
Conti 321 9510202 Phoenix School 650 Willard Drive Folsom California 95630
Conti 322 MM004 Garden Gate Apartments 2101 Mustang Road Alvin Texas 77511
BCMC 323 2658 Abbott Point Apartments 204 E. Point Lane East Lansing Michigan 48823
- ------------------------------------------------------------------------------------------------------------------------------------
BCMC 324 2785 Old Montecito Firehouse 1486 East Valley Road Montecito California 93108
Conti 325 9510171 Town & Country Adult Living 53 Mountain Avenue Mount Kisco New York 10549
Conti 326 NYU113 Sono Court 38-48 & 50 North Main Street South Norwalk Connecticut 06854
Conti 327 9510190SN Federal Way Self Storage 31031 21st Place SW Federal Way Washington 98023
RMF 328 ITUR01 The Crossing at Indian Trail 2040 Beaver Ruin Road Norcross Georgia 30093
Conti 329 97-S067 Chateau Royale Apartments 1211 East Gadsden Street Pensacola Florida 32501
Conti 330 97-H010 Fountain Retirement Hotel 12030 113th Street Youngtown Arizona 85363
Conti 331 A970034 537 Sweeten Creek Industrial 537 Sweeten Creek Industrial Park Asheville North 28803
Park Carolina
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE ORIGINAL REMAINING
ORIGINAL DATE CUT-OFF DATE SERVICING TERM TO TERM TO
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE MATURITY MATURITY
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE OR ARD OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Skilled CAN002, CAN003, 2,000,000 1,996,869 0.11 Actual/360 8.710 0.28250 116 114
Nursing CAN006
Skilled 2,000,000 1,995,555 0.11 Actual/360 7.930 0.27250 239 238
Nursing
Unanchored 2,000,000 1,994,961 0.11 Actual/360 7.875 0.09750 120 118
Retail
Multifamily 2,000,000 1,993,601 0.11 Actual/360 7.670 0.06750 180 176
Self-Storage 2,000,000 1,993,034 0.11 Actual/360 7.834 0.09750 120 117
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial 2,000,000 1,993,004 0.11 30/360 9.188 0.09750 120 116
Skilled 2,000,000 1,990,757 0.11 Actual/360 7.890 0.11750 120 116
Nursing
Hospitality 1,950,000 1,939,366 0.10 30/360 9.000 0.09750 120 114
Various 1,910,000 1,905,223 0.10 Actual/360 7.938 0.09750 180 178
Self-Storage
Self-Storage
Industrial 1,910,000 1,901,444 0.10 30/360 7.670 0.03500 120 116
Unanchored 1,900,000 1,889,974 0.10 30/360 8.060 0.03500 120 115
Retail
Self-Storage 1,885,000 1,880,177 0.10 Actual/360 7.310 0.02250 120 118
Self-Storage 1,875,000 1,868,235 0.10 30/360 9.000 0.09750 120 116
- -----------------------------------------------------------------------------------------------------------------------------------
Anchored 1,870,000 1,862,615 0.10 Actual/360 7.530 0.06750 240 238
Retail
Skilled CLP001 to CLP006 1,860,000 1,840,041 0.10 Actual/360 9.140 0.37880 36 24
Nursing
Self-Storage 1,825,000 1,816,203 0.10 Actual/360 8.859 0.09750 120 115
Multifamily 1,824,000 1,813,804 0.10 Actual/360 7.875 0.09750 120 115
Multifamily 1,800,000 1,797,075 0.10 30/360 7.060 0.02250 120 118
Hospitality 1,800,000 1,793,001 0.10 Actual/360 7.360 0.11000 120 118
Anchored 1,790,000 1,784,080 0.10 Actual/360 7.470 0.09750 180 176
Retail
Unanchored 1,775,000 1,767,685 0.10 30/360 8.188 0.09750 120 116
Retail
Office 1,750,000 1,750,000 0.09 30/360 7.490 0.02250 120 120
Hospitality 1,760,000 1,749,071 0.09 Actual/360 9.250 0.09750 120 116
- -----------------------------------------------------------------------------------------------------------------------------------
Mixed Use 1,750,000 1,748,037 0.09 30/360 7.600 0.02250 120 119
Office 1,750,000 1,743,046 0.09 30/360 8.412 0.09750 120 116
Unanchored 1,730,000 1,727,434 0.09 30/360 7.520 0.02250 84 82
Retail
Self-Storage 1,700,000 1,695,717 0.09 Actual/360 7.875 0.09750 120 118
Self-Storage 1,700,000 1,693,670 0.09 Actual/360 8.125 0.09750 240 238
Office 1,700,000 1,690,033 0.09 30/360 7.875 0.09750 180 178
Special 1,660,000 1,647,055 0.09 Actual/360 9.625 0.09750 180 177
Purpose
Hospitality 1,650,000 1,646,379 0.09 Actual/360 8.125 0.09750 120 119
Mixed Use 1,650,000 1,644,385 0.09 Actual/360 8.000 0.09750 120 117
Multifamily TA1534 & TA1533 1,628,000 1,624,367 0.09 30/360 7.520 0.02250 180 177
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily 1,600,000 1,597,608 0.09 30/360 7.480 0.02250 120 118
Office 1,600,000 1,595,596 0.09 30/360 8.875 0.09750 120 117
Anchored 1,600,000 1,594,555 0.09 Actual/360 8.000 0.09750 120 117
Retail
Assisted 1,580,000 1,574,735 0.08 Actual/360 8.150 0.11750 120 117
Living
Office 1,560,000 1,556,633 0.08 30/360 7.860 0.03500 120 118
Unanchored 1,550,000 1,548,481 0.08 30/360 8.430 0.09750 120 119
Retail
Hospitality 1,550,000 1,546,679 0.08 Actual/360 8.500 0.09750 120 119
Anchored 1,550,000 1,542,688 0.08 30/360 8.750 0.09750 120 115
Retail
Multifamily 1,530,000 1,526,529 0.08 30/360 7.550 0.02250 120 118
Hospitality 1,500,000 1,497,418 0.08 30/360 7.890 0.02250 180 179
- -----------------------------------------------------------------------------------------------------------------------------------
Self-Storage 1,500,000 1,496,444 0.08 Actual/360 7.880 0.02250 180 178
Self-Storage 1,500,000 1,494,275 0.08 Actual/360 7.875 0.09750 120 118
Various 1,500,000 1,493,173 0.08 Actual/360 8.000 0.09750 120 116
Multifamily
Multifamily
Multifamily
Mixed Use 1,500,000 1,488,442 0.08 Actual/360 9.063 0.09750 120 115
Unanchored 1,500,000 1,474,376 0.08 30/360 7.750 0.09750 84 80
Retail
Hospitality 1,400,000 1,397,000 0.08 Actual/360 8.500 0.09750 120 119
Unanchored 1,400,000 1,396,899 0.08 30/360 7.700 0.02250 120 118
Retail
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily 1,400,000 1,394,590 0.08 Actual/360 7.750 0.09750 240 238
Anchored 1,400,000 1,394,487 0.08 Actual/360 7.560 0.09750 120 118
Retail
Industrial 1,375,000 1,367,169 0.07 Actual/360 7.750 0.09750 120 115
Industrial 1,370,000 1,359,365 0.07 Actual/360 9.000 0.09750 180 175
Industrial 1,350,000 1,339,249 0.07 30/360 8.625 0.09750 120 115
Hospitality 1,340,000 1,337,129 0.07 Actual/360 8.500 0.09750 120 119
Assisted 1,330,000 1,323,947 0.07 Actual/360 8.000 0.11750 120 116
Living
Unanchored 1,330,000 1,321,016 0.07 Actual/360 8.500 0.09750 180 176
Retail
Self-Storage 1,300,000 1,296,725 0.07 Actual/360 7.875 0.09750 120 118
Hospitality 1,300,000 1,295,555 0.07 Actual/360 9.000 0.09750 240 238
- -----------------------------------------------------------------------------------------------------------------------------------
Unanchored 1,300,000 1,295,251 0.07 Actual/360 8.320 0.09750 240 238
Retail
Multifamily 1,300,000 1,294,983 0.07 Actual/360 7.762 0.09750 120 118
Multifamily 1,300,000 1,293,979 0.07 Actual/360 7.875 0.09750 120 116
Unanchored 1,280,000 1,275,588 0.07 Actual/360 7.750 0.09750 180 179
Retail
Unanchored 1,275,000 1,268,389 0.07 Actual/360 8.375 0.09750 180 175
Retail
Office 1,246,000 1,243,475 0.07 30/360 8.000 0.03500 120 117
Anchored 1,250,000 1,245,516 0.07 Actual/360 7.625 0.09750 120 117
Retail
Special 1,225,000 1,220,354 0.07 Actual/360 7.938 0.09750 180 178
Purpose
Multifamily 1,225,000 1,219,327 0.07 Actual/360 7.875 0.09750 180 176
Multifamily 1,200,000 1,200,000 0.06 30/360 7.220 0.03500 120 120
- -----------------------------------------------------------------------------------------------------------------------------------
Office 1,200,000 1,200,000 0.06 30/360 7.520 0.03500 120 120
Assisted 1,200,000 1,196,057 0.06 Actual/360 8.250 0.11750 120 117
Living
Mixed Use 1,200,000 1,195,771 0.06 Actual/360 7.750 0.09750 120 117
Self-Storage 1,200,000 1,193,539 0.06 Actual/360 8.125 0.14250 120 115
Unanchored 1,200,000 1,192,389 0.06 Actual/360 8.610 0.06750 120 115
Retail
Multifamily 1,175,000 1,170,402 0.06 30/360 8.506 0.09750 60 56
Assisted 1,150,000 1,145,866 0.06 Actual/360 7.610 0.11750 120 117
Living
Industrial 1,070,000 1,066,466 0.06 30/360 8.250 0.09750 84 82
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
300 298 11/21/97 8/20/07 Balloon 1,669,638 YM/36_5/12_4/12_2/12_1.5/12_
1/12_.5/12_0/8 1
240 239 12/29/97 1/1/18 Full 0 LO/84_Def/152_0/3 NAP
300 298 12/3/97 1/1/08 Balloon 1,614,655 LO/48_YM1/66_0/6 1
360 356 10/24/97 11/1/12 Hyper 1,524,017 LO/60_YM/60_4/12_3/12_2/12_1/12_0/12 1
300 297 11/11/97 12/1/07 Balloon 1,612,946 LO/60_YM1/54_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 296 10/23/97 11/1/07 Balloon 1,661,851 LO/60_YM1/48_0/12 2
300 296 10/7/97 11/1/07 Balloon 1,615,283 LO/36_4/12_3/12_2/12_1/12_0/36 NAP
300 294 8/21/97 9/1/07 Balloon 1,613,415 LO/48_YM1/66_0/6 2
300 298 12/30/97 1/1/13 Balloon 1,217,825 LO/60_YM1/60_0/60 2
300 296 10/21/97 11/1/07 Balloon 1,529,478 LO/60_YM/54_0/6 1
300 295 9/23/97 10/1/07 Balloon 1,536,838 LO/60_YM/54_0/6 1
309 307 12/3/97 1/1/08 Balloon 1,521,762 LO/36_YM1/81_0/3 2
300 296 10/9/97 11/1/07 Balloon 1,551,361 LO/60_YM1/54_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
240 238 12/19/97 1/1/18 Full 0 LO/60_YM/120_4/12_3/12_2/12_1/12_0/12 1
300 288 2/11/97 2/20/00 Balloon 1,795,962 LO/36 NAP
300 295 9/17/97 10/1/07 Balloon 1,509,382 YM1/114_0/6 2
300 295 9/30/97 10/1/07 Balloon 1,472,570 LO/60_YM1/54_0/6 2
360 358 12/24/97 1/1/08 Hyper 1,546,796 LO/60_Def/57_0%/3 NAP
245 243 12/4/97 1/1/08 Balloon 1,240,665 LO/48_YM1/69_0/3 1
360 356 10/30/97 11/1/12 Balloon 1,354,096 LO/28_Def/32_3/12_1/12_0/96 NAP
300 296 10/24/97 11/1/07 Balloon 1,440,334 LO/60_YM1/54_0/6 2
360 360 2/6/98 3/1/08 Hyper 1,518,577 LO/36_Def/81_0%/3 NAP
240 236 10/21/97 11/1/07 Balloon 1,263,598 LO/60_YM1/54_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 299 1/21/98 2/1/08 Hyper 1,398,771 LO/36_Def/81_0%/3 NAP
300 296 10/22/97 11/1/07 Balloon 1,427,931 LO/60_YM1/54_0/6 2
360 358 12/15/97 1/1/05 Hyper 1,589,192 LO/48_Def/33_0%/3 NAP
300 298 12/10/97 1/1/08 Balloon 1,372,457 LO/60_YM1/54_0/6 2
240 238 12/22/97 1/1/18 Full 0 LO/36_YM1/84_5/12_4/12_3/12_2/12_1/12_0/60 2
180 178 12/31/97 1/1/13 Full 0 LO/71_5/12_4/12_3/12_2/12_1/54_0/7 NAP
180 177 11/18/97 12/1/12 Full 0 LO/96_YM1/78_0/6 2
240 239 1/8/98 2/1/08 Balloon 1,145,877 LO/60_YM1/54_0/6 1
300 297 11/21/97 12/1/07 Balloon 1,336,368 LO/60_YM1/54_0/6 2
360 357 11/14/97 12/1/12 Hyper 1,228,845 LO/60_Def/117_0%/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
360 358 12/30/97 1/1/08 Hyper 1,388,107 LO/60_Def/57_0%/3 NAP
300 297 11/6/97 12/1/07 Balloon 1,320,011 YM1/114_0/6 2
300 297 11/20/97 12/1/07 Balloon 1,295,873 LO/60_YM1/54_0/6 2
300 297 11/26/97 12/1/07 Balloon 1,284,536 LO/60_YM1/54_0/6 2
300 298 12/3/97 1/1/08 Balloon 1,255,401 LO/60_YM/54_0/6 1
300 299 1/15/98 2/1/08 Balloon 1,265,294 YM1/114_0/6 2
240 239 1/8/98 2/1/08 Balloon 1,088,753 LO/60_YM1/54_0/6 1
300 295 9/3/97 10/1/07 Hyper 1,275,026 LO/29_Def/85_0/6 NAP
300 298 12/11/97 1/1/08 Hyper 1,221,304 LO/48_Def/69_0%/3 NAP
240 239 1/29/98 2/1/13 Hyper 615,330 LO/48_Def/129-0%/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
310 308 12/12/97 1/1/13 Balloon 992,144 LO/78_YM1/96_0/6 1
240 238 12/4/97 1/1/08 Balloon 1,033,658 YM1/114_0/6 2
300 296 10/27/97 11/1/07 Balloon 1,214,881 LO/60_YM1/54_0/6 2
240 235 9/9/97 10/1/07 Balloon 1,071,179 LO/60_YM1/54_0/6 2
144 140 10/30/97 11/1/04 Hyper 795,352 LO/28_Def/50_0/6 NAP
240 239 1/9/98 2/1/08 Balloon 983,390 LO/60_YM1/54_0/6 1
300 298 12/31/97 1/1/08 Hyper 1,121,966 LO/36_Def/81_0%/3 NAP
- -----------------------------------------------------------------------------------------------------------------------------------
240 238 12/10/97 1/1/18 Full 0 LO/120_YM1/60_0/60 2
240 238 12/4/97 1/1/08 Balloon 955,175 LO/60_YM1/54_0/6 2
300 295 9/25/97 10/1/07 Balloon 1,106,481 LO/60_YM1/54_0/6 2
240 235 9/18/97 10/1/12 Balloon 597,574 LO/60_YM1/114_0/6 2
240 235 9/9/97 10/1/07 Balloon 948,426 LO/60_YM1/54_0/6 2
240 239 1/8/98 2/1/08 Balloon 941,246 LO/60_YM1/54_0/6 1
300 296 10/29/97 11/1/07 Balloon 1,077,194 LO/60_YM1/54_0/6 2
240 236 10/27/97 11/1/12 Balloon 565,917 LO/60_YM1/114_0/6 2
300 298 12/10/97 1/1/08 Balloon 1,049,527 LO/60_YM1/54_0/6 2
240 238 12/22/97 1/1/18 Full 0 LO/120_YM1/114_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
240 238 12/4/97 1/1/18 Full 0 YM1/234_0/6 2
240 238 12/11/97 1/1/08 Balloon 892,660 LO/60_YM1/54_0/6 2
300 296 10/16/97 11/1/07 Balloon 1,049,529 LO/60_YM1/54_0/6 2
180 179 1/13/98 2/1/13 Full 0 LO/96_YM1/60_0/24 2
300 295 9/30/97 10/1/12 Balloon 827,995 LO/96_YM1/60_0/24 2
360 357 11/26/97 12/1/07 Balloon 1,093,049 LO/60_YM or 1%/54_0%/6 1
300 297 11/26/97 12/1/07 Balloon 1,002,588 LO/27_Def/87_0/6 NAP
240 238 12/15/97 1/1/13 Balloon 506,737 LO/96_YM1/60_0/24 2
300 296 10/24/97 11/1/12 Balloon 778,976 LO/96_YM1/60_0/24 2
300 300 2/13/98 3/1/08 Balloon 949,382 LO/60_YM/54_0/6 1
- -----------------------------------------------------------------------------------------------------------------------------------
300 300 2/13/98 3/1/08 Balloon 957,121 LO/60_YM/54_0/6 1
300 297 11/17/97 12/1/07 Balloon 978,034 LO/60_YM1/54_0/6 2
300 297 11/25/97 12/1/07 Balloon 965,654 LO/60_YM1/54_0/6 2
300 295 9/29/97 10/1/07 Balloon 974,986 LO/60_YM1/54_0/6 2
270 265 9/30/97 10/1/07 Hyper 926,318 LO/60_2/12_1.5/12_1/12_.5/12_0/12 NAP
300 296 10/23/97 11/1/02 Balloon 1,090,318 YM1/54_0/6 2
300 297 11/7/97 12/1/07 Balloon 922,015 LO/36_4/12_3/12_2/12_1/12_0/36 NAP
240 238 12/11/97 1/1/05 Hyper 870,720 LO/26_Def/9_YM1/43_0/6 2
<PAGE>
<CAPTION>
UNDER- SQ FT, LOAN PER
WRITTEN CUT-OFF SCHEDULED UNIT, SQ FT, UNIT,
ANNUAL UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD UNIT BED, PAD OCCUPANCY OCCUPANCY
DEBT SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
198,722 449,200 1.91 3,650,000 3/10/97 72.90 45.74 91 Beds 21,943.62 80.00 12/31/97
201,365 1,261,900 6.27 3,700,000 10/9/97 53.93 0.00 100 Beds 19,955.55 98.60 9/30/97
185,040 236,302 1.28 2,700,000 5/30/97 73.89 59.80 46,850 Sq Ft 42.58 97.00 11/30/97
172,441 243,895 1.41 2,540,000 9/18/97 78.49 60.00 79 Units 25,235.45 97.00 1/13/98
184,403 259,000 1.40 2,800,000 9/27/97 71.18 57.61 74,600 Sq Ft 26.72 85.60 11/2/97
- -----------------------------------------------------------------------------------------------------------------------------------
204,498 251,663 1.23 2,800,000 2/14/97 71.18 59.35 48,430 Sq Ft 41.15 88.50 4/1/97
185,287 688,909 3.72 5,100,000 7/1/97 39.03 31.67 118 Beds 16,870.82 97.61 6/30/97
196,372 261,907 1.33 2,450,000 4/4/97 79.16 65.85 63 Rooms 30,783.59 57.60 3/31/97
177,677 203,242 1.14 2,295,000 83.02 53.06 60,275 Sq Ft 31.61 0.00
61,938 825,000 9/5/97 0.00 26,000 Sq Ft 79.83 12/10/97
141,304 1,470,000 9/5/97 0.00 34,275 Sq Ft 88.00 9/5/97
171,919 216,949 1.26 2,600,000 8/5/97 73.13 58.83 121,400 Sq Ft 15.66 100.00 9/24/97
176,881 282,213 1.60 3,500,000 5/29/97 54.00 43.91 59,076 Sq Ft 31.99 92.00 4/1/97
164,374 309,376 1.88 3,300,000 11/4/97 56.98 46.11 45,697 Sq Ft 41.14 92.00 10/22/97
188,819 245,027 1.30 2,300,000 4/14/97 81.23 67.45 75,250 Sq Ft 24.83 92.20 9/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
182,666 212,109 1.16 2,400,000 11/25/97 77.61 0.00 10,594 Sq Ft 175.82 100.00 11/25/97
191,423 285,700 1.18 2,350,000 11/1/96 79.07 76.42 79 Beds 23,291.66 95.00 9/30/97
183,600 248,276 1.35 2,530,000 6/11/97 71.79 59.66 58,020 Sq Ft 31.30 88.22 7/16/97
168,782 238,250 1.41 2,300,000 8/18/97 78.86 64.02 84 Units 21,592.91 92.86 9/26/97
144,577 191,023 1.32 3,050,000 10/7/97 58.92 50.71 112 Units 16,045.32 97.00 12/1/97
172,164 277,551 1.61 2,900,000 11/12/97 61.83 42.78 81 Rooms 22,135.81 73.80 9/30/97
151,332 189,218 1.25 2,500,000 10/1/97 71.36 54.16 41,737 Sq Ft 42.75 100.00 10/28/97
167,051 230,833 1.38 2,300,000 7/14/97 76.86 62.62 14,575 Sq Ft 121.28 95.00 6/30/97
146,691 197,165 1.34 2,400,000 10/17/97 72.92 63.27 22,043 Sq Ft 79.39 100.00 10/24/97
195,246 299,938 1.54 2,900,000 6/4/97 60.31 43.57 118 Rooms 14,822.64 46.17 5/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
156,557 207,894 1.33 3,400,000 12/15/97 51.41 41.14 18,000 Sq Ft 97.11 100.00 1/21/98
167,854 207,271 1.23 2,100,000 5/21/97 83.00 68.00 26,311 Sq Ft 66.25 100.00 7/31/97
145,441 187,121 1.29 2,325,000 11/9/97 74.30 68.35 26,623 Sq Ft 64.89 91.00 12/15/97
157,284 344,675 2.19 3,600,000 7/31/97 47.10 38.12 80,000 Sq Ft 21.20 92.34 11/29/97
173,705 219,124 1.26 2,450,000 10/2/97 69.13 25,418 Sq Ft 66.63 89.21 11/20/97
193,484 233,179 1.21 3,000,000 9/23/97 56.33 12,950 Sq Ft 130.50 0.00
211,195 420,069 1.99 2,420,000 9/29/97 68.06 5,545 Sq Ft 297.03 100.00 9/29/97
168,574 262,621 1.56 2,650,000 9/24/97 62.13 43.24 62 Rooms 26,554.50 73.30 11/30/97
154,343 195,556 1.27 2,250,000 7/22/97 73.08 59.39 18,334 Sq Ft 89.69 100.00 6/1/97
136,866 165,951 1.30 2,100,000 8/5/97 75.62 58.52 32 Units 50,761.47 94.00 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
133,986 206,946 1.54 2,300,000 10/22/97 69.46 60.35 72 Units 22,189.00 99.00 10/31/97
159,485 205,795 1.29 2,400,000 4/21/97 66.48 55.00 24,304 Sq Ft 65.65 100.00 4/21/97
149,666 213,180 1.42 2,400,000 7/15/97 66.44 53.99 61,005 Sq Ft 26.14 100.00 10/1/97
149,720 171,713 1.15 2,000,000 6/5/97 78.74 64.23 92 Beds 17,116.69 100.00 6/30/97
142,752 192,100 1.35 2,570,000 7/25/97 60.57 48.85 37,861 Sq Ft 41.11 90.00 11/25/97
148,896 191,397 1.29 2,250,000 9/30/97 68.82 56.24 23,643 Sq Ft 65.49 100.00 11/12/97
162,823 235,209 1.44 2,100,000 9/25/97 73.65 51.85 50 Rooms 30,933.57 89.10 11/30/97
152,919 205,463 1.34 2,650,000 5/20/97 58.21 48.11 68,380 Sq Ft 22.56 95.44 7/1/97
136,276 173,166 1.27 2,050,000 5/8/97 74.46 59.58 66 Units 23,129.23 96.00 12/1/97
149,329 278,237 1.86 4,200,000 12/15/97 35.65 14.65 89 Rooms 16,824.93 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
137,520 274,264 1.99 2,400,000 10/16/97 62.35 41.34 66,726 Sq Ft 22.43 88.30 10/31/97
150,418 249,132 1.66 2,350,000 9/23/97 63.59 43.99 51,115 Sq Ft 29.23 99.00 11/28/97
140,299 198,676 1.42 2,175,000 68.65 55.86 63 Units 23,701.16 0.00
75,004 800,000 7/16/97 0.00 21 Units 100.00 5/29/97
81,029 725,000 7/16/97 0.00 18 Units 95.40 5/29/97
43,459 650,000 7/16/97 0.00 24 Units 100.00 5/29/97
164,205 308,711 1.88 2,637,000 4/17/97 56.44 40.62 32,218 Sq Ft 46.20 97.66 3/1/97
192,383 238,216 1.24 2,750,000 8/7/97 53.61 28.92 40,200 Sq Ft 36.68 100.00 9/17/97
147,066 217,466 1.48 1,950,000 9/20/97 71.64 50.43 58 Rooms 24,086.21 66.40 11/30/97
126,344 167,197 1.32 2,200,000 12/10/97 63.50 51.00 35,200 Sq Ft 39.68 100.00 10/10/97
- -----------------------------------------------------------------------------------------------------------------------------------
139,068 173,442 1.25 2,000,000 7/30/97 69.73 62 Units 22,493.39 100.00 11/18/97
137,070 214,091 1.56 2,300,000 8/25/97 60.63 41.53 111,761 Sq Ft 12.48 100.00 8/20/97
125,852 220,381 1.75 2,400,000 7/30/97 56.97 46.10 38,400 Sq Ft 35.60 100.00 6/30/97
149,300 191,865 1.29 2,050,000 5/6/97 66.31 29.15 88,072 Sq Ft 15.43 95.64 7/24/97
141,872 183,014 1.29 1,625,000 4/4/97 82.42 58.36 47,922 Sq Ft 27.95 100.00 4/4/97
140,763 183,871 1.31 1,800,000 9/21/97 74.28 52.29 53 Rooms 25,228.84 83.20 11/30/97
124,398 219,782 1.77 1,900,000 9/9/97 69.68 56.69 40 Beds 33,098.68 85.00 9/1/97
139,740 181,991 1.30 1,875,000 7/25/97 70.45 30.18 25,043 Sq Ft 52.75 100.00 7/25/97
120,276 260,482 2.17 2,880,000 8/19/97 45.03 36.44 71,490 Sq Ft 18.14 80.80 11/29/97
141,647 199,654 1.41 1,980,000 8/18/97 65.43 80 Rooms 16,194.44 53.00 6/30/97
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
134,775 190,742 1.42 1,900,000 11/4/97 68.17 34,412 Sq Ft 37.64 100.00 11/4/97
129,252 183,625 1.42 2,100,000 7/21/97 61.67 42.51 66 Units 19,620.95 93.90 12/19/97
120,280 178,016 1.48 2,030,000 5/19/97 63.74 51.70 100 Units 12,939.79 91.00 7/1/97
145,532 184,518 1.27 2,040,000 8/28/97 62.53 22,184 Sq Ft 57.50 100.00 7/18/97
123,166 189,378 1.54 1,825,000 6/30/97 69.50 45.37 11,200 Sq Ft 113.25 85.71 9/30/97
109,713 144,834 1.32 1,700,000 10/28/97 73.15 64.30 27,097 Sq Ft 45.89 100.00 11/1/97
113,157 147,212 1.30 1,570,000 9/17/97 79.33 63.86 6,500 Sq Ft 191.62 100.00 10/7/97
123,426 154,120 1.25 1,650,000 9/17/97 73.96 30.71 11,520 Sq Ft 105.93 100.00 9/17/97
113,340 154,928 1.37 1,550,000 7/23/97 78.67 50.26 125 Units 9,754.61 96.80 8/21/97
103,806 304,873 2.94 4,500,000 12/18/97 26.67 21.10 172 Units 6,976.74 84.00 2/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
106,602 142,402 1.34 1,950,000 1/12/98 61.54 49.08 6,350 Sq Ft 188.98 100.00 1/14/98
114,690 169,395 1.48 3,600,000 1/3/97 33.22 27.17 36 Beds 33,223.81 94.44 10/31/97
109,831 146,842 1.34 2,000,000 7/23/97 59.79 48.28 22,230 Sq Ft 53.79 95.95 11/19/97
113,470 217,568 1.92 2,400,000 8/5/97 49.73 40.62 56,650 Sq Ft 21.07 90.26 1/1/98
122,041 197,260 1.62 1,575,000 7/9/97 75.71 58.81 22,500 Sq Ft 53.00 100.00 12/31/97
113,594 144,314 1.27 1,565,000 8/14/97 74.79 69.67 68 Units 17,211.79 92.65 8/1/97
103,966 425,922 4.10 4,400,000 7/1/97 26.04 20.95 90 Beds 12,731.85 92.00 10/1/97
109,405 151,798 1.39 1,450,000 11/4/97 73.55 60.05 54,046 Sq Ft 19.73 100.00 11/25/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RMF 254 CAN002 Renaissance Care Center
RMF 255 FRH001 Forest Hills Care Center
Conti 256 97-L019 Airborne Complex/Jo-Ann 9,370 0.20 Jo-Ann Fabrics 21,323
Fabrics Center
RMF 257 BWA001 Bremner Woods Apartments
Phase I
Conti 258 9410252 Sun City RV & Mini Storage 7,460 0.10
- ----------------------------------------------------------------------------------------------------------------------------
Conti 259 9410209 Commerce Freeway Center 7,265 0.15 M & K Enterprises 5,712
Conti 260 97-H009 Crowne Health Care of 29,500 250.00
Greenville
Conti 261 9510150 Holiday Inn Express - 35,224 559.11
Greenfield
Conti 262 9410241 A Storage Inn #3 & #5 9,041 0.15
Conti 262A 9410241A A Storage Inn #3 3,900 0.15
Conti 262B 9410241B A Storage Inn #5 5,141 0.15
BCMC 263 2385 428 Hudson River Road 18,225 0.15 Hilti Inc. 41,400
BCMC 264 2157 Colonial Village Shopping 8,856 0.15 Rite Aid 6,070
Center
MS 265 MS39 AAA County Line Self 0 0.00
Storage
Conti 266 9410219 Tanglewood Self Storage 11,288 0.15
- ----------------------------------------------------------------------------------------------------------------------------
RMF 267 EDFR02 Eckerd Drugs Store Eckerd Drugs Store 10,594
RMF 268 CLP003 Goodwin's of Exeter
Conti 269 9410216 Security Public Storage - 8,700 0.15
Pittsburg
Conti 270 97C-0128 Briarwood Apartments 21,588 257.00
GACC 271 TA1335 Tower Apartments 28,000 250
MS 272 MS40 Super 8, Appleton 36,518 450.84
Conti 273 MP-1046 Capitol Hill Center 6,261 0.15 King Soopers 41,737
Conti 274 9510181 Holly-Norm Plaza 3,644 0.25 Nairi (Restaurant) 2,490
GACC 275 TA2143 84 Washington Street 41,438 1.88 Nazza, Inc. 4,296
Conti 276 HCCA1800 River Valley Motor Inn 38,526 326.49
- ----------------------------------------------------------------------------------------------------------------------------
GACC 277 TA1050 392-94 West Broadway 14,700 0.82 Thomas Walthner 5,600
Conti 278 9510170 Woodstone Plaza 6,841 0.26 HH Prince Aga Kahn 5,326
GACC 279 TA2477 Rancho Mission Plaza 4,606 0.17 McGregors' Grill and Ale 5,720
House
Conti 280 9410232 Secure Self Storage-Livonia 12,000 0.15
Conti 281 9410251 Crocker's Lockers 4,321 0.17
Conti 282 A970024 Montefiore Medical Center 2,590 0.20 Montefiore Medical Center 12,950
Conti 283 1022 Checkered Flag Car Wash 8,190 1.48
Conti 284 HCCA2049 Super 8 - Nampa 34,089 549.82
Conti 285 NYU106 Setre Corp. 3,667 0.20 Concord Paper 6,000
GACC 286 TA1533 Park Alamitas Apartments 9,600 300
- -------------------------------------------------------- --------------------------------------------------------------------
GACC 287 TA1043 October Hills 16,344 227
Conti 288 97-S020 One Elliot Place 3,646 0.15 Northwestern Mutual Life 5,348
Conti 289 NYU115 Quaker Villa Shopping 9,151 0.15 IGA 23,535
Center
Conti 290 97-H006 The Pointe Assisted Living 26,772 291.00
Facilities
BCMC 291 1755 Ruffin Road Office Park 9,465 0.25 ILA Zammit Engineering 7,055
Conti 292 97-S075 South Towne Business Park 3,546 0.15 Utah Collge of Massage 9,097
#4
Conti 293 HCCA2050 Super 8 - Winnemucca 32,574 651.48
Conti 294 A970049 Oswego Midtown Center 29,403 0.43 Eckerd Drug Store 16,000
GACC 295 TA0999 Grand Concourse Apartments 22,836 346
GACC 296 TA1666 Coral Reef Motel 75,383 846.999
- ----------------------------------------------------------------------------------------------------------------------------
MS 297 MS41 All Storage 0 0.00
Conti 298 9410250 Stonebrook Self-Storage 7,667 0.15
Conti 299 NYU109 Inwood Properties 16,569 263.00
Conti 299A NYU109A 10 Vermilyea 5,250 250.00
Conti 299B NYU109B 17-19 Vermilyea 4,500 250.00
Conti 299C NYU109C 530 Isham Street 6,000 250.00
Conti 300 9510158 Sam Sung Plaza 4,458 0.15 Sam Sung Electric, Inc. 10,417
Conti 301 A970023 Pacific Sales 19,698 0.49 Pacific Sales 40,000
Conti 302 HCCA2048 Super 8 - Clearfield 29,251 504.33
GACC 303 TA1024 Silk Greenhouse Building 12,427 0.35 Wallpaper Direct 22,000
- ----------------------------------------------------------------------------------------------------------------------------
Conti 304 NYU117 Kensington Apartments 15,500 250.00
Conti 305 97-L023 K-Mart - Toledo 11,176 0.10 Kmart 111,761
Conti 306 2243-09108 Airborne Freight 7,680 0.20 Airbone Freight Corporation 38,400
Conti 307 9410217 Newport Business Plaza 17,614 0.20 0
Conti 308 9510149 Aldine Westfield Road 7,188 0.15 Kodiak Industries, Inc. 47,922
Conti 309 HCCA2046 Super 8 - Ankeny 31,990 603.58
Conti 310 MM005 Lake Worth Village 10,000 250.00
Conti 311 PMC1003 Edwards Cinema 5,009 0.20 Edwards Cinema 25,043
Conti 312 9410233 Secure Self 10,724 0.15
Storage-Waterford
Conti 313 HCCA1925 Econo Lodge- Warrensville 35,393 442.41
- ----------------------------------------------------------------------------------------------------------------------------
Conti 314 97-S088 Westador Shopping Center 6,882 0.20 General Furniture 9,848
Conti 315 26583 845 Gerard Ave. 18,038 273.30
Conti 316 MM002 Normandy Manor Apartments 28,600 286.00
Conti 317 9510205 Payless Foods Supermarket 4,659 0.21 Payless Foods 22,184
Conti 318 NYU111 39 Queens Boulevard 1,680 0.15 Food Court Corp. 3,200
BCMC 319 1001 Moberly Center I & II 8,009 0.30 Alpha One 15,000
Conti 320 97-L026 Pier 1 Imports- Larchmont 975 0.15 Pier 1 Imports 6,500
Conti 321 9510202 Phoenix School 1,728 0.15
Conti 322 MM004 Garden Gate Apartments 37,500 300.00
BCMC 323 2658 Abbott Point Apartments 43,000 0.28
- ----------------------------------------------------------------------------------------------------------------------------
BCMC 324 2785 Old Montecito Firehouse 1,272 0.20 Easton-Satzinger Architects 3,000
Conti 325 9510171 Town & Country Adult Living 18,000 500.00
Conti 326 NYU113 Sono Court 6,669 0.30
Conti 327 9510190SN Federal Way Self Storage 8,498 0.15
RMF 328 ITUR01 The Crossing at Indian Lupitas Mexican Resturaunt 3,640
Trail
Conti 329 97-S067 Chateau Royale Apartments 17,000 250.00
Conti 330 97-H010 Fountain Retirement Hotel 16,250 180.56
Conti 331 A970034 537 Sweeten Creek 5,405 0.10 Saftey Equipment, Inc. 54,046
Industrial Park
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- -----------------------------------------------
<C> <C> <C> <C>
1994 NAP
1953 NAP
45.51 8/1/02 1950'S 1997
1975 NAP
1985 NAP
- --------------------------------------------
11.79 7/31/99 1988 NAP
1966, 1972 1994
1996 NAP
1980 1997
1995 NAP
34.1 4/30/02 1976 1995
10.27 2/25/01 1966 NAP
1984 NAP
1985 NAP
- --------------------------------------------
100 2/13/17 1997 NAP
1974 1980's
1978, 1982 NAP
1963 1993
1976 NAP
1985 1996
100 6/19/01 1974 1994
17.08 6/30/98 1990 NAP
19.49 8/31/98 1897 1987
1981 1992
- --------------------------------------------
31.11 3/1/02 1872 1970'S
20.24 3/31/98 1978 NAP
21.49 7/31/06 1981 NAP
1989, 1993 1993
1984 NAP
100 12/31/12 1931 1994
1994 NAP
1989 NAP
32.73 8/30/98 1964 1994
1985 NAP
- --------------------------------------------
1970 NAP
22.01 12/31/00 1985 NAP
38.58 5/31/99 1971 NAP
1966 1985
18.63 3/31/00 1986 NAP
38.48 5/30/02 1997 NAP
1993 NAP
23.4 7/14/07 1966 NAP
1928 1980 -
1990
1965 1995 -
1998
- --------------------------------------------
1978 1995
1996/97 NAP
1930 NAP
1922 NAP
1920 NAP
32.33 1963, 1976 NAP
99.5 12/31/05 1980 1993
1993 NAP
62.5 9/30/11 1972 1995
- --------------------------------------------
1925 1993
100 11/30/02 1972 1997
100 9/30/06 1988 NAP
0 1974 - 1976 NAP
100 8/31/07 1990 1996
1995 NAP
1996 NAP
100 1/31/12 1986 NAP
1982 - 1997 NAP
1969 1996
- --------------------------------------------
28.62 5/31/04 1979 1996
1927 NAP
1968 1993,
1997
100 12/31/06 1967 1996
28.57 11/29/01 1996 NAP
55.36 8/30/02 1995, 1997
100 10/1/07 1925 1997
1997 NAP
1978 1994
1967 1997
<PAGE>
- --------------------------------------------
47.24 11/30/02 1931 1996
1902 1995
1940s 1993
1989 NAP
16.18 10/31/99 1987 NAP
1923 1965
1971 1997
100 12/10/07 1985 1990
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CON-
LOAN TROL
SEL- NUM- LOAN
LER BER NUMBER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Conti 332 97C-0116 53rd Street 4630 West 53rd Street Chicago Illinois 60632
Conti 333 28000 Newington Warehouse 7234 Fullerton Road Springfield Virginia 22150
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 334 HCCA2047 Super 8 - Boone 1715 South Story Street Boone Iowa 50036
Conti 335 97099964 Morrow I Office Building 235 NE Loop 820 Hurst Texas 76053
Conti 336 NYU110 Jubilee Supermarket 396 Kenmore Avenue Buffalo New York 14223
RMF 337 EDFR01 Eckerd Drugs Store 1733 Powder Springs Road Marietta Georgia 30064
RMF 338 FSUR01 Franklin Station 1166 Franklin Road Marietta Georgia 30067
Conti 339 97-S036 Manassas Industrial Park 9091-9107 Euclid Ave. Manassas Virginia 20110
RMF 340 HVFR01 Hollywood Video Store - 7121 Merrill Road Jacksonville Florida 32277
Jacksonville
Conti 341 97060017 Meadowbrook MHP 460 Highway 142 East Covington Georgia 30014
Conti 342 97-S039 Suitland Shopping Center 4805 - 4823 Silver Hill Road Suitland Maryland 20746
Conti 343 9610066 Youngstown Mobile Home Park 999 Balmer Road Porter New York 14174
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 344 NYU114 723 St. Nicholas Avenue 723 St. Nicholas Avenue New York New York 10031
Conti 345 97-S093 Patuxent Self Storage 21502 Great Mills Road Lexington Park Maryland 20653
Conti 346 9410223 Okie Storage 6015 South Blackwelder Oklahoma City Oklahoma 73159
Conti 347 97-S079 Lake Pointe Apartments 746-748 North 1060 West Orem Utah 84057
Conti 348 97-S035 Scoville Street 5610-5700 Scoville Street Baileys Virginia 22041
Crossroads
BCMC 349 1006-III Aggregate Loan Level Various Various Various Various
Information
BCMC 349A 1006-III1 La Plaza Building 110 La Plaza West Hot Springs Arkansas 71909
Village
BCMC 349B 1006-III2 La Plaza Texaco & Convenience 140 La Plaza West Hot Springs Arkansas 71909
Store Village
Conti 350 97-S038 Suitland Plaza Shopping Center 4907-4939 Suitland Road Suitland Maryland 20746
Conti 351 PMC01000 Mimi's Cafe 7450 W. Bell Road Glendale Arizona 85308
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 352 26582 3810 Bailey Avenue 3810 Bailey Avenue Bronx New York 10463
Conti 353 HCCA2045 Super 8 - Abilene 2207 North Buckeye Avenue Abilene Kansas 67410
Conti 354 97-S037 Plaza 28 9091-9093 Mathis Avenue Manassas Virginia 20110
Conti 355 9410230 U-Stor-It Warehouse 1520 West Broadway Road Mesa Arizona 85202
Conti 356 9610073 Green River Mobile Home Park 2415 Caroline Street Dickinson Texas 77539
Conti 357 97-S051 Camelot Apartments 3600 - 3606 Spring Garden Street Philadelphia Pennsylvania 19104
Conti 358 97-S052 Gilbert Apartments 4020 Gilbert Ave. Dallas Texas 75219
Conti 359 97-S021 House of Carpets & Interiors 4517 E. Independence Blvd. Charlotte North 28205
Carolina
Conti 360 97-S087 West Hill Mobile Manor 2424 South 260th Street Kent Washington 98032
Conti 361 97-S069 Windcrest Apartments 5005 Manor Road Austin Texas 78723
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 362 97-S074 Western Community Bank 975 South State Road Pleasant Grove Utah 84062
Conti 363 97-S056 D'Orleans Apartments 1717-1745 Commonwealth Houston Texas 77006
Conti 364 97-S064 Andrews Avenue 2285 Andrews Avenue Bronx New York 10468
Conti 365 97060028 Orange County NECA 180 South Anita Drive Orange California 92868
Conti 366 97-S047 19 Norwich Street 19-21 Norwich Street Worcester Massachusetts 01608
Conti 367 97-S078 North Meadow Office Building 475 West 1400 North Orem Utah 84057
Conti 368 97-S072 1615-1619 Pitkin Avenue 1615-1619 Pitkin Avenue Brooklyn New York 11212
Conti 369 97-S045 260 Hawthorne Street 260 Hawthorne Street Brooklyn New York 11225
Conti 370 97-S043 96 Stedman Street 96 Stedman Street Lowell Massachusetts 01851
Conti 371 97-S040 Hughes Industrial Center 9101-9105 Ellis Road Melbourne Florida 32904
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 372 97-S073 Canyon Place Apartments 6730-6740 SW Canyon Road Portland Oregon 97225
Conti 373 97-S077 Executive Warehouse & Storage 1365-1375 West 1400 North Orem Utah 84057
Conti 374 97-S070 The Retreat Apartments 4400 Avenue A Austin Texas 78751
Conti 375 97-H007 Nursing Love and Care, Inc. 1045 West 23rd Street Hialeah Florida 33010
Conti 376 97-S025 Maple Leaf Office Complex 2310 First Street Tillamook Oregon 97141
Conti 377 97-S044 223 Islip Avenue 223 Islip Avenue Islip New York 11751
Conti 378 97-S089 3-3A Rose Street 3-3A Rose Street Dover New 03820
Hampshire
Conti 379 97-S055 Sands Chiropractic 1701 NE 28th Street Pompano Beach Florida 33064
<PAGE>
<CAPTION>
CUT-OFF % OF AGGREGATE
ORIGINAL DATE CUT-OFF DATE SERVICING ORIGINAL REMAINING
PROPERTY CROSSED PRINCIPAL PRINCIPAL PRINCIPAL INTEREST MORTGAGE FEE TERM TO TERM TO
TYPE LOAN GROUP BALANCE BALANCE BALANCE ACCRUAL METHOD RATE RATE MATURITY OR ARD MATURITY OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Industrial 1,070,000 1,065,130 0.06 Actual/360 8.000 0.09750 120 116
Industrial 1,067,600 1,061,959 0.06 Actual/360 8.250 0.09750 120 115
- -----------------------------------------------------------------------------------------------------------------------------------
Hospitality 1,030,000 1,027,793 0.06 Actual/360 8.500 0.09750 120 119
Office 1,000,000 997,924 0.05 30/360 8.100 0.09750 120 118
Anchored 1,000,000 996,537 0.05 Actual/360 7.875 0.09750 120 117
Retail
Anchored 1,000,000 994,792 0.05 Actual/360 7.530 0.06750 204 202
Retail
Unanchored 1,000,000 993,658 0.05 Actual/360 8.610 0.06750 120 115
Retail
Industrial 975,000 971,568 0.05 30/360 9.150 0.09750 120 116
Anchored 975,000 969,466 0.05 Actual/360 7.660 0.06750 180 178
Retail
Mobile Home 966,000 965,208 0.05 30/360 9.500 0.09750 120 119
Park
Unanchored 97-S039 960,000 955,743 0.05 30/360 9.125 0.09750 120 115
Retail & 97-S038
Mobile Home 950,000 945,394 0.05 Actual/360 8.820 0.09750 120 115
Park
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily 925,000 920,563 0.05 Actual/360 7.625 0.09750 120 116
Self-Storage 850,000 848,055 0.05 Actual/360 8.710 0.09750 120 118
Self-Storage 850,000 846,691 0.05 Actual/360 9.125 0.09750 120 116
Multifamily 830,000 828,354 0.04 30/360 8.380 0.09750 120 118
Industrial 830,000 826,319 0.04 30/360 9.125 0.09750 120 115
Various 1006-I, 823,000 821,846 0.04 30/360 7.800 0.03500 120 118
1006-II,
1006III,
1006IV
Unanchored
Retail
Unanchored
Retail
Unanchored 97-S039 810,000 806,408 0.04 30/360 9.125 0.09750 120 115
Retail & 97-S038
Unanchored 800,000 795,961 0.04 Actual/360 8.500 0.09750 120 117
Retail
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily 800,000 794,915 0.04 Actual/360 7.562 0.09750 180 178
Hospitality 770,000 768,350 0.04 Actual/360 8.500 0.09750 120 119
Unanchored 770,000 767,290 0.04 30/360 9.150 0.09750 120 116
Retail
Self-Storage 750,000 747,741 0.04 Actual/360 8.875 0.09750 120 117
Mobile Home 695,000 691,485 0.04 Actual/360 8.540 0.09750 84 79
Park
Multifamily 650,000 645,137 0.03 30/360 9.125 0.09750 120 115
Multifamily 625,000 621,592 0.03 30/360 9.000 0.09750 120 114
Unanchored 615,000 612,437 0.03 30/360 9.500 0.09750 240 235
Retail
Mobile Home 575,000 573,200 0.03 30/360 8.090 0.09750 120 117
Park
Multifamily 574,000 571,347 0.03 30/360 8.875 0.09750 120 115
- -----------------------------------------------------------------------------------------------------------------------------------
Unanchored 97-S074, 550,000 548,472 0.03 30/360 8.820 0.09750 120 117
Retail 97-S078
Multifamily 540,000 537,605 0.03 30/360 9.125 0.09750 120 115
Multifamily 500,000 497,038 0.03 Actual/360 8.500 0.09750 180 178
Office 500,000 494,388 0.03 30/360 8.450 0.09750 120 116
Office 475,000 473,914 0.03 Actual/360 8.720 0.09750 120 118
Office 97-S074, 475,000 473,681 0.03 30/360 8.820 0.09750 120 117
Unanchored 97-S078 430,000 427,594 0.02 30/360 9.625 0.09750 240 236
Retail
Multifamily 410,000 406,475 0.02 30/360 9.500 0.09750 240 234
Industrial 360,000 358,468 0.02 30/360 9.375 0.09750 120 115
Industrial 345,000 342,690 0.02 30/360 10.000 0.09750 240 235
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily 340,000 338,363 0.02 30/360 8.625 0.09750 120 115
Self-Storage 300,000 299,167 0.02 30/360 8.820 0.09750 120 117
Multifamily 275,000 272,645 0.01 Actual/360 8.500 0.09750 180 177
Assisted 265,000 263,676 0.01 Actual/360 8.590 0.11750 240 237
Living
Office 260,000 259,769 0.01 30/360 9.030 0.09750 120 119
Unanchored 234,500 230,875 0.01 30/360 9.500 0.09750 180 174
Retail
Multifamily 178,000 177,591 0.01 Actual/360 8.680 0.09750 120 118
Office 150,000 149,134 0.01 30/360 9.375 0.09750 240 236
<PAGE>
<CAPTION>
ORIGINAL REMAINING YIELD MAINT.
