<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of a final form of this
prospectus supplement and the prospectus to which it relates. This prospectus
supplement and the prospectus to which it relates 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.
<PAGE>
Filed Pursuant to Rule 424(b)(3)
File No. 033-96378-03
SUBJECT TO COMPLETION, DATED FEBRUARY 23, 1998.
PROSPECTUS SUPPLEMENT
(to Prospectus Dated February 23, 1998)
$1,557,709,000 (Approximate)
LB COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
----------------
The Series 1998-C1 Commercial Mortgage Pass-Through Certificates (the
"Certificates") will consist of 18 classes (each, a "Class") of Certificates,
including the eight Classes of Certificates offered hereby (collectively, the
"Offered Certificates"). The Certificates, in the aggregate, will represent the
entire undivided beneficial ownership interest in a trust fund (the "Trust
Fund") to be established by Structured Asset Securities Corporation (the
"Depositor"), that is expected to consist primarily of a segregated pool (the
"Mortgage Pool") of 261 conventional monthly pay, commercial and multifamily,
fixed rate mortgage loans (the "Mortgage Loans") having the characteristics
described herein.
(CONTINUED ON NEXT PAGE)
---------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE S-29 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 25 OF
THE PROSPECTUS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
<TABLE>
<CAPTION>
INITIAL % OF ASSUMED FINAL
CERTIFICATE INITIAL POOL PASS-THROUGH DISTRIBUTION CUSIP EXPECTED
CLASS BALANCE(1) BALANCE(1) RATE DATE(2) NO. RATING(3)
<S> <C> <C> <C> <C> <C> <C>
CLASS A-1............ $ 275,000,000 15.5% % OCTOBER, 2004 AAA/AAA
CLASS A-2............ $ 330,000,000 18.6% % AUGUST, 2007 AAA/AAA
CLASS A-3............ $ 646,492,000 36.4% % JANUARY, 2008 AAA/AAA
CLASS B.............. $ 88,759,000 5.0% % JANUARY, 2008 AA2/AA
CLASS C.............. $ 88,758,000 5.0% % SEPTEMBER, 2008 A2/A
CLASS D.............. $ 93,196,000 5.2% % AUGUST, 2012 BAA2/BBB
CLASS E.............. $ 35,504,000 2.0% % NOVEMBER, 2012 BAA3/BBB-
CLASS IO............. N/A(4) N/A(4) N/A(4) FEBRUARY, 2028 AAA/AAA
</TABLE>
(FOOTNOTES ON NEXT PAGE)
The Offered Certificates will be offered by Lehman Brothers Inc. (the
"Underwriter") from time to time 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, before deducting expenses payable by
the Depositor, will be approximately $ , which includes accrued
interest. See "Method of Distribution" herein.
The Offered Certificates are offered by the Underwriter when, as and if
issued and delivered to and accepted by the Underwriter, subject to prior sale
and subject to the Underwriter's right to reject orders in whole or in part. It
is expected that the Offered Certificates will be delivered to the Underwriter
in book-entry form through the Same-Day Funds Settlement System of The
Depository Trust Company on or about March 11, 1998.
-------------------------
LEHMAN BROTHERS
FIRST UNION CAPITAL MARKETS CORP.
The date of this Prospectus Supplement is February , 1998.
<PAGE>
(FOOTNOTES FROM TABLE ON PRIOR PAGE)
(1) Subject to a permitted variance of plus or minus 5%.
(2) The Assumed Final Distribution Date is defined (and has been determined on
the basis of the assumptions set forth) under "Description of the
Certificates--Assumed Final Distribution Date; Rated Final Distribution
Date" herein. The "Rated Final Distribution Date" is the Distribution Date
in February, 2030, which is the first Distribution Date that follows the
second anniversary of the end of the amortization term for the Mortgage Loan
that, as of the Cut-off Date, has the longest remaining amortization term.
See "Description of the Certificates-- Assumed Final Distribution Date;
Rated Final Distribution Date" and "Ratings" herein.
(3) By each of Moody's Investors Service, Inc. and Duff & Phelps Credit Rating
Co.
(4) The Class IO Certificates will not have a Certificate Balance nor will they
entitle the holders thereof to receive distributions of principal; however,
such Certificates will entitle the holders thereof to receive payments of
the aggregate interest accrued from time to time on the respective notional
amounts of the Class IO Components, as described herein. The aggregate of
such notional amounts will initially equal approximately $1,775,167,073. See
"Description of the Certificates--Certificate Balances and Notional
Amounts", "--Pass-Through Rates" and "--Distributions" herein.
- - ------------------------
(COVER CONTINUED)
On or before the date the Certificates are issued, the Depositor will
acquire the Mortgage Loans from an affiliate thereof and will transfer the
Mortgage Loans, without recourse, to LaSalle National Bank, as trustee of the
Trust Fund (the "Trustee"), in exchange for the Certificates. As of February 1,
1998 (the "Cut-off Date"), the Mortgage Loans had an aggregate principal balance
(the "Initial Pool Balance") of approximately $1,775,167,073, after application
of all payments of principal due on or before such date, whether or not
received. GMAC Commercial Mortgage Corporation as master servicer (in such
capacity, the "Master Servicer") and as special servicer (in such capacity, the
"Special Servicer"), directly or through one or more subservicers, will service
the Mortgage Loans. The Offered Certificates bear the class designations and
have the characteristics set forth in the table on the preceding page.
Simultaneously with the issuance of the Offered Certificates, the Private
Certificates (as defined herein) will be issued. Only the Offered Certificates
are offered hereby.
As and to the extent described herein, the Private Certificates will be
subordinate to the Offered Certificates; the Class B, Class C, Class D and Class
E Certificates will be subordinate to the Class A-1, Class A-2, Class A-3 and
Class IO Certificates; the Class C, Class D and Class E Certificates will be
subordinate to the Class B Certificates; the Class D and Class E Certificates
will be subordinate to the Class C Certificates; and the Class E Certificates
will be subordinate to the Class D Certificates. Distributions of interest on
and principal of the Certificates will be made, to the extent of available
funds, on the 18th day of each month or, if any such 18th day is not a business
day, then on the next succeeding business day, commencing in March 1998 (each, a
"Distribution Date"). As described herein, distributions allocable to interest
in respect of each Class of Offered Certificates (other than the Class IO
Certificates) will be made on each Distribution Date based on the pass-through
rate (the "Pass-Through Rate") applicable to such Class and the principal amount
(the "Certificate Balance") of such Class outstanding immediately prior to such
Distribution Date. The Class IO Certificates will have fourteen components
(collectively, the "Class IO Components"), each with a designation and a
notional amount that corresponds with the designation and Certificate Balance of
a Class of Sequential Pay Certificates (as defined herein). As described herein,
distributions allocable to interest in respect of the Class IO Certificates will
be made on each Distribution Date in an amount equal to the aggregate amount of
interest which has accrued on the notional amount of each of the Class IO
Components. Interest will accrue on the notional amount of each Class IO
Component based on the Pass-Through Rate of such Class IO Component. The
Pass-Through Rate applicable to each Class IO Component will be equal to the
Weighted Average Net Mortgage Rate (as defined herein) minus the Pass-Through
Rate applicable to the corresponding Class of Sequential Pay Certificates. As
described herein, distributions allocable to principal of the Offered
Certificates will be made sequentially to the Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D and Class E Certificates, in that order, until the
respective Classes of Certificates are retired. The Class IO Certificates will
not have a Certificate Balance, nor will they entitle the holders thereof to
distributions of principal. The holders of the Certificates may also receive
portions of any Prepayment Premiums and Yield Maintenance Charges (each as
defined herein) to the extent described herein. The holders of Sequential Pay
Certificates will also be entitled to receive, PRO RATA (based on their
respective initial Certificate Balances), any Additional Interest collected on
the ARD Loans (as defined herein). There is no assurance that any Additional
Interest will be collected on the ARD Loans. See "Description of the
Certificates--Distributions" herein.
The yield to maturity on each Class of Offered Certificates will depend on,
among other things, the rate and timing of principal payments (including by
reason of prepayments, defaults and liquidations) on the Mortgage Loans. THE
YIELD TO MATURITY ON THE CLASS IO CERTIFICATES WILL BE HIGHLY SENSITIVE TO THE
RATE AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING BY REASON OF PREPAYMENTS,
DEFAULTS AND LIQUIDATIONS) ON THE MORTGAGE LOANS AND
S-2
<PAGE>
INVESTORS IN THE CLASS IO CERTIFICATES SHOULD FULLY CONSIDER THE ASSOCIATED
RISKS, INCLUDING THE RISK THAT A RAPID RATE OF PREPAYMENT OF THE MORTGAGE LOANS
COULD RESULT IN THE FAILURE OF SUCH INVESTORS TO FULLY RECOUP THEIR INITIAL
INVESTMENTS. The allocation to any Class of Offered Certificates of any
Prepayment Premium or Yield Maintenance Charge may be insufficient to offset
fully the adverse effects on the anticipated yield to maturity resulting from
the corresponding principal prepayment. Any delay in collection of a Balloon
Payment (as defined herein) due at the maturity of a Mortgage Loan will likely
extend the weighted average life of the Class or Classes of Offered Certificates
entitled to distributions in respect of principal as of the date such Balloon
Payment was due. See "Description of the Certificates--Certificate Balances and
Notional Amounts" and "--Distributions," "Yield and Maturity Considerations" and
"Servicing of the Mortgage Loans--Modifications, Waivers and Amendments" herein,
and "Yield and Prepayment Considerations" and "Risk Factors--Yield and
Prepayment Considerations" in the Prospectus.
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund for
federal income tax purposes (the REMICs formed thereby, "REMIC I", "REMIC II"
and "REMIC III", respectively). The Offered Certificates will evidence "regular
interests" in the related REMIC. See "Certain Federal Income Tax Consequences"
herein and "Federal Income Tax Considerations" in the Prospectus.
There is currently no secondary market for the Offered Certificates. The
Underwriter currently intends to make a secondary market in the Offered
Certificates, but has no obligation to do so. See "Risk Factors--The
Certificates-- Limited Liquidity" herein.
---------------------
PROCEEDS OF THE ASSETS IN THE 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, THE UNDERWRITER, THE MASTER
SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS
WILL BE INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THE PROSPECTUS THAT ACCOMPANIES THIS PROSPECTUS SUPPLEMENT CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL TO OBTAIN MATERIAL INFORMATION CONCERNING THE OFFERED
CERTIFICATES. SALES OF THE OFFERED CERTIFICATES MAY NOT BE CONSUMMATED UNLESS
THE PURCHASER HAS RECEIVED A COPY OF BOTH THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT.
THROUGH AND INCLUDING JUNE , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN
THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY
BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS 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.
S-3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SUMMARY OF PROSPECTUS SUPPLEMENT.......................................................................... S-6
RISK FACTORS.............................................................................................. S-29
The Certificates........................................................................................ S-29
The Mortgage Loans...................................................................................... S-31
DESCRIPTION OF THE MORTGAGE POOL.......................................................................... S-38
General................................................................................................. S-38
Mortgage Loan History................................................................................... S-39
Certain Terms and Conditions of the Mortgage Loans...................................................... S-39
Assessments of Property Condition....................................................................... S-41
Additional Mortgage Loan Information.................................................................... S-42
The Mortgage Loan Seller................................................................................ S-56
Assignment of the Mortgage Loans; Repurchases........................................................... S-56
Representations and Warranties; Repurchases............................................................. S-57
Changes in Mortgage Pool Characteristics................................................................ S-59
SERVICING OF THE MORTGAGE LOANS........................................................................... S-60
General................................................................................................. S-60
The Master Servicer and the Special Servicer............................................................ S-62
Servicing and Other Compensation and Payment of Expenses................................................ S-62
Modifications, Waivers and Amendments................................................................... S-64
Custodial Account....................................................................................... S-65
The Controlling Class Representative.................................................................... S-68
Realization Upon Defaulted Mortgage Loans; Sale of Defaulted
Mortgage Loans and REO Properties..................................................................... S-69
REO Properties.......................................................................................... S-71
Replacement of the Special Servicer..................................................................... S-73
Inspections; Collection of Operating Information........................................................ S-73
Due-on-Sale and Due-on-Encumbrance Provisions........................................................... S-73
Maintenance of Insurance................................................................................ S-74
Evidence as to Compliance............................................................................... S-75
Certain Matters Regarding the Depositor, the Master Servicer and the Special Servicer................... S-75
Events of Default....................................................................................... S-76
Rights Upon Event of Default............................................................................ S-77
DESCRIPTION OF THE CERTIFICATES........................................................................... S-79
General................................................................................................. S-79
Registration and Denominations.......................................................................... S-79
Certificate Balances and Notional Amounts............................................................... S-80
Pass-Through Rates...................................................................................... S-81
Collection Account...................................................................................... S-81
Distributions........................................................................................... S-82
Subordination; Allocation of Losses and Certain Expenses................................................ S-89
P&I Advances............................................................................................ S-92
Appraisal Reductions.................................................................................... S-93
Reports to Certificateholders; Available Information.................................................... S-94
Assumed Final Distribution Date; Rated Final Distribution Date.......................................... S-98
Voting Rights........................................................................................... S-99
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Termination............................................................................................. S-100
The Trustee............................................................................................. S-100
The Fiscal Agent........................................................................................ S-101
YIELD AND MATURITY CONSIDERATIONS......................................................................... S-102
Yield Considerations.................................................................................... S-102
Price/Yield Tables...................................................................................... S-105
Weighted Average Life................................................................................... S-107
USE OF PROCEEDS........................................................................................... S-111
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................................................... S-111
General................................................................................................. S-111
Discount and Premium; Prepayment Premiums and Yield Maintenance Charges................................. S-111
Characterization of Investments in Offered Certificates................................................. S-112
Possible Taxes on Income from Foreclosure Property and Other Taxes...................................... S-113
Reporting and other Administrative Matters.............................................................. S-114
ERISA CONSIDERATIONS...................................................................................... S-114
LEGAL INVESTMENT.......................................................................................... S-117
METHOD OF DISTRIBUTION.................................................................................... S-118
LEGAL MATTERS............................................................................................. S-119
RATINGS................................................................................................... S-119
INDEX OF PRINCIPAL DEFINITIONS............................................................................ S-120
ANNEX A--CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS.................................................... A-1
ANNEX B--TERM SHEET....................................................................................... B-1
ANNEX C--FORM OF DISTRIBUTION DATE STATEMENT.............................................................. C-1
ANNEX D--FORM OF DELINQUENT LOAN STATUS REPORT............................................................ D-1
ANNEX E--FORM OF HISTORICAL LOAN MODIFICATION REPORT...................................................... E-1
ANNEX F--FORM OF HISTORICAL LOSS ESTIMATE REPORT.......................................................... F-1
ANNEX G--FORM OF REO STATUS REPORT........................................................................ G-1
ANNEX H--FORM OF WATCH LIST REPORT........................................................................ H-1
ANNEX I--OPERATING STATEMENT ANALYSIS..................................................................... I-1
ANNEX J--NOI ADJUSTMENT WORKSHEET......................................................................... J-1
ANNEX K--COMPARATIVE FINANCIAL STATUS REPORT.............................................................. K-1
</TABLE>
S-5
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND IN
THE ACCOMPANYING PROSPECTUS. CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY MAY
BE DEFINED ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS. AN
"INDEX OF PRINCIPAL DEFINITIONS" IS INCLUDED AT THE END OF THIS PROSPECTUS
SUPPLEMENT AND A "GLOSSARY" IS INCLUDED AT THE END OF THE PROSPECTUS. TERMS THAT
ARE USED BUT NOT DEFINED IN THIS PROSPECTUS SUPPLEMENT HAVE THE MEANINGS
SPECIFIED IN THE PROSPECTUS. ALL NUMERICAL INFORMATION PROVIDED HEREIN WITH
RESPECT TO THE MORTGAGE LOANS IS PROVIDED ON AN APPROXIMATE BASIS.
<TABLE>
<CAPTION>
INITIAL PERCENT OF WEIGHTED
MOODY'S/DCR CERTIFICATE INITIAL POOL CREDIT PASS-THROUGH AVERAGE LIFE
CLASS RATING BALANCE(1) BALANCE(1) SUPPORT (2) DESCRIPTION RATE (YEARS)(3)
- - ----------- ------------- -------------- ------------- ----------- ------------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-1 Aaa/AAA $ 275,000,000 15.5% 29.50% Fixed Coupon % 4.33
Class A-2 Aaa/AAA $ 330,000,000 18.6% 29.50% Fixed Coupon % 7.75
Class A-3 Aaa/AAA $ 646,492,000 36.4% 29.50% Fixed Coupon % 9.71
Class B Aa2/AA $ 88,759,000 5.0% 24.50% Fixed Coupon % 9.85
Class C A2/A $ 88,758,000 5.0% 19.50% Fixed Coupon % 9.90
Class D Baa2/BBB $ 93,196,000 5.2% 14.25% Fixed Coupon % 12.59
Class E Baa3/BBB- $ 35,504,000 2.0% 12.25% Fixed Coupon % 14.61
Class IO Aaa/AAA N/A(4) N/A N/A Variable IO Strip (5) N/A
Class F (6) $ 53,255,000 3.0% 9.25% Fixed Coupon % 14.75
Class G (6) $ 35,503,000 2.0% 7.25% Fixed Coupon % 14.85
Class H (6) $ 17,752,000 1.0% 6.25% Fixed Coupon % 14.85
Class J (6) $ 44,379,000 2.5% 3.75% Fixed Coupon % 15.21
Class K (6) $ 17,751,000 1.0% 2.75% Fixed Coupon % 17.57
Class L (6) $ 17,752,000 1.0% 1.75% Fixed Coupon % 19.15
Class M (6) $ 31,066,073 1.8% -- Fixed Coupon % 23.23
<CAPTION>
CASH FLOW
OR PRINCIPAL
CLASS WINDOW(3)
- - ----------- -------------
<S> <C>
Class A-1 03/98-10/04
Class A-2 10/04-08/07
Class A-3 08/07-01/08
Class B 01/08-01/08
Class C 01/08-09/08
Class D 09/08-08/12
Class E 08/12-11/12
Class IO 03/98-02/28
Class F 11/12-01/13
Class G 01/13-01/13
Class H 01/13-01/13
Class J 01/13-11/14
Class K 11/14-08/16
Class L 08/16-11/17
Class M 11/17-02/28
</TABLE>
- - ------------------------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) Represents initial aggregate Certificate Balance of all Classes of
Sequential Pay Certificates that are subordinate to the indicated Class
(expressed as a percentage of the Initial Pool Balance).
(3) Based on 0% CPR (except for the ARD Loans (as defined herein), which are
assumed to pay in full on their respective Anticipated Repayment Dates (also
as defined herein)) and the other assumptions set forth under "Yield and
Maturity Considerations--Weighted Average Life" herein.
(4) The Class IO Certificates will not have a specified Certificate Balance nor
will they entitle the holders thereof to receive distributions of principal.
See "--Description of the Certificates--Certificate Balances and Notional
Amounts" herein.
(5) Holders of the Class IO Certificates will be entitled to receive
distributions of interest in an amount equal to the aggregate interest
accrued on the notional amount of each of the Class IO Components, as
described herein. The Pass-Through Rate for each Class IO Component is
variable and, in general, equals the Weighted Average Net Mortgage Rate (as
defined herein) from time to time minus the Pass-Through Rate for the
corresponding Class of Sequential Pay Certificates. See "--Description of
the Certificates--Pass-Through Rates" herein.
(6) Not offered hereby. Accordingly, any information herein regarding the terms
of such Class of Certificates is provided solely because of its potential
relevance to a prospective purchaser of an Offered Certificate.
S-6
<PAGE>
<TABLE>
<S> <C>
TITLE OF CERTIFICATES.............. LB Commercial Mortgage Trust, Commercial Mortgage
Pass- Through Certificates, Series 1998-C1 (the
"Certificates"), to be issued in 18 classes (each, a
"Class") to be designated as: (i) the Class A-1, Class
A-2 and Class A-3 Certificates (collectively the
"Class A Certificates"); (ii) the Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J,
Class K, Class L and Class M Certificates
(collectively with the Class A Certificates, the
"Sequential Pay Certificates"); (iii) the Class IO
Certificates (collectively with the Sequential Pay
Certificates, the "Regular Interest Certificates");
and (iv) the Class R-I, Class R-II and Class R-III
Certificates (collectively, the "Residual Interest
Certificates"). Only the Class A-1, Class A-2, Class
A-3, Class B, Class C, Class D, Class E and Class IO
Certificates (collectively, the "Offered
Certificates") are offered hereby. The Class F, Class
G, Class H, Class J, Class K, Class L, Class M and
Residual Interest Certificates (collectively, the
"Private Certificates") have not been registered under
the Securities Act of 1933, as amended (the
"Securities Act"), and are not offered hereby. The
table on the preceding page sets forth the indicated
characteristics of the Certificates.
DEPOSITOR.......................... Structured Asset Securities Corporation, a Delaware
corporation. The Depositor is a wholly owned
subsidiary of Lehman Commercial Paper Inc., which, in
turn, is a wholly owned subsidiary of the Underwriter.
Neither the Depositor nor any of its affiliates has
insured or guaranteed the Offered Certificates. See
"The Issuer" in the Prospectus.
MASTER SERVICER AND SPECIAL
SERVICER......................... GMAC Commercial Mortgage Corporation ("GMACCM"), a
California corporation. In its capacity as Master
Servicer, GMACCM will be responsible for the servicing
of all the Mortgage Loans that, in general, are not in
default or in imminent danger thereof, and in its
capacity as Special Servicer, will be responsible for
performing certain servicing functions with respect to
the Mortgage Loans that, in general, are in default or
as to which default is imminent, for administering any
REO Property (as defined herein). The Controlling
Class (as defined herein) of Sequential Pay
Certificates will have the right, subject to certain
conditions described herein, to replace the Special
Servicer and to select a representative (the "Con-
trolling Class Representative") from whom the Special
Servicer will seek advice and approval and take
direction under certain circumstances, as described
herein. See "Servicing of the Mortgage Loans--The
Master Servicer and the Special Servicer", "--The
Controlling Class Representative" and "--Servicing and
Other Compensation and Payment of Expenses" herein.
TRUSTEE............................ LaSalle National Bank, a nationally chartered bank and
a wholly owned subsidiary of the Fiscal Agent.
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
FISCAL AGENT....................... ABN AMRO Bank N.V., a Netherlands banking corporation
and the corporate parent of the Trustee.
MORTGAGE LOAN SELLER............... An affiliate of the Underwriter and the Depositor. See
"Description of the Mortgage Pool--The Mortgage Loan
Seller" herein.
CUT-OFF DATE....................... February 1, 1998.
CLOSING DATE....................... On or about March 11, 1998.
RECORD DATE........................ With respect to any Distribution Date other than the
initial Distribution Date, the last business day of
the month immediately preceding the month in which
such Distribution Date occurs, and with respect to the
initial Distribution Date, the Closing Date.
DETERMINATION DATE................. The 10th day of each month, or if such 10th day is not
a business day, the next preceding business day.
DISTRIBUTION DATE.................. The 18th day of each month, or if such 18th day is not
a business day, the next succeeding business day,
commencing in March, 1998.
COLLECTION PERIOD.................. With respect to any Distribution Date, the period
commencing on the day 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, commencing
immediately following the Cut-off Date) and ending on
and including the Determination Date in the calendar
month in which such Distribution Date occurs.
INTEREST ACCRUAL PERIOD............ With respect to each Distribution Date, the calendar
month immediately preceding the month in which such
Distribution Date occurs.
REGISTRATION OF THE OFFERED
CERTIFICATES..................... The Offered Certificates of each Class will initially
be represented by one or more global Certificates
registered in the name of Cede & Co., as nominee of
The Depository Trust Company ("DTC"). No person
acquiring an interest in any Offered Certificate (any
such person, a "Certificate Owner") will be entitled
to receive such Certificate in fully registered,
certificated form (a "Definitive Offered
Certificate"), except under the limited circumstances
described under "Description of the
Certificates--Registration and Denominations" herein
and "Description of the Securities--Book-Entry
Registration" in the Prospectus. Instead, DTC will
effect payments and transfers in respect of the
Offered Certificates by means of its electronic
recordkeeping services, acting through certain par-
ticipating organizations ("Participants"). This may
result in
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
certain delays in receipt of payments by an investor
and may restrict an investor's ability to pledge its
Certificates. Unless and until Definitive Offered
Certificates of any Class are issued to the related
Certificate Owners, all references herein to the
rights of holders of such Class of Offered
Certificates are to the rights of those Certificate
Owners as such rights may be exercised through DTC and
its participants, except as otherwise specified
herein.
DENOMINATIONS...................... The Offered Certificates of each Class will be issued,
maintained and transferred on the book-entry records
of DTC and its Participants in denominations of
$10,000 actual principal amount (or $100,000 notional
amount with respect to the Class IO Certificates), and
in integral multiples of $1 in excess thereof.
THE MORTGAGE POOL.................. The Mortgage Pool will consist of 261 conventional,
monthly pay Mortgage Loans. The Mortgage Loans have an
aggregate Cut-off Date Balance of $1,775,167,073 (the
"Initial Pool Balance"), subject to a variance of plus
or minus 5.0%. The "Cut-off Date Balance" of each
Mortgage Loan will equal the unpaid principal balance
thereof as of the Cut-off Date, after reduction for
all payments of principal due on or before such date,
whether or not received. For purposes of the numerical
information provided herein, each of the Mortgage
Loans is deemed to be secured by one Mortgaged
Property, whether or not such Mortgaged Property is
comprised of more than one parcel.
Generally, all of the Mortgage Loans are non-recourse
obligations of the related borrowers. No Mortgage Loan
will be insured or guaranteed by any governmental
entity or private insurer.
Each of the Mortgage Loans is secured by a first
mortgage lien on the related borrower's fee simple
estate (or, with respect to 12 Mortgage Loans,
representing 4.3% of the Initial Pool Balance, on the
related borrower's leasehold estate) in income
producing real property (each, a "Mortgaged
Property").
</TABLE>
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<TABLE>
<S> <C>
Set forth below are the number of Mortgage Loans, and
the approximate percentage of the Initial Pool Balance
represented by such Mortgage Loans, that are secured
by Mortgaged Properties operated for each indicated
purpose:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGE INITIAL POOL
PROPERTY TYPE LOANS BALANCE
- - ------------------------------------------ ------------- ---------------
<S> <C> <C>
Retail.................................... 103 44.8%
Multifamily............................... 75 24.8%
Office.................................... 50 16.3%
Hospitality............................... 9 6.3%
Industrial/Warehouse...................... 16 5.5%
Health Care............................... 3 1.3%
Self Storage.............................. 3 0.6%
Mobile Home Park.......................... 1 0.2%
Parking Garage............................ 1 0.1%
</TABLE>
<TABLE>
<CAPTION>
The Mortgaged Properties are located throughout 36 states. Set
forth below are the number of Mortgage Loans, and the
approximate percentage of the Initial Pool Balance represented
by such Mortgage Loans, that are secured by Mortgage Properties
located in the states with concentrations of Mortgage Loans
above 5.0% (based on Cut-off Date Balance):
NUMBER OF PERCENTAGE OF
MORTGAGE INITIAL POOL
STATE LOANS BALANCE
- - ---------------------------------- ------------- -------------
Texas............................. 37 10.2%
<S> <C> <C>
Florida........................... 31 9.4%
New York.......................... 19 8.4%
California........................ 21 8.0%
Maryland.......................... 7 5.7%
Pennsylvania...................... 9 5.7%
</TABLE>
<TABLE>
<S> <C>
All of the Mortgage Loans bear interest at annualized
rates ("Mortgage Rates") that will remain fixed for
their respective remaining loan terms, except that, as
described below, the ARD Loans will accrue interest
after their respective Anticipated Repayment Dates at
a rate that is generally equal to the greater of (i)
two or more percentage points higher than their
respective Mortgage Rates and (ii) two or more
percentage points higher than the then current
applicable treasury rate. As used herein, the term
"Mortgage Rate" does not include the incremental
increase in the rate at which interest may accrue on
any ARD Loan after such date. No Mortgage Loan permits
negative amortization or (except for the ARD Loans)
the deferral of accrued interest. Scheduled payments
of principal and/or interest on the Mortgage Loans
("Monthly Payments") are due monthly on the first day
of each month. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage
</TABLE>
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<TABLE>
<S> <C>
Loans--Due Dates" and "--Mortgage Rates; Calculations
of Interest" herein.
One hundred seventy-seven (177) of the Mortgage Loans
(the "Balloon Loans"), representing 62.3% of the
Initial Pool Balance, provide for Monthly Payments
based on amortization schedules significantly longer
than their respective remaining terms to maturity. As
a result, such Mortgage Loans will have substantial
principal amounts due and payable (each such amount,
together with the corresponding payment of interest, a
"Balloon Payment") on their respective scheduled
maturity dates, unless prepaid prior thereto.
Sixty-one (61) of the Mortgage Loans, representing
30.1% of the Initial Pool Balance, are ARD Loans, as
described herein. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage
Loans--Hyperamortization" and "--Amortization of
Principal" herein. The remaining 23 Mortgage Loans,
representing 7.6% of the Initial Pool Balance, are
self-amortizing. See "Risk Factors--The Mortgage
Loans--Balloon Payments and Anticipated Repayment
Dates" herein.
An "ARD Loan" is a Mortgage Loan that provides that if
it is not paid in full as of a date specified in the
related Mortgage Note (the "Anticipated Repayment
Date"), then (i) interest will accrue thereon at a per
annum rate (the "Revised Rate") that is in excess of
the related Mortgage Rate and (ii) the related
borrower will be required to make payments thereon
each month in an amount that is equal to the greater
of the Monthly Payment and certain net cash flow
generated by the related Mortgaged Property. If the
net cash flow referred to in clause (ii) of the
preceding sentence exceeds the Monthly Payment, the
excess would be applied to repay the particular ARD
Loan.
In general, an ARD Loan will permit the related
borrower to prepay the related Mortgage Loan without
payment of a Prepayment Premium or a Yield Maintenance
Charge beginning three to six months prior to the
related Anticipated Repayment Date. The Anticipated
Repayment Date for any such ARD Loan is set forth in
Annex A. The interest accrued at the excess of the
related Revised Rate over the related Mortgage Rate
(such interest, the "Additional Interest"; and such
difference in rates, the "Additional Interest Rate")
will be deferred until the principal of such Mortgage
Loan is paid in full and, in some cases, may itself
accrue interest at the Revised Rate. All of the ARD
Loans for which a Lockbox Account (as defined herein)
has not been established on or before the Closing Date
provide that a Lockbox Account must be established on
or prior to the applicable Anticipated Repayment Date.
See "Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--ARD Loans"
herein.
</TABLE>
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<TABLE>
<S> <C>
As of the Cut-off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayments
in one of the following ways: (i) 259 Mortgage Loans,
representing 98.0% of the Initial Pool Balance,
currently prohibit voluntary prepayments of principal
for a period (a "Lockout Period") ending on a date
specified in the related Mortgage Note (as defined
herein) and, in general, thereafter impose a Yield
Maintenance Charge and/or Prepayment Premium (each as
defined herein) for most of their respective remaining
terms to maturity and, in some cases, with respect to
Defeasance Loans (as defined below), require the
pledging of Defeasance Collateral (also as defined
below); and (ii) two Mortgage Loans, representing 2.0%
of the Initial Pool Balance, currently permit
voluntary principal prepayments provided that the
prepayment is accompanied by a Yield Maintenance
Charge or by a Prepayment Premium for most of their
respective remaining terms to maturity. With respect
to the 69 Mortgage Loans which impose Yield Mainte-
nance Charges (whether currently or following a
Lockout Period), 68 of such Mortgage Loans
(representing 21.6% of the Initial Pool Balance)
provide for the calculation of the Yield Maintenance
Charge using a discount rate equal to the applicable
Treasury Rate (as set forth in the related Mortgage
Note), and one of such Mortgage Loans (representing
0.6% of the Initial Pool Balance) provides for the
calculation of the Yield Maintenance Charge using a
discount rate equal to the applicable Treasury Rate
plus 0.35%. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" and "--Additional
Mortgage Loan Information" herein. The ability of the
Master Servicer or the Special Servicer to waive or
modify the terms of any Mortgage Loan relating to the
payment of a Prepayment Premium or Yield Maintenance
Charge is limited as described herein. See "Servicing
of the Mortgage Loans--Modifications, Waivers and
Amendments" herein. Neither the Depositor nor the
Underwriter makes any representation as to the
enforceability of the provision of any Mortgage Note
requiring the payment of a Prepayment Premium or Yield
Maintenance Charge, or of the collectability of any
Prepayment Premium or Yield Maintenance Charge.
One hundred seventy-nine (179) of the Mortgage Loans
(the "Defeasance Loans"), representing 71.5% of the
Initial Pool Balance, provide that the holder of the
Mortgage, following notice from the borrower that the
borrower intends to prepay the Mortgage Loan as
permitted by the related Mortgage Note, may require
the borrower, in lieu of prepayment, to pledge to such
holder "Defeasance Collateral" and thereupon obtain a
release of the Mortgaged Property from the lien of the
related Mortgage. In general, "Defeasance Collateral"
is required to consist of direct, non-callable United
States Treasury obligations that provide for payments
prior, but as close as possible, to all successive Due
Dates (including the scheduled
</TABLE>
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<S> <C>
maturity date), with each such payment being equal to
or greater than (with any excess to be returned to the
borrower) than the Monthly Payment (including, in the
case of the scheduled maturity date, any Balloon
Payment), due on such date. The Pooling and Servicing
Agreement will require the Master Servicer or the
Special Servicer to require each borrower under a
Defeasance Loan that proposes to prepay its Mortgage
Loan to pledge instead Defeasance Collateral, but in
each case subject to certain conditions, including
confirmation from each Rating Agency that acceptance
of a pledge of the Defeasance Collateral in lieu of a
full prepayment will not result in a qualification,
downgrade or withdrawal of the rating then assigned by
it to any Class of Certificates.
All of the Mortgage Loans were originated in 1997 or
1998.
Set forth below is certain information regarding the
Mortgage Loans and the Mortgaged Properties as of the
Cut-off Date (all weighted averages set forth below
are based on the Cut-off Date Balances of the
respective Mortgage Loans). Such information is more
fully described, and additional information regarding
the Mortgage Loans and the Mortgaged Properties is set
forth, in the tables under "Description of the
Mortgage Pool--Additional Mortgage Loan Information"
herein and in Annex A hereto:
</TABLE>
<TABLE>
<S> <C>
Minimum Cut-off Date Balance.............. $613,738
Maximum Cut-off Date Balance.............. $62,467,513
Average Cut-off Date Balance.............. $6,801,406
Minimum Mortgage Rate..................... 6.97%
Maximum Mortgage Rate..................... 9.170%
Weighted Average Mortgage Rate............ 7.603%
Minimum Remaining Term to Maturity
(months)................................ 58
Maximum Remaining Term to Maturity
(months)................................ 360
Weighted Average Remaining Term to Matur-
ity (months)............................ 131
Minimum Remaining Amortization Term
(months)................................ 189
Maximum Remaining Amortization Term
(months)................................ 360
Weighted Average Remaining Amortization
Term (months)........................... 338
Minimum Cut-off Date DSC Ratio............ 1.19x
Maximum Cut-off Date DSC Ratio............ 2.13x
Weighted Average Cut-off Date DSC Ratio... 1.34x
Minimum Cut-off Date LTV Ratio............ 28.0%
Maximum Cut-off Date LTV Ratio............ 80.0%
Weighted Average Cut-off Date LTV Ratio... 73.2%
Minimum Maturity Date LTV Ratio(1)........ 8.9%
Maximum Maturity Date LTV Ratio(1)........ 76.0%
</TABLE>
S-13
<PAGE>
<TABLE>
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Weighted Average Maturity Date LTV
Ratio(1)................................ 62.1%
</TABLE>
--------------------------------------------------------------
(1) Applies only to Balloon Loans.
<TABLE>
<S> <C>
The Mortgage Loans will be acquired by the Depositor
from the Mortgage Loan Seller, which either originated
each such Mortgage Loan or acquired it in connection
with its commercial and multifamily mortgage loan
conduit program. See "Description of the Mortgage
Pool" herein.
On or prior to the Closing Date, the Depositor will
cause the Mortgage Loan Seller to assign the Mortgage
Loans, without recourse (except as set forth in the
next sentence), to the Trustee for the benefit of the
holders of the Certificates (the
"Certificateholders"). In connection with such
assignment, the Mortgage Loan Seller will make certain
representations and warranties regarding the
characteristics of its Mortgage Loans and, as more
particularly described herein, will agree to cure any
material breach thereof or, in the absence of such a
cure, to repurchase the affected Mortgage Loan. See
"Description of the Mortgage Pool--Representations and
Warranties; Repurchases" herein.
DESCRIPTION OF THE CERTIFICATES.... The Certificates will be issued pursuant to a Pooling
and Servicing Agreement, to be dated as of February 1,
1998, among the Depositor, the Master Servicer, the
Special Servicer, the Trustee and the Fiscal Agent
(the "Pooling and Servicing Agreement"), and will
represent in the aggregate the entire beneficial
ownership interest in a trust fund (the "Trust Fund")
consisting of the Mortgage Pool and certain related
assets. For purposes of the Prospectus, the Pooling
and Servicing Agreement constitutes, collectively, a
"Trust Agreement", a "Master Servicing Agreement" and
a "Special Servicing Agreement".
A. CERTIFICATE BALANCES AND
NOTIONAL AMOUNTS................. Upon initial issuance, and in each case subject to a
permitted variance of plus or minus 5.0%, the
respective Classes of Sequential Pay Certificates will
have the Certificate Balances set forth in the table
at the beginning of this Summary.
The "Certificate Balance" of any Class of Sequential
Pay Certificates outstanding at any time represents
the maximum amount that the holders thereof are
entitled to receive as distributions allocable to
principal from the cash flow on the Mortgage Loans and
other assets in the Trust Fund. As more particularly
described herein, the Certificate Balance of a Class
of Sequential Pay Certificates will be permanently
reduced on each Distribution Date by any distributions
of principal actually made on such Class of
Certificates on such Distribution Date, and further
permanently reduced by any losses (as more
</TABLE>
S-14
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<S> <C>
particularly described herein, "Realized Losses") on
the Mortgage Loans and certain Trust Fund expenses (as
more particularly described herein, "Additional Trust
Fund Expenses") actually allocated to such Class of
Certificates on such Distribution Date.
The Class IO Certificates will not have a Certificate
Balance, but will represent the right to receive
distributions of interest in an amount equal to the
aggregate interest accrued on the notional amount of
each of the Class IO Components, as described herein.
The Class IO Certificates will have fourteen
components (each, a "Class IO Component"), each corre-
sponding to a different Class of Sequential Pay
Certificates. Each Class IO Component will have the
same letter and/or numerical designation as the
corresponding Class of Sequential Pay Certificates.
The notional amount of each Class IO Component will
equal the Certificate Balance of the corresponding
Class of Sequential Pay Certificates outstanding from
time to time. On the Closing Date, the aggregate of
the notional amounts of all the Class IO Components
will equal the Initial Pool Balance. References herein
to the "notional amount" of the Class IO Certificates
shall mean the aggregate of the notional amounts of
all the Class IO Components. See "Description of the
Certificates--Certificate Balances and Notional
Amounts" herein.
The Residual Interest Certificates will not have
Certificate Balances or notional amounts, but will
represent the right to receive certain limited amounts
not otherwise payable on the Regular Interest
Certificates.
B. PASS-THROUGH RATES.............. The Pass-Through Rate applicable to each Class of
Sequential Pay Certificates for each Distribution Date
is fixed at the respective rate per annum set forth
with respect to such Class in the table at the
beginning of this Summary. The Pass-Through Rate
applicable to each Class IO Component for any
Distribution Date will be equal to the Weighted
Average Net Mortgage Rate for such Distribution Date
minus the fixed Pass-Through Rate applicable to the
corresponding Class of Sequential Pay Certificates.
The Residual Interest Certificates will not bear
interest.
The "Weighted Average Net Mortgage Rate" for each
Distribution Date is the weighted average of the Net
Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period,
weighted on the basis of their respective Stated
Principal Balances outstanding immediately prior to
such Distribution Date. The "Net Mortgage Rate" for
each Mortgage Loan will generally equal (x) the
Mortgage Rate in effect for such Mortgage Loan as of
the Cut-off Date, minus (y) the applicable
Administrative Cost Rate (as defined herein) for such
Mortgage Loan; provided that if any Mortgage Loan does
not accrue interest on the basis of a 360-day year
</TABLE>
S-15
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<TABLE>
<S> <C>
consisting of twelve 30-day months (which is the basis
on which interest accrues in respect of the Regular
Interest Certificates), then, solely for the purposes
of calculating the Weighted Average Net Mortgage Rate,
the Mortgage Rate referred to in clause (x) will, to
the extent appropriate, be adjusted from accrual
period to accrual period to compensate for such
difference. The "Stated Principal Balance" of each
Mortgage Loan outstanding at any time represents the
principal balance of such Mortgage Loan ultimately due
and payable thereon to Certificateholders and will
generally equal the Cut-off Date Balance thereof,
permanently reduced on each Distribution Date (to not
less than zero) by (i) any payments or other
collections (or advances in lieu thereof) of principal
of such Mortgage Loan that are due or received, as the
case may be, during the related Collection Period (as
defined herein) and distributed on the Certificates on
such date and (ii) the principal portion of any
Realized Loss incurred in respect of such Mortgage
Loan during the related Collection Period for such
Distribution Date. See "Description of the
Certificates--Pass-Through Rates" herein.
C. DISTRIBUTIONS................... Distributions on the Certificates will be made by the
Trustee, to the extent of available funds, monthly, on
each Distribution Date. The total of all payments or
other collections (or advances in lieu thereof) on or
in respect of the Mortgage Loans (other than
collections of Additional Interest, Prepayment
Premiums and Yield Maintenance Charges, which are
separately distributable in respect of the
Certificates) that are available for distribution to
Certificateholders on any Distribution Date is herein
referred to as the "Available Distribution Amount" for
such date. See "Description of the Certificates--
Distributions--The Available Distribution Amount"
herein.
On each Distribution Date, the Trustee will (except as
otherwise described under "Description of the
Certificates--Termination" herein), after deduction of
the Trustee Fee for such Distribution Date, apply the
Available Distribution Amount for such date for the
following purposes and in the following order of
priority, in each case to the extent of remaining
available funds:
(1) to distributions of interest to the holders of the
Class A-1, Class A-2, Class A-3 and Class IO
Certificates (in each case, so long as any such Class
remains outstanding), pro rata, in accordance with the
respective amounts of Distributable Certificate
Interest (as defined herein) on such Classes of
Certificates on such Distribution Date, in an amount
equal to all Distributable Certificate Interest in
respect of each such Class of Certificates for such
Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of
the Class A-1 Certificates in an amount (not to exceed
the then outstanding
</TABLE>
S-16
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Certificate Balance of such Class of Certificates)
equal to the Principal Distribution Amount (as defined
herein) for such Distribution Date;
(3) after the Class A-1 Certificates have been
retired, to distributions of principal to the holders
of the Class A-2 Certificates in an amount (not to
exceed the then outstanding Certificate Balance of
such Class of Certificates) equal to the Principal
Distribution Amount for such Distribution Date, less
any portion thereof distributed in respect of the
Class A-1 Certificates;
(4) after the Class A-1 and Class A-2 Certificates
have been retired, to distributions of principal to
the holders of the Class A-3 Certificates in an amount
(not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the
Principal Distribution Amount for such Distribution
Date, less any portion thereof distributed in respect
of the Class A-1 and/or Class A-2 Certificates;
(5) to distributions to the holders of the Class A-1,
Class A-2 and Class A-3 Certificates, pro rata, in
accordance with the amount of Realized Losses and
Additional Trust Fund Expenses, if any, previously
allocated to such Classes of Certificates and for
which no reimbursement has previously been received,
to reimburse such holders for such Realized Losses and
Additional Trust Fund Expenses, if any;
(6) to distributions of interest to the holders of the
Class B Certificates in an amount equal to all
Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior
Distribution Dates;
(7) after the Class A-1, Class A-2 and Class A-3
Certificates have been retired, to distributions of
principal to the holders of the Class B Certificates
in an amount (not to exceed the then outstanding
Certificate Balance of such Class of Certificates)
equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class A-2
and/or Class A-3 Certificates;
(8) to distributions to the holders of the Class B
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of
Certificates and for which no reimbursement has
previously been received;
(9) to distributions of interest to the holders of the
Class C Certificates in an amount equal to all
Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior
Distribution Dates;
(10) after the Class A-1, Class A-2, Class A-3 and
Class B Certificates have been retired, to
distributions of principal to
</TABLE>
S-17
<PAGE>
<TABLE>
<S> <C>
the holders of the Class C Certificates in an amount
(not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the
Principal Distribution Amount for such Distribution
Date, less any portion thereof distributed in respect
of the Class A-1, Class A-2, Class A-3 and/or Class B
Certificates;
(11) to distributions to the holders of the Class C
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of
Certificates and for which no reimbursement has
previously been received;
(12) to distributions of interest to the holders of
the Class D Certificates in an amount equal to all
Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior
Distribution Dates;
(13) after the Class A-1, Class A-2, Class A-3, Class
B and Class C Certificates have been retired, to
distributions of principal to the holders of the Class
D Certificates in an amount (not to exceed the then
outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class
A-2, Class A-3, Class B and/or Class C Certificates;
(14) to distributions to the holders of the Class D
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of
Certificates and for which no reimbursement has
previously been received;
(15) to distributions of interest to the holders of
the Class E Certificates in an amount equal to all
Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior
Distribution Dates;
(16) after the Class A-1, Class A-2, Class A-3, Class
B, Class C and Class D Certificates have been retired,
to distributions of principal to the holders of the
Class E Certificates in an amount (not to exceed the
then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class
A-2, Class A-3, Class B, Class C and/or Class D
Certificates;
</TABLE>
S-18
<PAGE>
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<S> <C>
(17) to distributions to the holders of the Class E
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of
Certificates and for which no reimbursement has
previously been received; and
(18) to distributions to the holders of the respective
Classes of Private Certificates as described herein
(provided that no distributions of principal will be
made in respect of any Class of Private Certificates
until the aggregate Certificate Balance of the Class
A-1, Class A-2, Class A-3, Class B, Class C, Class D
and Class E Certificates has been reduced to zero).
See "Description of the
Certificates--Distributions--Application of the
Available Distribution Amount" herein;
provided that, on each Distribution Date, if any,
after the aggregate of the Certificate Balances of the
Subordinate Certificates (as defined herein) has been
reduced to zero as a result of the allocation of
Realized Losses and Additional Trust Fund Expenses,
and prior to retirement of the Class A Certificates,
the payments of principal to be made as contemplated
by clauses (2), (3) and (4) above with respect to the
Class A Certificates, will be so made to the holders
of the respective Classes of such Certificates, up to
an amount equal to, and pro rata as among such Classes
in accordance with, the respective then outstanding
Certificate Balances of such Classes of Certificates,
and without regard to the Principal Distribution
Amount for such date.
The "Distributable Certificate Interest" in respect of
any Class of Sequential Pay Certificates for any
Distribution Date will generally equal one month's
interest at the applicable Pass-Through Rate accrued
during the related Interest Accrual Period on the
Certificate Balance of such Class of Certificates
outstanding immediately prior to such Distribution
Date, reduced (to not less than zero) by such Class'
allocable share (calculated as described herein) of
any Net Aggregate Prepayment Interest Shortfall (as
defined herein) for such Distribution Date. The
"Distributable Certificate Interest" in respect of the
Class IO Certificates for any Distribution Date will
generally equal the aggregate of one month's interest
at the applicable Pass-Through Rate accrued during the
related Interest Accrual Period on the notional amount
of each Class IO Component outstanding immediately
prior to such Distribution Date, reduced (to not less
than zero) by such Class' allocable share (calculated
as described herein) of any Net Aggregate Prepayment
Interest Shortfall for such Distribution Date.
Interest payable on the Regular Interest Certificates
will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. See "Servicing of
the Mortgage Loans--Servicing and Other Compensation
and Payment of Expenses" and
</TABLE>
S-19
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<TABLE>
<S> <C>
"Description of the Certificates--
Distributions--Distributable Certificate Interest"
herein.
The "Principal Distribution Amount" for any
Distribution Date will generally equal the aggregate
of the following (without duplication): (a) the
aggregate of the principal portions of all Scheduled
Payments (other than Balloon Payments) and the
principal portions of any Assumed Scheduled Payments
(as defined herein) due or deemed due, as the case may
be, on or in respect of the Mortgage Loans for their
respective Due Dates (as defined herein) occurring
during the related Collection Period; (b) the
aggregate of all principal prepayments received on the
Mortgage Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the
related stated maturity date occurred during or prior
to the related Collection Period, any payment of
principal (exclusive of any amounts described in
clause (b) above or clause (d) below) made by or on
behalf of the related borrower during the related
Collection Period (including any Balloon Payment), net
of any portion of such payment that represents a
recovery of the principal portion of any Scheduled
Payment (other than a Balloon Payment) due, or the
principal portion of any Assumed Scheduled Payment
deemed due, in respect of such Mortgage Loan on a Due
Date during or prior to the related Collection Period
and not previously recovered; (d) the aggregate of all
Liquidation Proceeds and Insurance Proceeds (each, as
defined herein) that were received on or in respect of
any of the Mortgage Loans during the related
Collection Period and that were identified and applied
by the Master Servicer as recoveries of principal, in
each case net of any portion of such amounts that
represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due,
or of the principal portion of any Assumed Scheduled
Payment deemed due, in respect of the related Mortgage
Loan on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(e) for each Distribution Date after the initial
Distribution Date, the excess, if any, of the
Principal Distribution Amount for the immediately
preceding Distribution Date, over the aggregate
distributions of principal made on the Certificates on
such immediately preceding Distribution Date.
The "Scheduled Payment" due on any Mortgage Loan on
any related Due Date is the Monthly Payment (excluding
any amounts representing Additional Interest with
respect to an ARD Loan) that is or would have been, as
the case may be, due thereon on such date, without
regard to any waiver, modification or amendment
granted or agreed to by the Special Servicer or
otherwise resulting from a bankruptcy or similar
proceeding involving the related borrower, and
assuming that the full amount of each prior Scheduled
Payment has been
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timely made. The "Assumed Scheduled Payment" is an
amount deemed due (i) in respect of a Balloon Loan
that is delinquent in respect of its Balloon Payment
beyond the first Determination Date (as defined
herein) after its stated maturity date and (ii) in
respect of each Mortgage Loan as to which the related
Mortgaged Property has been acquired on behalf of the
Certificateholders through foreclosure, deed in lieu
of foreclosure or otherwise (upon acquisition, an "REO
Property"). The Assumed Scheduled Payment deemed due
on any such Balloon Loan, on its stated maturity date
and on each successive related Due Date that it
remains outstanding and part of the Trust Fund, will
equal the Scheduled Payment that would have been due
thereon on such date if the related Balloon Payment
had not come due but rather such Mortgage Loan had
continued to amortize in accordance with its
amortization schedule in effect as of the Closing
Date. The Assumed Scheduled Payment deemed due on any
Mortgage Loan as to which the related Mortgaged
Property has become an REO Property, on each Due Date
that the related REO Property remains part of the
Trust Fund, will equal the Scheduled Payment that
would have been due in respect of such Mortgage Loan
on such Due Date had it remained outstanding (or, if
such Mortgage Loan was a Balloon Loan and such Due
Date coincides with or follows what had been its
stated maturity date, the Assumed Scheduled Payment
that would have been deemed due in respect of such
Mortgage Loan on such Due Date had it remained
outstanding). See "Description of the Certificates--
Distributions--Principal Distribution Amount" herein.
Reimbursements of previously allocated Realized Losses
and Additional Trust Fund Expenses will not constitute
distributions of principal for any purpose and will
not result in an additional reduction in the
Certificate Balance of the Class of Certificates in
respect of which any such reimbursement is made.
The holders of the Certificates may also receive
portions of any Prepayment Premiums and Yield
Maintenance Charges to the extent described under
"Description of the Certificates--Dis-
tributions--Allocation of Prepayment Premiums and
Yield Maintenance Charges" herein. Such distributions
will be in addition to the distributions of interest,
if any, made to such holders from the Available
Distribution Amount on each Distribution Date.
If and to the extent collected, Additional Interest
will be distributed, pro rata (based on their
respective initial Certificate Balances), among all
the Classes of Sequential Pay Certificates. There can
be no assurance as to what extent Additional Interest
will be collected on the ARD Loans, if at all.
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P&I ADVANCES....................... Subject to a recoverability determination, as
described herein, and further subject to the reduced
advancing obligations in respect of certain Required
Appraisal Loans (as defined herein) and certain
Mortgage Loans as to which the Monthly Payment has
been reduced as part of a modification or otherwise,
the Master Servicer will be required to make advances
(each, a "P&I Advance") with respect to each
Distribution Date in an amount that is generally equal
to the aggregate of all Scheduled Payments (other than
Balloon Payments) and any Assumed Scheduled Payments,
net of related Master Servicing Fees and, if
applicable, any related Workout Fees (each as defined
herein), due or deemed due, as the case may be, on or
in respect of the Mortgage Loans on their respective
Due Dates during the related Collection Period, in
each case to the extent that such amount was not paid
by or on behalf of the related borrower or otherwise
collected as of the close of business on the last day
of the related Collection Period. Pursuant to the
terms of the Pooling and Servicing Agreement, if the
Master Servicer fails to make a required P&I Advance,
the Trustee shall then be obligated to make such P&I
Advance, and if the Trustee fails to make a required
P&I Advance, the Fiscal Agent will then be obligated
to make such P&I Advance, in each case subject to a
recoverability determination, as described herein. No
default by the Trustee will be deemed to have occurred
if the Fiscal Agent makes such P&I Advance in a timely
manner, as set forth in the Pooling and Servicing
Agreement.
As more fully described herein, the Master Servicer
(or the Trustee or Fiscal Agent, as applicable) will
be entitled to interest on any P&I Advance made by it,
and each of the Master Servicer, the Special Servicer,
the Trustee and the Fiscal Agent will be entitled to
interest on certain reimbursable servicing expenses
incurred by any of them. Such interest will accrue
from the date any such P&I Advance is made or such
servicing expense is incurred at a rate per annum
equal to the "prime rate" published in the "Money
Rates" section of The Wall Street Journal, as such
"prime rate" may change from time to time (the
"Reimbursement Rate"); and such interest will be
compounded annually and will be paid, contemporane-
ously with the reimbursement of such P&I Advance or
servicing expense, out of general collections on the
Mortgage Pool then on deposit in the Custodial
Account. See "Description of the Certificates--P&I
Advances" and "Servicing of the Mortgage
Loans--Custodial Account" herein.
COMPENSATING INTEREST PAYMENTS..... The Master Servicer is required to make a
non-reimbursable payment (a "Compensating Interest
Payment") with respect to each Distribution Date to
cover any Prepayment Interest Shortfalls incurred
during such Collection Period in an amount equal to
the lesser of (a) the aggregate of all Prepayment
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Interest Shortfalls experienced during the related
Collection Period and (b) the sum of (i) the aggregate
of its Master Servicing Fees for such Collection
Period (but only to the extent of that portion thereof
calculated at a rate of 0.04% per annum with respect
to each and every Mortgage Loan) and (ii) all of its
other servicing compensation for such Collection
Period. A "Prepayment Interest Shortfall" is a
shortfall in the collection of a full month's interest
(net of the related Servicing Fees and, if applicable,
Additional Interest and without regard to any
Prepayment Premium or Yield Maintenance Charge
collected) on any Mortgage Loan by reason of a full or
partial principal prepayment made prior to its Due
Date in any Collection Period. The "Net Aggregate
Prepayment Interest Shortfall" for any Distribution
Date will be the amount, if any, by which (a) the
aggregate of any Prepayment Interest Shortfalls
incurred during the related Collection Period exceeds
(b) any Compensating Interest Payment made by the
Master Servicer with respect to such Distribution
Date. See "Servicing of the Mortgage Loans--Servicing
and Other Compensation and Payment of Expenses" and
"Description of the Certificates
--Distributions--Distributable Certificate Interest"
herein.
SUBORDINATION; ALLOCATION OF LOSSES
AND CERTAIN EXPENSES............. The rights of holders of the Class B, Class C, Class
D, Class E and Private Certificates (collectively, the
"Subordinate Certificates"), to receive distributions
of amounts collected or advanced on the Mortgage Loans
will, in each case, be subordinated, to the extent
described herein, to the rights of holders of the
Class A and Class IO Certificates (collectively, the
"Senior Certificates") and each other such Class of
Subordinate Certificates, if any, with an earlier
alphabetical Class designation. This subordination is
intended to enhance the likelihood of timely receipt
by the holders of the Senior Certificates of the full
amount of Distributable Certificate Interest payable
in respect of such Classes of Certificates on each
Distribution Date, and the ultimate receipt by the
holders of each Class of the Class A Certificates of
principal equal to the entire related Certificate
Balance. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the
likelihood of timely receipt by the holders of the
Class B, Class C, Class D and Class E Certificates of
the full amount of Distributable Certificate Interest
payable in respect of such Classes of Certificates on
each Distribution Date, and the ultimate receipt by
the holders of the Class B, Class C, Class D and Class
E Certificates of principal equal to the entire
related Certificate Balance. The protection afforded
to the holders of the Offered Certificates by means of
the subordination referred to above will be
accomplished by (i) the application of the Available
Distribution Amount on each Distribution Date in the
order described above in this Summary under
"--Description of the
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Certificates--Distributions" and (ii) by the
allocation of Realized Losses and Additional Trust
Fund Expenses as described below. No other form of
credit support will be available for the benefit of
the holders of the Offered Certificates.
On each Distribution Date, following all distributions
on the Certificates to be made on such date, the
aggregate of all Realized Losses and Additional Trust
Fund Expenses that have been incurred since the
Cut-off Date through the end of the related Collection
Period and that have not previously been so allocated
will be allocated, subject to the limitations
described herein, first to the Private Certificates
(other than the Residual Interest Certificates) in the
order described herein, and then to the Class E, Class
D, Class C and Class B Certificates, in that order,
until the Certificate Balance of each such Class has
been reduced to zero. Thereafter any additional
Realized Losses and Additional Trust Fund Expenses
will be allocated, subject to the limitations
described herein, to the Class A-1, Class A-2 and
Class A-3 Certificates, pro rata, in proportion to
their outstanding Certificate Balances (in each such
case, in reduction of the related Certificate
Balance). See "Description of the
Certificates--Subordination; Allocation of Losses and
Certain Expenses" herein.
Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of
any Class of Sequential Pay Certificates will result
in a corresponding reduction in the notional amount of
the related Class IO Component.
TREATMENT OF REO PROPERTIES........ In the event that a Mortgaged Property is acquired on
behalf of the Certificateholders through foreclosure,
deed in lieu of foreclosure or otherwise (upon
acquisition, an "REO Property"), the related Mortgage
Loan will be treated, for purposes of determining (i)
distributions on the Certificates, (ii) allocations of
Realized Losses and Additional Trust Fund Expenses to
the Certificates and (iii) the amount of fees payable
to the Trustee, the Master Servicer and the Special
Servicer under the Pooling and Servicing Agreement, as
having remained outstanding until such REO Property is
liquidated. In connection therewith, operating
revenues and other proceeds derived from such REO
Property (net of related operating costs, including
certain reimbursements payable to the Master Servicer
or the Special Servicer in connection with the
operation and disposition of such REO Property) will
be "applied" by the Master Servicer as principal,
interest and other amounts that would have been "due"
on such Mortgage Loan, and the Master Servicer (and,
if necessary, the Trustee and Fiscal Agent) will be
required to make P&I Advances in respect of such Mort-
gage Loan, in all cases as if such Mortgage Loan had
remained outstanding.
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OPTIONAL TERMINATION............... Each of the Depositor, the Master Servicer, the
Special Servicer, the Underwriter and the Majority
Subordinate Certificateholder (as defined herein) will
have an option to 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, on any Distribution Date on
which the aggregate Stated Principal Balance of the
Mortgage Pool is less than 1% of the Initial Pool
Balance. See "Description of the
Certificates--Termination" herein.
CERTAIN INVESTMENT
CONSIDERATIONS................... The yield to maturity of a Class A-1, Class A-2, Class
A-3, Class B, Class C, Class D or Class E Certificate
purchased at a discount or premium will be affected by
the rate of prepayments and other unscheduled
collections of principal on or in respect of the
Mortgage Loans and the allocation thereof to reduce
the principal balance of such Certificate. An investor
should consider, in the case of any such Certificate
purchased at a discount, the risk that a slower than
anticipated rate of prepayments could result in a
lower than anticipated yield and, in the case of any
such Certificate purchased at a premium, the risk that
a faster than anticipated rate of prepayments could
result in a lower than anticipated yield. IN ADDITION,
THE YIELD TO MATURITY OF THE CLASS IO CERTIFICATES
WILL BE HIGHLY SENSITIVE TO THE RATE AND TIMING OF
PRINCIPAL PAYMENTS (INCLUDING BY REASON OF
PREPAYMENTS, DEFAULTS AND LIQUIDATIONS) ON THE
MORTGAGE LOANS, AND INVESTORS IN THE CLASS IO
CERTIFICATES SHOULD FULLY CONSIDER THE ASSOCIATED
RISKS, INCLUDING THE RISK THAT A RAPID RATE OF
PREPAYMENTS AND/OR LIQUIDATIONS IN RESPECT OF THE
MORTGAGE LOANS COULD RESULT IN THE FAILURE OF SUCH
INVESTORS TO FULLY RECOUP THEIR INITIAL INVESTMENTS.
See "Yield and Maturity Considerations" herein and
"Yield and Prepayment Considerations" in the
Prospectus. The allocation to any Class of any
Prepayment Premium or Yield Maintenance Charge may be
insufficient to offset fully any adverse effects on
the anticipated yield to maturity resulting from the
corresponding principal prepayment. See "Description
of Certificates-- Distributions--Allocation of
Prepayment Premiums and Yield Maintenance Charges"
herein.
In addition, insofar as an investor's initial
investment in any Offered Certificate is returned in
the form of payments of principal thereon, there can
be no assurance that such amounts can be reinvested in
comparable alternative investments with comparable
yields. Because borrowers would have an incentive to
prepay their Mortgage Loans when, in any particular
case, prevailing market interest rates are below the
related Mortgage Rate, the rate of prepayments on the
Mortgage Loans is likely to be inversely related to
the level of prevailing market interest rates (and,
presumably, to the yields on comparable alternative
investments).
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CERTAIN FEDERAL INCOME TAX
CONSEQUENCES..................... Three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect
to the Trust Fund for federal income tax purposes,
with the resulting REMICs being herein referred to as
"REMIC I," "REMIC II" and "REMIC III". The assets of
REMIC I will consist of the Mortgage Loans, any REO
Properties acquired on behalf of the
Certificateholders and funds deposited from time to
time in the Custodial Account, the Collection Account
and any REO Account (each as defined herein),
exclusive of any Additional Interest on the ARD Loans
(see "Servicing of the Mortgage Loans--Custodial
Account" and "Description of the
Certificates--Collection Account" herein). For federal
income tax purposes, (a) the separate noncertificated
regular interests in REMIC I will be the "regular
interests" in REMIC I and will constitute the assets
of REMIC II, (b) the Class R-I Certificates will be
the sole class of "residual interests" in REMIC I, (c)
the separate noncertificated regular interests in
REMIC II will be the "regular interests" in REMIC II
and will constitute the assets of REMIC III, (d) the
Class R-II Certificates will be sole class of
"residual interests" in REMIC II, (e) the Regular
Interest Certificates will evidence ownership of the
"regular interests" in REMIC III (with each Class IO
Component constituting a separate "regular interest"),
which generally will be treated as debt instruments of
REMIC III, and (f) the Class R-III Certificates will
be the sole class of "residual interests" in REMIC
III. The Sequential Pay Certificates will also
represent pro rata (based on their respective initial
Certificate Balances) undivided beneficial interests
in the portion of the Trust Fund consisting of any
Additional Interest collected on the ARD Loans, and
such portion will be treated as part of a grantor
trust for federal income tax purposes.
The Class , Class and Class
Certificates will not, and the Class IO and Class
Certificates will, be treated as having been
issued with original issue discount for federal income
tax reporting purposes. The prepayment assumption that
will be used for purposes of computing the accrual of
original issue discount, market discount and premium,
if any, for federal income tax purposes will be that
the Mortgage Loans will not prepay (that is, a CPR of
0%), except that it is assumed that the ARD Loans pay
their respective outstanding principal balances on
their related Anticipated Repayment Dates. However, no
representation is made that the Mortgage Loans will
prepay at that rate or at any other rate.
The Offered Certificates will be treated as "real
estate assets" within the meaning of Section
856(c)(5)(A) of the Code. In addition, interest
(including original issue discount) on the Offered
Certificates will be interest described in Section
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856(c)(3)(B) of the Code. However, the Offered
Certificates will generally only be considered assets
described in Section 7701(a)(19)(C) of the Code to the
extent that the Mortgage Loans are secured by
residential property and, accordingly, an investment
in the Offered Certificates may not be suitable for
certain thrift institutions.
For further information regarding the federal income
tax consequences of investing in the Offered
Certificates, see "Certain Federal Income Tax
Consequences" herein and "Federal Income Tax
Considerations" in the Prospectus.
ERISA CONSIDERATIONS............... A fiduciary of any employee benefit plan or other
retirement arrangement subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code (a "Plan")
should review carefully with its legal advisors
whether the purchase or holding of Offered Certifi-
cates 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 to an investment therein.
The Underwriter has received from the U.S. Department
of Labor (the "DOL") an individual exemption,
Prohibited Transaction Exemption 91-14, which
generally exempts from the application of certain of
the prohibited transaction provisions of Sections
406(a) and (b) and 407(a) of ERISA and the excise
taxes imposed on such prohibited transactions by
Section 4975(a) and (b) of the Code, transactions
relating to the purchase, sale and holding of
pass-through certificates underwritten by the
Underwriter provided that certain conditions are
satisfied.
The Depositor expects that the Prohibited Transaction
Exemption will generally apply to the Senior
Certificates, but it will not apply to the other
Classes of Offered Certificates. ACCORDINGLY, EXCEPT
AS DESCRIBED HEREIN, THE CLASS B, CLASS C, CLASS D AND
CLASS E CERTIFICATES SHOULD NOT BE ACQUIRED BY A PLAN
OR ANY INVESTOR HOLDING ASSETS OF A PLAN. PURCHASERS
USING INSURANCE COMPANY GENERAL ACCOUNT FUNDS TO
EFFECT SUCH PURCHASE SHOULD CONSIDER THE AVAILABILITY
OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 (60
FED. REG. 35925, JULY 12, 1995) ISSUED BY THE DOL. See
"ERISA Considerations" herein and in the Prospectus.
RATINGS............................ It is a condition of their issuance that the Offered
Certificates receive the ratings from each of Moody's
Investors Service, Inc. ("Moody's") and Duff & Phelps
Credit Rating Co. ("DCR" and, together with Moody's,
the "Rating Agencies") set forth on the cover page of
this Prospectus Supplement. The ratings on the Offered
Certificates address the likelihood of the timely
receipt by holders thereof of all distributions of
interest to which they are entitled and, except in the
case of the Class IO
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Certificates, distributions of principal by the Rated
Final Distribution Date set forth on the cover page of
this Prospectus Supplement. 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. A security rating
does not represent any assessment of (i) the
likelihood or frequency of principal prepayments or
default interest on the Mortgage Loans, (ii) the
degree to which such prepayments might differ from
those originally anticipated or (iii) whether and to
what extent Additional Interest, Prepayment Premiums
and Yield Maintenance Charges will be received. 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 IO
Certificates might not fully recover their investment
in the event of rapid prepayments of the Mortgage
Loans (including both voluntary and involuntary
prepayments). Therefore, such security rating
addresses credit risk and not the risk of prepayment.
As described herein, the amounts payable with respect
to the Class IO Certificates consist only of interest.
Each Class IO Component's notional amount upon which
interest is calculated will be permanently reduced by
the allocation of Realized Losses and the distribution
of prepayments, whether voluntary or involuntary, to
or in respect of the corresponding Class of Sequential
Pay Certificates. The rating does not address the
timing or magnitude of reductions of the notional
amounts of the Class IO Components, but only the
obligation to pay interest timely on each such
notional amount as reduced from time to time.
Accordingly, the ratings of the Class IO Certificates
should be evaluated independently from similar ratings
on other types of securities. See "Ratings" herein and
"Risk Factors--Limited Nature of Rating" in the
Prospectus.
LEGAL INVESTMENT................... Upon initial issuance, the Class A, Class B and Class
IO Certificates will constitute "mortgage related
securities" pursuant to the Secondary Mortgage Market
Enhancement Act of 1984, as amended ("SMMEA"). All
other Offered Certificates (the "Non-SMMEA
Certificates") will not constitute "mortgage related
securities" for purposes of SMMEA. As a result, the
appropriate characterization of the Non-SMMEA Certifi-
cates under various legal investment restrictions, and
thus the ability of investors subject to these
restrictions to purchase the Non-SMMEA Certificates of
any Class, may be subject to significant
interpretative uncertainties. In addition,
institutions whose investment activities are subject
to review by federal or state regulatory authorities
may be or may become subject to restrictions on the
investment by such institutions in certain forms of
mortgage backed securities. 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.
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RISK FACTORS
Prospective purchasers of the Offered Certificates of any Class should
consider, among other things, the following risk factors (as well as the risk
factors set forth under "Risk Factors" in the Prospectus) in connection with an
investment therein.
THE CERTIFICATES
LIMITED LIQUIDITY. There is currently no secondary market for the Offered
Certificates. While the Underwriter currently intends to make a secondary market
in the Offered Certificates, it is not under any 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 the Offered Certificates
with liquidity of investment or that it will continue for the life of the
Offered Certificates. Any such secondary market may provide less liquidity to
investors than any comparable market for securities that evidence, for example,
interests solely in single-family mortgage loans. The Certificates will not be
listed on any securities exchange. See "Risk Factors--Limited Liquidity" in the
Prospectus.
CERTAIN YIELD AND MATURITY CONSIDERATIONS. The yield on the Class IO
Certificates and any other Classes of Offered Certificates that are purchased at
a discount or premium will be affected by the rate and timing of principal
payments applied or otherwise resulting in reduction of the Certificate Balance
of such Class of Certificates (or, in the case of the Class IO Certificates, the
notional amount of any Class IO Component), which in turn will be affected by
(i) the rate and timing of principal payments and collections on the Mortgage
Loans, particularly unscheduled payments or collections in the form of voluntary
prepayments of principal or unscheduled recoveries of principal due to defaults,
casualties or condemnations whether before or after the scheduled maturity date
of the related Mortgage Loans, and (ii) the order of priority of distributions
of principal in respect of the Sequential Pay Certificates. The rate and timing
of unscheduled payments and collections of principal on the Mortgage Loans is
impossible to accurately predict and will be affected by a variety of factors,
including, without limitation, the level of prevailing interest rates,
restrictions on voluntary prepayments contained in the Mortgage Notes, the
availability of mortgage credit and other economic, demographic, geographic, tax
and legal factors. In general, however, if prevailing interest rates fall
significantly below the Mortgage Rates on the Mortgage Loans, borrowers under
the Mortgage Loans will have an increased incentive to prepay. As described
herein, the Principal Distribution Amount for each Distribution Date will be
distributable entirely in reduction of the Certificate Balances of the Class
A-1, Class A-2 and Class A-3 Certificates, in that order (unless the aggregate
Certificate Balance of the Subordinate Certificates has been reduced to zero),
in each such case until the related Certificate Balance thereof is reduced to
zero, and will thereafter be distributable in its entirety in respect of each
remaining Class of Sequential Pay Certificates, sequentially in alphabetical
order of Class designation, until the related Certificate Balance of each such
Class is, in turn, reduced to zero. See "Description of the
Certificates--Distributions--Application of the Available Distribution Amount"
herein. Accordingly, the actual rate of principal payments on the Mortgage Loans
may have different effects on the yields of the respective Classes of Offered
Certificates. Any payment in reduction of the Certificate Balance of a Class of
Sequential Pay Certificates will also result in a corresponding reduction in the
notional amount of the related Class IO Component. Thus, the yield on the Class
IO Certificates will be extremely sensitive to the rate and timing of principal
payments on the Mortgage Loans, and the more rapidly the notional amount of any
Class IO Component is reduced, the greater will be the negative effect on the
yield on such Certificates, to the extent such effect is not offset by
distributions of a portion of any applicable Prepayment Premiums or Yield
Maintenance Charges to the holders thereof, as described under "Description of
the Certificates--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges" herein. In addition, the Mortgage Loans generally do not
require the payment of Prepayment Premiums or Yield Maintenance Charges in the
event of involuntary prepayments resulting from casualty or condemnation.
Furthermore, the enforceability, under the laws of a number of states, of
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provisions of the Mortgage Loans providing for the payment of a Prepayment
Premium or Yield Maintenance Charge is unclear. Thus, in the event of a
liquidation of a Mortgage Loan following a default, the liquidation proceeds may
be insufficient to cover any Prepayment Premium or Yield Maintenance Charge,
together with all principal, interest and other sums that may be due and owing
in respect of such Mortgage Loan, and the obligation to pay such Prepayment
Premium or Yield Maintenance Charge under those circumstances may be
unenforceable. No Prepayment Premium or Yield Maintenance Charge will be payable
in connection with any repurchase of a Mortgage Loan for a material breach of
representation or warranty or the failure to deliver material Mortgage Loan
documents, nor will any Prepayment Premium or Yield Maintenance Charge be
payable in connection with the purchase of all the Mortgage Loans and any REO
Properties by the Depositor, the Underwriter, the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder in connection with the
termination of the Trust Fund. See "Description of the Mortgage Pool--Assignment
of the Mortgage Loans; Repurchases" and "--Representations and Warranties;
Repurchases" and "Description of the Certificates--Termination" herein.
ACCORDINGLY, PROSPECTIVE INVESTORS IN THE CLASS IO CERTIFICATES SHOULD CONSIDER
THE ASSOCIATED RISKS, INCLUDING THE RISK THAT A RAPID RATE OF PREPAYMENTS ON THE
MORTGAGE LOANS COULD RESULT IN THE FAILURE OF SUCH INVESTORS TO FULLY RECOUP
THEIR INITIAL INVESTMENTS.
The yield on any Offered Certificate also will be affected by the rate and
timing of losses attributable to defaults on the Mortgage Loans, the severity of
such losses and the extent to which such losses and related expenses are applied
in reduction of the actual or notional principal amount of such Certificate or
otherwise reduce the amount of funds available for distribution to the holder of
such Certificate. To the extent described herein, the Private Certificates are
subordinate in right and time of payment to the Offered Certificates and will
bear shortfalls in collections and losses incurred in respect of the Mortgage
Loans prior to the Offered Certificates; and the Class B, Class C, Class D and
Class E Certificates are subordinate in right and time of payment to the Senior
Certificates and will bear such shortfalls and losses prior to the Senior
Certificates, in reverse alphabetical order of Class designation. The Class A-1,
Class A-2 and Class A-3 Certificates will bear shortfalls in collections and
losses incurred in respect of the Mortgage Loans PRO RATA, in proportion to
their respective outstanding Certificate Balances. However, until the first
Distribution Date after the aggregate of the Certificate Balances of the
Subordinate Certificates has been reduced to zero, (i) the Class A-3
Certificates will receive principal payments only after the Certificate Balances
of the Class A-2 and Class A-1 Certificates have been reduced to zero and (ii)
the Class A-2 Certificates will receive principal payments only after the
Certificate Balance of the Class A-1 Certificates has been reduced to zero. As a
result, the shortfalls and losses allocated to the Class A-1, Class A-2 and
Class A-3 Certificates will, depending on the timing of such shortfalls and
losses, have a greater effect on the Class A-3 Certificates than on the Class
A-1 and Class A-2 Certificates and a greater effect on the Class A-2
Certificates than on the Class A-1 Certificates. Any Realized Loss or Additional
Trust Fund Expenses allocated in reduction of the Certificate Balance of any
Class of Sequential Pay Certificates will result in a corresponding reduction in
the notional amount of the corresponding Class IO Component. See "Description of
the Certificates--Distributions" and "--Subordination; Allocation of Losses and
Certain Expenses" and "Yield and Maturity Considerations" herein and "Yield and
Prepayment Considerations" in the Prospectus.
The Pass-Through Rate applicable to each Class IO Component will be variable
and will be equal to the Weighted Average Net Mortgage Rate from time to time
minus the Pass-Through Rate on the Class of Sequential Pay Certificates related
to such Class IO Component. Accordingly, the Pass-Through Rate applicable to
each such Class IO Component and, correspondingly, the yield on the Class IO
Certificates will be sensitive to changes in the relative composition of the
Mortgage Pool as a result of scheduled amortization, voluntary prepayments and
liquidations. See "Description of the Certificates--Distributions" and
"--Subordination; Allocation of Losses and Certain Expenses" and "Yield and
Maturity Considerations" herein and "Yield and Prepayment Considerations" in the
Prospectus.
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POTENTIAL CONFLICTS OF INTEREST. Subject to certain conditions described
herein, the Pooling and Servicing Agreement will permit the holder (or holders)
of the majority of the Voting Rights (as defined herein) allocated to the
Controlling Class of Sequential Pay Certificates (that is, the Class of
Sequential Pay Certificates that bears the latest alphabetical Class designation
and that has a Certificate Balance that is greater than 25% of its original
Certificate Balance (or, if no Class of Sequential Pay Certificates has a
Certificate Balance that is greater than 25% of its original Certificate
Balance, the then outstanding Class of Sequential Pay Certificates with the
latest alphabetical Class designation)) to replace the Special Servicer or any
successor thereafter appointed and to select the Controlling Class
Representative from whom the Special Servicer will seek advice and approval and
take direction under certain circumstances, as described herein. The replacement
Special Servicer may be a Certificateholder of such Class or an affiliate of any
such Certificateholder. As described herein, any such Special Servicer will have
considerable latitude in determining to liquidate or modify defaulted Mortgage
Loans. In addition, the Special Servicer will perform certain servicing
functions with respect to the Mortgage Loans, pursuant to the Pooling and
Servicing Agreement. See "Servicing of the Mortgage Loans--Modifications,
Waivers and Amendments" herein. It is contemplated that the initial Special
Servicer or an affiliate thereof may purchase some or all of the Certificates of
one or more Classes of Private Certificates, including the initial Controlling
Class of Sequential Pay Certificates, and the Special Servicer or an affiliate
thereof is not prohibited from purchasing the Certificates of any other Class.
Although the Special Servicer will be obligated to observe the terms of the
Pooling and Servicing Agreement and will be governed by the servicing standard
described herein, it may, especially if it is itself a Certificateholder, have
interests when dealing with defaulted Mortgage Loans that are in conflict with
those of holders of Offered Certificates. For instance, a Special Servicer that
is a Certificateholder could seek to mitigate the potential for loss to its
Class from a troubled Mortgage Loan by deferring enforcement in the hope of
maximizing future proceeds. However, such action could result in less proceeds
to the Trust Fund than would have been realized if earlier action had been
taken. In connection with the servicing of the Specially Serviced Mortgage
Loans, the Special Servicer may, at the direction of the Controlling Class
Representative, 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. It is possible that the Controlling Class Representative
may direct the Special Servicer to take actions which conflict with the
interests of the holders of certain Classes of Offered Certificates.
BOOK-ENTRY REGISTRATION. The Offered Certificates of each Class thereof
will be initially represented by one or more Certificates registered in the name
of a nominee for DTC. As a result, unless and until corresponding Definitive
Offered Certificates are issued, the Certificate Owners with respect to each
Class of Offered Certificates will be able to exercise the rights of
Certificateholders only indirectly through DTC and its Participants. In
addition, the access of Certificate Owners to information regarding the Offered
Certificates in which they hold interests may be limited. Conveyance of notices
and other communications by DTC to Participants, and directly and indirectly
through the Participants to 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. Furthermore, as described herein, Certificate Owners
may suffer delays in the receipt of payments on the Offered Certificates when in
the form of global certificates, and the ability of any Certificate Owner to
pledge or otherwise take actions with respect to its interest in the Offered
Certificates may be limited due to the lack of a physical certificate evidencing
such interest. See "Description of the Certificates--Book-Entry Registration"
herein and "Description of the Securities--Book-Entry Registration" in the
Prospectus.
THE MORTGAGE LOANS
RISKS OF LENDING ON INCOME-PRODUCING PROPERTIES. The Mortgaged Properties
consist entirely of income-producing real estate. Lending on the security of
income-producing real estate is generally viewed as exposing a lender to a
greater risk of loss than lending on the security of single-family residences.
Lending on the security of income-producing property typically involves larger
loans than single-family
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lending. In addition, and unlike loans made on the security of single family
residences, repayment of loans made on the security of income-producing real
property depends upon the ability of the related real estate project (i) to
generate income sufficient to pay operating expenses and leasing commissions, to
make necessary repairs, tenant improvements and capital improvements and to pay
debt service and (ii) in the case of loans that do not fully amortize over their
terms, to retain sufficient value to permit the borrower to pay off the loan at
maturity by sale or refinancing. A number of factors, many beyond the control of
the property owner, can affect the ability of an income-producing real estate
project to generate sufficient net operating income to pay debt service and/or
to maintain its value. Among these factors are economic conditions generally and
in the area of the project, the age, quality and design of the project and the
degree to which it competes with other projects in the area, changes or
continued weakness in specific industry segments, increases in operating costs,
the willingness and ability of the owner to provide capable property management
and maintenance and, in the case of Mortgaged Properties that are retail,
industrial/ warehouse or office properties, the degree to which the project's
revenue is dependent upon a single tenant or user, a small group of tenants,
tenants concentrated in a particular business or industry and the competition to
any such tenants. If leases are not renewed or replaced, if tenants default
and/or if rental rates fall and/or if operating expenses increase, the
borrower's ability to repay the loan may be impaired and the resale value of the
property, which is substantially dependent upon the property's ability to
generate income, may decline. In addition, there are other factors, including
changes in zoning or tax laws, the availability of credit for refinancing, and
changes in interest rate levels that may adversely affect the value of a project
(and thus the borrower's ability to sell or refinance) without necessarily
affecting the ability to generate current income.
In addition, particular types of income properties are exposed to particular
risks. For instance, office properties may require their owners to expend
significant amounts of cash to pay for general capital improvements, tenant
improvements and costs of re-leasing space. Also, office properties that are not
equipped to accommodate the needs of modern businesses may become functionally
obsolete and thus non-competitive. Multifamily projects are part of a market
that, in general, is characterized by low barriers to entry. Thus, a particular
apartment market with historically low vacancies could experience substantial
new construction, and a resultant oversupply of units, in a relatively short
period of time. Since multifamily apartment units are typically leased on a
short-term basis, the tenants who reside in a particular project within such a
market may easily move to alternative projects with more desirable amenities or
locations. Shopping centers, in general, are affected by the health of the
retail industry, which is currently undergoing a consolidation and is
experiencing changes due to the growing market share of "off-price" retailing,
and a particular shopping center may be adversely affected by the bankruptcy or
decline in drawing power of an anchor tenant, a shift in consumer demand due to
demographic changes (for example, population decreases or changes in average age
or income) and/or changes in consumer preference (for example, to discount
retailers). Industrial properties may be adversely affected by reduced demand
for industrial space occasioned by a decline in a particular industry segment
(for example, a decline in defense spending), and a particular industrial
property that suited the needs of its original tenant may be difficult to re-let
to another tenant or may become functionally obsolete relative to newer
properties.
In the case of retail properties, the failure of an anchor tenant to renew
its lease, the termination of an anchor tenant's lease, the bankruptcy or
economic decline of an anchor tenant, or the cessation of the business of an
anchor at its store, notwithstanding its continued payment of rent after "going
dark", can have a particularly negative effect on the economic performance of a
shopping center property given the importance of anchor tenants in attracting
traffic to other stores within the same shopping center. In addition, the
failure of one or more major tenants, such as an anchor tenant, to operate from
its premises may entitle other tenants to rent reductions or the right to
terminate their leases.
Mortgage Loans secured by liens on residential health care facilities pose
risks not associated with loans secured by liens on other types of
income-producing real estate. Providers of long-term nursing care, assisted
living and other medical services are subject to federal and state laws that
relate to the adequacy of
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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
borrower to maintain or renew any required license or regulatory approval could
prevent it from continuing operations at a Mortgaged 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. Furthermore, in the event of foreclosure, there can be
no assurance that the Trustee or any other purchaser at 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 or that the related Mortgaged Property would be
adaptable to other uses. To the extent any nursing home receives a significant
portion of its revenues from government reimbursement programs, primarily
Medicaid and Medicare, such revenue may be 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 in the United States Congress that could
materially change or curtail 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. If not, net operating income of the Mortgaged Properties that
receive substantial revenues from those sources, and consequently the ability of
the related borrowers to meet their Mortgage Loan obligations, could be
adversely affected. Under applicable federal and state laws and regulations,
including those that govern Medicare and Medicaid programs, only the provider
who actually furnished the related medical goods and services may sue for or
enforce its rights to reimbursement. Accordingly, in the event of foreclosure,
none of the Trustee, the Master 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.
Various factors, including location, quality and franchise affiliation (or
lack thereof), affect the economic viability of a hotel. Adverse economic
conditions, either local, regional or national, may limit the amount that may be
charged for a room and may result in a reduction in occupancy levels. The
construction of competing hotels or motels 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. The successful operation of a hotel with a
franchise affiliation may depend in part upon the strength of the franchisor,
the public perception of the franchise service mark and the continued existence
of any franchise license agreement. The transferability of a franchise license
agreement may be restricted, and a lender or other person that acquires title to
a hotel property as a result of foreclosure may be unable to succeed to the
borrower's rights under any franchise license agreement. Furthermore, the
ability of a hotel to attract customers, and some of such hotel's revenues, may
depend in large part on its having a liquor license. Such a license may not be
transferable (for example, in connection with a foreclosure). See "Risk
Factors--Certain Mortgage Loans and Mortgaged Property; Obligor Default" in the
Prospectus.
RISKS PARTICULAR TO RETAIL PROPERTIES. In addition to risks generally
associated with income-producing real estate, retail properties are also
affected significantly by adverse changes in consumer spending patterns, local
competitive conditions (such as the supply of retail space or the existence or
construction of new competitive shopping centers or shopping malls), alternative
forms of retailing (such as direct mail and video shopping networks which reduce
the need for retail space by retail companies), the quality and philosophy of
management, the attractiveness of the properties to tenants and their customers
or clients, the public perception of the safety of customers at shopping malls
and shopping centers, and the need to make major repairs or improvements to
satisfy the needs of major tenants.
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Retail properties also are directly affected by the strength of retail sales
generally. The retailing industry is currently undergoing consolidation due to
many factors, including growth in discount retailing and mail order
merchandisers. If the sales by tenants in the Mortgaged Properties that contain
retail space were to decline, the rents that are based on a percentage of
revenues may decline and tenants may be unable to pay the fixed portion of their
rents or other occupancy costs. Retail properties may be adversely affected if a
significant tenant ceases operations at such locations (which may occur on
account of a voluntary decision not to renew a lease, bankruptcy or insolvency
of such tenant, such tenant's general cessation of business activities or for
other reasons), notwithstanding its continued payment of rent after "going
dark". Significant tenants at a retail property play an important part in
generating customer traffic and making a retail property a desirable location
for other tenants at such property. In addition, certain tenants at retail
properties may be entitled to terminate their leases if an anchor tenant fails
to renew or terminates its lease, becomes the subject of a bankruptcy proceeding
or ceases operations at such property. In such cases, there can be no assurance
that any such anchor tenants will continue to occupy space in the related
shopping centers. For several Mortgage Loans, the land and improvements utilized
by an anchor or other tenant are not subject to the related Mortgage.
RISKS PARTICULAR TO MULTIFAMILY PROPERTIES. Adverse economic conditions,
either local, regional or national, may limit the amount of rent that can be
charged for rental units, may adversely affect tenants' ability to pay rent and
may result in a reduction in timely rent payments or a reduction in occupancy
levels without a corresponding decrease in expenses. Occupancy and rent levels
may also be affected by construction of additional housing units, local military
base closings, company relocations and closings and national and local politics,
including current or future rent stabilization and rent control laws and
agreements. Multifamily apartment units are typically leased on a short-term
basis, and consequently, the occupancy rate of a multifamily rental property may
be subject to rapid decline, including for some of the foregoing reasons. In
addition, the level of mortgage interest rates may encourage tenants in
multifamily rental properties to purchase single-family housing rather than
continue to lease housing or the characteristics of the neighborhood in which a
multifamily rental property is located may change over time or in relation to
newer developments. Further, the cost of operating a multifamily rental property
may increase, including the cost of utilities and the costs of required capital
expenditures. Also, multifamily rental properties may be subject to rent control
laws which could impact the future cash flows of such properties.
RISKS PARTICULAR TO OFFICE PROPERTIES. In addition to risks generally
associated with income-producing real estate, mortgage loans secured by office
properties are also affected significantly by adverse changes in population and
employment growth (which generally creates demand for office space), local
competitive conditions (such as the supply of office space or the existence or
construction of new competitive office buildings), the quality and philosophy of
management, the attractiveness of the properties to tenants and their customers
or clients, the attractiveness of the surrounding neighborhood, and the need to
make major repairs or improvements to satisfy the needs of major tenants. Office
properties that are not equipped to accommodate the needs of modern business may
become functionally obsolete and thus noncompetitive. In addition, office
properties may be adversely affected by an economic decline in the businesses
operated by their tenants. Such decline may result in one or more significant
tenants ceasing operations at such locations (which may occur on account of a
voluntary decision not to renew a lease, bankruptcy or insolvency of such
tenants, such tenants' general cessation of business activities or for other
reasons). The risk of such an economic decline 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.
PROPERTY LOCATION AND CONDITION. The location and construction quality of a
particular building may affect the occupancy level, the rents that may be
charged and/or the performance of the occupants' businesses. The characteristics
of an area or neighborhood in which a Mortgaged Property is located may change
over time or in relation to competing facilities. The effects of poor
construction quality will increase over time in the form of increased
maintenance and capital improvements. Even good construction will deteriorate
over time if the management company does not schedule and perform adequate
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maintenance in a timely fashion. The borrowers are generally required to keep
the Mortgaged Properties in good repair. In addition, all the Mortgaged
Properties have been inspected within the last 18 months and, as of the date of
such inspection, show no material maintenance deficiencies. Although the Master
Servicer or the Special Servicer, as applicable, will be required to inspect the
Mortgaged Properties at least once every year, there can be no assurance that
such inspections will detect damage or prevent a default. See "Description of
the Mortgage Pool--Assessments of Property Condition" herein.
COMPETITION. Other comparable multifamily/commercial properties located in
the same areas compete with the Mortgaged Properties to attract residents,
retail sellers, tenants, customers and/or guests. The leasing of real estate is
highly competitive. The principal means of competition are price, location and
the nature and condition of the facility to be leased. A borrower competes with
all lessors and developers of comparable types of real estate in the area in
which the related Mortgaged Property is located. Such lessors or developers
could have lower rents, lower operating costs, more favorable locations or
better facilities. While a borrower may renovate, refurbish or expand the
related Mortgaged Property to maintain it and remain competitive, such
renovation, refurbishment or expansion may itself entail significant risks.
Increased competition could adversely affect income from and the market value of
the Mortgaged Properties. In addition, the business conducted at each Mortgaged
Property may face competition from other industries and industry segments.
CHANGES IN LAWS. Increases in income, service or other taxes (other than
real estate taxes) in respect of a Mortgaged Property generally are not passed
through to tenants under leases and may adversely affect the related borrower's
funds from operations. Similarly, changes in laws increasing the potential
liability for environmental conditions existing on properties or increasing the
restrictions on discharges or other conditions may result in significant
unanticipated expenditures, which could adversely affect the borrowers' funds
from operations. See "--Environmental Law Considerations" herein.
UNINSURED LOSS; SUFFICIENCY OF INSURANCE. All the borrowers are required to
maintain various types of casualty insurance with respect to the Mortgaged
Properties. See "Servicing of the Mortgage Loans-- Maintenance of Insurance"
herein. Certain types of losses, however, may be either uninsurable or not
economically insurable, such as losses due to riots or acts of war or
earthquakes. Should an uninsured loss occur, a borrower could lose both its
investment in and its anticipated profits and cash flow from its Mortgaged
Property, which would adversely affect the borrower's ability to make payments
under its Mortgage Loan. In addition, there is a possibility of casualty losses
with respect to the Mortgaged Property for which Insurance Proceeds may not be
adequate. There can be no assurance that any loss incurred will not exceed the
limits of policies obtained. In addition, although the Mortgage Loan Seller
required that probable or bounded maximum loss studies be conducted for all of
the 21 Mortgaged Properties located in the State of California, earthquake
insurance is generally not required to be maintained by a borrower, even in
respect of Mortgaged Properties located in California. See "Description of the
Mortgage Pool-- Certain Terms and Conditions of the Mortgage Loans--Earthquake
Analyses" herein.
GEOGRAPHIC CONCENTRATION. Repayments by the borrowers and the market value
of the Mortgaged Properties could be affected by economic conditions in regions
where the Mortgaged Properties are located, 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 particular to the locales of the respective Mortgaged
Properties.
The Mortgaged Properties are located in 36 states. However, 37 of the
Mortgaged Properties, representing security for 10.2% of the Initial Pool
Balance, are located in Texas; 31 of the Mortgaged Properties, representing
security for 9.4% of the Initial Pool Balance are located in Florida; 19 of the
Mortgaged Properties, representing security for 8.4% of the Initial Pool
Balance, are located in New York; 21 of the Mortgaged Properties, representing
security for 8.0% of the Initial Pool Balance, are located in California; seven
of the Mortgaged Properties, representing security for 5.7% of the Initial Pool
Balance
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are located in Maryland; and nine of the Mortgaged Properties, representing
security for 5.7% of the Initial Pool Balance, are located in Pennsylvania.
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. To the extent that a decline occurs in general economic or other
relevant conditions in states or regions in which Mortgaged Properties securing
significant portions of the aggregate unpaid principal balance of the Mortgage
Pool are located, resulting in a decrease in the consumer demand for commercial
property and/or housing in the region, the income from and market value of such
Mortgaged Properties may be adversely affected.
HIGHER THAN AVERAGE BALANCES. Certain groups of Cross-Collateralized
Mortgage Loans (as defined herein) and several of the individual Mortgage Loans
have Cut-off Date Balances that are substantially higher than the average
Cut-off Date Balance. See Annex A hereto. In mortgage pools with concentrations
of loans having larger-than-average balances, adverse circumstances relating to
an individual loan or group of cross-collateralized loans (such as a default or
the occurrence of a material casualty event with respect to a related mortgaged
property) having a larger-than-average balance can result in losses that are
more severe, relative to the size of the pool, than would be the case if the
aggregate balance of such pool were more evenly distributed.
RISK OF CHANGES IN CONCENTRATIONS. If and as payments in respect of
principal (including any voluntary principal prepayments and the principal
portion of any Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds) are received with respect to the Mortgage Loans, the remaining
Mortgage Loans as a group may exhibit increased concentration with respect to
the type of properties, property characteristics, number of borrowers and
affiliated borrowers and geographic location. Because principal of the
Sequential Pay Certificates is payable in sequential order, such Classes that
have a lower sequential priority are relatively more likely to be exposed to any
risks associated with changes in concentrations of loan or property
characteristics.
ZONING COMPLIANCE. Due to, among other reasons, 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, 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 and/or structures.
Such changes may limit the ability of the borrower to rebuild the premises "as
is" in the event of a substantial casualty loss with respect thereto.
NONRECOURSE MORTGAGE LOANS. The Mortgage Loans are not insured or
guaranteed by any governmental entity or private mortgage insurer. The Depositor
has not undertaken any evaluation of the significance of the recourse provisions
of Mortgage Loans that may permit recourse against the related borrower or
another person in the event of a default. Accordingly, investors should consider
all of the Mortgage Loans to be nonrecourse loans as to which recourse in the
case of default will be limited to the related Mortgaged Property.
ENVIRONMENTAL LAW CONSIDERATIONS. Contamination of real property may give
rise to a lien on that property to assure payment of the cost of clean-up or, in
certain circumstances, may result in liability to the lender for that cost. Such
contamination may also reduce the value of a property. A "Phase I" environmental
site assessment was performed at each of the Mortgaged Properties. See
"Description of the Mortgage Pool--Assessments of Property
Condition--Environmental Assessments" herein.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a Mortgaged Property prior to taking
possession of the property through foreclosure or otherwise or assuming control
of its operation. Such requirement effectively precludes enforcement of the
security for the related Mortgage 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
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will become liable for a material adverse environmental condition at the
Mortgaged Property. However, there can be no assurance that the requirements of
the Pooling and Servicing Agreement will effectively insulate the Trust Fund
from potential liability for a materially adverse environmental condition at any
Mortgaged Property. See "Servicing of the Mortgage Loans--Realization Upon
Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO Properties"
herein and "Risk Factors--Environmental Risks" and "Certain Legal Aspects of
Mortgage Loans--Environmental Matters" in the Prospectus.
BALLOON PAYMENTS AND ANTICIPATED REPAYMENT DATES. One hundred seventy-seven
(177) of the Mortgage Loans, representing 62.3% of the Initial Pool Balance,
will have substantial payments (that is, Balloon Payments) due at their
respective stated maturities, in each case unless the Mortgage Loan is
previously prepaid. In addition, 61 of the Mortgage Loans, representing 30.1% of
the Initial Pool Balance, are ARD Loans which will have substantial scheduled
principal balances as of their respective Anticipated Repayment Dates, in each
case unless the Mortgage Loan is previously prepaid. One hundred sixteen (116)
of the Balloon Loans and 36 of the ARD Loans, representing in the aggregate
54.1% of the Initial Pool Balance, will have Balloon Payments due or Anticipated
Repayment Dates scheduled, as the case may be, during the period from July 2007
through January 2008. Mortgage Loans with 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 an ARD Loan on the related 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 a number of factors occurring at the time of
attempted sale or refinancing, including the level of available mortgage rates,
the fair market value of the property, the borrower's equity in the related
property, the financial condition of the borrower and operating history of the
property, tax laws, prevailing economic conditions and the availability of
credit for multifamily or commercial properties, as the case may be. See
"Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans" herein.
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling and
Servicing Agreement permits the Special Servicer to extend and modify Mortgage
Loans that are in material default or as to which a payment default (including
the failure to make a Balloon Payment) is imminent; subject, however, to the
limitations described under "Servicing of the Mortgage Loans--Modifications,
Waivers and Amendments" and "--The Controlling Class Representative" herein.
There can be no assurance, however, that any such extension or modification will
increase the present value of recoveries in a given case. Any delay in
collection of a Balloon Payment that would otherwise be distributable in respect
of a Class of Offered Certificates, whether such delay is due to borrower
default or to modification of the related Mortgage Loan, will likely extend the
weighted average life of such Class of Offered Certificates. See "Yield and
Maturity Considerations" herein and in the Prospectus.
RISK OF SUBORDINATED DEBT. To the Depositor's knowledge, only one of the
Mortgaged Properties, representing security for a Mortgage Loan with a Cut-off
Date Balance of $16,166,316, is encumbered by $1,674,675 of subordinated debt.
The existence of subordinated debt encumbering any Mortgaged Property may
increase the difficulty of refinancing the related Mortgage Loan at maturity and
the possibility that reduced cash flow could result in deferred maintenance.
Also, in the event that the holder of the subordinated debt has filed for
bankruptcy or been placed in involuntary receivership, foreclosing on the
Mortgaged Property could be delayed. See "Certain Legal Aspects of Mortgage
Loans--Secondary Financing; Due-On-Encumbrance Provisions" in the Prospectus. In
addition, in several cases, ownership interests in certain borrowers under the
Mortgage Loans have been pledged to secure debt of the related principals.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 261 Mortgage Loans, with an Initial Pool
Balance of $1,775,167,073, which equals the aggregate Cut-off Date Balance of
such Mortgage Loans. The Cut-off Date Balances of the Mortgage Loans range from
$613,738 to $62,467,513, and the Mortgage Loans have an average Cut-off Date
Balance of $6,801,406. FOR PURPOSES OF CALCULATIONS HEREIN, AS SHOWN ON ANNEX A
HERETO, EACH OF THE MORTGAGE LOANS IS DEEMED TO BE SECURED BY ONE MORTGAGED
PROPERTY, WHETHER OR NOT SUCH MORTGAGED PROPERTY IS COMPRISED OF MORE THAN ONE
PARCEL. IN THE CASE OF MORTGAGE LOANS SECURED BY MULTIPLE MORTGAGED PROPERTIES
LOCATED IN MORE THAN ONE STATE, SUCH MORTGAGED PROPERTIES ARE, FOR PURPOSES OF
CALCULATIONS HEREIN, DEEMED TO BE LOCATED ONLY IN THE STATE OF THE MORTGAGED
PROPERTY OR PROPERTIES HAVING THE HIGHEST APPRAISED VALUE. ALL NUMERICAL
INFORMATION PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE LOANS IS PROVIDED ON AN
APPROXIMATE BASIS. ALL WEIGHTED AVERAGE INFORMATION PROVIDED HEREIN WITH RESPECT
TO THE MORTGAGE LOANS REFLECTS WEIGHTING BY RELATED CUT-OFF DATE BALANCE. ALL
PERCENTAGES OF THE MORTGAGE POOL, OR ANY SPECIFIED SUB-GROUP THEREOF, REFERRED
TO HEREIN WITHOUT FURTHER DESCRIPTION ARE APPROXIMATE PERCENTAGES BY AGGREGATE
CUT-OFF DATE BALANCE.
Each of the Mortgage Loans is evidenced by a promissory note (each a
"Mortgage Note") and secured by a mortgage, deed of trust or other similar
security instrument (a "Mortgage") that creates a first mortgage lien on the
related borrower's fee simple estate (or, in the case of 12 Mortgage Loans,
representing 4.3% of the Initial Pool Balance, on the related borrower's
leasehold estate) in an income-producing real property (each, a "Mortgaged
Property").
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Initial Pool Balance represented by such Mortgage Loans, that
are secured by Mortgaged Properties operated for each indicated purpose:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGE INITIAL POOL
PROPERTY TYPE LOANS BALANCE
- - --------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Retail......................................................... 103 44.8%
Multifamily.................................................... 75 24.8%
Office......................................................... 50 16.3%
Hospitality.................................................... 9 6.3%
Industrial/Warehouse........................................... 16 5.5%
Health Care.................................................... 3 1.3%
Self Storage................................................... 3 0.6%
Mobile Home Park............................................... 1 0.2%
Parking Garage................................................. 1 0.1%
</TABLE>
The Mortgaged Properties are located throughout 36 states. Set forth below
are the number of Mortgage Loans, and the approximate percentage of the Initial
Pool Balance represented by such Mortgage Loans, that are secured by Mortgaged
Properties located in the states with concentrations of Mortgage Loans above
5.0% (based on Cut-off Date Balance):
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGE INITIAL POOL
STATE LOANS BALANCE
- - --------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Texas.......................................................... 37 10.2%
Florida........................................................ 31 9.4%
New York....................................................... 19 8.4%
California..................................................... 21 8.0%
Maryland....................................................... 7 5.7%
Pennsylvania................................................... 9 5.7%
</TABLE>
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No Mortgage Loan or group of Mortgage Loans to one borrower or group of
affiliated borrowers exceeds 3.52% of the Initial Pool Balance. See
"--Additional Mortgage Loan Information."
In the case of one Mortgage Loan, which represents 3.52% of the Initial Pool
Balance, an affiliate of the Depositor and the Underwriter controls a general
partner of the related borrower. In addition, an affiliate of the Depositor and
the Underwriter is providing $24,500,000 of mezzanine financing to principals of
the Mortgage Loan borrower. Upon a default under the mezzanine loan, the
mezzanine lender could become the managing general partner of the Mortgage Loan
borrower.
MORTGAGE LOAN HISTORY
The Mortgage Loans will be acquired by the Depositor from the Mortgage Loan
Seller, which either originated each Mortgage Loan or acquired it in connection
with its commercial and multifamily mortgage loan conduit program. All of the
Mortgage Loans were originated in 1997 or 1998.
None of the Mortgage Loans was 30 days or more delinquent in respect of any
scheduled payment of principal and interest as of the Cut-off Date, and no
Mortgage Loan has been more than 30 days delinquent in respect of any scheduled
payment of principal and interest during the 12 months preceding the Cut-off
Date.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
MORTGAGE RATES; CALCULATIONS OF INTEREST. All of the Mortgage Loans bear
interest at Mortgage Rates that will remain fixed for their remaining terms,
except that, after their respective Anticipated Repayment Dates, the ARD Loans
will accrue interest at a higher rate per annum as described below. As used
herein, the term "Mortgage Rate" does not include the incremental increase in
the rate at which interest may accrue on any ARD Loan after its Anticipated
Repayment Date. See "--ARD Loans" below. Sixty-six (66) of the Mortgage Loans,
representing 23.1% of the Initial Pool Balance, accrue interest on the basis of
a 360-day year consisting of twelve 30-day months (a "30/360 basis"), and 195 of
the Mortgage Loans, representing 76.9% of the Initial Pool Balance, accrue
interest on the basis of the actual number of days elapsed over a 360 day year
(an "Actual/360 basis").
DUE DATES. All of the Mortgage Loans have Due Dates (that is, the dates
upon which the related Monthly Payments first become due) that occur on the
first day of each month.
ARD LOANS. Sixty-one (61) of the Mortgage Loans (the "ARD Loans"),
representing 30.1% of the Initial Pool Balance, provide for changes in their
payments and their accrual of interest if, in each such case, the particular
Mortgage Loan is not paid in full by a specified date (the "Anticipated
Repayment Date"). Each ARD Loan will bear interest at its related Mortgage Rate
until its Anticipated Repayment Date. Commencing on the respective Anticipated
Repayment Date, each ARD Loan will bear interest at a fixed per annum rate (the
"Revised Rate") generally equal to the greater of the related Mortgage Rate plus
two or more percentage points and the then current applicable treasury rate plus
two or more percentage points. The interest accrued at the excess of the Revised
Rate over the Mortgage Rate (such interest, the "Additional Interest"; and such
difference in rate, the "Additional Interest Rate") will be deferred until the
principal of such Mortgage Loan is paid in full and, in some cases, may itself
accrue interest at the Revised Rate. Non-payment of such Additional Interest
will not constitute a default under such Mortgage Loan prior to the related
maturity date. Prior to the Anticipated Repayment Date, borrowers under ARD
Loans will be required to enter into a lockbox agreement whereby all revenue
will be deposited directly into a designated account (the "Lockbox Account")
controlled by the Master Servicer. From and after the Anticipated Repayment
Date, in addition to paying interest (at the Mortgage Rate) and principal (based
on the amortization schedule), the related borrower generally will be required
to apply all remaining monthly cash flow from the related Mortgaged Property, if
any, after paying all permitted operating expenses and capital expenditures, to
pay principal on the Mortgage Loan until the Mortgage Loan is paid in full. As
described below, ARD Loans generally permit the related borrower to
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prepay the Mortgage Loan without payment of a Prepayment Premium or Yield
Maintenance Charge beginning three to six months prior to the Anticipated
Repayment Date. The Anticipated Repayment Date for each ARD Loan is listed in
Annex A.
AMORTIZATION OF PRINCIPAL. One hundred seventy-seven (177) of the Mortgage
Loans (the "Balloon Loans"), representing 62.3% of the Initial Pool Balance,
provide for Monthly Payments based on amortization schedules significantly
longer than their respective terms to maturity. Sixty-one (61) of the Mortgage
Loans, representing 30.1% of the Initial Pool Balance, are ARD Loans.
Twenty-three (23) of the Mortgage Loans, representing 7.6% of the Initial Pool
Balance, are self-amortizing. See "Risk Factors-- Balloon Payments and
Anticipated Repayment Dates" herein.
PREPAYMENT PROVISIONS. As of the Cut-off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayments in one of the following
ways: (i) 259 Mortgage Loans, representing 98.0% of the Initial Pool Balance,
currently prohibit voluntary prepayments of principal for a period (a "Lockout
Period") ending on a date specified in the related Mortgage Note and thereafter,
in general, require that prepayments made for most of their respective terms to
maturity be accompanied by a Prepayment Premium and/or Yield Maintenance Charge
in excess of the amount prepaid and, in some cases, with respect to Defeasance
Loans (as defined below), require the pledging of Defeasance Collateral (also as
defined below); and (ii) two Mortgage Loans, representing 2.0% of the Initial
Pool Balance, currently permit voluntary principal payments provided that the
prepayment is accompanied by a Yield Maintenance Charge or a Prepayment Premium
for most of their respective terms to maturity. With respect to the 69 Mortgage
Loans which impose Yield Maintenance Charges, 68 of such Mortgage Loans
(representing 21.6% of the Initial Pool Balance) provide for the calculation of
the Yield Maintenance Charge using a discount rate equal to the applicable
Treasury Rate (as set forth in the related Mortgage Note), and one of such
Mortgage Loans (representing 0.6% of the Initial Pool Balance) provides for the
calculation of the Yield Maintenance Charge using a discount rate equal to the
applicable Treasury Rate plus 0.35%. See "-- Additional Mortgage Loan
Information" herein. Prepayment Premiums and Yield Maintenance Charges, if and
to the extent collected, will be distributed to the holders of the Offered
Certificates as described herein under "Description of the
Certificates--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges". Neither the Depositor nor the Underwriter makes any
representation as to the enforceability of the provisions of any Mortgage Note
requiring the payment of a Prepayment Premium or Yield Maintenance Charge, or of
the collectability of any Prepayment Premium or Yield Maintenance Charge.
One hundred seventy-nine (179) of the Mortgage Loans (the "Defeasance
Loans"), representing 71.5% of the Initial Pool Balance, provide that the holder
of the Mortgage, following notice from the borrower that the borrower intends to
prepay the Mortgage Loan as permitted by the related Mortgage Note, may require
the borrower, in lieu of prepayment, to pledge to such holder "Defeasance
Collateral" and thereupon obtain a release of the Mortgaged Property from the
lien of the related Mortgage. In general, "Defeasance Collateral" is required to
consist of direct, non-callable United States Treasury obligations that provide
for payments prior, but as close as possible, to all successive Due Dates
(including the scheduled maturity date), with each such payment being equal to
or greater than (with any excess to be returned to the borrower) the Monthly
Payment (including, in the case of the scheduled maturity date, any Balloon
Payment) due on such date. The Pooling and Servicing Agreement will require the
Master Servicer or the Special Servicer to require each borrower under a
Defeasance Loan that proposes to prepay its Mortgage Loan to pledge instead
Defeasance Collateral, but in each case subject to certain conditions, including
(i) that the defeasance would not have an adverse effect on the REMIC status of
any of REMIC I, REMIC II or REMIC III (accordingly, no defeasance would be
required prior to the second anniversary of the Closing Date) and (ii) receipt
of confirmation from each Rating Agency that acceptance of a pledge of the
Defeasance Collateral in lieu of a full prepayment will not result in a
qualification, downgrade or withdrawal of any rating then assigned by it to any
Class of Certificates.
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Neither the Master Servicer nor the Special Servicer will be permitted to
waive or modify the terms of any Mortgage Loan prohibiting voluntary prepayments
during a Lockout Period or requiring the payment of a Prepayment Premium or
Yield Maintenance Charge except under the circumstances described in "Servicing
of the Mortgage Loans--Modifications, Waivers and Amendments" herein.
SECONDARY FINANCING. To the Depositor's knowledge, only one of the
Mortgaged Properties, representing security for a Mortgage Loan with a Cut-off
Date Balance of $16,166,316, is encumbered by subordinated debt in the amount of
$1,674,675. All of the Mortgage Loans either prohibit the related borrower from
encumbering the Mortgaged Property with additional secured debt or require the
lender's consent prior to so encumbering such property. See "--Due-on-Sale and
Due-on-Encumbrance Provisions" below.
NONRECOURSE OBLIGATIONS. The Mortgage Loans are generally nonrecourse
obligations of the related borrowers and, upon any such borrower's default in
the payment of any amount due under the related Mortgage Loan, the holder
thereof may look only to the related Mortgaged Property for satisfaction of the
borrower's obligations. In addition, in those cases where recourse to a borrower
or guarantor is purportedly permitted, the Depositor has not undertaken an
evaluation of the financial condition of any such person, and prospective
investors should thus consider all of the Mortgage Loans to be nonrecourse.
"DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" PROVISIONS. All of the Mortgages
contain "due-on-sale" and "due-on-encumbrance" clauses that, in general, permit
the holder of the Mortgage to accelerate the maturity of the related Mortgage
Loan if the borrower sells or otherwise transfers or encumbers the related
Mortgaged Property or prohibit the borrower from doing so without the consent of
the holder of the Mortgage. However, subject to the satisfaction of certain
specified conditions, certain of the Mortgage Loans permit one or more transfers
of the related Mortgaged Property. As provided in the Pooling and Servicing
Agreement, the Master Servicer or the Special Servicer, on behalf of the Trust
Fund, will determine, in a manner consistent with the Servicing Standard (as
defined herein) 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 "Risk Factors--Enforceability" in the
Prospectus.
CROSS-DEFAULT AND CROSS-COLLATERALIZATION OF CERTAIN MORTGAGE LOANS. Eleven
separate sets of Mortgage Loans (the "Cross-Collateralized Mortgage Loans"),
representing 1.8%, 1.2%, 1.1%, 0.8%, 0.8%, 0.6%, 0.3%, 0.3%, 0.3%, 0.1% and
0.1%, respectively, of the Initial Pool Balance, are, solely as among the
Mortgage Loans in each such particular set, cross-collateralized and
cross-defaulted with each other as indicated in Annex A. No Mortgage Loans are
cross-collateralized or cross-defaulted with any loans which are not included in
the Mortgage Pool. The Master Servicer or the Special Servicer, as the case may
be, will determine whether to enforce the cross-default and
cross-collateralization rights upon a default with respect to any of such
Cross-Collateralized Mortgage Loans. The Certificateholders will not have any
right to participate in or control any such determination. No other Mortgage
Loans are subject to cross-collateralization or cross-default provisions.
ASSESSMENTS OF PROPERTY CONDITION
PROPERTY INSPECTIONS. All of the Mortgaged Properties were inspected in
connection with the origination or acquisition of the related Mortgage Loans to
assess their general condition. No inspection revealed any patent structural
deficiency or any deferred maintenance considered material and adverse to the
interests of the holders of the Offered Certificates and for which adequate
reserves have not been established.
APPRAISALS. All of the Mortgaged Properties were appraised by a state
certified appraiser or an appraiser belonging to the Appraisal Institute. The
primary purpose of each appraisal was to provide an
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opinion of the fair market value of the related Mortgaged Property. There can be
no assurance that another appraiser would have arrived at the same opinion of
value.
ENVIRONMENTAL ASSESSMENTS. A "Phase I" environmental site assessment was
performed with respect to all the Mortgaged Properties in connection with the
origination of the related Mortgage Loans. In certain cases, additional
environmental testing, as recommended by such "Phase I" assessment, was
performed. In each case where environmental assessments recommended remediation,
the originator determined that the necessary remediation had been undertaken in
a satisfactory manner, was being undertaken in a satisfactory manner or that
such remediation would be adequately addressed post-closing. In some instances,
the originator required that reserves be established to cover the estimated cost
of such remediation. In two cases, such reserves exceeded $100,000.
ENGINEERING ASSESSMENTS. In connection with the origination of each
Mortgage Loan, a licensed engineer inspected the related Mortgaged Property to
assess the structure, exterior walls, roofing, interior structure and mechanical
and electrical systems. The resulting reports indicated certain deferred
maintenance items and/or recommended capital improvements with respect to
certain of the Mortgaged Properties. Generally, with respect to such Mortgaged
Properties, the related borrowers were required to deposit with the lender an
amount equal to at least 125% of the licensed engineer's estimated cost of the
recommended repairs, corrections or replacements to assure their completion.
EARTHQUAKE ANALYSES. An architectural and engineering consultant performed
an analysis on all of the 21 Mortgaged Properties located in the State of
California in order to evaluate the structural and seismic condition of the
property and to assess, based primarily on statistical information, the maximum
probable or bounded loss for the property in an earthquake scenario. The
resulting reports, which were prepared not earlier than March 1997, concluded
that in the event of an earthquake, only one of such Mortgaged Properties is
likely to suffer a maximum probable or bounded loss in excess of 25% of the
amount of the estimated replacement cost of the improvements. Such Mortgaged
Property is covered by earthquake insurance in an amount at least equal to the
outstanding principal balance of the related Mortgage Loan and is required to be
covered by such insurance through the maturity date thereof.
ADDITIONAL MORTGAGE LOAN INFORMATION
THE MORTGAGE POOL. For a detailed presentation of certain of the
characteristics of the Mortgage Loans and the Mortgaged Properties, on an
individual basis, see Annex A hereto. Certain additional information regarding
the Mortgage Loans is contained herein under "--Assignment of the Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases," and in
the Prospectus under "Security for the Bonds and Certificates" and "Certain
Legal Aspects of Mortgage Loans."
Each of the following tables sets forth certain characteristics of the
Mortgage Pool presented, where applicable, as of the Cut-off Date. For purposes
of the tables and Annex A:
(i) References to "DSC Ratio" are references to debt service coverage
ratios. 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 (that is, cash that remains after average cost of
non-capital expenses of operation, tenant improvements, leasing commissions
and replacement reserves during the term of the mortgage loan) 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. The DSC Ratio for any Mortgage Loan is the ratio of "Net Cash Flow"
produced by the related Mortgaged Property to the annualized amount of debt
service that will be payable under that Mortgage Loan commencing after the
origination date. The Net Cash Flow for a Mortgaged Property is the "net
cash flow" of such Mortgaged Property as set forth in, or determined by the
Mortgage Loan Seller on the basis of, Mortgaged Property operating
statements, generally unaudited, supplied by the related borrower and, in
the case of multifamily, retail, mobile home park, industrial/
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warehouse, self storage and office properties (each a "Rental Property"),
certified rent rolls (as applicable) supplied by the related borrower. In
general, the Mortgage Loan Seller relied on full year operating statements,
rolling 12-month operating statements and/or applicable year-to-date
financial statements, if available, and on rent rolls (for all Rental
Properties) that were current as of a date not earlier than six months prior
to the respective date of origination in determining Net Cash Flow for the
Mortgaged Properties. References to "Cut-off Date DSC Ratio" are references
to the DSC Ratio as of the Cut-off Date.
In general, "net cash flow" is the revenue derived from the use and
operation of a Mortgaged Property less operating expenses (such as
utilities, administrative expenses, repairs and maintenance, tenant
improvement costs, leasing commissions, management fees and advertising),
fixed expenses (such as insurance, real estate taxes and, if applicable,
ground lease payments) and replacement reserves and an allowance for
vacancies and credit losses. Net cash flow does not reflect interest
expenses and non-cash items such as depreciation and amortization, and
generally does not reflect capital expenditures, but does reflect reserves
for replacements and an allowance for vacancies and credit losses.
In determining the "revenue" component of Net Cash Flow for each Rental
Property, the Mortgage Loan Seller generally relied on the most recent rent
roll (as applicable) supplied and, where the actual vacancy shown thereon
and the market vacancy was less than 5.0%, assumed a 5.0% vacancy in
determining revenue from rents, except that in the case of the Mortgaged
Properties securing certain anchored shopping centers and certain single
tenant properties, space occupied by such anchor or single tenants may have
been disregarded in performing the vacancy adjustment due to the length of
the related leases or creditworthiness of such tenants, in accordance with
the Mortgage Loan Seller's underwriting standards. In determining rental
revenue for multifamily, self storage and mobile home park properties, the
Mortgage Loan Seller either reviewed rental revenue shown on the certified
rolling 12-month operating statements or annualized the rental revenue and
reimbursement of expenses shown on rent rolls or operating statements with
respect to the prior one to twelve month periods. For the other Rental
Properties, the applicable Mortgage Loan Seller generally annualized rental
revenue shown on the most recent certified rent roll (as applicable), after
applying the vacancy factor, without further regard to the terms (including
expiration dates) of the leases shown thereon. In the case of hospitality
properties, gross receipts were determined on the basis of historical
operating levels shown on the borrower-supplied 12-month trailing operating
statements. In the case of residential health care facilities, receipts were
based on historical occupancy levels, historical operating revenues and the
then current occupancy rates (with private occupancy rates within the then
current market ranges and vacancy levels at a minimum of 5%). In general,
any non-recurring items and non-property related revenue were eliminated
from the calculation except in the case of residential health care
facilities.
In determining the "expense" component of Net Cash Flow for each
Mortgaged Property, the Mortgage Loan Seller generally relied on full-year
or year-to-date financial statements, rolling 12-month operating statements
and/or year-to-date financial statements supplied by the related borrower,
except that (a) if tax or insurance expense information more current than
that reflected in the financial statements was available, the newer
information was used, (b) property management fees were generally assumed to
be 4% to 5% of effective gross revenue (except with respect to hospitality
properties, where a minimum of 4% of gross receipts was assumed, and except
with respect to the Mortgaged Properties securing certain single tenant
properties, where fees as low as 2% of effective gross receipts were
assumed), (c) assumptions generally were made with respect to reserves for
leasing commissions, tenant improvement expenses and capital expenditures
and (d) expenses were generally assumed to include annual replacement
reserves equal to (1) in the case of retail, office and industrial/
warehouse properties, not less than $0.09 and not more than $0.47 per square
foot net rentable commercial area, (2) in the case of multifamily
properties, not less than $150 or more than $403 per
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residential unit per year, depending on the condition of the property, (3)
in the case of hospitality properties, generally 4% of the gross revenues
received by the property owner on an ongoing basis, (4) in the case of
residential healthcare facilities, $257 to $350 per bed per year, (5) in the
case of the mobile home parks, $35 per pad per year and (6) in the case of
self storage facilities, not less than $0.10 or more than $0.20 per square
foot per year. In addition, in some instances, the Mortgage Loan Seller
recharacterized as capital expenditures those items reported by borrowers as
operating expenses (thus increasing "net cash flow") where the Mortgage Loan
Seller determined appropriate.
THE BORROWERS' FINANCIAL INFORMATION USED TO DETERMINE NET CASH FLOW WAS
IN MOST CASES UNAUDITED, AND NEITHER THE MORTGAGE LOAN SELLER NOR THE
DEPOSITOR VERIFIED THEIR ACCURACY.
(ii) References to "Cut-off Date LTV Ratio" are references to the ratio,
expressed as a percentage, of the Cut-off Date Balance of a Mortgage Loan to
the appraised value of the related Mortgaged Property as shown on the most
recent third-party appraisal thereof available to the Mortgage Loan Seller.
(iii) References to "Maturity Date LTV Ratio" are references to the
ratio, expressed as a percentage, of the expected balance of a Balloon Loan
on its scheduled maturity date (prior to the payment of any Balloon Payment)
to the appraised value of the Mortgaged Property as shown on the most recent
third-party appraisal thereof available to the related Mortgage Loan Seller
prior to the Cut-off Date.
(iv) References to "Loan per Sq. Ft.," "Unit," "Bed," "Pad" or "Room"
are, for each Mortgage Loan secured by a lien on a multifamily property
(including a mobile home park), hospitality property or healthcare facility,
respectively, references to the Cut-off Date Balance of such Mortgage Loan
divided by the number of dwelling units, pads, guest rooms or beds,
respectively that the related Mortgaged Property comprises, and, for each
Mortgage Loan secured by a lien on a retail, industrial/ warehouse, self
storage or office property, references to the Cut-off Date Balance of such
Mortgage Loan divided by the net rentable square foot area of the related
Mortgaged Property.
(v) References to "Year Built" are references to the year that a
Mortgaged Property was originally constructed or substantially renovated.
With respect to any Mortgaged Property which was constructed in phases, the
"Year Built" refers to the year that the first phase was originally
constructed.
(vi) References to "weighted average" or "wtd. avg."are references to
averages weighted on the basis of the Cut-off Date Balances of the related
Mortgage Loans.
(vii) References to "Underwriting Reserves" represent estimated annual
capital costs, as used by the Mortgage Loan Seller in determining Net Cash
Flow.
(viii) References to "Administrative Cost Rate" for each Mortgage Loan
represent the sum of the Master Servicing Fee Rate for such Mortgage Loan
and the Trustee Fee Rate.
(ix) References to "Original Amortization Term" represent, with respect
to each Mortgage Loan, the number of months from origination to the month in
which such Mortgage Loan would fully amortize in accordance with such loan's
amortization schedule, without regard to any Balloon Payment, if any, due on
such Mortgage Loan and assuming no prepayments of principal and no defaults.
(x) References to "Remaining Amortization Term" represent, with respect
to each Mortgage Loan, the number of months remaining from the Cut-off Date
to the month in which such Mortgage Loan would fully amortize in accordance
with such loan's amortization schedule, without regard to any Balloon
Payment, if any, due on such Mortgage Loan and assuming no prepayments of
principal and no defaults.
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(xi) References to "L(v)" represent, with respect to any Mortgage Loan,
a period of v years during which prepayments of principal are prohibited.
References to "I%(w)" represent, with respect to any Mortgage Loan, a period
of w years during which prepayments of principal are permitted, but must be
accompanied by a Prepayment Premium equal to I% of the principal prepaid.
References to "YM1% (x)" represent, with respect to any Mortgage Loan, a
period of x years during which prepayments of principal are permitted, but
must be accompanied by an amount that constitutes the greater of a Yield
Maintenance Charge and 1.0% of the principal prepaid. References to "YM (y)"
represent, with respect to any Mortgage Loan, a period of y years during
which prepayments of principal are permitted, but must be accompanied by an
amount that constitutes a Yield Maintenance Charge. References to "O(z)"
represent, with respect to any Mortgage Loan, a period of z years during
which prepayments of principal are permitted without the payment of any
Prepayment Premium or Yield Maintenance Charge and no defeasance can be
required. References to "< YMx%" represent, with respect to any Mortgage
Loan, the lesser of (a) an amount that constitutes a Yield Maintenance
Charge and (b) x% of the principal prepaid.
(xii) References to "DEF" represent, with respect to each applicable
Mortgage Loan, the right of the related holder of the Mortgage (i.e. the
Master Servicer on behalf of the Trust Fund for the
benefit of the Certificateholders) to require the related borrower, in lieu
of prepayment, to pledge to such holder Defeasance Collateral during the
period in which a Prepayment Premium or Yield Maintenance Charge is
required.
(xiii) References to "Occupancy Percentage" are, with respect to any
Mortgaged Property, references to (A) in the case of multifamily properties
and assisted living/congregate care facilities, the percentage of units
rented, (B) in the case of office and retail properties, the percentage of
the net rentable square footage rented, and (C) in the case of self-storage
facilities, either the percentage of the net rentable square footage rented
or the percentage of units rented (depending on borrower reporting).
(xiv) References to "Remaining Term to Maturity" are references to the
remaining term to maturity for each Mortgage Loan (or the remaining number
of months to the Anticipated Repayment Date with respect to each ARD Loan).
(xv) References to "Original Term to Maturity" are references to the
term from origination to maturity for each Mortgage Loan (or the term from
origination to the Anticipated Repayment Date with respect to each ARD
Loan).
(xvi) References to "Capital Imp. Reserve" are references to funded
reserves escrowed for repairs, replacements and corrections of issues
outlined in the engineering reports.
(xvii) References to "Replacement Reserve" are references to funded
reserves escrowed for ongoing items such as repairs and replacements,
including, in the case of hospitality properties, reserves for furniture,
fixtures and equipment.
(xviii) References to "TI/LC Reserve" are references to funded reserves
escrowed for tenant improvement allowances and leasing commissions.
(xix) References to "Original Interest-Only Period" are, with respect to
any Mortgage Loan, references to the period following the related
origination date during which Monthly Payments of interest only are
required.