AMORTIZATION AMORTIZATION ORIGINATION MATURITY AMORTIZATION BALLOON OR ARD PREPAYMENT CALCULATION
TERM TERM DATE DATE TYPE BALANCE PROVISION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
300 296 10/30/97 11/1/07 Balloon 866,615 LO/60_YM1/54_0/6 2
300 295 9/30/97 10/1/07 Balloon 870,126 LO/60_YM1/54_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
240 239 1/8/98 2/1/08 Balloon 723,495 LO/60_YM1/54_0/6 1
300 298 12/2/97 1/1/08 Balloon 809,678 LO/60_5/12_4/12_3/12_2/12_1/6_0/6 NAP
300 297 11/26/97 12/1/07 Balloon 807,329 LO/60_YM1/54_0/6 2
204 202 12/19/97 1/1/15 Full 0 LO/60_YM/84_4/12_3/12_2/12_1/12_0/12 1
270 265 9/30/97 10/1/07 Hyper 771,932 LO/60_2/12_1.5/12_1/12_.5/12_0/12 NAP
300 296 10/14/97 11/1/07 Balloon 809,467 YM1/114_0/6 2
180 178 12/16/97 1/1/13 Full 0 LO/60_YM/60_2.5/12_2/12_1.5/12_1/12_ 1
.5/6_0/6
300 299 1/9/98 2/1/08 Balloon 808,247 LO/60_4/12_3/12_2/12_1/18_0/6 NAP
300 295 9/30/97 10/1/07 Balloon 796,564 YM1/114_0/6 2
300 295 9/3/97 10/1/07 Balloon 784,991 LO/60_YM1/54_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 296 10/30/97 11/1/07 Balloon 741,916 LO/60_YM1/54_0/6 2
300 298 12/29/97 1/1/08 Balloon 700,543 YM1/114_0/6 2
300 296 10/3/97 11/1/07 Balloon 707,309 LO/60_YM1/54_0/6 2
300 298 12/11/97 1/1/08 Balloon 676,718 YM1/114_0/6 2
300 295 9/30/97 10/1/07 Balloon 688,696 YM1/114_0/6 2
360 358 12/31/97 1/1/08 Balloon 718,966 LO/60_YM1/54_0%/6 1
300 295 9/30/97 10/1/07 Balloon 672,101 YM1/114_0/6 2
240 237 11/12/97 12/1/07 Balloon 561,938 LO/24_YM1/90_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
180 178 12/7/97 1/1/13 Full 0 LO/96_YM1/78_0/6 2
240 239 1/8/98 2/1/08 Balloon 540,865 LO/60_YM1/54_0/6 1
300 296 10/14/97 11/1/07 Balloon 639,271 YM1/114_0/6 2
300 297 11/7/97 12/1/07 Balloon 620,523 LO/60_YM1/54_0/6 2
300 295 9/10/97 10/1/04 Balloon 619,692 LO/48_YM1/30_0/6 2
240 235 9/19/97 10/1/07 Balloon 463,323 YM1/114_0/6 2
300 294 8/21/97 9/1/07 Balloon 517,120 YM1/114_0/6 2
300 295 9/3/97 10/1/17 Balloon 255,846 YM/120_5/12_4/12_3/12_2/12_1/12_0/60 2
300 297 11/18/97 12/1/07 Balloon 465,448 YM1/114_0/6 2
300 295 9/12/97 10/1/07 Balloon 473,554 YM1/114_0/6 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 297 11/25/97 12/1/07 Balloon 453,172 YM1/114_0/6 2
300 295 9/8/97 10/1/07 Balloon 448,067 YM1/114_0/6 2
180 178 12/4/97 1/1/13 Full 0 YM1/120_5/12_4/12_3/12_2/12_1/6_0/6 2
180 176 10/6/97 11/1/07 Balloon 239,554 LO/48_5/12_4/12_3/12_2/12_1/18_0/6 NAP
300 298 12/29/97 1/1/08 Balloon 391,572 YM1/114_0/6 2
300 297 11/25/97 12/1/07 Balloon 391,376 YM1/114_0/6 2
240 236 10/14/97 11/1/17 Full 0 YM/120_5/12_4/12_3/12_2/12_1/12_0/60 2
240 234 8/21/97 9/1/17 Full 0 YM/120_5/12_4/12_3/12_2/12_1/12_0/60 2
300 295 9/4/97 10/1/07 Balloon 300,386 YM1/114_0/6 2
240 235 9/10/97 10/1/17 Full 0 YM/120_5/12_4/12_3/12_2/12_1/12_0/60 2
- -----------------------------------------------------------------------------------------------------------------------------------
300 295 9/29/97 10/1/07 Balloon 278,856 YM1/114_0/6 2
300 297 11/25/97 12/1/07 Balloon 247,185 YM1/114_0/6 2
180 177 12/1/97 12/1/12 Full 0 YM1/174_0/6 2
240 237 11/3/97 12/1/17 Full 0 LO/120_YM1/60_0/60 2
300 299 1/6/98 2/1/08 Balloon 215,270 YM1/114_0/6 2
180 174 8/27/97 9/1/12 Full 0 YM1/120_5/12_4/12_3/12_2/12_1/6_0/6 2
300 298 12/11/97 1/1/08 Balloon 146,598 YM1/114_0/6 2
240 236 10/22/97 11/1/17 Full 0 YM1/120_5/12_4/12_3/12_2/12_1/12_0/60 2
<PAGE>
<CAPTION>
LOAN PER
UNDER- SQ FT, SQ FT,
WRITTEN CUT-OFF SCHEDULED UNIT, UNIT,
ANNUAL UNDERWRITTEN CASH FLOW APPRAISED APPRAISAL DATE MATURITY DATE BED, PAD BED, PAD OCCUPANCY OCCUPANCY
DEBT SERVICE CASH FLOW DSCR VALUE DATE LTV OR ARD LTV OR ROOM UNIT TYPE OR ROOM PERCENTAGE AS OF DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100,080 154,593 1.54 1,570,000 6/23/97 67.84 55.20 55,000 Sq Ft 19.37 100.00 6/23/97
102,039 134,229 1.32 1,480,000 5/30/97 71.75 58.79 28,800 Sq Ft 36.87 100.00 11/1/97
- -----------------------------------------------------------------------------------------------------------------------------------
108,198 152,143 1.41 1,600,000 9/21/97 64.24 45.22 56 Rooms 18,353.44 64.30 11/30/97
93,414 146,692 1.57 1,750,000 10/24/97 57.02 46.27 39,171 Sq Ft 25.48 99.40 11/1/97
92,532 128,653 1.39 1,350,000 7/1/97 73.82 59.80 50,920 Sq Ft 19.57 100.00 11/2/97
105,215 134,553 1.28 1,500,000 11/25/97 66.32 0.00 9,504 Sq Ft 104.67 100.00 11/25/97
101,701 128,381 1.26 1,400,000 7/9/97 70.98 55.14 20,581 Sq Ft 48.28 100.00 12/31/97
99,391 138,230 1.39 1,470,000 6/12/97 66.09 55.07 31,500 Sq Ft 30.84 100.00 9/4/97
110,268 127,614 1.16 1,400,000 8/20/97 69.25 0.00 7,488 Sq Ft 129.47 100.00 12/31/97
101,279 149,603 1.48 1,670,000 10/8/97 57.80 48.40 78 Pads 12,374.46 92.31 10/12/97
97,663 145,557 1.41 1,515,000 6/10/97 65.76 52.58 39,023 Sq Ft 24.49 95.00 9/6/97
95,264 127,661 1.34 1,150,000 2/14/97 82.21 68.26 90 Pads 10,504.37 100.00 1/14/97
- -----------------------------------------------------------------------------------------------------------------------------------
83,728 171,513 2.05 1,500,000 7/31/97 61.37 49.46 40 Units 23,014.08 100.00 10/31/97
84,445 111,763 1.32 1,240,000 11/11/97 68.39 56.50 31,250 Units 27.14 99.09 12/15/97
87,392 116,967 1.34 1,300,000 6/19/97 65.13 54.41 48,402 Sq Ft 17.49 90.04 12/16/97
79,397 107,586 1.36 1,400,000 9/30/97 59.17 48.34 22 Units 37,652.45 100.00 12/2/97
84,438 118,383 1.40 1,425,000 5/20/97 57.99 48.33 23,200 Sq Ft 35.62 100.00 9/4/97
71,094 99,228 1.53 1,100,000 72.66 65.36 12,000 Sq Ft 68.49
66,009 700,000 10/27/97 10,000 Sq Ft 100.00 11/30/97
33,219 400,000 10/27/97 2,000 Sq Ft 100.00 11/30/97
82,404 108,247 1.41 1,170,000 6/10/97 65.76 57.44 22,440 Sq Ft 35.94 95.45 9/6/97
84,060 151,045 1.80 1,570,000 7/7/97 50.70 35.79 6,432 Sq Ft 123.75 100.00 7/1/97
- -----------------------------------------------------------------------------------------------------------------------------------
89,920 173,777 1.93 1,950,000 8/13/97 40.76 57 Units 13,945.87 94.74 11/17/97
80,886 118,314 1.46 1,390,000 9/18/97 55.28 38.91 62 Rooms 12,392.74 53.30 11/30/97
78,493 112,259 1.43 1,216,000 6/12/97 63.10 52.57 16,516 Sq Ft 46.46 100.00 9/4/97
75,550 112,403 1.49 1,100,000 7/11/97 67.98 56.41 38,550 Sq Ft 19.40 100.00 10/1/97
68,081 91,355 1.34 950,000 8/9/97 72.79 65.23 86 Pads 8,040.52 100.00 8/28/97
70,807 113,478 1.60 1,030,000 7/21/97 62.63 44.98 59 Units 10,934.53 94.92 8/22/97
62,940 101,766 1.62 900,000 7/15/97 69.07 57.46 30 Units 20,719.73 100.00 7/14/97
64,479 84,241 1.31 1,025,000 4/22/97 59.75 24.96 6,072 Sq Ft 100.86 100.00 4/22/97
53,667 128,439 2.39 1,450,000 9/6/97 39.53 32.10 63 Pads 9,098.42 96.82 9/6/97
57,215 77,365 1.35 882,000 8/8/97 64.78 53.69 58 Units 9,850.82 93.10 8/8/97
- -----------------------------------------------------------------------------------------------------------------------------------
54,576 73,646 1.40 850,000 9/30/97 63.13 53.31 6,380 Sq Ft 85.97 100.00 9/30/97
54,936 70,146 1.28 730,000 7/18/97 73.64 61.38 15 Units 35,840.35 93.00 8/1/97
59,509 94,319 1.58 1,040,000 7/30/97 47.79 37 Units 13,433.47 97.23 4/1/97
58,909 68,096 1.16 850,000 9/4/97 58.16 28.18 10,393 Sq Ft 47.57 100.00 7/21/97
47,229 85,049 1.80 680,000 7/14/97 69.69 57.58 22,901 Sq Ft 20.69 94.20 10/24/97
47,134 69,125 1.40 770,000 9/30/97 63.13 50.83 7,570 Sq Ft 62.57 100.00 11/6/97
48,520 70,063 1.44 640,000 8/27/97 66.81 4,048 Sq Ft 105.63 100.00 10/14/97
45,861 70,114 1.53 600,000 6/26/97 67.75 27 Units 15,054.65 100.00 7/29/97
37,369 47,799 1.28 485,000 7/2/97 73.91 61.94 10,542 Sq Ft 34.00 100.00 7/14/97
39,952 57,773 1.45 615,000 6/2/97 55.72 23,400 Sq Ft 14.64 92.31 8/5/97
- -----------------------------------------------------------------------------------------------------------------------------------
33,198 40,494 1.22 498,000 8/8/97 67.94 56.00 12 Units 28,196.92 100.00 9/1/97
29,769 40,174 1.35 525,000 9/30/97 56.98 47.08 18,832 Sq Ft 15.89 100.00 11/4/97
32,734 62,843 1.92 625,000 8/8/97 43.62 24 Units 11,360.23 95.83 11/1/97
28,027 43,192 1.54 400,000 6/5/97 65.92 23 Beds 11,464.16 100.00 7/2/97
26,247 36,191 1.38 475,000 7/1/97 54.69 45.32 7,414 Sq Ft 35.04 100.00 12/17/97
29,385 36,042 1.23 360,000 6/16/97 64.13 4,375 Sq Ft 52.77 100.00 7/18/97
17,640 28,086 1.59 236,000 10/20/97 75.25 62.12 6 Units 29,598.55 100.00 10/20/97
16,632 21,916 1.32 235,000 7/23/97 63.46 2,947 Sq Ft 50.61 100.00 8/25/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL TOTAL
REQUIRED REQUIRED ANNUAL TENANT
LOAN CONTROL LOAN ANNUAL RESERVES PER AREA LEASED
SELLER NUMBER NUMBER PROPERTY NAME RESERVES UNIT/SQ FT LARGEST TENANT (SQ. FT).
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Conti 332 97C-0116 53rd Street 5,500 0.10 Contract Systems 55,000
Installations Inc.
Conti 333 28000 Newington Warehouse 7,488 0.26 Springfield Auto Body 10,800
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 334 HCCA2047 Super 8 - Boone 26,528 473.71
Conti 335 97099964 Morrow I Office Building 7,834 0.20 ATI Enterprises 19,865
Conti 336 NYU110 Jubilee Supermarket 7,638 0.15 Jubilee Supermarket 50,000
RMF 337 EDFR01 Eckerd Drugs Store Eckerd Drugs Store 9,504
RMF 338 FSUR01 Franklin Station Scrub Club 2,925
Conti 339 97-S036 Manassas Industrial Park 4,725 0.15 Manassas Scrap Metal 7,000
RMF 340 HVFR01 Hollywood Video Store - Hollywood Video 7,488
Jacksonville
Conti 341 97060017 Meadowbrook MHP 7,000 89.74
Conti 342 97-S039 Suitland Shopping Center 7,805 0.20 Suitland Bowl 19,542
Conti 343 9610066 Youngstown Mobile Home Park 4,500 50.00
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 344 NYU114 723 St. Nicholas Avenue 10,000 250.00
Conti 345 97-S093 Patuxent Self Storage 4,688 21.31
Conti 346 9410223 Okie Storage 11,132 0.23
Conti 347 97-S079 Lake Pointe Apartments 5,500 250.00
Conti 348 97-S035 Scoville Street 3,480 0.15 Jack's Auto 11,600
BCMC 349 1006-III Aggregate Loan Level 0 0.00
Information
BCMC 349A 1006-III1 La Plaza Building HSV Homesites/Cooper I.D. 8,084
BCMC 349B 1006-III2 La Plaza Texaco & La Plaza Texaco Convenience 2,000
Convenience Store
Conti 350 97-S038 Suitland Plaza Shopping 4,488 0.20 Mother's Love Child Care 5,000
Center
Conti 351 PMC01000 Mimi's Cafe 965 0.15 SWH Corporation 6,432
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 352 26582 3810 Bailey Avenue 17,385 305.00
Conti 353 HCCA2045 Super 8 - Abilene 22,814 367.97
Conti 354 97-S037 Plaza 28 3,964 0.24 Maaco Auto Painting 7,200
Conti 355 9410230 U-Stor-It Warehouse 5,783 0.15
Conti 356 9610073 Green River Mobile Home 4,300 50.00
Park
Conti 357 97-S051 Camelot Apartments 14,750 250.00
Conti 358 97-S052 Gilbert Apartments 7,500 250.00
Conti 359 97-S021 House of Carpets & 911 0.15
Interiors
Conti 360 97-S087 West Hill Mobile Manor 3,150 50.00
Conti 361 97-S069 Windcrest Apartments 14,500 250.00
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 362 97-S074 Western Community Bank 1,276 0.20 Western Community Bank 6,380
Conti 363 97-S056 D'Orleans Apartments 3,750 250.00
Conti 364 97-S064 Andrews Avenue 9,250 250.00
Conti 365 97060028 Orange County NECA 2,702 0.26 Vanguard Integrity (Ste 4,523
102, 201 & 203)
Conti 366 97-S047 19 Norwich Street 5,725 0.25 Eden, Tolins, & Rafferty 5,000
Conti 367 97-S078 North Meadow Office 1,514 0.20 Carter Construction 2,214
Building
Conti 368 97-S072 1615-1619 Pitkin Avenue 1,012 0.25 Royston Antoine (Modern 1,350
Threads)
Conti 369 97-S045 260 Hawthorne Street 6,750 250.00
Conti 370 97-S043 96 Stedman Street 2,108 0.20 R.S. Guerette Corporation 5,163
Conti 371 97-S040 Hughes Industrial Center 3,510 0.15 ABC Inc. 2,400
- -----------------------------------------------------------------------------------------------------------------------------------
Conti 372 97-S073 Canyon Place Apartments 3,000 250.00
Conti 373 97-S077 Executive Warehouse & 2,825 0.15
Storage
Conti 374 97-S070 The Retreat Apartments 6,000 250.00
Conti 375 97-H007 Nursing Love and Care, Inc. 5,750 250.00
Conti 376 97-S025 Maple Leaf Office Complex 1,112 0.15 Key Title 2,626
Conti 377 97-S044 223 Islip Avenue 656 0.15 Future Unlimited, Inc. 1,400
Conti 378 97-S089 3-3A Rose Street 1,500 250.00
Conti 379 97-S055 Sands Chiropractic 442 0.15 Sands Chiropractic Clinic 2,947
<PAGE>
<CAPTION>
SQ FT AS
% OF LEASE YEAR YEAR
NSF EXP. DATE BUILT RENOVATED
- -----------------------------------------------
<C> <C> <C> <C>
100 3/31/08 1954 1976
37.5 12/31/98 1973 NAP
- --------------------------------------------
1990 NAP
50.71 8/31/04 1974 1997
98.19 11/1/07 1977 1997
100 4/7/15 1995 NAP
14.21 7/31/99 1987 NAP
22.22 5/31/02 1974 NAP
100 3/1/12 1997 NAP
1972 NAP
50.08 5/31/00 1953 NAP
1958 NAP
- --------------------------------------------
1920 1997
1988 1990
1983, 84 NAP
1994 NAP
50 8/31/01 1950 NAP
80.84 3/31/02 1997 NAP
100 5/31/17 1997 NAP
22.28 7/1/00 1972 NAP
100 6/30/17 1997 NAP
- --------------------------------------------
1925 NAP
1989 1994 -
1996
43.59 6/30/00 1974 NAP
1977 NAP
1985 NAP
1925 1996
1972 NAP
1984 1997
1972 NAP
1967 NAP
- --------------------------------------------
100 12/5/06 1996 NAP
1965 NAP
Circa 1930 1997
43.52 1/31/98 1982 NAP
21.83 5/31/02 1894 1983 -
1985
29.25 1/31/01 1996 NAP
33.35 2/28/93 1980 NAP
1927 NAP
48.98 1985 NAP
10.26 1/1/12 1983 NAP
- --------------------------------------------
1959 NAP
1991, 1994 NAP
1972 NAP
1967 1992
35.42 4/1/98 1973, 1997 1997
32 10/31/99 1978 NAP
1900 1997
100 7/25/17 1974 NAP
</TABLE>
<PAGE>
DISTRIBUTION OF AMORTIZATION TYPES
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE -------------------------------
MORTGAGE PRINCIPAL PRINCIPAL
AMORTIZATION TYPE LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------- --------- -------------- ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balloon........... 216 $ 792,684,849 42.74% $177,591 $29,965,579 $3,669,837
Fully Amortizing . 35 128,117,543 6.91 149,134 22,386,920 3,660,501
Hyperamortizing .. 128 933,988,057 50.36 993,658 63,109,462 7,296,782
--------- -------------- ------------- -------- ----------- ----------
Total*/Avg./Wtd.
Avg./Min./Max. 379 $1,854,790,449 100.0% $149,134 $63,109,462 $4,893,906
========= ============== ============= ======== =========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
WEIGHTED INTEREST TERM TO CUT-OFF DATE
AMORTIZATION TYPE MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ----------------- ------- ------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALLOON ......... 1.00 4.10 1.41 7.9021 129.2 71.36%
FULLY AMORTIZING. 1.05 6.27 1.59 8.5208 240.2 69.22
Hyperamortizing . 1.15 1.98 1.35 7.5994 126.9 74.32
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./Min./Max. 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-13
<PAGE>
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE ---------------------------------
RANGE OF MORTGAGE PRINCIPAL PRINCIPAL
AMORTIZATION TERMS LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ------------------ --------- -------------- ------------ --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
131 - 190 ........ 14 $ 33,901,288 1.83% $ 230,875 $14,587,046 $ 2,421,521
191 - 250......... 55 155,854,785 8.40 149,134 22,386,920 2,833,723
251 - 270......... 2 2,186,047 0.12 993,658 1,192,389 1,093,023
271 - 290......... 13 92,016,761 4.96 1,840,041 18,470,000 7,078,212
291 - 310......... 160 511,540,969 27.58 177,591 22,425,612 3,197,131
311 - 330......... 3 30,099,217 1.62 4,821,862 16,950,000 10,033,072
331 - 360......... 113 768,734,227 41.45 821,846 61,500,000 6,802,958
360 greater than = 19 260,457,156 14.04 2,647,870 63,109,462 13,708,271
--------- -------------- ------------- --------- ----------- ----------
Total*/Avg./Wtd.
Avg./ Min./Max. 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $ 4,893,906
========= ============== ============= ========= =========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
RANGE OF WEIGHTED INTEREST TERM TO CUT-OFF DATE
AMORTIZATION TERMS MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ------------------ -------- --------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
131 - 190........... 1.05 1.99 1.43 8.8352% 161.1 70.12%
191 - 250........... 1.06 6.27 1.55 8.1791 169.1 67.75
251 - 270........... 1.26 1.62 1.46 8.6100 115.0 73.56
271 - 290........... 1.18 1.47 1.31 8.2179 106.8 78.36
291 - 310........... 1.05 4.10 1.50 8.0706 131.3 68.22
311 - 330........... 1.28 1.40 1.32 7.8513 126.9 68.66
331 - 360........... 1.00 2.75 1.32 7.5953 140.4 74.85
360 greater than =.. 1.18 1.58 1.34 7.2965 118.6 76.89
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./ Min./Max... 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-14
<PAGE>
DISTRIBUTION OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE ------------------------------------
MORTGAGE PRINCIPAL PRINCIPAL
RANGE OF MORTGAGE RATES LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------------- --------- -------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
6.751 -7.000............ 5 $ 85,470,281 4.61% $1,998,328 $63,109,462 $17,094,056
7.001 -7.250............ 39 280,447,897 15.12 1,200,000 27,955,965 7,190,972
7.251 -7.500............ 51 381,694,226 20.58 1,597,608 61,500,000 7,484,201
7.501 -7.750............ 63 283,105,906 15.26 794,915 29,965,579 4,493,745
7.751 -8.000............ 60 228,721,743 12.33 821,846 23,417,541 3,812,029
8.001 -8.250............ 35 179,137,988 9.66 573,200 18,470,000 5,118,228
8.251 -8.500............ 48 199,639,529 10.76 272,645 12,258,387 4,159,157
8.501 -8.750............ 22 69,597,855 3.75 177,591 22,386,920 3,163,539
8.751 -9.000............ 19 58,533,956 3.16 299,167 19,406,230 3,080,735
9.001 -9.250............ 23 52,251,311 2.82 259,769 4,873,824 2,271,796
9.251 -9.500............ 10 19,185,373 1.03 149,134 8,327,355 1,918,537
9.501 -9.750............ 3 16,661,695 0.90 427,594 14,587,046 5,553,898
9.751 -10.000........... 1 342,690 0.02 342,690 342,690 342,690
--------- -------------- ------------- ---------- ----------- -----------
Total*/Avg./Wtd.
Avg./ Min./Max....... 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $ 4,893,906
========= ============== ============= ========== =========== ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
WEIGHTED INTEREST TERM TO CUT-OFF DATE
RANGE OF MORTGAGE RATES MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ----------------------- -------- --------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
6.751 - 7.000.......... 1.33 1.58 1.37 6.7897% 120.2 73.18%
7.001 - 7.250.......... 1.15 2.94 1.32 7.1542 140.8 76.36
7.251 - 7.500.......... 1.11 2.10 1.37 7.4299 128.1 73.65
7.501 - 7.750.......... 1.16 4.10 1.39 7.6401 130.4 72.16
7.751 - 8.000.......... 1.05 6.27 1.48 7.9120 127.4 70.34
8.001 - 8.250.......... 1.15 3.06 1.42 8.1047 134.9 71.61
8.251 - 8.500.......... 1.00 1.92 1.29 8.3253 158.5 74.26
8.501 - 8.750.......... 1.22 2.75 1.59 8.5997 171.4 71.41
8.751 - 9.000.......... 1.29 1.62 1.46 8.9269 165.3 64.49
9.001 - 9.250.......... 1.18 1.91 1.45 9.1399 78.9 71.34
9.251 - 9.500.......... 1.05 1.58 1.37 9.3747 129.2 58.98
9.501 - 9.750.......... 1.44 1.99 1.62 9.7344 175.0 75.94
9.751 - 10.000......... 1.45 1.45 1.45 10.0000 235.0 55.72
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./ Min./Max....... 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-15
<PAGE>
DISTRIBUTION OF SPECIFIC PROPERTY TYPES(1)
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE ------------------------------
MORTGAGE PRINCIPAL PRINCIPAL
PROPERTY TYPE LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ------------------------- -------------------------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Multifamily.............. 109 418,200,760 22.55 107,712 63,109,462 3,836,704
Anchored Retail.......... 47 295,127,291 15.91 969,466 29,965,579 6,279,304
Hospitality.............. 44 257,394,676 13.88 768,350 22,425,612 5,849,879
Office................... 52 238,403,474 12.85 149,134 30,429,599 4,584,682
Skilled Nursing Home .... 36 165,068,897 8.90 1,840,041 9,898,453 4,585,247
Unanchored Retail........ 67 140,301,317 7.56 60,914 7,983,324 2,094,050
Industrial............... 28 96,898,812 5.22 342,690 16,950,000 3,460,672
Self-Storage............. 97 96,569,962 5.21 99,830 3,403,768 995,567
Assisted Living Facility. 11 45,377,412 2.45 263,676 12,719,170 4,125,219
Special Purpose.......... 17 39,085,328 2.11 177,750 8,327,355 2,299,137
Mobile Home Park......... 11 38,064,733 2.05 573,200 7,407,772 3,460,430
Mixed Use................ 10 24,297,787 1.31 1,195,771 4,821,862 2,429,779
--------- ------------- ------------- --------- ---------- ----------
Total*/Avg./Wtd. Avg./
Min./Max.............. 529 1,854,790,449 100.00 60,914 63,109,462 3,506,220
========= ============= ============= ========= ========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE AVERAGE
--------------------------- MORTGAGE REMAINING CUT-OFF
WEIGHTED INTEREST TERM TO DATE
PROPERTY TYPE MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ---------------------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Multifamily .......... 1.00 2.94 1.33 7.3786 126.2 74.40
Anchored Retail....... 1.05 1.60 1.28 7.5631 161.5 75.65
Hospitality........... 1.25 2.30 1.53 8.1611 146.1 68.93
Office................ 1.05 1.80 1.33 7.6571 119.5 72.68
Skilled Nursing Home . 1.18 6.27 1.55 8.3993 139.5 74.77
Unanchored Retail..... 1.20 1.80 1.36 7.8859 125.9 71.60
Industrial............ 1.23 1.75 1.35 7.9599 117.4 65.87
Self-Storage.......... 1.14 2.19 1.52 7.7344 124.9 74.71
Assisted Living
Facility............. 1.15 4.10 1.57 7.8944 170.8 69.75
Special Purpose....... 1.25 1.99 1.54 9.0857 141.7 68.99
Mobile Home Park...... 1.18 2.39 1.30 7.7595 117.2 75.77
Mixed Use............. 1.26 1.88 1.39 7.7998 135.9 66.04
------- ------- -------- --------- --------- --------
Total*/Avg./Wtd. Avg./
Min./Max............ 1.00 6.27 1.39 7.7924 135.7 72.70
======= ======= ======== ========= ========= ========
</TABLE>
- ------------
(1) For Mortgage Loans secured by more than one Mortgaged Property, the
Cut-Off Date Balance of such Mortgage Loan has been allocated to each
such Mortgaged Property as provided in the related Mortgage Loan, or,
to the extent the Mortgage Loan did not provide any such allocation,
the Cut-Off Date Principal Balance of the related Mortgage Loan has
been allocated pro rata, based on Underwritten Cash Flow (except with
respect to 1 Mortgage Loan, where the Cut-Off Date Principal Balance
was allocated based upon Appraised Value).
* Totals may not equal due to rounding.
A-16
<PAGE>
DISTRIBUTION OF YEARS OF ORIGINATION
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-OFF DATE
AGGREGATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE ----------------------------------
MORTGAGE PRINCIPAL PRINCIPAL
YEAR OF ORIGINATION LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- -------------------- --------- -------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1996................ 1 $ 4,494,343 0.24% $4,494,343 $ 4,494,343 $4,494,343
1997................ 325 1,535,449,833 82.78 149,134 61,500,000 4,724,461
1998................ 53 314,846,274 16.97 259,769 63,109,462 5,940,496
--------- -------------- ------------- ---------- ----------- ----------
Total*/Avg./Wtd.
Avg./Min./Max.... 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $4,893,906
========= ============== ============= =========== =========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
WEIGHTED INTEREST TERM TO CUT-OFF DATE
YEAR OF ORIGINATION MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ------------------- -------- -------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
1996............... 1.54 1.54 1.54 9.2500% 105.0 59.92%
1997............... 1.00 6.27 1.40 7.8686 137.5 72.30
1998............... 1.19 2.94 1.33 7.3998 127.2 74.85
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./Min./Max.... 1.00% 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-17
<PAGE>
DISTRIBUTION OF ANNUALIZED DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE ----------------------------------
RANGE OF DEBT SERVICE MORTGAGE PRINCIPAL PRINCIPAL
COVERAGE RATIOS LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ----------------------- --------- --------------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
= less than 1.00........ 1 $ 8,868,778 0.48% $8,868,778 $ 8,868,778 $8,868,778
1.01-1.10............... 3 16,002,625 0.86 2,734,302 9,122,871 5,334,208
1.11-1.20............... 22 83,886,591 4.52 494,388 13,236,077 3,813,027
1.21-1.30............... 123 702,839,317 37.89 230,875 61,500,000 5,714,141
1.31-1.40............... 90 476,529,826 25.69 149,134 63,109,462 5,294,776
1.41-1.50............... 53 273,202,761 14.73 342,690 52,061,172 5,154,769
1.51-1.60............... 29 109,077,047 5.88 177,591 19,406,230 3,761,277
1.61-1.70............... 12 37,618,803 2.03 621,592 5,478,421 3,134,900
1.71-1.80............... 12 55,288,220 2.98 473,914 22,425,612 4,607,352
1.81-1.90............... 9 28,495,448 1.54 1,488,442 6,982,686 3,166,161
1.91-2.00............... 11 27,654,530 1.49 272,645 4,616,083 2,514,048
2.01-2.20............... 4 7,100,563 0.38 920,563 3,187,558 1,775,141
2.21-2.40............... 3 7,842,511 0.42 573,200 5,174,373 2,614,170
2.41-2.80............... 1 7,484,433 0.40 7,484,433 7,484,433 7,484,433
2.81-3.00............... 2 4,680,771 0.25 1,200,000 3,480,771 2,340,385
3.01 greater than = .... 4 8,218,227 0.44 1,145,866 3,086,049 2,054,557
--------- -------------- ------------- ---------- ----------- ----------
Total*/Avg./Wtd. Avg./
Min./Max. ............ 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $4,893,906
========= ============== ============= ========== =========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
RANGE OF DEBT SERVICE WEIGHTED INTEREST TERM TO CUT-OFF DATE
COVERAGE RATIOS MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- --------------------- -------- ------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
= LESS THAN 1.00........ 1.00 1.00 1.00 8.3100% 114.0 76.55%
1.01-1.10............... 1.05 1.06 1.06 8.3988 197.5 79.97
1.11-1.20............... 1.11 1.20 1.17 7.9463 121.6 76.50
1.21-1.30............... 1.21 1.30 1.26 7.6996 136.0 75.38
1.31-1.40............... 1.31 1.40 1.34 7.6268 131.1 74.39
1.41-1.50............... 1.41 1.50 1.45 7.8389 127.3 69.10
1.51-1.60............... 1.51 1.60 1.56 8.3980 184.5 70.36
1.61-1.70............... 1.61 1.70 1.65 8.0598 143.7 66.47
1.71-1.80............... 1.72 1.80 1.77 7.9430 121.7 61.49
1.81-1.90............... 1.82 1.88 1.84 7.7780 120.7 63.03
1.91-2.00............... 1.91 1.99 1.95 8.2479 121.7 66.25
2.01-2.20............... 2.05 2.19 2.13 7.6114 117.7 56.05
2.21-2.40............... 2.22 2.39 2.29 8.0652 115.9 54.73
2.41-2.80............... 2.75 2.75 2.75 8.5410 177.0 73.38
2.81-3.00............... 2.92 2.94 2.93 7.7926 250.1 37.47
3.01 greater than = .... 3.06 6.27 4.14 7.9320 145.8 49.83
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd. Avg./
Min./Max. ............ 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-18
<PAGE>
DISTRIBUTION OF REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE --------------------------------
RANGE OF REMAINING MORTGAGE PRINCIPAL PRINCIPAL
TERM TO MATURITY LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ------------------ --------- --------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
= less than - 70 .. 13 $ 49,586,505 2.67% $ 1,170,402 $13,438,883 $ 3,814,347
71 -90............. 9 23,916,188 1.29 691,485 5,984,328 2,657,354
91 -100............ 1 3,129,039 0.17 3,129,039 3,129,039 3,129,039
101 -110........... 4 16,245,959 0.88 2,946,349 4,616,083 4,061,490
111 -115........... 43 163,193,672 8.80 338,363 23,417,541 3,795,202
116 -120........... 213 1,126,043,264 60.71 177,591 63,109,462 5,286,588
121 -140........... 1 3,570,786 0.19 3,570,786 3,570,786 3,570,786
141 -150........... 1 19,169,231 1.03 19,169,231 19,169,231 19,169,231
151 -170........... 1 3,841,251 0.21 3,841,251 3,841,251 3,841,251
171 -190........... 64 301,755,208 16.27 230,875 14,587,046 4,714,925
191 -250........... 24 95,041,133 5.12 149,134 22,386,920 3,960,047
251 -310........... 5 49,298,211 2.66 3,480,771 19,406,230 9,859,642
--------- --------------- ------------- ---------- ----------- ----------
Total*/Avg./Wtd.
Avg./ Min./Max.. 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $ 4,893,906
========= =============== ============= ========== =========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
RANGE OF REMAINING WEIGHTED INTEREST TERM TO CUT-OFF DATE
TERM TO MATURITY MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ------------------ -------- -------- --------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
= LESS THAN - 70... 1.18 1.55 1.28 8.7573% 43.0 69.19%
71 -90............. 1.24 1.52 1.33 7.7509 81.1 73.21
91 -100............ 1.26 1.26 1.26 7.8000 97.0 74.50
101 -110........... 1.39 1.98 1.75 8.4272 106.1 62.45
111 -115........... 1.00 2.30 1.41 8.3027 114.5 69.70
116 -120........... 1.15 4.10 1.39 7.5847 117.9 73.19
121 -140........... 1.19 1.19 1.19 8.3700 136.0 72.87
141 -150........... 1.26 1.26 1.26 7.1300 142.0 74.52
151 -170........... 1.28 1.28 1.28 7.5400 170.0 57.33
171 -190........... 1.05 2.75 1.34 8.0202 176.8 74.14
191 -250........... 1.05 6.27 1.46 7.9856 235.8 72.36
251 -310........... 1.31 2.92 1.62 8.1556 295.0 70.39
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./ Min./Max.. 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-19
<PAGE>
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE ---------------------------------
RANGE OF CUT-OFF DATE MORTGAGE PRINCIPAL PRINCIPAL
LOAN-TO-VALUE RATIOS LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- --------------------- --------- -------------- ------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
25.01 -30.00.......... 2 $ 2,345,866 0.13% $1,145,866 $ 1,200,000 $1,172,933
30.01 -50.00.......... 13 37,882,154 2.04 272,645 13,438,883 2,914,012
50.01 -60.00.......... 41 120,527,725 6.50 259,769 22,425,612 2,939,701
60.01 -65.00.......... 44 134,273,603 7.24 149,134 15,436,550 3,051,673
65.01 -70.00.......... 51 171,507,649 9.25 263,676 19,406,230 3,362,895
70.01 -75.00.......... 108 589,843,393 31.80 358,468 61,500,000 5,461,513
75.01 -80.00.......... 100 695,318,762 37.49 177,591 63,109,462 6,953,188
80.01 -85.00.......... 18 91,208,437 4.92 945,394 27,955,965 5,067,135
85.01 -95.00.......... 2 11,882,859 0.64 4,145,452 7,737,408 5,941,430
--------- -------------- ------------- ----------- ----------- -----------
Total*/Avg./Wtd.
Avg./ Min./Max..... 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $4,893,906
========= ============== ============= =========== =========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
RANGE OF CUT-OFF DATE WEIGHTED INTEREST TERM TO CUT-OFF DATE
LOAN-TO-VALUE RATIOS MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- --------------------- ------- ------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
25.01 -30.00......... 2.94 4.10 3.51 7.4105% 118.5 26.36%
30.01 -50.00......... 1.44 3.72 1.82 8.3480 116.0 43.85
50.01 -60.00......... 1.05 6.27 1.68 8.1494 131.9 56.84
60.01 -65.00......... 1.20 3.06 1.55 7.7996 124.8 62.67
65.01 -70.00......... 1.16 1.99 1.48 8.0671 154.9 68.47
70.01 -75.00......... 1.19 2.75 1.36 7.7106 134.0 73.42
75.01 -80.00......... 1.00 1.82 1.31 7.7256 137.0 77.96
80.01 -85.00......... 1.06 1.50 1.26 7.6736 127.6 82.47
85.01 -95.00......... 1.05 1.43 1.30 7.3112 159.2 90.71
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./ Min./Max.... 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-20
<PAGE>
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE CUT-OFF DATE PRINCIPAL BALANCE
NUMBER OF CUT-OFF DATE CUT-OFF DATE -----------------------------------
RANGE OF CUT-OFF DATE MORTGAGE PRINCIPAL PRINCIPAL
PRINCIPAL BALANCES LOANS BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- -------------------------------- --------- --------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$= less than $999,999.00........ 45 $ 28,829,529 1.55% $ 149,134 $ 997,924 $ 640,656
999,999.01 -1,999,999.99 ....... 82 126,497,227 6.82 1,027,793 1,998,328 1,542,649
2,000,000.00 -2,999,999.99 ..... 56 138,249,837 7.45 2,000,000 2,997,776 2,468,747
3,000,000.00 -3,999,999.99 ..... 60 211,308,032 11.39 3,000,000 3,993,870 3,521,801
4,000,000.00 -4,999,999.99 ..... 31 140,377,287 7.57 4,002,922 4,996,100 4,528,300
5,000,000.00 -5,999,999.99 ..... 27 148,738,162 8.02 5,088,018 5,984,328 5,508,821
6,000,000.00 -6,999,999.99 ..... 7 46,626,359 2.51 6,174,569 6,982,686 6,660,908
7,000,000.00 -7,999,999.99 ..... 17 128,830,553 6.95 7,024,709 7,983,324 7,578,268
8,000,000.00 -8,999,999.99 ..... 12 101,599,170 5.48 8,142,276 8,868,778 8,466,597
9,000,000.00 -9,999,999.99 ..... 8 76,554,132 4.13 9,122,871 9,987,302 9,569,267
10,000,000.00 -11,999,999.99 ... 6 66,806,360 3.60 10,040,000 11,937,167 11,134,393
12,000,000.00 -13,999,999.99 ... 7 91,691,482 4.94 12,258,387 13,953,219 13,098,783
14,000,000.00 -16,999,999.99 ... 5 79,799,865 4.30 14,587,046 16,950,000 15,959,973
17,000,000.00 -39,999,999.99 ... 13 292,211,822 15.75 17,187,107 30,429,599 22,477,832
40,000,000.00 - (is greater
than or equal to) ............. 3 176,670,634 9.53 52,061,172 63,109,462 58,890,211
--------- --------------- ------------- ----------- ----------- -----------
Total*/Avg./Wtd. Avg./
Min./Max..................... 379 $1,854,790,449 100.00% $ 149,134 $63,109,462 $ 4,893,906
========= =============== ============= =========== ========== ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
DEBT SERVICE COVERAGE RATIO AVERAGE AVERAGE WEIGHTED
--------------------------- MORTGAGE REMAINING AVERAGE
RANGE OF CUT-OFF DATE WEIGHTED INTEREST TERM TO CUT-OFF DATE
PRINCIPAL BALANCES MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ------------------------------- ------- -------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
$= LESS THAN $999,999.00....... 1.16 2.39 1.47 8.6585% 133.5 63.51%
999,999.01 -1,999,999.99....... 1.14 6.27 1.59 8.0800 132.1 66.23
2,000,000.00 -2,999,999.99 .... 1.05 2.22 1.36 8.0041 121.8 72.19
3,000,000.00 -3,999,999.99 .... 1.18 3.06 1.47 7.8350 129.6 71.72
4,000,000.00 -4,999,999.99 .... 1.05 1.98 1.41 7.7276 135.9 73.24
5,000,000.00 -5,999,999.99 .... 1.11 2.30 1.38 7.7973 132.7 72.00
6,000,000.00 -6,999,999.99 .... 1.21 1.83 1.38 7.7422 126.4 71.13
7,000,000.00 -7,999,999.99 .... 1.18 2.75 1.45 7.9735 130.7 74.94
8,000,000.00 -8,999,999.99 .... 1.00 1.41 1.25 8.0300 146.6 74.38
9,000,000.00 -9,999,999.99 .... 1.06 1.44 1.30 7.7297 164.2 71.61
10,000,000.00 -11,999,999.99 .. 1.28 1.60 1.40 7.7037 169.6 73.68
12,000,000.00 -13,999,999.99 .. 1.15 1.47 1.29 7.9182 133.2 68.82
14,000,000.00 -16,999,999.99 .. 1.28 1.58 1.38 7.8456 127.7 73.23
17,000,000.00 -39,999,999.99 .. 1.21 1.78 1.35 7.6582 148.2 74.95
40,000,000.00 - (is greater
than or equal to) ............ 1.30 1.48 1.36 7.2138 118.0 76.54
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd. Avg./
Min./Max.................... 1.00 6.27 1.39 7.7924% 135.7 72.70%
======= ======= ======== ======== ========= ============
</TABLE>
- ------------
* Totals may not equal due to rounding.
A-21
<PAGE>
DISTRIBUTION OF PROPERTY BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-OFF DATE PRINCIPAL BALANCE
AGGREGATE ----------------------------------
NUMBER OF CUT-OFF DATE CUT-OFF DATE
MORTGAGED PRINCIPAL PRINCIPAL
PROPERTY STATE PROPERTIES BALANCE BALANCE MINIMUM MAXIMUM AVERAGE
- ------------------ ---------- ------------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
California ........ 56 303,807,858 16.38 494,388 30,429,599 5,425,140
New York........... 49 189,911,727 10.24 230,875 29,965,579 3,875,750
Massachusetts ..... 19 153,316,040 8.27 358,468 63,109,462 8,069,265
Florida............ 35 148,923,539 8.03 149,134 13,438,883 4.254,958
Texas.............. 68 121,107,985 6.53 99,830 15,436,550 1,781,000
Georgia ........... 34 97,658,251 5.27 289,506 23,000,000 2,872,302
Pennsylvania ...... 27 85,106,381 4.59 237,024 8,187,117 3,152,088
Colorado........... 14 74,848,481 4.04 1,784,080 13,335,747 5,346,320
Tennessee ......... 15 73,898,329 3.98 381,464 12,258,387 4,926,555
Virginia........... 11 48,752,389 2.63 767,290 19,406,230 4,432,035
Louisiana.......... 11 47,334,819 2.55 580,615 9,898,453 4,303,165
Maryland........... 10 44,698,713 2.41 806,408 9,954,489 4,469,871
Washington ........ 10 38,871,873 2.10 573,200 9,684,970 3,887,187
Alabama ........... 4 34,543,983 1.86 1,990,757 22,386,920 8,635,996
Nevada ............ 3 31,744,969 1.71 1,546,679 22,425,612 10,581,656
Michigan .......... 22 29,978,582 1.62 107,712 5,485,651 1,362,663
Illinois .......... 8 29,830,907 1.61 1,065,130 7,162,166 3,728,863
Puerto Rico........ 1 27,955,965 1.51 27,955,965 27,955,965 27,955,965
Missouri........... 15 26,583,313 1.43 150,762 5,478,421 1,772,221
New Hampshire ..... 9 25,823,694 1.39 177,591 4,788,063 2,869,299
Arizona ........... 9 25,451,684 1.37 747,741 7,484,433 2,827,965
North Carolina ... 13 21,077,871 1.14 612,437 4,494,343 1,621,375
Connecticut........ 6 19,018,060 1.03 1.195,771 7,188,665 3,169,677
Ohio............... 6 18,639,717 1.00 1,295,555 7,778,721 3,106,620
Wisconsin ......... 5 16,734,678 0.90 1,793,001 4,582,114 3,346,936
Oregon ............ 7 15,416,719 0.83 259,769 5,486,701 2,202,388
Arkansas........... 19 14,474,667 0.78 60,914 3,242,448 761,825
New Jersey ........ 5 11,631,289 0.63 1,394,590 3,894,199 2,326,258
Vermont ........... 2 10,281,722 0.55 4,990,781 5,290,941 5,140,861
New Mexico ........ 5 10,044,035 0.54 119,796 4,002,922 2,008,807
Kentucky .......... 2 10,029,153 0.54 2,291,745 7,737,408 5,014,576
Oklahoma .......... 5 9,843,750 0.53 449,234 4,588,744 1,968,750
Iowa............... 3 6,851,663 0.37 1,027,793 4,486,742 2,283,888
West Virginia ..... 1 6,400,000 0.35 6,400,000 6,400,000 6,400,000
Utah............... 6 5,095,155 0.27 299,167 1,548,481 849,192
Idaho.............. 2 3,787,298 0.20 1,646,379 2,140,919 1,893,649
Minnesota ......... 2 3,698,139 0.20 1,047,173 2,650,966 1,849,070
Kansas............. 2 2,891,305 0.16 768,350 2,122,955 1,445,653
Rhode Island ...... 2 2,442,810 0.13 1,075,642 1,367,169 1,221,405
Indiana............ 1 1,939,366 0.10 1,939,366 1,939,366 1,939,366
Hawaii............. 1 1,488,442 0.08 1,488,442 1,488,442 1,488,.442
South Carolina ... 2 1,487,462 0.08 628,927 858,535 743,731
Mississippi........ 2 1,367,666 0.07 668,859 698,808 683,833
---------- ------------- ------------- ----------- ---------- -----------
Total*/Avg./Wtd.
Avg./Min./Max. 529 1,854,790,449 100.00 60,914 63,109,462 3,506,220
========== ============= ============= =========== ========== ===========
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
DEBT SERVICE COVERAGE RATIO WEIGHTED WEIGHTED
--------------------------- AVERAGE AVERAGE WEIGHTED
MORTGAGE REMAINING AVERAGE
WEIGHTED INTEREST TERM TO CUT-OFF DATE
PROPERTY STATE MINIMUM MAXIMUM AVERAGE RATE MATURITY LTV
- ------------------ ------- ------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
California ........ 1.16 2.92 1.38 7.6688 152.4 71.72
New York........... 1.05 6.27 1.37 7.7465 128.0 73.19
Massachusetts ..... 1.24 1.80 1.33 7.1429 123.0 75.22
Florida............ 1.15 1.58 1.32 8.0848 118.3 71.22
Texas.............. 1.22 1.99 1.45 7.9352 120.8 72.47
Georgia ........... 1.00 1.69 1.33 7.8119 127.7 77.14
Pennsylvania ...... 1.25 1.60 1.31 7.5007 117.2 74.07
Colorado........... 1.11 1.88 1.26 7.5431 165.4 71.55
Tennessee ......... 1.06 1.98 1.31 8.1492 152.9 75.50
Virginia........... 1.05 1.82 1.50 8.3853 216.3 70.77
Louisiana.......... 1.14 1.26 1.21 8.0430 167.1 78.44
Maryland........... 1.25 1.44 1.39 8.0869 126.3 65.06
Washington ........ 1.30 2.39 1.44 7.8323 131.7 70.29
Alabama ........... 1.27 3.72 1.47 8.2935 205.2 69.65
Nevada ............ 1.44 1.78 1.75 8.0314 116.6 60.14
Michigan .......... 1.24 2.94 1.51 7.3653 141.2 73.84
Illinois .......... 1.27 1.85 1.44 7.6951 125.6 73.81
Puerto Rico........ 1.31 1.31 1.31 7.2250 118.0 84.72
Missouri........... 1.19 3.06 1.74 8.1673 131.6 69.35
New Hampshire ..... 1.18 1.59 1.23 9.0030 49.3 78.17
Arizona ........... 1.25 4.10 1.92 8.1631 134.6 70.20
North Carolina ... 1.31 1.54 1.45 7.9591 128.9 74.11
Connecticut........ 1.22 1.77 1.45 7.9845 116.7 72.54
Ohio............... 1.29 1.75 1.46 7.8408 125.0 65.15
Wisconsin ......... 1.61 2.10 1.86 7.3600 118.0 65.31
Oregon ............ 1.22 1.82 1.38 7.7640 122.9 71.15
Arkansas........... 1.32 1.53 1.51 7.7998 117.9 73.06
New Jersey ........ 1.25 1.41 1.32 7.4531 133.5 73.99
Vermont ........... 1.30 1.37 1.34 7.4743 118.0 74.40
New Mexico ........ 1.22 1.88 1.42 8.1247 77.1 76.57
Kentucky .......... 1.43 1.76 1.51 7.3891 145.4 83.32
Oklahoma .......... 1.25 1.68 1.49 8.0120 117.2 71.95
Iowa............... 1.31 1.41 1.33 7.6487 228.4 73.51
West Virginia ..... 1.38 1.38 1.38 7.7100 120.0 64.00
Utah............... 1.29 1.48 1.38 8.5422 118.3 66.19
Idaho.............. 1.56 1.68 1.63 8.0747 117.3 58.86
Minnesota ......... 1.30 1.30 1.30 7.4610 117.0 74.46
Kansas............. 1.19 1.46 1.26 7.7437 160.9 68.50
Rhode Island ...... 1.29 1.75 1.55 8.0670 142.7 66.72
Indiana............ 1.33 1.33 1.33 9.0000 114.0 79.16
Hawaii............. 1.88 1.88 1.88 9.0625 115.0 56.44
South Carolina ... 1.48 1.48 1.48 7.4720 118.0 79.48
Mississippi........ 1.48 1.48 1.48 7.4720 118.0 79.48
------- ------- -------- -------- --------- ------------
Total*/Avg./Wtd.
Avg./Min./Max... 1.00 6.27 1.39 7.7924 135.7 72.70
======= ======= ======== ========= ========= ============
</TABLE>
- ------------
For Mortgage Loans secured by more than one Mortgaged Property, the Cut-Off
Date Balance of such Mortgage Loan has been allocated to each such Mortgaged
Property pro rata based on Underwritten Net Cashflow.
* Totals may not equal due to rounding.
A-22
<PAGE>
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM ANALYSIS
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING PRINCIPAL BALANCE**
<TABLE>
<CAPTION>
MONTH 1 MONTH 13 MONTH 25 MONTH 37 MONTH 49 MONTH 61
--------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Locked out ............ 95.65% 91.69% 74.61% 58.57% 52.00% 13.49%
Defeasance ............ 0.00% 0.00% 15.75% 26.92% 29.72% 32.54%
Greater of 1% or Yield
Maintenance .......... 3.29% 6.39% 6.68% 9.13% 11.79% 30.99%
Yield Maintenance .... 0.61% 1.47% 1.62% 2.76% 3.68% 11.27%
--------- --------- --------- --------- -------- ---------
Sub-Total* ............ 99.54% 99.55% 98.67% 97.38% 97.19% 88.29%
Percentage Penalties
5% or Greater ........ 0.46% 0.45% 0.45% 0.52% 0.02% 4.76%
4% -4.99% ............ 0.00% 0.00% 0.00% 1.10% 0.65% 0.08%
3% -3.99% ............ 0.00% 0.00% 0.73% 0.12% 0.96% 3.86%
2% -2.99% ............ 0.00% 0.00% 0.00% 0.73% 0.29% 2.58%
1% -1.99% ............ 0.00% 0.00% 0.00% 0.00% 0.73% 0.30%
Less than 1% ......... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
FR (Open).............. 0.00% 0.00% 0.15% 0.15% 0.15% 0.14%
--------- --------- --------- --------- -------- ---------
Total* .............. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Balance of Mortgage
Loans (mm) ........... $1,854.79 $1,834.29 $1,791.37 $1,765.74 $1738.01 $1,680.89
% of Cut-Off Date
Balance Outstanding . 100.00% 98.89% 96.58% 95.20% 93.70% 90.62%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MONTH 73 MONTH 85 MONTH 97 MONTH 109 MONTH 121 MONTH 133 MONTH 145
--------- --------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Locked out ............ 13.00% 6.05% 4.02% 3.72% 0.00% 0.00% 0.00%
Defeasance ............ 32.61% 37.75% 37.88% 35.92% 30.71% 31.08% 33.08%
Greater of 1% or Yield
Maintenance .......... 31.37% 31.30% 33.28% 33.15% 35.24% 35.10% 36.67%
Yield Maintenance .... 11.23% 11.62% 11.56% 11.60% 6.61% 6.51% 2.43%
--------- --------- -------- --------- ------- --------- --------
Sub-Total* ............ 88.21% 86.73% 86.74% 84.39% 72.56% 72.69% 72.17%
Percentage Penalties
5% or Greater ........ 0.07% 0.35% 0.00% 0.00% 0.78% 0.00% 0.00%
4% -4.99% ............ 4.76% 0.07% 0.34% 0.33% 5.26% 0.75% 0.13%
3% -3.99% ............ 0.08% 5.96% 0.07% 0.00% 1.24% 6.24% 0.75%
2% -2.99% ............ 0.49% 0.24% 5.96% 0.26% 4.61% 0.10% 6.21%
1% -1.99% ............ 6.08% 1.97% 0.90% 6.04% 0.96% 4.66% 4.93%
Less than 1% ......... 0.00% 0.00% 1.31% 0.00% 0.00% 0.00% 0.00%
FR (Open).............. 0.31% 4.68% 4.69% 8.98% 14.59% 15.56% 15.81%
--------- --------- -------- --------- ------- --------- --------
Total* .............. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Balance of Mortgage
Loans (mm) ........... $1,649.29 $1,593.93 $1,557.00 $1,502.00 $379.70 $365.24 $333.04
% of Cut-Off Date
Balance Outstanding . 88.92% 85.94% 83.94% 80.98% 20.47% 19.69% 17.96%
</TABLE>
- ------------
* Totals may not equal due to rounding.
** Table calculated using Maturity Assumptions and assuming no prepayments
of principal.
A-23
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625 WAC:
Chicago, IL 60603 WAMM:
<TABLE>
<CAPTION>
NUMBER OF PAGES
---------------
<S> <C>
Table Of Contents 1
REMIC Certificate Report 1
Other Related Information 1
Asset Backed Facts Sheets 1
Delinquency Loan Detail 1
Mortgage Loan Characteristics 2
Loan Level Listing 1
---
TOTAL PAGES INCLUDED IN THIS PACKAGE 8
---
Specially Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
INFORMATION IS AVAILABLE FOR THIS ISSUE FROM THE FOLLOWING SOURCES
LaSalle Web Site www.lnbabs.com
Servicer Website www.servicer.com
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (312) 904-2200
Bloomberg User Terminal
ASAP #:
Monthly Data File Name:
</TABLE>
B-1
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625 WAC:
Chicago, IL 60603 WAMM:
<TABLE>
<CAPTION>
===================================================================================================================================
ORIGINAL OPENING PRINCIPAL PRINCIPAL NEGATIVE CLOSING INTEREST INTEREST PASS-THROUGH
CLASS FACE VALUE (1) BALANCE PAYMENT ADJ. OR LOSS AMORTIZATION BALANCE PAYMENT ADJUSTMENT RATE (2)
CUSIP Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Next Rate (3)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1
- -----------------------------------------------------------------------------------------------------------------------------------
A-2
- -----------------------------------------------------------------------------------------------------------------------------------
X-1
- -----------------------------------------------------------------------------------------------------------------------------------
X-2
- -----------------------------------------------------------------------------------------------------------------------------------
B
- -----------------------------------------------------------------------------------------------------------------------------------
C
- -----------------------------------------------------------------------------------------------------------------------------------
D
- -----------------------------------------------------------------------------------------------------------------------------------
E
- -----------------------------------------------------------------------------------------------------------------------------------
E-IO
- -----------------------------------------------------------------------------------------------------------------------------------
F
- -----------------------------------------------------------------------------------------------------------------------------------
G
- -----------------------------------------------------------------------------------------------------------------------------------
PP
- -----------------------------------------------------------------------------------------------------------------------------------
TA
- -----------------------------------------------------------------------------------------------------------------------------------
R-IV
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
===================================================================================================================================
Total P&I Payment 0.00
==============================
</TABLE>
Notes:
(1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred
Interest equals Accrual
(3) Estimated
B-2
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
<TABLE>
<CAPTION>
===================================================================================================================================
ACCRUED EXCESS INTEREST PRIOR ENDING ACTUAL
CERTIFICATE DEFERRED PREPAYMENT REDUCTION UNPAID UNPAID DISTRIBUTION
CLASS INTEREST INTEREST INT. SHORTFALLS AMOUNTS INTEREST INTEREST OF INTEREST
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
COLLATERAL INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
Component Sub-Pool I Sub-Pool II Sub-Pool III Pool Total
===================================================================================================================================
</TABLE>
Beginning Loan Count:
Ending Loan Count:
Beginning Scheduled Balance of the Mortgage Loans:
Ending Scheduled Balance of the Mortgage Loans:
Weighted Average Remaining Term to Maturity
B-3
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
<TABLE>
<CAPTION>
======================================================================================================================
Distribution Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bankruptcy REO Modifications
---------------------------------------------------------------------------------------------------------
Date # Balance # Balance # Balance # Balance # Balance # Balance
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/15/98 0 0 0 0 0 0 0 0 0 0 0 0
0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000% 0.00% 0.000%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
=======================================================================================================================
</TABLE>
[RESTUBBED TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
===============================================
Distribution Prepayments Curr Weighted Avg.
----------------------------------
Date # Balance Coupon Remit
- -----------------------------------------------
<S> <C> <C> <C> <C>
04/15/98 0 0
0.00% 0.000%
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
- -----------------------------------------------
===============================================
</TABLE>
Note: Foreclosure and REO Totals are Included in the Appropriate Delinquency
Aging Category
B-4
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
DELINQUENT LOAN DETAIL
<TABLE>
<CAPTION>
===================================================================================================================================
Paid Outstanding Out. Property Special
Disclosure Doc Thru Current P&I P&I Protection Advance Servicer Foreclosure Bankruptcy REO
Control # Date Advance Advances** Advances Description (1) Transfer Date Date Date Date
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
A. P&I Advance - Loan in Grace Period
B. P&I Advance - Late Payment but < one month delinq
1. P&I Advance - Loan delinquent 1 month
2. P&I Advance - Loan delinquent 2 months
3. P&I Advance - Loan delinquent 3 months or More
4. Matured Balloon/Assumed Scheduled Payment
===================================================================================================================================
</TABLE>
** Outstanding P&I Advances include the current period P&I Advance
B-5
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
DISTRIBUTION OF PRINCIPAL BALANCES
- -------------------------------------------------------------------------------
(2) Current Scheduled Number (2) Scheduled Based on
Balances of Loans Balance Balance
===============================================================================
$0 to $500,000
$500,000 to $1,000,000
$1,000,000 to $1,500,000
$1,500,000 to $2,000,000
$2,000,000 to $2,500,000
$2,500,000 to $3,000,000
$3,000,000 to $3,500,000
$3,500,000 to $4,000,000
$4,000,000 to $5,000,000
$5,000,000 to $6,000,000
$6,000,000 to $7,000,000
$7,000,000 to $8,000,000
$8,000,000 to $9,000,000
$9,000,000 to $10,000,000
$10,000,000 to $11,000,000
$11,000,000 to $12,000,000
$12,000,000 to $13,000,000
$13,000,000 to $14,000,000
$14,000,000 to $15,000,000
$15,000,000 & Above
===============================================================================
Total 0 0 0.00%
- -------------------------------------------------------------------------------
Average Scheduled Balance is 0
Maximum Scheduled Balance is 0
Minimum Scheduled Balance is 0
DISTRIBUTION OF PROPERTY TYPES
- -----------------------------------------------------------------
Number (2) Scheduled Based on
Property Types of Loans Balance Balance
=================================================================
=================================================================
Total 0 0 0.00%
- -----------------------------------------------------------------
DISTRIBUTION OF MORTGAGE INTEREST RATES
- -----------------------------------------------------------------
Current Mortgage Number (2) Scheduled Based on
Interest Rate of Loans Balance Balance
=================================================================
7.000% or less
7.000% to 7.125%
7.125% to 7.375%
7.375% to 7.625%
7.625% to 7.875%
7.875% to 8.125%
8.125% to 8.375%
8.375% to 8.625%
8.625% to 8.875%
8.875% to 9.125%
9.125% to 9.375%
9.375% to 9.625%
9.625% to 9.875%
9.875% to 10.125%
10.125% & Above
=================================================================
Total 0 0 0.00%
- -----------------------------------------------------------------
W/Avg Mortgage Interest Rate is 0.0000%
Minimum Mortgage Interest Rate is 0.0000%
Maximum Mortgage Interest Rate is 0.0000%
GEOGRAPHIC DISTRIBUTION
- ----------------------------------------------------------------------
Number (2) Scheduled Based on
Geographic Location of Loans Balance Balance
======================================================================
======================================================================
Total 0 0 0.00%
- ----------------------------------------------------------------------
B-6
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
LOAN SEASONING
- -----------------------------------------------------------------------------
Number (2) Scheduled Based on
Number of Years of Loans Balance Balance
=============================================================================
=============================================================================
- -----------------------------------------------------------------------------
Weighted Average Seasoning is 0.0
DISTRIBUTION OF AMORTIZATION TYPE
- ------------------------------------------------------------------------------
Number (2) Scheduled Based on
Amortization Type of Loans Balance Balance
==============================================================================
==============================================================================
Total 0 0 0.00%
- ------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING TERM
FULLY AMORTIZING
- -----------------------------------------------------------------
Fully Amortizing Number (2) Scheduled Based on
Mortgage Loans of Loans Balance Balance
=================================================================
60 months or less
61 to 120 months
121 to 180 months
181 to 240 months
241 to 360 months
=================================================================
Total 0 0 0.00%
- -----------------------------------------------------------------
Weighted Average Months to Maturity is 0
DISTRIBUTION OF REMAINING TERM
BALLOON LOANS
- -----------------------------------------------------------------
Balloon Number (2) Scheduled Based on
Mortgage Loan of Loans Balance Balance
=================================================================
12 months or less
13 to 24 months
25 to 36 months
37 to 48 months
49 to 60 months
61 to 120 months
121 to 180 months
181 to 240 months
=================================================================
Total 0 0 0.00%
- -----------------------------------------------------------------
Weighted Average Months to Maturity is 0
DISTRIBUTION OF DSCR
- ----------------------------------------------------------------------
Debt Service Number (2) Scheduled Based on
Coverage Ratio(1) of Loans Balance Balance
======================================================================
0.500 or less
0.500 to 0.625
0.625 to 0.750
0.750 to 0.875
0.875 to 1.000
1.125 to 1.250
1.250 to 1.375
1.375 to 1.500
1.500 to 1.625
1.625 to 1.750
1.750 to 1.875
1.875 to 2.000
2.000 to 2.125
2.125 & above
Unknown
======================================================================
Total 0 0 0.00%
- ----------------------------------------------------------------------
Weighted Average Debt Service Coverage Ratio is 0.000
NOI AGING
- ----------------------------------------------------------------------
Number (2) Scheduled Based on
NOI Date of Loans Balance Balance
======================================================================
1 year or less
1 to 2 years
2 Years or More
Unknown
======================================================================
Total 0 0 0.00%
- ----------------------------------------------------------------------
(1) Debt Service Coverage Ratios are calculated as described in the
prospectus, values are updated periodically as new NOI figures became
available from borrowers on an asset level. Neither the Trustee, Servicer,
Special Servicer or Underwriter makes any representation as to the
accuracy of the data provided by the borrower for this calculation.
B-7
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
LOAN LEVEL DETAIL
<TABLE>
<CAPTION>
===================================================================================================================================
Appraisal Property Operating Ending Loan
Disclosure Reduction Type Maturity Statement Principal Note Scheduled Prepayment Status
Control # Amounts Code Date DSCR NOI Date Balance Rate P&I Prepayment Date Code (1)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
</TABLE>
* NOI and DSCR, if available and reportable under the terms of the trust
agreement, are based on information obtained from the related borrower,
and no other party to the agreement shall be held liable for the accuracy
or methodology used to determine such figures.
- -------------------------------------------------------------------------------
(1) Legend:
A. P&I Adv - in Grace Period
B. P&I Adv - < one month delinq
1. P&I Adv - delinquent 1 month
2. P&I Adv - delinquent 2 months
3. P&I Adv - delinquent 3+ months
4. Mat. Balloon/Assumed P&I
5. Prepaid in Full
6. Specially Serviced
7. Foreclosure
8. Bankruptcy
9. REO
10. DPO
11. Modification
===============================================================================
B-8
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
SPECIALLY SERVICED LOAN DETAIL
<TABLE>
<CAPTION>
===================================================================================================================================
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code (1) Comments
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
</TABLE>
(1) Legend:
1) Request for waiver of Prepayment Penalty
2) Payment default
3) Request for Loan Modification or Workout
4) Loan with Borrower Bankruptcy
5) Loan in Process of Foreclosure
6) Loan now REO Property
7) Loans Paid Off
8) Loans Returned to Master Servicer
===============================================================================
APPENDIX A
B-9
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
MODIFIED LOAN DETAIL
===============================================================================
Disclosure Modification Modification
Control # Date Description
- -------------------------------------------------------------------------------
===============================================================================
APPENDIX B
B-10
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
BANC ONE MORTGAGE CAPITAL MARKETS, LLC AS SERVICER AND SPECIAL SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
ABN AMRO ACCT: 99-9999-99-9
ABN AMRO Statement Date: 04/15/98
LaSalle National Bank Payment Date: 04/15/98
Prior Payment: NA
Administrator: Record Date: 03/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1625
Chicago, IL 60603
REALIZED LOSS DETAIL
<TABLE>
<CAPTION>
===================================================================================================================================
Beginning Gross Proceeds Aggregate Net Net Proceeds
Dist. Disclosure Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Date Control # Date Value Balance Proceeds Sched Principal Expenses * Proceeds Sched. Balance Loss
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT TOTAL 0.00 0.00 0.00 0.00 0.00
CUMULATIVE 0.00 0.00 0.00 0.00 0.00
===================================================================================================================================
</TABLE>
APPENDIX C
* Aggregate liquidation expenses also include outstanding P&I advances and
unpaid servicing fees, unpaid trustee fees, etc.
B-11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus
Supplement") will be offered from time to time in series. The Offered
Certificates of any series, together with any other mortgage pass-through
certificates of such series, are collectively referred to herein as the
"Certificates".
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series,
the "Trust Fund") to be formed by Deutsche Mortgage & Asset Receiving
Corporation (the "Depositor") and including a segregated pool (a "Mortgage
Asset Pool") of various types of multifamily and commercial mortgage loans
("Mortgage Loans"), mortgage-backed securities ("MBS") that evidence
interests in, or that are secured by pledges of, one or more of various types
of multifamily or commercial mortgage loans, or a combination of Mortgage
Loans and MBS (collectively, "Mortgage Assets"). The Mortgage Loans in (and
the mortgage loans underlying the MBS in) any Trust Fund will be secured by
first or junior liens on, or security interests in, one or more of the
following types of real property: (i) Multifamily Properties (as defined
herein) units and mobile home parks; and (ii) commercial properties
consisting of office buildings, Retail Properties (as defined herein), hotels
and motels, health care-related facilities, recreational vehicle parks,
warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial facilities, parking lots, restaurants, mixed use properties (that
is, any combination of the foregoing), and unimproved land. To the extent
described in the Prospectus Supplement, Retail Properties and Multifamily
Properties will represent security for a material concentration of the
Mortgage Loans in (or the mortgage loans underlying the MBS in) any Trust
Fund, based on principal balance at the time such Trust Fund is formed. If so
specified in the related Prospectus Supplement, the Trust Fund for a series
of Certificates may also include letters of credit, surety bonds, insurance
policies, guarantees, reserve funds, guaranteed investment contracts,
interest rate exchange agreements or interest rate cap or floor agreements
designed to reduce the effects of interest rate fluctuations on the Mortgage
Assets. See "Description of the Trust Funds", "Description of the
Certificates" and "Description of Credit Support".
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments)
on the Mortgage Assets in the related Trust Fund and the timing of receipt of
such payments as described herein and in the related Prospectus Supplement.
See "Yield and Maturity Considerations". A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates--Termination;
Retirement of the Certificates".
(cover continued on next page)
------------------
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, DEUTSCHE BANK AG OR
ANY OF THEIR AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE
ASSETS WILL BE GUARANTEED OR INSURED BY THE DEPOSITOR OR ANY OF ITS
AFFILIATES OR, UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS
SUPPLEMENT, BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 9
HEREIN UNDER THE CAPTION "RISK FACTORS" AND SUCH INFORMATION AS MAY BE SET
FORTH UNDER THE CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT
BEFORE PURCHASING ANY OFFERED CERTIFICATE.
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, as described
under "Method of Distribution" and in the related Prospectus Supplement.
There will be no secondary market for the Offered Certificates of any
series prior to the offering thereof. There can be no assurance that a
secondary market for any Offered Certificates will develop or, if it does
develop, that it will continue. Unless otherwise provided in the related
Prospectus Supplement, the Certificates will not be listed on any securities
exchange.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any series unless
accompanied by the Prospectus Supplement for such series.
--------------------
The date of this Prospectus is March 16, 1998
<PAGE>
(cover continued)
As described in the related Prospectus Supplement, the Certificates of
each series, including the Offered Certificates of such series, may consist
of one or more classes of Certificates that: (i) provide for the accrual of
interest thereon based on a fixed, variable or adjustable interest rate; (ii)
are senior or subordinate to one or more other classes of Certificates in
entitlement to certain distributions on the Certificates; (iii) are entitled
to distributions of principal, with disproportionate, nominal or no
distributions of interest; (iv) are entitled to distributions of interest,
with disproportionate, nominal or no distributions of principal; (v) provide
for distributions of interest thereon or principal thereof that commence only
following the occurrence of certain events, such as the retirement of one or
more other classes of Certificates of such series; (vi) provide for
distributions of principal thereof to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some cases, substantially slower)
than the rate at which payments or other collections of principal are
received on the Mortgage Assets in the related Trust Fund; or (vii) provide
for distributions of principal thereof to be made, subject to available
funds, based on a specified principal payment schedule or other methodology.
Distributions in respect of the Certificates of each series will be made on a
monthly, quarterly, semi-annual, annual or other periodic basis as specified
in the related Prospectus Supplement. See "Description of the Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof
as a "real estate mortgage investment conduit" (each, a "REMIC") for federal
income tax purposes. If applicable, the Prospectus Supplement for a series of
Certificates will specify which class or classes of such series of
Certificates will be considered to be regular interests in the related REMIC
and which class of Certificates or other interests will be designated as the
residual interest in the related REMIC. See "Certain Federal Income Tax
Consequences".
An Index of Principal Definitions is included at the end of this
Prospectus specifying the location of definitions of important or frequently
used defined terms.
ii
<PAGE>
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to each series of Offered Certificates will, among other things, set forth,
as and to the extent appropriate: (i) a description of the class or classes
of such Offered Certificates, including the payment provisions with respect
to each such class, the aggregate principal amount, if any, of each such
class, the rate at which interest accrues from time to time, if at all, with
respect to each such class or the method of determining such rate, and
whether interest with respect to each such class will accrue from time to
time on its aggregate principal amount, if any, or on a specified notional
amount, if at all; (ii) information with respect to any other classes of
Certificates of the same series; (iii) the respective dates on which
distributions are to be made; (iv) information as to the assets, including
the Mortgage Assets, constituting the related Trust Fund (all such assets,
with respect to the Certificates of any series, the "Trust Assets"); (v) the
circumstances, if any, under which the related Trust Fund may be subject to
early termination; (vi) additional information with respect to the method of
distribution of such Offered Certificates; (vii) whether one or more REMIC
elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created and the identity of the
person (the "REMIC Administrator") responsible for the various tax-related
duties in respect of each REMIC to be created; (viii) the initial percentage
ownership interest in the related Trust Fund to be evidenced by each class of
Certificates of such series; (ix) information concerning the Trustee (as
defined herein) of the related Trust Fund; (x) if the related Trust Fund
includes Mortgage Loans, information concerning the Master Servicer and any
Special Servicer (each as defined herein) of such Mortgage Loans and the
circumstances under which all or a portion, as specified, of the servicing of
a Mortgage Loan would transfer from the Master Servicer to the Special
Servicer; (xi) information as to the nature and extent of subordination of
any class of Certificates of such series, including a class of Offered
Certificates; and (xii) whether such Offered Certificates will be initially
issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a
part) under the Securities Act of 1933, as amended, with respect to the
Offered Certificates. This Prospectus and the Prospectus Supplement relating
to each series of Offered Certificates contain summaries of the material
terms of the documents referred to herein and therein, but do not contain all
of the information set forth in the Registration Statement pursuant to the
rules and regulations of the Commission. For further information, reference
is made to such Registration Statement and the exhibits thereto. Such
Registration Statement and exhibits can be inspected and copied at prescribed
rates at the public reference facilities maintained by the Commission at its
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at its Regional Offices located as follows: Chicago Regional Office, 500 West
Madison, 14th Floor, Chicago, Illinois 60661; New York Regional Office, Seven
World Trade Center, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates and
electronically through the Commission's Electronic Data Gathering, Analysis
and Retrieval system at the Commission's Web site (http:// www.sec.gov).
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in
this Prospectus or any related Prospectus Supplement, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Depositor or any other person. Neither the delivery of this
Prospectus or any related Prospectus Supplement nor any sale made hereunder
or thereunder shall under any circumstances create an implication that there
has been no change in the information herein since the date hereof or therein
since the date thereof. This Prospectus and any related Prospectus Supplement
are not an offer to sell or a solicitation of an offer to buy any security in
any jurisdiction in which it is unlawful to make such offer or solicitation.
iii
<PAGE>
The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a class or series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository
Trust Company ("DTC") as described herein, then unless otherwise provided in
the related Prospectus Supplement, such reports will be sent on behalf of the
related Trust Fund to a nominee of DTC as the registered holder of the
Offered Certificates. Conveyance of notices and other communications by DTC
to its participating organizations, and directly or indirectly through such
participating organizations to the beneficial owners of the applicable
Offered Certificates, will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to
time. See "Description of the Certificates--Reports to Certificateholders"
and "--Book-Entry Registration and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder. The Depositor intends to
make a written request to the staff of the Commission that the staff either
(i) issue an order pursuant to Section 12(h) of the Exchange Act exempting
the Depositor from certain reporting requirements under the Exchange Act with
respect to each Trust Fund or (ii) state that the staff will not recommend
that the Commission take enforcement action if the Depositor fulfills its
reporting obligations as described in its written request. If such request is
granted, the Depositor will file or cause to be filed with the Commission as
to each Trust Fund the periodic unaudited reports to holders of the Offered
Certificates referenced in the preceding paragraph; however, because of the
nature of the Trust Funds, it is unlikely that any significant additional
information will be filed. In addition, because of the limited number of
Certificateholders expected for each series, the Depositor anticipates that a
significant portion of such reporting requirements will be permanently
suspended following the first fiscal year for the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended,
prior to the termination of an offering of Offered Certificates evidencing
interests therein. The Depositor will provide or cause to be provided without
charge to each person to whom this Prospectus is delivered in connection with
the offering of one or more classes of Offered Certificates, upon written or
oral request of such person, a copy of any or all documents or reports
incorporated herein by reference, in each case to the extent such documents
or reports relate to one or more of such classes of such Offered
Certificates, other than the exhibits to such documents (unless such exhibits
are specifically incorporated by reference in such documents). Such requests
to the Depositor should be directed in writing to the Depositor at One
International Place, Room 520, Boston, Massachusetts 02110, Attention:
Secretary, or by telephone at (617) 951-7690.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PROSPECTUS SUPPLEMENT................................................................ iii
AVAILABLE INFORMATION................................................................ iii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................... iv
SUMMARY OF PROSPECTUS................................................................ 1
RISK FACTORS......................................................................... 9
Limited Liquidity of Offered Certificates........................................... 9
Limited Assets...................................................................... 10
Credit Support Limitations.......................................................... 10
Effect of Prepayments on Average Life of Certificates............................... 11
Effect of Prepayments on Yield of Certificates ..................................... 12
Limited Nature of Ratings........................................................... 12
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans .. 13
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset Pool .. 16
Termination......................................................................... 16
Risks Associated With Multifamily Properties........................................ 17
Risks Associated With Retail Properties............................................. 17
DESCRIPTION OF THE TRUST FUNDS....................................................... 17
General............................................................................. 17
Mortgage Loans...................................................................... 18
MBS................................................................................. 24
Certificate Accounts................................................................ 25
Credit Support...................................................................... 25
Cash Flow Agreements................................................................ 25
YIELD AND MATURITY CONSIDERATIONS.................................................... 25
General............................................................................. 25
Pass-Through Rate................................................................... 26
Payment Delays...................................................................... 26
Certain Shortfalls in Collections of Interest....................................... 26
Yield and Prepayment Considerations................................................. 26
Weighted Average Life and Maturity.................................................. 28
Other Factors Affecting Yield, Weighted Average Life and Maturity................... 29
THE DEPOSITOR........................................................................ 31
DEUTSCHE BANK AG..................................................................... 31
v
<PAGE>
PAGE
--------
DESCRIPTION OF THE CERTIFICATES...................................................... 31
General............................................................................. 31
Distributions....................................................................... 32
Distributions of Interest on the Certificates....................................... 33
Distributions of Principal of the Certificates...................................... 34
Distributions on the Certificates in Respect of Prepayment Premiums or in
Respect of Equity Participations................................................... 34
Allocation of Losses and Shortfalls................................................. 35
Advances in Respect of Delinquencies................................................ 35
Reports to Certificateholders....................................................... 36
Voting Rights....................................................................... 37
Termination......................................................................... 37
Book-Entry Registration and Definitive Certificates................................. 38
DESCRIPTION OF THE POOLING AGREEMENTS................................................ 40
General............................................................................. 40
Assignment of Mortgage Loans; Repurchases........................................... 40
Representations and Warranties; Repurchases......................................... 42
Collection and Other Servicing Procedures........................................... 43
Sub-Servicers....................................................................... 45
Certificate Account................................................................. 45
Modifications, Waivers and Amendments of Mortgage Loans............................. 48
Realization Upon Defaulted Mortgage Loans........................................... 48
Hazard Insurance Policies........................................................... 50
Due-on-Sale and Due-on-Encumbrance Provisions....................................... 50
Servicing Compensation and Payment of Expenses...................................... 51
Evidence as to Compliance........................................................... 51
Certain Matters Regarding the Master Servicer, the Special Servicer,
the REMIC Administrator and the Depositor.......................................... 52
Events of Default................................................................... 53
Rights Upon Event of Default........................................................ 54
Amendment........................................................................... 55
List of Certificateholders.......................................................... 56
The Trustee......................................................................... 56
Duties of the Trustee............................................................... 56
Certain Matters Regarding the Trustee............................................... 56
Resignation and Removal of the Trustee.............................................. 57
vi
<PAGE>
PAGE
--------
DESCRIPTION OF CREDIT SUPPORT........................................................ 58
General............................................................................. 58
Subordinate Certificates............................................................ 58
Insurance or Guarantees with Respect to Mortgage Loans.............................. 58
Letter of Credit.................................................................... 59
Certificate Insurance and Surety Bonds.............................................. 59
Reserve Funds....................................................................... 59
Credit Support with respect to MBS.................................................. 60
Interest Rate Exchange, Cap and Floor Agreements.................................... 60
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS.............................................. 60
General............................................................................. 60
Types of Mortgage Instruments....................................................... 61
Leases and Rents.................................................................... 61
Personalty.......................................................................... 61
Foreclosure......................................................................... 62
Bankruptcy Laws..................................................................... 65
Environmental Considerations........................................................ 66
Due-on-Sale and Due-on-Encumbrance Provisions....................................... 68
Junior Liens; Rights of Holders of Senior Liens..................................... 68
Subordinate Financing............................................................... 68
Default Interest and Limitations on Prepayments..................................... 69
Applicability of Usury Laws......................................................... 69
Certain Laws and Regulations........................................................ 69
Americans with Disabilities Act..................................................... 69
Soldiers' and Sailors' Civil Relief Act of 1940..................................... 70
Forfeitures in Drug and RICO Proceedings............................................ 70
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.............................................. 71
Federal Income Tax Consequences for REMIC Certificates.............................. 71
Taxation of Regular Certificates.................................................... 74
Taxation of Residual Certificates................................................... 81
Taxes That May Be Imposed on the REMIC Pool......................................... 88
Liquidation of the REMIC Pool....................................................... 89
Administrative Matters.............................................................. 89
Limitations on Deduction of Certain Expenses........................................ 90
Taxation of Certain Foreign Investors............................................... 90
vii
<PAGE>
PAGE
--------
Backup Withholding.................................................................. 91
Reporting Requirements.............................................................. 92
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC ELECTION IS
MADE................................................................................ 92
Standard Certificates............................................................... 92
Stripped Certificates............................................................... 95
Reporting Requirements and Backup Withholding....................................... 98
Taxation of Certain Foreign Investors............................................... 99
STATE AND OTHER TAX CONSEQUENCES..................................................... 100
CERTAIN ERISA CONSIDERATIONS......................................................... 100
General............................................................................. 100
Plan Asset Regulations.............................................................. 100
Prohibited Transaction Exemptions................................................... 102
Tax Exempt Investors................................................................ 104
LEGAL INVESTMENT..................................................................... 104
USE OF PROCEEDS...................................................................... 106
METHOD OF DISTRIBUTION............................................................... 106
LEGAL MATTERS........................................................................ 108
FINANCIAL INFORMATION................................................................ 108
RATING............................................................................... 108
INDEX OF PRINCIPAL DEFINITIONS....................................................... 109
</TABLE>
viii
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each
series of Certificates contained in the Prospectus Supplement to be prepared
and delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
SECURITIES OFFERED ............ Mortgage pass-through certificates.
DEPOSITOR ..................... Deutsche Mortgage & Asset Receiving
Corporation, a Delaware corporation. See
"The Depositor".
TRUSTEE ....................... The trustee (the "Trustee") for each series
of Certificates will be named in the related
Prospectus Supplement. See "Description of
the Pooling Agreements--The Trustee".
MASTER SERVICER ............... If a Trust Fund includes Mortgage Loans,
then the master servicer (the "Master
Servicer") for the corresponding series of
Certificates will be named in the related
Prospectus Supplement. See "Description of
the Pooling Agreements--Certain Matters
Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the
Depositor".
SPECIAL SERVICER .............. If a Trust Fund includes Mortgage Loans,
then the special servicer (the "Special
Servicer") for the corresponding series of
Certificates will be named, or the
circumstances under which a Special Servicer
may be appointed will be described, in the
related Prospectus Supplement. See
"Description of the Pooling
Agreements--Collection and Other Servicing
Procedures".
MBS ADMINISTRATOR ............. If a Trust Fund includes MBS, then the
entity responsible for administering such
MBS (the "MBS Administrator") will be named
in the related Prospectus Supplement. If an
entity other than the Trustee and the Master
Servicer is the MBS Administrator, such
entity will be herein referred to as the
"Manager".
REMIC ADMINISTRATOR ........... The person (the "REMIC Administrator")
responsible for the various tax-related
administration duties for a series of
Certificates as to which one or more REMIC
elections have been made, will be named in
the related Prospectus Supplement. See
"Description of the Pooling
Agreements--Certain Matters Regarding the
Master Servicer, the Special Servicer, the
REMIC Administrator and the Depositor".
THE MORTGAGE ASSETS ........... The Mortgage Assets will be the primary
assets of any Trust Fund. The Mortgage
Assets with respect to each series of
Certificates will, in general, consist of a
pool of mortgage loans ("Mortgage Loans")
secured by first or
1
<PAGE>
junior liens on, or security interests in,
one or more of the following types of real
property: (i) residential properties (each,
a "Multifamily Property") consisting of five
or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or
garden apartment buildings or other
residential structures, and mobile home
parks; and (ii) commercial properties
("Commercial Properties") consisting of
office buildings, retail shopping
facilities, such as shopping centers, malls
and individual stores (each, a "Retail
Property"), hotels and motels, health
care-related facilities (such as hospitals,
skilled nursing facilities, nursing homes,
congregate care facilities and senior
housing), recreational vehicle parks,
warehouse facilities, mini-warehouse
facilities, self-storage facilities,
industrial facilities, parking lots,
restaurants, mixed use properties (that is,
any combination of the foregoing), and
unimproved land. To the extent described in
the Prospectus Supplement, Retail Properties
and Multifamily Properties will represent
security for a material concentration of the
Mortgage Loans in any Trust Fund, based on
principal balance at the time such Trust
Fund is formed. The Mortgage Loans will not
be guaranteed or insured by the Depositor or
any of its affiliates or, unless otherwise
provided in the related Prospectus
Supplement, by any governmental agency or
instrumentality or by any other person. If
so specified in the related Prospectus
Supplement, some Mortgage Loans may be
delinquent or nonperforming as of the date
the related Trust Fund is formed.
As and to the extent described in the
related Prospectus Supplement, a Mortgage
Loan (i) may provide for no accrual of
interest or for accrual of interest thereon
at an interest rate (a "Mortgage Rate") that
is fixed over its term or that adjusts from
time to time, or that may be converted at
the borrower's election from an adjustable
to a fixed Mortgage Rate, or from a fixed to
an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or
for payments that adjust from time to time
to accommodate changes in the Mortgage Rate
or to reflect the occurrence of certain
events, and may permit negative
amortization, (iii) may be fully amortizing
or may be partially amortizing or
nonamortizing, with a balloon payment due on
its stated maturity date, (iv) may prohibit
over its term or for a certain period
prepayments and/or require payment of a
premium or a yield maintenance payment in
connection with certain prepayments and (v)
may provide for payments of principal,
interest or both, on due dates that occur
monthly, quarterly, semi-annually or at such
other interval as is specified in the
related Prospectus Supplement. Each Mortgage
Loan will have had an original term to
maturity of not more than 40 years. No
Mortgage Loan will have been
2
<PAGE>
originated by the Depositor. See
"Description of the Trust Funds--Mortgage
Loans".
If any Mortgage Loan, or group of related
Mortgage Loans, constitutes a concentration
of credit risk, financial statements or
other financial information with respect to
the related Mortgaged Property or Mortgaged
Properties will be included in the related
Prospectus Supplement. See "Description of
the Trust Funds--Mortgage Loans--Mortgage
Loan Information in Prospectus Supplements".
If and to the extent specified in the
related Prospectus Supplement, the Mortgage
Assets with respect to a series of
Certificates may also include, or consist
of, mortgage participations, mortgage
pass-through certificates and/or other
mortgage-backed securities (collectively,
"MBS"), that evidence an interest in, or are
secured by a pledge of, one or more mortgage
loans that conform to the descriptions of
the Mortgage Loans contained herein and
which may or may not be issued, insured or
guaranteed by the United States or an agency
or instrumentality thereof. See "Description
of the Trust Funds--MBS".
THE CERTIFICATES .............. Each series of Certificates will be issued
in one or more classes pursuant to a pooling
and servicing agreement or other agreement
specified in the related Prospectus
Supplement (in any case, a "Pooling
Agreement") and will represent in the
aggregate the entire beneficial ownership
interest in the related Trust Fund.
As described in the related Prospectus
Supplement, the Certificates of each series,
including the Offered Certificates of such
series, may consist of one or more classes
of Certificates that, among other things:
(i) are senior (collectively, "Senior
Certificates") or subordinate (collectively,
"Subordinate Certificates") to one or more
other classes of Certificates in entitlement
to certain distributions on the
Certificates; (ii) are entitled to
distributions of principal, with
disproportionate, nominal or no
distributions of interest (collectively,
"Stripped Principal Certificates"); (iii)
are entitled to distributions of interest,
with disproportionate, nominal or no
distributions of principal (collectively,
"Stripped Interest Certificates"); (iv)
provide for distributions of interest
thereon or principal thereof that commence
only after the occurrence of certain events,
such as the retirement of one or more other
classes of Certificates of such series; (v)
provide for distributions of principal
thereof to be made, from time to time or for
designated periods, at a rate that is faster
(and, in some cases, substantially faster)
or slower (and, in some cases, substantially
slower) than the rate at which payments or
other collections of principal are received
on the Mortgage Assets in the related Trust
Fund; (vi) provide for distribu-
3
<PAGE>
tions of principal thereof to be made,
subject to available funds, based on a
specified principal payment schedule or
other methodology; or (vii) provide for
distribution based on collections on the
Mortgage Assets in the related Trust Fund
attributable to prepayment premiums, yield
maintenance payments or equity
participations.
If so specified in the related Prospectus
Supplement, a series of Certificates may
include one or more "Controlled Amortization
Classes", which will entitle the holders
thereof to receive principal distributions
according to a specified principal payment
schedule. Although prepayment risk cannot be
eliminated entirely for any class of
Certificates, a Controlled Amortization
Class will generally provide a relatively
stable cash flow so long as the actual rate
of prepayment on the Mortgage Loans in the
related Trust Fund remains relatively
constant at the rate, or within the range of
rates, of prepayment used to establish the
specific principal payment schedule for such
Certificates. Prepayment risk with respect
to a given Mortgage Asset Pool does not
disappear, however, and the stability
afforded to a Controlled Amortization Class
comes at the expense of one or more other
classes of the same series, any of which
other classes may also be a class of Offered
Certificates. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates"
and "--Effect of Prepayments on Yield of
Certificates".
Each class of Certificates, other than
certain classes of Stripped Interest
Certificates and certain classes of REMIC
Residual Certificates (as defined herein),
will have an initial stated principal amount
(a "Certificate Balance"); and each class of
Certificates, other than certain classes of
Stripped Principal Certificates and certain
classes of REMIC Residual Certificates, will
accrue interest on its Certificate Balance
or, in the case of certain classes of
Stripped Interest Certificates, on a
notional amount (a "Notional Amount"), based
on a fixed, variable or adjustable interest
rate (a "Pass-Through Rate"). The related
Prospectus Supplement will specify the
Certificate Balance, Notional Amount and/or
Pass-Through Rate (or, in the case of a
variable or adjustable Pass-Through Rate,
the method for determining such rate), as
applicable, for each class of Offered
Certificates.
If so specified in the related Prospectus
Supplement, a class of Certificates may have
two or more component parts, each having
characteristics that are otherwise described
herein as being attributable to separate and
distinct classes.
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates, by any governmental agency or
instrumentality or by any other person or
entity, unless otherwise provided in the
related Prospectus Supplement. See "Risk
Factors--Limited Assets".
4
<PAGE>
DISTRIBUTIONS OF INTEREST ON
THE CERTIFICATES ............. Interest on each class of Offered
Certificates (other than certain classes of
Stripped Principal Certificates and certain
classes of REMIC Residual Certificates) of
each series will accrue at the applicable
Pass-Through Rate on the Certificate Balance
or, in the case of certain classes of
Stripped Interest Certificates, the Notional
Amount thereof outstanding from time to time
and will be distributed to
Certificateholders as provided in the
related Prospectus Supplement (each of the
specified dates on which distributions are
to be made, a "Distribution Date").
Distributions of interest with respect to
one or more classes of Certificates
(collectively, "Accrual Certificates") may
not commence until the occurrence of certain
events, such as the retirement of one or
more other classes of Certificates, and
interest accrued with respect to a class of
Accrual Certificates prior to the occurrence
of such an event will either be added to the
Certificate Balance thereof or otherwise
deferred as described in the related
Prospectus Supplement. Distributions of
interest with respect to one or more classes
of Certificates may be reduced to the extent
of certain delinquencies, losses and other
contingencies described herein and in the
related Prospectus Supplement. See "Risk
Factors--Effect of Prepayments on Average
Life of Certificates" and "--Effect of
Prepayments on Yield of Certificates",
"Yield and Maturity Considerations--Certain
Shortfalls in Collections of Interest" and
"Description of the
Certificates--Distributions of Interest on
the Certificates".
DISTRIBUTIONS OF PRINCIPAL OF
THE CERTIFICATES ............. Each class of Certificates of each series
(other than certain classes of Stripped
Interest Certificates and certain classes of
REMIC Residual Certificates) will have a
Certificate Balance. The Certificate Balance
of a class of Certificates outstanding from
time to time will represent the maximum
amount that the holders thereof are then
entitled to receive in respect of principal
from future cash flow on the assets in the
related Trust Fund. The initial aggregate
Certificate Balance of all classes of a
series of Certificates will not be greater
than the outstanding principal balance of
the related Mortgage Assets as of a
specified date (the "Cut-off Date"), after
application of scheduled payments due on or
before such date, whether or not received.
As and to the extent described in each
Prospectus Supplement, distributions of
principal with respect to the related series
of Certificates will be made on each
Distribution Date to the holders of the
class or classes of Certificates of such
series then entitled thereto until the
Certificate Balances of such Certificates
have been reduced to zero. Distributions of
principal with respect to one or more
classes of Certificates: (i) may be made at
a rate that is faster (and, in some cases,
substantially faster) or slower (and, in
some cases,
5
<PAGE>
substantially slower) than the rate at which
payments or other collections of principal
are received on the Mortgage Assets in the
related Trust Fund; (ii) may not commence
until the occurrence of certain events, such
as the retirement of one or more other
classes of Certificates of the same series;
(iii) may be made, subject to certain
limitations, based on a specified principal
payment schedule; or (iv) may be contingent
on the specified principal payment schedule
for another class of the same series and the
rate at which payments and other collections
of principal on the Mortgage Assets in the
related Trust Fund are received. Unless
otherwise specified in the related
Prospectus Supplement, distributions of
principal of any class of Offered
Certificates will be made on a pro rata
basis among all of the Certificates of such
class. See "Description of the
Certificates--Distributions of Principal of
the Certificates".
CREDIT SUPPORT AND
CASH FLOW AGREEMENTS ......... If so provided in the related Prospectus
Supplement, partial or full protection
against certain defaults and losses on the
Mortgage Assets in the related Trust Fund
may be provided to one or more classes of
Certificates of the related series in the
form of subordination of one or more other
classes of Certificates of such series,
which other classes may include one or more
classes of Offered Certificates, or by one
or more other types of credit support, which
may include a letter of credit, a surety
bond, an insurance policy, a guarantee, a
reserve fund, or a combination thereof (any
such coverage with respect to the
Certificates of any series, "Credit
Support"). If so provided in the related
Prospectus Supplement, a Trust Fund may
include: (i) guaranteed investment contracts
pursuant to which moneys held in the funds
and accounts established for the related
series will be invested at a specified rate;
or (ii) interest rate exchange agreements,
interest rate cap or floor agreements, or
other agreements designed to reduce the
effects of interest rate fluctuations on the
Mortgage Assets or on one or more classes of
Certificates (any such agreement, in the
case of clause (i) or (ii), a "Cash Flow
Agreement"). Certain relevant information
regarding any applicable Credit Support or
Cash Flow Agreement will be set forth in the
Prospectus Supplement for a series of
Offered Certificates. See "Risk
Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit
Support" and "--Cash Flow Agreements" and
"Description of Credit Support".
ADVANCES ...................... If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund
includes Mortgage Loans, the Master
Servicer, the Special Servicer, the Trustee,
any provider of Credit Support and/or any
other specified person may be obligated to
make, or have the option of
6
<PAGE>
making, certain advances with respect to
delinquent scheduled payments of principal
and/or interest on such Mortgage Loans. Any
such advances made with respect to a
particular Mortgage Loan will be
reimbursable from subsequent recoveries in
respect of such Mortgage Loan and otherwise
to the extent described herein and in the
related Prospectus Supplement. See
"Description of the Certificates--Advances
in Respect of Delinquencies". If and to the
extent provided in the Prospectus Supplement
for a series of Certificates, any entity
making such advances may be entitled to
receive interest thereon for a specified
period during which certain or all of such
advances are outstanding, payable from
amounts in the related Trust Fund. See
"Description of the Certificates--Advances
in Respect of Delinquencies". If a Trust
Fund includes MBS, any comparable advancing
obligation of a party to the related Pooling
Agreement, or of a party to the related MBS
Agreement, will be described in the related
Prospectus Supplement.
OPTIONAL TERMINATION .......... If so specified in the related Prospectus
Supplement, a series of Certificates may be
subject to optional early termination
through the repurchase of the Mortgage
Assets in the related Trust Fund by the
party or parties specified therein, under
the circumstances and in the manner set
forth therein. If so provided in the related
Prospectus Supplement, upon the reduction of
the Certificate Balance of a specified class
or classes of Certificates by a specified
percentage or amount or upon a specified
date, a party specified therein may be
authorized or required to solicit bids for
the purchase of all of the Mortgage Assets
of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets
to retire such class or classes, under the
circumstances and in the manner set forth
therein. See "Description of the
Certificates--Termination".
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES ................. The Certificates of each series will
constitute or evidence ownership of either
(i) "regular interests" ("REMIC Regular
Certificates") and "residual interests"
("REMIC Residual Certificates") in a Trust
Fund, or a designated portion thereof,
treated as a REMIC under Sections 860A
through 860G of the Internal Revenue Code of
1986 (the "Code"), or (ii) interests
("Grantor Trust Certificates") in a Trust
Fund treated as a grantor trust (or a
partnership) under applicable provisions of
the Code.
Investors are advised to consult their tax
advisors concerning the specific tax
consequences to them of the purchase,
ownership and disposition of the Offered
Certificates and to review "Certain Federal
Income Tax Consequences" herein and in the
related Prospectus Supplement.
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<PAGE>
ERISA CONSIDERATIONS .......... Fiduciaries of employee benefit plans and
certain other retirement plans and
arrangements, including individual
retirement accounts, annuities, Keogh plans,
and collective investment funds and separate
accounts in which such plans, accounts,
annuities or arrangements are invested, that
are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code,
should review with their legal advisors
whether the purchase or holding of Offered
Certificates could give rise to a
transaction that is prohibited or is not
otherwise permissible either under ERISA or
Section 4975 of the Code. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
LEGAL INVESTMENT .............. The Offered Certificates will constitute
"mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA"), only if
so specified in the related Prospectus
Supplement. Investors whose investment
authority is subject to legal restrictions
should consult their legal advisors to
determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the related Prospectus
Supplement.
RATING ........................ At their respective dates of issuance, each
class of Offered Certificates will be rated
not lower than investment grade by one or
more nationally recognized statistical
rating agencies (each, a "Rating Agency").
See "Rating" herein and in the related
Prospectus Supplement.
8
<PAGE>
RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly
pertain to and be influenced by the characteristics or behavior of the
mortgage loans underlying any MBS included in such Trust Fund.
LIMITED LIQUIDITY OF OFFERED CERTIFICATES
General. The Offered Certificates of any series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time.
Furthermore, except to the extent described herein and in the related
Prospectus Supplement, Certificateholders will have no redemption rights, and
the Offered Certificates of each series are subject to early retirement only
under certain specified circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates--Termination".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Certificates of any series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for any series of Offered Certificates may indicate
that an underwriter specified therein intends to establish a secondary market
in such Offered Certificates; however, no underwriter will be obligated to do
so. Any such secondary market may provide less liquidity to investors than
any comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus
Supplement, the Certificates will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Certificates of any series, including
information regarding the status of the related Mortgage Assets and any
Credit Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling Agreement
as described herein under the heading "Description of the Certificates--
Reports to Certificateholders". There can be no assurance that any additional
ongoing information regarding the Offered Certificates of any series will
be available through any other source. The limited nature of such information
in respect of a series of Offered Certificates may adversely affect the
liquidity thereof, even if a secondary market for such Certificates does
develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to any series of Offered
Certificates or class thereof, the market value of such Certificates will be
affected by several factors, including the perceived liquidity thereof, the
anticipated cash flow thereon (which may vary widely depending upon the
prepayment and default assumptions applied in respect of the underlying
Mortgage Loans) and prevailing interest rates. The price payable at any given
time in respect of certain classes of Offered Certificates (in particular, a
class with a relatively long average life, a Companion Class (as defined
herein) or a class of Stripped Interest Certificates or Stripped Principal
Certificates) may be extremely sensitive to small fluctuations in prevailing
interest rates; and the relative change in price for an Offered Certificate
in response to an upward or downward movement in prevailing interest rates
may not necessarily equal the relative change in price for such Offered
Certificate in response to an equal but opposite movement in such rates.
Accordingly, the sale of Offered Certificates by a holder in any secondary
market that may develop may be at a discount from the price paid by such
holder. The Depositor is not aware of any source through which price
information about the Offered Certificates will be generally available on an
ongoing basis.
9
<PAGE>
LIMITED ASSETS
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other
person or entity; and no Offered Certificate of any series will represent a
claim against or security interest in the Trust Funds for any other series.
Accordingly, if the related Trust Fund has insufficient assets to make
payments on a series of Offered Certificates, no other assets will be
available for payment of the deficiency, and the holders of one or more
classes of such Offered Certificates will be required to bear the consequent
loss. Furthermore, certain amounts on deposit from time to time in certain
funds or accounts constituting part of a Trust Fund, including the
Certificate Account and any accounts maintained as Credit Support, may be
withdrawn under certain conditions, if and to the extent described in the
related Prospectus Supplement, for purposes other than the payment of
principal of or interest on the related series of Certificates. If and to the
extent so provided in the Prospectus Supplement for a series of Certificates
consisting of one or more classes of Subordinate Certificates, on any
Distribution Date in respect of which losses or shortfalls in collections on
the Mortgage Assets have been incurred, all or a portion of the amount of
such losses or shortfalls will be borne first by one or more classes of the
Subordinate Certificates, and, thereafter, by the remaining classes of
Certificates in the priority and manner and subject to the limitations
specified in such Prospectus Supplement.
CREDIT SUPPORT LIMITATIONS
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for a series of Certificates will describe any Credit Support provided with
respect thereto. Use of Credit Support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement.
Moreover, such Credit Support may not cover all potential losses; for
example, Credit Support may or may not cover loss by reason of fraud or
negligence by a mortgage loan originator or other parties. Any such losses
not covered by Credit Support may, at least in part, be allocated to one or
more classes of Offered Certificates.
Disproportionate Benefits to Certain Classes and Series. A series of
Certificates may include one or more classes of Subordinate Certificates
(which may include Offered Certificates), if so provided in the related
Prospectus Supplement. Although subordination is intended to reduce the
likelihood of temporary shortfalls and ultimate losses to holders of Senior
Certificates, the amount of subordination will be limited and may decline
under certain circumstances. In addition, if principal payments on one or
more classes of Offered Certificates of a series are made in a specified
order of priority, any related Credit Support may be exhausted before the
principal of the later paid classes of Offered Certificates of such series
has been repaid in full. As a result, the impact of losses and shortfalls
experienced with respect to the Mortgage Assets may fall primarily upon those
classes of Offered Certificates having a later right of payment. Moreover, if
a form of Credit Support covers the Offered Certificates of more than one
series and losses on the related Mortgage Assets exceed the amount of such
Credit Support, it is possible that the holders of Offered Certificates of
one (or more) such series will be disproportionately benefited by such Credit
Support to the detriment of the holders of Offered Certificates of one (or
more) other such series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable Credit Support supporting one or more classes of Offered
Certificates, including the subordination of one or more other classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level
of defaults, delinquencies and losses on the underlying Mortgage Assets and
certain other factors. There can, however, be no assurance that the loss
experience on the related Mortgage Assets will not exceed such assumed
levels. See "Description of the Certificates--Allocation of Losses and
Shortfalls" and "Description of Credit Support". If the losses on the related
Mortgage Assets do exceed such assumed levels, the holders of one or more
classes of Offered Certificates will be required to bear such additional
losses.
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<PAGE>
EFFECT OF PREPAYMENTS ON AVERAGE LIFE OF CERTIFICATES
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the
Offered Certificates of the related series may be highly unpredictable.
Prepayments on the Mortgage Loans in any Trust Fund will result in a faster
rate of principal payments on one or more classes of the related series of
Certificates than if payments on such Mortgage Loans were made as scheduled.
Thus, the prepayment experience on the Mortgage Loans in a Trust Fund may
affect the average life of one or more classes of Certificates of the related
series, including a class of Offered Certificates. The rate of principal
payments on pools of mortgage loans varies among pools and from time to time
is influenced by a variety of economic, demographic, geographic, social, tax
and legal factors. For example, if prevailing interest rates fall
significantly below the Mortgage Rates borne by the Mortgage Loans included
in a Trust Fund, then, subject to the particular terms of the Mortgage Loans
(e.g., provisions that prohibit voluntary prepayments during specified
periods or impose penalties in connection therewith) and the ability of
borrowers to obtain new financing, principal prepayments on such Mortgage
Loans are likely to be higher than if prevailing interest rates remain at or
above the rates borne by those Mortgage Loans. Conversely, if prevailing
interest rates rise significantly above the Mortgage Rates borne by the
Mortgage Loans included in a Trust Fund, then principal prepayments on such
Mortgage Loans are likely to be lower than if prevailing interest rates
remain at or below the mortgage rates borne by those Mortgage Loans. There
can be no assurance as to the actual rate of prepayment on the Mortgage Loans
in any Trust Fund or that such rate of prepayment will conform to any model
described herein or in any Prospectus Supplement. As a result, depending on
the anticipated rate of prepayment for the Mortgage Loans in any Trust Fund,
the retirement of any class of Certificates of the related series could occur
significantly earlier or later, and the average life thereof could be
significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the
related series will depend on the terms and provisions of such Certificates.
A class of Certificates, including a class of Offered Certificates, may
provide that on any Distribution Date the holders of such Certificates are
entitled to a pro rata share of the prepayments on the Mortgage Loans in the
related Trust Fund that are distributable on such date, to a
disproportionately large share (which, in some cases, may be all) of such
prepayments, or to a disproportionately small share (which, in some cases,
may be none) of such prepayments. A class of Certificates that entitles the
holders thereof to a disproportionately large share of the prepayments on the
Mortgage Loans in the related Trust Fund increases the likelihood of early
retirement of such class ("Call Risk") if the rate of prepayment is
relatively fast; while a class of Certificates that entitles the holders
thereof to a disproportionately small share of the prepayments on the
Mortgage Loans in the related Trust Fund increases the likelihood of an
extended average life of such class ("Extension Risk") if the rate of
prepayment is relatively slow. As and to the extent described in the related
Prospectus Supplement, the respective entitlements of the various classes of
Certificateholders of any series to receive payments (and, in particular,
prepayments) of principal of the Mortgage Loans in the related Trust Fund may
vary based on the occurrence of certain events (e.g., the retirement of one
or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such
Mortgage Loans).