(xx) References to "Remaining Interest-Only Period" are, with respect to
any Mortgage Loan, references to the period following the Cut-off Date
during which Monthly Payments of interest only are required.
The sum in any column of any of the following tables may not equal the
indicated total due to rounding.
S-45
<PAGE>
MORTGAGE LOANS BY STATE
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATES OF LOANS BALANCE BALANCE BALANCE BALANCE
- - -------------------------------------------- ------------- --------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
AL.......................................... 5 $ 21,399,669 1.2% $ 4,279,934 $ 7,991,175
AR.......................................... 2 9,471,056 0.5 4,735,528 6,481,655
AZ.......................................... 11 61,516,077 3.5 5,592,371 10,389,298
CA.......................................... 21 141,744,038 8.0 6,749,716 19,988,861
CO.......................................... 5 18,103,606 1.0 3,620,721 6,569,962
CT.......................................... 11 63,483,908 3.6 5,771,264 18,268,365
DE.......................................... 1 9,483,391 0.5 9,483,391 9,483,391
FL.......................................... 31 167,189,007 9.4 5,393,194 19,962,785
GA.......................................... 9 50,605,849 2.9 5,622,872 13,698,851
IA.......................................... 1 4,075,713 0.2 4,075,713 4,075,713
IL.......................................... 4 50,645,660 2.9 12,661,415 20,360,654
IN.......................................... 7 41,747,745 2.4 5,963,964 12,992,477
KS.......................................... 3 8,747,551 0.5 2,915,850 3,307,992
KY.......................................... 2 7,833,563 0.4 3,916,782 4,095,681
LA.......................................... 1 1,998,192 0.1 1,998,192 1,998,192
MA.......................................... 7 52,710,608 3.0 7,530,087 14,552,151
MD.......................................... 7 101,794,854 5.7 14,542,122 62,467,513
MI.......................................... 1 5,391,781 0.3 5,391,781 5,391,781
MN.......................................... 4 24,274,852 1.4 6,068,713 11,433,232
MO.......................................... 6 36,902,618 2.1 6,150,436 17,767,252
NC.......................................... 4 37,046,126 2.1 9,261,532 11,986,547
NE.......................................... 2 5,235,617 0.3 2,617,809 2,741,584
NJ.......................................... 6 58,367,545 3.3 9,727,924 18,309,365
NV.......................................... 6 70,323,370 4.0 11,720,562 16,086,751
NY.......................................... 19 149,964,407 8.4 7,892,864 22,622,349
OH.......................................... 6 69,858,309 3.9 11,643,051 41,975,309
OK.......................................... 1 4,492,874 0.3 4,492,874 4,492,874
OR.......................................... 2 11,242,128 0.6 5,621,064 6,994,419
PA.......................................... 9 101,156,192 5.7 11,239,577 33,180,421
SC.......................................... 8 25,250,954 1.4 3,156,369 4,444,963
TN.......................................... 9 86,214,359 4.9 9,579,373 31,382,675
TX.......................................... 37 181,336,173 10.2 4,900,978 19,227,633
UT.......................................... 2 30,932,447 1.7 15,466,223 17,944,805
VA.......................................... 5 19,105,712 1.1 3,821,142 7,741,368
WA.......................................... 5 39,527,698 2.2 7,905,540 19,460,119
WV.......................................... 1 5,993,427 0.3 5,993,427 5,993,427
--- --------------- ----- ------------ ------------
Total/Avg/Wtd. Avg./Min/Max:................ 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
STATES LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - -------------------------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
AL.......................................... 74.6% 79.6% 1.35x 1.25x 97.5%
AR.......................................... 59.7 60.9 1.37 1.32 90.9
AZ.......................................... 74.9 80.0 1.31 1.23 98.7
CA.......................................... 73.0 79.9 1.33 1.20 96.8
CO.......................................... 74.4 78.6 1.40 1.26 95.5
CT.......................................... 70.6 76.5 1.31 1.24 91.7
DE.......................................... 77.4 77.4 1.25 1.25 98.4
FL.......................................... 74.2 80.0 1.35 1.20 95.4
GA.......................................... 75.6 79.9 1.32 1.22 97.0
IA.......................................... 74.8 74.8 1.28 1.28 100.0
IL.......................................... 76.0 79.8 1.34 1.23 97.0
IN.......................................... 76.1 79.3 1.33 1.25 96.2
KS.......................................... 72.7 78.0 1.44 1.26 96.0
KY.......................................... 74.8 77.4 1.27 1.24 100.0
LA.......................................... 71.4 71.4 1.36 1.36 84.0
MA.......................................... 72.0 79.5 1.36 1.25 93.9
MD.......................................... 66.9 74.8 1.40 1.31 91.3
MI.......................................... 80.0 80.0 1.35 1.35 99.3
MN.......................................... 70.7 80.0 1.41 1.22 93.6
MO.......................................... 73.8 79.9 1.28 1.22 97.2
NC.......................................... 73.3 74.9 1.28 1.24 93.3
NE.......................................... 73.1 78.8 1.28 1.21 93.9
NJ.......................................... 72.8 80.0 1.31 1.19 97.8
NV.......................................... 78.6 80.0 1.29 1.20 93.2
NY.......................................... 71.4 79.9 1.35 1.23 97.6
OH.......................................... 71.9 79.9 1.32 1.22 98.3
OK.......................................... 66.1 66.1 1.72 1.72 96.3
OR.......................................... 71.1 72.1 1.28 1.26 96.1
PA.......................................... 75.3 80.0 1.27 1.21 95.9
SC.......................................... 70.2 78.8 1.42 1.22 95.8
TN.......................................... 70.1 79.8 1.43 1.20 98.4
TX.......................................... 75.4 79.9 1.36 1.21 94.4
UT.......................................... 72.7 74.8 1.54 1.49 --
VA.......................................... 74.1 79.4 1.34 1.23 95.9
WA.......................................... 73.6 75.0 1.29 1.23 97.4
WV.......................................... 76.8 76.8 1.33 1.33 100.0
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:................ 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
WTD.AVG.
MORTGAGE
STATES RATE
- - -------------------------------------------- -----------
AL.......................................... 7.569%
AR.......................................... 7.797
AZ.......................................... 7.711
CA.......................................... 7.696
CO.......................................... 8.204
CT.......................................... 7.947
DE.......................................... 7.650
FL.......................................... 7.530
GA.......................................... 7.621
IA.......................................... 7.440
IL.......................................... 7.514
IN.......................................... 7.388
KS.......................................... 7.387
KY.......................................... 8.232
LA.......................................... 7.990
MA.......................................... 7.475
MD.......................................... 7.692
MI.......................................... 7.390
MN.......................................... 7.522
MO.......................................... 7.505
NC.......................................... 7.456
NE.......................................... 7.926
NJ.......................................... 7.517
NV.......................................... 7.092
NY.......................................... 7.754
OH.......................................... 7.263
OK.......................................... 7.190
OR.......................................... 7.265
PA.......................................... 7.838
SC.......................................... 7.488
TN.......................................... 7.718
TX.......................................... 7.580
UT.......................................... 7.422
VA.......................................... 7.438
WA.......................................... 7.722
WV.......................................... 7.770
-----
Total/Avg/Wtd. Avg./Min/Max:................ 7.603%
-----
-----
</TABLE>
- - ------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
S-46
<PAGE>
MORTGAGE LOANS BY PROPERTY TYPE
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE OF LOANS BALANCE BALANCE BALANCE BALANCE
- - ------------------------------------------ ------------- --------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Retail.................................... 103 $ 794,883,450 44.8% $ 7,717,315 $ 62,467,513
Multifamily............................... 75 440,621,293 24.8 5,874,951 33,180,421
Office.................................... 50 289,905,060 16.3 5,798,101 31,382,675
Hotel..................................... 9 112,290,555 6.3 12,476,728 20,360,654
Industrial/W'hse.......................... 16 97,954,817 5.5 6,122,176 17,735,508
Health Care............................... 3 23,216,532 1.3 7,738,844 9,740,102
Self Storage.............................. 3 11,147,050 0.6 3,715,683 4,656,636
Mobile Home Park.......................... 1 2,900,000 0.2 2,900,000 2,900,000
Parking Garage............................ 1 2,248,317 0.1 2,248,317 2,248,317
--- --------------- ----- ------------ ------------
Total/Avg/Wtd. Avg./Min/Max:.............. 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
PROPERTY TYPE LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - ------------------------------------------ --------------- --------------- --------------- --------------- -------------
<S> <C>
Retail.................................... 73.0% 80.0% 1.33x 1.21x 96.0%
Multifamily............................... 76.9 80.0 1.31 1.19 94.4
Office.................................... 70.4 78.8 1.34 1.24 96.6
Hotel..................................... 71.3 77.4 1.52 1.40 --
Industrial/W'hse.......................... 68.5 80.0 1.39 1.28 98.3
Health Care............................... 75.7 79.6 1.46 1.37 94.2
Self Storage.............................. 66.0 71.8 1.45 1.33 89.4
Mobile Home Park.......................... 75.3 75.3 1.37 1.37 96.0
Parking Garage............................ 72.5 72.5 1.36 1.36 100.0
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:.............. 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
WTD.AVG.
MORTGAGE
PROPERTY TYPE RATE
- - ------------------------------------------ -------------
Retail.................................... 7.683%
Multifamily............................... 7.416
Office.................................... 7.674
Hotel..................................... 7.502
Industrial/W'hse.......................... 7.704
Health Care............................... 7.492
Self Storage.............................. 8.005
Mobile Home Park.......................... 7.110
Parking Garage............................ 7.460
-----
Total/Avg/Wtd. Avg./Min/Max:.............. 7.603%
-----
-----
</TABLE>
- - ------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
CUT-OFF DATE DSC RATIOS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
RANGE OF AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
CUT-OFF DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DSC RATIO (X) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - ------------------------------------------ ------------- --------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1.19-1.24................................. 30 $ 253,348,118 14.3% $ 8,444,937 $ 41,975,309
1.25-1.29................................. 55 474,128,073 26.7 8,620,510 33,180,421
1.30-1.34................................. 65 339,541,702 19.1 5,223,718 22,622,349
1.35-1.39................................. 45 293,146,523 16.5 6,514,367 62,467,513
1.40-1.44................................. 18 116,660,228 6.6 6,481,124 16,451,099
1.45-1.49................................. 20 140,360,211 7.9 7,018,011 20,360,654
1.50-1.54................................. 5 25,474,103 1.4 5,094,821 9,368,860
1.55-1.59................................. 6 45,793,000 2.6 7,632,167 17,944,805
1.60-1.64................................. 3 20,333,977 1.1 6,777,992 10,567,341
1.65-1.69................................. 3 16,709,147 0.9 5,569,716 8,723,040
1.70-1.74................................. 5 13,846,628 0.8 2,769,326 4,492,874
1.80-1.84................................. 2 23,262,611 1.3 11,631,305 18,940,051
1.90-1.94................................. 1 2,696,562 0.2 2,696,562 2,696,562
2.05-2.09................................. 2 8,122,183 0.5 4,061,092 4,625,654
2.10-2.14................................. 1 1,744,007 0.1 1,744,007 1,744,007
--- --------------- ----- ------------ ------------
Total/Avg/Wtd. Avg./Min/Max:.............. 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
RANGE OF WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
DSC RATIO (X) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - ------------------------------------------ --------------- --------------- --------------- --------------- -------------
<S> <C>
1.19-1.24................................. 76.7% 80.0% 1.22x 1.19x 95.8%
1.25-1.29................................. 76.2 80.0 1.27 1.24 96.5
1.30-1.34................................. 71.9 80.0 1.31 1.29 95.4
1.35-1.39................................. 73.6 80.0 1.36 1.34 94.8
1.40-1.44................................. 70.9 79.9 1.41 1.40 97.4
1.45-1.49................................. 72.2 78.7 1.47 1.44 96.1
1.50-1.54................................. 63.9 79.8 1.51 1.49 93.0
1.55-1.59................................. 69.3 74.8 1.57 1.54 95.2
1.60-1.64................................. 65.0 70.0 1.61 1.60 98.1
1.65-1.69................................. 67.1 71.7 1.67 1.67 92.2
1.70-1.74................................. 65.8 68.8 1.72 1.69 94.0
1.80-1.84................................. 51.4 55.4 1.80 1.80 99.2
1.90-1.94................................. 57.4 57.4 1.91 1.91 --
2.05-2.09................................. 43.0 54.4 2.05 2.05 65.0
2.10-2.14................................. 47.8 47.8 2.13 2.13 100.0
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:.............. 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
RANGE OF WTD.AVG.
CUT-OFF DATE MORTGAGE
DSC RATIO (X) RATE
- - ------------------------------------------ -------------
1.19-1.24................................. 7.565%
1.25-1.29................................. 7.507
1.30-1.34................................. 7.767
1.35-1.39................................. 7.583
1.40-1.44................................. 7.551
1.45-1.49................................. 7.571
1.50-1.54................................. 7.961
1.55-1.59................................. 7.618
1.60-1.64................................. 7.463
1.65-1.69................................. 7.816
1.70-1.74................................. 7.342
1.80-1.84................................. 7.908
1.90-1.94................................. 7.970
2.05-2.09................................. 7.567
2.10-2.14................................. 8.200
-----
Total/Avg/Wtd. Avg./Min/Max:.............. 7.603%
-----
-----
</TABLE>
The weighted average Cut-off Date DSCR is 1.34x.
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
S-47
<PAGE>
CUT-OFF DATE LTV RATIOS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
RANGE OF AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
CUT-OFF DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS (%) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - -------------------------------------------- ------------- --------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
25.1-30.0................................... 1 $ 3,496,530 0.2% $ 3,496,530 $ 3,496,530
45.1-50.0................................... 2 11,112,867 0.6 5,556,434 9,368,860
50.1-55.0................................... 5 39,677,497 2.2 7,935,499 18,940,051
55.1-60.0................................... 10 48,476,038 2.7 4,847,604 17,735,508
60.1-65.0................................... 11 51,313,653 2.9 4,664,878 9,474,950
65.1-70.0................................... 30 201,404,542 11.3 6,713,485 16,451,099
70.1-75.0................................... 111 749,269,220 42.2 6,750,173 62,467,513
75.1-80.0................................... 91 670,416,726 37.8 7,367,217 33,180,421
--- --------------- ----- ------------ -------------
Total/Avg/Wtd. Avg./Min/Max:................ 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ -------------
--- --------------- ----- ------------ -------------
The weighted average Cut-off Date LTV Ratio is 73.2%.
<CAPTION>
RANGE OF WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
LTV RATIOS (%) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - -------------------------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
25.1-30.0................................... 28.0% 28.0% 2.05x 2.05x 65.0%
45.1-50.0................................... 48.6 48.8 1.61 1.51 96.6
50.1-55.0................................... 52.5 54.5 1.65 1.32 94.1
55.1-60.0................................... 58.0 60.0 1.48 1.30 97.4
60.1-65.0................................... 62.7 64.7 1.43 1.20 95.0
65.1-70.0................................... 68.1 70.0 1.42 1.24 95.3
70.1-75.0................................... 73.3 75.0 1.34 1.22 95.7
75.1-80.0................................... 78.4 80.0 1.29 1.19 96.1
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:................ 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
The weighted average Cut-off Date LTV Ratio
<CAPTION>
RANGE OF WTD.AVG.
CUT-OFF DATE MORTGAGE
LTV RATIOS (%) RATE
- - -------------------------------------------- -----------
25.1-30.0................................... 7.220%
45.1-50.0................................... 8.326
50.1-55.0................................... 7.806
55.1-60.0................................... 7.795
60.1-65.0................................... 7.678
65.1-70.0................................... 7.808
70.1-75.0................................... 7.680
75.1-80.0................................... 7.414
-----
Total/Avg/Wtd. Avg./Min/Max:................ 7.603%
-----
-----
The weighted average Cut-off Date LTV Ratio
</TABLE>
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
MATURITY DATE LTV RATIOS
(ALL BALLOON LOANS)
<TABLE>
<CAPTION>
RANGE OF AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
MATURITY DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS (%) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - -------------------------------------------- ------------- --------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
5.1-10.0.................................... 1 $ 1,538,698 0.1% $ 1,538,698 $ 1,538,698
25.1-30.0................................... 2 18,365,287 1.7 9,182,643 11,991,271
30.1-35.0................................... 1 3,657,893 0.3 3,657,893 3,657,893
35.1-40.0................................... 2 7,130,520 0.6 3,565,260 5,386,513
40.1-45.0................................... 4 33,579,284 3.0 8,394,821 18,940,051
45.1-50.0................................... 8 50,872,920 4.6 6,359,115 14,742,098
50.1-55.0................................... 11 81,436,872 7.4 7,403,352 31,382,675
55.1-60.0................................... 21 150,193,000 13.6 7,152,048 20,360,654
60.1-65.0................................... 36 222,296,755 20.1 6,174,910 19,962,785
65.1-70.0................................... 63 365,178,309 33.0 5,796,481 22,622,349
70.1-75.0................................... 26 152,392,323 13.8 5,861,243 16,086,751
75.1-80.0................................... 2 19,250,119 1.7 9,625,059 15,981,129
--- --------------- ----- ------------ -------------
Total/Avg/Wtd. Avg./Min/Max: 177 $ 1,105,891,980 100.0% $ 6,247,977 $ 31,382,675
--- --------------- ----- ------------ -------------
--- --------------- ----- ------------ -------------
The weighted average Maturity Date LTV Ratio is 62.1%
<CAPTION>
RANGE OF WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
MATURITY DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
LTV RATIOS (%) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE (1)
- - -------------------------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
5.1-10.0.................................... 67.5% 67.5% 1.31x 1.31x 100.0%
25.1-30.0................................... 74.6 75.0 1.29 1.27 87.9
30.1-35.0................................... 74.7 74.7 1.30 1.30 100.0
35.1-40.0................................... 68.2 74.8 1.51 1.31 100.0
40.1-45.0................................... 51.1 58.2 1.68 1.32 98.3
45.1-50.0................................... 66.3 74.1 1.41 1.33 93.9
50.1-55.0................................... 69.4 78.3 1.35 1.27 97.1
55.1-60.0................................... 71.4 76.5 1.35 1.20 95.3
60.1-65.0................................... 71.9 79.6 1.40 1.21 94.8
65.1-70.0................................... 75.0 79.9 1.33 1.20 96.9
70.1-75.0................................... 79.2 80.0 1.29 1.20 93.8
75.1-80.0................................... 79.9 79.9 1.28 1.27 95.7
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max: 72.9% 80.0% 1.36x 1.20x 95.6%
--- --- --- --- -----
--- --- --- --- -----
The weighted average Maturity Date LTV Ratio
<CAPTION>
RANGE OF WTD.AVG.
MATURITY DATE MORTGAGE
LTV RATIOS (%) RATE
- - -------------------------------------------- -----------
5.1-10.0.................................... 8.080%
25.1-30.0................................... 7.836
30.1-35.0................................... 8.040
35.1-40.0................................... 8.102
40.1-45.0................................... 8.147
45.1-50.0................................... 8.150
50.1-55.0................................... 7.757
55.1-60.0................................... 7.648
60.1-65.0................................... 7.711
65.1-70.0................................... 7.808
70.1-75.0................................... 7.394
75.1-80.0................................... 7.383
-----
Total/Avg/Wtd. Avg./Min/Max: 7.728%
-----
-----
The weighted average Maturity Date LTV Ratio
</TABLE>
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
S-48
<PAGE>
MORTGAGE RATES
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
RANGE OF NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MORTGAGE RATES (%) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - -------------------------------------------- ------------- --------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
6.750-6.999................................. 6 $ 68,106,597 3.8% $ 11,351,099 $ 19,227,633
7.000-7.249................................. 29 248,114,693 14.0 8,555,679 41,975,309
7.250-7.499................................. 73 509,218,174 28.7 6,975,591 20,360,654
7.500-7.749................................. 67 481,472,615 27.1 7,186,158 62,467,513
7.750-7.999................................. 28 163,803,203 9.2 5,850,114 31,382,675
8.000-8.249................................. 35 162,639,971 9.2 4,646,856 22,622,349
8.250-8.499................................. 12 48,560,902 2.7 4,046,742 9,368,860
8.500-8.749................................. 4 37,579,037 2.1 9,394,759 13,325,200
8.750-8.999................................. 4 32,782,533 1.8 8,195,633 16,166,316
9.000-9.249................................. 3 22,889,348 1.3 7,629,783 14,742,098
--- --------------- ----- ------------ ------------
Total/Avg/Wtd. Avg./Min/Max:................ 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
RANGE OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
MORTGAGE RATES (%) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - -------------------------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
6.750-6.999................................. 78.8% 79.9% 1.33x 1.23x 93.2%
7.000-7.249................................. 74.9 80.0 1.30 1.19 96.5
7.250-7.499................................. 74.4 80.0 1.35 1.20 96.3
7.500-7.749................................. 73.6 80.0 1.33 1.20 94.7
7.750-7.999................................. 70.5 78.3 1.37 1.23 96.0
8.000-8.249................................. 68.4 79.4 1.43 1.20 97.1
8.250-8.499................................. 67.8 79.7 1.39 1.24 95.1
8.500-8.749................................. 73.0 75.2 1.27 1.20 97.0
8.750-8.999................................. 71.2 74.7 1.27 1.24 91.5
9.000-9.249................................. 69.1 73.4 1.34 1.30 97.5
--- --- --- --- ---
Total/Avg/Wtd. Avg./Min/Max:................ 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- ---
--- --- --- --- ---
<CAPTION>
WTD.AVG.
RANGE OF MORTGAGE
MORTGAGE RATES (%) RATE
- - -------------------------------------------- -----------
6.750-6.999................................. 6.977%
7.000-7.249................................. 7.173
7.250-7.499................................. 7.368
7.500-7.749................................. 7.600
7.750-7.999................................. 7.858
8.000-8.249................................. 8.096
8.250-8.499................................. 8.347
8.500-8.749................................. 8.563
8.750-8.999................................. 8.913
9.000-9.249................................. 9.053
-----
Total/Avg/Wtd. Avg./Min/Max:................ 7.603%
-----
-----
</TABLE>
The weighted average Mortgage Rate is 7.603%.
- - ------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
ORIGINAL TERMS TO MATURITY
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
RANGE OF AGGREGATE % BY AGGREGATE AVERAGE HIGHEST WTD.AVG.
ORIGINAL TERMS NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TO MATURITY (MONTHS) OF LOANS BALANCE BALANCE BALANCE BALANCE
---------------------- ------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
49-60......................................... 5 $ 91,425,940 5.2% $ 18,285,188 $ 62,467,513
73-84......................................... 35 204,105,711 11.5 5,831,592 19,227,633
85-96......................................... 1 16,166,316 0.9 16,166,316 16,166,316
109-120....................................... 163 1,021,635,412 57.6 6,267,702 33,180,421
121-132....................................... 2 8,924,744 0.5 4,462,372 6,128,098
133-144....................................... 1 18,940,051 1.1 18,940,051 18,940,051
145-156....................................... 1 18,309,365 1.0 18,309,365 18,309,365
169-180....................................... 27 236,569,940 13.3 8,761,850 41,975,309
217-228....................................... 1 1,245,316 0.1 1,245,316 1,245,316
229-240....................................... 17 99,257,068 5.6 5,838,651 17,735,508
265-276....................................... 1 2,696,562 0.2 2,696,562 2,696,562
289-300....................................... 6 43,890,649 2.5 7,315,108 13,698,851
349-360....................................... 1 12,000,000 0.7 12,000,000 12,000,000
--- --------------- ----- ------------ ------------
Total:........................................ 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
RANGE OF MAXIMUM WTD.AVG. MINIMUM WTD.AVG. WTD.AVG.
ORIGINAL TERMS CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
TO MATURITY (MONTHS) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
---------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
49-60......................................... 70.5% 79.9% 1.36x 1.27x 91.2%
73-84......................................... 74.2 80.0 1.35 1.20 94.2
85-96......................................... 69.4 69.4 1.24 1.24 89.7
109-120....................................... 73.8 80.0 1.34 1.20 96.2
121-132....................................... 74.3 79.0 1.46 1.38 93.2
133-144....................................... 50.5 50.5 1.80 1.80 99.0
145-156....................................... 80.0 80.0 1.19 1.19 95.0
169-180....................................... 74.8 79.9 1.30 1.22 97.3
217-228....................................... 71.2 71.2 1.37 1.37 100.0
229-240....................................... 65.7 78.9 1.41 1.20 96.6
265-276....................................... 57.4 57.4 1.91 1.91 --
289-300....................................... 74.5 79.4 1.33 1.23 94.2
349-360....................................... 80.0 80.0 1.21 1.21 100.0
--- --- --- --- -----
Total:........................................ 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
RANGE OF
ORIGINAL TERMS MORTGAGE
TO MATURITY (MONTHS) RATE
---------------------- -----------
49-60......................................... 7.442%
73-84......................................... 7.376
85-96......................................... 8.920
109-120....................................... 7.638
121-132....................................... 7.747
133-144....................................... 8.040
145-156....................................... 7.240
169-180....................................... 7.587
217-228....................................... 8.050
229-240....................................... 7.678
265-276....................................... 7.970
289-300....................................... 7.508
349-360....................................... 7.630
-----
Total:........................................ 7.603%
-----
-----
</TABLE>
The weighted average original term to maturity is 134 months.
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
S-49
<PAGE>
REMAINING TERMS TO MATURITY
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
RANGE OF AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
REMAINING TERMS NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TO MATURITY (MONTHS) OF LOANS BALANCE BALANCE BALANCE BALANCE
--------------------- ------------- --------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
49- 60...................................... 5 $ 91,425,940 5.2% $ 18,285,188 $ 62,467,513
73- 84...................................... 36 220,272,026 12.4 6,118,667 19,227,633
109-120..................................... 165 1,030,560,156 58.1 6,245,819 33,180,421
133-144..................................... 1 18,940,051 1.1 18,940,051 18,940,051
145-156..................................... 1 18,309,365 1.0 18,309,365 18,309,365
169-180..................................... 27 236,569,940 13.3 8,761,850 41,975,309
217-228..................................... 1 1,245,316 0.1 1,245,316 1,245,316
229-240..................................... 17 99,257,068 5.6 5,838,651 17,735,508
265-276..................................... 1 2,696,562 0.2 2,696,562 2,696,562
289-300..................................... 6 43,890,649 2.5 7,315,108 13,698,851
349-360..................................... 1 12,000,000 0.7 12,000,000 12,000,000
--- --------------- ----- ------------ ------------
Total/Avg/Wtd. Avg./Min/Max:................ 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
RANGE OF WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
REMAINING TERMS CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
TO MATURITY (MONTHS) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
--------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
49- 60...................................... 70.5% 79.9% 1.36x 1.27x 91.2%
73- 84...................................... 73.9 80.0 1.34 1.20 93.8
109-120..................................... 73.8 80.0 1.34 1.20 96.1
133-144..................................... 50.5 50.5 1.80 1.80 99.0
145-156..................................... 80.0 80.0 1.19 1.19 95.0
169-180..................................... 74.8 79.9 1.30 1.22 97.3
217-228..................................... 71.2 71.2 1.37 1.37 100.0
229-240..................................... 65.7 78.9 1.41 1.20 96.6
265-276..................................... 57.4 57.4 1.91 1.91 --
289-300..................................... 74.5 79.4 1.33 1.23 94.2
349-360..................................... 80.0 80.0 1.21 1.21 100.0
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:................ 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
RANGE OF WTD.AVG.
REMAINING TERMS MORTGAGE
TO MATURITY (MONTHS) RATE
--------------------- -----------
49- 60...................................... 7.442%
73- 84...................................... 7.489
109-120..................................... 7.639
133-144..................................... 8.040
145-156..................................... 7.240
169-180..................................... 7.587
217-228..................................... 8.050
229-240..................................... 7.678
265-276..................................... 7.970
289-300..................................... 7.508
349-360..................................... 7.630
-----
Total/Avg/Wtd. Avg./Min/Max:................ 7.603%
-----
-----
</TABLE>
The weighted average remaining term to maturity is 131 months.
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
CUT-OFF DATE BALANCES
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
RANGE OF AGGREGATE % BY AGGREGATE AVERAGE HIGHEST
CUT-OFF DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
BALANCES ($) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - -------------------------------------------- ------------- --------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
613,737- 2,000,000........................ 30 $ 44,170,430 2.5% $ 1,472,348 $ 1,998,192
2,000,001- 4,000,000....................... 72 204,957,569 11.5 2,846,633 3,997,942
4,000,001- 6,000,000....................... 61 300,129,564 16.9 4,920,157 6,000,000
6,000,001- 8,000,000....................... 27 183,539,838 10.3 6,797,772 7,991,175
8,000,001-10,000,000....................... 20 184,885,463 10.4 9,244,273 9,994,322
10,000,001-12,000,000....................... 14 157,527,694 8.9 11,251,978 12,000,000
12,000,001-14,000,000....................... 9 115,600,746 6.5 12,844,527 13,698,851
14,000,001-16,000,000....................... 8 117,586,095 6.6 14,698,262 15,981,129
16,000,001-18,000,000....................... 6 102,151,730 5.8 17,025,288 17,944,805
18,000,001-20,000,000....................... 8 152,629,022 8.6 19,078,628 19,988,861
20,000,001-22,000,000....................... 1 20,360,654 1.1 20,360,654 20,360,654
22,000,001-24,000,000....................... 1 22,622,349 1.3 22,622,349 22,622,349
30,000,001-32,000,000....................... 1 31,382,675 1.8 31,382,675 31,382,675
32,000,001-34,000,000....................... 1 33,180,421 1.9 33,180,421 33,180,421
40,000,001-42,000,000....................... 1 41,975,309 2.4 41,975,309 41,975,309
62,000,001-62,467,513....................... 1 62,467,513 3.5 62,467,513 62,467,513
--- --------------- ----- ------------ ------------
Total/Avg/Wtd. Avg./Min/Max:................ 261 $ 1,775,167,073 100.0% $ 6,801,406 $ 62,467,513
--- --------------- ----- ------------ ------------
--- --------------- ----- ------------ ------------
<CAPTION>
RANGE OF WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
BALANCES ($) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - -------------------------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
613,737- 2,000,000........................ 71.6% 79.9% 1.36x 1.20x 96.3%
2,000,001- 4,000,000....................... 72.5 80.0 1.38 1.21 95.6
4,000,001- 6,000,000....................... 72.6 80.0 1.36 1.20 96.5
6,000,001- 8,000,000....................... 74.0 80.0 1.36 1.25 95.9
8,000,001-10,000,000....................... 70.1 79.9 1.35 1.20 95.1
10,000,001-12,000,000....................... 74.2 80.0 1.32 1.21 96.0
12,000,001-14,000,000....................... 75.0 79.9 1.30 1.23 94.7
14,000,001-16,000,000....................... 76.8 79.9 1.31 1.20 97.0
16,000,001-18,000,000....................... 70.4 79.1 1.37 1.24 94.4
18,000,001-20,000,000....................... 73.8 80.0 1.35 1.19 95.3
20,000,001-22,000,000....................... 74.0 74.0 1.46 1.46 --
22,000,001-24,000,000....................... 74.2 74.2 1.30 1.30 100.0
30,000,001-32,000,000....................... 78.3 78.3 1.27 1.27 100.0
32,000,001-34,000,000....................... 78.1 78.1 1.28 1.28 95.5
40,000,001-42,000,000....................... 73.6 73.6 1.22 1.22 100.0
62,000,001-62,467,513....................... 70.2 70.2 1.36 1.36 88.3
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:................ 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
RANGE OF WTD.AVG.
CUT-OFF DATE MORTGAGE
BALANCES ($) RATE
- - -------------------------------------------- -----------
613,737- 2,000,000........................ 7.874%
2,000,001- 4,000,000....................... 7.656
4,000,001- 6,000,000....................... 7.582
6,000,001- 8,000,000....................... 7.728
8,000,001-10,000,000....................... 7.757
10,000,001-12,000,000....................... 7.392
12,000,001-14,000,000....................... 7.562
14,000,001-16,000,000....................... 7.539
16,000,001-18,000,000....................... 7.659
18,000,001-20,000,000....................... 7.527
20,000,001-22,000,000....................... 7.360
22,000,001-24,000,000....................... 8.220
30,000,001-32,000,000....................... 7.810
32,000,001-34,000,000....................... 7.190
40,000,001-42,000,000....................... 7.200
62,000,001-62,467,513....................... 7.580
-----
Total/Avg/Wtd. Avg./Min/Max:................ 7.603%
-----
-----
</TABLE>
The average Cut-off Date Balance is $6,801,406.
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
S-50
<PAGE>
REMAINING AMORTIZATION TERMS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
AVERAGE
REMAINING AGGREGATE % BY AGGREGATE CUT-OFF HIGHEST
AMORTIZATION NUMBER CUT-OFF DATE CUT-OFF DATE DATE CUT-OFF DATE
TERM (MONTHS) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - ---------------- ------------- --------------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
181-192...................................... 1 $ 1,538,698 0.1% $1,538,698 $ 1,538,698
217-228...................................... 1 1,245,316 0.1 1,245,316 1,245,316
229-240...................................... 20 110,719,856 6.2 5,535,993 17,735,508
265-276...................................... 2 8,689,989 0.5 4,344,994 5,993,427
277-288...................................... 1 4,075,713 0.2 4,075,713 4,075,713
289-300...................................... 46 325,875,695 18.4 7,084,254 31,382,675
313-324...................................... 1 2,198,361 0.1 2,198,361 2,198,361
325-336...................................... 1 5,386,513 0.3 5,386,513 5,386,513
349-360...................................... 188 1,315,436,934 74.1 6,997,005 62,467,513
--- --------------- ----- ----------- ------------
Total/Avg/Wtd. Avg./Min/Max:................. 261 $ 1,775,167,073 100.0% $6,801,406 $ 62,467,513
--- --------------- ----- ----------- ------------
--- --------------- ----- ----------- ------------
<CAPTION>
REMAINING WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
AMORTIZATION CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
TERM (MONTHS) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - ---------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
181-192...................................... 67.5% 67.5% 1.31x 1.31x 100.0%
217-228...................................... 71.2 71.2 1.37 1.37 100.0
229-240...................................... 65.1 78.9 1.43 1.20 97.3
265-276...................................... 70.8 76.8 1.51 1.33 100.0
277-288...................................... 74.8 74.8 1.28 1.28 100.0
289-300...................................... 71.6 79.6 1.39 1.21 96.0
313-324...................................... 61.9 61.9 1.32 1.32 95.2
325-336...................................... 74.8 74.8 1.31 1.31 100.0
349-360...................................... 74.3 80.0 1.32 1.19 95.5
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:................. 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
REMAINING WTD.AVG.
AMORTIZATION MORTGAGE
TERM (MONTHS) RATE
- - ---------------- -----------
181-192...................................... 8.080%
217-228...................................... 8.050
229-240...................................... 7.709
265-276...................................... 7.832
277-288...................................... 7.440
289-300...................................... 7.693
313-324...................................... 7.520
325-336...................................... 8.070
349-360...................................... 7.568
-----
Total/Avg/Wtd. Avg./Min/Max:................. 7.603%
-----
-----
</TABLE>
The weighted average remaining amortization term is 338 months.
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
AMORTIZATION TYPES
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
AVERAGE
AGGREGATE % BY AGGREGATE CUT-OFF HIGHEST
NUMBER CUT-OFF DATE CUT-OFF DATE DATE CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE BALANCE BALANCE BALANCE
- - --------------------------------------------- ------------- --------------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balloon...................................... 175 $ 1,095,261,980 61.7% $6,258,640 $ 31,382,675
ARD Loans.................................... 61 533,937,298 30.1 8,753,070 62,467,513
Interest-Only then Amortizing Balloon(2)..... 2 10,630,000 0.6 5,315,000 5,520,000
Fully Amortizing............................. 23 135,337,795 7.6 5,884,252 17,735,508
--- --------------- ----- ----------- ------------
Total/Avg/Wtd. Avg./Min/Max:................. 261 $ 1,775,167,073 100.0% $6,801,406 $ 62,467,513
--- --------------- ----- ----------- ------------
--- --------------- ----- ----------- ------------
<CAPTION>
WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
AMORTIZATION TYPES LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE(1)
- - --------------------------------------------- --------------- --------------- --------------- --------------- -------------
<S> <C>
Balloon...................................... 73.1% 80.0% 1.36x 1.20x 95.6%
ARD Loans.................................... 75.0 80.0 1.31 1.19 95.7
Interest-Only then Amortizing Balloon(2)..... 57.2 60.8 1.49 1.40 100.0
Fully Amortizing............................. 68.1 80.0 1.39 1.20 97.3
--- --- --- --- -----
Total/Avg/Wtd. Avg./Min/Max:................. 73.2% 80.0% 1.34x 1.19x 95.7%
--- --- --- --- -----
--- --- --- --- -----
<CAPTION>
WTD.AVG.
MORTGAGE
AMORTIZATION TYPES RATE
- - --------------------------------------------- -----------
Balloon...................................... 7.735%
ARD Loans.................................... 7.347
Interest-Only then Amortizing Balloon(2)..... 7.030
Fully Amortizing............................. 7.591
-----
Total/Avg/Wtd. Avg./Min/Max:................. 7.603%
-----
-----
</TABLE>
- - ----------------------------------
(1) Occupancy Rates were calculated without reference to hospitality properties.
(2) These Mortgage Loans require payments of interest only for a period of 24
months from origination prior to beginning to make payments that amortize
the Mortgage Loans.
OCCUPANCY RATES
(ALL MORTGAGE LOANS OTHER THAN MORTGAGE LOANS SECURED BY HOSPITALITY PROPERTIES)
<TABLE>
<CAPTION>
AVERAGE
RANGE OF AGGREGATE % BY AGGREGATE CUT-OFF HIGHEST
OCCUPANCY NUMBER CUT-OFF DATE CUT-OFF DATE DATE CUT-OFF DATE
RATES (%) OF LOANS BALANCE BALANCE BALANCE BALANCE
- - ----------- ------------- --------------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
60.001- 65.000............................... 1 $ 3,496,530 0.2% $3,496,530 $ 3,496,530
80.001- 85.000............................... 9 46,524,315 2.8 5,169,368 12,342,671
85.001- 90.000............................... 24 220,853,872 13.3 9,202,245 62,467,513
90.001- 95.000............................... 45 278,696,793 16.8 6,193,262 19,988,861
95.001-100.000............................... 173 1,113,305,009 67.0 6,435,289 41,975,309
--- --------------- ----- ----------- ------------
Total/Avg/Wtd. Avg./Min/Max:................. 252 $ 1,662,876,518 100% $6,598,716 $ 62,467,513
--- --------------- ----- ----------- ------------
--- --------------- ----- ----------- ------------
<CAPTION>
RANGE OF WTD.AVG. MAXIMUM WTD.AVG. MINIMUM WTD.AVG.
OCCUPANCY CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY
RATES (%) LTV RATIO LTV RATIO DSC RATIO DSC RATIO RATE
- - ----------- --------------- --------------- --------------- --------------- -------------
<S> <C>
60.001- 65.000............................... 28.0% 28.0% 2.05x 2.05x 65.0%
80.001- 85.000............................... 70.3 79.8 1.35 1.21 82.6
85.001- 90.000............................... 71.2 79.9 1.34 1.20 88.3
90.001- 95.000............................... 76.2 80.0 1.31 1.19 92.9
95.001-100.000............................... 73.3 80.0 1.33 1.20 98.6
--- --- --- --- ---
Total/Avg/Wtd. Avg./Min/Max:................. 73.3% 80.0% 1.33x 1.19x 95.7%
--- --- --- --- ---
--- --- --- --- ---
<CAPTION>
RANGE OF WTD.AVG.
OCCUPANCY MORTGAGE
RATES (%) RATE
- - ----------- -----------
60.001- 65.000............................... 7.220%
80.001- 85.000............................... 7.510
85.001- 90.000............................... 7.707
90.001- 95.000............................... 7.545
95.001-100.000............................... 7.612
-----
Total/Avg/Wtd. Avg./Min/Max:................. 7.610%
-----
-----
</TABLE>
The weighted average occupancy rate, excluding hospitality properties, is 95.7%.
S-51
<PAGE>
RESERVE ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL
DEPOSIT TO
CONTROL CAPITAL IMP
NUMBER PROPERTY NAME PROPERTY TYPE RESERVE
- - --------- -------------------------------------------------------------- ---------------------------------- -----------
<S> <C> <C> <C>
1 The Eastpoint Mall Retail--Anchored $367,375
2 Ohio Valley Plaza Retail--Anchored --
3 Blair Mill Village East Apt. Multifamily--Conventional 11,250
4 Oak Ridge Portfolio (Roll-up) Office --
5 Stewart Plaza Retail--Anchored 41,875
6 Northbrook Hilton Hotel Hotel--Full Service 17,320
7 Murrieta Town Center Retail--Anchored --
8 Ramada Plaza Hotel Gateway Hotel--Full Service
9 Tacoma Place Shopping Center Retail--Anchored --
10 Huebner Oaks Commons I & II (Roll-up) Retail--Anchored --
11 The Commons Shopping Center A Retail--Anchored --
12 70 East Sunrise Highway Office 938
13 Lakeview Apartments Multifamily--Conventional 37,500
14 One and Three Long Wharf Drive Office 11,812
15 Embassy Suites Salt Lake City Hotel--Limited Service --
16 Benjamin Plaza Shopping Center Retail--Anchored --
17 Bradley Industrial Park Industrial/Warehouse --
18 Fort Lee Hilton Hotel Hotel--Full Service 27,625
19 Tilghman Square Retail--Anchored 6,250
20 Oasis Trails Apt. Complex Multifamily--Conventional --
21 Vista Pointe at the Valley Apartments Multifamily--Conventional 18,500
22 Covered Bridges of Carol Stream Multifamily--Conventional 117,125
23 Oasis Terrace Apt. Multifamily--Conventional --
24 Rio Vista Shopping Center Retail--Anchored 32,625
25 1 Second St,8 & 10 State St,205 Wildwood Ave (Roll-up) Industrial/Warehouse 129,494
26 Copper Palms Apartments Multifamily--Conventional --
27 Tri-City Center Retail--Anchored 263
28 Lakeside Centre Retail--Anchored 5,000
29 Chastain Portfolio (Roll-up) Multifamily--Conventional 52,938
30 Parkview Plaza Retail--Anchored --
31 Eastland Place Shopping Center Retail--Anchored 8,625
32 Crystal Inn Hotel--Limited Service 14,375
33 Oasis Orchid Apt. Complex Multifamily--Conventional --
34 Parkway Plaza Shopping Center Retail--Anchored --
35 Perimeter Station Shopping Center Retail--Anchored --
36 TJ Maxx Plaza Retail--Anchored 52,000
37 Dauphin Plaza Shopping Center Retail--Anchored 40,625
38 Shops at Blue Bell Retail--Anchored --
39 Carrefour at Kirby Woods Retail--Anchored 9,781
40 Imperial Palms Apartments Multifamily--Conventional 436,447
41 Mitchell Plaza Office --
42 Garrett Square Apartments Multifamily--Section 42 --
43 The Sony Music Building Office --
44 S.S. Pierce Building Retail--Unanchored 36,813
45 Northcourt Commons Retail--Anchored --
46 Comdisco Office --
47 The Oak Run Apartments Multifamily--Conventional 12,094
48 Hampton Inn--Englewood & Dayton (Roll-up) Hotel--Limited Service --
49 Central Place Phase I & II (Roll-up) Retail--Anchored --
50 Delray Crossings Shopping Center Retail--Anchored 3,750
51 Silver Pines Multifamily--Conventional 30,000
52 Sycamore Square (Phases I & II) Retail--Anchored --
53 One Century Tower Office --
54 Flamingo Bay Club Apartments Multifamily--Conventional 15,188
55 University Business Center Industrial/Warehouse 20,000
56 Whitehall Boca Raton Health Care--Assisted Living/
Skilled Nursing 4,125
57 Shadowridge Meadows Apartments Multifamily--Conventional 25,000
58 Coral Springs Financial Plaza Office 76,400
59 Newark Shopping Center Retail--Unanchored 3,500
60 103-00 Foster Ave. Industrial/Warehouse --
61 Mercado at Scottsdale Ranch Retail--Anchored --
62 Nicholson Research Center Office --
63 The Plaza Rios Shopping Center Retail--Anchored 9,750
64 WWDC Industrial Park Industrial/Warehouse 12,625
65 Faircrest Apartments Multifamily--Conventional 60,938
66 Garden Walk Apartments Multifamily--Conventional 11,562
67 Shepherd Plaza Shopping Center Retail--Unanchored 49,800
68 Players Club Apartments Multifamily--Conventional 11,250
69 Ralph's Supermarket Retail--Anchored --
70 41 State Street Office --
71 Laguna Village Shopping Center Retail--Unanchored 94,859
72 Hoover Commons Shopping Center Retail--Anchored 32,250
73 Ashley Woods Apartments Multifamily--Conventional 625,940
74 Greenbriar South Shopping Center Retail--Anchored --
75 Springs of Napa Health Care--Congregate Care 16,875
<CAPTION>
CURRENT
BALANCE
OF CURRENT ANNUAL AS OF
CAPITAL BALANCE OF DEPOSIT CURRENT DATE OF
CONTROL IMP ANNUAL DEPOSIT TO REPLACEMENT TO TI/LC BALANCE OF RESERVE
NUMBER RESERVE REPLACEMENT RESERVE RESERVE RESERVE TI/LC RESERVE ACCOUNTS
- - --------- --------- ----------------------- ------------ --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 367,375 $144,000 $12,000 $96,000 $8,000 2/4/98
2 -- 57,668 -- 86,503 25,516 2/4/98
3 11,250 192,000 -- N/A N/A 12/11/97
4 -- 61,032 17,381 187,032 759,344 2/5/98
5 39,938 28,952 16,888 36,000 21,000 2/4/98
6 17,320 4% of Gross Income 44,956 N/A N/A 12/3/97
7 -- 64,984 5,415 160,033 436,941 2/4/98
8 4% of Gross Income 1,506,079 N/A N/A 12/31/97
9 -- 23,740 5,947 26,988 6,761 2/4/98
10 -- -- -- -- -- 2/4/98
11 -- 33,630 14,012 84,000 35,000 2/4/98
12 938 23,265 1,939 120,000 10,000 2/4/98
13 37,500 157,275 13,106 N/A N/A 2/4/98
14 11,812 25,080 3,205 219,876 854 2/4/98
15 -- 4% of Gross Income 78,841 N/A N/A 2/4/98
16 -- 29,666 4,944 120,000 20,000 2/4/98
17 -- -- 111,522 -- 150,000 2/4/98
18 27,625 4% of Gross Income 130,203 N/A N/A 2/3/98
19 -- 35,124 38,108 63,360 42,458 2/4/98
20 -- 54,000 4,500 N/A N/A 2/4/98
21 18,500 34,650 -- N/A N/A 2/4/98
22 77,850 94,488 19,940 N/A N/A 2/4/98
23 -- 50,400 4,200 N/A N/A 2/4/98
24 32,687 14,402 9,604 391,502 16,050 2/3/98
25 129,494 35,976 2,998 81,001 6,750 2/4/98
26 -- 40,424 3,369 N/A N/A 1/31/98
27 263 23,034 1,920 33,216 2,768 2/4/98
28 -- 27,271 4,995 61,217 -- 12/31/97
29 51,064 134,520 21,726 N/A N/A 2/4/98
30 -- 47,952 39,960 84,000 70,000 2/4/98
31 8,625 27,931 2,328 98,400 8,200 2/5/98
32 14,375 4% of Gross Income 28,751 N/A N/A 2/4/98
33 -- 54,000 -- N/A N/A 2/4/98
34 -- 17,160 1,430 33,000 2,750 2/4/98
35 -- 14,194 2,366 -- -- 2/4/98
36 52,000 38,450 -- 92,979 -- 12/12/97
37 40,625 18,437 3,075 50,000 505,725 2/4/98
38 -- 11,044 -- 27,554 -- 1/8/98
39 9,781 13,307 -- -- -- 2/4/98
40 436,447 122,745 -- N/A N/A 2/4/98
41 -- 13,006 1,084 -- 300,709 2/4/98
42 -- 99,800 16,646 N/A N/A 2/4/98
43 -- 7,532 628 48,966 4,081 2/4/98
44 5,563 18,204 4,556 70,000 17,524 2/4/98
45 -- -- -- -- -- 2/4/98
46 -- -- -- -- -- 2/4/98
47 -- 110,460 27,666 N/A N/A 2/4/98
48 -- 4% of Gross Income 12,705 N/A N/A 2/5/98
49 -- 19,308 19,308 34,415 34,415 2/4/98
50 -- 25,722 3,754 63,000 -- 12/31/97
51 30,000 65,262 -- N/A N/A 2/4/98
52 -- 40,833 3,403 -- -- 2/5/98
53 -- 23,388 9,759 -- 750,000 2/4/98
54 15,188 45,136 15,045 N/A N/A 2/3/98
55 20,000 65,100 20,726 -- -- 2/4/98
56
-- 35,748 4,120 N/A N/A 12/31/97
57 25,000 52,992 8,832 N/A N/A 2/3/98
58 -- 60,000 -- 153,360 -- 12/31/97
59 3,504 36,934 6,163 114,495 19,123 12/31/97
60 -- 40,404 13,504 75,000 31,377 2/4/98
61 -- 11,840 100,987 48,211 4,018 2/4/98
62 -- 14,200 4,750 247,661 82,852 2/4/98
63 -- 22,156 22,732 25,000 15,713 2/4/98
64 12,625 91,743 7,645 133,981 11,165 2/6/98
65 61,626 74,328 37,350 N/A N/A 9/30/97
66 11,562 47,520 7,928 N/A N/A 2/4/98
67 49,800 22,572 9,434 30,000 49,910 2/4/98
68 11,250 36,000 -- N/A N/A 12/30/97
69 -- 7,860 -- -- -- 2/4/98
70 -- 23,100 1,925 50,004 4,167 2/4/98
71 564 15,348 7,703 83,004 161,961 2/4/98
72 32,252 37,152 -- 88,884 -- 12/31/97
73 627,420 100,672 8,389 N/A N/A 2/4/98
74 -- 19,503 3,251 39,996 6,667 2/5/98
75 16,875 20,400 3,400 N/A N/A 2/4/98
</TABLE>
S-52
<PAGE>
RESERVE ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL
DEPOSIT TO
CONTROL CAPITAL IMP
NUMBER PROPERTY NAME PROPERTY TYPE RESERVE
- - --------- -------------------------------------------------------------- ---------------------------------- -----------
<S> <C> <C> <C>
76 Woodtrail Apartments Multifamily--Conventional $32,270
77 The Park Pineway Shopping Center Retail--Anchored 3,250
78 Stoneridge Apartment Project Multifamily--Conventional 11,875
79 The Shoppes at Fort Wayne Retail--Unanchored --
80 Fred Meyer Superstore Retail--Anchored 12,500
81 Uptown Collection Shopping Center Retail--Unanchored --
82 BJ's Wholesale Club Building Retail--Anchored --
83 Park Inn International Hotel--Limited Service 6,313
84 Harte Haven Shopping Center Retail--Anchored --
85 Northgate Shopping Center Retail--Anchored 136,100
86 Parkwood Square Shopping Center Retail--Anchored 220,231
87 Gateway Plaza Shopping Center Retail--Anchored 21,750
88 The Paragon Building Office --
89 Jefferson Square Shopping Center Retail--Anchored --
90 11000 & 13000 Midlantic Drive Industrial/Warehouse 1,563
91 Clearwater Village Shopping Center Retail--Anchored --
92 Woodbrook Apartments Multifamily--Conventional --
93 90 State Street Office 14,063
94 Ford Centre Office --
95 Northwood Plaza Retail--Anchored 46,250
96 Dogwood Station Shopping Center Retail--Anchored --
97 Los Mares Theater Plaza Retail--Unanchored --
98 Clearwater Shoppes Shopping Center Retail--Anchored 1,875
99 Lindenwood Shopping Center Retail--Anchored 28,770
100 Westvale Plaza Retail--Anchored 281,250
101 Valley Ridge Corporate Center Office 5,175
102 Hoffmann Manor Health Care--Assisted Living 17,250
103 Kendall Plaza Retail--Anchored 3,313
104 Roberts Field Shopping Center Retail--Unanchored 8,750
105 Piedmont Corporate Center (Motorola) Office --
106 Towne Parc Apartments Multifamily--Conventional 639,348
107 Royalton on the Green Multifamily--Conventional 11,250
108 Westgate Plaza Retail--Unanchored --
109 Three Stamford Landing Office 1,875
110 The Woodlawn Commons Medical Center Office 31,875
111 South Seminole Industrial/Warehouse 35,000
112 Orscheln Home & Farm Stores (Roll Up) Retail--Unanchored 3,938
113 The Lauderdale Tower Apartments Multifamily--Conventional 127,220
114 Creekside Business Park Office 688
115 500 & 800 Winding Brook Drive (Roll-up) Office --
116 Carriage Hills East Apartments Multifamily--Conventional --
117 Food For Less Grocery Store Retail--Anchored --
118 Alma Park Center Retail--Anchored --
119 Oak Park Apartments Multifamily--Conventional 103,750
120 Las Colinas Multifamily--Conventional 16,906
121 River Oaks Apartments--Killeen, TX Multifamily--Conventional --
122 Twin Oaks Village Shopping Center Retail--Anchored --
123 Woodmont Plaza Retail--Anchored 38,750
124 Treasury Services Corporation Building Office --
125 Graymere Apartments Multifamily--Conventional 11,375
126 Hart Street Medical Center Office --
127 1301 Guadalupe Street Retail--Anchored 1,250
128 Technologies Applications, Inc. Office --
129 Five Points Plaza Retail--Anchored 46,375
130 195 Bear Hill Road Self Storage 9,875
131 Hampton Inn Hotel Hotel--Limited Service 3,940
132 The Pender Mill Office Building Office --
133 Centre II Office 37,619
134 Plaza De Fiesta Retail--Unanchored 11,750
135 Crossroads Shopping Center Retail--Anchored 12,813
136 South Port Apartments Multifamily--Conventional 282,995
137 Extra Space Center IV, V & VI Self Storage 13,375
138 Two Stamford Landing Office 2,500
139 Metroplex Business Park Office 12,625
140 Atrium Northeast Office Building Office 1,250
141 The Cottages Multifamily--Conventional 17,188
142 Sabal Pointe Plaza Retail--Anchored --
143 Brookside Industrial Center Industrial/Warehouse 1,250
144 Playhouse Square Retail--Unanchored 1,806
145 Kittle's Home Furnishings Plaza Retail--Unanchored --
146 Atrium Northwood Office Building Office --
147 Food For Less Supermarket (Hempfield) Retail--Anchored 5,625
148 Osborn Commons Apartments Multifamily--Conventional --
149 One Dock Street Office 11,000
150 Columbia Station Apartments Multifamily--Conventional 8,250
151 Everett Auto Mall Retail--Unanchored 6,125
152 Coliseum Shoppes Retail--Unanchored --
153 Deerfield Run Apartments Multifamily--Conventional 13,000
<CAPTION>
CURRENT
BALANCE
OF CURRENT ANNUAL AS OF
CAPITAL BALANCE OF DEPOSIT CURRENT DATE OF
CONTROL IMP ANNUAL DEPOSIT TO REPLACEMENT TO TI/LC BALANCE OF RESERVE
NUMBER RESERVE REPLACEMENT RESERVE RESERVE RESERVE TI/LC RESERVE ACCOUNTS
- - --------- --------- ----------------------- ------------ --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
76 $27,760 $66,744 $5,890 N/A N/A 2/4/98
77 3,250 21,426 1,788 $ 36,000 $ 3,000 2/4/98
78 11,875 51,504 -- N/A N/A 1/31/98
79 -- 13,956 1,164 57,600 4,800 2/5/98
80 12,500 -- -- -- -- 2/4/98
81 -- 3,450 6,900 8,304 16,600 2/4/98
82 -- 10,851 1,811 -- -- 2/4/98
83 6,313 4% of Gross Income 9,319 N/A N/A 2/4/98
84 -- 22,164 -- 37,200 3,100 2/4/98
85 138,313 63,600 21,663 93,636 -- 2/9/98
86 220,231 12,234 1,019 38,333 -- 2/4/98
87 21,750 15,157 200,000 41,160 126,102 2/4/98
88 -- 17,373 1,448 12,000 51,000 2/4/98
89 -- 47,004 47,000 231,048 57,762 2/3/98
90 1,563 13,344 3,441 75,000 268,780 2/4/98
91 -- 2,988 249 24,000 2,000 2/5/98
92 -- 25,200 6,315 N/A N/A 1/31/98
93 14,063 27,791 4,632 80,044 8,998 2/4/98
94 -- 46,530 19,478 123,458 51,680 2/4/98
95 46,250 22,630 5,205 39,828 13,297 2/4/98
96 -- 8,220 2,750 18,900 6,323 12/31/97
97 -- 6,399 1,068 -- 285,224 2/4/98
98 1,875 9,335 778 47,400 3,950 2/5/98
99 28,770 12,908 1,076 28,000 2,333 2/4/98
100 281,250 26,196 2,183 -- -- 2/4/98
101 5,175 16,247 -- 75,000 6,250 2/4/98
102 17,250 50,000 -- N/A N/A 2/4/98
103 3,313 14,140 1,178 -- -- 2/4/98
104 8,750 13,722 -- 27,443 -- 12/31/97
105 -- 7,152 1,790 85,860 21,482 2/4/98
106 529,174 84,276 32,093 N/A N/A 2/9/98
107 11,250 60,324 -- N/A N/A 2/4/98
108 -- 15,172 1,264 45,311 103,776 2/4/98
109 1,875 8,742 4,371 55,000 27,500 2/4/98
110 31,875 14,397 -- 25,000 128,266 1/31/98
111 35,164 19,596 1,635 29,595 2,470 12/31/97
112 3,938 37,363 3,114 7,575 631 2/4/98
113 129,288 24,600 73,861 N/A N/A 2/9/98
114 688 103,001 -- 25,000 4,169 2/4/98
115 -- 13,968 9,734 50,000 79,672 (3) 2/4/98
116 -- 57,629 4,802 N/A N/A 2/4/98
117 -- 12,458 -- -- -- 2/4/98
118 -- 13,840 2,309 52,546 8,767 2/4/98
119 103,750 46,800 3,900 N/A N/A 1/31/98
120 13,331 61,680 25,519 N/A N/A 2/4/98
121 -- 60,648 5,054 N/A N/A 1/31/98
122 -- 23,491 1,708 40,000 3,333 2/5/98
123 38,750 13,865 1,155 30,466 2,539 2/4/98
124 -- -- -- 25,000 4,168 2/4/98
125 11,375 32,844 10,972 N/A N/A 2/4/98
126 -- 7,896 51,340 24,996 56,249 2/4/98
127 1,250 -- -- -- -- 2/4/98
128 -- -- 395 -- -- 2/4/98
129 46,375 14,326 2,389 27,000 203,453 2/4/98
130 9,875 18,502 7,733 N/A N/A 2/4/98
131 3,951 4% of Gross Income 16,751 N/A N/A 12/31/97
132 -- 10,581 40,947 26,804 2,234 2/4/98
133 37,618 8,136 678 35,261 2,938 2/4/98
134 11,750 12,000 1,000 -- -- 2/4/98
135 12,813 20,633 1,719 43,082 3,590 2/4/98
136 283,664 73,440 6,120 N/A N/A 2/4/98
137 13,366 19,774 -- N/A N/A 12/31/97
138 2,500 9,210 4,605 54,996 27,500 2/4/98
139 12,625 20,238 3,399 68,472 5,956 2/4/98
140 1,250 8,388 2,098 50,772 8,463 2/4/98
141 17,188 44,832 3,736 N/A N/A 2/4/98
142 -- 7,120 1,781 15,000 3,752 2/4/98
143 1,250 6,042 503 66,660 5,555 2/5/98
144 1,806 4,356 1,092 15,000 2,502 2/4/98
145 -- 9,732 -- -- -- 2/4/98
146 -- 9,108 3,042 66,996 58,592 2/4/98
147 5,625 5,193 433 -- -- 2/4/98
148 -- 43,896 -- N/A N/A 2/4/98
149 11,000 13,500 6,750 80,000 40,000 2/4/98
150 8,250 32,700 -- N/A N/A 2/4/98
151 6,125 7,140 -- 30,000 -- 2/3/98
152 -- 5,322 444 46,200 3,850 2/5/98
153 13,000 41,616 3,218 N/A N/A 2/5/98
</TABLE>
S-53
<PAGE>
RESERVE ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL
DEPOSIT TO
CONTROL CAPITAL IMP
NUMBER PROPERTY NAME PROPERTY TYPE RESERVE
- - --------- -------------------------------------------------------------- ---------------------------------- -----------
<S> <C> <C> <C>
154 Berkshire Center Retail--Unanchored $15,000
155 Heritage Place Apartments Multifamily--Conventional 129,415
156 K-Mart Plaza Retail--Anchored --
157 4611-4811 Kimmel Drive Industrial/Warehouse --
158 Flint's Crossing Shopping Center Retail--Anchored 52,750
159 Shaker-Loudon Road Plaza Office 23,063
160 Food For Less Supermarket (Pine) Retail--Anchored 9,375
161 Hitachi Tech Center Office 8,313
162 Bay Harbour Apartments Multifamily--Conventional 2,500
163 East Bridge Landing Annex Multifamily--Conventional 45,500
164 Raymour & Flanigan Retail--Unanchored 1,875
165 20-24 Newbury Street Retail--Unanchored 9,562
166 Tates Creek South Shopping Center Retail--Anchored --
167 Forest Lake II Apartments Multifamily--Conventional 5,938
168 446 Blake St Industrial/Warehouse --
169 The Pavillions and The Verandas (Roll-up) Retail--Unanchored 2,375
170 Deerfield Apartments Multifamily--Conventional 51,250
171 Bay Ridge Apartments Multifamily--Conventional 8,765
172 River Oaks Apartments--Wetumpka, AL Multifamily--Conventional --
173 Lawrence Commons Office 8,813
174 511 Eleventh Avenue South Office Building Office 22,250
175 Causeway Plaza Retail--Anchored --
176 Richwood Shopping Center Retail--Unanchored 171,000
177 Alderwood Target Plaza Retail--Unanchored 1,875
178 Cherokee North Shopping Center Retail--Anchored --
179 Stone Ridge Apartments Multifamily--Conventional --
180 Point West Apartments Multifamily--Conventional 20,875
181 Main Business Center Industrial/Warehouse 20,513
182 Lancers Square Retail Center Retail--Unanchored --
183 Cahokia Village Shopping Center Retail--Anchored --
184 Quarry West Apartments Multifamily--Conventional 15,938
185 Country Way Apartments Multifamily--Conventional 58,500
186 The Victorian Apartments Multifamily--Conventional 64,125
187 Picasso Tower Office 8,125
188 Alafaya Square Retail--Unanchored --
189 Sedgwick Centre Office Building Office --
190 Highland Ridge Apartments Multifamily--Conventional 29,000
191 Mobile One Mobile Home Park Mobile Home Park 33,406
192 Sand Creek Apartments Multifamily--Conventional --
193 Scotch Pines East Apartments Multifamily--Conventional 2,500
194 Oakcreek Apartments Multifamily--Conventional 120,500
195 New Towne West Aptartments Multifamily--Conventional 1,563
196 Stone Hollow Apartments Multifamily--Conventional 81,955
197 Holiday Inn Express Hotel--Limited Service 6,500
198 Village Square East Shopping Center Retail--Unanchored 8,625
199 Willowstream North Garden Apartments Multifamily--Conventional 55,125
200 Duck Creek Shopping Center Retail--Unanchored 65,750
201 470 West Avenue Office 875
202 River One Office Plaza Office 625
203 Lyell-Mt. Read Business Center Industrial/Warehouse 22,500
204 Landmark Woods Apartments Multifamily--Conventional 100,000
205 Mountain Vista Apartments Multifamily--Conventional 29,375
206 Shoppers Fair Shopping Center Retail--Unanchored --
207 Lafayette Place Apartments Multifamily--Conventional 20,185
208 America Plaza Office 1,556
209 Valley View Hacienda Business Park II Industrial/Warehouse 1,094
210 Salem Village Center Retail--Unanchored 10,000
211 Granada/Turnberry Apartments Multifamily--Conventional 11,000
212 The 14614 Falling Creek Office Building Office --
213 One Pavilion Avenue Industrial/Warehouse 143,500
214 Automotive Portfolio (Roll-up) Retail--Unanchored 28,313
215 Mountain Springs Apartments Multifamily--Conventional 173,563
216 The I-Drive Center Shopping Center Retail--Unanchored --
217 9-11 Park Avenue Parking Garage 33,750
218 Tricom Executive Center Office 8,650
219 3550 Biscayne Boulevard Office 71,875
220 Jefferson Park Apartments (I) Multifamily--Section 42 4,113
221 Clinical Associates Building Office 5,250
222 Summit Business Park Office --
223 Wellington Square Shopping Center Retail--Unanchored 16,250
224 Shannon Plaza Apartments Multifamily--Conventional 4,625
225 Bay Island Apartments Multifamily--Conventional 68,875
226 Academy Crossing Shopping Center Retail--Unanchored --
227 Coopersburg Shopping Center Retail--Anchored --
228 1003 London Road Office 2,500
229 Rutgers Plaza Shopping Center Retail--Anchored --
230 Apollo Beach Marina Apartments Multifamily--Conventional 813
231 Jefferson Park Apartments (II) Multifamily--Section 42 3,769
<CAPTION>
CURRENT
BALANCE
OF CURRENT ANNUAL AS OF
CAPITAL BALANCE OF DEPOSIT CURRENT DATE OF
CONTROL IMP ANNUAL DEPOSIT TO REPLACEMENT TO TI/LC BALANCE OF RESERVE
NUMBER RESERVE REPLACEMENT RESERVE RESERVE RESERVE TI/LC RESERVE ACCOUNTS
- - --------- --------- ----------------------- ------------ --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
154 $15,000 $31,111 $5,185 -- -- 2/4/98
155 129,415 21,000 7,014 N/A N/A 2/4/98
156 -- 35,475 5,917 $ 14,781 $ 2,465 2/4/98
157 -- 30,696 2,558 20,388 1,699 2/4/98
158 52,750 13,166 3,297 32,404 8,114 2/4/98
159 23,063 8,000 -- 75,000 -- 2/4/98
160 9,375 5,020 418 -- -- 2/4/98
161 8,313 13,182 1,099 -- -- 2/4/98
162 2,500 76,500 31,991 N/A N/A 2/4/98
163 45,500 7,500 3,135 7,608 3,170 2/4/98
164 1,875 5,520 922 11,040 1,844 2/4/98
165 9,562 3,225 808 36,000 9,018 2/4/98
166 -- 4,292 2,861 15,616 1,301 2/4/98
167 5,938 18,592 1,299 N/A N/A 2/5/98
168 -- 17,460 1,917 56,400 -- 2/4/98
169 2,375 2,352 -- 36,000 -- 2/5/98
170 51,360 38,484 3,207 N/A N/A 2/4/98
171 8,765 13,204 2,202 N/A N/A 2/4/98
172 -- 14,568 2,428 N/A N/A 1/31/98
173 8,813 8,755 80,971 30,000 102,500 2/4/98
174 22,250 32,938 2,745 -- -- 2/4/98
175 -- 21,329 5,342 35,000 8,766 2/4/98
176 171,000 8,807 734 20,916 100,000 2/4/98
177 1,875 26,340 1,239 70,000 19,375 2/4/98
178 -- 7,847 1,963 27,688 6,927 2/4/98
179 -- 21,730 -- N/A N/A 2/4/98
180 20,875 38,400 13,030 N/A N/A 2/4/98
181 20,513 28,248 4,708 20,000 3,333 2/4/98
182 -- 12,917 2,154 15,000 31,283 2/4/98
183 -- 14,544 2,425 40,000 6,669 2/4/98
184 15,938 27,504 2,293 N/A N/A 2/4/98
185 58,500 39,150 39,150 N/A N/A 2/4/98
186 64,125 38,700 -- N/A N/A 2/4/98
187 8,125 13,036 2,176 -- -- 2/4/98
188 -- 14,376 -- 31,128 -- 12/31/97
189 -- 7,368 614 49,118 4,093 2/3/98
190 29,000 38,302 22,164 N/A N/A 2/4/98
191 33,406 4,059 -- N/A N/A 2/5/98
192 -- 16,800 1,400 N/A N/A 2/4/98
193 2,500 19,584 1,632 N/A N/A 2/4/98
194 122,458 30,240 10,658 N/A N/A 2/9/98
195 1,563 33,120 8,286 N/A N/A 2/4/98
196 83,284 35,280 12,439 N/A N/A 2/9/98
197 6,500 4% of Gross Income 5,389 N/A N/A 2/4/98
198 8,625 10,480 1,747 30,000 5,000 2/4/98
199 55,125 12,600 2,101 N/A N/A 2/4/98
200 65,750 -- -- -- -- 2/4/98
201 875 9,000 4,500 38,000 19,000 2/4/98
202 625 5,916 986 26,712 4,456 2/4/98
203 22,500 28,047 4,675 -- -- 2/4/98
204 100,215 17,888 1,491 N/A N/A 2/4/98
205 29,375 38,004 9,501 N/A N/A 1/31/98
206 -- 10,098 4,219 15,000 6,267 2/4/98
207 20,185 69,000 11,500 N/A N/A 2/4/98
208 1,556 4,500 -- -- -- 12/8/97
209 1,094 5,094 -- -- -- 2/4/98
210 10,000 10,495 1,750 -- -- 2/4/98
211 11,000 24,300 2,025 N/A N/A 1/31/98
212 -- -- 100,474 34,915 78,266 2/4/98
213 143,500 39,745 9,952 14,172 3,543 2/4/98
214 28,398 7,200 -- 25,008 -- 12/31/97
215 173,563 29,040 3,051 N/A N/A 1/31/98
216 -- 10,280 -- 23,917 -- 2/4/98
217 33,750 8,116 676 N/A N/A 2/4/98
218 8,650 7,676 1,282 50,000 8,349 2/4/98
219 71,875 7,000 1,170 -- 40,027 2/4/98
220 4,113 20,900 -- N/A N/A 2/4/98
221 5,250 5,245 437 29,721 2,477 1/14/98
222 -- 8,160 -- 10,191 -- 1/2/98
223 16,250 9,837 4,111 30,000 5,800 2/4/98
224 4,625 21,216 3,540 N/A N/A 2/4/98
225 68,875 27,000 -- N/A N/A 2/4/98
226 -- 14,208 2,368 14,004 3,497 2/6/98
227 -- 13,572 3,404 27,912 5,364 2/6/98
228 2,500 4,997 -- 12,370 -- 12/18/97
229 -- 7,500 625 32,963 2,750 2/4/98
230 813 5,600 1,300 N/A N/A 2/4/98
231 3,769 22,000 -- N/A N/A 2/4/98
</TABLE>
S-54
<PAGE>
RESERVE ACCOUNTS
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
INITIAL
DEPOSIT TO
CONTROL CAPITAL IMP
NUMBER PROPERTY NAME PROPERTY TYPE RESERVE
- - --------- -------------------------------------------------------------- ---------------------------------- -----------
<S> <C> <C> <C>
232 Bert Kouns Self-Storage Self Storage --
233 Sunnyslope Terrace Multifamily--Conventional $ 39,458
234 Mountain View Villas Apartments Multifamily--Conventional 16,938
235 Power Road Medical Center Office 34,724
236 26 East Baseline Road Retail--Unanchored --
237 Country Club Arms Apartments Multifamily--Conventional 34,600
238 Sherman Street Apartments Multifamily--Conventional 25,518
239 Greenbriar Square Shopping Center Retail--Anchored 19,125
240 Woodberry Forest Apartments Multifamily--Conventional 458,065
241 Metro Crest Apartments Multifamily--Conventional 39,375
242 4490 Von Karman Ave. Office --
243 Art Colony Apartments Multifamily--Conventional 5,182
244 N. 10th & Vine Street Building Industrial/Warehouse 8,375
245 3 & 4 Corporate Plaza (Roll-up) Office 3,750
246 CVS--H&R Block Center Retail--Anchored --
247 The Crowne Building Office 4,688
248 23193 Sandalfoot Plaza Drive Retail--Unanchored --
249 CVS--St. Andrews Retail--Anchored --
250 Fair Oaks Shopping Center Retail--Unanchored 5,125
251 Windrush Apartments Multifamily--Conventional 143,600
252 Tutor Time Child Care Center Retail--Unanchored --
253 680 Bridgeport Avenue Office 2,500
254 NW 57th Ave & NW 176th Street Industrial/Warehouse --
255 Warwick Apartments Multifamily--Conventional 22,230
256 Grove One Apartments Multifamily--Conventional --
257 2410 West Temple Street Multifamily--Conventional 375
258 NWC Northwest 183rd Street & US 441 Retail--Unanchored --
259 9575 Southern Boulevard Retail--Unanchored --
260 The Outlot Shoppes at Fort Wayne Retail--Unanchored --
261 Twin Oaks Village Office Park Office 6,500
<CAPTION>
CURRENT
BALANCE
OF CURRENT ANNUAL AS OF
CAPITAL BALANCE OF DEPOSIT CURRENT DATE OF
CONTROL IMP ANNUAL DEPOSIT TO REPLACEMENT TO TI/LC BALANCE OF RESERVE
NUMBER RESERVE REPLACEMENT RESERVE RESERVE RESERVE TI/LC RESERVE ACCOUNTS
- - --------- --------- ----------------------- ------------ --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
232 -- $946 $79 N/A N/A 2/4/98
233 $ 39,458 20,000 3,333 N/A N/A 2/3/98
234 16,938 21,240 7,095 N/A N/A 2/4/98
235 34,724 8,961 15,107 $ 45,200 $ 30,397 2/4/98
236 -- 4,320 1,081 23,520 5,884 2/4/98
237 34,600 24,000 3,004 N/A N/A 2/5/98
238 25,518 22,212 1,851 N/A N/A 2/4/98
239 19,125 -- -- -- -- 2/4/98
240 465,536 21,348 19,744 N/A N/A 2/9/98
241 39,375 35,748 5,958 N/A N/A 2/4/98
242 -- 7,598 2,535 -- -- 2/4/98
243 5,182 11,025 1,838 N/A N/A 1/31/98
244 8,375 -- 16,486 -- 75,000 2/4/98
245 3,750 6,872 1,145 45,369 11,361 2/4/98
246 -- 2,153 718 -- 6,023 2/4/98
247 4,688 7,623 1,271 24,395 4,067 2/4/98
248 -- 1,129 1,129 7,139 -- 2/4/98
249 -- -- -- -- -- 2/4/98
250 5,125 -- -- -- -- 2/4/98
251 143,600 28,213 16,422 N/A N/A 2/4/98
252 -- 2,940 245 -- -- 2/4/98
253 2,500 2,802 1,401 12,000 6,000 2/4/98
254 -- 1,475 1,475 1,632 -- 2/4/98
255 22,230 24,996 10,447 N/A N/A 2/4/98
256 -- 3,500 876 N/A N/A 2/4/98
257 375 5,208 434 N/A N/A 2/4/98
258 -- 1,200 -- 3,500 -- 9/30/97
259 -- 1,662 1,663 2,374 -- 2/4/98
260 -- 591 49 5,100 425 2/5/98
261 6,500 5,506 209 10,540 878 2/5/98
</TABLE>
- - ------------------------
(1) Includes $423,605 tenant specific lease reserve.
(2) Includes $100,000 tenant specific lease reserve.
(3) Includes $57,422 tenant specific lease reserve.
(4) Includes $200,000 tenant specific lease reserve.
S-55
<PAGE>
THE MORTGAGE LOAN SELLER
On or about March 11, 1998 (the "Closing Date"), the Depositor will acquire
the Mortgage Loans from the Mortgage Loan Seller pursuant to a purchase
agreement (the "Mortgage Loan Purchase Agreement"). The Mortgage Loan Seller
acquired or originated the Mortgage Loans as described above under "--Mortgage
Loan History."
The Mortgage Loan Seller is a corporation organized under the laws of the
State of Delaware and an affiliate of both the Depositor and the Underwriter.
The principal offices of the Mortgage Loan Seller are located at 200 Vesey
Street, New York, New York 10285.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Closing Date, the Depositor will transfer the Mortgage
Loans, without recourse, to the Trustee for the benefit of the
Certificateholders. In connection with such transfer, the Depositor will require
the Mortgage Loan Seller to deliver to the Trustee or to a document custodian
appointed by the Trustee (a "Custodian"), among other things, the following
documents with respect to each Mortgage Loan (collectively, as to each Mortgage
Loan, the "Mortgage File"): (i) the original Mortgage Note, endorsed, without
recourse, to the order of the Trustee (or, if the original Mortgage Note has
been lost, an affidavit to such effect from the Mortgage Loan Seller or another
prior holder, together with a copy of the Mortgage Note); (ii) the original or a
copy of the Mortgage and of any and all intervening assignments of the Mortgage,
in each case with evidence of recording indicated thereon; (iii) the original or
a copy of any related assignment of leases (if such item is a document separate
from the Mortgage), and of any and all intervening assignments thereof, in each
case with evidence of recording indicated thereon; (iv) an original assignment
of the Mortgage in favor of the Trustee and in recordable form; (v) an original
assignment of any related assignment of leases (if such item is a document
separate from the Mortgage) in favor of the Trustee and in recordable form; (vi)
originals or copies of all written modification agreements in those instances in
which the terms or provisions of the Mortgage or Mortgage Note have been
modified; (vii) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such Mortgage Loan, or,
if such policy has not been issued, an irrevocable, binding commitment to issue
such title insurance policy; (viii) any file copies of any UCC financing
statements and related amendments and continuation statements in the possession
of the Mortgage Loan Seller; (ix) an original assignment in favor of the Trustee
of any financing statement executed and filed in favor of the Mortgage Loan
Seller or any prior mortgagee in the relevant jurisdiction; and (x) an original
or copy of any ground lease relating to such Mortgage Loan.
The Trustee or a Custodian on its behalf will be required to review each
Mortgage File within a specified period following its receipt thereof. If any of
the above-described documents is found during the course of such review to be
missing from any Mortgage File or defective, if such omission or defect
materially and adversely affects the interests of the Certificateholders, and if
the Mortgage Loan Seller cannot deliver the missing document or cure the defect
(other than omissions solely due to a document not having been returned by the
related recording office) within a period of 90 days following its receipt of
notice thereof, then the Mortgage Loan Seller will be obligated pursuant to the
Mortgage Loan Purchase Agreement (the relevant rights under which will be
assigned by the Depositor to the Trustee on or prior to the Closing Date) to
repurchase the affected Mortgage Loan at a price (the "Purchase Price")
generally equal to the sum of (i) the unpaid principal balance of such Mortgage
Loan, (ii) unpaid accrued interest on such Mortgage Loan (calculated at the
Mortgage Rate) to, but not including, the Due Date in the Collection Period in
which the purchase is to occur, and (iii) certain servicing expenses that are
reimbursable to the Master Servicer or the Special Servicer; provided that, with
limited exception, the Mortgage Loan Seller will have an additional 90-day
period to deliver the document or cure the defect, as the case may be, if it is
diligently proceeding to effect such delivery or cure and has delivered to the
Trustee an officer's certificate that describes the reasons that such delivery
or cure was not effected within the first 90-day cure period and the actions it
proposes to take to effect such delivery or cure, and which states that
S-56
<PAGE>
it anticipates such delivery or cure will be effected within the additional
90-day period; and provided further, that, if a document remains undelivered or
a defect remains uncured after the initial and additional 90-day periods due to
the failure of the related recording office to return such document, the
Mortgage Loan Seller will be entitled to continue deferring its cure and
repurchase obligations (but, in no event, however, beyond the second anniversary
of the Closing Date) as long as it certifies to the Trustee every 30 days that
the failure to deliver such document or cure such defect continues solely
because of the continued failure of the related recording office to return such
document and that it is diligently attempting to effect such delivery or cure,
specifying the actions being taken by it. The foregoing repurchase obligation
will constitute the sole remedy available to the Certificateholders and the
Trustee for any uncured failure to deliver, or any uncured defect in, a
constituent Mortgage Loan document. The Mortgage Loan Seller will be solely
responsible for such repurchase obligation, and such obligation will not be the
responsibility of the Depositor or any of its other affiliates.
The Pooling and Servicing Agreement will require the Trustee promptly to
cause each of the assignments described in clauses (iv), (v) and (ix) of the
second preceding paragraph to be submitted for recording or filing, as the case
may be, in the real property records of the jurisdiction in which the related
Mortgaged Property is located or in the appropriate public office for UCC
financing statements, as applicable. See "The Trust Agreement--Assignment of
Mortgage Assets" in the Prospectus.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller will
represent and warrant with respect to each Mortgage Loan (subject to certain
exceptions specified in the 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 that: (i) the information set forth in
the schedule of Mortgage Loans attached to the Mortgage Loan Purchase Agreement
(which contains certain of the information set forth in Annex A) is true and
correct in all material respects as of the Cut-off Date; (ii) if such Mortgage
Loan was originated by the Mortgage Loan Seller or an affiliate thereof, then,
as of the date of its origination, such Mortgage Loan complied in all material
respects with, or was exempt from, all requirements of federal, state or local
law relating to the origination of such Mortgage Loan and, if such Mortgage Loan
was not originated by the Mortgage Loan Seller or an affiliate thereof, then, to
the best of the Mortgage Loan Seller's knowledge after having performed the type
of due diligence customarily performed by prudent institutional commercial and
multifamily mortgage lenders, as of the date of its origination, such Mortgage
Loan complied in all material respects with, or was exempt from, all
requirements of federal, state or local law relating to the origination of such
Mortgage Loan; (iii) the Mortgage Loan Seller owns the Mortgage Loan, has good
and marketable title thereto, has full right and authority to sell, assign and
transfer the Mortgage Loan and is transferring the Mortgage Loan free and clear
of any and all liens, pledges, charges or security interests; (iv) the proceeds
of such Mortgage Loan have been fully disbursed and there is no requirement for
future advances thereunder; (v) to the actual knowledge of the Mortgage Loan
Seller, each of the related Mortgage Note, related Mortgage, related assignment
of leases, if any, and other agreements executed in connection therewith is the
legal, valid and binding obligation of the maker thereof (subject to any
non-recourse provisions therein and any state anti-deficiency legislation),
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), and a legal opinion generally to such effect
was obtained by the originator of such Mortgage Loan at the time of origination;
(vi) as of the date of its origination, there was no valid offset, defense,
counterclaim or right to rescission with respect to any related Mortgage Note,
Mortgage or other agreement executed in connection with such Mortgage Loan, and,
as of the Cut-off Date, to the actual knowledge of the Mortgage Loan Seller,
there is no valid offset, defense, counterclaim or right of rescission with
respect to any related Mortgage Note, Mortgage or other agreement; (vii) the
assignment of the related Mortgage in favor of the Trustee constitutes the
legal, valid and binding
S-57
<PAGE>
assignment of such Mortgage to the Trustee (subject to customary bankruptcy and
creditors' rights limitations); (viii) the related Mortgage is (or, in the case
of a Cross-Collateralized Mortgage Loan, each of the related Mortgages are) a
valid and enforceable first lien on the related Mortgaged Property, which
Mortgaged Property is free and clear of all encumbrances and liens having
priority over or on a parity with the first lien of such Mortgage, except for
(A) liens for real estate taxes and special assessments not yet due and payable,
(B) covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being customarily acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal of such
Mortgaged Property made in connection with the origination of such Mortgage
Loan, (C) other matters to which like properties are commonly subject which do
not, individually or in the aggregate, materially interfere with the benefits of
the security intended to be provided by such Mortgage or materially affect the
value or marketability of such Mortgaged Property and (D) any lien securing
another Mortgage Loan in the Trust Fund; (ix) to the actual knowledge of the
Mortgage Loan Seller, all taxes and governmental assessments that prior to the
Cut-off Date became due or owing in respect of, and affect, the related
Mortgaged Property (or, in the case of a Cross-Collateralized Mortgage Loan, the
related primary Mortgaged Property) have been paid, or an escrow of funds in an
amount sufficient to cover such payments has been established; (x) as of the
date of its origination, there was no proceeding pending for the total or
partial condemnation of the related Mortgaged Property (or, in the case of a
Cross-Collateralized Mortgage Loan, the related primary Mortgaged Property) that
materially affects the value thereof, and such Mortgaged Property was free of
material damage; and, as of the Cut-off Date, the Mortgage Loan Seller has not
received any notice of the commencement of any proceeding for the total or
partial condemnation of the related Mortgaged Property (or, in the case of a
Cross-Collateralized Mortgage Loan, the related primary Mortgaged Property) that
materially affects the value thereof, and such Mortgaged Property is free of
material damage; (xi) as of the date of its origination, all insurance required
under the related Mortgage for such Mortgage Loan was in full force and effect
with respect to the related Mortgaged Property (or, in the case of a
Cross-Collateralized Mortgage Loan, the related primary Mortgaged Property);
(xii) as of the Cut-off Date, no Mortgage Loan is, or in the prior 12 months,
has been, 30 days or more past due in respect of any Scheduled Payment; and
(xiii) one or more environmental site assessments were performed with respect to
the related Mortgaged Property (or, in the case of a Cross-Collateralized
Mortgage Loan, the related primary Mortgaged Property) during the 18-month
period preceding the Cut-off Date, and the Seller, having made no independent
inquiry other than to review the report(s) prepared in connection with the
assessment(s) referenced herein, has no knowledge of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property that
was not disclosed in such report(s). For purposes of the foregoing, the "primary
Mortgaged Property" for any Cross-Collateralized Mortgage Loan is the one
identified on Annex A as corresponding thereto.
In the case of a breach of any of the foregoing representations and
warranties that materially and adversely affects the interests of the
Certificateholders, the Mortgage Loan Seller, if it cannot cure such breach
within a period of 90 days following its receipt of notice thereof, will be
obligated pursuant to the Mortgage Loan Purchase Agreement (the relevant rights
under which will be assigned by the Depositor to the Trustee on or prior to the
Closing Date) to repurchase the affected Mortgage Loan at the applicable
Purchase Price; provided that, with limited exception, the Mortgage Loan Seller
will have an additional 90-day period to cure such breach if it is diligently
proceeding with such cure and has delivered to the Trustee an officer's
certificate that describes the reasons that a cure was not effected within the
first 90-day cure period and the actions it proposes to take to effect such cure
and which states that it anticipates such cure will be effected within the
additional 90-day period.
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any uncured breach of
the Mortgage Loan Seller's representations and warranties regarding the Mortgage
Loans. The Mortgage Loan Seller will be the sole warranting party in respect of
the Mortgage Loans, and neither the Depositor nor any of its other affiliates
will be obligated to repurchase any affected Mortgage Loan in connection with a
breach of the Mortgage Loan Seller's
S-58
<PAGE>
representations and warranties if the Mortgage Loan Seller defaults on its
obligation to do so. See "The Trust Agreement--Repurchase of Non-Conforming
Loans" in the Prospectus.
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 time the Offered Certificates are issued. 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. The Depositor believes that the information set forth herein will
be representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Offered Certificates are issued, although the range
of Mortgage Rates, maturities and certain other characteristics of the Mortgage
Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. If Mortgage Loans are removed from or
added to the Mortgage Pool as described in the preceding paragraph, such removal
or addition will be noted in the Form 8-K.
S-59
<PAGE>
SERVICING OF THE MORTGAGE LOANS
GENERAL
Although the obligations and duties of the Master Servicer and the Special
Servicer with respect to the Mortgage Pool will initially be performed by a
single entity (see "--The Master Servicer and the Special Servicer" below), the
discussion herein is presented so as to reflect an allocation of
responsibilities as if two separate entities were acting as Master Servicer and
Special Servicer. In the event the obligations and duties of the Master Servicer
and the Special Servicer are performed by separate entities, neither entity will
be liable for the actions of the other as Master Servicer or Special Servicer.
The servicing of the Mortgage Loans and any REO Properties will be governed
by the Pooling and Servicing Agreement. The following summaries describe certain
provisions of the Pooling and Servicing Agreement relating to the servicing and
administration of the Mortgage Loans and any REO Properties. The summaries do
not purport to be complete and are subject, and qualified in their entirety by
reference, to the provisions of the Pooling and Servicing Agreement. Reference
is made to the Prospectus for additional information regarding the terms of the
Pooling and Servicing Agreement relating to the servicing and administration of
the Mortgage Loans and any REO Properties and to the rights and obligations of
the Master Servicer and the Special Servicer thereunder, PROVIDED THAT THE
INFORMATION HEREIN SUPERSEDES ANY CONTRARY INFORMATION SET FORTH IN THE
PROSPECTUS. See "Servicing of Mortgage Loans" and "The Trust Agreement" in the
Prospectus. For purposes of the Prospectus, the Pooling and Servicing Agreement
constitutes a Master Servicing Agreement and a Special Servicing Agreement.
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans on
behalf of the Trustee for the benefit of the Certificateholders, in accordance
with applicable law, the terms of the Pooling and Servicing Agreement and the
terms of the respective Mortgage Loans and, to the extent consistent with the
foregoing, in accordance with the following standards (collectively, the
"Servicing Standard"): (i) with the same care, skill and diligence as is normal
and usual in its general mortgage servicing and asset management activities on
behalf of third parties or on behalf of itself, whichever is higher, with
respect to mortgage loans comparable to the Mortgage Loans; (ii) with a view to
the timely collection of all scheduled payments of principal and interest under
the Mortgage Loans, or, if a Mortgage Loan comes into and continues in default
and if, in the good faith and reasonable judgment of the Special Servicer, no
satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery on such Mortgage Loan to the
Certificateholders (as a collective whole) on a present value basis; and (iii)
without regard to (A) any relationship that the Master Servicer or the Special
Servicer, as the case may be, or any affiliate thereof may have with the related
borrower; (B) the ownership of any Certificate by the Master Servicer or the
Special Servicer, as the case may be, or any affiliate thereof; (C) the Master
Servicer's or the Special Servicer's obligation to make Advances (as defined
herein); and (D) the right of the Master Servicer or the Special Servicer, as
the case may be, or any affiliate of either of them, to receive reimbursement of
costs, or the sufficiency of any compensation payable to it under the Pooling
and Servicing Agreement or with respect to any particular transaction. The
Master Servicer and Special Servicer will each be required to service and
administer any group of related Cross-Collateralized Mortgage Loans as a single
Mortgage Loan as and when it deems necessary and appropriate, consistent with
the Servicing Standard.
In general, the Master Servicer will be responsible for the servicing and
administration of all the Mortgage Loans as to which no Servicing Transfer Event
(as defined herein) has occurred and all Corrected Mortgaged Loans (as defined
herein), and the Special Servicer will be obligated to service and administer
each Mortgage Loan (other than a Corrected Mortgage Loan) as to which a
Servicing Transfer Event has occurred (each, a "Specially Serviced Mortgage
Loan"). A "Servicing Transfer Event" with respect to any Mortgage Loan consists
of any of the following events: (a) any Monthly Payment shall be delinquent 60
or more days (or, in the case of a delinquent Balloon Payment, if the Master
Servicer determines that the related borrower has obtained a binding commitment
to refinance, such Balloon
S-60
<PAGE>
Payment shall be delinquent for such longer period of delinquency (not to exceed
120 days) within which such refinancing is expected to occur); (b) the Master
Servicer shall have determined that (i) a default in making a Monthly Payment is
likely to occur within 30 days, (ii) such default is likely to remain unremedied
for at least 60 days and (iii) in the case of a Balloon Payment, the related
borrower is not likely to refinance the subject Mortgage Loan within 120 days of
the maturity date; (c) there shall have occurred a default (other than as
described in clause (a) above) that materially impairs the value of the
Mortgaged Property as security for the Mortgage Loan or otherwise materially
adversely affects the interests of Certificateholders and that continues
unremedied for the applicable grace period under the terms of the Mortgage Loan
(or, if no grace period is specified, for 30 days); (d) a decree or order under
any bankruptcy, insolvency or similar law shall have been entered against the
related borrower and such decree or order shall have remained in force,
undischarged or unstayed for a period of 60 days; (e) the related borrower shall
consent to the appointment of a conservator or receiver or liquidator in any
insolvency or similar proceedings of or relating to such related borrower or of
or relating to all or substantially all of its property; (f) the related
borrower shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or (g) the Master Servicer shall
have received notice of the commencement of foreclosure or similar proceedings
with respect to the related Mortgaged Property.
If a Servicing Transfer Event occurs with respect to any Mortgage Loan, the
Master Servicer is required to transfer certain of its servicing
responsibilities with respect thereto to the Special Servicer. Notwithstanding
such transfer, the Master Servicer will continue to receive payments on such
Mortgage Loan (including amounts collected by the Special Servicer), to make
certain calculations with respect to such Mortgage Loan, and to make remittances
(including, if necessary, P&I Advances) and prepare certain reports to the
Trustee with respect to such Mortgage Loan. If title to the related Mortgaged
Property is acquired by the Trust Fund (upon acquisition, an "REO Property"),
whether through foreclosure, deed in lieu of foreclosure or otherwise, the
Special Servicer will continue to be responsible for the operation and
management thereof. Mortgage Loans serviced by the Special Servicer are referred
to herein as "Specially Serviced Mortgage Loans" and, together with any REO
Properties, constitute "Specially Serviced Trust Fund Assets." The Master
Servicer will have no responsibility for the Special Servicer's performance of
its duties under the Pooling and Servicing Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities):
(w) with respect to the circumstances described in clause (a) of the
second preceding paragraph, when the related borrower has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with a
bankruptcy or similar proceeding involving the related borrower or by reason
of a written modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to any of the circumstances described in clauses (b),
(d), (e) and (f) of the second preceding paragraph, when such circumstances
cease to exist in the good faith, reasonable judgment of the Special
Servicer, but, with respect to any bankruptcy or insolvency proceedings
described in clauses (d), (e) and (f), no later than the entry of an order
or decree dismissing such proceeding;
(y) with respect to the circumstances described in clause (c) of the
second preceding paragraph, when such default is cured; and
(z) with respect to the circumstances described in clause (g) of the
second preceding paragraph, when such proceedings are terminated;
so long as at that time no other circumstance identified in such clauses (a)
through (g) then exists.
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THE MASTER SERVICER AND THE SPECIAL SERVICER
The duties of both Master Servicer and Special Servicer will be performed by
GMAC Commercial Mortgage Corporation ("GMACCM"). The following information has
been provided by GMACCM. None of the Depositor, the Underwriter or any of their
affiliates takes any responsibility therefor or makes any representation or
warranty as to the accuracy or completeness thereof.
GMACCM, a corporation organized under the laws of the State of California,
is a wholly-owned direct subsidiary of GMAC Mortgage Group, Inc., which in turn
is a wholly-owned direct subsidiary of General Motors Acceptance Corporation.
The principal offices of GMACCM are located at 650 Dresher Road, Horsham,
Pennsylvania 19044. Its telephone number is (215) 328-4622. As of December 31,
1997, GMACCM was the servicer of a portfolio of multifamily and commercial
mortgage loans totaling approximately $40 billion in aggregate outstanding
principal amounts.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the Master Servicing Fee for each Mortgage
Loan, including each Specially Serviced Mortgage Loan and each Mortgage Loan as
to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan"). The "Master Servicing Fee" will be payable monthly on a
loan-by-loan basis from amounts received in respect of interest on each Mortgage
Loan, will be calculated on the basis of a 360-day year consisting of twelve
30-day months, will accrue at the related Master Servicing Fee Rate and will be
computed on the basis of the same principal amount respecting which any related
interest payment due on the Mortgage Loan is computed. For each Mortgage Loan,
the "Master Servicing Fee Rate" will be a per annum rate ranging from 0.0933% to
0.1733%. As of the Cut-off Date, the weighted average Master Servicing Fee Rate
is 0.1235% per annum.
If a borrower voluntarily prepays a Mortgage Loan on a date that is prior to
its Due Date in such Collection Period, the amount of interest (net of related
Servicing Fees (as defined herein) and, if applicable Additional Interest) that
accrues on the Mortgage Loan during such Collection Period, without regard to
any Prepayment Premium or Yield Maintenance Charge actually collected, will be
less (such shortfall, a "Prepayment Interest Shortfall") than the amount of
interest (net of related Servicing Fees and, if applicable, Additional Interest)
that would otherwise have accrued on the Mortgage Loan through such Due Date. If
such a principal prepayment occurs during any Collection Period after the Due
Date for such Mortgage Loan in such Collection Period, the amount of interest
(net of related Servicing Fees and, if applicable, Additional Interest) that
accrues and is collected on the Mortgage Loan during such Collection Period,
without regard to any Prepayment Premium or Yield Maintenance Charge actually
collected, will exceed (such excess, a "Prepayment Interest Excess") the amount
of interest (net of related Servicing Fees and, if applicable, Additional
Interest) that would have been collected on the Mortgage Loan during such
Collection Period if the borrower had not prepaid. Any Prepayment Interest
Excesses collected will be paid to the Master Servicer as additional servicing
compensation. However, with respect to each Distribution Date, the Master
Servicer will be required to deposit into the Collection Account (such deposit,
a "Compensating Interest Payment"), without any right of reimbursement therefor,
an amount equal to the lesser of (a) the aggregate of all Prepayment Interest
Shortfalls experienced during the related Collection Period and (b) the sum of
(i) the aggregate of its Master Servicing Fees for such Collection Period (but
only to the extent of that portion thereof calculated at a rate of 0.04% per
annum with respect to each and every Mortgage Loan) and (ii) all of its other
servicing compensation (including any Prepayment Interest Excesses received) for
such Collection Period. Compensating Interest Payments will not cover shortfalls
in Mortgage Loan interest accruals that result from any liquidation of a
defaulted Mortgage Loan, or of any REO Property acquired in respect thereof,
that occurs during a Collection Period prior to the related Due Date therein.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be: (i) the Special Servicing Fee
(together with the Master Servicing Fee, the "Servicing
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Fees") for each Specially Serviced Mortgage Loan and each REO Mortgage Loan;
(ii) the Liquidation Fee for each Specially Serviced Trust Fund Asset as to
which the Special Servicer receives any full or discounted payoff or any
Liquidation Proceeds (as defined herein); and (iii) the Workout Fee for each
Corrected Mortgage Loan. The "Special Servicing Fee" will be calculated on the
basis of a 360-day year consisting of twelve 30-day months, will accrue at a
rate (the "Special Servicing Fee Rate") equal to 0.25% per annum and will be
computed on the basis of the same principal amount respecting which any related
interest payment on the related Specially Serviced Mortgage Loan or REO Mortgage
Loan is computed. However, earned Special Servicing Fees will be payable out of
general collections on the Mortgage Loans then on deposit in the Custodial
Account. The Special Servicing Fee with respect to any Specially Serviced
Mortgage Loan or REO Mortgage Loan will cease to accrue if such Mortgage Loan
(or the related REO Property) is liquidated or such Mortgage Loan becomes a
Corrected Mortgage Loan. The "Liquidation Fee" with respect to each Specially
Serviced Trust Fund Asset as to which any full or discounted payoff or any
Liquidation Proceeds have been received, will generally be in an amount equal to
1.0% of such full or discounted payoff or such Liquidation Proceeds; provided
that no Liquidation Fee will be payable in connection with, or out of
Liquidation Proceeds resulting from, the purchase of any Specially Serviced
Trust Fund Asset (i) by the Mortgage Loan Seller (as described herein under
"Description of the Mortgage Pool--Assignment of the Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases," (ii) by the
Depositor, the Master Servicer, the Special Servicer, the Underwriter or the
Majority Subordinate Certificateholder as described herein under "Description of
the Certificates--Termination" or (iii) in certain other limited circumstances.
The "Workout Fee" with respect to each Corrected Mortgage Loan will generally be
an amount equal to 1.0% of all collections of principal and interest received in
respect of such Corrected Mortgage Loan.
As additional servicing compensation, the Master Servicer and/or the Special
Servicer will be entitled to retain or receive, as the case may be, any
assumption fees, modification fees, extension fees, "Default Interest" (that is,
interest in excess of interest at the related Mortgage Rate (or, if applicable,
the Revised Rate) accrued in respect of any Mortgage Loan as a result of a
default thereunder) and late payment charges payable under the related loan
documents and actually collected on the Mortgage Loans, all such amounts to be
allocated between the Master Servicer and the Special Servicer as provided in
the Pooling and Servicing Agreement. In addition, each of the Master Servicer
and the Special Servicer is authorized to invest or direct the investment of
funds held in those accounts maintained by it that relate to the Mortgage Loans
or REO Properties, as the case may be, in certain short-term United States
government securities and other permitted investment grade obligations
("Permitted Investments"), and the Master Servicer and the Special Servicer each
will be entitled to retain any interest or other income earned on such funds
held in those accounts maintained by it, but shall be required to cover any
losses on investments of funds held in those accounts maintained by it, from its
own funds without any right to reimbursement.
Each of the Master Servicer and Special Servicer will, in general, be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling and Servicing Agreement, including the
fees of any sub-servicers retained by it, and will not be entitled to
reimbursement therefor except as expressly provided in the Pooling and Servicing
Agreement. In general, customary, reasonable and necessary "out of pocket" costs
and expenses required to be incurred by the Master Servicer or Special Servicer
in connection with the servicing of a Mortgage Loan after a default, delinquency
or other unanticipated event, or in connection with the administration of any
REO Property, will constitute "Servicing Advances" (Servicing Advances and P&I
Advances, collectively, "Advances") and, in all cases, will be reimbursable from
future payments and other collections, including in the form of Insurance
Proceeds, Condemnation Proceeds and Liquidation Proceeds (each as defined
herein), on or in respect of the related Mortgage Loan or REO Property ("Related
Proceeds"). Notwithstanding the foregoing, each of the Master Servicer and
Special Servicer will be permitted to pay certain of such expenses (including
certain expenses incurred as a result of a Mortgage Loan default) directly out
of the Custodial Account and at times without regard to the relationship between
the expense and the funds from
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which it is being paid. See "--The Custodial Account" and "Description of the
Certificates--Collection Account" herein.
If the Master Servicer or Special Servicer is required under the Pooling and
Servicing Agreement to make a Servicing Advance, but neither does so within 15
days after such Servicing Advance is required to be made, then the Trustee will,
if it has actual knowledge of such failure, be required to give the defaulting
party notice of such failure and further will, if such failure continues for
three more business days, be required to make such Servicing Advance. The Fiscal
Agent will be required to make any such Servicing Advance that the Trustee was
required, but failed, to make.
Notwithstanding anything herein to the contrary, the Master Servicer, the
Special Servicer, the Trustee and the Fiscal Agent will be obligated to make
Servicing Advances only to the extent that such Servicing Advances are, in the
reasonable, good faith judgment of the Master Servicer, the Special Servicer,
the Trustee or the Fiscal Agent, as the case may be, ultimately recoverable from
Related Proceeds. With respect to any Servicing Advance, the Trustee and the
Fiscal Agent will be entitled to conclusively rely on the non-recoverability
determination made by the Master Servicer or Special Servicer.
The Master Servicer, the Special Servicer, the Trustee and the Fiscal Agent
will be each entitled to receive interest, at the Reimbursement Rate, on any
Servicing Advances made by it. Such interest will compound annually and will be
paid, contemporaneously with the reimbursement of the related Servicing Advance,
from general collections on the Mortgage Loans then on deposit in the Custodial
Account.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Pooling and Servicing Agreement will permit the Special Servicer to
modify, waive or amend any term of any Mortgage Loan if (a) it determines, in
accordance with the Servicing Standard, that it is appropriate to do so and (b)
except as described in the following paragraph, such modification, waiver or
amendment, will not (i) affect the amount or timing of any scheduled payments of
principal, interest or other amount (including Prepayment Premiums and Yield
Maintenance Charges but excluding Default Interest and other amounts payable as
additional servicing compensation) payable under the Mortgage Loan, (ii) affect
the obligation of the related borrower to pay a Prepayment Premium or Yield
Maintenance Charge or permit a principal prepayment during the applicable
Lockout Period, (iii) except as expressly provided by the related Mortgage or in
connection with a material adverse environmental condition at the related
Mortgaged Property, result in a release of the lien of the related Mortgage on
any material portion of such Mortgaged Property without a corresponding
principal prepayment or (iv) in the reasonable, good faith judgment of the
Special Servicer, materially impair the security for the Mortgage Loan or reduce
the likelihood of timely payment of amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph, subject to the
following sentence and the discussion under "--The Controlling Class
Representative" below, the Special Servicer may (i) reduce the amounts owing
under any Specially Serviced Mortgage Loan by forgiving principal, accrued
interest and/or any Prepayment Premium or Yield Maintenance Charge, (ii) reduce
the amount of the Monthly Payment on any Specially Serviced Mortgage Loan,
including by way of a reduction in the related Mortgage Rate, (iii) forbear in
the enforcement of any right granted under any Mortgage Note or Mortgage
relating to a Specially Serviced Mortgage Loan, (iv) accept a principal
prepayment during any Lockout Period, or (v) extend the date on which any
Balloon Payment is scheduled to be due in respect of a Specially Serviced
Mortgage Loan; provided that (w) the related borrower is in default with respect
to the Specially Serviced Mortgage Loan or, in the reasonable, good faith
judgment of the Special Servicer, such default is reasonably foreseeable, (x) in
the reasonable, good faith judgment of the Special Servicer, such modification,
waiver or amendment would increase the recovery to Certificateholders on a net
present value basis, (y) such modification, waiver or amendment does not result
in a tax being imposed on the Trust Fund or cause any REMIC created pursuant to
the Pooling and Servicing Agreement to fail to qualify as a REMIC at any time
the Certificates are outstanding and (z) in connection with extending the date
on which any Balloon Payment is scheduled to be due in respect of a Specially
Serviced Mortgage Loan, the Special
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Servicer has obtained an appraisal, in accordance with the standards of the
Appraisal Institute, of the related Mortgaged Property, performed by an
independent appraiser, in connection with such extension, which appraisal
supports the determination of the Special Servicer contemplated by clause (x) of
this proviso. In no event, however, will the Special Servicer be permitted to
(i) extend the maturity date of a Mortgage Loan beyond a date that is two years
prior to the Rated Final Distribution Date, (ii) extend the maturity date of any
Mortgage Loan which has a Mortgage Rate below the then prevailing interest rate
for comparable loans, as determined by the Special Servicer, unless such
Mortgage Loan is a Balloon Loan as to which the borrower has failed to make the
Balloon Payment at its scheduled maturity and such Balloon Loan is not a
Specially Serviced Mortgage Loan (other than by reason of failure to make the
Balloon Payment) and has not been delinquent in the preceding 12 months (other
than with respect to the Balloon Payment), in which case the Special Servicer
may make up to three one-year extensions at the existing Mortgage Rate for such
Mortgage Loan (provided that such limitation of extensions made at a below
market rate will not limit the ability of the Special Servicer to extend the
maturity date of any Mortgage Loan at an interest rate at or in excess of the
prevailing rate for comparable loans at the time of such modification), (iii) if
the Mortgage Loan is secured by a ground lease, extend the maturity date of such
Mortgage Loan beyond a date which is less than 10 years prior to the expiration
of the term of such ground lease, (iv) reduce the Mortgage Rate to a rate below
the then prevailing interest rate for comparable loans, as determined by the
Special Servicer or (v) defer interest due on any Mortgage Loan in excess of 10%
of the Stated Principal Balance of such Mortgage Loan or defer the collection of
interest on any Mortgage Loan without accruing interest on such deferred
interest at a rate at least equal to the Mortgage Rate of such Mortgage Loan.
The Special Servicer will be required to notify the Trustee and the Master
Servicer of any modification, waiver or amendment of any term of any Mortgage
Loan, and to deliver to the Trustee or the related Custodian, for deposit in the
related Mortgage File, an original counterpart of the agreement related to such
modification, waiver or amendment, promptly (and in any event within 10 business
days) following the execution thereof. Upon reasonable prior written notice to
the Trustee, copies of each agreement whereby any such modification, waiver or
amendment of any term of any Mortgage Loan is effected are required to be
available for review during normal business hours at the offices of the Trustee.
See "Description of the Certificates--Reports to Certificateholders; Available
Information" herein.
CUSTODIAL ACCOUNT
GENERAL. The Master Servicer will be required to establish and maintain one
or more separate accounts for the collection of payments on the Mortgage Loans
(collectively, the "Custodial Account"), which will be established in such
manner and/or with such a depository as are specified in the Pooling and
Servicing Agreement or, as confirmed in writing by each Rating Agency, as would
not cause a qualification, downgrade or withdrawal of any of the ratings then
assigned by it to any Class of Certificates (and, accordingly, which constitute
an "Eligible Account"). The funds held in the Custodial Account may be held as
cash or invested in Permitted Investments.
Any interest or other income earned on funds in the Custodial Account will
be paid to the Master Servicer as additional compensation subject to the
limitations set forth in the Pooling and Servicing Agreement. See "--Servicing
and Other Compensation and Payment of Expenses" above.
DEPOSITS. The Master Servicer will be required to deposit or cause to be
deposited in the Custodial Account upon receipt (in the case of collections and
payments on the Mortgage Loans) or as otherwise required under the Pooling and
Servicing Agreement, the following payments and collections received or made by
or on behalf of the Master Servicer subsequent to the Closing Date (other than
in respect of scheduled payments of principal and interest due on the Mortgage
Loans on or before the Cut-off Date, which belong to the Mortgage Loan Seller):
(i) all payments on account of principal on the Mortgage Loans,
including principal prepayments;
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(ii) all payments on account of interest on the Mortgage Loans,
including Default Interest and Additional Interest;
(iii) all Prepayment Premiums and Yield Maintenance Charges;
(iv) (A) all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to a Mortgaged Property
or the related Mortgage Loan (collectively with any comparable amounts
received with respect to an REO Property, "Insurance Proceeds"), other than
any such proceeds applied to the restoration of the property or otherwise
released to the borrower or another appropriate person, (B) all proceeds
received in connection with the condemnation or the taking by right of
eminent domain of a Mortgaged Property (collectively with any comparable
amounts received with respect to an REO Property, "Condemnation Proceeds"),
other than any such proceeds applied to the restoration of the property or
otherwise released to the borrower or another appropriate person, and (C)
all other amounts received and retained in connection with the liquidation
of defaulted Mortgage Loans by foreclosure or otherwise (collectively with
any amounts received in connection with the sale of an REO Property and the
amounts described in clause (v) below, "Liquidation Proceeds");
(v) all cash proceeds paid in connection with (A) the repurchase of any
Mortgage Loan by the Mortgage Loan Seller as described under "Description of
the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases" or
"--Representations and Warranties; Repurchases" herein, (B) the purchase of
any defaulted Mortgage Loan by any party as described under "--Realization
Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO
Properties" below and (C) the purchase of all remaining Mortgage Loans and
REO Properties by the Depositor, the Master Servicer, the Special Servicer,
the Underwriter or the Majority Subordinate Certificateholder as described
under "Description of the Certificates--Termination" herein;
(vi) any amounts required to be deposited by the Master Servicer in
connection with losses incurred with respect to Permitted Investments of
funds held in the Custodial Account;
(vii) all payments required to be deposited by the Master Servicer or the
Special Servicer in the Custodial Account with respect to any deductible
clause in any blanket insurance policy described under "--Maintenance of
Insurance" herein;
(viii) any amount required to be transferred from the REO Account (if
established); and
(ix) any other amounts required to be so deposited under the Pooling and
Servicing Agreement.
Upon receipt of any of the amounts described in clauses (i) through (v)
above with respect to any Specially Serviced Mortgage Loan, the Special Servicer
is generally required to promptly remit such amounts to the Master Servicer for
deposit in the Custodial Account.
WITHDRAWALS. The Master Servicer may make withdrawals from the Custodial
Account for any of the following purposes (the order set forth below not
constituting an order of priority for such withdrawals):
(i) to remit to the Trustee on or before the Distribution Date each
month an amount generally equal to that portion of the Available
Distribution Amount (inclusive of any amounts to be paid or reimbursed from
the Collection Account by the Trustee) for the related Distribution Date
then on deposit in the Custodial Account, together with any Prepayment
Premiums and/or Yield Maintenance Charges received during the related
Collection Period and in the case of the final distribution date, any
additional amounts received in connection with a purchase of all remaining
Mortgage Loans and REO Properties by the Depositor, the Master Servicer, the
Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder as described under "Description of the
Certificates--Termination" herein;
(ii) to apply amounts held for future distribution on the Certificates
to make P&I Advances;
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(iii) to reimburse the Fiscal Agent, the Trustee or itself (in that
order), as applicable, for unreimbursed P&I Advances (other than P&I
Advances that constitute Nonrecoverable Advances (as defined below), which
are reimbursable as described in clause (viii) below) made thereby (in each
case, with its own funds), such reimbursement to be made out of amounts
received which were identified and applied by the Master Servicer as late
collections of interest (net of related Master Servicing Fees) on and
principal (net of any related Workout Fees) of the particular Mortgage Loan
(including an REO Mortgage Loan) as to which each such P&I Advance was made;
(iv) to pay itself earned and unpaid Master Servicing Fees in respect of
each Mortgage Loan (including each Specially Serviced Mortgage Loan and each
REO Mortgage Loan), such payment being limited to amounts received on or in
respect of such Mortgage Loan that are allocable as a recovery of interest
thereon;
(v) to pay the Special Servicer, out of general collections on the
Mortgage Loans, Special Servicing Fees in respect of each Specially Serviced
Mortgage Loan and each REO Mortgage Loan;
(vi) to pay the Special Servicer earned and unpaid Workout Fees and
Liquidation Fees to which it is entitled as and from the sources described
above under "--Servicing and Other Compensation and Payment of Expenses";
(vii) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer (in that order), as applicable, for any unreimbursed Servicing
Advances made thereby (in each case, with its own funds), such reimbursement
to be made out of Related Proceeds;
(viii) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer (in that order), as applicable, out of general collections on the
Mortgage Loans and REO Properties, for any unreimbursed Advances made
thereby (in each case, with its own funds) that have been determined not to
be ultimately recoverable from Related Proceeds (any such Advance, a
"Nonrecoverable Advance");
(ix) at or following such time as it reimburses the Fiscal Agent, the
Trustee, the Special Servicer or itself, as applicable, for any unreimbursed
Advance as described in clause (iii), (vii) or (viii) above, to pay Fiscal
Agent, the Trustee, the Special Servicer or itself (in that order), as the
case may be, out of general collections on the Mortgage Loans and any REO
Properties, any interest at the Reimbursement Rate accrued and payable on
such Advance;
(x) to pay, out of general collections on the Mortgage Loans and any REO
Properties, for costs and expenses incurred by the Trust Fund in connection
with environmental testing and/or remediation as described in "--Realization
Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO
Properties";
(xi) to pay itself, as additional servicing compensation, (A) interest
and investment income earned in respect of amounts held in the Custodial
Account, (B) any Prepayment Interest Excesses and (C) Default Interest in
respect of Mortgage Loans that are not Specially Serviced Mortgage Loans or
REO Mortgage Loans, and to pay the Special Servicer as additional servicing
compensation, Default Interest in respect of Specially Serviced Mortgage
Loans and REO Mortgage Loans;
(xii) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for the cost of an independent appraiser or other expert in
real estate matters as required under the Pooling and Servicing Agreement.
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(xiii) to pay itself, the Special Servicer, the Depositor, or any of their
respective directors, officers, employees and agents, as the case may be,
out of general collections on the Mortgage Loans and any REO Properties,
amounts payable to any such person as described under "--Certain Matters
Regarding the Depositor, the Master Servicer and the Special Servicer"
below;
(xiv) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for the cost of certain advice of counsel and tax
accountants, the cost of certain opinions of counsel and the cost of
recording the Pooling and Servicing Agreement, all as set forth in the
Pooling and Servicing Agreement;
(xv) with respect to each Mortgage Loan purchased pursuant to or as
contemplated by the Pooling and Servicing Agreement, to pay to the purchaser
thereof all amounts received thereon subsequent to the date of purchase;
(xvi) to pay certain servicing expenses that would, if advanced,
constitute Nonrecoverable Advances, but the payment of which is determined
nonetheless to be in the best interests of the Certificateholders; and
(xvii) to clear and terminate the Custodial Account upon the termination
of the Pooling and Servicing Agreement.
THE CONTROLLING CLASS REPRESENTATIVE
SELECTION. The Pooling and Servicing Agreement permits the holder (or
holders) of the majority of the Voting Rights allocated to the Controlling Class
of Sequential Pay Certificates to replace the Special Servicer and to select a
representative (the "Controlling Class Representative") from whom the Special
Servicer will seek advice and approval and take direction under certain
circumstances. The "Controlling Class" of Sequential Pay Certificates is the
Class of Sequential Pay Certificates with the latest alphabetical Class
designation that has a Certificate Balance that is greater than 25% of its
original Certificate Balance; provided that if no Class of Sequential Pay
Certificates has a Certificate Balance that is greater than 25% of its original
Certificate Balance, the then outstanding Class of Sequential Pay Certificates
with the latest alphabetical Class designation will be the "Controlling Class"
of Sequential Pay Certificates. The Class A-1, Class A-2 and Class A-3
Certificates will be treated as one Class for determining the Controlling Class
of Sequential Pay Certificates.
CERTAIN RIGHTS AND POWERS. The Controlling Class Representative will be
entitled to advise the Special Servicer with respect to the following actions of
the Special Servicer, and subject to the discussion in the second following
paragraph, the Special Servicer will not be permitted to take any of the
following actions as to which the Controlling Class Representative has objected
in writing within ten business days of being notified thereof (provided that if
such written objection has not been received by the Special Servicer within such
ten business day period, then the Controlling Class Representative's approval
will be deemed to have been given):
(i) any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing
such of the Specially Serviced Mortgage Loans as come into and continue in
default;
(ii) any modification of a monetary term of a Mortgage Loan other than a
modification consisting of the extension of the maturity date of a Mortgage
Loan for one year or less;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust Fund as
described under "Description of the Certificates-- Termination" herein) for
less than the applicable Purchase Price;
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
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(v) any acceptance of substitute or additional collateral for a Mortgage
Loan;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
(vii) any acceptance of an assumption agreement releasing a borrower from
liability under a Mortgage Loan.
In addition, subject to the discussion in the following paragraph, the
Controlling Class Representative may direct the Special Servicer to take, or to
refrain from taking, such other actions as the Controlling Class Representative
may deem advisable or as to which provision is otherwise made in the Pooling and
Servicing Agreement.
The foregoing notwithstanding, no such advice, direction or objection
contemplated by either of the two preceding paragraphs may require or cause the
Special Servicer to violate any provision of the Pooling and Servicing
Agreement, including the Special Servicer's obligation to act in accordance with
the Servicing Standard or expose the Master Servicer, the Special Servicer, the
Trust Fund, the Trustee or the Fiscal Agent to material liability, or materially
expand the scope of the Special Servicer's responsibilities under the Pooling
and Servicing Agreement or cause the Special Servicer to act (including, without
limitation, by omission) in a manner which, in the reasonable judgment of the
Special Servicer, is not in the best interests of the Certificateholders.
LIMITATION ON LIABILITY OF CONTROLLING CLASS REPRESENTATIVE. The
Controlling Class Representative will have no liability to the
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, however, that the Controlling Class
Representative will not be protected against any liability which would otherwise
be imposed by reason of wilful misfeasance, bad faith or 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 Controlling Class Representative may take actions that
favor the interests of one or more Classes of the Certificates over other
Classes of the Certificates, and that the Controlling Class Representative may
have special relationships and interests that conflict with those of holders of
some Classes of the Certificates, and each Certificateholder agrees to take no
action against the Controlling Class Representative or any of its officers,
directors, employees, principals or agents as a result of such a special
relationship or conflict.
REALIZATION UPON DEFAULTED MORTGAGE LOANS; SALE OF DEFAULTED MORTGAGE LOANS AND
REO PROPERTIES
A borrower'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 borrower that is unable to make Mortgage Loan payments may also be
unable to make timely payments of taxes and to otherwise maintain and insure the
related Mortgaged Property. In general, the 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 borrower if cure is likely, inspect the related Mortgaged
Property and take such other actions as are consistent with the Servicing
Standard. 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 may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the borrower, 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 borrower files a bankruptcy
petition, the Special Servicer may not be permitted to accelerate the maturity
of the related Mortgage Loan or to
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foreclose on the Mortgaged Property for a considerable period of time. See
"Certain Legal Aspects of Mortgage Loans" in the Prospectus.
The Pooling and Servicing Agreement grants to the Master Servicer, the
Special Servicer and any holder of Certificates evidencing a majority interest
(or, if no Certificateholder holds a majority interest, the holder of
Certificates evidencing the largest interest) in the Controlling Class (the
"Majority Subordinate Certificateholder") a right to purchase from the Trust
Fund certain defaulted Specially Serviced Mortgage Loans in the priority
described below. If the Special Servicer has determined in good faith that any
such defaulted Specially Serviced Mortgage Loan will become subject to
foreclosure proceedings, the Special Servicer will be required to promptly so
notify in writing the Trustee and the Master Servicer, and the Trustee will be
required, within ten days after receipt of such notice, to notify the Majority
Subordinate Certificateholder. Such Certificateholder may at its option purchase
from the Trust Fund, at a cash price equal to the applicable Purchase Price, any
such defaulted Specially Serviced Mortgage Loan; provided that if such
Certificateholder has not purchased such defaulted Specially Serviced Mortgage
Loan within 30 days of its having received notice in respect thereof, either the
Special Servicer or the Master Servicer, in that order of preference, may at its
option purchase such Mortgage Loan from the Trust Fund, at a cash price equal to
the applicable Purchase Price. The Special Servicer may offer to sell any such
defaulted Specially Serviced Mortgage Loan not otherwise purchased as described
in the preceding sentence, 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 will be required to be made in
a commercially reasonable manner for a period of not less than ten days. Unless
the Special Servicer determines that acceptance of any bid would not be in the
best economic interests of the Certificateholders (as a collective whole) and
subject to any rights that the Controlling Class Representative may have to
object if the winning bid is not at least equal to the applicable Purchase
Price, the Special Servicer will be required to accept the highest cash bid
received from any person that constitutes a "fair price" (determined in
accordance with the Pooling and Servicing Agreement) for the particular Mortgage
Loan. See "--The Controlling Class Representative--Certain Rights and Powers"
above.
Notwithstanding any of the foregoing, the Special Servicer will not be
obligated to accept the highest cash bid if the Special Servicer determines, in
accordance with the Servicing Standard, that rejection of such bid would be in
the best interests of the Certificateholders (as a collective whole); and
subject to any rights that the Controlling Class Representative may have to
object if the winning bid is not at least equal to the applicable Purchase
Price, the Special Servicer may accept a lower cash bid (from any person or
entity other than itself or an affiliate) if it determines, in accordance with
the Servicing Standard, that acceptance of such bid would be in the best
interests of the Certificateholders (as a collective whole) (for example, if the
prospective buyer making the lower bid is more likely to perform its obligations
or the terms (other than the price) offered by the prospective buyer making the
lower bid are more favorable).
Neither the Trustee, in its individual capacity, nor any of its affiliates
may bid for or purchase any defaulted Specially Serviced Mortgage Loan or any
REO Property.
The Special Servicer will be required to exercise reasonable efforts,
consistent with the Servicing Standard and the discussion under "--The
Controlling Class Representative--Certain Rights and Powers" above, to foreclose
upon or otherwise comparably convert the ownership of properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments and
which are not sold as described above. Notwithstanding the foregoing, neither
the Master Servicer nor the Special Servicer is permitted, on behalf of the
Trust Fund, to obtain title to a Mortgaged Property by foreclosure, deed in lieu
of foreclosure or otherwise, or take any other action with respect to any
Mortgaged Property, if, as a result of any such action, the Trustee, on behalf
of the Certificateholders, could, in the reasonable, good faith judgment of the
Special Servicer exercised in accordance with the Servicing Standard, be
considered to hold title to, to be a "mortgagee-in-
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possession" of, or to be an "owner" or "operator" of such Mortgaged Property
within the meaning of CERCLA or any comparable law, unless:
(i) the Special Servicer has previously determined in accordance with
the Servicing Standard, based on a report prepared by a person who regularly
conducts environmental audits, that the Mortgaged Property is in compliance
with applicable environmental laws and regulations and 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) in the event that the determination described in the immediately
preceding clause (i) above cannot be made, (A) the Special Servicer has
previously determined in accordance with the Servicing Standard, on the same
basis as described in the immediately preceding clause (i) above, that it
would maximize the recovery to the Certificateholders on a present value
basis to acquire title to or possession of the Mortgaged Property and to
take such remedial, corrective and/or other further actions as are necessary
to bring the Mortgaged Property into compliance with applicable
environmental laws and regulations and to appropriately address any of the
circumstances and conditions referred to in the immediately preceding clause
(i) above, and (B) the Controlling Class Representative has not properly
objected to the Special Servicer's doing so. See "--The Controlling Class
Representative --Certain Rights and Powers" above and "Certain Legal Aspects
of Mortgage Loans-- Environmental Matters" in the Prospectus.
The cost of any environmental testing, as well as the cost of any remedial,
corrective or other further action contemplated by clause (ii) of the preceding
paragraph, is payable directly out of the Custodial Account.
If neither of the conditions set forth in clauses (i) and (ii) of the second
preceding paragraph has been satisfied with respect to any Mortgaged Property
securing a defaulted Mortgage Loan, the Special Servicer will be required to
take such action as is in accordance with the Servicing Standard (other than
proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trustee, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage; provided that, if such
Mortgage Loan has a then outstanding principal balance greater than $1 million,
then, prior to effecting such release, (i) the Special Servicer shall have
notified the Rating Agencies, the Trustee and the Master Servicer, (ii) the
Trustee shall have notified the Certificateholders and (iii) the holders of
Certificates entitled to a majority of the Voting Rights (as defined herein)
shall not have objected to such release within 30 days of their having been so
notified thereof.
REO PROPERTIES
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders pursuant to foreclosure proceedings instituted by the
Special Servicer or otherwise, the Special Servicer, on behalf of such holders,
will be required to sell the Mortgaged Property by the end of the third calendar
year following the calendar year of acquisition, unless (i) the Internal Revenue
Service grants an extension of time to sell such property (an "REO Extension")
or (ii) the Special Servicer obtains an opinion of counsel generally to the
effect that the holding of the property for more than three years after the end
of the calendar year in which it was acquired will not result in the imposition
of a tax on the Trust Fund or cause any REMIC created pursuant to the Pooling
and Servicing Agreement to fail to qualify as a REMIC under the Code. Subject to
the foregoing, the Special Servicer will generally be required to solicit bids
for any Mortgaged Property so acquired in such a manner as will be reasonably
likely to realize a fair price for such property. The Special Servicer may
retain an independent contractor to operate and manage any REO Property;
however, the retention of an independent contractor will not relieve the Special
Servicer of its obligations with respect to such REO Property.
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In general, the Special Servicer or an independent contractor employed by
the Special Servicer at the expense of the Trust Fund will be obligated to
operate and manage any Mortgaged Property acquired as REO Property in a manner
that (i) maintains its status as "foreclosure property" under the REMIC
Provisions and (ii) would, to the extent commercially reasonable and consistent
with the foregoing clause (i), 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 (or any person appointed thereby to act
as REMIC administrator) to determine the Trust Fund's federal income tax
reporting position with respect to the income it is anticipated that the Trust
Fund would derive from such property, the Special Servicer could determine
(particularly in the case of an REO Property that is a hospitality or
residential health care facility) that it would not be commercially reasonable
to manage and operate such property in a manner that would avoid the imposition
of a tax on "net income from foreclosure property", within the meaning of
Section 857(b)(4)(B) of the Code or a tax on "prohibited transactions" under
Section 860F of the Code (either such tax referred to herein as an "REO Tax").
To the extent that income the Trust Fund receives from an REO Property is
subject to a tax on (i) "net income from foreclosure property" such income would
be subject to federal tax at the highest marginal corporate tax rate (currently
35%) or (ii) "prohibited transactions," such income would be subject to federal
tax at a 100% rate. 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.