A series of Certificates may include one or more Controlled Amortization
Classes, which will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule. Although
prepayment risk cannot be eliminated entirely for any class of Certificates,
a Controlled Amortization Class will generally provide a relatively stable
cash flow so long as the actual rate of prepayment on the Mortgage Loans in
the related Trust Fund remains relatively constant at the rate, or within the
range of rates, of prepayment used to establish the specific principal
payment schedule for such Certificates. Prepayment risk with respect to a
given Mortgage Asset Pool does not disappear, however, and the stability
afforded to a Controlled
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<PAGE>
Amortization Class comes at the expense of one or more Companion Classes of
the same series, any of which Companion Classes may also be a class of
Offered Certificates. In general, and as more specifically described in the
related Prospectus Supplement, a Companion Class may entitle the holders
thereof to a disproportionately large share of prepayments on the Mortgage
Loans in the related Trust Fund when the rate of prepayment is relatively
fast, and/or may entitle the holders thereof to a disproportionately small
share of prepayments on the Mortgage Loans in the related Trust Fund when the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, a Companion Class absorbs some (but not all)
of the Call Risk and/or Extension Risk that would otherwise belong to the
related Controlled Amortization Class if all payments of principal of the
Mortgage Loans in the related Trust Fund were allocated on a pro rata basis.
EFFECT OF PREPAYMENTS ON YIELD OF CERTIFICATES
A series of Certificates may include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately
large, as compared to the amount of principal, as with certain classes of
Stripped Interest Certificates, a holder might fail to recover its original
investment under some prepayment scenarios. The extent to which the yield to
maturity of any class of Offered Certificates may vary from the anticipated
yield will depend upon the degree to which such Certificates are purchased at
a discount or premium and the amount and timing of distributions thereon. An
investor should consider, in the case of any Offered Certificate purchased at
a discount, the risk that a slower than anticipated rate of principal
payments on the Mortgage Loans could result in an actual yield to such
investor that is lower than the anticipated yield and, in the case of any
Offered Certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments could result in an actual yield to
such investor that is lower than the anticipated yield. See "Yield and
Maturity Considerations".
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such
Offered Certificates will receive payments to which such Certificateholders
are entitled under the related Pooling Agreement. Such rating will not
constitute an assessment of the likelihood that principal prepayments on the
related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood
of early optional termination of the related Trust Fund. Furthermore, such
rating will not address the possibility that prepayment of the related
Mortgage Loans at a higher or lower rate than anticipated by an investor may
cause such investor to experience a lower than anticipated yield or that an
investor that purchases an Offered Certificate at a significant premium might
fail to recover its initial investment under certain prepayment scenarios.
Hence, a rating assigned by a Rating Agency does not guarantee or ensure the
realization of any anticipated yield on a class of Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of
criteria established by each Rating Agency rating classes of the Certificates
of such series. Those criteria are sometimes based upon an actuarial analysis
of the behavior of mortgage loans in a larger group. However, there can be no
assurance that the historical data supporting any such actuarial analysis
will accurately reflect future experience, or that the data derived from a
large pool of mortgage loans will accurately predict the delinquency,
foreclosure or loss experience of any particular pool of Mortgage Loans. In
other cases, such criteria may be based upon determinations of the values of
the Mortgaged Properties that provide security for the Mortgage Loans.
However, no assurance can be given that those values will not decline in the
future. As a result, the Credit Support required in respect of the Offered
Certificates of any series may be insufficient to fully protect the holders
thereof from losses on the related Mortgage Asset Pool. See "Description of
Credit Support" and "Rating".
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CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS
General. The payment performance of the Offered Certificates of any series
will be directly related to the payment performance of the underlying
Mortgage Loans. Set forth below is a discussion of certain factors that will
affect the full and timely payment of the Mortgage Loans in any Trust Fund.
In addition, a description of certain material considerations associated with
investments in mortgage loans is included herein under "Certain Legal Aspects
of Mortgage Loans".
The Offered Certificates will be directly or indirectly backed by mortgage
loans secured by multifamily and/or commercial properties. Mortgage loans
made on the security of multifamily or commercial property may have a greater
likelihood of delinquency and foreclosure, and a greater likelihood of loss
in the event thereof, than loans made on the security of an owner-occupied
single-family property. See "Description of the Trust Funds--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans".
The ability of a borrower to repay a loan secured by an income-producing
property typically is dependent primarily upon the successful operation of
such property rather than upon the existence of independent income or assets
of the borrower; thus, the value of an income-producing property is directly
related to the net operating income derived from such property. If the net
operating income of the property is reduced (for example, if rental or
occupancy rates decline or real estate tax rates or other operating expenses
increase), the borrower's ability to repay the loan may be impaired. A number
of the Mortgage Loans may be secured by liens on owner-occupied Mortgaged
Properties or on Mortgaged Properties leased to a single tenant or a small
number of significant tenants. Accordingly, a decline in the financial
condition of the borrower or a significant tenant, as applicable, may have a
disproportionately greater effect on the net operating income from such
Mortgaged Properties than would be the case with respect to Mortgaged
Properties with multiple tenants. Furthermore, the value of any Mortgaged
Property may be adversely affected by factors generally incident to interests
in real property, including changes in general or local economic conditions
and/or specific industry segments; declines in real estate values; declines
in rental or occupancy rates; increases in interest rates, real estate tax
rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters and civil disturbances such as earthquakes, hurricanes, floods,
eruptions or riots; and other circumstances, conditions or events beyond the
control of a Master Servicer or a Special Servicer. Additional considerations
may be presented by the type and use of a particular Mortgaged Property. For
instance, Mortgaged Properties that operate as hospitals and nursing homes
are subject to significant governmental regulation of the ownership,
operation, maintenance and financing of health care institutions. Hotel and
motel properties are often operated pursuant to franchise, management or
operating agreements that may be terminable by the franchisor or operator,
and the transferability of a hotel's operating, liquor and other licenses
upon a transfer of the hotel, whether through purchase or foreclosure, is
subject to local law requirements.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be
greater than for pools of single-family loans because Mortgage Loans in a
Trust Fund will generally consist of a smaller number of higher balance loans
than would a pool of single-family loans of comparable aggregate unpaid
principal balance.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to
any such Mortgage Loan, recourse in the event of borrower default will be
limited to the specific real property and other assets, if any, that were
pledged to secure the Mortgage Loan. However, even with respect to those
Mortgage Loans that provide for recourse against the borrower and its assets
generally, there can be no assurance that enforcement of such recourse
provisions will be practicable, or that the assets of the borrower will
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be sufficient to permit a recovery in respect of a defaulted Mortgage Loan in
excess of the liquidation value of the related Mortgaged Property. See
"Certain Legal Aspects of Mortgage Loans--Foreclosure--Anti-Deficiency
Legislation".
Limitations on Enforceability of Cross-Collateralization. A Mortgage Pool
may include groups of Mortgage Loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all
of the collateral pledged to secure the respective Mortgage Loans in a
cross-collateralized group, and the cash flows generated thereby, are
available to support debt service on, and ultimate repayment of, the
aggregate indebtedness evidenced by those Mortgage Loans. These arrangements
thus seek to reduce the risk that the inability of one or more of the
Mortgaged Properties securing any such group of Mortgage Loans to generate
net operating income sufficient to pay debt service will result in defaults
and ultimate losses.
There may not be complete identity of ownership of the Mortgaged
Properties securing a group of cross-collateralized Mortgage Loans. In such
an instance, creditors of one or more of the related borrowers could
challenge the cross-collateralization arrangement as a fraudulent conveyance.
Generally, under federal and state fraudulent conveyance statutes, the
incurring of an obligation or the transfer of property by a person will be
subject to avoidance under certain circumstances if the person did not
receive fair consideration or reasonably equivalent value in exchange for
such obligation or transfer and was then insolvent or was rendered insolvent
by such obligation or transfer. Accordingly, a creditor seeking ownership of
a Mortgaged Property subject to such cross-collateralization to repay such
creditor's claim against the related borrower could assert (i) that such
borrower was insolvent at the time the cross-collateralized Mortgage Loans
were made and (ii) that such borrower did not, when it allowed its property
to be encumbered by a lien securing the indebtedness represented by the other
Mortgage Loans in the group of cross-collateralized Mortgage Loans, receive
fair consideration or reasonably equivalent value for, in effect,
"guaranteeing" the performance of the other borrowers. Although the borrower
making such "guarantee" will be receiving "guarantees" from each of the other
borrowers in return, there can be no assurance that such exchanged
"guarantees" would be found to constitute fair consideration or be of
reasonably equivalent value, and no unqualified legal opinion to that effect
will be obtained.
The cross-collateralized Mortgage Loans constituting any group thereof may
be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise
of a power of sale and because, in general, foreclosure actions are brought
in state court, and the courts of one state cannot exercise jurisdiction over
property in another state, it may be necessary upon a default under any such
Mortgage Loan to foreclose on the related Mortgaged Properties in a
particular order rather than simultaneously in order to ensure that the lien
of the related Mortgages is not impaired or released.
Increased Risk of Default Associated With Balloon Payments. Certain of the
Mortgage Loans included in a Trust Fund may be nonamortizing or only
partially amortizing over their terms to maturity and, thus, will require
substantial payments of principal and interest (that is, balloon payments) at
their stated maturity. Mortgage Loans of this type involve a greater
likelihood of default than self-amortizing loans because the ability of a
borrower to make a balloon payment typically will depend upon its ability
either to refinance the loan or to sell the related Mortgaged Property. The
ability of a borrower to accomplish either of these goals will be affected by
a number of factors, including the value of the related Mortgaged Property,
the level of available mortgage rates at the time of sale or refinancing, the
borrower's equity in the related Mortgaged Property, the financial condition
and operating history of the borrower and the related Mortgaged Property, tax
laws, rent control laws (with respect to certain residential properties),
Medicaid and Medicare reimbursement rates (with respect to hospitals and
nursing homes), prevailing general economic conditions and the availability
of credit for loans secured by multifamily or commercial, as the case may be,
real properties generally. Neither the Depositor nor any of its affiliates
will be required to refinance any Mortgage Loan.
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If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to
which a payment default is imminent. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". While the Master
Servicer or the Special Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery than liquidation, taking into account the time value of money, there
can be no assurance that any such extension or modification will in fact
increase the present value of receipts from or proceeds of the affected
Mortgage Loans.
Lender Difficulty in Collecting Rents Upon the Default and/or Bankruptcy
of Borrower. Each Mortgage Loan included in any Trust Fund secured by
Mortgaged Property that is subject to leases typically will be secured by an
assignment of leases and rents pursuant to which the borrower assigns to the
lender its right, title and interest as landlord under the leases of the
related Mortgaged Property, and the income derived therefrom, as further
security for the related Mortgage Loan, while retaining a license to collect
rents for so long as there is no default. If the borrower defaults, the
license terminates and the lender is entitled to collect rents. Some state
laws may require that the lender take possession of the Mortgaged Property
and obtain a judicial appointment of a receiver before becoming entitled to
collect the rents. In addition, if bankruptcy or similar proceedings are
commenced by or in respect of the borrower, the lender's ability to collect
the rents may be adversely affected. See "Certain Legal Aspects of Mortgage
Loans--Leases and Rents".
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration
Clauses. Mortgages may contain a due-on-sale clause, which permits the lender
to accelerate the maturity of the Mortgage Loan if the borrower sells,
transfers or conveys the related Mortgaged Property or its interest in the
Mortgaged Property. Mortgages also may include a debt-acceleration clause,
which permits the lender to accelerate the debt upon a monetary or
nonmonetary default of the mortgagor. Such clauses are generally enforceable
subject to certain exceptions. The courts of all states will enforce clauses
providing for acceleration in the event of a material payment default. The
equity courts of any state, however, may refuse the foreclosure of a mortgage
or deed of trust when an acceleration of the indebtedness would be
inequitable or unjust or the circumstances would render the acceleration
unconscionable.
Risk of Liability Arising From Environmental Conditions. Under the laws of
certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under
the laws of some states and under the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, a lender may be
liable, as an "owner" or "operator", for costs of addressing releases or
threatened releases of hazardous substances at a property, if agents or
employees of the lender have become sufficiently involved in the operations
of the borrower, regardless of whether the environmental damage or threat was
caused by the borrower or a prior owner. A lender also risks such liability
on foreclosure of the mortgage. See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and
Special Servicer for the related Trust Fund will be required to cause the
borrower on each Mortgage Loan in such Trust Fund to maintain such insurance
coverage in respect of the related Mortgaged Property as is required under
the related Mortgage, including hazard insurance; provided that, as and to
the extent described herein and in the related Prospectus Supplement, each of
the Master Servicer and the Special Servicer may satisfy its obligation to
cause hazard insurance to be maintained with respect to any Mortgaged
Property through acquisition of a blanket policy. In general, the standard
form of fire and extended coverage policy covers physical damage to or
destruction of the improvements of the property by fire, lightning,
explosion, smoke, windstorm and hail, and riot, strike and civil commotion,
subject to the conditions and exclusions specified in each policy. Although
the
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policies covering the Mortgaged Properties will be underwritten by different
insurers under different state laws in accordance with different applicable
state forms, and therefore will not contain identical terms and conditions,
most such policies typically do not cover any physical damage resulting from
war, revolution, governmental actions, floods and other water-related causes,
earth movement (including earthquakes, landslides and mudflows), wet or dry
rot, vermin, domestic animals and certain other kinds of risks. Unless the
related Mortgage specifically requires the mortgagor to insure against
physical damage arising from such causes, then, to the extent any consequent
losses are not covered by Credit Support, such losses may be borne, at least
in part, by the holders of one or more classes of Offered Certificates of the
related series. See "Description of the Pooling Agreements--Hazard Insurance
Policies".
Risks of Geographic Concentration. Certain geographic regions of the
United States from time to time will experience weaker regional economic
conditions and housing markets, and, consequently, will experience higher
rates of loss and delinquency than will be experienced on mortgage loans
generally. For example, a region's economic condition and housing market may
be directly, or indirectly, adversely affected by natural disasters or civil
disturbances such as earthquakes, hurricanes, floods, eruptions or riots. The
economic impact of any of these types of events may also be felt in areas
beyond the region immediately affected by the disaster or disturbance. The
Mortgage Loans securing certain series of Certificates may be concentrated in
these regions, and such concentration may present risk considerations in
addition to those generally present for similar mortgage-backed securities
without such concentration.
INCLUSION OF DELINQUENT AND NONPERFORMING MORTGAGE LOANS IN A MORTGAGE ASSET
POOL
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past
due or are nonperforming. However, Mortgage Loans which are seriously
delinquent loans (that is, loans more than 60 days delinquent or as to which
foreclosure has been commenced) will not constitute a material concentration
of the Mortgage Loans in any Trust Fund, based on principal balance at the
time such Trust Fund is formed. If so specified in the related Prospectus
Supplement, the servicing of such Mortgage Loans will be performed by the
Special Servicer; however, the same entity may act as both Master Servicer
and Special Servicer. Credit Support provided with respect to a particular
series of Certificates may not cover all losses related to such delinquent or
nonperforming Mortgage Loans, and investors should consider the risk that the
inclusion of such Mortgage Loans in the Trust Fund may adversely affect the
rate of defaults and prepayments in respect of the subject Mortgage Asset
Pool and the yield on the Offered Certificates of such series. See
"Description of the Trust Funds--Mortgage Loans--General".
TERMINATION
If so provided in the related Prospectus Supplement, upon the reduction of
the Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount or upon a specified date, a party designated
therein may be authorized or required to solicit bids for the purchase of all
the Mortgage Assets of the related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or classes, under the circumstances
and in the manner set forth therein. The solicitation of bids will be
conducted in a commercially reasonable manner and, generally, assets will be
sold at their fair market value. In addition, if so specified in the related
Prospectus Supplement, upon the reduction of the aggregate principal balance
of some or all of the Mortgage Assets by a specified percentage, a party or
parties designated therein may be authorized to purchase such Mortgage
Assets, generally at a price equal to, in the case of any Mortgage Asset, the
unpaid principal balance thereof plus accrued interest (or, in some cases, at
fair market value). However, circumstances may arise in which such fair
market value may be less than the unpaid balance of the related Mortgage
Assets, together with interest thereon, sold and therefore, as a result of
such a sale or purchase, the Certificateholders of one or more Classes of
Certificates may receive an amount less than the Certificate Balance of, and
accrued unpaid interest on, their Certificates. See "Description of the
Certificates--Termination."
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RISKS ASSOCIATED WITH MULTIFAMILY PROPERTIES
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord
may terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or in increases determined through
mediation or binding arbitration. In many cases, the rent control laws do not
permit vacancy decontrol. Local authority to impose rent control is
pre-empted by state law in certain states, and rent control is not imposed at
the state level in those states. In some states, however, local rent control
ordinances are not pre-empted for tenants having short-term or month-to-month
leases, and properties there may be subject to various forms of rent control
with respect to those tenants. Any limitations on a borrower's ability to
raise property rents may impair such borrower's ability to repay its Mortgage
Loan from its net operating income or the proceeds of a sale of refinancing
or the related Mortgaged Property.
RISKS ASSOCIATED WITH RETAIL PROPERTIES
The correlation between the success of tenant businesses and property
value is more direct with respect to Retail Properties than other types of
commercial property because a significant component of the total rent paid by
retail tenants is often tied to a percentage of gross sales. Retail
Properties that are not "anchored" have traditionally been perceived to be
more risky than "anchored" Retail Proeprties. See "Mortgage Loans -- Mortgage
Loans Secured by Retail Properties" herein. Furthermore, there is a greater
correlation between the success of tenant businesses and property value when
the property is a single tenant Retail Property.
Unlike office or hotel properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through electronic media, telemarketing and
outlet centers all compete with more traditional Retail Properties for
consumer dollars. Continued growth of these alternative retail outlets (which
are often characterized by lower operating costs) could adversely affect the
rents collectible at the Retail Properties included in the Mortgage Pool.
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of (i) various types of
multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates or other mortgage-backed securities
("MBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans or (iii) a
combination of Mortgage Loans and MBS (collectively, "Mortgage Assets"). Each
Trust Fund will be established by the Depositor. Each Mortgage Asset will be
selected by the Depositor for inclusion in a Trust Fund from among those
purchased, either directly or indirectly, from a prior holder thereof (a
"Mortgage Asset Seller"), which prior holder may or may not be the originator
of such Mortgage Loan or the issuer of such MBS. The Mortgage Assets will not
be guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the
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related Prospectus Supplement, by any governmental agency or instrumentality
or by any other person. The discussion below under the heading "--Mortgage
Loans", unless otherwise noted, applies equally to mortgage loans underlying
any MBS included in a particular Trust Fund.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (each, a "Mortgaged Property") consisting of
one or more of the following types of real property: (i) residential
properties ("Multifamily Properties") consisting of five or more rental or
cooperatively-owned dwelling units in high-rise, mid-rise or garden apartment
buildings or other residential structures, and mobile home parks; and (ii)
commercial properties ("Commercial Properties") consisting of office
buildings, retail shopping facilities, such as shopping centers, malls and
individual stores (each, a "Retail Property"), hotels or motels, health
care-related facilities (such as hospitals, skilled nursing facilities,
nursing homes, congregate care facilities and senior housing), recreational
vehicle parks, warehouse facilities, mini-warehouse facilities, self-storage
facilities, industrial facilities, parking lots, restaurants, mixed use
properties (that is, any combination of the foregoing), and unimproved land.
However, neither restaurants nor health care-related facilities will
represent security for a material concentration of the Mortgage Loans in any
Trust Fund, based on principal balance at the time such Trust Fund is formed.
The Multifamily Properties may include mixed commercial and residential
structures and apartment buildings owned by private cooperative housing
corporations ("Cooperatives"). Unless otherwise specified in the related
Prospectus Supplement, each Mortgage will create a first priority mortgage
lien on a fee estate in a Mortgaged Property. If a Mortgage creates a lien on
a borrower's leasehold estate in a property, then, unless otherwise specified
in the related Prospectus Supplement, the term of any such leasehold will
exceed the term of the Mortgage Note by at least ten years. Unless otherwise
specified in the related Prospectus Supplement, each Mortgage Loan will have
been originated by a person (the "Originator") other than the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens,
and the loans secured by the related senior liens ("Senior Liens") may not be
included in the Mortgage Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the related Senior Liens to
satisfy fully both the Senior Liens and the Mortgage Loan. In the event that
a holder of a Senior Lien forecloses on a Mortgaged Property, the proceeds of
the foreclosure or similar sale will be applied first to the payment of court
costs and fees in connection with the foreclosure, second to real estate
taxes, third in satisfaction of all principal, interest, prepayment or
acceleration penalties, if any, and any other sums due and owing to the
holder of the Senior Liens. The claims of the holders of the Senior Liens
will be satisfied in full out of proceeds of the liquidation of the related
Mortgage Property, if such proceeds are sufficient, before the Trust Fund as
holder of the junior lien receives any payments in respect of the Mortgage
Loan. If the Master Servicer were to foreclose on any Mortgage Loan, it would
do so subject to any related Senior Liens. In order for the debt related to
such Mortgage Loan to be paid in full at such sale, a bidder at the
foreclosure sale of such Mortgage Loan would have to bid an amount sufficient
to pay off all sums due under the Mortgage Loan and any Senior Liens or
purchase the Mortgaged Property subject to such Senior Liens. In the event
that such proceeds from a foreclosure or similar sale of the related
Mortgaged Property are insufficient to satisfy all Senior Liens and the
Mortgage Loan in the aggregate, the Trust Fund, as the holder of the junior
lien, and, accordingly, holders of one or more classes of the Certificates of
the related series bear (i) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (ii) the risk of
loss if the deficiency judgment is not obtained and satisfied. Moreover,
deficiency judgments may not be available in certain jurisdic-
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tions, or the particular Mortgage Loan may be a nonrecourse loan, which means
that, absent special facts, recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure repayment of the Mortgage Loan.
If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular series of Certificates may include Mortgage Loans that are
delinquent or nonperforming as of the date such Certificates are issued. In
that case, the related Prospectus Supplement will set forth, as to each such
Mortgage Loan, available information as to the period of such delinquency or
nonperformance, any forbearance arrangement then in effect, the condition of
the related Mortgaged Property and the ability of the Mortgaged Property to
generate income to service the mortgage debt. However, Mortgage Loans which
are seriously delinquent loans (that is, loans more than 60 days delinquent
or as to which foreclosure has been commenced) will not constitute a material
concentration of the Mortgage Loans in any Trust Fund, based on principal
balance at the time such Trust Fund is formed.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful
operation of such property (that is, its ability to generate income).
Moreover, as noted above, some or all of the Mortgage Loans included in a
particular Trust Fund may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating the
likelihood of default on such a loan. Unless otherwise defined in the related
Prospectus Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan
at any given time is the ratio of (i) the Net Operating Income derived from
the related Mortgaged Property for a twelve-month period to (ii) the
annualized scheduled payments of principal and/or interest on the Mortgage
Loan and any other loans senior thereto that are secured by the related
Mortgaged Property. Unless otherwise defined in the related Prospectus
Supplement, "Net Operating Income" means, for any given period, the total
operating revenues derived from a Mortgaged Property during such period,
minus the total operating expenses incurred in respect of such Mortgaged
Property during such period other than (i) noncash items such as depreciation
and amortization, (ii) capital expenditures and (iii) debt service on the
related Mortgage Loan or on any other loans that are secured by such
Mortgaged Property. The Net Operating Income of a Mortgaged Property will
generally fluctuate over time and may or may not be sufficient to cover debt
service on the related Mortgage Loan at any given time. As the primary source
of the operating revenues of a nonowner occupied, income-producing property,
rental income (and, with respect to a Mortgage Loan secured by a Cooperative
apartment building, maintenance payments from tenant-stockholders of a
Cooperative) may be affected by the condition of the applicable real estate
market and/or area economy. In addition, properties typically leased,
occupied or used on a short-term basis, such as certain health care-related
facilities, hotels and motels, and mini-warehouse and self-storage
facilities, tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods, such as
warehouses, retail stores, office buildings and industrial facilities.
Commercial Properties may be owner-occupied or leased to a small number of
tenants. Thus, the Net Operating Income of such a Mortgaged Property may
depend substantially on the financial condition of the borrower or a tenant,
and Mortgage Loans secured by liens on such properties may pose a greater
likelihood of default and loss than loans secured by liens on Multifamily
Properties or on multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage
Loan. As may be further described in the related Prospectus Supplement, in
some cases leases of Mortgaged Properties may provide that the lessee, rather
than the borrower/landlord, is
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responsible for payment of operating expenses ("Net Leases"). However, the
existence of such "net of expense" provisions will result in stable Net
Operating Income to the borrower/landlord only to the extent that the lessee
is able to absorb operating expense increases while continuing to make rent
payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property must be liquidated
following a default. Unless otherwise defined in the related Prospectus
Supplement, the "Loan-to-Value Ratio" of a Mortgage Loan at any given time is
the ratio (expressed as a percentage) of (i) the then outstanding principal
balance of the Mortgage Loan and any other loans senior thereto that are
secured by the related Mortgaged Property to (ii) the Value of the related
Mortgaged Property. Unless otherwise specified in the related Prospectus
Supplement, the "Value" of a Mortgaged Property will be its fair market value
as determined by an appraisal of such property conducted by or on behalf of
the Originator in connection with the origination of such loan. The lower the
Loan-to-Value Ratio, the greater the percentage of the borrower's equity in a
Mortgaged Property, and thus (a) the greater the incentive of the borrower to
perform under the terms of the related Mortgage Loan (in order to protect
such equity) and (b) the greater the cushion provided to the lender against
loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the likelihood of liquidation loss in a pool of Mortgage Loans. For
example, the value of a Mortgaged Property as of the date of initial issuance
of the related series of Certificates may be less than the Value determined
at loan origination, and will likely continue to fluctuate from time to time
based upon certain factors including changes in economic conditions and the
real estate market. Moreover, even when current, an appraisal is not
necessarily a reliable estimate of value. Appraised values of
income-producing properties are generally based on the market comparison
method (recent resale value of comparable properties at the date of the
appraisal), the cost replacement method (the cost of replacing the property
at such date), the income capitalization method (a projection of value based
upon the property's projected net cash flow), or upon a selection from or
interpolation of the values derived from such methods. Each of these
appraisal methods can present analytical difficulties. It is often difficult
to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections
of income and expense and the selection of an appropriate capitalization rate
and discount rate. Where more than one of these appraisal methods are used
and provide significantly different results, an accurate determination of
value and, correspondingly, a reliable analysis of the likelihood of default
and loss, is even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property
performance. As a result, if a Mortgage Loan defaults because the income
generated by the related Mortgaged Property is insufficient to cover
operating costs and expenses and pay debt service, then the value of the
Mortgaged Property will reflect such and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be
no assurance that all of such factors will in fact have been prudently
considered by the Originators of the Mortgage Loans, or that, for a
particular Mortgage Loan, they are complete or relevant. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--General" and "--Certain Factors Affecting Delinquency,
Foreclosure and Loss of the Mortgage Loans--Increased Risk of Default
Associated With Balloon Payments".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than 40 years and (ii)
provide for scheduled payments of principal, interest or both, to be made on
specified dates ("Due Dates") that occur monthly,
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quarterly, semi-annually or annually. A Mortgage Loan (i) may provide for no
accrual of interest or for accrual of interest thereon at a Mortgage Rate
that is fixed over its term or that adjusts from time to time, or that may be
converted at the borrower's election from an adjustable to a fixed Mortgage
Rate, or from a fixed to an adjustable Mortgage Rate, (ii) may provide for
level payments to maturity or for payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to reflect the occurrence of
certain events, and may permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or nonamortizing, with a balloon
payment due on its stated maturity date, and (iv) may prohibit over its term
or for a certain period prepayments (the period of such prohibition, a
"Lock-out Period" and its date of expiration, a "Lock-out Date") and/or
require payment of a premium or a yield maintenance payment (a "Prepayment
Premium") in connection with certain prepayments, in each case as described
in the related Prospectus Supplement. A Mortgage Loan may also contain a
provision that entitles the lender to a share of appreciation of the related
Mortgaged Property, or profits realized from the operation or disposition of
such Mortgaged Property or the benefit, if any, resulting from the
refinancing of the Mortgage Loan (any such provision, an "Equity
Participation"), as described in the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans
in the related Trust Fund, which, to the extent then applicable, will
generally include the following: (i) the aggregate outstanding principal
balance and the largest, smallest and average outstanding principal balance
of the Mortgage Loans, (ii) the type or types of property that provide
security for repayment of the Mortgage Loans, (iii) the earliest and latest
origination date and maturity date of the Mortgage Loans, (iv) the original
and remaining terms to maturity of the Mortgage Loans, or the respective
ranges thereof, and the weighted average original and remaining terms to
maturity of the Mortgage Loans, (v) the Loan-to-Value Ratios of the Mortgage
Loans (either at origination or as of a more recent date), or the range
thereof, and the weighted average of such Loan-to-Value Ratios, (vi) the
Mortgage Rates borne by the Mortgage Loans, or the range thereof, and the
weighted average Mortgage Rate borne by the Mortgage Loans, (vii) with
respect to Mortgage Loans with adjustable Mortgage Rates ("ARM Loans"), the
index or indices upon which such adjustments are based, the adjustment dates,
the range of gross margins and the weighted average gross margin, and any
limits on Mortgage Rate adjustments at the time of any adjustment and over
the life of the ARM Loan, (viii) information regarding the payment
characteristics of the Mortgage Loans, including, without limitation, balloon
payment and other amortization provisions, Lock-out Periods and Prepayment
Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage Loans (either
at origination or as of a more recent date), or the range thereof, and the
weighted average of such Debt Service Coverage Ratios, and (x) the geographic
distribution of the Mortgaged Properties on a state-by-state basis. In
appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the
provisions of leases and the nature of tenants of the Mortgaged Properties.
If the Depositor is unable to provide the specific information described
above at the time Offered Certificates of a series are initially offered,
more general information of the nature described above will be provided in
the related Prospectus Supplement, and specific information will be set forth
in a report which will be available to purchasers of those Certificates at or
before the initial issuance thereof and will be filed as part of a Current
Report on Form 8-K with the Commission within fifteen days following such
issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related
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Prospectus Supplement. However, many servicers do not maintain records
regarding such matters or, at least, not in a format that can be readily
aggregated. In addition, the relevant characteristics of a Master Servicer's
servicing portfolio may be so materially different from those of the related
Mortgage Asset Pool that such prepayment experience would not be meaningful
to an investor. For example, differences in geographic dispersion, property
type and/or loan terms (e.g., mortgage rates, terms to maturity and/or
prepayment restrictions) between the two pools of loans could render the
Master Servicer's prepayment experience irrelevant. Because of the nature of
the assets to be serviced and administered by a Special Servicer, no
comparable prepayment information will be presented with respect to the
Special Servicer's multifamily and/or commercial mortgage loan servicing
portfolio.
Mortgage Loans Secured by Multifamily Properties. Significant factors
determining the value and successful operation of a multifamily property are
the location of the property, the number of competing residential
developments in the local market (such as apartment buildings, manufactured
housing communities and site-built single family homes), the physical
attributes of the multifamily apartment building (such as its age and
appearance) and state and local regulations affecting such property. In
addition, the successful operation of an apartment building will depend upon
other factors, such as its reputation, the ability of management to provide
adequate maintenance and insurance, and the types of services it provides.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosures of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statues for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord
may terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or to increases determined through
mediation or binding arbitration. In many cases, the rent control laws do not
permit vacancy decontrol. Local authority to impose rent control is
pre-empted by state law in certain states, and rent control is not imposed at
the state level in those states. In some states, however, local rent control
ordinances are not pre-empted for tenants having short-term or month-to-month
leases, and properties there may be subject to various forms of rent control
with respect to those tenants. Any limitations on a borrower's ability to
raise property rents may impair such borrower's ability to repay its Mortgage
Loan from its net operating income or the proceeds of a sale or refinancing
of the related Mortgaged Property.
Adverse economic conditions, either local or national, may limit the
amount of rent that can be charge and may result in a reduction in timely
rent payments or a reduction in occupancy levels. Occupancy and rent levels
may also be affected by construction of additional housing units, local
military base or factory closings and national and local politics, including
current or future rent stabilization and rent control laws and agreements. In
addition, the level of mortgage interest rates may encourage tenants to
purchase single-family housing. The location and construction quality of a
particular building may affect the occupancy level as well as the rents that
may be charged for individual units. The characteristics of a neighborhood
may change over time or in relation to newer developments.
Mortgage Loans Secured by Retail Properties. Significant factors
determining the value of Retail Properties are the quality of the tenants as
well as fundamental aspects of real estate such as location and market
demographics. The correlation between the success of tenant businesses
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and property value is more direct with respect to Retail Properties than
other types of commercial property because a significant component of the
total rent paid by retail tenants is often tied to a percentage of gross
sales. Whether a Retail Property is "anchored" or "unanchored" is also an
important distinction. Retail Properties that are anchored have traditionally
been perceived to be less risky. While there is no strict definition of an
anchor, it is generally understood that a retail anchor tenant is
proportionately large in size and is vital in attracting customers to the
property. Furthermore, there is a greater correlation between the success of
tenant businesses and property value when the property is a single tenant
Retail Property.
Unlike office or hotel Properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through electronic media, telemarketing and
outlet centers all compete with more traditional Retail Properties for
consumer dollars. Continued growth of these alternative retail outlets (which
are often characterized by lower operating costs) could adversely affect the
rents collectible at the Retail Properties included in the Mortgage Pool.
Multifamily Properties. 21.8% of the Mortgage Loans, based on Initial Pool
Balance, are secured by Multifamily Properties. See Annex A hereto for
additional information.
Significant factors determining the value and successful operation of a
Multifamily Property are the location of the property, the number of
competing residential developments in the local market (such as apartment
buildings, manufactured housing communities and site-built single family
homes), the physical attributes of the Multifamily Property (such as its age
and appearance) and state and local regulations affecting such property. In
addition, the successful operation of a Multifamily Property will depend upon
other factors, such as its reputation, the ability of management to provide
adequate maintenance and insurance, and the types of services it provides.
Adverse economic conditions, either local or national, may limit the amount
of rent that can be charged and may result in a reduction in timely rent
payments or a reduction in occupancy levels.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord
may terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or to increases determined through
mediation or binding arbitration. In many cases, the rent control laws do not
permit vacancy decontrol. Local authority to impose rent control is
pre-empted by state law in certain states, and rent control is not imposed at
the state level in those states. In some states, however, local rent control
ordinances are not pre-empted for tenants having short-term or month-to-month
leases, and properties there may be subject to various forms of rent control
with respect to those tenants. Any limitations on a borrower's ability to
raise property rents may impair such borrower's ability to repay its
Multifamily Loan from its net operating income or the proceeds of a sale or
refinancing of the related Multifamily Property.
The rent limitations imposed on Section 42 Properties (as defined herein)
may adversely affect the ability of the applicable borrowers to increase
rents to maintain such Multifamily Properties in proper condition during
periods of rapid inflation or declining market value of such
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Multifamily Properties. In addition, the income restrictions on tenants
imposed by Section 42 of the Code may reduce the number of eligible tenants
in such Multifamily Properties and result in a reduction in occupancy rates
applicable thereto.
MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates or other
mortgage-backed securities or (ii) certificates issued and/or insured or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"), the
Federal National Mortgage Association ("FNMA"), the Governmental National
Mortgage Association ("GNMA") or the Federal Agricultural Mortgage
Corporation ("FAMC"), provided that, unless otherwise specified in the
related Prospectus Supplement, each MBS will evidence an interest in, or will
be secured by a pledge of, mortgage loans that conform to the descriptions of
the Mortgage Loans contained herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage
Asset Pool: (a) either will (i) have been previously registered under the
Securities Act of 1933, as amended, (ii) be exempt from such registration
requirements or (iii) have been held for at least the holding period
specified in Rule 144(k) under the Securities Act of 1933, as amended; and
(b) either (i) will have been acquired (other than from the Depositor or an
affiliate thereof) in bona fide secondary market transactions or (ii) if so
specified in the related Prospectus Supplement, may be derived from the
Depositor's (or an affiliate's) unsold allotments from the Depositor (or an
affiliate's) previous offerings.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar
agreement (an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer")
and/or the servicer of the underlying mortgage loans (the "MBS Servicer")
will be parties to the MBS Agreement, generally together with a trustee (the
"MBS Trustee") or, in the alternative, with the original purchaser or
purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the
MBS Trustee on the dates specified in the related Prospectus Supplement. The
MBS Issuer or the MBS Servicer or another person specified in the related
Prospectus Supplement may have the right or obligation to repurchase or
substitute assets underlying the MBS after a certain date or under other
circumstances specified in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount
of such credit support, if any, will be a function of the characteristics of
the underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may
have assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify: (i) the aggregate approximate initial and
outstanding principal amount(s) and type of the MBS to be included in the
Trust Fund, (ii) the original and remaining term(s) to stated maturity of the
MBS, if applicable, (iii) the pass-through or bond rate(s) of the MBS or the
formula for determining such rate(s), (iv) the payment characteristics of the
MBS, (v) the MBS Issuer, MBS Servicer and MBS Trustee, as applicable, of each
of the MBS, (vi) a description of the related credit support, if any, (vii)
the circumstances under which the related underlying mortgage loans, or the
MBS themselves, may be purchased prior to their maturity, (viii) the terms on
which mortgage loans may be substituted for those originally underlying the
MBS, (ix) the type of mortgage loans
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underlying the MBS and, to the extent appropriate under the circumstances,
such other information in respect of the underlying mortgage loans described
under "--Mortgage Loans--Mortgage Loan Information in Prospectus
Supplements", and (x) the characteristics of any cash flow agreements that
relate to the MBS.
The Depositor will provide the same information regarding the MBS in any
Trust Fund in its reports filed under the Exchange Act with respect to such
Trust Fund as was provided by the related MBS Issuer in its own such reports
if such MBS was publicly offered or the reports the related MBS Issuer
provides the related MBS Trustee if such MBS was privately issued.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which all payments and collections received or
advanced with respect to the Mortgage Assets and other assets in the Trust
Fund will be deposited to the extent described herein and in the related
Prospectus Supplement. See "Description of the Pooling
Agreements--Certificate Account".
CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the
Mortgage Assets in the related Trust Fund may be provided to one or more
classes of Certificates of such series in the form of subordination of one or
more other classes of Certificates of such series or by one or more other
types of Credit Support, which may include a letter of credit, a surety bond,
an insurance policy, a guarantee, a reserve fund, or any combination thereof.
The amount and types of such Credit Support, the identity of the entity
providing it (if applicable) and related information with respect to each
type of Credit Support, if any, will be set forth in the Prospectus
Supplement for a series of Certificates. See "Risk Factors--Credit Support
Limitations" and "Description of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant
to which moneys held in the funds and accounts established for such series
will be invested at a specified rate. The Trust Fund may also include
interest rate exchange agreements, interest rate cap or floor agreements, or
other agreements designed to reduce the effects of interest rate fluctuations
on the Mortgage Assets on one or more classes of Certificates. The principal
terms of any such Cash Flow Agreement, including, without limitation,
provisions relating to the timing, manner and amount of payments thereunder
and provisions relating to the termination thereof, will be described in the
related Prospectus Supplement. The related Prospectus Supplement will also
identify the obligor under the Cash Flow Agreement.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount
and timing of distributions on the Certificate. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can
generally be expected to have the same effect on the yield to maturity and/or
weighted average life of a class of Certificates as will the characteristics
and behavior of comparable Mortgage Loans, the effect may differ due to the
payment characteristics of the MBS. If a Trust Fund includes MBS, the related
Prospectus Supplement will discuss the effect, if any, that the payment
characteristics of the MBS may have on the yield to maturity and weighted
average lives of the Offered Certificates of the related series.
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PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable
or adjustable Pass-Through Rate, which may or may not be based upon the
interest rates borne by the Mortgage Loans in the related Trust Fund. The
Prospectus Supplement with respect to any series of Certificates will specify
the Pass-Through Rate for each class of Offered Certificates of such series
or, in the case of a class of Offered Certificates with a variable or
adjustable Pass-Through Rate, the method of determining the Pass-Through
Rate; the effect, if any, of the prepayment of any Mortgage Loan on the
Pass-Through Rate of one or more classes of Offered Certificates; and whether
the distributions of interest on the Offered Certificates of any class will
be dependent, in whole or in part, on the performance of any obligor under a
Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related
Trust Fund are due and the Distribution Date on which such payments are
passed through to Certificateholders. That delay will effectively reduce the
yield that would otherwise be produced if payments on such Mortgage Loans
were distributed to Certificateholders on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment
only through the date of such prepayment, instead of through the Due Date for
the next succeeding scheduled payment. However, interest accrued on any
series of Certificates and distributable thereon on any Distribution Date
will generally correspond to interest accrued on the Mortgage Loans to their
respective Due Dates during the related Due Period. A "Due Period" will be a
specified time period (generally corresponding in length to the period
between Distribution Dates) and all scheduled payments on the Mortgage Loans
in the related Trust Fund that are due during a given Due Period will, to the
extent received by a specified date (the "Determination Date") or otherwise
advanced by the related Master Servicer, Special Servicer or other specified
person, be distributed to the holders of the Certificates of such series on
the next succeeding Distribution Date. Consequently, if a prepayment on any
Mortgage Loan is distributable to Certificateholders on a particular
Distribution Date, but such prepayment is not accompanied by interest thereon
to the Due Date for such Mortgage Loan in the related Due Period, then the
interest charged to the borrower (net of servicing and administrative fees)
may be less (such shortfall, a "Prepayment Interest Shortfall") than the
corresponding amount of interest accrued and otherwise payable on the
Certificates of the related series. If and to the extent that any such
shortfall is allocated to a class of Offered Certificates, the yield thereon
will be adversely affected. The Prospectus Supplement for each series of
Certificates will describe the manner in which any such shortfalls will be
allocated among the classes of such Certificates. The related Prospectus
Supplement will also describe any amounts available to offset such
shortfalls.
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of
principal payments on the Mortgage Loans in the related Trust Fund and the
allocation thereof to reduce the principal balance (or notional amount, if
applicable) of such Certificate. The rate of principal payments on the
Mortgage Loans in any Trust Fund will in turn be affected by the amortization
schedules thereof (which, in the case of ARM Loans, may change periodically
to accommodate adjustments to the Mortgage Rates thereon), the dates on which
any balloon payments are due, and the rate of principal prepayments thereon
(including for this purpose, voluntary prepayments by borrowers and also
prepayments resulting from liquidations of Mortgage Loans due to defaults,
casualties or condemnations affecting the related Mortgaged Properties, or
purchases of Mortgage Loans out of the related Trust Fund). Because the rate
of principal prepayments on the Mortgage Loans in any Trust Fund will depend
on future events and a variety of factors (as described below), no assurance
can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend
upon the degree to which they are purchased at a
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discount or premium and when, and to what degree, payments of principal on
the Mortgage Loans in the related Trust Fund are in turn distributed on such
Certificates (or, in the case of a class of Stripped Interest Certificates,
result in the reduction of the Notional Amount thereof). An investor should
consider, in the case of any Offered Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the
Mortgage Loans in the related Trust Fund could result in an actual yield to
such investor that is lower than the anticipated yield and, in the case of
any Offered Certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments on such Mortgage Loans could result in
an actual yield to such investor that is lower than the anticipated yield. In
addition, if an investor purchases an Offered Certificate at a discount (or
premium), and principal payments are made in reduction of the principal
balance or notional amount of such investor's Offered Certificates at a rate
slower (or faster) than the rate anticipated by the investor during any
particular period, any consequent adverse effects on such investor's yield
would not be fully offset by a subsequent like increase (or decrease) in the
rate of principal payments.
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or
all of the Mortgage Assets in the related Trust Fund or (ii) equal the
Certificate Balances of one or more of the other classes of Certificates of
the same series. Accordingly, the yield on such Stripped Interest
Certificates will be inversely related to the rate at which payments and
other collections of principal are received on such Mortgage Assets or
distributions are made in reduction of the Certificate Balances of such
classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal
Certificates, a lower than anticipated rate of principal prepayments on the
Mortgage Loans in the related Trust Fund will negatively affect the yield to
investors in Stripped Principal Certificates, and a higher than anticipated
rate of principal prepayments on such Mortgage Loans will negatively affect
the yield to investors in Stripped Interest Certificates. If the Offered
Certificates of a series include any such Certificates, the related
Prospectus Supplement will include a table showing the effect of various
constant assumed levels of prepayment on yields on such Certificates. Such
tables will be intended to illustrate the sensitivity of yields to various
constant assumed prepayment rates and will not be intended to predict, or to
provide information that will enable investors to predict, yields or
prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation,
the availability of mortgage credit, the relative economic vitality of the
area in which the Mortgaged Properties are located, the quality of management
of the Mortgaged Properties, the servicing of the Mortgage Loans, possible
changes in tax laws and other opportunities for investment. In general, those
factors which increase the attractiveness of selling a Mortgaged Property or
refinancing a Mortgage Loan or which enhance a borrower's ability to do so,
as well as those factors which increase the likelihood of default under a
Mortgage Loan, would be expected to cause the rate of prepayment in respect
of any Mortgage Asset Pool to accelerate. In contrast, those factors having
an opposite effect would be expected to cause the rate of prepayment of any
Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the
extent to which such provisions may be practicably enforced. To the extent
enforceable, such provisions could constitute either an absolute prohibition
(in the case of a Lock-out Period) or a disincentive (in the case of a
Prepayment Premium) to a borrower's voluntarily prepaying its Mortgage Loan,
thereby slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be
affected by prevailing market interest rates for mortgage loans of a
comparable type, term and risk level. When the prevailing market interest
rate is below a mortgage coupon, a borrower may have an increased incentive
to refinance its mortgage loan. Even in the case of ARM Loans, as prevailing
market interest rates decline, and without regard to whether the Mortgage
Rates on such ARM Loans decline in a manner consistent therewith, the related
borrowers may have an increased incentive
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to refinance for purposes of either (i) converting to a fixed rate loan and
thereby "locking in" such rate or (ii) taking advantage of a different index,
margin or rate cap or floor on another adjustable rate mortgage loan.
Therefore, as prevailing market interest rates decline, prepayment speeds
would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash
flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that will
affect the prepayment of the Mortgage Loans in any Trust Fund, as to the
relative importance of such factors, as to the percentage of the principal
balance of such Mortgage Loans that will be paid as of any date or as to the
overall rate of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average
life of one or more classes of the Certificates of such series. Unless
otherwise specified in the related Prospectus Supplement, weighted average
life refers to the average amount of time that will elapse from the date of
issuance of an instrument until each dollar allocable as principal of such
instrument is repaid to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related
Mortgage Loans, whether in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes voluntary prepayments by
borrowers and also prepayments resulting from liquidations of Mortgage Loans
due to default, casualties or condemnations affecting the related Mortgaged
Properties and purchases of Mortgage Loans out of the related Trust Fund), is
paid to such class. Prepayment rates on loans are commonly measured relative
to a prepayment standard or model, such as the Constant Prepayment Rate
("CPR") prepayment model or the Standard Prepayment Assumption ("SPA")
prepayment model. CPR represents an assumed constant rate of prepayment each
month (expressed as an annual percentage) relative to the then outstanding
principal balance of a pool of mortgage loans for the life of such loans. SPA
represents an assumed variable rate of prepayment each month (expressed as an
annual percentage) relative to the then outstanding principal balance of a
pool of mortgage loans, with different prepayment assumptions often expressed
as percentages of SPA. For example, a prepayment assumption of 100% of SPA
assumes prepayment rates of 0.2% per annum of the then outstanding principal
balance of such loans in the first month of the life of the loans and an
additional 0.2% per annum in each month thereafter until the thirtieth month.
Beginning in the thirtieth month, and in each month thereafter during the
life of the loans, 100% of SPA assumes a constant prepayment rate of 6% per
annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of
the anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical
prepayment experience for single-family mortgage loans. Thus, it is unlikely
that the prepayment experience of the Mortgage Loans included in any Trust
Fund will conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average
life of each class of Offered Certificates of such series with a Certificate
Balance, and the percentage of the initial Certificate Balance of each such
class that would be outstanding on specified Distribution Dates, based on the
assumptions stated in such Prospectus Supplement, including assumptions that
prepayments on the related Mortgage Loans are made at rates corresponding to
various percentages of CPR or
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SPA, or at such other rates specified in such Prospectus Supplement. Such
tables and assumptions will illustrate the sensitivity of the weighted
average lives of the Certificates to various assumed prepayment rates and
will not be intended to predict, or to provide information that will enable
investors to predict, the actual weighted average lives of the Certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments
be made at maturity. Because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan
or to sell the related Mortgaged Property, there is a possibility that
Mortgage Loans that require balloon payments may default at maturity, or that
the maturity of such a Mortgage Loan may be extended in connection with a
workout. In the case of defaults, recovery of proceeds may be delayed by,
among other things, bankruptcy of the borrower or adverse conditions in the
market where the property is located. In order to minimize losses on
defaulted Mortgage Loans, the Master Servicer or the Special Servicer, to the
extent and under the circumstances set forth herein and in the related
Prospectus Supplement, may be authorized to modify Mortgage Loans that are in
default or as to which a payment default is imminent. Any defaulted balloon
payment or modification that extends the maturity of a Mortgage Loan may
delay distributions of principal on a class of Offered Certificates and
thereby extend the weighted average life of such Certificates and, if such
Certificates were purchased at a discount, reduce the yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative
amortization to occur (that is, Mortgage Loans that provide for the current
payment of interest calculated at a rate lower than the rate at which
interest accrues thereon, with the unpaid portion of such interest being
added to the related principal balance). Negative amortization on one or more
Mortgage Loans in any Trust Fund may result in negative amortization on the
Offered Certificates of the related series. The related Prospectus Supplement
will describe, if applicable, the manner in which negative amortization in
respect of the Mortgage Loans in any Trust Fund is allocated among the
respective classes of Certificates of the related series. The portion of any
Mortgage Loan negative amortization allocated to a class of Certificates may
result in a deferral of some or all of the interest payable thereon, which
deferred interest may be added to the Certificate Balance thereof. In
addition, an ARM Loan that permits negative amortization would be expected
during a period of increasing interest rates to amortize at a slower rate
(and perhaps not at all) than if interest rates were declining or were
remaining constant. Such slower rate of Mortgage Loan amortization would
correspondingly be reflected in a slower rate of amortization for one or more
classes of Certificates of the related series. Accordingly, the weighted
average lives of Mortgage Loans that permit negative amortization (and that
of the classes of Certificates to which any such negative amortization would
be allocated or that would bear the effects of a slower rate of amortization
on such Mortgage Loans) may increase as a result of such feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change
in its Mortgage Rate, (ii) provides that its scheduled payment will adjust
less frequently than its Mortgage Rate or (iii) provides for constant
scheduled payments notwithstanding adjustments to its Mortgage Rate.
Accordingly, during a period of declining interest rates, the scheduled
payment on such a Mortgage Loan may exceed the amount necessary to amortize
the loan fully over its remaining amortization schedule and pay interest at
the then applicable Mortgage Rate, thereby resulting in the accelerated
amortization of such Mortgage Loan. Any such acceleration in amortization of
its principal balance will shorten the weighted average life of such Mortgage
Loan and, correspondingly, the weighted average lives of those classes of
Certificates entitled to a portion of the principal payments on such Mortgage
Loan.