Generally, income from an REO Property that is directly operated by the Special
Servicer would be apportioned and classified as "service" or "non-service"
income. The "service" portion of such income could be subject to federal tax
either at the highest marginal corporate tax rate or at the 100% rate on
"prohibited transactions," and the "non-service" portion of such income could be
subject to federal tax at the highest marginal corporate tax rate or, although
it appears unlikely, at the 100% rate applicable to "prohibited transactions."
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 tax advisors regarding the possible imposition of
REO Taxes in connection with the operation of commercial REO Properties by
REMICs. See "Certain Federal Income Tax Consequences" herein and "Federal Income
Tax Considerations" in the Prospectus. The reasonable "out-of-pocket" costs and
expenses of obtaining professional tax advice in connection with the foregoing
will be payable out of the Custodial Account.
The Special Servicer will be required to segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an REO Property is acquired, the
Special Servicer will be required to establish and maintain one or more accounts
(collectively, the "REO Account"), to be held on behalf of the Trustee in trust
for the benefit of the Certificateholders, for the retention of revenues and
other proceeds derived from each REO Property. The REO Account is to be an
Eligible Account. The Special Servicer will be required to deposit, or cause to
be deposited, in the REO Account, upon receipt, all net income, Insurance
Proceeds, Condemnation Proceeds and Liquidation Proceeds received in respect of
an REO Property. The funds held in the REO Account may be held as cash or
invested in Permitted Investments. Any interest or other income earned on funds
in the REO Account will be payable to the Special Servicer, subject to the
limitations set forth in the Pooling and Servicing Agreement.
The Special Servicer will be required to withdraw from the REO Account funds
necessary for the proper operation, management, leasing, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account relating to such REO Property. Promptly following the end of
each Collection Period, the Special Servicer will be required to withdraw from
the REO Account and deposit, or deliver to the Master Servicer for deposit, into
the Custodial Account the aggregate of all amounts received in respect of each
REO Property during such Collection Period, net of any withdrawals made out of
such amounts as described in the preceding sentence; provided that the Special
Servicer may, subject to certain limitations set forth in the Pooling and
Servicing Agreement, retain in the REO Account such portion of such proceeds and
collections as may be necessary to maintain a reserve of sufficient funds
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for the proper operation, management, leasing, maintenance and disposition of
the related REO Property (including the creation of a reasonable reserve for
repairs, replacements and necessary capital improvements and other related
expenses).
REPLACEMENT OF THE SPECIAL SERVICER
The Pooling and Servicing Agreement will permit the holder (or holders) of
the majority of the Voting Rights allocated to the Controlling Class to
terminate an existing Special Servicer and to appoint a successor thereto. Any
such appointment of a successor Special Servicer will be subject to, among other
things, the Trustee's receipt of (i) written confirmation from each Rating
Agency that the appointment will not result in a qualification, downgrade or
withdrawal of any of the ratings then assigned thereby to the respective Classes
of Certificates, and (ii) the written agreement of the proposed Special Servicer
to be bound by the terms and conditions of the Pooling and Servicing Agreement,
together with an opinion of counsel regarding, among other things, the
enforceability thereof. Subject to the foregoing, any Certificateholder or
affiliate thereof may be appointed as Special Servicer.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Special Servicer will be required to perform or cause to be performed a
physical inspection of each REO Property and each Mortgaged Property securing a
Specially Serviced Mortgage Loan, at least once per calendar year. In addition,
the Master Servicer will be required to inspect or cause to be inspected each
other Mortgaged Property at least once per calendar year. The Master Servicer
and the Special Servicer will each be required to promptly prepare or cause to
be prepared and deliver to the Trustee a written report of each such inspection
performed by it that generally describes the condition of the Mortgaged Property
and that specifies the existence with respect thereto of any sale, transfer or
abandonment or any material change in its condition or value.
The Special Servicer, in the case of any Specially Serviced Mortgage Loans,
and the Master Servicer, in the case of all other Mortgage Loans, will also be
required to use reasonable efforts to collect from the related borrower and
review the quarterly and annual operating statements and rent rolls with respect
to each of the Mortgaged Properties and REO Properties. In connection therewith,
with respect to each Mortgaged Property and REO Property, the Master Servicer
(based on reports generated by itself and the Special Servicer) will be required
to deliver to the Trustee an Operating Statement Analysis for, or as of the end
of, the applicable period. See "Description of the Certificates--Reports to
Certificateholders; Available Information" herein. Each of the Mortgages
requires the related borrower to deliver an annual property operating statement.
However, there can be no assurance that any operating statements required to be
delivered will in fact be delivered, nor are the Master Servicer and the Special
Servicer likely to have any practical means of compelling such delivery in the
case of an otherwise performing Mortgage Loan.
Upon reasonable prior written notice to the Trustee, copies of the
inspection reports and operating statements referred to above will be required
to be available for review by Certificateholders during normal business hours at
the offices of the Trustee. See "Description of the Certificates--Reports to
Certificateholders; Available Information" herein.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Substantially all of the Mortgages contain "due-on-sale" and
"due-on-encumbrance" provisions, that, in general, entitle the holder thereof to
accelerate the maturity of the related Mortgage Loan upon any sale or other
transfer of, or upon the creation of any lien or other encumbrance upon, the
related Mortgaged Property or prohibit the borrower from doing so without the
consent of the lender. With respect to each Mortgage Loan, the Special Servicer,
on behalf of the Trustee as the mortgagee of record, will be required under the
Pooling and Servicing Agreement, to the extent permitted by applicable law, to
enforce the restrictions contained in the related Mortgage on transfers or
further encumbrances of the
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related Mortgaged Property and on transfers of interests in the related
borrower, unless the Special Servicer determines, in its reasonable, good faith
judgment, that waiver of such restrictions is in accordance with the Servicing
Standard and has not been properly objected to by the Controlling Class
Representative. See "--Controlling Class Representative--Certain Rights and
Powers" above. Notwithstanding the foregoing, the Special Servicer's exercise of
any such waiver in respect of a due-on-encumbrance provision is conditioned upon
its receipt of prior written confirmation from each Rating Agency (in the case
of DCR, only if the related Mortgage Loan represents 2% or more of the then
aggregate unpaid principal balance of the Mortgage Pool) that such action would
not result in a qualification, downgrade or withdrawal of any of the ratings
then assigned to the Certificates.
MAINTENANCE OF INSURANCE
The Master Servicer (with respect to Mortgage Loans other than Specially
Serviced Mortgaged Loans) and the Special Servicer (with respect to Specially
Serviced Mortgage Loans) are required, consistent with the Servicing Standard,
to cause to be maintained for each Mortgaged Property all insurance coverage as
is required under the related Mortgage; provided that if and to the extent that
any such Mortgage permits the holder thereof any discretion (by way of consent,
approval or otherwise) as to the insurance coverage that the related borrower is
required to maintain, the Master Servicer or the Special Servicer, as the case
may be, is to exercise such discretion in a manner consistent with the Servicing
Standard; and provided further that, if and to the extent that a Mortgage so
permits, the related borrower will be required to exercise its reasonable best
efforts to obtain the required insurance coverage from insurance companies or
security or bonding companies qualified to write the related insurance policy in
the relevant jurisdiction ("Qualified Insurers") that have a "claims paying
ability" rating meeting the requirements of the Pooling and Servicing Agreement.
The Majority Subordinate Certificateholder may request that earthquake insurance
be secured for one or more Mortgaged Properties at its expense.
The Special Servicer is required consistent with the Servicing Standard to
cause to be maintained for each REO Property no less insurance coverage than was
previously required of the borrower under the related Mortgage, all such
insurance to be obtained from Qualified Insurers that have, if they are
providing casualty insurance, a "claims paying ability" rating meeting the
requirements of the Pooling and Servicing Agreement. Such insurance policies are
required to be in the name of the Special Servicer, on behalf of the Trustee.
If either the Master Servicer or the Special Servicer obtains and maintains
a blanket policy insuring against hazard losses on all of the Mortgage Loans
and/or REO Properties that it is required to service and administer, then, to
the extent such policy is obtained from a Qualified Insurer having a
claims-paying rating meeting the requirements of the Pooling and Servicing
Agreement and provides protection equivalent to the individual policies
otherwise required, the Master Servicer or the Special Servicer, as the case may
be, will be deemed to have satisfied its obligation to cause hazard insurance to
be maintained on the related Mortgaged Properties and/or REO Properties. Such
blanket policy may contain a customary deductible clause, in which case the
Master Servicer or the Special Servicer, as appropriate, will, if there shall
not have been maintained on the related Mortgaged Property or REO Property a
hazard insurance policy complying with the requirements described in the
preceding two paragraphs, and there shall have been one or more losses that
would have been covered by such individual policy, promptly deposit into the
Custodial Account from its own funds the amount of such losses that would have
been so covered by an individual policy but are not covered under the blanket
policy because of such deductible clause. The Master Servicer or the Special
Servicer, as appropriate, are required to prepare and present, on behalf of
itself, the Trustee and Certificateholders, claims under any such blanket policy
in a timely fashion in accordance with the terms of such policy.
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EVIDENCE AS TO COMPLIANCE
On or before April 15 of each year beginning April 15, 1999, there is to be
furnished by each of the Master Servicer and the Special Servicer to the
Trustee, the Depositor, the Underwriter and to each other, a statement from a
firm of independent certified public accountants to the effect that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Master Servicer or Special Servicer, as applicable, which
includes an assertion that the Master Servicer or Special Servicer, as
applicable, 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
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 may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of commercial and multifamily mortgage loans by
sub-servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers.
The Pooling and Servicing Agreement also provides for each of the Master
Servicer and the Special Servicer to deliver to the Trustee, the Depositor, the
Underwriter and each other on or before April 15 of each year, beginning April
15, 1999, a certificate signed by one of its officers generally to the effect
that, except as otherwise indicated in such certificate, the Master Servicer or
the Special Servicer, as the case may be, has fulfilled its material obligations
under the Pooling and Servicing Agreement in all material respects throughout
the preceding calendar year and that the Master Servicer or the Special
Servicer, as the case may be, has received no notice regarding the
qualification, or challenging the status of, any of REMIC I, REMIC II or REMIC
III as a REMIC.
Copies of the foregoing annual accountants' statement and officer's
certificate of each of the Master Servicer and the Special Servicer will be made
available to Certificateholders (at their expense) upon written request to the
Trustee.
CERTAIN MATTERS REGARDING THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL
SERVICER
Any entity serving as Master Servicer or Special Servicer under the Pooling
and Servicing Agreement may have other normal business relationships with the
Depositor or the Depositor's affiliates. The Pooling and Servicing Agreement
will permit each of the Master Servicer and the Special Servicer to resign from
its obligations thereunder (in such capacity) upon 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;
provided that unless required by applicable law, no such resignation will become
effective until the Trustee or other successor has assumed the obligations and
duties of the resigning Master Servicer or Special Servicer, as the case may be,
under the Pooling and Servicing Agreement. The Master Servicer and the Special
Servicer will each have the right to resign at any other time provided that (i)
a willing successor thereto has been found, (ii) each of the Rating Agencies
confirms in writing that the successor's appointment will not result in a
qualification, downgrade or withdrawal of any rating or ratings then assigned to
any Class of Certificates, (iii) the resigning party pays all costs and expenses
in connection with such transfer, and (iv) the successor accepts appointment
prior to the effectiveness of such resignation. Neither the Master Servicer nor
the Special Servicer will be permitted to resign except as described above. The
Master Servicer and Special Servicer will each 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 Pooling and Servicing Agreement.
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The Pooling and Servicing Agreement will provide that none of the Depositor,
the Master Servicer or the Special Servicer will be under any liability to the
Trust Fund, the Trustee, the Fiscal Agent or Certificateholders for any action
taken, or not taken, in good faith pursuant to the Pooling and Servicing
Agreement or for errors in judgment; provided, however, that no such entity will
be protected against any liability that would otherwise be imposed by reason of
wilful misfeasance, bad faith or gross negligence in the performance of
obligations or duties thereunder. The Pooling and Servicing Agreement will
further provide that the Depositor, the Master Servicer, the Special Servicer
and any director, officer, employee or agent of any of them will be entitled to
indemnification by the Trust Fund against any loss, liability or reasonable
expense incurred in connection with any legal action that relates to the Pooling
and Servicing Agreement or the Certificates, other than any loss, liability or
expense: (i) incidental to its duties and obligations thereunder; (ii)
specifically required to be borne by such party without right of reimbursement
pursuant to the terms thereof; (iii) incurred in connection with any breach of a
representation, warranty or covenant made therein; or (iv) incurred by reason of
wilful misfeasance, bad faith or gross negligence in the performance of
obligations or duties thereunder. In addition, the Pooling and Servicing
Agreement will provide that none of the Depositor, the Master Servicer or the
Special Servicer will be under any obligation to appear in, prosecute or defend
any legal action that is not related to its respective responsibilities under
the Pooling and Servicing Agreement and, unless it is specifically required to
bear the costs of such legal action, that in its opinion may involve it in any
expense or liability. However, each of the Depositor, the Master Servicer and
the Special Servicer 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 and Servicing Agreement and the interests of the Certificateholders
thereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, will be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Master Servicer or the Special Servicer, as
the case may be, will be entitled to charge the Custodial Account therefor.
Any person into which the Depositor, the Master Servicer or the Special
Servicer may be merged or consolidated, or any person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or the Special
Servicer is a party, or any person succeeding to the business of the Depositor,
the Master Servicer or the Special Servicer, will be the successor of the
Depositor, the Master Servicer or the Special Servicer, as the case may be,
under the Pooling and Servicing Agreement; provided, however, that no successor
or surviving person shall succeed to the rights of the Master Servicer or the
Special Servicer unless, among other things, such succession will not result in
any qualification, downgrade or withdrawal of the rating then assigned by any
Rating Agency to any Class of Certificates (as confirmed in writing).
EVENTS OF DEFAULT
"Events of Default" under the Pooling and Servicing Agreement include each
of the following: (i) any failure by the Master Servicer or the Special Servicer
to deposit, or to remit to the appropriate party for deposit, into the Custodial
Account or REO Account, as applicable, any amount required to be so deposited or
any failure by the Master Servicer or the Special Servicer to make any required
Servicing Advances; (ii) any failure by the Master Servicer to remit to the
Trustee for deposit in the Collection Account any amount required to be so
remitted, which continues unremedied as of a specified time on the next
Distribution Date; (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 Pooling and Servicing Agreement, which
failure continues unremedied for 60 days after written notice of such failure
has been given to the Master Servicer or the Special Servicer, as the case may
be, by any other party to the Pooling and Servicing Agreement or to the Master
Servicer or the Special Servicer, as the case may be (with a copy to each other
party to the Pooling and Servicing Agreement), by Certificateholders entitled to
not less than 25% of the Voting Rights; (iv) any breach by the Master Servicer
or the Special Servicer of any of its representations or warranties contained in
the Pooling and Servicing Agreement that materially and adversely affects the
interest of any Class of Certificateholders and that continues unremedied for 60
days
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after written notice of such breach has been given to the Master Servicer or the
Special Servicer, as the case may be, by any other party to the Pooling and
Servicing Agreement, or to the Master Servicer or the Special Servicer, as the
case may be (with a copy to each other party to the Pooling and Servicing
Agreement), by Certificateholders entitled to not less than 25% of the Voting
Rights; (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 or the Special Servicer and certain actions by or on behalf of
the Master Servicer or the Special Servicer indicating its insolvency or
inability to pay its obligations; and (vi) the Trustee shall have received
notice from either of the Rating Agencies that (A) the Master Servicer's or the
Special Servicer's acting in such capacity shall have resulted in one or more
ratings assigned to the respective Classes of Certificates being qualified,
downgraded or withdrawn, or (B) the continuation of the Master Servicer or the
Special Servicer in such capacity would result in a qualification, downgrade or
withdrawal of any rating assigned thereby to any Class of Certificates. When a
single entity acts as Master Servicer and Special Servicer, an Event of Default
in one such capacity shall constitute an Event of Default in the other such
capacity.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default described in clauses (i)-(v) of under
"--Events of Default" above with respect to the Master Servicer or the Special
Servicer under the Pooling and Servicing Agreement remains unremedied, the
Trustee will be authorized, and at the direction of Certificateholders entitled
to not less than 25% of the Voting Rights, the Trustee will be required, to
terminate all of the rights and obligations of the defaulting party under the
Pooling and Servicing Agreement and in and to the Trust Fund other than any
rights thereof as a Certificateholder. If an Event of Default described in
clause (vi) under "--Events of Default" above occurs with respect to the Master
Servicer or, if applicable, the Special Servicer, the Trustee is required (by
notice in writing to the defaulting party with a copy to each other party hereto
and the Rating Agencies) to terminate all of the rights and obligations of the
defaulting party under the Pooling and Servicing Agreement and in and to the
Trust Fund other than any rights thereof as a Certificateholder. Upon any such
termination, the Trustee will succeed to all of the responsibilities, duties and
liabilities of the Master Servicer or Special Servicer, as the case may be,
under the Pooling and Servicing Agreement and will be entitled to like
compensation arrangements. If the Trustee is unwilling to so act, it may (or, at
the written request of Certificateholders entitled to a majority of the Voting
Rights, or if the Trustee is unable, or is not approved by each Rating Agency,
to act as a master servicer or special servicer, as the case may be, the Trustee
will be required to) appoint, or petition a court of competent jurisdiction to
appoint, an established and qualified institution to act as successor Master
Servicer or Special Servicer (subject in the case of successor Special Servicer,
to the rights of the holders of Certificates evidencing a majority of Voting
Rights in the Controlling Class to designate a successor Special Servicer), as
the case may be, under the Pooling and Servicing Agreement. Pending such
appointment, the Trustee will be obligated to act in such capacity.
The Certificateholders entitled to at least 66-2/3% of the Voting Rights
allocated to each Class of Certificates affected by any Event of Default may
waive such Event of Default; provided, however, that an Event of Default
described in clauses (i), (vi) and (vii) under "--Events of Default" above may
be waived only by all of the Certificateholders of the affected Classes. Upon
any such waiver of an Event of Default, such Event of Default will cease to
exist and will be deemed to have been remedied for every purpose under the
Pooling and Servicing Agreement.
No Certificateholder will have the right under the Pooling and Servicing
Agreement to institute any proceeding with respect thereto unless such holder
previously has given to the Trustee written notice of default and unless (except
in the case of a default by the Trustee) Certificateholders entitled to not less
than 25% of the Voting Rights shall have made written request upon the Trustee
to institute such proceeding in its own name as Trustee thereunder and shall
have offered to the Trustee reasonable indemnity, and the Trustee for 60 days
shall have neglected or refused to institute any such proceeding.
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The Trustee, however, will be under no obligation to exercise any of the trusts
or powers vested in it by the Pooling and Servicing Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of any of the Certificateholders, unless in the Trustee's opinion,
such Certificateholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The LB Commercial Mortgage Trust, Commercial Mortgage Pass-Through
Certificates, Series 1998-C1 (the "Certificates") will be issued pursuant to a
Pooling and Servicing Agreement, to be dated as of February 1, 1998, among the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent (the "Pooling and Servicing Agreement"). The Certificates will represent
in the aggregate the entire beneficial ownership interest in a trust fund (the
"Trust Fund") consisting primarily of: (i) the Mortgage Loans and all payments
and other collections in respect of the Mortgage Loans received or applicable to
periods after the Cut-off Date (exclusive of payments of principal and interest
due, and principal prepayments received, on or before the Cut-off Date); (ii)
any REO Property acquired on behalf of the Trust Fund; (iii) such funds or
assets as from time to time are deposited in the Collection Account (See
"--Collection Account" below), the Custodial Account or, if established, the REO
Account; and (iv) certain rights of the Depositor under the Mortgage Loan
Purchase Agreement relating to Mortgage Loan document delivery requirements and
the representations and warranties of the Mortgage Loan Seller regarding the
Mortgage Loans.
The Certificates will consist of 18 classes (each, a "Class") to be
designated as: (i) the Class A-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates (collectively, the "Class A Certificates"); (ii) the
Class B Certificates, the Class C Certificates, the Class D Certificates, the
Class E Certificates, the Class F Certificates, the Class G Certificates, the
Class H Certificates, the Class J Certificates, the Class K Certificates, Class
L Certificates and the Class M Certificates (collectively with the Class A
Certificates, the "Sequential Pay Certificates"); (iii) the Class IO
Certificates (collectively with the Sequential Pay Certificates, the "Regular
Interest Certificates"); and (iv) the Class R-I Certificates, the Class R-II
Certificates and the Class R-III Certificates (collectively, the "Residual
Interest Certificates").
Only the Class A-1, Class A-2, Class A-3, Class IO, 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
M and the Residual Interest Certificates (collectively, the "Private
Certificates") have not been registered under the Securities Act, and are not
offered hereby. Accordingly, information herein regarding the terms of the
Private Certificates is provided solely because of its potential relevance to a
prospective purchaser of an Offered Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be issued in book-entry format through the
facilities of The Depository Trust Company ("DTC"). Each Class of Offered
Certificates will be issued in denominations of not less than $10,000 actual
principal amount (or $100,000 notional amount with respect to the Class IO
Certificates), and in integral multiples of $1 in excess thereof.
Each Class of Offered Certificates will initially be represented by one or
more global Certificates 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
beneficial owner of an Offered Certificate (each, a "Certificate Owner") will be
entitled to receive a fully registered, certificated form of such Certificate (a
"Definitive Offered Certificate"), except under the limited circumstances
described under "Description of the Securities-- Book-Entry Registration" in the
Prospectus. Unless and until Definitive Offered Certificates are issued in
respect of a Class of Offered Certificates, beneficial ownership interests in
such Class will be recorded and transferred on the book-entry records of DTC and
its participating organizations (the "Participants"), and all references herein
to actions by holders of a Class of Offered Certificates will refer to actions
taken by DTC upon instructions received from the related Certificate Owners
through the Participants in accordance with DTC procedures, and all references
herein to payments, notices, reports and statements to the holders of a Class of
Offered Certificates will refer to payments, notices, reports and statements to
DTC or Cede & Co., as the registered holder thereof, for distribution to the
related Certificate Owners through the
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Participants in accordance with DTC procedures. The form of such payments and
transfers may result in certain delays in receipt of payments by an investor and
may restrict an investor's ability to pledge its securities. None of the
Depositor, the Master Servicer, the Special Servicer, the Trustee or the Fiscal
Agent or any of their respective affiliates will have any liability for any
actions taken by DTC or its nominee, including, without limitation, actions for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in Offered Certificates held by Cede & Co., as nominee for
DTC, or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. See "Risk Factors--The Certificates--Book-Entry
Registration" herein and "Description of the Securities-- Book-Entry
Registration" in the Prospectus.
CERTIFICATE BALANCES AND NOTIONAL AMOUNTS
Upon initial issuance, and in each case subject to a permitted variance of
plus or minus 5%, the respective Classes of Sequential Pay Certificates will
have the Certificate Balances set forth in the following table:
<TABLE>
<CAPTION>
PERCENT OF
INITIAL INITIAL
CLASS OF SEQUENTIAL CERTIFICATE POOL
PAY CERTIFICATES BALANCE BALANCE
- - ---------------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Class A-1 Certificates............................................................ $ 275,000,000 15.5%
Class A-2 Certificates............................................................ $ 330,000,000 18.6%
Class A-3 Certificates............................................................ $ 646,492,000 36.4%
Class B Certificates.............................................................. $ 88,759,000 5.0%
Class C Certificates.............................................................. $ 88,758,000 5.0%
Class D Certificates.............................................................. $ 93,196,000 5.2%
Class E Certificates.............................................................. $ 35,504,000 2.0%
Class F Certificates.............................................................. $ 53,255,000 3.0%
Class G Certificates.............................................................. $ 35,503,000 2.0%
Class H Certificates.............................................................. $ 17,752,000 1.0%
Class J Certificates.............................................................. $ 44,379,000 2.5%
Class K Certificates.............................................................. $ 17,751,000 1.0%
Class L Certificates.............................................................. $ 17,752,000 1.0%
Class M Certificates.............................................................. $ 31,066,073 1.8%
</TABLE>
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time represents the maximum amount that 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. The
Certificate Balance of each Class of Sequential Pay Certificates will be
permanently reduced on each Distribution Date by any distributions of principal
actually made on such Class of Certificates on such Distribution Date, and
further permanently reduced by any Realized Losses and Additional Trust Fund
Expenses actually allocated to such Class of Certificates on such Distribution
Date.
The Class IO Certificates will not have a Certificate Balance, but will
represent the right to receive distributions of interest in an amount equal to
the aggregate interest accrued on the notional amount of each of the Class IO
Components, as described herein. The Class IO Certificates will have fourteen
components (each a "Class IO Component"), each corresponding to a different
Class of Sequential Pay Certificates. Each such Class IO Component will have the
same letter and/or numerical designation as a Class of Sequential Pay
Certificates. The notional amount of each such Class IO Component will equal the
Certificate Balance of the corresponding Class of Sequential Pay Certificates
outstanding from time to time. On the Closing Date, the aggregate of the
notional amounts of all the Class IO Components will equal the Initial Pool
Balance. References herein to the "notional amount" of the Class IO Certificates
shall mean the aggregate of the notional amounts of the Class IO Components.
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The Residual Interest Certificates will not have Certificate Balances or
notional amounts, but will represent the right to receive on each Distribution
Date any portion of the Available Distribution Amount (as defined below) for
such date that remains after the required distributions have been made on all
the Regular Interest Certificates.
PASS-THROUGH RATES
The Pass-Through Rate applicable to each Class of Sequential Pay
Certificates for each Distribution Date is fixed at the respective rate per
annum set forth with respect to such Class in the table at the beginning of the
Summary. The Pass-Through Rate applicable to each Class IO Component for any
Distribution Date will be equal to the Weighted Average Net Mortgage Rate for
such Distribution Date minus the fixed Pass-Through Rate applicable to the
corresponding Class of Sequential Pay Certificates. The Residual Interest
Certificates will not bear interest.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period, weighted on the basis of their
respective Stated Principal Balances outstanding immediately prior to such
Distribution Date. The "Net Mortgage Rate" for each Mortgage Loan will generally
equal (x) the Mortgage Rate in effect for such Mortgage Loan as of the Cut-off
Date, minus (y) the sum of the applicable Master Servicing Fee Rate and the
Trustee Fee Rate (such sum, as to any Mortgage Loan, the "Administrative Cost
Rate"); provided that if any Mortgage Loan does not accrue interest on the basis
of a 360-day year consisting of twelve 30-day months (which is the basis on
which interest accrues in respect of the Regular Interest Certificates), then,
solely for purposes of calculating the Weighted Average Net Mortgage Rate, the
Mortgage Rate referred to in clause (x) will, to the extent appropriate, be
adjusted from accrual period to accrual period to compensate for such
difference. The "Stated Principal Balance" of each Mortgage Loan outstanding at
any time will generally be an amount equal to the Cut-off Date Balance thereof,
permanently reduced on each Distribution Date (to not less than zero) by (i) any
payments or other collections (or advances in lieu thereof) of principal of such
Mortgage Loan that are due or received, as the case may be, during the related
Collection Period and are distributed on the Certificates on such Distribution
Date and (ii) the principal portion of any Realized Loss incurred in respect of
such Mortgage Loan during the related Collection Period. Notwithstanding the
foregoing, if any Mortgage Loan is paid in full, liquidated or otherwise removed
from the Trust Fund, commencing as of the first Distribution Date following the
Collection Period during which such event occurred, the Stated Principal Balance
of such Mortgage Loan will be zero.
The "Collection Period" for each Distribution Date will be the period that
begins immediately following the Determination Date in the 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 and
includes the Determination Date in the same month as such Distribution Date. The
"Determination Date" will be the 10th day of each month (or, if not a business
day, the next preceding business day).
COLLECTION ACCOUNT
GENERAL. The Trustee will be required to establish and maintain one or more
accounts (collectively, the "Collection Account") for the distribution of
payments to the Certificateholders. Each such account is to be an Eligible
Account. The funds held in the Collection Account may be invested at the
direction of the Master Servicer (or as otherwise provided in the Pooling and
Servicing Agreement) in Permitted Investments.
DEPOSITS. On or before the business day prior to each Distribution Date,
the Master Servicer will be required to deliver to the Trustee, for deposit in
the Collection Account, in immediately available funds, the amounts described in
clause (i) under "Servicing of the Mortgage Loans--Custodial Account--
Withdrawals". In addition, the Master Servicer will be required, as and when
provided in the Pooling and
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Servicing Agreement, to deliver to the Trustee for deposit in the Collection
Account, any P&I Advances and/or Compensating Interest Payment with respect to
each Distribution Date.
WITHDRAWALS. The Trustee may, from time to time, make withdrawals from the
Collection Account for any of the following purposes, among others: (i) to make
distributions to the Certificateholders on each Distribution Date; (ii) to pay
itself the Trustee Fee each month; (iii) to reimburse and/or indemnify itself
and certain related persons as described under "--The Trustee" herein and to
make certain comparable reimbursements and/or indemnifications with respect to
the Fiscal Agent; (iv) to pay the Master Servicer, as additional servicing
compensation, interest and other investment income earned in respect of amounts
held in the Collection Account; (v) to pay for the cost of certain opinions of
counsel required under the Pooling and Servicing Agreement; (vi) to pay any
federal, state and local taxes imposed on the Trust Fund, its assets and/or
transactions, together with all incidental costs and expenses, to the extent
required to be borne by the Trust Fund, all as described under "Certain Federal
Income Tax Consequences--Possible Taxes on Income from Foreclosure Property and
Other Taxes" and "Servicing of the Mortgage Loans-- REO Properties" herein and
as provided in the Pooling and Servicing Agreement; and (vii) to clear and
terminate the Collection Account upon termination of the Trust Fund.
DISTRIBUTIONS
GENERAL. Distributions on the Certificates will be made by the Trustee, to
the extent of available funds, on the 18th day of each month or, if any such
18th day is not a business day, then on the next succeeding business day,
commencing in March 1998 (each, a "Distribution Date"). Except as described
below, all such distributions will be made on each Distribution Date to the
persons in whose names the Certificates are registered (the
"Certificateholders") at the close of business on the last business day of the
month preceding the month in which such Distribution Date occurs (or, in the
case of the initial Distribution Date, at the close of business on the Closing
Date) and shall be made by wire transfer of immediately available funds, if such
Certificateholder shall have provided wiring instructions no less than five
business days prior to such record date, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate register. The
final distribution on any Certificate (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously allocated to such Certificate) will be made only upon presentation
and surrender of such Certificate at the location that will be specified in a
notice of the pendency of such final distribution. All distributions made with
respect to a Class of Certificates will be allocated PRO RATA among the
outstanding Certificates of such Class based on their respective percentage
interests in such Class.
THE AVAILABLE DISTRIBUTION AMOUNT. The aggregate amount available for
distributions of interest and principal to Certificateholders on each
Distribution Date (the "Available Distribution Amount") will, in general, equal
the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties by the Master Servicer as of the close
of business on the related Determination Date and not previously distributed
with respect to the Certificates, EXCLUSIVE of any portion thereof that
represents one or more of the following:
(i) any Monthly Payments collected but due on a Due Date after the
related Collection Period,
(ii) any Prepayment Premiums and Yield Maintenance Charges,
(iii) Additional Interest, and
(iv) all amounts that are payable or reimbursable to any person
other than the Certificateholders as described under
"--Collection Account--Withdrawals" above and "Servicing of the
Mortgage Loans--Custodial Account--Withdrawals" and "--REO
Properties" herein;
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(b) all P&I Advances made by the Master Servicer with respect to such
Distribution Date (see "--P&I Advances" below);
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced during
the related Collection Period (see "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses" herein).
Any Prepayment Premiums and Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges" herein.
APPLICATION OF THE AVAILABLE DISTRIBUTION AMOUNT. On each Distribution
Date, the Trustee will (except as otherwise described under "--Termination"
below), after deduction of the Trustee Fee for such Distribution Date, apply
amounts on deposit in the Collection Account, to the extent of the Available
Distribution Amount, for the following purposes and in the following order of
priority:
(1) to distributions of interest to the holders of the Class A-1, Class
A-2, Class A-3 and Class IO Certificates (in each case, so long as any such
Class remains outstanding), pro rata based on entitlement, in an amount
equal to all Distributable Certificate Interest in respect of each such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount (as defined herein) for such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to distributions
of principal to the holders of the Class A-2 Certificates in an amount (not
to exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates;
(4) after the Class A-1 and Class A-2 Certificates have been retired, to
distributions of principal to the holders of the Class A-3 Certificates in
an amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 and/or Class A-2 Certificates;
(5) to distributions to the holders of the Class A-1, Class A-2 and
Class A-3 Certificates, pro rata in accordance with the respective amounts
of Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Classes of Certificates and for which no reimbursement has
previously been received, to reimburse such holders for all such Realized
Losses and Additional Trust Fund Expenses;
(6) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(7) after the Class A-1, Class A-2 and Class A-3 Certificates have been
retired, to distributions of principal to the holders of the Class B
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2 and/or Class A-3 Certificates on such
Distribution Date;
(8) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
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(9) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(10) after the Class A-1, Class A-2, Class A-3 and Class B Certificates
have been retired, to distributions of principal to the holders of the Class
C Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3 and/or Class B Certificates
on such Distribution Date;
(11) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(12) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(13) after the Class A-1, Class A-2, Class A-3, Class B and Class C
Certificates have been retired, to distributions of principal to the holders
of the Class D Certificates in an amount (not to exceed the then outstanding
Certificate Balance of such Class of Certificates) equal to the Principal
Distribution Amount for such Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class A-2, Class A-3, Class B
and/or Class C Certificates on such Distribution Date;
(14) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(15) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(16) after the Class A-1, Class A-2, Class A-3, Class B, Class C and
Class D Certificates have been retired, to distributions of principal to the
holders of the Class E Certificates in an amount (not to exceed the then
outstanding Certificate Balance of such Class of Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class A-2, Class A-3, Class
B, Class C and/or Class D Certificates;
(17) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(18) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(19) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D and Class E Certificates have been retired, to distributions of principal
to the holders of the Class F Certificates in an amount (not to exceed the
then outstanding Certificate Balance of such Class of Certificates) equal to
the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1, Class A-2, Class
A-3, Class B, Class C, Class D and/or Class E Certificates;
(20) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
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(21) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(22) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E and Class F Certificates have been retired, to distributions of
principal to the holders of the Class G Certificates in an amount (not to
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E and/or
Class F Certificates;
(23) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(24) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(25) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F and Class G Certificates have been retired, to
distributions of principal to the holders of the Class H Certificates in an
amount (not to exceed the then outstanding Certificate Balance of such Class
of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class F
and/or Class G Certificates;
(26) to distributions to the holders of the Class H Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(27) to distributions of interest to the holders of the Class J
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(28) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G and Class H Certificates have been retired, to
distributions of principal to the holders of the Class J Certificates in an
amount (not to exceed the then outstanding Certificate Balance of such Class
of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class
F, Class G and/or Class H Certificates;
(29) to distributions to the holders of the Class J Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(30) to distributions of interest to the holders of the Class K
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(31) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G, Class H and Class J Certificates have been
retired, to distributions of principal to the holders of the Class K
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and/or Class J Certificates;
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(32) to distributions to the holders of the Class K Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received;
(33) to distributions of interest to the holders of the Class L
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(34) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J and Class K Certificates have
been retired, to distributions of principal to the holders of the Class L
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J and/or Class K Certificates;
(35) to distributions to the holders of the Class L Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received;
(36) to distributions of interest to the holders of the Class M
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(37) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates have been retired, to distributions of principal to the holders
of the Class M Certificates in an amount (not to exceed the then outstanding
Certificate Balance of such Class of Certificates) equal to the Principal
Distribution Amount for such Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K
and/or Class L Certificates;
(38) to distributions to the holders of the Class M Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received; and
(39) to make distributions to the holders of the Residual Interest
Certificates, up to an amount equal to the excess, if any, of (a) the
Available Distribution Amount remaining for such Distribution Date, over (b)
the aggregate distributions made in respect of the Regular Interest
Certificates on such Distribution Date as described in clauses (1) through
(38) above;
provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero as
a result of the allocations of Realized Losses and Additional Trust Fund
Expenses, and prior to retirement of the Class A Certificates, the payments of
principal to be made as contemplated by clauses (2), (3) and (4) above with
respect to the Class A Certificates will be so made to the holders of the
respective Classes of such Certificates, up to an amount equal to, and pro rata
as among such Classes in accordance with, the respective then outstanding
Certificate Balances of such Classes of Certificates, and without regard to the
Principal Distribution Amount for such date.
DISTRIBUTABLE CERTIFICATE INTEREST. The "Distributable Certificate
Interest" in respect of each Class of Regular Interest Certificates for each
Distribution Date will equal the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, net of such Class's allocable
share (calculated as described below) of the aggregate of any Prepayment
Interest Shortfalls resulting from voluntary principal prepayments made on the
Mortgage Loans during the related Collection Period that are not covered by the
Master Servicer's Compensating Interest Payment for such Distribution Date (the
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aggregate of such Prepayment Interest Shortfalls that are not so covered, as to
any Distribution Date, the "Net Aggregate Prepayment Interest Shortfall").
The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay Certificates for each Distribution Date will equal one month's interest at
the applicable Pass-Through Rate accrued during the related Interest Accrual
Period on the Certificate Balance of such Class of Certificates outstanding
immediately prior to such Distribution Date. The "Accrued Certificate Interest"
in respect of the Class IO Certificates for any Distribution Date will equal the
aggregate of one month's interest at the applicable Pass-Through Rate accrued
during the related Interest Accrual Period on the notional amount of each Class
IO Component outstanding immediately prior to such Distribution Date. Accrued
Certificate Interest will be calculated on a basis of a 360-day year consisting
of twelve 30-day months.
The "Interest Accrual Period" in respect of each Class of Regular Interest
Certificates for each Distribution Date is the calendar month preceding the
month in which such Distribution Date occurs.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of Regular Interest
Certificates will equal the product of (a) such Net Aggregate Prepayment
Interest Shortfall, multiplied by (b) a fraction, the numerator of which is
equal to the Accrued Certificate Interest in respect of such Class of
Certificates for such Distribution Date, and the denominator of which is equal
to the aggregate Accrued Certificate Interest in respect of all Classes of
Regular Interest Certificates for such Distribution Date.
PRINCIPAL DISTRIBUTION AMOUNT. The "Principal Distribution Amount" for each
Distribution Date will generally equal the aggregate of the following (without
duplication):
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) due, and the principal portions of any Assumed
Scheduled Payments deemed due, on or in respect of the Mortgage Loans for
their respective Due Dates occurring during the related Collection Period;
(b) the aggregate of all principal prepayments received on the Mortgage
Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period, any
payment of principal (exclusive of any amounts described in clause (b) above
or clause (d) below) made by or on behalf of the related borrower during the
related Collection Period (including any Balloon Payment), net of any
portion of such payment that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due, or the
principal portion of any Assumed Scheduled Payment deemed due, in respect of
such Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds that were received on or in respect of any of the
Mortgage Loans during the related Collection Period and that were identified
and applied by the Master Servicer as recoveries of principal, in each case
net of any portion of such amounts that represents a recovery of the
principal portion of any Scheduled Payment (other than a Balloon Payment)
due, or of the principal portion of any Assumed Scheduled Payment deemed
due, in respect of the related Mortgage Loan on a Due Date during or prior
to the related Collection Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial Distribution
Date, the excess, if any, of the Principal Distribution Amount for the
immediately preceding Distribution Date, over the aggregate distributions of
principal made on the Certificates on such immediately preceding
Distribution Date.
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The "Scheduled Payment" due on any Mortgage Loan on any related Due Date is
the Monthly Payment (excluding any amounts representing Additional Interest with
respect to an ARD Loan) that is or would have been, as the case may be, due
thereon on such date, without regard to any waiver, modification or amendment of
such Mortgage Loan granted or agreed to by the Special Servicer or otherwise
resulting from a bankruptcy or similar proceeding involving the related
borrower, and assuming that the full amount of each prior Scheduled Payment has
been made in a timely manner. The "Assumed Scheduled Payment" is an amount
deemed due in respect of any Mortgage Loan that constitutes either (i) a Balloon
Loan that is delinquent in respect of its Balloon Payment beyond the first
Determination Date that follows its stated maturity date or (ii) a Mortgage Loan
as to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan"). The Assumed Scheduled Payment deemed due on any such Balloon
Loan on its stated maturity date and on each successive related Due Date that it
remains outstanding and part of the Trust Fund will equal the Scheduled Payment
that would have been due thereon on such date if the related Balloon Payment had
not come due but rather such Mortgage Loan had continued to amortize in
accordance with its amortization schedule, if any, in effect as of the Closing
Date. The Assumed Scheduled Payment deemed due on any REO Mortgage Loan on each
Due Date that the related REO Property remains part of the Trust Fund will equal
the Scheduled Payment that would have been due in respect of such Mortgage Loan
on such Due Date had it remained outstanding (or, if such Mortgage Loan was a
Balloon Loan and such Due Date coincides with or follows what had been its
stated maturity date, the Assumed Scheduled Payment that would have been deemed
due in respect of such Mortgage Loan on such Due Date had it remained
outstanding).
Distributions of the Principal Distribution Amount will constitute the only
distributions of principal on the Certificates. Reimbursements of previously
allocated Realized Losses and Additional Trust Fund Expenses will not constitute
distributions of principal for any purpose and will not result in an additional
reduction in the Certificate Balance of the Class of Certificates in respect of
which any such reimbursement is made.
TREATMENT OF REO PROPERTIES. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of determining (i) distributions on the Certificates, (ii) allocations
of Realized Losses and Additional Trust Fund Expenses to the Certificates, and
(iii) the amount of Trustee Fees and Servicing Fees payable under the Pooling
and Servicing Agreement, as having remained outstanding until such REO Property
is liquidated. In connection therewith, operating revenues and other proceeds
derived from such REO Property (net of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts that
would have been "due" on such Mortgage Loan, and the Master Servicer will be
required to make P&I Advances in respect of such Mortgage Loan, in all cases as
if such Mortgage Loan had remained outstanding. References to "Mortgage Loan" or
"Mortgage Loans" in the definitions of "Principal Distribution Amount" and
"Weighted Average Net Mortgage Rate" are intended to include any REO Mortgage
Loan.
ALLOCATION OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES. In the
event a borrower is required to pay any Yield Maintenance Charge or any
Prepayment Premium, the amount of such payments actually collected will be
distributed in respect of the Offered Certificates as set forth below. "Yield
Maintenance Charges" are fees paid or payable, as the context requires, as a
result of a prepayment of principal on a Mortgage Loan, which fees have been
calculated (based on Scheduled Payments on such Mortgage Loan) to compensate the
holder of the Mortgage for reinvestment losses based on the value of a discount
rate at or near the time of prepayment. Any other fees paid or payable, as the
context requires, as a result of a prepayment of principal on a Mortgage Loan,
which are calculated based upon a specified percentage (which may decline over
time) of the amount prepaid are considered "Prepayment Premiums."
On each Distribution Date, any Prepayment Premium or Yield Maintenance
Charge collected on a Mortgage Loan during the related Collection Period will be
distributed as follows. The holders of each Class of Sequential Pay Certificates
(other than an Excluded Class thereof) then entitled to distributions of
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principal on such Distribution Date will be entitled to an amount equal to (a)
the amount of such Prepayment Premium or Yield Maintenance Charge, multiplied by
(b) a fraction (which in no event may be greater than one), the numerator of
which is equal to the excess, if any, of the Pass-Through Rate of such Class of
Sequential Pay Certificates, over the relevant Discount Rate (as defined below),
and the denominator of which is equal to the excess, if any, of the Mortgage
Rate of the prepaid Mortgage Loan, over the relevant Discount Rate, and (c) a
fraction, the numerator of which is equal to the amount of principal
distributable on such Class of Sequential Pay Certificates on such Distribution
Date, and the denominator of which is the Principal Distribution Amount for such
Distribution Date. If there is more than one Class of Sequential Pay
Certificates (other than an Excluded Class thereof) entitled to distributions of
principal on any particular Distribution Date on which a Prepayment Premium or
Yield Maintenance Charge is distributable, the aggregate amount of such
Prepayment Premium or Yield Maintenance Charge will be allocated among all such
Classes up to, and on a PRO RATA basis in accordance with, their respective
entitlements thereto calculated as described in the foregoing sentence. The
portion, if any, of the Prepayment Premium or Yield Maintenance Charge remaining
after any such payments to the holders of the Sequential Pay Certificates will
be distributed to the holders of the Class IO Certificates. For purposes of the
foregoing, an "Excluded Class" of Sequential Pay Certificates is any Class
thereof other than the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F and Class G Certificates.
The "Discount Rate" applicable to any Class of Offered Certificates will be
equal to the yield (when compounded monthly) on the U.S. Treasury issue (primary
issue) with a maturity date closest to the maturity date for the prepaid
Mortgage Loan. In the event that there are two such U.S. Treasury issues (a)
with the same coupon, the issue with the lower yield will be utilized, and (b)
with maturity dates equally close to the maturity date for the prepaid Mortgage
Loan, the issue with the earliest maturity date will be utilized.
For an example of the foregoing allocation of Prepayment Premiums and Yield
Maintenance Charges, see Annex B hereto. The Depositor makes no representation
as to the enforceability of the provision of any Mortgage Note requiring the
payment of a Prepayment Premium or Yield Maintenance Charge, or of the
collectability of any Prepayment Premium or Yield Maintenance Charge. See
"Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" herein.
DISTRIBUTIONS OF ADDITIONAL INTEREST. On each Distribution Date, any
Additional Interest collected on an ARD Loan during the related Collection
Period will be distributed among all the Classes of Sequential Pay Certificates
on a PRO RATA basis in accordance with the respective initial Certificate
Balances of such Classes of Certificates. There can be no assurance as to what
extent Additional Interest will be collected on the ARD Loans, if at all.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
The rights of holders of the Class B, Class C, Class D and Class E
Certificates and each Class of the Private Certificates (collectively, the
"Subordinate Certificates") to receive distributions of amounts collected or
advanced on the Mortgage Loans will be subordinated, to the extent described
herein, to the rights of holders of the Class A and Class IO Certificates
(collectively, the "Senior Certificates") and each other such Class of
Subordinate Certificates, if any, with an earlier alphabetical Class
designation. This subordination is intended to enhance the likelihood of timely
receipt by the holders of the Senior Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of each Class of the Class A Certificates of principal in an amount equal to the
entire related Certificate Balance. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the likelihood of timely receipt by
the holders of the Class B, the Class C, the Class D and the Class E
Certificates of the full amount of Distributable Certificate Interest payable in
respect of such Classes of Certificates on each Distribution Date, and the
ultimate receipt by the holders of each such Class of Certificates of principal
equal to the
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entire related Certificate Balance. The protection afforded to the holders of
the Class E Certificates by means of the subordination of the Private
Certificates, to the holders of the Class D Certificates by means of the
subordination of the Class E and the Private Certificates, to the holders of the
Class C Certificates by means of the subordination of the Class D, the Class E
and the Private Certificates, to the holders of the Class B Certificates by
means of the subordination of the Class C, the Class D, the Class E and the
Private Certificates, and to the holders of the Senior Certificates by means of
the subordination of the Subordinate Certificates, will be accomplished by (i)
the application of the Available Distribution Amount on each Distribution Date
in accordance with the order of priority described under
"--Distributions--Application of the Available Distribution Amount" above and
(ii) by the allocation of Realized Losses and Additional Trust Fund Expenses as
described below. Until the first Distribution Date after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero,
the Class A-3 Certificates will receive principal payments only after the
Certificate Balances of the Class A-2 and Class A-1 Certificates have been
reduced to zero and the Class A-2 Certificates will receive principal payments
only after the Certificate Balance of the Class A-1 Certificates has been
reduced to zero. However, the Class A-1, Class A-2, Class A-3 and Class IO
Certificates will bear shortfalls in collections and losses incurred in respect
of the Mortgage Loans concurrently. No other form of credit support will be
available for the benefit of the holders of the Offered Certificates.
On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses that have been incurred since the Cut-off Date through the
end of the related Collection Period and that have not previously been allocated
as described below will be allocated among the respective Classes of Sequential
Pay Certificates (in each case in reduction of their respective Certificate
Balances) as follows, but in the aggregate only to the extent that the aggregate
Certificate Balance of all Classes of Sequential Pay Certificates remaining
outstanding after giving effect to the distributions on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date: first, to the Class M
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; second, to the Class L Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
third, to the Class K Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fourth, to the Class J
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; fifth, to the Class H Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
sixth, to the Class G Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; seventh, to the Class F
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eighth, to the Class E Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
ninth, to the Class D Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; tenth, to the Class C
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eleventh, to the Class B Certificates, until
the remaining Certificate Balance of such Class of Certificates is reduced to
zero; and, last, to the Class A-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates, pro rata, in proportion to their respective
outstanding Certificate Balances, until the remaining Certificate Balances of
such Classes of Certificates are reduced to zero.
Any Realized Loss or Additional Trust Fund Expenses allocated in reduction
of the Certificate Balance of any Class of Sequential Pay Certificates will
result in a corresponding reduction in the notional amount for the Class IO
Component that is related to such Class of Sequential Pay Certificates.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any Mortgage Loan, including by reason of the fraud
or bankruptcy of the borrower or a casualty of any nature at the related
Mortgaged Property, to the extent not covered by insurance. The Realized Loss in
respect of a liquidated Mortgage Loan (or related REO Property) is an amount
generally equal to the excess, if any, of (a) the outstanding principal balance
of such Mortgage Loan as of the date of liquidation, together with
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(i) all unpaid interest accrued thereon to but not including the Due Date in the
Collection Period in which the liquidation occurred (exclusive, however, of any
such accrued and unpaid interest that constitutes Default Interest and/or
Additional Interest) and (ii) related unreimbursed Servicing Advances, over (b)
the aggregate amount of Liquidation Proceeds, if any, recovered in connection
with such liquidation. If any portion of the debt due under a Mortgage Loan is
forgiven, whether in connection with a modification, waiver or amendment granted
or agreed to by the Special Servicer or in connection with the bankruptcy or
similar proceeding involving the related borrower, the amount so forgiven (to
the extent it constitutes principal, interest (other than Default Interest or
Additional Interest) or an amount for which a Servicing Advance has been made)
also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" are any expenses experienced with respect
to the Trust Fund other than Realized Losses, that would result in the holders
of the Regular Interest Certificates receiving less than the full amount of
principal and/or interest to which they are entitled on any Distribution Date,
and include, among other things, (i) any Special Servicing Fees, Liquidation
Fees and/or Work-out Fees paid to the Special Servicer, (ii) any interest paid
to the Master Servicer, the Special Servicer, the Trustee and/or the Fiscal
Agent in respect of unreimbursed Advances, and (iii) any of certain
unanticipated, non-Mortgage Loan specific expenses of the Trust Fund, including
certain indemnities and reimbursements to the Trustee and the Fiscal Agent of
the type described under "--The Trustee" herein (the Fiscal Agent having the
same rights to indemnity and reimbursement as described with respect to the
Trustee), certain indemnities and reimbursements to the Depositor, the Master
Servicer and the Special Servicer of the type described under "Servicing of the
Mortgage Loans--Certain Matters Regarding the Depositor, the Master Servicer and
the Special Servicer" herein and certain federal, state and local taxes, and
certain tax related expenses, payable from the assets of the Trust Fund and
described under "Certain Federal Income Tax Consequences--Possible Taxes on
Income from Foreclosure Property and Other Taxes" and "Servicing of the Mortgage
Loans--REO Properties" herein. Additional Trust Fund Expenses will reduce
amounts payable to Certificateholders and, subject to the distribution
priorities described above, may result in a loss on one or more Classes of
Offered Certificates.
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P&I ADVANCES
On or about each Distribution Date, the Master Servicer will be obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling and Servicing Agreement, from
funds held in the Custodial Account that are not required to be distributed to
Certificateholders (or paid to any other person pursuant to the Pooling and
Servicing Agreement) on such Distribution Date, in an amount that is generally
equal to the aggregate of all Scheduled Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Master Servicing Fees and, if
any, Workout Fees, due or deemed due, as the case may be, in respect of the
Mortgage Loans during the related Collection Period, in each case to the extent
such amount was not paid by or on behalf of the related borrower or otherwise
collected as of the close of business on the related Determination Date. The
Master Servicer's obligations to make P&I Advances in respect of any Mortgage
Loan will continue until liquidation of such Mortgage Loan or disposition of any
REO Property acquired in respect thereof. However, if the Monthly Payment on any
Mortgage Loan has been reduced in connection with a bankruptcy or similar
proceeding or a modification, waiver or amendment granted or agreed to by the
Special Servicer, the Master Servicer will be required to advance only the
amount of the reduced Monthly Payment (net of related Master Servicing Fees and,
if any, Workout Fees) in respect of subsequent delinquencies. In addition, if it
is determined that an Appraisal Reduction Amount (as defined below) exists with
respect to any Required Appraisal Loan (as defined below), then, with respect to
the Distribution Date immediately following the date of such determination and
with respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists, the Master Servicer will be required in the event of
subsequent delinquencies to advance in respect of such Mortgage Loan only an
amount equal to the product of (i) the amount of the P&I Advance that would
otherwise be required without regard to this sentence, multiplied by (ii) a
fraction, the numerator of which is equal to the Stated Principal Balance of
such Mortgage Loan, net of such Appraisal Reduction Amount, and the denominator
of which is equal to the Stated Principal Balance of such Mortgage Loan.
Pursuant to the terms of the Pooling and Servicing Agreement, if the Master
Servicer fails to make a P&I Advance required to be made, the Trustee shall then
be required to make such P&I Advance, and if the Trustee fails to make a P&I
Advance required to be made, the Fiscal Agent will then be required to make such
P&I Advance, in each case, subject to the recoverability standard described
below. No default on the part of the Trustee will be deemed to have occurred if
the Fiscal Agent makes such P&I Advance in a timely manner, as set forth in the
Pooling and Servicing Agreement. See "--Appraisal Reductions" below.
The Master Servicer (or the Trustee or Fiscal Agent, as applicable) will be
entitled to recover any P&I Advance made out of its own funds from any amounts
collected in respect of the Mortgage Loan as to which such P&I Advance was made
that constitute late collections of principal and interest (net of related
Master Servicing Fees and Workout Fees), whether such amounts are collected in
the form of late payments, Insurance Proceeds, Condemnation Proceeds or
Liquidation Proceeds, or any other recovery of the related Mortgage Loan or REO
Property. Neither the Master Servicer, the Trustee nor the Fiscal Agent will be
obligated to make any P&I Advance that it determines in accordance with the
Servicing Standard, would, if made, constitute a Nonrecoverable Advance, and the
Master Servicer (or the Trustee or the Fiscal Agent, as applicable) will be
entitled to recover, from general funds on deposit in the Custodial Account, any
P&I Advance made by it out of its own funds that it later determines to be a
Nonrecoverable Advance. See "Servicing of the Mortgage Loans--Custodial Account"
herein.
In connection with the recovery by the Master Servicer, the Trustee or the
Fiscal Agent of any P&I Advance made by it, the Master Servicer, the Trustee or
the Fiscal Agent, as applicable, will be entitled to be paid, out of any amounts
then on deposit in the Custodial Account, interest compounded annually at a per
annum rate (the "Reimbursement Rate") equal to the "prime rate" published in the
"Money Rates" section of THE WALL STREET JOURNAL, as such "prime rate" may
change from time to time, accrued on the amount of such P&I Advance from the
date made to but not including the date of reimbursement. To the
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extent not offset or covered by amounts otherwise payable on the Private
Certificates, interest accrued on outstanding Advances will result in a
reduction in amounts payable on the Offered Certificates, subject to the
distribution priorities described herein.
APPRAISAL REDUCTIONS
Upon the earliest of the date (each such date, a "Required Appraisal Date")
that (1) any Mortgage Loan is sixty (60) days delinquent in respect of any
Monthly Payments, (2) the Mortgaged Property securing any Mortgage Loan has
become an REO Property, (3) any Mortgage Loan has been modified by the Special
Servicer to reduce the amount of any Monthly Payment, other than a Balloon
Payment, (4) a receiver is appointed and continues in such capacity in respect
of the Mortgaged Property securing any Mortgage Loan, (5) a borrower with
respect to any Mortgage Loan is subject to any bankruptcy proceeding or (6) a
Balloon Payment with respect to any Mortgage Loan has not been paid within 20
days following its most recent scheduled maturity date (each such Mortgage Loan,
including an REO Mortgage Loan, a "Required Appraisal Loan"), the Special
Servicer will be required to use reasonable efforts to obtain (within 60 days of
the applicable Required Appraisal Date) an appraisal of the related Mortgaged
Property prepared in accordance with 12 CFR Section225.62 and conducted in
accordance with the standards of the Appraisal Institute by a Qualified
Appraiser, unless such an appraisal had previously been obtained within the
prior 12 months. A "Qualified Appraiser" is an independent appraiser that (i) is
a member in good standing of the Appraisal Institute, (ii) if the state in which
the subject Mortgaged Property is located certifies or licenses appraisers, is
certified or licensed in such state, and (iii) has a minimum of five years
experience in the subject property type and market. The cost of such appraisal
will be borne by the Special Servicer, subject to the Special Servicer's right
to be reimbursed therefor out of Related Proceeds or, if not reimbursable
therefrom, out of general funds on deposit in the Custodial Account. As a result
of any such appraisal, it may be determined that an "Appraisal Reduction Amount"
exists with respect to the related Required Appraisal Loan, such determination
to be made upon the later of 30 days after the Required Appraisal Date (if no
new appraisal is required) or after receipt of a new appraisal (if one is
required). The Appraisal Reduction Amount for any Required Appraisal Loan will
equal the excess, if any, of (a) the sum of, without duplication, (i) the Stated
Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer, the Trustee or the
Fiscal Agent, all unpaid interest on the Required Appraisal Loan through the
most recent Due Date prior to the date of calculation (net of related Master
Servicing Fees, and exclusive of any portion of such accrued and unpaid interest
that constitutes Additional Interest and/or Default Interest) (iii) all accrued
but unpaid Servicing Fees and any Additional Trust Fund Expenses in respect of
such Required Appraisal Loan, (iv) all related unreimbursed Advances (plus
accrued interest thereon) made by or on behalf of the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent with respect to such Required
Appraisal Loan and (v) all currently due and unpaid real estate taxes and
reserves owed for improvements (net of any amount escrowed therefor) and
assessments, insurance premiums, and, if applicable, ground rents in respect of
the related Mortgaged Property, over (b) an amount equal to 90% of the appraised
value (net of any prior liens) of the related Mortgaged Property as determined
by such appraisal.
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during such twelve-month period, in which case it will cease to
be a Required Appraisal Loan), the Special Servicer is required, within 30 days
of each anniversary of such loan's becoming a Required Appraisal Loan, to order
an update of the prior appraisal (the cost of which is to be covered by, and
reimbursable as, a Servicing Advance). Based upon such appraisal, the Special
Servicer will be required to redetermine and report to the Trustee the then
applicable Appraisal Reduction Amount, if any, with respect to such Required
Appraisal Loan.
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REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
CERTIFICATEHOLDER REPORTS. Based on information provided in monthly reports
prepared by the Master Servicer and the Master Servicer or Special Servicer, as
applicable, and delivered to the Trustee, the Trustee will prepare and forward
either electronically or by first class mail on each Distribution Date to, among
others, each Certificateholder, each initial Certificate Owner and (upon written
request made to the Trustee) each subsequent Certificate Owner (as identified to
the reasonable satisfaction of the Trustee):
1. A statement (a "Distribution Date Statement"), substantially in the
form of Annex C hereto, setting forth, among other things, for each
Distribution Date: (i) the amount of the distribution to the holders of each
Class of Sequential Pay Certificates in reduction of the Certificate Balance
thereof; (ii) the amount of the distribution to the holders of each Class of
Regular Interest Certificates allocable to Distributable Certificate
Interest; (iii) the amount of the distribution to the holders of each Class
of Regular Interest Certificates allocable to Prepayment Premiums and Yield
Maintenance Charges; (iv) the amount of the distribution to the holders of
each Class of Sequential Pay Certificates in reimbursement of previously
allocated Realized Losses and Additional Trust Fund Expenses; (v) the
Available Distribution Amount for such Distribution Date; (vi) the aggregate
amount of P&I Advances made in respect of the prior Distribution Date (vii)
(A) the aggregate amount of unreimbursed P&I Advances (and the aggregate
amount of interest accrued and payable thereon) as of the close of business
on the related Determination Date and (B) the aggregate amount of
unreimbursed Servicing Advances (and the aggregate amount of interest
accrued and payable thereon) outstanding as of the close of business on the
related Determination Date; (viii) the aggregate unpaid principal balances
of the Mortgage Pool outstanding immediately prior to, as of the close of
business on, and immediately after, the related Determination Date; (ix) the
number, aggregate unpaid principal balance, weighted average remaining term
to maturity and weighted average Mortgage Rate of the Mortgage Loans (other
than REO Mortgage Loans) as of the close of business on the related
Determination Date; (x) the number, aggregate unpaid principal balance (as
of the close of business on the related Determination Date) and aggregate
Stated Principal Balance (immediately after such Distribution Date) of
Mortgage Loans (A) delinquent one month, (B) delinquent two months, (C)
delinquent three or more months, and (D) as to which foreclosure proceedings
have been commenced; (xi) as to each Mortgage Loan referred to in the
preceding clause (x) above, (A) the loan number thereof, (B) the Stated
Principal Balance thereof immediately following such Distribution Date, (C)
whether the delinquency is in respect of its Balloon Payment, (D) whether a
notice of acceleration has been sent to the borrower and, if so, the date of
such notice, (E) whether a "Phase I" environmental assessment of the related
Mortgaged Property has been performed as contemplated by the Pooling and
Servicing Agreement and (F) a brief description of the status of any
foreclosure proceedings or any workout or loan modification negotiations
with the related borrower; (xii) with respect to any Mortgage Loan as to
which a liquidation event occurred during the related Collection Period
(other than a payment in full), (A) the loan number thereof, (B) the nature
of the liquidation event and, in the case of a determination by the Special
Servicer with respect to any defaulted Mortgage Loan or REO Property that
there has been a recovery of all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries that the Special
Servicer has determined in accordance with the Servicing Standard, will be
ultimately recoverable (a "Final Recovery Determination"), a brief
description of the basis for such Final Recovery Determination, (C) the
aggregate of all Liquidation Proceeds and other amounts received in
connection with such liquidation event (separately identifying the portion
thereof allocable to distributions on the Certificates), and (D) the amount
of any Realized Loss in connection with such liquidation event; (xiii) with
respect to any REO Property included in the Trust Fund as of the close of
business on the related Determination Date, the loan number of the related
Mortgage Loan, the book value of such REO Property and the amount of income
and other amounts, if any, received with respect to such REO Property during
the related Collection Period (separately identifying the portion
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thereof allocable to distributions on the Certificates); (xiv) with respect
to any Mortgage Loan as to which the related Mortgaged Property became an
REO Property during the related Collection Period, the loan number of such
Mortgage Loan and the Stated Principal Balance of such Mortgage Loan as of
the related acquisition date of such REO Property; (xv) with respect to any
REO Property included in the Trust Fund as to which a Final Recovery
Determination was made during the related Collection Period, (A) the loan
number of the related Mortgage Loan, (B) a brief description of the basis
for the Final Recovery Determination, (C) the aggregate of all Liquidation
Proceeds and other amounts received in connection with such Final Recovery
Determination (separately identifying the portion thereof allocable to
distributions on the Certificates), and (D) the amount of any Realized Loss
in respect of the related REO Property in connection with such Final
Recovery Determination; (xvi) the Accrued Certificate Interest and
Distributable Certificate Interest in respect of each Class of Regular
Interest Certificates for such Distribution Date; (xvii) any unpaid
Distributable Certificate Interest in respect of each Class of Regular
Interest Certificates after giving effect to the distributions made on such
Distribution Date, and if the full amount of the Principal Distribution
Amount was not distributed on such Distribution Date, the portion of the
shortfall affecting each Class of Sequential Pay Certificates; (xviii) the
Pass-Through Rate for each Class of Regular Interest Certificates for such
Distribution Date; (xix) the Principal Distribution Amount for such
Distribution Date, separately identifying the respective components thereof
(and, in the case of any principal prepayment or other unscheduled
collection of principal received during the related Collection Period, the
loan number for the related Mortgage Loan and the amount of such prepayment
or other collection of principal); (xx) the aggregate of all Realized Losses
incurred during the related Collection Period and, aggregated by type, all
Additional Trust Fund Expenses incurred during the related Collection
Period; (xxi) the aggregate of all Realized Losses and Additional Trust Fund
Expenses that remain unallocated immediately following such Distribution
Date; (xxii) the Certificate Balance of each Class of Sequential Pay
Certificates and the notional amount of each Class IO Component immediately
before and immediately after such Distribution Date, separately identifying
any reduction therein due to the allocation of Realized Losses and
Additional Trust Fund Expenses on such Distribution Date; (xxiii) the
certificate factor for each Class of Regular Interest Certificates
immediately following such Distribution Date; (xxiv) the aggregate amount of
interest on Advances paid to the Master Servicer, the Special Servicer, the
Trustee and the Fiscal Agent during the related Collection Period; and (xxv)
(A) the aggregate amount of servicing compensation (separately identifying
the amount of each category of compensation) paid to the Master Servicer,
the Special Servicer and, if payable directly out of the Trust Fund without
a reduction in the servicing compensation otherwise payable to the Master
Servicer or the Special Servicer, to each sub-servicer, during the related
Collection Period, and (B) such other information as the Trustee is required
by the Code or other applicable law to furnish to enable Certificateholders
to prepare their tax returns.
2. A "CSSA Loan File" report and a "CSSA Property File" report setting
forth certain information with respect to the Mortgage Loans and the
Mortgaged Properties, respectively.
The Master Servicer or the Special Servicer (as specified in the Pooling and
Servicing Agreement) is required to deliver to the Trustee monthly (or, in the
case of the reports described in clauses (g) and (h) below, within 30 days after
receiving annual operating statements for the subject Mortgaged Property or REO
Property), and the Trustee is required to deliver to each Certificateholder and
each other person sent a Distribution Date Statement, on the first Distribution
Date following receipt thereof, the following nine reports (to the extent
received by the Trustee):
(a) A "Delinquent Loan Status Report" containing substantially the
information set forth in Annex D attached hereto, including, among other
things, those Mortgage Loans that were, as of the Determination Date
immediately preceding the preparation of such report, (1) delinquent 30-59
days, (2) delinquent 60-89 days, (3)delinquent 90 days or more, (4) current
but specially serviced, or (5) in foreclosure but not REO Property.
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(b) An "Historical Loan Modification Report" containing substantially
the information set forth in Annex E attached hereto, including, among other
things, those Mortgage Loans which, as of the close of business on the
Determination 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.
(c) An "Historical Loss Estimate Report" containing substantially the
information set forth in Annex F attached hereto, including, among other
things, as of the close of business on the Determination Date immediately
preceding the preparation of such report, (i) the aggregate amount of
Liquidation Proceeds and expenses relating to each Final Recovery
Determination, both during the related Collection Period and historically,
and (ii) the amount of Realized Losses occurring during the related
Collection Period and historically, set forth on a loan-by-loan basis.
(d) An "REO Status Report" containing substantially the information set
forth in Annex G attached hereto, including, with respect to each REO
Property included in the Trust Fund as of the close of business on the
Determination Date immediately preceding the preparation of such report,
among other things, (i) the acquisition date of such REO Property, (ii) the
amount of income collected with respect to such 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
Special Servicer as of such Determination Date (including any prepared
internally by the Special Servicer).
(e) A "Watch List Report" containing substantially the information set
forth in Annex H attached hereto, including, among other things, any
Mortgage Loan that, as of the Determination Date immediately preceding the
preparation of such report, had a debt service coverage ratio of less than
1.0x and was in jeopardy of becoming a Specially Serviced Mortgage Loan.
(f) A "Loan Payoff Notification Report" setting forth, among other
things, for each Mortgage Loan where notice of anticipated payoff has been
received as of the Determination Date immediately preceding the preparation
of such report, the control number, the property name, the amount of
principal expected to be paid, the expected date of payment and the
estimated amount of Yield Maintenance or Prepayment Premium due.
(g) With respect to any Mortgaged Property or REO Property, an
"Operating Statement Analysis" containing substantially the information set
forth in Annex I, together with copies of the subject annual operating
statements for such property attached thereto as an exhibit. See "Servicing
of the Mortgage Loans--Inspections; Collection of Operating Information"
herein.
(h) With respect to any Mortgaged Property or REO Property, an "NOI
Adjustment Worksheet" containing substantially the information set forth in
Annex J (together with copies of the subject annual operating statements
attached thereto as an exhibit), and 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 Special Servicer in the other reports
referenced above.
(i) A "Comparative Financial Status Report" containing substantially the
information set forth in Annex K setting forth, among other things, the
occupancy, revenue, net operating income and debt service coverage ratio for
each Mortgage Loan or related Mortgaged Property, as applicable, as of the
last day of the calendar month immediately preceding the month of the
preparation of such report for each of the following three periods (to the
extent such information is in the Special Servicer's possession): (i) the
most current available year-to-date, (ii) each of the previous two full
fiscal years stated separately; and (iii) the "base year" (representing the
original analysis of information used as of the Cut-off Date).
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The Trustee will be required to make available monthly to, among others,
Certificateholders and Certificate Owners identified to the Trustee in writing,
an electronic file containing Mortgage Loan information, based on reports
provided to it by the Master Servicer and the Special Servicer, in the "CSSA
Loan periodic update file" and the "CSSA Property File" with the Delinquent Loan
Status Report, Historical Loan Modification Report, Historical Loss Estimate
Report, REO Status Report, Loan Payoff Notification Report and Watch List Report
attached (provided that these reports are delivered to the Trustee in an
electronic format acceptable to the Trustee) via the Trustee's bulletin board.
Access to the bulletin board can be obtained by dialing (714) 282-3990. Those
who have an account on the bulletin board may retrieve the data file for each
transaction in the directory. An account number may be obtained by typing "NEW"
upon logging into the bulletin board. In order to access information from the
bulletin board the user must have available their assigned log-on ID. The
Trustee may (at its discretion and with the consent of the Depositor and the
Underwriter) make the information that is available via its bulletin board, also
available via the Internet at www.LNBABS.com.
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) items (i), (ii), (iii) and (iv) of the
monthly Distribution Date Statements and such other information as may be
required to enable such Certificateholders to prepare their federal income tax
returns. Such information is required to include the amount of original issue
discount accrued on each Class of Certificates held by persons other than
Certificateholders and information regarding the expenses of the Trust Fund.
The information that pertains to Specially Serviced Trust Fund Assets
reflected in reports will be based solely upon the reports delivered by the
Special Servicer (directly or through the Master Servicer) to the Trustee prior
to related Distribution Date. Absent manifest error, none of the Master
Servicer, the Special Servicer or the Trustee will 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 Master Servicer, the Special Servicer or
the Trustee, as applicable.
OTHER INFORMATION. The Pooling and Servicing Agreement requires that the
Trustee, upon reasonable prior written notice, make available at its offices
primarily responsible for administration of the Trust Fund, during normal
business hours, for review by the Depositor, the Rating Agencies, the
Controlling Class Representative and, subject to the discussion in the following
paragraph, any Certificateholder, Certificate Owner or person identified to the
Trustee as a prospective transferee of a Certificate or an interest therein,
originals and/or copies of the following items: (i) this Prospectus Supplement,
the Prospectus and any other disclosure document relating to the Offered
Certificates and the Private Certificates, in the form most recently provided to
the Trustee by the Depositor or by any person designated by the Depositor; (ii)
the Pooling and Servicing Agreement, each sub-servicing agreement delivered to
the Trustee since the Closing Date and any amendments thereto; (iii) all reports
delivered to Certificateholders since the Closing Date as described in
"--Certificateholder Reports" above; (iv) all annual performance certifications
delivered by the Master Servicer and the Special Servicer, respectively, to the
Trustee since the Closing Date as described in "Servicing of the Mortgage
Loans--Evidence as to Compliance" herein; (v) all annual accountants' reports
caused to be delivered by the Master Servicer and the Special servicer,
respectively, to the Trustee since the Closing Date as described in "Servicing
of the Mortgage Loans -- Evidence as to Compliance" herein; (vi) the most recent
inspection report prepared by the Master Servicer or Special Servicer, as
applicable, and delivered to the Trustee in respect of each Mortgaged Property
as described under "Servicing of the Mortgage Loans--Inspections; Collection of
Operating Information" herein; (vii) the most recent annual operating statement
and rent roll of each related Mortgaged Property and financial statements of the
related borrower collected by the Master Servicer or Special Servicer, as
applicable, and delivered to the Trustee as described under "Servicing of the
Mortgage Loans--Inspections; Collection of Operating Information" herein; (viii)
any and all notices and reports delivered to the
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Trustee with respect to any Mortgaged Property as to which the environmental
testing described in "Servicing of the Mortgage Loans --Realization Upon
Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO Properties"
revealed that both of the conditions set forth therein were not satisfied; (ix)
each of the Mortgage Files, including any and all modifications, waivers and
amendments of the terms of a Mortgage Loan entered into or consented to by the
Special Servicer and delivered to the Trustee; (x) the most recent appraisal for
each Mortgaged Property and REO Property that has been delivered to the Trustee
by either the Master Servicer or the Special Servicer; and (xi) any and all
officer's certificates and other evidence delivered to or by the Trustee to
support its, the Master Servicer's, the Special Servicer's or the Fiscal
Agent's, as the case may be, determination that any Advance was (or, if made,
would be) a Nonrecoverable Advance. Copies of any and all of the foregoing items
will be available from the Trustee upon written request; however, except with
respect to the Rating Agencies, the Trustee will be permitted to require payment
of a sum sufficient to cover the reasonable costs and expenses of providing such
information, including, without limitation, copy charges and reasonable fees for
employee time and for space.
In connection with providing access to or copies of the items described in
the preceding paragraph, the Trustee will require: (a) in the case of
Certificate Owners, a confirmation executed by the requesting person (in a form
reasonably acceptable to the Trustee) generally to the effect that such person
is a beneficial holder of Certificates held in book-entry format and will keep
such information confidential (except that such Certificate Owner may provide
such information to any other person that holds or is contemplating the purchase
of any Certificate or interest therein, provided that such other person confirms
in writing such ownership interest or prospective ownership interest and agrees
to keep such information confidential); and (b) in the case of a prospective
purchaser of a Certificate or an interest therein, confirmation executed by the
requesting person (in a form reasonably acceptable to the Trustee) generally to
the effect that such person is a prospective purchaser of a Certificate or an
interest therein, is requesting the information for use in evaluating a possible
investment in Certificates and will otherwise keep such information
confidential. The holders of the Certificates, by their acceptance thereof, will
be deemed to have agreed to keep such information confidential (except that any
Certificateholder may provide any such information obtained by it to any other
person that holds or is contemplating the purchase of any Certificate or
interest therein, provided that such other person confirms in writing such
ownership interest or prospective ownership interest and agrees to keep such
information confidential).
BOOK-ENTRY CERTIFICATES. Until such time as Definitive Offered Certificates
are issued in respect of any Class of Offered Certificates, the foregoing
information and access will be available to the holders of the Offered
Certificates only to the extent it is forwarded by or otherwise available
through DTC and DTC participants. Any beneficial owner of an Offered Certificate
who does not receive information through DTC or its participants may request
that Certificateholder reports be mailed directly to it by written request to
the Trustee (accompanied by evidence of such beneficial ownership). The manner
in which notices and other communications are conveyed by DTC to its
Participants, and by such Participants to 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. The Master Servicer, the Special
Servicer, the Trustee and the Depositor are required to recognize as
"Certificateholders" only those persons in whose names the Certificates are
registered on the books and records of the Trustee or other registrar for the
Certificates.
ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The "Assumed Final Distribution Date" with respect to any Class of Regular
Interest Certificates is the Distribution Date on which the Certificate Balance
of such Class of Certificates (or, in the case of the Class IO Certificates, the
aggregate of the notional amounts of the respective Class IO Components) would
be reduced to zero based on the assumption that no Mortgage Loan is voluntarily
prepaid prior to its stated maturity date (except for the ARD Loans which are
assumed to be paid in full on their respective Anticipated Repayment Dates) and
otherwise based on the "Table Assumptions" set forth under "Yield
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and Maturity Considerations--Weighted Average Life" herein, which Distribution
Date shall in each case be as follows:
<TABLE>
<CAPTION>
ASSUMED FINAL
DISTRIBUTION DATE
----------------------
<S> <C>
Class A-1................................................................................. October 18, 2004
Class A-2................................................................................. August 18, 2007
Class A-3................................................................................. January 18, 2008
Class IO.................................................................................. February 18, 2028
Class B................................................................................... January 18, 2008
Class C................................................................................... September 18, 2008
Class D................................................................................... August 18, 2012
Class E................................................................................... November 18, 2012
Class F................................................................................... January 18, 2013
Class G................................................................................... January 18, 2013
Class H................................................................................... January 18, 2013
Class J................................................................................... November 18, 2014
Class K................................................................................... August 18, 2016
Class L................................................................................... November 18, 2017
Class M................................................................................... February 18, 2028
</TABLE>
The Assumed Final Distribution Dates set forth above were calculated without
regard to any delays in the collection of Balloon Payments and without regard to
a reasonable liquidation time with respect to any Mortgage Loans that may be
delinquent. Accordingly, in the event of defaults on the Mortgage Loans, the
actual final Distribution Date for one or more Classes of the Offered
Certificates may be later, and could be substantially later, than the related
Assumed Final Distribution Date(s).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR (as defined herein), except that it is
assumed that the ARD Loans pay their respective outstanding principal balances
on their related Anticipated Repayment Dates. Because the rate of principal
payments (including voluntary prepayments and prepayments resulting from
casualties and/or condemnations at the Mortgaged Properties or liquidations of
defaulted Mortgage Loans) on the Mortgage Loans can be expected to exceed the
scheduled rate of principal payments, and could exceed such scheduled rate by a
substantial amount, the actual final Distribution Date for one or more Classes
of the Offered Certificates may be earlier, and could be substantially earlier,
than the related Assumed Final Distribution Date(s). The rate of principal
payments (including prepayments) on the Mortgage Loans will depend on the
characteristics of the Mortgage Loans, as well as on the prevailing levels of
interest rates and other economic factors, and no assurance can be given as to
actual principal payment experience. See "Yield and Maturity Considerations" and
"Description of the Mortgage Pool" herein and "Yield and Prepayment
Considerations" in the Prospectus.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the first Distribution Date that follows the second anniversary
of the end of the amortization term for the Mortgage Loan that, as of the
Cut-off Date, has the longest remaining amortization term. The rating assigned
by a Rating Agency to any Class of Offered Certificates entitled to receive
distributions in respect of principal reflects an assessment of the likelihood
that Certificateholders of such Class will receive, on or before the Rated Final
Distribution Date, all principal distributions to which they are entitled. See
"Ratings" herein.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 100% of
the voting rights for the Certificates (the "Voting Rights") will be allocated
among the respective Classes of Sequential Pay
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Certificates in proportion to the Certificate Balances of those Classes. Voting
Rights allocated to a Class of Certificates will be allocated among the related
Certificateholders in proportion to the percentage interests in such Class
evidenced by their respective Certificates. See "The Trust Agreement--Voting
Rights" in the Prospectus.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will, with
limited exception, terminate upon payment (or provision for payment) to the
appropriate persons of all amounts held as part of the Trust Fund following the
earlier of (i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or REO Property subject thereto, and (ii)
the purchase of all of the Mortgage Loans and all of the REO Properties
remaining in the Trust Fund, if any, by (in the following order of priority) the
Depositor, the Underwriter, the Special Servicer, the Majority Subordinate
Certificateholder or the Master Servicer. Written notice of termination of the
Pooling and Servicing Agreement will be given to each Certificateholder, and the
final distribution will be made only upon surrender and cancellation of the
Certificates at the office of the Trustee or other registrar for the
Certificates or at such other location as may be specified in such notice of
termination.
Any such purchase by the Depositor, the Underwriter, the Special Servicer,
the Majority Subordinate Certificateholder or the Master Servicer of all the
Mortgage Loans and any REO Properties remaining in the Trust Fund is required to
be made at a price equal to (1) the greater of (x) the aggregate Purchase Price
of all the Mortgage Loans and any REO Properties then included in the Trust
Fund, and (y) the aggregate fair market value of such Mortgage Loans and REO
Properties then included in the Trust Fund (to be determined as mutually agreed
upon by the Master Servicer, the Special Servicer and the Trustee), minus (2) if
the purchaser is the Master Servicer or the Special Servicer, the aggregate of
amounts payable or reimbursable to such person under the Pooling and Servicing
Agreement. Such purchase will effect early retirement of the then outstanding
Offered Certificates, but the right of the Depositor, the Underwriter, the
Special Servicer, the Majority Subordinate Certificateholder or the Master
Servicer to effect such termination is subject to the requirement that the then
aggregate Stated Principal Balance of the Mortgage Pool be less than 1% of the
Initial Pool Balance.
The purchase price paid in connection with the purchase of all Mortgage
Loans and any REO Properties remaining in the Trust Fund, exclusive of any
portion thereof payable or reimbursable to any person other than the
Certificateholders, will constitute part of the Available Distribution Amount
for the final Distribution Date. The Available Distribution Amount for the final
Distribution Date will be distributed by the Trustee generally as described
herein under "--Distributions--Application of the Available Distribution
Amount", except that the distributions of principal on any Class of Sequential
Pay Certificates described thereunder will be made, subject to available funds
and the distribution priorities described thereunder, in an amount equal to the
entire Certificate Balance of such Class remaining outstanding, and further
except that any distributions of principal on the respective Classes of Class A
Certificates (if more than one is then outstanding) described thereunder will be
made on a pro rata basis in accordance with their respective Certificate
Balances.
THE TRUSTEE
LaSalle National Bank, a nationally chartered bank, will act as Trustee on
behalf of the Certificateholders. See "The Trust Agreement--The Trustee",
"--Duties of the Trustee" and "--Resignation of the Trustee" in the Prospectus.
As of the Closing Date, the offices of the Trustee primarily responsible for
administration of the Trust Fund (the "Corporate Trust Office") is located at
LaSalle National Bank, 135 South LaSalle Street, Suite 1625, Chicago, Illinois
60674-4107, Attention: Asset Backed Securities Trust Services Group--LB
Commercial Mortgage Trust 1998-C1. As compensation for its services, the Trustee
will be entitled to receive monthly, from general funds on deposit in the
Collection Account, the Trustee Fee. The "Trustee Fee" for each Mortgage Loan
and REO Mortgage Loan for any Distribution Date will
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equal one month's interest for the most recently ended calendar month
(calculated on the basis of a 360-day year consisting of twelve 30-day months),
accrued at the per annum rate (the "Trustee Fee Rate") set forth in the Pooling
and Servicing Agreement on the Stated Principal Balance of such Mortgage Loan or
REO Mortgage Loan, as the case may be, outstanding immediately following the
prior Distribution Date (or, in the case of the initial Distribution Date, as of
the Closing Date).
The Trustee and any director, officer, employee or agent thereof will be
entitled to indemnification, from amounts held in the Trust Fund, for any loss,
liability or reasonable "out-of-pocket" expense arising in respect of the
Pooling and Servicing Agreement or the Certificates; provided, however, that
such indemnification will not extend to any expense specifically required to be
borne by the Trustee pursuant to the terms of the Pooling and Servicing
Agreement, or 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.
The Trustee will also have certain duties with respect to REMIC
administration. See "Certain Federal Income Tax Consequences--REMICs--Reporting
and Other Administrative Matters" herein.
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,
Suite 1625, Chicago, Illinois 60674-4107; Attention: Asset-Backed Securities
Trust Services Group-LB Commercial Mortgage Trust 1998-C1. The Fiscal Agent will
make no representation as to the validity or sufficiency of the Pooling and
Servicing Agreement, the Certificates, the Mortgage Loans, this Prospectus
Supplement (except for the first two sentences of this paragraph) or related
documents. The duties and obligations of the Fiscal Agent consist only of making
P&I Advances as described under "--P&I Advances" above and Servicing Advances as
described under "Servicing of the Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses" herein. The Fiscal Agent will not be
liable except for the performance of such duties and obligations. The Fiscal
Agent will be entitled to reimbursement for each Advance made by it (with
interest thereon at the Reimbursement Rate) in the same manner and to the same
extent as the Trustee and the Master Servicer. The Fiscal Agent will be entitled
to various rights, protections and indemnities similar to those afforded the
Trustee. The Trustee will be responsible for payment of the compensation of the
Fiscal Agent. As of June 30, 1997, the Fiscal Agent had consolidated assets of
approximately $398 billion.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
GENERAL. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (i) the Pass-Through Rate for such Certificate (or, in the case of a
Class IO Certificate, the weighted average of the Pass-Through Rates for the
respective Class IO Components from time to time), (ii) the rate and timing of
principal payments (including principal prepayments) and other principal
collections on the Mortgage Loans and the extent to which such amounts are to be
applied in reduction of the Certificate Balance of the related Class (or, in the
case of a Class IO Certificate, the notional amount of a Class IO Component),
(iii) the rate, timing and severity of Realized Losses and Additional Trust Fund
Expenses and the extent to which such losses and expenses are allocable in
reduction of the Certificate Balance of the related Class (or, in the case of a
Class IO Certificate, the notional amount of a Class IO Component), and (iv) the
timing and severity of any Net Aggregate Prepayment Interest Shortfalls and the
extent to which such shortfalls are allocable in reduction of the Distributable
Certificate Interest payable on the related Class.
RATE AND TIMING OF PRINCIPAL PAYMENT. The yield to holders of the Class IO
Certificates will be extremely sensitive to, and the yield to holders of any
other Offered Certificates purchased at a discount or premium will be affected
by, the rate and timing of principal payments on or in respect of the Mortgage
Loans, which will in turn be affected by the amortization schedules thereof, the
dates on which Balloon Payments are due and the rate and timing of principal
prepayments and other unscheduled collections thereon (including for this
purpose, collections made in connection with liquidations of Mortgage Loans due
to defaults, casualties or condemnations affecting the Mortgaged Properties, or
purchases of Mortgage Loans out of the Trust Fund). Prepayments and, assuming
the respective stated maturity dates therefor have not occurred, liquidations
and purchases of the Mortgage Loans, will result in distributions on the
Certificates of amounts that would otherwise be distributed over the remaining
terms of the Mortgage Loans. Defaults on the Mortgage Loans, particularly at or
near their stated maturity dates, may result in significant delays in payments
of principal on the Mortgage Loans (and, accordingly, on the Offered
Certificates that are Sequential Pay Certificates) while work-outs are
negotiated or foreclosures are completed. See "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" and
"--Realization Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans
and REO Properties" herein and "Certain Legal Aspects of Mortgage
Loans--Foreclosure of Mortgage" in the Prospectus.
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 when, and to
what degree, payments of principal on the Mortgage Loans in turn are distributed
or otherwise result in reduction of the Certificate Balance or notional amount,
as the case may be, of such Certificates. 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 a Class IO Certificate or any other 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. In general, the earlier a payment of principal
on the Mortgage Loans is distributed or otherwise results in reduction of the
principal balance of an Offered Certificate that is a Sequential Pay Certificate
purchased at a discount or premium, the greater will be the effect on an
investor's yield to maturity. As a result, the effect on an investor's yield of
principal payments on the Mortgage Loans occurring at a rate higher (or lower)
than the rate anticipated by the investor during any particular period would not
be fully offset by a subsequent like reduction (or increase) in the rate of such
principal payments. THE YIELD ON THE CLASS IO CERTIFICATES WILL BE AFFECTED BY
ALL PRINCIPAL PAYMENTS ON THE MORTGAGE
S-102
<PAGE>
LOANS, AND INVESTORS IN SUCH CERTIFICATES SHOULD FULLY CONSIDER THE RISK THAT A
RAPID RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS COULD RESULT IN THE
FAILURE OF SUCH INVESTORS TO RECOUP THEIR INITIAL INVESTMENTS. Because the rate
of principal payments on the Mortgage Loans will depend on future events and a
variety of factors (as described more fully below), no assurance can be given as
to such rate or the rate of principal prepayments in particular. The Depositor
is not aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
LOSSES AND SHORTFALLS. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the
respective Classes of Sequential Pay Certificates, to the extent of amounts
otherwise distributable in respect of their Certificates, in reverse
alphabetical order of their Class designations. Realized Losses and Additional
Trust Fund Expenses will be allocated, as and to the extent described herein, to
the respective Classes of Sequential Pay Certificates (in reduction of the
Certificate Balance of each such Class), in reverse alphabetical order of their
Class designations. Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of any Class of Sequential Pay
Certificates will result in a corresponding reduction in the notional amount of
the related Class IO Component. As more fully described herein under
"Description of the Certificates--Distributions--Distributable Certificate
Interest," Net Aggregate Prepayment Interest Shortfalls will generally be borne
by the respective Classes of Regular Interest Certificates on a PRO RATA basis.
PASS-THROUGH RATES. The Pass-Through Rate applicable to each Class IO
Component will be variable and will be equal to the Weighted Average Net
Mortgage Rate from time to time minus the fixed Pass-Through Rate on the Class
of Sequential Pay Certificates relating to such Class IO Component. Accordingly,
the Pass-Through Rates on the Class IO Components and, correspondingly, the
yield on the Class IO Certificates, will be sensitive to changes in the relative
composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and liquidations and to changes in the relative sizes of
the Certificate Balances of the respective Classes of Sequential Pay
Certificates.
CERTAIN RELEVANT FACTORS. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Lockout Periods, provisions requiring
the payment of Prepayment Premiums and Yield Maintenance Charges and
amortization terms that require Balloon Payments), the demographics and relative
economic vitality of the areas in which the Mortgaged Properties are located and
the general supply and demand for rental units, hotel/motel guest rooms, health
care facility beds, mobile home park pads or comparable commercial space, as
applicable, in such areas, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. See "Risk Factors--The Mortgage Loans"
and "Description of the Mortgage Pool" herein and "Yield and Prepayment
Considerations" in the Prospectus.
The rate of prepayment on the Mortgage Pool 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 the Mortgage
Rate (or, in the case of an ARD Loan after its Anticipated Repayment Date, the
Revised Rate) at which a Mortgage Loan accrues interest, the related borrower
may have an increased incentive to refinance its mortgage loan. Conversely, to
the extent prevailing market interest rates exceed the applicable Mortgage Rate
(or, for ARD Loans after their Anticipated Repayment Dates, the Revised Rate)
for any Mortgage Loan, such Mortgage Loan may be less likely to prepay (other
than, in the case of the ARD Loans, out of certain net cash flow from the
related Mortgaged Property). In particular, the Revised Rate for each ARD Loan
generally is the greater of the Mortgage Rate therefor plus two or more
S-103
<PAGE>
percentage points and the then current applicable treasury rate plus two or more
percentage points, and the primary incentive to prepay an ARD Loan on or before
its Anticipated Repayment Date, assuming prevailing market interest rates exceed
such Revised Rate, is to give the borrower access to excess cash flow, all of
which (net of approved property expenses and any required reserves) must be
applied to pay down principal of the Mortgage Loan. Accordingly, there can be no
assurance that any ARD Loan will be prepaid on or before its Anticipated
Repayment Date or on any other date prior to maturity.
As of the Cut-off Date, all of the Mortgage Loans may be prepaid at any time
after the expiration of the applicable Lockout Period and/or any period when the
holder of a Mortgage may require a borrower to pledge Defeasance Collateral in
lieu of prepaying the related Mortgage Loan (a "Required Defeasance Period"),
subject, in most cases, to the payment of a Prepayment Premium or a Yield
Maintenance Charge. A requirement that a prepayment be accompanied by a
Prepayment Premium or Yield Maintenance Charge may not provide a sufficient
economic disincentive to deter a borrower from refinancing at a more favorable
interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance 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 rate and timing of prepayments and defaults on the Mortgage Loans, as
to the relative importance of such factors, as to the percentage of the
principal balance of the Mortgage Loans that will be prepaid or as to whether a
default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
DELAY IN PAYMENT OF DISTRIBUTIONS. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least 18
days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be lower than the yield that would otherwise be produced by
the applicable Pass-Through Rates and purchase prices (assuming such prices did
not account for such delay).
UNPAID DISTRIBUTABLE CERTIFICATE INTEREST. As described under "Description
of the Certificates
- - --Distributions--Application of the Available Distribution Amount" herein, if
the portion of the Available Distribution Amount distributable in respect of
interest on any Class of Offered Certificates on any Distribution Date is less
than the Distributable Certificate Interest then payable for such Class, the
shortfall will be distributable to holders of such Class of Certificates on
subsequent Distribution Dates, to the extent of available funds. 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 SENSITIVITY OF THE CLASS IO CERTIFICATES. The yield to maturity on
the Class IO Certificates will be extremely sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) on the Mortgage Loans. Accordingly, investors in the Class IO
Certificates should fully consider the associated risks, including the risk that
a rapid rate of prepayment of the Mortgage Loans could result in the failure of
such investors to fully recoup their initial investments. The allocation of a
portion of collected Prepayment Premiums and Yield Maintenance Charges to the
Class IO Certificates is intended to reduce those risks; however, such
allocation may be insufficient to offset fully the adverse effects on the yield
on such Class of Certificates that the related prepayments may otherwise have.
S-104
<PAGE>
PRICE/YIELD TABLES
The tables beginning on page B-13 of Annex B hereto (the "Yield Tables")
show the pre-tax corporate bond equivalent ("CBE") yield to maturity, modified
duration (except in the case of the Class IO Certificates), weighted average
life, first Distribution Date on which principal is to be paid ("First Principal
Payment Date") and final Distribution Date on which principal is to be paid
("Last Principal Payment Date") with respect to each Class of Offered
Certificates, prepared using the Table Assumptions (as described below) and,
where applicable, the specified assumed purchase prices (which prices do not
include accrued interest). Assumed purchase prices are expressed in 32nds (i.e.
100.04 means 100 4/32 %) as a percentage of the initial Certificate Balance (or,
in the case 32 of the Class IO Certificates, of the aggregate of the initial
notional amounts of the respective Class IO Components) of each Class of Offered
Certificates. For purposes of the Yield Tables relating to the Class IO
Certificates, the information therein relating to weighted average life, First
Principal Payment Date and Last Principal Payment Date is being calculated in
respect of the aggregate notional amount of the respective Class IO Components
of the Class IO Certificates.
The yields set forth in the Yield Tables were calculated by determining the
monthly discount rates which, when applied to the assumed stream of cash flows
to be paid on each Class of Offered Certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed purchase
prices, plus accrued interest from and including the Cut-off Date to but
excluding the Assumed Settlement Date (as defined below), and by converting such
monthly rates to semi-annual corporate bond equivalent rates. Such calculation
does 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 Offered Certificates and consequently does not purport to reflect the
return on any investment in such Classes of Offered Certificates when such
reinvestment rates are considered. For purposes of the Yield Tables (except in
the case of the Class IO Certificates), "modified duration" has been calculated
using the modified Macaulay Duration as specified in the "PSA Standard
Formulas." The Macaulay Duration is calculated as the present value weighted
average time to receive future payments of principal and interest, and the PSA
Standard Formula modified duration is calculated by dividing the Macaulay
Duration by the appropriate semi-annual compounding factor. The duration of a
security may be calculated according to various methodologies; accordingly, no
representation is made by the Depositor or any other person that the "modified
duration" approach used herein is appropriate. Duration, like yield, will be
affected by the prepayment rate of the Mortgage Loans and extensions in respect
of Balloon Payments that actually occur during the life of the Class A, Class B,
Class C, Class D and Class E Certificates and by the actual performance of the
Mortgage Loans, all of which may differ, and may differ significantly, from the
assumptions used in preparing the Yield Tables.
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 one or more mortgage loans.
The Yield Tables were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) no Mortgage Loan prepays during any
applicable Lockout Period or Required Defeasance Period or during any period
when a Prepayment Premium or a Yield Maintenance Charge could be required in
connection with a voluntary prepayment of principal, each ARD Loan is paid in
full on its respective Anticipated Repayment Date and, otherwise, in the case of
each of the Yield Tables, each Mortgage Loan is assumed to prepay at the
indicated level of CPR, with each prepayment being applied on the first day of
the applicable month in which it is assumed to be received, (ii) the
Pass-Through Rates of the respective Classes of Sequential Pay Certificates are
as follows: Class A-1 Certificates-- 6.150% per annum; Class A-2 Certificates--
6.250% per annum; Class A-3 Certificates-- 6.350% per annum; Class B
Certificates-- 6.500% per annum; Class C Certificates-- 6.500% per annum; Class
D Certificates-- 6.850% per annum; Class E Certificates-- 7.000% per annum; and
all Classes of Private Certificates--
S-105
<PAGE>
6.250% per annum; and initial Certificate Balances of the respective Classes of
Sequential Pay Certificates are as described herein, (iii) there are no
delinquencies or defaults with respect to, and no modifications, waivers or
amendments of the terms of, the Mortgage Loans, (iv) there are no Realized
Losses, Additional Trust Fund Expenses or Appraisal Reduction Amounts with
respect to the Mortgage Loans or the Trust Fund, (v) scheduled interest and
principal payments on the Mortgage Loans are timely received, (vi) all Mortgage
Loans have Due Dates on the first day of each month and accrue interest on the
respective basis described herein (i.e., a 30/360 basis or an actual/360 basis),
(vii) all prepayments are accompanied by a full month's interest and there are
no Prepayment Interest Shortfalls, (viii) there are no breaches of the Mortgage
Loan Seller's representations and warranties regarding the Mortgage Loans, (ix)
no Prepayment Premiums or Yield Maintenance Charges are collected, (x) no party
entitled thereto exercises its right of optional termination of the Trust Fund
described herein, (xi) distributions on the Certificates are made on the 18th
day (each assumed to be a business day) of each month, commencing in March 1998,
and (xii) the settlement date for the sale of the Offered Certificates is March
11, 1998 (the "Assumed Settlement Date").
The characteristics of the Mortgage Loans differ in certain respects from
those assumed in preparing the Yield Tables, and the Yield Tables are presented
for illustrative purposes only. In particular, none of the Mortgage Loans permit
voluntary partial prepayments. Thus neither the Mortgage Pool nor any Mortgage
Loan will prepay at any constant rate, and it is unlikely that the Mortgage
Loans will prepay in a manner consistent with any designated scenario for the
Yield Tables. In addition, there can be no assurance that the Mortgage Loans
will prepay at any particular rate, that the Mortgage Loans will not prepay
(involuntarily or otherwise) during Lockout Periods and/or Required Defeasance
Periods, that the ARD Loans will be paid in full on their respective Anticipated
Repayment Dates, that the actual pre-tax yields on, or any other payment
characteristics of, any Class of Offered Certificates will correspond to any of
the information shown in the Yield Tables, or that the aggregate purchase prices
of the Offered Certificates will be as assumed. Accordingly, investors must make
their own decisions as to the appropriate assumptions (including prepayment
assumptions) to be used in deciding whether to purchase the Offered
Certificates.
S-106
<PAGE>
WEIGHTED AVERAGE LIFE
The weighted average life of any Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D or Class E Certificate refers to the average amount of time
that will elapse from the assumed Closing Date until each dollar allocable to
principal of such Certificate is distributed to the investor. The weighted
average life of any such Offered Certificate will be influenced by, among other
things, the rate at which principal on the Mortgage Loans is paid or otherwise
collected or advanced and applied to pay principal of such Offered Certificate.
As described herein, the Principal Distribution Amount for each Distribution
Date will generally be distributable first in respect of the Class A-1
Certificates until the Certificate Balance thereof is reduced to zero, and will
thereafter generally be distributable entirely in respect of the Class A-2
Certificates, the Class A-3 Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E Certificates, in that
order, in each case until the Certificate Balance of such Class of Certificates
is reduced to zero.
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates (other than the Class IO
Certificates) that would be outstanding after each of the dates shown and the
corresponding weighted average life of each such Class of Offered Certificates.
The tables have been prepared on the basis of the Table Assumptions. To the
extent that the Mortgage Loans or the Certificates have characteristics that
differ from those assumed in preparing the tables, the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D and/or Class E Certificates may mature
earlier or later than indicated by the tables. In particular, partial
prepayments on the Mortgage Loans in fact are not permitted. Accordingly, the
Mortgage Loans will not prepay at any constant rate, and it is highly unlikely
that the Mortgage Loans will prepay in a manner consistent with the assumptions
described above. In addition, variations in the actual prepayment experience and
the balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial Certificate Balances (and shorten or extend the weighted
average lives) shown in the following tables. Investors are urged to conduct
their own analyses of the rates at which the Mortgage Loans may be expected to
prepay.
The tables set forth below were prepared on the basis of the Table
Assumptions and indicate the resulting weighted average lives of each Class of
Offered Certificates (other than the Class IO Certificates) and set forth the
percentages of the initial Certificate Balance of such Class of Offered
Certificates that would be outstanding after each of the dates shown in each
case assuming the indicated level of CPR. For purposes of the following tables,
the weighted average life of an Offered Certificate (other than the Class IO
Certificates) is determined by (i) multiplying the amount of each principal
distribution thereon by the number of years from the Assumed Settlement Date of
such Certificate 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.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS A-1 CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
---------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 93 93 93 93 93
February 18, 2000.......................................... 86 86 86 86 86
February 18, 2001.......................................... 79 79 79 79 79
February 18, 2002.......................................... 70 70 70 70 70
February 18, 2003.......................................... 30 30 30 30 30
February 18, 2004.......................................... 20 20 20 19 18
February 18, 2005.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 4.3 4.3 4.3 4.3 4.3
</TABLE>
S-107
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS A-2 CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
-----------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 100 100 100 100 100
February 18, 2000.......................................... 100 100 100 100 100
February 18, 2001.......................................... 100 100 100 100 100
February 18, 2002.......................................... 100 100 100 100 100
February 18, 2003.......................................... 100 100 100 100 100
February 18, 2004.......................................... 100 100 100 100 100
February 18, 2005.......................................... 48 48 48 48 48
February 18, 2006.......................................... 40 40 40 40 40
February 18, 2007.......................................... 31 30 30 29 27
February 18, 2008.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 7.8 7.7 7.7 7.7 7.7
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS A-3 CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
---------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 100 100 100 100 100
February 18, 2000.......................................... 100 100 100 100 100
February 18, 2001.......................................... 100 100 100 100 100
February 18, 2002.......................................... 100 100 100 100 100
February 18, 2003.......................................... 100 100 100 100 100
February 18, 2004.......................................... 100 100 100 100 100
February 18, 2005.......................................... 100 100 100 100 100
February 18, 2006.......................................... 100 100 100 100 100
February 18, 2007.......................................... 100 100 100 100 100
February 18, 2008.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 9.7 9.7 9.7 9.7 9.6
</TABLE>
S-108
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS B CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
---------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 100 100 100 100 100
February 18, 2000.......................................... 100 100 100 100 100
February 18, 2001.......................................... 100 100 100 100 100
February 18, 2002.......................................... 100 100 100 100 100
February 18, 2003.......................................... 100 100 100 100 100
February 18, 2004.......................................... 100 100 100 100 100
February 18, 2005.......................................... 100 100 100 100 100
February 18, 2006.......................................... 100 100 100 100 100
February 18, 2007.......................................... 100 100 100 100 100
February 18, 2008.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 9.9 9.9 9.9 9.9 9.9
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS C CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
---------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 100 100 100 100 100
February 18, 2000.......................................... 100 100 100 100 100
February 18, 2001.......................................... 100 100 100 100 100
February 18, 2002.......................................... 100 100 100 100 100
February 18, 2003.......................................... 100 100 100 100 100
February 18, 2004.......................................... 100 100 100 100 100
February 18, 2005.......................................... 100 100 100 100 100
February 18, 2006.......................................... 100 100 100 100 100
February 18, 2007.......................................... 100 100 100 100 100
February 18, 2008.......................................... 8 8 7 7 7
February 18, 2009.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 9.9 9.9 9.9 9.9 9.9
</TABLE>
S-109
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS D CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
---------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 100 100 100 100 100
February 18, 2000.......................................... 100 100 100 100 100
February 18, 2001.......................................... 100 100 100 100 100
February 18, 2002.......................................... 100 100 100 100 100
February 18, 2003.......................................... 100 100 100 100 100
February 18, 2004.......................................... 100 100 100 100 100
February 18, 2005.......................................... 100 100 100 100 100
February 18, 2006.......................................... 100 100 100 100 100
February 18, 2007.......................................... 100 100 100 100 100
February 18, 2008.......................................... 100 100 100 100 100
February 18, 2009.......................................... 94 94 93 93 92
February 18, 2010.......................................... 63 62 61 61 60
February 18, 2011.......................................... 33 31 30 30 29
February 18, 2012.......................................... 17 15 13 12 9
February 18, 2013.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 12.6 12.5 12.5 12.5 12.4
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS E CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YM OR PP--OTHERWISE AT
INDICATED CPR
---------------------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................................... 100% 100% 100% 100% 100%
February 18, 1999.......................................... 100 100 100 100 100
February 18, 2000.......................................... 100 100 100 100 100
February 18, 2001.......................................... 100 100 100 100 100
February 18, 2002.......................................... 100 100 100 100 100
February 18, 2003.......................................... 100 100 100 100 100
February 18, 2004.......................................... 100 100 100 100 100
February 18, 2005.......................................... 100 100 100 100 100
February 18, 2006.......................................... 100 100 100 100 100
February 18, 2007.......................................... 100 100 100 100 100
February 18, 2008.......................................... 100 100 100 100 100
February 18, 2009.......................................... 100 100 100 100 100
February 18, 2010.......................................... 100 100 100 100 100
February 18, 2011.......................................... 100 100 100 100 100
February 18, 2012.......................................... 100 100 100 100 100
February 18, 2013.......................................... 0 0 0 0 0
Weighted Average Life (in years)........................... 14.6 14.6 14.5 14.5 14.4
</TABLE>
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USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase the Mortgage Loans and to pay certain
expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Upon the issuance of the Offered Certificates, Sidley & Austin, counsel to
the Depositor, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Pooling and Servicing Agreement, for
federal income tax purposes, the portions of the Trust Fund designated in the
Pooling and Servicing Agreement as "REMIC I," "REMIC II" and "REMIC III,"
respectively, will each qualify as a REMIC under the Code. The assets of REMIC I
will consist of the Mortgage Loans, any REO Properties acquired on behalf of the
Certificateholders and funds deposited from time to time in the Custodial
Account, the Collection Account and any REO Account, exclusive of any Additional
Interest on the ARD Loans (see "Servicing of the Mortgage Loans--Custodial
Account" and "--REO Properties" and "Description of the Certificates--Collection
Account"). For federal income tax purposes, (a) the separate noncertificated
regular interests in REMIC I will be the "regular interests" in REMIC I and will
constitute the assets of REMIC II, (b) the Class R-I Certificates will be the
sole class of "residual interests" in REMIC I, (c) the separate noncertificated
regular interests in REMIC II will be the "regular interests" in REMIC II and
will constitute the assets of REMIC III, (d) the Class R-II Certificates will be
the sole class of "residual interests," in REMIC II, (e) the Regular Interest
Certificates (or, in the case of the Class IO Certificates, the Class IO
Components) evidence the ownership of the "regular interests" in REMIC III,
which generally will be treated as debt instruments of REMIC III, and (f) the
Class R-III Certificates will be the sole class of "residual interests" in REMIC
III. For federal income tax purposes the Class IO Certificates will consist of
fourteen components, each corresponding to one of the Classes of Sequential Pay
Certificates constituting "regular interests" in REMIC III. See "Federal Income
Tax Considerations" in the Prospectus. The Sequential Pay Certificates will
represent PRO RATA (based on their respective initial Certificate Balances)
undivided beneficial interests in the portion of the Trust Fund consisting of
any Additional Interest collected on the ARD Loans, and such portion will be
treated as part of a grantor trust for federal income tax purposes.
DISCOUNT AND PREMIUM; PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
The Class , Class , Class and Class Certificates
will not, and the Class IO and Class Certificates will, be treated as
having been issued with original issue discount for federal income tax reporting
purposes. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the Mortgage Loans will prepay at a rate equal to
a CPR of 0%, except that it is assumed that the ARD Loans are paid in full on
their respective Anticipated Repayment Dates. No representation is made as to
how the Mortgage Loans will prepay, if at all. See "Federal Income Tax
Considerations" in the Prospectus.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a
Certificateholder (in particular, the holder of a Class IO Certificate), the
amount of original issue discount allocable to such period would be zero and
such Certificateholder will be permitted to offset such negative amount only
against future original issue discount (if any) attributable to such
Certificates. Although the matter is not free from doubt, a holder of a Class IO
Certificate may be permitted to deduct a loss to the extent that his or her
respective remaining basis in such Certificate exceeds the maximum amount of
future payments to which such Certificateholder is entitled, assuming no further
prepayments of the Mortgage Loans. Any such loss might be treated as a capital
loss.
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The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. The OID
Regulations in some circumstances permit the holder of a debt instrument to
recognize original issue discount under a method that differs from that used by
the issuer. Accordingly, it is possible that the holder of an Offered
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the Trustee in preparing reports to the
Certificateholders and the IRS. Prospective purchasers of Offered Certificates
are advised to consult their tax advisors concerning the tax treatment of such
Certificates.
Certain Classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Certificates will be treated as holding a Certificate with
amortizable bond premium will depend on such Certificateholder's purchase price
and the distributions remaining to be made on such Certificate at the time of
its acquisition by such Certificateholder. Holders of such Classes of
Certificates should consult their own tax advisors regarding the possibility of
making an election to amortize such premium. See "Federal Income Tax
Considerations-- Taxation of Regular Interest Securities--Market Discount and
Premium" in the Prospectus.
Prepayment Premiums and Yield Maintenance Charges actually collected will be
distributed to the holders of the Offered Certificates as described herein. It
is not entirely clear under the Code when the amount of a Prepayment Premium or
Yield Maintenance Charge should be taxed to the holder of an Offered
Certificate, but it is not expected, for federal income tax reporting purposes,
that Prepayment Premiums and Yield Maintenance Charges will be treated as giving
rise to any income to the holders of the Offered Certificates prior to the
Master Servicer's actual receipt of a Prepayment Premium or Yield Maintenance
Charge. It appears that Prepayment Premiums and Yield Maintenance Charges, if
any, will be treated as ordinary income rather than capital gain. However, that
is not entirely clear and Certificateholders should consult their own tax
advisors concerning the treatment of Prepayment Premiums and Yield Maintenance
Charges.
Because Additional Interest will arise on the ARD Loans only if (contrary to
the prepayment assumption) they do not prepay on their related Anticipated
Repayment Date, for federal income tax information reporting purposes it will be
assumed that no such Additional Interest will be paid. Consequently, Additional
Interest will not be reported as income in federal income tax information
reports sent to holders of the Sequential Pay Certificates until such Additional
Interest actually accrues. Similarly, no portion of such holders' purchase price
of their Certificates will be treated as allocable to their right to receive
possible distributions of Additional Interest. However, the Internal Revenue
Service may disagree with this treatment and assert that additional income
should be accrued with respect to projected possible payments of Additional
Interest in advance of its actual accrual, that additional original issue
discount income should be accrued with respect to the REMIC regular interests
related to one or more classes of Sequential Pay Certificates, or both. In
either event, to the extent that any such projected possible payments of
Additional Interest were not actually made or were smaller in amount than the
portion of the holder's purchase price allocated thereto, the holder of such a
Certificate would be allowed to claim a loss, but the timing and capital or
ordinary character of such loss are unclear.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
In general, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(5)(A) of the Code
in the same proportion that the assets of the Trust Fund would be so treated.
The Offered Certificates will generally only be considered assets described in
Section 7701(a)(19)(C) of the Code to the extent that the Mortgage Loans are
secured by residential property and, accordingly, investment in the Offered
Certificates may not be suitable for certain thrift institutions. Moreover, if
95% or more of the assets of the Trust Fund qualify for any of the foregoing
characterizations at all times during a calendar year, the Offered Certificates
will qualify for the corresponding status in their entirety for that calendar
year. Interest (including original issue discount) on the Offered Certificates
will be interest described in Section 856(c)(3)(B) of the Code to the extent
that such
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Certificates are treated as "real estate assets" within the meaning of Section
856(c)(5)(A) of the Code. In addition, the Offered Certificates will be
"qualified mortgages" within the meaning of Section 860G(a)(3) of the Code. The
determination as to the percentage of the Trust Fund that constitutes assets
described in the foregoing sections of the Code will be made with respect to
calendar quarter based on the average adjusted basis of each category of the
assets included in the Trust Fund during such calendar quarter.
However, the Trust Fund will include, in addition to the Mortgage Loans,
payments on Mortgage Loans held pending distribution on the Certificates,
certain amounts in reserve accounts and property acquired by foreclosure held
pending sale. It is unclear whether property acquired by foreclosure held
pending sale would be considered to be part of the Mortgage Loans, or whether
such assets (to the extent not invested in assets described in the foregoing
sections of the Code) otherwise would receive the same treatment as the Mortgage
Loans for purposes of all of the foregoing sections of the Code. In addition, to
the extent an Offered Certificate represents ownership of an interest in any
Mortgage Loan which is secured in part by the related borrower's interest in an
account containing a holdback of loan proceeds, a portion of such Certificate
may not represent ownership of assets described in Section 7701(a)(19)(C) of the
Code and "real estate assets" under Section 856(c)(5)(A) of the Code and the
interest thereon may not constitute "interest on obligations secured by
mortgages on real property" within the meaning of Section 856(c)(3)(B) of the
Code. The REMIC Regulations (as defined in the Prospectus) do provide, however,
that cash received from payments on Mortgage Loans held pending distribution are
considered part of the Mortgage Loans for purposes of Section 856(c)(5)(A) of
the Code.
See "Description of the Mortgage Pool" herein.
POSSIBLE TAXES ON INCOME FROM FORECLOSURE PROPERTY AND OTHER TAXES
In general, the Special Servicer will be obligated to operate and manage any
Mortgaged Property acquired as REO Property in a manner that (i) maintains its
status as "foreclosure property" under the REMIC Provisions and (ii) would, to
the extent commercially reasonable and consistent with the foregoing clause (i),
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 or other REMIC administrator 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
that it would not be commercially reasonable to manage and operate such 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 or a tax on
"prohibited transactions" under Section 860F of the Code (either such tax
referred to herein as an "REO Tax"). To the extent that income the Trust Fund
receives from an REO Property is subject to a tax on (i) "net income from
foreclosure property", such income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%) and (ii) "prohibited
transactions", such income would be subject to federal tax at a 100% rate. 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. Generally, income from an REO
Property that is directly operated by the Special Servicer would be apportioned
and classified as "service" or "non-service" income. The "service" portion of
such income could be subject to federal tax either at the highest marginal
corporate tax rate or at the 100% rate on "prohibited transactions", and the
"non-service" portion of such income could be subject to federal tax at the
highest marginal corporate tax rate or, although it appears unlikely, at the
100% rate applicable to "prohibited transactions". 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 REO Taxes in
connection with the operation of commercial REO Properties by REMICs.
To the extent permitted by then applicable laws, any tax on "prohibited
transactions", tax on non-permitted contributions or tax on "net income from
foreclosure property" that may be imposed on REMIC I, REMIC II or REMIC III will
be borne by the Trustee, the Master Servicer or the Special
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Servicer, in any case out of its own funds, provided that such person has
sufficient assets to do so, and provided further that such tax arises out of a
breach of such person's obligations under the Pooling and Servicing Agreement.
Any such tax not borne by the Trustee, the Master Servicer or the Special
Servicer will be charged against the Trust Fund resulting in a reduction in
amounts available for distribution to the Certificateholders. See "Federal
Income Tax Considerations--Taxation of the REMIC--Prohibited Transactions and
Contributions Tax" in the Prospectus.
REPORTING AND OTHER ADMINISTRATIVE MATTERS
Reporting of interest income, including any original issue discount, if any,
with respect to Regular Interest Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of Regular Interest
Certificates and the Internal Revenue Service; holders of Regular Interest
Certificates that are corporations, trusts, securities dealers and certain other
non-individuals will be provided interest and original issue discount income
information and the information set forth in the following paragraph upon
request in accordance with the requirements of the applicable regulations. The
information must be provided by the later of 30 days after the end of the
quarter for which the information was requested, or two weeks after the receipt
of the request. The REMIC must also comply with rules requiring a Regular
Interest Certificate issued with original issue discount to disclose on its face
the amount of original issue discount and the issue date, and requiring such
information to be reported to the Internal Revenue Service.
As applicable, the Regular Interest Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided.
The "tax matters person" for each REMIC will be the holder of Residual
Interest Certificates evidencing the largest percentage interest in the
applicable Class of Residual Interest Certificates. All holders of Residual
Interest Certificates will irrevocably designate the Trustee (or other REMIC
administrator appointed by the Trustee) as agent for such "tax matters person"
in all respects.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Federal Income Tax Considerations"
in the Prospectus.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds, separate accounts and general accounts in which
such plans, accounts or arrangements are invested, that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each, a "Plan") should carefully 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 Underwriter received from the Department of Labor (the "DOL") an
individual prohibited transaction exemption, Prohibited Transaction Exemption
91-14 (the "Exemption"), which generally exempts from the application of the
prohibited transaction provisions of Sections 406(a) and (b) and 407(a) of
ERISA, and the excise taxes imposed on such prohibited transactions pursuant to
Sections 4975(a) and (b) of the Code, certain transactions, among others,
relating to the servicing and operation of mortgage pools and the purchase, sale
and holding of mortgage pass-through certificates underwritten or placed by an
Exemption-Favored Party, as hereinafter defined, provided that certain
conditions set forth in
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the Exemption are satisfied. For purposes of this discussion, the term
"Exemption-Favored Party" shall include (a) the Underwriter, (b) any person
directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with the Underwriter, and (c) any member
of the underwriting syndicate or selling group of which the Underwriter or a
person described in (b) is a manager or co-manager with respect to the Offered
Certificates.
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of Offered Certificates
to be eligible for exemptive relief thereunder. First, the acquisition of
Offered Certificates by a Plan 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 Offered Certificates evidencing
rights and interests not subordinated to the rights and interests evidenced by
the other Offered Certificates of the same series. Third, the Offered
Certificates at the time of acquisition by the Plan must be rated in one of the
three highest generic rating categories by DCR, Moody's, Standard & Poor's
Ratings Services A Division of the McGraw-Hill Companies, Inc. ("S&P") or
FitchIBCA Inc. ("Fitch"). Fourth, the Trustee cannot be an affiliate of any
other member of the "Restricted Group", which consists of any Exemption-Favored
Party, the Depositor, the Trustee, the Master Servicer, the Special Servicer,
any sub-servicer, the Mortgage Loan Seller, the provider of any credit support,
any mortgagor with respect to Mortgage Loans constituting more than 5% of the
aggregate unamortized principal balance of the Mortgage Loans as of the date of
initial issuance of the Offered Certificates and any affiliates of the foregoing
parties. Fifth, the sum of all payments made to and retained by the
Exemption-Favored Parties in connection with the sale of Certificates must
represent not more than
reasonable compensation for underwriting the Offered 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 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, the Special Servicer and any sub-servicer must
represent 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. Sixth, the investing Plan must be
an accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Offered Certificates, the second general condition set forth above is satisfied
with respect to such Certificates. It is a condition of their issuance that the
Senior Certificates be rated not lower than "Aaa" by Moody's and "AAA" by DCR.
Accordingly, upon initial issuance, the third general condition set forth above
will be satisfied with respect to the Senior Certificates. As of the Closing
Date, the fourth general condition set forth above will be satisfied with
respect to the Senior Certificates. A fiduciary of a Plan contemplating
purchasing a Senior Certificate in the secondary market must make its own
determination that, at the time of such purchase, such Certificate continues to
satisfy the second, third and fourth general conditions set forth above. In
addition, a fiduciary of a Plan contemplating the purchase of a Senior
Certificate, whether in the initial issuance of such Certificate or in the
secondary market, must make its own determination that the first, fifth and
sixth general conditions set forth above will be satisfied with respect to such
Certificate.
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 in such other
investment pools must have been rated in one of the three highest generic
categories of DCR, Moody's, S&P or Fitch for at least one year prior to the
Plan's acquisition of Senior Certificates; and (iii) certificates 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 Senior Certificates.
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 (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of Senior
Certificates acquired by a Plan upon initial issuance from the Depositor or an
Exemption-Favored Party when the Depositor, the
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Mortgage Loan Seller, the Master Servicer, the Special Servicer, the Trustee or
any sub-servicer, provider of credit support, Exemption-Favored Party or
mortgagor is a Party in Interest with respect to the investing Plan, (ii) the
direct or indirect acquisition or disposition in the secondary market of Senior
Certificates by a Plan and (iii) the continued holding of Senior Certificates by
a Plan. 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
Senior Certificate on behalf of an "Excluded Plan" (as defined in the following
sentence) by any person who has discretionary authority or renders investment
advice with respect to the assets of such Excluded Plan. For purposes hereof, an
Excluded Plan is a Plan sponsored by any member of the Restricted Group.
Moreover, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
also provide an exemption from the restrictions imposed by Sections 406(b)(1)
and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of the Code
in connection with (i) the direct or indirect sale, exchange or transfer of
Senior Certificates in the initial issuance of Senior Certificates between the
Depositor or an Exemption-Favored Party and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in such Certificates is (a) a mortgagor with respect
to 5% or less of the fair market value of the Mortgage Loans or (b) an affiliate
of such a person, (ii) the direct or indirect acquisition or disposition in the
secondary market of Senior Certificates by a Plan and (iii) the holding of
Senior Certificates by a Plan.
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the 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.
Lastly, if 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 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 (as defined in the Prospectus) 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 Senior Certificates.
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm (i) that the Senior Certificates constitute "certificates" for purposes
of the Exemption and (ii) that the general and other conditions set forth in the
Exemption and the other requirements set forth in the Exemption would be
satisfied at the time of such purchase.
In addition to making its own determination as to the availability of the
exemptive relief provided in the Exemption, the Plan fiduciary considering an
investment in Senior Certificates should consider the availability of any other
prohibited transaction exemptions. See "ERISA Considerations" in the Prospectus.
There can be no assurance that any such class exemptions will apply with respect
to any particular Plan investment in Senior Certificates or, even if it were
deemed to apply, that any exemption would apply to all prohibited transactions
that may occur in connection with such investment. A purchaser of Senior
Certificates should be aware, however, that even if the conditions specified in
one or more exemptions are satisfied, the scope of relief provided by an
exemption may not cover all acts which might be construed as prohibited
transactions.
Because the characteristics of the Class B, Class C, Class D and Class E
Certificates do not meet the requirements of the Exemption, the purchase or
holding of such Certificates by a Plan may result in a prohibited transaction or
the imposition of excise taxes or civil penalties. AS A RESULT, NO TRANSFER OF A
CLASS B, CLASS C, CLASS D OR CLASS E CERTIFICATE OR ANY INTEREST THEREIN MAY BE
MADE TO A PLAN OR TO ANY PERSON WHO IS 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 UNLESS THE PURCHASE AND HOLDING OF SUCH CERTIFICATE
OR
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INTEREST THEREIN IS EXEMPT FROM THE PROHIBITED TRANSACTION PROVISIONS OF SECTION
406 OF ERISA AND SECTION 4975 OF THE CODE UNDER SECTIONS I AND III OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60, WHICH PROVIDES AN EXEMPTION FROM THE
PROHIBITED TRANSACTION RULES FOR CERTAIN TRANSACTIONS INVOLVING AN INSURANCE
COMPANY GENERAL ACCOUNT. ANY PERSON TO WHOM A TRANSFER OF ANY SUCH CERTIFICATE
OR INTEREST THEREIN IS MADE WILL BE DEEMED TO HAVE REPRESENTED TO THE DEPOSITOR,
THE UNDERWRITER, THE MASTER SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, ANY
SUB-SERVICER AND ANY MORTGAGOR WITH RESPECT TO THE MORTGAGE LOANS, THAT EITHER
(I) IT IS NOT A PLAN AND IS NOT 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 OR (II) THE PURCHASE AND HOLDING OF SUCH
CERTIFICATE OR INTEREST THEREIN IS SO EXEMPT ON THE BASIS OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60.
Section III of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust Fund) in which an insurance company general account has
an interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase classes of
Certificates (such as the Class B, Class C, Class D and Class E Certificates)
which do not meet the requirements of the Exemption solely because they (i) are
subordinated to other Classes of Certificates and/or (ii) have not received a
rating at the time of the acquisition in one of the three highest rating
categories from DCR, Moody's, S&P or Fitch. All other conditions of the
Exemption would have to be satisfied in order for PTCE 95-60 to be available.
Before purchasing Class B, Class C, Class D or Class E Certificates, an
insurance company general account seeking to rely on Section III of PTCE 95-60
should itself confirm that all applicable conditions and other requirements have
been satisfied.
LEGAL INVESTMENT
Upon issuance, the Class A, Class IO and Class B Certificates (the "SMMEA
Certificates") will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA").
However, in order to remain "mortgage related securities", the SMMEA
Certificates must, among other things, continue to be rated in one of the two
highest rating categories by at least one nationally recognized statistical
rating organization. In addition, the SMMEA Certificates will constitute
"mortgage related securities" in part because they evidence interest in notes
secured by first (or effectively first) mortgage liens on one or more parcels of
real estate upon which is located a residential, commercial or mixed residential
and commercial structure. No representation is made as to the effect on their
status as "mortgage related securities" if any of the mortgagors entitled to do
so elect to defease their respective Mortgage Loans. Such defeasance may not
occur within two years of the Closing Date.
THE CLASS B CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES
AND THE CLASS E CERTIFICATES WILL NOT BE "MORTGAGE RELATED SECURITIES" FOR
PURPOSES OF SMMEA. As a result, the appropriate characterization of such Offered
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such Offered
Certificates, is subject to significant interpretive uncertainties.
The Depositor makes no representation as to the ability of particular
investors to purchase the Offered Certificates under applicable legal investment
or other restrictions. 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 legal
investments for them or are subject to investment, capital or other
restrictions.
All depository institutions considering an investment in the Offered
Certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of
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Securities Dealers and Unsuitable Investment Practices (to the extent adopted by
their respective regulatory authorities), setting forth, in relevant part,
certain investment practices deemed to be unsuitable for an institution's
investment portfolio, as well as guidelines for investing in certain types of
mortgage related securities.
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 and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or to
purchase Offered Certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for such investors.
See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") between the Depositor and the Underwriter, the
Depositor has agreed to sell to the Underwriter, and the Underwriter has agreed
to purchase, each class of Offered Certificates.
In the Underwriting Agreement, the Underwriter has agreed to purchase all of
the Offered Certificates if any are purchased. Proceeds to the Depositor from
the sale of the Offered Certificates, before deducting expenses payable by the
Depositor, will be approximately $ , which includes accrued interest.
Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. The Underwriter may effect such transactions
by selling the Offered Certificates to or through dealers, and the dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter. In connection with the purchase and sale of
the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. The
Underwriter and any dealers that participate with the 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.
The Underwriter expects to sell a portion of the Offered Certificates to or
through First Union Capital Markets Corp.
Purchasers of the 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 in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriter that it, through one
or more of its affiliates, currently intends to make a market in the Offered
Certificates; however, the Underwriter has no obligation to do so, any market
making may be discontinued at any time and there can be no assurance that an
active public market for the Offered Certificates will develop. See "Risk
Factors--Limited Liquidity" herein and in the Prospectus.
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against, or to make contributions to the Underwriter and each
such controlling person with respect to, certain liabilities, including
liabilities under the Securities Act.
S-118
<PAGE>
LEGAL MATTERS
Certain legal matters will be passed upon for each of the Depositor and the
Underwriter by Sidley & Austin, New York, New York.
RATINGS
It is a condition of their issuance that each of the Class A-1, Class A-2
and Class A-3 Certificates be rated not lower than "Aaa" by Moody's and "AAA" by
DCR; that the Class IO Certificates be rated not lower than "Aaa" by Moody's and
"AAA" by DCR; that the Class B Certificates be rated not lower than "Aa2" by
Moody's and "AA" by DCR; that the Class C Certificates be rated not lower than
"A2 " by Moody's and "A" by DCR; that the Class D Certificates be rated not
lower than "Baa2" by Moody's and "BBB" by DCR; and that the Class E Certificates
be rated not lower than "Baa3" by Moody's and "BBB-" by DCR.
The ratings on the Offered Certificates address the likelihood of timely
receipt by holders thereof of all distributions of interest to which they are
entitled on each Distribution Date and, except in the case of the Class IO
Certificates, all distributions of principal to which they are entitled by the
Rated Final Distribution Date. The ratings take into consideration the credit
quality of the Mortgage Pool, structural and legal aspects associated with the
Offered Certificates, and the extent to which the payment stream from the
Mortgage Pool is adequate to make payments required under the Offered
Certificates. A security rating does not represent any assessment of (i) the
likelihood or frequency of principal prepayments or default interest on the
Mortgage Loans, (ii) the degree to which such prepayments might differ from
those originally anticipated or (iii) whether and to what extent Additional
Interest, Prepayment Premiums and Yield Maintenance Charges will be received.
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 IO Certificates might not fully recover their investment in the event
of rapid prepayments of the Mortgage Loans (including both voluntary and
involuntary prepayments). Therefore, such security rating addresses credit risk
and not the risk of prepayment. As described herein, the amounts payable with
respect to the Class IO Certificates consist only of interest. If the entire
Mortgage Pool were to prepay in the initial month, with the result that the
holders of the Class IO Certificates receive only a single month's interest and
thus suffer a nearly complete loss of their investment, all amounts "due" to
such Certificateholders will nevertheless have been paid, and such result is
consistent with the ratings received on the Class IO Certificates. The Class IO
Certificates' notional amount upon which interest is calculated is reduced by
the allocation of Realized Losses and prepayments, whether voluntary or
involuntary. The rating does not address the timing or magnitude of reductions
of the notional amounts of the Class IO Components, but only the obligation to
pay interest timely on the notional amount of any Class IO Component as reduced
from time to time. Accordingly, the ratings of the Class IO Certificates should
be evaluated independently from similar ratings on other types of securities.
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been requested
by the Depositor to do so may be lower than the rating assigned thereto by
either of the Rating Agencies.
The ratings on 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. See "Risk
Factors--Limited Nature of Rating" in the Prospectus.
S-119
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
30/360 basis................................................................S-39
Accrued Certificate Interest................................................S-87
Actual/360 basis............................................................S-39
Additional Interest...................................................S-11, S-39
Additional Interest Rate..............................................S-11, S-39
Additional Trust Fund Expenses..............................................S-91
Administrative Cost Rate....................................................S-81
Advances....................................................................S-63
Anticipated Repayment Date............................................S-11, S-39
Appraisal Reduction Amount..................................................S-93
ARD Loan....................................................................S-11
ARD Loans...................................................................S-39
Assumed Final Distribution Date.............................................S-98
Assumed Scheduled Payment.............................................S-21, S-88
Assumed Settlement Date....................................................S-106
Available Distribution Amount.........................................S-16, S-82
Balloon Loans.........................................................S-11, S-40
Balloon Payment.............................................................S-11
CBE........................................................................S-105
Certificate Balance..............................................S-2, S-14, S-80
Certificate Owner......................................................S-8, S-79
Certificateholders..............................................S-14, S-82, S-98
Certificates......................................................S-1, S-7, S-79
Class.............................................................S-1, S-7, S-79
Class A Certificates...................................................S-7, S-79
Class IO Component....................................................S-15, S-80
Class IO Components..........................................................S-2
Closing Date................................................................S-56
Collection Account..........................................................S-81
Collection Period...........................................................S-81
Comparative Financial Status Report.........................................S-96
Compensating Interest Payment.........................................S-22, S-62
Condemnation Proceeds.......................................................S-66
Constant Prepayment Rate...................................................S-105
Controlling Class...........................................................S-68
Controlling Class Representative.......................................S-7, S-68
Corporate Trust Office.....................................................S-100
Corrected Mortgage Loan.....................................................S-61
CPR........................................................................S-105
Cross-Collateralized Mortgage Loans.........................................S-41
CSSA Loan File..............................................................S-95
CSSA Loan periodic update file..............................................S-97
CSSA Property File....................................................S-95, S-97
Custodial Account...........................................................S-65
Custodian...................................................................S-56
Cut-off Date.................................................................S-2
Cut-off Date Balance.........................................................S-9
DCR.........................................................................S-28
Default Interest............................................................S-63
Defeasance Collateral.................................................S-12, S-40
Defeasance Loans......................................................S-12, S-40
Definitive Offered Certificate.........................................S-8, S-79
Delinquent Loan Status Report...............................................S-95
Depositor....................................................................S-1
Determination Date..........................................................S-81
Discount Rate...............................................................S-89
Distributable Certificate Interest....................................S-19, S-86
Distribution Date......................................................S-2, S-82
Distribution Date Statement.................................................S-94
DOL..................................................................S-27, S-114
DTC....................................................................S-8, S-79
Due-on-Encumbrance..........................................................S-41
Due-on-Sale.................................................................S-41
Eligible Account............................................................S-65
ERISA................................................................S-27, S-114
Events of Default...........................................................S-76
Excluded Class..............................................................S-89
Excluded Plan..............................................................S-116
Exemption-Favored Party....................................................S-115
Final Recovery Determination................................................S-94
First Principal Payment Date...............................................S-105
Fitch......................................................................S-115
Form 8-K....................................................................S-59
Glossary.....................................................................S-6
GMACCM.................................................................S-7, S-62
Historical Loan Modification Report.........................................S-96
Historical Loss Estimate Report.............................................S-96
Index of Principal Definitions...............................................S-6
Initial Pool Balance....................................................S-2, S-9
Insurance Proceeds..........................................................S-66
Interest Accrual Period.....................................................S-87
IRS........................................................................S-112
Last Principal Payment Date................................................S-105
Liquidation Fee.............................................................S-63
Liquidation Proceeds........................................................S-66
Loan Payoff Notification Report.............................................S-96
Lockbox Account.............................................................S-39
Lockout Period........................................................S-12, S-40
Majority Subordinate Certificateholder......................................S-70
Master Servicer..............................................................S-2
Master Servicing Fee........................................................S-62
Master Servicing Fee Rate...................................................S-62
Monthly Payments............................................................S-10
Moody's.....................................................................S-27
Mortgage....................................................................S-38
Mortgage File...............................................................S-56
Mortgage Loan Purchase Agreement............................................S-56
Mortgage Loans.........................................................S-1, S-88
Mortgage Note...............................................................S-38
Mortgage Pool................................................................S-1
Mortgage Rate.........................................................S-10, S-39
Mortgage Rates..............................................................S-10
S-120
<PAGE>
Mortgaged Property.....................................................S-9, S-38
Net Aggregate Prepayment
Interest Shortfall....................................................S-23, S-87
Net Cash Flow...............................................................S-42
Net Mortgage Rate.....................................................S-15, S-81
NOI Adjustment Worksheet....................................................S-96
Non-SMMEA Certificates......................................................S-28
Nonrecoverable Advance......................................................S-67
Offered Certificates..............................................S-1, S-7, S-79
OID Regulations............................................................S-112
Operating Statement Analysis................................................S-96
P&I Advance...........................................................S-22, S-92
Participants...........................................................S-8, S-79
Pass-Through Rate............................................................S-2
Permitted Investments.......................................................S-63
Phase I.........................................................S-37, S-42, S-94
Plan.................................................................S-27, S-114
Pooling and Servicing Agreement.......................................S-14, S-79
Prepayment Interest Excess..................................................S-62
Prepayment Interest Shortfall.........................................S-23, S-62
Prepayment Premiums.........................................................S-89
Principal Distribution Amount...................................S-20, S-87, S-88
Principal Recovery Fee......................................................S-63
Private Certificates...................................................S-7, S-79
PTCE 95-60.................................................................S-117
Purchase Price..............................................................S-56
Qualified Appraiser.........................................................S-93
Qualified Insurers..........................................................S-74
Rated Final Distribution Date..........................................S-2, S-99
Rating Agencies.............................................................S-27
Realized Losses.............................................................S-90
Regular Interest Certificates..........................................S-7, S-79
Reimbursement Rate....................................................S-22, S-92
Related Proceeds............................................................S-63
REMIC..................................................................S-3, S-25
REMIC I.........................................................S-3, S-25, S-111
REMIC II........................................................S-3, S-26, S-111
REMIC III.......................................................S-3, S-26, S-111
REO Account.................................................................S-72
REO Extension...............................................................S-71
REO Mortgage Loan.....................................................S-62, S-88
REO Property....................................................S-21, S-24, S-61
REO Status Report...........................................................S-96
REO Tax..............................................................S-72, S-113
Required Appraisal Date.....................................................S-93
Required Appraisal Loan.....................................................S-93
Required Defeasance Period.................................................S-104
Residual Interest Certificates.........................................S-7, S-79
Restricted Group...........................................................S-115
Revised Rate..........................................................S-11, S-39
S&P........................................................................S-115
Scheduled Payment.....................................................S-20, S-88
Securities Act...............................................................S-7
Senior Certificates...................................................S-23, S-89
Sequential Pay Certificates............................................S-7, S-79
Servicing Advances..........................................................S-63
Servicing Fees..............................................................S-63
Servicing Standard..........................................................S-60
Servicing Transfer Event....................................................S-60
SMMEA.......................................................................S-28
SMMEA Certificates.........................................................S-117
Special Servicer.............................................................S-2
Special Servicing Fee.......................................................S-63
Special Servicing Fee Rate..................................................S-63
Specially Serviced Mortgage Loan............................................S-61
Specially Serviced Mortgage Loans...........................................S-61
Specially Serviced Trust Fund Assets........................................S-61
Stated Principal Balance..............................................S-16, S-81
Subordinate Certificates..............................................S-23, S-89
Table Assumptions....................................................S-98, S-105
Trust Fund.......................................................S-1, S-14, S-79
Trustee......................................................................S-2
Trustee Fee Rate...........................................................S-103
Underwriter..................................................................S-1
Underwriting Agreement.....................................................S-118
Voting Rights...............................................................S-99
Watch List Report...........................................................S-96
Weighted Average Net Mortgage
Rate..................................................................S-15, S-81
Workout Fee.................................................................S-63
Year Built..................................................................S-43
Yield Maintenance Charges...................................................S-88
Yield Tables...............................................................S-105
Zoning Laws.................................................................S-36
S-121
<PAGE>
LB Commercial Mortgage Trust 1998-C1
ITALICS indicate mortgage loans secured by multiple properties.
<TABLE>
<CAPTION>
Control
No. Property Name Address City
==============================================================================================================================
<S> <C> <C> <C>
1 The Eastpoint Mall North Pointe Blvd. & Eastern Ave. Baltimore
2 Ohio Valley Plaza I-70 And Mall Road St. Clairsville
3 Blair Mill Village East Apt. 3855 Blair Mill Rd Horsham
4 Oak Ridge Portfolio (Roll-up) Various Oak Ridge
- - ------------------------------------------------------------------------------------------------------------------------------
4a Oak Ridge Corporate Center 151 Layfayette Drive Oak Ridge
4b Oak Ridge Technical Center III 1099 Commerce Park Drive Oak Ridge
4c Oak Ridge Technical Center IV 1009 Commerce Park Drive Oak Ridge
4d Oak Ridge Technical Center VI 1060 Commerce Park Drive Oak Ridge
4e Oak Ridge Technical Center II 1093 Commerce Park Drive Oak Ridge
- - ------------------------------------------------------------------------------------------------------------------------------
4f Oak Ridge Technical Center I 1055 Commerce Park Drive Oak Ridge
5 Stewart Plaza 650 Stewart Avenue Garden City
6 Northbrook Hilton Hotel 2855 North Milwaukee Avenue Northbrook
7 Murrieta Town Center Murrieta Hot Springs Road Murrieta
- - ------------------------------------------------------------------------------------------------------------------------------
8 Ramada Plaza Hotel Gateway 7470 Irlo Bronson Highway Kissimmee
9 Tacoma Place Shopping Center 1091 72nd Street Tacoma
10 Huebner Oaks Commons I & II (Roll-up) NQH10 and Huebner Oaks San Antonio
10a Huebner Oaks Commons I
- - ------------------------------------------------------------------------------------------------------------------------------
10b Huebner Oaks Commons II
11 The Commons Shopping Center A NWC Germantown Parkway & IH-40 Memphis
12 70 East Sunrise Highway 70 East Sunrise Highway Valley Stream
13 Lakeview Apartments 590 Lower Landing Road Blackwood
- - ------------------------------------------------------------------------------------------------------------------------------
14 One and Three Long Wharf Drive One and Three Long Wharf Drive New Haven
15 Embassy Suites 110 West 600 South Salt Lake City
16 Benjamin Plaza Shopping Center 8944 Hillcrest Road Kansas City
17 Bradley Industrial Park West Side Route 303 Blauvelt
18 Fort Lee Hilton Hotel 2117 Route 4 Eastbound Fort Lee
- - ------------------------------------------------------------------------------------------------------------------------------
19 Tilghman Square 4650 Broadway South Whitehall
20 Oasis Trails Apt. Complex 4200 S. Valley View Boulevard Las Vegas
21 Vista Pointe at the Valley Apartments 701 Cowboys Parkway Irving
22 Covered Bridges of Carol Stream 637 Burns Street Carol Stream
23 Oasis Terrace Apt. 3975 N. Nellis Boulevard Las Vegas
- - ------------------------------------------------------------------------------------------------------------------------------
24 Rio Vista Shopping Center 8310-8740 Rio San Diego Drive San Diego
25 One 2nd St, 8 & 10 State St, 205 Wildwood
Ave (Roll-up) Various Various
25a One Second Street One Second Street Peabody
25b 8 State Street 8 State Street Woburn
- - ------------------------------------------------------------------------------------------------------------------------------
25c 10 State Street 10 State Street Woburn
25d 205 Wildwood Avenue 205 Wildwood Avenue Woburn
26 Copper Palms Apartments 1150 North Buffalo Drive Las Vegas
27 Tri-City Center 891-900 East Harmon Place San Bernadino
- - ------------------------------------------------------------------------------------------------------------------------------
28 Lakeside Centre 8122-8238 Glades Road Boca Raton
29 Chastain Portfolio (Roll-up) Various Various
29a Chastain Village Apartments 1901 Old Concord Road Smyma
29b Chastain Woods Apartments 2929 Landrum Dr. Atlanta
- - ------------------------------------------------------------------------------------------------------------------------------
29c The Chastain Crossing Apartments 2601 Roosevelt Highway College Park
29d Chastain Westcove 5271 West Fayetteville Road College Park
29e The Chastain Townhomes 2500 Pleasant Hill Road College Park
30 Parkview Plaza 886 Plaza Boulevard Lancaster
- - ------------------------------------------------------------------------------------------------------------------------------
31 Eastland Place Shopping Center Green River Road Evansville
32 Crystal Inn 230 West 500 South Salt Lake City
33 Oasis Orchid Apt. Complex 2700 N. Rainbow Boulevard Las Vegas
34 Parkway Plaza Shopping Center Vestal Parkway East Vestal
35 Perimeter Station Shopping Center SEC Perimeter Ctr. W. & Perimeter Ctr. Pky. Atlanta
- - ------------------------------------------------------------------------------------------------------------------------------
36 TJ Maxx Plaza 440 Middlesex Road Tyngsborough
37 Dauphin Plaza Shopping Center NWC Union Deposit Rd. & Victoria Ave. Susquehanna Township
38 Shops at Blue Bell 1750 DeKalb Pike Blue Bell
39 Carrefour at Kirby Woods 6685 Poplar Avenue Germantown
40 Imperial Palms Apartments 200 Keene Road Largo
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Crossed % of Aggregate Cumulative
Control Zip Collateralized Original Cut-off Date Cut-off Date % of Initial Mortgage
No. State Code Groups Balance ($) Balance ($) Balance Pool Balance Rate (%)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 MD 21224 62,500,000 62,467,513 3.52% 3.52% 7.5800
2 OH 43950 42,000,000 41,975,309 2.36% 5.88% 7.2000
3 PA 19044 33,200,000 33,180,421 1.87% 7.75% 7.1900
4 TN 37830 Group A 31,500,000 31,382,675 1.77% 9.52% 7.8100
- - --------------------------------------------------------------------------------------------------------------------------------
4a TN 37830 Group A 12,280,000 12,234,262
4b TN 37830 Group A 5,285,000 5,265,315
4c TN 37830 Group A 4,735,000 4,717,364
4d TN 37830 Group A 3,925,000 3,910,381
4e TN 37830 Group A 2,910,000 2,899,161
- - ------------------------------------------------------------------------------------------------------------------------------------
4f TN 37830 Group A 2,365,000 2,356,191
5 NY 11530 22,700,000 22,622,349 1.27% 10.79% 8.2200
6 IL 60062 20,400,000 20,360,654 1.15% 11.94% 7.3600
7 CA 92563 20,000,000 19,988,861 1.13% 13.07% 7.3700
- - ------------------------------------------------------------------------------------------------------------------------------------
8 FL 34747 20,000,000 19,962,785 1.12% 14.19% 7.5200
9 WA 98408 19,500,000 19,460,119 1.10% 15.29% 7.9900
10 TX 78230 Group B 19,252,000 19,227,633 1.08% 16.37% 6.9700
----------------------------------------------
10a Group B 18,240,000 18,216,914
- - ------------------------------------------------------------------------------------------------------------------------------------
10b Group B 1,012,000 1,010,719
11 TN 38133 19,000,000 18,940,051 1.07% 17.44% 8.0400
12 NY 11580 18,500,000 18,471,844 1.04% 18.48% 7.3900
13 NJ 08012 18,320,000 18,309,365 1.03% 19.51% 7.2400
- - ------------------------------------------------------------------------------------------------------------------------------------
14 CT 06511 Group C 18,300,000 18,268,365 1.03% 20.54% 7.6900
15 UT 84101 18,000,000 17,944,805 1.01% 21.55% 7.4300
16 MO 64132 17,800,000 17,767,252 1.00% 22.55% 7.5700
17 NY 10913 17,800,000 17,735,508 1.00% 23.55% 7.5000
18 NJ 07024 16,500,000 16,451,099 0.93% 24.48% 7.6000
- - ------------------------------------------------------------------------------------------------------------------------------------
19 PA 18052 16,250,000 16,166,316 0.91% 25.39% 8.9200
20 NV 89115 16,100,000 16,086,751 0.91% 26.29% 6.9800
21 TX 75063 16,000,000 15,981,129 0.90% 27.19% 7.2000
22 IL 60188 15,200,000 15,166,062 0.85% 28.05% 7.7000
23 NV 89115 14,825,000 14,812,800 0.83% 28.88% 6.9800
- - ------------------------------------------------------------------------------------------------------------------------------------
24 CA 92108 14,850,000 14,742,098 0.83% 29.71% 9.0500
25 MA Various Group D 14,560,000 14,552,151 0.82% 30.53% 7.4700
----------------------------------------------
25a MA 01960 Group D 6,000,000 5,996,765
25b MA 01801 Group D 960,000 959,482
- - ------------------------------------------------------------------------------------------------------------------------------------
25c MA 01801 Group D 2,640,000 2,638,577
25d MA 01801 Group D 4,960,000 4,957,326
26 NV 89128 14,210,000 14,192,872 0.80% 31.33% 7.1300
27 CA 92408 14,100,000 14,092,298 0.79% 32.13% 7.4300
- - ------------------------------------------------------------------------------------------------------------------------------------
28 FL 33434 14,062,500 14,046,685 0.79% 32.92% 7.3500
29 GA Various Group E 13,730,000 13,698,851 0.77% 33.69% 7.5500
----------------------------------------------
29a GA 30080 Group E 4,320,000 4,310,199
29b GA 30311 Group E 2,800,000 2,793,648
- - ------------------------------------------------------------------------------------------------------------------------------------
29c GA 30337 Group E 2,480,000 2,474,374
29d GA 30349 Group E 2,080,000 2,075,281
29e GA 30349 Group E 2,050,000 2,045,349
30 PA 17601 13,400,000 13,325,200 0.75% 34.44% 8.5240
- - ------------------------------------------------------------------------------------------------------------------------------------
31 IN 47115 13,000,000 12,992,477 0.73% 35.17% 7.2500
32 UT 84101 13,000,000 12,987,642 0.73% 35.90% 7.4100
33 NV 89108 12,865,000 12,854,413 0.72% 36.63% 6.9800
34 NY 13850 12,600,000 12,587,339 0.71% 37.34% 7.6900
35 GA 30346 12,600,000 12,533,296 0.71% 38.04% 7.7400
- - ------------------------------------------------------------------------------------------------------------------------------------
36 MA 01879 12,350,000 12,342,671 0.70% 38.74% 7.1700
37 PA 17110 12,300,000 12,278,857 0.69% 39.43% 7.7100
38 PA 19422 12,000,000 12,000,000 0.68% 40.11% 7.6300
39 TN 38138 12,000,000 11,993,317 0.68% 40.78% 7.3700
40 FL 33771 12,000,000 11,991,271 0.68% 41.46% 7.6000
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining
Interest Original Remaining Term to Term to Original
Control Administrative Accrual Amortization Interest-Only Interest-Only Maturity Maturity Amortization
No. Cost Rate (%) Method Type Period (Mos.) Period (Mos.) (Mos.) (Mos.) Term (Mos.)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.0933 Act/360 ARD 0 0 60 59 360
2 0.0933 Act/360 ARD 0 0 180 179 360
3 0.1533 Act/360 ARD 0 0 120 119 360
4 0.1533 Act/360 Balloon 0 0 180 176 300
- - ------------------------------------------------------------------------------------------------------------------------------------
4a
4b
4c
4d
4e
- - ------------------------------------------------------------------------------------------------------------------------------------
4f
5 0.0933 Act/360 Balloon 0 0 120 113 360
6 0.1533 Act/360 Balloon 0 0 120 118 300
7 0.1183 Act/360 ARD 0 0 120 119 360
- - ------------------------------------------------------------------------------------------------------------------------------------
8 0.1533 Act/360 Balloon 0 0 120 118 300
9 0.1683 Act/360 Balloon 0 0 120 116 360
10 0.0933 Act/360 ARD 0 0 84 82 360
10a
- - ------------------------------------------------------------------------------------------------------------------------------------
10b
11 0.0933 Act/360 Balloon 0 0 144 138 360
12 0.0933 30/360 ARD 0 0 120 118 360
13 0.0933 Act/360 ARD 0 0 156 155 360
- - ------------------------------------------------------------------------------------------------------------------------------------
14 0.1433 Act/360 Balloon 0 0 180 177 360
15 0.1433 Act/360 Balloon 0 0 120 117 300
16 0.1683 Act/360 Balloon 0 0 120 118 300
17 0.1433 30/360 Fully Amortizing 0 0 240 238 240
18 0.1183 Act/360 Balloon 0 0 120 117 300
- - ------------------------------------------------------------------------------------------------------------------------------------
19 0.0933 30/360 Balloon 0 0 90 81 360
20 0.1183 30/360 Balloon 0 0 84 83 360
21 0.0933 Act/360 Balloon 0 0 60 58 360
22 0.0933 Act/360 Balloon 0 0 120 116 360
23 0.1183 30/360 Balloon 0 0 84 83 360
- - ------------------------------------------------------------------------------------------------------------------------------------
24 0.1683 30/360 Balloon 0 0 180 172 300
25 0.1433 Act/360 ARD 0 0 120 119 360
25a
25b
- - ------------------------------------------------------------------------------------------------------------------------------------
25c
25d
26 0.1133 Act/360 ARD 0 0 120 118 360
27 0.1433 Act/360 Balloon 0 0 180 179 360
- - ------------------------------------------------------------------------------------------------------------------------------------
28 0.1533 Act/360 Balloon 0 0 120 118 360
29 0.0933 30/360 Fully Amortizing 0 0 300 298 300
29a
29b
- - ------------------------------------------------------------------------------------------------------------------------------------
29c
29d
29e
30 0.0933 30/360 Balloon 0 0 120 111 360
- - ------------------------------------------------------------------------------------------------------------------------------------
31 0.1433 Act/360 ARD 0 0 180 179 360
32 0.1433 Act/360 ARD 0 0 180 179 300
33 0.1183 30/360 Balloon 0 0 84 83 360
34 0.1433 Act/360 ARD 0 0 180 178 360
35 0.0933 30/360 Fully Amortizing 0 0 240 237 240
- - ------------------------------------------------------------------------------------------------------------------------------------
36 0.1533 Act/360 ARD 0 0 120 119 360
37 0.0933 Act/360 Balloon 0 0 120 117 360
38 0.1433 30/360 Fully Amortizing 0 0 360 360 360
39 0.0933 Act/360 Balloon 0 0 120 119 360
40 0.1683 30/360 Balloon 0 0 300 299 360
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Remaining
Control Amortization Origination Maturity Balloon
No. Term (Mos.) Date Date Balance($) Property Type
================================================================================================================
<S> <C> <C> <C> <C> <C>
1 359 12/9/97 1/1/03 59,583,677 Retail - Anchored
2 359 11/20/97 1/1/13 32,410,801 Retail - Anchored
3 359 12/11/97 1/1/08 29,089,679 Multifamily - Conventional
4 296 9/12/97 10/1/12 20,785,270 Office
- - ----------------------------------------------------------------------------------------------------------------
4a 8,102,957 Office
4b 3,487,304 Office
4c 3,124,388 Office
4d 2,589,911 Office
4e 1,920,163 Office
- - ----------------------------------------------------------------------------------------------------------------
4f 1,560,547 Office
5 353 6/10/97 7/1/07 20,408,753 Retail - Anchored
6 298 11/26/97 12/1/07 16,496,955 Hotel - Full Service
7 359 12/11/97 1/1/08 17,605,015 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
8 298 11/21/97 12/1/07 16,251,492 Hotel - Full Service
9 356 9/16/97 10/1/07 17,432,691 Retail - Anchored
10 358 11/25/97 12/1/04 17,709,649 Retail - Anchored
10a 16,778,724 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
10b 930,924 Retail - Anchored
11 354 7/3/97 8/1/09 16,376,835 Retail - Anchored
12 358 11/24/97 12/1/07 16,017,925 Office
13 359 12/31/97 1/1/11 15,010,944 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
14 357 10/3/97 11/1/12 14,430,189 Office
15 297 10/31/97 11/1/07 14,584,828 Hotel - Limited Service
16 298 11/25/97 12/1/07 14,485,411 Retail - Anchored
17 238 11/16/97 12/1/17 - Industrial/Warehouse
18 297 10/21/97 11/1/07 13,437,458 Hotel - Full Service
- - ----------------------------------------------------------------------------------------------------------------
19 351 4/30/97 11/1/04 15,099,639 Retail - Anchored
20 359 12/8/97 1/1/05 14,670,165 Multifamily - Conventional
21 358 11/10/97 12/1/02 15,190,142 Multifamily - Conventional
22 356 7/30/97 10/1/07 13,493,463 Multifamily - Conventional
23 359 12/8/97 1/1/05 13,508,397 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
24 292 5/22/97 6/1/12 9,856,867 Retail - Anchored
25 359 11/25/97 1/1/08 12,848,885 Industrial/Warehouse
25a 5,294,871 Industrial/Warehouse
25b 847,181 Industrial/Warehouse
- - ----------------------------------------------------------------------------------------------------------------
25c 2,329,740 Office
25d 4,377,094 Industrial/Warehouse
26 358 11/13/97 12/1/07 12,433,221 Multifamily - Conventional
27 359 12/10/97 1/1/13 10,992,295 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
28 358 11/11/97 12/1/07 12,374,222 Retail - Anchored
29 298 11/25/97 12/1/22 - Multifamily - Conventional
29a Multifamily - Conventional
29b Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
29c Multifamily - Conventional
29d Multifamily - Conventional
29e Multifamily - Conventional
30 351 4/7/97 5/1/07 11,878,215 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
31 359 12/31/97 1/1/13 10,054,331 Retail - Anchored
32 299 12/23/97 1/1/13 8,397,268 Hotel - Limited Service
33 359 12/8/97 1/1/05 11,722,464 Multifamily - Conventional
34 358 11/17/97 12/1/12 9,938,368 Retail - Anchored
35 237 10/19/97 11/1/17 - Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
36 359 12/18/97 1/1/08 10,815,400 Retail - Anchored
37 357 10/10/97 11/1/07 10,919,809 Retail - Anchored
38 360 1/7/97 2/1/28 - Retail - Anchored
39 359 12/9/97 1/1/08 10,563,008 Retail - Anchored
40 359 12/11/97 1/1/23 4,218,414 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Annual
Control Debt Net Appraised
No. Prepayment Provisions Service($) Cash Flow($) DSCR(x) Value($)
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
1 L(2.75),YM1%(2),O(.25) or DEF 5,285,255 7,181,459 1.36 89,000,000
2 L(10),YM1%(4.5),O(.5) or DEF 3,421,093 4,164,314 1.22 57,000,000
3 L(4),YM1%(5.75),O(.25) or DEF 2,701,596 3,449,564 1.28 42,500,000
4 L(10),YM1%(4.5),O(.5) or DEF 2,870,049 3,644,497 1.27 40,100,000
- - ------------------------------------------------------------------------------------------------------------------------------
4a 15,700,000
4b 6,700,000
4c 6,000,000
4d 5,000,000
4e 3,700,000
- - ------------------------------------------------------------------------------------------------------------------------------
4f 3,000,000
5 L(4),YM1%(5.5),O(.5) or DEF 2,040,708 2,644,942 1.30 30,500,000
6 L(4),YM1%(5.5),O(.5) or DEF 1,786,817 2,604,489 1.46 27,500,000
7 L(3),YM1%(6.75),O(.25) or DEF 1,656,803 2,075,303 1.25 25,500,000
- - ------------------------------------------------------------------------------------------------------------------------------
8 L(4),YM1%(5.5),O(.5) or DEF 1,776,702 2,639,898 1.49 25,800,000
9 3(3),2(3),1(3),O(1) 1,715,378 2,110,346 1.23 26,000,000
10 L(4),YM1%(2.5),O(.5) or DEF 1,532,357 1,968,125 1.28 24,065,000
10a 22,800,000
- - ------------------------------------------------------------------------------------------------------------------------------
10b 1,265,000
11 L(7),YM1%(4.5),O(.5) or DEF 1,679,345 3,019,179 1.80 37,500,000
12 L(4),YM1%(5.75),O(.25) or DEF 1,535,569 1,967,659 1.28 24,400,000
13 L(3),YM1%(9.5),O(.5) or DEF 1,498,206 1,787,456 1.19 22,900,000
- - ------------------------------------------------------------------------------------------------------------------------------
14 L(6),YM1%(8.5),O(.5) or DEF 1,564,146 1,973,523 1.26 25,000,000
15 L(4),3(2),2(2),1(1.5),O(.5) 1,586,399 2,508,183 1.58 24,000,000
16 L(4),YM1%(5.5),O(.5) 1,588,224 2,014,210 1.27 24,500,000
17 L(10),YM1%(9.5),O(.5) or DEF 1,720,747 2,248,413 1.31 29,650,000
18 L(4),YM1%(5.5),O(.5) or DEF 1,476,106 2,071,620 1.40 24,500,000
- - ------------------------------------------------------------------------------------------------------------------------------
19 L(4.417),YM1%(2.583),O(.5) or DEF 1,557,803 1,931,229 1.24 23,300,000
20 L(4),YM1%(2.5),O(.5) 1,282,770 1,808,257 1.41 20,345,000
21 3(1),2(1),1(2.5),O(.5) 1,303,273 1,650,848 1.27 20,000,000
22 L(4),YM1%(5.5),O(.5) or DEF 1,300,439 1,596,479 1.23 19,000,000
23 L(4),YM1%(2.5),O(.5) 1,181,185 1,603,334 1.36 19,270,000
- - ------------------------------------------------------------------------------------------------------------------------------
24 L(10),1(4),O(1) 1,501,554 2,002,312 1.33 21,500,000
25 L(4),YM1%(5.5),O(.5) or DEF 1,218,080 1,667,331 1.37 18,300,000
25a 7,600,000
25b 1,200,000
- - ------------------------------------------------------------------------------------------------------------------------------
25c 3,300,000
25d 6,200,000
26 L(4),YM1%(5.5),O(.5) or DEF 1,149,400 1,379,280 1.20 18,100,000
27 L(8),YM1%(6.5),O(.5) 1,174,971 1,531,506 1.30 18,500,000
- - ------------------------------------------------------------------------------------------------------------------------------
28 L(6),YM1%(3.5),O(.5) 1,162,640 1,651,418 1.42 18,750,000
29 L(15),YM1%(9.75),O(.25) or DEF 1,222,925 1,558,644 1.27 17,250,000
29a 5,400,000
29b 3,500,000
- - ------------------------------------------------------------------------------------------------------------------------------
29c 3,100,000
29d 2,600,000
29e 2,650,000
30 L(4),YM1%(5.5),O(.5) or DEF 1,239,149 1,574,101 1.27 18,700,000
- - ------------------------------------------------------------------------------------------------------------------------------
31 L(7),YM1%(7.5),O(.5) or DEF 1,064,195 1,328,864 1.25 16,800,000
32 L(7),YM1%(7.5),O(.5) or DEF 1,143,709 1,703,550 1.49 18,600,000
33 L(4),YM1%(2.5),O(.5) 1,025,021 1,265,164 1.23 16,285,000
34 L(9),YM1%(5.75),O(.25) or DEF 1,076,953 1,361,230 1.26 15,750,000
35 L(7),YM1%(3),< YM8%(1),< YM7%(1),< YM6%(1),< YM5%(2), 1,240,342 1,688,867 1.36 18,500,000
< YM4%(1),< YM3%(1),< YM2%(1),< YM1%(1.5),O(.5) or DEF
- - ------------------------------------------------------------------------------------------------------------------------------
36 L(4),YM1%(5.5),O(.5) or DEF 1,002,956 1,305,746 1.30 16,350,000
37 L(4),YM1%(5.5),O(.5) or DEF 1,053,348 1,362,784 1.29 16,400,000
38 L(12),DEF(2),O(16) 1,019,718 1,232,373 1.21 15,000,000
39 L(3),YM1%(6.5),O(.5) or DEF 994,082 1,334,993 1.34 16,000,000
40 L(9),YM1%(9),5(1),4(1),3(1),2(1),1(2.5),O(.5) or DEF 1,016,748 1,294,940 1.27 16,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled Loan per
Control Appraisal Date Maturity Year Year Bed, Pad Bed, Pad Occupancy
No. Year LTV (%) Date LTV (%) Built Renovated or Room or Room ($) Percentage (%)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1997 70.2 66.9 1956 1991 866,424 Sq Foot 72.14 88.3
2 1997 73.6 56.9 1996-1997 N/A 576,639 Sq Foot 72.84 100.0
3 1997 78.1 68.4 1972-74 1994-97 770 Unit 43,116.88 95.5
4 1997 78.3 51.8 1991-93 N/A 413,965 Sq Foot 76.09 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
4a 1997 1991 N/A 158,600 Sq Foot
4b 1997 1992 N/A 65,000 Sq Foot
4c 1997 1992-93 N/A 60,000 Sq Foot
4d 1997 1993 N/A 54,365 Sq Foot
4e 1997 1992 N/A 40,900 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
4f 1997 1991 N/A 35,100 Sq Foot
5 1997 74.2 66.9 1990 N/A 223,011 Sq Foot 101.79 100.0
6 1997 74.0 60.0 1973 1988 249 Room 81,927.71 NAV
7 1997 78.4 69.0 1988-91 N/A 390,794 Sq Foot 51.18 93.5
- - ----------------------------------------------------------------------------------------------------------------------------------
8 1997 77.4 63.0 1973 N/A 500 Room 40,000.00 NAV
9 1997 74.9 67.0 1988 N/A 231,686 Sq Foot 84.17 98.0
10 1997 79.9 73.6 1997 N/A 175,661 Sq Foot 109.60 95.0
10a 1997 1997 N/A 175,661 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
10b 1997 1997 N/A 175,661 Sq Foot
11 1997 50.5 43.7 1997 N/A 336,297 Sq Foot 56.50 99.0
12 1997 75.7 65.6 1985 N/A 155,099 Sq Foot 119.28 100.0
13 1997 80.0 65.5 1968-72 N/A 699 Unit 26,208.87 95.0
- - ----------------------------------------------------------------------------------------------------------------------------------
14 1997 73.1 57.7 1920 1980's 255,049 Sq Foot 71.75 86.6
15 1997 74.8 60.8 1986 N/A 241 Room 74,688.80 NAV
16 1997 72.5 59.1 1989-90 N/A 291,330 Sq Foot 61.10 95.5
17 1997 59.8 0.0 1985-91 N/A 586,960 Sq Foot 30.33 97.1
18 1997 67.2 54.8 1986 1994 236 Room 69,915.25 NAV
- - ----------------------------------------------------------------------------------------------------------------------------------
19 1997 69.4 64.8 1989 N/A 234,157 Sq Foot 69.40 89.7
20 1997 79.1 72.1 1990 N/A 360 Unit 44,722.22 95.0
21 1997 79.9 76.0 1995 N/A 231 Unit 69,264.07 95.2
22 1997 79.8 71.0 1974 1992 362 Unit 41,988.95 95.9
23 1997 76.9 70.1 1995 N/A 336 Unit 44,122.02 91.4
- - ----------------------------------------------------------------------------------------------------------------------------------
24 1996 68.6 45.8 1995 N/A 144,022 Sq Foot 103.11 100.0
25 1997 79.5 70.2 1980,85,88 N/A 358,945 Sq Foot 40.56 100.0
25a 1997 1988 N/A 157,266 Sq Foot
25b 1997 1980 N/A 24,000 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
25c 1997 1985 N/A 45,679 Sq Foot
25d 1997 1988 N/A 132,000 Sq Foot
26 1997 78.4 68.7 1996 N/A 248 Unit 57,298.39 97.6
27 1997 76.2 59.4 1987-90 N/A 153,559 Sq Foot 91.82 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
28 1997 74.9 66.0 1991 N/A 163,410 Sq Foot 86.06 96.0
29 1997 79.4 0.0 1969,72,73 1990 538 Unit 25,520.45 95.4
29a 1997 1969 1990 152 Unit
29b 1997 1972 N/A 88 Unit
- - ----------------------------------------------------------------------------------------------------------------------------------
29c 1997 1972 N/A 120 Unit
29d 1997 1973 N/A 92 Unit
29e 1997 1972 N/A 86 Unit
30 1997 71.3 63.5 1986 N/A 191,776 Sq Foot 69.87 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
31 1997 77.3 59.8 1982 N/A 202,051 Sq Foot 64.34 97.8
32 1997 69.8 45.1 1994 N/A 175 Room 74,285.71 NAV
33 1997 78.9 72.0 1989 N/A 280 Unit 45,946.43 90.4
34 1997 79.9 63.1 1997 N/A 164,448 Sq Foot 76.62 98.1
35 1997 67.8 0.0 1997 N/A 83,500 Sq Foot 150.90 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
36 1997 75.5 66.1 1985-86 N/A 175,934 Sq Foot 70.20 83.3
37 1997 74.9 66.6 1989 1995 214,991 Sq Foot 57.21 92.4
38 1997 80.0 0.0 1995 N/A 92,492 Sq Foot 129.74 100.0
39 1997 75.0 66.0 1973 1990's 133,067 Sq Foot 90.18 100.0
40 1997 75.0 26.4 1969 N/A 638 Unit 18,808.78 87.2
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
---------------------------------------------------
Tenant
Control Rent Roll Underwriting Area Leased Lease Control
No. Date Reserves ($) per Tenant Name (Sq. Ft.) Exp Date No.
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 11/14/97 0.15 Sq Foot JC Penny 151,629 8/31/06 1
2 1/09/98 0.15 Sq Foot Lowes Home Improvement 130,497 11/30/16 2
3 12/02/97 233.39 Unit 3
4 12/31/97 0.16 Sq Foot 4
- - ------------------------------------------------------------------------------------------------------------------------
4a 4a
4b 4b
4c 4c
4d 4d
4e 4e
- - ------------------------------------------------------------------------------------------------------------------------
4f 4f
5 5/06/97 0.13 Sq Foot Caldor 139,770 1/31/16 5
6 NAV 4% of Gross Income 6
7 12/03/97 0.17 Sq Foot Homebase 115,055 8/31/10 7
- - ------------------------------------------------------------------------------------------------------------------------
8 NAV 4% of Gross Income 8
9 7/01/97 0.10 Sq Foot HomeBase 103,689 4/30/08 9
10 10/31/97 0.09 Sq Foot Bed Bath & Beyond 35,009 1/31/08 10
10a 10a
- - ------------------------------------------------------------------------------------------------------------------------
10b 10b
11 7/01/97 0.10 Sq Foot Service Merchandise 50,000 3/31/17 11
12 10/07/97 0.15 Sq Foot 12
13 11/07/97 225.00 Unit 13
- - ------------------------------------------------------------------------------------------------------------------------
14 10/01/97 0.10 Sq Foot 14
15 NAV 4% of Gross Income 15
16 9/15/97 0.10 Sq Foot Burlington Coat Factory 73,173 1/31/99 16
17 1/16/98 0.19 Sq Foot 17
18 NAV 4% of Gross Income 18
- - ------------------------------------------------------------------------------------------------------------------------
19 4/23/97 0.15 Sq Foot Acme 57,733 10/1/09 19
20 9/20/97 274.90 Unit 20
21 10/31/97 150.00 Unit 21
22 8/27/97 266.00 Unit 22
23 9/20/97 240.84 Unit 23
- - ------------------------------------------------------------------------------------------------------------------------
24 8/21/97 0.10 Sq Foot Sports Authority 42,752 11/30/15 24
25 6/30/97 0.11 Sq Foot 25
25a 25a
25b 25b
- - ------------------------------------------------------------------------------------------------------------------------
25c 25c
25d 25d
26 10/13/97 163.00 Unit 26
27 10/01/97 0.15 Sq Foot Pace/Wal-Mart 102,516 7/31/06 27
- - ------------------------------------------------------------------------------------------------------------------------
28 9/16/97 0.17 Sq Foot Service Merchandise 41,667 2/28/06 28
29 10/21/97 263.44 Unit 29
29a 29a
29b 29b
- - ------------------------------------------------------------------------------------------------------------------------
29c 29c
29d 29d
29e 29e
30 3/03/97 0.25 Sq Foot Ollies Bargain Outlet 36,416 1/31/05 30
- - ------------------------------------------------------------------------------------------------------------------------
31 12/01/97 0.15 Sq Foot Best Buy 45,051 10/31/09 31
32 NAV 4% of Gross Income 32
33 9/20/97 337.77 Unit 33
34 11/14/97 0.10 Sq Foot Kohl's Department Store 86,821 1/31/19 34
35 9/18/97 0.18 Sq Foot Barnes & Noble 27,000 6/30/12 35
- - ------------------------------------------------------------------------------------------------------------------------
36 12/15/97 0.21 Sq Foot General Cinema 39,474 1/31/16 36
37 10/01/97 0.09 Sq Foot Hechinger 60,567 7/31/09 37
38 11/25/97 0.12 Sq Foot Giant Food Stores 56,600 7/31/02 38
39 10/20/97 0.10 Sq Foot Borders 30,000 1/31/16 39
40 9/28/97 160.33 Unit 40
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Address City
==============================================================================================================================
<S> <C> <C> <C>
41 Mitchell Plaza 5750 Old Orchard Road Skokie
42 Garrett Square Apartments 4216 and 4230 Garrett Road Durham
43 The Sony Music Building 605 Lincoln Road Miami
44 S.S. Pierce Building 1330 Beacon Street Brookline
45 Northcourt Commons 634 to 784 Highway 10 Blaine
- - ------------------------------------------------------------------------------------------------------------------------------
46 Comdisco 5851 Westside Avenue North Bergen
47 The Oak Run Apartments 5801 Preston Oaks Dallas
48 Hampton Inn - Englewood & Dayton (Roll-up) Various Various
48a Hampton Inn - Dayton 8099 Old Yankee Street Dayton
- - ------------------------------------------------------------------------------------------------------------------------------
48b Hampton Inn - Englewood 20 Rockridge Road Englewood
49 Central Place Phase I & II (Roll-up) 336-340 E. Baseline & 7227 South Central Av Phoenix
49a Central Place - Phase II 336-340 East Baseline Road Phoenix
49b Central Place - Phase I 7227 South Central Avenue Phoenix
- - ------------------------------------------------------------------------------------------------------------------------------
50 Delray Crossings Shopping Center 1040-1350 Linton Blvd. Delray Beach
51 Silver Pines 801 North Loara Street Anaheim
52 Sycamore Square (Phases I & II) 3308 Bragg Boulevard Fayetteville
53 One Century Tower 265 Church Street New Haven
- - ------------------------------------------------------------------------------------------------------------------------------
54 Flamingo Bay Club Apartments 5625 West Flamingo Road Las Vegas
55 University Business Center 1040-1194 University Avenue Rochester
56 Whitehall Boca Raton 7300 Del Prado Circle South Boca Raton
57 Shadowridge Meadows Apartments 1515 South Melrose Drive Vista
58 Coral Springs Financial Plaza 3300 University Drive Coral Springs
- - ------------------------------------------------------------------------------------------------------------------------------
59 Newark Shopping Center 230 East Main Street Newark
60 103-00 Foster Ave. 103-00 Foster Avenue Brooklyn
61 Mercado at Scottsdale Ranch SEC of Mt. View Rd & Via Linda Way Scottsdale
62 Nicholson Research Center 5510-5516 Nicholson Lane Kensington
63 The Plaza Rios Shopping Center 8602-8698 Skillman Street Dallas
- - ------------------------------------------------------------------------------------------------------------------------------
64 WWDC Industrial Park Brookville Rd., Manard Dr., and Pittman Dr. Silver Spring
65 Faircrest Apartments 10250 Beach Boulevard Stanton
66 Garden Walk Apartments 934 Garden Walk Blvd. Atlanta
67 Shepherd Plaza Shopping Center 2100 Richmond Avenue Houston
68 Players Club Apartments 1526 Charles Boulevard Greenville
- - ------------------------------------------------------------------------------------------------------------------------------
69 Ralph's Supermarket 4311 Lincoln Blvd. Marina Del Rey
70 41 State Street 41 State Street Albany
71 Laguna Village Shopping Center Southeast Corner of Ray & Kyrene Roads Chandler
72 Hoover Commons Shopping Center 1615 New Montgomery Highway Hoover
73 Ashley Woods Apartments 2300 Walden Glen Circle Cincinnati
- - ------------------------------------------------------------------------------------------------------------------------------
74 Greenbriar South Shopping Center SWC Greenbriar Parkway & Volvo Parkway Chesapeake
75 Springs of Napa 3460 Villa Lane Napa
76 Woodtrail Apartments 9001 Wurzbach Road San Antonio
77 The Park Pineway Shopping Center East Side of Hwy. 260 at Pineway Plaza Dr. Show Low
78 Stoneridge Apartment Project 3800 Southwest 34th Street Gainesville
- - ------------------------------------------------------------------------------------------------------------------------------
79 The Shoppes at Fort Wayne NEC of Coldwater Rd & Noble Drive Fort Wayne
80 Fred Meyer Superstore 6850 Lombard Street Portland
81 Uptown Collection Shopping Center 5365-5395 Westheimer Road Houston
82 BJ's Wholesale Club Building 10425 Marlin Road Culter Ridge
83 Park Inn International 11410 Rockville Pike Rockville
- - ------------------------------------------------------------------------------------------------------------------------------
84 Harte Haven Shopping Center South Side of State Highway 37 Massena
85 Northgate Shopping Center 500 U.S. Highway 77 Waxahachie
86 Parkwood Square Shopping Center 3000-3220 Custer Road Plano
87 Gateway Plaza Shopping Center 1000-1080 South Sable Boulevard Aurora
88 The Paragon Building 33325 8th Avenue South Federal Way
- - ------------------------------------------------------------------------------------------------------------------------------
89 Jefferson Square Shopping Center Olive Street at 28th Street Pine Bluff
90 11000 & 13000 Midlantic Drive 11000 & 13000 Midlantic Drive Mt. Laurel
91 Clearwater Village Shopping Center 4619-4733 East 82nd Street Indianapolis
92 Woodbrook Apartments 2529 Woodbrook Lane Monroe
93 90 State Street 90 State Street Albany
- - ------------------------------------------------------------------------------------------------------------------------------
94 Ford Centre 420 North Fifth Street Minneapolis
95 Northwood Plaza 2900 West Anderson Lane Austin
96 Dogwood Station Shopping Center Rolling & Dogwood Roads Cantonsville
97 Los Mares Theater Plaza 641 Camino De Los Mares San Clemente
98 Clearwater Shoppes Shopping Center 3841-3981 East 82nd Street Indianapolis
- - ------------------------------------------------------------------------------------------------------------------------------
99 Lindenwood Shopping Center 85-17 153rd Avenue Howard Beach
100 Westvale Plaza 2102 West Genesee Street Syracuse
101 Valley Ridge Corporate Center 4800 S. 188th St. SeaTac
102 Hoffmann Manor 274 West Broadway Long Beach
103 Kendall Plaza NEC of East Cumberland Road and Marmont Dr. Bluefield
- - ------------------------------------------------------------------------------------------------------------------------------
104 Roberts Field Shopping Center E/s MD Route 30 Hampstead
105 Piedmont Corporate Center (Motorola) 9801 South 51st Street Phoenix
106 Towne Parc Apartments 2930 SW 23rd Terrace Gainesville
107 Royalton on the Green 17300 - 17400 N.W. 68th Ave. Miami
108 Westgate Plaza 3724-58 La Sierra Av & 11130-11170 Magnolia Riverside
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Crossed % of Aggregate Cumulative
Control Zip Collateralized Original Cut-off Date Cut-off Date % of Initial Mortgage
No. State Code Groups Balance ($) Balance ($) Balance Pool Balance Rate (%)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
41 IL 60077 12,000,000 11,986,634 0.68% 42.13% 7.3800
42 NC 27707 12,000,000 11,986,547 0.68% 42.81% 7.3600
43 FL 33139 11,500,000 11,488,384 0.65% 43.46% 7.1350
44 MA 02146 11,500,000 11,477,744 0.65% 44.10% 7.2800
45 MN 55434 11,440,000 11,433,232 0.64% 44.75% 7.1800
- - ------------------------------------------------------------------------------------------------------------------------------------
46 NJ 07647 11,300,000 11,288,060 0.64% 45.38% 7.5410
47 TX 75240 10,600,000 10,567,341 0.60% 45.98% 7.3600
48 OH Various 10,500,000 10,480,745 0.59% 46.57% 7.3750
----------------------------------------------
48a OH 45458
- - ------------------------------------------------------------------------------------------------------------------------------------
48b OH 45322
49 AZ 85040 Group F 10,400,000 10,389,298 0.59% 47.15% 7.6200
----------------------------------------------
49a AZ 85040 Group F 4,800,000 4,795,061
49b AZ 85040 Group F 5,600,000 5,594,237
- - ------------------------------------------------------------------------------------------------------------------------------------
50 FL 33444 10,312,500 10,300,902 0.58% 47.73% 7.3500
51 CA 92801 10,150,000 10,144,219 0.57% 48.30% 7.3000
52 NC 28303 10,000,000 9,994,322 0.56% 48.87% 7.3100
53 CT 06510 10,000,000 9,978,054 0.56% 49.43% 7.7580
- - ------------------------------------------------------------------------------------------------------------------------------------
54 NV 89103 10,000,000 9,976,534 0.56% 49.99% 7.5300
55 NY 14607 10,000,000 9,938,303 0.56% 50.55% 8.0200
56 FL 33433 9,750,000 9,740,102 0.55% 51.10% 7.6600
57 CA 92083 9,750,000 9,732,178 0.55% 51.65% 7.4900
58 FL 33071 9,600,000 9,590,565 0.54% 52.19% 7.2600
- - ------------------------------------------------------------------------------------------------------------------------------------
59 DE 19711 9,500,000 9,483,391 0.53% 52.72% 7.6500
60 NY 11236 9,500,000 9,474,950 0.53% 53.26% 8.1200
61 AZ 85258 9,400,000 9,394,577 0.53% 53.79% 7.2600
62 MD 20895 9,400,000 9,368,860 0.53% 54.31% 8.3500
63 TX 75243 9,200,000 9,166,844 0.52% 54.83% 8.6410
- - ------------------------------------------------------------------------------------------------------------------------------------
64 MD 20910 8,900,000 8,884,568 0.50% 55.33% 7.8300
65 CA 90680 8,915,000 8,860,022 0.50% 55.83% 8.5700
66 GA 30348 8,760,000 8,750,368 0.49% 56.32% 7.4200
67 TX 77098 8,750,000 8,723,040 0.49% 56.81% 8.1200
68 NC 27858 8,700,000 8,691,241 0.49% 57.30% 7.1500
- - ------------------------------------------------------------------------------------------------------------------------------------
69 CA 90292 8,600,000 8,595,164 0.48% 57.79% 7.3400
70 NY 12207 8,475,000 8,465,651 0.48% 58.26% 7.4100
71 AZ 85224 8,100,000 8,076,727 0.45% 58.72% 8.3500
72 AL 35216 8,000,000 7,991,175 0.45% 59.17% 7.4100
73 OH 45231 8,000,000 7,987,580 0.45% 59.62% 7.2900
- - ------------------------------------------------------------------------------------------------------------------------------------
74 VA 23320 7,750,000 7,741,368 0.44% 60.06% 7.3800
75 CA 94558 7,500,000 7,481,807 0.42% 60.48% 7.1300
76 TX 78240 7,339,000 7,316,345 0.41% 60.89% 7.5500
77 AZ 85901 7,200,000 7,196,157 0.41% 61.29% 7.5000
78 FL 32608 7,200,000 7,195,767 0.41% 61.70% 7.2000
- - ------------------------------------------------------------------------------------------------------------------------------------
79 IN 46804 7,110,000 7,102,758 0.40% 62.10% 7.6500
80 OR 97203 7,000,000 6,994,419 0.39% 62.49% 7.1400
81 TX 77056 7,000,000 6,992,378 0.39% 62.89% 7.4500
82 FL 33157 6,880,000 6,872,237 0.39% 63.28% 7.3400
83 MD 20852 6,800,000 6,780,610 0.38% 63.66% 7.7900
- - ------------------------------------------------------------------------------------------------------------------------------------
84 NY 13662 6,750,000 6,746,597 0.38% 64.04% 7.6700
85 TX 75165 6,793,117 6,742,800 0.38% 64.42% 8.1500
86 TX 75075 6,600,000 6,596,217 0.37% 64.79% 7.2800
87 CO 80012 6,600,000 6,569,962 0.37% 65.16% 8.9300
88 WA 98003 6,525,000 6,513,367 0.37% 65.53% 7.5800
- - ------------------------------------------------------------------------------------------------------------------------------------
89 AR 71603 6,500,000 6,481,655 0.37% 65.89% 7.8400
90 NJ 08054 6,500,000 6,480,775 0.37% 66.26% 7.6100
91 IN 46250 6,400,000 6,393,258 0.36% 66.62% 7.5500
92 NC 28110 6,400,000 6,374,016 0.36% 66.98% 8.2800
93 NY 12207 6,350,000 6,308,373 0.36% 67.33% 8.8400
- - ------------------------------------------------------------------------------------------------------------------------------------
94 MN 55401 6,250,000 6,226,970 0.35% 67.68% 8.5200
95 TX 78757 6,200,000 6,168,738 0.35% 68.03% 9.0230
96 MD 21244 6,150,000 6,129,902 0.35% 68.37% 7.9200
97 CA 92672 6,150,000 6,128,098 0.35% 68.72% 8.0200
98 IN 46250 6,030,000 6,026,510 0.34% 69.06% 7.2500
- - ------------------------------------------------------------------------------------------------------------------------------------
99 NY 11414 6,000,000 6,000,000 0.34% 69.40% 7.4200
100 NY 13219 6,000,000 6,000,000 0.34% 69.73% 7.2800
101 WA 98188 6,000,000 5,996,495 0.34% 70.07% 7.2200
102 NY 11561 6,000,000 5,994,623 0.34% 70.41% 7.6700
103 WV 24701 6,000,000 5,993,427 0.34% 70.75% 7.7700
- - ------------------------------------------------------------------------------------------------------------------------------------
104 MD 21074 6,000,000 5,981,344 0.34% 71.08% 7.3600
105 AZ 85044 5,900,000 5,887,502 0.33% 71.42% 7.7800
106 FL 32608 5,920,000 5,874,820 0.33% 71.75% 8.0000
107 FL 33015 5,800,000 5,789,311 0.33% 72.07% 7.4600
108 CA 92505 5,700,000 5,694,370 0.32% 72.39% 7.7400
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining
Interest Original Remaining Term to Term to Original
Control Administrative Accrual Amortization Interest-Only Interest-Only Maturity Maturity Amortization
No. Cost Rate (%) Method Type Period (Mos.) Period (Mos.) (Mos.) (Mos.) Term (Mos.)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
41 0.0933 Act/360 ARD 0 0 120 118 360
42 0.0933 Act/360 Balloon 0 0 120 118 360
43 0.0933 Act/360 ARD 0 0 120 119 300
44 0.0933 Act/360 Balloon 0 0 84 81 360
45 0.1183 Act/360 ARD 0 0 120 119 360
- - ------------------------------------------------------------------------------------------------------------------------------------
46 0.0933 Act/360 ARD 0 0 120 118 360
47 0.0933 30/360 Balloon 0 0 84 80 360
48 0.1433 30/360 Fully Amortizing 0 0 240 239 240
48a
- - ------------------------------------------------------------------------------------------------------------------------------------
48b
49 0.1683 Act/360 Balloon 0 0 120 118 360
49a
49b
- - ------------------------------------------------------------------------------------------------------------------------------------
50 0.1533 Act/360 Balloon 0 0 120 118 360
51 0.1683 Act/360 ARD 0 0 120 119 360
52 0.1433 Act/360 ARD 0 0 180 179 360
53 0.0933 Act/360 Balloon 0 0 120 116 360
- - ------------------------------------------------------------------------------------------------------------------------------------
54 0.0933 Act/360 Balloon 0 0 120 116 360
55 0.1433 Act/360 Balloon 0 0 120 116 240
56 0.0933 Act/360 Balloon 0 0 120 118 360
57 0.1683 Act/360 Balloon 0 0 120 117 360
58 0.1533 Act/360 ARD 0 0 120 119 300
- - ------------------------------------------------------------------------------------------------------------------------------------
59 0.1533 Act/360 Balloon 0 0 120 117 360
60 0.0933 Act/360 Balloon 0 0 120 115 360
61 0.1683 Act/360 ARD 0 0 120 119 360
62 0.1433 Act/360 Balloon 0 0 120 116 300
63 0.0933 Act/360 Balloon 0 0 120 112 360
- - ------------------------------------------------------------------------------------------------------------------------------------
64 0.1433 30/360 Fully Amortizing 0 0 240 239 240
65 0.0933 30/360 Balloon 0 0 120 110 360
66 0.0933 Act/360 Balloon 0 0 120 118 360
67 0.0933 Act/360 Balloon 0 0 120 114 360
68 0.0933 Act/360 Fully Amortizing 0 0 300 299 300
- - ------------------------------------------------------------------------------------------------------------------------------------
69 0.0933 Act/360 Balloon 0 0 120 119 360
70 0.1433 Act/360 Balloon 0 0 120 118 360
71 0.1683 Act/360 Balloon 0 0 120 114 360
72 0.1533 Act/360 ARD 0 0 120 118 360
73 0.0933 30/360 Balloon 0 0 84 82 360
- - ------------------------------------------------------------------------------------------------------------------------------------
74 0.1533 Act/360 Balloon 0 0 180 178 360
75 0.1683 30/360 Balloon 0 0 120 118 300
76 0.0933 Act/360 Balloon 0 0 120 115 360
77 0.1683 Act/360 Balloon 0 0 120 119 360
78 0.1433 Act/360 ARD 0 0 120 119 360
- - ------------------------------------------------------------------------------------------------------------------------------------
79 0.1533 Act/360 Balloon 0 0 120 118 360
80 0.0933 30/360 Balloon 0 0 120 119 360
81 0.0933 Act/360 Balloon 0 0 120 118 360
82 0.1683 Act/360 ARD 0 0 180 178 360
83 0.0933 Act/360 Balloon 0 0 120 117 300
- - ------------------------------------------------------------------------------------------------------------------------------------
84 0.1433 Act/360 ARD 0 0 120 119 360
85 0.0933 30/360 Balloon 0 0 84 73 360
86 0.0933 Act/360 ARD 0 0 120 119 360
87 0.1683 30/360 Balloon 0 0 120 112 360
88 0.0933 Act/360 Balloon 0 0 120 117 360
- - ------------------------------------------------------------------------------------------------------------------------------------
89 0.1683 Act/360 Balloon 0 0 120 117 300
90 0.0933 Act/360 Balloon 0 0 84 81 300
91 0.1533 Act/360 ARD 0 0 180 178 360
92 0.1733 30/360 Balloon 0 0 240 236 300
93 0.1683 30/360 Balloon 0 0 120 113 300
- - ------------------------------------------------------------------------------------------------------------------------------------
94 0.1683 30/360 Balloon 0 0 120 114 360
95 0.0933 30/360 Balloon 0 0 120 111 360
96 0.1433 Act/360 Balloon 0 0 120 114 360
97 0.0933 Act/360 Balloon 0 0 121 117 300
98 0.1433 Act/360 ARD 0 0 180 179 360
- - ------------------------------------------------------------------------------------------------------------------------------------
99 0.0933 Act/360 Balloon 0 0 120 120 360
100 0.0933 Act/360 Fully Amortizing 0 0 240 240 240
101 0.0933 Act/360 Balloon 0 0 120 119 360
102 0.0933 Act/360 Balloon 0 0 180 179 300
103 0.0933 Act/360 ARD 0 0 120 119 276
- - ------------------------------------------------------------------------------------------------------------------------------------
104 0.1533 Act/360 Balloon 0 0 180 177 300
105 0.1683 30/360 Balloon 0 0 119 116 360
106 0.0933 30/360 Balloon 0 0 84 73 360
107 0.0933 Act/360 Balloon 0 0 120 117 360
108 0.1683 Act/360 Balloon 0 0 120 118 360
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Remaining
Control Amortization Origination Maturity Balloon
No. Term (Mos.) Date Date Balance($) Property Type
================================================================================================================
<S> <C> <C> <C> <C> <C>
41 358 12/1/97 12/1/07 10,567,407 Office
42 358 11/24/97 12/1/07 10,562,027 Multifamily - Section 42
43 299 12/19/97 1/1/08 9,234,456 Office
44 357 10/30/97 11/1/04 10,633,657 Retail - Unanchored
45 359 12/1/97 1/1/08 10,021,076 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
46 358 11/17/97 12/1/07 9,991,445 Office
47 356 9/26/97 10/1/04 9,714,497 Multifamily - Conventional
48 239 12/23/97 1/1/18 - Hotel - Limited Service
48a Hotel - Limited Service
- - ----------------------------------------------------------------------------------------------------------------
48b Hotel - Limited Service
49 358 11/13/97 12/1/07 9,213,767 Retail - Anchored
49a 4,252,508 Retail - Anchored
49b 4,961,259 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
50 358 11/11/97 12/1/07 9,074,429 Retail - Anchored
51 359 12/10/97 1/1/08 8,918,608 Multifamily - Conventional
52 359 12/22/97 1/1/13 7,754,760 Retail - Anchored
53 356 9/30/97 10/1/07 8,889,909 Office
- - ----------------------------------------------------------------------------------------------------------------
54 356 9/17/97 10/1/07 8,839,914 Multifamily - Conventional
55 236 10/1/97 10/1/07 7,056,303 Industrial/Warehouse
56 358 10/27/97 12/1/07 8,646,457 Health Care - Assisted Living/Skilled Nursing
57 357 10/27/97 11/1/07 8,608,835 Multifamily - Conventional
58 299 12/2/97 1/1/08 7,738,318 Office
- - ----------------------------------------------------------------------------------------------------------------
59 357 10/8/97 11/1/07 8,421,561 Retail - Unanchored
60 355 8/18/97 9/1/07 8,517,771 Industrial/Warehouse
61 359 12/29/97 1/1/08 8,251,126 Retail - Anchored
62 296 9/25/97 10/1/07 7,824,191 Office
63 352 5/14/97 6/1/07 8,349,862 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
64 239 12/10/97 1/1/18 - Industrial/Warehouse
65 350 3/19/97 4/1/07 7,909,510 Multifamily - Conventional
66 358 11/6/97 12/1/07 7,722,040 Multifamily - Conventional
67 354 7/23/97 8/1/07 7,846,850 Retail - Unanchored
68 299 12/23/97 1/1/23 483,207 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
69 359 12/17/97 1/1/08 7,564,378 Retail - Anchored
70 358 11/25/97 12/1/07 7,468,917 Office
71 354 7/21/97 8/1/07 7,302,896 Retail - Unanchored
72 358 11/25/97 12/1/07 7,050,304 Retail - Anchored
73 358 11/24/97 12/1/04 7,324,080 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
74 358 11/12/97 12/1/12 6,030,622 Retail - Anchored
75 298 11/26/97 12/1/07 5,918,920 Health Care - Congregate Care
76 355 8/22/97 9/1/07 6,490,021 Multifamily - Conventional
77 359 12/3/97 1/1/08 6,358,632 Retail - Anchored
78 359 12/30/97 1/1/08 6,310,239 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
79 358 11/26/97 12/1/07 6,303,705 Retail - Unanchored
80 359 12/5/97 1/1/08 6,026,503 Retail - Anchored
81 358 11/14/97 12/1/07 6,175,260 Retail - Unanchored
82 358 11/19/97 12/1/12 5,344,161 Retail - Anchored
83 297 10/31/97 11/1/07 5,568,916 Hotel - Limited Service
- - ----------------------------------------------------------------------------------------------------------------
84 359 12/18/97 1/1/08 5,986,438 Retail - Anchored
85 349 2/24/97 3/1/04 6,294,654 Retail - Anchored
86 359 12/24/97 1/1/08 5,796,320 Retail - Anchored
87 352 5/9/97 6/1/07 5,894,918 Retail - Anchored
88 357 10/20/97 11/1/07 5,774,263 Office
- - ----------------------------------------------------------------------------------------------------------------
89 297 10/23/97 11/1/07 5,330,992 Retail - Anchored
90 297 10/9/97 11/1/04 5,758,517 Industrial/Warehouse
91 358 11/26/97 12/1/12 5,017,462 Retail - Anchored
92 296 9/10/97 10/1/17 2,478,566 Multifamily - Conventional
93 293 6/18/97 7/1/07 5,234,524 Office
- - ----------------------------------------------------------------------------------------------------------------
94 354 7/3/97 8/1/07 5,539,787 Office
95 351 4/9/97 5/1/07 5,546,929 Retail - Anchored
96 354 7/30/97 8/1/07 5,489,042 Retail - Anchored
97 296 9/24/97 11/1/07 5,058,812 Retail - Unanchored
98 359 12/31/97 1/1/13 4,663,663 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
99 360 1/9/98 2/1/08 5,287,328 Retail - Anchored
100 240 1/13/98 2/1/18 - Retail - Anchored
101 359 12/24/97 1/1/08 5,261,251 Office
102 299 12/12/97 1/1/13 3,928,362 Health Care - Assisted Living
103 275 12/30/97 1/1/08 4,670,812 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
104 297 10/29/97 11/1/12 3,865,912 Retail - Unanchored
105 357 9/11/97 10/1/07 5,160,934 Office
106 349 2/24/97 3/1/04 5,474,665 Multifamily - Conventional
107 357 10/20/97 11/1/07 5,117,292 Multifamily - Conventional
108 358 11/5/97 12/1/07 5,064,800 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Annual
Control Debt Net Appraised
No. Prepayment Provisions Service($) Cash Flow($) DSCR(x) Value($)
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
41 L(2),YM1%(7.5),O(.5) or DEF 995,063 1,259,716 1.27 15,900,000
42 L(4),YM1%(5.5),O(.5) 993,101 1,233,246 1.24 16,300,000
43 L(4),YM1%(5.75),O(.25) or DEF 987,272 1,268,573 1.28 16,100,000
44 L(3),YM1%(3.5),O(.5) or DEF 944,213 1,275,488 1.35 17,000,000
45 L(3),YM1%(6.5),O(.5) 929,982 1,183,120 1.27 14,300,000
- - ------------------------------------------------------------------------------------------------------------------------------
46 L(4),YM1%(5.5),O(.5) or DEF 951,945 1,245,886 1.31 16,500,000
47 L(3),YM1%(3.5),O(.5) or DEF 877,239 1,430,237 1.63 15,100,000
48 L(10),YM1%(9.5),O(.5) or DEF 1,005,439 1,469,139 1.46 14,800,000
48a 8,300,000
- - ------------------------------------------------------------------------------------------------------------------------------
48b 6,500,000
49 L(4),YM1%(5.5),O(.5) 882,897 1,109,774 1.26 13,500,000
49a 6,000,000
49b 7,500,000
- - ------------------------------------------------------------------------------------------------------------------------------
50 L(6),YM1%(3.5),O(.5) 852,603 1,184,995 1.39 13,750,000
51 L(4),YM1%(5.75),O(.25) 835,025 1,012,572 1.21 12,800,000
52 L(7),YM1%(7.75),O(.25) or DEF 823,501 1,037,596 1.26 14,000,000
53 L(3),YM1%(6.5),O(.5) 860,358 1,152,813 1.34 18,300,000
- - ------------------------------------------------------------------------------------------------------------------------------
54 L(4),YM1%(5.5),O(.5) or DEF 841,524 1,007,779 1.20 12,500,000
55 L(5),YM1%(4.5),O(.5) or DEF 1,005,222 1,477,573 1.47 14,700,000
56 L(4),YM1%(5.5),O(.5) or DEF 830,937 1,213,987 1.46 13,200,000
57 L(4),YM1%(5.5),O(.5) or DEF 817,280 1,008,093 1.23 12,200,000
58 L(8),YM1%(1.5),O(.5) or DEF 833,416 1,066,426 1.28 13,250,000
- - ------------------------------------------------------------------------------------------------------------------------------
59 L(4),YM1%(5.5),O(.5) or DEF 808,846 1,013,036 1.25 12,250,000
60 L(5),5(1),4(1),3(1),2(1.667),O(.33) 846,048 1,182,582 1.40 14,800,000
61 L(4),YM1%(5.75),O(.25) 770,260 950,434 1.23 12,500,000
62 L(4),YM1%(5.5),O(.5) 896,922 1,351,612 1.51 19,200,000
63 L(7),YM1%(2.5),O(.5) 859,937 1,072,726 1.25 12,600,000
- - ------------------------------------------------------------------------------------------------------------------------------
64 L(7),YM1%(12.5),O(.5) 882,052 1,372,572 1.56 16,000,000
65 L(4),YM1%(3),3(1),2(1),1(.5),O(.5) 827,897 992,584 1.20 11,775,000
66 L(4),YM1%(5.5),O(.5) or DEF 729,264 913,124 1.25 10,950,000
67 L(6),YM1%(3.5),O(.5) or DEF 779,255 1,299,457 1.67 12,850,000
68 L(10),YM1%(14.5),O(.5) or DEF 747,897 989,524 1.32 11,600,000
- - ------------------------------------------------------------------------------------------------------------------------------
69 L(4),YM1%(5.75),O(.25) or DEF 710,317 1,011,875 1.42 13,100,000
70 L(5),YM1%(4.5),O(.5) or DEF 704,844 963,350 1.37 11,300,000
71 L(4),YM1%(5.5),O(.5) or DEF 737,076 1,066,409 1.45 11,250,000
72 L(4),YM1%(5.5),O(.5) or DEF 665,340 948,214 1.43 10,800,000
73 L(3),YM1%(3.5),O(.5) or DEF 657,496 948,368 1.44 11,750,000
- - ------------------------------------------------------------------------------------------------------------------------------
74 L(7),YM1%(7.5),O(.5) or DEF 642,645 850,424 1.32 10,200,000
75 L(4),YM1%(5.5),O(.5) 643,584 884,531 1.37 9,400,000
76 L(3),YM1%(6.5),O(.5) 618,802 837,689 1.35 9,200,000
77 L(5),5(1),4(1),3(1),2(1),1(.5),O(.5) 604,121 818,555 1.35 9,600,000
78 L(4),YM1%(5.75),O(.25) or DEF 586,473 753,578 1.28 9,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
79 L(4),YM1%(5.5),O(.5) or DEF 605,358 847,917 1.40 9,650,000
80 L(4),YM1%(5.75),O(.25) or DEF 566,774 712,124 1.26 9,700,000
81 L(5),YM1%(4.5),O(.5) or DEF 584,467 855,782 1.46 9,350,000
82 L(8),YM1%(6.5),O(.5) 568,253 711,604 1.25 8,600,000
83 L(5),5(1),4(1),3(1),2(1),1(.5),O(.5) or DEF 618,493 981,551 1.59 10,200,000
- - ------------------------------------------------------------------------------------------------------------------------------
84 L(4),YM1%(5.75),O(.25) or DEF 575,822 781,222 1.36 9,000,000
85 L(2),YM1%(4.5),O(.5) or DEF 606,692 793,989 1.31 9,400,000
86 L(4),YM1%(5.5),O(.5) or DEF 541,896 689,850 1.27 8,880,000
87 L(4),YM1%(5.5),O(.5) 633,276 799,321 1.26 8,800,000
88 L(4),YM1%(5.5),O(.5) or DEF 551,781 770,525 1.40 9,450,000
- - ------------------------------------------------------------------------------------------------------------------------------
89 L(4),YM1%(5.5),O(.5) 593,773 786,490 1.32 10,650,000
90 L(4),YM1%(2.5),O(.5) or DEF 582,006 781,397 1.34 8,660,000
91 L(7),YM1%(7.5),O(.5) or DEF 539,629 741,859 1.37 8,060,000
92 L(3),YM1%(16.5),O(.5) 607,070 797,223 1.31 8,635,000
93 L(4),YM1%(5.5),O(.5) or DEF 631,140 826,214 1.31 8,750,000
- - ------------------------------------------------------------------------------------------------------------------------------
94 L(4),YM1%(5.5),O(.5) 577,749 799,488 1.38 8,400,000
95 L(4),YM1%(5.5),O(.5) 599,871 820,071 1.37 8,400,000
96 L(6),YM1%(3.5),O(.5) or DEF 537,408 703,885 1.31 8,200,000
97 L(4),YM1%(5.58),O(.5) or DEF 570,579 854,195 1.50 8,500,000
98 L(7),YM1%(7.5),O(.5) or DEF 493,623 647,526 1.31 7,700,000
- - ------------------------------------------------------------------------------------------------------------------------------
99 L(5),YM1%(4.5),O(.5) or DEF 499,496 688,279 1.38 8,000,000
100 L(10),YM1%(9.75),O(.25) or DEF 574,862 834,520 1.45 9,500,000
101 L(4),YM1%(5.5),O(.5) or DEF 489,703 650,731 1.33 8,100,000
102 L(5),5(1),4(1),3(1),2(1),1(1),O(5) 540,061 848,957 1.57 8,100,000
103 L(4),YM1%(5.5),O(.5) 560,614 743,114 1.33 7,800,000
- - ------------------------------------------------------------------------------------------------------------------------------
104 L(7.5),YM1%(7),O(.5) or DEF 525,534 714,920 1.36 8,400,000
105 L(4),YM1%(5.417),O(.5) 508,688 640,148 1.26 7,860,000
106 L(2),YM1%(4.5),O(.5) or DEF 521,266 623,151 1.20 7,400,000
107 L(4),YM1%(5.5),O(.5) 484,748 616,817 1.27 7,400,000
108 L(4),YM1%(5.5),O(.5) 489,553 645,278 1.32 8,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled Loan per
Control Appraisal Date Maturity Year Year Bed, Pad Bed, Pad Occupancy
No. Year LTV (%) Date LTV (%) Built Renovated or Room or Room ($) Percentage (%)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
41 1997 75.4 66.5 1989 N/A 86,706 Sq Foot 138.40 98.6
42 1997 73.5 64.8 1966 N/A 499 Unit 24,048.10 94.0
43 1997 71.4 57.4 1932 1996 75,322 Sq Foot 152.68 100.0
44 1997 67.5 62.6 1898 1986 91,018 Sq Foot 126.35 89.8
45 1997 80.0 70.1 1989 N/A 129,554 Sq Foot 88.30 99.0
- - ----------------------------------------------------------------------------------------------------------------------------------
46 1997 68.4 60.6 1987-89 N/A 163,537 Sq Foot 69.10 100.0
47 1997 70.0 64.3 1979 1994-96 420 Unit 25,238.10 96.3
48 1997 70.8 0.0 Various N/A 260 Room 40,384.62 NAV
48a 1997 1989 N/A 130 Room
- - ----------------------------------------------------------------------------------------------------------------------------------
48b 1997 1986 N/A 130 Room
49 1997 77.0 68.3 1990 N/A 193,087 Sq Foot 53.86 97.5
49a 1997 1990 N/A 95,137 Sq Foot
49b 1997 1990 N/A 97,950 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
50 1997 74.9 66.0 1990-92 N/A 152,611 Sq Foot 67.57 88.8
51 1997 79.3 69.7 1958-59 1990 264 Unit 38,446.97 96.0
52 1997 71.4 55.4 1970's-87 N/A 270,320 Sq Foot 36.99 89.2
53 1997 54.5 48.6 1990 N/A 155,193 Sq Foot 64.44 81.0
- - ----------------------------------------------------------------------------------------------------------------------------------
54 1997 79.8 70.7 1991 N/A 208 Unit 48,076.92 88.5
55 1997 67.6 48.0 1920-1935 1989-92 404,072 Sq Foot 24.75 98.8
56 1997 73.8 65.5 1982 N/A 155 Bed 62,903.23 93.0
57 1997 79.8 70.6 1988 N/A 184 Unit 52,989.13 96.7
58 1997 72.4 58.4 1976 N/A 128,992 Sq Foot 74.42 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
59 1997 77.4 68.7 1950,71 1987 184,670 Sq Foot 51.44 98.4
60 1997 64.0 57.6 1969 N/A 404,000 Sq Foot 23.51 100.0
61 1997 75.2 66.0 1988 N/A 118,396 Sq Foot 79.39 99.4
62 1997 48.8 40.8 1965-74 N/A 141,514 Sq Foot 66.42 96.0
63 1997 72.8 66.3 1982 N/A 103,358 Sq Foot 89.01 98.0
- - ----------------------------------------------------------------------------------------------------------------------------------
64 1997 55.5 0.0 1960's-80's N/A 334,845 Sq Foot 26.58 96.0
65 1997 75.2 67.2 1970-71 1990-91 228 Unit 39,100.88 90.4
66 1997 79.9 70.5 1990 N/A 240 Unit 36,500.00 93.3
67 1997 67.9 61.1 1965-84 N/A 115,238 Sq Foot 75.93 89.0
68 1997 74.9 4.2 1995 N/A 144 Unit 60,416.67 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
69 1997 65.6 57.7 1994 N/A 50,000 Sq Foot 172.00 100.0
70 1997 74.9 66.1 1970's 1995-96 192,889 Sq Foot 43.94 96.0
71 1997 71.8 64.9 1989-95 N/A 102,320 Sq Foot 79.16 100.0
72 1997 74.0 65.3 1974 1990 195,472 Sq Foot 40.93 98.0
73 1997 68.0 62.3 1970 N/A 352 Unit 22,727.27 91.8
- - ----------------------------------------------------------------------------------------------------------------------------------
74 1997 75.9 59.1 1988 1990 97,516 Sq Foot 79.47 95.4
75 1997 79.6 63.0 1985 N/A 100 Bed 75,000.00 100.0
76 1997 79.5 70.5 1980 N/A 324 Unit 22,651.23 91.4
77 1997 75.0 66.2 1976-89 N/A 143,021 Sq Foot 50.34 100.0
78 1997 80.0 70.1 1977, 1997 1996 187 Unit 38,502.67 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
79 1997 73.6 65.3 1950's 1988 101,542 Sq Foot 70.02 95.2
80 1997 72.1 62.1 1963 1991 94,586 Sq Foot 74.01 100.0
81 1997 74.8 66.0 1997 N/A 42,880 Sq Foot 163.25 100.0
82 1997 79.9 62.1 1997 N/A 108,508 Sq Foot 63.41 100.0
83 1997 66.5 54.6 1950's 1997 158 Room 43,037.97 NAV
- - ----------------------------------------------------------------------------------------------------------------------------------
84 1997 75.0 66.5 1958,94 N/A 214,421 Sq Foot 31.48 100.0
85 1997 71.7 67.0 1970's 1986 190,696 Sq Foot 35.62 88.7
86 1997 74.3 65.3 1985 N/A 81,559 Sq Foot 80.92 100.0
87 1997 74.7 67.0 1985 N/A 101,048 Sq Foot 65.32 90.8
88 1997 68.9 61.1 1994 N/A 87,261 Sq Foot 74.78 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
89 1997 60.9 50.1 1967 1990 308,064 Sq Foot 21.10 86.7
90 1997 74.8 66.5 1986 N/A 133,413 Sq Foot 48.72 100.0
91 1997 79.3 62.3 1996 N/A 48,374 Sq Foot 132.30 100.0
92 1997 73.8 28.7 1997 N/A 168 Unit 38,095.24 89.2
93 1997 72.1 59.8 1929 N/A 168,049 Sq Foot 37.79 91.7
- - ----------------------------------------------------------------------------------------------------------------------------------
94 1997 74.1 65.9 1913 1993-94 261,088 Sq Foot 23.94 98.3
95 1997 73.4 66.0 1974 N/A 90,519 Sq Foot 68.49 90.7
96 1997 74.8 66.9 1991 N/A 82,193 Sq Foot 74.82 100.0
97 1997 72.1 59.5 1997 N/A 42,657 Sq Foot 144.17 92.6
98 1997 78.3 60.6 1990 N/A 45,957 Sq Foot 131.21 91.7
- - ----------------------------------------------------------------------------------------------------------------------------------
99 1997 75.0 66.1 1961 N/A 56,020 Sq Foot 107.10 100.0
100 1997 63.2 0.0 1970 1996-97 198,787 Sq Foot 30.18 85.2
101 1997 74.0 65.0 1979 1996 75,363 Sq Foot 79.61 98.6
102 1997 74.0 48.5 1923 1969 190 Bed 31,578.95 89.0
103 1997 76.8 59.9 1993 N/A 141,397 Sq Foot 42.43 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
104 1997 71.2 46.0 1980's-90's N/A 91,477 Sq Foot 65.59 97.4
105 1997 74.9 65.7 1997 N/A 71,550 Sq Foot 82.46 100.0
106 1997 79.4 74.0 1973 N/A 280 Unit 21,142.86 97.5
107 1997 78.2 69.2 1982 N/A 160 Unit 36,250.00 96.3
108 1997 71.2 63.3 1978 N/A 65,994 Sq Foot 86.37 95.5
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
---------------------------------------------------
Tenant
Control Rent Roll Underwriting Area Leased Lease Control
No. Date Reserves ($) per Tenant Name (Sq. Ft.) Exp Date No.
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
41 6/30/97 0.15 Sq Foot 41
42 10/13/97 200.00 Unit 42
43 12/02/97 0.15 Sq Foot 43
44 11/01/97 0.20 Sq Foot Maxi Drug 17,063 1/31/02 44
45 10/08/97 0.10 Sq Foot Office Max 25,496 2/28/09 45
- - ------------------------------------------------------------------------------------------------------------------------
46 9/18/97 0.15 Sq Foot 46
47 9/01/97 263.00 Unit 47
48 NAV 4% of Gross Income 48
48a 48a
- - ------------------------------------------------------------------------------------------------------------------------
48b 48b
49 10/01/97 0.09 Sq Foot 49
49a K-Mart 86,479 10/31/15 49a
49b Mega Foods 52,225 5/31/10 49b
- - ------------------------------------------------------------------------------------------------------------------------
50 10/09/97 0.17 Sq Foot Circuit City 32,196 1/31/06 50
51 10/01/97 247.16 Unit 51
52 12/17/97 0.15 Sq Foot US Postal Service 36,008 7/14/98 52
53 8/06/97 0.15 Sq Foot 53
- - ------------------------------------------------------------------------------------------------------------------------
54 9/12/97 217.00 Unit 54
55 8/15/97 0.25 Sq Foot 55
56 10/03/97 350.00 Bed 56
57 8/29/97 288.00 Unit 57
58 11/03/97 0.47 Sq Foot 58
- - ------------------------------------------------------------------------------------------------------------------------
59 10/01/97 0.10 Sq Foot Brunswick Lanes 26,345 6/30/04 59
60 8/05/97 0.15 Sq Foot 60
61 7/22/97 0.13 Sq Foot AJ's Fine Foods 30,376 12/8/13 61
62 7/14/97 0.10 Sq Foot 62
63 3/31/97 0.21 Sq Foot Tom Thumb 52,480 2/21/17 63
- - ------------------------------------------------------------------------------------------------------------------------
64 6/30/97 0.27 Sq Foot 64
65 8/28/97 326.00 Unit 65
66 9/18/97 198.00 Unit 66
67 7/01/97 0.20 Sq Foot Blockbuster Music 18,704 12/31/98 67
68 12/01/97 250.00 Unit 68
- - ------------------------------------------------------------------------------------------------------------------------
69 10/18/93 0.16 Sq Foot Ralph's Supermarket 47,000 9/5/19 69
70 10/09/97 0.12 Sq Foot 70
71 6/03/97 0.15 Sq Foot American Multi-Cinema 36,743 3/31/04 71
72 11/24/97 0.19 Sq Foot Burlington Coat Factory 59,680 1/31/99 72
73 10/10/97 300.00 Unit 73
- - ------------------------------------------------------------------------------------------------------------------------
74 10/31/97 0.20 Sq Foot Food Lion 32,056 12/31/09 74
75 9/01/97 350.00 Bed 75
76 3/26/97 206.00 Unit 76
77 9/30/97 0.15 Sq Foot Basha's 46,924 3/31/07 77
78 12/31/97 273.53 Unit 78
- - ------------------------------------------------------------------------------------------------------------------------
79 9/16/97 0.15 Sq Foot Leath Furniture 35,400 6/30/02 79
80 10/22/86 0.10 Sq Foot Fred Meyers 94,586 2/1/07 80
81 10/13/97 0.10 Sq Foot Edwin Watts Golf Shop 9,000 7/31/02 81
82 10/31/96 0.10 Sq Foot BJ's Wholesale Clubs 108,508 7/26/17 82
83 NAV 4% of Gross Income 83
- - ------------------------------------------------------------------------------------------------------------------------
84 12/16/97 0.10 Sq Foot P & C Food Market 63,077 1/31/10 84
85 12/31/97 0.33 Sq Foot J.C. Penny 31,738 11/10/98 85
86 1/14/98 0.15 Sq Foot Planet Pizza 20,351 9/30/05 86
87 7/08/97 0.16 Sq Foot Ross Stores, Inc. 27,720 1/31/02 87
88 10/13/97 0.15 Sq Foot 88
- - ------------------------------------------------------------------------------------------------------------------------
89 8/01/97 0.15 Sq Foot Mega Market 60,723 11/30/03 89
90 12/30/97 0.10 Sq Foot 90
91 9/16/97 0.10 Sq Foot Designer Shoe Warehouse 23,387 11/30/08 91
92 9/09/97 150.00 Unit 92
93 5/01/97 0.17 Sq Foot 93
- - ------------------------------------------------------------------------------------------------------------------------
94 9/26/97 0.18 Sq Foot 94
95 1/31/97 0.27 Sq Foot Steinmart 34,550 9/1/98 95
96 7/31/97 0.10 Sq Foot Mars Supermarket 36,280 12/31/15 96
97 10/01/97 0.00 Sq Foot Krikorian Premier Theaters 23,542 7/1/17 97
98 12/01/97 0.20 Sq Foot Country Friends 7,000 7/31/01 98
- - ------------------------------------------------------------------------------------------------------------------------
99 5/01/97 0.23 Sq Foot Waldbaums 25,000 3/1/03 99
100 12/24/97 0.15 Sq Foot P&C Foods 50,195 8/1/12 100
101 12/22/97 0.22 Sq Foot 101
102 9/19/97 257.89 Bed 102
103 5/31/97 0.10 Sq Foot K-Mart 112,397 1/31/19 103
- - ------------------------------------------------------------------------------------------------------------------------
104 9/01/97 0.20 Sq Foot Weiss Markets 49,200 3/31/11 104
105 6/08/97 0.10 Sq Foot 105
106 8/29/97 309.00 Unit 106
107 9/05/97 377.00 Unit 107
108 11/01/97 0.23 Sq Foot L.A. Fitness 20,767 12/1/05 108
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Address City
==============================================================================================================================
<S> <C> <C> <C>
109 Three Stamford Landing 46 Southfield Ave. Stamford
110 The Woodlawn Commons Medical Center NWC of Johnson Ferry Road and Woodlawn Road Marietta
111 South Seminole 975, 1075 & 1175 Florida Central Parkway Longwood
112 Orscheln Home & Farm Stores (Roll Up) Various Various
- - ------------------------------------------------------------------------------------------------------------------------------
112a 818 West College Street 818 West College Street Marshall
112b 1720 Crete Drive 1720 Crete Drive Moberly
112c 1722 Crete Drive 1722 Crete Drive Moberly
112d 2405 South Main Street 2405 South Main Street Maryville
112e 904 East South Street 904 East South Street Richmond
- - ------------------------------------------------------------------------------------------------------------------------------
112f Route 1 P.O. Box 66 Route 1 P.O. Box 66 Eldon
112g 211 East Main Street 211 East Main Street Parsons
112h 5326 Lake Avenue 5326 Lake Avenue St. Joseph
113 The Lauderdale Tower Apartments 2900 NE 30th Street Fort Lauderdale
- - ------------------------------------------------------------------------------------------------------------------------------
114 Creekside Business Park 1625-1701 McCarthy Boulevard Milpitas
115 500 & 855 Winding Brook Drive (Roll-up) 500 & 855 Winding Brook Drive Glastonbury
115a 500 Winding Brook Drive 500 Winding Brook Drive Glastonbury
115b 855 Winding Brook Drive 855 Winding Brook Drive Glastonbury
- - ------------------------------------------------------------------------------------------------------------------------------
116 Carriage Hills East Apartments 6080 Carriage Hill Drive E. Lansing
117 Food For Less Grocery Store NEC Broadway & Ballantyne Street El Cajon
118 Alma Park Center NWC of Alma School & Warner Roads Chandler
119 Oak Park Apartments 4505 Duval Street Austin
- - ------------------------------------------------------------------------------------------------------------------------------
120 Las Colinas 15800 Chase Hill Boulevard San Antonio
121 River Oaks Apartments - Killeen, TX 101 Twin Creek Drive Killeen
122 Twin Oaks Village Shopping Center Eastern Boulevard & Vaughn Road Montgomery
123 Woodmont Plaza 6401-6451 McCart Avenue Ft. Worth
124 Treasury Services Corporation Building 604 Arizona Avenue Santa Monica
- - ------------------------------------------------------------------------------------------------------------------------------
125 Graymere Apartments 1955 Union Place Columbia
126 Hart Street Medical Center 40 Hart Street New Britain
127 1301 Guadalupe Street 1301 Guadalupe Street Laredo
128 Technologies Applications, Inc. Missouri Research Park St. Charles
129 Five Points Plaza 505-595 South Riverside Avenue Rialto
- - ------------------------------------------------------------------------------------------------------------------------------
130 195 Bear Hill Road 195 Bear Hill Road Waltham
131 Hampton Inn Hotel 2700 South Perkins Road Memphis
132 The Pender Mill Office Building 3930 Pender Drive Fairfax
133 Centre II 3101 Bee Cave Road Rollingwood
134 Plaza De Fiesta 2726 South Alma School Road Mesa
- - ------------------------------------------------------------------------------------------------------------------------------
135 Crossroads Shopping Center 300 South M-291 Highway Liberty
136 South Port Apartments 6326 S. 107th East Avenue Tulsa
137 Extra Space Center IV, V & VI 105 & 601 S.Faulkenberg & 1755 W.Brandon Bl Brandon
138 Two Stamford Landing 68 Southfield Avenue Stamford
139 Metroplex Business Park 475 Metroplex Drive Nashville
- - ------------------------------------------------------------------------------------------------------------------------------
140 Atrium Northeast Office Building 115 Atrium Way Columbia
141 The Cottages 10300 Harwin Drive Houston
142 Sabal Pointe Plaza NWC Merritt Isnd Causeway & Sykes Creek Merritt Island
143 Brookside Industrial Center 1775 Sherman Drive Indianapolis
144 Playhouse Square 380 Washington Street Wellesley
- - ------------------------------------------------------------------------------------------------------------------------------
145 Kittle's Home Furnishings Plaza 5600 Britton Parkway Columbus
146 Atrium Northwood Office Building 7301 Rivers Avenue North Charleston
147 Food For Less Supermarket (Hempfield) Route 30 Hempfield
148 Osborn Commons Apartments 1502 East Osborne Road Phoenix
149 One Dock Street 396 Pacific Street Stamford
- - ------------------------------------------------------------------------------------------------------------------------------
150 Columbia Station Apartments 13410-13458 NE Sandy Boulevard Portland
151 Everett Auto Mall 406 Southeast Everett Mall Way Everett
152 Coliseum Shoppes 506 East Coliseum Boulevard Fort Wayne
153 Deerfield Run Apartments Northwest Side of India Hook Road Rock Hill
154 Berkshire Center 5620-5754 North Academy Blvd. Colorado Springs
- - ------------------------------------------------------------------------------------------------------------------------------
155 Heritage Place Apartments 700 Westminster Drive Franklin
156 K-Mart Plaza 3069-3099 Dixie Highway Edgewood
157 4611-4811 Kimmel Drive 4611-4811 Kimmel Drive Davenport
158 Flint's Crossing Shopping Center 1550 Opelika Road Auburn
159 Shaker-Loudon Road Plaza 664 Loudon Road Colonie
- - ------------------------------------------------------------------------------------------------------------------------------
160 Food For Less Supermarket (Pine) 10688 Perry Highway Pine
161 Hitachi Tech Center 3201 Premier Drive Irving
162 Bay Harbour Apartments 2500 East James Road Baytown
163 East Bridge Landing Annex 587-593 First Avenue @ East 34th Street New York
164 Raymour & Flanigan Mall Ring Road Scranton
- - ------------------------------------------------------------------------------------------------------------------------------
165 20-24 Newbury Street 20-24 Newbury Street Boston
166 Tates Creek South Shopping Center 4220 & 4240 Saron Drive Lexington
167 Forest Lake II Apartments Brittany Drive North of Cashua Drive Florence
168 446 Blake St 446 Blake Street New Haven
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Crossed % of Aggregate Cumulative
Control Zip Collateralized Original Cut-off Date Cut-off Date % of Initial Mortgage
No. State Code Groups Balance ($) Balance ($) Balance Pool Balance Rate (%)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
109 CT 06902 5,625,000 5,607,617 0.32% 72.71% 8.1100
110 GA 30068 5,600,000 5,597,021 0.32% 73.03% 7.5100
111 FL 32750 5,600,000 5,590,537 0.31% 73.34% 7.7700
112 MO Various Group G 5,575,000 5,564,120 0.31% 73.65% 7.5300
- - ------------------------------------------------------------------------------------------------------------------------------------
112a MO 65340 Group G
112b MO 65270 Group G
112c MO 65270 Group G
112d MO 64468 Group G
112e MO 64085 Group G
- - ------------------------------------------------------------------------------------------------------------------------------------
112f MO 65026 Group G
112g KS 67357 Group G
112h MO 64504 Group G
113 FL 33306 5,564,188 5,521,723 0.31% 73.97% 8.0000
- - ------------------------------------------------------------------------------------------------------------------------------------
114 CA 95035 5,520,000 5,520,000 0.31% 74.28% 7.0300
115 CT 06033 Group H 5,475,000 5,459,050 0.31% 74.58% 8.3050
----------------------------------------------
115a CT 06033 Group H 3,375,000 3,365,168
115b CT 06033 Group H 2,100,000 2,093,882
- - ------------------------------------------------------------------------------------------------------------------------------------
116 MI 48823 5,400,000 5,391,781 0.30% 74.89% 7.3900
117 CA 92021 5,400,000 5,386,513 0.30% 75.19% 8.0700
118 AZ 85224 5,350,000 5,340,620 0.30% 75.49% 7.6400
119 TX 78751 5,275,000 5,269,369 0.30% 75.79% 7.5100
- - ------------------------------------------------------------------------------------------------------------------------------------
120 TX 78256 5,264,000 5,247,751 0.30% 76.08% 7.5500
121 TX 76543 5,200,000 5,190,411 0.29% 76.38% 7.5600
122 AL 36117 Group I 5,200,000 5,188,975 0.29% 76.67% 7.9700
123 TX 76133 5,135,000 5,132,112 0.29% 76.96% 7.3400
124 CA 90401 5,110,000 5,110,000 0.29% 77.25% 7.0300
- - ------------------------------------------------------------------------------------------------------------------------------------
125 TN 38401 5,100,000 5,087,754 0.29% 77.53% 7.4500
126 CT 06052 5,000,000 4,991,908 0.28% 77.81% 7.9200
127 TX 78040 5,000,000 4,984,576 0.28% 78.09% 7.4000
128 MO 63304 4,850,000 4,841,273 0.27% 78.37% 7.5300
129 CA 92376 4,700,000 4,691,456 0.26% 78.63% 7.5100
- - ------------------------------------------------------------------------------------------------------------------------------------
130 MA 02154 4,700,000 4,656,636 0.26% 78.89% 8.1700
131 TN 38118 4,650,000 4,625,654 0.26% 79.15% 7.8300
132 VA 22124 4,600,000 4,594,676 0.26% 79.41% 7.2600
133 TX 78746 4,500,000 4,494,874 0.25% 79.67% 7.3100
134 AZ 85210 4,500,000 4,493,380 0.25% 79.92% 7.5600
- - ------------------------------------------------------------------------------------------------------------------------------------
135 MO 64068 4,500,000 4,493,366 0.25% 80.17% 7.5500
136 OK 74133 4,500,000 4,492,874 0.25% 80.43% 7.1900
137 FL 33619 4,500,000 4,492,222 0.25% 80.68% 7.8400
138 CT 06902 4,500,000 4,486,093 0.25% 80.93% 8.1100
139 TN 37211 4,450,000 4,445,234 0.25% 81.18% 7.5000
- - ------------------------------------------------------------------------------------------------------------------------------------
140 SC 29223 4,450,000 4,444,963 0.25% 81.43% 7.3300
141 TX 77036 4,400,000 4,396,506 0.25% 81.68% 7.1600
142 FL 32953 4,400,000 4,395,209 0.25% 81.93% 7.4500
143 IN 46201 4,375,000 4,370,869 0.25% 82.17% 7.4400
144 MA 02181 4,350,000 4,340,374 0.24% 82.42% 7.7300
- - ------------------------------------------------------------------------------------------------------------------------------------
145 OH 43216 4,325,000 4,322,560 0.24% 82.66% 7.3300
146 SC 29223 4,330,000 4,320,389 0.24% 82.90% 7.7200
147 PA 15601 4,300,000 4,297,787 0.24% 83.15% 7.6100
148 AZ 85014 4,296,000 4,293,545 0.24% 83.39% 7.2900
149 CT 06902 4,300,000 4,286,712 0.24% 83.63% 8.1100
- - ------------------------------------------------------------------------------------------------------------------------------------
150 OR 97230 4,250,000 4,247,709 0.24% 83.87% 7.4700
151 WA 98204 4,200,000 4,197,691 0.24% 84.11% 7.4100
152 IN 46825 4,200,000 4,197,551 0.24% 84.34% 7.2260
153 SC 29732 4,200,000 4,195,185 0.24% 84.58% 7.2900
154 CO 80918 4,200,000 4,194,723 0.24% 84.82% 8.3400
- - ------------------------------------------------------------------------------------------------------------------------------------
155 TN 37064 4,160,000 4,150,011 0.23% 85.05% 7.4500
156 KY 41018 4,100,000 4,095,681 0.23% 85.28% 7.5500
157 IA 52802 4,080,000 4,075,713 0.23% 85.51% 7.4400
158 AL 36830 4,070,000 4,062,396 0.23% 85.74% 7.4100
159 NY 12110 4,050,000 4,042,523 0.23% 85.97% 7.3200
- - ------------------------------------------------------------------------------------------------------------------------------------
160 PA 15090 4,000,000 3,997,942 0.23% 86.19% 7.6100
161 TX 75063 4,000,000 3,997,736 0.23% 86.42% 7.3200
162 TX 77520 4,000,000 3,987,652 0.22% 86.64% 7.5500
163 NY 10016 3,895,471 3,889,118 0.22% 86.86% 7.9574
164 PA 18508 3,800,000 3,793,832 0.21% 87.07% 7.9100
- - ------------------------------------------------------------------------------------------------------------------------------------
165 MA 02116 3,750,000 3,743,949 0.21% 87.28% 7.9300
166 KY 40515 3,750,000 3,737,883 0.21% 87.50% 8.9800
167 SC 29501 3,700,000 3,695,758 0.21% 87.70% 7.2900
168 CT 06510 Group C 3,675,000 3,657,893 0.21% 87.91% 8.0400
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining
Interest Original Remaining Term to Term to Original
Control Administrative Accrual Amortization Interest-Only Interest-Only Maturity Maturity Amortization
No. Cost Rate (%) Method Type Period (Mos.) Period (Mos.) (Mos.) (Mos.) Term (Mos.)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
109 0.1433 Act/360 Balloon 0 0 120 114 360
110 0.1733 Act/360 Balloon 0 0 120 119 360
111 0.1533 Act/360 Balloon 0 0 120 117 360
112 0.1683 30/360 Fully Amortizing 0 0 230 229 230
- - ------------------------------------------------------------------------------------------------------------------------------------
112a
112b
112c
112d
112e
- - ------------------------------------------------------------------------------------------------------------------------------------
112f
112g
112h
113 0.0933 30/360 Balloon 0 0 84 73 360
- - ------------------------------------------------------------------------------------------------------------------------------------
114 0.0933 Act/360 Interest-only then Amortizing 24 23 60 59 360
115 0.1433 Act/360 Balloon 0 0 120 114 360
115a
115b
- - ------------------------------------------------------------------------------------------------------------------------------------
116 0.0933 30/360 Balloon 0 0 84 82 360
117 0.1683 30/360 Balloon 0 0 240 237 330
118 0.1683 Act/360 Balloon 0 0 120 117 360
119 0.1733 Act/360 Balloon 0 0 120 118 360
- - ------------------------------------------------------------------------------------------------------------------------------------
120 0.0933 Act/360 Balloon 0 0 120 115 360
121 0.1733 Act/360 Fully Amortizing 0 0 300 298 300
122 0.1533 30/360 Balloon 0 0 120 118 300
123 0.0933 Act/360 ARD 0 0 84 83 360
124 0.0933 Act/360 Interest-only then Amortizing 24 23 60 59 360
- - ------------------------------------------------------------------------------------------------------------------------------------
125 0.0933 Act/360 Balloon 0 0 120 116 360
126 0.1433 Act/360 Balloon 0 0 120 117 360
127 0.0933 Act/360 Balloon 0 0 120 117 300
128 0.1683 30/360 Fully Amortizing 0 0 240 239 240
129 0.0933 Act/360 Balloon 0 0 120 117 360
- - ------------------------------------------------------------------------------------------------------------------------------------
130 0.0933 Act/360 Balloon 0 0 120 114 240
131 0.1533 30/360 Fully Amortizing 0 0 240 237 240
132 0.0933 Act/360 Balloon 0 0 84 82 360
133 0.0933 Act/360 Balloon 0 0 84 82 360
134 0.1683 30/360 Balloon 0 0 120 118 360
- - ------------------------------------------------------------------------------------------------------------------------------------
135 0.1683 30/360 Balloon 0 0 120 118 360
136 0.0933 30/360 Balloon 0 0 84 82 360
137 0.0933 Act/360 Balloon 0 0 120 118 300
138 0.1433 Act/360 Balloon 0 0 120 114 360
139 0.0933 Act/360 Balloon 0 0 120 118 360
- - ------------------------------------------------------------------------------------------------------------------------------------
140 0.0933 Act/360 ARD 0 0 84 82 360
141 0.1683 30/360 ARD 0 0 120 119 360
142 0.0933 Act/360 Balloon 0 0 120 118 360
143 0.1433 Act/360 ARD 0 0 120 119 300
144 0.0933 Act/360 Balloon 0 0 180 176 360
- - ------------------------------------------------------------------------------------------------------------------------------------
145 0.0933 Act/360 ARD 0 0 120 119 360
146 0.0933 Act/360 Balloon 0 0 84 80 360
147 0.0933 Act/360 ARD 0 0 120 119 360
148 0.0933 Act/360 Balloon 0 0 84 83 360
149 0.1433 Act/360 Balloon 0 0 120 114 360
- - ------------------------------------------------------------------------------------------------------------------------------------
150 0.0933 Act/360 Balloon 0 0 84 83 360
151 0.1433 Act/360 ARD 0 0 120 119 360
152 0.1433 Act/360 ARD 0 0 120 119 360
153 0.1533 Act/360 Balloon 0 0 120 118 360
154 0.1683 30/360 Balloon 0 0 120 118 360
- - ------------------------------------------------------------------------------------------------------------------------------------
155 0.0933 Act/360 Balloon 0 0 120 116 360
156 0.0933 Act/360 ARD 0 0 84 82 360
157 0.1683 Act/360 ARD 0 0 84 83 288
158 0.0933 Act/360 Balloon 0 0 84 81 360
159 0.0933 30/360 Fully Amortizing 0 0 240 239 240
- - ------------------------------------------------------------------------------------------------------------------------------------
160 0.0933 Act/360 ARD 0 0 120 119 360
161 0.0933 Act/360 Balloon 0 0 120 119 360
162 0.0933 Act/360 Balloon 0 0 120 115 360
163 0.0933 Act/360 Balloon 0 0 82 79 358
164 0.1433 Act/360 Balloon 0 0 120 117 360
- - ------------------------------------------------------------------------------------------------------------------------------------
165 0.1433 Act/360 Balloon 0 0 120 117 360
166 0.0933 Act/360 Balloon 0 0 120 112 360
167 0.1533 Act/360 Balloon 0 0 120 118 360
168 0.1433 Act/360 Balloon 0 0 180 177 240
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Remaining
Control Amortization Origination Maturity Balloon
No. Term (Mos.) Date Date Balance($) Property Type
================================================================================================================
<S> <C> <C> <C> <C> <C>
109 354 7/31/97 8/1/07 5,043,216 Office
110 359 12/10/97 1/1/08 4,946,840 Office
111 357 10/16/97 11/1/07 4,978,916 Industrial/Warehouse
112 229 12/23/97 3/1/17 - Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
112a Retail - Unanchored
112b Retail - Unanchored
112c Retail - Unanchored
112d Retail - Unanchored
112e Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
112f Retail - Unanchored
112g Retail - Unanchored
112h Retail - Unanchored
113 349 2/24/97 3/1/04 5,145,619 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
114 360 12/5/97 1/1/03 5,359,106 Office
115 354 7/10/97 8/1/07 4,931,104 Office
115a Office
115b Office
- - ----------------------------------------------------------------------------------------------------------------
116 358 11/24/97 12/1/04 4,951,084 Multifamily - Conventional
117 327 10/8/97 11/1/17 2,746,726 Retail - Anchored
118 357 10/9/97 11/1/07 4,741,497 Retail - Anchored
119 358 11/5/97 12/1/07 4,660,528 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
120 355 8/15/97 9/1/07 4,655,058 Multifamily - Conventional
121 298 11/13/97 12/1/22 335,599 Multifamily - Conventional
122 298 11/5/97 12/1/07 4,196,486 Retail - Anchored
123 359 12/23/97 1/1/05 4,752,776 Retail - Anchored
124 360 12/5/97 1/1/03 4,961,056 Office
- - ----------------------------------------------------------------------------------------------------------------
125 356 9/30/97 10/1/07 4,499,297 Multifamily - Conventional
126 357 10/29/97 11/1/07 4,461,605 Office
127 297 10/30/97 11/1/07 4,047,684 Retail - Anchored
128 239 12/2/97 1/1/18 - Office
129 357 9/25/97 11/1/07 4,151,981 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
130 234 7/31/97 8/1/07 3,333,826 Self Storage
131 237 10/21/97 11/1/17 - Hotel - Limited Service
132 358 11/17/97 12/1/04 4,252,350 Office
133 358 11/24/97 12/1/04 4,163,366 Office
134 358 11/12/97 12/1/07 3,910,919 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
135 358 11/19/97 12/1/07 3,910,065 Retail - Anchored
136 358 11/24/97 12/1/04 4,113,608 Multifamily - Conventional
137 298 11/25/97 12/1/07 3,691,273 Self Storage
138 354 7/31/97 8/1/07 4,034,573 Office
139 358 11/4/97 12/1/07 3,930,644 Office
- - ----------------------------------------------------------------------------------------------------------------
140 358 11/24/97 12/1/04 4,118,469 Office
141 359 12/10/97 1/1/08 3,789,835 Multifamily - Conventional
142 358 11/18/97 12/1/07 3,881,593 Retail - Anchored
143 299 12/30/97 1/1/08 3,545,827 Industrial/Warehouse
144 356 9/24/97 10/1/12 3,437,324 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
145 359 12/17/97 1/1/08 3,803,208 Retail - Unanchored
146 356 9/4/97 10/1/04 4,032,803 Office
147 359 12/10/97 1/1/08 3,807,938 Retail - Anchored
148 359 12/12/97 1/1/05 3,972,941 Multifamily - Conventional
149 354 7/31/97 8/1/07 3,855,259 Office
- - ----------------------------------------------------------------------------------------------------------------
150 359 12/18/97 1/1/05 3,942,021 Multifamily - Conventional
151 359 12/30/97 1/1/08 3,700,804 Retail - Unanchored
152 359 12/31/97 1/1/08 3,683,445 Retail - Unanchored
153 358 11/10/97 12/1/07 3,690,098 Multifamily - Conventional
154 358 11/3/97 12/1/07 3,709,743 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
155 356 9/30/97 10/1/07 3,670,015 Multifamily - Conventional
156 358 11/26/97 12/1/04 3,808,181 Retail - Anchored
157 287 12/15/97 1/1/05 3,554,692 Industrial/Warehouse
158 357 10/10/97 11/1/04 3,771,460 Retail - Anchored
159 239 12/31/97 1/1/18 - Office
- - ----------------------------------------------------------------------------------------------------------------
160 359 12/10/97 1/1/08 3,542,266 Retail - Anchored
161 359 12/3/97 1/1/08 3,516,521 Office
162 355 8/20/97 9/1/07 3,537,280 Multifamily - Conventional
163 355 10/21/97 9/1/04 3,644,650 Multifamily - Conventional
164 357 10/31/97 11/1/07 3,390,007 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
165 357 10/23/97 11/1/07 3,347,006 Retail - Unanchored
166 352 5/14/97 6/1/07 3,428,853 Retail - Anchored
167 358 11/10/97 12/1/07 3,250,801 Multifamily - Conventional
168 237 10/3/97 11/1/12 1,620,889 Industrial/Warehouse
- - ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Annual
Control Debt Net Appraised
No. Prepayment Provisions Service($) Cash Flow($) DSCR(x) Value($)
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
109 L(3),5(1),4(1),3(1),2(3),1(.5),O(.5) or DEF 500,477 715,154 1.43 7,500,000
110 L(4),YM1%(5.75),O(.25) or DEF 470,332 617,690 1.31 7,100,000
111 L(4),YM1%(5.5),O(.5) or DEF 482,358 707,793 1.47 7,650,000
112 L(7),YM1%(11.67),O(.5) 550,357 706,590 1.28 7,735,000
- - ------------------------------------------------------------------------------------------------------------------------------
112a 1,150,000
112b 1,250,000
112c 1,200,000
112d 820,000
112e 1,100,000
- - ------------------------------------------------------------------------------------------------------------------------------
112f 1,075,000
112g 540,000
112h 600,000
113 L(2),YM1%(4.5),O(.5) or DEF 489,937 587,754 1.20 8,600,000
- - ------------------------------------------------------------------------------------------------------------------------------
114 L(2.75),YM(1.75),O(.5) or DEF 442,032 (1) 617,582 1.40 10,250,000
115 L(4),YM1%(5.5),O(.5) or DEF 496,125 669,009 1.35 7,300,000
115a 4,500,000
115b 2,800,000
- - ------------------------------------------------------------------------------------------------------------------------------
116 L(3),YM1%(3.5),O(.5) or DEF 448,220 605,398 1.35 6,740,000
117 L(7),YM1%(12.5),O(.5) 489,366 639,992 1.31 7,200,000
118 L(4),YM1%(5.5),O(.5) 455,066 615,753 1.35 7,100,000
119 L(4),YM1%(5.5),O(.5) or DEF 443,036 651,675 1.47 6,700,000
- - ------------------------------------------------------------------------------------------------------------------------------
120 L(3),YM1%(6.5),O(.5) 443,845 573,902 1.29 6,700,000
121 L(8),YM1%(16.5),O(.5) 463,569 772,703 1.67 8,200,000
122 L(4),YM1%(5.5),O(.5) or DEF 480,374 630,505 1.31 7,300,000
123 L(4),YM1%(2.75),O(.25) or DEF 424,125 515,009 1.21 6,700,000
124 L(2.75),YM(1.75),O(.5) or DEF 409,200 (1) 653,802 1.60 8,400,000
- - ------------------------------------------------------------------------------------------------------------------------------
125 L(4),YM1%(5.5),O(.5) or DEF 425,826 512,996 1.20 6,400,000
126 L(4),YM1%(5.5),O(.5) or DEF 436,917 563,806 1.29 6,800,000
127 L(4),YM1%(5.5),O(.5) or DEF 439,499 575,958 1.31 6,720,000
128 L(12),YM1%(7.5),O(.5) 469,923 602,994 1.28 6,500,000
129 L(4),YM1%(5.5),O(.5) or DEF 394,743 523,564 1.33 6,300,000
- - ------------------------------------------------------------------------------------------------------------------------------
130 L(4),YM1%(5.5),O(.5) or DEF 477,737 762,438 1.60 8,000,000
131 L(4),YM1%(15.5),O(.5) or DEF 460,847 946,766 2.05 8,500,000
132 L(4),YM1%(2.5),O(.5) or DEF 376,936 502,562 1.33 6,600,000
133 L(4),YM1%(2.5),O(.5) or DEF 370,575 481,753 1.30 6,000,000
134 L(4),5(1),4(1),3(1),2(1),1(1.5),O(.5) 379,797 515,365 1.36 6,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
135 L(4),YM1%(5),O(1) 379,426 508,141 1.34 6,000,000
136 L(3),YM1%(3.5),O(.5) or DEF 366,180 631,256 1.72 6,800,000
137 L(4),YM1%(5.5),O(.5) or DEF 411,073 547,018 1.33 6,260,000
138 L(3),5(1),4(1),3(1),2(3),1(.5),O(.5) or DEF 400,382 522,309 1.30 6,000,000
139 L(4),YM1%(5.5),O(.5) or DEF 373,381 468,517 1.25 6,100,000
- - ------------------------------------------------------------------------------------------------------------------------------
140 L(3),YM1%(3.5),O(.5) or DEF 367,184 457,897 1.25 6,250,000
141 L(4),YM1%(4),2(1),O(1) 356,972 435,233 1.22 5,500,000
142 L(4),YM1%(5.5),O(.5) or DEF 367,379 478,938 1.30 5,900,000
143 L(4),YM1%(5.75),O(.25) or DEF 385,924 517,128 1.34 6,200,000
144 L(8),5(1),4(2),3(2),2(1),1(.25),O(.75) 373,246 476,700 1.28 5,800,000
- - ------------------------------------------------------------------------------------------------------------------------------
145 L(4),YM1%(5.75),O(.25) or DEF 356,870 651,153 1.82 7,800,000
146 L(3),YM1%(3.5),O(.5) or DEF 371,171 467,429 1.26 6,500,000
147 L(4),YM1%(5.75),O(.25) or DEF 364,689 453,359 1.24 5,400,000
148 L(4),YM1%(2.5),O(.5) or DEF 353,075 440,761 1.25 5,370,000
149 L(3),5(1),4(1),3(1),2(3),1(.5),O(.5) or DEF 382,587 493,685 1.29 6,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
150 L(3),YM1%(3.5),O(.5) or DEF 355,552 467,142 1.31 6,115,000
151 L(4),YM1%(5.75),O(.25) or DEF 349,303 463,739 1.33 5,600,000
152 L(4),YM1%(5.5),O(.5) or DEF 342,997 482,674 1.41 5,620,000
153 L(4),YM1%(5.75),O(.25) or DEF 345,185 473,458 1.37 5,565,000
154 L(6),YM1%(3.5),O(.5) 381,832 549,034 1.44 5,700,000
- - ------------------------------------------------------------------------------------------------------------------------------
155 L(4),YM1%(5.5),O(.5) or DEF 347,340 446,586 1.29 5,200,000
156 L(4),YM1%(2.5),O(.5) or DEF 345,700 428,275 1.24 5,290,000
157 L(3),YM1%(3.75),O(.25) 365,120 467,427 1.28 5,450,000
158 L(4),YM1%(2.5),O(.5) 338,492 447,970 1.32 5,125,000
159 L(4),YM1%(15.5),O(.5) or DEF 386,187 602,235 1.56 5,800,000
- - ------------------------------------------------------------------------------------------------------------------------------
160 L(4),YM1%(5.75),O(.25) or DEF 339,246 430,835 1.27 5,000,000
161 L(4),YM1%(5.5),O(.5) or DEF 329,727 409,134 1.24 5,100,000
162 L(3),YM1%(6.5),O(.5) 337,268 517,207 1.53 5,000,000
163 L(3.83),YM1%(2.5),O(.5) or DEF 342,080 430,402 1.26 5,300,000
164 L(4),YM1%(5.5),O(.5) 331,740 449,107 1.35 5,075,000
- - ------------------------------------------------------------------------------------------------------------------------------
165 L(2),5(2),4(2),3(1),2(1),1(1.5),O(.5) 328,001 439,098 1.34 6,100,000
166 L(4),YM1%(5.5),O(.5) or DEF 361,433 474,437 1.31 5,200,000
167 L(3),YM1%(6.75),O(.25) or DEF 304,092 453,387 1.49 4,920,000
168 L(6),YM1%(8.5),O(.5) or DEF 369,969 479,275 1.30 4,900,000
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled Loan per
Control Appraisal Date Maturity Year Year Bed, Pad Bed, Pad Occupancy
No. Year LTV (%) Date LTV (%) Built Renovated or Room or Room ($) Percentage (%)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
109 1997 74.8 67.2 1989 N/A 55,221 Sq Foot 101.86 100.0
110 1997 78.8 69.7 1986-87 N/A 49,345 Sq Foot 113.49 100.0
111 1997 73.1 65.1 1990 N/A 196,728 Sq Foot 28.47 100.0
112 1997 71.9 0.0 Various N/A 216,950 Sq Foot 25.70 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
112a 1997 1995 N/A 31,200 Sq Foot
112b 1997 1995 N/A 31,200 Sq Foot
112c 1997 1995 N/A 27,500 Sq Foot
112d 1997 1993 N/A 22,400 Sq Foot
112e 1997 1995 N/A 30,700 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
112f 1997 1995 N/A 30,700 Sq Foot
112g 1997 1973 N/A 23,250 Sq Foot
112h 1997 1990 N/A 20,000 Sq Foot
113 1997 64.2 59.8 1964 N/A 123 Unit 45,237.30 95.1
- - ----------------------------------------------------------------------------------------------------------------------------------
114 1997 53.9 52.3 1981-82 N/A 81,267 Sq Foot 67.92 100.0
115 1997 74.8 67.5 1983 1997 93,113 Sq Foot 58.80 93.3
115a 1997 1983 1997 61,113 Sq Foot
115b 1997 1983 1997 32,000 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
116 1997 80.0 73.5 1972 N/A 143 Unit 37,762.24 99.3
117 1997 74.8 38.1 1997 N/A 53,630 Sq Foot 100.69 100.0
118 1997 75.2 66.8 1985 N/A 69,198 Sq Foot 77.31 100.0
119 1997 78.7 69.6 1972 N/A 195 Unit 27,051.28 96.4
- - ----------------------------------------------------------------------------------------------------------------------------------
120 1997 78.3 69.5 1978 1996 232 Unit 22,689.66 91.8
121 1997 63.3 4.1 1995 N/A 228 Unit 22,807.02 96.0
122 1997 71.1 57.5 1984 N/A 98,790 Sq Foot 52.64 96.8
123 1997 76.6 70.9 1980 1997 86,665 Sq Foot 59.25 85.0
124 1997 60.8 59.1 1955 1994-95 42,050 Sq Foot 121.52 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
125 1997 79.5 70.3 1989 N/A 161 Unit 31,677.02 96.3
126 1997 73.4 65.6 1966 1990 52,481 Sq Foot 95.27 94.0
127 1997 74.2 60.2 1984 N/A 50,912 Sq Foot 98.21 100.0
128 1997 74.5 0.0 1997 N/A 47,421 Sq Foot 102.28 100.0
129 1997 74.5 65.9 1984 N/A 91,437 Sq Foot 51.40 94.4
- - ----------------------------------------------------------------------------------------------------------------------------------
130 1997 58.2 41.7 1959 1990 92,511 Sq Foot 50.80 100.0
131 1997 54.4 0.0 1994 N/A 132 Room 35,227.27 NAV
132 1997 69.6 64.4 1984 N/A 66,768 Sq Foot 68.90 96.0
133 1997 74.9 69.4 1985 N/A 54,248 Sq Foot 82.95 100.0
134 1997 74.9 65.2 1980 N/A 80,808 Sq Foot 55.69 97.2
- - ----------------------------------------------------------------------------------------------------------------------------------
135 1997 74.9 65.2 1971 N/A 103,165 Sq Foot 43.62 100.0
136 1997 66.1 60.5 1984 N/A 240 Unit 18,750.00 96.3
137 1997 71.8 59.0 1980,85-96 N/A 137,250 Sq Foot 32.79 80.7
138 1997 74.8 67.2 1988 N/A 61,622 Sq Foot 73.03 100.0
139 1997 72.9 64.4 1982/83 N/A 119,047 Sq Foot 37.38 86.0
- - ----------------------------------------------------------------------------------------------------------------------------------
140 1997 71.1 65.9 1988 N/A 55,855 Sq Foot 79.67 100.0
141 1997 79.9 68.9 1977 N/A 252 Unit 17,460.32 89.3
142 1997 74.5 65.8 1996-97 N/A 44,348 Sq Foot 99.22 96.9
143 1997 70.5 57.2 1989 N/A 278,000 Sq Foot 15.74 95.0
144 1997 74.8 59.3 1920 1980's 29,068 Sq Foot 149.65 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
145 1997 55.4 48.8 1996 N/A 97,378 Sq Foot 44.41 100.0
146 1997 66.5 62.0 1991 N/A 56,192 Sq Foot 77.06 92.0
147 1997 79.6 70.5 1993 N/A 51,926 Sq Foot 82.81 100.0
148 1997 80.0 74.0 1953 & 1974 N/A 186 Unit 23,096.77 98.4
149 1997 71.5 64.3 1900 1983 83,274 Sq Foot 51.64 99.0
- - ----------------------------------------------------------------------------------------------------------------------------------
150 1997 69.5 64.5 1973 N/A 137 Unit 31,021.90 89.8
151 1997 75.0 66.1 1988 N/A 47,580 Sq Foot 88.27 87.0
152 1997 74.7 65.5 1988 N/A 62,028 Sq Foot 67.71 94.4
153 1997 75.4 66.3 1990 N/A 144 Unit 29,166.67 98.0
154 1997 73.6 65.1 1985 N/A 71,280 Sq Foot 58.92 98.2
- - ----------------------------------------------------------------------------------------------------------------------------------
155 1997 79.8 70.6 1982 N/A 105 Unit 39,619.05 99.0
156 1997 77.4 72.0 1971 N/A 147,812 Sq Foot 27.74 100.0
157 1997 74.8 65.2 1978 N/A 306,970 Sq Foot 13.29 100.0
158 1997 79.3 73.6 1988 N/A 87,775 Sq Foot 46.37 98.4
159 1997 69.7 0.0 1970 1985 128,572 Sq Foot 31.50 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
160 1997 80.0 70.8 1993 N/A 50,198 Sq Foot 79.68 100.0
161 1997 78.4 69.0 1985 N/A 69,377 Sq Foot 57.66 100.0
162 1997 79.8 70.7 1973 1996 306 Unit 13,071.90 83.0
163 1997 73.4 68.8 1910-30 N/A 30 Unit 129,849.04 97.0
164 1997 74.8 66.8 1996 N/A 55,200 Sq Foot 68.84 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
165 1997 61.4 54.9 1920 1991 20,045 Sq Foot 187.08 100.0
166 1997 71.9 65.9 1992 N/A 42,919 Sq Foot 87.37 100.0
167 1997 75.1 66.1 1995-96 N/A 112 Unit 33,035.71 100.0
168 1997 74.7 33.1 1895-1985 N/A 174,590 Sq Foot 21.05 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
---------------------------------------------------
Tenant
Control Rent Roll Underwriting Area Leased Lease Control
No. Date Reserves ($) per Tenant Name (Sq. Ft.) Exp Date No.