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The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate
was purchased at a premium or a discount and (ii) the extent to which the
payment characteristics of such Mortgage Loans delay or accelerate the
distributions of principal on such Certificate (or, in the case of a Stripped
Interest Certificate, delay or accelerate the reduction of the notional
amount thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance
with their terms will affect the weighted average lives of those Mortgage
Loans and, accordingly, the weighted average lives of and yields on the
Certificates of the related series. Servicing decisions made with respect to
the Mortgage Loans, including the use of payment plans prior to a demand for
acceleration and the restructuring of Mortgage Loans in bankruptcy
proceedings or otherwise, may also have an effect upon the payment patterns
of particular Mortgage Loans and thus the weighted average lives of and
yields on the Certificates of the related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to
which such holders are required to bear the effects of any losses or
shortfalls in collections arising out of defaults on the Mortgage Loans in
the related Trust Fund and the timing of such losses and shortfalls. In
general, the earlier that any such loss or shortfall occurs, the greater will
be the negative effect on yield for any class of Certificates that is
required to bear the effects thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated
among the respective classes of Certificates of the related series in the
priority and manner, and subject to the limitations, specified in the related
Prospectus Supplement. As described in the related Prospectus Supplement,
such allocations may be effected by (i) a reduction in the entitlements to
interest and/or the Certificate Balances of one or more such classes of
Certificates and/or (ii) establishing a priority of payments among such
classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more classes of Certificates of any series,
including one or more classes of Offered Certificates of such series, may
provide for distributions of principal thereof from (i) amounts attributable
to interest accrued but not currently distributable on one or more classes of
Accrual Certificates, (ii) Excess Funds or (iii) any other amounts described
in the related Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, "Excess Funds" will, in general, represent
that portion of the amounts distributable in respect of the Certificates of
any series on any Distribution Date that represent (i) interest received or
advanced on the Mortgage Assets in the related Trust Fund that is in excess
of the interest currently accrued on the Certificates of such series, or (ii)
Prepayment Premiums, payments from Equity Participations or any other amounts
received on the Mortgage Assets in the related Trust Fund that do not
constitute interest thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce
the yield thereon. The related Prospectus Supplement will discuss the
relevant factors to be considered in determining whether distributions of
principal of any class of Certificates out of such sources is likely to have
any material effect on the rate at which such Certificates are amortized and
the consequent yield with respect thereto.
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THE DEPOSITOR
The Depositor is a special purpose corporation incorporated in the State
of Delaware on March 22, 1996, for the purpose of engaging in the business,
among other things, of acquiring and depositing mortgage assets in trust in
exchange for certificates evidencing interest in such trusts and selling or
otherwise distributing such certificates. The Depositor is not an affiliate
of Deutsche Bank AG. The principal executive offices of the Depositor are
located at One International Place, Room 520, Boston, Massachusetts 02110.
Its telephone number is (617) 951-7690. The Depositor's capitalization is
nominal. All of the shares of capital stock of the Depositor are held by The
Deutsche Mortgage & Asset Receiving Trust, a Massachusetts charitable lead
trust (the "DMARC Trust") formed by J H Management Corporation and J H
Holdings Corporation, both of which are Massachusetts corporations. J H
Holdings Corporation is the trustee of the DMARC Trust, which holds no assets
other than the stock of the Depositor. All of the stock of J H Holdings
Corporation and of J H Management Corporation is held by the 1960 Trust, an
independent charitable organization qualified under Section 501(c)(3) of the
Code, and operated for the benefit of a Massachusetts charitable institution.
None of the Depositor, J H Management Corporation, Deutsche Bank A.G. or
any of their respective affiliates will insure or guarantee distributions on
the Certificates of any series.
DEUTSCHE BANK AG
It is anticipated that the assets conveyed to the Trust Fund by the
Depositor will have been acquired by the Depositor from Deutsche Bank AG or
an affiliate thereof. Deutsche Bank AG is the largest banking institution in
the Federal Republic of Germany and one of the largest in the world. It is
the parent company of a group (the "Deutsche Bank Group") consisting of
commercial banks, investment banking and fund management companies, mortgage
banks and property finance companies, installment financing and leasing
companies, insurance companies, research and consultancy companies and other
domestic and foreign companies. The Deutsche Bank Group employs over 74,000
staff members at more than 2,400 branches and offices around the world.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling Agreement.
As described in the related Prospectus Supplement, the Certificates of each
series, including the Offered Certificates of such series, may consist of one
or more classes of Certificates that, among other things: (i) provide for the
accrual of interest on the Certificate Balance or Notional Amount thereof at
a fixed, variable or adjustable rate; (ii) constitute Senior Certificates or
Subordinate Certificates; (iii) constitute Stripped Interest Certificates or
Stripped Principal Certificates; (iv) provide for distributions of interest
thereon or principal thereof that commence only after the occurrence of
certain events, such as the retirement of one or more other classes of
Certificates of such series; (v) provide for distributions of principal
thereof to be made, from time to time or for designated periods, at a rate
that is faster (and, in some cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at which payments or other
collections of principal are received on the Mortgage Assets in the related
Trust Fund; (vi) provide for distributions of principal thereof to be made,
subject to available funds, based on a specified principal payment schedule
or other methodology; or (vii) provide for distributions based on collections
on the Mortgage Assets in the related Trust Fund attributable to Prepayment
Premiums and Equity Participations.
If so specified in the related Prospectus Supplement, a class of
Certificates may have two or more component parts, each having
characteristics that are otherwise described herein as being attributable to
separate and distinct classes. For example, a class of Certificates may have
a Certificate Balance on which it accrues interest at a fixed, variable or
adjustable rate. Such class
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of Certificates may also have certain characteristics attributable to
Stripped Interest Certificates insofar as it may also entitle the holders
thereof to distributions of interest accrued on a Notional Amount at a
different fixed, variable or adjustable rate. In addition, a class of
Certificates may accrue interest on one portion of its Certificate Balance at
one fixed, variable or adjustable rate and on another portion of its
Certificate Balance at a different fixed, variable or adjustable rate.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or REMIC Residual Certificates,
notional amounts or percentage interests, specified in the related Prospectus
Supplement. As provided in the related Prospectus Supplement, one or more
classes of Offered Certificates of any series may be issued in fully
registered, definitive form (such Certificates, "Definitive Certificates") or
may be offered in book-entry format (such Certificates, "Book-Entry
Certificates") through the facilities of DTC. The Offered Certificates of
each series (if issued as Definitive Certificates) may be transferred or
exchanged, subject to any restrictions on transfer described in the related
Prospectus Supplement, at the location specified in the related Prospectus
Supplement, without the payment of any service charges, other than any tax or
other governmental charge payable in connection therewith. Interests in a
class of Book-Entry Certificates will be transferred on the book-entry
records of DTC and its participating organizations. If so specified in the
related Prospectus Supplement, arrangements may be made for clearance and
settlement through CEDEL, S.A. or the Euroclear System, if they are
participants in DTC.
DISTRIBUTIONS
Distributions on the Certificates of each series will be made on each
Distribution Date from the Available Distribution Amount for such series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any series of
Certificates and any Distribution Date will refer to the total of all
payments or other collections (or advances in lieu thereof) on, under or in
respect of the Mortgage Assets and any other assets included in the related
Trust Fund that are available for distribution to the holders of Certificates
of such series on such date. The particular components of the Available
Distribution Amount for any series and Distribution Date will be more
specifically described in the related Prospectus Supplement. In general, the
Distribution Date for a series of Certificates will be the 25th day of each
month (or, if any such 25th day is not a business day, the next succeeding
business day), commencing in the month immediately following the month in
which such series of Certificates is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the
persons in whose names such Certificates are registered at the close of
business on the last business day of the month preceding the month in which
the applicable Distribution Date occurs (the "Record Date"), and the amount
of each distribution will be determined as of the close of business on the
date (the "Determination Date") specified in the related Prospectus
Supplement. All distributions with respect to each class of Certificates on
each Distribution Date will be allocated pro rata among the outstanding
Certificates in such class in proportion to the respective Percentage
Interests evidenced thereby unless otherwise specified in the related
Prospectus Supplement. Payments will be made either by wire transfer in
immediately available funds to the account of a Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder has provided the person required to make such payments with
wiring instructions no later than the related Record Date or such other date
specified in the related Prospectus Supplement (and, if so provided in the
related Prospectus Supplement, such Certificateholder holds Certificates in
the requisite amount or denomination specified therein), or by check mailed
to the address of such Certificateholder as it appears on the Certificate
Register; provided, however, that the final distribution in retirement of any
class of Certificates (whether Definitive Certificates or Book-Entry
Certificates) will be made only upon presentation and surrender of such
Certificates at the location specified in the notice to
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Certificateholders of such final distribution. The undivided percentage
interest (the "Percentage Interest") represented by an Offered Certificate of
a particular class will be equal to the percentage obtained by dividing the
initial principal balance or notional amount of such Certificate by the
initial Certificate Balance or Notional Amount of such class.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different
Pass-Through Rate, which in each case may be fixed, variable or adjustable.
The related Prospectus Supplement will specify the Pass-Through Rate or, in
the case of a variable or adjustable Pass-Through Rate, the method for
determining the Pass-Through Rate, for each class of Offered Certificates.
Unless otherwise specified in the related Prospectus Supplement, interest on
the Certificates of each series will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than a class of Accrual Certificates, which will be entitled to distributions
of accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement, and other than
any class of Stripped Principal Certificates or REMIC Residual Certificates
that is not entitled to any distributions of interest) will be made on each
Distribution Date based on the Accrued Certificate Interest for such class
and such Distribution Date, subject to the sufficiency of that portion, if
any, of the Available Distribution Amount allocable to such class on such
Distribution Date. Prior to the time interest is distributable on any class
of Accrual Certificates, the amount of Accrued Certificate Interest otherwise
distributable on such class will be added to the Certificate Balance thereof
on each Distribution Date or otherwise deferred as described in the related
Prospectus Supplement. With respect to each class of Certificates (other than
certain classes of Stripped Interest Certificates and certain classes of
REMIC Residual Certificates), the "Accrued Certificate Interest" for each
Distribution Date will be equal to interest at the applicable Pass-Through
Rate accrued for a specified period (generally the most recently ended
calendar month) on the outstanding Certificate Balance of such class of
Certificates immediately prior to such Distribution Date. Unless otherwise
provided in the related Prospectus Supplement, the Accrued Certificate
Interest for each Distribution Date on a class of Stripped Interest
Certificates will be similarly calculated except that it will accrue on a
Notional Amount that is either (i) based on the principal balances of some or
all of the Mortgage Assets in the related Trust Fund or (ii) equal to the
Certificate Balances of one or more other classes of Certificates of the same
series. Reference to a Notional Amount with respect to a class of Stripped
Interest Certificates is solely for convenience in making certain
calculations and does not represent the right to receive any distributions of
principal. If so specified in the related Prospectus Supplement, the amount
of Accrued Certificate Interest that is otherwise distributable on (or, in
the case of Accrual Certificates, that may otherwise be added to the
Certificate Balance of) one or more classes of the Certificates of a series
may be reduced to the extent that any Prepayment Interest Shortfalls, as
described under "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest", exceed the amount of any sums that are applied to
offset the amount of such shortfalls. The particular manner in which such
shortfalls will be allocated among some or all of the classes of Certificates
of that series will be specified in the related Prospectus Supplement. The
related Prospectus Supplement will also describe the extent to which the
amount of Accrued Certificate Interest that is otherwise distributable on
(or, in the case of Accrual Certificates, that may otherwise be added to the
Certificate Balance of) a class of Offered Certificates may be reduced as a
result of any other contingencies, including delinquencies, losses and
deferred interest on or in respect of the Mortgage Assets in the related
Trust Fund. Unless otherwise provided in the related Prospectus Supplement,
any reduction in the amount of Accrued Certificate Interest otherwise
distributable on a class of Certificates by reason of the allocation to such
class of a portion of any deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund will result in a corresponding increase in
the Certificate Balance of such class. See "Risk
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Factors--Effect of Prepayments on Average Life of Certificates" and "--Effect
of Prepayments on Yield of Certificates" and "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest".
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of REMIC Residual
Certificates) will have a Certificate Balance, which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will
be entitled to receive as principal out of the future cash flow on the
Mortgage Assets and other assets included in the related Trust Fund. The
outstanding Certificate Balance of a class of Certificates will be reduced by
distributions of principal made thereon from time to time and, if and to the
extent so provided in the related Prospectus Supplement, further by any
losses incurred in respect of the related Mortgage Assets allocated thereto
from time to time. In turn, the outstanding Certificate Balance of a class of
Certificates may be increased as a result of any deferred interest on or in
respect of the related Mortgage Assets being allocated thereto from time to
time, and will be increased, in the case of a class of Accrual Certificates
prior to the Distribution Date on which distributions of interest thereon are
required to commence, by the amount of any Accrued Certificate Interest in
respect thereof (reduced as described above). The initial aggregate
Certificate Balance of all classes of a series of Certificates will not be
greater than the aggregate outstanding principal balance of the related
Mortgage Assets as of a specified date (the "Cut-off Date"), after
application of scheduled payments due on or before such date, whether or not
received. The initial Certificate Balance of each class of a series of
Certificates will be specified in the related Prospectus Supplement. As and
to the extent described in the related Prospectus Supplement, distributions
of principal with respect to a series of Certificates will be made on each
Distribution Date to the holders of the class or classes of Certificates of
such series entitled thereto until the Certificate Balances of such
Certificates have been reduced to zero. Distributions of principal with
respect to one or more classes of Certificates may be made at a rate that is
faster (and, in some cases, substantially faster) than the rate at which
payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund. Distributions of principal with respect to
one or more classes of Certificates may not commence until the occurrence of
certain events, such as the retirement of one or more other classes of
Certificates of the same series, or may be made at a rate that is slower
(and, in some cases, substantially slower) than the rate at which payments or
other collections of principal are received on the Mortgage Assets in the
related Trust Fund. Distributions of principal with respect to one or more
classes of Certificates (each such class, a "Controlled Amortization Class")
may be made, subject to available funds, based on a specified principal
payment schedule. Distributions of principal with respect to one or more
other classes of Certificates (each such class, a "Companion Class") may be
contingent on the specified principal payment schedule for a Controlled
Amortization Class of the same series and the rate at which payments and
other collections of principal on the Mortgage Assets in the related Trust
Fund are received. Unless otherwise specified in the related Prospectus
Supplement, distributions of principal of any class of Offered Certificates
will be made on a pro rata basis among all of the Certificates of such class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF
EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums
or payments in respect of Equity Participations received on or in connection
with the Mortgage Assets in any Trust Fund will be distributed on each
Distribution Date to the holders of the class of Certificates of the related
series entitled thereto in accordance with the provisions described in such
Prospectus Supplement. Alternatively, such items may be retained by the
Depositor or any of its affiliates or by any other specified person and/or
may be excluded as Trust Assets.
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ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated
among the respective classes of Certificates of the related series in the
priority and manner, and subject to the limitations, specified in the related
Prospectus Supplement. As described in the related Prospectus Supplement,
such allocations may be effected by (i) a reduction in the entitlements to
interest and/or the Certificate Balances of one or more such classes of
Certificates and/or (ii) establishing a priority of payments among such
classes of Certificates. See "Description of Credit Support".
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special
Servicer, the Trustee, any provider of Credit Support and/or any other
specified person may be obligated to advance, or have the option of
advancing, on or before each Distribution Date, from its or their own funds
or from excess funds held in the related Certificate Account that are not
part of the Available Distribution Amount for the related series of
Certificates for such Distribution Date, an amount up to the aggregate of any
payments of principal (other than the principal portion of any balloon
payments) and interest that were due on or in respect of such Mortgage Loans
during the related Due Period and were delinquent on the related
Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates
entitled thereto, rather than to guarantee or insure against losses.
Accordingly, all advances made out of a specific entity's own funds will be
reimbursable out of related recoveries on the Mortgage Loans (including
amounts drawn under any fund or instrument constituting Credit Support)
respecting which such advances were made (as to any Mortgage Loan, "Related
Proceeds") and such other specific sources as may be identified in the
related Prospectus Supplement, including, in the case of a series that
includes one or more classes of Subordinate Certificates, if so identified,
collections on other Mortgage Assets in the related Trust Fund that would
otherwise be distributable to the holders of one or more classes of such
Subordinate Certificates. No advance will be required to be made by a Master
Servicer, Special Servicer or Trustee if, in the judgment of the Master
Servicer, Special Servicer or Trustee, as the case may be, such advance would
not be recoverable from Related Proceeds or another specifically identified
source (any such advance, a "Nonrecoverable Advance"); and, if previously
made by a Master Servicer, Special Servicer or Trustee, a Nonrecoverable
Advance will be reimbursable thereto from any amounts in the related
Certificate Account prior to any distributions being made to the related
series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will
be required to replace such funds in such Certificate Account on or prior to
any future Distribution Date to the extent that funds in such Certificate
Account on such Distribution Date are less than payments required to be made
to the related series of Certificateholders on such date. If so specified in
the related Prospectus Supplement, the obligation of a Master Servicer,
Special Servicer, Trustee or other entity to make advances may be secured by
a cash advance reserve fund or a surety bond. If applicable, information
regarding the characteristics of, and the identity of any obligor on, any
such surety bond, will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all
of such advances for a specified period during which such advances are
outstanding at the rate specified in such Prospectus Supplement, and such
entity will be entitled to payment of such interest periodically from general
collections on the Mortgage Loans in the related Trust Fund prior to any
payment to the related series of Certificateholders or as otherwise provided
in the related Pooling Agreement and described in such Prospectus Supplement.
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The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling Agreement or of a
party to the related MBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders
of each class of the Offered Certificates of a series, a Master Servicer,
Manager or Trustee, as provided in the related Prospectus Supplement, will
forward to each such holder, a statement (a "Distribution Date Statement")
that, unless otherwise provided in the related Prospectus Supplement, will
set forth, among other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of such class of Offered
Certificates that was applied to pay Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of such class of
Offered Certificates that was allocable to (A) Prepayment Premiums and (B)
payments on account of Equity Participations;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are entitled;
(v) if the related Trust Fund includes Mortgage Loans, the aggregate
amount of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if
payable directly out of the related Trust Fund, by any Special Servicer and
any Sub-Servicer) and, if the related Trust Fund includes MBS, the amount of
administrative compensation received by the MBS Administrator;
(vii) information regarding the aggregate principal balance of the related
Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans, information
regarding the number and aggregate principal balance of such Mortgage Loans
that are delinquent;
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments
made with respect to such Mortgage Loans during the related Prepayment Period
(that is, the specified period, generally corresponding in length to the
period between Distribution Dates, during which prepayments and other
unscheduled collections on the Mortgage Loans in the related Trust Fund must
be received in order to be distributed on a particular Distribution Date);
(x) the Certificate Balance or Notional Amount, as the case may be, of
such class of Certificates at the close of business on such Distribution
Date, separately identifying any reduction in such Certificate Balance or
Notional Amount due to the allocation of any losses in respect of the related
Mortgage Assets, any increase in such Certificate Balance or Notional Amount
due to the allocation of any negative amortization in respect of the related
Mortgage Assets and any increase in the Certificate Balance of a class of
Accrual Certificates, if any, in the event that Accrued Certificate Interest
has been added to such balance;
(xi) if such class of Offered Certificates has a variable Pass-Through
Rate or an adjustable Pass-Through Rate, the Pass-Through Rate applicable
thereto for such Distribution Date and, if determinable, for the next
succeeding Distribution Date;
(xii) the amount deposited in or withdrawn from any reserve fund on such
Distribution Date, and the amount remaining on deposit in such reserve fund
as of the close of business on such Distribution Date;
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(xiii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a
surety bond, the amount of coverage under each such instrument as of the
close of business on such Distribution Date; and
(xiv) the amount of Credit Support being afforded by any classes of
Subordinate Certificates.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per specified
denomination of the relevant class of Offered Certificates or as a
percentage. The Prospectus Supplement for each series of Certificates may
describe additional information to be included in reports to the holders of
the Offered Certificates of such series.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer, Manager or Trustee for a series of Certificates, as the
case may be, will be required to furnish to each person who at any time
during the calendar year was a holder of an Offered Certificate of such
series a statement containing the information set forth in subclauses
(i)-(iii) above, aggregated for such calendar year or the applicable portion
thereof during which such person was a Certificateholder. Such obligation
will be deemed to have been satisfied to the extent that substantially
comparable information is provided pursuant to any requirements of the Code
as are from time to time in force. See, however, "-Book-Entry Registration
and Definitive Certificates" below.
If the Trust Fund for a series of Certificates includes MBS, the ability
of the related Master Servicer, Manager or Trustee, as the case may be, to
include in any Distribution Date Statement information regarding the mortgage
loans underlying such MBS will depend on the reports received with respect to
such MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that
series in connection with distributions made to them. The Depositor will
provide the same information with respect to any MBSs in its own reports that
were publicly offered and the reports the related MBS Issuer provides to the
Trustee if privately issued.
VOTING RIGHTS
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes
of such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the related Pooling
Agreement and as otherwise specified in the related Prospectus Supplement.
See "Description of the Pooling Agreements--Amendment". The holders of
specified amounts of Certificates of a particular series will have the right
to act as a group to remove the related Trustee and also upon the occurrence
of certain events which if continuing would constitute an Event of Default on
the part of the related Master Servicer, Special Servicer or REMIC
Administrator. See "Description of the Pooling Agreements--Events of
Default", "--Rights Upon Event of Default" and "--Resignation and Removal of
the Trustee".
TERMINATION
The obligations created by the Pooling Agreement for each series of
Certificates will terminate following (i) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of
all property acquired upon foreclosure of any Mortgage Loan subject thereto
and (ii) the payment (or provision for payment) to the Certificateholders of
that series of all amounts required to be paid to them pursuant to such
Pooling Agreement. Written notice of termination of a Pooling Agreement will
be given to each Certificateholder of the related series, and the final
distribution will be made only upon presentation and surrender of the
Certificates of such series at the location to be specified in the notice of
termination.
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If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the
repurchase of the Mortgage Assets in the related Trust Fund by the party or
parties specified therein, under the circumstances and in the manner set
forth therein.
In addition, if so provided in the related Prospectus Supplement upon the
reduction of the Certificate Balance of a specified class or classes of
Certificates by a specified percentage or amount or upon a specified date, a
party designated therein may be authorized or required to solicit bids for
the purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set forth therein. The solicitation
of bids will be conducted in a commercially reasonable manner and, generally,
assets will be sold at their fair market value. Circumstances may arise in
which such fair market value may be less than the unpaid balance of the
Mortgage Loans sold and therefore, as a result of such a sale, the
Certificateholders of one or more Classes of Certificates may receive an
amount less than the Certificate Balance of, and accrued unpaid interest on,
their Certificates.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such series will be
offered in book-entry format through the facilities of DTC, and each such
class will be represented by one or more global Certificates registered in
the name of The Depository Trust Company ("DTC") or its nominee. If so
provided in the Prospectus Supplement, arrangements may be made for clearance
and settlement through the Euroclear System or CEDEL, S.A., if they are
participants in DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC was created to hold securities for its participating organizations
("DTC Participants") and facilitate the clearance and settlement of
securities transactions between DTC Participants through electronic
computerized book-entry changes in their accounts, thereby eliminating the
need for physical movement of securities certificates. DTC Participants that
maintain accounts with DTC include securities brokers and dealers, banks,
trust companies and clearing corporations and may include other
organizations. DTC is owned by a number of DTC Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
directly or indirectly clear through or maintain a custodial relationship
with a DTC Participant that maintains as account with DTC. The rules
applicable to DTC and DTC Participants are on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for such
purpose. In turn, the Financial Intermediary's ownership of such Certificates
will be recorded on the records of DTC (or of a participating firm that acts
as agent for the Financial Intermediary, whose interest will in turn be
recorded on the records of DTC, if the beneficial owner's Financial
Intermediary is not a DTC Participant). Therefore, the beneficial owner must
rely on the foregoing procedures to evidence its beneficial ownership of such
Certificates. The beneficial ownership interest of the owner of a Book-Entry
Certificate (a "Certificate Owner") may only be transferred by compliance
with the rules, regulations and procedures of such Financial Intermediaries
and DTC Participants.
DTC has no knowledge of the actual Certificate Owners; DTC's records
reflect only the identity of the DTC Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners.
The DTC Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to DTC Participants
and by DTC Participants to Financial Intermediaries and Certificate Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on such
date. Disbursement of such distributions by DTC Participants to Financial
Intermediaries and Certificate Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of each such DTC Participant (and not of DTC, the
Depositor or any Trustee, Master Servicer, Special Servicer or Manager),
subject to any statutory or regulatory requirements as may be in effect from
time to time. Accordingly, under a book-entry system, Certificate Owners may
receive payments after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement)
of Book-Entry Certificates will be the nominee of DTC, and the Certificate
Owners will not be recognized as Certificateholders under the Pooling
Agreement. Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly
through the DTC Participants who in turn will exercise their rights through
DTC. The Depositor has been informed that DTC will take action permitted to
be taken by a Certificateholder under a Pooling Agreement only at the
direction of one or more DTC Participants to whose account with DTC interests
in the Book-Entry Certificates are credited. DTC may take conflicting actions
with respect to the Book-Entry Certificates to the extent that such actions
are taken on behalf of Financial Intermediaries whose holdings include such
Certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain Certificate Owners, the
ability of a Certificate Owner to pledge its interest in Book-Entry
Certificates to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of its interest in Book-Entry
Certificates, may be limited due to the lack of a physical certificate
evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or
its nominee, only if (i) the Depositor advises the Trustee in writing that
DTC is no longer willing or able to discharge properly its responsibilities
as depository with respect to such Certificates and the Depositor is unable
to locate a qualified successor or (ii) the Depositor, at its option, elects
to terminate the book-entry system through DTC with respect to such
Certificates. Upon the occurrence of either of the events described in the
preceding sentence, DTC will be required to notify all DTC Participants of
the availability through DTC of Definitive Certificates. Upon surrender by
DTC of the certificate or certificates representing a class of Book-Entry
Certificates, together with instructions for registration, the Trustee for
the related series or other designated party will be required to issue to the
Certificate Owners identified in such instructions the Definitive
Certificates to which they are entitled, and thereafter the holders of such
Definitive Certificates will be recognized as "Certificateholders" under and
within the meaning of the related Pooling Agreement.
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DESCRIPTION OF THE POOLING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a Pooling
Agreement. In general, the parties to a Pooling Agreement will include the
Depositor, the Trustee, the Master Servicer, the Special Servicer and, if one
or more REMIC elections have been made with respect to the Trust Fund, the
REMIC Administrator. However, a Pooling Agreement that relates to a Trust
Fund that includes MBS may include a Manager as a party, but may not include
a Master Servicer, Special Servicer or other servicer as a party. All parties
to each Pooling Agreement under which Certificates of a series are issued
will be identified in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the Mortgage Asset Seller or an affiliate
thereof may perform the functions of Master Servicer, Special Servicer,
Manager or REMIC Administrator. If so specified in the related Prospectus
Supplement, the Master Servicer may also perform the duties of Special
Servicer, and the Master Servicer, the Special Servicer or the Trustee may
also perform the duties of REMIC Administrator. Any party to a Pooling
Agreement or any affiliate thereof may own Certificates issued thereunder;
however, except in limited circumstances (including with respect to required
consents to certain amendments to a Pooling Agreement), Certificates issued
thereunder that are held by the Master Servicer or Special Servicer for the
related Series will not be allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. However,
the provisions of each Pooling Agreement will vary depending upon the nature
of the Certificates to be issued thereunder and the nature of the related
Trust Fund. The following summaries describe certain provisions that may
appear in a Pooling Agreement under which Certificates that evidence
interests in Mortgage Loans will be issued. The Prospectus Supplement for a
series of Certificates will describe any provision of the related Pooling
Agreement that materially differs from the description thereof contained in
this Prospectus and, if the related Trust Fund includes MBS, will summarize
all of the material provisions of the related Pooling Agreement. The
summaries herein do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Pooling Agreement for each series of Certificates and the description of such
provisions in the related Prospectus Supplement. The Depositor will provide a
copy of the Pooling Agreement (without exhibits) that relates to any series
of Certificates without charge upon written request of a holder of a
Certificate of such series addressed to it at its principal executive offices
specified herein under "The Depositor".
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans
to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to
be received on or with respect to such Mortgage Loans after the Cut-off Date,
other than principal and interest due on or before the Cut-off Date. The
Trustee will, concurrently with such assignment, deliver the Certificates to
or at the direction of the Depositor in exchange for the Mortgage Loans and
the other assets to be included in the Trust Fund for such series. Each
Mortgage Loan will be identified in a schedule appearing as an exhibit to the
related Pooling Agreement. Such schedule generally will include detailed
information that pertains to each Mortgage Loan included in the related Trust
Fund, which information will typically include the address of the related
Mortgaged Property and type of such property; the Mortgage Rate and, if
applicable, the applicable index, gross margin, adjustment date and any rate
cap information; the original and remaining term to maturity; the
amortization term; and the original and outstanding principal balance.
In addition, unless otherwise specified in the related Prospectus
Supplement, the Depositor will, as to each Mortgage Loan to be included in a
Trust Fund, deliver, or cause to be delivered,
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to the related Trustee (or to a custodian appointed by the Trustee as
described below) the Mortgage Note endorsed, without recourse, either in
blank or to the order of such Trustee (or its nominee), the Mortgage with
evidence of recording indicated thereon (except for any Mortgage not returned
from the public recording office), an assignment of the Mortgage in blank or
to the Trustee (or its nominee) in recordable form, together with any
intervening assignments of the Mortgage with evidence of recording thereon
(except for any such assignment not returned from the public recording
office), and, if applicable, any riders or modifications to such Mortgage
Note and Mortgage, together with certain other documents at such times as set
forth in the related Pooling Agreement. Such assignments may be blanket
assignments covering Mortgages on Mortgaged Properties located in the same
county, if permitted by law. Notwithstanding the foregoing, a Trust Fund may
include Mortgage Loans where the original Mortgage Note is not delivered to
the Trustee if the Depositor delivers, or causes to be delivered, to the
related Trustee (or such custodian) a copy or a duplicate original of the
Mortgage Note, together with an affidavit certifying that the original
thereof has been lost or destroyed. In addition, if the Depositor cannot
deliver, with respect to any Mortgage Loan, the Mortgage or any intervening
assignment with evidence of recording thereon concurrently with the execution
and delivery of the related Pooling Agreement because of a delay caused by
the public recording office, the Depositor will deliver, or cause to be
delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment as submitted for recording. The
Depositor will deliver, or cause to be delivered, to the related Trustee (or
such custodian) such Mortgage or assignment with evidence of recording
indicated thereon after receipt thereof from the public recording office. If
the Depositor cannot deliver, with respect to any Mortgage Loan, the Mortgage
or any intervening assignment with evidence of recording thereon concurrently
with the execution and delivery of the related Pooling Agreement because such
Mortgage or assignment has been lost, the Depositor will deliver, or cause to
be delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment with evidence of recording thereon.
Unless otherwise specified in the related Prospectus Supplement, assignments
of Mortgage to the Trustee (or its nominee) will be recorded in the
appropriate public recording office, except in states where, in the opinion
of counsel acceptable to the Trustee, such recording is not required to
protect the Trustee's interests in the Mortgage Loan against the claim of any
subsequent transferee or any successor to or creditor of the Depositor or the
originator of such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered
to it within a specified period of days after receipt thereof, and the
Trustee (or such custodian) will hold such documents in trust for the benefit
of the Certificateholders of such series. Unless otherwise specified in the
related Prospectus Supplement, if any such document is found to be missing or
defective, and such omission or defect, as the case may be, materially and
adversely affects the interests of the Certificateholders of the related
series, the Trustee (or such custodian) will be required to notify the Master
Servicer, the Special Servicer and the Depositor, and one of such persons
will be required to notify the relevant Mortgage Asset Seller. In that case,
and if the Mortgage Asset Seller cannot deliver the document or cure the
defect within a specified number of days after receipt of such notice, then,
except as otherwise specified below or in the related Prospectus Supplement,
the Mortgage Asset Seller will be obligated to repurchase the related
Mortgage Loan from the Trustee at a price generally equal to the unpaid
principal balance thereof, together with accrued but unpaid interest through
a date on or about the date of purchase, or at such other price as will be
specified in the related Prospectus Supplement (in any event, the "Purchase
Price"). If so provided in the Prospectus Supplement for a series of
Certificates, a Mortgage Asset Seller, in lieu of repurchasing a Mortgage
Loan as to which there is missing or defective loan documentation, will have
the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of such series of Certificates, to replace such
Mortgage Loan with one or more other mortgage loans, in accordance with
standards that will be described in the Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, this repurchase or
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substitution obligation will constitute the sole remedy to holders of the
Certificates of any series or to the related Trustee on their behalf for
missing or defective Mortgage Loan documentation, and neither the Depositor
nor, unless it is the Mortgage Asset Seller, the Master Servicer or the
Special Servicer will be obligated to purchase or replace a Mortgage Loan if
a Mortgage Asset Seller defaults on its obligation to do so.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage
Loans in any Trust Fund and to maintain possession of and, if applicable, to
review the documents relating to such Mortgage Loans, in any case as the
agent of the Trustee. The identity of any such custodian to be appointed on
the date of initial issuance of the Certificates will be set forth in the
related Prospectus Supplement.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule
of Mortgage Loans appearing as an exhibit to the related Pooling Agreement;
(ii) the enforceability of the related Mortgage Note and Mortgage and the
existence of title insurance insuring the lien priority of the related
Mortgage; (iii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iv) the
payment status of the Mortgage Loan. It is expected that in most cases the
Warranting Party will be the Mortgage Asset Seller; however, the Warranting
Party may also be an affiliate of the Mortgage Asset Seller, the Depositor or
an affiliate of the Depositor, the Master Servicer, the Special Servicer or
another person acceptable to the Depositor. The Warranting Party, if other
than the Mortgage Asset Seller, will be identified in the related Prospectus
Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will
be required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Certificateholders of
the related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will
be obligated to repurchase such Mortgage Loan from the Trustee at the
applicable Purchase Price. If so provided in the Prospectus Supplement for a
series of Certificates, a Warranting Party, in lieu of repurchasing a
Mortgage Loan as to which a breach has occurred, will have the option,
exercisable upon certain conditions and/or within a specified period after
initial issuance of such series of Certificates, to replace such Mortgage
Loan with one or more other mortgage loans, in accordance with standards that
will be described in the Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, this repurchase or substitution obligation
will constitute the sole remedy available to holders of the Certificates of
any series or to the related Trustee on their behalf for a breach of
representation and warranty by a Warranting Party, and neither the Depositor
nor the Master Servicer, in either case unless it is the Warranting Party,
will be obligated to purchase or replace a Mortgage Loan if a Warranting
Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the
related series of Certificates is issued, and thus may not address events
that may occur following the date as of which they were made. However, the
Depositor will not include any Mortgage Loan in the Trust Fund for any series
of Certificates if anything has come to the Depositor's attention that would
cause it to believe that the representations and warranties made in respect
of such Mortgage Loan will not be accurate in all material respects as of the
date of issuance. The date as of which the representations and warranties
regarding the Mortgage Loans in any Trust Fund were made will be specified in
the related Prospectus Supplement.
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COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer for any Mortgage Pool, directly or
through Sub-Servicers, will each be obligated under the related Pooling
Agreement to service and administer the Mortgage Loans in such Mortgage Pool
for the benefit of the related Certificateholders, in accordance with
applicable law and further in accordance with the terms of such Pooling
Agreement, such Mortgage Loans and any instrument of Credit Support included
in the related Trust Fund. Subject to the foregoing, the Master Servicer and
the Special Servicer will each have full power and authority to do any and
all things in connection with such servicing and administration that it may
deem necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that
it services and will be obligated to follow such collection procedures as it
would follow with respect to mortgage loans that are comparable to such
Mortgage Loans and held for its own account, provided (i) such procedures are
consistent with the terms of the related Pooling Agreement and (ii) do not
impair recovery under any instrument of Credit Support included in the
related Trust Fund. Consistent with the foregoing, the Master Servicer and
the Special Servicer will each be permitted, in its discretion, unless
otherwise specified in the related Prospectus Supplement, to waive any
Prepayment Premium, late payment charge or other charge in connection with
any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be
required to perform as to the Mortgage Loans in such Trust Fund various other
customary functions of a servicer of comparable loans, including maintaining
escrow or impound accounts, if required under the related Pooling Agreement,
for payment of taxes, insurance premiums, ground rents and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; negotiating modifications;
conducting property inspections on a periodic or other basis; managing (or
overseeing the management of) Mortgaged Properties acquired on behalf of such
Trust Fund through foreclosure, deed-in-lieu of foreclosure or otherwise
(each, an "REO Property"); and maintaining servicing records relating to such
Mortgage Loans. The related Prospectus Supplement will specify when and the
extent to which servicing of a Mortgage Loan is to be transferred from the
Master Servicer to the Special Servicer. In general, and subject to the
discussion in the related Prospectus Supplement, a Special Servicer will be
responsible for the servicing and administration of: (i) Mortgage Loans that
are delinquent in respect of a specified number of scheduled payments; (ii)
Mortgage Loans as to which the related borrower has entered into or consented
to bankruptcy, appointment of a receiver or conservator or similar insolvency
proceeding, or the related borrower has become the subject of a decree or
order for such a proceeding which shall have remained in force undischarged
or unstayed for a specified number of days; and (iii) REO Properties. If so
specified in the related Prospectus Supplement, a Pooling Agreement also may
provide that if a default on a Mortgage Loan has occurred or, in the judgment
of the related Master Servicer, a payment default is reasonably foreseeable,
the related Master Servicer may elect to transfer the servicing thereof, in
whole or in part, to the related Special Servicer. Unless otherwise provided
in the related Prospectus Supplement, when the circumstances no longer
warrant a Special Servicer's continuing to service a particular Mortgage Loan
(e.g., the related borrower is paying in accordance with the forbearance
arrangement entered into between the Special Servicer and such borrower), the
Master Servicer will resume the servicing duties with respect thereto. If and
to the extent provided in the related Pooling Agreement and described in the
related Prospectus Supplement, a Special Servicer may perform certain limited
duties in respect of Mortgage Loans for which the Master Servicer is
primarily responsible (including, if so specified, performing property
inspections and evaluating financial statements); and a Master Servicer may
perform certain limited duties in respect of any Mortgage Loan for which the
Special Servicer is primarily responsible (including, if so specified,
continuing to
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receive payments on such Mortgage Loan (including amounts collected by the
Special Servicer), making certain calculations with respect to such Mortgage
Loan and making remittances and preparing certain reports to the Trustee
and/or Certificateholders with respect to such Mortgage Loan. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be responsible for filing and settling claims in respect of particular
Mortgage Loans under any applicable instrument of Credit Support. See
"Description of Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean
that operating income is insufficient to service the mortgage debt, or may
reflect the diversion of that income from the servicing of the mortgage debt.
In addition, a mortgagor that is unable to make Mortgage Loan payments may
also be unable to make timely payment of taxes and otherwise to maintain and
insure the related Mortgaged Property. In general, the related Special
Servicer will be required to monitor any Mortgage Loan that is in default,
evaluate whether the causes of the default can be corrected over a reasonable
period without significant impairment of the value of the related Mortgaged
Property, initiate corrective action in cooperation with the Mortgagor if
cure is likely, inspect the related Mortgaged Property and take such other
actions as it deems necessary and appropriate. A significant period of time
may elapse before the Special Servicer is able to assess the success of any
such corrective action or the need for additional initiatives. The time
within which the Special Servicer can make the initial determination of
appropriate action, evaluate the success of corrective action, develop
additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure)
on behalf of the Certificateholders of the related series may vary
considerably depending on the particular Mortgage Loan, the Mortgaged
Property, the mortgagor, the presence of an acceptable party to assume the
Mortgage Loan and the laws of the jurisdiction in which the Mortgaged
Property is located. If a mortgagor files a bankruptcy petition, the Special
Servicer may not be permitted to accelerate the maturity of the Mortgage Loan
or to foreclose on the related Mortgaged Property for a considerable period
of time. See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and
other similar matters. In general, the Master Servicer may approve such a
request if it has determined, exercising its business judgment in accordance
with the applicable servicing standard, that such approval will not adversely
affect the security for, or the timely and full collectability of, the
related Mortgage Loan. Any fee collected by the Master Servicer for
processing such request will be retained by the Master Servicer as additional
servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be
filed) of record a request for notice of any action by a superior lienholder
under the Senior Lien for the protection of the related Trustee's interest,
where permitted by local law and whenever applicable state law does not
require that a junior lienholder be named as a party defendant in foreclosure
proceedings in order to foreclose such junior lienholder's equity of
redemption. Unless otherwise specified in the related Prospectus Supplement,
the Master Servicer also will be required to notify any superior lienholder
in writing of the existence of the Mortgage Loan and request notification of
any action (as described below) to be taken against the mortgagor or the
Mortgaged Property by the superior lienholder. If the Master Servicer is
notified that any superior lienholder has accelerated or intends to
accelerate the obligations secured by the related Senior Lien, or has
declared or intends to declare a default under the mortgage or the promissory
note secured thereby, or has filed or intends to file an election to have the
related Mortgaged Property sold or foreclosed, then, unless otherwise
specified in the related Prospectus Supplement, the Master Servicer and the
Special Servicer will each be required to take, on behalf of the related
Trust Fund, whatever actions are necessary to protect the interests of the
related Certificateholders and/or to preserve the security of the related
Mortgage Loan, subject to the application of the REMIC Provisions. Unless
otherwise specified in
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the related Prospectus Supplement, the Master Servicer or Special Servicer,
as applicable, will be required to advance the necessary funds to cure the
default or reinstate the Senior Lien, if such advance is in the best
interests of the related Certificateholders and the Master Servicer or
Special Servicer, as applicable, determines such advances are recoverable out
of payments on or proceeds of the related Mortgage Loan.
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless
otherwise specified in the related Prospectus Supplement, such Master
Servicer or Special Servicer will remain obligated under the related Pooling
Agreement. Unless otherwise provided in the related Prospectus Supplement,
each sub-servicing agreement between a Master Servicer and a Sub-Servicer (a
"Sub-Servicing Agreement") must provide for servicing of the applicable
Mortgage Loans consistent with the related Pooling Agreement. The Master
Servicer and Special Servicer in respect of any Mortgage Asset Pool will each
be required to monitor the performance of Sub-Servicers retained by it and
will have the right to remove a Sub-Servicer retained by it at any time it
considers such removal to be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling Agreement is
sufficient to pay such fees. Each Sub-Servicer will be reimbursed by the
Master Servicer or Special Servicer, as the case may be, that retained it for
certain expenditures which it makes, generally to the same extent such Master
Servicer or Special Servicer would be reimbursed under a Pooling Agreement.
See "--Certificate Account" and "--Servicing Compensation and Payment of
Expenses".
CERTIFICATE ACCOUNT
General. The Master Servicer, the Trustee and/or the Special Servicer
will, as to each Trust Fund that includes Mortgage Loans, establish and
maintain or cause to be established and maintained the corresponding
Certificate Account, which will be established so as to comply with the
standards of each Rating Agency that has rated any one or more classes of
Certificates of the related series. A Certificate Account may be maintained
as an interest-bearing or a noninterest-bearing account and the funds held
therein may be invested pending each succeeding Distribution Date in United
States government securities and other investment grade obligations that are
acceptable to each Rating Agency that has rated any one or more classes of
Certificates of the related series ("Permitted Investments"). Such Permitted
Investments include federal funds, uncertificated certificates of deposit,
time deposits, bankers' acceptances and repurchase agreements, certain United
States dollar-denominated commercial paper, units of money market funds that
maintain a constant net asset value and any other obligations or security
acceptable to each Rating Agency. Unless otherwise provided in the related
Prospectus Supplement, any interest or other income earned on funds in a
Certificate Account will be paid to the related Master Servicer, Trustee or
Special Servicer as additional compensation. A Certificate Account may be
maintained with the related Master Servicer, Special Servicer, Trustee or
Mortgage Asset Seller or with a depository institution that is an affiliate
of any of the foregoing or of the Depositor, provided that it complies with
applicable Rating Agency standards. If permitted by the applicable Rating
Agency or Agencies, a Certificate Account may contain funds relating to more
than one series of mortgage pass-through certificates and may contain other
funds representing payments on mortgage loans owned by the related Master
Servicer or Special Servicer or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the following payments and
collections received or made by the
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Master Servicer, the Trustee or the Special Servicer subsequent to the
Cut-off Date (other than payments due on or before the Cut-off Date) are to
be deposited in the Certificate Account for each Trust Fund that includes
Mortgage Loans, within a certain period following receipt (in the case of
collections on or in respect of the Mortgage Loans) or otherwise as provided
in the related Pooling Agreement:
(i) all payments on account of principal, including principal prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans, including
any default interest collected, in each case net of any portion thereof
retained by the Master Servicer or the Special Servicer as its servicing
compensation or as compensation to the Trustee;
(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan or in connection with the full or partial condemnation
of a Mortgaged Property (other than proceeds applied to the restoration of
the property or released to the related borrower) ("Insurance Proceeds" and
"Condemnation Proceeds", respectively) and all other amounts received and
retained in connection with the liquidation of defaulted Mortgage Loans or
property acquired in respect thereof, by foreclosure or otherwise (such
amounts, together with those amounts listed in clause (vii) below,
"Liquidation Proceeds"), together with the net operating income (less
reasonable reserves for future expenses) derived from the operation of any
Mortgaged Properties acquired by the Trust Fund through foreclosure or
otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
(v) any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement;
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or
any other specified person as described under "--Assignment of Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases", all
proceeds of the purchase of any defaulted Mortgage Loan as described under
"--Realization Upon Defaulted Mortgage Loans", and all proceeds of any
Mortgage Asset purchased as described under "Description of the
Certificates--Termination; Retirement of Certificates";
(viii) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or the Special Servicer and is
not otherwise retained by the Depositor or another specified person, any
payments on account of modification or assumption fees, late payment charges,
Prepayment Premiums or Equity Participations with respect to the Mortgage
Loans;
(ix) all payments required to be deposited in the Certificate Account with
respect to any deductible clause in any blanket insurance policy as described
under "--Hazard Insurance Policies";
(x) any amount required to be deposited by the Master Servicer, the
Special Servicer or the Trustee in connection with losses realized on
investments for the benefit of the Master Servicer, the Special Servicer or
the Trustee, as the case may be, of funds held in the Certificate Account;
and
(xi) any other amounts received on or in respect of the Mortgage Loans
required to be deposited in the Certificate Account as provided in the
related Pooling Agreement and described in the related Prospectus Supplement.
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Withdrawals. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Master Servicer,
Trustee or Special Servicer may make withdrawals from the Certificate Account
for each Trust Fund that includes Mortgage Loans for any of the following
purposes:
(i) to make distributions to the Certificateholders on each Distribution
Date;
(ii) to pay the Master Servicer or the Special Servicer any servicing fees
not previously retained thereby, such payment to be made out of payments and
other collections of interest on the particular Mortgage Loans as to which
such fees were earned;
(iii) to reimburse the Master Servicer, the Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled payments
of principal and interest made by it, and certain unreimbursed servicing
expenses incurred by it, with respect to Mortgage Loans in the Trust Fund and
properties acquired in respect thereof, such reimbursement to be made out of
amounts that represent late payments collected on the particular Mortgage
Loans, Liquidation Proceeds, Insurance Proceeds and Condemnation Proceeds
collected on the particular Mortgage Loans and properties, and net income
collected on the particular properties, with respect to which such advances
were made or such expenses were incurred or out of amounts drawn under any
form of Credit Support with respect to such Mortgage Loans and properties, or
if in the judgment of the Master Servicer, the Special Servicer or such other
person, as applicable, such advances and/or expenses will not be recoverable
from such amounts, such reimbursement to be made from amounts collected on
other Mortgage Loans in the same Trust Fund or, if and to the extent so
provided by the related Pooling Agreement and described in the related
Prospectus Supplement, only from that portion of amounts collected on such
other Mortgage Loans that is otherwise distributable on one or more classes
of Subordinate Certificates of the related series;
(iv) if and to the extent described in the related Prospectus Supplement,
to pay the Master Servicer, the Special Servicer or any other specified
person interest accrued on the advances and servicing expenses described in
clause (iii) above incurred by it while such remain outstanding and
unreimbursed;
(v) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged Properties
that constitute security for defaulted Mortgage Loans, and for any
containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "--Realization Upon
Defaulted Mortgage Loans";
(vi) to reimburse the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor, the Trustee, or any of their respective
directors, officers, employees and agents, as the case may be, for certain
expenses, costs and liabilities incurred thereby, as and to the extent
described under "--Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the Depositor" and "--Certain Matters
Regarding the Trustee";
(vii) if and to the extent described in the related Prospectus Supplement,
to pay the fees of the Trustee, the REMIC Administrator and any provider of
Credit Support;
(viii) if and to the extent described in the related Prospectus
Supplement, to reimburse prior draws on any form of Credit Support;
(ix) to pay the Master Servicer, the Special Servicer or the Trustee, as
appropriate, interest and investment income earned in respect of amounts held
in the Certificate Account as additional compensation;
(x) to pay any servicing expenses not otherwise required to be advanced by
the Master Servicer, the Special Servicer or any other specified person;
(xi) if one or more elections have been made to treat the Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or local
taxes imposed on the Trust Fund or its assets or transactions, as and to the
extent described under "Certain Federal Income Tax Consequences--REMICs--
Prohibited Transactions Tax and Other Taxes";
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(xii) to pay for the cost of various opinions of counsel obtained pursuant
to the related Pooling Agreement for the benefit of Certificateholders;
(xiii) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xiv) to clear and terminate the Certificate Account upon the termination
of the Trust Fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master Servicer and the Special Servicer may each agree to modify,
waive or amend any term of any Mortgage Loan serviced by it in a manner
consistent with the applicable Servicing Standard; provided that, unless
otherwise set forth in the related Prospectus Supplement, the modification,
waiver or amendment (i) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (ii) will not, in the
judgment of the Master Servicer or the Special Servicer, as the case may be,
materially impair the security for the Mortgage Loan or reduce the likelihood
of timely payment of amounts due thereon and (iii) will not adversely affect
the coverage under any applicable instrument of Credit Support. Unless
otherwise provided in the related Prospectus Supplement, the Special Servicer
also may agree to any other modification, waiver or amendment if, in its
judgment, (i) a material default on the Mortgage Loan has occurred or a
payment default is imminent, (ii) such modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect to the Mortgage
Loan, taking into account the time value of money, than would liquidation and
(iii) such modification, waiver or amendment will not adversely affect the
coverage under any applicable instrument of Credit Support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of
the Trustee, may at any time institute foreclosure proceedings, exercise any
power of sale contained in the related Mortgage, obtain a deed in lieu of
foreclosure, or otherwise acquire title to the related Mortgaged Property, by
operation of law or otherwise. Unless otherwise specified in the related
Prospectus Supplement, the Special Servicer may not, however, acquire title
to any Mortgaged Property, have a receiver of rents appointed with respect to
any Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related series
of Certificateholders, or any other specified person to be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an
"operator" of such Mortgaged Property within the meaning of certain federal
environmental laws, unless the Special Servicer has previously received a
report prepared by a person who regularly conducts environmental audits
(which report will be an expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b)
there are no circumstances or conditions present at the Mortgaged Property
that have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters and
related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value
of money, than not taking such actions. See "Certain Legal Aspects of
Mortgage Loans--Environmental Considerations".
A Pooling Agreement may grant to the Master Servicer, the Special
Servicer, a provider of Credit Support and/or the holder or holders of
certain classes of the related series of Certificates
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a right of first refusal to purchase from the Trust Fund, at a predetermined
price (which, if less than the Purchase Price, will be specified in the
related Prospectus Supplement), any Mortgage Loan as to which a specified
number of scheduled payments are delinquent. In addition, unless otherwise
specified in the related Prospectus Supplement, the Special Servicer may
offer to sell any defaulted Mortgage Loan if and when the Special Servicer
determines, consistent with its normal servicing procedures, that such a sale
would produce a greater recovery, taking into account the time value of
money, than would liquidation of the related Mortgaged Property. In the
absence of any such sale, the Special Servicer will generally be required to
proceed against the related Mortgaged Property, subject to the discussion
above.
Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Special Servicer, on behalf of the Trust Fund,
will be required to sell the Mortgaged Property within two years of
acquisition, unless (i) the Internal Revenue Service (the "IRS") grants an
extension of time to sell such property or (ii) the Trustee receives an
opinion of independent counsel to the effect that the holding of the property
by the Trust Fund for more than two years after its acquisition will not
result in the imposition of a tax on the Trust Fund or cause the Trust Fund
(or any designated portion thereof) to fail to qualify as a REMIC under the
Code at any time that any Certificate is outstanding. Subject to the
foregoing and any other tax-related limitations, the Special Servicer will
generally be required to attempt to sell any Mortgaged Property so acquired
on the same terms and conditions it would if it were the owner. Unless
otherwise provided in the related Prospectus Supplement, if title to any
Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Special Servicer will also be required to ensure that the
Mortgaged Property is administered so that it constitutes "foreclosure
property" within the meaning of Code Section 860G(a)(8) at all times, that
the sale of such property does not result in the receipt by the Trust Fund of
any income from nonpermitted assets as described in Code Section
860F(a)(2)(B), and that the Trust Fund does not derive any "net income from
foreclosure property" within the meaning of Code Section 860G(c)(2), with
respect to such property. If the Trust Fund acquires title to any Mortgaged
Property, the Special Servicer, on behalf of the Trust Fund, may retain an
independent contractor to manage and operate such property. The retention of
an independent contractor, however, will not relieve the Special Servicer of
its obligation to manage such Mortgaged Property as required under the
related Pooling Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage
Loan are less than the outstanding principal balance of the defaulted
Mortgage Loan plus interest accrued thereon plus the aggregate amount of
reimbursable expenses incurred by the Special Servicer and/or the Master
Servicer in connection with such Mortgage Loan, then, to the extent that such
shortfall is not covered by any instrument or fund constituting Credit
Support, the Trust Fund will realize a loss in the amount of such shortfall.
The Special Servicer and/or the Master Servicer will be entitled to
reimbursement out of the Liquidation Proceeds recovered on any defaulted
Mortgage Loan, prior to the distribution of such Liquidation Proceeds to
Certificateholders, any and all amounts that represent unpaid servicing
compensation in respect of the Mortgage Loan, unreimbursed servicing expenses
incurred with respect to the Mortgage Loan and any unreimbursed advances of
delinquent payments made with respect to the Mortgage Loan. In addition, if
and to the extent set forth in the related Prospectus Supplement, amounts
otherwise distributable on the Certificates may be further reduced by
interest payable to the Master Servicer and/or Special Servicer on such
servicing expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any,
of the related hazard insurance policy are insufficient to restore fully the
damaged property, neither the Special Servicer nor the Master Servicer will
be required to expend its own funds to effect such restoration unless (and to
the extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master
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Servicer, as the case may be, for its expenses and (ii) that such expenses
will be recoverable by it from related Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds and/or amounts drawn on any instrument or fund
constituting Credit Support.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the Master Servicer (or the Special Servicer
with respect to Mortgage Loans serviced thereby) to use reasonable efforts to
cause each Mortgage Loan borrower to maintain a hazard insurance policy that
provides for such coverage as is required under the related Mortgage or, if
the Mortgage permits the holder thereof to dictate to the borrower the
insurance coverage to be maintained on the related Mortgaged Property, such
coverage as is consistent with the Master Servicer's (or Special Servicer's)
normal servicing procedures. Unless otherwise specified in the related
Prospectus Supplement, such coverage generally will be in an amount equal to
the lesser of the principal balance owing on such Mortgage Loan and the
replacement cost of the related Mortgaged Property. The ability of a Master
Servicer (or Special Servicer) to assure that hazard insurance proceeds are
appropriately applied may be dependent upon its being named as an additional
insured under any hazard insurance policy and under any other insurance
policy referred to below, or upon the extent to which information concerning
covered losses is furnished by borrowers. All amounts collected by a Master
Servicer (or Special Servicer) under any such policy (except for amounts to
be applied to the restoration or repair of the Mortgaged Property or released
to the borrower in accordance with the Master Servicer's (or Special
Servicer's) normal servicing procedures and/or to the terms and conditions of
the related Mortgage and Mortgage Note) will be deposited in the related
Certificate Account. The Pooling Agreement may provide that the Master
Servicer (or Special Servicer) may satisfy its obligation to cause each
borrower to maintain such a hazard insurance policy by maintaining a blanket
policy insuring against hazard losses on the Mortgage Loans in a Trust Fund.
If such blanket policy contains a deductible clause, the Master Servicer (or
Special Servicer) will be required, in the event of a casualty covered by
such blanket policy, to deposit in the related Certificate Account all
additional sums that would have been deposited therein under an individual
policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in each
policy. Although the policies covering the Mortgaged Properties will be
underwritten by different insurers under different state laws in accordance
with different applicable state forms, and therefore will not contain
identical terms and conditions, most such policies typically do not cover any
physical damage resulting from war, revolution, governmental actions, floods
and other water-related causes, earth movement (including earthquakes,
landslides and mudflows), wet or dry rot, vermin and domestic animals.
Accordingly, a Mortgaged Property may not be insured for losses arising from
any such cause unless the related Mortgage specifically requires, or permits
the holder thereof to require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at
all times to carry insurance of a specified percentage (generally 80% to 90%)
of the full replacement value of the improvements on the property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clauses generally provide that the
insurer's liability in the event of partial loss does not exceed the lesser
of (i) the replacement cost of the improvements less physical depreciation
and (ii) such proportion of the loss as the amount of insurance carried bears
to the specified percentage of the full replacement cost of such
improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale
or other transfer of the related
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Mortgaged Property made without the lender's consent. Certain of the Mortgage
Loans may also contain a due-on-encumbrance clause that entitles the lender
to accelerate the maturity of the Mortgage Loan upon the creation of any
other lien or encumbrance upon the Mortgaged Property. Unless otherwise
provided in the related Prospectus Supplement, the Master Servicer (or
Special Servicer) will determine whether to exercise any right the Trustee
may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
or Special Servicer, as applicable, will be entitled to retain as additional
servicing compensation any fee collected in connection with the permitted
transfer of a Mortgaged Property. See "Certain Legal Aspects of Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion
of the interest payments on each Mortgage Loan in the related Trust Fund,
including Mortgage Loans serviced by the related Special Servicer. If and to
the extent described in the related Prospectus Supplement, a Special
Servicer's primary compensation with respect to a series of Certificates may
consist of any or all of the following components: (i) a specified portion of
the interest payments on each Mortgage Loan in the related Trust Fund,
whether or not serviced by it; (ii) an additional specified portion of the
interest payments on each Mortgage Loan then currently serviced by it; and
(iii) subject to any specified limitations, a fixed percentage of some or all
of the collections and proceeds received with respect to each Mortgage Loan
which was at any time serviced by it, including Mortgage Loans for which
servicing was returned to the Master Servicer. Insofar as any portion of the
Master Servicer's or Special Servicer's compensation consists of a specified
portion of the interest payments on a Mortgage Loan, such compensation will
generally be based on a percentage of the principal balance of such Mortgage
Loan outstanding from time to time and, accordingly, will decrease with the
amortization of the Mortgage Loan. As additional compensation, a Master
Servicer or Special Servicer may be entitled to retain all or a portion of
late payment charges, Prepayment Premiums, modification fees and other fees
collected from borrowers and any interest or other income that may be earned
on funds held in the related Certificate Account. A more detailed description
of each Master Servicer's and Special Servicer's compensation will be
provided in the related Prospectus Supplement. Any Sub-Servicer will receive
as its sub-servicing compensation a portion of the servicing compensation to
be paid to the Master Servicer or Special Servicer that retained such
Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration
of the related Trust Fund, including, without limitation, payment of the fees
and disbursements of independent accountants, payment of fees and
disbursements of the Trustee and any custodians appointed thereby and payment
of expenses incurred in connection with distributions and reports to
Certificateholders. Certain other expenses, including certain expenses
related to Mortgage Loan defaults and liquidations and, to the extent so
provided in the related Prospectus Supplement, interest on such expenses at
the rate specified therein, may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will provide that on or before a specified date in each
year, beginning the first such date that is at least a specified number of
months after the Cut-off Date, there will be furnished to the related Trustee
a report of a firm of independent certified public accountants stating that
(i) it has obtained a letter of representation regarding certain matters from
the management of the Master
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Servicer which includes an assertion that the Master Servicer has complied
with certain minimum mortgage loan servicing standards (to the extent
applicable to commercial and multifamily mortgage loans), identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the Master
Servicer's servicing of commercial and multifamily mortgage loans during the
most recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the
American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that, in the opinion of such firm, such standards require it
to report. In rendering its report such firm may rely, as to the matters
relating to the direct servicing of commercial and multifamily mortgage loans
by Sub-Servicers, upon comparable reports of firms of independent public
accountants rendered on the basis of examinations conducted in accordance the
same standards (rendered within one year of such report) with respect to
those Sub-Servicers. The Prospectus Supplement may provide that additional
reports of independent certified public accountants relating to the servicing
of mortgage loans may be required to be delivered to the Trustee.
Each Pooling Agreement will also provide that, on or before a specified
date in each year, beginning the first such date that is at least a specified
number of months after the Cut-off Date, the Master Servicer and Special
Servicer shall each deliver to the related Trustee an annual statement signed
by one or more officers of the Master Servicer or the Special Servicer, as
the case may be, to the effect that, to the best knowledge of each such
officer, the Master Servicer or the Special Servicer, as the case may be, has
fulfilled in all material respects its obligations under the Pooling
Agreement throughout the preceding year or, if there has been a material
default in the fulfillment of any such obligation, such statement shall
specify each such known default and the nature and status thereof. Such
statement may be provided as a single form making the required statements as
to more than one Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders
upon written request to the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER, THE
REMIC ADMINISTRATOR AND THE DEPOSITOR
Unless otherwise specified in the Prospectus Supplement for a series of
Certificates, the related Pooling Agreement will permit the Master Servicer,
the Special Servicer and any REMIC Administrator to resign from its
obligations thereunder only upon (a) the appointment of, and the acceptance
of such appointment by, a successor thereto and receipt by the Trustee of
written confirmation from each applicable Rating Agency that such resignation
and appointment will not have an adverse effect on the rating assigned by
such Rating Agency to any class of Certificates of such series or (b) a
determination that such obligations are no longer permissible under
applicable law or are in material conflict by reason of applicable law with
any other activities carried on by it. No such resignation will become
effective until the Trustee or other successor has assumed the obligations
and duties of the resigning Master Servicer, Special Servicer or REMIC
Administrator, as the case may be, under the Pooling Agreement. The Master
Servicer and Special Servicer for each Trust Fund will be required to
maintain a fidelity bond and errors and omissions policy or their equivalent
that provides coverage against losses that may be sustained as a result of an
officer's or employee's misappropriation of funds or errors and omissions,
subject to certain limitations as to amount of coverage, deductible amounts,
conditions, exclusions and exceptions permitted by the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Master Servicer, the
Special Servicer, the REMIC Administrator, the Depositor or any director,
officer, employee or agent of any of them will be under any liability to the
related Trust Fund or Certificateholders for any action taken, or not taken,
in good
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faith pursuant to the Pooling Agreement or for errors in judgment; provided,
however, that none of the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor or any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of obligations or duties
thereunder or by reason of reckless disregard of such obligations and duties.
Unless otherwise specified in the related Prospectus Supplement, each Pooling
Agreement will further provide that the Master Servicer, the Special
Servicer, the REMIC Administrator, the Depositor and any director, officer,
employee or agent of any of them will be entitled to indemnification by the
related Trust Fund against any loss, liability or expense incurred in
connection with any legal action that relates to such Pooling Agreement or
the related series of Certificates; provided, however, that such
indemnification will not extend to any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the
performance of obligations or duties under such Pooling Agreement, or by
reason of reckless disregard of such obligations or duties. In addition, each
Pooling Agreement will provide that none of the Master Servicer, the Special
Servicer, the REMIC Administrator or the Depositor will be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective responsibilities under the Pooling Agreement and
that in its opinion may involve it in any expense or liability. However, each
of the Master Servicer, the Special Servicer, the REMIC Administrator and the
Depositor will be permitted, in the exercise of its discretion, to undertake
any such action that it may deem necessary or desirable with respect to the
enforcement and/or protection of the rights and duties of the parties to the
Pooling Agreement and the interests of the related series of
Certificateholders thereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, will be expenses, costs
and liabilities of the related series of Certificateholders, and the Master
Servicer, the Special Servicer, the REMIC Administrator or the Depositor, as
the case may be, will be entitled to charge the related Certificate Account
therefor.
Any person into which the Master Servicer, the Special Servicer, the REMIC
Administrator or the Depositor may be merged or consolidated, or any person
resulting from any merger or consolidation to which the Master Servicer, the
Special Servicer, the REMIC Administrator or the Depositor is a party, or any
person succeeding to the business of the Master Servicer, the Special
Servicer, the REMIC Administrator or the Depositor, will be the successor of
the Master Servicer, the Special Servicer, the REMIC Administrator or the
Depositor, as the case may be, under the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling Agreement either directly or by or through agents or attorneys, and
the REMIC Administrator will not be responsible for any willful misconduct or
gross negligence on the part of any such agent or attorney appointed by it
with due care.
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling Agreement will
include, without limitation, (i) any failure by the Master Servicer to
distribute or cause to be distributed to the Certificateholders of such
series, or to remit to the Trustee for distribution to such
Certificateholders, any amount required to be so distributed or remitted,
which failure continues unremedied for five days after written notice thereof
has been given to the Master Servicer by any other party to the related
Pooling Agreement, or to the Master Servicer, with a copy to each other party
to the related Pooling Agreement, by Certificateholders entitled to not less
than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such series; (ii) any failure by the
Special Servicer to remit to the Master Servicer or the Trustee, as
applicable, any amount required to be so remitted, which failure continues
unremedied for five days after written notice thereof has been given to the
Special Servicer by any other party to the related Pooling Agreement, or to
the Special Servicer, with a copy to each other party to the related Pooling
Agreement, by the Certificateholders entitled to not less than 25% (or such
other percentage specified in the related
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Prospectus Supplement) of the Voting Rights of such series; (iii) any failure
by the Master Servicer or the Special Servicer duly to observe or perform in
any material respect any of its other covenants or obligations under the
related Pooling Agreement, which failure continues unremedied for sixty days
after written notice thereof has been given to the Master Servicer or the
Special Servicer, as the case may be, by any other party to the related
Pooling Agreement, or to the Master Servicer or the Special Servicer, as the
case may be, with a copy to each other party to the related Pooling
Agreement, by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series; (iv) any failure by a REMIC Administrator (if other
than the Trustee) duly to observe or perform in any material respect any of
its covenants or obligations under the related Pooling Agreement, which
failure continues unremedied for sixty days after written notice thereof has
been given to the REMIC Administrator by any other party to the related
Pooling Agreement, or to the REMIC Administrator, with a copy to each other
party to the related Pooling Agreement, by Certificateholders entitled to not
less than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such series; and (v) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings in respect of or relating to the Master Servicer, the
Special Servicer or the REMIC Administrator (if other than the Trustee), and
certain actions by or on behalf of the Master Servicer, the Special Servicer
or the REMIC Administrator (if other than the Trustee) indicating its
insolvency or inability to pay its obligations. Material variations to the
foregoing Events of Default (other than to add thereto or shorten cure
periods or eliminate notice requirements) will be specified in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, when a single entity acts as Master Servicer, Special Servicer
and REMIC Administrator, or in any two of the foregoing capacities, for any
Trust Fund, an Event of Default in one capacity will constitute an Event of
Default in each capacity.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer, the
Special Servicer or a REMIC Administrator under a Pooling Agreement, then, in
each and every such case, so long as the Event of Default remains unremedied,
the Depositor or the Trustee will be authorized, and at the direction of
Certificateholders of the related series entitled to not less than 51% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series, the Trustee will be required, to terminate all
of the rights and obligations of the defaulting party as Master Servicer,
Special Servicer or REMIC Administrator, as applicable, under the Pooling
Agreement, whereupon the Trustee will succeed to all of the responsibilities,
duties and liabilities of the defaulting party as Master Servicer, Special
Servicer or REMIC Administrator, as applicable, under the Pooling Agreement
(except that if the defaulting party is required to make advances thereunder
regarding delinquent Mortgage Loans, but the Trustee is prohibited by law
from obligating itself to make such advances, or if the related Prospectus
Supplement so specifies, the Trustee will not be obligated to make such
advances) and will be entitled to similar compensation arrangements. Unless
otherwise specified in the related Prospectus Supplement, if the Trustee is
unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related series entitled to not less than 51% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series, it will be required to) appoint, or petition a
court of competent jurisdiction to appoint, a loan servicing institution or
other entity that (unless otherwise provided in the related Prospectus
Supplement) is acceptable to each applicable Rating Agency to act as
successor to the Master Servicer, Special Servicer or REMIC Administrator, as
the case may be, under the Pooling Agreement. Pending such appointment, the
Trustee will be obligated to act in such capacity.
If the same entity is acting as both Trustee and REMIC Administrator, it
may be removed in both such capacities as described under "-Resignation and
Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling Agreement to
institute any proceeding with respect to such Pooling Agreement unless such
holder previously has given to
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the Trustee written notice of default and the continuance thereof and unless
the holders of Certificates of any class evidencing not less than 25% of the
aggregate Percentage Interests constituting such class have made written
request upon the Trustee to institute such proceeding in its own name as
Trustee thereunder and have offered to the Trustee reasonable indemnity and
the Trustee for sixty days after receipt of such request and indemnity has
neglected or refused to institute any such proceeding. However, the Trustee
will be under no obligation to exercise any of the trusts or powers vested in
it by the Pooling Agreement or to institute, conduct or defend any litigation
thereunder or in relation thereto at the request, order or direction of any
of the holders of Certificates covered by such Pooling Agreement, unless such
Certificateholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
AMENDMENT
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may be amended by the parties thereto, without the consent
of any of the holders of Certificates covered by such Pooling Agreement, (i)
to cure any ambiguity, (ii) to correct or supplement any provision therein
which may be inconsistent with any other provision therein or to correct any
error, (iii) to change the timing and/or nature of deposits in the
Certificate Account, provided that (A) such change would not adversely affect
in any material respect the interests of any Certificateholder, as evidenced
by an opinion of counsel, and (B) such change would not adversely affect the
then-current rating of any rated classes of Certificates, as evidenced by a
letter from each applicable Rating Agency, (iv) if a REMIC election has been
made with respect to the related Trust Fund, to modify, eliminate or add to
any of its provisions (A) to such extent as shall be necessary to maintain
the qualification of the Trust Fund (or any designated portion thereof) as a
REMIC or to avoid or minimize the risk of imposition of any tax on the
related Trust Fund, provided that the Trustee has received an opinion of
counsel to the effect that (1) such action is necessary or desirable to
maintain such qualification or to avoid or minimize such risk, and (2) such
action will not adversely affect in any material respect the interests of any
holder of Certificates covered by the Pooling Agreement, or (B) to restrict
the transfer of the REMIC Residual Certificates, provided that the Depositor
has determined that the then-current ratings of the classes of the
Certificates that have been rated will not be adversely affected, as
evidenced by a letter from each applicable Rating Agency, and that any such
amendment will not give rise to any tax with respect to the transfer of the
REMIC Residual Certificates to a non-permitted transferee (See "Certain
Federal Income Tax Consequences--REMICs--Tax and Restrictions on Transfers of
REMIC Residual Certificates to Certain Organizations" herein), (v) to make
any other provisions with respect to matters or questions arising under such
Pooling Agreement or any other change, provided that such action will not
adversely affect in any material respect the interests of any
Certificateholder, or (vi) to amend specified provisions that are not
material to holders of any class of Certificates offered hereunder.
The Pooling Agreement may also be amended by the parties thereto with the
consent of the holders of Certificates of each class affected thereby
evidencing, in each case, not less than 66-2/3% (or such other percentage
specified in the related Prospectus Supplement) of the aggregate Percentage
Interests constituting such class for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of such
Pooling Agreement or of modifying in any manner the rights of the holders of
Certificates covered by such Pooling Agreement, except that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on a
Certificate of any class without the consent of the holder of such
Certificate or (ii) reduce the aforesaid percentage of Certificates of any
class the holders of which are required to consent to any such amendment
without the consent of the holders of all Certificates of such class covered
by such Pooling Agreement then outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to
consent to any amendment to a Pooling Agreement
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without having first received an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Master Servicer, the
Special Servicer, the Depositor, the Trustee or any other specified person in
accordance with such amendment will not result in the imposition of a tax on
the related Trust Fund or cause such Trust Fund (or any designated portion
thereof) to fail to qualify as a REMIC.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for
purposes of communicating with other holders of Certificates of the same
series with respect to their rights under the related Pooling Agreement, the
Trustee or other specified person will afford such Certificateholders access
during normal business hours to the most recent list of Certificateholders of
that series held by such person. If such list is as of a date more than 90
days prior to the date of receipt of such Certificateholders' request, then
such person, if not the registrar for such series of Certificates, will be
required to request from such registrar a current list and to afford such
requesting Certificateholders access thereto promptly upon receipt.
THE TRUSTEE
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any
Master Servicer, Special Servicer or REMIC Administrator and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling Agreement, such
Certificates or any underlying Mortgage Asset or related document and will
not be accountable for the use or application by or on behalf of any Master
Servicer or Special Servicer of any funds paid to the Master Servicer or
Special Servicer in respect of the Certificates or the underlying Mortgage
Assets. If no Event of Default has occurred and is continuing, the Trustee
for each series of Certificates will be required to perform only those duties
specifically required under the related Pooling Agreement. However, upon
receipt of any of the various certificates, reports or other instruments
required to be furnished to it pursuant to the related Pooling Agreement, a
Trustee will be required to examine such documents and to determine whether
they conform to the requirements of such agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the
related Master Servicer or other specified person or may be required to be
borne by the related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling
Agreement; provided, however, that such indemnification will not extend to
any loss liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence on the part of the Trustee in the performance of
its obligations and duties thereunder, or by reason of its reckless disregard
of such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of
its trusts or powers under the related Pooling Agreement or perform any of
this duties thereunder either directly or by or through agents or attorneys,
and the Trustee will not be responsible for any willful misconduct or gross
negligence on the part of any such agent or attorney appointed by it with due
care.
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RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling Agreement or if the Trustee becomes insolvent. Upon becoming aware of
such circumstances, the Depositor will be obligated to appoint a successor
Trustee. The Trustee may also be removed at any time by the holders of
Certificates of the applicable series evidencing not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance
of the appointment by the successor Trustee. Notwithstanding anything herein
to the contrary, if any entity is acting as both Trustee and REMIC
Administrator, then any resignation or removal of such entity as the Trustee
will also constitute the resignation or removal of such entity as REMIC
Administrator, and the successor trustee will serve as successor to the REMIC
Administrator as well.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a surety bond, an insurance
policy or a guarantee, the establishment of one or more reserve funds, or any
combination of the foregoing. If and to the extent so provided in the related
Prospectus Supplement, any of the foregoing forms of Credit Support may
provide credit enhancement for more than one series of Certificates.
The Credit Support may not provide protection against all risks of loss
and will not guarantee payment to Certificateholders of all amounts to which
they are entitled under the related Pooling Agreement. If losses or
shortfalls occur that exceed the amount covered by the related Credit Support
or that are of a type not covered by such Credit Support, Certificateholders
will bear their allocable share of deficiencies. Moreover, if a form of
Credit Support covers the Offered Certificates of more than one series and
losses on the related Mortgage Assets exceed the amount of such Credit
Support, it is possible that the holders of Offered Certificates of one (or
more) such series will be disproportionately benefited by such Credit Support
to the detriment of the holders of Offered Certificates of one (or more)
other such series.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature
and amount of coverage under such Credit Support, (ii) any conditions to
payment thereunder not otherwise described herein, (iii) the conditions (if
any) under which the amount of coverage under such Credit Support may be
reduced and under which such Credit Support may be terminated or replaced and
(iv) the material provisions relating to such Credit Support. Additionally,
the related Prospectus Supplement will set forth certain information with
respect to the obligor, if any, under any instrument of Credit Support. See
"Risk Factors--Credit Support Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate
Account on any Distribution Date will be subordinated to the corresponding
rights of the holders of Senior Certificates. If so provided in the related
Prospectus Supplement, the subordination of a class may apply only in the
event of certain types of losses or shortfalls. The related Prospectus
Supplement will set forth information concerning the method and amount of
subordination provided by a class or classes of Subordinate Certificates in a
series and the circumstances under which such subordination will be
available.
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such
provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of
such coverage.
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LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or other financial institution specified in such Prospectus Supplement
(the "Letter of Credit Bank"). Under a letter of credit, the Letter of Credit
Bank will be obligated to honor draws thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, generally equal to a
percentage specified in the related Prospectus Supplement of the aggregate
principal balance of some or all of the related Mortgage Assets on the
related Cut-off Date or of the initial aggregate Certificate Balance of one
or more classes of Certificates. If so specified in the related Prospectus
Supplement, the letter of credit may permit draws only in the event of
certain types of losses and shortfalls. The amount available under the letter
of credit will, in all cases, be reduced to the extent of the unreimbursed
payments thereunder and may otherwise be reduced as described in the related
Prospectus Supplement. The obligations of the Letter of Credit Bank under the
letter of credit for each series of Certificates will expire at the earlier
of the date specified in the related Prospectus Supplement or the termination
of the Trust Fund.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of Certificates of the related
series, timely distributions of interest or distributions of principal on the
basis of a schedule of principal distributions set forth in or determined in
the manner specified in the related Prospectus Supplement. The related
Prospectus Supplement will describe any limitations on the draws that may be
made under any such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments,
a demand note or a combination thereof will be deposited, in the amounts
specified in such Prospectus Supplement. If so specified in the related
Prospectus Supplement, the reserve fund for a series may also be funded over
time by a specified amount of certain collections received on the related
Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for
the purposes, in the manner, and to the extent specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
reserve funds may be established to provide protection only against certain
types of losses and shortfalls. Following each Distribution Date, amounts in
a reserve fund in excess of any amount required to be maintained therein may
be released from the reserve fund under the conditions and to the extent
specified in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or
other gain from such investments will be credited to the related reserve fund
for such series, and any loss resulting from such investments will be charged
to such reserve fund. However, such income may be payable to any related
Master Servicer or another service provider as additional compensation for
its services. The reserve fund, if any, for a series will not be a part of
the Trust Fund unless otherwise specified in the related Prospectus
Supplement.
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CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
INTEREST RATE EXCHANGE, CAP AND FLOOR AGREEMENTS
If so specified in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include interest rate exchange agreements or
interest rate cap or floor agreements. These types of agreements may be used
to limit the exposure of the Trust Fund or investors in the Certificates to
fluctuations in interest rates and to situations where interest rates become
higher or lower than specified thresholds. Generally, an interest rate
exchange agreement is a contract between two parties to pay and receive, with
a set frequency, interest payments determined by applying the differential
between two interest rates to an agreed-upon notional principal. Generally,
an interest rate cap agreement is a contract pursuant to which one party
agrees to reimburse another party for a floating rate interest payment
obligation, to the extent that the rate payable at any time exceeds a
specified cap. Generally, an interest rate floor agreement is a contract
pursuant to which one party agrees to reimburse another party in the event
that amounts owing to the latter party under a floating rate interest payment
obligation are payable at a rate which is less than a specified floor. The
specific provisions of these types of agreements will be described in the
related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable local law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular jurisdiction, or to encompass
the laws of all jurisdictions in which the security for the Mortgage Loans
(or mortgage loans underlying any MBS) is situated. Accordingly, the
summaries are qualified in their entirety by reference to the applicable laws
of those jurisdictions. See "Description of the Trust Funds--Mortgage Loans".
If a significant percentage of Mortgage Loans (or mortgage loans underlying
MBS), by balance, are secured by properties in a particular jurisdiction,
relevant local laws, to the extent they vary materially from this discussion,
will be discussed in the Prospectus Supplement. For purposes of the following
discussion, "Mortgage Loan" includes a mortgage loan underlying an MBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the
prevailing practice and law in the state in which the related Mortgaged
Property is located. Mortgages, deeds of trust and deeds to secure debt are
herein collectively referred to as "mortgages". A mortgage creates a lien
upon, or grants a title interest in, the real property covered thereby, and
represents the security for the repayment of the indebtedness customarily
evidenced by a promissory note. The priority of the lien created or interest
granted will depend on the terms of the mortgage and, in some cases, on the
terms of separate subordination agreements or intercreditor agreements with
others that hold interests in the real property, the knowledge of the parties
to the mortgage and, generally, the order of recordation of the mortgage in
the appropriate public recording office. However, the lien of a recorded
mortgage will generally be subordinate to later-arising liens for real estate
taxes and assessments and other charges imposed under governmental police
powers.
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TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast,
a deed of trust is a three-party instrument, among a trustor (the equivalent
of a borrower), a trustee to whom the real property is conveyed, and a
beneficiary (the lender) for whose benefit the conveyance is made. Under a
deed of trust, the trustor grants the property, irrevocably until the debt is
paid, in trust and generally with a power of sale, to the trustee to secure
repayment of the indebtedness evidenced by the related note. A deed to secure
debt typically has two parties, pursuant to which the borrower, or grantor,
conveys title to the real property to the grantee, or lender, generally with
a power of sale, until such time as the debt is repaid. In a case where the
borrower is a land trust, there would be an additional party because legal
title to the property is held by a land trustee under a land trust agreement
for the benefit of the borrower. At origination of a mortgage loan involving
a land trust, the borrower may execute a separate undertaking to make
payments on the mortgage note. In no event is the land trustee personally
liable for the mortgage note obligation. The mortgagee's authority under a
mortgage, the trustee's authority under a deed of trust and the grantee's
authority under a deed to secure debt are governed by the express provisions
of the related instrument, the law of the state in which the real property is
located, certain federal laws and, in some deed of trust transactions, the
directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease
and the income derived therefrom, while (unless rents are to be paid directly
to the lender) retaining a revocable license to collect the rents for so long
as there is no default. If the borrower defaults, the license terminates and
the lender is entitled to collect the rents. Local law may require that the
lender take possession of the property and/or obtain a court-appointed
receiver before becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels
or motels constitute loan security, the rates are generally pledged by the
borrower as additional security for the loan. In general, the lender must
file financing statements in order to perfect its security interest in the
room rates and must file continuation statements, generally every five years,
to maintain perfection of such security interest. In certain cases, Mortgage
Loans secured by hotels or motels may be included in a Trust Fund even if the
security interest in the room rates was not perfected or the requisite UCC
filings were allowed to lapse. Even if the lender's security interest in room
rates is perfected under applicable nonbankruptcy law, it will generally be
required to commence a foreclosure action or otherwise take possession of the
property in order to enforce its rights to collect the room rates following a
default. In the bankruptcy setting, however, the lender will be stayed from
enforcing its rights to collect room rates, but those room rates (in light of
certain revisions to the Bankruptcy Code which are effective for all
bankruptcy cases commenced on or after October 22, 1994) constitute "cash
collateral" and therefore cannot be used by the bankruptcy debtor without a
hearing or lender's consent and unless the lender's interest in the room
rates is given adequate protection (e.g., cash payment for otherwise
encumbered funds or a replacement lien on unencumbered property, in either
case equal in value to the amount of room rates that the debtor proposes to
use, or other similar relief). See "--Bankruptcy Laws".
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the
borrower and not previously pledged) may constitute a significant portion of
the property's value as security. The creation and enforcement of liens on
personal property are governed by the UCC. Accordingly, if a borrower pledges
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personal property as security for a mortgage loan, the lender generally must
file UCC financing statements in order to perfect its security interest
therein, and must file continuation statements, generally every five years,
to maintain that perfection. In certain cases, Mortgage Loans secured in part
by personal property may be included in a Trust Fund even if the security
interest in such personal property was not perfected or the requisite UCC
filings were allowed to lapse.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal
remedies under the mortgage. If the borrower defaults in payment or
performance of its obligations under the note or mortgage, the lender has the
right to institute foreclosure proceedings to sell the real property at
public auction to satisfy the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the
mortgage instrument. Other foreclosure procedures are available in some
states, but they are either infrequently used or available only in limited
circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action
is initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the
lender's right to foreclose is contested, the legal proceedings can be
time-consuming. Upon successful completion of a judicial foreclosure
proceeding, the court generally issues a judgment of foreclosure and appoints
a referee or other officer to conduct a public sale of the mortgaged
property, the proceeds of which are used to satisfy the judgment. Such sales
are made in accordance with procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure actions.
These principles are generally designed to relieve borrowers from the effects
of mortgage defaults perceived as harsh or unfair. Relying on such
principles, a court may alter the specific terms of a loan to the extent it
considers necessary to prevent or remedy an injustice, undue oppression or
overreaching, or may require the lender to undertake affirmative actions to
determine the cause of the borrower's default and the likelihood that the
borrower will be able to reinstate the loan. In some cases, courts have
substituted their judgment for the lender's and have required that lenders
reinstate loans or recast payment schedules in order to accommodate borrowers
who are suffering from a temporary financial disability. In other cases,
courts have limited the right of the lender to foreclose in the case of a
nonmonetary default, such as a failure to adequately maintain the mortgaged
property or an impermissible further encumbrance of the mortgaged property.
Finally, some courts have addressed the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that a borrower receive notice in addition to statutorily-prescribed
minimum notice. For the most part, these cases have upheld the reasonableness
of the notice provisions or have found that a public sale under a mortgage
providing for a power of sale does not involve sufficient state action to
trigger constitutional protections.
In addition, some states may have statutory protection such as the right
of the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
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Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained
in any other type of mortgage instrument if applicable law so permits. A
power of sale under a deed of trust allows a nonjudicial public sale to be
conducted generally following a request from the beneficiary/lender to the
trustee to sell the property upon default by the borrower and after notice of
sale is given in accordance with the terms of the mortgage and applicable
state law. In some states, prior to such sale, the trustee under the deed of
trust must record a notice of default and notice of sale and send a copy to
the borrower and to any other party who has recorded a request for a copy of
a notice of default and notice of sale. In addition, in some states the
trustee must provide notice to any other party having an interest of record
in the real property, including junior lienholders. A notice of sale must be
posted in a public place and, in most states, published for a specified
period of time in one or more newspapers. The borrower or junior lienholder
may then have the right, during a reinstatement period required in some
states, to cure the default by paying the entire actual amount in arrears
(without regard to the acceleration of the indebtedness), plus the lender's
expenses incurred in enforcing the obligation. In other states, the borrower
or the junior lienholder is not provided a period to reinstate the loan, but
has only the right to pay off the entire debt to prevent the foreclosure
sale. Generally, state law governs the procedure for public sale, the parties
entitled to notice, the method of giving notice and the applicable time
periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption
rights that may exist) and because of the possibility that physical
deterioration of the property may have occurred during the foreclosure
proceedings. Therefore, it is common for the lender to purchase the mortgaged
property for an amount equal to the secured indebtedness and accrued and
unpaid interest plus the expenses of foreclosure, in which event the
borrower's debt will be extinguished, or for a lesser amount in order to
preserve its right to seek a deficiency judgment if such is available under
state law and under the terms of the Mortgage Loan documents. (The Mortgage
Loans, however, may be nonrecourse. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--Limited
Recourse Nature of the Mortgage Loans".) Thereafter, subject to the
borrower's right in some states to remain in possession during a redemption
period, the lender will become the owner of the property and have both the
benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance
and to make such repairs as are necessary to render the property suitable for
sale. The costs of operating and maintaining a commercial or multifamily
residential property may be significant and may be greater than the income
derived from that property. The lender also will commonly obtain the services
of a real estate broker and pay the broker's commission in connection with
the sale or lease of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, because of the expenses associated with
acquiring, owning and selling a mortgaged property, a lender could realize an
overall loss on a mortgage loan even if the mortgaged property is sold at
foreclosure, or resold after it is acquired through foreclosure, for an
amount equal to the full outstanding principal amount of the loan plus
accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure
of its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full
amount of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the
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property that are subordinate to that of the foreclosing lender, from
exercise of their "equity of redemption". The doctrine of equity of
redemption provides that, until the property encumbered by a mortgage has
been sold in accordance with a properly conducted foreclosure and foreclosure
sale, those having interests that are subordinate to that of the foreclosing
lender have an equity of redemption and may redeem the property by paying the
entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order
for their equity of redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage,
the borrower and foreclosed junior lienors are given a statutory period in
which to redeem the property. In some states, statutory redemption may occur
only upon payment of the foreclosure sale price. In other states, redemption
may be permitted if the former borrower pays only a portion of the sums due.
The effect of a statutory right of redemption is to diminish the ability of
the lender to sell the foreclosed property because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be
limited to the Mortgaged Property and such other assets, if any, that were
pledged to secure the Mortgage Loan. However, even if a mortgage loan by its
terms provides for recourse to the borrower's other assets, a lender's
ability to realize upon those assets may be limited by state law. For
example, in some states a lender cannot obtain a deficiency judgment against
the borrower following foreclosure or sale under a deed of trust. A
deficiency judgment is a personal judgment against the former borrower equal
to the difference between the net amount realized upon the public sale of the
real property and the amount due to the lender. Other statutes may require
the lender to exhaust the security afforded under a mortgage before bringing
a personal action against the borrower. In certain other states, the lender
has the option of bringing a personal action against the borrower on the debt
without first exhausting such security; however, in some of those states, the
lender, following judgment on such personal action, may be deemed to have
elected a remedy and thus may be precluded from foreclosing upon the
security. Consequently, lenders in those states where such an election of
remedy provision exists will usually proceed first against the security.
Finally, other statutory provisions, designed to protect borrowers from
exposure to large deficiency judgments that might result from bidding at
below-market values at the foreclosure sale, limit any deficiency judgment to
the excess of the outstanding debt over the fair market value of the property
at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks
is that if the borrower's leasehold were to be terminated upon a lease
default, the leasehold mortgagee would lose its security. This risk may be
lessened if the ground lease requires the lessor to give the leasehold
mortgagee notices of lessee defaults and an opportunity to cure them, permits
the leasehold estate to be assigned to and by the leasehold mortgagee or the
purchaser at a foreclosure sale, and contains certain other protective
provisions typically included in a "mortgageable" ground lease. Certain
Mortgage Loans, however, may be secured by ground leases which do not contain
these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be
vacant or occupied by nonowner tenants. Such loans are subject to certain
risks not associated with mortgage loans secured by a lien on the fee estate
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of a borrower in real property. Such a loan typically is subordinate to the
mortgage, if any, on the Cooperative's building which, if foreclosed, could
extinguish the equity in the building and the proprietary leases of the
dwelling units derived from ownership of the shares of the Cooperative.
Further, transfer of shares in a Cooperative are subject to various
regulations as well as to restrictions under the governing documents of the
Cooperative, and the shares may be cancelled in the event that associated
maintenance charges due under the related proprietary leases are not paid.
Typically, a recognition agreement between the lender and the Cooperative
provides, among other things, the lender with an opportunity to cure a
default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article
9 of the UCC and the security agreement relating to the shares. Article 9 of
the UCC requires that a sale be conducted in a "commercially reasonable"
manner, which may be dependent upon, among other things, the notice given the
debtor and the method, manner, time, place and terms of the sale. Article 9
of the UCC provides that the proceeds of the sale will be applied first to
pay the costs and expenses of the sale and then to satisfy the indebtedness
secured by the lender's security interest. A recognition agreement, however,
generally provides that the lender's right to reimbursement is subject to the
right of the Cooperative to receive sums due under the proprietary leases.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to
enforce a deficiency judgment. For example, under the Bankruptcy Code,
virtually all actions (including foreclosure actions and deficiency judgment
proceedings) to collect a debt are automatically stayed upon the filing of
the bankruptcy petition and, often, no interest or principal payments are
made during the course of the bankruptcy case. The delay and the consequences
thereof caused by such automatic stay can be significant. Also, under the
Bankruptcy Code, the filing of a petition in bankruptcy by or on behalf of a
junior lienor may stay the senior lender from taking action to foreclose out
such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a
mortgage loan secured by a lien on property of the debtor may be modified
under certain circumstances. For example, the outstanding amount of the loan
may be reduced to the then-current value of the property (with a
corresponding partial reduction of the amount of lender's security interest)
pursuant to a confirmed plan or lien avoidance proceeding, thus leaving the
lender a general unsecured creditor for the difference between such value and
the outstanding balance of the loan. Other modifications may include the
reduction in the amount of each scheduled payment, by means of a reduction in
the rate of interest and/or an alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or by an
extension (or shortening) of the term to maturity. Some bankruptcy courts
have approved plans, based on the particular facts of the reorganization
case, that effected the cure of a mortgage loan default by paying arrearages
over a number of years. Also, a bankruptcy court may permit a debtor, through
its rehabilitative plan, to reinstate a loan mortgage payment schedule even
if the lender has obtained a final judgment of foreclosure prior to the
filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's
assignment of rents and leases related to the mortgaged property. Under the
Bankruptcy Code, a lender may be stayed from enforcing the assignment, and
the legal proceedings necessary to resolve the issue could be time-consuming,
with resulting delays in the lender's receipt of the rents. Recent amendments
to the Bankruptcy code, however, may minimize the impairment of the lender's
ability to enforce the borrower's assignment of rents and leases. In addition
to the inclusion of hotel revenues within the definition of "cash collateral"
as noted previously in the section entitled "--Leases and Rents", the
amendments provide that a pre-petition security interest in rents or hotel
revenues is designed to overcome those cases holding that a security interest
in rents is unperfected under the laws of
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certain states until the lender has taken some further action, such as
commencing foreclosure or obtaining a receiver prior to activation of the
assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that
ability may be impaired by the commencement of a bankruptcy case relating to
a lessee under such lease. Under the Bankruptcy Code, the filing of a
petition in bankruptcy by or on behalf of a lessee results in a stay in
bankruptcy against the commencement or continuation of any state court
proceeding for past due rent, for accelerated rent, for damages or for a
summary eviction order with respect to a default under the lease that
occurred prior to the filing of the lessee's petition. In addition, the
Bankruptcy Code generally provides that a trustee or debtor-in-possession
may, subject to approval of the court, (i) assume the lease and retain it or
assign it to a third party or (ii) reject the lease. If the lease is assumed,
the trustee or debtor-in-possession (or assignee, if applicable) must cure
any defaults under the lease, compensate the lessor for its losses and
provide the lessor with "adequate assurance" of future performance. Such
remedies may be insufficient, and any assurances provided to the lessor may,
in fact, be inadequate. If the lease is rejected, the lessor will be treated
as an unsecured creditor with respect to its claim for damages for
termination of the lease. The Bankruptcy Code also limits a lessor's damages
for lease rejection to the rent reserved by the lease (without regard to
acceleration) for the greater of one year, or 15%, not to exceed three years,
of the remaining term of the lease.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties
that are or have been used for industrial, manufacturing, military or
disposal activity. Such environmental risks include the possible diminution
of the value of a contaminated property or, as discussed below, potential
liability for clean-up costs or other remedial actions that could exceed the
value of the property or the amount of the lender's loan. In certain
circumstances, a lender may decide to abandon a contaminated mortgaged
property as collateral for its loan rather than foreclose and risk liability
for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several
states, such a lien has priority over all existing liens, including those of
existing mortgages. In these states, the lien of a mortgage may lose its
priority to such a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for
the costs of clean-up. A secured lender may be liable as an "owner" or
"operator" of a contaminated mortgaged property if agents or employees of the
lender have participated in the management of such mortgaged property or the
operations of the borrower. Such liability may exist even if the lender did
not cause or contribute to the contamination and regardless of whether the
lender has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such
liability is not limited to the original or unamortized principal balance of
a loan or to the value of the property securing a loan. Excluded from
CERCLA's definition of "owner" or "operator", however, is a person "who
without participating in the management of the facility, holds indicia of
ownership primarily to protect his security interest". This is the so called
"secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Act") amended, among other things, the provisions of CERCLA with
respect to lender liability and the secured creditor exemption. The Act
offers substantial protection to lenders by defining the activities in which
a lender can engage and still have the benefit of the secured creditor
exemption. In order for a lender to be deemed to have participated in the
management of a mortgaged property, the lender must actually participate in
the operational affairs of the property
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of the borrower. The Act provides that "merely having the capacity to
influence, or unexercised right to control" operations does not constitute
participation in management. A lender will lose the protection of the secured
creditor exemption only if it exercises decision-making control over the
borrower's environmental compliance and hazardous substance handling and
disposal practices, or assumes day-to-day management of all operational
functions of the mortgaged property. The Act also provides that a lender will
continue to have the benefit of the secured creditor exemption even if it
forecloses on a mortgaged property, purchases it at a foreclosure sale or
accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell
the mortgaged property at the earliest practicable commercially reasonable
time on commercially reasonable terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption.
In addition, under federal law, there is potential liability relating to
hazardous wastes and underground storage tanks under the federal Resource
Conservation and Recovery Act.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender
that becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean up the contamination
before selling or otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action (for example, actions based on nuisance or on toxic tort
resulting in death, personal injury or damage to property) related to
hazardous environmental conditions on a property. While it may be more
difficult to hold a lender liable in such cases, unanticipated or uninsured
liabilities of the borrower may jeopardize the borrower's ability to meet its
loan obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. Such costs may jeopardize
the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable,
it can bring an action for contribution against the owner or operator who
created the environmental hazard, but that individual or entity may be
without substantial assets. Accordingly, it is possible that such costs could
become a liability of the Trust Fund and occasion a loss to the
Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling Agreement will provide that
neither the Master Servicer nor the Special Servicer, acting on behalf of the
Trustee, may acquire title to a Mortgaged Property or take over its operation
unless the Special Servicer, based solely (as to environmental matters) on a
report prepared by a person who regularly conducts environmental audits, has
made the determination that it is appropriate to do so, as described under
"Description of the Pooling Agreements--Realization Upon Defaulted Mortgage
Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will
be required to operate the property in accordance with those laws and
regulations. Such compliance may entail substantial expense, especially in
the case of industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following
foreclosure). Such disclosure may decrease the amount that prospective buyers
are willing to pay for the affected property, sometimes substantially, and
thereby decrease the ability of the lender to recoup its investment in a loan
upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related
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Mortgage Loan or at some time prior to the issuance of the related
Certificates. Environmental site assessments, however, vary considerably in
their content, quality and cost. Even when adhering to good professional
practices, environmental consultants will sometimes not detect significant
environmental problems because to do an exhaustive environmental assessment
would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate
the maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such
clauses in many states. However, the Garn-St Germain Depository Institutions
Act of 1982 (the "Garn Act") generally preempts state laws that prohibit the
enforcement of due-on-sale clauses and permits lenders to enforce these
clauses in accordance with their terms, subject to certain limitations as set
forth in the Garn Act and the regulations promulgated thereunder.
Accordingly, a Master Servicer may nevertheless have the right to accelerate
the maturity of a Mortgage Loan that contains a "due-on-sale" provision upon
transfer of an interest in the property, without regard to the Master
Servicer's ability to demonstrate that a sale threatens its legitimate
security interest.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens,
and the loans secured by the related Senior Liens may not be included in the
Mortgage Pool. The primary risk to holders of Mortgage Loans secured by
junior liens is the possibility that adequate funds will not be received in
connection with a foreclosure of the related Senior Liens to satisfy fully
both the Senior Liens and the Mortgage Loan. In the event that a holder of a
Senior Lien forecloses on a Mortgaged Property, the proceeds of the
foreclosure or similar sale will be applied first to the payment of court
costs and fees in connection with the foreclosure, second to real estate
taxes, third in satisfaction of all principal, interest, prepayment or
acceleration penalties, if any, and any other sums due and owing to the
holder of the Senior Liens. The claims of the holders of the Senior Liens
will be satisfied in full out of proceeds of the liquidation of the related
Mortgage Property, if such proceeds are sufficient, before the Trust Fund as
holder of the junior lien receives any payments in respect of the Mortgage
Loan. In the event that such proceeds from a foreclosure or similar sale of
the related Mortgaged Property are insufficient to satisfy all Senior Liens
and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of the
junior lien, and, accordingly, holders of one or more classes of the
Certificates of the related series bear (i) the risk of delay in
distributions while a deficiency judgment against the borrower is obtained
and (ii) the risk of loss if the deficiency judgment is not realized upon.
Moreover, deficiency judgments may not be available in certain jurisdictions
or the Mortgage Loan may be nonrecourse.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior
lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the
subordinate financing permits recourse to the borrower (as is frequently the
case) and the senior loan does not, a borrower may have more incentive to
repay sums due on the subordinate loan. Second, acts of the senior lender
that prejudice the junior lender or impair the junior lender's security may
create a superior equity in favor of the junior lender. For example, if the
borrower and the senior lender agree to an increase in the principal amount
of or the interest rate payable on the senior loan, the senior lender may
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lose its priority to the extent any existing junior lender is harmed or the
borrower is additionally burdened. Third, if the borrower defaults on the
senior loan and/or any junior loan or loans, the existence of junior loans
and actions taken by junior lenders can impair the security available to the
senior lender and can interfere with or delay the taking of action by the
senior lender. Moreover, the bankruptcy of a junior lender may operate to
stay foreclosure or similar proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid.
In addition, the enforceability of provisions that provide for prepayment
fees or penalties upon an involuntary prepayment is unclear under the laws of
many states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply
to certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a
law or constitutional provision that expressly rejects application of the
federal law. In addition, even where Title V is not so rejected, any state is
authorized by the law to adopt a provision limiting discount points or other
charges on mortgage loans covered by Title V. Certain states have taken
action to reimpose interest rate limits and/or to limit discount points or
other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or
adoption) be eligible for inclusion in a Trust Fund unless (i) such Mortgage
Loan provides for such interest rate, discount points and charges as are
permitted in such state or (ii) such Mortgage Loan provides that the terms
thereof are to be construed in accordance with the laws of another state
under which such interest rate, discount points and charges would not be
usurious and the borrower's counsel has rendered an opinion that such choice
of law provision would be given effect.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply
(together with an inability to remedy any such failure) could result in
material diminution in the value of a Mortgaged Property which could,
together with the possibility of limited alternative uses for a particular
Mortgaged Property (i.e., a nursing or convalescent home or hospital), result
in a failure to realize the full principal amount of the related Mortgage
Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which
are structural in nature from existing places of public accommodation to the
extent "readily achievable." In addition, under the ADA, alterations to a
place of public accommodation or a
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commercial facility are to be made so that, to the maximum extent feasible,
such altered portions are readily accessible to and usable by disabled
individuals. The "readily achievable" standard takes into account, among
other factors, the financial resources of the affected site, owner, landlord
or other applicable person. In addition to imposing a possible financial
burden on the borrower in its capacity as owner or landlord, the ADA may also
impose such requirements on a foreclosing lender who succeeds to the interest
of the borrower as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the
owner or landlord, a foreclosing lender who is financially more capable than
the borrower of complying with the requirements of the ADA may be subject to
more stringent requirements than those to which the borrower is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an
annual rate of 6% during the period of such borrower's active duty status,
unless a court orders otherwise upon application of the lender. The Relief
Act applies to individuals who are members of the Army, Navy, Air Force,
Marines, National Guard, Reserves, Coast Guard and officers of the U.S.
Public Health Service assigned to duty with the military. Because the Relief
Act applies to individuals who enter military service (including reservists
who are called to active duty) after origination of the related mortgage
loan, no information can be provided as to the number of loans with
individuals as borrowers that may be affected by the Relief Act. Application
of the Relief Act would adversely affect, for an indeterminate period of
time, the ability of a Master Servicer or Special Servicer to collect full
amounts of interest on certain of the Mortgage Loans. Any shortfalls in
interest collections resulting from the application of the Relief Act would
result in a reduction of the amounts distributable to the holders of the
related series of Certificates, and would not be covered by advances or,
unless otherwise specified in the related Prospectus Supplement, any form of
Credit Support provided in connection with such Certificates. In addition,
the Relief Act imposes limitations that would impair the ability of the
Master Servicer or Special Servicer to foreclose on an affected Mortgage Loan
during the borrower's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the
"Crime Control Act"), the government may seize the property even before
conviction. The government must publish notice of the forfeiture proceeding
and may give notice to all parties "known to have an alleged interest in the
property", including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before
commission of the crime upon which the forfeiture is based, or (ii) the
lender was, at the time of execution of the mortgage, "reasonably without
cause to believe" that the property was used in, or purchased with the
proceeds of, illegal drug or RICO activities.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as
regulations (the "REMIC Regulations") promulgated by the U.S. Department of
Treasury (the "Treasury"). Investors should consult their own tax advisors in
determining the federal, state, local and other tax consequences to them of
the purchase, ownership and disposition of Certificates.
For purposes of this discussion, (i) references to the Mortgage Loans
include references to the mortgage loans underlying MBS included in the
Mortgage Assets and (ii) where the applicable Prospectus Supplement provides
for a fixed retained yield with respect to the Mortgage Loans underlying a
series of Certificates, references to the Mortgage Loans will be deemed to
refer to that portion of the Mortgage Loans held by the Trust Fund which does
not include the Retained Interest. References to a "holder" or
"Certificateholder" in this discussion generally mean the beneficial owner of
a Certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General
With respect to a particular series of Certificates, an election may be
made to treat the Trust Fund or one or more segregated pools of assets
therein as one or more REMICs within the meaning of Code Section 860D. A
Trust Fund or a portion thereof as to which a REMIC election will be made
will be referred to as a "REMIC Pool". For purposes of this discussion,
Certificates of a series as to which one or more REMIC elections are made are
referred to as "REMIC Certificates" and will consist of one or more Classes
of "Regular Certificates" and one Class of "Residual Certificates" in the
case of each REMIC Pool. Qualification as a REMIC requires ongoing compliance
with certain conditions. With respect to each series of REMIC Certificates,
Cadwalader, Wickersham & Taft, counsel to the Depositor, has advised the
Depositor that in the firm's opinion, assuming (i) the making of such an
election, (ii) compliance with the Pooling Agreement and (iii) compliance
with any changes in the law, including any amendments to the Code or
applicable Treasury regulations thereunder, each REMIC Pool will qualify as a
REMIC. In such case, the Regular Certificates will be considered to be
"regular interests" in the REMIC Pool and generally will be treated for
federal income tax purposes as if they were newly originated debt
instruments, and the Residual Certificates will be considered to be "residual
interests" in the REMIC Pool. The Prospectus Supplement for each series of
Certificates will indicate whether one or more REMIC elections with respect
to the related Trust Fund will be made, in which event references to "REMIC"
or "REMIC Pool" herein shall be deemed to refer to each such REMIC Pool. If
so specified in the applicable Prospectus Supplement, the portion of a Trust
Fund as to which a REMIC election is not made may be treated as a grantor
trust for federal income tax purposes. See "--Federal Income Tax Consequences
for Certificates as to Which No REMIC Election Is Made".
Status of REMIC Certificates
REMIC Certificates held by a domestic building and loan association will
constitute "a regular or residual interest in a REMIC" within the meaning of
Code Section 7701(a)(19)(C)(xi), but only in the same proportion that the
assets of the REMIC Pool would be treated as "loans . . . secured by an
interest in real property which is . . . residential real property" (such as
single family or multifamily properties, but not commercial properties)
within the meaning of Code Section 7701(a)(19)(C)(v) or as other assets
described in Code Section 7701(a)(19)(C), and otherwise will
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not qualify for such treatment. REMIC Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(5)(A), and interest on the Regular Certificates and
income with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the REMIC Pool would be so
treated. If at all times 95% or more of the assets of the REMIC Pool qualify
for each of the foregoing respective treatments, the REMIC Certificates will
qualify for the corresponding status in their entirety. For purposes of Code
Section 856(c)(5)(A), payments of principal and interest on the Mortgage
Loans that are reinvested pending distribution to holders of REMIC
Certificates qualify for such treatment. Where two REMIC Pools are a part of
a tiered structure they will be treated as one REMIC for purposes of the
tests described above respecting asset ownership of more or less than 95%. In
addition, if the assets of the REMIC include Buy-Down Mortgage Loans, it is
possible that the percentage of such assets constituting "loans . . . secured
by an interest in real property which is . . . residential real property" for
purposes of Code Section 7701(a)(19)(C)(v) may be required to be reduced by
the amount of the related Buy-Down Funds. REMIC Certificates held by a
regulated investment company will not constitute "Government Securities"
within the meaning of Code Section 851(b)(4)(A)(i). REMIC Certificates held
by certain financial institutions will constitute an "evidence of
indebtedness" within the meaning of Code Section 582(c)(1). The Small
Business Job Protection Act of 1996 (the "SBJPA of 1996") repealed the
reserve method for bad debts of domestic building and loan associations and
mutual savings banks, and thus has eliminated the asset category of
"qualifying real property loans" in former Code Section 593(d) for taxable
years beginning after December 31, 1995. The requirement in the SBJPA of 1996
that such institutions must "recapture" a portion of their existing bad debt
reserves is suspended if a certain portion of their assets are maintained in
"residential loans" under Code Section 7701(a)(19)(C)(v), but only if such
loans were made to acquire, construct or improve the related real property
and not for the purpose of refinancing. However, no effort will be made to
identify the portion of the Mortgage Loans of any Series meeting this
requirement, and no representation is made in this regard.
Qualification as a REMIC
In order for the REMIC Pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in
the Code. The REMIC Pool must fulfill an asset test, which requires that no
more than a de minimis portion of the assets of the REMIC Pool, as of the
close of the third calendar month beginning after the "Startup Day" (which
for purposes of this discussion is the date of issuance of the REMIC
Certificates) and at all times thereafter, may consist of assets other than
"qualified mortgages" and "permitted investments". The REMIC Regulations
provide a safe harbor pursuant to which the de minimis requirement is met if
at all times the aggregate adjusted basis of the nonqualified assets is less
than 1% of the aggregate adjusted basis of all the REMIC Pool's assets. An
entity that fails to meet the safe harbor may nevertheless demonstrate that
it holds no more than a de minimis amount of nonqualified assets. A REMIC
also must provide "reasonable arrangements" to prevent its residual interest
from being held by "disqualified organizations" and must furnish applicable
tax information to transferors or agents that violate this requirement. The
Pooling Agreement for each Series will contain a provision designed to meet
this requirement. See "Taxation of Residual Certificates--Tax-Related
Restrictions on Transfer of Residual Certificates--Disqualified
Organizations".
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter pursuant to a fixed price contract in effect on the Startup Day.
Qualified mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, including certain of the MBS, regular interests in another REMIC, such
as MBS in a trust as to which a REMIC election has been made, loans secured
by timeshare interests and loans secured by shares held by a tenant
stockholder in a cooperative housing corporation, provided, in general, (i)
the fair
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market value of the real property security (including buildings and
structural components thereof) is at least 80% of the principal balance of
the related Mortgage Loan or mortgage loan underlying the Mortgage
Certificate either at origination or as of the Startup Day (an original
loan-to-value ratio of not more than 125% with respect to the real property
security) or (ii) substantially all the proceeds of the Mortgage Loan or the
underlying mortgage loan were used to acquire, improve or protect an interest
in real property that, at the origination date, was the only security for the
Mortgage Loan or underlying mortgage loan. If the Mortgage Loan has been
substantially modified other than in connection with a default or reasonably
foreseeable default, it must meet the loan-to-value test in (i) of the
preceding sentence as of the date of the last such modification or at
closing. A qualified mortgage includes a qualified replacement mortgage,
which is any property that would have been treated as a qualified mortgage if
it were transferred to the REMIC Pool on the Startup Day and that is received
either (i) in exchange for any qualified mortgage within a three-month period
thereafter or (ii) in exchange for a "defective obligation" within a two-year
period thereafter. A "defective obligation" includes (i) a mortgage in
default or as to which default is reasonably foreseeable, (ii) a mortgage as
to which a customary representation or warranty made at the time of transfer
to the REMIC Pool has been breached, (iii) a mortgage that was fraudulently
procured by the mortgagor, and (iv) a mortgage that was not in fact
principally secured by real property (but only if such mortgage is disposed
of within 90 days of discovery). A Mortgage Loan that is "defective" as
described in clause (iv) that is not sold or, if within two years of the
Startup Day, exchanged, within 90 days of discovery, ceases to be a qualified
mortgage after such 90-day period.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13
months, until the next scheduled distribution to holders of interests in the
REMIC Pool. A qualified reserve asset is any intangible property held for
investment that is part of any reasonably required reserve maintained by the
REMIC Pool to provide for payments of expenses of the REMIC Pool or amounts
due on the regular or residual interests in the event of defaults (including
delinquencies) on the qualified mortgages, lower than expected reinvestment
returns, prepayment interest shortfalls and certain other contingencies. The
reserve fund will be disqualified if more than 30% of the gross income from
the assets in such fund for the year is derived from the sale or other
disposition of property held for less than three months, unless required to
prevent a default on the regular interests caused by a default on one or more
qualified mortgages. A reserve fund must be reduced "promptly and
appropriately" as payments on the Mortgage Loans are received. Foreclosure
property is real property acquired by the REMIC Pool in connection with the
default or imminent default of a qualified mortgage and generally not held
beyond the close of the third calendar year following the acquisition of the
property by the REMIC Pool, with an extension that may be granted by the
Internal Revenue Service (the "Service").
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a
REMIC Pool must be either of the following: (i) one or more classes of
regular interests or (ii) a single class of residual interests on which
distributions, if any, are made pro rata. A regular interest is an interest
in a REMIC Pool that is issued on the Startup Day with fixed terms, is
designated as a regular interest, and unconditionally entitles the holder to
receive a specified principal amount (or other similar amount), and provides
that interest payments (or other similar amounts), if any, at or before
maturity either are payable based on a fixed rate or a qualified variable
rate, or consist of a specified, nonvarying portion of the interest payments
on qualified mortgages. Such a specified portion may consist of a fixed
number of basis points, a fixed percentage of the total interest, or a fixed
or qualified variable or inverse variable rate on some or all of the
qualified mortgages minus a different fixed or qualified variable rate. The
specified principal amount of a regular interest that provides for interest
payments consisting of a specified, nonvarying portion of interest payments
on qualified mortgages may be zero. A residual interest is an interest in a
REMIC Pool other than a regular interest that is issued on the Startup Day
and that is designated as a residual interest. An interest
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in a REMIC Pool may be treated as a regular interest even if payments of
principal with respect to such interest are subordinated to payments on other
regular interests or the residual interest in the REMIC Pool, and are
dependent on the absence of defaults or delinquencies on qualified mortgages
or permitted investments, lower than reasonably expected returns on permitted
investments, unanticipated expenses incurred by the REMIC Pool or prepayment
interest shortfalls. Accordingly, the Regular Certificates of a series will
constitute one or more classes of regular interests, and the Residual
Certificates with respect to that series will constitute a single class of
residual interests on which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for
such year and thereafter. In this event, an entity with multiple classes of
ownership interests may be treated as a separate association taxable as a
corporation under Treasury regulations, and the Regular Certificates may be
treated as equity interests therein. The Code, however, authorizes the
Treasury Department to issue regulations that address situations where
failure to meet one or more of the requirements for REMIC status occurs
inadvertently and in good faith, and disqualification of the REMIC Pool would
occur absent regulatory relief. Investors should be aware, however, that the
Conference Committee Report to the Tax Reform Act of 1986 (the "1986 Act")
indicates that the relief may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the REMIC Pool's income
for the period of time in which the requirements for REMIC status are not
satisfied.
TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the
accrual method of accounting with regard to Regular Certificates, regardless
of the method of accounting otherwise used by such Regular
Certificateholders.
Original Issue Discount
Accrual Certificates and principal-only Certificates will be, and other
Classes of Regular Certificates may be, issued with "original issue discount"
within the meaning of Code Section 1273(a). Holders of any Class of Regular
Certificates having original issue discount generally must include original
issue discount in ordinary income for federal income tax purposes as it
accrues, in accordance with the constant yield method that takes into account
the compounding of interest, in advance of receipt of the cash attributable
to such income. The following discussion is based in part on temporary and
final Treasury regulations issued on February 2, 1994, as amended on June 14,
1996 (the "OID Regulations") under Code Sections 1271 through 1273 and 1275
and in part on the provisions of the 1986 Act. Regular Certificateholders
should be aware, however, that the OID Regulations do not adequately address
certain issues relevant to prepayable securities, such as the Regular
Certificates. To the extent such issues are not addressed in such
regulations, the Depositor intends to apply the methodology described in the
Conference Committee Report to the 1986 Act. No assurance can be provided
that the Service will not take a different position as to those matters not
currently addressed by the OID Regulations. Moreover, the OID Regulations
include an anti-abuse rule allowing the Service to apply or depart from the
OID Regulations where necessary or appropriate to ensure a reasonable tax
result in light of the applicable statutory provisions. A tax result will not
be considered unreasonable under the anti-abuse rule in the absence of a
substantial effect on the present value of a taxpayer's tax liability.
Investors are advised to consult their own tax advisors as to the discussion
herein and the appropriate method for reporting interest and original issue
discount with respect to the Regular Certificates.
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Each Regular Certificate (except to the extent described below with
respect to a Regular Certificate on which principal is distributed by random
lot ("Random Lot Certificates")) will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption
price at maturity" of the Regular Certificate over its "issue price". The
issue price of a Class of Regular Certificates offered pursuant to this
Prospectus generally is the first price at which a substantial amount of
Regular Certificates of that Class is sold to the public (excluding bond
houses, brokers and underwriters). Although unclear under the OID
Regulations, the Depositor intends to treat the issue price of a Class as to
which there is no substantial sale as of the issue date or that is retained
by the Depositor as the fair market value of that Class as of the issue date.
The issue price of a Regular Certificate also includes the amount paid by an
initial Regular Certificateholder for accrued interest that relates to a
period prior to the issue date of the Regular Certificate, unless the Regular
Certificateholder elects on its federal income tax return to exclude such
amount from the issue price and to recover it on the first Distribution Date.
The stated redemption price at maturity of a Regular Certificate always
includes the original principal amount of the Regular Certificate, but
generally will not include distributions of stated interest if such interest
distributions constitute "qualified stated interest". Under the OID
Regulations, qualified stated interest generally means interest payable at a
single fixed rate or a qualified variable rate (as described below) provided
that such interest payments are unconditionally payable at intervals of one
year or less during the entire term of the Regular Certificate. Because there
is no penalty or default remedy in the case of nonpayment of interest with
respect to a Regular Certificate, it is possible that no interest on any
Class of Regular Certificates will be treated as qualified stated interest.
However, except as provided in the following three sentences or in the
applicable Prospectus Supplement, because the underlying Mortgage Loans
provide for remedies in the event of default, the Depositor intends to treat
interest with respect to the Regular Certificates as qualified stated
interest. Distributions of interest on an Accrual Certificate, or on other
Regular Certificates with respect to which deferred interest will accrue,
will not constitute qualified stated interest, in which case the stated
redemption price at maturity of such Regular Certificates includes all
distributions of interest as well as principal thereon. Likewise, the
Depositor intends to treat an "interest only" class, or a class on which
interest is substantially disproportionate to its principal amount (a
so-called "super-premium" class) as having no qualified stated interest.
Where the interval between the issue date and the first Distribution Date on
a Regular Certificate is shorter than the interval between subsequent
Distribution Dates, the interest attributable to the additional days will be
included in the stated redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of
full years (i.e., rounding down partial years) from the issue date until each
distribution is scheduled to be made by a fraction, the numerator of which is
the amount of each distribution included in the stated redemption price at
maturity of the Regular Certificate and the denominator of which is the
stated redemption price at maturity of the Regular Certificate. The
Conference Committee Report to the 1986 Act provides that the schedule of
such distributions should be determined in accordance with the assumed rate
of prepayment of the Mortgage Loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates.
The Prepayment Assumption with respect to a Series of Regular Certificates
will be set forth in the related Prospectus Supplement. Holders generally
must report de minimis original issue discount pro rata as principal payments
are received, and such income will be capital gain if the Regular Certificate
is held as a capital asset. However, under the OID Regulations, Regular
Certificateholders may elect to accrue all de minimis original issue discount
as well as market discount and market premium under the constant yield
method. See "Election to Treat All Interest Under the Constant Yield Method".
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A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the
original issue discount on the Regular Certificate accrued during an accrual
period for each day on which it holds the Regular Certificate, including the
date of purchase but excluding the date of disposition. The Depositor will
treat the monthly period ending on the day before each Distribution Date as
the accrual period. With respect to each Regular Certificate, a calculation
will be made of the original issue discount that accrues during each
successive full accrual period (or shorter period from the date of original
issue) that ends on the day before the related Distribution Date on the
Regular Certificate. The Conference Committee Report to the 1986 Act states
that the rate of accrual of original issue discount is intended to be based
on the Prepayment Assumption. Other than as discussed below with respect to a
Random Lot Certificate, the original issue discount accruing in a full
accrual period would be the excess, if any, of (i) the sum of (a) the present
value of all of the remaining distributions to be made on the Regular
Certificate as of the end of that accrual period that are included in the
Regular Certificate's stated redemption price at maturity and (b) the
distributions made on the Regular Certificate during the accrual period that
are included in the Regular Certificate's stated redemption price at
maturity, over (ii) the adjusted issue price of the Regular Certificate at
the beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence is calculated based on
(i) the yield to maturity of the Regular Certificate at the issue date, (ii)
events (including actual prepayments) that have occurred prior to the end of
the accrual period and (iii) the Prepayment Assumption. For these purposes,
the adjusted issue price of a Regular Certificate at the beginning of any
accrual period equals the issue price of the Regular Certificate, increased
by the aggregate amount of original issue discount with respect to the
Regular Certificate that accrued in all prior accrual periods and reduced by
the amount of distributions included in the Regular Certificate's stated
redemption price at maturity that were made on the Regular Certificate in
such prior periods. The original issue discount accruing during any accrual
period (as determined in this paragraph) will then be divided by the number
of days in the period to determine the daily portion of original issue
discount for each day in the period. With respect to an initial accrual
period shorter than a full accrual period, the daily portions of original
issue discount must be determined according to an appropriate allocation
under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for
any period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either
an increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
In the case of a Random Lot Certificate, the Depositor intends to
determine the yield to maturity of such Certificate based upon the
anticipated payment characteristics of the Class as a whole under the
Prepayment Assumption. In general, the original issue discount accruing on
each Random Lot Certificate in a full accrual period would be its allocable
share of the original issue discount with respect to the entire Class, as
determined in accordance with the preceding paragraph. However, in the case
of a distribution in retirement of the entire unpaid principal balance of any
Random Lot Certificate (or portion of such unpaid principal balance), (a) the
remaining unaccrued original issue discount allocable to such Certificate (or
to such portion) will accrue at the time of such distribution, and (b) the
accrual of original issue discount allocable to each remaining Certificate of
such Class (or the remaining unpaid principal balance of a partially redeemed
Random Lot Certificate after a distribution of principal has been received)
will be adjusted by reducing the present value of the remaining payments on
such Class and the adjusted issue price of such Class to the extent
attributable to the portion of the unpaid principal balance thereof that was
distributed. The Depositor believes that the foregoing treatment is
consistent
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with the "pro rata prepayment" rules of the OID Regulations, but with the
rate of accrual of original issue discount determined based on the Prepayment
Assumption for the Class as a whole. Investors are advised to consult their
tax advisors as to this treatment.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted
issue price and the denominator of which is the excess of the remaining
stated redemption price at maturity over the adjusted issue price.
Alternatively, such a subsequent purchaser may elect to treat all such
acquisition premium under the constant yield method, as described below under
the heading "Election to Treat All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified amount and (ii) the interest compounds or is
payable at least annually at current values of (a) one or more "qualified
floating rates", (b) a single fixed rate and one or more qualified floating
rates, (c) a single "objective rate", or (d) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate". A floating rate
is a qualified floating rate if variations in the rate can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds, where such rate is subject to a fixed multiple that is greater than
0.65, but not more than 1.35. Such rate may also be increased or decreased by
a fixed spread or subject to a fixed cap or floor, or a cap or floor that is
not reasonably expected as of the issue date to affect the yield of the
instrument significantly. An objective rate (other than a qualified floating
rate) is a rate that is determined using a single fixed formula and that is
based on objective financial or economic information, provided that such
information is not (i) within the control of the issuer or a related party or
(ii) unique to the circumstances of the issuer or a related party. A
qualified inverse floating rate is a rate equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds; an inverse floating rate that is not a
qualified floating rate may nevertheless be an objective rate. A Class of
Regular Certificates may be issued under this Prospectus that does not have a
variable rate under the OID Regulations, for example, a Class that bears
different rates at different times during the period it is outstanding such
that it is considered significantly "front-loaded" or "back-loaded" within
the meaning of the OID Regulations. It is possible that such a Class may be
considered to bear "contingent interest" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of
contingent interest, are by their terms not applicable to Regular
Certificates. However, if final regulations dealing with contingent interest
with respect to Regular Certificates apply the same principles as the OID
Regulations, such regulations may lead to different timing of income
inclusion than would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on
the sale of contingent interest Regular Certificates as ordinary income.
Investors should consult their tax advisors regarding the appropriate
treatment of any Regular Certificate that does not pay interest at a fixed
rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to
current values of a variable rate (or the highest, lowest or average of two
or more variable rates), including a rate based on the average cost of funds
of one or more financial institutions, or a positive or negative multiple of
such a rate (plus or minus a specified number of basis points), or that
represents a weighted average of rates on some or all of the Mortgage Loans,
including such a rate that is subject to one or more caps or floors, or (ii)
bearing one or more such variable rates for one or more periods or one or
more
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fixed rates for one or more periods, and a different variable rate or fixed
rate for other periods qualifies as a regular interest in a REMIC.
Accordingly, unless otherwise indicated in the applicable Prospectus
Supplement, the Depositor intends to treat Regular Certificates that qualify
as regular interests under this rule in the same manner as obligations
bearing a variable rate for original issue discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity
and future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular
Certificate based on the initial rate (or, if different, the value of the
applicable variable rate as of the pricing date) for the relevant Class.
Unless otherwise specified in the applicable Prospectus Supplement, the
Depositor intends to treat such variable interest as qualified stated
interest, other than variable interest on an interest-only or super-premium
Class, which will be treated as non-qualified stated interest includible in
the stated redemption price at maturity. Ordinary income reportable for any
period will be adjusted based on subsequent changes in the applicable
interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent
that initial "teaser" rates cause sufficiently "back-loaded" interest to
create more than de minimis original issue discount. The yield on such
Regular Certificates for purposes of accruing original issue discount will be
a hypothetical fixed rate based on the fixed rates, in the case of fixed rate
Mortgage Loans, and initial "teaser rates" followed by fully indexed rates,
in the case of adjustable rate Mortgage Loans. In the case of adjustable rate
Mortgage Loans, the applicable index used to compute interest on the Mortgage
Loans in effect on the pricing date (or possibly the issue date) will be
deemed to be in effect beginning with the period in which the first weighted
average adjustment date occurring after the issue date occurs. Adjustments
will be made in each accrual period either increasing or decreasing the
amount of ordinary income reportable to reflect the actual Pass-Through Rate
on the Regular Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be Deferred Interest is includible in the stated redemption
price at maturity thereof. Accordingly, any Deferred Interest that accrues
with respect to a Class of Regular Certificates may constitute income to the
holders of such Regular Certificates prior to the time distributions of cash
with respect to such Deferred Interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections
and the principles applied by the OID Regulations in the context of original
issue discount, "market discount" is the amount by which the purchaser's
original basis in the Regular Certificate (i) is exceeded by the then-current
principal amount of the Regular Certificate or (ii) in the case of a Regular
Certificate having original issue discount, is exceeded by the adjusted issue
price of such Regular Certificate at the time of purchase. Such purchaser
generally will be required to recognize ordinary income to the extent of
accrued market discount on such Regular Certificate as distributions
includible in the stated redemption price at maturity thereof are received,
in an amount not exceeding any such distribution. Such market discount would
accrue in a manner to be provided in Treasury regulations and should take
into account the Prepayment Assumption. The Conference Committee Report to
the 1986 Act provides that until such regulations are issued, such market
discount would accrue either (i) on the basis of a constant interest rate or
(ii) in the ratio of stated interest allocable to the relevant period to the
sum of the interest for such period plus the remaining
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interest as of the end of such period, or in the case of a Regular
Certificate issued with original issue discount, in the ratio of original
issue discount accrued for the relevant period to the sum of the original
issue discount accrued for such period plus the remaining original issue
discount as of the end of such period. Such purchaser also generally will be
required to treat a portion of any gain on a sale or exchange of the Regular
Certificate as ordinary income to the extent of the market discount accrued
to the date of disposition under one of the foregoing methods, less any
accrued market discount previously reported as ordinary income as partial
distributions in reduction of the stated redemption price at maturity were
received. Such purchaser will be required to defer deduction of a portion of
the excess of the interest paid or accrued on indebtedness incurred to
purchase or carry a Regular Certificate over the interest distributable
thereon. The deferred portion of such interest expense in any taxable year
generally will not exceed the accrued market discount on the Regular
Certificate for such year. Any such deferred interest expense is, in general,
allowed as a deduction not later than the year in which the related market
discount income is recognized or the Regular Certificate is disposed of. As
an alternative to the inclusion of market discount in income on the foregoing
basis, the Regular Certificateholder may elect to include market discount in
income currently as it accrues on all market discount instruments acquired by
such Regular Certificateholder in that taxable year or thereafter, in which
case the interest deferral rule will not apply. See "Election to Treat All
Interest Under the Constant Yield Method" below regarding an alternative
manner in which such election may be deemed to be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount would be
reported in a manner similar to de minimis original issue discount. See
"Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should
consult their own tax advisors regarding the application of these rules.
Investors should also consult Revenue Procedure 92-67 concerning the
elections to include market discount in income currently and to accrue market
discount on the basis of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased
at a premium. If the Regular Certificateholder holds such Regular Certificate
as a "capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. The Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to
the accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations
such as the Regular Certificates, although it is unclear whether the
alternatives to the constant yield method described above under "Market
Discount" are available. Amortizable bond premium will be treated as an
offset to interest income on a Regular Certificate rather than as a separate
deduction item. See "Election to Treat All Interest Under the Constant Yield
Method" below regarding an alternative manner in which the Code Section 171
election may be deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument
subject to such an election, (i) "interest" includes stated interest,
original issue
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discount, de minimis original issue discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were
issued on the holder's acquisition date in the amount of the holder's
adjusted basis immediately after acquisition. It is unclear whether, for this
purpose, the initial Prepayment Assumption would continue to apply or if a
new prepayment assumption as of the date of the holder's acquisition would
apply. A holder generally may make such an election on an instrument by
instrument basis or for a class or group of debt instruments. However, if the
holder makes such an election with respect to a debt instrument with
amortizable bond premium or with market discount, the holder is deemed to
have made elections to amortize bond premium or to report market discount
income currently as it accrues under the constant yield method, respectively,
for all debt instruments acquired by the holder in the same taxable year or
thereafter. The election is made on the holder's federal income tax return
for the year in which the debt instrument is acquired and is irrevocable
except with the approval of the Service. Investors should consult their own
tax advisors regarding the advisability of making such an election.
Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally
will equal the cost of the Regular Certificate to the seller, increased by
any original issue discount or market discount previously included in the
seller's gross income with respect to the Regular Certificate and reduced by
amounts included in the stated redemption price at maturity of the Regular
Certificate that were previously received by the seller, by any amortized
premium and by previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
long-term capital gain holding period (currently more than one year). Such
gain will be treated as ordinary income (i) if a Regular Certificate is held
as part of a "conversion transaction" as defined in Code Section 1258(c), up
to the amount of interest that would have accrued on the Regular
Certificateholder's net investment in the conversion transaction at 120% of
the appropriate applicable Federal rate under Code Section 1274(d) in effect
at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior distribution
of property that was held as a part of such transaction, (ii) in the case of
a non-corporate taxpayer, to the extent such taxpayer has made an election
under Code Section 163(d)(4) to have net capital gains taxed as investment
income at ordinary rates, or (iii) to the extent that such gain does not
exceed the excess, if any, of (a) the amount that would have been includible
in the gross income of the holder if its yield on such Regular Certificate
were 110% of the applicable Federal rate as of the date of purchase, over (b)
the amount of income actually includible in the gross income of such holder
with respect to the Regular Certificate. In addition, gain or loss recognized
from the sale of a Regular Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c). Capital gains of certain non-corporate taxpayers generally
are subject to a lower maximum tax rate (28%) than ordinary income of such
taxpayers (39.6%) for property held for more than one year but not more than
18 months, and a still lower maximum rate (20%) for property held for more
than 18 months. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in
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distributions attributable to defaults or delinquencies on the Mortgage Loans
allocable to a particular class of Regular Certificates, except to the extent
it can be established that such losses are uncollectible. Accordingly, the
holder of a Regular Certificate may have income, or may incur a diminution in
cash flow as a result of a default or delinquency, but may not be able to
take a deduction (subject to the discussion below) for the corresponding loss
until a subsequent taxable year. In this regard, investors are cautioned that
while they may generally cease to accrue interest income if it reasonably
appears that the interest will be uncollectible, the Internal Revenue Service
may take the position that original issue discount must continue to be
accrued in spite of its uncollectibility until the debt instrument is
disposed of in a taxable transaction or becomes worthless in accordance with
the rules of Code Section 166. To the extent the rules of Code Section 166
regarding bad debts are applicable, it appears that holders of Regular
Certificates that are corporations or that otherwise hold the Regular
Certificates in connection with a trade or business should in general be
allowed to deduct as an ordinary loss any such loss sustained during the
taxable year on account of any such Regular Certificates becoming wholly or
partially worthless, and that, in general, holders of Regular Certificates
that are not corporations and do not hold the Regular Certificates in
connection with a trade or business will be allowed to deduct as a short-term
capital loss any loss with respect to principal sustained during the taxable
year on account of a portion of any class or subclass of such Regular
Certificates becoming wholly worthless. Although the matter is not free from
doubt, non-corporate holders of Regular Certificates should be allowed a bad
debt deduction at such time as the principal balance of any class or subclass
of such Regular Certificates is reduced to reflect losses resulting from any
liquidated Mortgage Loans. The Service, however, could take the position that
non-corporate holders will be allowed a bad debt deduction to reflect such
losses only after all Mortgage Loans remaining in the Trust Fund have been
liquidated or such class of Regular Certificates has been otherwise retired.
The Service could also assert that losses on the Regular Certificates are
deductible based on some other method that may defer such deductions for all
holders, such as reducing future cash flow for purposes of computing original
issue discount. This may have the effect of creating "negative" original
issue discount which would be deductible only against future positive
original issue discount or otherwise upon termination of the Class. Holders
of Regular Certificates are urged to consult their own tax advisors regarding
the appropriate timing, amount and character of any loss sustained with
respect to such Regular Certificates. While losses attributable to interest
previously reported as income should be deductible as ordinary losses by both
corporate and non-corporate holders, the Internal Revenue Service may take
the position that losses attributable to accrued original issue discount may
only be deducted as short-term capital losses by non-corporate holders not
engaged in a trade or business. Special loss rules are applicable to banks
and thrift institutions, including rules regarding reserves for bad debts.
Such taxpayers are advised to consult their tax advisors regarding the
treatment of losses on Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"),
and will not be taxed separately to the REMIC Pool. The daily portions of
REMIC taxable income or net loss of a Residual Certificateholder are
determined by allocating the REMIC Pool's taxable income or net loss for each
calendar quarter ratably to each day in such quarter and by allocating such
daily portion among the Residual Certificateholders in proportion to their
respective holdings of Residual Certificates in the REMIC Pool on such day.
REMIC taxable income is generally determined in the same manner as the
taxable income of an individual using the accrual method of accounting,
except that (i) the limitations on deductibility of investment interest
expense and expenses for the production of income do not apply, (ii) all bad
loans will be deductible as business bad debts and (iii) the limitation on
the deductibility of interest and expenses related to tax-exempt income will
apply.
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The REMIC Pool's gross income includes interest, original issue discount
income and market discount income, if any, on the Mortgage Loans, reduced by
amortization of any premium on the Mortgage Loans, plus income from
amortization of issue premium, if any, on the Regular Certificates, plus
income on reinvestment of cash flows and reserve assets, plus any
cancellation of indebtedness income upon allocation of realized losses to the
Regular Certificates. The REMIC Pool's deductions include interest and
original issue discount expense on the Regular Certificates, servicing fees
on the Mortgage Loans, other administrative expenses of the REMIC Pool and
realized losses on the Mortgage Loans. The requirement that Residual
Certificateholders report their pro rata share of taxable income or net loss
of the REMIC Pool will continue until there are no Certificates of any class
of the related series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship
between the timing of recognition of interest and original issue discount or
market discount income or amortization of premium with respect to the
Mortgage Loans, on the one hand, and the timing of deductions for interest
(including original issue discount) on the Regular Certificates or income
from amortization of issue premium on the Regular Certificates, on the other
hand. In the event that an interest in the Mortgage Loans is acquired by the
REMIC Pool at a discount, and one or more of such Mortgage Loans is prepaid,
the Residual Certificateholder may recognize taxable income without being
entitled to receive a corresponding amount of cash because (i) the prepayment
may be used in whole or in part to make distributions in reduction of
principal on the Regular Certificates and (ii) the discount on the Mortgage
Loans which is includible in income may exceed the deduction allowed upon
such distributions on those Regular Certificates on account of any unaccrued
original issue discount relating to those Regular Certificates. When there is
more than one class of Regular Certificates that distribute principal
sequentially, this mismatching of income and deductions is particularly
likely to occur in the early years following issuance of the Regular
Certificates when distributions in reduction of principal are being made in
respect of earlier classes of Regular Certificates to the extent that such
classes are not issued with substantial discount. If taxable income
attributable to such a mismatching is realized, in general, losses would be
allowed in later years as distributions on the later classes of Regular
Certificates are made. Taxable income may also be greater in earlier years
than in later years as a result of the fact that interest expense deductions,
expressed as a percentage of the outstanding principal amount of such a
series of Regular Certificates, may increase over time as distributions in
reduction of principal are made on the lower yielding classes of Regular
Certificates, whereas to the extent that the REMIC Pool includes fixed rate
Mortgage Loans, interest income with respect to any given Mortgage Loan will
remain constant over time as a percentage of the outstanding principal amount
of that loan. Consequently, Residual Certificateholders must have sufficient
other sources of cash to pay any federal, state or local income taxes due as
a result of such mismatching or unrelated deductions against which to offset
such income, subject to the discussion of "excess inclusions" below under
"Limitations on Offset or Exemption of REMIC Income". The timing of such
mismatching of income and deductions described in this paragraph, if present
with respect to a series of Certificates, may have a significant adverse
effect upon the Residual Certificateholder's after-tax rate of return. In
addition, a Residual Certificateholder's taxable income during certain
periods may exceed the income reflected by such Residual Certificateholder
for such periods in accordance with generally accepted accounting principles.
Investors should consult their own accountants concerning the accounting
treatment of their investment in Residual Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of
disposition of the Residual Certificate if earlier), determined without
taking into account the net loss for the quarter. The initial adjusted basis
of a purchaser of a Residual Certificate is the amount paid for such Residual
Certificate. Such adjusted basis will be increased by the amount of taxable
income of the REMIC Pool reportable by the Residual Certificateholder
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and will be decreased (but not below zero), first, by a cash distribution
from the REMIC Pool and, second, by the amount of loss of the REMIC Pool
reportable by the Residual Certificateholder. Any loss that is disallowed on
account of this limitation may be carried over indefinitely with respect to
the Residual Certificateholder as to whom such loss was disallowed and may be
used by such Residual Certificateholder only to offset any income generated
by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not
include cash received by the REMIC Pool that represents a recovery of the
REMIC Pool's basis in its assets. Such recovery of basis by the REMIC Pool
will have the effect of amortization of the issue price of the Residual
Certificates over their life. However, in view of the possible acceleration
of the income of Residual Certificateholders described above under "Taxation
of REMIC Income", the period of time over which such issue price is
effectively amortized may be longer than the economic life of the Residual
Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a
residual interest as zero rather than such negative amount for purposes of
determining the REMIC Pool's basis in its assets. The preamble to the REMIC
Regulations states that the Service may provide future guidance on the proper
tax treatment of payments made by a transferor of such a residual interest to
induce the transferee to acquire the interest, and Residual
Certificateholders should consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
Mortgage Loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not
so provide. See "Treatment of Certain Items of REMIC Income and
Expense--Market Discount" below regarding the basis of Mortgage Loans to the
REMIC Pool and "Sale or Exchange of a Residual Certificate" below regarding
possible treatment of a loss upon termination of the REMIC Pool as a capital
loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities
regarding the determination of specific items of income and expense are
subject to differing interpretations. The Depositor makes no representation
as to the specific method that it will use for reporting income with respect
to the Mortgage Loans and expenses with respect to the Regular Certificates,
and different methods could result in different timing of reporting of
taxable income or net loss to Residual Certificateholders or differences in
capital gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount
income on Regular Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates", without regard to the de minimis rule described therein, and
"--Premium".
Deferred Interest. Any Deferred Interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income
to the REMIC Pool and will be treated in a manner similar to the Deferred
Interest that accrues with respect to Regular Certificates as described above
under "Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool
allocable to such Mortgage Loans is exceeded by their unpaid principal
balances. The REMIC Pool's basis in such Mortgage Loans is generally the fair
market value of the Mortgage Loans immediately after the transfer thereof to
the REMIC Pool.
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The REMIC Regulations provide that such basis is equal in the aggregate to
the issue prices of all regular and residual interests in the REMIC Pool (or
the fair market value thereof at the Closing Date, in the case of a retained
Class). In respect of Mortgage Loans that have market discount to which Code
Section 1276 applies, the accrued portion of such market discount would be
recognized currently as an item of ordinary income in a manner similar to
original issue discount. Market discount income generally should accrue in
the manner described above under "Taxation of Regular Certificates--Market
Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the
amount of such excess. As stated above, the REMIC Pool's basis in Mortgage
Loans is the fair market value of the Mortgage Loans, based on the aggregate
of the issue prices (or the fair market value of retained Classes) of the
regular and residual interests in the REMIC Pool immediately after the
transfer thereof to the REMIC Pool. In a manner analogous to the discussion
above under "Taxation of Regular Certificates--Premium", a REMIC Pool that
holds a Mortgage Loan as a capital asset under Code Section 1221 may elect
under Code Section 171 to amortize premium on whole mortgage loans or
mortgage loans underlying MBS that were originated after September 27, 1985
or MBS that are REMIC regular interests under the constant yield method.
Amortizable bond premium will be treated as an offset to interest income on
the Mortgage Loans, rather than as a separate deduction item. To the extent
that the mortgagors with respect to the Mortgage Loans are individuals, Code
Section 171 will not be available for premium on Mortgage Loans (including
underlying mortgage loans) originated on or prior to September 27, 1985.
Premium with respect to such Mortgage Loans may be deductible in accordance
with a reasonable method regularly employed by the holder thereof. The
allocation of such premium pro rata among principal payments should be
considered a reasonable method; however, the Service may argue that such
premium should be allocated in a different manner, such as allocating such
premium entirely to the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject
to special treatment. That portion, referred to as the "excess inclusion", is
equal to the excess of REMIC taxable income for the calendar quarter
allocable to a Residual Certificate over the daily accruals for such
quarterly period of (i) 120% of the long-term applicable Federal rate that
would have applied to the Residual Certificate (if it were a debt instrument)
on the Startup Day under Code Section 1274(d), multiplied by (ii) the
adjusted issue price of such Residual Certificate at the beginning of such
quarterly period. For this purpose, the adjusted issue price of a Residual
Certificate at the beginning of a quarter is the issue price of the Residual
Certificate, plus the amount of such daily accruals of REMIC income described
in this paragraph for all prior quarters, decreased by any distributions made
with respect to such Residual Certificate prior to the beginning of such
quarterly period. Accordingly, the portion of the REMIC Pool's taxable income
that will be treated as excess inclusions will be a larger portion of such
income as the adjusted issue price of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the
Residual Certificateholder is an organization subject to the tax on unrelated
business income imposed by Code Section 511, the Residual Certificateholder's
excess inclusions will be treated as unrelated business taxable income of
such Residual Certificateholder for purposes of Code Section 511. In
addition, REMIC taxable income is subject to 30% withholding tax with respect
to certain persons who are not U.S. Persons (as defined below under
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors"), and the portion thereof attributable to excess inclusions is not
eligible for any reduction in the rate of withholding tax (by treaty or
otherwise). See "Taxation of Certain Foreign Investors--Residual
Certificates" below. Finally, if a real estate
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investment trust or a regulated investment company owns a Residual
Certificate, a portion (allocated under Treasury regulations yet to be
issued) of dividends paid by the real estate investment trust or a regulated
investment company could not be offset by net operating losses of its
shareholders, would constitute unrelated business taxable income for
tax-exempt shareholders, and would be ineligible for reduction of withholding
to certain persons who are not U.S. Persons. The SBJPA of 1996 has eliminated
the special rule permitting Section 593 institutions ("thrift institutions")
to use net operating losses and other allowable deductions to offset their
excess inclusion income from Residual Certificates that have "significant
value" within the meaning of the REMIC Regulations, effective for taxable
years beginning after December 31, 1995, except with respect to Residual
Certificates continuously held by thrift institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for
a taxable year cannot be less than the excess inclusions for the year. Third,
the amount of any alternative minimum tax net operating loss deduction must
be computed without regard to any excess inclusions. These rules are
effective for taxable years beginning after December 31, 1996, unless a
Residual Certificateholder elects to have such rules apply only to taxable
years beginning after August 20, 1996.
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as
defined below), a tax would be imposed in an amount equal to the product of
(i) the present value of the total anticipated excess inclusions with respect
to such Residual Certificate for periods after the transfer and (ii) the
highest marginal federal income tax rate applicable to corporations. The
REMIC Regulations provide that the anticipated excess inclusions are based on
actual prepayment experience to the date of the transfer and projected
payments based on the Prepayment Assumption. The present value rate equals
the applicable Federal rate under Code Section 1274(d) as of the date of the
transfer for a term ending with the last calendar quarter in which excess
inclusions are expected to accrue. Such a tax generally would be imposed on
the transferor of the Residual Certificate, except that where such transfer
is through an agent (including a broker, nominee or other middleman) for a
Disqualified Organization, the tax would instead be imposed on such agent.
However, a transferor of a Residual Certificate would in no event be liable
for such tax with respect to a transfer if the transferee furnishes to the
transferor an affidavit that the transferee is not a Disqualified
Organization and, as of the time of the transfer, the transferor does not
have actual knowledge that such affidavit is false. The tax also may be
waived by the Treasury Department if the Disqualified Organization promptly
disposes of the residual interest and the transferor pays income tax at the
highest corporate rate on the excess inclusions for the period the Residual
Certificate is actually held by the Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are
allocable to the interest in the Pass-Through Entity during the period such
interest is held by such Disqualified Organization, and (ii) the highest
marginal federal corporate income tax rate. Such tax would be deductible from
the ordinary gross income of the Pass-Through Entity for the taxable year.
The Pass-Through Entity would not be liable for such tax if it has received
an affidavit from such record holder that it is not a Disqualified
Organization or stating such holder's taxpayer identification number and,
during the period such person is the record holder of the Residual
Certificate, the Pass-Through Entity does not have actual knowledge that such
affidavit is false.
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For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a Residual Certificate, all interests in the
electing large partnership are treated as held by Disqualified Organizations
for purposes of the tax imposed upon a Pass-Through Entity by section 860E(c)
of the Code. An exception to this tax, otherwise available to a Pass-Through
Entity that is furnished certain affidavits by record holders of interests in
the entity and that does not know such affidavits are false, is not available
to an electing large partnership.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government,
any international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if
all of its activities are subject to tax and a majority of its board of
directors is not selected by any such governmental entity), any cooperative
organization furnishing electric energy or providing telephone service to
persons in rural areas as described in Code Section 1381(a)(2)(C), and any
organization (other than a farmers' cooperative described in Code Section
521) that is exempt from taxation under the Code unless such organization is
subject to the tax on unrelated business income imposed by Code Section 511,
(ii) "Pass-Through Entity" means any regulated investment company, real
estate investment trust, common trust fund, partnership, trust or estate and
certain corporations operating on a cooperative basis. Except as may be
provided in Treasury regulations, any person holding an interest in a
Pass-Through Entity as a nominee for another will, with respect to such
interest, be treated as a Pass-Through Entity, and (iii) an "electing large
partnership" means any partnership having more than 100 members during the
preceding tax year (other than certain service partnerships and commodity
pools), which elect to apply simplified reporting provisions under the Code.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
provide that any attempted or purported transfer in violation of these
transfer restrictions will be null and void and will vest no rights in any
purported transferee. Each Residual Certificate with respect to a series will
bear a legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under
the Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must
be furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor
would continue to be treated as the owner of the Residual Certificates and
thus would continue to be subject to tax on its allocable portion of the net
income of the REMIC Pool. Under the REMIC Regulations, a transfer of a
"noneconomic residual interest" (as defined below) to a Residual
Certificateholder (other than a Residual Certificateholder who is not a U.S.
Person, as defined below under "Foreign Investors") is disregarded for all
federal income tax purposes if a significant purpose of the transferor is to
impede the assessment or collection of tax. A residual interest in a REMIC
(including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of the transfer, (i) the
present value of the expected future distributions on the residual interest
at least equals the product of the present value of the anticipated excess
inclusions and the highest corporate income tax rate in effect for the year
in which the transfer occurs, and (ii) the transferor reasonably expects that
the transferee will receive distributions from the REMIC at or after the time
at which taxes accrue on the anticipated excess inclusions in an amount
sufficient to satisfy
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the accrued taxes. The anticipated excess inclusions and the present value
rate are determined in the same manner as set forth above under "Disqualified
Organizations". The REMIC Regulations explain that a significant purpose to
impede the assessment or collection of tax exists if the transferor, at the
time of the transfer, either knew or should have known that the transferee
would be unwilling or unable to pay taxes due on its share of the taxable
income of the REMIC. A safe harbor is provided if (i) the transferor
conducted, at the time of the transfer, a reasonable investigation of the
financial condition of the transferee and found that the transferee
historically had paid its debts as they came due and found no significant
evidence to indicate that the transferee would not continue to pay its debts
as they came due in the future, and (ii) the transferee represents to the
transferor that it understands that, as the holder of the noneconomic
residual interest, the transferee may incur tax liabilities in excess of cash
flows generated by the interest and that the transferee intends to pay taxes
associated with holding the residual interest as they become due. The Pooling
Agreement with respect to each series of Certificates will require the
transferee of a Residual Certificate to certify to the matters in the
preceding sentence as part of the affidavit described above under the heading
"Disqualified Organizations". The transferor must have no actual knowledge or
reason to know that such statements are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended
to apply to a transferee who is not a "U.S. Person" (as defined below),
unless such transferee's income is effectively connected with the conduct of
a trade or business within the United States. A Residual Certificate is
deemed to have tax avoidance potential unless, at the time of the transfer,
(i) the future value of expected distributions equals at least 30% of the
anticipated excess inclusions after the transfer, and (ii) the transferor
reasonably expects that the transferee will receive sufficient distributions
from the REMIC Pool at or after the time at which the excess inclusions
accrue and prior to the end of the next succeeding taxable year for the
accumulated withholding tax liability to be paid. If the non-U.S. Person
transfers the Residual Certificate back to a U.S. Person, the transfer will
be disregarded and the foreign transferor will continue to be treated as the
owner unless arrangements are made so that the transfer does not have the
effect of allowing the transferor to avoid tax on accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person" means a citizen or resident of the United States, a corporation,
partnership (except to the extent provided in applicable Treasury
regulations) or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate that is subject
to United States federal income tax regardless of the source of its income or
a trust if a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more United
States fiduciaries have the authority to control all substantial decisions of
such trust (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to
be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under
"Taxation of Residual Certificates--Basis and Losses") of such Residual
Certificateholder in such Residual Certificate at the time of the sale or
exchange. In addition to reporting the taxable income of the REMIC Pool, a
Residual Certificateholder will have taxable income to the extent that any
cash distribution to it from the REMIC Pool exceeds such adjusted basis on
that Distribution Date. Such income will be treated as gain from the sale or
exchange of the Residual Certificate. It is possible that the termination of
the REMIC Pool may be treated as a sale or exchange of a Residual
Certificateholder's Residual Certificate, in which case,
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if the Residual Certificateholder has an adjusted basis in such Residual
Certificateholder's Residual Certificate remaining when its interest in the
REMIC Pool terminates, and if such Residual Certificateholder holds such
Residual Certificate as a capital asset under Code Section 1221, then such
Residual Certificateholder will recognize a capital loss at that time in the
amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii)
in the case of a non-corporate taxpayer, to the extent such taxpayer has made
an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of
Code Section 1091 will apply to dispositions of Residual Certificates where
the seller of the Residual Certificate, during the period beginning six
months before the sale or disposition of the Residual Certificate and ending
six months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Section 1091) any residual
interest in any REMIC or any interest in a "taxable mortgage pool" (such as a
non-REMIC owner trust) that is economically comparable to a Residual
Certificate.
Mark to Market Regulations
The Service has issued regulations (the "Mark to Market Regulations")
under Code Section 475 relating to the requirement that a securities dealer
mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities of a dealer, except to the extent that
the dealer has specifically identified a security as held for investment. The
Mark to Market Regulations provide that, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked to market. The Mark to Market Regulations apply to all Residual
Certificates acquired on or after January 4, 1995.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss
includible in the federal income tax returns of Residual Certificateholders,
but rather will be taxed directly to the REMIC Pool at a 100% rate.
Prohibited transactions generally include (i) the disposition of a qualified
mortgage other than for (a) substitution within two years of the Startup Day
for a defective (including a defaulted) obligation (or repurchase in lieu of
substitution of a defective (including a defaulted) obligation at any time)
or for any qualified mortgage within three months of the Startup Day, (b)
foreclosure, default or imminent default of a qualified mortgage, (c)
bankruptcy or insolvency of the REMIC Pool or (d) a qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction
to sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is
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outstanding). The REMIC Regulations indicate that the modification of a
Mortgage Loan generally will not be treated as a disposition if it is
occasioned by a default or reasonably foreseeable default, an assumption of
the Mortgage Loan, the waiver of a due-on-sale or due-on-encumbrance clause
or the conversion of an interest rate by a mortgagor pursuant to the terms of
a convertible adjustable rate Mortgage Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during
the three months following the Startup Day, (ii) made to a qualified reserve
fund by a Residual Certificateholder, (iii) in the nature of a guarantee,
(iv) made to facilitate a qualified liquidation or clean-up call and (v) as
otherwise permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property", determined by
reference to the rules applicable to real estate investment trusts.
Generally, property acquired by deed in lieu of foreclosure would be treated
as "foreclosure property" for a period ending with the third calendar year
following the year of acquisition of such property, with a possible
extension. Net income from foreclosure property generally means gain from the
sale of a foreclosure property that is inventory property and gross income
from foreclosure property other than qualifying rents and other qualifying
income for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material
state income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of
its assets, provided that the REMIC Pool credits or distributes in
liquidation all of the sale proceeds plus its cash (other than amounts
retained to meet claims) to holders of Regular Certificates and Residual
Certificateholders within the 90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes
in a manner similar to a partnership. The form for such income tax return is
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return.
The Trustee will be required to sign the REMIC Pool's returns. Treasury
regulations provide that, except where there is a single Residual
Certificateholder for an entire taxable year, the REMIC Pool will be subject
to the procedural and administrative rules of the Code applicable to
partnerships, including the determination by the Service of any adjustments
to, among other things, items of REMIC income, gain, loss, deduction or
credit in a unified administrative proceeding. The Residual Certificateholder
owning the largest percentage interest in the Residual Certificates will be
obligated to act as "tax matters person", as defined in
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applicable Treasury regulations, with respect to the REMIC Pool. Each
Residual Certificateholder will be deemed, by acceptance of such Residual
Certificates, to have agreed (i) to the appointment of the tax matters person
as provided in the preceding sentence and (ii) to the irrevocable designation
of the Master Servicer as agent for performing the functions of the tax
matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a
taxable year of an individual taxpayer will be reduced by the lesser of (i)
3% of the excess, if any, of adjusted gross income over $100,000 ($50,000 in
the case of a married individual filing a separate return) (subject to
adjustments for inflation) or (ii) 80% of the amount of itemized deductions
otherwise allowable for such year. In the case of a REMIC Pool, such
deductions may include deductions under Code Section 212 for the servicing
fee and all administrative and other expenses relating to the REMIC Pool, or
any similar expenses allocated to the REMIC Pool with respect to a regular
interest it holds in another REMIC. Such investors who hold REMIC
Certificates either directly or indirectly through certain pass-through
entities may have their pro rata share of such expenses allocated to them as
additional gross income, but may be subject to such limitation on deductions.