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
109 5/20/97 0.16 Sq Foot 109
110 9/08/97 0.29 Sq Foot 110
111 9/10/97 0.10 Sq Foot 111
112 3/01/97 0.17 Sq Foot 112
- - ------------------------------------------------------------------------------------------------------------------------
112a Orscheln Properties 31,200 2/28/17 112a
112b Orscheln Properties 31,200 2/28/17 112b
112c Stage 12,000 7/31/06 112c
112d Orscheln Properties 22,400 2/28/17 112d
112e Orscheln Properties 30,700 2/28/17 112e
- - ------------------------------------------------------------------------------------------------------------------------
112f Orscheln Properties 30,700 2/28/17 112f
112g Orscheln Properties 23,250 2/28/17 112g
112h Orscheln Properties 20,000 2/28/17 112h
113 7/05/97 324.00 Unit 113
- - ------------------------------------------------------------------------------------------------------------------------
114 6/16/97 0.15 Sq Foot 114
115 5/01/97 0.15 Sq Foot 115
115a 115a
115b 115b
- - ------------------------------------------------------------------------------------------------------------------------
116 10/13/97 403.00 Unit 116
117 10/30/96 0.23 Sq Foot Food For Less 53,630 10/30/16 117
118 7/31/97 0.18 Sq Foot The Kroger Co. 11,868 8/31/05 118
119 8/31/97 240.00 Unit 119
- - ------------------------------------------------------------------------------------------------------------------------
120 6/30/97 265.85 Unit 120
121 9/01/97 266.00 Unit 121
122 8/11/97 0.24 Sq Foot T.J. Maxx 36,793 5/30/07 122
123 10/29/97 0.16 Sq Foot Petco 16,854 1/31/07 123
124 6/01/95 0.15 Sq Foot 124
- - ------------------------------------------------------------------------------------------------------------------------
125 7/25/97 204.00 Unit 125
126 12/31/97 0.15 Sq Foot 126
127 11/01/84 0.10 Sq Foot H. E. Butt Grocery Company 50,912 10/31/04 127
128 9/01/97 0.10 Sq Foot 128
129 6/01/97 0.15 Sq Foot Max Foods 46,967 8/31/10 129
- - ------------------------------------------------------------------------------------------------------------------------
130 6/30/97 0.20 Sq Foot 130
131 NAV 4% of Gross Income 131
132 8/31/97 0.15 Sq Foot 132
133 8/31/97 0.15 Sq Foot 133
134 10/22/97 0.22 Sq Foot Jungle Jim 28,000 1/1/02 134
- - ------------------------------------------------------------------------------------------------------------------------
135 9/23/97 0.20 Sq Foot Loehr's 30,800 4/30/00 135
136 10/12/97 325.00 Unit 136
137 11/22/97 0.14 Sq Foot 137
138 9/19/97 0.15 Sq Foot 138
139 9/29/97 0.17 Sq Foot 139
- - ------------------------------------------------------------------------------------------------------------------------
140 11/20/97 0.15 Sq Foot 140
141 10/25/97 177.89 Unit 141
142 6/11/97 0.19 Sq Foot Barnes & Noble 19,956 5/1/12 142
143 10/31/97 0.10 Sq Foot 143
144 9/01/97 0.15 Sq Foot FIC Management Incorporated 6,879 10/31/99 144
- - ------------------------------------------------------------------------------------------------------------------------
145 11/16/96 0.15 Sq Foot Kittle's 97,378 11/16/11 145
146 8/01/97 0.15 Sq Foot 146
147 11/01/97 0.10 Sq Foot Fleming Foods of Ohio, Inc. 51,926 11/1/13 147
148 10/25/97 236.00 Unit 148
149 5/20/97 0.16 Sq Foot 149
- - ------------------------------------------------------------------------------------------------------------------------
150 11/06/97 238.73 Unit 150
151 7/31/97 0.15 Sq Foot Bandag/Alpine 10,718 12/31/98 151
152 12/01/97 0.10 Sq Foot Wendy's Bridal Shoppes 6,686 1/31/02 152
153 8/13/97 289.00 Unit 153
154 10/01/97 0.44 Sq Foot U.S. Swim & Fitness 26,246 7/31/99 154
- - ------------------------------------------------------------------------------------------------------------------------
155 7/25/97 200.00 Unit 155
156 11/12/97 0.24 Sq Foot K-Mart 114,464 11/30/02 156
157 7/31/97 0.10 Sq Foot 157
158 7/01/97 0.15 Sq Foot Food World 47,875 2/28/08 158
159 8/28/97 0.15 Sq Foot 159
- - ------------------------------------------------------------------------------------------------------------------------
160 11/01/93 0.10 Sq Foot Fleming Foods of Ohio, Inc. 50,198 11/1/13 160
161 9/01/96 0.19 Sq Foot 161
162 3/31/97 250.00 Unit 162
163 10/13/97 250.00 Unit 163
164 10/01/97 0.10 Sq Foot Raymours Furniture Company 55,200 9/30/12 164
- - ------------------------------------------------------------------------------------------------------------------------
165 6/30/97 0.14 Sq Foot GA Boston (G. Armani) 8,173 12/31/00 165
166 4/01/97 0.10 Sq Foot Revco/Hook 22,000 5/31/12 166
167 8/13/97 166.00 Unit 167
168 1/22/98 0.10 Sq Foot 168
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Address City
==============================================================================================================================
<S> <C> <C> <C>
169 The Pavillions and The Verandas (Roll-up) Various Tallahasse
169a The Pavillions 1355-1410 Market St. Tallahasse
169b The Verandas 1333 & 1335 Market Street Tallahasse
170 Deerfield Apartments 2155 Deer Crest Lane Memphis
- - ------------------------------------------------------------------------------------------------------------------------------
171 Bay Ridge Apartments 3010 & 3020 Cowley Way San Diego
172 River Oaks Apartments - Wetumpka, AL 200 River Oaks Drive Wetumpka
173 Lawrence Commons 3371 Route 1 Lawrence
174 511 Eleventh Avenue South Office Building 511 Eleventh Avenue South Minneapolis
175 Causeway Plaza SEQ of Eau Gallie Blvd. & S. Patrick Dr. Melbourne
- - ------------------------------------------------------------------------------------------------------------------------------
176 Richwood Shopping Center 2000 Buckingham Road Richardson
177 Alderwood Target Plaza 18205 Alderwood Mall Boulevard Lynwood
178 Cherokee North Shopping Center NWQ West 95th St. & Antioch Road Overland Park
179 Stone Ridge Apartments 5100 Conser Street Overland Park
180 Point West Apartments 2925 West Normandale Fort Worth
- - ------------------------------------------------------------------------------------------------------------------------------
181 Main Business Center 17800 S. Main Street Carson
182 Lancers Square Retail Center 3198 West Parker Road Plano
183 Cahokia Village Shopping Center 1038 Camp Jackson Road Cahokia
184 Quarry West Apartments 560 and 606 S. 10th Ave & 801,811,&901 7th Waite Park
185 Country Way Apartments 4153 Logangate Road Youngstown
- - ------------------------------------------------------------------------------------------------------------------------------
186 The Victorian Apartments 9400 Coventry Square Houston
187 Picasso Tower 2800 Biscayne Blvd. Miami
188 Alafaya Square SWC of East Colonial Dr. & Alafaya Trail Orlando
189 Sedgwick Centre Office Building 400 Hardin Road Little Rock
190 Highland Ridge Apartments 329-353 Schraffts Drive Waterbury
- - ------------------------------------------------------------------------------------------------------------------------------
191 Mobile One Mobile Home Park East side of Church St. (Route 1310) Fredericksburg
192 Sand Creek Apartments 3801 Ashe Road Bakersfield
193 Scotch Pines East Apartments 915 East Drake Road Fort Collins
194 Oakcreek Apartments 6111 Vance Jackson Road San Antonio
195 New Towne West Aptartments 3316 North 102nd Plaza Omaha
- - ------------------------------------------------------------------------------------------------------------------------------
196 Stone Hollow Apartments 2400 Stone Hollow Drive Brenham
197 Holiday Inn Express 1943 Savannah Highway Charleston
198 Village Square East Shopping Center 8960-8998 East Hampden Avenue Denver
199 Willowstream North Garden Apartments South Side of NYS Rt. 31 Clay
200 Duck Creek Shopping Center 5006 N. Jupiter Rd. Garland
- - ------------------------------------------------------------------------------------------------------------------------------
201 470 West Avenue 470 West Avenue Stamford
202 River One Office Plaza 309 E. Osceola St. Stuart
203 Lyell-Mt. Read Business Center 777 Mt. Read Boulevard Rochester
204 Landmark Woods Apartments 1400 Cherokee Rd. Florence
205 Mountain Vista Apartments 358 East Roeser Road Phoenix
- - ------------------------------------------------------------------------------------------------------------------------------
206 Shoppers Fair Shopping Center 6800-6810 East P Street Lincoln
207 Lafayette Place Apartments 9450 Woodfair Drive Houston
208 America Plaza 1070 E. Indiantown Rd. Jupiter
209 Valley View Hacienda Business Park II 5375 South Procyon Avenue Las Vegas
210 Salem Village Center 4601 South Loop 289 Lubbock
- - ------------------------------------------------------------------------------------------------------------------------------
211 Granada/Turnberry Apartments 4003-4005 Red River & 910-920 E. 40th Sts. Austin
212 The 14614 Falling Creek Office Building 14614 Falling Creek Drive Houston
213 One Pavilion Avenue One Pavillion Avenue Riverside
214 Automotive Portfolio (Roll-up) Various Various
- - ------------------------------------------------------------------------------------------------------------------------------
214a Automotive Portfolio (Snellville) 3120 US Highway 78 Snellville
214b Automotive Portfolio (Marietta) 1775 Cobb Parkway Marietta
214c Automotive Portfolio (College Park) 5471 Old National Highway College Park
214d Automotive Portfolio (Norcross) 4842 Jimmy Carter Boulevard Norcross
- - ------------------------------------------------------------------------------------------------------------------------------
215 Mountain Springs Apartments 854 Sheppard Road Stone Mountain
216 The I-Drive Center Shopping Center 5430-5490 International Drive Orlando
217 9-11 Park Avenue 9-11 Park Avenue New York
218 Tricom Executive Center 2001 West Sample Road Pompano Beach
219 3550 Biscayne Boulevard 3550 Biscayne Blvd. Miami
- - ------------------------------------------------------------------------------------------------------------------------------
220 Jefferson Park Apartments (I) 1220 Missouri Court - Phase I Liberty
221 Clinical Associates Building 750 Main Street Reisterstown
222 Summit Business Park Route 52 Fishkill
223 Wellington Square Shopping Center 950 Indian Trail Road Lilburn
224 Shannon Plaza Apartments 2100 Heatherwood Lawrence
- - ------------------------------------------------------------------------------------------------------------------------------
225 Bay Island Apartments 6109 Bay Island Road Garland
226 Academy Crossing Shopping Center 3200 Academy Avenue Portsmouth
227 Coopersburg Shopping Center North Third Street (a.k.a. Rt. 309) Coopersburg
228 1003 London Road 1003 London Road Colonie
229 Rutgers Plaza Shopping Center 1680 Dunn Ave. Jacksonville
- - ------------------------------------------------------------------------------------------------------------------------------
230 Apollo Beach Marina Apartments North Side of Apollo Boulevard Apollo Beach
231 Jefferson Park Apartments (II) 1220 Missouri Court - Phase II Liberty
232 Bert Kouns Self-Storage 525 Bert Kouns Industrial Loop Shreveport
233 Sunnyslope Terrace 5383 Sunnyslope Road Maple Heights
234 Mountain View Villas Apartments 414 Mountain View Road Johnson City
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Crossed % of Aggregate Cumulative
Control Zip Collateralized Original Cut-off Date Cut-off Date % of Initial Mortgage
No. State Code Groups Balance ($) Balance ($) Balance Pool Balance Rate (%)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
169 FL 32312 3,600,000 3,598,066 0.20% 88.11% 7.4800
----------------------------------------------
169a FL 32312
169b FL 32312
170 TN 38134 3,600,000 3,594,466 0.20% 88.31% 7.3400
- - ------------------------------------------------------------------------------------------------------------------------------------
171 CA 92117 3,600,000 3,593,163 0.20% 88.52% 7.3500
172 AL 36092 3,550,000 3,543,385 0.20% 88.72% 7.4200
173 NJ 08648 3,500,000 3,496,985 0.20% 88.91% 8.1200
174 MN 55415 3,500,000 3,496,530 0.20% 89.11% 7.2200
175 FL 32935 3,425,000 3,418,757 0.19% 89.30% 7.5000
- - ------------------------------------------------------------------------------------------------------------------------------------
176 TX 75042 3,400,000 3,398,051 0.19% 89.49% 7.2800
177 WA 98037 3,375,000 3,360,026 0.19% 89.68% 7.7300
178 KS 66212 3,315,000 3,307,992 0.19% 89.87% 7.7900
179 KS 66202 3,300,000 3,294,712 0.19% 90.06% 7.1300
180 TX 76116 3,280,000 3,268,990 0.18% 90.24% 8.2800
- - ------------------------------------------------------------------------------------------------------------------------------------
181 CA 90248 3,200,000 3,188,880 0.18% 90.42% 7.8400
182 TX 75075 3,150,000 3,146,748 0.18% 90.60% 7.6100
183 IL 62206 3,135,000 3,132,309 0.18% 90.77% 8.1300
184 MN 56303 3,120,000 3,118,120 0.18% 90.95% 7.1200
185 OH 44505 3,100,000 3,094,365 0.17% 91.12% 7.5100
- - ------------------------------------------------------------------------------------------------------------------------------------
186 TX 77099 3,000,000 3,000,000 0.17% 91.29% 6.9800
187 FL 33137 3,000,000 2,995,019 0.17% 91.46% 8.0100
188 FL 32817 3,000,000 2,994,872 0.17% 91.63% 7.7300
189 AR 72211 3,000,000 2,989,401 0.17% 91.80% 7.7050
190 CT 06705 3,000,000 2,984,882 0.17% 91.97% 8.4300
- - ------------------------------------------------------------------------------------------------------------------------------------
191 VA 22408 2,900,000 2,900,000 0.16% 92.13% 7.1100
192 CA 93309 2,800,000 2,796,646 0.16% 92.29% 7.1500
193 CO 80525 2,800,000 2,795,696 0.16% 92.44% 7.3400
194 TX 78230 2,800,000 2,778,631 0.16% 92.60% 8.0000
195 NE 68134 2,750,000 2,741,584 0.15% 92.76% 7.4400
- - ------------------------------------------------------------------------------------------------------------------------------------
196 TX 77833 2,720,000 2,699,242 0.15% 92.91% 8.0000
197 SC 29404 2,700,000 2,696,562 0.15% 93.06% 7.9700
198 CO 80231 2,700,000 2,695,186 0.15% 93.21% 7.5800
199 NY 13090 2,700,000 2,693,726 0.15% 93.36% 7.4000
200 TX 75044 2,650,000 2,648,457 0.15% 93.51% 7.2300
- - ------------------------------------------------------------------------------------------------------------------------------------
201 CT 06901 2,650,000 2,641,811 0.15% 93.66% 8.1100
202 FL 34944 2,500,000 2,497,349 0.14% 93.80% 7.5300
203 NY 14606 2,500,000 2,496,227 0.14% 93.94% 7.8600
204 SC 29501 2,500,000 2,496,119 0.14% 94.08% 7.2900
205 AZ 85040 2,500,000 2,494,695 0.14% 94.22% 7.8700
- - ------------------------------------------------------------------------------------------------------------------------------------
206 NE 68510 2,500,000 2,494,033 0.14% 94.36% 8.4600
207 TX 76705 2,500,000 2,474,258 0.14% 94.50% 8.4400
208 FL 33477 2,475,000 2,473,635 0.14% 94.64% 7.4000
209 NV 89118 2,400,000 2,400,000 0.14% 94.78% 7.0900
210 TX 79424 2,400,000 2,394,892 0.13% 94.91% 7.8600
- - ------------------------------------------------------------------------------------------------------------------------------------
211 TX 78751 2,350,000 2,347,450 0.13% 95.05% 7.4600
212 TX 77068 2,350,000 2,347,297 0.13% 95.18% 7.2800
213 NJ 08075 2,350,000 2,341,262 0.13% 95.31% 7.8180
214 GA Various Group J 2,300,000 2,296,071 0.13% 95.44% 7.8900
- - ------------------------------------------------------------------------------------------------------------------------------------
214a GA 32207 Group J
214b GA 32207 Group J
214c GA 30337 Group J
214d GA 32207 Group J
- - ------------------------------------------------------------------------------------------------------------------------------------
215 GA 30083 2,300,000 2,294,796 0.13% 95.57% 7.4500
216 FL 32819 2,300,000 2,293,733 0.13% 95.70% 8.0100
217 NY 10021 2,250,000 2,248,317 0.13% 95.82% 7.4600
218 FL 33064 2,250,000 2,244,160 0.13% 95.95% 8.2400
219 FL 33137 2,200,000 2,198,361 0.12% 96.07% 7.5200
- - ------------------------------------------------------------------------------------------------------------------------------------
220 MO 64068 2,200,000 2,198,239 0.12% 96.20% 7.1200
221 MD 21136 2,190,000 2,182,056 0.12% 96.32% 7.4900
222 NY 12524 2,150,000 2,150,000 0.12% 96.44% 7.6400
223 GA 30247 2,150,000 2,145,871 0.12% 96.56% 8.1900
224 KS 66047 2,150,000 2,144,847 0.12% 96.68% 7.1600
- - ------------------------------------------------------------------------------------------------------------------------------------
225 TX 75043 2,125,000 2,125,000 0.12% 96.80% 6.9800
226 VA 23707 2,125,000 2,123,100 0.12% 96.92% 8.0200
227 PA 18036 2,120,000 2,115,837 0.12% 97.04% 8.1200
228 NY 12047 2,100,000 2,098,959 0.12% 97.16% 7.7200
229 FL 32218 2,100,000 2,098,883 0.12% 97.28% 7.5100
- - ------------------------------------------------------------------------------------------------------------------------------------
230 FL 33572 2,100,000 2,098,734 0.12% 97.40% 7.1200
231 MO 64068 2,040,000 2,038,367 0.11% 97.51% 7.1200
232 LA 71106 2,000,000 1,998,192 0.11% 97.62% 7.9900
233 OH 44137 2,000,000 1,997,751 0.11% 97.74% 7.3500
234 TN 37601 2,000,000 1,995,198 0.11% 97.85% 7.4500
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining
Interest Original Remaining Term to Term to Original
Control Administrative Accrual Amortization Interest-Only Interest-Only Maturity Maturity Amortization
No. Cost Rate (%) Method Type Period (Mos.) Period (Mos.) (Mos.) (Mos.) Term (Mos.)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
169 0.1433 Act/360 ARD 0 0 180 179 360
169a
169b
170 0.0933 30/360 Balloon 0 0 84 82 360
- - ------------------------------------------------------------------------------------------------------------------------------------
171 0.0933 Act/360 Balloon 0 0 180 177 360
172 0.1733 Act/360 Balloon 0 0 120 117 360
173 0.0933 Act/360 Balloon 0 0 120 118 360
174 0.1683 Act/360 ARD 0 0 120 119 300
175 0.0933 Act/360 Balloon 0 0 120 117 360
- - ------------------------------------------------------------------------------------------------------------------------------------
176 0.0933 Act/360 ARD 0 0 120 119 360
177 0.1683 30/360 Balloon 0 0 120 116 300
178 0.1683 30/360 Balloon 0 0 120 117 360
179 0.0933 30/360 Balloon 0 0 84 82 360
180 0.0933 Act/360 Balloon 0 0 84 77 360
- - ------------------------------------------------------------------------------------------------------------------------------------
181 0.1683 30/360 Fully Amortizing 0 0 240 238 240
182 0.0933 Act/360 ARD 0 0 120 118 360
183 0.1683 Act/360 ARD 0 0 120 118 360
184 0.1683 Act/360 ARD 0 0 120 119 360
185 0.0933 Act/360 Balloon 0 0 120 117 360
- - ------------------------------------------------------------------------------------------------------------------------------------
186 0.0933 Act/360 ARD 0 0 120 120 360
187 0.0933 Act/360 Balloon 0 0 120 118 300
188 0.1533 Act/360 Balloon 0 0 120 117 360
189 0.1683 30/360 Fully Amortizing 0 0 240 238 240
190 0.1433 30/360 Balloon 0 0 120 112 360
- - ------------------------------------------------------------------------------------------------------------------------------------
191 0.1533 Act/360 ARD 0 0 120 120 300
192 0.1683 Act/360 ARD 0 0 121 119 360
193 0.0933 30/360 Balloon 0 0 84 82 360
194 0.0933 30/360 Balloon 0 0 84 73 360
195 0.1683 Act/360 Balloon 0 0 120 117 300
- - ------------------------------------------------------------------------------------------------------------------------------------
196 0.0933 30/360 Balloon 0 0 84 73 360
197 0.0933 30/360 Fully Amortizing 0 0 276 275 276
198 0.1683 Act/360 Balloon 0 0 120 117 360
199 0.0933 30/360 Fully Amortizing 0 0 300 298 300
200 0.0933 Act/360 ARD 0 0 180 179 360
- - ------------------------------------------------------------------------------------------------------------------------------------
201 0.1433 Act/360 Balloon 0 0 120 114 360
202 0.0933 Act/360 Balloon 0 0 120 118 360
203 0.1433 Act/360 ARD 0 0 120 119 240
204 0.0933 30/360 Balloon 0 0 84 82 360
205 0.1733 Act/360 Balloon 0 0 180 176 360
- - ------------------------------------------------------------------------------------------------------------------------------------
206 0.0933 Act/360 Balloon 0 0 83 78 360
207 0.1433 Act/360 Balloon 0 0 120 113 240
208 0.1533 Act/360 ARD 0 0 84 83 360
209 0.1433 Act/360 ARD 0 0 120 120 360
210 0.0933 Act/360 Balloon 0 0 120 116 360
- - ------------------------------------------------------------------------------------------------------------------------------------
211 0.1733 Act/360 Balloon 0 0 120 118 360
212 0.0933 Act/360 Balloon 0 0 60 58 360
213 0.0933 Act/360 Balloon 0 0 120 116 300
214 0.1533 Act/360 Balloon 0 0 120 118 300
- - ------------------------------------------------------------------------------------------------------------------------------------
214a
214b
214c
214d
- - ------------------------------------------------------------------------------------------------------------------------------------
215 0.1733 30/360 Balloon 0 0 120 117 360
216 0.0933 Act/360 Balloon 0 0 120 117 300
217 0.0933 30/360 ARD 0 0 120 119 360
218 0.1433 Act/360 Balloon 0 0 120 117 300
219 0.0933 Act/360 Balloon 0 0 120 119 324
- - ------------------------------------------------------------------------------------------------------------------------------------
220 0.1683 30/360 Balloon 0 0 120 119 360
221 0.0933 30/360 Fully Amortizing 0 0 240 238 240
222 0.1433 Act/360 Balloon 0 0 120 120 360
223 0.0933 Act/360 Balloon 0 0 120 116 360
224 0.1683 30/360 Balloon 0 0 120 117 360
- - ------------------------------------------------------------------------------------------------------------------------------------
225 0.0933 Act/360 ARD 0 0 120 120 360
226 0.1433 Act/360 Balloon 0 0 120 118 360
227 0.1433 Act/360 Balloon 0 0 120 116 360
228 0.1533 Act/360 ARD 0 0 120 119 360
229 0.0933 Act/360 ARD 0 0 120 119 360
- - ------------------------------------------------------------------------------------------------------------------------------------
230 0.0933 Act/360 ARD 0 0 120 119 360
231 0.1683 30/360 Balloon 0 0 120 119 360
232 0.1433 Act/360 Balloon 0 0 120 118 360
233 0.1683 Act/360 Balloon 0 0 120 118 360
234 0.0933 Act/360 Balloon 0 0 120 116 360
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Remaining
Control Amortization Origination Maturity Balloon
No. Term (Mos.) Date Date Balance($) Property Type
================================================================================================================
<S> <C> <C> <C> <C> <C>
169 359 12/17/97 1/1/13 2,812,706 Retail - Unanchored
169a Retail - Unanchored
169b Retail - Unanchored
170 358 11/24/97 12/1/04 3,298,287 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
171 357 10/16/97 11/1/12 2,796,878 Multifamily - Conventional
172 357 10/31/97 11/1/07 3,128,976 Multifamily - Conventional
173 358 11/17/97 12/1/07 3,138,446 Office
174 299 12/29/97 1/1/08 2,817,821 Office
175 357 10/15/97 11/1/07 3,024,887 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
176 359 12/24/97 1/1/08 2,985,983 Retail - Unanchored
177 296 9/29/97 10/1/07 2,706,864 Retail - Unanchored
178 357 10/21/97 11/1/07 2,895,341 Retail - Anchored
179 358 11/3/97 12/1/04 3,013,896 Multifamily - Conventional
180 353 6/25/97 7/1/04 3,081,471 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
181 238 11/24/97 12/1/17 - Industrial/Warehouse
182 358 11/25/97 12/1/07 2,790,016 Retail - Unanchored
183 358 11/24/97 12/1/07 2,811,811 Retail - Anchored
184 359 12/2/97 1/1/08 2,728,758 Multifamily - Conventional
185 357 10/6/97 11/1/07 2,738,541 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
186 360 1/7/98 2/1/08 2,613,782 Multifamily - Conventional
187 298 11/3/97 12/1/07 2,472,983 Office
188 357 10/22/97 11/1/07 2,664,673 Retail - Unanchored
189 238 11/7/97 12/1/17 - Office
190 352 5/12/97 6/1/07 2,654,482 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
191 300 1/9/98 2/1/08 2,326,489 Mobile Home Park
192 358 12/1/97 1/1/08 2,447,355 Multifamily - Conventional
193 358 11/24/97 12/1/04 2,565,335 Multifamily - Conventional
194 349 2/24/97 3/1/04 2,589,368 Multifamily - Conventional
195 297 10/16/97 11/1/07 2,228,908 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
196 349 2/24/97 3/1/04 2,515,387 Multifamily - Conventional
197 275 12/11/97 1/1/21 - Hotel - Limited Service
198 357 10/24/97 11/1/07 2,389,350 Retail - Unanchored
199 298 11/17/97 12/1/22 - Multifamily - Conventional
200 359 12/24/97 1/1/13 2,047,709 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
201 354 7/31/97 8/1/07 2,375,916 Office
202 358 11/21/97 12/1/07 2,209,888 Office
203 239 12/16/97 1/1/08 1,753,743 Industrial/Warehouse
204 358 11/24/97 12/1/04 2,288,775 Multifamily - Conventional
205 356 9/24/97 10/1/12 1,987,368 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
206 355 6/7/97 8/1/04 2,356,264 Retail - Unanchored
207 233 6/13/97 7/1/07 1,790,197 Multifamily - Conventional
208 359 12/10/97 1/1/05 2,293,031 Office
209 360 1/8/98 2/1/08 2,097,082 Industrial/Warehouse
210 356 9/23/97 10/1/07 2,138,874 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
211 358 11/4/97 12/1/07 2,073,647 Multifamily - Conventional
212 358 11/10/97 12/1/02 2,233,076 Office
213 296 9/19/97 10/1/07 1,926,524 Industrial/Warehouse
214 298 11/6/97 12/1/07 1,889,395 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
214a Retail - Unanchored
214b Retail - Unanchored
214c Retail - Unanchored
214d Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
215 357 10/29/97 11/1/07 1,994,080 Multifamily - Conventional
216 297 10/7/97 11/1/07 1,895,641 Retail - Unanchored
217 359 12/12/97 1/1/08 1,951,162 Other
218 297 10/30/97 11/1/07 1,866,600 Office
219 323 12/2/97 1/1/08 1,859,195 Office
- - ----------------------------------------------------------------------------------------------------------------
220 359 12/19/97 1/1/08 1,893,167 Multifamily - Section 42
221 238 11/7/97 12/1/17 - Office
222 360 1/2/98 2/1/08 1,905,043 Office
223 356 9/25/97 10/1/07 1,931,160 Retail - Unanchored
224 357 10/14/97 11/1/07 1,851,851 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
225 360 1/7/98 2/1/08 1,851,429 Multifamily - Conventional
226 358 11/11/97 12/1/07 1,900,987 Retail - Unanchored
227 356 9/24/97 10/1/07 1,901,091 Retail - Anchored
228 359 12/12/97 1/1/08 1,864,734 Office
229 359 12/31/97 1/1/08 1,855,065 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
230 359 12/18/97 1/1/08 1,836,665 Multifamily - Conventional
231 359 12/19/97 1/1/08 1,755,482 Multifamily - Section 42
232 358 11/19/97 12/1/07 1,787,887 Self Storage
233 358 11/20/97 12/1/07 1,759,890 Multifamily - Conventional
234 356 9/30/97 10/1/07 1,764,430 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Annual
Control Debt Net Appraised
No. Prepayment Provisions Service($) Cash Flow($) DSCR(x) Value($)
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
169 L(7),YM1%(7.5),O(.5) or DEF 301,469 416,093 1.38 4,900,000
169a
169b
170 L(3),YM1%(3.5),O(.5) or DEF 297,342 371,554 1.25 5,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
171 L(7),YM1%(7.5),O(.5) or DEF 297,636 362,604 1.22 4,700,000
172 L(4),YM1%(5.5),O(.5) or DEF 295,535 370,353 1.25 4,450,000
173 L(4),YM1%(5.5),O(.5) or DEF 311,702 419,733 1.35 4,700,000
174 L(4),YM1%(5.5),O(.5) 302,768 621,777 2.05 12,500,000
175 L(4),YM1%(5.5),O(.5) or DEF 287,377 379,187 1.32 4,600,000
- - ------------------------------------------------------------------------------------------------------------------------------
176 L(4),YM1%(5.5),O(.5) or DEF 279,159 360,541 1.29 4,800,000
177 L(4),YM1%(5.5),O(.5) or DEF 305,377 410,455 1.34 4,600,000
178 L(4),YM1%(5.5),O(.5) 286,089 369,091 1.29 4,250,000
179 L(3),YM1%(3.5),O(.5) or DEF 266,926 458,375 1.72 5,150,000
180 L(3),YM1%(3.5),O(.5) or DEF 296,529 390,855 1.32 4,100,000
- - ------------------------------------------------------------------------------------------------------------------------------
181 L(8),YM1%(11.5),O(.5) 317,380 415,301 1.31 4,800,000
182 L(4),YM1%(5.5),O(.5) or DEF 267,156 334,063 1.25 4,100,000
183 L(4),YM1%(5.5),O(.5) 279,459 399,027 1.43 4,350,000
184 L(5),YM1%(4.5),O(.5) 252,114 307,006 1.22 4,000,000
185 L(4),5(1),4(1),3(1),2(1),1(1),O(1) 260,363 344,488 1.32 3,910,000
- - ------------------------------------------------------------------------------------------------------------------------------
186 L(4),YM1%(5.75),O(.25) or DEF 239,026 322,293 1.35 3,800,000
187 L(4),YM1%(5.5),O(.5) or DEF 278,092 375,719 1.35 4,500,000
188 L(4),YM1%(5.5),O(.5) or DEF 257,411 348,982 1.36 4,160,000
189 L(4),YM1%(15.5),O(.5) or DEF 294,543 431,615 1.47 5,220,000
190 L(4),YM1%(5.5),O(.5) or DEF 275,025 342,191 1.24 3,900,000
- - ------------------------------------------------------------------------------------------------------------------------------
191 L(4),YM1%(5.75),O(.25) or DEF 248,406 341,259 1.37 3,850,000
192 L(4),YM1%(5.58),O(.5) 226,937 313,170 1.38 3,540,000
193 L(3),YM1%(3.5),O(.5) or DEF 231,266 385,670 1.67 3,900,000
194 L(2),YM1%(4.5),O(.5) or DEF 246,545 297,106 1.21 3,500,000
195 L(4),YM1%(5.5),O(.5) 242,581 293,352 1.21 3,480,000
- - ------------------------------------------------------------------------------------------------------------------------------
196 L(2),YM1%(4.5),O(.5) or DEF 239,501 315,644 1.32 3,400,000
197 L(10),YM1%(7),5(1),4(1),3(1),2(1),1(1.5),O(.5) 256,450 491,045 1.91 4,700,000
198 L(4),YM1%(5.5),O(.5) 228,323 331,734 1.45 3,600,000
199 L(10),YM1%(14.5),O(.5) or DEF 237,330 291,609 1.23 3,400,000
200 L(7),YM1%(7.5),O(.5) or DEF 216,501 284,600 1.31 3,550,000
- - ------------------------------------------------------------------------------------------------------------------------------
201 L(3),5(1),4(1),3(1),2(3),1(.5),O(.5) or DEF 235,780 325,728 1.38 3,850,000
202 L(4),YM1%(5.5),O(.5) or DEF 210,381 279,192 1.33 3,350,000
203 L(4),YM1%(5.75),O(.25) or DEF 248,324 430,844 1.74 3,750,000
204 L(3),YM1%(3.5),O(.5) or DEF 205,467 351,710 1.71 3,800,000
205 L(5),YM1%(9.5),O(.5) or DEF 217,417 293,043 1.35 3,220,000
- - ------------------------------------------------------------------------------------------------------------------------------
206 L(4),YM1%(2.4167),O(.5) or DEF 229,824 314,335 1.37 3,730,000
207 L(4),YM1%(5.5),O(.5) 259,209 362,796 1.40 3,450,000
208 L(4),3(1),2(1),1(.5),O(.5) 205,637 273,322 1.33 3,300,000
209 L(2),YM1%(7.5),O(.5) or DEF 193,351 250,260 1.29 3,000,000
210 L(5),YM1%(4.5),O(.5) or DEF 208,520 287,607 1.38 3,400,000
- - ------------------------------------------------------------------------------------------------------------------------------
211 L(4),YM1%(5.5),O(.5) or DEF 196,407 250,578 1.28 3,150,000
212 L(2),YM(1),2.5(1),1.5(.5),O(.5) or DEF 192,948 244,099 1.27 3,150,000
213 L(4),YM1%(5.5),O(.5) or DEF 214,263 288,499 1.35 3,350,000
214 L(5),YM1%(4.5),O(.5) or DEF 211,014 304,738 1.44 3,070,000
- - ------------------------------------------------------------------------------------------------------------------------------
214a 810,000
214b 900,000
214c 560,000
214d 800,000
- - ------------------------------------------------------------------------------------------------------------------------------
215 L(4),YM1%(5.5),O(.5) or DEF 192,039 266,793 1.39 3,100,000
216 L(5),YM1%(4.75),O(.25) 213,204 325,845 1.53 3,950,000
217 L(4),YM1%(5.5),O(.5) or DEF 188,049 256,532 1.36 3,100,000
218 L(2),YM1%(7.5),O(.5) 212,701 276,302 1.30 3,000,000
219 L(4),YM1%(5.5),O(.5) or DEF 190,625 251,306 1.32 3,550,000
- - ------------------------------------------------------------------------------------------------------------------------------
220 L(4),YM1%(5),O(1) 177,773 216,638 1.22 2,750,000
221 L(10),YM1%(9.5),O(.5) or DEF 211,549 281,238 1.33 3,375,000
222 L(4),YM1%(5.5),O(.5) or DEF 182,877 238,739 1.31 2,900,000
223 L(4),YM1%(5.5),O(.5) or DEF 192,740 297,359 1.54 2,870,000
224 L(4),YM1%(5),O(1) 174,429 219,828 1.26 2,750,000
- - ------------------------------------------------------------------------------------------------------------------------------
225 L(4),YM1%(5.75),O(.25) 169,310 245,330 1.45 2,700,000
226 L(4),YM1%(5.5),O(.5) or DEF 187,466 272,472 1.45 3,000,000
227 L(4),YM1%(5.5),O(.5) or DEF 188,802 270,010 1.43 3,500,000
228 L(4),YM1%(5.75),O(.25) or DEF 180,014 245,098 1.36 2,900,000
229 L(4),YM1%(5.75),O(.25) or DEF 176,375 258,358 1.46 3,000,000
- - ------------------------------------------------------------------------------------------------------------------------------
230 L(4),YM1%(5.75),O(.25) or DEF 169,692 226,871 1.34 2,735,000
231 L(4),YM1%(5),O(1) 164,844 204,519 1.24 2,550,000
232 L(3),YM1%(6.5),O(.5) 175,936 239,959 1.36 2,800,000
233 L(4),YM1%(5.75),O(.25) or DEF 165,353 218,294 1.32 2,500,000
234 L(4),YM1%(5.5),O(.5) or DEF 166,991 207,354 1.24 2,500,000
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled Loan per
Control Appraisal Date Maturity Year Year Bed, Pad Bed, Pad Occupancy
No. Year LTV (%) Date LTV (%) Built Renovated or Room or Room ($) Percentage (%)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
169 1997 73.4 57.4 1986-87 N/A 65,657 Sq Foot 54.83 100.0
169a 1997 1986 N/A 40,502 Sq Foot
169b 1997 1987 N/A 25,155 Sq Foot
170 1997 71.9 66.0 1986 N/A 136 Unit 26,470.59 92.0
- - ----------------------------------------------------------------------------------------------------------------------------------
171 1997 76.5 59.5 1986 N/A 70 Unit 51,428.57 100.0
172 1997 79.6 70.3 1995 N/A 80 Unit 44,375.00 96.1
173 1997 74.4 66.8 1987 N/A 43,392 Sq Foot 80.66 100.0
174 1997 28.0 22.5 1981 N/A 219,585 Sq Foot 15.94 65.0
175 1997 74.3 65.8 1966 1993 106,648 Sq Foot 32.11 99.0
- - ----------------------------------------------------------------------------------------------------------------------------------
176 1997 70.8 62.2 1984 N/A 55,043 Sq Foot 61.77 82.0
177 1997 73.0 58.8 1988 N/A 33,036 Sq Foot 102.16 100.0
178 1997 77.8 68.1 1964 1987 52,311 Sq Foot 63.37 97.1
179 1997 64.0 58.5 1987 N/A 106 Unit 31,132.08 96.2
180 1997 79.7 75.2 1985 N/A 192 Unit 17,083.33 97.9
- - ----------------------------------------------------------------------------------------------------------------------------------
181 1997 66.4 0.0 1988-91 N/A 117,694 Sq Foot 27.19 91.0
182 1997 76.8 68.0 1979 1995-96 53,820 Sq Foot 58.53 100.0
183 1997 72.0 64.6 1960 1992 96,958 Sq Foot 32.33 97.0
184 1997 78.0 68.2 1987-89 N/A 120 Unit 26,000.00 96.7
185 1997 79.1 70.0 1971 N/A 175 Unit 17,714.29 90.3
- - ----------------------------------------------------------------------------------------------------------------------------------
186 1997 79.0 68.8 1985 N/A 172 Unit 17,441.86 96.6
187 1997 66.6 55.0 1986 N/A 64,789 Sq Foot 46.30 85.2
188 1997 72.0 64.1 1986 1996 39,637 Sq Foot 75.69 96.5
189 1997 57.3 0.0 1995 N/A 49,118 Sq Foot 61.08 100.0
190 1996 76.5 68.1 1970 N/A 137 Unit 21,897.81 93.0
- - ----------------------------------------------------------------------------------------------------------------------------------
191 1997 75.3 60.4 1976 N/A 186 Pad 15,591.40 96.0
192 1997 79.0 69.1 1984 N/A 112 Unit 25,000.00 94.6
193 1997 71.7 65.8 1977 N/A 102 Unit 27,450.98 95.1
194 1997 79.4 74.0 1976 1993 140 Unit 20,000.00 97.1
195 1997 78.8 64.0 1971 N/A 115 Unit 23,913.04 99.1
- - ----------------------------------------------------------------------------------------------------------------------------------
196 1997 79.4 74.0 1982 N/A 112 Unit 24,285.71 83.0
197 1997 57.4 0.0 1995-96 1996 80 Room 33,750.00 NAV
198 1997 74.9 66.4 1971 1987 52,938 Sq Foot 51.00 100.0
199 1997 79.2 0.0 1996-97 N/A 72 Unit 37,500.00 93.0
200 1997 74.6 57.7 1979 1992 57,910 Sq Foot 45.76 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
201 1997 68.6 61.7 1947 1988 55,222 Sq Foot 47.99 100.0
202 1997 74.6 66.0 1984 N/A 23,939 Sq Foot 104.43 100.0
203 1997 66.6 46.8 1938-43 1980's 186,980 Sq Foot 13.37 98.4
204 1997 65.7 60.2 1973 N/A 104 Unit 24,038.46 83.7
205 1997 77.5 61.7 1962 N/A 190 Unit 13,157.89 93.2
- - ----------------------------------------------------------------------------------------------------------------------------------
206 1997 66.9 63.2 1979 N/A 59,354 Sq Foot 42.12 88.2
207 1997 71.7 51.9 1979 1996 345 Unit 7,246.38 90.5
208 1997 75.0 69.5 1987 N/A 29,912 Sq Foot 82.74 100.0
209 1997 80.0 69.9 1997 N/A 50,940 Sq Foot 47.11 100.0
210 1997 70.4 62.9 1984 N/A 56,481 Sq Foot 42.49 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
211 1997 74.5 65.8 1966-69 N/A 87 Unit 27,011.49 100.0
212 1997 74.5 70.9 1981 N/A 56,955 Sq Foot 41.26 100.0
213 1997 69.9 57.5 1914-94 1990's 119,263 Sq Foot 19.70 100.0
214 1997 74.8 61.5 1985-86 N/A 39,590 Sq Foot 58.10 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
214a 1997 1985 N/A 3,360 Sq Foot
214b 1997 1985 N/A 1,920 Sq Foot
214c 1997 1986 N/A 3,300 Sq Foot
214d 1997 1985 N/A 2,800 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
215 1997 74.0 64.3 1972 N/A 104 Unit 22,115.38 95.2
216 1997 58.1 48.0 1984 N/A 33,686 Sq Foot 68.28 88.1
217 1997 72.5 62.9 1965 N/A 35,286 Sq Foot 63.76 100.0
218 1997 74.8 62.2 1987 N/A 50,000 Sq Foot 45.00 94.3
219 1997 61.9 52.4 1972 1997 47,106 Sq Foot 46.70 95.2
- - ----------------------------------------------------------------------------------------------------------------------------------
220 1997 79.9 68.8 1987 N/A 95 Unit 23,157.89 93.7
221 1997 64.7 0.0 1992 N/A 33,664 Sq Foot 65.05 95.3
222 1997 74.1 65.7 1992 N/A 27,378 Sq Foot 78.53 100.0
223 1997 74.8 67.3 1986 N/A 35,134 Sq Foot 61.19 100.0
224 1997 78.0 67.3 1986-1988 N/A 82 Unit 26,219.51 93.9
- - ----------------------------------------------------------------------------------------------------------------------------------
225 1997 78.7 68.6 1972 N/A 120 Unit 17,708.33 90.0
226 1997 70.8 63.4 1989 N/A 45,800 Sq Foot 46.40 98.6
227 1997 60.5 54.3 1973 N/A 90,475 Sq Foot 23.43 100.0
228 1997 72.4 64.3 1987 N/A 26,296 Sq Foot 79.86 100.0
229 1997 70.0 61.8 1988 N/A 50,154 Sq Foot 41.87 91.4
- - ----------------------------------------------------------------------------------------------------------------------------------
230 1997 76.7 67.2 1979-83 N/A 78 Unit 26,923.08 100.0
231 1997 79.9 68.8 1987 N/A 100 Unit 20,400.00 95.0
232 1997 71.4 63.9 1995-96 N/A 90,905 Sq Foot 22.00 84.0
233 1997 79.9 70.4 1963 1995 80 Unit 25,000.00 96.3
234 1997 79.8 70.6 1983 1997 60 Unit 33,333.33 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
---------------------------------------------------
Tenant
Control Rent Roll Underwriting Area Leased Lease Control
No. Date Reserves ($) per Tenant Name (Sq. Ft.) Exp Date No.
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
169 12/10/97 0.22 Sq Foot 169
169a Nu Life Fitness Center 9,960 4/1/98 169a
169b The Talbot's, Inc. 4,300 1/31/03 169b
170 7/08/97 283.00 Unit 170
- - ------------------------------------------------------------------------------------------------------------------------
171 7/01/97 188.63 Unit 171
172 9/08/97 182.00 Unit 172
173 1/25/98 0.19 Sq Foot 173
174 12/09/97 0.15 Sq Foot 174
175 9/30/97 0.15 Sq Foot Publix 45,753 8/18/13 175
- - ------------------------------------------------------------------------------------------------------------------------
176 10/30/97 0.16 Sq Foot Blockbuster Entertainment 6,000 3/31/99 176
177 9/12/97 0.15 Sq Foot Cost Plus, Inc. 15,000 1/31/99 177
178 1/01/97 0.15 Sq Foot House of Denmark 14,000 11/30/98 178
179 8/09/97 225.00 Unit 179
180 11/30/97 200.00 Unit 180
- - ------------------------------------------------------------------------------------------------------------------------
181 10/06/97 0.24 Sq Foot 181
182 11/20/97 0.24 Sq Foot B&G Printing 8,416 2/28/02 182
183 1/13/98 0.15 Sq Foot Shop N' Save 34,634 8/23/04 183
184 10/01/97 229.26 Unit 184
185 8/31/97 223.71 Unit 185
- - ------------------------------------------------------------------------------------------------------------------------
186 11/01/97 225.00 Unit 186
187 7/30/97 0.20 Sq Foot 187
188 10/02/97 0.37 Sq Foot Calico Jacks 8,094 8/31/02 188
189 8/22/97 0.15 Sq Foot 189
190 3/13/97 279.58 Unit 190
- - ------------------------------------------------------------------------------------------------------------------------
191 11/10/97 34.95 Pad 191
192 9/10/97 150.00 Unit 192
193 10/13/97 200.00 Unit 193
194 7/07/97 216.00 Unit 194
195 7/31/97 288.00 Unit 195
- - ------------------------------------------------------------------------------------------------------------------------
196 7/06/97 317.00 Unit 196
197 NAV 4% of Gross Income 197
198 7/31/97 0.20 Sq Foot Hampden St. Antique Market 16,727 2/28/99 198
199 11/03/97 175.00 Unit 199
200 1/08/98 0.15 Sq Foot C&S Hardware - 9/30/99 200
- - ------------------------------------------------------------------------------------------------------------------------
201 5/20/97 0.16 Sq Foot 201
202 10/01/97 0.25 Sq Foot 202
203 9/15/97 0.16 Sq Foot 203
204 10/08/97 250.00 Unit 204
205 9/01/97 200.00 Unit 205
- - ------------------------------------------------------------------------------------------------------------------------
206 8/27/97 0.17 Sq Foot Northwest Fabrics 30,000 1/31/02 206
207 4/30/97 200.00 Unit 207
208 12/04/97 0.15 Sq Foot 208
209 9/08/97 0.10 Sq Foot 209
210 8/01/97 0.19 Sq Foot McDougal Realtors 14,300 4/30/99 210
- - ------------------------------------------------------------------------------------------------------------------------
211 10/01/97 279.23 Unit 211
212 1/29/98 0.43 Sq Foot 212
213 8/01/97 0.33 Sq Foot 213
214 NAV 0.18 Sq Foot 214
- - ------------------------------------------------------------------------------------------------------------------------
214a Snellville Automotive 3,360 4/30/05 214a
214b McNeese Enterprises 1,920 11/30/99 214b
214c ABS Precision, Inc. 3,300 12/31/99 214c
214d Auto Unlimited 2,800 9/30/99 214d
- - ------------------------------------------------------------------------------------------------------------------------
215 8/10/97 279.18 Unit 215
216 9/01/97 0.31 Sq Foot Skips Boots 7,100 10/11/00 216
217 11/12/93 0.23 Sq Foot 217
218 8/01/97 0.20 Sq Foot 218
219 11/01/97 0.15 Sq Foot 219
- - ------------------------------------------------------------------------------------------------------------------------
220 9/22/97 217.41 Unit 220
221 7/24/97 0.12 Sq Foot 221
222 1/01/98 0.24 Sq Foot 222
223 8/01/97 0.28 Sq Foot Ladies Workout Express 5,200 3/31/01 223
224 9/15/97 258.76 Unit 224
- - ------------------------------------------------------------------------------------------------------------------------
225 11/04/97 225.00 Unit 225
226 8/04/97 0.31 Sq Foot Social Security Administration 6,579 10/17/00 226
227 12/31/96 0.15 Sq Foot Laneco 86,005 2/5/03 227
228 12/01/97 0.16 Sq Foot 228
229 12/11/97 0.15 Sq Foot Dollar General 7,400 11/30/99 229
- - ------------------------------------------------------------------------------------------------------------------------
230 9/15/97 204.00 Unit 230
231 9/22/97 217.41 Unit 231
232 9/21/97 0.10 Sq Foot 232
233 10/22/97 250.00 Unit 233
234 7/25/97 354.00 Unit 234
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Address City
==============================================================================================================================
<S> <C> <C> <C>
235 Power Road Medical Center 215 & 217 South Power Road Mesa
236 26 East Baseline Road NEC of Central Avenue & Baseline Road Phoenix
237 Country Club Arms Apartments 1775 Cedar Post Lane Rock Hill
238 Sherman Street Apartments 1240, 1250, and 1260 Sherman Street Denver
239 Greenbriar Square Shopping Center 1530 Clark Road Duncanville
- - ------------------------------------------------------------------------------------------------------------------------------
240 Woodberry Forest Apartments 914 South Oriole Circle Virginia Beach
241 Metro Crest Apartments 1515 Metrocrest Drive Carrollton
242 4490 Von Karman Ave. 4490 Von Karman Ave. Newport Beach
243 Art Colony Apartments 1122 Crescent Avenue Atlanta
244 N. 10th & Vine Street Building 819 North 10th Street Sacramento
- - ------------------------------------------------------------------------------------------------------------------------------
245 3 & 4 Corporate Plaza (Roll-up) 3 & 4 Corporate Plaza Newport Beach
245a 3 Corporate Plaza 3 Corporate Plaza Newport Beach
245b 4 Corporate Plaza 4 Corporate Plaza Newport Beach
- - ------------------------------------------------------------------------------------------------------------------------------
246 CVS - H&R Block Center 284-286 Winthrop St. Taunton
247 The Crowne Building 1870 The Exchange Marietta
248 23193 Sandalfoot Plaza Drive 23193 Sandalfoot Plaza Drive Boca Raton
249 CVS - St. Andrews 1248 St. Andrews Rd. Columbia
250 Fair Oaks Shopping Center 9901 Royal Lane Dallas
- - ------------------------------------------------------------------------------------------------------------------------------
251 Windrush Apartments 2447 Lockhill-Selma Road San Antonio
252 Tutor Time Child Care Center 1401 NE Green Oaks Boulevard Arlington
253 680 Bridgeport Avenue 680 Bridgeport Avenue Shelton
254 NW 57th Ave. & NW 176th St. SWC of NW 57th Ave. & NW 176th St. Miami
255 Warwick Apartments 2819 Las Vegas Trail Fort Worth
- - ------------------------------------------------------------------------------------------------------------------------------
256 Grove One Apartments 3052 S.W. 27th Avenue Coconut Grove (Miami)
257 2410 West Temple Street 2410 West Temple Street Los Angeles
258 NWC Northwest 183rd St. & US 441 NWC Northwest 183rd St. & US 441 Miami
259 9575 Southern Boulevard 9575 Southern Boulevard Royal Palm Beach
260 The Outlot Shoppes at Fort Wayne NEC of Coldwater Rd & Noble Drive Ft. Wayne
- - ------------------------------------------------------------------------------------------------------------------------------
261 Twin Oaks Village Office Park Eastern Boulevard & Vaughn Road Montgomery
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Crossed % of Aggregate Cumulative
Control Zip Collateralized Original Cut-off Date Cut-off Date % of Initial Mortgage
No. State Code Groups Balance ($) Balance ($) Balance Pool Balance Rate (%)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
235 AZ 85206 2,000,000 1,978,512 0.11% 97.96% 9.1700
236 AZ 85040 1,975,000 1,971,062 0.11% 98.07% 8.0800
237 SC 29703 1,950,000 1,946,629 0.11% 98.18% 7.6900
238 CO 80206 1,850,000 1,848,038 0.10% 98.29% 7.5300
239 TX 75137 1,825,000 1,823,967 0.10% 98.39% 7.3200
- - ------------------------------------------------------------------------------------------------------------------------------------
240 VA 23451 1,760,000 1,746,568 0.10% 98.49% 8.0000
241 TX 75006 1,750,000 1,745,020 0.10% 98.58% 7.8000
242 CA 92660 1,750,000 1,744,007 0.10% 98.68% 8.2000
243 GA 30309 1,744,000 1,740,873 0.10% 98.78% 7.5600
244 CA 95614 1,675,000 1,670,135 0.09% 98.88% 7.7000
- - ------------------------------------------------------------------------------------------------------------------------------------
245 CA 92660 Group K 1,630,000 1,625,150 0.09% 98.97% 8.4000
----------------------------------------------
245a CA 92660 Group K 955,000 952,158
245b CA 92660 Group K 675,000 672,991
- - ------------------------------------------------------------------------------------------------------------------------------------
246 MA 02780 1,600,000 1,597,083 0.09% 99.06% 7.5000
247 GA 30339 1,550,000 1,548,702 0.09% 99.14% 7.9600
248 FL 33428 1,550,000 1,538,698 0.09% 99.23% 8.0800
249 SC 29210 1,460,000 1,455,349 0.08% 99.31% 7.5400
250 TX 75231 1,350,000 1,349,296 0.08% 99.39% 7.5700
- - ------------------------------------------------------------------------------------------------------------------------------------
251 TX 78230 1,300,000 1,293,409 0.07% 99.46% 8.4000
252 TX 76006 1,250,000 1,245,316 0.07% 99.53% 8.0500
253 CT 06484 1,125,000 1,121,523 0.06% 99.59% 8.1100
254 FL 33169 1,100,000 1,097,047 0.06% 99.66% 8.0800
255 TX 76116 1,070,000 1,066,697 0.06% 99.72% 7.5500
- - ------------------------------------------------------------------------------------------------------------------------------------
256 FL 33133 1,000,000 994,654 0.06% 99.77% 7.6600
257 CA 91010 960,000 958,972 0.05% 99.83% 7.5000
258 FL 33162 950,000 946,804 0.05% 99.88% 8.2800
259 FL 33411 850,000 847,718 0.05% 99.93% 8.0800
260 IN 46804 665,000 664,323 0.04% 99.97% 7.6500
- - ------------------------------------------------------------------------------------------------------------------------------------
261 AL 36117 Group I 615,000 613,738 0.03% 100.00% 8.1700
- - ------------------------------------------------------------------------------------------------------------------------------------
1,778,622,776 1,775,167,073 100.00%
<CAPTION>
Original Remaining
Interest Original Remaining Term to Term to Original
Control Administrative Accrual Amortization Interest-Only Interest-Only Maturity Maturity Amortization
No. Cost Rate (%) Method Type Period (Mos.) Period (Mos.) (Mos.) (Mos.) Term (Mos.)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
235 0.1433 Act/360 Fully Amortizing 0 0 240 232 240
236 0.1683 30/360 Balloon 0 0 120 117 360
237 0.1533 Act/360 Balloon 0 0 120 117 360
238 0.1683 Act/360 Balloon 0 0 120 118 360
239 0.0933 Act/360 ARD 0 0 180 179 360
- - ------------------------------------------------------------------------------------------------------------------------------------
240 0.0933 30/360 Balloon 0 0 84 73 360
241 0.0933 Act/360 Balloon 0 0 120 117 300
242 0.0933 Act/360 Balloon 0 0 120 116 300
243 0.1733 Act/360 Balloon 0 0 120 117 360
244 0.1683 Act/360 Balloon 0 0 120 117 300
- - ------------------------------------------------------------------------------------------------------------------------------------
245 0.0933 30/360 Fully Amortizing 0 0 300 297 300
245a
245b
- - ------------------------------------------------------------------------------------------------------------------------------------
246 0.0933 Act/360 Balloon 0 0 120 117 360
247 0.0933 Act/360 ARD 0 0 180 179 300
248 0.0933 Act/360 Balloon 0 0 180 177 192
249 0.0933 Act/360 Fully Amortizing 0 0 240 238 240
250 0.0933 Act/360 ARD 0 0 180 179 360
- - ------------------------------------------------------------------------------------------------------------------------------------
251 0.0933 30/360 Balloon 0 0 84 76 360
252 0.0933 30/360 Fully Amortizing 0 0 228 226 228
253 0.1433 Act/360 Balloon 0 0 120 114 360
254 0.0933 Act/360 Balloon 0 0 180 177 300
255 0.0933 Act/360 Balloon 0 0 120 115 360
- - ------------------------------------------------------------------------------------------------------------------------------------
256 0.0933 30/360 Fully Amortizing 0 0 240 237 240
257 0.1683 Act/360 Balloon 0 0 120 118 360
258 0.0933 Act/360 Balloon 0 0 120 116 300
259 0.0933 Act/360 Balloon 0 0 180 177 300
260 0.1533 Act/360 Balloon 0 0 120 118 360
- - ------------------------------------------------------------------------------------------------------------------------------------
261 0.1533 30/360 Balloon 0 0 120 118 300
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Remaining
Control Amortization Origination Maturity Balloon
No. Term (Mos.) Date Date Balance($) Property Type
================================================================================================================
<S> <C> <C> <C> <C> <C>
235 232 5/30/97 6/1/17 120,622 Office
236 357 10/17/97 11/1/07 1,735,406 Retail - Unanchored
237 357 10/20/97 11/1/07 1,730,340 Multifamily - Conventional
238 358 11/10/97 12/1/07 1,635,318 Multifamily - Conventional
239 359 12/12/97 1/1/13 1,415,869 Retail - Anchored
- - ----------------------------------------------------------------------------------------------------------------
240 349 2/24/97 3/1/04 1,627,603 Multifamily - Conventional
241 297 10/28/97 11/1/07 1,433,596 Multifamily - Conventional
242 296 9/12/97 10/1/07 1,450,492 Office
243 357 10/7/97 11/1/07 1,542,574 Multifamily - Conventional
244 297 10/28/97 11/1/07 1,368,141 Industrial/Warehouse
- - ----------------------------------------------------------------------------------------------------------------
245 297 10/24/97 11/1/22 - Office
245a Office
245b Office
- - ----------------------------------------------------------------------------------------------------------------
246 357 10/17/97 11/1/07 1,413,087 Retail - Anchored
247 299 12/2/97 1/1/13 1,030,014 Office
248 189 10/6/97 11/1/12 203,802 Retail - Unanchored
249 238 11/12/97 12/1/17 55,169 Retail - Anchored
250 359 12/12/97 1/1/13 1,058,915 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
251 352 5/15/97 6/1/04 1,208,506 Multifamily - Conventional
252 226 11/5/97 12/1/16 - Retail - Unanchored
253 354 7/31/97 8/1/07 1,008,644 Office
254 297 10/6/97 11/1/12 735,526 Industrial/Warehouse
255 355 8/19/97 9/1/07 946,223 Multifamily - Conventional
- - ----------------------------------------------------------------------------------------------------------------
256 237 10/29/97 11/1/17 - Multifamily - Conventional
257 358 11/24/97 12/1/07 847,959 Multifamily - Conventional
258 296 9/17/97 10/1/07 789,191 Retail - Unanchored
259 297 10/6/97 11/1/12 568,361 Retail - Unanchored
260 358 11/26/97 12/1/07 589,587 Retail - Unanchored
- - ----------------------------------------------------------------------------------------------------------------
261 298 11/5/97 12/1/07 498,828 Office
- - ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Annual
Control Debt Net Appraised
No. Prepayment Provisions Service($) Cash Flow($) DSCR(x) Value($)
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
235 L(10),YM1%(9.5),O(.5) 218,565 283,534 1.30 3,300,000
236 L(4),YM1%(5.5),O(.5) 175,226 236,544 1.35 2,600,000
237 L(4),YM1%(5.5),O(.5) or DEF 166,671 203,576 1.22 2,470,000
238 L(5),5(1),4(1),3(1),2(1),1(.75),O(.25) 155,682 209,545 1.35 2,350,000
239 L(7),YM1%(7.5),O(.5) or DEF 150,438 199,058 1.32 2,440,000
- - ------------------------------------------------------------------------------------------------------------------------------
240 L(2),YM1%(4.5),O(.5) or DEF 154,971 190,242 1.23 2,200,000
241 L(3.5),5(1),4(1),3(1),2(1),1(2),O(.5) or DEF 159,309 202,456 1.27 2,300,000
242 L(5),YM1%(4.5),O(.5) or DEF 164,874 351,913 2.13 3,650,000
243 L(4),YM1%(5.5),O(.5) or DEF 147,192 180,214 1.22 2,200,000
244 L(4),YM1%(5.5),O(.5) 151,162 198,976 1.32 2,300,000
- - ------------------------------------------------------------------------------------------------------------------------------
245 L(4),YM1%(20.5),O(.5) or DEF 156,186 207,187 1.33 2,890,000
245a 1,550,000
245b 1,340,000
- - ------------------------------------------------------------------------------------------------------------------------------
246 L(5),5(2),4(2),3(.75),O(.25) or DEF 134,249 168,446 1.25 2,400,000
247 L(4),YM1%(10.75),O(.25) or DEF 143,065 209,662 1.47 2,200,000
248 L(5),< YM2%(9.5),O(.5) 172,910 226,904 1.31 2,280,000
249 L(4),YM1%(15.5),O(.5) or DEF 141,569 174,063 1.23 2,050,000
250 L(7),YM1%(7.5),O(.5) or DEF 114,050 164,173 1.44 1,735,000
- - ------------------------------------------------------------------------------------------------------------------------------
251 L(1.83),YM1%(4.67),O(.5) or DEF 118,847 156,129 1.31 2,200,000
252 L(4),YM1%(14.5),O(.5) or DEF 128,636 176,072 1.37 1,750,000
253 L(3),5(1),4(1),3(1),2(3),1(.5),O(.5) or DEF 100,095 129,509 1.29 1,500,000
254 L(5),< YM2%(9.5),O(.5) 102,580 148,785 1.45 1,480,000
255 L(3),YM1%(6.5),O(.5) 90,219 152,489 1.69 1,550,000
- - ------------------------------------------------------------------------------------------------------------------------------
256 L(4),YM1%(15.5),O(.5) 97,849 117,453 1.20 1,260,000
257 L(4),YM1%(5.5),O(.5) 80,550 113,023 1.40 1,200,000
258 L(5),YM1%(4.5),O(.5) 90,112 113,027 1.25 1,340,000
259 L(5),< YM2%(9.5),O(.5) 79,267 112,984 1.43 1,200,000
260 L(4),YM1%(5.5),O(.5) or DEF 56,619 78,336 1.38 900,000
- - ------------------------------------------------------------------------------------------------------------------------------
261 L(4),YM1%(5.5),O(.5) or DEF 57,794 76,161 1.32 1,170,000
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled Loan per
Control Appraisal Date Maturity Year Year Bed, Pad Bed, Pad Occupancy
No. Year LTV (%) Date LTV (%) Built Renovated or Room or Room ($) Percentage (%)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
235 1997 60.0 3.7 1987 N/A 41,411 Sq Foot 48.30 100.0
236 1997 75.8 66.7 1988 N/A 43,170 Sq Foot 45.75 92.7
237 1997 78.8 70.1 1974 N/A 80 Unit 24,375.00 94.0
238 1997 78.6 69.6 1948 1984 83 Unit 22,289.16 100.0
239 1997 74.8 58.0 1981 N/A 57,910 Sq Foot 31.51 92.6
- - ----------------------------------------------------------------------------------------------------------------------------------
240 1997 79.4 74.0 1971 N/A 92 Unit 19,130.43 94.6
241 1997 75.9 62.3 1969 1990 143 Unit 12,237.76 91.0
242 1997 47.8 39.7 1984 1989 30,390 Sq Foot 57.58 100.0
243 1997 79.1 70.1 1962 1996 49 Unit 35,591.84 89.8
244 1997 72.6 59.5 1960-70's 1991 164,863 Sq Foot 10.16 91.8
- - ----------------------------------------------------------------------------------------------------------------------------------
245 1997 56.2 0.0 1979 N/A 40,423 Sq Foot 40.32 100.0
245a 1997 1979 N/A 20,269 Sq Foot
245b 1997 1979 N/A 20,154 Sq Foot
- - ----------------------------------------------------------------------------------------------------------------------------------
246 1997 66.6 58.9 1987 N/A 14,350 Sq Foot 111.50 100.0
247 1997 70.4 46.8 1979 N/A 30,504 Sq Foot 50.81 100.0
248 1997 67.5 8.9 1988 N/A 14,140 Sq Foot 109.62 100.0
249 1997 71.0 2.7 1997 N/A 10,125 Sq Foot 144.20 100.0
250 1997 77.8 61.0 1984 N/A 14,957 Sq Foot 90.26 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
251 1997 58.8 54.9 1973 N/A 89 Unit 14,606.74 96.0
252 1997 71.2 0.0 1996 N/A 14,000 Sq Foot 89.29 100.0
253 1997 74.8 67.2 1986 N/A 15,960 Sq Foot 70.49 100.0
254 1997 74.1 49.7 1997 N/A 9,816 Sq Foot 112.06 100.0
255 1997 68.8 61.0 1971 1996 100 Unit 10,700.00 92.0
- - ----------------------------------------------------------------------------------------------------------------------------------
256 1997 78.9 0.0 1996 N/A 20 Unit 50,000.00 100.0
257 1997 79.9 70.7 1992 N/A 29 Unit 33,103.45 86.2
258 1997 70.7 58.9 1960 1994 7,000 Sq Foot 135.71 100.0
259 1997 70.6 47.4 1997 N/A 11,140 Sq Foot 76.30 100.0
260 1997 73.8 65.5 1988 N/A 7,000 Sq Foot 95.00 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
261 1997 52.5 42.6 1984-1991 N/A 14,947 Sq Foot 41.15 100.0
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
---------------------------------------------------
Tenant
Control Rent Roll Underwriting Area Leased Lease Control
No. Date Reserves ($) per Tenant Name (Sq. Ft.) Exp Date No.
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
235 4/09/97 0.22 Sq Foot 235
236 10/01/97 0.10 Sq Foot Greenbacks, Inc. 14,900 1/31/08 236
237 6/01/97 300.00 Unit 237
238 8/08/97 267.61 Unit 238
239 10/30/97 0.18 Sq Foot Minyard Food Stores - 6/1/07 239
- - ------------------------------------------------------------------------------------------------------------------------
240 7/07/97 232.00 Unit 240
241 9/26/97 250.00 Unit 241
242 12/01/94 0.25 Sq Foot 242
243 9/19/97 225.00 Unit 243
244 9/11/97 0.15 Sq Foot 244
- - ------------------------------------------------------------------------------------------------------------------------
245 8/01/97 0.17 Sq Foot 245
245a 245a
245b 245b
- - ------------------------------------------------------------------------------------------------------------------------
246 9/09/97 0.15 Sq Foot CVS 10,000 1/31/17 246
247 9/01/97 0.25 Sq Foot 247
248 9/25/97 0.18 Sq Foot Tire Kingdom 6,270 8/31/14 248
249 12/11/97 0.10 Sq Foot CVS 10,125 12/31/17 249
250 10/29/97 0.23 Sq Foot Premiere Video 5,402 1/31/01 250
- - ------------------------------------------------------------------------------------------------------------------------
251 8/28/97 317.00 Unit 251
252 12/01/95 0.21 Sq Foot Tutor Time Child Care 14,000 11/30/15 252
253 9/19/97 0.18 Sq Foot 253
254 9/23/97 0.30 Sq Foot 254
255 3/24/97 250.00 Unit 255
- - ------------------------------------------------------------------------------------------------------------------------
256 9/01/97 175.00 Unit 256
257 8/27/97 180.00 Unit 257
258 7/31/97 0.17 Sq Foot Payless Shoes 4,000 1/31/05 258
259 9/23/97 0.15 Sq Foot Brake World 3,984 4/30/07 259
260 9/16/97 0.15 Sq Foot Clark and Mitchell 2,400 0 260
- - ------------------------------------------------------------------------------------------------------------------------
261 8/11/97 0.36 Sq Foot 261
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. The Annual Debt Service, hence the DSCR, reflects the annualized monthly
principal and interest during the period in which the loan is amortizing.
<PAGE>
LB Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates,
Series 1998-C1
$1,557,709,000
(Approximate)
Offered Certificates
[GRAPHIC OMITTED]
% of Mortgage Pool by Cut-off Date Balance
LEHMAN BROTHERS
First Union Capital Markets Corp.
<PAGE>
LB Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates, Series 1998-C1
(LBCMT 1998-C1)
- - -----------------------------------------------------------------------
% Credit
- - ------------------------ % of Deal Enhancement
Class A-1
Aaa/AAA 15.5% 29.50%
- - ------------------------
Class A-2
Aaa/AAA 18.6% 29.50%
- - ------------------------
Class A-3 Class IO
Aaa/AAA Aaa/AAA 36.4% 29.50%
- - ------------------------
Class B
Aa2/AA 5.0% 24.50%
- - ------------------------
Class C
A2/A 5.0% 19.50%
- - ------------------------
Class D
Baa2/BBB 5.3% 14.25%
- - ------------------------
Class E
Baa3/BBB 2.0% 12.25%
- - ------------------------
Class F 3.0% 9.25%
- - ------------------------
Class G 2.0% 7.25%
- - ------------------------
Class H 1.0% 6.25%
- - ------------------------
Class J 2.5% 3.75%
- - ------------------------
Class K 1.0% 2.75%
- - ------------------------
Class L 1.0% 1.75%
- - ------------------------
Class M 1.8%
- - ------------------------
- - -----------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================================================
Original Avg Principal Legal
Class Face Rating (M/D) Description Coupon Life (1) Window (1) Status
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A-1 $ 275,000,000 Aaa/AAA Fixed 4.33 3/98 - 10/04 Public
- - ----------------------------------------------------------------------------------------------------------------
A-2 $ 330,000,000 Aaa/AAA Fixed 7.75 10/04 - 8/07 Public
- - ----------------------------------------------------------------------------------------------------------------
A-3 $ 646,492,000 Aaa/AAA Fixed 9.71 8/07 - 1/08 Public
- - ----------------------------------------------------------------------------------------------------------------
IO $1,775,167,073(2) Aaa/AAA WAC IO 9.63(3) 3/98 - 2/28 (3) Public
- - ----------------------------------------------------------------------------------------------------------------
B $ 88,759,000 Aa2/AA Fixed 9.85 1/08 - 1/08 Public
- - ----------------------------------------------------------------------------------------------------------------
C $ 88,758,000 A2/A Fixed 9.90 1/08 - 9/08 Public
- - ----------------------------------------------------------------------------------------------------------------
D $ 93,196,000 Baa2/BBB Fixed 12.59 9/08 - 8/12 Public
- - ----------------------------------------------------------------------------------------------------------------
E $ 35,504,000 Baa3/BBB- Fixed 14.61 8/12 - 11/12 Public
- - ----------------------------------------------------------------------------------------------------------------
F $ 53,255,000 Not Offered Fixed 14.75 11/12 - 1/13 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
G $ 35,503,000 Not Offered Fixed 14.85 1/13 - 1/13 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
H $ 17,752,000 Not Offered Fixed 14.85 1/13 - 1/13 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
J $ 44,379,000 Not Offered Fixed 15.21 1/13 - 11/14 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
K $ 17,751,000 Not Offered Fixed 17.57 11/14 - 8/16 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
L $ 17,752,000 Not Offered Fixed 19.15 8/16 - 11/17 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
M $ 31,066,073 Not Offered Fixed 23.23 11/17 - 2/28 Private, 144A
- - ----------------------------------------------------------------------------------------------------------------
Total $1,775,167,073
================================================================================================================
</TABLE>
(1) Assuming among other things, 0% CPR, no losses and that ARD loans pay off
on their Anticipated Repayment Date. Expressed in years.
(2) Represents notional amount on Class IO.
(3) Represents average life of related principal notional amounts on Class IO.
Rating Agencies: Moody's and Duff & Phelp's
Trustee: LaSalle National Bank
Master Servicer: GMAC Commercial Mortgage Corporation
Special Servicer: GMAC Commercial Mortgage Corporation
Closing Date: On or about March 11, 1998 (40 days accrued interest)
B-2
<PAGE>
LBCMT 98-C1 Structural Term Sheet (continued):
Cut-off Date: February 1, 1998.
ERISA: Classes A-1, A-2, A-3 and IO are expected to be eligible for
Lehman's individual prohibited transaction exemption with
respect to ERISA.
SMMEA: Classes A-1, A-2, A-3, B and IO are "mortgage related
securities" for purposes of SMMEA.
Payment: Pays on 18th of each month or, if such date is not a business
day, then the following business day, commencing March 18,1998.
The Class IO: The Class IO is comprised of fourteen components, one relating
to each class of Sequential Pay Certificates.
Optional Call: 1% Clean-up Call.
Collateral: The Certificates are backed by 261 mortgage loans secured by
first liens on 288 commercial and multifamily properties, such
mortgage loans having been originated by an affiliate of Lehman
Brothers, or its approved conduit originators.
Offering Highlights
o Newly Originated Collateral. The collateral consists of
261 Mortgage Loans with a principal balance (as of
February 1, 1998) of approximately $1.775 billion.
O Call Protection. 100% of the Mortgage Loans contain call
protection provisions. 98% of the Mortgage Loans provide
for initial lockout period followed by i) defeasance; or
ii) yield maintenance; or/and iii) percentage penalty. The
weighted average lockout and defeasance periods for all
loans is 8.9 years. The Mortgage Loans are generally
prepayable without penalty between three to six months
from Mortgage Loan maturity.
================================================================================
Type of Call Protection # of Loans % of Balance
- - --------------------------------------------------------------------------------
Lockout (weighted average 60 months),
then Defeasance 179 71.5
- - --------------------------------------------------------------------------------
Lockout (weighted average 56 months), then
Yield Maintenance("YM")* 66 21.3
- - --------------------------------------------------------------------------------
Lockout (weighted average 68 months), then
declining penalties 11 4.2
- - --------------------------------------------------------------------------------
Lockout (weighted average 60 months), then YM*,
then declining penalties 3 0.9
- - --------------------------------------------------------------------------------
Declining penalties only 2 2.0
================================================================================
* 97.1% of such Mortgage Loans provide for yield maintenance
prepayment premiums that are calculated at a discount rate
of Treasuries flat.
o No loan delinquent 30 days or more as of the Cut-off Date.
o $6.8 million average loan balance as of the Cut-off Date.
o 1.34x Weighted Average Debt Service Coverage Ratio
("DSCR") as of the Cut-off Date.
o 73.2% Weighted Average Loan to Value ("LTV") as of the
Cut-off Date.
o Property Types. 44.8% Retail (79.9% Anchored and 20.1%
Unanchored), 24.8% Multifamily, 16.3% Office, 6.3% Hotel,
5.5% Industrial/Warehouse and 1.3% Health Care.
o Geographic Diversification. Texas (10.2%), Florida (9.4%),
New York (8.4%), California (8.0%), Maryland (5.7%),
Pennsylvania (5.7%); all other states less than 5% each.
o Monthly Investor Reporting. Updated collateral summary
information will be part of the monthly remittance report
in addition to detailed P&I payment and delinquency
information. Quarterly NOI and Occupancy to the extent
delivered by borrowers, will be available to
Certificateholders.
o Cash Flows will be Modeled on BLOOMBERG.
(Except as otherwise indicated, percentages (%) represent the
principal amount of loan or loans compared to aggregate pool
balance, as of the Cut-off Date (the "Initial Pool Balance."))
B-3
<PAGE>
LBCMT 98-C1 Structural Term Sheet (continued):
Priority and Timing of Cash Flows *
[GRAPHIC OMITTED]
* Assuming 0% CPR, no losses. Otherwise based on Table Assumptions.
MORTGAGE LOANS: The collateral consists of an approximately $1.775 billion
pool of 261 fixed rate mortgage loans secured by first liens
on commercial and multifamily properties in 36 different
states. As of the Cut-off Date, the Mortgage Loans have a
weighted average coupon ("WAC") of 7.603% and a weighted
average maturity ("WAM") of 131 months (based upon the
anticipated repayment date of ARD loans).
See the Collateral Summary tables at the end of this memo
for more Mortgage Loan details.
CREDIT
ENHANCEMENT: Credit enhancement for each class of Certificates will be
provided by the classes of Certificates which are
subordinate in priority with respect to payments of interest
and principal.
DISTRIBUTIONS: Principal and interest payments will generally be made to
Certificateholders in the following order:
1) Interest to the Senior Classes: Class A-1,
Class A-2, Class A-3 and Class IO, pro rata,
2) Principal to Class A-1 until such Class is
retired,*
3) Principal to Class A-2 until such Class is
retired,*
4) Principal to Class A-3 until such Class is
retired,*
5) Interest to Class B, then Principal to
Class B until such Class is retired,
6) Interest to Class C, then Principal to
Class C until such Class is retired,
7) Interest to Class D, then Principal to
Class D until such Class is retired,
8) Interest to Class E, then Principal to
Class E until such Class is retired,
9) Interest and Principal to the Private
Classes, sequentially.
* Pro rata if Classes B through M are
retired.
REALIZED LOSSES: Realized Losses from any Mortgage Loan will be allocated in
reverse sequential order (i.e. Classes M, L, K, J, H, G, F,
E, D, C and B, in that order, and then pro-rata to Classes
A-1, A-2, and A-3).
B-4
<PAGE>
LBCMT 98-C1 Structural Term Sheet (continued):
- - ----------------------------------------------
APPRAISAL
REDUCTIONS: With respect to certain specially serviced Mortgage
Loans as to which an appraisal is required
(including any Mortgage Loan that becomes 60 days
delinquent), an Appraisal Reduction Amount may be
created, in the amount, if any, by which the Stated
Principal Balance of such Mortgage Loan, together
with unadvanced interest, unreimbursed P&I advances
and certain other items, exceeds 90% of the
appraised value of the related Mortgaged Property.
The Appraisal Reduction Amount will reduce
proportionately the amount of any P&I Advance for
such loan, which reduction may result in a shortfall
of interest to the most subordinate class of
Principal Balance Certificates outstanding. The
Appraisal Reduction Amount will be reduced to zero
as of the date the related Mortgage Loan has been
brought current for three months, paid in full,
repurchased or otherwise liquidated, and any
shortfalls borne by the subordinate classes may be
made whole.
<TABLE>
<CAPTION>
PREPAYMENT PREMIUMS (% represents % of Cut-off Date Balance):
- - --------------------------------------------------------------------------------------------------------------------------------
Prepayment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Premium 2/98 2/99 2/00 2/01 2/02 2/03 2/04 2/05 2/06 2/07 2/08
- - -----------------------------------------------------------------------------------------------------------------------------
Lock-out 98.0% 98.0% 95.2% 80.3% 29.5% 24.8% 21.1% 13.8% 11.0% 9.6% 1.7%
- - -----------------------------------------------------------------------------------------------------------------------------
Defeasance 2.4% 14.5% 50.5% 49.0% 49.2% 47.4% 48.3% 44.0% 17.6%
- - -----------------------------------------------------------------------------------------------------------------------------
YM 0.1% 3.0% 16.3% 16.8% 18.4% 16.6% 18.0% 15.7% 3.6%
- - -----------------------------------------------------------------------------------------------------------------------------
5% 0.2% 0.2% 0.4% 1.4% 0.2%
- - -----------------------------------------------------------------------------------------------------------------------------
4% 0.2% 0.6% 1.4% 0.2% 0.2%
- - -----------------------------------------------------------------------------------------------------------------------------
3% 2.0% 1.1% 1.1% 1.2% 1.0% 0.6% 1.9%
- - -----------------------------------------------------------------------------------------------------------------------------
2% 0.9% 1.1% 1.1% 1.2% 1.0% 1.6% 2.1% 0.5%
- - -----------------------------------------------------------------------------------------------------------------------------
1% 0.9% 0.9% 0.9% 1.2% 1.1% 2.7% 2.3% 0.8%
- - -----------------------------------------------------------------------------------------------------------------------------
Open 1.8% 10.0% 0.3%
=============================================================================================================================
Matured 5.2% 5.2% 17.6% 17.6% 17.6% 75.6%
=============================================================================================================================
Total 100.0% 100.0% 100.0% 100.0% 100.0% % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=============================================================================================================================
</TABLE>
* Note that Prepayment Premiums generally end prior to the last three to six
months before the Mortgage Loan's maturity date.
ALLOCATION OF PREPAYMENT PREMIUMS:
All Prepayment Premiums are distributed to
Certificateholders on the Distribution Date
following the one-month collection period in which
the prepayment occurred. All Prepayment Premiums
will be allocated to the Classes A through G, in
each case, up to the product of (i) the Prepayment
Premium, (ii) the "Discount Rate Fraction" and (iii)
the percentage of the total principal distribution
to Certificateholders to which such Class is
entitled. Any excess amounts will be distributed to
Class IO. The Discount Rate Fraction for Classes A
through G is defined as: (Coupon on Class -
Reinvestment Yield) / (Coupon on Mortgage Loan -
Reinvestment Yield)
B-5
<PAGE>
LBCMT 98-C1 Structural Term Sheet (continued):
PREPAYMENT PREMIUM ALLOCATION EXAMPLE:
The Yield Maintenance prepayment premium will
generally be equal to the present value of the
reduction in interest payments as a result of the
prepayment through the maturity of the Mortgage
Loan, discounted at the yield of a Treasury security
of similar maturity in most cases (converted from
semi-annual to monthly pay). The following example
reflects that method.
General Yield Maintenance Example:
Assuming the structure presented on pages 3 and 4 of
this memo and the following assumptions:
Mortgage Loan Characteristics of loan being
prepaid*:
Balance $10,000,000
Coupon 8.0%
Maturity 10 yrs (February 1, 2008)
Amortization Term 30 yrs
Prepayment Date 3/1/98
Prepayment Premium Type Yield Maintenance (Treasuries flat)
Certificate Characteristics
Class A-1 Coupon 6.00%
* The Yield Maintenance formula for certain Mortgage Loans may result in a lower
Yield Maintenance prepayment premium than set forth in this example.
<TABLE>
<CAPTION>
Mortgage Class A-1 Class IO
Loan Certificates Certificates
=======================================================================================================================
<S> <C> <C> <C>
Amount of Principal Prepayment $10,000,000 $10,000,000 N/A
- - -------------------------------------------------------------------------------------------------------------------------
Maturity Date of the Mortgage Loan 2/01/08
Number of Payments (1) 120
- - -------------------------------------------------------------------------------------------------------------------------
Treasury Note used for Reinvestment Yield (2) 7.875% 11/07
Treasury Yield (CBE) 5.563%
Reinvestment Yield (Mtg) (3) 5.500%
- - -------------------------------------------------------------------------------------------------------------------------
Mortgage Rate 8.00%
Payment Differential ($ per month) (4) $20,833.33
- - -------------------------------------------------------------------------------------------------------------------------
Certificate Pass-Through Rate 6.00%
- - -------------------------------------------------------------------------------------------------------------------------
Total Prepayment Premium $1,919,658
- - -------------------------------------------------------------------------------------------------------------------------
Discount Rate Fraction Calculation (6.00% - 5.500%) / excess
(Class A-1 Coupon - Reinvestment Yield) / (8.00% - 5.500%) = prepayment
(Gross Mortgage Rate - Reinvestment Yield) = 0.5 / 2.5 = premiums
- - -------------------------------------------------------------------------------------------------------------------------
$ Premium allocated to each class $383,931.60 $1,535,726.40
=========================================================================================================================
</TABLE>
(1) The number of payments to discount for yield maintenance prepayment
premium computation.
(2) The yield on the treasury note with a maturity date closest to the
maturity date of the loan.
(3) The Reinvestment Yield used is the mortgage equivalent of the CBE treasury
yield.
(4) (Mortgage Rate - Reinvestment Yield) x (amount of Principal Prepayment) /
12 used for 120 payments.
B-6
<PAGE>
LBCMT 98-C1 Structural Term Sheet (continued):
ADVANCING: The Master Servicer will be obligated to make
advances of scheduled principal and interest
payments (excluding balloon payments and Appraisal
Reduction Amounts) and certain servicing expenses
("Advances"), to the extent that such Advances are
deemed to be recoverable. If the Master Servicer
fails to make a required Advance, the Trustee or
Fiscal Agent will be obligated to make such
advances.
CONTROLLING CLASS
REPRESENTATIVE: A Controlling Class Representative will be appointed by a
majority of Certificateholders of the Controlling Class, which
will generally be the most subordinate class with a
Certificate Balance outstanding that is at least 25% of the
initial Certificate Balance of such Class. The Controlling
Class Representative will, subject to certain limitations, be
entitled to direct the Special Servicer on how to resolve
delinquent or defaulted loans.
SPECIAL SERVICER
FLEXIBILITY: The Pooling and Servicing Agreement will generally
permit the Special Servicer to modify, waive or
amend any term of any Mortgage Loan if (a) it
determines, in accordance with the servicing
standard, that it is appropriate to do so and (b)
among other things, such modification, waiver or
amendment will not, subject to certain exceptions:
(i) affect the amount or timing of any
scheduled payments of principal,
interest or other amount (including
Prepayment Premiums and Yield
Maintenance Charges) payable under the
Mortgage Loan;
(ii) affect the obligation of the related
borrower to pay a Prepayment Premium or
Yield Maintenance Charge or permit a
principal prepayment during the
applicable Lockout Period;
(iii) except as expressly provided by the
related Mortgage or in connection with a
material adverse environmental condition
at the related Mortgaged Property,
result in a release of the lien of the
related Mortgage on any material portion
of such Mortgaged Property without a
corresponding principal prepayment, or;
(iv) in the judgment of the Special Servicer,
materially impair the security for the
Mortgage Loan or reduce the likelihood
of timely payment of amounts due
thereon.
SPECIAL AND GMAC COMMERCIAL MORTGAGE CORPORATION ("GMAC")
MASTER SERVICER: As of December 31, 1997, GMAC had a total commercial
and multifamily mortgage loan servicing portfolio
(including loans serviced for its own account and
for others) of approximately $40.2 billion.
B-7
<PAGE>
LBCMT 98-C1 Structural Term Sheet (continued):
MINIMUM DENOMINATIONS:
Minimum Increments
Classes Denomination Thereafter Delivery
- - -------------------------------------------------------------------------------
A-1, A-2, A-3, B, C, D, and E $10,000 $1 DTC
- - -------------------------------------------------------------------------------
IO $100,000 $1 DTC
DETAILED MONTHLY INVESTOR REPORTING:
Updated collateral summary information will be a
part of the monthly remittance report in addition to
detailed P&I payment and delinquency information.
Quarterly NOI and Occupancy data, to the extent
delivered by the borrowers, will be available to
Certificateholders through the Trustee. The
following is a list of all the reports that will be
available to Certificateholders:
<TABLE>
<CAPTION>
<C> <S> <S>
Name of Report Description (information provided)
- - -------------------------------------------------------------------------------------------------------------------
1 Remittance Report principal and interest distributions, principal balances
- - -------------------------------------------------------------------------------------------------------------------
2 Mortgage Loan Status Report portfolio stratifications
- - -------------------------------------------------------------------------------------------------------------------
3 Comparative Financial Status Report revenue, NOI, DSCR to the extent available
- - -------------------------------------------------------------------------------------------------------------------
4 Delinquent Loan Status Report listing of delinquent mortgage loans
- - -------------------------------------------------------------------------------------------------------------------
5 Historical Loan Modification Report information on modified mortgage loans
- - -------------------------------------------------------------------------------------------------------------------
6 Historical Loss Estimate Report liquidation proceeds, expenses, and realized losses
- - -------------------------------------------------------------------------------------------------------------------
7 REO Status Report NOI and value of REO
- - -------------------------------------------------------------------------------------------------------------------
8 Watch List listing of loans in jeopardy of becoming Specially Serviced
- - -------------------------------------------------------------------------------------------------------------------
9 Loan Payoff Notification Report listing of loans that have given notice of intent to payoff
</TABLE>
B-8
<PAGE>
COLLATERAL OVERVIEW (as of the cut-off date - February 1, 1998):
- - ----------------------------------------------------------------
GENERAL CHARACTERISTICS
===============================================================
Characteristics
- - ---------------------------------------------------------------
Initial Pool Balance $1,775,167,073
- - ---------------------------------------------------------------
# of Loans 261
- - ---------------------------------------------------------------
Gross WAC 7.603%
- - ---------------------------------------------------------------
Original WAM 134(mos)
- - ---------------------------------------------------------------
Remaining WAM 131(mos)
- - ---------------------------------------------------------------
Avg. Loan Balance $6,801,406
- - ---------------------------------------------------------------
WA DSCR 1.34x
- - ---------------------------------------------------------------
WA Cut-off Date LTV Ratio 73.2%
- - ---------------------------------------------------------------
Balloon Loans 62.3%
- - ---------------------------------------------------------------
ARD Loans 30.1%
- - ---------------------------------------------------------------
PROPERTY TYPES
================================================================
Property % of Initial Pool
Types Balance
- - ---------------------------------------------------------------
Retail 44.8%
- - ---------------------------------------------------------------
Multifamily 24.8%
- - ---------------------------------------------------------------
Office 16.3%
- - ---------------------------------------------------------------
Hotel 6.3%
- - ---------------------------------------------------------------
Industrial/Warehouse 5.5%
- - ---------------------------------------------------------------
Health Care 1.3%
- - ---------------------------------------------------------------
Self Storage 0.6%
- - ----------------------------------------------------------------
Mobile Home Park 0.2%
- - ---------------------------------------------------------------
Parking Garage 0.1%
================================================================
DEAL SUMMARY BY PROPERTY TYPE:
- - -----------------------------------------------------------------
<TABLE>
<CAPTION>
Aggregate Average Rem. WA WA
# of Cut-off Date % of Cut-off Date Gross WAM LTV WA Occup. % %
Property Type Loans Balance Pool Balance WAC (mos) Ratio DSCR (x) Rate ) CA Balloon
($) ($) (%) (%) (%)(1)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail 103 794,883,450 44.8 7,717,315 7.68 130 73.0 1.33 96.0 4.5 25.1
- - ------------------------------------------------------------------------------------------------------------------------------------
Anchored 65 642,223,097 36.2 9,880,355 7.67 131 73.3 1.32 95.9 3.8 18.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Unanchored 38 152,660,353 8.6 4,017,378 7.72 127 71.6 1.40 96.1 0.7 6.7
- - ------------------------------------------------------------------------------------------------------------------------------------
Multifamily 75 440,621,293 24.8 5,874,951 7.42 127 76.9 1.31 94.4 2.0 17.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Conventional 72 424,398,139 23.9 5,894,419 7.42 127 77.0 1.31 94.4 2.0 16.5
- - ------------------------------------------------------------------------------------------------------------------------------------
Section 42 3 16,223,153 0.9 5,407,718 7.30 118 75.2 1.24 94.1 - 0.9
- - ------------------------------------------------------------------------------------------------------------------------------------
Office 50 289,905,060 16.3 5,798,101 7.67 130 70.4 1.34 96.6 0.8 11.0
- - ------------------------------------------------------------------------------------------------------------------------------------
Hotel 9 112,290,555 6.3 12,476,728 7.50 145 71.3 1.52 - - 4.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Full Service 3 56,774,538 3.2 18,924,846 7.49 118 73.2 1.45 - - 3.2
- - ------------------------------------------------------------------------------------------------------------------------------------
Limited Service 6 55,516,017 3.1 9,252,670 7.52 172 69.3 1.59 - - 1.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial/W'hse 16 97,954,817 5.5 6,122,176 7.70 153 68.5 1.39 98.3 0.3 2.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Health Care 3 23,216,532 1.3 7,738,844 7.49 134 75.7 1.46 94.2 0.4 1.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Assisted Living/ 1 9,740,102 0.5 9,740,102 7.66 118 73.8 1.46 93.0 - 0.5
Skilled Nursing
- - ------------------------------------------------------------------------------------------------------------------------------------
Congregate Care 1 7,481,807 0.4 7,481,807 7.13 118 79.6 1.37 100.0 0.4 0.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Assisted Living 1 5,994,623 0.3 5,994,623 7.67 179 74.0 1.57 89.0 - 0.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Self Storage 3 11,147,050 0.6 3,715,683 8.00 116 66.0 1.45 89.4 - 0.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Mobile Home Park 1 2,900,000 0.2 2,900,000 7.11 120 75.3 1.37 96.0 - -
- - ------------------------------------------------------------------------------------------------------------------------------------
Parking Garage 1 2,248,317 0.1 2,248,317 7.46 119 72.5 1.36 100.0 - -
====================================================================================================================================
Total/Avg/Min/Max/ 261 1,775,167,073 100.0 6,801,406 7.60 131 73.2 1.34 95.7 8.0 62.3
Wtd.Avg.:
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excluding Hotels.
B-9
<PAGE>
COLLATERAL OVERVIEW (as of the cut-off date - February 1, 1998):
DEAL SUMMARY BY PROPERTY TYPE (CONTINUED)
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Minimum
Aggregate % of Cut-off Cut-off Maximum Gross
Property # of Cut-off Date Initial Date Date Cut-off Date WAC
Type Loans Balance Pool Balance Balance Balance
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail 103 794,883,450 44.8 7,717,315 664,323 62,467,513 7.68
- - -----------------------------------------------------------------------------------------------------------
Anchored 65 642,223,097 36.2 9,880,355 1,455,349 62,467,513 7.67
- - -----------------------------------------------------------------------------------------------------------
Unanchored 38 152,660,353 8.6 4,017,378 664,323 11,477,744 7.72
- - -----------------------------------------------------------------------------------------------------------
Multifamily 75 440,621,293 24.8 5,874,951 958,972 33,180,421 7.42
- - -----------------------------------------------------------------------------------------------------------
Conventional 72 424,398,139 23.9 5,894,419 958,972 33,180,421 7.42
- - -----------------------------------------------------------------------------------------------------------
Section 42 3 16,223,153 0.9 5,407,718 2,038,367 11,986,547 7.30
- - -----------------------------------------------------------------------------------------------------------
Office 50 289,905,060 16.3 5,798,101 613,738 31,382,675 7.67
- - -----------------------------------------------------------------------------------------------------------
Hotel 9 112,290,555 6.3 12,476,728 2,696,562 20,360,654 7.50
- - -----------------------------------------------------------------------------------------------------------
Full Service 3 56,774,538 3.2 18,924,846 16,451,099 20,360,654 7.49
- - -----------------------------------------------------------------------------------------------------------
Limited Service 6 55,516,017 3.1 9,252,670 2,696,562 17,944,805 7.52
- - -----------------------------------------------------------------------------------------------------------
Industrial/W'hse 16 97,954,817 3.1 6,122,176 1,097,047 17,735,508 7.70
- - -----------------------------------------------------------------------------------------------------------
Health Care 3 23,216,532 1.3 7,738,844 5,994,623 9,740,102 7.49
- - -----------------------------------------------------------------------------------------------------------
Assisted Living/ 1 9,740,102 1.3 9,740,102 9,740,102 9,740,102 7.66
Skilled Nursing
- - -----------------------------------------------------------------------------------------------------------
Congregate Care 1 7,481,807 0.4 7,481,807 7,481,807 7,481,807 7.13
- - -----------------------------------------------------------------------------------------------------------
Assisted Living 1 5,994,623 0.3 5,994,623 5,994,623 5,994,623 7.67
- - -----------------------------------------------------------------------------------------------------------
Self Storage 3 11,147,050 0.6 3,715,683 1,998,192 4,656,636 8.00
- - -----------------------------------------------------------------------------------------------------------
Mobile Home Park 1 2,900,000 0.6 2,900,000 2,900,000 2,900,000 7.11
- - -----------------------------------------------------------------------------------------------------------
Parking Garage 1 2,248,317 0.1 2,248,317 2,248,317 2,248,317 7.46
===========================================================================================================
Total/Avg/Min/Max/ 261 1,775,167,073 100.0 6,801,406 613,738 62,467,513 7.60
Wtd.Avg.:
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Min Max Min Max WA Min Max WA Min Max
Property WAC WAC WAM WAM DSCR DSCR DSCR LTV LTV LTV
Type Ratio Ratio Ratio
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail 6.97 9.05 59 360 1.33 1.21 1.82 73.0 50.5 80.0
- - -----------------------------------------------------------------------------------------------------------
Anchored 6.97 9.05 59 360 1.32 1.21 1.80 73.3 50.5 80.0
- - -----------------------------------------------------------------------------------------------------------
Unanchored 7.23 8.46 78 229 1.40 1.25 1.82 71.6 55.4 77.8
- - -----------------------------------------------------------------------------------------------------------
Multifamily 6.98 8.57 58 299 1.31 1.19 1.72 76.9 58.8 80.0
- - -----------------------------------------------------------------------------------------------------------
Conventional 6.98 8.57 58 299 1.31 1.19 1.72 77.0 58.8 80.0
- - -----------------------------------------------------------------------------------------------------------
Section 42 7.12 7.36 118 119 1.24 1.22 1.24 75.2 73.5 79.9
- - -----------------------------------------------------------------------------------------------------------
Office 7.03 9.17 58 297 1.34 1.24 2.13 70.4 28.0 78.8
- - -----------------------------------------------------------------------------------------------------------
Hotel 7.36 7.97 117 275 1.52 1.40 2.05 71.3 54.4 77.4
- - -----------------------------------------------------------------------------------------------------------
Full Service 7.36 7.60 117 118 1.45 1.40 1.49 73.2 67.2 77.4
- - -----------------------------------------------------------------------------------------------------------
Limited Service 7.38 7.97 117 275 1.59 1.46 2.05 69.3 54.4 74.8
- - -----------------------------------------------------------------------------------------------------------
Industrial/W'hse 7.09 8.12 81 239 1.39 1.28 1.74 68.5 55.5 80.0
- - -----------------------------------------------------------------------------------------------------------
Health Care 7.13 7.67 118 179 1.46 1.37 1.57 75.7 73.8 79.6
- - -----------------------------------------------------------------------------------------------------------
Assisted Living/ 7.66 7.66 118 118 1.46 1.46 1.46 73.8 73.8 73.8
Skilled Nursing
- - -----------------------------------------------------------------------------------------------------------
Congregate Care 7.13 7.13 118 118 1.37 1.37 1.37 79.6 79.6 79.6
- - -----------------------------------------------------------------------------------------------------------
Assisted Living 7.67 7.67 179 179 1.57 1.57 1.57 74.0 74.0 74.0
- - -----------------------------------------------------------------------------------------------------------
Self Storage 7.84 8.17 114 118 1.45 1.33 1.60 66.0 58.2 71.8
- - -----------------------------------------------------------------------------------------------------------
Mobile Home Park 7.11 7.11 120 120 1.37 1.37 1.37 75.3 75.3 75.3
- - -----------------------------------------------------------------------------------------------------------
Parking Garage 7.46 7.46 119 119 1.36 1.36 1.36 72.5 72.5 72.5
===========================================================================================================
Total/Avg/Min/Max/ 6.97 9.17 58 360 1.34 1.19 2.13 73.2 28.0 80.0
Wtd.Avg.:
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
B-10
<PAGE>
COLLATERAL OVERVIEW (as of the cut-off date - February 1, 1998):
LOAN SIZE DISTRIBUTION
==============================================================================
% of Initial
Balance Ranges ($) # of Loans Pool Balance
- - -----------------------------------------------------------------------------
613,738 - 2,000,000 30 2.5
- - -----------------------------------------------------------------------------
2,000,001 - 4,000,000 72 11.5
- - -----------------------------------------------------------------------------
4,000,001 - 6,000,000 61 16.9
- - -----------------------------------------------------------------------------
6,000,001 - 8,000,000 27 10.3
- - -----------------------------------------------------------------------------
8,000,001 - 10,000,000 20 10.4
- - -----------------------------------------------------------------------------
10,000,001 - 12,000,000 14 8.9
- - -----------------------------------------------------------------------------
12,000,001 - 14,000,000 9 6.5
- - -----------------------------------------------------------------------------
14,000,001 - 16,000,000 8 6.6
- - -----------------------------------------------------------------------------
16,000,001 - 18,000,000 6 5.8
- - -----------------------------------------------------------------------------
18,000,001 - 20,000,000 8 8.6
- - -----------------------------------------------------------------------------
20,000,001 - 22,000,000 1 1.1
- - -----------------------------------------------------------------------------
22,000,001 - 24,000,000 1 1.3
- - -----------------------------------------------------------------------------
30,000,001 - 32,000,000 1 1.8
- - -----------------------------------------------------------------------------
32,000,001 - 34,000,000 1 1.9
- - -----------------------------------------------------------------------------
40,000,001 - 42,000,000 1 2.4
- - -----------------------------------------------------------------------------
62,000,001 - 62,467,513 1 3.5
=============================================================================
Minimum Balance: $613,738
Maximum Balance: $62,467,513
Average Balance: $6,801,406
GROSS RATE DISTRIBUTION
=======================================================
Gross Rate % of Initial
(%) Pool Balance
- - -------------------------------------------------------
6.970 - 6.999% 3.8
- - -------------------------------------------------------
7.000 - 7.249% 14.0
- - -------------------------------------------------------
7.250 - 7.499% 28.7
- - -------------------------------------------------------
7.500 - 7.749% 27.1
- - -------------------------------------------------------
7.750 - 7.999% 9.2
- - -------------------------------------------------------
8.000 - 8.249% 9.2
- - -------------------------------------------------------
8.250 - 8.499% 2.7
- - -------------------------------------------------------
8.500 - 8.749% 2.1
- - -------------------------------------------------------
8.750 - 8.999% 1.8
- - -------------------------------------------------------
9.000 - 9.170% 1.3
=======================================================
Minimum WAC: 6.970%
Maximum WAC: 9.170%
Weighted Avg. WAC: 7.603%
REMAINING TERMS TO MATURITY*
=======================================================
% of Initial
Months Pool Balance
- - -------------------------------------------------------
49 - 60 5.2
- - -------------------------------------------------------
73 - 84 12.4
- - -------------------------------------------------------
109 - 120 58.1
- - -------------------------------------------------------
133 - 144 1.1
- - -------------------------------------------------------
145 - 156 1.0
- - -------------------------------------------------------
169 - 180 13.3
- - -------------------------------------------------------
217 - 228 0.1
- - -------------------------------------------------------
229 - 240 5.6
- - -------------------------------------------------------
265 - 276 0.2
- - -------------------------------------------------------
289 - 300 2.5
- - -------------------------------------------------------
349 - 360 0.7
=======================================================
Minimum Remaining
Term to Maturity: 58 months
Maximum Remaining
Term to Maturity: 360 months
Weighted Average
Remaining Term to Maturity: 131 months
REMAINING AMORTIZATION TERM
=======================================================
% of Initial % of Initial
Months Pool Balance
- - -------------------------------------------------------
181 - 192 0.1
- - -------------------------------------------------------
217 - 228 0.1
- - -------------------------------------------------------
229 - 240 6.2
- - -------------------------------------------------------
265 - 276 0.5
- - -------------------------------------------------------
277 - 288 0.2
- - -------------------------------------------------------
289 - 300 18.4
- - -------------------------------------------------------
313 - 324 0.1
- - -------------------------------------------------------
325 - 336 0.3
- - -------------------------------------------------------
349 - 360 74.1
=======================================================
Minimum Remaining
Amortization Term: 189 months
Maximum Remaining
Amortization Term: 360 months
Weighted Average
Amortization Term: 338 months
* Assumes ARD Loans mature and pay off on their anticipated
repayment date.
B-11
<PAGE>
COLLATERAL OVERVIEW (as of the cut-off date - February 1, 1998):
DEBT SERVICE COVERAGE RATIOS
==============================================
% of Initial
DSCR Ranges (x) Pool Balance
- - -----------------------------------------------
1.19 - 1.24 14.3
- - -----------------------------------------------
1.25 - 1.29 26.7
- - -----------------------------------------------
1.30 - 1.34 19.1
- - -----------------------------------------------
1.35 - 1.39 16.5
- - -----------------------------------------------
1.40 - 1.44 6.6
- - -----------------------------------------------
1.45 - 1.49 7.9
- - -----------------------------------------------
1.50 - 1.54 1.4
- - -----------------------------------------------
1.55 - 1.59 2.6
- - -----------------------------------------------
1.60 - 1.64 1.1
- - -----------------------------------------------
1.65 - 1.69 0.9
- - -----------------------------------------------
1.70 - 1.74 0.8
- - -----------------------------------------------
1.80 - 1.84 1.3
- - -----------------------------------------------
1.90 - 1.94 0.2
- - -----------------------------------------------
2.05 - 2.14 0.6
===============================================
Minimum DSCR: 1.19x
Maximum DSCR: 2.13x
Weighted Average DSCR: 1.34x
LOAN TO VALUE % (LTV)
===============================================
% of Initial
LTV Ranges Pool Balance
- - -----------------------------------------------
25.01 - 30.00 0.2
- - -----------------------------------------------
45.01 - 50.00 0.6
- - -----------------------------------------------
50.01 - 55.00 2.2
- - -----------------------------------------------
55.01 - 60.00 2.7
- - -----------------------------------------------
60.01 - 65.00 2.9
- - -----------------------------------------------
65.01 - 70.00 11.3
- - -----------------------------------------------
70.01 - 75.00 42.2
- - -----------------------------------------------
75.01 - 80.00 37.8
===============================================
Minimum LTV: 28.0%
Maximum LTV: 80.0%
Weighted Average LTV: 73.2%
STATE DISTRIBUTION
===============================================
% of Initial
State Pool Balance
- - -----------------------------------------------
Texas 10.2
- - -----------------------------------------------
Florida 9.4
- - -----------------------------------------------
New York 8.4
- - -----------------------------------------------
California 8.0
- - -----------------------------------------------
Maryland 5.7
- - -----------------------------------------------
Pennsylvania 5.7
- - -----------------------------------------------
Tennessee 4.9
- - -----------------------------------------------
Nevada 4.0
- - -----------------------------------------------
Ohio 3.9
- - -----------------------------------------------
Connecticut 3.6
- - -----------------------------------------------
Other* 36.2
===============================================
* No other state greater than 3.5%.
B-12
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class A1 Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------ ---------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.04 6.115% 3.62 6.115% 3.62 6.115% 3.61 6.115% 3.61 6.114% 3.60
100.06 6.098% 3.62 6.098% 3.62 6.098% 3.61 6.098% 3.61 6.097% 3.60
100.08 6.081% 3.62 6.081% 3.62 6.081% 3.61 6.080% 3.61 6.080% 3.60
100.10 6.064% 3.62 6.064% 3.62 6.063% 3.61 6.063% 3.61 6.063% 3.60
100.12 6.047% 3.62 6.046% 3.62 6.046% 3.62 6.046% 3.61 6.046% 3.60
100.14 6.030% 3.62 6.029% 3.62 6.029% 3.62 6.029% 3.61 6.029% 3.60
100.16 6.013% 3.62 6.012% 3.62 6.012% 3.62 6.012% 3.61 6.011% 3.61
100.18 5.996% 3.63 5.995% 3.62 5.995% 3.62 5.995% 3.61 5.994% 3.61
100.20 5.979% 3.63 5.978% 3.62 5.978% 3.62 5.978% 3.61 5.977% 3.61
100.22 5.962% 3.63 5.961% 3.62 5.961% 3.62 5.961% 3.62 5.960% 3.61
100.24 5.945% 3.63 5.944% 3.62 5.944% 3.62 5.944% 3.62 5.943% 3.61
100.26 5.928% 3.63 5.927% 3.62 5.927% 3.62 5.927% 3.62 5.926% 3.61
100.28 5.911% 3.63 5.910% 3.63 5.910% 3.62 5.910% 3.62 5.909% 3.61
Weighted
Average
Life (yrs.) 4.33 4.32 4.32 4.31 4.30
First
Principal
Payment Date 18-Mar-98 18-Mar-98 18-Mar-98 18-Mar-98 18-Mar-98
Last
Principal
Payment Date 18-Oct-2004 18-Oct-2004 18-Sep-2004 18-Sep-2004 18-Aug-2004
</TABLE>
B-13
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class A2 Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------ ---------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.04 6.261% 5.93 6.261% 5.93 6.261% 5.92 6.261% 5.91 6.261% 5.89
100.06 6.251% 5.93 6.251% 5.93 6.251% 5.92 6.251% 5.91 6.251% 5.90
100.08 6.241% 5.94 6.241% 5.93 6.240% 5.92 6.240% 5.91 6.240% 5.90
100.10 6.230% 5.94 6.230% 5.93 6.230% 5.92 6.230% 5.92 6.230% 5.90
100 12 6.220% 5.94 6.220% 5.93 6.220% 5.92 6.219% 5.92 6.219% 5.90
100.14 6.209% 5.94 6.209% 5.93 6.209% 5.92 6.209% 5.92 6.209% 5.90
100.16 6.199% 5.94 6.199% 5.93 6.199% 5.93 6.198% 5.92 6.198% 5.90
100.18 6.189% 5.94 6.188% 5.93 6.188% 5.93 6.188% 5.92 6.188% 5.90
100.20 6.178% 5.94 6.178% 5.93 6.178% 5.93 6.178% 5.92 6.177% 5.90
100.22 6.168% 5.94 6.168% 5.94 6.167% 5.93 6.167% 5.92 6.167% 5.90
100.24 6.157% 5.94 6.157% 5.94 6.157% 5.93 6.157% 5.92 6.156% 5.90
100.26 6.147% 5.94 6.147% 5.94 6.147% 5.93 6.146% 5.92 6.146% 5.90
100.28 6.137% 5.95 6.136% 5.94 6.136% 5.93 6.136% 5.92 6.135% 5.91
Weighted
Average
Life (yrs.) 7.75 7.74 7.73 7.72 7.68
First
Principal
Payment Date 18-Oct-2004 18-Oct-2004 18-Sep-2004 18-Sep-2004 18-Aug-2004
Last
Principal
Payment Date 18-Aug-2007 18-Aug-2007 18-Jul-2007 18-Jul-2007 18-Jun-2007
</TABLE>
B-14
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class A3 Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------- ----------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.24 6.427% 7.02 6.427% 7.01 6.427% 7.01 6.427% 7.00 6.427% 6.98
99.28 6.410% 7.02 6.410% 7.01 6.410% 7.01 6.410% 7.00 6.410% 6.98
100.00 6.392% 7.02 6.392% 7.02 6.392% 7.01 6.392% 7.00 6.392% 6.99
100.04 6.374% 7.02 6.374% 7.02 6.374% 7.01 6.374% 7.01 6.374% 6.99
100.08 6.357% 7.03 6.357% 7.02 6.357% 7.01 6.357% 7.01 6.356% 6.99
100.12 6.339% 7.03 6.339% 7.02 6.339% 7.02 6.339% 7.01 6.339% 6.99
100.16 6.322% 7.03 6.321% 7.03 6.321% 7.02 6.321% 7.01 6.321% 7.00
100.20 6.304% 7.03 6.304% 7.03 6.304% 7.02 6.304% 7.01 6.303% 7.00
100.24 6.288% 7.04 6.286% 7.03 6.286% 7.02 6.286% 7.02 6.286% 7.00
100.28 6.269% 7.04 6.269% 7.03 6.269% 7.03 6.269% 7.02 6.268% 7.00
101.00 6.252% 7.04 6.251% 7.03 6.251% 7.03 6.251% 7.02 6.251% 7.01
101.04 6.234% 7.04 6.234% 7.04 6.234% 7.03 6.234% 7.02 6.233% 7.01
101.08 6.217% 7.04 6.217% 7.04 6.216% 7.03 6.216% 7.03 6.216% 7.01
Weighted Average
Life (yrs.) 9.71 9.70 9.69 9.67 9.64
First Principal
Payment Date 18-Aug-2007 18-Aug-2007 18-Jul-2007 18-Jul-2007 18-Jun-2007
Last Principal
Payment Date 18-Jan-2008 18-Jan-2008 18-Jan-2008 18-Jan-2008 18-Jan-2008
</TABLE>
B-15
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class B Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------- ----------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.24 6.581% 7.04 6.581% 7.04 6.581% 7.04 6.581% 7.04 6.581% 7.04
99.28 8.563% 7.04 6.563% 7.04 6.563% 7.04 6.563% 7.04 6.563% 7.04
100.00 6.545% 7.05 6.545% 7.05 6.545% 7.05 6.545% 7.05 6.545% 7.05
100.04 6.528% 7.05 6.528% 7.05 6.528% 7.05 6.528% 7.05 6.528% 7.05
100.08 6.510% 7.05 6.510% 7.05 6.510% 7.05 6.510% 7.05 6.510% 7.05
100.12 6.493% 7.05 6.493% 7.05 6.493% 7.05 6.493% 7.05 6.493% 7.05
100.16 8.475% 7.05 6.475% 7.05 6.475% 7.05 6.475% 7.05 6.475% 7.05
100.20 6.458% 7.06 6.458% 7.06 6.458% 7.06 6.458% 7.06 8.458% 7.06
100.24 6.440% 7.06 6.440% 7.06 6.440% 7.06 6.440% 7.06 6.440% 7.06
100.28 6.423% 7.06 6.423% 7.06 6.423% 7.06 6.423% 7.06 6.423% 7.06
101.00 6.405% 7.06 6.405% 7.06 6.405% 7.06 6.405% 7.06 6.405% 7.06
101.04 6.388% 7.07 6.388% 7.07 6.388% 7.07 6.388% 7.07 6.388% 7.07
101.08 6.371% 7.07 6.371% 7.07 6.371% 7.07 6.371% 7.07 6.371% 7.07
Weighted Average
Life (yrs.) 9.85 9.85 9.85 9.85 9.85
First Principal
Payment Date 18-Jan-2008 18-Jan.2008 18-Jan-2008 18-Jan-2008 18-Jan-2008
Last Principal
Payment Date 18-Jan-2008 18-Jan-2008 18-Jan-2008 18-Jan-2008 18-Jan-2008
</TABLE>
B-16
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class C Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------- ----------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.16 6.616% 7.06 6.616% 7.06 6.616% 7.06 6.616% 7.06 6.616% 7.06
99.20 6.598% 7.06 6.598% 7.06 6.598% 7.06 6.598% 7.06 6.598% 7.06
99.24 6.581% 7.06 6.581% 7.06 6.581% 7.06 6.581% 7.06 6.581% 7.06
99.28 6.563% 7.07 6.563% 7.07 6.563% 7.07 6.563% 7.06 6.563% 7.06
100.00 6.545% 7.07 6.545% 7.07 6.545% 7.07 6.545% 7.07 6.545% 7.07
100.04 6.528% 7.07 6.528% 7.07 6.528% 7.07 6.528% 7.07 6.528% 7.07
100.08 6.510% 7.07 6.510% 7.07 6.510% 7.07 6.510% 7.07 6.510% 7.07
100.12 6.493% 7.08 6.493% 7.08 6.493% 7.07 6.493% 7.07 6.493% 7.07
100.16 6.475% 7.08 6.475% 7.08 6.475% 7.08 6.475% 7.08 6.475% 7.08
100.20 6.458% 7.08 6.458% 7.08 6.458% 7.08 6.458% 7.08 6.458% 7.08
100.24 6.441% 7.08 6.441% 7.08 6.441% 7.08 6.441% 7.08 6.441% 7.08
100.28 6.423% 7.09 6.423% 7.09 6.423% 7.08 6.423% 7.08 6.423% 7.08
101.00 6.406% 7.09 6.406% 7.09 6.406% 7.09 6.406% 7.09 6.406% 7.09
Weighted Average
Life (yrs.) 9.90 9.90 9.90 9.89 9.89
First Principal
Payment Date 18-Jan-2008 18-Jan-2008 18-Jan-2008 18-Jan-2008 18-Jan-2008
Last Principal
Payment Date 18-Sep-2008 18-Sep-2008 18-Sep-2008 18-Aug-2008 18-Aug-2008
</TABLE>
B-17
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class D Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------- ----------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
98.16 7.094% 8.10 7.094% 8.08 7.094% 8.06 7.095% 8.04 7.095% 8.02
98.24 7.063% 8.10 7.063% 8.08 7.063% 8.07 7.063% 8.05 7.064% 8.03
99.00 7.032% 8.11 7.032% 8.09 7.032% 8.07 7.032% 8.06 7.033% 8.03
99.08 7.001% 8.12 7.001% 8.10 7.001% 8.08 7.001% 8.07 7.001% 8.04
99.16 6.970% 8.12 6.970% 8.10 6.970% 8.09 6.970% 8.07 6.970% 8.05
99.24 6.939% 8.13 6.939% 8.11 6.939% 8.09 6.939% 8.08 6.939% 8.05
100.00 6.909% 8.14 6.909% 8.12 6.909% 8.10 6.909% 8.09 6.909% 8.06
100.08 6.879% 8.15 6.878% 8.13 6.878% 8.11 6.878% 8.09 6.878% 8.07
100.16 6.848% 8.15 6.848% 8.13 6.848% 8.11 6.848% 8.10 6.847% 8.07
100.24 6.818% 8.16 6.818% 8.14 6.817% 8.12 6.817% 8.11 8.817% 8.08
101.00 6.788% 8.17 6.787% 8.15 6.787% 8.13 6.787% 8.11 6.786% 8.09
101.08 6.758% 8.17 6.757% 8.15 6.757% 8.14 6.757% 8.12 6.756% 8.09
101.16 6.728% 8.18 6.727% 8.16 6.727% 8.14 6.726% 8.13 6.726% 8.10
Weighted Average
Life (yrs.) 12.59 12.53 12.49 12.45 12.39
First Principal
Payment Date 18-Sep-2008 18-Sep-2008 18-Sep-2008 18-Aug-2008 18-Aug-2008
Last Principal
Payment Date 18-Aug-2012 18-Jun-2012 18-Jun-2012 18-Jun-2012 18-Jun-2012
</TABLE>
B-18
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class E Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------- ----------------- ----------------- ----------------- ----------------- -----------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97.08 7.380% 8.75 7.381% 8.73 7.381% 8.72 7.382% 8.71 7.382% 8.68
97.16 7.351% 8.76 7.352% 8.74 7.352% 8.73 7.352% 8.72 7.353% 8.69
97.24 7.322% 8.77 7.323% 8.75 7.323% 8.74 7.323% 8.72 7.324% 8.70
98.00 7.293% 8.77 7.294% 8.76 7.294% 8.75 7.294% 8.73 7.295% 8.71
98.08 7.264% 8.78 7.265% 8.77 7.265% 8.75 7.265% 8.74 7.266% 8.72
98.16 7.236% 8.79 7.236% 8.77 7.236% 8.76 7.236% 8.75 7.237% 8.73
98.24 7.207% 8.80 7.207% 8.78 7.208% 8.77 7.208% 8.76 7.208% 8.73
99.00 7.179% 8.81 7.179% 8.79 7.179% 8.78 7.179% 8.77 7.179% 8.74
99.08 7.150% 8.82 7.150% 8.80 7.150% 8.79 7.150% 8.78 7.151% 8.75
99.16 7.122% 8.83 7.122% 8.81 7.122% 8.80 7.122% 8.78 7.122% 8.76
99.24 7.094% 8.83 7.094% 8.82 7.094% 8.80 7.094% 8.79 7.094% 8.77
100.00 7.066% 8.84 7.066% 8.83 7.066% 8.81 7.065% 8.80 7.065% 8.78
100.08 7.038% 8.85 7.038% 8.83 7.037% 8.82 7.037% 8.81 7.037% 8.78
Weighted Average
Life (yrs.) 14.61 14.56 14.53 14.49 14.42
First Principal
Payment Date 18-Aug-2012 18-Jun-2012 18-Jun-2012 18-Jun-2012 18-Jun-2012
Last Principal
Payment Date 18-Nov-2012 18-Nov-2012 18-Oct-2012 18-Oct-2012 18-Oct-2012
</TABLE>
B-19
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified Duration of Class IO Certificates
0% CPR during lockout, defeasance, YM or PP - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ------------- ----------------- ----------------- ----------------- ----------------- -----------------
CBE CBE CBE CBE CBE
Yield Yield Yield Yield Yield
(%) (%) (%) (%) (%)
--- --- --- --- ---
<S> <C> <C> <C> <C> <C>
7.12 9.223% 9.194% 9.169% 9.146% 9.098%
7.14 9.021% 8.991% 8.966% 8.942% 8.894%
7.16 8.821% 8.791% 8.765% 8.742% 8.694%
7.18 8.624% 8.593% 8.568% 8.544% 8.496%
7.20 8.430% 8.399% 8.373% 8.349% 8.300%
7.22 8.238% 8.207% 8.181% 8.157% 8.108%
7.24 8.049% 8.017% 7.991% 7.967% 7.918%
7.26 7.863% 7.831% 7.804% 7.780% 7.730%
7.28 7.679% 7.646% 7.619% 7.595% 7.545%
7.30 7.498% 7.464% 7.437% 7.412% 7.363%
8.00 7.318% 7.285% 7.257% 7.232% 7.182%
8.02 7.142% 7.108% 7.080% 7.055% 7.004%
8.04 6.967% 6.933% 6.905% 6.879% 6.829%
Weighted Average
Life (yrs.) 9.63 9.60 9.58 9.56 9.53
First Principal
Payment Date 18-Mar-98 18-Mar-98 18-Mar-98 18-Mar-98 18-Mar-98
Last Principal
Payment Date 18-Feb-2028 18-Feb-2028 18-Feb-2028 18-Feb-2028 18-Feb-2028
</TABLE>
B-20
<PAGE>
Annex C
<TABLE>
<S> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct: WAC:
Chicago, IL 60603 WAMM:
===============================================================================================================================
Number Of Pages
Table Of Contents 1
REMIC Certificate Report 1
Other Related Information 1
Asset Backed Facts Sheets 1
Delinquency Loan Detail 1
Mortgage Loan Characteristics 3
Loan Level Listing 1
-
Total Pages Included In This Package 9
=
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
Servicer Website
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (312) 904-2200
Bloomberg User Terminal
ASAP #:
Monthly Data File Name:
==========================================================================
===============================================================================================================================
Page 1 of 9
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct: WAC:
Chicago, IL 60603 WAMM:
===============================================================================================================================
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)
- - -------------------------------------------------------------------------------------------------------------------------------
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
===========================
Page 2 of 9
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603 Other Related Information
===============================================================================================================================
=================================================================================================
Accrued Excess Interest Prior Ending Actual
Certificate Deferred Prepayment Reduction Unpaid Unpaid Distribution
Class Interest Interest Int. Shortfalls Amounts Interest Interest of Interest
=================================================================================================
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------------------------------------------------------------------------------------------
Collateral Information
---------------------------------------------------------------------------------------------
Component Sub-Pool I Sub-Pool II Sub-Pool IIIPool Total
=============================================================================================
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
=============================================================================================================================
Page 3 of 9
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
====================================================================================================================================
Distribution Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bankruptcy REO Modifications
----------------------------------------------------------------------------------------------------------------------
Date # Balance # Balance # Balance # Balance # Balance # Balance
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/01/98 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%
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
<CAPTION>
=====================================================
Prepayments Curr Weighted Avg.
- - -----------------------------------------------------
# Balance Coupon Remit
=====================================================
<S> <C> <C> <C>
0 0
0.00% 0.000%
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
- - -----------------------------------------------------
=====================================================
Page 4 of 9
Note: Foreclosure and REO Totals are Included in the Appropriate Delinquency Aging Category
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Delinquent Loan Detail
====================================================================================================================================
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>
====================================================================================================================================
#REF! #REF! #REF!
#REF! #REF! #REF!
====================================================================================================================================
** Outstanding P&I Advances include the current period P&I Advance Page 5 of 9
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Pool Total
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%
- - ----------------------------------------------------------
</TABLE>
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank Page 6 of 9
C-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Pool Total
</TABLE>
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 Loans 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
1.000 to 1.125
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.
02/24/97 - 13:09 (A99-A999)(C) 1998 LaSalle National Bank Page 7 of 9
C-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Pool Total
</TABLE>
Distribution of Maximum Rates
- - --------------------------------------------------------------------
Number (2) Scheduled Based on
Maximum Rates of Loans Balance Balance
====================================================================
No Maximum
0.01% to 12.00%
12.01% to 12.50%
12.51% to 13.00%
13.01% to 13.50%
13.51% to 14.00%
14.01% to 14.50%
14.51% to 15.00%
15.01% to 15.50%
15.51% to 16.00%
16.01% to 16.50%
16.51% to 17.00%
17.01% to 17.50%
Fixed Rate Mortgage
- - --------------------------------------------------------------------
0 0 0.00%
- - --------------------------------------------------------------------
Weighted Average for Mtge with a Maximum Rate is 13.49%
Distribution of Payment Adjustment
- - --------------------------------------------------------------------
Interest Adjustment Number (2) Scheduled Based on
Frequency Loans Balance Balance
====================================================================
- - --------------------------------------------------------------------
Total 0 0 0.00%
- - --------------------------------------------------------------------
Distribution of Indices of Mortgage Loans
- - ----------------------------------------------------------
Number (2) Scheduled Based on
Indices of Loans Balance Balance
==========================================================
- - ----------------------------------------------------------
Total 0 0 0.00%
- - ----------------------------------------------------------
Distribution of Mortgage Loan Margins
- - ----------------------------------------------------------
Number (2) Scheduled Based on
Mortgage Loan Margins Loans Balance Balance
==========================================================
No Margin
0.000% to 0.000%
0.010% to 1.000%
1.010% to 1.500%
1.510% to 2.000%
2.010% to 2.500%
2.510% to 3.000%
3.010% to 3.500%
3.510% to 4.000%
4.010% to 4.500%
4.510% & Above
Fixed Rate Mortgage
- - ----------------------------------------------------------
Total 0 0 0.00%
- - ----------------------------------------------------------
Weighted Average for Mtge with a Margin is 0.00%
Distribution of Minimum Rates
- - ----------------------------------------------------------
Number (2) Scheduled Based on
Minimum Rates (1) of Loans Balance Balance
==========================================================
No Minimum
0.010% to 3.000%
3.010% to 3.500%
3.510% to 4.000%
4.010% to 4.500%
4.510% to 5.000%
5.010% to 5.500%
5.510% to 6.000%
6.010% to 6.500%
6.510% to 7.000%
7.010% to 7.500%
7.510% to 8.000%
8.010% to 8.500%
8.510% to 99.000%
Fixed Rate Mortgage
- - ----------------------------------------------------------
0 0 0.00%
- - ----------------------------------------------------------
Weighted Average for Mtge with a Minimum Rate is 0.00%
Distribution of Interest Adjustment
- - ----------------------------------------------------------
Payment Adjustment Number (2) Scheduled Based on
Frequency Loans Balance Balance
- - ----------------------------------------------------------
- - ----------------------------------------------------------
0 0 0.00%
- - ----------------------------------------------------------
(1) For adjustable mortgage loans where a minimum rate does not exist the
gross margin was used.
02/24/97 - 13:09 (A99-A999)(C) 1998 LaSalle National Bank Page 8 of 9
C-8
<PAGE>
<TABLE>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Loan Level Detail
====================================================================================================================================
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)
====================================================================================================================================
====================================================================================================================================
* 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
====================================================================================================================================
02/24/97 - 13:09 (A99-A999)(C) 1998 LaSalle National Bank Page 9 of 9
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank 0 Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Specially Serviced Loan Detail
====================================================================================================================================
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code (1) Comments
====================================================================================================================================
====================================================================================================================================
(1) Legend :
1) Request for waiver of Prepayment Penalty 4) Loan with Borrower Bankruptcy 7) Loans Paid Off
2) Payment default 5) Loan in Process of Foreclosure 8) Loans Returned to Master Servicer
3) Request for Loan Modification or Workout 6) Loan now REO Property
====================================================================================================================================
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank Appendix A
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank 0 Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Modified Loan Detail
====================================================================================================================================
Disclosure Modification Modification
Control # Date Description
- - ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Appendix B
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABN AMRO LB Commercial Mortgage Trust Statement Date: 02/01/98
LaSalle National Bank Payment Date: 02/01/98
Commercial Mortgage Pass-Through Certificates Prior Payment: NA
Administrator: Series 1998-C1 Record Date: 01/31/98
Ryan Kutty (800) 246-5761
135 S. LaSalle Street Suite 1740 ABN AMRO Acct:
Chicago, IL 60603
Realized Loss Detail
====================================================================================================================================
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
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
====================================================================================================================================
Appendix C
* Aggregate liquidation expenses also include outstanding P&I advances and unpaid servicing fees, unpaid trustee fees, etc.
02/24/97 - 13:09 (A99-A999) (C) 1998 LaSalle National Bank
</TABLE>
C-12
<PAGE>
ANNEX D
LB Commercial Mortgage Trust 1998-C1
DELIQUENT LOAN STATUS REPORT
as of ___________
<TABLE>
<CAPTION>
====================================================================================================================================
S62 or
S4 S55 S61 S57 S58 S63 P8 P7 P37 P39 P38
- - ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d)
- - ------------------------------------------------------------------------------------------------------------------------------------
Other
Short Name Sq Ft Paid Scheduled Total P&I Total Advances
(When Property or Thru Loan Advances Expenses (Taxes &
Prospectus ID Appropriate) Type City State Units Date Balance To Date To Date Escrow)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90 + DAYS DELINQUENT
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================================
P25 P10 P11 P58 P54 P55 P81 P74 P75
- - ------------------------------------------------------------------------------------------------------------------------------------
(e)=a+b+c+d (f)=P38/P81 (g)= (.92*f)-e (h)=(g/e)
- - ------------------------------------------------------------------------------------------------------------------------------------
Value Appraisal Loss
Current Current LTM ***Cap using BPO or using 90%
Total Monthly Interest Maturity NOI LTM LTM Rate NOI & Valuation Internal Appr. or Estimated
Exposure P&I Rate Date Date NOI DSCR Assigned Cap Rate Date Value** BPO (f) Recovery %
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===================================================================================================
P35 P77 P79 P42 P82 P76
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
Total Appraisal Expected
Reduction Transfer Resolution FCL Start FCL Sale Workout
Realized Date Date Date Date Strategy Comments
- - ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------
</TABLE>
FCL - Foreclosure
LTM - Latest 12 Months either Last Annual or Trailing 12 months
- - --------------------------
* Workout Strategy should match the CSSA Loan file using abreviated words in
place of a code number such as (FCL - In Foreclosure, MOD - Modification,
DPO - Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan,
TBD - To Be Determined etc...) It is possible to combine the status codes if
the loan is going in more than one direction. (i.e. FCL/Mod, BK/Mod,
BK/FCL/DPO)
** App - Appraisal, BPO - Broker opinion, Int. - Internal Value
*** How to determine the cap rate is agreed upon by Underwriter and special
servicer - to be provided by a third party.