In addition, such expenses are not deductible at all for purposes of
computing the alternative minimum tax, and may cause such investors to be
subject to significant additional tax liability. Temporary Treasury
regulations provide that the additional gross income and corresponding amount
of expenses generally are to be allocated entirely to the holders of Residual
Certificates in the case of a REMIC Pool that would not qualify as a fixed
investment trust in the absence of a REMIC election. However, such additional
gross income and limitation on deductions will apply to the allocable portion
of such expenses to holders of Regular Certificates, as well as holders of
Residual Certificates, where such Regular Certificates are issued in a manner
that is similar to pass-through certificates in a fixed investment trust. In
general, such allocable portion will be determined based on the ratio that a
REMIC Certificateholder's income, determined on a daily basis, bears to the
income of all holders of Regular Certificates and Residual Certificates with
respect to a REMIC Pool. As a result, individuals, estates or trusts holding
REMIC Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC, or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single Class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the
related period on Residual Certificates. Unless otherwise indicated in the
applicable Prospectus Supplement, all such expenses will be allocable to the
Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or
other Non-U.S. Persons (as defined below), will be considered "portfolio
interest" and, therefore, generally will not be subject to 30% United States
withholding tax, provided that such Non-U.S. Person (i) is not a "10-percent
shareholder" within the meaning of Code Section 871(h)(3)(B) or a controlled
foreign corporation described in Code Section 881(c)(3)(C) and (ii) provides
the Trustee, or the person who would otherwise be required to withhold tax
from such distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial
owner and stating, among other things, that the beneficial owner of the
Regular Certificate is a Non-U.S. Person. If such statement, or any other
required statement, is not provided, 30% withholding will apply unless
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reduced or eliminated pursuant to an applicable tax treaty or unless the
interest on the Regular Certificate is effectively connected with the conduct
of a trade or business within the United States by such Non-U.S. Person. In
the latter case, such Non-U.S. Person will be subject to United States
federal income tax at regular rates. Prepayment Premiums distributable to
Regular Certificateholders who are Non-U.S. Persons may be subject to 30%
United States withholding tax. Investors who are Non-U.S. Persons should
consult their own tax advisors regarding the specific tax consequences to
them of owning a Regular Certificate. The term "Non-U.S. Person" means any
person who is not a U.S. Person.
The IRS recently issued final regulations (the "New Regulations") which
would provide alternative methods of satisfying the beneficial ownership
certification requirement described above. The New Regulations are effective
January 1, 1999, although valid withholding certificates that are held on
December 31, 1998, remain valid until the earlier of December 31, 1999 or the
due date of expiration of the certificate under the rules as currently in
effect. The New Regulations would require, in the case of Regular
Certificates held by a foreign partnership, that (x) the certification
described above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule would apply
in the case of tiered partnerships. Non-U.S. Persons should consult their own
tax advisors concerning the application of the certification requirements in
the New Regulations.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to
the conditions described in "Regular Certificates" above, but only to the
extent that (i) the Mortgage Loans (including mortgage loans underlying MBS)
were issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of
assets therein (as to which a separate REMIC election will be made), to which
the Residual Certificate relates, consists of obligations issued in
"registered form" within the meaning of Code Section 163(f)(1). Generally,
whole mortgage loans will not be, but MBS and regular interests in another
REMIC Pool will be, considered obligations issued in registered form.
Furthermore, a Residual Certificateholder will not be entitled to any
exemption from the 30% withholding tax (or lower treaty rate) to the extent
of that portion of REMIC taxable income that constitutes an "excess
inclusion". See "Taxation of Residual Certificates--Limitations on Offset or
Exemption of REMIC Income". If the amounts paid to Residual
Certificateholders who are Non-U.S. Persons are effectively connected with
the conduct of a trade or business within the United States by such Non-U.S.
Persons, 30% (or lower treaty rate) withholding will not apply. Instead, the
amounts paid to such Non-U.S. Persons will be subject to United States
federal income tax at regular rates. If 30% (or lower treaty rate)
withholding is applicable, such amounts generally will be taken into account
for purposes of withholding only when paid or otherwise distributed (or when
the Residual Certificate is disposed of) under rules similar to withholding
upon disposition of debt instruments that have original issue discount. See
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors" above concerning the disregard of certain transfers having "tax
avoidance potential". Investors who are Non-U.S. Persons should consult their
own tax advisors regarding the specific tax consequences to them of owning
Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to
a "backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
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Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from
distribution on the Regular Certificates would be refunded by the Service or
allowed as a credit against the Regular Certificateholder's federal income
tax liability. The New Regulations change certain of the rules relating to
certain presumptions currently available relating to information reporting
and backup withholding. Non-U.S. Persons are urged to contact their own tax
advisors regarding the application to them of backup withholding and
information reporting.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals,
estates, non-exempt and non-charitable trusts, and partnerships who are
either holders of record of Regular Certificates or beneficial owners who own
Regular Certificates through a broker or middleman as nominee. All brokers,
nominees and all other non-exempt holders of record of Regular Certificates
(including corporations, non-calendar year taxpayers, securities or
commodities dealers, real estate investment trusts, investment companies,
common trust funds, thrift institutions and charitable trusts) may request
such information for any calendar quarter by telephone or in writing by
contacting the person designated in Service Publication 938 with respect to a
particular series of Regular Certificates. Holders through nominees must
request such information from the nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool
to each Residual Certificateholder by the end of the month following the
close of each calendar quarter (41 days after the end of a quarter under
proposed Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service
concerning the percentage of the REMIC Pool's assets meeting the qualified
asset tests described above under "Status of REMIC Certificates".
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS
TO WHICH NO REMIC ELECTION IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates
that are not designated as "Stripped Certificates", as described below, as a
REMIC (Certificates of such a series hereinafter referred to as "Standard
Certificates"), the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i). Where there is no fixed retained yield with respect to
the Mortgage Loans underlying the Standard Certificates, the holder of each
such Standard Certificate (a "Standard Certificateholder") in such series
will be treated as the owner of a pro rata undivided interest in the ordinary
income and corpus portions of the Trust Fund represented by its Standard
Certificate and will be considered the beneficial owner of a pro rata
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undivided interest in each of the Mortgage Loans, subject to the discussion
below under "Recharacterization of Servicing Fees". Accordingly, the holder
of a Standard Certificate of a particular series will be required to report
on its federal income tax return its pro rata share of the entire income from
the Mortgage Loans represented by its Standard Certificate, including
interest at the coupon rate on such Mortgage Loans, original issue discount
(if any), prepayment fees, assumption fees, and late payment charges received
by the Master Servicer, in accordance with such Standard Certificateholder's
method of accounting. A Standard Certificateholder generally will be able to
deduct its share of the servicing fee and all administrative and other
expenses of the Trust Fund in accordance with its method of accounting,
provided that such amounts are reasonable compensation for services rendered
to that Trust Fund. However, investors who are individuals, estates or trusts
who own Standard Certificates, either directly or indirectly through certain
pass-through entities, will be subject to limitation with respect to certain
itemized deductions described in Code Section 67, including deductions under
Code Section 212 for the servicing fee and all such administrative and other
expenses of the Trust Fund, to the extent that such deductions, in the
aggregate, do not exceed two percent of an investor's adjusted gross income.
In addition, Code Section 68 provides that itemized deductions otherwise
allowable for a taxable year of an individual taxpayer will be reduced by the
lesser of (i) 3% of the excess, if any, of adjusted gross income over
$100,000 ($50,000 in the case of a married individual filing a separate
return) (subject to adjustments for inflation), or (ii) 80% of the amount of
itemized deductions otherwise allowable for such year. As a result, such
investors holding Standard Certificates, directly or indirectly through a
pass-through entity, may have aggregate taxable income in excess of the
aggregate amount of cash received on such Standard Certificates with respect
to interest at the pass-through rate on such Standard Certificates. In
addition, such expenses are not deductible at all for purposes of computing
the alternative minimum tax, and may cause such investors to be subject to
significant additional tax liability. Moreover, where there is fixed retained
yield with respect to the Mortgage Loans underlying a series of Standard
Certificates or where the servicing fee is in excess of reasonable servicing
compensation, the transaction will be subject to the application of the
"stripped bond" and "stripped coupon" rules of the Code, as described below
under "Stripped Certificates" and "Recharacterization of Servicing Fees",
respectively.
Tax Status
Standard Certificates will have the following status for federal income
tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be
considered to represent "loans . . . secured by an interest in real property
which is . . . residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), provided that the real property securing the Mortgage
Loans represented by that Standard Certificate is of the type described in
such section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code
Section 856(c)(5)(A) to the extent that the assets of the related Trust Fund
consist of qualified assets, and interest income on such assets will be
considered "interest on obligations secured by mortgages on real property" to
such extent within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to represent
an "obligation . . . which is principally secured by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) to the extent that
the assets of the related Trust Fund consist of "qualified mortgages" within
the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
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Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under "Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and
Expense--Premium".
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans
as to which the conditions for the application of those sections are met.
Rules regarding periodic inclusion of original issue discount income are
applicable to mortgages of corporations originated after May 27, 1969,
mortgages of noncorporate mortgagors (other than individuals) originated
after July 1, 1982, and mortgages of individuals originated after March 2,
1984. Under the OID Regulations, such original issue discount could arise by
the charging of points by the originator of the mortgages in an amount
greater than a statutory de minimis exception, including a payment of points
currently deductible by the borrower under applicable Code provisions or,
under certain circumstances, by the presence of "teaser rates" on the
Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. Unless indicated otherwise in the applicable Prospectus Supplement,
no prepayment assumption will be assumed for purposes of such accrual.
However, Code Section 1272 provides for a reduction in the amount of original
issue discount includible in the income of a holder of an obligation that
acquires the obligation after its initial issuance at a price greater than
the sum of the original issue price and the previously accrued original issue
discount, less prior payments of principal. Accordingly, if such Mortgage
Loans acquired by a Standard Certificateholder are purchased at a price equal
to the then unpaid principal amount of such Mortgage Loans, no original issue
discount attributable to the difference between the issue price and the
original principal amount of such Mortgage Loans (i.e., points) will be
includible by such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be
determined and will be reported as ordinary income generally in the manner
described above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount", except that
the ratable accrual methods described therein will not apply and it is
unclear whether a Prepayment Assumption would apply. Rather, the holder will
accrue market discount pro rata over the life of the Mortgage Loans, unless
the constant yield method is elected. Unless indicated otherwise in the
applicable Prospectus Supplement, no prepayment assumption will be assumed
for purposes of such accrual.
Recharacterization of Servicing Fees
If the servicing fee paid to the Master Servicer were deemed to exceed
reasonable servicing compensation, the amount of such excess would represent
neither income nor a deduction to Certificateholders. In this regard, there
are no authoritative guidelines for federal income tax purposes as to either
the maximum amount of servicing compensation that may be considered
reasonable in the context of this or similar transactions or whether, in the
case of the Standard Certificate, the reasonableness of servicing
compensation should be determined on a weighted average or loan-by-loan
basis. If a loan-by-loan basis is appropriate, the likelihood that such
amount would exceed reasonable servicing compensation as to some of the
Mortgage Loans would be increased. Service guidance indicates that a
servicing fee in excess of reasonable compensation ("excess servicing") will
cause the Mortgage Loans to be treated under the "stripped bond" rules. Such
guidance provides safe harbors for servicing deemed to be reasonable and
requires taxpayers to demonstrate that the value of servicing fees in excess
of such amounts is not greater than the value of the services provided.
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Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage
Loans. Under the rules of Code Section 1286, the separation of ownership of
the right to receive some or all of the interest payments on an obligation
from the right to receive some or all of the principal payments on the
obligation would result in treatment of such Mortgage Loans as "stripped
coupons" and "stripped bonds". Subject to the de minimis rule discussed below
under "--Stripped Certificates", each stripped bond or stripped coupon could
be considered for this purpose as a non-interest bearing obligation issued on
the date of issue of the Standard Certificates, and the original issue
discount rules of the Code would apply to the holder thereof. While Standard
Certificateholders would still be treated as owners of beneficial interests
in a grantor trust for federal income tax purposes, the corpus of such trust
could be viewed as excluding the portion of the Mortgage Loans the ownership
of which is attributed to the Master Servicer, or as including such portion
as a second class of equitable interest. Applicable Treasury regulations
treat such an arrangement as a fixed investment trust, since the multiple
classes of trust interests should be treated as merely facilitating direct
investments in the trust assets and the existence of multiple classes of
ownership interests is incidental to that purpose. In general, such a
recharacterization should not have any significant effect upon the timing or
amount of income reported by a Standard Certificateholder, except that the
income reported by a cash method holder may be slightly accelerated. See
"Stripped Certificates" below for a further description of the federal income
tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates
Upon sale or exchange of a Standard Certificate, a Standard
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its aggregate adjusted basis in the
Mortgage Loans and the other assets represented by the Standard Certificate.
In general, the aggregate adjusted basis will equal the Standard
Certificateholder's cost for the Standard Certificate, increased by the
amount of any income previously reported with respect to the Standard
Certificate and decreased by the amount of any losses previously reported
with respect to the Standard Certificate and the amount of any distributions
received thereon. Except as provided above with respect to market discount on
any Mortgage Loans, and except for certain financial institutions subject to
the provisions of Code Section 582(c), any such gain or loss would be capital
gain or loss if the Standard Certificate was held as a capital asset.
However, gain on the sale of a Standard Certificate will be treated as
ordinary income (i) if a Standard Certificate is held as part of a
"conversion transaction" as defined in Code Section 1258(c), up to the amount
of interest that would have accrued on the Standard Certificateholder's net
investment in the conversion transaction at 120% of the appropriate
applicable Federal rate in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with
respect to any prior disposition of property that was held as a part of such
transaction or (ii) in the case of a non-corporate taxpayer, to the extent
such taxpayer has made an election under Code Section 163(d)(4) to have net
capital gains taxed as investment income at ordinary income rates. Capital
gains of certain non-corporate taxpayers generally are subject to a lower
maximum tax rate (28%) than ordinary income of such taxpayers (39.6%) for
property held for more than one year but not more than 18 months, and a still
lower maximum rate (20%) for property held for more than 18 months. The
maximum tax rate for corporations is the same with respect to both ordinary
income and capital gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal
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payments and "stripped coupons" with respect to interest payments. For
purposes of this discussion, Certificates that are subject to those rules
will be referred to as "Stripped Certificates". Stripped Certificates include
"Stripped Interest Certificates" and "Stripped Principal Certificates" (as
defined in this Prospectus) as to which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or
any of its affiliates retains (for its own account or for purposes of
resale), in the form of fixed retained yield or otherwise, an ownership
interest in a portion of the payments on the Mortgage Loans, (ii) the Master
Servicer is treated as having an ownership interest in the Mortgage Loans to
the extent it is paid (or retains) servicing compensation in an amount
greater than reasonable consideration for servicing the Mortgage Loans (see
"Standard Certificates--Recharacterization of Servicing Fees" above) and
(iii) Certificates are issued in two or more classes or subclasses
representing the right to non-pro-rata percentages of the interest and
principal payments on the Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of
the principal payments on each Mortgage Loan and/or "stripped coupons" with
respect to its pro rata share of all or a portion of the interest payments on
each Mortgage Loan, including the Stripped Certificate's allocable share of
the servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped
Certificateholders, the servicing fees will be allocated to the Stripped
Certificates in proportion to the respective entitlements to distributions of
each class (or subclass) of Stripped Certificates for the related period or
periods. The holder of a Stripped Certificate generally will be entitled to a
deduction each year in respect of the servicing fees, as described above
under "Standard Certificates--General", subject to the limitation described
therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such
stripped interest is purchased. Although the treatment of Stripped
Certificates for federal income tax purposes is not clear in certain respects
at this time, particularly where such Stripped Certificates are issued with
respect to a Mortgage Pool containing variable-rate Mortgage Loans, the
Depositor has been advised by counsel that (i) the Trust Fund will be treated
as a grantor trust under subpart E, Part 1 of subchapter J of the Code and
not as an association taxable as a corporation or a "taxable mortgage pool"
within the meaning of Code Section 7701(i), and (ii) each Stripped
Certificate should be treated as a single installment obligation for purposes
of calculating original issue discount and gain or loss on disposition. This
treatment is based on the interrelationship of Code Section 1286, Code
Sections 1272 through 1275, and the OID Regulations. While under Code Section
1286 computations with respect to Stripped Certificates arguably should be
made in one of the ways described below under "Taxation of Stripped
Certificates--Possible Alternative Characterizations," the OID Regulations
state, in general, that two or more debt instruments issued by a single
issuer to a single investor in a single transaction should be treated as a
single debt instrument for original issue discount purposes. The Pooling
Agreement requires that the Trustee make and report all computations
described below using this aggregate approach, unless substantial legal
authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 provide for the
treatment of a Stripped Certificate as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount.
In addition, under these regulations, a Stripped Certificate that represents
a right to payments of both interest and principal may be viewed either as
issued with original issue discount or market discount (as described below),
at a de minimis original issue discount, or, presumably, at a premium. This
treatment suggests that the interest component of such a Stripped Certificate
would be treated as qualified stated interest under the OID Regulations.
Further, these final regulations provide that the purchaser of such a
Stripped Certificate will be required to account for any discount as market
discount rather than original issue discount if either (i) the initial
discount with respect to the Stripped Certificate was treated
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as zero under the de minimis rule, or (ii) no more than 100 basis points in
excess of reasonable servicing is stripped off the related Mortgage Loans.
Any such market discount would be reportable as described under "Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Market Discount," without regard to the de minimis rule
therein, assuming that a prepayment assumption is employed in such
computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt,
counsel has advised the Depositor that Stripped Certificates owned by
applicable holders should be considered to represent "real estate assets"
within the meaning of Code Section 856(c)(5)(A), "obligation[s] principally
secured by an interest in real property" within the meaning of Code Section
860G(a)(3)(A), and "loans . . . secured by an interest in real property which
is . . . residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the Mortgage
Loans and interest on such Mortgage Loans qualify for such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General", each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into
account the compounding of interest, which may be prior to the receipt of the
cash attributable to such income. Based in part on the OID Regulations and
the amendments to the original issue discount sections of the Code made by
the 1986 Act, the amount of original issue discount required to be included
in the income of a holder of a Stripped Certificate (referred to in this
discussion as a "Stripped Certificateholder") in any taxable year likely will
be computed generally as described above under "Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates". However, with the apparent exception of a Stripped Certificate
qualifying as a market discount obligation, as described above under
"General", the issue price of a Stripped Certificate will be the purchase
price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than
qualified stated interest to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition
of original issue discount will be either accelerated or decelerated and the
amount of such original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each
Mortgage Loan represented by such Stripped Certificateholder's Stripped
Certificate. While the matter is not free from doubt, the holder of a
Stripped Certificate should be entitled in the year that it becomes certain
(assuming no further prepayments) that the holder will not recover a portion
of its adjusted basis in such Stripped Certificate to recognize an ordinary
loss equal to such portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not
be made if the Mortgage Loans are prepaid could lead to the interpretation
that such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of
contingent interest, are by their terms not applicable to prepayable
securities such as the Stripped Certificates. However, if final regulations
dealing with contingent interest with respect to the
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Stripped Certificates apply the same principles as the OID Regulations, such
regulations may lead to different timing of income inclusion that would be
the case under the OID Regulations. Furthermore, application of such
principles could lead to the characterization of gain on the sale of
contingent interest Stripped Certificates as ordinary income. Investors
should consult their tax advisors regarding the appropriate tax treatment of
Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates". To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such
subsequent purchaser will be required for federal income tax purposes to
accrue and report such excess as if it were original issue discount in the
manner described above. It is not clear for this purpose whether the assumed
prepayment rate that is to be used in the case of a Stripped
Certificateholder other than an original Stripped Certificateholder should be
the Prepayment Assumption or a new rate based on the circumstances at the
date of subsequent purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible
interpretations of the applicable Code provisions. For example, the Stripped
Certificateholder may be treated as the owner of (i) one installment
obligation consisting of such Stripped Certificate's pro rata share of the
payments attributable to principal on each Mortgage Loan and a second
installment obligation consisting of such Stripped Certificate's pro rata
share of the payments attributable to interest on each Mortgage Loan, (ii) as
many stripped bonds or stripped coupons as there are scheduled payments of
principal and/or interest on each Mortgage Loan or (iii) a separate
installment obligation for each Mortgage Loan, representing the Stripped
Certificate's pro rata share of payments of principal and/or interest to be
made with respect thereto. Alternatively, the holder of one or more classes
of Stripped Certificates may be treated as the owner of a pro rata fractional
undivided interest in each Mortgage Loan to the extent that such Stripped
Certificate, or classes of Stripped Certificates in the aggregate, represent
the same pro rata portion of principal and interest on each such Mortgage
Loan, and a stripped bond or stripped coupon (as the case may be), treated as
an installment obligation or contingent payment obligation, as to the
remainder. Final regulations issued on December 28, 1992 regarding original
issue discount on stripped obligations make the foregoing interpretations
less likely to be applicable. The preamble to those regulations states that
they are premised on the assumption that an aggregation approach is
appropriate for determining whether original issue discount on a stripped
bond or stripped coupon is de minimis, and solicits comments on appropriate
rules for aggregating stripped bonds and stripped coupons under Code Section
1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income
tax purposes.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped
Certificateholder at any time during such year, such information (prepared on
the basis described above) as the Trustee deems to be necessary or desirable
to enable such Certificateholders to prepare their federal income tax
returns. Such information will include the amount of original issue discount
accrued on Certificates held by
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persons other than Certificateholders exempted from the reporting
requirements. The amounts required to be reported by the Trustee may not be
equal to the proper amount of original issue discount required to be reported
as taxable income by a Certificateholder, other than an original
Certificateholder that purchased at the issue price. In particular, in the
case of Stripped Certificates, unless provided otherwise in the applicable
Prospectus Supplement, such reporting will be based upon a representative
initial offering price of each class of Stripped Certificates. The Trustee
will also file such original issue discount information with the Service. If
a Certificateholder fails to supply an accurate taxpayer identification
number or if the Secretary of the Treasury determines that a
Certificateholder has not reported all interest and dividend income required
to be shown on his federal income tax return, 31% backup withholding may be
required in respect of any reportable payments, as described above under
"Certain Federal Income Tax Consequences for REMIC Certificates--Backup
Withholding".
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans
that are issued on or before July 18, 1984, interest or original issue
discount paid by the person required to withhold tax under Code Section 1441
or 1442 to nonresident aliens, foreign corporations, or other Non-U.S.
Persons generally will be subject to 30% United States withholding tax, or
such lower rate as may be provided for interest by an applicable tax treaty.
Accrued original issue discount recognized by the Standard Certificateholder
or Stripped Certificateholder on original issue discount recognized by the
Standard Certificateholder or Stripped Certificateholders on the sale or
exchange of such a Certificate also will be subject to federal income tax at
the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
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STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the
state and local tax consequences of the acquisition, ownership, and
disposition of the Offered Certificates. State tax law may differ
substantially from the corresponding federal law, and the discussion above
does not purport to describe any aspect of the tax laws of any state or other
jurisdiction. Therefore, prospective investors should consult their tax
advisors with respect to the various tax consequences of investments in the
Offered Certificates.
CERTAIN ERISA CONSIDERATIONS
GENERAL
Sections 404 and 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), impose certain fiduciary requirements and
prohibited transaction restrictions on employee pension and welfare benefit
plans subject to ERISA ("ERISA Plans") and on certain other retirement plans
and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company
general and separate accounts in which such ERISA Plans are invested. Section
4975 of the Code imposes essentially the same prohibited transaction
restrictions on tax-qualified retirement plans described in Section 401(a) of
the Code and on Individual Retirement Accounts described in Section 408 of
the Code (collectively, "Tax Favored Plans").
Certain employee benefit plans, such as governmental plans (as defined in
ERISA Section 3(32)), and, if no election has been made under Section 410(d)
of the Code, church plans (as defined in Section 3(33) of ERISA) are not
subject to ERISA requirements. Accordingly, assets of such plans may be
invested in Offered Certificates without regard to the ERISA considerations
described below, subject to the provisions of other applicable federal and
state law. Any such plan which is qualified and exempt from taxation under
Sections 401(a) and 501(a) of the Code, however, is subject to the prohibited
transaction rules set forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and
the requirement that a Plan's investments be made in accordance with the
documents governing the Plan. In addition, Section 406 of ERISA and Section
4975 of the Code prohibit a broad range of transactions involving assets of a
Plan and persons ("parties in interest" within the meaning of ERISA and
"disqualified persons" within the meaning of the Code; collectively, "Parties
in Interest") who have certain specified relationships to the Plan, unless a
statutory or administrative exemption is available with respect to any such
transaction. Pursuant to Section 4975 of the Code, certain Parties in
Interest to a prohibited transaction may be subject to a nondeductible 15%
per annum excise tax on the amount involved in such transaction, which excise
tax increases to 100% if the Party in Interest involved in the transaction
does not correct such transaction during the taxable period. In addition,
such Party in Interest may be subject to a penalty imposed pursuant to
Section 502(i) of ERISA. The United States Department of Labor ("DOL") and
participants, beneficiaries and fiduciaries of ERISA Plans may generally
enforce violations of ERISA, including the prohibited transaction provisions.
If the prohibited transaction amounts to a breach of fiduciary responsibility
under ERISA, a 20% civil penalty may be imposed on the fiduciary or other
person participating in the breach.
PLAN ASSET REGULATIONS
Certain transactions involving the Trust Fund, including a Plan's
investment in Offered Certificates, might be deemed to constitute prohibited
transactions under ERISA and the Code if the underlying Mortgage Assets and
other assets included in a related Trust Fund are deemed to be assets of such
Plan. Section 2510.3-101 of the DOL regulations (the "Plan Asset
Regulations") defines the term "Plan Assets" for purposes of applying the
general fiduciary responsibility
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provisions of ERISA and the prohibited transaction provisions of ERISA and
the Code. Under the Plan Asset Regulations, generally, when a Plan acquires
an equity interest in an entity, the Plan's assets include both such equity
interest and an undivided interest in each of the underlying assets of the
entity, unless certain exceptions not applicable here apply, or unless the
equity participation in the entity by "benefit plan investors" (i.e., Plans
and certain employee benefit plans not subject to ERISA) is not
"significant", both as defined therein. For this purpose, in general, equity
participation by benefit plan investors will be "significant" on any date if
25% or more of the value of any class of equity interests in the entity is
held by benefit plan investors. Equity participation in a Trust Fund will be
significant on any date if immediately after the most recent acquisition of
any Certificate, 25% or more of any class of Certificates is held by benefit
plan investors.
The prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code may apply to a Trust Fund and cause the Depositor, the
Master Servicer, any Special Servicer, any Sub-Servicer, any Manager, the
Trustee, the obligor under any credit enhancement mechanism or certain
affiliates thereof to be considered or become Parties in Interest with
respect to an investing Plan (or of a Plan holding an interest in an
investing entity). If so, the acquisition or holding of Certificates by or on
behalf of the investing Plan could also give rise to a prohibited transaction
under ERISA and the Code, unless some statutory or administrative exemption
is available. Certificates acquired by a Plan may be assets of that Plan.
Under the Plan Asset Regulations, the Trust Fund, including the Mortgage
Asset Loans and the other assets held in the Trust Fund, may also be deemed
to be Plan Assets of each Plan that acquires Certificates. Special caution
should be exercised before Plan Assets are used to acquire a Certificate in
such circumstances, especially if, with respect to such assets, the
Depositor, the Master Servicer, any Special Servicer, any Sub-Servicer, any
Manager, the Trustee, the obligor under any credit enhancement mechanism or
an affiliate thereof either (i) has investment discretion with respect to the
investment of Plan Assets; or (ii) has authority or responsibility to give
(or regularly gives) investment advice with respect to Plan Assets for a fee
pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to such Plan Assets.
Any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides
investment advice with respect to such assets for a fee, is a fiduciary of
the investing Plan. If the Mortgage Assets and other assets included in a
Trust Fund constitute Plan Assets, then any party exercising management or
discretionary control regarding those assets, such as the Master Servicer,
any Special Servicer, any Sub-Servicer, the Trustee, the obligor under any
credit enhancement mechanism, or certain affiliates thereof may be deemed to
be a Plan "fiduciary" and thus subject to the fiduciary responsibility
provisions and prohibited transaction provisions of ERISA and the Code with
respect to the investing Plan. In addition, if the Mortgage Assets and other
assets included in a Trust Fund constitute Plan Assets, the purchase of
Certificates by a Plan, as well as the operation of the Trust Fund, may
constitute or involve a prohibited transaction under ERISA or the Code.
The Plan Asset Regulations provide that where a Plan acquires a
"guaranteed governmental mortgage pool certificate", the Plan's assets
include such certificate but do not solely by reason of the Plan's holdings
of such certificate include any of the mortgages underlying such certificate.
The Plan Asset Regulations include in the definition of a "guaranteed
governmental mortgage pool certificate" FHLMC Certificates, GNMA Certificates
and FNMA Certificates, but do not include FAMC Certificates. Accordingly,
even if such MBS (other than FAMC Certificates) included in a Trust Fund were
deemed to be assets of Plan investors, the mortgages underlying such MBS
(other than FAMC Certificates) would not be treated as assets of such Plans.
Private label mortgage participations, mortgage pass-through certificates,
FAMC Certificates or other mortgage-backed securities are not "guaranteed
governmental mortgage pool certificates" within the meaning of the Plan Asset
Regulations. Potential Plan investors should consult their counsel and review
the ERISA discussion in the related Prospectus Supplement before purchasing
any such Certificates.
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PROHIBITED TRANSACTION EXEMPTIONS
The DOL granted an individual exemption, DOL exemption application number
E-0003 (the "Exemption"), to Deutsche Bank AG, New York Branch ("DBNY") and
Deutsche Morgan Grenfell Inc. ("DMG") which generally exempts from the
application of the prohibited transaction provisions of Section 406 of ERISA,
and the excise taxes imposed on such prohibited transactions pursuant to
Section 4975(a) and (b) of the Code, certain transactions, among others,
relating to the servicing and operation of mortgage pools and the initial
purchase, holding and subsequent resale of mortgage pass-through certificates
underwritten by an Underwriter (as hereinafter defined), provided that
certain conditions set forth in the Exemption are satisfied. For purposes of
this Section "ERISA Considerations," the term "Underwriter" shall include (a)
DBNY and DMG, (b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with DBNY
and DMG and (c) any member of the underwriting syndicate or selling group of
which a person described in (a) or (b) is a manager or co-manager with
respect to a class of Certificates.
The Exemption sets forth six general conditions which must be satisfied
for the Exemption to apply. First, the acquisition of Certificates by a Plan
or with Plan Assets must be on terms that are at least as favorable to the
Plan as they would be in an arm's-length transaction with an unrelated party.
Second, the Exemption only applies to Certificates evidencing rights and
interests that are not subordinated to the rights and interests evidenced by
other Certificates of the same trust. Third, the Certificates at the time of
acquisition by a Plan or with Plan Assets must be rated in one of the three
highest generic rating categories by Standard & Poor's Ratings Services, a
division of McGraw-Hill Companies, Inc., Moody's Investors Service, Inc.,
Duff & Phelps Credit Rating Co. or Fitch IBCA, Inc. (collectively, the
"Exemption Rating Agencies"). Fourth, the Trustee cannot be an affiliate of
any member of the "Restricted Group" which consists of any Underwriter, the
Depositor, the Trustee, the Master Servicer, any Sub-Servicer and any obligor
with respect to assets included in the Trust Fund constituting more than 5%
of the aggregate unamortized principal balance of the assets in the Trust
Fund as of the date of initial issuance of the Certificates. Fifth, the sum
of all payments made to and retained by the Underwriter(s) must represent not
more than reasonable compensation for underwriting the Certificates; the sum
of all payments made to and retained by the Depositor pursuant to the
assignment of the assets to the related Trust Fund must represent not more
than the fair market value of such obligations; and the sum of all payments
made to and retained by the Master Servicer and any Sub-Servicer must
represent not more than reasonable compensation for such person's services
under the related Agreement and reimbursement of such person's reasonable
expenses in connection therewith. Sixth, the Exemption states that the
investing Plan or Plan Asset investor must be an accredited investor as
defined in Rule 501(a)(1) of Regulation D of the Commission under the
Securities Act of 1933, as amended.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type
that have been included in other investment pools; (ii) Certificates
evidencing interests in such other investment pools must have been rated in
one of the three highest categories of one of the Exemption Rating Agencies
for at least one year prior to the acquisition of Certificates by or on
behalf of a Plan or with Plan Assets; and (iii) Certificates evidencing
interests in such other investment pools must have been purchased by
investors other than Plans for at least one year prior to any acquisition of
Certificates by or on behalf of a Plan or with Plan Assets.
A fiduciary of a Plan or any person investing Plan Assets intending to
purchase a Certificate must make its own determination that the conditions
set forth above will be satisfied with respect to such Certificate.
If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA, and the excise taxes imposed by Sections 4975(a) and (b) of
the Code by reason of Sections 4975(c)(1)(A)
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through (D) of the Code, in connection with the direct or indirect sale,
exchange, transfer, holding or the direct or indirect acquisition or
disposition in the secondary market of Certificates by a Plan or with Plan
Assets. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
Certificate on behalf of an "Excluded Plan" by any person who has
discretionary authority or renders investment advice with respect to the
assets of such Excluded Plan. For purposes of the Certificates, an Excluded
Plan is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code,
in connection with (1) the direct or indirect sale, exchange or transfer of
Certificates in the initial issuance of Certificates between the Depositor or
an Underwriter and a Plan when the person who has discretionary authority or
renders investment advice with respect to the investment of Plan Assets in
the Certificates is (a) a mortgagor with respect to 5% or less of the fair
market value of the Trust Fund Assets or (b) an affiliate of such a person,
(2) the direct or indirect acquisition or disposition in the secondary market
of Certificates by a Plan and (3) the holding of Certificates by a Plan or
with Plan Assets.
Further, if certain specific conditions of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by
Sections 406(a), 406(b) and 407 of ERISA, and the excise taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code
for transactions in connection with the servicing, management and operation
of the Trust Fund. The Depositor expects that the specific conditions of the
Exemption required for this purpose will be satisfied with respect to the
Certificates so that the Exemption would provide an exemption from the
restrictions imposed by Sections 406(a) and (b) of ERISA (as well as the
excise taxes imposed by Sections 4975(a) and (b) of the Code by reason of
Section 4975(c) of the Code) for transactions in connection with the
servicing, management and operation of the Trust Fund, provided that the
general conditions of the Exemption are satisfied.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by
Section 4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A)
through (D) of the Code if such restrictions are deemed to otherwise apply
merely because a person is deemed to be a Party in Interest with respect to
an investing Plan by virtue of providing services to the Plan (or by virtue
of having certain specified relationships to such a person) solely as a
result of the Plan's ownership of Certificates.
Because the exemptive relief afforded by the Exemption (or any similar
exemption that might be available) will not apply to the purchase, sale or
holding of certain Certificates, such as Subordinate Certificates, Residual
Certificates or any Certificates which are not rated in one of the three
highest generic rating categories by the Exemption Rating Agencies, transfers
of such Certificates to a Plan, to a trustee or other person acting on behalf
of any Plan, or to any other person investing Plan Assets to effect such
acquisition will not be registered by the Trustee unless the transferee
provides the Depositor, the Trustee and the Master Servicer with an opinion
of counsel satisfactory to the Depositor, the Trustee and the Master
Servicer, which opinion will not be at the expense of the Depositor, the
Trustee or the Master Servicer, that the purchase of such Certificates by or
on behalf of such Plan is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Depositor, the Trustee or
the Master Servicer to any obligation in addition to those undertaken in the
Agreement.
In lieu of such opinion of counsel, the transferee may provide a
certification substantially to the effect that the purchase of Certificates
by or on behalf of such Plan is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under ERISA or
Section 4975 of the Code, will not subject the Depositor, the Trustee or the
Master Servicer to any obligation in addition to those undertaken in the
Agreement and the following conditions are
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satisfied: (i) the transferee is an insurance company and the source of funds
used to purchase such Certificates is an "insurance company general account"
(as such term is defined in PTCE 95-60); (ii) the conditions set forth in
PTCE 95-60 Part I and III have been satisfied; and (iii) there is no Plan
with respect to which the amount of such general account's reserves and
liabilities for contracts held by or on behalf of such Plan and all other
Plans maintained by the same employer (or any "affiliate" thereof, as defined
in PTCE 95-60) or by the same employee organization exceed 10% of the total
of all reserves and liabilities of such general account (as determined under
PTCE 95-60) as of the date of the acquisition of such Certificates.
The purchaser or any transferee of any interest in a Class B Certificate
[or Class R Certificate] that is not a definitive certificate, by the act of
purchasing such Certificate, shall be deemed to represent that it is not a
Plan or directly or indirectly purchasing such Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of
a Plan. The Class B Certificates [and Class R Certificates] will contain a
legend describing such restrictions on transfer and the Pooling and Servicing
Agreement will provide that any attempted or purported transfer in violation
of these transfer restrictions will be null and void.
There can be no assurance that any DOL exemption will apply with respect
to any particular Plan that acquires the Certificates or, even if all the
conditions specified therein were satisfied, that any such exemption would
apply to all transactions involving the Trust Fund. Prospective Plan
investors should consult with their legal counsel concerning the impact of
ERISA and the Code and the potential consequences to their specific
circumstances prior to making an investment in the Certificates. Neither the
Depositor, the Trustee, the Master Servicer nor any of their respective
affiliates will make any representation to the effect that the Certificates
satisfy all legal requirements with respect to the investment therein by
Plans generally or any particular Plan or to the effect that the Certificates
are an appropriate investment for Plans generally or any particular Plan.
BEFORE PURCHASING A CERTIFICATE (OTHER THAN A SUBORDINATE CERTIFICATE,
RESIDUAL CERTIFICATE OR ANY CERTIFICATE WHICH IS NOT RATED IN ONE OF THE
THREE HIGHEST GENERIC RATING CATEGORIES BY THE EXEMPTION RATING AGENCIES), A
FIDUCIARY OF A PLAN SHOULD ITSELF CONFIRM THAT (A) ALL THE SPECIFIC AND
GENERAL CONDITIONS SET FORTH IN THE EXEMPTION OR ONE OF THE CLASS EXEMPTIONS
WOULD BE SATISFIED AND (B) IN THE CASE OF A CERTIFICATE PURCHASED UNDER THE
EXEMPTION, THE CERTIFICATE CONSTITUTES A "CERTIFICATE" FOR PURPOSES OF THE
EXEMPTION. IN ADDITION, A PLAN FIDUCIARY SHOULD CONSIDER ITS GENERAL
FIDUCIARY OBLIGATIONS UNDER ERISA IN DETERMINING WHETHER TO PURCHASE A
CERTIFICATE ON BEHALF OF A PLAN.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to
federal income tax. See "Certain Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Limitations on Offset or Exemption of REMIC Income".
LEGAL INVESTMENT
If so specified in the related Prospectus Supplement, the Offered
Certificates will constitute "mortgage related securities" for purposes of
SMMEA. Generally, only classes of Offered Certificates that (i) are rated in
one of the two highest rating categories by one or more Rating Agencies and
(ii) are part of a series evidencing interests in a Trust Fund consisting of
loans secured by first liens on real property and originated by certain types
of Originators specified in SMMEA, will be "mortgage related securities" for
purposes of SMMEA. As "mortgage related securities," such classes will
constitute legal investments for persons, trusts, corporations,
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partnerships, associations, business trusts and business entities (including
depository institutions, insurance companies and pension funds) created
pursuant to or existing under the laws of the United States or of any state
(including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulation, to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and
interest by the United States or any agency or instrumentality thereof
constitute legal investments for such entities. Pursuant to SMMEA, a number
of states enacted legislation, on or before the October 3, 1991 cutoff for
such enactments, limiting to varying extents the ability of certain entities
(in particular, insurance companies) to invest in "mortgage related
securities" secured by liens on residential, or mixed residential and
commercial properties, in most cases by requiring the affected investors to
rely solely upon existing state law, and not SMMEA. Pursuant to Section 347
of the Riegle Community Development and Regulatory Improvement Act of 1994,
which amended the definition of "mortgage related security" to include, in
relevant part, Offered Certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on
one or more parcels of real estate upon which are located one or more
commercial structures, states were authorized to enact legislation, on or
before September 23, 2001, specifically referring to Section 347 and
prohibiting or restricting the purchase, holding or investment by
state-regulated entities in such types of Offered Certificates. Accordingly,
the investors affected by any such state legislation, when and if enacted,
will be authorized to invest in Offered Certificates qualifying as "mortgage
related securities" only to the extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities,
and national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, the Office of the Comptroller of the Currency (the "OCC")
has amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell
for their own account, without limitation as to a percentage of the bank's
capital and surplus (but subject to compliance with certain general standards
concerning "safety and soundness" and retention of credit information in 12
C.F.R. Section 1.5), certain "Type IV securities," defined in 12 C.F.R.
Section 1.2(1) to include certain "commercial mortgage-related securities"
and "residential mortgage-related securities." As so defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean,
in relevant part, "mortgage related security" within the meaning of SMMEA,
provided that, in the case of a "commercial mortgage-related security," it
"represents ownership of a promissory note or certificate of interest or
participation that is directly secured by a first lien on one or more parcels
of real estate upon which one or more commercial structures are located and
that is fully secured by interests in a pool of loans to numerous obligors."
In the absence of any rule or administrative interpretation by the OCC
defining the term "numerous obligors," no representation is made as to
whether any class of Offered Certificates will qualify as "commercial
mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. Federal credit unions should review National
Credit Union Administration ("NCUA") Letter to Credit Unions No. 96, as
modified by Letter to Credit Unions No. 108, which includes guidelines to
assist federal credit unions in making investment decisions for mortgage
related securities. The NCUA has adopted rules, codified at 12 C.F.R. Part
703, which permit federal credit unions to invest in "mortgage related
securities" under certain limited circumstances, other than stripped mortgage
related securities, residual interests in mortgage related securities, and
commercial mortgage related securities, unless the credit union has obtained
written approval from the NCUA to participate in the "investment pilot
program" described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as
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revised April 15, 1994 (the "Policy Statement") of the Federal Financial
Institutions Examination Council (the "FFIEC"). The Policy Statement, which
has been adopted by the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the OCC and the Office of Thrift
Supervision, and by the NCUA (with certain modifications), prohibits
depository institutions from investing in certain "high-risk mortgage
securities" (including securities such as certain series or classes of the
Offered Certificates), except under limited circumstances, and sets forth
certain investment practices deemed to be unsuitable for regulated
institutions. On September 29, 1997, the FFIEC released for public comment a
proposed "Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities" (the "1997 Statement"), which would replace the
Policy Statement. As proposed, the 1997 Statement would delete the specific
"high-risk mortgage securities" tests, and substitute general guidelines
which depository institutions should follow in managing risks (including
market, credit, liquidity, operational (transactional), and legal risks)
applicable to all securities (including mortgage pass-through securities and
mortgage-derivative products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Offered
Certificates, as certain series or classes may be deemed unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines (in certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not
limited to, "prudent investor" provisions, percentage-of-assets limits,
provisions which may restrict or prohibit investment in securities which are
not "interest bearing" or "income paying," and, with regard to any Offered
Certificates issued in book-entry form, provisions which may restrict or
prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representation is made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase Offered Certificates under
applicable legal investment restrictions. The uncertainties described above
(and any unfavorable future determinations concerning legal investment or
financial institution regulatory characteristics of the Offered Certificates)
may adversely affect the liquidity of the Offered Certificates.
Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their legal advisors in
determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to such investor.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or
will be used by the Depositor to cover expenses related thereto. The
Depositor expects to sell the Certificates from time to time, but the timing
and amount of offerings of Certificates will depend on a number of factors,
including the volume of Mortgage Assets acquired by the Depositor, prevailing
interest rates, availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method
of offering being utilized for that series and will state the net proceeds to
the Depositor from such sale.
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The Depositor intends that Offered Certificates will be offered through
the following methods from time to time and that offerings may be made
concurrently through more than one of these methods or that an offering of
the Offered Certificates of a particular series may be made through a
combination of two or more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related Prospectus
Supplement;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the
Offered Certificates of a series may be offered in whole or in part to the
seller of the related Mortgage Assets that would comprise the Trust Fund for
such Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such
Certificates will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
to be determined at the time of sale or at the time of commitment therefor.
The managing underwriter or underwriters with respect to the offer and sale
of Offered Certificates of a particular series will be set forth on the cover
of the Prospectus Supplement relating to such series and the members of the
underwriting syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the distribution of the Offered
Certificates may be deemed to be underwriters in connection with such
Certificates, and any discounts or commissions received by them from the
Depositor and any profit on the resale of Offered Certificates by them may be
deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale
of the Offered Certificates of any series will provide that the obligations
of the underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor
against certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended, or will contribute to payments required to be made
in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Depositor and
purchasers of Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, in connection with reoffers and sales by
them of Offered Certificates. Holders of Offered Certificates should consult
with their legal advisors in this regard prior to any such reoffer or sale.
As to any series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any unrated class may be initially retained by the Depositor, and may be sold
by the Depositor at any time to one or institutional investors.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by the Underwriter in connection with offers and
sales related to market-making transactions in the Offered Certificates with
respect to which the Underwriter acts as principal. The Underwriter may also
act as agent in such transactions. Sales may be made at negotiated prices
determined at the time of sales.
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LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each series, including
certain federal income tax consequences, will be passed upon for the
Depositor by Cadwalader, Wickersham & Taft.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or
have any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement. The Depositor has determined that its financial statements will
not be material to the offering of any Offered Certificates.
RATING
It is a condition to the issuance of any class of Offered Certificates
that they shall have been rated not lower than investment grade, that is, in
one of the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the
structural, legal and issuer-related aspects associated with such
certificates, the nature of the underlying mortgage assets and the credit
quality of the guarantor, if any. Ratings on mortgage pass-through
certificates do not represent any assessment of the likelihood of principal
prepayments by borrowers or of the degree by which such prepayments might
differ from those originally anticipated. As a result, Certificateholders
might suffer a lower than anticipated yield, and, in addition, holders of
Stripped Interest Certificates might, in extreme cases fail to recoup their
initial investments. Furthermore, ratings on mortgage pass-through
certificates do not address the price of such certificates or the suitability
of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently
of any other security rating.
108
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
1986 Act 74
Act 66
ADA 69
ARM Loans 21
Book-Entry Certificates 32
capital asset 79
CERCLA 66
Certificate Account 25
Certificate Owner 38
Code 71
Commercial Properties 18
Commission 3
Companion Class 34
Condemnation Proceeds 46
Controlled Amortization Class 34
Cooperatives 18
CPR 28
Crime Control Act 70
Cut-off Date 34
DBNY 102
Definitive Certificates 32
Depositor 1
Determination Date 26, 32
Deutsche Bank Group 31
Disqualified Organization 86
Disqualified Organizations 87
Distribution Date Statement 36
DMARC Trust 31
DMG 102
DOL 100
DTC 4, 38
DTC Participants 38
Due Dates 20
Equity Participation 21
ERISA 100
ERISA Plans 100
Exchange Act 4
Exemption 102
Exemption Rating Agencies 102
FAMC 24
FHLMC 24
Financial Intermediary 38
FNMA 24
Foreign Investors 86
Garn Act 68
GNMA 24
Insurance Proceeds 46
IRS 49
Letter of Credit Bank 59
Lock-out Date 21
Lock-out Period 21
Mark to Market Regulations 88
Market Discount 78, 79
MBS 1, 17
MBS Agreement 24
MBS Issuer 24
MBS Servicer 24
MBS Trustee 24
Mortgage Asset Pool 1
Mortgage Asset Seller 17
Mortgage Assets 1, 17
Mortgage Loans 1, 17
Mortgage Notes 18
Mortgaged Property 18
Mortgages 18
Multifamily Properties 18
Multifamily Property 2
Net Leases 20
Nonrecoverable Advance 35
Non-U.S. Person 91
Offered Certificates 1
OID Regulations 74
original issue discount 74
Original Issue Discount 78, 79
Originator 18
Parties in Interest 100
Pass-Through Entity 85, 86
Percentage Interest 33
Permitted Investments 45
Plan Asset Regulations 100
Prepayment Assumption 75
Prepayment Interest Shortfall 26
Prepayment Premium 21
Prospectus Supplement 1
Purchase Price 41
Random Lot Certificates 75
Rating Agency 8
Record Date 32
Regular Certificateholder 74
Regular Certificates 71, 91
109
<PAGE>
Related Proceeds 35
Relief Act 70
REMIC 2, 71
REMIC Administrator 3
REMIC Certificates 71
REMIC Pool 71
REMIC Regulations 71
REO Property 43
Residual Certificateholders 81
Residual Certificates 71
Retail Property 2, 18
RICO 70
Senior Liens 18
Service 73
SMMEA 8
SPA 28
Standard Certificateholder 92
Startup Day 72
stripped bond 94
stripped bonds 95
Stripped Certificateholder 97
Stripped Certificates 92, 93, 95, 96
stripped coupons 95
Stripped Interest Certificates 96
Stripped Principal Certificates 96
Sub-Servicer 45
Sub-Servicing Agreement 45
Tax Exempt Investor 104
Tax Favored Plans 100
Title V 69
Treasury 71
Trust Assets 3
Trust Fund 1
UBTI 104
UCC 61
U.S. Person 87
Voting Rights 37
Warranting Party 42
</TABLE>
110
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
This diskette contains two spreadsheet files that can be put on a
user-specified hard drive or network drive. These two files are
"DMARC981.xls" and "DMARC981.wk4." The file "DMARC981.xls" is a Microsoft
Excel(1), Version 5.0 spreadsheet, and the file "DMARC981.wk4" is a Lotus
123(1), Version 4.1 spreadsheet. Each file provides, in electronic format,
certain loan level information shown in ANNEX A of the Prospectus Supplement.
Open either file as you would normally open any spreadsheet in either
Microsoft Excel or Lotus 123. After either file is opened, a securities law
legend will be displayed. READ THE LEGEND CAREFULLY. To view the ANNEX A
data, see the worksheet labeled "DMARC981."
- ------------
(1) Microsoft Excel and Lotus 123 are registered trademarks of Microsoft
Corporation and Lotus Development Corporation, respectively.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
DEPOSITOR OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Executive Summary ........................... S-6
Summary of Prospectus Supplement ............ S-10
Risk Factors ................................ S-21
Description of the Mortgage Pool ............ S-33
Description of the Offered Certificates .... S-42
Prepayment and Yield Considerations ........ S-60
The Pooling and Servicing Agreement.......... S-67
Certain Legal Aspects of the Mortgage Loans . S-95
Use of Proceeds ............................. S-96
Certain Federal Income Tax Consequences ..... S-96
ERISA Considerations......................... S-98
Legal Investment ............................ S-101
Method of Distribution ...................... S-101
Legal Matters ............................... S-103
Rating ...................................... S-103
Annex A -Certain Characteristics of the
Mortgage Loans ............................. A-1
Annex B -Form of Trustee Reports ............ B-1
PROSPECTUS
Prospectus Supplement ....................... iii
Available Information ....................... iii
Incorporation of Certain Information by
Reference .................................. iv
Summary of Prospectus ....................... 1
Risk Factors ................................ 9
Description of the Trust Funds .............. 17
Yield and Maturity Considerations ........... 25
The Depositor ............................... 31
Deutsche Bank AG ............................ 31
Description of the Certificates ............. 31
Description of the Pooling Agreements ...... 40
Description of Credit Support ............... 58
Certain Legal Aspects of Mortgage Loans .... 60
Certain Federal Income Tax Consequences ..... 71
Federal Income Tax Consequences for
Certificates as to which No Remic Elections
is Made..................................... 92
State and Other Tax Consequences ............ 100
Certain ERISA Considerations ................ 100
Legal Investment ............................ 104
Use of Proceeds ............................. 106
Method of Distribution ...................... 106
Legal Matters ............................... 108
Financial Information ....................... 108
Rating ...................................... 108
Index of Principal Definitions .............. 109
</TABLE>
<PAGE>
$
(APPROXIMATE)
DEUTSCHE MORTGAGE &
ASSET RECEIVING CORPORATION
COMMERCIAL MORTGAGE
PASS-THROUGH
CERTIFICATES,
SERIES 1998-C1
PROSPECTUS SUPPLEMENT
DEUTSCHE MORGAN GRENFELL
MORGAN STANLEY DEAN WITTER
LLAMA COMPANY, L.P.
and solely as members of the selling group
CONTIFINANCIAL SERVICES CORPORATION
SOUTHTRUST SECURITIES, INC.
MARCH [ ], 1998