D-1
<PAGE>
ANNEX E
LB Commercial Mortgage Trust 1998-C1
HISTORICAL LOAN MODIFICATION REPORT
as of _________________
<TABLE>
<CAPTION>
====================================================================================================================================
S4 S57 S58 P49 P48 P7* P7* P50*
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance Balance at
Mod / When Sent the Effective # Mths
Prospectus Extension Effect to Special Date of for Rate
ID City State Flag Date Servicer Rehabilitation Old Rate Change
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
- - ------------------------------------------------------------------------------------------------------------------------------------
Information is as of modification. Each line it should not change in the future. Only new modifications should be added.
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Total For All Loans:
- - ------------------------------------------------------------------------------------------------------------------------------------
Total For Loans in Current Month:
- - ------------------------------------------------------------------------------------------------------------------------------------
# of Loans $ Balance
- - ------------------------------------------------------------------------------------------------------------------------------------
Modifications:
- - ------------------------------------------------------------------------------------------------------------------------------------
Maturity Date Extentions:
- - ------------------------------------------------------------------------------------------------------------------------------------
Total:
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================
P50* P25* P25* P11* P11*
- - ----------------------------------------------------
- - ----------------------------------------------------
Total #
Mths for
New Old New Old New Change
Rate P&I P&I Maturity Maturity of Mod
====================================================
<C> <C> <C> <C> <C> <C>
- - ----------------------------------------------------
- - ----------------------------------------------------
- - ----------------------------------------------------
====================================================
- - ----------------------------------------------------
- - ----------------------------------------------------
- - ----------------------------------------------------
- - ----------------------------------------------------
- - ----------------------------------------------------
- - ----------------------------------------------------
</TABLE>
* The information in these columns is from a particular point in time and
should not change on this report once assigned.
(1) Actual principal loss taken by bonds
E-1
<PAGE>
ANNEX F
LB Commercial Mortgage Trust 1998-C1
HISTORICAL LOSS ESTIMATE REPORT (RE0-SOLD or DISCOUNTED PAYOFF)
as of _________________
<TABLE>
<CAPTION>
====================================================================================================================================
S4 S55 S61 S57 S58 P45/P7 P75 P45 P7 P37
- - ------------------------------------------------------------------------------------------------------------------------------------
(c)=b/a (a) (b) (d) (e) (f)
- - ------------------------------------------------------------------------------------------------------------------------------------
Latest
Short Name Appraisal Effect Net Amt Total
Prospectus (When Property % Received or Brokers Date of Sales Received Scheduled P&I
ID Appropriate) Type City State From Sale Opinion Sale Price from Sale Balance Advanced
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
- - ------------------------------------------------------------------------------------------------------------------------------------
All information is from the liquidation date and does not need to be updated.
- - ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Total all Loans:
- - ------------------------------------------------------------------------------------------------------------------------------------
Current Month Only:
====================================================================================================================================
<CAPTION>
====================================================================================================================
P39+P38
- - --------------------------------------------------------------------------------------------------------------------
(g) (h) (i)=d-(f+g+h) (k)=i-e (m) (n)=k+m (o)=n/e
- - --------------------------------------------------------------------------------------------------------------------
Servicing Actual Minor Total Loss %
Total Fees Losses Date Loss Adj to Minor Adj Loss with of Scheduled
Expenses Expense Net Proceeds Passed thru Passed thru Trust Passed thru Adjustment Balance
====================================================================================================================
<C> <C> <C> <C> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------
====================================================================================================================
- - --------------------------------------------------------------------------------------------------------------------
====================================================================================================================
</TABLE>
F-1
<PAGE>
ANNEX G
LB Commercial Mortgage Trust 1998-C1
REO STATUS REPORT
as of ______________
<TABLE>
<CAPTION>
====================================================================================================================================
S62 or
S4 S55 S61 S57 S58 S63 P8 P7 P37 P39 P38
- - ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d)
- - ------------------------------------------------------------------------------------------------------------------------------------
Other
Short Total Total Advances
Prospectus Name (When Property Sq Ft Paid Scheduled P&I Advances Expenses (Taxes &
ID Appropriate) Type City State or Units Thru Date Loan Balance To Date To Date Escrow)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
<CAPTION>
====================================================================================================================================
P25 P11 P58 P54 P81 P74 P75 P35
- - ------------------------------------------------------------------------------------------------------------------------------------
(e)=a+b+c+d (k) (j) (f)=(k/j) (g) (h)=(.92*g)-e (i)=(g/e)
- - ------------------------------------------------------------------------------------------------------------------------------------
Value Appraisal Total
Current LTM LTM using BPO or Loss using Appraisal
Total Monthly Maturity NOI NOI/ Cap Rate Valuation NOI & Internal 92% Appr. Estimated Reduciton
Exposure P&I Date Date DSC Assign Date Cap Rate Value** or BPO (f) Recovery % Realized
- - ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
</TABLE>
==============================================================
P77 P82 P79
- - --------------------------------------------------------------
- - --------------------------------------------------------------
REO Pending
Transfer Acquisition Resolution Comments
Date Date Date
- - --------------------------------------------------------------
==============================================================
(1) Use the following codes; App. - Appraisal, BPO - Brokers Opinion, Int -
Internal Value
G-1
<PAGE>
Annex H
LB Commercial Mortgage Trust
SERVICER WATCH LIST
as of ______________
<TABLE>
<CAPTION>
====================================================================================================================================
S4 S55 S61 S57 S58 P7 P8 P11 P54
- - ------------------------------------------------------------------------------------------------------------------------------------
Short Name Scheduled
Prospectus ID (When Appropriate) Property Type City State Loan Balance Paid Thru Date Maturity Date LTM DSCR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
List all loans on watch list and reason sorted in decending balance order.
Total:
====================================================================================================================================
</TABLE>
*LTM - Last 12 months either trailing or last annual
H-1
<PAGE>
Annex I
LB Commercial Mortgage Trust 1998-C1
OPERATING STATEMENT ANALYSIS REPORT
as of _____________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
LB Control Number
Current Balance/Paid to Date
Property Name
Property Type
Property Address, City, State
Net Rentable Square Feet
Year Built/Year Renovated
Year of Operations Underwriting 1994 1995 1996 Trailing
Occupancy Rate *
Average Rental Rate
* Occupancy rates are year end or the ending date of the financial statement for the period.
<CAPTION>
INCOME: No. of Mos.
-------------
Number of Mos. Prior Year Current Yr.
Period Ended Underwriting 1994 1995 1996 97 Trailing** 1996-Base 1996-1995
Statement Classification Base Line Normalized Normalized Normalized as of / /97 Variance Variance
<S> <C> <C> <C> <C> <C> <C> <C>
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Through/Escalations
Other Income
Effective Gross Income $0.00 $0.00 $0.00 $0.00 $0.00 % %
Normalized - Full year Financial statements that have been reviewed by the underwriter or Servicer
** Servicer will not be expected to "Normalize" these YTD numbers.
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
General & Administration
Repairs and Maintenance
Management Fees
Payroll & Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
Total Operating Expenses $0.00 $0.00 $0.00 $0.00 $0.00 % %
Operating Expense Ratio
Net Operating Income $0.00 $0.00 $0.00 $0.00 $0.00
Leasing Commissions
Tenant Improvements
Replacement Reserve
Total Capital Items $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
N.O.I. After Capital Items $0.00 $0.00 $0.00 $0.00 $0.00
Debt Service (per Servicer) $0.00 $0.00 $0.00 $0.00 $0.00
Cash Flow after debt service $0.00 $0.00 $0.00 $0.00 $0.00
(1) DSCR: (NOI/Debt Service)
DSCR: (after reserves\Cap exp.)
Source of Financial Data:
(ie. operating statements, financial statements, tax returns, other)
</TABLE>
Notes and Assumptions:
================================================================================
The years shown above will roll always showing a three year history. 1996 is the
current year financials; 1995 is the prior year financials.
This report may vary depending on the property type and because of the way
information may vary in each borrowers statement.
Rental Income needs to be broken down, differently whenever possible for each
property type as follows: Retail: 1) Base Rent 2)Percentage rents on cashflow
Hotel: 1)Room Revenue 2)Food/Beverage Nursing Home: 1)Private 2) Medicaid 3)
Medicare
Income: Comment
Expense: Comment
Capital Items: Comment
(1) Used in the Comparative Financial Status Report
I-1
<PAGE>
Annex J
LB Commercial Mortgage Trust 1998-C1
Form of NOI ADJUSTMENT WORKSHEET for "year"
as of _____________
PROPERTY OVERVIEW
LB Control Number
Current Balance/Paid to Date
Property Name
Property Type
Property Address, City, State
Net Rentable Square Feet
Year Built/Year Renovated
Year of Operations Borrower Adjustment Normalized
Occupancy Rate *
Average Rental Rate
Occupancy rates are year end or the ending
date of the financial statement for the period.
INCOME:
Number of Mos.Annualized "Year"
Period Ended Borrower Adjustment Normalized
Statement Classification Actual
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Throughs/Escalations
Other Income
Effective Gross Income $0.00 $0.00 $0.00
Normalized - Full year financial statements
that have been reviewed by the Servicer.
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
General & Administration
Repairs and Maintenance
Management Fees
Payroll & Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
Total Operating Expenses $0.00 $0.00 $0.00
Operating Expense Ratio
Net Operating Income $0.00 $0.00 $0.00
Leasing Commissions
Tenant Improvements
Replacement Reserve
Total Capital Items $0.00 $0.00 $0.00
N.O.I. After Capital Items $0.00 $0.00 $0.00
Debt Service (per Servicer) $0.00 $0.00 $0.00
Cash Flow after debt service $0.00 $0.00 $0.00
(1)DSCR: (NOI/Debt Service)
DSCR: (after reserves\Cap exp.)
Source of Financial Data:
(ie. operating statements, financial
statements, tax return, other)
Notes and Assumptions:
- - --------------------------------------------------------------------------------
This report should be completed by the Servicer for any "Normalization" of the
Borrower's numbers.
The "Normalized" column is used in the Operating Statement Analysis Report.
This report may vary depending on the property type and because of the way
information may vary in each borrower's statement.
Income: Comments
Expense: Comments
Capital Items: Comments
(1) Used in the Comparative Financial Status Report
J-1
<PAGE>
ANNEX K
LB Commercial Mortgage Trust 1998-C1
COMPARATIVE FINANCIAL STATUS REPORT
as of _______________
================================================================================
S4 S57 S58 P7 P8
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Last
Property Scheduled Paid Annual
Inspect Loan Thru Debt
Prospectus ID City State Date Balance Date Service
- - --------------------------------------------------------------------------------
yy/mm
- - --------------------------------------------------------------------------------
List all loans currently in deal with or without information largest to smallest
loan
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Total: $ $
- - --------------------------------------------------------------------------------
================================================================================
Financial Information:
Current Full Year:
Current Full Yr. received with DSC < 1:
Prior Full Year:
Prior Full Yr. received with DSC < 1:
================================================================================
S72 S69 S70 S65 S66 P65 P64 P59 P61 P63
- - --------------------------------------------------------------------------------
Original Underwriting 2nd Preceding Annual Operating
- - --------------------------------------------------------------------------------
Information Information
- - --------------------------------------------------------------------------------
Basis Year as of _______ Normalized
- - --------------------------------------------------------------------------------
Financial Financial
Info Info
as of % Total % (1) as of % Total $ (1)
Date Occ Revenue NOI DSCR Date Occ Revenue NOI DSCR
- - --------------------------------------------------------------------------------
yy/mm yy/mm
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
WA $ $ WA WA $ $ WA
- - --------------------------------------------------------------------------------
================================================================================
Received Required
- - --------------------------------------------------------------------------------
Loans Balance Loans Balance
# % $ % # % $ %
================================================================================
================================================================================
P58 P57 P52 P54 P56 P72 P73 P66 P68 P70
- - --------------------------------------------------------------------------------
Preceding Annual Operating Trailing Financial
- - --------------------------------------------------------------------------------
Information Information
- - --------------------------------------------------------------------------------
as of _______ Normalized Month Reported Actual
- - --------------------------------------------------------------------------------
Financial
Info FS FS
as of % Total $ (1) Start End Total % (1)
Date Occ Revenue NOI DSCR Date Date Revenue NOI DSC
- - --------------------------------------------------------------------------------
yy/mm yy/mm yy/mm
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
WA $ $ WA WA $ $ WA
- - --------------------------------------------------------------------------------
================================================================================
(2)
- - ------------------------
Net Change
- - ------------------------
- - ------------------------
Preceding & Basis
- - ------------------------
%
% Total (1)
Occ Revenue DSC
- - ------------------------
- - ------------------------
- - ------------------------
WA $ WA
- - ------------------------
========================
(1) DSCR should match to Operating Statement and is normally calculated using
NOI / Debt Service.
(2) Net change should compare the latest year to the underwriting year
K-1
<PAGE>
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE-BACKED SECURITIES, ISSUABLE IN SERIES
This Prospectus relates to Collateralized Mortgage Obligations (the "Bonds") and
Mortgage-Backed Certificates (the "Certificates," together with the Bonds, the
"Securities") which may be issued from time to time in one or more series
("Series") under this Prospectus and the related Prospectus Supplement
("Prospectus Supplement"). As specified in the related Prospectus Supplement,
the Securities of each Series will be either Bonds issued pursuant to an
Indenture and representing indebtedness of Structured Asset Securities
Corporation (the "Company") or an owner trust (the "Owner Trust") established by
it, or Certificates which will evidence a beneficial ownership interest in
assets deposited into a trust (a "Trust Fund") by the Company as depositor
pursuant to a Trust Agreement, as described herein. The issuer (the "Issuer")
with respect to a Series of Bonds will be the Company or the Owner Trust
established to issue such Bonds, and, with respect to a Series of Certificates,
will be the Trust Fund established in respect of such Certificates. Capitalized
terms not otherwise defined herein or the related Prospectus Supplement have the
meanings specified in the Glossary attached hereto.
The Securities will be sold from time to time under this Prospectus on terms
determined for each Series at the time of the sale and as described in the
related Prospectus Supplement. Each Series will consist of one or more Classes,
one or more of which may be Compound Interest Securities, Variable Interest
Securities, Individual Investor Securities, Planned Amortization Class ("PAC")
Securities, Zero Coupon Securities, Principal Only Securities, Interest Only
Securities, Participating Securities or another particular Class of Securities,
if any, included in such Series of Securities. Zero Coupon Securities and
Principal Only Securities will not accrue and will not be entitled to receive
any interest. Payments or distributions of interest on each Class of Securities,
other than Zero Coupon Securities, Principal Only Securities and Compound
Interest Securities will be made on each Payment Date or Distribution Date as
specified in the related Prospectus Supplement. Interest will not be paid or
distributed on Compound Interest Securities on a current basis until all
Securities of the related Series having a Stated Maturity or Final Scheduled
Distribution Date prior to the Stated Maturity or Final Scheduled Distribution
Date of such Class of Compound Interest Securities have been paid in full or
until such other date or period as may be specified in the related Prospectus
Supplement. Prior to such time, interest on such Class of Compound Interest
Securities will accrue and the amount of interest so accrued will be added to
the principal thereof on each Payment Date or Distribution Date. The amount of
principal and interest available and payable on each Series on each Payment Date
or Distribution Date will be applied to the Classes of such Series in the order
and as otherwise specified in the related Prospectus Supplement. Principal
payments or distributions on each Class of a Series will be made on either a pro
rata or a random lot basis among Securities of such Class, as specified in the
related Prospectus Supplement Any Series may include one or more Classes of
"Subordinate Securities," which are subordinated in right and priority to the
extent described in the related Prospectus Supplement to payment of principal
and interest, and may be allocated losses and shortfalls prior to the allocation
thereof to all other Classes of Securities of such Series (the "Senior
Securities"). Securities of a Series will be subject to redemption or repurchase
only under the circumstances and according to the priorities described herein
and in the related Prospectus Supplement.
Each Series will be secured by or offer a beneficial interest in one or more
types of mortgage assets ("Mortgage Assets") and other assets, including any
reserve funds established with respect to such Series, insurance policies or
other enhancement described in the related Prospectus Supplement. The Mortgage
Assets may consist of a pool of multifamily or commercial mortgage loans or
participation interests therein (collectively, "Mortgage Loans") and may include
FHA Loans. Mortgage Assets may also consist of mortgage participations or
pass-through certificates or collateralized mortgage obligations ("Private
Mortgage-Backed Securities") issued with respect to or secured by a pool of
Mortgage Loans. The Private Mortgage-Backed Securities and Mortgage Loans
securing a Series will not be guaranteed or insured by any agency or
instrumentality of the United States Government unless otherwise stated in the
related Prospectus Supplement. Some Mortgage Loans comprising or underlying the
Mortgage Assets may be delinquent or non-performing as specified in the related
Prospectus Supplement. The Mortgage Assets securing a Series or comprising the
Trust Fund may consist of a single Mortgage Loan or obligations of a single
obligor or related obligors as specified in the related Prospectus Supplement.
The Mortgage Loans underlying or comprising the Mortgage Assets may be
originated by or acquired from an affiliate of the Issuer and an affiliate of
the Issuer may be an obligor with respect to any such Mortgage Loans. See
"SECURITY FOR THE BONDS AND CERTIFICATES."
Bonds of a Series constitute non-recourse obligations of the Issuer, and
Certificates of a Series evidence an interest in the related Trust Fund only.
Neither the Bonds or Certificates of a Series are insured or guaranteed by any
governmental agency or instrumentality, by any person or entity affiliated with
the Company or Issuer, or, unless otherwise specified in the related Prospectus
Supplement, by any other person or entity. The Issuer has no significant assets
other than the Mortgage Assets and certain other assets pledged to secure the
Bonds or in which the Certificates represent a beneficial interest. See "RISK
FACTORS."
An election may be made, with respect to any Series of Securities, to treat
all or a specified portion of the assets securing such Series or comprising the
Trust Fund as a "real estate mortgage investment conduit" (a "REMIC"), or an
election may be made to treat the arrangement by which a Series of Securities is
issued as a REMIC. If such an election is made, each Class of Securities of a
Series will be either Regular Interest or Residual Interest, as specified in the
related Prospectus Supplement. See "FEDERAL INCOME TAX CONSIDERATIONS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Securities offered by this Prospectus and by the related Prospectus
Supplement are offered by Lehman Brothers and the other underwriters, if any,
subject to prior sale, to withdrawal, cancellation or modification of the offer
without notice, to delivery to and acceptance by Lehman Brothers and the other
underwriters, if any, and certain further conditions. Retain this Prospectus for
future reference. This Prospectus may not be used to consummate sales of the
securities offered hereby unless accompanied by a Prospectus Supplement.
LEHMAN BROTHERS
FEBRUARY 23, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PAGE
-----------
PROSPECTUS SUPPLEMENT..................................................................................... 5
ADDITIONAL INFORMATION.................................................................................... 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................................... 6
SUMMARY OF TERMS.......................................................................................... 7
RISK FACTORS.............................................................................................. 25
DESCRIPTION OF THE SECURITIES............................................................................. 31
General............................................................................................... 31
The Bonds--General.................................................................................... 31
The Certificates--General............................................................................. 32
Bearer Securities and Registered Securities........................................................... 33
Book-Entry Registration............................................................................... 34
Valuation of Mortgage Assets.......................................................................... 35
Payments or Distributions of Interest................................................................. 36
Payments or Distributions of Principal................................................................ 37
Special Redemption.................................................................................... 38
Optional Redemption................................................................................... 39
Mandatory Redemption.................................................................................. 39
Optional Termination.................................................................................. 39
Optional Repurchase of Certificates................................................................... 40
Other Repurchases..................................................................................... 40
YIELD AND PREPAYMENT CONSIDERATIONS....................................................................... 40
Timing of Payment or Distribution of Interest and Principal........................................... 40
Principal Prepayments................................................................................. 40
Prepayments and Weighted Average Life................................................................. 41
Other Factors Affecting Weighted Average Life......................................................... 42
SECURITY FOR THE BONDS AND CERTIFICATES................................................................... 43
General............................................................................................... 43
Mortgage Loans........................................................................................ 44
Private Mortgage-Backed Securities.................................................................... 48
Substitution of Mortgage Assets....................................................................... 50
Collection Account.................................................................................... 50
Other Funds or Accounts............................................................................... 51
Investment of Funds................................................................................... 51
Guaranteed Investment Contract........................................................................ 51
Enhancement........................................................................................... 51
SERVICING OF MORTGAGE LOANS............................................................................... 52
General............................................................................................... 52
Collection Procedures................................................................................. 52
Payments on Mortgage Loans; Deposits to Custodial Accounts............................................ 53
Advances.............................................................................................. 53
Maintenance of Insurance Policies and Other Servicing Procedures...................................... 54
Enforcement of Due-On-Sale Clauses.................................................................... 55
Modification; Waivers................................................................................. 55
Servicing Compensation and Payment of Expenses........................................................ 55
Evidence as to Compliance............................................................................. 55
Certain Matters Regarding the Master Servicer and Special Servicer.................................... 56
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
PAGE
-----------
ENHANCEMENT............................................................................................... 56
General............................................................................................... 56
Subordinate Securities................................................................................ 57
Cross-Support Features................................................................................ 58
Insurance on the Mortgage Loans....................................................................... 58
Letter of Credit...................................................................................... 58
Bond Guarantee Insurance.............................................................................. 58
Reserve Funds......................................................................................... 59
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS............................................................ 59
General............................................................................................... 59
Hazard Insurance on the Mortgage Loans................................................................ 60
FHA Insurance......................................................................................... 60
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS................................................................... 60
Mortgages............................................................................................. 61
Interest in Real Property............................................................................. 61
Junior Mortgages; Rights of Senior Mortgages or Beneficiaries......................................... 61
Foreclosure of Mortgage............................................................................... 63
Leasehold Risks....................................................................................... 65
Rights of Redemption.................................................................................. 65
Environmental Matters................................................................................. 66
Certain Laws and Regulations.......................................................................... 68
Leases and Rents...................................................................................... 68
Personality........................................................................................... 68
Anti-Deficiency Legislation and Other Limitations on Lenders.......................................... 69
Federal Bankruptcy and other Loans affecting Creditors' Rights........................................ 69
Due-on-Sale Clauses in Mortgage Loans................................................................. 71
Enforceability of Prepayment and Late Payment Fees.................................................... 71
Equitable Limitations on Remedies..................................................................... 72
Applicability of Usury Laws........................................................................... 72
Alternative Mortgage Instruments...................................................................... 72
Secondary Financing; Due-on-Encumbrance Provisions.................................................... 73
Americans with Disabilities Act....................................................................... 73
Soldiers' and Sailors' Civil Relief Act of 1940....................................................... 74
Forfeitures in Drug and RICO Proceedings.............................................................. 74
THE INDENTURE............................................................................................. 74
Certain Covenants..................................................................................... 74
Modification of Indenture............................................................................. 75
Events of Default..................................................................................... 76
Authentication and Delivery of Bonds.................................................................. 78
Satisfaction and Discharge of the Indenture........................................................... 78
Issuer's Annual Compliance Statement.................................................................. 78
List of Bondholders................................................................................... 78
Meetings of Bondholders............................................................................... 78
Fiscal Year........................................................................................... 79
Trustee's Annual Report............................................................................... 79
The Trustee........................................................................................... 79
THE TRUST AGREEMENT....................................................................................... 79
Assignment of Mortgage Assets......................................................................... 79
Repurchase of Non-Conforming Loans.................................................................... 80
Reports to Certificateholders......................................................................... 81
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
PAGE
-----------
Event of Default...................................................................................... 82
Rights Upon Event of Default.......................................................................... 82
The Trustee........................................................................................... 83
Duties of the Trustee................................................................................. 83
Resignation of Trustee................................................................................ 84
Amendment of Trust Agreement.......................................................................... 84
Voting Rights......................................................................................... 85
List of Certificateholders............................................................................ 85
REMIC Administrator................................................................................... 85
Termination........................................................................................... 85
THE ISSUER................................................................................................ 86
The Company........................................................................................... 86
Owner Trust........................................................................................... 86
Administrator......................................................................................... 86
USE OF PROCEEDS........................................................................................... 87
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES.............................................................. 87
FEDERAL INCOME TAX CONSIDERATIONS......................................................................... 88
General............................................................................................... 88
Characterization of Securities........................................................................ 88
Taxation of Regular Interest Securities............................................................... 89
Sale or Exchange of Regular Interest Securities....................................................... 94
REMIC Expenses........................................................................................ 95
Taxation of the REMIC................................................................................. 95
Taxation of Holders of Residual Interest Securities................................................... 97
Excess Inclusion Income............................................................................... 98
Restrictions on Ownership and Transfer of Residual Interest Securities................................ 98
Administrative Matters................................................................................ 99
Tax Status as a Grantor Trust......................................................................... 99
Miscellaneous Tax Aspects............................................................................. 103
Tax Treatment of Foreign Investors.................................................................... 103
STATE AND LOCAL TAX CONSIDERATIONS........................................................................ 104
ERISA CONSIDERATIONS...................................................................................... 104
LEGAL INVESTMENT.......................................................................................... 107
PLAN OF DISTRIBUTION...................................................................................... 109
LEGAL MATTERS............................................................................................. 110
GLOSSARY.................................................................................................. 111
</TABLE>
4
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series to be offered thereby and
hereby will, among other things, set forth with respect to such Series: (a)
whether such Securities are Bonds or Certificates, (b) the initial aggregate
principal amount, the Bond Interest Rate or Certificate Interest Rate (or method
for determining it) and authorized denominations of each Class of such Series;
(c) certain information concerning the Primary Assets securing such Series or
assets comprising the Trust Fund, including the principal amount, type and
characteristics of the Primary Assets securing such Bonds or assets comprising
the Trust Fund on the date of issue, and, if applicable, the amount of any
Reserve Funds for such Series; (d) in the case of Mortgage Assets consisting in
whole or in part of Private Mortgage-Backed Securities, information concerning
the issuer thereof or sponsor thereof, the PMBS Trustee, the Master Servicer, if
any, and the Underlying Collateral; (d) the circumstances, if any, under which
the Securities of such Series are subject to redemption prior to maturity or
repurchase prior to the Final Scheduled Distribution Date; (e) the Stated
Maturity of each Class of Bonds or Final Scheduled Distribution Date of the
Certificates; (f) the method used to calculate the aggregate amount of principal
available and required to be applied to the Securities of such Series on each
Payment Date or Distribution Date, as applicable, the timing of the application
of principal and the order of priority of the application of such principal to
the respective classes and the allocation of the principal to be so applied; (g)
the extent of subordination of any Subordinate Securities; (h) the identity of
each Class of Compound Interest Securities, Variable Interest Securities,
Planned Amortization Class Securities, Subordinate Securities, Individual
Investor Securities, Zero Coupon Securities, Principal Only Securities, Interest
Only Securities and Participating Securities included in such Series, if any, or
such other type of Class of Securities; (i) the principal amount of each Class
of such Series that would be outstanding on specified Payment Dates or
Distribution Dates, if the Mortgage Loans underlying or comprising the Mortgage
Assets pledged as security for such Series or comprising the Trust Fund were
prepaid at various assumed rates; (j) the Payment Dates or Distribution Dates,
as applicable for the respective Classes; (k) the Assumed Reinvestment Rate, if
any, and (if applicable) the percentage of Excess Cash Flow to be applied to
payments of principal of the Series; (l) relevant financial information with
respect to the Mortgagor(s) and the Mortgaged Property underlying the Mortgage
Assets, if applicable; (m) information with respect to any required Insurance
Policies relating to any Mortgage Loans comprising Mortgage Assets or Underlying
Collateral; (n) additional information with respect to any Enhancement,
Guaranteed Investment Contract or other agreement relating to the Series; (o)
the plan of distribution of such Series; and (p) whether the Securities are to
be issuable in registered form or bearer form or both, and if bearer securities
are issued, whether bearer securities may be exchanged for registered securities
and the circumstances and places for such exchange, if permitted.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Securities. This Prospectus, which forms a part of
the Registration Statement, omits certain information contained in such
Registration Statement pursuant to the Rules and Regulations of the Commission.
The Registration Statement and the exhibits thereto can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at certain of its Regional Offices
located as follows: Chicago Regional Office, Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York
Regional Office, 75 Park Place, 14th Floor, New York, New York 10007. 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.
The Issuer and Company do not intend to send any financial reports to holders of
Securities.
5
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the documents incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to the office of the Secretary, Structured Asset Securities
Corporation, 200 Vesey Street, New York, New York 10285, telephone number (212)
526-5594.
6
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SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and in the Prospectus
Supplement with respect to the Series offered thereby and to the Trust Indenture
(the "Trust Indenture") or Trust Agreement (the "Trust Agreement"), as
applicable, and the supplemental or terms indenture or agreement with respect to
such Series (the "Series Supplement") between the Company and Bankers Trust
Company of California, N.A., a national banking association, or Marine Midland
Bank, N.A., a national banking association (or another bank or trust company
qualified under the TIA and named in the Prospectus Supplement for the related
Series), as trustee (the "Trustee") or a Trust and the Trustee (collectively,
the Trust Indenture and any Series Supplement relating to Bonds are sometimes
referred to as the "Indenture," and the Trust Agreement and any Series
Supplement relating to Certificates are sometimes referred to as the "Trust
Agreement").
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SECURITIES OFFERED
A. THE BONDS............... Collateralized Mortgage Obligations (the "Bonds"). The Bonds
may be issued from time to time in separately secured Series
pursuant to the Indenture and a related Series Supplement.
Each Series will consist of one or more Classes, one or
more of which may be Classes of Compound Interest
Securities, Planned Amortization Class ("PAC") Securities,
Variable Interest Securities, Zero Coupon Securities,
Principal Only Securities, Interest Only Securities,
Participating Securities, Senior Securities or Subordinate
Securities. Each Class may differ in, among other things,
the amounts allocated to and the priority of principal and
interest payments, maturity date, Payment Dates and Bond
Interest Rate. Additionally, one or more Classes may
consist of Subordinate Securities which are subordinated
to other Classes of Bonds with respect to the right to
receive payments of principal, interest, or both, and may
be allocated losses and shortfalls prior to the allocation
thereof to other Classes of Bonds under the circumstances
and in such amounts as described herein and in the related
Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, the Bonds of each Class
will be issued in fully registered form in the minimum
denominations specified in the related Prospectus Sup-
plement. If so specified in the related Prospectus
Supplement, the Bonds or certain Classes of such Bonds
offered thereby may be available in book-entry form only.
The Bonds may be issued in registered form or bearer form
with coupons attached. Bonds in bearer form will be
offered only outside the United States to non- United
States persons and to offices located outside the United
States of certain United States financial institutions.
See "DESCRIPTION OF THE SECURITIES--The Bonds--General"
and "ENHANCEMENT--Subordinate Securities."
B. THE CERTIFICATES........ Mortgage-Backed Certificates (the "Certificates"). The
Certificates are issuable from time to time in separate
Series pursuant to separate Trust Agreements and a related
Series Supplement. Each Certificate of a Series will
evidence a beneficial ownership interest in the Trust Fund
for such Series. Each Series of Certificates will consist
of one or more Classes of Certificates, one or more of
which may be Classes of Compound Interest Securities, PAC
Securities, Variable Interest Securities, Zero Coupon
Securities, Principal Only
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Securities, Interest Only Securities, Participating
Securities, Subordinate Securities or Senior Securities.
If a Series consists of multiple Classes, the respective
Classes may differ with respect to the amount, percentage
and timing of distributions of principal, interest or
both. Additionally, one or more Classes may consist of
Subordinate Securities which are subordinated to other
Classes of Certificates with respect to the right to
receive distributions of principal, interest, or both
under the circumstances and in such amounts as described
herein and in the related Prospectus Supplement. The
Certificates will be issuable in fully registered form in
the authorized minimum denominations and multiples thereof
specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, the
Certificates or certain Classes of such Certificates
offered thereby may be available in book-entry form only.
ISSUER....................... The Issuer with respect to a Series of Bonds will be
Structured Asset Securities Corporation (the "Company") or
an owner trust established by it ("Owner Trust") for the
purpose of issuing one or more Series of Bonds. Each such
Owner Trust will be created by an agreement (the "Deposit
Trust Agreement") between the Company, acting as
depositor, and a bank, trust company or other fiduciary,
acting as owner trustee (the "Owner Trustee"). The Bonds
will be non-recourse obligations of the Issuer. The Series
Supplement for a particular Series of Bonds may permit the
assets pledged to secure the related Bonds to be
transferred by the Issuer to a trust or other limited
purpose affiliate of the Company, subject to the
obligations of the Bonds of such Series, thereby relieving
the Issuer of its obligations with respect to such Bonds.
The Issuer with respect to a Series of Certificates will be
a trust fund (the "Trust Fund") established by the Company
for the purpose of issuing one or more Series of
Certificates. Such Trust Fund will be created by an
agreement (the "Trust Agreement") between the Company,
acting as depositor, and a bank, trust company or other
fiduciary, acting as trustee (the "Trustee").
The Issuer will not have, nor be expected in the future to
have, any significant assets available for payments on a
Series of Bonds or distributions on a Series of
Certificates, other than the assets pledged as security
for a specific Series of Bonds issued by it, or assets
deposited into a Trust Fund, the Certificates issued by
such Trust Fund as Issuer representing a beneficial
ownership interest in such assets. Unless otherwise
specified in the related Prospectus Supplement, (i) each
Series of Bonds will be separately secured and no Series
of Bonds will have any claim against or security interest
in the assets pledged to secure any other Series, and (ii)
no Series of Certificates will have a beneficial ownership
interest in any other Series.
The Company, a Delaware corporation, is a limited-purpose
finance subsidiary organized for the purpose of issuing
one or more Series and other similar obligations directly
or through one or more
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Trust Funds established by it. Although all of the
outstanding capital stock of the Company is owned by
Lehman Commercial Paper Inc. ("LCPI"), a wholly owned
subsidiary of Lehman Brothers Inc. ("Lehman Brothers"),
neither LCPI nor Lehman Brothers nor any of their
affiliates has guaranteed or is otherwise obligated with
respect to any Series, except with respect to any
representations and warranties given by any such affiliate
as originator, seller or servicer of Mortgage Assets
relating to a Series.
The Company's principal office is located at 200 Vesey
Street, New York, New York 10285 and its telephone number
is (212) 526-5594. See "RISK FACTORS" and "THE ISSUER."
INTEREST PAYMENTS ON
THE BONDS.................. Each Class of a Series of Bonds (other than a Class of Zero
Coupon Securities or Principal Only Securities) will accrue
interest at the rate set forth in (or, in the case of
Variable Interest Securities, as determined by the method
described in) the related Prospectus Supplement (the "Bond
Interest Rate"). Interest on all Bonds which bear
interest, other than Compound Interest Securities, will be
due and payable on the Payment Dates specified in the
related Prospectus Supplement. However, failure to pay
interest on a current basis may not necessarily be an
Event of Default with respect to a particular Series of
Bonds. Payments of interest on a Class of Variable
Interest Securities will be made on the dates set forth in
the related Prospectus Supplement (the "Variable Interest
Payment Dates"). Interest on any Class of Compound
Interest Securities will not be paid currently, but will
accrue and the amount of interest so accrued will be added
to the principal thereof on each Payment Date through the
Accrual Termination Date specified in the related
Prospectus Supplement. Following the applicable Accrual
Termination Date, interest payments on such Bonds will be
made on the Compound Value thereof. Interest Only Bonds
may be assigned a "Notional Amount" which is used solely
for convenience in expressing the calculation of interest
and for certain other purposes. Unless otherwise specified
in the related Prospectus Supplement, the Notional Amount
will be determined at the time of issuance of such Bonds
based on the principal balances or Bond Value of the
Mortgage Loans attributable to the Bonds of a Series
entitled to receive principal, and will be adjusted
monthly over the life of the Bonds based upon adjustments
to the Bond Value of such Mortgage Loans. Reference to the
Notional Amount is solely for convenience in certain
calculations and does not represent the right to receive
any distributions allocable to principal. Zero Coupon
Securities and Principal Only Securities will not accrue,
and will not be entitled to receive, any interest.
Each payment of interest on each Class of Bonds (or addition
to principal of a Class of Compound Interest Securities)
on a Payment Date will include all interest accrued during
the Interest Accrual Period specified in the related
Prospectus Supplement preceding such Payment Date. If the
Interest Accrual Period for a Series ends on a date other
than a Payment Date for such Series, the yield
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realized by the Holders of such Bonds may be lower than
the yield that would result if the Interest Accrual Period
ended on such Payment Date. Additionally, if so specified
in the related Prospectus Supplement, interest accrued for
an Interest Accrual Period for one or more Classes may be
calculated on the assumption that principal payments (and
additions to principal of the Bonds), and allocations of
losses on the Mortgage Assets (if so specified in the
related Prospectus Supplement), are made on the first day
of the preceding Interest Accrual Period and not on the
Payment Date for such preceding Interest Accrual Period
when actually made or added. Such method would produce a
lower effective yield than if interest were calculated on
the basis of the actual principal amount outstanding. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
With respect to any Class of Variable Interest Securities,
the related Prospectus Supplement will set forth: (a) the
initial Bond Interest Rate (or the manner of determining
the initial Bond Interest Rate); (b) the formula, index or
other method by which the Bond Interest Rate will be
determined from time to time; (c) the periodic intervals
at which such determination will be made; (d) the interest
rate cap (the "Maximum Variable Interest Rate") or the
interest rate floor (the "Minimum Variable Interest Rate")
on the Bond Interest Rate, if any, for such Variable
Interest Securities; and (e) the Variable Interest Period
and any other terms relevant to such Class of Bonds. See
"DESCRIPTION OF THE SECURITIES-- Payments or Distributions
of Interest."
INTEREST DISTRIBUTIONS ON THE
CERTIFICATES............... Interest distributions on the Certificates of a Series
(other than Certificates that are Zero Coupon Securities or
Principal Only Securities) will be made from amounts
available therefor on each Distribution Date at the
applicable rate specified in (or determined in the manner
set forth in) the related Prospectus Supplement. The
interest rate on Certificates of a Series may be variable
or change with changes in the mortgage rates or annual
percentage rates of the Mortgage Assets included in the
related Trust Fund and/or as prepayments occur with
respect to such Mortgage Assets. Zero Coupon Securities
and Principal Only Securities may not be entitled to
receive any interest distributions or may be entitled to
receive only nominal interest distributions. Compound
Interest Securities will not receive distributions of
interest but accrued interest will be added to the
principal balance thereof on each Distribution Date until
the Accrual Termination Date. Following the Accrual
Termination Date, interest distributions with respect to
such Compound Interest Securities will be made on the
basis of their Compound Value.
PRINCIPAL PAYMENTS ON THE
BONDS...................... All payments of principal of a Series will be allocated
among the Classes of such Series in the order and amounts,
and will be applied either on a pro rata or a random lot
basis among all Bonds of any such Class, as specified in
the related Prospectus Supplement.
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Except with respect to Zero Coupon Securities, Compound
Interest Securities and Interest Only Securities, unless
specified otherwise in the related Prospectus Supplement,
on each Payment Date principal payments will be made on
the Bonds of each Series in an amount (the "Principal
Payment Amount") as determined by a formula specified in
the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, if the
Series of Bonds has a Class of Compound Interest
Securities, additional principal payments on the Bonds
will be made on each Payment Date in an amount equal to
the interest accrued, but not then payable, on such Bonds
for the related Interest Accrual Period. If the Series of
Bonds has a Class of PAC Securities, such PAC Securities
will have certain priorities of payment with respect to
principal to the extent of certain targeted amounts with
respect to each Payment Date, as set forth in the related
Prospectus Supplement.
PRINCIPAL DISTRIBUTIONS ON
THE CERTIFICATES........... Principal distributions on the Certificates of a Series will
be made from amounts available therefor on each Distribution
Date, unless otherwise specified in the related Prospectus
Supplement, in an aggregate amount determined as set forth
in the related Prospectus Supplement and will be allocated
among the respective Classes of a Series of Certificates
at the times, in the manner and in the priority (which
may, in certain cases, include allocation by random lot)
set forth in the related Prospectus Supplement.
Except with respect to Zero Coupon Securities, Compound
Interest Securities and Interest Only Securities, unless
specified otherwise in the related Prospectus Supplement,
on each Distribution Date principal payments will be made
on the Certificates of each Series in the Principal
Payment Amount as determined by a formula specified in the
related Prospectus Supplement. Unless otherwise specified
in the related Prospectus Supplement, if the Series of
Certificates has a Class of Compound Interest Securities,
additional principal payments on the Certificates will be
made on each Distribution Date in an amount equal to the
interest accrued, but not then payable, on such
Certificates for the related Interest Accrual Period. If
the Series of Certificates has a Class of PAC Securities,
such PAC Securities will have certain priorities of
distribution with respect to principal to the extent of
certain targeted amounts with respect to each Distribution
Date, as set forth in the related Prospectus Supplement.
ALLOCATION OF LOSSES......... If so specified in the related Prospectus Supplement, on any
Payment Date or Distribution Date, as applicable, on which
the principal balance of the Mortgage Assets is reduced
due to losses on the Mortgage Assets, (i) the amount of
such losses will be allocated first, to reduce the
Aggregate Outstanding Principal of the Subordinate
Securities or other subordination, if any, and, thereaf-
ter, to reduce the Aggregate Outstanding Principal of the
remaining Securities in the priority and manner specified
in such Prospectus Supplement until the Aggregate
Outstanding Principal of each
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Class of Securities so specified has been reduced to zero
or paid in full, thus reducing the amount of principal
payable or distributable on each such Class of Securities
or (ii) such losses may be allocated in any other manner
set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement,
such reductions of principal of a Class or Classes of
Securities shall be allocated to the Holders of the
Securities of such Class or Classes pro rata in the
proportion which the outstanding principal of each Bond or
Certificate of such Class or Classes bears to the
Aggregate Outstanding Principal of all Securities of such
Class. See "DESCRIPTION OF THE SECURITIES--Payments or
Distributions of Principal."
STATED MATURITY OF THE
BONDS...................... The "Stated Maturity" for each Class of a Series is the date
specified in the related Prospectus Supplement no later than
which all the Bonds of such Class will be fully paid,
calculated on the basis of the assumptions set forth in
the related Prospectus Supplement. However, the actual
maturity of the Bonds is likely to occur earlier and may
occur significantly earlier than their Stated Maturity.
The rate of prepayments on the Mortgage Assets pledged as
security for any Series will depend on a variety of
factors, including the characteristics of the Mortgage
Loans underlying or comprising the Mortgage Assets and the
prevailing level of interest rates from time to time, as
well as on a variety of economic, demographic, geographic,
tax, legal and other factors. No assurance can be given as
to the actual prepayment experience of such Mortgage
Assets. See "YIELD AND PREPAYMENT CONSIDERATIONS."
FINAL SCHEDULED DISTRIBUTION
DATE OF THE CERTIFICATES... The Final Scheduled Distribution Date for each Class of
Certificates of a Series is the date after which no
Certificates of such Class will remain outstanding,
assuming timely payments or distributions are made on the
Mortgage Assets in the related Trust Fund in accordance
with their terms. The Final Scheduled Distribution Date of
a Class may equal the maturity date of the Mortgage Asset
in the related Trust Fund which has the latest stated
maturity or will be determined as described herein and in
the related Prospectus Supplement.
The actual maturity date of the Certificates of a Series
will depend primarily upon the level of prepayments with
respect to the Mortgage Loans comprising the Mortgage
Assets in the related Trust Fund. The actual maturity of
any Certificate is likely to occur earlier and may occur
substantially earlier than its Final Scheduled Distri-
bution Date as a result of the application of prepayments
to the reduction of the principal balances of the
Certificates. The rate of prepayments on the Mortgage
Loans comprising Mortgage Assets in the Trust Fund for a
Series will depend on a variety of factors, including
certain characteristics of such Mortgage Loans and the
prevailing level of interest rates from time to time, as
well as on a variety of economic, demographic, tax, legal,
social and other factors. No assurance can be given as to
the actual prepayment experience with respect to a Series.
See "RISK FACTORS" and "YIELD
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AND PREPAYMENT CONSIDERATIONS--Prepayments and Weighted
Average" herein.
REDEMPTION OF BONDS.......... The Bonds will be redeemable only as follows:
A. SPECIAL REDEMPTION
If specified in the related Prospectus Supplement, Bonds of
a Series will be subject to special redemption, in whole
or in part, if, as a result of principal payments on the
Mortgage Assets securing such Series or low reinvestment
yields or both, the Trustee determines (based on
assumptions, if any, specified in the Indenture and after
giving effect to the amounts, if any, available to be
withdrawn from any Reserve Fund for such Series) that the
amount anticipated to be available in the Collection
Account for such Series on the date specified in the
related Prospectus Supplement will be insufficient to meet
debt service requirements on any portion of the Bonds. Any
such redemption would be limited to the aggregate amount
of all scheduled principal payments and prepayments on the
Mortgage Assets received since the last Payment Date or
Special Redemption Date, whichever is later, and may
shorten the maturity of any Bond so redeemed by no more
than the period between the date of such special
redemption and the next Payment Date. Unless otherwise
specified in the related Prospectus Supplement, special
redemptions of Bonds of a Series will be made in the same
priority and manner as principal payments are made on a
Payment Date. Bonds subject to special redemption shall be
redeemed on the applicable Special Redemption Date at 100%
of their unpaid principal amount plus accrued interest on
such principal to the date specified in the related
Prospectus Supplement. To the extent described in the
related Prospectus Supplement, Bonds of a Series may be
subject to special redemption in whole or in part
following certain defaults under an Enhancement Agreement
or other agreement, and in certain other events at the
Redemption Price. See "DESCRIPTION OF THE
SECURITIES--Special Redemption."
B. OPTIONAL REDEMPTION
To the extent specified in the related Prospectus
Supplement, one or more Classes of any Series may be
redeemed in whole, or in part, at, unless otherwise
specified in the related Prospectus Supplement, the
Issuer's option on any Payment Date on or after the date
specified in the related Prospectus Supplement and at the
Redemption Price. See "DESCRIPTION OF THE SECURITIES--
Optional Redemption."
C. MANDATORY REDEMPTION
If specified in the related Prospectus Supplement for a
Series, the Bonds of one or more Classes ("Individual
Investor Bonds") may be subject to mandatory redemptions
by lot or by such other method set forth in the Prospectus
Supplement. The related Prospectus Supplement relating to
a Series of Bonds with Individual Investor Securities will
set forth Class priorities, if any, and conditions with
respect to redemptions. Individual Investor Securities to
be redeemed shall be selected by random lot in $1,000
units, after
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making all permitted redemptions requested by holders of
Individual Investor Securities or by such other method set
forth in the Prospectus Supplement. See "DESCRIPTION OF
THE SECURITIES--Mandatory Redemption."
OPTIONAL TERMINATION OF TRUST
FUND....................... If so specified in the related Prospectus Supplement, the
Company, as depositor of the Primary Assets into the Trust
Fund (acting in such capacity, and in such capacity in
respect of an Owner Trust, the "Depositor"), the Servicer,
or such other entity that is specified in the related
Prospectus Supplement, may, at its option, cause an early
termination of the related Trust Fund by repurchasing all
of the Primary Assets remaining in the Trust Fund on or
after a specified date, or on or after such time as the
aggregate principal balance of the Certificates of any
Class of the Series is less than the amount or percentage
specified in the related Prospectus Supple-ment. See
"DESCRIPTION OF THE SECURITIES--Optional Termination."
REPURCHASES OF
CERTIFICATES............... If so specified in the related Prospectus Supplement, one or
more classes of the Certificates of such Series may be
repurchased, in whole or in part, at the option of the
Depositor, at such times and under the circumstances
specified in such Prospectus Supplement and at the
repurchase price set forth therein. See "DESCRIPTION OF
THE SECURITIES--Optional Repurchase of Certificates"
herein.
If so specified in the related Prospectus Supplement, any
Class of the Certificates may be subject to repurchase at
the request of the holders of such Class or to mandatory
repurchase by the Depositor (including by random lot). See
"DESCRIPTION OF THE SECURITIES--Other Repurchases" herein.
SECURITY FOR THE BONDS,
OR THE TRUST FUND FOR THE
CERTIFICATES............... Each Series of Bonds will be separately secured by Primary
Assets consisting of one or more of the assets described
below, as specified in the Prospectus Supplement. The
Trust Fund for a Series of Certificates will consist of
one or more of the assets described below, as specified in
the related Prospectus Supplement.
A. MORTGAGE ASSETS
The Primary Assets for a Series may consist of any
combination of the following, to the extent and as
specified in the related Prospectus Supplement:
(1) Mortgage Loans
Mortgage Assets for a Series may consist, in whole or in
part, of Mortgage Loans, including participation interests
therein owned by the Issuer. Some Mortgage Loans or
Mortgage Loans underlying such participation interests may
be delinquent or non-performing as specified in the
related Prospectus Supplement. The Mortgage Assets may
consist of a single Mortgage Loan or obligations of a
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single obligor or related obligors as specified in the
related Prospectus Supplement. Mortgage Loans comprising
or underlying the Mortgage Assets may be originated by or
acquired from an affiliate of the Issuer and an affiliate
of the Issuer may be an obligor with respect to any such
Mortgage Loan. Payments on such Mortgage Loans will be
collected by the Trustee or by the Servicer or Master
Servicer with respect to a Series and remitted to the
Trustee as described in the related Prospectus Supplement
and will be available in the priority described in the
related Prospectus Supplement to make payments on the
Bonds of that Series. To the extent specified in the
related Prospectus Supplement, Mortgage Loans owned by the
Issuer will be serviced by Servicers, and, if applicable,
a Master Servicer, either of which may be affiliates or
shareholders of the Issuer.
Mortgaged Properties securing Mortgage Loans may consist of
multifamily residential rental property or cooperatively
owned multifamily property consisting of five or more
dwelling units, mixed multifamily/commercial property or
commercial property. Mortgage Loans secured by Multifamily
Property may consist of FHA Loans. Mortgage Loans may, as
specified in the related Prospectus Supplement, have
various payment characteristics and may consist of fixed
rate loans or ARMs or Mortgage Loans having balloon or
other irregular payment features. Unless otherwise
specified in the related Prospectus Supplement, the
Mortgage Loans will be secured by first mortgages or deeds
of trust or other similar security instruments creating a
first lien on Mortgaged Property. If so specified in the
related Prospectus Supplement, Mortgage Loans relating to
real estate projects under construction may be included in
the Mortgage Assets for a Series. The related Prospectus
Supplement will describe certain characteristics of the
Mortgage Loans comprising the Mortgage Assets for a
Series, including, without limitation, (a) the aggregate
unpaid principal balance of the Mortgage Loans comprising
the Mortgage Assets; (b) the weighted average Mortgage
Rate on the Mortgage Loans, and, in the case of adjustable
Mortgage Rates, the weighted average of the current
adjustable Mortgage Rates, the minimum and maximum
permitted adjustable Mortgage Rates, if any, and the
weighted average thereof; (c) the average outstanding
principal balance of the Mortgage Loans; (d) the weighted
average remaining scheduled term to maturity of the
Mortgage Loans and the range of remaining scheduled terms
to maturity; (e) the range of Loan-to-Value Ratios of the
Mortgage Loans; (f) the relative percentage (by principal
balance as of the Cut-off Date) of Mortgage Loans that are
ARMs, fixed interest rate, FHA Loans or other types of
Mortgage Loans; (g) any enhancement relating to the
Mortgage Assets; (h) the relative percentage (by principal
balance as of the Cut-Off Date) of Mortgage Loans that are
secured by Multifamily Property or Commercial Property;
(i) the geographic dispersion of Mortgaged Properties
securing the Mortgage Loans; and (j) the use or type of
each Mortgaged Property securing a Mortgage Loan.
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If permitted by applicable law, the Mortgage Pool may also
include Mortgaged Properties acquired by foreclosure or by
deed-in-lieu of foreclosure ("REO Property"). To the
extent specified in the related Prospectus Supplement, the
Servicer or the Master Servicer or the Special Servicer,
if any, may establish and maintain a trust account or
accounts to be used in connection with REO Properties and
other Mortgaged Properties being operated by it or on its
behalf on behalf of the Trust Estate, by the mortgagor as
debtor-in- possession or otherwise. See "SECURITY FOR THE
BONDS AND CERTIFICATES--Mortgage Loans" and "SERVICING OF
MORTGAGE LOANS--Maintenance of Insurance Policies and
Other Servicing Procedures--Presentation of Claims;
Realization Upon Defaulted Mortgage Loans."
(2) Private Mortgage-Backed Securities
Private Mortgage-Backed Securities may include (a) mortgage
participations or pass-through certificates representing
beneficial interests in certain Mortgage Loans, (b) debt
obligations interest payments on which may be tax-exempt
in whole or in part secured by mortgages or (c)
participations or other interests in any of the foregoing.
Although individual Mortgage Loans underlying a Private
Mortgage-Backed Security may be insured or guaranteed by
the United States or an agency or instrumentality thereof,
they need not be, and the Private Mortgage-Backed
Securities themselves will not be, so insured or
guaranteed. Unless otherwise specified in the Prospectus
Supplement relating to a Series, payments on the Private
Mortgage-Backed Securities will be distributed directly to
the Trustee (on behalf of the Trust Estate) as registered
owner of such Private Mortgage-Backed Securities. Unless
otherwise specified in the Prospectus Supplement relating
to a Series, if payments with respect to interest on the
underlying obligations are tax-exempt, such Prospectus
Supplement will disclose the relevant federal income tax
characteristics relating to the tax-exempt status of such
obligations.
The related Prospectus Supplement for a Series will specify,
to the extent applicable, (i) the aggregate approximate
principal amount and type of any Private Mortgage-Backed
Securities to be included in the Trust Estate or Trust
Fund for such Series; (ii) certain characteristics of the
Mortgage Loans, participations or other interests which
comprise the underlying assets for the Private Mortgage-
Backed Securities including (A) the payment features of
such Mortgage Loans, participations or other interests
(i.e., whether they are fixed interest rate or adjustable
rate and whether they provide for fixed level payments,
negative amortization, or other payment features), (B) the
approximate aggregate principal amount, if known, of the
underlying Mortgage Loans, participations or other
interests which are insured or guaranteed by a
governmental entity, (C) the servicing fee or range of
servicing fees with respect to the Mortgage Loans, and (D)
the stated maturities of the Mortgage Loans, partic-
ipations or other interests at origination; (iii) the
maximum original term-to-stated maturity of the Private
Mortgage-Backed Securities;
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(iv) the weighted average term-to-stated maturity of the
Private Mortgage-Backed Securities; (v) the pass-through
or bond rate or ranges thereof for the Private
Mortgage-Backed Securities or formula therefor; (vi) the
weighted average pass-through or certificate rate of the
Private Mortgage-Backed Securities or formula therefor;
(vii) the issuer of the Private Mortgage-Backed Securities
(the "PMBS Issuer"), the Servicer or Master Servicer of
the Private Mortgage-Backed Securities and the trustee of
the Private Mortgage-Backed Securities (the "PMBS
Trustee"); (viii) certain characteristics of credit
support, if any, such as reserve funds, insurance
policies, letters of credit, guarantees or
overcollateralization, relating to the Mortgage Loans
underlying the Private Mortgage-Backed Securities, or to
such Private Mortgage-Backed Securities themselves; (ix)
the terms on which underlying Mortgage Loans, partici-
pations or other interests for such Private
Mortgage-Backed Securities or the Private Mortgage-Backed
Securities themselves may, or are required to, be
repurchased prior to maturity; and (x) the terms on which
substitute Mortgage Loans, participations or other inter-
ests may be delivered to replace those initially deposited
with the PMBS Trustee.
(3) Determination of Asset Value
If provided in the applicable Prospectus Supplement, each
item of Mortgage Assets for a Series will be assigned an
Asset Value. Unless otherwise specified in the related
Prospectus Supplement, the aggregate of the Asset Values
of the Primary Assets securing a Series of Bonds or
comprising a Trust Fund will equal not less than the
original Aggregate Outstanding Principal of such Series.
The Asset Value of an item of Primary Assets securing any
Series of Bonds or comprising a Trust Fund is intended to
represent the principal amount of Securities of such
Series that, based on certain assumptions stated in the
related Series Supplement, can be supported by payments on
such item of Primary Assets, irrespective of prepayments
thereon, together with, depending on the type of Primary
Assets and method used to determine its Asset Value,
reinvestment earnings at the related Assumed Reinvestment
Rate, if any, and amounts in any Reserve Fund established
for that Series. In such a case, the related Prospectus
Supplement will set forth the method or methods and
related assumptions used to determine Asset Value, if such
method is used, for the Primary Assets securing the
related Series. See "DESCRIPTION OF THE SECURITIES--
Valuation of Mortgage Assets."
B. COLLECTION ACCOUNT
Unless otherwise provided in the related Prospectus
Supplement, all payments on the Primary Assets pledged as
security for a Series or comprising the assets of a Trust
Fund will be remitted to a Collection Account to be
established with the Trustee, or if the Trustee is not
also the Paying Agent, with the Paying Agent, for such
Series. Unless otherwise provided in the related
Prospectus Supplement, such payments, together with the
Reinvestment Income thereon, if any, the amount of cash,
if any, initially deposited in the Collection
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Account by the Issuer together with Reinvestment Income
thereon, if any, and any amounts withdrawn from any
Reserve Fund established for such Series, will be
available to make payments or distributions of principal
of and interest on such Series on the next Payment Date or
Distribution Date, as applicable. Any funds remaining in
the Collection Account for a Series immediately following
a Payment Date or Distribution Date, as applicable (unless
required to be deposited into one or more Reserve Funds,
as described below, or applied to pay certain expenses or
other payments provided for in the Indenture or Trust
Agreement, as applicable) will be promptly paid as
provided in the Indenture or Trust Agreement to the Issuer
or, in certain circumstances, to owners of residual
interests and, upon such payment, will be released from
the lien of the Indenture or Trust Agreement, as
applicable. See "SECURITY FOR THE BONDS AND
CERTIFICATES--Collection Account."
C. GUARANTEED INVESTMENT CONTRACTS AND OTHER AGREEMENTS
The Issuer may obtain and deliver to the Trustee Guaranteed
Investment Contracts pursuant to which moneys held in the
funds and accounts established for such Series will be
invested at a specified rate for the Series. The Issuer
may also obtain and deliver to the Trustee certain other
agreements such as interest rate swap agreements, interest
rate cap or floor agreements or similar agreements issued
by a bank, insurance company, savings bank, savings and
loan association or other entity which reduce the effects
of interest rate fluctuations on the Mortgage Assets or
the Securities. The principal terms of any such Guaranteed
Investment Contract or other 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 Prospec-
tus Supplement for the related Series. Additionally, the
related Prospectus Supplement will provide certain
information with respect to the issuer of such Guaranteed
Investment Contract or other agreement.
ENHANCEMENT.................. Enhancement in the form of reserve funds, subordination,
overcollateralization, insurance policies, letters of credit
or other types of credit support may be provided with
respect to the Mortgage Assets or with respect to one or
more Classes of Securities of a Series. If the Mortgage
Assets are divided into separate Mortgage Groups, each
securing or supporting a separate Class or Classes of a
Series, credit support may be provided by a cross-support
feature which requires that distributions be made with
respect to Securities secured by one Mortgage Group prior
to distributions to Subordinate Securities secured by
another Mortgage Group within the Trust Estate or Trust
Fund.
The type, characteristics and amount of enhancement will be
determined based on the characteristics of the Mortgage
Loans underlying or comprising the Mortgage Assets and
other factors and will be established on the basis of
requirements of each Rating Agency rating the Securities
of such Series. If so specified in the related
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Prospectus Supplement, any such enhancement may apply only
in the event of certain types of losses or delinquencies
and the protection against losses or delinquencies
provided by such enhancement will be limited. See
"ENHANCEMENT" and "RISK FACTORS" herein.
A. SUBORDINATE SECURITIES
A Series of Securities may include one or more Classes of
Subordinate Securities. The rights of holders of such
Subordinate Securities to receive distributions on any
Payment Date or Distribution Date, as applicable, will be
subordinate in right and priority to the rights of holders
of Senior Securities of the Series, but only to the extent
described in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement,
subordination may apply only in the event of certain types
of losses not covered by other enhancement. Unless
otherwise specified in the related Prospectus Supplement,
such subordination will be in lieu of providing insurance
policies or other credit support with respect to losses
arising from such events. Unless otherwise specified in
the related Prospectus Supplement, the related Series
Supplement may require a trustee that is not the Trustee
to be appointed to act on behalf of holders of Subordinate
Securities.
The related Prospectus Supplement will set forth information
concerning the amount of subordination of a Class or
Classes of Subordinate Securities in a Series, the
circumstances in which such subordination will be
applicable, the manner, if any, in which the amount of
subordination will decrease over time, the manner of
funding any related Reserve Fund and the conditions under
which amounts in any related Reserve Fund will be used to
make distributions to holders of Senior Securities and/or
to holders of Subordinate Securities or be released from
the related Trust Estate or Trust Fund. If cash flows
otherwise distributable to holders of Subordinate
Securities secured by a Mortgage Group will be used as
credit support for Senior Securities secured by another
Mortgage Group within the Trust Estate or Trust Fund, the
related Prospectus Supplement will specify the manner and
conditions for applying such a cross-support feature. See
"ENHANCEMENT-- Subordinate Securities."
B. INSURANCE
If so specified in the related Prospectus Supplement,
certain insurance policies will be required to be
maintained with respect to the Mortgage Loans included in
the Trust Estate or Trust Fund for a Series. Such
insurance policies may include, but are not limited to, a
standard hazard insurance policy or, with respect to FHA
Loans, FHA Insurance. See "ENHANCEMENT" and "DESCRIPTION
OF INSURANCE ON THE MORTGAGE LOANS" herein. The Prospectus
Supplement for a Series will provide information con-
cerning any such insurance policies, including (a) the
types of coverage provided by each, (b) the amount of such
coverage and (c) conditions to payment under each. To the
extent described in
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the related Prospectus Supplement, certain insurance
policies to be maintained with respect to the Mortgage
Loans may be terminated, reduced or replaced following the
occurrence of certain events affecting the authority or
creditworthiness of the insurer. Additionally, such
insurance policies may be terminated, reduced or replaced
by the Servicer or Master Servicer, if any, provided that
no rating assigned to Securities of the related Series
offered hereby and by the related Prospectus Supplement is
adversely affected and such insurance policies may apply
only in the event of certain types of losses, all as set
forth in the related Prospectus Supplement.
C. LETTER OF CREDIT
If so specified in the related Prospectus Supplement, credit
support may be provided by one or more letters of credit.
A letter of credit may provide limited protection against
certain losses in addition to or in lieu of other credit
support. The issuer of the letter of credit (the "L/C
Bank") will be obligated to honor demands with respect to
such letter of credit, to the extent of the amount
available thereunder, to provide funds under the
circumstances and subject to such conditions as are
specified in the related Prospectus Supplement. The
liability of the L/C Bank under its letter of credit may
be reduced by the amount of unreimbursed payments
thereunder.
The maximum liability of an L/C Bank under its letter of
credit will be an amount equal to a percentage specified
in the related Prospectus Supplement of the initial
aggregate outstanding principal balance of the Mortgage
Loans in the Trust Estate or Trust Fund or one or more
Classes of Securities of the related Series (the "L/C
Percentage"). The maximum amount available at any time to
be paid under a letter of credit will be determined in the
manner specified therein and in the related Prospectus
Supplement. See "ENHANCEMENT--Letter of Credit."
D. BOND GUARANTEE INSURANCE
If so specified in the related Prospectus Supplement, credit
support for a Series may be provided by an insurance
policy (the "Bond Guarantee Insurance") issued by one or
more insurance companies. Such Bond Guarantee Insurance
may guarantee timely distributions of interest and full
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. See
"ENHANCEMENT--Bond Guarantee Insurance."
E. RESERVE FUNDS
The Issuer may deposit in one or more reserve funds
(collectively, the "Reserve Funds") for any Series cash,
Eligible Investments, demand notes or a combination
thereof in the aggregate amount, if any, specified in the
related Prospectus Supplement. Any Reserve Funds for a
Series may also be funded over time through application of
a specified amount of cash flow, to the extent described
in the related Prospectus Supplement. Such a Reserve Fund
may be established to increase the likelihood of the
timely distributions on the Securities of such Series or
to reduce the likelihood of a special
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redemption with respect to any Series. Reserve Funds may
be established to provide protection against certain
losses or delinquencies in addition to or in lieu of other
credit support. Amounts on deposit in the Reserve Funds
for a Series, together with (unless otherwise specified in
the related Prospectus Supplement) the reinvestment income
thereon, if any, will be applied for the purposes, in the
manner and to the extent provided by the related
Prospectus Supplement.
On each Payment Date or Distribution Date, as applicable,
for a Series, all amounts on deposit in any Reserve Funds
for the Series in excess of the amounts required to be
maintained therein by the related Indenture or Trust
Agreement, as applicable, and specified in the related
Prospectus Supplement may be released from the Reserve
Funds and will not be available for future payments or
distributions on the Securities of such Series.
Additional information concerning any Reserve Funds,
including whether any such Reserve Fund is a part of the
Trust Estate or Trust Fund, the circumstances under which
moneys therein will be applied to make distributions to
Bondholders or Certificateholders, the balance required to
be maintained in such Reserve Funds, the manner in which
such required balance will decrease over time and the
manner of funding any such Reserve Fund, will be set forth
in the related Prospectus Supplement. See "ENHANCEMENT--
Reserve Funds."
F. OVERCOLLATERALIZATION
To the extent applicable and as specified in the related
Prospectus Supplement, a Series may be structured such
that the outstanding principal balances or Aggregate Asset
Value of the Mortgage Assets securing a Series may exceed
the Aggregate Outstanding Principal of such Series,
thereby resulting in overcollateralization. See
"DESCRIPTION OF THE SECURITIES--Valuation of Mortgage
Assets."
SERVICING AGREEMENTS......... Various Servicers will perform certain servicing functions
with respect to any Mortgage Loans comprising Mortgage
Assets or Underlying Collateral for a Series. In addition,
if so specified in the related Prospectus Supplement, a
Master Servicer identified in the related Prospectus
Supplement may service Mortgage Loans directly or
administer and supervise the performance by the Servicers
of their duties and responsibilities under separate
servicing agreements. Each Servicer must meet the
requirements of the Master Servicer, if any, and be
approved by the Issuer, and, if specified in the related
Prospectus Supplement, the Master Servicer and each
Servicer must be approved by either FNMA or FHLMC as a
seller-servicer of mortgage loans and, in the case of FHA
Loans, by HUD as an FHA mortgagee. Each Servicer will be
obligated under a servicing agreement to perform customary
servicing functions and may be obligated to advance funds
to cover certain payments not made by the
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Mortgagors to the extent described herein and in the
related Prospectus Supplement. The Master Servicer, if
any, may, if so specified in the related Prospectus
Supplement, be obligated to advance funds to cover any
required Advances not made by the Servicers to the extent
that, in the judgment of the Master Servicer, such
Advances are recoverable under the Insurance Policies, any
Enhancement or from the proceeds of liquidation of the
Mortgage Loans or as provided in the related Prospectus
Supplement. The related Prospectus Supplement will specify
the conditions to and any limitations on such Advances and
the conditions under which such Advances will be
recoverable. With respect to any such Series, the Issuer
may (i) enter into a standby agreement with an indepen-
dent standby Servicer acceptable to each Rating Agency
rating such Securities providing that such standby
Servicer will assume the Servicer's or Master Servicer's
obligations in the event of a default by the Master
Servicer or Servicer or (ii) obtain a servicer perform-
ance bond acceptable to each Rating Agency rating such
Securities that will guarantee certain of the Servicer's
or Master Servicer's obligations. The Issuer will assign
to the Trustee its rights under any Master Servicing
Agreement and any servicing agreements so provided with
respect to a Series as security for the Series. See "SER-
VICING OF MORTGAGE LOANS" and "SECURITY FOR THE BONDS AND
CERTIFICATES--Mortgage Loans" herein.
SPECIAL SERVICER............. If so specified in the related Prospectus Supplement, to the
extent a Mortgage Loan on or after the Closing Date meets
certain criteria set forth in the related Prospectus
Supplement, (i) all or a portion of the servicing
responsibilities with respect to such Mortgage Loan may be
transferred to a Special Servicer or (ii) the Special
Servicer will provide advisory services with respect to
the servicing of such Mortgage Loan. See "SERVICING OF
MORTGAGE LOANS" herein.
FEDERAL INCOME TAX
CONSIDERATIONS............. Unless otherwise stated in the applicable Prospectus
Supplement, a real estate mortgage investment conduit (a
"REMIC") election will be made with respect to each Series
of Securities. Securities of such Series will be
designated as "regular interests" in a REMIC ("Regular
Interest Securities") or as "residual interests" in a
REMIC ("Residual Interest Securities").
If the applicable Prospectus Supplement so specifies with
respect to a Series of Securities, the Securities of such
Series will not be treated as regular or residual
interests in a REMIC for federal income tax purposes but
instead will be treated as (i) indebtedness of the Issuer,
(ii) an undivided beneficial ownership interest in the
Mortgage Loans (and the arrangement pursuant to which the
Mortgage Loans will be held and the Securities will be
issued will be treated as a grantor trust under Subpart E,
part I of subchapter J of the Code and not as an
association taxable as a corporation for federal income
tax purposes); (iii) equity interests in an association
that will satisfy the requirements for qualification as a
real estate investment trust; (iv) interests in an entity
that will be treated as a partnership
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for federal income tax purposes; or (v) interests in an
entity or a pool of assets that will satisfy the
requirements for qualification as a financial asset
securitization investment trust (a "FASIT") for federal
income tax purposes. Federal income tax consequences to
Bondholders or Certificateholders of any such Series will
be described in the applicable Prospectus Supplement.
Compound Interest Securities, Interest Weighted Securities
and Zero Coupon Securities will, and certain other Classes
of Securities may, be issued with original issue discount
that is not DE MINIMIS. In such cases, the Bondholder or
Certificateholder will be required to include the original
issue discount in gross income as it accrues, which may be
prior to the receipt of cash attributable to such income.
If a Security is issued at a premium, the holder will be
entitled to make an election to amortize such premium on a
constant yield method. Securities constituting regular or
residual interests in a REMIC will generally represent
"loans secured by an interest in real property" for
domestic building and loan associations and "real estate
assets" for real estate investment trusts to the extent
that the underlying mortgage loans and interest thereon
qualify for such treatment. Non-REMIC Securities (other
than interests in grantor trusts and certain interests in
a FASIT) will not qualify for such treatment.
A holder of a Residual Interest Security will be required to
include in its income its pro rata share of the taxable
income of the REMIC. In certain circumstances, the holder
of a Residual Interest Security may have REMIC taxable
income or tax liability attributable to REMIC taxable
income for a particular period in excess of cash
distributions for such period or have an after-tax return
that is less than the after-tax return on comparable debt
instruments. Accordingly, a Residual Interest Security may
have a negative "value". In addition, a portion (or all)
of the income from a Residual Interest Security (i) is not
subject to offset by losses from other activities, (ii)
for a holder that is subject to tax under the Code on
unrelated business taxable income, is treated as unrelated
business taxable income and (iii) for a foreign holder,
does not qualify for exemption from or reduction of
withholding. Further, individual holders are subject to
limitations on the deductibility of expenses of the REMIC.
See "FEDERAL INCOME TAX CONSIDERATIONS."
ERISA CONSIDERATIONS......... A fiduciary of any 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 Code, should carefully review with its
own legal advisors whether the purchase or holding of
Securities could give rise to a transaction prohibited or
otherwise impermissible under ERISA or the Code. See
"ERISA CONSIDERATIONS."
LEGAL INVESTMENT............. The related Prospectus Supplement will specify whether any
Class of the Securities of the particular Series offered by
this Prospectus and the related Prospectus Supplement will
constitute "mortgage related securities" under the
Secondary Mortgage Market Enhancement Act of 1984, as
amended ("SMMEA"). Investors
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whose investment authority is subject to legal
restrictions should consult their own legal advisors to
determine whether and to what extent the Securities
constitute legal investments for them. See "LEGAL
INVESTMENT."
USE OF PROCEEDS.............. The Issuer will use the net proceeds from the sale of each
Series to (i) purchase Mortgage Loans and/or Private
Mortgage-Backed Securities comprising the Mortgage Assets
securing such Securities, (ii) repay indebtedness which
has been incurred to acquire Mortgage Assets to be pledged
by the Issuer as security for the Bonds or to be deposited
into a Trust Fund, (iii) establish any Reserve Funds
described in the related Prospectus Supplement, or (iv)
pay costs of structuring, guaranteeing and issuing such
Securities. If so specified in the related Prospectus
Supplement, the purchase of the Mortgage Assets for a
Series may be effected by an exchange of Securities with
the seller of such Mortgage Assets. See "USE OF PRO-
CEEDS."
RATINGS...................... It will be a condition to the issuance of any Securities
offered by this Prospectus and the related Prospectus
Supplement that they be rated in one of the four highest
applicable rating categories by at least one Rating
Agency. The rating or ratings applicable to Securities of
each Series will be as set forth in the related Prospectus
Supplement.
A security rating should be evaluated independently of
similar ratings of different types of securities. A
security rating does not address the effect that the rate
of prepayment on Mortgage Loans comprising or underlying
the Mortgage Assets or the effect that reinvestment rates
may have on the yield to investors in the Securities. A
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 rating
should be evaluated independently of any other rating. See
"RISK FACTORS."
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RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Securities.
LIMITED LIQUIDITY. There can be no assurance that a secondary market for
the Securities of any Series will develop or, if it does develop, that it will
provide holders with liquidity of investment or will continue while Securities
of such Series remain outstanding. The market value of Securities will fluctuate
with changes in prevailing rates of interest. Consequently, sale of the
Securities by a holder in any secondary market which may develop may be at a
discount from par value or from their purchase price. Furthermore, secondary
purchasers may look only to the Prospectus Supplement attached hereto and to the
reports to Bondholders or Certificateholders, as applicable, delivered pursuant
to the Indenture or Trust Agreement, as applicable and as described herein under
the heading "DESCRIPTION OF THE SECURITIES--General," "--The Bonds--General,"
and "--The Certificates--General" for information concerning the Securities.
Except to the extent described in the related Prospectus Supplement, Bondholders
or Certificateholders, as applicable, will have no optional redemption or early
termination rights, respectively. The Bonds are subject to redemption, and the
Certificates are subject to early termination or repurchase, by the Issuer only
under certain specified circumstances described herein and in the related
Prospectus Supplement. See "DESCRIPTION OF THE SECURITIES--Special Redemption,"
"--Optional Redemption," "--Optional Termination," "--Optional Repurchase of
Certificates," and "--Other Repurchases." Lehman Brothers Inc. ("Lehman
Brothers"), through one or more of its affiliates, and the other underwriters,
if any, presently expect to make a secondary market in the Securities, but have
no obligation to do so.
LIMITED ASSETS. The Issuer will not have, nor be expected in the future to
have, any significant assets available for payments on a Series of Securities
other than the assets pledged as security or deposited into a Trust Fund for a
specific Series. The Bonds will be non-recourse obligations of the Issuer and
each Series of Bonds will be separately secured. Unless otherwise specified in
the related Prospectus Supplement, no Series will have any claim against or
security interest in the Primary Assets pledged to secure any other Series. If
the Primary Assets securing a Series of Bonds is insufficient to make payments
on such Bonds, no other assets of the Issuer will be available for payment of
the deficiency.
Unless otherwise set forth in the Prospectus Supplement for a Series of
Certificates, the Trust Fund for such Series will be the only available source
of funds to make distributions on the Certificates of such Series. The only
obligations, if any, of the Depositor with respect to the Certificates of any
Series will be pursuant to certain representation and warranties. The Depositor
does not have, and is not expected in the future to have, any significant assets
with which to meet any obligation to repurchase Mortgage Assets with respect to
which there has been a breach of any representation or warranty. If, for
example, the Depositor were required to repurchase a Mortgage Loan which
constitutes a Mortgage Asset, its only sources of funds to make such repurchase
would be from funds obtained from the enforcement of a corresponding obligation,
if any, on the part of the originator of the Mortgage Loans or the Servicer, as
the case may be, or from a reserve fund established to provide funds for such
repurchases.
Additionally, certain amounts remaining in certain funds or accounts,
including the Collection Account and any Reserve Funds, may be withdrawn under
certain conditions and circumstances described in the related Prospectus
Supplement. In the event of such withdrawal, such amounts will not be pledged
to, or available for, future payment or distribution of principal of or interest
on the Securities. If so specified in the related Prospectus Supplement, on any
Payment Date or Distribution Date on which the principal balance of the Mortgage
Assets is reduced due to losses on the Mortgage Assets, (i) the amount of such
losses will be allocated first, to reduce the Aggregate Outstanding Principal of
the Subordinate Securities or other subordination, if any, and, thereafter, to
reduce the Aggregate Outstanding Principal of the remaining Securities in the
priority and manner specified in such Prospectus Supplement until the Aggregate
Outstanding Principal of each Class of Securities so specified has been reduced
to zero or paid in full, thus, reducing the amount of principal payable on each
such Class of Securities or (ii) such losses
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may be allocated in any other manner set forth in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
such reductions of principal of a Class or Classes of Securities shall be
allocated to the Holders of the Securities of such Class or Classes pro rata in
the proportion which the outstanding principal of each Security of such Class or
Classes bears to the Aggregate Outstanding Principal of all Securities of such
Class.
YIELD AND PREPAYMENT CONSIDERATIONS. Prepayments on the Mortgage Loans
comprising or underlying the Mortgage Assets securing a Series or deposited into
a Trust Fund, as the case may be, generally will result in a faster rate of
principal payments on such Securities than if payments on such Mortgage Assets
were made as scheduled. Thus, the prepayment experience on the Mortgage Loans
comprising or underlying the Mortgage Assets will affect the average life of
each Class secured thereby and the extent to which each such Class is paid prior
to its Stated Maturity or Final Scheduled Distribution Date. The rate of
principal payments on pools of mortgage loans varies between pools and from time
to time is influenced by a variety of economic, demographic, geographic, social,
tax, legal and other factors. There can be no assurance as to the rate of
prepayment on the Mortgage Assets securing any Series of Bonds or deposited into
a Trust Fund, as the case may be, or that the rate of payments will conform to
any model described herein or in any Prospectus Supplement. If prevailing
interest rates fall significantly below the applicable mortgage rates, principal
prepayments are likely to be higher than if prevailing rates remain at or above
the rates borne by the Mortgage Loans comprising or underlying the Primary
Assets securing a Series of Bonds or deposited into a Trust Fund, as the case
may be. As a result, the actual maturity of or final distribution on any Class
could occur significantly earlier than its Stated Maturity or Final Scheduled
Distribution Date. The actual maturity of the Bonds or final distribution on the
Certificates will also be affected by the extent to which Excess Cash Flow is
applied to payments or distributions of principal on the Securities. A Series of
Securities may include Classes of PAC Securities or other Securities with
priorities of payment and, as a result, yields on other Classes of Securities of
such Series may be more sensitive to prepayments on Mortgage Loans. A Series may
include a Class offered at a significant premium or discount. Yields on such
Class of Securities will be sensitive, and in some cases extremely sensitive, to
prepayments on Mortgage Loans and, in the case of a premium Class, where the
amount of interest payable with respect to such Class is extremely
disproportionate to principal, a holder might, in some prepayment scenarios,
fail to recoup its original investment. See "YIELD AND PREPAYMENT
CONSIDERATIONS."
LIMITED NATURE OF RATING. Any rating assigned to the Securities by a Rating
Agency will reflect such Rating Agency's assessment solely of the likelihood
that holders of such Securities will receive payments required to be made under
the Indenture or Trust Agreement, as the case may be. Such rating will not
constitute an assessment of the likelihood that principal prepayments on the
Mortgage Loans underlying or comprising the Mortgage Assets will be made by
Mortgagors or of the degree to which the rate of such prepayments might differ
from that originally anticipated. Such rating will not address the possibility
that prepayment at higher or lower rates than anticipated by an investor may
cause such investor to experience a lower than anticipated yield or that
investors purchasing a Security at a significant premium might fail to recoup
their initial investment under certain prepayment scenarios.
The amount of Primary Assets, including any applicable Enhancement, required
to support a Series of Securities will be determined on the basis of criteria
established by each Rating Agency rating such Series. Such criteria are
sometimes based upon actuarial analysis of the behavior of mortgage loans in a
larger group. Such analysis is often the basis upon which each Rating Agency
determines the amount of Enhancement required with respect to each Series of
Securities. There can be no assurance that the historical data supporting such
actuarial analysis will accurately reflect future experience generally nor any
assurance that the data derived from a large pool of mortgages will accurately
predict the delinquency, foreclosure or loss experience of any particular pool
of Mortgage Loans. In other cases, such analysis may be based upon the value of
the property underlying the Mortgage Assets. There can be no assurance that such
value will accurately reflect the future value of the property and, therefore,
whether or not the Securities will be paid in full.
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CERTAIN MORTGAGE LOANS AND MORTGAGED PROPERTY; OBLIGOR DEFAULT. Mortgage
Loans made with respect to Multifamily or Commercial Property may entail risks
of loss in the event of delinquency and foreclosure that are greater than
similar risks associated with traditional single-family property. Many of the
Mortgage Loans may be nonrecourse loans as to which, in the event of an obligor
default, recourse may be had only against the specific Commercial or Multifamily
Property and such limited other assets as have been pledged to secure such
Mortgage Loan, and not against the obligor's other assets. Furthermore, the
repayment of loans secured by income producing properties is typically dependent
upon the successful operation of the related real estate project rather than
upon the liquidation value of the underlying real estate. If the net operating
income from the project is reduced (for example, if rental or occupancy rates
decline or real estate and personal property tax rates or other operating
expenses increase), the obligor's ability to repay the loan may be impaired. A
number of the Mortgage Loans may be secured by owner-occupied Mortgaged
Properties or Mortgaged Properties leased to a single tenant. Accordingly, a
decline in the financial condition of the obligor or single 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 liquidation value
of any Mortgaged Property may be adversely affected by risks 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
and personal property tax rates and other operating expenses including energy
costs; changes in governmental rules, regulations and fiscal policies, including
environmental legislation; acts of God; and other factors which are beyond the
Master Servicer's or the Special Servicer's, if any, control. Although the
Servicer or the Master Servicer is obligated to cause standard hazard insurance
to be maintained with respect to each Mortgage Loan, insurance with respect to
extraordinary hazards such as earthquakes and floods is generally not required
to be maintained, and insurance is not available with respect to many of the
other risks listed above.
Certain of the Mortgage Loans as of the Cut-Off Date may not be fully
amortizing over their terms to maturity, and, thus, will have substantial
principal balances due at their stated maturity. Mortgage Loans with balloon
payments involve a greater degree of risk because the ability of an obligor 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 an
obligor to accomplish either of these goals will be affected by a number of
factors, including the level of available mortgage rates at the time of sale or
refinancing, the obligor's equity in the related Mortgaged Property, the
financial condition and operating history of the obligor and the related
Mortgaged Property, tax laws, prevailing general economic conditions and the
availability of credit for commercial or multifamily, as the case may be, real
estate projects generally.
If so specified in the related Prospectus Supplement, in order to maximize
recoveries on defaulted Mortgage Loans, the Special Servicer, if any, will have
considerable flexibility under the Special Servicing Agreement to extend and
modify Mortgage Loans which are in default or as to which a payment default is
reasonably foreseeable, including in particular with respect to balloon
payments. In addition, the Special Servicer may receive a workout fee based on
receipts from or proceeds of such Mortgage Loans. While the Special Servicer
generally will be required to determine that any such extension or modification
is likely to produce a greater recovery on a present value basis than
liquidation, there can be no assurance that such flexibility with respect to
extensions or modifications or payment of a workout fee to the Special Servicer
will increase the present value of receipts from or proceeds of Mortgage Loans
which are in default or as to which a default is reasonably foreseeable. To the
extent losses on such Mortgage Loans exceed levels of available enhancement, the
Holders of the Bonds of a Series may experience a loss. See "SERVICING OF
MORTGAGE LOANS--Maintenance of Insurance Policies and Other Servicing
Procedures" and "ENHANCEMENT."
ENHANCEMENT LIMITATIONS. The amount, type and nature of Insurance Policies,
subordination, Bond Guarantee Insurance, letters of credit,
overcollateralization, Reserve Funds and other enhancement, if any, required
with respect to a Series will be determined on the basis of criteria established
by each Rating Agency rating such Series. Such criteria are sometimes based upon
an actuarial analysis of the behavior of
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mortgage loans in a larger group. Such analysis is often the basis upon which
each Rating Agency determines the amount of Enhancement required with respect to
each Series of Securities. There can be no assurance that the historical data
supporting any such actuarial analysis will accurately reflect future experience
nor any assurance that the data derived from a large pool of mortgage loans
accurately predicts the delinquency, foreclosure or loss experience of any
particular pool of Mortgage Loans.
In addition, if principal payments on Securities of a Series are made in a
specified order of priority, any limits with respect to the aggregate amount of
claims under any related insurance policy, letters of credit or other
enhancement may be exhausted before the principal of the lower priority Classes
has been repaid. As a result, the impact of significant losses on the Mortgage
Loans may bear primarily upon the Securities of the later maturing Classes.
The Prospectus Supplement for a Series will describe any Reserve Funds,
Insurance Policies, letter of credit, subordination, Bond Guarantee Insurance,
over collateralization or other credit support relating to the Mortgage Assets
or to the Securities of such Series. Use of such Reserve Funds and payments
under such Insurance Policies, Bond Guarantee Insurance, letter of credit or
other third-party credit support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement. Moreover,
such Reserve Funds, Insurance Policies, letter of credit or other credit support
may not cover all potential losses or risks; for example, Enhancement may or may
not cover fraud or negligence by the Issuer, the Master Servicer or other
parties. Moreover, if a form of enhancement covers more than one Series of
Securities (each, a "Covered Trust"), holders of Securities issued by any of
such Covered Trusts will be subject to the risk that such credit support will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage. The obligations of the
issuers of any credit support will not be guaranteed or insured by the United
States, or by any agency or instrumentality thereof. A Series of Bonds may
include a Class or multiple Classes of Subordinate Securities to the extent
described in the related Prospectus Supplement. Although such subordination is
intended to reduce the risk of delinquent distributions or ultimate losses to
Holders of Senior Securities, the amount of subordination will be limited and
will decline under certain circumstances and any related Reserve Fund could be
depleted in certain circumstances. See "DESCRIPTION OF THE SECURITIES,"
"SECURITY FOR THE BONDS AND CERTIFICATES" and "ENHANCEMENT."
OVERCOLLATERALIZATION AND SUBORDINATION. To provide Bondholders and
Certificateholders with a degree of protection against loss, Mortgage Assets
having an Asset Value in excess of the aggregate principal amount of the
Securities may be pledged to secure a Series or deposited into the related Trust
Fund, as the case may be, or Excess Cash Flow may be applied to create
overcollateralization. Alternatively, a Series of Securities may include one or
more Classes of Subordinate Securities to the extent described in the related
Prospectus Supplement. Such overcollateralization or subordination will be at
amounts established by the Rating Agency rating the Series based on an assumed
level of defaults, delinquencies, other losses, application of Excess Cash Flow
or other factors. There can, however, be no assurance that the loss experience
on the Mortgage Assets securing the Securities will not exceed such assumed
levels, adversely affecting the ability of the Issuer to meet debt service or
distribution requirements on the Securities.
Although overcollateralization and subordination are intended to reduce the
risk of delinquent payments or losses to holders of Senior Securities, the
amount of overcollateralization or subordination, as the case may be, will be
limited and will decline under certain circumstances and any related Reserve
Fund could be depleted in certain circumstances.
DELINQUENT AND NON-PERFORMING MORTGAGE LOANS. As set forth in the related
Prospectus Supplement, the Mortgage Pool for a particular Series may include, as
of the Cut-Off Date, REO Properties or Mortgage Loans that are past due or are
non-performing. If so specified in the related Prospectus Supplement, management
of such REO Properties or servicing with respect to such Mortgage Loans will be
transferred to the Special Servicer as of the Closing Date. Enhancement provided
with respect to a particular Series may not cover all losses related to such
delinquent or non-performing Mortgage Loans or to such REO Properties. Investors
should consider the risk that the inclusion of such Mortgage Loans or
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such REO Properties in the Mortgage Pool may affect the rate of defaults and
prepayments on such Mortgage Pool and the yield on the Securities of such
Series. See "SECURITY FOR THE BONDS AND CERTIFICATES--Mortgage Loans."
REMEDIES FOLLOWING DEFAULT. The market value of the Mortgage Assets
securing a Series will fluctuate as general interest rates fluctuate. Following
an Event of Default with respect to a Series of Bonds, there is no assurance
that the market value of the Mortgage Assets securing the Series, will be equal
to or greater than the unpaid principal and accrued interest due on the Bonds of
such Series, together with any other expenses or liabilities payable thereon. If
the Mortgage Assets securing a Series are sold by the Trustee following an Event
of Default, the proceeds of such sale may be insufficient to pay in full the
principal of and interest on such Bonds. However, in certain events the Trustee
may be restricted from selling the Mortgage Assets securing a Series. See "THE
INDENTURE--Events of Default."
In addition, upon an Event of Default with respect to a Series and a
resulting sale of the Mortgage Assets securing such Bonds, unless otherwise
specified in the related Prospectus Supplement, the proceeds of such sale will
be applied, first, to the payment of certain amounts due to the Trustee, second,
to the payment of accrued interest on, and then to the payment of the then
Aggregate Outstanding Principal of, such Bonds (including interest on and the
Aggregate Outstanding Principal of any Residual Interest Bond) (as specified in
the related Prospectus Supplement), third, to the payment of the remaining
Administration Fee, if any, and, fourth, to the payment of any additional
amounts due the Issuer or to the holders of the Residual Interest Bonds as
applicable. Consequently, in the event of any such Event of Default and sale of
Mortgage Assets, any Classes on which principal payments have previously been
made may have, in the aggregate, a greater proportion of their principal repaid
than will Classes on which principal payments have not previously been made.
In the event the principal of the Securities of a Series is declared due and
payable, the holders of any such Securities issued at a discount from par
("original issue discount") may be entitled, under applicable provisions of the
federal Bankruptcy Code, to receive no more than an amount equal to the unpaid
principal amount thereof less unamortized original issue discount ("accreted
value"). There is no assurance as to how such accreted value would be determined
if such event occurred.
ENFORCEABILITY. As specified in the related Prospectus Supplement, the
Mortgages may contain due-on-sale clauses, which permit 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. Such
clauses are generally enforceable subject to certain exceptions.
As specified in the related Prospectus Supplement, the Mortgage Loans may
include a debt-acceleration clause, which permits the lender to accelerate the
debt upon a monetary or non-monetary default of the borrower. 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 to
foreclose 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.
To the extent specified in the related Prospectus Supplement, the Mortgage
Loans will be secured by an assignment of leases and rents pursuant to which the
obligor typically assigns its right, title and interest as landlord under the
leases on the related Mortgaged Property and the income derived therefrom to the
lender as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. In the event the
obligor defaults, the license terminates and the lender is entitled to collect
rents. Such assignments must usually be recorded to be perfected as security
interests. In addition, some state laws require that the lender take possession
of the Mortgaged Property and/or obtain a judicial appointment of a receiver
before becoming entitled to collect the rents. See also "CERTAIN LEGAL ASPECTS
OF THE MORTGAGE LOANS--Anti-Deficiency Legislation and Other Limitations on
Lenders."
ENVIRONMENTAL RISKS. Real property pledged as security to a lender may be
subject to certain environmental risks. Under the laws of certain states,
contamination of a property may give rise to a lien on the property to assure
the costs of clean-up. In several states, such a lien has priority over the lien
of an
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existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 ("CERCLA"), a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or threatened releases of hazardous
substances that require remedy at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether or not the environmental damage or threat was actually
caused or exacerbated by the lender's agents or employees. A lender also risks
such liability on and following foreclosure of the Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the Servicing
Agreement, Master Servicing Agreement or Special Servicing Agreement, as
applicable, provides that the Servicer, the Master Servicer or the Special
Servicer, as applicable, acting on behalf of the Trust Estate, may not acquire
title to a Mortgaged Property underlying a Mortgage Loan or take over its
operation unless the Servicer, the Master Servicer or the Special Servicer, as
applicable, has previously determined, based upon a report prepared by a person
who regularly conducts environmental audits, that (i) the Mortgaged Property is
in compliance with applicable environmental laws and regulations or, if not,
that taking such actions as are necessary to bring the Mortgaged Property in
compliance therewith is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions and (ii) there are no
circumstances or conditions present that have resulted in any contamination or
if such circumstances or conditions are present for which sch action could be
required, taking such actions with respect to the affected Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis than
not taking such actions. See "CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS--Environmental Matters."
ERISA CONSIDERATIONS. Generally, ERISA applies to investments made by
employee benefit plans and transactions involving the assets of such plans. Due
to the complexity of regulations which govern such plans, prospective investors
that are subject to ERISA are urged to consult their own counsel regarding
consequences under ERISA of acquisition, ownership and disposition of the
Securities of any Series. See "ERISA CONSIDERATIONS."
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL INTEREST BONDS AND
RESIDUAL INTEREST CERTIFICATES. Holders of Residual Interest Bonds and Residual
Interest Certificates will be required to report on their federal income tax
returns as ordinary income their pro rata share of the taxable income of the
REMIC regardless of the amount or timing of their receipt of cash payments as
described in "FEDERAL INCOME TAX CONSIDERATIONS--Taxation of Holders of Residual
Interest Securities." Accordingly, under certain circumstances, holders of
Securities which constitute Residual Interest Bonds and Residual Interest
Certificates may have taxable income and tax liabilities arising from such
investment during a taxable year in excess of the cash received during such
period. The requirement that holders of Residual Interest Bonds and Residual
Interest Certificates report their pro rata share of the taxable income and net
loss of the REMIC will continue until the principal balances of all Classes of
Bonds or Certificates of the related Series have been reduced to zero, even
though holders of Residual Interest Bonds and Residual Interest Certificates
have received full payment of their stated interest and principal (if any). A
portion (or all) of a holder of a Residual Interest Bond's or Residual Interest
Certificate's share of the REMIC taxable income may be treated as "excess
inclusion" income to such holder which (i) generally, will not be subject to
offset by losses from other activities, (ii) for a tax-exempt holder, will be
treated as unrelated business taxable income and (iii) for a foreign holder,
will not qualify for exemption from withholding tax. Individual holders of
Securities constituting Residual Interest Bonds and Residual Interest
Certificates may be limited in their ability to deduct servicing fees and other
expenses of the REMIC. In addition, Residual Interest Bonds and Residual
Interest Certificates are subject to certain restrictions on transfer. Because
of the special tax treatment of Residual Interest Bonds and Residual Interest
Certificates, the taxable income arising in a given year on a Residual Interest
Bond or a Residual Interest Certificate will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pre-tax yield. Therefore, the after-tax
yield on the Residual Interest Bond and Residual Interest Certificates may be
significantly less than that of a corporate bond or stripped instrument having
similar cash flow characteristics, or may be negative.
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DESCRIPTION OF THE SECURITIES
GENERAL
The following summaries describe certain provisions common to each Series.
The summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the provisions of the Indenture or
Trust Agreement and the Prospectus Supplement relating to each Series. When
particular provisions or terms used in the Indenture or Trust Agreement are
referred to, such provisions or terms shall be as specified in the Indenture or
Trust Agreement.
THE BONDS--GENERAL
The Bonds will be issued in Series pursuant to a Trust Indenture between the
Company and Bankers Trust or Marine Midland (or another bank or trust company
qualified under the TIA and named in the related Prospectus Supplement for a
Series), as Trustee, or a Trust and the Trustee, each as supplemented by or as
incorporated by reference by a Series Supplement with respect to each Series. A
copy of the form of Trust Indenture has been filed with the Commission as an
exhibit to the Registration Statement of which the Prospectus forms a part. A
copy of the Series Supplement for a Series, if any, will be filed with the
Commission as an exhibit to a Current Report on Form 8-K to be filed with the
Commission within 15 days of issuance of the Bonds of the related Series.
The Indenture does not limit the amount of Bonds that can be issued
thereunder and provides that any Series may be issued thereunder up to the
aggregate principal amount specified in the related Series Supplement that may
be authorized from time to time by the Issuer. Each Series will consist of one
or more Classes, one or more of which may be Compound Interest Securities,
Variable Interest Securities, Individual Investor Securities, Planned
Amortization Class Securities, Zero Coupon Securities, Principal Only
Securities, Interest Only Securities or Participating Securities. A Series may
also include one or more Classes of Subordinate Securities. If so specified in
related Prospectus Supplement, such Subordinate Securities may be offered hereby
and by the related Prospectus Supplement. Each Class of a Series will be issued
in registered or bearer form, as designated in the related Prospectus Supplement
for a Series, in the minimum denominations specified in the related Prospectus
Supplement. See "--Bearer Securities and Registered Securities." Bonds of a
Series may be issued in whole or part in book-entry form. The transfer of the
Bonds may be registered and the Bonds may be exchanged without the payment of
any service charge payable in connection with such registration of transfer or
exchange.
Payments of principal of and interest on the Bonds which are registered
securities will be made by the Trustee, or if the Trustee is not the paying
agent, the Paying Agent. Payments of principal of and interest on a Series will
be made on the Payment Dates specified in the related Prospectus Supplement, to
Bondholders of such Series registered as such on the close of business on the
record date specified in the related Prospectus Supplement at their addresses
appearing on the Bond Register. All payments will be made by check mailed to the
Bondholder or by wire transfer to accounts maintained by such Bondholder as
specified in the related Prospectus Supplement, except that final payments of
principal in retirement of each Bond will be made only upon presentation and
surrender of such Bond at the office of the New York Presenting Agent. Notice
will be mailed to the holder of such Bond before the Payment Date on which the
final principal payment in retirement of the Bond is expected to be made.
The Trustee will include with each payment on a Bond a statement showing
among other things, the allocation of such payment to interest, if any, and
principal, if any, and the remaining unpaid principal amount of a Bond of each
Class having the minimum denomination for Bonds of such Class of that Series,
the amount of Advances made by the Primary Servicer, the amount of servicing
compensation paid with respect to the Mortgage Assets, the aggregate principal
balance of delinquent, foreclosed Mortgage Loans and REO Property, the realized
losses for the Mortgage Assets, if applicable, the number and aggregate
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principal balance of Deleted and Substitute Mortgage Loans, and on each Payment
Date prior to the commencement of principal payments on a Class of Compound
Interest Bonds, the aggregate unpaid principal amount of each Class of Bonds,
the interest accrued since the prior Payment Date and added to the principal of
a Compound Interest Bond having the minimum denomination for Bonds of such Class
and the new principal balance of such Bond.
THE CERTIFICATES--GENERAL
The Certificates will be issued in Series pursuant to separate Trust
Agreements between the Depositor and Bankers Trust or Marine Midland (or another
bank or trust company named in the related Prospectus Supplement). A form of
Trust Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The Trust Agreement relating to each Series
of Certificates will be filed as an exhibit to a report on Form 8-K to be filed
with the Commission within 15 days following the issuance of such Series of
Certificates. The following summaries describe certain provisions common to each
Series of Certificates. The summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the provisions
of the Trust Agreement and the Prospectus Supplement relating to each Series of
Certificates. When particular provisions or terms used in the Trust Agreement
are referred to, such provisions or terms shall be as specified in the Trust
Agreement.
Each Series of Certificates will consist of one or more Classes, one or more
of which may consist of Compound Interest Securities, Variable Interest
Securities, Interest Only Certificates, Principal Only Certificates, Zero Coupon
Securities or Planned Amortization Class Securities ("PACs"). A Series of
Certificates may also include one or more Classes of Subordinate Securities.
Each Series will be issued in fully registered form or bearer form, in the
minimum original amount or notional amount for Certificates of each Class
specified in the related Prospectus Supplement. The transfer of the Certificates
may be registered, and the Certificates may be exchanged, without the payment of
any service charge payable in connection with such registration of transfer or
exchange. If specified in the related Prospectus Supplement, one or more Classes
of a Series may be available in book-entry form only. See "--Bearer Securities
and Registered Securities."
Commencing on the date specified in the related Prospectus Supplement,
distributions of principal and interest on the Certificates will be made on each
Distribution Date as set forth in the related Prospectus Supplement.
Distributions of principal of and interest on Certificates of a Series in
registered form will be made by check mailed to Certificateholders of such
Series registered as such on the close of business on the record date specified
in the related Prospectus Supplement at their addresses appearing on the
Certificate Register, except that (a) distributions may be made by wire transfer
(at the expense of the Certificateholder requesting payment by wire transfer) in
certain circumstances described in the related Prospectus Supplement and (b) the
final distribution in retirement of a Certificate will be made only upon
presentation and surrender of such Certificate at the corporate trust office of
the Trustee for such Series or such other office of the Trustee as specified in
the Prospectus Supplement. Notice of the final distribution on a Certificate
will be mailed to the Holder of such Certificate before the Distribution Date on
which such final distribution in retirement of the Certificate is expected to be
made.
The Trustee will include with each distribution on a Certificate a statement
showing among other things, the allocation of such payment to interest, if any,
and principal, if any, and the remaining unpaid principal amount of a
Certificate of each Class having the minimum denomination for Certificates of
such Class of that Series, the amount of Advances made by the Primary Servicer,
the amount of servicing compensation paid with respect to the Mortgage Assets,
the aggregate principal balance of delinquent, foreclosed Mortgage Loans and REO
Property, the realized losses for the Mortgage Assets, if applicable,
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the number and aggregate principal balance of Deleted and Substitute Mortgage
Loans, and on each Distribution Date prior to the commencement of principal
payments on a Class of Compound Interest Securities, the aggregate unpaid
principal amount of each Class of Certificates, the interest accrued since the
prior Distribution Date and added to the principal of a Compound Interest
Certificate having the minimum denomination for Certificates of such Class and
the new principal balance of such Certificate. See "THE TRUST AGREEMENT--Reports
to Certificateholders."
BEARER SECURITIES AND REGISTERED SECURITIES
Unless otherwise provided with respect to a Series of Securities, the
Securities will be issuable as registered securities without coupons. If so
provided with respect to a Series of Securities, Securities of such Series will
be issuable solely as bearer securities with coupons attached or as both
registered securities and bearer securities. Any such bearer securities will be
issued in accordance with U.S. tax and securities laws then applicable to the
sale of such securities.
Unless applicable law at the time of issuance of any bearer securities
provides otherwise, in connection with the sale during the "restricted period'
as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury
Regulations (generally, the first 40 days after the Closing Date and, with
respect to unsold allotments, until sold) no bearer security shall be mailed or
otherwise delivered to any location in the United States (as defined under
"LIMITATIONS ON ISSUANCE OF BEARER SECURITIES"). A bearer security in definitive
form may be delivered only if the Person entitled to receive such bearer
security furnishes written certification, in the form required by the Indenture,
to the effect that such bearer security is not owned by or on behalf of a United
States person (as defined under "LIMITATIONS ON ISSUANCE OF BEARER SECURITIES"),
or, if a beneficial interest in such bearer security is owned by or on behalf of
a United States person, that such United States person (i) acquired and holds
the bearer security through a foreign branch of a United States financial
institution, (ii) is a foreign branch of a United States financial institution
purchasing for its own account or resale (and in either case (i) or (ii), such
financial institution agreed to comply with the requirements of Section
165(j)(3)(A), (B), or (C) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder) or (iii) is a financial institution purchasing for
resale during the restricted period only to non-United States persons outside
the United States. See "LIMITATIONS ON ISSUANCE OF BEARER SECURITIES."
Registered securities of any Series (other than in book-entry form) will be
exchangeable for other registered securities of the same Series and of a like
aggregate principal amount and tenor but of different authorized denominations.
In addition, if specified in the related Prospectus Supplement, if Securities of
any Series are issuable as both registered securities and as bearer securities,
at the option of the Holder, upon request confirmed in writing, and subject to
the terms of the Indenture or Trust Agreement, as the case may be, bearer
securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such Series will be exchangeable into registered
securities of the same Series of any authorized denominations and of a like
aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between the relevant record date and the relevant date
for payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
registered security issued in exchange for such bearer security, but will be
payable only to the holder of such coupon when due in accordance with the terms
of the Indenture or Trust Agreement, as the case may be. Except as provided in
an applicable Prospectus Supplement, bearer securities will not be issued in
exchange for registered securities. If Securities of a Series are issuable as
bearer securities, the Issuer will be required to maintain a transfer agent for
such Series outside the United States.
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Unless otherwise indicated in an applicable Prospectus Supplement, payment
or distribution of principal of and interest on bearer securities will be
payable or distributable, subject to any applicable laws and regulations, at the
offices of such Paying Agents outside the United States as the Issuer may
designate from time to time by check or by wire transfer, at the option of the
holder, to an account maintained by the payee with a bank located outside the
United States. Unless otherwise indicated in an applicable Prospectus
Supplement, payment or distribution of interest on bearer securities on any
Payment Date or Distribution Date, as applicable, will be made only against
surrender of the coupon relating to such Payment Date or Distribution Date, as
applicable. No payment or distribution of interest on a bearer security will be
made unless on the earlier of the date of the first such payment by the Paying
Agent or the delivery by the Issuer of the bearer security in definitive form
(the "Certification Date"), a written certificate in the form and to the effect
described above is provided to the Issuer. No payment or distribution with
respect to any bearer security will be made at any office or agency in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
Notwithstanding the foregoing, payment or distribution of principal of and
interest on bearer securities denominated and payable in U.S. dollars will be
made at the office of the Issuer's Paying Agent in the Borough of Manhattan, The
City of New York if, and only if, payment of the full amount thereof in U.S.
dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
BOOK-ENTRY REGISTRATION
If so specified in the related Prospectus Supplement, the Securities will be
issued in book-entry form in the minimum denominations specified in such
Prospectus Supplement and integral multiples thereof, and each Class will be
represented by one or more single Securities registered in the name of the
nominee of the depository, The Depository Trust Company ("DTC"), a
limited-purpose trust company organized under the laws of the State of New York.
Unless otherwise specified in the related Prospectus Supplement, no person
acquiring an interest in book-entry Securities (a "Securities Owner") will be
entitled to receive Securities representing such person's interest in the
Securities except in the event that Definitive Securities (as defined herein)
are issued under the limited circumstances set forth below. Unless and until
Definitive Securities are issued, it is anticipated that the only holder of
book-entry Securities will be Cede & Co., as nominee of DTC. Securities Owners
will not be "Holders," "Bondholders" or "Certificateholders" under the Indenture
or Trust Agreement, as applicable, and Securities Owners will only be permitted
to exercise the rights of Bondholders or Certificateholders, as applicable,
indirectly through DTC and its Participants.
DTC was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to entities that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Securities Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of book-entry
Securities may do so only through Participants and Indirect Participants.
Because DTC can only act on behalf of Participants and Indirect Participants,
the ability of a Securities Owner to pledge such owner's interest in a
book-entry Security to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interest in a book-entry
Security, may be limited. In addition, under a book-entry format, Securities
Owners may experience some delay in their receipt of principal and interest
distributions with respect to the book-entry Securities since such distributions
will be forwarded to DTC and DTC will then forward such distributions to its
Participants which in turn will forward them to Indirect Participants or
Securities Owners.
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Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the book-entry Securities
and is required to receive and transmit principal and interest distributions and
other distributions with respect to the book-entry Securities. Participants and
Indirect Participants with which Securities Owners have accounts with respect to
book-entry Securities similarly are required to make book-entry transfers and
receive and transmit such distributions on behalf of their respective Securities
Owners. Accordingly, although Securities Owners will not possess book-entry
Securities, the Rules provide a mechanism by which Securities Owners will
receive distributions and will be able to transfer their interests.
The Issuer understands that DTC will take any action permitted to be taken
by a Bondholder or Certificateholder under the Indenture or Trust Agreement, as
applicable, only at the direction of one or more Participants to whose account
with DTC ownership of the book-entry Securities is credited. Additionally, the
Issuer understands that DTC will take such actions with respect to Securities
Owners who are holders of a certain specified interest in book-entry Securities
or holders having a certain specified voting interest only at the direction of
and on behalf of Participants whose holdings represent that specified interest
or voting interest. DTC may take conflicting actions with respect to other
Securities Owners to the extent that such actions are taken on behalf of
Participants whose holdings represent that specified interest or voting
interest.
Unless otherwise specified in the related Prospectus Supplement, Securities
of a Series issued initially in book-entry form only will be issued in fully
registered, certificated form ("Definitive Securities") to Securities Owners,
rather than to DTC, only if (i) DTC advises the Trustee in writing that DTC is
no longer willing or able properly to discharge its responsibilities as
depository with respect to the Securities, and the Issuer is unable to locate a
qualified successor, (ii) the Issuer, at its sole option, elects to terminate
the book-entry system through DTC or (iii) after the occurrence of an Event of
Default under the Indenture or Trust Agreement, as applicable, Securities Owners
representing a majority of the aggregate outstanding principal amount of the
Securities advise DTC through Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of Securities Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Securities. Upon surrender by DTC of the
Securities registered in the name of its nominee and instructions for
registration, the Trustee will issue all, but not less than all, of the
principal amount of the formerly DTC-held Securities then outstanding in the
form of Definitive Securities, and thereafter the Trustee will recognize the
holders of such Definitive Securities as Bondholders under the Indenture, or
Certificateholders under the Trust Agreement, as applicable.
VALUATION OF MORTGAGE ASSETS
If stated in the applicable Prospectus Supplement, each item of Mortgage
Assets securing a Series, or comprising the Trust Fund, as the case may be, will
be assigned an initial Asset Value determined in the manner and subject to the
assumptions specified in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the aggregate of the Asset Values of the
Mortgage Assets pledged to secure a Series or comprising the Trust Fund, as the
case may be, will not be less than the initial Aggregate Outstanding Principal
of the related Series at the date of issuance thereof.
With respect to the Mortgage Assets pledged to collateralize the Bonds of a
Series, or comprising the Trust Fund, as the case may be, as of any date, the
Aggregate Asset Value, unless otherwise specified in the related Prospectus
Supplement, shall be equal to the aggregate of the Asset Values for each
Mortgage Loan or Private Mortgage-Backed Security or other Mortgage Assets in
the Trust Estate or Trust Fund, as
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applicable, for a Series of Securities plus the amount, if any, remaining in the
Collection Account and any other Pledged Fund or Account subsequent to an
initial deposit therein on the Delivery Date, together with Reinvestment Income
thereon, if any, at the Assumed Reinvestment Rate, if any.
There are a number of alternative means of determining Asset Value of the
Mortgage Assets, including determinations based on the discounted present value
of the remaining scheduled payments on such Mortgage Assets, determinations
based on the relationship between the interest rate borne by such Mortgage
Assets and the Bond Interest Rate or Rates or Certificate Interest Rate or Rates
for the related Classes of Securities, or based upon the aggregate outstanding
principal balances of the Mortgage Assets. If applicable, the Prospectus
Supplement for a Series will specify the method or methods and summarize the
related assumptions used to determine the Asset Values of the Mortgage Assets
for such Series of Securities.
The Assumed Reinvestment Rate, if any, for a Series will be the rate on
which amounts deposited in the Collection Account will be assumed to accrue
interest or a rate insured or guaranteed by means of a surety bond, Guaranteed
Investment Contract, or similar arrangement. If the Assumed Reinvestment Rate is
insured or guaranteed, the related Prospectus Supplement will set forth the
terms of such arrangement.
PAYMENTS OR DISTRIBUTIONS OF INTEREST
Each Class of a Series (other than a Class of Zero Coupon Securities or
Principal Only Securities) will accrue interest at the rate per annum specified,
or in the manner determined and set forth, in the related Prospectus Supplement
(calculated on the basis of a 360-day year of twelve 30-day months, unless
otherwise specified in the related Prospectus Supplement). Interest on all
Securities which accrue interest, other than Compound Interest Securities, will
be due and payable on the Payment Dates or Distribution Dates specified in the
related Prospectus Supplement. However, failure to pay interest on a current
basis may not necessarily be an Event of Default with respect to a particular
Series of Securities. Unless otherwise specified in the related Prospectus
Supplement, payment of interest on a Class of Compound Interest Securities will
commence only following the Accrual Termination Date. Prior to such time,
interest on such Class of Compound Interest Securities will accrue and the
amount of interest so accrued will be added to the principal thereof on each
Payment Date or Distribution Date. Following the applicable Accrual Termination
Date, interest payments will be made on such Class on the Compound Value of such
Class. The Compound Value of a Class of Compound Interest Securities equals the
original principal amount of the Class, plus accrued and unpaid interest added
to such Class through the immediately preceding Payment Date or Distribution
Date, less any principal payments previously made on that Class, and if
specified in the related Prospectus Supplement, losses allocable thereto. Each
payment of interest on each Class of Securities (or addition to principal of a
Class of Compound Interest Securities) on a Payment Date or Distribution Date
will include all interest accrued during the related Interest Accrual Period
preceding such Payment Date or Distribution Date, which Interest Accrual Period
will end on the day preceding each Payment Date or Distribution Date or such
earlier date as may be specified in the related Prospectus Supplement. If the
Interest Accrual Period for a Series ends on a date other than a Payment Date or
Distribution Date for such Series, the yield realized by the holders of such
Securities may be lower than the yield that would result if the Interest Accrual
Period ended on such Payment Date or Distribution Date. Additionally, if so
specified in the related Prospectus Supplement, interest accrued for an Interest
Accrual Period for one or more Classes may be calculated on the assumption that
principal payments (and additions to principal of the Securities), and
allocations of losses on the Primary Assets (if so specified in the related
Prospectus Supplement), are made on the first day of the preceding Interest
Accrual Period and not on the Payment Date or Distribution Date for such
preceding Interest Accrual Period when actually made or added. Such method would
produce a lower effective yield than if interest were calculated on the basis of
the actual principal amount outstanding.
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To the extent provided in the related Prospectus Supplement, a Series may
include one or more Classes of Variable Interest Securities. The Variable
Interest Rate of Variable Interest Securities will be a variable or adjustable
rate, subject to a Maximum Variable Interest Rate and a Minimum Variable
Interest Rate. It is the Issuer's present intention, subject to changing market
conditions, that the Variable Interest Rate formula or index be based on an
established financial index in the national or international financial markets.
The Variable Interest Payment Dates or Variable Interest Distribution Dates, as
applicable, for Variable Interest Securities will be set forth in the related
Prospectus Supplement and need not be the same as the Payment Dates or
Distribution Dates for other Securities in such Series, but may be either more
or less frequent. Unless otherwise specified in the related Prospectus
Supplement or herein, references to Payment Date or Distribution Dates include
Variable Interest Payment Dates or Variable Interest Distribution Dates, as
applicable. For each Class of Variable Interest Securities, the related
Prospectus Supplement will set forth the initial Bond Interest Rate or
Certificate Interest Rate, as applicable, (or the method of determining it), the
Variable Interest Period and the formula, index or other method by which the
Bond Interest Rate or Certificate Interest Rate, as applicable, for each
Variable Interest Period will be determined.
Interest Only Securities or Interest Weighted Securities, among others, may
be assigned a "Notional Amount" which is used solely for convenience in
expressing the calculation of interest and for certain other purposes. Unless
otherwise specified in the related Prospectus Supplement, the Notional Amount
will be determined at the time of issuance of such Securities based on the
principal balances or Bond Value of the Mortgage Loans attributable to the
Securities of a Series entitled to receive principal, and will be adjusted
monthly over the life of the Securities based upon adjustments to the Asset
Value or principal amounts of such Mortgage Loans. Reference to the Notional
Amount is solely for convenience in certain calculations and does not represent
the right to receive any distributions allocable to principal.
If so specified in the related Prospectus Supplement, if funds in the
Collection Account are insufficient to make required payments of interest to
Bondholders or Certificateholders on any Payment Date or Distribution Date, as
applicable, amounts available for payment to the Bondholders or
Certificateholders of each Class will be allocated pro rata in the proportion in
which the outstanding principal balance of each Bond or Certificate bears to the
aggregate outstanding principal balance of all Bonds or Certificates of such
Class, except that Subordinate Bondholders or Subordinate Certificateholders, if
any, will not, unless otherwise specified in the related Prospectus Supplement,
receive any payments of interest on the Subordinate Bonds or Subordinate
Certificates until Senior Bondholders or Senior Certificateholders receive
payments of interest due them (in each case as described in the related
Prospectus Supplement).
PAYMENTS OR DISTRIBUTIONS OF PRINCIPAL
On each Payment Date or Distribution Date for a Series, the Issuer will make
principal payments to the holders of the Securities of such Series on which
principal is then due and payable. Payments of principal on a Series will be
allocated among Classes of such Series in the order of priority and amounts
specified in the related Prospectus Supplement. All payments or distributions of
principal of Securities of a Class will be applied either on a pro rata or
random lot basis, as specified in the related Prospectus Supplement.
Except as specified otherwise in the related Prospectus Supplement, the
total amount of principal payments or distributions required to be made on the
Securities of any Series on a Payment Date or Distribution Date (the "Principal
Payment Amount") will be determined as specified in the related Prospectus
Supplement. If the Series of Bonds has a Class of PAC Securities, such PAC
Securities will have certain priorities of payment with respect to principal to
the extent of certain targeted amounts with respect to each Payment Date or
Distribution Date, as set forth in the related Prospectus Supplement. There can
be no assurance that the Principal Payment Amount on any Payment Date or
Distribution Date
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will be sufficient to pay in full the PAC Amount payable on such Payment Date or
Distribution Date. The failure to pay in full the PAC Amount payable on a
Payment Date or Distribution Date shall not constitute an Event of Default under
the Indenture or Trust Agreement.
If so specified in the related Prospectus Supplement, on any Payment Date or
Distribution Date on which the principal balance of the Mortgage Assets is
reduced due to losses on the Mortgage Assets, (i) the amount of such losses will
be allocated first, to reduce the Aggregate Outstanding Principal of the
Subordinate Bonds or Subordinate Certificates or other subordination, if any,
and, thereafter, to reduce the Aggregate Outstanding Principal of the remaining
Securities in the priority and manner specified in such Prospectus Supplement
until the Aggregate Outstanding Principal of each Class of Securities so
specified has been reduced to zero or paid in full, thus, reducing the amount of
principal payable on each such Class of Securities or (ii) such losses may be
allocated in any other manner set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, such reductions
of principal of a Class or Classes of Securities shall be allocated to the
holders of the Securities of such Class or Classes pro rata in the proportion
which the outstanding principal of each Security of such Class or Classes bears
to the Aggregate Outstanding Principal of all Securities of such Class.
One or more Classes of a Series may consist of Subordinate Bonds or
Subordinate Certificates. Subordinate Bonds or Subordinate Certificates may be
included in a Series to provide credit support as described herein under
"ENHANCEMENT" in lieu of or in addition to other forms of credit support. The
extent of subordination of a Class of Subordinate Bonds or Subordinate
Certificates may be limited as described in the related Prospectus Supplement.
See "ENHANCEMENT." If the Mortgage Assets are divided into separate Mortgage
Groups securing separate Classes of a Series, credit support may be provided by
a cross-support feature which requires that distributions be made to Senior
Bonds or Senior Certificates secured by one Mortgage Group prior to making
distributions on Subordinate Bonds or Senior Certificates secured by another
Mortgage Group within the Trust Estate or Trust Fund. Subordinate Bonds or
Subordinate Certificates will be offered hereby and by the related Prospectus
Supplement so long as such Bonds or Certificates are rated in one of the four
highest rating categories by at least one Rating Agency.
SPECIAL REDEMPTION
If specified in the related Prospectus Supplement, the Bonds of a Series may
be subject to special redemption on the day of any month specified therein if,
as a result of the prepayment experience on the Mortgage Assets securing such
Bonds or the low yield available for reinvestment or both, the Trustee
determines (based on assumptions specified in the Indenture and after giving
effect to the amounts, if any, available to be withdrawn from any Reserve Fund
for such Series) that the amount anticipated to be available in the Collection
Account on the date specified in the related Prospectus Supplement for such
Series, is anticipated to be insufficient to pay debt service on the Bonds of
such Series on such Payment Date. The principal amount of Bonds of such Series
required to be so redeemed will not exceed the Principal Payment Amount
otherwise required to be paid on the next Payment Date. Therefore, the primary
result of such a special redemption of Bonds is payment of principal prior to
the next scheduled Payment Date.
To the extent described in the related Prospectus Supplement, Bonds of a
Series may be subject to special redemption in whole or in part following
certain defaults under an Enhancement Agreement and, in certain other events, at
the Redemption Price.
All payments of principal pursuant to any special redemption will be made in
the order of priority and in the manner specified in the related Prospectus
Supplement. Notice of any special redemption will be mailed by the Issuer or the
Trustee prior to the Special Redemption Date. Unless otherwise specified in the
related Prospectus Supplement, the Redemption Price for any Bonds so redeemed
will be equal to
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100% of the principal amount of such Bonds (or 100% of the Compound Value of any
Compound Interest Securities) or portions thereof so redeemed, together with
interest accrued thereon to the date specified in the related Prospectus
Supplement.
In the event that Mortgage Assets having an Aggregate Bond Value at least
equal to the original Aggregate Outstanding Principal of a Series is not pledged
and delivered to the Trustee on the related Closing Date, the Issuer will
deposit cash or Eligible Investments on an interim basis with the Trustee on
such Closing Date in lieu of such Undelivered Mortgage Assets. If Mortgage
Assets are not subsequently delivered within 90 days of issuance of the Bonds,
the amount of such deposit corresponding to principal may be used to pay a
corresponding amount of principal of the Bonds to the extent set forth, and on
the Payment Dates specified, in the Prospectus Supplement.
OPTIONAL REDEMPTION
The Issuer, or such other Person specified in the related Prospectus
Supplement, may, at its option and if so specified in the related Prospectus
Supplement, redeem, in whole or in part, one or more Classes of any Series on
any Payment Date for such Series on or after the dates, if any, specified in
such Prospectus Supplement. Notice of such redemption will be given by the
Issuer or Trustee prior to the Redemption Date. In the case of a REMIC, the
Issuer may effect an optional redemption only if it qualifies as a "qualified
liquidation" under Section 860F of the Code. The Redemption Price for any Bond
so redeemed will be equal to 100% of the outstanding principal amount of such
Bond, together with interest accrued thereon to the date specified in the
related Prospectus Supplement.
MANDATORY REDEMPTION
If specified in the related Prospectus Supplement, Bonds of one or more
Classes of a Series ("Individual Investor Bonds") may be subject to mandatory
redemption by lot or by such other method set forth in the Prospectus
Supplement. Except as otherwise specified in the related Prospectus Supplement,
no Bonds of a particular Class will be redeemed until all Bonds in each Class
having a higher priority of redemption have been paid in full. Residual Interest
Bonds will not be redeemed except in connection with the liquidation of the
applicable REMIC, in which event the Residual Interest Bonds of the applicable
Series will be redeemed in full.
Individual Investor Bonds within a Class will be selected for redemption by
random lot in $1,000 units after all redemptions requested by holders of
Individual Investor Bonds in the Class have been made or by such other method
set forth in the Prospectus Supplement. Procedures relating to optional
redemptions requested by holders of Individual Investor Bonds and to mandatory
redemptions by the Issuer of Individual Investor Bonds, and the Class
priorities, if any, and conditions with respect to such redemptions, will be
described in the related Prospectus Supplement.
OPTIONAL TERMINATION
If so specified in the related Prospectus Supplement for a Series, the
Depositor, the Servicer, or another entity designated in the related Prospectus
Supplement may, at its option, cause an early termination of a Trust Fund by
repurchasing all of the Mortgage Assets from such Trust Fund on or after a date
specified in the related Prospectus Supplement, or on or after such time as the
aggregate outstanding principal amount of the Certificates is less than a
specified percentage of their initial aggregate principal amount. In the case of
a Trust Fund for which one or more REMIC elections have been made, the Trustee
must conduct the optional termination so as to constitute a "qualified
liquidation" under Section 860F of the Code. See "THE TRUST
AGREEMENT--Termination."
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OPTIONAL REPURCHASE OF CERTIFICATES
If so specified in the related Prospectus Supplement for a Series, one or
more Classes of the Certificates of such Series may be repurchased, in whole or
in part, at the option of the Depositor, at such times and under the
circumstances specified in such Prospectus Supplement. Notice of any such
repurchase must be given by the Trustee prior to the optional repurchase date,
as specified in the related Prospectus Supplement. The repurchase price for any
Certificate so repurchased will be set forth in the related Prospectus
Supplement.
OTHER REPURCHASES
If so specified in the related Prospectus Supplement for a Series, any Class
of the Certificates of such Series may be subject to repurchase at the request
of the holders of such Class or to mandatory repurchase by the Depositor. Any
such redemption at the request of holders or mandatory repurchase with respect
to a Class of a Series of the Certificates will be described in the related
Prospectus Supplement and will be on such terms and conditions as described
therein.
YIELD AND PREPAYMENT CONSIDERATIONS
TIMING OF PAYMENT OR DISTRIBUTION OF INTEREST AND PRINCIPAL
Each payment or distribution of interest on the Securities (or addition to
principal of a Class of Compound Interest Securities) on a Payment Date or
Distribution Date will include all interest accrued during the Interest Accrual
Period specified in the related Prospectus Supplement preceding such Payment
Date or Distribution Date. If the Interest Accrual Period for a Series ends on a
date other than a Payment Date or Distribution Date for such Series, the yield
realized by the holders of such Securities may be lower than the yield that
would result if the Interest Accrual Period ended on such Payment Date or
Distribution Date. Additionally, if so specified in the related Prospectus
Supplement, interest accrued for an Interest Accrual Period for one or more
Classes may be calculated on the assumption that principal payments or
distributions (and additions to principal of the Securities) and allocations of
losses on the Mortgage Assets are made on the first day of the preceding
Interest Accrual Period and not on the Payment Date or Distribution Date with
respect to such preceding Interest Accrual Period. Such method would produce a
lower effective yield than if interest were calculated on the basis of the
actual principal amount outstanding during such Interest Accrual Period.
PRINCIPAL PREPAYMENTS
The yield to maturity or final distribution on the Securities will be
affected by the rate of principal payments on the Mortgage Loans (including
principal prepayments resulting from both voluntary prepayments by the
Mortgagors and involuntary liquidations). The rate at which principal
prepayments occur on the Mortgage Loans will be affected by a variety of
factors, including, without limitation, the terms of the Mortgage Loans, the
level of prevailing interest rates, the availability of mortgage credit and
economic, tax, legal and other factors. The rate of principal payments or
distributions on the Securities will correspond to the rate of principal
payments on the Mortgage Assets. Principal prepayments on the Mortgage Assets
are likely to be affected by the existence of provisions prohibiting prepayment
of a Mortgage Loan underlying or comprising the Mortgage Assets for a defined
period of time (a "Lock-Out Period") or provisions requiring the payment of a
prepayment premium in the event of a prepayment (a "Yield Maintenance Payment"),
and by the extent to which the Primary Servicer is able to enforce such
provisions. Mortgage Loans with a Lock-Out Period or a Yield Maintenance
Payment, to the extent enforceable, generally would be expected to experience a
lower rate of principal prepayments than otherwise identical Mortgage Loans
without such provisions, with shorter Lock-Out Periods or with lower Yield
Maintenance Payments.
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If the purchaser of a Security offered at a discount calculates its
anticipated yield to maturity or final distribution based on an assumed rate of
distributions of principal that is faster than that actually experienced on the
Mortgage Loans, the actual yield to maturity or final distribution will be lower
than that so calculated. Conversely, if the purchaser of a Security offered at a
premium calculates its anticipated yield to maturity or final distribution based
on an assumed rate of distributions of principal that is slower than that
actually experienced on the Mortgage Loans, the actual yield to maturity or
final distribution will be lower than that so calculated.
The timing of changes in the rate of principal prepayments on the Mortgage
Loans may significantly affect an investor's actual yield to maturity, even if
the average rate of distributions of principal is consistent with an investor's
expectation. In general, the earlier a principal prepayment is received on the
Mortgage Loans and paid on an investor's Securities, the greater the effect on
such investor's yield to maturity or final distribution. The effect on an
investor's yield of principal payments or distributions occurring at a rate
higher (or lower) than the rate anticipated by the investor during a given
period may not be offset by a subsequent like decrease (or increase) in the rate
of principal payments or distributions.
PREPAYMENTS AND WEIGHTED AVERAGE LIFE
The Stated Maturity for a Class is the date specified in the related
Prospectus Supplement, calculated on the basis of the assumptions applicable to
such Series set forth therein, no later than which the entire Aggregate
Outstanding Principal thereof will be fully paid.
The rate of return on reinvestment of distributions of principal and
interest on the Mortgage Assets securing a Series, the rates at which principal
payments are received on such Mortgage Assets and the rate at which payments are
made from any Reserve Fund or other Enhancement for such Series may affect the
ultimate maturity of each Class of such Series. Prepayments on the Mortgage
Assets will accelerate the rate at which principal is paid or distributed on the
Securities. High reinvestment rates tend to increase the amount of Excess Cash
Flow, which, to the extent applied to principal payments or distributions on the
Securities, will accelerate principal payments or distributions on such
Securities.
"Weighted average life" refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
such security will be repaid to the investor. The weighted average life of the
Securities of a Series will be influenced by the rate at which principal on the
Mortgage Loans comprising or underlying the Mortgage Assets pledged as security
for such Bonds, or deposited in the Trust Fund, as the case may be, is paid,
which may be in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes prepayments, in whole or in part, and
liquidations due to default).
The rate of principal prepayments on pools of mortgages is influenced by a
variety of economic, demographic, geographic, tax, legal and other factors. The
rate of prepayments of housing loans has fluctuated significantly in recent
years. In general, however, if prevailing interest rates fall significantly
below the interest rates on the Mortgage Loans comprising or underlying the
Mortgage Assets pledged as security for a Series, such Mortgage Loans are likely
to be the subject of higher principal prepayments than if prevailing rates
remain at or above the rates borne by such mortgages. In this regard, it should
be noted that certain Mortgage Assets pledged as security for a Series may be
backed by Mortgage Loans with different interest rates and the stated
pass-through or pay-through interest rate of certain Mortgage Assets may be a
number of percentage points less than the underlying Mortgage Loans. In
addition, the weighted average life of the Securities may be affected by the
varying maturities of the Mortgage Loans comprising or underlying the Mortgage
Assets. If any Mortgage Loans comprising or underlying the Mortgage Assets for a
Series have actual terms to maturity of less than those assumed in calculating
Stated Maturity or the Final Scheduled Distribution Date, one or more Classes of
the Series may be fully paid prior to their
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respective Stated Maturities or the Final Scheduled Distribution Dates, even in
the absence of prepayments and a reinvestment return higher than the Assumed
Reinvestment Rate, if any. Accordingly, the prepayment experience of the
Mortgage Assets will, to some extent, be a function of the mix of interest rates
and maturities of the Mortgage Loans comprising or underlying such Mortgage
Assets. See "SECURITY FOR THE BONDS AND CERTIFICATES."
Prepayments on loans are also 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, each as
described below. CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans. SPA represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans. 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 pool of loans, including the Mortgage
Loans underlying or comprising the Mortgage Assets. Thus, it is likely that
prepayment of any Mortgage Loans comprising or underlying the Mortgage Assets
for any Series will not conform to any particular level of CPR or SPA.
The Issuer is not aware of any publicly available statistics that set forth
prepayment experience or prepayment forecasts of commercial or multifamily
mortgage loans over an extended period of time.
Except with respect to Interest Only Securities, the Prospectus Supplement
will contain tables setting forth the projected weighted average life of each
Class of such Series and the percentage of the original principal amount of each
Class of such Series that would be outstanding on specified Payment Dates or
Distribution Dates for such Series based on the assumptions stated in such
Prospectus Supplement, including assumptions that prepayments on the Mortgage
Loans comprising or underlying the related Mortgage Assets are made at rates
corresponding to various percentages of CPR, SPA or at such other rates
specified in such Prospectus Supplement. Such tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
Securities to various prepayment rates and will not be intended to predict or to
provide information which will enable investors to predict the actual weighted
average life of the Securities or prepayment rates of the Mortgage Loans
comprising or underlying the related Mortgage Assets. It is unlikely that
prepayment of any Mortgage Loans comprising or underlying the Mortgage Assets
for any Series will conform to any particular level of CPR, SPA or any other
rate specified in the related Prospectus Supplement.
OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
TYPE OF MORTGAGE LOAN. Mortgage Loans comprising or underlying the Mortgage
Assets may consist of ARMs. The rate of principal prepayments with respect to
ARMs has fluctuated in recent years. ARMs may be subject to a greater rate of
principal prepayments in a declining interest rate environment. For example, if
prevailing interest rates fall significantly below the then current mortgage
interest rates on the Mortgage Loans, the rate of prepayment on the Mortgage
Loans would be expected to increase. Conversely, if prevailing interest rates
rise significantly above the then current mortgage interest rates on the
Mortgage Loans, the rate of prepayment on the Mortgage Loans would be expected
to decrease. No assurances can be given as to the rate of prepayments on the
Mortgage Loans in stable or changing interest rate environments.
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A number of Mortgage Loans may have balloon payments due at maturity, and
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 risk that a number of Mortgage Loans having
balloon payments may default at maturity, or that the Servicer, the Master
Servicer or the Special Servicer, if any, may extend the maturity of such a
Mortgage Loan 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 Servicer, the Master Servicer
or the Special Servicer, if any, may, to the extent and under the circumstances
set forth in the related Prospectus Supplement, be given considerable
flexibility to modify Mortgage Loans which are in default or as to which a
default is reasonably foreseeable. Any defaulted balloon payment or modification
which extends the maturity of a Mortgage Loan will tend to extend the weighted
average life of the Securities thereby lengthening the period of time elapsed
from the date of issuance of a Security until each dollar of principal will be
repaid or distributed to the investor.
FORECLOSURES AND PAYMENT PLANS. The number of foreclosures and the
principal amount of the Mortgage Loans comprising or underlying the Mortgage
Assets which are foreclosed in relation to the number of Mortgage Loans which
are repaid in accordance with their terms will affect the weighted average life
of the Mortgage Loans comprising or underlying the Mortgage Assets and that of
the related Series of Securities. 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,
may also have an impact upon the payment patterns of particular Mortgage Loans.
The return to Holders of Securities may be adversely affected by servicing
policies and decisions relating to foreclosures.
DUE ON SALE CLAUSES. Acceleration of mortgage payments as a result of
certain transfers of underlying Mortgaged Property is another factor affecting
prepayment rates that may not be reflected in the prepayment standards or models
used in the relevant Prospectus Supplement. A number of the Mortgage Loans
underlying Private Mortgage-Backed Securities and Mortgage Loans in a Mortgage
Pool may include "due-on-sale" clauses which allow the holder of the Mortgage
Loans to demand payment in full of the remaining principal balance of the
Mortgage Loans upon sale or certain other transfers of the underlying Mortgaged
Property. Except as otherwise described in the Prospectus Supplement for a
Series, the Primary Servicer of Mortgage Loans comprising or underlying Mortgage
Assets securing such Series will not exercise its right to enforce any
"due-on-sale" clause applicable to the related Mortgage Loan so long as the new
mortgagor satisfies the applicable underwriting criteria for similar loans
serviced by the Primary Servicer. The Primary Servicer will not enforce such
clause to the extent enforcement would be unlawful or would prejudice recovery
under any applicable Insurance Policy. If the Primary Servicer determines not to
enforce such "due-on-sale" clause, it will enter into an assumption and
modification agreement with the person to whom the Mortgaged Property is to be
conveyed. FHA Loans are not permitted to contain "due-on-sale" clauses and are
freely assumable by qualified persons.
SINGLE MORTGAGE LOAN OR SINGLE OBLIGOR. The Mortgage Assets securing a
Series may consist of a single Mortgage Loan or obligations of a single obligor
or related obligors as specified in the related Prospectus Supplement.
Assumptions used with respect to the prepayment standards or models based upon
analysis of the behavior of mortgage loans in a larger group will not
necessarily be relevant in determining prepayment experience on a single
Mortgage Loan or with respect to a single obligor.
SECURITY FOR THE BONDS AND CERTIFICATES
GENERAL
Each Series of Bonds will be secured by a pledge by the Issuer to the
Trustee of all right, title and interest of the Issuer in the Primary Assets for
such Series, and each Series of Certificates will represent a
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beneficial interest in a Trust Fund comprised of Primary Assets transferred to
the Trustee by the Depositor. The Primary Assets may include (a) Mortgage Assets
directly owned by the Issuer, (b) amounts payable under the Mortgage Assets, (c)
funds, instruments or securities deposited or held from time to time in any
Reserve Fund, (d) funds, instruments or securities initially deposited in the
Collection Account for such Series, (e) an assignment of leases and rents, if
any, (f) reinvestment income, if any, on moneys deposited in any Pledged Fund or
Account, (g) Enhancement Agreements, if any, (h) Servicing Agreements, if any,
related to the Mortgage Loans of such Series, and (i) other funds, instruments
or securities specified as Primary Assets in the related Prospectus Supplement.
To the extent specified in the related Prospectus Supplement, certain
amounts received by the Trustee or a Servicer with respect to a Private
Mortgage-Backed Security or Mortgage Loan securing a Series may not be pledged
as Mortgage Assets for such Series or deposited into the Trust Fund for such
Series, as the case may be, but will be payable to the seller of such Private
Mortgage-Backed Security or Mortgage Loan or to a Servicer free and clear of the
lien of the Indenture, or interest granted under the Trust Agreement.
Mortgage Assets for a Series may consist of any combination of the following
to the extent and as specified in the related Prospectus Supplement: (a)
Mortgage Loans or participation interests therein and (b) Private
Mortgage-Backed Securities. Mortgage Loans for a Series will be purchased by the
Issuer directly or through an affiliate in the open market or in privately
negotiated transactions. Private Mortgage-Backed Securities will in turn be
secured by Underlying Collateral which will consist of Mortgage Loans.
Participation interests pledged as Mortgage Assets for a Series may be acquired
by the Issuer pursuant to a Participation Agreement or may be purchased in the
open market.
The Trustee or its agents or nominees will have possession of any Mortgage
Loans constituting Mortgage Assets and will be the registered owner of any
Private Mortgage-Backed Security which constitutes Mortgage Assets. The Trustee
will not, unless otherwise specified in the related Prospectus Supplement, be in
possession of or be the registered owner of any Underlying Collateral for any
Private Mortgage-Backed Security. See "--Private Mortgage-Backed Securities"
below.
Unless otherwise specified in the related Prospectus Supplement for a
Series, scheduled distributions of principal of and interest on the Mortgage
Assets pledged to secure a Series or deposited into the Trust Fund for such
Series, as the case may be, the amounts available to be withdrawn from any
related Reserve Fund, the amount of cash, if any, initially deposited in the
related Collection Account and any other Mortgage Assets pledged to secure such
Series or deposited into the Trust Fund for such Series, as the case may be,
together with the Reinvestment Income thereon at the Assumed Reinvestment Rate,
if any, will be sufficient irrespective of the rate of prepayments on the
Mortgage Assets to make required payments of interest on the Securities of such
Series and to retire each Class of such Series not later than its Stated
Maturity or Final Scheduled Distribution Date, as applicable. See "YIELD AND
PREPAYMENT CONSIDERATIONS." The Mortgage Assets for a Series will equally and
ratably secure each Class of such Series, or will represent beneficial interest
in the Trust Fund, as the case may be, without priority of one Class over the
other (subject to any subordination of Subordinate Securities of a Series as set
forth in the related Prospectus Supplement), and the Mortgage Assets securing
each Series, or comprising the Trust Fund, will serve as Mortgage Assets only
for that Series.
MORTGAGE LOANS
GENERAL. Mortgage Loans for a Series may consist of Mortgage Loans or
participation interests therein. Mortgage Loans comprising the Mortgage Assets,
Mortgage Loans in which participation interests are conveyed to the Trustee, and
Mortgage Loans underlying Private Mortgage-Backed Securities are referred to
herein as the "Mortgage Loans." Some of the Mortgage Loans may have been
originated by or acquired from an affiliate of the Issuer and an affiliate of
the Issuer may be an obligor with respect to a Mortgage Loan. Mortgage Loans
may, as specified in the related Prospectus Supplement, consist of fixed
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rate, level payment, fully amortizing Mortgage Loans, ARMs or Mortgage Loans
having balloon or other payment characteristics as described in the related
Prospectus Supplement. ARMs may have a feature which permits the borrower to
convert the rate thereon to a fixed rate. Unless otherwise specified in the
applicable Prospectus Supplement, the Mortgage Loans will be secured by first
mortgages or deeds of trust or other similar security instruments creating a
first lien on Mortgaged Property.
The Mortgaged Properties may include Multifamily Property (i.e., multifamily
residential rental properties or cooperatively owned properties consisting of
five or more dwelling units) or Commercial Property. Multifamily Property may
include mixed commercial and residential structures and may consist of property
securing FHA-insured Mortgage Loans made by private lending institutions to help
finance construction or substantial rehabilitation of the related multifamily
rental or cooperative housing for moderate-income or displaced families. See
"DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS--Hazard Insurance on the
Mortgage Loans--FHA Insurance."
Each Mortgaged Property will be located on land owned in fee simple by the
Mortgagor or on land leased by the Mortgagor for a term at least two years
greater than the term of the related Mortgage Loan. Unless otherwise specified
in the related Prospectus Supplement, the fee interest in leased land will be
subject to the lien securing the related Mortgage Loan. Mortgage Loans secured
by Multifamily Property or Commercial Property will generally also be secured by
an assignment of leases and rents and/or operating or other cash flow guarantees
relating to the Mortgage Loan.
If so specified in the related Prospectus Supplement, Mortgage Loans
relating to real estate projects under construction may be included in the
Mortgage Assets for a Series. The related Prospectus Supplement will set forth
the procedures and timing for making disbursements from construction reserve
funds as portions of the related real estate project are completed. If permitted
by applicable law, the Mortgage Pool may also include Mortgaged Properties
acquired by foreclosure or by deed-in-lieu of foreclosure ("REO Property"). To
the extent specified in the related Prospectus Supplement, the Servicer, the
Master Servicer or the Special Servicer, if any, may establish and maintain a
trust account or accounts to be used in connection with REO Properties and other
Mortgaged Properties being operated by it or on its behalf on behalf of the
Trust Estate or the Trust Fund, as the case may be, by the mortgagor as debtor-
in-possession or otherwise. See "SERVICING OF MORTGAGE LOANS--Maintenance of
Insurance Policies and Other Servicing Procedures--Presentation of Claims;
Realization Upon Defaulted Mortgage Loans." In addition, the Mortgage Pool for a
particular Series may include Mortgage Loans which consist of cash flow
mortgages, installment contracts, mortgage loans with equity features or other
mortgage loans described in the related Prospectus Supplement.
The related Prospectus Supplement for each Series will provide information
with respect to the Mortgage Pool as of the Cut-Off Date, including, among other
things, (a) the aggregate unpaid principal balance of the Mortgage Loans
comprising the Mortgage Pool; (b) the weighted average Mortgage Rate on the
Mortgage Loans, and, in the case of adjustable Mortgage Rates, the weighted
average of the current adjustable Mortgage Rates, the minimum and maximum
permitted adjustable Mortgage Rates, if any, and the weighted average thereof;
(c) the average outstanding principal balance of the Mortgage Loans; (d) the
weighted average remaining scheduled term to maturity of the Mortgage Loans and
the range of remaining scheduled terms to maturity; (e) the range of
Loan-to-Value Ratios of the Mortgage Loans; (f) the relative percentage (by
principal balance as of the Cut-Off Date) of Mortgage Loans that are ARMs, fixed
interest rate, FHA Loans or other types of Mortgage Loans; (g) any Enhancement
relating to the Mortgage Pool; (h) the relative percentage (by principal balance
as of the Cut-Off Date) of Mortgage Loans that are secured by Multifamily
Property or Commercial Property; (i) the geographic dispersion of Mortgaged
Properties securing the Mortgage Loans; and (j) the use or type of each
Mortgaged Property securing a Mortgage Loan. The related Prospectus Supplement
will also specify other characteristics of Mortgage Loans which may be included
in the Mortgage Pool for a Series. If Private Mortgage-Backed Securities
representing ownership interests in multiple mortgage pools constitute Mortgage
Assets for a Series, the
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Prospectus Supplement will set forth, to the extent available, the
above-specified information on an aggregate basis for the respective mortgage
pools. If specific information respecting the Mortgage Loans is not known to the
Issuer at the time the related Series is initially offered, more general
information of the nature described above will be provided in the Prospectus
Supplement, and final specific information will be set forth in a Current Report
on Form 8-K to be available to investors on the date of issuance of the Series
and to be filed with the Commission within 15 days after the initial issuance of
such Series.
If so specified in the related Prospectus Supplement, the terms of a
Mortgage Loan may provide that upon the sale of the Mortgaged Property, the
obligor may, in lieu of the payment in full of the amount of principal and
interest then outstanding or accrued on the related Mortgage Loan, irrevocably
deposit cash or other specified obligations into an account with the Trustee in
an amount which, together with interest thereon, will be sufficient to make
timely payments or distributions of principal and interest on the Mortgage Loan
and, therefore, on the Securities according to their terms.
The characteristics of the Mortgage Loans comprising or underlying the
Mortgage Assets may affect the rate of prepayment of Securities and the risk of
delinquencies, foreclosures and losses. See "RISK FACTORS" and "YIELD AND
PREPAYMENT CONSIDERATIONS."
MORTGAGE UNDERWRITING STANDARDS AND PROCEDURES. The underwriting procedures
and standards for Mortgage Loans included in a Mortgage Pool will be specified
in the related Prospectus Supplement to the extent such procedures and standards
are known or available. Such Mortgage Loans may be originated in contemplation
of the transactions contemplated by this Prospectus and the related Prospectus
Supplement. If stated in the related Prospectus Supplement, the originator of
the Mortgage Loans (or another entity specified in the related Prospectus
Supplement) will make representations and warranties concerning compliance with
such underwriting procedures and standards.
Except as otherwise set forth in the related Prospectus Supplement for a
Series, the originator of a Mortgage Loan will have applied underwriting
procedures intended to evaluate, among other things, the income derived from the
Mortgaged Property, the capabilities of the management of the project, including
a review of management's past performance record, its management reporting and
control procedures (to determine its ability to recognize and respond to
problems) and its accounting procedures to determine cash management ability,
the obligor's credit standing and repayment ability and the value and adequacy
of the Mortgaged Property as collateral. FHA Loans will have been originated by
mortgage lenders which are approved by HUD as an FHA mortgagee in the ordinary
course of their real estate lending activities and will comply with the
underwriting policies of FHA. Except as described below or in the related
Prospectus Supplement, the Issuer believes that underwriting procedures used
were consistent with those utilized by mortgage lenders generally during the
period of origination.
Unless otherwise specified in the related Prospectus Supplement, the
adequacy of a Mortgaged Property as security for repayment will generally have
been determined by appraisal by appraisers selected in accordance with
pre-established guidelines established by or acceptable to the loan originator
for appraisers. Unless otherwise specified in the related Prospectus Supplement,
the appraiser must personally inspect the property and verify that it was in
good condition and that construction, if new, has been completed. Unless
otherwise stated in the applicable Prospectus Supplement, the appraisal will
have been based upon a cash flow analysis or a market data analysis of recent
sales of comparable properties and, when deemed applicable, a replacement cost
analysis based on the current cost of constructing or purchasing a similar
property.
No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. Further, there is no assurance that appreciation of real
estate values generally will limit loss experiences on Commercial Property or on
non-traditional housing such as Multifamily Property. If the residential real
estate market should experience an overall decline in property values such that
the outstanding balances of the Mortgage Loans and any additional financing on
the Mortgaged Properties in a particular Mortgage Pool become equal to or
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greater than the value of the Mortgaged Properties, the actual rates of
delinquencies, foreclosures and losses could be higher than those now generally
experienced in the mortgage lending industry. To the extent that such losses are
not covered by the methods of Enhancement or the insurance policies described
herein, the ability of the Issuer to pay principal of and interest on the
Securities may be adversely affected. Even where credit support covers all
losses resulting from defaults and foreclosure, the effect of defaults and
foreclosures may be to increase prepayment experience on the Mortgage Assets,
thus shortening weighted average life and affecting yield to maturity. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
DETERMINATION OF COMPLIANCE WITH POOL REQUIREMENTS AND UNDERWRITING
PROCEDURES. As more specifically set forth in the related Prospectus
Supplement, the Issuer will represent and warrant, upon pledge of the Mortgage
Loans to the Trustee under the Indenture or deposit of such Mortgage Loans into
the Trust Fund, as applicable, among other things, as to the accuracy of the
information in the related Mortgage Loan Schedule. If specified in the related
Prospectus Supplement, the originator of a Mortgage Loan may make
representations and warranties with respect to such Mortgage Loan. If so
specified in the related Prospectus Supplement, the Issuer will assign its
rights and the seller's obligations under the agreement pursuant to which the
Issuer acquired the Mortgage Assets for the related Series to the Trustee.
If so specified in the related Prospectus Supplement, upon the discovery of
the breach of certain representations or warranties made by the Issuer in
respect of a Mortgage Loan that materially and adversely affects the interests
of the Bondholders or Certificateholders of the related Series, the Issuer will
be obligated to cause the seller of such Mortgage Loans to repurchase such
Mortgage Loan or deliver a substitute conforming Mortgage Loan as described
below under "Repurchase and Substitution of Non-Conforming Mortgage Loans." The
Trustee will be required to enforce this obligation for the benefit of the
Bondholders or Certificateholders, following the practices it would employ in
its good faith business judgment were it the owner of such Mortgage Loan. If so
specified in the related Prospectus Supplement, the Master Servicer, if any, may
be obligated to enforce such obligations rather than the Trustee.
REPURCHASE AND SUBSTITUTION OF NON-CONFORMING MORTGAGE LOANS. The Trustee,
or if so specified in the related Prospectus Supplement, a custodian, will
review Mortgage Loan documents after receipt thereof. Unless otherwise provided
in the related Prospectus Supplement, if any such document is found to be
defective in any material respect, or if it is determined that the Issuer has
breached any representation or warranty, the Trustee or the custodian shall
immediately notify the Issuer and the Master Servicer, if any, and the Trustee,
if the custodian. Unless otherwise specified in the related Prospectus
Supplement, if the Issuer cannot cure such defect thereafter, the Issuer will be
obligated to cause the seller of such Mortgage Loan to repurchase within 90 days
of the execution of the related Series Supplement, or within such other period
specified in the related Prospectus Supplement, the related Mortgage Loan or any
property acquired in respect thereof from the Trustee at a purchase price
generally equal to the unpaid principal balance of the Mortgage Loan (or, in the
case of a foreclosed Mortgage Loan, the unpaid principal balance of such
Mortgage Loan immediately prior to foreclosure) plus accrued interest.
Unless otherwise provided in the related Prospectus Supplement, the Issuer
may, rather than cause the repurchase of the Mortgage Loan as described above,
remove such Mortgage Loan from the Trust Estate (a "Deleted Mortgage Loan") or
Trust Fund, as applicable, and substitute in its place one or more other
Mortgage Loans (each, a "Substitute Mortgage Loan"); provided, however with
respect to a Series for which no REMIC election is made, such substitution must
be effected within the period specified in the related Prospectus Supplement.
Any Substitute Mortgage Loan will, on the date of substitution, have the
characteristics specified in the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation constitutes the sole remedy available to the Bondholders,
Certificateholders or the Trustee for a material defect in a Mortgage Loan
document or for breach of representations and warranties with respect to any
Mortgage Loan. With respect to Mortgage Loans underlying Private Mortgage-Backed
Securities, the PMBS
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Agreement may have terms relating to the repurchase or substitution obligations
which differ from those set forth above.
The Master Servicer, if any, may also make certain warranties with respect
to the Mortgage Loans comprising the Mortgage Pool for a Series. See "SERVICING
OF MORTGAGE LOANS--Certain Matters Regarding the Master Servicer and Special
Servicer." Upon a breach of any such warranty that materially and adversely
affects the interests of Bondholders or Certificateholders of the related
Series, the related Mortgage Loan will be required to be repurchased, subject to
the conditions described in the preceding paragraph and in the related
Prospectus Supplement. If the Master Servicer fails to repurchase such a
Mortgage Loan, payments to Bondholders or Certificateholders could be reduced to
the extent payments are not made on the Mortgage Loan.
Various Servicers will provide certain customary servicing functions with
respect to any Mortgage Loans pursuant to servicing agreements. Such Servicers
may include affiliates of the Issuer. If so specified in the related Prospectus
Supplement, a Master Servicing Agreement may be entered into between the Issuer
and a Master Servicer. The Master Servicer will supervise the performance by the
Servicers of their duties and responsibilities under the servicing agreements
with respect to Mortgage Loans for the related Series. Alternatively, if so
specified in the related Prospectus Supplement, the Master Servicer may be
obligated to service Mortgage Loans directly or through one or more Servicers.
In such a case, the Master Servicer will be primarily responsible for servicing
of the Mortgage Loans. The specific duties to be performed by any Servicers and
Master Servicer, if any, with respect to the Mortgage Loans of a particular
Series will be set forth in the Prospectus Supplement to the extent they differ
from the servicing obligations described herein under "SERVICING OF THE MORTGAGE
LOANS." Servicers and the Master Servicer, if any, may be required to advance
funds to cover delinquent payments on Mortgage Loans, to the extent specified in
the related Prospectus Supplement. The Prospectus Supplement also will specify
criteria to be met by each Servicer and the Master Servicer. Such criteria will
be determined by the Issuer consistent with the requirements of each Rating
Agency rating such Series. See "SERVICING OF MORTGAGE LOANS."
PRIVATE MORTGAGE-BACKED SECURITIES
GENERAL. Private Mortgage-Backed Securities may consist of (a) mortgage
participations and pass-through certificates, evidencing an undivided interest
in a pool of Mortgage Loans, (b) debt obligations (interest payments on which
may be tax-exempt in whole or in part), secured by mortgages or (c)
participations or other interests in any of the foregoing. Private
Mortgage-Backed Securities will have been issued pursuant to a pooling and
servicing agreement, an indenture or similar agreement, or a participation
agreement or similar agreement (a "PMBS Agreement"). The seller or servicer of
the underlying Mortgage Loans will have entered into the PMBS Agreement with the
trustee under such PMBS Agreement (the "PMBS Trustee"). The PMBS Trustee or its
agent, or a custodian, will possess the Mortgage Loans, participations or other
interest, underlying such Private Mortgage-Backed Security. Mortgage Loans
underlying a Private Mortgage-Backed Security will be serviced by the Master
Servicer directly or by one or more Servicers who may be subject to the
supervision of the Master Servicer. Unless otherwise specified in the Prospectus
Supplement relating to a Series, if payments with respect to interest on the
underlying obligations are tax-exempt, such Prospectus Supplement will disclose
the relevant federal tax characteristics relating to the tax-exempt status of
such obligations.
The issuer of the Private Mortgage-Backed Securities (the "PMBS Issuer") may
be a financial institution or other entity engaged generally in the business of
mortgage lending, a public agency or instrumentality of a state, local or
federal government or a limited purpose corporation organized for the purpose
of, among other things, establishing trusts and acquiring and selling housing
loans to such trusts, and selling beneficial interests in such trusts. If so
specified in the Prospectus Supplement, the PMBS Issuer may be an affiliate of
the Issuer. The obligations of the PMBS Issuer will generally be limited to
certain representations and warranties with respect to the assets conveyed by it
to the related trust. Unless
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otherwise specified in the related Prospectus Supplement, the PMBS Issuer will
not have guaranteed any of the assets conveyed to the related trust or any of
the Private Mortgage-Backed Securities issued under the PMBS Agreement.
Additionally, although the Mortgage Loans, participations or other interest,
underlying the Private Mortgage-Backed Securities may be guaranteed by an agency
or instrumentality of the United States, the Private Mortgage-Backed Securities
themselves will not be so guaranteed.
Distributions of principal and interest will be made on the Private
Mortgage-Backed Securities on the dates specified in the related Prospectus
Supplement. The Private Mortgage-Backed Securities may be entitled to receive
nominal or no principal distributions or nominal or no interest distributions.
Principal and interest distributions will be made on the Private Mortgage-Backed
Securities by the PMBS Trustee or the Servicer. The PMBS Issuer or the Servicer
or another person specified in the related Prospectus Supplement may have the
right or obligation to repurchase or substitute assets underlying the Private
Mortgage-Backed Securities after a certain date or under other circumstances
specified in the related Prospectus Supplement.
UNDERLYING MORTGAGE LOANS. The Mortgage Loans underlying the Private
Mortgage-Backed Securities may consist of fixed rate, level payment, fully
amortizing Mortgage Loans, ARMs, or Mortgage Loans having balloon or other
special payment features. Mortgage Loans underlying the Private Mortgage-Backed
Securities will be secured primarily by Multifamily Property or Commercial
Property. Unless otherwise stated in the related Prospectus Supplement, the
underwriting procedures set forth above will also apply to Underlying Mortgage
Loans.
ENHANCEMENT RELATING TO PRIVATE MORTGAGE-BACKED SECURITIES. Enhancement in
the form of reserve funds, subordination of other private mortgage certificates
issued under the PMBS Agreement, letters of credit, insurance policies or other
types of credit support may be provided with respect to the Mortgage Loans,
participations or other interest, underlying the Private Mortgage-Backed
Securities or with respect to the Private Mortgage-Backed Securities themselves.
The type, characteristics and amount of enhancement, if any, will be a function
of certain characteristics of the Mortgage Loans, participations or other
interest, and other factors and will have been established for the Private
Mortgage-Backed Securities on the basis of requirements of the Rating Agency
which assigned a rating to the Private Mortgage-Backed Securities.
ADDITIONAL INFORMATION. The Prospectus Supplement for a Series which
includes Private Mortgage-Backed Securities will specify, to the extent
available, (i) the aggregate approximate principal amount and type of the
Private Mortgage-Backed Securities to be included in the Trust Estate or Trust
Fund, as applicable, (ii) certain characteristics of the Mortgage Loans,
participations or other interests which comprise the underlying assets for the
Private Mortgage-Backed Securities including (A) the payment features of such
Mortgage Loans, participations or other interests (i.e., whether they are fixed
rate or adjustable rate and whether they provide for fixed level payments,
adjustable payments or other payment features), (B) the approximate aggregate
principal balance, if known, of Underlying Mortgage Loans, participations or
other interests insured or guaranteed by a governmental entity, (C) the
servicing fee or range of servicing fees with respect to the Mortgage Loans, and
(D) the minimum and maximum stated maturities of the underlying Mortgage Loans,
participations or other interests at origination, (iii) the maximum original
term-to-stated maturity of the Private Mortgage-Backed Securities, (iv) the
weighted average pass-through or bond rate of the Private Mortgage-Backed
Securities or formula therefor, (v) the pass-through or bond rate or ranges
thereof for the Private Mortgage-Backed Securities or formula therefor, (vi) the
PMBS Issuer, Master Servicer and the PMBS Trustee for such Private
Mortgage-Backed Securities, (vii) certain characteristics of enhancement, if
any, such as subordination, reserve funds, insurance policies, letters of credit
or guarantees relating to the Mortgage Loans, participations or other interests
underlying the Private Mortgage-Backed Securities or to such Private
Mortgage-Backed Securities themselves, (viii) the terms on which the Underlying
Mortgage Loans, participations or other interests for such Private
Mortgage-Backed Securities or the Private Mortgage-Backed Securities may, or are
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required to, be purchased prior to their maturity or the maturity of the Private
Mortgage-Backed Securities and (ix) the terms on which Mortgage Loans,
participations or other interests may be substituted for those originally
underlying the Private Mortgage-Backed Securities.
SUBSTITUTION OF MORTGAGE ASSETS
Unless otherwise provided in the related Prospectus Supplement, subject to
the limitations set forth in the Indenture or Trust Agreement for a Series, the
Issuer or Depositor may deliver to the Trustee other Mortgage Assets in
substitution for any Mortgage Assets originally pledged as security for a
Series, or deposited in the Trust Fund for a Series, as the case may be. Any
such Substitute Mortgage Assets will have an outstanding principal balance or
Asset Value (determined in a manner consistent with the Mortgage Assets for
which it is substituted) that is less than or equal to the outstanding principal
balance or Aggregate Asset Value of the Mortgage Assets for which it is
substituted, unless otherwise specified in the related Prospectus Supplement,
and will otherwise have such characteristics as shall be necessary to cause the
Mortgage Assets, upon such substitution, to conform more fully to the
description thereof set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, (1) no substitution
will be permitted which would delay the Stated Maturity or Final Scheduled
Distribution Date, of any Class of Securities of the related Series, (2) no more
than 40% of the Mortgage Assets (including any cash deposited on the Closing
Date) securing a Series may be substituted for, (3) only like kind Mortgage
Assets may be substituted for Mortgage Assets (or, with respect to a
substitution for cash deposited in any Pledged Fund or Account on the Closing
Date, the Substitute Mortgage Assets must be of like kind as the Mortgage Assets
securing the related Series) and (4) there can be no substitutions for
Substitute Mortgage Assets. No substitution may be made (1) if such substitution
would result in the Issuer becoming required to register as an "Investment
Company" for purposes of the Investment Company Act of 1940, (2) if the Rating
Agencies will, as a result of such substitution, downgrade the rating on the
related Series of Securities or any Class thereof or (3) in the event that the
Issuer has elected to be treated as a REMIC and such substitution would cause
the REMIC to lose its status as a REMIC or result in a tax on "prohibited
contributions" to or "prohibited transactions" of the REMIC.
If the Issuer elects to treat the Mortgage Assets securing a Series of
Bonds, or deposited into the Trust Fund, as a REMIC or an election is made to
treat the arrangement by which a Series of Securities is issued as a REMIC, no
Substitute Mortgage Assets may be pledged by the Issuer (a) in the case of the
substitution for a "defective obligation" (within the meaning of Section
860G(a)(4)(B) of the Code), more than two years after the "Start Up Day" (as
defined in Section 860G(a)(9) of the Code) of the REMIC, or (b) in the case of
any other Mortgage Assets, more than three months after the Start Up Day.
COLLECTION ACCOUNT
Unless otherwise provided in the related Series Supplement, a separate
Collection Account for each Series will be established by the Trustee, or if the
Trustee is not also the Paying Agent, by the Paying Agent, for receipt of all
monthly principal and interest payments on the Primary Assets securing such
Series and the amount of cash, if any, to be initially deposited therein by the
Issuer, Reinvestment Income, if any, thereon and any amounts withdrawn from any
Reserve Funds for such Series. If specified in the related Prospectus
Supplement, Reinvestment Income, if any, or other gain from investments of
moneys in the Collection Account will be credited to the Collection Account for
such Series and any loss resulting from such investments will be charged to such
Collection Account. Funds on deposit in the Collection Account will be available
for application to the payment of principal of and interest on the Securities of
the related Series and for certain other payments provided for in the Indenture
or Trust Agreement and described in the related Prospectus Supplement. To the
extent that amounts remaining on deposit in the Collection Account on each
Payment Date or Distribution Date represent Excess Cash Flow not required to be
applied to such payments or distributions, unless otherwise specified in the
related Prospectus Supplement,
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such amounts may be paid as provided in the Indenture or Trust Agreement to the
Issuer (or, in the case of a REMIC, to the holder of the residual interest
therein).
OTHER FUNDS OR ACCOUNTS
A Series may also be secured by certain other funds and accounts for the
purpose of, among other things, (i) paying certain administrative fees and
operating expenses and (ii) accumulating funds that are credited to the Issuer's
account pending their distribution to the Issuer. See "--Enhancement."
INVESTMENT OF FUNDS
The Collection Account, Servicing Accounts and certain other funds and
accounts for a Series are to be invested by the Trustee or the Paying Agent, as
directed by the Issuer, in certain Eligible Investments acceptable to each
Rating Agency rating such Series, which may include, without limitation, (a)
direct obligations of, and obligations fully guaranteed by, the United States of
America, FHLMC, FNMA or any agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and credit of the
United States of America, (b) demand and time deposits, certificates of deposit
or bankers' acceptances, (c) repurchase obligations pursuant to a written
agreement with respect to (1) any security described in clause (a) above or (2)
any other security issued or guaranteed by an agency or instrumentality of the
United States of America, (d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United States of
America or any state, (e) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof), (f) a
Guaranteed Investment Contract, (g) certificates or receipts representing
ownership interests in future interest or principal payments on obligations
described in clause (a) above, and (h) any other demand, money market or time
deposit obligation, security or investment acceptable to the Rating Agencies.
Eligible Investments with respect to a Series will include only obligations
or securities that mature on or before the date on which the Collection Account
or any other Pledged Fund or Account for such Series are required or may be
anticipated to be required to be applied for the benefit of the holders of such
Series. Any gain or loss from such investments for a Series will be credited or
charged to the appropriate fund or account for such Series unless otherwise
specified in the related Prospectus Supplement.
GUARANTEED INVESTMENT CONTRACT
If specified in the related Prospectus Supplement, on or prior to the
Delivery Date the Issuer and the Trustee will enter into a Guaranteed Investment
Contract with a guarantor acceptable to the Rating Agencies rating the
Securities (the "Guarantor"), pursuant to which all distributions on the
Mortgage Assets will be invested by the Trustee with the Guarantor, and the
Guarantor will pay to the Trustee interest at the rate per annum set forth in
such Guaranteed Investment Contract on all amounts invested. Whenever funds are
required under the Indenture to be paid to Bondholders or under the Trust
Agreement to be paid to the Certificateholders, the Guarantor, upon the request
of the Trustee, will remit such funds to the Trustee.
ENHANCEMENT
Enhancement may be provided with respect to a Series, or with respect to any
Mortgage Loans or Private Mortgage-Backed Securities securing a Series. See
"ENHANCEMENT."
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SERVICING OF MORTGAGE LOANS
GENERAL
The servicing obligations with respect to a particular Series may be
performed by various Servicers or by the Trustee. If so specified in the related
Prospectus Supplement, a Master Servicer or a Special Servicer may be appointed.
The related Prospectus Supplement for each Series will describe the extent, if
any, such rights, duties and obligations vary or differ with respect to such
Series from those described herein.
If so specified in the related Prospectus Supplement, pursuant to a Master
Servicing Agreement or Trust Agreement, customary servicing functions with
respect to Mortgage Loans which comprise Mortgage Assets for a Series, or which
constitute Underlying Collateral for a Private Mortgage-Backed Security will be
provided by the Master Servicer directly or by one or more Servicers subject to
supervision by the Master Servicer. To the extent specified in the related
Prospectus Supplement, a special servicer (the "Special Servicer") may be
appointed. The related Prospectus Supplement will describe the duties and
obligations of such Special Servicer. To the extent specified in the related
Prospectus Supplement, the Master Servicer or Special Servicer, if any, may have
the authority to sell or otherwise dispose of Mortgage Loans or the related REO
Property in order to maximize the value of such Mortgage Loans or property. The
entity which has primary liability for servicing Mortgage Loans directly is
sometimes referred to herein as the "Primary Servicer." If the Master Servicer
is not required under the Master Servicing Agreement, Trust Agreement or PMBS
Agreement, as applicable, to act as Primary Servicer, then the Master Servicer,
if any, will (i) administer and supervise the performance by the Servicers (who
will act as Primary Servicers) of their servicing responsibilities under the
Servicing Agreements, (ii) to the extent not maintained by a Primary Servicer,
maintain any insurance policy required for the related Mortgage Pool and (iii)
advance funds as described below under "Advances" and in the related Prospectus
Supplement. If a Master Servicer undertakes to service Mortgage Loans directly
it may do so through Servicers as its agents. In such case, the Master Servicer
will be responsible for all aspects of the servicing of the related Mortgage
Loans notwithstanding such use of Servicers. The Master Servicer or a Servicer
may be an affiliate of the Issuer. Unless otherwise specified in the related
Prospectus Supplement, in the case of FHA Loans, the Master Servicer and each
Servicer will be required to be approved by HUD as an FHA mortgagee. The Master
Servicer will only be responsible for the duties and obligations of the Special
Servicer to the extent set forth in the related Prospectus Supplement.
To the extent applicable, Master Servicing Agreements (direct or
supervisory), Servicing Agreements and Special Servicing Agreements, if any,
with respect to a Series will be filed as exhibits to a Current Report on Form
8-K within 15 days following the issuance of the Securities of a Series.
The Master Servicer will be paid a servicing fee for the performance of its
services and duties under each Master Servicing Agreement, as specified in the
related Prospectus Supplement. Each Servicer, if any, will be entitled to
receive a servicing fee. The Special Servicer, if any, will also be entitled to
a servicing fee. In addition, the Master Servicer, Special Servicer or Servicer
may be entitled to retain late charges, assumption fees and similar charges to
the extent collected from Mortgagors. If a Servicer or the Special Servicer is
terminated by the Master Servicer, the servicing function of the Servicer or the
Special Servicer will be either transferred to a substitute Servicer or Special
Servicer, as the case may be, or performed by the Master Servicer. The Master
Servicer will be entitled to retain the portion of the Servicing Fee paid to a
Servicer, under a terminated Servicing Agreement, or the Special Servicer, under
the Special Servicing Agreement, if the Master Servicer elects to perform such
servicing functions itself. See "--Servicing Compensation and Payment of
Expenses" below.
COLLECTION PROCEDURES
The Primary Servicer or, if so specified in the related Prospectus
Supplement, the Trustee, will make reasonable efforts to collect all payments
called for under the Mortgage Loans and will follow such collection procedures
as it follows with respect to mortgage loans serviced by it that are comparable
to the Mortgage Loans.
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Unless otherwise specified in the related Prospectus Supplement, the Primary
Servicer, to the extent permitted by law and the terms of the related Mortgage
Loans, will establish and maintain an escrow account (the "Escrow Account") in
which payments by Mortgagors to pay taxes, assessments, mortgage and hazard
insurance premiums, and other comparable items will be deposited. Withdrawals
from the Escrow Account are to be made to effect timely payment of taxes,
assessments and hazard insurance premiums, to refund to Mortgagors amounts
determined to be overages, to pay interest to Mortgagors on balances in the
Escrow Account to the extent required by law, to repair or otherwise protect the
Mortgaged Property and to clear and terminate such account. Alternatively, the
terms of the related Mortgage Loan may require, upon the occurrence of a
delinquency or default by the obligor, an impound account ("Impound Account") to
be established and maintained and into which payments by Mortgagors to pay
taxes, assessments, mortgage and hazard insurance premiums and other comparable
items will be deposited pending distribution of such items. The Primary Servicer
will be responsible for the administration of the Escrow Account or the Impound
Account and may be obligated to make escrow or impound advances to the relevant
account when a deficiency exists therein if so specified in the related
Prospectus Supplement.
PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO CUSTODIAL ACCOUNTS
With respect to any Series, the Master Servicer, if any, will establish an
account (the "Custodial Account") in the name of the Trustee, unless otherwise
specified in the related Prospectus Supplement. The Custodial Account will be
established so as to comply with the standards of each Rating Agency rating the
Securities of a Series. Amounts to be remitted to the Trustee shall be remitted
by the Master Servicer to the Trustee from the Custodial Account for deposit in
the Collection Account for the related Series.
In those cases where a Servicer is servicing Mortgage Loans pursuant to a
Servicing Agreement, the Servicer will establish and maintain an account (the
"Servicing Account") that will comply with the standards set forth below for the
Custodial Account and that is otherwise acceptable to the Master Servicer, if
any. The Servicer will be required to deposit into the Servicing Account on a
daily basis (or upon identification) all mortgage related receipts received by
it with respect to Mortgage Loans serviced by such Servicer subsequent to the
Cut-Off Date less its servicing fee and certain other amounts specified in the
Servicing Agreement. On each Servicer Remittance Date, the Servicer shall remit
all funds held in the Servicing Account (other than payments due on or before
the Cut-Off Date and other amounts permitted to be withdrawn from or held in the
Servicing Account pursuant to the Servicing Agreement) with respect to each
Mortgage Loan together with any Advances made by such Servicer for deposit to
the Custodial Account, or if a Custodial Account has not been established,
directly to the Collection Account. See "--Advances" below.
If so specified in the related Prospectus Supplement, the Custodial Account
and each Servicing Account may be maintained as an interest-bearing account, or
the funds held therein may be invested pending remittance to the Trustee in
Eligible Investments. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or the Servicer will be entitled to receive any
such interest or other income earned on funds in the Custodial Account or
Servicing Account as additional compensation.
The Master Servicer will deposit in the Custodial Account on a daily basis
all mortgage related receipts (including amounts remitted by the Servicer)
received by it subsequent to the Cut-off Date (other than payments of principal
and interest due on or before the Cut-off Date).
With respect to any other type of Mortgage Loan which provides for payments
other than on the basis of level payments, an account may be established as
described in the related Prospectus Supplement.
ADVANCES
GENERAL. To the extent provided in the related Prospectus Supplement, the
Primary Servicer may make periodic advances of cash ("Advances") from its own
funds or, if so specified in the related Prospectus Supplement, from excess
funds in the Custodial Account or Servicing Account, but only to the
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extent such Advances are, in the good faith business judgment of the Servicer or
the Master Servicer, as the case may be, ultimately recoverable from future
payments and collections on the Mortgage Loans or otherwise. Neither the Master
Servicer nor the Servicers will be required to make such Advances, unless
otherwise specified in the related Prospectus Supplement. The Master Servicer's
obligation to make Advances, if any, may, as specified in the related Prospectus
Supplement, be limited in amount or may be limited to Advances received from
Servicers. If so specified in the related Prospectus Supplement, the Master
Servicer will not be obligated to make Advances until all or a specified portion
of a Reserve Fund is depleted. Advances are intended to enable the Issuer to
make timely payment of the scheduled principal and interest payments or
distributions on the Securities of such Series, not to guarantee or insure
against losses. Accordingly, any funds so advanced are recoverable by the
Servicer or the Master Servicer, as the case may be, out of amounts received on
particular Mortgage Loans which represent late recoveries of principal or
interest respecting which any such Advance was made. If an Advance is made and
subsequently determined to be nonrecoverable from late collections, Insurance
Proceeds or Liquidation Proceeds from the related Mortgage Loans, or any other
source described in the related Prospectus Supplement, the Servicer or Master
Servicer will be entitled to reimbursements from other funds in the Custodial
Account or Servicing Account, as applicable.
ADJUSTMENTS TO SERVICING FEE OR ADVANCES IN CONNECTION WITH PREPAID MORTGAGE
LOANS. With respect to each Mortgage Pool, if an obligor makes a principal
prepayment between scheduled payment dates, the obligor may be required to pay
interest on the principal balance only to the date of prepayment in full. If and
to the extent provided in the related Prospectus Supplement, the amount of the
servicing fee may be reduced, or the Primary Servicer may be otherwise obligated
to advance moneys from its own funds or any reserve maintained for such purpose,
to the extent necessary to include an amount equal to a full month's interest
payment at the applicable Mortgage Rate. Partial principal prepayments may be
treated as having been received on the next Due Date, and, if so, no reduction
in interest remitted for deposit to the Collection Account will occur. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
MAINTENANCE OF INSURANCE POLICIES AND OTHER SERVICING PROCEDURES
GENERAL. To the extent specified in the related Prospectus Supplement and
the Servicing Agreement, the Primary Servicer will be required to cause to be
maintained a standard hazard insurance policy with respect to each Mortgaged
Property. In addition, all or a portion of the Mortgage Loans comprising a
Mortgage Pool or constituting Underlying Collateral may be insured by the FHA.
The Primary Servicer will be required to take such steps as are reasonably
necessary to keep such insurance in full force and effect. See "DESCRIPTION OF
INSURANCE ON THE MORTGAGE LOANS."
PRESENTATION OF CLAIMS; REALIZATION UPON DEFAULTED MORTGAGE LOANS. The
market value of any property obtained in foreclosure or by deed in lieu of
foreclosure may be based substantially on the operating income obtained by
renting the applicable property. As a default on a Mortgage Loan secured by
Multifamily Property or Commercial Property is likely to have occurred because
operating income, net of expenses, is insufficient to make debt service payments
on the related Mortgage Loan, it can be anticipated that the market value of
such property generally will be less than anticipated when such Mortgage Loan
was originated. To the extent that equity does not cushion the loss in market
value upon any liquidation and such loss is not covered by other credit support,
a loss may be experienced by the related Bondholders or Certificateholders, as
applicable.
The Primary Servicer, on behalf of itself, the Trustee, the Bondholders or
Certificateholders, as applicable, and the Issuer, will be required to present,
or cause to be presented, claims with respect to any insurance policy. The
Primary Servicer will be required to present claims and take such reasonable
steps as are necessary to permit recovery under any FHA insurance respecting
defaulted Mortgage Loans.
The Primary Servicer may foreclose upon or otherwise comparably convert the
ownership of properties securing such of the related Mortgage Loans as come into
and continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments. In connection with such
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foreclosure or other conversion, the Primary Servicer will generally follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities, subject to the
express provisions of the related Servicing Agreement.
ENFORCEMENT OF DUE-ON SALE CLAUSES
Unless otherwise specified in the related Prospectus Supplement, when any
Mortgaged Property is about to be conveyed by the Mortgagor, the Primary
Servicer will not exercise its rights to accelerate the maturity of such
Mortgage Loan under the applicable "due-on-sale" clause, if any, so long as the
new mortgagor satisfies the applicable underwriting criteria for similar loans
serviced by the Primary Servicer. If such conditions are met or the Primary
Servicer reasonably believes enforcement of a due-on-sale clause will not be
enforceable, the Primary Servicer is authorized to take or enter into an
assumption agreement from or with the person to whom such Mortgaged Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Mortgage Note and pursuant to which the original Mortgagor is released
from liability and such person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Unless otherwise specified in the related Prospectus
Supplement, any fee collected in connection with an assumption will be retained
as additional servicing compensation.
MODIFICATION; WAIVERS
As set forth in the related Prospectus Supplement, the Master Servicer or
Special Servicer, if any, may have the discretion, subject to certain conditions
set forth therein, to modify, waive or amend the terms of any Mortgage Loan
without the consent of the Trustee, or any Bondholder or Certificateholders, as
applicable.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer or the Special Servicer, if any, will not agree to any modification,
waiver or amendment of the payment terms of a Mortgage Loan unless the Master
Servicer or the Special Servicer, if any, has determined that such modification,
waiver or amendment is reasonably likely to produce a greater recovery on a
present value basis than liquidation of the Mortgage Loan.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer, the Special Servicer, if any, and each Servicer will be
entitled to a servicing fee in an amount specified or to be calculated in a
manner described in the related Prospectus Supplement. The servicing fee may be
fixed or variable, as specified in the related Prospectus Supplement. In
addition, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer, the Special Servicer, if any, or a Servicer will be entitled to
additional servicing compensation in the form of assumption fees, late payment
charges and modification fees.
The Primary Servicer will be entitled to reimbursement for certain expenses
incurred by it in connection with the liquidation of defaulted Mortgage Loans.
The ability of the Issuer of the related Series to pay principal of and interest
on the Securities will not be affected to the extent claims are paid under the
related insurance policies. If claims are either not made or paid under such
insurance policies or if coverage thereunder has ceased or is insufficient, the
ability of the Issuer to meet debt service requirements on the related Series
may be adversely affected. In addition, the Primary Servicer will be entitled to
reimbursement of expenditures incurred by it in connection with the restoration
of Mortgaged Property, such right of reimbursement being prior to the rights of
the Bondholders to receive any related Insurance Proceeds or Liquidation
Proceeds.
EVIDENCE AS TO COMPLIANCE
The Master Servicer and the Special Servicer, if any, will deliver to the
Trustee, on or before 120 days after the end of each fiscal year of the Master
Servicer and the Special Servicer, if applicable, an officer's certificate
stating that (i) a review of the activities of the Master Servicer, the Special
Servicer and the
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Servicers during the preceding calendar year and of performance under the Master
Servicing Agreement, Special Servicing Agreement, if applicable, and the
Servicing Agreements has been made under the supervision of such officer and
(ii) the Master Servicer and the Special Servicer, if applicable, has fulfilled
all its obligations under the Master Servicing Agreement and Special Servicing
Agreement, if applicable, throughout such year, and, to the best of such
officer's knowledge, based on such review, each Servicer has fulfilled its
obligations under the related Servicing Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. Such
officer's certificate shall be accompanied by a statement of a firm of
independent public accountants to the effect that, on the basis of an
examination of certain documents and records relating to servicing of the
Mortgage Loans, conducted in accordance with generally accepted accounting
principles in the mortgage banking industry, the Master Servicer's and the
Special Servicer's, if applicable, duties and duties of the Servicers have been
conducted in compliance with the provisions of the applicable agreement, except
for (i) such exceptions as such firm believes to be immaterial and (ii) such
other exceptions as are set forth in such statement. Copies of the annual
officer's certificate and accountants' statement may be obtained without charge
upon written request to the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND SPECIAL SERVICER
The Master Servicer and any Special Servicer for each Series will be
specified in the related Prospectus Supplement. The Master Servicer and any
Special Servicer may be an affiliate of the Issuer and may have other business
relationships with the Issuer and its affiliates.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer may not resign from its obligations and duties except with the consent
of the Trustee or upon a determination that its duties thereunder are no longer
permissible under applicable law. No such resignation will become effective
until the Trustee or a successor servicer has assumed the Master Servicer's
obligations and duties under such Master Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each Master
Servicing Agreement will also provide that neither the Master Servicer, nor any
director, officer, employee or agent of the Master Servicer, will be under any
liability to the Bondholders or Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to the Master
Servicing Agreement, or for errors in judgment; provided, however, that neither
the Master Servicer nor any such person will be protected against any liability
which would otherwise be imposed by reason of failure to perform its obligations
in compliance with the standards of care set forth in the Master Servicing
Agreement. The Master Servicer may, in its discretion, undertake any such action
which it may deem necessary or desirable with respect to the rights and duties
of the parties to the Master Servicing Agreement and the interests of the
Bondholders, or Certificateholders thereunder. In such event, the Master
Servicer will be entitled to be reimbursed for legal expenses and costs of such
action out of the related Custodial Account.
ENHANCEMENT
GENERAL
For any Series, Enhancement may be provided with respect to one or more
Classes thereof or the related Mortgage Assets. Enhancement may be in the form
of a letter of credit, the subordination of one or more Classes of the
Securities of such Series, the establishment of one or more reserve funds,
overcollateralization, guarantee insurance, the use of cross-support features or
another method of Enhancement described in the related Prospectus Supplement, or
any combination of the foregoing. If so specified in the related Prospectus
Supplement, any form of Enhancement (including but not limited to insurance,
letters of credit or guarantee insurance) may be structured so as to be drawn
upon by more than one Series to the extent described therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Enhancement will not provide protection against all risks of loss
and will not guarantee repayment of the entire principal
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balance of the Securities and interest thereon. If losses occur which exceed the
amount covered by Enhancement or which are not covered by the Enhancement,
Bondholders or Certificateholders, as applicable will bear their allocable share
of deficiencies. Moreover, if a form of Enhancement covers more than one Series
of Securities (each, a "Covered Trust"), holders of Securities issued by any of
such Covered Trusts will be subject to the risk that such Enhancement will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage.
If Enhancement is provided with respect to a Series, or the related Mortgage
Assets, the related Prospectus Supplement will include a description of (a) the
amount payable under such Enhancement, (b) any conditions to payment thereunder
not otherwise described herein, (c) the conditions (if any) under which the
amount payable under such Enhancement may be reduced and under which such
Enhancement may be terminated or replaced and (d) the material provisions of any
agreement relating to such Enhancement. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the issuer of any
third-party Enhancement, including (i) a brief description of its principal
business activities, (ii) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (iii) if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its business and (iv) its
total assets, and its stockholders' or policyholders' surplus, if applicable, as
of the date specified in the Prospectus Supplement.
SUBORDINATE SECURITIES
If so specified in the related Prospectus Supplement, one or more Classes of
a Series may be Subordinate Securities. If so specified in the related
Prospectus Supplement, the rights of the Holders of Subordinate Securities to
receive distributions of principal and interest from the Collection Account on
any Payment Date or Distribution Date will be subordinated to such rights of the
Holders of Senior Securities to the extent specified in the related Prospectus
Supplement. Unless otherwise provided in the Prospectus Supplement, the amount
of subordination will decrease whenever amounts otherwise payable to the Holder
of Subordinate Securities are paid to the Holders of Senior Securities
(including amounts withdrawn from any related Reserve Fund and paid to the
Holders of Senior Securities), and will (unless otherwise specified in the
related Prospectus Supplement) increase whenever there is distributed to the
Holders of Subordinate Securities amounts in respect of which subordination
payments have previously been paid to the Holders of Senior Securities. Unless
otherwise specified in the related Prospectus Supplement, the related Series
Supplement may require a trustee that is not the Trustee to be appointed to act
on behalf of Holders of Subordinate Securities.
A Series may include one or more Classes of Subordinate Securities entitled
to receive cash flows remaining after distributions are made to all other
Classes designated as being senior thereto. Such right will effectively be
subordinate to the rights of other Holders of Senior Securities, but will be not
be limited to a specified dollar amount of subordination. If so specified in the
related Prospectus Supplement, the subordination of a Class may apply only in
the event of (or may be limited to) certain types of losses not covered by
Insurance Policies or other credit support, such as losses arising from damage
to property securing a Mortgage Loan not covered by standard hazard insurance
policies.
The related Prospectus Supplement will set forth information concerning the
amount of subordination of a Class or Classes of Subordinate Securities in a
Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
the manner of funding any related Reserve Fund and the conditions under which
amounts in any related Reserve Fund will be used to make distributions to
Holders of Senior Securities and/or to Holders of Subordinate Securities or be
released from the related Trust Estate or Trust Fund. If cash flows otherwise
distributable to holders of Subordinate Securities secured by a Mortgage Group
will be used as credit support for Senior Securities secured by another Mortgage
Group within the Trust Estate or Trust Fund, the related Prospectus Supplement
will specify the manner and conditions for applying such a cross-support
feature.
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CROSS-SUPPORT FEATURES
If the Mortgage Assets for a Series are divided into separate Mortgage
Groups, each securing a separate Class or Classes of a Series, credit support
may be provided by a cross-support feature which requires that distributions be
made on Senior Securities secured by one Mortgage Group prior to distributions
on Subordinate Securities secured by another Mortgage Group within the Trust
Estate or Trust Fund. The related Prospectus Supplement for a Series which
includes a cross-support feature will describe the manner and conditions for
applying such cross-support feature.
INSURANCE ON THE MORTGAGE LOANS
Credit support with respect to a Series may be provided by insurance
policies that include standard hazard insurance and may, if specified in the
related Prospectus Supplement, include FHA Insurance. See "DESCRIPTION OF
INSURANCE ON THE MORTGAGE LOANS."
LETTER OF CREDIT
The letter of credit, if any, with respect to a Series of Securities will be
issued by the bank or financial institution specified in the related Prospectus
Supplement (the "L/C Bank"). Under the letter of credit, the L/C Bank will be
obligated to honor drawings thereunder in an aggregate fixed dollar amount, net
of unreimbursed payments thereunder, equal to the percentage specified in the
related Prospectus Supplement of the aggregate principal balance of the Mortgage
Loans on the related Cut-Off Date or of one or more Classes of Securities (the
"L/C Percentage"). If so specified in the related Prospectus Supplement, the
letter of credit may permit drawings in the event of losses not covered by
insurance policies or other credit support, such as losses arising from damage
not covered by standard hazard insurance policies. The amount available under
the letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments thereunder. The obligations of the L/C Bank under the
letter of credit for each Series of Securities will expire at the earlier of the
date specified in the related Prospectus Supplement or the termination of the
Trust Estate or Trust Fund, as applicable. A copy of the letter of credit for a
Series, if any, will be filed with the Commission as an exhibit to a Current
Report on Form 8-K to be filed within 15 days of issuance of the Securities of
the related Series.
BOND GUARANTEE INSURANCE
Bond guarantee insurance, if any, with respect to a Series of Bonds will be
provided by one or more insurance companies. Such bond guarantee insurance will
guarantee, with respect to one or more Classes of Bonds of the related Series,
timely distributions of interest and full 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. If so specified in the
related Prospectus Supplement, the bond guarantee insurance will also guarantee
against any payment made to a Bondholder which is subsequently recovered as a
"voidable preference" payment under the Bankruptcy Code. A copy of the bond
guarantee insurance for a Series, if any, will be filed with the Commission as
an exhibit to a Current Report on Form 8-K to be filed with the Commission
within 15 days of issuance of the Bonds of the related Series.
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RESERVE FUNDS
One or more Reserve Funds may be established with respect to a Series, in
which cash, a letter of credit, Eligible Investments, a demand note or a
combination thereof, in the amounts, if any, so specified in the related
Prospectus Supplement will be deposited. The Reserve Funds for a Series may also
be funded over time by depositing therein a specified amount of the
distributions received on the related Mortgage Assets as specified in the
related Prospectus Supplement.
Amounts on deposit in any Reserve Fund for a Series, together with the
reinvestment income thereon, if any, will be applied by the Trustee for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. A Reserve Fund may be provided to increase the likelihood of timely
payments or distributions of principal of and interest on the Securities, if
required as a condition to the rating of such Series by each Rating Agency, or
to reduce the likelihood of special redemptions with respect to any Series. If
so specified in the related Prospectus Supplement, Reserve Funds may be
established to provide limited protection, in an amount satisfactory to each
Rating Agency, against certain types of losses not covered by Insurance Policies
or other credit support, such as losses arising from damage not covered by
standard hazard insurance policies. Following each Payment Date or Distribution
Date amounts in such 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 and will not be
available for further application by the Trustee.
Moneys deposited in any Reserve Funds will be invested in Eligible
Investments, except as otherwise specified in the related Prospectus Supplement.
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 the Master Servicer or a Servicer as additional servicing
compensation. See "SERVICING OF MORTGAGE LOANS". The Reserve Fund, if any, for a
Series will not be a part of the Trust Estate or Trust Fund, as applicable,
unless otherwise specified in the related Prospectus Supplement.
Additional information concerning any Reserve Fund will be set forth in the
related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make payments or distributions to Bondholders or Certificateholders and use of
investment earnings from the Reserve Fund, if any.
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS
The following descriptions of standard hazard insurance policies and FHA
insurance and the respective coverages thereunder are general descriptions only
and do not purport to be complete.
GENERAL
Each Mortgaged Property will be covered by a standard hazard insurance
policy, as described in the related Prospectus Supplement. The coverage under
standard hazard insurance policies will be subject to conditions and limitations
described in the Prospectus Supplement and under "Hazard Insurance on the
Mortgage Loans" below. Certain hazard risks will, therefore, not be insured and
the occurrence of such hazards could adversely affect payments or distributions
to Holders. Additionally, to the extent that losses on a defaulted or foreclosed
Mortgage Loan are not covered by other credit support for such Series, such
losses, if any, would affect payments or distributions to Holders.
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HAZARD INSURANCE ON THE MORTGAGE LOANS
The standard hazard insurance policies will provide for coverage at least
equal to the applicable state standard form of fire insurance policy with
extended coverage. In general, the standard form of fire and extended coverage
policy will cover physical damage to or destruction of, the improvements on the
Mortgaged Property caused by fire, lightning, explosion, smoke, windstorm, hail,
riot, strike and civil commotion, subject to the conditions and exclusions
particularized in each policy. Because the standard hazard insurance policies
relating to the Mortgage Loans will be underwritten by different insurers and
will cover Mortgaged Properties located in various states, such policies will
not contain identical terms and conditions. The basic terms, however, generally
will be determined by state law and generally will be similar. Most such
policies typically will not cover any physical damage resulting from war,
revolution, governmental actions, floods and other water-related causes, earth
movement (including earthquake, landslides, and mudflows), nuclear reaction, wet
or dry rot, vermin, rodents, insects or domestic animals, theft and, in certain
cases, vandalism. The foregoing list is merely indicative of certain kinds of
uninsured risks and is not intended to be all-inclusive. Uninsured risks not
covered by a special hazard insurance policy or other form of credit support may
adversely affect the ability of the Issuer to make payments of principal or
interest on the Bonds. When a Mortgaged Property is located in a flood area
identified in the Federal Register by the Flood Emergency Management Agency, the
Master Servicer or the Servicer will be required to cause flood insurance to be
maintained with respect to such Mortgaged Property.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which will
require the insured at all times to carry hazard insurance of a specified
percentage (generally 80% to 90%) of the actual cash value of the improvements
on the Mortgaged Property in order to recover the full amount of any partial
loss. If the insured's coverage falls below this specified percentage, such
clause will provide that the hazard insurer's liability in the event of partial
loss will not exceed the greater of (i) the actual cash value (the replacement
cost less physical depreciation) of the improvements damaged or destroyed or
(ii) such proportion of the loss as the amount of insurance carried bears to the
specified percentage of the actual cash value of such improvements.
In the event of partial loss, hazard insurance proceeds may be insufficient
to restore fully the damaged property. Under the terms of the Mortgage Loans,
Mortgagors are required to present claims to insurers under hazard insurance
policies maintained on the Mortgaged Properties. The Primary Servicer, on behalf
of the Trustee, Bondholders, and Certificateholders, is obligated to present or
cause to be presented claims under any blanket insurance policy insuring against
hazard losses on Mortgaged Properties; however, the ability of the Primary
Servicer to present or cause to be presented such claims is dependent upon the
extent to which information in this regard is furnished to the Primary Servicer
by Mortgagors.
FHA INSURANCE
The FHA is responsible for administering various federal programs, including
mortgage insurance, authorized under the Housing Act, as amended, and the United
States Housing Act of 1937, as amended. To the extent specified in the related
Prospectus Supplement, all or a portion of the Mortgage Loans may be insured by
the FHA. The Primary Servicer will be required to take such steps as are
reasonably necessary to keep such insurance in full force and effect.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because such legal aspects are
governed by applicable state law (which laws may differ substantially), the
summaries do not purport to be complete nor to reflect the laws of any
particular state, nor to encompass the laws of all states in which the Mortgaged
Properties are situated. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the Mortgage Loans.
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MORTGAGES
Each Mortgage Loan will be secured by a mortgage, a 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. The filing of a mortgage, deed
of trust or deed to secure debt creates a lien upon, or grants a title interest
in, the real property covered by such instrument and represents the security for
the repayment of an obligation that is customarily evidenced by a promissory
note. The lien of the mortgage is generally subordinate to the lien for real
estate taxes and assessments or other charges imposed under governmental police
powers. The priority of the lien with respect to such mortgage depends on its
terms, the knowledge of the parties to the mortgage and generally on the order
of recording the mortgage with the applicable public recording office.
There are two parties to a mortgage: the mortgagor, who is the owner of the
property and usually the borrower, and the mortgagee, who is the lender. In the
case where the borrower is a land trust, there are three parties because title
to the property is held by a land trustee under a land trust agreement of which
the borrower is the beneficiary at origination of a mortgage loan involving a
land trust, the borrower executes a separate undertaking to make payments on the
mortgage note. A deed of trust has three parties: the owner of the property and
usually the borrower, called the trustor (similar to a mortgagor), a lender,
called the beneficiary (similar to the mortgagee), and a third-party grantee,
called the trustee. Under a deed of trust, the borrower grants the property,
irrevocably until the debt is paid, in trust, generally with a power of sale, to
the trustee to secure payment of the mortgage loan. The trustee's authority
under a deed of trust and the mortgagee's authority under a mortgage are
governed by the express provisions of the deed of trust or mortgage, the law of
the state in which the related Mortgaged Property is located and, in some cases,
in deed of trust transactions, the directions of the beneficiary. Some states
use a security deed or deed to secure debt which is similar to a deed of trust
except it has only two parties: a grantor (similar to a mortgagor) and a grantee
(similar to a mortgagee).
INTEREST IN REAL PROPERTY
The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, such an instrument may encumber other interests in real property such
as a tenant's interest in a lease of land or improvements, or both, and the
leasehold estate created by such lease. An instrument covering an interest in
real property other than the fee estate requires special provisions in the
instrument creating such interest or in the mortgage, deed of trust, security
deed or deed to secure debt, to protect the mortgagee against termination of
such interest before the mortgage, deed of trust, security deed or deed to
secure debt is paid. Unless otherwise specified in the Prospectus Supplement,
the Depositor or the Asset Seller will make certain representations and
warranties in the Agreement with respect to the Mortgage Loans which are secured
by an interest in a leasehold estate. Such representation and warranties will be
set forth in the Prospectus Supplement if applicable.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGES OR BENEFICIARIES
If specified in the applicable Prospectus Supplement, some of the Mortgage
Loans included in the Mortgage Pool will be secured by junior mortgages or deeds
of trust which are subordinate to senior mortgages or deeds of trust held by
other lenders or institutional investors. The rights of the Trust Fund (and
therefore the Certificateholders), as beneficiary under a junior deed of trust
or as mortgagee under a junior mortgage, are subordinate to those of the
mortgagee or beneficiary under the senior mortgage or deed of trust, including
the prior rights of the senior mortgagee or beneficiary to receive rents, hazard
insurance and condemnation proceeds and to cause the property securing the
Mortgage Loan to be sold upon default of the mortgagor or trustor, thereby
extinguishing the junior mortgagee's or junior beneficiary's lien unless the
Special Servicer asserts its subordinate interest in a property in foreclosure
litigation or satisfies the defaulted senior loan. Accordingly, the Trust Fund
(and therefore the Certificateholders), as the holder of the junior lien, bear
(i) the risk of delay in distributions while a deficiency judgement against
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the borrower is obtained and (ii) the risk of loss if the deficiency judgement
is not realized upon. Moreover, deficiency judgements may not be available in
certain jurisdictions or the Mortgage Loan may be nonrecourse. As discussed more
fully below, in many states a junior mortgagee or beneficiary may satisfy a
defaulted senior loan in full, or may cure such default and bring the senior
loan current, in either event adding the amounts expended to the balance due on
the junior loan. Absent a provision in the senior mortgage, no notice of default
is required to be given to the junior mortgagee.
The form of the mortgage or deed of trust used by many institutional lenders
confers on the mortgagee or beneficiary the right both to receive all proceeds
collected under any hazard insurance policy and all awards made in connection
with any condemnation proceedings, and to apply such proceeds and awards to any
indebtedness secured by the mortgage or deed of trust, in such order as the
mortgage or beneficiary may determine. Thus, in the event improvements on the
property are damaged or destroyed by fire or other casualty, or in the event the
property is taken by condemnation, the mortgagee or beneficiary under the senior
mortgage or deed of trust will have the prior right to collect any insurance
proceeds payable under a hazard insurance policy and any award of damages in
connection with the condemnation and to apply the same to the indebtedness
secured by the senior mortgage or deed of trust. Proceeds in excess of the
amount of senior mortgage indebtedness will, in most cases, by applied to the
indebtedness of a junior mortgage or trust deed. The laws of certain states may
limit the ability of mortgagees or beneficiaries to apply the proceeds of hazard
insurance and partial condemnation awards to the secured indebtedness. In such
states, the mortgagor or trustor must be allowed to use the proceeds of hazard
insurance to repair the damage unless the security of the mortgagee or
beneficiary has been impaired. Similarly, in certain states, the mortgagee or
beneficiary is entitled to the award for a partial condemnation of the real
property security only to the extent that its security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a "future advance" clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust.
While such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or "optional" advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other liens. Priority of advances under a
"future advance" clause rests, in many other states, on state law giving
priority to all advances made under the loan agreement up to a "credit limit"
amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage or deed of
trust used by many institutional lenders obligates the mortgagor or trustor to
pay before delinquency all taxes and assessments on the property and, when due,
all encumbrances, charges and liens on the property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee or beneficiary under the
mortgage or deed of trust. Upon a failure of the mortgagor or trustor to perform
any of these obligations, the mortgagee or beneficiary is given the right under
the mortgage or deed of trust to perform the obligation itself, at its election,
with the mortgagor or trustor agreeing to reimburse the mortgagee or beneficiary
for any sums expended by the mortgagee or beneficiary on behalf of the trustor.
All sums so expended by the mortgagee or beneficiary become part of the
indebtedness secured by the mortgage or deed of trust.
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The form of mortgage or deed of trust used by many institutional lenders
typically requires the mortgagor or trustor to obtain the consent of the
mortgagee or beneficiary in respect of actions affecting the mortgaged property,
including, without limitation, leasing activities (including new leases and
termination or modification of existing leases), alterations and improvements to
buildings forming a part of the mortgaged property and management and leasing
agreements for the mortgaged property. Tenants will often refuse to execute a
lease unless the mortgagee or beneficiary executes a written agreement with the
tenant not to disturb the tenant's possession of its premises in the event of a
foreclosure. A senior mortgagee or beneficiary may refuse to consent to matters
approved by a junior mortgagee or beneficiary with the result that the value of
the security for the junior mortgage or deed of trust is diminished. For
example, a senior mortgagee or beneficiary may decide not to approve a lease or
to refuse to grant a tenant a non-disturbance agreement. If, as a result, the
lease is not executed, the value of the mortgaged property may be diminished.
FORECLOSURE OF MORTGAGE
In states permitting nonjudicial foreclosure proceedings, foreclosure of a
deed of trust or deed to secure debt is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust which authorizes
the trustee to sell the property upon any default by the borrower under the
terms of the note or deed of trust or deed to secure debt. In some states, prior
to such sale, the trustee must record a notice of default and send a copy to the
borrower-trustor and to any person who has recorded a request for a copy of a
notice of default and notice of sale. In addition, the trustee in some states
must provide notice of any other individual having an interest in the real
property, including any junior lienholders. In some states there is a
reinstatement period. The trustor, borrower, or any person having a junior
encumbrance on the real estate may, during a reinstatement period, cure the
default by paying the entire amount in arrears plus the costs and expenses
incurred in enforcing the obligation. In other states, after acceleration of the
debt, the borrower is not provided with 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 controls the amount of foreclosure expenses and costs,
including attorneys' fees, which may be recovered by a lender. If the deed of
trust is not reinstated, a notice of sale must be posted in a public place and,
in most states, published for a specified period of time in one or more
newspapers. In addition, some state laws require that a copy of the notice of
sale be posted on the property, recorded and sent to all parties having an
interest in the real property. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
An action to foreclose a mortgage is an action to recover the mortgage debt
by enforcing the mortgagee's rights under the mortgage. It is regulated by
statutes and rules and subject throughout to the court's equitable powers.
Generally, a borrower is bound by the terms of the mortgage note and the
mortgage and cannot be relieved from his default if the mortgagee has exercised
his rights in a commercially reasonable manner. However, since a foreclosure
action historically was equitable in nature, the court may exercise equitable
powers to relieve a mortgagor of a default and deny the mortgagee foreclosure on
proof that either the mortgagor's default was neither willful nor in bad faith
or the mortgagee's action established a waiver, fraud, bad faith, or oppressive
or unconscionable conduct such as to warrant a court of equity refusing
affirmative relief to the mortgagee. Under certain circumstances, a court of
equity may relieve the borrower from an entirely technical default where such
default was not willful.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses or counterclaims are interposed, sometimes requiring up to
several years to complete. Moreover, a non-collusive, regularly conducted
foreclosure sale may be challenged as a fraudulent conveyance, regardless of the
parties' intent, if a court determines that the sale was for less than fair
consideration and such sale occurred while the mortgagor was insolvent and
within the state statute of limitations (which is tolled by the filing of a
bankruptcy case). Similarly, in some states, a suit against the debtor on the
mortgage note
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may take several years and, generally, is a remedy alternative to foreclosure,
the mortgagee being precluded from pursuing both at the same time.
In case of foreclosure under either a mortgage or a deed of trust, the sale
by the referee or other designated officer or by the trustee is a public sale.
However, because of the difficulty potential third-party purchasers at the sale
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
uncommon for a third party to purchase the property at a foreclosure sale.
Rather, it is common for the lender to purchase the property from the trustee or
referee for an amount which may be equal to the principal amount of the mortgage
or deed of trust plus accrued and unpaid interest and the expenses of
foreclosure, in which event the borrower's debt will be extinguished or the
lender may purchase for a lesser amount in order to preserve its right against a
borrower to seek a deficiency judgment in states where such a judgment is
available. Thereafter, and subject in some states to the right of the borrower
to stay in possession during a redemption period, the lender will assume the
burdens of ownership, including obtaining casualty insurance, paying taxes and
making such repairs at its own expense as are necessary to render the property
suitable for sale. The lender will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale of
the property may not equal the lender's investment in the property. Moreover, a
lender typically incurs substantial legal fees and court costs in acquiring a
mortgaged property through contested foreclosure. Furthermore, certain states
require that any environmental hazards be eliminated before a property may be
resold. In addition, a lender may be responsible under federal or state law for
the cost of cleaning up a mortgaged property that is environmentally
contaminated. As a result, a lender could realize an overall loss on a mortgage
loan even if the related 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 mortgage loan, plus accrued interest. Any
loss may be reduced by the receipt of any mortgage guaranty insurance proceeds.
The holder of a junior mortgage that forecloses on any 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.
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders, the Master Servicer or any related Sub-servicer or the
Special Servicer, on behalf of such holders, will be required to sell the
Mortgaged Property prior to the close of the third calendar year following the
year of acquisition of such Mortgaged Property by the Trust Fund, unless (i) the
Internal Revenue Service grants an extension of time to sell such property (an
"REO Extension") or (ii) it obtains an opinion of counsel generally to the
effect that the holding of the property for more than two years after its
acquisition will not result in the imposition of a tax on the Trust Fund or
cause any REMIC created pursuant to the Pooling and Servicing Agreement to fail
to qualify as a REMIC under the Code. Subject to the foregoing, the Master
Servicer or any related Sub-servicer or the Special Servicer will generally be
required to solicit bids for any Mortgaged Property so acquired in such a manner
as will be reasonably likely to realize a fair price for such property. The
Master Servicer or any related Sub-servicer or the Special Servicer may retain
an independent contractor to operate and manage any REO Property; however, the
retention of an independent contractor will not relieve the Master Servicer or
any related Sub-servicer or the Special Servicer of its obligations with respect
to such REO Property.
In general, the Master Servicer or any related Sub-servicer or the Special
Servicer or an independent contractor employed by the Master Servicer or any
related Sub-servicer or the Special Servicer at the expense of the Trust Fund
will be obligated to operate and manage any Mortgaged Property acquired as REO
Property in a manner that (i) would cause such property to be treated as
"foreclosure property" by any REMIC in which such REO Property is held and (ii)
would, to the extent commercially reasonable and
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consistent with clause (i), maximize the Trust Fund's net after-tax proceeds
from such property. After the Master Servicer or any related Sub-servicer or 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 the income it is anticipated that the Trust Fund would derive from
such property, the Master Servicer or any related Sub-servicer or the Special
Servicer could determine (particularly in the case of an REO Property that is a
hospitality property or residential health care facility) that it would not be
commercially feasible to manage and operate such property in a manner that would
avoid the imposition of a tax on "net income from foreclosure property," within
the meaning of Section 857(b)(4)(B) of the Code (an "REO 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 tax advisors
regarding the possible imposition of REO Taxes in connection with the operation
of commercial REO Properties by REMICs.
LEASEHOLD RISKS
Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the mortgagor. The most significant of these risks
is that the ground lease creating the leasehold estate could terminate, leaving
the leasehold mortgagee without its security. The ground lease may terminate if,
among other reasons, the ground lessee breaches or defaults in is obligations
under the ground lease or there is a bankruptcy of the ground lessee or the
ground lessor. This risk may be minimized if the ground lease contains certain
provisions protective of the mortgagee, but the ground leases that secure
Mortgage Loans may not contain some of these protective provisions, and
mortgages may not contain the other protections discussed in the next paragraph.
Protective ground lease provisions include the right of the leasehold mortgagee
to receive notices from the ground lessor of any defaults by the mortgagor; the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the leasehold mortgagee, the right to acquire the
leasehold estate through foreclosure or otherwise; the ability of the ground
lease to be assigned to and by the leasehold mortgagee or purchaser at a
foreclosure sale and for the concomitant release of the ground lessee's
liabilities thereunder; and the right of the leasehold mortgagee to enter into a
new ground lease with the ground lessor on the same terms and conditions as the
old ground lease in the event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may require
that the ground lease or leasehold mortgage prohibit the ground lessee from
treating the ground lease as terminated in the event of the ground lessor's
bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor. As further protection, a leasehold mortgage may provide
for the assignment of the debtor-ground lessee's right to reject a lease
pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as amended (Title
11 of the United States Code), although the enforceability of such clause has
not been established. Without the protections described above, a leasehold
mortgagee may lose the collateral securing its leasehold mortgage. In addition,
terms and conditions of a leasehold mortgage are subject to the terms and
conditions of the ground lease. Although certain rights given to a ground lessee
can be limited by the terms of a leasehold mortgage, the rights of a ground
lessee or a leasehold mortgagee with respect to, among other things, insurance,
casualty and condemnation will be governed by the provisions of the ground
lease.
RIGHTS OF REDEMPTION
In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the trustor or borrower and foreclosed junior lienors are given a
statutory period in which to redeem the property from the foreclosure sale. The
right of redemption should be distinguished from the equity of redemption, which
is a nonstatutory right that must be exercised prior to the foreclosure sale. In
some states, redemption may
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occur only upon payment of the foreclosure sales price and expenses of
foreclosure. In other states, redemption may be authorized 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. The right of redemption would defeat the title of any purchaser from
the lender subsequent to foreclosure or sale under a deed of trust.
Consequently, the practical effect of a right of redemption is to force the
lender to retain the property and pay expenses of ownership until the redemption
period has run. In some states, there is no right to redeem property after a
trustee's sale under a deed of trust.
Under the REMIC Provisions currently in effect, property acquired by
foreclosure generally must not be held beyond the end of the third taxable year
following the year of acquisition. Unless otherwise provided in the related
Prospectus Supplement, with respect to a series of Certificates for which an
election is made to qualify the Trust Fund or a part thereof as a REMIC, the
Agreement will permit foreclosed property to be held for more than two years if
the Internal Revenue Service grants an extension of time within which to sell
such property or independent counsel renders an opinion to the effect that
holding such property for such additional period is permissible under the REMIC
Provisions.
ENVIRONMENTAL MATTERS
Real property pledged as security to a lender may be subject to
environmental risks. For example, certain environmental liabilities may (1)
cause a diminution in the value of the Mortgaged Property; (2) limit the
lender's foreclosure rights; and (3) subject the lender to liability for
clean-up costs or other remedial actions. Under the laws of many states,
contamination of a property may give rise to a lien on the property to assure
the costs of clean-up. In several states, such a lien has priority over the lien
of an existing mortgage against such property.
The presence of hazardous or toxic substances, or the failure to remediate
such property properly, may adversely affect the market value of the property,
as well as the owner's ability to sell or use the real estate or to borrow using
the real estate as collateral. In addition, certain environmental laws and
common law principles govern the responsibility for the removal, encapsulation
or disturbance of asbestos containing materials ("ACMs") when these ACMs are in
poor condition or when a property with ACMs is undergoing repair, renovation or
demolition. Such laws could also be used to impose liability upon owners and
operators of real properties for release of ACMs into the air that cause
personal injury or other damage. In addition to cleanup and natural resource
damages actions brought by federal, state, and local agencies and private
parties, the presence of hazardous substances on a property may lead to claims
of personal injury, property damage, or other claims by private plaintiffs.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), and under the laws of certain
states, a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a Mortgaged Property may
become liable in some circumstances either to the government or to private
parties for cleanup costs, even if the lender does not cause or contribute to
the contamination. Liability under some federal or state statutes may not be
limited to the original or unamortized principal balance of a loan or to the
value of the property securing a loan. CERCLA imposes strict, as well as joint
and several, liability on several classes of potentially responsible parties,
including current owners and operators of the property, regardless of whether
they caused or contributed to the contamination. Many states have laws similar
to CERCLA.
Lenders may be held liable under CERCLA as owners or operators. 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 exemption for holders
of a security interest such as a secured lender applies only in circumstances
where the lender acts to protect its security interest in the contaminated
facility or property. Thus, if a lender's activities encroach on the actual
management of such facility or property, the lender faces potential liability as
an "owner or operator" under CERCLA. Similarly, when a lender forecloses and
takes title to a contaminated facility or
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property (whether it holds the facility or property as an investment or leases
it to a third party), the lender may incur potential CERCLA liability.
Whether actions taken by a lender would constitute such an encroachment on
the actual management of a facility or property, so as to render the secured
creditor exemption unavailable to the lender has been a matter of judicial
interpretation of the statutory language, and court decisions have historically
been inconsistent.
This ambiguity appears to have been resolved by the enactment of the Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996 (the
"Asset Conservation Act"), signed into law by President Clinton on September 30,
1996, which lists permissible actions that may be undertaken by a lender holding
security in a contaminated facility without exceeding the bounds of the secured
creditor exemption, subject to certain conditions and limitations. The Asset
Conservation Act provides that in order to be deemed to have participated in the
management of a secured property, a lender must actually participate in the
operational affairs of the property or the borrower. The Asset Conservation 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. In addition to
its application to CERCLA, the Asset Conservation Act applies to determining a
lender's liability as an owner or operator of a petroleum or hazardous substance
underground storage tank ("UST") under the federal Resource Conservation and
Recovery Act ("RCRA").
The secured creditor exemption does not protect a lender from liability
under CERCLA in cases, among others, where the lender arranges for disposal of
hazardous substances or for transportation of hazardous substances. In addition,
the secured creditor exemption does not govern liability for cleanup costs under
federal laws other than CERCLA or the petroleum and hazardous substance UST
provisions of RCRA. For example, under other provisions of RCRA, a past or
present owner or operator of a facility may be ordered to conduct environmental
property remediation in a proceeding brought by the government or by private
citizens. In addition, many states have statutes similar to CERCLA, and not all
those statutes provide for a secured creditor exemption.
In a few states, transfer of some types of properties is conditioned upon
clean up 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 cleanup 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 uninsurable liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental hazard, but that
person or entity may be bankrupt or otherwise judgment proof. It is possible
that cleanup costs could become a liability of the Trust Fund and occasion a
loss to Certificateholders in certain circumstances described above if such
remedial costs were incurred.
Except as otherwise specified in the applicable Prospectus Supplement, at
the time the Mortgage Loans were originated, it is possible that no
environmental assessment or a very limited environmental assessment of the
Mortgaged Properties was conducted.
Unless otherwise specified in the related Prospectus Supplement, the
Servicing Agreement, Master Servicing Agreement or Special Servicing Agreement,
as applicable, provides that the Servicer, the Master Servicer or the Special
Servicer, as applicable, acting on behalf of the Trust Estate or Trust Fund, as
applicable, may not acquire title to a Mortgaged Property underlying a Mortgage
Loan or take over its
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operation unless the Servicer, the Master Servicer or the Special Servicer, as
applicable, has previously determined, based upon a report prepared by a person
who regularly conducts environmental audits, that (i) the Mortgaged Property is
in compliance with applicable environmental laws and regulations or, if not,
that taking such actions as are necessary to bring the Mortgaged Property in
compliance therewith is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions and (ii) there are no
circumstances or conditions present that have resulted in any contamination or
if such circumstances or conditions are present for which any action could be
required, taking such actions with respect to the affected Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis than
not taking such actions.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties are 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 limited alternative
uses for such Mortgaged Property, result in a failure to realize the full
principal amount of the Mortgage Loans.
For instance, Mortgaged Properties which are hospitals, nursing homes or
convalescent homes may present special risks in large part due to significant
governmental regulation of the operation, maintenance, control and financing of
health care institutions. Mortgaged Properties which are hotels or motels may
present additional risk in that: (i) hotels and motels are typically operated
pursuant to franchise, management and operating agreements which may be
terminable by the operator, and (ii) the transferability of the hotel's
operating, liquor and other licenses to the entity acquiring the hotel either
through purchase or foreclosure is subject to the vagaries of local law
requirements.
LEASES AND RENTS
Multifamily and commercial mortgage loan transactions often provide for an
assignment of the leases and rents pursuant to which the borrower typically
assigns its right, title and interest, as landlord under each lease and the
income derived therefrom, to the lender while either obtaining a license to
collect rents for so long as there is no default or providing for the direct
payment to the lender. The manner of perfecting the mortgagee's interest in
rents may depend on whether the mortgagor's assignment was absolute or one
granted as security for the loan. Failure to properly perfect the mortgagee's
interest in rents may result in the loss of substantial pool of funds, which
could otherwise serve as a source of repayment for such loan. If the mortgagor
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 revenues are considered accounts
receivable under the UCC; generally these revenues are either assigned by the
mortgagor, which remains entitled to collect such revenues absent a default, or
pledged by the mortgagor, as security for the loan. In general, the lender must
file financing statements in order to perfect its security interest in the
revenues and must file continuation statements, generally every five years, to
maintain perfection of such security interest. Even if the lender's security
interest in room revenues is perfected under the UCC, the lender will generally
be required to commence a foreclosure or otherwise take possession of the
property in order to collect the room revenues after a default.
PERSONALTY
Certain types of Mortgaged Properties, such as hotels, motels and industrial
plants, are likely to derive a significant part of their value from personal
property which does not constitute "fixtures" under applicable state real
property law and, hence, would not be subject to the lien of a mortgage. Such
property is generally pledged or assigned as security to the lender under the
UCC. In order to perfect its security interest therein, the lender generally
must file UCC financing statements and, to maintain perfection of such security
interest, file continuation statements generally every five years.
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ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS
Certain states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, statutes limit the right of the beneficiary or mortgagee to obtain a
deficiency judgment against the borrower following foreclosure or sale under a
deed of trust. A deficiency judgment is a personal judgment against the former
borrower equal in most cases to the difference between the amount due to the
lender and the net amount realized upon the foreclosure sale. Other statutes may
require the beneficiary or mortgagee to exhaust the security afforded under a
deed of trust or mortgage by foreclosure in an attempt to satisfy the full debt
before bringing a personal action against the borrower. In certain other states,
the lender has the option of bringing a personal action against the borrower on
the debt without first exhausting such security; however, in some of these
states, the lender, following judgment on such personal action, may be deemed to
have elected a remedy and may be precluded from exercising remedies with respect
to the security. Consequently, the practical effect of the election requirement,
when applicable, is that lenders will usually proceed first against the security
rather than bringing personal action against the borrower. Finally, other
statutory provisions may limit any deficiency judgment against the former
borrower following a foreclosure sale to the excess of the outstanding debt over
the fair market value of the property at the time of such sale. The purpose of
these statutes is to prevent a beneficiary or a mortgagee from obtaining a large
deficiency judgment against the former borrower as a result of low or no bids at
the judicial sale. In some states, exceptions to the anti-deficiency statutes
are provided for in certain instances where the value of the lender's security
has been impaired by acts or omissions of the borrower, for example, in the
event of waste of the property.
In addition, substantive requirements are imposed upon lenders in connection
with the origination and the servicing of mortgage loans by numerous federal and
some state consumer protection laws. The laws include the federal
Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal Credit
Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and related
statutes and regulations. These federal laws impose specific statutory
liabilities upon lenders who originate loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of the
loans.
FEDERAL BANKRUPTCY AND OTHER LAWS AFFECTING CREDITORS' RIGHTS
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including the federal bankruptcy laws (the
"Bankruptcy Code") and state laws affording relief to debtors, may interfere
with or affect the ability of the secured lender to realize upon collateral
and/or enforce a deficiency judgment. For example, with respect to federal
bankruptcy law, the filing of a bankruptcy petition acts as a stay of the
enforcement of remedies (including the right of foreclosure) for collection of a
debt. Also, the filing of a petition in bankruptcy by or on behalf of a junior
lienor may stay a senior lender from taking action to foreclose the junior lien.
In a Chapter 11 case under the Bankruptcy Code, the lender's lien may be
transferred to other collateral and/or be limited in amount to the value of the
lender's interest in the collateral as of the date of the bankruptcy. The loan
term may be extended, the interest rate may be adjusted to market rates and the
priority of the loan may be subordinated to bankruptcy court-approved financing.
The bankruptcy court can also reinstate accelerated indebtedness and, in effect,
invalidate due-on-sale clauses through confirmed Chapter 11 plans of
reorganization. Under Section 363(b) and (f) of the Bankruptcy Code, a trustee
for a debtor, or a debtor as debtor-in-possession, may, despite the provisions
of the related Mortgage Loan to the contrary, sell its Mortgaged Property free
and clear of all liens, which liens would then attach to the proceeds of such
sale.
The Bankruptcy Code has recently been amended to provide that a lender's
perfected pre-petition security interest in leases, rents and hotel revenues
continues in the post-petition leases, rents and hotel revenues, unless a
bankruptcy court orders to the contrary "based on the equities of the case."
Thus, unless a court orders otherwise, revenues from a Mortgaged Property
generated after the date the bankruptcy petition is filed will constitute "cash
collateral" under the Bankruptcy Code. Debtors may only use cash
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collateral upon obtaining the lender's consent or a prior court order finding
that the lender's interest in the Mortgaged Properties and the cash collateral
is "adequately protected" as such term has been interpreted under the Bankruptcy
Code. It should be noted, however, that, in the case of hospitality properties,
the court may find that the lender has no security interest in either
pre-petition or post-petition revenues if the court finds that the loan
documents do not contain language covering accounts, room rents, or other forms
of personalty necessary for a security interest to attach to hotel revenues.
Lessee bankruptcies at the Mortgaged Properties could have an adverse impact
on the Mortgagors' ability to meet their obligations. For example, Section
365(e) of the Bankruptcy Code provides generally that rights and obligations
under an unexpired lease may not be terminated or modified at any time after the
commencement of a case under the Bankruptcy Code solely because of a provision
in the lease conditioned upon the commencement of a case under the Bankruptcy
Code or certain other similar events. In addition, Section 362 of the Bankruptcy
Code operates as an automatic stay of, among other things, any act to obtain
possession of property of or from a debtor's estate, which may delay the
Trustee's exercise of remedies in the event that a lessee becomes the subject of
a proceeding under the Bankruptcy Code.
Section 365(a) of the Bankruptcy Code generally provides that a trustee or a
debtor-in-possession in a case under the Bankruptcy Code has the power to assume
or to reject an executory contract or an unexpired lease of the debtor, in each
case subject to the approval of the bankruptcy court administering such case. If
the trustee or debtor-in-possession rejects an executory contract or an
unexpired lease, such rejection generally constitutes a breach of the executory
contract or unexpired lease immediately before the date of the filing of the
bankruptcy petition. As a consequence, the other party or parties to such
executory contract or unexpired lease, such as the Mortgagor as lessor under a
lease, would have only an unsecured claim against the debtor for damages
resulting from such breach, which could adversely affect the security for the
related Mortgage Loan. Moreover, under Section 502(b)(6) of the Bankruptcy Code,
the claim of a lessor for such damages from the termination of a lease of real
property will be limited to the sum of (i) the rent reserved by such lease,
without acceleration, for the greater of one year or 15 percent, not to exceed
three years, of the remaining term of such lease, following the earlier of the
date of the filing of the petition and the date on which such lender
repossessed, or the lessee surrendered, the leased property, and (ii) any unpaid
rent due under such lease, without acceleration, on the earlier of such dates.
Under Section 365(f) of the Bankruptcy Code, if a trustee or
debtor-in-possession assumes an executory contract or an unexpired lease of the
debtor, the trustee or debtor-in-possession generally may assign such executory
contract or unexpired lease, notwithstanding any provision therein or in
applicable law that prohibits, restricts or conditions such assignment, provided
that "adequate assurance of future performance" by the assignee is provided to
the lessor or contract party. The Bankruptcy Code specifically provides,
however, that adequate assurance of future performance for purposes of a lease
of real property in a shopping center includes adequate assurance of the source
of rent and other consideration due under such lease, and in the case of an
assignment, that the financial condition and operating performance of the
proposed assignee and its guarantors, if any, shall be similar to the financial
condition and operating performance of the debtor and its guarantors, if any, as
of the time the debtor became the lessee under the lease, that any percentage
rent due under such lease will not decline substantially, that the assumption
and assignment of the lease is subject to all the provisions thereof, including
(but not limited to) provisions such as a radius location, use or exclusivity
provision, and that the assignment will not breach any such provision contained
in any other lease, financing agreement, or master agreement relating to such
shopping center, and that the assumption or assignment of such lease will not
disrupt the tenant mix or balance in such shopping center. Thus, an undetermined
third party may assume the obligations of the lessee under a lease in the event
of commencement of a proceeding under the Bankruptcy Code with respect to the
lessee.
Under Section 365(h) of the Bankruptcy Code, if a trustee for a debtor, or a
debtor as a debtor-in-possession, rejects an unexpired lease of real property as
to which it is the lessor, the lessee may treat such lease as terminated by such
rejection or, in the alternative, may remain in possession of the leasehold for
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the balance of such term and for any renewal or extension of such term that is
enforceable by the lessee under applicable nonbankruptcy law. The Bankruptcy
Code provides that if a lessee elects to remain in possession after such a
rejection of a lease, the lessee may offset against rents reserved under the
lease for the balance of the term after the date of rejection of the lease, and
any such renewal or extension thereof, any damages occurring after such date
caused by the nonperformance of any obligation of the lessor under the lease
after such date.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer of any payments made by a mortgagor under
the related Mortgage Loan to the Trust Fund. Such payments may be protected from
recovery as preferences if they are payments in the ordinary course of business
made according to ordinary business terms on debts incurred in the ordinary
course of business. Whether any particular payment would be protected depends
upon the facts specific to the particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its costs
and expenses in preserving or selling mortgaged property ahead of payment to the
lender. In certain circumstances, a debtor in bankruptcy may have the power to
grant liens senior to the lien of a mortgage, and analogous state statutes and
general principles of equity may also provide a mortgagor with the ability to
halt a foreclosure proceeding or sale and to force a restructuring of a mortgage
loan on terms a lender would not otherwise accept. Moreover, the laws of certain
states also give priority to certain tax liens over the lien of a mortgage or
deed of trust. Under the Bankruptcy Code, if the court finds that actions of the
mortgagee have been unreasonable, the lien of the related mortgage and the claim
of the mortgagee may be subordinated to the claims of unsecured creditors.
DUE ON-SALE CLAUSES IN MORTGAGE LOANS
A note, mortgage or deed of trust relating to the Mortgage Loans generally
contains a "due-on-sale" clause permitting acceleration of the maturity of a
loan if the borrower transfers its interest in the property. In recent years,
court decisions and legislative actions placed substantial restrictions on the
right of lenders to enforce such clauses in many states. By virtue, however, of
the Garn St. Germain Depository Institutions Act of 1982 (the "Garn Act")
effective October 15, 1982 (which purports to preempt state laws which prohibit
the enforcement of due-on-sale clauses by providing among other matters, that
"due-on-sale" clauses in certain loans made after the effective date of the Garn
Act are enforceable, within certain limitations as set forth in the Garn Act and
the regulations promulgated thereunder) the Servicer or the Master Servicer may
nevertheless be able to accelerate many of the Mortgage Loans that contain a
"due-on-sale" provision upon transfer of an interest in the property subject to
the Mortgage Loans, regardless of the Servicer's or the Master Servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
ENFORCEABILITY OF PREPAYMENT AND LATE PAYMENT FEES
Forms of notes, mortgages and deeds of trust used by lenders may contain
provisions obligating the borrower to pay a late charge if payments are not
timely made, and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. 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. The enforceability, under the laws of a number of states of
provisions providing for prepayment fees or penalties upon an involuntary
prepayment is unclear, and no assurance can be given that, at the time a
prepayment fee or penalty is required to be made on a Mortgage Loan in
connection with an involuntary prepayment, the obligation to make such payment
will be enforceable under applicable state law. Late charges and prepayment fees
are typically retained by servicers as additional servicing compensation. The
absence of a restraint on prepayment, particularly with respect to Mortgage
Loans having higher mortgage rates, may increase the likelihood of refinancing
or other early retirements of the Mortgage Loans.
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EQUITABLE LIMITATIONS ON REMEDIES
In connection with lenders' attempts to realize upon their security, courts
have invoked general equitable principles. The equitable principles are
generally designed to relieve the borrower from the legal effect of his defaults
under the loan documents. Examples of judicial remedies that have been fashioned
include judicial requirements that the lender undertake affirmative and
expensive actions to determine the causes for 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 judgment and have
required that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from temporary financial disability. In
other cases, courts have limited the right of a lender to realize upon his
security if the default under the security agreement is not monetary, such as
the borrower's failure to adequately maintain the property or the borrower's
execution of secondary financing affecting the property. Finally, some courts
have been faced with the issue of whether or not federal or state constitutional
provisions reflecting due process concerns for adequate notice require that
borrowers under security agreements receive notices in addition to the
statutorily prescribed minimums. For the most part, these cases have upheld the
notice provisions as being reasonable or have found that, in cases involving the
sale by a trustee under a deed of trust or by a mortgagee under a mortgage
having a power of sale, there is insufficient state action to afford
constitutional protections to the borrower.
The Mortgage Loans may include a debt-acceleration clause, which permits the
lender to accelerate the debt upon a monetary default of the borrower, after the
applicable cure period. The courts of all states will enforce clauses providing
for acceleration in the event of a material payment default. However, courts of
any state, exercising equity jurisdiction, may refuse to allow a lender to
foreclose a mortgage or deed of trust when an acceleration of the indebtedness
would be inequitable or unjust and the circumstances would render the
acceleration unconscionable.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control Act
of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. Similar federal statutes
were in effect with respect to mortgage loans made during the first three months
of 1980. The OTS, as successor to the Federal Home Loan Bank Board, is
authorized to issue rules and regulations and to publish interpretations
governing implementation of Title V. Title V authorizes any state to reimpose
interest rate limits by adopting, before April 1, 1983, a state law, or by
certifying that the voters of such state have voted in favor of any provision,
constitutional or otherwise, which expressly rejects an application of the
federal law. Fifteen states adopted such a law prior to the April 1, 1983
deadline. 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.
In any state in which application of Title V has been expressly rejected or
a provision limiting discount points or other charges is adopted, no Mortgage
Loan originated after the date of such state action will be eligible as Mortgage
Assets 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 shall 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 Mortgagor's counsel has rendered an opinion that
such choice of law provision would be given effect. No Mortgage Loan originated
prior to January 1, 1980 will bear interest or provide for discount points or
charges in excess of permitted levels.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including ARMs originated by non-federally
chartered lenders, have historically been subject to a variety of restrictions.
Such restrictions differed from state to state,
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resulting in difficulties in determining whether a particular alternative
mortgage instrument originated by a state-chartered lender complied with
applicable law. These difficulties were alleviated substantially as a result of
the enactment of Title VIII of the Garn St. Germain Act ("Title VIII"). Title
VIII provides that, notwithstanding any state law to the contrary,
state-chartered banks may originate "alternative mortgage instruments"
(including ARMs) in accordance with regulations promulgated by the Comptroller
of the Currency with respect to origination of alternative mortgage instruments
by national banks; state chartered credit unions may originate alternative
mortgage instruments in accordance with regulations promulgated by the National
Credit Union Administration with respect to origination of alternative mortgage
instruments by federal credit unions and all other non-federally chartered
housing creditors, including state-chartered savings and loan associations; and
state-chartered savings banks and mortgage banking companies may originate
alternative mortgage instruments in accordance with the regulations promulgated
by the Federal Home Loan Bank Board, as succeeded by the OTS, with respect to
origination of alternative mortgage instruments by federal savings and loan
associations. Title VIII provides that any state may reject applicability of the
provisions of Title VIII by adopting, prior to October 15, 1985, a law or
constitutional provision expressly rejecting the applicability of such
provisions. Certain states have taken such action.
SECONDARY FINANCING; DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may not restrict secondary financing, thereby
permitting the borrower to use the Mortgaged Property as security for one or
more additional loans. Certain of the Mortgage Loans may preclude secondary
financing (by permitting the first lender to accelerate the maturity of its loan
if the borrower further encumbers the Mortgaged Property or in some other
fashion) or may require the consent of the senior lender to any junior or
substitute financing; however, such provisions may be unenforceable in certain
jurisdictions under certain circumstances.
Where the borrower encumbers the Mortgaged Property with one or more junior
liens, the senior lender is subjected to additional risk. For example, the
borrower may have difficulty servicing and repaying multiple loans or acts of
the senior lender which 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 lose its priority to the extent any existing junior lender is harmed
or the borrower is additionally burdened. In addition, 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, delay and in certain circumstances
even prevent the taking of action by the senior lender. In addition, the
bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
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 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 Mortgagor 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 Mortgagor as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord,
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a foreclosing lender who is financially more capable than the Mortgagor of
complying with the requirements of the ADA may be subject to more stringent
requirements than those to which the Mortgagor 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 mortgagor who enters military service after the
origination of such mortgagor's Mortgage Loan (including a mortgagor 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 mortgagor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
mortgagors 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 mortgagors
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 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 any 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 servicer to foreclose on an affected Mortgage Loan
during the mortgagor's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in the
event that such a Mortgage Loan goes into default, there may be delays and
losses occasioned thereby.
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.
THE INDENTURE
The following summaries describe certain provisions of the Indenture. The
summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Indenture. Where
particular provisions or terms used in the Indenture are referred to, such
provisions or terms are as specified in the Indenture.
CERTAIN COVENANTS
The Issuer may not liquidate or dissolve, without the consent of the holders
of not less than 66 2/3% of the Aggregate Outstanding Principal of each Series.
The Issuer also may not consolidate or merge with or into any other Person or
convey or transfer its properties and assets substantially as an entirety
without the consent of holders of not less than 66 2/3% of the Aggregate
Outstanding Principal of each Series, and
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unless (a) the Person (if other than the Issuer) formed or surviving such merger
or consolidation or acquiring such assets is a Person organized under the laws
of the United States of America or any State and shall have expressly assumed,
by supplemental indenture in form satisfactory to the Trustee, the due and
punctual payment of principal of and interest on all Bonds and the performance
of every applicable covenant of the Indenture to be performed, by the Issuer,
(b) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred, and be continuing, (c) the Trustee shall have
received a letter from each Rating Agency rating any outstanding Bonds to the
effect that the rating issued with respect to such Bonds is confirmed
notwithstanding the consummation of such transaction and (d) the Trustee shall
have received from the Issuer an Officers' Certificate and an Opinion of
Counsel, each to the effect that, among other things, such transaction complies
with the foregoing requirements.
The Issuer may incur, assume, have outstanding or guarantee any indebtedness
other than pursuant to the Indenture only subject to certain conditions and
limitations.
MODIFICATION OF INDENTURE
Except as set forth below, with the consent of the holders of not less than
a majority of the then Aggregate Outstanding Principal of each Series or Class
of such Series to be affected, the Trustee and the Issuer may amend the
Indenture or execute a supplemental indenture, to add provisions to or change or
eliminate any provisions of the Indenture or Trust Agreement, as applicable,
relating to such Series, or modify the rights of the holders of the Bonds of
that Series.
Without the consent of the holder of each outstanding Bond affected,
however, except as provided below, no such amendment or supplemental indenture
shall (i) change the Stated Maturity of the principal of or any installment of
principal of or interest on any Bond or reduce the principal amount thereof, the
Bond Interest Rate for any Bond or the Redemption Price with respect thereto, or
change the provisions of the Trust Indenture or the related Series Supplement
relating to the application of the Trust Estate to payment principal of or
interest on the affected Bonds, or change any place of payment where, or the
coin or currency in which, any affected Bond or any interest thereon is payable,
or impair the right to institute suit for the enforcement of the provisions of
the Indenture regarding payment, (ii) reduce the percentage of Aggregate
Outstanding Principal of the Bonds of the affected Series or Class of such
Series, the consent of the holders of which is required for the authorization of
any such amendment or supplemental indenture or for any waiver of compliance
with certain provisions of the Indenture or certain defaults thereunder and
their consequences, (iii) modify or alter the provisions of the Indenture
defining the term "Outstanding," (iv) permit the creation of any lien ranking
prior to or on a parity with the lien of the Indenture with respect to any part
of the property subject to the lien of the Indenture or terminate the lien of
the Indenture on any property at any time subject thereto or deprive the holder
of any Bond of the security afforded by the lien of the Indenture, (v) reduce
the percentage of the Aggregate Outstanding Principal of any Series (or Class of
such Series), the consent of the holders of which is required to direct the
Trustee to liquidate the Mortgage Assets for such Series, (vi) modify any of the
provisions of the Indenture if such modification affects the calculation of the
amount of any payment of interest or principal due and payable on any Bond on
any Payment Date or to affect the rights of the holders of Bonds of any Series
(or Class of such Series) to the benefit of any provisions for the mandatory
redemption of Bonds of such Series (or Class of such Series) contained therein
or in the related Series Supplement or (vii) modify the provisions of the
Indenture regarding any modifications of such Indenture requiring consent of the
holders of Bonds, except to increase the percentage or number of holders
required to consent to such modification of such Indenture or Trust Agreement,
as applicable, or to provide that additional provisions of the Indenture cannot
be modified or waived without the consent of the holder of each Bond affected
thereby.
The Issuer and the Trustee may also amend the Indenture or enter into
supplemental indentures, without obtaining the consent of holders of any Series,
to cure any ambiguity or to correct or supplement any provision of the Indenture
or any supplemental indenture which may be defective or inconsistent with
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any other provision, or to make or to amend any other provisions with respect to
matters or questions arising under the Indenture or any supplemental indenture,
provided that such action shall not materially adversely affect the interests of
the holders of the Bonds. Such amendments may also be made and such supplemental
indentures may also be entered into without the consent of Bondholders or
Certificateholders to set forth the terms of and security for additional Series,
to evidence the succession of another person to the Issuer, to add to the
conditions, limitations and restrictions on certain terms of any Series and to
the covenants of the Issuer, to surrender any right or power conferred upon the
Issuer, to convey, transfer, assign, mortgage or pledge any property to the
Trustee, to correct or amplify the description of any property subject to the
lien of the Indenture to modify the Indenture to the extent necessary to effect
the Trustee's qualification under the TIA or comply with the requirements of the
TIA, to provide for the issuance of Bonds of any Series, to make any amendment
necessary or desirable to maintain the status of a REMIC as a REMIC and to amend
the provisions of the Indenture relating to authentication and delivery of a
Series with respect to which a supplemental indenture has not theretofore been
authorized or to evidence and provide for the acceptance of appointment by a
successor trustee.
EVENTS OF DEFAULT
Unless otherwise stated in the related Prospectus Supplement, an "Event of
Default" with respect to any Series is defined in the Indenture as being: (i) a
continuing default for 5 days in the payment of interest on any Bond of such
Series; (ii) a continuing default for five days in the payment of principal,
when due, of any Bond of such Series; (iii) the impairment of the validity or
effectiveness of the Indenture or any grant thereunder, or the subordination,
termination or discharge of the lien of the Indenture with respect to such
Series, or the release of any Person from any covenants or obligations under the
Indenture with respect to such Series, unless otherwise expressly permitted, or
the creation of any lien, charge, security interest, mortgage or other
encumbrance with respect to any part of the property subject to the lien of the
Indenture, or any interest in or proceeds of such property, or the failure of
the lien of the Indenture to constitute a valid first priority security interest
in the property subject to the lien of the Indenture and the continuation of any
of such defaults for a period of 30 days after notice to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25% of the
then Aggregate Outstanding Principal of such Series; (iv) a default in the
observance of, or breach of, any covenant or negative covenant of the Issuer
made in the Indenture, or a material breach of any representation or warranty of
the Issuer made in the Indenture or in any certificate or other document
delivered pursuant thereto or in connection therewith as of the time when the
same shall have been made, and the continuation of any such default or breach
for a period of 60 days after notice to the Issuer by the Trustee or to the
Issuer and the Trustee by the holders of at least 25% of the then Aggregate
Outstanding Principal of such Series (unless the default or breach is with
respect to certain covenants specified in the Indenture not requiring such
continuation or notice); and (v) certain events of bankruptcy, insolvency,
receivership or reorganization of the Issuer. Notwithstanding the foregoing, if
a Series includes a Class of Subordinate Bonds, the Series Supplement for such a
Series may provide that certain defaults which relate only to such Subordinate
Securities shall not constitute an Event of Default with respect to the Bonds,
under certain circumstances, and may limit the rights of holders of Subordinate
Securities to direct the Trustee to pursue remedies with respect to such
defaults, or other Events of Default. Such limitations, if any, will be
specified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, in case an
Event of Default with respect to any Series should occur and be continuing, the
Trustee may and, upon the written request of the holders of at least 25% of the
then Aggregate Outstanding Principal of such Series shall, declare all Bonds of
such Series to be due and payable, together with accrued and unpaid interest
thereon. Such declaration may under certain circumstances be rescinded by the
holders of a majority of the then Aggregate Outstanding Principal of such
Series.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of an Event of Default with respect to a Series, mail to the holders
of such Series notice of all uncured or unwaived
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defaults known to it; provided that, except in the case of an Event of Default
in the payment of the principal or purchase price of or interest on any Bond,
the Trustee shall be protected in withholding such notice if it determines in
good faith that the withholding of such notice is in the interest of the
Bondholders of such Series, and provided, further, that, in the case of a
default specified in clause (iv) of the first paragraph of this "Events of
Default" subsection the Trustee is not required to give such notice until at
least 30 days after the occurrence of such default or breach and that, in the
case of any default or breach specified in clause (v) of the first paragraph of
this "Events of Default" subsection, the Trustee is not required to give such
notice until at least 60 days after the occurrence of such default or breach.
An Event of Default with respect to one Series will not necessarily be an
Event of Default with respect to any other Series.
Unless otherwise provided in the related Prospectus Supplement, if following
an Event of Default with respect to any Series, the Bonds of such Series have
been declared to be due and payable, the Trustee may, but shall not be obligated
to, in its sole discretion, refrain from liquidating the related Mortgage Assets
if (i) the Trustee determines that the amounts receivable with respect to such
Mortgage Assets and any Enhancement will be sufficient to pay (a) all principal
of and interest on the Bonds in accordance with their terms without regard to
the declaration of acceleration and (b) all sums due the Trustee and any other
administrative amounts required to be paid under the Indenture and (ii) Holders
of the requisite percentage of the Securities of such Series have not directed
the Trustee to sell the related Mortgage Assets as so specified in the
Indenture. In addition, unless otherwise specified in the related Prospectus
Supplement, the Trustee is prohibited from selling the Trust Estate following
certain Events of Default unless (a) the amounts receivable with respect to the
Mortgage Assets and any Enhancement are not sufficient to pay in full the
principal of and accrued interest on the Bonds of such Series and to pay sums
due the Trustee and other administrative expenses specified in the Indenture and
the Trustee obtains the consent of holders of 66 2/3% of the Aggregate
Outstanding Principal of such Series or (b) the Trustee obtains the consent of
100% of the Aggregate Outstanding Principal of such Series, and subject to the
provisions of the related Prospectus Supplement, the obligor under the
Enhancement. Unless otherwise provided in the related Prospectus Supplement, the
proceeds of a sale of Mortgage Assets will be applied to the payment of amounts
due the Trustee and other administrative expenses specified in the Indenture and
then distributed pro rata among the Bondholders of such Series (without regard
to Class, provided that Subordinate Securities will be subordinate to Senior
Securities of the Series to the extent provided in the related Prospectus
Supplement) according to the amounts due and payable on the Bonds for principal
and interest at the time such proceeds are distributed by the Trustee.
The Trustee shall not be deemed to have knowledge of any Event of Default or
Default described in clauses (iv) through (vi) of the first paragraph of this
"Events of Default" subsection unless an officer in the Trustee's corporate
trust department has actual knowledge thereof. Subject to the provisions of the
Indenture relating to the duties of the Trustee, in case an Event of Default
shall occur and be continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Bondholders of a Series, unless such Bondholders shall
have offered to the Trustee reasonable security or indemnity. Subject to such
provisions for indemnification and certain limitations contained in the
Indenture the holders of a majority of the then Aggregate Outstanding Principal
of a Series (or of such Classes specified in the related Prospectus Supplement)
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Series. In addition, the
Holders of a majority of the then Aggregate Outstanding Principal of a Series
(or of such Classes specified in the related Prospectus Supplement) may, in
certain cases, waive any default with respect to such Series, except a default
in payment of principal or interest or in respect of a covenant or provision
which cannot be modified without the consent of all Bondholders affected.
Unless otherwise specified in the related Prospectus Supplement, no holder
of Bonds of a Series will have the right to institute any Proceeding with
respect to the Indenture, unless (i) such Holder previously
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has given to the Trustee written notice of a continuing Event of Default with
respect to such Series and has offered the Trustee satisfactory indemnity, (ii)
the Holders of not less than 25% of the then Aggregate Outstanding Principal of
such Series have made written request upon the Trustee to institute such
Proceeding as Trustee and have offered satisfactory indemnity, (iii) the Trustee
has, for 60 days after receipt of such notice, request and offer of indemnity,
failed to institute any such Proceeding and (iv) no direction inconsistent with
such written request has been given to the Trustee during such 60-day period by
the Holders of a majority of the then Aggregate Outstanding Principal of such
Series; provided, however, that in the event that the Trustee receives
conflicting requests and indemnities from two or more groups of Bondholders,
each representing less than a majority of the Aggregate Outstanding Principal of
such Series, the Trustee may in its sole discretion determine what action with
respect to the Proceeding, if any, shall be taken.
AUTHENTICATION AND DELIVERY OF BONDS
The Issuer may from time to time deliver Bonds executed by it to the Trustee
and order that the Trustee authenticate such Bonds. Upon the receipt of such
Bonds and such order and subject to the Issuer's compliance with certain
conditions specified in the Indenture the Trustee will authenticate and deliver
such Bonds as the Issuer may direct. Unless otherwise specified in the related
Prospectus Supplement, the Trustee will be authorized to appoint an agent for
purposes of authenticating and delivering any Series of Bonds (the
"Authenticating Agent").
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will be discharged as to a Series (except with respect to
certain continuing rights specified in the Indenture or Trust Agreement, as
applicable), (a)(1) upon the delivery to the Trustee for cancellation of all of
the Bonds of such Series other than Bonds which have been mutilated, lost or
stolen and have been replaced or paid and Bonds for which money has been
deposited in trust for the full payment thereof (and thereafter repaid to the
Issuer and discharged from such trust) as provided in of the Indenture, or (2)
at such time as all Bonds of such Series not previously cancelled by the Trustee
have become, or, within one year, will become, due and payable or called for
redemption and the Issuer shall have deposited with the Trustee an amount
sufficient to repay all of the Bonds and (b) the Issuer shall have paid all
other amounts payable under the Indenture or Trust Agreement, as applicable,
with respect to such Series.
ISSUER'S ANNUAL COMPLIANCE STATEMENT
The Issuer will be required to file annually with the Trustee a written
statement as to fulfillment of its obligations under the Indenture.
LIST OF BONDHOLDERS
Three or more Holders of a Series which have each owned the Bonds for at
least six months may, by written application to the Trustee, request access to
the list maintained by the Trustee of all holders of the same Series or of all
Bonds, as specified in the request, for the purpose of communicating with other
Bondholders with respect to their rights under the Indenture.
MEETINGS OF BONDHOLDERS
Meetings of Bondholders or Certificateholders may be called at any time and
from time to time to (i) give any notice to the Issuer or to the Trustee, give
directions to the Trustee, consent to the waiver of any Default or Event of
Default under the Indenture, or to take any other action authorized to be taken
by Bondholders in connection therewith, (ii) remove the Trustee and to appoint a
successor Trustee, (iii) consent to the execution of supplemental indentures or
(iv) take any other action authorized to be taken by or on behalf of the
Bondholders of any specified percentage of the Aggregate Outstanding
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Principal of the Bonds. Such meetings may be called by the Trustee, the Issuer
or by the holders of 10% in Aggregate Outstanding Principal of any such Series.
FISCAL YEAR
The fiscal year of each Issuer ends on December 31.
TRUSTEE'S ANNUAL REPORT
The Trustee will be required to mail each year to all Bondholders a brief
report relating to its eligibility and qualification to continue as the Trustee
under the Indenture any amounts advanced by it under the Indenture which remain
unpaid on the date of the report, the amount, interest rate and maturity date of
certain indebtedness owing by the Issuer (or any other obligor on such Series)
to the Trustee in its individual capacity, the property and funds physically
held by the Trustee as such, any release or release and substitution of property
subject to the lien of the Indenture which has not been previously reported, any
additional issuance of Bonds not previously reported and any action taken by it
which materially affects the Bonds and which has not been previously reported.
THE TRUSTEE
Bankers Trust or Marine Midland (or another bank or trust company named in
the Prospectus Supplement related to a Series and, in the case of a Series of
Bonds, qualified under the TIA) will be the Trustee under the Indenture for the
Bond. The Issuer may maintain other banking relationships in the ordinary course
of business with the Trustee. If Bankers Trust Company of California, N.A.
serves as Trustee, the Trustee's "Corporate Trust Office" is 3 Park Plaza, 16th
Floor, Irvine, California 92714, and if Marine Midland Bank, N.A. serves as
Trustee, the Trustee's "Corporate Trust Office" is 140 Broadway, New York, New
York 10015, or at such other addressees as the Trustee may designate from time
to time by notice to the Bondholders and the Issuer. With respect to the
presentment and surrender of Bonds for final payment of principal in retirement
thereof on any Payment Date, Redemption Date, Special Payment Date or Special
Redemption Date and, with respect to any other presentment and surrender of such
Bonds and for all other purposes, unless otherwise specified in the related
Prospectus Supplement, such Bonds may be presented at the Corporate Trust Office
of the Trustee or at the office of the Issuer's agent in the State of New York
(the "New York Presenting Agent"), which (if Bankers Trust Company of
California, N.A. is the Trustee) will be Bankers Trust Company, Four Albany
Street, New York, New York 10006. If another bank or trust company serves as
Trustee or as the New York Presenting Agent, the address of its Corporate Trust
Office or such office of the New York Presenting Agent will be specified in the
related Prospectus Supplement.
THE TRUST AGREEMENT
The following summaries describe certain provisions of the Trust Agreement.
The summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Trust Agreement. Where
particular provisions or terms used in the Trust Agreement are referred to, such
provisions or terms are as specified in the Trust Agreement.
ASSIGNMENT OF MORTGAGE ASSETS
GENERAL. The Depositor will transfer, convey and assign to the Trustee all
right, title and interest of the Depositor in the Mortgage Assets and other
property to be included in the Trust Fund for a Series. Such assignment will
include all principal and interest due on or with respect to the Mortgage Assets
after the Cut-off Date specified in the related Prospectus Supplement. The
Trustee will, concurrently with such assignment, execute and deliver the
Certificates.
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ASSIGNMENT OF MORTGAGE LOANS. The Depositor will, as to each Mortgage Loan,
deliver or cause to be delivered to the Trustee, or, as specified in the related
Prospectus Supplement, the Custodian, the Mortgage Note endorsed without
recourse to the order of the Trustee or in blank, the original Mortgage with
evidence of recording indicated thereon (except for any Mortgage not returned
from the public recording office, in which case a copy of such Mortgage will be
delivered, together with a certificate that the original of such Mortgage was
delivered to such recording office) and an assignment of the Mortgage in
recordable form. The Trustee, or, if so specified in the related Prospectus
Supplement, the Custodian, will hold such documents in trust for the benefit of
the Certificateholders.
If so specified in the related Prospectus Supplement, the Depositor will, at
the time of delivery of the Certificates, cause assignments to the Trustee of
the Mortgage Loans to be recorded in the appropriate public office for real
property records, except in states where, in the opinion of counsel acceptable
to the Trustee, such recording is not required to protect the Trustee's interest
in the Mortgage Loan. If specified in the related Prospectus Supplement, the
Depositor will cause such assignments to be so recorded within the time after
delivery of the Certificates as is specified in the related Prospectus
Supplement, in which event, the Trust Agreement may, as specified in the related
Prospectus Supplement, require the Depositor to repurchase from the Trustee any
Mortgage Loan required to be recorded but not recorded within such time, at the
price described below with respect to repurchase by reason of defective
documentation. Unless otherwise provided in the related Prospectus Supplement,
the enforcement of the repurchase obligation would constitute the sole remedy
available to the Certificateholders or the Trustee for the failure of a Mortgage
Loan to be recorded.
Each Mortgage Loan will be identified in a schedule appearing as an exhibit
to the Trust Agreement (the "Mortgage Loan Schedule"). Such Mortgage Loan
Schedule will specify with respect to each mortgage loan: the original principal
amount and unpaid principal balance as of the Cut-off Date; the current interest
rate; the current Scheduled Payment of principal and interest; the maturity date
of the related mortgage note; if the Mortgage Loan is an adjustable rate
mortgage, the lifetime mortgage rate cap, if any, and the current index; and, if
the Mortgage Loan is a loan with other than fixed Scheduled Payments and level
amortization, the terms thereof.
REPURCHASE OF NON-CONFORMING LOANS
Unless otherwise provided in the related Prospectus Supplement, if any
document in the Mortgage Loan file delivered by the Depositor to the Trustee is
found by the Trustee within 45 days of the execution of the related Trust
Agreement (or promptly after the Trustee's receipt of any document permitted to
be delivered after the Closing Date) to be defective in any material respect and
the Depositor does not cure such defect within 90 days, or within such other
period specified in the related Prospectus Supplement, the Depositor will, not
later than 90 days or within such other period specified in the related
Prospectus Supplement, after the Trustee's notice to the Depositor or the Master
Servicer, as the case may be, of the defect, repurchase the related Mortgage
Loan or any property acquired in respect thereof from the Trustee at a price
generally equal to (a) the outstanding principal balance of such Mortgage Loan
(or, in the case of a foreclosed Mortgage Loan, the outstanding principal
balance of such Mortgage Loan immediately prior to foreclosure) and (b), accrued
and unpaid interest to the date of the next scheduled payment on such Mortgage
Loan at the related Certificate Interest Rate (less any unreimbursed Advances
respecting such Mortgage Loan).
Unless otherwise provided in the related Prospectus Supplement, the
above-described repurchase obligation constitutes the sole remedy available to
the Certificateholders or the Trustee for a material defect in a Mortgage Loan
document.
The Depositor or another entity will make representations and warranties
with respect to Mortgage Loans which comprise the Mortgage Assets for a Series.
If the Depositor or such entity cannot cure a breach of any such representations
and warranties in all material respects within 90 days after notification
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by the Trustee of such breach, and if such breach is of a nature that materially
and adversely affects the value of such Mortgage Loan, the Depositor or such
entity is obligated to repurchase the affected Mortgaged Loan or, if provided in
the related Prospectus Supplement, provide a Substitute Mortgage Loan therefor,
subject to the same conditions and limitations on purchases and substitutions as
described above.
The Depositor's only source of funds to effect any cure, repurchase or
substitution will be through the enforcement of the corresponding obligations of
the responsible originator or seller of such Mortgage Loans. See "RISK FACTORS".
REPORTS TO CERTIFICATEHOLDERS
The Trustee will prepare and forward to each Certificateholder on each
Distribution Date, or as soon thereafter as is practicable, a statement setting
forth, to the extent applicable to any Series, among other things:
(i) with respect to a Series, the amount of such distribution allocable to
principal on the Mortgage Assets, separately identifying the aggregate amount of
any principal prepayments included therein and the amount, if any, advanced by
the Servicer or by a Servicer;
(ii) with respect to a Series, the amount of such distribution allocable to
interest on the Mortgage Assets and the amount, if any, advanced by a Servicer;
(iii) the amount of servicing compensation with respect to the Mortgage
Assets and paid during the Due Period commencing on the Due Date to which such
distribution relates and the amount of servicing compensation during such period
attributable to penalties and fees;
(iv) the aggregate outstanding principal balance of the Mortgage Assets as
of the opening of business on the Due Date, after giving effect to distributions
allocated to principal and reported under (i) above;
(v) the aggregate outstanding principal amount of the Certificates of such
series as of the Due Date, after giving effect to distributions allocated to
principal reported under (i) above;
(vi) with respect to Compound Interest Securities, prior to the Accrual
Termination Date in addition to the information specified in (ii) above, the
amount of interest accrued on such Securities during the related Interest
Accrual Period and added to the Compound Value thereof;
(vii) in the case of Variable Rate Securities, the Variable Interest Rate
applicable to the distribution being made;
(viii) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which Certificateholders
would have received if there were sufficient eligible funds to distribute and
the amounts actually distributed);
(ix) if applicable, the number and aggregate principal balances of Mortgage
Loans delinquent for (A) two consecutive payments and (B) three or more
consecutive payments, as of the close of the business on the Determination Date
to which such distribution relates;
(x) if applicable, the book value of any REO Property acquired on behalf of
Certificateholders through foreclosure, grant of a deed in lieu of foreclosure
or repossession as of the close of the business on the Business Day preceding
the Distribution Date to which such distribution relates;
(xi) if applicable, the amount of coverage under any pool insurance policy
as of the close of business on the applicable Distribution Date;
(xii) if applicable, the amount of coverage under any special hazard
insurance policy as of the close of business on the applicable Distribution
Date;
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(xiii) if applicable, the amount of coverage under any bankruptcy bond as of
the close of business on the applicable Distribution Date;
(xiv) in the case of any other Enhancement described in the related
Prospectus Supplement, the amount of coverage of such credit support as of the
close of business on the applicable Distribution Date;
(xv) in the case of any Series which includes a Subordinate Securities, the
subordinated amount, if any, determined as of the related Determination Date and
if the distribution to the Holders of Senior Securities is less than their
required distribution, the amount of the shortfall;
(xvi) the amount of any withdrawal from any applicable reserve fund included
in amounts actually distributed to Certificateholders and the remaining balance
of each reserve fund, if any, on such Distribution Date, after giving effect to
distributions made on such date; and
(xvii) such other information as specified in the related Trust Agreement.
In addition, within a reasonable period of time after the end of each
calendar year the Trustee, unless otherwise specified in the related Prospectus
Supplement, will furnish to each Certificateholder of record at any time during
such calendar year: (a) the aggregate of amounts reported pursuant to (i)
through (iv), (vi), (viii) and (xvi) above for such calendar year and (b) such
information specified in the Trust Agreement to enable Certificateholders to
prepare their tax returns including, without limitation, the amount of original
issue discount accrued on the Certificates, if applicable. Information in the
Distribution Date and annual reports provided to the Certificateholders will not
have been examined and reported upon by an independent public accountant.
However, the Master Servicer will provide to the Trustee a report by independent
public accountants with respect to the Master Servicer's servicing of the
Mortgage Loans. See "SERVICING OF MORTGAGE LOANS--Evidence as to Compliance"
herein.
EVENT OF DEFAULT
Unless otherwise specified in the related Prospectus Supplement, events of
Default under the Trust Agreement for each Series include (i) any failure by the
Master Servicer to distribute to Certificateholders of such Series any required
payment which continues unremedied for five days after the giving of written
notice of such failure to the Master Servicer by the Trustee for such Series, or
to the Master Servicer and the Trustee by the Holders of Certificates of such
Series evidencing not less than 25% of the aggregate outstanding principal
amount of the Certificates for such Series, (ii) any failure by the Servicer
duly to observe or perform in any material respect any other of its covenants or
agreements in the Trust Agreement which continues unremedied for 30 days after
the giving of written notice of such failure to the Master Servicer by the
Trustee, or to the Master Servicer and the Trustee by the Holders of
Certificates of such Series evidencing not less than 25% of the aggregate
outstanding principal amount of the Certificates and (iii) certain events in
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings and certain actions by the Master Servicer indicating its
insolvency, reorganization or inability to pay its obligations.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default remains unremedied under the Trust Agreement
for a Series, the Trustee for such Series or Holders of Certificates of such
Series evidencing not less than 25% of the aggregate outstanding principal
amount of the Certificates for such Series may terminate all of the rights and
obligations of the Master Servicer as servicer under the Trust Agreement and in
and to the Mortgage Loans (other than its right to recovery of other expenses
and amounts advanced pursuant to the terms of the Trust Agreement which rights
the Master Servicer will retain under all circumstances), whereupon the Trustee
will succeed to all the responsibilities, duties and liabilities of the Master
Servicer under the Trust Agreement and will be entitled to reasonable servicing
compensation not to exceed the applicable servicing fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in the Trust Agreement.
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In the event that the Trustee is unwilling or unable so to act, it may
select, or petition a court of competent jurisdiction to appoint, a housing and
home finance institution, bank or mortgage servicing institution with a net
worth of at least $15,000,000 to act as successor Master Servicer under the
provisions of such Trust Agreement relating to the servicing of the Mortgage
Loans. The successor Servicer would be entitled to reasonable servicing
compensation in an amount not to exceed the servicing fee as set forth in the
related Prospectus Supplement, together with the other servicing compensation in
the form of assumption fees, late payment charges or otherwise, as provided in
the Trust Agreement.
During the continuance of any Event of Default under the Trust Agreement for
a Series, the Trustee for such Series will have the right to take action to
enforce its rights and remedies and to protect and enforce the rights and
remedies of the Certificateholders of such Series, and Holders of Certificates
evidencing not less than 25% of the aggregate outstanding principal amount of
the Certificates for such Series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred upon the Trustee. However, the Trustee will not be
under any obligation to pursue any such remedy or to exercise any of such trusts
or powers unless such Certificateholders have offered the Trustee reasonable
security or indemnity against the cost, expenses and liabilities which may be
incurred by the Trustee therein or thereby. Also, the Trustee may decline to
follow any such direction if the Trustee determines that the action or
proceeding so directed may not lawfully be taken or would involve it in personal
liability or be unjustly prejudicial to the nonassenting Certificateholders.
No Certificateholder of a Series, solely by virtue of such Holder's status
as a Certificateholder, will have any right under the Trust Agreement for such
Series to institute any proceeding with respect to the Trust Agreement, unless
such Holder previously has given to the Trustee for such Series written notice
of default and unless the Holders of Certificates evidencing not less than 25%
of the aggregate outstanding principal amount of the Certificates for such
Series 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 60 days has neglected or refused to institute any
such proceeding.
THE TRUSTEE
The identity of the commercial bank, savings and loan association or trust
company named as the Trustee for each Series of Certificates will be set forth
in the related Prospectus Supplement, and such Trustee may be Bankers Trust or
Marine Midland. The entity serving as Trustee may have normal banking
relationships with the Depositor or the Master Servicer. In addition, for the
purpose of meeting the legal requirements of certain local jurisdictions, the
Trustee will have the power to appoint co-trustees or separate trustees of all
or any part of the Trust Fund relating to a Series of Certificates. In the event
of such appointment, all rights, powers, duties and obligations conferred or
imposed upon the Trustee by the Trust Agreement relating to such Series will be
conferred or imposed upon the Trustee and each such separate trustee or
co-trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Trustee. The Trustee may also
appoint agents to perform any of the responsibilities of the Trustee, which
agents shall have any or all of the rights, powers, duties and obligations of
the Trustee conferred on them by such appointment; provided that the Trustee
shall continue to be responsible for its duties and obligations under the Trust
Agreement.
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the Certificates or of any Mortgage Asset or related
documents. If no Event of Default (as defined in the related Trust Agreement)
has occurred, the Trustee is required to perform only those duties specifically
required of it under the Trust Agreement. Upon receipt of the various
certificates, statements, reports or other instruments required to be furnished
to it, the Trustee is required to examine them to determine
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whether they are in the form required by the related Trust Agreement; provided,
however, the Trustee will not be responsible for the accuracy or content of any
such documents furnished to it.
The Trustee may be held liable for its own grossly negligent action or
failure to act, or for its own willful misconduct; provided, however, that the
Trustee will not be personally liable with respect to any action taken, suffered
or omitted to be taken by it in good faith in accordance with the direction of
the Certificateholders in connection with the occurrence and/or continuation of
an Event of Default (see "--Rights Upon Event of Default" above). The Trustee is
not required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under a Trust Agreement, or in
the exercise of any of its rights or powers, if it has reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
RESIGNATION OF TRUSTEE
The Trustee may, upon written notice to the Depositor, resign at any time,
in which event the Depositor will be obligated to use its best efforts to
appoint a successor Trustee. If no successor Trustee has been appointed and has
accepted the appointment within 30 days after giving such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
appointment of a successor Trustee. The Trustee may also be removed at any time
(i) by the Depositor, if the Trustee ceases to be eligible to continue as such
under the Trust Agreement, if the Trustee becomes insolvent, or if a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee pursuant to the Trust Agreement is
located, or (ii) by the Holders of Certificates evidencing over 50% of the
aggregate outstanding principal amount of the Certificates in the Trust Fund
upon 30 days' advance written notice to the Trustee and to the Depositor. 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.
AMENDMENT OF TRUST AGREEMENT
Unless otherwise specified in the Prospectus Supplement, the Trust Agreement
for each Series of Certificates may be amended by the Depositor, the Master
Servicer, and the Trustee with respect to such Series, without notice to or
consent of the Certificateholders (i) to cure any ambiguity, (ii) to correct or
supplement any provision therein which may be inconsistent with any other
provision therein or in the Prospectus Supplement, (iii) to make any other
provisions with respect to matters or questions arising under such Trust
Agreement or (iv) to comply with any requirements imposed by the Code; provided
that any such amendment pursuant to clause (iii) above will not adversely affect
in any material respect the interests of any Certificateholders of such Series
not consenting thereto. Any such amendment pursuant to clause (iii) of the
preceding sentence shall be deemed not to adversely affect in any material
respect the interests of any Certificateholder if the Trustee receives written
confirmation from each Rating Agency rating such Certificates that such
amendment will not cause such Rating Agency to reduce the then current rating
thereof. The Trust Agreement for each Series may also be amended by the Trustee,
the Master Servicer and the Depositor with respect to such Series with the
consent of the Holders possessing not less than 66 2/3% of the aggregate
outstanding principal amount of the Certificates of each Class of such Series
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Trust Agreement or modifying
in any manner the rights of Certificateholders of such Series; provided,
however, that no such amendment may (a) reduce the amount or delay the timing of
payments on any Certificate without the consent of the Holder of such
Certificate; or (b) reduce the aforesaid percentage of aggregate outstanding
principal amount of Certificates of each Class, the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of the aggregate outstanding principal amount of each Class of Certificates
affected thereby.
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VOTING RIGHTS
The related Prospectus Supplement will set forth the method of determining
allocation of voting rights with respect to a Series, if other than set forth
herein.
LIST OF CERTIFICATEHOLDERS
Upon written request of three or more Certificateholders of record of a
Series for purposes of communicating with other Certificateholders with respect
to their rights under the Trust Agreement or under the Certificates for such
Series, which request is accompanied by a copy of the communication which such
Certificateholders propose to transmit, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders of that Series held by the Trustee.
No Trust Agreement will provide for the holding of any annual or other
meeting of Certificateholders.
REMIC ADMINISTRATOR
With respect to any Series, preparation of certain reports and certain other
administrative duties with respect to the Trust Fund may be performed by a REMIC
administrator, who may be an affiliate of the Depositor.
TERMINATION
The obligations created by the Trust Agreement for a Series will terminate
upon the distribution to Certificateholders of all amounts distributable to them
pursuant to such Trust Agreement after (i) the later of the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust Fund for such
Series or the disposition of all REO Property or (ii) the repurchase, as
described below, by the Servicer from the Trustee for such Series of all
Mortgage Loans at that time subject to the Trust Agreement and all REO Property.
The Trust Agreement for each Series permits, but does not require, the Servicer
to repurchase from the Trust Fund for such Series all remaining Mortgage Loans
at a price equal to 100% of the Aggregate Asset Value of such Mortgage Loans
plus, with respect to REO Property, if any, the outstanding principal balance of
the related Mortgage Loan, less, in either case, related unreimbursed Advances
(in the case of the Mortgage Loans, only to the extent not already reflected in
the computation of the Aggregate Asset Value of such Mortgage Loans) and
unreimbursed expenses (that are reimburseable pursuant to the terms of the Trust
Agreement) plus, in either case, accrued interest thereon at the weighted
average Mortgage Rate through the last day of the Due Period in which such
repurchase occurs; provided, however, that if an election is made for treatment
as a REMIC under the Code, the repurchase price may equal the greater of (a)
100% of the Aggregate Asset Value of such Loans, plus accrued interest thereon
at the applicable net Mortgage Rates through the last day of the month of such
repurchase and (b) the aggregate fair market value of such Mortgage Loans; plus
the fair market value of any property acquired in respect of a Mortgage Loan and
remaining in the Trust Fund. The exercise of such right will effect early
retirement of the Certificates of such Series, but the Servicer's right to so
purchase is subject to the Aggregate Value of the Mortgage Loans at the time of
repurchase being less than a fixed percentage, to be set forth in the related
Prospectus Supplement, of the Cut-off Date Aggregate Asset Value. In no event,
however, will the trust created by the Trust Agreement continue beyond the
expiration of 21 years from the death of the last survivor of certain persons
identified therein. For each Series, the Servicer or the Trustee, as applicable,
will give written notice of termination of the Trust Agreement to each
Certificateholder, and the final distribution will be made only upon surrender
and cancellation of the Certificates at an office or agency specified in the
notice of termination. If so provided in the related Prospectus Supplement for a
Series, the Depositor or another entity may effect an optional termination of
the Trust Fund or repurchase all or certain Classes of Certificates of a Series
under the circumstances described in such Prospectus Supplement. See
"DESCRIPTION OF THE SECURITIES--Optional Termination," "--Optional Repurchase of
Certificates," and "--Other Repurchases" herein.
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THE ISSUER
THE COMPANY
The Company was incorporated in the State of Delaware on January 2, 1987.
The principal office of the Company is located at 200 Vesey Street, New York,
New York 10285. Its telephone number is (212) 526-5594.
The Certificate of Incorporation of the Company provides that the Company
may not conduct any activities other than those related to the issue and sale of
one or more Series and to serve as depositor of one or more trusts that may
issue and sell Bonds or Certificates. The Certificate of Incorporation of the
Company provides that any Securities, except for subordinated Securities, issued
by the Company must be rated in one of the three highest categories available by
any Rating Agency rating the Series. Pursuant to the terms of the Indenture or
Trust Agreement, as applicable, the Company may not issue any Securities which
would result in the lowering of the then current ratings of the outstanding
Securities of any Series.
The Series Supplement for a particular Series may permit the Primary Assets
pledged to secure the related Series of Bonds to be transferred by the Issuer to
a trust, subject to the obligations of the Bonds of such Series, thereby
relieving the Issuer of its obligations with respect to such Bonds.
OWNER TRUST
Each owner trust established to act as Issuer of a Series of bonds (each, an
"Owner Trust") will be created pursuant to a deposit trust agreement (the
"Deposit Trust Agreement") between the Company which will act as Depositor and
the bank, trust company or other fiduciary named in the related Prospectus
Supplement which will act solely in its fiduciary capacity as Owner Trustee.
Under the terms of each Deposit Trust Agreement, the Company will convey to the
Owner Trustee Mortgage Assets and other Primary Assets to secure one or more
Series in return for certificates or other instruments evidencing beneficial
ownership of the Owner Trust and the net proceeds of the sale of the Bonds. The
Company may in turn sell or assign the certificates of beneficial interest to
another entity or entities, including affiliates of the Company.
The Owner Trust will pledge the Mortgage Assets and other Primary Assets to
the Trustee under the related Indenture as security for a Series. The Trustee
will hold such Mortgage Assets as security only for that Series, and Holders of
the Bonds of such Series will be entitled to the equal and proportionate
benefits of such security, subject to the express subordination of certain
Classes thereof, as if the same had been granted by a corporate issuer.
Each Deposit Trust Agreement will provide that the related Trust may not
conduct any activities other than those related to the issuance and sale of the
particular Series. No Deposit Trust Agreement will be subject to amendment
without the prior written consent of the Owner Trustee, the holders representing
a majority of the beneficial interest of the Owner Trust and the Trustee, except
that the holders of not less than 66 2/3% of the Aggregate Outstanding Principal
of each Series must consent to any amendment of, among other provisions, the
limitation on activities of the Owner Trust and the provision regarding
amendments to the Deposit Trust Agreement. The holders of the beneficial
interests in an Owner Trust which issues a Series will not be liable for payment
of principal of or interest on the Bonds and each holder of Bonds of such Series
will be deemed to have released such beneficial owners from any such liability.
ADMINISTRATOR
Unless otherwise specified in the related Prospectus Supplement, it is
expected that the Issuer will enter into an administration agreement with an
administrator acceptable to the Rating Agencies rating the applicable Series of
Securities (the "Administrator") pursuant to which advisory, administrative,
accounting and clerical services will be provided to the Issuer with respect to
the Securities. The Trustee or the Master Servicer may serve as the Securities
Administrator. In addition, under the Indenture or Trust Agreement, as
applicable, the Issuer is responsible for certain administrative and accounting
matters
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relating to the Securities. It is intended that the Administrator will perform
these services on behalf of the Issuer, and amounts payable with respect to such
services, unless otherwise provided in the related Prospectus Supplement, will
be subordinate to the Issuer's obligations to pay principal and interest to the
Bondholders or Certificateholders (including any Residual Interest Bondholders
or Residual Interest Certificateholders) but, unless otherwise specified in the
related Prospectus Supplement, will be senior to the Issuer's obligation to pay
any Excess Cash Flow to the Residual Interest Bondholders or Residual Interest
Certificateholders.
USE OF PROCEEDS
The Issuer will apply all or substantially all of the net proceeds from the
sale of each Series offered hereby and by the related Prospectus Supplement to
purchase the Mortgage Assets securing each Series simultaneously with the
issuance and sale of such Securities. The proceeds may also be used to repay
indebtedness which has been incurred to acquire Mortgage Assets, to establish
the Reserve Funds, if any, for the Series and to pay costs of structuring,
guaranteeing and issuing the Securities. If so specified in the related
Prospectus Supplement, the purchase of the Mortgage Assets for a Series may be
effected by an exchange of Securities with the Seller of such Mortgage Assets.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
Any bearer securities will be issued in compliance with United States
federal tax laws and regulations applicable at the time of issuance. Under
current law, bearer securities may not be offered or sold during the restricted
period, or delivered in definitive form in connection with a sale during the
restricted period (as defined under "DESCRIPTION OF THE SECURITIES--Bearer
Securities and Registered Securities"), in the United States or to United States
persons other than to (a) the United States office of (i) an international
organization (as defined in Section 7701(a)(18) of the Code), (ii) a foreign
central bank (as defined in Section 895 of the Code), or (iii) any underwriter,
agent, or dealer offering or selling bearer securities during the restricted
period (a "Distributor") pursuant to a written contract with the Issuer or with
another Distributor, that purchases bearer securities for resale or for its own
account and agrees to comply with the requirements of Section 165(j)(3)(A), (B),
or (C) of the Code, or (b) the foreign branch of a United States financial
institution purchasing for its own account or for resale, which institution
agrees to comply with the requirements of Section 165(j)(3)(A), (B), or (C) of
the Code. In addition, a sale of a bearer security may be made during the
restricted period to a United States person who acquired and holds the bearer
security on the certification date through a foreign branch of a United States
financial institution that agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code. Any Distributor (including an affiliate of
a Distributor) offering or selling bearer securities during the restricted
period must agree not to offer or sell bearer securities in the United States or
to United States persons (except as discussed above) and must employ procedures
reasonably designed to ensure that its employees or agents directly engaged in
selling bearer securities are aware of these restrictions.
Bearer securities and their interest coupons will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Section 165(j) and 1287(a) of the
Internal Revenue Code."
As used herein, "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States and an estate the income of which is
subject to United States federal income taxation regardless of its source 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
persons have the authority to control all substantial decisions of such trust,
and "United States" means the United States of America (including the States and
the District of Columbia) and its possessions including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
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FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of certain anticipated federal income tax
consequences of the purchase, ownership, and disposition of the Securities. The
summary is based upon the provisions of the Code, the regulations promulgated
thereunder, including, where applicable, proposed regulations, and the judicial
and administrative rulings and decisions now in effect, all of which are subject
to change or possible differing interpretations. The statutory provisions,
regulations, and interpretations on which this summary and the opinion of
counsel to which the summary refers below, are based are subject to change, and
such a change could apply retroactively. No rulings have been or will be sought
from the IRS on these matters.
The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investors in light of their individual
circumstances, nor with certain types of investors subject to special treatment
under the federal income tax laws. This summary focuses primarily upon investors
who will hold Securities as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Code, but much of the
discussion is applicable to other investors as well. Potential purchasers of
Securities are advised to consult their own tax advisers concerning the federal,
state or local tax consequences to them of the purchase, holding and disposition
of the Securities.
CHARACTERIZATION OF SECURITIES
Unless otherwise stated in the applicable Prospectus Supplement, a REMIC
election will be made with respect to each Series of Securities. In such a case,
special counsel to the Issuer will deliver its opinion to the effect that the
arrangement by which the Securities of that Series are issued will be treated as
a REMIC as long as all of the provisions of the applicable Indenture or Trust
Agreement, as applicable, are complied with and the statutory and regulatory
requirements are satisfied. Securities of such Series will be designated as
"regular interests" or "residual interests" in a REMIC, as specified in the
related Prospectus Supplement.
If the applicable Prospectus Supplement so specifies with respect to a
Series of Securities, the Securities of such Series will not be treated as
regular or residual interests in a REMIC for federal income tax purposes but
instead will be treated as (i) indebtedness of the Issuer; (ii) an undivided
beneficial ownership interest in the Mortgage Loans (and the arrangement
pursuant to which the Mortgage Loans will be held and the Securities will be
issued will be treated as a grantor trust under Subpart E, part I of subchapter
J of the Code and not as an association taxable as a corporation for federal
income tax purposes); (iii) equity interests in an association that will satisfy
the requirements for qualification as a real estate investment trust; (iv)
interests in an entity that will be treated as a partnership for federal income
tax purposes, or (v) interests in an entity or a pool of assets that will
satisfy the requirements for qualification as a financial asset securitization
investment trust (a "FASIT") for federal income tax purposes. The federal income
tax consequences to Bondholders or Certificateholders of any such Series will be
described in the applicable Prospectus Supplement.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling Agreement or Indenture with respect to each REMIC will
include provisions designed to maintain the Trust Fund's status as a REMIC under
the REMIC Provisions. It is not anticipated that the status of any Trust Fund as
a REMIC will be terminated.
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Except to the extent the related Prospectus Supplement specifies otherwise,
if a REMIC election is made with respect to a Series of Securities, (i)
Securities held by a domestic building and loan association will constitute "a
regular or a residual interest in a REMIC" within the meaning of Code Section
7701(a)(19)(C)(xi) (assuming that at least 95% of the REMIC's assets consist of
cash, government securities, "loans . . . secured by an interest in real
property which is . . . residential real property," and other types of assets
described in Code Section 7701(a)(19)(C)); and (ii) Securities held by a real
estate investment trust will constitute "real estate assets" within the meaning
of Code Section 856(c)(6)(B), and income with respect to the Securities will be
considered "interest on obligations secured by mortgages on real property or on
interest in real property" within the meaning of Code Section 856(c)(3)(B)
(assuming, for both purposes, that at least 95% of the REMIC's assets are
qualifying assets). If less than 95% of the REMIC's assets consist of assets
described in (i) or (ii) above, then Securities will qualify for the tax
treatment described in (i) or (ii) in the proportion that such REMIC assets are
qualifying assets. In general, Mortgage Loans secured by non-residential real
property will not constitute "loans . . . secured by an interest in real
property which is . . . residential real property" within the meaning of Section
7701(a)(19)(C). 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.
It is possible that various reserves or funds will reduce the proportion of
REMIC assets which qualify under the standards described above.
TAXATION OF REGULAR INTEREST SECURITIES
INTEREST AND ACQUISITION DISCOUNT. Securities that qualify as regular
interests in a REMIC ("Regular Interest Securities") are generally treated as
indebtedness for federal income tax purposes. Stated interest on a Regular
Interest Security will be taxable as ordinary income using the accrual method of
accounting, regardless of the Bondholder's or Certificateholder's normal
accounting method. Reports will be made annually to the IRS and to holders of
Regular Interest Securities that are not excepted from the reporting
requirements regarding amounts treated as interest (including accrual of
original issue discount) on Regular Interest Securities.
Compound Interest Securities, Interest Weighted Securities, and Zero Coupon
Securities will, and other Securities constituting Regular Interest Securities
may, be issued with "original issue discount" ("OID") within the meaning of Code
Section 1273. Rules governing original issue discount are set forth in sections
1271-1275 of the Code and the Treasury regulations thereunder (the "OID
Regulations"). Treasury regulations (the "Contingent Regulations") governing the
treatment of contingent payment obligations also have been adopted. As described
more fully below, Code Section 1272(a)(6) requires the use of an income tax
accounting methodology that utilizes (i) a single constant yield to maturity and
(ii) the Prepayment Assumptions. Under Section 1272(a)(6) of the Code, special
rules apply to the computation of OID on instruments, such as the Regular
Interest Securities, on which principal is prepaid based on prepayments of the
underlying assets. Neither the OID Regulations nor the Contingent Regulations
contain rules applicable to instruments governed by Section 1272(a)(6). Although
technically not applicable to prepayable securities, the Contingent Regulations
may represent a possible method to be applied in calculating OID on certain
Classes of Certificates. Until the Treasury Department issues guidance to the
contrary, the Servicer or other person responsible for computing the amount of
original issue discount to be reported to a Regular Interest Securityholder each
taxable year (the "Tax Administrator") intends to
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base its computations on Code Section 1272(a)(6), the OID Regulations and the
Contingent Regulations as described below. However, because no regulatory
guidance currently exists under Code Section 1272(a)(6), there can be no
assurance that the methodology described below represents the correct manner of
calculating original issue discount on the Regular Interest Securities.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Regular Interest Security and its issue price.
A holder of a Regular Interest Security must include such OID in gross income as
ordinary interest income as it accrues under a method taking into account an
economic accrual of the discount. In general, OID must be included in income in
advance of the receipt of the cash representing that income. The amount of OID
on a Regular Interest Security will be considered to be zero if it is less than
a DE MINIMIS amount determined under the Code, generally less than 0.25% of the
stated redemption price at maturity of the Regular Interest Security multiplied
by the weighted average maturity of the Regular Interest Security. For this
purpose, the weighted average maturity of the Regular Interest Security 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 in reduction of stated redemption price at maturity 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 Interest
Security and the denominator of which is the stated redemption price at maturity
of the Regular Interest Security. The schedule of such distributions should be
determined in accordance with the assumed rate of prepayment of the Mortgage
Loans used in pricing the Regular Interest Securities (the "Prepayment
Assumption") relating to the Regular Interest Securities. The Prepayment
Assumption with respect to a Series of Regular Interest Securities will be set
forth in the applicable Prospectus Supplement. However, the amount of any DE
MINIMIS OID must be included in income as principal payments are received on a
Regular Interest Security, in the proportion that each such payment bears to the
original principal balance of the Security.
The issue price of a Regular Interest Security of a Class will generally be
the initial offering price at which a substantial amount of the Securities in
the Class are sold, and will be treated by the Issuer as including, in addition,
the amount paid by the Bondholder or Certificateholder for accrued interest that
relates to a period prior to the Closing Date of such Regular Interest Security.
Under the OID Regulations, the stated redemption price at maturity is the sum of
all payments on the Security other than any "qualified stated interest"
payments. Qualified stated interest is defined as any one of a series of
payments equal to the product of the outstanding principal balance of the
Security and a single fixed rate, or certain variable rates of interest, that is
unconditionally payable at least annually. See "--Variable Rate Securities"
below. In the case of the Compound Interest Securities, Interest Weighted
Securities and certain of the other Regular Interest Securities, none of the
payments under the instrument will be considered "qualified stated interest,"
and thus the aggregate amount of all payments will be included in the stated
redemption price. For example, any securities upon which interest can be
deferred and added to principal ("Deferred Interest Securities") will not be
"qualified stated interest." In addition, because Securities Owners are entitled
to receive interest only to the extent that payments are made on the Mortgage
Loans, interest on all Regular Interest Securities may not be "unconditionally
payable." In that case, all of the yield on a Regular Interest Security will be
taxed as OID, but interest would not then be includable in income again when
received. Unless otherwise specified in the related Prospectus Supplement, the
Issuer intends to take the position for formal income tax information reporting
purposes that interest on the Regular Interest Securities is "unconditionally
payable."
The holder of a Regular Interest Security issued with OID must include in
gross income, for all days during its taxable year on which it holds such
Regular Interest Security, the sum of the "daily portions" of such OID. Such
daily portions are computed by allocating to each day during a taxable year a
pro rata portion of the OID that accrued during the relevant accrual period. In
the case of a debt instrument, subject to Section 1272(a)(6) of the Code, such
as a Regular Interest Security, that is subject to acceleration due to
prepayments on other debt obligations securing such instrument, OID is computed
by
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taking into account the Prepayment Assumption. The amount of OID that will
accrue during an accrual period (generally the period between interest payments
or compounding dates) is the excess (if any) of (i) the sum of (a) the present
value of all payments remaining to be made on the Regular Interest Security as
of the close of the accrual period and (b) the payments during the accrual
period of amounts included in the stated redemption price of the Regular
Interest Security, over (ii) an "adjusted issue price" of the Regular Interest
Security at the beginning of the accrual period. The adjusted issue price of a
Regular Interest Security is the sum of its issue price plus prior accruals of
OID, reduced by the total payments made with respect to such Regular Interest
Security in all prior periods, other than qualified stated interest payments.
The present value of the remaining payments is determined on the basis of three
factors: (i) the original yield to maturity of the Regular Interest Security
(determined on the basis of compounding at the end of each accrual period and
properly adjusted for the length of the accrual period), (ii) events which have
occurred before the end of the accrual period and (iii) the assumption that the
remaining payments will be made in accordance with the original Prepayment
Assumption. Although original issue discount will be reported to Bondholders or
Certificateholders based on the Prepayment Assumption, no representation is made
to Bondholders or Certificateholders that Mortgage Loans will be prepaid at that
rate or at any other rate.
Certain classes of Regular Interest Securities may represent more than one
class of REMIC regular interests. Unless the applicable Prospectus Supplement
specifies otherwise, the Trustee intends, based on the OID Regulations, to
calculate OID on such Regular Interest Securities as if, solely for the purposes
of computing OID, the separate regular interests were a single debt instrument.
Certain Series of Securities may be structured to include two or more
REMICs, one or more of which (each, an "Upper Tier REMIC") hold regular
interests ("Lower Tier Interests") in other REMICs (each, a "Lower Tier REMIC").
Under the OID Regulations, OID on all of the Lower Tier Interests issued by a
single Lower Tier REMIC that are held by a second REMIC will be calculated by
treating all of such Lower Tier Interests as a single debt instrument.
A holder of a Regular Interest Security, which acquires the Regular Interest
Security for an amount that exceeds its stated redemption price, will not
include any original issue discount in gross income. A subsequent holder of a
Regular Interest Security which acquires the Regular Interest Security for an
amount that is less than its stated redemption price, will be required to
include original issue discount in gross income, but such a holder who purchases
such Regular Interest Security for an amount that exceeds its adjusted issue
price will be entitled (as will an initial holder who pays more than a Regular
Interest Security's issue price) to offset such original issue discount by
comparable economic accruals of offsetting portions of such excess.
INTEREST WEIGHTED SECURITIES. It is not clear how income should be accrued
with respect to Regular Interest Securities the payments on which consist solely
or primarily of a specified portion of the interest payments on qualified
mortgages held by a REMIC ("Interest Weighted Securities"). Absent guidance to
the contrary, the Issuer intends to take the position that all of the income
derived from Interest Weighted Securities is treated as OID and that the amount
and rate of accrual of such OID should be calculated in the same manner as for a
Compound Interest Security. Those calculations could result in an income accrual
for a period below zero (a "Negative Adjustment"). Any such 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 accruals of positive
OID. The legislative history to the relevant Code provisions indicates, however,
that negative amount of OID 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 appears that any losses
resulting from a Negative Adjustment may not be recognized currently, but must
be carried forward until disposition or retirement of the debt obligation.
However it is possible that income derived from an Interest Weighted Security
could be calculated as if the Interest Weighted Security were a bond purchased
at a premium equal to the excess of the price paid by such holder for the
Interest Weighted Security over its stated principal amount, if any. Under this
approach, a holder would be entitled
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to amortize such premium only if it had in effect an election under Section 171
of the Code with respect to all taxable debt instruments held by such holder, as
described below.
VARIABLE RATE REGULAR SECURITIES. The REMIC regulations (the "REMIC
Regulations") permit REMICs to issue regular interests bearing a variety of
variable rates including rates based on (i) "qualified floating rates" or (ii) a
weighted average of the interest rates on some or all of the qualified mortgages
held by the REMIC (a "Variable Rate Security"). 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 singled 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 is any rate
(other than a qualified floating 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 inverse floating rate may nevertheless be an objective rate.
Under the OID Regulations, the amount and accrual of OID on a Variable Rate
Security that qualifies for treatment under the rules applicable to variable
rate debt instruments (a "VRDI Security") is determined, in general, by
converting the VRDI Security into a hypothetical fixed rate security and
applying the rules applicable to fixed rate securities described above to the
hypothetical fixed rate security. A VRDI Security providing for a qualified
floating rate or rates or a qualified inverse floating rate is converted to a
hypothetical fixed rate security by assuming that each qualified floating rate
or the qualified inverse floating rate will remain at its value as of the issue
date. A VRDI Security providing for an objective rate or rates is converted to a
hypothetical fixed rate security by assuming that each objective rate will equal
a fixed rate that reflects the yield that reasonably is expected for the
instrument. Such hypothetical fixed rate securities are assumed to have terms
identical to those provided under the related VRDI Securities, except for the
substitution of fixed rates for the qualified floating rates, objective rates,
or qualified inverse floating rate as described above. In the case of a VRDI
Security that does not provide for the payment of interest at least annually,
appropriate adjustments to the OID accruals and the qualified stated interest
payments are made in each accrual period to the extent that the interest
actually accrued or paid during the accrual period is greater or less than the
interest assumed to be accrued or paid under the hypothetical fixed rate
security.
Regular Interest Securities of certain Series may provide for interest based
on a weighted average of the interest rates on some or all of the Mortgage Loans
of the related Trust ("Weighted Average Securities"). Under the OID Regulations,
it appears that Weighted Average Securities bear interest at an "objective
rate."
Due to the complexity of these rules and the variety of Variable Rate
Securities that may be offered hereunder, the precise application of these rules
to any Variable Rate Securities offered hereunder will be discussed in the
related Prospectus Supplement, based on the specific characteristics of each
such security.
EFFECT OF DEFAULTS AND DELINQUENCIES. Each holder of a Regular Interest
Security will be required to accrue interest and original issue discount on such
Security without giving effect to any reductions in distributions attributable
to defaults or delinquencies on the Mortgage Loans, until it can be established
that any such reduction ultimately will not be recoverable. As a result, the
amount of taxable income
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reported in any period by the holder of a Regular Interest Security could exceed
the amount of economic income actually realized by the holder in such period.
Although the holder of a Regular Interest Security eventually will recognize a
loss or reduction in income attributable to previously accrued and included
income that, as a result of such loss, ultimately will not be paid, the law is
unclear with respect to the timing and character of such losses or reduction in
income.
Under Section 166 of the Code, both corporate and noncorporate holders of
Regular Interest Securities that hold such Securities in connection with a trade
of business should be allowed to deduct, as ordinary losses, any losses
sustained during a taxable year in which their Regular Interest Securities
become wholly or partially worthless as the result of one or more realized
losses on the Mortgage Loans. However, it appears that a noncorporate holder
that does not acquire a Regular Interest Security in connection with a trade or
business will not be entitled to deduct a loss under Section 166 of the Code
until such holder's Regular Interest Security becomes wholly worthless (that is,
until its outstanding principal balance has been reduced to zero) and that the
loss will be characterized as a short-term capital loss.
MARKET DISCOUNT AND PREMIUM. A purchaser of a Regular Interest Security may
also be subject to the market discount rules of the Code. Such purchaser
generally will be required to recognize accrued market discount as ordinary
income as payments of principal are received on such Regular Interest Security,
or upon sale or exchange of the Regular Interest Security. In general terms,
until regulations are promulgated, market discount may be treated as accruing,
at the election of the holder, either (i) under a constant yield method, taking
into account the Prepayment Assumption, or (ii) in the ratio of (a) in the case
of a Regular Interest Security not originally issued with original issue
discount, stated interest payable in the relevant period to total stated
interest remaining to be paid at the beginning of the period or (b) in the case
of a Regular Interest Security originally issued at a discount, original issue
discount in the relevant period to total original issue discount remaining to be
paid. A holder of a Regular Interest Security having market discount may also be
required to defer a portion of the interest deductions attributable to any
indebtedness incurred or continued to purchase or carry the Regular Interest
Security. As an alternative to the inclusion of market discount in income on the
foregoing basis, the holder may elect to include such market discount in income
currently as it accrues on all market discount instruments acquired by such
holder in that taxable year or thereafter, in which case the interest deferral
rule will not apply.
A holder who purchases a Regular Interest Security (other than an Interest
Weighted Security, to the extent described above) at a cost greater than its
stated redemption price at maturity, generally will be considered to have
purchased the Security at a premium, which it may elect to amortize as an offset
to interest income on such Security (and not as a separate deduction item) on a
constant yield method. Although no regulations addressing the computation of
premium accrual on collateralized mortgage obligations or REMIC regular
interests have been issued, applicable legislative history indicates that
premium is to be accrued in the same manner as market discount. Accordingly, it
appears that the accrual of premium on a Regular Interest Security will be
calculated using the prepayment assumption used in pricing such Regular Interest
Security. If a holder makes an election to amortize premium on a Security, such
election will apply to all taxable debt instruments (including all REMIC regular
interests) held by the holder at the beginning of the taxable year in which the
election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the Internal Revenue
Service. Purchasers who pay a premium for the Regular Interest Security should
consult their tax advisers regarding the election to amortize premium and the
method to be employed.
ELECTION TO TREAT ALL INTEREST UNDER THE CONSTANT YIELD METHOD. A holder of
a debt instrument such as a Regular Interest Security 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 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
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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 premium
bonds held or market discount bonds 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 Internal Revenue Service. Investors should
consult their own tax advisors regarding the advisability of making such an
election.
SALE OR EXCHANGE OF REGULAR INTEREST SECURITIES
A Regular Bondholder's or Regular Certificateholder's tax basis in its
Regular Interest Securities is the price such holder pays for a Security, plus
amounts of original issue discount and market discount included in income and
reduced by any payments received (other than qualified periodic interest
payments), any amortized premium, and any prior losses. Gain or loss recognized
on a sale, exchange, or redemption of a Regular Interest Securities, measured by
the difference between the amount realized and the Regular Interest Security's
basis as so adjusted, will generally be capital gain or loss, assuming that the
Regular Interest Security is held as a capital asset. If, however, a Regular
Bondholder or Regular Certificateholder is a bank, thrift, or similar
institution described in Section 582 of the Code, gain or loss realized on the
sale or exchange of a Regular Interest Security will be taxable as ordinary
income or loss. In addition, gain from the disposition of a Regular Interest
Security that might otherwise be capital gain will be treated as ordinary income
to the extent of the excess, if any, of (i) the amount that would have been
includable in the holder's income if the yield on such Regular Interest Security
had equaled 110% of the applicable federal rate as of the beginning of such
holder's holding period, over (ii) the amount of ordinary income actually
recognized by the holder with respect to such Regular Interest Security. The
Taxpayer Relief Act of 1997 (the "1997 Act") has generally reduced capital gains
tax rates for non-corporate taxpayers, who should consult their tax advisors
regarding the consequences to them of the 1997 Act. There is no such discrepancy
in tax rates on capital gains and ordinary income in the case of corporations.
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REMIC EXPENSES
As a general rule, all of the expenses of a REMIC will be taken into account
by holders of the Residual Interest Securities or the REMIC residual interest.
In the case of a "single class REMIC," however, the expenses will be allocated,
under temporary Treasury regulations, among the holders of the Regular Interest
Securities and the holders of the Residual Interest Securities on a daily basis
in proportion to the relative amounts of income accruing to each Bondholder or
Certificateholder on that day. In the case of a holder of a Regular Interest
Security who is an individual or a "pass-through interest holder" (including
certain pass-through entities but not including real estate investment trusts),
such expenses will be deductible only to the extent that such expenses, plus
other "miscellaneous itemized deductions" of the Bondholder or Certificateholder
exceed 2% of such Bondholder's or Certificateholder's adjusted gross income and
will not be deductible in computing alternative minimum taxable income. In
addition, Code Section 68 provides that the amount of itemized deductions
otherwise allowable for the taxable year for an individual whose adjusted gross
income exceeds the applicable amount (for 1991, $100,000, or $50,000 in the case
of a separate return by a married individual within the meaning of Code Section
7703, which amounts will be adjusted annually for inflation) will be reduced by
the lesser of (i) 3% of the excess of adjusted gross income over the applicable
amount, or (ii) 80% of the amount of itemized deductions otherwise allowable for
such taxable year. Moreover, such expenses are discontinued entirely as
deductions for purposes of the Alternative Minimum Tax. The disallowance of this
deduction may have a significant impact on the yield of the Regular Interest
Security to such a holder. In general terms, a single class REMIC is one that
either (i) would qualify, under existing Treasury regulations, as a grantor
trust if it were not a REMIC (treating all interests as ownership interests,
even if they would be classified as debt for federal income tax purposes) or
(ii) is similar to such a trust and which s structured with the principal
purpose of avoiding the single class REMIC rules.
Unless otherwise disclosed in the related Prospectus Supplement, REMICs
issuing securities offered hereunder will not be treated as "single class"
REMICs under these rules.
TAXATION OF THE REMIC
GENERAL. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not generally subject to entity-level tax. Rather, the
taxable income or net loss of a REMIC is taken into account by the holders of
residual interests. The regular interests are generally taxable as debt of the
REMIC.
CALCULATION OF REMIC INCOME. The taxable income or net loss of a REMIC is
determined under an accrual method of accounting and in the same manner as in
the case of an individual, with certain adjustments. In general, the taxable
income or net loss will be the difference between (i) the gross income produced
by the REMIC's assets, including stated interest and any original issue discount
or market discount on loans and other assets, income from amortization of
premium on Regular Interest Securities issued at a premium and income from
write-off of Regular Interest Securities, and (ii) deductions, including stated
interest and original issue discount accrued on a Regular Interest Security,
amortization of any premium with respect to loans, losses on Mortgage Loans, and
servicing fees and other expenses of the REMIC. A holder of a Residual Interest
Security that is an individual or a "pass-through interest holder" (including
certain pass-through entities, but not including real estate investment trusts)
will be unable to deduct servicing fees payable on the loans or other
administrative expenses of the REMIC for a given taxable year, to the extent
that such expenses, when aggregated with the Residual Interest Securityholder's
other miscellaneous itemized deductions for that year, do not exceed two percent
of such holder's adjusted gross income. In addition, Code Section 68 provides
that the amount of itemized deductions otherwise allowable for the taxable year
for an individual whose adjusted gross income exceeds a specified applicable
amount will be reduced by the lesser of (i) 3% of the excess of adjusted gross
income over the applicable amount, or (ii) 80% of the amount of itemized
deductions otherwise allowable for such taxable year. See "--REMIC Expenses"
above.
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For purposes of computing its taxable income or net loss, the REMIC should
have an initial aggregate tax basis in its assets equal to the aggregate fair
market value of the regular interests and the residual interests on the Start Up
Day (generally, the day that the interests are issued). That aggregate basis
will be allocated among the assets of the REMIC in proportion to their
respective fair market values.
The original issue discount provisions of the Code apply to loans of
individuals originated on or after March 2, 1984, and the market discount
provisions apply to all loans. Subject to possible application of the DE MINIMIS
rules, the method of accrual by the REMIC of original issue discount on such
loans will be equivalent to the method under which holders of Regular Interest
Securities accrue original issue discount (i.e., under the constant yield method
taking into account the Prepayment Assumption). The REMIC will deduct original
issue discount on the Regular Interest Securities in the same manner that the
holders of the Securities include such discount in income, but without regard to
the DE MINIMIS rules. See "--Taxation of Regular Interest Securities" above.
However, a REMIC that acquires loans at a market discount must include such
market discount in income currently, as it accrues, on a constant interest
basis.
To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium, if attributable to
mortgages originated after September 27, 1985, will be amortized over the life
of the loans (taking into account the Prepayment Assumption) on a constant yield
method. Although the law is somewhat unclear regarding recovery of premium
attributable to loans originated on or before such date, it is possible that
such premium may be recovered in proportion to payments of loan principal.
INCOME FROM FORECLOSURE PROPERTY. To the extent that the Lower Tier REMIC
derives income from Foreclosed Properties that is treated as "net income from
foreclosure property," that income will be subject to taxation at the highest
corporate tax rate. Net income from foreclosure property generally includes gain
from the sale of a foreclosure property that is inventory property and net
income from the property that would not be treated as "rents from real property"
or other certain other qualifying income for a real estate investment trust. A
trust agreement or indenture may permit the Servicer to operate a Foreclosed
Property in a manner that produces income subject to the foregoing tax if
certain conditions are satisfied. In addition, if the operation of the
Foreclosed Property is treated as a trade or business carried on by the REMIC,
then unless the property is operated through an independent contractor, the
income from the foreclosed property will be subject to tax on "net income from
foreclosure property" at a rate of 100%. Accordingly, operation of Foreclosed
Properties generally will be required to be conducted through an independent
contractor.
PROHIBITED TRANSACTIONS AND CONTRIBUTIONS TAX. The REMIC will be subject to
a 100% tax on any net income derived from a "prohibited transaction." For this
purpose, net income will be calculated without taking into account any losses
from other prohibited transactions or any deductions attributable to any
prohibited transaction that resulted in a loss. In general, prohibited
transactions include (i) subject to limited exceptions, the sale or other
disposition of any qualified mortgage transferred to the REMIC; (ii) subject to
a limited exception, the sale or other disposition of a cash flow investment;
(iii) the receipt of any income from assets not permitted to be held by the
REMIC pursuant to the Code; or (iv) the receipt of any fees or other
compensation for services rendered by the REMIC. It is anticipated that a REMIC
will not engage in any prohibited transactions in which it would recognize a
material amount of net income. In addition, subject to a number of exceptions, a
tax is imposed at the rate of 100% on amounts contributed to a REMIC after the
close of the three-month period beginning on the Start Up Day. Unless chargeable
to the servicer or trustee under the applicable Trust Agreement or Indenture,
such taxes will be paid out of the assets of the REMIC and, unless otherwise
specified in the related Prospectus Supplement, will be allocated pro rata to
all outstanding Classes of Securities of such REMIC.
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TAXATION OF HOLDERS OF RESIDUAL INTEREST SECURITIES
The Holder of a Security representing a REMIC residual interest (a "Residual
Interest Security") will take into account the "daily portion" of the taxable
income or net loss of the REMIC for each day during the taxable year on which
such holder held the Residual Interest Security. The daily portion is determined
by allocating to each day in any calendar quarter its ratable portion of the
taxable income or net loss of the REMIC for such quarter, and by allocating that
amount among the holders (on such day) of the Residual Interest Securities in
proportion to their respective holdings on such day.
The holder of a Residual Interest Security must report its proportionate
share of the taxable income of the REMIC whether or not it receives cash
distributions from the REMIC attributable to such income or loss. The reporting
of taxable income without corresponding distributions could occur, for example,
in certain REMIC issues in which the loans held by the REMIC were issued or
acquired at a discount, since mortgage prepayments cause recognition of discount
income, while the corresponding portion of the prepayment could be used in whole
or in part to make principal payments on Regular Interest Securities issued
without any discount or at an insubstantial discount. (If this occurs, it is
likely that cash distributions will exceed taxable income in later years.)
Taxable income may also be greater in earlier years of certain REMIC issues as a
result of the fact that interest expense deductions, as a percentage of
outstanding principal on Regular Interest Securities, will typically increase
over time as lower yielding Securities are paid, whereas interest income with
respect to loans will generally remain constant over time as a percentage of
loan principal.
In any event, because the holder of a residual interest is taxed on the net
income of the REMIC, the taxable income derived from a Residual Interest
Security in a given taxable year will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pretax yield. Therefore, the after-tax
yield on the Residual Interest Security may be less than that of such a bond or
instrument, or may be negative. Consequently, a Residual Interest Security may
have a negative "value".
LIMITATION ON LOSSES. The amount of the REMIC's net loss that a holder may
take into account currently is limited to the holder's adjusted basis at the end
of the calendar quarter in which such loss arises. A holder's basis in a
Residual Interest Security will initially equal such holder's purchase price,
and will subsequently be increased by the amount of the REMIC's taxable income
allocated to the holder, and decreased (but not below zero) by the amount of
distributions made and the amount of the REMIC's net loss allocated to the
holder. Any disallowed loss may be carried forward indefinitely, but may be used
only to offset income generated by the same REMIC. The ability of Residual
Bondholders or Residual Certificateholders to deduct net losses may be subject
to additional limitations under the Code, as to which such holders should
consult their tax advisers.
DISTRIBUTIONS. Distributions on a Residual Interest Security (whether at
their scheduled times or as a result of prepayments) will generally not result
in any additional taxable income or loss to a holder of a Residual Interest
Security. If the amount of such payment exceeds a holder's adjusted basis in the
Residual Interest Security, however, the holder will recognize gain (treated as
gain from the sale of the Residual Interest Security) to the extent of such
excess.
MARK-TO-MARKET RULES. A Residual Interest Security is not treated as a
security and thus may not be marked to market under Treasury regulations that
generally require a securities dealer to mark to market securities held for sale
to customers.
SALE OR EXCHANGE. A holder of a Residual Interest Security will recognize
gain or loss on the sale or exchange of a Residual Interest Security equal to
the difference, if any, between the amount realized and such Bondholder's or
Certificateholder's adjusted basis in the Residual Interest Security at the time
of such sale or exchange. Except to the extent provided in regulations, which
have not yet been issued, any loss
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upon disposition of a Residual Interest Security will be disallowed if the
selling Bondholder or Certificateholder acquires any residual interest in a
REMIC or similar mortgage pool within six months before or after such
disposition.
EXCESS INCLUSION INCOME
The portion of a Residual Bondholder's or Residual Certificateholder's REMIC
taxable income consisting of "excess exclusion" income may not be offset by
other deductions or losses, including net operating losses, on such Bondholder's
or Certificateholder's federal income tax return. Further, if the holder of a
Residual Interest Security is an organization subject to the tax on unrelated
business income imposed by Code Section 511, such Residual Bondholder's or
Residual Certificateholder's excess inclusion income will be treated as
unrelated business taxable income of such Bondholder or Certificateholder's. In
addition, under Treasury regulations yet to be issued, if a real estate
investment trust, a regulated investment company, a common trust fund, or
certain cooperatives were to own a Residual Interest Security, a portion of
dividends (or other distributions) paid by the real estate investment trust (or
other entity) would be treated as excess inclusion income. If a Residual
Interest Security is owned by a foreign person, excess inclusion income is
subject to tax at a rate of 30% which may not be reduced by treaty and is not
eligible for treatment as "portfolio interest."
The excess inclusion portion of a REMIC's income is generally equal to the
excess, if any, of REMIC taxable income for the quarterly period allocable to a
Residual Interest Security, over the daily accruals for such quarterly period of
(i) 120% of the long term applicable federal rate on the Start Up Day multiplied
by (ii) the adjusted issue price of such Residual Interest Security at the
beginning of such quarterly period. The adjusted issue price of a Residual
Interest Security at the beginning of each calendar quarter will equal its issue
price (calculated in a manner analogous to the determination of the issue price
of a Regular Interest Security), increased by the aggregate of the daily
accruals for prior calendar quarters, and decreased (but not below zero) by the
amount of loss allocated to a holder and the amount of distributions made on the
Residual Interest Security before the beginning of the quarter. The long-term
federal rate, which is announced monthly by the Treasury Department, is an
interest rate that is based on the average market yield of outstanding
marketable obligations of the United States government having remaining
maturities in excess of nine years.
Under the REMIC Regulations, in certain circumstances, transfers of Residual
Interest Securities may be disregarded. See "--Restrictions on Ownership and
Transfer of Residual Interest Securities" and "-- Tax Treatment of Foreign
Investors" below.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF RESIDUAL INTEREST SECURITIES
As a condition to qualification as a REMIC, reasonable arrangements must be
made to prevent the ownership of a REMIC residual interest by any "Disqualified
Organization." Disqualified Organizations include the United States, any State
or political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, a rural
electric or telephone cooperative described in Section 1381(a)(2)(C) of the
Code, or any entity exempt from the tax imposed by Sections 1-1399 of the Code,
if such entity is not subject to tax on its unrelated business income.
Accordingly, the Indenture or Trust Agreement, as applicable, will prohibit
Disqualified Organizations from owning a Residual Interest Security. In
addition, no transfer of a Residual Interest Security will be permitted unless
the proposed transferee shall have furnished to the Issuer an affidavit
representing and warranting that it is neither a Disqualified Organization nor
an agent or nominee acting on behalf of a Disqualified Organization.
If a Residual Interest Security is transferred to a Disqualified
Organization (in violation of the restrictions set forth above), a substantial
tax will be imposed on the transferor of such Residual Interest Security at the
time of the transfer. In addition, if a Disqualified Organization holds an
interest in a pass-
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through entity (including, among others, a partnership, trust, real estate
investment trust, regulated investment company, or any person holding as
nominee), that owns a Residual Interest Security, the pass-through entity will
be required to pay an annual tax on its share of the excess inclusion income of
the REMIC allocable to such Disqualified Organization.
Under the REMIC Regulations, if a Residual Interest Security is a
"noneconomic residual interest," as described below, a transfer of a Residual
Interest Security to a United States person will be disregarded for all Federal
tax purposes unless no significant purpose of the transfer was to impede the
assessment or collection of tax. A Residual Interest Security 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 Security at least
equals the product of the present value of the anticipated excess inclusions and
the highest rate of tax 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 the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes. The
present value is calculated based on the Prepayment Assumption, using a discount
rate equal to the "applicable federal rate" at the time of transfer. If a
transfer of a residual interest is disregarded, the transferor would be liable
for any Federal income tax imposed upon taxable income derived by the transferee
from the REMIC. A significant purpose to impede the assessment or collection of
tax exists if the transferor, at the time of transfer, knew or should have known
that the transferee would be unwilling or unable to pay taxes on its share of
the taxable income of the REMIC. A similar limitation exists with respect to
certain transfers of residual interests by foreign persons to United States
persons. See "--Tax Treatment of Foreign Investors" below.
ADMINISTRATIVE MATTERS
The REMIC's books must be maintained on a calendar year basis and the REMIC
must file an annual federal income tax return. The REMIC will also be subject to
the procedural and administrative rules of the Code applicable to partnerships,
including the determination of any adjustments to, among other things, items of
REMIC income, gain, loss, deduction, or credit, by the Internal Revenue Service
in a unified administrative proceeding. The holder of the Residual Interest
Security holding the largest percentage interest will be designated as "tax
matters person" of the related REMIC for purposes of any such proceeding.
TAX STATUS AS A GRANTOR TRUST
GENERAL. If the applicable Prospectus Supplement so specifies with respect
to a Series of Securities, the Securities of such Series will not be treated as
regular or residual interests in a REMIC for federal income tax purposes but
instead, special tax counsel to the Issuer will deliver its opinion to the
effect that the arrangement by which the Securities of that Series are issued
will be treated as a "grantor" or "fixed investment" trust as long as all of the
provisions of the applicable Trust Agreement are complied with and the statutory
and regulatory requirements are satisfied. In some Series ("Pass-Through
Certificates"), there will be no separation of the principal and interest
payments on the Mortgage Loans. In such circumstances, a Certificateholder will
be considered to have purchased an undivided interest in each of the Mortgage
Loans. In other cases ("Stripped Certificates"), sale of the Certificates will
produce a separation in the ownership of the principal payments and interest
payments on the Mortgage Loans.
Each Certificateholder must report on its federal income tax return its pro
rata share of the gross income derived from the Mortgage Loans (not reduced by
the amount payable as fees to the Trustee and the Master Servicer and similar
fees (collectively, the "Servicing Fee")), at the same time and in the same
manner as such items would have been reported under the Certificateholder's tax
accounting method had it held its interest in the Mortgage Loans directly,
received directly its share of the amounts received with respect to the Mortgage
Loans, and paid directly its share of the Servicing Fees. In the case of Pass-
Through Certificates, such gross income will consist of a pro rata share of all
of the income derived from all of the Mortgage Loans and, in the case of
Stripped Certificates, such income will consist of a pro rata
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share of the income derived from each stripped bond or stripped coupon in which
the Certificateholder owns an interest. The holder of a Certificate will
generally be entitled to deduct such Servicing Fees under Section 162 or Section
212 of the Code to the extent that such Servicing Fees represent "reasonable"
compensation for the services rendered by the Trustee, the Master Servicer, and
any other service providers. In the case of a noncorporate holder, however,
Servicing Fees (to the extent not otherwise disallowed, e.g., because they
exceed reasonable compensation) will be deductible in computing such holder's
regular tax liability only to the extent that such fees, when added to other
miscellaneous itemized deductions, exceed 2% of adjusted gross income and may
not be deductible to any extent in computing such holder's alternative minimum
tax liability. In addition, Code Section 68 provides that the amount of itemized
deductions otherwise allowable for the taxable year for an individual whose
adjusted gross income exceeds the applicable amount (for 1997, $121,200, or
$60,600 in the case of a separate return by a married individual, which amounts
are adjusted annually for inflation) will be reduced by the lesser of (i) 3% of
the excess of adjusted gross income over the applicable amount, or (ii) 80% of
the amount of itemized deductions otherwise allowable for such taxable year.
DISCOUNT OR PREMIUM ON PASS-THROUGH CERTIFICATES. The holder's purchase
price of a Pass-Through Certificate is to be allocated among the Mortgage Loans
in proportion to their fair market values, determined as of the time of purchase
of the Certificates. In the typical case, the Trustee believes it is reasonable
for this purpose to treat each Mortgage Loan as having a fair market value
proportional to the share of the aggregate principal balances of all of the
Mortgage Loans that it represents, to the extent that the Mortgage Loans
underlying a series have a relatively uniform interest rate and other common
characteristics. To the extent that the portion of the purchase price of a
Certificate allocated to a Mortgage Loan (other than to a right to receive any
accrued interest thereon and any undistributed principal payments) is less than
or greater than the portion of the principal balance of the Mortgage Loan
allocable to the Certificate, the interest in the Mortgage Loan allocable to the
Certificate will be deemed to have been acquired at a discount or premium,
respectively.
The treatment of any discount will depend on whether the discount represents
original issue discount or market discount. Under Legislation enacted in 1997,
Section 1272(a)(6) of the Code requires in the case of a pool of Mortgage Loans
with original issue discount in excess of a prescribed DE MINIMIS amount, that a
holder of a Certificate report as interest income in each taxable year its share
of the amount of original issue discount that accrues during that year,
determined under a constant yield method by reference to the initial yield to
maturity of the Mortgage Loan, based on a prepayment assumption, in advance of
receipt of the cash attributable to such income and regardless of the method of
federal income tax accounting employed by that holder. It is unclear when such
prepayment assumption is determined or adjusted. Original issue discount with
respect to a Mortgage Loan could arise for example by virtue of the financing of
points by the originator of the Mortgage Loan, or by virtue of the charging of
points by the originator of the Mortgage Loan in an amount greater than a
statutory de minimis exception, in circumstances under which the points are not
currently deductible pursuant to applicable Code provisions. However, the OID
Regulations provide that if a holder acquires an obligation at a price that
exceeds its stated redemption price, the holder will not include any original
issue discount in gross income. In addition, if a subsequent holder acquires an
obligation for an amount that exceeds its adjusted issue price, the subsequent
holder will be entitled to offset the original issue discount with economic
accruals of portions of such excess. Accordingly, if the Mortgage Loans acquired
by a Certificateholder are purchased at a price that exceeds the adjusted issue
price of such Mortgage Loans, any original issue discount will be reduced or
eliminated.
Certificateholders also may be subject to the market discount rules of
Sections 1276-1278 of the Code. A Certificateholder that acquires an interest in
Mortgage Loans with more than a prescribed DE MINIMIS amount of "market
discount" (generally, the excess of the principal amount of the Mortgage Loans
over the purchaser's purchase price) will be required under Section 1276 of the
Code to include accrued market discount in income as ordinary income in each
month, but limited to an amount not exceeding the principal payments on the
Mortgage Loans received in that month and, if the Certificates are sold, the
gain
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realized. Such market discount would accrue, using a prepayment assumption, in a
manner to be provided in Treasury regulations. The relevant legislative history
of the 1986 Act indicates that, until such regulations are issued, such market
discount would in general accrue either (i) on the basis of a constant interest
rate or (ii) in the ratio of (a) in the case of Mortgage Loans not originally
issued with original issue discount, stated interest payable in the relevant
period to total stated interest remaining to be paid at the beginning of the
period or (b) in the case of Mortgage Loans originally issued at a discount,
original issue discount in the relevant period to total original issue discount
remaining to be paid.
Section 1277 of the Code provides that the excess of interest paid or
accrued to purchase or carry a loan with market discount over interest received
on such loan is allowed as a current deduction only to the extent such excess is
greater than the market discount that accrued during the taxable year in which
such interest expense was incurred. In general, the deferred portion of any
interest expense will be deductible when such market discount is included in
income, including upon the sale, disposition, or repayment of the loan. A holder
may elect to include market discount in income currently as it accrues, on all
market discount obligations acquired by such holder during the taxable year such
election is made and thereafter, in which case the interest deferral rule
discussed above will not apply.
A Certificateholder who purchases a Certificate at a premium generally will
be deemed to have purchased its interest in the underlying Mortgage Loans at a
premium. A Certificateholder who holds a Certificate as a capital asset may
generally elect under Section 171 of the Code to amortize such premium as an
offset to interest income on the Mortgage Loans (and not as a separate deduction
item) on a constant yield method. The legislative history of the 1986 Act
suggests that the same rules that will apply to the accrual of market discount
(described above), which rules now appear to require the use of a prepayment
assumption, will generally also apply in amortizing premium with respect to
Mortgage Loans originated after September 27, 1985. If a holder makes an
election to amortize premium, such election will apply to all taxable debt
instruments held by such holder at the beginning of the taxable year in which
the election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the Internal Revenue
Service. Purchasers who pay a premium for the Certificates should consult their
tax advisers regarding the election to amortize premium and the method to be
employed. Although the law is somewhat unclear regarding recovery of premium
allocable to Mortgage Loans originated before September 28, 1985, it is possible
that such premium may be recovered in proportion to payments of Mortgage Loan
principal.
Discount or Premium on Stripped Certificates. A Stripped Certificate may
represent a right to receive only a portion of the interest payments on the
Mortgage Loans, a right to receive only principal payments on the Mortgage
Loans, or a right to receive certain payments of both interest and principal.
Certain Stripped Certificated ("Ratio Strip Certificates") may represent a right
to receive differing percentages of both the interest and principal on each
Mortgage Loan. Pursuant to Section 1286 of the Code, the separation of ownership
of the right to receive some or all of the interest payments on an obligation
from ownership of the right to receive some or all of the principal payments
results in the creation of "stripped bonds" with respect to principal payments
and "stripped coupons" with respect to interest payments. Section 1286 of the
Code applies the original issue discount rules to stripped bonds and stripped
coupons. For purposes of computing original issue discount, a stripped bond or a
stripped coupon is treated as a debt instrument issued on the date that such
stripped interest is purchased with an issue price equal to its purchase price
or, if more than one stripped interest is purchased, the ratable share of the
purchase price allocable to such stripped interest. The Code, the OID
Regulations, and judicial decisions provide no direct guidance as to how the
interest and original issue discount rules are to apply to Stripped
Certificates. Under the method described above for REMIC Regular Interest
Certificates (the "Cash Flow Bond Method"), a prepayment assumption is used and
periodic recalculations are made which take into account with respect to each
accrual period the effect of prepayments during such period. Legislation enacted
in 1997 extends this treatment to instruments such as the Stripped Certificates.
The Cash Flow Bond Method will consequently be used in preparing information
reports as to the income accruing on such Certificates,
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and it is expected that original issue discount will be reported on that basis.
In applying the calculation to a class of Certificates, the Trustee will treat
all payments to be received with respect to the Certificates, whether
attributable to principal or interest on the loans, as payments on a single
installment obligation, in the case of a Class of Certificates that has no
right, or a nominal right, to receive principal, and as includable in the stated
redemption price at maturity. In the case of a "stripped bond" which is entitled
to a significant amount of principal, the Trustee intends to take the position
that interest payments are "qualified stated interest." The Internal Revenue
Service could, however, assert that original issue discount must be calculated
separately for each Mortgage Loan underlying a Certificate. In addition, in the
case of Ratio Strip or similar Certificates, the Internal Revenue Service could
assert that original issue discount must be calculated separately for each
stripped coupon or stripped bond underlying a Certificate.
Under certain circumstances, if the Mortgage Loans prepay at a rate faster
than the Prepayment Assumption, the use of the Cash Flow Bond Method may
accelerate a Certificateholder's recognition of income. If, however, the
Mortgage Loans prepay at a rate slower than the prepayment assumption, in some
circumstances the use of this method may decelerate a Certificateholder's
recognition of income.
A Stripped Certificate which either embodies only interest payments on the
underlying loans or (if it embodies some principal payments on the Mortgage
Loans) is issued at a price that exceeds the principal payments (an "Interest
Weighted Certificate"), may be taxed as a contingent payment instrument.
POSSIBLE ALTERNATIVE CHARACTERIZATIONS. The characterizations of the
Stripped Certificates described above are not the only possible interpretations
of the applicable Code provisions. Among other possibilities, the Internal
Revenue Service could contend that (i) in certain Series, each non-Interest
Weighted Certificate is composed of an unstripped undivided ownership interest
in Mortgage Loans and an installment obligation consisting of stripped principal
payments; (ii) the non-Interest Weighted Certificates are subject to the OID
Regulations; (iii) each Interest Weighted Certificate is composed of an
unstripped undivided ownership interest in the Mortgage Loans and an installment
obligation consisting of stripped interest payments; or (iv) there are as many
stripped bonds or stripped coupons as there are scheduled payments of principal
and/or interest on each Mortgage Loan.
Given the variety of alternatives for treatment of the Certificates and the
different federal income tax consequences that result from each alternative,
potential purchasers are urged to consult their own tax advisers regarding the
proper treatment of the Certificates for federal income tax purposes.
CHARACTER AS QUALIFYING MORTGAGE LOANS. In the case of Stripped
Certificates there is no specific legal authority existing regarding whether the
character of the Certificates, for federal income tax purposes, will be the same
as the Mortgage Loans. The IRS could take the position that the Mortgage Loans'
character is not carried over to the Certificates in such circumstances.
Pass-Through Certificates will be, and, although the matter is not free from
doubt, Stripped Certificates should be considered to represent "real estate
assets" within the meaning of Section 856(c)(6)(B) of the Code, and "loans . . .
secured by an interest in real property which is . . . residential real
property" within the meaning of Section 7701(a)(19)(C)(v) of the Code, and
interest income attributable to the Certificates should be considered to
represent "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code, in each case to the extent the underlying Mortgage Loans qualify for such
treatments. However, Mortgage Loans secured by non-residential real property
will not constitute "loans . . . secured by an interest in real property which
is . . . residential real property" within the meaning of Section
7701(a)(19)(C)(v) of the Code. In addition, it is possible that various reserve
funds underlying the Certificates may cause a proportionate reduction in the
above-described qualifying status categories of Certificates.
SALE OF CERTIFICATES. As a general rule, if a Certificate is sold, gain or
loss will be recognized by the holder thereof in an amount equal to the
difference between the amount realized on the sale and the Certificateholder's
adjusted tax basis in the Certificate. Such gain or loss will generally be
capital gain or
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loss if the Certificate is held as a capital asset. In the case of Pass-Through
Certificates, such tax basis will generally equal the holder's cost of the
Certificate increased by any discount income with respect to the loans
represented by such Certificate previously included in income, and decreased by
the amount of any distributions of principal previously received with respect to
the Certificate. Such gain, to the extent not otherwise treated as ordinary
income, will be treated as ordinary income to the extent of any accrued market
discount not previously reported as income. In the case of Stripped
Certificates, the tax basis will generally equal the Certificateholder's cost
for the Certificate, increased by any discount income with respect to the
Certificate previously included in income, and decreased by the amount of all
payments previously received with respect to such Certificate.
MISCELLANEOUS TAX ASPECTS
BACKUP WITHHOLDING. A Bondholder or Certificateholder, other than a
Residual Bondholder or Residual Certificateholder, may, under certain
circumstances, be subject to "backup withholding" at the rate of 31% with
respect to distributions or the proceeds of a sale of certificates to or through
brokers that represent interest or original issue discount on the Securities.
This withholding generally applies if the holder of a Security (i) fails to
furnish the Issuer with its taxpayer identification number ("TIN"); (ii)
furnishes the Issuer an incorrect TIN; (iii) fails to report properly interest,
dividends or other "reportable payments" as defined in the Code; or (iv) under
certain circumstances, fails to provide the Issuer or such holder's securities
broker with a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that the holder is not subject to backup
withholding. Backup withholding will not apply, however, with respect to certain
payments made to Bondholders or Certificateholders, including payments to
certain exempt recipients (such as exempt organizations) and to certain
Nonresidents (as defined below). Holders of the Securities should consult their
tax advisers as to their qualification for exemption from backup withholding and
the procedure for obtaining the exemption.
The Issuer will report to the Securityholders and to the Internal Revenue
Service for each calendar year the amount of any "reportable payments" during
such year and the amount of tax withheld, if any, with respect to payments on
the Securities.
TAX TREATMENT OF FOREIGN INVESTORS
Under the Code, unless interest (including OID) paid on a Security (other
than a Residual Interest Security) is considered to be "effectively connected"
with a trade or business conducted in the United States by a nonresident alien
individual, foreign partnership or foreign corporation ("Nonresidents"), such
interest will normally qualify as portfolio interest (except where (i) the
recipient is a holder, directly or by attribution, of 10% or more of the capital
or profits interest in the Issuer or (ii) the recipient is a controlled foreign
corporation to which the Issuer is a related person) and will be exempt from
federal income tax. Upon receipt of appropriate ownership statements, the Issuer
normally will be relieved of the obligation to withhold federal income tax from
such interest payments. These provisions supersede the generally applicable
provisions of the Code that would otherwise require the Issuer to withhold at a
30% rate (unless such rate were reduced or eliminated by an applicable tax
treaty) on, among other things, interest and original issue discount paid to
Nonresidents.
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Interest and original issue discount of Bondholders or Certificateholders
who are foreign persons are not subject to withholding if they are effectively
connected with a United States business conducted by the Bondholder or
Certificateholders. In such case, however, they will generally be subject to the
regular United States income tax.
Payments to holders of Residual Interest Securities who are foreign persons
will generally be treated as interest for purposes of the 30% (or lower treaty
rate) United States withholding tax. Holders should assume that such income does
not qualify for exemption from United States withholding tax as "portfolio
interest." To the extent that a payment represents a portion of REMIC taxable
income that constitutes excess inclusion income, a holder of a Residual Interest
Security will not be entitled to an exemption from or reduction of the 30% (or
lower treaty rate) withholding tax rule. If the payments are subject to United
States withholding tax, they generally will be taken into account for
withholding tax purposes only when paid or distributed (or when the Residual
Interest Security is disposed of). The Treasury has statutory authority,
however, to promulgate regulations which would require such amounts to be taken
into account at an earlier time in order to prevent the avoidance of tax. Under
the REMIC Regulations, if a Residual Interest Security has tax avoidance
potential, a transfer of a Residual Interest Security to a Nonresident will be
disregarded for all Federal tax purposes. A Residual Interest Security has tax
avoidance potential unless, at the time of the transfer the transferor
reasonably expects that the REMIC will distribute to the transferee residual
holder amounts that will equal at least 30% of each excess inclusion, and that
such amounts will be distributed at or after the time at which the excess
inclusion accrues and not later than the close of the calendar year following
the calendar year of accrual. If a Nonresident transfers a Residual Interest
Security to a United States person, and if the transfer has the effect of
allowing the transferor to avoid tax on accrued excess inclusions, then the
transfer is disregarded and the transferor continues to be treated as the owner
of the Residual Interest Security for purposes of the withholding tax provisions
of the Code. See "--Excess Inclusion Income."
STATE AND LOCAL TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "FEDERAL
INCOME TAX CONSIDERATIONS," potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the
Securities. State and local income tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state or locality. Therefore, potential
investors should consult their own tax advisors with respect to the various
state and local tax consequences of investment in the Bonds or Certificates. In
particular, potential investors in Residual Interest Securities should consult
their tax advisers regarding the taxation of the Residual Interest Securities in
general and the effect of foreclosure on the Mortgaged Properties on such
taxation.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") subject to
ERISA and persons who have certain specified relationships to such Plans
("Parties in Interest"). ERISA also imposes certain duties on persons who are
fiduciaries of Plans subject to ERISA and prohibits certain transactions between
a Plan and Parties in Interest with respect to such Plans ("Prohibited
Transactions"). Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a Plan is considered
to be a fiduciary of such Plan (subject to certain exceptions not here
relevant). Similar restrictions also apply to Plans and other retirement
arrangements, such as individual retirement accounts and Keogh plans, that are
subject to Section 4975 of the Code.
The Issuer, the Master Servicer, if any, the Servicer, the Trustee or the
provider of Enhancement, if any, because of their activities or the activities
of their respective affiliates, may be considered to be or may become Parties in
Interest with respect to certain Plans. If the Securities are acquired by a Plan
with
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respect to which the Issuer, the Master Servicer, if any, the Servicer, the
Trustee or the provider of Enhancement, if any, is a Party in Interest, such
transaction might be considered to violate the Prohibited Transaction rules of
ERISA and the Code unless such transaction were subject to one or more statutory
or administrative exemptions such as: Prohibited Transaction Class Exemption
("PTCE") 75-1, which exempts certain transactions involving employee benefit
plans and certain broker-dealers, reporting dealers and banks; PTCE 90-1, which
exempts certain transactions between insurance company pooled separate accounts
and Parties in Interest; PTCE 91-38, which exempts certain transactions between
bank collective investment funds and Parties in Interest; PTCE 95-60, which
exempts certain transactions between insurance company general accounts and
Parties in Interest; PTCE 84-14, which exempts certain transactions effected on
behalf of a Plan by a "qualified plan asset manager"; PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager"; or any other available exemption. Accordingly, prior to making an
investment in the Securities, investing Plans should determine whether the
Issuer is a Party in Interest with respect to such Plan and, if so, whether such
transaction is subject to one or more statutory or administrative exemptions.
Special caution should be exercised before the assets of a Plan (including
assets that may be held in an insurance company's separate or general accounts
where assets in such accounts may be deemed Plan assets for purposes of ERISA)
are used to purchase a Security if the Issuer, the Master Servicer, if any, the
Servicer, the Trustee, the provider of Enhancement, if any, or an affiliate
thereof is a fiduciary with respect to such assets.
The Certificates of a Series will, and the Bonds of a Series could, be
treated as "equity" for purposes of ERISA. Under regulations issued by the
Department of Labor ("DOL") (the "Plan Asset Regulations"), if a Plan makes an
"equity" investment in a corporation, partnership, trust or certain other
entities, the underlying assets and properties of such entity will be deemed for
purposes of ERISA to be assets of the investing Plan unless certain exceptions
set forth in the regulation apply.
If a particular Series is treated as "equity" for purposes of the Plan Asset
Regulations and the underlying assets of the Issuer are treated as assets of a
Plan purchasing Securities of such Series and the Mortgage Assets securing such
Series consists of a single Mortgage Loan or obligations of a single obligor or
related obligors as specified in the related Prospectus Supplement (e.g.,
affiliates of the Issuer), and Securities of such Series are acquired by a Plan
with respect to which the obligor or related obligors are Parties in Interest,
such transaction would violate the Prohibited Transaction rules of ERISA and the
Code unless such transaction were subject to one or more statutory or
administrative exemptions such as those described above or any other available
exemption. Accordingly, prior to making an investment in Securities of such
Series, a Plan investor should determine whether such obligor or related
obligors are Parties in Interest with respect to such Plan and, if so, whether
such transaction is subject to one or more of the statutory or administrative
exemptions.
If a particular Series is treated as "equity" for purposes of the Plan Asset
Regulations and the underlying assets of the Issuer are treated as assets of a
Plan purchasing Securities of such Series and the Mortgage Assets securing such
Series consists of multiple Mortgage Loans or obligations of multiple unrelated
obligors as specified in the related Prospectus Supplement, an investing Plan
may not be able to determine whether any of the obligors is a Party in Interest
with respect to such Plan. In that event, prior to making an investment in
Securities of such Series, such Plan investor should determine whether one or
more statutory or administrative exemptions is applicable.
Furthermore, in either of the cases above, if the Issuer were deemed to hold
plan assets by reason of a Plan's investment in a Security, the persons
providing services with respect to the assets of the Issuer, including the
Mortgage Loans, may be subject to the fiduciary responsibility provisions of
Title I of ERISA and be subject to the prohibited transactions provisions of
ERISA and Section 4975 of the Code with respect to transactions involving such
assets unless such transactions are subject to a statutory or administrative
exemption.
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One such exception applies if the class of "equity" interests in question is
(i) held by 100 or more investors who are independent of the Issuer and each
other, (ii) freely transferable, and (iii) sold as part of an offering pursuant
to (a) an effective registration statement under the Securities Act of 1933, and
then subsequently registered under the Securities Exchange Act of 1934 or (b) an
effective registration statement under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934 ("Publicly Offered Securities"). In addition, another
exception provides that if at all times less than 25% of the value of all
classes of equity interests in the Issuer are held by investors other than
"benefit plan investors" (which is defined as including plans subject to ERISA,
individual retirement accounts, certain plans not subject to ERISA, and entities
whose underlying assets include plan assets by reason of plan investment in such
entities), the investing Plan's assets will not include any of the underlying
assets of the Issuer.
Even if the underlying assets of the Issuer are treated as assets of a Plan
purchasing Securities of such series, an additional exemption may also be
available if the Issuer is a trust. The DOL granted to Shearson Lehman Hutton,
Inc. an administrative exemption (the "Exemption") from certain of the
prohibited transaction rules of ERISA with respect to the initial purchase, the
holding and the subsequent resale by Plans of certificates representing
interests in asset-backed pass through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The obligations covered by the Exemption include
obligations such as the Mortgage Assets. The Exemption will apply to the
acquisition, holding and resale of the Securities by a Plan, provided that
certain conditions (certain of which are described below) are met. The
Prospectus Supplement will specify whether the Exemption will apply with respect
to any particular series.
Among the conditions which must be satisfied for the Exemption to apply are
the following:
1. The acquisition of the Securities by a Plan is on terms (including the
price for the Securities) that are at least as favorable to the Plan as they
would be in an arm's-length transaction with an unrelated party;
2. The rights and interests evidenced by the Securities acquired by the Plan
are not subordinated to the rights and interests evidenced by other certificates
of the trust;
3. The Securities acquired by the Plan have received a rating at the time of
such acquisition that is in one of the three highest generic rating categories
from either Standard & Poor's Ratings Services A Division of the McGraw Hill
Companies, Inc. ("Standard & Poor's"), Moody's Investors Service, Inc.
("Moody's"), Duff & Phelps Credit Rating Co. ("DCR") or Fitch Investors Service,
L.P. ("Fitch");
4. The sum of all payments made to the underwriter in connection with the
distribution of the Securities represents not more than reasonable compensation
for underwriting the Securities. The sum of all payments made to and retained by
the seller pursuant to the sale of the obligations to the trust represents not
more than the fair market value of such obligations. The sum of all payments
made to and retained by the servicer represents not more than reasonable
compensation for the servicer's services under the related servicing agreement
and reimbursement of the servicer's reasonable expenses in connection therewith;
5. The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below); and
6. The Plan investing in the Securities 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 also must meet the following requirements:
(i) the corpus of the trust must consist solely of assets of the type which
have been included in other investment pools;
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(ii) certificates in such other investment pools must have been rated in one
of the three highest rating categories of Standard & Poor's, Moody's, DCR or
Fitch for at least one year prior to the Plan's acquisition of certificates; 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 Plan's acquisition of Securities.
Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when the Plan fiduciary
causes a Plan to acquire certificates in a trust in which the fiduciary (or its
affiliate) is an obligor on the receivables held in the trust provided that,
among other requirements: (i) in the case of an acquisition in connection with
the initial issuance of Securities, at least fifty (50) percent of each class of
Securities in which Plans have invested is acquired by persons independent of
the Restricted Group and at least fifty (50) percent of the aggregate interest
in the trust is acquired by persons independent of the Restricted Group; (ii)
such fiduciary (or its affiliate) is an obligor with respect to five (5) percent
or less of the fair market value of the obligations contained in the trust;
(iii) the Plan's investment in Securities does not exceed twenty-five (25)
percent of all of the Securities outstanding after the acquisition; and (iv) no
more than twenty-five (25) percent of the assets of the Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Issuer, the Underwriter, the Trustee, the Servicer, the Master
Servicer, if any, the Special Servicer, if any, any obligor with respect to
obligations included in a Trust constituting more than five (5) percent of the
aggregate unamortized principal balance of the assets in a Trust, provider of
Enhancement, if any, or any affiliate of such parties (the "Restricted Group").
There can be no assurance that the Securities will not be treated as equity
interests in the Issuer for purposes of the Plan Asset Regulations. Moreover, if
the Securities are treated as equity interests for purposes of ERISA, it should
be assumed, unless the Prospectus Supplement provides otherwise, that none of
the exceptions set forth in the Plan Asset Regulations will apply to the
purchase of Securities offered hereby.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code and the potential consequences to
their specific circumstances, prior to making an investment in the Securities.
Moreover, each Plan fiduciary should determine whether under the general
fiduciary standards of investment procedure and diversification an investment in
the Securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Section 4975 of the Code. However, such a governmental plan may be
subject to a federal, state, or local law which is, to a material extent,
similar to the provisions of ERISA or Section 4975 of the Code ("Similar Law").
A fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under Similar Law.
The sale of Securities to a Plan is in no respect a representation by the
Issuer or the Underwriter that this investment meets all relevant legal
requirements with respect to investments by Plans generally or by any particular
Plan, or that this investment is appropriate for Plans generally or for any
particular Plan.
LEGAL INVESTMENT
The Prospectus Supplement for each Series of Securities will specify which,
if any, of the Classes of Securities offered thereby will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA"). The appropriate characterization of those
Securities not qualifying as "mortgage related securities" ("Non-SMMEA
Securities") under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such Securities, may be
subject to significant interpretive uncertainties. Accordingly, investors
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whose investment authority is subject to legal restrictions should consult their
own legal advisors to determine whether and to what extent the Non-SMMEA
Securities constitute legal investments for them.
Those Classes of Securities 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
representing interests in, or secured by, a Trust Fund consisting of Mortgage
Loans or Private Mortgage-Backed Securities, provided that such Mortgage Loans
(or the Mortgage Loans underlying the Private Mortgage-Backed Securities) are
secured by first liens on Mortgaged Property and were originated by certain
types of originators as 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,
partnerships, associations, business trusts and business entities (including,
but not limited to, state-chartered savings banks, commercial banks, savings and
loan associations and insurance companies, as well as trustees and state
government employee retirement systems) 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" (effective December 31,
1996) to include, in relevant part, Securities satisfying the rating, first lien
and qualified originator requirements for "mortgage related securities," but
representing interests in, or secured by, 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 Securities. Accordingly, the investors
affected by such legislation will be authorized to invest in Securities
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 Securities 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
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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
as 12 C.F.R. SectionSection 703.5(f)-(k), which prohibit federal credit unions
from investing in certain mortgage related securities (including securities such
as certain Series or Classes of Securities), except under limited circumstances.
Effective January 1, 1998, the NCUA has amended its rules governing investments
by federal credit unions at 12 C.F.R. Part 703; the revised rules will permit
investments in "mortgage related securities" under certain limited
circumstances, but will prohibit investments in 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 Securities
should review the "Supervisory Policy Statement on Securities Activities" dated
January 28, 1992, as revised April 15, 1994 (the "Policy Statement") of the
Federal Financial Institutions Examination Council. 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 Securities),
except under limited circumstances, and sets forth certain investment practices
deemed to be unsuitable for regulated institutions.
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 Securities,
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 Securities 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 Securities as "mortgage
related securities," no representation is made as to the proper characterization
of the Securities for legal investment purposes, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase Securities under applicable legal investment restrictions.
The uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the Securities) may adversely affect the liquidity of the Securities.
Investors should consult their own legal advisors in determining whether and
to what extent the Securities constitute legal investments for such investors.
PLAN OF DISTRIBUTION
The Issuer may sell the Securities offered hereby through Lehman Brothers,
as agent or as underwriter, or through underwriting syndicates represented by
Lehman Brothers (collectively, the "Underwriters") or by one or more other
underwriters, in each case, to be specified in the related Prospectus
Supplement. The Prospectus Supplement relating to a Series will set forth the
terms of the offering of such Series and each Class within such Series,
including the name or names of the Underwriters, the proceeds to and their
intended use by the Issuer, and either the initial public offering price, the
discounts and commissions to the Underwriters and any discounts or concessions
allowed or reallowed to certain dealers, or the method by which the price at
which the Underwriters will sell the Securities will be determined.
The Underwriters will be obligated, subject to certain conditions, to
purchase all of the Securities described in the Prospectus Supplement relating
to a Series if any such Securities are purchased. The
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Securities may 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 a fixed public offering price or at varying prices determined
at the time of sale. If specified in the related Prospectus Supplement, a Series
may be offered in whole or in part in exchange for the Mortgage Assets that
would be pledged to secure such Series. In such event, the Prospectus Supplement
will specify the amount of compensation to be paid to the Underwriters and
expenses, if any, in connection with such distribution. If so indicated in the
Prospectus Supplement, the Issuer will authorize Underwriters or other persons
acting as the Issuer's agents to solicit offers by certain institutions to
purchase the Securities on such terms and subject to such conditions as so
specified.
The Issuer may also sell the Securities offered hereby and by means of the
related Prospectus Supplements from time to time in negotiated transactions or
otherwise, at prices determined at the time of sale. The Issuer may effect such
transactions by selling Securities to or through dealers and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Issuer and any purchasers of Securities for whom they may
act as agents.
If any Certificates are offered other than through underwriters pursuant to
such underwriting agreements, the related Prospectus Supplement or Prospectus
Supplements will contain information regarding the terms of such offering and
any agreements to be entered into in connection with such offering.
Purchasers of 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 (the "Securities Act"), in
connection with reoffers and sales by them of Certificates. Certificateholders
should consult with their legal advisors in this regard prior to any such
reoffer and sale.
If specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor, any affiliate thereof or any other person or
persons specified therein may purchase some or all of one or more Classes of
Certificates of such Series from the underwriter or underwriters of such other
person or persons specified in such Prospectus Supplement. The consideration for
such purchase may be cash or Mortgage Assets. Such purchaser may thereafter from
time to time offer and sell, pursuant to this Prospectus and the related
Prospectus Supplement, some or all of such Certificates so purchased, directly,
through one or more underwriters to be designated at the time of the offering of
such Certificates, through dealers acting as agent and/or principal as in such
other manner as may be specified in the related Prospectus Supplement. Such
offering may be restricted in the manner specified in such Prospectus
Supplement. Such transactions may be effected at market prices prevailing at the
time of sale, at negotiated prices or at fixed prices. Any underwriters and
dealers participating in such purchaser's offering of such Certificates may
receive compensation in the form of underwriting discounts or commissions from
such purchaser and such dealers may receive commissions from the investors
purchasing such Certificates for whom they may act as agent (which discounts or
commissions will not exceed those customary in those types of transactions
involved). Any dealer that participates in the distribution of such Certificates
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any commissions and discounts received by such dealer and any profit on the
resale of such Certificates by such dealer might be deemed to be underwriting
discounts and commissions under the Securities Act.
The place and time of delivery for the Series in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Issuer and for the Underwriters by Skadden, Arps, Slate,
Meagher & Flom, New York, New York, Weil, Gotshal and Manges, New York, New
York, Cadwalader, Wickersham & Taft, New York, New York, Sidley & Austin, New
York, New York or Thacher Proffitt & Wood, New York, New York.
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GLOSSARY
The following are abbreviated definitions of certain capitalized terms used
in this Prospectus. Unless otherwise provided in the Prospectus Supplement for a
Series, such definitions shall apply to capitalized terms used in such
Prospectus Supplement. The definitions may vary from those in the Indenture or
Trust Agreement, as applicable, and the Indenture or Trust Agreement, as
applicable, generally provides a more complete definition of certain of the
terms. Reference should be made to the Indenture or Trust Agreement, as
applicable, for a more complete definition of such terms.
"Accrual Date" means, with respect to any Series, the date upon which
interest begins accruing on the Securities of the Series, as specified in the
related Prospectus Supplement.
"Accrual Payment Amount" means, with respect to any Payment Date or
Distribution Date for a Series that occurs prior to or on the Accrual
Termination Date, the aggregate amount of interest which has accrued on the
Compound Interest Securities of such Series during the Interest Accrual Period
relating to such Payment Date or Distribution Date and which is not then
required to be paid.
"Accrual Termination Date" means, with respect to a Class of Compound
Interest Securities, the Payment Date or Distribution Date on which all
Securities of the related Series with Stated Maturities or Final Scheduled
Termination Dates earlier than that of such Class of Compound Interest
Securities have been fully paid, or such other date or period as may be
specified in the related Prospectus Supplement.
"Administration Agreement" means, with respect to a Series, an agreement
pursuant to which the Administrator agrees to perform certain ministerial,
administrative, accounting and clerical duties on behalf of the Issuer with
respect to such Series.
"Administration Fee" means the fee specified as such in the Administration
Agreement.
"Advances" means, unless otherwise specified in a Prospectus Supplement,
cash advances with respect to delinquent payments of principal and interest on
any Mortgage Loan made by the Primary Servicer from its own funds or, if so
specified in the related Prospectus Supplement, from excess funds in the
Custodial Account or Servicing Account, but only to the extent that such
advances are, in the good faith business judgment of the Servicer or the Master
Servicer, as the case may be, ultimately recoverable from future payments and
collections on the Mortgage Loans or otherwise.
"Aggregate Asset Value" means, with respect to any Series, the aggregate
amount obtained by adding the Asset Value of each Mortgage Loan or Private
Mortgage-Backed Security or other Mortgage Assets in the Trust Estate for such
Series, plus the Asset Value, as determined in the related Series Supplement, of
any cash remaining in the Collection Account or any other Pledged Fund or
Account subsequent to an initial deposit therein by the Issuer.
"Aggregate Outstanding Principal" means, with respect to any Series or Class
thereof, the principal amount of all Securities of such Series or Class
outstanding at the date of determination, including, in respect of any Class of
Compound Interest Securities of such Series (or other Class of Securities on
which interest accrues and is added to the outstanding principal amount
thereof), the Compound Value (or accreted value) of such Securities through the
Payment Date or Distribution Date immediately preceding the date of
determination.
"Appraised Value" means, unless otherwise specified in a Prospectus
Supplement, the lesser of the appraised value determined in an appraisal
obtained at origination or the sales price of a Mortgaged Property.
"ARM," "ARM Loan," or "Adjustable Rate Mortgage Loan" means a Mortgage which
provides for adjustment from time to time to the Mortgage Rate in accordance
with an approved index.
"Asset Value" means, unless specified otherwise in the related Prospectus
Supplement, with respect to each Private Mortgage-Backed Security or Mortgage
Loan or other Mortgage Assets included in the Trust
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Estate or Trust Fund for a Series, its Scheduled Principal Balance. In addition,
the related Series Supplement shall set forth, for purposes of calculating the
Asset Value of Mortgage Assets, the dates on which the scheduled principal and
interest payments with respect to such Mortgage Assets are assumed to be
deposited in the Collection Account. The Asset Value of any cash deposited in
any Pledged Fund or Account shall be as set forth in the related Series
Supplement.
"Assumed Deposit Date" means the date specified therefor in the Series
Supplement for a Series, upon which distributions on the Primary Assets are
assumed to be deposited in the Collection Account for purposes of calculating
Reinvestment Income thereon.
"Assumed Reinvestment Rate" means, with respect to a Series, the per annum
rate or rates specified in the related Prospectus Supplement or the related
Guaranteed Investment Contract for a particular period or periods as the
"Assumed Reinvestment Rate" for funds held in Pledged Funds and Accounts for the
Series.
"Bankers Trust" means Bankers Trust Company of California, N.A., a national
banking association.
"BIF" means Bank Insurance Fund.
"Bondholder" means the Person in whose name a Bond is registered in the Bond
Register.
"Bond Interest Rate" means the interest rate on the outstanding principal
amount of a Bond payable on the applicable Payment Date for such Bond, as
specified in the related Prospectus Supplement.
"Bond Register" means the register maintained pursuant to the Trust
Indenture for a Series, providing for the registration of the Bonds of a Series
and the transfers and exchanges thereof.
"Bonds" means Collateralized Mortgage Obligations sold by the Issuer
pursuant to this Prospectus and a related Prospectus Supplement.
"Business Day" means, with respect to any Series that does not include any
Class of Variable Interest Securities, any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in New York, New York, or in
the cities in which the Corporate Trust Office or, if applicable, the offices of
the Servicer or the Special Servicer, are then located, are authorized or
obligated by law or executive order to be closed, and with respect to any Series
that includes any Class of Variable Interest Securities, a day that is not a
Saturday or Sunday, and that is not a legal holiday nor a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close in either London or New York City or in the city in which the Corporate
Trust Office is then located.
"Cash Liquidation" means as to any defaulted Mortgage Loan other than a
Mortgage Loan with respect to which the related Mortgaged Property became REO
Property, the recovery of all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Master Servicer or Servicer, as applicable,
expects to be finally recoverable.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register.
"Certificate Interest Rate" means the per annum interest rate on the
outstanding principal amount of a Certificate payable on the applicable
Distribution Date for such Certificate, as specified in the related Prospectus
Supplement.
"Certificate Register" means the register maintained pursuant to the Trust
Agreement for a Series, providing for the registration of the Certificates of a
Series and the transfers and exchanges thereof.
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"Certificates" means the Mortgage-Backed Certificates sold by the Issuer
pursuant to this Prospectus and a related Prospectus Supplement.
"Class" means a class of Securities of a Series.
"Closing Date" means, with respect to a Series, the date specified in the
related Series Supplement as the date on which Securities of such Series are
first issued.
"Code" means the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.
"Collection Account" means, with respect to a Series, the account designated
as such and created pursuant to the Trust Indenture or Trust Agreement, as
applicable.
"Commercial Property" means any property securing a Mortgage Loan that used
for commercial purposes.
"Commission" means the Securities and Exchange Commission.
"Company" means Structured Asset Securities Corporation.
"Compound Interest Security" means any Security of a Series on which
interest accrues and is added to the principal of such Security periodically,
but with respect to which no interest or principal shall be payable except
during the period or periods specified in the related Prospectus Supplement.
"Compound Value" means, with respect to a Class of Compound Interest
Securities, as of any determination date, the original principal amount of such
Class, plus all accrued and unpaid interest, if any, previously added to the
principal thereof and reduced by any payments of principal previously made on
such Class of Compound Interest Securities and by any losses allocated to such
Class.
"Condemnation Proceeds" means any awards resulting from the full or partial
condemnation or any eminent domain proceeding or any conveyance in lieu or in
anticipation thereof with respect to a Mortgaged Property by or to any
governmental or quasi-governmental authority other than amounts to be applied to
the restoration, preservation or repair of such Mortgaged Property or released
to the related Mortgagor in accordance with the terms of the Mortgage Loan.
"Corporate Trust Office" means the corporate trust office of the Trustee,
which, unless otherwise specified in the related Prospectus Supplement, shall be
the office of Bankers Trust Company of California, N.A., 3 Park Plaza, 16th
Floor, Irvine, California 92714, if Bankers Trust Company of California, N.A. is
the Trustee, or Marine Midland Bank, N.A., 140 Broadway, New York, New York
10015, if Marine Midland Bank, N.A. is the Trustee.
"Covered Trust" means a Trust Estate or Trust Fund covered by a form of
credit support.
"CPR" means the Constant Prepayment Rate prepayment model.
"Custodial Account" means an account established by a Master Servicer, a
Servicer, or a Special Servicer in the name of the Trustee for the deposit on a
daily basis of all Mortgage Loan related receipts received by it subsequent to
the Cut-Off Date.
"Custodian" means any bank, savings and loan association, trust company or
other entity appointed to hold documentation with respect to any Mortgage Loans.
"Cut-Off Date" means, with respect to a Series, the date specified in the
related Series Supplement on which, as of the close of business on such date,
the Mortgage Loans securing or included in such Series are sold to a Trust or
subject to the lien of the Indenture.
"Deferred Interest" means the excess resulting when the amount of interest
required to be paid by a Mortgagor on a Mortgage Loan on any Due Date for such
Mortgage Loan is less than the amount of
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interest accrued on the Scheduled Principal Balance thereof, to the extent such
excess is added to the Scheduled Principal Balance of such Mortgage Loan.
"Deferred Interest Securities" means Bonds or Certificates on which interest
accrued during an Interest Accrual Period may be added to the principal amount
of such Bonds or Certificates rather than being paid in cash on the related
Distribution Date.
"Definitive Securities" means the Bonds or the Certificates for a Series
when and if issued in definitive form to the Securities Owners of such Series or
their nominees.
"Deleted Mortgage Loan" means a Mortgage Loan removed from the Trust Estate
or Trust Fund in order to substitute a Substitute Mortgage Loan.
"Delivery Date" means with respect to a Series, the date specified in the
related Prospectus Supplement as the date on which the Securities of such Series
are to be delivered to the original purchasers thereof.
"Depositor" means the Company (i) when acting in such capacity under a
Deposit Trust Agreement to deposit Primary Assets into an Owner Trust relating
to a Series of Bonds, or (ii) when acting in such capacity under a Trust
Agreement to deposit Primary Assets into a Trust Fund relating to a Series of
Certificates.
"Deposit Trust Agreement" means a deposit trust agreement between the
Company and an Owner Trustee pursuant to which an Owner Trust is created and
Primary Assets are deposited therein.
"Designated Interest Accrual Date" means, as specified in the related
Prospectus Supplement, (a) the day preceding a Redemption Date or Special
Redemption Date as the date through which accrued interest is paid upon
redemption or special redemption, or (b) the date through which accrued interest
is paid upon the occurrence of an Event of Default.
"Determination Date" means the date specified in the related Prospectus
Supplement.
"Disqualified Organization" means the United States, any State or political
subdivision thereof, any possession of the United States, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, a rural electric or telephone cooperative described in
section 1381(a)(2)(C) of the Code, or any entity exempt from the tax imposed by
sections 1-1399 of the Code, if such entity is not subject to tax on its
unrelated business income.
"Distribution Date" means the date on which distributions of principal of
and interest on Certificates of a Series will be made.
"DOL" means Department of Labor.
"Due Date" means each date on which a payment is due and payable on any
Mortgage Assets.
"Due Period" means, unless other specified in the related Prospectus
Supplement, for each Payment Date or Distribution Date, as applicable, the
period beginning on the second day of the month preceding the month in which
such Payment Date or Distribution Date, as applicable, occurs and ending on the
first day of the month in which such Payment Date or Distribution Date, as
applicable, occurs.
"Eligible Investments" means any one or more of the obligations or
securities described herein under "SECURITY FOR THE BONDS AND
CERTIFICATES--Investment of Funds."
"Enhancement" means the Enhancement for a Series, if any, specified in the
related Prospectus Supplement.
"Enhancement Agreement" means the agreement or instrument pursuant to which
any Enhancement is issued or the terms of any Enhancement are set forth.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plans" means qualified employee benefit plans established under ERISA
or the Code.
"Escrow Account" means an escrow account established and maintained by the
Primary Servicer in which payments by Mortgagors to pay taxes, assessments,
mortgage and hazard insurance premiums and other comparable items will be
deposited.
"Event of Default" unless otherwise specified in the Prospectus Supplement
shall have the meaning set forth herein under "THE INDENTURE AND TRUST
AGREEMENT--Events of Default."
"Excess Cash Flow" shall have the meaning set forth in the related
Prospectus Supplement.
"Exchange Act" means the Securities Exchange Act of 1934.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHA" means the Federal Housing Administration, a division of HUD. "FHA
Loan" means a fixed-rate mortgage loan insured by the FHA. "FHLMC" means the
Federal Home Loan Mortgage Corporation.
"FNMA" means the Federal National Mortgage Association.
"Final Scheduled Distribution Date" means the Distribution Date on which
principal of and interest on a Series of Certificates is scheduled to be paid in
full.
"First Mandatory Principal Distribution Date" means the date specified in
the related Prospectus Supplement as the Distribution Date on which the Issuer
must begin paying installments of principal of the Certificates of the related
Series or Class if the Issuer has not already begun making such distributions.
"First Mandatory Principal Payment Date" means the date specified in the
related Prospectus Supplement as the Payment Date on which the Issuer must begin
paying installments of principal of the Bonds of the related Series or Class if
the Issuer has not already begun making such payments.
"First PAC Paydown Date" means the date on which the initial PAC Principal
Payment is applied to the PAC Bonds, as set forth in the related Prospectus
Supplement.
"Garn-St. Germain Act" means the Garn-St. Germain Depository Institutions
Act of 1982.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate, remise,
convey, assign, transfer, create and grant a lien upon and a security interest
in and right of setoff against, deposit, set over and confirm.
"Guaranteed Investment Contract" means a guaranteed investment contract
providing for the investment of all distributions on the Mortgage Assets
guaranteeing a minimum or a fixed rate of return on the investment of moneys
deposited therein.
"Guarantor" means a guarantor acceptable to the Rating Agencies rating the
Securities.
"Highest Bond Interest Rate" means, unless specified otherwise in the
related Prospectus Supplement, with respect to any Series of Bonds, the highest
Bond Interest Rate borne by outstanding Bonds of the Series.
"Highest Certificate Interest Rate" means, unless otherwise specified in the
related Prospectus Supplement, with respect to any Series of Certificates, the
highest Certificate Interest Rate borne by outstanding Certificates of a Series.
"Holder" means a Bondholder or Certificateholder, as applicable.
"Housing Act" means the National Housing Act of 1934, as amended.
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"HUD" means the United States Department of Housing and Urban Development.
"Indenture" means, with respect to any Series of Bonds, collectively the
Trust Indenture and any related Series Supplement.
"Individual Investor Bonds" means each of the Bonds of a Class identified as
such in the related Prospectus Supplement.
"Individual Investor Certificates" means each of the Certificates of a Class
identified as such in the related Prospectus Supplement.
"Insurance Policies" means hazard insurance and other insurance policies
required to be maintained with respect to Mortgage Loans.
"Insurance Proceeds" means amounts received by the Trustee from the Master
Servicer or a Servicer in connection with sums paid or payable under any
insurance policies, to the extent not applied to the restoration or repair of
the Mortgaged Property.
"Interest Accrual Period" means the period specified in the related
Prospectus Supplement for a Series, during which interest accrues on Securities
of the related Series or Class with respect to any Payment Date, Distribution
Date, Redemption Date, or Special Redemption Date.
"Interest Only Securities" means a Security entitled to receive payments of
interest only based upon the Notional Amount of the Security.
"Interest Weighted Securities" means, with respect to Certificates issued by
a grantor Trust, Certificates that embody only interest payments on the
underlying Mortgage Loans or which consist in whole or in part of stripped
coupons or, in the case of a regular interest in a REMIC, which qualify as such
pursuant to Section 860G(a)(1)(B)(ii) of the Code.
"IRS" means the Internal Revenue Service.
"Issuer" means the Company Owner Trust, or a separate trust established by
the Company as issuer of a Series of Securities.
"L/C Bank" means the issuer of the letter of credit.
"LCPI" means Lehman Commercial Paper Inc.
"Lehman Brothers" means Lehman Brothers Inc.
"Liquidation Proceeds" means amounts (other than Insurance Proceeds)
received and retained in connection with liquidation of defaulted Mortgage Loans
whether through foreclosure or otherwise, net of related liquidation expenses
and certain other expenses.
"Loan-to-Value Ratio" means, as of any date of determination, the ratio of
the then outstanding principal amount to the lesser of the appraised value and
the purchase price of the Mortgaged Property at the time of origination.
"Marine Midland" means Marine Midland Bank, N.A., a national banking
association.
"Master Servicer" means, with respect to a Series secured by Mortgage Loans
or Private Mortgage-Backed Securities, the Person, if any, designated in the
related Prospectus Supplement to manage and supervise the administration and
servicing by the Servicers of the Mortgage Loans comprising Mortgage Assets or
Underlying Collateral for that Series, or the successors or assigns of such
Person.
"Master Servicing Agreement" means the Master Servicing Agreement between
the Issuer and the Master Servicer, if any, specified in the related Prospectus
Supplement.
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"Maximum Variable Interest Rate" means the interest rate cap on the Bond
Interest Rate or Certificate Interest Rate for Variable Interest Securities.
"Minimum Variable Interest Rate" means the interest rate floor on the Bond
Interest Rate or Certificate Interest Rate for Variable Interest Securities.
"Mortgage" means a mortgage, deed of trust or other security instrument
evidencing the lien on the Mortgaged Property.
"Mortgage Assets" means the Mortgage Loans, including participation
interests therein, REO Property and Private Mortgage-Backed Securities which are
Granted to the Trustee as security for a Series of Bonds or deposited into the
Trust Fund in respect of a Series of Certificates; an item of Mortgage Assets
refers to a specific Mortgage Loan, REO Property or Private Mortgage-Backed
Security.
"Mortgaged Properties" means the real properties on which liens are created
pursuant to Mortgages for purposes of securing the Mortgage Loans.
"Mortgage Loan Group" means groups of Mortgage Assets.
"Mortgage Loan" means a mortgage loan or participation interest therein that
is owned by the Issuer and constitutes a part of the Mortgage Assets for a
Series, or that is Underlying Collateral for a Private Mortgage-Backed Security
that constitutes a part of the Mortgage Assets for a Series.
"Mortgage Note" means the note or other evidence of indebtedness of a
Mortgagor with respect to a Mortgage Loan.
"Mortgage Pool" means, with respect to a Series, the pool of Mortgage Loans.
"Mortgage Rate" means, with respect to each Mortgage Loan, the annual
interest rate required to be paid by the Mortgagor under the terms of the
related Mortgage Note.
"Mortgagor" means the Person indebted under the Mortgage Note relating to a
Mortgage Loan.
"Multifamily Property" means any property securing a Mortgage Loan
consisting of multifamily residential rental property or cooperatively owned
multifamily property consisting of five or more dwelling units.
"New York Presenting Agent" means the Issuer's agent in the State of New
York, which, unless otherwise specified in the Prospectus Supplement for a
Series, will be Bankers Trust Company, Four Albany Street, New York, New York
10006. "Nonresidents" means a nonresident alien individual, foreign partnership
or foreign corporation.
"OID" means "original issue discount" within the meaning of section 1273 of
the Code.
"OTS" means the Office of the Thrift Supervision.
"Owner Trust" means the trust fund established by the Company pursuant to a
Deposit Trust Agreement to hold Primary Assets and issue a Series of Bonds.
"Owner Trustee" means the bank or trust company named in the Prospectus
Supplement related to a Series of Bonds, not in its individual capacity but
solely as trustee pursuant to a Deposit Trust Agreement, and its successors and
assigns.
"PAC" means Planned Amortization Class Securities.
"PAC Amount" means the scheduled amounts of principal payments to be applied
on each Payment Date or Distribution Date to the PAC Securities, as set forth in
the related Prospectus Supplement.
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"PAC Security" or "Planned Amortization Class Security" means a Security on
which the Principal Amortization Amount in an amount equal to the PAC Principal
Payment or PAC Principal Distribution will be applied to such Securities
commencing on the First PAC Paydown Date, and each Payment Date or Distribution
Dates thereafter.
"PAC Paydown Date" means the date on which each PAC Amount is applied to the
PAC Securities as set forth in the related Prospectus Supplement.
"PAC Principal Payment" means, with respect to a particular Payment Date,
the scheduled PAC Amount, if any, for such Payment Date less any principal
payments made on the PAC Securities due to a special redemption subsequent to
the preceding Payment Date.
"Participating Securities" means a Security entitled to receive payments of
principal and interest and an additional return on investment as described in
the related Prospectus Supplement.
"Participation Agreement" means the agreement through which participation
interests in a Series will be acquired.
"Pass-Through Certificates" means, in respect of Certificates issued by a
grantor trust, Certificates in which there is no separation of the principal and
interest payments on the underlying Mortgage Loans.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in the Indenture or Trust
Agreement, as applicable and is authorized and appointed pursuant to the
Indenture or Trust Agreement, as applicable by the Issuer to pay the principal
of or interest on any Securities on behalf of the Issuer.
"Payment Date" means the date on which payments of principal of and interest
on the Bonds will be made.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, or government or any agency or political
subdivision thereof.
"Pledged Fund or Account" means any fund or account, including, without
limitation, the Collection Account or any Reserve Fund established with respect
to, and Granted as security for, a Series.
"PMBS Agreement" means the pooling and servicing agreement, indenture or
similar agreement pursuant to which Private Mortgage-Backed Securities have been
issued.
"PMBS Issuer" means the issuer of the Private Mortgage-Backed Securities.
"PMBS Trustee" means the trustee of the Private Mortgage-Backed Securities.
"Policy Statement" means the supervisory policy statement adopted by the
Federal Financial Institution Examination Council.
"Prepayment Assumption" means the anticipated rate of prepayments assumed in
pricing the Securities.
"Prepayment Period" means, if specified in any Prospectus Supplement with
respect to any Series, the calendar month preceding the month in which the
related Payment Date occurs.
"Primary Assets" means that portion of the Trust Estate pledged to secure a
Series of Bonds, or comprising the Trust Fund relating to a Series of
Certificates.
"Primary Servicer" means the entity which has primary liability for
servicing Mortgage Loans directly.
"Principal Balance" means, unless otherwise specified in a Prospectus
Supplement, with respect to any Mortgage Loan or related REO Property, for any
Due Date and the Due Period with respect thereto, the principal balance of such
Mortgage Loan (or, in the case of REO Property, of the related Mortgage Loan
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on the last date on which a payment was made thereon) outstanding as of the
Cut-Off Date, after application of principal payments due on or before the
Cut-Off Date, whether or not received, plus all amounts of Deferred Interest
accrued on such Mortgage Loan to the Due Date in the Due Period immediately
preceding the date of determination minus the sum of (a) the principal portion
of the Scheduled Payment due on or prior to such Due Date, but only if received
from or on behalf of the Mortgagor, (b) all Principal Prepayments, and all
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and other
amounts applied as recoveries of principal to the extent identified and applied
by the Master Servicer, Special Servicer or Servicer, as applicable, as
recoveries of principal through the close of the related Prepayment Period for
the Master Servicer or Servicer, as applicable, and (c) any Realized Loss on
such Mortgage Loan to the extent treated as a principal loss and which is
realized during such Prepayment Period.
"Principal Determination Date" means the day specified in the related
Prospectus Supplement.
"Principal Payment Amount" means, with respect to any Payment Date or
Distribution Date related to a particular Series, the amount that is specified
in the related Prospectus Supplement.
"Principal Payment Dates" means, with respect to a Class, the dates
specified in the related Prospectus Supplement on which principal of the
Securities of such Class is to be paid.
"Principal Only Securities" means a Security entitled to receive payments of
principal only.
"Principal Prepayment" means, with respect to any Private Mortgage-Backed
Security or Mortgage Loan, any payment of principal on such Private
Mortgage-Backed Security or Mortgage Loan in excess of the Scheduled Payment,
resulting from prepayment, partial prepayment, (other than Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds) with respect to the Mortgage Loan
or Mortgage Loans underlying such Private Mortgage-Backed Security but not
including any Scheduled Payment received prior to the Due Period in which it was
scheduled to be paid.
"Private Mortgage-Backed Security" means a mortgage participation or other
interest, pass-through certificate or collateralized mortgage obligation.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PTE" means Prohibited Transactions Exemption.
"Rating Agency" means a nationally recognized statistical rating agency.
"Realized Losses" means, unless otherwise specified in a Prospectus
Supplement, with respect to each Mortgage Loan or REO Property, as the case may
be, as to which a Cash Liquidation or REO Disposition has occurred, an amount
equal to (i) the Principal Balance of the Mortgage Loan as of the date of Cash
Liquidation or REO Disposition, plus (ii) interest at the applicable Mortgage
Rate, from the date as to which interest was last paid up to the Due Date in the
period in which such Cash Liquidation or REO Disposition has occurred on the
Principal Balance of such Mortgage Loan outstanding during each Due Period that
accrued interest was not paid, minus (iii) Liquidation Proceeds received during
the month in which such Cash Liquidation or REO Disposition occurred, net of
related expenses, including but not limited to, amounts that are payable to a
Master Servicer, Servicer, or Special Servicer, as applicable, with respect to
such Mortgage Loan and (iv) any other amounts applied as a recovery of principal
or interest on the Mortgage Loan.
"Redemption Date" means, with respect to any Series, the Payment Date
specified by the Issuer for the redemption of Bonds of such Series pursuant to
the Indenture.
"Redemption Price" means, with respect to any Bond of a Series or Class to
be redeemed, an amount equal to the percentage specified in the related
Prospectus Supplement of the principal amount (or of the Compound Value of any
Compound Interest Security) of such Security so redeemed, together with accrued
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and unpaid interest thereon at the applicable Bond Interest Rate to the
Designated Interest Accrual Date for such Series.
"Regular Bondholder" means a Holder of a Regular Interest Bond.
"Regular Certificateholder" means a Holder of a Regular Interest
Certificate.
"Regular Interest Bonds" means Classes of Bonds constituting regular
interests in a REMIC.
"Regular Interest Certificates" means Classes of Certificates constituting
regular interests in a REMIC.
"Regular Interest Securities" means Regular Interest Bonds, Regular Interest
Certificates or Uncertificated Regular Interests, as applicable.
"Reinvestment Income" means any interest or other earnings on Pledged Funds
or Accounts that are part of the Primary Assets for a Series.
"REMIC Provisions" means the provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder.
"REMIC Regulations" means final Treasury regulations under Sections 860A
through 860G of the Code or related provisions.
"REO Disposition" means the receipt by the Master Servicer, Servicer, or
Special Servicer, as applicable, of Liquidation Proceeds, Insurance Proceeds and
other payments and recoveries (including proceeds of a final sale) from the sale
or other disposition of the REO Property.
"REO Property" means Mortgaged Properties the beneficial interest in which
has been acquired by a Trust Fund or by a Trustee on behalf of Bondholders by
foreclosure, by deed-in-lieu of foreclosure or otherwise.
"Reserve Fund" means, with respect to a Series, any reserve fund described
in the applicable Prospectus Supplement, including a Subordination Reserve Fund.
"Reserve Funds" means, collectively, more than one reserve fund.
"Residual Bondholder" means the Holder of a Residual Interest Bond.
"Residual Certificateholder" means the Holder of a Residual Interest
Certificate.
"Residual Interest Bonds" means Classes of Bonds constituting the residual
interest in a REMIC.
"Residual Interest Certificates" means Classes of Certificates constituting
residual interests in a REMIC.
"Residual Interest Securities" means Residual Interest Bonds or Residual
Interest Certificates, as applicable.
"SAIF" means Savings Association Insurance Fund.
"Scheduled Payments" means the scheduled payments of principal and interest
to be made by the Mortgagor on a Mortgage Loan in accordance with the terms of
the related Mortgage Note, as modified by any permitted modification of a
Mortgage Note.
"Scheduled Principal Balance" means the principal balance of a Mortgage Loan
outstanding as of the Cut-Off Date, after application of principal payments due
on or before the Cut-Off Date, whether or not received, plus all amounts of
Deferred Interest accrued on such Mortgage Loan to the Due Date in the Due
Period immediately preceding the date of determination, minus the sum of (a) the
principal portion of all Scheduled Payments due on or prior to such Due Date,
irrespective of any delinquency in payment by
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the Mortgagor, (b) all Principal Prepayments and all Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds and other amounts applied as
recoveries of principal to the extent identified and applied by the Master
Servicer, Special Servicer, or Servicer, as applicable, as recoveries of
principal through the close of the related Prepayment Period, and (c) any
Realized Loss on such Mortgage Loan to the extent treated as a principal loss
and that is realized during such Prepayment Period.
"Securities" means Bonds of Certificates.
"Securities Owners" means the owners of the beneficial interests in a Series
of Bonds or Certificates.
"Senior Securities" means a Class of Securities which are senior in right
and priority to the extent described in the related Prospectus Supplement to
payment of principal and interest to certain other Classes of Securities of such
Series.
"Series" means a separate series of Bonds sold pursuant to this Prospectus
and the related Prospectus Supplement.
"Series Supplement" means the supplemental indenture to or terms indenture
incorporating by reference the Trust Indenture or Trust Agreement, as
applicable, between the Issuer of a Series of Securities and the Trustee
relating to such Series of Securities.
"Servicer" means, for any Mortgage Loan, the Person approved by the Issuer
and by the Master Servicer, if any, as servicer of such Mortgage Loan, which
Person shall also be a FNMA or FHLMC-approved seller and servicer.
"Servicer Remittance Date" means with respect to each Mortgage Loan, the
date on which the Servicer shall remit all funds held in the Servicing Account
together with any Advances made by such Servicer for deposit to the Collection
Account.
"Servicing Account" means an account established by a Servicer which
complies with the standards set forth herein for a Custodial Account.
"Servicing Agreements" means the Master Servicing Agreement, Servicing
Agreement and Special Servicing Agreement, if any.
"Servicing Fee" means for any Series, the aggregate fees paid to the
Trustee, Master Servicer or other similar fees.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"SPA" means the Standard Prepayment Assumption prepayment model.
"Special Redemption Date" means, with respect to a Series, the date each
month (other than any month in which a Payment Date occurs) on which Bonds of
that Series may be redeemed pursuant to the Trust Indenture or the related
Series Supplement; such date shall be the same day of the month as the day on
which the Payment Date for the Bonds of that Series occurs.
"Special Servicer" means a special servicer identified in the related
Prospectus Supplement appointed to perform the activities set forth in the
related Prospectus Supplement.
"Start Up Day" means the "startup day" of the REMIC as defined in section
860G(a)(9) of the Code.
"Stated Maturity" means the date specified in the related Prospectus
Supplement no later than which all the Bonds of such Class will be fully paid,
calculated on the basis of the assumptions set forth in the related Prospectus
Supplement.
"Stripped Certificates" means, in respect of Certificates issued by a
grantor trust, Certificates in which there is considered to be a separate
ownership of the payments of principal and interest on the underlying Mortgage
Loans. "Subordinate Securities" means a Class of Securities which are
subordinate in right and
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priority to the extent described in the related Prospectus Supplement to payment
of principal and interest to Senior Classes of Securities of such Series.
"Substitute Mortgage Asset" means any Mortgage Asset that is Granted to the
Trustee as security for a Series of Bonds or deposited into the Trust Fund in
respect of a Series of Certificates in lieu of any Mortgage Assets then pledged
as security.
"Substitute Mortgage Loan" means a Mortgage Loan substituted for one or more
Deleted Mortgage Loans in the Trust Estate or Trust Fund.
"TIN" means Taxpayer Identification Number.
"Trust Agreement" means the trust agreement between the Company and a
Trustee pursuant to which a Series of Certificates is issued.
"Trust Estate" means, with respect to any Series of Bonds, all money,
instruments, securities and other property, including all proceeds thereof,
which are subject or intended to be subject to the lien of the Indenture for the
benefit of the Series as of any particular time (including, without limitation,
all property and interests Granted to the Trustee pursuant to the Series
Supplement for such Series).
"Trust Fund" means the trust fund established pursuant to a Trust Agreement
into which Primary Assets are deposited for the purpose of issuing a Series of
Certificates.
"Trust Indenture" means the trust indenture between the Company and the
Trustee or a Trust and the Trustee pursuant to which a Series of Bonds are
issued.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 and
rules and regulations promulgated by the Commission with respect thereto.
"Trustee" means Bankers Trust or Marine Midland or another bank or trust
company named as trustee in the Prospectus Supplement for a series of Securities
and, in the case of a series of Bonds, qualified under the TIA.
"Unavailable Amount" means, with respect to a Series, the amount, if any,
remaining in the related Collection Account on a related Payment Date that
represents (1) payments of scheduled payments of principal of and interest on
the Mortgage Assets due subsequent to the Principal Determination Date
immediately preceding the related Payment Date or Distribution Date, (2) the
amount of all related prepayments received or deemed received subsequent to the
Principal Determination Date immediately preceding such Payment Date or
Distribution Date, or (3) any investment income that has accrued subsequent to
the Principal Determination Date immediately preceding such Payment Date or
Distribution Date.
"Uncertificated Regular Interest" means a regular interest in a REMIC that
is not represented by a physical Certificate.
"Undelivered Mortgage Assets" means Mortgage Assets that are not pledged and
delivered to the Trustee on the related Closing Date.
"Underlying Collateral" means, with respect to a Private Mortgage-Backed
Security, the underlying Mortgage Loans.
"Underwriters" means, collectively, Lehman Brothers, as agent or as
underwriter, or underwriting syndicates represented by Lehman Brothers.
"VRDI Security" means a Regular Interest Security that qualifies as a
"variable rate debt instrument" under Section 1.7275-5 of the Treasury
Regulations.
"Variable Interest Distribution Date" means, with respect to a Class of
Variable Interest Securities issued as part of a Series of Certificates, the
date specified in the related Prospectus Supplement, it being
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expressly provided herein that Variable Interest Distribution Dates may be
monthly, quarterly, semi-annual or annual.
"Variable Interest Payment Date" means, with respect to any Class of
Variable Interest Securities issued as part of a Series of Bonds, the date
specified in the related Prospectus Supplement, it being expressly provided
herein that Variable Interest Payment Dates may be monthly, quarterly,
semi-annual or annual.
"Variable Interest Period" means, with respect to any Class of Variable
Interest Securities, the period commencing immediately subsequent to the
preceding Variable Interest Period (or, in the case of the Variable Interest
Period applicable to the first Variable Interest Payment Date with respect to
such Class of Variable Interest Securities, commencing on the Accrual Date for
such Class) and ending on the date specified in the related Prospectus
Supplement, during which such Class of Variable Interest Securities shall accrue
interest, payable on the immediately succeeding Variable Interest Payment Date
or Variable Interest Distribution Date, at the Bond Interest Rate or Certificate
Interest Rate determined on the immediately preceding Determination Date.
"Variable Interest Rate" means the interest rate in respect of a Variable
Interest Security.
"Variable Interest Security" means a Security on which interest accrues at a
Bond Interest Rate or Certificate Interest Rate that is adjusted, based upon a
predetermined index, at fixed periodic intervals, all as set forth in the
related Prospectus Supplement.
"Weighted Average Securities" means Regular Interest Securities that bear
interest at a rate based on a weighted average of the interest rates on some or
all of the Mortgage Loans of the related trust.
"Zero Coupon Bonds" means a Security entitled to receive payments or
distributions of Principal only. "1986 Act" means the Tax Reform Act of 1986, as
amended.
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"LB98C1.XLS" is a Microsoft Excel*, Version 5.0 spreadsheet that provides in
electronic format certain loan-level information shown in Annex A, as well as
certain Mortgage Loan and Mortgaged Property information shown in the
preliminary Prospectus Supplement. This spreadsheet can be put on a user-
specified hard drive or network drive. Open this file as you would normally open
any spreadsheet in Microsoft Excel. After the file is opened, a securities law
legend will be displayed. READ THE LEGEND CAREFULLY. To view the Annex A data,
see the worksheet labeled "Annex A".
* Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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- - --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
DEPOSITOR OR THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH THEY RELATE
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
- - -------------------------------------------------------------------------------------
<S> <C>
PAGE
---------
SUMMARY OF PROSPECTUS SUPPLEMENT.......................................... S-6
RISK FACTORS.............................................................. S-29
DESCRIPTION OF THE MORTGAGE POOL.......................................... S-38
SERVICING OF THE MORTGAGE LOANS........................................... S-60
DESCRIPTION OF THE CERTIFICATES........................................... S-79
YIELD AND MATURITY CONSIDERATIONS......................................... S-102
USE OF PROCEEDS........................................................... S-111
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... S-111
ERISA CONSIDERATIONS...................................................... S-114
LEGAL INVESTMENT.......................................................... S-117
METHOD OF DISTRIBUTION.................................................... S-118
LEGAL MATTERS............................................................. S-119
RATINGS................................................................... S-119
INDEX OF PRINCIPAL DEFINITIONS............................................ S-120
ANNEX A - CERTAIN CHARACTERISTICS OF MORTGAGE LOANS....................... A-1
ANNEX B - TERM SHEET...................................................... B-1
ANNEX C - FORM OF DISTRIBUTION DATA STATEMENT............................. C-1
ANNEX D - FORM OF DELINQUENT LOAN STATUS REPORT........................... D-1
ANNEX E - FORM OF HISTORICAL LOAN MODIFICATION REPORT..................... E-1
ANNEX F - FORM OF HISTORICAL LOSS ESTIMATE REPORT......................... F-1
ANNEX G - FORM OF REO STATUS REPORT....................................... G-1
ANNEX H - FORM OF WATCH LIST REPORT....................................... H-1
ANNEX I - OPERATING STATEMENT ANALYSIS.................................... I-1
ANNEX J - NOI ADJUSTMENT WORKSHEET........................................ J-1
ANNEX K - COMPARATIVE FINANCIAL STATUS REPORT............................. K-1
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS
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<S> <C>
PROSPECTUS SUPPLEMENT..................................................... 5
ADDITIONAL INFORMATION.................................................... 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 6
SUMMARY OF TERMS.......................................................... 7
RISK FACTORS.............................................................. 25
DESCRIPTION OF THE SECURITIES............................................. 31
YIELD AND PREPAYMENT CONSIDERATIONS....................................... 40
SECURITY FOR THE BONDS AND CERTIFICATES................................... 43
SERVICING OF MORTGAGE LOANS............................................... 52
ENHANCEMENT............................................................... 56
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS............................ 59
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS................................... 60
THE INDENTURE............................................................. 74
THE TRUST AGREEMENT....................................................... 79
THE ISSUER................................................................ 86
USE OF PROCEEDS........................................................... 87
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES.............................. 87
FEDERAL INCOME TAX CONSIDERATIONS......................................... 88
STATE AND LOCAL TAX CONSIDERATIONS........................................ 104
ERISA CONSIDERATIONS...................................................... 104
LEGAL INVESTMENT.......................................................... 107
PLAN OF DISTRIBUTION...................................................... 109
LEGAL MATTERS............................................................. 110
GLOSSARY.................................................................. 111
</TABLE>
$1,557,709,000
(APPROXIMATE)
LB COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
SERIES 1998-C1
---------------------
PROSPECTUS SUPPLEMENT
FEBRUARY , 1998
------------------------
LEHMAN BROTHERS
FIRST UNION CAPITAL
MARKETS CORP.
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